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Breakingviews: Europe yields to austerity reality

Wednesday, May 29, 2013 - 04:21

May 29 - European countries are to get more time to hit hair-shirt deficit targets, but the snag is that gentle markets will ease pressure for reform, says Breakingviews.

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Today I'm -- these why Europe is yielding to reality on austerity. Including global -- up must prove a life where it exists joining me now is which is breaking these economic -- and what's hot dust and let's thank you so much for joining us. But austerity for us and we own youth of this was coming right yeah. It's there if there was never really any doubt and I think it's important to think about. How there are a lot of people who -- accusing the European commission and the European authorities. They're kind of draconian. Harsh austerity to the in order to kill the European economy. But in fact I'm they've always been pretty realistic to have a goal. And there's an argument about how fast to get there. Think we'll be hot so of course yet still mired in recession. You're expired in recession than most economists think that growth is gonna start to come back slowly in the second half of the year. And do this and European authorities view has been and remains. That. You first have to get -- in fiscal order there are a nation by nation and start the process of reform. And that then. The you'll start to have solid sustainable growth. On and the growth has been slower than expected and is -- would rather than say we need more on the budget cuts what that community the commission is saying here as we need more reform we're not too worried about deficits. And as we send them in in in are going to send peace. You have markets are docile duels are coming down and voters are restive. They're not really very happy with the situation. He would be crazy would be suicidal. To insist now. So they're being realistic. As has -- in in terms of ethics accepting what's going on. But to sit -- upside is they get more time Spain fronds they get more time and we -- PC growth kicking and what is the downside well the downside. Is that the -- there has been in negotiation with the European Commission said look. We have these targets and were willing to soften them as long as you are reforms. Now they've softened them and they are saying we still really mean that about reforms but. Without the negotiating leverage it's quite possible that the pressure for reforms well will soften and the momentum for reforms so often. And that was cause problems in terms of high unemployment and you know lack of GDP growth. And and say you instead of actually getting out of the mire of structural problems. -- European countries will remain. In the Maude. And just to finish up and ready fun story from breaking views. Now I've got evidence that a -- do you walk amongst the Sundays this evidence comes from a full plate for the world's customs office -- that's right. And I think it's entertaining we've managed to explain something as dull as statistical anomaly of anomalies in terms of alien life. It was done by by Jeffrey Frankel three decades ago. The ideas that -- seems to be a world trade surplus if you add up all the on evidence of those trade national trade surpluses and deficits it looks like the world has a surplus -- -- itself. So maybe they're exporting to Mars. -- actually the numbers are wrong and so it's a very dull explanation. That -- emerging countries are picked him reporting trade surpluses and that are not really trade surpluses but our capital account. Movements. And that suggests. That somewhere along the line the economies of for example most likely China and some other emerging markets. Are overstating their trade surpluses. And understating. That the congress and capital account. And that we'll have some effect on the world but it's entertaining thought to think of the Chinese toys which rushing -- to -- -- -- science and now we know we're now getting exactly it. We have to leave it there my thanks to -- hide us from breaking bees don't miss our live coverage today with -- for helpful from the -- in Paris. He -- the last and more on the inside a platform. I'm passing along this is switches.

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Breakingviews: Europe yields to austerity reality

Wednesday, May 29, 2013 - 04:21