There was talk about renaming the Krugman thread for this purpose, but that seems to be going nowhere. Besides which, I feel the Krugman thread should be left to discuss Krugman while this thread can be used for more general economic discussion.
Discuss:
- The merits of competing theories.
- The role of the government in managing the economy.
- The causes of and solutions to our current economic woes.
- Comparisons between the economic systems of different countries.
- Theoretical and existing alternatives to our current market system.
edited 17th Dec '12 10:58:52 AM by Topazan
V
No, this all happened in Britain in the middle of an Economic Boom, which if I've got Keynes correct is the wrong time to perform a lot of stimulus spending...
Needless to say, PFI has proven to be a rather controversial practice, since debt repayments are spread forward (often 25-30 years) into the future, instead of being paid at the time. Of course, none of this spending appears on the Government's books.
edited 24th Nov '14 9:36:17 AM by Greenmantle
Keep Rolling On
Lost in Space
You keep proffering these scenarios without context and expecting me to provide informed answers. I'm getting a bit tired of being asked leading questions.
In an economic boom, you have to worry about inflationary effects, which can lead to bubbles. It is possible for public borrowing to crowd out private investment, and the government's proper role in these cases is to spend less, both to act as a counterweight to a potentially overheated economy and to reduce debt as a buffer against future crises.
Private debt has the same problem as any other form of debt where the issuer doesn't have fiscal sovereignty — it risks being unable to be repaid or devalued through inflation. The 2008 crisis was caused by excessive levels of private debt, not public debt. Public debt had nothing to do with it (and continues to have nothing to do with the current depression).
edited 24th Nov '14 9:41:53 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Fuck you, Fascist sympathizers
To be fair, private debt being devalued by inflation is good for the borrower, just bad for the lender. Deflation is what screws over borrowers.
Lost in Space
As should be obvious, my sympathies pretty much always lean towards the borrower, not the lender, in these cases. That said, since private borrowers tend to be less affluent than private lenders, simple math should tell us that inflation acts as an economic growth factor, since eroding the value of that debt allows individuals with a higher MPC to buy more.
Making debt an issue of morality may make for good sound bites on the news but is very bad for the economy.
edited 24th Nov '14 11:05:37 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
It is the lenders who, disproportionate to their numbers, determine the content of the evening news, or the economic policies of the government.
(Krugman) Keynes is slowly winning
The OECD, headed by a new chief economist, Catherine L. Mann, is calling for fiscal and monetary stimulus in Europe, Japan is generally being discussed in Keynesian terms, Mario Draghi sounds an awful lot like Yellen, and the hawks are in retreat at the Fed.
Why we're not working 3 hour workdays like Keynes guessed
edited 26th Nov '14 1:29:05 PM by PotatoesRock
Fuck you, Fascist sympathizers
Pretty much. The inexpensive cities are so for a reason.
Pittsburgh's still pretty good, actually. Despite all of the up-and-coming businesses in tech, the massive philanthropic apparatus, and medical centers, the city's still feeling the aftereffects of the steel crash of the 70s, and is still underpopulated compared to what its infrastructure was built for.
V
![[up]](https://static.tvtropes.org/pmwiki/pub/smiles/arrow_up.png "[up]"){kind=icon}
And Juncker reveals giant EU investment plan
At its heart is a new €21bn fund that would provide loans for infrastructure projects. Mr Juncker hopes most of the rest of the money will come from private backers.
Only €16bn of the original money would come from the European Union budget.
However, critics doubt it can attract so much private investment.
There was immediate scepticism from the European Trade Union Confederation (ETUC) whose General Secretary, Bernadette Segol, suggested the Commission was "relying on a financial miracle like the loaves and fishes".
She said she did not believe that €315bn could be raised from €21bn, a leverage factor of 15 which the ETUC argued was "almost certainly unrealistic".
The Commission believes it could create up to 1.3 million jobs with investment in broadband, energy networks and transport infrastructure, as well as education and research.
Interesting to note that somewhat unexpected view from ETUC.
However...
Hundreds of multi-national firms were reportedly attracted to Luxembourg in legal tax avoidance schemes. Mr Juncker was prime minister at the time but denies wrongdoing.
Although a vote against him is due to take place at the European Parliament on Thursday, it is unlikely to attract widespread support.
Oh, so that was Juncker's plan all along. Let the multinational corporations save and hold Europe on a tight leash.
HGW XX/7
If it works, great. If not - and I'm not particularly hopeful - then at the very least it is an acknowledgement that we won't get growth without investment.
Schild und Schwert der Partei
So. The US should institute a minimum basic income for citizens and then a guest-worker program. I mean, if our dollar and the desire to come live in America aren't national resources on par with Gulf oil...
Blowout soon fellow Stalker
I'm too tired to do the whole sarcastic post pretending to be a Republican equating that with communism thing but suffice to say we'd never go for it. Not our government or our people would tolerate the idea of giving money out.
edited 27th Nov '14 5:16:14 AM by LeGarcon
Oh really when?
Not unless a massive cultural shift occurs.
Also, Juncker's plan sounds good by why do I see this ending half assed and flaming trainwreck.
Lost in Space
If 38% supporting vote counts as "turning into", that is.
