The Market Wants More Stimulus

[EdwardBaiamonte]

he's knows what he's talking about.

If so you would not be so afraid to present a good example for the whole world to see.

 

[SAT2]

Ed, I asked you pages ago to explain to me what it is, specifically, that you want to see happen. Your answer included the term "etc". Which is not specific. Are you afraid?

 

[cbirch2]

Anyone that thinks the grek's debt problem is simply due to greek over spending needs to go read "This time is different". The point of the paper is actualy to prove the opposite: that this is just the countinuation of a long macroeconomic cycle. It examines economic trends back to about 1800

"Also consonant with the modern theory of crises is the striking correlation between freer capital mobility and the incidence of banking crises, as illustrated in Figure 3. Periods of high international capital mobility have repeatedly produced international banking crises, not only famously as they did in the 1990s, but historically."

Figure 3:

Basically greece and other periphery countries are the victim of increasing capital flowing into their country after the creation of the euro.

What? So failed Progressive economic theory is because of stuff that happened in the 1800's?

Are you fucking serious?

Where in the paper does it say that shit from the 1800's caused this? You've got to be very dumb to think that.

It graphs capital mobility versus government defaults and proves that, historically, governments default after periods of increased capital mobility. Thats the only reason it mentions the 1800's, to prove that this has been true throughout history. When capital flow from one part of the world to another increases dramtically, default inevitably follows when that flow ceases.

Besides, how exactly is this crisis the result of government spending. Greece is the only country that even fits that model, and its still an incorrect analysis

italy and spain, the two countries everyone is really worried about now, were actually decreasing their debt before the crisis. Spain had a surplus before 2008.

The problem is that capital that was once freely flowing from the core to the periphery abruptly stopped in 2008. Notice how the reduction in the current account deficits exactly coincides with the rise in the debt to GDP ratio in spain and italy.


Am i going to fast for you?

 

[cbirch2]

Maybe he doesn't have time to keep tutoring you.

Whether one agrees with him or not, he's knows what he's talking about.

I still have plenty of time to tutor him.

Its interesting. If i were to claim this all without proof, they would ask for proof. I sent them 100+ pages of proof and they just bitch...

Ill quote myself this time:

I dont know how many times i have to explain this, but this isnt the result of over spending. The governments in the north, the ones that are supposedly the examples of fiscal discipline, arguable have more expansive welfare states than southern europe, the part with debt issues.

The model that over spending caused the crisis only really fits greece anyways. Spain, for example: ran a budget surplus before the recession.

In reality: italy and spain were decreasing their debt rather than increasing it before this crisis started.

The Problem is that the creation of the euro allowed investors to treat every euro country the same. That caused massive amounts of capital to flow into the country, you can see this in the form of trade deficits. In 2008, that flow abruptly stopped:

This increased capital had the effect of increasing prices and wages and making the periphery economies less competitive:

This is the problem that needs to be unwound. Its not the problem of over spending, its a trade problem caused by the half-assed structure of the euro. Stronger treaties will fix this, thats what Merkel and Sarkozy are doing now.


The periphery needs to spend less, this is true. But Germany and the other northern countries need to spend more to offset, otherwise youll just see the euro as a whole plunge into a recession. You also need slightly higher inflation overall, or else you have deflation in the periphery. Thats why the ECB said over the weekend that it would allow higher inflation overall so that the periphery didnt deflate.

So in case you cant follow: this is not a spending problem, its a trade problem. Conservatives are just giant propaganda machines....

Creation of the euro leads to capital flowing to the periphery which leads to higher prices and wages which leads to uncompetitiveness which leads to less tax receipts and government deficit. Plus with a large section of your economy built on money flowing in, when that money stops you loss massive tax revenue. Notice how spain goes from surplus to giant deficit in 2008?

 

[CrusaderFrank]

Anyone that thinks the grek's debt problem is simply due to greek over spending needs to go read "This time is different". The point of the paper is actualy to prove the opposite: that this is just the countinuation of a long macroeconomic cycle. It examines economic trends back to about 1800

"Also consonant with the modern theory of crises is the striking correlation between freer capital mobility and the incidence of banking crises, as illustrated in Figure 3. Periods of high international capital mobility have repeatedly produced international banking crises, not only famously as they did in the 1990s, but historically."

