That’s the argument put forth by Ambrose-Evans Pritchard in his latest Telegraph column, and despite it sounding hyperbolic, it’s one of his best in a while, and it represents the vanguard of thinking about the European crisis.
The whole thing is a must-read, but the gist is this: Austerity is doomed to failure. There’s no way Greece or any of the Club Med countries can climb out of their hole by cutting spending and shrinking their GDP.
The only real answer is quantitative easing and some inflation, which the Germans will never accept. Meanwhile, over the years, Germany has compounded EU structural problems by aggressively keeping wages low, and thus exacerbating the Greek’s lack of wage competitiveness.
In short, the prescription of the right, in this case, won’t work, and thus the opportunity arises for the uber-left to take hold
Perma-slump has already chipped at the left flank of the ruling Socialists in Portugal. The Communist Party (PCP) and the Maoists and Trotskyists of the Left Bloc together won 18pc of the vote in September 2009, leaving premier Jose Socrates with the lonely task of enforcing yet more austerity by minority government.
Communist leader Jerónimo de Sousa said last week that the country was being reduced to a “protectorate of Brussels”, cowed into submission by financial blackmail. He invoked the civil war in 1383 when the country rallied heroically to expel the foreign opressor – with English help, the “ultimato inglês” as he calls it – from Portuguese soil.
Portugual is not unique. I spent Saturday delving into the subcultures of Italy’s Rifondazione Comunista, Spain’s Izquierda Unida, Olivier Besancenot’s Parti Anti-Capitaliste in France, and Germany’s Linke (Left). While it is too early to talk of a pan-European revolt against EMU-deflation, the Left is starting to offer the only coherent critique of what has gone wrong with monetary union and why there can be no durable solution until the EU creates full fiscal union (which creates its own problems of permanent subsidies, as from Ostrogoth Padania to Berber Sicily under the lira) or until this latter day Gold Standard is broken into viable halves.
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