Jeff MadrickAusterity is killing Europe
Proponents of austerity claim that as nations take control of their finances businesses become more convinced that interest rates will not rise and that growth will resume. Their reasoning has been abetted by the financial markets, which drove up rates on Greek debt and soon enough on the debt of nations like Portugal, Spain and Italy. Should these nations not be able to pay their debts, bond buyers wanted a high enough interest rate to compensate for the risk.But this is pre-Great Depression economics. How could the EU so misread history and treat with contempt the teachings of John Maynard Keynes, who argued that during recessions governments must expand economies through spending and tax cuts, not the opposite?
What Madrick says is laughable.
Sovereign debt is killing Europe.
Increasing the sovereign debt won’t reduce it. Nor will printing more euros - because they will just continue to spiral down in value and therefore it really gets you nowhere.
Sheesh.
And another thing: Jeff is wrong on the facts: Austerity is working in Germany and Ireland and Iceland and Greece and Spain and Italy are all already doing better with interest rates than before they enacted mild spending cuts.
Madrick and the Left think raising retirement age from 50 to 60-65 is draconian and immoral. They are wrong. What is wrong is asking hard-working and productive and independent people to continue to pay for these unsustainable welfare programs - and pay even more so others can work less.
Socialist programs are what's been driving the debt - not "unfunded wars" or "bloated defense budgets" or "tax breaks for the rich" or insufficient taxes.
Madrick and the Left could not be more wrong: their diagnosis is wrong and their prescription is wrong.
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