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dmaestro 27-Apr-12, 07:11	Conservatives Never Seem to Learn As I mentioned at the time, when the British Government was taken over by conservatives who promised prosperity if drastic austerity measures were used to combat the recession, this discredited conservative theory the government should be run like a mom and pop store had been tried before and repeatedly failed again and again. The UK government was warned that it would fail, but in typical conservative, faith based thinking, they did it anyway. At the time I said I would watch and see if somehow the conservatives could pull this insane experiment off this time. Well, it is not surprising to report that it was a dismal failure, and that the UK is back in a double dip recession. The verdict is in, and one can infer that if the tea party had been in power since 2009, which advocates an extreme version of similar theories, the USA economy would have totally tanked and not just stalled. But of course, these conservatives are true believers and reality never affects true believers. They will continue to peddle the same old snake oil theories no matter how many times they fail and no matter how much suffering it causes. Too bad they can't just find another world to live in where self delusion reigns and leave reality to the rest of us.   ============ 4/25/2012 British Economic Austerity Bombs As England Double Dips Into Recession Forbes Rick Ungar Over the past year, I’ve watched with wonder as American conservatives have grown increasingly comfortable with their narrative deriding our European friends as an oppressed people living in a socialist hellhole. To hear GOP leaders tell the story, Europe’s only true remaining value is to serve as a warning to good Americans everywhere that a life of croissant, kippers, long summer vacations and government run healthcare will surely turn us all into communists. They warn that continuing to allow our socialist president to take us down the European path will lead to us to become the American collectivist society. There is, however, one thing about Europe that the GOP has found very much to their liking – European style economic austerity. Since the moment English Prime Minister David Cameron instituted his government austerity program in the belief that taking huge sums of money out of the British economy would get England back on more solid financial footing, American conservative leaders have been fawning all over their Conservative Party counterparts—if not the actual nation that the British Conservatives lead. Today, the report card is in and the results are clear—the GOP has been backing the wrong horse…again. The British Office for National Statistics confirms that the country’s GDP fell 0.2 percent in the first quarter of this year after contracting by 0.3 percent during the last quarter of 2011. These two, consecutive contractions make it official- England has doubled-dipped itself into another recession. This headline in the Guardian says it all- “UK government stands accused of over-cooking austerity and killing off tentative recovery that was under way two years ago.” Numerous British economists had warned against the deep budget cutting, arguing that the government was heading down a dangerous path with potentially severe consequences. Steve Benen over at Maddowblog cites the advice of London Business School economist Richard Portes who warned one year ago, “My view is that we are in serious danger of a double-dip recession. This is going to be a cautionary tale.” A cautionary tale, indeed. The question that remains is whether our nation’s conservatives will get the message or continue to fervently pursue the austerity agenda that, while playing nicely to their base, would threaten to send this country spiraling into yet another recession as it has done in the United Kingdom. If the insistence of those who continue to try to persuade us that supply-side economics actually works is any indication—despite the endless reams of evidence that proves beyond a shadow of a doubt that it most certainly does not—I would not expect much change in the conservative approach. While the results of the British experiment should shed endless light on the mistaken path the GOP would put us on, in the mind of the Republican Party, there is no substitute to the appeal of peddling a message that produces votes—if not actual prosperity.
softaire 27-Apr-12, 07:41	A recession is bad. But hyper-inflation caused by borrowing too much money and "printing" more money than can be justified by a growing economy is worse. It will destroy a country and the economy. We have lots of example of that. I shouldn't need to remind you of those. There are pains associated with withdrawal from an addiction. The addiction of spending too much money will be painful to recover from, but it will be better than the rioting, violence and destruction associated with loss of an entire economy and the entire loss of value of anything monetary.
dmaestro 27-Apr-12, 07:49	Timing is everything. When times are bad you need to keep capital flowing into the consumer economy. When times are good then fiscal discipline is used to pay down the debt. That is the path we were on in 2001 until Bush decided to give the money back to the rich in tax cuts instead of reducing the deficit. You don't just impose austerity on a failing economy. Sometimes you do need to add more money to the economy. The pain you claim is necessary is overkill.
