End of stimulus

[allhatnocattle.livejournal.com]

http://www2.macleans.ca/2010/06/14/economic-crisis-the-end-of-the-great-stimulus-experiment/

I love Coyne. I've never liked the idea of bail-outs or stimulus.

I do think welfare is great with individuals, so they are not homeless and not starving. But corporate welfare should never exceed the welfare that would otherwise serve their employees and subs dependent on a business. In a free market, the market dictates success just as business savvy does. A bailout interferes in the natural economy.

And stimulus is just as bad. "Put simply, the money has to come from somewhere. Whatever funds you “put in” to the economy by government has first to be “taken out” of it. Borrow at home, and you displace private spending with public—the “crowding out” phenomenon. Borrow abroad, and you run into balance of payments difficulties: foreigners can only lend you the dollars they earn from trading with you. Borrow from the central bank, “print money,” and you bring on inflation, with all of its destructive impacts."

My take is that stimulus is not in keeping with the spirit of free market capitalism. It creates false economy that has to fail eventually.

A friend of mine's dad lost his foot last year to complications due to diabetes and a other illness's. Now he's about to loose his hand. Sadly it seems he's lost the will to live. But this is his journey and his alone. Rather then loose bits of himself in order to "save him" and prolong the inevitable, the man is now unwilling to see the surgeon. There is honour in this path.

Economic decisions are similar. While we could save Fanny, Freddie and even GM, the broader decisions to try to save whole nations is insane. USA never seemed in danger of complete collapse, but without the unnatural stimulus it probably would have suffered worse then it has these last two years.

And Greece, etc. What is the worse that could happen? These economy fail completely, and these nations revert back to a meagre existence of living off the land, unable to pay rent, and survival at a base level. Why is this so bad? Living within your earnings is a great lesson to learn.

Comments

[torpidai.livejournal.com]

My take is that stimulus is not in keeping with the spirit of free market capitalism. It creates false economy that has to fail eventually.

The whole capitalist system is based on poor mathematics, It is the biggest Ponzi scheme going, but no worries, none of our cash means anything these days, not like it's actually backed up by anything of value, Just print more lads :)

And Greece, etc. What is the worse that could happen? These economy fail completely, and these nations revert back to a meagre existence of living off the land, unable to pay rent, and survival at a base level. Why is this so bad? Living within your earnings is a great lesson to learn.

Yey, at last, someone with some common sense, Living within your means should be compulsory for all nations, though here, we have a problem...

In order to ensure that this would work, we'd need to put a stop to the borrowing, the capitalist system would be seen as a failure and some very rich people would be a tad pissed off.

[underlankers.livejournal.com]

Except if Greeks are required to they'd rather disintegrate their country, first. Greeks have the George W. Bush policy of fiscal control. They've depended on European graces while exisiting in default for 180 years and since 1453 had been subsidized by the Ottomans for the same gain that say, subsidizing Third World rat holes gave the USSR by 1989 or so.

But hey, if a bunch of Hellenized Slavs are allowed to boot out most of the Muslims who actually were living in Greece prior to 1830 and to this day deny that there are any Turks in Greece, calling them "Hellene Muslims" then I suppose that it's just an example of how much Europeans still care about Muslims. Which I'll say isn't much better than the USA that salivates over Muslims being killed in massacres.

[anfalicious.livejournal.com]

Yep, but the problem is when you radically deregulate you end up with companies "too big to fail" that then have to be bailed out or the whole economy tanks. "Free marketeers" need to work out what they want: no government regulation or no government intervention, because you can have both. I know what they'll choose, they'll continue to take the privatised profits with the socialised losses.

[vnsplshr.livejournal.com]

"Free marketeers" need to work out what they want: no government regulation or no government intervention, because you can have both

No "free marketer" wants "no government intervention".

[mijopo.livejournal.com]

So, you're telling us that a) the world economies could stand to lose a lesson or two from a diabetic who is losing appendages and has lost his will to live and (b) that going back to living in some primitive survivalist Mad Max dystopia is a possible outcome of the path you're suggesting. Thanks, allhat, your username seems more appropriate with each passing day.

[mijopo.livejournal.com]

s/lose a lesson/learn a lesson/

[underlankers.livejournal.com]

Remember he's a member of VHEMT.

The reality that a shitload of people would die from that is not a bad thing to him, it is what he wants.

[enders-shadow.livejournal.com]

you seem to ignore the very important first letter of that acronym

VOLUNTARY

I may not agree with allhatnocattle, but I *definitely* don't agree with strawmen arguments.

[allhatnocattle.livejournal.com]

What I really want is people to share in social responsibility. Unrestrained breeding has consequences that effect us all. Every child born is 75yrs of pollution. 75yrs worth of consumption. 75yrs worth of unsustainable existence.

