Tuesday, 19 October 2010

Roubini Condemns Austerity

Nouriel Roubini, sometimes called Dr. Doom, because for years he was warning of serious trouble resulting from Government debt, has condemned the economic austerity measures in Germany. He also says that the current austerity measures being undertaken could lead to Greece defaulting on its debts as its economy gets dragged down and less able to pay.

Roubini's comments apply equally to the policies being pursued by the Tories in Britain. He's not alone. Most economists beleive that withdrawing the stimulus now and imposing cuts is economic lunacy. The example of Ireland, which is going back into recession shows why. In Britain, the voice of Big Capital, the financial Times also opposes the Tories plans. Its two main economists Martin Wolf, and Samuel Brittain (Brother of Tory ex Chancellor Leon Brittain) have been expressing a barely disguised fury over the Tories policies, which they argue will cause huge damage to the economy and to the profits of Big Capital, which is dependent not only on Government contracts, but on stable economic growth, and the spending of large numbers of workers who may well lose their jobs.

Much, was made yesterday of the renewed publicity stunt by the tories of the 35 names they had sign up to a letter in the Torygraph supporting the Cuts. Although, it was presented as being of the UK's biggest companies - and indeed some of those who signed are executives of big companies like ASDA and Microsoft - half of them were from companies like the one whose boss was interviewed on Channel 4 News that employed just 100 people!!! It would be interesting to know what promises were made to these executives to persuade them to lend their names. It would be interesting to know to what extent they were reflecting the views and interests of the actual owners of these companies. But, obviously some sections of Big capital will favour the cuts. Its interests are not homogenous. Yet, the fact is that, as Wolf and Brittain point out, this policy is not in their interests. One contributor to Paul Mason's blog described it as Turkeys voting for Christmas.

What is more surprising is the extent to which, already, the sections of Capital who tradiitonally would have been supportive of such a policy have already twigged that it might mean their extinction. The organisations representing small businesses responded to the letter by saying that they were not at all confident that they could provide jobs and repalce the jobs lost in the Public Sector, on the contrary they said that the loss of contracts and demand for their goods would be likely to cause them considerable problems. That pressure is likely to make itself felt first through the Liberal Democrats, many of whose members are already running scared as they look extinction in the face.

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