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On August 27 2014 05:49 Nyxisto wrote:Show nested quote +On August 27 2014 05:46 WhiteDog wrote:On August 27 2014 05:23 Nyxisto wrote:
Compensating private consumption and production with government consumption has brought Japan to a public debt of 212% of their GDP. I wonder who's going to pay that off. The same logic applies to resorting to print money instead of restructuring the economy.
Monetary policy or financing the economy through debt isn't a substitute for structural reforms. It's also not solving the problem, but will only hit harder in a decade or two.
edit: not to say that getting the inflation up wouldn't help, but It won't do any good long term if countries like Italy don't reform their government. Take the 'ease of doing business' index for example.Italy ranks behind Belarus. The legal situation and corruption in Italy is horrible and still largely has not been dealt with. Japan waited too long - hence the idea of a "lost decade". Meanwhile, rampant precarity and negative effect on revenu prevented them to get back to their consumption level pre 1990. Their budgetary policy had good result on growth, but was not enough to put inflation at a level that would help against the debt - consumption never rose to a satisfactory level. May I had : does Japan current debt level cause a problem to them ? None. ![[image loading]](http://i.imgur.com/4ZfJcdX.jpg) Japan spends a quarter of their national budget on debt and interest payments. How is that not hurting? Source:http://www.mof.go.jp/english/budget/budget/fy2014/01.pdf
The largest holder of that debt is the Bank of Japan. If they choose to, they could reduce those payments further by increasing the Bank of Japan exposure to government debt.
Also, large debt only makes a difference if they literally can't make their payments, because the lenders won't accept the payment (due to worthless currency) or there is not enough money (not going to happen as long as Japan prints its own money).
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On August 27 2014 06:02 WhiteDog wrote:Show nested quote +On August 27 2014 06:00 Nyxisto wrote:On August 27 2014 05:53 WhiteDog wrote:
By the way, there is a simple rule in economy, a country never pay its debt back. So we'll just keep massing up debt so our children and grandchildren are royally fucked when everyone defaults at some point because "we're not paying our debt back anyway?" Doesn't sound like a very sensible solution to me. I mean the whole idea behind deficit spending is that you're not running a structural deficit all the time, which is exactly what happens in reality. Economy growth isn't worth anything if you're crippled by debt that's growing twice as fast. And how did we built the europe after WWII ? Did 1950's "children" and "grandchildren" cried out in the street throwing their money in US' pocket to pay back their astonishing debt (110 % GDP ratio for france if I reckon) ? No, we did what is / was intelligent to do, we inflated the debt away and lived a happy life. Do you think the US care about its debt ? They know they can just print it away. And putting that aside, it's also basic economic rule to follow contra cyclic policies : pay the debt when it's sunny, not when you need the money to build yourself a house and an umbrela. By the way, I call that being responsible : caring for the people before the borrowers, selected few that are already way too rich for their own goods. The US, in all their flaws, are being responsible, we are not. And it's the reason we have a far right party dominating the political debate in France.
I think the current situation is hardly comparable to the post WW II world. The economies were not stagnant back then because everything was bombed to ashes. If your economy doubles every year because you're basically starting at zero anyway the perspective on debt is a little different. Also wealth distribution was basically evened out after the wars. Redistribution is obviously something I'm not opposed to right now, too.
But the global economical situation is a little different right now. I think it's reasonable to assume that we're going to end up in a stagnant situation anyway, no matter what policy we're going to put in place. Growth in developed countries is rarely exceeding 1%-1,5% anyway. Global growth in the industrialized world has been going down by 1% every decade since the 60's, with all kinds of different policies in place. In a world without significant economic growth, debt and interest rates become a very real problem.
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On August 27 2014 06:00 Nyxisto wrote:Show nested quote +On August 27 2014 05:53 WhiteDog wrote:
By the way, there is a simple rule in economy, a country never pay its debt back. So we'll just keep massing up debt so our children and grandchildren are royally fucked when everyone defaults at some point because "we're not paying our debt back anyway?" Doesn't sound like a very sensible solution to me. I mean the whole idea behind deficit spending is that you're not running a structural deficit all the time, which is exactly what happens in reality. Economic growth isn't worth anything if you're crippled by debt that's growing twice as fast.
