European bankers demand unprecedented austerity measures

[Hannah Bell]

European bankers are demanding that countries on the brink of national bankruptcy impose brutal austerity measures on their populations...

Last week, Jean-Claude Trichet, the head of the European Central Bank (ECB), declared that the ailing Greek economy would receive “no special treatment” to help it deal with crippling levels of debt. Trichet went on to threaten other highly indebted Eurozone countries with “rapid changes in market sentiment,” meaning downgrades on their debt and higher interest costs to borrow money on capital markets...

Greece is currently tied with Ireland for having the highest level of projected budget deficits in the Eurozone—about 12.5 percent of GDP (i.e., over four times the upper limit allowed for Eurozone member states)... Spain is in third place, with a projected budget deficit of 11.2 percent, followed by France (8.3 percent) and Portugal (8.0 percent)...

Outlining the government program at a news conference on January 14, Finance Minister George Papaconstantinou declared, “We will attain our goals by any means possible..."

Even such subservience to the dictates of the European Commission and the international banks is deemed insufficient. European bankers and political leaders are demanding much more stringent measures by indebted states—even if it threatens the social stability of the countries involved...

Financial Times columnist Gillian Tett writes.. “What will be equally crucial in the coming years is not the sheer scale of debt, but whether governments can implement a rational and effective way of cutting it—and potentially allocating pain—without unleashing (at best) political instability, or (at worst) full-blown revolution.”

Tett...speculates whether the British government has the nerve to impose swingeing budget cuts in an election year. She warns that “social cohesion and patriotism in the UK are fragmenting,” which means “the answer is simply unknown.”

The social attacks demanded by Trichet, Juncker & company will inevitably exacerbate class tensions and lead to extreme political instability across the continent. As the comments cited above make clear, they will be accompanied by an intensification of attacks on democratic rights and state repression.

http://www.wsws.org/articles/2010/jan2010/pers-j19.shtml