Example of Economic Recovery

How does a country whose economy was devastated by the 2008-09 financial crisis now find itself with more vacant jobs than workers to fill them?

How does a county whose total economy shrank by 18% rebound and have a national budget surplus? By the way, an 18% contraction is larger than what Greece has seen over the past 5 years.

Maybe we should ask Estonia. What did they do? “I can answer in one word: austerity. Austerity, austerity, austerity,” says Peeter Koppel, investment strategist at the SEB Bank.

They made cuts and they made them everywhere. They didn’t just slow down the growth of their spending. They literally made spending cuts. You know the kind that means you spend less next year than you did this year…those kind of cuts.
They down sized the size of their government and the economy grew. Their budget to GDP is now at an astounding 6%.
I suspect that the more “dignified” countries in the Euro Zone and the United States won’t heed the common sense approach of Estonia. So as we see the cliff is getting closer, we will continue pushing the gas. Ignorantly, or perhaps arrogantly, believe that someway somehow we can spend ourselves out of this recession/depression.

Most of the countries who are closest to pulling the Thelma and Louise, when their government starts to mention trimming up the budget people take to the streets. The people of Estonia get it. My fear is that the rest of the developed world does not. Austerity is necessary. For most Americans and Western Europeans austerity is a curse word. Our thinking, “I am not suppose to have to make personal cuts…others are suppose to make sacrifices so that I can have.”

Until we follow Estonia’s example the cliff will get closer.