The case for austerity....

[Remster 24]

... just became not-so-factual.

http://www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems

Remster

[airdvr 197]

Absolutely! Given the narrow set of indicators we should just say 'fuck it all' and spend ourselves even more deeply in debt.

Please don't dent the planet.

Destinations by Roxanne

[lawrocket 3]

So the study shows that high public debt does not increase growth over low public debt.

So basically paying cash increases growth the same pace as running up the credit cards, without that long-term issue of debt servicing?

My wife is hotter than your wife.

[Remster 24]

Quote

as running up the credit cards

I did not see any credit card data in that study

You can come up with whatever allegory to make yourself feel better about your assumptions, but the data does not support what was used as proven fact to push austerity.

Remster

[billvon 2,404]

>So the study shows that high public debt does not increase growth over low public debt.

Right, the study shows basically no difference.

>So basically paying cash increases growth the same pace as running up the
>credit cards, without that long-term issue of debt servicing?

Well, no, it's WITH the long term issue of debt servicing.

[mistercwood 287]

I'm still yet to understand how anyone pushing for austerity as a solution to the US economy is still taken seriously, given we have to two real world examples of the pros and cons - Australia opted for stimulus and skated through the GFC with barely a scratch, while Europe has bet everything on austerity and is currently imploding. Doesn't seem like rocket surgery to me....

You are playing chicken with a planet - you can't dodge and planets don't blink. Act accordingly.

[Stumpy 256]

Yes and no. I don't believe Austerity is necessarily the answer, however Europe and Australia are two economies with entirely different constraints and pressures. Its disingenuous to compare them directly.

Never try to eat more than you can lift

[mistercwood 287]

Yeah I know it's a bit of a stretch, stimulus was a hell of a lot easier with our much smaller population base... I'd say comparing Europe to the US isn't as a big a jump though, and it should be serving as a shining example of what not to do.

You are playing chicken with a planet - you can't dodge and planets don't blink. Act accordingly.

[ManagingPrime 0]

Quote

I'm still yet to understand how anyone pushing for austerity as a solution to the US economy is still taken seriously, given we have to two real world examples of the pros and cons - Australia opted for stimulus and skated through the GFC with barely a scratch, while Europe has bet everything on austerity and is currently imploding. Doesn't seem like rocket surgery to me....

It may not be rocket surgery, but it's a little more complicated then how you presented the two scenarios.

[lawrocket 3]

Quote

while Europe has bet everything on austerity

The European austerity is not a "bet" - it's having no choice. You can't spend money if nobody will lend it. Thus it is forced and must be accomplished in a lousy and most painful way.

By the way - show me some data about this "austerity." There's a lot of talk, but I haven't seen any indication that any place has even cut spending at all. I haven't seen the data, but that's my understanding.

My wife is hotter than your wife.

[rehmwa 2]

Quote

Quote

while Europe has bet everything on austerity

The European austerity is not a "bet" - it's having no choice. You can't spend money if nobody will lend it. Thus it is forced and must be accomplished in a lousy and most painful way.

By the way - show me some data about this "austerity." There's a lot of talk, but I haven't seen any indication that any place has even cut spending at all. I haven't seen the data, but that's my understanding.

well, we can't really know unless we try both.

Let's start by asking if we can force Germany to bail us out too.....

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[billvon 2,404]

>well, we can't really know unless we try both.

We have; that's what the study is about.

(Which, BTW, does not mean that "massive amounts of debt are just fine." It just means there aren't as many economic impacts to carrying a high debt ratios as first thought.)

[ManagingPrime 0]

Quote

>well, we can't really know unless we try both.

We have; that's what the study is about.

(Which, BTW, does not mean that "massive amounts of debt are just fine." It just means there aren't as many economic impacts to carrying a high debt ratios as first thought.)

That's common sense. To single this poorly constructed and biased study serves no purpose other than to identify the obvious...it's a poorly constructed and biased study. I would not conclude that there are not many economic impacts from high DTI's.

[billvon 2,404]

>To single this poorly constructed and biased study serves no purpose other than
>to identify the obvious...it's a poorly constructed and biased study.

Exactly. That's the entire point of the article. Not only did they exclude some data, their Excel spreadsheet was just plain wrong. And since many people were basing their decisions on the original conclusions of the study, then it's important to point out that it was biased and poorly constructed (and indeed just plain wrong.)

> I would not conclude that there are not many economic impacts from high DTI's.

Agreed. All you can conclude is that countries do not see a GDP impact from high debt loads.