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Topic: The Job Trap< Next Oldest | Next Newest >
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PostIcon Posted on: Apr. 22 2013, 3:05 pm  Skip to the next post in this topic. Ignore posts   QUOTE

I so much wish that this point could driven home to the Republican House members and their tea party supporters.  They generate widespread fear of exactly the wrong thing, to the great damage of the American economy and millions of unempoloyed Americans.   :angry:

For the overriding fear driving economic policy has been debt hysteria, fear that unless we slash spending we’ll turn into Greece any day now. After all, haven’t economists proved that economic growth collapses once public debt exceeds 90 percent of G.D.P.?

Well, the famous red line on debt, it turns out, was an artifact of dubious statistics, reinforced by bad arithmetic. And America isn’t and can’t be Greece, because countries that borrow in their own currencies operate under very different rules from those that rely on someone else’s money. After years of repeated warnings that fiscal crisis is just around the corner, the U.S. government can still borrow at incredibly low interest rates.

But while debt fears were and are misguided, there’s a real danger we’ve ignored: the corrosive effect, social and economic, of persistent high unemployment. And even as the case for debt hysteria is collapsing, our worst fears about the damage from long-term unemployment are being confirmed.

            ......................................

And let’s be clear: this is a policy decision. The main reason our economic recovery has been so weak is that, spooked by fear-mongering over debt, we’ve been doing exactly what basic macroeconomics says you shouldn’t do — cutting government spending in the face of a depressed economy.

It’s hard to overstate how self-destructive this policy is. Indeed, the shadow of long-term unemployment means that austerity policies are counterproductive even in purely fiscal terms. Workers, after all, are taxpayers too; if our debt obsession exiles millions of Americans from productive employment, it will cut into future revenues and raise future deficits.

Our exaggerated fear of debt is, in short, creating a slow-motion catastrophe. It’s ruining many lives, and at the same time making us poorer and weaker in every way. And the longer we persist in this folly, the greater the damage will be.


http://www.nytimes.com/2013....ll&_r=0


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PostIcon Posted on: Apr. 22 2013, 3:43 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

Unemployment numbers won't be helped when millions still go to college with no goal other than an eventual degree.  Six or so years and plenty of debt later, we have someone with a bachelors in phsycholgy, or maybe a masters in anthropology working at Starbucks or waiting tables and wondering what went wrong.

Meanwhile, a German early twenty-something has just completed a grueling but effective apprentice program and is ready to be a productive, well-compensated member of society.  He has no student debt.

U.S. workers who go through an apprentice program:  .3%

German workers who go through an apprentice program:  40%


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PostIcon Posted on: Apr. 22 2013, 5:31 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

The only difference between us and Greece is that we don't have Angela Merkel telling us to straighten up our act.

I don't know where the line should be, but if we keep spending more than we take in, eventually the house of cards will collapse.
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PostIcon Posted on: Apr. 22 2013, 5:33 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

Spending is out of control......especially feel good things.............
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PostIcon Posted on: Apr. 22 2013, 5:36 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

Keep thinking that debt doesn't matter, because it does.
Turn it around or we are doomed.  Once we owed the money to Americans, now we owe much of it to foreign countries.


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PostIcon Posted on: Apr. 22 2013, 6:43 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

You can’t convince the “true believers”. They’ll find any means to support their pursuit of “debt hysteria”, as Krugman puts it. But, for the rest of us who might prove to be more objective, you removed the link in that article to Krugman’s much more interesting (to me, at least) article ("The Excel Depression") on the Reinhart-Rogoff analysis that is used to support the right’s position on debt, and that is used as support for the Ryan budget proposal.
QUOTE
The paper, “Growth in a Time of Debt,” concluded that countries with public debt in excess of 90 percent of gross domestic product suffered measurably slower economic growth. It has been cited by U.S. House Budget Committee Chairman Paul Ryan and European Union Economic and Monetary Affairs Commissioner Olli Rehn in defense of efforts to drive down budget deficits.

