The crisis in Europe - in Spain and Greece, the rich get a LOT richer

disaster capitalism continues to run amok...

Who Profits?

Austerity, Greed & the Pain in Spain

Nobel Laureate economist Joseph Stiglitz characterizes the Spanish bank bailout as “voodoo economics” that is certain “to “fail.” New York Times economic analyst Andrew Ross Sorkin agrees: “By now it should be apparent that the bailout has failed—or at least on its way to failing.” And columnist and Nobel Prize-winning economist Paul Krugman bemoans that Europe (and the U.S.) “are repeating ancient mistakes” and asks, “why does no one learn from them?”

[...]

If you work at a regular job, you are in deep trouble. Spanish unemployment is at 25 percent—much higher in the country’s southern regions—and 50 percent among young people. In one way or other, those figures—albeit not quite as high—are replicated across the Euro Zone, particularly in those countries that have sipped from Circe’s bailout cup: Ireland, Portugal, and Greece.

But if you are Josef Ackermann heading up the Deutsche Bank, you earned an 8 million Euro bonus in 2012, because you successfully manipulated the past four years of economic meltdown to make the bank bigger and more powerful than it was before the 2008 crash. In 2009, when people were losing their jobs, their homes, and their pensions, Deutsche Bank’s profits soared 67 percent, eventually raking in almost 8 billion Euros for 2011. The bank took a hit in 2012, but the Spanish bailout will help recoup Deutsche Bank’s losses from its gambling spree in Spanish real estate.

[...]

All over the world, capital is on the march, with the goal of rolling back the social programs of the post-World War II period and returning to the Gilded Age when the rich did pretty much as they pleased.

 

Weakening unions is central to this, as is privatizing everything capital can get its hands on, and the economic crisis is the perfect cover to try an accomplish this.

[...]

So, the answer to Krugman’s question, “why are they repeating ancient mistakes?”

Because they are making out like bandits.

as in spain, so in greece... the rich make out like bandits while the masses suck hind tit...

Greece: What Can be Done?

Greece faces the unenviable choice between accepting the terms of “the Troika” [the European Union, European Central Bank, and International Monetary Fund] and facing the continuation and deepening of a socio-economic crises, which includes five years of negative growth, over 23% unemployment, an astronomical rise in poverty (from less than 15% to over 40%) and mounting suicides, or a rejection of the “memorandum”, and a likely cut-off of Eurozone funding and capital markets with virtually few reserves toc over salaries, pensions or public services.

[...]

Greece, during its 30 year membership in the European Union actually saw its meager and backward manufacturing and agricultural base shrink, in the face of cheap and better imports from developed capitalist countries like Germany, France, Holland and elsewhere. Unlike Argentina, Greece received billions of dollars in “transfers,” compensation funds to upgrade its economy and competitiveness and prepare it for full integration (lowering of tariff barriers). However, the “transfers” were not channeled into productive activity either by the two ruling parties or by the ‘capitalists’ and ‘farmers.’ The ruling parties used the transfers to build extensive electoral patronage machines; they squandered funds for overpriced state contracts to provide builders engaged in non-productive building projects (including the multi-billion dollar swindle around the Olympic Games). Tens of thousands of unemployed graduates and party loyalists bloated the national, regional and local bureaucracy, increasing consumption, blocking any meaningful productive activity.

Capitalists designed “productive projects and then transferred EU loans and handouts to local and overseas real estate investments and luxury purchases. The Greek elite transferred loans to London, Swiss and Cypriot bank accounts – while the government signed off as ultimate guarantor.

[...]

Most important, the economic elite – bankers, ship owners, construction-real estate – politicians, speculators skimmed off billions from the EEC transfers in the form of illicit loans to cronies and in the form of fees, management charges for credit dealings and pension funding.

The European bankers, government officials and exporters were acutely aware that the “transfers” were being pillaged – but they went along, for obvious reasons of economic and political gain: lucrative interest payments flowed into their coffers; exporters took over Greek consumer markets; bankers and investment houses found willing pension fund managers ‘open’ to dubious investments. Even tourists enjoyed the sun and imports which reminded them of home: wiener schnitzel, English ale, Dutch feta. Moreover, Greece spent 15% of its budget on the military, serving NATO goals and bases.

[...]

Any road map out of the Greek crises will be difficult, complex, and arduous – given the “scorched earth” economy which a left government (LG) will inherit. The first and most basic concern of a LG is to end the policies and especially the agreements with the “Troika” that demand further mass firings of public employees, the reduction in social services, the cuts in minimum wages and pensions. A new LG needs to impose a series of emergency measures to avoid economic bankruptcy.

It is absolutely clear that European bankers and regimes want to punish Greece for transgressions of their “austerity pact.” If Greece should succeed in renouncing the austerity pact, the Euro bankers fear that other countries – Spain, Portugal, Italy, Cyprus and Ireland might follow suit.

Greece should suspend debt payments, impose tight capital controls and freeze bank deposits to avoid capital flight, in the face of the Troika cut-off of funding. The LG should convoke a series of emergency commissions to (1) secure alternative sources of emergency financing from several reserve funds with Euro holdings. They must seek loans from Russia, Iran, Venezuela, China and other states not beholden to the Troika and (2) make an inventory of available and potential productive enterprises – bankrupt or troubled firms, indebted enterprises – and convert them into state sponsored worker-employee operated co-operatives (3) investigate public debt to determine what can be classified as ‘legitimate’(loans channeled into productive employment) or illegitimate (loans that enriched speculators, corrupt contractors, political leaders) (4) investigate and attach overseas holdings of wealthy Greeks who were engaged in multi-year multi-million tax evasion and who accumulated illicit income via unpaid loans and money laundering. Greek auditors should proceed to demand that Eurozone creditors should collect debt payments from the bank accounts of wealth Greeks who laundered and deposited in London, Zurich, Frankfurt, New York and elsewhere.

The principle of the LG should be “those who borrowed the loans and profited, should pay them.”

[...]

The LG should repudiate illegal debts (the vast majority) and renegotiate and roll-over the rest over an extended time frame, pending an economic recovery.

What should be recognized is that past Greek governments (despite being formally elected) engaged in illegitimate activity which prejudiced the sovereignty, productive capacity, and livelihood of an entire people.

What is not acceptable is to force an entire people to sacrifice their lives because a minority of Greeks borrowed and didn’t invest or pay their debts to overseas creditors. Currently the kleptocratic millionaires are given “cover,” and their illicit multi-billion Euro bank accounts and real-estate holdings are protected by the banks demanding payments from the Greek government. Their current demands are based on a savage demolition of living standards for a whole people.

it will be very, VERY interesting to see the outcome of the greek election tomorrow...

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We are watching the beginnings of the defiant self-assertion of a new generation of Americans

david graeber on the wall street occupation...

from the guardian's comment is free via alternet...

We are watching the beginnings of the defiant self-assertion of a new generation of Americans, a generation who are looking forward to finishing their education with no jobs, no future, but still saddled with enormous and unforgivable debt. Most, I found, were of working-class or otherwise modest backgrounds, kids who did exactly what they were told they should: studied, got into college, and are now not just being punished for it, but humiliated – faced with a life of being treated as deadbeats, moral reprobates.

Is it really surprising they would like to have a word with the financial magnates who stole their future?

Just as in Europe, we are seeing the results of colossal social failure. The occupiers are the very sort of people, brimming with ideas, whose energies a healthy society would be marshaling to improve life for everyone. Instead, they are using it to envision ways to bring the whole system down.

[...]

What we've learned now is that the economic crisis of the 1970s never really went away. It was fobbed off by cheap credit at home and massive plunder abroad – the latter, in the name of the "third world debt crisis". But the global south fought back. The "alter-globalisation movement", was in the end, successful: the IMF has been driven out of East Asia and Latin America, just as it is now being driven from the Middle East. As a result, the debt crisis has come home to Europe and North America, replete with the exact same approach: declare a financial crisis, appoint supposedly neutral technocrats to manage it, and then engage in an orgy of plunder in the name of "austerity".

i'm surprised that he didn't once reference naomi klein and disaster capitalism, a topic i've posted on repeatedly here...

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Bush’s policy was to capture (and torture) suspects, while Obama simply assassinates them

chomsky at his usual best, writing in al akhbar...

