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Economist Michael Hudson has a new article at Counterpunch (Spanish language version at Sin Permiso) analyzing what he bluntly describes as financial coup.
Some key paragraphs:
A balanced budget in an economic downturn means shrinkage for the private sector. Coming as the Western economies move into a debt deflation, the policy means shrinking markets for goods and services – all to support banking claims on the “real” economy.
(...) The idea is to create an artificial financial crisis, to come in and “save” it by imposing on Europe and North America a “Greek-style” cutbacks in social security and pensions.
(...) It is diametrically opposed to the original liberalism of Adam Smith and his successors. The idea of a free market in the 19th century was one free from predatory rentier financial and property claims. Today, an Ayn-Rand-style “free market” is a market free for predators. The world is being treated to a travesty of liberalism and free markets.
(...) Latvia is the prime example. Despite a plunge of over 20 per cent in its GDP, its central bankers are running a budget surplus, in the hope of lowering wage rates.
(...) Beyond merely shrinking the economy, the neoliberal aim is to change the shape of the trajectory along which Western civilization has been moving for the past two centuries. It is nothing less than to roll back Social Security and pensions for labor, health care, education and other public spending, to dismantle the social welfare state, the Progressive Era and even classical liberalism.
(...) The problem is that there is not enough economic surplus available to pay the financial sector on its bad loans while also paying pensions and social security. Something has to give.
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What really is causing the financial and fiscal squeeze, of course, is the fact that that government funding is now needed to compensate the financial sector for what promises to be year after year of losses as loans go bad in economies that are all loaned up and sinking into negative equity.
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This is not the familiar old 19th-century class war of industrial employers against labor, although that is part of what is happening. It is above all a war of the financial sector against the “real” economy: industry as well as labor.
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Latvia has been held out as the poster child for what the EU is recommending for Greece and the other southern EU countries in trouble: Slashing public spending on education and health has reduced public-sector wages by 30 per cent, and they are still falling. Property prices have fallen by 70 percent – and homeowners and their extended family of co-signers are liable for the negative equity, plunging them into a life of debt peonage if they do not take the hint and emigrate.
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The explanation, of course, is that today’s economic planning is not being done by elected representatives. Planning authority has been relinquished to the hands of “independent” central banks, which in turn act as the lobbyists for commercial banks selling their product – debt. From the central bank’s vantage point, the “economic problem” is how to keep commercial banks and other financial institutions solvent in a post-bubble economy. How can they get paid for debts that are beyond the ability of many people to pay, in an environment of rising defaults?
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This is why I say that Europe is dying. If its trajectory is not changed, the EU must succumb to a financial coup d’êtat rolling back the past three centuries of Enlightenment social philosophy. The question is whether a break-up is now the only way to recover its social democratic ideals from the banks that have taken over its central planning organs.
I could add many things but would be mere extensions on this analysis. Sadly enough, Hudson is right and, unless the People of Europe reacts very strongly, the continent will be plunged in a matter of years into the most dystopic scenario with the vast majority of citizens dumped into misery conditions, industries fleeing or dying out and mafias running the only remnants of the economy.
The corruption of the parliamentary representation system, with nearly all politicians being nothing but puppets of their financial patrons and with nearly no free media surviving, plus the destruction of effective state sovereignty is leaving Europe (and the World) on the hands of the big bankers, who have only one goal: to keep their profits high for as long as possible, concentrating all the wealth in their hands, without any real plan for the future other than that.
Capitalism has taken off its mask. It still tries to sell workers' austerity as something "good" but in fact they have no project whatsoever anymore. The Cold War illusion of welfare under capitalist conditions is all but dead now: class war has become very real.
But by the moment at least, the bad news is that the oligarchs are winning the war. For how long?
9 comments:
The oligarchs have experienced a few set-backs, here in the United States, in recent years. It looks like re-regulation of the banksters and financial sector is going to happen, after all. Healthcare reform was passed, too, and none of this would have been possible were it not for the Republican loss of power in November of 2008.
So, the trend in the US is actually opposite of what Hudson claims, seems to me.
As for the rest of the Americas, again I think the trend is different. Honduras is struggling, obviously, but the tide seems generally against the oligarchs, these days. In such a climate, I suppose it's no wonder that the powers-that-be have turned their attention to Europe. I hear even US mafiosa have been leaving here for Italy.
Hmmm... I fear that you are overtly optimistic. Of course there are differences in the USA and EU:
1. The USA is the metropolis of the Empire and the process we are experiencing in Europe stinks to degradation to colonial ("Third World") levels. This is my view, though I see more as colonialism of bankers (in general) than as colonialism from any particular metropolis, be it the USA or Germany or whatever (but a bit of both).
2. Huston does mention that the Obama administration is more concerned by the need to get the economy going again and that, in this sense, he has weakly opposed the draconian measures of EU (and the US-dominated IMF) as excessive and imprudent. I can only agree with that criticism, of course, because cutting public spending in time of crisis offers nothing but economic chaos.
Elsewhere I have also read that European governments have proportionally spent much more bailing out banks than the USA. So, yes, the USA is acting somewhat more reasonably... but it is dominated by an "independent" central bank like the rest, the Fed, whose interests are only that bankers are well fed, so they can pay back their public loans (loans that are anyhow true gifts, as are given at below-inflation interest rates anyhow).
But anyhow the article is mainly about Europe, where Capitalism has finally taken off the mask and is showing its most horrid face. A face that is not about public welfare, of course, but is not either about anything related with the real economy either: only with bankers' profits.
Yes, they get makeup regulations on some minor issues such as financial transactions' tax (they are the only ones making money and the state has to have some income) and rules on CEOs' bonus, trying to get them more deeply implied in the mid-term well-doing of the companies they direct... but they are threatening to get all exiled in the Cayman Islands (ironically a colony or a EU member state).
Overall the impression is that of a hyper-globalized Capital, that is now essentially financial Capital, not productive Capital anymore, in front of which governments can only go socialist or bow to their merciless whip of absolute greed. Such a large and powerful state like the USA still has some leverage (not much but some) but EU seems quite powerless because it's not yet constituted as state but as mere confederation with focus not on political union but on mere economic union (free for multinationals to plunder therefore).
But even in the USA, facts like who pays for election campaigns really shows who is the boss: not the people, who mostly is only rallied by the parties and politicians promoted by the Big Capital, but a small oligarchy whose only rule is boundless greed, because it's that way how they get their power.
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There's really a long way to build a popular opposition in the USA. In Europe it might be slightly easier because here class consciousness and class networks still exists to some extent. But only slightly so in any case: there is a lot of demobilization and the belief in "human Capitalism" has caught deep enough to give the oligarchs some room to maneuver against the people in ways that I can't consider as crimes against Humanity.
"As for the rest of the Americas, again I think the trend is different. Honduras is struggling, obviously, but the tide seems generally against the oligarchs, these days".
Not only Honduras. Mexico and Colombia, two of the largest countries are also very bad. And the revolutionary (and reformist) wave of the last two decades has entered a slow track possibly.
"In such a climate, I suppose it's no wonder that the powers-that-be have turned their attention to Europe. I hear even US mafiosa have been leaving here for Italy".
Sure, the problems of Europe (and the USA too) have a lot to do with the "Third World" growing more powerful. Simply there's less to share, so the Capitalist class is making sure that it's all shared only by them.
But another problem comes from a market union without political union. Europe lacks any sort of unified political leadership and the extant government institutions have no legitimacy because they are not really elected democratically in any way. However all governments bow to Brussels without doubt, even if it's obviously suicidal (but, you know, when the country collapses, they'll be safe somewhere else enjoying their robbed fortunes, so "carpe diem").
Italy nowadays is very open to mafias. It has always been since the time of Mussolini and specially allied occupation in the 40s. But with Berlusconi it's a true mafioso paradise. Worse, they are expanding to other places like Spain and even Colombia, where it's rumored that every day is more common to listen Calabrian dialect in the streets. The free market area of EU can only favor their expansion unless they are very effectively tackled, what is not the case at all.
Also, I would wonder if the hypertrofic growth of the Jewish Mafia may get Italians feeling displaced in the USA. However they are more symbiotic than pure rivals in any case.
Maju, I substantially agree on all points.
What I meant to imply was not necessarily that things were going well in Latin America, generally, rather that politically the pendulum seems to be swinging toward the people, in recent years, and somewhat away from the oligarchs. Mexico and Columbia are a horrendous mess, I agree, yet even there I think Mexico is showing greater independence from the US than at any time in the past. That has to be a good thing.
Obama was not necessarily elected by big capital, though. He was elected by street-level organization, something that seems to be on the rise both in the US and throughout the Americas. I don't look to Obama to change anything, but I do have high expectations for his supporters. What change we have so far in this country, from the Bush-Cheney junta to now, is because those supporters demanded that change.
Politically, I see this country called América making real, albeit incremental, progress toward "authentic democracy". I think analysts like Hudson are too busy looking up at the leaders---and their financiers---obsessing on what goes on at the top of the pyramid, to fully comprehend where we are, down here, today.
On Europe, I certainly agree, allowing for the fact that I cannot possibly know too much detail from this distance. Europe must realize its combined strength. That day will come, but it is not today.
Speaking of Latin America, are you aware of the NarcoNews?
