Let's do it anyway, shall we?
by digby
Who could have ever predicted that Eurozone economy would shrink for the second consecutive quarter?
Bloomberg reports:
The euro-area economy was pushed into a recession for the second time in four years as trade slowed and government spending declined.
Gross domestic product in the 17-nation currency bloc slipped 0.1 percent in the third quarter from the previous three months, when it fell 0.2 percent, the European Union’s statistics office in Luxembourg said today, confirming an initial estimate published on Nov. 15.
Eurozone unemployment reached 26 percent in September. The youth unemployment rate has topped 50 percent and resulted in a “lost generation” for the continent’s young adults. Still, the pursuit of austerity continues.
The US unemployment picture looks better than that, obviously, (although not as good as some would like to pretend) but then so did the Eurozone's before they instituted widespread austerity. Not that anyone's paying any attention. Travis Waldren at Think Progress writes:
Lawmakers around the world have ignored the European lesson, though. Australia’s growth slowed last quarter as its government pursued deficit reduction, and in the United States, the so-called “fiscal cliff” brought on by Republican-demanded spending cuts is threatening the country with a bigger austerity package than those that have been implemented in Europe, even with ample proof that the U.S.’s original preference toward stimulus was more effective than the austere European approach.
As Bob Borosage at CAF says:
“The economy still faces fierce headwinds – tightening austerity at the federal level, recession in Europe, slower growth in India and China. There is no sign of the robust levels of growth that would produce the jobs we need for the more than 20 million people in need of full-time work. Mass, long-term unemployment is continuing. That means stagnant or falling wages, spreading misery, jobless young people, inadequate demand and a recovery that will continue to falter, if it continues at all.
“The high drama Washington fiscal cliff negotiations get it wrong. You can’t fix the debt, as the lavishly funded CEO lobby suggests, by focusing on deficits. You have to fix the economy. Fixing the economy will fix the debt.
If you step back a little from the daily sturm und drang it's almost impossible to believe they are focusing on long term debt at a time like this. The only philosophy that would require such a thing is the Shock Doctrine, anything else would at the very least demand flexibility and room to maneuver when all these moving parts are going in the same direction. Instead, we are locking in severe cuts and fetishizing tax hikes.
Oh well. Maybe it will work here where it didn't work anywhere else. We're exceptional dontcha know?
Also too, Krugman.
.