Excerpt: "More austerity serves no useful purpose; the truly irrational players here are the allegedly serious politicians and officials demanding ever more pain."
Portrait, New York Times columnist Paul Krugman, 06/15/09. (photo: Fred R. Conrad/NYT)
Europe's Austerity Madness
28 September 12
So much for complacency. Just a few days ago, the conventional wisdom was that Europe finally had things under control. The European Central Bank, by promising to buy the bonds of troubled governments if necessary, had soothed markets. All that debtor nations had to do, the story went, was agree to more and deeper austerity - the condition for central bank loans - and all would be well.
But the purveyors of conventional wisdom forgot that people were involved. Suddenly, Spain and Greece are being racked by strikes and huge demonstrations. The public in these countries is, in effect, saying that it has reached its limit: With unemployment at Great Depression levels and with erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far. And this means that there may not be a deal after all.
Much commentary suggests that the citizens of Spain and Greece are just delaying the inevitable, protesting against sacrifices that must, in fact, be made. But the truth is that the protesters are right. More austerity serves no useful purpose; the truly irrational players here are the allegedly serious politicians and officials demanding ever more pain.
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The Russians were left with no safety net when the Soviet Union collapsed. Ten years later they were enjoying more opportunities than us and now they are actually making fun of our loss of freedoms. As one ravda editorial put it, Americans are more concerned about Dancing with the Stars, than their loss of Freedoms, and growing dictatorship by the President.
The gov't can print money debt free which if used to employ people and invest in "productive" investments like rebuilding infrastructure do not cause either inflation or deflation. Japan has been running far bigger deficits than the US (in terms of debt to GDP ratios) and it has not effected the value of their currency or inflation one bit). So, yes, we should not be borrowing from private banks because the US gov't does not have to.
As for Russia, the "shock therapy" that they adopted (after it was promoted by the likes of Jeffrey Sachs and his Harvard boys) decimated their economy, drove millions into poverty (particularly the elderly whose life savings were wiped out) and has led to amongst other things, a drop in life expectancy (56 for men) to "third world" levels. The "opportunities" you speak about are due to only one thing...the price of oil which has fueled whatever growth the russian economy has experienced but this has nothing to do with the policies of the Russian gov't and (like here) has led to an ever increasing wealth gap in Russia so that the "opportunities" you refer to have not been reaped by the vast majority of russian.
Back in the US
Back in the US
Back in the USSR" - The Beatles
Have you seen the little Piggies... (Portugal, Ireland, Greece, Spain)
Have to think if there are any other Beatle tunes that would work.
Everything is closed it's like a ruin
Everyone you see is half asleep
And you're on your own, you're in the street
Good morning, good morning
After a while you start to smile, now you feel cool
Then you decide to take a walk by the old school
Nothing has changed, it's still the same
-- "Good Morning, Good Morning", The Beatles
How about "Nowhere Man"?
It's what I call a slippery slope in reverse: "If Stalin was bad, then, gee, lenin was bad. And if Lenin was bad then Marx was bad. And if Marx was bad then, well, it's all a hopeless scenario." I'm tired of the theme.
What I sense in your commentary is a "look before you leap" mentality regarding the subject. You fail to see the shades of gray in Soviet history.
(There are, beleive it or not.) Since Stalin was relatively unknown to other "comrades" at an early stage-that no one would expect the degree that Stalin would go as far as being nondiscriminati ng in his fuedal-like repression, the urgency intially wasn't there. Gradually Lenin began noticing Stalin's behavior and got to a point where he wanted Stalin removed as General Secretary of the Communist Party. Meanwhile, the likes of Lenin, Bucarin, etc. eventually launced the New Economic Policy where capitalism would be implemented but under socialist rule. After Lenin's death,the rest is unfortunate history, regarding Stalin, e.g., abolishing the NEP, and of course worse. So, yeah, I DO see a fundamental difference between Lenin and Stailn, as opposed to lumping a group all together in 100% lockstep. Truly, you know that Bolsheviks DID have varying personalities. While Lenin could be ruthless under emergencies, e.g., the Civl War, he, unlike Stalin, considered ideas. Stalin didn't, usually.
