Why Europe and the US Disagree on Stimulus

In a world of so many imbalances – some nations slotted as spenders, others as savers, some with more social welfare than others – a BusinessWeek article suggests that global coordination, or rather an overall blanket solution, may not work for the ongoing global crisis, particularly when it comes to spending. Some Europeans express concern that “massive public spending could revive fears of high taxes and inflation, hurting rather than helping confidence,” writes Jack Ewing for BusinessWeek. In analyzing a Wall Street Journal interview with European Central Bank President Jean-Claude Trichet, Ewing points out that European governments have devoted considerable effort to “get public spending under control, tame inflation, and create a stable basis for the common currency.” Too much stimulus spending could upset habits of prudence. – YaleGlobal