France to form new government

[fskimospy]

to me that may very well be our next bubble. Once interest rates start rising, we may have a very hard set of choices to make financially as a country.

Why would that be? Interest rates will only rise when the economy improves, which naturally gives us more money to pay the debt with because the economy is better.

 

[Doc Savage Fan]

One wouldn't! Unless you're reading the charts differently than I am France's debt/GDP ratio has continued to get worse.

And deficit/GDP ratio has significantly improved.

 

[dank69]

And deficit/GDP ratio has significantly improved.

That's the wrong chart.

 

[fskimospy]

And deficit/GDP ratio has significantly improved.

But deficit to GDP ratio is only useful insofar as it affects debt/GDP ratio, which has continued to worsen because of austerity's effects on economic growth.

 

[Doc Savage Fan]

That's the wrong chart.

Nope. It's correct.

http://www.tradingeconomics.com/france/government-budget

 

[dank69]

Nope. It's correct.

http://www.tradingeconomics.com/france/government-budget

I mean deficit isn't the same as debt.

 

[Doc Savage Fan]

I mean deficit isn't the same as debt.

Agree. However, I explicitly said deficit/GDP. I used this chart to illustrate that France has made significant progress in reducing their deficits. They will eventually reduce debt if this trend continues.

 

[Jhhnn]

Agree. However, I used this chart to illustrate that France has made significant progress in reducing their deficits. They will eventually reduce debt if this trend continues.

Which promotes growth how, exactly?

 

[shortylickens]

Mid decade? Yeah, that sounds about right.

 

[Doc Savage Fan]

But deficit to GDP ratio is only useful insofar as it affects debt/GDP ratio, which has continued to worsen because of austerity's effects on economic growth.

France's debt/GDP ratio growth rate has significantly decelerated under austerity and is currently much better than the US debt/GDP ratio. To call their austerity efforts an "unmitigated catastrophe" is ludicrous imo.

 

[fskimospy]

France's debt/GDP ratio growth rate has significantly decelerated under austerity and is currently much better than the US debt/GDP ratio. To call their austerity efforts an "unmitigated catastrophe" is ludicrous imo.

I guess it depends on how you define "much better".

France started implementing austerity policies in/around 2010. Since 2010 France has seen their debt/GDP ratio increase 1.8% less than the US has in that time period. The cost of approximately 1.8 points in debt/GDP ratio has been GDP growth that has been at Great Depression levels, mass unemployment, governmental instability, etc. To describe a 1.8% improvement in debt/GDP ratio over the US at such an enormous cost as anything other than a catastrophe is ludicrous imo.

 

[Doc Savage Fan]

I guess it depends on how you define "much better".

France started implementing austerity policies in/around 2010. Since 2010 France has seen their debt/GDP ratio increase 1.8% less than the US has in that time period. The cost of approximately 1.8 points in debt/GDP ratio has been GDP growth that has been at Great Depression levels, mass unemployment, governmental instability, etc. To describe a 1.8% improvement in debt/GDP ratio over the US at such an enormous cost as anything other than a catastrophe is ludicrous imo.

We had similar ratios in 2008...now there is about a 10 point difference in debt/gdp ratios. Our stimulus efforts cost us dearly in this area.

 

[fskimospy]

We had similar ratios in 2008...now there is about a 10 point difference in debt/gdp ratios. Our stimulus efforts cost us dearly in this area.

Right. What do you think about France's performance under austerity? Was all this damage worth 1.8%?

 

[Doc Savage Fan]

Right. What do you think about France's performance under austerity? Was all this damage worth 1.8%?

I think they screwed up with the large tax increases. BTW, it's a 10 point difference since the recession started. Using 2010 as a basis of comparison is cherry picking and you should know better...some people might think you're intentionally trying to deceive.

 

[fskimospy]

I think they screwed up with the large tax increases. BTW, it's a 10 point difference since the recession started. Using 2010 as a basis of comparison is cherry picking and you should know better...some people might think you're intentionally trying to deceive.

No, using 2010 is the only logical time period when assessing French austerity. To use 2008 as a basis would be to include two years in your analysis where the policies you're trying to analyze weren't in effect. Why on earth would anyone want to do that? It's nonsensical. 2010 is also instructive for the euro zone as a whole. As everyone shifted into austerity mode you can watch a recovery that was previously similar to the US totally flatline. Austerity has exacted a horrifying toll on the continent.

As much as I appreciate your veiled accusations of dishonesty, I would say that if I were attempting to deceive someone about the effects of policy one of the first ways to do it would be to try and include years without that policy in them. Some might say that this was intentional deception on your part. What do you think?

Also, you appear to be arguing that the same amount of consolidation would have been significantly less damaging if it took the form of spending cuts instead of tax increases. What is the research basis for this?

 

[Doc Savage Fan]

No, using 2010 is the only logical time period when assessing French austerity. To use 2008 as a basis would be to include two years in your analysis where the policies you're trying to analyze weren't in effect. Why on earth would anyone want to do that? It's nonsensical. 2010 is also instructive for the euro zone as a whole. As everyone shifted into austerity mode you can watch a recovery that was previously similar to the US totally flatline. Austerity has exacted a horrifying toll on the continent.

