On the horizon...?

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On the horizon...?

I thought I'd start a thread on the serious cuts taking place in man Euro countries, mainly to their public services.

The new British government is taking a big slice immediately.

Here are some other brief stats I'm pulling from Business Week (ah, actually the "new" Bloomberg Busisweek)

- Germany, plans on slashing public-sector jobs, reducing subsidies for families (no details given)

- Spain, cutting %5 of public servant wages; public service pay frozen in 2011

- Ireland has cut public service pay by %13; new taxes planned

The British cuts are currently most publicized but I'm too lazy to search for a link right now.  Fairly steep cuts, plus 4% on the VAT.

I wonder if Canadian pols will be following the trend, and clearly this will have a strong effect on our public servants.


Well, the federal public service is already subject to last year's "Expenditure Restraints Act" (I think that's the name), snuck in through the budget, which is currently holding total compensation increases to a maximum of 1.5% annually until 2011 (it was retro to 2008 or so), and there was a freeze for about 5 years in the early 1990s. Will they go further now? I have no idea.


They will a little bit because we do have large deficits at both federal and provincial levels but it's not quite the same situation as in Europe where they already went heavily into debt to support the financial sector. We're not going to see anything like the UK with government departments taking cuts of 25% or more.


As well as having huge deficits in much of Europe, they also have not had the kind of public sector cuts weve had for 20 years. Ripe targets for the bean counters.


Depending on the provincial government, I fully expect downward wage pressure at the very least.  And the Cons... hard to say.  They aren't exactly true blue fiscal conservatives.

Health care workers may escape this, but the trend is becoming much too clear, I think.  Once cutting and freezing becomes the norm in countries like Britain and France the trend also becomes easier for pols to sell at home.  I can see the HarperCons campaigning heavily on this issue.  One of the main planks in the various Tea Party candidates has been public spending, and look at the massive shift the US political scene has taken because of the TPers.

The private sector is in for trouble, probably another double-dip recession (I do hate these terms, but that's a convienient one), and the US States are going to be gutting their public sectors to pay for municpal debt loads - caused in part by new costs associated with Obama-care - and partly caused by complicated credit deals and re-sells on the municipal bond markets. 

Federally, the Cons won't raise taxes.  That doesn't leave much wiggle room when costs are continually climbing and things like resource revenue are down or stagnant or "dirty".


George Victor

When Paul Krugman predicted another depression on the way, you notice that all media quoted him...but not in great depth.  Just the usual drawing in of more "balance" opinion from the finance capital folk.

But what I really like about Krugman is that he's not just the hard-nosed Friedmanite for whom numbers are everything. He's more the Keynesian institutionalist, like Galbraith, for whom people are sort of important. He ended his NYTimes piece on Sunday with this: "And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."

Now THAT'S a depression, eh? And the bastards who caused it can still piss their margaritas into the sand of any number of exotic places.


Another quote taken from BloomyBizWeek.  They had a feature article on stock market\economic "bears."  I've lost track of my magazine, but one bear, said something to the effect that "rich people will be okay, will always be rich.  It's everyone else who's going to have trouble."

That comment feels very true to me.


The Ontario government has demanded a two year wage freeze of provincial public sector workers here, Farmpunk, so yes, it's happening here too.


I thought that was something suggested, not implemented.  Do Ontario public service wages go up annually with inflation?  I imagine only police and teachers have wages indexed to inflation (if that practice still exists).

It's grim in the US, from my readings.  Obama has had to push for continued stimulus so he can lend to cash strapped states, giving them another year to get their budgets in order.