[pp.int.general] Tyrant banks, walk the plank!

[aloa5]

Richard Stallman schrieb:
>     I don't think that austerity is
>     the biggest problem, rather it is corrupt and incapable politicians that
>     can not be voted out of office (like in Spain, Italy or Greece) and budget
>     cuts that hit social welfare and education rather than infrastructure,
>     politicians' wages or saving 'important' industries like banks, car
>     manufacturers and the likes.
> 
> Austerity for the sake of deficit reduction leads to depression
> regardless of how the cuts are made.


Richard,

this is not really true.

I don´t think that it would be valuable for us teaching macroeconomics 
on this list. I could say "believe me" because I am a well known German 
econ-blogger. ^ ^ But as we are all pirates (and think ourselves) you 
would prefer to read this:
http://www.eurointelligence.com/eurointelligence-news/home/singleview/article/the-economic-consequences-of-the-pact.html

Schulmeister on the fiscal pact. This short essay tells more about the 
problems as most of the people (and pirates) know:


"....If the budget targets were reached in spite of the prolonged 
recession, Spain needed not to continue an austerity policy according to 
the deficit criterion. This is so because the output gap widens to at 
least 5% of GDP so that the structural deficit is by more than 2.5% 
lower than the overall deficit....."



What is true (but not the same):

/.....Any sustained fiscal consolidation thus requires a change in the 
rules of the game which would shift profits – the core energy of 
capitalism – from the financial sphere to the real sphere of the 
economy. Enhancing austerity policy under the prevailing 
finance-capitalistic conditions will not reduce the public debt ratio. 
It will only reduce economic growth. The economic consequences of the 
fiscal pact will therefore be depressing....../



So there are different points
- growth
- austerity
- gdp and dept-to-gdp

What we will see is a depression not (or less) because of the 
(structural) deficit reduction but (more) because of the additional 
dept-to-gdp-rule.

Correct: "Austerity...leads to depression" but it is said that deficit 
reduction must not lead into austerity ;).

Hm.... was macroeconomic.... anyway: believe me :) ^ ^

Regards
Otmar