There is a common misconception that the European Debt Crisis was a result of massive government spending and that continue massive government spending by the US government will lead to a Eurozone-like crisis.
In summary, the European Debt Crisis was caused by: 1. Massive private (not government) debt. 2. Trade imbalances. 3. Eurozone countries surrendering control of their monetary policy to the European Central Bank, and the ECB refusing to lend to countries with high debt, like Greece, Italy and Spain, at low rates.
There is also the misconception that cutting spending (i.e. austerity) is the solution to recession, often said by Republicans and European leaders. This is also not true, in fact it will deepen the recession.
The european debt crisis is caused by all that plus: -American suprime crisis that sent the world into a "economic" crisis -American finance greed that with the help of the rating companys, the same that gave Madoff and the suprime funds TRIPLE AAA+ -Stupid corrupted european politians -Greedy banks and politicians that would invest even public funds and pension funds in american toxic funds
There is also the misconception that cutting spending (i.e. austerity) is the solution to recession, often said by Republicans and European leaders. This is also not true, in fact it will deepen the recession.
Thats true. BUT some countries spend to much and still need to cut spending, it won't help or potentially even harm these countries in this crisize, but in the long run... Some countries just spent more than they should have and need to cut spending.
The problem is, this should have happened during "the boom years", not during a crisis.
Greece for instance just could not support itself for all eternity.. "thanks" to the crisize the crash just came now and not later...
Public Debt IS Government Debt!. Trade imbalances is totally irrelevant here... Yes, centralizing power like is done in EU and the eurozone is not something I aplaud. But of course no one should lend to mismanaged economies at low rates!
Basically everything you mention is a result of politicians' actions.
And inflation as your solution? Really? Everyone will suffer from inflation. But what's worse, the people who have actually taken care of themselves and been responsible, i.e. the savers, will get all their wealth eroded. You're giving the wrong incentive to citizens and you're inviting a plauge (inflation) into your economy.
Careless austerity may deepen the recession. But long-term austerity plans to turn budget deficits into budget surpluses are definitely necessary.
On December 30 2011 20:31 ParasitJonte wrote: Uhm, I don't know where to start...
Public Debt IS Government Debt!. Trade imbalances is totally irrelevant here... Yes, centralizing power like is done in EU and the eurozone is not something I aplaud. But of course no one should lend to mismanaged economies at low rates!
Basically everything you mention is a result of politicians' actions.
And inflation as your solution? Really? Everyone will suffer from inflation. But what's worse, the people who have actually taken care of themselves and been responsible, i.e. the savers, will get all their wealth eroded. You're giving the wrong incentive to citizens and you're inviting a plauge (inflation) into your economy.
Careless austerity may deepen the recession. But long-term austerity plans to turn budget deficits into budget surpluses are definitely necessary.
That was a typo, should have said private debt, instead of public debt. Fixed now.
Oh yeah we just inflate our problems away because obviously that has no down side :/ Inflation means that all public sectors workers will get paid a lot less. That basically IS cutting spending. It's better to be upfront and honest about the problem and choose where you want to take money away.
The heart of the problem really is the trade deficit. Borrowing money is fine if the money is invested into something that gives a return. I.e. spend some to get lots back. But obviously what we did was spend lots and get less back. Then you're really in trouble.
It seems the solution to the European Debt Crisis is inflation to erode away debt, and the ECB to act as a lender of last resort.
This is the only solution to the European debt crisis but it will also be the catalyst to the end of the current capitalist system and a major financial meltdown. I don't have the time to write a huge essay on it but basically my expectation for the year end is currency wars, lack of confidence in thought to be stable currencies, bank runs/bankrupies a-la-lehman style.
I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
Hahaha, I can't believe someone actually recommends inflation as a way to get countries out of debt. "Well citizens, we realize you've been saving money and that's nice and all, but we're going to make all of that money worth fuck all. Enjoy your Deutsche mark circa 1923, guys!"
Really? It would work for government debt but it would kill off every single private persons' savings in the Eurozone. Are you absolutely mad?
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
I'm also a newb but I think it's more like : - Huge investor retrieve his capital invested in action in some bank - People freak out when they see a sudden -20% value of the shares and retrieve their actions and money from the bank - Banks (that heavily invested in actions) freak out too and in addition to that, they need to give money back to the customers that had title accounts in their bank. - Banks sell their actions stock at deficit an become kinda red listed, creating panic amoung the last investors. - Bank bankrupt.
Mainly due to huge investors pullling out of the market, this is about hundreds of millions retrieved in one day, not about iphones (computer, car...) bought with credit
On December 30 2011 20:31 ParasitJonte wrote: Uhm, I don't know where to start...
Public Debt IS Government Debt!. Trade imbalances is totally irrelevant here... Yes, centralizing power like is done in EU and the eurozone is not something I aplaud. But of course no one should lend to mismanaged economies at low rates!
Basically everything you mention is a result of politicians' actions.
And inflation as your solution? Really? Everyone will suffer from inflation. But what's worse, the people who have actually taken care of themselves and been responsible, i.e. the savers, will get all their wealth eroded. You're giving the wrong incentive to citizens and you're inviting a plauge (inflation) into your economy.
Careless austerity may deepen the recession. But long-term austerity plans to turn budget deficits into budget surpluses are definitely necessary.
It's not my solution, it's one part of Paul Krugman's solution (he's an economics professor who won a Nobel Prize).
The gap between German and Spanish wages he is talking about can clearly be seen in the Labor Cost graph in the BBC article I put in the OP (http://www.bbc.co.uk/news/business-16301630).
The inflation is also needed to close the large trade deficit, which partly caused the crisis (this gap can be seen in the graph in above article).
The other part is for the ECB to lend to the countries like Greece, Italy and Spain at low interest rates, so that they don't default.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
This is silly. For some Euro countries the problem does lie in government debt, but for others it does not. Making this a black/white story that supports a preferred policy as you make it out cheapens the problem and simplifies what is a complex issue.
The fact is Greece (lol check out the pork being shoveled out of the greek gov't - rail debt @ 5% of GDP http://www.nytimes.com/2010/07/21/business/global/21rail.html), Italy, and Spain all spend WAAAY too much. Was it unsustainable before the recession? No. But the countries spent themselves into vulnerable situations.
