NEWS,13.5.2012

France and Greece out to change Europe

 

Two politicians have within a week thrown the spanner into the eurozone’s prevailing economic thinking. It isn’t all that bad.One is Francois Hollande, to be sworn as French president on Tuesday. He chased the diminutive but combative Nicholas Sarkozy from office with a 51.6 per cent election victory a week ago.Unlike the 58-year-old Hollande, an old timer in the French Socialist Party politics, Greek Alexis Tsipras is a newcomer to parliamentary politics. His Synaspismos party and allied Coalition of the Radical Left emasculated the leading political parties in election last Sunday, making formation of a government impossible. The helicopter-like political ascent of Mr Tsipras, 37, is impressive. He rose from the Communist Youth of Greece to head a parliamentary party at 33. He entered Parliament three years ago. His ability to manage national affairs though remains unknown.Greece isn’t an economic shaker in the eurozone or Europe. France is. However, Mr Hollande and Mr Tsipras have one thing in common: they loathe fiscal austerity. That’s tight control of government spending. German Chancellor Angela Merkel is the leading proponent. Unfortunately, her sidekick, Sarkozy, is in a political freezer.Governments can’t raise all the money they need from their main source of income: taxes. Consequently, they borrow or issue bonds to meet the deficit.Debts and bonds aren’t a problem par se. The problem comes when governments fail to meet repayment schedules or the value of bonds decline to levels that make investors consider them junk. For reasons known to economists and financial wizards, trouble begins when a country’s debt hits 7 per cent of the Gross Domestic Product. At $661.6 billion—lots of money in any language--Greece’s debt hit 160 percent of the GDP. Athens couldn’t meet repayment schedules.There are several ways of dealing with the problem. They include rescheduling, reducing government spending, declaring bankruptcy, and getting a consortium of nations, multilateral lenders like the International Monetary Fund and regional organizations” member states, for a bailout. Bailouts aren’t free and conditions are attached. Greece isn’t the only eurozone country facing this problem. Portugal and Spain are most hit. Italy is staring at one. France, one of Europe’s top borrowers, fears it’s headed there.The 17-member eurozone, like a ship crew, prefers all hands, including the sick, on deck. Better find a cure for the sick and fast. The cure for the sick members is bailout. Conditions include massive cuts on government spending—austerity. That means many people have lost benefits and jobs.They are angry and have voted out political parties responsible. Greek voters were especially vicious. Mr Tsipras, who has described the agreement for the Greek bailout “null and void,” is riding this wave. However, he’s yet to offer an alternative. Hollande, more mellowed by age and temperament, has offered a sweetener to austerity policies, an element of growth.

Thousands march against economic gloom in Spain, UK

 

Thousands of Spaniards fed up with economic misery and waving banners against bankers marched on yesterday to mark the first anniversary of the grassroots "Indignados" movement that has sparked similar protests around the world.Up to 600 people denouncing the Bank of England rallied in London and a Reuters witness said scuffles broke out between some demonstrators and police, with at least 12 arrests.The Indignados and the offshoot Occupy and Take the Square movements had called for a global day of action against anti-debt austerity policies and the widening gap between rich and poor, but nowhere were protests as large as in Spain.A year after tens of thousands set up a month-long camp in Madrid's central Puerta del Sol square, drawing international attention, indignant Spaniards have even more to be angry about.Unemployment has soared to over 24%, over half the country's youth is out of work, the economy has dipped back into recession and one of its largest banks has been nationalised.Prime Minister Mariano Rajoy's conservative government has passed painful austerity measures that have hit once-sacred public health and education spending in an effort to appease international markets and avoid a Greek-style bailout."We have to stand up and say enough is enough! They pull our hair telling us we're lazy so they can dismantle social welfare and take away health and education and now they're bailing out the bankers," said Gloria Bravo, 48, a civil servant.Rescue money for banks, crippled after a 10-year building bubble burst four years ago, is a touchy subject for Spaniards, especially after the government took a stake in lender Bankia on Wednesday."They bail out banks but not people," banners read in Cantabria, northern Spain, home to Spain's biggest bank Santander.Demonstrators gathered in more than 80 cities across Spain, chanting the slogan that has become a mantra at protests over the past year: "They say it's democracy but it's not."In central Madrid, streets were blocked as activists convened in various neighbourhoods across the capital to march towards Puerta de Sol, which filled up with people waving flags and chanting to the beat of horns and drums."The situation is getting worse but the root of the problem remains the same; this is a moment of crisis for capitalism," Jesus Gonzalez, 38, an airline employee said as he made for the Puerta del Sol.Some 2,000 anti-riot police deployed to prevent protesters from setting up tent in the capital in a repeat of last year's camp-out.Protesters vowed four days of demonstrations to inject fresh life into a movement that has suffered internal divisions.The group behind the Puerta de Sol encampment last May - "Democracia real Ya!" (Dry), or Real Democracy Now - recently voted to register as a formal organisation, drawing the ire of the group's unconventional purists.In London, up to 600 people marched through the centre of the city, the number dwindling to around 200 after the demonstration reached its destination at the Bank of England.Protesters erected 11 tents nearby and flew banners that read "Bank of England, the St Paul's of money," in reference to St Paul's Cathedral, from which a long-running Occupy tent encampment was evicted in February."We're all here to show solidarity with the global movement..., groups that are forming against financial repression, political oppression," said Mark Weaver, 31, who is unemployed."We're here to make change, and making change doesn't happen overnight, you've got to do it for weeks, months, years, and you've got to be consistent."Occupy activists said they would dismantle the tents within hours and complained of police "aggression" and heavyhandedness."We're under siege," said activist Ronan McNern.Police declined comment on their tactics. They said only that four people had been arrested for public order offences.In Moscow, a few hundred people camped by the central city pond in an Occupy-style protest over the police crackdown on a May 6 anti-Kremlin rally held ahead of the inauguration of President Vladimir Putin.