[Non-US] News That Makes You laugh/cry/neither...

[Laertes]

Laertes, your optimism is totally unfounded. The European elite are dedicated to the EU and austerity, and the EU has a lot of institutionalized momentum behind it that will let it keep beating the continent with austerity long after they lose the mandate to do so (which, let's be honest, they already have).

Speaking from the perspective of a resident of the United Kingdom: the European elite are not the problem. What's fucking this country isn't the European elite, it's the local elite, and the Europeans are the only real hope we have for a check on them. The local elites are doing their damnedest to withdraw from Europe because they resent having a check on their power. I am firmly behind the European elites on this matter.

As for a mandate: Europe never had a popular mandate. Europe was only ever a project of the elites. And that's okay, because ending slavery didn't have a mandate within the British population, overthrowing Gaddafi didn't have a mandate within the Libyan population, ending apartheid didn't have a mandate within the enfranchised (read: white) South African population, extending the vote to women didn't have a mandate within the male population, and yet the invasion of Afghanistan in 2001 had an overwhelming mandate and look how that's turned out. There's a considerable groundswell in this country for parties that want to go back to the gold standard and end international free trade and abandon religious pluralism; and yet they remain bad ideas even after they receive mass support. Democratic mandates are only a thing inasmuch as you trust your fellow voters to have good ideas.

The best case scenario is that Europe is going to be hit with a Japan-style lost however-long except worse. Significant unemployment, the occasional riot, and a side of influential but not overwhelming radicalism feeding on disillusionment just become the new norms.

I have no idea about how it is where you live, but I've just done some scanning of figures for the big European economies and it looks like unemployment is falling, job creation is rising, and here in Britain there are worries about wages rising too quickly and causing a housing bubble. Japan style deflation is a long, long way off the cards.

This isn't to say that things are golden, but they're not doom and gloom. The real problem right now is that inequality is really really fucking high and keeps getting higher, and as I understand it that's not a first-world problem, that's more a consequence of globalisation and the rise of third-world manufacturing.

The worst case scenario is that backlash against the EU and the establishment that supports it lets a bunch of radical parties (on the left and right) sweep into power across Europe, and the EU falls apart after giving birth to a bunch of neo-Hitlers and/or radical leftists who range from "neo-Stalins" to "we only call them radicals because socialism is ebul." Depending on how you think the chips will fall between those three groups, you might actually call this the best case scenario.

The rise of neo-fascism in Hungary and elsewhere is pretty scary, yeah. However, my reading of it is much more along the same lines as the rise of religious dominionism in Turkey and India: There was a lot of screaming about it, and I would rather that someone else won the election, but to say they've wrecked the country would be hyperbole. When the AK won in Turkey people thought they would turn it into Saudi Arabia or that there would be civil war or that there would be an end to democracy. Instead... uh, they've just been another party of the right. Same with a lot of the parties in Europe.

That's not to say that I can't be wrong, of course.

But the establishment parties of the right being held accountable for the failure of austerity is just not going to happen. The establishment is being held accountable in its entirety, which is leading to a polarization as people turn to radical movements who are not a part of the establishment that is fucking them. The future of Europe is one of polarization, radicalism, and instability.

Again, I can't speak for the rest of Europe, but here in Britain the most remarkable thing happened as a result of the election. For some reason that I won't pretend to understand, the Labour party, whom I still think of as the despicable stooges of Tony Blair and George W. Bush, managed to reinvent themselves as a party of the moderate left and made a serious comeback. UKIP basically ate the Conservative party; the votes shifted from the moderate right to the far (unelectable) right.

In other words, the right made itself unelectable and last generation's bad guys rehabilitated themselves and became the good guys in only four years. That's not bad going.

The real problem, I think, is that everyone compares everything to the magical golden fairytale years of 2000 - 2007 when we were all living on borrowed money and the economy was doing unsustainable things due to the rise of china and the growth of the finance bubble, and as a result the doomsayers at the gate were long on rhetoric and short of support. We're never going to have it that good again, and people are pissed at that. But that's because nowadays we live in the real world. People are going to deny it and throw bricks at policemen, yes. But this is where we are now. This is the actual world. Pretending that we're ever going to return to the golden days of 2006 is a nostalgic and idiotic pipe dream, the same way my grandfather longs for the days before blacks had the vote: in both cases we're ignoring the fact that those days were a fairytale, even at the time.

So yeah. This is us now. This is the world. People who spent ages being alienated and not voting are now being alienated and voting. This is the world we live in and the world we made. And yes, I'm an optimist. You know why? Because even if we stagnate, even if we have high inequality, even if I get outraged by the craven, pathetic, obsequious pandering to the superrich that Britain indulges in, and even if my John Maynard Keynes and John Kenneth Gailbraith books sit on the shelf mourning how their legacy has faded, nobody is starving to death, we all have electricity and there will never be another industrial European war.

