G8 liking Obama growth, not Merkel austerity

cyberhog · 21-05-2012 03:49AM #1

The tide is turning against Merkel's austerity push.

CAMP DAVID, Md. — Leaders of the world’s richest countries banded together on Saturday to press Germany to back more pro-growth policies to halt the deepening debt crisis in Europe, as President Obama for the first time gained widespread support for his argument that Europe, and the United States by extension, cannot afford Chancellor Angela Merkel’s one-size-fits-all approach emphasizing austerity.

...

“Our imperative,” the leaders said in their statement, “is to promote growth and jobs.”

...Germany has insisted that Europe’s ailing economies tackle their financial problems through spending cuts, a policy that critics say has caused higher unemployment, brought Greece to the edge of bankruptcy and worsened the crises in Spain and Italy.

...American officials said they hoped that after the full-court press this weekend at Camp David, Ms. Merkel would be more amenable to the pro-growth argument when she meets with European leaders this week at a summit to come up with specific steps to fight rising debt while spurring the economy.

...

In comments to reporters afterwards, Mr. Obama said that the group needed to discuss “a responsible approach to fiscal consolidation that is coupled with a strong growth agenda.”

http://today.msnbc.msn.com/id/47489892/ns/world_news-the_new_york_times/

It seems that everyone but Merkel realises that concentrating on austerity alone is not the cure for the eurozone's ills. We need to make it clear to Merkel that it is not in our interest to vote yes to stricter fiscal discipline until we see Germany agreeing to back a strong growth package.

meglome · 21-05-2012 03:56AM

cyberhog wrote: »

The tide is turning against Merkel's austerity push.

Ah for the love of...

We are having austerity as we borrow one third of all government spending. Merkel may be promoting the very necessary austerity but no matter what we'll still be having austerity. Her view, no matter what it is, doesn't change reality.

cyberhog · 21-05-2012 05:50AM

meglome wrote: »

but no matter what we'll still be having austerity.

No one is arguing we won't. What the world is saying to Merkel is that she needs to focus more on growth rather than austerity.

GSF · 21-05-2012 06:01AM

No coincidence there are elections in the USA in November after which they have conveniently scheduling dealing with their massive deficit.

Blowfish · 21-05-2012 11:40AM

cyberhog wrote: »

No one is arguing we won't. What the world is saying to Merkel is that she needs to focus more on growth rather than austerity.

It's not 'the world' telling Merkel anything. It's 7 politicians who predictably enough for the sake of their careers want to be seen to be doing more than just cutting expenditure and raising taxes. The 'strong growth package' you mention is them wanting to borrow even more money for 'stimulus', thus increasing the debt burden even further.

promethius42 · 21-05-2012 11:46AM

Shouldn't the words of Merkel be listened to, it is Germany that still fairs well in this economic climate.

cyberhog · 22-05-2012 02:25AM

promethius42 wrote: »

Shouldn't the words of Merkel be listened to, it is Germany that still fairs well in this economic climate.

But for how much longer?

Germany's prime export market is within the eurozone, and if the periphery spirals down due to the fiscal policies being championed by Merkel, it will drag Germany down with it.The truth is, the world is listening to Merkel and it isn't liking what she's saying. In Germany itself, support for Merkel's party has plunged. People just do not believe the strict austerity policies promoted by Merkel will cure the eurozone's ills.

Ozymandius2011 · 22-05-2012 02:57AM

Is he hinting we should vote no to the Austerity Treaty?

Atlantis50 · 22-05-2012 03:52AM

Obama is in no position to give advice about growth and economic stimulus.

When he signed the 787 Billion dollar stimulus into law in February 2009, unemployment was 8.5%. Unemployment is now 8.1%. The so called 'stimulus' has been a spectacular failure. Not to mention him massively increasing the national deficit.

UNI4MER · 22-05-2012 04:51AM

GSF wrote: »

No coincidence there are elections in the USA in November after which they have conveniently scheduling dealing with their massive deficit.

Yes you are right. Speaking from California USA, actions speak louder than words and this president's policies have been a disaster unless you are a Socialist where government employee unions compensation suck the private sector dry and at the same time government tax policies slash growth in the private sector. They being the Socialists/Unions are only out for their short term gains at the expense of society.

cyberhog · 22-05-2012 05:21AM

Atlantis50 wrote: »

Obama is in no position to give advice about growth and economic stimulus.

Obama's advice was welcomed by Gilmore.

Speaking as he campaigned in Dún Laoghaire, Mr Gilmore welcomed US President Barack Obama's comments yesterday about the necessity for a growth agenda in Europe.

http://www.rte.ie/news/2012/0519/fiscal-treaty-referendum.html

Ozymandius2011 · 22-05-2012 07:03AM

cyberhog wrote: »

Obama's advice was welcomed by Gilmore.

http://www.rte.ie/news/2012/0519/fiscal-treaty-referendum.html

Just like he 'welcomed' Francois Hollande's election....

Suryavarman · 22-05-2012 06:20PM

cyberhog wrote: »

No one is arguing we won't. What the world is saying to Merkel is that she needs to focus more on growth rather than austerity.

What people need to start realising is that growth and austerity are not mutually exclusive.

hatrickpatrick · 22-05-2012 06:31PM

Suryavarman wrote: »

What people need to start realising is that growth and austerity are not mutually exclusive.

Depends how you define austerity. You can't have growth if you're not only taking an incredible amount of money out if circulation, but also showing no foreseeable end point or target. Growth is about consumer confidence above all, and merkel's brand of austerity is doing nothing more than scaring the bejaysus out of everyone.

What we need is a clear plan with a clearly defined end point. Right now all we have is "balance expenditure and revenue". THEN what? You can't balance Ye two if revenue keeps falling year on year, which it will unless they do something to restore some semblance of confidence and stop the endless vicious cycle of people hoarding their money because they know they won't have it next year.

