January 24, 2012
The NYT noted that factory orders across the European Union fell sharply in November. It told readers:
“businesses are cutting back as they wait for political leaders to resolve the debt crisis.”
Actually, businesses are cutting back precisely because political leaders are making cuts in spending and raising taxes in order to resolve the debt crisis. The steps being taken by Europe’s governments have the effect of reducing demand in the economy. The reduction in factory orders is the predictable result of the austerity being pursued by governments across the continent.
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