Cyprus Readies for Reopening of Banks

March 27, 2013 by

Global Geopolitics & Political Economy / IPS

AJ Correspondents

DOHA, Qatar, Mar 27 (Al Jazeera) – Cyprus is finalising capital control measures to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders.With banks due to reopen on Thursday, Finance Minister Michael Sarris said he expected the control measures to be ready by noon (1000 GMT) on Wednesday.

"I think they will be within the realms of reason," Sarris said in a Cyprus television interview, without going into details.

Cypriots have taken to the streets of Nicosia in their thousands to protest against the bailout deal they fear will push their country into an economic slump and cost many their jobs.

European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

A banking official said on Wednesday that new controls will include restrictions on large-scale transfers from Bank of Cyprus and Laiki, two of the country’s largest and troubled lenders, which are both being restructured.

Authorities are looking to increase the daily withdrawal limit from 100 euros to 300 euros, for at least a week until the situation stabilises, according to the official who spoke to AP news agency.

Banks will have heightened security across the island nation for the "comfort of both bank staff and clients, with the police also present", according to John Argyrou, the Cyprus managing director of private security firm G4S, which will deploy 180 of its staff to all bank branches.

"There may be some isolated incidents, but it’s in our culture to be civil and patient, so I don’t expect anything serious," said Argyrou.

Run on banks

"Banks will open on Thursday … We will look at the best way to limit the possibility of large sums of money leaving, and not imposing punitive conditions on the economy, businesses and individuals," Sarris said in the interview.

The central bank governor said earlier that "loose" controls would apply temporarily to all banks.

Earlier, the finance minister said they could be in place for weeks. Banks have been shut since final bailout talks got under way in mid-March.

Russia, whose citizens have billions of euros in Cypriot banks, cautioned Nicosia against imposing onerous controls on healthy banks.

"If there are such measures, this will not foster trust but only provoke additional problems for participants, depositors," Russian Finance Minister Anton Siluanov, in South Africa for a summit of the BRICS emerging powers group, told reporters late on Tuesday.

State-controlled Russian bank VTB has a subsidiary in Cyprus, Russian Commercial Bank, which has not been affected by the bailout deal.

Siluanov cautioned that Russian willingness to restructure and extend a 2.5-billion euro loan to Cyprus in 2011 would depend on the island’s decision on capital controls.

"We will discuss (restructuring of the loan) in the context of the decisions the parliament adopts," he said. "We are prepared to discuss within these parameters."

Bank executive sacked

Meanwhile, the chief executive of the Bank of Cyprus, the island’s biggest lender, was sacked by the central bank governor as part of the bailout deal, state media said.

Yiannis Kypri was fired on the instructions of the so-called troika of the European Union, European Central Bank and International Monetary Fund, the Cyprus News Agency reported.

The terms of the 10-billion euro (13-billion-dollar) rescue have stirred popular anger within Cyprus at the country’s partners in the EU, notably Germany, the bloc’s main paymaster and fiercest advocate of austerity.

On Tuesday, up to 3,000 high school students protested at parliament, in the first major expression of popular anger since the bailout was agreed in the early hours of Monday morning in Brussels.

The deal largely side-stepped parliament, and has triggered opposition calls for a referendum.

"They’ve just got rid of all our dreams," one student, named Thomas, said.

Outside the central bank, about 200 employees of the country’s biggest commercial lender, the Bank of Cyprus, demanded the resignation of central bank governor Panicos Demetriades, chanting "Hands off Cyprus" and "Disgrace".

*Published under an agreement with Al Jazeera.

All rights reserved, IPS – Inter Press Service, 2013.

This article may not be republished, broadcast, framed, or redistributed without the written permission of IPS – Inter Press Service. Republication of this material without permission from IPS, the copyright holder, constitutes a violation of United States and international copyright laws and may result in legal action.


Filed Under: Economic Crisis, Europe, Finance, Lead Tagged With: , , ,

This Is What a Humane Economy Looks Like

February 3, 2013 by

Global Geopolitics & Political Economy / IPS

Inés Benítez

MÁLAGA, Spain, Feb 02 (IPS) – The severe crisis crippling Spain is also sparking some creative responses, such the Okonomía project, a teaching initiative that helps individuals and communities to understand the workings of the economy and make more informed decisions to manage their finances."Things have gotten so bad, with people out of work, losing their homes and watching their savings vanish, that something has to be done to economically empower people," said activist Raúl Contreras, one of the academics behind this initiative that in February will open its first school in Benimaclet, a multicultural neighbourhood in the southeastern city of Valencia.

