Greece, in November 2013, had a repeat of scenes witnessed in the beginning of Greece’s economic crisis; auditors from the European Union and International Monetary Fund came face-to-face with the full force of anti-austerity anger as protesters in Athens jeered, heckled and stopped them from leaving the Finance Ministry as the austerity is forcefully leading citizens to repay the debts of the banks.
Held back by riot police, brought in to guard the department, the furious demonstrators screamed, “Take your bailout and get out of here”, as the officials left a first round of talks with the Finance Minister, Yannis Stournaras. The IMF’s Mission Chief to Greece, Poul Thomsen, was forced to duck as a man threw a barrage of coins at him.
To avoid higher taxes, the capitalists have introduced austerity. Corporations and the rich are promoting austerity, not taking into account the key economic problems, i.e., unemployment, lost job security and benefits, home foreclosures and record-breaking inequalities of income and wealth, but are rather addressing the government deficits and rising national debt as the real problem. As a result, there is a cutting in government spending on jobs, social benefits and social services. Money saved by these cuts is being used to pay interest on the national debt and reduce it.
The Overseas Development Institute (ODI) briefing paper “The IMF and the Third World” says austerity is “anti-developmental“, “self-defeating“, and tending “to have an adverse impact on the poorest segments of the population“. Ireland and Spain’s austerity measures, instituted in response to financial crises in 2009, proved ineffective in combating public debt and placed those countries at risk of defaulting in late 2010.
David Stuckler and Sanjay Basu in their study ”The Body Economic: Why Austerity Kills”, a health crisis is being triggered by austerity policies, including up to 10,000 additional suicides which have occurred across Europe and the US since the introduction of austerity programs. Moreover, Barry Eichengreen and Kevin H. O’Rourke write that the IMF’s new estimate of the extent to which austerity restricts growth was much lower than historical data suggests.
17 nations in the European Union had unemployment rise by 60,000 in September, which makes it 19.4 million unemployed in the EU now. Unemployment is a million higher than in September 2012, and up by almost four million since the spring of 2011.
At 12.2%, the jobless rate is the highest since monetary union began at the end of the 1990s, according to data from Eurostat, the EU’s statistical agency.
Analysts said the labor market in the euro area had yet to stabilize, despite the return of modest growth in recent months. Jobless rates range from 4.9% in Austria and 5.2% in Germany to 26.6% in Spain and 27.6% in Greece, with unemployment in Italy rising to a record high of 12.5% in September.
Latest Bubble
The last bubble was a mix of regulation, Investment Banking and low interest rates. The low interest rates were introduced to attack investors after the 9-11 attacks, by de-regulation the investment bankers had no legitimacy in the doings, heavily over-spent and exploited the low interest rate borrowing as much as possible. When the interest rates increased and faulty investments started failing, the world hit a financial catastrophe.
To cure the crisis, huge trillions of dollars’ worth of bailouts was offered by governments of nearly all countries majorly affected by the crisis. Approximately, a third of these bailouts were temporary and properly allocated, the rest was used by investors who wanted a lot of things but never had the money to do so. Even Beverly Hills got the billion dollar bailout!
The interest rates after 2008 have fallen even lower than post 9-11 to nearly zero percent all over the world, and are still falling. Latest developments reinforce our view that the ECB will end up cutting interest rates from 0.50% to 0.25% sooner or later.
“Indeed, we certainly would not rule out a cut in December, although the ECB may hold off acting until the early months of 2014.” Chris Towner, director at foreign currency specialists HiFX, says: “Inflation data from the EU this morning shocked the market as the rate fell alarmingly from 1.1% to just 0.7%, which is the lowest level seen in four years.”
This author has confused the financial disaster called Pakistan with the prosperous success story called USA…he is incredibly negative and has no understanding of the power of a strong capitalist system to overcome and prosper from “economic bubbles”…yes we all know that the world economy went through a rough patch exacerbated by the uncontrolled terrorism of 9/11 produced by Islamic extremists…but the USA eliminated the source of that problem in Afganistan…and the fact is we all survived and the economy is now picking up and resuming its progress…the authors prediction that the USA will fail is grossly incorrect and his understanding of international economics is totally inadequate…if he really knew anything about monetary policy he would know that ” capitalism is the cure for poverty”….his hate for the USA and jealousy for western success is not based on facts but on misguided delusions..
Let him dream on mate. The best part about sites like PKKH is that they end up passing on propaganda and confuse the poor Paki even more.
More deluded Pakis are a good sign – because sooner or later, someone will wake up (red pill blue pill scenario) and fix the Matrix that is Pakistan
eddi who edited your small-brain
how can u be one of those blindfold people, who can’t see the disaster being brought upon humanity by the IMF, the banks and the one-sided justice of international orgs. like the UN & THE ICJ, perhaps ignorants like you vote for the status quo in the US in every election to bring doom closer to humanity every elections,, nobody is hate/jealous with the US, but everybody can’t stop calling a cancer a cancer just to keep the blind happy..
I agree that capitalism is the cure for poverty but capitalism has a tendency of creating cyclical bubbles that get burst and put the economies in depression.
Today US economy is no.1 and most countries in the world have USA as their no.1 business partner and foreign investor. Failure of USA will spell doom for the world but its highly highly unlikely.
The slow down could largely be attributed to
1. US and NATO countries intervention in Iraq followed by global war on terror as trillions of dollars have gone into these wars, and
2. collapse of soviet union made more and more nations adopting capitlist economy that led to large scale globalization that helped creating a bubble.
Getting over a bubble burst is a slow process and an eye opener.