Then, on top of all this, GIS do not control their currency, thus cannot devalue to improve the competitiveness of their industries. The trade imbalance isn't the problem per se, bu rather a symptom. Gov't control of the labor market and manufacturing has produced high wages and low productivity. This means no one buys GIS products. Therefore GDP cannot outgrow the huge increase in debt the recession added to the gov't debt accrued during the good times. From where i'm sitting it looks like gov't interference and a bloated labor market from the interference has made the problem even worse.
Though in the end, i'm convinced by Scott Sumner (themoneyillusion.com) that this the crisis part of the this goes away if the ECB steps up as a lender of last resort.
TLDR: Crisis + huge public debt + Private Debt + ECB unwilling to devalue euro or act as lender of last resort all contributed to the crisis.
PS- The Nobel winning Krugman was VERY different than the current Krugman
Edit: Also austerity doesn't mean strict monetary policy, which monetarists believe is more important than fiscal policy for keeping demand up and nGDP from collapsing. It is possible to do austerity without causing a recession.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
That's certainly part of it.
Then take that to a larger scale. -Big companies borrow money to invest in high street stores. -Another lot of big companies borrow money to invest in giant out of town shopping centers. -First set of big companies lose the war and their investment is now worthless. They've borrowed lots of money and now contribute nothing to the economy.
This then led to problems for the Government. -Take more money in tax to pay higher wages -Tax reduces competitiveness of entire private sector, plus private sector is screwing itself over (see above) therefore tax revenue falls -Now you can't afford to pay higher wages but you already promised them so you borrow the money. -Now you can't borrow more money and interest rates are going up and the private sector is in real trouble. -You have stop borrowing money, a lot of which props up the private sector, further screwing the economy.
And even that's just part of the problem. A lack of coherent economic strategy from almost every Country in the EU has led to some awful decisions being made.
On December 30 2011 21:17 bumwithagun wrote: This is silly. For some Euro countries the problem does lie in government debt, but for others it does not. Making this a black/white story that supports a preferred policy as you make it out cheapens the problem and simplifies what is a complex issue.
The fact is Greece (lol check out the pork being shoveled out of the greek gov't - rail debt @ 5% of GDP http://www.nytimes.com/2010/07/21/business/global/21rail.html), Italy, and Spain all spend WAAAY too much. Was it unsustainable before the recession? No. But the countries spent themselves into vulnerable situations.
Then, on top of all this, GIS do not control their currency, thus cannot devalue to improve the competitiveness of their industries. The trade imbalance isn't the problem per se, bu rather a symptom. Gov't control of the labor market and manufacturing has produced high wages and low productivity. This means no one buys GIS products. Therefore GDP cannot outgrow the huge increase in debt the recession added to the gov't debt accrued during the good times. From where i'm sitting it looks like gov't interference and a bloated labor market from the interference has made the problem even worse.
Though in the end, i'm convinced by Scott Sumner (themoneyillusion.com) that this the crisis part of the this goes away if the ECB steps up as a lender of last resort.
TLDR: Crisis + huge public debt + Private Debt + ECB unwilling to devalue euro or act as lender of last resort all contributed to the crisis.
PS- The Nobel winning Krugman was VERY different than the current Krugman
Yes, you're correct on Greece. For Greece, the problem is very much government debt. But for Italy and Spain government debt wasn't the problem.
On December 30 2011 20:31 ParasitJonte wrote: Uhm, I don't know where to start...
Public Debt IS Government Debt!. Trade imbalances is totally irrelevant here... Yes, centralizing power like is done in EU and the eurozone is not something I aplaud. But of course no one should lend to mismanaged economies at low rates!
Basically everything you mention is a result of politicians' actions.
And inflation as your solution? Really? Everyone will suffer from inflation. But what's worse, the people who have actually taken care of themselves and been responsible, i.e. the savers, will get all their wealth eroded. You're giving the wrong incentive to citizens and you're inviting a plauge (inflation) into your economy.
Careless austerity may deepen the recession. But long-term austerity plans to turn budget deficits into budget surpluses are definitely necessary.
It's not my solution, it's one part of Paul Krugman's solution (he's an economics professor who won a Nobel Prize).
The gap between German and Spanish wages he is talking about can clearly be seen in the Labor Cost graph in the BBC article I put in the OP (http://www.bbc.co.uk/news/business-16301630).
The inflation is also needed to close the large trade deficit, which partly caused the crisis (this gap can be seen in the graph in above article).
The other part is for the ECB to lend to the countries like Greece, Italy and Spain at low interest rates, so that they don't default.
Paul Krugman won the noble prize for his research on trade theory not on the debt crisis. For 10 years he resembles more a politician than an economist. He is not active in research anymore and yet voices his opinion on pretty much everything that concerns economics. In last 5 years his been ridiculed or proven wrong many times yet he keep preaching. I would take everything that he said with a bowl of salt. He has political agenda and he keep pushing it.
The crisis in Europe is a complex event and it will be studied for years before people converge causes. But so far it looked that it was caused: - Greece: by huge budget deficit it was running for years - Italy - uncompetitive economy - basically Italy has been not growing for years thanks to Berlusconi. - Spain - burst of the housing bubble + other economic problems - Ireland - subprime crisis in US - Iceland - same as Ireland
It quotes Olivier Blanchard, a IMF economist, who wrote a widely used macro 101 textbook.
I should note that the article doesn't directly apply to the Eurozone, as the point of inflation in the Eurozone is to close the trade imbalances between the countries.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
You realize the reason the eu's rules became a joke is because of germany? They broke the deficit rules way back in the early 90's and a pot can't exactly call a kettle black, hence why they allowed the PIIGS to break EU laws for so long.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
Ironically the people who tend to evade more taxes, here in Portugal, are those with the highest incomes... And now I have to pay even more taxes...lol T.T
On December 30 2011 21:28 Lebesgue wrote: The crisis in Europe is a complex event and it will be studied for years before people converge causes. But so far it looked that it was caused: - Greece: by huge budget deficit it was running for years - Italy - uncompetitive economy - basically Italy has been not growing for years thanks to Berlusconi. - Spain - burst of the housing bubble + other economic problems - Ireland - subprime crisis in US - Iceland - same as Ireland
I agree.
