"Indignados" in Málaga, Spain, protest cuts in health and education. Credit: Inés Benítez/IPS

By Roberto Savio
ROME, Jul 8 2013 (IPS)

At the last summit of European heads of state held in Brussels at the end of June, the main theme was youth unemployment, which has now reached 23 percent of European youth (although it stands at 41 percent in Spain).

Last year, the International Labour Organisation issued a dramatic report on Global Employment Trends for Youth 2012 in which it spoke of a “lost generation”.

According to projections, the generation currently seeking to enter the market place will retire with a pension of just 480 euros – if it actually succeeds in entering the market – because of temporary jobs without social contributions.

After long discussions, Europe’s leaders decided to allocate six billion dollars to fight youth unemployment. After much shorter discussions, they decided to allocate up to 60 billion dollars to support Europe’s banks. This, on top of the striking subsidies already received: the European Central Bank alone has given 1,000 billion dollars to the banks at nominal cost.

All the efforts to create a European banking system under a central regulator are now on hold until the German elections in September. As a member of the German delegation at the June summit is reported to have said: ”We know well what we are supposed to do, to calm financial markets. But we are not elected by financial markets, we are elected by German citizens.” (IHT, Jun. 28, 2013).

And of course, no effort has been made to explain to Germany’s citizens why it is in their interest to show economic solidarity with the most fragile countries of Europe. Democracy, as it is understood today, is based on leaders who follow popular feelings, not on leaders who feel it their duty to push their electors towards a world of vision and challenges.

The summit was also obliged to accept the blackmail of British Prime Minister David Cameron: either you maintain the subsidies that then Prime Minister Margaret Thatcher obtained in 1973, when you insisted that we join Europe (which makes Britain a net recipient of European money), or we will block the European budget.

This is because the anti-Europe electorate in Britain is growing and Cameron could not afford to appear weak. But Cameron was one of the strongest proponents of the subsidy for the banks, and no wonder: the financial system now accounts for 10 percent of Britain’s gross domestic product (GDP).

It is a very curious situation, in which Europe has not only spent several hundred billion dollars on its banks, it has even invited the International Monetary Fund (whose controlling member is the U.S.) to join the European institutions and manage the European crisis.

And, in an unprecedented sign of independence from the U.S., Europe has rejected American calls for reducing austerity and starting policies of growth as Washington and Tokyo have been doing, so far with proven success.

Nevertheless, what is common to the three most powerful players in the West (U.S., Europe and Japan) has been their inability – and unwillingness – to place banks under control and react to their string of crimes.

Central bankers from the entire world join in the Bank for International Settlements (BIS) based in Basel. Now its Basel Committee on Banking Supervision has come up with a proposal that would tighten the relationship between the capital of the banks and the volume of financial operations they can afford. The proposal establishes that banks must maintain high-quality capital, like stock or retained earnings, equal to seven percent of their loans and assets, and that the biggest banks may be required to hold more than nine percent.

This is not exactly a revolutionary proposal, and has been criticised as insufficient by many analysts and regulators. This is confirmed by the fact that the U.S. Federal Reserve estimates that between 90 and 95 percent of banks with assets of less than 10 billion dollars already respect such parameters. Well, even this bland proposal has been received with a howl of protest from many banks, claiming that they would have great difficulty in raising capital.

Under the old capitalist economy, no enterprise would run without capital adequate to its need. Today we have a new branch of the economy, which wants to play without capital, and expects the state to bail it out if anything goes wrong. So, let us just look briefly at how many times things went wrong without anybody ever going to jail:

On Apr. 28, 2002, the U.S. Securities and Exchange Commission (SEC), won a lawsuit ordering 10 banks to pay 1.4 billion dollars in compensation and fines because of fraudulent activities. One year later, the SEC discovered that 13 out of 15 financial institutions randomly investigated were guilty of fraud. In 2010, Goldman Sachs agreed to a fine of 550 million dollars to avoid a trial for fraud.

In July last year, the U.S. Senate presented a 335-page report on the British bank HSBC. Over the years it helped drug dealers and criminals recycle illicit money. The fine was 1.9 billion dollars.

In November 2012, SAC Capital was fined 600 million dollars, and in the same month the second leading British bank, Standard Chartered, was fined 667 million dollars.

In February this year, Barclays Bank announced that it had set aside 1.165 billion euros to face fines for “illicit transactions”.

And in March this year, Citigroup accepted a fine of 730 million dollars for “selling investments based on junk to unsuspecting clients”.

We all know that the crisis in which we find ourselves (which, for the optimists, will end in 2020 and for the pessimists in 2025) originated in the U.S., caused by the 10 largest banks’ decision to sell derivatives based on junk and certified by the Standard & Poor’s and Moody’s rating agencies. U.S. taxpayers “donated” 750,000 million dollars to the banks, while the British did the same for HSBC, Royal Bank of Scotland, Barclays Bank and Northern Rock.

