Showing posts with label Greece. Show all posts
Showing posts with label Greece. Show all posts

Sunday, February 08, 2015

Waving Buh Bye To Austerity

It's not surprising that Europe is finally ejecting austerity from the capsule and moving on to an economic policy rooted in reality as opposed to unicorn, fairy land.

The ECB’s new stimulus “should strengthen demand, increase capacity utilization and support money and credit growth,” Mr. Draghi said. He rejected any criticism that the vast expansion of the ECB’s easy-money policies would stoke inflation down the road, noting that inflation has stayed very low even after several interest-rate cuts and abundant ECB loans to banks. “There must be a statute of limitations for those who say there will be inflation,” he said.

Yeah, that was passed by a long time ago...

Equally not surprising is the recent vote in Greece firmly against austerity.

Greece currently has public debt equivalent to 177 percent of its gross domestic product (GDP). Its unemployment rate stands near 25 percent overall, and more than half of young adults have no jobs and few prospects. The austerity measures have gutted many of the country's most vital social programs. The economy has shrunk by more than 23 percent since the 2008 global financial crisis, a contraction comparable to the U.S. economy's during the Great Depression.

Austerity in times of economic contraction doesn't work. It never has. The only question that remains is when this shift in policy produces results, will the pathological haters of government finally admit fault?