The May 6 Greek election set off political and financial shock waves and seems to have opened a new phase in the prolonged economic crisis-depression that began in July-August 2007 with the U.S. sub-prime mortgage crisis and has increasingly taken on the form of a social and political crisis as well.
Last February, a deal was worked out in which the Greek governmental debts were written down by about 50 percent. In return, the Greek government was forced to agree to a stiff austerity program aimed at both the employees of the state and workers employed by private capitalists.
Financial circles openly admitted that the austerity polices would further extend and deepen the already five-year-old Greek recession. But they claimed that a really deep recession throughout Europe had been staved off, and the U.S. media reported that the American recovery was now at long last gaining momentum.
The U.S. Labor Department reported a decline in the unemployment rate from around 9 percent last year to just over 8 percent last month. What the capitalist media largely overlooked, however, is that the decline in the unemployment rate was achieved by an alleged decline in the number of people actively looking for work, the exact opposite of what would normally happen during a period of economic recovery.
If it were calculated honestly, the U.S. unemployment rate would show no real decline since the “Great Recession” bottomed out in 2009. The most that could be claimed using U.S. Labor Department data—but not their phony method of calculating the rate of unemployment—is that the U.S. unemployment crisis is not getting any worse. However, the most recent unemployment figures indicate that once again the growth in total employment has fallen well below the level necessary to prevent a long-term rise in unemployment when the growth in the size of the working population is taken into account. So in reality, the long-term U.S. unemployment crisis is still growing.
In Europe as whole, the situation is even worse. While the crisis first broke out in the U.S. in 2007 and reached a climax on Wall Street in the third quarter of 2008, the crisis more recently has been more severe in Europe. Official unemployment is now 11 percent, the highest since 1995, when figures began to be kept for European-wide unemployment.
But unemployment varies considerably from country to country. In Germany, Europe’s most economically powerful country by far, the official unemployment rate is “only” 6.7 percent—considerably better than the official U.S. unemployment figures—while in Spain it is over 24 percent, almost matching the quasi-official U.S. unemployment rate of 24.9 percent in early 1933 at the very bottom of the Great Depression. In Greece, it is 22 percent and rising. Therefore, as far as Spain and Greece are concerned, a new “Great Depression” is no longer a threat—it is a reality.