Comments on: Monti turnaround can go much further

By: aeuropean

aeuropean — Mon, 20 Feb 2012 01:03:27 +0000

To Lafayette:
I can agree with the second part of Your deliberations.
The first part is bulls….
The increased tax should be on people and corporations which will never decrease their spending because they have so much money they can’t even spend it and use it only to create new money by playing the global monopoly game.
But unfortunately the politicians only target the lower and the middle class with austerity measures and not their rich friends and tax evaders.

By: pgitalia

pgitalia — Wed, 15 Feb 2012 15:56:13 +0000

I disagree completely, the state can and must cut its spending. This can be accomplished most effectively through the privatisation of state run enterprises. This reduces expenses and transfers the costs or actual deficits of these entities to the private sector, which is governed by market rules and is therefore more likely to balance its expenses against its revenues; whereas in the public sector the deficit is absorbed by the government ergo the taxpayers.
A plan of massive privatisation would be a welcome relief to the European budgets and would begin reversing the debt spiral, without impacting the revenue base.

By: deLafayette

deLafayette — Tue, 14 Feb 2012 11:31:22 +0000

Let’s understand something simple about “austerity”: It typically means that the state augments taxes in order to maintain debt payments. That is, in the trade-off between cutting government expenditures and maintaining debt levels, for the economy per se there is no real difference in terms of consequences.

Meaning this: If a state cuts my net disposable income by increasing taxes, yes I reduce my spending. But, if the increased revenue allows the state to maintain payments of social security to the unemployed , who then spend it, then for the economy no difference exists.

The money then by these unfortunates on consumption (which supports production and therefore employment and thus household disposable income) is therefore a net benefit to the society as a whole.

Any society with a sense of egalitarian values would understand that the state must intervene with assistance in those circumstances which are the most extreme that happen when the economy goes into a downward inflexion.

The point being this: It is a far, far better thing a government does to avoid recessions than ignoring the possibility of their happening. In both America and the EU, past governments have failed to do so. In the US, it was a matter of market oversight laxity and in Europe in the Commission’s negligence in country budget oversight.

The EuroZone made a colossal mistake not to enforce the penalty rules for consistent budget indebtedness (above 3% of GDP). Had it done so, maybe the Greeks, Italians, Spanish and Irish would have learned quicker that they could not assume more debt to spend their way out of a recession.

Once the debt spiral begins, it is extremely difficult to stop – especially in a EuroZone with consistently higher unemployment than elsewhere.

Furthermore, once the debtor EuroZone countries can get their house in order, it will be time to look at the Commission’s practice of governance in Brussels – which failed to enforce the debt-penalty rules from the beginning.

Like families, countries must learn to live within their means.

By: ARJTurgot2

ARJTurgot2 — Tue, 14 Feb 2012 05:07:39 +0000

“Monti turnaround can go much further”

This begs to be said, so I shall: Are you proposing this should go all the way to the Full Monti.