Another box on fiscal multipliers: ECB December Bulletin

This post was written by Philip Lane

See Box 6 in the latest monthly bulletin - here.

19 Responses to “Another box on fiscal multipliers: ECB December Bulletin”

  1. The Dork of Cork. Says:

    I found box 4 more interesting….

    “The latest data show that the annual rate
    of change in real disposable income, which has
    been negative for a protracted period, declined
    markedly, by 2.1% in the second quarter of 2012.
    In an effort to mitigate the effect of this decline
    on consumption, households dipped into their
    savings. As a result, their saving ratio fell to the
    lowest level recorded since the start of the series”

    Box 5 is just the fiscal stuff which would be a bit of a bore but for the amount of damage it is doing
    Its merely private banks trying to stop the flow so that they can continue with their wealth transfer thingy……….

    The fiscal “structural adjustment” of Italy in the late 90s seems to be the model
    But bankers like models who take steroids these days.

    Nothing much physical which will last was made back then.
    It was merely a transfer of tokens within the system.
    Very important for the token holders but pretty much pointless in the end.

  2. The Dork of Cork. Says:

    Box 3 Labour

    “The annual growth in compensation per employee further declined to 1.6% in the second quarter of
    2012 from rates of above 2% in the second half of 2011. This moderation by and large absorbed the
    upward impact of lower productivity growth on unit labour cost growth. Year-on-year unit labour
    cost growth stood at 1.4% in the second quarter of this year, compared with 1.6% in the fi rst quarter.
    The low productivity growth – in a context of modest economic growth – is expected to continue
    exerting upward pressure on unit labour cost growth in the near term.”

    Ask yourself why must they squeeze labour value ?
    So as to increase the surplus going into non labour costs of production.
    This is then expressed in bank credit for capital stuff.

    Houses , cars and other crap stuff.

    But its not working because the machines are eating the capital base at a faster and faster rate.

    Why is the cost of real capital / oil so high ?

    See above.

    The banks wish to bypass labour with their credit machines so as to extract the surplus value of production.
    Therefore in a financialised world the BANKS MUST DESTROY REAL CAPITAL TO EXTRACT A PROFIT

    This is a mirror image of the credit inflation.
    The money deflation phase of this extraction operation is the same phenomenon.

    Ireland was destroyed by Labour arbitrage in the high energy sectors of the economy that gave a false price signal to these operations…..

    To conceal the real capital destruction they reduced wages……..

    Think of low cost airlines , ferries , construction etc…..
    They even went so far as shipping in cheap labour from Turkey to build a Cork road.

    This is how Europe operates folks.
    It will not change until it has destroyed all of the capital base.

    Its a straight up criminal operation.
    As plain to see as rudolph’s nose.

    http://www.youtube.com/watch?v=pc302tejlkI

  3. The Dork of Cork. Says:

    And this is not just the big stuff …….

    Why do they need multiple companies with multiple trucks to pick your rubbish up ?
    Surely this practise destroys more Diesel for no real return…….

    Labour arbitrage from top to bottom.

    Its a bankers paradise .
    Until the capital destruction moves to the very top of the food chain.

    The EU is the most evil construct ever created.
    It will destroy the entire planet.

  4. The Dork of Cork. Says:

    Euro wage deflation & subsequent capital export goes back a long long way………

    We were the beneficiary of this in the 60s & 70s getting plants such as Verolme Dockyard until the shipping stuff went to Asia.

    When we were in the Sterling zone we were at least mostly integrated which meant the Dagenham yank came back and spent his money on Pints……

    But we have all of the disadvantages now , no advantages……..

    Our capital is being exported to elsewhere on the planet where it can get a better return……..

    When will yee guys realize we are worth more dead then alive within the Euro market state construct.
    And that includes the former Mount Oval middle class in this country.

    We gave up so much when the already most extreme market like state of the nation state system became a proper market state.

    The best in the class.

    Casablanca got 31Km of tram track yesterday.
    They must pay a rent to the French but it most likely beats the oil bill.

    http://www.youtube.com/watch?v=KnHibD1V2Mo

  5. The Dork of Cork. Says:

    Is anybody shocked ?

    http://www.youtube.com/watch?v=nM_A4Skusro

    I guess not.

  6. The Dork of Cork. Says:

    Once Europe builds stuff it must move onward and upward………it will not give you the tokens to use the capital it has built as that would involve a wealth transfer.

    This is clear as mud physical proof that we operate within a private money system.
    The money system should not be private.
    It is or should be a commons thingy.

    Another tramway in Algeria ……..building more stuff when they are closing down trams in Spain …….

    http://www.youtube.com/watch?v=MGXCh72qdc4&feature=plcp

  7. David O'Donnell Says:

    Hogging the thread! C’mon Dork - empirics suggest that when you hog early on the contributors flee elsewhere ….. now the ECB and the EU Commission might ignore empirics but neither you nor I do!

