His lard arse sprawled comfortably atop his holier-than-thou perch, Stephen Harper is wasting no time exhorting G20 leaders to fight their economic battles on the backs of their most vulnerable. This ridiculous ponce with his well-demonstrated failed grasp of economics demands that they plunge into the abyss of austerity budgeting to halve their deficits by 2013.
Steve, you theocratic sphincter, you haven't a clue about the economic dilemma facing these countries. Then again, your Liberal predecessors and the relatively brief period you had to subvert their fiscal prudence, saved you from plunging Canada into the very same mess. Like all radical doctrinaires, you're a gasbag.
Paul Krugman, writing from Berlin, explains why everything Harper is saying is utter crap:
Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere...
...Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.
But despite these warnings, the deficit hawks are prevailing in most places — and nowhere more than here, where the government has pledged 80 billion euros, almost $100 billion, in tax increases and spending cuts even though the economy continues to operate far below capacity.
...In America, many self-described deficit hawks are hypocrites, pure and simple: They’re eager to slash benefits for those in need, but their concerns about red ink vanish when it comes to tax breaks for the wealthy. Thus, Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion.
German deficit hawkery seems more sincere. But it still has nothing to do with fiscal realism. Instead, it’s about moralizing and posturing. Germans tend to think of running deficits as being morally wrong, while balancing budgets is considered virtuous, never mind the circumstances or economic logic. “The last few hours were a singular show of strength,” declared Angela Merkel, the German chancellor, after a special cabinet meeting agreed on the austerity plan. And showing strength — or what is perceived as strength — is what it’s all about.
There will, of course, be a price for this posturing. Only part of that price will fall on Germany: German austerity will worsen the crisis in the euro area, making it that much harder for Spain and other troubled economies to recover. Europe’s troubles are also leading to a weak euro, which perversely helps German manufacturing, but also exports the consequences of German austerity to the rest of the world, including the United States.
We've got a billion reasons to know how important it is to Steve to host this 3-day gabfest, but his demonstrated grasp of economics isn't something he need draw attention to. He inherited a substantial budget surplus, defunded the treasury, introduced Canada's own subprime mortgage regime, left the country vulnerable to a recession steamroller he didn't see - or hear - coming, did a mini-bank bailout capped off with the most pointless Pinata stimulus/recovery budget imagineable that will ensure Canadians will in the future have all the burden but none of the benefit they deserved from that reckless spending. And this jackass is going to tell other leaders what they need to do? Breathtaking.
Where is the "like" button on this page...
Another excellent post.
I only hope those leaders don't get captivated by Steve's austerity speech. In fact, after he told them where to go with their global bank tax, I hope these leaders return the favor when Steve begins to talk austerity: I hope these leaders tell him precisely where to go. Sadly, this won't happen, I'm sure. Sarkozy is already implementing a hike in minimum retirement age and pension cuts.
BTW; Krugman isn't alone; there are other economists I've read recently who say the same thing he does: that austerity isn't the answer, but rather, would make things far worse.
Practically the whole school of Keynesian economics (the side that prevailed after the Chicago School cratered) echoes Krugman's position. Even Obama is going to the G20 to plead with them not to abandon stimulus programmes until there's some reliable strength to the recovery.
Merkel is panicked and her support at home has collapsed. I think the same fate may well fall on Sarkozy, Cameron too.
The three of them appear to be setting up Europe to repeat Japan's "lost decade." It's so easy to stumble into that and so very hard to get out again.
One day you wake up and find that the geeks who ran your high school student council are now running the world. Sigh.
I don't get why austerity is becoming more and more in vogue like the latest styles in Jeans or suits.
Hell, the Dutch just voted in (mind you by 1 measly seat and coalitions are being negotiated) a center-right party under leader Mark Rutte who's entire campaign was practically based on cuts all over the map.
You're probably right about Merkel and Sarkozy: Recent elections in France have shown that his party is going down. I also heard the same regarding Merkel's party from a German friend of mine.
