Austerity policies driven by calculation error

[decocker 7,198]

looking at the people that are suffering under these misguided measures, I am not sure they're in the mood to be laughing

and let's see how quick supporters of austerity back down..

[Mr. Big Dog 10,747]

and let's see how quick supporters of austerity back down..

They won't. At least not in these parts. Facts have not ever swayed any of them.

[decocker 7,198]

They won't. At least not in these parts. Facts have not ever swayed any of them.

sad but true.

[Mr. Big Dog 10,747]

sad but true.

Case in point fresh off the press: Austerity poster child UK had its credit rating dropped a notch by a second rating agency. Why? Poor economic and fiscal outlook. Lack of growth. But not to be swayed by facts, the austerity fetishists running the country insist that the UK economy is healing. Nobody is seeing it but them. Odd, ain't it?

Fitch downgrades UK credit rating to AA+

The Fitch credit ratings agency has downgraded the UK to AA+ owing to a weakened economic outlook.

The move, after Moody's downgrade in February, came as Chancellor George Osborne defended the government's austerity plan.

Fitch said its downgrade primarily reflected a weaker economic and fiscal outlook.

Mr Osborne has said his was the "right plan" and that the economy was "healing".

Fitch said its downgrade "primarily reflects a weaker economic and fiscal outlook" but returned its outlook to "stable", removing the threat of further rate action in the near term.

Ed Balls, Labour's shadow chancellor, said: "This is another humiliating blow to a prime minister and chancellor who said keeping our AAA rating was the number one test of their economic and political credibility.

"And it ends a disastrous week for George Osborne's economic policy after the IMF downgraded its UK economic forecasts again and warned Britain needs a plan B for jobs and growth," he said, referring to a report issued by the International Monetary Fund earlier this week.

In its twice-yearly World Economic Outlook published on Wednesday, the IMF slashed its forecast for growth to 0.7% in 2013 after saying in January that the country's economy could expect 1% growth.

[decocker 7,198]

Case in point fresh off the press: Austerity poster child UK had its credit rating dropped a notch by a second rating agency. Why? Poor economic and fiscal outlook. Lack of growth. But not to be swayed by facts, the austerity fetishists running the country insist that the UK economy is healing. Nobody is seeing it but them. Odd, ain't it?

ikr. how bout all those job bills we've been seeing..

[The Nature Boy 4,224]

and let's see how quick supporters of austerity back down..

You know me, I am my very free with the truth, so I will be honest in saying, I really don't know much about the subject of austerity politics and I am not going to waste a lot of time reading up on it. Economictheroy is like the weather. Broad things apply and often time the best of them are wrong.

I do understand such basic things as, if you keep spending more than you take in sooner or later you run out of money.

That having been said, the whole story just made me laugh as it smelled of BS. Not taking one side or the other becuse as i said, I have no idea what side I am on.

[OnMyWayID 1,489]

Holy hell people come on..

Never never never in the history of time has any heavily debt ridden country ever solved the problem by borrowing more money. Austerity is the least painful thing left. Don't like it? Then don't borrow the next generation of peoples money.. When you take a tool (borrowing money) that is useful for creating short term bubbles to even out the highs/lows that economy's experience and instead use it to raise the standard of living for decades what the hell do you think the result is going to be?

When your foot is stuck in a trap and your choices are to cut it off or starve you can ###### all you want about how its going to hurt and that its unfair..

We've borrowed enough that growing out of the problem is no longer an option.. The options are austerity or collapse.

Quit pretending like there are other viable options.. grow up.

[Póg mo 1,749]

Holy hell people come on..

Never never never in the history of time has any heavily debt ridden country ever solved the problem by borrowing more money.

Really? The United States post ww2 continued to borrow despite have a debt to gdp ratio greater than one hundred percent. How did that work out?

[Mr. Big Dog 10,747]

Really? The United States post ww2 continued to borrow despite have a debt to gdp ratio greater than one hundred percent. How did that work out?

It's futile to have that discussion with the austerity fetishists. As I posted earlier:

Facts have not ever swayed any of them.

[james&olya 1,121]

It's futile to have that discussion with the austerity fetishists. As I posted earlier:

For the sheep it is like a religion, they accept it on faith (meaning an irrational belief with no objective evidence to support). The people who peddle this BS do it to justify policies that further enrich themselves and their friends. Pretty much the same as these cheesy TV preachers, just on a much larger scale dollar-wise.

People need to understand that if they want to compare this with household finances they need to include the mortgage on the family home in their numbers. When you include that indebtedness it puts the family debt greater by a significant margin than the family yearly income. But that very home ownership represents a healthy investment in the future and is analogous to what our nations leaders should be doing in investing in the future of this great nation!

