When will people finally realize that the discourse of many leaders over months now about the return of growth, the effectiveness of the G-20 and the end of the crisis are nothing but a farce? Not only has nothing been resolved, not only has no truly serious measure been taken, but on top of that, the management of the crisis up until now has only fattened the avalanche that will tumble down over following generations.
First of all, the facts: Growth is not recovering in our countries and punishing unemployment reduces people’s ability to consume and to pay down their debts. In France, 4.7 million people either are not working as many hours as they’d like or aren’t working at all. In the United States, 17.5 percent of people are in that situation and those who work are, on average, working only 33 hours a week. The duration of unemployment is lengthening everywhere. Global trade is contracting. The drop in global prices, as well as in the dollar and yuan, creates unemployment and pushes still more consumers into looking for lower-priced goods, which destroys still more jobs.
The banks, reportedly out of the woods, will not be able to finance the investments necessary for a recovery: many of the biggest banks, from the United States to China by way of Europe, tragically lack capital – to the point that Jean-Claude Trichet has asked them not to distribute dividends. Moreover, industrialized countries’ governments must find 12 trillion dollars next year to finance their deficits; their debt will soon exceed 80 percent of global GDP, which will lead consumers to save still more to prepare themselves for an inevitable rise in taxes. On top of that, government bonds are no longer considered safe investments for banks and insurance companies, undermining supplementary pensions and retirement savings. Finally, the risks central banks have taken without any transparency are staggering; and sovereign wealth funds are seriously affected, as what’s playing out in Dubai demonstrates.
The risks that result from this state of affairs are still worse: they simultaneously threaten the interruption of public services, the bankruptcies of banks, companies and nations, the ruin of workers and savers, in a domino game that will lead to a depressive spiral followed by an inflationary backlash. And even if the recovery – against all reason – were to firm up, all historical precedents show that at the very earliest, employment would not recover to its pre-crisis level for at least two years.
We cannot sit back and agree to accept these threats without reacting, nor allow the hope of minuscule artificial growth to postpone ever greater difficulties to the future. We must urgently commit to structural reforms, at least in France, that will allow us to rediscover paths to strong growth. That’s entirely possible. Only it would require the courage of the truth, the sole justification for the effort, the sole prerequisite for success.
Translation: Truthout French Language Editor Leslie Thatcher.