Well, well, well… “Less government spending will equal more economic growth, the European Central Bank asserted Thursday in a report.” Now I’m preeeetty sure that a year or so ago they were all gung-ho about printing insane amounts of money, implementing stimulus packages and huge bailouts… it seems to me that all these big central banks are beginning to change their tune long after the damage has been done. How ironic…
Less government spending will equal more economic growth, the European Central Bank asserted Thursday in a report, in an effort to keep up the pressure on less-troubled countries like Germany to cut their budgets, Jack Ewing reports in The New York Times.
Previous budget-cutting by countries including Ireland, the Netherlands and Finland led to faster growth fairly quickly, according to an analysis in the central bank’s monthly bulletin for June that appeared to reflect the thinking of members of the bank’s executive board.
In recent weeks the European Central Bank president, Jean-Claude Trichet, as well as presidents of national central banks have been urging governments — which only months ago were starting cash-for-clunkers programs and other costly attempts to stimulate growth — to move in the opposite direction.
“Sustainable growth is not possible without healthy public finances,” the Bank of Finland governor, Erkki Liikanen, said Thursday in a statement that echoed Mr. Trichet and other central bank policy makers. While cuts in government spending might temporarily slow growth, Mr. Liikanen said, “the longer-term impact will be positive.” [MG: Soooo, what does all the horrendous spending that has been going on prior to that statement mean for Europe?]
– The New York Times
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