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When Did Austerity Become A 4 Letter Word?

Tyler Durden's picture


Via Peter Tchir of TF Market Advisors,


Suddenly, everywhere you look, “austerity” has become a 4 letter word.  Clearly it wasn’t excessive spending that caused too much debt.  Surely we didn’t hit a financial crisis in spite of excessive spending, nope, it is all the fault of austerity.

In the rush to avoid supporting anything that could be viewed as “austerity” we have lost sight of what austerity is, and how it can impact the economy.

Is pushing the retirement age from 55 to 57 “austerity”?  I don’t see how making decisions like this is bad.  It has very little impact on the economy today, yet is a crucial step to creating long term fiscal balance.

Is cutting retirement benefits, starting in 5 years “austerity”?  Once again, the near term impact is minimal, and while painful, is a necessary step towards long term sustainability.

Is firing government employees “austerity”?  While necessary in the long term, the immediate impact on the economy may not be worth it.  Maybe bloated governments need to be dealt with, but over time.

Are programs designed to enforce the tax code “austerity”?  Collecting these taxes will take money out of current spending, but the people holding this money by not following the tax laws don’t deserve to have it.  It is necessary to create a culture of fairness.  This is money that was supposed to be the government’s anyways.  You might not like what the government does with the money (do any of us?), but programs that enforce existing tax codes should not be cancelled.

Are unemployment benefits “austerity”?  This gets a lot trickier.  The short term impact would be to take money out of the economy, as people are likely spending this money as they get it. Yet, if the benefits are too good, are people choosing unemployment with benefits over work?

Are cuts to health care “austerity”?  A very touchy subject, yet the reality is this is an area that needs to be addressed.  There has to be a balance between ensuring people can have access to great healthcare and that the system is sustainable and the cost/benefits don’t get out of control.  In Greece, doctor’s were force to file things electronically or risk not getting paid.  Funny how quickly doctor’s were able to computerize their offices, bringing costs lower, in spite of what looked like an “austerity” program.

So, let’s not let politicians get away with claiming everything that is “austerity” is bad.  It isn’t.  Some forms of “austerity” have minimal near term impact yet are crucial for the long run.

Then let’s look at the long run.  Dr. Krugman had a piece today that highlighted the correlation between “austerity” and GDP growth.  It showed that more “austerity” (however it was defined) meant slower growth.  Doesn’t take a PhD to figure out that GDP is consumption based, and a cut in spending would reduce GDP.

What this chart, and so many other fails to do, is analyze what the impact is two years down the road.  Countries were all busy spending throughout the 2000’s and here we are with a debt crisis.  Too much debt is impeding the ability to grow.  If a farmer planted a seed and the next day gave up in disgust because there were no crops to harvest, we wouldn’t have any food.  Programs and policies take time.  It is obvious that spending provides a bigger short term boost than cutting spending.  It is far less obvious, that a year from now, the adjustments made to deal with the spending cuts won’t create a better future.

We too often confused “conjecture” with “fact”.  Lately I have seen a lot written about how much better the job situation is today than it would have been without all the policies of Obama, Geithner, and Bernanke.  It is treated as fact, yet it is merely conjecture.  I will admit in the quarter the policies were applied, it made the situation in that quarter better than it was.  We cannot know whether we are better off now than had we followed some alternative path.  Maybe waiting to apply the policies would have created a bigger effect – the “wait until you see the white’s of their eyes” theory.  Maybe allowing more banks to fail would have created a wave of new lending institutions that aren’t in competition with subsidized zombie banks.  We don’t know.  Economics is guess work.  There are competing reasons in economics because with some data, some math, some simplifications, and some logic, both sides of a coin can sound good.  The theories can’t be put to a proper test.  There are no 3 identical economies where you can leave one alone (the control) and apply the competing theories to the other 2 economies and see which theory is correct.

We need to take a longer term view to determine the best solution and we need to critically analyze what has been done and not just assume alternative paths would have led to a worse current situation.


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Thu, 04/26/2012 - 13:43 | 2377295 Mongo
Mongo's picture

Is bailing out banks austerity?

Thu, 04/26/2012 - 13:47 | 2377305 economessed
economessed's picture

Is generational inequity austerity?

Thu, 04/26/2012 - 13:59 | 2377348 SilverTree
SilverTree's picture

Most people don't even know what Austerity means.


Austerity - to deny ones right to Obama money.

Thu, 04/26/2012 - 14:12 | 2377400 ShankyS
ShankyS's picture

Austerity will be a 4 letter word till November 7th. 

Thu, 04/26/2012 - 14:27 | 2377441 SilverTree
SilverTree's picture

ShankyS, is that the O Shit bumper-sticker as your avatar?

Thu, 04/26/2012 - 14:52 | 2377547 TonyCoitus
TonyCoitus's picture

Passing on the Mercedes-Benz SLS AMG and "settling" for the that's austerity!

Thu, 04/26/2012 - 17:17 | 2378134 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

very sorry to hear that. my thoughts and prayers go to you, your family, and your mistresses

Thu, 04/26/2012 - 19:45 | 2378631 TonyCoitus
TonyCoitus's picture

Nice ass baby doll!

