2. Break the euro and acknowledge austerity has been a
disaster? That's a fantastic horror, recommends 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.
4. France and Greek held political elections on May 6, and
both countries showed a strong support for candidates
who were against austerity policies. A number of people
have lost their jobs in European nations due to revolts
over the circumstances. The "unwashed masses" are
done with austerity measures suggested and passed
now, although a new policy has not been passed,
according to Krugman.
5. Franois Hollande's defeat of French President Sarkozy
was painted in ominous tones by The Economist, which
considers Hollande's turn from malfunctioning
orthodoxy to be "rather dangerous." However, from an
economic standpoint, Sarkozy's strategies - enacted in
close tandem by neighboring political ally Chancellor
Merkel of Germany - clearly weren't working, claims
Krugman. Two years of austerity have done nothing but
grind into the public, and the voters had enough.
7. The austerity measures were initiated in an attempt to
try and get results in the tough economy. The problem
was that people could not spend more because they did
not have the cash with all spending slashes and job
eliminations. The economic depression just got worse
with the measures.
8. Ireland was among the nations that did austerity
measures, although it did these measures simply to help
the country's standing in bond markets. This was
something anticipated to work, and the press called it
success despite the truth that it really was not. In fact,
Ireland's borrowing costs stayed very high while all
other borrowing in nations decreased a ton.
10. 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 easily restore
cost-competitiveness and exports via devaluation of the
currency. Iceland did it to the krona and allowed its
banks to fail, and the nation is now on the road to
recuperation.
11. Killing the euro would be disruptive for a time and an
utter defeat for the concept of the European Union. But
Europe as a whole would not be financially
compromised. Krugman wonders whether there is one
more way out, via an economic road once paved by
Germany. By trading with nations facing an inflationary
boom, nations with above-normal inflation can
experience a trade surplus compared with its struggling
neighbors, provided interest rates are low.
12. The European Central Bank would have to focus on
economic growth rather than inflation if anything were
to work.
