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  1. Havakasha is offline
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    04-25-2012, 09:32 PM #61
    Fareed Zakaria

    European concerns about deficits and debt are valid. But it was a mistake to use these medium- and long-term problems as a reason to make massive spending cuts in the middle of the worst economic slowdown in 80 years. Government policy at its best is countercyclical: You cut in boom times and spend during troughs. Europe is doing the opposite, and the effect is to worsen budget deficits. In most European countries, spending cuts have led to slower growth, lower tax revenue and thus bigger deficits. Spain and Britain are running deficits well in excess of earlier projections.

  2. Havakasha is offline
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    04-25-2012, 09:33 PM #62
    http://www.forbes.com/sites/rickunga...nto-recession/


    4/25/2012 @ 2:09PM |455 views
    British Economic Austerity Bombs As England Double Dips Into Recession
    + Comment now


    David Cameron is a British politician, Leader of the Conservative Party (Photo credit: Wikipedia)

    Over the past year, I’ve watched with wonder as American conservatives have grown increasingly comfortable with their narrative deriding our European friends as an oppressed people living in a socialist hellhole.

    To hear GOP leaders tell the story, Europe’s only true remaining value is to serve as a warning to good Americans everywhere that a life of croissant, kippers, long summer vacations and government run healthcare will surely turn us all into communists. They warn that continuing to allow our socialist president to take us down the European path will lead to us to become the American collectivist society.

    There is, however, one thing about Europe that the GOP has found very much to their liking – European style economic austerity.

    Since the moment English Prime Minister David Cameron instituted his government austerity program in the belief that taking huge sums of money out of the British economy would get England back on more solid financial footing, American conservative leaders have been fawning all over their Conservative Party counterparts—if not the actual nation that the British Conservatives lead.

    Today, the report card is in and the results are clear—the GOP has been backing the wrong horse…again.

    The British Office for National Statistics confirms that the country’s GDP fell 0.2 percent in the first quarter of this year after contracting by 0.3 percent during the last quarter of 2011. These two, consecutive contractions make it official- England has doubled-dipped itself into another recession.

  3. Havakasha is offline
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    04-25-2012, 09:38 PM #63
    Austerity drives Greece, Ireland, Portugal, Spain and now Britain into recession. Next?
    byMeteor Blades

    How austerity policies and stimulus policies affect the GDP
    The financial experts had expected the U.K. to eke out a teensy bit of economic growth in 2012. But the Office for National Statistics reported Wednesday that the British economy contracted for the second consecutive quarter, registering a 0.2 percent decline in annualized Gross Domestic Product for the first quarter of the year on top of the 0.3 percent GDP decline in the fourth quarter of 2011. The killers came from the biggest drop in construction in three years and in industrial production.
    They call what's happening a "technical recession" as a result of the back-to-back two-quarter loss, just as they call what's happening in Spain a "technical recession." Technically, it's weasel wording. Britain, Spain, Portugal, Greece and Ireland are all now in recession. The Netherlands and France have not yet succumbed, but weak economic data have roiled their governments, contributing to the collapse of the Dutch parliamentary coalition and French President Nicolas Sarkozy's loss in the first round of voting over the weekend.

    Behind it all is European austerity policy, the very stuff Republicans in the United States have been promoting for the past three-plus years. If they'd won the election in 2008 and imposed their proposals, you could add the U.S. to those nations who are now seeing so much economic damage. Indeed, it is unlikely the U.S. would have emerged from recession as it "technically" did in mid-2009. The policies the GOP objected to, particularly the economic stimulus package put forth and barely passed by Congress shortly after Barack Obama took the oath as president, have made a big difference even though they were not nearly as vigorous as truly needed to deal with the depth of the Great Recession. The GDP chart above shows the difference.

    Now, as Joe Stiglitz makes clear in an excellent interview in The European, GDP is not the best measurement of people's well-being since it keeps going up while workers keep getting bit in the behind. (There's a discussion in bobswern's diary.) But there is still a big difference in what's happened in the United States and Europe over the past few years.

