The Economic Crisis Ends; the Political Crisis Begins
By Shamus Cooke
First Iceland, then Ireland, now Greece. Much of Europe is mired in inescapable debt and bankrupt nations, the result of crashing banks, bank bailouts, and soaring unemployment. The U.S. and U.K. watch from a distance, knowing their turn is next. Continue
The Economic Crisis Ends; the Political Crisis Begins
By Shamus Cooke
December 28, 2009 "Information Clearing House" -- First
The European corporate-elite — like their American counterparts — lavished non-stop praise on the “bold yet necessary” decision to bail out the banks; the economy was supposedly saved from “impending collapse.” But every action has an equal but opposite reaction. Bailing out the banks saved the butts of dozens of European bankers, but now millions of workers are about to experience a thundering kick in the ass.
Unbeknownst to most Europeans, the public money that financed the bank bailouts created a massive public debt problem, to be solved by massively slashing public programs that benefit workers and the poor. This amounts to a blatant transfer of billions — maybe trillions of dollars — in public wealth, away from the majority of citizens toward a parasitic crust of bankers.
These “tough decisions” should act as warnings to the American working class, since the U.S. corporate-elite, too, has clear-cut plans for who is to pay for their colossal spending spree on bank giveaways and foreign wars (hint: it’s not them).
The massive amounts of government bonds printed to pay for the global bank bailouts were purchased by global investors (capitalists). For these vultures, government bonds are an excellent investment when the economy crashes, and gambling on stocks turns sour. Now, these investors want to be sure that the heavily indebted governments are able to pay up. And they’re becoming impatient.
A good peek into the mind of the global investor can be seen in any of the three global “credit ratings agencies” — Moody’s, Standard and Poor’s, and Fitch. These corporations give “grades” to debtors — federal governments, corporations, state and city governments, etc. — based on their “credit worthiness.” To have one’s grade lowered means that investors should back off and demand higher interest rates on loans, if loans are made at all. Receiving a “B” instead of an “A” can make the difference between a poor nation being able to build a highway, hospital, or school.
Recently, Moody’s released their notorious “misery index” — the nations that are most sunken in debt and least able to pay it back, requiring that “special measures” be taken to prove to investors that these governments are able to repay their loans. The biggest losers of the misery index were not surprises and included the above-mentioned European countries. However, ranking right behind bankrupt
Moody’s is warning rich investors to be wary of formerly rich countries defaulting on their loans, i.e., going bankrupt. Moody’s chief of rating nations’ credit, Pierre Cailleteau, explains why:
"This is mainly because of the crisis of public finances [bank bailouts plus unemployment] that has beset many rich countries in what Moody's believes will be the final — and disturbingly long-lasting — stage of the crisis.” This is what passes for optimism nowadays.
Moody’s is demanding that less-rich nations like
“More than $4 billion in cuts…will slash salaries for 400,000 government workers while making painful reductions in benefits for such groups as widows and single mothers to the blind and disabled children.” Unemployment benefits were also slashed by as much as 30%.” (
The
“…this will be the year [2010] where both the
John Chambers of Standard & Poor’s was more blunt:
"The U.S. government, like the U.K. government, the Greeks and the Irish, is going to need to draw down fiscal stimulus, pare expenditures [make cuts], raise revenues [taxes] and probably take a look at [cuts] in their entitlement programs" —Social Security, Medicare, Education, etc.
This is not news to President Obama. While he was extending the Bush bank bailouts, Obama took time to calm the nerves of investors, who saw an exploding debt that would soon need to be dealt with. That is why Obama pledged to the Washington Post that he would "reform entitlement programs.” (
It's almost time.
The mainstream media will surely go on the offensive to support our corporate-owned President in his assault on the social programs long cherished by the American working class. We will be told that there are “no other options,” when in fact there are.
Not only could military spending be reduced by hundreds of billions of dollars per year, but taxes should be raised significantly for the very wealthy. If the top 1 percent of the richest Americans were taxed at 90 percent, hundreds of millions of Americans would benefit, since public education would be saved, alongside Medicare and Social Security.
Barack Obama will soon be pursuing a policy that George Bush Jr. would never dare try. He must be resisted at every step. American unions should look to
Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org). He can be reached at shamuscook@yahoo.com
Posts
