A contagion of bad ideas ( Joseph Stiglitz )

Financial distress isn't the only thing that moves easily across borders - so do misguided economic policies

August 8, 2011

The Great Recession of 2008 has morphed into the North Atlantic Recession: it is mainly Europe and the United States, not the major emerging markets, that have become mired in slow growth and high unemployment. And it is Europe and the US that are marching, alone and together, to the denouement of a grand debacle. A busted bubble led to a massive Keynesian stimulus that averted a much deeper recession, but that also fueled substantial budget deficits. The response - massive spending cuts - ensures that unacceptably high levels of unemployment (a vast waste of resources and an oversupply of suffering) will continue, possibly for years.

The European Union has finally committed itself to helping its financially distressed members. It had no choice: with financial turmoil threatening to spread from small countries like Greece and Ireland to large ones like Italy and Spain, the euro's very survival was in growing jeopardy. Europe's leaders recognised that distressed countries' debts would become unmanageable unless their economies could grow, and that growth could not be achieved without assistance.

But, even as Europe's leaders promised that help was on the way, they doubled down on the belief that non-crisis countries must cut spending. The resulting austerity will hinder Europe's growth, and thus that of its most distressed economies: after all, nothing would help Greece more than robust growth in its trading partners. And low growth will hurt tax revenues, undermining the proclaimed goal of fiscal consolidation.

The discussions before the crisis illustrated how little had been done to repair economic fundamentals. The European Central Bank's vehement opposition to what is essential to all capitalist economies - the restructuring of failed or insolvent entities' debt - is evidence of the continuing fragility of the Western banking system.

in full: http://english.aljazeera.net/indepth/opinion/2011/08/20118765237109365.html

But we knew that.




K & R

that more hardship is inevitable for many. So needlessly too....makes ya crazy/angry just thinking about it.

is not going to be ABLE to stop the moral rot on Wall St. Even if it wanted to. Which it really doesn't.