Thu, 04/26/2012 - 21:59 | 2378956 Acorn10012
Acorn10012's picture

And legs...sheeeiiiiitttttt!

Thu, 04/26/2012 - 14:53 | 2377550 Piranhanoia
Piranhanoia's picture

but not a few days afterward

Thu, 04/26/2012 - 16:12 | 2377881 DaveyJones
DaveyJones's picture

"Austerity" has been a four letter word almost as long as "bank" has been one.

Thu, 04/26/2012 - 16:40 | 2377985 midtowng
midtowng's picture

Austerity by itself is neither good nor bad. But in the cases of Spain and Ireland, which are already in Depressions and got their because of the banks (not because of excessive spending), austerity is just punishing innocent people.

Thu, 04/26/2012 - 15:06 | 2377593 Woodyg
Woodyg's picture

I'll be all in favor of Austerity when we apply it to the banksters, the Federal reserve, the lying thieving politicians, the privatized war machine and the insurance industry.....

no so much in favor of it when it's applied to my 85 year old mom living on 1250 a month while the banksters who crashed this sucker still get their multi-million dollar bonuses for ineptitude.

Thu, 04/26/2012 - 13:45 | 2377300 Burr's 2nd Shot
Burr's 2nd Shot's picture

Correlation equals causation, duh!  Doesn't take a Nobel prize to know that.

Thu, 04/26/2012 - 14:17 | 2377414 ironymonger
ironymonger's picture

It's a bit more insidious than that.

What he and Herr Professor Doktor Krug are glossing over is the implicit problem that if an economy become more dependent on government spending, it becomes more dependent on government spending!

Thu, 04/26/2012 - 13:47 | 2377302 Chief KnocAHoma
Chief KnocAHoma's picture

And the truth shall set you free!


Thu, 04/26/2012 - 13:48 | 2377306 Nid
Nid's picture

Is cranking up the presses and issuing a perpetual Put in order to subsudize a broken market Austerity?

Thu, 04/26/2012 - 14:04 | 2377372 ATM
ATM's picture

No. It is the end game.

Thu, 04/26/2012 - 13:48 | 2377309 Spastica Rex
Spastica Rex's picture

Austerity is for the poor. Suck it, the poor.

Thu, 04/26/2012 - 14:46 | 2377521 Dr. Engali
Dr. Engali's picture

I wonder who junked you....the 1% who doesn't like the biting sarcasm or some dumb ass who thinks you're serious.

Thu, 04/26/2012 - 13:49 | 2377310 Everybodys All ...
Everybodys All American's picture

There is no common sense with the liberals on economics and never will be so stop trying to convince them that you're right. Besides they have all the PHD's and all I've got are WTF's.

Thu, 04/26/2012 - 14:41 | 2377506 Harbanger
Harbanger's picture

Progressives hghjacked the term "liberal" in America in the 60's. 

The Conservative Dutch freedom Party for example, is a Dutch "Liberal" Political Party.  Because they mean Classic  Liberals, not the modern (progressive) Liberals, which are anything but liberal. 

Thu, 04/26/2012 - 13:49 | 2377312 swmnguy
swmnguy's picture

The trouble is, many people see that much of the "austerity" checklist is also the playbook of those who would impose a form of corporate feudalism.  The "austerity" measures tend to gut the middle class.  The poor will remain poor, and the benefits accrue to the rich.  By the time any benefits might "trickle down" to the middle class, there won't be a middle class, because they'll all be poor.  Those who have benefitted the most from the current fiasco will benefit again, and those who are paying the price will pay the biggest price.  It's only "austerity" for those who have gone along and upheld their end of the social bargain.

Whether or not you agree with that assessment, that's how a growing number of people worldwide see it.  And that's why there's growing resistance.  Perhaps an "austerity" that didn't target the middle class, and affected all levels of society equally relative to their means would be less unpopular.

Thu, 04/26/2012 - 13:52 | 2377321 Nid
Nid's picture

Life expectancy for the Middle Class is pretty much the same as for everyone else...give or take.

Thu, 04/26/2012 - 13:53 | 2377327 Everybodys All ...
Everybodys All American's picture


Thu, 04/26/2012 - 13:59 | 2377354 swmnguy
swmnguy's picture

I didn't say that's how I see it.  I said that's how a growing number of people see it.  Hence the resistance.  My views on it are a lot more complicated.

Thu, 04/26/2012 - 14:08 | 2377386 Everybodys All ...
Everybodys All American's picture

Social justice for all is what I'm reading and that is not capitalism and if it's not capitalism it's not going to be self sustaining. It's not complicated and has worked for well over 200 years here in the US. No need to believe the garbage coming from Krugman or any of his cronies who never have advocated to cut spending to within our means.

Thu, 04/26/2012 - 14:18 | 2377416 swmnguy
swmnguy's picture

I'd question whether what we've had for "well over 200 years here in the US" is truly capitalism, but that's beside the point here. 

