Megan Greene is right.
Ireland, held up as Europe's poster child for austerity, is a good example of the pitfalls of loosening deficit targets for a country in fiscal crisis.
The government has passed half a dozen austerity bills over the past four years, and in many ways the policy is working. Last week the European Commission said Ireland's budget deficit was 7.6 percent of gross domestic product, below its 8.6 percent of GDP target. Bond markets seem to have regained confidence in Ireland's creditworthiness, with 10-year government bond yields hovering around an affordable 3.6 percent.
Austerity measures have gone smoothly thanks in part to an acquiescent population. In Dublin, which during the boom had an oxygen bar where one could go to breathe different flavors of oxygen, people recognized they had partied too hard and would have to tighten their belts.
But even the Irish are starting to push back against austerity. Labor unions recently rejected a motion called Croke Park 2, which the government proposed to further cut the public- sector wages. Some government ministers have begun to say Ireland should ease up on spending cuts and use the savings from February's restructuring of promissory notes to plug budget gaps.
Loosening austerity to stimulate growth is a classic Keynesian approach and makes a lot of sense -- unless you are dealing with a country that has unsustainable public finances, such as Ireland. Germany Should End Austerity, Not Ireland - Bloomberg.
However, Megan Greene is only right within a narrow context, which itself is wrong. Megan goes on to say that Germany should pick up the slack before it is too late. She's right about that too but also only within a failed context.
What's missing from her critique is the always present option of governments issuing debt-free money pegged to real productivity that is measured in real-time.
The idea for a debt-free currency is ancient. The idea of pegging it to real productivity in real-time is mine (by God). I say that because various people come to this site and complain and complain about such matters and without justification. (See: Not Enough: PEOPLE For Mathematically Perfected Economy and especially the comment section.)
The ultimate solution, however, is a moneyless society. There is no money in Heaven; and as a Christian, I am taught by Jesus to pray for Heaven to come to Earth.
If you think one must be a capitalist to be a Christian, you don't know Jesus.