chaz5 27-Apr-12, 07:49	... neither extreme works. Only when there's cooperation and compromise can one make a government work ... cooperation and compromise even when we must forgo everything we believe in for some of what is really important to most of the people.
softaire 27-Apr-12, 07:53	"... neither extreme works. Only when there's cooperation and compromise can one make a government work ... cooperation and compromise even when we must forgo everything we believe in for some of what is really important to most of the people." Thank you Neville Chamberlain.
chaz5 27-Apr-12, 08:07	... OK, if you like Neville so much, you can get into his foxhole ... he trusts ANYone.
dmaestro 27-Apr-12, 08:26	In fairness to bush, 911 took a huge chunk out of the economy. But those tax cuts had very little stimulative value and for every dollar lost in tax revenue only a small fraction was returned in taxes on increased revenue. They should have only been a very short term measure at best. Supply side economics is generally totally refuted. The underlying weakness of the economy was masked by huge increases in deficits and hyperspeculation that subsequently collapsed at the end of the bush term.
chaz5 27-Apr-12, 08:37	Dm ... ... defense spending also went up during this time, artificially stimulating the economy. It's only correct to drawdown this extra spending when we can least afford it.
dmaestro 27-Apr-12, 09:51	Yes defense related increases unpaid for with additional revenue syrocketed deficits with short term stimulative effect. Furthermore the way the dod always pays for weapons systems which many have criticized was blasted by gao as a huge waste. Buying unproven technology rather than incremental enhancements results in a huge risk and constant overruns. Dod needs to be trimmed but intelligently.
dmaestro 27-Apr-12, 10:00	Hyperinflation is an extreme phenomena. The unusual factors that would allow it are not evident in the US. The economy is far more vulnerable to meddling by ignorant politicians than from skilled economists.
chaz5 27-Apr-12, 10:07	... isn't that always the case?
dmaestro 27-Apr-12, 10:20	Politicians are no better than lay people in other areas where they lack expertise. The failure to listen to mainstream expertise instead of pandering to ignorance is the gravest danger to the US.
chaz5 27-Apr-12, 10:24	Dm ... ... I realize that this has almost always been the case ... and not to sound redundant or dismissive, but I find it easy to critique politicos, yet there's little way to get their attention when they're so astute at "delivering" so much of what their public wants. We don't vote out Santa Claus on one hand, and we don't vote out those who conspicuously represent our core values on the other. No one wants a dictator. How can we repair the system to become more "mature"?
dmaestro 27-Apr-12, 11:09	I wish the average citizen realized the implications of how the system is gamed and the enabling role the public has played in allowing this to happen. Most people do not grasp the implications of changes that were not possible for the founders to predict for a then sparsely populated nation struggling to survive as it evolved to the premier world power. One was the rise of lock step party polarization and the way in which. the process could be gamed by the wings at the expense of the middle. Another was the extent to which technology and overall knowledge would increase so even someone like the brilliant Jefferson could not stay current with it and we would become dependent on specialists. Another factor is the changes in level of representation. Today the average Congressman represents 700,000 constituents, at the founding there were around 60 reps for a small population of probably around 1M white male eligible voters. And at the founding there was a population difference of 13 to 1 between the most and least populous states, while today it is about 50 to 1, yet the number of senators is the same, so gridlock at 60 votes in the senate by a minority fringe is easy. Add to that the fact that a minority of eligible voters even vote and you have a hollow democracy rather than an engaged and informed citizenry required for a government of the people. Unfortunately for decades citizens have been blaming politicians for a system that produces the result we see. Until the political middle understands the problem and votes in those who represent them rather than the lesser of evils, I am not optimistic. The term for trying to fix problems not understood is meddling. Right now we have meddling by the majority of pols and voters.
chaz5 27-Apr-12, 11:25	Dm ... ... thanks for the thoughtful presentation ... albeit a bit pessimistic. There seems so little to rally around.
dmaestro 27-Apr-12, 11:44	In management theory we modify the pareto principle to say that 80% of problems are the system and 20% individual managers. Same here.

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