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Guest Post: How To Make Austerity Work
Submitted by Pater Tenebrarum of Acting-Man blog,
A Question of Spending Discipline and Reform
The Baltic States are unique in Europe in that they went through an austerity crash program a while ago already (beginning right after the 2008 crisis) and have in the meantime recovered strongly. Der Spiegel has an interesting interview with Lithuanian president Dalia Grybauskaite, in which she explains her views on the topic. It can obviously be done successfully.
Just to get this out of the way up front: we are aware that every case is unique. The problems are not the same in every country, and due to cultural norms and traditions, it may be easier to enact reform in certain countries than others. Nevertheless, no matter how many times Paul Krugman insists that no Baltic nation can possibly be held up as an example, the fact remains that they have imposed fiscal austerity and implemented wide-ranging reform measures and have succeeded.
Here are a few notable excerpts from the interview:
SPIEGEL ONLINE: In spite of the ongoing crisis, Lithuania wants to join the euro zone in January 2015. Why?
Grybauskaite:This is not a crisis of the euro zone, but a debt crisis. Some states, inside and outside the euro zone, have difficulties because of their irresponsible economic and fiscal policies.
[…]
SPIEGEL ONLINE: A new poll in six big EU countries shows that trust in the EU is declining rapidly. Are EU leaders taking this growing unease seriously enough?
Grybauskaite:This is the consequence of the crisis in Europe and people's reaction to the inability of the politicians to tackle the challenges.
SPIEGEL ONLINE: The president of the EU commission, José Manuel Barroso, said this week that austerity in Europe had reached its limit. The political and social acceptance is not there any longer. Is it time to relax the efforts?
Grybauskaite: There is not one rule you can apply to every state. In the Baltic states, after 2009 we had to implement very radical austerity measures. In Lithuania, we consolidated 12 percent of GDP in two years. We cut public salaries by 20 percent and pensions by 10 percent. Our adjustment was a lot deeper than what we see now in Southern Europe. And we saw growth return after 2 years.
SPIEGEL ONLINE: So Barroso is wrong?
Grybauskaite: Some countries need extra stimulus in specific areas. Something has to be done against high youth unemployment in Greece and Spain, for example. But in the end, there is no way around it: The debt levels have to come down.
SPIEGEL ONLINE: You say that reducing public debt is mainly about political will. Where do you see this will lacking in Europe?
Grybauskaite: I won't name countries, but reforms could be quicker in many parts. There are different mentalities and different ideas about political responsibility in the North and the South.
SPIEGEL ONLINE: Austerity is often seen as a diktat from Germany. From the perspective of a small country, is Berlin too powerful?
Grybauskaite: We need to understand the situation of the German people. They are largely responsible for paying for these bailouts. I cannot imagine a head of government whose country is paying for something not asking for certain conditions. It is legitimate that Berlin leads the way.”
(emphasis added)
Takeaways:
She is right – as we have often pointed out in these pages, it is not a currency crisis, but a debt crisis. The euro as such seems to be doing fine, as well as can be expected from a modern fiat currency. It is the private and public sector debt mountains that have been built up over time that are the problem, not the fact that several nations use a common currency.
One might of course counter 'the common currency has caused debts to increase so much', but that is only partially true. We cannot recall that Italy or Greece had any problems growing their debt into the blue yonder in the past, i.e., prior to the adoption of the euro. The main difference is that they used to be able to devalue their way out of problems, thereby robbing their citizens surreptitiously. At least nowadays the cost is quite obvious to all.
Take note of the example she gives for austerity a la Lithuania (similar courses were followed in the other Baltic nations): “We cut public salaries by 20 percent and pensions by 10 percent. Our adjustment was a lot deeper than what we see now in Southern Europe. And we saw growth return after 2 years.”
The magic words here are: “cut spending”. As opposed to “raise taxes, and then raise them some more, while leaving spending almost exactly as it was before” – the preferred method in places like Italy, Spain and Greece. Yes, the debt levels have to come down – but it is not immaterial how they are coming down. No doubt it was not exactly great fun to be in the Baltics during the harsh period of adjustment. However, we are sure Greece's citizens would have been more or less perfectly fine with just two years of hardship. It is vastly different when the hardship is going into its fifth year with still no light at the end of the tunnel. In this context, Mr. Barroso's recent proclamations strike us as rather dubious. He seems to think there is a 'choice', but there very likely isn't one, as markets will sooner or later penalize countries veering from their fiscal consolidation efforts.
