The Day After... Italy.

[Wonkish1]

Well sure, I agree with you. But that's now how your masters in Frankfurt, Berlin and Washington DC see it.

Incorrect! Creditors are demanding cuts. That's it because they can do simple math showing that Italy isn't going to get a 6%+ growth rate to keep up with the interest. And if you don't heed their demands than they bail on you and the situation gets worse. Creditors aren't the masters they were willing to lend their money to Italy to sustain its spending.

Instead while creditors set the number its the Italian government that says where cuts are made. So if they decide to start with things like police than that's their own problem not those in Frankfurt, Berlin, or DC.

[Wonkish1]

Um.. Wonk, he was talking about the fact that most technology is developed by the State and then 'private industry' just makes off with it risk free.

First that is unbelievably stupid. Every single day there are thousands of little innovations occurring in the private sector because by definition anything that you do, create, or change that allows you to be more efficient is an innovation even if its a tiny change in a system(aka way of doing things).

Second, what does "downside risk" have to do with technology? No instead he was referring to bailouts as if to act like TARP is universal throughout all failures in capitalism instead of a very unique situation that almost never happens(and I didn't even agree with). 99.999% of all businesses that fail are allowed to fail without any absorption of the "downside risk" by the American tax payer.

[Wonkish1]

Second, what does "downside risk" have to do with technology? No instead he was referring to bailouts as if to act like TARP is universal throughout all failures in capitalism instead of a very unique situation that almost never happens(and I didn't even agree with). 99.999% of all businesses that fail are allowed to fail without any absorption of the "downside risk" by the American tax payer.

actually this isn't what I was talking about.  the downside risk of r & d is that you won't get anywhere, or at least not far enough to cover the initial investment.

Further demonstration that you have no clue what your talking about. Downside risk has absolutely nothing to do with that.

[Wonkish1]

I never get better at doing anything in life unless I stand to profit from it.

No, but in a competitive environment your forced to because your competition is to. When your not in a competitive environment like in the public sector you can get by doing the same routine barely changing anything for 50 years.

[Wonkish1]

The basic problem is keeping on thinking that the interests on our debt will be at 6% in the long term.
Of course we can't suddenly achieve a 6% GDP growth rate. But,at the same time,the interest rate will go down by quite a bit.

That is just coming from someone that doesn't get this situation at all. Interest rates are r*(risk free rate) + duration + default risk. Now if you can get your default risk down because you are able to grow at a faster rate than the interest since your in debt at 120% of GDP than you may have a shot(but its not going to happen). Otherwise the only way to reduce your default risk is much stronger austerity to cut your deficit by having a large enough primary surplus large enough to cover almost all of the debt service.

If neither of those things happen than the interest rate isn't going to come down a bit they are going to get worse because your default risk is continually higher. There is no way that your interest rate will fall as your country goes from 120% debt to GDP, to 130% debt to GDP, to 140% debt to GDP, etc. If you were creditor how wouldn't you demand more and more interest to continue to roll over that debt. Because each day in that situation the risk continues to get worse.

If Italy can only produce enough austerity to cause a very, very small drop in debt to GDP than than creditors will think that if they kept the budget the same as that the debt to GDP picture will continually get better and they'll cut their interest rate considerably.

[Wonkish1]

First that is unbelievably stupid. Every single day there are thousands of little innovations occurring in the private sector because by definition anything that you do, create, or change that allows you to be more efficient is an innovation even if its a tiny change in a system(aka way of doing things).

And all those little cheap, minor innovations are based on the incredibly expensive basic research and development carried out by the State.  (that's what I was getting at with the 'make off with' comment).

Second, what does "downside risk" have to do with technology?

Um, are you kidding me?  Obviously the risk of investing large amounts in technologies that don't 'pay off'.  This investment risk is borne by the State, not the rip-off corporations (in most cases).

You have no idea what your talking about!

