As austerity voices here act as though the economic conditions of 2008-09 haven't improved in this country....
What has austerity brought?
http://www.thedailybeast.com/article...o-warning.html
Davos World Economic Forum: George Soros Issues Euro Warning
by Daniel Gross Jan 25, 2013
At the World Economic Forum, you can sit in on dozens of panel discussions and hear different varieties of the same economic conventional wisdom, rendered in generally bland rhetoric. But Soros has a few contrary views, and a willingness to air them forthrightly.
That’s not surprising, given his personal history, but Soros also has a few positive things to say about Germany and its performance in the rolling European crisis. By intervening in government debt markets—only after German Chancellor Angela Merkel agreed—the European Central Bank may have saved the currency, but damaged the continent that uses it. “Germany did the minimum that was necessary to save the euro,” he said.
The result now is that the euro zone is effectively divided into creditors (countries like Germany, Holland, and the Scandinavian countries) and debtors (Greece, Spain, Italy, Portugal, Ireland). “
The creditors are in charge, and are unfortunately arguing for a policy of austerity, which is counterproductive,” he said. While the ECB and IMF have made budget cuts and tax increases a condition of receiving aid, he notes, “You can’t reduce excessive debt by reducing the GNP.” He said austerity is pushing the euro zone into recession, which will further aggravate political tensions.
There are also problems brewing between Europe and other developed countries, with Soros citing evidence of what he calls “an incipient war in currencies.”
Virtually alone among developed economies, Europe’s central bank is not engaging in quantitative easing. After years of stagnation, Japan has elected a government that is finally pushing for (and getting) more aggressive monetary policy. The goal is to make the yen weaker against other countries’ currencies, which will boost exports. “This is something of a direct challenge to Germany,” Soros said, because Japan and Germany compete for high-end exports. (A weaker yen gives a Japanese-made Lexus an advantage over a German-made BMW.) “The divergence between the Japanese yen and the euro will be aggravated, and that will have a negative effect on Germany’s performance,” Soros predicted. The result: potential rising tensions between Germany and Japan.
Other sources of volatility include China, where a rise in personal political expression may lead to repression, or may be channeled into external conflicts with countries like Japan. “The Japan-China conflict is already one of the sharpest ones in the world,” he said. And Soros has particularly harsh words for Russia. “Investing in Russia, I think, is a big mistake.” The Putin regime, he said, “doesn’t respect the rule of law.” As a result, Russia is suffering capital flight and brain drain, and is growing weaker. “So I think Putin has to cling to power because it the only place he can feel safe; for his personal safety,” he said. “Inevitably, things are moving, and I think Russia will open up, but not necessarily in my lifetime."
Davos World Economic Forum: George Soros Issues Euro Warning
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