Mahilena's Debunking Libertarianism/Conservatism ...

Blind faith in Free Markets caused the ECONOMIC CRISIS - The Financial Crisis Inquiry Report

Blind faith in Free Markets caused the ECONOMIC CRISIS 

and the REPUBLICAN conservative ECONOMY WE ARE CURRENTLY FACING 

 

The Financial Crisis Inquiry Report

 

The financial Crisis Inquiry Report 

only shows and demonstrates the failure of capitalism and deregulation or laxed regulation

caused the mortgage crisis led by the greatest AynRand disciple Alan Greenspan who thought 

"due to the widely accepted faith in the selfcorrecting nature of the markets and the 

 

ability of inancial institutions to effectively

police themselves." - the invisible hand of capitalism

 

 

CONSERVATIVE FREE MARKET ORIENTED LIBERTARIAN GOVERNING ALLOWING CAPITALISM TO REIGN CAUSED THE CRISIS 

In other words Free Market Capitalism with Conservative GOP policies are the right mix for FAILURE

 

The report says, 

 

"While the vulnerabilities that created the potential for crisis were years in the making, it was the collapse of the housing bubble—fueled by

low interest rates, easy and available credit, scant regulation, and toxic mortgages

Trillions of dollars in risky mortgages had become embedded

throughout the financial system, as mortgage-related securities were packaged,

repackaged, and sold to investors around the world. The losses were magnified by derivatives

such as synthetic securities."

 

"The crisis reached seismic proportions in September  with the failure of

Lehman Brothers and the impending collapse of the insurance giant American International Group (AIG). Panic fanned by a lack of transparency of the balance sheets of major inancial institutions, coupled with a tangle of interconnections among institutions

perceived to be “too big to fail,” caused the credit markets to seize up. Trading ground

to a halt. The stock market plummeted. The economy plunged into a deep recession" - 

The big Capitalists!!!

 

"Financial markets have become increasingly globalized." BY REAGANOMICS "Technology has transformed

the eiciency, speed, and complexity of inancial instruments and transactions. There

is broader access to and lower costs of inancing than ever before. And the inancial

sector itself has become a much more dominant force in our economy"

 

"From 1978 to 2007, the amount of debt held by the inancial sector soared from

$3 trillion to $36 trillion, more than doubling as a share of gross domestic product.

The very nature of many Wall Street irms changed—from relatively staid private

partnerships to publicly traded corporations taking greater and more diverse kinds of

risks. By 2005, the 10 largest U.S. commercial banks held 55% of the industry’s assets,

more than double the level held in 1990. On the eve of the crisis in 2006, inancial

sector proits constituted 27% of all corporate proits in the United States, up from

15% in 1980. "

 

"There was an explosion in risky subprime

lending and securitization, an unsustainable rise in housing prices, widespread reports of egregious and predatory lending practices, dramatic increases in household

mortgage debt, and exponential growth in inancial irms’ trading activities, unregulated derivatives, and short-term “repo” lending markets, among many other red

lags. Yet there was pervasive permissiveness; little meaningful action was taken to

quell the threats in a timely manner. "

 

Conclusions

 

1) We conclude this financial crisis was avoidable.

The prime example is the Federal Reserve’s pivotal failure to stem the low of toxic

mortgages, which it could have done by setting prudent mortgage-lending standards.

The Federal Reserve was the one entity empowered to do so and it did not

(Under the lead of Alan Greenspan - an AynRand disciple)

 

2) We conclude widespread failures in financial regulation and supervision

proved devastating to the stability of the nation’s financial markets. The sentries

were not at their posts, in no small part due to the widely accepted faith in the selfcorrecting nature of the markets and the ability of inancial institutions to effectively

police themselves. More than 30 years of deregulation and reliance on self-regulation

by inancial institutions, championed by former Federal Reserve chairman Alan

Greenspan

 

Yet we do not accept the view that regulators lacked the power to protect the financial system. They had ample power in many arenas and they chose not to use it.

To give just three examples: the Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not.

The Federal Reserve Bank of New York and other regulators could have clamped

down on Citigroup’s excesses in the run-up to the crisis. They did not. Policy makers

and regulators could have stopped the runaway mortgage securitization train. They

did not. In case after case after case, regulators continued to rate the institutions they

oversaw as safe and sound even in the face of mounting troubles, often downgrading

them just before their collapse. And where regulators lacked authority, they could

have sought it. Too often, they lacked the political will—in a political and ideological

environment that constrained it

 

3) "We conclude dramatic failures of corporate governance and risk management" (BY THE ILLUSION OF SELFREGULATING FREE MARKETS IDEOLOGY)

at many systemically important inancial institutions were a key cause of this crisis. There was a view that instincts for self-preservation inside major inancial irms

would shield them from fatal risk-taking without the need for a steady regulatory

hand, which, the irms argued, would stile innovation. Too many of these institutions" (CAPITALIST FAILURE) acted recklessly, taking on too much risk, with too little capital, and with too

much dependence on short-term funding. In many respects, this relected a fundamental change in these institutions, particularly the large investment banks and bank

holding companies, which focused their activities increasingly on risky trading activities that produced hefty proits. They took on enormous exposures in acquiring and

supporting subprime lenders and creating, packaging, repackaging, and selling trillions of dollars in mortgage-related securities, including synthetic inancial products.

Like Icarus, they never feared lying ever closer to the sun.

 

4) "We conclude the government was ill prepared for the crisis, and its inconsistent

response added to the uncertainty and panic in the inancial markets. As part of

our charge, it was appropriate to review government actions taken in response to the

developing crisis, 

(TOTALLY NEGLECTED BY THE REPUBLICAN PRESIDENT AND CONGRESS)

"not just those policies or actions that preceded it, to determine if

any of those responses contributed to or exacerbated the crisis.

As our report shows, key policy makers—the Treasury Department, the Federal

Reserve Board, and the Federal Reserve Bank of New York—who were best positioned to watch over our markets were ill prepared for the events of  and .

Other agencies were also behind the curve. They were hampered because they did

not have a clear grasp of the inancial system they were charged with overseeing, particularly as it had evolved in the years leading up to the crisis. This was in no small

measure due to the lack of transparency in key markets. They thought risk had been

diversiied when, in fact, it had been concentrated."

 

5)We conclude there was a systemic breakdown in accountability and ethics. (BY THE CAPITALIST PRIVATE LENDERS in addition to the 

REPUBLICAN ADMINISTRATION)

Lenders made loans that they knew borrowers could not afford and that could

cause massive losses to investors in mortgage securities. As early as September ,

Countrywide executives recognized that many of the loans they were originating

could result in “catastrophic consequences.” Less than a year later, they noted that

certain high-risk loans they were making could result not only in foreclosures but

also in “inancial and reputational catastrophe” for the irm. But they did not stop.

And the report documents that major inancial institutions ineffectively sampled

loans they were purchasing to package and sell to investors. They knew a signiicant

percentage of the sampled loans did not meet their own underwriting standards or

those of the originators. Nonetheless, they sold those securities to investors. The

Commission’s review of many prospectuses provided to investors found that this critical information was not disclosed.

 

 

6) We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the lame of contagion and crisis. When housing

prices fell and mortgage borrowers defaulted, the lights began to dim on Wall Street.

This report catalogues the corrosion of mortgage-lending standards and the securitization pipeline that transported toxic mortgages from neighborhoods across America to investors around the globe. 

Many mortgage lenders set the bar so low that lenders simply took eager borrowers’ qualiications on faith, often with a willful disregard for a borrower’s ability to

pay. Nearly one-quarter of all mortgages made in the irst half of 2005 were interestonly loans. During the same year,  of “option ARM” loans originated by Countrywide and Washington Mutual 

had low- or no-documentation requirements.

