A trans-Atlantic rift is growing over the right medicine for Europe's financial crisis, with Britain announcing its steepest cuts in decades Tuesday and Germany defending its own austerity measures after a warning by President Barack Obama that budget-slashing could threaten the global recovery.
Britain's emergency budget is the latest in a string of deep cuts in public spending and reflects new resolve in Europe, after Greece was pushed to the brink of bankruptcy and even threatened the bloc's economic union, to tackle debt before worrying about growth.
As leaders of the Group of 20 economic powers prepare to assemble later this week in Canada, that single-minded focus is worrying the United States. Obama wrote a letter to world leaders Friday warning against excessive spending cuts.
German Chancellor Angela Merkel fought back this week, defending her government's $80 billion savings plan as British treasury chief George Osborne forged ahead with his own grim budget.
Many European analysts agree that taming deficits is the more urgent priority.
Obama "has a point, but there are some countries that don't have a luxury of a choice, they have got to get a grip and start cutting quickly because the alternative of becoming the next Greece is not palatable to them," said Jonathan Loynes, chief European economist at Capital Economics in London.
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3 comments:
cut SPENDING?! why? you still have a little change in your pocket. give it to the government. they can handle it alot better than you can. and if we cant, well get your neighbor's money too...
anyone with common sense spooks "the won".
What's the problem??? When your credit cards are maxed out, your bank account has less than $20 in it, your job just got eliminated and you're 2 months late on the house payment, isn't the best solution to go buy a new car, open another couple of credit card accounts and apply for a LARGE personal loan? When deeply in debt, and no way to pay it back (remember the IMF projected that in 2012, the U.S. will owe more money than it produces), just SPEND MORE MONEY! BORROW MORE MONEY!!! You sayin' Obama is WRONG??? How dare you! Note: we are in deep sh**.
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