Monday, April 30, 2012

Spain downgraded by S&P

Nice comment from Paul De Grauwe, professor at the London School of Economics :
"S&P downgrades Spain for too much austerity that kills growth. Last year it downgraded for too little austerity. Europe ruled by madmen."

Wednesday, April 25, 2012

Dutch government resignation : a good news !

After Italy and Spain during the last weeks, Netherlands is now obliged to concede that its fiscal discipline targets will not be met.
Moreover, the government led by Prime Minister Mark Rutte (see picture here above) is pushed to resignation because the rightwing populist party of Geert Wilders, which belongs to the ruling coalition, refused to endorse new austerity measures.
This is certainly a turning point in the saga of the Eurozone fighting its fiscal and economic imbalances.
What is paradoxical is that the arrogant Dutch government was one of the hardest defenders of a German-style "all-austerity" stance among European countries. Remember that in October-November last year, Netherlands insisted a lot to impose the "Golden rule" and the obligation for all Eurozone members to reach the maximum level of 3% annual budget deficit by 2013.
It is now clear that this "one-size-fits-all" policy of austerity is dragging one country after another back into recession and that many European countries will probably enter into a period of political crises.
The resignation of the Dutch government is a good news in the sense that it is an alarm signal for all policy-makers in Europe : if they continue to support this suicidal austerity-only stance, the result will be a political nightmare on top of an economic disaster.
The next test is on the 6th of May : 2nd round of presidential elections in France and general elections in Greece.