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Excel Error Contributes To Problems With Austerity Study
quarterbuck writes "Many politicians, especially in Europe, have used the idea that economic growth is impeded by debt levels above 90% of GDP to justify austerity measures. The academic justification came from a paper and a book by Kenneth Rogoff and Carmen Reinhart. Now researchers at U Mass at Amherst have refuted the study — they find that not only was the data tainted by bad statistics, it also had an Excel error. Apparently when averaging a few GDP numbers in an excel sheet, they did not drag down the cell ranges down properly, excluding Belgium. The supporting website for the book, 'This time it is different,' has lots of financial information if a reader might want to replicate some of the results."
The Excel error is making the rounds as the cause of the problems with the study, but it's actually a minor component. The study also ignores some post-WWII data for countries that had a high debt load and high growth, and there's some fishy weighting going on: "The U.K. has 19 years (1946-1964) above 90 percent debt-to-GDP with an average 2.4 percent growth rate. New Zealand has one year in their sample above 90 percent debt-to-GDP with a growth rate of -7.6. These two numbers, 2.4 and -7.6 percent, are given equal weight in the final calculation, as they average the countries equally. Even though there are 19 times as many data points for the U.K."
No, finite resources do.
When I read the title, I expected a calculation or rounding issue, or an internal range issue from built in components and not "dumb ass user didn't set the range correctly when averaging". That's not an Excel error, that's a user error - Excel did exactly what it was told to do.
Anyone who prefers debt is a fucking idiot and shouldn't be trusted.
That statement is plain daft. It's much too broad. Sometimes debt can be good. For example, getting a mortgage for a home might not be bad. Sure, it would be better to buy with cash and avoid paying all the interest, but if you don't have a pile of cash lying around, you are limited to saving while paying rent. It might actually work out better to get the mortgage.
Also, getting a loan to start a company might be a great way to have enough capital to get to the market quickly and by doing so make a huge profit.
Not all debt is bad. Debt without any plan to pay it off and without evaluating whether the costs of managing the debt outweigh the benefits is bad. The problem is that most political parties these days seem to have a horizon of the next election when it comes to balancing the books. The problem with this sort of debt is that they spend up big and have no real plan to pay it back.
Moved to http://soylentnews.org/. You are invited to join us too!
Economics. The social "science" with a pretension and envy of physics, practiced by those who couldn't cut it at math or physics.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
It's about what you spend it on.
If you spend it on capital goods that allow you to produce more, that's investment.
If you spend it on final use goods, that's consumption
Simple concepts: consumption is not production and not all spending is investment. And yet, look at how Gross Domestic Product is calculated.
GDP = private consumption + gross investment + government spending + (exports - imports)
Set your phasers on "funky"!
In Holland at least, financial products must carry a legal disclaimer stating that past performance is no indication for the future.
What is this entire flawed study? Trying to predict the future, from past performance.
The Dutch economy is an open economy heavily dependent on the performance of the rest of the world. It doesn't much matter what our leaders do, the rest of the world dictates the state of the Dutch economy. So how do you compare its performance with the rest of world? It doesn't matter what our debt is, it matter how many products Germany ships through Rotterdam. But still, these economists try to compare how The Netherlands fared with X debt against the US which has a totally different economy. How different? The US is one of the bigger countries and is #1 in agri culture. The Netherlands is one of the smallest countries and is #2 in agri culture. Why? Every American black and white cow was created by a dutch boy sticking his arm up a cow. And jerking of a bull. The US exports low value agri cultural products, the Netherlands high value.
But it means the SAME industry, is COMPLETELY different. Baby cow production US style is cowboys and homo sexuality in the prairy. Dutch baby cow production is bestiality and high tech in the desolate north.
It is interesting to note that politicians who claim to want the best for big business are NEVER themselves successful big business owners AND that the successful big business owners never ever agree with them. Wallstreet likes the Republicans supposedly (but the two top financial newspapers advised voting against Romney because even a socialist in the white house would be better) but people like Warren Buffet and Richard Branson sing a very different tune. They think the best way to beat a recession is to spend. Not spend recklessly but invest in the future not in handing out tax cuts to buy votes.
