Thursday, August 4, 2011

The Failure of Austerity

From today's Washington Post:

The trouble in Italy and Spain came amid more signs that European economies are rapidly slowing as nations across the continent tighten their fiscal belts to combat high debt loads. At the same time, economists warn, the spending cuts in the U.S. debt agreement could undercut the anemic U.S. economic recovery. Concerns about slower growth are already rattling global markets and raising the prospect that European countries will have an even harder time than anticipated restoring themselves to health.
And then there is this:

“The U.S. debt ceiling debate has, I think, really eroded confidence among consumers and businesses in addition to creating uncertainty,” Stock said in an interview. “The resolution of uncertainty with the compromise doesn’t restore with it the view of legislative competence in economic management.”

I have a GREAT idea. While the economy is already weak, let's embrace austerity! That will slow growth even more and increase out debt to GDP ratio so we can then engage in even more austerity to slow the economy even more ....