With the votes of the social democratic PASOK party, the Greek Parliament approved a new package of austerity measures on Wednesday. The vote marks a political watershed for the whole of Europe.
No serious economist doubts that the austerity measures will reverse the living standards of broad social layers by decades. The first austerity package adopted last year already contained massive cuts to public service salaries, pensions and other benefits. At the same time, it increased consumption taxes, thereby triggering a deep recession and a sharp increase in unemployment.
Now an additional €28 billion is to be saved by 2015. This represents 12 percent of the gross domestic product of this country of 11 million people. In Germany, equivalent cuts would amount to €300 billion, and in the US to $1.7 trillion. A further €50 billion will be raised through the privatisation of state enterprises.
The new program will lead to 150,000 job cuts in public services, reductions in social spending and health care, together with huge tax increases for median incomes. The Value Added Tax for pubs and restaurants will be increased from 13 to 23 percent. In Greece, where the economy relies heavily on such small businesses, this will mean ruin for thousands, and will deepen the recession.
Even Wolfgang Münchau, a leading columnist for the Financial Times and, until now, an advocate of austerity has come to the conclusion that such austerity measures are “financially reckless and politically irresponsible.” “The program, as it stands, is politically, morally and economically hard to justify,” he writes.
HERE
I guess the USA is next for financial ruin caused by 'austerity'.
