fiscal austerity Archives - the patient investor

March 8, 2013

Far from being a disaster, the results of the Italian election could be a turning point for Italy and the Eurozone. | EUROPP

Jonathan Hopkin argues that austerity has failed to produce results in Southern Europe and calls for European leaders to reconsider their approach:

…..perhaps the most important result of the election is that it will likely prove to be a turning point in the way in which the European Union deals with the debt crisis in the South. As was the case in Greece, the attempt to impose technocratic rule on a debtor nation to implement austerity and reform has been a political and economic disaster…… The Monti experiment produced no clear economic gains and has been decisively rejected at the polls. It would be reckless in the extreme of Europe’s leaders not to reconsider their approach.

via Far from being a disaster, the results of the Italian election could be a turning point for Italy and the Eurozone. | EUROPP.

February 24, 2013

The final verdict on George Osborne as Chancellor | Mainly Macro

Simon Wren-Lewis, economics professor at Oxford University, writes:

What George Osborne did with his austerity programme was the equivalent of putting a sick patient on a starvation diet accompanied by cold showers. The UK economy without accelerated austerity would still have been in poor shape, but under George Osborne it has been a disaster.

October 15, 2012

Australia’s Future Fiscal Shock | Centre For Independent Studies

by Robert Carling

Long-term prospects for Australia’s public finances are not receiving the attention they deserve. It is one thing for Commonwealth and state governments to balance their budgets in the short term, as they are attempting to do, but spending commitments are being made as though nothing beyond the four-year horizon of the forward estimates matters. Under current policies, Australia is heading in the long term for a substantially larger share of government spending in the economy, which will bring pressures for higher taxation or borrowing or both. Spending by governments at all levels as a proportion of gross domestic product (GDP) (currently around 36%) could rise to well above 40% over the decades ahead, if not sooner…….

via Australia’s Future Fiscal Shock (pdf).

July 26, 2012

U.K. Stumbles, Fueling Austerity Debate – WSJ.com

More evidence that imposing fiscal austerity while the private sector is deleveraging will aggravate rather than cure the problem. From WSJ.com:

The [UK] economy shrank 0.7% between April and June, dragged down by weakness in the construction industry, according to official data released Wednesday.

An extra day’s holiday in June for the Queen’s Diamond Jubilee had a significant negative impact on the economy, the data showed, but an official said it was too early to quantify the full effect at this stage. Unusually wet weather during the quarter may also have played a role.

It is the third quarter in a row that gross domestic product has shrunk and the largest quarterly contraction since early 2009.

via U.K. Stumbles, Fueling Austerity Debate – WSJ.com.