Revenge of the Savings Glut Theory? | 53 comments (53 topical, editorial, 0 hidden)

Re: well (none / 1)

What kind of pain would you favour? Social cuts, investment cuts, military cuts, VAT raises, income tax raises, business tax raises, property tax raises, other?

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Thu Jun 10th, 2010 at 09:51:01 AM EST
[ Parent ]

Re: well (none / 1)

For the record, I wouldn't be against balancing the budget in a weak recession with taxes; and having seen how inflation is also a way to reduce pensions and social benefits and how industries dependent on imported raw materials or machines suffer from exchange rate devaluations too, I am less confortable with the inflate-out-of-debt solution.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Thu Jun 10th, 2010 at 10:06:41 AM EST
[ Parent ]

Re: well (4.00 / 3)

But taxes also have a disincentive effect on economic behaviour. Taxing either wages or business profits in a slowdown nips recovery in the bud. Taxing capital appreciation realised in asset sales has fewer undesirable disincentives. Also taxing asset values (and the problem was in part an asset bubble). Immovable assets (that is, real state and straight land values) are the only ones that cannot flee in response to a tax, and also responsible for the greater part of the debt bubble in much of the OECD, so taxing them would also be a good thing.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu Jun 10th, 2010 at 10:13:16 AM EST
[ Parent ]

Re: well (none / 1)

Taxing either wages or business profits in a slowdown nips recovery in the bud.

That assumes a uniform recession across all industries, and a uniform recycling of all personal income as consumption (or investment). In addition, in a country suffering from trade deficits, there could be import taxes; though those could be problematic for other reasons.

BTW, I forgot to write: beyond more debt, savings and taxes; debt restructuring and temporary capital controls might also work in a mild recession. (And in a heavy one, there is default.)

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Thu Jun 10th, 2010 at 10:22:02 AM EST
[ Parent ]

Re: well (none / 0)

The problem with import taxes, debt restructurings and capital controls is that the serious trade imbalances are intra-EU, debtors and creditors tend to be on opposite sides of national borders, and both tariffs and capital controls are against EU internal market rules.

Either we're in it all together, or we're not. Apparently we were in it all together only as long as the going didn't get too rough. Now tha name of the game is class war and nationalism.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu Jun 10th, 2010 at 11:34:17 AM EST
[ Parent ]

Re: well (none / 0)

You forgot inflation, which not so recently wasn't "pain":

Jerome a Paris:

a little bit of inflation (say 3-7% per year) is good for the poor and bad for the rich; more is the opposite.

However, apparently Jerome now prefers the Bundesbank's "virtue" of less than 2% inflation regardless of the point in the business cycle or the amount of outstanding debt...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu Jun 10th, 2010 at 10:09:11 AM EST
[ Parent ]

One of these days (none / 0)

I will just use a swear word to answer you. You are choosing each time to distort my positions and make them look like some kind of religious nuttery.

I'll just stop answering you.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 10th, 2010 at 10:20:21 AM EST
[ Parent ]

Re: One of these days (none / 0)

I don't know that swearwords are worse than your usual 'meh' or 'bah'.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu Jun 10th, 2010 at 11:23:47 AM EST
[ Parent ]

Re: One of these days (none / 1)

I though 'Gah' was the official Parisian response.

'Bah' is the Colman maneuver, occasionally TBG-ified.

'Meh' doesn't seem to be part of ISO-standard ET.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jun 10th, 2010 at 12:15:42 PM EST
[ Parent ]

Revenge of the Savings Glut Theory? | 53 comments (53 topical, 0 editorial, 0 hidden)

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