Thursday, February 14, 2013

PROBLEMS IN THE EUROZONE ECONOMY

And Obama is following the same pattern of deficit spending that is not working in Europe.

There is no magic bullet that can magically transform the EU economy.  The French made a mistake electing a socialist in France that decided to expand government programs and increase taxes.  But no one ever confused the French for being capitalists.  The multiplier effect of government spending is 0.  You cannot tax and spend your way to economic prosperity.

Europeans never learned that.  They are full on Keynesians.  Central planners.  Bureaucrats.

The debts they have accrued are eating them alive.  Their economies cannot grow fast enough to keep up. They have entered what is known as the death spiral.  Because of the heavy government interference in markets, and the artificial low interest rates the EU Central bank is imposing, capital is locked.  It doesn’t turn over and won’t cannot be allocated through the marketplace to more productive resources.

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