Ireland’s austerity measures and spending cuts is a model that all European countries should adopt – or is it?

About three years ago, Ireland was granted 85 billion Euros by the Eurogroup and the IMF. As a part of the deal, the government of Ireland was obliged to take over all liabilities of the country’s banks to prevent an economic collapse.

Later, on a panel of the premiers, the current Prime Minister of Finland Jyrki Tapani Katainen said: “The Irish model is the one we all need. I don’t see that we have any choice… there is no short cut to heaven.” For some time now, Ireland’s implementation of the austerity package has been considered a role model for the rest of the Eurozone.

By measures which include increasing the state pension age and cutting public sector jobs and pay, Ireland turned 10 years of budget deficits into a surplus. David Begg, the general secretary of the Irish Confederation of Trade Unions, says: “We were the poster child for globalisation. Now we are the poster child for austerity.”

Recently, the Financial Times called Ireland’s minister of finance one of the best in Europe. Irish banks can borrow again on the open market, and the interest rates on sovereign bonds are rapidly falling. Indeed, that can be an indicator of the faith international capital has in the country’s future.

Added to this, Ireland is still a heaven for international companies searching for low taxes. On one hand the austerity measures seem to be working. The country’s budget deficit fell, unemployment rate is also slightly down. What is even more important: Ireland has avoided downgrades by Fitch and S&P, unlike many others.

But despite S&P reaffirming Ireland’s ‘BBB’ rating, it did not change its negative outlook. The agency explained that negative outlook is justified by the high risks to the stability of the financial sector and “uncertain growth prospects.” At the same time, according to Fitch, negative outlook also persist in countries like Belgium, France, Italy, Portugal, Spain and not least the United Kingdom.

So let us not forget that Europe is in deep need of a success story. The truth is, it is not all sunshine and rainbows. The economy is still weak, the growth the country is experiencing now is mostly due to the substantial fall in the labor cost.

Due to the small domestic market, almost all manufacturers are exporting to the Eurozone, the United Kingdom and the United States. Those destinations have the big problems of their own and probably even more to come.

Without further substantial economic growth, it will be impossible to reduce the government deficit and debt in the future. And without further reforms, the crisis could start all over again.

Image Courtesy :  Jpmpinmontreal

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Let’s talk about James Buchanan. No, not the last American president born in the 18th century. About James McGill Buchanan. Why him? He was a Nobel Prize laureate and American economist who got recognized for his study on public choice theory, and who just recently passed away (January 9, 2013).

So why is his work still relevant today? Mainly because Buchanan initiated research on how non-economic forces and politicians’ personal interests affect economic policy.

His research includes extensive writings on macroeconomics, constitutional economics, the public debt, public finance and voting – all that is very important especially now, at the time of global economic crisis.

What is even more important, looking at the entire government “struggle against the economy,” is that in his studies Buchanan rejects “any organic concept of the state as superior in wisdom, to the citizens of this state.” This is where the interesting part begins.

Thanks to his philosophical position the basis of constitutional economics can be formed. According to Buchanan, every constitution is created for the time period of at least several generations and therefore, it should be able to balance interests of the society, state and each individual.

Unfortunately we don’t see this happening all around us. There are, of course, exclusions, but in whole we see just the opposite. The rich are getting richer or at least are well off anyways. And middle class is getting the full blow of the recession.

It is interesting that Buchanan’s ideas were always seen as a challenge to John Maynard Keynes. And Keynes is recognized to be one of the most influential economists of the last century and founder of modern macroeconomics. He was among those who advocated the use of monetary and fiscal measures to reduce the negative effects of economic recessions.

Once Keynes’s ideas became widespread, they were adopted by leading economies. Even though the outburst of the global financial crisis in 2007 caused degradation in Keynesian thought, the principals of Keynesian economics are still used to give response to the crisis. Unfortunately, neither the administration of George W. Bush or Barack Obama developed new approaches.

In his works Buchanan poses a question, “What do individuals seek in politics if they do not seek to maximize their own expected net wealth?” Which seems to make perfect sense, doesn’t it?

The main point is that modern politics can be adjusted only through the change to the constitution. In this way individuals will be able to act according to the long-term interest of the community and not their own short-term interests.

James M. Buchanan says, “Until and unless we begin to take the long-term perspective in our private and in our public capacities, including the adoption of new and binding constitutional constraints on the fiscal and monetary powers of government, we are doomed to remain mired in the muck of modern politics.”