VHEMT is a case of Common Good vs. Individual Rights. I have the right to speech, but I do not have the right to yell "fire" in a crowded theatre. Your right to breed impacts the common good. I would much prefer a one child policy with the goal of sustainable future then this unsustainable growth which in the immediate has lead to our wide gulf of economic disparity, but in the future can only lead to mass famine. It's your choice to be responsible or not.

[allhatnocattle.livejournal.com]

No pain, no gain. Dystopia seems to be the inevitable result of the current course we've charted regardless.

The G-20 agreed this past weekend to end stimulus. I happen to agree with world leaders. I don't think allowing failures to fall, economies to exist in more natural states, necessarily leads to madmax existence. In fact I think it saves us from it.

[underlankers.livejournal.com]

It's bad because when you admit Greece and keep enabling the Greeks to default, as they have for the past 180 years while they riot every time Athens so much as vaguely looks like it's about to crack down on that and leave out say, Turkey, which is showing it's a better economy than most of its former territories.....

But I forget, Europeans don't want to admit it but the EU is a club for wealthy Christian countries. Well, except Russia.

[allhatnocattle.livejournal.com]

Poland, Ukraine...

[vnsplshr.livejournal.com]

USA never seemed in danger of complete collapse, but without the unnatural stimulus it probably would have suffered worse then it has these last two years.

Without government's efforts to ward off suffering, the suffering may have been quicker than we've seen, and truly over by now.

[rev-proffessor.livejournal.com]

I think you are trying to equate the micro (personal anecdotes and tight belt family finance) to the macro (national populations and economies of scale). The problem is, nations are not individuals. The shortage of money mentioned in the article came about from lowering taxes on the wealthiest Americans as we were expanding our social safety net. Return the tax system to pre Regan days and the whole deficit would slowly melt away. If it doesn't, cut defense spending by 5 to 10%.

The article also ignores the unemployed by stating that;

"What prevented the crisis from becoming a depression was not fiscal stimulus, but monetary: first, to shore up the banking system—the real “lesson of the Depression”—and second, to prevent a scarcity of liquidity from strangling the economy at a time when people were hoarding cash. That’s demonstrably true in this country, where the recovery had already begun by the second quarter of 2009, long before any of the fabled shovels had hit the ground. "

It seems that the author is only concerned with banks recovery and the average Joe can just get in the bread line.

[allhatnocattle.livejournal.com]

note, the author is (after all) Andrew Coyne, a not so distant relative of Pierre Trudeau (cousin?). His concerns and loyalties are therefore slightly elite.

[penguin42.livejournal.com]

Borrow at home, and you displace private spending with public—the “crowding out” phenomenon.

In a recession, there isn't enough private spending, so you're not "crowding out" -- the room isn't very crowded to begin with. And this has nothing to do with where you borrow from but where you spend.

Borrow abroad, and you run into balance of payments difficulties: foreigners can only lend you the dollars they earn from trading with you.

That hasn't seemed to be a problem so far. Of course it's helped by the fact that China doesn't want their currency to float.

Borrow from the central bank, “print money,” and you bring on inflation

Yeah look at those inflation rates skyrocket

[txconservative.livejournal.com]

I think the government has intervened with "WE THE PEOPLE" far to long now, and I believe that this happy bailout, stimulus spending that Obama is doing, will lead this country to the possibility of bankruptcy. The government's problem is that they are going to have to do away with the welfare system, not completely, but by necessary means what will suffice. I believe in welfare to an extent (temporary, for those who need to get on their feet). There are far too many people who do abuse the governments welfare system and it's wasting mine/yours tax dollars daily. I believe we should bring back "The Contract with America". The government needs to stop the mass spending.

[allhatnocattle.livejournal.com]

First of all the stimulus started before Obama. Secondly, last weekend all the G20 (including Obama) has agreed to end stimulus spending.

I doubt that the gov't does have to do away with welfare for individuals. Even with abuses in the system, the welfare budget still pales to other government spending. We could do away with some military spending for instance. Army, Navy, AirForce, Marines, CIA, DEA, ATF, seems like there's some overlap that could be cut back, instead of cutting welfare to unemployed people.

[txconservative.livejournal.com]

I didn't mean to say totally do away with it all because it's not going to happen, but to merely reenforce something along the lines of The Personal Responsibility Act. I'm aware that the stimulus started before Obama. Taxes are sky high and will continue to be that way as long as the current administration is in office. I'm not saying we shouldn't pay taxes, but they should be much lower. If the government abided by the Constitution and allowed the free market system to flourish we wouldn't have this problem.