Austerity friendly economist, Naill Ferguson, criticized Joe Biden during the VP debates in response to his lack of details to cut the $16 Trillion U.S. deficit. Equating Biden’s closing that “everything will be Okay” to ‘Irish blarney’.
What Biden Doesn’t Want You to Know.
Eurozone Versus The US: Austerity Lite or Austerity Heavy
Here is a quick snapshot how austerity and stimulus fared over the last four years in Europe vs the US.
US official unemployment levels are at 7.8 percent while Eurozone unemployment is over 11 percent. While net government spending in the US has gone down, (see state, local, and federal levels) Obama’s stimulus is seen as a ‘growth’ measure. The US at this point has been less focused on debt to GDP and more focused on lowering unemployment and increasing GDP output.
See Fed official who changed his inflation and QE3 position 180 degrees.
IMF Raises Red Flag With Austerity Measure
IMF has switched its stance on 180 degrees on debt and austerity. Previously, IMF has been an outspoken fiscal hawk, pushing for balanced budgets in the face of economic crisis. Less concerned over growth and pushing balanced budgets.
It turns out, these spending cuts may have made a bad situation worse. Here is what the IMF has said of global growth:
“At the Annual Meetings in Tokyo, the IMF’s policy steering committee called on its members to act decisively to break negative feedback loops and restore the global economy to a path of strong, sustainable, and balanced growth.”
“IMF members all agreed we are in better place today than we were six months ago. We are in a better position with regard to the policy footing to get growth started as well as fiscal consolidation,” Singapore Finance Minister Tharman Shanmugaratnam said October 13 at the closing press conference of the International Monetary and Financial Committee (IMFC).
Global Growth Concerns
The study pointing out the concern many economists like Paul Krugman, Martin Wolf, and Delong have long been decrying. There are 600 new jobs for the global economy that needs to be provided and no new prospects for creating them.
Goolish growth prospects have immediately increased net debt or debt to GDP while reducing future economic output.
While past studies by the IMF have exposed the myth ‘confidence theory‘ where the market will turn around as soon as they see governments balance debt, that didn’t stop participants in the IMF meeting from referring to it.