While this financial disaster was happening, the ‘Big Five’ (Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bearn Sterns) paid their executives three billion dollars between 2003 and 2007, And, in 2008, they received 20 billion dollars in bonuses while their banks were losing 42 billion dollars.

All of this was certified by Standard & Poor’s and Moody’s, which control 75 percent of the world market. Now Standard & Poor’s has been requested to pay 500 million dollars.

But what about the millions of people who have lost their jobs? The millions of young people who see no future in their lives? It’s the old story: if you steal bread, you go to jail, but if you steal millions, nothing will happen to you … and if you steal millions in a bank, even less reason to worry.

Meanwhile, back at the summit table, the priority for survival is to allocate taxpayers’ money to banks, even if all talk is about youth unemployment.

(END/COPYRIGHT IPS)

Excerpt:

By Roberto Savio
ROME, Apr 24 2013 (IPS)

For a long time it was a given that while Europe was based on defending a more just society, with social values and solidarity, the United States was based on the glory of individualism and competition, and anything public was considered “socialist”.

Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency. Credit: IPS

One of the main accusations of the last electoral campaign in the U.S. was that Barack Obama had an unspoken design to transform the U.S. into another Europe, beginning with healthcare reform.

Well, it’s time for an update – the defenders of market fundamentalism are now in Europe.

At the last meeting of Ministers of Finance on Apr. 9, the freshly-appointed U.S. Treasury Secretary Jacob J. Lew tried to convince Europeans to lessen their commitment to austerity as the best medicine for economic problems. The U.S. Treasury, together with the U.S. Federal Reserve, has launched a policy of economic stimulus, with concrete success.

Every month, the Federal Reserve alone is putting 80 billion dollars into the bond market. Incidentally, Japan is doing the same, on an even greater scale. Lew was met with a firm rejection: the best way to achieve growth in the long term (contrary to any evidence) is to cut deficits and reassure the markets, even at the cost of higher unemployment and social misery in the short term.

Europe’s most powerful minister, Germany’s Wolfgang Schauble, said: “Nobody in Europe sees this contradiction between fiscal consolidation and growth. We must stop this debate, which says that you have to choose between austerity and growth.”

He was echoed by the president of the European Union, Herman Van Rompuy: “There is no room for complacency. The European economies have a high level of debt, deep structural medium-term challenges, and short-term economic headwinds that we need to confront.”

"Share traders [are] both more reckless and more manipulative than psychopaths"
These short-term economic headwinds are the daily reality of all the countries of Southern Europe. Suffice it to point out that youth unemployment has climbed to 22 percent across Europe (Spain is close to 47 percent) to see that we are wasting a generation, which will have no access to a future pension or a house. Like it or not, a study by the International Labour Organisation (ILO) foresees that the generation now entering the labour market will retire with a pension of only 640 euro per month. Is that a sustainable society?

The reaction of British Prime Minister David Cameron to his country’s loss of Triple A status, was to reaffirm even more his commitment to austerity, including reductions in education and health spending. He conveniently used the funeral celebrations for former British Prime Minister Margaret Thatcher, the forerunner of the dismantling of the welfare state, to place himself as the heir of the Iron Lady: TINA, There Is No Alternative.

Meanwhile, we now have the data for Cyprus. It is widely accepted that it will lose at least two percent of its gross domestic product (GDP) in the coming months and the social impact will be dramatic. Soon, it will be obliged to ask for another bailout.

But under the new formula imposed by Germany, which is to make bank investors and depositors pay for the bailout, they have already lost 60 percent of their money. It will be interesting to see how Germany will find a way for a new bailout.

The Bank of Cyprus has already sold all its gold reserves. What will they now extort, the sale of houses? This is what is widely rumoured will be asked for in Spain and Italy, where citizens would pay a one-off amount and bank depositors would be taxed on their deposits as a condition for any European money.

At the same time, Germany sits comfortably on its trade surplus with Southern Europe, which has reached, according to the OECD, the magical amount of one trillion euro. And the bailouts to Greece, Portugal and Ireland were directed towards reimbursing bad German bank investments.

Yet, the situation of the banks and the volume of toxic titles they still possess are unclear. A number of figures circulate: what it is agreed is that banks still need money to stabilise. The case of Bankia in Spain is emblematic. The government has poured in 72 billion dollars, more than what it cut in health and education. Have the banks become wiser and less speculative now that they know that they will be bailed out anyhow?

The latest news from Wall Street is revealing. The banks that created risky amalgams of mortgages and loans – the so-called derivatives, which created the immense disaster that ignited the present crisis (with the added contribution of European bank speculation over sovereign titles) – are creating exactly the same instruments of risky speculation. Forgotten is the last crisis five years ago. In the last quarter alone, banks have issued 33.5 billion dollars in bonds backed by commercial mortgages and proven disastrous speculation is back, just like collateralised debt obligations.

