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Battered Britain hovers on the edge of double-dip recession OFFICIAL: Double dip!!!

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freegeeks

Diamond Member
May 7, 2001
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Well since we're on that topic, explain the sharp drop in 10 year US bond yields from when Cameron took office. If you watch US and UK bond trends since 2008 you will notice that they follow a very similar pattern, which should probably suggest a mild effect on bond rates by Cameron's government at best.

US Debt/GDP ratio has been significantly higher than the UK's during this entire period. From about May 2010 to present, UK bonds went from around 3.75% to about 1.75%. US bonds went from about 3.5% to 1.75%. As prospects of a global economic recovery have dimmed again, bond rates have fallen again. This is most likely because we're in a liquidity trap. During the same time, US growth has continued at a modest (but by no means great) pace, and the UK has returned to recession. Is that the austerity effect you're looking for?

Germany has engaged in basically no austerity measures. Its economy has done quite well, partially due to the same reasons why southern Europe is doing so poorly. The Euro is allowing it to export at an artificially low currency rate.
because the UK has the printing presses rolling. There is a deal between the govt and the treasury, austerity in return for letting the printing presses go wild. The UK is basically doing the same as the USA, it may work in the short term (low interest rates) but it will blow up some day. The USA can not keep running near double digits deficits
 

fskimospy

Elite Member
Mar 10, 2006
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get your facts straight, austerity in has been going on in Germany for 10 years now, that's why their economy is so competitive right now. Germany was called the "sick man" 10 years ago. Former Chancellor Gerhard Schröder started the "Agenda 2010" reforms in 2003 and the so called Hartz reforms are still in effect. A big part of these plans were austerity measures that are still in effect today.
You understand that cutting government deficits during times of GDP growth is exactly what Keynesians want, right? That's what the Germans did, and that was a good idea. As for why Germany's economy is so competitive, you seem to be forgetting the massive advantage Germany gets from the Euro. Germany's booming export sector is also a big reason why the south of Europe is so screwed.

I wonder where some of you spend spend spend guys get your information. I'm Belgian and I am happy that our German overlords are stomping some fiscal sense into my govt. I rather take the pain now and emerge with a competitive economy then be dragged in the Greek and Spain fiasco. F$ck all those Club Med countries, kick them out of the EU and let them go back to their heavily devaluated currencies. I will happily buy me a nice vacation home in Spain with my hard Euro
We get our information from publicly available employment, GDP, and debt numbers. Austerity has been an unqualified catastrophe, and governments such as the US, the UK, and Germany should be massively ramping up their spending. Speaking of fiscal issues, Spain had a lower debt/GDP ratio than Germany and a budget surplus going into the euro crisis. If anything they had more 'fiscal sense' than Germany at the time, and yet they are being pounded. Now the Germans think that the answer is an austerity forced deflationary death spiral. It's just criminally incompetent at this point.
 

freegeeks

Diamond Member
May 7, 2001
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Actually the general economies are not nearly as linked as you think. If I remember correctly, US trade with Europe is somewhere around 2% of US GDP.

As for the effects of austerity, the UK has now officially given a worse economic performance in this recession than it did in the Great Depression.

As far as the outcomes of differing economic policies, well here's a chart of the US, the UK, and the Eurozone's experience after the financial crisis of 2008. (of note, late 2010 is when the Cameron government took over and promised austerity measures.)



That's pretty damning.
where do you get this stuff, EU - USA trade flows are by far the biggest in the world, more then 30% of global trade is between the EU and USA but according to your theory both economies are not really linked together
 

fskimospy

Elite Member
Mar 10, 2006
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where do you get this stuff, EU - USA trade flows are by far the biggest in the world, more then 30% of global trade is between the EU and USA but according to your theory both economies are not really linked together
I didn't say the economies weren't linked together, I said the linkages were smaller than people think.

US exports to the EU in 2011 were ~$268B. http://www.census.gov/foreign-trade/balance/c0003.html

US GDP in 2011 was about ~14.59T. http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:USA&dl=en&hl=en&q=us+gdp

268B/14.59T = 1.8%.
 

freegeeks

Diamond Member
May 7, 2001
5,460
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You understand that cutting government deficits during times of GDP growth is exactly what Keynesians want, right? That's what the Germans did, and that was a good idea. As for why Germany's economy is so competitive, you seem to be forgetting the massive advantage Germany gets from the Euro. Germany's booming export sector is also a big reason why the south of Europe is so screwed.



