A new stage in the euro crisis
2012-07-26 0:00

By Peter Schwarz | WSWS.org



Reading the latest headlines on the euro crisis, one experiences a feeling of déjà vu. Like last summer, the rating agencies are lowering their ratings, interest rates for government bonds are rising to astronomical heights, and governments are announcing new austerity measures. Only this time Spain has supplanted Greece, whose economy is just one fifth the size of Spain’s, as the focal point of the crisis.

Despite the billions in bailouts and trillions injected by the European Central Bank, as well as round after round of austerity measures, the euro stands closer to the abyss than ever before. “We believe that Europe is sleepwalking toward a disaster of incalculable proportions,” 17 leading European economists warn in a report published this week.

It would be naïve to attribute the worsening of the crisis to a purely technical response by the markets to rising public debt in Southern European countries. Even the Financial Times’ editorial on Wednesday acknowledged that Spain’s public debt is “well below the euro zone average,” and that “there are no underlying economic reasons to feel differently about Spain now than a week ago”. Nevertheless, interest rates on ten-year Spanish bonds have risen far above the critical level of 7 percent.

Behind the onslaught on the euro lie fundamental class interests. The international financial oligarchy that dominates the financial markets and stock exchanges will not rest until all the social gains won by the European working class after World War II have been destroyed. In their eyes, collectively agreed upon wages and workers’ rights are illegitimate restrictions on their wealth, as is government spending on education, health, pensions, public services and infrastructure.

A definite pattern has been established. First, the rating agencies downgrade the creditworthiness of a country, which results in an increase in the interest it must pay on its debt. The country falls into a debt trap and turns to the European Union (EU) and the International Monetary Fund (IMF). These institutions, dominated by the major international banks, guarantee the creditors’ loans and dictate drastic austerity measures to the country. It slides into recession, the debt continues to rise, there follow further austerity diktats, and the recession deepens—until the welfare state is destroyed and the working class is ruined.

[...]

Read the full article at: wsws.org





Related Articles
The eurozone’s religious faultline
Government by the Banks, for the Banks: The ESM Coup D’Etat in Europe
The Gang of Four: Presidents propose power of eurozone authorities over national governments


Latest News from our Front Page

Sweden may be at war "in a few years" - top brass in leaked document
2016-02-13 5:24
In a few years Sweden may be engaged in a war with a “qualified opponent” after two centuries of peace, a senior Swedish commander has told soldiers in an internal brochure. The alarming message was reportedly sent by Major General Anders Brännström, the Army chief, in a brochure distributed among the participants of a major annual event that is to open ...
Danish imam urges govt to accept child marriages among refugees
2016-02-13 4:57
A high-profile imam has urged the Danish government to accept child brides, as the practice is part of the culture of many refugees arriving in the country. It follows an announcement by Denmark that such couples will be separated under Danish law. Imam Oussama El-Saadi, of the Aarhus mosque in Denmark, said that child brides should be looked at from a ...
White Parents in Virginia Shutdown White Guilt Video!
2016-02-13 4:56
You see folks? This is what happens when you stop blaming the Joo, and you get the fuck off your favorite bitch corner and start taking action! This is what happens when parents start parenting again! What? You’re gonna brainwash our kids with your filth and lies? We don’t think so. How would you like an empty school with no ...
Hungarian Top Economist: Civil War is Coming to Europe
2016-02-13 2:36
Zsolt Bayer, Hungarian journalist, publicist, and co-founder of Hungary's currently ruling political party, and Dr. László Bogár, former politician and leading economist, discuss the Cologne sexual assualts committed by migrants on New Year's Eve, 2016. This short part of the 60-minute long television program that aired on Echo TV on January 8, 2016, is of a rant by Mr. Bogár warning ...
British scientists granted permission to genetically modify human embryos
2016-02-12 23:48
The Francis Crick institute will genetically edit the leftover embryos from from IVF clinics British scientists have been granted permission to genetically modify human embryos by the fertility regulator. The scientists want to deactivate genes in leftover embryos from IVF clinics to see if it hinders development. It will only be the second time in the world that such a procedure has ...
More News »