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 The credit agency S&P cutting the ratings of nine European countries on Friday is normally nothing more than financial news, and it got reported accordingly. But buried deep in its report was an interesting sentence.

 Governments are also aiming to put greater focus on growth-enhancing structural measures. While these may contribute positively to a lasting solution of the current crisis, we believe they could also run counter to powerful national interest groups, whose resistance could potentially jeopardize the reform momentum and impede the recovery of market confidence.
 S&P doesn't elaborate on who these "powerful national interest groups" are, or why they would oppose governments trying to grow their economy, but it's pretty easy to guess. It's also easy to see the likely consequences of this conflict of interests.

 Government pro-growth measures involve tax cuts and spending measures. The people who oppose those measures, the ones who want to impose the exact opposite (austerity and tax hikes), are the creditors of the world (multi-national banks and the wealthy).
   Thus we find a direct conflict of interest between the 1% and the 99% (i.e. those "powerful national interest groups").

   A new report came out that detailed exactly how far the people can be punished with austerity measures before they won't take it anymore.

 The cocktail of economic inequality and cheap, ubiquitous digital
connectivity has severely eroded government legitimacy. From organisers in Cairo (Egypt) rallying poor neighbourhoods around high food prices to indignados in Madrid (Spain) calling for democracia real, social movements have focused on the inability
or failure of governments to address popular concerns. Democracy, according to the Occupy Wall Street protesters, has been subverted by powerful corporate and financial interests. Dignity and fairness, according to workers in China and India, have been thwarted by systemic corruption and entrenched privilege. Collectively, these critiques are challenging the legitimacy of both states and markets, and posing the first major challenge to globalisation in the 21st century.
 What's interesting is that this source is extremely pro-business, and they looked at the issue from a historical point of view.
   You can see the increasing risk of social unrest as more and more austerity measures are imposed. While a repeat of Europe's interwar events seems unlikely, it is increasingly probable to witness some echo of history.

  French President Sarkozy recently warned that the end of the endangered Euro would mean "and end to peace" in Europe. Perhaps Sarkozy was thinking about the fate of the last French president during an economic crisis.

  On the other side of the equation is the one ingredient that even the 1% can understand - the poor need to be able to eat. That is becoming increasingly difficult, and it is leading directly to worldwide social unrest.

  Why are food prices so high that the poor of the world are overthrowing governments? Because of financial speculation by the same people who want to impose austerity on the poor.

 The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate. The charge against them is that by taking advantage of the deregulation of global commodity markets they are making billions from speculating on food and causing misery around the world.
 January 14th is the one year anniversary of the Tunisian Revolution. Who could have dreamed the changes this would inspire? It was like the pebble that started the avalanche. Who knows where that next pebble might start rolling.

   So what will the new year bring?

 We are likely to see much greater centralisation of top-down suppression - and a rash of laws around the developed and developing world that restrict human rights. But we are also likely to see significant grassroots reaction.
    What we are witnessing in the drama of increasingly globalised protest and repression is the subplot that many cheerleaders for neoliberal globalisation never addressed: the power of globalised capital to wreak havoc with the authority of democratically elected governments. From the perspective of global corporate interests, closed societies like China are more business-friendly than troublesome democracies, where trade unions, high standards of human-rights protection, and a vigorous press increase costs.
    All over the world, the pushback against protest looks similar, suggesting that state and corporate actors are learning "best practices" for repressing dissent while maintaining democratic facades.
 What we are looking at is an oligarchy that is "going for broke" - both literally and figuratively.

   Figuratively: They've taken off the kid gloves. They are wielding the power of the state directly against its people. The nakedness of this abuse, and the increasingly draconian austerity measures is leaving the public with no choice but fight back.

  Literally: Let's take the example of Greece. The Greek economy is at the point of collapse from the radical austerity measures already put into place. Riots and general strikes are a common occurance.
   In response, the bankers, led by Goldman Sachs, have led a de facto coup of the Greek government in order to enforce ever more draconian austerity measures.
    The important thing to realize is that even if the bankers get everything they want, it probably won't work.

 Politically, the government can say the pain of austerity is being shared with creditors. That may help it continue with reforms that remain vital. But even after this haircut, Greek debt is forecast to be 120% of GDP in 2020. A plan to reach Italian levels of indebtedness 10 years into a bailout program does not obviously indicate sustainability.
 What's more, even these numbers, which aren't sustainable, are based on optimistic assumptions about economic growth. Growth that repeatedly fails to happen during times of austerity. It increasingly appears that the economic model of globalism is hopelessly flawed.

   What that adds up to is a global financial coup based on an unsustainable level of theft. It's a doomed strategy, and the oligarchs are either in denial, or are so sociopathic that they don't care. If this sounds vaguely familiar, it should because you've seen it before on a smaller scale.
   Even while we approach this End Game, their greed reaches ever higher levels.

