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chellovek
Joined: 29 Feb 2008
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 Posted: Sun Jun 20, 2010 12:41 am Post subject: |
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[quote="blade"]
| Senior wrote: |
| Quote: |
| blade wrote: |
| Senior wrote: |
Whenever govts introduce austerity measures, the economy improves.
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So, by this logic the 1980s should have a golden age for South American countries.
Never mind the reality, continue to blame all of man's problems on socialism. |
Chile, especially, is strong now because they took these measures early on. There was a quite severe recession in the 80s where most govts cut spending (NZ is actually a good example) and had very strong economic growth through out the 90s.
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Anyway the point of the OP was point out economic growth isn't failing because of government stimuluses but because the wrong people i.e. banking industry has been allowed to drag everyone down with it.
My own countries economy would be well on the way to recovery at this stage if the main banks were allowed fail and money used to bail them out was used to kick start the economy. This could have been done for a fraction of the cost. |
I 100% agree with you, except for the "kick start the economy" part. You are completely right in your analysis that corporate SOCIALISM at the end of the last decade caused the problems we have in the new one. |
Why not? EU structural funds helped start Ireland's economy in the early 1990s. Also if things such bridges, roads, water treatment plants are built they will most likely benefit any economy in the long run. These things are even more needed when the private sector isn't in a position to fund them. |
The EU is bad, son. |
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Senior
Joined: 31 Jan 2010
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| Posted: Sun Jun 20, 2010 1:03 am Post subject: |
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| chellovek wrote: |
The EU is bad, son. |
All forms of central planning have a propensity towards rubbishness, yes. |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Sun Jun 20, 2010 4:21 am Post subject: |
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| blade wrote: |
| Senior wrote: |
Whenever govts introduce austerity measures, the economy improves.
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So, by this logic the 1980s should have a golden age for South American countries.
Never mind the reality, continue to blame all of man's problems on socialism. |
No. The 1980s Latin America was plagued by corruption even more than by inward ISI.
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| In Latin American countries where ISI was most successful, it was accompanied by structural changes to the government. Old neocolonial governments were replaced by more or less democratic governments. Banks and utilities and certain foreign-owned companies were nationalized or transferred ownership to local businesspeople. |
| Quote: |
Anyway the point of the OP was point out economic growth isn't failing because of government stimuluses but because the wrong people i.e. banking industry has been allowed to drag everyone down with it.
My own countries economy would be well on the way to recovery at this stage if the main banks were allowed fail and money used to bail them out was used to kick start the economy. This could have been done for a fraction of the cost. |
I don't know about well on the way to recovery, but I have to agree that you wouldn't knock the Stimulus without finger-wagging TARP. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Jun 20, 2010 6:10 am Post subject: |
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Stimulus is an attempt to keep the bubble levels of growth.
From around 97-06 the economy was blown larger via an increase in the amount of debt. This was a consequence (in the US) of Fed rates, Fanny Freddy and other policy that was designed to keep the cost of borrowing low (derivatives played a big role too).
Now the debt is unwinding because it was an unsustainable mechanism for growth. The economy will contract to a level that excludes the debt expansion of the past while. This will be extremely painful.
Replacing the accumulation of private debt with public debt only adds more dysfunction into the system. The economy must contract. Back when the .com bubble burst the Keynesians (like Krugman) advocated and supported the blowing of a housing bubble to replace the tech bubble. Now they want a public spending binge to replace the housing bubble. Best, just stop this.
Taleb has the best reply to this. If Krugman is wrong, the consequences are an end to the dollar and the destruction of the economy. If he is right we get a couple years of severe correction.
The economy must rebalance. Building houses and selling debt to each other is not a healthy economy. Capital must be made more expensive.
Wages will decline across the board. To compensate, asset and commodity prices will decline as well. If the government backs away and capital made more expensive the price of those things we need to live will decline significantly. To return to trend (bench marked by the 97-99 price levels) housing prices likely have 40% or more to go. Rents will decrease as well. The S&P/DOW are around 50% over valued too. The banks will lose horribly and the big ones will eventually collapse. Oh well. Banks do that. The big problem will be pension funds. I don't know what to do about them.
Stimulus will merely delay the adjustments and every day we delay they become more painful.
