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John Passant

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November 2011



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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

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Make Gina Rinehart work for her dole

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Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. (0)

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Can Europe survive?

Financial crisis and uneven development have combined to shatter the mirage of European unity argues Ben Hillier in Socialist Alternative.   

The monetary union is now under immense pressure as sovereign bonds in the Mediterranean countries continue to be devalued by markets, pushing up borrowing costs for already indebted governments.

The pretension of “harmony” between peoples has given way to an atmosphere of acrimony between states. The ruling classes of Germany and France, who for so long have used the EU as a means to further their own imperialist ambitions, have led the charge to pulverise the weaker economies, and humiliate their populations, through austerity.

The economic crisis

At the beginning of 2010 Socialist Alternative noted:

“States are struggling to manage the tripling of government debt in the course of saving the financial sector. Thus far there has been no unified strategy or coherent response from the ruling class. Yet a series of questions have been raised: 1) How will economies cope when massive government support is withdrawn? 2) How will governments manage to repay their enormous debts without inflicting more economic damage? 3) Who will bear the brunt of the repayment plans? We are about to get some tentative answers.”

At the end of 2011 the answers are clearer:

1) Not very well. The European Commission’s latest economic forecast expects “No economic growth…in the current and coming quarters” in the EU.

The peripheral states – Portugal, Spain, Greece and Ireland – continue to be a disaster. Greece is set to contract by over 8 percent this year and next, on top of the 7 percent decline over the previous two years. Unemployment will continue to rise to above 18 percent officially. The real number will likely be higher than 30 percent. The Portuguese economy will contract 5 percent over the next two years. Unemployment will continue to rise to nearly 14 percent officially. In Spain growth is stagnant. Unemployment is officially over 20 percent and not budging. Youth unemployment is pushing 50 percent. Ireland has stabilised in growth terms, but the economy is around 10 percent smaller than 3 years ago. Unemployment will remain around 14 percent for the foreseeable future. In Germany, France and Italy, the three largest economies, growth is slowing.

2) They won’t. The mass wave of austerity in the periphery, sold as necessary medicine to pay down government debt, has not only contributed to economic contraction – the economic contraction has in turn exacerbated the debt burden.

In Greece, government debt will continue to rise – from 145 percent of GDP this year to around 200 percent in 2013. In Portugal it will rise from 93 percent of GDP to 112 percent in 2013. In Spain, it will rise from 61 to 78 percent of GDP – a figure downwardly distorted by the high level of provincial debt that goes unregistered in the national accounts. And in Ireland, the increase will be from 95 percent of GDP this year to 120 percent in 2013. Add in private sector debt and the numbers triple in Ireland, Portugal and Spain.

France too will see government debt rise from 82 to 92 percent of GDP. Italy’s debt level is stable – at €1.9 trillion. The country is considered both too big to fail and the debt too big to save. Recent spikes in its borrowing rate to above 7 percent saw markets panic with the realisation that there is not enough money to bail the country out if it comes to that. The government is pushing through a new austerity package to pay down the debt, but with already sluggish growth, this may serve, as elsewhere, to increase the burden.

3) Admittedly, this was a no-brainer. Despite a generally rising tide of struggle in Greece, Spain, Italy, Britain and Portugal, the attacks on workers and the poor have continued relentlessly. The Greek working class is being sent back to the Stone Age, and the welfare states dismantled elsewhere, further destroying the post-war settlement.

This is what “democracy” looks like

The EU was a debasement of democracy to begin with. The Economist wrote in 1997 of the Council of Ministers being “perhaps the only law-making body in the democratic world that takes decisions behind closed doors”. The European Commission – the body of bureaucrats that proposes legislation and has the power to give directives to member states – is unelected. And the (also unelected) European Central Bank has the power to dictate monetary policy across the region.

The economic crisis ravaging Europe has thrown the undemocratic nature of the EU, and of individual states themselves, into sharper relief. Larry Elliott, writing in the Guardian, explained:

“Here’s how things work. The real decisions in Europe are now taken by the Frankfurt Group [the French and German leaders, the International Monetary Fund, and the four major EU institutions]… This group, which is accountable to no one, calls the shots in Europe. The cabal decides whether Greece should be allowed to hold a referendum and if and when Athens should get the next tranche of its bailout cash. What matters to this group is what the financial markets think not what voters might want. To the extent that governments had any power, it has been removed and placed in the hands of the European Commission, the European Central Bank and the IMF. It is as if the democratic clock has been turned back to the days when France was ruled by the Bourbons.”

George Papandreou and Silvio Berlusconi, prime ministers of Greece and Italy respectively, have been forced out – not by their own constituents, as in the case of Ireland and Portugal, but by the European establishment. Papandreou proposed a referendum on paying the debt. While it was an attempt to blackmail the population into accepting austerity as the only course, the idea of the Greek people having a say over the future of their country was too much. Stefano Leprit, writing in the Italian La Stampa, spoke for all the ruling classes of Europe when he wrote:

“But isn’t it fair to give the word to the people when it comes to bearing such heavy sacrifices? In this case no. On the matter to be decided, Greece’s national sovereignty no longer exists.”

