Comments on: Austerity has brought Europe to the brink again http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/ Sat, 21 Jun 2014 15:30:06 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Anonymous http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-670 Mon, 01 Oct 2012 08:52:48 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-670 See, if you look at all the past crisis, tequila crisis, Asia crisis, and mire recently USA and Europe. The causes are the same.

Deficits above 5% of GDP, debt above 60% GDP. The problem is the deficit and the debt, not the lack of governor spending.

They where also often characterized by current account deficits. Spendingloans for example on imports from China. Example, government pus pensionr, and borrows money to pay social security. Pensioner buys cheap clothing from China. China turns around and lends money to the government which they promise to pay back with interest.

Government in europe / USA becomes the debtor, China the creditor.

Debtor is servant to the creditor. Now we have Asian companies buying European companies, banks etc.

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By: Anonymous http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-669 Mon, 01 Oct 2012 08:45:48 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-669 Europe has too many people claiming to be hard up, unwell, lazy etc.

I think huge cuts need to be made in government expenditure, to allow room for the private sector to crowd in.

Take the example of a regional administrator or customs official. They waste thier time on administrative tasks. The offices are sleepy and unproductive. Or worse, thy are paid to sit at airports and check people’s bags. What a life, eh

If they where released from thier jobs, they might accomplish great things, open a business, provide a service, become a specialist etc.
Same for all the people on benefits. remove the benefits and suddenly, they need to prod

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By: youyi http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-547 Tue, 29 May 2012 01:37:57 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-547 What Europe needs at the moment are ‘statesmen’ NOT politicians. ‘Statesmen’ lead for the next generation, while ‘politicians’ look at only the next election. The Euro Currency was flawed from the start — a currency union without any central fiscal union and inviting too many players of different condition at the start of the game. So how to save a good concept from going bad?? Implement fiscal union – central monetary authority, mutualization of soverign debt, central settlement … remove player that are not fit to play … and do it decisively!!! Seems LS contribution to the debate between austerity and growth is meaningless … since both approaches just treat the symptoms not the underlying cause. LS is right, the patient will get worse, but under both a growth or austerity treatment. To treat the cause of the patients illness Europe needs to quickly implement measures for a fiscal union. Is LS a ‘statesman’ or just another ‘polotician’??

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By: GMavros http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-545 Wed, 02 May 2012 08:39:41 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-545 Wow…the world’s top economic experts have all gathered here…for no use.

The EU & USA are gone, collapsed, finished,
…China, here I come….

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By: ARJTurgot2 http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-544 Wed, 02 May 2012 01:03:42 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-544 “Austerity has brought Europe to the brink again…”

No, actually running a steady stream of deficits brought Europe to the brink. Austerity is a late entry and a distant second to the actual cause. Tough to be a Keynesian in a world where the chickens have come home to roost.

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By: EagleDriver http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-543 Tue, 01 May 2012 23:53:08 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-543 “The cause of Europe’s financial problems is lack of growth”

The bail outs only prevented the banks from failing.
The unemployment went up, gas prices went up and housing suffered. Tax revenues took a big hit, but governments did not cut back fast enough and the socialist program costs soared to support the ever increasing
unemployeed. A vivious cycle emerged.

The solution is hard to hear, but hear it goes. Europe and the USA is overpopulated. There is not enough jobs to support the population. Factories are too automated and the Asian and Latin economies allow dirt cheap labor and will never return. The jobs will not come back, so we have to start enforcing the borders and start throwing out the freeloaders. This is hard for leftist groups to fathom, but the truth is sometimes painful, but we need to take care of our own. We have been too soft for too long. Our bleeding hearts have spread to every orifice of our body and we are in danger of bleeding out.

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By: DifferentOne http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-542 Tue, 01 May 2012 17:19:32 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-542 Essentially what is needed is economic activity. But what could the source of that economic activity be? The public sector – as the author wishes? Or the private sector?

More economic activity could be generated by the private sector in the EU and USA if their goods were more competitive in international markets. But they are typically not competitive, because goods made in China are cheaper, thanks to China’s currency manipulation.

This situation is highly profitable for the large international corporations who manufacture in China, but disastrous for the industrialized economies as a whole. And it is plainly unfair.

So how could the EU and USA stimulate the private sector? By insisting that China allow its yuan to float freely, as other major currencies do.

If allowed to float freely, yuan would rise to a fair level, and jobs would come back to the EU and USA. The resulting higher personal incomes would yield greater tax revenues, and hence lower national debt levels.

Wake up Europe and America! Time is running out!

