Patterico's Pontifications

5/7/2012

French, Greeks vote against imaginary austerity

Filed under: General — Karl @ 10:27 am

[Posted by Karl]

Paul Krugman and other lefties are rejoicing over the results of the French and Greek elections (even if markets are not) as a rebuke against European “austerity” programs.  However, it is worth remembering that those attacking “austerity” programs in Europe are also fond of claiming Congressional Republicans are backing “draconian cuts” in the size of government, all evidence to the contrary.  As the Mercatus Center’s Veronique de Rugy notes in a new paper:

If there is austerity in Europe, in most cases it hasn’t taken the form of massive spending cuts.

Following years of large spending expansion, Spain, the United Kingdom, France, and Greece—countries widely cited for adopting austerity measures—haven’t significantly reduced spending since “austerity” supposedly started in 2008. When spending was actually reduced—between 2009-2010 in Greece, Italy, and Spain—the cuts have been relatively small compared to the size of bloated European budgets. Meaningful structural reforms were seldom implemented. Instead, whenever cuts took place, they were always overwhelmed with large counterproductive tax increases.

This so-called balanced approach—some spending cuts for large tax increases—has been proven to be a recipe for disaster by economists. It fails to stabilize the debt, and it is more likely to cause economic contractions.

That summary excludes Ireland, but as Kyle Wingfield notes, the top marginal tax rate there rose 17 percent amid a global recession.  In contrast, Estonia, Lithuania and Latvia have bounced back strongly after adopting strict austerity measures and vastly reducing government indebtedness.  The finding that the big-tax, “balanced” approach to fiscal consolidation generally fails is consistent with prior studies from the OECD and IMF.

So what is the effect of the Greek and French elections? Maybe not much.  As Rick Ackerman reminds us, “even the socialists in Greece’s parliament were forced to support austerity measures a few months ago, because without such measures the country would have been unable to borrow enough cash to meet payroll.”  As for France, even Jukebox Mafioso Matt Yglesias acknowledges:

[O]ne very plausible story of what happens next is simply that the European Central Bank will decide it needs to bring the continent’s newest leader to heel. If the ECB signals that it will only support the French banking system and the French economy if Hollande sticks with the status quo program, then Hollande may well have no choice. Elections in Europe aren’t necessarily what they used to be.

Or, as Iowahawk bluntly tweeted to Greece: “[Y]ou can vote against austerity all you want. Austerity doesn’t give a sh*t about election results.” Also: “French vote out austerity, gravity; prompts new fears of airborne flocks of rich, drunk flying Frenchmen.”

–Karl

157 Responses to “French, Greeks vote against imaginary austerity”

  1. Ding!

    Karl (f82126)

  2. They just need to spend their way out of bankruptcy.

    JD (d4dd44)

  3. Remember the multiplier effect! Every deficit Euro they spend comes back to them at 1.5 euros of taxes!

    luagha (5cbe06)

  4. “They just need to spend their way out of bankruptcy.”

    JD – Tax their way to GREATNESS by eating the rich, following the Krugman method!

    daleyrocks (bf33e9)

  5. Leave no youth employed or other peoples’ money unspent.

    daleyrocks (bf33e9)

  6. Maggie Thatcher famously asserted, “The problem with socialism is that eventually you run out of other people’s money.”

    Well, I checked the calendar. “Eventually” has finally arrived !

    Elephant Stone (0ae97d)

  7. If any of y’all think that Americans will allow the actual payment of our debt as currently constituted then y’all are delusional. What we are seeing in Europe we will see at home inside of ten years.

    Ed from SFV (a7215d)

  8. One thing you gotta give the socialists… They really take that “if at first you don’t succeed” thing to heart. Doesn’t matter how many times it fails, they’re always willing to fail again.

    Ghost (6f9de7)

  9. “It’s all ‘Greek’ to me !”

    Elephant Stone (0ae97d)

  10. Anyone ever see any of the old “Wonder Woman” tv series starring Lynda Carter, and in a limited role, Debra Winger ?

    With all this talk of Greece, truth lassos, and utopia, I think there’s a joke about Paradise Island or the Island of Lesbos just waiting to be made !

    Colonel Haiku ?

    Elephant Stone (0ae97d)

  11. Not-draconian cuts tied to regressive tax increases on actual tax payers. Sound familiar?

    JD (d4dd44)

  12. Why yes, JD, that does seem oddly familiar.

    Dustin (330eed)

  13. Sure does sound like that “fair and balanced approach”

    JD (d4dd44)

  14. If only Paul Krugman were imaginary.

    Ipso Fatso (7434b9)

  15. Comment by Ed from SFV — 5/7/2012 @ 11:16 am

    My little village’s police pension funds exceeds the police payroll. I’m afraid that Ed is right.

    nk (875f57)

  16. Anyway, all the Greeks need to do is reinvade Persia and they’ll be just find.

    There are seventy-year old goatherds up on the mountain who are self-sufficient. There are hard-working waiters at the tourist resorts, 14-hour days. They’ll be fine. There are professional colleges students, drinking ouzo and listening to bouzouki music, on their parents’ pensions, who will not be.

    nk (875f57)

  17. Spain, the United Kingdom, France, and Greece—countries widely cited for adopting austerity measures—haven’t significantly reduced spending since “austerity” supposedly started in 2008. When spending was actually reduced—between 2009-2010 in Greece, Italy, and Spain—the cuts have been relatively small..

    There they go again with this fallacy.

    There have been spending cuts. And as I pointed out in comment 112 to http://patterico.com/2012/04/29/the-democrats-are-the-problem-a-second-view/

    A spending freeze is a spending cut.

    A spending freeze is a spending cut, because the only way to get that is for the entitlement terms to change. You cannot freeze spending and expect things to remain the same.

    The argument that there hasn’t been any austerity is another example of how to lie with statistics.

    Furthermore, tax increases and sudden tax enforcement of bad taxes are just as much (budget) austerity as spending cuts are.

    The election results themselves should tell you something. No, the people of Greece are not deluded into thinking something has changed.

    Greece Approves Pension Overhaul Despite Protests
    By LANDON THOMAS Jr. and NIKI KITSANTONIS
    Published: July 8, 2010

    ATHENS — Greece took a big step toward overhauling its debt-plagued economy on Thursday by forcing through a pension bill that would sharply pare down the country’s welfare state by increasing the retirement age and reducing benefits.

    For Prime Minister George Papandreou, who commands a seven-member majority in Parliament, the bill represents the beginning of the end of the cradle-to-grave state compact that his father put in place as prime minister in the early 1980s.

    http://dealbook.nytimes.com/2010/08/13/greek-recession-deepens-amid-spending-cuts/

    Gross domestic product declined by 1.5 percent from the previous quarter as the government reduced spending. The unemployment rate, meanwhile, rose to 12 percent in May from 11.9 percent, the statistics agency said.

    Greece Agrees to Harsh New Spending Cuts as Lenders Ratchet Up the Pressure
    By RACHEL DONADIO and NIKI KITSANTONIS
    Published: February 5, 2012

    http://www.nytimes.com/2012/02/06/world/europe/greece-fights-on-two-fronts-to-secure-new-bailout.html?_r=1

    Frustrated at the political gridlock and the slow pace of structural changes in Greece, the country’s so-called troika of foreign lenders — the European Commission, the European Central Bank and the International Monetary Fund — have increased their pressure.

    They have demanded that Greece reduce its public sector workforce by 150,000 people, cut supplemental pensions and introduce private-sector wage cuts in exchange for the bailout money Greece needs to avoid default when a bond comes due in March…..But after nearly two years of austerity, with unemployment at 19 percent and the country plunged into a deep recession, such measures are expected to anger voters and cause social unrest at a time when Greece’s political parties are fighting for survival.

    http://www.nytimes.com/2012/05/07/world/europe/greeks-vote-in-parliamentary-elections.html?pagewanted=print

    Greek Voters Punish 2 Main Parties for Collapse

    With 80 percent of votes counted, the center-right New Democracy was in first place with 20 percent of the vote, or 111 seats in the 300-member Parliament, a sharp drop from the 34 percent it won in 2009. In a major shift, the Socialists, who dominated for decades and were in power when Greece asked for foreign aid in 2010, appeared to have only 14 percent of the vote, or 42 seats — down significantly from their 44 percent share in 2009.

    The results put them behind the Coalition of the Radical Left, called Syriza, which opposes the terms of Greece’s agreement with its foreign lenders. It drew 16 percent of the vote, or 50 seats, dominating in all major metropolitan areas. In a sign of the depth of the social turmoil here, early results also showed the far-right Golden Dawn party, whose members perform Nazi salutes at rallies, pulled in 6.8 percent of the vote — compared with less than 1 percent in 2009 — enough to enter Parliament for the first time with 21 seats….

    …Yet with Greece’s gross national product having dropped 20 percent since 2009 and unemployment soaring to 21 percent, fierce opposition to the bailout terms — tax increases and wage cuts — has led to the implosion of the Socialist and New Democracy Parties, and the rise of parties on the right and the left that oppose the loan deal.

    That anger was palpable on Sunday in Neos Kosmos, a middle-class district near central Athens. Evgenia Vogiatzi, a 45-year-old teacher and a lifelong Socialist, said that Greece was “in a state of enslavement” that had led her to support the Communist Party, which backs a return to the drachma, Greece’s currency before the euro.

    “I’ve had my salary cut 30 percent, I’m paying taxes through the nose and they’re talking about more cuts,” Ms. Vogiatzi said. “If that’s what it takes to stay in Europe, I don’t want Europe.”

    In the upper-middle-class Psychiko neighborhood in Athens, many supporters of the Socialist Party, known here as Pasok, said they had voted for radical-left Syriza for the first time. “I voted in anger,” said Evangelia Grillaki, 65, a retired florist. “We feel 1,000 percent betrayed.”

    Sammy Finkelman (d22d64)

  18. http://www.nytimes.com/2012/05/05/world/europe/greeks-expected-to-make-old-guard-pay-for-turmoil.html?pagewanted=all

    Many Greeks are ready to abandon the established parties. “This is the first year I’m going to vote for a smaller party,” said Anna Zerva, 45, a shop clerk and former Socialist supporter. She said that she was undecided between Syriza or the Ecologist Greens, which may reach the 3 percent threshold required to enter Parliament.

