Why Europe's Austerity Isn't Working (death, Clinton, ratings, economy)

[MTAtech]

Originally Posted by rbohm

...
adding new regulations on business only costs money, and that is something that business cant afford right now. also he increased the cost of repatriating money earned by US corporations overseas, and that is why more than a trillion dollars is still stilling in banks overseas, rather than coming home and being used here by corporations to expand their business here
...

1) What particular regulations did you disagree or was it every regulation is automatically bad?

2) You do know that Bush added more regulations in the same time span?

3) How can you say that "business cant afford right now" when they're posting record profits?

[Fiddlehead]

Kudos to all. Some very informative posts on this thread.

Not the usual, "Obama is a homosexual satanist illegal alien" type posts.

I am actually learning something.

I don't fully understand the EU situation, but it seems to me that there are several distinct patterns:

1) Completely corrupt systems (Greece, possibly Italy)
2) Overleveraged small economies that were hosed (Ireland, Iceland)
3) Germanic countries with high productivity AND high social welfare spending (Germany, Scandinavia, Netherlands)
4) Countries heavily exposed to the US/Anglo Saxon housing bubble (UK, Spain, Portugal, Ireland)

It is hard to draw hard and fast conclusions vis a vis the left vs. right arguments we have here every day. Seems pretty easy to cherry pick facts and to generalize.

[Mircea]

Originally Posted by Stateisota

Yes social spending was cut but we have to remember Europe has many countries with different government structures, many of which differ from themselves and from that of the USA. If we were to directly compare social cutting in one country and attribute it to "good or bad" would be absurd.

Indeed.

Unfortunately, some people just can't grasp the concept.

Structurally...

Mircea

Originally Posted by evilnewbie

I think it is funny... the austerity programs started what, a year or two ago? And liberals are calling it a failure... Obama has been in office for almost 4 years and they say its too soon to decide whether it has been successful or not... funny.

Couldn't rep you again, but that's not comedy, that's hypocrisy. Hypocrisy and double standards must be a uniquely Liberal trait.

Humorously...

Mircea

Originally Posted by MTAtech

Now Britain is officially in double-dip recession, and has achieved the remarkable feat of doing worse this time around than it did in the 1930s, which combated the Depression with expansion instead of austerity.

Expand? Expand where? Why don't we just ignore the existence of British Colonies in Asia, Africa, the Atlantic and the Pacific. Well, maybe the Brits could re-colonize India (and Pakistan and Bangladesh).

It's not exactly the same world today as it was in the 1930s in terms of economic markets.

Colonially...

Mircea

Originally Posted by Motion

I thought his emphases on the eurozone countries having this one-size-fits-all solution to their problems was worth noting.

This thread is quite stupid actually.

A good analogy would be an idiot who earns $2,000 per month and then spends $1,000 a month on their credit cards, until the card holder banks cut them off.

Now they have, um, you know, "austerity measures" forced upon them because they can only spend $2,000 per month instead of $3,000.

But they can't even spend $2,000 because they have to take $500 of that $2,000 and use it to pay down their credit card debt, so their spending is limited to $1,500 per month.

And after only 17 minutes, they're screaming that "austerity" isn't working.

Well, it will take a couple of years to pay down the credit card debt so that the card holder banks will restore credit privileges.

I don't think you understand the differences here. Greece's debt is owed to other banks, and not to investors who purchased Greek treasury securities.

Is Britain borrowing money from banks? No, Britain is selling treasury securities just like the US is (and like Greece is not).

This is not just a subtle nuance. Britain (and the US) have a luxury that Greece and the other PIIGS countries do not, and that is printing their own currency. In other words, Britain and the US can [secretly] buy their own debt, while Greece/PIIGS cannot. Of course, to do so would result in Real Inflation getting out of control.

The PIIGS countries borrowed money from banks to finance their fancy welfare schemes, but now the banks won't loan them any money, at least not until those countries implement austerity measures to pay down their debt.

I'll wait (not) for you all to explain how PIIGS can spend money that does not exist.

Originally Posted by Motion

I guess this is one of the big shortcomings with having all these countries connected to a common currency.

You mean like the United States?

You're a little weak on your History, Political Science and Economics.