[Wonkish1]

First of all,just like I am not judging you,you should not judge me or my "knowledge" of the situation.
I know perfectly what the interest rate comes from. And I know perfectly that with a bigger debt/GDP ratio would come a higher rate.
What I was saying is that,given the current situation AND the austerity plan that's gonna be put in place,that 6,5% rate does not reflect our actual situation.
Is our debt that much worse than France's to justify such a big difference in interest rates? No.
The actual rate is at 6% because of the "default risk",but that is NOT an objective factor. The rate was going up because people feared we would not pay back,and so our situation worsened and so did the fears,and so on.
Am I saying we don't need reforms? Not at all. We wasted the last 3 years because of Berlusconi saying that "our economy was great",and got stuck in the actual situation. Now,instead, we're even amending the Constitution so that it includes a balanced budget...

What I am saying basically is: the rate kept going up because people didn't believe the old gov't would put in place the reforms needed to improve our debt/GDP ratio. It did not reflect the situation of the economy in that moment,but was rather a bet on its future.
Now there is going to be a new gov't,new majority,reforms,austerity,everything you want...and so there is no reason to believe that we will just slowly slide towards default,and so the default risk should not be as high.

You made a statement that the interest rate would go down in the future(you never said anything about it doing so because of austerity). Also you have decried some of the austerity already taking place. So it looked like you were saying that the interest rate would just magically go down on its own without very large changes in the budget. That is false. If you didn't mean that fine. But if you did than I would be right in saying you don't understand the situation.

Of course after strong austerity 6%+ will no longer be the interest rate. That is why I'm advocating strong austerity.

Actually there is a huge difference between your country and France. Italy is in 120% of GDP in debt and France is about 85% of GDP in debt. Actually, a lot of their interest rate increases over the last year has had more to do with situation in the rest of the Eurozone (including your country) dragging them down because of the impact an Italian default(for example) would have on their economy and their banking system.

There are 2 parts to the equation. The first is the fundamental debt picture in Italy which is very ugly. And the second is the confidence creditors have in the government to implement the necessary austerity to right that fundamental picture. It has nothing to do with the confidence in the leadership to 'pay' while the fundamental picture deteriorates(if that is what you sold creditors they would start demanding 20% interest rates... instead they wanted Berlusconi gone because they didn't think he could push through the tough austerity). If you think that Mario Monti will be easily able to cut government expenditure by more than 20% so Italy can fix its fundamental picture I've got some swampland to sell you. Who knows maybe he can pull something like that off, but it certainly isn't going to be easy and the public will be squealing like you wouldn't believe as he single handedly saves your country from the cliff. A cliff that much of your public doesn't even realize how bad it is or they wouldn't be freaking out after every single cut.

The balanced budget amendment is a good thing, but the result of that is going to be very, very tough austerity get ready for it.

Everything in your last paragraph is correct! But don't think that it will be easy, and don't think you wont be ticked by more austerity measures far more difficult than police officers paying for their gas out of their own pocket.

[Wonkish1]

turns out I didn't use the preferred neoliberal term -- should still be elementary to discern what I'm talking about.

"neoliberal term" please you just don't have a clue as to what your saying. Its like watching an episode of Its Always Sunny with Charlie throwing out words like "filibuster" at random points of a conversation.

And I don't think anybody could have figured out what you meant because "downside risk" has nothing to do with "public r&d expenditure". First "downside risk" isn't government spending. Assuming a future bailout it can only mean possible future spending so it takes place later not before. Government expenditure in R&D happens before implementation. It is spending. It isn't risk. And it doesn't result in any future spending once the project is complete.

Your just absolutely clueless and you seem intent on digging yourself deeper in a hole.

[Wonkish1]

Here's a piece of an article of the FT that explains in a clearer way what I meant:
"Consider the example of Italy: the net public debt is 120 per cent of gross domestic product;
average maturity is seven years; and the fiscal deficit is 4 per cent of GDP. So its
government needs to raise a fifth of GDP each year. Every creditor knows this. Suppose
creditors feared that the government might be unable to borrow such vast sums. Could Italy
survive by slashing spending? No. If the country tried to redeem its debt out of revenue, it
would need to slash spending by far more than a fifth of GDP, overnight, since the very
attempt would tip the country into a depression. No sane creditor imagines that a country
could roll over its debt in this situation.
Government debt markets are lifted by their own bootstraps: the willingness to lend
depends on the perceived willingness of others to do so, now and in future. Such markets
are exposed to self-fulfilling runs and so need a credible buyer of last resort: the central
bank. The UK has one. Your members do not. In effect, they borrow in foreign currency."