Still, the underlying problem was the market losing faith in the governments of Europe. Example Italy: The economic indicators did hardly change throughout the last 10 years, but the market's opinion did, and that is why the interest rates sky rocketed. Almost no country could pay interest rates of more than 7%.
Of course the Greek budget deficit getting out of control and the apparent inability of the European Union to act decisively triggered the loss of faith.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
You realize the reason the eu's rules became a joke is because of germany? They broke the deficit rules way back in the early 90's and a pot can't exactly call a kettle black, hence why they allowed the PIIGS to break EU laws for so long.
The Greek government lied about their deficit when joining the euro, you can't blame Germany for another countries lies
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
You realize the reason the eu's rules became a joke is because of germany? They broke the deficit rules way back in the early 90's and a pot can't exactly call a kettle black, hence why they allowed the PIIGS to break EU laws for so long.
There was no EU in the early 90s, what rules are you talking about?
Aah, nice. this is a good perspective, and I was curious whether a thread like this would pop up eventually.
Also should be noted that the ability for governments to deal with the weak economy is hamstrung by the myth of excessive government spending, and the accompanying myth of austerity measures being necessary to deal with it. Austerity only increases wealth disparity which further exacerbates weak economies.
Fun not-so-tangentally related fact, of all 37 or so times that the US has raised the minimum wage, a net employment gain was realized shortly after.
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
Why is economic growth good for everyone? Is it simply the assumption that more stuff for everyone is better?
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
Why is economic growth good for everyone? Is it simply the assumption that more stuff for everyone is better?
Well yeah, true economic growth is by definition an increase in the standard of living. That's good for everyone. What messes it up is, for example, when the government takes all of person A's money and gives it to person B. But we wouldn't say economic growth was bad for person A, we would say redistribution was bad for person A.
On December 30 2011 19:34 paralleluniverse wrote: There is a common misconception that the European Debt Crisis was a result of massive government spending and that continue massive government spending by the US government will lead to a Eurozone-like crisis.
In summary, the European Debt Crisis was caused by: 1. Massive private (not government) debt. 2. Trade imbalances. 3. Eurozone countries surrendering control of their monetary policy to the European Central Bank, and the ECB refusing to lend to countries with high debt, like Greece, Italy and Spain, at low rates.
There is also the misconception that cutting spending (i.e. austerity) is the solution to recession, often said by Republicans and European leaders. This is also not true, in fact it will deepen the recession.
1. and 3. seem to be contradictory because massive government debt lead to high interest rates that Greece, Italy and Spain cannot afford. I mean high debt in terms of GDP. Since these contries cannot print their own money, they do not have an easy solution to how to pay these interest rates.
Cutting spending is not the best solution and will deepen the recession. But, some countries need to cut spending. The best solution is to print a lot of money to pay back the debt and will lower the cost of the goods you produce, so your exports should increase. Unfortunately, Greece can not do this as long as it is part of the Eurozone and Germany and France will not allow a lot of money to be printed.
This means that the ECB won't act as the lender of last resort and inflation won't occur because money won't be allowed to be printed.
Possible Solution: The reason that the interest rates are so high for many of the Eurozone countries is because of the potential for a Greece default. So, what if Greece was removed from the Eurozone, but not the European Union. This would allow Greece to have its own currency and do the inflation/ currency devaluation that needs to be done. This should lower the interest rates for the rest of the Eurozone since the chance of a Greece default will be removed. By remaining part of the EU, Greece will not be able to add taxes on imports from other EU countries.
Greece public debt in 2010 was around $460 B. If the Eurozone agreed to take on 50% of Greeces debt, in exchange for Greeece leaving the Eurozone, Greece would have a debt level that it can manage and with its own currency, hopefully be able to turn its economy around. The Eurozone devt would be held at the ECB and each countriy would pay a % based on its GDP as a % of the Eurozone.
Why would the Eurozone take on Greece debt? They allowed Greece to enter when Greece did not meet the requirements. Greece cooked its books for 1 year to show its defecit was in line with Eurozone requirements and was admitted. This should have been very suspicious given Greece historical defecit levels. It was also allow countries to borrow at lower rates because of the lowered possibility of default. Finally, it will allow Germany and France to save their banks from huge write downs on Greece debt, which would cause them to have to recapitalize. http://www.indexmundi.com/g/g.aspx?v=65&c=gr&l=en http://www.indexmundi.com/g/g.aspx?v=143&c=gr&l=en
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929
This is a very contrived example, but an apt description of our economy in simplistic terms.
I basically agree with what you're saying about distribution, but saying that economic growth is good for everyone kind of glosses over the fact that the way we delineate 'economies' is more or less arbitrary (i.e. countries), when flows of capital do not confine themselves to the same lines, nor flow equally to all areas within these delineations.
Talking about 'economic growth' is more or less used in public discourse as a proxy for talking about quality of life, the two are not the same.
Of course we could talk about economies of individuals or whatever, and say that economic growth within that domain is good for the individual, and that would probably be true, but that's such a skewed way of interpreting the term that its nearly useless.
Its very annoying if you actually study economics to read these threads and see how everyone talks about random solutions/problems without understanding the basic principles that lie underneath.
The main problem as has been said by multiple politicians is that the southern countries of europe aren't competitive anymore. They have to rework there economies to become competitive again and then there is no longer a problem. This means shortterm aid is necessary to help them bridge untill they can rework there economies. Also from a Dutch perspective, a big % of our export goes to southern Europe. So I always find it funny when people say 'they spend to much' while really we SOLD stuff to them.
Looking from a broader perspective, I think that Greece no longer belongs in the Euro. Its actually better for them to devaluate the currency at this point to invite tourists. Its still a beautiful country and this will help them to become solvant again in 8-10 years. Every country has different problems, Spain its mostly unemployment not debt, Italy has a huge debt but there yearly budget deficit was actually positive last 2-3 years. So they are already on the way out.
The way forward is to have people that actually know what has to be done, which is mainly the current top of the ECB and the politicians, have a bigger voice. So that populists who yell for ECB intervention won't become a majority. Because ECB stepping in will only hurt us more in the long run, its better to bleed now then to bleed in 10 years. This has always been Northern Europe's point of view, in contradiction to American/GB who just print moneys and try to keep the economy pumping that way.
