Tuesday, August 24, 2010

No, Really, Austerity Doesn't Work

From the FT:

The eurozone’s growth spurt lost momentum this month, as an expansion in output in Germany and France failed to make up for a near standstill elsewhere in the 16-country region.

A closely followed barometer of business activity on Monday pointed to a slower but still solid expansion in private sector activity, with the region’s prospects hanging largely on Germany and France, its two largest economies.

The purchasing managers’ indices are regarded as an early indicator of business trends, and the latest readings contained some hope of growth continuing at a brisk pace, even if the US economy slows.

But they intensified worries that the region will be marred increasingly by weaker growth in the peripheral eurozone countries such as Spain and Greece, where fears remain over the stability of public finances

I realize that abject stupidity is becoming the currency of political discourse on both sides of the aisle, but really, the whole austerity thing doesn't work.

Here's a chart of the data from the same article: