Disaster Capitalism Hits Europe (and the US is Next)

via CommonDreams:



Published on Friday, July 9, 2010 by The Guardian/UK

Disaster Capitalism Hits Europe (and the US is Next)
Eurozone governments and European authorities are using the economy to justify pushing through rightwing policy changes

by Mark Weisbrot


One thing should be made clear about the situation in the eurozone economies that is not clear at all if we rely on most of the news reports. This is not a situation where countries face a "dilemma" because they have overspent and piled up too much public debt. They do not face "tough choices" that will force them to cut spending and raise taxes while the economy is weak or in recession, in order to "satisfy financial markets".

What is really going on is that powerful interests within these countries - including Spain, Greece, Ireland and Portugal - are taking advantage of the situation to make the changes that they want. Perhaps even more importantly, the European authorities - including the European commission, the European central bank and the IMF - who are holding the purse strings of any bailout funds, are even more committed than the national governments to rightwing policy changes. And they are further removed from any accountability to any electorate.

In 13 Bankers, by Simon Johnson (a former chief economist at the IMF) and James Kwak, the authors describe the emerging market crises of the 1990s and note that Washington used them to promote changes that it wanted: "When an existing economic elite has led a country into a deep crisis, it is time for a change. And the crisis itself presents a unique, but short-lived opportunity for change." Naomi Klein, author of The Shock Doctrine, provides an excellent history of how crises have been used to introduce or consolidate regressive and unpopular economic "reforms".

This is what is happening in the eurozone economies right now, although the "crisis" is considerably exaggerated in most of them. Spain is a good example. The story that Spain got into a mess because of government overspending is not supported by the data. Spain reduced its gross debt-to-GDP ratio sharply as the economy grew from 2000-2007, from 59 to 36% of GDP, and was running budget surpluses in the three years prior to the 2008 crash. The crash was triggered by the collapse of a large housing bubble in Spain, as well as the bursting of a big stock market bubble: the value of stocks plunged from 125% of GDP in November 2007 to 54% of GDP a year later. The collapse of each of these bubbles had a huge impact in reducing private spending. The world recession added more external shocks to the Spanish economy. ..........(more)

The complete piece is at: http://www.commondreams.org/view/2010/07/09-11

"You know, when you are hauling in over $40 million a year in Republicorporate propaganda payola, this kinda stuff don't mean shit. Too bad (smirk) about you little people. Bwaaa ha ha ha ha. Smirk."

- Rush DraftDodger Limbaugh (R - Propagandist)

I'd call it being a kleptocracy, but what's the real difference. We had the foxes running the henhouse...lobbyists writing the laws, a regime hellbent on expanding the corporate welfare system and destroying or ignoring any regulation or oversight. We had a bank bailout in its last days (one last fleecing) that was created by the banksters and "fixed" by the banksters. It cratered the market and destroyed much of the financial infrastructure that has led to our own "austerity" program. Governments are broke and being forced to downsize, individuals have seen their money lose value and their savings either vanish or lose a lot of its value. And now we have an administration that is inundated by their own special interests as well as an obstructionist Senate that lead to half measures and stop gaps, no long range plan.

to pull it together. It will include France and Germany as well as "PIIGS". Of course, this may be disrupted before then. September is a long way away. But times they are a'changin. Globally speaking, the left is beginning to come together. It's just at the very beginnings, but it's something.

All right you bankster assholes, you've fucked up your casino again and this time I have some new "austerity measures" to put it right:
1) Debt will be written down, based on how risky it was when you packaged it. If you packaged and sold junk notes, the government will only bail you out at 30 cents on the dollar. (Ya hear that Timmy?)
2) Since private spending has been reduced, we'll make up for it in public spending. And where will we get the money to spend? You. Top tax rate goes up to 70%, effective tomorrow.
3) It's time to put unproductive capital back to work. Second homes will have double the property tax, third homes triple, and so on. Same with boats, airplanes, and cars; you get one exemption for business related use, recreational use is gonna cost you.
4) "Collectibles" are going to collect tax for us. If you can afford $50,000 for an 18th century parsons table, you can pay tax on it.

It was when the tax rates for the rich were cut from what were the 50-90% range is when the USA started to go into massive debt and with increased deficits. The increased disposable income of the rich was a double edged sword that allowed them to increase political donations and the increased political influence was used to make it even better for the rich and more stressful for the nation. It affected the ability of the government to effectively regulate industry and banks and Wall Street for starters.

The core of our nation's problems are caused by the shift of wealth from the nation to a relative tiny percent of the population. That has created all kinds of subsequent problems.