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View Full Version : Why aren't things working better in Europe?


XT
08-16-2011, 06:16 PM
I've been reading a lot lately about the European economy hitting the wall (http://money.cnn.com/2011/08/16/news/international/european_union_gdp/index.htm?hpt=hp_t2) and my question is, why? What's going on in Europe that's causing such problems?

My 'agenda' here is to ask this WRT the board liberals, and WRT how higher taxes and more social spending is supposed to spark or spur economic growth. Why isn't that happening in Europe? Is it because America doesn't do those things, or some other thing related to America, or is there something else at work here (perhaps the taxes aren't high enough? I'm not asking this snarky or tongue in cheek, it's a serious question)? I know that a few really serious economic emergencies in a few countries like Spain, Greece, Ireland, etc are having an impact on them all, but it doesn't seem like Germany, France or England (who I would guess are powerhouses in the Eurozone) aren't doing very well either, at least from what I've been reading.

So, what's the deal? Why is Europe doing so bad, despite seemingly having everything we poor Americans don't wrt taxing the rich, lots of regulation, green energy initiatives and even lower mandated emissions, and lots and lots of social programs...arguably the best and most comprehensive in the world...plus, a fairly small/modest defense bill. So, what's up?

-XT

Der Trihs
08-16-2011, 06:31 PM
Why aren't things working better in Europe?Because the entire world in in the grip of economic disaster?

My 'agenda' here is to ask this WRT the board liberals, and WRT how higher taxes and more social spending is supposed to spark or spur economic growth. Higher taxes and social spending in America. Where the problem is the wealthy hogging the wealth of the country and self destructively low taxes for the rich. Higher taxes aren't always the answer any more than lowering taxes is always the answer; it's just that higher taxes are the answer here. Increasing the taxes on wealthy Europeans isn't going to be as useful because they haven't been allowed to suck society dry to the same extent.

So, what's the deal? Why is Europe doing so bad, despite seemingly having everything we poor Americans don't wrt taxing the rich, lots of regulation, green energy initiatives and even lower mandated emissions, and lots and lots of social programs...arguably the best and most comprehensive in the world...plus, a fairly small/modest defense bill. :dubious: Most of that is desirable for reasons having nothing to do with the economy, you know. I really don't care if strong environmental regulation helps the economy or hurts it; I just don't want to live in a poisoned desert.

YogSothoth
08-16-2011, 06:36 PM
It seems like some countries in the Euro zone are doing poorly and others have had to keep them afloat, making the entire zone suffer. Its not liberal policies that have sunk them, its just plain bad policies, like Greece's tax issue. Sorta like the phenomenon here in the US where some red states are not as indebted as blue states, but they get disproportionately more federal aid

John Mace
08-16-2011, 06:45 PM
Forget "Europe". You need to look at individual countries. Is Germany doing worse than the US?

I just got finished listening to a blurb on NPR about how the Europeans (Germans and French) are telling us we shouldn't be extending Unemployment Insurance because it causes people to delay taking jobs. That was interesting!

My understanding is that Brazil is doing quite well, although when you're down on the economic ladder, it's a lot easier to move up.

An Gadaí
08-16-2011, 06:56 PM
Well in this country, Ireland, we're suffering the aftereffects of a ridiculously overheated property market and government idiocy with regard to privately held debt. Our European overlords have had to bail us out, so they suffer too, in the short term.

Great Antibob
08-16-2011, 07:08 PM
I just got finished listening to a blurb on NPR about how the Europeans (Germans and French) are telling us we shouldn't be extending Unemployment Insurance because it causes people to delay taking jobs. That was interesting!

It's also pretty well known here. We know unemployment insurances causes people to delay taking jobs. But it won't cause them to indefinitely put off taking jobs. Also, that advice is rather suspect when we have 5 times as many unemployed as job openings.

Do we want to cut it off to all those people, with the effects we know will come from that?

It's a balancing act, and we've been coming down on the side of extending benefits.

Do we really want to take queues from Europe? Europe seems to work by the ECB implementing whatever policies most benefit Germany and telling everybody else to deal with it.

John Mace
08-16-2011, 07:10 PM
It's also pretty well known here. We know unemployment insurances causes people to delay taking jobs. But it won't cause them to indefinitely put off taking jobs. Also, that advice is rather suspect when we have 5 times as many unemployed as job openings.

Do we want to cut it off to all those people, with the effects we know will come from that?

It's a balancing act, and we've been coming down on the side of extending benefits.

