Lambert here: Ho hum, another day, another legitimacy crisis.
By Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media. Cross posted from Testosterone Pit
Recent events in Spain have left me in even more a fog of confusion than usual. Here’s why: a little over a month ago, just before Christmas, it was announced to the loudest possible fanfare that Spain had finally fulfilled all its bailout obligations.
Its work done, the Troika was withdrawing its troops. After 18 long, arduous months of economic belt-tightening, Spain had finally regained its independence, its government and people liberated from the shackles of neo-colonial economic rule.
Personally speaking, I had my reservations. But even I, a seasoned skeptic, never imagined that the Troika’s shock troops would be back quite so soon. On Thursday morning, while scrolling the home page of El Diario, the following headline caught my eye:
“IMF Technocrats Do Not Deign To Explain Their Reforms in Spain“
The technocrats in question were two chief economists from the IMF’s European Department, Martin Schindler and Jasmin Rahmen, and two assistants from the same department, Helge Berger and Antonio Spilimbergo.
They were in Madrid for the express purpose of present their latest study, “Employment and Growth: Supporting European Recovery” — a title that proves, if nothing else, that the “Fund of Funds” hasn’t lost its sense of humour. The study contained the standard, all-familiar IMF recommendations: greater labour mobility (i.e. make it easier for companies to fire and hire workers, the former of which is definitely no longer a problem in Spain), lower salaries (always nice coming from unelected officials earning fat, tax-free, all expenses-included salaries) and, of course, less union involvement in collective bargaining agreements.
Things got interesting, however, at the end of the presentation when the small gathering of journalists began launching questions at the four IMF employees, to which Antonio Spilimbergo had one solitary response:
“We will not be taking any questions on the specifics of the Spanish situation.”
And there you have it: the perfect summation of how our new technocratic system of governance functions in Europe today. A small clique of four empty suits rides into town, announces “recommendations” for economic reforms — reforms that will continue to suck the life-blood out of the Spanish economy – refuses to answer even the most innocent question on said reforms, and then rides back to wherever it came from.
In this new model of governance, difficult questions must never be asked. If they are asked, they must never be answered — for the simple reason that the IMF, the ECB, and the European Commission do not have plausible answers to such questions. In this video Klaus Masuch, a European Central Bank official, mumbles, stumbles, and squirms his way through a steady onslaught of probing questions from a seasoned Irish journalist. At the end of his merciless interrogation, the Irish journalist says:
This isn’t good enough. You people are intervening in this society causing huge damage while requiring us to make payments not for the benefit of anyone in Ireland but for the benefit of European financial institutions. Now could you explain why the Irish people are inflicted with its burden?
A damn good question, and one that merits an answer, but instead was met with a wall of silence, followed by all manner of evasive tactics.
Like Spain, Ireland was recently proclaimed cured. It had exited from the bailout program and, as The Guardian put it, recently made a “storming return” to the international bond market. Yet while the country may be returning to a semblance (for that is all it is) of normality in macro financial terms, the cold, hard frost of austerity continues to bite on the ground.
In October last year, Irish premier Enda Kenny announced another round of austerity cuts in the government’s (read: Troika’s) budget for 2014. Among many other things, health costs will soar, medical cards will be withdrawn from 35,000 people over 70, welfare rates will be cut for job seekers, and maternity benefits will be reduced.
The results are plainly visible for all to see. In Ireland, as in Spain, the poverty rate keeps rising, opportunity becomes a thing of the past for more and more young workers, the brain drain continues its onward march, the suicide rate is going up and public services are gradually deteriorating to the point where they no longer serve the public — cue: privatisation.
Ditto for Portugal, ditto for Italy, and the less said about the tragic fate of Greece, the better. Soon, even Europe’s core countries will be invited to join the eternal race to the bottom.
To paraphrase the Roman historian Tacitus, “They make an economic desert and call it progress.”
The markets raucously cheer and applaud from the sidelines, rewarding the respective national governments’ noble efforts to impoverish their own citizens with slightly higher bond prices, healthier-looking risk premiums and more debt — always more debt! In October, the continent’s Banking Union will be consummated, granting exclusive supervision of the continent’s banking system to unelected, unaccountable apparatchiks of the European Central Bank. And with it, another hefty chunk of our national sovereignty will disappear.
Yet if someone dares to ask any of the Troika’s three horsemen of Europe’s economic apocalypse just why such drastic steps and their brutal social, economic and political fallout are necessary — something that most representatives of the fourth estate seem strangely loath to do — you are greeted with silence, more lies, and evasion.
That was merely a performance.
Vincent Browne is a Fabian socialist.
Look we are dealing with Hanoverian like forces which will destroy all vibrant life in their quest for a sacred banking union.
Its just what they do – destruction comes naturally to them.
A great performance, nonetheless.
The ‘masters of the universe’ never learn.
