Thanks for visiting this blog, created in July 2012 out of great concern for the fate of the €uro currency area, once again on the verge of collapse due to the economically ill-advised and heartless austerity policies imposed on Greece, Spain and other heavily-indebted €uro area countries by a christian democratic German chancellor impressed with the budgeting skills of Schwabian housewives. Meant to reduce the public debt and put the countries back on a path to economic growth, these macro-economically idiotic policies are doing anything but cause "pointless misery" as Paul Krugman so aptly describes it (Bloomberg, July 23-29, 2012).

Instead of reducing public debt, the austerity measures set in motion a vicious cycle of economic contraction, rising unemployment and poverty, lower tax revenues, private capital flight, and rising public debt shares as the economy declines faster than the public debt. What’s more, the austerity-driven ‘blood, sweat and tears’ policies recommended to the European periphery derive from the same economic doctrine that brought us to the brink of disaster in 2008. These policies are not only misanthropic and counterproductive to economic growth and debt reduction in Europe, but will prove explosive for the €uro currency area unless a drastic change of course takes place - and soon.

While I do not pretend to have ‘the’ solution for the €uro crisis, I would like to offer alternative economic perspectives and views on current events, and hope to chart a more humane path toward a balanced, socially fair, and sustainable economic future for the €uro area.

On the origins of the 2008 Great Financial Crisis:
“90+% of traders are men, and they bet all of our bank deposits on liar loans which froze credit leading to 40% average losses passed on to ordinary taxpayers; then begged for trillion-dollar bailouts upon which they paid themselves 50% higher boni.”


Monday, August 20, 2012

Don't Shock the Countries, Shock the Banks/ters ! Part I: economic shock therapy in Europe ?

In September 2007, a year away from the fall of Lehman Brothers and the ensuing Global Financial Crisis, award-winning investigative journalist Naomi Klein introduced her new book "The Shock Doctrine: the Rise of Disaster Capitalism" at the studios of Democracy Now. Klein explained that

 "the shock doctrine"...."is a philosophy that holds that the best way, the best time, to push through radical free market ideas is in the aftermath of a major shock. That shock could be ....a natural disaster....a terrorist attack....or an economic meltdown."

One year later, 10 days after the collapse of Lehman Brothers in September 2008, Klein commented on the emergency actions to stem the spread of the financial crisis, including the $85bln rescue and takeover of AIG by the US government:

"Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of 'free market' ideology.....The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalisation for deep cuts to social programmes, and for a renewed push to privatise what is left of the public sector."

 Doesn't that sound eerily, scarily familiar in the midst of the eurozone crisis ?

Haven't events evolved exactly as Naomi Klein predicted 4 years ago, including the convenient  interpretation of the eurozone crisis as a public debt crisis instead of a financial crisis 2.0 ?

And isn't it a fact that, instead of cleaning up Europe's banking sector and going after the billions of Euros stacked away by financial speculators, the so-called sovereign debt crisis has been presented as a consequence of people living 'above their means' and thus, as a justification to punish innocent people with drastic cuts in public social programs, pensions and wages, as well as staff reductions and privatizations of public sector enterprises and services ?

If you answered 'yes' to all three questions, you are ready to arrive at a correct diagnosis of the eurozone crisis as well as a consequential path toward a solution.

                                                                                                          ......more on this in upcoming posts


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