Making Their Move
by digby
WASHINGTON (MarketWatch) – G-20 countries are on the verge of reaching an agreement on common goals for deficit and debt reduction, a European regulator said late Saturday.
“The fact that the G-20 probably will be ready to accept some targets for deficit reductions and debt reduction is very encouraging,” European Commission President Jose Barroso told reporters. “I am encouraged by fact that there is a convergence about setting these minimum requirements on deficit and debt reduction. We expect it to be approved tomorrow.”
Barroso said the European Commission supports Canadian Prime Minister Stephen Harper’s proposal to have advanced economies of the G-20 member countries cut their deficits in half by 2013. He also expressed support for Harper’s proposal to have countries stabilize their government debt to Gross Domestic Product ratios, by putting them on a downward path, by 2016.
If you read Krugman, you know that this is simply batshit insane. Get ready for more recession, a lost decade or something worse. Apparently all we “small people” need to be taught a lesson in responsible fiscal management and we’re going to get it by sacrificing the dreams and futures of millions of people. I feel “cleansed” of my sins already.
The good news is that the US is the one country that doesn’t seem to be quite on the page:
G-20 observers contend that the U.S. may be the largest obstacle to reaching a common consensus on deficit and debt reduction. President Barack Obama warned fellow G-20 leaders in a letter last week not to withdraw fiscal stimulus and hurt a burgeoning recovery.
Huzzah. After blathering on about Grand Bargains and Deficit Panels for a year and half, the administration has finally figured out that thy might just be screwing themselves (much less the people) by putting deficit reduction on the table at a time of economic hardship.
Well, sort of:
However, U.S. Treasury Secretary Timothy Geithner disputed assertions that the U.S. is seeking a different fiscal direction for G-20 countries.
“If you look at the rest of the major economies you see more in common than different,” Geithner told reporters on Saturday.
He added that the U.S. announced measured path for deficit reduction over the next three years is actually more forceful that Germany.
“If you look at the announced measured path of deficit reduction for the US for the next three years relative to what the leaders are considering are appropriate for Germany.
“Look at the announced measured path of deficit reduction for the United States of America over the next three years relative to what the leaders of Germany are considering appropriate for Germany,” Geithner said. “And if you look at those together, you’ll see ours is much steeper, appropriately so.”
Awesome. And if we keep looking I’m sure we’ll find those WMD in Iraq too.
Update: More from Krugman on the Invisible Bond Vigilantes
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