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The Creativity of Austerity: An International Financial Foresight for 2013

Part I: Political Economy and Terminologies

By Marios P. Efthymiopoulos

CEO & Founder, Strategy International


While I was being educated at different Universities completing the degrees, which were of interest to me, while I was hoping later on to secure a professional position when my education would be complete, either in the market world or the academia (as I wished), I found out, relatively late, to honestly say, that without sound economic education and training I would not be able to have a complete file, one that would make my candidacy attractive.

I was always wondering why would a political scientist, with a diverse international and national background, a multi-leveled and international education and ability to think at different levels and scopes would not be good enough, credible and able to lead, if economic education and proof of completed courses and practice would not have been included at the curriculum of a professional. As such I understood that economic knowledge and professional experience would largely prove economic knowledge and possibly in the future ability to lead and credibility in making economic or political economic assessments whether in professional work or politics.

In order to gain knowledge and experience I embarked in working and most importantly learning, by working on sound economic and prestigious places, the ability to manoeuver at different economic levels of administration and decision-making whether national or international; To understand how capital is created, where and with what credentials would the capital be invested; How would taxation be collected and why is important, why would in international affairs and corporate world, the stock market shares and bonds matter greatly. Even more so, how would the economic viability of an international organization or a country would suit the needs of a constant changing world, one of alliances and interests made upon short-term interests and long-term goals. Why would economies boost or face inflation. Why would the world or countries have to face recessions. Why would austerity measures, be applied as a consequence of financial negative foresights and actual outcomes. Why would wars occur and why are countries suddenly become so interested at the viability or destruction or dissolution of its society for that matter, of another.

In answering all the above questions is not an easy task. But it is very important to answer with as much simplicity as possible and as much accuracy as possible. We need to realize at this early level, that stakes are high. Any possible mistakes at the forthcoming level (Part II) that includes foresight and the ‘diplomacy of the policy of austerity’ may jeopardize our main goal. And that is to provide a complete correct insight why things progress the way that they go and provide a program of possible solutions for consideration.

Economic foresight is to come, in the forthcoming article, next to the below established framework of explanation, analysis and exploration of the basic root causes of political economics. The article will foresight the future of economic prosperity and provide solutions will explain and balance upcoming international economic whereabouts of the current negative international, and national negative overflow of capital, goods and production.  And as stated to the earlier article, this is an attempt to understand better the world and provide robust and credible solutions through the understanding of effective analysis, proposals and possible political future engagement. As such those articles will always be considered as professional/scientific on the one hand but also professional/political on the other. This is the political assumption of how the world is and how it will develop. Lastly what measures need we to take to avoid and future and possible negative effects that unfortunately some are unavoidable.

Terminology is essential. Economic analysis and foresight requires terminology explanation; and is very much so provided in reality by international professionals, economic experts whether in the micro or macro level.  Nonetheless, it is essential for this article to explain individually from others, how we interpret the status of economics and political economy, at least at the level of terminology and while this article develops practically.

There is a need to hold and develop a complete understanding of economics in its simplest form when referring to the economic status of nations or internationally. Terminology along with a political economic analysis through the creativity of austerity, instead of productivity will explain the financial foresight of 2013-2014, as the title of the article introduces, in the regions of Southeast Europe, the Mediterranean and the Middle East and the world.

Capital is created as a result of trade. Capital is the outcome of an economic trade that is created for the support of the national and international economies, for the benefit of those that privately wish to invest and make large profits out of the creation of goods, and at the country level, for the benefit of the state. The state, offers through investment possibilities and or provides a social infrastructure and as such gives back to its own people and in different levels.

Currency is the actual practical method that we conduct exchanges of goods for which we pay of or get in return for our goods or services. The currency which is used, a now, suddenly made complicated affair in the 21st century international economics, trade, banking and acquisitions affairs (will explain at the next article why and how it reflects politics), is a currency that supports the works as well of national governments or joint interest economies of countries or international organizations and community.

