55 replies on “The Debate on Fiscal Policy in Europe: Beyond the Austerity Myth”
Guys, you’re in a hole. Don’t be digging.
From the paper:
There is widespread agreement that fiscal consolidation
should be pursued in most European countries.
Obviously this paper is the work of right wing reactionaries and it a part of the continuing change in approach of giving up on the economic theory and data and reverting purely to arguments about intangibles such as confidence and credibility, the failure of democracies to take their neoliberal medicine except under pressure and the legal and institutional restrictions that are part of EMU.
This is a paper about economic policy that does not reference any “real world” measured numbers of any significance and that should tell all you need to know about the usefulness of the European Commission’s economic policy making (or justifying) apparatus. DG ECFIN will not even acknowledge the numbers that demonstrate the effects of their policies.
Let us hope that this position paper is an apologia that Buti’s camp has been forced to issue as it dawns on the rest of the European Commission that someone is going to have to take the blame for five years of failure and that the unfortunate Mr Rehn is an insufficiently credible sacrifice.
The idea about austerity benefiting a country and reducing the key debt/GDP ratio is about as ridiculous as saying that you can increase the speed of your car while taking your foot off the accelerator. The idea about Austerity being good for you as distinct from something forced on you reminds me of people draining their blood with leeches during the eighteenth century to fix some ailment. Osbourne needs to be congratulated on that one as he managed to prove to the world that self imposed Austerity is really self flagellation.
Austerity was forced on the Irish by the Trokia because Germany did not finance our fiscal deficit indefinitely. The reason that the rate on the bonds has decreased is not because our debt/gdp ratio has decreased because de facto Austerity will increase this ratio, no the reason is that the bond holders now believe that we can push out the payment of a lot of debt into the never never of 20 – 30 years of the Anglo Irish bank repayments and simulataneously decrease the interest or drag. The effective debt/dgp ratio is now much lower and the chances of the investor getting back his ten year money has now increased significantly – Markets are very rational in the medium term.
“… since fiscal consolidation cum deflation is likely to be self-defeating, re-establishing competitive-ness across the area implies higher than average infla-tion in stronger countries, provided price stability in the euro area as a whole is ensured and expectations well anchored.”
Where is the evidence? None that I can identify …
How does Francois Hollande come into this? The French voted for the guy after he campaigned that Eurocrat economic policy was crap. And his opponent also largely argued that Austerity was garbage. And now, despite support from the left and right in his country, he’s mute. Beyond deferential and obsequious.
I had high hopes after Cameron nixed UK involvement in the anti-growth, anti-stability suicide pact that this would break the evil spell. Maybe Cameron needs to follow up. There’s nothing to be lost politically on either his left or right flank at this point. This is about basic respect for democracy. Europe is again sacrificing democracy for a few scribbles on a piece of paper.
‘To act as if you know it all is catastrophic:
and if you try to control it
you will stare into your empty hand.
Tao Te Ching #64
Interesting that the authors of this defence of austerity make their appeal to higher authority (a mysterious “consensus” that austerity is the right approach). They do not address the quite fundamental criticism that austerity’s predicted effects have not happened. Austerity had not worked as forecast. Austerity has produced the outcomes that it’s critics predicted. That’s almost a lab test.
fyi
Cyprus:
‘European bailout without the IMF for Cyprus’
13 March 2013 Presseurop Politis
European Union:
National budgets under Brussels’ supervision
13 March 2013 Presseurop Le Temps, Le Figaro
On March 12, the European parliament voted to approve “a restrictive directive that will oblige eurozone member states to present their planned budgets in Brussels, even before they are presented to national parliaments,” explains Le Temps.
Draghi has rigged the sovereign bond market, just as he did with the interbank market before that. The bond sale is part of the ‘recovery’ theatre, where the only thing genuinely at risk is our growth prospects.
fyi
Vatican 360: A Virtual Tour of the Catholic State
Where exactly is the monastery where Benedict XVI will live now that he has stepped down? What about the hotel where the 115 cardinals are staying while they are in Rome choosing a new pope? Join SPIEGEL ONLINE for a virtual tour.
The proof of the austerity pudding will evidently be in the eating.
DOD,
Looks like the sound money men lose control of the Vatican as well.
This is an extremely reasonable and reasoned document. I am amazed but not surpriesd that the overwhelming reaction so far on this thread has tself been of the extreme ideological variety.
@ Brian Woods II
The Commission document states;
“In Germany, the fiscal stance is now broadly neutral, hence consistent with the call for a differentiated fiscal stance according to the budgetary space.”
One wonders whether this is still true given the bringing forward by Schaeuble by one year of the balancing of the German budget. One is regrettably forced to the conclusion that Hollande has chosen to go head to head with Germany and there are very few who think that he is likely to succeed.
Some face-saving formula will, undoubtedly, be found, especially as Cameron is under such pressure domestically.
The undoubtedly accidental but possibly pivotal role of Ireland may be noted.
Its a pity the document was not translated into English and the errors removed.
But it does not matter.
Schaeuble has told them where to go with their suggestion in point 5 below
“The improved current balances in the periphery thus have to be matched by rebalancing trends also in euro area countries that feature large current account surpluses. Policies and reforms supporting demand in the-se countries have a role to play. In Germany, the fiscal stance is now broadly neutral, hence consistent with the call for a differentiated fiscal stance according to the budgetary space”
He brought forward publication of a balanced German budget as per FT link posted by DOCM link.
This was the man who started to rubbish the June 29th communique before the ink was dry on the paper.
If anybody is wondering where danger is coming from in Europe, they should forget thinking about Beppe Grillo and have a think about Schaeuble.
This brief completely avoids any reference to the cause/s of the current financial mess. Hence any discussion, explanation or justification of the different courses of action are devoid of context. Other than references to ‘fiscal imbalances’ and ‘fiscal sustainability’.
Presumably the courses of actions put into effect should have some direct reference to the cause/s. Which were? So why not deal with the disease rather than the symptoms? Or at least acknowledge the disease. And could we not have had an acknowledgement that borrowing for day-to-day government spending is mathematically equivalent to reducing part of your future income – so you may have to borrow even more to make up the deficit in income if your expected income fails to increase. Do I detect the implied belief that ‘future incomes’ (as well as property values) would ALWAYS increase?
Since; Y = C + G + I + Nx (simple addition here)
Y will do what? when C falls, G falls, I falls – Nx is now irrelevant.
What happens to employments when C and G both fall? And if anyone is naive enough to believe that more persons will find work when wages/salaries are reduced – then they need to seek psychiatric assistance.