Contreras – an economist who also heads the company Nittúa, which sponsors this project – spoke with IPS about the powerlessness and fear that is taking hold of many people who do not understand how the economy works and how it affects their lives, and are thus made vulnerable to manipulation.

"Doubts, ignorance and fear – in some cases spread intentionally – lead to mistakes, anxiety and difficult situations that could be avoided if people are better informed and equipped to make decisions or choices," Nittúa’s website reads.

One out of every four economically active persons is currently unemployed in Spain, where dozens of families are evicted daily from their homes for failure to meet their mortgage payments, and the measures implemented by the right-wing government of Mariano Rajoy to address the crisis involve huge cuts to health, education and other basic services.

Hundreds of thousands of people in Spain fell prey to "preferential shares" and other financial product schemes and lost all their savings. As the crisis deepened and banks became desperate for cash, they convinced more and more savers to buy these products, taking advantage of their lack of understanding of the ins and outs of investment, and using misleading and distorted sales pitches.

Okonomía – which is financing its start-up needs through a crowdfunding campaign – calls itself a "popular economics school" that "develops dialectical educational processes, building on the reality and economic knowledge of each participant, to enable participants to understand their economic situation so that they can make informed and conscious decisions, both individually and collectively, that will lead to the transformation of society through economic empowerment."

The school is formed by professionals from the fields of economics and education and its activities include training multiplying agents who will spread their newly-acquired knowledge in their immediate social environment.

"The school won’t solve people’s problems, but it will provide a toolbox to help individuals make more informed decisions based on their specific needs," Contreras explained, highlighting the project’s cross-cutting approach to solidarity economy, as it emphasises sustainable alternatives.

While the head of Nittúa stresses the solidarity aspect of this economic model, he says it is not the school’s intent to preach any one model or solution. Rather it seeks to give participants an understanding of economics in general, including a range of economic alternatives, such as ethical banking, responsible consumption, fair trade and the cooperative model.

"A large part of society has realised that a different way of teaching economics is needed," Carlos Ballesteros, a lecturer on consumer behaviour at Madrid’s Comillas Pontifical University, told IPS. "Ninety-nine percent of the world’s business schools stick close to the neoliberal paradigm," which is profit-driven and based on maximising earnings.

Ballesteros said that while Okonomía’s target public is civil society as a whole and its main objective is to teach and inform, on the understanding that "the economy is everyone’s responsibility," it also aims to gather and systematise knowledge on solidarity economy practices that may prove useful to people working in that field.

Okonomía offers semester courses, with in-person classes held every two weeks. The methodology is based on the popular education model developed by Brazilian educator Paulo Freire (1921-1997), who believed that "to teach is not to transfer knowledge but to create the possibilities for the production or construction of knowledge."

In each session an issue is presented and material is provided to facilitate reflection. "The learning process is a group activity. The classes are not lectures, but rather dialogue-based and interactive," Contreras said.

He added that after each session the conclusions drawn from the group’s discussions are published online and posted in an intranet, which will form a database of the school’s results, a sort of "Wikipedia of Popular Economy".

Economist Arcadi Oliveres, one of Okonomía’s advisers, said this project is valuable because it "seeks to reveal to the people the underlying workings of the economy" and "because we’re really in the dark" when it comes to the financial world, he told IPS.

Oliveres, a professor of applied economics at the Autonomous University of Barcelona, believes that "people don’t know that there are alternatives to the traditional economic system" and calls for critically aware citizens who can make informed decisions.

Independently of how financial markets and governments behave, the actions of common citizens also have an impact on the economy, so that people must be conscious that they too can make irresponsible choices as consumers or that their deposits can go to financing environmentally-harmful corporate activities, the economist argued.

"We have to start asking ourselves where our money goes – what do I do with my savings, where do I deposit them and why? – and learn to take control of our finances," Contreras said.

The aim of the school is to help people "understand and then make free, but conscious decisions," he added.

The expert noted that he has not found similar projects anywhere else in the world and that Okonomía, which combines a methodology inspired by Paulo Freire with social innovation methods, has the potential to be replicated outside of Spain "with the support of the social fabric of neighbourhoods and communities".

