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Is Greece going to set off the long feared next wave of the Great Recession?

 
 
georgeob1
 
  1  
Reply Wed 31 Aug, 2011 07:37 am
@cicerone imposter,
cicerone imposter wrote:

From USA Today.
Quote:


Economists agree: Stimulus created nearly 3 million jobs
Updated 8/30/2010 5:12 PM | Comments 3,019 | Recommend 49 E-mail | Save | Print |

Enlarge By Kevork Djansezian, Getty Images



By David J. Lynch, USA TODAY
Amid mounting signs that the economic recovery is faltering, one potential remedy seems out of the question: a booster shot of government spending.
The White House says the multiyear $814 billion stimulus program passed by Congress in 2009 boosted employment by 2.5 million to 3.6 million jobs and raised the nation's annual economic output by almost $400 billion. A recent study by two prominent economists generally agrees, crediting the pump-priming with averting "what could have been called Great Depression 2.0.



This is but one of a series of posts you have made supporting the idea that the Obama stimulus package had beneficial economic effects. It is certainly true that there were some good economic effects from the extended unemployment benefits, grants to states and other measures listed. It is also true that no significant new infrastructure was created and very few new private sector jobs resulted from the giveaways with borrowed money. Quoted releases from White House political advocates; or Democrat Committee Chairmen in the Senate and the unnamed economists who are in their employ, etc. are not cconvincing or reliable proofs that the stimulus package did all the things our feckless President claimed they would do, or that the net total economic effect, including that of the added public debt associated with the stuimulus spending, was a significant stimulus to our economy.

We were discussing whether such Keynsean stimulus is an effective antidote to a cyclic recession in the case of a ccountry with already very high government debt. I used Greece as an example, noting that no serious economist and no one in the governing councils of Europe is advocating stimulus spending as an antiodote to the exonomic and financial crisis facing the Greeks - and indirectly themselves - as a result of Greece's exploding public debt now over 140% of GDP. . I also argued that the same might be true for our country, now with a combined Federal and local government debt about equal to our GDP.

You have evaded that issue, claiming that the extraordinary public debt associated with WWII is an excellent "proof" that debt levels don't matter and that such stimulus spending doers indeed work as advertised.

However you failed to address either the Greek question or the counterexamples I offered - namely the high levels of government spending and debt accumulated during the Vietnam war - which led directly to our abandonment of the Breton Woods agreement and the gold standard ffor the dollar and a decade of high inflation and low economic growth. You also failed to address the unique aspects of the WWII situation that I rather fully described - namely that after the war we had the world's only intact mass industrial & agricultural production capacity and could easily sell all we could produce, almost without competition, enabling us to accumulate enormous liquidity and wealth, rapidly paying doen the debt and growing our economy. I could also have added the forvced private savings that occurred during WWII - bond drives and rationing - which financed the explosion of pent up pricate sector demand and spending that occurred immmediately after the war.

In short your argument that the experience of WWII in demonstrating that high levels of government debt don't reduce the net effectiveness of Keynesian stimulus during a cyclic recession is demonstrably without merit and contradicted by our experience in the 1970s, today and that of Greece in the current crisis. You failed to acknowledge these points and instead shifted to specious arguments that the Obama stimulus did some good - stuff mostly coming from unnamed sources or those in the Administration. You also failed to address the questions that, if it did so much good, why is unemployment still so high and why has the recovery of the ec0nomy stalled?

In short, you have merely ignored the counterarguments; repeated your original propositions and thrown a lot of dust in the air concerning alleged "benefits" that can't be proved because they are all measured against imaginary hypotheticals, and which mostly come from biased sources, and all of which ignore the stunningly obvious fact that our economy is still seriously stalled and precariously close to another contraction.

