Bezuinigingen veroorzaken recessie

Austerity
Hugo Freutel

De bezuinigingen van het huidige kabinet zijn klaarblijkelijk bedoeld om de sociale welvaartsstaat af te breken en met de grond gelijk te maken. Ik kan er niets anders van maken. Met open ogen stuurden Rutte, Samsom en Asscher naar een catastrofe toe. Als het al hun bedoeling was om de kosten voor staatsleningen te drukken door het verlagen van het Nederlands begrotingstekort en daardoor een lage rente te verkrijgen voor staatsleningen door positieve kredietbeoordelingen van de grote kredietbeoordelaars, dan is ook dat finaal mislukt. Nederland betaalde een tijd geleden heel weinig voor zijn leningen. Dat zal gauw veranderen. Het begrotingstekort is nu 3,6 %. We hebben 600.000 werklozen. De bezuinigingen zijn een gigantische mislukking. De kabinetten Rutte hebben het geld over de balk gegooid en daarbij onze economie en maatschappij diepgaand ontwricht. Fatsoenlijke politici zouden nu hun ontslag indienen. Maar dat doen ze natuurlijk niet. Daarom is mijn conclusie dat dit resultaat de doelstelling was waar men naartoe werkte, de afbraak van de welvaartstaat. Rutte breekt records.

In Europa wordt de ellende steeds groter. De bevolking moet opdraaien voor de onbetaalbare leningen verleend door de Europese en buitenlandse banken. Die banken hebben geld uitgeleend dat ze niet eens hadden. Dus om een fictie in stand te houden worden de realiteit geweld aangedaan.

FinancialTimes: "The economic slowdown that has shaken the eurozone’s periphery will continue to bleed into the currency bloc’s core this year, with France and Germany barely growing, according to highly anticipated forecasts published on Friday by the European Commission.

The deepening recession will hit particularly hard in countries that have required EU financial assistance, particularly Greece, Spain and Portugal, which are expected to suffer deeper recessions this year and barely return to growth next year, according to the new forecasts."

Adbusters: "The first act of the European tragedy is over: debt has taken the central place in the material constitution of the Eurozone, ushering in the triumphant dismantling of democracy and the impoverishment of social life.

The second act of the European tragedy now begins: the fracturing of national states, the rise of anti-German hatred, the growth of fascist parties in Greece, Italy, Hungary, Finland and elsewhere."

Voxeu: "Eurozone policy seems driven by market sentiment. This column argues that fear and panic led to excessive, and possibly self-defeating, austerity in the south while failing to induce offsetting stimulus in the north. The resulting deflation bias produced the double-dip recession and perhaps more dire consequences. As it becomes obvious that austerity produces unnecessary suffering, millions may seek liberation from ‘euro shackles’.

There is a strong perception that countries that introduced austerity programs in the Eurozone were somehow forced to do so by the financial markets.

Three conclusions can be drawn from the previous analysis.

    Since the start of the debt crisis financial markets have provided wrong signals; led by fear and panic, they pushed the spreads to artificially high levels and forced cash-strapped nations into intense austerity that produced great suffering.

They also gave these wrong signals to the European authorities, in particular the European Commission that went on a crusade trying to enforce more austerity.

Thus financial markets acquired great power in that they spread panic into the world of the European authorities that translated the market panic into enforcing excessive austerity. While the ECB finally acted in September 2012, it can also be argued that had it acted earlier much of the panic in the markets may not have occurred and the excessive austerity programs may have been avoided.

    Panic and fear are not good guides for economic policies.

These sentiments have forced southern EZ countries into quick and intense austerity that not only led to deep recessions, but also up to now, did not help to restore sustainability of public finances. On the contrary, the same austerity measures led to dramatic increases of the debt-to-GDP ratios in southern countries, thereby weakening their capacity to service their debts.

In order to avoid misunderstanding, we are not saying that southern European countries will not have to go through austerity so as to return to sustainable government finances. They will have to do so. What we are claiming is that the timing and the intensity of the austerity programs have been dictated too much by market sentiments of fear and panic instead of being the outcome of rational decision-making processes.

    Financial markets did not signal northern countries to stimulate their economies, thus introducing a deflationary bias that lead to the double-dip recession.