All rights reserved, IPS – Inter Press Service, 2012.

This article may not be republished, broadcast, framed, or redistributed without the written permission of IPS – Inter Press Service. Republication of this material without permission from IPS, the copyright holder, constitutes a violation of United States and international copyright laws and may result in legal action.


Filed Under: Economic Crisis, Education, Europe, Poverty, Report Tagged With: , ,

Obama’s OMB Channels its Inner Tea Party

December 27, 2012 by

By William K.Black The Office of Management and Budget (OMB) is every administration’s heavy artillery on budget issues.  OMB’s staff is dominated by neo-liberal micro-economists under every administration, so it is institutionally…

 

“The Office of Management and Budget (OMB) is every administration’s heavy artillery on budget issues.  OMB’s staff is dominated by neo-liberal micro-economists under every administration, so it is institutionally conservative.  OMB personnel obtain promotions by killing programs, cutting spending, and either blocking the adoption of regulations or weakening the regulations.  OMB is institutionally predisposed to embrace austerity.  OMB is also expected to be a zealous advocate for the President.”

“The combination of those dual roles can produce especially bad pro-austerity propaganda.  President Obama’s OMB produced a classic example of that propaganda in 2012 that exemplifies the administration’s incoherence on austerity.  Obama 2013 budget proposal contains OMB’s ode to austerity.  It was prepared under Jacob Lew’s direction.  Lew was OMB’s head until he became Obama’s chief of staff in January 2012.  Lew is described as the leading candidate to succeed Treasury Secretary Geithner.  Lew, Geithner, and William Daley (then Obama’s chief of staff) were Obama’s principal aides during his attempt in July 2011 to negotiate the Great Betrayal with Speaker Boehner.  Each of them is a strong supporter of austerity and cuts to the safety net and a champion of Wall Street’s interests.”

See on neweconomicperspectives.org


Filed Under: Budget, Economic Policy, Economy, Headlines, United States Tagged With: , ,

Alexis Tsipras: ‘We are the great hope for change’

December 27, 2012 by



Greece’s young leftist firebrand held the future of his country in his hands for a few days in June. He may do again in 2013

“He came from Greece‘s political wilderness – yet for a few days in June Alexis Tsipras held the future of the euro in his hands. Six months on, the fast-talking firebrand who took the world by storm in the runup to the Greek elections may no longer be in the spotlight, but he has not faded into history. “We may have narrowly lost the battle,” Tsipras says of the failure of his radical left Syriza party to clinch power. “But we have not lost the war.”"


See on www.guardian.co.uk


Filed Under: Economic Crisis, Economy, Elections, Europe, Headlines, Politics, Unrest Tagged With: , , ,

Crisis in the Eurozone: Costas Lapavitsas: 9781844679690: Amazon.com: Books

December 26, 2012 by



Crisis in the Eurozone [Costas Lapavitsas] on Amazon.com. *FREE* super saver shipping on qualifying offers. A controversial call to break up the Eurozone and stop the debt crisis.


See on www.amazon.com


Filed Under: Economic Crisis, Economic Policy, Economy, Europe, Headlines Tagged With: , , ,

Germany’s austerity plans will beggar Europe

December 26, 2012 by



Costas Lapavitsas: Berlin’s mantra about spending cuts in the eurozone is bringing unemployment and spreading hopelessness across Europe


See on www.guardian.co.uk


Filed Under: Headlines Tagged With: , , , ,

Salvaging Waste Food for the Hungry in Spain

December 21, 2012 by

Global Geopolitics & Political Economy / IPS

Inés Benítez

MÁLAGA, Spain, Dic 21 (IPS) – A recurring question in crisis-stricken Spain is how to ensure that surplus agricultural products reach those most in need. One response is citizen initiatives to protest the waste of food and to advocate efficient management along the full length of the food chain."We want government agencies and private companies to take measures," said Luis Tamayo, one of the promoters of "Comida Basura: Tu basura es mi tesoro" (Waste Food: Your Trash, My Treasure), a citizen’s platform combating food waste, created in Madrid in 2010. It promotes activities like collecting food in good condition that has been thrown out by supermarkets, asking for leftovers at restaurants and organizing soup kitchens.

Tamayo said "the laws on surplus food have been designed with an economic approach," and producers and shopping centres are required to throw out tons of food still fit for consumption.

