Thursday, April 19, 2012

My letter to the NY Times re: Listen to Germany, Not to America

Subject: Listen to Germany, Not to America
Date: Thu, 19 Apr 2012 13:01:27 -0400

Re: Debate Grows As Europe Fears Return Of a Crisis

Dear Sirs:
High borrowing costs for the "struggling Southern European countries" is NOT the root cause of the crisis. The root cause of the crisis is spending, more specifically spending that is funded by too much debt. Borrowing costs merely reflect creditor uncertainty that debts will be repaid in money of the same purchasing power as lent. So, if too much spending is the problem, how can increased spending, as recommended by the Americans, possibly be the answer? Fortunately there is a country that understands basic economics--Germany. Germany's finance minister, Wolfgang Schauble, recommends further spending cuts and changes in labor markets as the path to recovery. He is right. No nation can live beyond its means forever, and no nation can spend its way to prosperity. Europe needs increased savings, not spending, to rebuild its capital base that was squandered by government policies to create bubble economies based on money manipulation and fiscal interventions. These measures have failed spectacularly. If Wolfgang Schauble ever needs a job, I propose that he apply for Timothy Geithner's.

Patrick Barron

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