Is Europe's Recession Really Over? 159
jones_supa writes "Bloomberg, the WSJ and the NYT cheered to report that the Euro Zone's economy has showed signs of recovery after two years of decline. They're all based on the news that Eurostat, the keeper of economic statistics for the European Union, says GDP grew 0.3 percent within the EU's borders from the end of March through June. As Olli Rehn, Eurostat's vice president, writes on his blog: 'I hope there will be no premature, self-congratulatory statements suggesting "the crisis is over."' He calls the GDP report only another sign of 'a potential turning point in the EU economy.' The quick conclusion by some economists and some in the news media that a slight rise in one quarter's GDP means a recession is over ignores how experts figure out when an economy is either in a significant downturn (a recession) or enjoying steady growth (an expansion)."
Betteridge's law of headlines (Score:5, Funny)
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Bitch sang a long time ago
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If she sang, it must have been in Germany, and I bet Spain is sure hoping she plays Madrid soon.
AC's law of watching the data ... (Score:1)
and throwing the Economist's bone's, killing a chicken, and skaking the Magic Eight Ball: [purdue.edu]
Question: what will the European economy do?
"My sources say no"
Which is much more informative than Alan Greenspan EVER was.
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You beat me to it. But basically, you're right. The sad thing is, in this case, a simple statement of negation would have sufficed for a headline.
Re:Betteridge's law of headlines (Score:5, Informative)
No.
Actually, yes, in this case. People tend to think that "recession" has a fuzzy definition, and means bad economic times, or high numbers of jobless. It doesn't. Recession means two or more consecutive quarters of economic contraction. Period. A recession is not "over" when you get back to the previous levels of income and employment. It is over when you hit bottom and start to recover.
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Problem is, a single growing quarter doesn't mean we've hit rock bottom. So, yes, technically this recession may be over, but that doesn't mean we won't have a new one half a year from now.
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http://www.merriam-webster.com/dictionary/recession
Depends which dictionary you are consulting.
Definition #3 is, perhaps, what the general public is running with:
3: a period of reduced economic activity
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Doesn't mean they won't revise the number 6 months from now. I'll go with the pesimistic ``NONE of the problems have been resolved... so... why the optimism?''
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No.
Actually, yes, in this case. People tend to think that "recession" has a fuzzy definition, and means bad economic times, or high numbers of jobless. It doesn't. Recession means two or more consecutive quarters of economic contraction. Period. A recession is not "over" when you get back to the previous levels of income and employment. It is over when you hit bottom and start to recover.
That's a major problem. The governments and news organizations use the term "recession" based on numbers. The general populace uses the term "recession" based on pain. As far as they're concerned, being financially restrained because of suppressed wages or worries about job stability means "recession" a lot more than the level of the Dow or T-Bill rates.
The Greenspans and Bernankes don't get this. They've got high-paying civil service jobs which are still going to be there, recession or not. Political dema
Mod parent up! (Score:2)
Wish I had the mod points.
GDP growth is merely one metric.
Re:Betteridge's law of headlines (Score:5, Informative)
Being from Spain, this guy is right. The answer is a simple "no". I am giving zero craps about the wellbeing of the EU as a thing, but I can't take any more tax raises and salary cuts as we are. A new tax raise AND salary cut for all is coming soon. So yeah, the recession is here to stay.
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Spain's problem is that the regulatory system makes it very hard to do business. I don't see how they expect to improve their economy while the bureaucracy actively fights anyone trying to make money or pay people.
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Spain's problem is southern Europe's problem is corruption.
The state collects taxes, half of the money disappears into deep pockets, there is not enough money to pay for investments in infrastructure and social security, so social security is slashed, investments go down, taxes are raised... repeat.
Corruption is one of the greatest scourges in the world. Greedy, selfish and ambitious people, the scum of Earth.
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Cheers friend. I hope this stuff finishes soon for all of us.
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Spain voted right because the country was broke and couldn't borrow more money without getting the money from Germany and Germany has at best, enough money to create a soft landing rather than a hard one.