 

7) We conclude over-the-counter derivatives contributed signiicantly to this 

crisis. The enactment of legislation (BY THE CONSERVATIVE Testimony of Chairman Alan Greenspan

Over-the-counter derivatives

Before the Committee on Agriculture, Nutrition and Forestry, United States Senate February 10, 2000 

http://www.federalreserve.gov/boarddocs/testimony/2000/20000210.htm) in 2000 to ban the regulation by both the federal

and state governments of over-the-counter (OTC) derivatives was a key turning

point in the march toward the inancial crisis.

 

8) We conclude the failures of credit rating agencies were essential cogs in the

wheel of inancial destruction. The three credit rating agencies were key enablers of

the inancial meltdown. The mortgage-related securities at the heart of the crisis

could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened

without the rating agencies.

.

http://www.gpo.gov/fdsys/pkg/GPO-FCIC/content-detail.html

 

Government Austerity (Small/Miniarchy Government) DOES NOT BRING PROSPERITY!!

Government Austerity (Small/Miniarchy Government) DOES NOT BRING PROSPERITY!!

France elects Socialist Hollande as new leader, Europe faces new direction

PARIS - France handed the presidency Sunday to leftist Francois Hollande, a champion of government stimulus programs who says the state should protect the downtrodden — a victory that could deal a death blow to the drive for austerity that has been the hallmark of Europe in recent years.

"Austerity can no longer be inevitable!" Hollande declared in his victory speech after a surprising campaign that saw him transform from an unremarkable figure to an increasingly statesmanlike one. He will take office no later than May 16.
Speaking to exuberant crowds, Hollande portrayed himself as a vehicle for change across Europe. (AND HOPEFULLY A VEHICLE FOR CHANGE IN THE USA AS WELL!)

"In all the capitals ... there are people who, thanks to us, are hoping, are looking to us, and want to finish with austerity," he told supporters early Monday at Paris' Place de la Bastille. "You are a movement lifting up everywhere in Europe, and perhaps the world."

http://ca.news.yahoo.com/french-vote-decisive-run-off-election-between-sarkozy-100127727.html

@MittRomney not a match for the #WhiteHouse

How MittRomney made his money matters i.e., his judgement, 

"The presidency of the United States is not just about a track record or success but about judgment. A person's judgment determines their choices and how Romney chose to make his money should be of utmost importance in the upcoming elections. Bain Capital may have been wildly successful with Romney as CEO but that success came at a heavy price for the companies that collapsed under the weight of Bain's investment methods.

The president must not just be an effective leader but a statesman with a broad view of the world. To demonstrate that quality, one needs to exhibit responsibility, judgment and sometimes personal sacrifice in many areas of life, including business. Mitt Romney chose to make his fortune in a way that might not be unethical but is still irresponsible and mercenary. He had a right to do that but the tradeoff is that he must now take responsibility for his choice. The philosophy that made Bain and its CEO wealthy is also destructive for our economy and nation, and that makes Romney a bad match for the White House

http://www.huffingtonpost.com/sanjay-sanghoee/romney-bain_b_1483682.html?ref=tw

#Current2012 Why #America does not need a CEO - or a #wealthy parasite @mittromney

The allure of Romney as president is based on the mythology of the "CEO" in our culture. Americans vest considerable faith in corporate leaders, mainly because they drive our capitalist system and prosperity. That is valid but in electing a president we should make the crucial distinction between a capitalist system and a nation. A country is a much more complex enterprise than a business. While Bain Capital does not need to worry about poverty, disease, hunger, terrorism, education, culture or science unless they can profit from doing so, America definitely does. The takeaway is that the rules and priorities which create success in business may not be appropriate for the more challenging task of running a country.
By the market's benchmarks, a CEO who can meet quarterly earnings targets and boost a company's market value is considered a success. Nowhere in those benchmarks are any that gauge a CEO's ability to meet the needs of stakeholders other than investors; such as employee welfare or social impact and certainly not the environment or America's reputation in the global community.

Those things may not be a CEO's problem, but are the responsibility of the president. A president cannot just crunch numbers and make policy on the back of a short-term gain -- the leader of the free world must consider the effects of any decision that he makes not just on the present generation but on future generations; not just on business but on society; not just on the rich and the middle class but on the poor as well. That is a daunting task that requires not only exceptional intelligence but empathy for all Americans, and also the courage to make unpopular decisions.

