COMMENT: German Foreign Policy further develops the story of the economic and social devastation manifesting in Europe as a direct result of the measures dictated to the European Union by Germany.
Far from inspiring “growth through confidence,” as the Germans and American GOP would have us believe result from “austerity,” the measures are driving the countries of Southern Europe into serious recession.
As we have seen in several posts, the EU/Germany installed a provisional government in Greece that included the Greek neo-Nazi LAOS party, headed by a Holocaust denier. The citizens of Greece–“the cradle of democracy”–had no say whatsoever in the incorporation of the Greek Nazi party into the government!
As noted by British Prime Minister David Cameron, the EU (read Germany) has “outlawed Keyesnianism.”
One can scarcely blame the Greek policeman’s union for advocating the issuing of a warrant for the arrest of the EU overseers of Greece. When the medicine for Greek recovery involves slashing of the minimum wage by 25% (32% for the youth), what is to be expected but economic disaster?
The settlement may well be sowing the seeds for a future political crisis in Europe, because European Union taxpayers will be responsible for the debt of the unfortunate Southern European nations.
In time, the export-dependent German economy may well fall victim to the malaise as well, as noted in the article excerpted below.
EXCERPT: The austerity dictate imposed by Berlin and Brussels is driving nearly all indebted southern European countries deeper into the recession, as shown by new data on the economic developments of Spain, Italy, Portugal and Greece. According to this data Portugal’s economy, for example, declined by 1.3 percent in the last quarter of 2011 and could shrink by up to six percent this year. Industrial production in Italy registered a sharp decline. Retail sales in Spain – an indicator of private consumption – declined by almost a quarter in comparison to 2007. Greece is approaching the economic level of countries in Latin America or Southeast Asia, which, up to now, had clearly lagged behind European standards. In the longer run, the recession could have a backlash on Germany because the massive slump is also affecting German exports. This could have serious repercussions.
“On the Right Path”
Germany is continuing to impose disastrous economic austerity measures all over Europe. Top German politicians and officials relentlessly plead for the continuation of the austerity policy, undeterred by the erupting recession in areas of the Euro zone. The policy became binding for almost all EU member countries through the signing the Fiscal Pact on March 2. As German Finance Minster Wolfgang Schäuble declared March 6, by signing the Fiscal Pact, Europe is on the “right path.” Indicating the Czech Republic and Great Britain, both of which refused to sign the treaty that will slowly erode national sovereignty, he added that he hoped all EU members would soon sign up for the Pact, which Berlin substantially formulated. On March 13, Federal Bank President Jens Weidmann called for the southern Euro countries, which are currently slipping into recession, to apply “stiffer reforms” and additional austerity measures. . . .
On the Way to the Third World
Where this austerity policy, imposed by the German government on Europe, will lead, can be seen in Greece’s dramatic crash, which can literally be characterized as Greece saving itself to death. According to all predictions, in 2012 the country will remain in its fourth year of recession and continue to approach the economic level of the third world. The German business press predicts that if Greece’s economic contraction continues, it will be bypassed by countries such as Vietnam or Peru. A deeper recession could even saddle Greece with a GNP, in terms of buying power, lower than the GNP of Bangladesh. The German edition of the Financial Times speaks of a “historically exceptional” economic collapse. “Some experts fear that the GNP for 2012 will again decline up to eight percent, after an approx. 6.5 percent drop in 2011. This is “the worst recession that a western country has encountered since the war,” explains Barry Eichengreen, an economic historian at the University of Berkeley. . . .