I don't think you understand. I didn't say we haven't had recessions in the past. We have. What I said was they were short and sharp recessions. They didn't last but a year to two years tops. But the government of the US and indeed the world over time has gotten into this line of thought especially in the early 1900's up to today where they believe that they can prevent recessions. The problem is they can't. It's like a law of nature. The economy will expand and then it will contract in order to get rid of, for lack of a better word, the garbage circulating in the economy. The governments attempts at preventing recessions and having nothing but boom times only makes the bad times longer and more painful. If you notice the time before each recession you listed gets shorter and shorter. Why? Because the government keeps doing things to interfere with the economy. Then the government got the bright idea that if it created the Federal Reserve it could prevent future recessions. Well not only have we had recessions but we've had two depressions and as time goes on and our government keeps spending out of control we are staring at a possiblity of a decades long recession or an outright depression. (especially with the idiotic Fed doing this QE2 thing)
And where have we seen a small but good example of that recently? We saw it with the hiring of all the cenus workers and the administration trying to take credit for making unemployment go down. (plus they were cheating by laying off people and then rehiring those same people and counting it as seperate) What happened when the cenus ended? Unless all those people found jobs they were out of work. Again. Unemployment went up. Again.
Damn strait ! Who can't see that the Fed is already creating (piling on, actually) the next bubble in US Treasuries? Or in the dollar, or the inflated equity markets, for that matter? Time will bring the inevitable reckoning, just like it did with the dot-com, the tulip, or the subprime bubbles.
Exactly. And why are they doing it? Because they think they can fix things and prevent it from getting worse. Yet all they are doing is setting the country up for bigger problems in the next few years. Gas, milk and certain other items (I've heard shoes and womens clothing) are already starting to rise in prices through in inflation. The Fed thinks it can control the monster it is making right now but I say like everything else it has done it will fail and the inflation monster will go on a rampage and then we will see the SHTF for our economy and indeed the world economy.
Yup. One of the most bizarre aspects is the convention of Inflation data (CPI and PPI, for example) being presented ex Food & Energy. They fuckin intentionally exclude the most volitile part of consumer prices - the food costs (which are going up because commod. price hikes) and the energy (ditto). And then they say 'we got no inflation.' Well, duh! Cracks me up. Even given the claimed rationale, it's kind of crazy.
Whoa......back the train up.....they can't be financially strapped, because every day......it's capital is DUB'LIN! Capitol....Dublin.....Doubling as it were.......little play on words. Yeah........
There have been severe austerity measures, felt by every single citizen, regardless of what bullshit justification you try to come up with to explain why they haven't worked. In this case, that appears to be "you didn't go far enough, you didn't abolish the state altogether".
No. Said it once, I'll say it again, policies on this should not be driven by anyone's moral objection to debt. Clearing deficits is not, in itself, a good thing unless it leads to economic growth. That is the endgame. If an ecnomy is mistakenly reliant on govt spending because to many people are employed by teh public sector directly or indirectly AND the private sector that there is goes into a tail spin, cutting the govt spending is going to ram that economy into the mud. Especially when you can't actually afford to stimulate private business with things like tax cuts.
Yes but I think you'll find there is a fairly standard notion of pump-priming where you can stimulate employment to a point where it becomes self-sustaining. Obviously it didn't work in the case of census workers.
You're simply wrong and if you bothered to put 5 minutes of research into it before spouting off with ideological nonsense you'd know it. http://247wallst.com/2010/09/09/the-13-worst-recessions-depressions-and-panics-in-american-history/ A few just from US history and BTW European history is much longer and full of a great many more examples. The Depression of 1807-12 was 5 years in length. The Depression of 1815-1821 was 6 years in length. There were several big multi year panics which caused massive bank and business failures but I'd have to look up exactly how long each one lasted; 1837, 1857, 1873, 1893. That last one, the Panic of 1893, caused 15,000 businesses to close and 500 banks to collapse setting off a liquidity trap (I'll let you look that up since I doubt you even know what it is judging on the uninformed nonsense you've been posting) and causing a nation wide depression which lasted for 10 years. It was the worse depression until the Great Depression. Oh, and let's not forget the Panic of 1907 which set in motion the events which eventually resulted in the creation of the Federal Reserve system because everyone was sick and tired of the constant boom and bust cycles.
