Madmen in Authority

LauraW10

Rereading my post on the folly of the G20, it seems to me that I didn’t fully convey just how crazy the demand for fiscal austerity now now now really is.

Paul Krugman June 7th 2010

Why, then, are Very Serious People demanding immediate fiscal austerity?

The answer is, to reassure the markets — because the markets supposedly won’t believe in the willingness of governments to engage in long-run fiscal reform unless they inflict pointless pain right now. To repeat: the whole argument rests on the presumption that markets will turn on us unless we demonstrate a willingness to suffer, even though that suffering serves no purpose.


And the basis for this belief that this is what markets demand is … well, actually there’s no sign that markets are demanding any such thing. There’s Greece — but the Greek situation is very different from that of the US or the UK. And at the moment everyone except the overvalued euro-periphery nations is able to borrow at very low interest rates.


So wise policy, as defined by the G20 and like-minded others, consists of destroying economic recovery in order to satisfy hypothetical irrational demands from the markets — demands that economies suffer pointless pain to show their determination, demands that markets aren’t actually making, but which serious people, in their wisdom, believe that the markets will make one of these days.
Awesome.

http://krugman.blogs.nytimes.com/

Double Dip here we come and we can lay the blame firmly on the coalition government who don't have any bottle.

Kohoutek

LauraW10 wrote: »

http://krugman.blogs.nytimes.com/

Double Dip here we come and we can lay the blame firmly on the coalition government who don't have any bottle.

Who do you think is demanding that debts and deficits be dealt with by austerity? Paul Krugman is an idiot or being disingenuous if he thinks that it's government leaders that are driving this. It's the creditors of debts that always demand the austerity solution....

LauraW10

Kohoutek wrote: »

Paul Krugman is an idiot

But he's a noble prize winning "idiot" - what's the coalition's credentials?

LauraW10

Kohoutek wrote: »

It's the creditors of debts that always demand the austerity solution....

No they are not. To quote Paul Krugman back at you

well, actually there’s no sign that markets are demanding any such thing. There’s Greece — but the Greek situation is very different from that of the US or the UK. And at the moment everyone except the overvalued euro-periphery nations is able to borrow at very low interest rates. Paul Krugman

This is what the Tories want - not what the markets want - don't be fooled.

StevieJ

LauraW10 wrote: »

But he's a noble prize winning "idiot" - what's the coalition's credentials?

They have Georgie Porgie, what is your problem?

HAMISH_MCTAVISH

http://krugman.blogs.nytimes.com/

The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity.

But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.


But what about Greece and all that?

Look, right now sovereign debt problems are taking place in countries with a very specific problem: they’re part of the euro zone, AND they’re badly overvalued thanks to huge capital inflows in the good years; as a result they’re facing years of grinding deflation.

Countries not in that situation are not facing any pressure from the markets for immediate cuts; as of this morning, 10-year bonds were yielding 3.51 in Britain, 3.21 in the US, 1.27 in Japan.

Yet the conventional wisdom now is that these countries must nonetheless cut — not because the markets are currently demanding it, not because it will make any noticeable difference to their long-run fiscal prospects, but because we think that the markets might demand it (even though they shouldn’t) sometime in the future.

Utter folly posing as wisdom. Incredible.

Krugman makes sense.....

LauraW10

StevieJ wrote: »

They have Georgie Porgie, what is your problem?

My problem is that we shouldn't just believe the rubbish that the coalition tell us - there are choices.

Kohoutek

LauraW10 wrote: »

Well you tell me ?(or Paul Krugman) that's the point .

I just told you, read my first post.

Take Greece as an example. What would be the best solution for the Greek people regarding its debts? Socialise the losses and drive the country into depression (the current solution), or restructure the debt and put the burden on its creditors, i.e. French and German banks? Greece has been in default on average for 50% of its history since independence - doesn't seem to have done any long term damage. Attempting to pay off debt by causing a depression and privatising all the country's infrastructure on the other hand...

kabayiri

StevieJ wrote: »

They have Georgie Porgie, what is your problem?

Indeed.
Let the lad have a go, we let Broon have a go at being PM after all.

LauraW10

HAMISH_MCTAVISH wrote: »

Krugman makes sense.....

Apparently, I'm you

or I'm Chucky

or Dithering Dad....:D

or Uncle Tom Cobbley ....

Or just generally a sock puppet because I don't agree with Generali and Wookster

Kohoutek

LauraW10 wrote: »

My problem is that we shouldn't just believe the rubbish that the coalition tell us - there are choices.

What's your choice? Labour's was the same as the Conservatives, except slightly delayed.