In some countries, fascists are in power. In other countries, people bought the election in order to slash taxes. Yes, it sucks. Democracy's like that. But to claim that it's the end of the world is just narcissistic.

[angelfromanotherpin]

there will never be another industrial European war.[/i]

Not for nothing, but we've heard that tune before, and the coda sucked.

[nockermensch]

It's really actually quite scary. Things have never gotten this bad without widespread revolution and anarchy before. And the architects of this disaster are still calling the shots and calling to make it worse. It's surreal.

-Username17

The elites got better at the panem et circenses strategy. There are social programs to give shelter and food to the unemployed AND there's plenty of free or cheap entertainment to be had. Combine this with the increased police state apparatus, where 100% of the Internet and a lot of real world public spaces are constantly under surveillance and you get the formula for why things can get so bad now without a violent revolution. Most of people are sedated and whoever tries to be serious about an uprising can be entrapped and jailed.

[DSMatticus]

Speaking from the perspective of a resident of the United Kingdom: the European elite are not the problem. What's fucking this country isn't the European elite, it's the local elite, and the Europeans are the only real hope we have for a check on them. The local elites are doing their damnedest to withdraw from Europe because they resent having a check on their power. I am firmly behind the European elites on this matter.

What. The EU is not an effective check of power on any member government. Hungary exists, and is totally still a member. When presented with both the opportunity and pressing need to meaningfully sanction a member state for the blatant illegitimacy of its government, the EU decided they were too busy not giving a fuck. The only authority the EU has (or cares to exercise, whichever you prefer) is the authority to inflict suffering on the people of Europe for the sins of bankers abroad. They sure as hell aren't going to save you from David Cameron, because they are ran by almost exactly the same brand of conservatives who wants you to suffer in almost exactly the same ways.

ending apartheid didn't have a mandate within the enfranchised (read: white) South African population, extending the vote to women didn't have a mandate within the male population

Nitpick: that is very much not how mandates work.

and yet the invasion of Afghanistan in 2001 had an overwhelming mandate and look how that's turned out.

Bush lost that election. Any discussion of anything Bush did begins with "and then the U.S.'s undemocratically elected president..." And while Iraq is the war everyone remembers as being surrounded by bullshit and propaganda, Afghanistan isn't actually much better. The administration decided they wanted the war on day 1, and then spent the following month deliberately sabotaging any and all possible peaceful resolutions, as well as telling Fox News to fill the air with pro-bomb shit talking points ranging from "half-true" to "probably true, let's just say it and find out later" to "totally not true, but we want people to think it is."

The Bush administration is the thing you point to when you want to demonstrate why it's so important that politicians have a mandate and be accountable. Because the Bush administration did not have a mandate and was never held accountable for anything, and it's an administration that spent eight years committing deliberate acts of deceit and sabotage against its own people. The war on Iraq obviously never needed to happen, and even the war on Afghanistan might have had alternatives that would have accomplished exactly the same goals (dismantle Al Qaeda infrastructure, capture their leadership) and we'll never know because Bush deliberately set fire to those alternatives instead of investigating them.

Bush is solidly a point in my favor here.

There's a considerable groundswell in this country for parties that want to go back to the gold standard and end international free trade and abandon religious pluralism; and yet they remain bad ideas even after they receive mass support.

You're not listening. Radicalism in Europe is on the rise because the political institutions of Europe are losing their mandate and because they are rigged (to varying extents) in such a way that preserves their power in spite of that. If these governments were actually structured in such a way that they were accountable for addressing the needs and concerns of their people, then they would do so or be replaced, and radicalism would not actually be able to take root in the people's disillusionment with their own lack of representation. Radicalism is the thing that happens when the game is rigged and people are ready to flip over the table.

I have no idea about how it is where you live, but I've just done some scanning of figures for the big European economies and it looks like unemployment is falling, job creation is rising, and here in Britain there are worries about wages rising too quickly and causing a housing bubble. Japan style deflation is a long, long way off the cards.

Inflation in the EU is half a percent. Scary fact: the EU has made inflation forecasts that have been wrong by more than the entire current inflation rate of the EU. A bunch of individual members already have (or have had at some point) deflation. Fun fact: unemployment in the UK ('recovering' as it is) is still higher than Japan's unemployment at any point in the past thirty years. But mostly, you need to remember that the UK is not on the euro. They have their own sovereign currency, and as such the UK is basically immune to the mandates of austerity that they are helping impose on the rest of the EU. So the fact that the UK isn't doing quite as shittily as some other members isn't even worth talking about.

