So in the recent Greece and France elections, the populace of each country has spoken out against their parties who have endorsed austerity measures.
So let me see if I understand this here.
The people of Greece, who has burdened the European Union with massive amounts of debt and has been on the verge of bankruptcy multiple times, have spoken and demonstrated against politicians who wish to correct this by passing austerity measures.
The people of France, understanding what is happening in Greece, have still chosen to, despite economic problems, elect left-wing politicians who are also opposed to austerity measures to combat said economic programs.
I guess what I'm asking here is: Is there any rational reason why anyone would be opposed to austerity programs? Is this just people ridiculously holding onto their government-sponsored entitlement programs while the economies of their countries collapse, or is there an actual reason why austerity measures would be less productive than not passing them?
Economic collapse often appears distant to the average citizen, especially since they're seeing an artificially rosy picture as they get cheap benefits from the government. They either feel detached from the financial disasters elsewhere enough to not believe they can be effected by them, or they are scared crapless of said disasters and are terrified of how hard things will be if they suddenly lose the entitlements that are already barely keeping them afloat.
In a nutshell, a combination of arrogance and fear
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The people who oppose it are probably the ones who require it. I'm not Greek, so I have no idea...
My guess is that some of these people need the measures to eat/have a home, something like that. They need these welfare programs to survive. Without them, they will starve and live on the streets. So, they could care less about whether the government itself is hurt.
A necessity like this would explain why there has been such a backlash. The people would not riot if the programs were non-essential. Pretty much, people get loans they cannot pay in order to support themselves. Same thing is happening here.
That is my guess.
France doesn't have as big of a problem. The US doesn't implode every time we elect a Democratic president.
The general argument against austerity is that severe cuts in government spending might have a negative impact on the economy by leaving many government employees unemployed and leaving people who depended on government aid of some form destitute. The result would be decreased tax revenue, and you haven't really fixed anything.
For example, Ireland slashed the crap out of their deficits a few years ago, but has been seeing little growth to show for it.
Certainly there are situations in which government spending must be reduced - there are limits and downsides to deficit spending. However, sharp budget cuts have their downsides too, and are not a magical cure-all.
Austerity in Europe should only be taken up by countries that cannot afford stimulus, I know Greece cannot afford it and thus it really sucks to be them, I am not sure on France. But Europe is currently a major drag on our economy right now because of their embracing austerity when many of them didn't need to.
I guess what I'm asking here is: Is there any rational reason why anyone would be opposed to austerity programs? Is this just people ridiculously holding onto their government-sponsored entitlement programs while the economies of their countries collapse, or is there an actual reason why austerity measures would be less productive than not passing them?
There's a good quote from The Matrix that explains why people still cling onto opposing austerity despite the financial crisis:
"The Matrix is a system. Most of the people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it." -- Morpheus, to Neo
In order to accept money from the EU, Greece has to accept policies that exacerbate 20%+ unemployment (50%+ for ages 18-24), mangle its political system, and sacrifice sovereignty to the decrees of Merkozy and the ECB, just to avoid some ill defined "greater pain". I'm not really sure how you could inflict more damage on them without issuing sanctions or declaring war.
Not saying they didn't have tons of self inflicted problems, but it's not like they're going as cleanly down as, say, Argentina. There needs to be deregulation and reform in Greece, as well as slashing certain commitments, curbing corruption, etc. But they're doing the same thing Ireland's been doing and like Ireland have even less than they started with to show for it, so it's not shocking that they're reconsidering their commitments. Greece under new management might withdraw from the Euro and flip the EU the bird, which I would pay to see. They never should've joined the Euro and leaving it is really the best option for them now.
So, here is my question then. Lets say this all plays out. Greece and its eventual new government decides that the massive austerity arent in their best interests, and refuse, and instead decide to leave the european union and thusly the euro itself for their currency, and of course, then default on their outstanding bonds and other money owed to bondholders, the EU and otherwise.
So, they do all that. Then what? What would their country look like then? Who would ever loan them money after doing that? Without being able to borrow money, would their economic situation end up better or worse than it would have been under austerity? Im seriously curious what people think the end result would be.
Strangely enough countries default on debts all the time and still manage to get loans later.
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Actuly, with a 100% withdraw from the outside world you could very easily stabilize the economy. Simply control the money supply. However that only works if you are 100% selfsustaining and do not need or want ANYTHING from any other nation. you have to switch priority to First teir and second teir jobs (farming/Factory production) Simply put in such a socity their is little room for things like politicians/computer programmers and luctory services. (note I said little not none)
I am not an economist so i do not know the answer to this question. Has austerity imposed on a debt ridden nation ever worked? If anyone has any evidence of this i would like to see it. It makes common sense that if you cant afford your budget that you have to cut your programs. I don't trust common sense. I believe austerity should be applied when the country is prospering and deficit spending when the economy hits a downturn.