Do folk not realise that a significant proportion of domestic demand is absolutely dependent on increasing credit, simultaneously inflating asset values and the maintenance of government transfers? Apparently not. And now they wonder about ‘lack of growth’ and blame those virtual multipliers – whatever these may be.
Our economic model is a FIRE-based, demand driven one with credit as the growth fuel. The major polluting output is debt, which retards and eventually asphyxiates economic activity. Sequester the debt, press REBOOT and off we go again!
@Brian Woods II
BWII writes: This is an extremely reasonable and reasoned document. I am amazed but not surprised that the overwhelming reaction so far on this thread has itself been of the extreme ideological variety.
Thanks, Brian. My own first-glance impression is that the document is at worst a curate’s egg, i.e. it is certainly ‘good in parts’. For example, the authors state that [t]ax measures have focused on higher income brackets, and cuts in government wages or social benefits have often spared the lowest income levels. That seems fair enough, at any rate is is not a ‘load of bullshit’.
Ditto for the (somewhat euphemistically worded) argument that spreading the costs across the population and confronting vested interests which often protect less productive spending help generate a sense that everyone pays their fair share.
In plain English it reads:
“Spreading the costs across the population and confronting overpaid lard-ass public sector workers who spend most of the working day scratching themselves help generate a sense that everyone pays their fair share.”
Fair enough in my book.
Most of the commenters here don’t seem to have read the article in depth (well, I didn’t) but if you have the death sentence in your pocket before you enter the courtroom then I suppose you consider listening to the evidence for the defence a waste of time.
@ AA
This is the conclusion that German policymakers have apparently arrived at, no doubt also motivated by Germany’s relatively high level of government debt and facilitated by the fact that German firms produce goods that the world wishes to buy.
However, sudden withdrawal of the credit drip risks killing the patients, Germany included.
Simpleton writes:
Austerity has produced the outcomes that its critics predicted. That’s almost a lab test.
Unfortunately economic forecasts are made in a real-world environment that is about as remote from laboratory testing as one can get. Most economists, judging by their writings, don’t even understand the meaning of ceteris paribus. Google it if it’s all Greek to you.
Just on the side, over the past few years I must have read several hundred articles and op-eds on the case against austerity in connection with the Greek and Irish economies. It’s never been clear to me what precisely opponents to austerity (which I take to mean government cuts, regardless of pro- or anti-euro positions as such) propose as an alternative. Do they mean:
– a little less austerity (i.e. slightly lower government cuts in wages, social services etc.)
– a lot less austerity (minor cuts)
– no austerity (e.g. no Croke Park Agreement at all)
– a little ‘counter austerity’ (i.e. a modest increase in government expenditure, with somewhat higher public sector wages, pensions, etc)
– an explosion in government expenditure, which thanks to the sacred ‘multiplier effect’ will lead to the Holy Grail of job creation and a new era of prosperity for all?
Anti-austerity advocates aspire to second-guess the behaviour of lenders. That is their greatest weakness: if they’re so smart, why can’t they convince lenders that by spending more governments will promote economic growth to such an extent that, on some fine day, the ratio of debt to GDP will begin to decline and we will all start reaching for the heavens again? That’s their core argument after all.
Why don’t the creditors see the Keynesian light? Why are creditors so goddam uptight, especially after already losing half of their past investments?
Because, as the Germans so beautifully put it, Geld ist scheu wie ein Reh. Money is as shy as a deer.
Especially in the case of deer who have already lost an arm and a leg in the financial markets. Metaphorically speaking, at any rate.
Carolus
Opponents of austerity generally want to govt to spend more money on something to achieve something. Generally this spending has to be financed by others people money….either taxes or borrowing.
It is not clear what the plan B is when the other people decline to provide the money or don’t have it.
Simpleton,
Implicit in your thesis is the existence of a lab experiment or a clinical trial with a better outcome. As you know many drugs have worked very well in rats or monkeys but have perverse and unanticipated effects when used in humans.
@Carolus Galviensis
Unfortunately economic forecasts are made in a real-world environment that is about as remote from laboratory testing as one can get
You did not appear to answer simpleton’s question – why, in a Eurozone context, has the experiment of austerity had such negative outcomes when everyone in the commission, in the German block and on the right of the political spectrum were so convinced it would work?
Your touching story of money’s shyness also seems inconsistent with another recent real world experiment which was the genesis of the whole crisis – the inability of investors to measure risk that caused the global financial crisis and Europe’s incredibly mismanaged piece of it.
Anyway, the apologia/defence pleading/suicide note from DG ECFIN in the OP is a really interesting read – surely someone with more time and expertise can give it an analysis – it has the feeling of a historical document.
For some reason I am reminded of Albert Speer‘s complaint to his captors.
“History always emphasizes terminal events.”
I
@Shay Begorrah
You write: Your touching story of money’s shyness also seems inconsistent with another recent real world experiment which was the genesis of the whole crisis – the inability of investors to measure risk that caused the global financial crisis and Europe’s incredibly mismanaged piece of it.
Chapeau — a very good argument. But if money wasn’t shy THEN it certainly is shy NOW. That’s the point. The deer have since been to finishing school and have abandoned their foolish ways.
I’m not sure that ‘everyone .. on the right of the political spectrum were so convinced (austerity) would work’. Many simply argued that austerity would have less negative outcomes than the alternative, i.e. non-austerity. There are worse things than having half a loaf. Such as having no bread at all.
And what IS non-austerity? What DO you guys propose?
I don’t expect you to post a ten-page reply but I would appreciate one or more links to a cogently and realistically argued case for the alternative (such as abandoning the euro, but not a fantasy proposal that the Germans pay a trillion euros reparations to the Greeks).
A terrible end (leaving the euro) or an endless terror (staying within the fold) may be the only outcomes.
Tull Mcadoo: It is not clear what the plan B is when the other people decline to provide the money or don’t have it.
Tut, tut–but that’s an easy one — the ‘other people’ will be sent to Keynesian reducation camps until they change their wicked, self-destructive ways and learn how to throw money into a bottomless pit again while prostating themselves before the God of the Multiplier.
@carolus
“Anti-austerity advocates aspire to second-guess the behaviour of lenders. That is their greatest weakness: if they’re so smart, why can’t they convince lenders that by spending more governments will promote economic growth to such an extent that, on some fine day, the ratio of debt to GDP will begin to decline and we will all start reaching for the heavens again? That’s their core argument after all.
Why don’t the creditors see the Keynesian light? Why are creditors so goddam uptight, especially after already losing half of their past investments?”
