[Closed] With austerity biting hard across Europe....

Both.

Normally a good war will sort it out.
Lets hope there is a plan b.
It will probably involve the Chinese coming to the rescue and Europe bending over.

Eventually they will realise that austerity cannot fix the problem and begin a systematic default on their debts, but not until things have got a lot worse and it becomes blatantly obvious to everyone that cutting spending does not encourage growth.

Default is going to be worse than austerity. It's not as if they can just refuse to pay debts then carry on as normal. They'll have huge problems if they go down that route.

doesnt matter whos the first IMHO
its everyones problem in the eurozone because of the single currency

stepping back I see it exactly the same as the structural adjustment programs the IMF/world bank inflicted on most of africa and a lot of s and central america in the 70s and 80s
and we just looked on and thought it would never happen to us
we ve been conned into thinking default would be worse i think jonba
look at what happened to argentia when it defaulted
everyone on the streets, 2 months of not knowing how much anything was worth
but the upshot was that people still went to work and in fact kicked out their bosses and told the shareholders to stuff it (basically they took back the means of production (which sounds a bit marxist doesnt it))... the people neutralised their personal debts (remember the uk average of 50K debt per person) and within 6 months the govt was borrowing on the world markets for a fair bit less than they were previous to the crisis.
who lost out
management
shareholders
corperate types in general... and its them who got us into this mess in the first place, and deliberatly securitzed themselves into a commanding position post the 2008 'liquidity' crisis, cunningly shifting what was in fact a real solvency crisis to the governments and thus citizens to bail out with years of austertiy...

check out http://www.golemxiv.co.uk/ (he is a guardian journo and its where he publishes the stuff the newspaper wont print for fear of no bank ever placing an ad again)

I live in france an am well scared of marie le pen and the right getting a say but TBH the political class have their hands tied atm

so its transitional 'technocratic' government for the worst half and more and more taxes, higher prices and reduced services for the rest

Its not on the news at all but I have good info from friends in greece that there are increasing numbers of young people squatting agricultural land and taking over businesses while the political class talk about an orderly default(!)

the IMF dont want 'explosions' at all
nor do the people (sadly as i belive it would help the average person)
we ll just have a massive rift between those who can afford to carry on and those who cant

ok rant over
someone tell me im wrong and it not happening please

good thoughts jimsmith, (my gf is a regular on golumxiv), sadly I can't offer any reassurance.

I'm intrigued to see how it plays out... but I can't help but think that the growing chasm between have and have nots will create so much anger and resentment that something will kick off.

Eventually they will realise that austerity cannot fix the problem and begin a systematic default on their debts, but not until things have got a lot worse and it becomes blatantly obvious to everyone that cutting spending does not encourage growth.

Yup, Argentina didn't abandon austerity until 10 years ago when it got to the point when they were forced to register the largest sovereign default in history. They then went on a tax and spending spree and their economy has been growing every since - allowing them to pay their outstanding IMF debt off 6 years ago.

In 2011 Argentina, along with China, had the fastest growing economy in the world - both economies grew 9.2%.

But keep that information under your hat, the British public isn't suppose to know - apparently there is no alternative to austerity. Even though austerity hasn't worked in Greece, Spain, and Ireland, and it isn't working here.

So trust Double-Dip Osborne, not me.

e_l 😉

[FT Oct 20 - Editorial]

hurty 😉

[Morning Star Oct 19 - Editorial]

I couldn't find the 19th (was that a joke?) but found articles around the same date.

Ok, an "interesting" perspective, so I can only hope that the FT is right now that "I'm (recently) out." 😉

good morning star editorial E_L (you meant the 10th right?)
I dont get over to their site enough (the memorys of SWP idiots when i was in college kinda haunts with me)

prior to WW2 unions and workers fought long and hard for the rights we have today... i feel they might be about to be totally dismantled
and the threat of the resurgence of the right is in someways real
but in europe is being used as the threat to hold the EU together
when in fact it is just a way to shaft us more

anyone come across the setting up of the EU wide riot police?
they sent belgian riot squads into athens to do the real shit kicking
bit like with the miners strike when they shipped the MET and others southern forces in

I suspect the coming conflict in Iran will be a pivot point globally for china india and russia to shun the dollar and form new bi and multi lateral alliances without using the dollar as the currency of exchange
thus the end of the dollar as the reserve currency of the world is nigh (!)

