@Cycloptichorn,
Cycloptichorn wrote:
georgeob1 wrote:
You are dead wrong. Check your facts.
In all of these countries, government spending - which was already high compared to our US levels - grew to accomodate the global financial bubble of the 1999-2008 era. This bubble was fueled primarily by real estate and speculative real-estate products in exactly the same fashion as ours was. In fact, many of the same banks were involved in owning these MBSecurities and CDSwaps both in America and abroad. This speculation led to a giant boom in the construction and housing industry.
When the market crashed, these governments were suddenly screwed - they had grown to rely too heavily on a source of income which was primarily fueled through speculation. They couldn't even come close to meeting their obligations at that point. In fact, it's exactly the same as what happened to us here in CA.
It is true that corruption in some countries, notably Greece and Ireland, exacerbated this problem to a great degree; but to say that speculation wasn't the cause of the crash is a total joke. You and other Conservatives have been attempting to blame the problems there on the structure of their society and their spending models. There's little evidence that those were the cause, though. Spain's economy didn't crash because of their spending levels, it crashed because their tax base evaporated...
Cycloptichorn
The common denominator in all the European problems (except Ireland, Latvia and Iceland) was excessive government spending relative to the size of the economy; public employee unions and public service beneficiaries unwilling to accept any loss of pay or benefits; and generally high levels of government debt (Spain is an exception here). The world wide liquidity crisis forced these issues to a head, but this would eventually have occurred even without it. Greece was merely the extreme case of an all-too-common situation, which even affects the UK , France and Italy, though to a lesser degree. Government debt was the problem. The liquidity crisis was merely the spark.
To say that Spain's economy didn't crash because of spending levels but rather "because their tax base evaporated" is nonsensical and self referential. It's like saying their economy collapsed because no one was making any money, or, in other words, because their economy collapsed. The fact was the government was itself fuelling the construction boom through extensive public works and by directing excess capital to mortgage and building loans much as we did here.
Speculators make their money by betting on the economic mistakes of fools. It takes a fool and a series of mistakes to feed a speculator.