Take a look at the Krugman and Balls interviews on Newsnight
(BBC site) 12th and 13th March respectively. If you view these with your dispassionate political analysis hat on (ie pretend you are a Joe Soap floating punter) they should illustrate the difficulties of ‘convincing’ on the political front.
For the moment, convincing the lenders really amounts to convincing them you can and will print if necessary to pay coupons or principal should it be required. The risk then transfers to FX rates, and they are so difficult to get right in any case, there is a (current) willingness to ignore potential knock-on effects of said printing.
@Mods
Ireland is back in the markets. Wot, no thread?
@Carolus Galviensis
A terrible end (leaving the euro) or an endless terror (staying within the fold) may be the only outcomes.
This is a false dilemma, obviously the arrangement of EMU we have now, legally and institutionally, is the terrible thing. EMU, as it is now, is the problem and it needs to end.
What will hopefully end it is the political pressure that will come from the loss of faith in austerity (or “budget swaddling” as it will soon be renamed in a Commission cartoon). Perhaps Herr Schadensprudel’s preemptive crushing of the German budget is a defensive position against this pressure or a sign that Germany may abandon the Euro leaving its stragglers to create an ECB with a license to print and a dual mandate (like a proper central bank) or for it to dissolve altogether.
@grumpy
Money-printing eliminates default risk but transfers it not only to FX rates as you mention, but also ultimately to internal price inflation – i.e. domestic prices and wages.
Money-printing also removes the pressure on politicians to overcome weak policies and fix weak institutions. In Europe you can see this already in the way political progress towards a banking union has slowed to a crawl since the introduction of OMT (which at this stage is still only a threat of money-printing). When you consider that Europe needs not only a banking union but also some form of closer fiscal union, and that these problems are political and cannot be solved by the central bank, then the slowness of political progress becomes a serious concern.
Similar effects can be seen in the US, where central bank activism is accompanied by political gridlock and paralysis. The problems we face are inherently political and cannot be solved by CBs, but they are also very difficult and politicans will prefer not to confront them if the CB provides cover. The German central bank is the only major CB that perceives this clearly, but its attitude is misunderstood in the Anglo-American world (of which Ireland is part), where the principle of CB independence has never been fully developed.
@Shay Begorrah
EMU, as it is now, is the problem and it needs to end.
I happen to share that view (though EMU is not the ONLY problem) but I think that opponents of EMU should have the honesty to acknowledge that the end, even in the best of circumstances, will be a pretty nasty one. It will be VERY nasty in the short run — and the short run may not be that much shorter than the long run.
Besides, eliminating EMU is not a magic wand. What effect would its disappearance have, say, on reducing the unfunded liabilities of the Irish state, (estimated by some Freiburg economists whose names I can’t remember to be in the region of 1400 per cent of GDP)?
@BWII: “I am amazed but not surpriesd….”
WTF?
@myself
re: Ireland’s unfunded liabilities (implicit government debt)
The paper to read is:
Explizite und implizite Staatsverschuldung in Europa: eine Tragfähigkeitsanalyse
Moog, S. und B. Raffelhüschen, Zeitschrift für Staats- und Europawissenschaften, 10(2), 277-290.
The paper is not on line or is behind a pay barrier but has frequently been cited in the German press.
@ CG
Not the article in question but on the same theme.
By the way, you are most unlikely to get an answer to the question you pose as to what alternative “anti-austerians
@ CG
propose, especially as events, at least for the moment, appear to be undermining their general thesis.
@DOCM
especially as events, at least for the moment, appear to be undermining their general thesis.
It takes some mix of delusion and dishonesty to look at the Eurozone of 2013 and say “The critics of austerity have been disproved.”, but you are in elite (or German speaking) company.
The critics of austerity are faced with a difficult problem, the austerians (is “fiscal fascists” too pointed?) are still in control of the levers of policy making and it has to have dawned on even the most Europhiliac of us now that there are no falling metrics (outside of CDU polls) that would persuade them to change tack.
The policy is a human and economic catastrophe but its advocates only answer to requests for a change of approach is “Despite getting the outcome of this policy wrong we believe its the best one.”. Sometimes as above the response is not an appeal to conservatism but the addled “Given the economic mess that implementing austerity during a financial crisis created recession has created austerity is the only sane response!”.
What ever your question, whatever the circumstances, austerity is the answer.
Austerity is a political cult comprising a certain set of hard money neoliberals (a cult who are the useful idiots of financial capital) and we should not be debating them, we should be trying to expose its members and remove them from positions of influence.
@DOCM
Thanks for the link, much appreciated
@Shay Begorrah:
“Austerity is a political cult comprising a certain set of hard money neoliberals […] and we should not be debating them, we should be trying to expose its members and remove them from positions of influence”
Let’s assume you are right and that the austerity advocates are the equivalent of flat earthers who wear tinfoil hats and so dumb that you are liable to suffer brain damage just by trying to refute them. You guys still have to propose SOMETHING as an alternative even if it’s ‘BLATANTLY OBVIOUS’ to yourselves.
But I suppose DOCM is right and that I am wasting my time seeking an answer to that $64000 dollar question one can ask of all incumbent politicians across the spectrum:
What would YOU do in their place?
@All Austerians & Financial System Spinners
‘To act as if you know it all is catastrophic:
and if you try to control it
you will stare into your empty hand.
Tao Te Ching #64
But I suppose DOCM is right and that I am wasting my time seeking an answer to that $64000 dollar question one can ask of all incumbent politicians across the spectrum:
What would YOU do in their place?
Kevin O’Rourke had a good answer on the front page:
looser monetary policy, more debt restructuring, a countervailing core fiscal stimulus channelled either through Germany or some EU body like the EIB — and moves towards an appropriate Eurozone architecture — a real banking union, which will require at least some element of fiscal union, and ideally some other elements of fiscal union as well
@Carolus Galviensis
“But I suppose DOCM is right …
He/She is fairly far to the right alroight …
I have another question: where is the sense in paying back 30+ Bilion to ourselves and then burning it?
@ CG
For the avoidance of any confusion, I should have made clear that the events that I am referring to are in Ireland although I thought that was clear from the context. I have always argued that Ireland is an outlier and does not belong in the company of the Club Med in terms of analysis.
I have also repeatedly made the point that we need only get our own irons out of the fire. Other countries are in charge of their own affairs and neither welcome nor will they accept – a la Timothy Garton Ash – lectures on what is good for them.
@Ernie Ball
The follow-up question is: how does KOR’s proposal translate into plain German?
