Tag Archives: eurozone

Government Social Spending and Government Debt: The Troubles of Europe

Paul Krugman, once again, throws cold water on the right-wing claim that  Europe’s troubles are the consequence of excess government spending on social support programs. It’s necessary to do this every once in a while: the facts are beyond the grasp of most Republicans and their media flacks:

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Bonds in Crisis?

One more thing from last Sunday’s “This Week” talk show.

As noted by Paul Krugman, Douglas Holtz-Eakin (George W. Bush’s chief economist) said:

“We are headed straight toward a Greek-style fiscal crisis. We are in the range of the measures of countries that have that.”

Well, let’s take a look at the “measures.” The most obvious measure is the rate-spread on government bonds. A government in crisis, or perceived to be headed toward a crisis, must pay a stiff interest rate premium in order to sell its bonds. The premium is commonly reported in the form of the “spread” between rates for the very strong German bond and the bond of the country in question.

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