The Harvard professors said they had inadvertently left some data out of their calculations in the study.

“It is sobering that such an error slipped into one of our papers,” they said in an e-mail. “We do not, however, believe this regrettable slip affects in any significant way the central message of the paper.”


The e-mail came in response to a study released on April 15 by a trio of economists from the University of Massachusetts at Amherst charging that the Reinhart-Rogoff work contained “serious errors that inaccurately represent the relationship between public debt and growth.”

Continuing, from that same article:
QUOTE
In defending their work, Reinhart and Rogoff pointed out that the University of Massachusetts study also finds “lower growth associated with periods when debt is over 90 percent.”

Ash said in a telephone interview yesterday that his paper does show “a modest diminishment of growth” in countries with big debts yet nothing like “the stagnation or decline” seen in the study by Reinhart and Rogoff.

The University of Massachusetts paper grew out of homework assignment by Ph.D. student Herndon in which he attempted to replicate the results of the research by Reinhart and Rogoff. Herndon received an A in the course, Ash said.

Ryan, a Wisconsin Republican and former vice presidential candidate, pointed to the work by Reinhart and Rogoff in his 2013 budget, “The Path to Prosperity: A Blueprint for American Renewal.”

“Essentially, the study confirmed that the massive debts of the kind the nation is on track to accumulate are associated with stagflation -- a toxic mix of economic stagnation and rising inflation,” the blueprint said.

The findings by Reinhart and Rogoff “have served as an intellectual bulwark in support of austerity policies,” the University of Massachusetts academics said. The fact that their results “are wrong should therefore lead us to reassess the austerity agenda.”
”Reinhart-Rogoff Acknowledge Mistake in 2010 Paper Cited by Ryan“

Krugman takes issue with their conclusion about the errors in their paper.
QUOTE
Reinhart-Rogoff quickly achieved almost sacred status among self-proclaimed guardians of fiscal responsibility; their tipping-point claim was treated not as a disputed hypothesis but as unquestioned fact. For example, a Washington Post editorial earlier this year warned against any relaxation on the deficit front, because we are “dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth.” Notice the phrasing: “economists,” not “some economists,” let alone “some economists, vigorously disputed by other economists with equally good credentials,” which was the reality.

For the truth is that Reinhart-Rogoff faced substantial criticism from the start, and the controversy grew over time. As soon as the paper was released, many economists pointed out that a negative correlation between debt and economic performance need not mean that high debt causes low growth. It could just as easily be the other way around, with poor economic performance leading to high debt. Indeed, that’s obviously the case for Japan, which went deep into debt only after its growth collapsed in the early 1990s.
http://www.nytimes.com/2013....on.html

As Krugman explains, both in the above article and on his blog, after other economists obtained access to the original data, they found that Reinhart-Rogoff had obtained their result by using faulty methods and incorporating a couple of errors in their spreadsheet to boot:
QUOTE
Selective Exclusions. Reinhart-Rogoff use 1946-2009 as their period, with the main difference among countries being their starting year. In their data set, there are 110 years of data available for countries that have a debt/GDP over 90 percent, but they only use 96 of those years. The paper didn't disclose which years they excluded or why.

Unconventional Weighting. Reinhart-Rogoff divides country years into debt-to-GDP buckets. They then take the average real growth for each country within the buckets. So the growth rate of the 19 years that the U.K. is above 90 percent debt-to-GDP are averaged into one number. These country numbers are then averaged, equally by country, to calculate the average real GDP growth weight.

Coding Error. As Herndon-Ash-Pollin puts it: "A coding error in the RR working spreadsheet entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark, from the analysis. [Reinhart-Rogoff] averaged cells in lines 30 to 44 instead of lines 30 to 49...This spreadsheet error...is responsible for a -0.3 percentage-point error in RR's published average real GDP growth in the highest public debt/GDP category." Belgium, in particular, has 26 years with debt-to-GDP above 90 percent, with an average growth rate of 2.6 percent (though this is only counted as one total point due to the weighting above).
http://www.nextnewdeal.net/rortybo....roblems
The original paper by Reinhart-Rogoff, a PDF, is here:
Reinhart-Rogoff: “Growth in a Time of Debt”
"Reinhart-Rogoff: “Growth in a Time of Debt”"
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PostIcon Posted on: Apr. 22 2013, 6:49 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

So much for logic, reason and expert opinion.

