Austerity works.

S

speedracer

Banned
So the UK decided to go the opposite route of the US and they cut the living shit out of their government in order to cut the deficit. The conservatives there won power 18 months ago and did what every Republican has been saying we should do. So here 18 months later, how they doin?
The fourth-quarter GDP report showing that the economy went into reverse and shrank at a 2.0% annual rate.

...

the government’s Office for National Statistics said economic growth between April and June was 0.1 percent, half the previous estimate. It also revised first-quarter growth down to 0.4 percent from 0.5 percent.
Click to expand...
Completely stagnant growth and total GDP is significantly down. Whoopsie. How's employment?
Youth unemployment topped the 1 million mark for the first time in history.
Click to expand...
Whoopsie. At least their market is stable, right? All we hear is how business needs stability to grow, right?
The nearly 5 percent inflation rate is the highest in years
Click to expand...
Whoopsie. I mean, jesus. That's a full and complete repudiation of Hayekian economics during a recession.

But wait a minute. I forgot the most important part. At the very least, they're saving money from cutting, right? I mean, that's the whole fucking point, right?
George Osborne is braced to admit this month that the scale of Britain's economic slowdown, demonstrated yesterday by youth unemployment spiralling to more than 1 million, means he will be unable to meet his main deficit reduction target before the next election.

It is now expected that the Office for Budget Responsibility (OBR) will declare at the time of Osborne's autumn statement on 29 November that the downturn's impact is more permanent than thought and the government may not be able to meet its commitment to eliminate the structural deficit – the part of the deficit unaffected by growth – by 2014-15, as he predicted in the June 2010 budget.
Click to expand...
Slashing causes a slowdown causing less tax income causing more deficit causing more cuts to government causing more slashing causing more slowdown?

Who could have known?

edit: A liberal blogger just pointed out the same thing:
Austerity in a recession is just insanity.
Government borrowing is expected to rocket to levels higher than was envisaged by Labour, despite George Osborne's deep spending cuts.

On a day when youth unemployment rose to a record 1.02 million, figures slipped out by the Treasury revealed how the Chancellor's deficit reduction plan has been blown off course by anaemic growth levels and high jobless figures. Labour claimed the pain of £40bn of cuts and tax rises had not been worth it.
Click to expand...
Higher unemployment and higher deficits. Winning!!!

No one will shift gears, because they'll be proved fucking right! The pointless goal was to borrow less than Labour was planning to borrow, and now they're borrowing more so look over there Yurp!
Click to expand...
 
Last edited by a moderator:
The global elites are at a level of clueless destructiveness not seen since the run up to the first world war.
 
So, I'm curious what the best response to this would be.

1) Pointing out the amount the Greek government has spent on social issues, their tax rates and their current economic situation, or

2) Pointing out the economic situation in the UK 18 months ago, before their conservatives took power and how it was already pretty bad, or

3) Pointing out that 18 months isn't a very long time to make major changes in economic policy - during a major recession (hell, Obama's been in office for 34 months and he still gets a free pass with his "Blame Bush" card), or

4) Posting the chart from the Obama stimulus plan days that showed the projected unemployment rate, the projected rate with Obama's stimulus and the actual unemployment rate, or

5) Making a comment about how the UK doesn't operate in a vacuum during a complete global economic crisis, or

6) Just post a badly photoshopped picture of a vacuum cleaner with the UK inside of it.
 
[quote name='Msut77']The global elites are at a level of clueless destructiveness not seen since the run up to the first world war.[/QUOTE]

They arnt clueless, they simply dont care. Austerity is great for the top bad for the bottom.
 
[quote name='MSI Magus']They arnt clueless, they simply dont care. Austerity is great for the top bad for the bottom.[/QUOTE]

For a while anyway.
 