Does it mean that German taxpayers will have to pay more, or doesn’t it? Here is how I reckon most Germans will construe KOR’s words:
countervailing core fiscal stimulus = Germany will have to pay more
real banking union = Germany will have to pay more
some element of fiscal union = Germany will have to pay more
some other elements of fiscal union = Germay will have to pay more
etc.
I hope I am mistaken about this.
Carolus,
Pretty much spot on with the follwing caveats. The alternative to not paying more or accepting higher inflation is
1. Series of default by the periphery on debts owed to core
2. Periphery leaves EZ and DM appreciates by 40-50%
3. EU breaks apart in acrimony and every body blames Germans for destroying Europe/global economy….again.
Bottom line- tough for the German corporate sector, its employees and retirees. Good for German domestic tourism.
@DOCM
I have also repeatedly made the point that we need only get our own irons out of the fire.
To that I would add that that ‘we’ consists of over four million individual selves, whose interests are not necessarily the same and indeed may well be conflicting — such as public sector workers versus the private sector, old versus young, the export industry versus domestic retailers, and so forth.
I know that’s an almost trite observation but I think it’s worth rubbing it in even at the risk of sounding like a broken record. It’s not just a matter of what’s ‘good for Ireland’, or what’s ‘good for each and everyone of us’. We are dealing not just with a ‘problem’ with a possible ‘solution’, which can be worked out if we all sit down together and put on our collective thinking cap. We are dealing also with a domestic intragroup conflict, and conflicts have outcomes, not solutions.
Indeed individuals may well agree about the facts of the case and differ on some kind of ‘moral’ grounds as to the appropriate policy response. The over-90 OAP who would long ago have died were it not for subsidised medical care may be well aware that she is costing wealth-generating taxpayers a small fortune but at the same time feel she ‘deserves’ what she is getting come hell or high water. Younger taxpayers may have a more Nietzschean attitude as to footing the bills — see the often-quoted dictum:
Thou shalt not kill; but needst not strive. Officiously to keep alive
@Tull Mcadoo. Thanks. Good points.
@ KOD
“WTF”
I know this is intellectually challenging for you. For some time I have been amazed at how ideological and stubborn has been the rejection of any fiscal consolidation whatsoever, by most contributors to this blog. I was therefore not surprised that the overwhelming reaction to this reasoned note is one of hysterical Kerriganism (see Sindo each week). “Amazed but not surprised” no “WTF” about it.
The document simply states that some fiscal consolidation was required but the pace was debatable. They argue that, more or less, the correct pace was chosen, but not with ideological certainty. Meanwhile the likes of Shay, who obviously knows what she is talking about, insist that there was no case whatsoever for attempting to consolidate our 14% fiscal deficit.
@The Recent Reactionary Troika
The irrationality of [your defence of EZ macro economic policy] is not an argument against its existance; rather it is a conditon of it.
[Nietzsche reloaded in the context of this blog’s ‘eternal recurring’]
Where is the sense in paying back 30+ Bilion to ourselves and then burning it? Such simple questions drove poor oul nietsche insane; are we dealing with nonsense or insanity?
countervailing core fiscal stimulus = Germany will have to pay more
real banking union = Germany will have to pay more
some element of fiscal union = Germany will have to pay more
some other elements of fiscal union = Germay will have to pay more
I imagine US taxpayers felt the same way in 1947 or so.
@Ernie Ball
Good one, that. I almost sornted — oops, snorted — thru my nightcap.
Gdoo nigth,
Cralsou
Noch eni Bire, bitte.
BWII: “Amazed but not surprised” no “WTF” about it.
Fair enough. I’ve no idea what it feels like to be amazed but not surprised. I can certainly imagine being surprised but not amazed, for example by a mugging or a car crash. To me, any event which is truly amazing is ipso facto very surprising indeed. Hence my reaction, WTF?
But it’s your mind and I don’t pretend to know what goes on there.
At the risk of being rude, I’d suggest that if you have a good enough brain to be an actuary it’s a real shame to dismiss contrary views as “hysterical Kerriganism” — I doubt that Krugman, Blanchard, Solow and DeLong have ever heard of Kerrigan. It’s world-class work you should tackle if you’re at all serious, not the Sindo.
@Brian Woods II
I was therefore not surprised that the overwhelming reaction to this reasoned note is one of hysterical Kerriganism (see Sindo each week).
I’m fairly astonished at an intellect that wades through the Sindo week on week and comes out the other side with the impression that Gene Kerrigan is “hysterical”, particularly given the lunacies for which that paper is rightfully infamous (and I’m not just talking about Colm McCarthy). It suggests that no evidence is likely to penetrate the ideological position.
@ Carolus
Come now. Are we really supposed to pretend that ‘austerity’ was actually ever seriously intended as a solution to the current Europe-wide recession, and not just opportunism by free-market types to indulge in rolling back social democracy?
In light of the blatant dishonesty involved, the only onus here is on the deficit scolds to actually admit that austerity has worsened the recession, and that you have been wrong at every turn.
@ KOD
lol Amazed vs Surprised, its getting too deep for me!!
As to the learned gentlemen, yes I can see them taking issue with the EC note but more in terms of its degree. They would not be hysterical proponents of “all fiscal consolidation is austerity, all austerity is a vicious attack on the citizenry (or at least those in highly paid academic posts facing a fourth consolidation of their remuneration)”
But I take yours and other advices that I really must give up the Sindo.
Tut Tut – such wanton attacks on our award winning crime novelist ….
Shurely a crime novelist is well qualified to comment on .. er .. crime?
@Gene Kerrigan
BWII is a fan! Keep up the good work on exposing all those criminals.
Buti and Carnot have posted a shorter version on Vox, drawing a response from Krugman; key paragraph:
Now, much of that tightening comes from countries that have no choice about imposing at least some austerity. But the Commission should be urging those countries not suffering from a debt crisis to be engaged in offsetting expansion — not giving Germany a thumbs up when it has in fact been moving in the the wrong direction. And the Commission should be pointing out just how bad an idea it is for France to be engaged in fiscal tightening because its economy is weaker than expected, which is exactly the reverse of prudent macro policy.
55 replies on “The Debate on Fiscal Policy in Europe: Beyond the Austerity Myth”
Guys, you’re in a hole. Don’t be digging.
From the paper:
There is widespread agreement that fiscal consolidation
should be pursued in most European countries.
Obviously this paper is the work of right wing reactionaries and it a part of the continuing change in approach of giving up on the economic theory and data and reverting purely to arguments about intangibles such as confidence and credibility, the failure of democracies to take their neoliberal medicine except under pressure and the legal and institutional restrictions that are part of EMU.
