published Tuesday, May 8th, 2012

Austerity havoc in Europe

The United States under the Obama administration has managed to steer the economy out of the Great Recession of 2007 and back on a growth path by injecting some measured stimulus spending -- chiefly tax cuts for the broad middle class, and phased assistance to state governments over the past three years. That has kept the bottom from falling out in education and vital state services and state employment, while nurturing consumer confidence and 26 straight months of private sector job growth.

Europe could have been learning from that example. But it chose to go in the opposite direction toward harsh budget slashing and forced "austerity" to reduce the federal debt of the European Union's members as an antidote to the recession. That's the same recipe that America's Republicans now propose.

It has been disastrous.

In the same period since the horrific banking collapse that nearly pushed the western world into a gripping depression, most of Europe -- under the austerity mandated by the EU's economic giant and its banking paymaster, Germany -- has struggled on the fine line between economic stagnation and double-dip recession, if not fallen back hard into the latter.

That dire trajectory has shoved Greece, Ireland, Portugal, Spain and Italy into increasingly deep recessions and bitterly high unemployment. More recently, the solid Dutch have found themselves in a recession that caused the government to step down. And on Sunday, the backlash caught up with France.

On the heel's of Greece's ballot rebellion against the government, French voters threw out President Nicolas Sarkozy, and elected a new president from the Socialist party for the first time in 31 years -- all to avoid a harsher veer into recession and deeper pain from rising unemployment and steep cutbacks in health care and education.

The drift in France from the center-right approach of austerity has to alarm Germany, which, as the biggest contributor to the European Central Bank, has been unwilling to grasp two core realities that challenge its "austerity first" dogma. One is that its export-led economic juggernaut can't remain strong if its fellow EU members can't afford to buy its products. The other looming reality is the undesirable end of pushing less affluent EU members to abandon the EU and its common euro currency, and defaulting on its ECB loans and bonds altogether.

It's too soon to forecast the shrinkage or demise of the EU and the euro, though a lot of analysts are raising that flag. But the fact of the matter is that the austerity push -- which has also riven Great Britain under the same recessionary pains and electoral anger -- is turning its economic victims into intensely angry citizens who are ready to torch the government (sometimes literally: see Greece) out of despair over the lack of jobs, food, health care and classrooms in the self-perpetuating downward cycle of austerity and economic decline.

There's a lesson here for Democrats, Republicans and American voters. The only thing keeping American voters out of the desperation that plagues Europeans is the careful piloting of Obama and the slender Democratic majority in the Senate, which has managed to steer clear of the extreme austerity measures that Republicans want to impose, and its consequences.

If Republicans win in November, and impose the Ryan budget passed haughtily by the House, the austerity advocates could easily change direction toward the current European model. Then, its disaster could become our reality.

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timbo said...

What in the heck is old Harry smoking? He sees everything through his pinko glasses. Obama "steered" us through the recession...you're joking right?

May 8, 2012 at 12:27 a.m.
nucanuck said...

The editor makes a good point if one believes that the massive stimulus can create enough growth to end the stimlus (deficit spending). Unfortunately, the evidence to date indicates that the US recovery is so weak that any pullback in debt creation would sink the recovery.

The workforce is still shrinking, good paying full-time jobs are still shrinking, incomes for middle Americans remain flat to down...this recovery is in GDP numbers only, not in the lives of average Americans.

Bringing business forward by ever-increasing debt has worked for 30 years, but with ever lessening impact. The evidence before us now is that we have reached the point of diminishing returns and that the new debt we are adding is assuring an unpleasant default rather than fueling a recovery.

We are in uncharted waters, but there are warning signs aplenty that we cannot continue to add debt. Our creditors have made it very clear that they will not continue business as usual. Our bonds are now largely bought by our own Fed in contorted acts of financial chicanery. Organized efforts to re-route commerce, avoiding the US dollar are well underway, and if continued would mean the end of the dollar as the world's reserve currency. That would be a massive economic blow to the US were that to happen.

Just because we seem to be better off than Europe at the moment does not mean that we are on the right course or that we have dodged the economic reality that awaits us. We have only bought time and we are paying a big price for that time...too big, in my opinion.