[quote name='Msut77']For a while anyway.[/QUOTE]

There was actually a great segment on Talk of the nation last night dealing with this. It was a discussion with a guy that wrote a book about how the top 1% has become a revolving door. They all make their money and then do things like put it in the market or risky investments and lose a very large % of it. Talked about how the top 1% actually shrank by like 20% in America because of this and how long term our economy is at risk because of the games of chicken these people play with the bulk of US capital.

http://www.npr.org/2011/11/16/142407107/binges-of-high-beta-rich-shake-up-u-s-economy

For those interested
 
from a psychology standpoint it's a very interesting case. They aren't keeping up with the jonses so to speak, they want to show off useless crap that is so far beyond their pals that the pals have to keep up now. In essence, they aren't willing to sit back and enjoy low to moderate growth. If they aren't doubling every few years they lose a certain lustere so to speak.
 
[quote name='UncleBob']1) Pointing out the amount the Greek government has spent on social issues, their tax rates and their current economic situation[/quote]
Which says what about austerity exactly? What about one of the most profligate countries makes for a quality comparison?

Nuance is dead.
2) Pointing out the economic situation in the UK 18 months ago, before their conservatives took power and how it was already pretty bad
Click to expand...
I guess my underlining didn't serve its purpose. Structural deficit. Google it then read my underlined statement again.

Precluding your question with an answer doesn't seem to work.
3) Pointing out that 18 months isn't a very long time to make major changes in economic policy - during a major recession (hell, Obama's been in office for 34 months and he still gets a free pass with his "Blame Bush" card)
Click to expand...
See above.
4) Posting the chart from the Obama stimulus plan days that showed the projected unemployment rate, the projected rate with Obama's stimulus and the actual unemployment rate
Click to expand...
Find me a Keynesian that thinks a stimulus should be 35-40% tax cuts. I'm talking about actual economics here, not politics. I know, it's hard.
5) Making a comment about how the UK doesn't operate in a vacuum during a complete global economic crisis
Click to expand...
You would be right if we were talking about cyclical debt. We're talking structural and the effect structural austerity has on GDP and growth. Again, I underlined that statement as a way of proving that out in advance.

So, let's think about this rationally using market based theory. The UK went full bore Thatcherite austerity. The markets love austerity, smaller govt., etc. etc. right? Naturally. Why then isn't business flocking there in droves? Why aren't they creating jobs at a furious pace?

Well they're in the global economy, as you say. Ok. But now have we not just directly proved that austerity does nothing for a recessed economy? It doesn't drive jobs. It doesn't drive investment. And most importantly (if nothing else, let's try to pay attention to this one line): IT DOESN'T LOWER STRUCTURAL DEBT, ITS ONE AND ONLY STATED GOAL.

But the stimulus didn't do shit either, speed. Totally. I feel you. The difference being that the UK's austerity was 100% austerity. They didn't throw 35-40% of it at liberal economic thought to appease the other side. Spineless Obama and Shitbag Summers didn't go all in the way Keynesians wanted.

But that's a cop out, speed. Totally. But we're not talking a full blown cop out. There *has* been full blown Keynesian moves in America and they resulted in the significant (if not outright) creation of a middle class in America. Something Hayekians cannot say under any circumstances anywhere.*

And the middle class is where the problem is, right?

*To my knowledge.
 
@speedracer - Dont forget that besides the fact that a large section of it being tax cuts that a fair portion of the stimulus never was released. So we had a stimulus that was seen as too small to begin with, a big portion of it was tax cuts and then a portion of it was never used.
 
[quote name='speedracer']Which says what about austerity exactly? What about one of the most profligate countries makes for a quality comparison?[/quote]

Greece has lots of trouble collecting taxes, are cons now arguing Greeks should pay more taxes effectively?

Also of all the problems Greece has one of the biggest is that they are not in control of their own currency, the UK and US are.

The starve ourselves to prosperity and confidence fairy push is an ideological failure.

As for the rest of the dumbfuckery... the Stimulus created jobs, it just didn't create enough jobs.

The Stimulus should been bigger from the beginning and it should have been comprised of less tax cuts while being better targeted.

There are comparisons to be made from the Great Depression, but I ain't gonna bother because it is not like this isn't the 40th time or so this shit has been explained before.
 
