Geographies of Recession and Government Debt
NICE - 'A period of non-inflationary consistent expansion' (Kitson et al 2011:289). There had been a long boom in growth between 1993 - 2010...However, household debt has increased in that time also...
From NICE to VILE - The recession led to a period of 'Volatile, Inflation, Little Expansion'.
US Government Debt Interest only at 7% of public spending roughly
Responses to Austerity
Monastiriotis (2011) argues Greece was exposed to an unprecedented financial crisis because:
- It had chronic budgetary control problems, including an inability to control expenditure and low levels of tax revenue (typically 7% lower than the OECD average)
- It was locked into the EMU, which set unrealistically low interest rates and prevented currency devaluation
- Budget monitoring and reporting of the problems lacked precision and credibility
- Immediate Fiscal Austerity --> now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed
'Austerity … has become a keyword for these ostensibly post-crisis times' (Peck 2012: 626)
- Austerity can be seen as a response to growing government debt – and the cost of servicing this debt through interest payments
- The experience of austerity varies between countries, depending on their structural position and the politics of their response
- Greece is an extreme example of austerity government
- But there isn’t universal acknowledgement that this type of response will be successful in the long run.