The European economy did exactly what economists predicted last quarter…

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It shrank. Between April and June – the euro zone shrank by .2%. That’s yet more proof that austerity isn’t working in Europe. Just look at Greece, which saw its GDP shrink by a whopping 6.2% in the second quarter this year – with the jobless rate creeping up to 23.1% and more than half of all 15-24 year-olds out of work.

Italy is now pursuing austerity and suffering similar economic pain. At the end of June, Italy’s public debt reached a record high, just as their economy shrank .7% in the second quarter. Italy is now headed down the same road as Greece – and the rest of Europe is following in suit thanks to its addiction to austerity.

And if Paul Ryan and Mitt Romney win – and are able to bring their austerity agenda to the White House – then the United States won’t be too far behind in economic collapse.

Thom Hartmann Administrator's picture
Thom Hartmann A...
Dec. 29, 2009 10:59 am


One of the many sound bites I heard this weekend following Willard's pick of Paul Rand ... ooops, Paul Ryan as his VP candidate, was an amusing one that seems to have missed the rest of the lame stream media. In the clip, Willard was whining about the US under President Obama looking more and more like Europe. I guess the Romney campaign handlers have not put the last two versions of the Ryan budget on his reading list yet, because if they had, he should know it is nothing but a European style austerity budget meant to starve the poor and middle class and benefit the rich and the banksters.

If the principles of the Ryan budget are so great, then why would it take 2 or 3 decades to balance the budget ?

Jul. 7, 2011 12:13 pm

(Federal Deficits = Net Private Savings+ net imports), applies to all nations in the euro-zone. If you sum this over all of Europe, we get

(Euro deficit = Euro net savings + net imports) to Europe from countries outside Europe.

Internal trade cancels out.

Because of Maastricht treaty, the left hand side is near zero. The right hand side must also be zero. Foreign trade will help some nations to grow and lead to ruin for others which can’t keep their deficits to zero.

The same equation applies to USA, a money creator, which can deficit spend without limit and the economy can grow even with positive net imports (like Japan and India who deficit spend a lot). The limit to deficit is full employment after which inflation may arise.

Individual states like CA have to depend on federal money transfers. Luckily we have have no such thing like a Maastricht treaty!

In fact all states can be funded directly (per capita) and state income taxes eliminated to save untold hours of tax preparation!

pshakkottai's picture
Jul. 11, 2011 11:27 am

European economy did exactly etc etc etc.

Isn't that like saying, the trained monkey under the microscope did what we trained it to, and we watched it happen, so it proves our point about what monkeys should do with their lives?

anonymous green
Jan. 5, 2012 11:47 am

Not really. I have explained why.

pshakkottai's picture
Jul. 11, 2011 11:27 am

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