Thursday, January 10, 2013
US headed towards Austerity for five years?
Lowering the budget deficit has been the talk during the last couple of weeks. The US is doing as much as it can to avert the fiscal cliff and its aftermath. In order to keep the budget in check, the government has to spend more hence avoid the fiscal cliff. On the other hand we could lead ourselves off the Fiscal cliff and deal with the deficit. Two choices, one of them leads us into what the Euro zone has gone through - tough times. Read this article and decide if she US government should risk it and be "cornered" into relying on austerity for the next 5 years.
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I couldn't access the article, I have discussed the issue of the fiscal cliff with many people over the course of winter break. Many of them were for putting of the fiscal cliff for as long as possible, but as you have stated that requires the government to spend more. Personally,I think that if we just let the fiscal cliff happen and get it over with, we can move on from there. A now instead of later idea...
ReplyDeletehere is a direct link: http://www.ft.com/intl/cms/s/0/65bc5798-55be-11e2-9aa1-00144feab49a.html#axzz2Hb5ZyOXs
DeleteInteresting article. It starts off by saying that the United States has become very European. Though changes have been made in terms of social government spending, I do not see the United States’ economic as being similar to Europe’s.
ReplyDeleteI do think what Munchau says about the fiscal multipliers is very interesting and makes a lot of sense. It makes sense that the multiplier's effect is much larger now than before the financial crisis because our economic needed the extra stimulus through institutional oversight. Though the United States should be cautious of their changes in austerity measures, this can be done with through certain efforts of risk management and regulation. If the government needs to lower the deficit, I say let them do it but be ready to react to the effects.