The reason is simple. Unless banks are put back to the pre-Clinton era when deposit banks were rigidly separated from investment banks, all the money that goes to the banks will go first to speculation, which has a higher return (and if anything goes wrong the state will bail them out again), and then to deposits and loans, which have a much smaller return.

So, the traders specialised in those derivatives are being hired back by the banks.

Two experienced forensic experts working for a Swiss university have devised computer simulation and intelligence tests to measure the egoism of 28 professional financial traders, and to check their willingness to cooperate with others. They discovered that the share traders were both more reckless and more manipulative than psychopaths. Thomas Noll, a psychiatrist and a prison administrator, told Germany’s ‘Der Spiegel’ that the “more egoistic” traders “were more willing to take risks than a group of psychopaths who took the same test”.

What surprised the researchers was the competitive attitude of the financial traders, which had a destructive edge. Instead of being business-like and aiming to reach the highest profit, explained Noll, “it was most important to the traders to get more than their opponents, and they spent a lot of energy trying to damage their opponents”.

How many crises do we have to bear before regulations eliminate risks from the banks and they are confined to the world of speculation? Or, in other words, before regulations isolate normal citizens from traders who are not wired like us?

(END/COPYRIGHT IPS)

Excerpt:

Poverty in Portugal has risen to levels that were unimaginable a year ago despite the bleak outlook forecasted by the harsh measures imposed by the troika of creditors in exchange for the country’s financial bailout.

An eatery in Lisbon offers cheap “troika” lunches to weather the crisis. Credit: Katalin Muharay /IPS

Unable to pay their bills or even meet basic food needs, thousands of families are facing dire times and turning increasingly to charities for assistance. Many do so secretly, however, ashamed to admit they have to resort to such means to get by.

The phenomenon has become so widespread that the impoverished middle class is starting to be known as the “embarrassed poor”.

This new poverty, caused by unemployment and the inability to repay bank loans, is also driving up the number of suicides, according to reports by Caritas, Food Bank and other social solidarity organisations.

According to figures from the National Statistics Institute, in 2012 a fifth of all Portuguese were living on less than 478 dollars a month, well under the minimum wage established by law at 644 dollars a month and 14 salaries a year.

In June 2012, a year after the troika – comprised of the European Union (EU), the International Monetary Fund (IMF) and the European Central Bank (ECB) – stepped in with a bailout package, soup kitchens have sprung up across Lisbon, bringing back the “sopa dos pobres” served out by Catholic organisations to feed the poor in the 1950s.

Today long lines of people can again be seen queuing outside charity centres waiting to receive their only hot meal of the day.

Teachers around the country report alarming cases of middle-class children coming to school on an empty stomach, dizzy and even fainting from hunger, but trying to act normal so as not to be confused with poorer children.

Middle-class Portuguese people of all ages are finding it hard to accept the fact that their dream of attaining the upper middle-class status they had been working towards for the past two decades is slipping away.

Those efforts are, in fact, having the opposite effect, experts say. Buried under a mountain of unpayable debts, the middle class is sinking closer and closer to the lower class, which at 24.4 percent has increased two percentage points since 2009, in a population of 10.6 million.

According to the National Statistics Institute anyone with an income between 768 and 2,660 dollars a month is considered middle class, in a country where half the population earns less than 932 dollars. Officially, around 60 percent of the population falls within that definition.

“In Portugal, poverty is becoming part of the scenery,” João Pedro da Fonseca, a young unemployed electrician specialising in generators, told IPS.

After a decade on his own, enjoying a high standard of living, he had to move back in with his parents and depend on their meagre pensioner income, “with little hope of finding work” in his field.

Out of a job for nearly a year now and with no unemployment insurance, this 29-year-old Lisbon native believes “this is just the beginning of a long period of poverty, a terrible crisis that I’m not responsible for, caused by the usual powerful men.”

Marina Oliveira, a 26-year-old psychologist who has been unemployed for the past 13 months, told IPS that when a crisis hits — no matter where in the world — “poverty only comes calling at the doors of the most vulnerable.”

She survives thanks to her parents, who are helping her “until I can leave the country to follow my dreams, which sadly have become impossible in my country, where poverty is only going to get worse, as new measures are imposed to pay the troika back,” Oliveira said.

The troika granted the Portuguese government a total of 110 billion dollars to service the national debt, meet administration costs and, above all and despite great criticism, provide capital for its distressed banks.

Oliveira highlighted that other countries have also suffered “these crises imposed by the promoters of the consumerist dream, who never get stuck with the bill.”

“The most outrageous example of this is the United States, where some of the leading people responsible for the 2008 crisis, which later spread across the world, were invited by (President Barack) Obama to serve as advisers and consultants for his administration,” he said.

In “Portugal we have to live under the rules dictated by this enormously powerful troika, making us bow to a global financial system that is unscrupulous and completely heartless and that forces us to surrender our country to that pack of vultures that are the large banks.”

The latest statistics available indicate that in 2011 Portugal had a gross domestic product (GDP) of 214 billion dollars and its national purchasing power stood at 77.4 percent of the average purchasing power for the EU.

Preliminary data for 2012 reveal a drop of 2.9 percentage points in Portugal’s GDP, confirming the downward trend observed since the start of the crisis. From 2009 to the end of 2013 it will have dropped by a total of 7.4 percent, according to projections released by the Bank of Portugal on Jan. 15.

For the victims of the crisis, the last straw came on Jan. 10 with the IMF’s new recommendations.

In a document addressed to the Portuguese government, the IMF called for greater austerity, which is certain to affect an already besieged middle class that in 18 months lost almost 25 percent of its purchasing power.

The IMF recommends a new package of measures, with additional cuts in pensions and wages, in particular in sectors such as education, health and law enforcement.

It also recommends raising public hospital fees, firing 14,000 teachers, placing 50,000 elementary teachers in a mandatory relocation scheme and privatising public education.

In his Jan. 22 opinion column, featured in the Público de Lisboa newspaper, analyst José Vítor Malheiros noted that this policy of drastic cuts is applied “only to social areas, never affecting the benefits of the (wealthiest) one percent”, and it is aimed at “pleasing creditors and perpetuating Portugal’s dependence on the financial system”.

Among the many waiting in line at a Lisbon Employment Centre, a man in his forties told IPS that he comes to the centre every day in the hope of finding “any job they can offer me, because I have a 12-year-old daughter and we’re both going hungry.”

He agreed to talk to IPS but asked to remain anonymous “because I’d like to speak frankly and, if I give you my name, they’ll never give me a job.”

He also refused to give his profession or trade, merely noting, “I was foolish enough to think that a university degree would guarantee a decent future. But here I am, willing to take any job.”

“Portugal has been gripped by fear, a fear that’s spreading thanks to outrageous policies. And those who are lucky to still have a job are bending over backwards to please their bosses, afraid they’ll be fired and will have to join the ranks of the new poor.”

The Peoples Summit will begin this Friday, Jan. 25 with a march through the streets of Santiago, Chile. Credit: Pamela Sepúlveda/IPS

By Marianela Jarroud
SANTIAGO, Jan 24 2013 (IPS)

More than 400 social organisations from Europe and Latin America and the Caribbean will gather on Jan. 25-27 at a Summit of the Peoples called as an alternative to the bi-regional meeting of heads of state and government to be held at the same time in the Chilean capital.

Convened under the slogan “For social justice, international solidarity and sovereignty of the peoples”, the aim of the meeting held parallel to the Santiago summit of EU and Latin American and Caribbean leaders is to make sure the civil societies of both regions are heard, as they voice their opposition to the model of development imposed by previous bi-continental summits.

“The peoples are being forced to bear the brunt of a crisis that was unquestionably caused by poor financial management,” Chilean activist Martín Pascual, one of the organisers of the alternative summit, told IPS.

“This summit is a response to that official view that comes from the so-called First World, and we believe that we’re going to find echo in several Latin American governments that hold a different view, and, of course, among social organisations,” he said.

Pascual noted that there are a number of countries in Latin America and the Caribbean that promote a “more independent, more autonomous, more sovereign” path.

“The governments of Venezuela, Argentina, Brazil, Ecuador and several other countries have refused to bow to the demands of the International Monetary Fund (IMF) and other international financial institutions. Many of these countries have clashed with multinational corporations over nationalisations,” he said.

Pascual further observed, “All these countries also seek to strengthen their economies, without focusing exclusively on ‘extractivism’, which is what industrialised countries want them to do. That’s the role they want to assign our countries in the global economy.”

In Pascual’s opinion, the slogan chosen for the official summit, “Alliance for Sustainable Development to Promote Investments of Social and Environmental Quality”, sparks a warning among many peoples and social organisations because “it prioritises the issue of investments, even if these are qualified” by social and environmental considerations.

This will be the seventh biennial EU-LAC summit since top leaders of the two regions started meeting in Rio de Janeiro in 1999. But this year’s edition in Santiago marks a new start, as it will be the first time that the Latin American and Caribbean region participates through the Community of Latin American and Caribbean States (CELAC), its recently created intergovernmental body for political integration.

The new regional body, founded in 2010, will celebrate its first summit with the EU in Santiago on Jan. 26-27. Hosts expect that of the 33 CELAC member countries 24 presidents will attend the summit, along with 17 heads of state of a total of 27 EU nations, in addition to EU authorities.

As current temporary president of CELAC, Chile will also host the regional body’s first formal summit on Jan. 27-28, where Cuba will assume the presidency. So far CELAC has only had two major meetings: one in Mexico in 2010, in which the body was created, and another in Venezuela in 2011, where it began operating.

According to figures from the board of global economic relations of Chile’s Foreign Affairs Ministry, CELAC-EU trade expanded at an average annual rate of 13 percent from 2002 to 2011, totalling 276 billion dollars in 2011, up 23.9 percent from 2010.

The summit, however, will take place against the backdrop of the European bloc’s economic and financial crisis, which it is combating with rigid austerity policies imposed by Brussels on the worst-hit governments. This strategy is viewed by civil society in both regions as a serious setback for social justice and democracy.

“Europe is suffering a crisis that affects the most developed countries, in a context in which Latin America also faces certain difficulties, in particular with the presence of multinational corporations,” Pascual, who is also head of the Chilean Association of Non-Governmental Organisations, told IPS.

To make things worse, he said, there are additional “pressures from some international funding agencies”.

For Pascual, the 2013 Peoples Summit takes on greater importance in view of the historical moment that global civil society is living.

“If there’s a common denominator that characterises both continents today it is the mass mobilisation of their civil societies,” he said.

Not since the first major social mobilisation calling for an alternative model, back in 1998, “had we imagined a scenario like this, in which both continents are mobilised, rising up against injustices and rejecting (neoliberal) policies.”

That year, activists and social organisations from around the world gathered in the U.S. city of Seattle to counter the World Trade Organisation (WTO) meeting held there.

The Peoples Summit will begin this Friday, Jan. 25 with a march through the streets of Santiago, culminating in a cultural and artistic celebration in the Plaza de Armas, the city’s main public square.

From Friday until noon on Saturday, civil society organisations will hold 85 activities, followed by plenary meetings addressing the four key themes established for this summit: democracy, participation and sovereignty of the people against corporate power; labour and human rights against the privatisation of common goods; good living and rights of Mother Earth against the commodification of nature and life; and integration and solidarity of the peoples against social injustice.

The Peoples Summit 2013 will also focus on investments, gender and indigenous peoples as crosscutting issues.

For anthropologist Juan Carlos Skewes, these meetings held in parallel to governmental gatherings are a valuable contribution to the official meetings because they offer alternative visions.

“In general, these high-level political summits represent the interests of each country’s elites and their discussions focus on financial (issues), taxes, foreign commerce and other such issues,” he explained.

The Peoples Summit, instead, “is important because it gives other sectors of society represented at those meetings the chance to bring up their own views and realities.”

“It’s also an opportunity for civil society to meet, discuss and generate other views alternative to the prevailing regional, national and international processes,” he said.

He stressed, “The great virtue (of civil society) is its capacity to raise awareness on issues that are critical within a more hegemonic project, which is not as visible to society and which provides a counterbalance.”

(END)

A riot policeman in Greece attacks a protester during an anti-austerity rally in Athens. Credit: PIAZZA del POPOLO/CC-BY-2.0

By Julio Godoy
BERLIN, Nov 16 2012 (IPS)

The austerity programmes being rolled out in virtually every member state of the European Union (EU) – particularly in Greece, Portugal, Spain and Italy – have failed to reach their stated objective of consolidating public finances in order to solve sovereign debt crises.

Instead, these programmes – which entail massive public spending cuts in sectors such as education, health and governance – are “leading to collective folly” and even to “a social breakdown” across the continent, according to numerous economic experts.

Far from solving the debt crisis, as promised, the current fiscal consolidation plans will result in higher debt-GDP ratios in the EU in 2013, according to recent research.

Several reports have now confirmed what economists and activists warned months and even years ago: that the economic crisis, triggered by the financial collapse of 2007-2008 and the subsequent state-sponsored bailout of banks and investment funds, has resulted in higher unemployment and poverty rates in every country.

According to figures published by the official European statistics office, Eurostat, youth unemployment in Greece, Ireland, Italy, Portugal and Spain is presently above 30 percent.

The situation is particularly difficult in Greece, where youth unemployment has more than doubled since 2008, to reach 55.4 percent in 2012. In Spain, where a 37 percent youth unemployment rate was the norm in 2008, the crisis has rendered over 50 percent of the youth labour force jobless.

Further deterioration of the social climate in Greece, where unions have orchestrated a wave of general strikes against yet another bout of state budget cuts, this time worth 17 billion dollars, augurs ill for the future of the Union under the shadow of austerity.

In its newest Global Prospects Report, released on Nov. 5, the London-based Centre for Economic and Business Research (CEBR) predicts that the Eurozone recession will continue through 2013, with only “marginal growth … likely” in 2014.