Most of the Republicans thinks that the national economy is like a family budget, rather than the macro economic management system that it actually is.

We could handle a great deal more debt than we have now, and still be strong and growing.  If we put in place policies to get the economy back into a stronger position, we could get back to model we at the end of the Clinton administration, with a balanced budget, an annual surplus and paying down on the national debt for the first time eons.

If we can just keep the Republicans out of office so they don't ruin it again, as Gdumbya did, just as soon as he got his hands on the reins, plus getting us into two expensive wars that have caused most of the debt growth since that time.

What a country!


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PostIcon Posted on: Apr. 23 2013, 6:05 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE


(wwwest @ Apr. 22 2013, 4:49 pm)
QUOTE
If we can just keep the Republicans out of office so they don't ruin it again, as Gdumbya did, just as soon as he got his hands on the reins, plus getting us into two expensive wars that have caused most of the debt growth since that time.

What a country!

From the Los Angeles Times, not exactly a bastion of conservative ideology:
"The bill to taxpayers so far has been $2 trillion, plus $260 billion in interest on the resulting debt. By comparison, the current federal budget is $3.8 trillion."

Now, you can go along with Krugman or not, though at SOME point, even an economy like ours reaches the point where you simply cannot pay it back, and the only out from  under is to inflate it into irrelevance, not a real fine option.
But let's at least keep our facts straight. The cost of both wars to date is less than the deficits of any two years of the current administration. So while they are a factor, it's simply not accurate to claim they have caused "most of the debt growth".


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PostIcon Posted on: Apr. 23 2013, 9:12 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

The point is we can't pay back the debt without economic recovery and lower unemployment -- and that austerity measures are a much larger obstacle to economic recovery than budget deficits (especially when interest rates are so low).

Also remember that debt is not a one sided equation. Loss of revenue is a major factor in current deficits. The right tries to characterize Obama as a profligate spender, but that simply isn't true.


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PostIcon Posted on: Apr. 23 2013, 11:24 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE


(justwalkin @ Apr. 22 2013, 1:43 pm)
QUOTE
... U.S. workers who go through an apprentice program:  .3%

German workers who go through an apprentice program:  40%

The last I read on average new machinists wages, they were averaging $18 per hour and expected to stay fairly stagnant (thanks to union busting), while a head fry chef makes $13 per hour.  Thing is head fry chef can start earlier on a 401k and home; more importantly cannot be outsourced.  That psyche major switching to a marketing MBA just may find a new wrapper to sell bacon-wrapped pork patties.

In terms of debt the US can print more dollars whereas Greece cannot.  Now we may have an inflation problem later if a President nominates a political hack for the Fed but not a debt problem unless we choose to.


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PostIcon Posted on: Apr. 24 2013, 1:05 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

Good OP and good link.

Going one step further than Krugman does - the US is creating a new permanent underclass of mostly young workers who are being effectively thrown away by this economy.

What happens to the unemployed recently graduated American born chemical engineer who can't even get a job at Starbucks? The months go by and the perceived skills deteriorate ( while a foreign born engineer on a VISA gains the job experience ) . At some point as Krugman points out, the engineer is effectively unemployable.

Think about MILLIONS in the same situation - adding the people who have stopped looking for work and are no longer contributing to society. Many will be supported by parents and relatives, and many will come to rely on public programs. Instead of making life in America better, doing their part to increase the standard of living, this new underclass is sucking up resources.

While this new "leisure class" of have-nots is growing, the producing class is being forced to work harder and longer. You have to wonder what type of culture America will be as this trend continues. Will being a "man of leisure" or a "welfare mother" become socially acceptable? Will this new "leisure class" become politically active and vote themselves big welfare benefits?
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(Bass @ Apr. 24 2013, 1:05 pm)
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What happens to the unemployed recently graduated American born chemical engineer who can't even get a job at Starbucks?

