Austerity increases Confidence in the Debt

[cthulu2016]

Talking Point: Conservative UK Prime Minister Cameron's austerity measures (slashing government spending) will improve the economy by increasing confidence in the sustainability of the public debt.

Counter-argument: Slashing government spending reduces economic activity and growth, thereby reducing government revenue and increasing demand for government services... debt reduction in a weak economy makes the long term debt situation worse.

Moody's Strips the UK of Its Triple-A Rating
Friday, 22 Feb 2013

Credit ratings agency Moody's Investors Service downgraded Britain's government bond rating one notch from the top AAA to AA1 Friday, citing weaknesses in the economy's medium-term outlook.

Moody's said "subdued" growth prospects and a "high and rising debt burden" were weighing on the British economy.

The agency said rising debt meant "a deterioration in the shock-absorption capacity of the government's balance sheet, which is unlikely to reverse before 2016."

http://www.cnbc.com/id/100474901

[putitinD]

1. it must be "backwards day" again

[BootinUp]

2. Krugmans blog currently has some great stuff

on Austerity too.

http://krugman.blogs.nytimes.com/

(the blog's front page is not behind the pay firewall.)