    Nodding at Greece’s culture of political patronage, Ms. Zerva said that the Socialists had helped her husband find a job at the post office. “In spite of that, we don’t feel the need to support them forever,” she said. She added that her mother, a New Democracy supporter, would vote for Independent Greeks because she is angry that her pension had been cut to $760 a month and that her last electricity bill was $520.

    No budget cuts? What world is Veronique de Rugy living in???

    Sammy Finkelman (d22d64)

  19. When the banks charge a high service fee, or just flat refuse to cash those U.S.Goverment checks, will that constitute a spending freeze, or cut?

    AD-RtR/OS! (b8ab92)

  20. (The Greek government has added property taxes to electricity bills in order to collect them. Some people apparently did not understand that the only reasons the taxes were at these levels is that people did not pay them, and that not paying full taxes had been factored into people’s plans.

    An increase in tax collection, an increase in tax enforcement IS a tax increase.

    Nobody should ever kid themselves about that.

    http://www.nytimes.com/2011/11/28/world/europe/greeks-balk-at-paying-new-property-tax.html?sq=greece%20electricity%20bills&st=Search&scp=4&pagewanted=print)

    NEA IONIA, Greece — Ioannis Chatzis is 86 and lives in a tiny, single room, surviving on a pension that is just enough to pay for food and care for his bedridden wife.

    But in its latest push to raise cash, the Greek government sent him a new $372 real estate tax bill, incorporated into his October electric statement.

    Mr. Chatzis says he is being asked to choose between lights and paying for his wife’s medicines, since he cannot afford both on his $720-a-month pension.

    “This is how we are treated,” he said recently, his face a mixture of fury and despair. “I have nothing left to give. I will not be paying it.”

    Mr. Chatzis is far from alone in that vow, and it is not certain that the Greek government will do anything about the tax rebels.

    As the first due dates approach on the Greek government’s novel idea of linking electricity to tax payments, a growing resentment is settling over many parts of this country — one that some local officials believe could even shake its political stability.

    Already there are pockets of resistance popping up in dozens of areas, including this northern suburb of Athens, where Mayor Iraklis Gotsis has promised to fight the tax bills in court. He has also organized a group of electricians willing to reconnect — illegally — anyone who is cut off. “This thing on top of all the other taxes and salary cuts has made people snap,” Mr. Gotsis said recently. “It is the drop that made the glass full.”

    Sammy Finkelman (d22d64)

  21. “A spending freeze is a spending cut.”

    Sammy – If I budgeted $100 for something last year and $100 again this year that is a cut? Under BCA or Washingtonianese, but not plain English.

    Try explaining your ideas a little more simply, e.g. in terms of dollars per beneficiary for entitlement programs.

    daleyrocks (bf33e9)

  22. But….but….all entitlements have to have a COLA adjustment to protect recipients from the ravage of government-driven inflation.
    It would be inhumane if everyone in the system had to operate with the same level of funding year to year.
    Who do you think they are: Private Citizens?

    AD-RtR/OS! (b8ab92)

  23. People in Greece, I read, are moving back to rural areas where they can support themselves by farming.

    It could be that the greater effect is from the tax increases. The budget cuts mostly come in the form of lower wages for government employees, reduced pensions, and reduced eligibility for government benefits. And the reductions are sometimes of the meat ax type, because that’s all you can do quickly.

    You can’t cut waste, fraud and abuse.

    For example:

    http://www.nytimes.com/2011/12/27/world/europe/greeks-reeling-from-health-care-cutbacks.html?pagewanted=all

    By Suzanne Daley

    Published online December 26, 2011 and in the newspaper Tuesday December 27, 2011 on page A4

    Imnportant things indicating real cuts (as well as the danger of national health insurance) in blodface:

    PERAMA, Greece — The free clinic here opened about a year ago to serve illegal immigrants. But these days, it is mostly caring for Greeks like Vassiliki Ragamb, who was sitting in the waiting room hoping to get insulin for her young diabetic son.

    Four days earlier, she had run out of insulin and, without insurance and unable to pay for more, she had gone from drugstore to drugstore, pleading for at least enough for a few days. It took her three hours to find a pharmacist who was willing to help.

    “I tried a lot of them,” she said, gazing at the floor.

    Greece used to have an extensive public health care system that pretty much ensured that everybody was covered for everything. But in the last two years, the nation’s creditors have pushed hard for dramatic cost savings to cut back the deficit. These measures are taking a brutal toll on the system and on the country’s growing numbers of poor and unemployed who cannot afford the new fees and co-payments instituted at public hospitals as part of the far-reaching austerity drive.

    At public hospitals, doctors report shortages of all kinds of supplies, from toilet paper to catheters to syringes. Computerized equipment has gone unrepaired and is no longer in use. Nurses are handling four times the patients they should, and wait times for operations — even cancer surgeries — have grown longer.

    Access to drugs has also been affected, as some drug manufacturers, owed tens of millions of dollars, are no longer willing to supply Greek hospitals. At the same time pharmacists, afraid that the government might not reimburse them, are asking for cash payments, even from those with insurance.

    Many experts say that Greece’s public health system was bloated and corrupt and in dire need of reform. But they say also that the cuts have been so deep and have come so fast, that they have hit like a tsunami.

    In just two years, the government has cut spending on health care to $17 billion from $19.5 billion — a 13 percent decrease. And under its agreement with its creditors, Greece must find even more health care savings next year — as much as $915 million, government officials said.

    At the same time, public health facilities have seen a 25 to 30 percent increase in patients because so many Greeks can no longer afford to visit private clinics.

    Dr. Olatz Ugarte, an anesthesiologist at the Saint Savvas Cancer Hospital in Athens, said that breast cancer patients often have to wait three months now to have tumors removed. “Waiting that long can be life or death for these patients,” she said.

    In a recent letter to the medical journal The Lancet, a team of English researchers warned that a “Greek tragedy” could be in the making, pointing to rising suicide and H.I.V. rates and deterioration of services at hospitals under financial pressure. “In an effort to finance debts,” the researchers said, “ordinary people are paying the ultimate price: losing access to care and preventive services, facing higher risks of H.I.V. and sexually transmitted diseases, and in the worst case losing their lives.”

    At the Perama clinic, which is run by the international nonprofit Doctors of the World, doctors say they are seeing many families that cannot afford bus fare, let alone the new $6.50 fee at public clinics.

    Technically, those Greeks who cannot pay are entitled to free care. But the bureaucracy can be overwhelming. Ms. Ragamb, a former hairdresser whose unemployment benefits and health insurance ran out six months ago, said she was still waiting to get the right papers.

    The story did not surprise Dr. Liana Mailli, the pediatrician who was seeing Ms. Ragamb’s son, Elias. The 3-year-old got a diagnosis of diabetes only a few months ago, after he fell into a coma. Dr. Mailli has heard of such bureaucratic troubles from many patients. Even more often, she said, parents have fallen behind in paying their health insurance contributions, or their employers do not pay and so they are no longer covered.

    One development that Dr. Mailli said she found particularly disturbing was that a growing number of children had not had their basic vaccinations.

    If nothing is done, she said, polio, diphtheria and whooping cough could all return to Greece. “This is such a serious thing,” she said. “But these vaccines are expensive.”

    At the start of its debt crisis, Greece was spending about 6 percent of its G.D.P. on health care — about average for Europe. But the system was far from efficient. It includes many small hospitals and a reliance on expensive brand name drugs.

    Moreover, there was widespread corruption. Experts say doctors often had lucrative deals with drug manufacturers that led them to vastly overprescribe, and many expected cash payments on the side for timely and attentive care.

    Since the debt crisis began in 2009, the government has frozen hiring, cut salaries and focused on tracking prescriptions and new procurement procedures. About 20 doctors have been arrested for corruption.

    But little has gone smoothly.

    Government officials acknowledge some problems, but say that the system was simply unsustainable. In the next year, they say, adjustments can be made.

    “We have had two years of emphasis on the financial, now we will pass to evaluation,” said Nikos Polyzos, the secretary general of the Health Ministry.

    But many doctors say the new emphasis on cutting costs has gone too far. In addition to shortages, they say that the supplies they do have are of poor quality. They complain that bugs have been found in new syringes imported from China, sutures fall apart and generic drugs do not seem to do the job. And the hiring freeze has caused such a shortage of nurses, some doctors said, that procedures frequently have to be postponed.

    “The whole system is a mess right now,” said Dr. Elias Sioras, a cardiologist and a union activist at the Evangelismos Hospital in Athens. “In a six-hour shift, I am seeing 40 patients, which is ridiculous. It makes my work more difficult, but it is also much worse for the patients. And a lot of things that were covered, especially tests, are not covered anymore and the patients don’t have the money to pay.”

    Dr. Sioras said that 11,000 patients used to have bypass surgery in public hospitals each year, but that number fell to 9,000 last year. “The way I see it, at least 2,000 people needed a bypass and didn’t get it,” he said. “I have no idea where they are. They could be dead.”

    [Actually a lot of bypass surgery isn’t necessary or helpful, as indeed the article quotes someone as saying]

    Some experts, including Lykourgos Liaropoulos, a health economist at the University of Athens who helped the government design many of its cost-saving measures, say the hospitals were probably performing too many bypass procedures.

    But even he questioned the virtual hiring freeze on nurses. “It’s one of the areas where the troika got it wrong,” he said, referring to the nickname that has been given to Greece’s three creditors, the International Monetary Fund, the European Commission and the European Central Bank.

    Access to drugs has also become a problem for many patients. Some pharmaceutical companies — owed millions, or unhappy with the new, lower rates the government plans to pay — have stopped supplying the hospitals. These include the Swiss pharmaceutical giant Roche, which makes cancer drugs not available elsewhere.

    And many pharmacists now demand cash payments from patients, unwilling to take the risk of waiting for reimbursements.

    The president of the Athens pharmacists’ association, Konstantinos Lourantos, said few pharmacists could afford to wait for reimbursements, especially for cancer drugs, which can cost 5,000 euros, or $6,500, a month.

    He said he told one client to see if any hospital pharmacies had the drug on hand. But the man later told him he had gone to six hospitals without success. “I have no idea what happened to him,” Mr. Lourantos said.

