Graph of the day: Keynes was wrong
A fundamental insight of Keynes was that even in the case of flexible wages and other prices a monetary economy can get stuck in a low-level equilibrium. The developments in Spain, Portugal, Greece and Ireland disprove this idea: if there only was a low-level equilibrium in those countries… The other option is of course that Keynes was basically right but that economic policies aggravated the crisis. Anyway – little could have been done to mitigate the direct consequences of the bursting of the e-nor-mous building housing bubbles in Spain and Ireland. At this moment, however, a kind of secundary crisis has set in, with more job losses in other sectors.