^ By facts, you mean from sources like Bloomberg and huffingtonpost that earlier this year claimed Cali's debt is worse than Kazakhstan's. Linkaroo Anyway, pls forgive me - forget I said anything about Cal or NY, lets just stick with the latest bankrupt, Ireland, and wait until Cal again must issue IOUs instead of cash or however it deals with its piper when he presents his next bill. Ireland is plenty to pay attention to - let's not let this derail its misery as it refuses to become miserly.
And it's also been shown that it's wrong. The interference from central banks and governments in the last 100-120 years to control growth and busts has created booms that get too large and too inflationary and busts that are deep and long in response. Growth and busts are normal. Growth happens and then you get a bust which is usually sharp but thankfully is short. The goal of central banks and the Fed is to get rid of the busts and have nothing but growth but as we have seen that is not only not possible but them trying it just makes things worse. In fact the Fed was created to try and eliminate the busts. And what have we got in return? Two Depressions (1920 before the boom and the Great Depression), multiple deep and long recessions, and a possible third depression around the corner (Our current events 2008-2011).
Well Rick is phrasing things wrong, as if lowering spending caused a higher deficit. The increase in deficit is likely a result of decreased tax receipts due to Ireland going from ~4% unemployment in 2008 to ~14% in 2010. Since Ireland is part of the European Union its ability to borrow for deficit spending for recovery is limited by its participation in the European Central Banking System. Put simply, Ireland was the very model of a modern capitalist country, ranking 3rd in economic freedom, but they had a property bubble and it fucked up their economy. Since any form of policy change or economic intervention has a lag to it, any changes to taxation or spending are too little too late.
The hard reality is a whole lot of Irish people are going to have to leave Ireland to find jobs for a few years. That's going to mean fewer consumers spending less but there is no way to avoid it at this point.
^ To PGT - Mostly non sustainable public sector jobs that could be done more economically by private sector contractors!
Most people employed by the government are not directly employed by the government but are contractors who sell things to the government. Goverments purchase everything from desks to computers to nuclear missiles to dams to roads. Guess what? Some company makes those and sells them to the government.
Great story and all, except we had several strong recessions in the 1700's and 1800's (they were called panics at the time) before the Federal Reserve was even created. Panics: 1819, 1837, 1857, 1873, 1884, 1893, 1896, 1901, 1907. Causes: Dechartering of National Banks, Gold Shortages, Changes in how the government purchased land, stock market bubbles, railroad overexpansion. I'm not a huge fan of the Federal Reserve because they lack oversight, but to state that they're the cause of the depressions of the 1900's is a bit much. If we look at the past we see whenever there's a major change to monetary standards, changes to monetary standards, deflation of assets whether they be physical or currency, War, or bubbles, that's when we get depressions.
Uh, no, because many public sector jobs are not done for proftiable reasons. And to be clear, I am not saying they are all necessary in the long term. But removing them with little prospect of something else replacing them is a recipe for disaster.
"Don't wanna" != "Can't". Their budget isn't balanced because they're not really trying to balance it. They're trying to pretend severe measures aren't necessary and inevitable, and people like Henry up there are more than happy to promote the delusion that genuine "austerity" has been attempted.
Not necessarily if done properly. Say you're in the middle of a recession, consumer spending is down, businesses are tightening their belts, and unemployment is up. Lowered employment and business revenue are bad for the government, since their money comes from tax receipts. Since infrastructure maintenance or expansion is necessary, government can use the period of the recession to use cash reserves or deficit spending to put people to work improving infrastructure. People go back to work, consumer spending increases, tax receipts go up, and industrial/residential capacity is increased through better infrastructure.
Often recessions are a great time to do building projects or repairs simply because land costs and construction costs are down and people need employment so it's a good way to get needed work down at a time when it would cost less. Plus a lot of these projects do generate new economic activity; Eisenhower used to call it "the virtuous cycle" because you build more roads and highways, more people use them thus generating more commerce, which causes demand for roads and highways to rise...
^ To Sanolich: One of the many problems with that dumbfuck idea is that when the new roads are finished and the money has been spent all those people are back out of work. Hence your unemployment goes back up, spending goes down and you're right back in recession.
Yeah, I was taught Keynesian economics in college, too. Even thought it made sense. Problem is, there is never a reserve and certainly not any paying down of debt during the good times. The human condition makes Keynesian economics as realistic as achieving the endgame of communism, unfortunately.
OK, it's not necessary or good and the government shouldn't build roads to encourage commerce? Gee, I guess we should be using the same old dirt roads we had in 1776 and the Federal government shouldn't be trying to promote interstate commerce.
Idiot! Govt should build roads that are needed, not build to put people to work. When they do that we get the bridges to nowhere we saw in Barry's anti-stimulus bill.
Yeah, that is the hard part in a democracy though China seems to be managing it just fine (they just had a stimulus of 20% of GDP paid for out of saved government funds). In Democracies everyone says "I want tax cuts" or "we need more investment/spending on X" and so we often don't save money from the good times or cut back during the good times. That's a valid critique but it's also a failure to follow what Keynes said rather then a failure of Keynsianism.
The modern neo-Keynesian approach is "deficit spend in the bad times because we have to, deficit spend in the good times because we can."
Well, especially now that the wranglers all come with chrysler minivan engines. But up through '06 they were still pretty distinctive mechanically from anything mopar.
A friend of mine has a 2004 Jeep with the old AMC 4.0L straight six engine. The thing is bullet proof and Chrysler has updated it nicely.
