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Latest EU Failure: Deficit Targets

A new IMF report showing that few European countries are expected to hit their target levels of budget deficits is adding fuel to the fires slowly consuming any remaining confidence in the policy pronouncements of European leaders. Shortly after agreeing to new deficit targets for 2013, few countries are on track to meet these targets even after serious budget cuts due to the faltering European economy, the IMF reports.

The list of affected countries includes usual offenders like Greece and Spain, where deficits are nearly two percentage points higher than the target, but also includes newer faces such as France and the Netherlands. And it is difficult to see a policy fix to this problem, as many analysts now warn that any steps taken to meet these targets may end up making things worse by crippling the economy further. The WSJ reports:

Pursuing more cuts to hit next year’s deficit targets would further roil Europe’s political waters and test the powers of these governments to push more austerity through restive national parliaments. The European Commission, the EU’s executive arm, is set in the coming weeks to review national austerity programs, making its own determination about whether the programs will hit the budget targets. If the commission believes the numbers don’t add up, it will discuss with other EU governments in the coming months whether to seek further cuts or relax the 2013 targets for the governments in question.

This news is depressing enough on its own, but more depressing is the frequency with which the confident forecasts and carefully negotiated agreements of European leaders turn out to be worthless trash.  Is any sentient being on planet Earth when yet another European agreement and policy consensus turns out to be a tissue of lies and false hopes? Does a solitary person anywhere believe one word EU leaders say about the state of their economies?

Can anybody anywhere on earth recall such a train of stupid policy decisions, foolish assumptions and failed fixes as the member countries of the eurozone have made since Francois Mitterand demanded the establishment of a single European currency as the price for German unification?

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