Anti-austerity bloc brings down Portugal's government

originally posted by: ScepticScot
a reply to: InnerPeace2012
The problem is when people don't spend their own money due to lack of confidence in the economy, the "paradox of thrift".
What is rational behaviour for an individual, when done en masse can make everyone worse off.
This is why government needs to be the spender of last resort.

Ok that is fair enough, that sounds much clearer now and I see your argument of why it is important to increase government spending

Hey thanks ScepticScot, I have learned something new today..starred

a reply to: Phage
By feasible I mean where mechanisms exist for doing so. The EU is badly designed in many ways and has many of the restrictions of a national government without all yhe tools and levers. For example if the US government wants to boost the economy of a state it can locate a government agency or military base there.
No austerity is trying to cut spending during an economic downturn. It is economically illiterate nonsense.
You still seem to be looking at this as an accounting exercise. If the EU spends x billion on improving the economy and as a result the combined GDP grows by more than x then that is not handing a blank cheque or throwing good money after bad.

originally posted by: hopenotfeariswhatweneed
a reply to: InnerPeace2012

In the end, it comes down to whether you trust private individuals to spend their own money wisely or whether you think government officials will do a better job.

That is quite a conundrum...

Yeah it was quite confusing, especially for a non finance person like myself..lolzz

But spending more either way seems like the right thing to do, and there is more trust in the government to do so, then individuals who are are more interested in saving their hard earned money than increasing thier spendings.

It is more feasible when the government does it, is what I understand from this discussion.

Now, if you ask me any finance question, I haven't a clue but when it makes logical sense than thats what matters..

originally posted by: liteonit6969

This is fantastic news. This myth of cutting government spending is being exposed.

What myth?

Recent research at Harvard Business School began with the premise that as a state's congressional delegation grew in stature and power in Washington, D.C., local businesses would benefit from the increased federal spending sure to come their way.

It turned out quite the opposite. In fact, professors Lauren Cohen, Joshua Coval, and Christopher Malloy discovered to their surprise that companies experienced lower sales and retrenched by cutting payroll, R&D, and other expenses.

#28 – “Government Spending Brings Jobs and Prosperity”

a reply to: TheBandit795

The CCM analysis was comprehensively shredded in later research. The gist being that the selection criteria used was based on some fairly erroneous assumptions (they did not look at all changes in chair) , the evidence was overwhelmingly taken from one state and that the relationship between level of funding based on change of chair does not correlate with the affect they claim on private sector investment.

a reply to: ScepticScot

Any links?

the problem in portugal is that austerity has created unemployment (masked) and a massive emigration crysis (oficially about 350 thousand) most foreigners left the country also, if that whas not enough the cutting has not been on things that actually made sense (maybe stop buying cars for politicians and employing uneeded people from their political party or paying private schools to do the same thing public ones used to do for a fraction of the price while finished new public schools are closed because it was too expensive?) or selling every source of income of the country to foreign entity's for ridiculous prices (tap wich had it's own fleet (77 planes) could not lease newer planes but after being sold it can and it's main office can move from the country in 10 years, and it was making a profit for 5 years but because the government wanted to sell it and not honor written agreements it had previously made strikes started so it stopped it's profit...and it was sold for about 10 million
after four years the debt is much larger the people much poorer the services much worse
the debt is at about 129 it started at 108 in 2011 whats the point of all the austerity?

a reply to: TheBandit795

This one deals specificity with that paper.

papers.ssrn.com...

If you prefer I can post some links to research into positive impact of government spending.

a reply to: ScepticScot

They replied to that critique:

www.people.hbs.edu...

Ok, go ahead with the links.

Thank you.

a reply to: TheBandit795

Thanks, will read pdf and reply tonight when back on real keyboard. (I must be over the age bracket who find touch screen intuitive)

As an observation does the whole methodology of this paper not seem a bit contrived (and this applies to rebuttal I linked as well). The justifications for using changes in chair rather than measuring directly seem unconvincing to me.

originally posted by: Phage
a reply to: ScepticScot

In time of crisis government have to be prepared to be the spender of last resort as well as the lender of last resort.

