Tue Oct 9th, 2012 at 08:37:39 AM EST
Lets just note this little gem from the Eurointelligence morning briefing about the downbeat IMF report on prospects for the world economy:
The FT offered some interesting and important details in its coverage. The IMF disputes government's use of the fiscal multiplier. While governments tend to use a multiplier of 0.5, the IMF's now looks at multipliers in the range of 0.9-1.7. "This finding is consistent with research suggesting that in today's environment of substantial economic slack, monetary policy constrained by the zero lower bound, and synchronised fiscal adjustment across numerous economies, multipliers may well be above 1." That means each euro of savings depresses GDP by more than a euro.
You'll note that this is consistent with what the government funded ESRI was telling the government here years ago.
Austerity can't work, won't work. Every time the private sector here tries to stage a recovery the government cuts it off at the knees for what are ideological reasons that don't make sense even within the frameworks of standard economics.