This is a paper about economic policy that does not reference any “real world” measured numbers of any significance and that should tell all you need to know about the usefulness of the European Commission’s economic policy making (or justifying) apparatus. DG ECFIN will not even acknowledge the numbers that demonstrate the effects of their policies.
Let us hope that this position paper is an apologia that Buti’s camp has been forced to issue as it dawns on the rest of the European Commission that someone is going to have to take the blame for five years of failure and that the unfortunate Mr Rehn is an insufficiently credible sacrifice.
More irrational behaviour from the markets!
http://www.irishexaminer.com/breakingnews/business/noonan-hails-extraordinary-response-to-irelands-10-year-bond-sale-587852.html
Some more detail!
http://www.irishtimes.com/business/economy/ireland/ireland-takes-major-step-towards-exiting-bailout-with-10-year-bond-sale-1.1324166
The idea about austerity benefiting a country and reducing the key debt/GDP ratio is about as ridiculous as saying that you can increase the speed of your car while taking your foot off the accelerator. The idea about Austerity being good for you as distinct from something forced on you reminds me of people draining their blood with leeches during the eighteenth century to fix some ailment. Osbourne needs to be congratulated on that one as he managed to prove to the world that self imposed Austerity is really self flagellation.
Austerity was forced on the Irish by the Trokia because Germany did not finance our fiscal deficit indefinitely. The reason that the rate on the bonds has decreased is not because our debt/gdp ratio has decreased because de facto Austerity will increase this ratio, no the reason is that the bond holders now believe that we can push out the payment of a lot of debt into the never never of 20 – 30 years of the Anglo Irish bank repayments and simulataneously decrease the interest or drag. The effective debt/dgp ratio is now much lower and the chances of the investor getting back his ten year money has now increased significantly – Markets are very rational in the medium term.
“… since fiscal consolidation cum deflation is likely to be self-defeating, re-establishing competitive-ness across the area implies higher than average infla-tion in stronger countries, provided price stability in the euro area as a whole is ensured and expectations well anchored.”
Where is the evidence? None that I can identify …
How does Francois Hollande come into this? The French voted for the guy after he campaigned that Eurocrat economic policy was crap. And his opponent also largely argued that Austerity was garbage. And now, despite support from the left and right in his country, he’s mute. Beyond deferential and obsequious.
I had high hopes after Cameron nixed UK involvement in the anti-growth, anti-stability suicide pact that this would break the evil spell. Maybe Cameron needs to follow up. There’s nothing to be lost politically on either his left or right flank at this point. This is about basic respect for democracy. Europe is again sacrificing democracy for a few scribbles on a piece of paper.
‘To act as if you know it all is catastrophic:
and if you try to control it
you will stare into your empty hand.
Tao Te Ching #64
Interesting that the authors of this defence of austerity make their appeal to higher authority (a mysterious “consensus” that austerity is the right approach). They do not address the quite fundamental criticism that austerity’s predicted effects have not happened. Austerity had not worked as forecast. Austerity has produced the outcomes that it’s critics predicted. That’s almost a lab test.
fyi
Cyprus:
‘European bailout without the IMF for Cyprus’
13 March 2013 Presseurop Politis
http://www.presseurop.eu/en/content/news-brief/3530961-european-bailout-without-imf-cyprus
European Union:
National budgets under Brussels’ supervision
13 March 2013 Presseurop Le Temps, Le Figaro
On March 12, the European parliament voted to approve “a restrictive directive that will oblige eurozone member states to present their planned budgets in Brussels, even before they are presented to national parliaments,” explains Le Temps.
http://www.presseurop.eu/en/content/news-brief/3532541-national-budgets-under-brussels-supervision
Cartoon of the Day! ‘eternally recurring’ …
http://www.presseurop.eu/en/content/cartoon/3533201-making-little-headway
@ DOCM
More irrational behaviour from the markets!
What markets ?
Draghi has rigged the sovereign bond market, just as he did with the interbank market before that. The bond sale is part of the ‘recovery’ theatre, where the only thing genuinely at risk is our growth prospects.
fyi
Vatican 360: A Virtual Tour of the Catholic State
Where exactly is the monastery where Benedict XVI will live now that he has stepped down? What about the hotel where the 115 cardinals are staying while they are in Rome choosing a new pope? Join SPIEGEL ONLINE for a virtual tour.
http://www.spiegel.de/international/world/a-virtual-tour-of-the-vatican-a-888488.html
@all
No white smoke yet from the ideologues of austerity!
@ All
FYI
http://online.wsj.com/article/SB10001424127887324392804578358102136937958.html
@ All
Berlin ups the ante!
http://www.ft.com/intl/cms/s/0/8a97c6de-8bff-11e2-b001-00144feabdc0.html#axzz2NRxE5Zek
The proof of the austerity pudding will evidently be in the eating.
DOD,
Looks like the sound money men lose control of the Vatican as well.
This is an extremely reasonable and reasoned document. I am amazed but not surpriesd that the overwhelming reaction so far on this thread has tself been of the extreme ideological variety.
@ Brian Woods II
The Commission document states;
“In Germany, the fiscal stance is now broadly neutral, hence consistent with the call for a differentiated fiscal stance according to the budgetary space.”
One wonders whether this is still true given the bringing forward by Schaeuble by one year of the balancing of the German budget. One is regrettably forced to the conclusion that Hollande has chosen to go head to head with Germany and there are very few who think that he is likely to succeed.
Some face-saving formula will, undoubtedly, be found, especially as Cameron is under such pressure domestically.
The undoubtedly accidental but possibly pivotal role of Ireland may be noted.
@ All
FYI
http://www.guardian.co.uk/business/2013/mar/13/ireland-bond-sale-bailout
Its a pity the document was not translated into English and the errors removed.
But it does not matter.
Schaeuble has told them where to go with their suggestion in point 5 below
“The improved current balances in the periphery thus have to be matched by rebalancing trends also in euro area countries that feature large current account surpluses. Policies and reforms supporting demand in the-se countries have a role to play. In Germany, the fiscal stance is now broadly neutral, hence consistent with the call for a differentiated fiscal stance according to the budgetary space”
He brought forward publication of a balanced German budget as per FT link posted by DOCM link.
This was the man who started to rubbish the June 29th communique before the ink was dry on the paper.
If anybody is wondering where danger is coming from in Europe, they should forget thinking about Beppe Grillo and have a think about Schaeuble.
