Austerity isn't really working is it?

coffee_cake

Generating debt that has to be paid back with interest, with every country getting bits of the debt but nobody having to pay it back, what? That's not even a eurobond, nevermind that it makes no sense.

noodler

Our deficit is shrinking.

Austerity is working.

Three Seasons

KyussBishop wrote: »

Again your own total ignorance, in saying that a policy analogous to the US using public debt, to fund spending, is 'imaginary', or some radical economic theory when it is done all the time.

It seems blindingly obvious at this stage, that posters are either deliberately ignoring and misrepresenting this, to push their own views, or are just elaborately attempting to troll or control the debate.

No you just don't realise the stupidity of your argument.

Anynama141

KyussBishop wrote: »

Yes those are idiotic comparisons, put forward for rhetorical affect. By the same token, the US borrowing money to fund spending, is comparable to all of the above; that's utter nonsense.

Yes, and surely proposing a solution that requires a European superstate that does not exist and does not look likely even in the foreseeable futures is also nonsense?

KyussBishop

Three Seasons wrote: »

Likewise I am not claiming that the US will donate 100 billion euro to Ireland, however it is an alternative merely obstructed by politics.

Again, that's a ridiculously stupid straw-man, which ignores that even that is allowed by Eurobonds, because if the EU were issuing eurobonds and the US had €100 billion lying around, they could choose to buy up eurobonds.

You don't give a toss about debating honestly at this stage, because even when it is pointed out, that this is analogous to states within the US, and the US using public debt for funding, you still treat it like it is some 'radical' idea alien to economic theory.

It is either deliberate obstinacy i.e. arguing in bad faith at this stage, or just an attempt at trolling.

KyussBishop

bluewolf wrote: »

Generating debt that has to be paid back with interest, with every country getting bits of the debt but nobody having to pay it back, what? That's not even a eurobond, nevermind that it makes no sense.

Evidently you've not made the most minimal effort to read anything actually posted, before setting up straw-men (that nobody pays the debt back), for the sake of knocking down.

Chips Lovell

KyussBishop wrote: »

Again your own total ignorance, in saying that a policy analogous to the US using public debt, to fund spending, is 'imaginary', or some radical economic theory when it is done all the time.

It seems blindingly obvious at this stage, that posters are either deliberately ignoring and misrepresenting this, to push their own views, or are just elaborately attempting to troll or control the debate.

I'll give you this. It's certainly a better idea than your first idea for getting us all out of this mess - printing money.

Three Seasons

KyussBishop wrote: »

Again, that's a ridiculously stupid straw-man, which ignores that even that is allowed by Eurobonds, because if the EU were issuing eurobonds and the US had €100 billion lying around, they could choose to buy up eurobonds.

You don't give a toss about debating honestly at this stage, because even when it is pointed out, that this is analogous to states within the US, and the US using public debt for funding, you still treat it like it is some 'radical' idea alien to economic theory.

It is either deliberate obstinacy i.e. arguing in bad faith at this stage, or just an attempt at trolling.

Where does the money come from to pay back the Eurobonds? Please be more specific than "Europe as a whole".

coffee_cake

KyussBishop wrote: »

Evidently you've not made the most minimal effort to read anything actually posted, before setting up straw-men (that nobody pays the debt back), for the sake of knocking down.

Not agreeing with you doesn't mean I'm not reading.
I've seen:
issue eurobonds which would be cheaper for us
ignore that they're not cheaper for stronger states
insist that an EU united states would issue them and give money to who they feel like
insist that we won't have to pay it back
insist that of course bonds have to be paid back with interest, but being rather light on the details as to who IS going to pay them back

Perhaps instead of having a fit and calling everyone trolls, you could explain the finer points of
1/ why the stronger countries would want to partake in issuing more expensive debt
2/ who exactly is going to pay back if Ireland and our national debt isn't
3/ who is going to pay back particularly if they didn't benefit from this issue

My name is URL

noodler wrote: »

Our deficit is shrinking.

Austerity is working.

Manufacturing, exports and employment rates are down as a result though.. so it's a bit self-defeating. It doesn't matter how quickly our deficit shrinks if there is little or no economic growth to support us once it becomes less of a burden.

