The lasting effects of austerity are plunging parts of Europe into economic holes that could last for decades, according to a number of Nobel laureates.
At a gathering of prizewinning economists at Lake Constance, unemployment expert Professor Peter Diamond told British broadsheet The Telegraph that “historians are going to tar and feather Europe’s central bankers,” and that “young people in Spain and Italy who hit the job market in this recession are going to be affected for decades. It is a terrible outcome, and it is surprising how little uproar there has been over policies that are so stunningly destructive.”
Suggesting that Europe’s austerity measures have been self-defeating, Diamond reportedly said: “It could be avoided with better use of stimulus, and spending on infrastructure. That would boost growth and help the debt to GDP ratio.”
Professor Joseph Stiglitz gave an even harsher assessment of European austerity policies, calling them a “disastrous failure” that are directly responsible for the failure of many countries to recover. France saw no growth at all over the first half of the year, Germany’s economy contracted in the second quarter and Italy has tumbled into a triple-dip recession.
According to Stiglitz, financial decision makers in the Eurozone have stuck stubbornly to erroneous policies despite the “contractionary” effects of austerity and despite claims that the crisis has passed.. “I am very concerned about the future of monetary union, and they haven’t yet felt the impact of geopolitical tensions,” he said.
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