I don't disagree with the sentiment you expressed at all though.
Italy's debt has ballooned to 150% of it's GDP, France is heading for 130% in the near future. Whatever happened in the EU, was not Germany's responsibility. Even Greece's debt is way higher than it should be after the Euro zone austerity "cure".
If there had been real austerity and real slashing of the national budgets so that all countries of the euro-zone actually complied with the fiscal pact that says that euro countries should not have a level of debt higher than 60% of it's GDP, then the Euro-zone would actually have some dry powder left to face these uncertain times.
Instead, the only country who seems to try to do something currently is Germany, precisely because it's debt is lower than most Euro-zone countries and therefore it can afford to spend more to try to create growth.
France is running 5%+++ deficit each year and it has not complied with the euro-zone fiscal rules for the last 20 years. Finland has 10% unemployment, Italy is not doing much better.
Where do these countries go from here? Do they cut social services and risk getting ousted in the next election? Do they borrow more and more with not much to show for it? That is the question that is facing these countries and nobody has the answers.
If you cripple the gdp through austerity policies (killing borrowing to chase the “responsibility dream”) the fiscal multiplier becomes a ruinous curse.
Of course, pissing money into a spending bonfire, driving inflation with excess liquidity, isn’t going to help; bit it’s just as bad as crippling growth by holding it back for lack of capital injection
I realize that. I just don't agree that any austerity measures have been taken which was the point of the comment I was responding to.
If real austerity had occurred then the countries' debt to gdp ratio should have been going down for at least a few years in order to get the expenses under control.
Unfortunately, that did not happen as many EU countries including Italy, France and Greece are still not within the EU rules to this very day.
> If you cripple the gdp through austerity policies (killing borrowing to chase the “responsibility dream”) the fiscal multiplier becomes a ruinous curse.
I agree except that these austerity measures as you put it if they ever existed, did not work because the debt to gpd ratio is still increasing in many EU countries.
> Of course, pissing money into a spending bonfire, driving inflation with excess liquidity, isn’t going to help; bit it’s just as bad as crippling growth by holding it back for lack of capital injection
Well Germany doesn't care supposedly. Where that takes us, who knows.
Aren't they the same thing?
One example is when the same stuff gets more expensive. If I have something, like a loaf of bread, a house, a smartphone all of them the exact same get more expensive, GDP increases if demand doesn't change (let's say because its inflexible).
You could argue this is due to some increased foreign demand for said product and the price increase legit represents increased economic output.
But in the case of tariffs for example, we know that's not the case - stuff became more expensive because of levied taxes. No new stuff got produced, no foreigners are buying up this stuff, demand likely decreased for said product, yet the GDP contribution increased.
Another very typical example are things with inflexible supply, such as housing, where due to the increased volume of money, the exact same house now costs more. But since transactions still happen, that means the economy got better, right?
The point being is that the US should NOT follow ANY economic advice from EU leaders, it is a recipe for disaster.
In any case where the European union keeps failing is that it keeps not focusing on creating as many common rules and regulations across the EU, so, yet again, scaling your french business beyond your borders, or bulgarian one, is always very difficult.
Most countries in Europe are ridden by pointless nationalism on so many matters when our biggest issue is creating a strong internal market in Europe, but our biggest economies are still manufacturing and exporting ones, with little focus on the strengthening of our internal markets.
Instead of looking at the US, let's look at what used to be a relevant ally...
In the eurozone, for example, politicians are hiding the lack of growth behind a growing mountain of public debt and the GDP growth ain't even beating inflation since the 2008 crisis. In 2008 the eurozone represented about 25% of the world's GDP. Now it's not even 15% anymore.
Falling into irrelevancy doesn't begin to describe the state of things for the eurozone: from 25% of the world's GDP to less than 15% in 17 years is more than alarming.
And yet if you look at the eurozone in Euro, it looks like it's been growing since 2008. But it's actually been stuck since nearly two decades now and there aren't signs of anything getting any better in the eurozone. German carmarkers, the number one export of the eurozone, are in huge trouble (with China eating their lunch).
The US and China are, obviously, less fucked than the eurozone but the USA's growth has also been achieved at the cost of a runaway public debt and runaway inflation.
I don't know what protectionism can and cannot do for the US and it's not clear if manufacturing can really come back to the US but one thing is certain: the eurozone is a failure and whatever it is that they did or do should definitely not be copied. Unelected bureaucrats have managed, in 17 years, to drive the eurozone into the ground. It's mostly true for non-eurozone EU countries as well but some, like Poland (which is in the EU but not in the eurozone), are doing fine.
Basically: if you want to slash your part of the world's GDP by 40% in 17 years, do what the eurozone did.
Now we must understand this: the eurozone didn't just slash it's part of the global GDP by 40% in 17 years... They did so while, at the same time, creating a gigantic mountain of public debt and experiencing inflation.
Another 17 years of this, so another 40% loss, and the eurozone would only represent 9% of the world's GDP. And these unelected bureaucrats are so incompetent that I don't discard the possibility that they'll actually be able to crash the eurozone even faster than that. For example at the moment, while german carmarkers are in trouble, EU bureaucrats are hard at work trying to kill them for good.
Anti-americanism and anti-trumpism is a thing on HN but people should really look more closely at what's happening elsewhere.
What about an article from The Economist as to the reasons the eurozone managed to lose 40% of their share of the world's GDP since the 2008 financial crisis?