With austerity biting hard across Europe….

Oi, TH get yourself out for that ride! Just heading out myself to have a look at that part of Hankley you mentioned.

Yup, Argentina didn’t abandon austerity until 10 years ago when it got to the point when they were forced to register the largest sovereign default in history. They then went on a tax and spending spree and their economy has been growing every since – allowing them to pay their outstanding IMF debt off 6 years ago.

In 2011 Argentina, along with China, had the fastest growing economy in the world – both economies grew 9.2%.

is there really any point in holding up argentina and china as examples of how the uk can resolve it’s financial woes ?

we’re hardly in a position to get out of the mess by offering the world cheap goods based on comparatively low production costs are we ? firstly we’ve got no production industries left and secondly how are we going to compete with china unless our workers get paid chinese wages.

i’m happy to let my very basic grasp of world economics allow you to hand my arse back to me on a plate in the hope of understanding the comparison but i really don’t see that there could be one.

TJ stop being silly.

The parallel is when you base policy on flawed foundations. And no, things haven’t got better for many reasons including incorrect policy responses in the Uk and in Europe. Europe was not a problem of deficits, that was a symptom and a result. Europe was a flawed model that consigned the Pigs to failure after the sugar rush of lower interest rates. Ditto UK households and banks got their rush from leverage and the hangover is not pretty.

But if you want a policy foundation based on theft and destroying not re-negotiating pensions then go ahead.

Shame ATP I am going the opposite direction to meet a friend.. Enjoy the drops, they are short but sweet looking.

THM – its you that is being silly – contradicting yourself. So are we or are we not following a similar path to argentina – you have now claimed both.

You really need to look beyond the failed neoliberal orthodoxy you are wedded to.

Lets just get it in proportion eh!

UK GDP – in USD, at current values

Argentine GDP

Take another look at what happened after default – Ernie, TJ, you’re complaining about Austerity in the UK

UK Government Expenditure in the UK

Compared with Argentina, lets get this clear – look at what happened to the UK Government spending in our recent recession, and a look at what happened to Argentinian Government spending after default.

Austerity? you honestly have the front to compare recent evil tory cuts with what happened in Argentina after the default, and come to conclusion that default was preferable?

Argentinian government spending more than halved overnight – now, THATS Austerity!

As we don’t really make anything that other countries want these days, where is the argument against import taxes on foreign goods to try and give a kick up the arse to our own manufacturing?

Of course prices will rise, but lets face it, some chinese goods are ridiculously cheap and a more successful home manufacturing base would boost employment and the economy.

As we don’t really make anything that other countries want these days

We make plenty of stuff that other countries want

The underlying problem with the system is the reliance on the oxymoron of sustainable growth.

Given that we appear to be stuck in a closed circle of debt/growth is there a way out?

I heard a lecture by Richard Heinberg on this, some interesting thoughts here:

I heard a lecture by Richard Heinberg

Just redone the link for you.

ta.

trailmonkey – Member

is there really any point in holding up argentina and china as examples of how the uk can resolve it’s financial woes ?

Holding Argentina up as example of how the reverse of austerity can work is quite reasonable imo. In fact holding up most of Latin America as an example isn’t a bad idea. Thanks to brutal and repressive Washington backed military dictatorships, and any opposition being silenced on the pain of death, the Chicago School of Economics had a free hand to use Latin America as a very early experiment for their neoliberal theories – with disastrous consequences, as it is also now having throughout the rest of the world. However Latin American is now several years into the process of abandoning the experiment, and the results are proving to be quite startling. Certainly in terms of effect on the quality of people’s life’s.

Holding up Greece, Spain, Ireland, etc, as examples of how austerity doesn’t work isn’t a bad idea either. Although of course we can see here in Britain that austerity isn’t working. Still, I’m sure Double-Dip Osborne who blamed the last Labour government for the global recession, will successfully convince people that his failures is all the fault of outside factors.

The Chancellor George Osborne blames a 0.2 per cent contraction in the UK economy on the crisis in the eurozone

teamhurtmore – Member

Of course these policies are great for solving inequality – you simply screw everyone and destroy the middle classes. Oh, except for the elite or very rich who conveniently keep their wealth offshore.

You really, really, really, don’t know what you’re talking about hurty, as that comment exquisitely shows.

It was precisely the middle classes, who were hammered by the complete failure of the neoliberal/Thatcherite experiment. By the time Argentina registered the largest sovereign default in history Argentina’s middle classes had been totally shafted.

