7 ms·

Europeans fail to understand how much they were fucked by the 2008 crisis

30 points by Melchizedek 2y ago

alephnerd 2y ago
Plenty of older Europeans (and non-Europeans) remember the Eurozone crisis, austerity, and the North-South clashes - it just got memory holed by a subset of European techies. Take a look at the polling booths today to see those who remember the Eurozone crisis.
- TMWNN 2y ago
  Brexit had a role. The weeping and wailing began the night of the referendum. By the next morning we were confidently told by the press, Reddit, and Twitter that millions of Leave voters were already regretting their vote, and that another referendum was thus the only fair/democratic/correct thing to do. (That even if such millions of Regretters actually existed that does not mean that a revote would occur is a minor technicality.) Since "they" were for Brexit "we" must be against it, with "it" thus resulting in an ever-firmer embrace of all that the EU says and does. Since then we've seen every single ailment in the UK blamed on Brexit (while every single time the UK does better than continental Europe blithely ignored), even while similar pressures/desires elsewhere are ignored. Macron admitted in 2018 that the French would probably have voted to leave in a UK-style referendum. <https://www.theguardian.com/world/2018/jan/21/emmanuel-macron-uk-yes-no-brexit-vote-mistake https://www.theguardian.com/world/2018/jan/21/emmanuel-macro...>
iLoveOncall 2y ago
There's absolutely no indication that what is highlighted in the tweet is due to the 2008 crisis. As a French, I can tell you that the reason the GDP doesn't grow is because France is absolutely failing at any sort of innovation. So are most EU countries. This is self-inflicted damage, nothing to do with 2008.
- alephnerd 2y ago
  > There's absolutely no indication that what is highlighted in the tweet is due to the 2008 crisis Not in the tweet, but the austerity policies pushed by the ECB in the aftermath of the crisis has been shown to have significantly slowed down economic growth [0] [0] - https://www.nber.org/system/files/working_papers/w23147/w23147.pdf https://www.nber.org/system/files/working_papers/w23147/w231...
- MattPalmer1086 2y ago
  Then what explains the clear inflection point in 2008? Did western Europe suddenly become less innovative?
  - steveBK123 2y ago
    Austerity
Loughla 2y ago
Is GDP per capita a measure of anything real for day-to-day life?
- trgn 2y ago
  It's a measure of global agency.
- 082349872349872 2y ago
  The lower the Gini coefficient, the better day-to-day proxy it makes? (I saw a claim here on HN the other day that the state of mississippi has a higher GDP/capita than europe in general; while I don't know if that be true [my corner of western europe being over twice on that scale], the two potential explanations [based on my memories of a neighbouring state] which sprung to mind were: (a) the benefit of the general productivity of mississippi may be concentrated [and perhaps not even among those living there], or (b) GDP/capita is a better indicator for finance than prosperity)
  - tharmas 2y ago
    Its the UK, minus London, that has a similar GPD per capita as Mississippi.
- deleted 2y ago
  [deleted]
- rsynnott 2y ago
  Not particularly; it's not even _supposed_ to be a measure of wellbeing/standard of living. It's at best a measure of economic activity, but it's kind of problematic even for that, especially in an increasingly globalised economy.
- tharmas 2y ago
  It can be heavily skewed. The UK and Ireland are two examples. Ireland's GDP per capita is heavily skewed by the Big corporations that are registered there for low tax purposes. And the UK's GDP is heavily skewed by London's financial sector. Its a very rough indicator. Silicon Valley and the poorest county in Mississippi are in deep contrast to each other. California has one of the highest GDPs per capita in the world. Mississippi has the lowest in the USA.
stranded22 2y ago
I was thinking about this the other day. The house prices in the UK have steadily risen way above salary. Could it be that the salary was screwed by 2008, but the house prices continued? Either via investments (buy to let as well as stocks etc), other home owners being able to sell / buy or international money?
- deleted 2y ago
  [deleted]
jc_811 2y ago
Does anyone have any good recommended articles/reads about why exactly the US recovered quite spectacularly (GDP wise) after the ‘08 financial crisis, while the EU stagnated so heavily?
- ivewonyoung 2y ago
  I think the short answer is stimulus and spending in the US vs. austerity in the EU. And also labor laws and the red tape in company regulations.