I would not say that Mexico is "showing greater independence from the US than at any time in the past". Rather the opposite: it's become a US colony (in time of the PRI at least it had an independent policy and even nationalized the oil industry - it was a corrupt undemocratic regime but relatively independent). Since Fox and the new dictatorship of the PAN, Mexico has gone deeply downhill. The Mexican people is growingly active but that's different from the state which is totally subservient to Washington and Big Business.
"Obama was not necessarily elected by big capital, though. He was elected by street-level organization"...
Where is that street level organization now? Divided between reluctant support, back home disappointed or flirting with more radical options. As far as I can see Obama dropped the leftist discourse as soon as he was appointed Democrat candidate and since then on he's been almost only the successor of Bush with a more polished image.
Obama's campaign was essentially paid by the Zionist Lobby (i.e. Big Industry, Jewish Mafia and Israeli global networks in general) of which Obama has always been adept. And these are the ones dictating his policy to a large extent.
That same "campaing" has been unable to get the much needed radical representatives and senators in the respective chambers. So even if Obama tries to do something (not much as far as I can see) he's blocked in Congress. Why is that fascist Liebermann still there for instance?
"... something that seems to be on the rise both in the US and throughout the Americas".
The Obama grassroots campaign really looked like the beginning of something but, watching from the distance, I have the feeling that it was only that: a beginning. And Obama himself is an obstacle to go beyond that because many seem to think it's enough. Meanwhile US citizens, pushed by increased poverty, keep being drafter for colonial wars (senseless massacres) in remote countries that end up hating the USA and all the West for what they do to them, Guantanamo death camp remains open, the CIA and such keep torturing, Bush' exception laws remain active, Israel is being pampered and financed with YOUR money even against a NATO ally like Turkey and even if it is a declared nuclear threat against Europe.
What the Obama campaign shows is that a well organized grassroots movement can arise in the USA. And the next time it does it'll be more radical surely. But by the moment it's almost totally demobilized by its own "success".
It's a good demonstration that what matters is the popular organization and not the leaders, who mostly betray the people at any opportunity.
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"I don't look to Obama to change anything, but I do have high expectations for his supporters. What change we have so far in this country, from the Bush-Cheney junta to now, is because those supporters demanded that change".
That's true to some extent at least. And some are probably still mobilizing even against Obama but others seem to be demobilized by that very success. I doubt that anything via the Democratic Party is going to change anything of importance ever. The Dems are part of the system, as much as the GOP. It's the same in Europe: the same policies are implemented by the Christian-Democrats and the Social-Democrats. They may argue about abortion rights and some aesthetic issues but essentially they are only cosmetic alternatives to each other.
That's the limit of parliamentary democracy: you can choose but the choice is most of the time totally trivial.
"Politically, I see this country called América making real, albeit incremental, progress toward "authentic democracy"".
I hope you're right. According to the Marxist classics, socialist revolution can only be expected to happen first in the central Capitalist countries such as the USA or Europe. But they have been wrong in the past anyhow.
I do think that there's a growing consciousness and militancy in the USA. I do have that impression. But it's very limited yet.
"I think analysts like Hudson are too busy looking up at the leaders---and their financiers---obsessing on what goes on at the top of the pyramid, to fully comprehend where we are, down here, today".
Maybe. But we cannot ignore what they are doing to us. The top of the pyramid is by the moment where rules are set, projects are planned and where reforms are stalled as well.
In order for a powerful conscious popular movement to exist, there must be consciousness of what the oligarchs are doing. And right now it's worse than ever in living memory and that's of course more reason to oppose them.
"... are you aware of the NarcoNews?"
Not till now. Thanks for the link. :)
I was aware of the liberation of the Atenco 12, thanks to a local free radio.
Maju, you place me in an interesting position. I have no desire to argue with you. In fact, I suspect that our respective visions of "how things should be" are, in all likelihood, virtually identical. However, you write:
"As far as I can see Obama dropped the leftist discourse as soon as he was appointed Democrat candidate..."
The man always presented himself as a somewhat left-leaning centrist and was very consistent about it. Had he presented himself as more leftist he could not have been elected. This is the political reality of this country.
I did not support Obama because I agreed with his political ideology; I supported him, and continue to support him, because the Republican alternative is nothing short of HORRIFIC. I try never to lose sight of this fact. To pretend, as the good folks at CounterPunch seem to do, that Obama is just as bad as any Republican candidate is patently absurd.
For instance, health care reform, flawed as it obviously was, will provide 30 million Americans with access to affordable care that did not previously have it. Obama led the campaign for that reform and as a result there will be a little less misery in the lives of the poor. To Hell with "leftist discourse". You write:
"Obama's campaign was essentially paid by the Zionist Lobby..."