As much as I appreciate your veiled accusations of dishonesty, I would say that if I were attempting to deceive someone about the effects of policy one of the first ways to do it would be to try and include years without that policy in them. Some might say that this was intentional deception on your part. What do you think?

Also, you appear to be arguing that the same amount of consolidation would have been significantly less damaging if it took the form of spending cuts instead of tax increases. What is the research basis for this?

So let me get this straight...it appears that you think it's rational to compare the effects of stimulus vs. austerity on debt/GDP ratio by omitting any spending related to the stimulus effort which occurred in 2008 and 2009 (i.e. Economic Stimulus Act of 2008 and American Recovery and Reinvestment Act of 2009). The way you think is very interesting.

 

[michal1980]

eskiomspy is spend mr spend now, pay never. He's a paul kurgam tit sucker. no mater how much government spends, its never enough.

When do you pay your bills? In their world, they day after tomorrow.

http://www.google.com/publicdata/ex...tend=1377406800000&hl=en&dl=en&ind=false&icfg

Here is his eskiomspy disaster:

 

[brianmanahan]

one way the french are much, much better than us:

they have no government!

 

[fskimospy]

So let me get this straight...it appears that you think it's rational to compare the effects of stimulus vs. austerity on debt/GDP ratio by omitting any spending related to the stimulus effort which occurred in 2008 and 2009 (i.e. Economic Stimulus Act of 2008 and American Recovery and Reinvestment Act of 2009). The way you think is very interesting.

I'm not sure where you ever got such an idea. France and the US both enacted stimulative policies in 2008 and 2009. 2010 is when their two policies diverged. When you're analyzing a policy change that's what you look for.

I wasn't actually discussing the merits of stimulus vs. austerity in this discussion anyway as I feel like that discussion has been over for several years now. The evidence for counter-cyclical stimulus spending is so overwhelming that anyone who isn't convinced at this point is unlikely to be amenable to rational argument. Their objections are likely ideological in nature. There's not really much else to say on it, the evidence speaks for itself.

Hell, look at France's GDP growth. Austerity gets implemented, growth dies.

You may have misunderstood my point in bringing up the US; it was simply as an example of a country that had not engaged in the kind of austerity France did as a benchmark for comparison during that time period. They engaged in hard core austerity, we didn't. Their growth died, ours continued. Their debt to GDP ratio and ours continued on a roughly similar trajectory. That, friend DSF, is what we call policy failure.

Imagine how much better our recovery would have been had we not engaged in austerity at all.

 

[Greenman]

I find all of this fascinating. I wish this place wasn't so polarized that an honest discussion of the topic is impossible.

 

[Jaskalas]

Hell, look at France's GDP growth. Austerity gets implemented, growth dies.

When the economy is built on falsehoods, how long can it last?

We can appreciate the stimulative effects on GDP, but what about the consequences later? We have to stop the stimulus at some point.

 

[glenn1]

Imagine how much better our recovery would have been had we not engaged in austerity at all.

Imagine how much better our recovery would have been had the "stimululs" not been blown on stupid shit like subsidizing state spending, high speed trains to nowhere, really shitty domestic automakers like Chrysler, and 99+ weeks of unemployment. Instead of addressing the #1 by far problem in the economy (huge indebtedness by both consumers and governments) Eskimospy wants to inflate the debt bubble ever higher with his misguided stimulus and further enslave to their debt prison the people he thinks he's helping.

 

[Jhhnn]

When the economy is built on falsehoods, how long can it last?

We can appreciate the stimulative effects on GDP, but what about the consequences later? We have to stop the stimulus at some point.

What about... Chicken Little!?

Is it time for Zimbabwe & the Weimar Republic to be dragged out as false banners?

 

[Jhhnn]

Imagine how much better our recovery would have been had the "stimululs" not been blown on stupid shit like subsidizing state spending, high speed trains to nowhere, really shitty domestic automakers like Chrysler, and 99+ weeks of unemployment.

Why are those things stupid?

Instead of addressing the #1 by far problem in the economy (huge indebtedness by both consumers and governments) Eskimospy wants to inflate the debt bubble ever higher with his misguided stimulus and further enslave to their debt prison the people he thinks he's helping.

What does that have to do with what you said above & what specific remedies do you recommend?

And, uhh, what does any of it have to do with France?

 

[Exterous]

Right. What do you think about France's performance under austerity? Was all this damage worth 1.8%?

I'm not sure this is the result of austerity. It seems like this is the result of cutting spending, popping the housing bubble (instead of encouraging a gradual decline) and raising taxes. The tax rate in France has risen for at least 5 years in a row to now be even higher than the quintessential high tax model Sweden. The housing drop is expected to remove more than 0.5 points off of France's GDP this year (compared to removing 0.4 last year) fueled by widespread rent caps, new taxes and labor costs with construction and drastically increasing the red tape needed to buy a home

These aren't just taxes increases for the rich either. Taxes on goods have increased, the VAT tax is up, tax bands frozen, no more tax free overtime, increased taxes on tourists etc etc.

Austerity is one thing but doing it while increasing taxes during a housing bubble is a whole other beast