Discredited Economic Theory Holds Europe in Deflationary Thrall

[marmar]

from truthdig:


Discredited Economic Theory Holds Europe in Deflationary Thrall

Posted on Nov 5, 2013
By William Pfaff


This week the notorious “troika” representing the three major lenders to severely indebted European Union nations—officials from the IMF, the European Commission and the European Central Bank—once again descended upon Athens to consider new Greek proposals for dealing with its debt. (The IMF has recently expressed some doubts about all this but is still in the game.) The three were asked to approve a new Greek government plan to complete its 2014 budget in a way that would justify the next scheduled payment of troika loans needed for Greece’s national “bailout.”

In return for a new troika loan payment, the Greeks undoubtedly will be expected to offer still more austerity measures. After already accepting drastic orthodox fiscal punishment since 2010—and a six-year recession that has produced unemployment of nearly 28 percent and a 40 percent fall in household disposable income—the Greeks would like some breathing space. Whether they get it should be known by the time this article is published.

The troika routine is as familiar as an old-fashioned music-hall turn. The troika knows only one song to sing: the neo-liberal dirge of sacrifice and suffering to impose upon the mass of citizens in the loan-besieged states of the European Union’s southern and Mediterranean basin. The music is German, Wagnerian even, unchanging. Its auditors must produce and export, earning money that will allow them to emulate Germany’s record of virtue.

Bankers are not the only ones who have asked Germany how everybody can export at the same time, least of all the poor states with weak economies and a lack of investment. The American Nobel laureate economist and New York Times columnist Paul Krugman has been hammering on this point since Wall Street put the world into this mess. But no one will listen. Keynesianism was murdered in the U.S.A. by a conspiracy called the Washington Consensus. ............(more)

The complete piece is at: http://www.truthdig.com/report/item/discredited_economic_theory_holds_europe_in_deflationary_thrall_20131105

[Laelth]

1. k&r for exposure. n/t

-Laelth