And now we are taught basic macroeconomics by clever folk from foreign lands
Interesting article by Jayati Ghosh in today's Guardian.
http://www.guardian.co.uk/commentisfree/2011/sep/13/spooked-austerity-economic-grave
I'll quote from the article, albeit selectively. (I'd read the whole article if you can manage it. Some of the comments after it are also interesting: especially from the folk who don't get the point.)
"Part of the problem is that the bulk of the mainstream economics profession has forgotten basic Keynesian macroeconomics, and so is unable to offer even the most obvious advice."
"What is happening in Greece confirms this analysis. After aggressive cutbacks in public spending forced by the EU-IMF bailout, the economy shrank at an annual rate of 7.3% in the second quarter of 2011. This far exceeds the most pessimistic projections of the IMF or the EU. Since tax revenues can hardly improve now, even with the most sweeping attempts at better collection, fiscal balances will improve only with further public spending cuts. Even so, public-debt-to-GDP ratios will deteriorate."
"The point is that fiscal space is not a static variable. Expansionary policies increase demand and revenues and therefore generate more tax revenues. It makes much more sense to grow out of debt than to plunge into a downward spiral worsened by public austerity.
Of course, how this is done matters. Tax cuts (especially on the rich) are less effective than spending on infrastructure, social transfers and subsidies. Multiplier effects are higher when public spending is directed to lower-income groups that have higher propensity to spend their incomes. How could any government, including in the UK, ignore this obvious point?" [My emphasis.]
The corollary to this last paragraph being that QE just gives the banks more money to not lend to small businesses or other needy folk. Banks don't need any more money: small businesses and ordinary people and the economy as a whole do.
Not that anyone will take notice of her: after all, she is a woman, and most definitely not 'white'.
I really f**king wish she were in charge of our [the UK's] economy, and not Little Gideon.
So....if Greece's austerity measures have shrunk Greece's economy by 7.3% in 2011 Q2, what effects will the austerity measures demanded by the markets have on Spain, Portugal, Italy, and possibly France have on the world economy?
I'd love to start a book (this is betting for those unfamiliar with the phrase) on just how much each of these countries' economies will shrink over the next year, but I haven't quite got the funds to cover folks' wagers. So, pulling numbers out of my ass (as my American cousins put it so picturesquely) here are my predictions.
Spain 10%?
Portugal 12%?
Italy 8%?
And now for the big questions: what are the panel's predictions? And whither the US in all this if the GOP continues to plough its particular neo-classical furrow?
And as a supplement to those, will China step in and save all our asses? And even if the will is there, can China actually do anything about this anyway?
http://www.guardian.co.uk/commentisfree/2011/sep/13/spooked-austerity-economic-grave
I'll quote from the article, albeit selectively. (I'd read the whole article if you can manage it. Some of the comments after it are also interesting: especially from the folk who don't get the point.)
"Part of the problem is that the bulk of the mainstream economics profession has forgotten basic Keynesian macroeconomics, and so is unable to offer even the most obvious advice."
"What is happening in Greece confirms this analysis. After aggressive cutbacks in public spending forced by the EU-IMF bailout, the economy shrank at an annual rate of 7.3% in the second quarter of 2011. This far exceeds the most pessimistic projections of the IMF or the EU. Since tax revenues can hardly improve now, even with the most sweeping attempts at better collection, fiscal balances will improve only with further public spending cuts. Even so, public-debt-to-GDP ratios will deteriorate."
"The point is that fiscal space is not a static variable. Expansionary policies increase demand and revenues and therefore generate more tax revenues. It makes much more sense to grow out of debt than to plunge into a downward spiral worsened by public austerity.
Of course, how this is done matters. Tax cuts (especially on the rich) are less effective than spending on infrastructure, social transfers and subsidies. Multiplier effects are higher when public spending is directed to lower-income groups that have higher propensity to spend their incomes. How could any government, including in the UK, ignore this obvious point?" [My emphasis.]
The corollary to this last paragraph being that QE just gives the banks more money to not lend to small businesses or other needy folk. Banks don't need any more money: small businesses and ordinary people and the economy as a whole do.
Not that anyone will take notice of her: after all, she is a woman, and most definitely not 'white'.
I really f**king wish she were in charge of our [the UK's] economy, and not Little Gideon.
So....if Greece's austerity measures have shrunk Greece's economy by 7.3% in 2011 Q2, what effects will the austerity measures demanded by the markets have on Spain, Portugal, Italy, and possibly France have on the world economy?
I'd love to start a book (this is betting for those unfamiliar with the phrase) on just how much each of these countries' economies will shrink over the next year, but I haven't quite got the funds to cover folks' wagers. So, pulling numbers out of my ass (as my American cousins put it so picturesquely) here are my predictions.
Spain 10%?
Portugal 12%?
Italy 8%?
And now for the big questions: what are the panel's predictions? And whither the US in all this if the GOP continues to plough its particular neo-classical furrow?
And as a supplement to those, will China step in and save all our asses? And even if the will is there, can China actually do anything about this anyway?