Cutting spending is not everything of course – economic reform is just as, if not more important. This is another area where many European governments are lacking the necessary political will and imagination. The Baltic nations still have memories of Soviet Russia's embrace – that does wonders for one's political will and the ability to endure hard times for a little while.
And finally, yes, the paymasters must be expected to insist on conditions for keeping others afloat. Imagine if things were the other way around: if Italy, Spain, Greece, etc., were asked to bail out Germany and Finland, would they be doing so without demanding conditions? Not very likely, is it?
Lithuania: a bubble, followed by a severe bust coupled with austerity, and the return of growth- click to enlarge.
The ups and downs of industrial production in Lithuania. Note that production began to improve well before the contraction in GDP ended- click to enlarge.
The budget deficit as a percentage of GDP. Lithuania is already getting close to the Maastricht ratio again – click to enlarge.
Conclusion:
There are ways and means to deal with a major bust and fiscal troubles. None of them are painless, but some make more sense than others.
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"The euro as such seems to be doing fine, as well as can be expected from a modern fiat currency."
If the euro is "doing fine", I wonder what the definition of "hanging on by the fingernails" is?
LIETUVA! LIETUVA! LIETUVA!
Austerity is a smoke screen behind which TPTB can keep the ponzi going a little bit longer while they steal the middle class's wealth.
absolutely, this article is horseshit on toast.
1)the public should not have to pay for profligate banks
2)the lithuania success story always seems to forget to mention the exodus of people FROM lithuania, elsewhere.
3)the victimized German paymasters have arguably reaped the most reward from the euro abortion - having the same currency peg as their ugly duckling brethren and stacking the deck for their exports. They have taken europe over without firign a shot.
Nice shill piece.
make the slaves work harder and longer for less is how austerity works
Words to receive definitions in the ZH glossary au gratis the Tylers:
Fauxsterity
Moar
Kroogle (and its many derivatives)
Also, a hierarchy of evil ranking Mario Draghi, Jamie Dimon and Ben Bernanke.
And, why is Deirdre Bolton so hot?
this essay is absolutely spot on. fire gov't employees, cut salaries of the remaining publ. serpents' salaries, slash publ. serpents' bloated pensions. make the gov't and publ. serpents sector as tiny as possible.
The idea of cutting public salaries makes total sense to me - here in the USA. Isn't their overall pay compared to a similar private sector postion a lot higher?
And imagine if we went to a fair, flat or otherwise simplified tax system. Its glaringly evident that not doing so is its simply a jobs program. Unfortunately, those with the IRS jobs are a major drag on what could be a more efficient economy.
Even Obama, when he came into office, discussed the the massive amount of waste and overlap there was in government. Deep down many people know their jobs contribute nothng to society, and are actually dead weight.
Bullshite, propaganda for the EU pro-euro fanatics, abetted by quisling gov't leaders
This stuff has been debunked a while ago, by Ambrose Evans-Pritchard among others
Many people in the Baltics have suffered terribly ... and huge enormous chunks of their populations have departed in emigration to greener pastures
Yeah, it does get things 'going' when a lot of people leave
Exactly right. People need to do the fucking math. If the beginning of "harsh austerity period" = 100, at the end of all those double digit decreases in the harsh austerity period the economy was 50.95, having shrunk a total of 49.05%.
Add up all those years of low to middle single digit growth after the economy was decimated by austerity and we are back to 77.65 from 100. If you think a 22% decline in GDP is a fucking success, then you are a fucking idiot.
Yes but huge numbers of Lithuanians emigrated to find work elsewhere in Europe just as huge numbers of Icelanders went to Norway. Small countries find it easier to export their young people but how many countries can absorb Spanish and Italian youth unemployment ? The demographic consequences of this wuill be disastrous in 20 years fot ageing Western European societies. To save the Banks the politicians have sacrificed the population
"The demographic consequences of this will be disastrous in 20 years for ageing Western European societies."
This is exactly the reason we need to explain to boomers that we can't afford to extend their lives to infinity before they start queuing up for replacement hearts, hips, etc.
