Ambrose Evans Pritchard has a wonderful piece in The Telegraph today telling us why the eurozone’s attempt to use austerity to solve the continent’s economic problems just isn’t going to work. Why it cannot work in fact, not just that it isn’t going to. It starts with this observation:
The entire EU austerity plan is based on a false premise. This disastrous error is now clear beyond any reasonable doubt.
The Teuto-Calvinists believe – or profess to believe, since much of their dogma is national self-interest dressed up as theory – that the fiscal multiplier is around 0.5.
That is to say, fiscal retrenchment worth 1pc of GDP will cut output by half as much, or around 0.5pc over two years. There is pain, but at least there is gain.
This is based on the IMF’s analysis of fiscal crises over the decades.
Well, it has not worked out like that. Ireland has contracted at nearly seven times the speed, Spain four times, and Greece three times……………………………
full article at source:http://www.forbes.com/sites/timworstall/2012/10/04/eurozone-why-the-austerity-solution-is-doomed-to-failure/
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About machholz
I started this Blog to get out of my system the absolute rage that I have for the corrupt politicians and their Banker Buddies. I’m an ordinary guy, married with kids, and have firm opinions of what is right and what is wrong. I’m not afraid to say it even when it makes me unpopular.
I reproduce news all manner of articles, but will always confirm the source of the articles; this is a compliment to the source of such news pieces. But if you do not agree with this and you are the original author, I will take down any article when requested to do so. I do not assume that the author of the news articles share with my views, I include news articles to give readers another slant to my views or to illustrate what the mainstream news media say on the relevant topic.
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For the record I am currently an Independent political activist and am not affiliated to any political party
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