I would think after the last 5 years and the way debt build up among fiat states has grown people would be more cautious about prognosticating world wide defaults or whatever. What is happening in developed countries and what has been happening in Japan for the last 20 years is a lot more complicated than just debt = bad. Conversely, the kind of pain and limited gain that we are seeing in countries that dont control their currency -- Spain/Greece/theBaltics should also lend some caution to this idea that debt elimination is priority.
Nor can we really forecast what low/high debt to gdp rates can really mean, before the crisis really hit Europe the French debt/gdp was lower than the German one, yet after the crisis hit the French debt exploded as the German one decreased on the back of stronger exports thanks to weaker euro.
All we can really say is that high debt, denominated in money you dont control = bad and also that deflation = bad. Those are the only two so far 'hard'-ish facts. Everything else seems complicated.
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On August 27 2014 06:20 Nyxisto wrote:Show nested quote +On August 27 2014 06:02 WhiteDog wrote:On August 27 2014 06:00 Nyxisto wrote:On August 27 2014 05:53 WhiteDog wrote:
By the way, there is a simple rule in economy, a country never pay its debt back. So we'll just keep massing up debt so our children and grandchildren are royally fucked when everyone defaults at some point because "we're not paying our debt back anyway?" Doesn't sound like a very sensible solution to me. I mean the whole idea behind deficit spending is that you're not running a structural deficit all the time, which is exactly what happens in reality. Economy growth isn't worth anything if you're crippled by debt that's growing twice as fast. And how did we built the europe after WWII ? Did 1950's "children" and "grandchildren" cried out in the street throwing their money in US' pocket to pay back their astonishing debt (110 % GDP ratio for france if I reckon) ? No, we did what is / was intelligent to do, we inflated the debt away and lived a happy life. Do you think the US care about its debt ? They know they can just print it away. And putting that aside, it's also basic economic rule to follow contra cyclic policies : pay the debt when it's sunny, not when you need the money to build yourself a house and an umbrela. By the way, I call that being responsible : caring for the people before the borrowers, selected few that are already way too rich for their own goods. The US, in all their flaws, are being responsible, we are not. And it's the reason we have a far right party dominating the political debate in France. I think the current situation is hardly comparable to the post WW II world. The economies were not stagnant back then because everything was bombed to ashes. If your economy doubles every year because you're basically starting at zero anyway the perspective on debt is a little different. Also wealth distribution was basically evened out after the wars. Redistribution is obviously something I'm not opposed to right now, too. But the global economical situation is a little different right now. I think it's reasonable to assume that we're going to end up in a stagnant situation anyway, no matter what policy we're going to put in place. Growth in developed countries is rarely exceeding 1%-1,5% anyway. Global growth in the industrialized world has been going down by 1% every decade since the 60's, with all kinds of different policies in place. In a world without significant economic growth, debt and interest rates become a very real problem.
The global economy is stagnating because of europe. It's dragging international economy since the euro now, we're a cancer to global economy, just like China some years ago, with a high commercial excedant, low growth, low investment. Do you really think there are no possibility for growth in a part of the world with 10 % unemployment ? A 2% should not be impossible.
Here, even the IMF agree with me :
Olivier Blanchard, the International Monetary Fund's (IMF) chief economist, says the gap between the US and Europe is not only damaging for Europeans but could also spell serious trouble for the global economy.
http://www.risk.net/risk-magazine/news/2261984/imfs-blanchard-warns-europe-could-drag-world-economy-down
Some people were saying that europe is a "global drag" since even before the crisis (http://www.amazon.com/Euroland-World-Economy-Global-Player/dp/0230500560) :
Little attention has been paid to the role of the European economies, and notably of the euro area, in the current global imbalance of international payments and growth rates, leading to somewhat simplistic views of Euroland contributing to limiting those imbalances and providing a template of economic policy for the twenty-first century. In addition, an influential view continues to stress the need for deeper and more comprehensive supply-side, structural reforms as a means to protect Euroland from potentially adverse global developments and play a positive role in the orderly correction of global imbalances. The contributions in this volume challenge this view and compellingly question, from a variety of angles, many popular beliefs about the road to virtues of Euroland, providing a comprehensive and fresh framework to address important questions for the future of the euro, from a critique of current macroeconomic policy institutions to proposals for both soft and tougher modifications of euro institutions, all pointing to a key question for the future of Europe: will the single currency project contribute to world economic dynamism or will it be driven by the vigour and vitality of others? Will Euroland act as global player or global drag?
