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Austerity news from Around the Globe


 
 

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Austerity is a Four-Letter French Word

FXstreet.com
Austerity is a four-letter Anglo-Saxon – or even worse, Teutonic – word in socialist France, yet the market at some point is going to want to see a move toward sustainable budgets. Government bond investors are not philanthropists. They look for the …
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Austerity drains economic life

Yorkshire Post
THE latest statistics confirm that wages are increasing by well under the inflation rate, at the same time as benefits for those of working age are rising at just one per cent a year. So I’m not surprised that the economy is still struggling, as people 
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Scottish independence: ‘No’ vote austerity warning

Scotsman
But Labour leader Johann Lamont insisted that an independent Scotland would face even harsherausterity than the UK amid concerns that SNP “big business” tax breaks will see major job cuts. The leaders clashed today during the final First Ministers 
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Portugal: 5 million participated in general strike, say unions

 

Patience with the government’s austerity plan is running thin in Portugal with banners reading ‘Enough’ and ‘Government Out’. In their fourth general strike in two… read full article

 Austerity: ‘unprecedented erosion’ in living standards
The Guardian
If you thought you were feeling the pinch, here’s probably why. Rising prices, stagnant wages and benefit cuts are creating an “unprecedented erosion” in living standards, especially for low and middle income families, according to new research from 
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Stuff your austerity! We want something different

New Internationalist (blog)

The idea of the Peoples Assemblies is to create a mass national and local movement against austerity. Saturday’s event brought together people of all ages and walks of life – trade unionists, direct activists, students, pensioners, hackers, disabled …
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Social Justice Ireland says austerity not working

RTE.ie

“Austerity is not working for Ireland. Government has cut spending, raised taxes, increased unemployment, lowered wages, decimated services and allowed infrastructure to deteriorate on the understanding that austerity would lead to recovery …
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Austerity leaves bitter taste as Leinster House sweet shop shuts
Irish Times
It was the Taj Mahjal of the mint humbug, the Southfork of the chocolate snowball, the Buckingham Palace of the fruit pastille. The notorious Leinster House sweetie shop – that glass walled monument to the Celtic Tiger notions of a discredited …
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Miliband’s offer of austerity in a red rosette is failing voters
New Statesman
If austerity is wrong and counter-productive when the Tories do it, it will be wrong and counter-productive whoever does it. Austerity in a red rosette is no less brutal and damaging than in a blue one. In failing to articulate a clear economic …
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Portuguese businesses attack austerity, urge U turn
GlobalPost
Portuguese business leaders launched on Monday a strong attack on austerity conditions tied to the EU-IMF bailout of the economy, saying that they had failed and the government should change direction to save the country from “recession”.
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Union warns austerity will spur growth of ‘zero hours’ contracts
Financial Times
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Austerity will spur the use of zero hours contracts, as more public sector work is outsourced to providers who rely on the ultimate flexible employment option, a think tank and union have said. The contracts, which offer no guaranteed work, are being …
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Discredited Pro-Austerity Research Gets New Love From World’s Central Bank
Huffington Post
Our world’s troubling austerity deficit is actually not the main message of the BIS’ 76-page opus, but an entire chapter, “Fiscal sustainability: Where do we stand?” is dedicated to the topic. And this chapter sounds a rallying cry for more austerity …
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Austerity Loses in Massachusetts
The Nation.
Gomez ran as a classic proponent of austerity. He proposed to balance budgets on the backs of working families and retirees. The Republican nominee supported raising the retirement age for Social Security benefits for future retirees and he wanted to …
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France’s Austerity Drive Pushes Country into Recession
IBTimes.co.uk
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France’s drive to slash spending and debt by implementing strict austerity measures has pushed the country into recession, confirmed the government’s statistics office. In the first quarter of 2013, French gross domestic product (GDP) in volume …
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Lying about austerity serves “special interests”
People’s World
A few weeks ago, the most prestigious apologists for austerity in the economics profession, Ken Rogoff and Carmen Reinhart of Harvard University – now known as R & R – were brought up short when a blatant spreadsheet error in their published work …
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‘Greece to avoid more austerity’
Independent Online
images (10)
Athens – Greece’s Prime Minister Antonis Samaras said on Tuesday avoiding new austeritymeasures to fulfill targets in the country’s international bailout was a priority of his two-party coalition government. “Our immediate priority is to return to …
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Greece: Austerity Doesn’t Involve Public-Sector Layoffs
Heritage.org (blog)
Slate’s Matthew Yglesias might be attacked as an “austerity denier” now that he has joined Heritage’s Salim Furth in pointing out that there is a lot of policy diversity under the broad label of “austerity.” Yglesias explained last week why a small but …
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Austerity support frays at edges among EU smaller fiscal hawks
Financial Times
Since the financial crisis swept through Europe four years ago, the bloc’s triple-A rated economies have been vociferous backers of controversial austerity measures as the solution to the continent’s woes. Yet as the crisis drags on, unemployment rises …
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Austerity Remains Key to Britain’s Economic Plan
New York Times (blog)
LONDON — Extended spending cuts, including a fresh squeeze on welfare payments, were announced by the British government on Wednesday, ensuring that the politics of austerity remain firmly center stage in the run-up to the country’s next elections.
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UK austerity: ‘Diverting money from poor to rich under guise of economic crisis’
RT (blog)
The UK’s austerity policy is ideologically driven and is aimed at diverting finance from the poor to the rich under the pretext of the economic crisis, writer John Wight told RT. Britain’s Chancellor of the Exchequer George Osborne is announcing …
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Portuguese Workers Strike to Say Austerity Has Gone Too Far
Wall Street Journal
LISBON—A nationwide strike froze public-transport services and shrank hospital staffs across Portugal on Thursday amid a growing consensus among workers and businesses that austerity has reached its limit. Protests and strikes have become common …
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Austerity Britain rolls on
Morning Star Online
In the run-up to George Osborne’s spending review, the Sunday TV discussion programmes ran with their usual carefully selected commentators. All of them accepted that there have to be cuts in public expenditure. There was not an alternative policy on …
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Britain sugars austerity pill with infrastructure boost
euronews
LONDON (Reuters) – Chancellor George Osborne unveiled a new round of spending cuts on Wednesday, but promised to pump some of the savings straight back into the economy to counter charges of excessive austerity. In a speech to parliament …
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More spending cuts for Britain, but austerity pill is sugared
Reuters UK
LONDON (Reuters) – Chancellor George Osborne unveiled spending cuts on Wednesday to try to tame the country’s big public deficit, but promised to reinvest some of the money saved to counter criticism of excessive austerity. In a speech to parliament, …
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Austerity? It’s hardly begun! Chancellor Osborne tightens the purse strings …
This is Money
But for all the talk of austerity, government spending is set to rise from £720billion this year to £745billion in 2015/16 – the year the latest cuts take place. Over the same period, tax receipts are expected to rise from £612billion to £658billion …
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The EU need not look beyond its own borders to see widespread poverty


