On Austerity, Unrest, And Quantifying Chaos

Tyler Durden's picture

Politically speaking, austerity is a challenge. While we would expect that governments imposing spending cuts on their voting public may face electability issues, in fact, a recent paper from the Center for Economic Policy Research finds that there is no empirical evidence to confirm this - i.e. a budget-cutting government is no less likely to be re-relected than a spend-heavy government. However, what the CEPR paper does find as a factor in delaying austerity is much more worrisome - a fear of instability and unrest. The authors found a very clear relationship between CHAOS (their variable name for demonstrations, riots, strikes and worse) and expenditure cuts. As JPMorgan notes, austerity sounds straightforward as a policy, until the consequences bite. It remains unclear that the road Europe is taking is less costly in the long run, in economic, political and social terms. The history of Europe over the last 100 years shows that austerity can have severe consequences and outcomes and perhaps most notably, the independent variable that did result in more unrest: higher levels of government debt in the first place.

The passage through time of the author's CHAOS factor shows that since 1994 we have had relative stability but given the ongoing austerity that is being forced (rightfully) upon the most indebted nations in Europe, it is perhaps no longer an issue of electability as technocrats roam freely and much more one of central stability and fear of the empirical link between austerity and anarchy.


JPMorgan recently noted this study:

The authors tested to see if results varied with ethnic fragmentation, inflation, penetration of mass media and the quality of government institutions; they did not. Results are also consistent across time, covering interwar and postwar periods.


The independent variable that did result in more unrest: higher levels of government debt in the first place.


Compounding the problem is the way some decisions are being taken, which may reinforce perceptions of a "democratic deficit" at the EU level, an issue highlighted by Germany’s Constitutional Court. It remains to be seen if Europe can sustain cohesion around its path of most resistance. One sign of rising tensions: the following (staggering) comment by the head of the Bank of France: "A downgrade does not appear to me to be justified when considering economic fundamentals," Noyer said. "Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping." At a time of increasing budgetary pressures and declining growth, I suppose there are limits to European solidarity.

The full paper can be found below:

Austerity And Anarchy

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
GeneMarchbanks's picture


This is also what Nietzsche's "will to power" wished to be. Philosophy is not Besinnen but struggle. And this struggle has no end and will have no end. The kingdom of God, as it is written, is attained through violence.-Lev Shestov

Oh regional Indian's picture

Weird, I have that open in a tab right now. Stunning stuff eh? 

Boxing Minister....too interesting and highly reccomended.


eureka's picture

Anyone here who appreciate people like Marc Faber and Jim Rogers knows and understands that losses and bankruptcies are part of capitalism - and good for the markets and the populations - and should not be obstructed by QE etc which only keeps the incompetent and the manipulators in "power".

So please, stop whining about austerity while simultaneously being against money "printing" abd the FED and for gold and silver money etc etc etc


It's that - or surrender to the Elite, fiat money, the US FED and Military Empire etc. 



TheAkashicRecord's picture

watched yesterday, great stuff, doesn't watch tv and reads 3-4 hours a night, look at what happens when you are not pacified 

Oh regional Indian's picture

Holy smoke Gene. That link is a crazy rabbit hole. 

The kingdom of an Angry God may be gained through violence, but that is such a sad, retro, Saturnian perspective. The way is not forward, that would be too easy, the way is UP.

En-lightened takes on a whole new purse-pective there. ;-)

As for Austerity Vs. Chaos, the difference thsi time around is TV. TV and the Church Industry. THe great pacifiers. Both have a Bull-y Pulpit.

Axiomatically, the poorer east will farre better in austere times. In fact, we are currently in them and have been for ever, the recent credit-wealth bloat being consumed by runaway, biting inflation and choices galore on how to lose what you earn.

Never learn.



