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September 23, 2011
The IMF is calling on the leaders of European Governments (eg., France and Germany) to bail out their banks again in the context of the growing risk of default by Greece and other vulnerable eurozone countries.
However, the eurozone countries have very little ammunition to confront the coming financial storm that will cause havoc amongst the cowboys and machos in the finance-driven, deregulated economy in which we now live. The euro crisis looks to be spinning out of control and the euro’s survival increasingly hangs in the balance.
On current policy trends, a series of sovereign and banking defaults are unavoidable: the inability to issuance eurobonds; the European Central Bank (ECB) is highly unlikely to be permitted to carry out the full range of lender of last resort functions to eurozone sovereigns and bank---eg., to step in and buy unlimited amounts of government debt in order to demonstrate to investors that their fears over insolvency are unfounded; the slowness of the eurozone governments to move to recapitalise their banks, so that they were better placed to cope with the coming debt defaults.
Then we have the failure to shift away from fiscal austerity even though household and business confidence is crumbling rapidly across the currency union, depressing economic activity, and with it the likelihood of governments meeting their fiscal targets.
The inference from this is that there are sever and well known limits of the eurozone: it has a "single currency" that isn't backed by political sovereignty, a central bank that doesn't act as lender of last resort or finance government borrowing, and no significant European public budget. The flaws of the ECB's obsessive anti-inflationary stand, and its propensity to raise the interest rate whatever the cause of price rises, are also plain to see.
The issue is whether Greece, Spain and Italy are forced to quit the currency union in order to be able to print money, recapitalise their banks and escape deflation.
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Well, what was the European Community ever about, than the elites of countries ganging up to impose neoliberalism on their locales and populaces.
As with the USA, what's actually happened has been that government is captured by the commercial elites and the one policy that has supplanted all else has been the organised plunder of western infrastructure, a resource to be expropriated same as the oil fields of the middle east.
The removal of representation and participation from within the masses has allowed the exploitation of the first second and third worlds to accelarate without serious opposition, as media and press spin from the mouthpieces of the system "normalises" the processes in the minds of both westerners and the starving masses who can be be quietly starved or cluster bombed into submission over what we are told is "terrorism", eg resistance.