I'm not advocating "Social justice for all."  Some are, though.  I'm saying that the growing number of those who oppose "austerity" see the "austerity" being proposed as nothing more than another government-sanctioned bailout of those who profited from getting us into this mess in the first place.  "I didn't take handouts, or get bailouts.  But I'm going to pay higher taxes and get lousy roads, schools and hospitals out of the deal.  I'm the one who won't be able to retire at 60, or 65, or 70; assuming I can find a job.  I'm the one who loses the value of my home, while my mortgage stays the same."  That sort of argument.

Again, whether or not you agree with it, that's the argument we're seeing.

Thu, 04/26/2012 - 14:25 | 2377444 Everybodys All ...
Everybodys All American's picture

People who think a bailout is austerity are confused. Austerity means that people will suffer for a period of time and the majority of people are too weak to deal with the pain. However, if the spending is not placed under control the market as in Europe will bring austerity on whether the people here want it or not.

Thu, 04/26/2012 - 15:22 | 2377665 Woodyg
Woodyg's picture

once the corporate predators capture and control the guv Bankruptcy is ineviatable.....


even with Austerity -  those Austerity measures will just lead to more tax cuts for the top .001% or their fraudelent corporations.....


What Austerity will NEVER lead to as long as the oligarchs control the entire governing process is smaller deficits -  Austerity is simply a way to funnel money to the top......


for example - Ryans budget plan gives out more tax cuts to the top .001% than the program cuts add up to.... balancing the budget has NOTHING to do with Austerity....

Thu, 04/26/2012 - 14:05 | 2377377 ATM
ATM's picture

The status quo is what accrues to the rich.

Thu, 04/26/2012 - 14:19 | 2377419 swmnguy
swmnguy's picture

I would agree with you.  Of course, the rich being rich, that's always true.  If it weren't true, the rich wouldn't be rich. ;>)

Thu, 04/26/2012 - 15:15 | 2377630 Harbanger
Harbanger's picture

One way to avoid "austerity" is for European countries to drop the Euro and go back to their individual currencies.  America needs to drop the Fed reserve notes and go back to the US Notes and a gold standard.

Sat, 04/28/2012 - 14:48 | 2382497 WeekendAtBernankes
WeekendAtBernankes's picture

Wish I could give you more than +1.  


No, sicko, I mean like +3.  Geeze.

Thu, 04/26/2012 - 13:53 | 2377322 Ben Burnyankme
Ben Burnyankme's picture

Are programs designed to enforce the tax code “austerity”?  Collecting these taxes will take money out of current spending, but the people holding this money by not following the tax laws don’t deserve to have it.  It is necessary to create a culture of fairness.  This is money that was supposed to be the government’s anyways.  You might not like what the government does with the money (do any of us?), but programs that enforce existing tax codes should not be cancelled.

Translation:  Fuck your private property rights.  It is all ours.

Thu, 04/26/2012 - 14:12 | 2377401 ultraticum
ultraticum's picture


As soon as I got to that section, I too had to wretch.

Thu, 04/26/2012 - 14:46 | 2377525 SheepDog-One
SheepDog-One's picture

Exactly. 'The people holding this money dont deserve to have it'....why, because someone signed a piece of paper saying they shouldnt keep their own money? Its theft, slavery by govt decree....doesnt make it right at all.

Thu, 04/26/2012 - 14:52 | 2377545 Ben Burnyankme
Ben Burnyankme's picture

Yes.  Profit is hard, plunder is easy.  Legal plunder my friend. 

Sat, 04/28/2012 - 14:50 | 2382500 WeekendAtBernankes
WeekendAtBernankes's picture

Butt plunder.

Thu, 04/26/2012 - 13:56 | 2377324 q99x2
q99x2's picture

Return the bankster's stolen money. 

Starve the beast.

Austerity the banksters.

Opensource the monetary system.

Sat, 04/28/2012 - 14:50 | 2382501 WeekendAtBernankes
WeekendAtBernankes's picture

If you mean bitcoin you're totally phucked in the head there Lahey.

Thu, 04/26/2012 - 13:59 | 2377341 ebworthen
ebworthen's picture

Where was the "austerity" talk in 2008 when the banks and insurance companies were bailed out?

Why should I swallow austerity for the sake of bankers and politicians?

You are putting the cart before the horse.

Why should I bust my ass to have my money and property stolen?

What benefit is there for the individual in austerity when it does not exist for governments, the banksters, and the corporatocracy?

Thu, 04/26/2012 - 14:01 | 2377355 Nid
Nid's picture

Why should any non banker/non poli swallow yours or anyone else's' iToy bill and/or 40 year retirement?

Thu, 04/26/2012 - 14:07 | 2377384 ebworthen
ebworthen's picture


Moral Hazard.

Thu, 04/26/2012 - 14:30 | 2377409 Nid
Nid's picture

Kinda' sorta'....

At the heart is Liberal, bankers were only bailed out of a crater created by Liberal Policies in the first place ("lend more to those you know can't pay you back, or else...") shitty dealings and "shadow banking" were rational repsonses to circumstances created by irrational policies of vote whoring politicians. Not that the fuckers on Wall Street didn't enjoy the money they derived from the scam, but....just sayin'.

Thu, 04/26/2012 - 14:20 | 2377420 Harbanger
Harbanger's picture

If they weren't bailed out in 2008, we would have crashed, your house would be worth about 40k, but the fiat ponzi may have been over by now.  So now you'll just have to wait.

