Christine Lagarde, the new IMF chief, says that European growth is being hampered by too much sovereign debt. She thinks that there has been a “crisis of confidence”, and industrialized nations must work together. Cutting back of course stimulates growth, but there is only so much cutting back that countries, especially certain countries, can tolerate.
Greece, in particular doesn’t seem to be able to tolerate much more. Just because Lagarde says Germany austerity programs are “doing fine” in Germany doesn’t matter. Germany isn’t Greece.