Be wary of any leader who leads out of an ideology and not what is needed right now. Would you go to a doctor whose every answer is "lets amputate"? No? Then why vote for a politician whose every answer is "cut taxes, spend less, except on the pork project I need to get re-elected"? Real leadership is looking at what needs to be done and then do it. Not just have a one size fits all slogan.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
"""
Paul Ryan's Path to Prosperity budget states their study "found conclusive empirical evidence that [debt] exceeding 90 percent of the economy has a significant negative effect on economic growth."
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Nope. "has a[n] effect" is a claim of causation. In reality, all they found was a correlation. And by "reality", I of course mean "made up fantasy land where they can't use excel properly".
-- FatPhil (AC, as I'm away from home and don't remember my password)
Attempting to justify more theft of the public and increased government spending.
It's simple to answer this question, do you want to incur debt or spend money that you have? Anyone who prefers debt is a fucking idiot and shouldn't be trusted.
Wow this brings stupidity to new levels. A report is widely used to justify government cut backs. The report proves to have mistakes in it that would have given a different result - so pointing out the error is "Statist Bullshit"? There would be some justification in arguing that the report does not matter, though for people who previously used it to argue their case this would be hypocritical. But to argue that we should continue to use the incorrect report because correcting it is statist is just dumb.
Carmen Reinhart: (Chief Economist) Bear Stearns -> IMF -> Harvard
\-> married with Vincent Reinhart: FED -> (Chief US Economist) Morgan Stanley.
famous quote: "Secretary Paulson Makes the Right Call" The Wall Street Journal, Sept. 16, 2008:
"In other words, some government aid might ultimately have to be directed toward financial firms whose failure would otherwise threaten the financial system.
The politicians now running for office should also appreciate that their grand ambitions for new spending programs or tax cuts may have to be tempered by the need to rescue financial firms."
Kenneth Rogoff: IMF -> Harvard
Reinhart and Rogoff have certainly been warning of high debt levels, but it's wrong to give this study too much credit for what "austerity" there has been across Europe. Most cuts in places like Greece and Spain were fait accompli, once it was clear that the ECB was not going to budge on its inflation target to neither try and boost nominal growth nor to crudely relieve nominal debt levels.
I will grant that the 90% debt/gdp trigger is most likely non-existent, but the rest of their book does yeoman's work in cataloging financial crises. It's a useful antidote to the mass psychological amnesia that is perpetually recurring. "Our new investments our safe and returns will never fall" inevitably leads to "what perfidy caused this?" The cycle has been repeated in remarkably similar ways for nearly a millenium now. We should appreciate the detailed financial history they have created, and chide them for the dubious massaging of the data. Just don't overstate its political implications.
I got a catholic block.
Does High Public Debt Consistently Stifle Economic Growth?
No, finite resources do.
High public debt drains away valuable resources faster than low public debt
Given the same amount of initial resource, a country with high public debt will have smaller chances for recovery
But then again, most economies (other than that of North Korea) are dynamic, and the amount of resource fluctuates
Muchas Gracias, Señor Edward Snowden !
When you're cooking the data, try not to make too many obvious mistakes. Of course, had the original propaganda piece, I mean "study", been peer-reviewed by someone who "could do the math" (obviously NOT any economists), this would have been pointed out as total nonsense in the first place.
It's "affect" Mr Highly Educated.
Actually if you get a mortgage at a low rate and invest the rest of your money over the 30 years you would have made more money then if you were just buy the house, and invest your existing money.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
But then again, most economies (other than that of North Korea) are dynamic, and the amount of resource fluctuates
That depends on what you mean by "resources." An MBA Romney-style corporate raider considers "resources" to mean "cash and credit" while someone who isn't a rent-seeking parasite considers things like timber, ore, fuel, and available labor to be resources. The only real resources that fluctuate are labor and renewables.
Free Martian Whores!
I agree with you, debt without evaluating the cost and a plan to manage it is bad news.
However you say "it would be better to buy with cash and avoid paying all the interest"
Sure buying with cash avoids paying interest, however it also avoids collecting interest on whatever else you would have invested in. Essentially buying a house with cash can be considered as investing in property at the mortgage rate of interest. If you can beat that in the market (with a suitable level of security/liquidity) then it's worth condiering a mortgage and investing.
Of course differential tax treatment, stamp duty on house purchase, duration you expect to hold the house/asset, etc all feed in to make it a more complex analysis. YMMV, this is not financial advice, etc
Thank you for using your brain, far too many around here don't bother.
Doesn't anyone who supports big government socialism see that the people encouraging all the debt and deficit spending are *not* the same people paying the taxes, ever? Anyone? Hello?
Good grief.
Debt without any plan to pay it off and without evaluating whether the costs of managing the debt outweigh the benefits is bad. The problem is that most political parties these days seem to have a horizon of the next election when it comes to balancing the books. The problem with this sort of debt is that they spend up big and have no real plan to pay it back.
Therein lies the problem. In my opinion, borrowing should be done to acquire capital for investment; not to simply acquire nice things. I think most people are so used to doing that (e.g. credit card debt,) that they don't really pay attention when the government does it either. Many are even fine with the idea that they can just spend until they are upside down, and then file chapter 7. Governments can't do that (if they did when they do - there will be hell to pay.)
Nice things would be (and this is a classic example libertarians point out) things like national endowment of the arts. If any given artwork isn't worth anything to anybody, then why on earth are we paying somebody to make it? I really don't know if any nice things have come of it, but in the end that is all it is - just a nice thing that we don't actually need in the classical sense, and that money should be going towards paying back debts.
Sadly that is lost among posters like the one just above you, who I think probably constitute a majority. I hear many talk about how a subset of Americans don't want to adopt European policies just for the sake of not being like Europe. Ignoring that the reverse is also true (it certainly is) there is also that subset who want to simply follow Europe's lead just for the sake of doing so. I don't think that is a wise idea given the current Eurozone crisis.
There was a time when the roles were reversed - the US tended to follow Keynesian thought more than Europe. That was the great depression. And as it turns out, the US fared far far worse than Europe.
The great depression wasn't caused by the stock market crash, by the way. The crash simply created a panic, but on its own it didn't cause the mess that followed. After the crash, the unemployment rate was about what it is now - floating between 9 and 10 percent, even showed signs of recovery for a brief period. Things didn't get really bad until the government tried to "fix" things. Smoot-Hawly for example, designed to create jobs, raised domestic prices dramatically and dropped exports by half. Domestic production and exports rise and fall with one another, for those who don't know. That followed by heavy deflation, prohibition, FDR declaring bullion as contraband, the new deal, among a bunch of other things that were supposed to "improve humanity" (the prohibitionists identified themselves as progressives, by the way) and only made things much worse.
Notice below how you see the dow begin to recover up until Smoot-Hawly
https://en.wikipedia.org/wiki/File:1929_wall_street_crash_graph.svg
(Strange world we live in how Republicans wanted tariffs, Democrats did not, and now things are reversed with Unions heavily lobbying for tariffs to protect their jobs.)
What do I know though, I'm just another one of those libertarian whackos who still believe that Keynesian theory was shattered when it proposed that stagflation can't possibly happen, but it did anyways.
Careful with names containing L slashdot.org/~AiphaWolf_HK slashdot.org/~AlphaWoif_HK slashdot.org/~AiphaWoif_HK
http://en.wikipedia.org/wiki/Confirmation_bias
The researchers got the result they wanted, so they didn't bother to check if they were actually correct.
And actually, that's being kind.
These two numbers, 2.4 and -7.6 percent, are given equal weight in the final calculation, as they average the countries equally. Even though there are 19 times as many data points for the U.K."
Why should the UK be given more weight? There's only one such country, not 19 such countries. And the UK data in question is highly correlated (it all comes from the same debt over the same span of time, not 19 different points in the UK's history).
In addition, the rebuttal ignores two stretches of data:
RR examines three data samples: 20 advanced economies over 1946{2009; the same 20 economies over roughly 200 years; and 20 emerging market economies 1970{2009. We repli- cate the results only from the first sample as these are the most relevant to current U.S. and European policy debates, and they require the least splicing of data from multiple sources. We focus exclusively on their results regarding means because these have generated the most widespread attention. On their website, Reinhart and Rogo provide public access to coun- try historical data for public debt and GDP growth in spreadsheets with complete source documentation.3 However, the spreadsheets do not include guidance on the exact data series, years, and methods used in RR.
It's worth noting here that the rebuttal is willing to take data from the period just after the Second World War where a number of countries had high debt and were transitioning from a total war economy (that is, an economy totally focused on winning a particular war to exclusion of everything else, including economic growth) to a normal one - including the 19 year series of the UK mentioned above, and periods of excluded (excluded that is from the original study for unknown reasons) data from Australia, New Zealand, and Canada. All of these incidentally show high economic growth combined with high debt.
If we're excluding data series due to their irrelevance to current economies, why should these be counted? The US and Europe haven't been in a total war economy since the end of the Second World War. So it is to be expected that one would not see the economic gain (whether or not the debt is present) that one saw in the immediate post-war period.
The original research seems weak for a number of reasons, but I'm not willing to call it "fishy" on the basis of a rebuttal which makes its own "fishy" assumptions.
As a historical note, christianity used to have nearly identical rules concerning usury; and the deep suspicion of interest-bearing loans is a least as old as Aristotle(who was Not A Fan).
As time went on, though, a number of... increasingly creative... legalisms were hacked together to allow contractual arrangements that were loans at interest in everything but name. In the case of christianity, the charade was so transparent, and the amount of obviously-loan-backed economic activity so significant, by the early modern period, if not earlier, that almost everyone bowed to the inevitable and "usury" stopped meaning 'charging interest' and started meaning 'charging lots and lots of interest'(and even 'lots and lots' has proven to be pretty flexible).
Islam has not (yet) reached the 'eh, fuck it, sure we charge interest' stage; but let's just say that they are doing some downright jesuitical work at the 'So, what sophistry can we spin to make interest not look like interest?' stage. The range of products dubbed 'islamic finance' won't say 'interest'; but it will look like a duck and quack like one.
The only real resources that fluctuate are labor and renewables
I guess you are not in the high tech field
As one in the tech field since the 1970's, one very real resource that I count on is BRAIN-POWER, aka, ideas
Timber can cut into wood for burning, or could be turned into tables and chair by carpenters, or could be used for building a dormitory, or, in the hands of master crafter like Stradivarius, becomes his world famous violins
Muchas Gracias, Señor Edward Snowden !
It means less flexibility.
More liability.
Less freedom.
More waste.
Say what you will about this study, the governments of the western world are living beyond their means.
The US government for example is spending about 50k per US household.
The median income of US households is about 49k.
That alone should tell you there is a problem.
To paraphrase Emperor Augustus: "things that can't go on forever - don't."
These governments are spending well beyond their means and the only way they can presume to maintain it even for a time is through massive inflation. Which will harm the economy, raise interest rates, and generally transition any country that chooses this path into a second world country.
And even this won't be enough because having destroyed your credit and dealing with increasingly higher interest rates it will only be a matter of time before you can't inflate the currency fast enough to paper over your debt.
And when that happens... anarchy... blood... social collapse.
People need to stop deluding themselves that they can magic the debt away as if it won't exist if you don't believe in it.
It isn't a six year old's imaginary monster. It's our civilization's very real debt. And it will bring us low if we don't bring it under control.
I also love that they're whining about these austarity measures when many of these countries are still increasing the amount of debt they owe. In many cases, they're simply slowing down... not reversing course.
If a country can at least tread water without building additional net debt then it's got the situation under control.
But many do not. The US does not. We spend more every year and the tax recipes and economic growth are not remotely keeping up.
I know I'm going to get hate mail for this... It's what comes of having an open forum.
But you can't wish the numbers away through denial. It's like arguing with the Sun.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Professionals don't use excel for data analysis
The great depression wasn't caused by the stock market crash, by the way.
Indeed. It was caused by the very same actions that caused the 2008 meltdown. There's an excellent history of the 1920s written shortly after the crash that was required reading in a class I took at SIU about 40 years ago, Only Yesterday. It's a good read, and an eye-opener about our own time.
After the crash, the unemployment rate was about what it is now - floating between 9 and 10 percent
I'd be very interested in a citation -- everything I've read (and my grandparents, who were born about the turn of the century) said it was more like 25-35%.
Notice below how you see the dow begin to recover up until Smoot-Hawly
That was enacted in 1930, your graph shows no such thing. Read the book I linked, the full text is there.
Free Martian Whores!
Stupid? Really? I see you cleverly avoided answering the question.
My point was that no report is necessary to make the correct conclusion, errors in Excell are not relevant, nor is the report.
Deficit spending is bad, debt is bad, big government statism is bad, unless you are one of the thieves of course.
And you present no argument otherwise, except for calling me stupid. Nice.
Fuck off.
OK so you can know what's good and bad without regard to any facts. I'll let others decide whether that is stupid or clever.
If you are paying interests below inflation, you should pile up debt, if possible long term, as much as you can. In fact, this is a clever way to cheaply roll over older, more expensive debt.
Also, in a semi-depressed economy, any kind of spending by the government, even on inane things, will turn out to help recovery, provided enough people get to dip in. Of course if you spend on unemployment benefits and on re-training of workers, you get much more immediate returns.
Yes, because we should be bitter about government not pretending to our misunderstanding of economics. And inflicting massive pain on tens of millions of people is OK. It is for a GOOD cause: decreasing the debt, which is ALWAYS BAD.
Rich economies are rich. One of the side effect of being rich is that you can pile on proportionately more debt. Which is completely fine, and in any case an infinitely better use of money than bullion in vaults.
You know that Germany has relatively low unemployment compared to the rest of Europe because many youth learn trades instead of being jobless? Same for Austria and Switzerland.
Austerity affects everyone. It kill opportunities, it stifles social mobility, it removes funds from research and long term investments. There are no good aspects to austerity, except that at the top you fall less than those at the bottom so you are comparatively better off. But to rejoice in that makes you a horrible person.
You are entitled opinions, but not facts.
Not much I can add, except that maybe people who use the term, "Libertards" seem universally to be idiots. But that's just an entitled opinion of mine.
I have yet to meet a libertarian that was not a greedy asshole (the pretend ones) or lived in a parallel universe (the true believers).
I wouldn't expect you to recognize a situation where you had.
An error with an Excel spreadsheet looses Belgium, and the corresponding warp in the data space plays with the world economy? The only logical explanation is someone in Heaven has hired Douglas Adams to make reality 'more interesting'.
The loans from the USA to the UK after WWII where anything but favourable. They where under incredibly harsh terms that impeded economic growth and lead almost directly to the loss of empire.
Bad for who?
I have an uncle who was the finance director for a large oil drilling company and he gave me a useful piece of advice:
"never pay off your debts"
Why pay the mortgage off after 25 years? Why not extend the debt, use the equity, and hopefully die before it's all paid off? Inflation takes care of the payments, hopefully. Locked up equity is no good to anyone apart from the creditor.
It's a game and some of the rules can be decided by the debtor.
I'm on my forth mortgage. I've used the equity to pay for holidays, new kitchen and bathroom, and a host of other things. I pay less per month today than I did 15 years ago because of inflation.
