The Myth of European Austerity

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    Nov 16, 2014 5:11 PM GMT
    Note Italy

    http://www.bloombergview.com/articles/2014-08-19/european-austerity-is-a-myth

    iDwzQf8rHO9s.jpg


    Also on the UK:
    https://www.bondvigilantes.com/blog/2014/08/21/great-british-austerity-myth/
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    Nov 16, 2014 11:20 PM GMT
    The Bloomberg piece is completely fucking useless without total general government expenditure in inflation adjusted dollars. Contraction in private sector GDP (as you would expect in financial crisis situation) would also increase the public % of GDP if public total expenditure was exactly the same.
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    Nov 16, 2014 11:46 PM GMT
    grofte saidThe Bloomberg piece is completely fucking useless without total general government expenditure in inflation adjusted dollars. Contraction in private sector GDP (as you would expect in financial crisis situation) would also increase the public % of GDP if public total expenditure was exactly the same.


    Fucking useless? Maybe if you think that government spending shouldn't change irrespective of what's happening in the private sector but that would sort of betray the point that there really hasn't been any austerity. It shows quite explicitly how government spending as a percentage of overall GDP has grown.

    And for your "fucking" reference:

    Among the 28 EU members, public spending reached 49 percent of gross domestic product in 2013, 3.5 percentage points more than in 2007. It wasn't a linear increase: The spending-to-GDP-ratio first ballooned by 2009, exceeding 50 percent for the EU as a whole, and then shrank a little.

    That, however, was not the result of government's austerity efforts: Rather, the spending didn't go down as much as the economies collapsed, and then didn't grow in line with the modest rebound. In Italy, for example, the government spent 47.6 percent of GDP in 2007 and 50.6 percent of GDP in 2013, when economic output was 2.6 percent lower than in 2007. The country's economy dipped into recessions, surfaced, struggled -- but the government spent more or less as much money as before.
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    Nov 17, 2014 1:15 AM GMT
    A country economy is a complex subject that cannot be described in a single chart completely. Not to mentioned a clearly biased article.

    As a European living in the US I can tell you that some European countries have greatly reduced expenditure in public services and social programs: public hospital wait lists are longer now, public education fees are higher, etc. Plus, taxes are higher now that they were in 2007, specially among the middle class.

    There is austerity, way more than Bloomberg is willing to admit.

    However, and here is the catch, what the graph actually shows is that austerity, per se, doesn't create growth. Why? Well, look at the German-friendly European Central Bank policies.

    Since you mentioned Italy, remember they had a technocratic Prime Minister called Mario Monti who was imposed, rather than elected, and that didn't help a lot, did it?.
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    Nov 17, 2014 2:16 AM GMT
    enlalinea saidA country economy is a complex subject that cannot be described in a single chart completely. Not to mentioned a clearly biased article.

    As a European living in the US I can tell you that some European countries have greatly reduced expenditure in public services and social programs: public hospital wait lists are longer now, public education fees are higher, etc. Plus, taxes are higher now that they were in 2007, specially among the middle class.

    There is austerity, way more than Bloomberg is willing to admit.

    However, and here is the catch, what the graph actually shows is that austerity, per se, doesn't create growth. Why? Well, look at the German-friendly European Central Bank policies.

    Since you mentioned Italy, remember they had a technocratic Prime Minister called Mario Monti who was imposed, rather than elected, and that didn't help a lot, did it?.


    No one is saying this chart describes a country's economy completely. Again, what it does show is that there isn't the austerity that politicians and statists have claimed.

    You can claim to anecdotal examples of cutting - but this doesn't mean that overall spending has decreased - which again, it hasn't. It's cynical but true in politics that if you're forced to cut, you make them public in visible areas that hurt people the most while making smaller reductions if not spending increases in others that help keep you in power.