Option A: Keep spending until the money runs out and then everything gets cut.
Option B: Make painful cuts but most of everything keeps running.
Unless you know of some third option?
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No.
There's a slight complication here, in that *if* this is a case of Betteridge rather than a legitimate question, then the answer the headline is implying is already "no". It's not "Is Europe's recession over?", it's "Is Europe's recession *really* over?" (as in, other people have already said that and *this* is the note of doubt implying a "no").
In this case, then, *if* one assumes this is a case where Betteridge is relevant, then, the "correct" answer should be "yes"!
Of course, Betteridge only applies
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Is Europe's Recession Really Over? (Score:1)
nope.
Betteridge is actually wrong this time (Score:4, Informative)
A recession is defined as two consecutive quarters of negative growth. Thus, the recession is technically over.
Which doesn't mean it can't come back later.
Re:Betteridge is actually wrong this time (Score:4, Insightful)
Thus, the recession is technically over.
Technically, the growth needs to be measured in concert with actual monetary inflation. I don't know what the status is in the EU, but in the US, they *never* do that on state-controlled media.
More important is what the unemployment levels are like vs. historical norms. For instance, in the US, we'd need 3.5% growth for ten consecutive years to reach pre-2000 levels of employment. That level of growth was never achieved in the 20th century.
As I understand it, Spain, for example, is in much worse shape than the US in terms of employment.
Official numbers rarely reflect the condition of the common man.
Re:Betteridge is actually wrong this time (Score:4, Informative)
Spain overall unemployment @ 28%
Spain also has a huge underground economy. Lots of people work "off the books" and are not counted in the official employment numbers.
Re:Betteridge is actually wrong this time (Score:4, Funny)
A recession is defined as two consecutive quarters of negative growth. Thus, the recession is technically over.
Which doesn't mean it can't come back later.
"A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Jimmy Carter loses his."
-- Ronald Wilson Reagan
Re:Betteridge is actually wrong this time (Score:4, Interesting)
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Really? I didn't know they were responsible for the implementation of Keynesian economic policy during the age of the great depression in the 1930's, and were fundamental in it's acceptance in the 1920's. Useful tip: Keynesian economics is what creates bubble economies.
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That was the beginning of bubble economics, yes.
However, the eighties was when focus shifted from producing goods to just earning money.
That is the true bubble problem, no real valie behind the percieved value.
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However, the eighties was when focus shifted from producing goods to just earning money.
Apparently you should just swing back to the 1930's and see where that statement is wrong. "Producing goods" walked away when governments decided Keynesian economics were the way to go.
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There were economic bibbles all the way through the 19th century. There was a huge depression in the 1870's that puts the current problems to shame - http://en.wikipedia.org/wiki/Long_Depression [wikipedia.org]
The first known bubble being a stock market explosion in Britain in the 18th C known as the south sea bubble http://en.wikipedia.org/wiki/South_Sea_Company [wikipedia.org]
Keynsian counter-cyclical policy is a useful way of mitigating boom-bust business cycles, but it is more or less politically impossible in the western world - when
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This is exactly the opposite of the truth.
Every time we give up on Keynes we get a bubble followed by a crash.
It's so fucking easy - spend your way out of depressions, reimburse the debt when things are good. But you always get some idiot saying we should do the opposite.
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Too early to call (Score:3)
A recession is defined as two consecutive quarters of negative growth. Thus, the recession is technically over.
Which doesn't mean it can't come back later.
It seems to me that if you need two consecutive quarters of negative growth to call it recession, you should also need two consecutive quarters of positive growth to call it an expansion or recovery
One quarter of weak growth doesn't really tell you anything.
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Then what do you call the bit in-between?
Re:Betteridge is actually wrong this time (Score:4, Interesting)
This definition is fundamentally flawed. Under this, it is technically possible for an economy to decline indefinitely which never actually entering a recession. GDP change from quarter to quarter could progress like so
.....