All that aside, there is of course a role for the state. This adjustment will be very painful. I'm not mean. The extension of unemployment benefits is sensible as would have been the public option for health care in the US. The state has a role to pay. Keeping the party going might be good for electoral strategy but it is national economy suicide. A depression is a process of cleansing an economy system of dysfunction. We need that. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Jun 22, 2010 7:56 am Post subject: |
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http://www.businessinsider.com/obama-increasingly-isolated-on-economic-policy-as-g20-draws-near-2010-6
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Obama Increasingly Isolated On Economic Policy, As G20 Draws Near
It increasingly looks as though Barack Obama will be the only world leader calling for more aggressive stimulus at this weekend's G20 conference in Toronto.
World leaders are making clear that they want no part. Germany has reiterated once again that it doesn't need debt fueled stimulus, per FT Alphaville. The country's finance minister is also claiming that it hasn't received any pressure from Obama, which may be true in a narrow sense (no direct pressure), but the President did send a letter to all the attendees telling them it was too early to take the training wheels off.
And our close allies the UK are also are in austerity mode, as are the Japanese, under new PM Kan, who has acknowledged that his country could face a Greek-like situation.
We wouldn't bet on Obama winning anyone over this weekend. A lot of this austerity talk is about political credibility (rather than actual economics), and the last thing these leaders need to do is to start flip-flopping on this stuff. |
Larry Summers and Paul Krugman against the world!
http://www.businessweek.com/news/2010-06-22/cameron-bets-on-growth-from-austerity-as-u-s-delays-update3-.html
Canada cut to get out of a slump in the 90's. It was a very difficult time. I remember my dad saying "stay alive till 95" almost daily. The Canadian economy is now among the strongest in the world, though I believe a strong recession is looming in q4 this year. Paul Krugman says America can't do similar because all the variables are exactly the same in the US today as they were with Canada. Krugman would be advocating austerity if a Republican were in power. He wants stimulus to keep the economy going long enough to keep Barry in office. Damned be the future. We have the DNC to fuss about. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Jun 22, 2010 8:02 am Post subject: |
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And finally, the root cause of most of our problems.
http://mises.org/daily/4511
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As with all government plans, Bretton Woods was dealing with symptoms rather than causes and treating those symptoms in a way that enables and even encourages the disease. It pegged currencies at unrealistic levels, provided a bailout mechanism for governments and banking establishments to continue to do what they should not be doing, and thereby prolonged the problems and made them worse in the long run.
Governments have been throwing our good money after bad for a very long time. The plan, just as with the latest round of bailouts in the United States or Europe, was to dump money on near-bankrupt countries and thereby encourage them to continue with the very policies and practices that created the problem to begin with. |
I especially enjoyed the bolded part. |
Yes. When the economy is bubbly (I mean, er, growing) the Keynesian will say you can't cut government spending cause it will cause a recession. When the economy is deflating (uh, unexpectedly taking a temporary inconsequential break from growth?) you can't government spending cause it will cause it depression. There is never a good time to remove stimulus. Unfortunately, stimulus has been our problem. We're now dealing with the consequences of stimulus (monetary) to blow a housing bubble to recover from the tech crash. It's one crisis after another, each leading to the next.
Yet the same charlatans that get us into these tragic problems continue to have a soap box to stand on. Shall I point out that Bernanke hired Krugman at Princeton? It's a circle jerk of incompetents who are too proud to admit failure.
Obama's going to be very lonely in Toronto:
http://www.zerohedge.com/article/germany-us-rift-gets-deeper-merkel-openly-mocks-obamas-keynesian-guidelines
Here is Pat Buchanan's (booo, hisssssss) take on Obama's longing for a new stimulus:
http://www.lewrockwell.com/buchanan/buchanan141.html
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Even lifelong Democratic pol Steny Hoyer, majority leader of the U.S. House, is balking at Barack Obama's latest bailout proposal.
"I think there is spending fatigue," said Steny. "It's tough in both houses to get votes."
Hoyer was referring to Obama's weekend letter to Capitol Hill calling for a $50 billion bailout of state and city governments, to spare our elected politicians the pain of balancing their budgets with their own tax revenues.
Obama calls it an "emergency" measure to prevent "massive layoffs of teachers, police and firefighters." Yet, none of the 20 million state, county or municipal workers can lose their job unless an elected legislature and a chief executive agree that they should go.
Obama is calling for a taxpayer rescue of the political class to which he belongs, to spare it the painful duty tens of thousands of business executives have had to perform. Private employees � 25 million of whom are out of work, underemployed or have given up looking for jobs � may be expendable, but government workers are not.
