TO THE RESCUE
c 2010 Tristan Winter
A couple of specters are haunting Europe these days, and when not fossicking out any terrorist plots of El Kabong, Europe, along with the UK and US, are puling over the possible implosion of the euro. Having just bestowed several generations of ‘debt’ on the natives in exchange for rescuing outfrauded financial agglomerations, the EU governments are now worrying about having to restructure loan debts of their own member states.
The politely named PIIGS -Portugal, Italy, Ireland, Greece and Spain- have been cited for exceeding EU debt to GNP ratios, which is neither new nor unique to them, but their economic prospects and practices are causing despair in the European Central Bank responsible for a 16-nation currency. However, the racing possibility of default put Greece at the front of the whipping line these past months, and, after much apparent hesitation and loathing, the EU has united with the International Monetary Fund to loan Greece money to cover its national nut in order to save the euro. -But who is saving whom?
Greece has been begging for some time now, absorbing condemnations of its ethnic proclivities while Germany as the iron core of the Central Bank has led both the castigation and resistance to aid. Naturally, during this impasse the world financial markets have been burning down Greek government bonds and devaluing the country with every profitable gimmick available. As the raiding continues, and begins to look equally profitable when applied to the other little PIIGS (sometimes written as PIIGSUK to include the UK), the Greek economy has made such a noise bouncing off the bottom that world doubts about the euro have begun to echo. So, with many sighs, the deal was fixed.
The IMF was brought in to excuse the parsimoniousness of the EU. The Greeks know of the IMF’s dreadful record[i] and anticipate its involvement like a return to 400 years of Ottoman oppression. They likewise have foul recollections of German altruism. Furthermore, they have no faith whatever in the poltroons who make up the Greek ruling classes. Being hounded for the economic flimflam of their rulers and seeing them imploring ‘help’ from the EU/IMF reaper had gotten masses of Greeks into the streets in impotent frustration. And now, sure enough, the combination has proven a long, slow cyanide cocktail. EU and IMF ukases -‘austerity’ requirements in exchange for loans- will return the country to immediate post-war deprivations. Measures which, the record shows, will actually enfeeble the economy perhaps beyond any recovery.
Now the populace realize they’re being set up, that they will be bearing the full punishment for the cataract of state and corporate fraud; that their political and business classes are scheming with the banking interests of Europe to rip the food off their tables to collect for some swindling perpetuated by international speculators and facilitated by local cannibals. First came the strikes and protests, then the General Strike, which brought people of all ages to the streets. Police gassing and police fleeing. State buildings and banks mobbed by outraged citizens yelling ‘Thieves! Thieves!’ Attempted storming of Parliament to cries of ‘Burn the bordello!’ Three dead in a bank fire.
Average Greeks, scuttling through life on subsistence wages, recollect that they had no say in the construction of this mysterious ‘debt,’ but they also cannot comprehend the dilatory machinations of the EU/IMF in settling them. They recall yesterday’s bailouts[ii] -quoted as being between 4 to 16 TRILLION in Europe alone, and 11 to 23 TRILLION in America- when taxpayers’ money was instantly thrown into the kitty for banks, insurers and corroded industry megaliths[iii]. So today they resent that 120 billion to rescue a nation of 11 million people brings with it the lash of total impoverishment.
Now ‘reluctant’ Germany is leading the campaign to gut Greek social structures, gilding such unfortunate demands as part of its gambit to ‘save the euro.’ Recall that the EU was ostensibly established to sod over a continent drenched by thousands of years of human blood. The elimination of economic territorialism began after the war, with the creation of the primarily Franco-German European Coal and Steel Industry. Working towards a unified currency, the concept was not only to preclude war, but to serve as an economic counterweight to the U.S. and Asia. The EU’s economic raison d’etre was to fix exchange rates and policy to a European Central Bank, thus protecting the EU against currency convulsions and maintaining a basic trade balance. Yet Germany is now calling the shots precisely because it has the greatest trade surplus, which means that other euro lands are, according to this principle, operating in deficit. The present German position came about because the previous government of Social Democrats -as always throughout history- citing the need for ‘realism,’ cleared pesky undergrowth away for modern commerce and systematically eviscerated the German social democratic structures, to the extent that today there is remains no federally mandated minimum wage, health care is suspicious, and general benefits are retributive (e.g., the 1 euro per hour jobs unemployed are required to take). German big business spent the last years conquering their own citizens in order to gain international strength.
These are the same Social Democrats who intrigued with Kohl’s CDU government to foment war between Serbs and Croats, reintroducing German military forays to the outside world for the first time since the war, and whose former government ministers are now lobbyists for gargantuan filth (viz, Gazprom and Nabucco). -The same generation as Blair and Clinton, both similarly famous for annihilating their own parties’ precepts as a new way of marketing themselves into, and then maintaining, power. With the incompetent IMF, the German-led EU can now reduce Greece to a Third World country in order to save the euro. Leave aside all sighs of Greece being a scapegoat; it is being demolished to lay forth a fresher field of slaughter, more able to accommodate First World fraud.
