economic crisis

Spain and Ireland who had not been profligate borrowers. They had been running budget surpluses before the crisis. This was entirely a story of reckless lenders in Germany and elsewhere making bad loans to the private sector in these countries. Yet, the austerity policies being imposed ensure that the people of Spain and Ireland suffer even if the pain is not quite bad as in Greece.

The time has come for the European Union to stop running economic policy based on silly myths. If German Chancellor Angela Merkel and other leaders in the European Union cannot accept reality then Greece and southern Europe would be far better off breaking free of the euro and leave Germany to wallow in its 19th century economic fairy tales.

As long as SYRIZA is able to confront the Troika — even at tremendous costs — they would maintain their credibility and secure support of their voters. An apparent slippage in the government’s position on the other hand, would have fatal consequences. It would damage the reputation of the Left in Greece heavily and the Right, maybe even the fascist Golden Dawn party, would see its popularity surge.

Besides some impressive initiatives which combat the direct effects of austerity policies like foodbanks and solidarity clinics, there is another remarkable development. People are talking about the creation and extension of alternative economic networks – and they already started working on it. In the last years, many cooperatives were born, producer-consumer networks and producer markets were established. Some were established out of pure necessity, but there is also a realization of the fact that there won’t be any fundamental change without alternative economic institutions.

The spider web of financial connections in today’s global financial system is still not well understood. Estimating the potential psychology of investor responses is almost impossible.

Despite all this, arrogant German, Dutch, and other technocrats and bankers intent on retaining the old order of austerity and debt payments in Greece continue blindly to insist on more of the same, when it is clear that the Greek people and, hopefully its government, will refuse to continue with ‘business as usual’.

This support is multifarious, possibly inchoate. Can it be given a shape that can channel into a more focused energy, and a coherent – even while open – set of political purposes?

The question then becomes whether or not Corbyn can ‘represent’ the commonality of these demands. And this is a question of process – a two-way process, and one which is ongoing. Here Corbyn’s commitment to democratic engagement and openness, and to doing politics in a different way, as well as his rejection of individual celebrity status, is a real strength.

How about something that captures the dominance of finance and financialisation in our lives and society? If the experience of Podemos is anything to go by, this will be a long-debated issue.

It may be that Jeremy Corbyn will somehow be hounded out. If he is, and if the party returns to the comfort zone of pale imitation of the Tories – in a context whereby the centre will inevitably move yet further to the right – the Labour Party may well face extinction as any kind of progressive force. We must do everything we can to keep this initiative growing and to play our part in the wider movement that keeps on bubbling up.

It is concluded that, for the euro area, like for the United States, that the short-term effect on the price level is very small, while the long-term effect on prices is significant.

the key to avoiding deflation in the euro area, and elsewhere, is not to introduce structural reforms. It is, rather, a solid growth of domestic demand.