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Merkozy’s Scared of a Working Capital Loan
When Merkozy met last week with few changes to EU treaties, the Euro hit a new low. With Sarkozy up for re-election later this spring, and Merkel still in charge of a hawkish government, fear of Greek default is growing. If only Merkozy had the same attitude as those taking out a working capital loan…
Merkozy’s idea is that by spending less, private companies will invest more, thereby creating more jobs and keeping taxes low. That in turn buoys consumer confidence so that austerity leads to growth.
In opposition to this is the Keynesian view, which holds that in a more globalized economy, especially one in which a country has no control over its exchange rate, it’s more likely that such belt-tightening will prevent spending in general, making it take longer to recover from recession. If instead the German government began to spend on infrastructure, its growth could help weaker countries, such as Italy and Spain, from a weakening Euro.
The keyword is “could.” No one knows what to do because a currency union without fiscal unity has never existed before. The bottom line is that Germany is scared to spend because they don’t want to wind up bailing out the weaker European countries. If only they had the confidence of we Americans, working to take out a merchant cash advance.
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Posted on: Monday, January 16th, 2012 at 9:51 am
Posted in: Merchant Cash Advance
Tags: merchant cash advance, working capital loan