The real problem, I think, is that everyone compares everything to the magical golden fairytale years of 2000 - 2007 when we were all living on borrowed money and the economy was doing unsustainable things due to the rise of china and the growth of the finance bubble, and as a result the doomsayers at the gate were long on rhetoric and short of support. We're never going to have it that good again, and people are pissed at that. But that's because nowadays we live in the real world. People are going to deny it and throw bricks at policemen, yes. But this is where we are now.

Now that's actually overly pessimistic. Note: you can't actually borrow from the future. It doesn't exist yet. It is not there to borrow from. Everything that has ever been done by anyone in any place at any time was done with resources that existed in the then and there. The only real kind of unsustainability is resource depletion, such as water, electricity, or having a climate capable of supporting civilization. When people talk about unsustainable economic practices, they're actually talking about structural flaws in economic systems that result in the inability to avoid completely unnecessary implosion.

The 2009 economic crisis was not caused by any particular change in the resource situation. It was caused by numbers on paper. And it could have been completely prevented (and could still be completely reversed) by being smarter about the way we handle numbers on paper. Things probably won't be as good as they were for some time, but that's a political problem - not an economic one. 2009 wasn't a magical tipping point, it was just a number on papers crisis that the world's governments have been unable to solve because the major players are all corrupt to varying degrees.

nobody is starving to death, we all have electricity

And you're back to naivete and optimism. That is happening in Greece this very moment! You can't actually say life is good, because it totally actually isn't for millions of people. Here are some European states with double-digit unemployment: Greece, Spain, Italy, France. What do you think slashing the social safety net (because austerity) does when 1 in 4 people are unemployed? It starves people.

[Aharon]

If a country wants to be able to influence its own economic policy and remain a member of the Euro, austerity seems rational: only by cutting the current, overblown deficits is it possible to gain enough free room to later on take on new credit if needed - while the Euro is a net advantage for most countries, it takes away monetary policy as a tool available to the country.

Also, if no measurements had been taken in this direction, the german public wouldn't have accepted any policies of giving guarantees for other countries credits. This was seen as a huge commitment by most Germans, and if we hadn't gotten anything in return (namely, the promise to cut spending and become less reliant on credit), the Euro would have blown up back then.

I also don't think that preaching austerity is a dogma for conservatives - at least not in Germany: Merkel had to demand something in return from the European countries benefitting from the European Stability Mecchanism. That she - and the CDU as a whole - don't believe in austerity as a dogma can be seen in how they reacted to the recession in Germany in 2008/09: countercyclically, pumping money into the economy.

[Starmaker]

If a country wants to be able to influence its own economic policy and remain a member of the Euro, austerity seems rational: only by cutting the current, overblown deficits is it possible to gain enough free room to later on take on new credit if needed

Austerity is not how you cut deficit on a country level: the economy contracts, tax revenue falls, people lose jobs and require more raw $$ in social security payments even though you just slashed it, and deficit increases.

[DSMatticus]

If a country wants to be able to influence its own economic policy and remain a member of the Euro, austerity seems rational: only by cutting the current, overblown deficits is it possible to gain enough free room to later on take on new credit if needed - while the Euro is a net advantage for most countries, it takes away monetary policy as a tool available to the country.

I... are you serious? Am I about to go on a rant and find out this was an obvious parody I somehow missed?

First off: if you think deficits were a significant driving force behind the latest crisis, you are actually a moron. That is the word for what you are. What would you think happened to a country that went into this crisis running a surplus with a debt as percent GDP almost half of Germany's? If you predicted their debt had tripled and their unemployment had soared into the high 20's, you are winner! That country is Spain. Apparently, being "responsible" with your debt and your deficit doesn't actually fucking do anything at all.

The list of countries whose problems can actually be significantly attributed to unsustainable debt/deficit spending are Greece and nope that's it. And you can see how austerity has worked out for them - as percent GDP, deficits and debt have gone up and unemployment is in the double digits. Because austerity in a recession tanks your economy, and when your economy tanks, you become LESS able to pay off existing debts and meet existing budgetary requirements. It's like trying to pay off your credit card by quitting your job. It makes zero fucking sense.

But you know what? It's funnier than that. It really is. Credit is the sort of thing that takes two to tango: for every borrower, there's a lender. So maybe it'd be worthwhile to ask: who are the stupid fucks that gave Greece all this easy credit? Well, the answer is underregulated German banks, who had vastly overleveraged themselves throwing money at Greece. Greece, meanwhile, turned around and spent a significant part of this easy credit on German exports, helping support the "miracle" of German industry. Man, now Germany's narrative about those nasty irresponsible Greeks sounds sort of hypocritical. Awkward.