“At the Palace of Versailles outside Paris, Germany signs the Treaty of Versailles with the Allies, officially ending World War I. The English economist John Maynard Keynes, who had attended the peace conference but then left in protest of the treaty, was one of the most outspoken critics of the punitive agreement. In his The Economic Consequences of the Peace, published in December 1919, Keynes predicted that the stiff war reparations and other harsh terms imposed on Germany by the treaty would lead to the financial collapse of the country, which in turn would have serious economic and political repercussions on Europe and the world.”
Now the IMF is repeating the ‘reparations’ mistake through out Europe, grinding each country’s economy with austerity programs. Why? Do the biggest banks have such huge interest/currency rate derivative bets that they will fail unless they can ensure specific interest/currency rates in each country? No, that couldn’t be the reason.
There is actually a good reason for imposing austerity on the periphery, namely that it’s the only way of dealing with the competitiveness disparities as between core and periphery. Of course the social costs are horrendous, but that’s an inherent flaw in common currencies.
The other possible way is for Germany to implement excess inflation, but that just ain’t going to happen.
Oh, Germany will implement inflation. It’s only a question of *when*.
The alternative is for Germany to implement deflation.
But the first step is going to be breaking the common currency. I’m surprised it’s taken this long to do it. The next general European war may happen first at this rate, and we’re getting closer and closer to it.
My question is: why do politicians everywhere submit? Denmark, Greece, and Ireland are three very different societies with three very different histories and electorates, yet everywhere we see bland, lying (to the electorate) submission. Can they all have been bribed, all of them, everywhere? Or do they know something that they seem not able to dare to tell? Why is the neoliberal ideology so overwhelmingly compelling that it sweeps away any commitment of parties and politicos from Sweden to South Africa? I think these are important questions that need to be answered. I hear much speculation and many accusations, but evidence of why seems to be lacking.
Why is neoliberal ideology so compelling? It’s compelling to middle class. The middle class has been completely programed and it believes that the only people getting screwed are uneducated and the poor–and that’s ok with them, they got corporate ladders to climb and family to take care of, everything else be dammed.
Nobody who’s actually in the middle class dealing with the situation as it is believes that.
I can’t explain Ireland. Ireland has been supine.
Greece was the subject of massive propaganda and it still almost rejected the Troika.
Denmark, likewise, plus, they’re doing relatively well, so people are less awake.
This excellent essay reveals something that it is difficult for us to accept, yet very important. We no longer have any accountability for the kleptocaratic elites: to the press, the voters, the justice system. A 12 year old kid misbehaves in school and starts down a path to incarceration, joblessness, and misery– while a billionaire gets away with fouling the drinking water of thousands with nary a slap on the wrist.
Our only hope for positive change lies in our decision to not concede any legitimacy to the current system. This system is not based on the consent of the governed, the divine right of kings or anything more than “they with the gold make the rules.”
I agree, but if we are to be anything more than “crackpots” and “conspiracy theorists” and “paranoid” we need a clear delineation of how this is happening, with names, dates, and places. We need a bill of indictment, not a set of accusations that you and I accept as true but that billions of dollars are spent to naysay or deny. We have to be able to show that this universal pattern of surrender to the dictates of the rich and their institutions (central banks, corporations) is forced, not an inevitable giving in to the ” objective needs” of the “economy” (both reified concepts if there ever were any). We need a group of reporters and scholars to nail all this down cold. Right now we are still in the land of correlation and inference. We need to demonstrate causality and intent.
One fact is that the EU banks have just begun another round of stress tests.
I can’t tell from the reporting if the stress tests will include derivatives exposure.
The excellent research by Yves Smith, David Dayen, and many others has provided us with excruciating detail about the banksters’ shenanigans and power grabs. Other folks have focused on the oil industry, the MIC, union-busting law firms, etc.
It would indeed be useful for someone to synthesize all this readily available information into a sort of grand “bill of indictment,” as you suggest!
You probably need different forms of bill of indictment for countries with different legal traditions.
We’ve got it pretty close to lined up for the English legal tradition. The English courts are actually pretty honest still, too. A couple of private prosecutions could start bringing things down in England.
I don’t know what to do about, for instance, Spain, where the government has decided to reimplement fascism.
“Our only hope for positive change lies in our decision to not concede any legitimacy to the current system.”
I agree with Ulysses. However, “…there is many a slip twixt cup and lip.”
Neoliberals love centralization, top down economies and monopolistic debt, so the antidote must be non-indebted, non-monopolistic local economies. I see this happening on grassroot levels far below the myopic eyes of the elites, who remain focused on the institutions which serve neoliberalism… international corporations.
The control of national finances has slipped out of the hands of individual states and dropped into the lap of huge banks whose job is to serve not citizens but stock prices. Politicial leaders of all types have allowed this to happen but so have the people that voted for them.
I too am encouraged by the alternate economies emerging under the radar– particularly by the growth of worker owned cooperatives.