Obama Jobs Plan

[Razgovory]

I think it would still need to have been larger.  US GDP shrunk by almost 7% (annualised) in the first quarter of 2009 and the 2008 decline has also been consistently revised downwards.  I think you needed a larger stimulus and had the debate taken place knowing how large a decline had taken place, I think you would've got one.

GDP shrank from a bubble inflated level.  It doesn't make a lot of sense to me to try and regain that level through Keynesian stimulus.

Are you suggesting that the current state of the economy is where it ought to be?

[MadImmortalMan]

The malinvestment point is a good one (I think that's where Yi is going with that). There are businesses and jobs that need to stop existing so people and investment can go to something society actually needs. The problem is one of letting it deflate gradually vs crash. Crash delays the reinvestment process I would think since it makes everything seize up.

[Admiral Yi]

Are you suggesting that the current state of the economy is where it ought to be?

No. 

Sort of MIM.  Take the PIIGS as an example.  Their economies were previously inflated by unsustainable deficit spending.  When you remove that, the economy deflates.  Surprise, surprise.

[Ed Anger]

I better not miss ONE SECOND of Packers/Saints.

[DGuller]

Are you suggesting that the current state of the economy is where it ought to be?

No. 

Sort of MIM.  Take the PIIGS as an example.  Their economies were previously inflated by unsustainable deficit spending.  When you remove that, the economy deflates.  Surprise, surprise.

Like Spain, you mean?

[Admiral Yi]

Like Spain, you mean?

Or even the S in PIIGS.

[Sheilbh]

Sort of MIM.  Take the PIIGS as an example.  Their economies were previously inflated by unsustainable deficit spending.  When you remove that, the economy deflates.  Surprise, surprise.

You're only describing Greece.

Spain and Ireland both had healthy surpluses and Italy and Portugal had middlingly sustainable deficits.  Government spending isn't the cause of the collapse in these economies.

[Ed Anger]

HURRY THE FUCK UP YOU IDIOTS. I've got 50 bucks on the Pack you assholes.

[Admiral Yi]

You're only describing Greece.

Spain and Ireland both had healthy surpluses and Italy and Portugal had middlingly sustainable deficits.  Government spending isn't the cause of the collapse in these economies.

Spain had a surplus???

The bond markets seem to have disagreed with your assessment of the sustainability of Italy and Portugal's deficits.

[Admiral Yi]

HURRY THE FUCK UP YOU IDIOTS. I've got 50 bucks on the Pack you assholes.

They can't kick off till we finish this discussion?

[Ed Anger]

HURRY THE FUCK UP YOU IDIOTS. I've got 50 bucks on the Pack you assholes.

They can't kick off till we finish this discussion?

Let me rage, ok?

[Admiral Yi]

Let me rage, ok?

Kay.

Since you do it so rarely.

[Ed Anger]

Let me rage, ok?

Kay.

Since you do it so rarely.

Thank you. I just want my football.

[MadImmortalMan]

Full Text

[Sheilbh]

Spain had a surplus???

Yep.  Spain had a surplus and a very low debt as % of GDP prior to the crisis.  There was talk of this being unsustainably based on a construction boom, property taxes (similar in Ireland) and a flood of cheap credit, but high government spending didn't sustain the Spain prior to the crisis.  Equally the Spanish, and Italian and Portuguese welfare states weren't terribly effective, or generous unless you're elderly.

The bond markets seem to have disagreed with your assessment of the sustainability of Italy and Portugal's deficits.

Yeah, sorry on Portugal.  Their deficit was above the EU and the Portuguese average for most of the last decade - though again that was facilitated by very low bond yields.  So the markets didn't disagree for a very long time.

In terms of bond markets with Italy though we're only about where we were before the Euro.  That's part of the problem is that the markets with Eurozone governments haven't really worked in a way that judged each country's deficit as sustainable or not for most of the past decade.  But for most of this period Italy was Europe's Japan.  They had deficits, unsustainable amounts of debt, anemic growth, but pretty low bond yields - I think Italy, like Japan has a far higher than average proportion of domestic pension funds.

Edit:  And it's worth saying the bond markets loved that Spain got their debt down to just under 40% of GDP and had balanced budgets or surpluses for the best part of the last decade.  They never expected what hit them.