The Austerity Disaster

HAMISH_MCTAVISH

Thrugelmir wrote: »

Anybody with a degree of financial sense would know that that this isn't achievable.

I agree.....

Which just goes to show how clueless TPTB really are.

“Those who argue that dealing with our deficit and promoting growth are somehow alternatives are wrong. You cannot put off the first in order to promote the second.”
-- David Cameron

“I firmly believe, that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.”
--Jean-Claude Trichet

vivatifosi

Half a century ago, any economist — or for that matter any undergraduate who had read Paul Samuelson’s textbook “Economics” — could have told you that austerity in the face of depression was a very bad idea. (from Hamish's article)

Half a century ago, Samuelson's textbook followed a largely Keynesian approach to economics. I think both Samuelson and Keynes would have been flummoxed by the concept of managing to build up such huge deficits during such a long run of prosperity.

michaels

And yet the result of an unsustainable public debt trajectory are staring us in the face every day and yet still many are suggesting we can spend our way out of the problem...take the blinkers off guys. The risk that we will lose the confidence of the markets and face IMF imposed crash diet austerity remains very real. The markets may be 'wrong' when they push up interest rates perceiving a higher risk of default but for a country that spends more than it earns there is no other game in town.

The_White_Horse

everyone wants to blame bankers, but the real issue for Europe is its socialist lefty agenda. massive benefits for the bone idle, huge public sectors, massive pensions. it is completely unsustainable. however, the lefty will never back down. look at the union scum holding London to ransom yet again over bribes for working during the olympics. why do they do it, because they get what they want every time.

until the lefties realise their dreams are unworkable, there is no hope.

Mr_Mumble

HAMISH_MCTAVISH wrote: »

Just goes to show I have no blind allegiance to ideology, but can consider a good idea from wherever it comes from in the political or economic spectrum.

It isn't an ideological question but a factual one. As Warner points out Krugman doesn't even realise the "Great Depression" was not that in the UK - if you want to look at austerity look at 1920 or the late 1940s.

Hmmmm, Nobel prize winning economist or Moneyweek journalist?

An economics professor whose ideas are featured in Moneyweek - not the journalist. Also, it's kinda ridiculous trying to pull an argumentum ad verecundiam with Krugman the Enron adviser.

vivatifosi wrote: »

Half a century ago, any economist — or for that matter any undergraduate who had read Paul Samuelson’s textbook “Economics” — could have told you that austerity in the face of depression was a very bad idea. (from Hamish's article)

Half a century ago, Samuelson's textbook followed a largely Keynesian approach to economics. I think both Samuelson and Keynes would have been flummoxed by the concept of managing to build up such huge deficits during such a long run of prosperity.

To get an idea of just how wrong Samuelson - and Keynesian thinking in general - is on austerity read this (for Hamish: that is also written by someone who has a PhD in Economics and is not a Moneyweek journalist!).

GDB2222

All this austerity is very bad for the economy - the Chinese economy, I mean. It's also bad for employment - Chinese employment. Well, you get the picture.

vivatifosi

Mr_Mumble wrote: »

To get an idea of just how wrong Samuelson - and Keynesian thinking in general - is on austerity read this (for Hamish: that is also written by someone who has a PhD in Economics and is not a Moneyweek journalist!).

To be fair Keynesianism has its place, but it is context specific and this isn't the right context. A bit like prescribing polio medicine for leprosy then wondering why your leg needs to be cut off.

IronWolf

Why is everything always the governments fault? Have people not realised yet that there are some things the government cant do anything about, and a global depression is one of them.

homelessskilledworker

The_White_Horse wrote: »

everyone wants to blame bankers, but the real issue for Europe is its socialist lefty agenda. massive benefits for the bone idle, huge public sectors, massive pensions. it is completely unsustainable. however, the lefty will never back down. look at the union scum holding London to ransom yet again over bribes for working during the olympics. why do they do it, because they get what they want every time.

until the lefties realise their dreams are unworkable, there is no hope.

Wow!!

Pretty brutal stuff, and I am a big critic of the way the welfare state has gone. But I am also aware that there are people at the bottom of the food chain that need some tough love not unforgiving hate.

I do blame the financial centre/ Bankers in the UK today, for some reason ALL of our political parties have bent over backwards to give them whatever they want, they are still doing it now while the poor suffer.

I partly agree with Hamish, but what I would support is a huge infastructure project to bring the UK up and beyond the 21st century, the people in the UK that you now so loathe could maybe find their pride again with a spade in hand.

Let finance bog off to the far east or wherever it wants to go, we need real hope and real jobs for real people.

Generali

Hmm. Austerity, UK style. Nominal UK Government spending (incl. local and devolved Governments):

2007: £544,000,000,000
2008: £575,700,000,000
2009: £621,500,000,000
2010: £660,600,000,000
2011: £683,400,000,000*
2012: £703,400,000,000*
2013: £722,200,000,000*

*Estimated.

Dr K also ignores (rather usefully given his argument) the fact that the UK had 10 years of recession or below par growth from 1921 - 31 due enforced deflation to enable a return to and continuance of the Gold Standard at pre-WW1 gold prices. The subsequent depression and return to growth has to be seen in that historical context.

Also while it is reasonable to argue that a set of policies made the 1930s Great Depression worse, it doesn't follow that following a specifically different set of policies in the 2010s Great Recession will produce a better outcome. To stretch vivatifosi's metaphor somewhat it's rather like arguing that because the polio medicine didn't work for the last leper, Lemsip is certain to work for the next one.