We get our information from publicly available employment, GDP, and debt numbers. Austerity has been an unqualified catastrophe, and governments such as the US, the UK, and Germany should be massively ramping up their spending. Speaking of fiscal issues, Spain had a lower debt/GDP ratio than Germany and a budget surplus going into the euro crisis. If anything they had more 'fiscal sense' than Germany at the time, and yet they are being pounded. Now the Germans think that the answer is an austerity forced deflationary death spiral. It's just criminally incompetent at this point.
uhhh, Germany started reforms in 2003 because of stagnant growth and rising unemployment and a growing uncompetitive economy

Spain is broke because their growth was artificially inflated by a real estate bubble for more then a decade. Both Spain and Greece basically had a fake growing economy for the last decade, it's one giant bubble

screw them
 

fskimospy

Elite Member
Mar 10, 2006
73,612
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uhhh, Germany started reforms in 2003 because of stagnant growth and rising unemployment and a growing uncompetitive economy
Spain is broke because their growth was artificially inflated by a real estate bubble for more then a decade. Both Spain and Greece basically had a fake growing economy for the last decade, it's one giant bubble

screw them
Germany's growth happened due to a boom in exports, one that largely came from big time movement of capital towards nations just like Spain and Greece, not due to austerity measures inside of it. It maintains these huge surpluses now because of the Euro. Without it currency adjustments could happen, and Germany wouldn't be sitting quite so well.

The Germans have made a catastrophic mistake in seemingly choosing to believe that every other country can have a similar trade surplus (a logical impossibility). Either that, or they genuinely still believe that a few more government cuts will solve the problem despite several years of ever more convincing evidence that this path is utter foolishness.

It does seem like the rest of Europe is waking up to the catastrophic consequences of austerity however, so there is hope that you guys can recover from past mistakes. I for one am pulling for you.
 

freegeeks

Diamond Member
May 7, 2001
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I didn't say the economies weren't linked together, I said the linkages were smaller than people think.

US exports to the EU in 2011 were ~$268B. http://www.census.gov/foreign-trade/balance/c0003.html

US GDP in 2011 was about ~14.59T. http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:USA&dl=en&hl=en&q=us+gdp

268B/14.59T = 1.8%.
You are sorely mistaken if you think that only the USA to Europe exports matter.
According to a study of your own Congressional Research Service, a study presented to your own congress, the total of transfers (import, export, transfers, investments, ...) between USA and EU was more then 1,5 trillion in 2010 and is still growing

Both our economies are very much linked together
 

fskimospy

Elite Member
Mar 10, 2006
73,612
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You are sorely mistaken if you think that only the USA to Europe exports matter.
According to a study of your own Congressional Research Service, a study presented to your own congress, the total of transfers (import, export, transfers, investments, ...) between USA and EU was more then 1,5 trillion in 2010 and is still growing

Both our economies are very much linked together
That is a totally different number. As far as what concerns US GDP growth, US exports to Europe are by far the most important thing, and they represent approximately 2% of US GDP. If you want to count European exports and transfers then we need to count in Eurozone GDP as well. In that case we'll tack on another $17.5 trillion in GDP to the figure. That would bring total linkages to approximately 5% of the combined GDP of the two areas, even considering the dubious idea of counting money movement.

So yeah, like I said. Not too terribly linked. The vast, vast majority of US and Eurozone GDP is generated and utilized internally.
 

freegeeks

Diamond Member
May 7, 2001
5,460
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Germany's growth happened due to a boom in exports, one that largely came from big time movement of capital towards nations just like Spain and Greece, not due to austerity measures inside of it. It maintains these huge surpluses now because of the Euro. Without it currency adjustments could happen, and Germany wouldn't be sitting quite so well.

The Germans have made a catastrophic mistake in seemingly choosing to believe that every other country can have a similar trade surplus (a logical impossibility). Either that, or they genuinely still believe that a few more government cuts will solve the problem despite several years of ever more convincing evidence that this path is utter foolishness.

It does seem like the rest of Europe is waking up to the catastrophic consequences of austerity however, so there is hope that you guys can recover from past mistakes. I for one am pulling for you.
and how do you think they became an export powerhouse? You can only become an export powerhouse if you are competitive player in the world economy. The reforms started 10 years ago (and a big part of these reforms were austerity measures) so they could be that exporting powerhouse again, it didn't happen by magic. Stop making up stuff and read about the reforms that Germany did 10 years ago. A lot of them were about decreased govt spending and big reforms.

Spain and Greece are learning the hard way what Germany learned at the end of the 90's, the big difference that Spain and Greece a largely depended on their internal markets, Spain and Greece have a negative trade balance for decades and have no real export economy. You can not run an economy on exporting feta cheese and olive oil. The real problem is that growth in Spain and Greece was artificial because of a real estate bubble and cheap lending made possible because of the Euro. The Germans actually make a lot of stuff that the rest of the world wants
 

freegeeks

Diamond Member
May 7, 2001
5,460
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That is a totally different number. As far as what concerns US GDP growth, US exports to Europe are by far the most important thing, and they represent approximately 2% of US GDP. If you want to count European exports and transfers then we need to count in Eurozone GDP as well. In that case we'll tack on another $17.5 trillion in GDP to the figure. That would bring total linkages to approximately 5% of the combined GDP of the two areas, even considering the dubious idea of counting money movement.

