Larry Summers to Europe's rescue

I'm sure that the Europeans are absolutely giddy at the prospect of heeding advice from the man who managed the American economy under Barack Obama. Lawrence Summers has jumped on the "growth" bandwagon that is sweeping Europe at the moment, giving in to the demands of citizens who don't want to lose their cradle to grave security despite the fact that there's no money left to pay for it. Or, there is money, as long is it can be created out of thin air and paid back by future generations. Summers writing in the Financial Times: Treating symptoms rather than causes is usually a good way to make a patient worse. So it is in Europe. Its financial problems stem from lack of growth. In any financial situation where interest rates far exceed growth rates, debt problems spiral out of control. The right focus for Europe is on growth. In this context increased austerity is a step in the wrong direction. Systematic comparisons of the experience of different European countries or more...(Read Full Post)