I agree, it's a tough decision. For me, I'd like to see that benefit devolve to the states. We're a big, diverse country and one size does not fit all.

XT
08-16-2011, 07:19 PM
Forget "Europe". You need to look at individual countries. Is Germany doing worse than the US?

The trouble is that their economies ARE rather tied together (well, not England so much I guess). I don't believe Germany is doing substantially worse than the US...it's not doing substantially better either, afaik.

I just got finished listening to a blurb on NPR about how the Europeans (Germans and French) are telling us we shouldn't be extending Unemployment Insurance because it causes people to delay taking jobs. That was interesting!

Yeah, the irony factor there is fairly high.

Because the entire world in in the grip of economic disaster?

So, what you are saying is that the Europe would be doing great if the whole world wasn't experiencing an 'economic disaster'? Ok, fair enough, if you have some evidence that this is so. But shouldn't they be doing better than us, since they have all those things I mentioned in the OP? Aren't those things supposed to spur their economy?

Higher taxes and social spending in America. Where the problem is the wealthy hogging the wealth of the country and self destructively low taxes for the rich. Higher taxes aren't always the answer any more than lowering taxes is always the answer; it's just that higher taxes are the answer here. Increasing the taxes on wealthy Europeans isn't going to be as useful because they haven't been allowed to suck society dry to the same extent.

Ok, so European tax rates are high enough. But why isn't their current levels spurring their economy? I understand that you believe that ours are too low, but why aren't all those things making Europe an economic powerhouse? Why are they doing poorly?

Most of that is desirable for reasons having nothing to do with the economy, you know. I really don't care if strong environmental regulation helps the economy or hurts it; I just don't want to live in a poisoned desert.

Why the dubious smiley? I'm asking why, despite having all those things you say are 'desirable', is Europe doing poorly. That's the question here.

It seems like some countries in the Euro zone are doing poorly and others have had to keep them afloat, making the entire zone suffer. Its not liberal policies that have sunk them, its just plain bad policies, like Greece's tax issue. Sorta like the phenomenon here in the US where some red states are not as indebted as blue states, but they get disproportionately more federal aid

So, it's the aggregate that is pulling everyone down?

-XT

Starving Artist
08-16-2011, 07:31 PM
Where the problem is the wealthy hogging the wealth...What do you mean they're "hogging" the "country's" wealth. Their money isn't yours and it isn't the country's either, apart from whatever taxes the government requires them to pay. The money they have is theirs by virtue of their having earned it, which is by virtue of the fact that lots of people have willingly given them their own money in return for the goods and services they offer.

Furthermore, your earning capacity isn't harmed in the least by the amount of money those people have. When you say the wealthy are "hogging" all the money, what you are really saying is that there is only so much money to go around and since they have so much of it there's that much less for you. This is blatantly false. You are perfectly free and able to earn however much your talents or skills are worth in the marketplace. You will not earn one dollar less in your life because of the money the wealthy have, and you will not earn one dollar more if they lose it all. There's no corelation between the two. None at all!

The only way - and I mean the only way - that a person could come up with even a halfway arguable position that the wealthy are "hogging" all the wealth is by having deluded themself that they are owed money by the wealthy for no other reason than the wealthy have money and they don't. Which is as ridiculous a notion as if a homeless person were to come knocking at your door insisting that you give him a sizable chunk of your bank account and possessions simply because you have more than he does. I have no doubt you would be "disinclined", to say the least, to allow him to do that, but that's exactly what you want the government to do to them...and for the same reason! The biggest difference is that on the one hand you lose money and possessions that you've earned, and on the other you receive money and benefits from the money someone else earned. And yet I'd bet dollars to donuts that you regard the people who don't want to give their money to you when you come knocking at their door as "selfish". Can you explain to me why their reaction is any more "selfish" than yours would be with the homeless guy? 'Cause from where I'm sitting it's the same thing.

Baron Greenback
08-16-2011, 07:43 PM
queues

It's "cues". A queue is a different thing, Great Antibob. :)

John Mace
08-16-2011, 07:44 PM
It's "cues". A queue is a different thing, Great Antibob. :)

I thought something was a little off in that sentence!

The trouble is that their economies ARE rather tied together (well, not England so much I guess). I don't believe Germany is doing substantially worse than the US...it's not doing substantially better either, afaik.
Well, it's your OP. You tell us. Is it doing better, worse or about the same?

Der Trihs
08-16-2011, 07:51 PM
So, what you are saying is that the Europe would be doing great if the whole world wasn't experiencing an 'economic disaster'? Well, yes. They were, after all.

