20 Percent Drops in GDP: Economists New Definition of Success

[Hannah Bell]

Back when I learned economics, companies were supposed to make profits and economies were supposed to grow. That doesn't seem to be the case anymore. We have "saavy" businessmen like Goldman Sachs CEO Lloyd Blankfein who took his company to the edge of bankruptcy only to be rescued by bailouts from the Fed and Treasury. Most of the crew of Wall Street multi-millionaires would be on the unemployment line today without the big helping hand from the Nanny State.

In the same vein, the NYT is now citing research from Deutsche Bank reporting : "that euro-area countries 'can learn some valuable lessons from the Baltics’ experience over recent quarters.' Those countries survived drastic budget consolidation without devaluing their currencies."

The article then continues to quote the Deutsche Bank experts: "Restoration of competitiveness and weighty fiscal consolidation in the absence of currency adjustment is difficult but doable ... as long as politicians and the general public are willing to accept some up-front pain in return to longer term gains.”

Just to give a clearer idea of what the Deutsche Bank crew is talking about, the IMF projects that GDP in each of the Baltic countries will drop by close to 20 percent from its 2007 levels. In the United States this would be equivalent to losing $3 trillion in annual output. By 2014, the last year for the projections, GDP is expected to be 7.1 percent lower than its 2007 level in Lithuania, 9.1 percent lower in Estonia, and 14.5 percent lower in Latvia. Unemployment in these countries is more than 15 percent in Estonia and Lithuania and more than 20 percent.

It is nice to see that German bankers applaud this pain.

http://www.cepr.net/index.php/blogs/beat-the-press/20-percent-drops-in-gdp-economists-new-definition-of-success/

[Demeter]

1. I Expect the US To Do Worse than a 20% Drop

There is no engine for recovery, no plan, not even much of a safety net.

[blindpig]

3. There will be no full 'recovery', not even in the cards.

This is the new reality, Capitalism works just fine for the ruling class and fuck everybody else.

[Zynx]

6. Would you like to bet on that? I'd love to take the other side of that.

[Demeter]

7. Sure! If You Lose, You Get to Post Weekend Economists For a Whole Weekend

If you win, you get the job for life. My time frame---from now until the US unemployment rate rises to 1999 levels--however long that takes.

[Zynx]

8. 20% real GDP drop from these levels or from the 2008 peak?

[Demeter]

9. From the Peak, of Course!

[Rex]

2. Repukes love to bail out failure, it reminds them of themselves

like when Reagan bailed out Donald Trump to the tune of 700 million dollars! Repuke believe in failure and reward those that can and do harm America for their own personal gain.

[maryf]

4. morning K&Rnt

[entanglement]

5. IMF "help" is like chemotherapy, only worse. A "cure" that ends up killing the patient,

more often than not.