In the UK, 25% of all hospital beds are taken by people with dementia which should be example enough that past a certain age, healthcare costs need to be borne by the individual, not society.
A generational sacrifice, if you will, like their parents' generation made when they went off to fight in WWII.
But is there any appetite for sacrifice in these times of plenty (for boomers that is) ?
It's ironic that the hippie generation used to tell people not to trust anyone over the age of 30. Now their children want to discard them.
""The demographic consequences of this will be disastrous in 20 years for ageing Western European societies."
This is exactly the reason we need to explain to boomers that we can't afford to extend their lives to infinity before they start queuing up for replacement hearts, hips, etc.
In the UK, 25% of all hospital beds are taken by people with dementia which should be example enough that past a certain age, healthcare costs need to be borne by the individual, not society.
A generational sacrifice, if you will, like their parents' generation made when they went off to fight in WWII.
But is there any appetite for sacrifice in these times of plenty (for boomers that is) ?"
So what are you suggesting? That all those old people with dementia should be put out on the street to fend for themselves?
When they were young and able to work the government said give us a share of your earnings and we will take care of you when you are old and sick. What happened to that promise?
I can also tell you the WW2 generation made out like bandits. They grew up with the new welfare state, they got all the benefits of free or cheap education, good jobs, the nice house in the suburbs, cheap gas, the whole works. Then they got early retirement with generous buyouts as the industrial economy wound down, 10% interest on GICs and lived out their lives with generous pensions and died just as the whole system went to shit.
The boomers came of age with inflation, stagflation, gas crises (plural) all the good jobs going overseas. They got sucked into living the high life by piling debt on debt, now their jobs are gone, houses gone, investments gone and pensions gone.
When the boomers were first buying houses interest rates were 8%, 12%, 16% as high as 20%. I know people who made these bone crushing payments for years.
Now the house is paid for and they have money to invesst (if they were lucky and smart).
Do you know what interest rates are on GICs? 1.5% to 2%. Let's say you are real lucky and have $1,000,000 in savings and can get 2% interest. Do you know what that comes to?
$20,000 a year or $384.62 a week. When you see someone who makes $384.62 a week do you thnk "there goes someone with a millionaire's income" because that is what it is.
So how is it fair they had to pay for the WW2 generation, themselves, had to raise and educate their own children, now you want to shove them out on an ice flow to die.
It's not the boomers. It's the thieves at the top. The boomers pensions are the juiciest thing left to grab. Once they clean up that pile of money they will be coming for you.
Or do you really think they are going to keep the promises they made you?
Governments seem to always put the austerity cuts on things that really fleece the serfs, and do more bad than good.
Pub beer sales fall by 50 million pints
In this case case the serfs revolted, and said sales (caugh caugh) might get a boost.
Lithuania also retains its own national currency. The devaluation in the Lita helped the country recover quicker. In the Eurozone, there is no way to replicate an external currency devaluation; hence, the long, slow strangling of the periphery that we are observing.
http://dareconomics.wordpress.com/2013/04/30/around-the-globe-04-30-2013/
Bingo!
Currency devalution (not austerity) has always been the key to reviving economic activity; it makes products competitive in the global market place and drives exports. The only problem is a race where every nation aims to win at devaluation.
SPIEGEL ONLINE: In spite of the ongoing crisis, Lithuania wants to join the euro zone in January 2015. Why?
Grybauskaite:This is not a crisis of the euro zone, but a debt crisis
What a load of fucking crap.
The Baltics don't live in a fish bowl (a closed economic system)
Much of the young people came over to the British isles.
The rise in GDP is a result of exports.............a collapse of domestic fucking demand.
The debt is a instrument - a instrument of war.
This is not a debt crisis.
Its a crisis of the nation state under full scale attack by the Euro fucking Soviet.
And anyway, here is the question again:
'In spite of the ongoing crisis, Lithuania wants to join the euro zone in January 2015. Why?'
And here is the answer:
'This is not a crisis of the euro zone, but a debt crisis. Some states, inside and outside the euro zone, have difficulties because of their irresponsible economic and fiscal policies.'
