Posted on 11/06/2011 9:07:47 PM PST by bruinbirdman
No surprise that last week's Cannes summit did not save the world.
The focus remains on debt and its supposed cure – austerity. Yet the only satisfactory cure for macro debt problems comes from economic growth, and growth requires more spending.
There wasn't much recognition of this among the world's large surplus countries, either inside or outside the euro. "Not me, guv" is the prevailing attitude in Chermany's twin capitals, Berlin and Beijing.
More interestingly, no one seems to mind the damp squib in Cannes. We are now suffering from summit fatigue. It is apparently enough to have saved the eurozone by keeping Greece on the straight and narrow – for now.
She may have stepped back from the brink but no one should imagine that this puts an end to the matter. Her politicians talk about finding "a solution" over the next twelve months. For the economy, even twelve years won't be enough.
Within the euro, for Greece there is nothing but bleak depression as far as the eye can see.
Outside the euro, there would still need to be austerity and some sort of default, but with a lower currency there would at least be the prospect of a boost to net exports. And this is, after all, the time-honoured IMF prescription for countries in Greece's predicament.
For the rest of the eurozone, however, last week marked the crossing of the Rubicon. Not long ago, when I suggested that the most likely outcome from the euro crisis was some sort of break-up, audiences on the continent reacted with a mixture of amusement and disdain. They deployed a barrage of counter-arguments: there was no provision in the European treaties for a country to leave; an exit would be technically impossible, or at least extremely messy for
(Excerpt) Read more at telegraph.co.uk ...
Germany’s elites are more than ready to cross the Rubicon, so to speak. This is just posturing to make them look like they are doing it reluctantly, even though it’s so transparent that the world should be really insulted by it.
Caption...
“Mine’s only this big”
Insert picture of the >>> "Oh-Jeez-not-this-sh!t-again-guy." <<< here.
Growth requires increases in real output. That is not demand, and it is not spending.
If spending could grow economies, no politician would ever lose an election, and EVERY nation would be prosperous and growing without limit. Because -- let's face it -- other than lying there isn't really anything that comes more naturally to politicians than spending.
(Yet the only satisfactory cure for macro debt problems comes from economic growth, and growth requires more spending.)
Are they all really that stupid, or they know the truth, but they want to purposefully confuse us? While we agree that growth is extremely important to get out of the mess, it’s growth fueled by the Private Sector, and not by Government that is beneficial. Growth in government spending will actually make things much, much worse. In fact, it’s the growth in government spending that got us into this mess. The best thing that government can do is to shrink! That’ll allow the private sector to breathe again and to grow.
“Yet the only satisfactory cure for macro debt problems comes from economic growth, and growth requires more spending.”
Growth requires spending which requires debt. That will solve the “macro debt” problem. Progressive economics in a nutshell.
Remember that GDP includes government spending.
So, say GDP was $14 trillion +/- in 2008. If The Obammunist increased government spending, from 2008 level, by $2 trillion of a $15 trillion GDP, thats 13.3%, just in govt increase.
And that created a GDP growth rate of 2.5% !!!
Take away The Obammunists 13% government spending (unproductive) increase and what does that leave???
yitbos
1)...Obama demonstrates his involvement with his boy friend in the back of the limmo
2)....Obama demonstrates how to roll a big wad of weed.
Spending by the government won't work. In order for the government to spend a dollar it must take at least 4 dollars out of the economy, it's a commode like downward spiral.
The spending must be done by the public within the public. Each time that dollar changes hands within the public sector the economy gathers strength.
That's from an Micro Economics 101 class from the late 60s.
Thanks bruinbirdman.
Yep, that line “growth requires more spending” just blows the whole argument.
Only applies to growth of government.
I guess these world “Leaders” are just going to keep on keeping on until the music stops.
Bet they don’t spend themselves into prosperity in their personal lives.
If a major country like Germany decides to leave the EU, what are the rest going to do? Invade?
If by “public” — which conventionally means “government,” — you actually mean “private,” this is only partially true, and the reason I say that growth must be driven by increases in real output. The reason for that is that if there is no increase in real output then even private spending has to be borrowed. Private borrowing is less toxic than government debt but it is still dangerous at some level if it doesn’t fuel increases in real output.
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