Tags: Austerity | Europe | euro

Experts: Austerity May Go Overboard in Europe

Wednesday, 04 Jan 2012 07:57 AM

Austerity measures such as tax hikes and public-sector layoffs imposed in debt-ridden southern European countries may be going overboard, experts say, pointing out such steps will cut into growth.

Countries such as Greece have agreed to undertake tough austerity measures in exchange for aid or investor turnout at bond auctions, although layoffs and tax hikes designed to streamline the public sector and ease debt burdens mean less tax revenues down the road.

Less people working means less money coming back in. Plus, a small government means less economic output as well.

Unthinkable ‘Death Cross’ Signal Haunts Investors

MarketWatch reports that “all three major U.S. indexes now are in Death Cross mode,” signaling a possible crash. Watch the Aftershock Video, Be prepared!


"Every government in Europe with the exception of Germany is bending over backwards to prove to the market that they won’t hesitate to do what it takes," says Charles Wyplosz, a professor of economics at the Graduate Institute of Geneva, The New York Times reports.

"We’re going straight into a wall with this kind of policy. It’s sheer madness."

(Getty Images photo)
Europe is already on the road to recession, many say.

"Europe is likely to have a meaningful recession in 2012," says Tobias Levkovich, Citigroup’s chief equity strategist, The New York Times adds.

While U.S. businesses may not be directly exposed to problems in Europe, protests stemming from austerity measures could spark worries in U.S. capital markets.

"Powerful street protests could bring it back to the front pages," Levkovich says.

"We've seen episodic crises in Europe over the past two years. It's a recurring event."

Greek Prime Minister Lucas Papademos told the country in a New Year's Eve address that Greece must prepare for another tough year that includes sticking with austerity measures.

"A very difficult year is ahead of us. We must continue our efforts with decisiveness, to stay in the euro, to make sure we do not waste the sacrifices and do not turn the crisis into an uncontrolled and disastrous bankruptcy," Papademos said, Reuters reports.

© 2015 Moneynews. All rights reserved.

Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

DEA Chief: US Abandoned Plan to Track Cars near Gun Shows

Wednesday, 28 Jan 2015 11:29 AM

The Drug Enforcement Administration abandoned an internal proposal to use surveillance cameras for photographing vehicle . . .

Politico: Homeland Security Funding No Longer a Priority

Wednesday, 28 Jan 2015 10:53 AM

The Department of Homeland Security's funding deadline, once deemed critical by House Republicans seeking to include imm . . .

Report: FBI Probing Online Bomb Threats Against US Airlines

Wednesday, 28 Jan 2015 10:32 AM

The FBI is investigating a series of terror bomb threats against U.S. airlines since the weekend, including a fourth Twi . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved