As we put another load in the washing machine, or wonder who will be the first to be ejected from the latest “X Factor” show, other important issues enter the minds of a new global citizenry.
Clocks are stopping as another crash occurs, defining moments are now common to more and more people, as the way things have been for the last 30 years lurch towards an as yet undefined precipice. Socially, economically and environmentally the prosperity bus is finding less and less traction as the steep gradient on the Mountain of Debt slows the engines of growth.
“The world has a stock of $220 trillion of financial assets, nearly four times the world’s GDP. Almost $150tn of those assets are varying forms of debt. What has spooked the
financial markets is that it is becoming obvious that the world economy, and a growing number of indebted governments, cannot create the surpluses to service the interest and principal payments on that volume of debt – whether in the public or private sector. Somebody somewhere is going to have to shoulder an enormous amount of financial pain.” The Observer (U.K.) Editorial 7th August 2011
In what Marina Prior described in the Guardian as “arse covering”, the Bank of England’s Governor Mervyn King responded to “the biggest financial crisis the world has ever faced” by deciding to print another 75 billion one pound notes and announce “QE2”, the second round of “quantitative easing” in the United Kingdom. http://www.guardian.co.uk/commentisfree/2011/oct/07/mervyn-king-financial-armageddon-inertia
The “light touch” financial system introduced by Gordon Brown in the early years of the millennium helped to cement the U.K. as the financial centre of the world, and is the main reason why England suffered more than most countries in the 2008 crash. It was the place where financial regulation was taboo, because of the fear of trading moving to another centre.
As moves around Europe gain ground for a “Robin Hood” tax on financial transactions, England’s now Conservative government is the main stumbling block, again seeing the possible introduction as a precursor to traders taking flight.
So the “light touch” remains, so too does the economic miasma that confounds all governments who mistakenly thought a financial “recovery” was under way in 2010. Who see economic growth, GDP, wealth accumulation and consumer culture as “the way forward”, and the only solution to social unrest, world poverty and environmental degradation.
This is the economic system to which we are now captive. The transfer of corporate debt to sovereign debt has transferred business’ that are “too big to fail” into countries that are “too big to fail”. The connectedness of the financial system discovered and blindly supported in 2007 has now seen the transfer of that debt to countries through bail outs, and taxpayer guaranteed loans.
European countries that cannot service their debts through economic growth, (such as Greece, Portugal, Ireland, Spain and Italy), are now subject to the “troika”, the I.M.F. and European Central Bank, and the European Union, for funding. This is conditional upon showing that new loans can be serviced, through further austerity measures, cuts in government spending and asset sales.
Future economic feasibility means adding considerably to the massive mountain of UNKNOWN and KNOWN debt. (i.e.QE 2). When and if, the scores of trillions of derivative debt is revealed and accounted for at face value, or “mark to market”, the system will collapse, at present this is being hidden.
The impact of economic growth on the environment will be discussed in a later piece, what is happening at the time of writing is the mass awakening to the fact that the economic growth system is socially bankrupt, and causing stress to an increasing number of people on a global scale. The common factor is the involvement of a new generation of protestors who are well educated, connected by new media outlets, see no future in the existing political system, and feel it does not represent them. Tracing the social unrest is an interesting phenomena due to a severe social economic malaise that refuses to go away.
THE ARAB SPRING has been cited by some as the precursor to the economic protests that have and are sweeping Europe and America. They began in December 2010 following Mohamed Bouazizi’s self-immolation in protest of police corruption and ill treatment in Tunisia. What the Arabian protests proved is that a persistent movement cannot be ignored.
The map below shows the levels of discord within the Arabic states.
Revolution Civil war Sustained civil disorder and governmental changes Protests and governmental changes Major protests Minor protests Protests outside the Arab world
In Tunisia, Egypt, and Libya, the protests were centered upon food costs (shortages), corruption and regime change. The (then) governments had ruled the respective countries for 30 – 40 years with lip service being paid to democracy in the form of
rigged elections. Social unrest was avoided by brutal policing and a secret service operation complicit in the Iraqi renditions. The protests that unfolded were anti-corruption and had demands for regime change and democratic elections.
