Austerity doesn’t work. The Greeks tried it—and they are now in danger of defaulting on their loans. Portugal tried it—and it has now had to ask for a bailout of up to 80 billion euros.
Ireland tried it—and is now looking for renegotiated terms to its 87 billion euro bailout deal.
And the US tried it—and a credit rating company has just published a warning that its ability to repay its loans may not warrant its triple-A rating.
The International Monetary Fund and the European Union jet from one collapsed economy to another, promising funding on one condition—extreme public spending cuts.
If Greece defaulted, it would mean it would struggle to borrow internationally except at exorbitant rates.
Without access to loans, the very day-to-day functioning of the state would plunge into crisis.
The default of a European country would send a shudder around the world. The whole notion that cuts offer a way out of the crisis would be undermined.
The German and French banks that provided the bulk of the Greek loans would suffer huge losses—and further squeeze other countries that owe money.
A far-right party, the “True Finns”, won 19 percent of last week’s general election vote in Finland with a chauvinistic campaign opposing a bailout for Portugal.
Plans for a European bailout would be scuppered if Finland opposed them, as such votes have to be unanimous.
But bailouts or defaults will not solve the spreading crisis. Either way it will be the workers and poor who are punished.
There is an alternative. We can resist. Greek trade unionists have called another one-day general strike on 11 May against the austerity measures.
In Britain, public sector workers are organising to fight together to defend pensions.
We can take the fight to the bosses and politicians, and make our demands on them.
Raise taxes on the rich.
Use the money to provide the health, education and welfare services that are vital to the lives of millions of ordinary people.
And across the world, stop paying back the loans to the greedy banks.