Quote of the day

John Stanton wrote:

The USA and European Union (EU) continue on their downward trajectory in the 14th year of 21st Century. The perpetual state of war against terror, drugs, immigrants, the press and whistle-blowers moves on uninhibited. Another war, this time named Austerity, is being waged by USA and EU leaders against the middle and lower classes. Youth are particularly hard hit with the average unemployment rate in the EU at 23 percent. In the USA the figure is 17 percent according to the Bureau of Labor Statistics. But never mind that.

Cutting benefits, or, rather, throwing people away, will reduce the unemployment rate and that’s good for the economy. Such is the mindset of the financier class as reflected in the comments of Joe LaVorgna, chief economist at Deutsch Bank. He noted that in the USA,  23 percent of the 1.5 million who are losing their unemployment benefits will simply exit the work force, and another 850,000, at the state level, would give up on trying to find employment. LaVorgna stated that the unemployment will drop to 6.7 percent. Yippie!

Stanton here seeming channels thoughts previously explored by Zygmunt Baumann and Loïc Wacquant. Bauman wrote (2003, p. 5) that:

The production of ‘human waste’, or more correctly wasted humans (the ‘excessive’ and ‘redundant’, that is population of those who either could not or were not wished to be recognized or allowed to stay) is an inevitable outcome of modernization, and an inescapable accompaniment of modernity. It is an inescapable side-effect of order building (each order casts some parts of the extant population as ‘out of place’, ‘unfit’ or ‘undesirable’) and economic progress (that cannot proceed without degrading and devaluating the previously effective modes of ‘making a living’ and therefore cannot but deprive their practitioners of their livelihood).

Wacquant wrote (2009, p. 303)

Punishing the Poor contends that it is not the generic “risks and anxieties” of “the open, porous, mobile society of strangers that is late modernity” that have fostered retaliation against lower-class categories perceived as undeserving and deviant types seen as irrecuperable, but the specific social insecurity generated by the fragmentation of wage labor, the hardening of class divisions, the erosion of the established ethnoracial hierarchy guaranteeing an effective monopoly over collective honor to whites in the United States (and to nationals in the European Union). The sudden expansion and consensual exaltation of the penal state after the mid-1970s is not a culturally reactionary reading of “late modernity,’ but a ruling-class response aiming to redefine the perimeter and missions of Leviathan, so as to establish a new economic regime based on capital hypermobility and labor flexibility and to curb the social turmoil generated at the foot of the urban order by the public policies of market deregulation and social welfare retrenchment that are the core building blocks of neoliberalism.

The jobless poor, the masterless men and women who live in slums, basements, shelters, tent cities and, of course, on the streets of many cities, are fated to confront a bitter death as ‘freemen’ and ‘women’ or as prisoners within the vast prison apparatus that has grown these last 50 years. They are, however, artifacts produced by capital. As such, they also comprise signs that point to the barbarism of the age. The goal of our governors: To remove them from a shared everyday life and render to them faceless.

Neoliberalism is an ideology and a compulsion

The symbol of the Euro in front of the Europea...

Mike Whitney and Dean Baker argue that those leading the European Central Bank, the European Union, and the International Monetary Fund (The Troika) find it difficult to experience the world but through the lens of their idiotic economic theory. Baker had the recent opportunity to observe the Troika in action. He drew this conclusion:

There is no economic reasoning behind the troika’s positions. For practical purposes, Greece and the other debt-burdened countries are dealing with crazy people. The pain being imposed is not a route to economic health; rather it is a gruesome bleeding process that will only leave the patient worse off. The economic doctors at the troika are clueless when it comes to understanding a modern economy.

Mike Whitney’s analysis affirms Baker’s assessment. Whitney notes that, “If Greece’s €130 billion loan was going to be used for fiscal stimulus, then it might be worth the commitment. Because that kind of money could put a lot people back to work and kick-start the economy fast.” Yet…he continues by observing:

But the loan isn’t going to be used for stimulus. It’s going to be used to recapitalize the banks and pay off creditors, neither of which will do anything to boost activity or create jobs. So, why bother? Why dig an even deeper hole if it achieves nothing? If that’s the case, then Greece should just default now and start rebuilding the economy ASAP. There’s no point in putting it off any longer.

Indeed, why would Greece accept the bitter medicine dispensed by the European Union?

