If Greece still had its own currency, the authorities could devalue it while tightening fiscal policy.

In exchange for this liquidity support, Greece will be forced to accept painful fiscal tightening and falling GDP.

But, given the large adjustment needs, it is not politically feasible to do everything, including painful fiscal tightening, immediately.

In particular, Germany demands more fiscal belt tightening from heavily indebted Southern European countries, whose unions (and voters) are rejecting further austerity.

Second, they overestimated the extent to which quantitative easing (QE) by the monetary authorities that is, printing money could counterbalance fiscal tightening.

That will be hard to achieve, because fiscal tightening will reduce Italian GDP, which is now barely growing, in turn shrinking tax revenue.

In Europe and Japan, for example, monetary and fiscal policies have been tightening in response to domestic concerns, further slowing the world economy.

Even German government officials now concede that something more than fiscal belt tightening is needed to revive the economies of the eurozone periphery.

As for fiscal policy, it is already in high gear and needs gradual tightening over several years, lest already troubling government debt levels deteriorate even faster.

An alternative is domestic deflation combined with extreme fiscal tightening that is, a period of slow or negative growth in wages, incomes, and some prices of non traded goods.

Will Fed Tightening Choke Emerging Markets?

Finally, attention should be paid to the balance between fiscal tightening and supply side reforms whenever appropriate, more priority should be given to the latter than has been the case so far.

A Cautionary History of US Monetary Tightening

The Bundesbank is also tightening credit at home.

But monetary tightening would weaken already slow growth.

As sensible as this two pronged approach spend now, cut later may be, it is made virtually impossible by the absence of any mechanism whereby President Barack Obama can credibly commit himself or future administrations to fiscal tightening.

But inflation remains high or rising, so more tightening is imposed.

At that time, both domestic investment and exports required immediate tightening.

Third, while US data have been surprisingly encouraging, America s growth momentum appears to be peaking. Fiscal tightening will escalate in 2012 and 2013, contributing to a slowdown, as will the expiration of tax benefits that boosted capital spending in 2011.

Sound judgment is needed regarding the speed and timing of regulatory tightening.

But when and how the Fed will begin tightening monetary policy remains unclear.

WASHINGTON, DC American foreign policy stands on the brink of substantial belt tightening.

Without growth, it will be difficult to stabilize public and private debts and deficits as a share of GDP the most important indicator of fiscal sustainability. Moreover, without growth, the social and political backlash against painful belt tightening will eventually undermine austerity and reform.

With Gazprom having already doubled gas tariffs for Georgia, the energy noose is tightening.

When the Hoover administration did swing to fiscal tightening, it was responding to pressures from the capital and foreign exchange markets, which in turn were responding to the crises in Latin America and Central Europe, where public finances had been a major part of the problem.

Since then, Iran has responded to incremental tightening of international sanctions by building more centrifuges.

If central banks are tightening and long term rates aren t rising, one needs some explanation.

They defied their Lord 's messenger , so He seized them with an ever tightening grip .

They defied their Lord 's messenger , so He seized them with an ever tightening grip .

They have already been tightening the screws on credit growth for several months, with positive effects.

European leaders have so far offered no solution to the growth conundrum other than belt tightening.

The mix of Chinese policy tightening, however, needs to shift much more decisively toward higher interest rates.

But, with budget tightening around the world, demand for Asia s exports is expected to continue to falter.

The timing of the inevitable policy shift back to tightening depends on overall inflation, particularly house prices.

And they disobeyed the messenger of their Lord , therefor did He grip them with a tightening grip .

And they disobeyed the messenger of their Lord , therefor did He grip them with a tightening grip .

The Bosnia and Herzegovina Parliament fully enacted 20 laws, many of which introduced significant structural reforms, such as tightening fiscal policies and budget control, setting up a State level Phytosanitary Administration, strengthening market standards, introducing effective and transparent public procurement and reforms in the fields of the judiciary and police.

The good news for Asia is that most of the region s monetary authorities are, in fact, tightening policy.

The only effective anti inflation strategy entails aggressive monetary tightening that takes policy rates into the restrictive zone.

Meanwhile, the state lurches from fiscal tragedy to fiscal farce.

Fiscal consolidation was not, however, the result of formal fiscal rules.

If there is no movement on these fronts, there will likely be pressure in the US for tightening sanctions.

The government has taken a first step by tightening its own budget and spending less, especially on distortionary subsidies.

Fiscal Follies

Fiscal stimulus is turning into fiscal austerity and a drag on growth.