    I’ll get to Box 6 later - in case you are feeling lonely with the DorkMonoLogues!

  8. The Dork of Cork. Says:

    @David
    Yes of course - its what I do best.

    Its a important paper as it shows quite clearly the failure (success for a few) of the Eurozone in the physical economy despite the fiscal spin.

    Essentially the wastage of real resources going unused so that a few can earn a wage arbitrage.

    Its a quite incredible story as clearly no one could make that many “mistakes” without them being not mistakes.

    I see it as detached multinational oil capital pumping and dumping countries internal energy systems into eternity….
    A nightmare of biblical scale , Manchester economics in its most extreme form.

    I bet in a few years the Algerians & Turks will not have any tokens to use on their fancy new trains as oil capital moves elsewhere……

    Always of course running down the capital base clock.
    We live within a very sick market state without any check on it nature.

  9. Gavin Kostick Says:

    Re Box 6

    [Scene: A spacious drawing room in Frankfurt. A patient is strapped to a table. M Drachet in attendance, plus admirers]

    M Drachet: Our diagnosis for this fellow is an excess of partying, too much of the punch-bowl, a surfeit of humours, grass corpulence and a palpable debt overhang. Our remedy? Leeches!

    [Enter Mr deKrugman, a plain talking Yankee]

    Mr deKrugman: Hold your hand, sir! The patient is week. Leeches will only distress his condition further.

    M Drachet: Oh that annoying fellow. Even your fellow Americans agree that leeches are the cure.

    Mr deKrugman: Not any more they don’t. They’ve changed their minds.

    M Drachet: Really? Never mind - bring on the leeches.

    Mr deKrugman: Rather than leeches, this fellow needs an infusion of fresh blood to recover.

    M Drachet: Are you volunteering?

    Mr deKrugman: You, sir, can create all the blood you wish and you know it.

    M Drachet: Balderdash.

    [A fop whispers in M Drachet's ear]

    M Drachet: Well that’s news. But you forget, our medical charter expressly forbids it. And you miss the nicer point, if we were to do so, this fellow would learn nothing from his foolishness and return to his profligate ways.

    Mr deKrugman: Are you trying to cure the fellow, or teach him a lesson?

    M Drachet: A soupcon of A and a morsel of B. Now, the leeches.

    [The leeches are applied, and the patient becomes noticeably paler]

    Mr deKrugman: Told you.

    M Drachet: You really are the most arrogant fellow.

    Mr deKrugman: Says the man with the leeches.

    M Drachet: But this is part of the cure! You see he is being purged, in in being purged he will ultimately return stronger.

    Mr deKrugman: Or dead like that poor Greek fellow.

    M Drachet: And anyway, you quite misunderstand. It is not the leeches that make him pale, but, er, that, that and la bas!

    Mr deKrugman: You’re pointing at a bunch of random things.

    M Drachet: Not at all, I’m pointing at fetid air! Contagion I tell you. Stop looking at the leeches.

    Mr deKrugman. Look, are the leeches to teach a painful lesson or to help the patient get better?

    M Drachet: Can they be both?

    Mr deKrugman: No.

    M Drachet: To be honest monsieur, we do it because we’ve always done it.
    But our meticulous research shows that if the patients have, er, died in the past - it wasn’t the leeches fault! It was, um, something else!

    Mr deKrugman: I strongly recommend an infusion of fresh blood.

    M Drachet: But if we tried something new and it proved better, why our reputation for competence would be in tatters - you laugh sir?

    Mr deKrugman: No sir, I weep. I weep.

    [They continue to bicker as the bloated leeches suck happily at the patient]

  10. The Dork of Cork. Says:

    A paper which highlights the real export of hard currency from these shores……….

    http://www.cso.ie/en/media/csoie/census/documents/census2011profile10/Profile%2010%20Full%20Document.pdf

    See table 2

    Means of travel to work
    Y1986 : Bicycle : 60,750
    Y2011 : Bicycle : 39,803

    Y1986 : motor car : driver :402,878
    Y2011 : motor car : driver :1,067,451 (a slight decline from Y2006 :1,080,446 )

    Whats striking is the decline of car sharing in a age of austerity !!!

    Y1986 passenger : 89,831
    Y1996 passenger :112,432 (peak)
    It remained above 100,000 during Y2002 & Y2006….
    But dived in Y2011 to 69,164 in Y2011 !!!

    The school run figures are even worse…….

    The cars are not paying for themselves………
    The problem can only be solved with a national currency & rational polices which reduce the real waste in the system.

  11. Gtfaway Says:

    If anyone still wonders why the number and quality of comments in this forum is declining this thread is a classic.

