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OECD Secretary-General: Austerity Versus Stimulus - A "False Dilemma"... And The Krugman Bloomberg Interview
The Secretary-General of the OECD Angel Gurria shares some surprisingly candid observations on the suddenly overpopular debate over austerity versus perpetual stimulus, saying it does not have to be one or the other, a choice he calls a "false dilemma" but instead you need one and the other, to be able to achieve any form of economic recovery. "Today's numbers are absolutely unsustainable, not only are they going to spook the market, they are simply not financeable. Whether the market is spooked or not it is almost secondary, you just can not hold it up for too long because you won't be able to finance these deficits, and they are creating a confidence crisis also." We hope that part about the market being "held up" is merely a Freudian slip, because we know that nobody does that - after all the market finds its natural level of supply and demand, and any purported "holding up" would involve central bank intervention... and we all know that's pure conspiracy theory. As to the solution: "Spain and Greece and Portugal are countries which have to start an earlier process of adjustment. It's not going to happen overnight. There has to be a clear path of where they are going. When you are cutting budgets, you have to cut those things that would not affect growth like education, research and development, the things that will move the economies in the years to come." On how to convince Germans to stop saving and start spending: "No reason why one should do that, and there is no possibility of success. Germans are reacting to a situation that was unsustainable. Medium and long-term there is no way that the speed and accumulation of debt can be sustained." And yes, "short term growth" will inevitably be impacted. Gurria can only hope the markets would cut these countries some slack when growth comes in far below expected... Which it won't.
We disagree with Mr. Gurria that it is all about signals - the vigilantes have had enough of signals without actions. Kicking the can down the road for another 5 years while taking cosmetic actions will do nothing at all, as politicans and policy-makers simply resort to doing what they do best - spend all they can before the next election, which they know they are going to lose. "If you are living by the day's news, and if you are living by what happens in the stock market, and what happens with interest rates in one particular day, you are never going to succeed in making medium or long-term policy." Alas, as pointed out previously, everyone's attention span and investment horizon is now precisely 24 hours. Especially that of the voters, and if their 401(k) are lower, one can be certain all incumbents are gone. Which is why the vicious circle between the ever more ADDed market, and the 4 year political cycle, is getting every more dangerous until it results in the complete collapse of not only financial markets, but the supporting (fake) democratic foundation of bankrupt developed markets.
And, for those that may have missed it, here is yesterday's interview with Paul Krugman.
h/t Patrik
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It's getting to the point where I almost can't stand it anymore.
So much manipulation, so many lies. And so transparent. Everywhere.
Danger beyond every curve, in every bush, and around every corner.
Just going to sit here on my assets and do nothing.
Paper assets?
Lots of different assets. PMs. FRN$. Other...
Is this the interview where he wants to "throw the kitchen sink at it"? The lack of direction, the broken windows aspect of it, it's all so absurd.
"There has to be a clear path of where they are going." I think this is the point that gets missed all too often. How can any plan succeed if you don't have a long-term end in mind? Of course, I think that is the goal...
There is a long term plan in place. You might search for NSSM 200. It is not palatable, but it is what the long term plan is. Owners have plans, their smoke and mirrors minions have (deny, distract, deceive, delay, deride, declaim, divide, delude, etc.).
http://www.youtube.com/watch?v=Qy0TJeMQrno
Yes. There were places in Asia where you could get into the football or cricket match for free if you got a vasectomy at the free clinic tent outside the sports venue (not joking)
At this point really it's just a matter of time before they put it in the bottled water or cans of soda pop.
The short camp is filled. Barton was last to enter. I can see them from here from my little tent. The ZH'rs and doomsayers stoking bonfires in unison. Enjoy this face ripping melt up while you all stroke each other on the same info. Remember, group think will hurt your performance. Time to cover kids...or just shout louder. Y'all are under the 1040 coffee table looking up through the glass. Its ok, you can come back out.
Is a fractional reserve-based financial system one that inevitably ends in Doom?
Ok, so we all come back to play.
Then what? Getting fleeced the other way.
I hold cash, not bonds or cash equivalent. Actual cash.
And shorts. And sleep well at nights.
Thanks for your concern though.
Just because I expect the system to ultimately collapse doesn't mean for a second that I don't play the drops and pops. Don't mistake conviction of an inevitable collapse with narrow minded beliefs that it will always go down. That is not what most here on ZH think or say.
We are talking about long term views when we say the system is collapsing. Short term a bounce was over due. Most ZHer's are either out of the market entirely or they are trading. Very few are permanently short.
I wouldn't dare hold on to a short or, even worse, use margin. Personally, I think we'll begin to see inflation (QE 2-7.0) before we have a truly meaningful drop in equities. Kind of hard to go up against a counter party who has the power to counterfiat new money on a whim....
plus, per the ZH article the other day about what is being traded, obviously nobody is really in the market anymore. Most of the big money has already moved into "safe havens". Benron doesn't need to crash equities and drive $ into tdebt when they have the unlimited power of money multiplier from the commercial banks to create new money to buy tdebt and keep the circle jerk going.
