From the FINANCIAL TIMES:
European leaders have agreed to back a fiscal discipline treaty, handing Angela Merkel, German chancellor, a symbolic victory in her months’ long drive to enforce tough budget limits for the single currency.
Under the pact, eurozone countries would be legally bound to balance national budgets over time – a price that European leaders see themselves paying to ensure Berlin’s fiscal might continues to back the single currency.
But it also comes as leaders and institutions around the world, from the International Monetary Fund to Italy’s prime minister, question the austerity-centred policy backed by Ms Merkel. Some likened the pact to outlawing Keynesian-style fiscal stimulus…
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EDITORIAL: If indeed the ‘discipline treaty’ prohbits deficit spending in times of recession or depression, then it will do far more harm than good. The fact that sovereign loan lenders to Greece are going to take a 70% ‘haircut’ should be in itself a huge deterent to future excesses.
Europeans are learning from their mistakes. Not we Americans who are unwilling to reduce the size of banks that are deemed “too big to fail.”