According to the CEBR, the outlook is particularly calamitous in Greece, Italy, and Spain, with negative economic growth prospects. The report forecasts contractions of gross domestic product (GDP) in all three countries for 2013, of seven, 1.8, and 2.2 percent respectively.

“The economic situation in some parts of Europe is moving from bad to catastrophic,” Douglas McWilliams, chief executive of CEBR and a co‐author of the report, told IPS. “There is a danger that the economic problems will spill over into social breakdown in many areas of Europe as unemployment soars and governments run out of money.”

Yet another analysis of the economic and social situation in Europe, released Nov. 1 and authored by two leading economists at the London-based National Institute of Economic and Social Research (NIESR), goes even further, arguing that the austerity programmes across the continent are “self-defeating”.

The NIESR’s most benign scenario for 2013 forecasts a worsening of the present depression. According to their calculations, the austerity programmes will have a negative impact on the debt-growth ratios of 8.9 percent in Greece, 7.7 percent in Portugal, 4.2 percent in Spain, and 1.9 percent in Italy.

Jonathan Portes, co-author of the study, told IPS that his analysis of the present fiscal policies in Europe leads to the conclusion that “while in ‘normal times’, fiscal consolidation would lead to a fall in debt-GDP ratios, in current circumstances…fiscal consolidation is indeed likely to be ‘self-defeating’ for the EU collectively.”

Youth hit hard by austerity

In a study released late October, the European Foundation for the Improvement of Living and Working Conditions (Eurofound), an autonomous body of the EU, emphasised, “The immediate future of Europe depends upon the 94 million Europeans aged between 15 and 29.”

According to the study, the youth unemployment rate was 33.6 percent (or 19.5 million people) in 2011, “the lowest level ever recorded in the history of the European Union”.

However, there is huge variation between EU member states, with rates varying from below 7 percent in Luxembourg and the Netherlands, to above 17 percent in Bulgaria, Ireland, Italy, and Spain.

“The consequences of a lost generation are not merely economic,” the Eurofound report warns, “but are societal, with the risk of young people opting out of democratic participation in society.”

The drain of an unproductive youth force – in terms of lost output – amounts to some 153 billion euros annually, or 1.2 percent of the EU’s GDP, according to the Eurofound report.

Stefano Scarpetta, deputy director for Employment, Labour and Social Affairs at the Organisation for Economic Co-operation and Development (OECD), charged that Europe was “failing in its social contract” with the young, and warned that political disenchantment could reach levels similar to those that sparked the North African uprisings that have been dubbed the Arab Spring.

According to a report released last May by the International Labour Organisation (ILO), unemployment among young people in North Africa jumped five percentage points in 2011, to 27.9 percent.

“North Africa and the Middle East stand out in terms of their overall unemployment problem and these are the only two regions where the unemployment rate exceeded 10 percent in 2011 for the population aged 15 and above,” according to the ILO.

That situation is now true in various EU member states, where discontent has emerged in the form of ‘indignados’ in Spain and mass youth mobilisations in Portugal, Greece, and elsewhere in Southern Europe.

Peter Matjasic, president of the European Youth Forum, the representative body of more than 90 national youth councils and international youth NGOs, urged the EU to make the European “vision (of a social democratic society) a reality for a generation.”

Matjasic also demanded that expectations raised by the bestowal of the Nobel Peace Prize upon the EU this year be fulfilled. “The Nobel committee (talked) of the success of the ‘European dream’ and European leaders this week spoke about strengthening it. But without investing in youth now, it is in danger of becoming a lost dream.”

(END)

Thousands have protested against the austerity measures imposed on Greece by its creditors. Credit: George Laoutaris/CC-BY-ND-2.0

By Apostolis Fotiadis
ATHENS, Nov 9 2012 (IPS)

Ignoring the thousands of protestors gathered outside the Greek parliament on Wednesday, the government voted in public spending cuts amounting to 17 billion dollars in an economy already on its knees from a lacerated budget.

The government was promised 40 billion dollars of bailout money in exchange for the implementation of this fresh bout of austerity.

But the country’s creditors – the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF), known as the Troika – have fallen out over crucial disagreements about the terms of the financial “rescue” operation, resulting in a stalemate that has brought Greece to the knife’s edge.

It is obvious that a write-down of Greece’s 200-billion-euro debt, now owned by the European public sector, is sorely needed in order for Greece to avoid disorderly default.

In fact, a day before the election in the United States, even incumbent President Barack Obama threw his weight behind calls for a write-down.

But the EC and ECB are reluctant to accept losses, which the IMF has deemed “necessary”.

The handling of Greek debt has been a point of contention between the IMF management and European interests in and outside the Fund since Greece first asked its international creditors to rescue it from default back in May 2010.

Unable to survive its debt obligations, Greece entered into a 110-billion-euro loan deal with its eurozone partners and the IMF, conditional on the implementation of severe austerity measures.