SHE DIDN'T ANSWER THE FREAKIN' QUESTION. They never do. The true answer is this:
'If I support accession to the Euro I personally and my family will benefit financially for the rest of our lives by having access to tax-free synecures and pensions the like of which my countrymen cannot even imagine'. That's the true answer.
Don't be stupid. Lithuania wants to join the Euro so that it is protected as much as possible against Russian aggression and further Russian claims to Baltic territorial rights, but you can't exactly go around shouting that in public when you still trade with the Russians and are dependent on them for energy.
Obviously, you don't know shit about history.
@Irene
However - Its the same Soviet.
Just a different geographic area.
How poetic.......but bent.
http://www.youtube.com/watch?v=ydkaJwqRWyE
Always ask yourself ..........who benefits ?
Oh please, it is not the same Soviet. You're just some spoiled Westerner who knows nothing about forced deportations, gulags, population decimation or anything else the Baltics have gone through during the Soviet years.
Of course, the wonderful welcome of near-slave working conditions your compatriots showered upon Lithuanian workers in Ireland, which prompted a diplomatic protest, gives you all the moral authority needed to weigh in with your snark.
You don't know shit either.
Irene
The Anglo banks got a income from Soviet debt & "growth"..........
The Anglo & Swedish banks got a income from your recent bubble "growth"
When the bubble burst (because of high energy prices caused by the very same credit operations) they decided to favour real goods over income.
Therefore they must drive you into physical surplus.
Europe & the eurosystem is their modern India - a physical trade surplus entity.
Its how the real world works my dear.
You act as a mere conduit for global banking operations.
For example the UK in 2012 was in real goods trade deficit of 106 billion Sterling or nearly 7 % of GDP.........that stuff must come from surplus countries.
Its China trade deficit declined somewhat and its euro trade deficit increased.
PS Irene
I don't speak for Irish oligarchs ........
Any homogenous society such as Ireland pre EU will react in predicable ways when the labour value of that unit is sucked out of its system.
Given what happened to my country its amazing people are so friendly to outsiders.
They must have some understanding of how the system works don't you think ?
Oh and to add that jewish thingy of we are the only victims does not cut any ice with me.
Its not very nice to Harp on about such things.
First, sweetie, I'm a born and bred American and am very familiar with how the real world works.
Short of autarky, the Baltics after the USSR fell didn't have a lot of options available. I mean, it's not like Europe or the USA stepped up to the plate to help, say, the way West Germany bankrolled East Germany.
So, the Baltics, with savings in a non-convertible and practically-speaking worthless currency, were supposed to do what exactly to survive?
Actually, my family did warn the nascent Lithuanian gov not to go the route of IMF loans, etc., and that they should get their gold reserves back from England ASAP and rebuild as the country did before the Soviet years. But the world is a very different place now and in the jubilation of "freedom", the Baltics wanted to rejoin Western Europe and were naive in believing that the West (with a special hattip to the Swedes) wanted to really help them rebuild and integrate. And, of course, there were the typical native opportunists who made matters much worse for the fledgling democracies, e.g., Russian mafia and corrupt bankers.
Seriously, Dork, what "Jewish thingy" is your very vivid imagination attributing to me?
@Irene
That we are the only victims.....we were the only people to be shot in the back of the head and all that.
I did not assume you are Jewish or not & I don't care.
I could give you a full Beal Bocht Irish story if you wanted but it was not relevant to the discussion.
Dork you are being a dick.
It Comes Naturally
So what you are saying is that if I cut something, I will get more of it. Is that right? If I cut GDP growth, I will get more GDP growth. If I demand my employer to cut my salary, I will get more salary.
See its easy! I'm not sure why Italy, Spain, Portugal, Cyprus, Greece and the US ( most assuredly at the state level) are having such difficulty with expansionary fiscal contraction.
Bullshit, there is absolutely NO evidence that austerity brings growth, not even a single example. (Let me help you, so at least you mention the two stereotype examples always used in support of expansionary fiscal contraction. Denmark and Ireland. And in these countries, it has been shown that it is not fiscal contraction, it is rather the massive exchange rate devaluations that brought the growth)
It is one thing to say that fiscal expansion does not lead to growth (which is much more debatable), but it is utter drivel to claim austerity brings growth..Can someone explain ONE SINGLE CHANNEL through which austerity fosters growth, apart from the complete non-sense idea of government spending crowding out private investment?