Regarding "big money" I'm closely watching mutual fund and pension disclosures which just starting to come out. In particular I'm looking at what and how much they are holding and comparing it to quarters and years past. Let's see how much the MF managers believe in this recovery.
aren't they generally limited to 2 options....errr I guess I should say isn't the sophistication of MF managers limited....
1) buy
2) buy more
LOL
Per prospectus, each MF manager can hold some cash. The max amount can be found in the prospectus. The annual and semi annual reports are also helpful. Pension funds have some more flexibility in many cases. Either way, it is like reading tea leaves.
Gold, dirtysanchezez!
Wake me up when it breaks channel resistance
dirtiersanchez
Are you in an actual tent?
Or are you laying in bed looking at the tent your hard-on created as you were conjuring up this (in your mind) intellectual, poetic nugget?
Angel Gurria is a Bilderberg blood sucker
http://www.speak.ca/forum/view_topic.php?id=45&forum_id=20&page=62
Well in that case f*** him.
I have to say I agree with Angel, for what it is worth. Although I would rather have no STIMULUS than one that the oilgarchs and kleptocrats want, I still think spending some monie on high speed rail, organic farm training (like Hulk's joint), and some other things could create jobs and help out in the long run. Austerity is needed too, but not like Swartzinazi wants. At least this guy is on the right track.
Obviously, not all spending is bad, and not all cutting is good.
Are we the only ones that understand this?
obama already thought of that type of spending - he improved the unemployment figures by creating jobs for people to count each other. Is that the kind of help this country needs - creating government or govt-subsidized jobs that counteract the very gdp that needs improving? The census is another entitlement boondoggle - the productive pay to count the nonproductive so the government knows how to better make the productive pay for the unproductive.
Why couldn't the private sector teach people to farm organically? I mean really, do you want the training cost to exceed the cost of a lifetime supply of store-bought organics, per trainee? If so, call the govt. High speed rail is another boondoggle, as it always has been. There is not enough demand to justify it, and if there is the CBA is way too lopsided. They couldn't even get slow speed rail right, seeing as how the taxpayers have been propping up railway entitlements for at least four decades now, at great cost.
The government by definition can't create a single job, by the definition of a job. Every job they create is funded by a taxpayer's job. If there is not demand for organic farming, and they persist in that endeavor, they create jobs the market won't sustain. If there is demand, then the private sector can step in.
Eliminate spending and by extension you eliminate the need for austerity.
Why hello there!
Well, people will be farming with or without training, and if wes a gonna spend our ways outta it, we might as well do it smartly. And rail is a "boondogle"....well, not sure what that word means, but how do you say peak oil? You are using strawmen arguements ie "Slow speed rail". c'mon.
Hi.
There is no such thing as spending our way out smartly. Once you have spent more than you have, further spending is neither smart nor a way out.
Make-work projects are doonboggles. I don't see how it's an invalid argument to not want an expensive high speed rail because I'm already subsidizing expensive passenger and freight train service. But if you really think that comparing two models of transportation -- that differ only in how fast they go and their source of power, and in all other respects are virtually indistinguishable -- is fallacious, it's trivial to fix:
I don't want high speed rail projects because other high speed rail projects have failed stupendously.
It's like doing fire prevention when your house is on fire.
They should have made these austerity measures when the economy was good. While the industry was screaming for employees.
Now is to late. "There is only a problem when we are faced with the problem"
This were our presidents famous words 4 years ago and everybody said: He's SO right!
And now we are paying for it...
Bad management? YES
Idiots rule? YES
The candidates with the best marketing agency wins. it's that simple.
Why do you think Obama needed to spend billions and billions? The biggest amount EVER!? Because forces that be figured out that to fool the people, they needed a joker.
It's evil to be a racist, so you needed to vote for the black guy. Smart thinking. And I'm not a racist for saying this is anybody wants to junk me because he feels bad and has mental problems :)
My fellow investors, some people are calling for instant austerity, and others want stimulus forever. I propose a middle path: instant forever. Vote for me and you can have both, forever and ever, amen.
Could we also have an austere stimulus? I mean, since we can have both, or all, or whatever...
Do you also offer a free dental programm for everybody?
Kkkrugman wants to know if you are offering free douches?
Why, is he afraid of competition?
Of course, SD, free dental for everyone. We've scheduled your appointment for tooth-hurty.
Krugman has got to be in here someplace. I just don't have time to look.
http://www.bigdouchebag.com/archive.htm
He is the biggest douchebag of them all.
We hope that part about the market being "held up" is merely a Freudian slip, because we know that nobody does that - after all the market finds its natural level of supply and demand, and any purported "holding up" would involve central bank intervention... and we all know that's pure conspiracy theory.
Classic TD. It is so frustrating that the majority of the populace cannot see what is there in plain sight...
Krugman and some blond chick having Keynesian intercourse. No self doubt there.
Interesting - in my last post on my new (baby) blog (yes shameless plug), I commented on this debate and I do wonder if casting this debate as a choice between austerity and stimulus is counter-productive. (Btw, my blog is not an economics blog but I do feel free to comment on economic issues regardless of what Kartik Athreya thinks ;)
http://arkadaba.blogspot.com/
Ok, i've decided i can't put it off any longer - here it is ...
Scary DOW monthly chart.
http://stockmarket618.wordpress.com
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