But shouldn't they be doing better than us, since they have all those things I mentioned in the OP? Aren't those things supposed to spur their economy?No. Those are most or all either not about the economy or relate to America-specific problems.

Ok, so European tax rates are high enough. But why isn't their current levels spurring their economy? I understand that you believe that ours are too low, but why aren't all those things making Europe an economic powerhouse? Why are they doing poorly?Again, because the whole world is doing badly. They don't exist in a vacuum. Under the present conditions, no one is going to be an "economic powerhouse".

Why the dubious smiley? I'm asking why, despite having all those things you say are 'desirable', is Europe doing poorly. The :dubious: is because - as I said - most of those things aren't about the economy. The economy isn't the be-all and end-all of human existence.

What do you mean they're "hogging" the "country's" wealth. Their money isn't yours and it isn't the country's either, apart from whatever taxes the government requires them to pay. The money they have is theirs by virtue of their having earned it, which is by virtue of the fact that lots of people have willingly given them their own money in return for the goods and services they offer. They have that money because they've engineered our entire society to benefit them at the expense of the rest of us. Nor did they earn most of it; the vast amount of it was either the result of various scams or was earned for them by other people. And it's "this country's wealth" as in the collective wealth of everyone in the country. Which the wealthy have the majority of.

Furthermore, your earning capacity isn't harmed in the least by the amount of money those people have. When you say the wealthy are "hogging" all the money, what you are really saying is that there is only so much money to go around and since they have so much of it there's that much less for you. This is blatantly false.No, it's the simple truth. They have most of the nation's money, therefore there's less for everyone else. Everyone else is expected to carry them on our backs so they don't have to pay their fair share.

And yet I'd bet dollars to donuts that you regard the people who don't want to give their money to you when you come knocking at their door as "selfish". Can you explain to me why their reaction is any more "selfish" than yours would be with the homeless guy? 'Cause from where I'm sitting it's the same thing.Of course; you are right wing so your philosophy is "worship the rich, crush the poor." And the differences are that the wealthy have a grossly disproportionate amount of the nation's wealth, the have benefited much more from society than either I or the homeless guy so owe more back. And since the wealthy have most of the nation's money it's the wealthy who have to be taxed more to keep the country from general collapse; their destructive greed is dragging the nation to disaster. The rest of us can't carry their parasitic weight much longer.

Inbred Mm domesticus
08-16-2011, 09:06 PM
I've been reading a lot lately about the European economy hitting the wall (http://money.cnn.com/2011/08/16/news/international/european_union_gdp/index.htm?hpt=hp_t2) and my question is, why? What's going on in Europe that's causing such problems?

My 'agenda' here is to ask this WRT the board liberals, and WRT how higher taxes and more social spending is supposed to spark or spur economic growth. Why isn't that happening in Europe? Is it because America doesn't do those things, or some other thing related to America, or is there something else at work here (perhaps the taxes aren't high enough? I'm not asking this snarky or tongue in cheek, it's a serious question)? I know that a few really serious economic emergencies in a few countries like Spain, Greece, Ireland, etc are having an impact on them all, but it doesn't seem like Germany, France or England (who I would guess are powerhouses in the Eurozone) aren't doing very well either, at least from what I've been reading.

So, what's the deal? Why is Europe doing so bad, despite seemingly having everything we poor Americans don't wrt taxing the rich, lots of regulation, green energy initiatives and even lower mandated emissions, and lots and lots of social programs...arguably the best and most comprehensive in the world...plus, a fairly small/modest defense bill. So, what's up?

-XT

I am liberal on most measures, which I guess gives me the opportunity to provide my perspective. The short answer: I think what is going on in Europe is not much different than in the US, but only the US has the flexibility to make this economic crisis less difficult than it is.