[The Nature Boy 4,224]

For the sheep it is like a religion, they accept it on faith (meaning an irrational belief with no objective evidence to support). The people who peddle this BS do it to justify policies that further enrich themselves and their friends. Pretty much the same as these cheesy TV preachers, just on a much larger scale dollar-wise.

People need to understand that if they want to compare this with household finances they need to include the mortgage on the family home in their numbers. When you include that indebtedness it puts the family debt greater by a significant margin than the family yearly income. But that very home ownership represents a healthy investment in the future and is analogous to what our nations leaders should be doing in investing in the future of this great nation!

What you are missing is that, yes, it does put the debt more than the yearly income. However you are servicing that debt and reducing the principal because you are REDUCING the debt every month not increasing it. To do that you have to spend less than you take in every month.

If in your Family debt scenario you are bring in 3000 per month and your outflow with your mortgage payment is 4000 a month, at some point you hit a wall. It's really so simple a 5th grader could grasp it. You keep spending way more than you take in sooner or later you will not be able to service your debt.

[OnMyWayID 1,489]

Generally I avoid trading posts with some of you you because quite frankly you live for your agenda and are so biased and self-certain that I don't think any facts or evidence can sway your thought process.

But I am going to try...

For some countries borrowing like a mad man makes sense. Brazil for example, or India. These countries are on the low end of their growth cycle and can look forward to many years of double digit growth in their economies. Any drag from debt would be far outweighed by the growth in the strength of their currency and the added infrastructure.

Another example would be a mature economy that goes through a recession.. Germany is the best example here.. If they suddenly went through very tough times they could borrow a lot of money for a moderate amount of time with little interest and the benefits would outweigh the consequences.

We are a mature economy with a heavy debt load. We get less benefit from heavy spending than developing economies... They can experience double digit growth, we can't... and because we have been dependent on debt for so long we no longer use it to build infrastructure or build the economic machine. We use it as fuel - we pay the debt load and keep the basic economic machinery running.

That is the cycle of debt if not managed properly - it goes from promoting growth to eventually maintaining the status quo and finally staving off collapse. This is not in dispute by economists. The argument is where in the cycle we are and how far debt can be pushed before an inevitable collapse occurs.

Austerity is not a tool.. When a country has gone too far and can no longer borrow money (eventually they will no longer be able to borrow money) choices have to me made by that country.. They can just print money and devalue the currency, they can go to war, they can be bailed out by another country, they can default on the money they owe, or they can live below their means and pay down the debt load.

That last one is called "Austerity".. Raising taxes, lowering spending and not borrowing. Some of you like to make fun of it, but when a country runs out of options and there is no one left to lend them money which direction do you suggest? All of those previous options have been used by countries before so you can go research the various outcomes. Suggest a possible course for these countries with heavy debt load ... please don't start with "borrow more money"

When I see posts on austerity being some evil tool - It's like a drug addict being told that quitting is going to create a whole lot of withdrawal and incredible pain. Taking another hit would feel so much better and we can deal with that addiction thing later on when we are stronger and more able... I guess it is technically true and we can post articles about how awful the withdrawal is compared to that sweet last hit.. You can imagine how I feel about the morality of the person selling that line and the intelligence of those that believe it.

Did any of that sink in or did you just go to Google or your list of think-same bloggers for ways to make you feel better about your already formed opinion?? Yeah I thought so...

[Mr. Big Dog 10,747]

Man, if only Bill Gross would have your wisdom...

Pimco’s Bill Gross blasts Europe’s focus on austerity

April 22, 2013, 6:52 AM

If last week was a rough one for austerity advocates, Monday morning isn’t off to a great start either.

Pimco’s Bill Gross, the manager of the world’s largest bond fund, is the latest to trash a focus on austerity by British and euro-zone officials, telling the Financial Times that moving to cut debt too fast instead risks wrecking an economic recovery rather than righting the fiscal ship.

“The U.K. and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not,” Gross said. “You’ve got to spend money.”

[Mr. Big Dog 10,747]

There is nothing wrong, by the way, with austerity. There is nothing wrong with sound fiscal policy which necessarily includes austerity measures. The issue is that this is NOT the time for austerity. Governments MUST spend during downturns and MUST cut back on spending when recovery takes hold. The issue is that we haven't done the cutting back in good times in this century. That does not mean, however, that NOW is the time to do that. The recovery is too weak and may not take hold at all. Which is what happened to most of Europe. They made a mistake and I can't figure out why that cannot be admitted.

[Póg mo 1,749]

Generally I avoid trading posts with some of you you because quite frankly you live for your agenda and are so biased and self-certain that I don't think any facts or evidence can sway your thought process.

Facts, evidence? Where? You haven't posted a single verifiable fact or shred of evidence. Just lots of snarky comment and dubious claims regarding the merits of austerity.