Here is the relevant bit from a post by Paul Krugman on his NY Times blog:
Today, the OECD warns that things are looking vewy, vewy bad:For the bottom 99% when you make a serious error, you pay through loss of job or serious jail time. For the elite, a serious error is simply ignored and you continue to blather with your pithy statements of false platitudes. You are secure because you "own" you position in society. You don't have to work for it.Decisive policies must be urgently put in place to stop the euro area sovereign debt crisis from spreading and to put weakening global activity back on track, says the OECD’s latest Economic Outlook.That’s all perfectly sensible. But how did we get here? In large part, by listening to people like … the OECD, which demanded both fiscal austerity and interest rate hikes back in early 2010. And yes, it was the same people now running scared of the consequences of those spending cuts and rate hikes.
The euro area crisis remains the key risk to the world economy, the Outlook says. Concerns about sovereign debt sustainability are becoming increasingly widespread. If not addressed, recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption. Pressures on bank funding and balance sheets increase the risk of a credit crunch.
Another serious downside risk is that no action would be agreed to offset the large degree of fiscal tightening implied by current law in the United States. This could tip the economy into a recession that monetary policy could do little to counter.
Maybe a little soul-searching might be in order?
To be fair, though, it wasn’t just the OECD. Future historians will look back in astonishment at the Great Pivot of 2010, in which all the Very Serious People on both sides of the Atlantic– and, sad to say, in both parties in the United States — decided that in the face of high unemployment, weak growth, and low inflation, what the world really needed was austerity.
I’m actually having trouble writing about all this; it’s just too depressing.