GeneMarchbanks's picture


In its famous paradox, the equation of money and excrement, psychoanalysis becomes the first science to state what common sense and the poets have long known - that the essence of money is in its absolute worthlessness.
Norman O. Brown

I neither worship at the Money Temple nor the Thanatos Cult of bullets as you already know but here we are ORI, it's either a globally coordinated debt forgiveness fest or we start the destruction.


Oh regional Indian's picture

Indeed Gene, here we are. people say bullets, beans and band-aid, I say how about grace, gentlenes and generosity.


redpill's picture

Won't happen.  Humans are scorpions.

Oh regional Indian's picture

The reptilian core, fed by enough stimulus (violence, alcohol, flashing lights, auditory overload) is definitely on the ascendent Redpill.


hedgeless_horseman's picture



Lucky the Russkies have been putting fluoride in everyone's water.

flattrader's picture

>>>I say how about grace, gentlenes and generosity.<<<


From the criminal psychopaths who designed and executed this bout of financial terrorism that has in fact resulted in death?


Dream on...

GeneMarchbanks's picture


"The masses in highly industrialized countries like England, the United States, or France are largely de-Christianized. Technology, and the way of life it produces, undermines Christianity far more effectively than do violent measures." -   --  Czeslaw Milosz

Do you get it yet? It has gone past the mind and into the nerves and flesh. You can easily just simply say "de-Spiritualized". Machinery, task performance, production: IMPACT THE WORLD!!! YOU MUST IMPACT THE WORLD!!!


StychoKiller's picture

Shiva must dance...too bad the banksters are trying to prevent his next step.  You do remember Shiva, ne?

eureka's picture

It is obvious that Tyler - by this and similar posts - not so subtly, but perhaps inadvertently, at least indirectly advocates FED "printing", monetization, asset purchases etc - using the itch to avoid the horrors of "austerity" as excuse...

Perhaps Tyler is a Shakespeare wanna-be; playing both sides of the fence, the moral argument - to entice and entrance the audience with ambiguity.

Perhaps it is too taxing to be consistently "Austrian" - or of any other clearly defined pursuasion & principle.

Principles, Bitches. Not whining!

Chump's picture

Tyler isn't singular.

LoneCapitalist's picture

I would not be in favor of printing, if we had a stable monetary system. However I believ there is no way to fix this mess with the current fiat system. Therefor, I say print until it all crashes, and then we can talk about a stable system.

Piranhanoia's picture

The TD once said to be careful about what we wish for, due to the societal collapse that the fundamentals are pointing to.  They said that this is hardly a good outcome to what appears to be on our near horizon.  Remember that the TD's have also put forth reasonable suggestions on how to avoid this.

We little people will not have a choice in whether organized crime continues unabated or if chaos begins.  We will only get a choice in how we rebuild afterward.  

Sure would like to see any indication that a TD has advocated printing of money on these pages, because I can't remember any such statement.  Many "Guest Posts" have done so. Is there a chance that is what you are referring to?

eureka's picture

We The People do have a choice - and it is called FREEDOM - and if we don't fight for it and win it - the US will start WWIII at the time when printing doesn't fool anyone anymore and thus no one will buy US paper/debt.

THAT - is the one and only inevitable and eventual consequence of QE ad infinitum.

Chose FREEDOM NOW - i.e. Ron Paul, i.e. no more empire and associated serfdom - or realize that "America" will never again be - not only that - after WWIII the US will completely isolated - no one will submit to it like they did after WWII - because WWIII will be started by US - i.e. US EMPIRE IS the evil initiator of WWIII - not as with WWII the savior.

ANyone who does not see and understand this - is in denial - or an establishment tool and a tool of the elite's paper/military empire - AND NEEDS TO OPEN THEIR EYES AND FACE THE TRUTH - TO WIT:


RE TYLER DURDEN's position - I believe any editor & publisher should be 100% clear on their position and principles and never give any wind to its opposition and antithetical positions. Ambiguity is a toll of power - not truth. Is the Tyler Durden(s) for or against US Empire? Against the US FED RESERVE? Against QE? And yet simultaneously, though perhaps somewhat indirectly and or stealthily, for avoiding "austerity" - and how can one reconcile such opposing views - and thus how can anyone not see such antithetical promotions as double-speak/new-speak?

