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For a few months, a new edge in the debates in Europe on fiscal and economic reform has begun to emerge. It isn't particularly radical or new; in point of fact, it is genuinely old school. But the lessens in this case are akin to someone shooting himself in the foot and then wondering why he's limping.
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It started as the dimmest of concepts and seems to be gaining some momentum. This is the idea that gutting an economy is not a particularly great idea for long-term growth.
The only economic dynamic that will pull Spain, Ireland, Portugal, Italy and Greece out of their economic predicaments is growth. There are other simplistic concepts that are out-of-reach and too peculiar or distasteful to mention out loud, such as have everyone in those countries without a job move to Germany.
Some weeks ago, International Monetary Fund Director Christine Lagarde began to mention stimulus spending. French President Nicolas Sarkozy and others mentioned this to German Chancellor Angela Merkel.
Guess how that idea sounded in Berlin?
When it comes to spending in the eurozone, there are fewer and fewer countries each month willing and able to do so. Pretty soon spending in Europe boils down to how much of a break is Germany willing to dole out. The answer to this is much more blunt than it was a year ago, given the German economy declined in the fourth quarter of 2011, contracting 0.2 percent.
During the weekend, German Finance Minister Wolfgang Schauble warned Greece still has work to do in bringing its fiscal reforms to reality. Greece has to do more than simply "announce them," he said. It actually has to walk the walk.
It is true enough. Greece is in a bad spot -- not only because the government overspent, but because it deliberately hid the depth of the problem from the European Commission. That said, Greece is also notorious for having a poor track record on tax collection. The parliament can put reforms down on paper. Someone has to carry them out.
In Brussels, at the same time, The New York Times reported European leaders are attempting to burn the candle at both ends. Leaders are working on a treaty that would tighten fiscal discipline, making over-spending all but a criminal offense. At the same time, it is acknowledged some stimulus is required.
For the 5 million unemployed workers in Spain, fiscal discipline is all well and good, but it is not a job. It doesn't create one or pretend to.
All this adds up to a nearly impossible near-term goal of restoring confidence in European markets. This is hard to do when the solutions at play seem to be polar opposite.
In international markets Monday, the Nikkei 225 index in Japan dropped 0.54 percent while the Shanghai composite index in China fell 1.47 percent. The Hang Seng index in Hong Kong shed 1.66 percent while the Sensex in India plunged 2.15 percent.
The S&P/ASX 200 in Australia gave up 0.37 percent.
In midday trading in Europe, the FTSE 100 index lost 1.19 percent while the DAX 30 in Germany lost 1.28 percent. The CAC 40 in France dropped 1.32 percent while the Stoxx Europe 600 fell 1.17 percent.
