Sunday, February 26, 2012

Greece, Spain, Angie and Heinrich

It's nice to see Harald Freiberger und Markus Zydra in the Süddeutsche Zeitung recall that economic depressions can and have had adverse affects on democracies (Griechenland-Krise im historischen Vergleich. Das Gespenst von Weimar 26.02.2012).

The Troika of the IMF, the EU and the ECB (European Central Bank) agreed a week ago on paying the latest tranche of bailout money to Greece, in exchange for more of Angela Merkel's crippling austerity politics, with the absurd aim of reducing Greece's debt-to-GDP ration to 120% by 2020. Greece, Spain, Ireland, Portugal and Italy are all undergoing EU- and bond market-imposed austerity programs of Angienomics, in the middle of a depression when the business cycle is dropping into a new recession in Europe. Others not under immediate pressure are taking less drastic but similar steps, as the Great God Free Market demands its latest sacrifices. Angienomics will shrink their economies, damage millions of lives, worsen their debt ratios and endanger democracy.

Democracy is in abeyance already in Hungary. Greece and Italy are operating under EU-imposed governments whose democratic legitimacy is valid only the most technical of senses, i.e., they went through the motions of parliamentary approval before installing the bank-collectors-agency governments that Angie demanded.

Feiberger and Zydra write:

Die spanische Regierung hat ehrgeizige Sparziele: Experten nennen das eine prozyklische Politik. Sie verstärkt den Trend, und der ist negativ. Die Rezession verschlimmert sich. "Dabei besteht die Gefahr, dass es durch die Abschwächung der Wirtschaft zu geringeren Staatseinnahmen und damit zu einem höheren Defizit als geplant kommt", fürchtet [Ökonom Peter] Bofinger und warnt: "Wenn die spanische Politik gezwungen wird, hierauf mit erneuten Sparmaßnahmen zu reagieren, dann spart sich das Land wirklich kaputt."

Griechenland, so Bofinger, sei diesem Punkt schon viel zu nahe. "Die katastrophale Lage der griechischen Wirtschaft kann nicht primär auf die mangelnde Spar- und Reformbereitschaft Griechenlands zurückgeführt werden", sagt er. Die jetzt beschlossenen Maßnahmen wie die Senkung des Mindestlohns, Rentenkürzungen und die Entlassung von 15.000 Staatsbediensteten würden vielmehr fatal an die Notverordnungspolitik des Reichkanzlers Heinrich Brüning von 1930 bis 1932 am Ende der Weimarer Republik erinnern und die Nachfrageschwäche in Griechenland weiter verschärfen.

[The Spanish government has ambitious savings goals: experts call that a pro-cyclical policy. It strengthens the trend and that is negative. The recession will get worse. "That creates the danger that through the weakening of the economy, there will be less government income and therefore a higher deficit than planned.," fears [economist Peter] Bofinger and warns: "If the Spanish policy is compelled to respond to that with new savings measures, then the country will really save itself to death."

Greece, according to Bofinger, is much to close to that point. "The catastrophic situation of the Greek economy cannot be traced primarily to the insufficient readiness of Greece to save and reform," he says. The currently decided measures like the lowering of the minimum wage, reduction of pensions and the laying off of 15,000 public employees would more recall the emergency-decree policy of Reich Chancellor Heinrich Brüning from 1930 to 1932 at the end of the Weimar Republic, and increase the weakness of economic demand in Greece.]
Political changes immediately following Brüning's Chancellorship are not generally considered to be constructive.

The EU, whose purpose way to secure democracy and peace in Europe, is turning into a nightmare for democracy. In Greece and several others countries, the nightmare is already underway.

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