You can endlessly pollute this site with quotes and cites available in the internet in your attempts to evade the questions put to you. However, that does not constitute either logical argument or proof. These things require attention to counterarguments, thought and logical synthesis. You have done none of that.
Cycloptichorn
 
  1  
Reply Wed 31 Aug, 2011 07:43 am
@georgeob1,
georgeob1 wrote:

cicerone imposter wrote:

From USA Today.
Quote:


Economists agree: Stimulus created nearly 3 million jobs
Updated 8/30/2010 5:12 PM | Comments 3,019 | Recommend 49 E-mail | Save | Print |

Enlarge By Kevork Djansezian, Getty Images



By David J. Lynch, USA TODAY
Amid mounting signs that the economic recovery is faltering, one potential remedy seems out of the question: a booster shot of government spending.
The White House says the multiyear $814 billion stimulus program passed by Congress in 2009 boosted employment by 2.5 million to 3.6 million jobs and raised the nation's annual economic output by almost $400 billion. A recent study by two prominent economists generally agrees, crediting the pump-priming with averting "what could have been called Great Depression 2.0.



This is but one of a series of posts you have made supporting the idea that the Obama stimulus package had beneficial economic effects. It is certainly true that there were some good economic effects from the extended unemployment benefits, grants to states and other measures listed. It is also true that no significant new infrastructure was created and very few new private sector jobs resulted from the giveaways with borrowed money. Quoted releases from White House political advocates; or Democrat Committee Chairmen in the Senate and the unnamed economists who are in their employ, etc. are not cconvincing or reliable proofs that the stimulus package did all the things our feckless President claimed they would do, or that the net total economic effect, including that of the added public debt associated with the stuimulus spending, was a significant stimulus to our economy.


Does the Congressional Budget Office count as a reliable source to you? Or are they just another group of partisan hacks?

http://www.cbpp.org/cms/index.cfm?fa=view&id=3567&emailView=1

Quote:
“A new Congressional Budget Office (CBO) report estimates that the American Recovery and Reinvestment Act (ARRA) increased the number of people employed by between 1.0 million and 2.9 million jobs as of June of this year. In other words, between 1.0 million and 2.9 million people employed in June owed their jobs to the Recovery Act.”


Cycloptichorn
georgeob1
 
  1  
Reply Wed 31 Aug, 2011 07:52 am
@Cycloptichorn,
Instead of merely sniping about particulars, I would be very interested to read a thoughtful argument from you that addresses the basic questions we have been discussing and the arguments I have made.

The good effects of government spending unfold fairly quickly. The bad effects of the borrowing required to support it unfold over time. Cited short term benefits measured against hypotheticcal alternatives, in the midst of continuing high unemployment and stalled economic growth, don't constitute a convincing proof.
0 Replies
 
cicerone imposter
 
  1  
Reply Wed 31 Aug, 2011 09:22 am
@georgeob1,
I did answer the greek question; there's no comparison between the two countries. The Greek economy as it stands today is in no position to pay back the loans, but the US has never failed to pay on its bonds.
High Seas
 
  1  
Reply Wed 31 Aug, 2011 09:45 am
@Walter Hinteler,
Thank you for that link - is it correct to say there's no firm date for the Constitutional Court's decision? "Anytime in the next 3 months" starts running when, early July when oral arguments were presented? Do you have any sense for which way the case will go? Btw, since you got so annoyed with me for not capitalizing the Constitutional Court, I now expect you to get on the FAZ editor's case, tell him foreign readers are horrified at the typos in his publication Smile
Quote:
Voßkuhle hat 2008 die damailge Pendlerpauschale für verfassungswidrig erklärt

(underlining added)
http://www.faz.net/artikel/C32552/bundesverfassungsgericht-profis-auf-der-richterbank-30456565.html

spendius
 
  2  
Reply Wed 31 Aug, 2011 09:55 am
@cicerone imposter,
Quote:
US has never failed to pay on its bonds.


And Lehman Bros. had never failed to honour its pledges. Until it did that is.
0 Replies
 
Walter Hinteler
 
  1  
Reply Wed 31 Aug, 2011 10:03 am
@High Seas,
The decission will be published on the 7th of September.

I've no sense what they will decide.

