Subjective Invective v.9

From the WSJ:

ATHENS—Greece's fiscal discipline efforts appear to be paying off, according to budget data released Monday, with a primary surplus that may help make the country's case for further debt relief from international creditors.

But the steep spending cuts brought about by the fiscal discipline have come at a huge price for the country. The economy contracted by 4.6% in the second quarter, albeit at a slower pace than previous quarters, raising doubts as to whether it will be able to return to growth in 2014 and start lowering record high unemployment rates.

I am not sure why economists invented the term "primary surplus", except to make government budget appear better than they are. The idea of a primary surplus or primary deficit is that it excludes interest payments on debt, and usually other real expenses such as social security payments.

The reality is that debt payments must be made, and pretending government finances are fine by excluding them is a strange exercise in fantasy. Economists nurture a similar fantasy that sovereign debt never has to be repaid, and can be rolled over forever, when there are numerous examples to the contrary throughout history.

In my opinion, Japan is still in the pole position for the Keynesian end game winner. Developed western nations are quickly following the Japanese fiscal leadership of infinite debt and economic stagnation. Don't change that dial, the finish is likely to be spectacular!