Dow Jones Europe Index is headed for a test of the band of support between 200 and 205. A 63-day Twiggs Momentum peak below zero would warn of a strong primary down-trend. Failure of primary support would offer a target of 150*.
* Target calculation: 205 – ( 260 – 205 ) = 150
When national economies suffer a downturn, governments should borrow and spend money to boost economic activity. Part of the proceeds of the resulting economic growth should then be used to repay the debt.
~ John Maynard Keynes (He failed to answer the question: what if there is no “resulting economic growth”? )
Ok, and what if that borrowing was used to support a corrupt and broken financial system, tax cuts for the wealthy and wars of discretion instead of investing in core infrastructure and increasing employment? I say let’s focus the spending in the right place and put your question to the test!
We would get a completely different result if we invested in infrastructure projects that generate a direct return on investment rather than wasteful spending or “investing” in projects that do not provide a direct return on investment (e.g. school halls). This is addressed in greater detail at Austerity and infrastructure spending.
Keynes concept of repaying debt from “the proceeds of the resulting economic growth” leaves politicians with too much scope to promote their own agenda (re-election). Most projects (e.g. a school library) can be justified as promoting long-term economic growth but provide no means for immediate repayment of the debt. Don’t get me wrong: I am strongly in favor of investment in education, research, community halls, parks, recreation facilities, etc. — which improve our quality of life — but they should be funded out of (current) tax revenue and not out of debt. The same goes for employment schemes and training. They do not generate hard, saleable assets and should therefore not be funded out of debt.