Czech PM Atacks Obama Spending

[Prannon]

BBC

The Czech prime minister has condemned US President Barack Obama's economic recovery plans as "a way to hell".

Mirek Topolanek was speaking in the European Parliament, in his capacity as current holder of the EU presidency.

Hours before his remarks, President Obama appealed for all countries to bear the burden of spending to stimulate the world economy.

Mr Topolanek said the biggest success of last week's EU summit was its refusal to copy the US example.

His intervention comes 10 days before the G20 summit meeting in London and coincides with a visit to New York by UK Prime Minister Gordon Brown, who has called for a "worldwide fiscal and monetary stimulus".

Other European leaders, particularly French President Nicolas Sarkozy and German Chancellor Angela Merkel, want tougher financial regulation to be the priority of the G20.

Mr Topolanek, whose government collapsed last night in a Czech parliament vote of no-confidence, said the United States was not taking "the right path".

He attacked the US's growing budget deficit and the "Buy America" campaign, saying "all of these steps, these combinations and permanency is the way to hell".

"We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way," he said.

EU wary of deficits

BBC correspondent Jonny Dymond says his comments are not quite a full frontal assault on US economic strategy - but they come pretty close.

He says Mr Topolanek has again underlined that European leaders see no need for a further global economic stimulus to come out of the G20 summit.

Mr Topolanek has said he will step down as Czech prime minister, but the Czech Republic is set to complete its six-month EU presidency regardless.

At the end of their Brussels summit last week EU leaders insisted that the EU's existing stimulus measures - put at about 400bn euros ($543bn; £375bn) - had to be given time to kick in.

In the US, correspondents say, President Obama faces a tough fight to get support in Congress for his draft $3.6tn (£2.5tn) budget.

The package means an increased deficit, reckoned to be $1.4tn for next year. Mr Obama says his goal is to create jobs, revive the housing market and encourage a resumption of bank lending by providing more liquidity.

Emphasis mine. Interesting to see that the spend-your-way-out-of-the-crisis mindset is not entirely universal and that there are many skeptics of further stimulus packages. So here's a question: will this create any big rifts among Westerners in navigating the crisis, or will one side or another win out?

[Count Chocula]

Also interesting that a guy the Czechs don't want running their government any more, making him a short-term lame duck, is the guy criticizing the US. I do, however, happen to agree with him. General agreement, at least in England, is telling, where the Bank of England put bonds out for bid and pulled them for insufficient market interest.

It will be interesting to see if the EU banks have any AIG-sized land mines on their books; from what I've read, Europe's banking and financial institutions are far more opaque and secretive than American institutions. I suspect that 2008's US blowout will surface in 2009 in the EU.

[Prannon]

Even though Mr. Topolanek doesn't have much in the way of political credibility anymore, the fact that his country holds the EU presidency and that his remarks reflect the opinions of other European leaders gives me pause. I mean, it's one thing if the bailout-stimulus solution to the economic crisis is getting a lot of flak domestically, but if it's getting flak abroad as well?

[Fingolfin_Noldor]

Even though Mr. Topolanek doesn't have much in the way of political credibility anymore, the fact that his country holds the EU presidency and that his remarks reflect the opinions of other European leaders gives me pause. I mean, it's one thing if the bailout-stimulus solution to the economic crisis is getting a lot of flak domestically, but if it's getting flak abroad as well?

Since when does foreign opinion matter to the domestic audience especially if the foreigners aren't the one suffering? For the Europeans, they are more worried of intra-European protectionism, and countries such as the Czechs are far more vulnerable to this than others.

[Prannon]

Even though Mr. Topolanek doesn't have much in the way of political credibility anymore, the fact that his country holds the EU presidency and that his remarks reflect the opinions of other European leaders gives me pause. I mean, it's one thing if the bailout-stimulus solution to the economic crisis is getting a lot of flak domestically, but if it's getting flak abroad as well?

Since when does foreign opinion matter to the domestic audience especially if the foreigners aren't the one suffering? For the Europeans, they are more worried of intra-European protectionism, and countries such as the Czechs are far more vulnerable to this than others.

Good point. I can imagine why they would be worried about "buy America first" clauses since they want to keep trade with the US going, and they would oppose continued deficit spending since that would continue to weaken the dollar and make exports to the US even more difficult. I think there's also fear of greater deficits and debt down the road in there somewhere.

Still, if the Europeans aren't all that worried about additional stimulus, gotta wonder why the idea is getting so much airtime in the US.

[LMSx]

I'm not surprised some countries would rather let the big countries like the US do all the heavy lifting. If the US spends a lot and recovers then others get to enjoy renewed global activity sooner without hurting their own budgets.

The Czech President is a vehement global warming denier. I wonder if there's something in the water there?

[sketerpot]

It'll be interesting to see who does better economically. Science!