    Sammy Finkelman (d22d64)

  24. If people were given money, instead of eligibility for care, they maybe could prevent crazy things like bugs (insects) in syringes imported from China -= they would avoid any clinic that had a problem like that – or a refusal to supply insulin because of delays in payment.

    Note also there was a 13% cut And more was expected. Of course maybe a 13% cut shouldn’t cause these results, but this is government.

    Sammy Finkelman (d22d64)

  25. When society implodes, the self-sufficient will survive, as they will have put away sufficient goods to fall back upon.
    Canned goods, guns, and ammo, are always in style when anarchy rides through the countryside.

    AD-RtR/OS! (b8ab92)

  26. Sammy,

    What percentage of GDP do the freeze/cuts represent as a percentage of any of these countries’ GDP?

    An example: The Greeks agreed to $4 billion in cuts, which the L.A. Times called “savage.” GDP is still $308 billion and change. And their debt is at least $500 billion. The notion that this constitutes “savage” austerity is laughable. Losing 150K gov’t jobs in an economy where govt consumes 40% of GDP, has a ridiculous retirement age and employment-strangling regulations? I weep.

    But Iowahawk really has the bottom line here: When people stop lending you money, you will spend less. You will be a lot more austere than Greece or France is today.

    Karl (f82126)

  27. Could you please just link rather than lifting their work?

    JD (d4dd44)

  28. Comment by daleyrocks — 5/7/2012 @ 12:33 pm

    “A spending freeze is a spending cut.”

    Sammy – If I budgeted $100 for something last year and $100 again this year that is a cut? Under BCA or Washingtonianese, but not plain English.

    It is a cut. It is a cut because you can’t do the same thing.

    The population doesn’t stay the same, and its composition doesn’t stay the same. And if the economy gets worse more people are eligible for things. And there are all sorts of built in cost increases. With government often it’s debt, pensions, and and multi-year projects.

    With a family maybe you wouldn’t say so, but wait. Suppose you have a 2 year old child. Will expenses be the same next year?? And the year after that? Wouldn’t food, at least, cost more?

    Try explaining your ideas a little more simply, e.g. in terms of dollars per beneficiary for entitlement programs.

    I don’t know the statistics, but almost anytime you have a freeze you have this kind of a cut. And if you really have a cut, even 10%, it becomes a drastic cut. You can’t budget out waste, fraud and corruption. That requires changing incentives, and the exact results cannot be known in advance. You can only do this by trial and error.

    Sammy Finkelman (d22d64)

  29. That was for Sammy, not Karl.

    JD (d4dd44)

  30. Sammy (again),

    Also note the role taxes are playing in your cut-and-pastes. This is what de Rugy is talking about. The “balanced” approach is a big fail. Much better to rip off the band-aid quickly than drag it out. The Baltic states took a big hit, but are now growing at 5%-6%.

    Karl (f82126)

  31. Sammy – If I budgeted $100 for something last year and $100 again this year that is a cut? Under BCA or Washingtonianese, but not plain English.

    It is a cut. It is a cut because you can’t do the same thing.

    Complete and utter nonsense.

    JD (d4dd44)

  32. BTW, EU population growth, already low for years, is falling to near-zero, even with liberal immigration.

    Karl (f82126)

  33. Comment by Karl — 5/7/2012 @ 12:52 pm

    When people stop lending you money, you will spend less. You will be a lot more austere than Greece or France is today.

    But they are not stopping lending money. In fact it is very important for the creditors not to stop, or else their own economies will be affected because creditors won’t be paid. What they are doing is lending, but only on conditions.

    The conditions are actually self-defeating. They use static accounting to determine how much taxes will be collected and how much will be spent. They never can get to a lower budget deficit.

    There may be ways of cutting but it requires careful planning.

    Sammy Finkelman (d22d64)

  34. “They just need to spend their way out of bankruptcy.”

    – JD

    I suppose they can get started right after they tax-cut their way to higher revenue.

    Leviticus (5a2bf1)

  35. Shoick therapy (sudden reduction in government expenses, basically laying off people) was used in Poland after the fall of Communism, but the government was careful to make sure there’d be countervailing new businesses created.

    Sammy Finkelman (d22d64)

  36. Leviticus,

    Reducing income tax rates and capital gains tax rates actually does result in higher tax revenues, because it frees up money for investors to invest in expansion, and it frees up money for consumers to spend…and that increased activity in the economy provides higher sales tax revenues as well as income tax revenues.

    Go read about the Laffer Curve.

    Elephant Stone (0ae97d)

  37. Leviticus – snark aside, not draconian cuts tied to tax increases on actual taxpayers is not working. It is delaying the inevitable, at best.

    JD (d4dd44)

  38. The Greeks and French were acting rationally, at least from their perspective and in the short term.

    Why not push for higher taxes when it isn’t you that is getting taxed? And don’t bother trying to explain that regular folk are negatively impacted by raising taxes on rich folks, that is a lie spread by the rich trying to escape paying their fair share. You and I both know things would be better if the rich just coughed up a little bit more in taxes.

    Why accept even the threat of austerity when it is a bunch of German banks that are the prime beneficiary of the agreement? Why should we accept cuts in order to keep those banks (who, by the way, are responsible for the problems in the first place) and their shareholders from having to take losses on their loan portfolios?

    As for the Greek and French government losing the ability to finance their deficit spending? That too is just extraneous noise pushed by those holding us back. Besides, the Greeks and French people know that even if they defaulted on their sovereign debt, the Germans wouldn’t hesitate to loan them even more money.

    They – along with a good chunk of the American public – are acting the way you would expect a non-educated, non-productive group to react. They don’t know economic theory, couldn’t pick Adam Smith out of a lineup. All they know is that some evil group (German bankers in the case of Europe and Wall Street and the GOP here at home) is threatening to take away things they have (their government jobs, benefits, etc.) in order to keep their ill-gotten and excessively large share of the pie. This is why Obama starts with a built-in 45% of the electorate… and why it is so hard for Romney to make the economic case for pro-growth policies.

    steve (369bc6)

  39. Sammy,

    Thank you for conceding the main point of the post, i.e., the governments must ultimately accede to the demands of the lenders (even if you don’t like those conditions).

    But since you pased in some sob stories from Greece, let’s have Judd Gregg remind us of the big picture:

    The retirement system for many union and government employees allows a person to retire at age 55 at close to full pay. For a while they had in place a 35-hour work-week law, which is still followed by many businesses and government entities.

    ***

    The reason this is instructive is that it reflects the fact that there is a point of critical mass. If a culture gets to a position where your vote establishes your income, then it becomes rather reasonable to expect a massive growth in government, the outer limits of which have not even been reached in France.

    The effect of this will not be apparent for a while. But the outcome is inevitable.

    First, the government runs up massive debts to pay for its expenditures. When adding debt can no longer be done conveniently, it turns to a dramatically progressive tax policy. Both of these steps, when coupled with an irrational retirement system, lead to a dramatic drop in the productivity of the society and an inevitable resulting drop in the standard of living for all.

    Ironically, all this is done under the banner of “fairness and equality.”

    Karl (f82126)

  40. Comment by Karl — 5/7/2012 @ 12:59 pm

    EU population growth, already low for years, is falling to near-zero, even with liberal immigration.

    That’s right. I don’t know what the dependency ratio is. (that’s the ratio of people below 18 or 25 and over 65 to all others)

    In Greece population growth has dropped in half since about 2007. The crude birth rate hgas taken a sudden drop of about 5% The death ratre has also risen a bit too, bvut that looks like the aging of the population. There are actually also people leaving Greece. Crude population is still abou hald a percent higher. But old people cost more than babies. Greece probably has more people collecting pensions every year.

    Sammy Finkelman (d22d64)

  41. A big part of the problem in Greece is that people are/were in the wrong kind of jobs. And some jobs have too much income. What this means is that overall, the productivity of the economy is lower, although that didn’t cause the debt problem – accounting gimmicks did.

    This article tells about the licensing proscedures in Greece:

    http://www.nytimes.com/2010/10/15/world/europe/15greece.html?pagewanted=all

    It says there are about 70 closed professions” which tends to result in higher prices.

    And there are unnecessary capital costs. To open a pharmacy you basically have to buy a license from another pharmacy, and the going rate could be up to $400,000. There can only be one pharmacy neara hospital and it sis often closed at night.

    Trucking licenses are limited in Greece like taxi medallions in New York, and now licenses sell for $500,000 – and who wants to see their investment become worth zero? So it costs more to truck something from Athens to Thebes (45 miles) than from Athens to Rome (600 miles)

    Sammy Finkelman (d22d64)

  42. JD – My guess is that the Greeks would be complaining just as much about massive tax increases as they are about these spending cuts.

    And that’s really the problem, at the end of the day: people want a social safety net, without paying the high costs that such a thing requires.

    Elephant Stone,

    The Laffer Curve strikes me as a silly political tool. If a country taxes citizens earning $50 at a 30% rate, it’s going to make $15; if the same country taxes doubly-productive citizens at a 10% rate, it’s going to earn $10. Beyond that, the Laffer Curve is based on the idea of single, uniform tax rate (which seems silly).

    I’ll agree with you that there might be tax rates so high that they stifle productivity, but you’re gonna have to meet me halfway by acknowledging that a categorical believe in the economically beneficial nature of tax cuts is an abuse of Laffer Curve logic. There’s gotta be a middle ground – a circumstantially optimal tax/spending ratio. It’s all about that balance; arguing that tax cuts solve everything is irresponsible.

    Leviticus (5a2bf1)

  43. I suppose they can get started right after they tax-cut their way to higher revenue.

    Comment by Leviticus

    This is fodder for someone to remark on how tax cuts lead to revenue, but you’re right to dismiss this argument. No tax system can fix this problem.

    As JD noted, we must see enormous cuts.

    We have an absurd spending binge. It was very bad during the Bush administration. It’s far worse today with Obama, who isn’t leader enough to pass a budget.

    This is why the primary was so bad. The only conservatives were poor politicians. The only skilled politicians… well I don’t expect them to demand a balanced budget. And we can’t have a balanced budget without over a trillion in cuts + PLUS!!!! major cuts to entitlements.

    I think some out there have given up on sustainable policy and are just having a last hurrah, like a pre bankruptcy credit card funded trip to Las Vegas.