Figure 3:

Basically greece and other periphery countries are the victim of increasing capital flowing into their country after the creation of the euro.

What? So failed Progressive economic theory is because of stuff that happened in the 1800's?

Are you fucking serious?

Where in the paper does it say that shit from the 1800's caused this? You've got to be very dumb to think that.

It graphs capital mobility versus government defaults and proves that, historically, governments default after periods of increased capital mobility. Thats the only reason it mentions the 1800's, to prove that this has been true throughout history. When capital flow from one part of the world to another increases dramtically, default inevitably follows when that flow ceases.

Besides, how exactly is this crisis the result of government spending. Greece is the only country that even fits that model, and its still an incorrect analysis

italy and spain, the two countries everyone is really worried about now, were actually decreasing their debt before the crisis. Spain had a surplus before 2008.

The problem is that capital that was once freely flowing from the core to the periphery abruptly stopped in 2008. Notice how the reduction in the current account deficits exactly coincides with the rise in the debt to GDP ratio in spain and italy.


Am i going to fast for you?

Too fast? You're a window licker on the short bus. You're steeped in the Krugmanonics and are genetically unteachable.

Greece, Italy, Spain, the USA all suffer from the same malady: Progressive economics. The faster we let assets and liabilities reprice, let the Free Markets work again, the better off we'll all be.

 

[cbirch2]

What? So failed Progressive economic theory is because of stuff that happened in the 1800's?

Are you fucking serious?

Where in the paper does it say that shit from the 1800's caused this? You've got to be very dumb to think that.

It graphs capital mobility versus government defaults and proves that, historically, governments default after periods of increased capital mobility. Thats the only reason it mentions the 1800's, to prove that this has been true throughout history. When capital flow from one part of the world to another increases dramtically, default inevitably follows when that flow ceases.

Besides, how exactly is this crisis the result of government spending. Greece is the only country that even fits that model, and its still an incorrect analysis

italy and spain, the two countries everyone is really worried about now, were actually decreasing their debt before the crisis. Spain had a surplus before 2008.

The problem is that capital that was once freely flowing from the core to the periphery abruptly stopped in 2008. Notice how the reduction in the current account deficits exactly coincides with the rise in the debt to GDP ratio in spain and italy.


Am i going to fast for you?

Too fast? You're a window licker on the short bus. You're steeped in the Krugmanonics and are genetically unteachable.

Greece, Italy, Spain, the USA all suffer from the same malady: Progressive economics. The faster we let assets and liabilities reprice, let the Free Markets work again, the better off we'll all be.

Well lets ignore the fact that krugman has graduated from yale and mit, and taught at yale, mit, princeton, stanford, london school of economics and berkley, and been given the nobel prize in economics specifically for trade theory; while you havent done shit....

but...

Yes im sure the NY Fed is just steeped in "krugmanonics" as well

http://www.newyorkfed.org/research/current_issues/ci17-5.pdf

"After the creation of the euro area, Greece and other periphery countries had access to financing at much lower interest rates than would otherwise have been possible (Chart 3). Investors knew
that monetary policy for the region as a whole would be set by the European Central Bank (ECB), seen as likely to continue the strong anti-inflation policies of Germany’s central bank. This essentially eliminated the risk that investments in periphery countries’ debt instruments would be eroded by high inflation. Moreover, given the common currency, the possibility of depreciation or devalua- tion in the periphery countries was eliminated as well. The one risk that remained, of course, was credit or default risk: the prospect that the periphery sovereigns could not or would not make good on obligations as they came due—something to which the market assigned little probability.1
Not surprisingly, the fall in interest rates that came with
the periphery countries’ entry into the euro area facilitated the buildup of current account deficits."

Evvvvvvery page is filled with things like that!

Why would the fed put out a report saying exactly what the fuck i just said?

Are you suggesting that current account deficits dont matter? Do you even understand what ive said thus far!?

Are you smarter than the fedreal reserve? So what your claiming is that you actually have the answer to this problem, and that the federal reserve, the ECB, and the european national governments are just overcomplicating things? funny....

 

[CrusaderFrank]

Are you fucking serious?

