This is the Cato Daily Podcast for Friday, May 11th, 2012. I'm Caleb Brown.

A turnover in European governments hasn't given capital markets much to cheer about and that's

because austerity really hasn't been tried.

The task now says Cato Institute Senior Fellow Jerry O'Driscoll is adopting policies that

can spur that reinvestment.

Well, they're not credible because their actions don't live up to their words.

If you look at the actual budgets of these countries, at least through the end of last year that I've seen,

there's been no actual cuts in spending. There have been talk about cuts and spending. I understand

that some of these cuts will happen in 12, but they haven't happened yet. Most of

what's called austerity has been tax increases on the private sector so it's

been austerity for the private sector and if anything investors I don't think are

sufficiently concerned about what's going on over there.

Investors have, I think, been willing up till now to take politicians somewhat at their word and

their promises somewhat at their word but I think now they're beginning to have

doubts the complete collapse of Greece after it's having been bailed out is very telling.

Some news sources in Europe have couched this fight or I should say to the extent that voters are speaking at the ballot box

have suggested that well voters don't like austerity and they want growth.

And this is presented as essentially an either or proposition.

Well some years back the German government did engage in a kind of austerity measures of their own, not in a crisis situation in which they

eliminated some transfer payment social welfare benefits and did some liberalization and labor markets.

And the reason the Germany is growing is the result of their prior austerity.

So far from austerity. So far from austerity being anti-growth, the German example shows that when it's

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