But well, throw the comparaison with WWII away, and just compare our situation to US : how does Obama reduiced its deficit after their crisis ? They reduced it for a part by reducing government expense, and they also supported growth, getting them more income through automatic stabilizer.
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On August 27 2014 06:26 WhiteDog wrote:
But well, throw the comparaison with WWII away, and just compare our situation to US : how does Obama reduiced its deficit after their crisis ? They reduced it for a part by reducing government expense, and they also supported growth, getting them more income through automatic stabilizer.
How has the US reduced their deficit after the crisis? The US public debt went up from 65% of their GDP to 100% of their GDP in only 6 years. Surely there is a lot of irrational "inflation fear" in Germany/Northern Europe, but if you want to inflate the debt away at the rate that the US has been racking it up lately you're going to end up in some kind of Weimar Republic scenario.
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On August 27 2014 06:36 Nyxisto wrote:Show nested quote +On August 27 2014 06:26 WhiteDog wrote:
But well, throw the comparaison with WWII away, and just compare our situation to US : how does Obama reduiced its deficit after their crisis ? They reduced it for a part by reducing government expense, and they also supported growth, getting them more income through automatic stabilizer. How has the US reduced their deficit after the crisis? The US public debt went up from 65% of their GDP to 100% of their GDP in only 6 years.
Deficit =/= Debt.
http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php
2008 $459 Billion Deficit $504.95 Billion Deficit
2009 $1413 Billion Deficit $1559.6 Billion Deficit
2010 $1294 Billion Deficit $1404.99 Billion Deficit
2011 $1299 Billion Deficit $1367.37 Billion Deficit
2012 $1100 Billion Deficit $1134.02 Billion Deficit
2013 $680 Billion Deficit $691.06 Billion Deficit
2014 $492 Billion Deficit $492 Billion Deficit
From 1413 Billion to 492 Billion in five years (it's nominal and inflation adjusted).
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Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well.
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On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless.
No the deficit is the difference between income and spendings in one year, while the debt is the debt. It's not an imaginary number at all - it's the rate of growth of the debt if you want. In Europe we have a rule of 3 % deficit and 60 % debt gdp ratio, that nobody strictly followed (Germany included).
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On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well.
They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that.
Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse).
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They have already begun to surface. Corporations are pooling huge sums of money in offshore accounts, driving up the prices in assets markets, and investing in a real estate bubble. Europe has been having trouble getting investment in normal productive enterprises because no one wants to invest in situations where the EROI is so low/risky. So capital owners are instead buying things up for the coming economic contraction. The only places still growing are China and India, China's and India's resource supplies (Indonesia, Brazil, Chile), and the US debt economy. The US economy took a hard hit last winter, and with El Nino this year, it's shaping up to be another hard winter.
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On August 27 2014 06:56 Sub40APM wrote:Show nested quote +On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse).
I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment.
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On August 27 2014 07:45 WhiteDog wrote:Show nested quote +On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment.
I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it.
And I don't think continuing this by funding it through the ECB or more debt is going to help long-term.
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On August 27 2014 08:05 Nyxisto wrote:Show nested quote +On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term.
Correlation != causation. Part of the economic problems came from the lack of action in the early stages of the debt crisis. Greece ran out of cash, plain and simple, and could not pay its bills. The solution that eventually came to them in terms of an edict was to mainly slash government spending tremendously and increase taxes, in return they would be given temporary debt relief. Doing the first severely crippled their economy, so they no longer had the ability to make further payments down the road.
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On August 27 2014 08:05 Nyxisto wrote:Show nested quote +On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term.
