If Nobody Sees Him by Midnight, Be Alarmed...
And Ryan Avent Calls Out the Shoggoth that Is Ben Nelson...

I Recall That the People Went About with Pale and Worried Faces, and Whispered Warnings and Prophecies Which No One Dared Consciously Repeat or Acknowledge to Himself that He Had Heard: a Sense of Monstrous Guilt Was Upon the Land, and Out of the Abysses

Yes, Paul Krugman reports from Europe. He talks to the Great and Good of Germany. And what he hears would shatter any lesser man.

Paul Krugman:

That ’30s Feeling: Here’s roughly how the typical conversation goes....

German Deficit Hawk: We must cut deficits immediately, because we have to deal with the fiscal burden of an aging population.

Ugly American: But that doesn’t make sense. Even if you manage to save 80 billion euros — which you won’t, because the budget cuts will hurt your economy and reduce revenues — the interest payments on that much debt would be less than a tenth of a percent of your G.D.P. So the austerity you’re pursuing will threaten economic recovery while doing next to nothing to improve your long-run budget position.

GDH: I won’t try to argue the arithmetic. You have to take into account the market reaction.

UA: But how do you know how the market will react? And anyway, why should the market be moved by policies that have almost no impact on the long-run fiscal position?

GDH: You just don’t understand our situation....

[T]he advocates of austerity pose as hardheaded realists, doing what has to be done... [but] can’t and won’t justify their stance with actual numbers — because the numbers do not... support their position.... [M]arkets are [not] demanding austerity... the German government remains able to borrow at rock-bottom interest rates. So the real motivations for their obsession with austerity lie somewhere else.

In America, many self-described deficit hawks are hypocrites, pure and simple.... Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion [over ten years].

German deficit hawkery seems more sincere... it’s about moralizing and posturing. Germans tend to think of running deficits as being morally wrong... showing strength — or what is perceived as strength — is what it’s all about. There will, of course, be a price for this posturing. Only part of that price will fall on Germany: German austerity will worsen the crisis in the euro area.... But German politicians seem determined to prove their strength by imposing suffering — and politicians around the world are following their lead.... [E]conomic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day...

Tomorrow, Paul Krugman reports from "the throne of Azathoth, the blind idiot God, where you must sign in your own blood the book of Azathoth, watch his flopping horde of mindless and amorphous dancers, and be lulled by the thin monotonous piping of a demonic flute held in nameless paws." I think this is a reference to the G-20...

Comments