I don't mind about typos in the FAZ Wink
georgeob1
 
  1  
Reply Wed 31 Aug, 2011 11:12 am
@cicerone imposter,
cicerone imposter wrote:

I did answer the greek question; there's no comparison between the two countries. The Greek economy as it stands today is in no position to pay back the loans, but the US has never failed to pay on its bonds.
Saying we have never defaulted before dosen't insure that it won't happen in the future. There is no doubt that the dollar has already lost a great deal of its former stature & reliability, and that the security of our debt is no longer beyond question.

The issue in Greece also exists to varying degrees in Ireland, Spain, Italy and other EU nations. Banks in major EU countries are themselves at risk for the debt of these countries. All of this strongle influences the current instability of international financial markets, affecting our bond issues as well. In addition, all of these factors are at work here as well.

In point of fact you have not addressed "the Greek question" at all, Your transparent attempt to pretend that you have and dismiss the issue entirely simply doesn't cut it.
Cycloptichorn
 
  0  
Reply Wed 31 Aug, 2011 11:18 am
@georgeob1,
Quote:

Saying we have never defaulted before dosen't insure that it won't happen in the future.


Only if we force that to happen through legislative BS like the Republicans tried to pull. Otherwise, we will never default on our bonds, ever - as we can simply print however much money we need to pay them. Greece cannot. So, comparisons of the situation of the two countries which posit any sort of equivalence are fundamentally flawed.

Cycloptichorn
0 Replies
 
cicerone imposter
 
  1  
Reply Wed 31 Aug, 2011 12:10 pm
@georgeob1,
You wrote,
Quote:
Saying we have never defaulted before dosen't insure that it won't happen in the future. There is no doubt that the dollar has already lost a great deal of its former stature & reliability, and that the security of our debt is no longer beyond question.


When you talk about the future, there is no guarantee on anything - including our economy. So, what's your point? The US bond market is the most desired in the world today; that speaks volume about the security of US bonds vs all others.

As for your comparison of Greece to the other Euro countries, it only
strengthens the argument for US bonds.

I'm not sure what you are looking for concerning "the Greek question." By all indications, there's no comparison between Greece and the US - by any economic measure. You need to explain what you are looking for?
georgeob1
 
  1  
Reply Wed 31 Aug, 2011 02:10 pm
@cicerone imposter,
cicerone imposter wrote:

I'm not sure what you are looking for concerning "the Greek question." By all indications, there's no comparison between Greece and the US - by any economic measure. You need to explain what you are looking for?


One more time.....

If a "Keynesian stimulus" involving large-scale government deficit spending to correct or mitigate a recession is inappropriate for a nation like Greece with government debt at about 140% of GDP, at what lower level of government debt does it become appropriate? With state & local government debt included, ours is at about 100% of GDP now and rising very fast. Is a three trillion dollar stimulus like that recommended by the weasel Krugman really an available, effective remedy for us as you, Thomas, and Cyclo have repeatedly claimed?

Remember that sovereigns can almost always add debt to meet their needs. The potential bond buyers will set their discounts and interest rates in response to the perceived risk. The issue is the net economic effect that results from how the money is spent and the subsequent economic consequences of repaying the loans.

The only unique elements about the Greek crisis are the fact of the common European currency, and the complexities resulting from the desire of the Greeks for European bailout money and that of France and Germany to protect their banks. The fact is the Greeks could find buyers for new bonds on the international market, though they might not like the interest rates involved. That and the economic consequences of retyiring the debt are what makes such borrowing & stimulus infeasible.

