By Nile Gardiner
All over Europe governments have begun to implement austerity
measures in an effort to rein in spending and reduce crippling budget
deficits. It is hard to find a major European leader these days still
advocating the kind of large-scale stimulus spending championed by the
Obama Administration in the United States over the past three years.
Ironically, the most vocal supporters of greater government spending in
the EU can be found today in America.
In yet another hectoring New York Times piece last week on the
European financial crisis (a follow-up to his November 10 article
“Legends of the Fail”), imaginatively entitled “Killing the Euro”,
Nobel Prize-winning economist Paul Krugman attacked “deficit scolds and
inflation obsessives”, completely dismissing the idea that the EU debt
disaster has anything to do with out-of-control spending:
“How did things go so wrong? The answer you hear all the time is
that the euro crisis was caused by fiscal irresponsibility. Turn on
your TV and you’re very likely to find some pundit declaring that if
America doesn’t slash spending we’ll end up like Greece. Greeeeeece!
“But the truth is nearly the opposite. Although Europe’s leaders
continue to insist that the problem is too much spending in debtor
nations, the real problem is too little spending in Europe as a whole.
And their efforts to fix matters by demanding ever harsher austerity
have played a major role in making the situation worse.
“So the next time you hear someone claiming that if we don’t slash
spending we’ll turn into Greece, your answer should be that if we do
slash spending while the economy is still in a depression, we’ll turn
into Europe. In fact, we’re well on our way.”
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