So yeah, like I said. Not too terribly linked. The vast, vast majority of US and Eurozone GDP is generated and utilized internally.

all reports, whitepapers and reports say that the USA - EU economic framework is the most interlinked and important in the world, except ofcourse for our resident Eskimospy analyst, not terrible linked :)
 

fskimospy

Elite Member
Mar 10, 2006
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and how do you think they became an export powerhouse? You can only become an export powerhouse if you are competitive player in the world economy. The reforms started 10 years ago (and a big part of these reforms were austerity measures) so they could be that exporting powerhouse again, it didn't happen by magic. Stop making up stuff and read about the reforms that Germany did 10 years ago. A lot of them were about decreased govt spending and big reforms.
About half of the German adjustment in labor costs happened before the 2003 reforms. It came from big time inflation in other Euro nations due to huge amounts of money being poured into them from a number of countries, Germany included. It most certainly didn't happen by magic, but it was most certainly helped along a great deal by the unique (and unfortunate) aspects of the Eurozone. The Eurozone is now paying the price for this.

Spain and Greece are learning the hard way what Germany learned at the end of the 90's, the big difference that Spain and Greece a largely depended on their internal markets, Spain and Greece have a negative trade balance for decades and have no real export economy. You can not run an economy on exporting feta cheese and olive oil. The real problem is that growth in Spain and Greece was artificial because of a real estate bubble and cheap lending made possible because of the Euro. The Germans actually make a lot of stuff that the rest of the world wants
No. Spain and Greece's experience are nothing like Germany's in the 90's.
 
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fskimospy

Elite Member
Mar 10, 2006
73,612
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all reports, whitepapers and reports say that the USA - EU economic framework is the most interlinked and important in the world, except ofcourse for our resident Eskimospy analyst, not terrible linked :)
You are attempting to use two totally different terms. 'Most interlinked/important' is a relative measure as compared to other economies. I am giving you the actual numbers in terms of trade relative to GDP.

I'm sorry if they are telling you things that you don't want to hear, but that's not my fault.
 

freegeeks

Diamond Member
May 7, 2001
5,460
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About half of the German adjustment in labor costs happened before the 2003 reforms. It came from big time inflation in other Euro nations due to huge amounts of money being poured into them from a number of countries, Germany included. It most certainly didn't happen by magic, but it was most certainly helped along a great deal by the unique (and unfortunate) aspects of the Eurozone. The Eurozone is now paying the price for this.



No. Spain and Greece's experience are nothing like Germany's in the 90's.

which big time inflation?

inflation in Spain from mid-90's until now ranged from 1,5% - 3,7%
inflation in Greece quickly fell from around 7% in 1996 to around 3,8% in 1998, since then inflation is in the 2 to 3,5% range

give me your inflation numbers, by all accounts, introduction of euro has created a low inflation in these countries
 

freegeeks

Diamond Member
May 7, 2001
5,460
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You are attempting to use two totally different terms. 'Most interlinked/important' is a relative measure as compared to other economies. I am giving you the actual numbers in terms of trade relative to GDP.

I'm sorry if they are telling you things that you don't want to hear, but that's not my fault.
you are just making stuff up, a serious drop in USA - EU trade and investments is millions of jobs on both sides of the ocean, but hey that only marginal according to you
 

fskimospy

Elite Member
Mar 10, 2006
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which big time inflation?

inflation in Spain from mid-90's until now ranged from 1,5% - 3,7%
inflation in Greece quickly fell from around 7% in 1996 to around 3,8% in 1998, since then inflation is in the 2 to 3,5% range

give me your inflation numbers, by all accounts, introduction of euro has created a low inflation in these countries
Greek and Spanish inflation rates have run considerably higher than those in Germany since the introduction of the Euro. This is indisputable.

Regardless, we are getting totally off topic here. Can I ask you what sort of evidence would be required for you to admit that austerity has been a failure?
 

fskimospy

Elite Member
Mar 10, 2006
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you are just making stuff up, a serious drop in USA - EU trade and investments is millions of jobs on both sides of the ocean, but hey that only marginal according to you
No, I'm giving you the real numbers. Speaking of 'making stuff up', what exact figures are you referencing for 'a serious drop' and 'millions of jobs on both sides of the ocean'? I'm guessing... you just made some stuff up.

You appear to be trying to make my position into 'US-Europe trade linkages don't matter', which is an obvious strawman. What I said is that they matter much less than people generally think, due to their size relative to our overall GDP. You may have your opinion colored by your location however, as exports from Eurozone countries to the US tend to be far more important the European nation than vice versa.
 

freegeeks

Diamond Member
May 7, 2001
5,460
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Greek and Spanish inflation rates have run considerably higher than those in Germany since the introduction of the Euro. This is indisputable.

