Merkel-Hollande Growth Pact

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The headline reads “Merkel agrees fiscal consolidation and growth needed.” This means EU spending (Keynesian-style government projects). The article specifically mentions “more flexible use of EU structural aid, a bigger role for the European Investment Bank and the introduction of ‘project bonds’ to foster investments in infrastructure like transportation and energy networks.”

Up to now, all European efforts have been oriented toward bailing out insolvent banks by monetary means. These money and credit creation efforts have done nothing to revive Greece or any of the other failed or failing economies in Europe. So now government-generated and controlled money and credit will be directed by the EU at selected projects. This is the “solution” for mass unemployment and moribund or depressed economies tried in America in 1932 and 1933 when Herbert Hoover created the Reconstruction Finance Corporation, followed by Roosevelt’s further spending on public works. It didn’t work then to create a robust and growing economy, and it won’t work now.

8:49 am on May 19, 2012