Alas, it is these last two requirements for the presidency that Romney cannot meet.

http://www.huffingtonpost.com/sanjay-sanghoee/mitt-romney-business-experience_b_1441222.html?ref=tw

Hypocrite @MittRomney Created #Prosperity Through #Debt

Hypocrite Mitt Romney Created Prosperity Through Debt

By: Ray MedeirosMay 5, 2012
The Republicans have been focused on the national debt and deficit ever since they couldn’t control the purse strings of the nation. Before this, the Republicans had full control and even the Vice President, Dick Cheney said, “deficits don’t matter”. This is obvious an about face to their current mantra.

They have told the American people that you can not create prosperity by going into debt. The problem with their theory is the Republican presumptive nominee, Mitt Romney, did exactly this.

Mitt Romney was in the business of leveraged buy outs. What is this? A leveraged buyout is essentially using debt to buyout a business for a potential profit and increasing personal prosperity.

This is how it works in its simplest terms. Mitt Romney’s company would purchase, through debt, a controlling interest in a company’s equity or value. The assets of the acquired company are used as collateral for the debt he used to initially buy the company in the first place.

So by initially going into short term debt, he used the debt to potentially increase long term personal and business prosperity. The same theory works with government debt, as long as that debt is directed toward creating jobs.

On a personal level, Americans do this all the time, whether it may be going into debt to purchase a home or start a business. The short term debt can increase long term prosperity.

Mitt Romney’s private business history proves that progressives have been correct and the supply side conservative economic model doesn’t work. Debt creates prosperity, whether it is accumulated by the public or in the private sector.
Restricting debt or credit stalls prosperity and economic growth. A great example of this can be seen through the 1980s. Back in the early 1980s, the interest rate was extremely high and borrowing money was very expensive. This initiated the economic recession of the early 1980s. In fact former Federal Reserve chairman Paul Volker said in 1979, “The standard of living of the average American has to decline.”

By the mid 1980s borrowing became very easy, thanks to Alan Greenspan and the Federal Reserve. The American consumer was able to easily borrow against future wages. This spurred the economic growth of that decade. Think about how easy it was to obtain a credit card in those days. Today, the consumer is now paying for the borrowing of those easy credit days and can not handle more. We are in what many economists are calling a phase of “deleveraging”.

So, in closing, if Mitt Romney was not able to acquire and accumulate debt to purchase businesses, he would not have been successful in business and would have not been prosperous at all.

This is what happened with the current economy. There were many Republicans, along with many conservative Democrats, who didn’t want to use debt as leverage to create jobs, like Mitt Romney did in the private sector. They restricted the “credit” of the United States and stifled economic growth.

http://www.politicususa.com/hypocrite-mitt-romney-created-prosperity-through-debt.html

On the Economy The buck stops with Congress

The buck stops with Congress

By WARREN BEYER

We are all wondering what is happening in the stock market, or what is going on with the price of gasoline at the pump. I suggest neither President George W. Bush or President Barack Obama should be blamed for these two things.

The Congress of the United States should accept the blame and the responsibility for much of the economic hurt in this country.

The speculators on Wall Street artificially inflate the price of a great many commodities and resources, gasoline being only one. Their access and hoarding tens of millions of barrels is what raises the price at the pump. The Congress of the U.S. has, for years, allowed the oil companies and their Wall Street cronies to control the market.

I spoke to the office of a New York state senator and he gave me a contrived answer as to why the prices at the pump were so high. His office told me the prices are sticky on the way down and slippery on the way up.

That was it! After a two-year study that was their finding. Hard to believe.

Does anyone in this country know what it actually cost to produce one gallon of unleaded gas? I don't. Try and find out. The answer is not there for you and I. Why not?

