Austerity

 

Austerity was, is and always will be BOLLOCKS (especially when a country is entering a recession)!

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OECD States The Bleedin' Obvious!

OECD no longer remotely favours austerity...

its chief economist tells me
- fresh austerity would provoke a popular backlash
- fiscal policy should do the stabilisation work
- governments should ditch fixed targets on debt

m/f
https://t.co/408GwX7XQk

— Chris Giles (@ChrisGiles_) January 4, 2021

It is remarkable that it took the OECD so long to realise this, all in all I am beginning to wonder if the OECD is shite!

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Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

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Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

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More Austerity For Greece - Whether Greece Likes It or Not!

Athens fears IMF, Berlin will reach deal for further austerity https://t.co/C8kOauW3P2 pic.twitter.com/yQww2i0Yt3

— yannis xamonas (@xamonas) November 29, 2016

Eurogroup Agrees Euro10BN Greek Bailout

The Eurogroup has agreed a Euro10BN bailout for Greece.

However, before people crack open the champagne there are a number of catches wrt the bailout:

1 The money will not go to the Greek people, but be used to pay interest on Greek debt (ie it goes back to the creditors).

2 In order to get the money Greece has had to pass further austerity measures.

3 There is no unconditional debt relief, as demanded by the IMF. Instead there is a vague promise to consider it later.

4 Greece will never implement the austerity measures, nor stick to the agreement.

5 The IMF caved in on its demand frop unconditional debt relief. Instead it has accepted the deal on the promise of a DSA and the possibility of debt relief being considered in the future.

In short absolutely nothing has changed, this is merely a means of ensuring that the creditors will continue to have their debts serviced.

Eurogroup Cancelled

The Quadriga and Greece have been unable to agree on the list of contingency measures worth 3.6 billion euro demanded by the IMF, as such Thursday's Eurogroup meeting has been cancelled.

Greece has not specified where the cuts would be made.

When will Greece realise that leaving the Eurozone is its best option?

Europe Isn't Working

UN Human Rights expert finds “Humanitarian crisis in #Greece has worsened” after 5 years of austerity program https://t.co/r0yGijfhWv

— Keep Talking Greece (@keeptalkingGR) December 8, 2015

Osborne Encounters Resistance

Poor old George Osborne appears to be encountering some resistance form other ministers to his plans to slash spending by £11.5BN.

As yet, according to the FT, his "colleagues" in government have only come up with £2.5BN in cuts; with some ministers failing to provide Osborne with the list of 10% in proposed departmental cuts he ordered before last month’s deadline.

Could it be that they don't think that he will still be in office in a year, and that as such he can "safely" be ignored?

As with any business, there will always be resistance to cuts. However, also as with any business, if the person who is demanding them is deemed to be "on his way out" the cuts will never materialise.

Fitch Downgrades UK

Last week Fitch downgraded the UK to AA+ owing to a weakened economic outlook.

This follows on from Moody's downgrade in February. The BBC quote Fitch as saying that the downgrade:

"Primarily reflects a weaker economic and fiscal outlook".

However, it has placed the UK's outlook as being "stable"; ie it does not expect to downgrade the UK again in the foreseeable future.

As to whether austerity is the corset means of bringing about growth, only time will tell.

Osborne Rearranges The Deckchairs On The Titanic

George Osborne is set to deliver his Autumn Statement 2012 today at 12.30pm, in which he will rearrange the deckchairs.

Eurozone Driven Into Recession Again

The Eurozone has fallen back into recession again.

As per Eurostat:

"GDP fell by 0.1% in the euro area1 (EA17) and increased by 0.1% in the EU271 during the third quarter of 2012, compared with the previous quarter, according to flash estimates published by Eurostat, the statistical office of the European Union. In the second quarter of 2012, growth rates were -0.2% in both zones.

Compared with the same quarter of the previous year, seasonally adjusted GDP fell by 0.6% in the euro area and by 0.4% in the EU27 in the third quarter of 2012, after -0.4% and -0.3% respectively in the previous quarter.

During the third quarter of 2012, GDP increased by 0.5% in the United States compared with the previous quarter (after +0.3% in the second quarter of 2012) and fell by 0.9% in Japan (after +0.1%).

Compared with the same quarter of the previous year, GDP rose by 2.3% in the United States (after +2.1% in the previous quarter) and by 0.2% in Japan (after +3.4%)."

Could it be that the dogmatic policy of austerity, being pursued by unelected bureaucrats and vainglorious politicians, is driving the Eurozone onto the rocks?

Surely not?!

The Eurozone Tinderbox

The growing backlash against the economic dogma of Eurozone austerity has found physical form today, as unions stage a series of demonstrations and "general strikes" across the European Union.

By way of an example, Greece continues to suffer. The Hellenic Statistical Authority has released data that shows that the Greek economy shrank by 7.2% on an annual basis in the three months to the end of September.

Driving economies and people into the ground for the sake of an economic doctrine imposed by unelected bureaucrats will backfire on those who pursue this misguided policy.

EU Budget Qualified Again

The European Court of Auditors found that controls over 86% of the EU budget are only "partially effective", this makes the 18th year running that the budget has been qualified.

To add to this annual disgrace, it transpires that the frequency rate for "material error" rose by 8% in 2011 from 36% to 44%, with £4BN in EU payments directly affected by irregularities.

