Tim Duy asks. How high does unemployment need to rise, how much output needs to be lost, how much poverty must be endured before European policymakers realize that the framework supporting the Euro politically is an economic failure?
While Lawrence Summers thinks that the idea of expansionary fiscal contraction is not just oxymoronic but plain moronic .
Paul Krugman takes the bat from Tim Duy, and concludes that European officials remain in deep denial about the fundamentals of the situation. They continue to define the problem as one of fiscal profligacy, which is only part of the story even for Greece, and none of the story elsewhere. They keep declaring success for austerity and internal devaluation, using any excuse at hand: a spurious surge in measured Irish productivity becomes evidence that internal devaluation is working, the decline in bond yields following ECB intervention is proclaimed as a vindication of austerity.
While Lawrence Summers thinks that the idea of expansionary fiscal contraction is not just oxymoronic but plain moronic .
Paul Krugman takes the bat from Tim Duy, and concludes that European officials remain in deep denial about the fundamentals of the situation. They continue to define the problem as one of fiscal profligacy, which is only part of the story even for Greece, and none of the story elsewhere. They keep declaring success for austerity and internal devaluation, using any excuse at hand: a spurious surge in measured Irish productivity becomes evidence that internal devaluation is working, the decline in bond yields following ECB intervention is proclaimed as a vindication of austerity.
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