If the Germany (i.e. Mrs. Merkel) continues insisting on this foolish austerity for everyone, the entire €urozone is going to implode by the next summer.
As tempting as it is to believe, this is not a failed case of socialism. Spain ran a budget surplus and had very low debt before the crisis. All of its current problems are inflicted by the European Union's shortsighted focus on austerity and its inability to devalue its currency (since it doesn't have its own currency), thus sending it spiraling down a negative economic cycle. Your economy contracting sharply from cutting the government in recession results in your sovereign debt suddenly becoming much larger than if you had ran an economic stimulus and taken out additional debt. All economic models reliably support this, as well as the expected result that Spain, Greece, Ireland and C.O. got after years of cutting.
Greece did run itself into its initial problems by spending too much and racking up too much debt, and Ireland too by excessive gambling by its banks, and that debt should be paid off, but recessions are not the time to pay it off. Debt is paid off by saving from growth (something that should be legally instituted, I agree), not by cutting. The austerity approach that the EU has taken during the last 2 years has magnified the problems a hundredfold.
I agree that the Euro might be doomed, but it has nothing to do with socialism. And for all of USA's currently superior position (due to the limited stimulus + quantitative easing + primary world currency with lowest interest rates), if it continues on its current path of doing nothing it will soon be its turn as well.
As tempting as it is to believe, this is not a failed case of socialism. Spain ran a budget surplus and had very low debt before the crisis. All of its current problems are inflicted by the European Union's shortsighted focus on austerity and its inability to devalue its currency (since it doesn't have its own currency), thus sending it spiraling down a negative economic cycle. Your economy contracting sharply from cutting the government in recession results in your sovereign debt suddenly becoming much larger than if you had ran an economic stimulus and taken out additional debt. All economic models reliably support this, as well as the expected result that Spain, Greece, Ireland and C.O. got after years of cutting.
Greece did run itself into its initial problems by spending too much and racking up too much debt, and Ireland too by excessive gambling by its banks, and that debt should be paid off, but recessions are not the time to pay it off. Debt is paid off by saving from growth (something that should be legally instituted, I agree), not by cutting. The austerity approach that the EU has taken during the last 2 years has magnified the problems a hundredfold.
I agree that the Euro might be doomed, but it has nothing to do with socialism. And for all of USA's currently superior position (due to the limited stimulus + quantitative easing + primary world currency with lowest interest rates), if it continues on its current path of doing nothing it will soon be its turn as well.
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