And its a very complex problem, dont even get me started on why its bad that the banks are forced to take a loss on the government debt.
Also, I dont think there is a right or wrong in this discussion, Monetary economics is traditionally a debate between inflation and rent%. (hard-nosed vs wet-nosed). America has always been less caring about inflation and europe has always been more focused on keeping inflation down. Its a debate thats been going on for centuries and now both sides have different solutions again.
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929
This is a very contrived example, but an apt description of our economy in simplistic terms.
Well I answered this above but GDP growth isn't REALLY a signal of economic growth. There's usually some correlation between the two so we're OK using it as a measure, but in reality you can't say "oh GDP went up, that's growth."
Real growth means an increase in the standard of living.
Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929
This is a very contrived example, but an apt description of our economy in simplistic terms.
Well I answered this above but GDP growth isn't REALLY a signal of economic growth. There's usually some correlation between the two so we're OK using it as a measure, but in reality you can't say "oh GDP went up, that's growth."
Real growth means an increase in the standard of living.
Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
yes, true. I edited my post above just now.
My contention I suppose is the usage of the term 'economic growth' as a proxy for standard of living. We can define growth as standard of living, and I think it would be a justified writing back of the term, but the vast majority of its use in popular discourse is as a feel-good analogue to GDP which results in people supporting policies which neglect quality of life but increase GDP with the tacit and misguided belief that quality of life increases will result.
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929
This is a very contrived example, but an apt description of our economy in simplistic terms.
Well I answered this above but GDP growth isn't REALLY a signal of economic growth. There's usually some correlation between the two so we're OK using it as a measure, but in reality you can't say "oh GDP went up, that's growth."
Real growth means an increase in the standard of living.
Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
yes, true. I edited my post above just now.
My contention I suppose is the usage of the term 'economic growth' as a proxy for standard of living. We can define growth as standard of living, and I think it would be a justified writing back of the term, but the vast majority of its use in popular discourse is as a feel-good analogue to GDP which results in people supporting policies which neglect quality of life but increase GDP with the tacit and misguided belief that quality of life increases will result.
Well politicians have never understood economics so it's no surprise that they confuse GDP with true growth. And most classical economists do define growth as a measured increase in the standard of living...it's not a new or even obsolete definition. If you use an increase in GDP to mean growth in any discourse, you're just wrong. You're just using the wrong words. A lot of people do it but they aren't correct.
I guess maybe in the finance world they might use the two as the same thing...I'm not sure. I sit in the economics camp.
On December 31 2011 00:10 FuzzyJAM wrote: We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929
This is a very contrived example, but an apt description of our economy in simplistic terms.
Well I answered this above but GDP growth isn't REALLY a signal of economic growth. There's usually some correlation between the two so we're OK using it as a measure, but in reality you can't say "oh GDP went up, that's growth."
Real growth means an increase in the standard of living.
Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
yes, true. I edited my post above just now.
My contention I suppose is the usage of the term 'economic growth' as a proxy for standard of living. We can define growth as standard of living, and I think it would be a justified writing back of the term, but the vast majority of its use in popular discourse is as a feel-good analogue to GDP which results in people supporting policies which neglect quality of life but increase GDP with the tacit and misguided belief that quality of life increases will result.
Well politicians have never understood economics so it's no surprise that they confuse GDP with true growth. And most classical economists do define growth as a measured increase in the standard of living...it's not a new or even obsolete definition. If you use an increase in GDP to mean growth in any discourse, you're just wrong. You're just using the wrong words. A lot of people do it but they aren't correct.
I guess maybe in the finance world they might use the two as the same thing...I'm not sure. I sit in the economics camp.
heh, whoops, I re-read my post ''economic growth' as a proxy for standard of living'-- should read as economic growth as a proxy for 'increase in GDP'.
but I think that came across in the rest of my post. *yawns* its late, and its been a long-ass day. Time to sleep. Hope this thread isn't a shitstorm or been overrun by the mindless hordes of walking undead when I check it tomorrow. XD
Economic growth refers to absolute increase in output, while the Gini coefficient shows how equal this output is distributed, so you really need both to get a good picture of the living standards of the average person.
Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
You realize the reason the eu's rules became a joke is because of germany? They broke the deficit rules way back in the early 90's and a pot can't exactly call a kettle black, hence why they allowed the PIIGS to break EU laws for so long.
There was no EU in the early 90s, what rules are you talking about?
Most people assume the EU came into being around the year 2000 with the introduction of the Euro currency. It's actually completely wrong, the currency was simply the next step of the plan. The European union actually started very soon after WW2 in the 1950's with the maastricht treaty and so on and so forth. I don't really want to elaborate too much because the EU problem takes too long to explain and too complicated for non-finance/economics people. If you live in Europe and have a saved up pension, I HIGHLY recommend you read up on the crisis and figure out what's going to happen to your money because 40-50 years of work can become worthless very fast.
Articles quoted are about Spain, what about Greece?
3. Eurozone countries surrendering control of their monetary policy to the European Central Bank, and the ECB refusing to lend to countries with high debt, like Greece, Italy and Spain, at low rates.
How about just surrendering control of their monetary policy to a central entity. Leave it at that.
banks become popular-> banks become bigger-> banks become Big and are becoming bigger-> All money is trusted on big banks->big banks make mistakes thinking it will make them more money(bigger yay!)-> big banks crash-> economy crisis/ recession .
Is basically what happened, in my view. Note: very basic view of it all but also very clear. Although Greece just bad at making people spend income taxes >.>
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
Because the countries that are going under buy other peoples goods, so the exports of all the EU states will suffer as a result with the other elements to the economy of a country suffering as a result.
Btw, did this guy seriously suggest inflation as a cure?
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
My limited understanding of the EU is that it's actually a pretty ironclad union. You're not allowed to just kick people out whenever you feel like it. And the debt is going to have serious ramifications for the strength of the Euro.
Debt bearing and import heavy countries need a strong currency. If the Euro gets weak, it's going to make goods imported to Europe MUCH more expensive.
P.S. I say debt bearing and import heavy as opposed to export driven economies like China that want weak currencies to make their exports cheaper to the rest of the world.
