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March 8, 2013

Latest Posts from Economist's View


Latest Posts from Economist's View


Posted: 25 Feb 2013 12:24 AM PST
What does the election in Italy tell us about the impact of failed austerity policies on the political and economic stability of Europe?:
Austerity, Italian Style, by Paul Krugman, Commentary, NY Times: Two months ago, when Mario Monti stepped down as Italy's prime minister, The Economist opined that "The coming election campaign will be, above all, a test of the maturity and realism of Italian voters." The mature, realistic action, presumably, would have been to return Mr. Monti — who was essentially imposed on Italy by its creditors — to office, this time with an actual democratic mandate.
Well, it's not looking good. Mr. Monti's party appears likely to come in fourth; not only is he running well behind the essentially comical Silvio Berlusconi, he's running behind an actual comedian, Beppe Grillo, whose lack of a coherent platform hasn't stopped him from becoming a powerful political force.
 It's an extraordinary prospect... But without trying to defend the politics of bunga bunga, let me ask the obvious question: What good, exactly, has what currently passes for mature realism done in Italy or for that matter Europe as a whole?
For Mr. Monti was, in effect, the proconsul installed by Germany to enforce fiscal austerity on an already ailing economy... This would be fine if austerity policies actually worked — but they don't. And far from seeming either mature or realistic, the advocates of austerity are sounding increasingly petulant and delusional..., austerity hasn't even achieved the minimal goal of reducing debt burdens. And because austerity policies haven't been offset by expansionary policies elsewhere, the European economy as a whole ... is back in recession...
Given all of this, one might have expected some reconsideration and soul-searching on the part of European officials, some hints of flexibility. Instead, however, top officials have become even more insistent that austerity is the one true path. ...
Which brings me back to Italy, a nation that for all its dysfunction has in fact dutifully imposed substantial austerity — and seen its economy shrink rapidly as a result.
Outside observers are terrified about Italy's election, and rightly so: even if the nightmare of a Berlusconi return to power fails to materialize, a strong showing by Mr. Berlusconi, Mr. Grillo, or both would destabilize not just Italy but Europe as a whole. But remember, Italy isn't unique: disreputable politicians are on the rise all across Southern Europe. And the reason this is happening is that respectable Europeans won't admit that the policies they have imposed on debtors are a disastrous failure. If that doesn't change, the Italian election will be just a foretaste of the dangerous radicalization to come.
Posted: 24 Feb 2013 09:53 AM PST
The President's weekly address:
Remarks of President Barack Obama As Prepared for Delivery The White House February 23, 2013: Hi, everybody. Our top priority as a country right now should be doing everything we can to grow our economy and create good, middle class jobs.
And yet, less than one week from now, Congress is poised to allow a series of arbitrary, automatic budget cuts that will do the exact opposite. They will slow our economy. They will eliminate good jobs. They will leave many families who are already stretched to the limit scrambling to figure out what to do.
But here's the thing: these cuts don't have to happen. Congress can turn them off anytime with just a little compromise. They can pass a balanced plan for deficit reduction. They can cut spending in a smart way, and close wasteful tax loopholes for the well-off and well-connected.
Unfortunately, it appears that Republicans in Congress have decided that instead of compromising – instead of asking anything of the wealthiest Americans – they would rather let these cuts fall squarely on the middle class. ...
Are Republicans in Congress really willing to let these cuts fall on our kids' schools and mental health care just to protect tax loopholes for corporate jet owners? Are they really willing to slash military health care and the border patrol just because they refuse to eliminate tax breaks for big oil companies? Are they seriously prepared to inflict more pain on the middle class because they refuse to ask anything more of those at the very top?
These are the questions Republicans in Congress need to ask themselves. And I'm hopeful they'll change their minds. Because the American people have worked too hard for too long to see everything they've built undone by partisan recklessness in Washington. ...
Making America a magnet for good jobs. Equipping our people with the skills required to fill those jobs. Making sure your hard work leads to a decent living. That's what this city should be focused on like a laser. And I'm going to keep pushing folks here to remember that.
Thanks.
I suppose it's a sign that the president has compromised like he claims, but the compromise has gone too far already from my perspective and I am not enthralled with his deficit reduction plan (though at least Obama finally seems to be getting his priorities -- jobs first -- correct).

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