Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts

Thursday, December 13, 2012

The Class Struggles in Southern Europe (2)


Euro-area finance ministers approved the payout of 49.1 billion euros ($64 billion) of loans through March and committed to “additional measures” in case Greece’s debt reduction veers off track.
While another cut in bailout-loan rates and an increase in infrastructure funding would top the list of extra measures, the policy makers hinted that outright debt relief -- still a taboo topic in creditor countries led by Germany -- would be on the table as well.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_13/12/2012_474302

The failure of the bond buy out target was waived very quickly, you might say they stopped short at appearing to bend over backwards to lend Greece more money, but that's all. And they still argue that Syriza (the radical left Greek party that advocates strong negotiation) would not have (had) any leverage!

From, for instance, Merkel's recent position on Greece as well as banking supervision, you can see that she does not act chiefly for her own nation as a whole but also and predominantly for her class as a cosmopolitan European entity. This is why Greece gets the bail out despite failing (and once again defaulting) to meet the criteria of the bond buy back, and why Merkel must sell the idea that Germany will not mutualise debt to her own ordinary citizens, while making sure that this is a future possibility. Each other bourgeois leader does similar, more-or-less, and is involved in the political charade.

So what does this mean for a future Europe?

While it shows that there can be compromises between the national interests, these interests are only compromised by trading with and often away the rights and interests of the lower classes (especially in the crisis), namely the general European working class. Where their own national bourgeois interests outweigh their general interest, national interests tend to win out, but this depends on the relative national power of the competing nation too. Germany is the biggest European economic power and can therefore better defend its own national interests while also ensure its cosmopolitan elite profits from the European project too. Notwithstanding, the national interest does not always coincide with the interests of the ruling national class, which is easier to see in Greece than in Germany of course, but is also just as true in Germany.

The big problem is the reality that is the present economic crisis. The progress of the crisis has been relentless, and the politics has run kind of parallel to it in a way that is consistently only really self interested, so it uses the crisis as a means to implement measures that the European ruling classes desired anyway, it is an opportunity for it, and it takes its opportunities like any opportunist would. But in doing so it tends to ignore the reality of the crisis or give to it only a passing nod of attention. So we have two paths that, in fits and starts, are diverging. The first path is the apparent political route to financial harmonization and federalism in the Eurozone, backed up by humanist rhetorical flourishes such as the recent Nobel Prize awarded (to the EU, or to itself you might say) for 'creating peace in Europe'. As well as proving a negative this piece of ridiculous hubris is set against a reality of harsh austerity measures deriving from its neoliberal policies which have generated poverty and some extreme reactions such as the rise of fascism in Greece and extreme rightist policies in Spain.

This clash of opposites has not yet become so sharp as to be able to puncture the smug pomposity of the Eurozone apparatchiks or the club of political leaders, who only see a slow and steady progress to something ill defined that could possibly be a federal social democratic Europe, but which looks like at the moment a vehicle for the richest nations to better exploit the poor of the poorest 'peripheral' nations at the behest of their lesser endowed bourgeoisie. Yet the problem of the economic crisis is not resolved either by the austerity or the manifold agreements to unify, at some stage, Europe. In actual fact the problems are exacerbated by these, at best partial illusions under the influence of which both the club of national leaders and Euro apparatchiks can drift into the self satisfaction that they have 'acted' and so at least absolved themselves from further responsibility. That in, say, Greece people are suffering, with a lack of a social safety net, from the effects of the crisis and the failure of their policies, can be set aside as something that exists as if in another dimension which cannot impinge on theirs. Of course, the contours of this partition between the two dimensions has, as well as ideological illusions, also some real aesthetic accoutrements, the repressive state apparatus that in the end enforces the will of the state by violence, the riot cops and suchlike.