Greece is at 140%; we're at 100%. At what point does a stimulus with borrowed money produce a net beneficial effect (assuming that unlike our earlier effort the money is wisely spent)?
cicerone imposter
 
  1  
Reply Wed 31 Aug, 2011 02:31 pm
@georgeob1,
As in WWII, we spent a great deal more than revenue, and was able to create the strongest economy in the world. The management of our economy can't be compared in any way to Greece, because - as I've stated often enough - that Greece is not capable to pay on their loans. Our economy is dynamic, and the demand for our goods and services are world-wide. To provide our economy with some impetus, our government needs to spend money on our infrastructure and education - without which our competitiveness will depreciate. Along with this spending would create more demand for goods and services that provides our economy with the increase in jobs. Without government spending, we can only watch as our GDP continues to shrink.

The key in government spending is on our infrastructure and education; both are required for our economy to remain competitive and grow.
georgeob1
 
  1  
Reply Wed 31 Aug, 2011 03:55 pm
@cicerone imposter,
Oh, I see. It won't work for the Greeks because ... well they're Greeks and they won't be able to repay their loans. It will, however, work for us because our econom is so dynamic, or something like that. Funny, it doesn't appear so dymanic right now.

Bottom like here is you are either unable or unwilling to provide a coherent answer to a very straightforward and relevant question.
cicerone imposter
 
  1  
Reply Wed 31 Aug, 2011 05:51 pm
@georgeob1,
Yes, the Greeks are unable to pay back their loans. With their exports at $23 billion vs the US at $1.28 trillion, Greece's debt vs exports makes it impossible for them to repay their loan. When I say the US economy is dynamic, I mean that our economy's competitive advantage far exceeds that of Greece; no contest. It helps our country in this recession as our currency continues to devalue against our traders. Greece's Euro is barely holding up from the high interest loans they are holding. It also means that the US exports the latest in high tech, agriculture, airplanes, and other machinery to almost all countries around the world - which are mostly high value trade products.

Greece's exports are limited to food and beverage, textiles, chemicals, and petroleum products. No contest vs the US.
georgeob1
 
  1  
Reply Wed 31 Aug, 2011 07:23 pm
@cicerone imposter,
I agree about our greater potential for export income, compared to Greece. Unfortunately we import far more than we export, so our advantage in this area is decidedly limited. Moreover our current Administration has done all it could to limit domestic production of petroleum (our major import), thereby seriously worsening our balance of trade (and payments).

The debasement of our currency has indeed made our exports more competitive on world markets, just as you say. However, the corresponding rise in the prices of the commodities we import (also including petroleum) has also risen, thereby wiping out any net gain (net exporting nations like China and Germany benefit from depreciating their currencies, but we don't). This, of course, is an easily correctable problem, simply by changing our energy policy regarding domestic petroleum production and the preferential use of cost effective sources of emissions free energy such as nuclear. However, to do this I believe we will first have to get rid of the idiots who currently occupy the White House.

Beyond that we do have a creative and resilient economy, also just as you claim. This spirit of entrepreneurisnm, innovation and competition has done great things for us in the past. However here too the Administration is doing all it can to kill the goose that lays the golden eggs.

However, I do appreciate the fact that you are finally addressing the issues.
cicerone imposter
 
  1  
Reply Wed 31 Aug, 2011 07:51 pm
@georgeob1,
Domestic energy policy has remained consistent over several administrations and congress; you can't blame Obama for this situation. As for our importing more than our exports, that's been an on-going problem for many decades. Our balance of trade has been increasing since the 80's and 90's, and most dramatically under GW Bush.

I blame the company boards for their transfer of profits gained through productivity increases by companies to the CEO's and officers while ignoring the middle class and keeping their wages in limbo. This dynamic has caused households to cut back on savings to consume ever increasing inflated costs for goods and services for several decades.

Studies have shown that the middle class have barely kept up with inflation for some thirty years, while the CEO's and officers gained 400X the average worker wages and benefits.

This shift in wealth to the top 10% of Americans is not healthy for our economy.

Greed sees no equality or in other's struggles.

