Analysts Warn that Cutbacks by State and Local Governments Can Worsen the Downturn and Raise Unemployment

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Tuesday, 27 April 2010 04:41

Oh yeah, the Post forgot to mention this part of the story. In an article that focuses on the debt burden facing an Italian city, the Post told readers: "analysts are also warning that national coffers could be further strained if heavily indebted countries are forced to spend precious resources to rescue local jurisdictions."

This is a problem for the euro zone countries who do not have the option to simply print money to boost their economy in the downturn. Since the basic probelm facing the world economy right now is inadequate demand, there is little reason that large economies cannot boost demand by simply printing money. The European Central Bank could do this on behalf of its member countries. It has chosen not to, thereby subjecting millions of people to unnecessary suffering. It is remarkable that the Post chose not to mention this fact.