It was the middle classes who were forced to queue outside the closed doors of banks desperately hoping that the bank would open and allow them to have a few quid to buy food. It was the middle classes who were unable to collect their pensions.

Let me show you a picture and a link to help you understand.

Argentina’s government has had to postpone payments to 1.4 million pensioners because of a cash shortage caused by its mounting economic troubles.

It was the professionals who believed that they had jobs which would guarantee that they would never be unemployed in their lives who were thrown out of work. It was educated professional types who stood at traffic lights in Buenos Aires desperately hoping they might be able to sell something to drivers when they changed red.

It was people with professions who queued at European consulates, mostly Spanish and Italian, in the vain hope that they might be able to immigrate to the country of their grandparents.

It was the middle classes who were screwed when the Argentine economy went tits up thanks to the catastrophic failures of neoliberalism. The middle classes are always screwed when an economy experiences catastrophic failure and the crumbs from the top table are withdrawn.

Today the Argentine middle classes are firmly behind Cristina Kirchner, how do you think she enjoys that level of support ? And the reason for that is quite clear – because her policies have changed their lives round.

Two months ago during the Spanish general election campaign, the leader of the conservatives Mariano Rajoy, claimed that 1,200 Spaniards are emigrating to Argentina each month because of Spain’s economic crisis. How different things are today as a result of Argentina abandoning neoliberalism and embracing social-democracy.

And contrary to your completely false claim it is the “elite or very rich” who have had most to lose and despise Cristina Kirchner with a vengeance. Unfortunately for them they are small in numbers, and more importantly, they and their mates in Washington can no longer call in the army to move against the people. Latin America has changed.

.

Wow, Ernie this is a serious love vest! Two quotes spring to mind – ” But love is blind and lovers cannot see.” ( the good bard) and more universally, “your analysis has more holes than a string vest.”

No mate, the reverse is true. I haven’t allowed my lifelong opposition to the Peronist movement blind me from the successes of the Kirchners. And I have seen the huge queues outside banks and people desperately trying to sell stuff at red traffic lights with my own eyes.

Furthermore I am not even a social-democrat, but it is precisely because I am both realistic and pragmatic, that a fully accept the undeniable truth that social-democracy is immeasurable more desirable and successful than brutal neoliberalism. Politics for me is more than just a game to be played on a bike forum or as an after-dinner activity.

Finally your analysis proves just how completely clueless you are…….”more holes than a string vest” LOL ! 😀

elzorillo – Member

As we don’t really make anything that other countries want these days,

You just disqualified yourself from this thread tbh. Don’t believe the myth.

However Latin American is now several years into the process of abandoning the experiment, and the results are proving to be quite startling. Certainly in terms of effect on the quality of people’s life’s.

yeah i understand that. what i think i’m driving at is that south america and china are in a position to improve their economies and the conditions of their workers because of their relatively low pay and low quality of life in comparison to ours and in the case of argentina, huge natural agricultural resources.

their economies are just in a much better position than ours to grow. we have little to sell or produce and we can’t compete on production costs without huge wage cuts.

is that not true or could subsidy in industry enable us to compete and keep wages at a level where people could afford to live?

Trailmonke3y – we have plenty of wealth – its just concentrated in the hand of the few. 5% of the population have 40% of its wealth. A little bit of redistribution would help greatly.

well obviously, i hardly need a lecture on the redistribution of wealth from you rachman 😉

i’m not arguing against govt. subsidy or tax and spend. i just don’t understand how we can compare with argentina when our economies and situations seem so different.

Because if we used that wealth that is accumulated in the hands of the few to pay people to do useful things not to sit around doing nowt we would increase the wealth of the country

E_L, I will give you 100% for persistance and passion. But let’s agree to differ here otherwise we will bore the pants of everyone else and we don’t want to fall into the trap of endless repetition and mis-quoting quoting employed by others (mentioning no names :wink:)

Interesting to read the different perspectives and thanks for the photo – spent many hours in that exact building and have a picture of the word “murderers” which was painted on the side. They will blame Thatcher for many things – stealing the Malvinas but not their money!!

Lets assume that I teach, or taught, economics, you will have to excuse my not passing on the MS or Sun for quoting in exams. I want/would like them to get A*s. As I said plenty of other case studies that can be used to ……….. (!) explain why current economic policies are misguided – even the neo classical (spit) ones.

