PARIS -- The good news: Austerity is finally on the defensive. At the Camp David G-8 summit, all the other national leaders pressed German Chancellor Angela Merkel to relent and to allow Europe's ravaged economy to grow.
The bad news: The shift is mainly at the level of rhetoric and token policy changes. Nobody in the political mainstream is seriously proposing the kind of radical reform that would allow growth to occur.
Two weeks of interviews with progressive leaders in Europe -- academics, the left wing of labor and social democratic parties, NGO groups -- suggest a remarkable consensus on what needs to be done. You can see it in any of several manifestos from groups like Social Europe, the European Trade Union Confederation, Re-Define, Foundation for European Progressive Studies, Finance Watch, the British group Compass, among several others.
The elements:
Drastic debt relief for Greece, so that the Greek economy can begin to grow again, coupled with real tax reform in Greece so that wealthy Greeks begin paying taxes owed. This means cancelling a lot of the Greek debt. Yes, the previous Greek government cooked its books, but do you think the government of East Germany didn't? Yet that didn't prevent the West German government from pumping about a trillion dollars into the former communist state. Oh, but these people were Germans, not Greeks.
A makeover of the European Central Bank, so that it can lend directly to European countries, rather than using a subterfuge of low interest rate loans to Europe's commercial banks, which in turn buy government bonds. The problem with the present policy is that it is a house of cards that puts banks more deeply in debt.
Radical constraints on financial speculation, so that hedge funds and banks stop speculating against the bonds of weak countries and start financing the real economy. A combination of regulation and a financial transaction tax could achieve this.
Mutualization of sovereign debt through Euro bonds, so that weak countries are not made to pay exorbitant interest rates to finance crushing debt. This would also take a lot of the profit out of speculation. The behavior of money markets in the European depression is pro-cyclical -- it piles on vulnerable countries and deepens the slump. Government policy needs to be counter-cyclical.
Massive public investment financed at the European level, to improve green infrastructure and create jobs. This is a "supply-side" as well as a "demand-side" program. It improves productivity even as it boosts purchasing power
Suspension of the deficit reduction clause in the Stability and Growth Pact that requires EU member countries to move towards deficit reduction in a deep recession. The pact, in fact, has just such an escape provision, allowing countries to exceed the debt and deficit limits of Europe's Maastricht Treaty, which created the European Union, when they face an economic emergency. But Chancellor Merkel and the European Central Bank have been behaving as if that clause didn't exist, putting pressure on Greece, France, Italy and Spain to cut deficits in a deep slump.
The rhetoric has changed, but how many of these radical policy changes are seriously on the table?
Perhaps two.
European leaders are now talking seriously about cobbling together an investment program of as much as 200 billion euros, using mainly unused regional development funds. The funds haven't been used because peripheral countries such as Greece, Portugal, Spain and Ireland are under such pressure from the same EU to cut spending that they can't come up with the necessary national matching funds. These investment funds though not large enough to pull Europe out of its incipient depression; but if targeted at small countries, they could make a constructive difference.
There is also serious talk, belatedly, about suspending the austerity provisions in the EU's 1997 Stablity and Growth Pact, as embellished by the austerity compact agreed to by 25 European governments last December.
But because of the general conservatism of most European leaders, there is no agreement on the more radical and necessary measures.
There is little support for Euro-bonds, little support for converting the ECB to a true central bank, and not quite enough support for a financial transactions tax.
A financial transactions tax could do double duty. It could take a lot of the profit out of speculation against sovereign bonds -- and also raise revenue needed for public investment. But though most European national governments now favor such a tax, it would be difficult to implement without cooperation of the two biggest money centers, namely Britain and the U.S., whose governments remain opposed.
So while Greece is right on the razor's edge of default, and may yet be granted some overdue relief, the prospects for broader European recovery are still very bleak until the politics get a lot more radical.
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.
"State Domination Replaces, Yet Represents, the Leading Group's Hegemony in Passive Revolutions: Gramsci: "The important thing is to analyse more profoundly the significance of a 'Piedmont'-type function in passive revolutions -- i.e. the fact that a State replaces the local social groups in leading a struggle of renewal. It is one of the cases in which these groups have the function of 'domination' without that of 'leadership': dictatorship without hegemony. The hegemony will be exericesed by a part of the social group over the entire group, and not by the latter over other forces..."
Former Republican gubernatorial candidate Tim James said the money in the trust fund should be used for its intended purpose — to help future generations.
"There's not much difference between the Alabama politicians and your Greek politicians," James said, referring to the European country's debt crisis. "Same politicians, just different continent. Instead of looking adversity in the eye, just robbing future generations."
versus
State Health Officer Donald Williams said failure of the constitutional amendment would wipe out about 10 percent of the revenue for state agencies. "I simply don't think it's going to be possible to build a Medicaid budget with a 10 percent reduction ----
"I think you are then beginning to see the dangers we're talking about, which is doctors leaving, hospitals closing, patients on Medicaid in nursing homes no longer being able to be maintained in the nursing homes," he said. "And then it's not just a problem with Medicaid, it's become a problem with the whole health care system."
