The Crisis In Spain

[CaneBrain 95]

Great depression: massive income inequality, Hoover tried austerity which made it worse, FDR increased government spending which made it better.See, I can just write things that I believe too with nothing to back it up.What I do know (instead of just believe) is the idea that if Europe had just tried real austerity instead of half-assed austerity that everything would be fine and dandy by now is wishful thinking bordering on delusion.

[FCP Bob 1,312]

OK, show me some stats on this alleged "austerity". How many Euro countries have cut their spending in the last three years, and by how much? What is the average change in spending among the Euro countries.Just because Krugman keeps saying "austerity austerity austerity" doesn't mean anyone has actually tried it yet.

http://www.bbc.co.uk/news/10162176

EU austerity drive country by country Irish RepublicThe IMF signed off on a 3.9bn euros (£3.2bn) tranche of loans to Ireland in December 2011, following on from a EU/IMF bailout worth 85bn euros a year earlier.In July 2011, EU leaders agreed to a request from the new government of Enda Kenny to lower the interest rate from around 6% to between 3.5% and 4%.The length of time to pay back the loan was also extended from seven-and-a-half years to 15 years.The toughest budget in the nation's history included a pledge to trim the deficit by 6bn euros in 2011.Government spending has been slashed by 4bn euros, with all public servants' pay cut by at least 5% and social welfare reduced.VAT rose to 23% as child benefit was cut and police stations were closed.The government aims to cut public service pay by 400m euros in 2012.Ireland's economy shrank by almost 2% in the third quarter of 2011, compared with growth of 1.4% in the previous quarter.

[hblask 1]

Hoover tried austerity which made it worse,

This didn't happen. Hoover increased govt spending by huge amounts. FDR, in his first term, ran against Hoover by talking about what a big spender Hoover was.You need to get your news from someone other than Krugman. Reality matters.

FDR increased government spending which made it better.

And created a 15 year depression that has it's own name.

See, I can just write things that I believe too with nothing to back it up.

The data is easy to look up. Hoover and FDR both increased spending and regulatory burden.

What I do know (instead of just believe) is the idea that if Europe had just tried real austerity instead of half-assed austerity that everything would be fine and dandy by now is wishful thinking bordering on delusion.

Except that every time it has been tried, it has worked. Real spending and tax cuts work. Limited government works. There's plenty of data. Look at a graph of the Index of Economic Freedom vs any indicator of well-being that you want. This is not even a close call any more. What would've happened if the EU was responsible is that the problems would not be so deep in the first place. But once they got deep, all they needed to do fix it, and take the correction. Iceland did it, it worked.

[hblask 1]

http://www.bbc.co.uk/news/10162176

So Ireland is thinking about it.... if they actually do it, they will recover faster than the rest of Europe. Big talk won't do it; let's see if it actually happens. So far they've all made lots of empty promises, followed by lots of lack of recovery.

[CaneBrain 95]

Iceland defaulted on their obligations. I guess that's responsible governance in fantasy world. I don't read Krugman but I'm glad you are obsessed with him. The only information I can find on Iceland is they voted not to pay off their debts and they expanded their social safety net. I guess we mean totally different things when we say austerity.The economic index of freedom is something produced by the Heritage Foundation? haha, of course that's going to say whatever they want it to say. These are the people who said we would be greeted in Iraq as liberators. Oh man, I'll stick to pretending to read Krugman, thanks.

[CaneBrain 95]

On Iceland:"The country's debt grew to more than 100 percent of GDP in 2011. But even as government officials made budget cuts in an effort to return to a more sustainable path, they deliberately safeguarded its already-generous social safety net, adding and expanding programs targeted to the most vulnerable groups. In part to offset those measures, the country put in place new taxes on the banking system and on wealthy individuals."Wow, some cuts, expansion of programs for the most vulnerable, and new taxes on big business, banks, and the wealthy. That sounds dangerously like Barack Obama's plan, Henry.

[FCP Bob 1,312]

Iceland put in capital controls which are leading to a housing bubble.The key thing for Iceland is that they have their own currency so they could devalue to make themselves more competitive. In a currency union like The Euro Zone that isn't an option. It also wouldn't be an option with things like a Gold Standard and it's one of the reasons that the faster countries left the gold standard the faster they recovered from the Great Depression Iceland real estate bubble looms four years after last crisis

Iceland, whose 2008 banking default on US$85-billion pushed the economy into a recession that lasted through the first half of 2010, is now outgrowing Europe and the U.S. Its gross domestic product will expand 3% this year and 3.9% in 2013, according to Arion. The economy of the 17 countries sharing the euro will contract 0.3% in 2012 before growing 1% in 2013, the European Commission said on May 11.Much of Iceland’s recovery has rested with its “unorthodox” crisis management, according to Fitch Ratings, which restored the island’s investment grade credit status in February.Iceland’s rebound is now being driven by household spending, a team of Arion economists led by Sveinsson said in a May 21 note. The central bank has raised borrowing costs four times since August, bringing the benchmark lending rate to 5.5%. The bank signalled this month more tightening is needed to cool the economy as inflation hovers well above its 2.5% target. Consumer prices grew an annual 6.4% in April, Statistics Iceland said April 27

