Merkel to Obama: We want to focus on debt, not government spending

[The_Penguin]

BERLIN (Reuters) – Europe will push for a swift exit from fiscal stimulus programs and a focus on budget consolidation at the G20 meeting next week, German Chancellor Angela Merkel said on Saturday.

"European participants are of the opinion that this is urgently necessary to prevent such crises from happening again in the future," Merkel said in her weekly podcast.

Leaders of the 20 biggest developed and developing economies meet on June 26-27 in Toronto, Canada.

Merkel's stance contrasted with that of U.S. President Barack Obama, who this week said public finance problems should be addressed "in the medium term" -- a warning that clamping down budgets should not be done at the expense of recovery.

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Europe to urge exit from stimulus schemes at G20: Merkel - Yahoo! News

Well, since we can safely say that the stimulus spending has worked about as well as a flying rock, anyone betting that Germany (and those who focus on reducing debt) will be in a better position to develop and grow in the future?

 

[washunut]

Europe to urge exit from stimulus schemes at G20: Merkel - Yahoo! News

Well, since we can safely say that the stimulus spending has worked about as well as a flying rock, anyone betting that Germany (and those who focus on reducing debt) will be in a better position to develop and grow in the future?

An interesting issue for Germany is how they handle other countries in the EU. How do they control the spending in Greece, Spain etc. If not do they bail out other countries while holding down domestic spending.

A collorary is a bunch of states in the U.S. bailing out NY and Calif. Will Senators from other states continue to have their constituents subsidize the crazy spending in a few, large states which have a lot to say about who gets to be President.

 

[Civil1z@tion]

Over the long term a lower debt means less taxes are needed everything else being equal, and lower taxes help economic growth. However, in the short to medium term you won't see much benefit except for those countries entering debt crises (like Greece). A debt crisis can really mess up government spending and thereby hurt the economy for the short to medium term. However, such a crisis then has the added problem of making a country less reliable, meaning that investors demand higher bond rates over the long term, necessitating higher taxes to service any debt, thereby hurting growth.

While there are a lot of factors into economic growth, all other things being equal a lower government debt helps growth over the long term if it leads to lower taxes.

 

[Orion]

Oh the G20 meeting in Toronto. Yeah... the one that our Conservative government undemocratically allotted $2 billion to for "security", without any parliamentary say so in order to have the meeting in the middle of downtown Toronto. Yeah, that made a lot of sense. They should have just had it in a military bunker if security is such a concern.

I am tired of hearing about the G20 and the G8. They aren't meeting to discuss policy that is beneficial to their constituents; they are meeting to discuss policy that is best for the upper crust: the owners of industry and the bankers. They don't care that the cost of living is increasing while livable wages have hardly budged in the last 20+ years.

The G20 meeting is undemocratic. I didn't authorize my government to spend so much money on a three day get together of the world's financial elite. They can all go to hell.