Greek Week Rush - Analyzing the Euro Crisis

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Monday November 07, 2011 · 8:02 AM PST

2011/11/07 · 08:02

A lot of news over the weekend on the Euro 'crisis'. As I write this, but before I publish it - Greece may even have a new government. That's how quickly things are changing. Because of all the news, I'm pretty sure all my posts this week are going to concentrate on Greece, the Euro, and the Modern Monetary Theory(MMT) economic approach to understanding what is happening. Note that I do not call it the Greek crisis. It is a crisis of the European Union and the single Euro currency.

First, a brief overview of the problem and the dealings. The European Union, when it switched from all having independent currencies to the Euro, it required all participating countries to have(among other things) a budget deficit that was less than 3% of gdp and total debt less than 60% of gdp. For example, if a country has a trillion euro economy, its budget deficit can only be 30 billion euros, and it's total deficit 600 billion euros. If a country violates those numbers, it must come up with an economic plan to resolve the issue and it was subject to fines by the European Central Bank - yes, even for Sovereign governments banks punish you for not having money by charging you more money. As you can imagine, this eventually caused some problems.

maddogg

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Wednesday November 02, 2011 · 8:04 AM PDT

2011/11/02 · 08:04

Last week it appeared that a bailout deal between Greece and the rest of the EU was going to go through. However, it seems that the prime minister of Greece is going to quite literally, "let the people decide". Now, the Greek people must decide if they want to vote for the bailout - which requires them to raise taxes and cut government services, or against the bailout which would cause them to default on their loans. If the default on their loans, they won't be able to deficit spend Euros anymore and will have to, in response... raise taxes and cut government services. That is quite a dilemma for Greek Citizens.

maddogg

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Tuesday November 01, 2011 · 6:49 AM PDT

2011/11/01 · 06:49

Nothing makes an argument more frustrating than when 2 people are using the same words to argue over 2 different things. When discussing strategies to get out of the recession, market fundamentalists (usually conservatives) argue to let the markets work. Others, usually liberals who sorta-kinda understand Keynesian economics, argue that we need more stimulus to jump-start the economy. Then the market fundamentalists respond with "markets are more efficient than government" it is always better. Then they give some example of the government, in fact, screwing something up. Then the liberal Keynesian says, free markets got us into this mess, and then gives an example of a corporation, in fact, either screwing something up or doing something evil. This goes back and forth and is never resolved because they are talking about two different things.

If you're arguing for more stimulus or increased aggregate demand and end up arguing over how much governments and markets do or don't suck, you've lost the argument or - at best - will stalemate. The reason is that in most cases markets are more efficient than government trying to do it. Be it selling shoes or setting apartment rent prices. The liberal position is not to suggest otherwise. The problem is that it has nothing to do with your argument for demand management. An economy that is deficient of aggregate demand can not fix itself because it has nothing to do with an individual product or industry.

maddogg

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Monday October 24, 2011 · 8:34 AM PDT

2011/10/24 · 08:34

Have you ever heard of the term “economic rent”? No? That’s probably because of the greatest political coup in the history of our republic. In politics, true power comes – not from your argument – but from the ability to steer the conversation to what you want to talk about and away from what you don’t want to talk about. The true elites in our society have continued “winning” the political debate by removing a very important concept from the political conversation.

I admit, reading the term, “economic rent” can cause eyes to glaze over quickly. A more accurate description is “unearned income”. It is people and companies who make money by doing zero work and risk little or none of their own assets.

maddogg

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Monday September 19, 2011 · 7:13 AM PDT

2011/09/19 · 07:13

For the purposes of this diary, 'P' Word = Ponzi or Ponzi Scheme
When it comes to framing a debate, conservatives pretty much eat our(progressive's) lunch. We're in the middle of letting it happen again ever since Rick Perry started suggesting that Social Security is a 'P' word. If we let them win the framing debate in this case, they're going to start eating our parent's and grandparent's lunch.

For those who've never heard the term 'framing' or need a refresher course on it, then I suggest you read jamess's diary, "The Framing Game -- with some Advice from George Lakoff". It's a good introduction to the topic and the work of George Lakoff (a man who will likely die before most progressives properly realize the extent of his contributions to the political Left). One of the first lessons of framing a debate is that you can't win by just negating your opponent's frame.
(quoting Jamess's diary)

Negating a frame activates that frame. Using conservative language to argue against conservatives just reinforces conservative framings. Environmental language must avoid activating anti-environmental frames and anti-environmental language. For example, defending science activates the idea the science needs defending and so is questionable. Go on offense, not on defense.

So to everyone who keeps saying, explaining, pointing out, and pontificating how Social Security is not a 'P' word, you are, in a way, helping Rick Perry destroy Social Security.

maddogg

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Friday September 16, 2011 · 9:30 AM PDT

2011/09/16 · 09:30

The Republican speaker of the house, John Boehner said yesterday that, "Job creators in America are essentially on strike." Boehner is right about that. The people who create jobs aren't creating jobs out of fear. However, Boehner gets everything else wrong. He's wrong about who the job creators are and he's wrong about what is making them scared.

maddogg

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Monday August 22, 2011 · 6:30 AM PDT

2011/08/22 · 06:30

Right now, in the United States, over 25 million people who want to work, are without work or are working part time cause they can't find full time work. That's larger than any army on Earth. Can you imagine what could be accomplished in this country if, instead of wasting all their talent and energy, we used this army of the unemployed to accomplish something? To give us an idea of how much opportunity is being lost every single day, let's crunch some numbers. All these numbers are from the July 2011 Employment Statistics.

