The problem with this thread it that no conservative, at least those in the US, is calling for austerity. Austerity is higher taxes and lowered spending. While the lowered spending is good, the higher taxes end up hurting the economy. Companies have less to invest with and consumers have less income to spend. Conservatives want lower spending AND taxes. 

You can't spend your way out of debt. And while it is true that a little debt isn't a bad thing, the point of debt is that you are going to eventually pay it off. Unfortunately, governments have no intention of paying any of it back. In fact, they just keep adding to it.

I didn't think austerity was ever credited as a path to prosperity to begin with. I mean, you take money out of the economy, the GDP of that economy will go down...it's kind of common sense. Unless a country's deficit is at a point where it's on the verge of going bankrupt, all austerity will do is hurt a country's economy, as has been proven in both the US and Europe.

Moderate austerity is a fine thing to do in the middle of a healthy economy when tax revenue is up and people will be less reliant on government services. But severely cutting government spending or raising taxes in the middle of a weak economy is incredibly stupid, and anyone with half a brain should have realized that. Heck, the unemployment rate would be a whole percentage point lower (not taking into account factors like increased labor participating in a healthier economy of course) if government employment had just remained the same as it had been in 2008.

http://blogs.wsj.com/economics/2012/05/08/unemployment-rate-without-government-cuts-7-1/

Hopefully, sanity will eventually return to Washington. We need government spending and lower taxes NOW, lowered spending and higher taxes once we're back to full employment.

Exactly. Pretty much every instance of economic prosperity has been a "bubble" of some sort, backed by both private and government spending.

Well, no, true austerity is reducing government spending and raising taxes. Doesn't matter so much if your still running a deficit. Otherwise pretty much every usage of the word I've seen for the past five years has been wrong. That's what European governments have been practicing, and that's (sort of) what we've been practicing, and it's been attributed to reduced GDP and significantly higher unemployment by economists.

Taking money out of the economy isn't going to magically make the economy better. It's just going to shrink it. It's something you do in a time of prosperity.

Imaginationland.

Private spending is organic.  That's not a bubble.   It's only a bubble if there isn't anything of substance supporting it.

And if every instance of economic prosperity was built on a bubble...notice how messed up everything is?  Maybe we should have focused on something more organic instead.

Not usually it isn't... no.

If that were true GDP would be ~ equal to pick any time int he past really.

The fact that GDP even after bubble crashes stays where it is shows that most growth is real growth.

Also,  I'd suggest government spending mostly doesn't cause bubbles either.  Instead it causes cliffs.  Like the "Fiscal" cliff.  We spend, then when we don't anymore we "fall off" it.

It's not really effecting consumer demand so i don't think bubble is an accurate term.

Government POLICES can cause a bubble.  Sometimes with spending involved  (for example, giving homeowners a tax credit, or forcing banks to give loans to certain people).  The spending though is irrelevent to the real distortions caused by the policy.

Spending itself however doesn't really create  a bubble so much as cause inefficencies because it generally will spend a lot of money on stuff people don't want because one central guy can't really pick out what people want as much as everybody could for themselves.

At least they are growing, we in the UK are amazed at .3% growth. How pathetic!! Sadly, it's the same across much of Europe too. We are just so screwed. Australia must at least maintain what it's got.

This graph is the UK's poor economy

You must have missed this, I personally haven't felt any pinch and this town has been expanding like crazy over the last few years. (Although, that's not representative of the entire nation.)


4.3% growth at one point in 2012, at the moment the growth rate seems to dropping, according to the news it's about 1% currently, the government needs to do more stimulas. I.E. Not bail out companies, but give billions to the people again. :P

Dont forget that those countries didnt go  BAM! now everything is changed. It took them months to change every little aspect of their policy and Its not even in full austeriy mode yet. So give them a few years.

There is also dumb citizens that 1) stop working/strike 2) go on the streets to destroy cars buldings shops 3) and block every little change. 4) force the state to pay alot of money to have security at the "demonstrations"  Of course NOT WORKING when working NOT ENOUGH being the problem helps a lot. And destroying infrastructure helps in having better infrastructure. Thats pure LOGIC!

People became lazy  they thought nothern EU countries will make the eurozone some kind of welfare place. And after spending more money than they had f*cked them up they refuse to change their behavior.

I mean look at the pension percentage compared to the actual income.  Whereas in Germany the pension is roughly 39% of the former income. Greeks get 80% of their former income as pension. 

Cut the greek pension in half and then you have alot of money.    Or in Germany stop "importing" useless cavemen without education  and start to "import" educated people college graduates etc.  All those "society parasites" they import dont help. I mean look at canada they know how to do it.

"You want to live in Canada?  Okay you have to bring XY dollars with you, you have to have a useful job/education. You also have to double the money you brought within a year. You also have to understand and speak either english or french. Welcome to Canada!"

THATS the way to go.

And not  "you are of no use? You cant speak our language? You have 20 family members that are waiting to follow you into our country? You dont want to work for your money? You plan on having 5 kids that will probably be undereducated and become criminals? Welcome to Deutschland"

I am not saying that every family is like this but there is tons of them.

TBH They should force those families to clean the streets and remove grafity,  give them something useless to do  but let them do something for their money...

Austerity alone is not the solution. They need to stop the waste of money.  They have to spend more money for important things. Short term profit/saved money   never helps  in the long run.

Governments are usually stupid, For example some German guy invented special asphalt that wont get damaged by cars or the winter/ice. It will be the same after 50 years of usage.  The asphalt costs like twice as much as normal asphalt but so far no country uses it.

They prefer to patch every little hole again and again and again.  I mean every country is in dept it doesnt matter if you buy asphalt for 2x the price. But when you do you dont have to patch ever again.

I couldn't agree  with you more.

I just have to be thankful  I live in a country (Brazil) where there are jobs available everywhere, as long as you have good technical education.  And thanks to our massive industrial production and the great companies (Vale do Rio Doce, Petrobras, etc) that give all the necessary support to our great technical schools, we have great technical education for free.