KyussBishop

Anynama141 wrote: »

Yes, and surely proposing a solution that requires a European superstate that does not exist and does not look likely even in the foreseeable futures is also nonsense?

Again, seemingly for rhetorical effect, you ignore this is all in reply to your claim, that austerity is necessary due to economic theory, when this shows that is not the case, that it is politics which necessitates it.

I have specifically said I don't expect to see Germany ever agree to these policies, and that does not change that the alternative is there, and that economic theory does not necessitate austerity.


It is like saying, the US government has chosen to enact austerity, and therefore there is no possible alternative in the US, to austerity, when it is just a policy decision; it's precisely the same with Europe, with governance and policy set by the EU member states collectively.

KyussBishop

bluewolf wrote: »

Not agreeing with you doesn't mean I'm not reading.
I've seen:
issue eurobonds which would be cheaper for us
ignore that they're not cheaper for stronger states
insist that an EU united states would issue them and give money to who they feel like
insist that we won't have to pay it back
insist that of course bonds have to be paid back with interest, but being rather light on the details as to who IS going to pay them back

Perhaps instead of having a fit and calling everyone trolls, you could explain the finer points of
1/ why the stronger countries would want to partake in issuing more expensive debt
2/ who exactly is going to pay back if Ireland and our national debt isn't
3/ who is going to pay back particularly if they didn't benefit from this issue

Misrepresenting what is said, either means you are not reading, or intentionally misrepresenting.

In this case, you know full well I never said we won't have to pay the bonds back, and that what I did say, is the entire EU pays them back, which obviously means every member state in the EU.

It's analogous in most respects, to the US and their national debt, and individual states there

coffee_cake

KyussBishop wrote: »

In this case, you know full well I never said we won't have to pay the bonds back,

Sure you did:
http://www.boards.ie/vbulletin/showpost.php?p=83946658&postcount=430

and that the entire EU pays them back, which obviously means every member state in the EU.

So it would be put on our debt?

And why would every member state do this if 1/ it's cheaper to borrow separately and 2/ they may not get any of the benefit of the funds in the first place? What if all the money is thrown at greece and ireland - is every member state still going to pay it back for us? How is it going to be divided out, total/#states or by population or by GDP or ... ?

Three Seasons

My name is URL wrote: »

Manufacturing, exports and employment rates are down as a result though.. so it's a bit self-defeating. It doesn't matter how quickly our deficit shrinks if there is little or no economic growth to support us once it becomes less of a burden.

The goal isn't to increase GDP immediately. It's to close the deficit. A reduction in GDP is to be expected. It is far from self defeating as we will be able to grow our economy from a more fiscally healthy baseline down the road. Granted it's a long road, but we can either cut off an arm now before its too late or we can let the patient die.

coffee_cake

Oh, he's talking about this?
http://en.wikipedia.org/wiki/Eurobonds
Yeah, moral hazard and free rider problems ...

On the other hand, the governments of those states that most people would like to take over those debt risks do not think that this is a good idea and see other effects. They do not understand why it should help a group of states that have excessively borrowed and circumvented the EU contracts for many years should now be helped by making it even easier for them to borrow even more via Eurobonds. Germany is one of those skeptical states,[7][8] together with Austria,[9] Finland and the Netherlands.[10]

Borrowing more and more is definitely not the answer, and dragging everyone else down with you!

Anynama141

KyussBishop wrote: »

Again, seemingly for rhetorical effect, you ignore this is all in reply to your claim, that austerity is necessary due to economic theory, when this shows that is not the case, that it is politics which necessitates it.

Can you please show me where I made that claim? Or is that trolling on your part?

K-9

KyussBishop wrote: »

Again your own total ignorance, in saying that a policy analogous to the US using public debt, to fund spending, is 'imaginary', or some radical economic theory when it is done all the time.

It seems blindingly obvious at this stage, that posters are either deliberately ignoring and misrepresenting this, to push their own views, or are just elaborately attempting to troll or control the debate.

If you think somebody is trolling report the post and the mods will take a look. That goes for everybody.

