Unemployment has reached a new record in Greece, with the jobless rate increasing to 27 per cent in November 2012, compared to 20.8 per cent in the same month the previous year. The country’s Statistics Agency said that unemployment increased from October, which stood at record 26.6 per cent. The worst affected are young people, with unemployment at 61.7 per cent in the 15-24 age group in November.
Greece is mired in the sixth year of a deep recession, and has been relying for nearly three years on international rescue loans to keep it afloat. In return for the bailout from the International Monetary Fund and other euro countries, the government has imposed deep spending cuts and tax hikes which have hammered the economy and forced thousands of businesses to close.
THE BACKGROUND
It is not Germany alone that is suffering and reeling under the pressure of recession. The whole Euro zone is facing similar problems with varying degrees. The euro zone slipped deeper than expected into recession in the last three months of 2012 after its largest economies, Germany and France, shrank at the end of a wretched year for the region. Economic output in the 17-country region fell by 0.6 per cent in the fourth quarter. Within the zone, only Estonia and Slovakia grew in the last quarter of the year. The big economies set the tone. Germany contracted by 0.6 per cent on the quarter. France’s 0.3 per cent fall was also slightly worse than expectations. French figures showed its output fell by 0.1 per cent in each of the first and second quarters of 2012, meaning the country has already experienced one bout of recession in the last 12 months.
THE OVERVIEW
Similar is the condition of the US. The story repeats in India and elsewhere. It is a worldwide phenomenon. But the story of Europe has one added element, that of experiments in a new economic zone and a new currency – the Euro. We can, for ease of discussion, divide the world economy between the dollar zone and the euro zone. Both the currency zones are in despair proving that there is some basic and structural problem in the economies. The problem of Euro zone is that all its nations are witnessing downward trend in economy and some of them are even facing the risk of sovereign debt crisis. In other words some of the European countries are in such a bad shape that their governments may fail to pay routine commitment like salaries and instalments of internal and external debts. If it actually happens at any pace it may be a catastrophe, vitiating the faith of citizens in their governments. Any deeper analysis will reveal that both the Euro and dollar zones of the economy, severity apart, are facing problems owing to the same ailment which is ingrained with and inherent in capitalist economic system – that of debt based economy reeling under the pressure of deficit financing where nations plan more expenses than the income available and the deficit is financed by internal and/or external borrowings loaded with ever increasing and burgeoning compound interest burden.