Powered up the hills BTW 😉

Because if we used that wealth that is accumulated in the hands of the few to pay people to do useful things not to sit around doing nowt we would increase the wealth of the country

if we could resurrect our now extinct manufacturing industry and subsidise wages in order to compete globally and reinvigorate the agriculture that has been disappearing since the advent of the industrial revolution by taxation alone, i’d be both overjoyed and amazed.

but short of a revolution it’s never going to happen is it ?

Teamhurtmore

You appear to be doing the “Emperors new clothes” here. Clearly you know a lot about economics and can bandy around acronyms with the best. However you are so stuck in your viewpoint that you cannot recognise two basic things. There is another viewpoint and the conventional economics theories simply have failed the bulk of the population.

trailmonkey – Member

our now extinct manufacturing industry

Bzzt. Wrong answer

(at the risk of being dragged into this again- UK manufacturing has grown almost every year for the last 50, output was at an all-time high in 2008, and as of June 2010 the UK was the 7th biggest industrial producer in the world)

TJ when will you grow up? Play the Internet Bully with others but not me. It won’t wash. Stop assuming you know what I think and stop misquoting me. Otherwise you simply look a fool.

At least Ernie has a view on something other than dogma/wikipedia so you can learn from reading a different perspective (even the morning star, sun, and clearly some other sources) even if you don’t agree.

By all means have the last word and enjoy the….. Deleted, can’t be bothered wasting my time.

Teamhurtmore – I am not playing the internet bully – thats your game with your offensive bluster and snidey putdowns. the usual several personal attacks in your post. Shows the paucity of your position when your only defense is to attack someone who questions you.

I can only assume you think what you post and you always follow the same line. Are you trolling all the time and not posting what you think?

As for misquoting you? I don’t even quote you 🙄

trailmonkey – Member

yeah i understand that. what i think i’m driving at is that south america and china are in a position to improve their economies and the conditions of their workers because of their relatively low pay and low quality of life in comparison to ours and in the case of argentina, huge natural agricultural resources.

I see what you’re saying but my point is that’s it is the policies which determine how well a country does with what it’s got or hasn’t got.

Sure, Argentina has huge potential after all it is, fabulously fertile, the 7th largest country in the world, and underpopulated. And 100 years ago it was the 4th wealthiest country in the world – Harrods even opened a branch in Buenos Aires.

But yet despite all that, ten years ago free-market neoliberal economic policies screwed the country to the point that it was responsible for the largest sovereign default in history. Today the situation has been completely turned around. Argentina is still in the same location, its climate hasn’t changed, its natural resources are exactly the same as they were 10 years ago, nothing, absolutely nothing, has changed. Even the Peronist are still in government.

But one thing that has changed is Argentina’s economic policies. There is a serious lesson to be learnt there, and the lesson is that TINA is false. Even a country with huge potential will be screwed if the economic policies are wrong. And free-market neoliberalism is quite simply wrong, as Argentina, Ireland, Iceland, the Eurozone, etc, prove.

teamhurtmore – Member

But let’s agree to differ here…….

No I won’t agree to differ. You are completely wrong concerning the middle classes in Argentina. They suffered tremendously under the previous neoliberal administration and are now doing considerably better under the present one. They are not being screwed and destroyed as you falsely claim.

Nor are the “elite or very rich” somehow being protected as you also falsely claim. It is them more than anyone else who are opposed to the government, because their power, wealth, and privileges, are being challenged and reduced. Believe me the elite and very rich didn’t suffer when the shit hit the fan 10 years ago, as they never do when that sort of thing happens, including here in the UK.

I won’t agree to differ because you are wrong not in opinion, but wrong in fact.

As for giving me “100% for persistence” it’s you who won’t give up making completely false claims, repeating won’t make them right you know. Just admit that you don’t know what you’re talking about 😀

BTW I’ve been meaning to ask you……..how does it feel to know that the global events of the last three years or so have exposed the fact that everything you had been teaching your students up until then, turns out to have been complete bollox ?

Or is that the reason why you are still in denial ? 😉

Trailmonkey, a lot of what you say is true….for a country to have true clout and the almost mythical ‘sustainable growth’ it has to have raw materials.
Part of the problem in the UK now is that raw materials are hard to come by and expensive….any attempt to extract something from the ground is met with hysteria by the Green lobby who seem to want to bring back the horse and cart.
There is rumoured to be coal, gas and oil all over the UK and our coast….is it likely to be mined?….is it heck, instead we build windmills all over the hills and bend over to get shafted for Russian gas.

