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View Diary: You can't borrow your way out of debt- what? (44 comments)

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  •  Re (1+ / 0-)
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    As Keynes pointed out, spending money on things like unemployment insurance payments serves to keep the economy from falling into a black hole during a recession
    That's not an investment. Sure, it helps bridge the gap, but productive industry is what matters.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Sun May 12, 2013 at 05:37:57 PM PDT

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    •  correct (3+ / 0-)

      Consider Greece. As the austerity produces a terrible business climate with e.g. so many fired state employees and reduced pensions, even profitable well run companies find themselves under pressure and with reduced margins. But they can't find any loans to e.g. sell more in Germany and US or to meet present needs. So they go under and their employees and creditors and suppliers now are not paying rent/taxes and not purchasing goods and services.   And then, surprise, state deficits INCREASE because the economy is collapsing and tax collections drop.  

      This is an inexcusable process given the current state of economic knowledge. It's just gratuitous immiseration and the people responsible for those policies should be jailed.

      self-appointed intellectual cop

      by citizen k on Sun May 12, 2013 at 05:53:05 PM PDT

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      •  You are confusing cause and effect (0+ / 0-)

        Greece's entire economy relies on its exports (principally, tourism and shipping... there are other industries but I'll keep it simple).

        The rest of the world sees Greece as a black box. The world pours in steel, consumer goods, food, etc, and gets back out tourism and shipping. The internals of Greece's economy are of no interest to anyone other than creditors (people who gave Greece steel and consumer goods and are hoping to get paid back in tourism and shipping someday).

        Tourism and shipping (Greece's export industries) run the whole party for Greece. They pay for everything: government spending, health care, food, retiree pensions; every single thing Greece does originates because some Greek shipper or tour operator performed a service for a foreigner.

        When you talk about Greece's economy melting down, you are talking about the collapse of dependent industries (government, local restaurants, etc) that depend on shipping and tourism to exist. Shipping and tourism aren't having trouble (well, other than tourism being disrupted by the unrest). The problem is that previously, the "other stuff" industries were allowed to get too big for what Greece's sustainable output of shipping and tourism is likely to be in the future.

        The austerity isn't causing the meltdown, the austerity is a result of Greece's bad financial situation.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sun May 12, 2013 at 08:09:59 PM PDT

        [ Parent ]

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