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Bill Clinton, at Milken conference, warns Europe on austerity

Former president says continent can't rely on cost cutting to solve its debt crisis. Instead it must focus on growth, he says.

May 03, 2012|By Andrew Tangel and Meg James, Los Angeles Times
  • Former President Bill Clinton gave the keynote address at the Milken Institute's 2012 Global Conference at the Beverly Hilton hotel.
Former President Bill Clinton gave the keynote address at the Milken Institute's… (Michael Robinson Chavez,…)

Bill Clinton has some advice for Europe's leaders: Focus on stimulus, not cost cutting.

The former president told a capacity crowd inside the Beverly Hilton's grand ballroom that the continent cannot rely on austerity measures to bail itself out of the debt crisis. Instead, it needs to focus on multiyear plans to boost its nations' economies.

"The prescription of austerity has continued to be pushed in the face of all the evidence that it won't work," Clinton said at the Milken Institute's 2012 Global Conference.

He said this kind of cost cutting might "work in the short run and it may soothe the credit markets" but that cuts in spending when private demand has plunged and interest rates are flat won't lead to growth.

"You've got to do it with growth," Clinton said. "You cannot reduce the public debt without proper budget restraint, proper revenue stream and adequate growth."

His advice to Europe came on the final day of the conference, which was launched 15 years ago by former junk bond king Michael Milken. This year's event drew about 3,000 registrants, many of them chief executives, politicians and well-known economists.

Among the warm-up acts for Clinton was Nouriel Roubini, the New York University economist better known on Wall Street as "Dr. Doom" for his bleak financial predictions. He also warned that Europe could be heading for a fiscal disaster if it implements more austerity.

Roubini said during a panel discussion earlier Wednesday that European countries were in a deepening recession and that a social and political backlash to austerity could lead to a breakup of Europe's common euro currency.

"Breaking up is going to be a mess," he said, and "financial contagion will be significant."

He also warned that the U.S. economy was in danger of slowing next year because of stagnant wages and Washington gridlock with fiscal policy. Further, Roubini warned that consumer spending would dive if taxes were raised and government subsidies dried up.

"The optimists today are saying the U.S. is on the cusp of self-sustaining recovery," he said. "My view of it is: The data suggests that we'll be lucky if this year we're going to grow [by] barely 2%."

Media mogul Sumner Redstone also spoke at the conference during a panel discussion on entrepreneurship.

The legacy of Redstone — the Viacom chief is three weeks shy of his 89th birthday — has been written by many, including Redstone himself. And on Wednesday, he told his story again to a standing-room-only crowd in a small conference room at the Beverly Hilton.

The mogul's secret to success, he said: "You have to be in control of your destiny. You can't work for anyone else. It's not about money, it's about winning. You have to have a passion to win." ("A Passion to Win" is also the title of Redstone's 2001 autobiography.)

"I've taken some perilous risks. But I never took them unless I was confident that the rewards far outweighed the risk," he said.

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