-2.0%, +0.1%, -2.0%, +0.1%, -2.0%, +0.1%, -2.0%, +0.1%,
Which works out at a -3.7% decline every year, but still technically no recession. This is what we refer to in the mathematical business as "absurd".
Unfortunately, this appears to be exactly how the political class across the Eurozone appears to doing. The continent is slowly imploding, but event one 0.1% quarter of growth is taken as proof that "The recession is over". The way the modern world is going, I'm really beginning to understand exactly how the Soviet Union operated on a political level.
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Which is why there are other terms in use than just 'recession'. A recession is a reasonably short term description. Medium and longer term descriptions such as stagnation and depression exist too.
It is useful to have precise language available so we can communicate precisely. If everyone understands the recession = 2 quarters of GDP decline then we know where we are and can analyse patterns over time.
I think the solution is to remember that 'recession' has a technical definition, rather than a coloquial on
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It still seems pretty absurd, though. Especially since it's being pitched about to laymen all of the time. It's a very specific and arbitrary definition, and as OMF points out, the utility of it is questionable at best.
Why not an average of the last two quarters (or three quarters)? Or the trend of a rolling average across several years. That would address the example described above. There are many other different metrics that you could use that would actually have analytical utility. That we choose this o
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Unless the Europeans are a hell of a lot better at determining these numbers then we are, they are sure to be revised. More than once. There is no guarantee that 5 years from now 2nd quarter 2013 EU GDP will still be positive. For instance US fourth quarter 2012 GDP was initially -0.1%, revised to +0.1%, revised to +0.4%.
Debt-backed economies.... (Score:1, Insightful)
... cannot recover. That's what debt is - a promise to work harder later than you work now. In the case of large public debt, it's a promise to force your children to work harder than you do.
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This AC is completely wrong. All public debts are matched by an equal private asset. "Paying off" public debt consists of asset swaps between reserve accounts and securities accounts held at the Federal Reserve. There will never be a need to levy higher taxes to conduct such swaps, let alone a need for private individuals to "work harder."
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If this were true, there'd be no real problem with the Federal Reserve buying up all the Public Debt in the USA, and then doing so again whenever more money is needed (nex
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If this were true, there'd be no real problem with the Federal Reserve buying up all the Public Debt in the USA, and then doing so again whenever more money is needed (next month, and every month after, basically).
Reserves and Securities are both highly liquid, interest-bearing public debts. The point is that if you trade one for another the only difference is the interest rate (currently ~3% for securities and 0.25% for reserves). If the Fed literally bought all of securities, the private sector would have less money in the long run due to a lower average interest rate.
Hell, they could abolish income taxes and corporate taxes too, while they're at it.
It is absolutely a fact that taxes (and bond sales) do not operationally fund the federal government's expenditures. In that sense they could be abol
Re:Debt-backed economies.... (Score:4, Interesting)
You are right about passing debt to our children
Wrong. Whatever is produced at a given point in time is available for consumption at that time. We will never send real resources backwards in time in order to "repay" public debts.
The real theft your generation has perpetrated on mine is all of this lost output which can never be regained. Public debt needs to increase so the output gap can be closed.
Lost Output Clock [lostoutputclock.com]
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We will never send real resources backwards in time in order to "repay" public debts.
Who said anything about sending resources back in time? We'll send our resources to our creditors and as the debt and interest increase future generations will have to send more of it to our creditors than we do now. You seem to think that increased spending leads to increased output but that's debatable and even if you do get an increase in output you can't guarantee that it will be domestic output.
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We'll send our resources to our creditors and as the debt and interest increase future generations will have to send more of it to our creditors than we do now.
Perhaps that will happen, but that is rarely how government debt has been repaid in the past. Much more often the debt has been monetized, and simply inflated away. When Japan started to run big trade deficits with America, and buying lots of bonds, there were 800 yen to the dollar. Today there are about 100 yen to the dollar. So the Japanese are getting back 12 cents on the dollar.
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I am so confused. In 1972 (that is as far back that I can easily go) it was 300 Yen to the dollar, before any large currency flows out of Japan. In 1980 is was 200. Today 125. Where is 800 coming from?
