Krugman on the Euro Establishment’s “Suicide Pact”
This post was written by Gregory Connor
Krugman has a very strongly-worded op-ed piece in The New York Times today, arguing against the fiscal austerity strategy of the Eurozone. The article is inside a paywall (you are allowed ten visits per month without paying) but here is a fair-use quote that gives a sense of his views:
“When the bubble burst, the Spanish economy was left high and dry; Spain’s fiscal problems are a consequence of its depression, not its cause. Nonetheless, the prescription coming from Berlin and Frankfurt is, you guessed it, even more fiscal austerity. This is, not to mince words, just insane. …… Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy — and their society — off a cliff. And the whole world will pay the price. “
Pretty scary stuff to read. I am not sure what alternative he is offering for countries running out (or run out) of fiscal space, like Ireland. He seems to think that Germany should come to our rescue — good luck with that. It is quite pessimistic in tone so perhaps he knows that his alternative non-austerity strategy is also not a politically feasible outcome.