    Dustin (330eed)

  44. And I guess I’m not even considering Europe. What’s the point, other than as a warning for America?

    Dustin (330eed)

  45. By the way I read there are some speculators in Greek debt.

    http://www.nytimes.com/2012/05/05/business/global/bondholders-bullish-on-greece.html?ref=todayspaper&gwh=AEA623F7E8A55B40A2618926BDC99BFA

    The interest rate now on the market is an effective 21% or so, and it is kind of expected there will be another writedown in debt owed, but some people are buying it up, gambling it won;t happen because very little of the debt is now in private hands.

    Most of it is now owne3d by the Internatyional Monetary Fund, the European Central Bank or individual counmtries.

    http://www.nytimes.com/2012/03/10/business/global/greece-debt-restructuring-deal-private-lenders.html?pagewanted=all

    Sammy Finkelman (d22d64)

  46. Hi, Neat post. There’s a problem along with your website in internet explorer, might check this? IE nonetheless is the marketplace leader and a good section of people will miss your great writing because of this problem.

    search engine pagerank (5ac306)

  47. This so-called balanced approach—some spending cuts for large tax increases—has been proven to be a recipe for disaster by economists. It fails to stabilize the debt, and it is more likely to cause economic contractions.

    What they are trying to do is get a primary budget in balance (balanced except for interest payments)

    What really doesn’t work is any attempt to balance the budget, either with tex increases or spending cuts. Tax increases probably have a worse effect on the economy, especially the wrong kind of tax. What is needed is lending and other things to encourage the formation and expansion of businesses – but businesses that make sense.

    Spending cuts only cut people off from one source of income. Broad tax increases may reduice income everywhere.

    Sammy Finkelman (d22d64)

  48. Comment by Dustin — 5/7/2012 @ 1:27 pm

    And we can’t have a balanced budget without over a trillion in cuts + PLUS!!!! major cuts to entitlements.

    Not so. The budget was balanced in the 1990s without that.

    If we get economic growth there are automatic spendinbg cuts and tax revenue grows too.

    Sammy Finkelman (d22d64)

  49. Not so. The budget was balanced in the 1990s without that.

    I disagree for two reasons. The most glaring is that the ‘balanced budget’ Newt and Clinton saw did not count social security. Indeed the national debt went up every single year of the 1990s. You do not have a balanced budget if you lose money. You just have rhetoric.

    The other reason is that to get to the size of the government of the 1990s we would need…

    …drumroll…

    over a trillion in cuts.

    Dustin (330eed)

  50. And I don’t like this ‘if we get economic growth’ it’ll work itself out claim.

    I think that’s a lot like saying we can’t tend the farm we need for food because we’re hungry. If we wait until we get food, then we can tend the farm.

    We need the government to be cut down to a reasonable size. As small as possible. I think this partly as a matter of liberty and sense, but also this will permit economic growth on an organic basis.

    Otherwise, I’m waving at every pickup with a “Secede” bumper sticker. Seeing more and more of them.

    But I’ll take what I can get. I think Paul Ryan offers the most realistic way forward. I do not think this country has what it takes to rise and demand the kind of fix we so obviously need.

    We don’t need food stamps, EPA, fifty Murtha post offices. Frankly I don’t think we need the size of military we have if we have the willpower to use a smaller, cheaper, effective one in a way that offers a deterrent. You don’t need to languish expensively in Afghanistan if your enemies are scared to death of some idiot repeating 9/11. They aren’t. That’s expensive.

    But the lion’s share of the problem is ‘unfunded liabilities’ in entitlements. This is a nice way to say ‘legalized stealing’. Boomers and now younger generations have skipped out on paying for their entitlements (any time there is a deficit, the fair share was not paid). They are not entitled to anything. I think benefits should remain, and it should be called “charity”, and those with pride should turn their noses up at it.

    Obama would scoff at this, and promise a ‘comfortable retirement’. Who is going to pay for that? The beneficiary did not.

    Dustin (330eed)

  51. “We’re going to Greece!”
    “And swim the English Channel?”
    “No, no – to ancient Greece…”

    Space Cockroach (8096f2)

  52. Good Allah. We will never take any adult steps to fix things. Just use Sammy as an example, and his stay the same equals a cut nonsense will pale in comparison to the demagoguery, lies, and smears that will come from the left.

    JD (d4dd44)

  53. SF: “Not so. The budget was balanced in the 1990s without that.”

    Comment by Dustin — 5/7/2012 @ 1:46 pm

    I disagree for two reasons. The most glaring is that the ‘balanced budget’ Newt and Clinton saw did not count social security.

    No, wait, I think the problem is supposed to be that they did count Social Security, which was running a surplus.

    Social Security had been folded into the “unified budget” in 1968 by President Johnson for the fiscal 1969 budget (then running July 1 to July 1. This web page has an error.

    http://www.ssa.gov/history/BudgetTreatment.html

    This was actually recommended by something called the President’s Commission on Budget Concepts.

    Since the revenue was at least in theory dedicated what this meant was that the rest of the government was borrowing money from Social Security.

    As of 1993 Social Security was off budget again.

    Was it counted on budget again for purposes of political argument? Somebidy needs to check this.

    Sammy Finkelman (d22d64)

  54. Indeed the national debt went up every single year of the 1990s. You do not have a balanced budget if you lose money. You just have rhetoric.

    Ah – if you include the debt held by the Social Security Trust fund then maybe the debt went up.

    But Social Security wasn’t counted in the first place. Somebody needs to check this thing out.

    Sammy Finkelman (d22d64)

  55. The other reason is that to get to the size of the government of the 1990s we would need…

    …drumroll…

    over a trillion in cuts.

    Now some of that is simply because of higher unemployment. A lot may be due to higher medicalk costs.

    Also maybe higher college tuition costs (government support also includes grants)

    Sammy Finkelman (d22d64)

  56. Ah – if you include the debt held by the Social Security Trust fund then maybe the debt went up.

    But Social Security wasn’t counted in the first place. Somebody needs to check this thing out.

    Comment by Sammy Finkelman

    Yes.

    They counted the revenues and not the liabilities.

    Hence we were getting poorer while pretending the budget was balanced.

    What we really need is reform that greatly reduces the ‘liabilities’ imposed on nonvoters (many who weren’t even born yet) by greedy people.

    Dustin (330eed)

  57. The problem for the US is that not only is the US broke, but so are most of the states that make up the US…… Time is coming soon for us as well….

    Alex (c76e4d)

  58. I like the word “medicalk”, Sammy. Nancy Pelosi’s been getting that for a while through her elite health plan I suspect, but I never knew what it was called. Thanks!

    elissa (93bf0f)

  59. Now some of that is simply because of higher unemployment.

    Yes.

    And we have a serious problem on that front that is related to Obamacare, IMO. But also related generally to high corp. taxation and regulation.

    This is what I meant above about reducing the size of government to the smallest size possible regardless of deficit issues. It has a lot of impacts on liberty and prosperity because government gets in the way. Not just literally when the TSA stops you from walking to your boarding gate, but by taking up part of the economy, the arts, education, etc. We don’t need that.

    We don’t need the government telling employers what needs to happen with health insurance, either. Get out of that, and suddenly we have more jobs. And yes, that means more tax revenue, but I hate to try to perfect this machine to the point where taxes are maximized because I know where that’s going: the largest sustainable government possible.

    I would rather just cut everything that can be cut.

    Dustin (330eed)

  60. Was it counted on budget again for purposes of political argument? Somebidy needs to check this.

    They took IOUs from the “surplus” to create the fictional surpluses they were forecasting.

    JD (d4dd44)

  61. Comment by steve — 5/7/2012 @ 1:15 pm

    The problem in Germany is not that the bankers won’t lend more to the Greeks, it is that the German taxpayer is more and more refusing to be put on-the-hook in backstopping those loans.

    AD-RtR/OS! (b8ab92)

  62. The Laffer Curve strikes me as a silly political tool.
    Spoken by someone who has probably scrimped on his economic education.
    The Laffer Curve is all about incentives.
    When the marginal tax rate reaches a certain point, it dis-incentivizes additional output; when it is lowered, the incentive push in activity produces revenues that increase in a decreasing tax environment.
    Dems traditionally score tax charts in a static manner without any consideration of the incentives (or disincentives) built into them.
    Laffer advocates dynamic tax scoring which does at least recognize that humans react to incentives in positive and negative ways.

    AD-RtR/OS! (b8ab92)

  63. Regarding budgets in 1999 or so:

    Comment by Dustin — 5/7/2012 @ 2:14 pm

    They counted the revenues and not the liabilities.

    Fact check org http://www.factcheck.org/2008/02/the-budget-and-deficit-under-clinton/

    argues this, though:

    The surplus grew so big it was balanced even without Social Security revenues!!

    (In fact I will say that hiding the budget surplus was one of Clinton’s lies. Clinton kept hiding and underestimating the surplus. Clinton kept underestimating economic growth, and the resulting budget surplus. Then he demanded it not be used – that Social Security be kept in a lockbox. Clinton opposed tax cuts, and he wanted a perpetual budget crisis because you could get certain things through Congress in continuing resolutions and big budget bills that you couldn’t in the normal course of events. Clinton was partially responsible for brownouts and very high electric rates in California, as California kept underestimating electricity usage because they tied it to the economy when forecasting.

    Clinton’s large budget surpluses also owe much to the Social Security tax on payrolls. Social Security taxes now bring in more than the cost of current benefits, and the “Social Security surplus” makes the total deficit or surplus figures look better than they would if Social Security wasn’t counted. But even if we remove Social Security from the equation, there was a surplus of $1.9 billion in fiscal 1999 and $86.4 billion in fiscal 2000. So any way you count it, the federal budget was balanced and the deficit was erased, if only for a while.

    Update, Feb. 11 [2008] : Some readers wrote to us saying we should have made clear the difference between the federal deficit and the federal debt. A deficit occurs when the government takes in less money than it spends in a given year. The debt is the total amount the government owes at any given time. So the debt goes up in any given year by the amount of the deficit, or it decreases by the amount of any surplus. The debt the government owes to the public decreased for a while under Clinton, but the debt was by no means erased.

