We Are All Austrian Now...

[GRG55]

Looks like they must have ordered the Ministers to pack dirndl and lederhosen for the G20 summit given the newfound "austerity" outcome. Is that Mozart's Requiem Mass in D minor that I hear in the background?

G20 communique after meeting in South Korea

BUSAN
Sat Jun 5, 2010 3:57am EDT

South Korea (Reuters) - Following is the statement issued by the Group of 20 after a meeting of its finance ministers and central bank chiefs on June 4-5.

1. We, the G20 Finance Ministers and Central Bank Governors, met at a critical juncture to firmly secure the global recovery and address the economic challenges and risks.

2. The global economy continues to recover faster than anticipated...We will pursue well coordinated economic policies. The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances. Those countries with serious fiscal challenges need to accelerate the pace of consolidation. We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions...

[Jim Nickerson]

Re: We Are All Austrian Now...

Here is a bit of further discussion on the G-20 actions. http://www.calculatedriskblog.com/20...e-we-come.html

Krugman's apparent conclusion "Utter folly posing as wisdom. Incredible."

[jk]

Re: We Are All Austrian Now...

i think ej got it right, pointing to japan's oscillation between stimulus and austerity, as economic conditions permitted and political ones dictated. so maybe instead of "we are all austrian now," it should be: "we are all austrian for the moment."

[jtabeb]

Re: We Are All Austrian Now...

Didn't EJ cite this VERY EXAMPLE when he was proposing the trigger(s) for a SUDDEN-STOP event?

SUDDEN-STOP, Count the days?

[FRED]

Re: We Are All Austrian Now...

Didn't EJ cite this VERY EXAMPLE when he was proposing the trigger(s) for a SUDDEN-STOP event?

SUDDEN-STOP, Count the days?

Yes. It's explained in Debt-deflation Bear Market Update - Part I: First Bounce officially over and The Next Crash - Part I: How the First Bounce of the Debt Deflation Bear Market ends.

[GRG55]

Re: We Are All Austrian Now...

i think ej got it right, pointing to japan's oscillation between stimulus and austerity, as economic conditions permitted and political ones dictated. so maybe instead of "we are all austrian now," it should be: "we are all austrian for the moment."

Tim is having second thoughts apparently. He probably doesn't look good in leather pants...

ECB Advocates Tightening as U.S. Urges Domestic Demand Growth

June 6 (Bloomberg) -- European Central Bank President Jean- Claude Trichet and Treasury Secretary Timothy F. Geithner diverged on prescriptions to sustain growth, with Europe set to tighten budgets and the U.S. seeking stronger domestic demand.

The impact of narrower budget gaps “on growth could not be considered negative because it would improve confidence,” Trichet told reporters yesterday after meeting with Group of 20 finance chiefs in Busan, South Korea. The need for such action is clear in “old industrialized economies,” he said.

The remarks underline determination within the 16-nation euro area to shrink budget deficits in the wake of a sovereign debt crisis that has led to a 750 billion-euro ($913 billion) rescue fund for the region’s weakest members. The emphasis contrasts with the message delivered to the G-20 by the U.S., which wants countries with trade surpluses, including China and Germany, to stoke demand to help sustain the global recovery.

“Stronger domestic demand growth in Japan and in the European surplus countries” is needed, Geithner said at a separate press briefing in Busan. Spending in both areas is “relatively weak,” he said...

[GRG55]

Re: We Are All Austrian Now...

G-20 Clash Over Recovery Risks ’Sub-Potential’ Growth

June 7 (Bloomberg) -- Global policy makers are starting to clash over their individual prescriptions for recovery as Europe demands lower budget deficits while the U.S. warns against pushing exports instead of domestic demand.

At a meeting of Group of 20 finance chiefs in Busan, South Korea, June 4-5, Treasury Secretary Timothy F. Geithner said the world cannot again bank on the cash-strapped U.S. consumer to drive growth and urged other nations to stimulate their own demand. European Central Bank President Jean-Claude Trichet said fiscal tightening in “old industrialized economies” would aid the expansion by shoring up investor confidence.

Each strategy carries threats for the global rebound that the G-20 said faces “significant challenges.” Continued stimulus risks bondholder revolt over rising debt burdens, while spending cutbacks could worsen unemployment. Relying on exports leaves the world prone to trade wars and competitive currency devaluations as countries seek to give their companies an edge.

“The world may end up in a period of sub-potential growth for two or three years,” said Venkatraman Anantha-Nageswaran, who helps manage about $140 billion in assets as global chief investment officer at Bank Julius Baer & Co. in Singapore. “We need to accept that all of us cannot simultaneously grow our way out of trouble.”...

...In a sign of tension among the world’s economic policy chiefs, Geithner flagged concern that others are turning to cheaper currencies and fiscal restraint, leaving their rebounds reliant on foreign rather than domestic buyers for strength.

“Stronger domestic demand in Japan and in the European surplus countries” is needed, Geithner said in a June 5 press briefing in Busan. “The value of the G-20 is to help each of us individually recognize the importance of economic policies that are in our broad collective interest.”...

[hayekvindicated]

Re: We Are All Austrian Now...

Here is a bit of further discussion on the G-20 actions. http://www.calculatedriskblog.com/20...e-we-come.html

Krugman's apparent conclusion "Utter folly posing as wisdom. Incredible."

One can only hope that Krugman has all his life savings in government bonds. If that is what he has done, he will have finally got what he deserves.

[GRG55]

Re: We Are All Austrian Now...

From EuroIntelligence:

...The eurozone country that should be lagging the process towards austerity is pressing ahead the fastest. Coalition leaders met for a weekend retreat and agreed on the essential cornerpoints of an austerity programme. German newspapers have been reporting various details of the talks, which are still continuing today.

Frankfurter Allgemeine reports that there will be severe cuts in the public sector, welfare spending, and subsidies, as well as a tax on nuclear power stations. The total size of the package is €51bn until 2016 – which is necessary for Germany to meet its own self-imposed debt rules, which will kick in that year. Merkel lent her support to the decision to focus the austerity on welfare spending cuts, rather than tax increased, as had been demand by some sections of her own party. The trade unions have already indicated their opposition to those plans...