Stiglitz Says European Leaders Showing No Plans to Spur Economic Growth
Nobel Prize-winning economist Joseph Stiglitz said he sees no indication from European officials that they have a plan to support growth in the region as they reduce budget deficits to quell their debt crisis.
Stiglitz, who is attending the World Economic Forum in Davos, Switzerland, said the speeches he’s heard there have made him more pessimistic.
“They repeat the same kind of platitudes, ‘we need to get growth, austerity won’t be enough,’ but no country policies that will achieve growth,” Stiglitz said today in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene from Davos. “I haven’t heard a single thing here that has given me a sense that the European leaders have any sense of what” they need to do and will do.
The International Monetary Fund this week cut its forecast for global growth and warned that the European debt crisis could plunge the world into another recession. It cautioned countries that have fiscal room to maneuver, including in the euro area, against “overdoing fiscal adjustment in the short term” because it may damp growth further and damage market confidence.
Earlier today, World Bank President Robert Zoellick said Germany and others in the 17-country euro region need to do more to help Italy grow as it takes measures to reduce its public debt.
“If we’re sitting here six months from now and the Italian public says enough’s enough, then what happens to Europe?” Zoellick said in an interview with Bloomberg Television’s Erik Schatzker in Davos.
Stiglitz said there’s still a “serious risk of contagion” coming out of Greece, where talks on a debt swap to lower Greece’s borrowing continue.
Risks are still here because of a lack of transparency in financial markets, Stiglitz said.
“Nobody knows who owes what to whom, where the risks of a Greek default are,” according to the Columbia professor.
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