Archive | February, 2012

De ce trebuie sa ne uitam critic la BNR

28 Feb

Cateva ganduri de la Matei Paun, un economist influent care merita citit intr-un context in care economistii BNR au parca infailibilitate:

1. In Statele Unite, in Anglia si chiar si in Uniunea Europeana, bancile centrale au cumparat obligatiuni emise de stat, refinantand astfel datoria publica. Asta ar trebuie sa faca si BNR. Dar, din pacate, noi nu numai ca trecem printr-o criza economica fara precedent, dar entitatea care este pe prima linie in aparare in fata crizei, adica BNR, “lupta” folosind arme care, din punctul meu de vedere, nu sunt adaptate pentru a face fata situatiei. Este posibil ca BNR sa spuna ca legea nu permite asa ceva, dar atunci trebuie schimbata legea. Si in alte state, acolo unde a fost o problema cu legea, legea s-a schimbat. Daca statul ar scapa de problema datoriei pe termen scurt si-ar permite sa plateasca ariratele, ajutand astfel economia.

2. Atitudinea care nu se potriveste situatiei de fata este una antiinflationita. Nu inteleg cum cineva isi poate face griji legate de inflatie, cand economia este in picaj de cand a inceput criza. In plus, inflatia de baza (core inflation) este rezultatul unui dezechilibru intre cerere si oferta. Inflatia se naste cand exista o cerere prea mare pentru o oferta prea mica. Astfel cresc preturile. Cum putem noi avea o cerere prea mare in momentul de fata, cand economia a scazut cat a scazut? Daca privim celalalte elemente care ameninta cu cresterea preturilor, majorarea TVA si a accizelor, este adevarat ca ele au impact asupra inflatiei, dar efectul este pe termen scurt si nu se rezolva prin o politica monetara stransa pentru ca o crestere a inflatiei pe termen scurt nu inseamna ca economia in sine are o problema legata de inflatie.Timp de 20 de ani BNR s-a luptat cu inflatia cu un efect indoielnic insa, tinand cont ca Romania a avut intotdeauna una din cele mai inalte rate de cresteri de preturi din UE. Acum, Banca Nationala se lupta in continuare cu acest “balaur”, cand chiar nu mai este nevoie. Atitudinea sa accentueaza criza.

3. BNR ar trebui sa incurajeze cresterea economica prin curs. Dupa 3 ani de criza, cursul este relativ in acelasi punct in care era la inceputul crizei. Daca ne uitam la celelalte tari din jur vedem ca, fara exceptie, monedele lor s-au depreciat in criza si asta pentru ca o ajustare economica este foarte mult ajutata de o ajustare a cursului. Daca leul se depreciaza exporturile cresc si importurile scad, economia se echilibreaza. Ungaria de exemplu a trecut printr-o criza majora, iar moneda lor s-a depreciat puternic, si cred ca ei acum o duc mai bine decat o ducem noi. Si nu sunt singurii. Daca ne uitam la euro, vedem ca acesta s-a depreciat cu aproximativ 15% in 6 luni, iar consecinta este ca Germania a crescut cu 2,2% trimestrial. Asadar, aceste mecanisme functioneaza si sunt folosite de altii. Doar la noi nu sunt folosite pentru ca avem aceasta problema de mentalitate legata de inflatie si de creditele in euro, care ar fi ambele afectate de o depreciere a leului. Deprecierea leului ar putea genera cresterea restantelor, care ar afecta bilanturile bancilor. Problema care se pune este daca are sens sa sacrificam economia Romaniei pentru a proteja bancile care, oricum, in proportie de 80% sunt straine.

4. Daca vom continua in acelasi ritm am putea ajunge in scurt timp la situatia Greciei. Cresterea datoriei externe din ultimul timp este o problema.O problema este si faptul ca ne indatoram in euro, ceea ce ne expune riscului valutar. Nu inteleg de ce trebuie sa finantam constructia de autostrazi in euro, cand forta de munca folosita de constructori este platita in lei, iar materia prima este cumparata cu lei. Numai ca noi, pentru a face pe plac firmelor de constructii, indexam totul in euro, ceea ce ne va crea mari probleme in viitor. Sub aripile BNR-ului, care nu a lasat cursul liber, am ajuns la o economie care in proportie de 70% este euroizata. Facturile la telefon sunt practic in euro, cele la electricitate la fel etc. Cred ca este inevitabila si foarte de dorit o depreciere a leului, pentru a se reechilibra dezechilibrele. Leul a evoluat total anormal in comparatie cu monedele acestor tari.

INSERT: If a country is like the United States or Japan, and borrows almost entirely in its own currency, then it would only default on its debt as a political decision (e.g. it refuses to extend a debt ceiling, authorizing the debt to be paid).Since it issues its own currency, it can always issue the currency needed to finance its debt. There markets seem to understand this point very well. The countries that issue debt in their own currency (e.g. Sweden, Denmark, the UK) consistently enjoy lower interest rates on their debt than countries with comparable debt burdens who do not have their own currency (DEAN BAKER)

5. Sansa adoptarii euro a murit in 2008, odata cu lansarea crizei. Trebuie sa uitam de euro in momentul de fata. Cred ca vor trece inca 10 ani inainte de adoptarea euro. Intrarea in zona euro acum este pericolul cel mai mare pentru o revenire economica. Preocuparea BNR ar trebui sa fie strict relansarea economica.

6. Profiturile pe care le au acum bancile sunt extrem de mari in comparative cu volumul enorm de credite neperformante. Ele au reusit sa atinga aceasta performanta cu sprijinul finantelor si al BNR-ului. BNR le-a finantat la o anumita dobanda iar ele au imprumutat apoi statul la o dobanda mai mare castigand din marja. Totodata, au fost ajutate de leu, care nu este lasat sa se deprecieze. Desigur, curatarea de portofolii ar insemna ca unele firme care nu mai reusesc sa isi plateasa datoriile sa intre in insolventa, dar asa functioneaza o economie normala si astfel se creeaza o baza sanatoasa pentru o eventuala relansare.

7. Ca sa ajute economia, guvernul ar trebui sa aiba o politica bugetara inteligenta. Pana acum, raspunsul sau a fost sa taie, de fiecare data cand a aparut o problema. Eu cred ca suntem capabili de o gandire mai complexa: trebuie sa stii unde sa tai si unde sa cresti.

8. Este ciudat ca bancile sunt foarte bine reprezentate in Consiliul Fiscal. Ele reprezinta, practic, Consiliul Fiscal si nu inteleg de ce: au cumva monopol pe politica economica a Romaniei? Sa nu uitam ca ele sunt foarte interesate de felul in care se contureaza politica fiscala la noi pentru ca expunerea pe care o au in Romania este enorma si fac tot ce se poate pentru a isi salva pielea.S

ursa: http://economie.hotnews.ro/stiri-finante_banci-7715576-matei-paun-bac-investement-nu-inteleg-finantam-constructia-autostrazi-euro-cand-forta-munca-materia-prima-platita-lei-indexand-totul-euro-vom-avea-mari-probleme-viitor.htm

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Criza si extremism politic de dreapta

27 Feb

Trei istorici ai economiei se uita la Marea Criza din anii treizeci si se intraba in ce tari este probabila ridicarea dreptei extreme in vreme de criza. Raspuns: in sisteme politice cu democratii tinere, partide de extreme dreapta deja existente si sisteme electorale care nu pun piedici majore reprezantarii parlamentare a partidelor noi.

Our statistical results show that that the Depression was good for fascists. It was especially good for fascists in countries that had not enjoyed democracy before 1914; where fascist parties already had a parliamentary base; in countries on the losing side in WWI; and in countries that experienced boundary changes after 1918.

Since Germany ticks each of these boxes and saw a particularly large increase in the fascist vote, one may ask whether these interaction effects are driven by the German experience alone. The answer is that they are not.

Importantly, it shows that what mattered was not the current growth of the economy but cumulative growth or, more to the point, the depth of the cumulative recession. One year of contraction was not enough to significantly boost extremism, in other words, but a depression that persisted for years was.

The results stand up to the inclusion of control variables, including period dummies, the urbanisation rate, and the effective electoral threshold, and to alternative econometric specifications. In other regressions, we again find that the impact of poor growth was greater in countries where fascists were already represented in parliament and in countries with shorter histories of democracy. Our results are thus consistent with the claim of authors such as Almond and Verba (1989) that political culture mattered, and with the argument of Persson and Tabellini (2009) that countries with a longer history of democracy accumulate social and political capital that increases the probability that they will be able to resist threats to the prevailing political system.

Finally, we find that the electoral success of right-wing anti-system parties was shaped by the structure of the electoral system. A higher minimum share of the vote needed in order for a party to gain parliamentary representation made it more difficult for fringe parties to translate votes into seats and lowered fascist electoral gains.

Mai mult aici:
http://www.voxeu.org/index.php?q=node/7660

Ce s-ar intampla daca nu ar exista redistribuirea veniturilor de catre stat?

27 Feb

Fernholz and Fernholz (2012) fac o analiza economica din care rezulta ca in lipsa redistribuitiei prin politica impozitelor si cea fiscala am avea societati cu un mare rad de volatilitate a distributiei ventiturilor si tendinta clara de concentrare a lor la varf. Ma rog, asta stiam, dar e bine sa avem si modelarea economica pentru a sustine argumentul pro-redistributie contestat de dreapta.

http://www.voxeu.org/index.php?q=node/7667

Pro si contra in dezbaterea pe pactul fiscal

24 Feb

Iata analiza cu cifre facuta Ionut Dumitru, boss-ul Consiliului Fiscal, organizatie ale carui referinte conservatoare sunt din cele mai impecabile. Ideea de baza este ca posibilitatea de interventie a statului prin politica fiscala va fi chiar mai redus in viitoare crize decat a fost sub guvernul Boc.

“Noua limita pentru deficitul structural impusa de pactul fiscal european va impune un control foarte strict asupra finantelor publice in Romania, acest lucru avand avantaje clare, dar si dezavantaje.Romania a avut in trecut o politica fiscala discretionara prociclica, indisciplinata, accentuand dezechilibrele macroeconomice in loc sa le atenueze. Astfel, deficitul structural a crescut in mod inutil cand PIB-ul era peste nivelul potential, anuland astfel actiunea stabilizatorilor automati. Noua regula care limiteaza deficitul structural la 0.5% din PIB va conduce aproape la imposibilitatea practicarii unor politici fiscale prociclice si la o disciplina fiscala pronuntata, cea ce pentru o tara ca Romania, data fiind experienta istorica negativa, poate fi un avantaj semnificativ.

Daca regula ar fi functionat in trecut, un calcul simplu, desi nu corect in totalitate, arata ca de exemplu, in 2008 cand PIB-ul era peste potential, Romania ar fi trebuit sa aiba un excedent bugetar de 2.5% din PIB in locul unui deficit bugetar efectiv de 5.7% din PIB. De altfel, in toata perioada 2004-2008, Romania ar fi trebuit sa aiba excedente bugetare, PIB-ul fiind in acea perioada peste nivelul sau potential, iar deficitul bugetar structural de numai 0.5% din PIB ar fi fortat soldul bugetar efectiv sa fie pe excedent.

