Krugman Blames Germany For Disastrous And Unnecessary Austerity

I see that my favorite economist, Paul Krugman, is once again going after the “Davos elites” about the disastrous turn to austerity in Europe. He is especially critical of Germany, saying that country “bears some of the responsibility because of turning what should have been viewed as essentially a technical economic problem into a morality play”. 

The lectures on fiscal responsibility by the European technocratic establishment simply provide a cover for them to take advantage of a difficult economic crisis in order to impose structural reforms in the labor and other markets in the Southern European countries and, of course, protect the big Northern European banks who had the most exposure to southern debt at all costs. And it has turned into a disaster. As Krugman notes, after eight years of grinding austerity, the debt-to-GDP ratio in Greece is actually higher than ever. And the (usually overly optimistic) forecasts for the future predict that Greece’s unemployment rate will not get below 10% for another 25 years – basically condemning nearly two generations to under-employment. That is sadly, but truly, the definition of failure.