This brief completely avoids any reference to the cause/s of the current financial mess. Hence any discussion, explanation or justification of the different courses of action are devoid of context. Other than references to ‘fiscal imbalances’ and ‘fiscal sustainability’.
Presumably the courses of actions put into effect should have some direct reference to the cause/s. Which were? So why not deal with the disease rather than the symptoms? Or at least acknowledge the disease. And could we not have had an acknowledgement that borrowing for day-to-day government spending is mathematically equivalent to reducing part of your future income – so you may have to borrow even more to make up the deficit in income if your expected income fails to increase. Do I detect the implied belief that ‘future incomes’ (as well as property values) would ALWAYS increase?
Since; Y = C + G + I + Nx (simple addition here)
Y will do what? when C falls, G falls, I falls – Nx is now irrelevant.
What happens to employments when C and G both fall? And if anyone is naive enough to believe that more persons will find work when wages/salaries are reduced – then they need to seek psychiatric assistance.
Do folk not realise that a significant proportion of domestic demand is absolutely dependent on increasing credit, simultaneously inflating asset values and the maintenance of government transfers? Apparently not. And now they wonder about ‘lack of growth’ and blame those virtual multipliers – whatever these may be.
Our economic model is a FIRE-based, demand driven one with credit as the growth fuel. The major polluting output is debt, which retards and eventually asphyxiates economic activity. Sequester the debt, press REBOOT and off we go again!
@Brian Woods II
BWII writes:
This is an extremely reasonable and reasoned document. I am amazed but not surprised that the overwhelming reaction so far on this thread has itself been of the extreme ideological variety.
Thanks, Brian. My own first-glance impression is that the document is at worst a curate’s egg, i.e. it is certainly ‘good in parts’. For example, the authors state that [t]ax measures have focused on higher income brackets, and cuts in government wages or social benefits have often spared the lowest income levels. That seems fair enough, at any rate is is not a ‘load of bullshit’.
Ditto for the (somewhat euphemistically worded) argument that spreading the costs across the population and confronting vested interests which often protect less productive spending help generate a sense that everyone pays their fair share.
In plain English it reads:
“Spreading the costs across the population and confronting overpaid lard-ass public sector workers who spend most of the working day scratching themselves help generate a sense that everyone pays their fair share.”
Fair enough in my book.
Most of the commenters here don’t seem to have read the article in depth (well, I didn’t) but if you have the death sentence in your pocket before you enter the courtroom then I suppose you consider listening to the evidence for the defence a waste of time.
@ AA
This is the conclusion that German policymakers have apparently arrived at, no doubt also motivated by Germany’s relatively high level of government debt and facilitated by the fact that German firms produce goods that the world wishes to buy.
However, sudden withdrawal of the credit drip risks killing the patients, Germany included.
Simpleton writes:
Austerity has produced the outcomes that its critics predicted. That’s almost a lab test.
Unfortunately economic forecasts are made in a real-world environment that is about as remote from laboratory testing as one can get. Most economists, judging by their writings, don’t even understand the meaning of ceteris paribus. Google it if it’s all Greek to you.
Just on the side, over the past few years I must have read several hundred articles and op-eds on the case against austerity in connection with the Greek and Irish economies. It’s never been clear to me what precisely opponents to austerity (which I take to mean government cuts, regardless of pro- or anti-euro positions as such) propose as an alternative. Do they mean:
– a little less austerity (i.e. slightly lower government cuts in wages, social services etc.)
– a lot less austerity (minor cuts)
– no austerity (e.g. no Croke Park Agreement at all)
– a little ‘counter austerity’ (i.e. a modest increase in government expenditure, with somewhat higher public sector wages, pensions, etc)
– an explosion in government expenditure, which thanks to the sacred ‘multiplier effect’ will lead to the Holy Grail of job creation and a new era of prosperity for all?
Anti-austerity advocates aspire to second-guess the behaviour of lenders. That is their greatest weakness: if they’re so smart, why can’t they convince lenders that by spending more governments will promote economic growth to such an extent that, on some fine day, the ratio of debt to GDP will begin to decline and we will all start reaching for the heavens again? That’s their core argument after all.
Why don’t the creditors see the Keynesian light? Why are creditors so goddam uptight, especially after already losing half of their past investments?
Because, as the Germans so beautifully put it, Geld ist scheu wie ein Reh. Money is as shy as a deer.
Especially in the case of deer who have already lost an arm and a leg in the financial markets. Metaphorically speaking, at any rate.
Carolus
Opponents of austerity generally want to govt to spend more money on something to achieve something. Generally this spending has to be financed by others people money….either taxes or borrowing.
It is not clear what the plan B is when the other people decline to provide the money or don’t have it.
Simpleton,
Implicit in your thesis is the existence of a lab experiment or a clinical trial with a better outcome. As you know many drugs have worked very well in rats or monkeys but have perverse and unanticipated effects when used in humans.
@Carolus Galviensis
Unfortunately economic forecasts are made in a real-world environment that is about as remote from laboratory testing as one can get
You did not appear to answer simpleton’s question – why, in a Eurozone context, has the experiment of austerity had such negative outcomes when everyone in the commission, in the German block and on the right of the political spectrum were so convinced it would work?
Your touching story of money’s shyness also seems inconsistent with another recent real world experiment which was the genesis of the whole crisis – the inability of investors to measure risk that caused the global financial crisis and Europe’s incredibly mismanaged piece of it.
Anyway, the apologia/defence pleading/suicide note from DG ECFIN in the OP is a really interesting read – surely someone with more time and expertise can give it an analysis – it has the feeling of a historical document.
For some reason I am reminded of Albert Speer‘s complaint to his captors.
“History always emphasizes terminal events.”
I
@Shay Begorrah
You write:
Your touching story of money’s shyness also seems inconsistent with another recent real world experiment which was the genesis of the whole crisis – the inability of investors to measure risk that caused the global financial crisis and Europe’s incredibly mismanaged piece of it.
Chapeau — a very good argument. But if money wasn’t shy THEN it certainly is shy NOW. That’s the point. The deer have since been to finishing school and have abandoned their foolish ways.
I’m not sure that ‘everyone .. on the right of the political spectrum were so convinced (austerity) would work’. Many simply argued that austerity would have less negative outcomes than the alternative, i.e. non-austerity. There are worse things than having half a loaf. Such as having no bread at all.
And what IS non-austerity? What DO you guys propose?
I don’t expect you to post a ten-page reply but I would appreciate one or more links to a cogently and realistically argued case for the alternative (such as abandoning the euro, but not a fantasy proposal that the Germans pay a trillion euros reparations to the Greeks).
