We learn from Mr. Krugman that he, and only he has the answer. There is the “Republican narrative and the German narrative. Neither story fits the facts.”
“The Republican story ….. is that Europe is in trouble because it has done too much to help the poor and unlucky,” This is a classic mischaracterization of Republican and conservative positions. Conservatives have just as much compassion for the truly poor and unlucky as anyone. The objection is to the creation of dependency and an unsustainable welfare state that extends well beyond the poor and unlucky to include a majority of the populace. The inimitable Denis Miller put it succinctly when he said “We just want some bona fides, that’s all”.
“[C]ountries that aren’t on the euro seem able to run large deficits and carry large debts countries that aren’t on the euro seem able to run large deficits and carry large debts without facing any crises. Britain and the United States can borrow long-term at interest rates of around 2 percent; Japan, which is far more deeply in debt than any country in Europe, Greece included, pays only 1 percent… Britain and the United States can borrow long-term at interest rates of around 2 percent; Japan, which is far more deeply in debt than any country in Europe, Greece included, pays only 1 percent.”
What’s that Paul,“without facing any crises” There’s the rub. What must it take to get Mr. K to see a pending crisis? George Osborne holds the position of Chancellor of the UK, a position similar to that of our Treasurer.
The Government ‘has run out of money’ and cannot afford debt-fuelled tax cuts or extra spending, George Osborne has admitted. In a stark warning ahead of next month’s Budget, the Chancellor said there was little the Coalition could do to stimulate the economy. Mr. Osborne made it clear that due to the parlous state of the public finances the best hope for economic growth was to encourage businesses to flourish and hire more workers. “The British Government has run out of money because all the money was spent in the good years,” the Chancellor said.
As far as the U.S. is concerned we already know Krugman’s position is to keep increasing the level of spending until it gets us out of debt. It’s my blog but I am a generous chap so I’ll give the famed economist the final word… which is –
“The next time you hear people invoking the European example …. here’s what you need to know: they have no idea what they’re talking about.”