Paul Krugman:
What happened to Spain was a housing bubble — fueled, to an important degree, by lending from German banks — that burst, taking the economy down with it. Now the country has 23.6 percent unemployment, 50.5 percent among the young.
And
the policy response is supposed to be even more austerity, with the
European Central Bank, natch, obsessing over inflation — and officials
claiming that the incredibly foolish rate hike last year was actually something to be proud of.
The European Union experiment was an interesting one, but as long as Germany insists on pushing strict austerity measures on countries that are suffering economically, it cannot hold together. I sincerely hope that they have economists working on how to dismantle the whole thing without causing further economic collapse.
"The European Union experiment was an interesting one, but as long as Germany insists on pushing strict austerity measures on countries that are suffering economically, it cannot hold together."
ReplyDeleteAh, remember, that's not a bug, it's a feature.
The EU will not fail, the Euro will not fail. They are too big to fail (really, nobody on planet earth (OK, a few people who'd come up better than before) wants them to fail, the consequences would be too big).
But just like your American debt crisis (remember when the Republicans brought you within days of actual bankruptcy?), this will set the stage for radical cuts in the social AND the political sector. They're demonstrating with Greece how they's simply exchanging the power of government with the power of the money lenders. They want to tear all that social security shit down. They are fully aware that they're ruining the economy along the way and drive those countries into deeper debt (I mean, who's kidded by cutting the minimum wage? that increases deficit because it means less revenue). But we'll all end up a bit (or in case of Greece and Spain a lot) poorer and with less social security.
MIght be that they turn around on the ever expanding EU, too and use this crisis to "cut a bit of dead wood".
It's a sad state of affairs that the European Union (read: Germany) seem to be taking their cues from the US.
ReplyDeleteAlthough, if you've got the same type of leaders-- who don't care for the constituents, but for those who have money-- it's not terribly surprising.