With the appearance a few years ago of a Greek sovereign crisis - it must be said for debt levels that weren't much higher than those of the USA - the alpha and omega of the EU's response has been to demand austerity. There's two things to be said for Greek austerity. The first is that Greece's difficulties - condemned by German politicians and capitalists as being the result of greedy workers living the high life - is actually the result of the fact that the Euro is too high given the level of development of the Greek economy. On the other hand, the downward pressure that Greek underdevelopment exerted on the EU had the effect of boosting German exports. Not only did German capitalism sell abroad, it also colonized the European economy, competing on an equal footing with unequally developed economies, like those of Portugal and Greece. So, German finger-wagging is utter hypocrisy. The greasy Euro notes that line the pockets of German capitalists were squeezed out of the pockets of Greek and Portuguese workers.
But the second thing that must be said about austerity is this: it doesn't work. As Larry Elliott notes in today's Guardian:
"The lesson from Greece is absolutely clear: slashing spending and increasing taxes when an economy is in free fall leads to higher, not lower, levels of debt. Spain is following Greece down the vicious spiral that starts with weak growth and rising unemployment and ends with expensive bail outs that do more harm than good."And therein also lies the madness. Having haughtily and with much chest-thumping bravado, utterly destroyed the Greek economy, these idiots are now proceeding to perform the same savage surgery on the Spanish economy. But if the Greek economy represents merely cutting off an EU earlobe, the Spanish economy - the fourth largest in the EU - is like losing an arm or a leg. Such a large wound won't cauterize itself and Europe could easily bleed out with Italy following Spain down the path to ruin. European capitalists, again, led by the Germans, remind me nothing so much as a medieval leech, who cures the patient by killing them. The only hope for both Greece & Spain is that the revolt of the masses, still on a simmer in Greece and heading for a boil in Spain with demonstrations last week involving millions, forces the ruling class of Europe to give up on austerity as a strategy. The long term hope is that the masses kick out the ruling class of Europe and run the continent in the interests of the people who do the work, not the parasitic bankers and bond traders who brought the continent to this pass in the first place.