Thu, 04/26/2012 - 22:42 | 2379049 smb12321
smb12321's picture

So instead we set ourselves up for a much worse crash with debt of 20 trillion rather than the 9.5 trillion we had at the time.  The MSM has maintained the BS than an orderly default means massive layoffs and the end of industries when when the reverse is true - as American Airlines demonstrates.   An orderly default of General Motors would have resulted in layoffs but would have set the company on a viable path.  Instead, it is an arm of the UAW implementing the bidding of "czars" and their pet agendas.

One reason the MSM campaigned against an orderly default was the negative affect it would have on union (and political) activity.

Thu, 04/26/2012 - 14:26 | 2377447 SheepDog-One
SheepDog-One's picture

Exactly, how is it my duty to bust my ass so some fractional reserve pirates can maintain their lifestyles?

This is all just justifying why slaves must be slaves, and the rich non producers must remain where they are.

Thu, 04/26/2012 - 14:00 | 2377349 AccreditedEYE
AccreditedEYE's picture

Peter, how DARE you think you know better than the aristocracy and their army of Fed-employed PhD's! LOL Don't worry, even with all of their mathmatical alchemy, creative verbal conjuring and a global public that still can't figure out on their own that 1+1 can never equal 5, they CAN'T stop the global deleveraging process. They can continue to make it a more painful process but there ain't no stoppin' it.

Thu, 04/26/2012 - 13:59 | 2377350 Piranhanoia
Piranhanoia's picture

The answer is yes to some of your questions.  You may be forgetting that the people involved,  the ones being asked to suffer austerity due to the actions of their government giving their money away,  would have major issues with your rush to spread their future around like manure.

Austerity as it is currently being dished out is a shit sandwich for everyone but those it will directly benefit,  so,  fascist in nature.  No?

Thu, 04/26/2012 - 14:00 | 2377357 The Alarmist
The Alarmist's picture

Is never actually trying real cuts austerity?

Thu, 04/26/2012 - 14:27 | 2377450 SheepDog-One
SheepDog-One's picture

Funny how the only time 'cuts' are mentioned its never to the millionaire politicians and billionaire banksters.

Thu, 04/26/2012 - 22:50 | 2379067 smb12321
smb12321's picture

But taking wealth from someone is not a "cut" - even if they are a billionaire or even an Obama millionaire ($250K).  The clearest case of what is truly out of control is found by  comparing the 2007-2008 budget with one for 2011-2012.  (well, we haven't had a budget in years but compare the numbers.)  Revenues were almost exactly the same - $2.5 trillion.  The difference?  Spending had risen $1 trillion.  Now tell me why we shouldn't cut.

Thu, 04/26/2012 - 14:00 | 2377360 mendolover
mendolover's picture

Who's the douche on CNBS with the hair?  Does he actually get laid with that coif?


Thu, 04/26/2012 - 14:05 | 2377365 Dr. Acula
Dr. Acula's picture

"We need to take a longer term view to determine the best solution and we need to critically analyze what has been done and not just assume alternative paths would have led to a worse current situation."

No. You need to read von Mises:


Thu, 04/26/2012 - 14:03 | 2377369 Kreditanstalt
Kreditanstalt's picture

This whole article has as a premise that "taking money out of the economy is bad".  Therefore, the writer says, don't cut ANY spending!

Money doesn't come "out" of the economy: it just moves from government spending and overpaid government employees to REAL PEOPLE.

Thu, 04/26/2012 - 17:19 | 2378143 Umh
Umh's picture

Would that be trickle out economics?


Thu, 04/26/2012 - 14:07 | 2377373 Problem Is
Problem Is's picture
"When Did Austerity Become A 4 Letter Word?"

When government deficits exploded bailing out Banksters and corporate CEOs with The Big Government Teat of Corporate Welfare at taxpayer expense...

Who Should Pay?

Lewis, Moron-ihan, Pandit the Bandit, Jamie & Lloyd et al...

Without Big Teat Welfare... These boys would be shining shoes...

Jamie & Lloyd: Amerika's Shoe Shine Boys
Gimmie a shine, Jamie...

Thu, 04/26/2012 - 14:08 | 2377388 Kreditanstalt
Kreditanstalt's picture

(Who should pay?) you ask...?

Yes, "Lewis, Moron-ihan, Pandit the Bandit, Jamie & Lloyd et al..."

But also those on extended-extended benefits.  Those on food stamps.  Those paid by government.  Government employees.  Government contractors.  Local governments.  Taxes should be cut.  Those on child support payments, medicaid, medicare and other entitlements.  They all need "austerity" too...

Thu, 04/26/2012 - 14:06 | 2377380 LongSoupLine
LongSoupLine's picture

On that note the big scam (aka - SPX) just touched 1400.

Fucking asshole crooks!

Thu, 04/26/2012 - 14:07 | 2377383 jmac2013
jmac2013's picture

The super-rich who enjoy all the benefits of bailouts and money printing financial capitalism should pay the bill or bond holders should take losses and cuts, not everyday working people.

