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Fri Apr 27, 2012, 02:24 AM

Death of a Fairy Tale | Krugman - NYT

...

For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.

snip


But while the confidence fairy appears to be well and truly buried, deficit scare stories remain popular. Indeed, defenders of British policies dismiss any call for a rethinking of these policies, despite their evident failure to deliver, on the grounds that any relaxation of austerity would cause borrowing costs to soar.

So we’re now living in a world of zombie economic policies — policies that should have been killed by the evidence that all of their premises are wrong, but which keep shambling along nonetheless. And it’s anyone’s guess when this reign of error will end.

link to the full article

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 03:22 AM

1. Austerity is sadistic when it's used at a time when people are losing their incomes,

benefits, homes.





Shameful.

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Response to pacalo (Reply #1)

Fri Apr 27, 2012, 03:48 AM

4. Exactly.

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 03:23 AM

2. Austerians - putting the "con" in confidence

K&R

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 03:41 AM

3. austerity is simply the Shock Doctrine at full throttle.

 

I think Naomi Klein is prescient or something.

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 04:03 AM

5. Because it Worked So Well for Herbert Hoover

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 07:04 AM

6. first voodoo economics, now zombie economics

"No one could have foreseen..."

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 07:32 AM

7. A nice one for Krugman .. thanks! /nt

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 08:32 AM

8. Time for the 99% to eat our peas.

'specially old folks. Peas and catfood.

I know, I know... IOKIYAD.

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Response to MannyGoldstein (Reply #8)

Fri Apr 27, 2012, 08:51 PM

10. There you go wasting money again, they shall have either peas OR catfood, NOT BOTH!

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Response to Dragonfli (Reply #10)

Fri Apr 27, 2012, 10:51 PM

11. Peas AND Catfood - that's what qualifies me as a Liberal

Actually, that seems true these days...

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 08:50 PM

9. I think we need some sort of a "grand bargain" so that we may get a visit from

the "confidence fairy", austerity should be a bi-partisan goal or so I have heard.

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Response to BootinUp (Original post)

Fri Apr 27, 2012, 11:13 PM

12. Seems that any policy that's bad for the economy and society is the top of the conserv. todo list.

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