Austerity and the Economic Crisis by Art Perlo

Introduction -- Summary of Economic Situation


We meet as the European economy is spiraling down into chaos. The devastation in Greece has been likened to living under occupation in WWII. Spain and Italy are heading toward financial crisis. Increasingly, the question is not whether, but how long until the Euro and the European Union collapse or are significantly weakened.

In the US, after 4 months of modest but real job growth over the winter, we have now had 3 months of jobs barely keeping up with population growth. (March, April, May). Projections for the next few months vary, and economic indicators are contradictory. EG, Retail sales up. Business investment slowing.

IMO, the best possible scenario is continued sluggish growth through the elections, with a modest pickup in employment. Even with best case scenario, excessive "happy talk" from the administration could lead millions to think Obama is disconnected from the reality they see every day.

Weighing against a robust recovery, or even continued slow growth, are the economic boat anchors that have been blocking recovery for four years.

*deep burden of unpayable household debt from home mortgages, credit cards and student loans
*low household consuming power due to high unemployment and stagnant wages
*global economic crisis, especially in Europe and now threatening in China
continued instability and threat of crisis in the financial system, exemplified in *the recent JP Morgan Chase losses
*austerity policies enacted at state, local, and increasingly federal government levels.

It is the last factor -- government austerity policies, that I will deal with in this report. These are the policies by which government have the most direct, immediate influence on the economy, and which are at the center of this year's elections.

Read more here.