The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
Why is this? If I'm the minister of finance and don't feel like rolling over my bonds as they come due, who's going to stop me? I don't need the permission of some other borrower. Peak oil is not an energy crisis. It is a liquid fuel crisis.
If you attempt to reduce your consolidated government debt faster than society reduces its need for government money, you get deflation, which increases the magnitude of the government's obligation relative to GDP, both directly through shrinking nominal GDP for the same real GDP and indirectly by wrecking real GDP.
- Jake Friends come and go. Enemies accumulate.
And if you do you end up as Spain or Ireland. No amount of deficit reduction, no matter when it happens can unfuck the Eurozone.
Not if you keep devaluing your currency through inflation
shrug
I have no great issue with inflation in the mid to high single digits. Beats unemployment in the mid to high single digits.
Another problem is using the boom to pay down government debt rather than to invest in a reduction of the trade deficit. Because if your economy is booming under a trade deficit the economy is taking debt on as a whole, and if you don't take that debt on as a government the private sector is doing it while at the same time growing on imports. That is not a healthy situation as we have seen, and the market won't correct it by itself. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
You only really want to run surpluses when you have a foreign surplus (particularly when you suspect that it is caused by hot money) or a private sector credit expansion in excess of trend.
For the same reason anyone with sense doesn't put monkeys in charge of a banana plantation. She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
I think we even have legislation demanding the government run a 1 % budget surplus over the business cycle.
I recently learned that that legislation was a preparation to joining EMU and was commented by the magazine Affärsvärlden as an abandonment of Keynesian politics.
Budgettaket är en anpassning till EMU
Tidskriften Affärsvärlden konstaterade redan när budgetsystemet beslutades att det innebär "en av de största förändringarna någonsin i svensk ekonomisk politik", närmare bestämt "ett byte av ekonomisk-politiskt system" och att "den keynesianska budgetpolitiken överges".
Still, your point is relevant, in that the Euro would never have worked unless there were strict budget discipline and large budget surpluses during the good times, as the interest rate weapon would work much less efficiently during the bad times, and fiscal stimulus becomes very problematic in a common currency area unless your government debt is initially very low. Maybe the cap should have been set not at 60% of GDP, but at 30%? Then we would have no EZ at the moment, as Germany would not have managed to reach 30% yet. Seems like a good outcome to me... No caps on deficits, hard caps on debt ratios which were to be waived in the event of local asymmetric shocks.. Peak oil is not an energy crisis. It is a liquid fuel crisis.
But from what I now understand he could have told "you and what central bank?" and got them to stop smirking. If there was a law in place to stop direct borrowing form Riksbanken they could always used Nordea that the government had taken over and borrowed as much as they wanted. Thus turning the speculators to... raw meatballs? Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
When it comes to the 70ies and 80ies I think the standard explanation overlooks factors like oil dependence, RoW catching up (Sweden did not have its industrial base destroyed in wwII) and demographics - Sweden avoiding wwII meant more people born in 10's and 20ies working in the 50ies and 60ies and retiring in the 70ies and 80ies. I also object to stagnation causing the property bubble of the late 80ies, I see that as caused by the deregulation of 1985:
Novemberrevolutionen (Sverige) - Wikipedia
Novemberrevolutionen är det informella namnet på Riksbankens beslut att avreglera den svenska kreditmarknaden den 21 november 1985.[1] Beslutet innebar bland annat att bankerna fick låna ut obegränsat med pengar utan att Sveriges riksbank lade hinder i vägen. Nationalekonomen Lars Jonung har skrivit om novemberrevolutionen: "Detta är den s.k novemberrevolutionen som markerar den mest genomgripande omläggningen av Riksbankens penningpolitiska strategi under hela efterkrigstiden.".[2]
Novemberrevolutionen är det informella namnet på Riksbankens beslut att avreglera den svenska kreditmarknaden den 21 november 1985.[1] Beslutet innebar bland annat att bankerna fick låna ut obegränsat med pengar utan att Sveriges riksbank lade hinder i vägen.
Nationalekonomen Lars Jonung har skrivit om novemberrevolutionen: "Detta är den s.k novemberrevolutionen som markerar den mest genomgripande omläggningen av Riksbankens penningpolitiska strategi under hela efterkrigstiden.".[2]
But we are getting into a very broad topic and of the imho interesting topic in relation to the ongoing euro crisis - did Persson need to borrow abroad and if so why? Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
Have to be very careful when making conclusions based on Economic History. It's easy, with the best will in the world, to fall into "Correlation-as-Causation" fallacies. She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by Frank Schnittger - Feb 7
by Oui - Feb 4 33 comments
by Frank Schnittger - Feb 2 8 comments
by Frank Schnittger - Jan 26 3 comments
by Frank Schnittger - Jan 31 3 comments
by Frank Schnittger - Jan 22 3 comments
by Cat - Jan 25 63 comments
by Oui - Jan 9 21 comments
by Oui - Feb 7
by Oui - Feb 433 comments
by Oui - Feb 311 comments
by Frank Schnittger - Feb 28 comments
by Oui - Feb 2109 comments
by Oui - Feb 16 comments
by Frank Schnittger - Jan 313 comments
by gmoke - Jan 29
by Oui - Jan 2735 comments
by Frank Schnittger - Jan 263 comments
by Cat - Jan 2563 comments
by Frank Schnittger - Jan 223 comments
by Oui - Jan 2110 comments
by Oui - Jan 21
by Oui - Jan 20
by gmoke - Jan 20
by Oui - Jan 1841 comments
by Oui - Jan 1591 comments
by Oui - Jan 145 comments