All those governments in Europe who thought that it was a great idea to combat the recession by imposing drastic austerity measures and balancing their budgets by squeezing the poor, labor, and middle classes are taking well-deserved drubbings. Yesterday, the governments of France and Greece joined that of the Netherlands, Spain, Portugal, and Denmark in getting kicked out of office.
France’s Nikolas Sarkozy had another strike against him in that was a jerk in addition to his policies being failures, according to this radio report from The World before the election.
It can’t have helped that his wife was also voted the most annoying celebrity.
Of course, the international financial oligarchy, fronted by the government of Germany, will continue to demand austerity using their control of credit and it will be interesting to see to what extent the new governments can resist the pressure.
Austeria? Is that anywhere near Proosia or Bumfukistan?
I get it now. You’re referring to the Austerian School of Economics, as exemplified by von Miserable and Haystack.
I’m not seeing that anything they have tried is fixing the Euro currency.
In this case, austerity has resulted in quite a few governments falling as the people vote them out of office.
So what will fix the Euro’s problems? AFAICT, it isn’t a long term viable currency and they will end up scrapping it.
Right now, the best thing for Greece would be to exit the Euro and declare bankruptcy. That is where they are heading anyway, might as well get it over with.
Austerianism is the economic principle that unsupported inflationary bubbles are only good for making a few people very rich. When they inevitably burst it is the average folks job to take the hit and poor folks’ role to quietly starve.
the euro could be made long-term viable, but i suspect it’d take much further integration of the EU; most likely the creation of a united states of Europe, in practice if not in name. whether that’s more or less likely than scrapping the euro, i’m not current enough with EU politics to guess.
I am not sure about the other governments, but wasn’t the Greek government blatantly overspending?
Okay, so which of these new governments is proposing policy that isn’t austerity?
The short answer is yes, the Greek government was overspending. The long answer is rather more complicated.
In 2010 the Greek deficit was over 12%, more than four times what supposedly allowed under eurozone regulations. Successive Greek governments had consistently and deliberately misreported the country’s official economic statistics to keep within the regulations. This enabled Greek governments to spend beyond their means while hiding the actual deficit from the EU. Revised figures put Greece’s 2009 deficit at 15.4% of GDP and public debt at 126.8% of GDP making it the biggest deficit, as a percentage of GDP, amongst the EU member nations.
One major problem the Greeks have is tax evasion. In the last quarter of 2009, tax evasion reached an estimated 49%. The Greek Finance Minister said: “Around 15,000 individuals and companies owe the taxman 37 billion euros.”
The Greek government has been kept afloat by its fellow euro zone countries, but at a steep price: the austerity measures demanded by France and Germany in return for two massive bailout packages have ripped holes in the Greek safety net and plunged the country into a recession of near-Great Depression dimensions. After long resisting the idea of a default, last March eurozone officials forced Greece to negotiate a debt restructuring deal with the vast majority of its private sector lenders, who agreed to swap €70 billion in Greek debt for new bonds worth as much as 75% less. It was the largest default in history.
The deal cleared the way for the European Central Bank to release funds from a €120 billion bailout package, avoiding an uncontrolled default that loomed a mere 10 days away. But that still leaves Greece saddled with unsustainable debts and little prospects for growth. Unable to devalue its currency and with its economy spiraling down, officials are pinning their hopes on long-term measures like reform of the tax system.
The recent election has clouded the picture considerably. The centerist coalition government will be replaced but it’s difficult to know which parties will be dominant. Both the left and extreme right made gains at the expense of the center. The socialists are not happy with the austerity measures demanded by the ECB. We’ll have to see what happens.
I am not an economist, I’m only a physicist and software engineer and I can’t see how putting people out of work will lead to properity. Could someone explain, using small words pleaee, how this works?
Unfortunately, here in Spain the incumbent government was replaced by one which is very much in favour of austerity. But they are being very selective about where the cuts are made. They are cutting funding for education and science, whilst maintaining spending on the military, the royal family and the church. Oh and for good measure they are threatening to erode women´s reproductive rights too.
Although France now has a social-democrat for a president (and since he appoints the prime minister with whom he will select a cabinet that part of the executive branch can be deemed social-democrat as well) the French parliament — the legislative branch — is as it was. On 10 and 17 June of this year parliamentary elections will be held in France, and that is a direct representative election, unlike their presidential elections. And if you look at the first round of the presidential elections the right-wing bloc is larger than the left-wing bloc. It remains to be seen if austerity measures are off the table.
And being Dutch myself… In the Netherlands the government (VVD/CDA) wasn’t kicked out of office; the government resigned because the right-wing populist partner (PVV) for the minority government withdrew its support. An ad-hoc parliamentary coalition (VVD/CDA/D66/SP/CU) has agreed upon most of the planned austerity measures, and that happened two days after the “fall” of the government. Elections will be held in September and it’s highly unlikely that the political left will be able to form a government, if only because social-democrats (PvdA) have never shown any inclination to work together with radical socialists (SP). It will most likely be a centre-right government with support from smaller so-called leftist parties (that ad-hoc coalition), or a “grand” coalition that straddles the centre (VVD/PvdA/CDA or VVD/PvdA/???).
(For any Dutch people reading this: I have voted and will vote SP. If it had been Plasterk instead of Samson I would have considered PvdA.)
It doesn’t work. It leads to prolonged economic depression as in the 1930s. Keynes understood this -- read him.
My enthusiasm for Greece’s new government is limited, given that they seem to have elected fascists. Hollande looks more promising. The Euro will almost certainly go down. So what? Even the conservative economists are saying that increased spending is the only thing that will get us out of this tailspin.
Much of this comment was plagiarized from the New York Times’ summary of news on Greece.
This is part of a pattern of behavior.