CHARTS: How U.S. Stimulus Bested U.K. Austerity

[gator996]

Since 2010 there has been no question which economic path has been better...


Britan has announces extended austerity until 2018...
http://thinkprogress.org/economy/201...rity-policies/


Europe teters on triple dip recession
http://www.marketplace.org/topics/wo...ture-uncertain


Japan joins the QE Bandwagon...
http://www.usnews.com/news/articles/...t-will-it-work




http://thinkprogress.org/economy/201...-uk-austerity/

CHARTS: How U.S. Stimulus Bested U.K. Austerity

"As ThinkProgress has explained, the U.S. has rebounded from the 2008 financial crisis quicker than Europe, in part because it embraced stimulus measures, while several Eurozone countries have implemented (or been pushed into) austerity. One of those countries is the UK, where growth has essentially flat-lined.

According to new data from economists Moritz Schularick and Alan Taylor, the U.S. has done better than should have been expected, considering the nature of the Great Recession. The same can’t be said for the UK:


The pink range indicates the expected recovery path. As we noted in our original column, the US exceeds expectations here. The US growth path manages to emerge from and stay above the predicted range by years 3-4-5 (i.e. 2010–12). In contrast, the UK path is disappointing, and can’t really be called a recovery yet.

Even using the maximal measure of excess credit based on bank and shadow bank data to bias the forecast path down as far possible, it is still not possible to account for the UK’s dismal performance. The UK was on a similar path to the US in years 1-2 (2008–09), but falls well behind the US in years 3-4 (2010–2011), only to drop below the forecast range in year 5 (2012)."

[oragator1]

I have said for a few years that we took the right path because cutting into a recession becomes self defeating in the short term. This makes that point.
But the fair question, and one we can't answer for another few years yet, is this:
Who will be better off long term? Will the UK's austerity sacrifice short term pain for long term gain through systemic change, will we still be anemic over the medium term because of the debt we have incurred and still have to face? Who is truly better off in 5 or 10 years from the event (2-7 years from now)?

[gator996]

The UK's pain is hardly short term...

They've announced the need for austerity through 2018...
They started in 2010.

At least 8 years of misery worst than the US has experienced and a triple dip recession?

What would the anxiety level be in this country now if Obama had chosen that path?

The arguments for cutting spending by itself have been proven wrong, as the rest of the world has learned...

Cutting spending, along with stimulus, and tax reform are how you solve the economic problem.

Those that have argued for cutting spending "can't see the forest for the trees..."

[Burke]

Our current "prosperity" is a Fed created illusion. When the massive money printing stops, as it must eventually one way or another, all hell will break loose. And subsidizing failing businesses just puts off the inevitable and makes the pain far worse in the end.

Central banks all over the world are buying gold and demanding that their gold being held elsewhere be returned to them. The burning question among many investors is which will collapse first, the bond market or the dollar.

Anyone who thinks the looting of the country that has been going on since the final months of the Bush term has brought us prosperity is in for a well-deserved shock.

To put it mildly.

[surfn1080]

So we have a pile of stimulus debt to reach 7.8% unemployment and we are celebrating it? Another factor to look at is who will benafit more in the long run. They cut spending already and just need to global market to turn around. We still have to figure out how to stop spending so damn much.

[gator996]

Originally Posted by surfn1080

So we have a pile of stimulus debt to reach 7.8% unemployment and we are celebrating it? Another factor to look at is who will benafit more in the long run. They cut spending already and just need to global market to turn around. We still have to figure out how to stop spending so damn much.

Congratulations you epitomize the problem in this country...

Yes, they chose to simply cut spending and they're slipping into a triple dip recession.
Now they're scrambling to follow Obama's lead...some cuts along with stimulus...

Stimulus, spending cuts, & monetary policy has kept you out of a triple dip recession.

[orangeblueorangeblue]

Keynesian policy is almost undeniably effective. But we've never really enjoyed it. It's supposed to a shot in the arm, paid for by past (or at worst) future relative austerity during times of stability.

So ... we're not doing it right.

[surfn1080]

Originally Posted by gator996

Congratulations you epitomize the problem in this country...

Yes, they chose to simply cut spending and they're slipping into a triple dip recession.
Now they're scrambling to follow Obama's lead...some cuts along with stimulus...

Stimulus, spending cuts, & monetary policy has kept you out of a triple dip recession.

You don't think we are heading in a similar direction?? Don't be fooled by recent stock market activity. You really don't understand the effect QE by the Feds is having. I am not even talking about inflation. It hopefully won't be as bad as 2007-2010 but many investors or bunking down and I'd say wait for the hit in q3 of this year.

Our market is so fragile that when we received just the slightest on decent news from the euro zone last week, our stocks went up and mortgage rates went up as well. Imagine once the euro zone drops again.... Oh by the way we seem to be following the policies that got these euro countries into this mess.....

[mastoidbone]

missing key data points--
what is deficit each year as a percent of GDP?
What is historic delta in GDP growth between the 2 nations.

By that--if UK is growing at 0.2 and has a deficit of 5% GDP
while US grows at 2.2% but has a deficit of 9.3 %----who is REALLY better off????
If you are a short timer---USA_---but if your window is >5 years---and it should be----the UK.
Because one is on a path to sustainability and one is on a path to economic shock---the US.

