The American economy is certainly a cause for concern at the moment, but Paul Krugman is more troubled by issues abroad, declaring in his New York Times column on Monday that “the situation in Europe worries me even more than the situation in America.” Uh-oh.
The New York Times:
Just to be clear, I’m not about to rehash the standard American complaint that Europe’s taxes are too high and its benefits too generous. Big welfare states aren’t the cause of Europe’s current crisis. In fact, as I’ll explain shortly, they’re actually a mitigating factor.
The clear and present danger to Europe right now comes from a different direction — the continent’s failure to respond effectively to the financial crisis.
Europe has fallen short in terms of both fiscal and monetary policy: it’s facing at least as severe a slump as the United States, yet it’s doing far less to combat the downturn.