German finance minister Wolfgang Schauble left little question about his view of the wisdom of the economic policies of the Obama Administration. Schauble called the U.S. plan to pour trillions of dollars into the bailout fund “stupid” and said it would destroy the AAA ratings for the members — precisely what occurred to the U.S. this year. There is rising criticism of the economic views of Timothy Geithner, who some view as steering the U.S. into massive and unproductive spending.
It is rare to see such a public rebuke in diplomatic circles and highlights the lingering questions of the Administration’s policies of pumping huge amounts of money into the market and into jobs programs.
The Obama jobs plan has received little support on the Hill where critics are charging that the plan will cost $200,000 a job — an assertion defenders have called misleading. ABC News reported “Treasury Secretary Timothy Geithner didn’t dispute a Harvard economist’s estimate that each job in the White House’s jobs plan would cost $200,000, but said the pricetag is the wrong way to measure the bill’s worth.”
I tend to be a bit skeptical of the government being able to prime the pump with huge bailouts and stimulus handouts. Similarly, the last stimulus fund created for shovel-ready projects appears to have been largely a failure from a cost-benefit perspective. That perspective is not helped with President Obama now saying that there is “no such thing” as shovel-ready jobs after using the pitch to sell the last massive fund.
What do you think?
Source: Telegraph
Loviatar,
Those facts just keep getting in the way of the Right, but I will echo Gyges comments that Ekeyra is a good poster.
Loviatar,
Ekeyra’s a grouch, but she’s a grouch willing to explain her views. If you’d rather talk to someone that’s less abrasive, that’s your choice. I just wanted you to know, she’ll actually have a conversation.
@ Gyges
Typically, I’m a great person for give and take in a discussion (see the back and forth with Berliner above) and I also believe I’m open minded enough that a persuasive argument can change my opinion.
However, in their 40 year assault on the middle class the other side has made their economic argument with a litany of BS, outright lies and insults. I’m sorry, I can no longer give these people the benefit of the doubt, I don’t believe they’re making good faith arguments and my patience is no longer there for the back and forth over an argument I don’t respect.
In this particular case, ekeyra starts with an insult – Just because you dont have enough critical thinking skills to form your own opinions without krugman’s dubious guidance doesn’t mean he’s right. – then takes Professor Krugman’s quote out of context and ends by posting two videos that are disingenuous and misleading, I don’t see the discussion going up from there. Why waste my or anyone else time by constructing an informed response.
Gyges,
No big deal, just letting you know krugman does a better job of discrediting himself than I ever could. Thats why Im constantly astounded anyone takes him seriously.
You should also let loviatar know how offended I am at being called conservative. Did you see the debates? Those people are crazy.
http://www.thedailyshow.com/watch/mon-september-26-2011/indecision-2012—the-great-right-hope—the-gop-finds-another-ideal-candidate?xrs=share_copy
Swords to plowshares is as much an economic principle, as much as a moral or philosophical one.
Ekerya,
Can’t listen to video right now, I’ll check it out later.
Gyges,
Krugman says ww2 got us out of the depression in the video i posted…the same one where he also says that a fake alien invasion would save the economy by building weapons to fight a non existent enemy. And yes the new deal made it much worse. Considering their logical extension of bastiats work, I would bet every asset to my name that noone at mises ever wrote an article about how ww2 got us out of the depression.In fact, if you do take the time to look you will find articles explaining how the ww2-new deal paradigm is a false discussion. It was neither. Oh look here’s one title “WW2 did not end the great depression”.
http://mises.org/daily/5069
Also your looking at the broken window fallacy too narrowly. Millions of men shipping off to war instead of finding peaceful, productive employment at home, or diverting vast portions of productive capacity to manufacturing things that will end up as smoldering wreckage, is just as destructive to an economy as dropping bombs on cities, or throwing rocks through windows.
That which is seen and that which is unseen.
Loviatar,
May I suggest you actually try talking to Ekeyra, I think you’ll find her (Ekerya, I’m not sure why I have the impression you’re a she, are you?) generally more willing to engage in actual conversation than a good chunk of people here. Including some people I agree with.