[quote name='Msut77']
As for the rest of the dumbfuckery... the Stimulus created jobs, it just didn't create enough jobs.
[/QUOTE]

We don't need jobs. I can probably go get a job at Target tonight if I want one. We need careers where people can get paid well enough to have a life and put food on their family.

Yes I realize that's "give everyone more money" kind of hooey, but there is a ripple effect, more people with more money spend more money thereby creating more careers in manufacturing/transportation/construction/accounting/service/etc... The problem with the durr version of Keynseian economics is that it's too easy to point out "take from the top and give to the bottom", while the realistic version of K Econ is that more transactions create more income for everyone. Instead, we've tossed a majority of our manufacturing overseas thus taking out a core principle of more people making more money. Profit > People or rather profit at the expense of people (see: layoffs to raise profit as opposed to raising revenue with the same costs) does not build or grow anything. To the contrary it causes less consumption while production remains relatively even. Your average economic neocon will try to tell you that inflation is too many dollars chasing too few goods, but they never bother to analyze the reverse of that structure which is too few dollars chasing the same amount of goods. Inventory gets to be too high so you slow down production (and the labour that drives it) which doesn't solve the problem, indeed it exacerbates the problem.

Your average aggressive econ neocon will tell you that people that don't fall in line with their line of thinking are seeking a jubilee of sorts and/or demonize profit. Profit isn't bad at all. Profit drives growth (eventually, since growth itself usually causes a downswing in profit since you're spending to get to a profitable point) and since we need growth profit isn't evil.

So there's your cliff notes version of the first two classes of Econ 101, albeit mixing macro and micro just a bit. Which leads to the other problem, neocons want to fix macroeconomics with microeconomics, or put crudely, they want to use a hammer to pound in a screw.

To be extremely blunt, trickle down DOES NOT WORK. The general theory states that the wealthy will invest for more wealth. The problem with that theory is that it's like trying to build a house while starting with the roof. There's no fucking foundation (working class stiffs such as ourselves) and to make that same roof analogy, gravity will eventually make the roof fall down since there's nothing underneath it. See French Revolution, downfall of the Roman Empire, the beginning of The Renaiscance, etc...
 
Thing is that there may have been a time that trickle down economics could have possibly worked. Problem is the world has globalized and with that trickle down economics became impossible of ever working.
 
Trickle Down is napkin scribble economics.

Do you think if we tell the holy rollers debt jubilees are in the bible they will go for it?

...Me neither.
 
[quote name='Msut77']Trickle Down is napkin scribble economics.

Do you think if we tell the holy rollers debt jubilees are in the bible they will go for it?

...Me neither.[/QUOTE]

I am not saying I personally believe in it. I am just saying I could see where someone 60 years ago would have thought it would possibly work. Now days though I dont understand with globalization how anyone could possibly think that trickle down works.
 
Soo... because the global economy is in the toilet and because there are virtually no jobs anywhere, the UK's plans suck (which they do) simply because...
the downturn's impact is more permanent than thought and the government may not be able to meet its commitment to eliminate the structural deficit
Click to expand...

gotcha.
 
[quote name='UncleBob']Soo... because the global economy is in the toilet and because there are virtually no jobs anywhere, the UK's plans suck (which they do) simply because...


gotcha.[/QUOTE]
Right. This argument turns on ignorance. Or, in the parlance of the economic "leaders" of our times, nobody could have predicted.. Obama couldn't have predicted...
But the stimulus wasn’t nearly big enough to restore full employment — as I warned from the beginning. And it was set up to fade out in the second half of 2010.

So what was supposed to happen? The invisible cavalry were supposed to ride to the rescue.

I never understood why the Obama administration thought this would happen so soon; history tells us that the effects of a financial crisis on private spending are normally protracted. And sure enough, the cavalry has not arrived.
Click to expand...

