The European Union still hasn’t figured out what to do about Greece.
But, they have spent their time coming up with new guidelines for the size of government deficits and debts.
My guess is that this is just all BS.
Most of the countries are already in violation of the debt target (on the right). And … in order to avoid getting worse on the debt, you (more or less)* need to keep your deficit above zero (on the left). But the target on the left is actually in negative territory, permitting a country to be passing on that count but making the other one worse.
Having said that, I have no problem with a country running a deficit or having some debt. I have a lot of problem with a country using deficits and debts as ways to avoid politically painful decisions.
Taken from “Europe Tightens Fiscal Ties” in the January 31st issue of The Wall Street Journal.
* Keep in mind that because this is a ratio, making sweeping claims is problematic: both numbers could go up while their ratio goes down, and vice versa.
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