Budget set to cut jobs and growth
Quite a headline.
I'm sure those who sacrifice their jobs to reduce the deficit more quickly will realize that it's all in a good cause.
Meanwhile, the Economist has a nice article which states that experience tells us a fiscal consolidation should be composed of 80% spending cuts and only 20% tax increases, and illustrates the point with a neat table of ten recent fiscal consolidations, of which only two actually reduced spending by this much. Which makes you wonder where the 80:20 number comes from. The Treasury perhaps?
Meanwhile, Krugman has an amusing post in which he points out that in German, 'debt' and 'guilt' are the same word. He also goes on to point out that there is no experience of deficit reduction helping growth when interest rates are low and world demand absent. Is it different this time? Well, if it is, that doesn't explain why Ireland's bond spreads are higher than Spain's.