The troika (the European Central Bank, the European Union, and the International Monetary Fund) is demanding another €3 billion in spending cuts even though unemployment is tipping 20 percent and the economy shrank 7 percent in the last quarter. What sense does that make? You don’t have to be a genius to figure out that Greece won’t reach its budget targets if tax revenues continue to fall because everyone’s either been laid off or taking a pay-cut. It will just make a bad situation even worse. But the troika doesn’t worry about these type of things. They don’t care that their lamebrain economic theories have failed miserably so far, or that their austerity measures have been a complete flop. They just keep plugging along making the same mistakes over and over again, impervious to the criticism of reputable economists, oblivious to the abysmal results, they remain steadfast in their commitment to belt tightening, sure that a strict diet of breadcrumbs and water is the best way to nurse an ailing economy back to health. It doesn’t bother them that the facts prove otherwise.

An austerity politics entails personal suffering for many people. It immiserates them by design. This effect is considered a feature of an austerity regime. And the Greeks have already suffered, as we know. But an austerity politics also makes little sense during a recession. It is a policy regime a crazy person recommends.

The upshot: The government of Greece, if it were rational, would take the Argentinean path to recovery. Country debt and risk are not perpetual prison sentences. If Greece were to take this path, it would default on its obligations and exit the European Union (advocated here). It ought to do so because its current predicament and the proposed — or imposed — ‘remedy’ for it will only serve to transfer wealth to the financial institutions holding Greece’s debt and, of course, to plunder the country of those assets worth owning (discussed by Michael Hudson here). Greek “have-nots” have and continue to protest this imperial imposition on their country. It is rational for them to do this just as it is rational for the Greek government default on its financial obligations and jettison the Euro.

Related articles

Greece under the yoke

English: Various Euro bills.

Reuters reported that:

Greece must surrender control of its budget policy to outside institutions if it cannot implement reforms attached to euro zone rescue measures, the German economy minister was quoted as saying on Sunday.

The fact that the German Economic Minister made this already credible statement indicates that Greece lacks control over its budget. The issue at hand is whether the European Union would exercise direct or indirect control over the Greek budget, not whether Greece would control its own budget.

Quote of the day

Thomas Naylor claims:

The euro is going down and may take the 17 nation euro zone with it, if not the entire 28 nation European Union. Or maybe it will be the other way around? Does it really matter?

Having never recovered from the 2008 recession, the collapse of the euro will drive the U.S. economy deeper into the quagmire of more unemployment, negative economic growth, schizophrenic fiscal policy, Congressional gridlock, inflationary monetary policy, and the rout of the dollar. Is it possible that whatever the White House, the Congress, or the Fed may do will make not one whit of a difference?

To deflect public opinion away from their incompetence and corruption the White House, the Congress, the Fed, the European Central Bank, and all of the political leaders of Europe need an international scapegoat. What could be better than a war against some unpopular rogue state such as Cuba, Iran, North Korea, or Venezuela whose leader is considered by many Americans to be demonic.

Enter Israeli Prime Minister Benjamin Netanyahu bearing gifts for American and European political leaders. “Have I got a deal for you,” says Netanyahu. “Why don’t NATO and its Arab allies take out the nuclear weapons program of the terrorist state of Iran? It would divert the attention of the American and European people away from their economic woes. Everyone (except the Iranians) would gain.”

Serendipity or conspiracy?

Quote of the day

Serge Halami of Le Monde Diplomatique appropriately compared the recent European Union, European Central Bank and International Monetary Fund (“the troika”) intervention in Greece’s affairs to the Soviet Union’s termination of the Prague Spring:

For people in countries suffering under austerity measures, the history of Europe provides some outstanding examples. In some ways, recent events in Athens recall Czechoslovakia in 1968: the crushing of the Prague Spring and the removal of the Communist leader Alexander Dubcek. The troika has played the same part in reducing Greece to a protectorate as the Warsaw Pact did in Czechoslovakia, with Papandreou in the role of Dubcek, but a Dubcek who would never have dared to resist. The doctrine of limited sovereignty has been applied, though admittedly it is preferable and less immediately lethal to have its parameters set by rating agencies rather than by Russian tanks rolling over the borders.

Having crushed Greece and Italy, the EU and the IMF have now set their sights on Hungary and Spain.

