Monday, 4 March 2013

EUROPE: '' Austerity v Stimulus'': There is not a ''quick fix''


The third-largest Eurozone economy is a fertile source of uncomfortable questions. Reforms and restructuring are good ideas, but what happens if unemployment does not recover within the next year? What happens if economic hardship continues, if the recession does not recede, and if hope is not expanded? What if companies continue to go bankrupt? What if banks keep on closing credit lines? The answers are unclear at best.

Anti-austerity and anti-reform movements prevail and advocate policies that would deliver only in the medium term, if at all.

What happens in the meantime? How can a democratic society be managed even if it is unable to provide jobs to the young generation (which is often highly trained) and if it cannot retain skilled workers within the workforce? This has never happened before in Europe, and a solution isn’t yet in sight. The view into the future is obstructed by forthcoming disasters.

A red thread runs through the European continent and binds it together with economic spreads, elections, unemployment numbers and collapsing private consumption figures. It’s a scary and dangerous thread, a sort of negative integration of the continent.

In Brussels, worries are becoming more widespread. The European policy-makers now believe that citizen dissatisfaction is ultimately much more dangerous than the impatience of markets. High-level meetings among European leaders have recently been dominated by this worry. Citizens simply cannot bear never-ending sacrifices if they don’t see a light at the end of the tunnel. If plans and resources for growth are not proposed, social stability is at risk.

In Portugal, huge crowds recently gathered in the capital Lisbon to demand the government resign.
Many carried placards condemning the "Troika" of the IMF, the European Commission and the European Central Bank, which demanded budget cuts in return for a financial bailout.

Ten days ago in Spain, tens of thousands of protesters amassed in Madrid and other Spanish cities to voice their anger over harsh austerity and the way the country's being run in the wake of its financial crisis.

Many in Spain have been struggling since the global financial crisis knocked the bottom out of the country's housing market and sparked a major recession that left thousands jobless. The country's unemployment rate stands at 26% -- its highest level ever -- and the situation is even worse for young people, with more than 55% of 16- to 24-year-olds out of work.

 In Greece and the Irish Republic, unemployment figures are at their highest level in 10 years, while Spain's unemployment has doubled in just three years.
 
In Britain the government is planning to slash spending by up to 25% in some areas, while France has seen angry protests against a planned increase in the minimum retirement age.
 
Actually, Europe may have more than one problem – especially if we include Greece in our calculations, a country on the brink of humanitarian catastrophe in peacetime. Even the Red Cross has been forced to cut blood supplies because Athens does not have enough money to pay for them. That’s an incredible and grim occurrence at our own doorstep.
 
In Italy, the situation is not much better: Italy becomes a valley of tears, marked by high unemployment, bankruptcies, collapsing consumption and banks in turmoil.

It is fair to say that ''austerity'' is not the cure of the Europe financial crisis. While stimulus might be the ''remedy'', politicians's corruption and lack of accountability are mainly the ''obstacles''.

By Guylain Gustave Moke
Political Analyst/Writer
Investigative Journalist