In Europe it’s called looking out for numero uno, and doing it rather miserably. The UK’s Evening Standard cites James Surowiecki’s article in the New Yorker that points out the the EU member states are the collective ‘big government that couldn’t’.
Just as Sarko and Merkel may have been congratulating themselves, Surowiecki delivers the sting in the tail.It’s not that they won’t do a debt-heaping stimulus package for same reasons, surely that’s what they’ve been already doing be way of dirigisme, de-facto state industries, and subsidies anyway for ages. They simply can’t find that many institutions to take up their dept, and are mortally afraid of the GDP-multiples of their existing borrowing, not to mention that in Europe, more than anywhere else, commercial bonds could scupper them in a way that will make the banks look like a safe investment.
"They’re also probably counting on the fact that, even as they sit tight, their economies will get a boost from the American and Chinese stimulus packages. The thing about government spending is that it “leaks”: a good chunk of our stimulus package will buy other countries’ goods. So Europeans can avoid getting too deeply into debt and still reap some of the benefits of our borrowing.