[Peace-discuss] Fw: No justice, No Euro

[unionyes]

----- Original Message ----- 
From: <moderator at PORTSIDE.ORG>
To: <PORTSIDE at LISTS.PORTSIDE.ORG>
Sent: Sunday, June 06, 2010 7:39 PM
Subject: No justice, No Euro


> Eurozone Crisis Is Self-Inflicted
> The populations now suffering under EU-imposed
> austerity must have a real and credible threat of
> leaving the euro
> Mark Weisbrot
> guardian.co.uk,
> 26 May 2010
> http://www.guardian.co.uk/commentisfree/cifamerica/2010/may/26/eurozone-crisis-austerity-euro
>
> The current turmoil in financial markets around the
> world is another illustration of the damage that can be
> done by a bloated and politically powerful financial
> sector, combined with finance ministers and central
> bankers who identify with this sector and have their own
> rightwing policy agenda.
>
> Welcome to Europe, which has become the epicentre of the
> new global "financial crisis".
>
> On Tuesday, the focus of Europe's troubles shifted
> somewhat from Greece to Spain.
>
> At first glance it's not obvious that there should be a
> crisis in Europe at all. Even if Greece were to default
> on its debt - and this would most likely be a
> rescheduling or a restructuring rather than a large-
> scale cancellation of the bulk of Greece's debt - this
> would involve a relatively small amount of money
> compared to the resources that the EU has available to
> bail out any affected banks. And Spain's debt is much
> smaller, relative to its economy, than that of Greece:
> it's about 60% of GDP, well below the EU average of 80%.
>
> But "the markets" have decided that Spain is next in
> line for attack, and so the price of credit default
> swaps - a type of insurance - on their debt shot up
> today. If this sentiment grows, Spain's interest rates
> will continue to rise, and then their debt burden really
> could become unsustainable.
>
> To make it worse, "the markets" can't seem to decide
> what they want from these governments in order to love
> them again. Two weeks ago the euro was plummeting
> because the financial markets wanted more blood: they
> wanted Greece, Spain, Portugal, and the other currently
> victimised countries of Europe (Italy and Ireland) to
> commit to more spending cuts and tax increases. Then
> they got what they wanted, and within a day or two, the
> euro started crashing again because "the markets"
> discovered that these pro-cyclical policies would
> actually make things worse in the countries that adopted
> them, and reduce growth in the whole eurozone.
>
> Unfortunately the European authorities - especially the
> European Central Bank - are even worse than the markets.
> They are less ambivalent and more committed to punishing
> the weaker economies by having them cut spending even if
> it causes or deepens recession and mass unemployment
> (over 20% in Spain).
>
> It will be recalled that the turmoil in financial
> markets took a big turn for the worse on 6 May when the
> European Central Bank announced that it was not going to
> engage in "quantitative easing" - creating money - in
> order to help ease the crisis. They reversed their
> decision, but only partially. And the agreement reached
> for the so-called "trillion dollar bailout" requires
> that any country borrowing the funds must agree to more
> austerity. This means that if a country like Spain does
> run into trouble due to increased borrowing costs,
> tapping the "bailout" funds will force them to
> accelerate a downward economic spiral. And where is the
> inflation that the ECB is worried about? The eurozone is
> projected by the IMF to have 1% inflation for this year
> and 1.5% next year.
>
> Imagine how much worse the United States economy would
> be today if, instead of responding to our recession with
> fiscal stimulus, near-zero interest rates and a doubling
> of the Fed's balance sheet, we had opted for budget cuts
> and tax increases. That is what the European authorities
> are advocating for the weaker eurozone economies.
>
> The Greek population refuses to accept these conditions,
> and understandably so. The upper classes in Greece don't
> pay their taxes, and now the majority are being forced
> to pay the price for their cheating - a price greatly
> magnified by the irrational, pro-cyclical nature of the
> adjustment. Unrest is growing in Spain as well, with the
> largest unions talking about a general strike. There is
> a class dimension to all of this, with the EU
> authorities and the bankers united in wanting to balance
> the books on the backs of the workers - and adopt
> "labour market reforms" that will weaken labour and
> redistribute income upward for generations to come. The
> EU authorities and financiers believe that real wages
> must fall quite sharply in these countries in order to
> make them internationally competitive - but the
> protesters are responding with a fiscal version of "No
> justice, no peace".
>
> They might add: "No justice, no euro." From the
> beginning there have been serious economic questions
> about the viability and the desirability of the common
> currency - most importantly whether such a currency
> union was feasible among countries with greatly
> different productivity levels, no common fiscal policy,
> and a Central Bank committed only to maintaining very
> low inflation (without regard to employment). The
> populations now suffering under EU-imposed austerity
> must have a real and credible threat to get out - or
> they will end up with indefinite sacrifice for the
> reward of lower living standards.
>
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