You would think that the transformation of the European Union into a transfer union, the extension of the rescue facility for the continent’s fragile currency by a few hundred billion dollars, and new policy dictates to struggling economies like Greece would be of some interest to the wider public.
The financial crisis has made us remember some half-forgotten truths. One of them is that countries with negative net foreign assets and large government liabilities are in danger of being shut out of capital markets. [...]
By comparing the different economic conditions of Europe and Australia, it should not be too difficult for Australians to make a choice about economic policy. Mimicking European policies is the surest way to economic disaster. [...]
The problem with Keynesians like Krugman and Stiglitz is that they are theoretically committed to balanced budgets, but only in the long run. But as no other than Keynes taught us, in the long run we are all dead. In the meantime, his disciples will never tire to explain why the right time to cut spending is never. [...]
In many ways, Australia today reminds me of Europe in the first decades of the post-war period. We are full of optimism ... our population is growing ... our economy is booming. But make the wrong choices about the size of government now, ignore the challenge of population ageing, gloss over temporary problems with public deficits, and just a few decades later, we will end up like Europe – under different stars, but with the same destiny. [...]
Just like their Australian cousins, most Britons regard home ownership as a good in itself. It is thought to be a panacea for all sorts of social ills, a tool for regenerating run-down areas, a safe investment for retirement, and a key to building a stable democracy. You can spend the whole week watching all sorts of ‘property porn’ shows on British TV that tell you how to build, buy, renovate or sell your home. Politicians regularly talk about it in terms of ‘aspiration’ and promise help for first-timers to step onto the property ladder. Yet there is a dark side to Britain’s property mania. [...]
Private and public overspending has fuelled Britain’s economic growth of the past but it is now high time to rid ourselves of our sweet tooth for debt. The Chancellor is right but his words are just a little hollow without an acknowledgement that the Government has contributed to the current credit crisis.
The forthcoming comprehensive spending review would be a good opportunity for Mr Darling to follow his words with action. If his own finances were in order, his advice to the private sector would carry greater weight. [...]