There are officially 13,931,000 people unemployed and actively looking for work. There are another 2,785,000 people not actively looking for work(for various reasons), but would take a job if one was offered. That is 16,716,000 full time unemployed. Finally, there are 8,396,000 people who are working part time, but would work full time if given the chance. If we assume that full time is 40 hours a week, and the people working part time are only working 20 hours a week, but want to work 40 hours a week(all perfectly reasonable assumptions) we will arrive a shocking number. Every work day we are losing up to 167 million hours of lost labor. Can you imagine for a moment what you could accomplish if you had a 167 million extra hours at work?

maddogg

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Friday July 22, 2011 · 6:02 AM PDT

2011/07/22 · 06:02

"If the government creates money all it'll do is cause inflation and we'll all suffer." This is one of the deadliest lies we've been told for the last 40 years. For centuries, philosophers and economists thought that any increase in money would always increase prices. John Maynard Keynes pretty much set the record straight on that about 80 some years ago. But the idea has been resurrected in the last few decades and is now mainstream again. It's this rationale that conservatives use to justify destroying social programs, budget cuts, and the basis for the current debt "ceiling" discussions in Washington. What makes the idea so insidious is that it makes sense on the surface. With most things, the more of something there is, the less it's worth. But unlike most things, money has no intrinsic value. That makes it fundamentally different. Below I will show you the modern re-emergence of this theory and why it is bullshit.

maddogg

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Wednesday June 15, 2011 · 6:50 AM PDT

2011/06/15 · 06:50

Modern Monetary theory(MMT for short) is a relatively new economic school of thought. It was developed by Prof. L Randall Wray, Warren Mosler, and Prof. William Mitchel. They have been privately working on it for 20 years, but only went public about 10 years ago. MMT is a paradigm shifting theory that changes the nature of economic management and policy recommendations.

Right now, Wray is running a Q&A MMT Primer on his site, New Economic Perspectives.

maddogg

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Tuesday June 07, 2011 · 6:30 AM PDT

2011/06/07 · 06:30

There are a lot of Chicken Littles running around these days warning us all of the coming hyperinflation. They range from vile fear mongers like Glenn Beck, to radio host sell-outs that are peddling gold, to idiotic wall street "analysts" who actually believe their own bullshit. The basis for their fear is based on government deficit spending. The fact that they think that deficit spending in the wake of a financial and unemployment crises is going to somehow lead to hyperinflation shows a stunning amount of ignorance on the topic.

There are so many angles of stupid when it comes to worrying about hyperinflation at a time like this that it can't possibly fit into one diary. Instead, I'm going to concentrate on the most important and most common aspects. That way when your right-wing friends, family members, or co-workers bring up the topic, you can be ready to demolish them using pure logic.

maddogg

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Friday May 27, 2011 · 12:26 PM PDT

2011/05/27 · 12:26

Conservatives often compare a government to running a business. They do this many times and in many different ways. They do this often to justify business experience as interchangeable with governing experience. They use it to justify calling government inefficient compared to businesses because it can't turn a profit. They do it to justify their position that the government should run budget surpluses. They do it sub-consciously when people like Stossel issues challenges like, "name one thing government does better than business".

While I have many intellectual objections to thinking of government like a business, I think that even if you accept this tortured metaphor, that conservatives use it incorrectly(big surprise, I know). The way that they screw it up is that they completely get wrong who a government's customer and employee is. It also leads to bad conclusions of government spending.

Once a correct metaphor is constructed, the policy recommendations deducted from the metaphor completely changes.

maddogg

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Friday May 20, 2011 · 6:30 AM PDT

2011/05/20 · 06:30

For those who follow this group, Money and Public Purpose, this diary won't be anything too surprising for you. However, if you're new to this group you should know that my goal is to so completely change your view of money that your brain will violently reject it, or you'll start questioning everything you thought you knew about money and macroeconomics. If you still want to take that proverbial ~~blue pill~~red pill, read on.

I want to present to you a world where one day everyone was working and mostly happy. The next day, one fifth of the population could no longer work. That fifth of the population now had to subsist on handouts from the remaining people that were working. The handouts are barely enough to get food and medicine for their family.

Although this group was told that it was their own fault that they couldn't work, The reason they couldn't work wasn't because they didn't want to. They really did want a job that would get them off of handouts and provide a life beyond just surviving. The reason they couldn't work also wasn't because their jobs were irrelevant. Many of them were police, and there was still crime - it was, in fact, rising. Many of them were teachers, and there were still children who needed to learn. Many were factory workers, and people still wanted the stuff they manufactured. All of them still had talents to offer the world, but they couldn't... for some reason.

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Greek Week Rush - Analyzing the Euro Crisis

The Dilemma Faced by Greek Citizens: How to Vote?

Unemployment Vs. Economic Efficiency

Time to resurrect an old idea: Economic Rent

Stop using Social Security and the 'P' Word Together

Boehner's Right, The Job Creators are on Strike

A Thousand Lifetimes Lost Everyday(and other Unemployment Fun Facts)

(More Money = Inflation) = False

Modern Money Primer

Hyperinflation for Hyperventilators

If Government Was Like a Business

We Could Afford it Yesterday, but Not Today?