Podcast: Play in new window
Silver start ups on the rise, interesting.
Iran Delays Oil Sales cut Due to European Cold Snap.
The bankers get pretty controlling with “their” money-debt that they created with a clock and an algorithm. Especially considering that it’s un-payable by definition, and they consumed the wealth that made the system crash.
Bible had it right I guess.
Why would a country, like Ireland, sell off it’s assets so that it can spend the money on work creation projects ? Work creation projects should be building more assets for your country !! People should work for a stock option in those exact resources being sold off !!
My take on it, was that:
1. Ireland needs to get a return to consistent growth….
2. To do this, they need cash…
3. They can’t borrow any more, so are going to sell assets to raise money to fund the projects…
4. The hope being that once growth returns, Joe Public will start borrowing due his new job/ income, spurring growth etc….
It would seem they have realised consistent austerity will sink them in a downward spiral, and there is no other
way for the Irish Gov’t to get the cash needed to fund the projects….
I assume they told the creditors for two reasons…
1. To make them, and the rest of the watching world think they have a plan.
2. To ensure it isn’t seen as a last ditch panic for cash to pay the creditors
ie “We are selling assets, but it is for investment for sustained growth, not
to pay our debts and be back at square one this time next year” ( kind of thing..?? )
This was my view anyway, could be wrong though..?? :)
I can follow your logic and would suggest that you want companies borrowing/spending to expand as well. I quess Ireland used up all it bullets a long time ago with low tax rates, etc. This is all that is left. Sell the farm.
An apple a day
A little simplistic, but interesting, if you get reduce the government overhead, then the private sector doesn’t need to pay so much tax, and so will be able to employ more and, indeed have more cash to spend on stuff that it wants to spend on, rather than have the government spend the tax revenue on stuff that it wants to squander the money on.
I see this as a growth issue. All those government sector drones want to see growth in their budgets and departments so that they can claim higher salaries. Efficiency and profitability don’t sit very well in an environment where the more inefficient you are the better the rewards. The UK and Italy GDP’s are now at a level where the government is spending more than 50% of the total.
It seems to grow until it chokes out the host. Look at the result of Reagan’s two terms. The largest attempt in history to curb the growth of the US government resulted in… more government. The increased wealth generation in the private sector was just too much for the man to pass up.
I think the question is – What is wrong with the government spending 50%~?
(not forgetting that Northern European countries do the same and more)
I do not think there is an answer to the question, “what is the optimal percentage of GDP that government spending should be at”?
The question should always be, “what are the buggers spending on now?”
IMO, the issue crystalises itself in my old man, who passed away a long time ago, he was the head of administration of the local government. He quite obviously saw his personal success in increasing the size of the department and budget every year. And to give him his due, he had excellent skills at convincing people that more administration was required, and that all administrative staff should be merged under his umbrella. He was very successful, and essentially created a huge department out of nothing, which subsequently, after he retired, dwindled down to a shadow of where it had been.
The successor simply did not have the skills to make a “success” of growing further. I suspect this was also due to my old man ensuring that there were no “upstarts” around to challenge his authority.
Anyway, as long long as the money is being spent on improving the economy, then it probably is not important what percentage of GDP the government spends. However being net exporters the northern Europeans have more money to play with.
As Bigcollapso points out, administration spending seem to grow and grow until they run over the cliff.
The question of course is whether the consumption and spending of government produces more wealth or less wealth than spending in the private sector. Deficit spending transfers consumption, wealth and power from the private to the public sector. If the transfer causes more wealth production, then the monetary system is stabilized. If the consumption/spending/power transfer causes less wealth production, then it’s bye, bye monetary system.
I have come to realize that this MMT/ Government spending argument is not an argument about how the systems works, but is rather a Left/Right argument about whether control of resources and wealth should be in the hands of the private or public sector.
I am very much of the opinion (much of it learned in US public schools in the 1970′s) that central government control always fails. I was taught that it would be the undoing of the USSR, I watched it happen, and now I am watching it happen in the USA.