Thu, 04/26/2012 - 14:08 | 2377385 Bam_Man
Bam_Man's picture

In Europe, annual budget deficits equal to 4% of GDP are now called "austerity".

Here in the US, a budget deficit equal to 5% of GDP would be considered "austerity".

Balanced budgets anywhere, ever are absolutely unthinkable.

Yeah, this will end well.


Thu, 04/26/2012 - 14:07 | 2377387 taniquetil
taniquetil's picture

I guess what Paul "Professional Blogger" Krugman missed was that the countires enacting the most austerity, tend to be the countries that are the most fucked up.


This is like saying "China has no austerity, that means austerity is bad!"


Whether or not Spain cuts costs is ultimately irrelevant to the fate of the country, save to maybe push the GDP contraction from -1% to -.8%, which buys it a year or two. In the mean-time, the ultimate experiment in socialism that is the Euro will keep making the Germans bleed.

Thu, 04/26/2012 - 14:12 | 2377389 NewWorldOrange
NewWorldOrange's picture

" Economics is guess work.  There are competing reasons in economics because with some data, some math, some simplifications, and some logic, both sides of a coin can sound good.  The theories can’t be put to a proper test.  There are no 3 identical economies where you can leave one alone (the control) and apply the competing theories to the other 2 economies and see which theory is correct."

And therein lies the problem with the entire methodology used by most economists of all schools. Except the Austrians, who correctly recognize that the "a posteriori" method doesn't work because every economy is a complex variable and cannot be rationally compared to another. The Austrian school approaches economics in an "a priori" way - it starts with basic truths about individuals and their self-interest based actions and builds up from there ("praxeology".) That's the reason the predictive power of the Austrian school is so accurate, whereas with the other schools it's a crapshoot.

Thu, 04/26/2012 - 14:29 | 2377459 GeneMarchbanks
GeneMarchbanks's picture

Post-Keynesians like Keen also saw the crisis coming. Building on Hyman Minsky and Basil Moore, Keen has been just as accurate. The divide between certain post-Keynesians and Austrians is more about remedy than prediction yet both are considered 'fringe'.

Thu, 04/26/2012 - 15:58 | 2377822 NewWorldOrange
NewWorldOrange's picture


"The divide between certain post-Keynesians and Austrians is more about remedy than prediction"

No, it's not. The divides between them are wide, and more on methodology (the foundation) than anything.

But of course, you're just trolling AGAIN. Didn't you just learn your lesson on that other thread Gene? IT WAS ONLY ONE OF THE MOST PATHETIC TROLLS IN INTERNET HISTORY:

Here's Gene's comment TODAY w/ regard to James Rickard's "Currency Wars (trolling):

"Aside from his usual nonsense he manages to somehow tie in sociology, physics, game theory while leading you through a vague, superficial history lesson on monetary theory. End result? Nonsense akin to the New Religionists."


"He performed brilliantly in the LTCM case. A true patriot, you should hang on every word he utters with all his amazing insights. You should purchase his book on amazon... or you can visit several blogs for free that document the glaringly obvious fact that economics in this century is a replacement for military expansionism." (comment 2173201)

JUST for you Gene, since you desperately need to be a SPECIAL snowflake:

Thu, 04/26/2012 - 14:11 | 2377398 Dr. Engali
Dr. Engali's picture

I'm not a fan of government or of government programs, but I don't know how anybody can justifiably ask people to give up "benefits" when the banks, the war machine, and other failed institutions are being funneled so much money.

Thu, 04/26/2012 - 14:12 | 2377399 New_Meat
New_Meat's picture

"When Did Austerity Become A 4 Letter Word?"

Where has Joe Bite-Me been?

- Ned

Thu, 04/26/2012 - 14:14 | 2377405 Venerability
Venerability's picture

Little Larry's tirade against Geithner today is one of the most positive signs I've seen in this corrupt market for several years!

I'm sure near 100 percent of those watching were laughing hysterically.

Either major financial media - both print and on-air - start to tone down the political bias, or they will very soon become totally unreadable or unwatchable, as the case may be.

As you know, I believe Little Larry, Little Laffer, and their inept candidate, Little Brain McCain CAUSED the Market Crash of 2008 and everything else the world has suffered since then.

Geithner versus Little Larry is a positive sign that this kind of media-induced Crash will simply not be permitted to happen again, especially if instigated by a similar cast of Media Heavyweights - this time mostly on Fleet Street - and all the Go Along to Get Along types who enable them to get their way.

On the down side: A nasty worm of some sort has been steadily spreading around the Internet, possibly originally emanating from whatever facility powers that idotic Yellow Pad logo on the Seeking Alpha dashboard - not that Yahoo's idiotic Fantasy Finance facility and its web of illegal links is helping things, either.

I'm sure some - if not many - of the Good Little Bots who frequent Zero Hedge know exactly who is behind this. If so, you should be working to prevent it, not turning a blind eye, because it seems to have gone pretty close to "rogue" and may start taking out exchanges, banks, and nuclear facilities again!

No, I don't think I am exaggerating.

Thu, 04/26/2012 - 14:17 | 2377412 buzzsaw99
buzzsaw99's picture

My idea of austere is roasting the 1% on a spit.