The Financial Times is f**king clueless. Printing money has never gotten any country out of a sovereign debt crisis when their debt is over 100% of GDP. Creditors just end up demanding more interest because of the inflation. And god forbid you print enough to substantially reduce the total debt to less than 70% of GDP than you would have been better to just default because the rampant hyper inflation does more damage to your economy over the long term than the default could.

If you were to believe that the FT's analysis that sizable austerity would bring on a Depression than you might as well just default. Its the simplest point between A to B as you can get and while your economy goes to $hit overnight at least you'll have some strong growth prospects for the future and wont be burdened by debt as much. Of course than your banking sector, and your public and private pensions blow up, but then you'll be forced into either letting them fail or bailing them out at the expense of lets say 1/4 of  social security payments because nobody will lend to you then.

Painful spending cuts doesn't bring on a depression, FT is full of $hit! Trade has to almost shut down for a depression to occur. A complete collapse of the money supply can almost shut down trade by cutting off the amount of available money to trade with. Extremely high tax rates can almost shut down (non black market) trade by removing any profitability in engaging in it. Painful spending cuts doesn't even come close to shutting down trade because people not dependent on taxpayer money still have excess money to spend and companies can still sell to those people plus sell outside of the country.

[Wonkish1]

do you think class action lawyers are production?

LOL, I was a little disappointed he didn't continue the conversation because nobody got to see where I was going with that.

Our GDP data classifies class action lawyers as production. Its interesting because all they do is engage in the business of transferring money from one party to another. Since this is an industry than so is anything the government does in transferring money from one party to another(even if that industry wouldn't exist outside of government). That means that everything the government is doing falls under the standard poli sci definition of "production and distribution of capital" within the poli sci definition of socialism(the one Polnut posted and Siboleth agreed with).

Based on what I just posted the public sector is ~40% of the economy so the economy is 40% socialist in nature(using Polnut's definition). Does that make the US socialist? How about when its at 50%? Or 60%? etc. At what point does the government control enough means of production to define the country as a socialist nation? That is why you have to get into a discussion about the % of GDP because all government spending is the government controlling the means of *that* production.


Tweed I don't expect you understand this because of how lost you are already, but hopefully you understand why the class action lawyer question was very pertinent to the discussion.

[Wonkish1]

you again show that you have no idea what socialism is.  you can try to hide behind the (Polnut's definition) disclaimer but you offered this idea of sectoral, proportional definition in the first place.  the British nationalizations of the 40s can be understood as defeats for socialism because they did nothing to expand worker control over production, always understood to be the core of any meaningful definition of socialism before the bourgeois and Leninist propagandists took over in the 1910s and 1920s.  a public sector workplace that remains hierarchical and totalitarian in nature has no more relation to socialism than a sweatshop.

Well now who ^^^ is changing the definition from the standard accepted poli sci definition of socialism?

My proportional definition grew out of the definition Polnut posted. It has to when you realize that public spending is "production and distribution of capital".


Who f**king cares anyway? Pick whatever definition you want out of a hat. It doesn't change the fact that in real world issues like what we are talking about today in regards to efficiency, technology, innovation, markets, the Eurozone, etc. you are bumbling idiot.

[Wonkish1]

I'm not an idiot, I'm just not self-circumscribed within the limits of discussion set by elite circles.  granted this will limit my career prospects if I don't give it up; but that's fine, and I have no intention of doing so.  nearly all of your Serious discussion have absolutely no meaning to the majority of the people on the planet, because it isn't intended to care about them.  I don't necessarily care about them either, but I get a high out of it, and I find them on the whole far more interesting.

LOL, "limits of discussion set by elite circles" again your absolutely clueless. Things like interest rates, growth, efficiency, budgets, etc. aren't topics picked because they are "limits of the elite". They are picked because they are reality! They may not have meaning to most people, but they have huge consequence to most people(and some people here actually care about helping people in reality not in theory).

You seem intent on having a theoretical discussion. Well when you want to produce positive change for people there are 2 things you need. 1 is idealism(which you clearly have a lot of) and 2 is an understanding of reality(which you have none of). Where they can meet together  you may just be able to do something about it and actually impact peoples lives in a positive way(instead of spending your days dreaming about an unrealistic utopia with more holes than a sponge). Sure I would love it if wealth and supply were infinite and the government could give everybody everything they wanted so we all could go "trala la la la through candy land", but in the real world you actually have to spend time learning about these "limits of discussion" that actually focus on how to grow wealth and supply so that people can have more of what they want and so that you can actually make progress on the idealistic goals you care about.

