STOCK MARKET WATCH -- Monday, 12 November 2012 (Holiday -- US markets closed)

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47. Americans Say Europe Lesson Means Act Now as Austerity Will Fail

http://www.bloomberg.com/news/2012-11-12/americans-say-europe-lesson-means-act-now-as-austerity-will-fail.html

When the housing bubble burst in 2006, U.S. policy makers looked to Japan for clues about what to do -- and not do -- in response. Now their attention is shifting to Europe as America gets set to follow that region with a concerted attack on its budget deficit.

Among the lessons being drawn: Don’t put off budget action until the financial markets demand it. Big, immediate cuts aren’t always the best way to reduce deficits. And central bankers should be ready to try to offset the economic impact of any fiscal contraction.

“The lesson of Europe is, don’t wait until you’re in a crisis to act. Do it now,” said Alice Rivlin, the founding director of the Congressional Budget Office in Washington. “The other lesson is that austerity is not a good prescription for weak economies.”

The stock market would benefit if the U.S. avoids the year- end so-called fiscal cliff and reaches a deal to put the deficit on a downward path, said Jack Ablin, who helps oversee about $65 billion of assets as chief investment officer at BMO Private Bank in Chicago.