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Austerity actually works really well it's just that its point is not actually to "fix the economy"
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Jul 17, 2015 13:17
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Bob le Moche posted:Austerity actually works really well it's just that its point is not actually to "fix the economy" Austerity re: Greece is not that complicated. 1) The Greek government is spending a ton more than it can collect, for reasons. 2) The shortfall has to be financed or the Greek state will literally collapse. 3) Nobody wants lovely Greek bonds anymore. The countries contributing to the periodic Greek bailouts don't want to pour money into a black hole forever so they're pushing hard for Greece to generate a budget surplus so they won't have to do that + so they might eventually see some of that money back. Unfortunately, given the size of its debt Greece is utterly and completely hosed and will never be able to repay.
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Jul 17, 2015 13:31
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wateroverfire posted:The countries contributing to the periodic Greek bailouts don't want to pour money into a black hole forever so they're pushing hard for Greece to generate a budget surplus so they won't have to do that + so they might eventually see some of that money back. Except this is the opposite of what is happening because austerity fucks the long-term ability of your economy to grow and produce returns
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Jul 17, 2015 13:59
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Waaaah the Christians are out to get me
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I understand the slashing of public spending and all that to balance the books to an extent, but what does weakening labor law and screwing organized labor have to do with public economics? It seems to me in many nations hit with austerity immediately go after non-economic structural changes like making workers easier to fire and ending rent control etc. At that point it just seems like organized thuggery from banks using debt relief as a club to make the target nation more compliant to their wishes.
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Jul 17, 2015 14:15
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Sounds like someone needs to read Klein's The Shock Doctrine, or listen to Deltron: "crises precipitate change".
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Jul 17, 2015 14:24
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Badger of Basra posted:Congrats, you're smarter than anyone who works for the IMF, the ECB, or the German government. Is he though? Those people get mad checks with no drawback either way right?
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Jul 17, 2015 14:25
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Peven Stan posted:I understand the slashing of public spending and all that to balance the books to an extent, but what does weakening labor law and screwing organized labor have to do with public economics? It seems to me in many nations hit with austerity immediately go after non-economic structural changes like making workers easier to fire and ending rent control etc. At that point it just seems like organized thuggery from banks using debt relief as a club to make the target nation more compliant to their wishes. It "improves investor confidence."
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Jul 17, 2015 15:02
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Junior G-man posted:Mark Blyth probably explains this better than anyone here will: I was going to watch about 5 minutes of that and ended up watching the whole thing because it was great.
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Jul 17, 2015 15:21
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Pohl posted:I was going to watch about 5 minutes of that and ended up watching the whole thing because it was great. Yeah, it really is very good. He does an amazing job of synthesizing the philosophy and reality.
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Jul 17, 2015 15:23
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E; snip I'm dumb. I got through 3 pages and was like hm I don't see anything yet and posted that.
Blowdryer fucked around with this message at 15:39 on Jul 17, 2015 |
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Jul 17, 2015 15:33
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Blowdryer posted:Does anyone have links to/know of any economic experts critiques of austerity? Literally three posts above. A big YouTube.
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Jul 17, 2015 15:35
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Quantum Mechanic posted:Except this is the opposite of what is happening because austerity fucks the long-term ability of your economy to grow and produce returns Austerity in an economy that's going through some rough times but otherwise is structurally fine, sure. But there's "going through some tough times" and then there's whatever the gently caress is going on in Greece. Without bringing spending into balance they are literally a bottomless pit that will suck down all the euros shoved into it and come asking for more in a few months. Peven Stan posted:I understand the slashing of public spending and all that to balance the books to an extent, but what does weakening labor law and screwing organized labor have to do with public economics? It seems to me in many nations hit with austerity immediately go after non-economic structural changes like making workers easier to fire and ending rent control etc. At that point it just seems like organized thuggery from banks using debt relief as a club to make the target nation more compliant to their wishes. Those are not non-economic structural changes, though. Those costs add up.
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Jul 17, 2015 16:37
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wateroverfire posted:Those are not non-economic structural changes, though. Those costs add up. 1. Cook the books with the help of a few government officials 2. Demand changes that have no proven effect on a government's ability to pay back their debt, but that are hugely beneficial to corporations that operate in Greece and align perfectly with the ideology of the IMF/Troika 3. Deleverage, profit.
