“Small and medium-sized enterprises in many countries, which are the engines of employment, are starved of credit. The prospects in the countries on the periphery of a reduction in today’s record-level unemployment are bleak. These countries face a lost decade of economic progress that will trap tens of millions of people in misery.”
“the E.C.B. will discover that just pumping in liquidity will not suffice to prevent economic conditions from getting worse.”
says William R. Rhodes, former senior vice chairman of Citigroup
Rhodes is correct. This bleak picture does not need to be. The European Central Bank (and the Federal Reserve) could make loans to the treasuries of sovereign nations that they could use to employ the unemployed to construct much needed infrastructure. This would increase consumer demand for products of the economy. It is only myth and superstition that prevent governments from seeing the obvious. Austerity is absurd.