The Real Greek Crisis, – Bryan Gould

The Real Greek Crisis

By Bryan Gould

Most people will feel that they don’t need to look far for an explanation as to what lies behind the Greek crisis. Lazy reporting and racial stereotyping will persuade them that the Greeks – a feckless lot, no doubt – have spent more than they should, got into debt, taken out loans from the hard-working Germans and now won’t repay the loans because they refuse to tighten their belts.

But there is another narrative that tells a somewhat different story. That story is one of a powerful economy enforcing its will on its weaker neighbours and refusing to acknowledge that it has thereby made it impossible for them to dig themselves out of a hole.

The story begins at the turn of the century when the Greeks, along with many others, were persuaded that being part of Europe required them to give up their own currency and accept the euro. A single currency meant a single monetary policy and a single central bank – and guess who decided what that policy should be and what the central bank should do?

Germany, by far the most powerful economy in the euro zone, ran it to serve its own interests, but life wasn’t so easy for the weaker countries. The Greeks, for example, with their smaller and less developed economy, had no chance of surviving the competition from efficient German manufacturing. We do not need the benefits of hindsight to make this point, since many commentators, myself included, foresaw the inevitability of this outcome at the time.

As things began to go wrong, and they had to borrow to keep their heads above water, the Greeks were assured that they could look to the Germans and others to help them out. But this was in the days of cheap and plentiful credit; when the Global Financial Crisis struck and the cheap credit dried up, the creditors who had happily lent to the Greeks wanted their money back.

The Greeks didn’t have the money. But the price they had to pay for borrowing yet more from the IMF and the European Central Bank was to accept a programme of savage austerity. The cuts they have already been forced to make have meant that 25% of the Greek economy has simply closed down and 60% of young people are without a job. Again, as some commentators observed at the time, it was impossible to see how the Greeks could ever – from an already weak economy that is now so much smaller and still going backwards – find the resources needed to repay their debts.

And so it has proved. The price that creditors insist upon for a continued bail-out is yet more austerity which can only mean yet more closures and unemployment. Leaked papers show that the creditor institutions themselves recognise that more austerity will make it even less possible for the Greeks to pay back their debts.

So why are the Germans and other creditors determined to force the Greeks into such a damaging dead end? The answer is that they care little for the travails of the Greek people. Their focus is on those countries that are watching the Greek situation closely – countries like Spain, Portugal, Bulgaria, even Italy, that have faced similar problems, and suffered similar penalties, but that have not yet been compelled by pressure from their populations to resist a further descent into even more austerity.

The fear from the financial establishment and from the Germans in particular is that the Greeks might find a way to demonstrate to other similarly afflicted countries in the euro zone that there is a way out – and that those other countries would then follow a similar course. The rational course for the Greeks to take, after all, would be to leave the euro zone, restore their own currency and then print the drachmas needed, as monetarily sovereign countries are able and entitled to do, and repay their debts in devalued drachmas.

The difficulty that Greek Prime Minister Tsipras faces is that he has committed to resist austerity but also to retain the euro. It is doubtful that he can achieve both. In the forthcoming referendum, no one can be sure whether the dislike of austerity or the fear of leaving the euro zone will prevail. The poor and the unemployed – those who have suffered most from austerity – will vote to reject the new bail-out offer; the holders of assets and the pensioners will vote to stay with the euro.

Either way, the outlook for the euro looks bleak. In the long run, the attempt by the financial establishment to over-ride the wishes and interests of ordinary people and to negate the power of a democratic government to protect them will fail. The only question is as to how many more crises there will be and how much more suffering has to be endured before common sense prevails.

Bryan Gould 

“I once contested the Labour party’s leadership myself. The answers to the dilemmas facing British politicians today seem to me to be more clear-cut than was the case in 1992. It is easier now, with a longer perspective on the orthodoxy that has prevailed for so long, to see what has gone wrong, and to see what is needed to put it right. What is needed now is to unlock the intellectual straitjacket in which Labour has been shackled for too long. Where is the leader to deliver that?” Since Bryan Gould wrote these words,  Jeremy Corbyn agreed to stand as leader, and there is hope for a change from the intellectual straitjacket Bryan speaks of.

Can the Eurozone survive its Crisis?

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In May 2012, Marco d’Eramo wrote:

It is plain to all: monetary union is dividing Europe. The divide is political, social, economic in particular. The euro was designed as a tool to cement European political union and to anchor German prosperity to the rest the Continent. Instead, it has served to highlight the gap between town and country, led to economic collapse and exacerbated nationalism and xenophobia. A collateral by product, but no less devastating, is that the euro is undermining democracy, thwarting universal suffrage, cancelling two centuries of popular gains, erasing with a stroke of the pen essential elements of civilization. (1)

Professor Bill Mitchell, prominent heterodox MMT economist, explains in his 30 minute lecture, that the underlying problems with the structure and neoliberal assumptions of the Eurozone, made the Eurocrisis resulting from the Balance Sheet recession caused by the financial sector, inevitable.  There are really only two options for recovery – a full federal system or a return to currency sovereignty.

