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“We are headed to a Greece-type collapse,” GOP presidential candidate Mitt Romney has warned repeatedly, while indicting President Obama’s stimulus plan. Romney promises to slash spending and balance the budget to unleash growth.
Only now his warning provides a starkly different caution. Portugal, Ireland, Spain, Italy, Britain — the countries that have responded to the economic crisis by focusing on slashing their deficits — are sinking. And the ruin inflicted on Greece threatens its democracy, as riots and resistance spread.
The advocates of austerity — here and in Europe — have argued that cutting spending and reducing deficits, even with interest rates already near zero, would revive the economy. The irresponsible — other than the banks — would be disciplined. This would reassure investors and “job creators,” and they would invest and start to hire again. With an added refrain about deregulation, this remains the mantra chanted ceaselessly by Republicans.
The failure of austerity politics
Article Source: The Washington Post
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In the United States, President Obama resisted, but in Europe, austerians — led by Angela Merkel in Germany and the new Tory government of David Cameron in Britain — won the day. But what New York Times columnist Paul Krugman justly derided as the “confidence fairy” didn’t show up. Turns out businesses lacked customers, not confidence. And the countries that followed that advice have been sinking into recession or worse ever since.
(my emphasis)
- 4 votes
#1 - Wed Feb 22, 2012 9:09 AM ESTThere is a bit of irony here -
The Republicans accuse Obama of wanting a European-style economy.
The European countries are actually attempting to use a Republican-style economy (reducing revenue to the government and in turn reducing benefits to taxpayers) . And it's failing miserably. In fact there's a inverse relationship between the amount of austerity and their economic health.
- 2 votes
Yeah, anyone who knows anything about economics knows that...
- 4 votes
#2 - Wed Feb 22, 2012 10:02 AM ESTThe beatings will continue till the moral improves. Can a political party belief this BS. The world has gone mad, you can't slash your way out it only drives you deeper in the hole. Its like the farmer who cut costs by not feeding his wife. He lamented "Just as soon as I got her trained to not eat she ups and dies" One would think that the elite would realize that the short term benefit of avoidance of their fair share of taxes will be offset by a ruinous economy.
- 3 votes
#3 - Wed Feb 22, 2012 10:15 AM ESTchum,
the thing is, some countries needed austerity, even if it is painful. Greece for example, it just doesn't even have the foundation of an economy that can support the spending that was happening. Therefore it needed to have an economic reset.
The United States on the other hand has an economy that can support it, and therefore austerity right now is just counter productive and would do more harm than good.
The question really shouldn't be austerity or not, but should be 'what is the right solution for this situation'.
- 2 votes
#4 - Wed Feb 22, 2012 11:16 AM ESTI agree with your post. And I think Greece is going to face a lot of pain for a long time.
The question really shouldn't be austerity or not, but should be 'what is the right solution for this situation'.
Exactly. If we had people trying to answer that question instead of trying to form policy for political reasons, we would be much better off.
- 1 vote
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