My name is URL

Three Seasons wrote: »

The goal isn't to increase GDP immediately. It's to close the deficit. A reduction in GDP is to be expected. It is far from self defeating as we will be able to grow our economy from a more fiscally healthy baseline down the road. Granted it's a long road, but we can either cut off an arm now before its too late or we can let the patient die.

http://www.irishtimes.com/debate/austerity-without-growth-a-guarantee-of-stagnation-1.496247

KyussBishop

bluewolf wrote: »

Sure you did:
http://www.boards.ie/vbulletin/showpost.php?p=83946658&postcount=430

That says:

KyussBishop wrote: »

Christ...it is not put on our national debt, they are EU-wide bonds.

Where did I say we wouldn't pay it back?

bluewolf wrote: »

So it would be put on our debt?

Eurobonds are EU-wide debt, they are not added to any individual countries national debt load; national debts from countries can even be promoted up to EU-level debt (where the countries pay that part of the debt themselves, unless negotiated otherwise), which straight away gives the benefit of lower interest rates.

bluewolf wrote: »

And why would every member state do this if 1/ it's cheaper to borrow separately and 2/ they may not get any of the benefit of the funds in the first place? What if all the money is thrown at greece and ireland - is every member state still going to pay it back for us? How is it going to be divided out, total/#states or by population or by GDP or ... ?

1: Good luck getting Ireland to borrow at rates cheaper than centralized EU debt, 2: If you actually read the posts, you'd see it funds investment all over the EU, 3: The payment of the bonds would be negotiated as part of the EU budget, between all member states.


The EU's total public debt vs GDP, allows trillions to be attained and spent this way, while maintaining economic sustainability.

Kyuss - you seem to be advocating a form of structural or cohesion funding, with the money coming from Eurobonds rather than states contributions (and ultimately direct taxes)

The current round of structural and cohesion funding (2007-2013) comes to €347 billion.

While it has some merit there are practical problems - interest would have to be paid on this, presumably by everyone to a greater or lesser extent. Would the debt be rolled over indefinately (if possible) What happens if it starts to grow and hits a ceiling?

Jingoistically - what do you see in this for us? We are a wealthy country, with infrastructure that has come on leaps and bounds in the past decade. At best we might some retraining money. The best returns will be making up infrastructural deficits in Eastern Europe. Any money borrowed centrally would just be lumped onto national debts notionally when lenders are making their decisions.

Finally - it is good to see that you seem to have come around to the fact that money can't just be created from thin air.

Anynama141

My name is URL wrote: »

http://www.irishtimes.com/debate/austerity-without-growth-a-guarantee-of-stagnation-1.496247

Bunch of economists think 'X'. Other bunch of economists presumably thinks 'Y'.

Chips Lovell

My name is URL wrote: »

Manufacturing, exports and employment rates are down as a result though.. so it's a bit self-defeating. It doesn't matter how quickly our deficit shrinks if there is little or no economic growth to support us once it becomes less of a burden.

Exports are at a ten year high. Unemployment is also falling the past few months.

My name is URL

Anynama141 wrote: »

Bunch of economists think 'X'. Other bunch of economists presumably thinks 'Y'.

And your point?

How about Christine Lagarde then?

Markets dislike low growth even more than high debt, says Christine Lagarde

http://www.ft.com/cms/s/0/315ed340-c72b-11e0-a9ef-00144feabdc0.html#axzz1VCaF2w9H

Anynama141

KyussBishop wrote: »

1: Good luck getting Ireland to borrow at rates cheaper than centralized EU debt, 2: If you actually read the posts, you'd see it funds investment all over the EU, 3: The payment of the bonds would be negotiated as part of the EU budget, between all member states.

1. For Ireland it will be cheaper. For other countries, it will be more expensive borrowing. I've explained this to you several times - why do you continue to ignore it?
2. You haven't explained the mechanism whereby it is decided who gets this investment - how do propose this sort of doling out of cash is made politically palatable? Will well-managed countries be happy to see their Euro-tax (a new tax they have to pay) being funnelled towards poorly-managed countries like Ireland and Greece?
3. Right, so all countries are looking at a new tax to pay for this? With no guarantee that they will even be deemed worthy of 'projects' because they manage themselves too well?

Anynama141

My name is URL wrote: »

And your point?

My point is that there is widespread disagreement on the correct approach - this is hardly news.

Three Seasons

KyussBishop wrote: »

That says:

Where did I say we wouldn't pay it back?