The success or failure has been dependent upon where the sympathies of the armed forces of the countries involved lay, or the extent to which western countries
were prepared to involve themselves in regime change i.e. where it suited their
economic outlook (oil supplies in Libya).
To date thousands have been killed in Syria, yet external interference is blocked in the U.N. Security Council. The latest “success” has been the reported resignation of President Saleh in Yemen, but protests throughout the Arab world are continuing even where governments have changed.
THE EUROPEAN SUMMER, began a tad early, perhaps due to climate change. Never the less it arrived with a bang in mid May. Since 2008. the Greek economy (along with Portugal and Ireland) had bail outs, austerity measures, riots and government changes. Portugal’s new government immediately cancelled a high-speed rail link from Lisbon to Madrid. The Spanish housing bubble caused it’s economy to crash, general unemployment of 20% and youth unemployment of 40% have clung stubbornly to a Socialist government that introduced severe austerity measures, and in a symbolic sign has set a Federal election on the date of fascist dictator Francesco Franco’s death.
What had not been foreseen was the mass reaction to the austerity measures which had been a condition of the E.U. IMF and ECB loans. The Greek riots lit the fuse, but the global media machines were hard at work “spinning” the lazy Greek worker who retired at 50 and the Mediterranean “attitude” of the “fringe” European countries who had borrowed extensively to maintain their “cultural” difference and refused to adopt a more “Teutonic” economic philosophy.
On the 15th May the current and perhaps most effective protest movement ever enacted was launched in Madrid. In sympathy with the anti-austerity protests in Greece, and coinciding with Spanish state elections, Spanish youth gave birth to the “occupation” strategy. The global media being indifferent to protests which arrive at 11am, have a march to a square, listen to some speeches and disperse by 3pm.
This was unique, the protestors didn’t go away, they stayed, and camped for 3 weeks in Puerta del Sol. Similar protests began in Barcelona which lasted 6 weeks. In between there were mass marches of up to 250,000 people. There were no demands, which provided the same derision from the Spanish mainstream media as the Occupy Wall St
protests attract in America, but “Los Indignados” had arrived, and what a beautiful sight it was, but the police response was disgraceful ;
A virus was born. Similar encampments started in Syntagma Square, and in Berlin and Paris. The protests throughout Europe in 2008 were now crystalized in a new form.
Spanish protests went unreported globally, the only information was on the new media, the blogosphere, and up to this day it remains the only reliable source of information on the new movement. “Real Democracia Ya !” (Real democracy now) fits the protestors call for a transition to a new political era.
Eduardo Galeano’s informal “talk” to the protestors is a perfect assessment of the situation (See “Social” tag or “Home” page).
Political thought, philosophy and system is no longer relevant to the millions who are destined to make up a lost generation, this is as true in Cairo as it is in New York.
The debts that well-educated citizens carry is added to the massive public
debt with which governments are now burdening future generations.
Demands have now been formulated from Madrid and Athens, they can be found here http://www.thenewsignificance.com/2011/09/05/joint-statement-by-puerta-del-sol-economics-working-group-syntagma/ , and here. http://www.zcommunications.org/indignant-and-organized-from-15-m-to-19-j-by-david-marty
The protests are no more evident than in Chile where the first Milton Freidman inspired dose of disaster capitalism occurred. Young people no longer vote, the Chilean protest movement is centered on the privatisation of education system invoked from Pinochet’s
early years. It has taken 40 years for this protest to arise, 20 years since the military dictatorship ended. http://www.guardian.co.uk/world/2011/oct/08/camila-vallejo-latin-america-revolutionary?INTCMP=SRCH
It is no coincidence that the transitions to democracy in Chile, Greece and Spain from brutal dictatorships, has shell-shocked their populations. The gradual liberalization of the respective societies has allowed the fascist leftovers to merge with a Freidman-esque conservatism that is acceptable in modern society under the banner of “free market fundamentalism”.
Governments, and democracy, are now slaves to free market economics, there is a centralization of authority from the people to global corporations and financial institutions, which demands economic growth of 4% a year. In these new “service” economies this means offshoring manufacturing to cheap labour states and allowing financial “markets” to fill the GDP gap through ever more dubious financial “products”.
