Austerity Will Crush Economies, And Budget Deficits Soar

Nomura’s Richard Koo is clearly one of the most important voices on this next stage of the economic cycle, as deeply indebted governments try to figure out what comes next.

To those that think austerity is the answer, he has an ominous warning: If your private sector is still deleveraging, your economy will crash and your deficit will grow. That latter is the key one, as it’s the experience in Japan (and Ireland, and probably Greece, Spain, Portugal, and the UK next).

via Richard Koo: Governments That Practice Austerity Will See Their Economies Crushed, And Budget Deficits Soar.