Naturally - I am challenging and provoking clarification of THE TD POSITION.

I do not subscribe to the theory that a publisher's philosophical postitions should be - or even can be - private. That sort of covering claims are mumbo-jumbo for manipulators.

The TDs can state their position or not as they please. Astute readers draw their own conclusions.

hedgeless_horseman's picture



Is the Tyler Durden(s) for or against US Empire? Against the US FED RESERVE? Against QE?

Sounds like you are trying to get Tyler(s) sent to Gitmo and detained indefinetly.

eureka's picture

Are you kidding?  Ron Paul would then have been sent to Gitmo long ago.

Don't worship icons (like the Tylers) - and don't fear anyone - least of all US fricking Empire.

Let's not kid ourselves - CIA knows all of us and could take any one of us anytime they want. And yet they aren't. Why? We're not there yet - and we are insignificant - until we stand up, like Ron Paul, in full daylight, and then we are protected by the truth and its followers.

I, personally, do not ask for anything more.

HardlyZero's picture

Someone please see the Sovereign Credit-Default Swaps blowing out on Hungary, Egypt, Japan.

Should we call it PHIIGS now ?  who will bail-out Hungary ?  Hungary is now more risky than Ireland !

Egypt SCDS has increased 40% in 2 months.

Japan SCDS has increased 30% in 2 months.  Japan is more risky than Panama ? !


quantifying chaos.  It tally's up.  SCDS...shows what is getting risky.


vato poco's picture

It's "obvious" (the) Tylers(s) want blah blah blah?? In what alternate universe? *Possible*, sure - because anything's possible, and smart people making strategic feints just amplifies that. But obvious? Let me guess: you're an Alex Jones follower, the guy who not only suspects the official story is BS, but can PROVE it!!!!!!! (by and by. someday.)

slaughterer's picture

Hatzius forecasts severe recession in Europe.  SPY shoots up.  The fade-GS-play is now common.  

eureka's picture


"All man-made money is a liability of the creator and I am afraid that.  Man-made money is ultimately doomed.  Gold will be the last man standing as it has been over thousands of years.

At the start this site I mentioned that already 6.3 trillion dollars have been lost in this early, and I emphasize, early, stage of the bear market.  The essence of what I foresee ahead -- we are now moving into the second half of one of the greatest bear markets in history.  It will not be a time for making money, rather it will be a time for austerity and survival.

Europe is already practicing austerity, and shortly I expect the US to follow in its footsteps.  One great problem is that the US's politicians are trying to avoid pain.  Austerity means pain, and to reduce our consumption and spending means one thing – taking the pain. 

Already the early signs of pain are appearing, and of course what I'm talking about is unemployment well above the present level.  During the 1930s unemployment rose to 25%.  I think ultimately we will again see unemployment above 25% before this bear market ends"

pods's picture

But is it better than expected?

Ghordius's picture


Eh? Interesting Conclusion here

"The political economy literature on austerity suggests a paradox. There is no significant punishment at the polls for governments pursuing cut-backs, and no evidence of gains in response to budget expansion".

So the median elector is more intelligent than the median politician (witness the Swiss direct democracy)... and it comes all down to corruption.


Shizzmoney's picture

JPMorgan notes the study....as they give more charity to the NYPD fund.

flattrader's picture

More?  Yet another "donation" to buy off the cops?


SheepDog-One's picture

GEE really? If you hand free billions and trillions to worthless banker criminals and pay for it by totaly screwing the people by taking away whatever meager pensions they may have had to live on, there may be 'political backlash' against the totaly corrupt politicians? Frankly Im SHOCKED!!

