So you think the European excessive spending crisis is over? Listen to the Washington Post’s David Ignatius, a liberal, but a cautious one:
the European package . . . postpones problems rather than resolves them. It will delay Eurobond defaults another year or two, and it will add some fiscal discipline . . . But there's nothing to address the deeper structural imbalances between high-saving northern Europe and the spendthrift "Club Med" countries of southern Europe that used the euro as a credit card. Basically, the north's abundance created a low-interest Eurobond market that underpriced the risk of investments in the south.
the austerity measures have two big drawbacks. . . imposing harsh budget cuts and other belt-tightening on the "Club Med" countries, while appealing to German workers, may [hurt] European recovery [that] is so fragile. . . [Even] trickier . . . is building political support for the austerity measures that are coming. . . Europeans believe in the welfare state as a matter of social entitlement.
In the face of Europe’s problems, the Wall Street Journal’s Daniel Henninger reflected on their implications for the U.S. Henninger's column made these points:
➢ . . . criticism of Mr. Obama and the Democrats [for] nudging America toward a European-style social-market economy came to awful life in the panicked, stricken faces of Europe's leadership: Merkel, Sarkozy, Brown, Papandreou. They look like that because Europe has just seen the bond-market devil.
➢ Europe's governments [once] told the devil that, more than anything, they wanted a life of social protection and income fairness no matter the cost. Life was good. [Then Greece collapsed], the bond devil arrived and asked for his money.
➢ A 4% growth rate, which Europe will never see again, pays social dividends innumerably greater than 2.5% growth. Which path are we on?. . . the floundering United Kingdom['s] failed prime minister, Gordon Brown, said on leaving, "I tried to make the country fairer." Maybe there's a more important goal.
➢ After Europe's abject humiliation, the chance is at hand for the Republicans to do some useful self-definition. They should make clear to the American people that the GOP is "The We're Not Europe Party."