Europe Leading the Way with Common Sense?

Who would have thought that the European Union - democratic socialists all - would be the ones to show fiscal restraint? Yet below is the essence of a disagreement between the U.S. and Europe in advance of the G20 Summit...

From The Times
March 11, 2009

A simmering row about the whole point of the G20 meeting on April 2 burst into the open when Larry Summers, chief economic adviser to President Obama, called on other countries to follow America’s lead in pumping even more money into stimulus plans to revive the world economic system.

The United States’ stimulus package of $787 billion is equivalent to about 5.5 per cent of its annual economic output, although it is spread over three years, whereas the EU has struggled to reach agreements on a sum that barely reaches 1.5 per cent of its total GDP.

Mr Summers’s plea was attacked by Jean-Claude Juncker, the Luxembourg Prime Minister, who heads the eurogroup of single currency countries. He declared: “The 16 euro-area ministers agreed that recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis was not to our liking.”

Mr Juncker suggested that the eurozone countries would rather adopt a wait-and-see approach than rush to incur even more debt.