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Jul 17, 2015 16:41
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wateroverfire posted:Austerity in an economy that's going through some rough times but otherwise is structurally fine, sure. That's because that bottomless pit isn't in Greece. 90% of that 'bailout' went to recapitalising banks and fiscal institutions (ECB, IMF etc). There's no such thing as 'bringing spending into balance' when all your spending is to creditors who insist, on pain of economic death, on being made whole. Unless the entire 100% of Greek GDP (including profits, pensions, personal income, EVERYTHING) is used to service loans it will just go from bad to worse. The reason they have to come back for more and more is because what's being forced down their throat, austerity, is exactly the thing that prevents the economy from growing and 'genuinely' reducing the debt load. As it's been called before ITT; this is the austerity death spiral.
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Jul 17, 2015 16:44
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Seems like there is several types of austerity going on here, the low taxes and low public spending in America, the privatization in the U.K., and the restructuring of Greece's debt.
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Jul 17, 2015 16:55
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ColoradoCleric posted:Seems like there is several types of austerity going on here, the low taxes and low public spending in America, the privatization in the U.K., and the restructuring of Greece's debt. America's not doing austerity, never has. Their problem is that their tax rates are far too low.
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Jul 17, 2015 17:02
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ColoradoCleric posted:Seems like there is several types of austerity going on here, the low taxes and low public spending in America, the privatization in the U.K., and the restructuring of Greece's debt. They all have the same goal: destroy welfare states.
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Jul 17, 2015 17:02
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That the structure of the Eurozone compels Greece to adopt bad policy does not make that policy not bad. Rather, it makes the structure of the Eurozone also bad.
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Jul 17, 2015 17:03
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Junior G-man posted:America's not doing austerity, never has. Their problem is that their tax rates are far too low. well, it has austerity for the poor you're technically right though since there's a lot of subsidies and government assistance for large corporations
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Jul 17, 2015 17:47
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Junior G-man posted:That's because that bottomless pit isn't in Greece. 90% of that 'bailout' went to recapitalising banks and fiscal institutions (ECB, IMF etc). To borrow a phrase, the vampire squid is bleeding them to death.
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Jul 17, 2015 18:38
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I heard austerity being described as what happens when the international capitalist class realizes that colonialism doesn't have to just be a thing you do to periphery countries, you can make the same techniques work in the core too now! I thought that was an interesting take on it.
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Jul 17, 2015 21:19
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Bob le Moche posted:I heard austerity being described as what happens when the international capitalist class realizes that colonialism doesn't have to just be a thing you do to periphery countries, you can make the same techniques work in the core too now! I thought that was an interesting take on it. this makes a lot of sense
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Jul 17, 2015 21:22
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ColoradoCleric posted:Seems like there is several types of austerity going on here, the low taxes and low public spending in America, the privatization in the U.K., and the restructuring of Greece's debt. the privatisation in the uk isn't actually austerity under the conventional definition, it's just privatisation under a new coat of paint, one that was trendy during the financial crisis. america likewise won't touch austerity with a ten foot pole: every credible voice and every instance of it being tried demonstrate it doesn't function. Reagan wasn't practising austerity, thatcher wasn't practising austerity. they thought cutting was a good idea for purely ideological reasons, and bashed economic theory hard enough it bent into something that could sell (trickle down economics, mostly, the laffer curve, etc), sold it to their respective countries and achieved their ideological goals. they both spent like crazy, but on things their ideologies felt were justified, mostly massive military spending. similar is happening now. what's happening the Greece isn't like what's happening in the US and the UK because the latter two are functional economies being led by more or less intelligent people who simply have different goals as to what a nation should do and engage in lots of flavor of the month political theatre to get it. CoolCab fucked around with this message at 02:10 on Jul 18, 2015 |
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Jul 18, 2015 01:54
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To be fair, although America hasn't been doing austerity, that doesn't mean some parts of it aren't giving it the old college try.
