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View Diary: The failure of Austerity (144 comments)

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  •  Countries do not have a right to borrow money (2+ / 0-)
    Recommended by:
    judyms9, pHunbalanced

    if investors do not want to buy the bonds.  In the Euro zone, an individual country does not have the power to monetize their debt without the consent of the other Euro countries.  

    Keynesian economics says that increased taxes are contractionary.

    Countries, such as Greece may have borrowed too much in the past, so when their economy became weak, their government had already used up their capacity to stimulate ther economy with government debt.  The forgotten part of Keynes's recommendations, was reducing the debt in the good years.

    10 year Greek bonds have an interest rate of 35%, issuing new debt will not find buyers in sufficient volume to provide enough funding to stimulate their economy into healthy growth.

    The countries other than Greece, don't want to become like Greece, so they want to keep debt capacity in reserve, so they are still increasing their debt but not rapidly enough so government spending levels don't look like austerity.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sun Dec 18, 2011 at 09:05:00 AM PST

    •  you mean... (4+ / 0-)
      Recommended by:
      judyms9, Saint Jimmy, Egalitare, Matt Z

      that when faced with a giant surplus, you should probably pay down debt and hold onto that surplus to get the house in order rather than eliminating the surplus by giving giant tax cuts to billionaires?

      who could have predicted that?

      /snark

      In other words, we had a chance to not be Greece, but Bush blew it back in 2002...

      •  Well, duh. W and 'blew it' are synonyms. (4+ / 0-)
        Recommended by:
        judyms9, Saint Jimmy, Egalitare, Matt Z

        The real villian here is Greenspan, who knew better and sold bondholders down the driver.  Yet they love him for it.

      •  Politics make it difficult to pay down debt. (1+ / 0-)
        Recommended by:
        pHunbalanced

        Social Security should never have been included in the annual budgeting or what is in the budget surplus or deficit.

        So for the past three decades the budget deficits have been significantly understated by including the Social Security surpluses, so spending was higher and taxes lower than they should have been.  

        So now we have rising debt (excluding Social Security surplus), at the same time the Social Security surplus has withdrawals making turbo- charging rising debts and deficits.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sun Dec 18, 2011 at 12:48:36 PM PST

        [ Parent ]

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