But those responsible for most of the waste in industrialised countries are consumers, who throw out perfectly good food on their plates or get rid of food that has gone bad in their larders through sheer neglect or for lack of a little basic planning before shopping.

A European Parliament (EP) report in late 2011 said that Spain wasted 7.7 million tons of food in good condition every year, an average of 163 kgs per person.

This squandering is at odds with the fact that over 21 percent of Spain’s 47 million people are living in poverty, according to the Economically Active Population Survey by the National Statistics Institute (INE).

The same EP report indicates that 42 percent of the 89 million tons of food wasted in the European Union comes from households, 39 percent from industry, five percent from the distribution system and 14 percent from other sources.

A special event was held on Oct. 21 in the northern city of Zaragoza, when around 1000 people got together for a lunch prepared from leftover food in good condition.

It was organised "Feeding Zaragoza", promoted by the Aragonese Alliance Against Poverty and modelled on actions like "Le Banquet des 5,000," held in Paris, and "Feeding the 5,000" in London.

As a result of the "impressive" popular response to "Feeding Zaragoza," a campaign was launched to protest food waste and raise awareness, activist Sonia Méndez, who helped promote the event, inspired by Tristram Stuart, the author of "Waste: Uncovering the Global Food Scandal", told IPS.

A study in May 2011 commissioned by the United Nations Food and Agriculture Organisation and carried out by the Swedish Institute for Food and Biotechnology (SIK) warned that 1.3 billion tons a year of food are spoiled or go to waste worldwide.

"How can we waste one-third of the food we produce when so many people are hungry?" protested Méndez, who said "we are living in a food bubble."

FAO Director-General José Graziano da Silva said one-third of the food produced globally is thrown away, a quantity that could feed 500 million people.

People scavenging for food in the trash bins outside supermarkets are now a common sight in Spain, where more than five million people are unemployed.

Solving the problem of leftovers is "difficult" because making use of them "requires infrastructure and management," and the laws "guiding and controlling the market make donating food difficult," Javier Peña, head of Bancosol Alimentos, a food bank in the southern city of Málaga, told IPS.

"Our basic task is to find surpluses, make use of the most suitable items that would otherwise be discarded and act as intermediaries to distribute everything from fresh produce to processed and frozen foods," said Peña, who has run the organisation for 15 years along with around 100 people, mostly volunteers.

There are 52 food banks in Spain, associated in the Spanish Federation of Food Banks (FESBAL). They are not-for-profit bodies run by volunteers who deliver food donated by firms and agencies to social assistance organisations for redistribution to the needy, in order to avoid waste.

Millions of tons of food fit for human consumption are wasted due to over-production, but also as a result of defective packaging, imperfections in shape or size, or short “sell-by” dates.

"For the last year-and-a-half an organisation has been coming to collect what we have not sold. We used to throw it out," an attendant at a large commercial centre in Málaga told IPS as he removed several tomatoes from display "because they don’t look good.”

The EP report recommends modifying the "sell by" dating system that forces large quantities of food to be discarded, diversifying packaging sizes and introducing a food course in school curricula.

"One of the biggest problems is the squandering of food in homes," said Peña. "Half of what is bought goes into the bin because people don´t check sell-by dates."

Last year Bancosol Alimentos distributed 5,000 tons of surplus food from wholesale markets, supermarkets and donations from corporations and individuals, to 230 social organisations.

"Many people are hungry and poor," Roberto Suárez, the head of the Málaga Association of Ecuadorean Immigrants (ASIMEC), told IPS. Once a month, he and several fellow Ecuadoreans go to Bancosol to collect food and then distribute it to over 100 families of different nationalities.

On this occasion, Choro Sonko from Senegal, who works occasionally as a dancer, has joined them on the errand. She is an activist in Sunugal, an association through which she wants to distribute food to her fellow-Senegalese, "who are having a very rough time and feel ashamed for having to ask for food," she said.

Food banks are currently overwhelmed by requests. "They are essential," said Tamayo, who added that it is also necessary to raise awareness about efficient management of surplus food.

All rights reserved, IPS – Inter Press Service, 2012.

This article may not be republished, broadcast, framed, or redistributed without the written permission of IPS – Inter Press Service. Republication of this material without permission from IPS, the copyright holder, constitutes a violation of United States and international copyright laws and may result in legal action.


