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Impoverishment Made in Germany

category international | eu | opinion/analysis author Friday April 27, 2012 16:29author by O.O'C. - People's Movementauthor phone 086 3150301 Report this post to the editors

By Kevin McCorry

The German austerity dictate is leading to new economic and social turbulence in the indebted counties of the southern Euro-zone.

Spain, compelled in late March to make financial cutbacks totalling 27 billion Euros, must extend its austerity program to a total of 37 billion Euros. An increasing number of debtors cannot repay their credits on time. With their backlog of 143,8 billion Euros, the country's banks, in fact, can only refinance themselves through the European Central Bank. Italy is also slipping into the downward spin of cutbacks, growing unemployment, decreasing purchasing power and increasing social spending and, like Greece a few years ago, must already readjust its savings goals. Greece has been fully drawn into this development. Last year, 68,000 enterprises went bankrupt - the volume of incoming orders has dramatically shrunk. A high number of bankruptcies is also expected this year. This offers German enterprises good opportunities for acquiring the fillet morsels of state enterprises at rock-bottom prices.

Compulsory Social Cuts

Germany's political elite firmly insists on maintaining this disastrous austerity policy, imposed on European countries within the framework of the measures to overcome the crisis. At the end of last month, Chancellor Merkel imposed the political line of march to be taken by Madrid in this crisis. Spain will meet all of its deficit obligations, decreed Merkel in a newspaper interview as the right wing Spanish government announced 27 billion Euros worth of new social cuts and austerity measures, to ward off the continued growing budged deficit.[1] "I am optimistic that everyone will meet their obligations," Merkel stated, referring also to the reduction of Spain's budget deficit to below the 3 percent GDP-limit by 2013.

Ten Billion More

A mere three weeks later, the situation in Spain worsened dramatically again. The burden for Spanish government bonds' interests has increased once more, the budget deficit has again grown, the economic outlook has become even more somber. After Madrid was forced at an auction to pay 5.7 percent for ten-year government bonds, Prime Minister, Mariano Rajoy's government took headlong flight into even more austerity measures. This time, around ten billion Euros would be saved on the health and educational systems - through measures including higher supplementary payments for medicine and more pupils to school classrooms. Madrid's "clean-shave" austerity program would add up to about 37 billion Euros, withdrawn from the domestic economy, already in a tailspin.

Record Payment Backlogs

According to its Minister of Economics, Luis de Guindos' preliminary estimates, Spain has re-entered a recession, with the first quarter in 2012 having turned out just as bad "as the last quarter of the preceding year," showing an economic contraction of 0.3 percent.[2] The uncompromising austerity course is being applied to a country wracked by crisis. Since the burst of the real estate bubble, which, for years, had served as the economic motor, the economy has been groaning under the weight of a gigantic mountain of debts and an unemployment rate of around 23 percent - the highest in all of Europe. Spain's youth unemployment rate has risen to 50 percent. Due to the disastrous economic trend, a diminishing number of mortgage holders can still use their credits, contributing to a destabilization of the Spanish - and indirectly also the European - financial systems.[3] In the meantime, 8.16 percent of all credits issued in Spain have a backlog in payments, which is an absolute record, corresponding to 143.8 billion Euros. It is, therefore, no wonder that Spain's financial establishments are being drip-fed by the European Central Bank and can only refinance themselves through the ECB.[4]

Italy also in an Downward Spin

As a consequence, Spain is undergoing the same catastrophic crisis spiral as Greece had been forced into by Berlin and Brussels. Repeatedly, new austerity measures are permitting a collapse of domestic consumption demand, leading, in its turn, to an escalating recession. In the end, this course generates massive poverty and an economic collapse, which places the targeted savings goals out of reach - because the recession causes a breakdown of tax intake while bloating the social expenditures. The devastating down spin that has so ravaged Greece and is now gripping Spain, is also reaching Italy. Applying more comprehensive and more ruthless austerity measures, the Italian Prime Minister, Mario Monti, imposed by Merkel and her French junior partner, Nicolas Sarkozy at the head of a technocratic government, hopes to achieve a balanced budget by 2013. In 2011, the new debts were still at the level of 3.9 percent. Now Monti must sheepishly admit that this year, Italy's recession will reach 1.2 percent - much worse than his previous 0.5 percent forecast. The Italian technocrat no longer wants to talk in terms of a "balanced budget." In 2013 he expects a 0.5 percent deficit.[5]

