The Horrors of Austerity

The enforcement of austerity in the Eurozone (and the covert concessions here) are taking a horrendous toll that can’t be quantified. That which can be commodified indicates that austerity as a policy is as toxic as synthetic CDOs or the poisonous brew of beer and gasoline downed by a despairing Greek man whose business was ruined. For many Greeks, suicide seems like the only way out.

The most dramatic sign of Greece's pain is a surge in suicides.

Recorded suicides have roughly doubled since before the crisis to about six per 100,000 residents annually, according to the Greek health ministry and a charitable organization called Klimaka.

About 40% more Greeks killed themselves in the first five months of this year than in the same period last year, the health ministry says.

A suicide help line at Klimaka, the charitable group, used to get four to 10 calls a day, but "now there are days when we have up to 100," says a psychologist there, Aris Violatzis.

The caller often fits a certain profile: male, age 35 to 60 and financially ruined. "He has also lost his core identity as a husband and provider, and he cannot be a man any more according to our cultural standards," Mr. Violatzis says.

What I don’t understand is the idea that austerity will solve economic ills. The policy of higher taxes on everyone but the top 1% and deep spending cuts that only affect the lower 99% leads to a terrible outcome. Everyone is buried under debt, there are no jobs, therefore there is no income tax revenue, demand is nonexistent except for the need for necessities like food, shelter and health care:

Gross domestic product in the second quarter was down more than 7% from a year before, amid government spending cuts and tax increases that, combined, will add up to about 20% of GDP. Unemployment is over 16%. Crime, homelessness, emigration and personal bankruptcies are on the rise.

The weaker countries in the Eurozone are “contaminating” the so-called stronger economies. Remember when Paulson/Bernarke said the subprime disaster could be contained? They were sticking their fingers in an overflowing dike. Interbank lending has dried up, money market managers have pulled out, bank runs are plentiful and the PIIGs can’t raise any money without having to pony up more each day. What banks are holding what unwinding sovereign debt?

Wall Street runs on greed and fear, and fear is ruling the day. It is unknown how many credit default swaps are in play and what is the notional value involved because the CDS market is unregulated and no one has the faintest idea how much or how far.

It’s hilarious that the Tea Partiers complain about the restrictions of Dodd Frank or the Consumer Financial Protection Bureau, as though the global financial system didn’t blow up in 2008 and there was no need to prevent that from happening again. Boy do they hate the equivalent of seat belts and motorcycle helmets. Until they hit a brick wall and go flying through the windshield or into open space. Wait’ll they get a load of real sovereign debt default instead of the blackmailing, Standard & Poor’s-driven downgrade.