Call for Growth Rises to Counter German Push for Austerity
BERLIN — With political allies weakened or ousted, ChancellorAngela Merkel’s seat at the head of the European table has become much less comfortable, as a reckoning with Germany’s insistence on lock-step austerity appears to have begun.
Around the world, corporate media and even substantial segments of the working class have embraced an old religious creed, the celebration of austerity. Its cold bath is supposed to rid us of our sins. Its tenets stand in contrast to the academic wisdom of post World War II generation and to many of the metrics commonly accepted across the political spectrum. We cannot understand the power of this reborn orthodoxy without addressing its complex roots. Several historical narratives converge. They reflect and sustain compelling social and personal identities. These seem especially comforting amidst cultural and economic turmoil. Nonetheless, if this austerity is not effectively challenged, it may unleash forces as destructive as those of the thirties. And stopping austerity will also require critical scrutiny of much of the liberal and neo-Keynesian critiques that thus far constitute the only serious systemic response to austerity’s lure.
A German-inspired austerity regimen agreed to just last month as the long-term solution to Europe’s sovereign debt crisis has come under increasing strain from the growing pressures of slowing economies, gyrating financial markets and a series of electoral setbacks.
Spain officially slipped back into recession for the second time in three years on Monday, after following the German remedy of deep retrenchment in public outlays, joining Italy, Belgium, the Netherlands and the Czech Republic. In the Netherlands, Prime Minister Mark Rutte handed his resignation to Queen Beatrix on Monday after his government failed to pass new austerity measures over the weekend.
Europe’s embrace of austerity is especially troublesome because it evokes memories of fascism. Many commentators constantly reiterate that Weimar hyperinflation led to the Nazis. Hyperinflation, however, occurred in the early twenties when the Weimar Republic chose to pay its obligations by printing more money. The Nazis were and remained a minority party during the Weimar hyperinflation. They grew during massive deflationary pressures occasioned by Depression and by the government’s harsh austerity measures taken in the face of contracting demand.
The political upheaval drove stock markets on the Continent sharply lower, with Germany’s DAX index finishing the day down 3.4 percent. The sell-off in Europe dragged American indexes down around 1 percent. A survey of European purchasing managers showed an unexpected plunge in confidence this month.
The Netherlands, a staunch supporter of the German position, became the latest European country forced into early elections by the European crisis,more from source
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