    Other readers have noted a USA Today story stating that, under an alternative type of accounting, the final four years of the Clinton administration taken together would have shown a deficit. This is based on an annual document called the “Financial Report of the U.S. Government,” which reports what the governments books would look like if kept on an accrual basis like those of most corporations, rather than the cash basis that the government has always used. The principal difference is that under accrual accounting the government would book immediately the costs of promises made to pay future benefits to government workers and Social Security and Medicare beneficiaries. But even under accrual accounting, the annual reports showed surpluses of $69.2 billion in fiscal 1998, $76.9 billion in fiscal 1999, and $46 billion for fiscal year 2000. So even if the government had been using that form of accounting the deficit would have been erased for those three years.

    – Brooks Jackson

    The budget really was balanced in the year 2000, and we would have known it sooner, or realized it more, had not Clinton striven to conceal it.

    Sammy Finkelman (d22d64)

  64. And I don’t like this ‘if we get economic growth’ it’ll work itself out claim.

    I think that’s a lot like saying we can’t tend the farm we need for food because we’re hungry. If we wait until we get food, then we can tend the farm.

    well, the thing is you don’t want to just wait, you want to do things about it.

    Economic growth does both gain revenue and cut spending. There may be idiotic or wrongheaded spending, too, that’s very true. and some oif it may be really counterproductive.

    Sammy Finkelman (d22d64)

  65. The only document that matters is the Annual, FY- End report on the increase/decrease of the National Debt.
    Clinton ran a deficit – every year!

    AD-RtR/OS! (b8ab92)

  66. By the way I read there are some speculators in Greek debt.

    Yeah, his name is Jon Corzine and he is going to jail.

    JVW (4d72aa)

  67. cORZINE WSAS SPEDCULATING

    Sammy Finkelman (d22d64)

  68. 66. LOL, indeed.

    Alex (c76e4d)

  69. Corzine was speculating on the debt of countries in sounder condition than Greece, and he may not have been wrong. But he went broke before the market corrected itself.

    Sammy Finkelman (d22d64)

  70. 69: Then he was wrong, lol

    Alex (c76e4d)

  71. Leviticus,

    May I kindly recommend you read up on Thomas Sowell, Art Laffer, Steve Forbes, et al.
    I think it would be helpful to improving your understanding of economics.

    When income tax rates and capital gains tax rates are reduced, it frees up capital for investment and expansion, and it also frees up money for consumers to spend in the economy. When that “consumption” is taxed as sales tax, and when the rising tide of incomes is taxed, it can generate higher revenues than were coming in prior to the cuts in rates.

    This has been proven.

    I don’t know if you’re aware, but there’s a reason it’s called a “curve” as it appears on a graph. That’s because it depends upon the variable numbers being implemented. I know you guys like to use a straw man bow and arrow and say, well if they drop it all the way down to ten percent down from fifty percent, how does that generate MORE revenue !
    But that’s merely an admission of not knowing how a graph works.

    Elephant Stone (0ae97d)

  72. Corzine was betting that the EU would provide a full bail-out to Greece that would not necessitate them taking the austerity measures that they ultimately adopted. He was wrong, wrong, wrong. If Greece leaves the EU they will probably inflate their way out of debt, and I don’t see how that would help bondholders any.

    Sooner or later, the whole west will be enjoying Zimbabwe-like economics.

    JVW (4d72aa)

  73. Clinton tried to hide the projected surplus?!?!?! Apparently you were in a coma back then.

    JD (d4dd44)

  74. Comment by Elephant Stone — 5/7/2012 @ 2:47 pm

    No, they know how a graph works, they just don’t understand parabolas.

    AD-RtR/OS! (b8ab92)

  75. Finkleman, the FY 2001 budget adopted in closing months of Clinton admin was not in surplus as projected for 2001 and out years. That was before even the recession in early 01 was recognized. The theme of Clinton “leaving” a surplus was false.

    SPQR (546334)

  76. ““A spending freeze is a spending cut.”

    Sammy – If I budgeted $100 for something last year and $100 again this year that is a cut? Under BCA or Washingtonianese, but not plain English.

    It is a cut. It is a cut because you can’t do the same thing.

    The population doesn’t stay the same, and its composition doesn’t stay the same.”

    Sammy – If I had fewer people participating in the program my $100 was targeted at my freeze would be an INCREASE! Your mendacious hyperventilation over statistics works both directions, which is why you need to discuss specific examples.

    daleyrocks (bf33e9)

  77. Finkleman, the FY 2001 budget adopted in closing months of Clinton admin was not in surplus as projected for 2001 and out years. That was before even the recession in early 01 was recognized. The theme of Clinton “leaving” a surplus was false.

    Indeed. The tech bubble had burst by the summer of 2000, as evidenced by the drop in federal receipts between Fiscal Year 2000 (10/99 through 9/00) and FY 2001 (10/00 through 9/01) after 30 straight years of rising revenues. It always puzzles me that conventional wisdom has it that Clinton left this strong economy for his successor.

    JVW (4d72aa)

  78. JVW – the MFM luvs to service Teh Narrative.

    JD (d4dd44)

  79. “Clinton tried to hide the projected surplus?!?!?!”

    JD – I thought he tried to hide the Salami?

    daleyrocks (bf33e9)

  80. well, the thing is you don’t want to just wait, you want to do things about it.

    Hey, I’m not saying you’re wrong or anything. People are hurting and we need to proactively deal with the recession. It just so happens that ending Obamacare and … basically the opposite of Obama’s 2013 plans as well … would go a long way towards doing so. Government policy is so wrong that it’s entirely possible to step off the economy’s back and improve things.

    I just have a different long term view of the main reason to limit government.

    Dustin (330eed)

  81. The best government is that which governs least.

    peedoffamerican (ee1de0)

  82. “Spoken by someone who has probably scrimped on his economic education.
    The Laffer Curve is all about incentives.
    When the marginal tax rate reaches a certain point, it dis-incentivizes additional output; when it is lowered, the incentive push in activity produces revenues that increase in a decreasing tax environment.”

    – AD-RtR/OS!

    Huh… it’s almost like I said something exactly like that or something…

    Me: “I’ll agree with you that there might be tax rates so high that they stifle productivity, but you’re gonna have to meet me halfway by acknowledging that a categorical believe in the economically beneficial nature of tax cuts is an abuse of Laffer Curve logic. There’s gotta be a middle ground – a circumstantially optimal tax/spending ratio.”

    AD-RtR/OS!: “UR DUMB, HIGH TAXES DISINCENTIVIZE OUTPUT, YOU GOTTA FIND THE MARGINAL TAX RATE”

    Leviticus (870be5)

  83. Leviticus – Behavioral Economics, it’s what’s for dinner! People change their behavior in response to incentives, but just like food, when it’s too rare or too well done, people reject the incentives.

    daleyrocks (bf33e9)

  84. “The best government is that which governs least.”

    POA – The fish rots from the head.

    daleyrocks (bf33e9)

  85. Who here believes that the Dems will try to end the Bush/Obama tax cuts on all taxpayers?

    JD (d4dd44)

  86. 85: not “will”, they “have been trying”

    Alex (a92691)

  87. So they implement foolish policies, and when they fail, they misrepresent the source of the crisis,
    well what did Axelrod say;

    narciso (8d0f34)

  88. “Clinton tried to hide the projected surplus?!?!?!”

    JD – I thought he tried to hide the Salami?

    Comment by daleyrocks

    he’s no Columbus
    Paula said Bill’s no bigger
    than roll of quarters

    Colonel Haiku (0a0a46)

  89. “…categorical believe (sic) in the economically beneficial nature of tax cuts is an abuse of Laffer Curve logic…”

    and I said that where?
    I do believe that, for the most part, tax cuts are good.
    The problem is the disconnect between those who want to set tax rates at a level to fund all of the dreams of government planners, and those who see government as an overall drag on the economy,
    and that rates should be set only as high as to fund the core responsibilities of that level of government.

    Right now, it can be easily said that the American People are overtaxed (particularly in the extreme Blue Model states – NY, CA, IL, etc), and that the scope of government needs to be trimmed back to what the People actually want, and can afford.

    AD-RtR/OS! (b8ab92)

  90. Aw crap, f****** Greek beggars. They’ve been on borrowed tit since April 21, 1967. I lost my side of the mountain because the c***s****** government could not provide us a port for our produce. And it was good — olives, olive oil, figs, wool, lambs, wheat. Let them die.

    nk (875f57)

  91. The budget really was balanced in the year 2000, and we would have known it sooner, or realized it more, had not Clinton striven to conceal it.

    Comment by Sammy Finkelman

    Interesting. And whether this is exactly right or not is a bit beside the point.

    I want people to say ‘hey, I wish we could get back to this feasible balanced budget like Clinton had’. Even though I don’t think Clinton had one, I love the idea of teaching present politicians that a balanced budget is a rewarding result. I want to incentivize that. I want democrats to look back with rose colored lenses and imagine that Clinton’s economy was a result his his wise balanced budget. even though this is not exactly true, a bit of truth is there. The government was leaner then. And that did help the economy. And Republicans worked hard to make government more lean. And Clinton was wise enough to play ball with these efforts instead of stand against them as France appears to want to.

    Dustin (330eed)

  92. Who here believes that the Dems will try to end the Bush/Obama tax cuts on all taxpayers?

    Comment by JD — 5/7/2012 @ 3:55 pm

    85: not “will”, they “have been trying”

    Comment by Alex — 5/7/2012 @ 4:01 pm

    Alex shows here the kind of trolling we’ve come to expect from him. The Bush tax rates became the Obama tax rates at a time when the Democrats controlled both Houses of Congress and the White House. But Alex tells us that they were “trying” to end them.

    When you control all of the Federal government, legislature and executive, there is no try, only ‘do’.

    SPQR (26be8b)

  93. You remind of this, SPQR’

    http://www.yodaspeak.co.uk/

    narciso (8d0f34)

  94. It always puzzles me that conventional wisdom has it that Clinton left this strong economy for his successor.

    Should not the network broadcast and print media have exposed this?

    Michael Ejercito (64388b)

  95. narciso, really?

    SPQR (546334)

  96. “What this means is that overall, the productivity of the economy is lower, although that didn’t cause the debt problem – accounting gimmicks did.”