The last 20 years of government, state and federal, has seen the Congress make the tax laws to accommodate those who pay for their elections. Why else would oil companies, steel companies, auto companies, chemical and drug companies contribute to both sides. And no, they no longer have to disclose their contribution amounts or to whom they contribute. You can thank the Supreme Court for that one.

No, Justice Clarence Thomas did not break his silence and say something.

Can we, as a free people, continue down this path of economic Orwellian control. I think not. The ugly specter of class distinction is growing and the powers at the top are allowing us to fight it out for the small change. Write your Congressman, call him on the phone, tell him what you think. This is your country not a possession of theirs that they can control with impunity.

Can we blame the presidents for some things? Yes, of course. But the arrogant Congress of the U.S. has proven that party politics and feathering their nest comes first. The health-care debate is easy to fix. Give the American people whatever Congress gives itself.

Does it make any sense that a person would run for office and spend $10 million or $20 million for a job that pays a few hundred thousand? Of course not. It's the control of the law that determines who can really control the economy.

Follow the money (like Deep Throat said) and you will find the guilty party, the disloyal and the treasonous.

Dont forget to vote. It's your only real power.

http://observertoday.com/page/content.detail/id/562917/The-buck-stops-with-Congress.html?nav=5046

Teaparty FOR OBAMA @ObamaTeaParty: Dear Patriot,

Obama and his community organizers have been working day and night to recruit and train volunteers to gear up for this fall’s battles. The left is targeting Tea Party favorites like Scott Walker, Allen West and Steve King. And of course, Obama’s well-oiled campaign machine is already firing on all cylinders recruiting thousands of volunteers in every state.
The Tea Party for Obama is not sitting still. We are in the midst of the largest grassroots recruitment and training program in the history of our movement. We have abandoned the prestigious Leadership Institute to hold cutting edge grassroots training programs for tea party volunteers all across America.
Our goal is to support the Obama machine and his legions of intelligent allies on the ground this fall. We are supporting the plans to recruit more Tea Party for Obama leaders, train more Tea Party for Obama activists, and educate more Tea Party for Obama voters than ever before. True Tea Party members support Obama.
Please pray for The Tea Party for Obama today so we can fully realise this aggressive program to save America from closed-minded, partisan evil.
Each grassroots training session will empower regular Americans by providing insight on how to recruit volunteers, register voters, turn out the vote and prevent election fraud. This is state of the art enlightenment for ordinary citizens who have never really been involved in politics before but know our country is heading for disaster if they don’t act now.
Our goal is to understand the issues in every single state and wish for thousands upon thousands of Tea Party for Obama volunteers to show support for our President.
That includes finding an issue, paying fair taxes, etc. The upcoming campaign will be extremely intensive, hands on affairs involving the very latest in organizational tactics and technology. You are hard-working taxpayers who have families and often have been hit very hard by an ineffective, obstructionist Congress.
If this program to empower regular Americans to help get this country back on track and maintain our constitutional principles is as popular as we anticipate, it won’t cost us a single dime.
I believe this program is critically important to the Tea Party for Obama movement and most importantly our country. Barack Obama and his allies have political trainers criss-crossing the country. If we help, we can be certain of victory. In a campaign of huge staffs of professional trainers and massive budgets, grassroots understanding of issues is free.
I want to urge you to support the Tea Party for Obama by spreading the word. NO DONATIONS PLEASE. We rely on the energy and mouths of our collective to get the word out.
Thank you in advance for all your help!
For Liberty, for the Constitution, for Obama
Ji Hobr
Co-Founder and National Coordinator
Tea Party For Obama

http://teapartyforobama.com/2012/05/01/a-grassroots-effort/

#Economics 101 - Demand, NOT SUPPLY creates jobs

Economics101: Consumer Demand is the single force that creates jobs

Economics101: Sale of Supply (Goods and Services) is the result of the force of Demand

Economics101: Production of Supply (Goods and Services) is the result of the force of Demand

Economics101: Perishing Supply (Goods and Services) is the reslut of the lack of Demand

Economics101: Purchasing Ability (earnings) of consumers create Demand therefore jobs

Economics101: Cutting Purchasing Ability (earnings) to consumers shrinks Demand, Kills jobs