Can you elaborate on this supposed connection between "not creating enough well paying jobs" and a "bloated public sector" that leads to "lack of private investment?"
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On August 27 2014 08:18 IgnE wrote:Show nested quote +On August 27 2014 08:05 Nyxisto wrote:On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term. Can you elaborate on this supposed connection between "not creating enough well paying jobs" and a "bloated public sector" that leads to "lack of private investment?"
The fun fact is : the euro was supposed to boost private investment. France before the euro was an investment power house, with private investment rising up to a point where economists thought it could be dangerous, too risky for an economy. Today, private investment in the entire euro zone is at its lowest - in France lower than prior to the euro.
The only thing that the euro did is lowering interest rate on public debt.
The reality is the debt is non factor. Countries with high GDP debt ratio are just the one that suffered harder backlash after the 2008 subprime crisis : France had the same GDP debt ratio as germany before 2008, and yet everybody point at France as one of the worst exemple of european economy. It does not even mean that those countries spend more to face the crisis ! It is just the effect of automatic budgetary stabilizer, as more people were unemployed and received money from welfare program / and less people paid their tax.
Putting Germany aside, Spain was cited as the prime exemple of an european economy in boom, while it suffered more than most after the crisis.
The state of mind of some rightish people in europe, such as Nyxisto, and Germany at large (but a big part of France as well) is that the debt gdp ratio is not only an economic indicator, it is a moral indicator, that tells a lot about the "responsability" and "discipline" of the country - the "management". It is a judgement not on economic difficulties, tied to a difficult context, heterogenous effect of the crisis and the euro on the euro zone, but a judgement on the people, their behavior and their value : see how Germany's newspapers depicted Greek during the peak of the crisis, scoundrel who abuse of public services and state programs.
And that's the biggest problem : it has nothing to do with economy, it is a political and moral judgement, on the "south", coming from the "north".
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On August 27 2014 08:18 IgnE wrote:Show nested quote +On August 27 2014 08:05 Nyxisto wrote:On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term. Can you elaborate on this supposed connection between "not creating enough well paying jobs" and a "bloated public sector" that leads to "lack of private investment?"
I think de-industrialization in Europe and the shift to consumer oriented economies that tend to run permanent deficits plays a big role I guess. (apart from Italy). The service sector isn't very productive, public or private for that matter. I also don't think the US is doing 'fine'. Sure the economic growth is stable and the unemployment is relatively low, but I just don't think it's sustainable given the decade long deficit budget that the US has been running. Also I'd say that economic growth or employment is a pretty weak indicator for actual standard of living. I'd rather be unemployed in Europe than working three Jobs in the US without healthcare.
The state of mind of some rightish people in europe, such as Nyxisto, and Germany at large (but a big part of France as well) is that the debt gdp ratio is not only an economic indicator, it is a moral indicator, that tells a lot about the "responsibility" and "discipline" of the country - the "management".
I find it ridiculous that you always come up with this. The EU isn't the Ussr, nobody is forcing anybody to anything. You're making it sound like Germans are whipping Greek citizens through the streets.
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On August 27 2014 08:53 Nyxisto wrote:Show nested quote +On August 27 2014 08:18 IgnE wrote:On August 27 2014 08:05 Nyxisto wrote:On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term. Can you elaborate on this supposed connection between "not creating enough well paying jobs" and a "bloated public sector" that leads to "lack of private investment?" I think de-industrialization in Europe and the shift to consumer oriented economies that tend to run permanent deficits plays a big role I guess. (apart from Italy). The service sector isn't very productive, public or private for that matter. I also don't think the US is doing 'fine'. Sure the economic growth is stable and the unemployment is relatively low, but I just don't think it's sustainable given the decade long deficit budget that the US has been running. Also I'd say that economic growth or employment is a pretty weak indicator for actual standard of living. I'd rather be unemployed in Europe than working three Jobs in the US without healthcare. Show nested quote +The state of mind of some rightish people in europe, such as Nyxisto, and Germany at large (but a big part of France as well) is that the debt gdp ratio is not only an economic indicator, it is a moral indicator, that tells a lot about the "responsibility" and "discipline" of the country - the "management". I find it ridiculous that you always come up with this. The EU isn't the Ussr, nobody is forcing anybody to anything. You're making it sound like Germans are whipping Greek citizens through the streets.
