European Businesses Are Cutting Back as Governments Try to Solve the Debt Crisis

The NYT noted that factory orders across the European Union fell sharply in November. It told readers:

"businesses are cutting back as they wait for political leaders to resolve the debt crisis."

Actually, businesses are cutting back precisely because political leaders are making cuts in spending and raising taxes in order to resolve the debt crisis. The steps being taken by Europe's governments have the effect of reducing demand in the economy. The reduction in factory orders is the predictable result of the austerity being pursued by governments across the continent.

Counter-cyclical spending
written by David B. Schuster, January 24, 2012 5:47 AM

That is an important distinction that you make. After sixty years of pursuing counter-cyclical spending, why has austerity become the new black?

obedient and unemployed
written by Union Member, January 24, 2012 7:45 AM

I'm confused, I thought the markets were supposed to resolve the debt crisis, not polical leaders.

Even The IMF Gets That Austerity Doesn't Work
written by Charley James, January 24, 2012 10:35 AM

On Monday, Christine Legere (sp?) cautioned European governments that they are taking the nonsensical "austerity" craze too far. The head of the IMF told reporters that Europe is approaching a "1930s moment" in that the rush to slash federal budgets is risking what little economic recovery there is on the other side of the Atlantic.

You'd think by now that even conservatives would understand that a nation cannot "save" its way out of a deep recession by stopping spending.

...
written by John Q, January 24, 2012 2:03 PM

To Union Member:
"You'd think by now that even conservatives would understand that a nation cannot "save" its way out of a deep recession by stopping spending."

You'd think. But if you've been listening to the Republican candidates lately, you'll realize that that understanding has yet to reach them.

European Businesses Are Cutting Back as Governments Try to Solve the Debt Crisis

About Beat the Press