Is Austerity Worse than Default?

The following comments under the pseudonym, “Capitalistic,” appeared in The Atlantic in response to an article entitled, Is Austerity Worse than Default? (2011):

1. Default is better than austerity. Governments don't function like businesses.
2. Governments can default because they do not like the terms of their loans.
3. Austerity favors debt holders, not governments.
4. When a country's economy contracts, austerity is the worst thing a government can implement. It leads to stagnation.
5. A country can default, wipe out their debt, and raise new capital with higher interest rates.
6. There's no proof that austerity works.

The commentary above is succinct and instructive for those still considering the implications of austerity for a society. We the people should be quite careful what we wish for...

Source: Indiviglio, D (2011, June 21), Is Austerity Worse than Default? Atlantic.

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