we will be told its those pesky greeks with their long lunch breaks and months of holidays, retiring at 55 and all that

I think generally its sad that people no immediately in the crosshairs dont give two hoots, in fact they are blaming those in the mire like the greeks and the rest of the PIIGS

I know its a bike website but the threat of withdrawl of shiny things for the masses could be hard

where are they and their 'opinions'

Sorry hurty, I meant January 19.

http://newsnetscotland.com/index.php/scottish-news/3057-a-story-missing-from-our-media-icelands-on-going-revolution

I dont get over to their site enough (the memorys of SWP idiots when i was in college kinda haunts with me)

I don't think the SWP idiots were selling the Morning Star 😀

It will be a funny day when trots are backing a "stalinist" paper read by working class lefties.

that article is a good summary of iceland jonah tonto

I think the problem the finacial elite and the political class fear is that single countries suddenly defaulting can be sucked up

but the euro and the dollar are seen as too big to fail (individual countries are nt tho)

although its inevitable i think in the long run

just timescale and how 'orderly' the default is

for orderly default i substitute fire sale

yeah dunno why i have that association TBH
I guess they didnt really know what they were talking about and nor did i 😯

Surely the people who are owed money by Argentina want it back now they are flush again.
It can't be good for anyone to live beyond their means,get into trouble and then tell their creditors to poke it. Isn't that what happened in Florida and kicked this whole mess off?

its all we deserve for our colective complacancy.

From that Iceland article.

In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent

and

Geir Haarde, the Prime Minister of a Social Democratic coalition government, negotiated a two million one hundred thousand dollar loan

[img] [/img]

Such figures don't give me much faith in the veracity of the article. That said, Iceland has been off the radar for a while, so I need to go and educate myself a bit.

re: zippykona

thats bankruptcy/default for you
common as you like and considered normal for business owners worldwide, liquidate your assests, fire the workforce and wipe the slate

problem is its not the populous generally who are doing the 'living beyond their means' its the financial institutions backed by the state who deregulated too far and now the biggest fish are eating nations as they ve run out of small fish to fry

what we ve all done however which is different to iceland and argentina is ignore the resource problems which i would argue underpin this whole sorry mess

weve hit peak oil (and peak metals and other natural resources)

the oil co.s want to reduce demand because they cant supply

and the banks have realised we cant take more debt, we ve all got a car 2 phones 50K of loans and mortgages etcetc

they want out, and to take their money to china, india russia ... places where there is growth to be had an very poor social and environmental legislation/bodies etc

so at the end of all that what we have had is an economy based on growth but backed by debt.

and in reality an economy of decline and a debt spiral we cant get out of...

anyone got a paddle???

ianmunro
they got the numbers a bit wrong in the article... not unusual in the banking game 🙂

lawmanmx
yes we deserve it, but they deserve it more but we get lumped with it all?
I agree the complacency is shocking but it has been made v v v complicated (for instance with securitzation) and i suspect the economists are about to realise their models dont work any more (no that they ever correlated very well anyway)

Surely the people who are owed money by Argentina want it back now they are flush again.
It can't be good for anyone to live beyond their means,get into trouble and then tell their creditors to poke it.

Argentina [i]has[/i] been paying off its debts, I've already pointed out that 6 years ago it paid off fully its IMF debts. It simply couldn't pay its debts when nearly 20% of its working population was unemployed, obviously. So they went on a tax and spending spree and got people back to work. The Tories however seem to think that making people unemployed is a good way to generate wealth and cut costs. Today Argentina has lower levels of unemployment than Britain.

And it wasn't a question of them 'living beyond their means' btw. On the contrary, it was cutting back spending and austerity which got them in the debt mess (including also like Greece pegging their currency to another one, which why Argentina advises Greece to tell the EU to get stuffed)

'Telling their creditors to poke it' was the best thing Argentina did. Unfortunately they waited until the banks were forced to close their doors, almost a fifth of the working population was out of work, over a third of the population was living in poverty, and children were dying every week of starvation in one of the most fertile and underpopulated country on earth.

You make it sound as though defaulting was a blessing for the Argentines.

No mention of savers being wiped out, chronic unemployment, crime rates soared, FDI disappearing overnight... Protests, demonstrations, violence, riots, etc, etc... Yes - AFTER the default.

Not only foreign creditors lost, savings in local banks got frozen, converted from dollars to pesos and devalued by more than 75%. Pensions and retirement savings wiped out overnight. Poverty rates (ie, those who could not afford to eat, not those who only had one TV) through the roof.