    Austerity in itself doesn't create growth - it's about releasing resources back into the private sphere that allows for value to be created. Not sure what your point is about Monti. I didn't appoint him - all that the data shows is that whoever is/was in power in Italy didn't reduce spending and in fact, didn't cut relative to the economy.
  • tj85016

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    Nov 17, 2014 3:08 AM GMT
    lol how can you possibly reduce government spending when it's a house of cards? you can't, you just string it along until it just lets go

    meanwhile, you just get fed BS from the media

    Japan and most of Asia are actually in worse shape, Brazil is a joke
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    Nov 17, 2014 4:14 AM GMT
    Well, we actually agree more than it may seem, but with one clear difference: I don't believe there's any separation at all between big businesses and government in Europe, and probably around the world (for example, about 2/3 of the previous presidents and ministers of Spain work now for big corporations).

    Not to mention, a chunk of that extra public debt was caused by the EU forcing countries to "rescue" the financial sector, converting therefore private debt in public debt. Had we let private and semi-private banks orderly fail and backup only up to 100K Euros per account, things would be much clearer now.

    Additionally, in the case of southern and eastern European countries, underground economy is 20%-30% of the GDP. If laws were enacted to make them pay taxes the situation would be so much better as well.

    Also, although the article implies otherwise, the public sector isn't inherently bad and the private sector isn't inherently good. They cover different needs, and therefore need to be measured differently, ie: I love Google, but then, Arpanet, one of the essential precursors of the Internet, was publicly developed.

    The reference to Mario Monti is just a historical note. They said it was the politicians fault, and so they imposed technocratic governments which didn't solve the issue. Now they say we should distrust new political forces in France, Italy, and Greece that question the status quo because they are radical. Well, do they really expect people to stand all the sacrifices without any hope of a better future?.


    riddler78 said
    enlalinea saidA country economy is a complex subject that cannot be described in a single chart completely. Not to mentioned a clearly biased article.

    As a European living in the US I can tell you that some European countries have greatly reduced expenditure in public services and social programs: public hospital wait lists are longer now, public education fees are higher, etc. Plus, taxes are higher now that they were in 2007, specially among the middle class.

    There is austerity, way more than Bloomberg is willing to admit.

    However, and here is the catch, what the graph actually shows is that austerity, per se, doesn't create growth. Why? Well, look at the German-friendly European Central Bank policies.

    Since you mentioned Italy, remember they had a technocratic Prime Minister called Mario Monti who was imposed, rather than elected, and that didn't help a lot, did it?.


    No one is saying this chart describes a country's economy completely. Again, what it does show is that there isn't the austerity that politicians and statists have claimed.

    You can claim to anecdotal examples of cutting - but this doesn't mean that overall spending has decreased - which again, it hasn't. It's cynical but true in politics that if you're forced to cut, you make them public in visible areas that hurt people the most while making smaller reductions if not spending increases in others that help keep you in power.

    Austerity in itself doesn't create growth - it's about releasing resources back into the private sphere that allows for value to be created. Not sure what your point is about Monti. I didn't appoint him - all that the data shows is that whoever is/was in power in Italy didn't reduce spending and in fact, didn't cut relative to the economy.
  • tj85016

    Posts: 4123

    Nov 17, 2014 6:42 AM GMT
    Europe drank the Kool-Aide, now they live with the consequences, simple

    no jobs for French and Spanish and English kids and taxes to pay for fake jobs and "free" healthcare for 59 year olds
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    Nov 17, 2014 6:56 PM GMT
    riddler78 said
    Austerity in itself doesn't create growth - it's about releasing resources back into the private sphere that allows for value to be created. Not sure what your point is about Monti. I didn't appoint him - all that the data shows is that whoever is/was in power in Italy didn't reduce spending and in fact, didn't cut relative to the economy.


    Oh okay, so governments should increase their spending to release resources? Makes sense.
    Italy is a mess and it has been forever.
  • tj85016

    Posts: 4123

    Nov 18, 2014 1:28 AM GMT
    they have to increase government spending or demand collapses and they go back into recession (which Japan already has) = it's not only Italy, but Spain, France, Portugal,Greece, Ireland, the UK also

    the EU Central Bank floods the system with money and negative interest rates, but only the top 10% ca use it because there's no collateral left

    so the rich make a few bucks and the rest remain unemployed

    so Europe has 3 choices: just hand out money (not good), make structural reforms (austerity, not good either) or string out the current lousy situation as along as possible (like Japan did)
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    Nov 19, 2014 3:53 AM GMT
    TomSOCAL saidriddler78 said: Fucking useless? Maybe if you think that government spending shouldn't change irrespective of what's happening in the private sector but that would sort of betray the point that there really hasn't been any austerity. It shows quite explicitly how government spending as a percentage of overall GDP has grown.


