We are used in data free irrational rants from Steve Kates but yesterday he went into overdrive.
He 'looked' at Greece and suggested that the reason Greece was about to experience growth for the first time since 2008 was because the budget was being balanced.
Well I went and looked at the latest IMF report.
Wow guess what it showed a lot of what Kates said was complete and utter cobblers.
First let us go through what Keynesian economics would say about Greece.
Given the private sector has been contracting ever since the GFC any Government imposing austerity would make the economy worse . This occurred.
It would only get weaker if the CHANGE in the structural part of the budget was larger than the year previous. This occurred.If the change is smaller then it would be positive for the economy.
see Here for example. update This is even better
Kates then goes on to say even though there has been no growth since 2008 this only occurred in the public sector. The private sector continued to grow. Now dear reader when you examine the data in the IMF report can you see this? No? No-one can. Kates is simply making stuff up as he always does.
Have a look at the private sector in terms of consumption and investment. When does it become positive . Around 2015 as the IMF projects after a tentative recovery in 2014.
If the private sector was in such a healthy state wouldn't investment be rising over that time instead of FALLING?
This is another of the Kates fictional stories like the 10 fiscal stimuli's that never occurred in Japan during the 90s or the only reason classical economics has never worked was because all the statisticians were Keynesians!
Put Kates in a white jacket ans stick him in a mental institution. The man is seriously deranged and has no idea of reality!
And yes you can tell I'm bored!
An e-mailer makes the valid point if Kates is to be consistent about Austerity promoting growth in a recession then why did it take so long?
I am afraid Kates has never been consistent except in being wrong!