What capacity does the government of Portugal have to dig it's way out of the deeper hole it is digging?

But, but... Keynes.... LOL. Sad. It was nice knowing you portugal.



Hahah, people think theyre screwing the bankers by begging for dependence on them.

a reply to: ISawItFirst

A genuinely Keynesian solution is exactly what is needed for Portugal.

Not sure what screwing bankers has got to do with it.

a reply to: TheBandit795
Apologies never got time to look at pdf, will do so and reply at weekend.

As a European living just across the water from Portugal and having family in Greece, I feel that some people who are distanced from the shenannigans of the EU dont' fully understand the history of a lot of the countries that have been "forced" into joining the EU and previously the EEC.

Portugal is a poor country. It was under dictatorship until the 1970's and that takes a long time to recover from. Greece also was late into the democratic stakes with years of military coups and disharmony until again in the 1970's when the military was overthrown and the democratic process started again. Romania was under the control of the dictator Ceaușescu until 1989 and the country was an economic disaster having been drained since WW2 by the Russians.

It should be remembered that the Common Market as it was known, was started after the 2nd WW as an answer to labour shortages across Europe and the free movement of trade without the previous red tape & bureaucracy that stifled businesses. It was a time of a necessary loosening of the hold Governments had on imports & exports much needed after the devastating WWI & WWII. Over the years, it has morphed into a bureaucratic nightmare of control, regulation and legislation the opposite of what it was originally set up for. The EU Commission is now more interested in serious expansionism rather than the happiness of its members, and the cost of joining the EU is outrageous in most cases, but the alternatives are isolation & exclusion. The cost to the UK alone is in the region of £118billion per year according to the UK Taxpayers Alliance, far higher than the doctored figures of the EU Commission.

Forcing countries to join the EU with false promises and swaying the voters with dreams of better lives and minimum wages is what has brought many countries, not just Portugal & Greece, to the brink of bankruptcy coupled with the huge costs of actually being in the EU. This is why countries have to be bailed out, this is why austerity measures are being forced onto populations, not because necessarily their own Governments are incompetent but to pay off the debts forced onto them by the Inner Six. The current criteria and terms of membership are wholly unacceptable with a very flawed single currency making some countries highly un-competitive in terms of trade defeating the object of all nations being equal etc. The poorer countries cannot keep up and cannot afford the contributions demanded by the EU Commissioners for which they see very little by way of returns. Romania, Croatia, Serbia, Hungary and the majority of the ex Eastern bloc countries are already poor and joining them to the EU is not going to make them richer and far from increasing trade the EU ensures that it controls all aspects of trade in a "fair" trade policy that benefits only the richer countries. The EU has failed spectacularly in its promises of free & profitable trade with only 5% of UK businesses exporting to the EU stiifled and hamstrung by the EU's legilsation. The few countries outside of the EU such as Sweden have shown continual increased trade and more particularly superbly negotitated contracts with China a country the EU have consistently failed to negotiate any form of free trade agreements with.

Financial power has been slowly taken from all EU members with the exception of the Inner Six. Contributions bear no resemblance to the benefits reaped. Portugal Greece and the rest will not recover their economies by being in the EU as it is now, they will simply be lured by more bailout loans and promises, until eventually, almost all control is handed over to the EU as is the case with Greece & Germany. German businesses get a free ride in Greece, they have now taken over the airports and toll roads, the biggest financially secure businesses in Greece are German, and what's more they don't pay tax. How is this good for the Greek economy? Entry to the Euro almost crippled their highly lucrative tourist industry with people opting for Turkey and other countries who had not relinquished their currency and where they got a far better exchange rate and value for money. The more Portugal takes in order to remain in the EU, the less control they will have over the running of their own country

The current refugee crisis is a fine example of the EU failing its mission with rumours of backroom deals in Brussels and the inability to reach any kind of decision without months and months of arguing between members unable to agree even basic solutions. Portugal would have survived without EU intervention and now, they will never shake them off

a reply to: liteonit6969

This solves nothing unless people go the way of iceland and get rid of banks altogether and jail the bankers. We need an Icelandic world.

But props to any small victory, but the focus was in the wrong place.