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<Theo Weigels' merry men wrote the 3-percent deficit limit into the Maastricht Treaty.>

No. They proposed it; and 1< other governments accepted it. What about their agency?

In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

> Germany opposed fiscal stimulus as the G20 in 2009 on the grounds that "automatic stabilizers were sufficient" only to spearhead the destruction of the EU's welfare state and social compact when the said automatic stabilizers pushed deficits well above 3% EU-wide as they couldn't possibly fail to do in a deep recession.>

That is a bit dubious history. In July 2009, when the summit happened, in Germany the stimulus was already enacted at about 1.6% of gdp in 2009.

Which is chickenshit compared to the magnitude of money printing needed to restore private sector solvency.

That was not really then the stimulus in the US, not to talk of the other G8 countries. And the argument that countries with big automatic stabilizers like Germany need a smaller explicit stimulus is at least plausible.

Only if you do not then proceed to destroy those automatic stabilisers when they start working.

<Germany has for 2 years and increasingly transparently pushing a laundering a bank bailout through Greece, in the process destroying the Greek economy and making the Greek debt situation worse with each  crisis "resolution" proposal.>

You mean Germany and the other EU-countries, I hope.

No, Germany and France.

If you start holding mini-summits with Merkozy and presenting their conclusions as fait accomplis that Germany will not deviate from, then Germany and France are to blame for EU policy.

And France will get its comeuppance soon enough, so again we're back to the problem of con-men and marks.

And the greek economy was hardly in a healthy state in 2009.

Irrelevant when the German response was to do everything in its power to make the crisis worse.

There was and in same sense is a global crisis starting in 2008, even if you like to pretend it isn't.

Irrelevant to the Eurozone. The Eurozone would have been fully capable of burying the crisis in newly printed money if the Bundesbank assholes and Frau Merkel and her merry band of Swabian Housewife Economists had not pitched a hissy fit every time an actual workable solution was proposed.

You don't mean Merkel, you don't mean right-wing policies, you mean Germany, going back to at least Waigel.

Germany has been consistently conducting right-wing policy at least since Weigel. So, yeah.

But probably you think that the root of this ancient conspiracy goes back to when Helmut Schmidt duped Giscard d'Estaing into a common european currency.

No, it goes back to when Schmidt duped d'Estaing into accepting that the Bundesbank's Lysenkoist economic theology was used as a foundation for that common currency.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 10:12:43 AM EST
[ Parent ]

In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

That is just nonsense. Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

 >Which is chickenshit compared to the magnitude of money printing needed to restore private sector solvency.<

And that is shifting the goalposts. Tgere was a very considerable fiscal stimulus in Germany, perhaps the biggest in the G8.

 <Only if you do not then proceed to destroy those automatic stabilisers when they start working.<<p> The automatic stabilizers in Germany are unchanged.

 >No, Germany and France.

 If you start holding mini-summits with Merkozy and presenting their conclusions as fait accomplis that Germany will not deviate from, then Germany and France are to blame for EU policy.

 And France will get its comeuppance soon enough, so again we're back to the problem of con-men and marks.<

What about the Netherlands or Finland? or Luxemburg? All german puppets? Once again, you are denying the agency of all other EU countries.

 <Irrelevant when the German response was to do everything in its power to make the crisis worse.>

 Irrelevant to the Eurozone. The Eurozone would have been fully capable of burying the crisis in newly printed money if the Bundesbank assholes and Frau Merkel and her merry band of Swabian Housewife Economists had not pitched a hissy fit every time an actual workable solution was proposed.

And here you are denying the agency of all other members of the governing council. Was Trichet a stealth keynesian or what? And neither the fed nor the BoE was able or perhaps willing to bury their great recession. Do want to blame Merkel or the "Bundesbank" for that result, too?

 >Germany has been consistently conducting right-wing policy at least since Weigel. So, yeah.

 No, it goes back to when Schmidt duped d'Estaing into accepting that the Bundesbank's Lysenkoist economic theology was used as a foundation for that common currency.<

And I thought I was joking. You really think everything is a german conspiracy. Have you worked in templars and jesuits yet?

by IM on Sat Feb 18th, 2012 at 10:52:05 AM EST
[ Parent ]
Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

As a matter of fact, given the quality of public debate, this is exactly what happened.

