Paul Krugman didn't win a Nobel Prize for nothing. For months and months, he and a handful of folks who know something about economics have been warning that if Europe continued to focus on austerity measures rather than creating jobs, disaster loomed.
As more European countries teeter on the edge of recession or slip into one — Spain, on Monday, was the latest to slide — even the policy-making elite has begun to question whether Germany and the European Central Bank have gone too far in insisting that fiscal discipline is a prerequisite to growth.
Euro zone unity is under strain as other Europeans resent what they perceive as Germany’s holier-than-thou attitude in insisting that all countries in the euro currency union keep their promises to reduce government budget deficits to 3 percent or less of gross domestic product. Germany’s government deficit was a modest 1 percent of gross domestic product at the end of 2011.
“A global, undifferentiated rush to austerity will ultimately prove self-defeating,” Christine Lagarde, the president of the International Monetary Fund, said at the fund’s spring meeting in Washington on Saturday.
Of course, the article notes that Europe is kind of out of options. The result is political turmoil -- including growing support for socialism -- and a spreading recession that could easily drag down the United States before the year is through. There's the catch, isn't it? A weak economy will guarantee the election of one Willard M. Romney, who is committed to the exact same disastrous policies that are destroying Europe (except with tax cuts for the rich to make things even worse). In a normal world, policy makers here would learn from the madmen across the water.
We don't live in a normal world.