Have them contact me, we're actively looking for chemical engineers, as well as just about any other type of engineer.

Full time, full benefits, good starting salary


This isn't the first time this has happened, after looking for over a year for a job in geology, I found one in Texas, it was tough moving from the PNW but I least I found a job which turned into a career.  This was in 1975.


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(wwwest @ Apr. 22 2013, 12:05 pm)
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And America isn’t and can’t be Greece, because countries that borrow in their own currencies operate under very different rules from those that rely on someone else’s money...

That is true -- but it is also a very dangerous thought.  Why?  Because it leads to complacency.  And we the American people collectively aren't known for our financial discipline or consumption forbearance!

Recall how the British pound used to reign as world currency par excellence!  And how that prolonged (and perhaps lulled) the Brits into over borrowing and over consumption!  Living on the financial edge for so long -- WW2 did them in -- even when they were one of the 'victors'!

Yes, we can borrow more than most and get away with it.  But lose our competitive edge... and we kiss our high standard of living good-bye.  Britain itself almost went the way of Argentina -- except Thatcher finally kicked ass and turned that country around 30 years ago.


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(Chuck D @ Apr. 24 2013, 11:13 am)
QUOTE

(Bass @ Apr. 24 2013, 1:05 pm)
QUOTE
What happens to the unemployed recently graduated American born chemical engineer who can't even get a job at Starbucks?

Have them contact me, we're actively looking for chemical engineers, as well as just about any other type of engineer.

Full time, full benefits, good starting salary


This isn't the first time this has happened, after looking for over a year for a job in geology, I found one in Texas, it was tough moving from the PNW but I least I found a job which turned into a career.  This was in 1975.

Seems there's been an increasing regional focus for jobs, so at least some of the jobs problem is many won't move (or can't for home owners, dependents, etc..).   The middle part of the country has energy while the coast has technology.  Everyone else seems to play as supporting cast.  Nursing was booming but a niece of mine couldn't find a position in the Northeast, and had to work in Texas before finding a better location in the Lake Tahoe area.  Nursing.  

There is a bit more flexibility for some employers.  A nephew of mine lives in Phoenix for a few weeks but works mining in Alaska the other 3 weeks.


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PostIcon Posted on: Apr. 24 2013, 11:27 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

Right now in the gulf coast energy sector good jobs are plentiful, many that don't require a degree that can pay 6 figures including OT and shift differentials.

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PostIcon Posted on: Apr. 25 2013, 8:09 am Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

Chuck D
QUOTE
Right now in the gulf coast energy sector good jobs are plentiful, many that don't require a degree that can pay 6 figures including OT and shift differentials.


Not so in my part of Tennessee. Layoffs are still happening here - but they are mostly the contract worker part-time and temps. Most workers are now contract worker part-time or temps - the full timers were laid off years ago. The exception is nursing and jobs in the medical field. The laid-off American born engineers seem to gravitate to wait jobs at Outback Steak House while they retrain as accountants at the community college.

The current "fad" in my community is parents purchasing large pre-fabricated sheds and putting them in their back yards for their jobless twenty-something kids - with their kids - to move into. Many of these twenty-somethings graduated from college in something like social work or some useless technical study like engineering - and now make a few dollars mowing lawns or working a few weeks during the holidays at a retail store.  

Those kids are tomorrow's voters and the people who will be the "producers" ( we hope ) that contribute to the GDP and drive America's standard of living higher ( we hope ) in the future.

So at the OP link, Krugman's article, points out - we are wasting a lot of talent and resources by cutting costs rather than investing in this labor force.
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PostIcon Posted on: Apr. 25 2013, 8:38 am Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

People have to make choices, sometimes the choice involves moving away from home.

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(Bass @ Apr. 24 2013, 1:05 pm)
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Will this new "leisure class" become politically active and vote themselves big welfare benefits?

