Since the fullest flush of the financial crisis, Paul Krugman has been a relentless voice for stimulus, infrastructure spending and all-out war against high unemployment. Throughout his tenure at the Times, he has been so often right on fundamentals -- the Bush tax cuts, the housing bubble, the size of the 2009 stimulus -- that I would guess his credibility is unsurpassed among lay liberal readers.
So it's interesting to see a fact-based, more or nonideological commentator take on Krugman with regard to Euro-austerity. The dissenter is the Financial Times' Gideon Rachman, repeat winner of xpostfactoid's Wolf Munch Rock award, so named because the truth is hard to digest. Krugman calls European austerity policies "insane," Rachman notes, "with characteristic understatement." There's a bit of a tonal joke there, methinks, because for Rachman, understatement really is characteristic.
Rachman shares the FT Comment page with Martin Wolf, Wolfgang Munchau and others who have lamented the slow-motion Eurozone train wreck these past two years -- and the drastic effects of cutting spending as economies contract. He recognizes the basic Keynesian equation. But his argument about stimulus in Europe is a kind of mirror image of progressives' take on tax cuts for the wealthy in the US: we are tapped out on that front. So is much of Europe, he argues, on infrastructure spending, government payrolls and social services:
Showing posts with label eurozone. Show all posts
Showing posts with label eurozone. Show all posts
Tuesday, May 01, 2012
Thursday, December 22, 2011
Chronicle of a crisis diffused?
My perception as a semi-informed layman of the latest chapter in the Eurozone crisis has been singular, and maybe worth recording.
For months, the supremely knowledgeable columnists on my favorite opinion page, the FT, along with many other observers, have played Greek chorus to an EU tragedy unfolding in several acts. Most recently, in the runup to the early December EU summit, Wolfgang Munchau, Martin Wolf, Philip Stephens and others have warned that the Eurozone is on the brink of avoidable doom. The most recent lament has been that the European Central Bank could at any given time end at least the immediate existential crisis by buying bonds Italian and Spanish government debt -- on the secondary market, since the EU charter apparently bans the ECB from buying the bonds directly. But the ECB's new president, Mario Draghi, like his predecessor, has demurred. The summit yielded only a pact for stricter enforcement of budget austerity standards, which does nothing to ease the pressure of rising interest rates.
Then, yesterday, I pick up some uncertainly-sourced snippet to the effect that banks are buying Italian and Spanish debt, those countries' interest rates are falling, and some are saying that the crisis may be over. Yeahrright....
This morning, however, the Times' Floyd Norris brings those glimmers into focus:
For months, the supremely knowledgeable columnists on my favorite opinion page, the FT, along with many other observers, have played Greek chorus to an EU tragedy unfolding in several acts. Most recently, in the runup to the early December EU summit, Wolfgang Munchau, Martin Wolf, Philip Stephens and others have warned that the Eurozone is on the brink of avoidable doom. The most recent lament has been that the European Central Bank could at any given time end at least the immediate existential crisis by buying bonds Italian and Spanish government debt -- on the secondary market, since the EU charter apparently bans the ECB from buying the bonds directly. But the ECB's new president, Mario Draghi, like his predecessor, has demurred. The summit yielded only a pact for stricter enforcement of budget austerity standards, which does nothing to ease the pressure of rising interest rates.
Then, yesterday, I pick up some uncertainly-sourced snippet to the effect that banks are buying Italian and Spanish debt, those countries' interest rates are falling, and some are saying that the crisis may be over. Yeahrright....
This morning, however, the Times' Floyd Norris brings those glimmers into focus:
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