BF2S Forums The Eurocrisis

Dilbert_X wrote:

And the increase in the deficit under Republican Presidents?
What economic theory were they using?

Fiscal deficits don't disprove Keynesian theory any more than they disprove free market theory.
Not that I'm saying its right just that your arguments don't fly.

Did we have these financial crises when we just had moderate levels of deficit spending under those other administrations, and weren't implementing Keynesian policies?

No. We didn't. They have exacerbated the problem.

Dilbert_X wrote:

FEOS wrote:

Dilbert_X wrote:

And the increase in the deficit under Republican Presidents?
What economic theory were they using?

Fiscal deficits don't disprove Keynesian theory any more than they disprove free market theory.
Not that I'm saying its right just that your arguments don't fly.

Did we have these financial crises when we just had moderate levels of deficit spending under those other administrations, and weren't implementing Keynesian policies?

No. We didn't. They have exacerbated the problem.

Erm, yes you did, the financial collapse happened under Bush IIRC, and he was the king of cutting taxes and increasing spending was he not?
Right up until the actual collapse when he was as in favour of the stimulus spending as anyone else.

Decades of spending more than the tax revenue have led to this, not the short term response - which hasn't helped.

The housing bubble--which we've recovered from--started under Bush, yes. And had nothing to do with deficit levels.

The recent downgrade, which put the markets into a tailspin, has everything to do with our massive debt, which was contributed to more by the Obama administration and the dem-controlled Congress than any other in US history. That portion of the debt is the result of Keynesian buffoonery, just as the debt crisis in Europe is.

Dilbert_X wrote:

The US has recovered from the housing bubble? Are you sure? How many people are still bankrupt, and how much toxic debt is the govt now holding?

And the rest of the debt? Where did that come from?

Didn't Bush also saddle Obama with a huge deficit, besides the housing/banking collapse?
Handing over a huge deficit, plus a financial meltdown requiring increasing the deficit to pay the bail-out and some stimulus can hardly be laid at Obama's door.

Plus the two expensive and unnecessary wars, obviously.

Recession ended. Next?

The rest of the debt came from all the other administrations, combined. And Obama's about to eclipse them.

The deficit Bush "saddled" Obama with was one quarter of what Obama put forward in his first budget. That, and Bush put in place a program by which the housing crisis could get resolved (at least on the securities side), and the government get paid back--with interest. Which has happened.

See above. The "financial crisis" was resolved and the country wasn't left with a huge debt because of it. All of that bailout money was paid back, with interest...unlike the majority of Obama's "stimulus" plans, which have simply evaporated billions of dollars.

Compared to the amounts wasted in the past two and a half years, that's pocket change. And only one of those wars is arguably unnecessary (Iraq). We can't say Afghanistan was never worth fighting simply because some aren't happy with being there now.

Macbeth wrote:

At least most of one page was about the EU. Now it's Dilbert vs America part 108.

Excellent point. My intention was not to feed a derail, but to point out how Keynesian policies have hosed both the US and now Europe, wondered if anyone would recognize it and stick a stake in the heart of that nonsense economic cult.

I did hear on the radio last night that Europe lags 6-8 months behind the US, economically, so what they are dealing with now is similar to what we were dealing with last year, and they should come out of it in the next several months. Not sure how accurate that is, as it was just a sound bite on a short trip in the car. Would be interested if anyone has heard anything similar, and why that would be. They seemed to be following the adage of "When America sneezes, Europe catches a cold." Again, not sure I buy it on face value...would like to see some data to explain that linkage a bit.

Macbeth wrote:

At least most of one page was about the EU. Now it's Dilbert vs America part 108.

So the ramp up in the deficit over eight years under Bush was because he was following Keynesian theory? Because we know he's a big fan of Keynes.
Or was he simply mismanaging the finances?

The causes of the Eurocrisis are simple mismanagement. The mismanagement of the resulting crisis may well draw from Keynes but thats not the same thing at all.

FEOS wrote:

That sudden increase is what caused the problem, not the previous buildups, as they were manageable.

They weren't really manageable, since they were deficits piled on deficits - the total debt has been steadily added to.
Now the total debt is unmanageable.

Besides handing on an unmanageable debt there were the housing collapse and financial meltdown to consider - which required some spending.

FEOS wrote:

The debt was completely manageable. By adding on more than all his predecessors combined.

It wasn't manageable, and it wasn't more than all his predecessors combined at all.

If you look at the chart you'll see he increased the debt by about the same as Bush I and Bush II combined. They didn't take on complete financial meltdowns, nor did they take on the compound interest payments on the debt they created - Obama took on both, plus two ongoing wars, sick baby-boomers demanding free treatment and drugs etc etc.

I can see you've been totally brainwashed by Fox News, maybe try watching another channel?

Last edited by Dilbert_X (2011-08-22 02:12:05)

The "complete financial meltdown" was fixed by TARP

Apart from the housing collapse and 10% unemployment, yes, great fix.

FEOS wrote:

Unemployment was 7.7% when Bush left office.

And rising rapidly/

Housing collapse was caused by shitty decade-plus old legislation, not the President.

Which he had 8 years to fix. Oh well.

You going to talk about Europe at some point?

If you're going to continue with the false assumption that the Eurocrisis was caused by Keynesian spending, and not multi-decade fiscal slackness, then no.

Jenspm wrote:

FEOS wrote:

Will people now realize that Keynesian economics doesn't work?

Keynesian economics has two sides though, doesn't it. Countries like Greece etc didn't apply the idea of "saving in good times", but said "Oh look, loads of money, time to give my citizens x, y and z" followed by "Oh, look, out of money, better borrow something to spend on it to fix it", followed by "Oh shit, can't pay it back, I guess we'll have to print some more" and then the realization that "ugh, I'm a part of the Euro aren't I, shit".

Keynesian economics would work if you stick to it in good times as well, I think - save up so you can afford expansionary policy. Or if you find a shit-ton of oil. Either way.

Also, pretty sure you can regard GWB's $170 billion stimulus package in '07 as Keynesian.

Even on a business level keynsian economics is debunked. ex business' don't lower supply to meet demand in order to keep prices up, they just change their prices to meet demand.

Jenspm wrote:

FEOS wrote:

Will people now realize that Keynesian economics doesn't work?

Keynesian economics has two sides though, doesn't it. Countries like Greece etc didn't apply the idea of "saving in good times", but said "Oh look, loads of money, time to give my citizens x, y and z" followed by "Oh, look, out of money, better borrow something to spend on it to fix it", followed by "Oh shit, can't pay it back, I guess we'll have to print some more" and then the realization that "ugh, I'm a part of the Euro aren't I, shit".

Keynesian economics would work if you stick to it in good times as well, I think - save up so you can afford expansionary policy. Or if you find a shit-ton of oil. Either way.

Also, pretty sure you can regard GWB's $170 billion stimulus package in '07 as Keynesian.

Which he signed pretty much under duress and only after it was restructured to ensure payback.

FEOS wrote:

So because you disagree, you're just going to go OT and bash Bush instead? Makes perfect sense.

No, just pointing out your arguments apply more to the US collapse than they do to the Eurocrisis - which has absolutely nothing to do wth Keynesian theory.