Olli Rehn (the incompetent idiot), Europe's economic commissioner, welcomed news that the 17 nations that use the single currency had expanded collectively by 0.3% in the three months to June – the first pick- up in activity since the autumn of 2011.
But Rehn said celebrations should be put on hold given Europe's jobs crisis and the wide disparity in economic performance across the eurozone. "Yes, this slightly more positive data is welcome – but there is no room for any complacency whatsoever", Rehn said. "I hope there will be no premature, self-congratulatory statements suggesting the crisis is over. For we all know that there are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile."
Rehn (the conventional idiot) said the average number for the bloc hid substantial differences between states, with Germany's positive performance outstripping that of Spain and Italy, who remain in recession. He added that some member states still have unacceptably high unemployment rates, with economic reforms still in their infancy, leaving the region with a "very long way to go."
"A sustained recovery is now within reach, but only if we persevere on all fronts of our crisis response: keep up the pace of economic reform, regain control over our debt, both public and private, and build the pillars of a genuine economic and monetary union," he said. Figures released by Eurostat, the EU's statistical agency, showed that a stronger than expected performance by the single currency's two biggest economies - Germany and France - helped haul the eurozone out of recession. Financial markets had been braced for a rise in eurozone GDP following the increase in industrial production reported on Tuesday but were surprised by news that Germany grew by 0.7% in the second quarter and that France grew by 0.5%. Along with the rest of the world, the eurozone fell into a deep slump in the winter of 2008-09 before recovering in 2010 and early 2011. But a second leg of the downturn then commenced as a result of the eurozone's sovereign debt crisis, which hit confidence, led to a mothballing of investment and resulted in the imposition of hardline austerity programmes.
Despite the growth in the second quarter, the European Commission still expects the eurozone to suffer a second full calendar year of falling output in 2013, with growth resuming in 2014.
Eurostat's figures showed that Italy and Spain - the single currency's third and fourth biggest economies - both remained in recession in the second quarter of 2013. Spain's economy shrank by 0.1% percent on the quarter, while Italy posted a 0.2% decline.
The Dutch economy also contracted by 0.2% but Portugal – one of the three countries that required a financial bailout – recorded the fastest growth of any eurozone country with 1.1% quarterly growth.Funny - some friends just returned from France on a hunt for bargain property - looked at a 3.5M Euro estate that was asking 1.2M. They passed because as they stated, "you could smell desperation in the air - shops in the nearby town were shuttered - there was no activity on the street"... Can someone explain how France is growing? The MSM is getting very desperate trying to create "green shoots"... Do you think we are stupid enough to believe this BS?....am so disillusioned with this its incredible. It's just a cycle which lasts 10-15 years. Growth-Depression, Growth-Depression. Couple this with increasing house prices which are doomed to crash again we have the same thing happening. Europe obviously hasn't learned and as the saying goes they will be doomed to repeat the past.
7 comments:
economics is an inexact science
Economics is psuedoscience. Economics dresses itself in the language of science but there is no application of the scientific method. Crude economic models aren't the problem. Wrong economic models were the problem.
The attacks against economics are not ad-hominen. These attacks are criticisms of ideas not people. Here are some of the attacks :
1. Debunking Economics: The Naked Emperor Dethroned - Steve Keen
2. Zombie Economics: How Dead Ideas Still Walk among Us - John Quiggin
3. Econned - Yves Smith
4.
the typical graduate macroeconomics and monetary economics training received at Anglo-American universities during the past 30 years or so, may have set back by decades serious investigations of aggregate economic behaviour and economic policy-relevant understanding. It was a privately and socially costly waste of time and other resources.
- Willem Buiter, 2009
All 3 of the books above are written by pro-Capitalists.
Economics is psuedo-science, or at best a degenerate research programme.
Economics is a social science; in the 19th century and before, it maybe claimed to be like a pure science subject, but today most economists show more humility. Rajan is an example of a good current economic thinker. If only most others were so honest!.
Often theories and/or predictions can be tested. A problem with macroeconomics, however, is it may take over a decade to get a verification or to refutation. This makes it of little use to policy makers.
Economics is psuedo-science, or at best a degenerate research programme. It seems to offer no predictive ability, and its proponents spend all their time protecting the core ideas by building more and more explanations of why evidence not fitting theory doesn't mean you need to chuck out the central theory - just tweak around the edges here and there.
http://en.wikipedia.org/wiki/Imre_Lakatos#Pseudoscience
Runc's comments in this thread about the poor maths used (straight lines everywhere, assumption of equilibrium, "ceteris paribus", seemingly even a difficulty in doing calculus, never mind the issues to do with disequilibrium, chaotic systems, unpredictable oscillations, etc. that the rest of science tries to understand).
