ΠΗΓΗ: Social Europe Journal
by John Weeks
In August 1982 the government of Mexico announced it could not service its debts. Thus began an unnecessary, creditor-enforced depression that would sweep Latin American, and usher in the “Lost Decade” with appalling human suffering. Thirty years later we replay this grim history in Western Europe. The sorry fate of the European Union demonstrates the power of neo-liberalism. Begun by social and Christian democrats to end centuries of European civil wars and bring prosperity to a conflict-ravaged continent, the European Union can now be found in the vanguard of imposing neo-liberal austerity.
In May 2010 the government of Greece faced a debt service problem. In the context of the euro zone as a whole, the Greek difficulties were minor, equivalent to a US state government unable to balance its budget. The obvious solution was for the European Central Bank to buy part or all of the Greek debt, ending the problem in a stroke. With the purely financial difficulty eliminated, political discussions could have begun to correct the underlying cause of the short term problem. The corrections would have included major changes in Greek taxation and expenditure policy, which could have been phased over several years. The phasing would have allowed for economic growth to make the adjustments relatively easy.
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