ECONOMIC AUSTERITY MEASURES IN EUROZONE PUBLIC DEBTS CRISIS

摘要

The Euro-zone public debts crisis was directly impacted by the US sub-prime crisis.Greece,Ireland, and Portugal, with their own ballooning budget deficits in the past decade, received the bail-out package from IMF and bilateral loans from Euro-zone partners and European Union rescue funds, and are forced to deliver the cuts on budget deficits and implement economic austerity measures to restructure their economy, also known as internal devaluation including the public sector jobs reduction;slashing pensions;eliminating public sector annual bonuses to minimal;changes in collective bargaining rules;pay cuts for public sector employees;raising value-added tax;taxes increase on fuel, tobacco and alcohol;and privatization as well as restructuring of public sector entities.The key austerity measures implemented by the European Central Bank in late December 2011 and February 2012 were the liquidity injection of over Euro 1 trillion into the European banking system, similar to the "quantitative easing" measures advocated by the US Federal Reserve Bank.In comparison, Asian economic crisis forced Thailand, Indonesia, and South Korea to receive the rescue package from the IMF which imposed the economic austerity measures of the budget deficit reduction, raising the interest rates to improve the domestic funding market, restructuring the financial and banking markets to enhance the competitiveness, and currency devaluation to improve the country's products and services competition.In a far more extensive response to the US sub-prime mortgage crisis, the Federal Reserve started off with the conventional monetary policy by drastically lowering federal funds interest rate, and then turned to non-conventional monetary measures,known as"quantitative easing", through(1) liquidity injection by lowering the discount rate and the temporary Term Auction Facility, and through USD swap lines with foreign central banks, (2) the USD 300 billion long-term Treasury bonds purchase and the outright purchase of USD 1.25 trillion of mortgage-backed securities, (3) the bank stress tests to ensure sufficient capital, (4) the bailouts of financial institutions through the TARP funds to inject capital into financial institutions, and (5) the USD 787 billion fiscal stimulus package of tax cuts and government spending increase.It is evidenced from these economic crises that, while other economic measures are country specific, the liquidity injection and fiscal stimulus in both local as well as foreign currencies for growth into the troubled economies are essential and necessary.