At the end of the day Argentina is a tin-pot country. It didn't have much to lose by defaulting. What's the worse that could of happened? It became even more of a tinpot country!?

e_l [b]you can present a far better argument[/b] against austerity, a misunderstanding that the € issue is a deficit-caused issue, the absurdity of the current German proposals and UK's over reliance on monetary policy than resorting to Argentina's voodoo economics.

Do you really want the UK to steal from its creditors, from its own people and to continue to lie about inflation statistics to ensure that people continue to robbed? Do you want all our savings to be wiped out in a flash? And do you think we will be bailed out by a dramatic increase in one of our main exporting goods (soya)?

Argentina is a great case study about the dangers of what could happen to the banks in the PIGS, but hardly a model of economics.

Dig a little deeper into what happened when the banks collapsed and what happened to savings. You will then understand why Argentines wrote murders on the walls of banks in BA. I will sent you some pictures if you like.

I gotta be out...but...
but my partner was living there when they defaulted and her impression was somewhat different
how do you define tinpot? have you been? many are surprised i might add...

Back to the OP - if the front page of the FT is correct, Greece will see far more severe social unrest and this could well trigger the same in other PIGS.

Lots of people screwed Greece - their own government, the financial system, the Germans etc - and I find it inconceivable that the population will let outsiders take complete control of their economy.

Its a beautiful country with fantastic cities, amazing hotels, beef, wine and countryside but that has come at a devastating cost.

And for an alternative view on Argentina's recent economic policies. The FT:

When is austerity not austerity? When the country in question is Argentina.
The government has long described inflation, for example – a phenomenon now running at 23 per cent according to private economists, who the government has fined for misinformation – as mere “price tensions”.
Its new decision to start eliminating subsidies to residential utilities bills is expressed as “solidarity” with the lowest income groups and as one more step towards better income distribution, a stated aim of the government of Cristina Fernández.

But what such obfuscation seeks to conceal, some say, is that for all its abhorrence of the International Monetary Fund and the recommendations the lender tends to dish out to profligate governments in overheating economies, Argentina’s government is quietly applying an IMF-style “adjustment”.

The very word in Spanish – ajuste – sends shivers down the spines of a population with long experience of crisis but that has, in the last eight years, got rather used to heady economic growth, a free-spending government and pay rises that have fuelled a consumer boom in things like cars and plasma TVs.

[b]And yet, critics note slyly, look at what the government has done in the window between Fernández’s landslide re-election and her inauguration for a second term on December 10.
[/b]

[b]There has been a rash of announcements to cut subsidies and talk of limiting pay rises. Foreign exchange controls have been imposed to try to stem rampant capital flight. Interest rates have shot up to help support the exchange rate amid devaluation tensions.
[/b]
As Claudio Loser, the IMF’s former Western Hemisphere chief, told Clarín newspaper (which, it must be said, is an arch critic of the government):

"Adding it all up, it looks like a fairly orthodox position, similar to what we would have recommended in the Fund years ago. It is part of what I’d call a classic Fund programme."

Ouch. Argentina wants to be praised for its bold, unorthodox economic model which it says delivers growth and jobs, [b]not a tried, tested and, it says, broken prescription for recession-inducing austerity, unemployment and misery [/b](like Greece is being told to apply, it says).

 

I see it exactly the same as the structural adjustment programs the IMF/world bank inflicted on most of africa and a lot of s and central america in the 70s and 80s
and we just looked on and thought it would never happen to us

teamhurtmore - Member

.....some say......And yet, critics note.......is an arch critic of the government

Yeah, yeah, yeah.........her opponents slag her off. Surprise surprise, the neoliberals don't like her. And of course it's got nothing to do with the fact that she is, and has been, proving them wrong.

Yes, inflation is relatively high. Which nicely nails the neoliberal/Thatcherite lie that the most important issue for a healthy economy is low inflation. High unemployment, contrary to what Tory chancellors like to tell us, is not "a price worth paying" for low inflation. And the Kirchners have also firmly nailed the neoliberal/Thatcherite lie that tax and spending is bad for an economy. How embarrassing for the neoliberal/Thatcherite myth-makers.

For the last 10 years the neoliberals have constantly been predicting that the Argentine economy is heading for the rocks and that very soon everything will unravel. They will continue no doubt to do so for the next 10 years. And yet all their predictions have been proved to have been false. Indeed it is the [i]neoliberal economies[/i] which have gone tits up......... Big Time.

I am not offering Argentina up as an example of an "economic miracle", there is no such thing as an economic miracle, despite the fondness capitalism's cheerleaders to constantly offer us examples of "economic miracles", which btw always end up in tears.....remember the economic miracles which were Greece, Italy, Japan, Ireland, Iceland, etc ?

Argentina [i]will[/i] have problems in the future, it is still fundamentally a capitalist country, and capitalism is always fundamentally flawed - however much you tinker with it.

But its priorities have now irreversibly changed, and changed in a meaningful way which affects people's life's. Never again will they return to the nightmare and mess which was left by the neoliberals.

And neoliberalism isn't just finished in Argentina but also throughout Latin American which suffered so much as a result of the early neoliberal experiment. The Chicago economists are no longer welcomed in Latin America, and Washington no longer has the power to enforce brutal and inhumane economic policies through brutal and inhumane military juntas.

The Argentine electorate supports Cristina Kirchner because she and her husband got real results which affect real people - including slashing unemployment and poverty. And her support is huge, with over half of voters choosing her as their first choice 12 weeks ago. She received more than 3 times the support of her nearest rival - the sort of support which most western leaders can only dream of.

And the reason for that level of support is clear, because unlike the British electorate the Argentine electorate knows not only what they are voting against, but also what they are vote for. TINA no longer exists in Latin America.

Wealthy Argentines however despise her, so expect to hear plenty of bad-mouthing about her and her government's policies in the right-wing press. Although ironically Rupert Murdoch's Sun newspaper gave her what I thought was a rather fair analysis, not quite what I expected from the Son :

http://www.thesun.co.uk/sol/homepage/features/article4074118.ece

BTW take my comments as coming from someone who has always been anti-Peronist believing Peron to have been nothing more than a quasi-fascist. But I can't however deny the stunning success the Kirchners have had in saving Argentina from the neoliberl nightmare, not that they had much choice mind. And of course their policies couldn't be more opposed to those of Carlos Menem - a truly vile Peronist.

And oh btw hurty, the FT doesn't like its paywall to be circumvented - quality journalism costs money. So I'm surprised you have such a callous attitude and are prepared to undermine a company which relies solely on providing specialised journalism. Do you have no respect for their need to make a profit ? They are not a charity you know.

Wow, Ernie this is a serious love vest! Two quotes spring to mind - " But love is blind and lovers cannot see." ( the good bard) and more universally, "your analysis has more holes than a string vest."

Remember when the UK did the same thing, we had to introduce prices and incomes policies and they didn't work and workers correctly argued for reall increases in wages.....miners strike....economic collapse.

But Argentina is much more deceitful. They simply lie about inflation so that they can borrow with inflation (sic) linked bonds. This is straight theft. The public sector are up in arms about reforms to pensions imagine if you simply just stole them. And this is not gordon brown stealing it's proper theft.

[b]As I said, there are perfectly rational ways to argue against the current neoliberal response to the crisis without making oneself look silly. [/b]But you are correct about the FT. I must and will stop (I was asked to do this on another thread, but that is no excuse - even when attributing it.) and anyway decent analysis and quality journalism as you call it is obviously wasted! So stupid decision both ways.

Meanwhile low quality journalism remains free, so let's stick to the Morning Star and The Sun. An unlikely combination in some ways but similar in others!

Back to the OP, the combination of German myopia and IMF rigidity described in Sunday papers is going to create serious civil unrest. Note how Europe's leaders are behaving here and consider the implications for democracy.

So teamhurtmore - why is the Argentinian government so popular then if what they are doing is robbing the people?

It's like the uk, if you make people happy in the short run they will vote for you. It was ever thus. And people either don't understand or ignore what the government is really doing if they can have a new car and a plasma screen today. We did the same in the Uk remember, borrow and enjoy today, tomorrow never comes. But it does!

Still If you follow the thieves closely enough you can make money off them. The funds who bought the restructured debt did well in the end and anyone who bought companies after the crisis and sold them after the latest mini-boom recently did well.

To repeat, finally, there are plenty of rational ways to argue against an overt focus on deficit (Merkel, Osborne) and incorrect policies (QE) without resorting to voodoo economics (an FT description for Argentina but can't quote it).

Given you views you should be outraged at what the EU is proposing now. Not only are they implementing the wrong policies but they are circumventing the democratic process to do so.