Several economic problems are interacting:
1) The economy the world over is slowing down. I have no idea, but I assume there is just nothing productive to spend money on. I don't think the money disappeared, its just a waste of time to use it on anything from a business perspective.
2) Normally #1 would not matter too much if it weren't for the debt some of these countries have and have to budget for. Greece, Iceland, Italy, Ireland, and Portugal (not all EU countries but European countries in the news for economic woes) are in the top 20 for debt to GDP ratio. Spain is 28. The USA is 37. I have no idea what the EU would be as a whole, but I bet its higher than 37 since Germany, the UK and France all have higher ratios. (http://online.wsj.com/article/SB10001424053111903480904576511741119883776.html)
3) #1 and #2 interact to cause a loss of revenue to the governments of these countries. I think this can best be approximated by looking at the unemployment rate. (http://www.google.com/publicdata/explore?ds=z8o7pt6rd5uqa6_&met_y=unemployment_rate&idim=country:de&fdim_y=seasonality:sa&dl=en&hl=en&q=unemployment+germany#ctype=l&strail=false&nselm=h&met_y=unemployment_rate&fdim_y=seasonality:sa&scale_y=lin&ind_y=false&rdim=country_group&idim=country:de:uk:tr:fr:gr:ie:es:pt:nl:se:no:fi&ifdim=country_group&hl=en&dl=en) This assumes that greater unemployment reflects greater loss of economic activity. In the link, of Portugal, Spain, Italy, Greece and Ireland, Italy has the lowest unemployment rate at 8% while the other countries have truly abysmal unemployment rates, topped out by Spain at 20%!
4) #1-3 makes financial markets shaky and then you see the inability of companies to grow because they cannot get the cash to do it.

The worst hit countries cannot keep up their spending at the rates they may have become used to because their economies cannot supply the revenue to maintenance the debt caused by government spending.

I am not 100% certain but I think all these countries differ for the "why's" of their government spending. I don't think it is all social programs. Greece seemed to have a problem with having too many people making a living off of government. I doubt Ireland's economic boom was fueled the same way. Germany is not suffering, but experiencing a slowdown, yet it is utilizing public spending on green energy at a high rate.

Taking all of this together. The USA and Europe are in roughly the same boat economically. I think most of the countries in the EU and the USA can ride through this without disaster, although it is tenuous.

The difference between the USA and the EU is how government is involved. Our government is not taking on debt as the economic wimps and powerhouses of the EU. We are avoiding debt and that may be a good thing in the long run. On the other hand, we have a lot of room before we become like any of these powerhouses and wimps in terms of debt. Some of these powerhouses are showing us that it is possible to spend a lot more and still be no worse than anyone else. Germany was supposedly cooking until last quarter.

When I think about the why's of our debt I start to get a little enraged. Most of our debt is due to war and providing the lowest possible taxes for people who will never know the struggles I face in regards to money yet have the personal ear of any politician they care to consider. I think they are not paying their fair share in this crisis. The only responsible use of government money in the last decade has been bailing as all out of the mistakes made by irresponsible financiers and borrowers alike.

That said, we can tax them to reasonable levels, we can set up works projects and training programs that actually mean something and we can publicly finance the green revolution. I think the US is missing out on one of the greatest changes in energy production in human history (akin to finding uses for oil) while arguing over whether we should tax rich people, going back to unworkable health care, and continuing to spend unbelievable amounts of money on the military.

To summarize, we have the room to make the average person's life a bit easier for the short term while improving our infrastructure and technology, but it is not being done in the name of preventing any sort of tax burden on those who can afford it most.

XT
08-16-2011, 10:04 PM
Well, it's your OP. You tell us. Is it doing better, worse or about the same?

Depends on which metric we use I guess, John, if we are just talking about Germany (which I wasn't...I just mentioned them in the OP, it wasn't the main focus of what I wanted to discuss). Which metric did you want to use? I believe that unemployment is better...economic growth is about the same or worse.

-XT

MOIDALIZE
08-16-2011, 10:12 PM
Short answer: Europe, like the US, is suffering the aftermath of a major financial crisis. An economy doesn't quickly bounce back from something like that for a variety of reasons. It doesn't have much to do with higher taxes and welfare programs.

MOIDALIZE
08-16-2011, 10:13 PM
Depends on which metric we use I guess, John, if we are just talking about Germany (which I wasn't...I just mentioned them in the OP, it wasn't the main focus of what I wanted to discuss). Which metric did you want to use? I believe that unemployment is better...economic growth is about the same or worse.

-XT

Are you really this lazy?

Measure for Measure
08-17-2011, 12:54 AM
1. European is conducting austerity measures, just like the US. They should be conducting greater deficit spending. Two sources of aggregate demand during recession are 1) higher government spending and 2) depreciation of the currency and export boom. Unfortunately, #2 is limited since we're in a world recession.

2. Spain, Greece, Portugal, Ireland and probably Italy need to depreciate their currencies. But they can't -- because they no longer have their own currency. If they could depreciate, that would effectively lower domestic wages relative to world ones.

Why doesn't the US have this problem? In the US, if Texas and Oklahoma are hit by low oil prices (like during the mid 1980s), they tend to have net labor out-migration. They also tend to have lower taxes (they send less to Washington) and get higher government spending (in the form of unemployment insurance and welfare payments). In Europe, migration is limited by language barriers. And the policy makers screwed up royally by not establishing fiscal systems that automatically send funds to their states during downturns.