200 Bankruptcies Daily

The example of Greece shows where the Europe-wide austerity measures are ultimately heading. After applying a number of the austerity measures and suffering about four years of recession, the country has an unemployment rate of nearly 22 percent and is undergoing a comprehensive de-industrialization. Since June 2007, incoming orders for the Greek industry, characterized by small enterprises, has dropped by 35 percent. London's Markit Financial Information Services predicts a "markedly lower production, new orders and the number of employees." Many enterprises will not survive. In 2011, approx. 68,000 small and medium enterprises went bankrupt, an average of 200 per day. Experts are predicting around 63,000 more bankruptcies this year.[6]

Sell Out

The industry and infrastructure still remaining in state ownership is now being sold off under German supervision. The comprehensive sale of public property, that Athens was forced to agree to as the price for receiving further credits, is being carried out by the Hellenic Republic Asset Development Fund (HRADF). The German Ministry of Economics' Germany Trade and Invest (GTAI) agency is serving as its advisor. (german-foreign-policy.com reported.[7]) GTAI's listed duties conveniently include the counseling of German companies in their foreign activities. The agency is explicitly seeking German buyers for the fillet morsels of Greek bankruptcy assets, according to the German Economics Ministry's "Checklist of an Investment and Growth Offensive for Greece."[8] "Assistance in finding German investors and placing the German experience in the privatization and restructuring process of the new [East German] federal states" will be GTAI's contribution to its Greek counterparts. The latter chore listed is in reference to the German Treuhand (Trust Fund), which, in a chaotic process beginning in 1990, squandered the public property of the German Democratic Republic.

Bargain Hunting

The time is right for cheap "bargain deals" in Greece. The disastrous economic situation is rapidly shrinking the value of public property now being put up for sale. Already last February, the Greek government was forced to radically reduce its original prognosis of expected receipts for 2015 from its privatization measures from 50 billion to merely 15 billion Euros. Hence, it seems that particularly German companies are profiting from Athens' economic collapse, for which the austerity policy imposed by Berlin bears the brunt of the responsibility.

[1] Merkel: Spanien wird Defizit-Verpflichtungen einhalten; www.stern.de 31.03.2012

[2] Rezession! Spanien steckt im Schuldenstrudel; www.abendblatt.de 16.04.2012

[3] Spanien: Doubtful Loans auf 18-Jahreshoch; www.querschuesse.de 18.04.2012

[4] Spanische Banken ersticken an ihren faulen Krediten; www.welt.de 18.04.2012

[5] Rückschlag für Super-Mario; www.ftd.de 18.04.2012

[6] Griechen stecken tief im Tal der Tränen; www.mainpost.de 03.04.2012

[7] see also Patterned after the Treuhand

[8] Ausverkauf: Deutschland hilft Griechenland beim Privatisieren; www.deutsche-mittelstands-nachrichten.de 20.04.2012

Related Link: http://www.irishreferendum.com
author by keiserpublication date Sat Apr 28, 2012 05:02Report this post to the editors

who needs the Reich and it's panzers and blitzgreig, when we have the ECB, austerity and ex goldman sachs technocrats to hollow out all the european domestic economies, leaving all the assets and property at bargain basement prices for german investors to hoover up. Nice. Especially since the money used to take over these countries is just fiat funny money plucked out of the ass of the ECB in the first place.
Physical War is old hat. Welcome to the new era of Financial terrorism, currency war, and economic oppression. Seig Heil.

author by opus diablos - the regressive hypocrite partypublication date Sun Apr 29, 2012 12:58Report this post to the editors

Nobody..except BAe, Raytheon, Big Oil, McDonnell Douglas...Halliburton, Bechtel...KBB..Wall St...Shannon Eirebase...CIA/MI5/6...drone technologists...downstream research fund hunters....Nuclear industrialist....Israel and the EU/US martial axis of virtue....Hollywood, DARPA...Media PR-op agendists...laboratories across the globe developing new forms of biocide

Oh, and Bill 'n' Hillarious with their stoopid ekkkonomy.

 
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