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When Austerity Fails
http://www.nytimes.com/2011/05/23/op...er=rss&emc=rss
OP-ED COLUMNIST
When Austerity Fails
By PAUL KRUGMAN
Published: May 22, 2011
I often complain, with reason, about the state of economic discussion in the United States. And the irresponsibility of certain politicians — like those Republicans claiming that defaulting on U.S. debt would be no big deal — is scary.
But at least in America members of the pain caucus, those who claim that raising interest rates and slashing government spending in the face of mass unemployment will somehow make things better instead of worse, get some pushback from the Federal Reserve and the Obama administration.
In Europe, by contrast, the pain caucus has been in control for more than a year, insisting that sound money and balanced budgets are the answer to all problems. Underlying this insistence have been economic fantasies, in particular belief in the confidence fairy — that is, belief that slashing spending will actually create jobs, because fiscal austerity will improve private-sector confidence.
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Oh, look, it's Hava (get a freakin accountant) kasha.
The solutions for Greece to spend their way out of it are 1.) default, 2.) get a massive bailout, or 3.) raise money on the open market at 17% interest due to their shitty credit rating.
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