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zorroloco 20-Feb-12, 06:46	austerity vs. spending it appears as if obama was right (left) and the tea party/austerity/spend less crowd wrong (i say appears because it is still early). but, look at europe - austerity measures throughout and their economies are mired stagnation or worse - the confidence fairy has failed to show up: none of the countries slashing spending have seen the predicted private-sector surge. instead, the depressing effects of fiscal austerity have been reinforced by falling private spending. bond markets keep refusing to cooperate. even austerity’s star pupils, countries that, like portugal and ireland, have done everything that was demanded of them, still face sky-high borrowing costs. why? spending cuts have deeply depressed their economies, undermining their tax bases to such an extent that the ratio of debt to gdp is getting worse rather than better. conversely, countries that didn’t jump on the austerity train —usa and japan most notably — continue to have very low borrowing costs, defying the dire predictions of fiscal hawks. in fact, the us has had, i believe, 36 months of job growth and low borrowing costs and the economy is slowly improving. all i can say is i am glad we did not slash government spending and follow the austerity/cut spending crowd off the cliff like a bunch of lemmings. it is true that we still have the deficit to deal with - but a smaller deficit with a destroyed economy would have been far worse that a larger deficit and a recovering economy. i do not expect people like dok and softy to be able to see this - but one might hope that they can see the facts.
changeling 20-Feb-12, 06:50	One can also take a look at Australian fiscal measures during the world economical downturn. Growth all around. Money spent by government! No austerity cuts in sight. Better banking system.
chaz- 20-Feb-12, 07:05	... austerity cuts ... yeah, there's nothing like adding to the unemployment stats, is there? A slow, methodical withdrawal from the recession seems to be working here in the US.
zorroloco 20-Feb-12, 07:09	the thing that we need to keep in mind is that the deficit does matter. when the economy starts to hum again, that is when we need to make spending cuts and try to reign in the deficit.
chaz- 20-Feb-12, 08:05	Z ... ... I know you're one to reduce the military spending, but that's not in universal favor (as you know too). Besides raising the soc sec threshold age, and raising the medicare salary cap for paying premium, what other measures of significance might assist in this process.
zorroloco 20-Feb-12, 08:09	taxes on financial transactions, tax capital gains just like income, increase taxes on the ultra wealthy, cut military, raise soc. sec. age, and cut all subsidies.
dmaestro 20-Feb-12, 19:37	Chaz, as you know when the austerity bandwagon got rolling I said it was again a time to see if conservative/ tea party economics or neo keynesian economics worked once again after a long history of failure for right wing trickle down economics. I said if by chnace it did I would be open to changing some of my economics beliefs, because mainstrame economists were dubious. Once again, austerity in a global down turn has to failed, but given the groundhog day mindset, you will hear no acknowlegement of any need to reconsider from the extreme right,.
ace-of-aces 20-Feb-12, 20:55	When the income is very high there is not much of a problem in spending within certain limits but when the income is low there will be some problem even spending for basic necessities. There are 2 school of thoughts in balancing the budget when the income becomes lower. 1. Austerity measures to cut spending and balance the budget. 2. Increased spending and tax cuts to stay afloat and stimulate the economy during hard times. Personally I believe in 1. austerity measures. How can I keep more spending with my credit cards when my income is low? I cannot keep on spending since the interest alone on my credit will become very huge and will become unsolvable/bankrupt. You have to believe in Darwin's law, that is survival of the fittest. If one cannot survive the crisis, let it becomes extinct or die. That is the law of nature but human beings have a different philosophy. Can you let a person die? or as a good samaritan are you not going to help the victim during hard times ? The logic behind this is when a person can overcome the crisis with your help, you might like to assume that he or she might have a bright future. This is the idea of President Roosevelt. He created social security during the great depression of 1930s. This logic has certain drawbacks because, your help have certain limits when the crisis is prolonged and you cannot keep on going helping forever. 2. The champion of Reagamonics that is tax cuts by President Reagan is his great idea that with less tax, people will have more money to spend and buy goods which will generate more jobs. Thus it will create more tax revenue, interrupt the vicious cycle and solve the problems. I beleive you can see the effects of Reagamonics some time later during President Bush's term when he was elected with surplus budget. For me, considering the current failed economy # 2 increased spending to create more jobs may not be working. I am not sure whether # 2 is the real culprit of the problem or due to some other unkown factors are coming into play. I want to hear your opinion.
dmaestro 20-Feb-12, 21:08	Ace I would recheck your history. Supply side economics did not produce budget surpluses, Reagan ran huge deficits. You don't get enough extra taxable income to make up for the lost revenue. Supply sideside is considered dubious. Accoeding to David Stockman who did Reagans budget supply side was justthe ajealous way of gainingthe support for lower tax brackets.The best idea is to do what Clinton did which is what mainstrea economists suggest, balance budget cuts and tax revenues. That is the only time recently when the budget deficit actually decreased. In bad times you use credit if you can pay it down in good times, whereas austerity causes a negative chain reaction in bad times. But you have to pay it back by surpluses when you can. We all agree debt can't increase forever.
whbmoores 21-Feb-12, 10:51	Debt fueled "growth" is about as real as GDP fueled by sub-prime mortgages. It is temporary, illusory, and serves as an economic drag when it is time to pay the piper. That is precisely what is happening now. The party was on until 2008, and now we have an economic hangover. Of course some prescribe the hair of the dog and want to take on more public debt. Until we all live within our means in an environmentally sustainable fashion, we can be sure to relive the current glory days again and again on the belief that this time its different, this time there is a new paradigm. It is a testament to our hopefulness and foolishness at the same time.
zorroloco 21-Feb-12, 10:57	whb could not agree with you more. i will often argue that the stimulus and bailouts were necessary, given the intransigent consumption society we live in. it appears obvious to me that this is, at best, a short term solution. like you, i believe we either put all our efforts into developing a sustainable, walk-lightly-on-the-earth culture, or we are doomed.
dmaestro 21-Feb-12, 12:36	We need to balance the budget and the pay down the deficit to manageable levels by balancing cuts and revenues. We cannot afford the kind of military adventures that occured over the last decade. Neoconservatives wasted trillions and the only result was decreased world opinion for the USA.

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