Soonergrunt Zandar linked to earlier) has to just love headlines like this:
At this point, we’re in the economic equivalent of the movie Groundhog Day:
Since the beginning of the debt crisis in Europe more than two years ago, defenders of the euro currency union have stuck to a basic argument: if the euro zone’s weaker economies would only keep pursuing policies of austerity, even as growth collapsed and job losses mounted, they would be rewarded by investors more willing to buy their bonds.
Yes, the social cost would be high, but over the long term economies would benefit from the lower interest rates that can come with the seal of approval from global bond investors. Or so goes the argument.
That approach, though, has failed in Greece, Ireland and Portugal. And now it is being severely tested in Spain, where the more the government promises to cut its budget deficit, the more foreigners are unloading their Spanish bond holdings.
Late Thursday, when Standard & Poor’s jumped into the fray by slapping Spanish bonds with a two-notch downgrade, it gave public voice to what investors have been sensing for months now — that it will be nearly impossible for Spain to meet its current deficit-lowering target amid one of the most severe recessions in the euro zone.
For those of you who, like me, do not have degrees in economics, here is a very useful primer for determining who to trust. If anyone ever sincerely used the phrase “bond vigilantes” or asserted that austerity would inspire confidence, and that would turn the economy around- ignore them. Forever.
On a more serious note, how long are we going to live in a world ruled by self-serving idiots who lie or are wrong about everything?
Actually, it was Zandar who did the link. I wish I had been the one to post it.
Was watching the beeb earlier today and the newsreader was interviewing some random person about Spain and he sounded genuinely puzzled. “Spain’s done everything right, they’ve stuck to the austerity program and yet the unemployment rate is at a record high!” IT never occurred to him that austerity may have been the wrong prescription.
You’re walking close to the fire now amigo.
Always have been, always will be.
Those with the gold make the rules, in their favor always.
I googled them, and confidence fairies look like this in the wild, just so you noes what to look out for.
They ain’t Tinkerbell.
Dude, Where’s My Economy?
Meanwhile,also from BBC news
This is a disaster.
I’d say the bond vigilanties are voting with their money. It’s just that the idiots refuse to count the votes.
It’s been 3.5 billion years so far. I’m not holding my breath.
I thought the Confidence Fairy looks like this.
here is a very useful primer for determining who to trust.
Or just don’t trust anyone who claims to be an economist until they can prove you should.
It’s too early to judge. Give it another six months.
Tone In DC
The Portuguese, Irish, Greeks and Spaniards may default at this rate. Then, things could get very bad very quickly.
Nobody expects the Spanish Influenza! It’s chief weapons are fear, surprise and a ruthless dedication to austerity.
Good. Get people talking about it, and keep them talking about it, until it finally starts to dawn on enough people that this austerity shit does not work.
You don’t honestly think the unicorns would hang out with a bunch of riff-raff like that, do you?
Honey, like the Israelites, we may have to let a generation or two die in the wilderness before we can have a bit of reason.
@MikeJ: It was just the wrong austerity. The daytime childrens austerity when the nightime austerity with pseudoephedrine and codine was needed. That has been kept behind the counter.
Snarki, child of Loki
All the previous answers are wrong.
The correct answer is “until we die, probably killed as a result of said idiocy”
Perhaps we should consider killing them first.
Austerity is all part of the meme. You can’t have the rabble (or the Spanish government) saying f- you to the bond holders, so austerity is the prescription. If the Spanish government can default, then Joe and Joan Public can too. And then the Lords of the Universe will control only 80% of the world’s wealth rather than 99%, and we can’t have that, right?
@Roger Moore: It’s been a long time since I’ve seen a unicorn, so I couldn’t weigh in on this.
Austerity: a comic at Yuk Yuks — can’t remember his name — used to do a routine about women and pantyhose. He would mime a woman holding up a pair in the air, while declaring “This pair! This pair will be perfect and never, ever run!” before putting them on and — well, you know.
I am now envisioning a bunch of confidence fairies doing the can-can across the European stage in the shredded remnants of what used to be pantyhose.
Wait, you mean taking more money out of the economy in a recession means there will be fewer jobs and less money to pay interest on bonds, and will result in a vicious cycle where the economy continuously worsens while yields rise and it’s even more expensive for the government to borrow funds? How…obvious.
