"The IMF released its economic outlook for Europe in Brussels, at a time when the eurozone sovereign debt crisis is mutating into a new banking crisis, and "therefore we recommend changing economic policy" away from austerity and back towards stimulus, the 100-page report said." Read more: http://www.news.com.au/breaking-new...ut/story-e6frfku0-1226159620539#ixzz1Zu9wpZ1v I don't get it. Firstly, I don't normally read this rubbish but I am having a coffee break, but anyway, why do they keep pushing for stimulus? If all these so called experts keep pushing for it, do you think it either a) actually has merit, or B) they're being paid handsomely for continuing to spruik stimulus? I am no expert but I have been reading about this potential looming crisis daily and from what I have been reading general consensus seems to not agree with continuing to provide stimulus and bailout packages.... Am I missing something fundamental here???
Austerity = political suicide Stimulus = buys votes Stimulus = must borrow money, someone must benefit and we prolong the system ???????
well stimulus will mean short term gain and then long term bigger crash, If they announce a huge stimulus I think it would be safe to buy lots of shares if you plan to keep them for a short term
The argument for austerity is that deficits (whether you're going deeper into debt or reducing debt) need to be cut and debts need to be paid back. One way of doing this is to make cutbacks so that more income can be directed towards servicing the debt. The argument for stimulus is that if too much money is being spent paying back debts and making cutbacks, there isn't any cash left over to spend on other things and there are a bunch of people out of work as a result of the cutbacks. That results in no growth and high unemployment. The danger is if you get the balance wrong between making reasonable cutbacks on genuinely wasteful and/or inefficient spending and under-stimulating the economy so that nobody can do the things that generate tax revenue which can be used to pay back the debt. If you do get the balance wrong, you have to correct it by doing more of whichever force is needed to create equilibrium.