There’s some great dialogue to be had at this site, assuming you’re willing to be civil. There’s also some crappy preaching, but eventually most of us figure out who does which.
Krugman is 99.999% right.
This thread on the net is another example of lawyers and idiots that know nothing about another field pretending they know everything about another field.
My problem with that quote from Keynes in that clip of Fareed Zakaria is that it implies any gov’t stimulus job is equal. And at times, Krugman has basically gone along with that.
But the original stimulus was sabotaaged from the beginning and implemented incorrectly.
Originally there was great talk of fixing infrastructure — the Minnesota Bridge and bridges like that. But in the Cabinet, it turns out Summers doesn’t believe in infrastructure projects, so he nuked them.
Then Valerie Jarrett (encouraged by a Robert Reich editorial) directed that much of the stimulus go to jobs for women, even though women were by far not the hardest hit segment. It was men in construction and similar fields.
And then many of the jobs went to paper pushing gov’t jobs or short term pot hole fixing.
And even though many many months went by from November 4 to when the stimulus started, there was no effort by Obama to tell states to prioritize projects, start the paperwork. Neither was there guidance from Obama to EPA or others to streamline EIRs or reduce or eliminate them for the duration of the stimulus.
And so the states had nothing to do but fill in paper pushing temporary gov’t jobs and fix some seasonal pot holes.
But all of that gives guidance on how a new stimulus, if one were created, should be managed.
Feel free to contribute any actual ideas you have to repudiate my statements, rather than simply calling me names.
Ekerya,
The only people I’ve heard claim WWII got us out the Great Depression were people claiming that the New Deal made it worse (actually I recall a Mises.org article to that effect, but I could be wrong); I’d like to see the quote of Krugman’s saying that (if you have it handy). If not, don’t worry about it, I’m busy enough that I probably won’t be able to give this conversation much attention.
As near as I can tell, with a few notable exceptions, most of WWII happened elsewhere. As I understand it, the broken window fallacy applies to closed systems. Which this wouldn’t be, since the destruction was of other countries and the discussions usually center around the U.S. economy.
Out of curiosity, if it wasn’t WWII or The New Deal, what did get us out of the great depression?
Why some inflation is needed. Simple version.
Right now inflation is about zero.
Right now there is not enough spending in the economy. And we are told that companies have money but are not spending. Banks are not loaning.
If I told you that your $10 today will be worth only $5 next week, what would you do today?
For those still thinking of voting Republicans or still calling yourself Conservative, this – ekeyra – is constructive discussion from your fellow travelers.
After reading and viewing the stupidity posted by ekeyra, I prefer the smug entitlement from the earlier comments. What a waste : (
The notion that WW2 got us out of the depression is simply a broken window fallacy writ large. If he cant even figure that much out, how insightful is the rest of the dribble that falls out of his hairy piehole?
This kid has it figured out
Just because you dont have enough critical thinking skills to form your own opinions without krugman’s dubious guidance doesn’t mean he’s right. In defiance of all logic and common sense krugman suggests a fake alien invasion could save us all from economic collapse. One more time i ask with all sincerity: How long are you going to keep betting on this horse?
As for loviator, how much would have been enough? 4 trillion? 6 trillion? How much should we have poured down a black hole before we can go back to pretending were properous again?
“A haircut of 1/4 would mean that the German federal (and state) budget(s) would take a hit of ~5 billion euros (plus the German part of ECB and so on).
Which would lead to austerity and “suffering” for the German taxpayers, because that money has to come from somewhere.”
Take the 5 bln euros from any financial industry executive who held a title of Vice President or above within the past 10 years. I’m sure while they were in the process of cratering the global economy they were easily taking home payments in excess of that amount.
– “Just saying “bank” when you talk about Germany is highly misleading because so many banks here are owned by governments (and mostly that`s a good thing).”