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
My limited understanding of the EU is that it's actually a pretty ironclad union. You're not allowed to just kick people out whenever you feel like it. And the debt is going to have serious ramifications for the strength of the Euro.
Debt bearing and import heavy countries need a strong currency. If the Euro gets weak, it's going to make goods imported to Europe MUCH more expensive.
P.S. I say debt bearing and import heavy as opposed to export driven economies like China that want weak currencies to make their exports cheaper to the rest of the world.
Yeah, the Euro will get weaker, wich would make my money stronger towards the euro and I don't really see the bad in that, for me I mean. I'm not trying to troll or to be aggressive it's just that I don't simply understand since I'm pretty dimwitted when it comes to economy and all that
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
My limited understanding of the EU is that it's actually a pretty ironclad union. You're not allowed to just kick people out whenever you feel like it. And the debt is going to have serious ramifications for the strength of the Euro.
Debt bearing and import heavy countries need a strong currency. If the Euro gets weak, it's going to make goods imported to Europe MUCH more expensive.
P.S. I say debt bearing and import heavy as opposed to export driven economies like China that want weak currencies to make their exports cheaper to the rest of the world.
Yeah, the Euro will get weaker, wich would make my money stronger towards the euro and I don't really see the bad in that, for me I mean. I'm not trying to troll or to be aggressive it's just that I don't simply understand since I'm pretty dimwitted when it comes to economy and all that
If your currency can move independently from the Euro then yes, it will get stronger. Although I thought European currencies were pegged to the Euro.
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
My limited understanding of the EU is that it's actually a pretty ironclad union. You're not allowed to just kick people out whenever you feel like it. And the debt is going to have serious ramifications for the strength of the Euro.
Debt bearing and import heavy countries need a strong currency. If the Euro gets weak, it's going to make goods imported to Europe MUCH more expensive.
P.S. I say debt bearing and import heavy as opposed to export driven economies like China that want weak currencies to make their exports cheaper to the rest of the world.
Yeah, the Euro will get weaker, wich would make my money stronger towards the euro and I don't really see the bad in that, for me I mean. I'm not trying to troll or to be aggressive it's just that I don't simply understand since I'm pretty dimwitted when it comes to economy and all that
In that aspect yes you personally will be better. Your country will not however. When the euro goes down and the krone goes up in value, nobody will buy Swedish goods because they are too expensive=ikea too expensive=ikea makes a loss and cuts jobs= bad for Sweden. Not multiply that to all the other firms that depend on Europe to buy their goods.
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
My limited understanding of the EU is that it's actually a pretty ironclad union. You're not allowed to just kick people out whenever you feel like it. And the debt is going to have serious ramifications for the strength of the Euro.
Debt bearing and import heavy countries need a strong currency. If the Euro gets weak, it's going to make goods imported to Europe MUCH more expensive.
P.S. I say debt bearing and import heavy as opposed to export driven economies like China that want weak currencies to make their exports cheaper to the rest of the world.
Yeah, the Euro will get weaker, wich would make my money stronger towards the euro and I don't really see the bad in that, for me I mean. I'm not trying to troll or to be aggressive it's just that I don't simply understand since I'm pretty dimwitted when it comes to economy and all that
If your currency can move independently from the Euro then yes, it will get stronger. Although I thought European currencies were pegged to the Euro.
We don't use the euro, yet we're in the EU. The switch over to using the euro was optional for each member country, so Sweden for instance is not part of said monetary union wich is why I don't see how we will be affected by this. But I see now why it's called the "European debt crisis" most countries will be affected since they are using the euro.
EDIT: In that aspect yes you personally will be better. Your country will not however. When the euro goes down and the krone goes up in value, nobody will buy Swedish goods because they are too expensive=ikea too expensive=ikea makes a loss and cuts jobs= bad for Sweden. Not multiply that to all the other firms that depend on Europe to buy their goods.
Ok thanks, I see now. But wouldn't that situation apply to all countries then ? Their money being stronger compared to the euro-using countries and therefore nobody would buy their stuff ? Like Brittain, Russia or Turkey for instance ?
On December 31 2011 03:23 DorF wrote: Why is it called the European debt crisis ? I live in Europe and we don't have any significant debt in Sweden... I thought it was like mainly Italy, Greece and Spain, that's not really even a majority of Europe is it ?
Because depending on how it's solved, everyone in the EU is going to suffer. Actually, I think no matter how it's solved everyone in the EU is going to suffer.
I don't really see how, I mean not all the countries in the EU use the same currency. And couldn't we technically just kick them out and cut our losses if we felt like it was going to be detrimental to us ?
My limited understanding of the EU is that it's actually a pretty ironclad union. You're not allowed to just kick people out whenever you feel like it. And the debt is going to have serious ramifications for the strength of the Euro.
Debt bearing and import heavy countries need a strong currency. If the Euro gets weak, it's going to make goods imported to Europe MUCH more expensive.
P.S. I say debt bearing and import heavy as opposed to export driven economies like China that want weak currencies to make their exports cheaper to the rest of the world.
Yeah, the Euro will get weaker, wich would make my money stronger towards the euro and I don't really see the bad in that, for me I mean. I'm not trying to troll or to be aggressive it's just that I don't simply understand since I'm pretty dimwitted when it comes to economy and all that
In that aspect yes you personally will be better. Your country will not however. When the euro goes down and the krone goes up in value, nobody will buy Swedish goods because they are too expensive=ikea too expensive=ikea makes a loss and cuts jobs= bad for Sweden. Not multiply that to all the other firms that depend on Europe to buy their goods.
Maybe, but what's Sweden's trade balance like? If imports outweigh exports then a stronger currency will be a net benefit for the country.
@Dorf that's turning out to be a wise decision for Sweden. And yes, your country will be less affected than the others then.
On December 30 2011 21:12 paralleluniverse wrote: It's not my solution, it's one part of Paul Krugman's solution (he's an economics professor who won a Nobel Prize).
On December 30 2011 21:17 bumwithagun wrote: PS- The Nobel winning Krugman was VERY different than the current Krugman
On December 30 2011 21:28 Lebesgue wrote: Paul Krugman won the noble prize for his research on trade theory not on the debt crisis.
There is no Nobel Prize in Economics.