While I don't fanatically adhere to a particular ism, I find that some are potentially more an evolvement than say a 19th century, laissez faire relic. Marxism cannot/should not be akin to a religious dogma, since that precisely contradicts it. It's not 100% pure or correct. But it's got a means to directly deal with recent historical struggles, even now and I dare say in the future. Now, we have a more direct pattern again of laissez faire in the form of politically-dis abled Republicans and, sometimes, politically-spi neless Democrats. But they are each others' loyal, opposition.
What will it take to get it through the very thick neo-liberals brains that when a person is down and out, that first you may have to give him a fish. You give it to him so he can survive, and you give it to him because you have enough fish to eat. Then, when his hunger has abated you teach him to fish and then give him a pole to fish for himself. Instead the neo-liberals hand you a pole, tell you to pay for any fishing lessons, and that the pole can be paid for with the first fish you catch each day.
It is that simple. What the bleepity bleep is wrong with these banksters, no matter what country they are from.
Perhaps the fault lies with career oriented education? I don't know, but it seems any person with a solid rounded education would understand.
I like your phrase better!
Duh.
No one has to work ever again! we will simply print what ever money we need!
the point is not that since the gov't can print debt free money that no one now has to work. the point is that if the private sector cannot/will not employ people then the gov't can and does not have to worry about going broke. can the gov't "print" too much money? Sure. But this has nothing to do with whether or not the gov't is running a deficit or not. The question is how big (or small) a deficit is needed in order to ensure that there is enough money in circulation to put everyone to work and produce (and then consume) all of the goods and services necessary to provide for all of its people. Again, look at Japan. If a sovereign gov't cannot simply run deficits and print money then how do you explain that Japan has been doing it for years with no effect on either the value of its currency or inflation/defla tion?
correct, and we could discuss the reasons for this (which i would argue are due to the same decline in the rate of profit that the US is experiencing and which we will no doubt experience foer many years unless there is a far greater destruction of value such as the US experienced in the great depression).
However, my point, which you have not addressed, is that japanese deficit spending has not affected either the value of their currency or caused inflation which are the typical arguments for why the US gov't cannot afford current levels of gov't spending -- let alone an increase -- or a real "stimulus" (what we have done so far, i.e., throw virtually "free money" at the banks in the hopes they would invest in back into the productive economy was never the kind of "stimulus" that would do what it was supposed to do i.e., put people back to work and get the economy moving again)...if you are saying that japan's spending is the cause of its lack of growth you need to make this case (which i do not believe is a case that can be made since it simply isn't true...again, the cause of Japan's slow growth has to do with the low rate of profit rather than gov't spending).
John Maynard Keynes, The Economic Consequences of the Peace
Keynes actually got this one right
Assuming Keynes got this one right, the question then is what causes inflation right? Well, Keynes (since you used him as the example) did not say that deficit spending in and of itself causes inflation and in fact he argued that the gov't must run a deficit during economic downturns when the private sector will not or cannot invest. so, how does your example challenge in any way the notion that the US gov't can't go broke or that increasing gov't spending today to put people back to work, invest in productive investments (like infrastructure and or education) will cause the country to either go broke or cause inflation? There is simply no evidence in the real world for such a position (comparisons to greece or spain don't hold because they do not control their own currency since joining the euro; nor is Weimar Germany or other earlier examples since they are from a time when currency was pegged to the value of "precious metals".
The phrase is "continuing process of inflation" and as in many things inflation can be a tool for good or ill. When there has been a massive, sudden shift of assets from the Middle Class to the wealthy, then a short period of moderate inflation can minimize much of the impact of that robbery. That should be part of the solution for the US. In Spain the story was quite different. They were thrust into a wholesale national austerity program with no Euro support to help them get through even the initial shock. At the same time the bubble burst, inflation struck. This made a bad situation much worse, especially since at that time (as was the US) they were in a dropping labor market. Inflation will not help Spain, but it will help the US. Different situations, different tools.
sure good for those running the printing press - they get first and free use of the currency. Now for those idiots who saved -- stinks to be you.
never mind the mal-investments inflation encourages -- we can simply pass the bill on to the kids.
and in a super duper really cool idea since no one else will buy our debt we will buy our own.
