Thought-Factory.net Philosophical Conversations Public Opinion philosophy.com Junk for code
hegel
"When philosophy paints its grey in grey then has a shape of life grown old. By philosophy's grey in grey it cannot be rejuvenated but only understood. The owl of Minerva spreads its wings only with the falling of dusk." -- G.W.F. Hegel, 'Preface', Philosophy of Right.
RECENT ENTRIES
SEARCH
ARCHIVES
Library
Links - weblogs
Links - Political Rationalities
Links - Resources: Philosophy
Public Discussion
Resources
Cafe Philosophy
Philosophy Centres
Links - Resources: Other
Links - Web Connections
Other
www.thought-factory.net
'Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainity and agitation distinquish the bourgeois epoch from all earlier ones ... All that is solid melts into air, all that is holy is profaned.' Marx

the new austerity « Previous | |Next »
June 28, 2010

The debt slashers are back at work at the G20, which is normally about hot air and photo opportunities.The G20's failure to address any of the structural problems that caused the financial and economic crises of the past three years is well known, as its complete refusal to deal with the challenge of climate change.

The debt slashers cry is austerity ---fiscal discipline and lower public debt. The time for harsh cutbacks is now they say. We need to appease the financial markets they say to one another. In Europe, that fiscal consolidation --- slashing public pensions and other social spending--- means in the context of a recession, economic stagnation and unemployment not economic growth. It will shrink European economies. The way to prosperity is via austerity say the neo-liberal debt slashers.

Their target at the G20 is the US, which challenges Europe's policy of planned economic shrinkage. The Obama administration argues that deficit reduction should not be at the expense of the short-term need to stimulate growth and create jobs. Understandably, because the US recovery is running out of steam and jobs growth have been weak. So the US government wants to maintain the stimulus.

Michael Hudson in New Economic Perspectives says:

Beyond merely shrinking the economy, the neoliberal aim is to change the shape of the trajectory along which Western civilization has been moving for the past two centuries. It is nothing less than to roll back Social Security and pensions for labor, health care, education and other public spending, to dismantle the social welfare state, the Progressive Era and even classical liberalism.

Global financial capital is fighting the social democratic reforms that sought to subordinate financial capital to the economy at large and to let the let the financial sector run the show.

Hudson says that the problem is that there is not enough economic surpluses available to pay the financial sector on its bad loans while also paying pensions and social security:

What really is causing the financial and fiscal squeeze, of course, is the fact that that government funding is now needed to compensate the financial sector for what promises to be year after year of losses as loans go bad in economies that are all loaned up and sinking into negative equity...Somebody must take a loss on the economy's bad loans – and bankers want the economy to take the loss, to "save the financial system." From the financial sector's vantage point, the economy is to be managed to preserve bank liquidity, rather than the financial system run to serve the economy. Government social spending (on everything apart from bank bailouts and financial subsidies) and disposable personal income are to be cut back to keep the debt overhead from being written down. Corporate cash flow is to be used to pay creditors, not employ more labor and make long-term capital investment.

Wall Streets strategy in the US is to panic voters about the federal debt – panic them enough to oppose spending on the social programs designed to help them. The fiscal crisis is being blamed on demographic mathematics of an aging population – not on the exponentially soaring private debt overhead, junk loans and massive financial fraud that the government is bailing out.

So the financial sector is to be rescued by cutting back social spending on Social Security, health care and education, bolstered by more privatization sell-offs.

| Posted by Gary Sauer-Thompson at 2:05 PM | | Comments (2)
Comments

Comments

the ''cuts versus growth'' debate has been building steadily for more than a year on both sides of the Atlantic.

Attention All, The poor news right here is that Obama's Rateing was 43 approval, now it has jumped to 47 or 48 again, We all should Maintain up The Pressure All of the method to November If we're to Survive This And Win, I agree with all of you that he is transforming this nation in the Socialist Nation, but we need to stay strong!!?!!!!!!!