Reprinted from: The Gazette (April 26, 2012)
By: Jay Bryan
“The tide is certainly shifting,” says Peter Berezin, Chief Strategist of The Bank Credit Analyst.
“Markets now seem to understand that austerity damages growth. The view has shifted from a very firm focus on cutting to a focus on growth.” Berezin sees this not only in the lack of a positive reaction when new austerity measures are announced, but also in comments from clients.
Probably the best formula, suggests Berezin, is to “backload austerity.” He would have Europeans ease up substantially on immediate spending cuts, such as those that fund infrastructure and essential services, but impose policies that will gradually tighten spending on pensions and similar social entitlements, which threatens to grow hugely among the region’s aging population.
The result would be more growth now, providing hope to despairing Europeans, along with a cut in new borrowing over the coming decades.