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Although the United States financial crisis is not comparable to the economic situation in Europe, things are not going as well as they should. In St. Petersburg, Florida, the crisis has kicked into many people’s pockets. Although it seems that better times are coming, there are still local stores that struggle.

In Europe, people are tired of expressions such as financial bailout, risk premium or long-term credit ratings. In the United States, dramatic situations have been avoided thanks to the measures that drive America’s economic activity. However, there are negative issues here: the U.S. imports much more than we export and the unemployment rate has reached 8.2 percent. St. Pete’s small businesses say that people don’t consume as much as before, and some stores have closed as a result during the last years. Therefore, we can assume that people are suffering from the crisis in one way or the other.

Toonari reporter Ines Sanchez has out on the streets of St Petersburg, asking local business owners how the crisis has impacted their stores.

Bad or slightly bad. These were the most repeated answers from 24 local business. In particular, seven of them said that it was affecting them in a bad way, while eight said that was impacting them in a slightly bad way. For example, Spencer DeHaven from The Cupcake Spot says that “customers spend much less money than years ago.”

And in what way is the crisis affecting sales? Most agree that it has decreased the number of customers and how much they spend. There are also some stores that have been forced to lower their prices and to increase the number of on-sale events and coupons. For example, Sarah Gecan from Daddy Kool Records was forced to reduce the staff, expenses and inventory due to decreased income.

Meanwhile, six of the surveyed shops said the crisis was not affecting their commerce, that everything remained the same as before the global financial collapse.

Everyone agrees on one thing though: during periods of crisis, small businesses have to be supported somehow by governmental measures. “During the bad economic periods, it is necessary to support the local businesses because that is what makes the city keep on going,” said Sarah Gecan from Daddy Kool Records. And according to Rossana Gahhos from All Sewn Up Boutique, this works well in St Petersburg: “In St Pete there is a loyal customer base and everyone supports each other very well.”

The truth is that during crisis there are some types of businesses that are more affected than others. People still need groceries, eat out and even get tattoos or buy flowers. “I do not think there is an economic crisis,” says a food store manager, who prefers to remain anonymous.

On the other hand, there are stores that are run down by the crisis. One examples is the art galleries. Linda Smolski from An Artisans Gallery recognizes that she might close the store in September if the situation does not change. “There is no money for art. People just look at the pictures but they cannot afford them. There are a 99% of poor people and just 1% of rich and powerful. We have to change the ratio,” she says, remembering a better time.

Phugiyg Huyn from City Hair & Nails agrees with Smolki: “There is no business at all, my store is most of the time empty, we are facing a really bad situation.”

These store owners have come up with possible solutions. “There should be less government rules and regulations. They should let the business do their job instead of interfering so much,” says Alan Rulifson from Green Bench Flowers.

“More funding would help or at very least free advertising to help develop local community businesses,” says Davor Polster from a local grocery store.

Negativity surrounds merchants who see how things are not improving. “The news constantly reports that things are getting better, that real estate values are returning and that unemployment numbers are decreasing, but all we see happening is the exact opposite,” says Justin Chamoun from St. Pete Brasserie.

However, there are also people such as Badr Elamin, owner of El’s Menswear for five years, who stays positive and appeals to faith at these tough moments in life: “The key to success is to have faith in yourself and to develop your own human nature. In a business you have to treat everyone with honesty, loyalty, and integrity.”

It seems that businesses have struggled through the worst phase and that it is “starting to slowly pick up at least in retail,” says Aneesa Shakur from The Trunk Stylists.

“This summer is going much better compared to last one,” says Jennifer Kosharek from Eve-N-Odd gallery.

Let’s hope so.

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On Saturday November 12 at 9.42 pm CET Italian Prime Minister Silvio Berlusconi has officially resigned.

His resignation arrived just few hours after the Italian parliament’s lower house passed an austerity measures package demanded by European Union and ECB in order to restore confidence in Italy’s economy and face the country’s heavy debt crisis.

Over 17 years, Berlusconi has always been the main character of the political scene in Italy, he was elected four times as prime minister – in 1994, 2001, 2005, and 2008 – and survived to more than 20 trials and accusations, several votes of confidence, sex scandals and conflict of interest.

After failing to win a parliamentary majority on a budget vote four days ago – for the first time since his election in 2008 – , he announced he would have left office right after the passage of the austerity package demanded by EU.

While the political events were getting hotter day by day, the economic crisis of the country kept on worsening especially because of the strong financial speculation of the markets.

Hence, in such a difficult and hard situation Berlusconi seemed to have no choice and had to surrender and eventually step down.