Where in the paper does it say that shit from the 1800's caused this? You've got to be very dumb to think that.

It graphs capital mobility versus government defaults and proves that, historically, governments default after periods of increased capital mobility. Thats the only reason it mentions the 1800's, to prove that this has been true throughout history. When capital flow from one part of the world to another increases dramtically, default inevitably follows when that flow ceases.

Besides, how exactly is this crisis the result of government spending. Greece is the only country that even fits that model, and its still an incorrect analysis

italy and spain, the two countries everyone is really worried about now, were actually decreasing their debt before the crisis. Spain had a surplus before 2008.

The problem is that capital that was once freely flowing from the core to the periphery abruptly stopped in 2008. Notice how the reduction in the current account deficits exactly coincides with the rise in the debt to GDP ratio in spain and italy.


Am i going to fast for you?

Too fast? You're a window licker on the short bus. You're steeped in the Krugmanonics and are genetically unteachable.

Greece, Italy, Spain, the USA all suffer from the same malady: Progressive economics. The faster we let assets and liabilities reprice, let the Free Markets work again, the better off we'll all be.

Yes im sure the NY Fed is just steeped in "krugmanonics" as well

http://www.newyorkfed.org/research/current_issues/ci17-5.pdf

"After the creation of the euro area, Greece and other periphery countries had access to financing at much lower interest rates than would otherwise have been possible (Chart 3). Investors knew
that monetary policy for the region as a whole would be set by the European Central Bank (ECB), seen as likely to continue the strong anti-inflation policies of Germany’s central bank. This essentially eliminated the risk that investments in periphery countries’ debt instruments would be eroded by high inflation. Moreover, given the common currency, the possibility of depreciation or devalua- tion in the periphery countries was eliminated as well. The one risk that remained, of course, was credit or default risk: the prospect that the periphery sovereigns could not or would not make good on obligations as they came due—something to which the market assigned little probability.1
Not surprisingly, the fall in interest rates that came with
the periphery countries’ entry into the euro area facilitated the buildup of current account deficits."

Evvvvvvery page is filled with things like that?

Why would the fed put out a report saying exactly what the fuck i just said.

Are you suggesting that current account deficits dont matter? Do you even understand what the fuck i said!?

Wow! Every page? Wow!

That's like so awesome!

I love reading stuff that makes no sense in the trillions column! I might have to read that....does Krugman approve?

 

[CrusaderFrank]

I love it when economists focus on symptoms rather than causes!

 

[cbirch2]

Focusing on cutting government spending would be focusing on the symptom rather than the cause you blundering retard.

The cause is the current account deficit, not the government deficit.

Do you understand it yet? Jesus.

I give you a step by step explanation of how it works. I link you to a 100+ page report with historical evidence supporting the view, and then i give you a NY Fed paper that explains it step by step with data, and all you do is talk shit like a god damn idiot.

Do you have anything to say that isnt an ad hominem attack against liberals?

Could you at least tell me how that view is wrong? Can you please explain how exactly your view is superior to the view of the NY Federal Reserve?

Your view is a totally over simplified view of how the world economy works, from the mind of an internet roaming fool. Sorry, but I think the safe bet is with experts from the Federal Reserve.

 

[rdean]

Of course the market wants another damn stimulus?
Can we all say in unison...1...2...3.....DUUUHHH.

2008...market collapses finally under the weight of it's own corruption and miles of fake money.
Fall of 2008....stimulus.
2009...the banks and Wall Street has the best year in the history of Wall Street. Financial institutions gave record bonuses and salary hikes - also - in history...and guess where that money came from???

YOU.

Hell yeah they want another stimulus.

I sense a bit of confusion in your post as to what you think the market actually is.

The truth is that Business owners have been saying they aren't hiring because of a lack of demand. They've been saying it "LOUD AND CLEAR" it's a "lack of demand".

Republicans hear "uncertainty". Which is not what business has been saying.

 

[cbirch2]

And if your answer is correct, and this is all about spending, why exactly has your solution worsened the problem?

Since greece has been forced to pull back government spending its debt to GDP ratio has gotten worse, its interest rates have risen, and its been forced by the EU and the IMF to take more bailouts.