The programme failed and the economy has all but imploded.

Peter Chowla, head of the London-based Bretton Woods Project, a non-governmental organisation that monitors IMF and World Bank activity, told IPS that it was obvious to most observers very soon after the program began that a second bailout agreement would soon follow.

He added “Even during 2010, many internal IMF reports warned that the Greek programme would not work out. Those were systematically ignored by the Fund’s leadership in order to present homogeneity of the Troika in negotiations with Greece.”

Meanwhile the main line inside the Fund gradually shifted away from European interests and closer to the positions of developing countries like India, Brazil and Russia, all of whom expressed doubts about the efficacy of the Greek plan.

Finally a compromise was struck between the IMF and the European financial institutions about the writing down of Greek debt to a level that might allow the programme to continue.

“In the spring of 2011, amid disagreements about the sustainability of Greek debt, the IMF warned, for the first time, of not offering any more money unless a debt restructure took place. European interests, inside and outside the Fund, finally had to accept this, but tried to limit their losses as much as possible,” Chowla explained.

In October 2011, the Troika offered a second 130-billion-euro bailout loan that not only demanded another austerity package, but also forced private creditors holding Greek government bonds to sign a deal accepting a 53.5 percent face value loss.

Soon after, it became clear that the second programme was wreaking havoc on a crumbling economy and would not put Greek public finances back in order.

And meanwhile, relations within the Troika kept deteriorating.

A confirmation of the depth of the fracture inside the Fund emerged this past July, when Peter Doyle, after two decades of service within the Research and Development branch of the Fund, resigned.

In his brief letter he criticised the IMF’s role in the Troika, blaming ‘European bias’ for constraining the Fund from exercising an impartial role.

Doyle charged that the IMF had compromised its independence, citing “suppression” of information that had been identified well in advance as a reason for the failure of the institution’s surveillance mechanism, which should have properly examined the impacts of the austerity plan.

Austerity shock therapy, according to Doyle, has caused the economy to disintegrate faster than expected and has brought “the second global reserve currency to the brink”.

Further evidence of the Fund’s responsibility in what is now a full-blown Greek crisis surfaced during the launch of the IMF’s autumn 2012 World Economic Outlook in Tokyo, where the IMF’s chief economist, Olivier Blanchard, acknowledged that the Fund’s surveillance models, used to dictate the terms of bailouts, were flawed.

Panagiotis Roumeliotis, Greece’s one-time representative to the IMF, confirmed to IPS that Doyle’s criticism is serious and valid.

He also provoked a high-profile investigation about the handling of the crisis by stating in an interview with the New York Times this August that the bailout plan was “condemned” from the start.

Domenico Lombardi, Italy’s former representative on the IMF’s executive board, says the impasse within the Troika is now reaching a total deadlock.

This August, the Fund refused to provide money to pay off a 3.2- billion-euro Greek bond held by the ECB, Lombardi told IPS. This was made up by an emergency bond sale by the Greek state.

A 5.5-billion-euro bond due to expire on Nov. 16 should be covered by anticipated bailout loans, but the IMF seems unwilling to participate in financing that either.

“Basically the IMF is not going to contribute in any meaningful way till the debt restructuring issue is agreed, formally or informally, explicitly or implicitly,” Lombardi told IPS.

He added that the entire joint programme would have to be restructured if the IMF pulled out at this late stage.

Given that the Greek economy will face an emergency liquidity problem next week, it hastily organised a short-term bond sale Friday to close the gap.

This debt is owned by the ECB, which has thus far refused to write down the debt or lower interest rates.

The situation has now become very dangerous, according to Lombardi.

The creditors may be able to buy some time “by lowering the interest rate on bailout money they have loaned to Greece,” he said.

But the most pressing issue is that none of the leading players seems to have any idea what is to be done in the long term.

(END)

Greeks citizens protesting against the public spending cuts that have accompanied the austerity package. Credit: Bego Astigarraga/IPS

By Apostolis Fotiadis
ATHENS, Oct 10 2012 (IPS)

Like a person on life support whose vital functions are failing, the Greek economy is slowly but surely shutting down as radiation from the so-called ‘austerity plan’ erodes public institutions.

When German Chancellor Angela Merkel arrived here on Tuesday morning for an economic assessment of the debt-ravaged country, she did not see the things that, for thousands, have become commonplace: cancer patients dying outside clinics, unable to access the treatment they need, or kindergartens turning students away due to overcapacity.

Meanwhile, international financial institutions continue to drag their feet on how best to solve the debt crisis and revive the country’s banking system.

Greek Prime Minister Antonis Samara publicly stated last week that Greece will be “unable to go on without further international financial aid after November”, referring to the long-awaited 31.5-billion-euro bailout. This amount is only the latest tranche of a 110-billion-euro loan that the eurozone and the IMF earmarked for Greece back in May 2010, conditional on the implementation of austerity measures.

