I've changed the thread from "Radiation levels .
. ." because, in referring to Paul Krugman's
latest epistle (see below), Ray has now left nuclear reactors behind.
At 06:03 16/04/2012, Ray wrote:
(REH) Are we even in the same universe? You
do it right and you get wrong. You do it wrong
and you get wrong. Didn't Gregory Bateson call
this a "double bind"? Would we have been
better off to save all of that cold war money
and just let this all sink into the sunset and
save our pennies at home. No Vietnam, maybe
no second world war. Just let Germany and the
Soviets fight it out. We seem to keep pouring
money down a foreign aid and military hole while
the right arms itself in America. How long
before the left gets the idea and begins to arm
itself and play with guns? We already
continous war and a suspension of murder of
Americans without trials. People
"disappearing." It all started when we
decided to missionize the world for
democracy. If someone is going commit
suicide in front of your face, perhaps there
comes a time when you should just watch.
(KH) Yes, watch by all means. Paul Krugman is
quite right (so help me) -- at least in his first
paragraph (dubious in places elsewhere). Yes,
pretty well all European governments, within and
without the Eurozone, are committing suicide. But
you'd better hope that we don't expire too
quickly because America is still reliant on quite
a lot of trade with Europe and, otherwise, we'd
bring you down, too, before you'd have time to adjust.
I don't quite know why Krugman is calling time on
Europe just now. After all, the European Central
Bank has been doing what the Fed has been doing
under Bernanke -- money printing in lavish
quantities. The latest was only a fortnight ago
when the ECB released another 1 trillion Euros (a
3-year "loan") into European banks. This was the
largest dollop yet and was supposed to give at
least a 1 to 2 years' breathing space. But no,
within a week, Spanish bond yields have been
going up (that is, the value of the bonds
themselves has been going down). In short,
investors are avoiding Spain because it seems to
be next on the chopping block after Greece.
But Krugman had better be not not so cock-sure
about America. Even Bernanke seems to be having
doubts about the efficacy of money-printing. Also
Krugman ought to get down to some serious reading
about the history of the real gold standard as it
had finally developed in the latter decades of
the 19th century. What he's referring to are
problems caused by the pseudo gold standard of
America (as established from the beginning by the
Fed in 1913) and the pseudo gold standard of
Europe (as re-established in Europe after World
War I -- the Genoa Conference of 1922).
Keith
April 15, 2012
Europes Economic Suicide
By
<http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html?inline=nyt-per>PAUL
KRUGMAN
On Saturday The Times reported on an apparently
growing phenomenon in
Europe:<http://www.nytimes.com/2012/04/15/world/europe/increasingly-in-europe-suicides-by-economic-crisis.html?_r=1&ref=world>
suicide by economic crisis, people taking
their own lives in despair over unemployment and
business failure. It was a heartbreaking story.
But Im sure I wasnt the only reader,
especially among economists, wondering if the
larger story isnt so much about individuals as
about the apparent determination of European
leaders to commit economic suicide for the Continent as a whole.
Just a few months ago I was feeling some hope
about Europe. You may recall that late last fall
Europe appeared to be on the verge of financial
meltdown; but the European Central Bank,
Europes counterpart to the Fed, came to the
Continents rescue. It offered Europes banks
open-ended credit lines as long as they put up
the bonds of European governments as collateral;
this directly supported the banks and indirectly
supported the governments, and put an end to the panic.
The question then was whether this brave and
effective action would be the start of a broader
rethink, whether European leaders would use the
breathing space the bank had created to
reconsider the policies that brought matters to a head in the first place.
But they didnt. Instead, they doubled down on
their failed policies and ideas. And its
getting harder and harder to believe that
anything will get them to change course.
Consider the state of affairs in
<http://topics.nytimes.com/top/news/international/countriesandterritories/spain/index.html?inline=nyt-geo>Spain,
which is now the epicenter of the crisis. Never
mind talk of recession; Spain is in full-on
depression, with the overall unemployment rate
at 23.6 percent, comparable to America at the
depths of
<http://topics.nytimes.com/top/reference/timestopics/subjects/g/great_depression_1930s/index.html?inline=nyt-classifier>the
Great Depression, and the youth unemployment
rate over 50 percent. This cant go on and the
realization that it cant go on is what is
sending Spanish borrowing costs ever higher.
In a way, it doesnt really matter how Spain got
to this point but for what its worth, the
Spanish story bears no resemblance to the
morality tales so popular among European
officials, especially in
<http://topics.nytimes.com/top/news/international/countriesandterritories/germany/index.html?inline=nyt-geo>Germany.
Spain wasnt fiscally profligate on the eve of
the crisis it
<http://krugman.blogs.nytimes.com/2012/04/15/insane-in-spain/>had
low debt and a budget surplus. Unfortunately, it
also had an enormous housing bubble, a bubble
made possible in large part by huge loans from
German banks to their Spanish counterparts. When
the bubble burst, the Spanish economy was left
high and dry; Spains fiscal problems are a
consequence of its depression, not its cause.
Nonetheless, the prescription coming from Berlin
and Frankfurt is, you guessed it, even more fiscal austerity.
This is, not to mince words, just insane. Europe
has had several years of experience with harsh
austerity programs, and the results are exactly
what students of history told you would happen:
such programs push depressed economies even
deeper into depression. And because investors
look at the state of a nations economy when
assessing its ability to repay debt, austerity
programs havent even worked as a way to reduce borrowing costs.
What is the alternative? Well, in the 1930s an
era that modern Europe is starting to replicate
in ever more faithful detail the essential
condition for recovery was exit from the gold
standard. The equivalent move now would be exit
from
<http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/euro/index.html?inline=nyt-classifier>the
euro, and restoration of national currencies.
You may say that this is inconceivable, and it
would indeed be a hugely disruptive event both
economically and politically. But continuing on
the present course, imposing ever-harsher
austerity on countries that are already
suffering Depression-era unemployment, is whats truly inconceivable.
So if European leaders really wanted to save the
euro they would be looking for an alternative
course. And the shape of such an alternative is
actually fairly clear. The Continent needs more
expansionary monetary policies, in the form of a
willingness an announced willingness on the
part of the European Central Bank to accept
somewhat higher inflation; it needs more
expansionary fiscal policies, in the form of
budgets in Germany that offset austerity in
Spain and other troubled nations around the
Continents periphery, rather than reinforcing
it. Even with such policies, the peripheral
nations would face years of hard times. But at
least there would be some hope of recovery.
What were actually seeing, however, is complete
inflexibility. In March, European leaders signed
a fiscal pact that in effect locks in fiscal
austerity as the response to any and all
problems. Meanwhile, key officials at the
central bank are making a point of emphasizing
the banks willingness to raise rates at the
slightest hint of higher inflation.
So its hard to avoid a sense of despair. Rather
than admit that theyve been wrong, European
leaders seem determined to drive their economy
and their society off a cliff. And the whole world will pay the price.
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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