Tags: Stiglitz | Europe | Double-Dip | Recession

Stiglitz: Europe on Brink of Double-Dip Recession

By    |   Tuesday, 24 Aug 2010 02:59 PM

The austerity plans implemented by European governments to cut their budget deficits risk pushing the continent’s economy back into recession, says Nobel laureate economist Joseph Stiglitz.

“Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish,” he said in an Irish radio interview, Bloomberg reports.

After the Greek debt crisis this spring, many governments cut spending to push their deficits below the European Union mandate of 3 percent.

“Because so many in Europe are focusing on the 3 percent artificial number, which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double dip,” Stiglitz said.

The European Union’s economic growth jumped in the second quarter but now appears to be slipping.

So this isn’t the time to pull back on government stimulus, Stiglitz says.

“The problem is that we aren’t getting out of this current crisis very quickly,” he said. “What we’re doing is setting ourselves for a longer-term Japanese-style malaise of weak growth for an extended period of time.”

Many experts also are worried about a double-dip recession in the United States.

"The case for a double dip is not a complex case. It starts with a weak recovery,” Morgan Stanley economist Steve Roach told CNBC. “You don't have the staying power to avoid a relapse."

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The austerity plans implemented by European governments to cut their budget deficits risk pushing the continent s economy back into recession, says Nobel laureate economist Joseph Stiglitz. Cutting back willy-nilly on high-return investments just to make the picture of...
Stiglitz,Europe,Double-Dip,Recession
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2010-59-24
Tuesday, 24 Aug 2010 02:59 PM
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