It's a gamble. And as I smoke like a chimney, a good gamble.
This post contains benzene, nitrosamines, formaldehyde and hydrogen cyanide.
post-WWII data for countries that had a high debt load and high growth
It would be hard to not have had high growth after WWII for most of Europe. Given most of those economies had been pounded into next to nothing by the war. If you have a GDP of $1 in 1945 and $2 in 1946, why that is 100% year over year growth!
Next debt load and austerity are not the same thing. The UK had a high debt load post WWII and was also rationing food. So it had high debt AND austerity. Using debt to invest in critical infrastructure like roads and basic sanitation for example you don't have or is no longer workable, and perhaps providing minimal nutrition to the needy is an entirely different proposition than making sure every dope who masters long division gets to hang out for four years at University.
Public debt is not always bad when there is clear ROI on where the revenues for its issuance are being directed. Debt should not be used to fund blue sky efforts, nor should it be used to provide comfort. If 'austerity' today had any relationship what what it meant in the 1940s-1950s than I might be included to agree it would be going to far for the present situation to justify, but as its used today it might as well just be a synonym for 'waste'.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
BZZZT! Wrong
Red to red, black to black. Switch it on, but stand well back.
The thing to remember when hearing about all this "austerity" in Europe is that no country in Europe has tried real austerity .*
Real austerity is cutting spending until outlays match receipts. As the linked chart shows, the overwhelming majority have raised taxes or continued deficit spending. Some have slightly reduced the ratio of deficit spending to GDP and called it "austerity." They're still digging a hole, they're just doing it more slowly.
Politicians are addicted to spending to prop up an unsustainable welfare state. They've seen what the future looks like in Greece and they still refuse to stop spending. And the current government of the United States is right there digging with them.
Austerity hasn't been tried and failed. It's been declared difficult and left untried.
(*with the possible exception of Estonia and one or two other small countries)
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
Germany has undergone many years of internal devaluation, partly because of the costs induced by the integration of East Germany, partly because of pure masochism. Life in many parts of Germany is harsher, and the standards of living lower than in Northern Italy, for example. No parts of Europe is truly a hell hole -- this is not the US. It is also the case that the current imbalances in Europe are due in part to this largely pointless German deflationary strategy.
If you look at a GDP/capita map of Europe, which looks at regions instead of countries, you will see that there is indeed a core and a periphery. The core comprises southern Germany, Western Austria, Switzerland and Northern Italy. The periphery comprises Eastern Austria, Northern and Eastern Germany and Southern Italy. The separation in fates during this crisis comes from 1) unfortunate and fortunate lumping of regions with blocks which could or could not transfer funds when needed 2) Those countries forced into austerity contracted badly.
You want to keep providing substance-free responses I can keep bouncing them back.
Are you actually trying to argue that debt is good like the chain smoker above?
Gwan, we're all waiting.
Fool.
Debt for ongoing regular expenditure is always bad (maybe excepting developing countries in times of crisis). Debt for things like infrastructure projects, research, etc. can be good if the expected payoff is greater than the cost. I think most people would agree that ideally we should not be where we are now. However, whether fixing the problem in the time of recession with unemployment, lower tax incomes, etc is good is another matter. The study was used to justify a reasonably fast pay-back with austerity during recession because it seemed to show that large deficits equal low growth.
The opposing view is that trying to reduce spending too much during recession will itself slow growth more than the deficit. A rather over-the-top analogy is of someone who is short on money deciding to save on the travel money by not going into work every day. This argument says that the defect will be easier to pay off when the recession ends, there will be lower unemployment, and higher tax revenue. Personally I think that there is a balance, the government should aim to make some savings but not hurry to pay too much off in recession.
The thing is, if the report is used to justify the severe austerity approach, and the report is wrong, then the approach may be doing more harm that good. The reduced expenditure could mean less growth, postponing the time there will be greater revenue - and the paying off debt by itself may do little or nothing to promote growth.
