Thursday, September 13, 2012

The Troika: Portugal needs only a teentsie bit less austerity - next target: Spain

The Troika - the EU Commission, the IMF and the European Central Bank (ECB) - or just read: Germany - has been merciful to Portugal. Portugal is struggling with an economy in recession that is projected to shrink further in 2013. So instead of insisting on the previous target of a 5% deficit target this fiscal year, the Troika graciously allowed Portugal to do only 4.5%. (Portugal, en su trampa Página 12 11.09.2012)

This, of course, continues the austerity program that is wrecking Portugal's economy, along with those of Greece, Ireland, Italy and Spain. So the cuts in government employment and the sell-off of public property will continue, as the Troika's neoliberal program demands. So will cutbacks in public assistance for the poor and unemployed.

Spain, meanwhile, is coming closer to asking for direct aid from the Troika, which would mean yet another austerity agreement for Spain, where the previous Socialist government and the present conservative won have been pursuing the austerity agenda with gusto even in the face of the depression. The eurozone finance ministers are meeting on Friday to discuss new Spanish terms for the bailout, which is still officially a hypothetical case, since Spain's Prime Minister Mariano Rajoy hasn't formally requested it yet.

Spain's debt-to-GDP ratio was at 35% before the depression started, now it's edging toward 100% aafter the end of their considerable housing boom and the general economic depression got underway. (Álvaro Romero, El BCE alerta que la deuda pública se irá sobre el 100% del PIB si falla en el ajuste El País 13.09.2012) The ECB is pushing them hard to improve the debt ration by austerity measures to lower the deficit, thus continuing the downward cycle, with workers overwhelmingly paying the heaviest price. This is a continuing nightmare.

More serious in the long term than the economic damage is the damage to democracy this could do. Greece, Ireland, Italy, Portugal and Spain are all in varying degrees operating on economic policies that have been more-or-less forced on them by the EU (read: Germany). Greece and Italy even had to change governments at the EU's direction. And the policies they are following are drastically increasing economic inequality, definitely an unhelpful condition for democracy. And voting in new governments doesn't change the policies in any material way. As Joaquín Estefanía writes, "Si no existe la capacidad de intervención efectiva por parte de una autoridad política electa, no hay democracia." ("If the capacity doesn't exist for an effective intervention on the part of an elected political authority, there is no democracy.") (La democracia aletargada El País 13.09.2012)

Alexis Tsipras, leader of Greece's second-largest party, Syriza, has held to the position that Greece should stay in the eurozone. But apparently he's now appreciating the Argentine approach more and more (Tsipras: 'I wish we had become Argentina' Athens News 09/07/2012):

The leader of Syriza told parliament on Friday that he wished Greece “had become Argentina”.

Alexis Tsipras made the remarks when asking a parliamentary question during the prime minister’s question time about the proposed government sell off of Hellenic Postbank. ...

Addressing the finance minister, Tsipras said: "You say how "we didn’t become Argentina’. I wish that we had: Argentina went through huge difficulties and its citizens were able to stand with dignity.”
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