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Austerity doesn't work: New IMF report details the damage


lies

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In a new paper published Thursday, IMF Economic Counsellor Olivier Blanchard and research-department economist Daniel Leigh show the IMF recommended slashing budgets too fast early in the euro crisis, starving many economies of much-needed growth.

In “Growth Forecast Errors and Fiscal Multipliers,” Messrs. Blanchard and Leigh calculate IMF and European economists underestimated the euro-for-euro effect of cutting government budgets. While economists expected that cutting a euro from the budget would cost around 50 cents in lost growth, the actual impact was more like 1.50 per euro.
m.dailykos.com/stories/1176099
 


tigerben

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As per normal a report comes out when all the damage is done. But to be fair the government in opposition knew this, they said it, they said you can't tax your way out of recession, to much cuts hurts, remember Noonan asking Lenihan " what did the third child do to you". When CA was cut harder. But it shows in government the IMF are the boss, and our politicans are overpaid CS.
 

OCicero

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Austerity was just another passing ideology. So noughties now.
 

Boy M5

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Isn't this story about 2 weeks old. Certainly correct though.
The IMF - seen as an international bogeyman - is less harsh than our partners in the EU and the ECB - in which we have a board seat.

As the Economist cover story of a few months ago: A ship already underwater, with the speech bubble "time to start the engines Mrs Merkel"
No chance in a German election year, unless our Government uses this to pressure the German politicans. Reverse the pressure. Mick Collins would have done so. Time for Kenny to take down Collins' portrait. Maybe John Brutal can lend Enda his picture of John Redmond?
 

lies

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As per normal a report comes out when all the damage is done. But to be fair the government in opposition knew this, they said it, they said you can't tax your way out of recession, to much cuts hurts, remember Noonan asking Lenihan " what did the third child do to you". When CA was cut harder. But it shows in government the IMF are the boss, and our politicans are overpaid CS.
Well, I think that even if various Irish parties had argued against austerity, or the degree of cuts, it would've been largely moot, because we are just some reliant on outside funding.

I would HOPE that this shift in IMF position can be used as leverage by Irish presure group and ministers to reverse some of the cuts. Hope.

Of course for that to happen, ministers would have to be mature enough to admit mistakes.

:/
 

lies

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Isn't this story about 2 weeks old. Certainly correct though.
The IMF - seen as an international bogeyman - is less harsh than our partners in the EU and the ECB - in which we have a board seat.

As the Economist cover story of a few months ago: A ship already underwater, with the speech bubble "time to start the engines Mrs Merkel"
No chance in a German election year, unless our Government uses this to pressure the German politicans. Reverse the pressure. Mick Collins would have done so. Time for Kenny to take down Collins' portrait. Maybe John Brutal can lend Enda his picture of John Redmond?
The paper in question was just published:

www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf
 

lies

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Boy M5

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So they've announced it twice.
Brilliant!
Thanks for the links.
 

culmore

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you must remember also that clown and Lenny gave our Country away and we dont have much say in our affairs now, outsiders tell us what to do and how to do it. hopefully we will have our country back next year and then we can shape our budgets to some extent.
 

SPN

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What Austerity?

Irish Government spending has increased 12.5% since 2008.

Irish Government debt has increased by €96 Billion since 2008.
 

lies

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you must remember also that clown and Lenny gave our Country away and we dont have much say in our affairs now, outsiders tell us what to do and how to do it. hopefully we will have our country back next year and then we can shape our budgets to some extent.
Hopefully next time we'll do a better job managing it. Of course we replaced all the incompetent idiots in government with honest, compotent, unselfish savants. So. Problem solved.
 
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Kevin Doyle

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you must remember also that clown and Lenny gave our Country away and we dont have much say in our affairs now, outsiders tell us what to do and how to do it. hopefully we will have our country back next year and then we can shape our budgets to some extent.

If we don't require a second bailout.

The IMF is forgetting something here, lots of countries simply don't have a choice, they had to cut spending and raise revenue as they were priced out of the bond markets, most countries do not have the luxury of fantasy borrowing the US has where it can continue to raise its debt ceiling and keep on borrowing to fund massive stimulus packages and lower taxes a la carte.

We hit a wall in 2010. What else could we do?
 

Boy M5

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[SUP][/SUP]
you must remember also that clown and Lenny gave our Country away and we dont have much say in our affairs now, outsiders tell us what to do and how to do it. hopefully we will have our country back next year and then we can shape our budgets to some extent.
Good Morning to ye in Mount St.

We won't if our domestic economy doesn't recover.
 

lies

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If we don't require a second bailout.

The IMF is forgetting something here, lots of countries simply don't have a choice, they had to cut spending and raise revenue as they were priced out of the bond markets, most countries do not have the luxury of fantasy borrowing the US has where it can continue to raise its debt ceiling and keep on borrowing to fund massive stimulus packages and lower taxes a la carte.

We hit a wall in 2010. What else could we do?
Well, the fact is that the GOAL has to be rescuing the economy (ie the nation), not just paying debts.

If austerity is in fact counterproductive to that goal then its bad policy. Couldn't be more simple. Austerity isnt meant to be a punishment, but a solution.

IMF forecasts have been consistently too optimistic for countries that pursued large austerity programs. This suggests that tax hikes and spending cuts have been doing more damage to those economies than policymakers expected. (Conversely, countries that engaged in stimulus, such as Germany and Austria, did better than expected.)
m.washingtonpost.com/blogs/wonkblog/wp/2012/10/12/imf-austerity-is-much-worse-for-the-economy-than-we-thought/
 

Kevin Doyle

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Well, the fact is that the GOAL has to be rescuing the economy (ie the nation), not just paying debts.

If austerity is in fact counterproductive to that goal then its bad policy. Couldn't be more simple. Austerity is t meant to be a punishment, but a solution.
I dont hear the IMF calling for debt forgiveness of some sort or a reduction of their interest rates.
 

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