[g8trjax]

Originally Posted by Burke

Our current "prosperity" is a Fed created illusion. When the massive money printing stops, as it must eventually one way or another, all hell will break loose. And subsidizing failing businesses just puts off the inevitable and makes the pain far worse in the end.

Central banks all over the world are buying gold and demanding that their gold being held elsewhere be returned to them. The burning question among many investors is which will collapse first, the bond market or the dollar.

Anyone who thinks the looting of the country that has been going on since the final months of the Bush term has brought us prosperity is in for a well-deserved shock.

To put it mildly.

You are wasting your keystrokes. The OA has it's priorities set. Gun grabs and illegal immigrant, get out the vote campaigns. Kind of makes you all warm and fuzzy inside.

[G8trGr8t]

Originally Posted by gator996

Congratulations you epitomize the problem in this country...

Yes, they chose to simply cut spending and they're slipping into a triple dip recession.
Now they're scrambling to follow Obama's lead...some cuts along with stimulus...

Stimulus, spending cuts, & monetary policy has kept you out of a triple dip recession.

And put future generations under a tremendous burden. Check back in 20 years to see which plan produced best long term results

[The_Ultimate_Gator]

Originally Posted by mastoidbone

missing key data points--
what is deficit each year as a percent of GDP?
What is historic delta in GDP growth between the 2 nations.

By that--if UK is growing at 0.2 and has a deficit of 5% GDP
while US grows at 2.2% but has a deficit of 9.3 %----who is REALLY better off????
If you are a short timer---USA_---but if your window is >5 years---and it should be----the UK.
Because one is on a path to sustainability and one is on a path to economic shock---the US.

This guy gets it.

[Burke]

If you understand that all the bailouts, spending, taxation, and money printing schemes are nothing but wealth redistribution from productive people to unproductive people, you should be able to see clearly what we are in for.

They may just as well have repealed the laws against robbery, theft, and fraud and called it an economic program.

Instead of the "investment" BS we hear from Obama.

The fact is that we are addicted to spending. When it stops, we are going to crash.

Badly.

The only reason it hasn't happened already is that there is more here to steal to postpone it. But when it runs out . . . .

It's going to get very ugly.

"Austerity" here may likely be a police state.

[gatorev12]

Originally Posted by mastoidbone

missing key data points--
what is deficit each year as a percent of GDP?
What is historic delta in GDP growth between the 2 nations.

By that--if UK is growing at 0.2 and has a deficit of 5% GDP
while US grows at 2.2% but has a deficit of 9.3 %----who is REALLY better off????
If you are a short timer---USA_---but if your window is >5 years---and it should be----the UK.
Because one is on a path to sustainability and one is on a path to economic shock---the US.

It's refreshing to have someone on this board who "gets" economics.

Well-said.

[surfn1080]

unfortunately the "crap" will hit the fan. Q3 of this year will probably start to show that.

[MichiGator2002]

This entire argument is sort of similar to the one FSU fans were making back when Spurrier left and UF's program appeared to be in deep crap for the next four seasons. The "stimulated" Bowden's career longevity. Point of metaphor is this -- the pain is a given, it is a fait accompli. Austerity is taking the hit on your own terms. Stimulus and pie on the sky Keynesian dreams are a vote to enjoy the time you have.

[gatorpa]

Originally Posted by Burke

Our current "prosperity" is a Fed created illusion. When the massive money printing stops, as it must eventually one way or another, all hell will break loose. And subsidizing failing businesses just puts off the inevitable and makes the pain far worse in the end.

Central banks all over the world are buying gold and demanding that their gold being held elsewhere be returned to them. The burning question among many investors is which will collapse first, the bond market or the dollar.

Anyone who thinks the looting of the country that has been going on since the final months of the Bush term has brought us prosperity is in for a well-deserved shock.

To put it mildly.

^THIS^ and, for those that "can't see the forest", I can only say there is a giant sinkhole under the entire forest, it's called 80Trillion in liabilites that will never be paid for.

We cry about "wealth disparity" yet who does inflation hit the hardest? Please don't respond with "inflation is low". That's crap, look at the cost of food, energy, ins(not ever Health) over the last 10 yrs.

Better have a plan B because you very well may need it.

[JerseyGator01]

All this thread shows is that politicians shouldn't be in the business of reviving economies since most politicians have never run real businesses in their lives.

[oragator1]

Originally Posted by gator996

The UK's pain is hardly short term...

They've announced the need for austerity through 2018...
They started in 2010.

At least 8 years of misery worst than the US has experienced and a triple dip recession?

What would the anxiety level be in this country now if Obama had chosen that path?

The arguments for cutting spending by itself have been proven wrong, as the rest of the world has learned...

Cutting spending, along with stimulus, and tax reform are how you solve the economic problem.

Those that have argued for cutting spending "can't see the forest for the trees..."

Once your house is in order austerity is the new normal, and private use of funds is almost always more efficient than public use. The US had arguably the most successful economic period in our history during a time when we were paying down our debt (the '50s).
Again, I am not saying you (and me because I supported this path as well) won't be proven correct, only that it's too early to know.