    As my colleague Laurence Lewis wrote this past weekend, "Austerity is a disaster." Just as its tentacles have spread across Europe, the backlash against it is spreading as well. Whether (and how fast) potential replacement governments in France and the Netherlands and perhaps Britain itself can reverse the slide is anybody's guess. But it's increasingly clear that the people in those countries, and in Spain where youth unemployment is a stunning 50 percent, are fed up with the imposition of austerity on everyone but the people who brought on the financial crises in the first place.

    (Continue reading below the fold)

    http://www.dailykos.com/

  4. Havakasha is offline
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    04-27-2012, 08:55 AM #64
    http://www.nytimes.com/2012/04/27/op...=2&ref=opinion

    OP-ED COLUMNIST
    Death of a Fairy Tale
    By PAUL KRUGMAN
    Published: April 26, 2012

    This was the month the confidence fairy died.

    For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

    Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.

    The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.

  5. Havakasha is offline
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    05-02-2012, 09:14 AM #65
    http://www.nytimes.com/2012/04/27/op...tale.html?_r=1



    Death of a Fairy Tale
    By PAUL KRUGMAN
    Published: April 26, 2012


    This was the month the confidence fairy died.

    For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

    Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.

    The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.

    So, about that doctrine: appeals to the wonders of confidence are something Herbert Hoover would have found completely familiar — and faith in the confidence fairy has worked out about as well for modern Europe as it did for Hoover’s America. All around Europe’s periphery, from Spain to Latvia, austerity policies have produced Depression-level slumps and Depression-level unemployment; the confidence fairy is nowhere to be seen, not even in Britain, whose turn to austerity two years ago was greeted with loud hosannas by policy elites on both sides of the Atlantic.

    None of this should come as news, since the failure of austerity policies to deliver as promised has long been obvious. Yet European leaders spent years in denial, insisting that their policies would start working any day now, and celebrating supposed triumphs on the flimsiest of evidence. Notably, the long-suffering (literally) Irish have been hailed as a success story not once but twice, in early 2010 and again in the fall of 2011. Each time the supposed success turned out to be a mirage; three years into its austerity program, Ireland has yet to show any sign of real recovery from a slump that has driven the unemployment rate to almost 15 percent.

  6. Havakasha is offline
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    05-08-2012, 09:03 AM #66
    http://www.washingtonpost.com/opinio...y.html?hpid=z2



    Eugene Robinson
    Opinion Writer
    Austerity as a bridge to nowhere
    By Eugene Robinson, Published: May 7

    Economic austerity is a dangerous, self-defeating intellectual fad. Perhaps I should say that’s what it was, given Sunday’s election results in Europe. Perhaps I should also say good riddance.

    Voters in France, Greece and even Germany — a hotbed of the austerity cult — told their political leaders, in no uncertain terms, that boosting economic growth is more important than cutting government spending. Here in the United States, I hope that Democrats, at least, were paying attention; I fear that the addled ideologues who control the Republican Party will never get the message.
    On Sunday, French voters elected Socialist Party candidate Francois Hollande as president, ousting center-right incumbent Nicolas Sarkozy in what amounted to a referendum on Sarkozy’s embrace of austerity.

    Sarkozy and German Chancellor Angela Merkel agreed on a common policy of budget cuts and partial “reform” — a euphemism for “dismantling” — of the welfare state. This, they decided, was the way to return Europe to prosperity and save the European Union’s common currency, the euro, from collapse.

    But on Sunday, even Merkel got a message from voters: Her party was punished in local elections in the northern German state of Schleswig-Holstein, where it appeared that a center-left, anti-austerity coalition would end up in control.

    Also on Sunday, voters in Greece tried their best to say no to austerity. For them, sadly, it’s probably too late. The fiscal and debt crises there were so acute that the Greeks, from the start, have had only painful choices.

