The President of European Commission Jose Manuel Barroso has written the leaders of the EU in advance of this week’s summit meeting. His message, stay the course on austerity.
“Steadfast implementation of reforms is beginning to deliver results in terms of current accounts and regaining competitiveness,”
Now those of you paying attention to increasing debt in Greece, Spain and Italy, along with 25%+ unemployment in the former two countries, or England on the verge of a triple dip recession may be planting your face in your palm in disbelief. But like
Krugthulu, who thinks a focus on deficits is misplaced, you are missing the real point of austerity as the EC President helpfully explained highlighting two countries that have gone all in on austerity measures.
He said that structural overhauls were contributing to a rebalancing of the E.U. economy, particularly where governments had undertaken the measures as part of their bailout agreements.
Ireland and Portugal had reversed trends in terms of their unit labor costs, which were now more favorable than before compared to their trading partners, according to the charts that accompanied Mr. Barroso’s letter. By contrast, according to the charts, unit labor costs in countries like France and Italy still were higher compared to those of their trading partners.
You see there is nothing like 14 or 16% unemployment to convince those pesky workers to worker harder for less. And that my friends, is the basis for a healthy economy, if by a healthy economy you mean record corporate profits and a soaring stock market.