Friday, July 23, 2010

Hoover in Frankfurt

Now that everyone has forgotten what the fear of a financial meltdown feels like, Jean Claude Trichet feels like it's time for a return to business as usual - fiscal consolidation is back on the agenda. In an article in today's FT, Trichet tells us 'it's time to tighten'. Everybody. Obviously, the private sector, brimming with confidence, will spend what the governments stop spending. Or maybe not. Maybe instead we'll have 10 years of high unemployment, just like in the 1980s. But that, of course, is a price worth paying, to get deficits back down to 3%. And even if we have a double-dip recession and deficits don't manage to get back down to 3%, at least Jean Claude will have done the right thing.