If cutting government spending is supposedly so great for the economy, why is it making things worse in Greece?

By all accounts, the austerity measures in Europe failed.

Italy, Spain and Greece all suffered massive economic downturn after the austerity measures...

This is why you never cut spending during a recession, only during economic prosperity.

This is the premise of Keynesian economics, NEVER cut in a recession. Cut government spending during economic prosperity, so that you can balance the budget and pay down the debt. This then gives room to spend more in a recession to stimulate the private sector. W. Bush did the opposite of this, he dramatically increased spending during prosperity which ruined Clinton's surplus and gave us very little room to stimulate this last recession.

From 1941-1973, the U.S. had it's longest and great economic expansion known as the Postwar Economic Expansion. During this period, BOTH political parties implemented Keynesian policies. The GOP then went back to pre-Great Depression fiscal policies (Friedman's variation of the Austrian school of economics) when Reagan took office.

@Mjǫlnir - That's a peculiar take on our situation. Considering Democrats are the only ones wanting to increase government revenue by raising taxes. Republicans have NEVER balanced the budget (paid down debt) beginning with Reagan, when the obsession with tax cuts were adopted. The last Republicans to actually balance the budget (Eisenhower and Nixon), both RAISED TAXES. The last four Presidents to actually balance the budget and pay down the debt? RAISED TAXES. Tax cuts have NEVER increased revenue, the Republicans have been the party of HUGE deficits ever since Reagan.

I found it entertaining that Republicans were suddenly trying to act like deficit hawks when Obama took office, considering the majority of our debt is from Republican Presidents ($9 trillion). This is what happens when you cut taxes and increase military spending, it's fairly simple.

@Little Princess - Then how do you explain the economic success of countries like Germany, Sweden or Denmark? These countries are very well off at the moment, and their fiscal policies are dominated by European democratic socialism.

Nice try.

EDIT: @Little Princess - You realize that all these countries operate with a national debt as well? You realize that the U.S. has had a national debt since the Revolutionary War, and has only been fully paid down once in 1832? Your attempt to apply personal finance principles to a national held debt tells me you know basically nothing about macroeconomics.

Previous Greek governments borrowed enormous sums of money on the international money market and spent recklessly,if not criminally. The workshy Greeks gave themselves a 30 hour working week, with retirement for workers in the ridiculously over subscribed public sector being set at 55 years of age. The Greeks did not make the goods which the world wanted so their balance of payments was an economic disaster. Once the spaghetti hit the fan in 2008 and borrowing money at an affordable rate became virtually impossible Greece was to all intents and purposes bankrupt. Payback time had arrived but the Greeks didn't have any dosh to pay back nor the necessary credit rating to borrow any. So, they turned to the hard working, innovative Germans for a loan. The Germans obliged with many billions of Euros, a lot of which they have since written off. However, the Germans insisted that the Greeks started to live within their means and cut back dramatically on public spending ( with money they hadn't got nor earned) thus the return of the Greek economy to it's pre Euro days. Of course there is a method with in the apparent German madness of lending the European ''basket case economies'' such as Greece, Portugal and the Republic of Ireland the many billions of Euros which they will never see again. That is if the 'Euro' collapsed and the Euro Zone countries returned to their original currencies the value of the Deutsche Mark would go sky high thus making their exports virtually cost prohibitive in the countries to which they export. The real point is, a country can only spend what it earns. America already owes the Chinese a few trillion dollars and is continuing to overspend and over borrow.Sometime there is going to have to be a ''payback'' point and unless you want the once great United States of America to end up being humiliated like the Greeks then the sooner you start to draw a line at your '' live now, pay tomorrow'' mentality the better. Bite the bullet before it bites you.

In Greece, a huge percent of the people live on government entitlements and pensions. They had very generous government-provided pensions that enabled them to retire after only 20 years of working. It isn't a country with a strong industrial base, either.

When the people are dependent upon government outlays to put food on their table, a roof over their heads, etc, then there is no solution to such a debt crisis except bankruptcy or getting kicked out of the Euro. What happened is that the government could no longer borrow more money, and thus they could not keep giving their population money. The solution isn't to just keep giving them money indefinitely, because that harms the countries that weren't irresponsible.

The US has a very different situation, for now. People mostly live on their earnings and private pensions and there is still a lot of revenue going into the government.

But things could change very quickly because the Democrats are hell-bend on ignoring the debt crisis.

Its hot heads thinking America is invincible. We're at a global economic crisis at this point. People don't seem to grasp this. It has nothing to do with government. The world is broke! We determine wealth by the dumbest standards. Its not who you saved or helped along the way, its the size of the television your bum friends are staying over and watching.

Is there really an economical crisis? Or is it just that people think they should have the same thing their neighbors have? Our economic crisis is really just a bunch of envy. Give me convienience or give me death. I won't let anyone starve, but why do they expect to watch a movie while I feed them?

The problems that Greece is experiencing is a result of having not cut their spending. Greece has run out of money and no one is willing to loan them more money.

One of the problems with socialism is that eventually you run out of other people's money. Greece hit that point. They ran out of everyone else's money.

edit:

Wake Up: all those countries are aggressively drilling for oil. They are securing the revenues necessary to pay for their government programs. Greece did not similarly ensure that they had the revenues to cover their expenses. They borrowed their money. That money ran out.

Lets start with it only being two years. This stuff takes years and years to fix. Plus it's not just the spending cuts, it's a lot of other things.

Didn't those people get a little too attached to the government handouts and goodies?