The EU's response?

They intend to increase their expenditure by £95BN over the next eight years.

Who pays for this?

The hapless citizens of the EU, who are themselves being told by their EU overlords to endure years of austerity!

Hollande Leads Eurozone Breakaway Movement

For reasons that are unclear President Francois Hollande appears intent on destroying the French economy.

Why does he want to do that?

Could it be that he wants to lock in France's fate fully with Greece, Portugal, Spain et al thereby creating a level of economic failure so great (a form of critical mass) that the Eurozone cannot afford to expel these countries without an economic implosion, and using this as an opportunity to lead a breakaway movement from German dominance of the Eurozone?

IMF Loses Patience With Eurozone

The IMF has warned that the Eurozone still poses the greatest threat to global financial stability, and has urged the Eurozone to "do whatever it takes" to protect the Euro.

All very nice, maybe, but experience has shown that the politicians and bureaucrats of the Eurozone are not capable of decisive action. Hence the fact that the IMF in the report issued the warning that the lack of decisive action by European governments and institutions risked tearing the Eurozone apart:

"Incremental policy making has been insufficient to fully allay market tensions, despite the recent market rally since end July.

Merely muddling through imposes increasingly higher costs, as the unchecked forces of fragmentation continue to gather speed and undermine the very foundations of the union – a common monetary policy, and economic and financial integration....

The existing strains in the markets require a leap to better policies if the euro area is to stabilise funding markets and reduce spreads, arrest capital flight, and begin to reintegrate financially."

The advice is sound, and the warning valid. However, the leaders and bureaucrats of the Eurozone are simply not up to the job; as the millions who are unemployed and living in poverty in the Eurozone can attest to.

25 Million Europeans Unemployed

As at August (as per Eurostat) a staggering 25.466 million Europeans were unemployed, with 18 million of them residing in the Eurozone. As if these figures were not bad enough, youth unemployment in Greece in August was 55.4%, and in Spain the rate was 52.9%.

Rest assured that the unemployment rates have worsened since then!

This is a situation that must not be allowed to continue, as the social consequences in those countries where their democracies are being undermined by the economic doctrines of Eurozone bureaucrats will be unimaginable.

As if things were not already bad in Greece, it appears that they will become worse. Greece's Net TV has obtained a draft budget that shows that the Greek economy will contract by 6.1% this year and 3.8% next year.

This is in stark contrast to the view of the European Commission, which expects the Greek economy to display "an insignificant improvement in activity in 2013" (European Economic Forecast Spring 2012 page 71).

The people of Greece, if they have any sense, should flee the Eurozone as fast as their legs will carry them.

Merkel's Bleeding Heart

Doubtless the people of Greece who are facing destitution, courtesy of their country's ill fated and suicidal dalliance with the Eurozone, will be heartened to learn that Chancellor Angela Merkel's "heart bleeds" for the Greeks who are facing hardship.

Does this mean that she will lighten up on the Eurozone's austerity package?

No.

Greeks Pressed Into Servitude

The media are awash with rumours that the Troika have requested that private companies in Greece introduce a six day working week.

Let's see how well that "suggestion" goes down with the Greek people.

Greece Pleads For Time

As I noted on Monday, Greek Prime Minister Antonis Samaras is asking Eurozone leaders for Greece to be granted "a little room to breathe" on its austerity targets.

Interestingly he is not asking, as yet, for more money. The Telegraph quotes him:

"Let me be very clear: We require no additional money.

All we want is a little room to breathe, to get the economy going and to increase government revenues. 

More time does not automatically mean more money." 

All very well, maybe. However, as I also noted on Monday, there is a Euro3.5BN black hole in Greece's fiances for 2013/14.

Where will the money come from to fill that?

Euro Burnout

The hapless citizens of the Eurozone who feel that they are forever condemned to a lifetime of austerity and recession until their political masters finally admit that the Euro (in its current form) is destined to fail, may be forgiven for thinking that no Eurocrat understands what they are going through.

Step forward the very empathetic folks at the ECB.

For they too are suffering from "Euroburnout".

According to Welt Online the burnout amongst ECB staff trying to cope with the Euro crisis is a "serious potential operational risk for the ECB".

The "good" news for the staff of the ECB and the citizens of the Eurozone is that 40 new jobs will be created within the ECB to address this issue.

Hoozah!

Admittedly 40 new jobs is but a gnat's piss against the millions of jobs destroyed by the Eurocrisis, but a job's a job!

The bad news is that these jobs won't be created until 2013, by which time the Euro and the Eurozone economy will have all but collapsed.

Cameron's 2020 Vision - Austerity Until 2020

It appears that the world will be mired in recession until 2020.

That at least is the view of David Cameron, who says that he now expects the crisis in the eurozone to drag on for years.

When asked by The Telegraph as to whether the austerity programme would now last a decade until 2020, the Prime Minister replied:

“I think it’s going to be...this is a period for all countries, not just in Europe but I think you will see it in America too, where we have to deal with our deficits and we have to have sustainable debts. I can’t see any time soon when…the pressure will be off. 

I don’t see a time when difficult spending choices are going to go away.”

That kind of talk will not help the economy, as consumer economies are underpinned by hope/expectations of growth and prosperity.