So, here is my question then. Lets say this all plays out. Greece and its eventual new government decides that the massive austerity arent in their best interests, and refuse, and instead decide to leave the european union and thusly the euro itself for their currency, and of course, then default on their outstanding bonds and other money owed to bondholders, the EU and otherwise.
So, they do all that. Then what? What would their country look like then? Who would ever loan them money after doing that? Without being able to borrow money, would their economic situation end up better or worse than it would have been under austerity? Im seriously curious what people think the end result would be.
If Greece decides that the Euro is no longer in their interests and that defaulting on debt + reform is the best way to get their finances in order, the best example they would have to follow is Argentina.
This is the link to the Wikipedia article of Argentina's default in '02. They ended up, at least for their own interests, in a much better position. They still can't borrow on a global market, which...honestly isn't THAT bad.
They're still going to NEED to do austerity, attacking regulations with red tape and cutting commitments. A devalued drachma would help Greek industry and encourage foreign investment compared to a strong Euro. Over a course of years, not overnight. But it's a way out of a debacle, while things in Greece are getting progressively worse with no end in sight. Essentially pulling the old Chapter 11 bankruptcy trick.
The EU is a currency union, not a fiscal union. States are required to have a balanced budget, and are in both a currency and fiscal union. The federal gov't should have a balanced budget, but that would require tax, medicare, and military reform, none of which are feasible right now.
The main argument is that that Greece & France shouldn't ruin their economies by frantically trying to cut their debt in such a short time but instead go slowly about it, more long term thinking. Other's think that will even cause bigger pains.
Remember, Europe isn't like the US who simply prints more money when they need it (countries will loan to the US anyway and the US knows this).
It's all a battle about what's best: Slowly decreasing the debt and not be as harsh about it since we're in a crisis now or Quickly take measures and get rid of your debt asap.
The problem I have is that over the decades, politicians have done the wrong thing: They spend more money/increase debt when the growth is high and cut spendings when in a crisis. You should exactly do the other thing around. That's much more stable. Now we're either high on speed or in the gutter of a crisis.
Mostly this.
To the OP and anyone else acting like it's pure foolishness that someone would oppose austerity during a recession and you don't know why anyone would disagree... how about actually reading some of the many respected economists who disagree with you?
Don't act mystified that Keynesian economics is actually a thing that people take seriously. If you're not at all familiar with the arguments for it, then you need to do a lot more reading on economics.
I'm tired of seeing people acting like conservative schools of economics like supply-side are simply settled and there's no controversy over which theories are right - and most of the time don't even display an awareness of what the arguments for the other side would be.
You do realize that most persons in Greece and also a large number of economist blame Greek austerity measures for worsening the crisis, right?
It's not someone clinging to a false hope that refuses to deal with austerity measures. It's that the politicians who tried austerity measures did so and it made the situation worse. So they're not going to let it continue to worsen.
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Asking people to remove quotes in their signatures is tyranny! If I can't say something just because someone's feelings are hurt then no one would ever be able to say anything! Political correctness is stupid.
You do realize that most persons in Greece and also a large number of economist blame Greek austerity measures for worsening the crisis, right?
It's not someone clinging to a false hope that refuses to deal with austerity measures. It's that the politicians who tried austerity measures did so and it made the situation worse. So they're not going to let it continue to worsen.
It's not the cuts, it's the decrease in the money supply and social problems that inflation would partially solve through devaluation. One major problem is that the Greeks don't really have that much to export other than perhaps their ancient ruins and tourism.
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Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
The austerity measures aren't intrinsically harsh, no.
25% unemployment - 50% among youth - is harsh. They've been using this strategy for three years and things aren't getting better. The Greeks don't particularly care about austerity this or that, they care about jobs and their families and their retirement.
Their jobs are vanishing - their payroll is being cut - and things aren't getting better. It's been three years in a slump that's as large as the Great Depression, and their economy has shrunk by 20%. It shows no signs of getting better. The plans of the people pushing austerity as the solution haven't shown any returns. Ireland and Greece have pursued cuts for three years, and the end result is the Irish are now teaching courses on how to move to Australia.
If they continue this for another 3 years, it might end up with another 20% contraction and they'll have to continue giving them money just so they can pay their bonds to the EU.
The people of Greece are displeased with having their standard of living cut to repay debts the government accumulated because it aint the government that is left with less to live on. It aint the government that feels the 20+ percent unemployment. So people don't much like it when the IMF comes in and says that the minimum wage and social services must be cut before they hand out more loans to stop the state from immediately going bankrupt. Blaming the population is just dumb.