While longstanding US policies remain stable, with tactical adjustments, under Obama there have been some significant changes. Military analyst Yochi Dreazen observes in the Atlantic that Bush’s policy was to capture (and torture) suspects, while Obama simply assassinates them, with a rapid increase in terror weapons (drones) and the use of Special Forces, many of them assassination teams. Special Forces are scheduled to operate in 120 countries. Now as large as Canada’s entire military, these forces are, in effect, a private army of the president, a matter discussed in detail by American investigative journalist Nick Turse on the website Tomdispatch. The team that Obama dispatched to assassinate Osama bin Laden had already carried out perhaps a dozen similar missions in Pakistan.

As these and many other developments illustrate, though America’s hegemony has declined, its ambition has not.

Another common theme, at least among those who are not willfully blind, is that American decline is in no small measure self-inflicted. The comic opera in Washington this summer, which disgusts the country (a large majority think that Congress should just be disbanded) and bewilders the world, has few analogues in the annals of parliamentary democracy. The spectacle is even coming to frighten the sponsors of the charade. Corporate power is now concerned that the extremists they helped put in office in Congress may choose to bring down the edifice on which their own wealth and privilege relies, the powerful nanny state that caters to their interests.

The eminent American philosopher John Dewey once described politics as “the shadow cast on society by big business,” warning that “attenuation of the shadow will not change the substance.” Since the 1970s, the shadow has become a dark cloud enveloping society and the political system. Corporate power, by now largely financial capital, has reached the point that both political organizations, which now barely resemble traditional parties, are far to the right of the population on the major issues under debate.

[...]

The deficit crisis is largely manufactured as a weapon to destroy hated social programs on which a large part of the population relies. Economics correspondent Martin Wolf of the London Financial Times writes that “it is not that tackling the US fiscal position is urgent…. The US is able to borrow on easy terms, with yields on 10-year bonds close to 3 percent, as the few non-hysterics predicted. The fiscal challenge is long term, not immediate.” Very significantly, he adds: “The astonishing feature of the federal fiscal position is that revenues are forecast to be a mere 14.4 percent of GDP in 2011, far below their postwar average of close to 18 percent. Individual income tax is forecast to be a mere 6.3 percent of GDP in 2011. This non-American cannot understand what the fuss is about: in 1988, at the end of Ronald Reagan’s term, receipts were 18.2 percent of GDP. Tax revenue has to rise substantially if the deficit is to close.” Astonishing indeed, but it is the demand of the financial institutions and the super-rich, and in a rapidly declining democracy, that’s what counts.

Though the deficit crisis is manufactured for reasons of savage class war, the long-term debt crisis is serious, and has been ever since Ronald Reagan’s fiscal irresponsibility turned the US from the world’s leading creditor to the world’s leading debtor, tripling national debt and raising threats to the economy that were rapidly escalated by George W. Bush. But for now, it is the crisis of unemployment that is the gravest concern.

[...]

In the past 30 years, the “masters of mankind,” as Smith called them, have abandoned any sentimental concern for the welfare of their own society, concentrating instead on short-term gain and huge bonuses, the country be damned – as long as the powerful nanny state remains intact to serve their interests.

yes, we have to turn to foreign media to see, hear and read chomsky...

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What a sorry state of affairs...! Just look at this grab-bag of shit...!

Looting Frenzies: Thinking about the Federal Reserve while Nursing a Cheap Beer

The Federal Reserve used to tell us how many dollars were in circulation, but in March of 2006, it stopped. A sane man would deduce that it wanted to hide how much inflation it was generating, but, no, this sudden opacity was merely a cost cutting measure, so explained the Fed, the profligate, money pumping Fed.

To grasp immediately how much your dollar has depreciated, look no further than the price of gold. In 1982, an ounce was less than $500. Now it has breached $1,800. Surging gold price also indicates that people are losing faith in their economic, political and social system, and that they fear the immediate future. When gold shoots up, this house is coming down. Wander into any Vietnamese or Cambodian neighborhood, you’ll see an inordinate number of jewelry stores selling gold. People who have been traumatized by war and dictatorship don’t trust in banks or even money, but only gold to help them survive any societal upheaval.

So if the dollar is sinking, why accumulate it? First off, foreign governments must have dollars to buy oil, since no country can sell petroleum for anything but the dollar. The only renegades to this rule are Iran and Venezuela. Accepting Chinese yuans for oil, they have constantly been threatened by Washington. If euros, yens, yuans or rubles were generally accepted for oil, the United States would quickly become irrelevant and no one would have to send us real products for our increasingly worthless paper.