On December 30 2011 21:28 Lebesgue wrote: Paul Krugman won the noble prize for his research on trade theory not on the debt crisis. For 10 years he resembles more a politician than an economist. He is not active in research anymore and yet voices his opinion on pretty much everything that concerns economics. In last 5 years his been ridiculed or proven wrong many times yet he keep preaching. I would take everything that he said with a bowl of salt. He has political agenda and he keep pushing it.
Economics is mostly politics. Throw a few billion at historians and the same thing would happen to history. Throw a few billion at psychologists and... oh wait, that already happened.
On December 30 2011 22:22 mememolly wrote: Greece should never of been allowed to join the Euro but who knew they were lying about their deficit?
At least some people in the Greek Government and some people in Goldman Sachs
On December 31 2011 00:10 FuzzyJAM wrote: The developed world is still far better off (on average) than it was a couple decades ago.
On December 31 2011 02:26 Klondikebar wrote: Well yeah, true economic growth is by definition an increase in the standard of living. That's good for everyone.
It really depends what you do with the data. A fantastically simple example: Take a million people who earn $1 a day. Lets inject some "economic growth". We'll put 999,999 people on 50c a day and put one person on $1,000,0001 a day. This million people now, on average, earn 50% more. But the median person earns half what they earned before.
On December 31 2011 02:38 Klondikebar wrote: Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
You mean REdistribution. Distribution of wealth is like gravity, it just happens. Actually so does redistribution so you're kind of screwed there too, I think what you mean is "redistribution by the state".
On December 31 2011 02:55 Klondikebar wrote: Well politicians have never understood economics so it's no surprise that they confuse GDP with true growth.
On December 31 2011 03:27 sekritzzz wrote: I don't really want to elaborate too much because the EU problem takes too long to explain and too complicated for non-finance/economics people.
No one understand economics, it's not just in random threads on team liquid that people argue about it, at the highest levels there are fundamentally different philosophies being argued over. Within philosophies there are arguments over what to do to solve even very basic problems.
On December 31 2011 02:32 Dwelf wrote: Its very annoying if you actually study economics to read these threads
That's weird, I usually find people who study economics annoying.
On December 30 2011 21:12 paralleluniverse wrote: It's not my solution, it's one part of Paul Krugman's solution (he's an economics professor who won a Nobel Prize).
On December 30 2011 21:28 Lebesgue wrote: Paul Krugman won the noble prize for his research on trade theory not on the debt crisis. For 10 years he resembles more a politician than an economist. He is not active in research anymore and yet voices his opinion on pretty much everything that concerns economics. In last 5 years his been ridiculed or proven wrong many times yet he keep preaching. I would take everything that he said with a bowl of salt. He has political agenda and he keep pushing it.
Economics is mostly politics. Throw a few billion at historians and the same thing would happen to history. Throw a few billion at psychologists and... oh wait, that already happened.
On December 31 2011 02:26 Klondikebar wrote: Well yeah, true economic growth is by definition an increase in the standard of living. That's good for everyone.
It really depends what you do with the data. A fantastically simple example: Take a million people who earn $1 a day. Lets inject some "economic growth". We'll put 999,999 people on 50c a day and put one person on $1,000,0001 a day. This million people now, on average, earn 50% more. But the median person earns half what they earned before.
On December 31 2011 02:38 Klondikebar wrote: Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
You mean REdistribution. Distribution of wealth is like gravity, it just happens. Actually so does redistribution so you're kind of screwed there too, I think what you mean is "redistribution by the state".
On December 31 2011 02:55 Klondikebar wrote: Well politicians have never understood economics so it's no surprise that they confuse GDP with true growth.
On December 31 2011 03:27 sekritzzz wrote: I don't really want to elaborate too much because the EU problem takes too long to explain and too complicated for non-finance/economics people.
No one understand economics, it's not just in random threads on team liquid that people argue about it, at the highest levels there are fundamentally different philosophies being argued over. Within philosophies there are arguments over what to do to solve even very basic problems.
"The will of the Swedish chemist Alfred Nobel, the inventor of dynamite, established the prizes in 1895. The prizes in Physics, Chemistry, Physiology or Medicine, Literature, and Peace were first awarded in 1901."
About 75 years later in 1968 sweden's central bank invented the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It's usually called the Nobel Prize for Economics, but I believe that is a very underhand way of perpetuating a very damaging lie. Namely that Economics is a science.
On December 31 2011 05:25 Dapper_Cad wrote: "The will of the Swedish chemist Alfred Nobel, the inventor of dynamite, established the prizes in 1895. The prizes in Physics, Chemistry, Physiology or Medicine, Literature, and Peace were first awarded in 1901."
About 75 years later in 1968 sweden's central bank invented the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It's usually called the Nobel Prize for Economics, but I believe that is a very underhand way of perpetuating a very damaging lie. Namely that Economics is a science.
It is a science. You form a hypothesis about the world, collect data, test your hypothesis (preferably multiple times), and draw conclusions. Your odd elitism can't change that.
You can't test an Economic hypothesis because you can't invent an Economic experiment. You can study history and attempt to draw conclusions but they can always be refuted. That's why a lot of the Economic arguments you hear today are hundreds of years old.
This isn't elitism, this is argument.
On December 31 2011 03:27 sekritzzz wrote: I don't really want to elaborate too much because the EU problem takes too long to explain and too complicated for non-finance/economics people.
I really hope someone brought up or will bring up Iceland, I don't have much time to explain it all, then again there's not too much to say about it. They are starting to financially grow again, after completely kicking all those corrupt banks, taking the huge interest hit (I think for America were to do it, it'd rise up to around 35-40%) and just going through the growing pains of recovery. To me, you have private banks (public banking, especially in Germany, was truly inspiring when I first learned about it.) that have private interests, just wanting it to always seem like the world will end without them, that they've always been there "for" us.
What I'm reading in the OP is "please don't use Europe's economic state as evidence against Europe's economic policies." The suggestion that their spending had nothing at all to do with their massive debt is just laughable. Did other things affect European debt? Of course. But they merely exacerbated the problem that was already in existence.
They do the same exact routine in the US. All the democrats say "the real problem is MILITARY spending!" And all the republicans say "the real problem is SOCIAL spending and waste!" Meanwhile the debt continues to skyrocket and the only people we choose to blame are the rich on wall street.
