Do you think that Obama came back from the G20 looking worse for promoting the Keynsian spend-as-cure for a recession, or was it Miss Merkel, who was more interested in reducing deficits as a method for getting an economy back on track? It seems the press releases and official statements that came out of the G20 cut an impotent line down the center, simply promoting "balanced and sustainable growth," whatever that means. But, there was a marked division between Europe and the U.S. in terms of what kind of fiscal policy is best suited to soothe global economic struggles, so I ask ye, who's got it right?

And, while I'm at it, what countries in Europe will be next to default? Taking bets. Portugal?

Comments (8)


Obama was right I think. Confidence in the UK is down after the new emergency budget which was supposed to restore confidence and rely on that to make-up for the budget cuts. But how is consumer confidence supposed to increase when they are worried about losing jobs and how is business confidence supposed to increase when the UK government is cancelling so many orders. Although saying that I do agree with most of Osborne's budget just not the time to do it and would have to agree with Obama on delaying it till the recovery is secured i.e almost definitely next year. But hopefully Osborne's gamble pays off otherwise the UK is fucked.

Also can anyone explain to me why everyone seems to think that the UK has a massive problem similar to Greece when our loans mature in 10-16 years.


As long as it wins the world cup it should be ok, Hopefully


Merkel is right. Obama and Soros are wrong. Why should Germany run a deficit to help out the PIGS ?

In reply to SAC

Merkel is right. Obama and Soros are wrong. Why should Germany run a deficit to help out the PIGS ?

Because in the magical fairytale that is the EU, there is not such thing as national sovereignty anymore. Everyone needs to do whatever he can to help his neighbor or not actually help but make his neighbor feeeeel better.

Is your neighbor blind? Then gouge out an eye and offer ti to your neighbor. No shit, it won't get rid of his blindness but at least he appreciates the gesture.

Damn!! The Germans work a decade longer than the Greeks and enjoy less generous pensions and benefits but now they're obligated to bail out Greek gluttony. I'm pretty sure GREECE is not "Too big to fail" and I'm equally sure that they will not be able to pay back the loans when they come do. If a man is missing the lower half of his body, don't bleed yourself dry giving him blood transfusions. He's done for and that's that. Hopefully, the Greeks at least appreciate the fact that responsible nations are weakening the whole system by helping them.

In reply to SAC

Merkel is right. Obama and Soros are wrong. Why should Germany run a deficit to help out the PIGS ?

Germany is an export based economy. Who do you think they are selling too?

Fact is, Germany needs to choose to stay in Euro and fund its neighbors import based economies or it needs to leave altogether to allow Club Meds to devalue their currency to make imports cheaper.

Monetary union without fiscal union does not work, and this is perfect evidence. I don't see Germany leaving the Eurozone, simply because too much political capital has been invested in creating this. I also don't see the Eurozone becoming a united country, as nationalist ideals in each of the member states are too strong to create a fiscal union. Thus, the only way to maintain stability is to fund the PIGS with bailouts. If Germany doesn't do this, the whole system will collapse. PIGS would default, and the German and French banks holding their debt would be screwed anyway. Not to mention, those countries would not be able to purchase German exports to Club Meds, thus throwing Germany/France back into recession, and creating a feedback loop which will catapult the Europeans into depression.

At the end of the day, its probably too late for this crisis to pass over without serious long term consequences.

looking for that pick-me-up to power through an all-nighter?

Fiscal austerity measures in the US ran the risk of increasing the already high level of unemployment. The current examples of countries that have responded to the crisis by "tightening their belts" provides even more evidence of the need to pursue Keynesian style expansionary policies. Ireland, Latvia and Estonia have all experienced worse slumps in output and employment than even Iceland which was more severely affected by the crisis. Obama was in my opinion right to promote the Keynesian spend as a cure policies.


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