Go look at your credit card statement and let us know how much debt you have? It is certain that too much debt will destroy the country. Are you ashamed to use your Krugman id? This is like saying house prices can go up faster than people's income forever! You are thinking short term...long term...massive debt will kill the HOST BEAST. Austerity is to get debt back under control.
So you favor the Japanese model? How do you think that is going to work out. It amazing how people that know 1 + 1 = 2....can come up with 3! FOOL!
Ad hominem attacks are standard behaviour when someone does not possess enough knowledge to formulate a coherent counter-argument to an idea.
so you are not worth replying.
But I hate krugman if you wonder.
@macroeconomist
Me thinks you miss the point entirely. No shit, austerity does not bring growth. The fact is that growth was overstated, and continued 'growth' was not sustainable at those levels (sound familiar?). So, what they did is to take a step back. They just simply evaluated their unsustainable path, readjusted, took the big hit (sort of like declaring bankruptcy), and now they can be more honest with themselves. I bet they feel pretty good about it too.
macroidiot - You use "Austerity" as a generic example, typical of left wing morons. "Austerity" as in CUT Gov't spending, and encourage PRIVATE Investment is the only pain / policy that will work.
This is what the article is proposing. There is no other way out from the feckless, left wing, immoral policies of the past. Pain must be taken BECAUSE of the very policies you seem to want to expand on. Admit that the past neo Keynsian policies were utter failures, and then you might be able to comprehend what the article is proposing.
And you are typical right-wing moron, aren't you? Typical zerohedge parrot with no knowledge of what Keynesianism is and what it is not. Get educated first, by your very Austrian friends about what is Keynesian and what is not:
http://www.zerohedge.com/article/inflation-seen-nations-salvation-redux-...
So don't make a fool of yourself first by talking about Keynes without having an idea, ok?
The post does not talk about any causality, about why austerity might bring growth (which channels) and the graph there is utter stupidity. How does austerity bring growth? All that happens is when austerity increases private sector de-leveraging, and after some point when leveraging re-starts growth picks up. With new debt. With more pain for the working class.
First discard your prejudices about economists that each one of them is a "psuedo_keynesian" monetarist, and then join the discussion with some productive input.
Excellent article! So it can be done.
Something to keep in mind: A debt crisis becomes a currency crisis through money printing.
Watch out for the ECB Lithuania! (that is if you are idiotic enough to join a failing currency union.)
The problem resides within Core Europe.
It is a extreme entrepot economy (it merely adds value to stuff & fluff)
i.e. it has very little primary production (especially Germany )
It has very little primary production net of raw material inputs as this requires labour in vast amounts for activities that the wage arbitrage banks cannot make any money on.
Germany got rid of Nuclear ..........not because they thought it was dangerous.
The real reason is that they would need to pay skilled workers vs interest on money.
To extract raw materials the core must destroy (drive into physical surplus) all countries which orbit its dark heart.
Thailand and Indonesia to name but 2..... the forced (thanks Timmay) austerity killed the economy in both for 3 years, but look at them now. As an aside Thai corporate balance sheets have never been as strong as they are now. At the time the TBTF's came are raped and pillaged as much as they could. Lehman Bros were the worst. USDTHB went from 25 to 56, but exports tourism and a lesson hard learned saw both come back. The irony of all the western BS is not lost out here.
And the critical lesson? Don't borrow from Farangs in pinstripes.
and so the critical lesson has nothing to do with currency and a lot with sensible policies
Or, alternatively, they could catch tax cheats and throw their filthy asses in jail with the other criminals, and confiscate their money. That would balance their budgest right up. Over twenty trillion in overseas money is going untaxed. Why should the guys patching potholes get a pay cut so the stinking rich can duck taxes?
"Or, alternatively, they could catch tax cheats and throw their filthy asses in jail with the other criminals, and confiscate their money. That would balance their budgest right up."
Then what? Would we have balanced budgets going forward? Would we have a well to draw from for revenue? I don't disagree with wealth clawbacks (particularly from the various financial vampires), but it's a one-time deal. Walk us through the next steps, and you might have a better shot at selling this idea.
the fact remains that they have imposed fiscal austerity and implemented wide-ranging reform measures and have succeeded.