Th west as China buys USA debt directly from Treasury instead of through Wall St
Today, the government is poised to implement an integration action plan aimed at ... in the period 1955-1973 Germany absorbed 603300 Greek migrants, Australia 170700, ...
The Greek people are one of the hardest working on earth
Errr, yeah, right. They were unifying a country. There were a lot of problems in the unification based on some corrupt business practices, but the Germans sucked it up and paid (and are still paying) a unification tax. You see the difference? The Germans are paying to unite THEIR country. The Greeks were suppose to come to the table ready to join the game fairly. They lied. Germans put their house in order---unified a country and propped up the Euro. What more do you want? The Greeks need to put the house in order in order to get help. Simple.
This day of reckoning has been steadily heading their way for 50 years - and the crap is finally getting ready to hit the fan. Kuttner's right about this: European austerity and significant economic growth are two opposing forces. But given the hole the Europeans have put themselves in, they've run out of wiggle room - there's nowhere that will begin solve the two headed problem of deficit and economic growth left to turn.
They can, if they choose to, borrow more today to temporarily stave off disaster but when the disaster comes, as it surely will, the economic and human costs will be absolutely titanic.
Chinas money is involved here but who is to say Greece will not do a deal with China -- but wiil they give up their perceived loss of freedom in this geo political place in the history of the Ottoman, WW2, their own torture of their own post WW2 , loss of royal family, their orthodoxy and their trump card like turkey --a christian wall on an upheaving islamic front
Greek response repeatedley points to nationalism of Germany to rule and middle line of Greece says Greece with 350 billion deficit will not have money in one month
Return to 1920,s with people dead on street--
What about Germany post 1918 and 1945 say Greeks.
See this excellent argument of open forum on Australias (wait for video to be posted but see summation --live now
http://www.sbs.com.au/insight/episode/overview/477/Exit-Greece
Despite tough opposition from Germany, French president Francois Hollande is expected to revisit the idea of Eurobonds at the EU Summit later this week. Hollande is pushing Eurobonds as a way to propel economic growth, but a German official has insisted that the proposal is “the wrong prescription at the wrong time”.
http://www.sbs.com.au/insight/episode/transcript/477/Exit-Greece
This is the only way for our global crisis to exist but fortunately it also gives us our key indicator for how we can exit it: By reforming our relationships. Because our global economy is interconnected and interdependent it means that mutually responsible relationships are needed for equilibrium to be achieved.
But because fundamental changes don’t usually come from governments, or from economists or corporations, we need to look to ourselves. We need to become an educated global populace. We need to listen to the scientists, to study how we are today globally connected and interdependent.
Only then will we have the proper mindset to begin fixing the global economy by the global populace becoming educated about the true state of our world. Growth is not the answer. In fact, eventually growth must end and we must become a globally sustainable species. The crisis is rooted in how we relate to one another. This is where our efforts should be focused chiefly.
What we've learned is that you (Ultrabrite) are listening to really bad sources. But I suspect deep down you already knew that.
Greece and the other troubled countries could only do something similar in similar circumstances: when massive spending abroad makes up for the consequences of local austerity to the national economy. But one of the problems is that Germany - despite the lessons of its own success - refuses pointblank to create such a situation. Without the compensating effects of external demand, austerity just leads to recession and deflation, increasing the debt/GDP ratio instead of reducing debt. This is why the reforms Greece was pushed to enact by the Merkozy duo have only made the situation worse. Much worse.
In short, austerity in the PIIGS only makes sense if there is a corresponding level of stimulus spending in Germany and other countries which can afford it. If everybody tightens the belt at the same time, which is what the Germans are insisting on, the result is recession - or worse. Even in Germany.
That's right 'were able to' and not 'were compelled to'. Who's fault is it that they borrowed?
In German Austerity will hit the old, the retired, the savers, the middle class. Their purchasing power will be taken from them in the form of inflation. They will be told they are saving Europe. When all they are doing is being robbed to support failed socialist states. When you are 75 and the government inflates the value of your life savings away there is nothing you can do to get it back.
Europes problems is that they believe they haven't run out of other peoples money yet. Obama will secretly lend them more from the fed discount window and they will steal the value of the German savers.
Why would Obama support this? He can't have the EU fall apart before his re-election. To him it's all about winning 4 more years...nothing else matters.
Translation, I want to be as athletic as LeBron James, but I prefer to lay on the couch and eat chips all day.
Give them a break! I don't know how the economic tale will end, but I do have some confidence that the political vacuum will be filled. Elections are still won in the center, as Obama and Hollande proved, and sooner or later Greece will have new moderates, untainted by the failed policies of the past, rising to power.