U.S. government Shutdown Irrationality & higher Unemployment in Europe:A very bad combination

The long predicted but nevertheless very foolish self inflicted irrational Tea party Inspired shutdown of all but essential U.S. government services has occurred as of midnight last night, Washington time. It is difficult to predict how long it will last and whether it is a prelude to the even more damaging refusal  to raise the debt ceiling that needs to be renegotiated before the middle of October or the U.S. could default on its federal public sector debt – a financial doomsday scenario for it and the global economy. In the seventeen or so government shutdowns that have occurred previous to this one so long as the shutdown was ended within a few days the damage was minimal-although plenty of government workers suffered economic damage. But if they persisted as they sometimes did for weeks the fall in stock markets and undermining of confidence was much more substantial.  The threat of not raising the debt ceiling and actually defaulting on debt interest payments which many Republicans self indulgently and extremely foolishly look like they also want to play chicken over is a far more damaging prospect.

One can only look on in despair at such irresponsible and irrational behaviour. It is simply unworthy of a global economic power and world leader to behave in this sort of way. It also could not come at a worse time. The global economy is still very fragile and not yet properly back on course to a robust recovery. In fact the latest unemployment numbers from Eurostat show that Europe as of August 2013 was still mired in depression style unemployment in many countries outside of low unemployment countries like Austria 4.9%, Germany 5.2 % and Luxembourg 5.8 %. So for example Greece has 27.9 % unemployment;Spain 26.2 %; Portugal 16.5%;Cyprus 16.9%, Ireland 13.6%, Italy 12.2 % and France 11.0%. Rates are very elevated but less depression style in Finland 8.0%; Denmark 6.6%; Belgium 8.7 % and Sweden 8.0 %. The U.S. currently has 7.3 % unemployment . The negative consequences of the craziness in the U.S. political system and in particular its extreme Tea Party wing for economic stability in both North America and Europe cannot be underestimated. History will judge them harshly if they provoke another crash and deeper depression.

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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.
This entry was posted in austerity, business cycles, European financial stability fund, European unemployment, fiscal policy, France politics+economy, government shut down+debt ceiling U.S., Spain, U.K. economy, U.S., Uncategorized, unemployment and tagged , , , . Bookmark the permalink.

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