Of course these policies are great for solving inequality - you simply screw everyone and destroy the middle classes. Oh, except for the elite or very rich who conveniently keep their wealth offshore.

Or perhpas its that pursuing policies that enrich the majority at the expense of the rich elite gives you popularity. This is what we see all over south America. As well as driving growth an increasing prosperity of course and empowering people

We did not do the same in the UK at all. Nothing like what was done in argentina, If we had have done we would be far better off

You adherence to the failed neoliberal economic model make me laugh.
TINA my arse

Insanity is continuing to do the same thing over and over again, and expecting different results.

TJ yes we did. We had an economic miracle based on excess leverage and little foundation. Trouble with voodoo economics of all sorts, you get found out in time.

Anyway time for a ride...Argentina is an interesting if flawed distraction, other than telling us what is likely to unwind in Greece. But like yesterday it will give me something to focus on when hitting the steep climbs. A giggle helps to overcome the pain or is that a new plasma or a new car?

Have similar austerity measures to what we're seeing now ever worked for a country?

Actually Lula built a much more sustainable model in BZ without resorting to theft. But income inequality is a challenge that all systems face irrespective of political persuasions and BZ has a high GINI coefficient and challenges in getting the balance right. But they have done a better job that the Argies in the LR.

Teamhurtmore - really - we defaulted on the debt and nationalised industry? I must have missed that bit.

So obviously everything has got better in the UK since the Tories got in with their austerity measures. Growth must be up,inflation down, employment up, balance of payments improved and we will all be riding now on the gravy train. let the good times roll!

Oi, TH get yourself out for that ride! Just heading out myself to have a look at that part of Hankley you mentioned.

Yup, Argentina didn't abandon austerity until 10 years ago when it got to the point when they were forced to register the largest sovereign default in history. They then went on a tax and spending spree and their economy has been growing every since - allowing them to pay their outstanding IMF debt off 6 years ago.

In 2011 Argentina, along with China, had the fastest growing economy in the world - both economies grew 9.2%.

is there really any point in holding up argentina and china as examples of how the uk can resolve it's financial woes ?

we're hardly in a position to get out of the mess by offering the world cheap goods based on comparatively low production costs are we ? firstly we've got no production industries left and secondly how are we going to compete with china unless our workers get paid chinese wages.

i'm happy to let my very basic grasp of world economics allow you to hand my arse back to me on a plate in the hope of understanding the comparison but i really don't see that there could be one.

TJ stop being silly.

The parallel is when you base policy on flawed foundations. And no, things haven't got better for many reasons including incorrect policy responses in the Uk and in Europe. Europe was not a problem of deficits, that was a symptom and a result. Europe was a flawed model that consigned the Pigs to failure after the sugar rush of lower interest rates. Ditto UK households and banks got their rush from leverage and the hangover is not pretty.

But if you want a policy foundation based on theft and destroying not re-negotiating pensions then go ahead.

Shame ATP I am going the opposite direction to meet a friend.. Enjoy the drops, they are short but sweet looking.

THM - its you that is being silly - contradicting yourself. So are we or are we not following a similar path to argentina - you have now claimed both.

You really need to look beyond the failed neoliberal orthodoxy you are wedded to.

Lets just get it in proportion eh!

UK GDP - in USD, at current values

[img] ?s=/united-kingdom/gdp-at-current-prices-in-us-dollars-imf-data.html&d1=19800101&d2=20151231[/img]

Argentine GDP

[img] ?s=/argentina/gdp-at-current-prices-in-us-dollars-imf-data.html&d1=19800101&d2=20151231[/img]

Take another look at what happened after default - Ernie, TJ, you're complaining about Austerity in the UK

UK Government Expenditure in the UK

[img] ?s=/united-kingdom/general-government-final-consumption-expenditure-us-dollar-wb-data.html&d1=19670101&d2=20120129[/img]

Compared with Argentina, lets get this clear - look at what happened to the UK Government spending in our recent recession, and a look at what happened to Argentinian Government spending after default.

[img] ?s=/argentina/general-government-final-consumption-expenditure-us-dollar-wb-data.html&d1=19670101&d2=20120129[/img]

Austerity? you honestly have the front to compare recent evil tory cuts with what happened in Argentina after the default, and come to conclusion that default was preferable?

Argentinian government spending more than halved overnight - now, THATS Austerity!