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Party of the European Left –transform! europe “Together we can put an end to the problems of debt and austerity in Europe !”. “Connecting the debt crisis with the question of the crisis in the financial system and neoliberal policies. The Troika intervention. The ECB and the Banking Union”
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Party of the European Left –transform! europe“Together we can put an end to the problems of debt and austerity in Europe !” “Connecting the debt crisis with the question of the crisis in the financial system and neoliberal policies. The Troika intervention. The ECB and the Banking Union” Elena Papadopoulou, NPI Brussels, 10 April 2014
Evolution of Greek sovereign debt – MoU scenario • FAILURE OF THE THREE MAIN RECIPIES OF ECONOMIC ORTHODOXY • Excessive sovereign debt can be repaid by primary budget surpluses • Austerity can be expansionary and constitute the way out of the crisis • Reducing unit labour costs is the way to restore competitiveness
Could the problem of the Greek debt be resolved earlier? • Debt crisis is not an isolated event. • Strongly connected to the systemic crisis of the capitalist system and more specifically • Facet of the global financial crisis in the conditions of the architecture of the Eurozone and in the context of the neoliberal transformation of the European economies after ‘70s. But • Debt as an excuse to tighten the neo-liberal economic order within a conservative federalist framework • Greek debt still not viable: further write-off only after primary surpluses and the completion of "structural reforms" • Alternative would have helped preserve the European social model and changed the neo-liberal agenda. Kicking the can down the road
Contesting the “Greek exceptionality” • Main arguments of the “exceptionality” narrative about the Greek fiscal crisis: • Government profligacy and populist politics • Lived too long beyond our means • Oversized public sector • Rent-seeking redistribution coalitions marginalize “productive” entrepreneurs So Austerity response to the crisis as an opportunity to carry out the reforms that should have been implemented long ago to recalibrate the economy in order to marginalize the former groups and enhance the latter.
Economic consequences (L-shaped recovery) • Flows are going the wrong way • Problems accentuated by the architecture of the EU and the eurozone (no fiscal transfers, breakdown of monetary transmission mechanism, role and scope of the ECB, Banking Union not moving forward) • Danger of disinflation • German strategy of keeping surpluses while the South must keep in balance • Jobless growth (equilibrium with high unemployment) • Markets can't kick start the economy with automatic mechanisms • Neoliberal project destroys the capacities and institutional tools for policy against a stagnating economy
Conclusions • The debt crisis as part of the systemic crisis of the capitalist system in the context of the neoliberal European integration • New restructuring inevitable • Cancel big part, repay the remaining with growth clause • Debt Conference ala London 1953 2. The problem of production reconstruction and rethinking about industrial policy in the context of the challenges of our time