Dezavantajul noii reguli fiscale europene pentru Romania este ca spatiul de manevra existent pentru a putea stimula economia in perioadele de recesiune va fi foarte redus. In cazul Romaniei, limita de deficit structural de 0.5% din PIB va fi cel mai probabil atinsa inainte ca deficitul public efectiv sa ajunga la 3% din PIB (Romania poate avea deficite bugetare de 3% din PIB numai in perioadele extreme de criza – output gap negativ de circa 8.33%, data fiind elasticitatea soldului ciclic de doar 0.3 la modificarea cu un punct procentual a output-gap-ului). In plus, in recesiunea din 2009-2010, deficitele bugetare efective nu ar fi putut depasi 2% din PIB.

Prin asumarea unei tinte de deficit structural maxim de 0.5% din PIB (probabil usor mai ridicat data fiind datoria publica semnificativ sub 60% din PIB), Romania isi asuma obligatia ca deficitul bugetar efectiv, ca medie pe parcursul unui ciclu economic (si media pe un orizont lung de timp), sa fie de maxim 0.5% din PIB, ceea ce va insemna fata de standardele istorice (3.8% din PIB media deficitului structural in perioada 1999-2011) un deficit bugetar mult mai mic si un spatiu de “manevra” mult redus.

Cristi Socol:

Ne spune art 3 litera c părţile contractante pot să devieze temporar de la obiectivul lor pe termen mediu sau de la strategia de ajustare pentru atingerea acestuia doar în circumstanţe excepţionale, astfel cum sunt definite la litera (b) de la alineatul (3) un eveniment neobişnuit asupra căruia partea contractantă vizată nu are niciun control şi care are o influenţă majoră asupra poziţiei financiare a administraţiei publice sau perioade de recesiune economică gravă, astfel cum este definită în Pactul de stabilitate şi de creştere revizuit, cu condiţia ca deviaţia temporară a părţii contractante vizate să nu pericliteze sustenabilitatea fiscală pe termen mediu. M-am dus frumuşel la Pactul de stabilitate şi creştere revizuit să văd traducerea. Recesiune economică gravă înseamnă o cădere a PIB ului real de cel puţin 2%. La noi, PIB real a căzut cu 7,1% în 2009 şi cu 1,3% în 2010. Deci Tratatul nu este chiar aşa de absurd.

Victoria Stoiciu:
Acordul se adresează în primul rând statelor din zona euro şi va intra în vigoare abia după ce minim 12 state membre ale zonei euro îl vor ratifica – deci indiferent că România semnează sau nu, soarta Pactului va fi decisă de alţii. Apoi, chiar şi după intrarea sa în vigoare, el va rămâne deschis statelor UE care nu îl vor semna de la bun început. Ceea ce are să se întâmple se va întâmpla oricum, asta e condiţia noastră de ţară periferică, indiferent că ne place sau ba.
http://www.criticatac.ro/14632/stahanovism-damboviean-euro-optimism-naiv-de-ce-atata-grab-cu-pactul-fiscal/

Sfarsitul consensului in macroeconomie (in engleza; specialist)

24 Feb

De la Simon Wren Lewis

The return of schools of thought in macroeconomics

Simon Wren-Lewis
24 February 2012

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Just five years ago, macroeconomists talked about a new synthesis, bringing together Keynesian and Classical ideas in a unified, microfounded theoretical framework. Following the Great Recession, it appears that mainstream macroeconomics has once again split into schools of thought. This column explains why macroeconomics, unlike microeconomics, periodically fragments in this way.

In the 1970s and 1980s, macroeconomics was all about ‘schools of thought’. A popular textbook (Snowdon et al 1994) had the title A Modern Guide to Macroeconomics: An Introduction to Competing Schools of Thought. Macroeconomists tended to take sides, and different schools had clear ideological associations. Antagonists often talked across each other, and anyone not already on one side just got totally confused. Schools of thought fragmented mainstream macroeconomics in a way that had no parallel in mainstream microeconomics.

