Well it looks as if my fears are coming to fruition, we now have the fiscal conservatives in the driving seat in the main power and economic centers of Europe.
France, Germany, United Kingdom, and Italy all have conservative governments with Spain for the time being the odd one out and in real trouble.
The mantra of the day now appears to be cut everything a la Maggie Thatcher. I can see what remains of the public sector industries being sold off as governments struggle to fill their coffers.
Now for many on the right this is a dream come true after decades of stifling the power of the unions they can expect little real resistance. The first target will be the public sector and its services. I haven't seen any major calls for strict progressive taxation so far.
Rises in such taxation tools such as VAT [value added tax/sales tax] disproportionately effect those least able to pay, it is at present running around 20% on average.
This sudden mad dash to appear more frugal than thy neighbor may well throttle what little recovery there is at present. Talk of splitting Europe into haves and have nots, rather than progressively driving it towards the obvious solution of a Federal Europe is increasing.
Splitting up Europe would be a disaster of global proportions, old barriers would be imposed and the collective bargaining via our currency [which the British have always disdained] would cease. We can be a world player when 450 million innovative and creative people work together, this was the dream, rather than turning the soil into a battlefield, that was so often a feature of the past.
This dream was based on social democratic principles that now appear to be being written off as too expensive and making us uncompetitive. This is conservative speak for lets cut wages and social programs.
The UK has seen a rift widening between rich and poor similar to that in the US, this under a so called Labour government that took more from Mrs Thatcher than it ever did from its founding unions.
Europe has lost its way by adopting these policies, the time is for more social cohesion rather than savage cuts, wise spending is needed to keep the momentum going. However the mood is panic, and severe cuts and resulting social unrest are on the cards.
If this program goes ahead most sane economists are predicting a double dip recession, this would once again empty the public coffers and cause more cuts. The final maneuver will be then to raise taxes, at exactly the wrong time.
The time to raise taxes is now and funnel this extra revenue into programs that employ more people who in turn generate more revenue. Europe has unemployment rates that make the US figures appear good especially amongst the 18-30 portion of the population where it can be as high as 30%. What a damn waste.
We need more work, not more cuts, yet conservatives are leading us down a road that will take decades to recover from.
But to suggest there is international consensus is way wide of the mark. Across the Atlantic there is, in some quarters, dismay that EU governments are now taking action in direct contradiction to the approach that the G20 settled upon at the height of the global economic crisis.
Last week the message from the US Treasury department was clear: too much austerity, too fast, could damage the word's fragile economic recovery. Treasury officials circulated comments made by the US treasury secretary, Timothy Geithner, at last weekend's G20 meeting. Geithner had made clear that the US did not want to see big European countries, such as Germany, slashing spending too much lest it damage domestic demand. "The core nations of Europe, the strongest, richest countries in Europe, [should] keep active to help support recovery," Geithner said.
http://www.guardian.co.uk/...
I rarely agree with Geithner, and probably we have very divergent views how we should spend, but to cut hard now is madness.
Let the Euro fall, drive exports, increase infrastructure investment, raise taxes progressively and increase revenue. By all means cut out real waste. but don't twirl an axe blindly. If needed cut VAT to free up money amongst those who really need it and improve their conditions. Job creation not cuts, will increase revenue.
Does nobody read about the great depression any more? Were no lessons learned? Do we have to have another one just to remember? I seem to remember somewhere Europe having a little problem that kicked off in 1938. I suppose you could argue that little conflagration got us out of the last one definitively, but who wants that all over again?
So European conservatives please stop panicking, our economies cannot be related to household budgets, the wealth is in the people and the very earth we live on, and not in the checking account.
Update:
Well I got in from walking the dogs and this is on the wreck list. I am pleasantly surprised. Its just a simple point of view and not being an economist a relatively limited one. I was just beginning to see some pick up over here, then they announce austerity plans. In my humble opinion wanting economic growth and then imposing austerity is counterintuitive. We all know who ends up footing the bill however when cuts are called for.