It has been a while since the media has covered the worlds economic outlook in part because of the recent events that took place in Egypt as well as the George Zimmerman case here in the United States. Today while driving home I was listening to the radio when I heard a statement dealing with austerity that caught my attention immediately. The radio host began to talk about austerity over in Europe. At first I thought it would be the same song however, with a different beat I was going to hear. Paraphrasing what the host said in regards to austerity measures was how the program with all of its spending cuts has not solved the rising debt that the Eurozone block has hoped to take place.
With the austerity program that the Eurozone has been exercising since the financial collapse in 2008 we have seen countries such as Portugal, Ireland, Spain, and Greece have a steady climb within their unemployment rate. Some of the countries listed above have seen their unemployment rate climb to 20% even as high as 27% but the most frightening statistic is how 50% to 60% of young adults are unemployed and unable to find any work. This has also created a migration of citizens from these struggling countries to flood other nations such as Germany which has been able to stave off the economic slump Europe has been witnessed to for sometime.
First off the economic world leaders of the Eurozone have been very hard on nations with outstanding debt and seeking bailout packages. Requiring them to agree to more cuts and less investment in those nations suffering from the economic turmoil. The reason why the Eurozone has yet to stymie off the rise of debt is because the nation has yet to create an economic plan that can not only produce jobs but also a form of revenue.
With the cuts into social programs such as education, retirement packages, and public jobs the Eurozone has cut off its two legs and is now trying to stand upright again. If a country maintains its cuts how can those countries generate the revenue to pay off its bills. Then to add to the Eurozone’s lack of true leadership they demand that these nations continue their cuts just to receive the bailout money to pay off their debt. Now if the money you are receiving from the IMF, European Central Bank, and the European Union are to go to its creditors and not to the investment of the countries infrastructure then how do you plan to create any form of employment?
The money goes right back to the very banks who gave out the bailout packages in the first place. Leaving countries to find ways to generate jobs without any form of money to do it. Whats even more devastating is how the education part is being severely cut off leaving future generations with the question of whether or not they will receive the proper education that they are entitled to receive as citizens of the world and of their country. The most important thing that a person can have is an education and if you take that away from future generations then what type of nation are you setting up for in the future a nation of the haves and have nots?
The Eurozone needs to understand that in order for the ailing nations to get out the slump that they have been in for almost five years they have to take another route instead of austerity the route of stimulus and responsible cuts. Now some say that both cannot be done and my question to that is Why not? The United States installed a stimulus package and even though our economic growth is a bit anemic to say the least, the country has been able to climb up bit by bit to some form of better economic standing. Now this doesn’t mean that the United States is out the water just yet because China the second largest economy in the world had to shave off its projected growth for the remainder of the year. Which is not a good sign but for the country of China to stay at a growth rate of 6.5% to 7.0% is better then Germany and the United States.
If you are able to invest in your country and fund projects such as infrastructure spending you create jobs for constructions workers. This now will have an effect on companies that produce cement, companies that specialize in tools needed to run these projects, and finally restaurants in the surrounding area where the project is being under taken. By having the demand of work orders for these projects may push employers to higher more employees to help fill those orders or future orders.
Now I am not saying that spending in infrastructure would be the solvent for the countries debt problem but it would be a start to begin bringing in some form of revenue cause now you are generating jobs. Investing in public services will also benefit in the long term as well in my opinion. What I wish the Eurozone would do is negotiate to creditors a plan that can work for all parties. Such as a plan to hold off any future payments to its creditors until the Eurozone members begin to see an improvement in job growth. Once unemployment levels begin to drop to six percent or even five percent then the process of paying back those lenders can now be placed back on the table. Or paying a minimal amount that does not require outrageous spending cuts to those countries already suffering a high unemployment rate.
The problems that have erupted in the past five years are man made and because they are man made they are solvable by man. The only problem is that the methods that are being used today are only benefitting one group of people and those are the banks who help bailout these nations. Instead of borrowing more money to just pay off the money they owe which they will also have to pay back in the future they should be using those bailouts to help create more jobs and create a economic circle where money continues to go round and round not from point A to point B because if this plan for austerity does not begin to be lifted then who will know the future of the Eurozone. People have gone to the streets in protest to the pressures being placed on the ailing nations of the euro bloc and only time can truly tell what will happen when the demands of its people are not met.