Wednesday, August 18, 2010

Tory Cuts - The Death Spiral

As Westminster cuts come Greece, using 'austerity' cuts, enters into its "Death Spiral".

If you want to know what 'austerity' does to a country consider what Der Spiegel has to say about Greece in the following article:

Entering a Death Spiral?

Tensions Rise in Greece as Austerity Measures Backfire

So, what is 'austerity' doing to Greece?

The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.

The story of Greece is not unlike the UK. In Britain Labour has bankrupted Britain and systematically lied about its finances and now a new government is using 'austerity' as means of dealing with the problem they inherited:

This dire prognosis comes even despite Athens' massive efforts to sort out the country's finances. The government's draconian austerity measures have managed to reduce the country's budget deficit by an almost unbelievable 39.7 percent, after previous governments had squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10 percent, 4.5 percent more than the EU and International Monetary Fund (IMF) had required.

Sounds sensible right? Well, remember accountants are not the same as economists. What is the consequence of all this?

The problem is that the austerity measures have in the meantime affected every aspect of the country's economy. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country's gross domestic product shrank by 1.5 percent in the second quarter of this year. Tax revenue, desperately needed in order to consolidate the national finances, has dropped off. A mixture of fear, hopelessness and anger is brewing in Greek society.

Unemployment Rates of up to 70 Percent

People, I read about what 'austerity' does to countries years ago. It is surely not beyond the political parties of Scotland and London to study Argentina or other countries where the IMF have enforced these 'austerity' programmes. It leads to total collapse. (If you want to read about 'austerity' programmes read about the man who had to enforce them - none other than the former chief economist of the World Bank - Joseph Stiglitz here. It's short and very readable)

And yet, just like 'stimulus' was a religion last year so 'austerity' has now become holy scripture. The best the Scottish blogosphere can come up with is a debate about how the council tax can be increased to compensate for government cuts to the Scottish budget. How utterly sterile!

In the Scottish context there is no deficit so why cuts anyway? You certainly are not going to get the Scottish media running with a line which supports an independent economy nomatter how glaringly obvious it is but why not the SNP?

Just as stunning though is why 'austerity' anyway? Well, Labour were going to do it and now the Tories have to clean up their mess goes the Tory (and SNP) line and Labour is going to try and pretend that cuts are a horrible punishment meted out by the evil Tories because that's what they're like, nothing to do with them. The left is gearing up for strikes and anti-Tory propaganda and the right is never averse to making the poor pay for the problems caused by the super rich who they regularly dine with after all and who have huge influence as movers and shakers - the kind politicians need, Labour and Tory.

Sorry but why is no-one talking about stopping the expensive wars? Scrapping Trident? Taking the bail-out money back? The savings would alleviate the economy which is buckling under the weight of too much debt. This is the real debate that is not taking place! There's no reason why the SNP should not benefit the most from it! Bankers and other war profiteers are controlling the agenda and the parties are afraid of tackling the real causes of the economic crisis lest big business turns their back on them..

So, what is 'austerity' going to look like to the man and woman on the street? Quoting one ordinary Greek, Der Spiegel sums it up perfectly:

"If you take away my family's bread, I'll take you down -- the government needs to know that," Meletis says. "And don't call us anarchists if that happens! We're heads of our families and we're desperate."

'Stimulus' and 'bail-outs' got Britain into an even bigger mess than it was in. The next step of robbing the UK blind is 'austerity' - people will lose jobs, will get lower salaries and will be more dependent on debt than ever. Each stage helps no-one but the bankers.

This is going to be no insignificant matter. You better get your anti-war banners out now because if you don't Britain WILL collapse. You will see mass emigration and the unborn will owe thousands in debt for several generations to come.

Many people think that economics is complicated. Well, you better start getting your head round it or there'll be no economy.


cynicalHighlander said...

And no one is talking about tax evasion and avoidance as they are a big drain. The US is heading the same way as Greece but has a greater access to natural resources within its shores, Cuba be wary.

Beyond lying about my age.

Alex Porter said...

The people will have to say no to the cuts. This is going to get very, very messy. I really don't think people know what's a coming. The sooner they speak up the better for themselves and their family's future.