Arnaud Montebourg, France’s economy minister who has just resigned, is quite right. He denounced austerity policies as “absurd” because they had brought about “the most destructive crisis in Europe since 1929″ He rightly attacked the Eurozone’s fiscal stance as “the cause of the unnecessary prolongation of the economic crisis and the suffering of the European population”, and he correctly demanded a major change of policy away from “the extreme orthodoxy of the German right”.
Montebourg is not the only one who has been railing against the absurdity of counter-productive policies which are relentlessly dragging down the Eurozone into deflation. Renzi, the young Italian prime minister, has rightly been demanding an easing of over-tight fiscal policies and a longer timescale to generate the growth to enable his country to overcome its excessive indebtedness. Italy, like Japan before it, has now endured nearly two decades of falling living standards and in the absence of growth will soon find maintaining its interest payments unsustainable. Continue reading