Boskowski · 22-05-2012 06:43PM

You're damned if you do and damned if you don't.
Has everyone already forgotten that only about 6 months ago a large portion of the people on this very forum were convinced the Euro had merely days left?
Austerity is a ridiculous word because its a blind exaggeration. What the EU wants is that we stop to continuously overspend, put at least some sort of check on things. Because even the money providing markets no longer believe this is going to end well.
So how in gods name has ridiculous and reckless borrowing with no concept of when and how to turn the tide has become the new mantra and sound policy?
Yesus lads you should listen to yourselves. Do you really believe we can borrow and borrow and spend forever and ever and at no stage it will come down on us like a ton of bricks? We have learned absolutely nothing have we?
The more prudent voices in the EU want this to make a soft landing (remember the phrase?), what we fail to register is that what we call unbearable austerity (while we still have cars, fags and Sky sports) is the soft landing. I don't want to see the hard one.

cyberhog · 23-05-2012 12:29AM

Now the OECD chief economist Pier Carlo Padoan is backing calls for a growth compact.

The Paris-based, international think tank has waded into the political row over how to shore up the currency union with an emphatic endorsement of French President Francois Hollande’s policy proposals. Measures to restore growth are vital to lift the ailing region alongside a “fiscal compact” to reduce debt and deficits, OECD chief economist Pier Carlo Padoan said.

“Elections in a number of euro area countries have signalled that reform fatigue is increasing and tolerance for fiscal adjustment may be reaching a limit,” he said. To ease the burden of austerity, “additional measures towards the establishment of a 'growth compact’” are needed.

http://www.telegraph.co.uk/finance/financialcrisis/9281198/Debt-crisis-OECD-backs-call-for-eurobonds.html

So there is another internationally respected voice that says Merkel should soften her stance. I think it is time for some people around here to wake up and smell the coffee!!

K-9 · 23-05-2012 01:01AM

cyberhog wrote: »

Now the OECD chief economist Pier Carlo Padoan is backing calls for a growth compact.

http://www.telegraph.co.uk/finance/financialcrisis/9281198/Debt-crisis-OECD-backs-call-for-eurobonds.html

So there is another internationally respected voice that says Merkel should soften her stance. I think it is time for some people around here to wake up and smell the coffee!!

The key word to me is "alongside", who doesn't want growth?

Merkel made a point at the meeting with Hollande, we want growth is a very fuzzy phrase. Take the No side of the Treaty debate, SF and Ganley would probably have very different ideas on how to achieve growth. I think it is better to deal with the stability aspect separately as it's a separate complicated matter, many are having difficulty with an eleven page treaty without more stuff for people to over complicate it.

What's the rush on forcing some type of deal on growth when nearly everybody agrees on austerity? even SF.

Ozymandius2011 · 23-05-2012 08:03AM

Expect a lot of growth 'optics' from today's EU summit but little in the way of concrete measures.

GSF · 23-05-2012 08:12AM

hatrickpatrick wrote: »

Depends how you define austerity. You can't have growth if you're not only taking an incredible amount of money out if circulation

Sure you can. You can cut public spending to balance the budget and ease monetary policy to make more credit available to the private sector as the same time.

Well we could if we werent part of the Euro of course!

antoobrien · 23-05-2012 01:19PM

hatrickpatrick wrote: »

Depends how you define austerity. You can't have growth if you're not only taking an incredible amount of money out if circulation, but also showing no foreseeable end point or target. Growth is about consumer confidence above all, and merkel's brand of austerity is doing nothing more than scaring the bejaysus out of everyone.

What we need is a clear plan with a clearly defined end point. Right now all we have is "balance expenditure and revenue". THEN what? You can't balance Ye two if revenue keeps falling year on year, which it will unless they do something to restore some semblance of confidence and stop the endless vicious cycle of people hoarding their money because they know they won't have it next year.

Take a read of this article that appeared in Friday's indo. There's a comparison between the cuts of 15% made by Canada (they got their spending in order within 3 years) and the massive stimulus tried by the USA & Japan (both of which failed).

Also, in the early 90s the digital plant laid off 700 workers in Galway. Terrible at the time, but within a couple of years it was viewed as perhaps the best thing that happened to Galway in quite a while. Why? Well the factory space that was opened up lead to different industry taking over, the people that were employe in digital started their own companies or became important members of staff in other companies in Galway.

So austerity (I prefer calling it what it is - fiscal prudence, as this does not change depending on the economic season) can be viewed as a danger or an opportunity.

cyberhog · 24-05-2012 02:16AM

K-9 wrote: »

What's the rush on forcing some type of deal on growth...?

The OECD has warned that if we don't act quickly the eurozone risks falling into a "severe recession".

The risk is increasing of a vicious circle, involving high and rising sovereign indebtedness, weak banking systems, excessive fiscal consolidation and lower growth,” said Pier Carlo Padoan, the chief economist of the Organization for Economic Co-operation and Development.

...

"There is scope for easing the pace (of debt reduction in some countries)," Padoan said in the OECD’s economic outlook.

“For Spain and other countries, if there are unforeseen drops in economic activity then the fiscal necessary adjustment which ensues should only be done very gradually,” he told Reuters in an interview before the report’s official release.

...

"Given the likely slow growth of private demand during the prolonged period of adjustment... actions at the European level could help to speed up the process and generate a more propitious environment in which to undertake structural reforms," the report said.

“EU-wide measures would strengthen activity... by boosting confidence and making it easier to achieve the intra euro rebalancing effort,” the OECD said.

http://english.alarabiya.net/articles/2012/05/22/215701.html

G8 liking Obama growth, not Merkel austerity

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