My call is that Europe is, in fact, going into deflation... Or call it Japanification, if you like.
Leftist Failure - The EU is on brink
- Thread starter jem
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I realize they are many countries, but I wonder about the composition of their debt. Do they mostly owe themselves, or owe foreigners?
Reports this week, after Hollande's crushing defeats in France, of Socialists losing favor and Conservatives gaining HUGE ground in the polls.
Seems like they're finally getting it.... "There really ain't no free lunch"... in spite of what the greedy, self-serving politicos spew.
Now... if only America/Odumbo could wise up.
:>(
Seems like they're finally getting it.... "There really ain't no free lunch"... in spite of what the greedy, self-serving politicos spew.
Now... if only America/Odumbo could wise up.
:>(
The OP warned of deflation and suggested the problem was big govt.
" DEFLATION CAUSES EUROPE TO RUN OUT OF OTHER PEOPLE'S MONEY"
When the problem is too much govt spending, tax increases are frequently the exact opposite of what is needed.
http://articles.latimes.com/2012/may/18/opinion/la-oe-derugy-austerity-gets-bad-rap-20120517
There are two basic problems with this growing anti-austerity backlash. First, where spending was actually reduced, the cuts have been relatively small compared to the size of the problem and meaningful structural reforms were seldom implemented. Second, to the extent declining Europe countries pursued austerity, it has mainly been through large tax increases. If the economies of Spain, France, Britain and other European nations are suffering, it's not because of "savage" spending cuts. It's because small spending cuts are overwhelmed by tax increases.
Consider Britain, where supposed austerity measures represent a "stunning failure of policy," according to Krugman in his New York Times column. In 2009, British Prime Minister Gordon Brown promised he would reform social programs and dramatically cut spending and taxes. Instead, he increased the top marginal income tax rate shortly before he left office. When David Cameron replaced him in 2010, he promised to pursue the same austerity measures. However, in 2011-12, spending increased from $1.15 trillion to $1.2 trillion, and public pensions have yet to be reformed. Instead, the government increased the capital gains tax, national insurance tax and value-added tax along with other fees and duties.
In Spain, the conservative party raised the retirement age from 65 to 67 in January 2011, but it has failed to implement comprehensive structural reforms. It was, however, successful in pushing through higher personal income and property tax rates in an attempt to balance its books. This year, the government has proposed reducing the deficit by $35.2 billion through a combination of tax increases ($16 billion) and spending cuts ($19.2 billion). But the spending reductions, even if implemented, won't be enough to compensate for an overly optimistic growth rate. Although the increase of the corporate income tax will be real, so will the increase in public pension and unemployment benefits.
Then there are the French, who elected a Socialist president for the first time since the 1980s. Hollande wants to replace what he calls austerity with "pro-growth" policies. But there is nothing austere about France's spending, which rose by $33.4 billion between 2009 and 2010 and an additional $29.5 billion in 2011. French public spending already equals 56% of GDP. Hollande's own wishful projections show total tax receipts rising from 45% of the economy to 47% in five years thanks to his plan to impose a 75% top marginal income tax rate for those earning more than $1.3 million and an increase in the corporate income tax. If this is pro-growth, then garlic breath is pro-romance.
" DEFLATION CAUSES EUROPE TO RUN OUT OF OTHER PEOPLE'S MONEY"
When the problem is too much govt spending, tax increases are frequently the exact opposite of what is needed.
http://articles.latimes.com/2012/may/18/opinion/la-oe-derugy-austerity-gets-bad-rap-20120517
There are two basic problems with this growing anti-austerity backlash. First, where spending was actually reduced, the cuts have been relatively small compared to the size of the problem and meaningful structural reforms were seldom implemented. Second, to the extent declining Europe countries pursued austerity, it has mainly been through large tax increases. If the economies of Spain, France, Britain and other European nations are suffering, it's not because of "savage" spending cuts. It's because small spending cuts are overwhelmed by tax increases.