Just because Germany did it with bailout money stipulations instead of tanks doesn't mean it's any different.
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On August 27 2014 09:01 aksfjh wrote:Show nested quote +On August 27 2014 08:53 Nyxisto wrote:On August 27 2014 08:18 IgnE wrote:On August 27 2014 08:05 Nyxisto wrote:On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term. Can you elaborate on this supposed connection between "not creating enough well paying jobs" and a "bloated public sector" that leads to "lack of private investment?" I think de-industrialization in Europe and the shift to consumer oriented economies that tend to run permanent deficits plays a big role I guess. (apart from Italy). The service sector isn't very productive, public or private for that matter. I also don't think the US is doing 'fine'. Sure the economic growth is stable and the unemployment is relatively low, but I just don't think it's sustainable given the decade long deficit budget that the US has been running. Also I'd say that economic growth or employment is a pretty weak indicator for actual standard of living. I'd rather be unemployed in Europe than working three Jobs in the US without healthcare. The state of mind of some rightish people in europe, such as Nyxisto, and Germany at large (but a big part of France as well) is that the debt gdp ratio is not only an economic indicator, it is a moral indicator, that tells a lot about the "responsibility" and "discipline" of the country - the "management". I find it ridiculous that you always come up with this. The EU isn't the Ussr, nobody is forcing anybody to anything. You're making it sound like Germans are whipping Greek citizens through the streets. Just because Germany did it with bailout money stipulations instead of tanks doesn't mean it's any different.
Yeah, Merkel is literally Hitler. Quality comment. All European countries are democracies. The victim logic is ridiculous. Spain,Portugal and Italy which have been hit very hard by the recession unquestionably, are not electing right or left-wing radicals.
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On August 27 2014 09:06 Nyxisto wrote:Show nested quote +On August 27 2014 09:01 aksfjh wrote:On August 27 2014 08:53 Nyxisto wrote:On August 27 2014 08:18 IgnE wrote:On August 27 2014 08:05 Nyxisto wrote:On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term. Can you elaborate on this supposed connection between "not creating enough well paying jobs" and a "bloated public sector" that leads to "lack of private investment?" I think de-industrialization in Europe and the shift to consumer oriented economies that tend to run permanent deficits plays a big role I guess. (apart from Italy). The service sector isn't very productive, public or private for that matter. I also don't think the US is doing 'fine'. Sure the economic growth is stable and the unemployment is relatively low, but I just don't think it's sustainable given the decade long deficit budget that the US has been running. Also I'd say that economic growth or employment is a pretty weak indicator for actual standard of living. I'd rather be unemployed in Europe than working three Jobs in the US without healthcare. The state of mind of some rightish people in europe, such as Nyxisto, and Germany at large (but a big part of France as well) is that the debt gdp ratio is not only an economic indicator, it is a moral indicator, that tells a lot about the "responsibility" and "discipline" of the country - the "management". I find it ridiculous that you always come up with this. The EU isn't the Ussr, nobody is forcing anybody to anything. You're making it sound like Germans are whipping Greek citizens through the streets. Just because Germany did it with bailout money stipulations instead of tanks doesn't mean it's any different. Yeah, Merkel is literally Hitler. Quality comment. All European countries are democracies. The victim logic is ridiculous. Spain,Portugal and Italy which have been hit very hard by the recession unquestionably, are not electing right or left-wing radicals.
So saying that germany and european far right forced policies on greek and made moral judgement on southern countries rather than economic analysis is litterally saying Merkel is Hitler. Wow that escalated quickly.
About the désindustrialisation of europe : the euro is largely to blame for it, aggravating the specialisations of countries within the EU rather than helping industries in need, it favored more competitive industries, and with no fiscal redistribution and european policies, let weaker industries die out, impossible to sell their goods with heavy competition and a money way too high.