May 8, 2012 at 2:32 a.m.
conservative said...

timbo....your short comment suggests to me that you like myself didn't read past the first paragraph of this lunacy.

May 8, 2012 at 9:32 a.m.
chet123 said...

HEY FELLOWS....I BEEN TRYING TO TELL YOU THIS.........GAME PLAYING TIME IS OVER

HOPE YOU UNDERSTAND WHAT THE WORD AUSTERITY MEANS....Hmmmmm?

AMERICA IS ON THE EDGE OF A REVOLUTION....THANKS TO THE RIGHT-WING NUTTY.....I HATE TO SAY IT....."BUT I TOLD YOU SO"

May 8, 2012 at 10:41 a.m.
harrishaven said...

"The United States under the Obama administration has managed to steer the economy out of the Great Recession of 2007 ..." What about the Great Recession of 2008, 2009, 2010, 2011, 2012...??

May 8, 2012 at 1:27 p.m.
chet123 said...

HARRISHAVEN I KNOW YOU AND MITCH MCCONELL WOULD LOVE NOTHING MORE THAN THE ECONOMY TO TANK.....BUT SINCE WE ARE IN A GREAT RECESSION THAT WAS MAN MADE BY YOUR PARTY...WHY ASK A STUPID QUESTION LIKE THAT...Hmmmm?,BY THE WAY...OBAMA PRESIDED 2009,2010,2011,2012....LET ME HELP YOU OUT....OBAMA WAS SWORED IN 2009.....

I HAVE A QUESTION FOR YOU! DO YOU KNOW WHAT A GREAT RECESSION IS AND WHO PUT US IN IT.....AND IF IT GREAT...HOW CAN YOU TURN IT ON A DIME WITH REPUBLICANS BLOCKING REVENUE...THINK!THINK!

May 8, 2012 at 2:14 p.m.
Rickaroo said...

What we are seeing in Europe now are the tangible and direct results of austerity measures. Austerity in a time of economic crisis DOES NOT work. It doesn't take a PhD in economics to know that. The wheels of society still have to be greased and the extent to which we keep money flowing among the middle class, the quicker we can be back on the road to recovery. WPA-like jobs, infrastructure, education and jobs-training programs are all worth spending money on. Raise the taxes on the rich, for god's sake, and stop whining about hurting the feelings of the "job creators," who in fact have not created jobs in ten years of tax cuts! How long must we be subjected to the insanity of these believers in the fairy tales of trickle down and austerity? Sure, the deficit is huge. Sure, something must be done about it. But the time to worry about it is not in a time of economic crisis. Spend money that will in turn cause more money to be spent among the middle class. Austerity breeds only one thing - worse austerity.

May 8, 2012 at 3:25 p.m.
timbo said...

conservative....No I read this idiot like I always do..need to know what the enemy is doing.

Rickaroo.... Speaking of fairy tales...your was a good one. To be in character, you probably dress up like Mao on Halloween. That was about the dumbest thing I have every read. Ok, it was a tie with old Harry's article.

I am going to go CHET123......HOW DO YOU THINK THAT THESE COUNTRIES GOT INTO TROUBLE IN THE FIRST PLACE? THEY GOT IN TROUBLE BECAUSE OF SPENDING TOO MUCH, TAXING TOO MUCH, AND TURNING MORE SOCIALIST. SO YOU THINK THAT MORE OF THE SAME BEHAVIOR WILL "SAVE" THEM ECONOMICALLY. THAT IS TOTALLY IDIOTIC.

One more thing, without us "job creators" even people on the dole and government workers wouldn't last 6 months. Snarling at us some leftist crap doesn't change the fact that without us this country would be Cuba.

Your so dumb you don't deserve "trickle down" anything. If you have a job I hope your boss is reading this stuff and down-sizes you into oblivion.

May 8, 2012 at 4:28 p.m.
Rickaroo said...

Am I supposed to feel insulted, timbo? Whatever floats your boat. I feel kinda like... when a chihuahua yaps at my feet.

May 8, 2012 at 4:47 p.m.
Downtownman said...

