The crisis is not relinquishing its grip on Europe. From autumn 2008 to early 2009 the world market experienced the deepest slump in economic output since the Second World War. This is a global crisis. Even in emerging economies like China, Brazil or India economic growth declined and could not compensate for the recession in the North Atlantic region. For the first time since the worldwide economic crisis of the 1930s global economic output has shrunk. After a brief uptick in 2010 which barely restored the level of reproduction prior to the crisis, in 2011 growth was again in worldwide decline. In the last quarter of 2011 economic output in the EU shrunk by 0.3 percent. In the first months of 2012 industrial production in the large EU nations of France, Italy and Spain contracted further.
From early 2010 the crisis in Europe has emerged as being one of state refinancing. In every crisis fiscal revenues take a hit while unemployment, and with it, social expenditures increase. To this is added the gigantic bank rescue packages and – in comparison to these the admittedly less substantial – stimulus packages. All this has resulted in large increases in budget deficits and state debt. A number of countries, starting with Greece, have reached the limits of their borrowing capacity. Because international investors have lost confidence that these countries can any longer service their debt, they are not able to obtain any new credit from the capital markets, or if so only at an intolerably high rate of interest. Some investors are also betting with credit default swaps on the bankruptcy of individual countries – a self-fulfilling prophecy.
Thomas Sablowski works at the Institute for Critical Social Analysis of the Rosa Luxemburg Foundation. He is also member of editorial board of the journal PROKLA and a member of the scientific advisory board of ATTAC Germany.
This article originally appeared in Junge Welt, May 5, 2012, also published in www.socialistproject.ca/bullet/635.php and mrzine.monthlyreview.org/2012/sablowski160512.html
Translation by Sam Putinja.