But then things began to change. The discipline appeared to become much more unified. It would be going much too far to suggest that there was a general consensus, but to use a tired cliché, most macroeconomists started talking the same language, even if they were not saying the same thing. Goodfriend and King (1997) coined the term ‘New Neoclassical Synthesis’. Other authors wrote along similar lines (eg Woodford 2009 and Arestis 2007).This synthesis did only apply to what is generally described as mainstream economics. Heterodox economists continued to organise in schools (for example neo-Marxists, post-Keynesians, and Austrians). The synthesis was reflected in master’s-level textbooks (eg Romer 1996), which would typically begin by setting out a Ramsey-style model, then discuss ‘real business cycle’ models, and finally move on to add sticky prices to get New Keynesian theory.

There were two main factors behind this synthesis. The first was microfoundations, ie deriving the components of macro models from standard optimisation applied to representative agents. This gave macroeconomics the potential to achieve the same degree of unity as microeconomics. The second was the development of New Keynesian theory, which allowed an analysis of aggregate demand within a microfounded framework, and which integrated ideas like rational expectations and consumption-smoothing into Keynesian analysis. All models were now ‘dynamic stochastic general equilibrium’ models.

Following the Great Recession, things seem rather different. In popular discussion of macroeconomics, schools of thought in macro are definitely back. Bitter disputes have broken out between those advocating fiscal stimulus (‘Keynesians’) and those against. (For just one example of such quarrelling, see DeLong 2012.) For those in freshwater departments like Chicago, the idea of an effective fiscal stimulus was something they thought had died with the rational expectations and New Classical revolutions. It must therefore have been something of a shock to see it being resurrected, and it is understandable that they might dismiss it as invoking long-discredited ‘fairy tales’. It looked as if 30 years of progress in the discipline was being ignored. Those advocating stimulus and deploring premature austerity, on the other hand, were understandably taken aback to find their analysis dismissed in this way. They thought they were using mainstream macroeconomic theory, not the partisan analysis of a Keynesian school of thought. In a recent Vox column, Jonathan Portes (Portes 2012) describes his puzzlement at being labelled Keynesian, when he thought he was following synthesis macroeconomics.

So why have schools of thought within mainstream macroeconomics returned? One simple story is that schools of thought are associated with macroeconomic crises, and macro synthesis follows periods of calm. Keynesian theory itself was born out of the Great Depression. The first Neoclassical Synthesis arose from the period of strong growth and low inflation in the postwar period. Monetarism gained strength from the rapid inflation of the 1970s. The more recent synthesis may be a child of the Great Moderation, and now we have the Great Recession, schools of thought have returned. Because these crises are macroeconomic, and there are no equivalent crises involving microeconomic behaviour or policy, then fragmentation of the mainstream into schools will be a macro, not micro, phenomenon.

However I think this is too simplistic a view of what is happening today. One interesting feature of the current divide is that the label ‘Keynesian’ appears to be used more by those opposed to certain policies – and in particular fiscal stimulus – than those on the other side. Typically Keynesians see themselves as putting forward synthesis analysis, without the need for branding. What has become clear is that the New Neoclassical Synthesis was in many ways a celebration of New Keynesian theory which was not shared by many freshwater departments in the US.

There may be good reasons why New Keynesian economists might have imagined that their analysis was now an uncontested part of the mainstream. In particular, it is used in nearly all central banks as their main tool in carrying out monetary policy. With monetary policy somewhat depoliticised through central bank independence, the successful implementation of New Keynesian theory during the Great Moderation allowed divisions among academic departments to remain dormant.

On the other side, there was a belief that New Classical economics had been revolutionary, ie a successful counter-revolution against Keynesian ideas. Once again there were good reasons supporting this belief. On consumption, rational expectations, the Lucas critique and more, traditional Keynesians had unsuccessfully opposed New Classical ideas. Furthermore, many of the leaders of New Classical thought did not want to update Keynesian thinking; they wanted to destroy it. The label ‘Keynesian’ was associated with much more than a belief that prices were sticky and that therefore aggregate demand mattered. Instead it became associated with state intervention. Wikipedia, in its third paragraph on ‘Keynesian economics’, says: “Keynesian economics advocates a mixed economy – predominantly private sector, but with a significant role of government and public sector…”.

