Turbulence continues European debt, High unemployment + Reforming Wall Street dominate news

As we begin the new week there is a lot to reflect upon. The Europeans are supposedly going to resolve the deadlock over how to repair the bailout of Greece. Their austerity program has not worked and Greece now needs further funding and as part of the package the European leadership wants to ring fence Greece and prevent it from affecting other sovereign debt difficulties in other countries. They are also apparently considering increasing the terms of the haircut they want to impose on bondholders to as much as 50 %. The risk is that in so doing they will cause bond holders to flee other sovereign debt holdings of countries like Ireland, Portugal, Spain and Italy.

The rate of unemployment rose in the U.K to 8.1 % and 2.57 million . In the U.S. it remained at 9.1 % and in Canada it dropped to 7.1 % but was 7.6 % in Ontario and 7.3 % in Quebec. It is much lower in Manitoba, 5.5 %; Saskatchewan 4.6 %; Alberta 5.6% and B.C. 6.7 %. The high unemployment in the U.S. and the Republican refusal to pass the Jobs bill seems to have fuelled the political anger of many jobless left and liberal citizens who are supporting the growing ”Occupy Wall Street” movement. So long as the protests remain peaceful they can contribute to reinforcing the will of legislators to ensure that regulation is improved and also to pressure conservative politicians to rapidly adopt major stimulus measures.

The neo-cons have counterattacked strongly claiming that Keynesian measures will not work and crying wolf about deficits. But as Paul Krugman correctly observed on CNN this afternoon all the scientific evidence still backs  properly conceived and implemented Keynesian stimulus and claims to the contrary are merely repeating the economic fallacies of the 1930s and the more recent rational markets school that led us to this debacle.


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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