Enthusiasts of Mondern Monetary Theory view all money as representing debt; painted as value, but created by debt. The historical rise of trade led to forms of credit, which in turn led to trade in derivatives of credit, which is by any definition speculation. The consolidation of corporate structures -banks and joint-stock ventures in the first instance- led to companies whose existence depends on speculating. Directors of such companies and institutions are in fact merely controlling other people’s money -not their own- and so gambling with ‘social’ capital. Clearly this amounts to the socialization of risk, although private profit is the aim and beneficiary. The European crisis is both a shockwave and an emulation of the American crash, which was chiefly tipped over by overreliance on magical ‘financial instruments’ such as MBSs and CDOs. These are Mortgage-Backed Securities and Collateralized Debt Obligations -packages of bankrupt and near-bankrupt obligations heaped into pyramid schemes and sold by the banks to varying levels of suckers in the hope that the pinnacle will remain aloft as the lower tiers sink into quicksand. By 2008 Lehman Brothers showed us the way to bore through Earth’s mantle.[iv]
But speculation remains the locomotion, and only more speculation can sustain this kind of market. As early as 1880 Marx admitted that “It is impossible to say at what precise point trade ends and speculation begins:” By now the financial markets have supremacy, and in this swirling cosmocolonic economy Greece is being bludgeoned by its illusion of national sovereignty. To save the euro, euro-state Germany is lending euro-state Greece 22.4 billion. The Greek government must pay Germany 5% interest on this begrudged bursary. The German government itself can borrow this same money for under 4 %. Ach, it is with enormous reluctance they will make this profit from speculation.
Due to the primacy of financial markets, the euro -as well as the Pound and the Dollar- will remain precarious. The most basic speculation can destroy all in its path, as witnessed by Wall Street one mysterious half-hour this week. The unregulated and untamed worlds of derivative speculation have sent all national currencies squealing for succor, and the bizarre complicity of the credit rating agencies looms ever more ominously. The current fretting over the euro has arisen because ‘sovereign’ Greece has been ravaged by global financial markets; currency speculation fusillades, credit default swaps, etc., have whipped the interest rates on any potential debt loans to Greece to untenable heights. -These international manipulations being orchestrated by speculators who themselves would never consider lending Greece one cent. The nation has been unable to refinance its 300 billion euros of bonds due as borrowing costs -to Greece- on the international market have shot to 20 to 38%.
Massive bank manipulations and their subsequent bailouts are equally dangerous in every market. The international economy is one of sytemic cycles of misusing and misrepresenting the ‘social’ capital, then, through public extortions, recapturing the squandered money and using it to make more. Only further swindling can sustain this kind of market. Yet what appears to be a virus in the ‘laws of the market’ is now the global standard. The illusory nation-state is chronically malnourished, unable to withstand any depredations of the financial markets. The recent Greek economy might’ve been summarized back in 2006, when Habermas claimed that “Today’s conditions deprive the national state of the tax resources it needs to satisfy its population’s demand for collective goods and public services, or even maintain the staus quo.” In Europe, the result of these conditions is that Germany, with the IMF collection agency, will expand on its own success by paving the way to divert and withhold just such resources, collective goods and public services from the Greek people in order to build up mega-capital. The economy of the EU, the U.K. and U.S. will proceed according to plan -which is to let the market run amok, then sweep up the debris, into the buckets of those who shattered it.
Which is how Greece will save the market.
[i] In addition to its usual ‘austerity’ conditions -cutting wages, cutting pensions, raising consumer taxes, chopping social programs, cutting jobs and creating unemployment- the IMF regularly demands privatization, ‘opening the markets to investment’ (speculation), and manages to make national assets and resources disappear.
[ii] 85 Billion for AIG alone.
[iii] 27 Trillion is the 2009 estimated total obligation as reported by TARP special investigator general Neil Barofsky. At that time he complained that there were already 35 “major” fraud investigations related to the bailout program, and cited serious problems with “conflicts of interest.” This last was a genteel way of saying that many of the beneficiary banks and investment firms were using the bailout monies to break competitors and consolidate clear monopolies.
[iv] all money … painted as value, but created by debt: We know the basic Freudian equation of money with the anal stage of psychological development. But that orthodoxy, establishing money as analogous to feces throughout the life of the psyche, still retains value as a basis. Actually, perceiving deficits as values is a fundamental survival mechanism of human psychology, and in economics is carried over from the (modern) psyche, with identity deficits desperately hoarded and trafficked as assets. -But I will address this another time.