Comment 75810

By Undustrial (registered) - website | Posted April 10, 2012 at 00:01:03

Kudos for posting this Ryan...glad to see this kind of analysis on RTH.

If "overspending" created the Euro crisis then wouldn't it be Sweden, Norway and Denmark with collapsing economies and riots in the streets? That logic just doesn't add up. What do Spain, Portugal, Greece and Italy have in common? They're poor. Since switching to the Euro, they've totally lost control of local monetary policy. If Greece still used the Drachma, it could simply print a bunch of money, drive down the value and create a whole pile of jobs in the process (stimulating revenues). Since it adopted the same currency as Germany and Sweeden, it's only monetary option has been going into larger amounts of debt.

The problem with Austerity is that it doesn't work. As Ryan mentions, crippling an economy only makes it harder to repay debts, and that's exactly what's happened in Greece. Tax revenues have fallen as the economy continued to fail under these cuts, leaving the government with less spend on debt repayment. As this happened, investors stopped buying their bonds sending their interest rates skyrocketing. It's called a debt "trap" for a reason.

Canada, on the other hand, enjoys very low interest rates, has its own currency and the lowest debt:GDP ratio in the G8. We're extremely rich in natural resources, which our government seems intent on giving away (translation: "we're a great place to invest"). Our drive for austerity is clearly political, and that says just as much as the continuing failures of these policies in Europe.

Do Harper and McGuinty seriously believe that what we need right now is a dose of Greek-style crisis economics? Is this what we, as the Canadian people want for our country?

"Today, the notion of progress in a single line without goal or limit seems perhaps the most parochial notion of a very parochial century." — Lewis Mumford

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