Tuesday, July 21, 2015

The Test of The Republi-CON Myth of Expansionary Austerity, Greek Edition

UPDATE:  "It’s astonishing even now how blithely top European officials dismissed warnings that slashing government spending and raising taxes would cause deep recessions, how they insisted that all would be well because fiscal discipline would inspire confidence. (It didn’t.) The truth is that trying to deal with large debts through austerity alone — in particular, while simultaneously pursuing a hard-money policy — has never worked. It didn’t work for Britain after World War I, despite immense sacrifices; why would anyone expect it to work for Greece?"

Read The New York Times, Europe’s Impossible Dream.

As noted before, expansionary austerity is a Republi-con myth.

There was the limited experiment on Kansas that failed.

Now for the grand test, "[i]t could be a chapter in an economics textbook: What happens when severe austerity is imposed on an economy that’s already lost a quarter of its output?

Greece will find out how bad it could be."

Read Bloomberg, Greece Rewrites Economic Textbooks With Austerity on Austerity.

Read also, the Washington Post, Europe’s dirty little secret is Greece will never pay back its debt, which notes that "if Greece can't cut its way out of debt and it can't grow its way out of debt, its only option is to default its way out of debt. There are more and less painful ways of doing this. Least among them is for the two sides to work together, so both can keep getting at least some money from the other. That's a polite default, or a restructuring. And the IMF has suggested three ways that might work. Europe can either give Greece money every year; give Greece a pass on some of what it owes; or give Greece far more time to pay what it owes, with a 30-year grace period at the start. But in any case, Europe is effectively going to have to give—notice how that word keeps popping up—Greece money. It just depends on how they want to do it."

And here's a dirty little secret for you -- well not really a secret, just something Republi-cons would never admit -- the United States of America only works because of money subsidies/transfers from rich, prosperous states to poor, needy states and labor mobility from poor, needy regions to wealthy, prosperous regions.

Read The New York Times, The Problem With a Euro Fix: What’s in It for the Dutch? and the Washington Post, The four ways to end the Greek crisis, from Obama’s former top economist.

And in the U.S., it is the Blue states that are rich and prosperous; the Red states that are poor and needy.

Read Slate, How The US Currency Union Works—Endless Subsidies To Low-Productivity Areas.

Read also, Rich state, poor state, red state, blue state: What’s the matter with Connecticut?