US Trails Socialist Giants!

And since YOU think Der Speigal is a reliable source:

"A Keynesian Success Story
Germany's New Economic Miracle

During the worst of the global financial meltdown, Berlin pumped tens of billions of euros into the economy and spent hundreds of billions propping up German banks. Now, the country is reaping the benefits as Germany is once again Europe's economic motor...."

http://www.spiegel.de/international/business/0,1518,707231,00.html

Germany is benefiting from exports to China. I see nothing in that article to change that view.

"I see nothing in that article to change that view."

Not, you know, the HEADLINE?

"A Keynesian Success Story "?

Not

"In keeping with Keynes' theory, the former grand coalition government of the center-right Christian Democrats (CDU) and the center-left Social Democrats (SPD) launched an extensive package of stimulus and bailout measures, which included €480 billion for ailing banks, €115 billion for financially weakened companies and €80 billion for two programs to stimulate the domestic economy."?

not

"Public spending, in the form of economic stimulus programs, kept the economy afloat," says economist Peter Bofinger, a member of the German Council of Economic Experts"?

not

"In addition to benefiting the labor market, the German economic stimulus program also boosted consumer spending"?

That is just from page 1. Clearly, you did not read it, or want to actually believe what the article said. But you said Der Spiegal was a legitimate source, not me.

whoops...rent stabilizer not reading?

here comes the tube!

Germany benefited from exports to China. I don't see this as domestic demand from stimulus.

thats twice you've said this. perhaps three times?

Can someone, Anyone please touch me? My husband knows that "thousands of people have touched [me]". But no one today.

Nothing in jason's article gives factual support to the claims made, or contradicts riversider.

From e21: First, one must acknowledge that stimulus in the U.S. provided a large boost to the economies of major exporters to the U.S. In June, the U.S. trade deficit increased by nearly 15% to $62 billion. An increase in the budget deficit to fund stimulus results in an increase in the trade deficit, and the trade deficit subtracts from GDP. As economist John Cochrane puts it, belief in the efficacy of government expenditure as economic stimulus requires a world where “people make plans to consume more, invest more, and pay more taxes with the same income (emphasis added).” The “same income” point is significant because an increase in consumption for a given amount of national income naturally results in a larger trade deficit. The increase in aggregate consumption not only increases spending on imports, but also increases domestic spending on goods and services that would have otherwise been exported (see Tony Makin’s chapter).

Although no breakdown is yet available, most analysts anticipate that a major driver of the German economic expansion was an increase in net exports. Part of this is due to the decline in the value of the euro, which made German-produced goods less expensive, but some of it is directly attributable to stimulus spending in the U.S. and China. When a hypercompetitive, high-end manufacturing base like Germany sees major trading partners increase government expenditure, the optimal policy response is to do nothing. Some of the increase in external demand will translate to increased exports, providing a boost to the domestic economy without a penny of additional borrowing.

To the extent the Obama Administration comments on the strength of the German economy, it is likely to cast Germany as an obdurate free-rider that takes advantage of the U.S. stimulus and thwarts necessary “global rebalancing.” As Treasury Secretary Geithner has emphasized, a major objective of U.S. economic policy is to end the trade patterns of the past decade so “one country, or group of countries, does not consume in excess while another set of countries produces in excess.” Germany is likely to be viewed as undermining this effort by failing to boost its domestic demand through additional government stimulus.

While the Obama Administration’s critique is reasonable from a raw arithmetic standpoint, blaming Germany’s robust growth on its failure to stimulate domestic consumption rings hollow. As the International Monetary Fund (IMF) explains in its 2010 review of the German economy, “Germany’s strong export orientation stems from the openness of its economy, its long-standing manufacturing traditions and its competitiveness in global markets.” After enduring nearly a decade of slow growth and low inflation, Germany has disinflated its way to an extremely competitive position thanks to painful labor market reforms. The cost of one hour of labor in Germany is now extremely low relative to the economic value added in that hour. Better coordination of public expenditures is not going to erase Germany’s huge competitive advantage in high-end manufacturing.