3. Their monetary policy is too tight: they need to cut interest rates.

4. If Greece tries to leave the Euro, they will spark an enormous banking crisis. So they won't do that. Ever. Until at least that huge banking crisis happens anyway. Then they will leave the Euro if they are wise.

In short Europe is FUBAR, much like the US... and Japan!

obbn
08-17-2011, 01:19 AM
Europe seems to work by the ECB implementing whatever policies most benefit Germany and telling everybody else to deal with it.

Would you want to piss Germany off? Didn't work out to well last time they did. Keep 'em happy may not be such a bad policy. :dubious:

treis
08-17-2011, 01:56 AM
Depends on which metric we use I guess, John, if we are just talking about Germany (which I wasn't...I just mentioned them in the OP, it wasn't the main focus of what I wanted to discuss). Which metric did you want to use? I believe that unemployment is better...economic growth is about the same or worse.

-XT

Unemployment is 9.2% in the states vs. 6% for Germany.

I would be careful about directly comparing GDP growth. Population in the USA is rising, while IIRC it's stagnating or shrinking in much of Europe.

I submit that this is a poorly constructed OP. I don't have numbers off the hand, but my impression is that Europe has done substantially better in the recent economic troubles than the USA. Of course, Europe can't really be treated as a whole. The PIGS are doing pretty bad, but Northern Europe seems to be much better off.

An Gadaí
08-17-2011, 02:24 AM
Unemployment is 9.2% in the states vs. 6% for Germany.

I would be careful about directly comparing GDP growth. Population in the USA is rising, while IIRC it's stagnating or shrinking in much of Europe.

I submit that this is a poorly constructed OP. I don't have numbers off the hand, but my impression is that Europe has done substantially better in the recent economic troubles than the USA. Of course, Europe can't really be treated as a whole. The PIGS are doing pretty bad, but Northern Europe seems to be much better off.

Micro-nitpick, Ireland is in Northern Europe, the I in PIGS.

2sense
08-17-2011, 02:41 AM
According to Paul Krugman, Europe got into the mess the same way we did: housing bubbles and toxic derivatives. They compounded it the same way we did: austerity measures to cut government spending at exactly the wrong time. But they did better than us initially because their stronger social safety nets didn't allow them to reduce spending as much.

However, he also suggests that the EU is in a much worse situation than the US because some countries are really hurting and they have integrated their currency without integrating their labor force. That is, Greeks and Portuguese are less willing and able to move to the countries where the jobs are to even things out while their governments are unable to manipulate their currencies to soften the blow since they are using the Euro. The US economy is stronger overall because it is integrated and we retain our sovereign currency. So people could move south out of Pittsburgh when steel mills closed and we can devalue the dollar to make it cheaper to pay off our debt and improve our balance of trade.

(If Krugman counts as a liberal. He identifies as one but he is a free trader, after all.)

Capitaine Zombie
08-17-2011, 04:23 AM
According to Paul Krugman, Europe got into the mess the same way we did: housing bubbles and toxic derivatives. They compounded it the same way we did: austerity measures to cut government spending at exactly the wrong time. But they did better than us initially because their stronger social safety nets didn't allow them to reduce spending as much.

However, he also suggests that the EU is in a much worse situation than the US because some countries are really hurting and they have integrated their currency without integrating their labor force. That is, Greeks and Portuguese are less willing and able to move to the countries where the jobs are to even things out while their governments are unable to manipulate their currencies to soften the blow since they are using the Euro. The US economy is stronger overall because it is integrated and we retain our sovereign currency. So people could move south out of Pittsburgh when steel mills closed and we can devalue the dollar to make it cheaper to pay off our debt and improve our balance of trade.

(If Krugman counts as a liberal. He identifies as one but he is a free trader, after all.)

Arent both Portugual and Greece strong emigration countries (at the very least, they used to be) ?

SecondJudith
08-17-2011, 05:38 AM
Micro-nitpick, Ireland is in Northern Europe, the I in PIGS.

I thought Italy must be the I in the PIGS treis meant - I usually see it as PIIGS, Portugal, Ireland, Italy, Greece and Spain.

Rune
08-17-2011, 05:59 AM
Some also use the PIIGGS, to include Great Britain.