For 5 years at my previous job I had the pleasure of working and living in Sindelfingen just outside of Stuttgart, so I am well aware of the government owned banks. I agree with you that they are mostly a good thing, especially if you also have a robust private banking sector. However, in regards to this discussion, bank debt whether private or government owned is still subject to the variances of the Eurozone.
I don’t think you’re understanding my point or if you do, I don’t think you’re taking it seriously enough. Germany to its credit was and is a great believer in an integrated Europe, in fact they were one of the earliest supporters of the Euro and the Eurozone. This early and passionate support however has greatly exposed them more than others (England) to the downside of any Eurozone failure. The belief out there is that a default of any of the PIGS will lead to a contagion effect of all the PIGS defaulting. If this happens you can kiss your social security goodbye.
Germany can not make decisions in a self serving manner, with the demise of the Deutsche Mark, this is no longer possible. I not a hater of profit making banks and I know it hurts to accept that some people (Greek civil servants) will get away with making bad financial decisions. However its in your best interest for the Greeks to have a manageable debt that they will attempt to pay off rather than them just throwing their hands up and saying F… it I’m not paying anything.
“Privately owned German banks” and “Germany” are two different things.
The federal government is exposed with ~17.5 billion euro, the state governments (mostly just Baden-Württemberg though) with ~2.5 billion euro.
The private owned banks with 5.5 billion.
(Commerzbank 2.9 billion, Deutsche Bank 1.6 billion, and DZ Bank 1 billion).
Just saying “bank” when you talk about Germany is highly misleading because so many banks here are owned by governments (and mostly that`s a good thing).
For example the German bank most exposed to the Greek debt is the KfW (with 8.4 billion euros), which is owned wholly by the federal government.
There are no fat cat investors who can take a hit, because the stockholders are, in effect, all the German tax payers.
Look, I hate for profit banking as much as the next guy, but in this instance they’re really not the core problem.
Blouise, good morning! I have been missing your postings on the blawg, it’s always a treat to see/read you.
“no one has provided words that show error in that reasoning.” re: bailout and calling it a stimulus: Isn’t it amazing how much big law seems to get passed with minutes left on the clock and no one reading or understanding or even disclosing exactly what’s in the bills? Or at least that’s how it’s being played. Even when the deals get done among the pols the proposed laws are not fully disclosed or discussed to citizens until after the vote is taken. Government is becoming completely divorced from the citizenry. Or as we used to say at the job, ‘man, they don’t tell me anything, I just work here.’
– “And having my social security dismantled so that some Greek public servant can retire with 53 in his villa strikes me as profoundly unfair.”
Your social security is being dismantled because many bank executive was massively incentivized to seek a slightly higher return on investment by pushing and investing in junk mortgages and investments. Both the bank executive and the Greek civil servant are to blame, however I put the majority of blame on those pushing the bad debt (i.e. who do you blame more the drug dealer or the drug addict).
—–
– “Your comment about “bank bailouts” seem to indicate that you don’t understand that this isn’t a bank crisis but a sovereign debt crisis.”
This is a bank crisis, a too big to fail bank crisis. Earlier I wrote, If you owe the bank thousands of dollars,the bank owns you. If you owe the bank billions of dollars, then you own the bank.
I’ll add a codicil;
If the bank becomes too big to fail, then they own the country.
This has become a sovereign debt crisis because the banks have become too big to fail, but at its core its still a bank crisis. In my above suggestions I should have included a requirement that the banks be broken up to a more manageable size.
—–
– “The money (less than 6 billion euro) private German banks own of the Greek sovereign debt isn’t really the problem.”
German exposure to Greek debt has been quoted anywhere from 20 to 34bln dollars.
Wall Street Journal
“German and French banks carry a combined $119 billion in exposure to Greek borrowers alone and more than $900 billion to Greece and other countries on the euro-zone’s vulnerable periphery: Portugal, Ireland and Spain.”
—–
Again with the integration of the European economy, Germany can not be self serving with their decisions. They have too much to lose if the PIGS go under and default. A haircut of 25 to 33% percent is much better than a default and run on the Euro.