Tag: Austerity

Beware Greeks Breaking Bonds

Just recently, I read Michael Lewis’s Boomerang, which includes a long essay on the economic problems of Greece. It’s difficult to describe Greece’s economy without the words “holy fucking shit, dude, are you serious?” but I’ll try.

For years, the Greek budgets were a fraud. The EU rules required them to keep their deficits below 3% of GDP. But massive amounts of the Greek economy are underground. Their system encourage abuse and fraud so that very few people pay taxes and no one thinks they should pay taxes. Government spending figures were made up so that they could comply with EU budget requirements. Their government is large and pays salaries much higher than any other country. And they can retire at age 50 and draw huge pensions. They also have a fertility rate of 1.3, so it’s not like a baby boom is going to sustain this massive wave of retirees.

When you know the details, you realize just how necessary the recent austerity was. Greece was in so much debt and their budget was so out of control, they had to make drastic changes. This wasn’t some evil imposition by imperialistic Germans; this was math.

Well, the Greeks voted today for an anti-austerity party:

Exit polls suggest a historic victory for the anti-austerity Syriza party in Greece’s general election.

The polls indicate that Syriza took between 36% and 38% of the total vote, with the ruling New Democracy party a distant second with 26%-28%.

It is unclear whether Syriza has enough votes to govern the country alone.

Syriza’s Alexis Tsipras has pledged to renegotiate Greece’s debt arrangement with international creditors.

He has also vowed to reverse many of the austerity measures adopted by Greece since a series of bailouts began in 2010.

The result is being closely watched outside Greece, where it is believed a Syriza victory could encourage radical leftist parties across Europe.

The exit polls suggested Syriza had won between 148 and 154 parliamentary seats. They need 151 seats for an outright majority.

(Aside: there are a lot of liberals who think we should have a parliamentary system in this country, mainly because they don’t like Obama being opposed on legislation. This election is a good demonstration of why I don’t like parliamentary systems. Syriza is going to take over Greece based on a third of the vote. The parliamentary system encourages radical minorities to take the wheel of government and spin it madly. I’ll take our gridlock, thank you.)

Fuck Greece. They’ve gotten tens of billions of dollars in help and their response is to whine and cry because they can no longer live high on the hog on a fraudulent system paid for by other countries. Don’t let them leave the Euro; kick them the hell out. Let inflation and default ruin their economy. Maybe then they’ll figure out that you can’t run a country on bullshit.

Maybe other people will too.

A Recovery About Nothing

As you know, there are signs — tentative ones — that our economy is beginning to recover from Great Depression II. It’s about on schedule — I thought we would need about five years to crawl out of the hole we were in. But we had 5% growth in Q3 and unemployment continues to edge down (although the U6 remains high). Projections for 2015 are cautiously optimistic, barring a major war or something (which, with Obama, is always on the cards).

I have noted, however, that this recovery runs against the dogma we’ve been hearing from the Keynesians and pseudo-Keynesians on the Left Wing. According to them, the “austerity” of the last few years (i.e., flat spending) should have caused us to have a double-dip recession. David Harsanyi expands on this:

But if activist policies really have as big an impact on our economic fortunes as Washington operatives claim, I only have one question: What policy did Barack Obama enact to initiate this astonishing turnaround? We should definitely replicate it.

Because those who’ve been paying attention these past few years may have noticed that the predominant agenda of Washington has been to do nothing. It was only when the tinkering and superfluous stimulus spending wound down that fortunes began to turn around. So it’s perplexing how the same pundits who cautioned us about gridlock’s traumatizing effects now ignore its existence.

For instance, Paul Krugman wrote a column titled “The Obama Recovery.” The problem is that the author failed to justify his headline. It begins like this:

“Suppose that for some reason you decided to start hitting yourself in the head, repeatedly, with a baseball bat. You’d feel pretty bad. Correspondingly, you’d probably feel a lot better if and when you finally stopped. What would that improvement in your condition tell you?”

Suppose you tell us what the bat represents, because spending in current dollars has remained steady since 2010, and spending as a percentage of GDP has gone down. In 2009, 125 bills were enacted into law. In 2010, 258. After that, Congress, year by year, became one of the least productive in history. And the more unproductive Washington became the more the economy began to improve.

Krugman argues that the recession lingered because government hadn’t hired enough people to do taxpayer-funded busywork. The baseball bat. But then he undercuts this notion by pointing out that there was an explosion of public-sector hiring under George W. Bush—the man he claims caused the entire mess in the first place. Krugman also ignores the stimulus, because it screws up his imaginary “austerity” timeline. He then spends most of the column debunking austerity’s success in Britain.