Greece wasnt going to make its first deficit goals, so EU forced austerity measures in return for the bailout. A year later, after following the forced austerity measures your advocating, greece missed the same deficit target!

The first indication that your diagnosis of the problem is wrong is when your solution doesnt work, and in fact makes it worse.

 

[EdwardBaiamonte]

A year later, after following the forced austerity measures your advocating, greece missed the same deficit target!

Of course if your deficit is too large you must spend less. Only in liberal goofy land is reducing what you spend relative to income called, austerity.

Of course only in liberal goofy goofy land is spending more than you have a fomula for prosperity.

 

[SAT2]

What do you call austerity?

 

[EdwardBaiamonte]

The truth is that Business owners have been saying they aren't hiring because of a lack of demand. They've been saying it "LOUD AND CLEAR" it's a "lack of demand".

Republicans hear "uncertainty". Which is not what business has been saying.

Of course uncertainty about, for example, keeping your job will cause you to demand less.

In any case if liberals could stimulate demand for goods and services it would be obvious and we'd never have economic problems again. Liberals believe in magical government they way children believe in Santa Claus.

 

[EdwardBaiamonte]

Sorry, but I think the safe bet is with experts from the Federal Reserve.

absolutely, the Fed that presided over and caused the Great Depression and current Great Recession!!


“All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.” Bernanke

 

[Mishima]

Liberals are short-sighted; they go by the IMAGINED results of their spending programs, not the realities.

Most of the reason is that Liberals go by feelings, and it "sounds" good to be spending money on something to "help" others. It takes mental EFFORT to think through the all of the effects of their spending on recepients (their initiative, dependency, narcissism) and the overall citizenry (less income, fewer purchases, less money available for lending, discouraging business start-ups, etc.).

Liberals will always appeal to emotions and relate to an imaginary world where Santa Claus can provide. This is easy to discern by their direct statements or implications that they actually believe - like children at Christmas - that presents are "free."

 

[Brutus]

Liberals are short-sighted; they go by the IMAGINED results of their spending programs, not the realities.

Most of the reason is that Liberals go by feelings, and it "sounds" good to be spending money on something to "help" others. It takes mental EFFORT to think through the all of the effects of their spending on recepients (their initiative, dependency, narcissism) and the overall citizenry (less income, fewer purchases, less money available for lending, discouraging business start-ups, etc.).

Liberals will always appeal to emotions and relate to an imaginary world where Santa Claus can provide. This is easy to discern by their direct statements or implications that they actually believe - like children at Christmas - that presents are "free."

I always wonder if liberals rely on feelings because they lack intelligence or because of a psychological defect. What do you think .

 

[editec]

The AUTOMATIC BUDGET CUTS are going to cause a disasterous decline in the economic activity.

Those cuts will cause more unemployment, and the recession will deepen.

50% of the automatics cuts will come from the Dept of Defence assuming the cuts happen as they were intended to happen.

That is a terrible idea, economically speaking.

 

[cbirch2]

Lol i post graphs and conservatards just ignore them....typical

Will someone at least read the federal reserve report?

Jesus this is a bunch of idiots.

 

[cbirch2]

A year later, after following the forced austerity measures your advocating, greece missed the same deficit target!

Of course if your deficit is too large you must spend less. Only in liberal goofy land is reducing what you spend relative to income called, austerity.

Of course only in liberal goofy goofy land is spending more than you have a fomula for prosperity.

If the answer was for greece to simply spend less, why has its debt/GDP gotten worse??????

If you cut spending in the middle of a recession you hurt the economy and lower tax revenue and therefore your ability to pay off debt is worse than originally. I know conservatives dont like graphs but....

Is that simple enough for you!? The greek position has gotten worse as they actively attempt to deflate their economy.

After being forced to cut spending by technocrats in the EU, the actual private sector markets have consitently asked for higher yields:

Why are you siding with technocrats in a international government rather than private sector bond markets??????

Of course the solution is less greek spending. But the problem was trade balances between the north and south. The only way to unwind that trade balance is for the north to invest more and the south to save more.

I dont know how i can make this more clear, this isnt a problem of profligate countries in the south. its obvious now that your ideological convictions will prevent you from accepting any amount of proof, even when its coming from the largest central bank in the world.