This has been seen and responded to in Europe by a new generation of educated citizens. As well as the “occupations” that took place, a march began in Madrid to take the protest to Brussels, the major center of the destructive “troika”. The marchers are already in Paris and plan to “encamp” in Brussels on October 15th, a nominated day of
international protest. http://spanishrevolution11.wordpress.com/
‘Vamos despacio porque vamos lejos’ (‘We’re going slow because we’re going far’).
AMERICAN AUTUMN adds to the global movement, with the “Occupy Wall Street” protests that began with a few hundred people camping in Zuccotti Park renamed Liberty Plaza, near Wall St, the “heart of the beast”, as Naomi Klein has called it. In the 3 weeks of “occupation” the numbers have swelled to the tens of thousands. 70 American cities now have, or are planning occupations. The protests have been met with the usual brutal police response, pepper spray and beatings. http://www.guardian.co.uk/world/blog/2011/sep/28/occupy-wall-street-anthony-bologna
This has only intensified, and legitimized what has always been peaceful protest.
It has taken 4 years of millions of home foreclosures, unemployment, threats to social
services and right-wing political extremism to generate a public response in America. Wall Street institutions have meanwhile flourished. The 1% has been widely condemned for “owning” the government of the day, and the movement from the 99% is a natural response.
Independent Senator Bernie Sanders has been almost a lone voice in opposing cut backs to social services. In December 2010 he gave a brilliant speech in the senate of a
“war” being waged by the wealthy in America against the lower and middle classes. http://www.youtube.com/watch?v=Tq1zpHF0J04
The main product of this myopic adherence to excessive concentration of income and wealth is fourfold;
First ; above a certain limit of inequality – one that has and is still being severely breached – economies develop a natural tendency to deflation. In the UK and US, by cutting the purchasing power needed to buy the extra output being produced, the long wage squeeze has created consumer societies without consumers. The solution to this problem of a prolonged erosion in living standards – which would have brought a deep-seated recession much earlier – was to allow an unsustainable explosion in private
debt to fill the gap.
Second, concentrating income in fewer and fewer hands eventually leads to “bubble” economies. Private and corporate assets skyrocket and ridiculous prices are paid for companies and property on the assumption that the bubble will keep expanding. In
England house prices rose by 91% in the past decade whereas wages rose by only 40%. One property in Dublin sold for a record 58 million pounds in 2007, it is now on the market for 15 million pounds. This scenario has played out all over the world particularly in the U.S.A. and Europe and is responsible for the economic chaos now.
Third, the towering rewards that became available in finance distorted business
incentives. The biggest money could be made through business strategies that were unproductive. Instead of the faster wealth creation promised, money poured into activity – takeovers, private equity, property and financial engineering – that delivered fortunes through the transfer of existing, rather than the creation of new wealth, businesses and jobs.
Finally, excessive concentrations of wealth create dangerous concentrations of economic power, with finance and its lobbyists able to ensure measures like weak
financial regulation by the state, lower taxes on the wealthy, and inaction on tax havens, which operate in the interests of a small commercial class. In more equal societies, as in the postwar era, finance is much more constrained.
The four mechanisms that link inequality and economic malfunction are still at work.
Falling real wages are stifling demand in the world’s richest economies. The globe’s largest corporations are sitting on near-record volumes of cash, assets are even larger today than they were before the crash, and the power of the City and Wall Street remains intact. When these assets are spent, they are likely to finance another wave of high-margin financial and industrial restructuring rather than the productive investment that creates robust economies.
There have been no lessons learned from 2007, 4 years later the only solutions are repeat doses of the same medicine; more debt, which is fueling a rising tide of global
protest. Far from the free market system providing a trickle-down effect to solve global poverty and inequality, it has been shown that the reverse is happening, people’s wealth is trickling upward. In America, the top 1% income earners earn 24% of all the income earned in America, more income than is earned by the bottom 50% of the population.
There has never been a time when income inequality has been greater and social unrest is a major product. Each season of the northern hemisphere year has been highlighted by a mass protest movement. Social justice has never been more pointedly focused as we move into a WINTER OF DISCONTENT.
Relevant Links ;
Democracy Now coverage is the BEST coverage has been full on since OWS began
http://www.democracynow.org/shows/2011/10/6 full list on site.