In October 2011, eurozone leaders agreed to offer a second, 130-billion-euro, financial bailout.

Disbursement of this loan has been momentarily stalled due to a stalemate between the IMF and its European counterparts (the European Commission and the European Central Bank) over whether Greece will be able to meet its debt obligations in the near future.

Sources close to the government told IPS that the IMF is even considering opting out of the Troika, the body that has been responsible for negotiating and implementing a severe austerity plan for more than two years.

Over the next few days, Merkel, a staunch supporter of the massive public spending cuts required by the austerity package, will push the Greek government to reduce public spending by a further 13 billion dollars.

A malfunctioning state

But state employees say additional cuts will be fatal. Already crucial state institutions are showing serious signs of malfunction or even collapse, with hospitals, schools, day-care centres, social security funds, tax offices and courts all struggling to withstand budgetary lacerations.

Giannis Tsounis, secretary general of the federation of municipalities (POE-OTA), an umbrella for all the major municipal unions in Greece, told IPS that the municipal administration is on the verge of collapse.

“Before the crisis the state dedicated 169 million euros to municipalities. Now that number has reduced to 95 million and will eventually reach 72 million.

“Next year they will enlarge our portfolio by adding 113 responsibilities (to our mandate), which we will be expected to carry out after a 60 percent reduction in resources,” according to Tsounis.

“There are 65,000 municipal workers in Greece and 10,000 will (retire) in the next few months,” Tsounis added. “According to austerity plans they won’t be replaced.

“In order to unburden the central administration of responsibilities, the Minister of Interior gets rid of the problem by pushing various functions of the government onto the municipal level.

“Some municipalities are already using money allocated for other purposes to pay wages while many workers remain unpaid for months,” said Tsounis.

“We cannot keep functioning like this, where there is no money left even to maintain public swimming pools, or pay kindergarten teachers their wages.”

A more silent, but equally dangerous breakdown is looming over the health sector, according to Giorgos Vixas, a cardiologist running a makeshift yet highly efficient clinic in Elliniko in South Athens.

Some weeks ago, during a radio debate with Vixas, the Greek minister of health was forced to admit that the public health system is unable to provide medical assistance to an uninsured person.

Most workers lose their insurance barely a year after they are laid off. Self-employed people lose the possibility of medical care the minute they fail to renew their insurance.

According to the labour inspectorate one in every three workers is uninsured. Roughly 57.2 percent of uninsured labourers are Greek and 42.8 percent are migrant workers.

Vixas believes the government has made a “huge mistake” by cutting state budgets and restricting access to public healthcare during a time of crisis.

“Many people with serious conditions are left without medicine, diagnostic examinations, or surgery. People do not take their drugs for months because they can’t afford them. Three cancer patients that came here, to this very clinic, died because they had no access to chemotherapy.”

Agios Savvas and Metaxa, two specialised cancer hospitals, have directed patients to Vixas’ makeshift clinic for drugs.

“A woman who had miscarried came here, with the foetus still inside her. She needed an emergency operation but no public clinic would accept her. We managed to send her to a private clinic that offered her a free abortion,” he added.

“In other cases various doctors continue to treat excluded patients in public hospitals despite a term in the austerity memorandum that states that when a doctor offers services informally, he or she must cover the expense themselves,” Vixas said.

He also predicted that the health sector budget would be choked by “another 1.5 billion euros, bringing total cuts to five billion euros since the austerity package was first implemented.”

Antonis Liakopoulos, deputy president of the Association of Attika Police Officers, told IPS that even public safety is at risk due to financial constraints.

Policemen have taken a six percent wage reduction, before taxes. Often, those who work the night shifts are not paid at all, and none receives wages for anything more than 48 hours of work despite working much longer hours.

“More than 35 percent of police officers have a second job. Plenty of our colleagues are forced to shoulder the expense of adding petrol, or changing tires. Many police vehicles are immobilised” due to inadequate repairs, he added.

“A reduction in the quality of safety services might open the door to corruption within the police structure, though the risk of this is low at the moment,” said Liakopoulos.

Stavros Lygeros, a popular economic and political commentator and author of the best-selling analysis on the Greek crisis, ‘From Cleptocracy to Bankruptcy’, told IPS austerity policies are fast destroying the capacities of the Greek state.

“We are observing a rapid deterioration of governability. The preconditions for (total) collapse, characterised by defunct state institutions, are approaching fast.”

It is of ultimate importance that European partners understand where the austerity package is leading Greek society, Lygeros warned.

What Greece is experiencing is not what the IMF calls “economic therapy”, but rather a slow death, he said.

“No country can do what the Troika is asking for. No society can accept a devaluation of such proportions,” Lygeros concluded.

(END)