Economics101: Cutting earnings for the poor and middle class shrinks Demand, kills jobs

Economics101: Cutting Government Programs for the poor and middle class shrinks earnings, shrinks Demand, Kills jobs

Economics101: Government Spending on Programs for the poor and middle class increase earnings, increase Demand, creates jobs

Economics101: Tax Cuts for the poor and middle class increase earnings, increase Demand, creates jobs

Economics101: Tax Cuts for the Wealthy creates Wealth for such Wealthy, Wealthy will save it or invest it on their own Interest

Economics101: Wealthy may invest in Jobs (only if there is Demand)Wealthy will save or invest in themselves (when no Demand for their products)

Economics101: Wealthy are motivated by self-interest and profits, not by social interests, they don't need to be loyal to the Nation 

Economics101: Wealthy only invest in jobs if they magnify their profits and WHERE their profits are magnified

Economics101: Wealthy will invest in jobs in geographical areas where their profits can be maximized, no need to be loyal to the Nation

Economics101: Wealthy will invest in jobs in the Nation only if the Nation can guarantee their magnification

Economics101: Wealthy will not invest in jobs in the Nation for the sake of the Nation but for their own sake

Economics101: Benefits to the Wealthy results in more wealth for the Wealthy, they are not committed to return the benefit to the Nation

Economics101: Wealth does not create jobs by itself, it does only if accompanied by consumer demand for the products they sell

Economics101: Government rewards to the Wealthy only increases their wealth without any guarantee return of benefits to the Nation

Economics101: Government Tax Cuts to the Wealthy only increases their wealth without any guarantee return of benefits to the Nation

Economics101: Government Spending balances out Private Sector restraint on Supply Investments based upon lack of Demand

Economics101: Government Spending balances out reduces Private Sector "lack of Confidence" on the surge of Demand

Economics101: Private Sector "Lack of Confidence" is not because of Government Taxation or Regulation but because of Lack of Demand

Economics101: Austrian Economics is based on Blind Faith on Free Markets but not on 

Economics Scientific facts or data

Economics101: Austrian Economics is based on Assumptions not Facts

Economics101: Hayek's Economics is based on Blind Faith on Free Markets but not on 

Economics Scientific facts or data

Economics101: Keynes's Economics is based on pragmatic Scientific facts or data

Economics101: Blind Faith on the goodness of Free Markets is a religion not a sound 

Economic scientific fact

Economics101: Free Markets by themselves (Competition and Price setting) only contribute to the wealth of the Stronger DIRECTLY

Economics101: Free Markets by themselves (Competition and Price setting) benefit the poor and middle class only INDIRECTLY

Economics101: Free Markets by themselves ARE RISKY AND THEIR BENEFITS ARE ONLY COINCIDENTAL NOT ASSURED

Economics101: Free Markets by themselves CANNOT SOLVE THE NATION'S PROBLEMS since this is not their intention

Economics101: Free Markets by themselves are frail and fail often when WEALTH is MAGNIFIED for the STRONGER few and not for ALL 

Economics101: Free Markets succeed ONLY THRU GOVERNMENT BALANCING SUPPLY AND DEMAND AND BALANCING THE INTERESTS OF ALL

Economics101: Free Markets by themselves cycle Economic growth Up and Down depending on the stability/instability of Supply and Demand

Economics101: When Free Markets cycle Economic growth Down (Too much Supply Too little Demand), Government needs to Spend to cycle growth up

Economics101: When Free Markets cycle Economic growth Up (Too much Demand, Short Supply), Government needs to restraint Spending

Economics101: Austerity on Government spending only works on a strong balanced Economy

Economics101: Austerity on Government spending does not work on a weak Economy, Austerity makes Economy weaker (shrinks Demand)

Economics101: Government Deficit (Debt greater than Revenue) OK when stimulating/balancing a down economic cycle

Economics101: Government Deficit is paid by the returned benefit of stimulating economic grow of a down economic cycle (increase Demand)