The Irish government is halfway through its Presidency of the Council of the European Union. The Presidency Programme targets “stability, jobs and growth” and picks a round of “fights”, namely: the fight against poverty, the fight against hunger, the fight against the effects of climate change, and the fight against tax evasion and tax fraud.

The fight against poverty

In the ‘fight against poverty’, the programme makes reference to the Europe 2020 Strategy, which aims to lift 20 million people out of the risk of poverty or social exclusion by 2020. No mention is made of the fact that, last year, the Irish government reduced its target from eliminating consistent poverty by 2016, to reducing it to 4% by 2016. The European Anti-Poverty Network expressed alarm at this reduction. In its key message on the overall target, the organisation said: “Austerity policies are generating poverty and undermining an inclusive recovery.” Far from reducing poverty, European and Irish policy, through austerity, is concentrating wealth and thereby increasing poverty. Ireland, at the helm of the EU, is presiding over poverty.

The EU, which often praises its own role in international development, need not look beyond its own borders to see widespread poverty. 24% of the EU27 population is at risk of poverty or social exclusion (approximately 120 million people) and up from 23% the previous year. At 38%, Ireland has the highest rate of children at risk in Western Europe and the fifth highest of the EU27. The Irish League of Credit Unions ‘What’s Left’ surveys are important indicators in the Irish media and have been ‘noted’ by the Troika. The latest of these, based on December 2012, showed that 61% of people have less than €100 left at the end of the month once essential bills are paid, 36% have less than €50 and 20% have nothing at all. Another survey showed that 56% of Irish homes have been forced into debt to pay household bills.

The CSO’s Survey in Income and Living Conditions demonstrates that almost one quarter of the population, over one million people, experienced two or more types of deprivation in 2011. These types of deprivation include: unable to afford to replace any worn out items of furniture, without heating at some stage in the last year, and unable to afford a roast one a week. This poverty has manifested itself in hunger as 10% of the population or 450,000 people are in food poverty. One cannot deny that there are a significant amount of people that are struggling to get by in modern Ireland.

‘One law for the rich, one for the poor’

Despite these levels of poverty, we remain a very wealthy as a society. But this wealth is concentrated in very few hands. According to the CSO and Credit Suisse, the total wealth in Ireland is €468 billion. Half of this is owned by the richest 5%. The top 1% (36,000 adults), where the true extent of the concentration of wealth is seen, own a startling €131.5 billion or 28% of all wealth in Ireland. This is same amount as owned by the poorest 80%, 2.9 million adults! The chart below indicates the distribution of wealth across the population deciles (10%). The concentration of wealth can clearly be seen as the richest 1% towers over the other deciles. The first five deciles, the poorest 50% of the population, between them own €4.8 billion and barely register on the chart.