Eurobonds are EU-wide debt, they are not added to any individual countries national debt load; national debts from countries can even be promoted up to EU-level debt (where the countries pay that part of the debt themselves, unless negotiated otherwise), which straight away gives the benefit of lower interest rates.


1: Good luck getting Ireland to borrow at rates cheaper than centralized EU debt, 2: If you actually read the posts, you'd see it funds investment all over the EU, 3: The payment of the bonds would be negotiated as part of the EU budget, between all member states.


The EU's total public debt vs GDP, allows trillions to be attained and spent this way, while maintaining economic sustainability.

You aren't getting the concept that if you are required to pay back money at a future date that means you have incurred debt.

KyussBishop

Anynama141 wrote: »

Can you please show me where I made that claim? Or is that trolling on your part?

Anynama141 wrote: »

Noreen1 wrote: »

Why is that relevant?

A discussion on whether austerity is working, or not, has nothing to do with whether we have a choice in the matter.

Because it's like asking whether the earth orbiting the sun is 'working' - it's a completely meaningless question if it's the only way it can be.

Here you say discussion of whether or not austerity works is meaningless, because you say it is the only way it can be; given the availability of alternative policies, it is not the only way it can be.

coffee_cake

KyussBishop wrote: »

Here you say discussion of whether or not austerity works is meaningless, because you say it is the only way it can be; given the availability of alternative policies, it is not the only way it can be.

He said IF it's the only way that can be.
He asked if it's a choice and did they have any alternatives
http://www.boards.ie/vbulletin/showpost.php?p=83941116&postcount=321

KyussBishop wrote: »

That says:

Where did I say we wouldn't pay it back?

So it's not a debt but we have to pay it back even though it's not a debt

Anynama141

KyussBishop wrote: »

Here you say discussion of whether or not austerity works is meaningless, because you say it is the only way it can be; given the availability of alternative policies, it is not the only way it can be.

Of course I should have clarified that I meant in this universe, where we live...not in the universe where a United States of Europe was formed at some point. :rolleyes:

Thanks for demonstrating that I never made that claim.

KyussBishop

Deleted User wrote: »

Kyuss - you seem to be advocating a form of structural or cohesion funding, with the money coming from Eurobonds rather than states contributions (and ultimately direct taxes)

The current round of structural and cohesion funding (2007-2013) comes to €347 billion.

While it has some merit there are practical problems - interest would have to be paid on this, presumably by everyone to a greater or lesser extent. Would the debt be rolled over indefinately (if possible) What happens if it starts to grow and hits a ceiling?

Jingoistically - what do you see in this for us? We are a wealthy country, with infrastructure that has come on leaps and bounds in the past decade. At best we might some retraining money. The best returns will be making up infrastructural deficits in Eastern Europe. Any money borrowed centrally would just be lumped onto national debts notionally when lenders are making their decisions.

Finally - it is good to see that you seem to have come around to the fact that money can't just be created from thin air.

Basically, it makes funding sustainable while EU-wide public debt vs GDP, is within sustainable figures.

The structural and cohesion funding doesn't seem to utilize bonds, though I am not familiar with that program in general; this would utilize bonds, going to the European Investment Fund, much as described in Yanis Varoufakis's Modest Proposal document.

The debt wouldn't need to be rolled over, but (just like any countries debt) there's no reason it couldn't be either; that's not something I present an opinion on, it would be something the EU have to collectively negotiate.

The EU would of course, want to keep it within sustainable debt to GDP levels, so it wouldn't be pushed to that point.


What I see in it for the EU as a whole, would be approaching full employment for all nations, and a buildup of needed infrastructure, plus the necessary money for provide adequate public services, and in general, a gradual and faster recovery and end to the economic crisis (minus the socially punitive aspects of austerity).

None of the eurobonds would be lumped onto any countries national debts; the debt servicing would be shared by the entire EU, by all member states.

The best way to look at that, is to just look at the US; as I repeated a few times: The US wouldn't avoid expanding their public debt to fund spending, because they think Wyoming or another state couldn't afford it (that would be a totally separate problem to deal with in its own right).


I haven't discarded money creation as a useful policy but focus primarily here on Eurobonds. If money creation were on the table, it would pretty much obsolete Eurobonds, and all the concerns surrounding it.