Call for Growth Rises to Counter German Push for Austerity

[alp227]

Source: New York Times

With political allies weakened or ousted, Chancellor Angela Merkel’s seat at the head of the European table has become much less comfortable, as a reckoning with Germany’s insistence on lock-step austerity appears to have begun.

“The formula is not working, and everyone is now talking about whether austerity is the only solution,” said Jordi Vaquer i Fanés, a political scientist and director of the Barcelona Center for International Affairs in Spain. “Does this mean that Merkel has lost completely? No. But it does mean that the very nature of the debate about the euro-zone crisis is changing.”

A German-inspired austerity regimen agreed to just last month as the long-term solution to Europe’s sovereign debt crisis has come under increasing strain from the growing pressures of slowing economies, gyrating financial markets and a series of electoral setbacks.

Spain officially slipped back into recession for the second time in three years on Monday, after following the German remedy of deep retrenchment in public outlays, joining Italy, Belgium, the Netherlands and the Czech Republic. In the Netherlands, Prime Minister Mark Rutte handed his resignation to Queen Beatrix on Monday after his government failed to pass new austerity measures over the weekend.

Read more: http://www.nytimes.com/2012/04/24/world/europe/call-for-growth-puts-pressure-on-german-led-austerity.html?pagewanted=all

[DJ13]

1. Did they really think that asking the 99% to sacrifice

.... while watching the 1% increase their incomes, was a plan that wouldnt fail?

Seriously?

[cstanleytech]

2. Why dont the governments just tell everyone they sold bonds to that will mature between now and

say the next 20 or so years from now that their bond repayment will be delayed by 10 years?
Would it really kill the bond holders to wait awhile longer?

[DallasNE]

3. "Countries Cannot Cut Their Way To Fiscal Health" DUH!!!

Merkel's plan had a 100% chance of failure from the start. At some point she will have to allow the European Central Bank to embrace quantitative easing to encourage growth. They will need fiscal stimulus as well.

What boggles the mind is that they seem to have been blindsided that austerity only would not work as a policy. Do they not have economic models that they can use to crunch numbers for various scenarios like the CBO back here? That should have prevented them from going down this path in the first place. But what has happened was both predictable and predicted.

[newspeak]

4. all of these talks about austerity in europe reminds me of a discussion

our history class had in the early nineties about the formation of the european union. Those for the union were talking how in order to compete in the corporate world, they might have to get rid of some of those old pesky social programs or diminish them. Now this discussion was back in, I believe 1990, 91.

And what a propitious economic environment to further that agenda.