Portugal Protests - " Screw The Troika " is the rally cry !

http://www.juancole.com/2013/03/austerity-democracy-europe.html

Austerity and the threat to Democracy, in the US, Europe and the Middle East

Posted on 03/03/2013 by Juan

The “sequester” is actually, of course, the American form of austerity, or cut-backs in government spending during a recession. Austerity, or stingy government in Europe has kept employment extremely depressed compared to what it would have been with government stimulus, as Paul Krugman argues.

Saturday, there were massive protests throughout Portugal against Scrooge policies by the government, which have so destroyed the country’s economy that 2% of the population has fled abroad for jobs in the past 2 years alone. On Friday, Greek workers staged a huge general strike. In Italy, anti-austerity feeling made grumpy comedian Beppe Grillo and his party the swing vote in the new parliament. Grillo may single-handedly destroy the Euro zone. European newspapers rather amusingly demanded that Grillo now ‘take responsibility’ and ‘tell us what he wants.’ He is a contrarian comedian. It would be like having Robin Williams or Tracy Morgan as the swing vote in Congress, with the press hounding them for their agricultural policy and asking them about the dangers of deflation. But Grillo’s ascendancy, while less alarming than the resurgence of the Greek far Right, is a manifestation of the rejection by the Italian public of the long dreary road prescribed by the ‘troika,’ (The International Monetary Fund, the European Union, the Central Bank), of further government cut-backs, reductions in minimum wage, high unemployment, no hope.

While for some odd reason the Middle East does not usually get analyzed with the same social science tools as Europe, the political crisis in Egypt is related to the Muslim Brotherhood government’s austerity program. The later, as Samuel Knight argues, is being pursued under pressure from the International Monetary Fund. Secretary of State John Kerry is in Cairo, also urging acceptance of the austerity program. Austerity is estimated to have reduced Egyptians’ real income by 3 percent in January alone. Tunisia isdoing better than Egypt economically, but the parliament, dominated by the religious Right, is also tempted by austerity measures, seeking to trim a point off the budget deficit this year while seeking 4.5% growth. While letting the value of the Tunisian dinar fall would hurt consumers with regard to imported goods, it would make Tunisian textiles and tourism more affordable for those abroad. Tunisia’s exports are hurt by European economic problems, and the country would do well to develop more Asian customers (Brazil has had success reorienting exports to the Pacific Rim). Likewise, although Yemen’s economy improved in 2012 after a 10 percent drop in the revolutionary year of 2011, if anything the government budget deficit of 5.5% is not big enough to stimulate the economy properly.

Reducing the state budget at a time of economic contraction is the opposite of what the great economist John Maynard Keynes prescribed. When the economy is in the doldrums, the businesses are skittish about investing their money, and so keep it in the bank. The only force, Keynes argued, that can and will risk putting a lot of money into the economy during a deep recession is the government. Of course, the government has less money at that point, too, since tax receipts are reduced. So it will simply have to spend money it doesn’t technically have, i.e. go into deficit and print extra paper money. The extra paper will, obviously, lose some of its value. But that loss can have benefits, too, since it will make the goods produced by the country less expensive abroad, and spur exports.

This argument is straightforward for most countries, and it is mysterious why European and some Middle Eastern governments reject it. It is complicated in the US by the position of the dollar as a reserve currency and by the fall of manufacturing to only 20% of the US economy. The former means that large budget deficits don’t necessarily reduce the dollar’s value significantly, because the US only holds about a third of the world’s dollars and there is a lot of confidence in its value. The latter means that even when the dollar falls against the yen or euro, the jump in exports is limited to a fifth of the economy and domestic services don’t get much of a boost. But actually these peculiarities of the US economy are not arguments for austerity; on the contrary, the reserve dollar allows the US to do stimulus without as much pain as one would otherwise expect.

Instead, the Tea Party has forced the US into an artificial crisis with the ‘sequester,’ taking $100 bn. a year out of the economy for the next ten years, which cut cut half a point of economic growth and harm workers, keeping unemployment high– not to mention the harm it likely will do to medical research, higher education, etc. That this austerity is being pursued by the GOP in part in hopes of disillusioning voters with President Obama in his second term is fairly obvious, but it is also in order to protect the 2003 Bush tax cuts for the wealthy, 80% of which have been retained. Sequester, as usual with these things in the US, is actually a tax on the middle classes to benefit the wealthy, since it preserves undeserved tax cuts for the latter by reducing government services for the former.

That austerity does not work economically should be clear. But that it creates populist discontents that are shaking southern Europe and could derail Middle East democratization is even more alarming. The world needs stimulus, not Scrooge government if it is to pull out of the crisis kicked off by corrupt bankers in 2008.

http://rt.com/news/thousands-protest-austerity-portugal-734/

‘Screw the Troika’: Hundreds of thousands protest austerity measures across Portugal

Published time: March 03, 2013 00:55

People gather against government austerity policies at Lisbon's main square Praca do Comercio March 2, 2013 (Reuters / Hugo Correia)

Tags

Austerity, EU, Politics, Protest

Hundreds of thousands of people flooded the streets of Portuguese cities protesting austerity measures that the government hopes will help to avoid the bailout and lift the country out of recession.

