This is nothing but a death spiral, there is no light at the end of the tunnel, the tunnel will have a dead end and a cave in.
I agree.
Rational budget cuts are sound.
But killing the economy with massive tax increases discredits neo-liberal economics.
The markets are not happy because there’s not the right kind of fiscal discipline and the markets are not happy because there’s no economic growth to allow massive debt to be painlessly repaid.
Europe is caught up in a proverbial Catch-22.
Death spirals do not happen in economics. For every action and situation, economic forces work so as to find a new equilibrium. Now, mind you, many folk may not LIKE that new equilibrium point, but the system will find a new balance point... IF it is allowed to. We do get death spirals, but only when governments impose idiotic rules and benchmarks that prevent the natural economic forces from doing their job. The problem, as is almost always the truth, is the government intervention, not the economics.