Nobel Prize-winning economist Paul Krugman is not a lover of economic austerity procedures. He proposes that populist strife across Europe that has resulted from a tightening up of the purse strings has done nothing great for consumer confidence or economic recovery. Just because a government reduces spending does not mean that all will suddenly become right in the world.
Many individuals lose jobs over revolt
Krugman makes it clear that while no new policy against austerity has been initiated, people are done with austerity measures and the officials who passed them in European nations. Many people have lost their jobs in these nations because of revolt over the measures. Candidates against austerity measures were voted for by the strong majority of people on May 6 when both France and Greece held political elections.
The Economist explained the defeat of French President Sarkozy by Franois Hollande. Sarkozy's decisions were not really working, according to Krugman, although The Economist points out that it can be dangerous to turn as Hollande plans to do.
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 in spite of the fact that it was certainly not succeeding at all. Most 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.
The next place for Europe
Krugman suggests that the euro should be abolished. If Greece, Spain, Ireland and other nations in economic trouble still had their own currency, Europe wouldn't be in such a pickle. Troubled nations could quickly restore cost-competitiveness and exports via devaluation of the currency. Iceland did it to the krona and allowed its banks to fail, and the country is now on the road to recuperation.
There may be difficulties 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 everyone is having countries with increased inflation helping their neighbors out through trade. He believes this might really help everyone's economy.
According to Krugman, none of this will work unless the European Central Bank changes from thinking about inflation to thinking about economic growth.
Many individuals lose jobs over revolt
Krugman makes it clear that while no new policy against austerity has been initiated, people are done with austerity measures and the officials who passed them in European nations. Many people have lost their jobs in these nations because of revolt over the measures. Candidates against austerity measures were voted for by the strong majority of people on May 6 when both France and Greece held political elections.
The Economist explained the defeat of French President Sarkozy by Franois Hollande. Sarkozy's decisions were not really working, according to Krugman, although The Economist points out that it can be dangerous to turn as Hollande plans to do.
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 in spite of the fact that it was certainly not succeeding at all. Most 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.
The next place for Europe
Krugman suggests that the euro should be abolished. If Greece, Spain, Ireland and other nations in economic trouble still had their own currency, Europe wouldn't be in such a pickle. Troubled nations could quickly restore cost-competitiveness and exports via devaluation of the currency. Iceland did it to the krona and allowed its banks to fail, and the country is now on the road to recuperation.
There may be difficulties 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 everyone is having countries with increased inflation helping their neighbors out through trade. He believes this might really help everyone's economy.
According to Krugman, none of this will work unless the European Central Bank changes from thinking about inflation to thinking about economic growth.
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