Wake up and smell the austerity! Shock Doctrine come to Europe.

[Magda Hassan]

Even with Keynesian economics, which is still mainstream Capitalism and in no way shape or form socialistic, there was no fixing the system. It was WW2 which got the unemployed off the dole and into war time jobs. Since then it was the post war extension of credit to the working classes which has kept them indebted and allowed the burgeoning of the finance sector and the Cold War continued to grow the military economy. In the US there is now only about 3% manufacturing jobs. The last light bulb factory left there has just closed and has gone to China. The only economy which is left standing there is the war economy. Currently it is involved in other people's countries but soon it will be in a town near you.

IMF Fears 'Social Explosion' From World Jobs Crisis

America and Europe face the worst jobs crisis since the 1930s and risk "an explosion of social unrest" unless they tread carefully, the International Monetary Fund has warned.

by Ambrose Evans-Pritchard
"The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment," said Dominique Strauss-Kahn, the IMF's chief, at an Oslo jobs summit with the International Labour Federation (ILO).
Unemployed workers protest on the steps of Federal Hall across from the New York Stock Exchange on August 12 in New York. (AFP/Getty Images/File/Chris Hondros)
He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. "We are not safe," he said. A joint IMF-ILO report said 30m jobs had been lost since the crisis, three quarters in richer economies. Global unemployment has reached 210m. "The Great Recession has left gaping wounds. High and long-lasting unemployment represents a risk to the stability of existing democracies," it said.
The study cited evidence that victims of recession in their early twenties suffer lifetime damage and lose faith in public institutions. A new twist is an apparent decline in the "employment intensity of growth" as rebounding output requires fewer extra workers. As such, it may be hard to re-absorb those laid off even if recovery gathers pace. The world must create 45m jobs a year for the next decade just to tread water.
Olivier Blanchard, the IMF's chief economist, said the percentage of workers laid off for long stints has been rising with each downturn for decades but the figures have surged this time.
"Long-term unemployment is alarmingly high: in the US, half the unemployed have been out of work for over six months, something we have not seen since the Great Depression," he said.
Spain has seen the biggest shock, with unemployment near 20pc. Britain's rate has risen from 5.3pc to 7.8pc over the last two years, a slightly better record than the OECD average. This contrasts with the 1970s and early 1980s when Britain was notoriously worse. UK jobless today totals 2.48m.
Mr Blanchard called for extra monetary stimulus as the first line of defence if "downside risks to growth materialise", but said authorities should not rule out another fiscal boost, despite debt worries. "If fiscal stimulus helps avoid structural unemployment, it may actually pay for itself," he said.
"Most advanced countries should not tighten fiscal policies before 2011: tightening sooner could undermine recovery," said the report, rebuking Britain's Coalition, Germany's austerity hawks, and US Republicans. Under French socialist Strauss-Kahn, the IMF has assumed a Keynesian flavour.
The report skirts the contentious issue of whether globalisation lets companies engage in "labour arbitrage", locating plant in low-wage economies such as China to ship products back to the West. Nor does it grapple with the trade distortions caused by China's currency policy, except to call on "surplus countries" to play their part in rebalancing.
The IMF said there may be a link between rising inequality within Western economies and deflating demand.
Historians say the last time that the wealth gap reached such skewed extremes was in 1928-1929. Some argue that wealth concentration may cause investment to outstrip demand, leading to over-capacity. This can trap the world in a slump.

Meanwhile the TUC president in the UK is gearing up to defend established working conditions and warning of the future if these cuts go ahead:

The motion rejected the idea that cuts were necessary to pay for the deficit and said they were a "savage and opportunistic attack on public services" which "goes far further than even the dark days of Thatcher".
TUC general secretary Mr Barber told delegates: "These are not temporary cuts, but a permanent rollback of public services and the welfare state. Not so much an economic necessity as a political project driven by an ideological clamour for a minimal state.
"What they take apart now could take generations to rebuild. Decent public services are the glue that holds a civilised society together and we diminish them at our peril. Cut services, put jobs in peril and increase inequality, that's the way to make Britain a darker, brutish, more frightening place."

Meanwhile the government, working for business interests, is trying to get the union leadership to collaborate with the bosses in preserving their profits by getting workers to make all the sacrifices:

The PM's spokesman said they wanted "partnership" with the unions to tackle the deficit.

Even bringing out the big guns to tell the unions how it is going to be:

Bank of England governor Mervyn King will address the TUC later - only the second holder of the post to do so in the union umbrella group's 142 years.
He is also expected to answer questions from congress delegates in Manchester, who have voiced concerns this week about government spending cuts.

Meanwhile the Police Chiefs are having none of this austerity nonsense for their departments. They're asking for much more money to deal with the predicted social unrest from the austerity cuts implemented in the working classes. Or else. :

Cambridgeshire's Chief Constable has warned the police service may be forced to deal only with 999 calls.
Julie Spence is retiring from the force on Sunday and has spoken out over government plans to cut its budget by up to 40%.
The force faces £33m cuts over the next four years.
"It would be Armageddon. The police service that you see today would not be the police service that you would see in the future," Mrs Spence said.