This petro dollar arrangement is enforced by the U.S. military. As Saddam Hussein and Muammar Gaddafi have found out, America will rain bombs on your people’s heads if you try to escape from this racket. Gaddafi wanted to nationalize Libya’s oil fields. He also proposed a common currency for Africa. In their trade with each other, African countries could then be free from the tyranny of the dollar, but such insolence could not go unpunished. America will hold a gun to your head to make sure you go on biting its bucks.

but wait, there's more...

how interesting that THIS story never made any real headlines until AFTER the credit rating cut...

U.S. Inquiry Eyes S.& P. Ratings of Mortgages

The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.

The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it is likely to add fuel to the political firestorm that has surrounded that action. Lawmakers and some administration officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.

matt taibbi talks about the whitewashing of the records of criminals...

Is The SEC Covering Up Wall Street Crimes?

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

meanwhile, in the uk...

The stench of a police state

The events of the last 12 days are a warning to the working class in Britain and internationally. The state repression and right-wing hysteria unleashed in response to youth rioting in London and other cities reveal the preparations of the ruling class for police-state forms of rule.

The riots were triggered by the police execution of Mark Duggan, a black 29-year-old father of four, in Tottenham, north London on August 4, followed by an unprovoked police assault on a peaceful protest over his killing two days later. Almost a fortnight later, no officer has been identified, let alone charged, for these crimes.

Instead, the political elites who sanctioned the looting of public funds to bail out the banks and the super-rich, and who covered up the illegal phone hacking of Rupert Murdoch’s media empire, have sought to whip up a lynch mob atmosphere against the “criminality” and “immorality” of working class youth.

Cheered on by the Labour Party, Prime Minister David Cameron and his Conservative-Liberal Democrat government have organized vicious state repression, authorizing the use of water cannons and plastic bullets and the possible use of the army against further social unrest.

Basic democratic rights have been thrown to the winds. The presumption of innocence has been jettisoned as police carry out mass arrests, with those detained subject to show trials presided over by courts acting directly at the behest of the authorities.

Some 3,000 people, the majority aged between 16 and 24, have been rounded up in sweeps across the capital and elsewhere, with police battering down the doors of people’s homes for what are, in the main, petty misdemeanours. The names and photographs of people not even charged with any offence—let alone found guilty—are broadcast daily by the media. Juvenile defendants, some as young as 11, have been stripped of their right to anonymity.

naomi klein with more on the uk offers a very perceptive comparison to argentina...

Looting With The Lights On

Argentina, circa 2001. The economy was in freefall and thousands of people living in rough neighbourhoods (which had been thriving manufacturing zones before the neoliberal era) stormed foreign-owned superstores. They came out pushing shopping carts overflowing with the goods they could no longer afford – clothes, electronics, meat. The government called a "state of siege" to restore order; the people didn't like that and overthrew the government.

Argentina's mass looting was called el saqueo – the sacking. That was politically significant because it was the very same word used to describe what that country's elites had done by selling off the country's national assets in flagrantly corrupt privatisation deals, hiding their money offshore, then passing on the bill to the people with a brutal austerity package. Argentines understood that the saqueo of the shopping centres would not have happened without the bigger saqueo of the country, and that the real gangsters were the ones in charge. But England is not Latin America, and its riots are not political, or so we keep hearing. They are just about lawless kids taking advantage of a situation to take what isn't theirs. And British society, Cameron tells us, abhors that kind of behaviour.

This is said in all seriousness. As if the massive bank bailouts never happened, followed by the defiant record bonuses. Followed by the emergency G8 and G20 meetings, when the leaders decided, collectively, not to do anything to punish the bankers for any of this, nor to do anything serious to prevent a similar crisis from happening again. Instead they would all go home to their respective countries and force sacrifices on the most vulnerable. They would do this by firing public sector workers, scapegoating teachers, closing libraries, upping tuition fees, rolling back union contracts, creating rush privatisations of public assets and decreasing pensions – mix the cocktail for where you live. And who is on television lecturing about the need to give up these "entitlements"? The bankers and hedge-fund managers, of course.

This is the global saqueo, a time of great taking. Fuelled by a pathological sense of entitlement, this looting has all been done with the lights on, as if there was nothing at all to hide. There are some nagging fears, however. In early July, the Wall Street Journal, citing a new poll, reported that 94% of millionaires were afraid of "violence in the streets". This, it turns out, was a reasonable fear.