No, that isn't true. I am one of the strongest critics of Israel I know and even I would not make such a claim. A surprisingly large percentage of Obama's campaign money came from small donors. In fact, it's how he beat Hillary Clinton in the primaries.
Obama has opposed Israel more strenuously than any president since Carter. That his opposition has been feeble and grossly inadequate, and far from what either you or I might desire, is wholly irrelevant. Israel and its supporters would make this country ungovernable, if it was seriously opposed. The last US president to say "no" to the Israelis was Kennedy.
Senator "Holy Joe" Lieberman represents the Connecticut defense industry, companies like Sikorsky Aircraft. The fact that he is unashamedly pro-war and pro-Israel and that he supported the Republican ticket AGAINST Obama, in 2008, should surprise no one.
Broadly speaking, there are severe limitations to what Obama may do. He is not a dictator and the US is still a democratic republic, more-or-less. It was said, in the early days of the Deepwater Horizon disaster, that, given the number of oil-friendly Bush appointees still at work in government agencies, there was no guarantee that a direct presidential order would be carried-out as intended. Given the thoroughness of the ratfucking this country received under the Cheney-Bush junta, I have no reason to doubt it.
"I did not support Obama because I agreed with his political ideology; I supported him, and continue to support him, because the Republican alternative is nothing short of HORRIFIC".
That's a stand I cannot ever take: I'd rather have a direct confrontation with the far right than support "lesser evils" that are barely a make up. But of course, that's a matter of opinion.
You can easily end up propping politicians that will make things even worse than the far right. That's what happened in Greece with the Socialists recently (did they have no choice? There's always a choice and Iceland is a good example).
My experience in Spain is the same: the socialists end up doing the dirty work of the far right. I'd rather have them out of the picture and have a direct confrontation between the extremes. The center always ends up doing the work of the extreme right more or less.
"To pretend, as the good folks at CounterPunch seem to do, that Obama is just as bad as any Republican candidate is patently absurd".
I don't see much difference. Ok, he's clearly much smarter than Bush and is supposed to deliver to a more respectable electoral audience but in practical terms... the differences are very small.
Obama, after being elected, remained silent on "Cast Lead" genocide against Gaza, supported the coupist regime of Honduras, performed a new invasion of Haiti, consolidated the alliance-protectorate with Colombia against the South American nations that strive for sovereignty, supported Israel against a NATO ally (!) in the Mavi Marmara massacre, has not removed the troops from Iraq as promised, has not closed Guantanamo as promised, has not allowed access to Bush camarilla's crime record, has not revoked the fascist laws he enacted, has not done anything to improve relations with Cuba as promised, etc.
He did not even have the dignity of rejecting a Nobel Peace Price he knew well was totally undeserved.
What has he done? A half-half-witted healthcare reform that was desperately needed? Great! But that is far from making any meaningful difference overall. At least from outside I can't see any meaningful difference.
"No, that isn't true".
I know that lots of money for the Obama campaign came from small popular donors but the lack of persistent organization of them makes their influence negligible (in fact they count more for their votes than for their money). Meanwhile most of the rest of the financing came from the Zionist Lobby. Actually this mafia has been supporting Obama since his time as local Chicago politician. Obama has accepted this more than dubious clout because he knows who rules the country in practical terms and he is ambitious enough.
See: Petras' article right after his election and other materials on Obama at Voltaire Net.
I'm sorry to disappoint you but this guy, while intelligent and a great orator, is not clean at all.
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"Obama has opposed Israel more strenuously than any president since Carter".
He has been instrumental in the confrontation between JStreet/Labor Zionism vs. the hardcore Lobby/Likud. He has only done that on the advise of his Zionist "subordinates", in particular Rahm Emanuel, who is the political commissary of the Lobby, together with Clinton, AFAIK.
But the moment of truth comes when it's time to pay Israel its taxes ("aid") and in critical moments such as the Mavi Marmara attack or "Cast Lead". In all those moments Obama has been with Israel 100%.
"Senator "Holy Joe" Lieberman represents the Connecticut defense industry, companies like Sikorsky Aircraft. The fact that he is unashamedly pro-war and pro-Israel and that he supported the Republican ticket AGAINST Obama, in 2008, should surprise no one".
What surprises me is that he's still being re-elected, and many more like him. The US Congress is essentially made up of such kind of individuals. Where's the "grassroots Obama campaign for change(TM)"? Nowhere to be seen. It was a one summer flower.
I don't say that the problem is Obama (also but not only), I say that the problem is the deep corruption of the supposedly democratic system AND the lack of a popular class-conscious movement beyond punctual circumstances. Obama, Lieberman, Bush Jr., AIPAC are just the symptoms of this lack of popular organization whose main consequence is the loss of true democracy.
Not just a US problem of course.
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