Some parts of Europe is doing bad because of decades of public overspending and way too much debt, for too long. A little present the current aging generation leaves for future generations. Thanks geezers. It's trouble only worsened by the current global economic crisis, but that would have come eventually under all circumstances. It’ll take years or possible decades to bring the debt back on a manageable level. For this time growth will be stunted. Money used on servicing debt is money not used on consumption. And people advocating greater deficit spending should ask themselves if they’d want to invest their pension savings in Greek bonds if they were not convinced Germany would back them up. In addition productivity in Spain/Italy is low and the economy is stifled by an inflexible labour market and too much regulation. Spain, like Ireland, also had a building boom and now the regional banks sit with a great deal of bad loans. More debt.

Martin Hyde
08-17-2011, 07:00 AM
One of the things about Germany at least is that during an economic downturn manufacturers do not instantly layoff tons of workers. It is more restrictive there and while people do lose their jobs in a bad economy, it isn't so "hair trigger" a response as it can be in the United States. Further I would argue when German companies do it they do it because they legitimately cannot keep all their workers paid. When American companies lay workers off there is unfortunately some evidence to suggest it is often almost entirely based on maintaining good stock market financials because that is what the CEO's bonuses are based on.

Not to say all American layoffs are invalid and only designed to placate investors to the long term detriment of the company, only that some of them are while in Germany that isn't really an accepted practice.

What this tends to do is as long as global demand eventually picks back up, German manufacturers are going to be very well positioned to fill orders, because they have not decimated their workforce. Notice Volkswagen is now building factories here in the States and has a reasonable chance at becoming the world's largest automaker within the next decade. In part that is because they have the strategic advantage of keeping a trained workforce around through the leaner times so that they have the personnel ready to go to take advantage of recoveries. Ford and GM did not have that to the same degree.

Rune
08-17-2011, 07:09 AM
The more restrictive German labour laws also meant that Germany was riddled with a persistent high unemployment rate in the decade leading up till the current financial crisis (compared to for instance Denmark). And especially a high youth unemployment rate. The labour laws may mean that companies are more reluctant to let people go on a downturn, but it also means that they are more reluctant to hire people in an economic upturn.

Mijin
08-17-2011, 07:37 AM
In some ways Europe is at the other extreme as the US -- overly generous social support, taxes which strangle the economy and restrictive labour laws.
There's no inconsistency in saying america should raise taxes and europe should reduce them (not that I'm saying that myself).

In the case of britain I think public spending (on things like public sector jobs and pensions, not so much social security) is way out of control. Successive governments have failed to stand up to the unions. That's our main problem.

Things like healthcare are getting very expensive now. We still pay much less per patient than the US, but like the US costs are often hidden, so there are few downward pressures on the costs of equipment and pharma.

We also subsidize industries, mainly for political rather than economic reasons. Europe wastes a lot of money subsidizing farmers and it seems unlikely to change for some time.
</rant>

Mijin
08-17-2011, 07:47 AM
We still pay much less per patient than the US

btw For this I was thinking of total costs. I would assume that public spending on healthcare is less in the US.

Great Antibob
08-17-2011, 08:58 AM
Arent both Portugual and Greece strong emigration countries (at the very least, they used to be) ?

Not sure about Portugal or Greece, but "strong" is relative.

In the US, it's not surprising at all to have been born in Hawaii, go to school in Connecticut or Massachusetts, move to Illinois, and finally take a job in DC.

If one state is not doing so well, it's no big problem packing up and moving to a different state. Texas' job "miracle" is more about people moving here than any sort of business-friendly climate.

While there's some labor mobility in some parts of Europe, it's not nearly as common as the US and it's certainly more involved than packing up and driving a few hundred miles.

Marley23
08-17-2011, 09:09 AM
Are you really this lazy?
In the future, please just post the information (or let someone else do it) instead of insulting other posters.

MOIDALIZE
08-17-2011, 09:23 AM
In the future, please just post the information (or let someone else do it) instead of insulting other posters.

Why should I have to post anything? He's the one who posted a half-baked OP that draws conclusions based on what he guesses the data might say. Go look it up first!

XT
08-17-2011, 10:09 AM
Why should I have to post anything? He's the one who posted a half-baked OP that draws conclusions based on what he guesses the data might say. Go look it up first!

I based the OP on the linked article I also posted in the OP. Did you click on the link and read it? Here, let me help:

European leaders call for action as economy hits wall

NEW YORK (CNNMoney) -- The leaders of France and Germany on Tuesday called for more integrated economic policies to help stabilize the euro and restore growth across the European Union.

