Europe blunders towards new recession

Dick Nichols writes that Europe blunders towards new recession.

The main cause of the possible new recession in Europe is due to the fundamental problem of Capitalism:

The root cause is the lack of profitable investment opportunities in production, even as big capital is nearly drowning in retained earnings.

The Europe-wide shortfall in demand arising from the investment slump is also confirmed by the continuing decline in the annual EU inflation rate. It fell to a new low of 0.4% in September and was zero or negative in four of the crisis-hit countries of the “periphery” — Greece, Portugal, Spain and Italy.

The IMF has proposed a Keynesian response of using the very low interest rates to fund public works:

The evidence of the costs of stagnant investment has now become so strong that IMF chief economist Oliver Blanchard has called on Germany to take advantage of its very low borrowing costs to raise its deficit and fund public investment in infrastructure.

Since Germany is so intransigently pro-business in pushing for lower public debt, lower wages, and lower taxes, the only real hope for Greece is for strong left-wing government action:

By the same token, however, if a Syriza government can force through its program of radical debt renegotiation, higher working-class incomes and greater public investment funded by higher taxes on the rich, then the start of the only possible road out of austerity will become visible.

The lessons of the last two hundred years of Capitalism are still being ignored. The Capitalists are only interested in protecting their capital. And the state protects the Capitalists. The sooner the workers wake up to this, the sooner they can start exploring alternatives to Capitalism.