The other point you made about wages is true also, the point at which it became cheaper to import steel than get it from Sheffield should have set alarm bells ringing with regard to wage demands….to compete with China, Argentina, Brazil etc on industry we would need to relax our pollution laws and allow wage deflation….cant see that being too popular at the ballot box!

Fact is we have become very comfortable as a nation….nice health service, decent wages, generous welfare state etc etc….then we moan because other countries (without these things) are hot on our heels economically due to most of their population having a lower standard of living and being willing to work for peanuts.

ernie_lynch

BTW I’ve been meaning to ask you……..how does it feel to know that the global events of the last three years or so have exposed the fact that everything you had been teaching your students up until then, turns out to have been complete bollox ?

Or is that the reason why you are still in denial ?

🙂

He can’t admit it Ernie – he cannot even admit there could be a possibility of another point of view let alone that actually conventional economics has been shown to be no more a model of reality than voodoo is

(apologies to others for the above..)

E-L, fine by me. I have spent a lot of time in Argie and BZ over the past few decade. Benefitted from the recovery but glad not to be involved workwise with Argentina any more. Bloody hairy place to do business. But may go back on holiday as clearly need to learn a lot more. 😉 Complete fluke obviously to have got away with it for the past few years and it is beautiful as a country..

A*s for why Euro zone was economically flawed and why monetary policy is ineffective with a flat LM curve. And they will quote the FT not the Morning Star or the Sun 😉

Anyway back to the OP – the next civil unrest.

Part of the problem in the UK now is that raw materials are hard to come by and expensive….any attempt to extract something from the ground is met with hysteria by the Green lobby who seem to want to bring back the horse and cart.
There is rumoured to be coal, gas and oil all over the UK and our coast….is it likely to be mined?.

Its unfair to group all people who promote a green agenda under the same umbrella.

Mining more cola gas / gas / oil only delays the inevitable. It is not possible to keep on increasing the per head energy need and use age. It is not possible to keep on increasing the per head population.

I would say it is the standard economists that are looking for a backward step. Expecting it to be possible for things to be the same in the future as they have been in the past. Managing a move to a more stagnant economy (in terms of growth) is the only long term solution in reality. It is not something I relish but it is better to prepare for it and make moves in that direction than to ignore the inevitable and carry on regardless. If the move is not managed nature and market force will take over and the end result will be far more brutal.

There is rumoured to be coal, gas and oil all over the UK and our coast….is it likely to be mined?….is it heck, instead we build windmills all over the hills and bend over to get shafted for Russian gas.

Yeah we decided a while back that we didn’t want to use the coal that we have. The UK is a still more or else self sufficient in oil, although when we were producing 30% iirc? in excess of our needs, it didn’t bring any noticeable prosperity to the UK – it just paid for unemployment. And UK imports less than 2% of its gas from Russia, so I’m not sure why we’re bending over and getting shafted by the Russians.

TheBrick….got no problem at all with a move to a stagnant economy as it fits in nicely with what i believe about people (and governments) living within their means.
Sustainable growth is only possible with a rising population, limitless energy and limitless resources….this seems a little unrealistic when you stop and think about it so i agree with you in that respect.

However, why make things difficult for ourselves now?….if the natural resources are there and can be mined giving people cheap energy for the next 50-100 years then why shouldnt we benefit in the short term while making alternative plans for the future?
It seems masochistic to deny ourselves the natural resources on this island simply because they wont be available in the future.

If anyone is interested in some serious analysis of Argentina and Greece (stop now if you think the answer is a failure simply of neo-classical economics), I would recommend the following:

“Greece’s Odious Debt – the Looting of the Hellenic Republic by the Euro, the Political Elite and the Investment Community.” Jason Manolopoulous (Anthem Press).

A fascinating study of the Greek crisis that contains an excellent comparative analysis of the crisis in Argentina and Greece and the extraordinary parallels between both stories. The author has open-eyes and an open-mind ( :wink:) describing how markets, governments, cronyism, corruption, populist policies and the inabilty to differentiate between good luck and correct economic policies ALL led the the crisis in both economies. It also highlights the failure of fixed exchange rate systems – the common pattern of economic history over time of real appreciation of the exchange rate, the subsequent investment and consumption boom and finally and fatally the deterioration of external accounts and crisis.

Normally reserved for A* students, but I am sure there are plenty here who enjoy some “proper” analysis of both economies and the reasons for their failures. The parallels are frightening because Europe’s elite and the markets ignored them for so long.

E_L, thanks for jogging the memory. I had forgotten to finish the final chapter until tonight. And thanks again for posting the old picture of the Bank Boston HQ in BA – such intriguing memories.