In Steve Keen's book he tells a story of how young economics students often raise concerns about the simplifications being employed by their first year economics lecturer. "Oh, don't worry, we realise it's a simplification, but we deal with the more complex details later on" says the lecturer -- but you never get there. It's the same simplifications all the way up.
If only economics had the same problem as weather simulation. The reason we have such a huge problem is that mainstream economists choose not to analyse the economy as a chaotic system at all.
The fact is there's just no way to reconcile viewing the economy as a self-correcting equilibrium with viewing the economy as a non-linear chaotic system. You pick which one you believe the economy to be, and all subsequent analysis and modelling must fit within that paradigm.
While you and I, and everyone else in the world who's not a mainstream economist, will look at the economy and see how it fits all the criteria of a chaotic system (sensitive to initial conditions, topological mixing, density of periodic orbits - or more basically, unpredictability), mainstream economists start with the assumption that the economy tends to equilibrium. In system terms this is the opposite of a chaotic system (one that will become increasingly unpredicatable over time) as it represents a belief that the system will trend towards a predictable state over time.
So I have a problem with mainstream economists because I subscribe to the 'chaotic' paradigm and not the 'equilibrium' paradigm, so everything that they hold to - the theory, the tools and models, the mathematics - is an absurdity to me. There's better and more sophisticated mathematics put to use by an engineer building a dishwasher and modelling the water flow than there is in the whole of the economic mainstream.
The day we get to the point where we can genuinely say economists face the same kind of problems as weather simulation we'll be starting to get somewhere at last. Unfortunately we're probably in for a long wait. As Max Planck said of scientific theory...
"Truth never triumphs — its opponents just die out. Science advances one funeral at a time"
Economics is no doubt a difficult subject - given the conflict / violations you mention, and the fact that theories are proved or rejected after extended periods of time. Would be nice if a simple test tube experiment could validate an economic theory!
I think there are a few factors that explain the increasingly 'attacking' nature within economists:
- The 'airtime' that economists receive has increased considerably post the crisis. Whilst economists might find competing on the 'number of twitter followers' they have, a bit crass, they do pander to their supporters.
- The credit crisis has polarised the view of most people so they want, follow, and often quote - economic commentary that is extreme. Economists have started complying to this demand.
A fairly standard type of comment on CiF starts by dismissing the whole field of economics......
My standard type of comment is to dismiss the whole field of (mainstream) economics because its stupid practitioners (which includes all mentioned above, and the author of the article) do not recognise the wisdom in Boulting's "Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist."
Intelligence without wisdom (and, so, altruism) will be the downfall of the industrialised populations with their capitalism and concomitant consumerism.
And that downfall will occur ere long (a month/, a year?, five years?, a decade?-----though the Bank of England fears less than a year)
It was reasonable to pursue the 'growth', beloved of the mainstream economists, for a period after WWII when the necessary increase in input resources was available. But that ended forty years ago as a slew of publications such as Limits to Growth (Meadows 1972) pointed out.
The mainstream economists are arguing over the behaviour of individual cells when the need is to recognise that they all come from a cancerous tumour.
Why do high-profile economic tussles turn so quickly to ad hominem attacks? Perhaps the most well-known recent example has been the Nobel laureate Paul Krugman's campaign against the economists Carmen Reinhart and Kenneth Rogoff, in which he moved quickly from criticism of an error in one of their papers to charges about their commitment to academic transparency.
For those who know these two superb international macroeconomists, as I do, it is evident that these allegations should promptly be dismissed. But there is the larger question of why the paranoid style has become so prominent.
Part of the answer is that economics is an inexact science, with exceptions to almost every pattern of behaviour that economists take for granted. For example, economists predict that higher prices for a good will reduce demand for it. But students of economics will no doubt remember an early encounter with "Giffen goods", which violate the usual pattern. When tortillas become more expensive, a poor Mexican worker may eat more of them, because she now has to cut back on more expensive food like meat.
Such "violations" occur elsewhere as well. Customers often value a good more when its price goes up. One reason may be its signalling value. An expensive handcrafted mechanical watch may tell time no more accurately than a cheap quartz model; but, because few people can afford one, buying it signals that the owner is rich. Similarly, investors flock to stocks that have appreciated, because they have "momentum".
The point is that economic behavior is complex and can vary among individuals, over time, between goods, and across cultures. Physicists do not need to know the behavior of every molecule to predict how a gas will behave under pressure. Economists cannot be so sanguine. Under some conditions, individual behavioral aberrations cancel one another out, making crowds more predictable than individuals. But, under other conditions, individuals influence one another in such a way that the crowd becomes a herd, led by a few.
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