Debt mustn't be repaid, anyway. If a state can't repay its debts, well, that's the end of it. Maybe the people who lent them money in the first place should have been more careful with it.
Thats a fine position and all... but its toothless. If that was the position Greece was going to take, the IMF restrictions would be meaningless. Those restrictions are only there as conditions of the loans the greek government is taking out to cover its debts. If it decides not to cover the degbts, it can give a giant finger to the loans.
Of course... one has to wonder how its going to afford to pay for any entitlements, much less reduced entitlement, when nobody is willing to loan them any money.
Thats a fine position and all... but its toothless. If that was the position Greece was going to take, the IMF restrictions would be meaningless. Those restrictions are only there as conditions of the loans the greek government is taking out to cover its debts. If it decides not to cover the degbts, it can give a giant finger to the loans.
Of course... one has to wonder how its going to afford to pay for any entitlements, much less reduced entitlement, when nobody is willing to loan them any money.
Basically, Greece is going to crash without austerity measures. And crash hard. Instead of reduced entitlements from the government, the Greek people will have NO entitlements.
Although I do see a new industry rising up in Greece because of this.
Mail-order Greek brides.
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If they ignore the debts they have more leeway with handling other issues. They could also always just stop buying military hardware from foreign companies.
Some local currencies have already appeared to use alongside the euro, currencies you get by providing your skills as services. Farmers and customers have begun meeting, skipping out on the middle man so that farmers can get cash in hand directly and people get produce at a third of the price they would find in stores. If Greece had a government similarly willing to think outside the box, the Greeks themselves would be happy to follow suit.
What the hell kind of answer is that? Just ignore the debt? Blow off every bank, investor, and country that loaned them money with a big "**** YOU!"?
Yeah...I'm sure that will solve all their debt problems. Because they sure as hell won't have anyone willing to loan them money ever again after that.
Do you seriously think it's okay to run up debt, and then just not pay it off?
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I was driven from this once-great site by abusive mods and admins, who create rules out of thin air to punish people for breaking them (meaning the rule does not exist under forum rules) and selectively enforce the rules that are written on the forum rules. I am currently lurking while deleting 6 years and 2 months of posting history. I will return when ExpiredRascals, Teia Rabishu and Blinking Spirit are no longer in power.
Morally speaking? Yes. Lending people money with the intention of pressuring them into giving you back more money than you lent them is a huge ******* thing to do, because the people who most need loans are the ones who will have their freedom restricted the most by them. It's extortion.
Why do people take loans? Because they are unable to afford, for example, a home (or medical care, or rent) and have no other choice. Why do they return the money they were given? Because there are legal consequences for not doing so. Foreclosure is one example. You may also have heard of debtor's prisons. The only reason to banks giving out loans is that they feel secure in knowing that they can force unpleasant consequences upon those who refuse to or cannot pay. It's "pay us back or else". That's clearly coercion.
No, it's "not-theft". Similarly, the fact that there are consequences for me if I grab something from a shopping mall and run out without paying for it does not mean that I'm being extorted.
So let me see if I understand this here.
The people of Greece, who has burdened the European Union with massive amounts of debt and has been on the verge of bankruptcy multiple times, have spoken and demonstrated against politicians who wish to correct this by passing austerity measures.
The people of France, understanding what is happening in Greece, have still chosen to, despite economic problems, elect left-wing politicians who are also opposed to austerity measures to combat said economic programs.
I guess what I'm asking here is: Is there any rational reason why anyone would be opposed to austerity programs? Is this just people ridiculously holding onto their government-sponsored entitlement programs while the economies of their countries collapse, or is there an actual reason why austerity measures would be less productive than not passing them?
In a nutshell, a combination of arrogance and fear
My guess is that some of these people need the measures to eat/have a home, something like that. They need these welfare programs to survive. Without them, they will starve and live on the streets. So, they could care less about whether the government itself is hurt.
A necessity like this would explain why there has been such a backlash. The people would not riot if the programs were non-essential. Pretty much, people get loans they cannot pay in order to support themselves. Same thing is happening here.
That is my guess.
France doesn't have as big of a problem. The US doesn't implode every time we elect a Democratic president.
For example, Ireland slashed the crap out of their deficits a few years ago, but has been seeing little growth to show for it.
Certainly there are situations in which government spending must be reduced - there are limits and downsides to deficit spending. However, sharp budget cuts have their downsides too, and are not a magical cure-all.
