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Conservatives (Neo Liberals) as Teenagers
Krugman reports that neo liberal technocrat Frau Merkel gave her response to the S&P downgrades in Europe.
German chancellor Angela Merkel has called on eurozone governments speedily to implement tough new fiscal rules after Standard & Poor’s downgraded the credit ratings of France and Austria and seven other second-tier sovereigns.
More austerity – exactly a reason S&P gave for the downgrade.
We also believe that the agreement [the latest euro rescue plan] is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the EMU’s core and the so-called “periphery”. As such, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers’ rising concerns about job security and disposable incomes, eroding national tax revenues.
Yes, she ignored what S&P said in their report.
Of course this is the same reaction we are seeing from Republicans in the US – economy killing spending cuts along with tax cuts. Is the debt a problem? Yes! Can you solve that problem by killing the economy and reducing tax revenue? No! Clueless plutocrats and technocrats on both sides of the pond.
5 Responses to “Conservatives (Neo Liberals) as Teenagers”
Wonder if it will make my old Zeiss f2.8/45 worth more? Should I thank Merkel or not?
Merkel will pay at the polls. So will Sarkozy.
Someone explain to me why Merkel will pay at the polls. Germany has kept it’s AAA rating and was assigned a stable outlook, the implication being Merkel is doing something right in the eyes of S&P.
Germany’s number one export market, Europe, is going belly up, what do you think happens in Germany after the Europeans stop buying German goods?
PS. Standard & Poors are the same people who rated Mortgage Bonds in the US and did no notice the Real-Estate Bubble, so I would not put to much faith in their ratings.
If we don’t put much faith in S&P’s opinion that negates Krugman’s/Beasley’s point that Merkel is wrong by acting counter to S&P’s opinion. Actually looking at the entire S&P report their opinion is quite a bit more complex than Krugman portrays it, and his essay is probably just the usual complaining from Krugman.