Austerity policies were likewise supposed to provide stability to the Eurozone countries, not undermine them. Portugal, Ireland, Italy, Greece, and Spain (the PIIGS of Europe) have all implemented tough austerity packages since the financial crisis hit them in 2008. Greece’s bloated public-sector debt, Spain’s overleveraged private sector, Portugal’s and Italy’s illiquidity, and Ireland’s insolvent banks ended up being bailed out by their respective states, blowing holes in their debts and deficits. The answer to their problems, as with the US debt-ceiling agreement, was supposed to be austerity. Cut the budget, reduce the debt, and growth will reappear as “confidence” returns.

Mark Blyth, Austerity, loc. 29