Will Reality Never Set In?
I had thought the situation in Greece would eventually hammer home for everyone the perils of reckless enlargement of the state and deficit spending. But apparently, it is not to be. This is how Kevin Drum describes the core problem in Greece:
the austerity madness prompted by the 2008 financial collapse
So the problem is not a bankrupt state, but the "austerity" which by the way has at best carved only a trivial amount out of spending. And it was triggered not by a ballooning deficit as a percent of GDP and an inability to meet interest and principle payments, but by the US financial crisis.
This is willful blindness of absolutely astounding proportions. Which means the same folks are likely just rehearsing to ride the US right into the same hole.
Jim Clay:
Just remember, though, there aren't any important differences between Republicans and Democrats.
February 15, 2012, 11:32 amDrTorch:
Well sure, they just need to spend themselves out of a recession.
But if that doesn't work, it looks like they'll print the money they need:
http://www.nationalreview.com/corner/291103/and-now-quasi-drachmas-andrew-stuttaford
February 15, 2012, 11:46 amDJB:
And I am sure he goes home at night and says to his wife "Damnit Honey, you know we would be a lot wealthier if we would start spending a bunch more money and using more credit cards".
*Oh, but its different if its macro.*
February 15, 2012, 11:49 amTed Rado:
Jim Clay:
Unfortunately, you are SO right. They both piss away our money to buy votes and run up the debt. The D's just do it a little faster and more brazenly. Where it will all stop is anyone's guess.
February 15, 2012, 11:56 amme:
@Jim - well.... it's easy to see where this perception originates. I'll never forgive Bush for bailing out failed businesses to the tune of 700B. Obama really got that, his campaign rethoric was all about how that was a horrific mistake. Then he got into office and spend another 700B on bailing out failed businesses. That's a lot of my money they are spending. There were the useless wars that I am opposed to on financial and ethical issues. Same difference. Oh, and the awful shredding of the civil liberties guaranteed by the constitution under Bush. Which Obama gleefully trumped.
I am sure there are some slight differences (height? skin tone?), but compared to messing with the fundamental rights and adding enormous future tax load with no payoff but sustaining crony diseconomies, they hardly matter IMHO.
February 15, 2012, 12:00 pmNL_:
This is akin to Wile E. Coyote blaming gravity for his fall, and not the fact that he ran fifty paces off a cliff.
It's not that "austerity" is to blame. What's to blame is that they can't just inflate away the problem by devaluing the currency in which they borrowed. In other words, the adoption of the euro blocked their old trick for evading responsibility.
February 15, 2012, 12:01 pmlitehouse:
Greece has structural problems (e.g. lack of competitiveness), and borrowing+government spending has been made at unsustainable levels. But it also seems that the dramatic Depression that we see right now is made worse by imposing austerity measures on a sluggish economy, and in this sense Drum is right. The situation in the US is very different, as our debt is denoted in dollars, and, contrary to Greece, we are able to devaluate and just print the necessary money.
February 15, 2012, 12:19 pmColin:
Explain to me again why you read Kevin Drum? He is one of the blogosphere's biggest intellectual non-entities. Have never understood why he is someone people pay attention to or quote.
February 15, 2012, 4:28 pmRick Caird:
I don't think it so much "willful blindness" as it is a lack of understanding of basic economics and an irrational belief in Keynesian economics. All the Keynesians are horrified of austerity, but they seem to believe this outrageous government deficit spending can go on forever or that it is a problem that can be put off until "later". It is now "later", but they missed it.
February 15, 2012, 4:36 pmKR:
I'm with Colin. It seems like half your blog is "Kevin Drum said [something stupid]". It's your blog, I'm not going to tell you how to run it, but don't you feel like you're just banging your head against a wall here?
February 15, 2012, 5:13 pmMesa Econoguy:
Asking Kevin Dumb to diagnose Eurosocialist economic problems is somewhat like asking Ed Gein about his interior decorating influences – he’s kinda the source of the problem.
February 15, 2012, 6:11 pmDaublin:
Americentrism.
Many people view all occurrences, everywhere in the world, through the lens of how it fits in with American politics.
February 15, 2012, 7:51 pmMesa Econoguy:
Apologies if re-post (got snagged in the filter), trying out new material:
Asking Kevin Dumb to diagnose economic problems is somewhat like asking Ed Gein about his interior decorating influences.
February 15, 2012, 8:47 pmSam L.:
You call it willful blindness. Others may call it brainless, or having decided to believe someone else and not their lying eyes. They are hanging on to their dreams when reality is knocking on their doors.
As the song said, "I hear you knockin', but you can't come in." Too bad for them that reality is driving a D-9 Caterpiller.
The wailing of terrible wails and the gnashing of terrible teeth is coming soon.
February 15, 2012, 8:55 pmchuck martel:
A government not having enough money to fulfill all the promises it made to buy the votes that put it in power is "austerity". These politicians can't go out of business fast enough. It's important that the man on the Athenian street and Spanish calle and American boulevard realize that this problem is not a defect of the uncontrolled free market but rather the inevitable result of the nation-state having control of money.
February 15, 2012, 9:52 pma_random_guy:
What I like is the recent call by the Obama administration for a global minimum tax. Clearly essential. I mean, otherwise people and companies might vote with their feet, and move to countries with more sensible fiscal policies.
February 16, 2012, 2:27 amCraig Loehle:
Both Greece & Italy have high corruption in the form of people not reporting income. I saw an estimate a few years ago for Italy of 1/3 of economy was underground. So (some) people have more money than they let on, but the gov is under-funded. Second problem, they have taken early retirement to absurd heights (like certain municipalities in USA) where after 30 yrs you can retire at age 50. AND in Greece, most everyone can retire with "disabilities" so their pension goes up. Plus in Greece apparently the gov officials were embezzling, so the people are even more angry because of that. They are somehow angry that banks that loaned them money won't forgive more of the debt. ???
February 16, 2012, 8:35 amTed Rado:
Cuck Martel:
As you point out, the problem is politicians making impossible-to-keep promises. It costs them nothing, as it will not come home to roost until they are out of office. There needs to be some way of making politicians immediately accountable. For example, they lose part of their pension every year that there is a deficit. Or, they are prohibited from running for reelection if the debt increases during their time in office. The present system offers no hope of dealing with the deficit spending problem.
February 16, 2012, 10:14 amGil:
People like Drum "Arithmetic Deniers"
February 16, 2012, 12:02 pmJohn Cunningham:
check out this debt chart, showing Obama's proposed debt plan, compared to Paul Ryan's.
http://blog.american.com/2012/02/this-is-the-debt-chart-obama-and-geithner-should-be-ashamed-of/
Note also that Obama's builds in grossly optimistic economic growth numbers, reality is highly likely to be far worse.
February 16, 2012, 3:59 pmIGotBupkis, Three Time Winner of the Silver Sow Award:
Their goal is nothing less than the destruction of America. This is put forth by certain inimical parties and a hell of a lot of Useful Idiots, like Drum.
February 17, 2012, 3:14 amangsto the clown:
problem: how to rule the world.
February 18, 2012, 1:36 amreaction: get everybody arguing over nothing while you rob them blind.
solution: murder 90 percent of the population, make the rest slaves, achieve immortality.
zionism 101