It is apparently a matter of national pride that Spain "will be in the core Euro" (that's just laughable given the fundamentals, in the case of France it's equally wrongheaded but at least borderline), just like it was a matter of national pride to get into the Euro in 1999. A lot of it must have had to do with "showing those Germans and Dutch" (do you remember the rhetoric of the late 1990s about undeserving Southerners? Not that different from Rutte's and de Jager's this past year)

Another example, when in late 2008 there were discussions about having a G20 there was a huge brouhaha in Spain about whether Spain would have a seat at the table or not. It was all about national pride again. There was not a single discussion of what it was that Spain wanted to say from that seat, if it got it (which it did, and we apparently had Sarkozy to thank for that, or something).

I mean, European politics is at the level of a nursery school playground.

In addition, as I have pointed out repeatedly, there is an issue of "European inadequacy complex" on the part of Greece, Portugal and Spain, which were kept out of the European Communities on account of, first, underdevelopment and then, until the mid-1970s, because they were dictatorships. Presumably Italy got in early because of its industrial North, because Italians also contributed greatly to the Gastarbeiter in the 1960s like the other Mediterranean countries.

Around 1990, only the lyrical left opposed the Maastricht treaty and, boy, were they right (and for the right reasons, too). By the time 1999 rolled by, the Euro wasn't debatable in serious company.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 11:04:29 AM EST
[ Parent ]
>As a matter of fact, given the quality of public debate, this is exactly what happened.<

Do really think the quality of public debate in Germany is higher? The other european countries have professional governments, professional administrations, armies of economist, jurist etc. too. So they shuold have been as bale or unable as germany to understand what they were doing. It is not as if Germany is the only professional government in the EU facing a bunch of prt.time village councils.

 >It is apparently a matter of national pride that Spain "will be in the core Euro" (that's just laughable given the fundamentals, in the case of France it's equally wrongheaded but at least borderline), just like it was a matter of national pride to get into the Euro in 1999. A lot of it must have had to do with "showing those Germans and Dutch" (do you remember the rhetoric of the late 1990s about undeserving Southerners? Not that different from Rutte's and de Jager's this past year)<

You can't blame idiotic nationalistic pride in other countries on Germany.

 >Another example, when in late 2008 there were discussions about having a G20 there was a huge brouhaha in Spain about whether Spain would have a seat at the table or not. It was all about national pride again. There was not a single discussion of what it was that Spain wanted to say from that seat, if it got it (which it did, and we apparently had Sarkozy to thank for that, or something).<

Like german as working language in the EU or the eternal german quest of a permanent seat in the security council.

 >In addition, as I have pointed out repeatedly, there is an issue of "European inadequacy complex" on the part of Greece, Portugal and Spain, which were kept out of the European Communities on account of, first, underdevelopment and then, until the mid-1970s, because they were dictatorships. Presumably Italy got in early because of its industrial North, because Italians also contributed greatly to the Gastarbeiter in the 1960s like the other Mediterranean countries.>

I am reasonably sure a similar complex exists in most eastern european countries.

 

by IM on Sat Feb 18th, 2012 at 11:33:28 AM EST
[ Parent ]
I am reasonably sure a similar complex exists in most eastern european countries.

Luckily for them, they joined the EU in 2004.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 11:48:33 AM EST
[ Parent ]
Do really think the quality of public debate in Germany is higher?

No, but Germany is benefiting from the delusions in question.

Again: Does Scientology magically become not a pyramid scam just because the people running it happen to believe in the bullshit they're selling?

Does a homeopath suddenly become blameless for killing people through malign neglect, just because he believes that his magic water will cure their cancer?

Does Jim Jones becomes blameless for lacing his kool-aid with cyanide, just because his followers swallowed it?

If the answer to any of those questions is "no," then why the fuck should we cut Germany a break for wrecking the Eurozone?

I am reasonably sure a similar complex exists in most eastern european countries.

And this makes it OK for Germany to exploit it?

Just so we're clear on that. Because if it's OK for Germany place its own narrow national interest above the interests of the European community, then it would also be OK for, say, Ireland to selectively default on only German holders of Irish government bonds.

Sauce for the goose, and all that.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:48:40 AM EST
[ Parent ]
The  tax-haven and neo-liberal casino of Ireland has done damage enough, including  sending european commissars pushing neo-liberalism.

Do you really want to argue that out of 27 EU-Countries only one has a national interest?

>then it would also be OK for, say, Ireland to selectively default on only German holders of Irish government bonds.<

careful here, the mask is dropping-

by IM on Sat Feb 18th, 2012 at 11:54:44 AM EST
[ Parent ]
And now the half of the Irish population that never touched Fianna Fail with a barge pole must be punished for McCreevy, eh?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:59:40 AM EST
[ Parent ]
Oh, no nationality doesn't matters, what?
by IM on Sat Feb 18th, 2012 at 12:18:59 PM EST
[ Parent ]
My point is that why did they join is not an argument. They did it ostensibly for the wrong reasons.