Protests, coordinated through social media by nonpartisan groups, have swept across the country with the biggest mass demonstration taking place in the capital Lisbon.

According to rally coordinators, some 500,000 protesters filled a Lisbon boulevard leading to the Finance Ministry. Many of them were carrying placards and chanting "It's time for the government to go!" and "Screw the Troika, we want our lives back," referring to the lenders from the European Commission, European Central Bank and International Monetary Fund.

People in the crowd sang 'Grandola,' a protest song from the 1974 'Carnation Revolution' that ousted the dictatorship established by Antonio Salazar, and brought an end to military rule in the country. During the past few week activists have sung the song to heckle government ministers making public speeches. 

What the protesters are demanding is a complete change of the government’s policies aimed at reviving Portugal’s economy as the country faces its worst recession since the 1970s.

Demostrators shout while taking part in a march against government austerity policies in Lisbon March 2, 2013 (Reuters / Hugo Correia)

The main reasons of mass protests are an increase in taxes and cuts in public wages imposed by the “Troika” of lenders in exchange for the 78 billion euro bailout, agreed in mid-2011. The measure pushed unemployment to record levels of 17 per cent.

"People are desperate, seeing their incomes fall sharply, their families and friends without jobs," the WSJ quoted a 49-year-old journalist and one of the protest organizers, Nuno Almeida.

On Thursday Portugal's Prime Minister Pedro Passos Coelho promised more spending cuts as a part of a deep reform of the state, which, he said, is necessary to make lower taxes possible in the future.

"This government has left the people on bread and water, selling off state assets for peanuts to pay back debts that were contracted by corrupt politicians to benefit bankers," Reuters quotes one of the protesters said a movie-maker, Fabio Carvalho. "If not today, things have to change tomorrow and we need to remain in the streets for the government to fall."

The rallies were organized in Lisbon, Porto and several dozen other cities via the Internet by a group of activists known as Que Se Lixe a Troika, or Screw the Troika, Reuters reports. 

These demonstrations coincide with a quarterly review by the EU/IMF bailout inspectors.

People gather to protest against government austerity policies at Lisbon's main square Praca do Comercio March 2, 2013 (Reuters / Hugo Correia)

Demonstrators shout while taking part in a march against government austerity policies in Lisbon March 2, 2013 (Reuters / Hugo Correia)

People march against government austerity policies in Lisbon March 2, 2013 (Reuters / Jose Manuel Ribeiro)

http://www.france24.com/en/20130302-hundreds-thousands-march-against-austerity-portugal-0

Hundreds of thousands march against austerity in Portugal

A woman protests during a demonstration in downtown Lisbon on March 2, 2013. Hundreds of thousands of people took to the streets of Lisbon and other Portuguese cities Saturday to protest against the government's austerity measures aimed at rescuing the debt-hit eurozone nation.

Peole take part in a demonstration in downtown Lisbon on March 2, 2013.

AFP - Hundreds of thousands of people took to the streets of Lisbon and other Portuguese cities Saturday to protest against the government's austerity measures aimed at rescuing the debt-hit eurozone nation.
The rallies were organised by a non-political movement which claimed 500,000 marched in the country's capital and another 400,000 in the main northern city of Porto. There have been no official estimates of the crowds.
But the mood of the crowd was clearly political, calling for new elections with banners declaring "Portugal to the polls!" and "If you fall asleep in a democracy, you wake up in a dictatorship".
Another banner showed a picture of centre-right Prime Minister Pedro Passos Coelho with the caption: "Today I am in the street, tomorrow it will be you."
Portugal was granted a financial rescue package worth 78 billion euros ($103 billion) in May 2011, in exchange for a pledge to straighten out its finances via austerity measures and economic reforms.
Lisbon has to reduce its public deficit to 4.5 percent of GDP this year, but the government recently conceded it may be impossible for it to reach that target given the continued recession.

Finance Minister Vitor Gaspar has said the economy is expected to contract around two percent this year, double an earlier forecast.
The organisers of Saturday's march are galvanised by their opposition to the so-called troika of public creditors -- the European Union, the European Central Bank and the International Monetary Fund -- who bailed out Portugal.
"This demonstration is a clear sign that 'the troika' and the government are not wanted in this country," said Joao Semedo, the leader of a far-left bloc.
The march included groups of teachers, healthcare workers and pensioners who have been especially hard hit by the budget cuts.
After cutting salaries and pension benefits in 2012, the government this year has declared a general tax increase and expects to impose further cuts of some four billion euros.