Now, I know what you're thinking: how could it possibly get any more sketchy or hypocritical than that? Well, we're going to talk about the bailouts. So, German banks are sitting there with a bunch of Greek debt that is toxic with a capital "OH FUCK WE'RE RUINED." So, did Germany implicitly admit responsibility for the ruinous excesses of their banking system and use their own taxpayers' money to bail out their own banks? HAHAHAHA. Instead, they used their authority over the ECB to have it directly bailout those toxic assets, shifting the burden and risk of the loans the German banks made in the fucking first place to the entire EU. P.S.: this is the exact same story that happened in Italy, Spain, Ireland, and to varying extents the EU periphery as a whole.

So let's recap: Germany's underregulated banks overleverage themselves extending easy credit to a bunch of countries in the EU. These countries turn around and spend this credit on German exports, driving the German economy. When this unsustainable house of cards collapses, Germany has the ECB bail out their assets abroad in a way that distributes the responsibility for their predatory lending to the entire EU and not themselves. And now that they've saved themselves from the clusterfuck they caused using everyone else's money, they're taken up the warcry of austerity. tl;dr fuck Germany. The people who had a significant hand in causing this crisis and then gave themself unconditional bailouts using the EU's money do not get to wave around a narrative of responsibility. Germany is deeply irresponsible and managed to survive unscathed only through pervasive corruption.

So, what's the actual solution? Well, the problem is that the core and the periphery are on the same currency, but their economies are drastically out of sync with one another. Germany is running basically normally, but Spain is deeply depressed. There are two solutions to that problem:
1) Spain undergoes internal devaluation. I.e., austerity, deflation, wage cuts, the whole nine yards. This is supposed to restore competitiveness with Germany, and thereby bring the two countries back in sync. This is what countries in the periphery were forced to attempt, and it did not work. Their deficits, debts, and unemployment have all gotten worse, not better, even as Germany laughs its way to the bank.

2) The ECB lets the printing press run wild for a bit. Due to its shitty aggregate demand, inflation won't really take hold in Spain, but it will take hold in Germany. This would also restore Spain's competitiveness with Germany, but unlike internal devaluation, this method can actually succeed. But Germany is opposed to this, because, in part, they have no intention of restoring competitiveness to other countries and/or are stupidly inflation-phobic.

[Morat]

The fun thing is, Germans all seem to believe that they did 1) after reunification, when actually Europe did them a solid and let them do 2). Now when Europe needs them to help out in exactly the way they were helped out, suddenly it's fiscally irresponsible, and the profligate southerners must pay.

And this is going to end up costing Germany *more* than the sane plan. The individual bailout packages are smaller, but they will continue until the euro falls apart, since they're not actually solving the problem.

To be fair, though, a lot of the Irish insanity was UK lending instead. France and the Netherlands got in on this disaster, too. Though hilariously the stupid Irish banks had very little to do with the actual Irish population. Ordinary peoples' deposits were in different banks entirely, had the Irish government told the failures that there wasn't going to be a bailout, Ireland would be more or less fine. The UK and Germany would have had to eat a hundred billion euro loss, so Ireland had to submit.

[DSMatticus]

Yeah, Germany was not the only one involved in the risky lending. France was definitely another big player. But Germany is pretty much the only one of the lenders who successfully shoved their toxic assets off onto the rest of the EU. A huge amount of the initial bailout money that was supposably for these failing countries was actually just the ECB buying toxic assets the German banks didn't want to be left holding onto, such that when those assets imploded it would be Europe splitting the bill, not Germany. France, meanwhile, is still on the hook for a lot of its bullshit and/or has just plain eaten a bunch of losses.

[Lago PARANOIA]

Can someone explain to me what's Germany's obsession with maintaining a trade surplus?

[darkmaster]

Kind of the same thought as Mercantilism, but with less closed borders. For anyone who's wondering, Mercantilism is a terrible long term economic plan.

[Aharon]

@DS
I wasn't trying to modest proposal you, I actually happen to think that reducing deficit, in general, is not a bad idea. How and when it is done is another question, but I think it might be a good idea before potential lenders doubt your ability to pay them back. And the measurements, while also having many negative effects - which I won't deny, the whole crisis could have been handled better - have had at least one intended consequence - Greece's and Spain's credit ratings are getting better again, so it will be easier for both countries to take on new credits in the future.

Also, what would you have done instead of bailing the credit-giving banks out? Yes, it's unjust, and yes, deregulating the banks in the first place was shortsighted, but once the shit hit the fan, would you really have preferred a system collapse?
Right now, your proposal to increase inflation might work, but at the height of the crisis, this would have been suicidal.

@Morat:
Huh? The reunification came with a huge increase in spending, not with austerity. Everybody still pays the "Solidaritätszuschlag" in Germany (5.5% of gross income) to pay for the financial burden.

@Starmaker
your link didn't work.

