Austerity Plans Solve Nothing; May Cause European Depression (for 1/4/12)

If European nations come together this year with an austerity plan that would sharply curtail government spending for all member nations of the European Union, it may cause a depression in Europe. Prior to the economic crisis, Spain had low debt relative to its economic size. During this time, Greece was the only European nation not within the 3-4% target rates for deficits. Government stimulus and bailouts drove up deficits since then. Poor investments have caused Europe's problems. Italy and Greece did not invest in research and development. No central bank in Europe has acted as the European Union's emergency lender. Therefore, bond market speculators are gambling on their ability to pay their loans. Great Britain has grown slowly, but speculators have not yet gone after this nation as it will always pay off its debts, thanks to the Bank of England. http://www.alternet.org/economy/153656/austerity_plans_are_based_on_the_wrong_diagnosis_of_the_wrong_problem_--_and_may_plunge_europe_into_depression