Also, the difference in real interest rates and purchasing parity explains most the change – not monetary policy.
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It already is happening. The amount of interest we pay as a % of total tax revenue collected has been steadily rising and is at a a 10 year high [worldbank.org] even though the interest rate on treasury bonds is at relatively low levels [treasury.gov]. In other words the money we're borrowing is really cheap, yet we're borrowing so much of it that we're still paying more in interest relative to total revenues collected than we have in the past decade and there's no reason to believe that we will be able to continue to borrow money cheapl
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You still aren't getting it. We do not conduct public borrowing in order to obtain money to spend. We first spend money, which we exchange for real resources, then "borrow" that same money back when our trading partners transfer their financial assets into "securities accounts" which pay a somewhat higher interest than do reserves themselves (current rates are ~3% for "long-term" securities, which are actually highly liquid, and 0.25% for reserves). Indeed, it cannot be otherwise as a matter of logic, becau
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Even if the debt were "repaid" via increased tax levies, that would not imply transfer of real resources. Since the de novo source of US dollars can (by definition) only be the US government, the government must first transfer money into the private sector for said money to be later taxed.
No matter what happens vis-a-vis the government's debt positions, the only way for us to lose access to our real resources is by voluntarily exchanging them for financial assets.
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It isn't true that it is only the US (or other national governments) that are the only creators of money. Most western countries operate a fractional reserve banking system, so the banks create a fair amount of money.
You could argue that the banks' scope for lending and money creation is regulated, and so limited, but it is limited by the central bank (in most countries) which is mostly independent of the government.
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A couple things here. Yes, banks create money via lending under fractional reserve banking. However, their lending creates bank deposits which are functionally separate as a system from the central bank's reserves. The only source of reserves is indeed the central government, so the central bank has to do a "reserve add" (buy securities) before it can do a "reserve drain" (i.e. have the Treasury sell securities). Since the "reserve add" comes first it's clear that the central bank / central government is no
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Inflation expectations are factored into the price of government debt. Unexpected inflation surges will be priced into future gilt purchase prices.
Plus a fair amont of US govt. debt is in TIPS, which are indexed against the CPI.
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We'll send our resources to our creditors and as the debt and interest increase future generations will have to send more of it to our creditors than we do now.
We don't "repay" public debts with real resources. We "repay" them when a securities account (yes, that's what they call them) at the Fed is debited and a reserve account is credited. We also don't "borrow" (sell securities) in order to fund expenditures. Indeed, it is impossible for someone to exchange US dollars for US securities without having first obtained the dollars. This is in direct contradiction to the normal state of affairs during "borrowing." The only way for future generations to lose real res
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Let me point out 2 examples of where you are wrong.
First, you are assuming that the products are being generated inside the economy. If you are borrowing money from China to buy Chinese goods this is no longer true.
Second, you need to learn a little about pension accounting. If I am working today but I am going to retire in a few years you have a huge liability to pay form my pension and medical costs. While no formal bond has been issued governments, it carries a similar or higher obligation. In this case
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First, you are assuming that the products are being generated inside the economy. If you are borrowing money from China to buy Chinese goods this is no longer true.
You have this backwards. The only de novo source of US dollars is the US federal government itself. We must first purchase goods from the Chinese in order for them to gain US dollars. Once they have gained dollars via this voluntary exchange of their real resources for our paper, they may spend those dollars themselves. However, generally they wish to hold those dollars. Since those dollars collect 0.25% interest, they choose to use those dollars to purchase US securities, currently bearing ~3% interest. Th
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Hello reve_etrange,
Please ignore my previous post to you mentioning money creation and fr-banking, which on reflection was a bit patronising. It is clear that you understand the subtleties involved and we are operating at different levels of abstraction.
I agree with your points above, and with your general theme that money is an abstraction used to account for real resources, and that balance of trade accounts merely record (rather than dictate) the exchange of resources or investments.