Of course London's riots weren't a political protest. But the people committing night-time robbery sure as hell know that their elites have been committing daytime robbery. Saqueos are contagious. The Tories are right when they say the rioting is not about the cuts. But it has a great deal to do with what those cuts represent: being cut off. Locked away in a ballooning underclass with the few escape routes previously offered – a union job, a good affordable education – being rapidly sealed off. The cuts are a message. They are saying to whole sectors of society: you are stuck where you are, much like the migrants and refugees we turn away at our increasingly fortressed borders.

Cameron's response to the riots is to make this locking-out literal: evictions from public housing, threats to cut off communication tools and outrageous jail terms (five months to a woman for receiving a stolen pair of shorts). The message is once again being sent: disappear, and do it quietly.

before i sign off on this post, let's turn back to the u.s. and yet another (god save us all) shit-kickin' texan, governor goodhair (with deep thanks to the late molly ivins)...

Perry Reveals Plan for Total US Anarchy

Today, Gov. Rick Perry (R-TX) issued the first policy position of his presidential campaign by asking the White House to issue a “moratorium on regulations across this country”:

We’re calling today on the president of the United States to put a moratorium on regulations across this country, because his regulations, his EPA regulations are killing jobs all across America..

i simply can't describe the sinking feeling i get reading this kind of news... and, believe me, it's not made one whit easier reading it from here in kabul...

oh, well...

today's a day off (afghan holiday) and i'm kicking back and looking forward to going out to dinner this evening with a good afghan friend and his lovely wife... it'll be a nice break...

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The wealthy continue to prosper while plundering the assets of the masses

in greece as in the u.s. as in the uk as in the rest of the world...

from spiegel...

Greece is tightening its belt -- and the number of people living in poverty is surging as a result. Thousands line up in front of food banks and resort to rifling through rubbish bins. The country's financial crisis is rapidly turning into a social one -- while wealthy tax evaders manage to get off scot-free.

[...]

In 2010, the number of jobless in Greece rose by 230,000, to reach 14.8 percent. Given Greece's weak social safety net, unemployment is more or less tantamount to social bankruptcy. For example, unemployment benefits are only available for a year at a monthly rate of less than €500. After that, the state offers practically no assistance. Officials estimate that only about 280,000 of the 800,000 peoplhttp://www.blogger.com/img/blank.gife without jobs are still eligible to claim unemployment benefits. This has resulted in a dramatic rise in the number of homeless people -- by up to 25 percent in Athens alone.

According to official data, unemployment is expected to climb to between 17 percent and 18 percent by the end of 2011, but the true figure could be as high as 23 percent. "That would be 1.2 million jobless people," Robolis says [professor of economics and social policy at Athens' Panteion University and director of the Labor Institute of the General Confederation of Greek Workers]. The last time Greece saw something like this was in 1961, when the introduction of modern farming technology put thousands of agricultural laborers out of work.

what isn't mentioned in the article is the massive privatization scheme that accompanies the greek eu bailout... basically, greece is being forced to divest of all of its principal assets in order to satisfy the terms of the eu loans, effectively resulting in wiping out greek sovereignty and putting the ownership of the country in the hands of our already super-rich elites...

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Using the economic crisis the super-rich elites created to further enrich and empower the super-rich elites

among other tactics, the possibility of privatizing municipalities by fiat...

from democracy now...

As a wave of anti-union bills are introduced across the country in the wake of Wall Street financial crisis, many analysts are picking up on the theory that award-winning journalist and author Naomi Klein first argued in her 2007 best-selling book, "The Shock Doctrine: The Rise of Disaster Capitalism." In the book, she reveals how those in power use times of crisis to push through undemocratic and extreme free market economic policies. Democracy Now! interviews Naomi Klein to discuss how the shock doctrine is being used by politicians pushing drastic cuts and reforms as a response to the financial crisis.

Naomi Klein on Anti-Union & Budget "Crisis" Bills and Shock Doctrine American-Style, Part 1



Naomi Klein on Anti-Union & Budget "Crisis" Bills and Shock Doctrine American-Style, Part 2



klein's point is very well-taken... this coup d'etat cannot be fought on a partisan basis... both the dems and the repubs are in cahoots here and it's clear that aligning with a party is only enabling the rape and pillage to continue...

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