Filed Under: Agriculture, Economic Crisis, Economy, Europe, Health, Lead, Poverty Tagged With: , , , , ,

Thinking Out Loud About the Financial Crisis and Austerity

November 19, 2012 by

By Alan Fogelquist

The reason societies like those of Eurozone the United States don’t move effectively to address the real causes of economic crisis and the unnecessarily high levels of unemployment is that members of the comfortable middle class with stable positions don’t yet feel the pain felt by the victims of bad economic policy and long standing institutionalized inequality. These problems are off the radar screen of many with upper incomes and secure positions even when a much larger share of  income is flowing to a tiny minority of individuals higher up the ladder associated with financial institutions that have the power to create money in the form of debt. The crisis is rooted in debt financed speculation, but the people paying the cost of the collapse in the value of assets and financial panic are not those with high paid positions in the large speculative financial institutions that have been rescued with public money, but common citizens whose businesses or jobs are lost in the recession or whose,  jobs, wages and salaries are cut through austerity measures.
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The Eurocratic elites are doing one thing and one thing only. They are trying to force working people in Spain, Greece, Ireland, Portugal, Italy and elsewhere to pay off odious debt with interest and penalties to banks that were allowed to gamble in derivatives and create money in the form of debt. It’s time to cancel the debt and to introduce a new leadership in Europe or for the peoples of countries most victimized to force out governments subservient to the Eurocrat oligarchy and withdraw from the Eurozone. Until one of these things happens the people have no choice but protest.
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“But that’s not my issue’, some may say. But everything is becoming everyone’s issue in the world of 21st century conflict, financial crisis and victimization of millions. It’s a global problem both ethical and real and the issues are interrelated. That’s the reason the planet urgently requires effective multidimensional efforts to resolve pressing human and environmental problems before it becomes too late.
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Yes, this  may seem like preaching from the top a soap box, but what do you think Fox News does? What counts is what is said from the top of the soap box. Millions of soap boxes are necessary to counter false ideology spread in the mass media. We need a mass media that reflects the real interests of the majority of the people,  people who carry out real productive and useful work and receive modest wages and salaries. These are the people whose interests need to be defended. We need rational economic systems that make maximum use of the world’s productive capacity, technology, and brain power to serve human needs.

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The real issues in the world financial crisis and depression are institutional and moral, not technocratic. If the technocrats were to work diligently to solve the real issues facing humanity instead of inventing technical arguments to avoid them there would be much less suffering and much less unemployment.

———-

© Copyright 2012 Alan F. Fogelquist, Ph.D. All rights reserved.


Filed Under: Economic Crisis, Economic Policy, Economy, Europe, Finance, Inequality, Media, Opinion, Politics, Poverty, Social Justice Tagged With: , ,

Global Rebalancing – Implications For Asia

November 16, 2012 by

Global Geopolitics & Political Economy / IPS

Supachai Panitchpakdi

Nov 15 (IPS) – Although it remains the fastest growing region, Asia is already experiencing an economic slowdown, with gross domestic product (GDP) expected to fall from 6.8 percent in 2011 to slightly below six percent in 2012. Several countries – including China, India and Turkey – have been adversely affected by weaker demand from developed countries.

Given the headwinds from the international economy, some developing countries have since relaxed their monetary conditions and many of them have applied countercyclical measures that are helping to boost household incomes and to maintain a much needed shift from external to domestic demand, alongside the role of investment.

China, for example, has played a critical role in global rebalancing, being the chief engine of world growth since 2009 and having reduced its surplus markedly (from 10 percent of GDP in 2007 to two percent in 2012) as it shifted its economy towards domestic demand.

In China and other major economies in the region, however, internal rebalancing remains unfinished as private consumption should take on a greater role relative to investment. High wage growth will help to support this goal as well as helping to promote further external rebalancing.

High and volatile commodity prices also present a risk to the rebalancing process for the Asian region, because they can be a drag on growth. Rising oil prices, for example, act as an immediate dampener on aggregate spending in fuel-importing countries, contracting spending more or less immediately, whereas any spendi, Ang expansion from fuel-exporting countries occurs only after a lag.