Economics101: Government Deficit (Debt greater than Revenue) BAD when economic cycle is up (Waste contributing to higher taxes shrinking Demand)

Economics101: Government Deficit DOES NOT MATTER for FUTURE GENERATIONS - for a MONETARILY SOVEREIGN NATION

Economics101: Government Deficit DOES MATTER if contributing to wasteful spending that will shrink Demand by increasing taxes

Economics101: Government Jobs increase (earnings) increase Aggregate Demand/contribute to the Wealthy's confidence On Demand and create jobs

Economics101: The President DOES NOT DIRECTLY OWN THE ECONOMY so much since he DOES NOT CONTROL THE BUDGET

Economics101: The Party Policies that create a Recession or Depression OWN SUCH ECONOMY until these are reversed

Economics101: Congress DIRECTLY OWNS THE ECONOMY very much since it CONTROLS THE BUDGET

Economics101: The government impact on the Economy is primarily the result of Congressional behavior, secondarily of Executive behavior

Economics101: The government impact on the Economy is primarily the result of Congressional policies, secondarily of Executive policies

Economics101: Supply Side Government Policies (Tax Benefits for Corporations) work only on normal economies not in a weak ones

Economics101: Demand Side Government Policies (Government Spending/Tax Benefits for Middle Class/poor) work mostly on weak economies

Social Democracies in Europe with their Social program do better than those with Austerity

Social Democracies in Europe with their Social program do better than those with Austerity

I’ve been hearing two claims, both false: that Europe’s woes reflect the failure of welfare states in general, and that Europe’s crisis makes the case for immediate fiscal austerity in the United States.

The assertion that Europe’s crisis proves that the welfare state doesn’t work comes from many Republicans. For example, Mitt Romney has accused President Obama of taking his inspiration from European “socialist democrats” and asserted that “Europe isn’t working in Europe.” The idea, presumably, is that the crisis countries are in trouble because they’re groaning under the burden of high government spending. But the facts say otherwise.

It’s true that all European countries have more generous social benefits — including universal health care — and higher government spending than America does. But the nations now in crisis don’t have bigger welfare states than the nations doing well — if anything, the correlation runs the other way. Sweden, with its famously high benefits, is a star performer, one of the few countries whose G.D.P. is now higher than it was before the crisis. Meanwhile, before the crisis, “social expenditure” — spending on welfare-state programs — was lower, as a percentage of national income, in all of the nations now in trouble than in Germany, let alone Sweden.

Oh, and Canada, which has universal health care and much more generous aid to the poor than the United States, has weathered the crisis better than we have.

http://politicsnotasusual.com/2012/01/03/romney-fudges-facts-on-europe-and-the-welfare-state/

MittRomney/GOP Austerity Policies sinking Europe

For the last year or two, Europe has been implementing, in real time, exactly the policies that Romney and congressional Republicans fervently believe are the best strategy for boosting economic growth. It’s called “austerity,” and it means cutting deficits, slashing spending, and chipping away at all those goodies the social welfare state provides.

And guess what? It’s not working. Compared with the United States, Europe is in shambles.

Unemployment is rising across the continent. Just this week, the United Kingdom, which has pursued an austerity regime so severe that it makes House Republicans drool with lust, slipped back into recession. In France, the socialist candidate for president (and likely winner), François Hollande, has been campaigning against austerity. Italy’s prime minister, Mario Monti, is expressing qualms. The latest news out of Brussels, according to the Daily Telegraph, suggests “a major shift in economic strategy” as fears spread “that excessive fiscal tightening will inflict unnecessary damage on a string of eurozone countries.”

The evidence keeps amassing. Maybe, just maybe, John Maynard Keynes was right: Cutting government spending in the face of a weak economy is a recipe for further decline.
Daily Kos: Open thread for night owls: Why are the Europhobes silent when Mitt Romney promotes austerity?http://www.dailykos.com/story/2012/04/29/1086494/-Open-thread-for-night-owls-Why-are-the-Europhobes-silent-when-Mitt-Romney-promotes-austerity- via @dailykos