Britain’s “austerity”, incidentally, was called austerity when the UK economy was stagnant. When it began to recover, the exact same budgets were described as having abandoned austerity. With the Keynesians, it’s always heads they win, tails we lose.

This recession was not about a lack of demand or a lack of spending. It was about the huge amount of debt that the American people had dug themselves into. That debt has declined — mortgage debt is down and consumer debt is down. Student and public debts have risen but not as sharply. In short, we’re finally getting out from under the 16,000 pound boulder that was the Housing Bubble. And, who knows? Maybe things would be better if we didn’t have the 10,000 pound boulder of federal debt and the 2,000 pound barbell of student loans.

OK, I’m letting that metaphor get away from me.

Anyway, our gridlocked do-nothing Congress has failed to pass a “jobs” bill, has failed to enact “temporary” stimulus and has cut programs to “build the economy”. And the result is the healthiest economic numbers in a decade.

Funny how well we can do when our government stops “helping” us. Now imagine if we could get them to stop giving us “free” healthcare and regulating our every move.

The Latest Triumph of Obamanomics

You remember the “Summer of Recovery”? That was back in 2010 when the combination of fiscal stimulus and Obama frisson was supposed to get the economy moving again. Since then, we’ve been waiting and waiting for a full recovery, bumbling along at 2% growth with job creation barely keeping up with population. But I’m sure an economic boom is just around …


The Commerce Department said on Thursday that the nation’s overall output shrank at an annual rate of 1 percent in the first three months of the year, revising downward its initial estimate from late April, which showed a very slight gain for the period. It is the first quarter in three years in which the nation’s output of goods and services has contracted.

The figures are bad news for the White House as well as for Democrats running for Congress in November’s midterm elections. Although there’s still time for growth to rebound before then — and recent data on hiring has been more encouraging — little room remains on the runway for an economic takeoff this year.

This is being blamed on the unusually cold winter. That’s not a ridiculous explanation but it’s not enough to explain everything. Gross Domestic Income fell a whopping 2.3% which could indicate that further revisions will be even worse.

Yeah, I know. Austerity! Republicans! Libertarians! Uh … no:

It has been six years since the financial crisis. Federal government spending is still around 21 percent of GDP, up from 19 percent in 2007, and the Federal Reserve still has a very expansive monetary policy. Under those circumstances, a quarter of negative growth is pretty unsettling.

Exactly. The “austerity” we’ve enjoyed has been a huge increase in FY2009 followed by flat spending. It has included a massive quantitative easement from the Fed. You simply can not look at all that and call it austerity, no matter how much Paul Krugman stamps his foot.

The Faux Economist

Just in case you were wondering if it was only the American sport media that never bothers to fact check:

As an ex-presidential consultant, a former adviser to the World Bank, a financial researcher for the United Nations and a professor in the US, Artur Baptista da Silva’s outspoken attacks on Portugal’s austerity cuts made the bespectacled 61-year-old one of the country’s leading media pundits last year.

The only problem was that Mr Baptista da Silva is none of the above. He turned out to be a convicted forger with fake credentials and, following his spectacular hoodwinking of Portuguese society, he could soon face fraud charges.

Blessed with such an impressive CV, Mr Baptista’s subsequent criticisms of the Lisbon government’s far-reaching austerity cuts, as well as dire warnings that the UN planned to take action against it, struck a deep chord with its financially beleaguered population.

According to the Spanish newspaper El País, his powerfully delivered comments at a debate at the International Club, a prestigious Lisbon cultural and social organisation last month, were greeted with thunderous applause and a part-standing ovation.

Then, in a double page interview in the weekly newspaper Expresso in mid-December, Mr Baptista da Silva continued to denounce the government’s policies. That was followed by an interview for the radio station TSF, appearances in high-profile television debates and well-publicised meetings with trade union leaders to advise them on economic policies.

Oh, you just knew he was going to be a damned Keynesian, didn’t you? Has anyone checked up on Paul Krugman lately? I mean really checked to make sure his blog isn’t being written by a perl script?

Frankly, it doesn’t surprise me that no one could tell he was a fake. A lot of economists seem to make stuff up as they go; a lot of attention is paid to those who reinforce popular but wrong-headed ideas; the media loves politicians who embrace big government and see it as the solution to all ….

Ok, seriously, has anyone checked on Paul Krugman?