By Abraham Newman – Europe’s recent economic troubles have taken three different forms.
- Some countries, such as Greece, face an old-fashioned debt crisis: Governments borrowed too much money during the boom and have no viable means of repaying it.
- In other countries, such as Ireland, the financial crisis forced governments to bail out the banking sector and absorb its debts.
- Still other countries, such as Spain, suffered a crisis of liquidity after bond purchasers demanded higher interest rates on government debt.
In the latter two, markets, not governments, were the primary culprits. But that has not stopped politicians in Germany and the Netherlands from singling out government — inefficient, bloated, and profligate — as the problem. The government in Athens has become the poster child of the austerity movement, but it only speaks to one of the causes of Europe’s current woes.
Austerity politics in Europe is not simply a short-term fight between the surplus countries in the center and the deficit countries on the periphery. It is a long-term political agenda that privileges lenders over debtors and capital over labor and, as such, should be seen through the lens of partisan politics. more> http://is.gd/SIXgFt
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