For thee but not for me
by digby
Love this headline:
Widening Split in Europe on the Virtue of Austerity
Gosh I wonder why?
Throughout Europe’s long debt crisis, Germany has prescribed the same strong remedy to its troubled neighbors: a stiff dose of fiscal discipline.
As long as the patients were southern European countries like Greece and Italy, seen as victims of an unhealthy lifestyle, northern-tier nations like France, Austria and the Netherlands have been willing to go along with Germany’s prescriptions for reducing debt in the name of economic health. And they were willing to support Germany’s insistence that the European Central Bank not be a lender of last resort to indebted governments by actively buying their bonds.
But suddenly, as investors’ fears mount that many euro area nations are about to tip into recession, even countries like creditworthy France are finding it much more expensive to borrow money in the open market. And with that development comes a dawning realization: that austerity, rather than making it easier for them to pay down their higher debts, could make it harder — and more expensive.
Yeah. Austerity's great if you aren't the one suffering.
It's not the same situation here but the lesson is the same. Austerity is very likely to dampen any hope of a robust recovery and make it that much harder to pay down the deficit everyone is allegedly so concerned about. I suppose if they get really hardcore they can withdraw the funds for such safety net programs as unemployment food stamps and Medicaid, but society will pay in other ways. Homelessness, crime, ill health, crushing personal debt, creating a generation of people who've never known any financial security have costs too. I'm sure they fit somewhere else on the national accounting spreadsheet but they are costs nonetheless.
All these people droning on about saving the grandkids and thinking about the long term are actually gorging on America's seed corn. And they're not even hungry.
Update: Here's a piece on how it's (not) working in the UK.
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