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Well, I wasn't really being clear about the different types of "money" that are out there, like central bank reserves and bank deposits in that case.
But, yes, that's exactly my point. "Trade deficit" by definition means "capital surplus." That should be considered a good thing, as the real terms of trade are clearly in our advantage. Whether or not we issue more non-convertible debts doesn't change that (the key is that we only borrow in our own sovereign currency, which itself is non-convertible and has a
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You are right about passing debt to our children
Wrong. Whatever is produced at a given point in time is available for consumption at that time. We will never send real resources backwards in time in order to "repay" public debts.
That isn't the point of debt. Debt is borrowing money or resources now and paying for them with future income or resources. So you can borrow more to produce more, but as a consequence, you will be producing less in the future for a period of time.
Let's put this into perspective. Suppose the interest rate on that public debt was very considerable 100% per year for ten years and adjusted for inflation. That is, every dollar you borrowed, you had to pay back each year for ten years. According to your view,
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Hello khallow,
"That isn't the point of debt. Debt is borrowing money or resources now and paying for them with future income or resources. So you can borrow more to produce more, but as a consequence, you will be producing less in the future for a period of time.
Let's put this into perspective. Suppose the interest rate on that public debt was very considerable 100% per year for ten years and adjusted for inflation. That is, every dollar you borrowed, you had to pay back each year for ten years. According t
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but most debbt is like this - borrowed to invest in improvements
Public debt is the obvious exception to this rule. For example, suppose Congress passes yet another idiotic regulatory scheme which causes $10 of damage for every dollar of its budget. Ok, now they borrow $1000 to fund it. The agency causes $10,000 of harm to society and now society has to pay that debt back as well. Well, that's an unproductive "investment" (since it actually has considerable negative return on investment), but it's the sort of thing that Congress (or any budget-making authority in a gover
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You don't understand the difference between private debt and public debt. When the United States "borrows," various entities which have already obtained US dollars compete to exchange their US dollars, which do not bear interest (or only 0.25% for electronic reserves) for US securities which obtain a higher rate of interest but remain highly liquid. It is directly analogous to a depositor of a bank transfering money between checking and savings accounts. Fed employees even refer internally to "securities ac
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You don't understand the difference between private debt and public debt.
You have yet to explain the difference. I could view private borrowing in the same way. I don't consider it a productive way to do so since it obfuscates the actual economical dynamics of the situation.
There are no existing financial or legal structures which require the United States government or the US private sector to render its real resources to any so-called creditors outside of voluntary market exchange.
Those aren't the only "structures" out there. Inflation is an economic structure which can require the US to do such things or face consequences. The people who say that the US should borrow more money never have an answer for inflation.
We have plenty of people willing to work, plenty of jobs that need doing and plenty of resources, but are constantly told there is "not enough money" to connect these things.
So what? Lack of money is not even remotely the problem, but such things
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I could view private borrowing in the same way.
Again, no, you can't. The balance sheet effects of private lending and government borrowing are very different. When banks lend, new deposits are created when the bank credits a debtor's account in the amount of the loan. The loan precedes the existence of the deposit. In stark contrast, the government "borrows" by selling securities in return for money which it has already printed and released previously. Government borrowing does not involve creation of deposits. In fact, it reduces the money supply.
considerable labor competition from cheaper parts of the world
You a
Measures of uncertainty (Score:3)
Notice how economic indicators never come with measures of uncertainty. It's always "we added 100,000 jobs this month". You'll never hear "we added 100,000 +/- 50,000 jobs". Yet another reason why economics is not a real science.
Re:Measures of uncertainty (Score:5, Informative)
That's the quality of reporting for you. Most original reports include confidence intervals. The Census, for example, provides access to economic indicator data with its confidence intervals.
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it's not really an integrated economy yet (Score:5, Informative)
The EU is getting more integrated, but is still nowhere near one economy that moves in unison. So the answer to the headline question is: yes in some places, no in others. Germany's GDP is growing; Spain's is shrinking.