Inflation is a tax - a silent thief that robs in favor of the counterfeiter (government) who prints the money diluting the monetary base with out adding any value.
2) yes, in fact we should be buying our own debt; that's the whole point of what a sovereign country that creates its own currency debt free can do...another example would be North Dakota which created its own state bank so that when they need to borrow they borrow from themselves and don't have to go to the wall street bond markets at all. Problem is we have no federal publicly owned central bank and thus create money by issuing it as debt to the private banks...that's what is insane about our system...the US gov't could issue money debt free but instead we issue it as debt owed (including interest) to the private banking system.
The US has recently issued trillions in new currency (more than $16 trillion "lent" to the private banks at almost 0% interest on top of the official bailout monies) and this has not affected the value of the dollar nor caused any inflation so what "dilusion" of the monetary base are you talking about? it's fiction and fantasy by those who are using economic principles of currency based on "precious metals" that simply don't apply in a "fiat" money system.
Dangoodbar, great question. The problem with leaving the euro for greece or spain would be in the short term...imagine having to retrofit all of the ATMs in the country e.g. What others have suggested is essentially creating a duel currency system that would give (in this case) greece and spain control over their own currency for domestic purposes (this way they could borrow from themselves in their own currency rather than borrowing in another currency i.e., the euro which they don't control and are thus subject to the dictates of the lenders terms). But, your basic point i think is correct...count ries that have been screwed by the international banking system can and should ultimately say FU to the lenders as Argentina did when it defaulted on its debt after which it enjoyed much higher growth rates and significantly lowered both unemployment and raised incomes. The problem for the euro countries is that if they default and leave the euro it would cause real short-term turmoil which is why the duel currency ideas make much more sense as a way out while at the same time minimizing the disruption and the pain this would cause the population as a whole.
In the present case, it was conveniently forgotten that the bail out was designed and approved by the neocons under Bush and that half the money was already spent by the time Obama got into office. But it's all Obama's fault.
This could even have been done with tax credits thus avoiding any outlay of money from the fed.
It would have restored the value behind the CDO mortgage backed securities that wall street got themselves into so much trouble with, and thus saved Wall Street while tremendously boosting the consumer driven economy, as the money would have gone directly to the mortgage holding banks while at the same time effectively doubling the amount of bailout money by lifting a enormous debt weight from all those homeowners who would then have had an equivalent amount of disposable funds to spend any way they chose.
...
Obama campaigned for the restoration of Glass-Steagall, and then put in place all the same people who'd destroyed it. He'd been made an insider.
...
It was the same pattern Obama followed in every department: Where he didn't leave Bush's people in charge he brought back Clinton's. Anything to be an insider.
http://antemedius.com/content/reminder-wall-streets-mercenaries-ride-donkeys
there were so many althernative that could and should have been implemented.
Bravo for talking about real world alternatives that would actually have made a difference to millions.
I think the thumbs down probably come from people very aware that suggestions like this make their candidate (on either side of the two party false choice paradigm) look less than appealing? From people more interested in their candidate "winning" even if it's at everyone elses expense.
Um... the bankers' bailout was engineered by Bush.
FYI: Pelosi's house,
Reids / Obama's senate put that bill on Bushes desk.
and President Obama has prosecuted zero banksters -
But Obama has presided over the biggest fascist take over of industry in Amreica's history
Clearly BOTH parties are robbing the little people blind --
And only the blind see fault in the other party but not their own.
Martinfre, in this one you make some good points but then completely undercut yourself by saying that "Obama has resided over the biggest fascist take over of industry in America's history."
I wish Obama had truly taken over the banks that put our economy in the toilet. And his "takeover" of the auto industry or AIG were in fact merely cash infusions since the stock the gov't purchased were nonvoting shares and so even here they did not demand the firing of the executives that got these companies into the mess they found themselves in.
so, i agree that both parties are "robbing the lttle people blind" but that is not due to any "fascist take over" of american industry but rather the state's role in advanced capitalist economies of protecting capital in general (and not individual capitalists).