A healthy middle class would have sustained our economy for many more generations.
georgeob1
 
  1  
Reply Wed 31 Aug, 2011 08:20 pm
@cicerone imposter,
cicerone imposter wrote:

Domestic energy policy has remained consistent over several administrations and congress; you can't blame Obama for this situation. As for our importing more than our exports, that's been an on-going problem for many decades. Our balance of trade has been increasing since the 80's and 90's, and most dramatically under GW Bush.
You are correct that we have had a negative balance of trade for many decades. It was a manageable ($100) Billion up through 1997 (Bill Clinton), when it started a steep descent, reaching ($860Billion) by 2006. The big drivers were our petroleum imports which started growing in the 1970s and the more recent export of our light and heavy manufacturing industries to China, which took off in the 1990s.
http://en.wikipedia.org/wiki/Balance_of_trade

You are dead wrong about energy policy. The Obama EPA has frozen investment in Coal fired power plants and threatens new rules that will very quickly shutdown the source of 52% of our electrical power. Previous administrations opened up petroleum exploration in Alaska and the Gulf which significantly reduced our imports. Obama has halted both in actions that will send our imports out of the ballpark.

cicerone imposter wrote:

I blame the company boards for their transfer of profits gained through productivity increases by companies to the CEO's and officers while ignoring the middle class and keeping their wages in limbo. This dynamic has caused households to cut back on savings to consume ever increasing inflated costs for goods and services for several decades.

Studies have shown that the middle class have barely kept up with inflation for some thirty years, while the CEO's and officers gained 400X the average worker wages and benefits.
Your numbers here are off the mark by a wide margin. The real drivers here are the loss of our industrial base and the high paying skilled labor wages that went with it. This was a casualty of the greed of organized labor as well as that of executives. Recall that the last strike by the UAW against GM was to prevent the modernization and automation of two assembly plants in Flint Michigan - something GM proposed to do to enable them to compete with similat Toyots plants in Kentucky. The proposed upgrades would have cost GM several Billions but by raising productivity would have fairly quickly paid for themselves. Plant employment would be reduced by about 25% but the remaining jobs would be secure. The UAW went on strike and aon the issue. Two years later GM closed the plants forever because they couldn't compete.

cicerone imposter
 
  1  
Reply Sun 4 Sep, 2011 07:58 pm
@georgeob1,
And then there is this.

Quote:


EPA Proposes First National Standard for Mercury Pollution from Power Plants / Mercury and air toxics standards represent one of strongest health protections from air pollution since passage of Clean Air Act

Release date: 03/16/2011

Contact Information: Enesta Jones, [email protected], 202-564-7873, 202-564-4355

WASHINGTON – In response to a court deadline, today the U.S. Environmental Protection Agency (EPA) proposed the first-ever national standards for mercury, arsenic and other toxic air pollution from power plants. The new power plant mercury and air toxics standards – which eliminate 20 years of uncertainty across industry – would require many power plants to install widely available, proven pollution control technologies to cut harmful emissions of mercury, arsenic, chromium, nickel and acid gases, while preventing as many as 17,000 premature deaths and 11,000 heart attacks a year. The new proposed standards would also provide particular health benefits for children, preventing 120,000 cases of childhood asthma symptoms and about 11,000 fewer cases of acute bronchitis among children each year. The proposed standards would also avert more than 12,000 emergency room visits and hospital admissions and 850,000 fewer days of work missed due to illness.

This rule will provide employment for thousands, by supporting 31,000 short-term construction jobs and 9,000 long-term utility jobs.

“Today’s announcement is 20 years in the making, and is a significant milestone in the Clean Air Act’s already unprecedented record of ensuring our children are protected from the damaging effects of toxic air pollution,” said EPA Administrator Lisa Jackson. “With the help of existing technologies, we will be able to take reasonable steps that will provide dramatic protections to our children and loved ones, preventing premature deaths, heart attacks, and asthma attacks.”