Professor Bill Mitchell on the Eurocrisis, May 1, 2012

 

Bill Mitchell gave this presentation in Melbourne at an event hosted by the Monash University European Union Centre.

Professor Bill Mitchell concludes that a full federal system has little support in the populations of Eurozone countries and recommends an orderly return to sovereign currencies, but as we have seen in the past year, let alone days, that seems unlikely.  Some argue that a crisis will be staved off by fudging until after the German national elections.  Others think that the unacceptable terms of the Cypriot bank bailout suggests that there is a growing sense here that Germany is up to something big, perhaps even a decision to get the hell out of the euro. (2)

However, there is no doubt that there has been, and certainly still is, a large degree of brinkmanship (3).  The ‘shock doctrine’ of the Greek ‘experiment’ has been used across the EZ  to justify austerity policies and to frighten the electorates into accepting fiscal  integration.

‘This structure will ensure the austerity mindset, firmly in place among global capitalists, will dominate and spread across all of Europe. This mindset will be hard-wired into the rules and regulations…. Not only will democracy be diminished, the result could be catastrophic for peace within Europe itself.’ (4)

What will happen now? There is no doubt that the Eurocrisis will not go away until the contradictions upon which the EZ was conceived are resolved .. and there is no doubt that the undemocratic behaviour of the Troika (EU, ECB and IMF) has been ruthless, as Michael Burke explains with regard to Cyprus, in his Guardian article:

The raid has been instructed by the “Troika” – the European commission, the IMF and the European Central Bank – as part of a characteristic “take it or leave it” ultimatum to the Cypriot government. …

However, he concludes .. it is foolish of the Troika to assume that its confiscation of Cypriot savings will have no international implications. Savers all across Europe will look on in horror, and are bound to wonder whether it could happen in their own countries. It is entirely possible they will respond by shifting their savings into state or postal savings banks at the very least, even if outright bank runs are avoided. If this happens on sufficient scale, it could further undermine the fragile banking system in a number of countries.(5)

That popular resistance is also growing is evidenced by the European anti-austerity movements, the demonstrations, national strikes and the electoral success of the Grillinis in Italy.  Political polarisation is occurring with a frightening rise in extreme right wing/fascist parties.

What a disastrous mess with devastating consequences for ordinary people, particularly the young … and for what?  The accumulation of more and more wealth into the hands of the extremely few. Its back to the future Neofeudalism.

 Update:  Alexis Tsipras: Greece could be the spark for defeating austerity across Europe – video interview with Seamus Milne

http://www.guardian.co.uk/commentisfree/video/2013/mar/19/alexis-tsipras-syriza-greece-video-interview 

(1)  http://revolting-europe.com/2012/05/17/theres-just-one-choice-save-the-euro-or-save-our-economies/

(2)  http://hat4uk.wordpress.com/2013/03/18/cyprus-disaster-open-dissent-in-merkels-cdu-as-schaubles-attempt-to-avoid-responsibility-for-cyprus-depositors-dismissed-as-bare-faced-lie/

(3)  https://think-left.org/2012/06/15/brinkmanship-and-the-euro-crisis/ 

(4)  Democracy in the Euro-zone is under threat

(5)  http://www.guardian.co.uk/commentisfree/2013/mar/17/savers-horror-troika-raid-cyprus 

 

GDP DATA SHOWS BRITAIN IS THE WEAKEST OF ALL THE LARGE ECONOMIES

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First posted Sunday, 3 February 2013 at Socialist Economic bulletin

GDP Data Shows Britain Is the Weakest of All the Large Economies

By Michael Burke

Britain is only the second large economy to report GDP data for the final quarter of 2012.  It showed a contraction of 0.3%.  China has already reported its GDP, which accelerated in the 4th quarter – Chinese GDP being 7.9% higher compared to a year ago.  In stark contrast there has been no growth in the British economy over the same period, with GDP unchanged from the 4th quarter of 2011.
Other leading economies will report the final quarter growth of 2012 by the end of this month.  In terms of Purchasing Power Parities (PPPs), the UK economy produces slightly over US$2 trillion.  The table below shows economy in relation to other economies of a similar size or greater.  The data is based on the most recent OECD estimates of constant PPPs at 2005 prices.

Table 1

13 01 29 Table 1

Where the comparable data is available for these economies to the 3rd quarter of 2013, the British economy has the weakest economy growth over the period.  Only the performance of the Euro Area economy was worse, contacting 0.6% from a year ago compared to zero growth in Britain.
Since the global crisis in 2008 the Chinese, Indian and Brazilian economies have all recovered the output lost in the recession and have grown further.  GDP in China, India and Brazil is now more than 40%, 30% and 10% higher than at the outset of the crisis respectively.
Growth in the other large economies has been slower.  The Russian economy has also fully recovered and has grown by a little over 3% since the crisis began.  The chart below shows the weaker growth economies since the crisis began at the beginning of 2009.  Only the US and German economies have fully recovered at all, a recovery of just 2% above the pre-recession peak.  The French economy is still 0.8% below its peak while both the Euro Area and Japanese economies are 2.4% below their peak before the recession began.  The performance of the British economy is the worst of all these economies, being 3% below the prior peak.  These comparative data do not include the contraction of the British economy in the 4thquarter GDP.