A terrible end (leaving the euro) or an endless terror (staying within the fold) may be the only outcomes.
Tull Mcadoo:
It is not clear what the plan B is when the other people decline to provide the money or don’t have it.
Tut, tut–but that’s an easy one — the ‘other people’ will be sent to Keynesian reducation camps until they change their wicked, self-destructive ways and learn how to throw money into a bottomless pit again while prostating themselves before the God of the Multiplier.
@carolus
“Anti-austerity advocates aspire to second-guess the behaviour of lenders. That is their greatest weakness: if they’re so smart, why can’t they convince lenders that by spending more governments will promote economic growth to such an extent that, on some fine day, the ratio of debt to GDP will begin to decline and we will all start reaching for the heavens again? That’s their core argument after all.
Why don’t the creditors see the Keynesian light? Why are creditors so goddam uptight, especially after already losing half of their past investments?”
Take a look at the Krugman and Balls interviews on Newsnight
(BBC site) 12th and 13th March respectively. If you view these with your dispassionate political analysis hat on (ie pretend you are a Joe Soap floating punter) they should illustrate the difficulties of ‘convincing’ on the political front.
For the moment, convincing the lenders really amounts to convincing them you can and will print if necessary to pay coupons or principal should it be required. The risk then transfers to FX rates, and they are so difficult to get right in any case, there is a (current) willingness to ignore potential knock-on effects of said printing.
@Mods
Ireland is back in the markets. Wot, no thread?
@Carolus Galviensis
This is a false dilemma, obviously the arrangement of EMU we have now, legally and institutionally, is the terrible thing. EMU, as it is now, is the problem and it needs to end.
What will hopefully end it is the political pressure that will come from the loss of faith in austerity (or “budget swaddling” as it will soon be renamed in a Commission cartoon). Perhaps Herr Schadensprudel’s preemptive crushing of the German budget is a defensive position against this pressure or a sign that Germany may abandon the Euro leaving its stragglers to create an ECB with a license to print and a dual mandate (like a proper central bank) or for it to dissolve altogether.
@grumpy
Money-printing eliminates default risk but transfers it not only to FX rates as you mention, but also ultimately to internal price inflation – i.e. domestic prices and wages.
Money-printing also removes the pressure on politicians to overcome weak policies and fix weak institutions. In Europe you can see this already in the way political progress towards a banking union has slowed to a crawl since the introduction of OMT (which at this stage is still only a threat of money-printing). When you consider that Europe needs not only a banking union but also some form of closer fiscal union, and that these problems are political and cannot be solved by the central bank, then the slowness of political progress becomes a serious concern.
Similar effects can be seen in the US, where central bank activism is accompanied by political gridlock and paralysis. The problems we face are inherently political and cannot be solved by CBs, but they are also very difficult and politicans will prefer not to confront them if the CB provides cover. The German central bank is the only major CB that perceives this clearly, but its attitude is misunderstood in the Anglo-American world (of which Ireland is part), where the principle of CB independence has never been fully developed.
@Shay Begorrah
EMU, as it is now, is the problem and it needs to end.
I happen to share that view (though EMU is not the ONLY problem) but I think that opponents of EMU should have the honesty to acknowledge that the end, even in the best of circumstances, will be a pretty nasty one. It will be VERY nasty in the short run — and the short run may not be that much shorter than the long run.
Besides, eliminating EMU is not a magic wand. What effect would its disappearance have, say, on reducing the unfunded liabilities of the Irish state, (estimated by some Freiburg economists whose names I can’t remember to be in the region of 1400 per cent of GDP)?
@BWII: “I am amazed but not surpriesd….”
WTF?
@myself
re: Ireland’s unfunded liabilities (implicit government debt)
The paper to read is:
Explizite und implizite Staatsverschuldung in Europa: eine Tragfähigkeitsanalyse
Moog, S. und B. Raffelhüschen, Zeitschrift für Staats- und Europawissenschaften, 10(2), 277-290.
The paper is not on line or is behind a pay barrier but has frequently been cited in the German press.
@ CG
Not the article in question but on the same theme.
http://www.risknet.de/risknews/risikofaktor-explizite-und-implizite-staatsverschuldung/eb2e2bf44c10069ef8d5962304b28379/
By the way, you are most unlikely to get an answer to the question you pose as to what alternative “anti-austerians
@ CG
propose, especially as events, at least for the moment, appear to be undermining their general thesis.
@DOCM
It takes some mix of delusion and dishonesty to look at the Eurozone of 2013 and say “The critics of austerity have been disproved.”, but you are in elite (or German speaking) company.
The critics of austerity are faced with a difficult problem, the austerians (is “fiscal fascists” too pointed?) are still in control of the levers of policy making and it has to have dawned on even the most Europhiliac of us now that there are no falling metrics (outside of CDU polls) that would persuade them to change tack.
The policy is a human and economic catastrophe but its advocates only answer to requests for a change of approach is “Despite getting the outcome of this policy wrong we believe its the best one.”. Sometimes as above the response is not an appeal to conservatism but the addled “Given the economic mess that implementing austerity during a financial crisis created recession has created austerity is the only sane response!”.
What ever your question, whatever the circumstances, austerity is the answer.
Austerity is a political cult comprising a certain set of hard money neoliberals (a cult who are the useful idiots of financial capital) and we should not be debating them, we should be trying to expose its members and remove them from positions of influence.
@DOCM
Thanks for the link, much appreciated
@Shay Begorrah:
“Austerity is a political cult comprising a certain set of hard money neoliberals […] and we should not be debating them, we should be trying to expose its members and remove them from positions of influence”
Let’s assume you are right and that the austerity advocates are the equivalent of flat earthers who wear tinfoil hats and so dumb that you are liable to suffer brain damage just by trying to refute them. You guys still have to propose SOMETHING as an alternative even if it’s ‘BLATANTLY OBVIOUS’ to yourselves.
But I suppose DOCM is right and that I am wasting my time seeking an answer to that $64000 dollar question one can ask of all incumbent politicians across the spectrum:
What would YOU do in their place?
@All Austerians & Financial System Spinners
‘To act as if you know it all is catastrophic:
and if you try to control it
you will stare into your empty hand.
Tao Te Ching #64
But I suppose DOCM is right and that I am wasting my time seeking an answer to that $64000 dollar question one can ask of all incumbent politicians across the spectrum:
What would YOU do in their place?
Kevin O’Rourke had a good answer on the front page:
@Carolus Galviensis
“But I suppose DOCM is right …
He/She is fairly far to the right alroight …
I have another question: where is the sense in paying back 30+ Bilion to ourselves and then burning it?