Some would say that has already happened.

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(Drift Woody @ Apr. 23 2013, 9:12 pm)
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The point is we can't pay back the debt without economic recovery and lower unemployment -- and that austerity measures are a much larger obstacle to economic recovery than budget deficits (especially when interest rates are so low).

Also remember that debt is not a one sided equation. Loss of revenue is a major factor in current deficits. The right tries to characterize Obama as a profligate spender, but that simply isn't true.

Great post Woody.

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PostIcon Posted on: Apr. 26 2013, 11:02 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

+1

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The motivated "makers" have to outnumber the unmotivated "takers" in any economic system.

Greece reached a tipping point where they don't have enough wealth makers.

Thankfully we aren't there...yet


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(Ron. @ Apr. 27 2013, 8:45 am)
QUOTE
The motivated "makers" have to outnumber the unmotivated "takers" in any economic system.

Greece reached a tipping point where they don't have enough wealth makers.

Thankfully we aren't there...yet

Greece is a red herring constantly trotted out by the right to advance an austerity agenda that is proving to make economic matters wherever it's been implemented.

Blaming our economic problems on "unmotivated takers" is an even more absurd rightwing talking point. Lack of opportunity and declining wages & benefits are what's holding back our economy.


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(Drift Woody @ Apr. 27 2013, 9:14 am)
QUOTE

(Ron. @ Apr. 27 2013, 8:45 am)
QUOTE
The motivated "makers" have to outnumber the unmotivated "takers" in any economic system.

Greece reached a tipping point where they don't have enough wealth makers.

Thankfully we aren't there...yet

Greece is a red herring constantly trotted out by the right to advance an austerity agenda that is proving to make economic matters wherever it's been implemented.

Blaming our economic problems on "unmotivated takers" is an even more absurd rightwing talking point. Lack of opportunity and declining wages & benefits are what's holding back our economy.

You quoted me then responded to your own strawmen, nice :)

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(Chuck D @ Apr. 25 2013, 6:38 am)
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People have to make choices, sometimes the choice involves moving away from home.

Very true, I'm always amazed at the people unwilling to do so. Moving to where the jobs are is nothing new either, has happened historically many times before.
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(Ron. @ Apr. 27 2013, 6:45 am)
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The motivated "makers" have to outnumber the unmotivated "takers" in any economic system.

Okay, you've convinced me: let's tax capital gains at (at least) income-level rates. Those takers have had a free ride long enough; it's time the people who actually create wealth (i.e., work) got a fair shake.
QUOTE
Greece reached a tipping point where they don't have enough wealth makers.

Thankfully we aren't there...yet

You know what was one of the big factors in Greece's disaster? Tax evasion. It was at least as much a revenue-side problem as a spending problem.


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PostIcon Posted on: Apr. 28 2013, 12:29 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE


(wycanislatrans @ Apr. 27 2013, 7:49 am)
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(Chuck D @ Apr. 25 2013, 6:38 am)
QUOTE
People have to make choices, sometimes the choice involves moving away from home.

Very true, I'm always amazed at the people unwilling to do so. Moving to where the jobs are is nothing new either, has happened historically many times before.

There's a cost, though, to families and communities. There are considerations other than mere money, and these aren't trivial.

A more humane kind of capitalism would make efforts to minimize the necessity of moving in order to survive (as opposed to the option of moving for a better job).


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PostIcon Posted on: Apr. 28 2013, 12:47 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

I amde a 30 yr career out of moving to where the work was.  I spent 5 yrs in Wy and Mt, 5 more in NH and Boston, 5 in Hawaii, and 15 in Portland.  If I had stayed in Wy, I doubt I could afford to retire by now.  

There are sacrifices.  I had to move from places I liked, to places I had never been before.  That is intimidating to some.  I had to leave behind friends i had made in those locations, and some of them I have continued to have contact with, but not many.  Family was either visited on vacations, or they came to see me at those locations.  Still, it was worth it to not only stay relatively employed, but to see what the rest of the country was like.  I would hate to think of staying in one area, state, or city, all of my life.  


