Break the euro and acknowledge austerity has been a disaster? That's a fantastic horror, suggests 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 needs to give.
Revolt means loss of jobs
France, Greece and various other European nations have shown indications of revolt over dire economic circumstances that have cost many individuals their jobs. Both France and Greece held political elections May 6, and in both nations, voters cast a firm majority vote for candidates willing to jettison economic austerity policies. While a clear policy option to austerity has yet to be defined, Krugman suggests that the "unwashed masses" are through with the type of austerity that learned officials suggested and enacted.
The Economist explained the defeat of French President Sarkozy by Franois Hollande. Sarkozy's decisions were not actually working, according to Krugman, although The Economist points out that it can be dangerous to turn as Hollande intends to do.
Strategies need to be changed
The economic depression got even worse when austerity measures were put into place. Getting rid of jobs and cutting spending made it impossible for people to spend more. They did not have the cash to do so. The economy was not getting any better.
In Ireland, austerity measures were passed to gain favor and improve the nation's standing in the bond markets. Conventional wisdom suggested austerity would work on that level, but what actually occurred in Ireland is borrowing costs remained considerably higher than those in Spain, Italy and Germany. The European press drank the Kool Aid legislators were serving and declared Ireland's measures a success, despite obvious evidence to the contrary.
Looking to the future
Europe itself would not be doing so 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 starting to recuperate again. Cost-competitiveness could possibly be restored, and countries could export depending on devaluation of currency.
There might be issues for a while when the Euro is killed, but eventually Europe would become whole again and would be better than ever. Krugman does point out that the European Union would become obsolete with the change. He also states that one choice that could help every person is having countries with increased inflation helping their neighbors out through trade. He believes this could really help everyone's economy.
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 proposes.
Revolt means loss of jobs
France, Greece and various other European nations have shown indications of revolt over dire economic circumstances that have cost many individuals their jobs. Both France and Greece held political elections May 6, and in both nations, voters cast a firm majority vote for candidates willing to jettison economic austerity policies. While a clear policy option to austerity has yet to be defined, Krugman suggests that the "unwashed masses" are through with the type of austerity that learned officials suggested and enacted.
The Economist explained the defeat of French President Sarkozy by Franois Hollande. Sarkozy's decisions were not actually working, according to Krugman, although The Economist points out that it can be dangerous to turn as Hollande intends to do.
Strategies need to be changed
The economic depression got even worse when austerity measures were put into place. Getting rid of jobs and cutting spending made it impossible for people to spend more. They did not have the cash to do so. The economy was not getting any better.
In Ireland, austerity measures were passed to gain favor and improve the nation's standing in the bond markets. Conventional wisdom suggested austerity would work on that level, but what actually occurred in Ireland is borrowing costs remained considerably higher than those in Spain, Italy and Germany. The European press drank the Kool Aid legislators were serving and declared Ireland's measures a success, despite obvious evidence to the contrary.
Looking to the future
Europe itself would not be doing so 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 starting to recuperate again. Cost-competitiveness could possibly be restored, and countries could export depending on devaluation of currency.
There might be issues for a while when the Euro is killed, but eventually Europe would become whole again and would be better than ever. Krugman does point out that the European Union would become obsolete with the change. He also states that one choice that could help every person is having countries with increased inflation helping their neighbors out through trade. He believes this could really help everyone's economy.
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 proposes.
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