Toxic air pollutants like mercury from coal- and oil-fired power plants have been shown to cause neurological damage, including lower IQ, in children exposed in the womb and during early development. The standards also address emissions of other toxic metals linked with cancer such as arsenic, chromium and nickel. Mercury and many of the other toxic pollutants also damage the environment and pollute our nation’s lakes, streams, and fish. In addition, cutting these toxic pollutants also reduces fine particle pollution, which causes premature death, heart disease, workdays lost to illness and asthma.

"The American Lung Association applauds the release of this sensible public health measure. When it becomes final, the cleanup rule that the EPA is putting forward today will save lives, protect the health of millions of Americans and finally bring about an action that is 20 years overdue. This must happen,” said Charles D. Connor, president and CEO of the American Lung Association.

Power plants are the largest remaining source of several toxic air pollutants – responsible for half of mercury and more than half of acid gas emissions in the United States. In the power sector alone, coal-fired power plants are responsible for 99 percent of mercury emissions. Currently, more than half of all coal-fired power plants already deploy the widely available pollution control technologies that allow them to meet these important standards. Once final, these standards will ensure the remaining coal-fired plants, roughly 44 percent, take similar steps to decrease dangerous pollutants.

The updated standards will provide a first-ever level playing field for all power plants across the country, ensure that they play by the same rules, and provide more certainty to business. The proposed rule provides up to 4 years for facilities to meet the standards and, once fully implemented, will prevent 91 percent of mercury in coal from being released into the air.

More than 20 years ago, the 1990 Clean Air Act Amendments mandated that EPA require control of toxic air pollutants including mercury. Since then, EPA has taken action to reduce mercury emissions from many high-emitting sources; however, there is still no national standard for mercury emissions from power plants. Today’s announcement is long awaited, coming 11 years after EPA announced it would set such limits for power plants, and following a February 2008 court decision that struck down the previous administration's mercury rule. In October 2009, EPA entered into a consent decree that required a proposal to be signed by March 16, 2011, and a final rule to be completed by November 2011.

The proposed mercury and air toxics standards are in keeping with President Obama’s executive order on regulatory reform. They are based on the latest data and provide industry significant flexibility in implementation through a phased-in approach and use of already existing technologies.

The proposed standards also ensure that public health and economic benefits far outweigh costs of implementation. EPA estimates that for every dollar spent to reduce pollution from power plants, the American public and American businesses will see up to $13 in health and economic benefits. The total health and economic benefits of this standard are estimated to be as much as $140 billion annually.

Also in keeping with the president’s executive order, the proposed standard puts a premium on important input and feedback from stakeholders to inform any final standard. The public comment period, which will last 60 days after appearing in the Federal Register, will allow stakeholders including the public, industry and public health communities, to provide important input and feedback, ensuring that any final standard maximizes public health benefits while minimizing costs.

As part of the public comment process, EPA will also hold public hearings on this proposed rule. Additional details on these events will be announced at a future date.

More information: http://www.epa.gov/airquality/powerplanttoxics/
0 Replies
 
cicerone imposter
 
  1  
Reply Sun 4 Sep, 2011 08:04 pm
@georgeob1,
You wrote,
Quote:
Your numbers here are off the mark by a wide margin.


What numbers?

Here's a study by UCSC.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
0 Replies
 
High Seas
 
  1  
Reply Mon 5 Sep, 2011 09:26 am
@Walter Hinteler,
Walter Hinteler wrote:

The decission will be published on the 7th of September.

I've no sense what they will decide.

I don't mind about typos in the FAZ Wink

Does your former chancellor from Hamburg have "some sense" about that court (sorry Court!) decision? It's alarming to me that he and assorted other dirigistes (to put it mildly) have scheduled a press conference on the same date - and believe me I never forgot how much he opposed German unification on grounds it might bring down the welfare state! Chancellor Merkel's crushing electoral defeat in her own home state yesterday took place after this was written but otherwise it's a good summary: http://www.economist.com/node/21528283
 

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