EUROZONE CRISIS IS FIRST AND FOREMOST A GROWTH CRISIS

The Eurozone crisis is not a financial crisis. It is not an economic crisis. IT IS FIRST AND FOREMOST A GROWTH CRISIS.  EU countries (except for Germany and Scandinavian countries) have not spent enough in areas that produce growth: human capital formation, training, research, education and innovation. These are all the things by the way in which Germany has invested. Productivity is also a key factor that leads to overall economic growth. Productivity is affected by investments in R&D and new capital formation.

Germany does not follow growth though cuts. Although the country has been forced to institute its own austerity budget, Germany's budget in education and research is up. Over the last decade, Germany has been spending on R&D, education, human capital. Germany has created a financial system that rewards, rather than penalize those companies that think about the long run (internet, biotech, nanotech etc..)

The austerity plans being imposed on Greece, Italy, Portugal are run by the financial interests of the IMF and the EC. These institutions are primarily concerned with belt tightening and with fear of inflation. Yet, the fact is that the few developing countries that have experienced growth in recent years (China, Brazil etc.) have made expensive investments in key areas like education and research and in targeted industries like biotech and now green technology. These smart investments are causing them to be emergent leaders in the global race for new growth inducing technology.

Austerity measures will only cause the affected EU countries to spend less in precisely those areas in which they need to increase investment.