But the comments disappointed many on Wall Street who were hoping the leaders would announce new plans to contain the sovereign debt crisis roiling global markets.

French President Nicolas Sarkozy and German Chancellor Angela Merkel met in Paris to discuss, among other things, a proposed "golden rule" to require all 17 members of the currency union to commit to balanced budgets.

I mentioned France and Germany because, you know, they were IN THE LINKED ARTICLE:

Germany, the largest economy in Europe, nearly ground to a halt in the quarter. The nation's GDP grew at a quarterly rate of only 0.1%, down from 1.3% in the first quarter.

France, the second largest EU economy, reported last week that its economy did not grow at all in the second quarter.

But I wasn't wanting to focus on just one country in Europe, since the article was about the overall European situation. I was ASKING for information...if I knew the answers, well, I wouldn't have to ask for opinions...I would have, instead, said 'This is the way it is...discuss'. See the difference?

(Also, I have to apologize...I started this OP while I was on the road thinking I'd be home for a week or so, but last night I got called to one of our sites that is totally TU, so I probably won't be posting much for the next few days)

-XT

YogSothoth
08-17-2011, 10:15 AM
So, it's the aggregate that is pulling everyone down?



It would be more accurate to say that there seems to be more weaker countries than economically stronger ones (on account of the entire world being down right nwo), and through ties via the EU, the weaker ones exert more net economic negativity than the stronger ones can exert in the other direction. Not that Germany could go it alone, somebody's gotta buy those Volkswagons and bratwursts.

XT
08-17-2011, 10:22 AM
Are you really this lazy?

I am possibly 5 of the laziest people on this message board...orders of magnitude more lazy that you can probably imagine.

Unemployment is 9.2% in the states vs. 6% for Germany.

which would mean that 'I believe that unemployment is better', right? 6.0 is better than 9.2, last time I checked. ;)

I would be careful about directly comparing GDP growth. Population in the USA is rising, while IIRC it's stagnating or shrinking in much of Europe.

I'm not using any metrics at all. I'm going based on articles such as the one I linked to in the OP showing that Europe, as a whole, is doing poorly. Feel free to use any metrics you like to show that this isn't happening, or is only happening in selected countries while others in the aggregate are bringing everyone else down. My question was why aren't things doing better in Europe, as a whole. There have been many good answers in this thread that addressed the actual question.

I submit that this is a poorly constructed OP. I don't have numbers off the hand, but my impression is that Europe has done substantially better in the recent economic troubles than the USA. Of course, Europe can't really be treated as a whole. The PIGS are doing pretty bad, but Northern Europe seems to be much better off.

It probably was poorly constructed...I should have quoted some from the linked article and done some additional scrounging for additional data. There are tons of articles out there right now decrying how badly Europe, as a whole, is doing right now, and I assumed it was something that everyone was following...and hoping that some of the folks who know more about economics and markets could explain to me why Europe is doing so poorly, overall...really no better or worse (seemingly, to me...could be wrong) than the US, and this despite having all the things that many claim we need in order to get out of the current doldrums.

-XT

Ximenean
08-17-2011, 10:46 AM
I don't see any point in arguing that "this works/doesn't work in Europe, so why should/shouldn't we try it here?" The economies of the various blocs are not directly comparable. Within Europe, there's the EU-countries and the non-EU countries, which include significant economies such as Switzerland and Norway, not to mention Russia, and within the EU there's the eurozone and the non-euro-using countries, which include the UK, Denmark and Sweden.
Some of those blocs and/or countries face similar problems to the US, coming off the back of a credit bubble and banking crisis, but some don't, and others have additional worries, such as the ongoing crisis in the eurozone, which has no obvious solution and could turn very nasty.

treis
08-17-2011, 12:07 PM
It probably was poorly constructed...I should have quoted some from the linked article and done some additional scrounging for additional data. There are tons of articles out there right now decrying how badly Europe, as a whole, is doing right now, and I assumed it was something that everyone was following...and hoping that some of the folks who know more about economics and markets could explain to me why Europe is doing so poorly, overall...really no better or worse (seemingly, to me...could be wrong) than the US, and this despite having all the things that many claim we need in order to get out of the current doldrums.

-XT

I think you need to reread those articles. The concern is about a handful of governments defaulting on debt, and what the repercussions would be for the Euro. That's the concern for Northern Europe. Otherwise, they collectively are doing a lot better than the U.S. during this recession. Somehow, I don't think that fact is going to change your tune.

