The Greek Crisis (June 2011)

by Gary Tedman

BBC:

"Berlin, backed by the Dutch, Austrians, and Finns, have been arguing for weeks that there can be no new bailout of Greece without the country's private creditors being forced to suffer losses on their loans. Otherwise, they argue, European taxpayers will be shouldering the costs while the international banks pocket the proceeds.

The ECB, the European Commission and other EU countries led by France argue that this could pave the way to disaster, with the financial markets decreeing the compulsory "haircuts" on private bondholders a Greek default, a "credit event" that could lay waste to the single currency.

"We are against any sort of default with haircuts and any form of private-sector event that could lead to a credit event or a rating event," Constancio said."
http://www.guardian.co.uk/world/2011/jun/15/europe-warned-greece-financial-crisis

So we have an impasse, both positions make no sense. This was bound to happen sooner or later. They do not want default, but they do not want 'haircuts' on the loans, and they do not want the single currency to fail. But Germany also does not want to keep bailing out the bad loans that it and the other Euro big nations have made. In effect, what they are saying is that they wanted the Eurozone if it meant they win from it financially, but not if they have any responsibility for losses. This represents the position of the German ruling class, but not all, because some German banks will want the endless bail outs, because it is they who need bailing out. And some big French banks too. But anyone can see that this must come to an end somewhere. The debts are unsustainable and so are its bailing out. Something has to give. The ordinary people cannot keep being made to give up their public wealth to the private banks. Even if they did, at the end of that road exists a notional single private bank owning all public debt and assets (i.e. owning Greece), and thus becoming effectively the state, i.e. that would be de facto socialism of one type or another, probably national socialism. No capitalist wants that solution in general, for this is why they break up monopolies (because they in the end mean the death of capitalism as such), but each individual capitalist entity, fighting for their share and to avoid taking the hit, will not try to prevent it, they only want to protect themselves.

So what will happen? What can happen? Greece will default one way or another. Either Germany or Greece or both will have to effectively withdraw from the Eurozone, at least as a financial structure. Or can it be fudged, they take on the option of the haircuts but try to call it something other than a default?

This seems to have been tried, but it does not fool anyone, it is still a default. And even if suiccessful, Greece still defaults. In fact the bail outs would have to be a permanent feature of a united European currency for the long term, as for instance California in the USA is a part of the USA. But Europe is not united in this way, it is just set up for the benefit of the big nations, and these do not want the responsibilities of a real central government, so they will each go their separate way if this is political issue is left unresolved. So the German project of a unified Europe flounders on its own selfishness and the profligacy and greed of its banks. Its 'sober' and 'successful' capitalism eats itself.

How the mighty have fallen from their self made pedestals.

It looks like they might just try to stave off the culmination of this crisis, yet again In a sense they seem to be waiting for the Greek people to decide what they will do, given it is only they who have any choice and power at this time, the politicians are too hampered by their masters the banks, who want two things at the same time which are in contradiction to each other. Yet the politicians also fight the Greek people with all the forces at their disposal, because they wish to blame the people for their plight, so they are also hampering any (albeit temporary) conclusion to the crisis in this way too. So even on this front there is an unsustainable stasis. An event is awaited, a spark that will change things, some fortuitous or unfortuitous happening. The bourgeoisie keep things the same, they prolong, and cross their fingers, shuffling the lame parliament, trying to reinvigorate the semblance of democracy, for no particular reason than their is nothing else left to do.

Corporations hate Obama

A measure of who is going in the right direction...

The Old Enemies
By PAUL KRUGMAN
Published: May 23, 2010

So here’s how it is: They’re as mad as hell, and they’re not going to take this anymore. Am I talking about the Tea Partiers? No, I’m talking about the corporations.

Much reporting on opposition to the Obama administration portrays it as a sort of populist uprising. Yet the antics of the socialism-and-death-panels crowd are only part of the story of anti-Obamaism, and arguably the less important part. If you really want to know what’s going on, watch the corporations.

How can you do that? Follow the money — donations by corporate political action committees.

Read the whole story here...

AFL-CIO to Support Nationalizing Banks

From the New York Time
By STEVEN GREENHOUSE
Published: March 3, 2009

MIAMI BEACH — The A.F.L.-C.I.O.’s executive council will call on the Obama administration on Wednesday to speed the nationalization of problem banks to stimulate lending and lift the sagging economy.

The labor federation, a lobbying powerhouse that represents 10 million workers, will thus become one of the first groups — and certainly the most powerful — to call for moving more aggressively on nationalization, both to counter Republican and business cries against it and to press the Obama administration not to vacillate over such a move.