@ CG
For the avoidance of any confusion, I should have made clear that the events that I am referring to are in Ireland although I thought that was clear from the context. I have always argued that Ireland is an outlier and does not belong in the company of the Club Med in terms of analysis.
I have also repeatedly made the point that we need only get our own irons out of the fire. Other countries are in charge of their own affairs and neither welcome nor will they accept – a la Timothy Garton Ash – lectures on what is good for them.
@Ernie Ball
The follow-up question is: how does KOR’s proposal translate into plain German?
Does it mean that German taxpayers will have to pay more, or doesn’t it? Here is how I reckon most Germans will construe KOR’s words:
countervailing core fiscal stimulus = Germany will have to pay more
real banking union = Germany will have to pay more
some element of fiscal union = Germany will have to pay more
some other elements of fiscal union = Germay will have to pay more
etc.
I hope I am mistaken about this.
Carolus,
Pretty much spot on with the follwing caveats. The alternative to not paying more or accepting higher inflation is
1. Series of default by the periphery on debts owed to core
2. Periphery leaves EZ and DM appreciates by 40-50%
3. EU breaks apart in acrimony and every body blames Germans for destroying Europe/global economy….again.
Bottom line- tough for the German corporate sector, its employees and retirees. Good for German domestic tourism.
@DOCM
I have also repeatedly made the point that we need only get our own irons out of the fire.
To that I would add that that ‘we’ consists of over four million individual selves, whose interests are not necessarily the same and indeed may well be conflicting — such as public sector workers versus the private sector, old versus young, the export industry versus domestic retailers, and so forth.
I know that’s an almost trite observation but I think it’s worth rubbing it in even at the risk of sounding like a broken record. It’s not just a matter of what’s ‘good for Ireland’, or what’s ‘good for each and everyone of us’. We are dealing not just with a ‘problem’ with a possible ‘solution’, which can be worked out if we all sit down together and put on our collective thinking cap. We are dealing also with a domestic intragroup conflict, and conflicts have outcomes, not solutions.
Indeed individuals may well agree about the facts of the case and differ on some kind of ‘moral’ grounds as to the appropriate policy response. The over-90 OAP who would long ago have died were it not for subsidised medical care may be well aware that she is costing wealth-generating taxpayers a small fortune but at the same time feel she ‘deserves’ what she is getting come hell or high water. Younger taxpayers may have a more Nietzschean attitude as to footing the bills — see the often-quoted dictum:
Thou shalt not kill; but needst not strive. Officiously to keep alive
@Tull Mcadoo. Thanks. Good points.
@ KOD
“WTF”
I know this is intellectually challenging for you. For some time I have been amazed at how ideological and stubborn has been the rejection of any fiscal consolidation whatsoever, by most contributors to this blog. I was therefore not surprised that the overwhelming reaction to this reasoned note is one of hysterical Kerriganism (see Sindo each week). “Amazed but not surprised” no “WTF” about it.
The document simply states that some fiscal consolidation was required but the pace was debatable. They argue that, more or less, the correct pace was chosen, but not with ideological certainty. Meanwhile the likes of Shay, who obviously knows what she is talking about, insist that there was no case whatsoever for attempting to consolidate our 14% fiscal deficit.
@The Recent Reactionary Troika
The irrationality of [your defence of EZ macro economic policy] is not an argument against its existance; rather it is a conditon of it.
[Nietzsche reloaded in the context of this blog’s ‘eternal recurring’]
Where is the sense in paying back 30+ Bilion to ourselves and then burning it? Such simple questions drove poor oul nietsche insane; are we dealing with nonsense or insanity?
countervailing core fiscal stimulus = Germany will have to pay more
real banking union = Germany will have to pay more
some element of fiscal union = Germany will have to pay more
some other elements of fiscal union = Germay will have to pay more
I imagine US taxpayers felt the same way in 1947 or so.
@Ernie Ball
Good one, that. I almost sornted — oops, snorted — thru my nightcap.
Gdoo nigth,
Cralsou
Noch eni Bire, bitte.
BWII: “Amazed but not surprised” no “WTF” about it.
Fair enough. I’ve no idea what it feels like to be amazed but not surprised. I can certainly imagine being surprised but not amazed, for example by a mugging or a car crash. To me, any event which is truly amazing is ipso facto very surprising indeed. Hence my reaction, WTF?
But it’s your mind and I don’t pretend to know what goes on there.
At the risk of being rude, I’d suggest that if you have a good enough brain to be an actuary it’s a real shame to dismiss contrary views as “hysterical Kerriganism” — I doubt that Krugman, Blanchard, Solow and DeLong have ever heard of Kerrigan. It’s world-class work you should tackle if you’re at all serious, not the Sindo.
@Brian Woods II
I was therefore not surprised that the overwhelming reaction to this reasoned note is one of hysterical Kerriganism (see Sindo each week).
I’m fairly astonished at an intellect that wades through the Sindo week on week and comes out the other side with the impression that Gene Kerrigan is “hysterical”, particularly given the lunacies for which that paper is rightfully infamous (and I’m not just talking about Colm McCarthy). It suggests that no evidence is likely to penetrate the ideological position.
@ Carolus
Come now. Are we really supposed to pretend that ‘austerity’ was actually ever seriously intended as a solution to the current Europe-wide recession, and not just opportunism by free-market types to indulge in rolling back social democracy?
In light of the blatant dishonesty involved, the only onus here is on the deficit scolds to actually admit that austerity has worsened the recession, and that you have been wrong at every turn.
@ KOD
lol Amazed vs Surprised, its getting too deep for me!!
As to the learned gentlemen, yes I can see them taking issue with the EC note but more in terms of its degree. They would not be hysterical proponents of “all fiscal consolidation is austerity, all austerity is a vicious attack on the citizenry (or at least those in highly paid academic posts facing a fourth consolidation of their remuneration)”
But I take yours and other advices that I really must give up the Sindo.
Tut Tut – such wanton attacks on our award winning crime novelist ….
Shurely a crime novelist is well qualified to comment on .. er .. crime?
@Gene Kerrigan
BWII is a fan! Keep up the good work on exposing all those criminals.
Buti and Carnot have posted a shorter version on Vox, drawing a response from Krugman; key paragraph:
http://krugman.blogs.nytimes.com/2013/03/15/delusions-at-the-european-commission/
@ All
FYI
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/136188.pdf
Offsetting expansion? Where is the evidence that such a move by Germany would benefit other countries whose problems are structural not cyclical?