Retailers lifting prices before the carbon tax is implemented?

[777]

Europe is talking austerity whilst increasing spending and money supply-not real austerity.Go and look at Germany's budget figures.
You have conveniently ignored the Japanese experience-22 years of stimulus and still no end in sight.And the USA is hardly a role model for stimulus.

Europe is not increasing spending - certainly not in the basket case countries. I think the correlation between austerity and economic performance is obvious:



As for Japan, well there's a strong argument that having got through it's "lost decades" with low unemployment, stable politics, etc is not exactly a failure. If you take into account the size of the Japanese bubble (remember when there were small parts of Tokyo worth more than the entire state of Qld?) the consequences for the society to date have been far milder than Spain (30ish percent unemployment and counting) for example that has tried to cut it's way back to prosperity. Lots of counterfactuals involved but hard to argue it's a failure compared to other.

The problem is that spending by governments has been excessive for several decades encouraging consumption.I doubt that hair of the dog is great for countries economies.

Indeed but Keynesian economics 101 is not that governments should always spend it is that government policy should be countercyclical. So the time to run a surplus is when the economy is strong and the time to run a deficit is when the economy is weak. Which was the point above that started all this and you don't seem to be refuting again.

By the way I actually dont support the European so called austerity problems.I think the best thing for Greece to do is default on the debt.have a really bad couple of years and then resume real growth as Iceland has done.Problem is no politician is willing to admit they can get things wrong.

I agree. But that would be terribly Keynesian! The argument for austerity is what... again?

 

[drron]

In your graph just take Finland and Portugal-virtually identical graph plots but one is a basket case and one a strong economy.
Japan with the highest debt to GDP in the world,trade balance going negative-hardly a marvellous success.
And where did I say I supported the austerity programs.Though when the Asian financial crisis occurred the IMF imposed austerity and those economies survived.

I just wonder why most think that the institutions that got us into this mess and didn't see it coming are now the ones who most trust to know how to get us out of the mess.

 

[eastwest101]

In your graph just take Finland and Portugal-virtually identical graph plots but one is a basket case and one a strong economy.
Japan with the highest debt to GDP in the world,trade balance going negative-hardly a marvellous success.

I think part of the story is also countries like Greece, Ireland and Portugal that by joining the EU also lost their independant currencies and shared a common currency, and also shared common interest rates. Losing this important shock absorber is part of the problem, a lot of these countries also had big speculative real estate booms. Another group of countries like Spain, Italy, Greece and possibly France have more systematic and demographic problems with their tax bases and governments that cannot live within their means.

Whatever the case - its a recepie for high unemployment, under-investment, inflation and possible political extremism and nationalism - which is never good in Europe.

 

[777]

And where did I say I supported the austerity programs.

When you jumped into the debate about what government should do with fiscal policy in the face of a tightening economy?

 

[drron]

When you jumped into the debate about what government should do with fiscal policy in the face of a tightening economy?

Re read post 20 just before your post.

By the way I actually dont support the European so called austerity problems

Though problems should read programs-just a little CRAFT.

 

[whatmeworry]

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