As for Cameron, I can see his coalition potentially falling apart somewhere down the line.
Like I said, I really hope that these leaders return the favor and tell Steve where to go.
Unfortunately, I don't think President Obama is going to be of much influence. He's becoming a laughing stalk on the world stage as well.
The Greek fiasco scrambled their minds and sapped their resolve. But it's a bit like a tightrope walker who loses his resolve halfway across the canyon. No good can come of it.
I wouldn't be so quick to write off Obama. At least he's the sane voice of the G20 urging leaders not to abandon their stimulus/recovery programmes before they have time to work and warning of the risks of austerity backfiring. Besides, Obama makes Harper look like a complete dolt - Bonus!
Ihope you're right. I hope Obama's voice will be louder than Steve's.
Strange how the Greeks became a convenient scapegoat. Even when they were still using the Drachma, that is the way they always lived.
All this right wing paranoia about Greece starting the next recession. It's too small to do that.
I also heard from some other economist on the radio the other night that Europe was like a "museum"; meaning they never really contributed to world economies in the first place.
Why the panic now?
Funny how no one addresses bank deregulation in the U.S. Did Obama pass that regulation bill yet? Wouldn't be surprised if he didn't given corporations and banks own congress.
After reading many of the Harpercon cheerleaders, it screams jealousy. They're all ga ga giddy over the idea of Europeans losing their social programs and 'soshalism' is dying and all that...In reality, like most of us, they would actually kill to have their programs.
I'll say this much, I would far rather be a senior citizen in the Netherlands (as it is now, Rutte may not be PM after recounts and coalition talks are complete; Dutch Labour lost to Rutte by only 1 seat) than here in Canada.
Is it just me, or Do Steve and his cheerleaders only seem happy when misfortune happens to others. I always get the feeling they love to watch others suffer greatly. In fact, I think they actually feed off of it.
Like I said, I hope the Europeans do tell Steve where to go.
I would like to see Steve try that on a NON EU socialist country like Norway or Sweden. Yet, they still rank higher than we do, don't they?
Yeah, CK, I think Steve has an irrepressible fundamentalist, theocratic sense of superiority over the 'godless' Euros. He does like to gloat. Even his staff admit he's a tempermental, authoritarian prick. Raging about, kicking chairs over - how prime ministerial!
Greece failed to enforce its own tax laws but spent as though it had and the populace got accustomed to that. Likewise, Spain, Portugal and Ireland seemingly stumbled upon instant riches. Remember the "Celtic Tiger"? Unfortunately, due to the failure of the EU to properly regulate and police the Euro, all these national illusions were pledging their credit against everyone's Euro, particularly Germany and France.
It won't be Greece that starts the next recession so much as the German and French (and British) reaction to the problem. It'll be the stagnation of the Bigs, driven by counterproductive austerity campaigns, that'll turn recessionary.
Merkel's fortunes have gone boom to bust in a heartbeat. Sarkozy's are less battered but wobbly nonetheless. Who knows what lies in store in the coming months for Cameron but he's probably in for a rough ride too. This might just be the best thing that ever happened to Labour.
Steve really has no reason to gloat or to scold. Our manufacturing sector is no hell either. Resources have kept our head above water, for now. But our balance of trade surplus has wobbled a bit lately and isn't exactly robust.
And the Europeans never contributed to the world economy? Until just two years ago Germany was the greatest exporter (by value) in the world.
By contrast, America's contribution to the world economy (borne out by their balance of trade/balance of payments deficits) has been to stand as the world's top consumer fueled by foreign borrowings.
There's a reason America is deeply in the hole at all levels - federal, state, municipal, corporate and individual. Well before the meltdown/bailouts the former Comptroller General was warning anyone who would listen that the average American family's share of their federal government's debt and unfunded obligations stood at $480,000. To that you add the family's share of their state and municipal debts plus their burgeoning household debt. It's as though debt of itself was a contribution to the world economy. As Chris Hedges says, America is in such a state of illusion that it perceives debt as wealth. Breathtaking.
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