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Jul 18, 2015 03:05
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LeoMarr posted:Can someone explain to me how Austerity works in economics. I understand the concept but not the implemetation and how it actually saves an economy Austerity, a fancy way of saying your country spent too much. And now they can not find new loans which can be used to generate more growth. When your government spends too much, or your liabilities grow faster than your assets and the asset generating cash flows the leders will no longer support you rolling over your current account deficit. As this contra account balance becomes every more skewed towards an impossible resolution, bond investors be they pension funds or endowments will demand shorter repayment terms and higher bond yields. To meet this, the government can either agree to manage their cash outflows better or: they can seek methods to generate more tax revenue. The most common of which is tax private enterprise and consumption more to 'goal seek' to the solvency ratios require for their target Government Interest rate. Should a government be particularly inept, or it is impossible to tax your population any more than they can bear (because its likely a bear market), we will see the central bank step in and debase the currency, so that consumption and other independent cash outflows for a country (like personal consumption/lending) have a smaller effect on the country's foreign reserves. Which makes it easier for the government to pay back its creditors, if there is more plenty of foreign currencies for meeting the governments outflows. I should note, every currency has a "cost" associated with it. Thats what FX is all about. When you have a currency union, your central bank can no longer devalue the currency to make domestic consumption weaker and temper cash outflows so this forces governments to admit they have a spending problem. In the case of Greece, Venezuela, and 80% of Asia, domestic retirees and populists are easy to sway and motivate. Particularly when they are told they are being 'overpaid' by foreign counterparties, and domestic politicians have very little interest in admitting they mismanaged the country finances. So we see a reluctance to address those large cash outflow burdens and thus we have the mystical term of "austerity". Which is, as I said above, a fancy way of saying your country spent too much, and your existing population have little interest in adjusting to a way of life that better suits their country's real GDP and real US dollar adjusted wage. Sooner or later if your country has a current account deficit the piper will need to be paid. You can't debase a currency beyond the lower bound of 0, nor can you underpay the cost of capital by keeping rates at negative yield for more than 10 years before bad things happen. Like Japan and most of the AFPAC trade union. Hope that helps. Current answers were lacking. Note: Privatization is NOT austerity. You only suggest the spinout of crown corporations when you conclude that government crowns are 1.) a part of the problem which led to a reluctance to build sustainable cash positive industries or 2.) those entities (SOE's) show a willingness to champion reforms in wage, pension and capital reinvestment that will take most of the populist ire away from government's attempts to fix the trade and union laws. Should austerity not be attempted, and a central bank can no longer defend the currency then we will see bank runs and a flight from the currency. Like Ukraine and Argentina before their govt. revolts. When the bank runs out of reserves to defend their FX, bonds are dumped in masse and yields skyrocket, leading to a liquidity shortange and bank holiday. At this point the IMF and World Bank usually step in, to prevent a failed country forming, however should the risk be too great for even them, the country as a whole needs to abandon their currency regime and the government must abdicate their role as the manager of the trust to the country's real estate laws. A longwinded way of saying: My Government just filed for Chapter 11. At this point, all holders of government treasuries are repudated or written off; what we call a "hair cut", and the Central Bank and newly formed Govt. can issue new debt having no new leins. At the expense of everyone who used the "old" monetary regieme. Which usually means all wage earners, banks, pensions, endowments, and businesses (including universities).
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Jul 19, 2015 00:04
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Hal_2005 posted:Austerity, a fancy way of saying your country spent too much. And now they can not find new loans which can be used to generate more growth. Good post, thank you. I think it is necessary for everyone to keep in mind that austerity in the most recent European scenarios is not primarily meant to increase the GDP, but to prevent a sovereign default.
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Jul 19, 2015 04:48
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IAMNOTADOCTOR posted:I think it is necessary for everyone to keep in mind that austerity in the most recent European scenarios is not primarily meant to increase the GDP, but to prevent a sovereign default. Defenders of austerity are not normally so blatant that it's explicitly meant to protect global capital no matter the cost to ordinary people, so thanks for that
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Jul 19, 2015 09:17
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IAMNOTADOCTOR posted:Good post, thank you. I think it is necessary for everyone to keep in mind that austerity in the most recent European scenarios is not primarily meant to increase the GDP, but to prevent a sovereign default. And in both cases it is a spectacular failure. Remember that Greece already had 2 very big rounds of austerity politics - how did that work out for them, either in terms of GDP or preventing a sovereign default?
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Jul 19, 2015 09:17
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One should also remember that we see austerity implemented in countries that are nowhere near a sovereign default. It's a purely ideological thing, and doesn't actually help avoid defaults either.
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Jul 19, 2015 09:32
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If austerity is all about not defaulting, wouldn't it be great if you were sovereign and issued your own currency?