Aside from your arguments amounting to nothing more than ad hom, straw men, and picking at my spelling error, the key thing to take from my post was unsurprisingly lost on you.
No smart person anywhere will ever argue that you should use borrowed money on what basically amount to luxuries.
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I will answer your rhetorical question.
The government wasn't trying to "increase access to healthcare". Their goal is universal access to healthcare. The difference is that they aren't trying to "increase access" for people who already have and can afford it. They are trying to increase access for people who don't have/can't afford healthcare. Now, these people tend to be people with lower incomes. Maybe you don't follow politics, but this past year Republicans talked a lot about the "49% who don't pay federal income taxes" who tend to be lower income families. I would posit that most of the people who don't have health insurance are also probably in the group that don't pay federal income taxes. So, your solution would do almost nothing to solve the problem that they were trying to solve. All it would do would be to put the government further in debt, mostly to the advantage of people who already have health insurance.
Another problem that they were trying to solve is the rising cost of healthcare which is putting our healthcare system on an unsustainable path. They focused on trying to incentivize results instead of actions (spending). Your proposed solution would incentivize healthcare spending, so would be doing the opposite (encouraging healthcare providers to provide more care i.e. spending instead of focusing on making that care unnecessary).
In conclusion, the answer to your (rhetorical) question as to why Obamacare did not "simply and immediately cease collecting income taxes on that portion of income spent on healthcare related expenses" is thus. Because it is a fucking stupid idea. I see why you said it was rhetorical. Because the answer makes you look like an idiot.
At some point the country with more debt has had more money than the other one. What matters is what the country is doing with that extra-resource. As a example, in June 1999, Google was 25 millions in debt, a considerably worst shape than my local kebab place.
Debt is just an indicator. That's what's wrong with the current austerity measure in Europe. It does not matter what a Country is doing with its money, Europe only cares about the yearly balance sheet and does not give a damn about the future of the country.
I don't know your political persuasion, but something tells me you are quite generous.... ...with other people's money, and never your own.
Anyways, some of the most well known (in terms of media spotlight) libertarians are very charitable, like Penn Jillette. I call him out in particular because he has some words of wisdom that somebody such as yourself probably will never understand:
It's amazing to me how many people think that voting to have the government give poor people money is compassion. Helping poor and suffering people is compassion. Voting for our government to use guns to give money to help poor and suffering people is immoral self-righteous bullying laziness.
People need to be fed, medicated, educated, clothed, and sheltered, and if we're compassionate we'll help them, but you get no moral credit for forcing other people to do what you think is right. There is great joy in helping people, but no joy in doing it at gunpoint.
People try to argue that government isn't really force. You believe that? Try not paying your taxes. (This is only a thought experiment -- suggesting on CNN.com that someone not pay his or her taxes is probably a federal offense, and I'm a nut, but I'm not crazy.). When they come to get you for not paying your taxes, try not going to court. Guns will be drawn. Government is force -- literally, not figuratively.
I don't believe the majority always knows what's best for everyone. The fact that the majority thinks they have a way to get something good does not give them the right to use force on the minority that don't want to pay for it. If you have to use a gun, I don't believe you really know jack. Democracy without respect for individual rights sucks. It's just ganging up against the weird kid, and I'm always the weird kid.
http://www.cnn.com/2011/OPINION/08/16/jillette.atheist.libertarian/index.html
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What Greek, Cyprus and others teach us is that once you've surrendered your own money you lose control of your destiny. The practical result of Euro is that countries that are struggling can't let their currency devalue and result in natural rebalancing of imports and exports. It forces all the economies in Europe (well, those who joined it, anyway) to march in lockstep, but they're too different so it's going badly.
This attempt to build an unified Europe is coming to the same end all the previous ones have. The only question is: how chaotic will the collapse be?
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
Not exactly. You are comparing buying a thing with entering into an agreement in which someone else buys a thing and you pay them to be able to use it for whatever (legal) purposes you like. They are not the same even though a mortgage is called 'buying', it isn't.
