Hadn't seen it, nor read about it. Corbyn seems to be getting more comfortable taking the floor, which is great.

However, all those recent mentions of sound finance and balanced budgets worry me. Just last week, McDonnell made a whole assortment of statements that sound awfully deficit hawkish. "Iron discipline", "economic credibility" -- that's the language of people who use market/economic constraints as a disguise for policies that can often be described as plain old class warfare.

Looking at their economic advisers, it sounds like Wren-Lewis rather than Stiglitz or Mazzucato.

Let's ignore for the moment what led to this current mess within the Eurozone. You point out, correctly, that Greece is too poor to service its debt. And yes, for the German government to do whatever is required to get back their loans is to be expected. However, Greece was incapable of servicing its debt five years ago. Yet the subsequent programs, all supported or even demanded by the German government, reduced Greece's ability to pay back at least portions of its debt. At the end of the day, goods and services are what it's all about. And by dismantling the Greek economy, nevermind the Greek society, they actively undermined what they publicly claimed to be working for: a self-reliant Greek economy, capable of financing the needs of Greece. And capable of paying back what is owed.

The question inescapably poses itself: was it done intentionally or are they blinded by ideology?

One doesn't have to be as far left as I am to see that it didn't work, doesn't work, and never could have worked. Even the likes of Krugman and Stiglitz are perfectly clear about it.

Varoufakis, as you note, has been just as clear about this at least since late 2010, when he published the first draft of his Modest Proposal with Stuart Holland. There was a very good discussion about it in Austin in 10/2013 under the topic "Can the Eurozone be saved?" Participants included Varoufakis, Tsipras, Flassbeck, Holland and Galbraith, amongst others. I submitted a short clip back then.

His argument that Germany won't see a dime when Greece is shoved off a cliff, as correct as it is, never had any bite to begin with. The German government, and large parts of parliament, are operating in a parallel universe, economically. Over here, mercantilism is the road to success. Monetarism works. Surplus good, deficit bad. Saving good, spending bad. Everyone should have a current account surplus.

It's horseshit by the gallons, and it's the official economic policy of the largest economy in the EU.

And we're not even getting into the political aspects of it. Throwing a member of the EU into debt bondage, suspending its democracy to please the gods of the market... that's a travesty and a half. Yet it's also inevitable if they insist on going down the road of neoliberalism.

Worst of all, Greece is just the canary in the coal mine, as Varoufakis likes to point out. Greece had plenty of issues before they joined the EZ, but when they chose to adapt the same currency as a much larger economy hell bent on competitiveness, which is the favorite euphemism for Germany's beggar-thy-neighbour policies, they were doomed to be crushed. The rest of the PIIGS are next in line, unless this whole mess explodes beforehand. Maybe Rajoy's Franco-esque repression techniques fail, maybe le Pen wins in 2017, who knows. Maybe Schäuble finds the 100k of bribes that he conveniently forgot about back in the '90s and chokes on them.

Last but not least, 208 billion Euros – that's the projected current account surplus of Germany this year. That's 208 billion Euros of debt foreign economies have to accumulate, so that the German public and private sector can run a combined surplus of €208b. That's the elephant in the room. Systematic undercutting of the inflation target through suppression of unit labour costs and a dysfunctional focus on exports.

Unfortunatly, it's not just Merkel and her cabinet. It's the press, it's the economics departments at universities, it's politicians at all levels. Call it an economic nationalism, hell-bent to defend what they know to be the moral way of doing business. Everything left of this special flavour of market fundamentalism has been systematically attacked and suppressed for at least 30 years.

For instance, our socialist party, still referred to as the fringe of what is acceptable, runs on what is basically a carbon-copy of social-democrat programmes from the '70s. Similar to the British Green Party and Labour. Krugman, Stiglitz, Baker, Wolff, DeLong -- they'd all be on the fringe in Germany. Even the likes of Simon Johnson (IMF) or Willem Buiters (City Group).

If you speak out in favour of higher inflation (wage growth) to ease the pressure on our brothers and sisters in southern Europe, you'll be charged with waging a war against German saver. "You want to devalue what little savings a nurse can accrue? Don't you support blue collar workers?"

The same blue collar workers have been stripped of their savings by 15 years of wage suppression, the same blue collar workers are looking at poverty when they retire, because the PAYGO pension system was turned into a capital-based system that only works to your benefit if you never lose your job, always pay your dues and reach at least age 95. The previous system survived two world wars without a problem, yet was deemed flawed when they realized how much money could be channeled into the financial system – only to disappear at the first sight of a crisis, eg every five to ten years.

