Eurozone crisis

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Greece: signs of growth come as austerity eases | Mark Weisbrot

Published by Anonymous (not verified) on Wed, 22/01/2014 - 10:36pm in

The IMF's austerity plan hasn't worked. Greece's possible recovery is down to a construction programme boosting the economy

It was nearly four years ago that the Greek government negotiated its agreement with the IMF for a harsh austerity programme that was ostensibly designed to resolve its budget problems. Many economists, when we saw the plan, knew immediately that Greece was beginning a long journey into darkness that would last for many years. This was not because the Greek government had lived beyond its means or lied about its fiscal deficit. These things could have been corrected without going through six or more years of recession. It was because of the "solution" itself.

Four years later, Greece is down by about a quarter of its pre-recession national income – one of the worst outcomes of a financial crisis in the past century, comparable to the worst downturn of the US's Great Depression. Unemployment has passed 27% and more than 58% for young people (under 25). There are fewer Greeks employed than there have been at any time in the past 33 years. And real public healthcare spending has been cut by more than 40%, at a time when people need the public health system more than ever.

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Why has Europe's economy done worse than the US? | Mark Weisbrot

Published by Anonymous (not verified) on Fri, 17/01/2014 - 12:15am in

The eurozone experience shows what can happen when people lose control over their government's economic policies

If we compare the economic recovery of the United States since the Great Recession with that of Europe – or more specifically the eurozone countries – the differences are striking, and instructive. The US recession technically lasted about a year and a half – from December 2007 to June 2009. (Of course, for America's 20.3 million unemployed and underemployed, and millions of others, the recession never ended – but more on that below.) The eurozone had a recession of similar length from around January 2008 to April 2009. But it then fell into a longer recession in the third quarter of 2011 that lasted for another two years, and may only be exiting that recession currently.

This makes a big difference in people's lives. In the eurozone, unemployment is at near record levels of 12.1%; while in the US, it is currently 6.7%. Despite the incompleteness of these measures, these numbers are comparable. And, of course, in Spain and Greece unemployment is 26.7 and 27.8%, respectively, with youth unemployment at an intolerable 57.4 and 59.2%.

Historical experience indicates that successful fiscal consolidations were often launched in the midst of economic downturns or the early stages of recovery.

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