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And as a German-born American, I certainly hope the EU never moves economically in unison, since the only way to get that to happen is to basically destroy every shred of autonomy for the member nations.
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It would be better if there were at least more labor-market mobility. Countries could still run their own domestic economies, but someone who didn't like the economic policies of country A could just move to country B and choose theirs instead.
That is legally possible today but in practice done much less than e.g. state-to-state movement in the U.S., for many reasons. Some of them are legal barriers to recognizing credentials, although those are slowly being harmonized (e.g. medical licenses are now harmoni
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Both professionally and privately I travel a lot and I see the European project as a great chance for it's people, a much better chance for peace and prosperity than the individual nations can ever give.
The economic problems in many of the EU countries are not a lack of funds but individuals, companies and banks refusing to spend it.
There is ple
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Why would the division of power between local, national and supranational governments have any influence on personal autonomy?
Because there is a fundamental power struggle between the individual and the collective state. The more divided the power of the latter, the weaker it will be. There are two common ways to do this. First, is by function. I don't know of a democracy that doesn't divide up the power of making law from that of implementing law. And most also provide for a third fairly independent body to interpret the legality of that law and its implementation.
The second common means is division via scope or extent of the
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Well, European stuff can work in two modes.
The confederation: each member state keeps all its sovereignty, and they cooperate on project they choose to enter or left. Democracy works inside the member states, and you will have trade barriers (which IMO is a good thing, now that we have three decade of experience in removing trade barriers).
The federation: you remove sovereignty from member states and transfer it to the Union. This is what we are doing now. That requires a democracy at the EU level, which do
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Some economies where never shrinking much in the first place. So if you are talking about EU recession you are talking EU numbers.
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Not many economies are integrated in the way you're thinking. Try looking at the economic data for London versus Yorkshire and see how often the two have moved in unison for any sustained period of time.
In most economies it is accepted fact that some areas will boom while others don't, and that the two will cross-subsidise and even each other out. The EU's problem isn't that the nations aren't in synch, it's that there isn't that level of acceptance of cross subsidisation yet. We still have a situation wher
Watch Germany (Score:5, Insightful)
Specifically, German manufacturing...
That sector benefited over the years between the start of European Monetary Union and the start of the Mediterranean death-spiral from being locked into a favourable exchange rate with a relatively cash-rich (albeit debt-fuelled) set of customer states. Most of those states are economically dead or dying at the moment.
If the German manufacturing sector has managed to diversify its markets enough over the last couple of years that it can weather the delayed shock of this when it finally hits, then Europe will probably muddle through. Once the worst of the crisis has past, the states that should never have been in EMU to begin with can be eased out of it without too much risk of contagion and most of Europe will be ok (though I suspect living standards in Greece etc will take decades to make up lost ground, if indeed they ever do).
If German manufacturing does start to suffer in a big way over the next year or two, then we've only seen the start of the problem, as if the economic engine of much of the continent splutters, then the death spiral will just widen. In that case, expect to see the UK and some of Eastern European states split away in self preservation and some really unpleasant social disorder sweep most of the rest of the continent.
All of which is absolutely nothing compared to what will happen when China's generation of largely-single angry-young-men-used-to-ever-rising-living-standards (the inevitable result of a one-child-policy that turns a blind eye to a bit of back-door gender selection) experiences its first serious recession.
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The UK isn't in what you're calling the European Monetary Union, so it can hardly "split away", and UK funds cannot legally be used directly and immediately to fund Eurozone bailouts. UK funds *can* be used in supporting loans and in direct aid to EU members (and hence Eurozone members) so it's not that the UK won't be supporting struggling Eurozone economies, but it is not directly tied to it beyond the fact that the collapse of the UK's largest trading market would be ruinous for the UK economy.
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The German economy is a ticking time bomb due to sub replacement birth rates and a unaccommodating immigration policy coupled with negative attitudes towards Muslim immigrants.
It's also well-known that Germany's long term care system is unsustainable due to the demographic problem.
