Trigger A Depression - Imitate Europe

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"Unemployment in the Eurozone has reached a record high, increasing to 11.8 per cent in November, the EU's statistics office reports. Spain and Greece are suffering the most with roughly one in four workers unemployed."

"Since last autumn the Portuguese, too, have joined the swelling ranks of Europe’s discontent. The government stepped up austerity last September with more steep tax increases and public sector job cuts."

http://rt.com/news/eurozone-unemployment-new-record-568/

Somehow, pulling money out of the economy with austerity, and throwing 1 out of 4 into unemployment is supposed to raise the revenues to pay for additional loans to pay off current loans.

Unemployed people and shut down businesses don't pay taxes! Austerity becomes a dog chasing its tail. Declining revenues incapable of paying existing debt, and more debt to cover the shortfall. LIke the U.S., the Eurozone needs to dump borrowing money into existence and begin spending money into existence equal to the idle productive capacity of the Eurozone to utilze it. It's a system that once worked very, very well.

Probably our imitating the Eurozone is rather stupid when the results of the policy are right before our eyes.

Under the privatizied global monetary system, all money is brought into being through debt. Governments borrow non-existent money through fractional reserve banking so they can print it. There comes a time when the accumlated debt simply can't be repaid. The 300 year run of doing that has reached its payback limit.

Retired Monk - "Ideology is a disease"


polycarp2
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Jul. 31, 2007 4:01 pm

Comments

Even the oft-tauted German economy ain't so hot.

German Economy Shrank in Fourth Quarter

stuff's picture
stuff
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Nov. 24, 2012 4:59 pm

Wow, those Europeans are really scraping the bottom of the barrel now, or should I say, the bottom of horse stalls?

Ireland: Horsemeat Found in Supermarket Burgers

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stuff
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Nov. 24, 2012 4:59 pm

You mean the Confidence Fairy isn't magically transforming Greece, Spain, Portugal, Italy and Ireland into growth havens?

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 8:21 pm
You mean the Confidence Fairy isn't magically transforming Greece, Spain, Portugal, Italy and Ireland into growth havens?

I think the confidence fairy has jumped that ship.

Time to dump euros and buy dollars.

stuff's picture
stuff
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Nov. 24, 2012 4:59 pm

It's not the currency, it's the oligarch debt scammers!

shockwave
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Nov. 13, 2012 12:14 am

from Prof. Mark ThomaEuropean Labor Markets: Six Key Lessons

Jonathan Portes (he also provides discussion of each of these points):

European labor markets: six key lessons from the Commission report, by Jonathan Portes: I haven't always been complimentary about the European Commission - either its economic analysis or its policy advice. So it's nice to be able to be wholeheartedly positive about the excellent report "Employment and Social Developments in Europe 2012"...The report is really worth reading. But it's close to 500 pages, and the main messages deserve as wide an audience as possible, so I thought I'd try to highlight them with some commentary. To my mind, the key ones are the following:1. Economic weakness in Europe, and the consequent rise in unemployment, are mostly to do with a lack of aggregate demand, which in turn is the result of mistaken macroeconomic policies - especially aggressive fiscal consolidation...2. Although financial markets may have stabilized - who knows for how long - things are getting worse, not better, in the real economy of the crisis countries...3. Countries with more generous welfare states, but also more flexible labor markets, have fared best...4. Following on from this, structural reforms in labor markets are required in many countries - but they need to be based on evidence! Segmented labor markets are a problem and raise youth unemployment.....and even in recession, minimum wages at a sensible level do more good than harm. ...5. Where they were allowed to operate, the "automatic stabilizers" worked...(in both macroeconomic and social terms)......while where they were overridden, in the pursuit of "self-defeating austerity", things have got worse...6. Latvia, Ireland (and even Estonia) may look like "success stories" to some in the Commission, and perhaps to the financial markets (at present) but the reality in terms of jobs and incomes is rather different. ...

