4 ms·

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.

Gibbon1 2y ago
I will totally agree with that. The US response needed to be double what it was. But at least the sign was in the right direction. I remember at the time reading what the European Central Bank was doing and going it's not acting like a central bank. Was trying to squeeze blood out of the less economically developed southern countries to protect French and German Banks from their own underwriting failures. So that austerity means their response was destructive.
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.

Gibbon1 2y ago

I will totally agree with that. The US response needed to be double what it was. But at least the sign was in the right direction. I remember at the time reading what the European Central Bank was doing and going it's not acting like a central bank. Was trying to squeeze blood out of the less economically developed southern countries to protect French and German Banks from their own underwriting failures. So that austerity means their response was destructive.

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.