A recent census shocked German politicians when it showed a population 1.5 millions smaller than expected.
http://www.nytimes.com/2013/06/01/world/europe/census-shows-new-drop-in-germanys-population.html?_r=0 [nytimes.com]
Steady bad isn't exactly good (Score:5, Interesting)
People can weather bad times for a while, many have nest eggs, live off ramen noodles and stay with their parents longer, don't start a family, take more education instead and whatnot to live a subsistence life but those options tend to run out and eventually what they desperately need is a job and an income so they can get on with their lives. That the economy isn't tanking even more is great, but unless there's real growth and people getting back into the labor force it's still going to be a train wreck in progress. The same is happening in the US, before the financial crisis the employment-population ratio was about 63% now it's hovering between 58% and 59%, despite what the unemployment rate says. The US would need another 10 million jobs to return to 2008 levels.
So far I must say that despite everything it has been very calm so far, when you're looking at 27.6% unemployment and 64.9% youth unemployment like Greece does right now many countries would be at "fuck it, communism can't get any worse" conditions. And fat fucking luck if you're going to get a job after years of unemployment, most places will see you as damaged goods and rather hire someone straight out of school. The economy is one thing, it will survive somehow but the people are getting royally screwed. It's a generation almost certain to have it much worse than their parents, despite all the technological advances. And somehow I have the feeling it's just one bad domino away from becoming something much worse, so many look ready to fall.
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Far be it from me to paint rosy pictures in these economic times ... BUT ... to be fair, the majority of that change you note is due to demographic changes, e.g. the leading edge of the Boomers retiring ... which will continue to cause the ratio you mention to decline for some time.
Data.
Your own data contradict your claims.
"...over the 2008-2011 period...only one-quarter of the...decline of actual LFPR...can be attributed to demographic factors."
This conclusion - that three-quarters of the decline in the LFPR since the beginning of the Great Recession can be attributed to cyclical factors - is supported by other research.
Yes, the demographics are one factor but it dropped like a rock over the span of a little over a year, so drastically the composition of the population doesn't change.
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warning: incoherent rant (Score:2)
Our parental overlords and their pressure groups and lizard people are going to permit our cookie jar to magically refill itself.
Not.
They don't want it. They say that since we ate all the cookies, there are no more cook
Recession over, depression underway (Score:3)
Sure, the recession is technically over. Thus begins the extended economic depression during which unemployment remains extraordinarily high - over 60% for young people in periphery countries - and the economy significantly underperforms its potential.
This is all the result of a political economy which requires permanent public deficits for private sector growth in the absence of private credit expansion, combined with a private debt overhang prohibiting such an expansion.
Not newsworthy (Score:2, Informative)
Nothing new in this submission. It's well known that real-time economic data is noisy. This holds particularly true for real GDP as well some other statistics from the national income accounts (but less so for labor-market statistics). Revisions between the first and final data release of GDP average somewhere around 1 percentage point (that's in the US data, but it's probably relatively similar in the EU).
In the Long Run, All of Europe is Fucked (Score:1, Insightful)
The European welfare state is unsustainable. [washingtontimes.com] It's unsustainable in the short run for the PIIGS, but also, with declining birth rates and rising debts, unsustainable even for Germany and other Northern European countries. Even the smallest nods towards austerity are greeted with riots. The only question is how much pain, economic collapse and hyperinflation happen on the way down.
Re: (Score:2)
Perhaps better to start with (Score:5, Insightful)
is the GDP report even valid? Given the multi-decade manipulation of the way the deflator (inflation) is calculated it is quite possilbe that not only Europe, but the US as well, has been in recession since the early 2000's. Shadowstats is an outfit that provides US figures using the most recent prior methodology - I think it is circa 1992. And remember, the government(s) have a very vested interest in keeping the "official" inflation figure low - it lowers any payment tied that rate (social security, procurment contracts) while also making the GDP figure look better.
