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View Diary: Krugman Goes Doomer! This is Going To Hurt. (523 comments)

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  •  Three stories from the BBC to see, plus one more (18+ / 0-)

    Looks like Merkel's conservatives are taking a beating in German elections in one of their most populous states.

    The Greek situation is looking more unstable - their chances of forming a government just decreased.

    In Spain, thousands are protesting the austerity policies being imposed on them by a conservative government.

    Since returning to power in December, Prime Minister Mariano Rajoy has vowed to undertake harsh austerity measures - promising a major reform "every Friday".

    He defended such policies at a political rally on Sunday, reported Reuters news agency, saying they were necessary to tackle the country's economic problems.

    "We'll get out of this [crisis] if the government doesn't tire of making reforms, and the government is not going to tire," Mr Rajoy reportedly said.

    But amid a relapse into recession and an unemployment rate that has soared to 24%, many protesters say such policies are not working.

    And in Great Britain, Krugman notes how things are going: Not well - so more of the same insanity.
    There might conceivably be a justification for this policy if Britain were facing an intense cash squeeze. But it isn’t — it’s able to borrow very cheaply, with near-zero real interest rates even on very long-term borrowing.

    And given that public investment is, you know, productive, this is almost surely a case of self-defeating austerity: by shortchanging infrastructure now the Cameron government is saving only a trivial amount on interest payments while reducing long-run growth and hence revenues.

    The fact that this passes for responsible behavior is proof that the lunatics are running the economic policy asylum.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Sun May 13, 2012 at 06:34:39 PM PDT

    [ Parent ]

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