Newswise — “It is no surprise that there are downgrades of various EU countries — they are currently engaged in a wrong-headed attempt to cure deficit problems with contractionary fiscal policies which will only serve to worsen the slumps that are a major contributor to the deficits.
“The UK has had austerity policies in place since 2010 and is leading the pack in its slide into recession. Watching the goal posts of budget balance pushed ever further away by the very policies designed to get there is like watching a dog chasing its tail. Look for further downgrades if these policies continue to be pushed — and look for the very possible exit of Greece from the Eurozone as austerity policies there fail to enable the debt repayments they were intended to promote.
“None of this is good news for the USA. While a large-scale financial meltdown may be avoided by European Central Bank actions, the overall economic slowdown will limit the upside potential of our own nascent recovery. It is an open question whether this will be felt by the time the election rolls around but it is certainly possible.”
--Steven Kyle, professor of management at Cornell University's Dyson School of Applied Economics and Management
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