Not a good time for Greece and others to be cutting agg demand with
spending cuts and tax hikes, but that’s what the euro’s institutional structure ‘demands.’
The risk is this fiscal constraint employed to reduce national deficits will further reduce demand, which causes revenues to fall further and transfer payments to increase further, resulting in even larger deficits, etc.
But nothing will change unless things get bad enough, which obviously they are not.
Europe’s Recovery Almost Stalls as Investment Drops
German Machine Orders Fell in January on Weak Domestic Demand
EU Says Competitiveness of Greek Economy Down ‘Substantially’
French Unemployment Rate Increases as Companies Trim Payrolls