Thursday, 16 June 2011

The Greeks MUST default on 'their' debt

I came across this post by Mark Hudson yesterday on a blog called Naked Capitalism. It's an excellent description of how the failures of financial capitalism, which culminated in the collapse of Lehman Brothers in 2008 and threatened to bring down the world economy, are being used by the capitalist class to roll back all the democratic gains made in the past century by ordinary people. This is, as Naomi Klein has described, an economic shock doctrine - use a crisis to impose cuts in living standards on the mass of the people which they would ordinarily never accept.

Its worth a brief recap of how we got here. Financial deregulation since the 1970's, combined with an aggressive free market doctrine known as neo-liberalism, which originated in the Chicago School, have lead to banks and financial institutions such as hedge funds becoming out of democratic control in Western countries. At the same time the standard of living of all except the wealthiest has come under attack. The lack of controls on financial capitalism has lead to a series of economic crashes since the 1980s, each one worst than the last. These include; the Asian crisis, the dotcom boom, and the latest and greatest crisis since the crash of the Great Depression, which began in the USA with the collapse of subprime mortgages in 2006.

The latest crisis resulted in the virtual collapse of banks worldwide which was only halted by state intervention. What began as a crisis for the financial sector lead directly to the current sovereign debt crisis which we are now in. This sovereign debt crisis, in which taxpayers are being asked, once again, to bail out the financial system is being used as a weapon to impose neoliberalism on people in Europe and the USA. This means an attack on welfare, pensions, wages, workers rights, and environmental regulation, and privatisation of public services and state assets. This is driven not by economics but ideology. The aim is not to find a solution to the crisis but to use the shock of the crisis to destroy the standard of living of the mass of the population in the West. Those who gain from this will be the capitalist class.

Nowhere is this revealed more starkly at the moment than in Greece. The bailout of Greece, imposed last year to the tune of €110 billion, failed. The important point is that this bailout was only ever in tended to protect French and German banks, and other bondholders, and not the Greek people. Also of great importance was the desire to protect the great European single-state project know as the Euro. Of course the Greeks should never have been in the Euro. Without their own currency and the ability to set interest rates they were always going to struggle economically. Of course it can be argued that successive Greek governments mismanaged the economy and that the Greeks were living beyond their means but that misses the essential point. This is really about a coup d'etat, about financial technocrats and finance capitalists taking control. It is a struggle between democracy and capitalism.

The only way forward for the Greeks (and the Irish for that matter) is to default on their debts and leave the Euro. The alternative is the end of Greek democracy and the wholesale privatisation of the country at knock down prices. Greece will become a sovereign state and democracy in name only. As Mark Hudson said in his post; this is the road to financial serfdom;

"This new road to neoserfdom is an asset grab. But to achieve it, the financial sector needs a political grab to replace democracy with financial technocrats. Their job is to pretend that there is no revolution at all, merely an increase in “efficiency,” “creating wealth” by debt-leveraging the economy to the point where the entire surplus is paid out as interest to the financial managers who are emerging as Western civilization’s new central planners".

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