Within days of proposing the referendum, Papandreou had backed down, and then resigned. Berlusconi, mired in corruption and sex scandals, was considered unable to push through harsh austerity. He lacked legitimacy in the eyes of a population that has already mobilised in their hundreds of thousands against his government. He couldn’t be relied on, so he had to go. As Tony Barber, writing in the Financial Times put it:

“Two democratically elected leaders…[have been] eased out of office at Europe’s behest and replaced by unelected technocrats [Mario Monti and Lucas Papademos]…trusted within the EU to pass economic reforms deemed appropriate by policymakers in Berlin, the bloc’s top paymaster, and at EU headquarters in Brussels.”

The widely-used term “technocrat” is misleading, however. It implies that economics is some autonomous discipline that is not or should not be tainted by politics – hence running an economy is simply a “technical” and therefore apolitical duty. But making sure that the god of the market (which is somewhat akin to the collective consciousness of the ruling elite) is satisfied is hardly just a technical task. These are political appointments. The new leaders’ jobs are to smash the poor to enable the rich to continue making money – it’s that simple. Illustrating the reality, one EU official told the Financial Times, “The pressure will be maintained because it doesn’t really matter who is in leadership – they still have to deliver.”

An intractable problem

The vision of a united Europe was always either a utopia or a fraud, depending on how you looked at it. It was utopian if you believed it, fraudulent if you were the rulers of the powerful capitalist states at the heart of the project. Today the idea of a community of nations is ruined in practice if not in people’s heads. The current union may or may not unravel, but the project of trying to create a European counter-power to US and Chinese imperialism is unlikely to be discarded.

However, it is clear that Europe is now at an impasse. The generalised crisis has exposed the contradiction at the heart of the European project: attempting to find some reconciliation between states with competing agendas, and between classes with different interests.

Smashing the working class has on one hand exacerbated the economic problems. On the other, the austerity has provoked resistance, often fierce, to national governments and, increasingly, against the system itself. The leaders of Europe are proving they have no solutions but to continue this path, to try to squeeze every last drop of profit out of the workforce while giving back as little as possible. As each month passes, the institutions of the EU show that they are more willing to sacrifice democracy for the greater good of capitalist stability.

If two years ago the ruling class had “no unified strategy or coherent response”, it is clearer now. Smash, grab, hold on and try to weather both the economic storm and the wave of popular resistance that is being provoked. What remains unclear is how exactly they will be able to do so.



Comment from Ross
Time November 20, 2011 at 10:45 pm

The US Federal Reserve ( private banks) in addition to the $ 15 trillion they put the US Govt in debt for bailouts and wars etc ,has secretly bailed out its mates and own interests for an additional $16 trillion.This money has mostly gone into the phoney economy to prop up their scams.While the real economy collapes so does everyones’ assets & shares, so the elites take more to feed their scams.

Thus everything spirals backwards.Prof Bill K Black says that 90% of the Fannie and Freddie loans can be proven to be fraudulant but the system is now so corrupted, no one in authority will act.Only protestors get gaoled.This lot make the Mafia look like choir boys.

Russia Warships by the way have moved into Syrian waters to stop a NATO attack on them.Perhaps Russia also can put Israel in their cage and stop them attacking Iran.

Comment from Chris Warren
Time November 21, 2011 at 8:29 am

Geez, I have major problems with this sort of stuff.

How can anyone discuss the current economic crisis without associating it with the analysis of Marx?

Europe is (essentially) irrelevant – it is just the latest symptom (or occasion) of the ongoing, general, global crisis of capitalism based on a structural contradiction unique to capitalism that has been building up ever since 1900.

All OECD capitalist economies have been increasing their macroeconomic imbalances for decades, as they try to inject so-called ‘countervailling tendencies’ against capitalist crisis.

The overall, long-term, pattern is depicted at:

The point that must be made, is that the crisis is general [most agree thus far] BUT because of this, it will impact on our own economy in the future.

When we gaze at Europe (and so on) we should remember we are in fact looking at our own future.

And to respond to this future and specifically, to avoid the attacks on workers and pensioners, we need to be well acquainted with the analysis of Marx – front and centre.

Europe was just a game for capitalists after they smashed the economies of, Eastern Europe, South America, SE Asia, Japan and Iceland.

Comment from Ross
Time November 21, 2011 at 7:33 pm

I don’t think Chris Warren grasps the big picture.Just because I comment here does not mean I support Marx.I’m a libertarian who believes in the free market and true democracy.

The free market has not been allowed to operate.Cartels and banking monopolies have hi-jacked the entire economic system.

When private banks can create from nothing all the money to equal our increases in productivity + inflation,we are their debt slaves and they have total power over us and our Govts.This is the core of the issue.

I support John not because of his political philosophy but because his humanity and sense of justice.John and I see a catastrophic reality but a few months away.

The collapse of the US $ will be the most singular monumental event in human history.It will touch every person on the planet.With the counterfeiting of $ trillions it is a mathematical surity that hyperinflation,with unemployment will follow.

Unlike the Great Depression of 1930’s we have no manufacturing to replace the non-productive service industry.It only exists in the good times.
In hard times people will mow their own lawns,cut their own hair and cook their own food.There will be very few jobs since the real productive ones are outsourced to poorer countries.

“I may not agree with what you say but will fight to the death for your right to say it.”

So if you want to have a say,start suggesting some practical solutions.

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