The application of austerity in the last six budgets, far from closing these gaps or protecting the vulnerable, has seen the rich get richer. According to the CSO, between 2009 and 2010 the disposable household income of each decile fell, except that of the richest 10% – which increased. In the year following two austerity budgets, the poorest 10% of people got 26% poorer while the richest 10% got 8% richer. This scenario was acknowledged by the European Commission last year: “Italy recorded a particularly sharp rise in financial distress followed by Greece, Ireland, Cyprus, Portugal and Spain, with the upper quartile seeing the greatest impact of the rise in all except Cyprus and Ireland where the lower quartiles bore the brunt”.

The proponents of austerity, the Troika, cannot even agree over whether the policy is working, with recent exchanges between the EU and IMF. An IMF working paper in January found that “stronger planned fiscal consolidation has been associated with weaker growth than expected” and that “fiscal multipliers were substantially higher than implicitly assumed by forecasters,” particularly in the short term. Fiscal multipliers, though only one factor to consider for fiscal policy, are an indication of the effect of changes in government spending on economic output (GDP). The IMF has found that fiscal multipliers due to fiscal consolidation (austerity) are far higher than originally assumed and are of the order 0.9 to 1.7. This means that every €1 cut from government spending will reduce economic output by between €0.90 and €1.70. Far from improving the situation, austerity is making things much worse  and, in fact, both Ireland and the Eurozone are officially back in recession.Despite the government rhetoric, employment is not rising and emigration is. Nobel Prize-winning economist, Paul Krugman, has described austerity as: “an unethical experimentation on human beings going on across the world right now”.

Austerity may not be working for most of us, but it certainly is for the super-rich. The richest 300 people in Ireland make up the richest 1% of the richest 1% of adults. These 300 people in Ireland own €66bn. That’s more than that of half the population and almost as much as the entire bailout package. The era of austerity has been very good to these people as their take has risen from €50 bn (2010), €57 bn (2011), €62 bn (2012) to €66 bn (2013), according to the Sunday Independent. That’s an increase of one third in just three years!

The ideology of austerity has become EU and Irish law through the Fiscal Compact Treaty, the ‘Six Pack’ and the ‘Two Pack’. Therefore, if one agrees that this austerity law has benefitted the rich while the poor get poorer then we certainly have a case of, as Christy Moore puts it, ‘one law for the rich, one for the poor’.

Debt, investment and demand

It is in this context that at least €64 billion (or 40% GDP) of private banking debt has been taken on by the Irish State. According to economist Michael Taft, Ireland has borne the brunt of European banking debt, 42% of the total cost of the European banking crisis. The recent promissory notes ‘deal’ does not represent any success for the Irish Presidency of the EU. The liquidation of IBRC and conversion of the promissory notes to 25-40 year government bonds completes the transfer of private banking debt to sovereign debt liable to be paid by the Irish public. According to Prof. Terrence McDonough of NUI Galway, the deal represents little to no saving, will not reduce austerity, and is really a “scam”.

The application of austerity in Ireland cannot therefore be separated from the private banking crisis. The socialisation and subsequent repayment of these private banking debts has been an effective transfer of wealth from across Irish society to investors in major international banks (the bondholders), i.e. from the side of labour to the side of capital, from poor to rich. Such a transfer (particularly in the context of austerity) is making the crisis worse as it reduces consumer spending , i.e. aggregate demand. Nobel Prize-winning economist, Joseph Stiglitz, describes this process as follows: “In effect, we have been transferring money from the poor to the rich, from people who would spend the money to people who do not need to spend the money, and the result of that is weaker aggregate demand”.

As austerity continues, and as the property tax and the Croke Park 2 cuts are coming down the line), domestic demand (personal consumption + government expenditure) has fallen each year. The latest Quarterly National Accounts show that personal consumption has fallen by €7bn government expenditure by €5bn since 2007, however the big loser has been gross fixed capital formation (investment) which has fallen by over €20bn and is now the lowest in the EU27 as a percentage of GDP. Economist Michael Burke has outlined the investment strike taking place in Ireland since 2007. Put simply, business is not investing for production, and this is holding back employment and economic growth.

To overcome the private investment strike, the state should invest to kick start the economy through large-scale job-creation schemes and should reverse public sector cuts. However, the austerity doctrine holds that the debt must be repaid and the deficit must be reduced. Overcoming the investment strike by investing billions of Euro, say in social housing construction or food production, is effectively illegal. The true fight against poverty is a fight against austerity. It is a fight for public investment to overcome unemployment and a fight to put the needs of the vast majority in society above those of the super-rich.

Richard Manton is a journalist with Youth Media and the Irish Presidency, a Youth in Action initiative run by European Movement Ireland, and blogs at Public Engineering

via The EU need not look beyond its own borders to see widespread poverty | Irish Student Left Online.

via The EU need not look beyond its own borders to see widespread poverty | Irish Student Left Online.

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