Consider Britain, where supposed austerity measures represent a "stunning failure of policy," according to Krugman in his New York Times column. In 2009, British Prime Minister Gordon Brown promised he would reform social programs and dramatically cut spending and taxes. Instead, he increased the top marginal income tax rate shortly before he left office. When David Cameron replaced him in 2010, he promised to pursue the same austerity measures. However, in 2011-12, spending increased from $1.15 trillion to $1.2 trillion, and public pensions have yet to be reformed. Instead, the government increased the capital gains tax, national insurance tax and value-added tax along with other fees and duties.
In Spain, the conservative party raised the retirement age from 65 to 67 in January 2011, but it has failed to implement comprehensive structural reforms. It was, however, successful in pushing through higher personal income and property tax rates in an attempt to balance its books. This year, the government has proposed reducing the deficit by $35.2 billion through a combination of tax increases ($16 billion) and spending cuts ($19.2 billion). But the spending reductions, even if implemented, won't be enough to compensate for an overly optimistic growth rate. Although the increase of the corporate income tax will be real, so will the increase in public pension and unemployment benefits.
Then there are the French, who elected a Socialist president for the first time since the 1980s. Hollande wants to replace what he calls austerity with "pro-growth" policies. But there is nothing austere about France's spending, which rose by $33.4 billion between 2009 and 2010 and an additional $29.5 billion in 2011. French public spending already equals 56% of GDP. Hollande's own wishful projections show total tax receipts rising from 45% of the economy to 47% in five years thanks to his plan to impose a 75% top marginal income tax rate for those earning more than $1.3 million and an increase in the corporate income tax. If this is pro-growth, then garlic breath is pro-romance.
The problem with these official stats is not taking into account unfunded liabilities (like GSEs, for example)
So the left's failure was adopting anti-Keynesian policies, i.e. raising taxes and cutting spending.
Agreed!
Of course, no. The problem was, as usual, that debt didn't matter. Until it did.
Europe also had that pesky "Euro" thing. You know, one central bank, two dozen economies.
Thanks.
One way to look at it - wherever this Spend Your Nuts Off road goes, Japan is way ahead of us all at 200%+. Pretty impressive that we've managed to keep this thing going this long. I mean, it seems hard to believe that people even accept Yen as money without laughing.
People sure do get stuck in their ruts.
if you read Keynes you know the answer was lowering taxes.
http://reason.com/blog/2012/04/17/ke...t-supply-sider
But if Keynes wasnât a Keynesian, what was he? As it turns out -- fasten your seat belts and take a deep breath â he was a supply sider. Yes. Itâs true. He believed that, up to a point, cutting taxes would actually increase government revenues and vice versa. Here is a quote of Keynes that I stumbled upon in a 2004 Heritage Foundation paper by Arthur Laffer, the modern-day guru of supply side economics:
When, on the contrary, I show, a little elaborately, as in the ensuing chapter, that to create wealth will increase the national income and that a large proportion of any increase in the national income will accrue to an Exchequer, amongst whose largest outgoings is the payment of incomes to those who are unemployed and whose receipts are a proportion of the incomes of those who are occupied...
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.
http://reason.com/blog/2012/04/17/ke...t-supply-sider
But if Keynes wasnât a Keynesian, what was he? As it turns out -- fasten your seat belts and take a deep breath â he was a supply sider. Yes. Itâs true. He believed that, up to a point, cutting taxes would actually increase government revenues and vice versa. Here is a quote of Keynes that I stumbled upon in a 2004 Heritage Foundation paper by Arthur Laffer, the modern-day guru of supply side economics:
When, on the contrary, I show, a little elaborately, as in the ensuing chapter, that to create wealth will increase the national income and that a large proportion of any increase in the national income will accrue to an Exchequer, amongst whose largest outgoings is the payment of incomes to those who are unemployed and whose receipts are a proportion of the incomes of those who are occupied...
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.
So the left's failure was adopting anti-Keynesian policies, i.e. raising taxes and cutting spending.
Agreed!