This is another voice by a great economist, Paul de Grauwe, about austerity and debt relaxation.
In a nutshell, de Grauwe confronts the joy of the European Commission on achieving a growth rate of 0.3% the second quarter of the year, hence its joy on austerity programs’ payback eventually. He posits that the last months, the EC has had to relax its strict policies in a number of Eurozone countries as it became clear that these policies could not work.
The author even claims that it is surreal to believe that fiscal discipline is the cause of the recovery!
De Grauwe lays his arguments on why there are dangers to this recovery especially becasue the EC is waiting “in the corner” to impose again strict auetsrity measures on the one hand and because Northern countries are driven by emotional views that “evil”, the Southern countries, should be punished. As a consequence, policy makers do not make rational decisions based on debt relief to exit crisis.
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