The news of his future resignation was welcomed by all the opposition parties, one part of his government coalition and a large portion of economics and politics experts and specialists.

Today after the austerity package was approved by the parliament lower chamber with 380 votes and the Republic President signed the legislation in the afternoon, the crucial moment arrived.

The official meeting to hand in his resignation to Republic President Giorgio Napolitano was set for 8.30 pm CET but Berlusconi arrived notably late.

Many people gathered in Rome, out of the presidential palace, to witness the last minutes of Berlusconi as prime minister and celebrate his resignation. At his arrival at the crowds started shouting “Buffoon!”, “Shame!”, and “Get out!”.

For about 40 minutes all the country waited for the official news. Journalists from all around the world were there and the attention of the media was totally drawn on this extraordinary event. November 12 was called the “freedom day” by the crowds gathered in Rome as by many people on social network sites happy to see him leaving the scene.

When the news of Berlusconi resignation broke at 9.42 pm CET, the crowds erupted in cheers, waving Italian and European flags, singing, dancing, jumping for joy. Resistance period songs were struck, bottle of champagne open to toast, and also the Handel’s Hallelujah was performed by chorus of professional and non-professional singers and classical musicians.

Silvio Berlusconi stated he won’t run for next elections but he will keep on contributing and collaborating with his political party. He also wants to participate in the new transition government foundation putting members of his party as candidates.

The new government, which will be led by Mario Monti former European commissioner, will be probably made up of technocrats and economics experts who will have to deal with the heavy economic crisis and the huge debt of the country. Tomorrow Sunday 13, Republic President Giorgio Napolitano will announce the complete government coalition.

The resignation of Berlusconi is seen as the end of an era and a new start for Italy and its political scene but the scenario is still unclear and confused. Next weeks and months will tell us what will be the future of a country that is on the brink of precipice.

Photo courtesy of http://www.flickr.com/photos/andresubierna/6241870752/

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On the streets of Rome, Italy’s capital, up to 200.000 demonstrators took the streets to join the global protest called from one side to other of the world. Among those, a group of Black Bloc protesters – between 100 and 200 people – hijacked the peaceful march with an explosion of violence against stores, banks, cars, police and other protesters.

October 15th was the day of worldwide demonstrations. In 951 cities in more than 80 countries hundreds of thousands of people took the streets and the squares to protest against financial elites, capitalists, bankers and governments’ austerity measures and to claim rights and real democracy for all.

Although the massive participation in most of the cities, reports on violence are rare and the protests were peaceful and quiet even in the European capitals which are the epicenter of the crisis and where the anger and the frustration are stronger.

In this scenario of collaboration and solidarity the exception has been Rome. Here just half an hour after the peaceful march of the Italian “indignados” started – at around 2.30 pm Italian time –, a small group of demonstrators with covered faces and clad totally in black broke away from the main rally and began to throw bottles, stones and incendiary devices at stores, banks, and police.

Numerous cars and trash bins were set on fire in the streets of downtown, offices of the Defence Ministry were assaulted and set on fire as well, banks and stores’ windows were smashed, journalists crew were attacked and many other damages were caused by the group of Black Bloc rioters. Pictures and videos report images of urban guerrilla, terrified people, bloody faces, fire, smoke, destruction and violence. They show the “total black protesters” breaking away from the main group and attacking police and peaceful demonstrators on their way.

The estimated number of injured people is around 70. Two protesters and one policeman have been seriously hurt, one of them – a 52-years-old man who tried to stop the violents – lost two fingers for the explosion of a firecracker thrown by one of the Black Blocs – as it’s shown in one video.

During a high tension moment of clashes between riot police and the violent group, a police armour-plated car was set on fire and police charged repeatedly the protesters and used tear gas and water cannons to stop the riots. The peaceful part of demonstrators, that is the big majority of them, ran away and fled the violence. Some of them who turned against the small violent group trying to stop and push them away were attacked and injured.

Around 12 people have been arrested. Rome’s mayor Gianni Alemanno, ministers and leaders of all parties blamed the violence. Some leader of the opposition questioned on how it was possible that the police was not able to stop such a small and well identifiable violent group for so many hours.

Meanwhile, on the web and on social media some users are rising the question on whether the Black Blocs could be real protesters or infiltrated policemen. Some suggest also that those protesters could have been paid and supported by “men of power”, who have strong interests in a violent hijacking of the peaceful protest to boycott it and manipulate the consequent news for condemning the demonstration. At the moment there is no proof for these conjectures to be true.