Anyway back to the now – FT tomorrow headlines – Greek fury at the Germans and Hester turns down his bonus!!!

And thanks again for posting the old picture of the Bank Boston HQ in BA – such intriguing memories.

I’m amazed that you remember anything – you were obviously walking around with your eyes closed. Proven by the fact that you know absolutely nothing about the situation in Argentina.

“Of course these policies are great for solving inequality – you simply screw everyone and destroy the middle classes. Oh, except for the elite or very rich who conveniently keep their wealth offshore. “

LOL ! 😀

Yep, loved playing blind mans bluff in the bar of the Alvear Palace. Buenos noches!

Yep, me and loads of economists….

Stop it mate, my sides are starting to hurt 😀

You and loads of economists ? And economists are always right – yeah ? That’s why two economists can never agree – because the other one is always wrong !

Economists got the world in this mess, George Bush had access to the best Harvard trained economist in the world, it didn’t stop them from screwing up the US economy though. And remember, according to you “we have seen a failure of capitalists rather than capitalism” In other words it was the people, ie the economists, who screwed up. So don’t give me this “me and loads of economists” bollox. I’m not impressed – as you can probably tell 😉

EDIT : You crafty fecker, you’ve edited your post. Can’t say I blame you though.

Ernie, you are finally getting it. As you said, the economists who screwed up….and economist are …..people…..finally a eureka moment has arrived.

Of course economists screwed up, as did lots of individuals, the bankers, the cronies, the industrialists etc. Politicians of different persuasions screwed up, some were economists, others such as Alfosin had no care for economics at all. Even Eva Peron was known for her quote “Keeping books on social aid is capitalistic nonsense. I just use the money for the poor. I can’t stop to count it.”

Take Menem and Cavallo – did they make mistakes or not? So convertibility was a success.? Well yes initially in terms of sorting out inflation. But with alarming parallels with Greece, an A level student would be able to explain that if you take an economy with lower productivity than the US (Germany) but give it the same currency, the dollar (euro) you have an untenable situation which does not take a Harvard doctorate to determine. You get wave of imports at ridiculously prices and guess what the 1990s became Argentina’s decade of the disappearance of Argentine industry. And look what happened to the competitiveness of the PIGS. Either Merkel made mistakes or she deliberately screwed the PIGS, take your choice. Some clever (?) people make mistakes and others are simply crooks. I am sure you know the history of Argentina’s privatisation (sic) and the famous murder trial. Oh and the fact that Siemens was fined for doing what……are people, people, people they make mistakes/do bad things!!

And guess what, they don’t learn. So history repeats itself a decade or so later in Greece. Both governments regularly cooked their books and still do, but of course you can take the A/G parallels to far as there as a many differences as similarities in their models. Except of course, for the one great similarity – they are populated by people, people who make good choices and people who make bad choices whatever their policial or economic persuasion.

So UK banking has some people who made mistakes (Fred and Co) and others who have continued to thrive (Peter Sands) yet they operate in the same economic model . In the failure of markets and current economics, why does Standard Chartered continue to thrive and their CEO still get paid his bonus. Because they are people who make the correct decisions and know how to run a bank properly

Going back to the OP (and ignoring the subsequent ‘its all Fatcha’s fault’ predictable bickering). I think what’s being interestingly illustrated is the very different culture in southern Europe to here.

Can you imagine a 50%, and rising, youth unemployment rate in this country? Half this countries youth living on benefits? Can you seriously imagine it? What effect it would have on already stretched social cohesion?

For a start, every town centre in the country would be in flames every weekend. Last years riots would look like a country fete.

And I’d imagine you’d be getting your house burgled twice a week, and mugged every other day. I seriously think we’d be close to a complete breakdown of law and order

It’ll be interesting to see how long they can keep a lid on it in Spain

the radio4 was telling me that the numbers may sound bad (50%), but they hide a large and growing hidden economy, basically working cash in hand.

Very true binners.

Ernie, if the “if we have seen a failure of capitalists rather than capitalism” is so offensive to you, replace the words capitalist and capitalism with Kenysians and Keynesiasm. Then go an re-read ED Balls speech recently to the Fabian Society where he argues how it was not Keynsianism that failed, it was the politicians who incorrectly applied his policies. He targets Labour but Tories did the same – remember “stop-go” ? So when you need Keynsianism to help aggregate demand, the solutions it brings are tarnished by the people who badly implemented it and the same will happen with capitalism.