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 digitalWhat's interesting is that this source is extremely pro-business, and they looked at the issue from a historical point of view.
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.
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 looking at is an oligarchy that is "going for broke" - both literally and figuratively.
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.
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.Actually, I think the public is starting to figure it out.
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.