    Sammy – I am sure that the lenders to Greece will be fascinated to learn that their loans became troubled due to accounting gimmicks and not other factors. I learn something new on this blog every day.

    daleyrocks (bf33e9)

  97. I was referring to ‘Alex’s third person trolling.

    narciso (8d0f34)

  98. Just having fun, narciso.

    SPQR (546334)

  99. One thing about the Greeks. They f****d their gods, figuratively, and literally (well the goddesses, anyway). Can’t take that away from them.

    Heard that from a Spaniard, two lifetimes ago, about Franco and his iron hand: “We are not a docile people.”

    nk (875f57)

  100. “One thing about the Greeks. They f****d their gods, figuratively, and literally (well the goddesses, anyway).”

    Animals too.

    Can’t take that away from them.

    daleyrocks (bf33e9)

  101. 91-nk Perhaps you should have stayed in Greece and fought for your beliefs, instead of retreating to America. I am not leaving America without a fight for my way of life.

    sickofrinos (44de53)

  102. #96-If it were true, yes.

    tye (2537fc)

  103. I like the valuable info you provide to your articles. I’ll bookmark your blog and take a look at once more right here frequently. I’m somewhat certain I’ll learn lots of new stuff right here! Best of luck for the following!

    personalized mms (5faced)

  104. Thanks for the comic relief, “tye”

    JD (d4dd44)

  105. “A spending freeze is a spending cut.”

    Daleyrocks: Sammy – If I budgeted $100 for something last year and $100 again this year that is a cut? Under BCA or Washingtonianese, but not plain English.

    SF: It is a cut. It is a cut because you can’t do the same thing.

    SF: The population doesn’t stay the same, and its composition doesn’t stay the same.”

    Comment by daleyrocks — 5/7/2012 @ 3:02 pm

    Sammy – If I had fewer people participating in the program my $100 was targeted at my freeze would be an INCREASE!

    That’s right. And it happens, too. It is a kind of unnoticed increase, and the people on the receiving end of the money probably take advantage of their opportunities. It could happen in a school system where the school population was declining. If the increase is not too much, it’s probably utilized as well as average.

    Your mendacious hyperventilation over statistics

    I don’t like it when people argue no cut or almost no cut has been made using the kind of obviously faulty statistical reasoning like the one we have here where there is the argument that there’s been no austerity in Greece (and people there are foolish for believing that there has been)

    Now Veronique de Rugy may be right that most of the “austerity” in Europe consists of tax increases, but there are cuts too, in pensions, in the amount government pays for things, and in government employees, which in some cases may result in things simply not working right. (especially a hiring freeze where some necessary jobs have a lot of turnover compared to other jobs)

    works both directions,

    I overgeneralized it, without really intending to. I was talking about the usual situation, and especially the situation now.

    which is why you need to discuss specific examples.

    I think I can speak in principle here.

    When people facilely talk about a spending freeze, and say that’s only keeping things the way they are, that’s simply not true. Now it might be true that certain things, and maybe many things, could take a cut and, even work better, but it’s a budget cut, nevertheless, and it has to be treated that way, which means thought through and not airily dismissed as not a cut.

    Sammy Finkelman (0dadb5)

  106. 73. Comment by JD — 5/7/2012 @ 2:49 pm

    Clinton tried to hide the projected surplus?!?!?!

    Yes, he did. And when he couldn’t hide it any more, he started talking about keeping Social Security taxes in a “lockbox”

    I know it sounds counterintuitive, but it is true.

    Clinton was not an idiot, and he wasn’t honest. I think he felt the prospects of getting bad appropriations and earmarks through were actually better when there was budgetary pressure (and a massive deal would need to be cut)

    Apparently you were in a coma back then.

    What do you think the “lockbox” was all about?

    Sammy Finkelman (0dadb5)

  107. Ahem, yes, Greece is famous for double-billing tourists, not paying taxes, petty crime and missing every austerity target the Germans impose.

    That said, they are in the fifth year of recession, will contract another 1.5% this year and are too broke to go bankrupt. The last ‘bailout’ was as big a joke as ‘austerity’ ever was.

    The German’s motor of the EU has tossed a valve, the EU will not make it to the pit.

    gary gulrud (d88477)

  108. sickofrinos #104,

    I have my grandfather’s Ellis Island records. He left Chicago in 1912 to go to Greece and “fight for his beliefs”. He helped drive out three million Turks, and double Greece’s territory. He married two Greek women, had two daughters and six sons. He sent one daughter and four sons back to Chicago. I came with one of them.

    nk (875f57)

  109. I know it sounds counterintuitive

    It does not sound counterintuitive. It is a complete fabrication.

    JD (d4dd44)

  110. Very nice post. I just stumbled upon your blog and wished to say that I have truly enjoyed surfing around your weblog posts. In any case I’ll be subscribing in your feed and I am hoping you write once more soon!

    The Wordpress secrets that designers don't want you to know about (6959fe)

  111. Today in Ireland Sein Fein has posters up touting “Austerity has Failed” and to vote against further cuts.
    I must have missed the happy news about low unemployment numbers and higher revenues to the treasury here in Ireland while I was busy watching your pResident Obama spike that bin Laden football.
    Watch as France’s new prez gets smacked with reality as he discovers things didn’t get better just because he got elected.

    Check Please!

    firefirefire (b0457e)

  112. “I think I can speak in principle here.

    When people facilely talk about a spending freeze, and say that’s only keeping things the way they are, that’s simply not true. Now it might be true that certain things, and maybe many things, could take a cut and, even work better, but it’s a budget cut, nevertheless, and it has to be treated that way, which means thought through and not airily dismissed as not a cut.”

    Sammy – I think you are wrong once again. Your focus seems to be mostly on entitlement and safety net programs and you should say so. Social security benefits are determined by statute and the number of people eligible to receive them. Eligibility is also determined by statute. Unless Congress meddles with the benefits statutes, other than COLA adjustments, or eligibility requirements, the expenditures are easily determinable and your hyperventilation is for naught.

    Food stamps are a similar case. If the economy actually improves, fewer people will remain eligible for food stamps and budgeting the same amount will result in an excess in that budget line item at the end of the fiscal year, as it would for unemployment benefits.

    Are we still budgeting the same amounts for Hurricane Katrina relocation assistance or have we frozen those, Sammy?

    Do we need to budget more than $35 billion for DOE green energy loan guarantees every year or does keeping it the same represent a cut?

    Your logic is faulty.

    daleyrocks (bf33e9)

  113. What do you think the “lockbox” was all about?

    Comment by Sammy Finkelman — 5/8/2012 @ 3:49 am

    The “lockbox” was dishonest political propaganda.

    SPQR (26be8b)

  114. Pollack: “Sarkozy lost because, like nearly a dozen other European leaders, he lacked the courage to make the harsh but necessary reforms to set France right. The lesson for both Democrats and Republicans in the U.S. is that political cowardice is no longer an option.”

    Non-EU investors, e.g., Norway, will no longer buy PIIGS debt at any yield because they won’t be paid.

    The EU is forcing its own banks, much larger than the US market, to fund the welfare state with funny money.

    The BOJ meanwhile is buying stocks and corporate bonds with scrip.

    The contrarians give the whole farce 18 months, tops. Look for significant inflation out of China’s exports by the 4th.

    gary gulrud (1de2db)

  115. In a lot of countries, it’s all about getting past the next election. Doom can be pushed off, and so can serious reform. And serious reform is as likely as all you can eat unicorn at Red Lobster.

    Dustin (330eed)

  116. Sarkozy did not lose because he lacked the courage necessary to reform, he lost because the French socialists are willing to tell the French that they don’t have to reform.

    SPQR (26be8b)

  117. The analogy to the juvenile behavior of the Democratic Party ought to be obvious. (Not least to Obama telling the French not to abandon austerity when Obama is telling Americans that they don’t have to do any austerity themselves).

    SPQR (26be8b)

  118. “Now Veronique de Rugy may be right that most of the “austerity” in Europe consists of tax increases, but there are cuts too, in pensions, in the amount government pays for things, and in government employees, which in some cases may result in things simply not working right. (especially a hiring freeze where some necessary jobs have a lot of turnover compared to other jobs)”

    Sammy – You need to focus on the fact that the second Greek bailout, the one calling for pension cuts and government jobs cuts, was only approved by the Greek Parliament in mid-February and resulted in this past weekend’s elections. The facts are on DeRugy’s side.

    daleyrocks (bf33e9)

  119. Comment by Sammy Finkelman — 5/8/2012 @ 3:49 am

    “What do you think the “lockbox” was all about?”

    Comment by SPQR — 5/8/2012 @ 8:48 am

    The “lockbox” was dishonest political propaganda.

    It was, it was. But it meant that there was a budget surplus that Clinton didn’t want us to recognize. William Safire said (see below) it was to prevent a tax cut.

    Actually I see now that Al Gore is noted for using that word. There must be soime usage by Clinton, too.

    Sammy Finkelman (d22d64)

  120. In his regular column for September 10, 2001, William Safire wrote about the origin of the word lockbox:

    http://www.nytimes.com/2001/09/10/opinion/essay-jimmy-that-lockbox.html

    A decade ago, huge deficits were predicted ”as far as the eye could see”; never happened. A few months ago, the same savants saw huge surpluses far into the baby boomers’ geezerhood; now their surplus prediction is in free fall. Lesson in humility: The economic eye cannot see that far….

    …Why isn’t the government getting out of the restraining posture of surplus and getting into the stimulating business of deficit?

    The reason that good Keynesian sense is not prevailing is that Bill Clinton, eager to find a way to avoid tax reduction, spooked the nation with his phony notion of a ”lockbox” on revenues coming in from the payroll tax.

    BTW, Safire here was accepting Keynesian economics. which has never worked. But go on.

    It’s phony because no such vault exists; no fund containing cash or gold is set aside for future retirees. The notion of an uncrackable safe containing untouchable security is a fraud. The only thing in the ”lockbox” is government paper, which is a promise to pay from the Treasury in the future.

    By striking fear into oldsters with his demagogic ”save Social Security” slogan, he joined conservatives in making ”deficit” a dirty word. But only in boom times is ”deficit” a dirty word; when air is hissing out of the balloon and a deficit becomes temporarily desirable, ”surplus” becomes the dirty word.

