Comments on Europe and thoughts on the cyclical recovery in the US

Daily commentary: 2013-03-01
Europe is in recession right now, but the US is in a weak but fairly long-lived economic recovery. The difference in economic fortunes owes entirely to differing policy responses in both regions. In Europe, the economic paradigm has favoured austerity as a policy tool. And the result has been fiscal retrenchment met with varying levels of additional private retrenchment - no confidence fairies here. That is the reason for the recessions across Europe. In the US, the policy response has been varying degrees of fiscal and monetary stimulus. And the result has been a muted recovery in both output and employment. The question is whether either of these policy paths is sustainable. I say no on both counts and want to address here why.

Now, I have already said a ...


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