When Austerity Meets Reality

HAMISH_MCTAVISH

With all the focus on abstract economic theories, much is forgotten about reality.

Political reality in particular.

Austerity without growth was never going to be politically sustainable. And that which is unsustainable, cannot be sustained.

Hollande promised this week to stand up to Merkel in demanding "an end to the austerity that has brought desperation to people throughout Europe.

"Germany does not make decisions for the whole of Europe (and) Germany must realise that it is growth that will allow us to solve a big part of our problems.

Hollande's call for a greater focus on promoting growth is a rallying cry that is already winning sympathy from neighbours such as Italy, Spain, Belgium and Austria, as well as strugglers such as Ireland, Portugal and Greece.
.

And lest we forget just how much more is at stake than a paltry few percent on some investment return somewhere.

In the first round of France's presidential election two weeks ago, 29 per cent of voters went for the National Front's Marine Le Pen or communist-backed Jean-Luc Melenchon, both of whom oppose not just austerity but open markets and the EU itself.

Greece's election will see record votes for the far Left and a collection of xenophobic nationalist parties including Golden Dawn, a group which boasts fascist salutes and a swastika-like emblem.

This backlash against austerity and resort to hard-line nationalist parties reflects a crisis of political legitimacy in Europe which is not isolated to France and Greece.

All starting to sound a tad too familiar....


http://www.theaustralian.com.au/news/world/bitter-pill-europeans-wont-take/story-e6frg6ux-1226347229072

Graham_Devon

Hamish backs up the socialist view.

There's a first! Just don't bring socialism here eh Hamish?

HAMISH_MCTAVISH

Graham_Devon wrote: »

Hamish backs up the [STRIKE]socialist[/STRIKE] realist view.

Fixed that for you....

There comes a point when austerity without growth is politically unsustainable.

In large parts of Europe, that point has been reached.

I've posted on this topic extensively in the past, and you don't have to support socialism to see that growth is a vital part of the equation.

And remind me again, what happened last time large parts of Europe suffered through a depression, and then fringe parties with flags similar to this one started getting votes....

Graham_Devon

I realise you have posted the same thing extensively Hamish.

The nazi thing is a relatively new addition, presumably to add substance to the previous attempts at getting the point across?

michaels

Just like the BBC take:
http://www.bbc.co.uk/news/business-17980926

No mention of the fact that if you spend more than you receive then you have to borrow which means you need someone willing to lend to you which means there is a limit to how much more you can spend than you receive in tax. Ignore this 'little' problem and ending austerity sounds like a great idea.

Generali

If you wouldn't advise your mother to buy Greek Government bonds as an investment then you have to accept that austerity isn't a choice.

Mr_Mumble

A reality where government spending being 25% higher than government receipts is viable? Hmm.

I'd be far more worried about the French gives 18% of the popular vote to neo-nazis than 7% of Greeks.

Congrats to Graham on being quickly vindicated with regards the grand Merkosy deal. Dead in the water - despite all the nonsensical talk of Britain being isolated - the Greek and French electorates said no yesterday, the Dutch government fell a few weeks back because of its demands and the Czech republic and other eastern European countries always paid lip-service to the deal.

For anyone wanting a reminder of the media beating Cameron got for his last decent decision stick "isolated Britain bbc" or "isolated Britain guardian" into google.

CLAPTON

Generali wrote: »

If you wouldn't advise your mother to buy Greek Government bonds as an investment then you have to accept that austerity isn't a choice.

many choices

leave the euro

default on debts

millions emigrate to UK

just to think of a few

Graham_Devon

Innocent question as I have no idea....

Various people, mainly those who want to see this happen to help out property prices etc, suggest many of the french caught out by one particular tax (increase on those earning €1.3m or more) will arrive in London.

Why would they choose the UK over all the other surrounding countries?

Generali

Graham_Devon wrote: »

Innocent question as I have no idea....

Various people, mainly those who want to see this happen to help out property prices etc, suggest many of the french caught out by one particular tax (increase on those earning €1.3m or more) will arrive in London.

Why would they choose the UK over all the other surrounding countries?

Because any European that takes his career seriously will have fluent English.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

With all the focus on abstract economic theories, much is forgotten about reality....

Austerity without growth was never going to be politically sustainable. And that which is unsustainable, cannot be sustained.

Your business is failing. £1million of assets 5 years ago has been whittled down to £100K, which only exists because you have penny-pinched and squeezed your costs for the last 2 years.

Possibly, just possibly, a clever investment of your last £100K into new innovations or plant or equipment may well save the day.....

My business is also failing. £1million of assets 5 years ago have all gone, and in fact I'm already £500K 'into the bank', for which I'm having to pay crippling interest.

In my case, it's academic whether £100K investment would help, because I do not have a cat's chance in hell of getting it, or paying the interest on it. I either admit defeat and go bankrupt, or try avidly to halve my costs while retaining, say, 60% of my turnover. Severe austerity. Hobson's choice, really.

That's reality.