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The Bailout Delusion: European Summits Can't Fix Economy, Only Jobs Can

Op-Ed: Rescue plans were the focus of this week’s high-stakes EU summit in Brussels. But anyone really wanting to know how Europe is doing should stop looking to its leaders, and talk instead with the region’s struggling business owners and unemployed wor

A homeless man in Barcelona, Spain (2009)
A homeless man in Barcelona, Spain (2009)
Günther Lachmann

BERLIN -- Amidst all this economic turmoil, no one's thought to ask how Emmanouel Kastanakis is doing. That's a shame, because the answer to that question says more about the future of Europe than all the official summit press releases of European leaders promising bailout after bailout. Who is Mr. Kastanakis? He is the owner of a medium-sized business – in Thessaloniki, Greece.

Among other things, Kastanakis sells gas heating. He also represents several well-known German companies, such as Thyssen, Wolf and Stiebel Eltron. His company was just about to go public, when, in 2010, the sovereign debt crisis broke. Today, his firm still exists – but is in a daily struggle not to go bankrupt.

Kastanakis' reality is that of countless business owners in the construction, transportation, carpentry, plumbing, electrical and manufacturing sectors all over Greece, Spain or Portugal. Like Kastanakis' heating company, medium-sized enterprises across southern Europe have cracked from the crisis, putting their employees out of work. With one fell swoop, millions saw the very foundations of their existence disappear.

In the whole of Europe, 23 million people are presently unemployed. In May of this year, the jobless rate in the euro zone for those under 25 years of age was 20%. In Spain, 44.4% of young people are jobless, in Greece 38.5%. The situation isn't much better in countries that are presently off the radar: Slovakia, for example, where the number of unemployed young people stands at 33.7%. In Lithuania it is 32.9%. The future does not look good for these unemployed.

The dangers of a "rescue mentality"

Anyone curious to know how Europe is doing shouldn't look for the answer at summits of state or gatherings of government heads. They'd do better asking the European citizens themselves. The questions to be asking are about the millions of unemployed, the thousands of companies on the brink of ruin. Only those who truly understand just how seriously weakened the European economy is can speak with any authority about how the continent feels, about its democratic stability, and about the quality of the politics responsible for all this.

European leaders can unfurl three, four, even 10 bailout schemes. But in the end they're not going to have an impact on economic development. Of all the billions that have been handed out under the pretext of saving Europe, not a cent has gone to the people. On the contrary, every euro that relieves the speculators' hunger is not going into the real economy -- which is to say, to the citizens of Europe. It is nothing short of a joke to imagine that this is the way to save Europe.

No mechanism will end the debt crisis unless it also sees to people getting salaries and food. Where else are governments supposed to get the money to pay off their huge piles of debt if not from their businesses and citizens? They depend on the tax revenues from a flourishing economy.

So where's the plan to create jobs and prosperity in the crisis countries? There isn't one. The politicians whole rescue mentality is reminiscent of someone who sees an injured traffic accident victim, and without looking, runs out into the road to help them – only to get hit by a bus.

The politicians are overlooking the greatest danger: the decline of the real economy. And yet the indications are obvious. The European Central Bank just adjusted its economic forecast markedly downwards. That means that for millions of people in Europe, there's no hope in the near future. And that will just speed up Europe's decline.

Read the original article in German

Photo – Arrels Fundacio

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