Re:Perhaps better to start with (Score:4, Insightful)
So then, they changed it to the current hedonics system [wikipedia.org], which as I understand the intent, is supposed to be a parameter space of baskets of goods of equivalent utility to our groups in question (here, attempted by decomposing goods into their functions and treating good bundles as equivalent which have equivalent combinations of these functions). So in particular, substitution of expensive goods with less expensive goods of equivalent quality are allowed. One then looks at the point on that parameter space with the lowest cost to the group in question and that becomes the basis of an inflation calculation.
I see plenty of means to distort this sort of calculation by deciding which functions are more important and lowering the weight of stuff that has an exceptionally high rate of cost increase (such as housing, education, and medical care - which is true throughout the developed world, I might add).
Re: (Score:2)
1) Steak is too expensive? Eat chuck hamburger instead. Deflation.
2) Laptop costs less? Deflation.
#1 is crazy on the face of it and yet thats part of the calculation. #2 I feel is disengenous as the price drop was due to productivity and not "deflation". As much of the manufactured goods these days are high tech electronics (which all tend to have rapid price drops as production techniques are sorted out) there is a constant anchor from keeping the reported inflation rate from climbing. Never mind th
Error Margin? (Score:2)
GDP grew by 0.3%. If I remember GDP figures correctly they usually have a error margin of +/- 0.5.
Pay Rise (Score:2)
Great, now all the staff that work for companies that aren't contracting and are still making nice big profits thank you very much, now they can give them a proper pay rise that makes up for when they shafted them with 0% pay rises because of the 'recession'.
If you accepted a 0% pay rise then you're a mug and the directors who gave themselves another 10% are laughing at you.
We can see from dynamics that this one will linger (Score:2)
MOD UP (Score:2)
The Europe we want is where the cooks are French, the police are British, the mechanics are German, the lovers are Italian, and the bankers are Swiss.
The Europe we have is where the cooks are British, the police are German, the mechanics are French, the lovers are Swiss, and the bankers are Italian (well the l [ecb.int]
The days of unbridled growth are over (Score:2)
Those died in 1975 or so, and there will hopefully never be another boom in the West like the one between 1945 and 1975. The reason is simple: everything was destroyed in 1945, hundreds of millions had died, and everything was there to be rebuilt. This is fortunately no longer the case.
However this is not a normal situation. In peace, we should all expect a small, steady growth, more or less proportional to the population increase, but not much more, e.g. in the West anywhere between 0.5 to 2% a year. Anyth
Trouble in the UK (Score:2)
Recent figures suggesting (very) modest growth in the UK have been greeted with enthusiasm, but I still think as a country we're in trouble, and a big part of that I think is that wages have not in any way been keeping up with the huge rises in house prices over the last 20-30 years.
The government is encouraging banks to lend to house buyers by guaranteeing a portion of the mortgages, but it seems to me to just be encouraging another bubble.
The average full-time, permanent employee salary in the UK is aroun
Economists: the modern Royal Readers of Entrails (Score:2)
I just adore the use of the GDP to tell when an economy's in recession, depression, or not. The one in the US, for example, being declared over years ago...
Tell that to everyone out of work, esp. those out of work for *years*.
GDP is the mean, not the median. The "financial services" industry, incl. the market, are getting richer and richer, and so our GDP is going up, right?
Horse hockey.
A science has predictive power. An art has descriptive power. "Economics" has neither; rather, it has the track record of
Re:Big Mistake (Score:5, Funny)
See, this is why the dolphins think we're morons.
I'm inclined to agree.
Re: (Score:1)
Terrorist. Grab the dolphin lover.
Humans are the only sub-sapient species on this planet. The proof is all around us.
Re: (Score:2)
Um .... I'm pretty sure 9 to 5 (8 hours) is longer than 12 to 6 (6 hours) ... unless you mean noon until 6am the next day (or midnight until 6pm, both of which seem ridiculous). Am I missing something obvious here?
Re: (Score:2)
Ah ok I see.
Hmm yeah, I suppose the "9-5" idiom doesn't make sense in Europe anyway considering they generally use 24h time there. 0900-1700 doesn't quite have the same ring to it.