Esculent 69's picture

Commodities to buy for the forseable future- 1. Gold and Silver. 2. Guns and ammo.   3. Gas, solar panels, batteries, radio, and more ammo. 4. Canned goods, top ramen, water, medicines, first aid supplies, and more ammo. 5. Night vision goggles, guard dog, and more ammo. 6. Losts of beer, whiskey, cigarettes, pot, lighters, physical porn rather than digital porn (for when electricity is scarce and you cant get on the internet) and lots and lots and lots of ammo. Did I forget anything?

Caviar Emptor's picture

Hand to hand combat weapons, crank radios, generators, cigarettes for barter, big dogs, big helmets, powdered drugs for barter, gaggle of hoes for business

roccman's picture

two books:


1) where there is no dentist

2) where there is no doctor


and a suture kit.

francis_sawyer's picture

a good handyperson needs only two things... WD-40 & duct tape

If it's stuck... WD-40 it

If it's loose... Duct tape it

Falcon15's picture

A well fortified location and a very well armed and dedicated group of individuals to defend all your stuff. Non-hybrid seed and livestock. The skills that will be needed along with tools - carpentry, mechanic, reloading, gunsmithing, as well as water and land mangement. Extra dry batteries for your battery bank, clothing, thread, copius amounts of 12VDC equipment (fans, lights, etc). Spares for your spares. One is none and two is one.



Beano. Lots of it.

Canning and preserving equipment, and loads of spares.


Did I mention Salt?

Don't forget rebuild kits for your weapons, wood (for heat and cooking), if you are lucky wood gassification setup and multifuel carberators for your internal combustion devices (including vehicles) to be able to run on producer gas.

Gold and silver for wealth transition - should be bought AFTER you have the three B's (beans, bullets, bandaids). I could go on, but you get the gist.

Never forget the Prepardness Triangle:


francis_sawyer's picture

What a lot of people never consider is to start by saving, organizing, & inventorying all the stuff that they have lying around...

Open a can of soup, tuna, beans, or whatever??? Wash & save the tin (turn them into portable wood gasifiers)

Got stuff in glass jars in the fridge... They can become temporary Mason jars

Plastic Bags (glad bags, trash bags, whatever)

aluminum cans = insulation

wine bottles, vodka & whiskey bottles, little airplane kit bottles, etc...

That's just a starter kit... I've been saving stuff for years now, keeping it sanitized, sealed, & ready for use (in a 2nd life), should it become necessary... People out there shopping for food survival kits nowadays are way late to the party...


flattrader's picture

I have never entertained the idea that in a true SHTF scenario which includes natural disaster, that I could reasonably expect to stay in one place...though I do have extensive home supplies.

I just re-worked the bug-out packs...car supplies, dual and foot.

It was an interesting exercise.

Only need about $100 for upgrades/additions.

This is a good time to shop--post hunting season and consumermass.

Cpl Hicks's picture

Dog food, tp- can't wipe your ass with all that ammo, some kind of water purification method, seeds and gardening tools, woodworking tools, all kinds of tools, in fact.

HardlyZero's picture

Whisky...it tastes better than Whiskey.

StychoKiller's picture

A dozen or so friends to help stand watch.

Caviar Emptor's picture


>>The independent variable that did result in more unrest: higher levels of government debt in the first place.<<


Makes sense because higher debt in the first place correlates with financiers getting rich. Then they want that debt repaid just when everything is tanking all around. Choices left: serfdom or revolution

Bob Sacamano's picture

Higher govt debt directly correlates with higher govt spending which correlates with ensnaring more dependence on the government  -- the government that was suppose to solve most societal ills by its massive central planning, spending and redistribution -- because government knows best.   Yet with tremendous growth in government we get more unrest. 

redpill's picture

The US has the benefit of having a massive military budget that could be substantially cut long before true "austerity" would be felt at home.  Most of these Euro countries, though, are consumed almost entirely by the welfare state, wherein every penny cut enflames the mob that violently objects every time they get a single spoonful less slop at the trough.  Bon chance, mes amis!

Caviar Emptor's picture

Can't meaningfully cut the military budget