I'm not saying that CNN's Fareed Zakaria is wrong. But after all of these years of the West, via the IMF, forcing developing countries to decimate their budgets and thus their economies, at the expense of their people, now that the tough love medicine is hitting too close to home, suddenly it's time to revisit the notion that there's no such thing as too much, or ill-timed, austerity.
Fareed Zakaria at CNN:
Consider that data we started with. The U.S. economy, which received monetary and fiscal stimulus, will grow at well over 2% this year. European economies that have followed the path of cutting spending and raising taxes to reduce deficits are finding themselves in a downward spiral: cutting spending means laying off people, which means less demand for good and services, which means the economy shrinks, which - ironically - means lower tax revenues and thus larger budget deficits.
Take a look at Britain. Britain has followed a brave austerity plan, cutting government spending across the board and raising taxes. The result, British growth has stalled; the economy will grow barely 0.8% this year. And while its budget deficit was predicted to be under 13 billion dollars in February, it was in fact 24 billion dollars for that month alone.
After its austerity programs, Spain has hit 20% unemployment - 50% youth unemployment - and now has a much larger budget deficit than projected.