Regardless, we are getting totally off topic here. Can I ask you what sort of evidence would be required for you to admit that austerity has been a failure?
so you admit of making stuff up, Greece and Spain don't have hight inflation for the last 15 years

we are not offtopic, you are you just making stuff up trying to make a point that only exist in your imagination

regardless of austerity or not, both Spain and Greece are doomed because there is no growth path, you can trow a trillion euro at them and they will still be uncompetitive because fundamentally they are so weak. They can not export themselves out of their misery because they don't really have an export economy and their internal market is just voodoo economics and asset bubbles.
 

fskimospy

Elite Member
Mar 10, 2006
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so you admit of making stuff up, Greece and Spain don't have hight inflation for the last 15 years

we are not offtopic, you are you just making stuff up trying to make a point that only exist in your imagination

regardless of austerity or not, both Spain and Greece are doomed because there is no growth path, you can trow a trillion euro at them and they will still be uncompetitive because fundamentally they are so weak. They can not export themselves out of their misery because they don't really have an export economy and their internal market is just voodoo economics and asset bubbles.
No, I just told you that they had high inflation relative to Germany, which was of course the whole point. You can stick your fingers in your ears all you want, it doesn't change objective reality that anyone can check the figures on. (I won't even get into why comparing pre and post euro inflation is absurd)

So again I ask, what will have you admit that this course is the catastrophic failure that it is?
 

freegeeks

Diamond Member
May 7, 2001
5,460
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No, I just told you that they had high inflation relative to Germany, which was of course the whole point. You can stick your fingers in your ears all you want, it doesn't change objective reality that anyone can check the figures on. (I won't even get into why comparing pre and post euro inflation is absurd)

So again I ask, what will have you admit that this course is the catastrophic failure that it is?
a 1 to 1,5 % difference in inflation is not "high"
please post the figures so you look like a fool and get an economy 101 course
 

fskimospy

Elite Member
Mar 10, 2006
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a 1 to 1,5 % difference in inflation is not "high"
please post the figures so you look like a fool and get an economy 101 course
I understand you are getting angry because your world view is being threatened. That's not my fault. I'm on my phone but the information is freely available

I am still waiting to hear what evidence will suffice to have you admit you are wrong.
 

freegeeks

Diamond Member
May 7, 2001
5,460
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I understand you are getting angry because your world view is being threatened. That's not my fault. I'm on my phone but the information is freely available

I am still waiting to hear what evidence will suffice to have you admit you are wrong.
LOL, my world view, I'm just stating the facts

- Germany is so competive because of the reforms started in 2003, these reforms included austerity measures, that is a FACT not some imaginary inflation theory of yours that I have proved to be wrong by COLD NUMBERS (I'm still waiting for these high inflation numbers of yours)

- Spain and especially Greece are doomed anyway because they have fundamental problems and whatever amount of money you throw at it will not help anyway. Going back to their drachmes and pesetas will make it even worse, even if they are so called competitive because of their heavy devaluated drachmes and pesetas. They can not export themselves out of their misery because they simply don't have the kind of exports that makes them competitive.

This is not about failure or not, there is simply no other way. Their economies first have to "reset" and reach their true worth level before they can start even thinking about growth. The decline in GDP you see in Greece tells me everything I need to now how inflated the economy in reality was
 

fskimospy

Elite Member
Mar 10, 2006
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LOL, my world view, I'm just stating the facts

- Germany is so competive because of the reforms started in 2003, these reforms included austerity measures, that is a FACT not some imaginary inflation theory of yours that I have proved to be wrong by COLD NUMBERS (I'm still waiting for these high inflation numbers of yours)
This is simply not a fact. It is also not an 'imaginary inflation theory', it is widely accepted by economists worldwide. I'm sorry if you didn't get the memo. Once again, high Greek and Spanish inflation vis a vis Germany in spite of large trade deficits was an is an enormous problem.

- Spain and especially Greece are doomed anyway because they have fundamental problems and whatever amount of money you throw at it will not help anyway. Going back to their drachmes and pesetas will make it even worse, even if they are so called competitive because of their heavy devaluated drachmes and pesetas. They can not export themselves out of their misery because they simply don't have the kind of exports that makes them competitive.
Not to mention that many other countries need to increase their exports as well, and it is logically impossible for everyone to increase their balance of trade at once.

This is not about failure or not, there is simply no other way. Their economies first have to "reset" and reach their true worth level before they can start even thinking about growth. The decline in GDP you see in Greece tells me everything I need to now how inflated the economy in reality was
Factually false. I'm unaware of many people who think that there is 'no other way'.
 

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