The Joplin Globe, Joplin, MO

Opinion

July 3, 2012

Our View: European bailout

— The United States, during the past week, has been consumed by the Supreme Court announcement upholding the Affordable Care Act.

Yet something of significant importance was going on in Europe as well. A European economic summit was held to try to resolve the crushing debt burden on many countries in the European Union.

The resolution, or so it seems from initial reporting, is that Europe is going for the quick fix by agreeing to lend more money to struggling nations and banks within the European Union. A European Union central bank has about $625 billion available for lending.

Prior to last week’s summit, those funds were subject to strong austerity demands, primarily to significantly cut spending before the loans would be made available. Now it seems that relaxation of such demands has been decided as the better course for Europe to take to help countries such as Spain and Italy, perhaps even Greece.

It seems Europe is now attempting to stimulate economic conditions much as we tried to do in 2009 with our $825 billion government stimulus to lower the unemployment rate and ignite more economic growth. We wonder if the European stimulus will be any more successful than our own attempts.

In our view, the underlying economic problem in Europe and the United States is that we spend far more than we can hope to collect in taxes. That creates ever-increasing debt in our collective democracies. The long-range solution is to begin to live within our means as democracies.

We tried a quick fix through a huge government stimulus using borrowed money. Now, the November presidential election may well depend upon the voters’ views of the success of that stimulus and plans for long-term stability in our economy.

Europe seems now to be heading down the same path. We wonder how Europe might deal with the results three years from now.

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