    The Bush administration and Republicans in Congress were snookered by the ”lockbox” oratory and now are stuck with a foolish promise. Democrats in Congress would rather see Bush wriggle than let him off that hook; obsessed with the success of their lockbox ploy, they are hinting that the way to preserve the counterproductive surplus is to repeal the Bush tax reduction. The Senate leader, Tom Daschle, forgets that the last president to answer a downturn with a tax increase was Herbert Hoover.

    The only way out the new president left himself was ”in case of war or recession.” The time has come for using the second part of that out. …

    This was published, after all, September 10, 2001. So only recession, no war.

    My plan: Increase federal spending on education and missile defense; as the slump deepens, fold in a prescription drug benefit for seniors. At the same time, double the summertime tax cut, reducing taxes on average families again in time for Christmas purchasing, to which no liberal could object; add in a capital gains cut to move the markets and bestir optimism….Break out of the depressive lockbox mentality. In economic buoyancy lies the only social security.

    Sammy Finkelman (d22d64)

  121. Another link to the Safire lockbox column (in case somebody has trouble getting to the article)

    http://partners.nytimes.com/library/magazine/home/20001126mag-onlanguage.html

    Sammy Finkelman (d22d64)

  122. That is from the language column, and it ran on Sunday, November 26, 2000:

    Alternate URL: http://www.nytimes.com/2000/11/26/magazine/the-way-we-live-now-11-26-00-on-language-snippy.html

    Although the word originated in the central states somehow Newt Gingrich (?) ius suppsoed the first use. And then Bill Archer.

    Lockboxing Day

    If any issue dominated the 2000 campaign, it was Social Security; if any cliche dominated, it was ”the third rail of American politics”; and if any word was given the glow of energy from that power source, it was lockbox.

    It landed in the political lexicon in 1995, as Speaker Newt Gingrich promised that a spending bill would be amended to include what he called ”a lockbox provision” stipulating that no spending cuts would be used to offset tax reductions. This was purely symbolic because government funds are fungible.

    Bill Archer, chairman of the House Ways and Means Committee, used the lockbox in 1999: ”We created the Social Security lockbox to lock that money up so it cannot be spent for anything else.” G.O.P. leaders actually used a strongbox as a prop for television coverage.

    Bill Clinton promptly adopted the metaphor, leaving the Republicans sputtering. In the 2000 campaign, Al Gore made it central to his stump speech and debate appearances: ”I think we need to put Medicare and Social Security in a lockbox. The governor” — Bush — will not put Medicare in a lockbox.”

    The meaning was taken to be ”a box with a lock on it; a small safe.” The more specific definition is ”a safe-deposit box in a bank.” Especially in the Central states, lockbox is an old-fashioned word for ”safe-deposit box.” A lockbox is to a safe-deposit box what an icebox is to a refrigerator.

    The origin is ”a postal box with a window requiring a key for the postal customer to open.” In 1906, Mary E.W. Freeman, in her novel ”By the Light of the Soul,” wrote: ”She saw one letter slanted across the dusty glass of the box. It was not a lock box, and she had to ask the postmaster for the letter.” That is, it was a box unlocked to the postal worker, as distinct from a locked box rented by the customer.

    Now, it means, generally, ”strongbox,” or more specifically, ”a political metaphor for a trust fund that cannot be spent for purposes other than specified in the politician’s promise.”

    See the projecyed surplus was so great by then, Medicare too needed to be put into a lockbox.

    Sammy Finkelman (d22d64)

  123. Karl: Sammy,

    Thank you for conceding the main point of the post, i.e., the governments must ultimately accede to the demands of the lenders (even if you don’t like those conditions).”

    No, I didn’t concede that. They can default. As a matter of fact the lenders will probably cave in in the end, and/or be need to be rescued in the end themselves by Ben Bernanke, with Obama’s support..

    What I conceded was the idea that economy of Greece has a lot of structural faults, and maybe also that they can’t continue to borrow.

    What’s happened here is that an economic decision has been converted into a political one.

    It’s definitely not clear to the people of Greece (and France and Italy and Spain) that things are being forced by economics, but everything looks like an arbitrary political decision.

    The people who demanded Greece and other countries sign on to unpopular budget cuts were idiots really. They should never have stopped taht referendum. The only way for the lenders to get what they want is for Greece to give up its independence.

    Sammy Finkelman (d22d64)

  124. The only way for the lenders to get what they want is for Greece to give up its independence.

    I can kinda sorta see your point. If your point is that Greece should now declare itself independent of its obligation to pay back the money it borrowed.

    It’s a tempting thought. It sometimes occurred to me to declare myself independent of my credit card bills.

    Like Greece, I could get away with that maybe once.

    Steve (90e0d3)

  125. Sarkozy did not lose because he lacked the courage necessary to reform, he lost because the French socialists are willing to tell the French that they don’t have to reform.

    Yep. This seems to be the problem at home, as well.

    Plenty of Americans hear a message about how the solution to our deficit is to tax the rich ‘their fair share’. The vagueness helps, because for however long we have a deficit, that mantra works. Even though even taxing the rich 100% of their income wouldn’t solve the problem. Or make much of a dent.

    It’s a great diversion from the fact that we can and must cut spending. A lot.

    But what’s #Julia going to do if she can’t get all this spending? I guess she’s going to have to get a job.

    Dustin (330eed)

  126. ut what’s #Julia going to do if she can’t get all this spending? I guess she’s going to have to get a job.

    I have an issue with Julia. But it boils down to this: if I’m going to be her daddy and pay for her expenses from the day she’s born until the day she dies, doesn’t someone owe me at least one night of wild sex?

    Steve (90e0d3)

  127. Don’t worry, Steve. You’re already getting screwed.

    Dustin (330eed)

  128. Does anyone realize that today is V-E day? I don’t think it is any newspapers, I thought maybe even in France but I found (Google is your friend they say. Sometimes anyway. Other times it’s frustrating.)

    http://abcnews.go.com/International/wireStory/sarkozy-lead-day-ceremonies-paris-16299742

    Hollande, Sarkozy Lead V-E Day Ceremonies in Paris

    I thought Giscard D’Estang had stopped them after 30 years, but I didn’t rmemeber right, he just tried.

    Meanwhile, I read today in the Wall Street Journal:

    http://online.wsj.com/article/global_view.html

    Bret Stephens: To the Class of 2012 Attention graduates: Tone down your egos, shape up your minds

    A few months ago, I interviewed a young man with an astonishingly high GPA from an Ivy League university and aspirations to write about Middle East politics. We got on the subject of the Suez Crisis of 1956. He was vaguely familiar with it. But he didn’t know who was president of the United States in 1956. And he didn’t know who succeeded that president.

    Pop quiz, Class of ’12: Do you?

    People born at the time of the Gulf War no longer know….

    Sammy Finkelman (d22d64)

  129. Don’t worry, Steve. You’re already getting screwed.

    It’s the sandpaper condom I have a problem with, Dustin.

    Steve (90e0d3)

  130. Comment by Dustin — 5/8/2012 @ 10:27 am

    But what’s #Julia going to do if she can’t get all this spending? I guess she’s going to have to get a job.

    They have her startying her own business eventually. But with a loan from the Small
    Business Adminsitration.

    I remember my father applied once. But they said he (and his partners) had to apply first to banks and be turned down. So they applied, but the bank made the loan.

    The business was not a success. They were going to sell it, but the buyers then turned around and made a deal directly with the bank.

    Sammy Finkelman (d22d64)

  131. OK. I have a problem with the whole thing.

    Steve (90e0d3)

  132. “What I conceded was the idea that economy of Greece has a lot of structural faults, and maybe also that they can’t continue to borrow.”

    Sammy – You said Greece’s debt problem was due to accounting gimmicks, which is slightly different.

    Lenders love to give money to borrowers with no prospect of getting it back, so your concept of Greece being able to restructure its debt and/or continue its borrowing without agreeing to some austerity is truly one of the most idiotic things you have said on this blog.

    daleyrocks (bf33e9)

  133. The only way for the lenders to get what they want is for Greece to give up its independence.

    Comment by Steve — 5/8/2012 @ 10:23 am

    I can kinda sorta see your point. If your point is that Greece should now declare itself independent of its obligation to pay back the money it borrowed.

    No, no no. That’s what I said Greece could do. That would not be good for the lenders, unless they got bailed out by the Federal Reserve Board of the United States.

    What I said was, to get the opposite result, or at least to get things done the way the lenders want them to, Greece would have to lose its independence. Its finances – tax and budget decsiions would have to be run by an outside financial control board or maybe the whole Greek budget be taken over by the Europeaan Union. Like happens with some cities sometimes in the United States.

    Probably the only way this would be palatable would be for all European countries to lose a lot of their independence.

    It’s a tempting thought. It sometimes occurred to me to declare myself independent of my credit card bills.

    People have done that. If you don’t have any money, and don’t expect ever to get any, exceot for Social Security, which can’t legally be garnisheed for credit card or most other bills it’s very possible. You may not even need to file for formal bankruptcy. You can move to California and skip out on all your bills. You don’t need to move to California but that’s also if you have electric, gas qnd other bills.

    What you can’t default on are student loans. And Social Security can be garnisheed for student loans.

    Like Greece, I could get away with that maybe once.

    Once every seven years or so.

    Sammy Finkelman (d22d64)

  134. They have her startying her own business eventually. But with a loan from the Small
    Business Adminsitration.

    Yes. The idea is that the government can create prosperity by taking my prosperity and magically guiding it in just the right way.

    Michelle Malkin noted that she started several businesses without any taxpayer money. That’s fascinating. Imagine someone starting a business without taxpayer money! It would mean they didn’t need to keep Obama in office to prosper. I imagine this is the point.

    So they applied, but the bank made the loan.

    Yeah, banks are willing to make loans if they think they can be paid back, because it’s profitable.

    Obama’s ‘Julia needs me to start a business’ argument is the most annoying part of the entire shtick.

    Dustin (330eed)

  135. A generation is learning that the way to prosper is to figure out how to get these grants and government loans. The idea that taxpayer funded goodies are charity is simply out of touch.

    They will be dependent and invested and willing to defend this unsustainable beast. When it falls apart, they will actually demand more of the problem.

