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Wednesday, 9 May 2012

Austerity, my foot! Is Europe facing its own demise?

The Greek people has spoken, so did the French.  The elections of the past weekend have shown what the European population thinks about austerity in order to prevent an overall economic and monetary breakdown in the EU.

While François Hollande will assume the French presidency by mid-May and break with the pro-austerity policy of its predecessor Sarkozy, Greece is facing political disaster, with none of the bigger political parties able to form a coalition. The Greeks have given a notable number of votes to the radicals, either the leftish or the right wing extremists, as a protest against the austerity strategy of its own government and its imminent economic collapse.

As I mentioned in a previous blog post earlier on, Hollande will most likely refuse to follow Markel’s austerity policy implementation for the EU, leading Germany to probably either go on alone, or alter its policy. However, due to the urgency of the Greek matter and the rapid decline of Spain, Portugal, and Italy, any alteration away from austerity might be the totally wrong option.

Austerity is a painful option, no question about it. However, in the view of the current situation and the long-term effects of a spreading monetary disaster (with voices shouting loud that Greece might leave the EMU), polemics and protest votes gain a significant weight in contemporary public politics. As a result, people tend to either not going voting at all, voting blank, or voting radical left or radical right wingers – as a message of protest against the political established of the country in question.

Is this a reasonable solution? Certainly not, but in times of a full scale economic downturn or even a depression, radicals appeal to the general public’s fundamental fear of economic stability for the protection of jobs, living standards, and the own individual safety perceptions. Unfortunately, none of the radicals is remotely able to promote reasonable solutions, nor strategies.

Again, there is a historic correlation: Germany during the Weimar era until 1933 was in exactly the same situation, leading to the ultimate victory of the Nazi-Party and the total defeat of democracy in post WW 1 Germany. The results are very well known. The Greek Neo-Nazi Party has gained 7% at last weekend’s elections – far less than the left-wingers, but still.

Is Greece going to face the same fate as Germany at the end of the Weimar Republic? That’s way too early to say at the present time, but if the political leadership in Greece and in other EU countries are unable to respond in a reasonable way to the crisis, the radicals will gain, and the people’s trust and faith in its own democratic principles will be shattered to bits. The people is certainly distrusting the EU system as a whole in the view of the recent developments, the new common enemy is called “austerity”.

But ask yourself: if you are running out of money and your budget is seriously limited or even declining, and your fiscal stability is in danger, you will have to start saving money and cutting costs to get along. Every reasonable individual will have to apply this to his daily life and his expenditures. If you fail to do so, you will be broke, and it is certainly not a state someone wants to experience. States have to apply the same rules: cut costs where possible, start saving, implement legislative acts to fulfil austerity programs. If a state fails to implement austerity on a wider scale, it will be broke.

Any policy opposing the necessary austerity strategies is irresponsible and will cause even far more damage than austerity per se. If you nevertheless refuse to austerity, you will take all the consequences arising – and the responsibilities. People, however, have to be aware of that, even if it is an unpopular way. But it is the only way.

1 comment:

  1. The comparison of a household and a national economy that is very popular lately in germany, is lame - even a freshman in economic studies knows it can't be done. Unlike households, economies recess upon strict austerity, they suffocate. Growth is not possible in this environment, because unlike in households where the income is stable, with strict austerity national income suffers, investments die. No one really believes in canceling austerity measures completely and there have to be serious structural changes in most of the suffering economies, no doubt (everyone pretty much knows that, regardless of political demagogic speeches), but there has to be a moderation of the austerity and a serious motivation for growth, or else u can kiss the (whole) european south goodbye from the eurozone, not just greece. The problem with the european austerity policies is that they remind of a madman: they keep repeating the same, obviously failed recipe, hoping every time to get another result. This stubbornness and unwillingness to flex of german conservative politics, will in the future history books be charged heavily with the fall of the euro, should it go so far.
    As for the radicals who rose through both the crisis and also, the humiliation campaign of the country that took place in europe, especially in germany, they are indeed an unpretty thing. However (i think and hope at least) they are no real worry if the financial situation gets stabilized. In fact their real percentage is much lower, because for one thing, most voters of the strongly right and conservative "laos" party, which messed up communicatively in the pre-election period, turned to the radicals "to make a statement", without really belonging to this political space, and for another because the participation in the elections was very low, and of course all who did not go vote were moderate people - the radicals always vote. However i will agree with you that if the country bankrupts and a social chaos unfolds, radicals will be favored, pretty much to unpredictable results.