In mid-July the great-and-good finance ministers of the European Monetary Union (EMU) gathered to consider the euro zone's economic condition. They ruminated over the most recent economic forecast, which projects annual GDP growth in the euro zone this year at a pathetically anemic 0.7%. Then, to a minister, without exception, they all but decided that their economies should suffer more of the same, if not worse.
They reiterated their commitment to the Stability and Growth Pact, which requires euro-zone countries to raise taxes and cut spending, putting even more downward pressure on their economies. The Pact is already knocking Germany into recession, and Italy's government is struggling to revise its growth forecasts fast enough to keep up with falling output. But none of this is apparently enough to force officials to re-examine their priorities.
Some EU finance ministers still view the Stability Pact as the ``cornerstone'' of EMU. Others talk of the importance of obeying the ``rules of the game.'' Still others say that while it is clearly essential to restore economic growth, the recovery must occur ``within the spirit of the Pact.''
From the American side of the Atlantic, all of these rationales seem utterly bizarre.