    One obviously bad option would have been to withdraw from the euro, default on a mountain of debt and slowly climb back from a deep economic depression. Officials in Athens decided to go with a worse option — stay with the euro, impose draconian austerity, muzzle anyone who utters the word “default” — that also sent the country into a deep economic depression with no apparent way out.

    Yes, one lesson from the Greek experience is that there are limits. There is a point at which deficits become too large, debt too crushing and social spending too generous. The lifestyle a nation enjoys must bear some relationship to what that nation produces.

    But another clear lesson is that austerity has to be seen as a means, not an end. The goal is to recover from the massive blow inflicted by the global financial meltdown and return to prosperity. This may involve a measure of austerity — but definitely requires considerable economic growth, which should be policymakers’ first priority.

    The reason is simple: If you can get the economy growing again, all other aspects of the crisis become more manageable. Debt and deficits shrink as a percentage of national output. Unemployment declines, as does the need for social spending.

  7. SiriuslyLong is offline
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    05-13-2012, 11:41 AM #67
    It will certainly be interesting to watch the new Socialist France pay for the good life with money they don't have.

    Crisis threatens Europe's way of life

    By Karl Ritter, Associated Press | Associated Press – Tue, May 8, 2012

    Elections in France and Greece reflect the anger and disillusionment coming to the surface across Europe as a celebrated way of life that people have long enjoyed — and even taken for granted — comes under pressure in these times of crisis. Though the situation varies from north to south, Europe is undergoing profound change — from its sophisticated lifestyle to its cherished welfare benefits and a sense among many Europeans of being the world's elite.

    These are some of the ways you can see Europe grappling with change:

    — THE WELFARE STATE: Six-week paid vacations. Retirement in your early 60's. Generous benefits for the sick and unemployed. The cradle-to-grave welfare system that was a pillar of European life for decades is being scaled back from one austerity package to another. Retirement ages are being raised past 65 in many countries. The Swedish prime minister even toyed with the idea of making people work until 75. Europeans are not about to give up on their fabled social model, but they can expect a slimmed-down version in the future. "I don't think the social welfare system is being dismantled," says Rebecca Adler-Nissen, assistant professor at the University of Copenhagen's Center for European Politics. "It's more about what we can afford in the future."

    — LIFESTYLE: Bon-vivants or loafers? When it comes to work-life balance, Europeans either got it totally right or lost their minds completely, depending on whom you ask. But economic realities are now forcing the most stressed countries to question some deeply ingrained habits. Long lunches are on the wane across the continent. Spain is considering a change that takes aim at the habit of employees turning up for work and immediately going down to the closest coffee shop for a half-hour or more breakfast. Another sacred cow being targeted is the habit of making a long weekend out of it when a holiday falls on a Thursday, by taking off the Friday as well. In Ireland, the crisis has had an impact on legendary pub traditions. The Irish increasingly socialize at home, avoiding pubs where beer and other drink prices are several times higher than what's offered by the German discount supermarkets now proliferating in Ireland.

    — POLITICAL EXTREMES: The National Front in France. Golden Dawn in Greece. The Freedom Party of the Netherlands. The True Finns. Across Western Europe, and in parts of the East, the far-right is on the march. Europe has deep traditions of tolerance and pluralism with roots in the 18th century Enlightenment. But European history also offers the most extreme examples of racist nationalism. While outright Nazis are a tiny minority in Europe today, the economic crisis has fueled forces on the right opposed to immigrants and the very idea of European integration. On the other end of the spectrum, left-wing parties who see the European Union as a capitalist superstate suppressing the working classes have made gains in France, Spain, Greece and Denmark, among other countries.