  - steveBK123 2y ago
    Two huge factors, agreed. US did bailouts & stimulus, and now compared to COVID arguably far too little stimulus for partisan reasons. Meanwhile the EU was implementing austerity due partially to Germans incessant inflation fears.
    - tharmas 2y ago
      Yes. Bernanke was a keen student of the Great Depression of the 1930s. He argued that a big part of that problem was the lack of money supply. So he did QE (a term coined by Prof Richard Werner, by the way). The only problem was too much of that money ended up in purchasing assets rather than being invested in productive capacities. Hence the asset price inflation we have today. Tory Austerity has absolutely decimated the UK. George Osbourne should be pilloried as being the main architect of its demise. Ideology is a pernicious disease.
      - steveBK123 2y ago
        The monetary side could only do so much and the fiscal side didn’t pull its weight. For better or worse, having a GOP president during COVID lead to more stimulus as the Dems will play along and just add some pro labor addendums. Having Obama in the WH he mostly dealt with nonstop GOP attempts to block any fiscal aid. Not to mention the huge focus on Obamacare by Dems took the eye off the ball. US came out of GFC better than most but we still could have gotten out of it 2x faster.
immibis 2y ago
The only consistent conclusion I can come to with all of these metrics (not just this one) is that they're severely underreporting USA inflation, and therefore severely overvaluing whatever is happening in the USA. When I talk to people from the USA they don't feel twice as rich, although by the numbers they are. Instead I notice that a prepared meal that costs about €10 here costs about $20 there (€1≈$1), although junk food is still super cheap for them due to their government subsidizing it way more. It feels like the US$ should be valued about half as much as it is, to make all the numbers be consistent. And this meshes with the knowledge the USA has basically gone on a money printing rampage since 2008, more than any other country that shows up on these graphs. By the amount of money printing and the hypothesis that money printing is the cause of inflation, the US$ should be worth half. It meshes with the rise of the USA's stock market indices while most of the rest of the world was flat. If the US$ had halved in value (since 2008) but publicly traded companies were still producing the same real profits, indices would have about doubled (since 2008). They have. So why isn't the currency exchange rate reflecting that?
rspoerri 2y ago
I wonder how much of this GDP US growth is from big corps, instead of income increase of low and medium income households. Because if i look at the politics and the topics that are a huge problem in the USA right now, it's that those struggle equally or even more then the european households.
r-u-serious 2y ago
If GDP rises but wages stagnate, where does the money go?
- tharmas 2y ago
  It can go into a few hands. UK is the 6th largest economy in the world. Yet if you factor out London, the rest of the country has a GDP per capita the equivalent of Mississippi, the poorest state in the USA. In short, UK has relatively high GDP but it is heavily concentrated in one small geographic area.
kkfx 2y ago
As an European: most in the EU have failed to understand that we was global superpower when we have had domestic industry and no, the country size count little, Portugal and the Nederland was two biggest world superpower despite their tiny size. For one. Secondary EU and USA interests are different, simply, we have still a bit of industry but not natural resources and space, Russian Federation have them and with our tech we could be again a balanced (no one of the two can oppress/rule the other) superpower no one in the world, USA and China combined, could beat us. We committed suicide with two world war, maybe it's time to avoid a third one. Tertiary UE dense cities are simply untenable and have no reasons to be kept in modern time, after globalization and IT/TLC revolution it's about time to stop wasting enormous resources in concentration and spread again. USA need cities to have large slice of poor easy to be used as Ford model workers because USA have domestic resources, we have not, we can't compete in that term, but we are capable of crafting things together, meaning we can cooperate in a spread and very diverse system, with different languages and laws as well. Sorry guys, that's is. The world is vary and anyone have it's own interests.

