Predator Class economics really REALLY sucks.
The World Gets Fiscal Austerity Fever, As The UK Unnecessarily Commits Economic Suicide
Marshall Auerback | May. 17, 2010, 5:44 PM | 526 | 16
Virtually the entire world’s press is now focusing on the travails of the euro zone, but continues to draw the wrong lessons from what now afflicts the region. But Americans might be pleased to know that this collective economic insanity is not restricted to the pages of the right wing press or the rantings of Fox News commentators such as Glenn Beck. No America, you can rejoice! This has become a fully fledged global disease. You are not alone.
As I have pointed out before, no euro zone government issues its own currency. Consequently, they have to “finance” every euro they spend. And, as Bill Mitchell notes, if tax revenues do not cover pre-existing spending desires, then all of these countries (including Germany) have to issue debt. The current crisis is manifested by the bond markets’ unwillingness to lend to the PIIGS governments any longer because they are beginning to query the PIIGS’ national solvency.
These funding constraints do not apply to the US government, which is sovereign in the US dollar and can never be revenue constrained. more