Also, countries have not opposed Merkel more forcefully because doing so "might be un-european" or something. In the Spring of 2010 Sarkozy reportedly (later deniedly) threatened to quit the Eurozone there and then if Germany didn't agree to a Greek bailout. Also Zapatero should have realised the "European friends" were not his friends at all, but he probably couldn't fathom it (Here is a fully sourced contemporary diary to anger you). Less than a year after that, Socrates and Zapatero even saw it fit to shun a PES summit in order not to be seen as "not playing ball" with the Eurozone powers that be.

I call this Stockholm syndrome. You may disagree. What it isn't is a rational macroeconomic policy.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 11:56:44 AM EST
[ Parent ]
And I call it blame shifting. And scape goating.

The actual policies of the european countries - as opposed to the policies you thin they should pursue - matter very much.

>You may disagree.<

Very generous.

>What it isn't is a rational macroeconomic policy.<

Have I said so?

by IM on Sat Feb 18th, 2012 at 12:04:54 PM EST
[ Parent ]
And I call it blame shifting. And scape goating.

Accusing Zapatero of being spineless and clueless is blame shifting?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:33:07 PM EST
[ Parent ]
Yes. Of the "the emperor is good-intentioned. But just listening to evil councilors. These evil councilors being in the pay of foreign interests" sort.
by IM on Sat Feb 18th, 2012 at 01:42:23 PM EST
[ Parent ]
Funny you should say that.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:52:52 PM EST
[ Parent ]
 Jordi Sevilla, alias Jürgen Schulze, german agent.
by IM on Sat Feb 18th, 2012 at 01:54:17 PM EST
[ Parent ]
He's just as neoliberal as the SPD.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:03:54 PM EST
[ Parent ]
As to ZP's cluelessness, do you know about the anecdote of the "two afternoons"?

There was a notorious "open mike" gaffe between Sevilla and Zapatero. Zapatero had made some rookie mistake in a public statement as opposition leader and Sevilla said to him "don't worry, I can teach you all you need to know in two afternoons".

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:06:22 PM EST
[ Parent ]
To teach the tenets of practical neoliberalism, two hours will do. Perhaps another hour for the third way dressing.
by IM on Sat Feb 18th, 2012 at 02:14:01 PM EST
[ Parent ]
Well, I could also conclude that ZP was evil or traitorous. Would that be better?

After all,

The day after ZP won the elections on March 14, 2004, the cry of the youth on the street was Zapatero, no nos falles (Zapatero, don't let us down). [After May 15, 2011], it's Zapatero nos falla y nos reprime (Zapatero lets us down and represses us).


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:29:03 PM EST
[ Parent ]
>As a matter of fact, given the quality of public debate, this is exactly what happened.<

Do really think the quality of public debate in Germany is higher?

Patently not, as you know from my commenting here.

But what is the implication of that? That we should just accept that the body politic is stupid and stop criticising stupid policy?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:11:27 PM EST
[ Parent ]
In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

That is just nonsense. Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

Caveat emptor, eh?

In point of fact, they did not understand what they were signing. This is a matter of public record. Nowhere in the Eurozone was there any substantive public debate on the consequences of accession. And what sorry excuse for a debate there was adopted Lysenkoist economics wholesale.

Suppose, now, that Germany was, in fact, acting in good faith. What is the good-faith response to realising that you have proposed a system that manifestly does not work?

It is to say "oops, sorry, let's fix this." In this case, to support unconditional fiscal defence of full employment, backed by the full seigniorage power of the central bank.

Germany has not made this good-faith response to the crisis. On the contrary, Germany has been the loudest and most hysterical voice decrying any and all reasonable plans, and proposing one Rube Goldberg-esque bullshit pseudo-solution after the other in order to avoid negotiating in good faith.

The fact that Germany is not the only Eurozone country to do so does not detract from the fact that it is both the largest, the most vocal and the most extremist in insisting that others bow down before its inflation neurosis.

And that is shifting the goalposts. Tgere was a very considerable fiscal stimulus in Germany, perhaps the biggest in the G8.

No. To be "considerable," it has to bear some considerable relationship to the magnitude of the problem. Defining "considerable" as "considerable relative to what the Swabian Housewife Economists at the Bundesbank would have liked," by contrast, is moving the goalposts.

What about the Netherlands or Finland? or Luxemburg?

Were they invited to the Merkozy mini-summits?

No, I thought not.

If you presidentialise the EU around Frau Merkel, then you don't get to play the victimisation card and the "but they do it too" card when people assume that Merkel is the president of Europe.

All german puppets? Once again, you are denying the agency of all other EU countries.