Europe couldn't have predicted...
June 29, 2010

That’s why the Irish debacle is so important. All that savage austerity was supposed to bring rewards; the conventional wisdom that this would happen is so strong that one often reads news reports claiming that it has, in fact, happened, that Ireland’s resolve has impressed and reassured the financial markets. But the reality is that nothing of the sort has taken place: virtuous, suffering Ireland is gaining nothing.

Of course, I know what will happen next: we’ll hear that the Irish just aren’t doing enough, and must do more. If we’ve been bleeding the patient, and he has nonetheless gotten sicker, well, we clearly need to bleed him some more.

One hopes something will wake up our elite policymakers. Maybe a stock market crash would do it. But their track record has not been very impressive, though as we all know, nobody could have predicted...
Click to expand...

The UK couldn't have predicted.... yadda yadda.

A year and a half later. And still, nobody could have predicted.

You know, except the Keynesians.
 
[quote name='MSI Magus']Thing is that there may have been a time that trickle down economics could have possibly worked. Problem is the world has globalized and with that trickle down economics became impossible of ever working.[/QUOTE]

No.
It's so far beyond reality that it ceases to even be remotely credible from a theory standpoint. It is simply an opinion based on distortions of Friedman's theory. Of course those that espouse TDE conveniently ignore negative income taxes and necessary regulation that Friedman claimed were needed to balance a system that worked that way he envisioned.
So you end up with these clowns who add Milton Friedman with Ayn Rand and come up with a sum that is basically "prosperity is measured by GDP but can completely ignore poverty or any other byproduct of complete free market". It simply doesn't work.

The duplicitous manner by which these people measure their own BS is a barometer of how full of shit they truly are. Stock market goes up during Reagan years means GOP policy is effective. Same thing happens under Clinton and suddenly the DJIA is no longer a measurement with which we need to be concerned, despite the fact that it QUADRUPLED between 1992 and 2000. Goes up after Bush Jr. gets into office and it's indicitive of tax cuts being a resounding success. Drops by almost 33% after starting a pair of wars and it's no biggie. Then it gets to an all time high over 14,000 after Obama gets elected, but it's a reflection of Bush Jr. policy, even though it still doesn't matter because it didn't during the Clinton years. Along comes Obama and we have a drop of 50% in the span of a year. This clearly shows how useless the guy is, well until it rebounds to 85-90% of the highest ever, which is ignored because Obama is still an economic failure and now we've settled back to daily DJIA closings between 10k and 12k.

So here's all you need to know:
DJIA going up with a (R) president means great economic success and is attributed to their trickle down BS
DJIA going up with a (D) president doesn't matter
DJIA going down with a (R) president doesn't matter
DJIA going down with a (D) president is because they are evil socialists


long story short, hopefully you were old enough in the 90's to appreciate what was going on because it's likely to not happen again in our lifetimes. The US economy is circling the drain and not one single policy maker has the balls to step up and say that, and then follow that up with a starting point that will lead to anything resembling a long term solution.
 
The Congress super committee failed. All they needed was 1.2 trillion savings over 10 years. That's an average of 120 billion a year. That's nothing. Just roll back the Bush tax cuts. That's 5 trillion savings over the next 10 years or an average of 500 billion a year. We did fine in the 90's prior to the tax cuts and rolling them back won't make much of a difference. And I don't mean for the rich, I mean roll them ALL back. Then cut back spending in many areas, military, means test social security, raise the age folks can collect social security and medicare...see how much that saves. Oh wait, that saves the country. Of course, the republican's refuse to allow tax increases and the democrats refuse to allow spending cuts. Our Congress is full of uncompromising politicians who care more about being elected than saving our country from falling into the abyss.
 
