Democracy and the Eurozone crisis
Austerity without hope is not popular. The first round result of the French presidential election appears to show that. The Greek elections may send the same message. Meanwhile, the Dutch government has fallen because it cannot get its budget through. In other news, Spain is back in recession.
The Eurozone governments have committed themselves to austerity death spirals as they cut spending which in turn hits growth, which in turn leads to calls for more austerity as tax revenues come in lower than hoped for. At some point, voters feel that power has been taken away from them and take it back. If mainstream parties abdicate responsibility for promoting growth, they should not be surprised if the electorate sends them a message.
Radical action is required to restore the Eurozone to health but it may still yet take further upheavals before a new consensus develops. It will be better if political leadership is exercised.
Stephen Beer, 23/04/2012
| We're in a weaker position than during the Great Depression. |