The US GDP is the aggregate of all the GDPs of all of the countries that make up the United States. That's what States are...countries: sovereign political entities that have agreed to surrender certain functions to an higher power in order to speak in unison. Those certain functions are spelled out in the US Constitution and basically are Diplomacy, Foreign Policy, Foreign Trade and Defense, as well as the right to print their own currency and coins.

Some countries in the US have only a single economy, while other countries in the US have two economies, and some have three or more economies. Those economies are not necessarily co-dependent or interdependent.

In other words in Florida (which has two economies), if the Tourist Economy on which Southern Florida relies collapses, it does not automatically have a negative impact on the economy of North Florida.

You have several States in the United States bordering on bankruptcy just like you have several States in the European Union in or teetering on bankruptcy. Right? Right.

Originally Posted by Motion

Seems like it would be better if each country could sort out their own solutions to the recession.

And you could say the same about the United States. Not all US States are suffering poorly in terms of economics or GDP. Just because you live in a State that might have a severely depressed economy doesn't mean everyone lives in a State with a severely depressed economy. In fact, some regions/cities in the US have not suffered or suffered very little in the last 4-5 years.

Originally Posted by Motion

Countries like Poland who aren't in the EU seem to be doing better.

I don't even know how to retort to something as idiotic as that.



With great reluctance, I post a map of European Union Member States (wondering if anyone still knows how to read maps).

Austerely...

Mircea

[MTAtech]

Mircea, you completely missed the meaning of "expansionary." It has nothing to do with expanding geographically. It's the process of using monetary and fiscal policy to expand the economy.

Originally Posted by Motion

Countries like Poland who aren't in the EU seem to be doing better.

Motion is actually right. Poland expanded government spending and greatly improved GDP. The countries that underwent austerity had economic decline.

[Motion]

Mircea,

I've explained why I said what I said about Poland. I understand now that it's that Poland isn't a member of the eurozone.

[pvande55]

Austerity was not what was needed. When a man is drowning you shouldn't throw him an anchor! Unless there is a change in policy Greece will probably be the first to leave the Euro zone. Italy, Spain, Portugal, and maybe France will follow.

[Mulhall]

Originally Posted by pvande55

Austerity was not what was needed. When a man is drowning you shouldn't throw him an anchor! Unless there is a change in policy Greece will probably be the first to leave the Euro zone. Italy, Spain, Portugal, and maybe France will follow.

Possibly not in relation to the Eurozone countries, although the UK has different problems which cutting back on spending will help redress.

[MTAtech]

This was in the paper a few days ago:

Britain’s austerity experiment in particular has been judged by economists to have been ill-timed and poorly constructed at best. It is a reminder, in the consensus view, that the basic tenets of Keynesian economics – primarily, that government spending plays a key role in maintaining demand when the private sector is struggling in a severe financial crisis — remain as valid as ever.

In the United States, the British experience is being held up, by Democrats and mainstream economists, as an object lesson in the risks inherent in aggressive short-term budget-cutting amid signs that the recovery could be losing traction again.

However flawed the stimulus plan Mr. Obama pushed through Congress more than three years ago, fiscal policy has helped the United States generate stronger growth rates coming out of the recession than Britain or the euro zone countries.
...

To me, government spending is a component of GDP and cutting government spending necessarily cuts GDP when the economy is depressed. It's different when the economy is overheated and government crowds out credit. But that's not in the tea leaves now.

In addition, when millions of workers are unemployed the top priority is getting the workers back to work so they can restart paying taxes and that, in itself, will reduce deficits. Reducing the deficit in the short-term is self-defeating.

[Aville239]

You can’t cut your way to prosperity. It’s as simple as that. The US chose investment and stimulus and is pulling out of the crisis. Meanwhile, Europe chose austerity and has double dip recession in UK and Spain (coming soon to others).

[rbohm]

Originally Posted by MTAtech

1) What particular regulations did you disagree or was it every regulation is automatically bad?

some regulation is needed for proper oversight. however when we look at laws like dodd-frank, obamacare, etc. regulation becomes onerous and is a burden on the system.

2) You do know that Bush added more regulations in the same time span?

he also eliminated a lot of regulation as well.

3) How can you say that "business cant afford right now" when they're posting record profits?

some businesses are posting record profits, mostly large corporations that have world wide reach, ford for instance is making more money outside the US than inside. its the smaller businesses that are struggling, and these are the ones that drive the employment engine. the smaller businesses are the ones that cant afford to pay for the new regulations, and still hire new people.