Comments on: EU’s Message to the PIS Nations: Go Hog Wild! http://blog.robertsalomon.com/2010/02/09/eus-message-to-the-pis-nations-go-hog-wild/ Thu, 09 Sep 2010 22:11:50 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Robert Salomon http://blog.robertsalomon.com/2010/02/09/eus-message-to-the-pis-nations-go-hog-wild/comment-page-1/#comment-1761 Robert Salomon Wed, 10 Feb 2010 02:37:58 +0000 http://blog.robertsalomon.com/?p=1629#comment-1761 Oops CSpain, I forgot to address your second question. In my opinion an IMF-supported solution that imposes some much needed fiscal discipline is a better route for Greece. This would serve as an example for the rest of the fiscally troubled European nations (including Spain), and provide the appropriate incentives to credibly commit to bringing their deficits down to 3% of GDP. But make no mistake, increasing taxes and/or severely curtailing spending to bring deficits down will be a very painful process for the citizens of those countries. Oops CSpain, I forgot to address your second question. In my opinion an IMF-supported solution that imposes some much needed fiscal discipline is a better route for Greece. This would serve as an example for the rest of the fiscally troubled European nations (including Spain), and provide the appropriate incentives to credibly commit to bringing their deficits down to 3% of GDP.

But make no mistake, increasing taxes and/or severely curtailing spending to bring deficits down will be a very painful process for the citizens of those countries.

]]> By: Robert Salomon http://blog.robertsalomon.com/2010/02/09/eus-message-to-the-pis-nations-go-hog-wild/comment-page-1/#comment-1760 Robert Salomon Tue, 09 Feb 2010 23:09:04 +0000 http://blog.robertsalomon.com/?p=1629#comment-1760 CSpain, in the case of Spain, what I mean by behaving badly is that Spain has less of an incentive to take the tough decisions to address its deficit/debt problem. I agree that Spain's problem was not entirely its own creation in the sense that it was not a repeat offender that had run structural deficits like Italy and Greece. But now that such deficits exist, it is unclear that Spain will have the incentive to address it. CSpain, in the case of Spain, what I mean by behaving badly is that Spain has less of an incentive to take the tough decisions to address its deficit/debt problem. I agree that Spain’s problem was not entirely its own creation in the sense that it was not a repeat offender that had run structural deficits like Italy and Greece. But now that such deficits exist, it is unclear that Spain will have the incentive to address it.

]]> By: cspain http://blog.robertsalomon.com/2010/02/09/eus-message-to-the-pis-nations-go-hog-wild/comment-page-1/#comment-1759 cspain Tue, 09 Feb 2010 22:59:25 +0000 http://blog.robertsalomon.com/?p=1629#comment-1759 Could you clarify what you mean when you say "Spain now [has] the incentive to continue to behave badly". Italy and Greece, with long-running structural deficits and high debts, I undertand. But your link makes the point about how their situations differ: http://krugman.blogs.nytimes.com/2010/02/07/know-your-deficits I wonder how, in your opinion, has Spain been behaving badly? And what would you propose they do to fix it? Could you clarify what you mean when you say “Spain now [has] the incentive to continue to behave badly”. Italy and Greece, with long-running structural deficits and high debts, I undertand. But your link makes the point about how their situations differ:

http://krugman.blogs.nytimes.com/2010/02/07/know-your-deficits

I wonder how, in your opinion, has Spain been behaving badly? And what would you propose they do to fix it?

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