However the main risk continues to be concentrated in the developed economies, where the United Nations Conference on Trade and Development (UNCTAD) has long been concerned that premature and excessive fiscal austerity is choking recovery and growth unnecessarily. The developing economies in Asia have played a major role stoking the engine of growth since the crisis, but this could be derailed if there continues to be a decline in consumer demand from their traditional markets in the advanced economies, and the effects of a reduction in this demand would of course have further spill-over effects if it provoked a downturn in Asian household and investment demand.

The second aspect of the rebalancing has occurred after the crisis. Global trade rebalancing has been largely due to the decrease in China’s exports and the increase in its domestic demand. Trade imbalances for many other East and South-East Asian (ASEAN) countries have not altered significantly. In 2011, the trade surplus of ASEAN as a whole had recovered to its 2007 level and it is currently similar in size to that of China, at about 100 billion dollars.

The rebalancing of the last three years has been due to a number of factors: the worsening terms of trade, especially for China, the decrease in international demand for products collaboratively (vertically) produced by East Asian countries, and the increase in domestic demand in China.

In practice, while China’s trade surplus is largely related to its trade with high-income markets, that of other East Asia countries is largely owing to trade with China. Indeed, the trade surplus of ASEAN countries with China has been increasing in the recent years.

The implications of this rebalancing are largely related to Chinese imports from the region. In this regard, the increase in Chinese domestic demand and the weak international demand for Chinese manufactures are resulting in a shift in the composition of Chinese imports. In practice, China imports relatively fewer goods to fuel its export sectors, and more consumption goods to meet the increasing domestic demand.

In this context, regional partners serving the Chinese export industry (those with vertical supply chain links with China) are likely to continue to be negatively affected as long as demand for Chinese exports remains weak. On the other hand, regional firms serving the Chinese domestic markets are likely to show continuous growth. However, a caveat is that China’s demand for final goods is still largely met by domestic producers, and thus the increase in domestic demand may not have large external spillovers.

A reduction in international demand for Chinese exports may also accelerate the transformation of the Chinese manufacturing industry towards higher value-added goods. This clearly depends on the extent to which Chinese firms are able to upgrade along the value chain and to capture market share in these segments.

If (or when) this occurs, it may have repercussions for the vertical integration of production processes in the region. In practice, Chinese firms could turn from vertically integrated partners into competitors of firms in more advanced countries. On the other hand, the process of manufacturing upgrading may benefit less advanced economies in the region, which are presently competitors of Chinese firms.

Ultimately, what is most important is that regional markets remain open, so that rising domestic demand in each country is met not only by domestic enterprises but also by those operating in other countries of the region. (END/COPYRIGHT IPS))

* Supachai Panitchpakdi is the secretary-general of the United Nations Conference on Trade and Development (UNCTAD).

All rights reserved, IPS – Inter Press Service, 2012.

This article may not be republished, broadcast, framed, or redistributed without the written permission of IPS – Inter Press Service. Republication of this material without permission from IPS, the copyright holder, constitutes a violation of United States and international copyright laws and may result in legal action.


Filed Under: Asia, Development, Economy, Trade Tagged With: , , ,

How Austerity Plans Failed the Europe Union

November 16, 2012 by

Global Geopolitics & Political Economy / IPS

Julio Godoy

BERLIN, Nov 16 (IPS) – The austerity programmes being rolled out in virtually every member state of the European Union (EU) – particularly in Greece, Portugal, Spain and Italy – have failed to reach their stated objective of consolidating public finances in order to solve sovereign debt crises.Instead, these programmes – which entail massive public spending cuts in sectors such as education, health and governance – are “leading to collective folly” and even to “a social breakdown” across the continent, according to numerous economic experts.

Far from solving the debt crisis, as promised, the current fiscal consolidation plans will result in higher debt-GDP ratios in the EU in 2013, according to recent research.

Several reports have now confirmed what economists and activists warned months and even years ago: that the economic crisis, triggered by the financial collapse of 2007-2008 and the subsequent state-sponsored bailout of banks and investment funds, has resulted in higher unemployment and poverty rates in every country.

According to figures published by the official European statistics office, Eurostat, youth unemployment in Greece, Ireland, Italy, Portugal and Spain is presently above 30 percent.

The situation is particularly difficult in Greece, where youth unemployment has more than doubled since 2008, to reach 55.4 percent in 2012. In Spain, where a 37 percent youth unemployment rate was the norm in 2008, the crisis has rendered over 50 percent of the youth labour force jobless.

