How can a country build popular support for austerity when their governments are leveraging their children’s future to help mitigate the pain and severity of the problems faced by the parents. Why would anyone vote to take a hit in any form if they don’t see or feel the problem.
Popular support for reform in any country unfortunately won’t surface until the crisis is allowed to spill over to “Main Steet”. When that happens, holy cow is this going to be a doozy.
American led capitalism and American style bailouts will be the blame, but the real culprit will have been the global addiction and greedy dogmatic support for globalization. Globalization may work one day, but only at sustainable levels of growth.
Bringing forward a generation of consumption using ungodly sums of debt and calling it growth is neither transparent nor healthy.
Lending money to less worthy borrowers at rates supported by more worthy borrowers is a typical parent-child relationship.
However the current system has parents borrowing from children which is both immoral and unsustainable and it means that many kids today will be living with their parents for a lot longer than they know.
In Europe the situation is even worse as parents in the periphery are effectively borrowing from children in the core.
Ask many who worked at Lehman how 40x leverage works when the music stops.
CNBC.com Article: European Central Bank Leveraged Like Lehman: Author
The European Central Bank is indebted to the hilt and is beginning to look like one of the banks it has done so much to save, according to the author Satyajit Das.