Here’s your real primer on economics:
The US can borrow at negative real interest rates. The bond vigilantes are slacking off.
@Dave: It’s pure genius, the same type of genius that would lead someone to save on their home heating bills by burning all the exterior doors to their house.
And to think — the IMF and World Bank had been pushed to the point of apologizing to many countries in Latin America and Africa and Asia for their obsessive commitment to austerity and “structural adjustment” throughout the 1980s and 1990s, and then they and we all forget about that and pretend like we’ve never been here before.
For Spain, Greece, etc., in the long run it wouldn’t have mattered even if they hadn’t enacted austerity. These countries within the EMU were running persistent trade deficits, which meant that money was being drained from their private sectors every year. Austerity just hastened the inevitable result.
We have trade imbalances among our own states, but the federal government gives each state a block grant each year so the state governments can replace the lost dollars by spending. The EMU desperately needs a supra-national entity which can play that role, a Federal Government of Europe.
That’s why Romney is a moron for suggesting the U.S. will become Greece: in our monetary system the Fed decides what interest rates are, in the EMU system the bond markets decide.
@El Cid: they don’t count because they failed austerity because they were not ‘developed’ countries. See how that works?
How long? Forever. So long as there are winners in a system, they will preserve it.
I’m spending the weekend with my BIL. He’s a FL “independent”. Discussed politics with him today and ended up in a position where he was all “the left does it too.” I had just talked about a concrete thing the right did, he agreed with me, and then pulled that out.
The girlfriend and I tried very hard to make him give one single example and he would not, could not. The best he could do is mumble something about Democrats and “the right.” I made sure to let him know that he did not say “the left” and “the right”. I let him know Reagan’s people think Obama is to the right of Reagan. Yet, the Democrats are linked in his mind to Marxism and soshulism.
He works for Lockheed Martin programming missile guidance systems, perfecting ways to pretend we can pinpoint target and only kill bad people when that isn’t true.
So then we talked about the space program. He feels NASA’s budget is huge, relatively speaking. (And yes “feels” is the only word for these truthy facts.) We talked about humanity and how we need to find a way to live elsewhere in the universe if humanity is to continue. I pointed out that we can use technology to save humanity but we choose to use technology to kill people. He agrees, and somehow his role on the killing people side doesn’t factor in.
He is a white male from FL who once told me, laughingly, about driving home drunk and running a 4-way stop that is known for having cops scope it out. He didn’t have his license. They let him go. This is in a state where having skittles and iced tea get the vigilante death penalty if you are black.
He complains about not being able to afford college for his kids, but feels kids whose parents earn minimum wage should have no trouble paying for college.
The best part, though, is that we are here visiting the brother who had a stroke. Guess what? Having insurance problems because they are claiming pre-existing condition. They are working out ways to keep his income going until he can collect social security. And he’s really looking forward to a huge pension that is almost never available to other people who work just as long and just as hard. The two “fiscal conservative” brothers are livid about the costs of the one’s care.
But not to worry. Twenty seconds later they will complain about taxes and tell me how the left is just as bad. Straight white man, from the Christian tradition. To him, things aren’t actually bad at all.
@Ben Wolf: Yeah, and how is that working out?
“For Spain, Greece, etc., in the long run it wouldn’t have mattered even if they hadn’t enacted austerity. These countries within the EMU were running persistent trade deficits, which meant that money was being drained from their private sectors every year. Austerity just hastened the inevitable result.
We have trade imbalances among our own states, but the federal government gives each state a block grant each year so the state governments can replace the lost dollars by spending.”
@gex: IOW, he is exactly the guy who let the GOP keep sprinting right, having the Dems tack right, and keeps pining for centrism. He is the mechanism for the Overton window.
Are you serious?
Just what is it you think you’re objecting to?
Bighorn Ordovician Dolomite
God, that is so depressing. How can we possibly compete with that level of determined denial?
@gex: Oh, and the day started when he tried to say that it is a made up fact that Zimmerman confronted Trayvon Martin. “We don’t know what happened.”
I tried to boil it down to, if someone followed you in their car, got out, and was packing, would you find that confrontational? We couldn’t agree on that.
Weirdly, if you take things outside of realities of US politics, we value and agree upon many things. The media consolidation crap as well as Fox news blasted in almost every restaurant and bar you go to have done their propaganda well.
