News. April 7 (Bloomberg) -- Europe’s economy unexpectedly stagnated in the fourth quarter as companies cut spending more than previously estimated.
My view. This is what happens to countries with high deficits -- sluggish growth.
High deficit countries are forced to raise taxes. Purchasing power declines. People spend less. The underground economy expands. Tax receipts decrease. The government becomes repressive to increase tax revenues. The economy suffers.
I have been there. I have seen it and lived it when I was in Italy. Let's hope our leaders have more foresight than the European ones.
You can rest assured that high government deficits and big popular social programs will cause the pie to grow much more slowly. It is not a political bias. It is the reality. And what is happening in Europe proves it.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest
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