There's a good quote from The Matrix that explains why people still cling onto opposing austerity despite the financial crisis:
"The Matrix is a system. Most of the people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it." -- Morpheus, to Neo
Not saying they didn't have tons of self inflicted problems, but it's not like they're going as cleanly down as, say, Argentina. There needs to be deregulation and reform in Greece, as well as slashing certain commitments, curbing corruption, etc. But they're doing the same thing Ireland's been doing and like Ireland have even less than they started with to show for it, so it's not shocking that they're reconsidering their commitments. Greece under new management might withdraw from the Euro and flip the EU the bird, which I would pay to see. They never should've joined the Euro and leaving it is really the best option for them now.
So, they do all that. Then what? What would their country look like then? Who would ever loan them money after doing that? Without being able to borrow money, would their economic situation end up better or worse than it would have been under austerity? Im seriously curious what people think the end result would be.
If Greece decides that the Euro is no longer in their interests and that defaulting on debt + reform is the best way to get their finances in order, the best example they would have to follow is Argentina.
http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999%E2%80%932002)
This is the link to the Wikipedia article of Argentina's default in '02. They ended up, at least for their own interests, in a much better position. They still can't borrow on a global market, which...honestly isn't THAT bad.
They're still going to NEED to do austerity, attacking regulations with red tape and cutting commitments. A devalued drachma would help Greek industry and encourage foreign investment compared to a strong Euro. Over a course of years, not overnight. But it's a way out of a debacle, while things in Greece are getting progressively worse with no end in sight. Essentially pulling the old Chapter 11 bankruptcy trick.
To the OP and anyone else acting like it's pure foolishness that someone would oppose austerity during a recession and you don't know why anyone would disagree... how about actually reading some of the many respected economists who disagree with you?
Don't act mystified that Keynesian economics is actually a thing that people take seriously. If you're not at all familiar with the arguments for it, then you need to do a lot more reading on economics.
I'm tired of seeing people acting like conservative schools of economics like supply-side are simply settled and there's no controversy over which theories are right - and most of the time don't even display an awareness of what the arguments for the other side would be.
It's not someone clinging to a false hope that refuses to deal with austerity measures. It's that the politicians who tried austerity measures did so and it made the situation worse. So they're not going to let it continue to worsen.
People are just used to their ridiculous entitlements, so any shift away from the status quo is felt to be "draconian".
It's not the cuts, it's the decrease in the money supply and social problems that inflation would partially solve through devaluation. One major problem is that the Greeks don't really have that much to export other than perhaps their ancient ruins and tourism.
Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
25% unemployment - 50% among youth - is harsh. They've been using this strategy for three years and things aren't getting better. The Greeks don't particularly care about austerity this or that, they care about jobs and their families and their retirement.
Their jobs are vanishing - their payroll is being cut - and things aren't getting better. It's been three years in a slump that's as large as the Great Depression, and their economy has shrunk by 20%. It shows no signs of getting better. The plans of the people pushing austerity as the solution haven't shown any returns. Ireland and Greece have pursued cuts for three years, and the end result is the Irish are now teaching courses on how to move to Australia.
If they continue this for another 3 years, it might end up with another 20% contraction and they'll have to continue giving them money just so they can pay their bonds to the EU.
Thats a fine position and all... but its toothless. If that was the position Greece was going to take, the IMF restrictions would be meaningless. Those restrictions are only there as conditions of the loans the greek government is taking out to cover its debts. If it decides not to cover the degbts, it can give a giant finger to the loans.
Of course... one has to wonder how its going to afford to pay for any entitlements, much less reduced entitlement, when nobody is willing to loan them any money.
Basically, Greece is going to crash without austerity measures. And crash hard. Instead of reduced entitlements from the government, the Greek people will have NO entitlements.
Although I do see a new industry rising up in Greece because of this.
Mail-order Greek brides.
What the hell kind of answer is that? Just ignore the debt? Blow off every bank, investor, and country that loaned them money with a big "**** YOU!"?
Yeah...I'm sure that will solve all their debt problems. Because they sure as hell won't have anyone willing to loan them money ever again after that.
Do you seriously think it's okay to run up debt, and then just not pay it off?
That is what he was advocating, yes.
Solaran was pointing out exactly that: lenders will follow this rule, to the long-term detriment of those blowing off their debt.
candidus inperti; si nil, his utere mecum.
We had an entire thread earlier that points out why your position is ridiculous.
Or common sense could as well. No, it's not extortion, it's the entire point of giving a loan in the first place.
No, that never occurred to me ever...
It would really help to actually know what the word extortion means before making this claim.
http://en.wikipedia.org/wiki/Extortion
No, it's "not-theft". Similarly, the fact that there are consequences for me if I grab something from a shopping mall and run out without paying for it does not mean that I'm being extorted.