Reading List: Why Portugal may be the next Greece

27th March 2012

Why Portugal May Be the Next Greece

A shrining economy, high bond yields and higher private-sector debt than Greece, make Portugal Europe's second biggest problem, according to Michael Sivy. TIME


Emerging Asia: Two Paths through the Storm

Two academics find two different stories emerged from how Emerging Asia coped with the financial crisis of 2007-2009 – in particular how global financial markets and international trade affected some but not others. Federal Reserve Bank of San Francisco


Britain's Experience in Raising the Top Tax Rate

When Britain raised the income tax rate from 45% to 50% on the wealthy, it produced less revenue than had been predicted, but how such a step might play in the United States is uncertain, Bruce Bartlett writes. Economix


Robert Reich on Saving Capitalism and Democracy

An interview with political economist Robert Reich where he says despite three decades of growing inequality in America, which have imperiled democracy, there are precedents for a way out. The Browser


What's GDP got to do with it?

Sam Bowman concludes after reading a piece by Bryan Caplan in which he discusses the problems with GDP, "when people – especially politicians – treat GDP as the end-goal, they've misunderstood what the point of GDP is." Adam Smith


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9 thoughts on “Reading List: Why Portugal may be the next Greece”

  1. forbin says:

    hello shaun,

    they tell us we have trouble ahead if the young don’t get employed – growing army of never have’s = dangerous

    they tell us more part time jobs = less tax taken , less spending power – ergo economy shrinks again

    less productive ? perhaps whats being measure is the shorter hours a lot of these part time jobs have…… or why use machinery and computers ( improves productivity ) when all all you need is a few cheap toilet cleaners / shelf stackers ?

    honest Shaun , I dont think any government over the past 30 years has really tackled lower wages – its always been the for the best – the last boom was money brought into the economy from using houses as collateral – thats maxed out now and the lower wages are squeezing the results further…..

    as Indy Jones said – no good ,not good at all……


    1. Anonymous says:

      Hi Forbin
      You make a good point which is the time that individual’s are unemployed for matters considerably. Whilst “labour hoarding” may have capped unemployment for now what is missing is something to reduce it preferably quickly.Otherwise long-term unemployment and its implications are going to be bigger and bigger issues….
      Which film did he say that in by the way?

  2. JW says:

    Hi Shaun
    We are just mirroring the US with the employment stats. More part-time replacing full-time. Less male, more female employment. These add up to a reducing take home pay for the majority in real terms. This is inevitable given the global headwinds, a sobering reality of reducing relative standards of living for the vast majority whilst the debt induced ‘growth’ of the last decade or so is unwound. We are going back to the underlying trend that would have been there since the 70s without the mirage of ‘financialised’ growth. It will take a long time to unwind and its not very nice.

    1. Anonymous says:

      Hi JW

      It remains my view that rather than ploughing on with the zombie bank culture we would do much better if we addressed the underlying problems. We would then know where we stand and be able to start again. A bit of honesty would do us a lot of good….

      1. JW says:

        Hi Shaun
        Yes it would be good for the 99.9%. Unfortunately the 0.1% are doing very nicely out of this situation and its not in their interest to let too much ‘light’ in.

  3. Rods says:

    Hi Shaun,

    Another excellent piece of analysis, where you have looked ‘under the bonnet’ and analysed well a group of conflicting statistics.

    “My contention has been that the UK is in more of a depression where economic growth flatlines for a considerable period rather than in a recession where it is falling quickly”.

    Shaun, is this a depression in the UK or not? Nobody seems to know as there is no standard definition of a depression. A recession is easy on the basis that we all know the standard definition of a recession “It is when you have two or more adjacent quarters of negative growth”.

    But nobody seems to have provided a formal definition of a depression in a similar way, so this is my first attempt:

    “A depression is when there is a sustained period of very slow, below trend or negative growth, so that output remains below the last pre-recession peak for at least 3 years.”

    Now, I haven’t done any analysis yet to see how this would fit into the profiles of previous depressions and recessions, especially whether the 3 year period should be a bit shorter or more likely longer maybe even as long a 5 years. The key to me is the below pre-recession peak output as this quite rightly excludes, very slow growing economies with several mild recessions, as there output on trend would be higher. I would welcome your comments and that of other readers to see if we can make together a formal definition that you and the other readers are happy with. You could then use this formal definition on your blog, so you can say on our definition, with confidence, whether an economy is just in recession or in a depression.

    1. Anonymous says:

      Hi Rods
      There have been efforts at providing a definition of a depression but as you point out none of them have acquired the status of the recession definition. The two main factors are clearly size of the decline and how long it lasts for. The Economist magazine had a go at this and agreed with your 3 years and added a 10% decline in GDP. The trouble with the 10% decline definition is that say in the UK’s current situation our perception of the problem depends also on how long we are in it. So I would have the decline element reducing the longer the time period.

      What I mean by this is that say over 3 years a 10% drop is a depression, but after five years with some growth to follow people might be in the same position as an economy which had dropped by 6% and then not grown. So my suggestion would be that the longer the period a depression lasts for the less GDP needs to fall.After all if we look at the UK with our 4% decline and no recovery,when is that a depression?

      Another intriguing way of putting it is to define it in terms of how it began i.e depressions tend to come from bursting asset and credit bubbles. Is that enough for a definition?

  4. Anonymous says:

    Shaun..Thousands and thousands are being denied benefits for the first time having been on icap benefit for years and these people are then deemed to be too ill for jsa but not ill enough for esa and are caught in no mans land as far as benefits are concerned..
    Do you know if these figures include the thousands who have had their benefits stopped due to sanctions…I do know many many people on the forums i help on have given up on esa and stopped claiming and are relying on their dla to live on…I do wonder if this affects the figures?

    1. Anonymous says:

      Hi Geoff
      I think I have figured out the acronym’s which incapacity benefit,job seekers allowance and employment and support allowance.
      To answer your questio the overall labour market figures will include such people. If they are not in work for any reason other than retirement then they will be captured by the category for inactivity. This category fell by 181,000 in the last quarter to 9.01 million. For the categories that apply to your question we saw the following.
      temporary sickness: fell by 3,000 to 181,000
      long-term sick: fell by 32,000 to 2.104 million
      I hope these were genuine falls rather than the sick being squeezed off the list however it is just numbers which are not broken down further. I wish I could be more help as I had some experience via someone I know of the last effort in this direction- the All Works Test- and I did not like much what I saw. Good luck…

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