Similarly, you could point out that a focus on trade surpluses might not be the greatest of ideas, given the dependence it creates on foreign demand, a weak currency and restricted wage growth domestically. But they'll call you a looney. "The trade surplus is a result of just how industrious our workers, how creative our scientists and how skilled our engineers are. It's all innovation, mate! Are you saying we force the others to buy our stuff? That's madness."

You simply cannot have an open discussion about macroeconomics in Germany. Do I have to mention how schizophrenic it makes me feel to read contradictory descriptions of reality every day? It's bonkers and everyone's better off NOT reading both German and international sources on these matters.


Any compromise would have to work with this in mind. They'd have to package in a way that doesn't smell like debt relief of any kind. People know that stretching the payment out over 100 years equals debt relief, but it might just be enough of a lie to get beyond the level of self-deception that is simply part of politics. If they manage to paint Varoufakis' idea of growth-based levels of payment as the best way to get German funds back, people might go for it. Not sure if our government would, but you could sell it to the public. And with enough pressure from Greece, Spain, Italy, and France most of all, maybe Merkel could be "persuaded" to agree to a deal.

As for Syriza's domestic problems: it's a one-way ticket to hell. Undoing decades of nepotism under external pressure, with insolvency knocking on your door? Best of luck.

Italy is hard on Greece's heels in terms of institutional corruption. Southern Italy, in particular, is an absolute mess. Given the size of the Italian economy, Syriza better succeed, so their work can be used as a blueprint. Otherwise we're going to need a whole lot of popcorn in the next decade...


Edit: Case in point, German position paper, as described by Reuters. As if the elections in Greece never took place.

Excellent stuff, all around. It's nice to have a comprehensive overview over certain aspects of (y)our economic system instead of having to rely on piecemeal analysis by Baker, Stiglitz, Krugman, Galbraith, DeLong and the likes.

I watched the November issue last night and it made me appreciate even more that we still have a proper socialist party in our parliament, including a communist wing. They are still considered pariahs, yet their presence alone suffices to keep the other parties from following the British Tories' footsteps -- what a nasty bunch of inhumane wankers they continuously reveal themselves to be.

Joseph Stiglitz is an advocate of more lending, in order to stimulate growth. Unrestrained lending is exactly how we got in this recession, and exactly why Stiglitz should be banned from Occupy Wall St.

http://www.hacer.org/chile/?p=22

Naomi Klein’s disastrous yet popular polemic against the great free market economist.

In the future, if you tell a student or a journalist that you favor free markets and limited government, there is a risk that they will ask you why you support dictatorships, torture, and corporate welfare. The reason for the confusion will be Naomi Klein’s book The Shock Doctrine: The Rise of Disaster Capitalism.

In a very short time, the book has become a 21st-century bible for anticapitalists. It has also drawn praise from mainstream reviewers: “There are very few books that really help us understand the present,” gushed The Guardian. “The Shock Doctrine is one of those books.” Writing in The New York Times, the Nobel-winning economist Joseph Stiglitz called it “a rich description of the political machinations required to force unsavory economic policies on resisting countries."

Klein’s basic argument is that economic liberalization is so unpopular that it can only win through deception or coercion. In particular, it relies on crises. During a natural disaster, a war, or a military coup, people are disoriented, confused, and preoccupied with their own immediate survival, allowing regimes to liberalize trade, to privatize, and to reduce public spending with little opposition. According to Klein, “neoliberal” economists have welcomed Hurricane Katrina, the Southeast Asian tsunami, the Iraq war, and the South American military coups of the 1970s as opportunities to introduce radical free market policies. The chief villain in her story is Milton Friedman, the economist who did more than anyone in the 20th century to popularize free market ideas.

To make her case, Klein exaggerates the market reforms in question, often ignoring central events and rewriting chronologies. She confuses libertarianism with the quite different concepts of corporatism and neoconservatism. And she subjects Milton Friedman to one of the most malevolent distortions of a thinker’s ideas in recent history.

Democrats are jointly responsible with Republicans in the destruction of the middle class. Cutting the corporate tax rates would serve primarily to increase corporate profits. If the demand isn't there for goods and services, corporations won't increase production and hire more workers. Not to mention this won't help deficits. You definitely would help the stock market in the short run, which is disproportionately invested in by the rich, thereby stratifying the population even more along class lines.

The stats you're pointing to are horrible stats for useful data points about economic policy. It's true that the bottom 50% of the population are paying less as a percentage of total tax revenues collected today compared to five years ago. When unemployment went to 10% and higher, who typically lost their jobs? The bottom 50%. Whose houses typically got foreclosed on? The bottom 50%. When pay was cut, who most often lost out on that? The bottom 50%.

