Saturday, November 12, 2011

It Certainly LOOKS Like Germany Won WWII


Why do YOU think she was giggling? It's not because she was listening to "Breastfed" on the headset

People barely want to read about the American economic crisis, let alone the one in Europe-- not that I'm going to let that stand in my way of trying to understand what's going on over there. And James Galbraith's post at Salon Thursday, The Crisis In The Eurozone, is a good place to start. He points out gloomily that the best ideas for solving the banking crisis there will never be acted on because "Europe’s political classes exist these days in a vise forged by desperate bankers and angry voters, no less in Germany and France than in Greece or Italy. Discourse is sealed off from fresh ideas and political survival depends on kicking cans down roads so that the fact that this is a banking crisis does not have to be faced. The fate of the weak is at best incidental. Thus every meeting of finance ministers and prime ministers yields treacherous half-measures and legal evasions."
Like our own, the European banking crisis is the product of over-lending to weak borrowers, including for housing in Spain, commercial real estate in Ireland and the public sector (partly for infrastructure) in Greece. The European banks leveraged up to buy toxic American mortgages and when those collapsed they started dumping their weak sovereign bonds to buy strong ones, driving up yields and eventually forcing the whole European periphery into crisis. Greece was merely the first domino in the line.

In all such crises the banks’ first defense is to plead surprise-- “no one could have known!”-- and to blame their clients for recklessness and cheating. This is true but it obscures the fact that the bankers pushed the loans very hard while the fees were fat. The defense works better in Europe than in the U.S. because national boundaries separate creditors from debtors, binding the political leaders in German and France to their bankers and fostering a narrative of national-racism (“lazy Greeks,” “feckless Italians”) whose equivalent in post-civil rights America has been largely suppressed.

Underpinning banker power in Creditor Europe is a Calvinist sensibility that has turned surpluses into a sign of virtue and deficits into a mark of vice, while fetishizing deregulation, privatization and market-driven adjustment. The North Europeans have forgotten that economic integration always concentrates industry (and even agriculture) in the richer regions.

As this process unfolds the Germans reap the rents and lecture their newly indebted customers to cut wages, sell off assets, and give up their pensions, schools, universities, healthcare-- much of which were second-rate to begin with. Recently the lectures have become orders, delivered by the IMF and ECB, demonstrating to Europe’s new debt peons that they no longer live in democratic states.

...Political fragility also explains the fury in France and Germany when George Papandreou [the calmest man in Europe, by the way, having been born and raised in Minnesota] sought to cut the knot of his rebellious ministers, irresponsible opposition and angry public by putting the latest austerity package to a vote. God help the bankers! The move was fatal to Papandreou in short order, and Greece will now be turned over to a junta of creditors’ deputies if such can be found willing to take the job. It won’t be anyone who wants to continue to live in Greece afterward.

Greece and Ireland are being destroyed. Portugal and Spain are in limbo, and the crisis shifts to Italy-- truly too big to fail-- which is being put into an IMF-dictated receivership as I write. Meanwhile France struggles to delay the (inevitable) downgrade of its AAA rating by cutting every social and investment program.

If there were an easy exit from the Euro, Greece would be gone already. But Greece is not Argentina with soybeans and oil for the Chinese market, and legally exit from the Euro means leaving the European Union. It’s a choice only Germany can make. For the others, the choice is between cancer and heart attack, barring a transformation in Northern Europe that not even Socialist victories in the next round of French and German elections would bring.

So the cauldrons bubble. Debtor Europe is sliding toward social breakdown, financial panic and ultimately to emigration, once again, as the way out, for some. Yet-- and here is another difference with the United States-- people there have not entirely forgotten how to fight back. Marches, demonstrations, strikes and general strikes are on the rise. We are at the point where political structures offer no hope, and the baton stands to pass, quite soon, to the hand of resistance. It may not be capable of much-- but we shall see.

Let me make this a little more palatable. Well, not palatable-- nothing is going to make it palatable-- but easier to understand. The video below is by Bell X1, who are from County Kildare in Ireland, one of the countries slated for... hard times. "Sugar High" is on their new album Bloodless Coup, and when I heard it, I asked Paul, the lead singer, if I was off base in thinking it was written as part of the worldwide revulsion at Wall Street's excesses at the expense of the rest of us. Thing is, Blooodless Coup came out in April, so I'm guessing they wrote "Sugar High" sometime in 2010. Could they have had OccupyWallStreet in mind before anyone had ever even heard of Zuccotti Park? Paul's answer sounds like he's been keeping up, maybe even reading David Korten's books.
"I had some sort of desire to address the dysfunction and unfairness of the systems currently in place that govern our lives and the distribution of wealth. We've drifted far from the noble idea of a group of people coming together as a nation and putting in place such systems to ensure the best quality of life for all. We need to rekindle an awareness of and take responsibility for this, in how we vote, spend and consume."

Gee, I hope the Germans-- or whoever they wind up hiring to do their wet work-- don't do anything bad to him.

Labels: , , ,


At 4:13 PM, Blogger Darren J. McDermott said...

Pity the Sugar High video on your post isn't available to us in Ireland in the same way the understanding of its lyrics is!


Post a Comment

<< Home