Nice try Rickaroo. Arguing with these guys is like trying going up against the president of the jr high young Republicans: all they have is name calling, slavish devotion to an ideology, and misleading "facts".The US has clearly done better with the stimulus (albeit slow, mainly due to the fact the stimulus effort was watered down by the president himself, combined with budget slashing by local governments)than the austerity measures of Europe (double dip recessions, etc).

The fact is, over the last century, in a battered economy (courtesy conservative government)austerity has never worked. There is NO money fueling the capitalist engine, making things worse. Government intervention has worked everytime, with austerity measures occuring after recovery. Remember, even Reagan and his advisors knew what to do...raise taxes, especially on the wealthy.

May 8, 2012 at 7:28 p.m.

Don't go confusing them with the facts, they have their prejudices to keep!

May 8, 2012 at 11:24 p.m.
joneses said...

Obama has spent 6 trillion dollars with nothing to show for it and the unemployment rate if 8.2% gas is at almost $4.00 per gallon. Below is the comparison and happywithbeinganidiot these are the facts. of the obastard recession.

Obama’s record from what he inherited from Bush and the DEMOCRAT HILL:

AAA credit rating 7.1 % official unemployment rate $1.85 gas prices 10 trillion dollar debt 2 wars 26 week unemployment benefits a budget 304,761,895 population 13,524,982 actual unemployed people People on food stamps ----------------31.79 million Debt per CITIZEN $33,600 Debt per TAXPAYER $94,360 Are You Better Off Today Than you Were Two 1/2 Years Ago? Numbers Don't Lie. . ---------------------------------------------------------Jan 2009-------Sept 2011 . Price/gallon gas--------------------------------------$1.83 ------------$3.69 Crude oil (barrel)-------------------------------------$38.74-----------$115.34 Corn, No.2 yellow------------------------------------$3.56-------------$14.33 Soybeans----------------------------------------------$9.66-------------$13.58 Raw Sugar cane,lb----------------------------------$13.37-----------$35.39 . Unemployment rate, non-farm--------------------7.6%--------------9.1% Unemployment rate, blacks-----------------------12.6%------------16.7% Number of unemployed----------------------------10,616,000------14,500,000 . Number of fed. Employees------------------------2,779,000--------2,840,000 Real median household income-----------------$50,112-----------$49,777 Number of food stamp recipients ---------------31,983,716-------43,300,878 . Unemployment benefit recipients----------------7,526,598--------9,393,838 Number of long-term unemployed---------------2,600,000--------6,900,000 . Poverty rate, individuals----------------------------13.2%------------15.1% People in poverty in U.S.---------------------------39,800,000------46,200,000 . Economic Freedom World Ranking------------------5------------------9 Failed banks-------------------------------------------140-----------------170 Dollar vs Jap yen exchange rate-----------------89.76---------------76.15 National debt, in trillions---------------------------$10.627------------$15.052 . Just take this last item: In the last 2.5 years we have accumulated national debt at a rate more than 27 times as fast as during the rest of our entire nation's history. Over 27 times as fast! Metaphorically, speaking, if you are driving in the right lane doing 65 MPH and a car rockets past you in the left lane 27 times faster . . . it would be doing 1,755 MPH! This is a disaster! . Sources: (1) U.S. Energy Information Administration; (2) Wall Street Journal; (3) Bureau of Labor Statistics; (4) Census Bureau; (5) USDA; (6) U.S. Dept. of Labor; (7) FHFA; (8) Standard & Poor's/Case-Shiller; (9) RealtyTrac; (10) Heritage Foundation and WSJ; (11) The Conference Board; (12) FDIC; (13) Federal Reserve; (14) U.S. Treasury

May 9, 2012 at 6:01 a.m.
joneses said...

Tell the young people obastards recession is getting better.

The April unemployment rate for workers under 25 was 16.4 percent—more than double the overall national rate; as many as half of recent college graduates are unemployed or underemployed; younger workers have fared worse than any other age group in terms of recovering from President Obama's failed economic plan and recession.

And you liberals think he is the Messiah, unbelievable.

May 9, 2012 at 8:45 a.m.
Downtownman said...

