Though Cowards Flinch

Tom at Freemania points out Moody’s latest judgment on how countries are coping with their deficits.

Pierre Cailleateau of Moody’s says:

Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion… the severity of the crisis will force governments to make painful choices that expose weaknesses in society.

Thing is, Pierre Cailleateau of Moody’s said almost the exact same thing three months ago.

In those countries whose debt has increased significantly – and especially those whose debt has become unaffordable – the need to rein in deficits will test social cohesiveness. The test will be starker as growth disappoints and interest rates rise……In 2010, the ongoing crisis will further test such fortitude. We are closely monitoring signs of economic rebound as well as of political and social tension as early indicators of the sustainability of fiscal efforts.

Tom thinks Cailleteau makes a ‘commendably frank statement’.  Well, the message at least is consistent: “bugger the social consequences, it’s debt affordability that matters.”

When I suggested the possibility that to great a focus on fiscal deficit at the expense of social need might lead to ‘social cohesion’ problems, I was accused of encouraging race riots.  I wonder if Pierre Cailleteau will get the same.