  12. The Dork of Cork. Says:

    @GTfaway

    Thanks Gtfaway………..

    I regard that as a compliment.

    Economists with fiscal fetishes when the physical world is breaking down around them need to be challenged don’t you think ?

    You know that basic input output thingy that they ignore as if it was a alien concept.

    Fuel is a bigger import / money export then food
    We have a economic collapse.
    And yet people are not sharing their car.

    Explain to me again how this is not a monetary crisis…………..

  13. The Dork of Cork. Says:

    The EU is engaged in the most brutal monetary war against labour since the 1930s which throws people off monetary cliffs when they run out of tokens…..

    explain to me these figures
    This is real stuff
    Not claims on stuff.

    Brussels, 16/11/2012 - In November, demand for new cars was down for the fourteenth consecutive month in the EU*, dropping by 10.3% compared with November 2011 which counted on average the same number of working days in the region. In total, 926,486 new cars were registered. From January to November, the EU* recorded 11,255,094 new cars, or 7.6% less than in the same period a year ago.

    New car registrations in November were up 11.3% in the UK, while declining in all other significant markets: -3.5% in Germany, -19.2% in France, -20.1% in Italy and -20.3% in Spain. A vast majority of markets contracted, leading to an overall 10.3% downturn in the EU*, which totaled 926,486 new cars.

    From January to November, the picture was somewhat similar, with the UK being the only major market to expand (+5.4%) and Germany (-1.7%), Spain (-12.6%), France (-13.8%) and Italy (-19.7%) all contracting. Over eleven months, demand for new cars in the EU* fell by 7.6%, amounting to 11,255,094 units, a historical low since 1993.

  14. The Dork of Cork. Says:

    You can get rid of the cars the easy way or the hard way

    The EU has chosen the hard road………..

    DEFLATION

    WASTE

    IMPLOSION

    The UK is happy to eat the remaining small surplus (for the moment)

  15. Bleeding the Patient: A Drama : rabble Says:

    [...] piece via irishEconomy.ie Similar schtuff…Doctor too fit to workWhat’s happening to CF patients?[Politricks] [...]

  16. The Dork of Cork. Says:

    Our energy balance has not moved much in Euros this past year

    http://www.cso.ie/en/media/csoie/releasespublications/documents/externaltrade/2012/gei_oct2012.pdf

    Jan oct

    Y2011 : - 4,586 million
    Y2012 : - 4,411 million

    Imports of oil alone remains higher then food imports despite the continual deflation
    oil imports : 4,667
    food imports : 4,541
    fuel imports total : 6,006.

    Again this is a general characteristic of all PIig countries
    This hard currency export for no return totally wrecks their domestic systems.

    The cars remain jammed in a huge stock & flow vice 5+ years after the economic singularity of late summer 2007.

  17. The Dork of Cork. Says:

    14.5 Km of tram line opens in Paris today…

    http://paris-ile-de-france.france3.fr/2012/12/15/en-direct-le-t3-poursuit-sa-route-vers-le-nord-de-la-capitale-165219.html

    French Rail fixed capital stuff coming on line is now almost a weekly thing.

    The French elite are obviously milking the non sov euro hinterland of everything not tied down while preparing for a new change in the flow.

    Ireland is a sad place.
    The middle men are not too bright absentee landlords who get to eat a ration over and above their true capacity while the very dumb general population get their labour surplus value stripped from their back via constant inward migration flows.

    I guess we did it to England
    What goes around comes around.

  18. The Dork of Cork. Says:

    “not too bright agents of absentee landlords even…..”

    The higher tempo nature of monetary warfare against this population since 1986 is one for the history books I imagine.

    The population believed the bull about the dumb hicks in 1970s FF which caused the collapse of the 80s

    But we all know now it was much deeper then that….it was the first phase.

    With perhaps a small neo liberal niche within each of the parties guiding policy debate into a deep sea of entropy.

    The destruction of capital in a effort to avoid giving labour value continues……….
    Soon very little organic capital will remain on this island.

  19. David O'Donnell Says:

    Returning to Box 6: A critcal insider ECB review

    Well, the assumption of -0.5 is not supported by Hibernian emperics or the IMF -could be up to three times (or even more) - oh dear gotta shift focus or we are in danger of being deemed incompetent. It’s the long term that matters not the short term and our sophisticated SIMULATION suggests we are right [forget real empirics] to continue with austerity and ordo liberalism. Of course we are wrong but to admit such would deem us incompetent and it is far better to be deemed competent with the wrong policy than to change to a sensible policy and have our record to date deemed incompetent. Our SIMULACRUM IS THE NEW REALITY EVEN IF IT DESTROYS EUROPE, ITS CITIZENRY, AND THE EUROPEAN PROJECT. How we miss Dear Lorenzo.

    @The Guv’nor
    ?

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