Greek Referendum Poll

[Admiral Yi]

Nothing changed. Austerity doesn't work and never had.

It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.

[crazy canuck]

Nothing changed. Austerity doesn't work and never had.

It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.

Its not clear to me that your claim is accurate.  In many of those cases other factors contributed to economic well being and it may be the case that things worked out despite the austerity measures.

[Valmy]

Its not clear to me that your claim is accurate.  In many of those cases other factors contributed to economic well being and it may be the case that things worked out despite the austerity measures.

Well true, economics is complicated and it is hard to say for sure if a particular policy was responsible. You could say the same about every single economic policy ever implemented anywhere. That is what I was told by Republicans over and over again to explain why the economy was doing well despite Bill Clinton having disastrous economic policies.

[The Minsky Moment]

Nothing changed. Austerity doesn't work and never had.

It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.

It didn't work in these we usually talk about economic policies working - i.e. increasing output.  A simple plot shows an inverse relationship between harsher austerity and GDP.  You can argue that is too simplistic and crude - probably so, but it makes it hard to argue the contrary proposition.  The IMF has reversed itself with the benefit of hindsight on this issue.

[Admiral Yi]

It didn't work in these we usually talk about economic policies working - i.e. increasing output.  A simple plot shows an inverse relationship between harsher austerity and GDP.  You can argue that is too simplistic and crude - probably so, but it makes it hard to argue the contrary proposition.  The IMF has reversed itself with the benefit of hindsight on this issue.

Really Joan, I expected better from you.

Of course cutting deficits doesn't create growth.  That's not its purpose.  It's purpose is to rein in deficits, reduce the growth of debt, and maintain creditworthiness and the ability to borrow in the future.

If the only criteria we're going to use to judge the efficacy of an economic policy is whether it directly leads to increased output, then we have to judge Volker's tight money an abject failure.

[The Minsky Moment]

What matters for credit is debt/GDP ratio.  You can have harsh austerity as in Greece and debt/GDP goes up because GDP takes a dive.  Very counterproductive.

Creditworthiness is nice in theory but the name of the game for nations is increasing the economic pie.  Historically creditors as a class have short memories.  Strong economies always attract investment.  And weak economies have problems regardless of their perceived probity.

[Martinus]

Nothing changed. Austerity doesn't work and never had.

It works very well when you consider its true purpose: to pauperize the middle classes and emasculate the nation states of the West.


G.

Zizek makes a very good point about this (I posted his essay in the Piketty on German debt thread) - the point is humiliation and subjugation of sovereign nations by unaccountable and unelectable bodies (the Trojka or the dreaded "financial markets").

[crazy canuck]

Its not clear to me that your claim is accurate.  In many of those cases other factors contributed to economic well being and it may be the case that things worked out despite the austerity measures.

Well true, economics is complicated and it is hard to say for sure if a particular policy was responsible.

Which is why I wonder why some people insist that austerity is always the answer.

[Admiral Yi]

What matters for credit is debt/GDP ratio.  You can have harsh austerity as in Greece and debt/GDP goes up because GDP takes a dive.  Very counterproductive.

Creditworthiness is nice in theory but the name of the game for nations is increasing the economic pie.  Historically creditors as a class have short memories.  Strong economies always attract investment.  And weak economies have problems regardless of their perceived probity.

Yes you can have austerity and tank the economy.  You can also have austerity and GDP growth, as I pointed out.

If creditors are amnesiacs, why are Venezuela and Argentina paying 14%?

[The Minsky Moment]

Zizek makes a very good point about this (I posted his essay in the Piketty on German debt thread) - the point is humiliation and subjugation of sovereign nations by unaccountable and unelectable bodies (the Trojka or the dreaded "financial markets").

Except that is what a currency union really entails - surrendering ultimate economic sovereignty.

One striking aspect of this whole crisis is the degree to which all sides are in utter denial about what it means to have a workable currency union across such a broad area.  The "creditor states" don't get that the system is doomed to instability and crisis in the absence of credible automatic mechanisms to bolster troubled regions; the "debtor states" don't get that membership comes with a price in the form of truncated sovereignty.

[The Minsky Moment]

If creditors are amnesiacs, why are Venezuela and Argentina paying 14%?

Because their economies are lousy and their governments are sad jokes.

Replace Venezuela's government and economic policy mix with that of say Colombia and watch those yields go down quick.  It's a new era, draw a line under the past, blah blah blah

[Valmy]

Which is why I wonder why some people insist that austerity is always the answer.

Indeed. There is not anything that is always the answer.

Zizek makes a very good point about this (I posted his essay in the Piketty on German debt thread) - the point is humiliation and subjugation of sovereign nations by unaccountable and unelectable bodies (the Trojka or the dreaded "financial markets").

Like how the Conservative States in the US were humiliated and subjugated by the unaccountable and unelectable Supreme Court of the United States? Man you sound like Ron Paul ranting on about the Fed.

[Admiral Yi]

Because their economies are lousy and their governments are sad jokes.

Replace Venezuela's government and economic policy mix with that of say Colombia and watch those yields go down quick.  It's a new era, draw a line under the past, blah blah blah

To 7.26 on the 10 year.

[Iormlund]

Nothing changed. Austerity doesn't work and never had.

It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.

There was a very clear moment of inflexion for most of those countries: Draghi's OMT announcement. That's because the root problem had always been political, not economic. Empirical data does not support the notion that austerity has done anything but lengthening the crisis.

[Razgovory]

Yi subscribes to a school of economics that doesn't put a lot of faith in that sort of thing.