Not to mention the Long Depression of 1873-1879. Of course, that's one definiton of it - plenty of other definitions put the entire cycle of recessions and depressions in that time frame together, which gets you from 1873-1896 - an entire generation. http://en.wikipedia.org/wiki/Long_Depression I think part of our problems on business cycles is not looking at it long term, and will be investigated by economists at length in future days. One, the cycle of expansion in the 1500-1900 was colonial and flat out predatory. I'm not passing judgment on that, but clearly it can no longer work that way. There was a lot of expansion in the West because of the huge technological (and structural) advantages we had. Two, the US in the 2nd part of the 20th century was an economic powerhouse without a doubt, but we also had no competition because it took 20-30 years for most of the industrialized world to truly recover from WWII and the deficits they ran there and for China to overcome their ideological and structural problems in their economy. Even our tech advantage is atrophying, because the information age has allowed it to spread everywhere. The difference between the West and 2nd and 3rd world countries in the 1950s-1980s was much larger than it is now. Hence so many of our jobs flowing overseas. Globalization is the wrong word IMO. What it really is is equilibrium. We will have a world economy with much less difference between the have and have nots, and it will be capitalism, not socialism, that drives that. Problem is we are used to being the haves. Our comparative advantage is dwindling, and lots of people here are paying the price. The real estate bubble IMO in recent time were manufactured as a way of trying to avoid that. It didn't work.
Not really on topic, but in response to this ^, that is one of my gripes with Dubya. Bubba was in office at the perfect time. We'd just won the Cold War, so there were huge savings he could reap by drawing down our military and closing bases. NAFTA had just opened up trading with Mexico and Canada. And the Internet had just been opened up to commerce, with the WorldWide Web making it easily accessible to everyone for the first time. Then his policies put the GOP in power of the legislature, to reign in social programs and enforce fiscal responsibility. On top of it all, IMO the economy pretty much goes in 10 year cycles since at least Reagan. You had the Reagan banking crisis. Then the economy softened up right at the tail end of the Bush Administration. So Clinton came in in a "sweet spot". Things started going south right on schedule, as his second term was winding down, but he was smart enough to figure out how to delay it until he was out of office. Then Dubya got whacked with the double whammy of a cyclical recession, compounded by the .com meltdown and the Enron debacle along with 9/11. And rather than deal with the pain of that, he artificially kept the economy chugging along at its superheated Clinton era "perfect storm" levels--levels that weren't sustainable in 1999 or 2002 and they sure weren't sustainable in 2007 or 2010. Not that any sane person is going to tell you that the Obama's "fix" for it is going to do anything but make things much, much worse, but he did get dealt a crappy hand to start with.
Things are moving fast, and we're being sold down the river by our leaders as I type. By Monday there'll be agreement with the EU/IMF for a fund of around €85 billion, at an extortionate rate of interest, most of which will go toward paying off debts incurred to German and UK banks, and turning the country into a debt-collection agency for the next two decades. These fuckers need to be tried for treason. This article sums up my thoughts... http://www.zerohedge.com/article/memo-ireland
Well, the Eurozone was nice while it lasted. I'm sure the Germans will be happy to say "Deutsche Mark" again.
Zombie, I don't know what to say other then you desperately need to go to community college and take an econ 101 class because just about everything you've written here is completely wrong on a factual basis. When we stopped teaching economics as part of basic schooling back in the early 80's I think we did this country a major disservice because without a fact based background and a basic understanding charlatans and hucksters dope folks into believing complete nonsense.
Rick, I don't like the idea of cutting unemployment when you're in the midst of a huge recession but I guess Ireland really has no choice now. On the other hand I'm all for completely eliminating the minimum wage as it is pretty much useless anyway to any educated worker and the only folks who make minimum wage are high school kids. Keeping the minimum wage artificially high just decreases the number of low paid jobs out there when really we, as a society, want young people to work part time so that the get experience, contribute to society, and learn a good work ethic. In short order (once they're out of school) they'll use that work experience to move up the economic ladder and get jobs which pay much more then minimum wage. Without that low paid work experience it becomes much harder for them to get their feet in the doors which will eventually help them land a good paying job. Oh, and if you think the IMF's loan terms are so terrible imagine how bad it would be if Ireland doesn't get those loans. You'd literally have no credit and so you'd have to balance the budget every year for the next decade or two so you'd end up with the same or larger cuts & tax increases along with a bunch of inflation once Ireland was kicked out of the Euro. As harsh as the IMF's terms are they're better then the only other alternative on offer right now.
