A glimpse of the future? Those folks screaming for focus on deficit reduction -- massive budget cuts -- if they succeed, they may be sending us down the path that Greece is currently taking into the abyss. Austerity is dangerous, especially in a slow economy.
Ireland, Greece, ... the other side of the Atlantic is giving us plenty of dire example for what can happen when you focus on deficit reduction while your economy is running slow. In slow times, cuts may take away what little demand there is ... which means less payroll tax income ... which can mean bigger deficits. Ironic, eh?
Update 01/06/2011:
Germany has joined the club of pain and protests have started there.
UK: UK labor unions warn of surge in strikes
Italy: Italian students are protecting austerity measures. The NY Times reports, "Giuliano Amato, an economist and former Italian prime minister, was even more blunt. “By now, only a few people refuse to understand that youth protests aren’t a protest against the university reform, but against a general situation in which the older generations have eaten the future of the younger ones,” he recently told Corriere della Sera, Italy’s largest newspaper."
Spain: "New austerity measures in Spain, where the overall unemployment rate is 20 percent, the highest in the European Union, are further narrowing the employment window. Spain has pledged to raise its retirement age to 67 from 65, but incrementally over the next 20 years."
All because they're embracing austerity rather than splitting up the currency and having the struggling economies apply the medicine they really need.
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