What gives in Europe? [updated]

There are conflicting narratives about the weekend elections in Greece and France, one of which enjoys mainstream pundit consensus and thus dominance: austerity is here to stay, so get used to it. there is NO ALTERNATIVE. Europe lived beyond its means for decades, provided its citizens a comfy social safety net, six weeks of vacations, tons of free things, cushy health care and pensions, and now the bill for all that overspending has come due. Vote for whomever you like, but the Market Gods will determine your margin of maneuver. Socialist, neo-liberal, far-right-winger or social democrat, it’s all the same because banks, not voters, now decide policy.

The alternative view, pushed by the incoming president of France, Francois Hollande, is that the slash-and-burn approach is not enough and that austerity must be tempered with economic stimulus and job creation.

What often gets lost in the bobbing-heads news coverage we’re subjected to is that the austerity program shoved down the collective European throat for two years running is an abject failure. The cuts have driven the continent back into recession, further undermining government finances and worsening the debt crisis that the cuts themselves were supposed to solve. It’s the logic of debtors’ prison: when a guy can’t make his payments, you put him in jail so he stops earning entirely.

I’ve yet to see any of the smug commentators promoting this approach explain how it will work. Instead, they talk in terms of moral probity, that the excesses and luxuries of the social net were not paid for, that countries are like households, that one must earn in order to spend, etc.

Another common trope is the constant trashing of Argentina for daring to go its own way, defying the international bank consortium, abolishing dollar parity and repudiating its unpayable debt rather than accept more decades of financial peonage. That was supposed to turn the entire populace into beggars and send Argentina back to colonial penury. Instead, the country has racked up impressive growth figures for a decade. On the rare occasion this counter-example is raised, it’s (falsely) attributed to dumb luck and high agricultural prices.

The Greeks may well fit the description of the profligate state with too-plump chickens now coming home to roost. But the ‘assistance’ being provided by the European masters was never designed to rescue the country’s wrecked economy or its destitute citizens but instead to recycle the foolishly-borrowed cash back to the teetering German and French and British banks who foolishly lent it. Without a balancing dose of stimulus, the Greeks are condemned to euro-occupation by the hated northerners into the foreseeable future, and so no wonder anti-Teutonic stereotypes have resurfaced there—along with some real-live, albeit home-grown nazis.

There Is No Alternative, intone the European architects of the current mess, and yet those who are being invited to not work, not to eat and not to have anywhere to live seem to have a different idea. With the opposing sides digging in and scary extremist tendencies growing stronger day by day, it’s hard to glimpse an outcome that does not include a blow-up of some sort.

[update] Bill Black, a former savings & loan regulator, adds in a Naked Capitalism post this essential detail of the push for austerity:

Germany and the ECB are open that they are not simply demanding austerity and massive privatization – they are also demanding dramatic reductions in working class wages throughout the EU. The German’s and the ECB are not demanding any sacrifices from European elites. They explicitly target the working class and government workers’ wages and oppose any increased taxation of the wealthy.

So the ever-so-essential cuts must only come from those at the bottom, never the financial engineers themselves. How appropriate that class war is back with a German-inflected vengeance!