30 points by Melchizedek 2y ago

Plenty of older Europeans (and non-Europeans) remember the Eurozone crisis, austerity, and the North-South clashes - it just got memory holed by a subset of European techies. Take a look at the polling booths today to see those who remember the Eurozone crisis.

TMWNN 2y ago
Brexit had a role. The weeping and wailing began the night of the referendum. By the next morning we were confidently told by the press, Reddit, and Twitter that millions of Leave voters were already regretting their vote, and that another referendum was thus the only fair/democratic/correct thing to do. (That even if such millions of Regretters actually existed that does not mean that a revote would occur is a minor technicality.) Since "they" were for Brexit "we" must be against it, with "it" thus resulting in an ever-firmer embrace of all that the EU says and does. Since then we've seen every single ailment in the UK blamed on Brexit (while every single time the UK does better than continental Europe blithely ignored), even while similar pressures/desires elsewhere are ignored. Macron admitted in 2018 that the French would probably have voted to leave in a UK-style referendum. <https://www.theguardian.com/world/2018/jan/21/emmanuel-macron-uk-yes-no-brexit-vote-mistake https://www.theguardian.com/world/2018/jan/21/emmanuel-macro...>

iLoveOncall 2y ago

There's absolutely no indication that what is highlighted in the tweet is due to the 2008 crisis. As a French, I can tell you that the reason the GDP doesn't grow is because France is absolutely failing at any sort of innovation. So are most EU countries. This is self-inflicted damage, nothing to do with 2008.

alephnerd 2y ago
> There's absolutely no indication that what is highlighted in the tweet is due to the 2008 crisis Not in the tweet, but the austerity policies pushed by the ECB in the aftermath of the crisis has been shown to have significantly slowed down economic growth [0] [0] - https://www.nber.org/system/files/working_papers/w23147/w23147.pdf https://www.nber.org/system/files/working_papers/w23147/w231...
MattPalmer1086 2y ago
Then what explains the clear inflection point in 2008? Did western Europe suddenly become less innovative?
- steveBK123 2y ago
  Austerity

Loughla 2y ago

Is GDP per capita a measure of anything real for day-to-day life?

trgn 2y ago
It's a measure of global agency.
082349872349872 2y ago
The lower the Gini coefficient, the better day-to-day proxy it makes? (I saw a claim here on HN the other day that the state of mississippi has a higher GDP/capita than europe in general; while I don't know if that be true [my corner of western europe being over twice on that scale], the two potential explanations [based on my memories of a neighbouring state] which sprung to mind were: (a) the benefit of the general productivity of mississippi may be concentrated [and perhaps not even among those living there], or (b) GDP/capita is a better indicator for finance than prosperity)
- tharmas 2y ago
  Its the UK, minus London, that has a similar GPD per capita as Mississippi.
deleted 2y ago
[deleted]
rsynnott 2y ago
Not particularly; it's not even _supposed_ to be a measure of wellbeing/standard of living. It's at best a measure of economic activity, but it's kind of problematic even for that, especially in an increasingly globalised economy.
tharmas 2y ago
It can be heavily skewed. The UK and Ireland are two examples. Ireland's GDP per capita is heavily skewed by the Big corporations that are registered there for low tax purposes. And the UK's GDP is heavily skewed by London's financial sector. Its a very rough indicator. Silicon Valley and the poorest county in Mississippi are in deep contrast to each other. California has one of the highest GDPs per capita in the world. Mississippi has the lowest in the USA.

stranded22 2y ago

I was thinking about this the other day. The house prices in the UK have steadily risen way above salary. Could it be that the salary was screwed by 2008, but the house prices continued? Either via investments (buy to let as well as stocks etc), other home owners being able to sell / buy or international money?

deleted 2y ago
[deleted]

jc_811 2y ago

Does anyone have any good recommended articles/reads about why exactly the US recovered quite spectacularly (GDP wise) after the ‘08 financial crisis, while the EU stagnated so heavily?