What it’s sure is that the news of the violent riots spread easier and stronger than the actual and true mass event which was this global peaceful protest covering it up. Though this has been a serious and blameworthy violence episode, we should also look to the importance and the strength of a worldwide movement that gathered 200.000 people just in Rome who are claiming for a future and protesting against a heavy economical crisis which is not the people’s fault. Also in a country which is standing on bended knees such as Italy, people answered to the call “People of the word: rise up!”.

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Israel has been having its fair share of domestic and international problems recently. Tel-Aviv has become the latest staging ground for large-scale demonstrations which protesters rallying against economic stagnation and dwindling opportunities for Israelis.

The social protest movement boasted an estimated 500,000 people who marched down Rothschild Boulevard where a massive tent has been put up to initially demonstrate against rising housing prices. The protests have been fueled by dissatisfaction with the direction of the Israeli economy – a historically state-run enterprise that has been increasingly privatized in recent years.

The latest rally in Tel-Aviv on September fell short of its advertised goal of one million people. Protests in other cities added to the numbers with tens of thousands of demonstrators taking to the streets around the country, according to local reports.

Israeli Arabs, a large number of whom live below the poverty level, have joined the demonstrations, lending credence to the assertion that the whole of the Israeli population is represented and not just the elites or upper/middle classes. A row with Turkey has also threatened to boil over after Prime Minister Benjamin Netanyahu refused to apologize for last year’s military action aboard the Gaza-bound Mavi Marmara.

A recently released UN report has established that Israeli commandos used unreasonable force during the raid of the ship. Netanyahu regretted the loss of life but refused to apologize, saying that Israel would unconditionally defend its soldiers “in every forum.” In response, Turkey expelled its Israeli ambassador, froze all military agreements and pacts with Israel and threatened legal action against the country.

Relations between Israel’s right-wing coalition lead by Prime Minister Benjamin Netanyahu and Turkey’s Prime Minister, Recep Tayyip Erdogan, a champion of the Palestinian cause, have never been robust but seems likely to become even icier in the future.

The Palestinian Authority is also gearing up for an imminent bid for final status – effectively statehood – as the United Nations Generally Assembly reconvenes. Although the Obama administration has promised to exercise the United State’s veto power if the measure were to come before the Security Council, the bid comes at a bad time for Israel internationally.

It threatens to highlight the state’s decades-long occupation of the Palestinian territories, as well as alleged human rights violations there. These economic, social, and international travails are making the way forward seem even hazier for Israel.

In the past year, both the botched raid on the aid flotilla bound for the Gaza Strip and the government’s defiant refusal to halt further construction of settlements in occupied territory, have skewed the image of Israel to the world — especially in conjunction with a recent ceasefire-violating missile strike in Gaza. Israel seems to have alienated itself from its allies and the international community at large.

Mikhail Levit / Shutterstock.com

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On 12th January, 2010 Haiti experienced a new drama. An earthquake seven points of moment magnitude shocked the country leaving after it a trail of devastation and worst of all a stealth battle of ruthless numbers.

At the beginning of 2011, one year after the disaster, the Haitian government increased the initial death toll from 220.000 over 300.000 while the international community set a number lower than 100.000. They did it unexpectedly, without any previous comment and not defining the parameters and methodology used for the estimation.

Maybe they thought two hundred were not enough to boost international aid, and a bigger new headline of misery would have helped them to raise more funds. The math is obvious for Haitian rulers: higher victims mean more pity and shame which tends to increase international aid flowing into the country.

According to Inter-American Development Bank the earthquake caused damage estimated near 14 billion dollar, more than the country GDP, and somehow they need to put pressure on international donors both to increase the amount pledged, 5.3 billion dollars, and to speed the deliver into the country up.

It is believe that Haitian government had added into earthquake victims, among other, the subsequent 200.000 cholera infected and 4.000 dead. A rate that is still growing as of March 2011 rises to 300.000 with 5.000 deaths reported by WHO.The first cholera case appear months after the earthquake, it was reported on 14 October 2010 in the department of Artibonite, the country largest department located in the north-west side of the island, from where the disease quickly spread through Artibonite Rive affecting other departments.

Cholera is an infection of the intestine caused by a bacterium that causes diarrhea and vomiting which in severe cases can lead to death by dehydration due to an untreated patient may produce 10 liters of diarrheal fluid a day. The last cholera epidemic in Latin America started Peru in 1991, during the 7^th pandemic and after reach other countries but not Haiti, a country with none recorded cases previous 2010.