 In the past year, FINCEN tracked 1,446,273 Suspicious Activities reports. This deals with transactions that financial institutions know, suspect, or have reason to believe may be related to illicit activity.
   It does not cover other crimes that banks and investment institutions commit with a claim that they are legal.
    Financial journalists rarely report about these crimes unless someone big is being investigated or prosecuted. Hence the public doesn't really know the extent of the corruption of the system.
 Actually, I think the public is starting to figure it out.
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Comment Preferences

  •  They're Taking Over the World. 2012 May Be the (8+ / 0-)

    year this statement gains global credibility.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sat Jan 14, 2012 at 08:19:18 AM PST

  •  I think the financiers are expecting (8+ / 0-)

    either social unrest (unlike any we have seen in the US in 100years) and/or Jubilee. In either case,right now then becomes the time to accelerate all one's wealth gathering,devil take the hindmost style.
    & maybe those global corporate interests (referenced above) counting on China remaining so extremely business friendly might want to read a bit of 20th C Chinese history.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Sat Jan 14, 2012 at 08:25:56 AM PST

  •  They may know it's unsustainable (11+ / 0-)

    but that would just shift them into "getting while the getting's good" mode.

  •  I read, but can't find at the moment, that during (6+ / 0-)

    the Christmas season of 2011, gun sales rose an astounding 132%! Makes me shiver...and a big sign that people are taking desperate measures for a future they see as much grimer than it is now (which is really bad).

    Hope has a hole in it when Republicans come, bringing shackles and sorrow; branding their greed on the backs of the poor. - Wendy Connors

    by Wendys Wink on Sat Jan 14, 2012 at 08:38:30 AM PST

  •  My fingers are crossed that last year (2+ / 0-)
    Recommended by:
    Noor B, shaharazade

    was the year of unrest.

    Occupy should be established enough to bring about the change we need without people panicking or getting violent.

    Education is a progressive discovery of our own ignorance.

    by Horace Boothroyd III on Sat Jan 14, 2012 at 08:54:07 AM PST

  •  I agree with the backdrop... (4+ / 0-)
    Recommended by:
    tardis10, daveygodigaditch, Noor B, Woody

    ...though not with all of your conclusions. It's been consistent since 1Q2011, confirmed with every social and financial outlook, that the world, for varying reasons, is in long term economic turmoil. Yes, globalism is flawed but it's here and a real and unavoidable and long term as climate change.

    There are things the US and EU can do to weather the storms better and transition to a new global economic order already sputtering against the headwinds of change. It is unreasonable to expect that the US government will do what needs to be done.

    Same for the EU. And no matter what the EU does, if the US does not act correctly the long hard slog predicted will be longer and harder. The very poor of the world dependent on developed nations will suffer exponentially more than us as we flounder.  

    The actions of 2011 and where we are today confirm the worst predictions. All of this results in social unrest proportional to time and austerity. To some extent, the existing social unrest is quite low compared to the circumstances and consequences of weak governments and the incomprehensible consolidation of wealth, probably due to the complexity and people's natural sense of hope and optimism.

    There are solutions, neither radical nor revolutionary, but none of them are being discussed seriously and no one is positioned to act on either side of the pond for different reasons.  

    The usual suspects will reap the short term gains but where we disagree is that I believe that the worlds economic and corporate leadership wants stability and growth. They don't know how to do in the current monetary-banking-government landscape. No one has taken hold of the power. Surely no one has taken the proverbial metaphoric mic.

    If either China or Germany go into recessions, definitely possibilities for 2012, things get worse and social unrest grows exponentially. If both happen in '12 we can multiply the social unrest.

    We could nationalize a dozen or so banks during this global economic emergency of delevering and repositioning, but each country has its local treasure hunters (e.g., US's Pete Petersens salivating for Social Security) who are and will continue to pitch each county's weak governments against taking the right actions.

    I do not believe in "a" "they" and further I believe that such framing gets us further from solutions.

    Also, we know so many millions will be sheltered from the negative consequences (look around - most of us) of this period that social unrest may be the only variable that could trigger change besides time. Individuals are probably best to work at local solutions that may have a chance at happening in the next 15 years.

    Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

    by kck on Sat Jan 14, 2012 at 08:54:14 AM PST

    •  Such a long winded comment & I need to clarify?!?! (5+ / 0-)
      Recommended by:
      tardis10, shaharazade, gjohnsit, Noor B, Woody

      Totally agree that 2012 has a high likelihood of being a year of social unrest, albeit unnecessary, and it could well be to a very high.

      Very good diary & important. Thanks.

      Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

      by kck on Sat Jan 14, 2012 at 09:29:29 AM PST

      [ Parent ]

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