The New Classical counter-revolution failed in one respect. While Keynesian analysis may have suffered a near-death experience, it survived and subsequently prospered. New Classical critiques led to fundamental and largely progressive changes. Yet, for many reasons including ideological ones, the would-be counter-revolutionaries did not want to give up their counter-revolution. Partly as a result, the degree to which New Keynesian theory was taught to graduate students differed widely among academic departments, at least in the US.

So, perhaps unlike the first (postwar) neoclassical synthesis, the New Neoclassical Synthesis was partial in terms of its coverage among academics. This incompleteness was not apparent during the Great Moderation, because in central banks the synthesis was uncontested. The fault lines only became evident when monetary policy became relatively impotent at the zero bound after the Great Recession, and fiscal stimulus was used both in the US and UK. Once that happened, what might be called the Anti-Keynesian school re-emerged.

Using this account, it is perhaps possible to view the current emergence of schools of thought as a historical aberration. The microfoundation of macroeconomics would seem to imply that mainstream macro should be as free from fragmentation into schools as microeconomics. As it becomes clear that the New Classical counter-revolution was not successful, the New Neoclassical Synthesis may yet become complete. (For an argument along these lines, see Economist 2012) After all, New Keynesian models are essentially real business cycle models plus sticky prices, and the addition of price rigidity seems both empirically plausible and inoffensive in itself. Both sides could agree that for economies with a floating exchange-rate monetary policy is the stabilisation tool of choice, with fiscal policy only being used if monetary policy is constrained (Kirsanova et al 2009). When interest rates are stuck at the zero lower bound, synthesis models clearly show fiscal policy can be highly effective at stimulating output (Woodford 2011). What has been called ‘demand denial’ appears not to make academic sense, particularly at a zero lower bound (Wren-Lewis 2011).

This outcome may, however, represent wishful thinking by New Keynesians. An alternative reading is that the Keynesian/Anti-Keynesian division is always going to be with us, because it reflects an ideological divide about state intervention. That divide occurs all the time in microeconomics, but because it involves arguing about many different externalities or imperfections it does not lend itself to fragmentation into schools. In macro, however, there is one critical externality to do with price rigidity, and so disagreements about policy can easily be mapped into differences about theory. Demand denial is attractive because it gives a non-ideological justification for what is essentially an ideological position about economic policy. Unfortunately, there is a danger that dividing mainstream analysis this way makes macroeconomics look more like a belief system than a science.

Author’s Note: This column combines a number of recent posts from my blog, mainly macro.
References

Arestis, P, ed, (2007), Is There a New Consensus in Macroconomics? London: Palgrave Macmillan.

DeLong, B (2012), “Understanding the Chicago Anti-Stimulus Arguments” , blogpost, Grasping Reality with the Invisible Hand, 4 January.

Economist (2012), “Stimulus, austerity and the weltgeist”, blogpost, Democracy in America, 1 February.

Goodfriend, M and RG King (1997), “The New Neoclassical Synthesis and the Role of Monetary Policy,” in Bernanke, B and J Rotemberg, eds, NBER Macroeconomics Annual. Cambridge, MA: MIT Press, 231–82.

Kirsanova, T, C Leith, C and S Wren-Lewis (2009), “Monetary and Fiscal Policy Interaction: The current consensus assignment in the light of recent developments”, Economic Journal 119: F482–96.

Portes, J (2012), “Fiscal Policy: What Does ‘Keynesian’ mean?”, VoxEU.org, 7 February.

Romer, D (1996), Advanced Macroeconomics, New York: McGraw-Hill.

Snowdon, B, H Vane, and P Wynarczyk (1994), A Modern Guide to Macroeconomics: An Introduction to Competing Schools of Thought, Aldershot, UK and Brookheld, USA: Edward Elgar.