[Username17]

I wasn't trying to modest proposal you, I actually happen to think that reducing deficit, in general, is not a bad idea.

Well then, you're wrong. The deficit is simply the amount of government spending that the government performs in excess of the amount of wealth or income the government confiscates as taxation. Since my income is your spending, a reduction in deficit means necessarily reduced national incomes. That is all it can possibly mean. It must, by accounting identity, mean that the people of the nation are getting poorer.

It is, definitionally, a terrible idea. And people who suggest it are arguing that they want some section of the country to suffer and be poorer because they are pretty sure the people who are going to have food robbed from their mouths aren't going to be them.

-Username17

[Winnah]

Debt monetisation totally works...Until it doesn't.

And when it doesn't? It's window breaking time.

[Username17]

Debt monetisation totally works...Until it doesn't.

And when it doesn't? It's window breaking time.

Deficits don't require debt monetization to pay for. You could print additional money to cover the difference as well. There are limits to that, but they take the form of inflationary pressure, something few countries in the developed world have had problems with in the last decade.

As to the limits of debt issue, they do not correspond to the world popping. A debt limit is not running out of resources or having insufficient available labor or something. It's a problem with moving pieces of paper around. If you simply declare by fiat that you don't have the problem anymore, the worst thing that happens is people who liked the old paper shuffling system get mad at you. That's really honestly the entire argument against simply declaring the sovereign debt crisis to not exist - that maybe people who liked the old paper shuffling system would get mad if it was changed.

As it happens, the ECB stepped in to declare the sovereign debt crisis over in Spain and Italy, and despite a year and a half of hand wringing that people might get mad, people didn't even seem to care.

There are real limits to fiscal policy. There are a finite number of laborers and resources and energy are likewise finite. There are organizational limits as well, meaning that the number of shovel ready projects is not always sufficient to achieve full employment. But no countries in the OECD actually have much to fear from any of those limits. Unemployment could be reduced by 1% in every OECD country in the world in a month by simply by pursuing a more aggressive fiscal policy. There are countries in Europe where the unemployment rate could literally be dropped by ten percent in the same period.

-Username17

[DSMatticus]

I wasn't trying to modest proposal you, I actually happen to think that reducing deficit, in general, is not a bad idea. How and when it is done is another question, but I think it might be a good idea before potential lenders doubt your ability to pay them back. And the measurements, while also having many negative effects - which I won't deny, the whole crisis could have been handled better - have had at least one intended consequence - Greece's and Spain's credit ratings are getting better again, so it will be easier for both countries to take on new credits in the future.

Spain has gone from running a modest surplus to six years of deficits, with total debt level skyrocketing from an unnoteworthy 36.1% of GDP to 93.9% of GDP. Greece was running deficits before, but is now running deficits that around twice that size, and their debt as percent GDP has gone from 98.6% to 175.1%. The deficit/debt situation in Greece and Spain is not better, it is worse. And you know what? It will be worse again next year.

Think about what you're arguing. Seriously, just stop and think. You are claiming that a recent credit bump for Greece and Spain is the market responding to an improvement in their debt/deficit situation. And you are also claiming that austerity is responsible for their improving debt/deficit. Do you see the problem yet? The improvement you're talking about didn't actually happen. You are claiming that markets responded to a fictitious event, and that austerity is responsible for causing this fictitious event to happen. Alternative theory: things that didn't happen didn't actually happen, and things that do not happen also do not have causes or effects.

Greece and Spain are probably getting credit bumps because investors are less afraid of a euro exit, and as long as there's no EU exit Europe will at least partially have their back. Whereas if Greece and Spain did leave the EU, they would just establish their own sovereign currency and declare any debts they didn't want to pay over. But if they haven't bailed yet, after 5+ years of crippling austerity and 2-3 years of unemployment >20%, it probably ain't happening until actual radicals take over.

But I would also like to point out that your reasoning is fundamentally flawed. While there is no reason to believe that the recovery fairy is currently visiting Greece or Spain, recovery is actually the default. Unless the system is tremendously fucked, the inexorable tide of growth marches on and eventually returns things to normal. The storm always passes. Always. But even if the storm passes, it is still absolutely the case that staying indoors is better than standing on your roof trying to catch wind debris with your mouth. Different strategies will greatly change the extent to which the storm fucks up your day before it goes away. And it turns out that austerity is being the guy on the roof playing suicide frisby with a hurricane. Even if he survives, even when the storm finally fades, that guy is still a dumbass. You have to compare two different strategies, and by all sane analysis austerity has been one of the worst fucking choices possible.

Also, what would you have done instead of bailing the credit-giving banks out? Yes, it's unjust, and yes, deregulating the banks in the first place was shortsighted, but once the shit hit the fan, would you really have preferred a system collapse?

