Tuesday, October 16, 2012

Lithuania isn't in a recession - No Right Turn is not right again

I do read the No Right Turn blog from time to time, and it demonstrate how willfully blind and deceptive some can be when the facts reported in the same story they quote from, don't fit their blinkered vision.

Lithuanians went to the polls today in the first round of parliamentary elections - and have voted resoundingly against their neoLiberal, pro-austerity government which had plunged them into a Greek-style austerity-induced recession.

He links to a BBC article about the election and says that the government "plunged them" into a recession.  The leftwing meme being simply that reforms that shrink the state sector create a recession and Greece's problems are that it is cutting spending, not that it can't borrow to sustain overspending anymore and is having to beg from other states to cover its overspending until it can balance its books.

Yet that very same article from the BBC says this about the Lithuanian economy:

Mr Kubilius came to power in 2008, just as the global financial crisis was bringing a dramatic end to an extended Lithuanian boom fuelled by cheap Scandinavian credit.

So Lithuania's recession started the same way as most of the others, cheap credit from banks with state issued fiat currencies, overborrowing and an adjustment when reality set in.

Mr Kubilius enforced a drastic austerity programme, to stave off national bankruptcy.

Presumably the leftwing view of this is that the government should simply print more money.  After all if the state can't borrow anymore, it either has to cut spending, raise taxes or print.

Meanwhile, economic output dropped by 15%, unemployment climbed and thousands of young people emigrated from the Baltic nation of 3.3 million in search of work.

Yes, a fiat currency credit fueled boom adjusting itself, and the government balancing its books.

The budget deficit has since been tamed and GDP reached growth of 5.8%.

Hold on.  Growth of 5.8%? What is this austerity induced recession?  Indeed according to Eurostat, Lithuania's unemployment rate has been dropping from a peak of 18.3% in June 2010 to 12.9% in August 2012.  

Idiot Savant need only have read the rest of the article for it to be obvious the recession in Lithuania is well and truly over, and a 5 minute search to find the Lithuanian unemployment rate.

However, that wouldn't suit the "evil neo-liberals want to destroy the state and ruin the economy and want mass unemployment, but socialists love people, want prosperity and know how to do it, if only they were allowed to spend money that doesn't exist, and could get their hands on all the money of the evil capitalists" monologue that he, and the left (becoming more and more out of touch with economic) have been preaching.

Greece is a totemic example of the failure of socialism to deliver sustainable prosperity, followed by Portugal and Italy.  Spain and Ireland are totemic examples of the failure of cheap credit created from nothing through fiat currencies and fractional reserve banking.

Maybe Idiot Savant might want to revise his tired empty thesis that the only people to blame when governments overspend, are those who loaned money to them in the first place,  because when they stop, what does he really expect should happen?

1 comment:

Mark Hubbard said...

And if it's not bad enough he always gets it wrong, Bryce Edwards continues to quote him in his Political Daily as if he's some type of authority.