posted October 9, 2019
Europe Today & Tomorrow: Weak Link in Global Economy, Part 1

Interviewer:

So, I think the most important question now is the question about Europe. What will happen in Europe, in terms for example: Look what’s happening right now in France.

Rasmus:

Well, Europe is indeed troubled and it’s going to get deeper. It’s the sick man of the global capitalist economy, right now. As you probably know, it’s already slowed down. It’s almost stagnant and it’s only growing at two tenths of one percent, last quarter and it’s heading towards a recession that I have been predicting.

I have been predicting a recession in the U.S late 2019 or early 2020 as well. But Europe is the even weaker link and of course with Brexit, with the UK is going to have a negative effect and it looks increasingly like it may be a hard Brexit.
And what’s happening in Italy is important. In Italy the new parties are trying to stimulate the economy with fiscal policy, but the Euro Zone rules and regulations prevent a fiscal stimulus above a certain deficit amount. Italy may break that mold, and if it does then the Euro Zone could unravel into a smaller Euro Zone. We have problems with not only Italian banks but other European banks; Greek banks, Portugal Banks, even Deutsche Bank, Commerce bank in Germany.

What you are seeing in France with yellow vest protests is the consequence of the kind of weak recover policy that’s been in place since 2010 and then the double dip recession in 2011-2013 that followed. To what extent there’s been a recovery, that’s been engineered by the European central bank and purely monetary policy, and that hasn’t worked. It’s bailed out the banks, but European banks are still in trouble. There are Trillions of dollars of non-performing bank loans still overhanging the economy. Whenever the European Central Bank, ECB, stimulates the economy by buying bonds and injecting liquidity into it a lot of that liquidity largely flows out of Europe to emerging markets or the United States, so it hasn’t had much of a stimulus effect. And because of that there hasn’t been a real recovery in Europe. It’s the same for the United States, but even more for Europe, since 2008. And the employment growth in both economies has been mostly contingent labor. In other words, a low paid, part time, second class citizens, whatever.

In addition to failed central bank monetary policy the solution has been by policy makers in Europe and politicians to engage in what’s called internal devaluations, in other words because you have a common currency you cannot otherwise devalue your currency to stimulate your economy. All you can really do is lower your wage costs and other costs. In other words, internal devaluation. That policy of internal devaluation, i.e. reducing wages and labor costs, across Europe has been implemented under the cover of labor market reforms. Which are really a way of “Let’s reduce our wages and costs to make our products more competitive” in the world economy. Europe depends much more on exports than the United States, and Germany depends on half its GDP on exports to other European economies and globally. What was set up with the Euro was very preferential to Germany and Northern European economies which have really exploited the periphery economies and benefited from it. I wrote about this in my book - Looting Greece: A New financial Imperialism Emerges. It’s Internal Imperialism, you might say, but through the Euro exploiting the rest of the periphery of the Euro Zone in particular.

Those policies in other words, i.e. internal devaluation, labor market reforms, monetary policy of the ECB, have bailed out the banks and made a small percent of the population, that is the wealthier part, wealthier. But those policies have left behind most of the rest of the economy and people. That’s why you see this uprising going on and this nationalism going on. You know the “Brexit, let’s leave Europe” that was really driven by working class Midlands, England folks who are discontent with the recovery. And then you have immigration laid on top of the poor recovery, so it looks like the immigrants are the cause of it and you get this anti-immigration and growth of right-wing parties as a result. But it’s the economic policies of the elites in Europe that are responsible for this. Europe is now experiencing the consequences in nationalist Catalonia, “Let’s leave Spain”, in Scotland, in Italy. All the nationalist solutions to the crisis which are not solutions at all.

Of course, I see the eruption of working classes and middle classes in France as a harbinger of things to come elsewhere as the next recession hits, which could be even more serious than the last one. So, Europe is in a very precarious state, you see, and the symptoms of its problems are this nationalist trend which reflects itself in various ways, you know separatism and anti-immigration and Brexits, and maybe an Italian exit from the Euro, if the situation gets much worse there over the next couple of years and the economic growth is just not there. That’s why Europe is in a very precarious state, it’s the weak link in the global capitalistic economy and you know future is very unstable, economically and politically, for Europe, as I see it going forward.

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WHAT REVIEWERS SAY ABOUT THE PLAY 'FIRE ON PIER 32'
"The acting is also outstanding, helping us feel in our guts what it must have been like to be a worker with only his fists, courageously facing police and National Guard machine guns and tanks...."

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