Stiglitz reiterates : Austerity Pushes Europe ‘Suicide’

Europe Pushed to ‘Suicide’ on Austerity, Stiglitz Says – Bloomberg

Nobel Prize-winning economist Joseph Stiglitz said Europe is in a “dire” situation as a focus on austerity pushes the continent toward “suicide.”

“There has never been any successful austerity program in any large country,” Stiglitz, 69, told reporters in Vienna yesterday. “The European approach definitely is the least promising. I think Europe is headed to a suicide. ”

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Stiglitz says European austerity plans are a ‘suicide pact’ – Telegraph

European governments have signed a “suicide pact” by imposing fiscal austerity plans that will collapse their economies, Joseph Stiglitz, the liberal economist, has warned.

Imposing austerity measures as countries slow towards recession is a fundamentally flawed response, said Mr Stiglitz, who won the Nobel prize in 2001 for his work on how markets work inefficiently.

Cropped picture of Joseph Stiglitz, U.S. economist. (Photo credit: Wikipedia)

“The answer, even though they see over and over again that austerity leads to collapse of the economy, the answer over and over [from politicians] is more austerity,” said Mr Stiglitz to the Asian Financial Forum, a gathering of over 2,000 finance professionals, businessmen and government officials in Hong Kong.

“It reminds me of medieval medicine,” he said. “It is like blood-letting, where you took blood out of a patient because the theory was that there were bad humours.

“And very often, when you took the blood out, the patient got sicker. The response then was more blood-letting until the patient very nearly died. What is happening in Europe is a mutual suicide pact,” he said.

Keynesian economics, which require governments to help sustain demand, suggests that austerity measures should be imposed when an economy is booming, not waning.

Mr Stiglitz pointed out that 700,000 public sector jobs had been cut in the United States in the past four years, removing demand from the system as unemployment spikes. The UK is set to lose a similar number by 2017.

via Stiglitz says European austerity plans are a ‘suicide pact’ – Telegraph.