In Europe there is an evolution in talking about the anti-crisis measures. The old "Stability Pact" (based on austerity) is step by step replaced by something new, called "Growth Pact". Under this obviously must be understand some kind of big spending of Keynesian type. The idea is to raise the GDP and this way to oppose the crisis. Such an idea is unlikely to be contrary to the bureaucrats who are always wondering how to spend other people's money for large projects.

Spending money to promote "growth" is the delusion, that ravaged the Europe economy in last 50 years. Today we have to pay the price of half a century Keynesian super experiment that led to the logical absurd called "consumer society". A society based on the faith that "consumption generates GDP". A statement absolutely not resting on any logic, but entirely dominating the economic science and politics. The truth is that not the consumption, but labor and entrepreneurism generate GDP. And consumption is just a reward for this work. The absurd policy to raise GDP by encouraging consumption only by redistributing money (not in exchange for labor) led Europe to a complete bankruptcy. And not just financial, but also a general economic bankruptcy, because the economy itself - industry and technology has already moved out. And in this situation now the bureaucrats decided to invent a "Growth Pact" as an alternative to savings and austerity.

But are the savings a theme of discussion? Are they avoidable? Is there an alternative?

No. It is obvious these savings are not subject to election, but an unavoidable reality based on the lack of money. But bureaucrats propose new spending. It is interesting while talking about "growth", the talkers to say where the needed money will come from... Because even the Keynesian experiments need money... Where is the money? As we see debt financing is under high interest-up pressure. And money-print financing led to nothing although 1 trillion Euros were printed, increasing the balance sheet of ECB by one third. And nothing as a result... So, where is the money that will reverse the austerity reality...

By now the only proven scenario for growth is... austerity. As we can see from the experience of some countries that tested this, the system is working. Stable countries, even poorer ones, attract investors that make the economy to grow. And such countries are not dependent on interest rates and market turbulences...

Dobri
April 30th 2012