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On August 27 2014 09:37 WhiteDog wrote:Show nested quote +On August 27 2014 09:06 Nyxisto wrote:On August 27 2014 09:01 aksfjh wrote:On August 27 2014 08:53 Nyxisto wrote:On August 27 2014 08:18 IgnE wrote:On August 27 2014 08:05 Nyxisto wrote:On August 27 2014 07:45 WhiteDog wrote:On August 27 2014 06:56 Sub40APM wrote:On August 27 2014 06:42 Nyxisto wrote:
Because the deficit does not include most of the federal borrowing,it's an imaginary, meaningless number. Greece is also running a primary surplus, it's completely meaningless. I don't exactly understand why modern economics has come to the conclusion that debt is a meaningless concept, but in reality countries that have a lot of it don't seem to perform very well. They dont perform that badly either. the US is growing faster than the EU. Japan has been facing a high debt for the last 20 years and the prescription that debt-fear-mongers keep alerting you to: skyrocketing interest rates and then hyperinflation has not occurs. You are right, Greece, a country that has no control over its monetary policy, is struggling, as have all countries that borrowed in foreign currencies. But what is happening in most developed world countries is not that. Just stating 'this pushes the problem to our grandkids!' doesnt answer the question of through what mechanism will these problems surface and why they havent already began to surface due to both high debt and the rationality of the market (ie, if France is going to collapse and you are a rational Frenchmen then you would start selling your French assets which would then speed up the collapse). I seriously think that this post from Nyxisto is what is wrong about Europe : for him (and Germany's/Europe's nuts policy makers), the indicator that shows that Greece is in deep shit is its debt gdp ratio, and not its unemployment, poverty rate or private investment. I think it is all connected. I don't know how you just want to ignore the debt, as there's a pretty strong correlation in Europe between public debt and the general economic state of the countries. It probably isn't a coincidence that the countries with the highest public debt also are the countries that are suffering the most atm in Europe. The high debt is just a symptom of decade long mismanagement, including not creating enough well paying jobs, a bloated public sector and thus a lack in private investment and countries that rely on public consumption to make up for it. And I don't think continuing this by funding it through the ECB or more debt is going to help long-term. Can you elaborate on this supposed connection between "not creating enough well paying jobs" and a "bloated public sector" that leads to "lack of private investment?" I think de-industrialization in Europe and the shift to consumer oriented economies that tend to run permanent deficits plays a big role I guess. (apart from Italy). The service sector isn't very productive, public or private for that matter. I also don't think the US is doing 'fine'. Sure the economic growth is stable and the unemployment is relatively low, but I just don't think it's sustainable given the decade long deficit budget that the US has been running. Also I'd say that economic growth or employment is a pretty weak indicator for actual standard of living. I'd rather be unemployed in Europe than working three Jobs in the US without healthcare. The state of mind of some rightish people in europe, such as Nyxisto, and Germany at large (but a big part of France as well) is that the debt gdp ratio is not only an economic indicator, it is a moral indicator, that tells a lot about the "responsibility" and "discipline" of the country - the "management". I find it ridiculous that you always come up with this. The EU isn't the Ussr, nobody is forcing anybody to anything. You're making it sound like Germans are whipping Greek citizens through the streets. Just because Germany did it with bailout money stipulations instead of tanks doesn't mean it's any different. Yeah, Merkel is literally Hitler. Quality comment. All European countries are democracies. The victim logic is ridiculous. Spain,Portugal and Italy which have been hit very hard by the recession unquestionably, are not electing right or left-wing radicals. So saying that germany and european far right forced policies on greek and made moral judgement on southern countries rather than economic analysis is litterally saying Merkel is Hitler. Wow that escalated quickly.
I was referring to aksfjh's comment, not yours.
About the désindustrialisation of europe : the euro is largely to blame for it, aggravating the specialisations of countries within the EU rather than helping industries in need, it favored more competitive industries, and with no fiscal redistribution and european policies, let weaker industries die out, impossible to sell their goods with heavy competition and a money way too high.
The de-industrialization actually started quite some time before the Euro, especially in the UK, and it was widely celebrated in the UK as a "step forward" and often compared as a progress over for example, Germany's still industrialized economy. In hindsight I think that didn't turn out to well.
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EPT