Both interventions were intended to undermine democratic accountability in a peripheral state. Both, by the way, were successful.

Bond markets push Italy closer to the abyss

The New York Times reports:

Italy’s financial crisis deepened on Wednesday despite a pledge by Prime Minister Silvio Berlusconi to resign once Parliament passes austerity measures demanded by the European Union.

The move failed to convince investors, propelling Italy’s borrowing costs through a key financial and psychological barrier of 7 per cent, close to levels that have required other euro zone countries to seek bailouts. Cornered by world markets and humiliated by a parliamentary setback, Mr. Berlusconi appeared to become the most prominent victim of the broader European debt crisis. But his decision did not remove wide uncertainty about Italy’s ability to tackle the crisis, and some analysts said the prospect of a protracted period of political wrangling could exert further pressure for a quicker exit from the impasse.

A note on the obliteration of the ‘responsible’ left in Europe and the United States

Serge Halimi rightly points out that:

The Occupy Wall Street protests in the US are also directed against the Street’s representatives in the Democratic Party and the White House. The protesters probably don’t know that Socialists in France still consider Barack Obama exemplary, since, unlike President Sarkozy, he had the foresight to take action against banks. Is there a misunderstanding? Those who are unwilling or unable to attack the pillars of the neoliberal order (financialisation, globalisation of movements of capital and goods) are tempted to personalise the disaster, to attribute the crisis in capitalism to poor planning or mismanagement by their political opponents. In France it’s Sarkozy, in Italy Berlusconi, in Germany Merkel, who are to blame. And elsewhere?

Elsewhere, and not only in the US, political leaders long considered as models by the moderate left also face angry crowds. In Greece, the president of the Socialist International, George Papandreou, is pursuing a policy of extreme austerity: privatisations, cuts in the civil service, and delivering economic and social sovereignty to a ultra-neoliberal “troika” (1). The conduct of the Spanish, Portuguese and Slovenian governments reminds us that the term “left” is now so debased that it is no longer associated with any specific political content.

The current French Socialist Party spokesman explains the impossible situation of European social democracy very clearly: in his new book Tourner la page, Benoît Hamon writes: “In the European Union, the European Socialist Party is historically associated, through the compromise linking it with Christian democracy, with the strategy of liberalising the internal market and the implications for social rights and public services. Socialist governments negotiated the austerity measures that the European Union and the International Monetary Fund wanted. In Spain, Portugal and Greece, opposition to the austerity measures is naturally directed against the IMF and the European Commission, but also against the socialist governments … Part of the European left no longer denies that it is necessary, like the European right, to sacrifice the welfare state in order to balance the budget and please the markets. … We have blocked the march of progress in several parts of the world. I cannot resign myself to this” (2).

Others think the debasement is irreversible because it is connected to the gentrification of European socialists and their lack of contact with the world of work.

The upshot: Leftist reformers in Europe and America’s legacy parties will never implement radical and desirable reforms unless large and active movements compel them to do so.

Italy’s Silvio Berlusconi offers to leave office

“There is no alternative….”

Margaret Thatcher

According to the New York Times, Italy’s battered and irrelevant Prime Minister Silvio Berlusconi:

…offered a conditional resignation on Tuesday, agreeing to step down but only after Parliament passes an austerity package — before the country will go to early elections, government sources said on Tuesday evening.

The move comes in the face of an escalating debt crisis that has hobbled Greece, threatens Italy and could infect the rest of Europe.

Infect? Italy’s national crisis is also a significant component of the Eurozone’s system crisis. It is not an agent external to the Eurozone. Italy is Europe’s third largest economy. Because of Italy’s size and importance, it should come as no surprise that:

Speaking after a meeting of European Union finance ministers in Brussels on Tuesday, Olli Rehn, European commissioner for economic and monetary affairs, said Italy’s economic and financial position was “very worrying.” He added that the European Commission was “concerned about the situation and we following the situation very closely.”

Ironically:

“‘The problem in Italy is not primarily the real data,” Germany’s finance minister, Wolfgang Schaüble, said in Brussels on Tuesday. “The debt is high, the deficit is not — economic data are not that bad. The problem is a lack of trust from the financial markets and that of course is a realistic situation. And this trust has to be strengthened.”