Thu, 04/26/2012 - 14:21 | 2377425 Madcow
Madcow's picture

No new (voluntary) debt = no net new cash being created.  That means there's no way to feed the compound interest monster - even at .000001%.   So, eventually, it is inescapable that all the bonds and rents and financicial assets must collpase.   Live by the sword, die by the sword.  This is the inevitable conclusion of fiat money and central planning. 

The collpase can either be swift and brutal (Argentina) - or it can be long and agonizing (Japan) - but it can't be avoided. 

Thu, 04/26/2012 - 14:22 | 2377435 SheepDog-One
SheepDog-One's picture

'Austerity' never seems apply to billionaire bankers, no they apprently can never do with less....and it seems this author could find a reason why bailing out obviously criminal banks and placing new debt of around $120,000 per US taxpayer is somehow just the right thing to do and needs to be sucked up, stiffen your chin there taxpayer the criminal govt needs you to pay up.

Thu, 04/26/2012 - 14:25 | 2377442 Squid Vicious
Squid Vicious's picture

off topic: what is the fucking deal with this market? we just went up 45 handles because lies-man and ben shalom had a cirle jerk ?

Thu, 04/26/2012 - 14:59 | 2377572 mayhem_korner
mayhem_korner's picture



The talking heads are just front running for the algo-feeding headlines being cycled in the background.

It's like when your CPU slows down and you check all the "processes" running in the background.  That's the real action.

Thu, 04/26/2012 - 14:27 | 2377448 catladdy
catladdy's picture

ES shorts, my condolences today

Thu, 04/26/2012 - 14:27 | 2377449 fuu
fuu's picture

Austerity for you.

Thu, 04/26/2012 - 14:29 | 2377458 MachoMan
MachoMan's picture

Austerity became a 4 letter word when the debt became odious. 

Thu, 04/26/2012 - 14:34 | 2377477 mendolover
mendolover's picture

Awesome!  Just found out a spread open section of the FT fits perfectly in my chicken coop!

Thu, 04/26/2012 - 14:37 | 2377479 Dr. Engali
Dr. Engali's picture

My wife has been imposing sexual austerity on me,and that to speak. Maybe I should hang with the secret service guys.

Thu, 04/26/2012 - 14:42 | 2377509 vigged6
vigged6's picture

Tyler – The FED is continually managing the stock market. It has become it’s only saving grace with inflation at running at two percent. All you have to do is look at the recent data on the clevland Fed’s website entitled Credit easing tools – At the recent turning points of the market the Fed announced (or did not in the case of MBS) and then increased its balance sheet and the monetary base through it’s mechanisms.

In november they announced the currency swaps (turning point in stock market) and then the swaps blasted off (going from 1 to 110 billion in a heartbeat) while simultaneously juicing MBS holdings 20 billion in early January – both juiced the market near lows.

Most recently the Fed injected a quick 24 billion of MBS expansion last week at the turning point of the recent decline.

 I can find absolutely no correlation in the schedule of purchases – to when the balance sheet increases and decreases. The FED is using this tool to inject high powered money into the system when the market suffers a downdraft.

Additionally the fed’s “other assets” (whatever that is) balance sheet is almost a mirror image of the stock market rise from 2009 – (click on other assets)

When the FED is increasing the balance sheet and thus the monetary base they are directly trying to manage the stock market. The correlation market lows is too high for it not to be the case.

Thu, 04/26/2012 - 14:43 | 2377514 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Rather than a bottle in front of me, they've given out frontal lobotomies. Silly Mr. Tchir, did you miss your appointment?

Spend now, pay for it later, see? How complicated is that? If no one spends, then we have no economy.

Austerity will create a ... insert something bad ... and we will all be ... insert expletive.

Now we can have fun and future generations will be ... insert expletive.

Everything is fun when the gubmint pays you and your IQ has been reduced mechanically.

Thu, 04/26/2012 - 14:45 | 2377517 GMadScientist
GMadScientist's picture

Austerity for whom, Peter?

Thu, 04/26/2012 - 14:46 | 2377526 mayhem_korner
mayhem_korner's picture




All politics is local.  Austerity should follow that axiom.

Thu, 04/26/2012 - 14:45 | 2377519 mayhem_korner
mayhem_korner's picture

Doesn’t take a PhD to figure out that GDP is consumption based, and a cut in spending would reduce GDP.


GDP is consumption based?  Let's think hard about that one...

In a Keynesian-based, fiat-debt economy, we can be deluded into thinking that GDP is consumption based.  But the most basic principals of economics say that GDP is production based.  After all, it's not GDC, right?

Consume less than you produce = wealth creation

Consume more than you produce = debt creation

Perpetually consume more than you produce = belief that Gross Domestic Product is a measure of consumption


Thu, 04/26/2012 - 14:48 | 2377532 SheepDog-One
SheepDog-One's picture

'GDP' is now totaly ZIRP QE based.

Thu, 04/26/2012 - 14:56 | 2377564 mayhem_korner
mayhem_korner's picture



Then we should call it GDQE.