    RE: Yes you are correct that the chart shows that govt spending - as a PERCENTAGE of Gross Domestic Product - has GROWN in MOST of these nations.

    The US needs to CUT spending in many areas that do NOT help Americans. For example we need to cut defense spending, i.e. pull out of hundreds of foreign military bases and countries where we are losing, such as Iraq and Afghanistan.

    We also need to CUT tax RATES - like Reagan and JFK both did - income, payroll - on ALL income brackets (even the rich), in order to STIMULATE private savings, consumer spending, and investment in new companies.

    Again, Reagan and JFK cut tax RATES, they did NOT cut TAXES - BIG difference. See Mike Rosen, Denver Post, KOA Radio -

    " I’m sure my listeners and FB fans understand the difference between “tax cuts” and tax RATE cuts. But I honestly don’t think Barack Obama does. Do you remember this part of the first debate? If you mention to a liberal that you can actually raise more tax revenues by cutting tax rates, they look at you like you’re from Mars. All you have to do is look at tax revenues after the Kennedy tax RATE cuts. After the Reagan tax RATE cuts. And yes, after the Bush tax RATE cuts. You will see increasing REVENUES in each case. "

    We also need a Single Payor Health Care plan (as I call, Kucinich Kare), to reduce huge taxpayor costs at Emergency Rooms, for those who don't have health care and then visit ER's for minor ailments.

    We also need to eliminate free health care for Federal Employees. They are well paid, and should have enough money to buy health care from the private sector.

    We also need to decrease salaries for government employees. GS-15, $150,000 a year, or somewhere thereabouts, is outrageous. If you work in government service, it should be - public SERVICE, the emphasis on SERVICE - you shouldn't expect much in return for your ... SERVICE.

    We also should have, as Thom Hartmann suggests, a national Service program for all young adults out of high school - either they elect to serve to rebuild our infrastucture, or, they serve in the military - in exchange for college.

    For every year that a 19 year old paves roads, and is given free room and board with his buddies from his high school graduating class, that saves the equivalent of one public employee (not to mention, the pension for that one year of service).

    States need to start passing bills that would ban public employee unions and their pensions - it is ridiculous that states like California have huge pension obligations, see - LA Times -

    http://www.latimes.com/business/la-fi-controller-pension-website-20141114-story.html

    So you can see I'm a mix of a Reagan Republican, JFK Liberal, Kucinich Liberal, Larry Kudlow fan (he's such a sweet man, guysicon_redface.gif), and Thom Hartmann fan (although Hartmann is actually too "Socialistic" for me!icon_biggrin.gificon_biggrin.gificon_biggrin.gificon_biggrin.gificon_biggrin.gificon_biggrin.gif


    Larry Kudlow forever in love with his pink ties,
    https://31.media.tumblr.com/tumblr_mdffn8SKbp1rktbkco1_500.jpg
    Larry's bud Jared Bernstein,
    http://vineyardgazette.com/sites/default/files/article-assets/main-photos/2012/summer_institute_jared_bernstein.jpg


    ^^^ I have to admit this is one of the most intelligently worded and nonidelogically presented posts I've read on RJ regarding socioeconomic behavior modification/reform. I appreciate the lack of cynicism (I'm guilty) and the reference to Thom Hartman, probably one of the most intelligent voices in political broadcasting. Thanks TomSOCAL
  • tj85016

    Posts: 4123

    Nov 19, 2014 6:50 AM GMT
    ^^

    lool socioeconomic behavior modification/reform

    Tavistock worked on that crap after WW2, Jimmy Carter gave it a shot. Mostly asshole believe in this shit - oh, it works

    how do you think we got in this lousy situation in the first place?
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    Nov 19, 2014 11:15 AM GMT
    Riddy has a downer on Europe generally and has been willing it to fail since the start of the crash (and probably before then).