Could coercive budget discipline save us all?
Are you paying attention to Europe’s financial crisis? If your retirement check depends upon investment returns, you should be. Europe’s turmoil has been whacking international stock markets.
It’s all about the pigs.
Well, not exactly. Pigs is the homophone for PIIGS, which stands for Portugal, Italy, Ireland, Greece and Spain. These are the deficit-ridden, debt-stricken, poor economic partners in the Eurozone. Their declining credit quality and skyrocketing borrowing costs are undermining the 17-country economic and monetary union and its common currency, the Euro.
Germany and France, the Eurozone’s strong economies, are being called upon to bail out their weak sisters. Before doing so, though, they want some way to enforce fiscal discipline on the pigs, eh, PIIGS.
“Coercive budget discipline” to the rescue. The pact pushed through by Germany and France forces all 17 Eurozone nations to limit structural budget deficits to no more than 0.5 percent of GDP and yield budget sovereignty to the European Commission. The commission will be empowered to reject national budgets, send them back for revision, and impose sanctions when any nation’s budget deficit exceeds 3 percent of GDP.”
Bill Crawford
12/13/11