Well written comment, BC. Punctuation is our friend. Periods prevent run-on sentences.
When we have a balance sheet recession, we need govt. spending. Fiscal stimulus is required to counterbalance contraction and deleveraging in the private sector. But, once the private sector economy recovers, the govt. needs to shut off the spigot.
Yep, it looks like your brain was chipped out of stone in the 70′s and is never gonna change.
You bore me something chronic~!
The collapse will be less boring, standby
You have to put away the rhetoric and anaylze the problem with an open mind. Google Richard Koo’s explanation of a balance sheet recession. If he is not good enough for you, then look up your Milton Friedman’s explanation of why the Great Depression was such a fiasco. It was because of terrible govt. fiscal stimulus and monetary policies!
Surely, Milton Friendman must be your demi-god! Use your brain! If the banks aren’t lending, the consumers aren’t borrowing/spending and the corporations are fixing their balance sheets, THEN THERE IS NO FUCKING ECONOMY without govt. intervention!
Please explain to us how, when and if the economy would ever recover without govt. intervention.
All true. There are at least three interesting failure modes the the current monetary system as implemented. Don’t get too concerned with only one.
True. All govt spending is not a good thing, just a temporary fix. Shutting off the govt spigot is very hard.
Also, the duopoly created between the banks and the politicians is what will inevitably lead to our demise. Without the banks’ poltical contibutions, the politicians would not get re-elected. By buying their influence, the banks avoid regulations that could be passed by the politicians that would end their reckless ventures. Neither group is acting on behalf of the people or the nation. They will eventually drag us down.
It depends on the nature of the spending. If it is stimulative and beneficial to its citizens and industry, then it is good govt. spending. If it political, cronyistic or even too paternalistic, then it is bad govt. spending.
For example, funding light rail systems to alleviate congested urban transportation is good. Providing corn farmers with massive subsidies to produce ethanol (and thus ensure their votes in the Iowa causcus) is bad.
We could conduct a rational evaluation of govt. spending programs, from Energy to Education, to decide what is productive or destructive. Unfortunately, politicians often utilize govt. spending as a re-election tool.
How about a bridge to nowhere connecting a high speed rail link? Vote for me!
Perhaps an increase in hybrid and electric car sales (look at the link) coupled with the aftershocks of the ‘Great Recession’ are causing the declines in your first chart but I’m not very confident in that theory… Still, it doesn’t hurt to take a stab at it, even if it is a positive one.
The other night you mentioned that you didn’t think us Americans had suddenly gone ‘green’ but the are pockets of it. Californians are definitely headed that direction (slowly), but if you want to see the future you have to travel to Hawaii. Gas is really expensive there and people keep things very clean. Monterey Bay is the closest thing I’ve seen to it in California. I too a sailing tour there with some people from my company and while we were returning to doc on the boats motor (post sailing), the captain actually stopped the ship and backed up to pick up a plastic bag in the water. I wanted tell him he was stupid for wasting the gas, but I had already pissed him off in an argument over the ability of sugar cane to replace fossil fuels, so I kept my mouth shut about it.
I’m surprised you didn’t tell him that his whole business was a waste of energy…..Tempting fat americans to fly to his silly island etc.
If the passengers were smart, they should have continuosly thrown their empty Big Mac and Cheese Doodle packages in the water and extended their tour a few more hours.
California has a terrible public transit system! It is the ultimate car culture state. That is why the air quality is so bad; smog in Los Angelses, Sacramento, Silicon Valley. They would rather spend 2 hours sitting in their idling cars to drive 30 miles, during commuter times, than seek alternative transportation means or demand a good public transit system. The car is the god of Californians.
Hawaii is a small tourist island, not representative of normal American driving distances and requirements. Same goes for Monetery Bay; tourist destination, nothing else (nice place, I used to scuba dive and go camping there).
Good public transit systems can be found in New York, Boston, Washington, DC and Portland, OR.
Sugar cane can be a source of fuel, but only if you have a tropical climate and a labor pool of millions of poor people who will break their backs to harvest it for essentially slave wages; i.e. Brazil.