Tag Archives: austerity

Real Fiscal Responsibility 2; Carter: Stagnation and Unemployment

Posted on August 31, 2014 by Joe Firestone | 15 comments

This post continues my series evaluating the fiscal responsibility/irresponsibility of the Governments of the United States (mostly the Congress, the Executive Branch, and the Federal Reserve) by Administration periods beginning in 1977 with the Jimmy Carter period. My first post explained why I chose to start my evaluation with the Carter period, and also laid out my related definitions of fiscal sustainability, and fiscal responsibility.

It explained why fiscal responsibility is closely connected to the idea of public purpose, which I’ve laid out here. I also claimed that the Government of the United States has been fiscally irresponsible in every Administration period since 1977. The remaining posts in this series, and they will be many, will document that claim with analysis.

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Posted in Joe Firestone

Tagged Austerians, austerity, Carter Administration, debt and deficits, expanded policy space, MMT, modern money theory, Paul Volcker, public purpose, REAL fiscal responsibility

Real Fiscal Responsibility I: Preliminaries

Posted on August 29, 2014 by Joe Firestone | 16 comments

By Joe Firestone

This is the first in a lengthy blog series that will evaluate the US Government’s record on Real Fiscal Responsibility, Administration period by Administration period, since the Administration of Jimmy Carter in 1977. In evaluating the US Government’s record, it’s important to state clearly that I will be evaluating more than just each Administration and its activities.

The record of fiscal responsibility is not the product of the Executive Branch alone. It is the outcome of the interaction of the Executive with the two Houses of Congress and the Federal Reserve System, even on occasion the interaction of one or more of these with the Supreme Court. All bear joint, though not equal responsibility for the record of Government fiscal responsibility or fiscal irresponsibility, as the case may be, during each Administration period.

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Posted in Joe Firestone

Tagged Austerians, austerity, debt and deficits, expanded policy space, MMT, modern money theory, public purpose, REAL fiscal responsibility

Hollande Channels Pétain and Chooses Economic and Political Suicide

Posted on August 27, 2014 by William Black | 2 comments

By William K. Black

In a prior column I described how the finance ministers of Italy and Serbia committed financial malpractice and betrayed their nations and their heads of state by insisting on bleeding the economy through austerity to make it healthy. “Two EU Finance Ministers Throw their Bosses and Nations Under the Bus.”

In France, however, Economy Minister Arnaud Montebourg risked his political life to try to prevent President Hollande from throwing France and the Socialist Party under the austerity bus. Hollande and Prime Minister Valls proved that no good deed goes unpunished by forcing Montebourg out of his position and throwing the Nation and their Party under the bus. Montebourg proved the truth of the proverb that warns that it is dangerous to be correct when those in power are desperately wrong.

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Posted in William K. Black

Tagged Austerians, austerity, eu, France

Europe’s Lousy Bank Loans Expose the “Recovery” Myth

Posted on August 22, 2014 by William Black | 3 comments

By William K. Black

One of the great lies of the financial industry is that it is the engine of Main Street’s growth. Giving the finance industry an enormous share of total business profits was supposed to super charge Main Street’s growth. It has never delivered on this promise. The truth is the opposite. The efficiency condition for a middleman like finance is that its size and profits should be minimized. Finance’s fraud epidemics blew up the world economy and devastated Main Street. Finance is a parasite that saps Main Street. The latest example of this comes in a New York Times article about European bank’s bad loans.

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Posted in William K. Black

Tagged accounting control fraud, austerity, bank fraud, fraud, Great Financial Crisis

Italian’s Apology for German Austerity Diktats Lasts 24 Hours

Posted on August 20, 2014 by William Black | 1 comment

By William K. Black

On August 13, 2014, the International New York Times printed an op ed by Beppe Severgnini attacking Matteo Renzi, Italy’s Prime Minister. Severgnini offered readers this classic question and answer.

“So why is Italy’s economy, the eurozone’s third largest, the only major one in Europe currently flatlining? Last week Istat, the national statistics bureau, reported that it had contracted in two successive quarters for the third time since 2007, plunging us into a triple-dip recession.

How did we pull that one off? Plenty of plausible explanations blame the feckless government of Silvio Berlusconi, or the acquiescent administrations of Mario Monti and Enrico Letta that followed, the latter two having imposed the European Union’s — or rather, Berlin’s — belt-tightening on a country needing to boost consumption and investment.

But blaming Brussels, or anyone else abroad, is wrong. The rest of Europe followed the German diktat, and yet Italy is the only one suffering.”

