I know it’s a stretch at this point, but I keep looking for evidence their budget deficits are large enough to support GDP at current (depressed) levels.

And yes, further austerity works against this.

French Industrial Production Unexpectedly Rose 1.5% in August

October 10 (Bloomberg) — French industrial production unexpectedly rose in August, driven by manufacturing of transport equipment. Production gained 1.5 percent in the month from July, Insee said.

Italian Industrial Output Unexpectedly Rises 1.7% in August

October 10 (Bloomberg) — Italian industrial production unexpectedly rose in August. Output rose 1.7 percent from July, when it contracted a revised 0.1 percent, Istat said. Production fell 5.2 percent from a year earlier on a workday-adjusted basis, the 12th annual decline. The euro region’s third-biggest economy will probably contract 2.4 percent this year and 0.2 percent next, the government said last month. Industrial production fell 0.9 percent in the third quarter from the previous three months, employers lobby Confindustria predicted on Oct. 1. Output declined 0.3 percent in September from the previous month, according to the survey. Istat had originally reported a 0.2 percent drop industrial production in July.

Same goes for the UK:

U.K. Third-Quarter GDP Jumps the Most in Five Years, Niesr Says

October 10 (Bloomberg) — The U.K. economy grew at its fastest pace in five years in the third quarter after a rebound from one-off disruptions in the prior three months, the National Institute of Economic and Social Research said. Gross domestic product rose 0.8 percent, compared with 0.1 percent in the quarter through August, Niesr said. Underlying growth was weaker than suggested by the headline number, Niesr said. Stripping out distortions stemming from June’s extra public holiday for Queen Elizabeth II’s Diamond Jubilee, it measured the economy’s pace of expansion as closer to between 0.2 percent and 0.3 percent. “The strength of the figure for the three months to September is largely an artefact of special events,” it said.

17 Responses

  1. yesterday Monti have increased VAT of 1%
    and decrease Personal Incom Tax of 1%
    This is our GREAT STIMULUS

    next spring election => market attak => new austerity in exchange of bailout from Mario (Draghi) to Mario (Monti)…

  2. Let’s be clear here: you’re reaching, grasping for what you can hit you’re otherwise clueless as to what I te appropriate amount. When there is a bad headlines, you respond with “deficits are too low” and when there is a somewhat moderate headlines, you opine “deficits may be sufficient to muddle through”. The reality is you have no idea but have a convenient hedge to mitigate this. In Japan for example, despite high levels of debt and deficits, you can just say there’s not enough. And though you claim no financial crisis is so deep that spending increases and tax cuts can’t save the economy, you still feel it necessary to hedge with an ELR. The fact is all you’ve proposed is far from new and original, had long been discussed and argued, and until you actually conduct legitimate scholarship (not relying on post Keynesian canards) you will sing the same song in a manner where you can only be right, never wrong. You have not been forthcoming, Warren, and it will run out.

    1. @Macros am,
      Common gimmie a break. Warren has maintained we can get there the easy way or the hard way. Its pretty clear from the MMT literature that deficits should be increased to close the output gap.

    2. I suspect deficits in europe have gotten high enough to muddle through but I’m not sure as they are still applying ‘new’ austerity measures that could keep gdp negative.

      The US deficit seems to be high enough to muddle through with maybe 2% gdp growth and maybe more with housing picking up.
      But there’s an open manhole cover in the road- the fiscal cliff- that can take us down hard.

      The elr provides a superior buffer stock to unemployment

      I never said it any of it was new and original. i said it’s the way it works.

      I know of several people who had it right during the last several hundred years, all quoted on this website.

      The problem is the mainstream has it wrong

      1. @WARREN MOSLER, Warren, hi there how do you ascertain what size deficit is required for a particular country. Is there somewhere on your site where I can educate myself. For example, how have you determined that the current US deficit is the right size for 2% GFP growth.
        Many thanks.

      2. Which charlatan are you referring to? The one laughing like a hyena having te time on his life yammering things like “so what?!” And “investors made money”? You see, MMT can’t see these speculative bubbles coming (everytime Norman says to short gold, buy it). They can’t see that their proposals encourage bubble formation. They don’t see personal consumption and post tax corporate profits at all time highs. They look at the C and the G but forgot about the I. They don’t realize Keynes rejected Lerner. They don’t believe in degrees of uncertainty. And they mangled Keynes’s theory of effective demand. All due to some bizarre refusal to actually read Keynes (this includes A Treatise on Probability). It’s difficult to teach a man something when his job depends on him not understanding it (paraphrased).

  3. This is off topic but related to the cause.

    please, please, please comment at this military website discussing the “foolishness of nat’l debt” – this is a community worth converting – and refer them to diverse entries at MoslerEconomics; the more the better

    America’s strength is an illusion created by foolish borrowing

    and please be polite; the audience is mostly retired military officers; a very useful community to recruit

    the author is a respected military historian; he’s clearly out of his comfort zone re the details of currency operations, but so is 99.9% of the electorate;
    Please help inform, educate and recruit these people. It may be very useful.

  4. it looks like, as anyone who knows a damn about international currency exchanges, that a devalued currency does indeed help out exports, and thus industrial production, and that yes, the Eurozone’s problem began as a balance of payments crisis with a one-size-fits-two currency (Germany and Netherlands).

  5. I agree with most of what Mr. Mosler says except he missing the key point about the true role of the Federal Reserve.

    Here is great video that explains the true role of the Federal Reserve.

  6. Why is it that whether an economic event was expected or unexpected is always cited as if it mattered? Does it ever occur to anyone that, if the expectations are routinely false, it may be because the expectant people aren’t very good at looking ahead and may be confusing expectation with wishful thinking? Is it because wishful thinking is mistaken for expectation that “nobody could have expected” what has already happened and was, in fact, anticipated by people to whom nobody in authority wanted to pay attention?
    Is it wishful thinking that keeps economic projections from ever being right?

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