Austerity Proponents Give In To New Suggestions
Break the euro and admit austerity has been a failure? That's an excellent horror, recommends Nobel Prize-winning economist Paul Krugman...
http://live4earn.blogspot.com/2014/07/austerity-proponents-give-in-to-new.html
Break the euro and admit austerity has been a failure? That's an excellent horror, recommends Nobel Prize-winning economist Paul Krugman, tongue planted firmly in cheek. People and businesses are not spending in the wake of government belt-tightening, so something has to give.
Many individuals lose jobs over revolt
Krugman makes it clear that while no brand new policy against austerity has been initiated, people are done with austerity measures and the officials who passed them in European nations. A number of people have lost their jobs in these nations due to revolt over the measures. Candidates against austerity measures were voted for by the strong majority of people on May 6 when both France and Greece held political elections.
Franois Hollande's defeat of French President Nicolas Sarkozy was painted in ominous tones by The Economist, which considers Hollande's turn from malfunctioning orthodoxy to be "rather dangerous." However, from an economic standpoint, Sarkozy's strategies - passed in close tandem by neighboring political ally Chancellor Merkel of Germany - clearly weren't working, says Krugman. Two years of austerity have done nothing but grind to the public, and the voters had enough.
Cutting not helping
Cutting spending and getting rid of jobs might mean something if real outcomes were soon to follow. Yet when nothing but misery became of austerity - business and consumers didn't spend more because they could not - all the policies did was make the economic depression worse.
In Ireland, austerity measures were passed to get favor and improve the nation's standing in the bond markets. Conventional wisdom suggested austerity would work on that level, but what actually happened in Ireland is borrowing costs remained significantly higher than those in Spain, Italy and Germany. The European press drank the Kool Aid legislators were serving and declared Ireland's measures a success, in spite of obvious evidence to the contrary.
Moving on for Europe
Krugman recommends that the euro should be abolished. If Greece, Spain, Ireland and other nations in economic trouble still had their own currency, Europe wouldn't be in such a pickle. Troubled nations could easily restore cost-competitiveness and exports via devaluation of the currency. Iceland did it to the krona and allowed its banks to fail, and the country is now on the road to recuperation.
There may be problems for a while when the Euro is killed, but eventually Europe would become whole again and would be better than ever. Krugman does point out that the European Union would become obsolete with the change. He also states that one choice that could help everybody is having nations with increased inflation helping their neighbors out through trade. He believes this could really help everyone's economy.
According to Krugman, none of this will work unless the European Central Bank changes from thinking about inflation to thinking about economic growth.
Many individuals lose jobs over revolt
Franois Hollande's defeat of French President Nicolas Sarkozy was painted in ominous tones by The Economist, which considers Hollande's turn from malfunctioning orthodoxy to be "rather dangerous." However, from an economic standpoint, Sarkozy's strategies - passed in close tandem by neighboring political ally Chancellor Merkel of Germany - clearly weren't working, says Krugman. Two years of austerity have done nothing but grind to the public, and the voters had enough.
Cutting not helping
Cutting spending and getting rid of jobs might mean something if real outcomes were soon to follow. Yet when nothing but misery became of austerity - business and consumers didn't spend more because they could not - all the policies did was make the economic depression worse.
In Ireland, austerity measures were passed to get favor and improve the nation's standing in the bond markets. Conventional wisdom suggested austerity would work on that level, but what actually happened in Ireland is borrowing costs remained significantly higher than those in Spain, Italy and Germany. The European press drank the Kool Aid legislators were serving and declared Ireland's measures a success, in spite of obvious evidence to the contrary.
Moving on for Europe
Krugman recommends that the euro should be abolished. If Greece, Spain, Ireland and other nations in economic trouble still had their own currency, Europe wouldn't be in such a pickle. Troubled nations could easily restore cost-competitiveness and exports via devaluation of the currency. Iceland did it to the krona and allowed its banks to fail, and the country is now on the road to recuperation.
There may be problems for a while when the Euro is killed, but eventually Europe would become whole again and would be better than ever. Krugman does point out that the European Union would become obsolete with the change. He also states that one choice that could help everybody is having nations with increased inflation helping their neighbors out through trade. He believes this could really help everyone's economy.
According to Krugman, none of this will work unless the European Central Bank changes from thinking about inflation to thinking about economic growth.