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By: stevedebi http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-541 Tue, 01 May 2012 16:04:26 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-541 I concur with USA4. The US is a capitalist society, driven by small business. It is completely different from Europe in how it functions.

People can’t figure out how to get out of the current problems because they are looking at the economy, which is the symptom not the problem. The main problem I see today is that the education system and society in general have been deceived by false theories about how the world functions. We teach kids to expand their horizons, but not how to calculate; people vote based on ideas that have no basis in reality and don’t seem to want to question anything – only accept whatever the media presents. We need to apply ourselves to healing our society (the economy will follow). The bill for decades of dreaming is coming due in a harsh reality.

As to the rich, people seem to forget that George Washington was one of the richest men in the Colonies, as were members of the Continental Congress. Such were the people who provided freedom to the land. The result of hard work is wealth (if the government doesn’t take it first). That is not a bad thing, it is capitalism. The American people can find a way forward if they remain true to the concepts that built the country. That is not to say that we should not “buy American”, or that people should outsource jobs. It is to say that we need to find ways to embrace and enhance what made the country great rather than argue over wealth.

I would also like to point out that the US Government has no legal obligation to pay anyone anything out of Social Security. The US Supreme Court (in it’s rulings back in the 1940’s) clearly stated that the money provided to SS belongs to the US Government and not to the individual who paid into the system, and that it can spend it any way it desires. It is only politics that keep it “reserved” for retirees and others. I myself learned this very recently.

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By: jmitch http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-539 Tue, 01 May 2012 12:44:41 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-539 “The cause of Europe’s financial problems is lack of growth.”

Really? Let’s take a look at the numbers. These are the 2011 GDP growth figures of the eurozone countries and the US.

Take a good look. Compared to the eurozone countries, the US is slightly below average. Much better than the worst (Greece), and much worse than the best (Estonia).

Data taken from the CIA World Factbook.

Estonia 6.5
Luxembourg 3.6
Austria 3.3
Slovakia 3.3
Finland 2.7
Germany 2.7
Malta 2.5
Belgium 2
France 1.7
Netherlands 1.6
United States 1.5
Ireland 1.1
Slovenia 1.1
Spain 0.7
Italy 0.6
Cyprus 0
Portugal -2.2
Greece -6

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By: MohamedMalleck http://blogs.reuters.com/lawrencesummers/2012/04/30/austerity-has-brought-europe-to-the-brink-again/#comment-538 Tue, 01 May 2012 12:13:38 +0000 http://blogs.reuters.com/lawrencesummers/?p=189#comment-538 From the start, it had been clear that the Eurozone’s economic meltdown resulted from structural dysfunctions rather than short-term deviations from equilibrium that could be fixed by routine economic stabilization measures like fiscal austerity and quick-fix “quantitative easing”. Larry Summers is perfectly right that a collective, non-dissonant commitment to growth by ALL members of the Eurozone is what is required tosave the common-currency regime. The real question that Larry does not address is : what are the tools available to achieve that growth, which will have to be intensely job-creating in nature. Evidently, what the flailing European economies need is not just short-term funding, but several phased episodes of disbursements of fresh funds while it GRADUALLY restructures the macroeconomy and the mesoeconomy (that is, while it carries out structural adjustment and sectoral adjustment) to refurbish its manufacturing base to higher-quality industrial output that also creates employment. Simultaneously these countries would need to overhaul their tax structure to generate the revenues to repay mounting debt.

The “Argentine solution”of the write-off of a critical mass of Eurozone debt by the commercial banks (either through pro-rata defaults by each Eurozone country or by a select group f debt-distressed countries) is a non-starter, because it is mainly Eurozone banks that are exposed to the non-performing debts. The ECB and EFSF (European Sinancial Stability Fund), for their part, do not have the reserves to meet the financial means to tide the distressed Eurozone countries over the short and medium terms to stimulate growth. And just “prining money” a la Greenspan won’t work, either because confidence in the Euro would plummet further. The IMF also does not, as of now, have the resources to finance the pro-growth structural adjustment programmes that the Euorzone countries will need to get out of the morass. It has been said before and it needs to be repeated : the only way for the IMF and the EFSF (European Financial Stabilization Fund) to obtain the 2-trillion dollar-size funds that is required to do the job is to open up the paid-up and callable capital base of the IMF and secure related loanable funds from China, Brazil and West Asia to the EFSF and in return give them more voting power and influence in the IMF and related multilateral financial institutions. If, in the G20 meeting in June, the G8 group of countries implement this inevitable act of financial sanity, the world will be saved. Otherwise, let each country, within the Eurozone and outside it save its own skin as best it can.

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