The U.S. lawmakers who are determined to force deep spending cuts and other European-style austerity measures on American’s are in danger of causing an ‘endless depression.’
In an economic outlook report, chief economist John Greenwood, who manages Invesco Perpetual in the U.K., had a grave warning for European governments pursuing austerity measures as a means to solve their debt problems. Greenwood said,“…The precedent set by Cyprus's creditor-funded 10 billion euro ($13 billion) bailout meant that euro zone banks will opt to be far more conservative with lending in the future, leading to extended deleveraging,” according to a CNBC report.
"In view of this outcome,” Greenwood added, “it is clear that the euro area orthodoxy implies further austerity and almost endless depression."
During the 2012 election season, conservative candidates used the European debt crisis as a frightening set of policies that the U.S. should avoid.
But many of those same politicians are now lobbying the American public for their support on deep spending cuts to government programs and other European-style austerity measures.
There is no evidence to suggest that austerity measures in the U.S. would be a successful deficit reduction tool, when it has failed so miserably in Europe.
If congressional budget hawks are successful in imposing austerity measures, they too risk being the cause of an ‘endless depression’ in the United States.