The other fact is that neither the US nor any EU country of any size has actually engaged in actual austerity. Slightly bending the rate of government growth doesn't count.
Makes sense. Cut the cost of the non productive sector. Government sector cost inflation and excessive regulation is pretty much what killed California.
Europe austerity is a myth, state "workers" are fully protected.
Really? Might want to ask the Greeks about that.
Exports add to GDP
You can't eat exports.
The UK & France remain in extreme real goods deficit.
The UK & France are richer countries..............but their GDP is flat.
Be careful of guys calling for a Maoist like drive for GDP growth.
What matters is domestic consumption - although it is very unbalanced in both the UK & France for obvious reasons.
Domestic consumption can only go one way when real incomes are in decline (unless the credit spigot is loosened once again, of course).
We live in a world without final settlement.......
How do you know which is real.
Always keep your money supply positive ... ALWAYS ...........in this world of no settlement let it free float and fuck the rest of the world.
The UK and France are having a mad laugh out of this.
It just gets better and better for those at the top of both societies.
To nitpick further you could say that only satisfaction counts, though it can't be counted and in large part is derived from domestic consuption so ... yeah it's not GPD per capita.
I guess a lot of crooks would have harder work if the prime gauge of prosperity was PRIVATE domestic consuption per capita.
Three is the charm. After nearly a century of trying, the Germans finally figured out how to take over Europe.
The fact is that they never even implemented any real austerity measures, they just gave lip service to it. Now, they are bitching that the austerity is what's causing their problems... austerity that never existed. But to a large extent I think the market bought of or was rigged to reflect the measures that weren't even there. So that means the politicos are going to be chomping at the bit to do more spending on top of the insolvent debt situation they were already facing and never really did a single thing to address. They are wanting to dive further into debt.. most likely, fearing an uprising/rioting.
Of course, the growth heralded by the 'stimulus' measures has never happened. The real reason for 'stimulus' is to save the banks.
"Of course, the growth heralded by the 'stimulus' measures has never happened. The real reason for 'stimulus' is to save the banks."
This. Exactly this.
There's a old saying out there...all politics are local...so, on a human level, what has to happen is for some strong leaders to emerge and lay down the law...if you want to eat, you're gonna' have to work...no more free lunches...you mention Thailand...there is little if any safety net for slackers...hey, there's a broom over there to sweep the streets...or a job picking up garbage...of coruse the crooked politicians get their graft, but what country doesn't have that...you just can't have masses of human debris lolling around not contributing, but yet feeding off the rest...jmho
If this "what has to happen is for some strong leaders to emerge and lay down the law...if you want to eat, you're gonna' have to work" happens, than we're heading for second middle ages.
What the people need is not a good king, but for the current rulers to take the boot from their collective neck. Just stop the robbery of massive taxation and regulation (obviously parasites will have nothing to devour than too) and we will be just fine. Without the glorious Fuhrer to lead us out of the darkness.
Lithuania is in the zermaniosphere.
Lithuanian chicks are the n°1 in the world with Lebanese and Czech.
It's what happen when you don't marry for the money.
"The Baltic States are unique in Europe in that they went through an austerity crash program a while ago already (beginning right after the 2008 crisis) and have in the meantime recovered strongly."
Math works. When you hit a true bottom, there is nowhere to go but up.
The problem with all the intervention, is that it is an effort to prevent hitting true bottom, thus it impedes recovering strongly off the bottom, as the true bottom is still exerting its influence, having not been attained.
No one wants to have a recession now, to have a strong rebound when it ends. People would rather have higher unemployment years on end, rather than have even higher unemployment for a shorter time, with unemployment dropping rapidly after a true bottom is hit and true pent up demand is unleashed. No one wants the pain to get the gain.
"No one wants the pain to get the gain."
That's the new, improved democracy (since the arrival of the internet, twitter, i.e. instant reactions/brainfarts to everything) for you.
If you crash -20% and than crawl out by +10% where is the victory? When these countries are well off, than we can talk about thier plans being fullfiled. Right now, they are "in better shape than Greece and Spain" which is a low bar to jump over.