Nothing to show for it...lie. Good start Joneses. Recession has a specifice meaning; the economy is shrinking. It is not. It is growing too slowly, thanks to the idiotic, misguided obstructionism of Repulicans and a handful of Democrats under the spell of corporations.Europe's economy's in the toilet, thanks to slashing and burn conservative economics. It is stunning that there are people other than billionaires who think conservatism is good for them. Unbelievable

May 9, 2012 at 8:58 a.m.
chet123 said...

TIMBO....YOU JUST KEEP BELEIVING THAT....FOR ALL I CARE...WE CAN START ALL OVER TO ZERO....FOR IF THE MIDDLE CLASS AND WORKING CLASS WHO ARE THE CONSUMER IN THIS COUNTRY STOP SPENDING THIS WHOLE ECONOMY WILL CRASH......

AMERICAN KNOW ABOUT THE INCOME DESPAIRTY AND INCOME MARGIN BETWEEN THE 1% AND WORKING CLASS.....AMERICAN IS NOT GOING FOR ANYMORE SLASHING......AUSTERITY IS NOT WELCOME......AND AMERICA IS ON THE EDGE OF BEING FRANCE...

May 9, 2012 at 9:57 a.m.
chet123 said...

JONESES...WHY DO YOU SPEND ALL THAT TIME QUOTING RIGHT-WING SOURCES....IT DONT WORK ANYMORE!....WHEN YOU START GETTING YOUR INFO FROM CREDIBLE SOURCE MAYBE I WILL TAKE YOU SERIOUSLY HA HA HA HA HA.....

OH...YOU FORGOT TO MENTION OBAMA HAVENT APPOINTED ANY FEDERAL JUDGES LATELY.....HA HA HA HA...I WANDER WHY??? HA HA HA

SO WASTE YOUR TIME WITH FUZZY MATH....OBAMA WILL STILL WIN.....YOU ARE IN A LOST LOST SITUATION.....

IF OBAMA LOSES....THERE WILL BE A HUGE PUSH BACK AGAINST THE REPUBLICAN....BECAUSE THE MAJORITY OF VOTER WILL SAY THE ELECTION WAS STOLEN(REMEMBER 2000,2004)....HA HA HA HA....IT IS THEN YOU WILL SEE A SOCIALIST CANDIDATE......IT IS GOING TO BE FUN TO SEE WHAT HAPPEN THE NEXT 5 YEARS HA HA HA HA....FOR YOU RIGHT-WING NUTTY..ITS A LOSE LOSE SITUATION

May 9, 2012 at 10:08 a.m.
chet123 said...

LISTEN TO JONESES LANGUAGE....HA HA HA....NOW HES ANOTHER BIBLE THUMPER HA HA HA HA HA.....KEEP RECRUITING FOR MUSLIM DUMB OLD MAN

May 9, 2012 at 10:10 a.m.
chet123 said...

TIMBO...I BEEN LOOKING FOR YOU!..WHERE HAVE YOU BEEN HIDING....DONT TAKE IT PERSONAL,BUT I WILL CLEAN YOUR CLOCK....EAT YOUR LUNCH.....DONT RUN AND HIDE......SEE YOU STILL LYING TWISTING FACTS....BROWN-NOSING HA HA HA

May 9, 2012 at 10:15 a.m.
chet123 said...

DONT THE REPUBLICAN KNOW FROM WORLD HISTORY THAT YOU CAN PUSH THE PEOPLE ONLY SO FAR....Hmmm?

HA HA HA HA...THE RICH AND GREEDY IS SCARED TO DEATH HA HA HA...SO ARE THE BUTT KISSERS HA HA HA

May 9, 2012 at 10:18 a.m.

Nothing to show for it?

I can find at least six roads in the county that I know were paved with Stimulus money.

Maybe you don't like driving on smooth, well-paved roads, but I do.

May 9, 2012 at 11:26 a.m.
JustOneWoman said...

Jonsass said....And you liberals think he is the Messiah, unbelievable.

You seem to be the only one thinking or talking about him being a messiah. Is that kind of like idol worship for you?

May 9, 2012 at 1:19 p.m.
chet123 said...

THE RIGHT-WING TALK ABOUT HIM 24/7 IS HE JUST IGNORE THEM....HA HA HA

May 9, 2012 at 6:14 p.m.
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