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Austerity Proponents Give In To New Suggestions


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Austerity Proponents Give In To New Suggestions

  1. 1. Austerity Proponents Give In To New Suggestions
  2. 2. Break the euro and acknowledge austerity has been a disaster? That's a fantastic horror, recommends Nobel Prize-winning economist Paul Krugman, tongue planted firmly in cheek. People and companies aren't spending in the wake of government belt-tightening, so something has to give.
  3. 3. The vote revolt
  4. 4. France and Greek held political elections on May 6, and both countries showed a strong support for candidates who were against austerity policies. A number of people have lost their jobs in European nations due to revolts over the circumstances. The "unwashed masses" are done with austerity measures suggested and passed now, although a new policy has not been passed, according to Krugman.
  5. 5. Franois Hollande's defeat of French President Sarkozy was painted in ominous tones by The Economist, which considers Hollande's turn from malfunctioning orthodoxy to be "rather dangerous." However, from an economic standpoint, Sarkozy's strategies - enacted in close tandem by neighboring political ally Chancellor Merkel of Germany - clearly weren't working, claims Krugman. Two years of austerity have done nothing but grind into the public, and the voters had enough.
  6. 6. Economy not getting better
  7. 7. The austerity measures were initiated in an attempt to try and get results in the tough economy. The problem was that people could not spend more because they did not have the cash with all spending slashes and job eliminations. The economic depression just got worse with the measures.
  8. 8. Ireland was among the nations 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 despite the truth that it really was not. In fact, Ireland's borrowing costs stayed very high while all other borrowing in nations decreased a ton.
  9. 9. Europe's next move
  10. 10. Krugman suggests that the euro should be abolished. If Greece, Spain, Ireland and other nations in economic trouble still had their own currency, Europe wouldn't be in such a pickle. Troubled nations could easily restore cost-competitiveness and exports via devaluation of the currency. Iceland did it to the krona and allowed its banks to fail, and the nation is now on the road to recuperation.
  11. 11. Killing the euro would be disruptive for a time and an utter defeat for the concept 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.
  12. 12. The European Central Bank would have to focus on economic growth rather than inflation if anything were to work.
  13. 13.