We aren't talking about whether or not the bailouts should have happened (they should have, though the lack of accountability involved is fucking criminal). We are talking about how bullshit it is that when German banks overleveraged themselves handing out risky loans it ended up being European Union taxpayers who bailed those banks out, not German taxpayers. Germany, already one of the strongest economies in the EU, has received hundreds of billions of euros of aid in the form of having Europe foot the bill for their banks' toxic assets - for a brief period at the outset of the bailouts, German banks were receiving more aid from the Greek bailouts than Greece itself!

Right now, your proposal to increase inflation might work, but at the height of the crisis, this would have been suicidal.

You are going to have to explain that one. Because it wouldn't have been suicidal in the least, and I do not actually know enough about whatever bullshit centrist economics are floating around in your skull to understand why you even think that would be the case.

[Aharon]

@Frank
So why finance the spending via deficit and not via more sensible taxation (higher capital gains tax, for example)?

@DS
Please cut down the vitriol a bit. While I usually don't object to that board culture, I noticed right now that it makes it harder for me to change my mind despite you making good points. I'll try and answer despite being pretty much persuaded - I would like if you could expand on these points.

@Spain
AFAIK, The spanish modest surplus was in part founded on a housing bubble, so the situation wasn't as rosy as it looked on paper.

@Credit bumps/Euro Exit
Yes, that makes sense.

@Austerity worst fucking choice
So why was this choice made, then? I'm no economist, I don't have a deep understanding of the underlying structures. But as I pointed out earlier, the German government at the time didn't believe in austerity as some kind of dogma, acting keynesian in response to the crisis internally. I don't understand why there's such a strong push for austerity from some factions if it is as totally unworkable as you say.

@German banks overleveraging
So in your opinion this should have been paid for by German taxpayers alone? As you said earlier, there's two parties involved - while the lendor has some responsibility, so has the loan-taker.

@High inflation at the height of the crisis
Officially condoned high inflation in the whole Eurozone => Fear of Hyperinflation => Bank Runs

[Maj]

@Austerity worst fucking choice
So why was this choice made, then? I'm no economist, I don't have a deep understanding of the underlying structures. But as I pointed out earlier, the German government at the time didn't believe in austerity as some kind of dogma, acting keynesian in response to the crisis internally. I don't understand why there's such a strong push for austerity from some factions if it is as totally unworkable as you say.

I'm sure I will be corrected if I'm wrong, but from where I'm sitting...

In times of scarcity, Nature's response is to withdraw and become conservative with resources. In the case of people, we not only withdraw and become more conservative, but accuse those people who aren't withdrawing of being wasteful and unable to manage their resources.

While there is absolutely nothing wrong with going over your expenses to make sure that you're spending wisely and efficiently, that's not what conservatives want. They want to cut indiscriminately because they're only looking for a small number, not efficiency and wise investment. And they don't see the frequent hypocrisies in their spending (ie: raise defense budget, but cut taxes).

[Kaelik]

@Frank
So why finance the spending via deficit and not via more sensible taxation (higher capital gains tax, for example)?

Because during an economic downturn is the part where you run deficits to escape the economic downturn.

@Austerity worst fucking choice
So why was this choice made, then? I'm no economist, I don't have a deep understanding of the underlying structures. But as I pointed out earlier, the German government at the time didn't believe in austerity as some kind of dogma, acting keynesian in response to the crisis internally. I don't understand why there's such a strong push for austerity from some factions if it is as totally unworkable as you say.

Because it is the choice that benefits the filthy rich German bankers the most at the expense of everyone else. But since the German government disproportionately represents rich Germans, and represent Greeks and English and French people zero fucking percent, they are going to advocate that all the French and Greeks and Spanish and English people (and to a lesser extent average Germans) suck all the dicks so they don't have to. This is like, economics 101, Greek people being miserable is an externality to the German government.

@German banks overleveraging
So in your opinion this should have been paid for by German taxpayers alone? As you said earlier, there's two parties involved - while the lendor has some responsibility, so has the loan-taker.

Said every idiot ever when blaming the victim of the loan shark for their broken thumbs. Many interactions are not made based on equal power or knowledge, sometimes people take loans because they trust that the people loaning the money are capable of determining if they can pay it back. Sometimes they take a gamble because they are willing to risk having to default, only to find out that instead of defaulting resulting in bad credit and less ability to take out loans, it results in someone breaking your goddam thumbs if you tell them you want to default.

Hint hint, the German banks getting the German government to get the EU to threaten to murderize the Greek economy is exactly like Loan Sharks breaking thumbs. It is completely bullshit and not one of the risks that Greece actually signed up for when they borrowed money.

[DSMatticus]

So why was this choice made, then?

