The only possible choice in today's Europe

[fpb]

There is an alternative to the hopeless policy of cuts-cuts-cuts with no light at the end of the tunnel, and I suspect that the evident anger of the voters in Greece, France, Italy and Britain (the coalition did what at last Thursday's election?) will begin to prod it over the horizon of things that politicians don't want to see. It is called bankruptcy, and it is what businesses and people naturally do when they cannot pay their debts. We need to go into bankruptcy, and in a few years the USA will be there as well. This will have one silver lining: those banks that survive the earthquake (and I am at the point where I would not mind if most bankers died of cancer) will never lend to sovereign authorities, leaving the states to use only taxation to pay for expenditure. It would be an unprecedented experiment in cutting our clothes according to our cloth, and I can't think it would be bad.

Comments

[mindstalk.livejournal.com]

Why would the US or UK have to end up in bankruptcy when Japan, with much higher debt, has gotten along for two decades now?

The more reasonable alternative is Keynesian stimulus and modest inflation, but the euro makes that hard for the component countries.

[fpb.livejournal.com]

WE cannot go on making debt upon debt. We have come to the limit of what Keynesian stimuli can do, if they ever could do much, because the more capital we remove not just from the present but from the future, the more we impoverish ourselves in the long run, and the more our choices are limited. Enough. Debt is never a good idea, and the idea that it can safely be managed and allowed to grow with no consequences is comparable to the similar delusion - that also reigns among the same elites - that nuclear power can be used with no risk and no permanent consequences. Debt is radioactive waste. The only way to deal with it is by not touching it.