Turbulence Ahead

[unhappycamper]

Turbulence Ahead
Monday 24 January 2011
by: Joseph E. Stiglitz, News Analysis

Another year of malaise along the Atlantic.

By the numbers, the great recession's long gone. The World Bank forecasts that developing countries -- chugging along at an average growth rate of 6 percent -- will expand the global economy by more than 3 percent this year. In the last six months, London's FTSE 100 is up more than 15 percent, and Wall Street's Dow Jones index is up nearly as much. It's just about enough to say the good times are back.

All this good news, however, provides little comfort to workers in the U.S. and Europe. Because even in the rosiest scenarios, job prospects there will continue to be few and far between. And more broadly, on jobs, austerity, and currencies, both sides of the Atlantic may spend the year caught in an ill-informed policymaking spiral that means, though it's frustrating to say it, more malaise.

No recovery can be called real without bringing down unemployment. As in the euro zone, the haunting number in the U.S. hovers around 10 percent. (In Spain, it's twice that.) And there is a wide consensus among economists that something like the pre-crisis unemployment level of 5 percent remains years away, at least.

But rather than putting people back to work, economic leaders have embarked on a misguided austerity mission. Stimulus cash in Europe and America is now fading away, with no real robust recovery to take its place. And we've been here before. From President Hoover in the Great Depression, to global responses to the East Asia crisis in the late 1990s, it's clear that government cuts weaken economies rather than alleviating malaise. Slashing spending hobbles economic growth; we already see the effects in Ireland, Greece, and other countries on the vanguard. And after the cuts, the cycle takes hold: those out of work for extended periods see their savings accounts eroded and their skills attenuate. Less spending means a slower economy. Anemic growth further hobbles state fiscal positions, sparking more cutbacks.

[Hannah Bell]

1. kr. austerity = a way for the rich to pay off their debts on your misery.

let the fuckers go bankrupt.

they're always talking about "personal responsibility" for thee -- but never for them.