A.F.L.-C.I.O. officials asserted that the administration’s practice of giving billions of dollars in dribs and drabs to distressed banks had failed to restore their solvency, leaving them as zombie banks that largely refrain from lending, thereby contributing to the economy’s decline.

Read the whole story here...

Those Gallup people are sharp

by Joel Wendland

A recent Gallup poll astutely found that language and framing play a huge role in constructing and reflecting public opinion. Focusing on the financial crisis late last month, Gallup asked people two questions: 1) "Do you favor or oppose the federal government temporarily taking over major U.S. banks in danger of failing in an attempt to stabilize them?" 2) "Do you favor or oppose the federal government nationalizing major U.S. banks in danger of failing in an attempt to stabilize them?"

54% of respondents to question 1 said yes. Only 37% of respondents to question 2 said yes.

Gallup's conclusion is that public support for the issue depends on what you call. Astute.

But Gallup's own method might be inherently flawed. Four additional questions, at least should have been asked in order to get at the truth of public opinion on this question: 1) Should major banks in danger of failing be allowed to fail? 2) Do you favor permanently taking over major US banks in an attempt to keep them from failing? 3) Do you favor permanently nationalization major banks in an attempt to keep them from failing? 4) Do you favor creating a permanent national bank to compete with private banks?

I might be inclined to say yes to all of these.

What's most amusing about the survey's results is the extent of support for "taking over" banks. Suggests may be that the new GOP mantra that President Obama is a socialist might not have much in the way of legs.

Sweden’s Fix for Banks: Nationalize Them

The New York Times
January 23, 2009
Sweden’s Fix for Banks: Nationalize Them

By CARTER DOUGHERTY

The Swedes have a simple message to the Americans: Bite the bullet and nationalize.

Officials in Washington are trying to figure out how to shore up American banks that once ruled the financial world but now seem to weaken by the day, despite receiving hundreds of billions of dollars in government aid.

With Sweden’s banks effectively bankrupt in the early 1990s, a center-right government pulled off a rapid recovery that led to taxpayers making money in the long run.

Former government officials in Sweden, many of whom come from the market-oriented end of the political spectrum, say the only way to solve the crisis in the United States is for the government to be prepared to temporarily take full ownership of the banks.

Read the whole story here...

Waiting For Obama

by Norman Markowitz

In the mid 1930s, playwright Clifford Odets, then a Communist Party USA member, wrote a powerful labor drama, Waiting for Lefty, which many believed caught the spirit of the time. Its main setting was union meeting where angry workers are debating whether or not to strike. An old guard union leader, named as I remember "Happy Fat," calls upon the workers to be moderate, wait, wait, wait for the new administration to provide aid, wait for a message from another official, Lefty, to give them more information. Finally, after the story of the workers struggle against the depression is told, a leftwing militant (to people at that time and place a Communist) passionately addresses the workers and tells them to abandon their illusions, that Lefty may never come, that they must strike and strike now. The play ends in a cathartic moment as the actors and the audience join together shouting Strike.

Today, we are all waiting for Obama as the economic crisis deepens around us. Today we are reading about auto executives asking for a federal bailout and the UAW being asked to make significant concessions (as if workers wages and benefits are somehow comparable to executive pay). No sane worker anywhere who has union based supplemental unemployment benefits for example would compare that to an "unemployed"executive's golden parachute.

If Agate Keller, the militant hero of Waiting for Lefty was around today (I hope I am spelling his name correctly because I have not really seen or read the play in a very long time and my internet access is erratic) he would tell workers to tell their union leaders that they did not create this disaster and they must not be punished for it. That a democratic government with a small d represents the people, not the corporations. That a Democratic congress and President with a big D was elected by labor and moderate and lower income people, not by big business and the wealthy, who have shown a very distinct preference in elections for the Republican party since the late 19th century.

"Bailouts" in advanced industrial countries of anything, banks, corporations, state and local governments, education, housing, can't be separated from serious regulation in the interests of workers and consumers. A socialist solution of course would be public ownership connected to job, benefit and wages guarantees to workers (an equivalent of the government "loan guarantees" to capitalists). The present "race" to save through bailouts the system from the top down without substantial protections and benefits for labor and moderate and low income people can only result in a greater political and social crisis. If congressional Democrats act like the fictional Happy Fat" in Waiting for Lefty, going along with corporate bailouts on corporate terms, they will be shooting themselves and the President in the foot even before the administration begins.