Too bad fiscal policymakers didn't do their homework and learn these lessons about austerity, social insurance, automatic stabilizers, and so on before putting harmful or ineffective policy in place (or failing to implement policy when action is called for, e.g. to reduce unemployment). Wish I thought they were doing their homework now.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 8:21 pm

It is time to dump failed austerity policies and look for ways to directly grow the world economy. Making the poor and elderly pay for the failures of the Banksters and Bond Traders seems unfair. It is time to recognize that machines are doing more labor, and that we need to increase transfer payments/ welfare/ direct redistribution of wealth in order to keep the consumers fed and housed.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 8:21 pm
Too bad fiscal policymakers didn't do their homework and learn these lessons about austerity, social insurance, automatic stabilizers, and so on before putting harmful or ineffective policy in place (or failing to implement policy when action is called for, e.g. to reduce unemployment). Wish I thought they were doing their homework now.

Very interesting post and a good summary.

Here is the basic political dilemma as I see it: Germans think they have more meager social services than Greeks but are being asked to bailout Greece so that it can continue to enjoy better social services than Germany. This perception rasises a number of obvious political resentments and problems for the Merkel government.

stuff's picture
stuff
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Nov. 24, 2012 4:59 pm

Actually, the Germans are being asked to bail German/Netherlands banksters. .Bailing Greece protects the assets of German/Netherlands banks. It's probably best to keep that behind the scenes. People are getlting tired of bailing banksters for their foolish loans.

Probably bailing Greece with more loans it can't repay is rather foolish. All it does is kick the can down the road. European banks will have to be bailed again...with more bailout loans to Greece unless, of course, the money is simply handed to Greece and added to the German deficit..

Greece's plunging economy, being stripped to bail banksters, lowers government revenues...making repayment of more loans highly unlikely. Stripping the German economy to repay the loans will throw Germany into an economic downturn. The only winners are banks.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm
Actually, the Germans are being asked to bail German/Netherlands banksters. .

So, German public opinion is wrong. Wouldn't be the first time.

Popular misunderstandings nevertheless create very difficult political constraints for their elected representatives.

stuff's picture
stuff
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Nov. 24, 2012 4:59 pm

Public opinion is formed by the "facts" it's presented, isn't it? Can't form an opinion about something you don't know about.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm
Can't form an opinion about something you don't know about.

Nonetheless, that's how Germans feel, which puts tremdous political pressure on Merkel. Germans are beginning to tire of the EU and Germany's support of the euro. The EU is Germany's only hope for economic growth. Merkel will do whatever public opinion allows her to preserve the Union.

There you have it.

stuff's picture
stuff
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Nov. 24, 2012 4:59 pm

The bottom line is that the banks foolishly gambled and lost. Now they're asking us to pay their gambling debts. We must refuse and let the banks collapse and go away. We'll form new ones with stricter laws and sane administrators.

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captbebops
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Jul. 31, 2007 4:01 pm

People are missing the point about Austerity when they say it's a disaster -

It's actually a quite successful set of policies if the aim is an upward redistribution of wealth, and a conversion of public, national assets into private monopolistic hands for nickles on the dollar.

Add in Worker Insecurity to the point where Peter Schiff's dream of 'globally competitive wages' is coming true and wa-la no recovery in sight for the 99%.

The surest sign of success are the cases of self immolation occuring in europe - they've occured because of the economic crisis now in spain, greece, italy and germany -

great Job by the Banksters and the kleptocrats.

Scappoose's picture
Scappoose
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Mar. 30, 2012 7:49 am

Well, that true. Austerity does push remaining wealth upwards. If it had the reverse effect, it wouldn't be implimented.

t's a success story...depending on where you're sitting in the re-distribution of wealth.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm
...cases of self immolation occuring in europe...

Whoa! I haven't heard of that. That's awful. Can you direct me to some examples?

stuff's picture
stuff
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Nov. 24, 2012 4:59 pm

The EU's best chance for growth are the PIGS. They are the most depressed, and can bounce back the strongest.
And BeBops is correct. The banks lent money to the PIGS, and are expecting Germany to collect.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 8:21 pm

If someone doesn't collect, German and Netherlands banks are in a heap of doo doo. Germany has the option of bailing them directly, or indirectly by squeezing Greece to pay for it....with new loans.

Since Greece's ability to pay is plunging right along with their employment rate, the outcome should be interesting.

Retired Monk - "Ideology is a disease"

polycarp2
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