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[hblask 1]

But perhaps we should see what some actual studies have found:"Higher total government expenditure, no matter how financed, is associated with a lower growth rate of real per capita gross state product." -- S.M. Miller and F.S. Russek, "Fiscal Structures and Economic Growth at the State and Local Level, Public Finance Review, March 1997"The ratio of real government consuption expenditure to real DGP had a negative association with growth and investment," and "Growth is inversely related to the share of government consumption in GDP, but insignificantly related to teh share of public investment." -- Robert j Barrow, "Economic Growth in a Cross Section of Countries", Quarterly Journal of Economics, Vol 106 No 2.An increate in [total government spending] by 10 percentage points would decrease the growth rate of [total factor productivity] by 0.92 percent. A commensurate increase of [government consumption spending] would lower the [total factor productivity growth rate by 1.4 percent]." -- P Hansson and M. Henrekson, "A New Framework for Testing the Effect of Government Spending on Growth and Productivity", Public Choice Vol 81.There is substantial crowding out of private spending by government spending... Permanent changes in government spending lead to a negative wealth effect." -- Shaghil Ahmed, "Temporary and Permanent Government Spending in an Open Economy", Journal of Monetary Economics, Vol 17 No 2"The coefficient of additive terms of government-size variable indicates that a 1% increase in government size decreases the rate of economic growth by 0.143%" -- James S Guseh, "Government Size and Economic Growth in Developing Countries: A Political-Economy Framework", Journal of Macroeconomics, Vol 19 No 1.The estimated effects of [government expenditure variable] are also somewhat larger, implying that an increase in the expenditure ration by 10 percent of GDP is associated with an annual growth rate that is 0.7-0.8 percentage points lower." -- S. Folster and M. Henrekson, "Growth Effects of Govt Expenditure and Taxation In Rich Countries", European Economic Reivew, Vol 45, No 8"A 10 percent balanced budget increase in government spending and taxation is predicted to reduce output growth by 1.4 percentage points per annum, a number comparable in magnitude to results from the one-sector theoretical models in King and Robello" -- Eric M Engen and Jonathan Skinner, "Fiscal Policy and Economic Growth", National Bureau of Economic Research Working Paper, No 4223.And from those right wing kooks at the IMF:"Average grwoth for the preceding 5 year period... was higher in countries with small governments in both periods. The unemployment rate, the share of the shadow economy, and the number of registered patents suggest that small governments exhibit more regulatory efficiency and have less o an inhibiting effect on the functioning of labor markets, participation in the formal economy, and the innovateness of the private sector", -- Vito Tanzi and Ludger Shuknechi, "Reforming Government in Industrial Countries,", IMF Finance and Development, Sept 1996It goes on and on but I'm tired of typing. The evidence is in, it's overwhelming. Government spending is a drain on the economy, during good times and bad.

[hblask 1]

Iceland defaulted on their obligations. I guess that's responsible governance in fantasy world. I don't read Krugman but I'm glad you are obsessed with him. The only information I can find on Iceland is they voted not to pay off their debts and they expanded their social safety net. I guess we mean totally different things when we say austerity.

Basically, the let their "too big to fail" banks fail. They took the economic hit and moved on. Europe and the US, on the other hand, continue to suffer with poor growth and high debt.

The economic index of freedom is something produced by the Heritage Foundation? haha, of course that's going to say whatever they want it to say. These are the people who said we would be greeted in Iraq as liberators. Oh man, I'll stick to pretending to read Krugman, thanks.

If you have any specific criticism of the Index, feel free to provide it. This "la-la-la can't hear you don't like the results" thing is really beneath you. The data is reproducible and available to anyone who wishes to review it.Or, cover your eyes and ears and shout la-la-lah. It's up to you.

[hblask 1]

On Iceland:"The country's debt grew to more than 100 percent of GDP in 2011. But even as government officials made budget cuts in an effort to return to a more sustainable path, they deliberately safeguarded its already-generous social safety net, adding and expanding programs targeted to the most vulnerable groups. In part to offset those measures, the country put in place new taxes on the banking system and on wealthy individuals."Wow, some cuts, expansion of programs for the most vulnerable, and new taxes on big business, banks, and the wealthy. That sounds dangerously like Barack Obama's plan, Henry.

I didn't say it was perfect; but it's far better than what the EU is attempting. They are not afraid to take their medicine. Apparently, Ireland is considering it too. We'll see if they actually do it.

[CaneBrain 95]

So you agree that the best path forward is obama's plan to mix cuts and tax increases, while keeping the safety net for the most vulnerable. Awesome.