They better jump before the French say "Franc". And leave Germany... :alone: as the backbone economy of the Eurozone.
You can do stuff like that when you have good credit but when no one will lend you any more money then you literally can't do that. Oh, and no, I don't think the Germans or the British (both of whom have their own deep austerity programs going) would agree to subsidize Irish borrowing so they can do another round of stimulus. Stimulus is often a great economic policy during a recession but you have to be able to pay for it or at the very least be able to borrow the money for it. Right now Ireland can't do either nor will its neighbors subsidize it excessively to help it do so. sorry, mate, but your back is to the wall now.
I might find those things more acceptable as part of an overall recovery strategy were it not for the fact that the government is determined to repay every cent invested in our banks as well. As it is, all of the pain is for nothing, because those debts are simply too big. It's hard to express how much contempt I have for Brian Cowen right now. An orderly default on bank debt, in the form of a debt-equity swap should have been pursued two years ago, when our problems first started. At this point, when there's still no sign of that being considered and when Cowen and co. have been transparently lying to the Irish people - although it sounds mad - it begins to appear as if he's got some alterior motive for putting the bankers interests first. Have they got something on him, or his cohorts? Perhaps he knew more about the problems in Anglor Irish Bank at an earlier point than he has admitted. That's being seriously suggested by some commentators now.
If it were just the IMF, you'd be right. But this is the EU's problem just as much as ours. If they don't sort it out, Ireland defaults and banks collapse all over Europe, meaning that the Euro is fucked. Our negotiators should be pushing for better terms with that as our trump card. Also, as I understand it, they can't "kick us out" of the Euro. We're more likely to leave voluntarily as it's overvalued for us.
I agree with you there. Bankers bought bonds they knew might go bad so logically they should receive a hair cut and not get 100% back. That said, if you make them take too large of a lose then they'll go bust resulting in a liquidity trap (the classic drop in the money supply due to the fact that banks can loan more money then they actually have in deposits so if too many of them go bust you can set off a chain reaction which literally destroys a modern economy). Thus they should be striving for that ever hard to find balance where investors lose enough so that moral hazard isn't increased yet not so much that banks fail. I suspect that right now most of the banks in the EU are actually zombie banks which are technically insolvent. Thus the EU is trying to subsidize them so they can rebuild their balance sheets. Of course, the logical thing would have been to regulate the hell out of the banks to begin with so that an asset bubble never happened but politicians just do love to goose the economy even while banks love those boom time profits (and the bust time bailouts). Canada kept it's regulatory system iron clad and while Canada didn't experience the big real estate boom the US did it also didn't experience the bust so now Canada's banks are ranked as the healthiest banking system in the world. That kind of shows the need for hard but sound regulations of the banking system.
Also, technically although we can't reasonably borrow on the markets, we are funded into mid-2011 and have a pension reserve fund that we can use if it came to that, so a default wouldn't immediately trigger such dire consequences as you say. The "bailout" is occurring now rather than later because the EU didn't want to risk waiting. So again, it's their problem too.
I think what he knows, and which is just now starting to reach the public, is that the debt crisis at private banks and insurance companies in Ireland is much, much worse then the government has so far let on. Nationalizing several of the banks was a bid to help prevent their collapse but the cost was so great it put Ireland's national credit rating at risk. Now, Cowen is going to have to admit the problems with the private banks are much worse then he has previously admitted to in public. http://www.thejournal.ie/anglo-irish-bank-credit-rating-downgraded-to-junk-2010-11/ I very well could be wrong but that's my guess.
People have been saying that for two years as well, though, so it's no secret. The cost of propping up the banks with public money has been getting worse and worse - it's all the more reason not to continue doing so.