As it becomes obvious that the austerity programs produce unnecessary sufferings especially for the millions of people who have been thrown into unemployment and poverty, resistance against these programs is likely to increase. A resistance that may lead millions of people to wish to be liberated from what they perceive to be shackles imposed by the euro."

More evidence that financial markets imposed excessive austerity in the eurozone

Paul Krugman neemt zijn hoed af voor die andere Paul - Paul De Grauwe and the Rehn of Terror - NYTimes.com 

Beurs: "Wordt verwacht: nulgroei voor de komende decennia"

Het hele probleem van schulden is een fictief probleem. Het komt neer op het ondersteunen van de financiële wereld, dus de banken, die met miljarden werken en miljarden uitlenen, maar die miljarden niet in huis hebben, want alle banken zijn per definitie insolvent (vandaar dus de huidige problemen in de bankwereld) eenvoudig omdat ze nog geen 10% van het geld waarmee ze handelen, lenen en speculeren, werkelijk in huis hebben.

greece-debt-crisis

AlienatedLeft: "The supposedly hard-headed and realistic analysis of our current situation is that we are doomed to higher taxes and cut services until we can pay off our debts; and that no action by government can change this fact. This is the version of reality that suits the people who caused the crisis – big banks, hedge funds, billionaire speculators. It also suits the big parties in government who get donations to party funds from them.

So the people who caused the problem get to keep on getting big bail-outs at taxpayers’ expense while being able to avoid paying most tax themselves through tax havens and multinational corporate structures.

We are not dealing with a hard unchangeable reality, but with the confused idea that money and debt exist anywhere but in our heads. Banks can and do create money out of nothing as debt simply by issuing a loan or mortgage. Governments can create it out of nothing by printing it or by issuing loans or grants. These are the two main ways it has come into circulation for at least a century. Similarly lenders can “write off” some or all of a debt and it instantly vanishes.

Governments printing money and issuing it as grants, or zero interest loans or low interest loans is no different from private banks issuing it as loans or mortgages, other than that government can take into account aims in lending other than it’s own fairly short term profit. It can consider what investments are important to develop our economy and society, reduce poverty or reduce environmental damage over the long term.

The usual scare story you will hear at this point is that if we print money it will cause hyper-inflation. It could, if you printed an amazing amount of it, but in reality hyper-inflation has pretty much never happened unless a country is also under economic sanctions (e.g Zimbabwe) or under occupation and with a large part of it’s economic output going to other countries after defeat in a war (e.g Germany after World War I when France occupied the Rhur valley and all steel and coal from there went to France).

Studies done by the IMF and cited by Chang show no fall in growth rate from inflation until it reaches at least 8% per year, while less conservative studies put the rate at 20%.

While inflation devalues money it also devalues any debt, as debt is denominated in money – so the higher inflation is the faster debt shrinks; and that is why banks and other lenders want low inflation. The British and American governments are heavily in the pockets of banks and hedge funds who are major donors to the party funds of all the main parties.

Australian economics Professor Steve Keen has also shown that a major cause of the financial crisis is most money having been created as debt by private banks, with a recession resulting when the amount of debt issued is so great that the debtors can no longer repay it and the lenders will no longer issue new loans or forgive it, resulting in a crisis of confidence among both consumers and lenders. He suggests government printing money and giving it to debtors to pay off their debts. This would certainly solve the immediate crisis, but it wouldn’t stop the cycle starting all over again.

Only nationalised banks printing money and issuing it as grants and low or zero interest loans can do that. Of course it would still be unwise to issue infinite amounts of money without any checks on whether money issued as a loan or grant will increase government revenues or reduce it’s costs in future. So government controlled banks, after helping debtors pay off their debts and paying off it’s own debts by printing money, would have to ensure that some of it’s loans were issued to get a return, while others would be issued as grants for purposes other than getting a financial return, with the former funding the latter in the long term.

Every time you are told that we just have to face up to the reality that we and our grandchildren will have to pay off our current debts and suffer for the actions of the banks, you are being lied to and fed the line those banks want you to believe. Don’t believe it – and tell others the truth."

© 2009