Ian Welsh suggests that the fall of Italy and Greece to the forces of "austerity" is only the beginning

Greece's Papandreou had to go for resisting the enforcement of the plutocrats' kleptocratic "austerity" buying spree and for clinging to the vestiges of democracy. Italy's clown-crook Berlusconi . . . well, he just had to go.

"These attacks on currencies are deranged. The countries are not in that much difficulty, certainly the idea that France is in enough difficulty to be under attack is crazy. These attacks are about power. . . . The financial elites are on a plundering spree, gleefully using their power to force entire nations into poverty, blackmailing governments into huge payouts. . . . The elites will only respond when they feel your pain. And they will only feel it if you make them feel it."

-- Ian Welsh, in "What's happening in Europe
is what matters: rules of the financial rich"

by Ken

I don't imagine any DWT reader imagined that the fall of the governments in Greece and Italy was likely to be a portent of better things to come. In Greece, of course, Prime Minister Papandreou had to go for having the temerity to suggest that the even more stringent chokehold about to be placed on his country be subjected to, you know, a vote. (Voting in a nominal democracy? How unplutocratic!) And in Italy, well, the clown-crook Berlusconi simply had to go.

In his post "What's happening in Europe is what matters: rules of the financial rich" Ian Welsh argues: " The idea that the Mario Monti, the new PM of Italy, is something wonderful, is deranged. Note that once again, neither an election nor a referendum was allowed."

Here's Ian's take:

If you want to save the Euro and some form of European prosperity, there is only one solution, the European Central Bank (ECB) must do what it keeps insisting it won’t do, it must buy Eurobonds from members. And it must buy them at fixed prices. Italian, Greek, French, German bonds will be issued at X price, and if insufficient investors want to buy at that price, tough, the ECB will buy. If this causes inflation, great, Europe needs inflation right now.

Even France and to a lesser extent, Germany, are coming under attack. However France is under significant attack, and Merkel and the ECB seem unwilling to really do anything about it. France has the option to go off the Euro in a way that most other countries don’t. The issue with going off the Euro is simple: oil prices. You now have to buy oil with your lousy currency, which is even more worthless than the Euro. But if you happen to control countries that have oil, like France does (for example, France is mostly in control of Libya right now, not the US), then hey, sign some long term contracts and voila. It is not written in stone that prices must be set on open bid markets.

Which leads us to the sudden surge in the price of oil to $107 a barrel. On the face of it, this is crazy. Yes, the US has had a bit of a recovery, but Europe is going hard core austerity. But this is the game the hot money is playing: they move out of bonds and into oil, out of oil and into bonds. $107/barrel oil means the US recovery (such as it is, which isn’t much) isn’t going to last much longer.

Being rich is about being liquid when everyone else isn’t, so you can buy up assets on the cheap. When the rich are properly under control (ie. when you keep them poor and terrified of government and the people, as they should be) they can’t create such buying opportunities, they have to wait for them, and the government makes it so that the rich can’t take too much advantage of them, because taking advantage of them means taking advantage of other people when they’re most vulnerable.

Right now the rich can and are crashing asset prices by forcing countries into austerity through attacks on their currencies and control of their elites. They then buy up assets for fire-sale prices. (The history of fire-sale is worth commenting on. Crassus, the Roman Senator of the first triumvirate, had a fire fighting team. When a fire broke out they’d go to the fire, fight off the other fire teams, then Crassus would buy the burning buildings from their owners, negotiating as they burned. If they refused to sell, well, they lost everything.)

These attacks on currencies are deranged. The countries are not in that much difficulty, certainly the idea that France is in enough difficulty to be under attack is crazy. These attacks are about power: the global rich were bailed out after the crash, now they are using their hot money in attack after attack, demanding austerity, which will cause semi-permanent depression in those countries which accept it. That allows them to buy up what they want, keeps their labor costs down, and lets them divert what money they spend on investment which creates actual real economic growth into developing countries which are cheaper for them.

But watching European leaders respond has also made clear that they are either compromised, ideologically neo-liberals or completely ineffective. Watching the ECB insist that it won’t just buy bonds has been particularly amusing, because if the ECB won’t defend even France, the Euro is in great danger of not existing in a few years, and if the Euro doesn’t exist, neither does the ECB, which means all those central bankers will be out of jobs. They won’t even act to save their own jobs.

All of this is crazy. The financial elites are on a plundering spree, gleefully using their power to force entire nations into poverty, blackmailing governments into huge payouts. Pay extra on bonds, or pay extra on oil, or hey, why not both!

The political elites are clearly either bought or completely ineffective at resisting. If the ECB won’t buy bonds, then countries just need to leave the Euro so they can print money. Yes, that might cause inflation and various other problems, but that is better than semi-permanent depression through austerity.

Now, what can the people do when the elites won’t allow direct referendums, and when there are elections you can only vote for parties which are all in favor of austerity?

Make them fear you. Start as follows, which is what was done in Argentina: find their cars, those nice expensive cars, and trash them. Every time you see someone in a suit coming from the airport, surround the car and slash the tires.

And if you’re going to riot, don’t do it in your own neighbourhoods. Go to the parliament buildings, the bank HEADQUARTERS or to the neighbourhoods in which the rich live, and riot there.

If you insist on some form of pure nonviolence (which the European left and right don’t) then you must chain and twist tie yourselves around important areas. Go to the headquarters and shut them down by tying yourself up to all the entrances. Twist ties aren’t just the cop’s friends, they are yours. Love them and learn how to use them.

The elites will only respond when they feel your pain. And they will only feel it if you make them feel it.

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