Home > Uncategorized > Meanwhile, in Austeristia – unemployment is increasing everywhere

Meanwhile, in Austeristia – unemployment is increasing everywhere

1. JEROEN DIJSSELBLOEM, OLLI REHN, JÖRG ASMUSSEN, KLAUS REGLING and WERNER HOYER have published an ‘Austeristic manifesto’ in the New York Times

2. It’s kind of bizarre: unprecedented unemployment is necessary, according to them.

“The current crisis has exposed both fiscal and macroeconomic imbalances caused by a lack of reforms in several euro zone countries as well as structural problems in the institutional set-up of Europe’s economic and monetary union. But in the eye of the storm, we strengthened the foundations of our currency and improved the sustainability of our economies. Not everything is in its right place yet, and the necessary adjustment is bringing serious social challenges, notably in the form of unacceptably high unemployment. These challenges have to be addressed with determination”

3. But it’s extremely flawed, too. The Netherlands, home country of mr. Dijsselbloem, have an extremely competitive export sector which, even at the moment, is doing very well. Not “quite well”, but very well. During the last two years, wages increases were among the lowest of the entire European Union. The Netherlands are supposed to be among the best of the best, when it comes to economic resilience. The current account has a 9% of GDP surplus, pensions funds have an amount of funds which is about twice the size of GDP – exactly what we want Spain and comparable countries to have.

4. But the economy is crumbling in the Netherlands, at least to an extent because of the bust of the house price boom and the commercial real estate building boom. Today, new data on unemployment were published. Even the most negative expectations were surpassed, with a wide margin. Despite low wage increases. Despite an export sector which is doing well. By the way – retail sales went down (volume) with about 7%, in February. Demand matters.

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