[Wonkish1]

I'm not an idiot, I'm just not self-circumscribed within the limits of discussion set by elite circles.  granted this will limit my career prospects if I don't give it up; but that's fine, and I have no intention of doing so.  nearly all of your Serious discussion have absolutely no meaning to the majority of the people on the planet, because it isn't intended to care about them.  I don't necessarily care about them either, but I get a high out of it, and I find them on the whole far more interesting.

This just shows you have no clue!

LOL, "limits of discussion set by elite circles" again your absolutely clueless. Things like interest rates, growth, efficiency, budgets, etc. aren't topics picked because they are "limits of the elite". They are picked because they are reality! They may not have meaning to most people, but they have huge consequence to most people(and some people here actually care about helping people in reality not in theory).

they're 'picked' because they're the issues that govern the affairs of relations between elite groups.  while they of course have tangential effects on large amounts of people, this is immaterial, as there is no avenue for the people to have an impact on interest rates, the Eurozone crisis, etc.  no avenue except to resist, which is exceedingly dangerous when taken to its limits, and after working 70 hours a week in dead end jobs they're unlikely to have the time or energy to form any opinion at all.

[Wonkish1]

I didn't say they don't matter to people, I said 1) they're not designed with the general population in mind, and 2) there is no way for the general population to impact economic policy while remaining within the system, so it may as well not.


I'm obviously not 'sticking it to the man' by posting on a message board, but plan to in the future, by defending terrorists, murderers, etc for a living.  maybe something else, who knows.

They aren't "designed" they are mathematics. What your essentially saying is that you refuse to believe that 2+2=4 is beneficial for society and so wouldn't it be so much more awesome if 2+2=5. The only difference is with an economy this math spans a lot more areas and is more complicated. I mean you apparently have no desire to have a clue as to what is reality in the world and instead just want continue to say that you believe in economic unicorns.

[Wonkish1]

I didn't say they don't matter to people, I said 1) they're not designed with the general population in mind, and 2) there is no way for the general population to impact economic policy while remaining within the system, so it may as well not.


I'm obviously not 'sticking it to the man' by posting on a message board, but plan to in the future, by defending terrorists, murderers, etc for a living.  maybe something else, who knows.

They aren't "designed" they are mathematics. What your essentially saying is that you refuse to believe that 2+2=4 is beneficial for society and so wouldn't it be so much more awesome if 2+2=5. The only difference is with an economy this math spans a lot more areas and is more complicated. I mean you apparently have no desire to have a clue as to what is reality in the world and instead just want continue to say that you believe in economic unicorns.

"...'pure' economic theory, that is economic theory which abstracts from a specific social structure, is impossible.  It would be similar to 'pure' anatomy, abstracted from the specific species which is to be examined."  -Ernest Mandel, 1976

the 'objective' economic logic is, of course, a battlefield of its own.

Well first of all your not even arguing with economic practice, but instead with economic measurements calling them "limits of the elite". Even if you wanted to (rather stupidly) argue that you somehow possessed more understanding of the issues to be a better decider of economic policy you wouldn't be able to change the objective realities existing in the world. The current interest rate on a 10 year Italian bond is an objective reality, the current total budget is an objective reality, the total GDP in any country is an objective reality, efficiency is an objective reality, etc. you can't change those things by just willing them to be different. The only thing you can do is change policy that impacts those things.

But since you can't even tell the difference between objective economic metrics and economic theory I don't doubt anybody should take you posting that quote seriously because you don't even understand what he meant.

[Wonkish1]

you're familiar with Ernest Mandel?

Yes he was a Marxist!

Which by the way its particularly odd that you would quote a man who's economic school of thought has been thrown in the ash heap of history. Its funny though that I doubt you could even grasp the arguments made by famous Marxist economists.

And its quite telling as to how "out there" you exactly are.

[Wonkish1]

there has actually been a large-scale academic revival of Marxism since the fall of the USSR.

I wouldn't call it "academic" and instead call it wishful thinking by clueless idiots.