The central core of the Eurozone ideology sees itself as a hero of peaceful diplomacy and soft power (to use an appropriate phrase from Saif's LSE doctoral thesis) belonging to its humanist-humanitarian ideals, which are in fact stressed in the European Charter, but just as this document is being trampled underfoot in the rush to austerity for the workers, the reality is one of implementing by increasingly authoritarian means anti-social and anti democratic policies. It is not that the European peoples have failed to notice this disparity, they have protested vigorously as we all know; the problem is what to do about it beyond mere protest. While, say, Egyptians are strenuously trying to get a democratic government at least as democratic as exists in a few nations central to Europe, European peoples are protesting against secular democratic governments and systems that have been achieved after similar long historical struggles. These governments and their democracies still appear to be advanced; they still appear to represent the people, and to belong to the people. This is democracy, how can they attack democracy without seeming to want despotism? So protests tend to flounder on the rocks of democracy itself, and/or the question of democracy begins to loom: what is it exactly? Why are we apparently failed by this system, yet we have the vote? Have we really voted to represent us these fools who have squandered money and got into enormous debt just because we, like them, became greedy? The poor became greedy!! The people are told this is how it was, that it was their choice and so also their fault as well as the fault of democracy (and its baggage of 'entitlements', the sense of entitlement, and the dignity that goes with that) itself that the crisis led to such huge debts. There is little room left here for a critique of democracy. The bourgeoisie say it is democracy or fascism, you choose one or the other, and the people do not want fascism, so it is democracy, this democracy. The question as to whether this democracy was ever truly representative is not to be discussed, it is a taboo subject. For on this assumption, that we have such a choice, rests the whole underlying bourgeois media story of ordinary folk being to blame for the crisis.

It is not the end of the matter though, again because the crisis is just too big and too deep. It has its own reality that will trump the measures and the illusions both. At some future point we can expect the opposition between the reality and the rhetoric of power to become too sharp. Even if, for instance, a federal states of Europe becomes increasingly a genuine possibility, long before this can happen the crisis will be also visiting Germany, and with that the problem of sharing the debt, as federal partners, or not. Indeed this crisis is likely to be both the motivation for federalism as a solution to the crisis and at the same time the reason why its biggest apparent exponent does not want it to be the solution. In the process we can expect that the debts will be smuggled and dispersed even more onto the shoulders of the European working classes, but as the consequences of austerity approaches the core, so too will the protests that follow it. The European project may not be about to fail formally, but it has in fact failed as a form of social democracy, the ideals of a harmonious Europe have been shattered and left behind and what we face is not necessarily a de facto break up of the Eurozone but its repressive iron fist poking out of threadbare holes in the soft glove in order to hold it together. That it may or may not break up is therefore a merely academic question, European nations are not about to sail away from Europe, but in actual fact what has been lost is already the most important part of it, you might say, its heart. It will be the task of the European workers to start it beating again, even though it was mostly fictitious in the first place, only they can give real heart to the heart of Europe.

by Gary Tedman



Friday, April 30, 2010

The 'Endarkenment' and the Euro Debt Fiasco in the Cradle of Western Civilization (Greece)

By Gary Tedman

I found this, I think, brilliant term (to 'endarken', implying the opposite to enlighten, to confuse and obfuscate) mentioned by the blogger 'suav' on a BBC blog. The writer says it was from Polish youth.

The principles of 'endarkenment' are working well in the Press these days while they try hard to disassociate the current sovereign debt crisis (Greece and so on) from the earlier banking crisis (Lehman collapse), whilst constantly trying to highlight the 'recovery', but the fact that the latter crisis developed from out of the former will not go away, it is history and it shapes events anyway.

From an article in the Independent online edition "Sean O'Grady: Greece is a problem – but Spain could destroy the euro" Friday, 30 April 2010, a useful timeline of the current shenanigans is given:

See:
http://www.independent.co.uk/news/business/comment/sean-ogrady-greece-is-a-problem-ndash-but-spain-could-destroy-the-euro-1958682.html


"2 May IMF talks in Athens with Greek officials end
3-6 May French parliament expected to approve rescue package
3-10 May IMF board, EU Commission have to formally approve the deal
6-7 May Greek parliament votes on new three-year austerity programme
6-10 May German Bundestag expected to endorse the deal, the last of those required to, the Netherlands and Luxembourg already having given tacit approval
9 May Key elections in North Rhine-Westphalia, Germany's most populous state
10 May European summit formally endorses the deal
19 May Next repayment of Greek debt; €8.5bn must be in place if Greece wants to avoid default
31 May €355m debt repayment due
Summer/autumn 2010 Threat of widespread strikes and unrest in Greece at harshness of deal; risk of political instability or that the government might fall
29 September Further €180m debt repayment due
2011 Greece needs to refinance the equivalent of 18 per cent of its GDP, or €23bn, with almost €9bn due on 20 March 2011. Annual deficit down to 9 per cent of GDP. Return to world growth should help
2012 Annual deficit down to 3 per cent of GDP by year end"

