Sunday, April 26, 2009

Politics Worsening the Recession

I warned in "Militarism and Financial Excess: Two Sides of the Same Coin" that:

Beyond all discussion of economics still lies the global political system, which can be distinguished from the global economic system but not separated from it.

Now comes a report on Eastern Europe by Jelena Vukotic via RGE Monitor that lays out a vicious cycle of "economic pain and political jitters," illustrating a different way in which economics and politics are linked:

As the economic crisis bites and unemployment rates soar, voters have been losing confidence in their governments’ ability to cope with the deepening economic downturn. What is more troubling is that this confluence of crises creates a vicious circle. Economic gloom fans social unrest and brings governments down. In turn, rising political risk unsettles already jittery investors and will certainly not help the recovery prospects in the region that is highly dependent on capital inflows.

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