It is a matter of “trust,” and thus, in the first instance, “a political crisis as much as an economic crisis,” as David Dayen points out. Finance capitalists across the world just do not trust Italy to resolve its problems, to solve them, in other words, to their satisfaction. This mistrust is contagious. The economic crisis is a political crisis because Italy’s sovereign debt crisis, like those found in Greece, Spain, Portugal, Ireland, etc., ineluctably threatens the core institutions of the Eurozone system. Whence the Euro, we might wonder, when so many national economies collapse?

To be sure, Italy’s sovereign debt crisis will not spare Italy’s political institutions and political culture. The imposition of an austerity regime on Italy will necessarily modify its political institutions, and thus kinds of politics Italians can feasibly give themselves in the future. Alterations of this sort are features of the austerity project. They amount to an economic and political constraint placed on Italy’s democratic institutions.

From the part to the whole: The Eurozone’s political crisis — will it exist tomorrow, the day after? — also helps to determine its financial crisis. After all, imposing austerity regimes on Italy and Greece will fail to resolve the Eurozone’s economic problems. It will, at best, transform them into a diminished quality of life for many living in those countries now suffering sovereign debt crises. This ‘best case’ outcome will, in turn, merely create another political problem for the Eurozone and, naturally, for those countries forced to endure an austerity regime. Europe’s transnational institutions and some of its national institutions will appear less than sufficiently rational and thus able to provide in the future an acceptable standard of living for many living in the Eurozone. In fact, this rationality deficit has already appeared as such: The Europeans and the G-20 have no answers, according to Barry Eichengreen. Consequently, “[t]he republic of the centre [in Europe] has institutions and media behind it, but it is tottering,” according to Serge Halimi. Armies await their orders, for civil order — Which civil order? Whose civil order? — must be kept intact even if the new transnational order demolishes the lives of millions.

Berlusconi to walk like a Grecian pol?

Berlusconi, bloodied, but not yet out

It appear so:

Italy’s stock and bond markets endured a volatile session on Monday as Silvio Berlusconi was reported to have denied reports that he intended to resign as prime minister.

Fabrizio Cicchitto, head of the parliamentary group of Mr Berlusconi’s People of Liberty party, said in a statement that the prime minister had told him that “rumours of his resignation were baseless”.

Ansa news agency also quoted Mr Berlusconi as telling people close to him that the reports were not true. A page on Facebook under the name of the prime minister quoted him as dismissing the rumours.

Franco Bechis, deputy editor of Libero, a pro-Berlusconi newspaper, had said earlier on Monday that Mr Berlusconi would resign on Monday night or Tuesday. Mr Bechis later said on Twitter that the prime minister had decided after talking to his family in Milan to call a vote of confidence in his government on the basis of its mandate to pass reforms requested by the European Union.

A financial source close to the prime minister told the Financial Times that Mr Berlusconi intended to step down later on Monday.

The reasons for Berlusconi’s latest humiliation?

European efforts to solve a growing sovereign debt crisis have failed to quell market unease on the Continent, and the skepticism over Greece points to continued volatility this week.

Among fresh warning signs, Italy’s cost of borrowing has jumped to the highest rate since the country adopted the euro.

And:

The yield on 10-year Italian notes has surpassed that on Spanish debt by nearly a full percentage point, reaching 6.51 percent on Monday after leaders at a meeting last week of the Group of 20 nations failed to come up with details on how to stop the European crisis from spreading. The rising yield is troubling because once the interest rates on the debt of Greece and Portugal surpassed 7 percent they shot up far higher, requiring those countries to turn to outside sources of financing. Rates on their debt remain in double digits.

At the end of last month, Italy issued 3 billion euros worth of bonds at an interest rate of more than 6 percent, about 1.5 percentage points higher than it had had to pay as recently as the summer. The extra bond yields are adding as much as 3 billion euros (about $4.1 billion ) annually in additional interest payments, estimates Tobias Blattner, a former economist at the European Central Bank who is an economist at Daiwa Securities in London.

Analysts are concerned that if interest rates on Italian debt keep rising, the country may no longer be able to afford to borrow on the open markets and instead would have to turn to official lenders like the European Union or the International Monetary Fund.

The latest rate “is a warning,” said Mark McCormick, currency strategist at Brown Brothers Harriman. “Seven percent would be a point of no return.”

Follow

Get every new post delivered to your Inbox.

Join 136 other followers