What's happening to the people in Baltimore's Wall Street/Washingt on trashed economy makes Europe's austerity look like a government stimulus program.
THE REAL BALTIMORE: INVISIBLE HAND WAVES GOODBYE
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5601
In every debate that I can think of, this observation holds true. In creationism vs. evolution, denierism vs. global warming, fiscal austerity vs. Keynesian economics, what being Moslem means, the roots of terrorism, etc. there are many threads that interact, and none of the interactions are easy to analyze. But the right wing gives us simplistic answers and isn't capable of realizing how much other influences are acting in a given situation. For this reason we went into Iraq "with the army we had" and instead of being greeted with flowers and candy, we met IED's to the neocons' great surprise! The same type of thing applies to every other dispute that separates the two world views.
One of the problems here is that the range of perspectives or options has been defined by and is so constrained by both the "mainstream" media as well as academia such that people believe that the only alternatives are between regressive "free market" neo-liberals and Keynsians like Krugman. Sadly, this leaves out other perspectives and alternatives posed by, to name just two examples, either marxist or modern monetary theory (MMT) types.
So, for example, the debate should not simply be between those facing fiscal austerity and the Keynsians (who ultimately buy into the very same deficit/debt problem paradigm but simply say now is not the time to deal with it) and ignores those who challenge the entire paradigm and say that in fact deficits in and of themselves (as well as debt) don't matter but rather the question is how big or small they need to be and how the money gets used; but this is a very different discussion and one which we never engage in because of how the terms of the debate have been set for us.
That was the best darn description of calling the Right Wing reactionaries stupid that I have ever heard.
Bumper sticker thinking is exactly what he does and it drives me crazy.
"If you read the fine print, you gain an education. If you don't read the fine print, you gain experience."
In America, supporters and shills for both major political parties are determined to make sure you "gain experience", as the parties develop the fine print of austerity planning.
.....
“We’ve got to educate the American people at the same time we educate the President of the United States. The Republicans, Speaker Boehner or Majority Leader Cantor did not call for Social Security cuts in the budget deal. The President of the United States called for that,” [John Conyers (D-Mich)], who has served in the House since 1965, said. “My response to him is to mass thousands of people in front of the White House to protest this,” Conyers said strongly.
-- http://antemedius.com/content/it-not-obamas-fault
.....
.....
"what's happening in Greece is a dress rehearsal for what's going on in the United States"
US Gov. Spending Cuts: What's On The Table? You're On The Table
-- http://antemedius.com/content/us-gov-spending-cuts-whats-table
.....
[snip]
On July 07 [2011] Doyle McManus published an op-ed in the Los Angeles Times on Team Obama's victory plan, analyzing Senior White House Adviser (the "brains" behind the president's 2008 campaign) David Plouffe's comments at a breakfast Wednesday, July 6, 2011, organized by Bloomberg news.
McManus reported in that article that Team Obama sees four reasons they expect to win the 2012 election, and Plouffe's first reason seems unbelievably disconnected from reality, unless we assume it is Obama's intention to enable republican policies and turn the country over to the plutocrats:
First, Plouffe suggested, Obama has an opportunity to improve his standing among independent voters -- many of whom deserted the Democrats in the 2010 midterm election -- by working with Republicans toward bipartisan deficit-reducti on measures.
It Is Not Obama's Fault
-- http://antemedius.com/content/it-not-obamas-fault
-- http://seekingalpha.com/article/136589-dollar-s-purchasing-power-annihilated-the-chart-they-don-t-want-you-to-see
And don't forget to vote for either Romney or Obama by the way, because apparently the other guy would be worse.....
Albert, you are not very bright. The trouble with capitalism is that the BANKERS LOST OTHER PEOPLE MONEY that they stolen and gambling with.
If you do a google image search on the words "local currency" you'll currently get about 100 Million search results.
It appears there are a few people who aren't sitting around waiting for some slick politician to save their world.
The NYT sends me a daily summary of the news. As a non-subscriber, I am entitled to read only ten articles a month. I choose Krugman articles.
Today, and also in the past, the Krugman article did not appear on the summary.
Think about that.
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