Austerity: Unintended consequences… February 27, 2013Posted by WorldbyStorm in Economy, European Politics.
In a way the events in Italy are remarkable. A genuine slap in the face to the orthodoxy and from a (relatively) unexpected quarter. As the Guardian notes, one A. Merkel was counting on relative calm on the European front in the run up to her own election contest, but all changed and changed, well, quite a lot.
That said, this gave me pause for thought.
Both Berlusconi and Grillo have been harshly critical of the Germans, decried Monti’s austerity packages, and have raised questions as to whether Italy, the eurozone’s third biggest economy, should remain in the single currency. Grillo has called for a referendum on the matter.
Has the Commission and ECB boxed too clever by half on all this with austerity? Because it’s beginning to look as if – even apart from the dubious merits of that approach, it may be generating significant dissent against aspects of the European project.
Still. Why should that be such a surprise? If the policy adhered to by the orthodoxy is incorrect, and demonstrably so – to the extent that the IMF itself has found evidence of same, why should one credit them with any competence at all in regard to being able to keep the broader show on the road?
And no surprise at all at the level of populations seeing nothing in the prospect of “austerity” as a near permanent fixture in their lives.