As America is running a second consecutive deficit of $1.4 trillion, however, the U.S. government has no tax revenue to send to the cities and states. We would have to borrow the $50 billion from China, Japan and the Persian Gulf nations.
Obama is thus asking Congress to deepen America's fiscal crisis and put the next generation on the hook for another $50 billion so today's mayors and governors can get an exemption from their political duty.
Where is the justice here?
Government workers enjoy far greater job security than private-sector workers. At the state and local level, their average pay and benefits, about $40 an hour, far exceed the $27 per hour in the private sector. The federal worker has it even better, receiving $30,000 a year more in pay and benefits than the average worker in the private sector.
Obama's proposal is thus about taking care of his own and the Democratic Party's political base.
Consider. The American Federation of State, County and Municipal Employees, the American Federation of Teachers, the Transport Workers Union of America and other government unions in the AFL-CIO are all powerhouses of the Democratic Party.
Obama is proposing a $50 billion payoff for his own voters.
Democrats are the Party of Government. The more government programs and agencies there are, the more government bureaucrats and beneficiaries there are. As government grows � it now consumes close to 40 percent of the entire economy � the larger and more solid the base of the party becomes.
In Washington, D.C., the largest employers, far and away, are the U.S. and D.C. governments. They dominate the city, which is why city elections are so one-sided. The district has the only three electoral votes never to have gone for a GOP presidential nominee.
Richard Nixon in 1972 and Ronald Reagan in 1984, in their 49-state landslides, did not carry 20 percent of the district's popular vote. John McCain got 6.5 percent.
As Democrats are the party of government, Washington, D.C., is the capital of the Democratic Party as well as the nation. When the rest of America suffers a depression and recession, Washington knows prosperity. An economic crisis for the country means job opportunities here.
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I think PB is right. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Jun 27, 2010 7:25 am Post subject: |
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http://www.washingtonpost.com/wp-dyn/content/article/2010/06/24/AR2010062402999.html
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For the G-20, order is restored with America's leadership
By David Ignatius
Friday, June 25, 2010
As the Group of 20 prepares for its economic summit this weekend in Toronto, the mood is one that would have surprised many observers a year ago: The United States is once again in the driver's seat on global economic policy, with China emerging as a potent partner. |
He goes on to talk about the CNY.
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It was popular a year ago to speak of the post-American era and of the collapse of the "Washington consensus" about free markets and globalization. But over the past year, the world has rallied behind resilient U.S. financial institutions and the American approach to economic management. Much of the necessary repair work has been done, with one nagging exception -- the lack of a credible long-term plan to control the deficit. Hopefully, that's coming.
Obama gets little credit for economic success at home, where the unemployment rate remains shockingly high. But if you listen carefully in Toronto, you will hear a few sighs of relief |
"Resilient U.S. financial institutions. Un-fracking-believable. Why even have accountants? All you need is a group of voodoo high priests in the media. If you assert it, it is true.
Ok, so how is American economic leadership going? What's that look like:
http://news.bbc.co.uk/2/hi/world/us_and_canada/10426747.stm
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US warns over recession risks as G20 meeting starts
The US has said the world's largest economies should focus on maintaining growth to avoid a double-dip recession.
As the G20 summit begins in Canada, US Treasury Secretary Timothy Geithner said Europe and Japan should boost domestic demand instead of cutting spending. |
Isn't that just like the US government now? First, jump to the scare. Double dip etc. Second, spit nonsense. Stimulus is not growth. It might keep Barry O in power but it isn't growth. I see no reason why Canada, Germany etc should destroy their balance sheets so that Barry can get elected again.
http://www.nytimes.com/2010/06/27/business/global/27summit.html?hp
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| TORONTO � Despite President Obama�s pitch at the summit meeting for developed nations here for continued stimulus measures to prevent another global economic downturn, the United States will go along with other leaders who are more concerned about rising debt and join in a commitment to cut their governments� deficits in half by 2013, administration officials said on Saturday. |
Peter Orzig quite the WH because he couldn't convince Larry Summers on the need to focus on the deficit. Larry Summers is the go-to guy for Obama. That is a tragedy.
http://exiledonline.com/larry-summers-a-suicidal-choice/2/
They're going to do to America what they did to Russia, Lithuania and others. The G8/G20 must reject American economic leadership. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Sun Jun 27, 2010 7:32 am Post subject: |
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| David Ignatius is a neo-con so of course he's going to BS about American influence and power. |
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