    The architects of this situation are unlikely to suffer for its failure.

    So I think the best way to handle waking up in an insane asylum is to attempt to exit instead of attempting to educate it. There are two dramatically different cultures that can more peaceably exist in different states.

    Dustin (330eed)

  136. Comment by JVW — 5/7/2012 @ 2:48 pm

    Sooner or later, the whole west will be enjoying Zimbabwe-like economics.

    You mean, eventually, the only money will be the U.S. Dollar??

    That’s what has happened in Zimbabwe. Their $100 trillion dollar bills have been replaced by the U.S. Dollar.

    The only problem is, there’s no change. People don’t trust the banks, and a lot of things cost less than $1.00. South African rand coins circulate, but the exchange rate varies, so nobody knows exactly what it is worth, and they are in short supply in any case. Quarters, nickels and dimes cost too much to ship from the United States.

    http://www.nytimes.com/2012/04/25/world/africa/using-us-dollars-zimbabwe-finds-a-problem-no-change.html?_r=2&pagewanted=all

    Alternate URL:

    http://www.post-gazette.com/stories/news/world/using-us-dollars-zimbabwe-finds-a-problem-no-change-633017/

    So people try to make things add up even and add things to what they purchase to round things up:
    Four aspirin pills at 5 cents a piece, a steel bottle opener for 10 cents. Clothespins the customer doesn’t want right now and really can’t afford to buy.

    Sometimes storeowners give some things away for free. One case the reporter witnessed was a box of staples for 30 cents. The store had no change, and just gave it away.

    The single dollar bills that circulate are very worn, and black, but $2 bills are usually much cleaner and have become popular.

    Inflation is now at 3% a year.

    In 1980, the Zimbabwean dollar was worth $1.25. Inflation was in double digits and then triple digits a year by 2001. Prices then doubled every day.

    In January 2009 the Zimbabwe 100 trillion dollar note was introduced and worth about $30.

    In April 2009 the government legalized the use of foreign money, and suspended the issuance of the Zimbabwe dollar.

    At one point a hundred-trillion-dollar bill couldn’t buy a bus ticket in the capital of Harare, or a loaf of bread, but now each one is worth about $5.00 on eBay, 15 times their last reported worth. (But only the uncirculated ones sell for that price)

    Some years ago some people bought quantities of freshly released money for $1 or $2 a bill, in bricks of thousands of bills, and are making a profit. There may have been about 5 to 7 million printed, but less were released.

    $100 trillion bills (circulated) are also popular with tourists and vistors may be able to get one for $1.00. But they can pay up to $10 if they are not careful. $100 billion notes sell for the same price as $100 trillion notes in Zimbabwe.

    The old money was never exchanged for anything by the government. Zimbabwe, by the way, is not one of those countries that have officially adopted the dollar – it’s just legal to use there.

    Paul Ryan is one of the people who have gotten a $100 trillion dollar bill. They are popular with economists too.

    Under Chinese influence (I would assume) Mugabe wants to bring back a gold-backed Zimbabwean dollar, but that’s not going to happen.

    http://www.newzimbabwe.com/business-5127-RBZ+urges+gold-backed+Zim+dollar/business.aspx

    That story is already almost a year old.

    Sammy Finkelman (d22d64)

  137. How many rounds of 7.62×39 will $1US buy in Zimbabwe?
    That is the “street” rate of exchange.

    AD-RtR/OS! (b8ab92)

  138. 140. How many rounds of 7.62×39 will $1US buy in Zimbabwe?
    That is the “street” rate of exchange.

    Comment by AD-RtR/OS! — 5/8/2012 @ 11:45 am

    Not a clue. But it’s funny you ask. The last time I was in Zimbabwe you could buy gold for cheaper than .416 Rigby ammo.

    That’s a slight exaggeration. But not by much.

    Steve (90e0d3)

  139. Word to the wise; it’s best not to bring up politics and the price of ammo when traveling to Zimbabwe.

    I admit I did buy a T-shirt with the dictator’s face emblazoned on it. Underneath the pic were the words, “Rob Mugabe!”

    On the back were the words, “Before he robs you!”

    I made sure I was safely out of the country first. I don’t plan on going back. Now that they’ve introduced strip searches at the Harare airport and a stiff duty on everything down to your underwear.

    Steve (90e0d3)

  140. My baby brother was in Grenada when Reagan wanted a distraction from the massacre of our soldiers he had placed in harm’s way in Beirut.

    He paid his housekeeper a dollar a day. He brought back a machete (big knife, tool/weapon) as a souvenir. He paid a dollar for it, too. Otherwise, the farmers could not afford them.

    nk (875f57)

  141. Inflation. I paid 8 bucks for my last Machete.

    I must have been nuts. A hatchet will do the same job.

    Steve (90e0d3)

  142. “What I conceded was the idea that economy of Greece has a lot of structural faults, and maybe also that they can’t continue to borrow.”

    Comment by daleyrocks — 5/8/2012 @ 10:47 am

    Sammy – You said Greece’s debt problem was due to accounting gimmicks, which is slightly different.

    I said that, but I also said that things were set up wrong. I didn’t say that they couldn’t continue to borrow, but that was the problem, although some of that is imposed by decree rather than the market..

    I said:

    “A big part of the problem in Greece is that people are/were in the wrong kind of jobs. And some jobs have too much income. What this means is that overall, the productivity of the economy is lower, although that didn’t cause the debt problem – accounting gimmicks did.”

    I said there were structutral faults. That is indeed not directly related to their debt.

    The accounting gimmicks allowed Greece to pile up debt even though its agreement with the EU that allowe it to join the Euro limited the size of the government deficits.

    Sammy Finkelman (d22d64)

  143. Lenders love to give money to borrowers with no prospect of getting it back,

    Sometimes, if the alternative is recognizing losses. Most often if the debtor is too big to fail. Especially if the debtor is a bank.

    http://en.wikipedia.org/wiki/Zombie_bank
    http://www.nytimes.com/2011/04/17/business/17view.html?_r=2

    Or a country that if it defaulted would createa cascade of defaults.

    Sammy Finkelman (d22d64)

  144. so your concept of Greece being able to restructure its debt and/or continue its borrowing without agreeing to some austerity is truly one of the most idiotic things you have said on this blog.

    There doesn’t have to be any agreement on a budget for them to be bailed out. This agreement is only there because the people bailing them out wanted it as the condition for a bailout or continued loans by the IMF, the ECB and some countries (including Spain)

    The agreement that is attached to the bailout reflects some economic theory, and everybody knows it.

    The theory is this will restore sound finances. But the theory doesn’t work, and it wouldn’t no matter what. Austerity, as practiced by the EU, doesn’t work because it shrinks the economy.

    The EU assumes you can raise taxes drastically – and a tax that was supposed to be paid but wasn’t in fact collected is really a new tax – taxes anmd the economy don’t know anything about the law – without impeding economic growth. And the deficit gets worse actually.

    To not shrink it, they first must avoid new taxes, and income streams that are cut off have to be replaced by other income streams, overall anyway.

    (some of that is happened as people move back to farms. But if they cut spending business and therefore government revenue is also going to go down.)

    Sammy Finkelman (d22d64)

  145. Greece could, and probably will, call Angela Merkel’s bluff. Right now what you can expect is either an attempt to renegotiate, or a default, which will create problems not for Greece, but for its creditors.

    Anyway no government of Greece is going to do what the previous government agreed to. Run out of money, maybe yes. But implement this agreement, no. They are not going to cut their own throats. They’d rather just let things happen.

    They can always default.

    They may in fact not be able to pay back their old debt.

    To continue borrowing perhaps they’d have to print their own fiat money. Of course, if there is any hint of leaving the Euro people will pull money out of banks and pysically take it across borders. It’ll be very chaotic. So maybe the government will just run out of money.

    Sammy Finkelman (d22d64)

  146. 69, 70.

    SF: Corzine was speculating on the debt of countries in sounder condition than Greece, and he may not have been wrong. But he went broke before the market corrected itself.

    Comment by Alex — 5/7/2012 @ 2:47 pm

    69: Then he was wrong, lol

    No, as — John Maynard Keynes said:

    “The market can stay irrational longer than you can stay solvent.”

    It’s no irrational – it just may be wrong. Every instrument that Jon Corzine bought may very pay off in full at par when due.

    Sammy Finkelman (d22d64)

  147. Corzine’s problem is that he speculated with OPM.

    AD-RtR/OS! (b8ab92)

  148. Sammy – Just stop the lunacy and irrational commentary.

    The accounting gimmicks allowed Greece to pile up debt even though its agreement with the EU that allowe it to join the Euro limited the size of the government deficits.

    You are already conceding that Greece ceded control of it’s government budget to outside parties to join the European Union but call doing so in a debt restructuring impossible. You make no sense.

    Lenders love to give money to borrowers with no prospect of getting it back,

    Sometimes, if the alternative is recognizing losses. Most often if the debtor is too big to fail. Especially if the debtor is a bank.

    The bailout proposal which the Greek Parliament approved entailed private lenders accepting 50% on the dollar for their existing debt, but the quid pro quo was Greece enacting reforms, which resulted in widespread rioting in February. Are you seriously trying to tell me that lenders have not recognized any losses on their Greek loans? Do you know anything about current accounting standards?

    There doesn’t have to be any agreement on a budget for them to be bailed out.
    They can always default.

    There was an agreement. You need to familiarize yourself with other sovereign defaults or debt restructurings because you are clearly out of your league. The Latin American debt crisis of the early 1980s might be a good place to start.

    daleyrocks (bf33e9)

  149. Sure, but just thinking about future austerity is stressful! It’s Orwellian!

    Whew, I need a couple belts of Ensure.

    Leslie Stahl (e1d89d)

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    mr robot (6029d1)

  151. Stop me if you’ve heard this:

    American capitalism: You have two cows, sell one, buy a bull, soon you have a hundred cows.
    Fascism: The state takes your cows and you have to buy your milk from it.
    Communism: The state takes your cows. The milk is free but you have stand in line to get it and by then it’s sour.
    French socialism: You have one cow, you go on strike until the state gives you one more. Until then, who needs milk if you have wine?
    Lower Slobovian capitalism: You have two bulls. You wonder why they give no milk and the milkers are always injured.

    nk (875f57)

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