History Set on Repeat – Paul Krugman on the New Depression Politics

Let’s set aside the polarization in the US for a minute. Everyone knows our system is at it height of dysfunction. Whether it is the GOP stonewalling for political gain or the Democrats unparalleled lack of backbone, it does not represent the possible political dangers coming out of Europe.

Paul Krugman’s latest column comes out and calls the current economic malaise exactly what it is – a Depression. Sure it’s not the 1930s style 25% unemployment but this economic downturn is no less pronounced given its global reach. What is disturbing is the recent political developments out of EU countries. The shared currency that was supposed to bind nations together has only increased bitterness between them.

Last month the European Bank for Reconstruction and Development documented its sharpest drop in public support for democracy in ‘new’ Euro countries. Most of these countries are from the old Soviet-bloc and have experienced the worst slumps since the start of the downturn in 2008. Western Europe though has not been immune to the rise of radical political parties.

All of this combined together has seen the rise of radical right wing parties in Europe. In Austria, a right wing populist party (with neo-nazi connections) has begun polling neck and neck with more established parties. In Finland, the anti-immigrant True Finns has a strong electoral showing in April.

The most disturbing political development out of Europe has to be in Hungary. While not in the Euro, the country suffered heavily in the current crisis due to over-borrowing and gross mismanagement of the left leaning governing party. The center right party, European Bank for Reconstruction and Development, won an overwhelming majority in Parliament last year and has set about to install a permanent rule under the veneer of democracy.

A crackdown on independent media has ensued in Hungary along with overlapping measures to create gerrymandered districts to ensure victory for the ruling party. A new constitutional addendum would make the leading leftist party illegal.

While none of this points to a new Hitler rising in Europe, it should be concerning to both the EU and the United States. The backsliding of democracies in Central and Eastern Europe shows no sign of slowing down and with parties such as the True Finns, it looks to be spreading to the more liberal counties of Western Europe.

written by

An avid market watcher, Martin enjoys the tech arena the most with the Nasdaq being his main area of focus. A finance major, Martin is working to the goal of one day ringing the bell at the NYSE.
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