The German emphasis on competitiveness and the Obama Administration’s obsession with demand management captures well why these economies are moving at such discrepant speeds. The Obama Administration proposes significant tax increases on consumers and small business owners (most small business income is reported by taxpayers in the top two personal income tax brackets that are set to rise substantially in 2011), but is willing to spare no expense to prevent any contraction of state and local payrolls. Rather than focusing on public support for consumption expenditure, the Obama Administration should be more concerned about U.S. competitiveness and productivity. . . .

It has been distressing to watch analysts blame the lackluster recovery in the U.S. on an insufficiently large stimulus. Both historical and contemporaneous data suggest that the problem may just be the broader concept of a debt-financed stimulus. The German GDP growth rate is an important reminder to U.S. policymakers that a dynamic system as complex as the U.S. economy cannot be reduced to simple algebraic equations that suggest the road to economic growth is paved through increasing amounts of public expenditure.

http://www.economics21.org/commentary/lessons-german-economic-recovery

Well the first stimulus went to municipalities to subsidize budgets, extend unemployment benefits, health insurance food stamps...wait that doesn't sound like stimulus at all? No wonder unemployment didn't fall to 8% like Obama said it would.

I don't know about you, but I thought stimulus meant building roads, bridges, schools an improved energy grid. The first stimulus was a lie, no wonder nobody trusts the government with a second act. How does increasing unemployment benefits reduce unemployment?

idiot.

what do people do with unemployment benefits?

hmmn....they spend it.

where does that money go?

idiot.

.
Under that theory the Obama could have just left the money on the front lawn of the white house.

its not a theory, you idiot.

where does the money go?

cc is clueless. That money going to the unemployed is coming from someplace. Instead of people investing in businesses either directly or through bank savings, they buy Treasuries so the government directs the money to unemployment insurance. No added economic production has occurred. At least if you build roads, bridges, etc., if done correctly and not for bridges to nowhere, you create infrastructure for future economic growth. But Obama didn't care about that. He just wanted to funnel billions to unions.

you are as stupid as your friend. we're not talking about where it comes from -- we're discussing whether or not unemployment benefits stimulate the economy and contribute to other people keeping their jobs.

so, to repeat. where does the money go? that's the question.

CC, your grasp of Economics is truly impressive..
Companies do not increase their pay-rolls as a result of government increases in unemployment benefits.
Transfer and entitlements do nothing to increase GDP. Once the money is spent the effect is over. And
the receiver's of these benefits are not getting jobs which is what they really need.

If we had decided to spend it on NASA, High speed trains build new bridges or a new power grid, engineers, bids would have gone out, companies would have received contracts, new technological advances produced, engineers and construction workers would have hire and the rest of the economy would have benefited from improvements in our infrastructure.

But I guess it's better for the money to go to Budweiser and the Hostess Snack Company(just being a little pejorative) and give people the false illusion of a few months of security, rather than get them rehired.

you still haven't answered the question.

what happens to the money that is received for unemployment benefits?

where does it go?

perhaps your idiot friend would like to weigh in here.

hey idiot friend, where does the money go?

So LICC, RS - last bastions of the Robber Baron bands - where's your evidence of the effectiveness of neoclassical economics, as it's been rejected by approximately 90% of the world's economists?

Something like the Lost Bush Years, no real growth from 1999 to 2009? The policies you expound always have and always will lead to boom and bust cycles. Again, read the economic history of the 19th century.

But then of course, you won't. You're happy to read the comics and get all your best ideas from Little Orphan Annie.

Who has no eyes.

so...the geniuses have gone silent?

90% of the world's economists got us into this mess and didn't see it coming...

Try to stay on topic.

Where does the unemployment money go?

To the unemployed, but not to those like my husband who don't try to work after a failed career at Dean Witter Reynolds Discover Card.

http://www.chandlerswatch.com/wp-content/uploads/2009/03/9-11-1.bmp

islam... the religion of peace....

RS, I 100% agree that the government should have invested more in infrastructure projects just like China, but I think NASA can wait. However, I do believe NASA should continue to be funded for the benefits noted, but I don't agree with increasing its funding at this economic environment.

I think CC is trying to point out that unemployment benefits are usually spent right away. Even if some of it went to "Budweiser and the Hostess Snack Company", it keeps these companies and those up and down the food chain from having to cut more people. Additionally, I think that "false illusion of a few months of security" is very important, especially when there are children in the household.