If you're paying taxes, it means you're earning income. Ask the unemployed what they'd rather be - taxpayers or jobless? They'd go with having to pay taxes. It's not all roses for the bottom 50% who are not paying taxes right now. But the point still stands - when the economy goes into a tailspin, it distorts who's shouldering the burden for paying the taxes.

This data varies too widely to be useful due to extraneous influences.

>> ^bobknight33:

Fuck that. The democrats had the chance and the duty to pass a budget when they were in complete control. This issue lays on their door step.
Cut corporate taxes jobs will come back and bring more opportunity fro all of us. Then pass the budget proposal for 2012 that cuts more than $5.8 trillion spread over a few years. These ex FED employees could then go back to private employment.
The top 1% of taxpayers pay about 40% of all income taxes,
the top 10% pay 71%,
and the top 50% pay 97% of all taxes.
The bottom 50% pays less than 3% of all income taxes paid.

Someone posted an interview.
http://videosift.com/video/Joseph-Stiglitz-on-Of-the-1-by-the-1-for-the-1

Yet another example clarifying why I cannot see economics as a science. They don't even use the same words. Stiglitz refers to the theories of his fellow economists. But a theory in science is reserved for extremely well-supported explanations, ones where the evidence is so overwhelming that there is effectively no disagreement, like the theory of gravity. Economists use the word in the layman's sense of "a guess".

As far as I can see, there are no theories at all (in the scientific sense) in economics.

>> ^Stormsinger:
@<A rel="nofollow" href="http://farhad.videosift.com" title="member since August 10th, 2006" class="profilelink"><STRONG style="color:#DCDCDC">Farhad2000
Then the people who caused this crisis would probably not be getting multi-million dollar bonuses this year (while millions have no job at all), would they? From my personal point of view, it's damned hard to see how things could have turned out worse...I've lost everything I worked for over the last 35 years, and we're just a few months from finding ourselves living on the street. This, in spite of the fact that I had not one thing to do with this crisis. I, and millions like me, are paying the price, instead of those who actually caused it.
Honestly, you really think that taking advice from the very people who caused the problem is the best course? If they are so knowledgeable and bright, how did we get here? Why didn't they see it coming beforehand?
I believe the answers are pretty plain. They're -not- bright and knowledgeable...they're short-sighted and greedy, and don't give a damn who gets hurt as long as they continue to pull in huge amounts of unearned wealth. They should be doing hard time, rather than being asked for guidance.
Sadly, it's quite plain that nothing meaningful is going to be done to ensure that it won't happen again. So, to judge by history, we'll see another such crisis in a decade or so.


Just want you to know...I'm in the same boat.

I am a few hundred dollars away from losing everything.

@Stormsinger, I hear ya, and I sympathize, but Stiglitz isn't one of the people who caused the crisis, and he has definitely been pissed at the way the bailouts were structured.

I think the point is, from a macroeconomic point of view, even a bailout that involves bad moral hazard (protecting bank CEO's jobs), can still be good for the economy, even if you would've preferred to do it in a way that would've insured that the people who made the mistakes were actually held accountable.

He's also very much in favor of re-regulating the banking industry.

This clip is just him responding to teabaggers (and Ron Paul supporters) who think everything would be fine now if the banks had been allowed to go down in flames. Simply put, it would've been much, much worse.

Think in reverse. What if the financial sector was not saved? >> ^Stormsinger:
One point that made me chuckle, he stated that most people in the financial sector agreed that the bailout of the financial sector prevented a depression.

Thanks d00d.

In reply to this comment by eric3579:
discarded

In reply to this comment by KnivesOut:
Damnit, someone discard this video so I can sift it again.

^ The key on the chart says it's 2008 spending. Seems to match other sources, like this one.

Joe Stiglitz wrote a book saying it'd really be $3 trillion for the Iraq war, total. I'll amazon it to the post.

Edit: Guess you can't amazon a blog post: http://www.amazon.com/Three-Trillion-Dollar-War-Conflict/dp/0393067017

>> ^GeeSussFreeK:
It is a similar institution to a theocracy when "do gooders" take control of policies to archive their own moral prerogative. There is no difference between health care for all or prayer in schools in a absolute morality since. "Progressive" ideals are just that, personal ideals, and have no business in government as much as religious ones. We created this nation to escape moral tyranny only to create a new one.
There is no difference between the moral planning of any sort; be it religious or otherwise.


The hardest part is to realize that a person may think they are doing good, but in reality they may not be doing good.

I think it has something to do with proximity. The fact that this person may be surrounded by persons who say "YES THAT'S GOOD STUFF" to every thing this person in power does.

So in total: This hypothetical person may have no Idea what their good intentions are doing. Compound that with group think, and we have a damaging situation.