Mon Jan 30th, 2012 at 04:08:08 AM EST
Via Brad DeLong comes E.U. Leaders Set to Admit Austerity Is Not Enough (NY Times, January 29, 2012)
Bowing to mounting evidence that austerity alone cannot solve the debt crisis, European leaders are expected to conclude this week that what the debt-laden, sclerotic countries of the Continent need are a dose of economic growth.
A draft of the European Union summit meeting communiqué calls for ‘‘growth-friendly consolidation and job-friendly growth,’’ an indication that European leaders have come to realize that austerity measures, like those being put in countries like Greece and Italy, risk stoking a recession and plunging fragile economies into a downward spiral.
“The recognition is coming that austerity won’t work,”’ said [Joachim Fritz-Vannahme, director of the Europe program at the research institute Bertelsmann Stiftung], “but how to get beyond austerity politics is completely unclear. There is no master plan under discussion in this country.”