Because the choice is being made by conservatives in the EU core (read: mostly Germany), who have basically already recovered and/or are only suffering minimally. Greece and Spain do not actually have a lot of political weight or representation, and the institutions of the EU are more than somewhat biased towards the big players and towards the conservative agenda. Imagine if Texas were in charge of managing the USD, and Iowa slipped into a recession while Texas was holding steady. Would Texas be under significant pressure to address Iowa's concerns? No, not really. Voters in Iowa can't shape the Texan government. There are no incentives there for the German government to give a fuck about suffering in Greece and Spain, and so they observe that their banker friends and corporate friends are doing okay and immediately stop giving a fuck.

So in your opinion this should have been paid for by German taxpayers alone? As you said earlier, there's two parties involved - while the lendor has some responsibility, so has the loan-taker.

Well, Greece is broke. The loan-taker very specifically can't pay back the loans - that's what started the crisis in the first place. The question is why are people in the UK, and France, and Portugal, and Italy, and Spain, and Greece, and so on... paying to save German banks, when German's economy is the one least in need of help, and they could easily afford their own bailout? Especially when they aren't paying equal amounts to save French banks, who did the same thing but not as bad? Or UK banks, who did the same thing but not as bad?

But no, I'm not bringing this up to talk about what the solution should have been. I'm bringing this up to highlight the staggering amounts of bullshit and corruption hidden in the German government's official narrative. While shoving austerity down Greece's throat and shouting RESPONSIBILITY!, they had the rest of Europe bail them out of their own irresponsible practices... and have since spent the entire crisis pretending to be the model of self-restraint, discipline, and success. They didn't even need bailouts, but they still secretly gave themselves bailouts and then spent the next five years pretending to be independently successful and self-reliant.

Officially condoned high inflation in the whole Eurozone => Fear of Hyperinflation => Bank Runs

That hasn't actually happened. Like, ever. Keep in mind, the EU as a whole has inflation at half a percent. That's not high. That's nothing. Their own announced inflation target is just under 2%, and a great deal of credible economists have (especially since the latest crisis) argued that 2% is too low, because it's too easy to run into the lower bound from there. The UK is actually almost meeting their ~2% target, and the market has not punished them in anyway for their "risky" inflationary practices in anyway.

People who tell you inflation are scary are liars. For whatever reason, they are politically opposed to using monetary policy to solve economic problems, and saying that inflation will destroy the world!!1! is just what they do when they want to make you afraid of monetary policy. But their hypothesis that the markets will punish governments for inflation is not borne out by reality.

[Lago PARANOIA]

People who tell you inflation is scary are liars.

To be fair, inflation is very, very scary to the money men. As shown in the U.S., Japan, and most cogently by the EU, they would rather have 2% inflation and 50% youth unemployment than 5% inflation and 4% unemployment.

So it might just be pathological psychological projection rather than an outright lie. You can never tell with conservatives.

[Username17]

@Frank
So why finance the spending via deficit and not via more sensible taxation (higher capital gains tax, for example)?

That wouldn't be a deficit spending. If you increase taxes and increase spending, that is deficit neutral. It can still be a good thing to do when you're in a recession and the velocity of money is low. Just have the state confiscate some money that isn't being spent and spend it. Spend it on hookers and bathtub hooch for all I care, that'll increase employment in the hospitality and agriculture sectors.

But the point is that deficit spending (as opposed to mere government spending) is ultimately where growth of the monetary base comes from. All those dollars in circulation have to come from somewhere, and ultimately that place is a government deficit. The government spends a dollar that didn't come from taxing away a dollar and it prints a dollar to cover that debt. If there aren't enough dollars in circulation, you need more deficit spending, not less. Not even the same amount.

I'm all for balanced budget fiscal expansions (taxing and spending) in times of crisis, but you still need the deficits as a simple matter of accounting.

@Spain
AFAIK, The spanish modest surplus was in part founded on a housing bubble, so the situation wasn't as rosy as it looked on paper.

It doesn't actually matter why they had a surplus. The point is not that Spain had a great economy, merely that its public debt to GDP ratio was actually low. The entire narrative that they had a government debt problem is objectively false. Obviously they had and have problems - official unemployment rates do not climb north of 25% if there isn't some problem somewhere. But the people who want to make this about the Spanish government borrowing too much money are simply lying to you.

@Austerity worst fucking choice
So why was this choice made, then? I'm no economist, I don't have a deep understanding of the underlying structures. But as I pointed out earlier, the German government at the time didn't believe in austerity as some kind of dogma, acting keynesian in response to the crisis internally. I don't understand why there's such a strong push for austerity from some factions if it is as totally unworkable as you say.