The earthquake caused massive population movements inside the country as in Cité l’Eternel, a neighborhood in Port-Au-Prince, home for tens of thousands of families who live crammed together in tiny shacks with no running water or proper sewage facilities. The mounds of garbage and the open sewers full of human waste are breeding grounds for cholera, typically transmitted by either contaminated food or water.

After a rapid spread the worst part took place between mid November and January, usually with more than 10.000 cases per week throughout the country, uncontrollable sometimes like the first week of the year when 14.000 cases just in Port-Au-Prince were reported.

While all this misery happens in Haiti, in the neighboring Dominican Republic were just 200 reported cases during the whole year, confirmed along the borderline, a gap which can be explained by their citizens’ wealth.  The GDP per capita is eight time higher in Dominican Republic than in Haiti, where just 96 dollars per year an person can be spent in health care.

Thus creating a risk profile for cholera within a population where 60 percent suffer from prevalence of undernourishment, 40 percent has no access to improved drinking water and just 20 percent has access to improved sanitation before the earthquake. The World Health Organization states also that cholera is one of the key indicators for social development.

While the disease no longer poses a threat to countries with minimum standards of hygiene, it remains a challenge to countries where access to safe drinking water and adequate sanitation cannot be guaranteed. Almost every developing country faces cholera outbreaks or the threat of a cholera epidemic. As it can be imagined Africa nations head the rank.

With this outlook after the earthquake just NGOs were able to contain the epidemic, but it should be emphasized that dying by cholera is not easy with a minimum sanitation care. Around 75 percent  people infected do not become ill, but when illness does occur, 80 to 90 percent of episodes are of mild or moderate severity which can be treated with a simple treatment of oral hydration solutions, mere sugar and salt mix to be ingested costing about 10 cents the sachet.

For severe dehydration cases intravenous rehydration is necessary with mortality rate lower than 1 percent but untreated it raises over 50 percent. Moreover currently in the market two preventive vaccines are available; Dukoral and Sanchol, both with a protection close to 8o percent for the first two years and a cost between 1.50 to 5 dollars a dose.

Still, the cruel reality is that there is no money for everything and priorities have to be done. That is why some experts argue that a vaccination campaign would be neither feasible nor cost-effective, and advocating putting forth other measures. According to UNICEF NGOs have been deploying several initiatives to prevent, contain and reduce the epidemic.

In partnership with the Ministry of Health they are working to raise awareness about cholera through radio, television and text messages targeting at least 80 per cent of the population.

Through neighborhoods they have been putting up posters to help teach people how to protect themselves and giving information about the disease in schools, health centers, market and even door to door, with an aim to ensure that households have at least one person who knows how to prevent cholera and what to do in case symptoms occur.

Furthermore they install public water points where water tankers provide free and pure potable water where water purification tablets and soap are free handing out too. Without this facilities cholera spreading would have been unstoppable because in water kiosk 5 gallons of drinkable water cost up to one dollar when most of the population is surviving with less than a dollar per day, so is unaffordable for almost everybody.

A complete sanitation and potable water system for 1000 people during a year costs 18.000 dollars or more, so many times is too expensive as well. That is why they seek for other sustainable alternatives like wells, another effective and cheap way to allow easy access to safe water. After the well is constructed the NGOs put in charge a different committee for each site to makes sure it keeps running effectively.

Owing to the lack of resources NGOs try to do their best in a very difficult situation. Now that media focus has been diverted to the nuclear crisis Japan and Somalia famine the donatives have been critically reduced and foreign aid tends to displace to hot points. Under these circumstances nobody can be sock by the macabre game played by Haitian government.

Headlines are more important now than ever to keep the attention over a country where still 600.000 people live in displacement camps and 40.000 new cholera cases per month. Unfortunately more people are dying by starvation in Africa and like in a Machiavellian chain this triggers off mass media interest; giving television, radio and press space.

The chain continues with international donors, as foundations or governments seeking for recognition or NGOs seeking for promotion, increasing their efforts in the hot spot and therefore reducing staff and money from other projects. Likely the organizations in Haiti will be able to steadily reduce the monthly cholera cases and deaths into a situation under control, but not capable of eradicating it.

The country is struggling right now against a new endemic disease, they can win or they can lose and resign themselves to counting dozens of deaths per month. Everything depends on international help, Haiti is totally crippled, but these days developed countries are bailing banks out with tons of dollars used to make up a financial balance instead constructing a well for potable water that actually could save lives.

Image Courtesy of  http://www.flickr.com/photos/britishredcross/

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