Tuesday, May 11, 2010

g.h.kirsch: Pawns in Their Game

The banker bailouts continue, this time in Europe, as the oligarchy rushes to prepare for the crash, printing money for themselves, foreclosing properties, stripping assets worldwide, untaxing themselves and loading labor and industry with a burden sure to sink nations everywhere into debt peonage. 

While Greeks take to the ramparts to protest their government's surrender to unelected financial officials, in America we have the Tea Party movement, led by the misguided, supposedly outraged by bank bailouts, blindly furthering the program of the same financial oligarchy. 

Michael Hudson is an economist who advises governments in Europe and Asia.  He is president of The Institute for the Study of Long-Term Economic Trends (ISLET), has long served as a Wall Street financial analyst, and is Professor of Economics at the University of Missouri.  He asks, rhetorically,

"How are the Greek rioters like America’s Tea Party movement?   Both reject government being taken over by the financial oligarchy to shift the tax burden onto labor.  The difference is that the Tea Partiers have lost faith in government. This is just what the financial oligarchy wants, of course. Giving up hope of gaining electoral control to pursue a fair fiscal agenda, the Tea Partiers have abandoned the centuries-long fight for reform to make governments better by giving them the power to check predatory finance and wealth. Sliding to the right wing of the political spectrum and acting mainly out of frustration, they have succumbed to a Utopian desire simply to shrink a government that they see acting adversely to their interests.
America’s Tea Partiers and anti-tax rebels have given up the fight to reform governments. Squeezed by debt from which they see no escape, they demand lower taxes – and are willing to see the highest brackets become the major beneficiaries in an even more regressive tax shift. Faced with the corruption of Congress by lobbyists acting on behalf of the vested interests, they reject government itself."
While Greek labor is rioting to prevent the financial powers from gaining control of their government, in the US the frustrated attack their governement and seek to weaken rather than reform the only democratic institution standing between them and de facto slavery. 

In a recent article reprised at Counterpunch, Hudson writes,
"Financial lobbyists here in the U.S. are using the Greek crisis as an object lesson to warn about the need to cut back public spending on Social Security and Medicare. This is the opposite of what the Greek demonstrators are demanding: to reverse the global tax shift off property and finance onto labor, and to give labor’s financial claims for retirement pensions priority over claims by the banks to get fully paid on hundreds of billions of dollars of recklessly bad loans recently reduced to junk status.
Let’s call the “Greek bailout” what it is: a TARP for German and other European bankers and global currency speculators. The money is being provided by other governments (mainly the German Treasury, cutting back its domestic spending) into a kind of escrow account for the Greek government to pay foreign bondholders who bought up these securities at plunging prices over the past few weeks. They will make a killing, as will buyers of hundreds of billions of dollars of credit-default swaps on the Greek government bonds, speculators in euro-swaps and other casino-capitalist gamblers. (Parties on the losing side of these swaps now will need to be bailed out as well, and so on ad infinitum.)"
Author Greg Moses recently observed, "One annoying aspect of the Tea Party movement is how it pretends to stand apart from the history that got us here or the pain that will get us out."  This is most likely because the organizers of the movement have long been in the service of the financial sector and will not bite the hand that fed them.  Moses observes,

"If there is to be a process of social healing during the debt detox that lies ahead, as all the junk gets flushed down the world commode, a certain maturity will demand acceptance of the pain that comes with any withdrawal of toxic needs.
Alienation is the word Marx used to name lives confined to other people's motives for profit.
Once a person or generation realizes they have sold themselves into slavery, are they required to keep the contract? And if the lender could foresee the whole slavery debt coming, wouldn’t we call it predatory? Therefore, in the name of a crash and recovery that shall not be the re-alienation of the debtor classes, some systematic reduction in accounts receivable is one thing the "new normal" will require."
The great failure of the Tea Party movement is its cognitive incoherence in framing and enunciating any policy to address the imbalance that has resulted from surrendering monetary policy to the financial elites and expecting government to succeed in formulating rational fiscal policy.

This is a tragic error, and it is difficult to understand how Tea Partiers, self-acclaimed conservatives, miss the irony.  They lament the destruction of the middle class and  erosion of middle class values, while unwittingly doing the bidding of a class that is feeding off this decline.

Greeks are fighting to preserve the reforms ushered in centuries ago in the era of classical progressive economics. Confronted by governments controlled by aristocracies, 19th-century reformers sought to replace them with democratic institutions.

Political economic theory was a reform program to tax away the “free lunch” of land rents, monopoly rents and financial interest extraction. John Maynard Keynes celebrated this program in his gentle term, “euthanasia of the rentiers.”

Hudson again,
"The Greek crisis shows how far the “European idea” has shifted from 1957 when the six-member European Economic Community (EEC) was formed. At U.S. prodding, Britain and Scandinavia created the rival seven-member European Free Trade Association (EFTA). Even so, the promise of Euroland – at least before Maastricht and Lisbon – was to elevate labor to middle-class prosperity, not to impose IMF-type austerity programs of the sort that devastated Third World countries.
Greece is locked into a European currency union, run by unelected financial officials who have inverted the historical meaning of democracy. Instead of the economy’s most important sector – finance – being subject to electoral politics, central banks (the designated lobbyists for commercial and investment bankers) have been made independent of political checks and balances.

In truly Orwellian fashion, right-wingers in Europe and the United States (such as Fed Chairman Ben Bernanke) call this the “hallmark of democracy.” It actually is the stamp of oligarchy, stripping away control over the economy’s credit allocation – and hence, forward planning – while giving high finance a stranglehold over public spending programs.
And taxes on labor now are about to be jacked up to pay off the public debts resulting from the asset-price inflation and financial wreckage that property tax cuts have helped cause. This is the cause of national debts. Governments have run into debt as a result of un-taxing the wealthy in general, not just real estate.

Following Western governments in shifting the fiscal burden off property and finance onto labor over the past few decades, Greece’s government is politically unable or unwilling to tax the wealthy, or even well-to-do professionals."
Meanwhile, here at home, we have the Tea Party pawns, with their knee-jerk anti tax ideology, unable to see the consequences of un-taxing the chess masters these several decades.

Like the Greeks, we will soon face even tougher choices:  will we surrender our infrastructure like some third world country; how will we choose between paying pensioners and retirees, and servicing a debt load we've taken on to cover the foreseeable losses of predatory lenders; will we reform a health-care system co-opted by institutions who have long been extorting monopoly profits from US citizens?

Led by puppets who claim to represent Joe Six-pack, The Tea Party movement worked for health-insurers, pharmaceutical companies, and highly paid medical specialists.  So far, they've failed to join the fight to regulate a monstrous financial sector. 

All in all, they cry out for less, apparently to transfer more to the oligarchs .
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