I'm starting to think more and more that democracy is simply an unworkable system.
PS: Also OP, no republican says that the solution to the recession is cutting spending. They say that the solution to unsustainable public debt is cutting spending. It's a long term, rather than a short term, solution.
On December 31 2011 06:07 liberal wrote: I'm starting to think more and more that democracy is simply an unworkable system.
I know what you mean. I think you need an organised, educated public who aren't living in fear for their economic and personal safety for it to function at it's best.
On December 31 2011 06:07 liberal wrote: What I'm reading in the OP is "please don't use Europe's economic state as evidence against Europe's economic policies." The suggestion that their spending had nothing at all to do with their massive debt is just laughable. Did other things affect European debt? Of course. But they merely exacerbated the problem that was already in existence.
They do the same exact routine in the US. All the democrats say "the real problem is MILITARY spending!" And all the republicans say "the real problem is SOCIAL spending and waste!" Meanwhile the debt continues to skyrocket and the only people we choose to blame are the rich on wall street.
I'm starting to think more and more that democracy is simply an unworkable system.
PS: Also OP, no republican says that the solution to the recession is cutting spending. They say that the solution to unsustainable public debt is cutting spending. It's a long term, rather than a short term, solution.
Untill YOU stop blaming more and more on the politicians, the number of laws will increase. It is basic math: The more they think they have to take on their backs, the more they are covering their ends...
It has been stated numerous times in this thread that the crisis in Greece = public debt, Spain = Unemployment and Italy = debt, but fearmongering mostly.
Of course the politicians are a part of the problem, but that is because some people makes them targets for every little boohoo that might or might not have anything to do with them and the government desperately tries to cover those with detailed completely unenforceable and unfair regulations.
Drawing parrallels between US politics and any mainland european nations politics is very dodgy since the systems are fundamentally different.
Please keep your conspiracy theories calm unless you can substantiate or can communicate in a non-judgemental way!
On December 31 2011 06:07 liberal wrote: What I'm reading in the OP is "please don't use Europe's economic state as evidence against Europe's economic policies." The suggestion that their spending had nothing at all to do with their massive debt is just laughable. Did other things affect European debt? Of course. But they merely exacerbated the problem that was already in existence.
They do the same exact routine in the US. All the democrats say "the real problem is MILITARY spending!" And all the republicans say "the real problem is SOCIAL spending and waste!" Meanwhile the debt continues to skyrocket and the only people we choose to blame are the rich on wall street.
I'm starting to think more and more that democracy is simply an unworkable system.
PS: Also OP, no republican says that the solution to the recession is cutting spending. They say that the solution to unsustainable public debt is cutting spending. It's a long term, rather than a short term, solution.
I think you have to keep in mind the bigger picture here. In 2008, we saw the breakdown of a global financial system where all developed countries and their citizens had been financing everything by a bottomless pit of debt. Before the bubble burst, this made good sense to most people because economy was speculation, and as long as the numbers added up, everything was fine. They had been living beyond their means, in other words, for resources that the financial systems bestowed upon them, allowing them access to riches from around the world. While the economy was looking good, the budget for most countries were fine, but once the global financial crisis hit, suddenly the countries had to adjust. Obviously, no country should spend more than they can afford, and with the economical crisis countries have had to face this fact. This has nothing to do with social spending; what you spend your money on is simply a matter of priority. I don't think anyone will oppose getting rid of "waste", but how you solve the concrete problems of maintaining a welfare society that you can no longer afford is a very different matter. For instance, the former Danish government decided to cut down on a lot of activities, and it turned out that many of this created more value than expense when you looked at the bigger picture. They also used centralization as a way to save resources and cut costs, but it turned out that the centralization hardly saved any money and all it did was deteorate the systems that were already in place. For instance, the Danish social psychiatric sector, which offers services to mentally ill has had many problems and had decreased greatly in quality due to centralization.
Mind you, most European countries aren't hit harder by the economic crisis than the rest of the world. The reason that things are looking gloomy for Europe is because of rising unemployment and a rising elderly demographic. If you can run you economy on imaginary values, it's not problem to have businesses that flourish, keep peopel employed and generate wealth for a well-established society. However, once you remove those imaginary values and are limited to your actual resources, all of a sudden, you have to adjust. The richest countries have seen a lot of their low-skilled labour outsourced to countries where people are poorer and are willing to work for less. This means that these countries now produce a lot less and have to have other industries that make up for it and create value and jobs. Many European countries seem to be facing this problem and desperately need to find a way to create value for the future through knowledge-based industries or accept a drastic decline in standards of living. We have been perfectly happy to let China produce many of our goods, but now China is quickly becoming a well-established country, which allows the Chinese to get their share of the resources, causing a redistribution that value that is created on a global scale. This is a long-term problem, and the short-term problems that shape the agenda now are rather based on unique cases. Italy has been run by a president who seemingly had no care for its well-being, slowly allowing its infrastructure to deteriorate and let corruption it away. Greece, from the sound of it, have fallen victim to a very egocentric culture of tax-evasion and corruption which the system can no longer bear under current conditions. In Spain, we see how other countries may fare if the no longer have sufficient industries to make up for the loss of production through low-skilled labour. The current Danish government hopes that in the future we can create jobs by being experts in the fields of sustainable energy, welfare technology and ecology, but I doubt that's enough. In the end, with the world's population increasing and its resources slowly being redistributed, the richest countries can only hope to maintain their standard of living by political force or through the resources created by technological advance. Otherwise, the natural development would be that Europeans inevitably would have to accept to work more for less money, with access to less goods. If people accept to work of half of what the do today they will be poorer, but it suddenly becomes viable to produce a lot of things again. Right now, a lot of a people are unemployed and are unable to add value to the society. There are a lot of thing that they could be doing, but that they would rather let people do cheaper elsewhere (working harder and under worse conditions than Spanish workers would). The situation remains this way because things are not bad enough that such changes are forced yet.
US spending won't just lead to a Europe like crisis, it will be much, much worse. There's not going to be anyone to bail out the US because they've been constantly bailing it out through their lending.