    — EUROPE IN THE WORLD: The world still admires French art, Italian food and Spanish soccer. But in the global economy, sluggish Europe is looking less attractive when compared to fast-growing emerging economies such as China, India and Brazil. That's a blow to the ego of a continent accustomed to seeing itself as having a central place in history. The European Union's seemingly endless debt crisis has seriously damaged confidence in its common currency project. Bickering between nations has also tarnished Europe's self-image as a role model of how nations can come together to build peace and prosperity.

    — CULTURE AND ARTS: http://finance.yahoo.com/news/crisis...175243621.html

    Europe's pain is coming our way............... "Everyone" knows that ever increasing national debt is unsustainable

  8. SiriuslyLong is offline
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    05-15-2012, 03:41 PM #68
    That is..................... "everyone".

    Well, not Daily Kos....

    http://www.dailykos.com/story/2012/0...ostage-crisis-

    Daily Kos must think that ever increasing national debt is SUSTAINABLE. He called it, "a manufactured crisis" and appears to deride republicans for wanting to change this current tragectory: http://www.usdebtclock.org/

    Just another liberal trying to use the ultimate power of the government to enforce his ideology.

    Greece cannot figure out how to pay their debt. Here's Krugman's take on it. http://www.nytimes.com/2010/05/07/op...gman.html?_r=1

    Funny that he suggests that the EU should inflate their way out of it when Keynes himself said this about inflationism.

    "Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. [1]"

    http://en.wikipedia.org/wiki/Inflationism

    Interesting that inflation is a one way street - only inflate, never deflate

  9. Havakasha is offline
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    05-15-2012, 07:33 PM #69
    Remember this prediction?

    Soros on Austerity in Europe

    http://www.marketwatch.com/story/sor...me_latest_news

    Jan. 25, 2012, 9:51 a.m. EST
    Soros: Austerity fomenting Europe tensions
    Germans have been traumatized by inflation, billionaire says
    By Polya Lesova, MarketWatch



    DAVOS, Switzerland (MarketWatch) — Billionaire investor George Soros warned on Wednesday that the austerity Germany wants to impose on other euro-zone nations “will push Europe into a deflationary debt spiral.”

    Germans “have been traumatized by inflation and they don’t understand the threat that deflation can cause,” Soros told reporters at the annual meeting of the World Economic Forum in Davos. “There’s a shift in German thinking recognizing this isn’t working, but we’re quite far yet from abandoning this emphasis on inflation as the only threat to stability.”


    The euro zone’s sovereign-debt crisis is a major topic this year, with German Chancellor Angela Merkel due to give the opening address this evening and European Central Bank President Mario Draghi set to speak later in the week.

    Investors are closely watching talks between debt-laden Greece and private-sector creditors in which the two sides are trying to agree on a writedown of Greek debt that will be voluntary.

    “The big issue is how does the euro cope with the danger of a Greek default,” Soros said. “Because that is something that is looming — it may or may not be avoided.”

    Soros, an outspoken billionaire and philanthropist, gave a speech on the euro crisis and then took questions from reporters on a wide range of subjects, including China, the U.S., Russia, the Swiss franc and oil prices.

    Soros, who has written a new book on financial turmoil in Europe and the U.S., said that measures taken by the European Central Bank in December have relieved the liquidity problems of European banks, but “they did not cure the financing disadvantage from which the highly indebted member states suffer.”

    High risk premiums on Italian and Spanish bonds threaten the capital adequacy of banks and leave weaker euro-area nations “relegated to the status of third-world countries that became highly indebted in a foreign currency,” he said.


    Instead of the International Monetary Fund, “Germany is acting as the taskmaster imposing tough fiscal discipline,” Soros said. “This will generate both economic and political tensions that could destroy the European Union.”

    The billionaire investor said that fiscal discipline alone isn’t enough to solve the crisis and that the EU will have to provide stimulus to get out of the deflationary spiral. “This will require euro bonds in one guise or another,” he said.


    Click on link at top of page to read whole article.

  10. SiriuslyLong is offline
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    05-16-2012, 07:37 AM #70
    Perhaps Soros falls into this catagory?

    "By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some."

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