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Responding to financial crisis: are austerity and suffering inevitable?
by Jayati Ghosh
Sunday Feb 3rd, 2013 3:28 PM
Austerity in a recession is counter-productive. Lower taxes and lower wages lead to lower demand, lower GDP, lower state revenue and higher unemployment.
"All too often people in countries experiencing financial crisis are told that the road to recovery necessarily involves pain, that fiscal austerity and cuts in spending that adversely affect the lives of ordinary citizens are necessary costs of correction of macroeconomic imbalances and the consequent adjustment that is considered essential for recovery. This is repeated so often that it is now taken as received wisdom by policy makers and civil society alike – yet in fact it is not true at all. It can actually be plausibly argued that in several situations the reverse is correct, that attempts to reverse economic downswings through cuts in public spending are counterproductive and makes matters much worse. This is clearly evident for all to see in the case of crisis-ridden countries in the Eurozone, for example.

And there are also positive counter-examples that show how taking into account the concerns and requirements of ordinary citizens (and paid and unpaid workers in particular) can work as a positive macroeconomic strategy that actually provides a route out of crisis. Sweden provides an example of a country that responded to the financial crisis by explicitly recognizing and attempting to reduce the pressures on workers, and particularly women workers whose needs are often the last to be considered in such periods of crisis. Sweden incorporated measures to maintain or ensure favourable conditions of women’s work and life into its broader economic recovery strategy.
In the early 1990s, Sweden experienced a dual financial and real economic crisis that bears many similarities to the sub-prime crisis in the United States and to the current difficulties faced by some Eurozone countries. Financial deregulation in the 1980s generated significant capital inflows and sparked a lending boom, which was then associated with rapidly increasing consumption, investment and asset price bubbles and heightened activity in the domestic non-tradable sector (particularly in real estate and construction). The Swedish krona was pegged to the US dollar, and so the real exchange appreciated— but this was not the only problem (because even if there were flexible exchange rates, the capital inflows may have nonetheless continued to drive up the nominal exchange). Around 1990, the bubble burst and the boom turned into slump, with capital outflows, widespread bankruptcies, falling employment, declining investment, negative GDP growth, systemic banking crises driven by deterioration in banks’ balance sheets and currency crises (Jonung 2010)."

to read the entire article published in the Real World Economics Review February 1, 2013, click on

by -A-
Wednesday Feb 6th, 2013 8:02 PM
Maybe not a bad idea if it radicalizes the following categories:

middle class reformists
undecided folk
and people on government welfare benefits

That's a huge chunk of people turning against the system overnight once the pain of austerity settles in and it won't take very much effort on the part of revolutionaries to get a rebellion going. OFF OF THE COUCH AND INTO THE STREETS BRINGING THE EMPIRE DOWN TO ITS KNEES! Better to sabotage business as usual all over to disrupt and shut U.S. imperialism than to waste anymore time going to work and protesting with a sign as if that were working as a solution. The only thing our labor, pay checks and spending has ever done was enrich rich fucks and supply the military with more bombs and ammunition to put everyone at risk.

It has to stop now. Everything must stop in the work place. Everything must stop at the banks. No more shopping. No more consumption. Just daily nightly disruption of commerce and finance is all that matters. No more living in a daze and not caring about political corruption. No more living in a daze and not caring about murder by Obama drones. No more sitting back while business owners make profit via wage slavery. The time for all of this to end is now.

The coming austerity will be our only hope to get support for an insurrection.