"Austerity" the New Buzzword: Mass Protest in Romania Over Austerity Measures; Greek Unions Protest Austerity Measures;Sarkozy Grapples with Austerity
Social unrest continues to brew in Europe. This time in Romania and Greece. France is on deck as French President Nicolas Sarkozy battles unions who refuse any cuts in pension benefits. French unions have called for a general strike starting May 27.
Let's kick of the discussion with a look at Romania. The BBC reports Thousands protest over Romania austerity measures.
Tens of thousands of public sector workers have gathered in the Romanian capital Bucharest to protest against plans to cut wages and pensions. The gathering was one of the biggest on the streets of Bucharest was one of the biggest since the Romanian Revolution.New Wave of Strikes in Greece Over Painful Austerity Measures
"We will not leave until the government quits," said Bogdan Hossu, leader of the Cartel Alfa trade union. Marian Gruia, head of the policemen's union, called on Romanians to unite, "as we did in 1989, when we overthrew the dictatorship" of communist leader Nicolae Ceausescu.
Romania's economy shrunk more than 7% last year and it needed an IMF bail-out in order to meet its wage bill. It says it needs to implement new austerity measures to qualify for the next installment of the 20m-euro ($25bn; £17bn) IMF loan.
The government has proposed wage cuts of 25% and pension cuts of 15% in order to reduce the country's budget deficit.
Please consider Greek unions hold new general strike against cuts
Unions plan to protest the painful austerity measures of Greece's cash-strapped government by holding a general strike Thursday that will close much of the country's public sector and shut down the country's ferries, trains and public transport.Austerity Woes in France
Thursday's strike is to shut down schools, tax and local administration offices, ferries, trains and most other public transport options in Athens. State hospitals will have to operate with emergency staff only.
Most flights will be unaffected, as air traffic controllers will stay on the job. However, some regional airports will close, and Greece's Olympic Air carrier said it was canceling 30 domestic flights.
Inquiring minds are reading Sarkozy Grapples With ‘Politically Unacceptable’ Deficit Cuts.
French President Nicolas Sarkozy’s popularity fell to its lowest since his 2007 election last month. Worse may lie ahead as he cuts spending and raises taxes in the wake of Europe’s financial crisis.Austerity Measures Postponed, Scaled Back, Stretched Out, Abandoned
Sarkozy risks increasing voters’ ire two years ahead of presidential elections as he strives to meet promised deficit- reduction targets and pacify investors. The choices include the politically sensitive areas of lifting the top tax rate and tightening pension requirements.
“Austerity is economically necessary but politically unacceptable,” said Laurent Dubois, a professor at Paris’s Institute of Political Studies. “But he has no choice, the debts are too heavy.”
The dilemma facing the French leader, who took office three years ago this week, underscores the bind facing European Union politicians, whose response to the Greek debt crisis prompted them to pledge reductions in their deficits and public debt.
Sarkozy has said he will cut France’s deficit to 3 percent of economic output in 2013 from 8 percent now. His reliance on a spending freeze, economic growth and a pension overhaul will get him only partway there, according to Samuel-Frederic Serviere, a researcher at Ifrap, a Paris-based group that monitors government spending
“With just the measures that have been announced, at best we’ll get the deficit down to 5 percent by 2013, and that’s in the best of cases,” Serviere said. “What they’ve announced so far just isn’t sufficient given our European engagements.”
Union leaders say they won’t accept any change to France’s legal retirement age of 60 and have called a general strike for May 27. The opposition Socialist Party is also defending retirement at 60 and says higher taxes will plug the deficit.
These austerity programs will not last long.
Expect to see Greece, Romania, France, Germany, and the UK all scale back, abandon, or stretch out austerity plans when the global economy does a second half relapse under the weight $trillion in consumer debt and round after round of "stimulus" measures that did little but rack up still more debt.
If so, gold is likely to be the beneficiary.
Mike "Mish" Shedlock
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