Sunday, I understand that argument. It is made by every supporter of the last stimulus go-around. The effect is temporary at best is no different than leaving the money on the white house lawn, and provides little if any long term positive impact to the economy, but does leave the tax-payer with the debt.

The question is do both forms of "stimulus" have the same multiplier effect. Will the person who gets a job spend the same as someone receiving an extra weeks of unemployment insurance and does two years of unemployment insurance encourage or discourage the regaining of employment?

My point about NASA technologies resulted in improvements in computer systems, aerospace systems, medicine, improvements in the uniforms and gear of fire fighters, velcro, flat screens, joysticks(which have applications beyond games) and a host of other technologies.

Plus if we want to keep up or stay ahead of the Chinese, Europeans, Japanese, Indians, etc it's something we must do.

Can we change the topic to the supposed most pure form of communism on the globe, red China? Manufacturing jobs from capitalist countries get outsourced to China because of cheap labor. All information points to horrific working conditions, appalling exploitation of humanity for the sake of cheap manufactured goods. My point? I have none. Neither does anyone else in their Holy War pounding on bibles and shrieking "capitalism!" "socialism!" as though it's a struggle between the forces of darkness and light.

RS, are you seriously against funding extended unemployment benefits? Some of the people who lost their jobs will never be able to get the same type of jobs back. They will need to be retrained. The unemployment checks buy them that time to retrain. The government doesn't have to choose between unemployment benefits and infrastructure projects. They can and should do both. Of course infrastructure projects will have larger, longer impact, which is why I agree is something they should do. However, you made it sound like extending unemployment benefit is a waste of money; that I strongly disagree.

As for NASA, I agree 100% on its benefit to the country and humankind. Again, keep current funding and increase it when the economy is in better shape.

http://www.september11news.com/CNNAPLibertySkyline.jpg

Sunday, I seriously doubt unemployment checks have resulted in any meaningful job retraining. If that was the objective suspension of the pay-roll tax or other inducements toward employers for hiring and training would have been money better spent. Two years of unemployment is a long time. An I'm not sure we can do both. Since Obama became president(our national debt has exploded.. and yes I agree he inherited a terrible economy) a good president is a good chief executive who can allocate resources wisely and efficiently. Doing everything is not a choice.

juliag, is that real?

Infrastructure, infrastructure, infrastructure..... does anyone remember that having been a mantra of Clinton's FIRST Presidential campaign?

I am still waiting to see public works projects. In their favor, let me say: (a) people feel better about their lives when they are physically making something - when it's finished they can point to a bridge or a tower and say to their granddaughter, "I helped build that." (b) Construction work cannot be outsourced. (c) We use infrastructure whether we work to create it or not.

http://www.september11news.com/WTCPhotoSequenceReuters.jpg

Just cut taxes and get the govt the hell out of the way. No more govt spending period. Down size the govt.

Reagan did infrastructure, too: rebuilt the roads. Baltimore thanks him for a new Harbor Tunnel and ring road.

So do I.

yes, steve, there are many huge infrastructure projects even now
I see nothing wrong with them
I'm not always understanding whether they are a result of a federal policy initiative, with the funding trickling slowly down to reality, like the Charlotte Street ranch houses in the Bronx, which went up long after all the photo-ops, or whether these huge building projects we see are another byproduct of cheap loans

I'd like to see a completed Second Avenue subway (100 years in the making so far), a reconstructed Third Avenue local in the Bronx, and much more.

I think everyone acknowledges the benefits of infrastructure, but as lowery's post alludes to they take planning and require more oversight. Far easier for politicians in an panic-election mode to just "throw money" at a problem.

Problem not solved? Easy! Throw more money at it!

just to be clear.

your plan is to raise interest rates and cut government spending?

and lower taxes?

What is we raise rates, cut government spending and cut taxes?

http://www.economist.com/node/17039151?story_id=17039151

Indeed, the main centre-right party, the Moderates, could oust the Social Democrats as Sweden’s biggest single party—for the first time since the 1930s. The centre-right’s success has not only undermined the view, widely held outside Sweden, that the place is a social-democratic paradise; it has also chipped away at a social model that foreigners find enviable but Swedes find expensive.

steve, never mind the Economist article- just stick to your delusional fantasyland about the utopia of Sweden.