You seem to have a buried assumption that the European technocrats know what's best for the economy of Europe and would do it if they knew what it was. There's no reason to believe either of those things. The current economic crisis has slogged on for 6 years. That is a legacy of failure. That is the worst shepherding of the economy of Europe since we started tracking the economy of Europe. David Cameron has presided over a worse economic record for the UK in this recession than in the Great Depression. The Great and the Good of Europe are fucking up.

Your base assumption should not be "How could things have been so bad that despite the interventions of these smart guys in suits, the economy is still in the shitter?" Your assumption should be "The economy is still in the shitter, why are these people making these choices that are so obviously wrong?"

Yes, as a simple matter of basic math, "expansionary austerity" is bullshit. And obviously so. The fact that Germany forced the other countries to do it means that they are either liars or stupid. The fact that as you've noticed, Merkel has no intention on imposing that shit on her own people should tell you which she is. Really. It's that simple.

Destroying the economy of Greece wasn't an inevitable casualty of the war, it wasn't even a mistake. It's the goal. Germany keeps cranking down the screws on Greece and trying to bully them into privatizing their stuff (and selling it to German companies, naturally).

@High inflation at the height of the crisis
Officially condoned high inflation in the whole Eurozone => Fear of Hyperinflation => Bank Runs

That is not how bank runs work. Bank Runs happen because of the belief that the banks aren't going to be able to cover their obligations. If money becomes worth considerably less every day that it isn't earning interest, that makes pulling it out of a bank and putting it into a sock drawer worse, not better.

You literally have the incentives on that backwards.

-Username17

[Blicero]

Can someone give me an "explain to the ignorant American" rundown on why European countries so frequently have technocratic elites?

[Lago PARANOIA]

Every post-WWI, post-Industrial Revolution country has technocratic elites -- for a given value of elite, of course. Japan has them, Australia has them, Russia has them, and especially the United States has them. The United States only looks like it doesn't have them because the conservative and to a lesser extent liberal economic consensus is confused. The libertarians/Austrians, Chicago schoolers, and market monetarists aren't in sync. They can agree on broad things (like inflation being the Great Satan, taxes on the rich are bad, capital gains needs a cut like yesterday) but on specifics (necessity of economic stimulus, how much the taxes of the lower class should be cut, the desirability of a trade deficit, how tight should be the connection between private industry and government) their responses can get confused.

But before Milton Friedman oozed onto the scene the United States had their own technocratic elites for 30-40 years. They were called Keynesians, or Old Keynesians if you prefer. Few people complained about them because suboptimal Keynesian policy that's literally four generations older than modern conservative policy is still much more efficient. In much the same way that Darwinists from the late 19th century can still do better biology than modern Internet 2.0 creationists.

[Username17]

Can someone give me an "explain to the ignorant American" rundown on why European countries so frequently have technocratic elites?

For starters, there's the aristocracy. You know how the Waltons and the Kochs have ridiculous amounts of wealth and disproportionate political power? Well in Europe, people kind of like that (Karlings, Hapsburgs, Lotharingias, etc.) took over the entire continent more than a thousand years ago and the creation of the nation state itself was a giant clawback program that was only partially successful. So there are all these "counts," "princes," and "barons" lying around who are independently wealthy, have a strong sense of entitlement, and are openly hostile to the idea of democracy. This means that in every country in Europe there is a well funded group of serious sounding people espousing radically conservative and anti-democratic ideas all the time. These guys are actually way more radical than the Teaparty in that they want to disenfranchise everyone, rather than just Black people and Mexicans. But they demand and receive respectful treatment from the media. It's kind of insane.

The second major issue is that a lot of European countries are bullshit small. You know how Rhode Island is small? There are seventeen countries in Europe that are smaller than Rhode Island. And that's not some sort of isolated thing, there are eleven more countries in Europe that are smaller than Connecticut. Estonia needs to rely on expertise from outside because the entire country has the population of Dallas. Not the population of the Dallas-Fort Worth metropolitan area, just the city limits of Dallas. So things that the people of the city of Dallas look to State and Federal government to do for them rather than the fucking mayor's office are things that the Estonians would really rather turn over to regional authorities. But Estonians don't get to vote on the regional authorities, because they aren't technically part of the same country as the other places in their region.

The third major issue is Thatcherism. Now, Thatcher was a Baroness, and that kind of ties in to issue 1, but the people who put together the European Union during the 80s and early 90s (when a lot of the important institutions were defined), held to the ideas of Friedman. The concept was that the government should follow some simple rules to keep inflation under control and just let the market handle everything else. It's basically insane and it doesn't work, but the European Central Bank doesn't have a dual mandate. Technically, reducing the impact of recessions isn't even in their job description, because the right wing ideologues who made the Maastricht Treaty claimed that recessions would never happen again if the government stopped having an active fiscal policy.

-Username17