It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege.The results of this is a discreditation of democracy in Europe and a rise in the popularity of authoritarianism. Krugman describe several European examples, of which the following is one.
[In poorly understood Europe] The shared currency, which was supposed to bind nations together, has instead created an atmosphere of bitter acrimony.
Specifically, demands for ever-harsher austerity, with no offsetting effort to foster growth, have done double damage. They have failed as economic policy, worsening unemployment without restoring confidence; a Europe-wide recession now looks likely even if the immediate threat of financial crisis is contained. And they have created immense anger, with many Europeans furious at what is perceived, fairly or unfairly (or actually a bit of both), as a heavy-handed exercise of German power.
Right-wing populists are on the rise from Austria, where the Freedom Party (whose leader used to have neo-Nazi connections) runs neck-and-neck in the polls with established parties, to Finland, where the anti-immigrant True Finns party had a strong electoral showing last April. And these are rich countries whose economies have held up fairly well. Matters look even more ominous in the poorer nations of Central and Eastern Europe.Essentially what has happened is that the bank-created economic disaster has destroyed the lives of a large number of Europeans and they want to know who to blame. But the banks are in charge of solving the economic problems, so they are demanding austerity solutions.
Austerity does not end a Depression. It never has and it never will. So things are getting worse as austerity is imposed by bank-advised governments.
As things get worse, the governments are being blamed. They are imposing the austerity, after all. Since the governments are failing, obviously they need to be changed. There are people out there saying "Give me control and I will fix the economy!" But they can't get control in the existing democracies. So the problem will be solved by eliminating democracy and putting those who promise solutions into control of government.
Welcome to authoritarianism! Will the new authoritarians when installed stop listening to the bankers who are demanding austerity "solutions"? Yeah, for a while anyway. But authoritarianism brings its own set of new problems with it.
This is a bit different from the set of economic problems here in America. Here we have a minority political party with discredited solutions to the very economic problems they themselves created who are using provisions of the Constitution to paralyze government in the face of those very problems that minority party created. The purpose of paralyzing the government is to force the American public to return the failed minority to power because they will not permit the government to act to solve problems while they are out of power.
The link between European problems and American problems is that the very banks which created the economic problems both national entities face are demanding that the governments install socially destructive and economically ineffective austerity "solutions" to fix the economic problems the banks created. The so-called solutions will actually do nothing more than shift wealth From the middle and working classes who create the wealth to the financial predators who make up much of the top 1% of the economic classes in both America and Europe.
If the bankers have to install authoritarian governments to get their way, they will not hesitate to do so.
Krugman's right. The problem has moved far beyond just a really severe recession. Both America and Europe are now in the early stages of another Depression, one which combines economic hardship with very strong threats to democracy.