Why the Argument for Austerity Took a Big Hit Yesterday
In the years following the financial crisis, America has been obsessed with debt. Hurting from the crisis, consumers and businesses have been busy paying off debt, while the federal government has ramped up its borrowing through a combination of stimulus spending and lower tax revenue. And of course all this new government debt — which has reached 73% of GDP and is expected to remain roughly at that level for the next decade — has many policy makers and citizens deeply concerned, to say the least. But exactly how concerned we ought to be over that debt level — and how radically we need to act to reduce it — remains hotly debated. Governments obviously need to be able to borrow, and nearly every government does so. But experts have reached no clear consensus over how much (relative to the size of its economy) a nation can safely borrow. That is, no consensus had begun to emerge until the appearance in 2010 of a paper, by economists Carmen Reinhart and Kenneth Rogoff, called “Growth ...
Outside the Box: The unhelpful debate over austerity vs. stimulus
The austerity versus stimulus debate has grown stale, says Barry Wood. It’s simplistic to argue that the U.S. is pursuing expansion while Europe goes in the opposite direction, foolishly choosing austerity over growth.
US, German finance chiefs downplay differences
BERLIN -- The new U.S. Treasury secretary and his German counterpart are downplaying their differences over whether Europe should ease off on austerity in the interests of economic growth....
Was Thatcherism Good (or Bad) for the Economy?
Margaret Thatcher was known as the woman who, between 1979 to 1990, brought austerity and — at least for part of her tenure — economic growth to a stagflation-riddled Britain. She’s also known as a heedless free-market deregulator who set the stage for financial boom and bust, as well as for growing inequality. At a time when the debate over growth and austerity is front and center in the UK, the US, Europe, and much of the rest of the world, what is the legacy of Thatcher economics? Below, a look at some of the Iron Lady’s key economic ideas and what, if anything, they have to teach us today. A focus on inflation versus unemployment. Perhaps it was justified back then, given that inflation in Britain in the late 1970s was heading towards 20%. But as Capital Economics managing director Roger Bootle points out in his smart look at Thatcher’s legacy in The Telegraph, the result of the government’s policy of fighting inflation by hiking interest rates fast and hard was “a cripplingly ...
Europe Markets: Portugal stocks slump in otherwise upbeat Europe
Portuguese stocks slump in an otherwise upbeat European market on Monday, after the country’s high court strikes down some of the austerity measures enacted as part of its rescue plan.