09:17:00
Break the euro and admit austerity has been a disaster? That's a fantastic horror, suggests Nobel Prize-winning economist Paul Krugman, tongue planted firmly in cheek. People and businesses are not shelling out in the wake of government belt-tightening, so something has to give.
Seeing revolt signs
France and Greek held political elections on May 6, and both nations showed a strong support for candidates who were against austerity policies. A lot of people have lost their jobs in European nations because of revolts over the conditions. The "unwashed masses" are done with austerity measures proposed and passed now, although a brand new policy has not been passed, according to Krugman.
French President Nicolas Sarkozy's economic strategy was clearly not really working, according to Krugman. Still, Franois Hollande's defeat concerns the Economist. It believes that Hollande is taking a dangerous path with the new policies.
Slashing not helping
The economic depression got even worse when austerity measures were put into place. Getting rid of jobs and cutting spending made it extremely hard for people to spend more. They did not have the cash to do so. The economy was not getting any better.
Ireland was among the countries that did austerity measures, although it did these measures simply to help the country's standing in bond markets. This was something anticipated to work, and the press called it success in spite of the truth that it really was not. In fact, Ireland's borrowing costs stayed very high while all other borrowing in countries decreased a ton.
Europe's next move
Europe itself would not be doing this badly without the euro, according to Krugman. He believes that Greece, Spain and Ireland would not be hurting Europe as a whole if they had their own currency. Iceland let the krona banks fail, and now it is beginning to recuperate again. Cost-competitiveness could be restored, and countries could export based on devaluation of currency.
Killing the euro would be disruptive for a time and an utter defeat for the idea of the European Union. But Europe as a whole would not be financially compromised. Krugman wonders whether there is one more way out, via an economic road once paved by Germany. By trading with nations facing an inflationary boom, nations with above-normal inflation can experience a trade surplus compared with its struggling neighbors, provided interest rates are low.
If that were to work, and the European Central Bank were to change its focus from inflation to economic growth, the chance for real change could emerge, Krugman argues.
Seeing revolt signs
France and Greek held political elections on May 6, and both nations showed a strong support for candidates who were against austerity policies. A lot of people have lost their jobs in European nations because of revolts over the conditions. The "unwashed masses" are done with austerity measures proposed and passed now, although a brand new policy has not been passed, according to Krugman.
French President Nicolas Sarkozy's economic strategy was clearly not really working, according to Krugman. Still, Franois Hollande's defeat concerns the Economist. It believes that Hollande is taking a dangerous path with the new policies.
Slashing not helping
The economic depression got even worse when austerity measures were put into place. Getting rid of jobs and cutting spending made it extremely hard for people to spend more. They did not have the cash to do so. The economy was not getting any better.
Ireland was among the countries that did austerity measures, although it did these measures simply to help the country's standing in bond markets. This was something anticipated to work, and the press called it success in spite of the truth that it really was not. In fact, Ireland's borrowing costs stayed very high while all other borrowing in countries decreased a ton.
Europe's next move
Europe itself would not be doing this badly without the euro, according to Krugman. He believes that Greece, Spain and Ireland would not be hurting Europe as a whole if they had their own currency. Iceland let the krona banks fail, and now it is beginning to recuperate again. Cost-competitiveness could be restored, and countries could export based on devaluation of currency.
Killing the euro would be disruptive for a time and an utter defeat for the idea of the European Union. But Europe as a whole would not be financially compromised. Krugman wonders whether there is one more way out, via an economic road once paved by Germany. By trading with nations facing an inflationary boom, nations with above-normal inflation can experience a trade surplus compared with its struggling neighbors, provided interest rates are low.
If that were to work, and the European Central Bank were to change its focus from inflation to economic growth, the chance for real change could emerge, Krugman argues.
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