[quote name='Blaster man']The Congress super committee failed. All they needed was 1.2 trillion savings over 10 years. That's an average of 120 billion a year. That's nothing. Just roll back the Bush tax cuts. That's 5 trillion savings over the next 10 years or an average of 500 billion a year. We did fine in the 90's prior to the tax cuts and rolling them back won't make much of a difference. And I don't mean for the rich, I mean roll them ALL back. Then cut back spending in many areas, military, means test social security, raise the age folks can collect social security and medicare...see how much that saves. Oh wait, that saves the country. Of course, the republican's refuse to allow tax increases and the democrats refuse to allow spending cuts. Our Congress is full of uncompromising politicians who care more about being elected than saving our country from falling into the abyss.[/QUOTE]

Two things

1. Its really getting tiring hearing that Democrats refuse to allow spending cuts. They have spent the better part of the year saying they are willing to make billions in cuts yet it goes ignored. First off people always forget to add that they have for years been willing to make cuts, just not the ones Republicans want to make. Second off in the last year or so numerous Democrats have said they are willing to make changes/cuts to Democratic "sacred cows" like medicare and SS. The reason people are still under the belief that "Democrats wont make cuts" is because Republicans wont budge on the Bush Tax Cuts and then whine Democrats wont budge on spending because "they have not put forth an official plan". One Republican yesterday on the Diane Rehm show actually had the balls to say "they never had a plan on paper". So basically anything Dems say doesnt matter...it must be an official paper version submitted to be rejected.

2. I could get behind everything you say except for raising the retirement age. I think its a dream that people talk about this. Are people living longer? Yep! Are they in working condition at age 67? Not always and not even usually! I know a lot of people at that age that can and still do work, but I know just as many others who age or a life time of doing physical labor cant.

I also take issue with the idea because as it is business dont want to hire older people. If you are that age and want a sure fire job then working at a grocery store seems to be your only option now days. I simply believe that human beings are worth more and deserve 10-15 years of retirement vs work till you drop and if no real business will take you we will tuck you in a corner waving at people as they enter the store.
 
[quote name='Blaster man']Of course, the republican's refuse to allow tax increases and the democrats refuse to allow spending cuts.[/QUOTE]

If you think the story is that simple, then you have failed as a citizen by not paying attention to what the various party blocs within the supercommittee attempted to bring to the table.

The "both parties do it" trope is convenient and easy (and makes a person appear aloof from the process by virtue of not picking a side), but it's also nonsense.

Show me someone who says "both sides are doing it" and I'll show you someone who doesn't know much about politics.
 
Oh but myke, both sides *are* doing it, if by *it* you mean participating in political theater. Ray Charles could see that the "Supercommitee" didnt stand a snowball's chance in hell of succeeding. Democrats (to their credit) had long ago announced that they were willing to cut spending, perhaps even including SS/Medicare/Medicaid to the tune of a 10/1 ratio of revenue (tax) increases. The Republicans (to their detriment) had long ago drew a line in the sand of "no new taxes". A dead even group with well defined positions had ZERO chance of succeeding legislatively. But such a panel might be useful for scoring political points.

Best case scenario, the 12 people came up with something 7 of them could agree on. They'd *still* have to have it voted on /approved/ratified by the two Houses of Congress and the President sign it. That wasn't going to happen, not when the issue could be wielded like a club for the next year.

I just wish our political system came with a disclaimer like on psychic hotlines: FOR ENTERTAINMENT PURPOSES ONLY.
 
Do you believe that:

1) Dems knew the supercommittee would fail, therefore setting up the cuts that would stem from such failure would be beneficial to Dems (expiration of bush tax cuts, defense cuts, no cuts to medicare/SS)

or

2) Dems are too weak/stupid to know better and went into the supercommittee like Charlie Brown charging after Lucy holding a football - in the end, losing out on cuts and only gaining a pyrrhic victory over Republicans?

I could see either being the case. It's hard for me to believe Democrats are politically savvy any longer.
 
Any time someone says Democrats are weak, I'm generally on board. But I dont see this as a binary mutually exclusive choice as you set up. Rather, I see a little from column A, a little from column B.

1) Dems knew the supercommittee fail.
2) Dems are too weak/stupid to realize that like Lucy, the Reps would yank the tax/military cuts at the last minute, leaving Charlie Brown to only punt away the domestic spending cuts (air).