I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.

And neither the fed nor the BoE was able or perhaps willing to bury their great recession.

The US Fed/Treasury are doing an almost reasonable job of fighting their recession.

The BoE can't tell the Exchequer to spend more money. But it sure as Hell isn't telling the Exchequer that it can't spend more money.

The central bank and the treasury have to work together to bury a downturn in newly printed money. In the UK, it's the Tory-controlled Treasury that is obstructionist. In the Eurozone, it is the BuBa-dominated ECB that is obstructionist.

And I thought I was joking. You really think everything is a german conspiracy. Have you worked in templars and jesuits yet?

I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.

The fact that the Swabian Housewife Economists believe in the bullshit they peddle is not an excuse, any more than being a fervent believer in homeopathy is an excuse for pretending that it can cure disease. Nor is the fact that the rest of Europe believes it as well.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:13:04 AM EST
[ Parent ]
>Caveat emptor, eh?<

Among professionals that is indeed the legal principle. And the other european governments are as professional or non-professional as the the german one.

 >In point of fact, they did not understand what they were signing. This is a matter of public record. Nowhere in the Eurozone was there any substantive public debate on the consequences of accession.<

But this nowhere in the eurozone includes Germany doesn't it?

>Suppose, now, that Germany was, in fact, acting in good faith. What is the good-faith response to realising that you have proposed a system that manifestly does not work?

 It is to say "oops, sorry, let's fix this." In this case, to support unconditional fiscal defence of full employment, backed by the full seigniorage power of the central bank.<

Hold on. is there a single, I repeat a single european government proposing that? You see the problem?

>No. To be "considerable," it has to bear some considerable relationship to the magnitude of the problem. Defining "considerable" as "considerable relative to what the Swabian Housewife Economists at the Bundesbank would have liked," by contrast, is moving the goalposts.<

That is not what I said. Considerable compared to all other G8 countries, including the US and considerable measured in gdp.

 >I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.<

Of course they can. Theres is no German veto not shared with any other Eu country. In every majority voting case, there is a possibility to out-vote Germany. And at the ECB, the center of your complaints, is is really easy to outvote two german members on the council.

 >The US Fed/Treasury are doing an almost reasonable job of fighting their recession.<

Nonsense. The stimulus was much to small. But even you can't refashion republicans or moderate democrats into german agents, so you rather paint a rosy picture.

 >I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy. And I thought blaming les anglo saxons is simple minded.

 >The fact that the Swabian Housewife Economists believe in the bullshit they peddle is not an excuse, any more than being a fervent believer in homeopathy is an excuse for pretending that it can cure disease. Nor is the fact that the rest of Europe believes it as well.<

But a fact; a fact you tend to ignore in preferment to your nationalistic narrative.

by IM on Sat Feb 18th, 2012 at 11:51:05 AM EST
[ Parent ]
>I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy.

Well, no. The German economic establishment is wrong but powerful so it can spread its wrongness.

I mean, the conventional wisdom at street level is that anything Germans say on economics must be right.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 12:00:36 PM EST
[ Parent ]
I mean, the conventional wisdom at street level is that anything Germans say on economics must be right.

But back in the far-aywy day of say 2004 that wasn't conventional wisdom. Back then the celtic tiger was the model.

Or Slovakia or Estonia or whatever.

by IM on Sat Feb 18th, 2012 at 12:07:11 PM EST
[ Parent ]
No. It is a modern variation of 'Might makes Right.' Germany is the modern European economic superpower. 'It must be because they are doing things right.' Not only are the poor honest, but they are also generous. They would not think that the reason Germany is doing so well, comparatively, is that they are manipulating the rules to their advantage.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 19th, 2012 at 07:46:18 PM EST
[ Parent ]
Among professionals that is indeed the legal principle.

Except when it comes to government bonds, apparently. You're not allowed to tell the buyer to fuck off and die on those, are you?

But this nowhere in the eurozone includes Germany doesn't it?

It does.

Believing in fairy tales is not an excuse for murder.

And let's be perfectly fucking clear here: What Mr. Schauble is doing is murder. Clear, cold-blooded murder. Before this crisis is over, he and his friends will have murdered tens of thousands of Greeks and God only knows how many Spaniards, Irish and Italians.

Major industrial depressions are not a fucking game that you get to play over drinks in the country club.

Hold on. is there a single, I repeat a single european government proposing that? You see the problem?

No, I do not see any problem with attacking the most stridently insane country of the lot.

When Germany starts acting less insane than the Netherlands, I will happily begin going after the Netherlands. Until and unless that happens, however, you are making pathetic excuses.