If you want a brief rundown of the problems in Europe:

Ireland: Housing boom, and their banks were heavily invested, relative to Ireland's GDP, in the type of investments that went bust. The cost of bailing out/nationalizing the banks is staggering. 65 billion Euros or 40% of GDP. That's really what the problem is.

Italy: This is really a N. Italy vs S. Italy thing. N. Italy is well off, and doing fine economically. I can't really speak too much about why there is a gap, but it's been there for over a century. It probably has do with Italy's notoriously ineffective and corrupt government. Realistically though, their debt is high, but still manageable. And, more importantly for this thread, there economy hasn't been doing worse than the USA.

Greece: Total clusterfuck. The Govt lied about the debt and deficit for years. The economy is heavily regulated, and many industries are protected. Tax payments are extremely low, and basically everyone cheats and gets away with it. I could go on, but Greece's problems have nothing to do with large safety net vs. low safety net.

Spain: Boomed with real estate (16% of GDP at one point), and now is busting with real estate.

XT
08-17-2011, 01:39 PM
I think you need to reread those articles. The concern is about a handful of governments defaulting on debt, and what the repercussions would be for the Euro. That's the concern for Northern Europe. Otherwise, they collectively are doing a lot better than the U.S. during this recession. Somehow, I don't think that fact is going to change your tune.

No? Considering that it answers the questions I'm asking, I am puzzled as to why it wouldn't change my 'tune'. Do you have some cites that they are collectively doing better than the US during this recession? If so, then that certainly would go a long way to changing my preconceptions.


Thanks for the thumbnail run down btw...appreciated.

-XT

Asympotically fat
08-17-2011, 01:45 PM
IMO the USA is a failed state, it has one of the lowest soccer stadiums per capita in the World.

treis
08-17-2011, 03:41 PM
No? Considering that it answers the questions I'm asking, I am puzzled as to why it wouldn't change my 'tune'. Do you have some cites that they are collectively doing better than the US during this recession? If so, then that certainly would go a long way to changing my preconceptions.


Thanks for the thumbnail run down btw...appreciated.

-XT


http://www.tradingeconomics.com/united-states/gdp-per-capita
http://www.tradingeconomics.com/germany/gdp-per-capita

As you can see, Germany more or less shrugged off the recent recession. Other northern European countries aren't as good as Germany, but most of them managed to break even or grow a bit.

Martin Hyde
08-19-2011, 08:22 AM
The more restrictive German labour laws also meant that Germany was riddled with a persistent high unemployment rate in the decade leading up till the current financial crisis (compared to for instance Denmark). And especially a high youth unemployment rate. The labour laws may mean that companies are more reluctant to let people go on a downturn, but it also means that they are more reluctant to hire people in an economic upturn.

Oh, absolutely. When government has a strong hand in controlling things like that, it always results in such a situation. Strict rent control regimes almost invariably result in housing shortages, tight labor laws result in fewer jobs and higher institutional unemployment.

I won't argue for it being good or bad, economically I think the higher institutional or "natural" unemployment of a country like Germany is almost proven fact (or as close to it as can be in a field like economics.) There may be valid reasons a society chooses such an outcome, though. As long as that society is willing to provide some level of social services for its unemployed, and as long as the institutional unemployed are a "revolving group of individuals" and not the same group perpetually without work the system won't break down.

I think the Germans were pretty good to start implementing policies that try to insure people who are unemployed try to get jobs, and when they saw that it worked somewhat for them I even saw some articles in which Germans were saying the U.S. should take a cue from them on how to get people off unemployment. What is funny is most of the German changes have been parts of our unemployment system for generations

Martin Hyde
08-19-2011, 08:27 AM
http://www.tradingeconomics.com/united-states/gdp-per-capita
http://www.tradingeconomics.com/germany/gdp-per-capita

As you can see, Germany more or less shrugged off the recent recession. Other northern European countries aren't as good as Germany, but most of them managed to break even or grow a bit.

A recession is typically defined by negative GDP growth, your chart is not as relevant as:

This one (http://www.tradingeconomics.com/germany/gdp-growth)

Germany definitely suffered the recession and had negative GDP growth. But your graph doesn't really accurately reflect that, it almost suggests that Germany did not take a hit to GDP at all during the 2008 global recession--when it in fact did.

Now, in 2005 Germany had an unemployment rate of 12% that was down to 7% by the 2008 recession and then went back up to 9% and has been decreasing since then.

It is definitely accurate to say Germany was better positioned to get through the recession and had a recovery with greater job creation than other countries.

As seen here: link (http://www.tradingeconomics.com/germany/unemployment-rate)