If you are making any progress with him, any at all, then the GOP is fucked. Because speaking historically your BIL is smack dab in the middle of the core John Birch Society demographic. As in the people who thought that Eisenhower was a Communist. If he is backsliding even a little bit, then the water levels have drawn down so far in the nuclear reactor of Right Wing Idiocy that pretty soon the core will be exposed.
Give it some time, guys. Any moment now the invisible hand is going to raise that flaccid economy and it will be fully engorged.
@El Cid: Gonna be interesting to see how the first world likes being treated like the third world. The Greeks are showing the way.
Texas is devolving into an extraction economy. Don’t recommend raising children in the environment we’ll be creating.
@ThatLeftTurnInABQ: We agree on many values, of things we find disturbing and wrong, etc. but leftism, soshulism, etc. are all bad. Free market fairies fix everything, and besides taxes are bad.
Until we strangle the last Republican with the entrails of the last liberterian.
What it needs is some good old fashioned Rand Porn.
Futures in Soylent Red are at an all time high.
Odie Hugh Manatee
Fix’t that for ya.
I’m waiting for the next World War. Governments with economies tanking have a history of starting wars to divert attention from the problems at home (blame the Other!) and it has the side benefit of creating ‘jobs’. After trashing the world economies the rich cash out again by supplying goods for war, it’s what they do.
We’re just here as pawns for them to use in their get rich schemes.
The only problem with that analogy is that the next step is a large explosion that makes the surrounding area too radioactive for humans for several decades
@Ben Wolf: so you have no links to “We have trade imbalances among our own states, but the federal government gives each state a block grant each year so the state governments can replace the lost dollars by spending.”
That sure doesn’t explain why the states are slashing their budgets and going after unions and women. Does it?
And linking to a website of unknown economists does not make an argument.(Anna Fedec & Antonio Sousa). Economists, like historians, are great at predicting the past.
Also, too, Krugman, who has a Nobel, disagrees with you. And he has been proven right. As far as economics can be proven right.
@gex: I would think that while your BIL works for a private company, that company is a defense contractor and he is paid out of a federal government contract, no? So his money comes from the taxpayers ultimately, right? Well, yes, under the rethugs, defense contracts would still happen, but not much else… short sighted (excuse me) jerks.
@The Sailor: That sure doesn’t explain why the states are slashing their budgets and going after unions and women. Does it?
States are slashing their budgets because the idiots all amended their state constitutions to require balanced budgets and their revenues are all down.
(Which we should remind the idiots of when they want to give the federal government a balanced budget amendment. We’ll be in deeper shit then.)
@PurpleGirl: Everyone I know who works for a defense contractor is a fiscal conservative who thinks the government spends too much.
The thing is, you can never spend too much to kill brown people and you can never pay white men too much to kill brown people, so it’s okay.
@The Sailor: Dude, they aren’t predicting anything. They’re using data from each country’s central bank collected over the last two years. The peripheral nations of the EMU have been running persistent trade deficits to the core nations (Germany) since the introduction of the euro in 1999. Why do you think Germany’s economy has done comparatively well? Because it’s been sucking the life out of it’s neighbors.
The reason states have been slashing their budgets is because the block grants aren’t big enough to counter both their trade deficits and the collapse in tax revenues following the financial crisis. That’s why I support a massive increase in the federal deficit, on the order of an additional $700 billion annually.
Worst of all, said BIL was bemoaning how more politicians can’t be like McCain. If you can afford to be stupid based on your demographics, apparently you will be stupid. Why spend time understanding what your guy does when you can spend that time on the golf course?
Germany will be deservedly fracked up if these countries pull out of the Euro. Their currency will be devalued and then guess who can’t afford all those expensive goods Germany ships to its neighbors?
rob in dc
At some point responsibility falls on the victim. In this case it’s not fool me once anymore, it’s fool me three times. If the Spanish government wants to go along with austerity to preserve financiers that is their prerogative. And if the Spanish people want to be the sheeple getting raped by financiers like the rest of the world than that’s their choice as well.
The only solution in Europe to the soft-core fascism that has taken hold there is terrorism. But the conditions haven’t gotten bad enough to commit to such an extreme course of action. 5 more years of slow bleed and that situation might change though. . .