Does that sound reasonable to you?
 
Last edited by a moderator:
Indeed, with the big caveat that Republicans don't have the power to enforce any stoppage of the cuts that will result from the supercommittee failure. They lack a vetoproof majority (and will not gain one next year). Their only shot to stop the cuts is to win the Presidency next year. Which, given the cast of jobbers they have put out right now, seems highly unlikely.
 
Jobbers. I have a theory on that. Whereas I'm pretty much always ready to believe in Dem weakness, I'm equally inclined to believe in Rep shrewdness. Thus, I think all the Cain, Perry, etc hype is to make Romney seem reasonable by comparison. Thus making Romney more palatable in a general election. Sure Huntsman being there kinda dilutes it, but they can always just say, "Yeah, but he worked *for* Obama" and marginalize him.

That could make Obama vulnerable. He's going to lose Iowa, Indiana, Virginia, and North Carolina for sure. Colorado and Michigan are really shaky against Romney (despite him being against the auto bailout). Pennsylvania and New Mexico are not gimmies. And there is always the "How did they fuck up this year?" states: Ohio and Florida. There is a real path for a Romney to win, as long as he's not the main one associated with the batshit crazy ideas the right wants to implement, even if that exactly what he wants as well.
 
a 'radical flank' effect, huh?

I could buy that for a dollar.

something else I could buy - every nut-shit GOP "I could never vote for a godless Mormon" person will be among the first in line to vote for Romney come election day. Which, if you pay attention to voting trends and who tends to vote and who tends not to, is not a surprise at all.
 
Last thing mentioned is fairly key, but slightly misleading.

"There isn't a shortage of money in this economy, there is a shortage of money going into job creation. There is excess money sitting at the banks and continually going into speculation."

Speculation is a very loaded word in that statement given the first portion of the statement. It's the problem with all of these commentators, they have this notion of a black and white world where you can only do one or the other. We need some money into speculation as it spurs growth in diverse directions (very simply stated: oil reaches $150 per barrel and all of the sudden venture capital/speculation goes into alternate energy) which creates employment. On the other hand if you put all your eggs in that basket you end up with a WorldComm type situation where you can fold under the weight of your investment.
"Job Creation" is bullshit too. You can't spend money to create a job at the level which we need to satisfy unemployment #'s. Consumer spending is the driver of our economy and until we get more of it, on products and services which have a profit margin significant enough to neccesitate more hiring, there won't be much of any growth.
Of course your politicians see this in one of two ways; top down (give money to the owners to inspire them to hire) or side up (give money to organizations that actually hire, but it's only temporary - see census jobs). Of course neither of these actually work. Sadly, no one is willing to even suggest a bottom up type of movement, despite the fact that it's the way our economy actually works.

The second portion of the statement (money sitting at banks) isn't strictly on the hands of the banks either. With such stagnant growth, why take out a loan and get that exposure when you can still hold on with what you have at your small business right now? Then again, this also supposes the trickle down theory actually works (it doesn't) in that "if we just give them money they'll make jobs".

So essentially, in the span of a 15 minute interview, this numbskull just proved himself completely invalid.

Why isn't there a girl with big breasts responding to the video? I've come to understand that is how this works!
 
Spreading money around would create jobs. But the government would need to give it to the poor and middle class. It's much more fun to give it to rich asses who will give you a kickback or a sinecure even though it doesn't work.
 
Last edited by a moderator:
Well, that, and if you dare give anything to the working class, then the very same working class will vote you out of office for not giving to the wealthy.
 
[quote name='mykevermin']Well, that, and if you dare give anything to the working class, then the very same working class will vote you out of office for not giving to the wealthy.[/QUOTE]

We live in odd times...
 
[quote name='mykevermin']Well, that, and if you dare give anything to the working class, then the very same working class will vote you out of office for not giving to the wealthy.[/QUOTE]
And people get upset when someone says Americans are stupid. :lol:
 
You must log in or register to reply here.
bread's done
Back
Top