Further deterioration of the social climate in Greece, where unions have orchestrated a wave of general strikes against yet another bout of state budget cuts, this time worth 17 billion dollars, augurs ill for the future of the Union under the shadow of austerity.

In its newest Global Prospects Report, released on Nov. 5, the London-based Centre for Economic and Business Research (CEBR) predicts that the Eurozone recession will continue through 2013, with only “marginal growth … likely” in 2014.

According to the CEBR, the outlook is particularly calamitous in Greece, Italy, and Spain, with negative economic growth prospects. The report forecasts contractions of gross domestic product (GDP) in all three countries for 2013, of seven, 1.8, and 2.2 percent respectively.

“The economic situation in some parts of Europe is moving from bad to catastrophic,” Douglas McWilliams, chief executive of CEBR and a co?author of the report, told IPS. “There is a danger that the economic problems will spill over into social breakdown in many areas of Europe as unemployment soars and governments run out of money.”

Yet another analysis of the economic and social situation in Europe, released Nov. 1 and authored by two leading economists at the London-based National Institute of Economic and Social Research (NIESR), goes even further, arguing that the austerity programmes across the continent are “self-defeating”.

The NIESR’s most benign scenario for 2013 forecasts a worsening of the present depression. According to their calculations, the austerity programmes will have a negative impact on the debt-growth ratios of 8.9 percent in Greece, 7.7 percent in Portugal, 4.2 percent in Spain, and 1.9 percent in Italy.

Jonathan Portes, co-author of the study, told IPS that his analysis of the present fiscal policies in Europe leads to the conclusion that “while in ‘normal times’, fiscal consolidation would lead to a fall in debt-GDP ratios, in current circumstances…fiscal consolidation is indeed likely to be ‘self-defeating’ for the EU collectively.”

Youth hit hard by austerity

In a study released late October, the European Foundation for the Improvement of Living and Working Conditions (Eurofound), an autonomous body of the EU, emphasised, “The immediate future of Europe depends upon the 94 million Europeans aged between 15 and 29.”

According to the study, the youth unemployment rate was 33.6 percent (or 19.5 million people) in 2011, “the lowest level ever recorded in the history of the European Union".

However, there is huge variation between EU member states, with rates varying from below 7 percent in Luxembourg and the Netherlands, to above 17 percent in Bulgaria, Ireland, Italy, and Spain.

“The consequences of a lost generation are not merely economic,” the Eurofound report warns, “but are societal, with the risk of young people opting out of democratic participation in society.”

The drain of an unproductive youth force – in terms of lost output – amounts to some 153 billion euros annually, or 1.2 percent of the EU’s GDP, according to the Eurofound report.

Stefano Scarpetta, deputy director for Employment, Labour and Social Affairs at the Organisation for Economic Co-operation and Development (OECD), charged that Europe was “failing in its social contract” with the young, and warned that political disenchantment could reach levels similar to those that sparked the North African uprisings that have been dubbed the Arab Spring.

According to a report released last May by the International Labour Organisation (ILO), unemployment among young people in North Africa jumped five percentage points in 2011, to 27.9 percent.

“North Africa and the Middle East stand out in terms of their overall unemployment problem and these are the only two regions where the unemployment rate exceeded 10 percent in 2011 for the population aged 15 and above,” according to the ILO.

That situation is now true in various EU member states, where discontent has emerged in the form of ‘indignados’ in Spain and mass youth mobilisations in Portugal, Greece, and elsewhere in Southern Europe.

Peter Matjasic, president of the European Youth Forum, the representative body of more than 90 national youth councils and international youth NGOs, urged the EU to make the European “vision (of a social democratic society) a reality for a generation.”

Matjasic also demanded that expectations raised by the bestowal of the Nobel Peace Prize upon the EU this year be fulfilled. “The Nobel committee (talked) of the success of the ‘European dream’ and European leaders this week spoke about strengthening it. But without investing in youth now, it is in danger of becoming a lost dream.”

All rights reserved, IPS – Inter Press Service, 2012.

This article may not be republished, broadcast, framed, or redistributed without the written permission of IPS – Inter Press Service. Republication of this material without permission from IPS, the copyright holder, constitutes a violation of United States and international copyright laws and may result in legal action.


Filed Under: Economic Crisis, Economic Policy, Europe, Featured, Politics Tagged With: , , ,
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