Austerity Creates Highest Unemployment Rise In EuroZone

So how's that austerity been working for you, Mr.Cameron? Unemployment in the euro zone rose to a new high in November, according to data released Tuesday that also showed that the troubles in the 17-nation currency bloc were straining its

So how's that austerity been working for you, Mr.Cameron?

Unemployment in the euro zone rose to a new high in November, according to data released Tuesday that also showed that the troubles in the 17-nation currency bloc were straining its strongest member, Germany.
The euro zone jobless rate rose to 11.8 percent in November from 11.7 percent in October, according to Eurostat, the statistical agency of theEuropean Union.

Eurostat estimated that 18.8 million people in the euro zone were unemployed in November, two million more than a year earlier.Germany has provided momentum to the European economy over the past three years, as strong exports protected the country from the crisis.But on Tuesday, the Federal Statistics Office in Berlin said that German exports declined 3.4 percent while imports slid 3.7 percent in November from a month earlier. The weakness narrowed Germany’s trade surplus to €14.6 billion, or $19 billion.German factory orders also fell in November amid weak demand from outside the euro area, the Economy Ministry said Tuesday. Orders, adjusted for seasonal swings and inflation, slid 1.8 percent from October, when they jumped 3.8 percent.

You don't say! But the Beltway Villagers and teaBirchers are demanding the same policies for America. And you've probably read about the new IMF mea-culpa while admitting to really fuc*&ng up on their austerity projections.

The International Monetary Fund is revising its metrics on how fast governments should cut their budgets, with the IMF’s top economist making the case that Europe’s fiscal diets were too severe.In a new paper published Thursday, IMF Economic Counsellor Olivier Blanchardand research-department economist Daniel Leigh show the IMF recommended slashing budgets too fast early in the euro crisis, starving many economies of much-needed growth.

In “Growth Forecast Errors and Fiscal Multipliers,” Messrs. Blanchard and Leigh calculate IMF and European economists underestimated the euro-for-euro effect of cutting government budgets. While economists expected that cutting a euro from the budget would cost around 50 cents in lost growth, the actual impact was more like 1.50 per euro.

Republicans like Goober Graham repeatedly fret over the US becoming Greece and call for raising retirement ages and slashed benefits for our entitlements, but the policies they are trying to force us into will actually pave the way to a Greek-like state of mind.

As my friend Georgia Logothetis writes:

In Greece, which has implemented draconian austerity measures at the request of the IMF, the European Commission and the European Central Bank in order to receive bailout funding, the results are seen on the streets where a middle class has plummeted into poverty. One out of three Greeks now lives in poverty and average salaries have been slashed to just several hundred net euros a month. Homelessness, which was rarely seen in that country, is now endemic in certain parts of Athens. The unemployment rate has reached a record 26 percent, with more than 50 percent of Greece's youth out of a job.

Greece received billions of euros in bailout funds, but a large part of why austerity didn't work in Greece is because it wasn't offset by any growth strategy. In a shocking example of how twisted reality became, Greece's bailout funds at one time were simply wired into an escrow account that the government couldn't touch and then wired back for debt service to European banks just days later (read the NYT report here). In other words, not only were there painful cuts, but any money coming into the country was spent almost exclusively on debt reduction rather than on stimulating the economy.

Here's Goober:

I’m not going to raise the debt ceiling unless we get serious about keeping the country from becoming Greece, saving Social Security and Medicare [sic]. So here’s what i would like: meaningful entitlement reform — not to turn Social Security into private accounts, not to take a voucher approach to Medicare — but,adjust the age for Social Security, CPI changes and means testing and look beyond the ten-year window. I cannot in good conscience raise the debt ceiling without addressing the long term debt problems of this country and I will not.

Graham brings up Greece almost every time he goes on TV.
The evidence is overwhelming that turning to austerity during a down economy only destroys it further and turns us into Greece.

That is what has been happening with a vengeance in Greece, where fund forecasters, as part of the country’s first bailout program in 2010, predicted that the nation could cut deeply into government spending and pretty quickly bounce back to economic growth and rising employment.Two years later, the Greek economy is still shrinking and unemployment is at 25 percent.Of course no two circumstances are alike. Shut out of international bond markets, Greece had little choice but to begin bringing its public finances into line or face a catastrophic default. Financing wasn’t available to sustain prior spending levels. For an economy that has been reeling for several years, however, a billion or two in extra government programs or investment could have kept a few small businesses open and kept a few more families employed and spending.

When will they all get the message? Portugal's President is fighting back against the draconian cuts now. Only Keynesian philosophies can save us.

Does President Obama get this, too?

About John Amato

Comments

We welcome relevant, respectful comments. Please refer to our Terms of Service for information on our posting policy.