[CaneBrain 95]

Here is a great critique of the economic freedom index: it's written by and the factors that matter are picked by a group of people proven to be both stupid and to have an agenda.

[FCP Bob 1,312]

Spain has lower government spending than Germany, just saying.

[Balloon guy 158]

So you agree that the best path forward is obama's plan to mix cuts and tax increases, while keeping the safety net for the most vulnerable. Awesome.

If only he was in charge of things and could do those things.....Oh that's right, next time he's planning on getting around to fixing the economy by doing these things. Trust us.Or is he promising this like he promised us closing Gitmo then gave up when he found out actual work would be required? The republicans are too mean, they won't let me save the world, so I can't do it...waaaaaaaaaaahhhhhhOf course it is a juggernaut of a republican party with its 52 person majority in 1/2 of the legislative branch. I guess the hurdle was too great for any man....52 people, of which many of them vote democrat side often.I guess we'll just have to accept that Obama has the right plan, but is too inept to make it happen. Or he has the right plan, and too lazy to make it happen. Which one?

[InternetExplorer 2,609]

why did you bring up iceland after all the stuff you said about national/family budgets, morality and all the rest? the way they handled their banks was about as scummy as it gets.

[CaneBrain 95]

why did you bring up iceland after all the stuff you said about national/family budgets, morality and all the rest? the way they handled their banks was about as scummy as it gets.

It's not the first time either.

[hblask 1]

Here is a great critique of the economic freedom index: it's written by and the factors that matter are picked by a group of people proven to be both stupid and to have an agenda.

You are calling people stupid and forget to include a link or write compete sentences?The agenda behind the Index of Economic Freedom is to create a set of factors that is predictive in economic growth. If you know of a better one, please proivde it. Just saying "we don't like the people who created it nyah nyah nyah" is just pettiness, not critiquie.

[hblask 1]

Spain has lower government spending than Germany, just saying.

They are essentially the same, and one of them is doing through deficit spending. Think about it. I never said there is a single factor, but government spending is the one of the biggest factors that determines economic growth. I would add that the change in government spending is also important. An economy that goes from 30 to 35% will fare worse than one that goes from 40 to 35%

[hblask 1]

why did you bring up iceland after all the stuff you said about national/family budgets, morality and all the rest? the way they handled their banks was about as scummy as it gets.

They were the only nation that got things correct and let private investors take their losses. Their economic growth since demonstrates the wisdom. They've done many other things wrong, but at a key point they showed that non-intervention is the correct move.But OK, don't use that example. It's still hundreds of examples proving my point, none proving that central planning and big government works.

[CaneBrain 95]

You are calling people stupid and forget to include a link or write compete sentences?The agenda behind the Index of Economic Freedom is to create a set of factors that is predictive in economic growth. If you know of a better one, please proivde it. Just saying "we don't like the people who created it nyah nyah nyah" is just pettiness, not critiquie.

I had no link just the knowledge that the Heritage Foundation has been the opposite of infallible in my lifetime. It has nothing to do with "like"; it's a foundation that is constantly wrong. What I wrote was grammatically correct thanks to the colon.

[CaneBrain 95]

The agenda behind anything at the Heritage Foundation is to promote a conservative agenda. The next time they disagree with current republican wisdom will be the first time.It's why they were probably for the insurance mandate in 1991 and against it now.

[InternetExplorer 2,609]

They were the only nation that got things correct and let private investors take their losses. Their economic growth since demonstrates the wisdom. They've done many other things wrong, but at a key point they showed that non-intervention is the correct move.But OK, don't use that example. It's still hundreds of examples proving my point, none proving that central planning and big government works.

it ISN'T a good example because icelandic depositors were made whole whilst foreign ones were left holding the bag.but good, you're backing off of it. showing some sense.

[hblask 1]

I had no link just the knowledge that the Heritage Foundation has been the opposite of infallible in my lifetime. It has nothing to do with "like"; it's a foundation that is constantly wrong.What I wrote was grammatically correct thanks to the colon.

So you are sticking by your "I have no actual information about the Index being wrong, I just don't like the results so I will ignore them."That should make you go far in life.

[hblask 1]

The agenda behind anything at the Heritage Foundation is to promote a conservative agenda. The next time they disagree with current republican wisdom will be the first time.It's why they were probably for the insurance mandate in 1991 and against it now.

I disagree with the Heritage Foundation quite frequently, just as I disagree wtih HuffPo sometimes. But I'm not so ideologically blind that I just say "I disagree with them sometime therefore I get to ignore them whenever I feel like it." That seems to be your position.The point remains: if you have an actual scientific objection to their Index, or know of what that is a more accurate predictor of economic growth, provide it. This blind ideolgoue thing you are doing is way beneath you.

[Balloon guy 158]

This thread is turning from the Crisis in Spain to the Crisis with Cane....