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 has to give.
Signs of revolt
France, Greece and various other European nations have shown indications of revolt over dire economic circumstances that have cost many people their jobs. Both France and Greece held political elections May 6, and in both countries, voters cast a firm majority vote for candidates willing to jettison economic austerity policies. While a clear policy alternative to austerity has yet to be defined, Krugman recommends that the "unwashed masses" are through with the type of austerity that learned officials suggested and enacted.
French President Nicolas Sarkozy's economic strategy was clearly not really working, according to Krugman. Still, Franois Hollande's defeat concerns the Economist. It believes that Hollande is taking a dangerous path with the brand new policies.
Economy not getting better
The economic depression got even worse when austerity measures were put into place. Getting rid of jobs and cutting spending made it extremely hard for people to spend more. They did not have the money to do so. The economy was not getting any better.
Austerity measures in Ireland were done to try to get the bond markets up and the media called this a success regardless of the belief that it was clearly not succeeding at all. A lot of people would assume austerity would work for that, but really it just brought on borrowing costs to remain much higher in Ireland than it was in many other countries.
Looking to the future
One suggestion Krugman gives is to allow the euro to be abolished. He believes that if nations could export based on the devaluation of the currency, it would be much better. Iceland let banks fail, leading it to recuperation. Krugman believes that Europe would not be in such a bad place if there were not so many troubles in Greece, Spain and Ireland financially due to the euro.
Krugman points out that the European Union would essentially be abolished if the euro was gone, and it would trigger struggles for a time, but eventually Europe would be better than ever. He also suggests that nations with great inflation right now can trade with neighbors who are struggling, which can be another choice to consider.
If which 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.
Signs of revolt
France, Greece and various other European nations have shown indications of revolt over dire economic circumstances that have cost many people their jobs. Both France and Greece held political elections May 6, and in both countries, voters cast a firm majority vote for candidates willing to jettison economic austerity policies. While a clear policy alternative to austerity has yet to be defined, Krugman recommends that the "unwashed masses" are through with the type of austerity that learned officials suggested and enacted.
French President Nicolas Sarkozy's economic strategy was clearly not really working, according to Krugman. Still, Franois Hollande's defeat concerns the Economist. It believes that Hollande is taking a dangerous path with the brand new policies.
Economy not getting better
The economic depression got even worse when austerity measures were put into place. Getting rid of jobs and cutting spending made it extremely hard for people to spend more. They did not have the money to do so. The economy was not getting any better.
Austerity measures in Ireland were done to try to get the bond markets up and the media called this a success regardless of the belief that it was clearly not succeeding at all. A lot of people would assume austerity would work for that, but really it just brought on borrowing costs to remain much higher in Ireland than it was in many other countries.
Looking to the future
One suggestion Krugman gives is to allow the euro to be abolished. He believes that if nations could export based on the devaluation of the currency, it would be much better. Iceland let banks fail, leading it to recuperation. Krugman believes that Europe would not be in such a bad place if there were not so many troubles in Greece, Spain and Ireland financially due to the euro.
Krugman points out that the European Union would essentially be abolished if the euro was gone, and it would trigger struggles for a time, but eventually Europe would be better than ever. He also suggests that nations with great inflation right now can trade with neighbors who are struggling, which can be another choice to consider.
If which 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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