Liars are good at using confusing words to cover up the truth, like "austerity" and "quantitative easing."  Why can't we just say "spend less than you take in"?

Thu, 04/26/2012 - 16:07 | 2377865 fuu
fuu's picture

"Why can't we just say "spend less than you take in"?"

There's no percentage to be had in that approach.

Thu, 04/26/2012 - 16:24 | 2377932 Clowns on Acid
Clowns on Acid's picture

GDP = C+G+I - (T). "I' = Investment (capital). Historically the multiplier effcet of I has been greater than C, and indeed both greater than the dreaded G.

The US has been a C based economy in recent years ,as I has gone overseas to build prodcution facilities given the tax rates, Gov't regulation, risk from EEOC suits.

The major activity in the "I" variabloe has been Federal and State Gov't Indebtedness. Of course Ben Dover's printing has increased the I of the Federal Reserve, but that is not counted in the traditional GDP formula.


Thu, 04/26/2012 - 15:00 | 2377575 LongBallsShortBrains
LongBallsShortBrains's picture

".........Is firing government employees “austerity”?  While necessary in the long term, the immediate impact on the economy may not be worth it.  Maybe bloated governments need to be dealt with, but over time.".......


What do these employees supply that is in such demand that we cannot do without their services?....never mind....

We probably should hire some more gubmint workers.......

Thu, 04/26/2012 - 15:24 | 2377672 insanelysane
insanelysane's picture

Exactly, this is why they just keep extending the current budget.  A few years ago they kept saying "if we don't pass this budget, the government will shut down" and the people said "good shut the fucker down."  You don't hear, "well we'll shut down the government" anymore, do you?

Thu, 04/26/2012 - 15:25 | 2377675 lightning
lightning's picture

I am a long time reader of Zero Hedge who is trying to educate myself out of the sheeple class.  My understanding is that austerity is identified as bad because it is what Europe is doing, and the Eurozone is in the economic toilet.  Yet I get confused because I thought austerity was started after Europe built up huge deficits, demanded taxpayers give banks money for liquidity/reserves, and then also demanded that they bail out their profligate neighbors.  Isn't that the same as me taking on the debt of my next door neighbor who happens to be a crack addict?  How can anyone reasonably expect that after getting myself into hock that I can give my neighbor a boatload of cash and balance my books by the small measures of austerity highlighted in the article?  This seems nuts to me, and yet no one seems to question the logic of sticking the taxpayer with these bills.

Thu, 04/26/2012 - 15:41 | 2377754 Carp Flounderson
Carp Flounderson's picture

don't try to understand economics from zerohedge... you're better off reading nothing.  Learn the difference between Greece owing debt in Euros vs US owing debt in dollars.  Greece is not a currency issuer.  Most news stories on government debt are massive fails because they don't recognize the difference.

Thu, 04/26/2012 - 15:32 | 2377702 spooz
spooz's picture

Typical neolib propaganda. First this:

"Collecting these taxes will take money out of current spending, but the people holding this money by not following the tax laws don’t deserve to have it."

BUZZZZZZZ.  WRONG.  See WSJ's "Diamond and Saez: High Tax Rates Won't Slow Growth":

"But will raising top tax rates significantly lower economic growth? In the postwar U.S., higher top tax rates tend to go with higher economic growth-not lower."

Second bit of propaganda presented here:

 "Yet, if the benefits are too good, are people choosing unemployment with benefits over work?"

That only works when the unemployment rate is to a level where people have a choice.  As it is, if jobs are to be found at all, they are low paying, no benefit McJobs.

As far as health care goes, since neither party is willing to take on Big Pharma, the Insurance Industry and Corporate Health Care, we can't expect to see affordable health care.  Most doctors would prefer a single payer system, but these guys won't let it happen.  It eats into their profits.  So we have to figure out a way to milk some austerity out of the sheeple.  Lets just make the poor bastards, with their McJobs, fend for themselves, right?

As far as the hopey changey just give it a little longer crap, we've been waiting for the trickle down to work for too long.  It failed to do anything but bring on some bubbles fed by debt that failed to address economic sustainability.

I've been looking at the political system, with its false sense of left and right, in terms of the political compass.  The neolibs are represented by both parties in our corrupt two party system. They point at each other, so the sheeple can feel like they have a choice.  But its all the same.  Wake up.

Here's a link to where candidates for the US 2012 Presidential Election lie on the political compass.  Ron Paul is the only one was in the running that I would have felt okay voting for.  The rest are fascists.


Thu, 04/26/2012 - 15:38 | 2377735 Carp Flounderson
Carp Flounderson's picture

"Too much debt is impeding the ability to grow."  someone doesn't undertsand the difference between US dollar debt and household debt.  MMT for the win... makes this article look like economic voodoo mysticism.  Economics isn't guesswork.  Try again.

Thu, 04/26/2012 - 16:29 | 2377941 The Alarmist
The Alarmist's picture

BTW, how can we take his economic analyses seriously when he can't even get the tick mark labels to display "low," i.e. not in the middle of the f@cking graph? would also be nice to see the r^2 value ... nice regression line there, but the fit looks kinda loose.