>I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.<

Of course they can. Theres is no German veto not shared with any other Eu country.

My emphasis.

See the problem here?

In every majority voting case, there is a possibility to out-vote Germany. And at the ECB, the center of your complaints, is is really easy to outvote two german members on the council.

And every time they do that, the Bundesbank immediately goes to Frankfurter Allgemeine BildZeitung and shrieks and whines about how unfair everybody is treating Germany until it stops.

>The US Fed/Treasury are doing an almost reasonable job of fighting their recession.<

Nonsense. The stimulus was much to small. But even you can't refashion republicans or moderate democrats into german agents, so you rather paint a rosy picture.

The stimulus was much too small, certainly.

But I note that no American state has seen 34 % drops in government outlays, 15 % drops in nominal wages and unemployment percentages in the high 20s. Even after you strip out all the lies the Americans put in their statistics, they're still outperforming the Troika by five to ten percentage points on all important measures.

>I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy. And I thought blaming les anglo saxons is simple minded.

I am blaming the Hayekians. I am noting that Germany is the foremost peddler of the Hayekian cancer in Europe today.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:18:03 PM EST
[ Parent ]
>Except when it comes to government bonds, apparently. You're not allowed to tell the buyer to fuck off and die on those, are you?<

As far as I understand the legal situation, it is not any different. But you don't really want to hear that, do you?

 >It does.

 Believing in fairy tales is not an excuse for murder.<

And hyperbole doesn't replace an argument.

 >No, I do not see any problem with attacking the most stridently insane country of the lot.

 When Germany starts acting less insane than the Netherlands, I will happily begin going after the Netherlands.<

Ad calendas graecas or so.

 >My emphasis.

 See the problem here?<

No.

 >And every time they do that, the Bundesbank immediately goes to Frankfurter Allgemeine BildZeitung and shrieks and whines about how unfair everybody is treating Germany until it stops.<

But that, like the two resignations, is actually a sign of weakness and waning influence.

 >The stimulus was much too small, certainly.

 But I note that no American state has seen 34 % drops in government outlays, 15 % drops in nominal wages and unemployment percentages in the high 20s.<

As far as I understand the states and local governments have almost offset the federal stimulus with their balanced budgets requirements. and the resulting fiscal austerity.

by IM on Sat Feb 18th, 2012 at 12:36:45 PM EST
[ Parent ]
Believing in fairy tales is not an excuse for murder.

And hyperbole doesn't replace an argument.

The closest point of comparison to what the Troika is inflicting on Greece is Russia under Yeltsin.

That experience killed roughly 1 % of the Russian population. If Greece performs similarly, and there is no, a priori, any reason it should not, you're looking at somewhere on the order of fifty thousand preventable deaths.

Yeah, I call that murder.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:42:35 PM EST
[ Parent ]
As far as I understand the [US] states and local governments have almost offset the federal stimulus with their balanced budgets requirements. and the resulting fiscal austerity.

And yet they are still doing measurably better than the Troika.

In other words, the Troika confidence fairie performs worse than a placebo stimulus.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:45:30 PM EST
[ Parent ]
Because of - may I mention that once again - automatic stabilizers. The federal spending on Social security, medicare and medicaid keeps places like Nevada afloat.
by IM on Sat Feb 18th, 2012 at 12:53:24 PM EST
[ Parent ]
Automatic stabilisers which Germany is busy dismantling in Greece.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 01:57:03 PM EST
[ Parent ]
Let me remind you that Greece was running deficits even before the crisis hit and the automatic stabilizers kicked in. Look, if you want to run Keynesian policy, either through automatic stabilizers or stimulus programs, you need to have at least semi-sound public finances before the crisis hits. And after the crisis, you need to pay down debt, so you have a space financial space available to borrow heavily during the next crisis.

Sadly, politicians far prefer spending during bad times than they enjoy saving during good times (try to convince the Swabian housewifes that taxes must rise during good times to increase the size of the budget surplus), which is likely why Keynesians has gotten such a bad reputation.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Feb 18th, 2012 at 02:24:43 PM EST
[ Parent ]
That's only true under a commodity standard or pegged ForEx policy.

It is true that ideally you would attempt to deter inflation whenever this is consistent with full employment. But under a floating FX regime and absent atavistic commodity pegs, nothing about having spent yesteryear prevents you from spending this year.

Yes, spending yesteryear may have created inflation. But it makes no sense to encourage deflation today just because because there was inflation yesterday. For the same reason it makes no sense to shoot a man in the back after he has been shot in the front, on the theory that "the average bullet velocity through his chest will be zero."

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 03:39:48 PM EST
[ Parent ]

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