ivewonyoung 2y ago
I think the short answer is stimulus and spending in the US vs. austerity in the EU. And also labor laws and the red tape in company regulations.
- steveBK123 2y ago
  Two huge factors, agreed. US did bailouts & stimulus, and now compared to COVID arguably far too little stimulus for partisan reasons. Meanwhile the EU was implementing austerity due partially to Germans incessant inflation fears.
  - tharmas 2y ago
    Yes. Bernanke was a keen student of the Great Depression of the 1930s. He argued that a big part of that problem was the lack of money supply. So he did QE (a term coined by Prof Richard Werner, by the way). The only problem was too much of that money ended up in purchasing assets rather than being invested in productive capacities. Hence the asset price inflation we have today. Tory Austerity has absolutely decimated the UK. George Osbourne should be pilloried as being the main architect of its demise. Ideology is a pernicious disease.
    - steveBK123 2y ago
      The monetary side could only do so much and the fiscal side didn’t pull its weight. For better or worse, having a GOP president during COVID lead to more stimulus as the Dems will play along and just add some pro labor addendums. Having Obama in the WH he mostly dealt with nonstop GOP attempts to block any fiscal aid. Not to mention the huge focus on Obamacare by Dems took the eye off the ball. US came out of GFC better than most but we still could have gotten out of it 2x faster.

immibis 2y ago

The only consistent conclusion I can come to with all of these metrics (not just this one) is that they're severely underreporting USA inflation, and therefore severely overvaluing whatever is happening in the USA. When I talk to people from the USA they don't feel twice as rich, although by the numbers they are. Instead I notice that a prepared meal that costs about €10 here costs about $20 there (€1≈$1), although junk food is still super cheap for them due to their government subsidizing it way more. It feels like the US$ should be valued about half as much as it is, to make all the numbers be consistent. And this meshes with the knowledge the USA has basically gone on a money printing rampage since 2008, more than any other country that shows up on these graphs. By the amount of money printing and the hypothesis that money printing is the cause of inflation, the US$ should be worth half. It meshes with the rise of the USA's stock market indices while most of the rest of the world was flat. If the US$ had halved in value (since 2008) but publicly traded companies were still producing the same real profits, indices would have about doubled (since 2008). They have. So why isn't the currency exchange rate reflecting that?

rspoerri 2y ago

I wonder how much of this GDP US growth is from big corps, instead of income increase of low and medium income households. Because if i look at the politics and the topics that are a huge problem in the USA right now, it's that those struggle equally or even more then the european households.

r-u-serious 2y ago

If GDP rises but wages stagnate, where does the money go?

tharmas 2y ago
It can go into a few hands. UK is the 6th largest economy in the world. Yet if you factor out London, the rest of the country has a GDP per capita the equivalent of Mississippi, the poorest state in the USA. In short, UK has relatively high GDP but it is heavily concentrated in one small geographic area.

kkfx 2y ago

As an European: most in the EU have failed to understand that we was global superpower when we have had domestic industry and no, the country size count little, Portugal and the Nederland was two biggest world superpower despite their tiny size. For one. Secondary EU and USA interests are different, simply, we have still a bit of industry but not natural resources and space, Russian Federation have them and with our tech we could be again a balanced (no one of the two can oppress/rule the other) superpower no one in the world, USA and China combined, could beat us. We committed suicide with two world war, maybe it's time to avoid a third one. Tertiary UE dense cities are simply untenable and have no reasons to be kept in modern time, after globalization and IT/TLC revolution it's about time to stop wasting enormous resources in concentration and spread again. USA need cities to have large slice of poor easy to be used as Ford model workers because USA have domestic resources, we have not, we can't compete in that term, but we are capable of crafting things together, meaning we can cooperate in a spread and very diverse system, with different languages and laws as well. Sorry guys, that's is. The world is vary and anyone have it's own interests.