I don't know about America but in the UK this isn't the case. When you buy a house with a mortgage you own the house, not the mortgage company.
The mortgage company holds a charge over the property such that should you default they have first dibs on the asset but that is not the same as saying they own the property. Should you default and the property be insufficient to pay off the mortgage then you'll still be liable for any remaining debt.
It's not that unusual in the UK for the mortgage to be secured on a different property to the one being bought with the loan. In the past it also wasn't that unusual for mortgages to be used to buy things other than property
We have hire-purchase which is closer to what you describe (although I've never heard of it being used for house purchases) where the ownership stays with the lender and (subject to a pre-agreed charge) the buyer can walk away from the deal at any time.
Tim.
God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.
This is beyond the scope of the state Why? Just because you say so? I personally think that helping to ensure the continued existence of life in the universe should be part of the state's scope, so support spending on space exploration. Does that make it so? Of course not. Governments have to do what the people who they purport to rule desire in the aggregate, if not they are replaced. Even kings lost their heads to commoners. Just because your personal religion proclaims that anything beyond ensuring that you get to satisfy your greed at the expense of the rest of society is "beyond the scope of the state" in no way makes your desire into reality.
Even if you exclude the pure research there is a lot of R&D that most people would expect a state to do. Things like epidemiology (tracking diseases etc), defense research, surveying, demographic studies, evaluating allocation of resources - from radio bands to water extraction, pedagogy and other educational studies, traffc flow analysis.
The creation of the USA also had it's problems, because the states were so different. e.g. A civil war due to differences in economies in the south and the north, one symptom of which was the positive and negative views of slavery.
But would you be better off now if you'd remained independent states?
And what of the people who thought the collapse of the US was inevitable?
The UK has had much higher debt ratios in the past. It equalled 30 years of tax revenue after the war with France and Spain in the early 19th century. It took most of the century to pay it off
So? That was the UK's greatest period of growth and relative prosperity. It's often cited as an example of debt not impeding growth. Similarly the US had federal debt of 125%/GDP after WWII, and post-WWII was our greatest growth period. It helped that the debt was mostly internal (i.e. War Bonds were held by Americans, so paying off the debt meant paying Americans). AFAIK the same was true of the UK after the Napoleonic wars.
However, I'm not saying debt isn't important, just that it's not the only or the ultimate evil. Other things can be worse, and can justify increasing the debt.
This attempt to build an unified Europe is coming to the same end all the previous ones have. The only question is: how chaotic will the collapse be?
It won't be a collapse, it will be a war, actually a civil war similar to the mid-19th century civil war in the United States. The United States of Europe will go through the same thing. The wealthy productive states will impose more and more requirements on the indebted states, the indebted states rebel, the wealthy states resentful that their money would be used to bail out the states that spent more than they had, and it will come to a head.
So which are the wealthy states? Well, at the top is Germany. And many in Europe see Germany as attempting to implement the "Fourth Reich" to take over Europe through financial means. That may be a little over-the-top, but the political climate there is growing heated. Germany and the EU will use this crisis to press for greater central control, and in fact are already doing so. Countries that don't like giving up more sovereignty balk, and more financial pressure is applied. We can only hope it doesn't turn into a shooting war. Already a lot of street-level violence going on.
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
I don't know about not reading TFA, you can't even understand TFS.
To have a right to do a thing is not at all the same as to be right in doing it
The authors of the study have posted a response that refutes these criticisms.
http://www.huffingtonpost.com/mark-gongloff/reinhart-rogoff-research-response_b_3099185.html?utm_hp_ref=tw
The real issue here is not the data which seems to be holding up, but the deeper question as to whether correlation implies causation. It clearly does not - that is low economic growth could be causing high deficits just as likely as the reverse.
HOWEVER it does seem pretty unlikely that one can claim that high deficits cause higher economic growth. That is the real take away here.