Woodford, M (2009), “Convergence in Macroeconomics: Elements of the New Synthesis”, American Economic Journal: Macroeconomics 1(1): 267–79.

Woodford, M (2011), “Simple Analytics of the Government Expenditure Multiplier,” American Economic Journal: Macroeconomics 3(1): 1–35.

Wren-Lewis, S (2011), “Lessons from failure: fiscal policy, indulgence and ideology”, National Institute Economic Review 217(1): R31–R46.

Luati-ne si morfina

24 Feb

Pentru cei care stiu ce inseamna cancerul in faza terminala, faptul ca guvernul nu a asigurat trei milioane de euro si a intretinut un sistem de stimulete pentru vanzatorii de morfina pentru a condamna la durere oameni aflat la sfarsitul vietii este dovada unui esec moral aiuritor.

Intr-o tara in care orice oras de provincie are mai multe masini de lux decat o capitala nordica, in care milionarii se impoziteaza la niveluri rizibile si in care datoriile la fisc ale unor companii gigant se masoara in sute de milioane de euro, condamnarea la tortura a celor mai vulnerabili dintre noi nu numai prin inexistanta unui sistem public de hospice, dar acum si prin lipsirea de acces la morfina este incalificabila.

Dreptul la tratament impotriva durerii este un drept al cetateanului iar cand intelectuali si politicieni autoproclamati crestini scriu fatwa dupa fatwa despre avort si sexualitate dar care cer mai multa “piata” in sanatate, spunandu-ne ca nu exista drept la sanatate, mi se face pur si simplu sila.

http://www.cotidianul.ro/i-au-condamnat-pe-toti-la-dureri-insuportabile-173915/

Austeritatea ca impuscatura in picior (English)

24 Feb

WASHINGTON (AP) – Europe has endured the pain of layoffs, wage cuts and tax increases designed to bring government debt under control.

So where’s the gain?

Far from falling, debt burdens are rising fastest in European countries that have enacted the most draconian austerity programs, according to The Associated Press’ Global Economy Tracker, which monitors the performance of 30 major economies. The numbers back up what many analysts say: Austerity isn’t just painful. It can be counterproductive and even make a country’s debt load grow.

Many fear the cutbacks will cause Europe to sink into a self-defeating spiral: Higher debt leads to harsher austerity, growing social instability and deeper economic problems. Governments could find it even harder to pay their bills.

The pain is already intense. Portugal’s unemployment rate hit a record 14 percent at the end of last year. Ireland’s economy contracted a worse-than-expected 1.9 percent in the July-September quarter of 2011. And Greece reported that its already basket-case economy shrank 7 percent in the October-December quarter of last year.

“This isn’t a healthy situation,” says Peter Morici, an economist at the University of Maryland.

Under a deal approved Tuesday by the 17 countries that use the euro and the International Monetary Fund, Greece will get a $172 billion bailout in exchange for accepting another dose of austerity that includes laying off 15,000 civil servants and slashing the minimum wage by 22 percent.

– Portugal cut pensions, reduced public servants’ wages and raised taxes starting in 2010. Yet in the third quarter of 2011, government debt equaled 110 percent of GDP. That was up from 91 percent a year earlier.

– In Ireland, middle-class wages have been reduced 15 percent and the sales tax boosted to 23 percent (the highest in the European Union). But its debt amounted to 105 percent of economic output in the third quarter of last year; a year earlier, it was 88 percent.

– In Britain, Prime Minister David Cameron staked his political future on his austerity plan. Government debt ratios, though, reached 80 percent in third-quarter 2011, up from 74 percent a year earlier. And Moody’s this month cut its outlook on Britain’s prized AAA credit rating from “stable” to “negative.”

– In Greece, two years of austerity programs have devastated the economy and triggered riots. Still, the government’s debt equaled an alarming 159 percent of the country’s GDP in the July-September quarter of 2011. That was up from 139 percent a year earlier.