From http://www.independent.co.uk/news/business/comment/sean-ogrady-greece-is-a-problem-ndash-but-spain-could-destroy-the-euro-1958682.html

To illuminate this from NYTimes "As Greek Drama Plays Out, Where Is Europe?", Published: April 29, 2010, Steven Erlanger writes:

from http://www.nytimes.com/2010/04/30/world/europe/30europe.html?hp


“The fact that a German regional election can play such a disproportionate role in messing up efforts to contain what was a much smaller crisis several months ago is astonishing,”

Mr. Kirkegaard said. And the fact that there will be no European Union summit meeting until May 10, after the German elections, “is so blatantly political,” he said.

“This is no way for an E.U. that has to contain an accelerating crisis and market panic to behave,” Mr. Kirkegaard said.


"...the Lisbon Treaty that created Mr. Van Rompuy’s position, and which was intended to make the enlarged European Union more agile and coherent, deliberately left out powers for coordinating fiscal policies, which are the fiercely guarded prerogative of the separate nations. Even so, countries like Germany can only blame themselves for not insisting on realistic European oversight of Greek statistics, which were widely believed to be false for two decades."

(…)


“Questions are asked to nations, not to the E.U. — but nations cannot deal with this problem alone,” said Dominique Reynié, director of the Foundation for Political Innovation and a political scientist at the Institut d’Études Politiques de Paris.

“The silence of the E.U. and its institutions has become deafening. It is incapable of demonstrating that an entity called Europe exists. This is a situation that cannot go on.”

"...The European Union “seems to be in a state of permanent self-promotion,” he said. “But it cannot ask its voters to relinquish part of their nations’ sovereignty and then not answer the call when there’s a problem.”…."

from http://www.nytimes.com/2010/04/30/world/europe/30europe.html?hp


Well… it has… so far; Merkel is, or was, trying still to put off any vote to ratify a loan in Germany until May 10 after the elections there, when it 'is expected' to be agreed by the whole Bundestag, all of whom are (weirdly, given they are still 'expected' to agree it) voicing strong anti-bail-out sentiments, and thus making her job rather more difficult. This would, if achieved, exculpate her party from sole responsibility for dumping the crisis onto the backs of German workers again.

Meanwhile neither the Greek nor the German working people want a bail out. They didn't cause the crisis.

Yes, the Greek and German people agree, they don't want a bail out which will just make them suffer more and help make the bankers and bourgeoisie even more wealthy (yet again). But the politicians, they want a bail out and don't want it all at the same time. The one's who stand to lose from a default want the bail out, but the others who want the euro low for exports want the falling euro, they also fear more for their personal political position. If both lots look at the future though, they see whole rounds of bail outs being necessary, including very probably for themselves, but will there be any money left in the kitty after a few have gone to the wall? Unlikely. But they won't worry about the future much.

Thus the current 'solution' is letting things slide, the anarchy of the market. And the longer the politicians dither about the loan the higher its price becomes and the more serious the social consequences of 'contagion', but it doesn't matter to these politicians because they know they won't be paying the price anyway, this will be taken on by the working classes of Europe, who they seek to be elected by (!), thus what matters to them is their own political futures. After all, the founding members of the EU wanted Greece on board for the benefits, to collude and trade with, not for its social problems, not to share responsibility for looking after the people who they are meant to represent, just for swapping them as a cheap labour force.

At the moment the world is being led by credit rating agencies, big investment banks, and big speculators (this is almost always the case in capitalism, but it is now very visible in the crisis). The main credit rating agencies are anointed by the SEC, based in New York they are private financial corporations that wield a lot of power and influence and are a part of the problem, they are not independent and 'objective' as is often made out, but have vested interests. Their judgements are as political as they are economic. The SEC was once run by Bernie Madoff, now in prison, and that just about sums up their approach to regulating finance. Of course they got the ratings wrong in the crisis (giving top ratings to bankers toxic CDSs), but that isn't the point - it just proves the politics of it. Most 'economists' are paid to get it wrong in the 'right way' for the ruling class, they are perhaps one of the last academic professions to still be in this backward condition of anti-science.