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Home Publications Blogs Beat the Press Steven Beard at Market Place Flunks Euro Crisis 101

Steven Beard at Market Place Flunks Euro Crisis 101

Friday, 02 December 2011 05:52

Steven Beard apparently does not have access to data on budget deficits. He wrongly told Market Place listeners that the euro zone crisis is due to the fact that euro zone countries spent more money than they took in. This is wrong, wrong, and wrong!

The euro zone crisis is due to the fact the European Central Bank was managed by incompetent people who either did not see the housing bubbles across the continent and the world or did not understand their implications for the euro zone economies. It was the collapse of these bubbles that threw the euro zone countries into a severe downturn.

With the exception of Greece, it is this downturn that is the origin of chronic deficit problems. The other heavily indebted countries had sustainable deficits or even surpluses prior to the collapse.

Comments (8)Add Comment
Government Failure is Real - Market Failure is a Myth
written by izzatzo, December 02, 2011 5:13
Steven Beard knows what any economist knows - market failures are a myth. There's only government failure - never market failure.

Markets can't spend more than they take in because they have self-correcting mechanisms that prevent it. Governments can spend more than they take in by design, plus it's easy to calculate the outcome with arithmetic.

Just add or subtract to see if more or less is in the glass than was taken out from spending. This removes the ambiguity of half-empty/half-full indeterminism and provides certainty to the interpretation.

Stupid liberals.
Market failure is real
written by Bill Turner, December 02, 2011 6:34
Markets can't spend more than they take in because they have self-correcting mechanisms that prevent it.

Apparently, izzatzo, has never heard of leverage.

Nor has he heard of such well-known market failures as the commons, moral hazard or other negative externalities, things that are spoken of in every intro econ course or book. Perhaps the conservative state that he seems to admire so much has withdrawn so much educational funding that he has not learned to read.

Stupid conservative.
written by JSeydl, December 02, 2011 9:11
izzatzo is an interesting case. Like you, Bill, I used to think izzatzo was a nut-job right-winger who ignores data and logic. But I actually think that izzatzo's posts are sarcasm, and that he's actually a liberal trying to highlight how silly the conservative narrative is. izzatzo, can you please confirm this?
written by sufferingsucatash, December 02, 2011 9:21
Izzatzo is a nut-job right winger who delivers economic phrasings with a lemonade stand perspective. The delivery is less shooting a gun and more like throwing a bullet. He clearly is living in Greece somewhere.
Stupid liberals absent earlier this year
written by MarkJ, December 02, 2011 11:22
After reading izzatso's posts through the years I have come to the conclusion that izzatzo is expressing a point of view as JSeydl suggests.

I did think there was something wrong with izzatzo earlier this year when many of izzatzo's posts did not end with "Stupid liberals" and was not the first post. Glad to see all is well with izzatzo.
Historically anomalous attitude toward debt
written by Wisdom Seeker, December 02, 2011 1:15
Dean, only in the past few decades have we brainwashed ourselves into thinking that debt levels of 40-80% of GDP were normal, or that there could be such a thing as a "sustainable deficit". Our forebears were demonstrably wiser than most Boomers today, and I fear we're about to relearn some very painful historical lessons.

Historically the US, like other nations, has sought very hard to stay out of debt, not to add to it with allegedly "sustainable" deficits. This is illustrated very dramatically with the historical debt charts. The one on Wikipedia is particularly accessible:


U.S. pubic debt was only 20% of GDP in the early 1800s, and the debt was all but extinguished from 1830-1860. The Civil War led to a debt burden of 30-40%, which was again extinguished by 1910. World War I led to another 30% burden, which had been cut to 20% when the Great Depression hit. Even in the GD, the debt only went up to 40%. It was only World War 2 which pushed the debt to 110% of GDP, and once again as soon as the war ended we sensibly reduced the debt burden, reaching about 25% of GDP in 1970-1980.

Since 1980 we have gone on a debt binge. We are not alone. The European "canaries" are screaming that we now live in an unsafe "coal mine", a debt trap!

If we don't get our debts back into balance, we face horrific declines in our national standard of living due to either defaults or inflation.

It is time to bring the Debt-to-GDP ratio back down. Any incremental debt must therefore have a strong impact on GDP growth. The current Administration and Congress are unable to deliver. We need to change, if we are to have hope!

written by liberal, December 02, 2011 2:29
JSeydl wrote,
But I actually think that izzatzo's posts are sarcasm...

Jeez, ya think?

I'm continually amazed how many people can't figure out that those posts are spoofs.
Thank you izzatzo
written by deanx, December 04, 2011 4:17
Folks, izzatzo is merely trying to point out the free market itself doesn't have 'balanced budgets' either. Why was a $7.7T injection needed less than 3 years ago. That one had nothing to do with sovereign debt, rather bubble economics, like Mr. Baker is pointing out now.

When did the banks get bigger than countries? This is now the tail that wags the dog.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.