The stock market and bonds (public or private, even more so equities and natural resources and gold) are realities that strongly boost the shares of a country or company. Both exist in parallel worlds. In the political world (where gold and public bonds are the stocks of the state including also natural resources) and in the corporate world (where stocks and goods production, innovation and marketing is the key to success) is allowed to exist as for faster growth to occur. Cash is now able to flow inside the company and/or the country, making it more profitable in the short-term and more adjustable to the needs of investment and innovation as well as infrastructure and allocation of sources that will benefit the social structure and its citizens.

Gold is the mechanism of exchange to currency and each state according to its productivity, real-estate wealth, gold and others sources is exchanged to currency that allows for goods to be created, cities to be built and even wars to be conducted. However new energy sources emerged since the 1950s onwards as being quite important as equal to gold now reflect new realities for the 21st century. A century that its measured stability, growth and profitability of the state or states, interest and joint alliances or aims is measured upon the ability of a state or a union of states, to exploit natural resources as well as scarce natural resources or alternate sources of energy.

Politics and Economics matter. Both policies matter in different levels and are inter-related with each other and are applicable at different levels and actions. Politics of the 21st century is largely a methodology used through the legalities and laws created, through the political philosophy and elitist personalities and joint interest groups (from now on known as caveats) to boost a nation’s economy or a single international organization entity such as the European Union as example or the international community at large. Politics is root causality of economic wishful prosperity but with a variety of tactics implemented to achieve the initial economic aims. It is also a way of swift pragmatic economic implementation in every day affairs and in between states or organizations and private businesses and firms.

Economic implementation, increasing profitability through creation and selling of goods, comes forth, for the benefit of a nation, through exploitation of natural resources, marketing and management, communication and public relations, services and goods, technology innovation, energy and security. It does also come in social security and country stability and constant education, healthcare and research. Economic profitability and enlargement of national or international capital, comes forth through investment or constraints (austerity) –yes in fact it happens as such- between people, members, governments, states and organizations. Depending on interest politics and sharing of joint interests, economic profitability increases or decreases. Production of goods increases or decreases as well depending on the state and the allowance to create a good that will be sold in the market or exported. In some cases stability or instability of a state or region occurs when markets are infected positively or negatively, where there is allocation of natural resources that are needed and can or cannot be used by national owned land government, or when the government or people are faced with social and political consequences internal or external and cannot be resolved as such making difficult the exploitation of natural resources that are needed for the survival of others. As such the exploitation of the natural resources is an issue of the fittest in both political and economic terms, when the resources are considered as prime-time goods for the profitability of people and states that are most needed to survive with.

Politics and economics is all a matter of ‘taking while giving’. As such politics and economics are merely rules with which one can be engaged in public or private affairs. Politics, economics and  in this case as well the rule of law, provide the rules of the game, the rules of engagement in the ‘battle of the strongest and the fittest’ who gets what, when, where and with what objective and in exchange of what and in what method and level.

Ιn real-politic affairs, in a pragmatic level approach, currency and capital are used for the profitability, investment opportunities and resolution of disputes and issues between states, governments and organizations. They are used for what we call in political affairs, peaceful means and or negotiating terms and mediate solutions.

Taking this to a whole new and practical level, what we are trying to imply in real terms, is: “that everyday life, politics and the answer to the question, why things happen as such, occur due to economic ties or wishes; as capital is all around us. Capital creation and increase is the main consideration and measurement of structural solid success.  Economic application is a method for actual structural, institutional, legally made, and in some instances illegally made, profitability. Essentially capital and economic prosperity guarantee stability, some level success and prosperity at all levels”.

However, too much, prosperity, stability and knowledge of natural resources located in one area may also be proven fatal and negatively consequential in the long-term politics, alliances and economic prosperity. A variety of attempts will be made for exploitation. And these include: the right to exploit natural resources either by peaceful means or through the creativeness of instability. Through the known methodology of exploitation, by the strongest, fittest and the most populated (where needs are increasingly higher than the location of the country that holds natural resources).


End of Part I


Next: Economic foresight 2013-2014 and the ‘Diplomacy’ of Austerity.