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Jul 19, 2015 10:53
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Hal_2005 posted:Austerity, a fancy way of saying your country spent too much. And now they can not find new loans which can be used to generate more growth. The champions of austerity, the loving IMF and World Bank are both now against it. Show us where austerity has actually worked. Seriously, give us a few examples where austerity has worked and everyone came out better for it. Austerity doesn't mean what you think it does. It means a government is usually screwed through bad economic & monetary policy, while looking to maximize the needs of business over the general public. This leads to a lot of debt, and austerity is always implemented to pay down that debt, which it never ever can. It isn't because the Government spent too much money, it is because the government had really lovely economic policies and tax cuts, including borrowing a ton of money they didn't need to borrow; or selling public lands and public infrastructure into private hands. Austerity is essentially the end goal of what is now a corporate takeover of a public state. The really bad thing is, the debt that leads to austerity generally doesn't buy anything, it is almost all on paper between banks and it is worthless to begin with. All it does is move money around between rich people, improving their capital, while robbing several generations of a country of any sort of future. Oh, and privatization is explicitly austerity in these situations. You wrote a lot of good sounding words but they don't add up to anything. Pohl fucked around with this message at 12:10 on Jul 19, 2015 |
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Jul 19, 2015 11:55
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Quantum Mechanic posted:Defenders of austerity are not normally so blatant that it's explicitly meant to protect global capital no matter the cost to ordinary people, so thanks for that Except that GDP is not directly related to "the cost of ordinary people"? Greece (both the government and the ordinary people) have made it clear that they want to stay in the euro, a sovereign default would mean the end of that. Don't blame me for their decision. I'm of the opinion that a structured default and a grexit are the best steps forward for greece at the moment. Junior G-man posted:And in both cases it is a spectacular failure. I don't get this sorry, Greece still has not had a sovereign default so the answer would be pretty good in terms of sovereign default?
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Jul 19, 2015 17:08
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IAMNOTADOCTOR posted:I don't get this sorry, Greece still has not had a sovereign default so the answer would be pretty good in terms of sovereign default? So if you had to pick which one has done more to keep Greece from defaulting, would you say that it's austerity or the rest of the Eurozone and the IMF lending them hella cash?
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Jul 19, 2015 17:36
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Cerebral Bore posted:So if you had to pick which one has done more to keep Greece from defaulting, would you say that it's austerity or the rest of the Eurozone and the IMF lending them hella cash? The EU and IMF lending cash was contingent on austerity. So there's not really a choice to make between those two?
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Jul 19, 2015 19:01
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IAMNOTADOCTOR posted:The EU and IMF lending cash was contingent on austerity. So there's not really a choice to make between those two? I don't understand why the patient isn't recovering! We keep pumping our precious O2 into their lungs to oxygenate their blood as long as they agree to keep strangling themselves even tighter. Their medical bill is getting HUGE! These dumb patients. Why can't they just get off their lazy rear end and learn breath their OWN AIR!?
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Jul 19, 2015 19:10
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IAMNOTADOCTOR posted:The EU and IMF lending cash was contingent on austerity. So there's not really a choice to make between those two? If the EU and IMF made lending cash dependent on sacrifices to the Olympians, this would not make ceremonial goat death good economic policy.
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Jul 19, 2015 19:22
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IAMNOTADOCTOR posted:The EU and IMF lending cash was contingent on austerity. So there's not really a choice to make between those two? So your silver bullet retort is literally the claim that austerity and loans are somehow inseparable on a conceptual level? That's a new one, I'll have to admit.
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Jul 19, 2015 19:47
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Peel posted:If the EU and IMF made lending cash dependent on sacrifices to the Olympians, this would not make ceremonial goat death good economic policy. No in deed, that's why in my humble opinion the question if austerity did more or less than the loans is not a productive question. But reading back on it I didn't really clarify anything with that, apologies. The position that is mine and that I am willing to defend is that austerity can be an effective means to prevent sovereign default. The effectiveness and desirably of austerity over a default differs on a case by case basis. Reducing austerity and people defending it to complete idiocy in snappy one liners does not really contribute to the discussion in my opinion. Disclaimer, I'm more than willing to be proven wrong as this is not my area of expertise, but so far the more thought out and data driven post have been from post's defending aspect's of austerity.
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Jul 19, 2015 19:54
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The people who sincerely push austerity as necessary (instead of as a cynical ploy to get their money out or whatever) basically believe that the
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Jul 19, 2015 20:25
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IAMNOTADOCTOR posted:No in deed, that's why in my humble opinion the question if austerity did more or less than the loans is not a productive question. But reading back on it I didn't really clarify anything with that, apologies. This is a post, in video form. I realize it is an hour, but it is well worth that hour. He talks about a lot of poo poo even I don't understand, but he also talks about and explains a lot of the stuff I learned in school or picked up on my own time. Overall, unless you are willing to read books and books of information on this topic, this video should at least be a good primer. Warning, the entire concept/reality is scarier than you think! Junior G-man posted:Mark Blyth probably explains this better than anyone here will:
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Jul 19, 2015 22:12
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