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PostIcon Posted on: Apr. 29 2013, 6:37 pm Skip to the previous post in this topic. Skip to the next post in this topic. Ignore posts   QUOTE

Yeah, most of the "debt hawks" don't seem to dig very deeply for support, beyond simply finding justification (any justification will do, seemingly) to push curtailment of social infrastructure.

Post #9 (and posts #22, #25) cuts to the chase, doesn't it? Why does the right think that their "justifications" are NOT transparent.

The "debt hawks" will take any basis for reducing the size of government, even if it's spurious, and even if the cuts they are after have no positive effect whatsoever for them, other than to reduce government oversight in those areas they're most concerned about. Everything else is simply necessary "collateral damage" to achieve their goal.

--------------------------

Thought I’d be at least somewhat fair and post that RR responded (in the NY Times) to the criticisms leveled at them from Krugman and various other places, like “The Rachel Maddow Show” and, I think, “The Daily Show”.
"Reinhart and Rogoff: Responding to Our Critics"

I have to say that I respect the work of Reinhart and Rogoff, and their attempt to make sense out of the differences between previous downturns and the current one, but their response in this case is something less than forthcoming. They don’t admit to their biases at all, and they attempt to make their contact, and influence with, legislators seem much less than it actually is.

There’s an interesting Youtube video of a “debate” between Rogoff and Krugman that, I think, clearly points out the differences between the two. Let’s face it: Krugman is a very traditional Keynesian, and Rogoff just is not.
"Paul Krugman v Kenneth Rogoff"

There is another article posted this last week by Reinhart & Rogoff that purports to go into more detail about their analysis (or I thought it did), but turns out to be pretty much a rehash of the other one above.
Reinhart and Rogoff: Debt, Growth and the Austerity Debate
http://www.nytimes.com/2013....te.html

My favorite retort to this article (in the comments section) was this one, posted by “Ken Miller”. I don’t know if this is the economist “Ken Miller”, but his comments are pretty trenchant.
QUOTE
Now R&R claim they are just academic who found an interesting association, not advocates of austerity. That causality might run either way: high debt to slow growth, or slow growth to high debt. And "Nowhere did we assert that 90 percent was a magic threshold that transforms outcomes".
But in Bloomberg View in July 2011, they wrote "Our empirical research ... supports the view that current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP.... ". An "important marker" is pretty much a threshold, isn't it?; and "current debt trajectories are a risk to ... growth" means debt will cause slow growth (see http://bit.ly/11eGb8m for strong evidence the causality runs the other way.)
In April 2011, meeting with 40 Senators, as quoted in then-Sen. Tom Coburn's book: they were asked “Do we need to act this year? Is it better to act quickly?”. Coburn writes "“Absolutely," Rogoff responded. "Not acting moves the risk closer,” he explained, because every year of not acting adds another year of debt accumulation." Not advocating austerity?
Republican politicians and media pundits repeatedly, repeatedly quoted R&R to claim 90% debt was a tipping point (documented at http://bit.ly/11U7ceN). Where is a single statement from R&R correcting this?
I'm afraid this oped, contrasted with the real record, will only further undermine their credibility.

http://www.nytimes.com/2013....8854357
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(ol-zeke @ Apr. 28 2013, 9:47 am)
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I would hate to think of staying in one area, state, or city, all of my life.  

Obviously you've never lived in San Francisco.  :;):

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(Lamebeaver @ Apr. 22 2013, 5:31 pm)
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The only difference between us and Greece is that we don't have Angela Merkel telling us to straighten up our act.

I don't know where the line should be, but if we keep spending more than we take in, eventually the house of cards will collapse.

We may not borrow in our own currency

But we print it as fast as we can......the dollar is worth less all the time

Krugman fails to mention that we have drastically increased the debt....spent even more money that we don't have and yet we have not created jobs.

If you want to reduce the fear try acting like you actually care about it

If debt doesn;t matter then why bother raising taxes???

Just keep using the charge card!

What a moron


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