However there still remains a question how much of thier position just before the crash was phony growth. If 20% if their GPD was useless malinvestment from boom, than even 20% crash if it only took down that crap could be considered beneficial (at least long term).
Look lads this is very simple.
Why did London undergo the big bang of the early 80s ?
The euro soviet went into extreme surplus goods trade with the UK
I think also the UK went into current account surplus in 1984~
Those free goods flowing in London had to be consumed.
The economy became even more Financialized so as to produce the paper to consume the products.
The people driven out of surplus countries (eventually the baltics) functioned nicely as servants for the rich & famous.
These people have not got a political brain cell or bone in their body.
They are easier meat then even the Irish.
Dumb Fucks.
Moody's just downgraded Slovenia to junk - add another S to PIIGS.
Cyprus 2.0 in the making.
Losing up to 30% of your population and having a lot of the rest of your people dependent on remittances from relatives abroad is not what I would call success
Slovenia just down-graded to junk status...wwonder how that's going to work out...
"The fact is that they never even implemented any real austerity measures, they just gave lip service to it. Now, they are bitching that the austerity is what's causing their problems..."
Austerity is not even the problem, the boom is the problem. Simple math- 100% of booms end in a bust. The bigger the boom, the bigger the bust.
They are not going to admit that the boom is the problem. They long for the days of the last boom. BUT they are currently in the days of the last boom- the bust which follows.
Politicians want to spend money. Republicans give lip service to attacking deficits for their political purposes, but both Bush and McCain were happy to support a TARP bill for 700 billion. If McCain was elected, deficits would probably have been nearly comparable to what Obama has run, since politicians put getting re-elected first.
And if Latvia and Lithuania are doing so well why are there still bucket loads of them here with more coming all the time. I ain't complaining cos we need the labour, but.................
Maybe because min salary is 230 EUR here in Estonia....another example to follow for Med Club!
What % of polulation is trying to live off that amount?
Ribbons my girl............
When you drive yourself into surplus someone else eats your ration.
Yee lot are the perfect slaves......
Yee don't consume like good catholic girls.
what is it again - a extreme Lutheran thingy or something ?
The Dancer...pension 240 is common, 300 is good and 350 is very good(after 40 years of working)-LOTS of people. Severe disabled child pension is 80 and mother (carer 24/7) gets 19 EUR monthly(after all she gets "popular pension" 120 eur).Surviving is usual thing here and immigrate is just dream(realized for lots of workers and professionals already). Graphics may look good but population vote with one way tickets.
Ask managers if their projects have been successful and they will always say 'yes'.
In Southern Europe government AND private sector headcounts have plummeted by 50% and pensions have been looted. There is no growth only increasing poverty leading to depression. Somehow or other this does not register with the EU establishment.
Also unmentioned is that the inhabitants of the Baltics have left their countries and migrated to the rest of Europe ... accelerating unemployment in these other countries as a consequence. When other countries are picking up your bar-tab you can indeed enjoy 'austere' success.
A few months ago, the Estonian prez (penguin) got into a bit of a pissing contest via Twitter with that ass wipe Krugman. Glad to see it. Too bad the Estonians buckled a few years ago and went to the euro (a year later than planned, I believe, but they made the switch nonetheless).
Latvia hasn't yet made the switch, but I believe they are on the verge of selling out as well. Lots of cash in Latvian banks from outsiders, predominantly Russian citizens (who get residence if they buy property there). I wonder when the Latvians will be "Cyprus'ed".
Jubilee? anyone? anyone?
nothing succeeded in Lithuania or Latvia (GDPs have not recovered yet to pre-crisis levels).
It only appears to have worked because jobless people there have emmigrated to the west (england, norway, sweden etc)
I can not imagine for example Spain exporting its joblessness :) it is simply too big for that to be absorbed by the rest of the europe
Fiscal austerity can absolutely work -- IF you have control of your monetary destiny. Many countries have done it.
The problem with the eurozone countries in the EMF is that they're trapped in a monetary straightjacket.
Sadly, the USA controls its monetary destiny, and look what a great job it's done so far.
Lithuania is run by Soviet minded people. Their aging population is still in that mindset, there is an exceptence of putting up with shit.
Its a shame they cant keep more of their younger generation from leaving, its what they really need to move forward to wash away the Soviet residue.
You can get some bargain property there though.