Europe’s Puny Stimulus

The headline out of today’s summit of major eurozone leaders is agreement to do a $163 billion stimulus program. This is relative to a €9 trillion eurozone GDP. So we’re talking about approximately 1.4 percent of GDP. It might be a good idea, but it’s hardly a game-changer.

Only the European Cental Bank has the firepower needed to address the demand-side aspects of this crisis and then leave the national governments to work on the real side.