What could go wrong? Everything. When a country slashes spending and raises taxes at a time of already-weak growth, it tends to reduce domestic demand. Austerity programs are prodding Greek, Irish and Spanish citizens to spend and invest less. That leads to fewer tax collections and more problem loans. Worse, the austerity-enacting European countries lack the ability to reduce the value of their common currency. The upshot: foreign demand for Greek, Irish and Spanish goods and services won't rise sharply because the Euro hasn't weakened significantly. (Greece didn't get any cheaper for U.S. tourists last summer because the Euro remained buoyant against the dollar). Austerity without a flexible currency and a stimulative monetary policy is a recipe for contraction.
This is not a trick question: Ireland and Greece's policy of huge wage cuts, public layoffs and tax increases will make it: (a) more likely that Irish and Greek mortgage holders will stay current; or (b) less likely that Irish and Greek mortgage holders will stay current? The answer, of course, is (b). And when defaults rise, lenders start to freak out, interest rates rise and the powers that be call for anotherround of austerity. Wash, rinse, repeat. Which is why Ireland on Wednesday unveiled another austerity plan and an expensive bailout -- just months after stress tests gave many large Irish banks a clean bill of health.
-, On Wednesday November 24, 2010, 5:04 pm EST
Government can (almost) never stimulate economy, and here is why:
http://blog.udn.com/martinique/3671891
http://blog.udn.com/martinique/3676012
http://blog.udn.com/martinique/3679458
When politicans use any excuse to spend our money, they are likely just buying votes for next election. Government spending makes politicians look like they are doing something, and that's about it. 99.99% of gornment spending hurts economy. See above three posts.
Paul Krugman..? not sure, could be a communist.
摸 象 或 (不?) 著 木目 於 2010/10/26 20:56回覆
1929年大蕭條的起因之一，就是各國都怕財政收支不平衡，削減預算，使本來因消費減少引起的不景氣雪上加霜。
歐巴瑪政府刺激經濟的效果不彰，因為很多人被各種債務綁死了，不敢再亂花錢。而失業率高，工作保障低，也讓消費者不敢隨便刷卡。其實應該說十年前泡沫一個接一個，景氣（也許該用別的名詞）過度膨脹，才有現在的調整。
真正的解決之道是美國的生產力必須跟得上薪資（包括福利）上漲的速度。一味要求雇主提高薪資和員工福利，而勞動力（品質、產量）並沒有提高，註定要在全球競爭的環境中失敗。