On December 31 2011 06:07 liberal wrote: What I'm reading in the OP is "please don't use Europe's economic state as evidence against Europe's economic policies." The suggestion that their spending had nothing at all to do with their massive debt is just laughable. Did other things affect European debt? Of course. But they merely exacerbated the problem that was already in existence.
They do the same exact routine in the US. All the democrats say "the real problem is MILITARY spending!" And all the republicans say "the real problem is SOCIAL spending and waste!" Meanwhile the debt continues to skyrocket and the only people we choose to blame are the rich on wall street.
I'm starting to think more and more that democracy is simply an unworkable system.
PS: Also OP, no republican says that the solution to the recession is cutting spending. They say that the solution to unsustainable public debt is cutting spending. It's a long term, rather than a short term, solution.
Democracy has never worked and the founding fathers knew it. That's why the US is a constitutional limited democracy and not a democracy. It's unfortunate but the philosophy that gave rise to the constitution is now all but dead and all a president has to do to violate it is stack the Supreme Court with his lackeys. Gone are the days when we'll hear anything like this come out of a president's mouth:
"I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that, though the people support the government, the government should not support the people."
On December 30 2011 20:49 mdb wrote: I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks - they dont invest the money in smth that will return profit, but instead buy iphones and such stuff - people cant return the money to the banks - banks bankrupt
is this correct?
No, you're wrong.
Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out.
Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming.
Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people.
I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
You don't know how shit works in Greece so don't open your big fucking mouth about it. How about you not insult an entire country of people because what a few fucking politicians did, which was at the direction of major corporations such as the IMF and Goldman Sachs. Not to mention what REALLY destroyed Greece's economy was the euro. They should have never been a part of the EU to begin with, not because of their debt, but because a tourist economy like greece's needs the option to be able to devalue their currency when they need to, which is impossible with the euro. And the oh so great German government could have saved this entire debacle years ago by lending the money they needed back then, instead of escalating it and making the problem literally thousands of times worse. What's the point of having a European Union that will be on the verge of collapsing if one country goes defunct, when the other countries in the union have a chance to stop it but don't.
When Spain and Italy's economy implodes for the exact same reason it will probably be Greece's fault too amirite?
On December 31 2011 06:07 liberal wrote: What I'm reading in the OP is "please don't use Europe's economic state as evidence against Europe's economic policies." The suggestion that their spending had nothing at all to do with their massive debt is just laughable. Did other things affect European debt? Of course. But they merely exacerbated the problem that was already in existence.
They do the same exact routine in the US. All the democrats say "the real problem is MILITARY spending!" And all the republicans say "the real problem is SOCIAL spending and waste!" Meanwhile the debt continues to skyrocket and the only people we choose to blame are the rich on wall street.
I'm starting to think more and more that democracy is simply an unworkable system.
PS: Also OP, no republican says that the solution to the recession is cutting spending. They say that the solution to unsustainable public debt is cutting spending. It's a long term, rather than a short term, solution.
Spending had nothing to do with their crisis, in all cases except Greece.
For Greece governement spending was 100% the problem.
For countries like Italy and Spain, the main problem is high debt held by the private sector and people, which led to a recession, and huge imbalances (high wages making their export uncompetitive).
lol the best part about economics is that people who study economics have the least clue about how real economics works and how it affects markets, and why things happen
all i can say is that the bor market is pricing in massive funding pressures and a cut to 0.75% right now, and it's a lot more interesting to actually see what is going on in the market than speculating from the outside
On December 31 2011 05:25 Dapper_Cad wrote: "The will of the Swedish chemist Alfred Nobel, the inventor of dynamite, established the prizes in 1895. The prizes in Physics, Chemistry, Physiology or Medicine, Literature, and Peace were first awarded in 1901."
About 75 years later in 1968 sweden's central bank invented the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It's usually called the Nobel Prize for Economics, but I believe that is a very underhand way of perpetuating a very damaging lie. Namely that Economics is a science.
It is a science. You form a hypothesis about the world, collect data, test your hypothesis (preferably multiple times), and draw conclusions. Your odd elitism can't change that.
It's not accurate to call it a science, anymore than calling sociology a science would be.
Forming a hypothesis about the world, collecting data, testing hypotheses are elements of the scientific method, but are not all that is necessary to make something a science, otherwise history would just as easily be a science.
Instead, what is necessary is, in addition to what you mention, the assumed fact that what is being studied and modelled is constrained by an underlying deterministic system bound by a small set of physical laws, i.e. chemistry, physics, etc. In other words, discretely modellable by a finite formal system. (Note that mathematics isn't a science, because of Godel's incompleteness theorem)
Economics pretends to be this, and the pretension is damaging. Economics is a study of human behaviour, but humans do not behave in strictly deterministic ways, at least not in ways we are even close to understanding.
Calling economics a science however innoculates it from criticism that it describes something that is neither orderly nor deterministic, implicating the agency and importance of individuals (especially particular individuals, whoever they might be) within the system. The reasons that this is problematic are pretty obvious and shouldn't need to be stated here.
yes, yes, quantum mechanics, not deterministic. But if you understand enough to be able to raise that objection you also likely operate under the assumption that there are hidden variables, and you realize that it's a qualitatively different situation than modelling human beings, which are a confluence of many many different levels of complexity and physical systems. Anyways off topic.
On December 31 2011 05:48 Wombatsavior wrote: I really hope someone brought up or will bring up Iceland, I don't have much time to explain it all, then again there's not too much to say about it. They are starting to financially grow again, after completely kicking all those corrupt banks, taking the huge interest hit (I think for America were to do it, it'd rise up to around 35-40%) and just going through the growing pains of recovery. To me, you have private banks (public banking, especially in Germany, was truly inspiring when I first learned about it.) that have private interests, just wanting it to always seem like the world will end without them, that they've always been there "for" us.
Oh yes Greece would like to do that, but it was not allowed to. The news about referendum if to accept the bailout (means "no" as the greeks want out of EU) was a bit of shock for the financial powers,but they acted very quickly. The next day another surprise- the all top military command and a score of officers were replaced in fear of coup d’etat (there is no any other possible explanation). There are some patriots among military that were ready to fight for the country sovereignty . Greeks do not have control over their own country now, they cannot decide what to do. They decision has impact on all Europe.
There is also a quite famous documentary "Debtocracy", a point of view on the situation from some greek people.
EPT