"For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled." - Richard Feynman
V
Then again, Switzerland is one of the European countries where their military only works office hours...
Hmmm. My first instinct would be... OK: who (besides cheque-bouncing terrorists) does the community want to screw over?
Because, frankly... the average Swiss doesn't tend to fall for the old gold standard routine. As a general rule. Oh, sure: they like to back safe horses and believe in reserves that bring the cows home, but...
Most have some grasp of economics. Unless they've been drinking a lot of German Kool-Aid recently. 
edited 29th Nov '14 11:01:48 PM by Euodiachloris
Abe's snap elections might be an intentional means of telling the Bureaucratic triangle of the Iron Triangle to shut up. The article then goes on to note if the major countries can prove their commitment, their stock markets might explode in wealth. Also more aggressive QE in Japan and Europe might lead to an increase of demand in bonds for the U.S.
As well, this helps the Fed as QE abroad will reduce pressure on the Fed to tighten monetary policy because of bond yields being kept low. I.E.: What Krugman was saying about Keynesianism winning out.
Basically of the innovations in the 1950s and 60s lead to the automobile spreading, radio, TV, the washing machine, lighting, dishwasher, indoor plumbing. While the innovations onwards from the 70s benefit the wealthy and powerful (finacialization via credit cards and AT Ms, surveillance via drones, big data and drones, medical innovations have been focused on extending life rather than lessening child mortality.)
edited 1st Dec '14 1:59:45 AM by PotatoesRock
V
First World Problems. Child mortality (and birth) rates fall as economies become more developed, due to better health systems.
![[down]](https://static.tvtropes.org/pmwiki/pub/smiles/arrow_down.png "[down]"){kind=icon}
Healthcare. Hasn't the US got one of the worst healthcare systems in the developed world?
edited 1st Dec '14 5:27:34 AM by Greenmantle
Keep Rolling On
Child mortality is higher in the U.S., which is what Turchin (and the guy he's overviewing) is mostly commenting on. The U.S. has a fairly high child mortality rate.
The final stage – from €60bn to €300bn – is the most important and least certain one. Say, for example, the EIB wants to invest in a €10bn energy project between France and Spain. It puts in an equity investment of €2bn; private investors supply the rest. If losses occur, the EIB bleeds first. Such a construction could work. The cash comes in advance because of the first-loss guarantee protecting private investors. The leverage ratio is five-to-one – ignoring for the moment that the EIB’s equity contribution has already been leveraged twice by that time.
This structure would ensure the best outcome. But I fear that, instead of putting upfront cash into a project, the EIB may merely issue a guarantee. This would lead to three problems. Without upfront cash, it might be hard to attract investors. If the project makes a loss, how much is the guarantee worth? Can the guarantor refuse payment, for example, if fraud is involved? Is the guarantee subject to any form of political or legal interference? The advantage of upfront cash is that it disappears automatically when losses arise. The guarantee would first have to be invoked.
Jean-Claude Juncker, president of the European Commission, has provided details of the commission’s plans to kickstart investment spending in Europe and seed growth. The guarantee has a second weakness. The economic purpose of capital is not only to cover risk, but also to provide upfront liquidity to a project. When cash is there, it makes it easier to raise additional cash, and allows the project to start earlier.
The third problem is more fundamental. Mr Juncker wants to encourage €300bn in investment over three years, which translates to roughly 0.8 per cent of the EU’s gross domestic product per year. This would make a difference. But even if he manages to achieve this headline number, it is not clear that he will have prompted new investments.
The problem with all EIB lending is that we never know how much net new investment it induces. Of course, we know what it lends, and the total amount of co-funding from the private sector. But some of that would have taken place without the EIB. For a small business loan, for example, the difference in interest rates between an EIB-sponsored loan and a commercial loan can be as little as 0.5 per cent. The test of this programme is not whether Mr Juncker can claim his €300bn target, but whether private sector investment in the eurozone rises by an additional 1 per cent per year. I can confidently predict that this will not happen.
Mr Juncker’s fund could turn out to be both a bureaucratic triumph, and an economic non-event. And that would be one of the better outcomes.
My overall conclusion is that there will be no fiscal stimulus in the eurozone, not even an indirect one. The overall fiscal stance will continue to be mildly contractionary.
The heavy lifting will have to come from the European Central Bank – in the form of sovereign debt purchases. For this to work, a programme of quantitative easing will have to be drawn up that is quite different in spirit from Mr Juncker’s €300bn programme. It will have to go on for as long as it takes, and it will have to involve real money upfront, and no guarantees, and no tricks. The eurozone needs a truly grown-up response if growth is to be revived.
edited 1st Dec '14 5:39:10 AM by PotatoesRock
That smells of privatization, which is rarely a viable solution in an economic environment where depressed public spending is the major cause of your woes. I mean, sure, if you need to do something like that to get shit built, go ahead. What matters is that money is being spent to generate economic activity, not necessarily who is spending it.
As Krugman would say, if you can't have the ideal situation (government borrowing to fund direct stimulus), you go with whatever you can get. Paying people to dig and fill ditches may not have any inherent value, but at least it creates jobs.
edited 24th Nov '14 9:33:38 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"