In 2010 Harvard University economists Carmen Reinhart and Kenneth Rogoff published a paper, based largely on their book, This Time It’s Different. The paper suggested that there was a correlation (not a causal relationship, as Rogoff and Reinhart were careful to point out) between a public debt of more than 90% of a nation’s GDP and slow economic growth. The hypothesis was used by many, especially Congressman Paul Ryan, Mitt Romney’s Vice-Presidential candidate in the 2012 election) to justify strong measures to reduce public debt. Indeed, the hypothesis was cited by some economists in the European Central Bank and the International Monetary Fund to justify harsh austerity measures in several European states with high public debt. In now turns out that there were many errors in the study, and the correlation is now open to question. So the question is now whether the austerity measures imposed were in fact justified. Obviously more research is necessary, but it is disheartening to think that the unemployment rates in Greece and Spain (upwards of 35%) are due to flawed analysis.
A new form of bank protest has emerged in Spain and has rapidly spread across Europe. Flash mobs are assembling in all sorts of bank facilities and doing a flamenco (a dance form with strong anti-government roots in Spain). You can find information about this protest movement at flo6x8, but here is a You Tube example of the protest. Check out the security officer as he tries to figure out what to do. I especially like the guy in the cow outfit.
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