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Posted in William K. Black

Tagged Austerians, austerity

The Real Fiscal Responsibility Talk Show Pilot Project

Posted on August 15, 2014 by Joe Firestone | 21 comments

By Joe Firestone

This pilot project and the radio/video shows it will produce and place on the web is for everyone tired of hearing economic commentary from those who got everything wrong. For decades, the doctrine of “Fiscal Responsibility” interpreted as long-term deficit reduction and Government austerity has had a secure place in American politics. This doctrine is the economic equivalent of the medieval notion that patients must be bled to cure them of disease. And this truth is reflected in the economic history of the United States at least since 1976, when we first began to practice ideology-based austerity in its modern form by planning for deficit reduction and balanced budgets in order to decrease the debt-to-GDP ratio.

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Posted in Joe Firestone

Tagged Austerians, austerity, debt and deficits, expanded policy space, MMT, modern money theory, public purpose, REAL fiscal responsibility

Two EU Finance Ministers Throw their Bosses and Nations Under the Bus

Posted on July 14, 2014 by William Black | 1 comment

By William K. Black

The finance ministers of Italy and Serbia have just publicly thrown their heads of state and their nations under the bus. In a testament to the crippling effect of the belief that “there is no alternative” (TINA) to austerity, these finance ministers have insisted on bleeding economies that are in desperate need of fiscal stimulus. Their pursuit of economic malpractice is so determined that they eagerly sought out opportunities to embarrass the democratically elected head of state in Serbia when he dared to support competent economic policies.

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Posted in William K. Black

Tagged austerity, eu

Merkel’s Pyrrhic Victory over Cameron

Posted on July 9, 2014 by William Black | 2 comments

By William K. Black

The old line that one should be very careful about what one wishes for – for you may receive it applies to Germany’s installation of Jean-Claude Juncker as head of the EU Commission. Germany’s Prime Minister Angela Merkel has just crushed her UK counterpart (David Cameron) by orchestrating a nearly unanimous vote among EU nations to appoint (not, really, “elect”) Juncker as head of the EU Commission (not, really, “Parliament”).

The old days of needing to hide Germany’s control of the EU through the façade of a German-French partnership are long gone. EU nations know that there will be a high price to pay for attempting to buck Germany – and that the effort will fail. Cameron’s effort to block Juncker is generally viewed outside of the UK as quixotic and humiliating while Merkel is viewed as reigning supreme and serene.

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Posted in William K. Black

Tagged austerity, eu

It’s Long Past Time for Krugman to Name and Shame NYT’s Eurozone Reportage

Posted on July 7, 2014 by William Black | 7 comments

By William K. Black

Monday, July 7, 2014 provided another example of Paul Krugman explaining why austerity was an insane response to the Great Recession and the New York Times authoring another of its endless articles that assumes that austerity is essential to a eurozone recovery. I have no problem with the NYT reporters providing their rationale for why they concluded that Krugman was wrong and that austerity is the proper response to a recession. My problems are with the NYT reporters ignoring Krugman’s views – views shared by the great bulk of economists – and with their failure to question whether austerity is the proper response to a recession.

Recessions occur when demand becomes seriously inadequate and industries fire workers and decrease production and investment. Austerity further reduces already inadequate demand by reducing public sector demand. Austerity is akin to bleeding the patient (the economy) to make him well. It would, therefore, be exceptionally strange if austerity were to be the optimal response to the Great Recession. We have a great deal of real world experience in dealing with recessions that confirms that austerity is self-destructive in such circumstances.

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Posted in William K. Black

Tagged austerian, austerity, Eurozone

Matteo Renzi Puts the Lie to “There is not alternative” (TINA) to Austerity

Posted on July 3, 2014 by William Black | Comments Off

By William K. Black

In a recent column I responded to a conservative scholar’s (Victor David Hanson) claim that U.S. “employment rates for college graduates are dismal” by showing that the employment rate for college graduates seeking employment was 96.8% – and rising.

Employment rates for recent college graduates are far worse than “dismal” in the periphery of Europe because the EU troika (the ECB, the EU Commission, and the IMF) have inflicted austerity on these nations. This produced a gratuitous second Great Recession in the Eurozone as a whole, but it also caused Great Depression levels of unemployment in Spain, Greece, and Italy. Those three nations have over 100 million in total population – roughly one-third of the eurozone’s total population. College graduates in these nations have unemployment rates ten times greater than in the U.S. (Hanson is a big fan of austerity, so he managed to get everything – the facts and the cause – reversed in his fable.)

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