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Europe: defending the banks « Previous | |Next »
November 13, 2011

Greece and Italy have new leaders: Papandreou has gone, so has Berlusconi, for the moment. They've gone to ensure the financial and political stability, and to help prevent the Euro from imploding. New technocratic governments are being formed in both countries and the decisions about the austerity management of the debt crisis are being taken by a small group highlighting the democratic deficit.

RowsonMEurotroubles.jpg Martin Rowson

Defending the interests of the banks requires a democratic deficit. The political system and the “free market” are rigged to the advantage of the rich and powerful. There are attacks on the welfare state, the undermining of unions in both the public and private sectors, the cutting back of pension schemes, increasing unemployment.

| Posted by Gary Sauer-Thompson at 3:54 PM | | Comments (7)
Comments

Comments

The European parliament has never managed to break through to become, as it should be, the dominant part of the EU structure.

Well, it's give and take- we give, they take..

So how do they---the Frankfurt Group---reduce the cost of borrowing for Italy? How to prevent the Italian yields again rising above 7% ?

There is a fundamental flaw in the Eurozone: a monetary union outside a fiscal union is a deeply unstable arrangement. The reason for the flaw is that its wealthier North European ones –don't have any appetite for fiscal union or integration, ie., a greater pooling of budgetary resources, joint debt issuance, a common backstop to the banking system, and so on.

North European policy-makers have been reluctant to accept this interpretation. For them, the crisis is not one of the eurozone itself, but of individual behaviour within it. If the eurozone is in difficulty, it is because of a few ‘bad apples’ in its ranks. In this interpretation, neither the design of the eurozone nor the behaviour of the ‘virtuous’ in the core were at fault.

Interest rates on Belgian, Austrian and French debt rose sharply on Tuesday--- the pressure on the Eurozone from the markets is increasing.

The financial markets are unconvinced that governments can sort out their public finances. Nobody in Europe shows any sign of taking charge of the problem.

The European Central Bank needs to become a lender of last resort---and buy enormous quantities of Italian and Spanish bonds. It can only do so by cranking up the printing press/

Germany opposes this as it smacks of printing money and the memories of the 1923 hyper-inflation still resonate.

The Euro region looks to be headed for a recession in the next 12 months.
Many of the region’s economies – Spain, Italy and France along with Portugal, Ireland and Greece – are now embracing similar budget cutting measures. These involve reducing the number of public servants and cutting their wages, introducing pension reforms, reducing health insurance costs, and selling off government assets.

Karen Maley in Business Spectator says:

European leaders are deeply aware that these savage cuts in government spending will likely trigger a recession on the continent. Under the cover of austerity programs, they want to dismantle the extensive and expensive social security system that Europe introduced after the Second World War ... They want to boost European productivity by deregulating labour markets and increasing the ability of employers to sack workers.

It's a brutal neo-liberal politics being imposed on the European people.