(1) a great deal of the deficits in many nations are just automatic stabilizers: the result of the collapse in tax revenues and rise in unemployment; in this sense, the rise in public debt is just a symptom of the private sector malaise.
(2) the Eurozone is a badly designed neoclassical disaster. We should not be surprised if it breaks up.
Tuesday, November 22, 2011
Steve Keen on Fiscal Stimulus
A rather brief little comment here from Steve Keen, but still worth emphasising:
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But isn't most of the Eurozone doing just fine? I speak of France, Germany, Austria, Netherlands, Belgium, and a few others.
ReplyDeleteAmong the member countries, aren't the troubled economies just a small minority?
If you mean not having a sovereign debt crisis like Greece, then you might say they are doing "fine".
ReplyDeleteHowever, the offical unemployment rate in France is 9.6%:
http://www.tradingeconomics.com/france/unemployment-rate
Of course, the "offical" unemployment rates tend to underestimate or under-report unemployment, so things are probably much worse.
Germany's rate is 6.5%:
http://www.tradingeconomics.com/germany/unemployment-rate
Even Finland has a rate of about 7%.
That's not fine in my book. That is a serious problem.
And the rest, including Germany are going to have sovereign debt crises if the current German-backed, full-steam-ahead-to-that-iceberg policies are followed. The German auction flap is a harbinger of this. All Euro states grossly underspend if they are considered as independent sovereign states, which they no longer are. The GFC ripped away that illusion. But they are all grossly overspending, overindebted if they are considered as US-state equivalents, under the thumb of a delusional ECB, which is their current reality.
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