Thu, 04/26/2012 - 16:35 | 2377950 falak pema
falak pema's picture

the best definition of austerity is to go from debauchery to temperance. From delusions of grandeur to modest investment and consumption. Its all a question of balance and when IMBALANCE is the norm, as today, then the pendulum has to swing back a long way. But not brutally, not ideologically, but pragmatically and for ethical reasons. Thats the difference between violent reactionary change and a search for sustainable balance based on rule of law and respect of tradition. That is in essence the lesson of civilization as opposed to social darwinism.

The key issues here are having a value system that defends the constitution and adheres to reality not to fantasy, facts and acts. We are what we do, we stay accountable and all acts of cover up are unacceptable; separation of powers enacted in deeds the acid test of systemic balance by institutions of elected representatives working for the general interest.

Austerity is one side of the coin, its not an end in itself,  its a means to an end, and we should keep in mind the other side which allows us to return to hope after the discipline coming from privations. 

The Greeks, inventors of logic and analysis,  taught us four values : caution, courage, temperance and justice. To those we could add those of the revelatory tradition : faith, hope and charity; all now performed in the context of  a secular Republic for collective values of our civilization where transcendantal beliefs stay private. 

As in civil society entrepreneurship is the salt of individual liberties, it stays our most precious common objective, to pursue happiness through economic wellbeing and achievement in society; but it is not the only one. As the joys of human relationship based on love and family are even more precious. 

Austerity is the face of life when the sun goes down and we always await for the next sunrise, like the Mayans. 

Four letter words are what we say when we lose hope of a new dawning. It is the face of totalitarian systemic change that could enduce such a recurrent belief in men and lead to the opposite of civilization : barbarism and anarchy.

Thu, 04/26/2012 - 16:33 | 2377962 Benjamin Glutton
Benjamin Glutton's picture

If by austerity you mean cutting the military budget by 50% and freezing it for twenty years then I say the 4 letter word is GOOD.

Fri, 04/27/2012 - 03:27 | 2379393 SeattleBruce
SeattleBruce's picture

The military and everything else in the 'budget'.  First we need to get rid of the FED, and establish non-debt based money, and throw the criminals in jail - as without that, we'll never get to your suggestion...

Thu, 04/26/2012 - 16:40 | 2377984 TheMuppet
TheMuppet's picture

Is the UK a 4 letter word?  It certainly spells squat after well over four years of some of the harshest austery around.

Nice to see "libertarians" lining up to defend Bernanke and the banksters who accomplished all the "crowding out" of investment.

Looks like 4 years is max memory horizon. Beyond that it's put away those phoney tea bags and vote for Romney and Austerity!

Thu, 04/26/2012 - 17:07 | 2378073 smb12321
smb12321's picture

The only libertarians defending Bernanke are in your mind.   I know of not one libertairan who has nice words for the response to the crisis.  Harsh austerity?  Gimme a break.  Unless you think it's a divine right to live forever on the dole, there was a very slight reduction of some groups.  And what will those making below $82,000/yr do without all their child benefits?  (That's right - earn $80K a year and the UK gov't gives benefits.)

The problem with the UK (and Europe in general) is that compared to just a few decades, the State is the major player in the economy. The UK (and Europe) are trapped - failure to reduce spending brings unsustainable bond prices.

Fri, 04/27/2012 - 03:29 | 2379396 SeattleBruce
SeattleBruce's picture

"phoney tea bags"

You must think those million average protestors in DC a couple years ago were fake too...

Thu, 04/26/2012 - 19:33 | 2378597 Bansters-in-my-...
Bansters-in-my- feces's picture

This was money that was "supposed to be the goverments anyways."

Take a hike loser.

Fri, 04/27/2012 - 03:09 | 2379377 AnAnonymous
AnAnonymous's picture

Working in conjectures is how US citizens conceal what they are doing.

US citizens have built a world of quasi certainty and are hiding it by casting conjectures everywhere.

US citizens do work solid on certain points which are seldom spoken of directly.

Up to now, concerning the Earth as an environment, humanity since their dawn, have been on the upward leg when it comes to extracting from the environment.

But signs shows that the downward leg is closing on.

US citizens work hard on making sure they have the best of the upward leg period.

Keeping consuming as much as possible when being insolvent is one of it.

But US citizens wont speak directly of that.

Just as Ben Bernanke is toying willingfully with an inflation factor to meet certain goals (like choking economies that have to actually buy USD to get an access to vital inputs to their commodities and preserve US of A middle class) and wont mention it.

Fri, 04/27/2012 - 04:53 | 2379459 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Working in conjectures is how US citizens conceal what they are doing.

Chinese citizenism citizens do in public things which should be concealed. Lack of self indiction is problemic Chinese citizenism issue being.

But signs shows that the downward leg is closing on.

Chinese citizenism signs shows something else that downward leg is stepping in:

But Chinese citizenism citizens wont speak directly of that.


Fri, 04/27/2012 - 03:24 | 2379390 SeattleBruce
SeattleBruce's picture

"Maybe bloated governments need to be dealt with, but over time."


Maybe??  Over time?  You mean the humongous beast - the federal government - needs a little extra time to get their spending under control?....what dream world thinking is this?

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