Figure 1

13 02 03 Figure 1

In terms of broad categories of output, the weakness in the British economy is concentrated in manufacturing and construction as the chart below from the Office for national Statistics shows.  In fact, even within the services sectors, only two categories of services are higher now than where they were in 2008.  These are business and financial services and government services.  The former represents the commitment of the government to supporting the finance sector, while the latter represents its inability to cut the total of current government spending while poverty is increasing.  This is a broad-based failure of the economy and of economic policy.

Figure 2
13 01 03 Chart 2

The fall in investment Gross Fixed Capital Formation (GFCF) is the main brake on the recovery output in the OECD countries since the crisis began.  In Britain the shortfall (before the 4th quarter data) accounts for more than the entirety of the slump.  Among the weaker large economies identified above, Britain has the weakest level of investment since the crisis, down 20.1% since the crisis.  Even the crisis-torn Euro Area as a whole is not as weak, down 17.8% although some countries within the Euro Area are much weaker than Britain.

Figure 3
13 02 01 Figure 3

Whatever the outcome of the data for the final quarter of 2012 for the other large economies, to date the British economy has been the weakest of all the large economies. This is driven by the weakness of investment, which accounts for the whole of the slump and which is also the weakest of all those major economies.

(emphasis added)

Other Michael Burke articles reposted on Think Left:

PRODUCTIVITY CRISIS IN THE BRITISH ECONOMY

20 YEARS OF LOST OUTPUT

The Autumn Statement and long-term Austerity

Investment Slump Greater Than Whole Loss of British GDP

BRITAIN’S EXPORT PERFORMANCE IS WOEFUL

The new recession is directly made in Downing Street

WHY MORE ‘AUSTERITY’ IS ON THE WAY

THE UK’S BUDGET DEFICIT IS RISING NOT FALLING

Truths behind global debt crisis – Max Keiser interviews Steve Keen

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Published on Aug 25, 2012 by PressTVGlobalNews
In this edition of the show Max interviews Steve Keen from Debtdeflation.com. It has been five years since global debt crisis began. The debt is now so great that it can no longer be hidden. Max discusses the issue with Steve to see what triggered the current debt crisis, what the response to it was and where we stand now. Steve also comments on the latest global debt crisis and banker’s role in the current situation.Steve Keen is a professor in economics and finance at the University of Western Sydney and the author of Debunking Economics.

Italian Views on Austerity, the Euro and Democracy

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Related Posts from Think Left
As Michael Hudson predicted – The Euro-Reality of Austerity and
Think Left Democracy in Europe is under threat

ITALIAN VIEWS ON AUSTERITY, THE EURO AND DEMOCRACY

By Pam Field, with contribution from Sue Davies,

Translations By: Prue Plumridge

Across Europe, ordinary people are struggling, their governments having wanted to ‘repay deficits’, or having been persuaded, or “blackmailed” by financiers who seem able to raise interest rates at will, to make cuts in public services and so to turn on the screws and bring about very real suffering. Governments have imposed austerity measures, which are justified in terms of the need to reassure the markets and finance the increased interest rates. Simplistic it may seem to you, but the only way real wealth was ever produced was by workers. It is the use of precious Earth’s resources transformed by skilled hands which allowed mankind to survive, to be creative and successful. Printing money, like a stuttering press churning out IOUs never made anything else, apart form a subservient populace.

‎”God help me, I can perceive nothing but a certain conspiracy of rich men procuring their own commodities under the name and title of the commonwealth.’ Thomas More Utopia of 1516. 3) Guardian

‎’Yanis Varoufakis, ex-speechwriter for former Greek prime minister George Papandreou and now an economics professor in the US, said … : “There is precisely zero chance of austerity working. It is the same as thinking you can escape from gravity by waving your arms up and down.”‘ 4) Guardian

Amid reports of a divided Europe, we should be reading “Divided classes”. What is needed is an united opposition to austerity. As the people of Europe witness the reality resulting from tolerance of tax evasion by the super-rich, a united approach to counteract that is the only way forward, and must be part of the inevitable rejection of austerity at some point in the future. People can only take so much of this financial abuse.

In April, (5), Tax Research UK reports that the European parliament has officially adopted the policies of the Tax Justice network. The time for action to reclaim wealth stashed away in tax havens is well overdue and until this has been addressed no progress will be made.

We live in an oligarchy. Power rests in the hands of a few.

Democracy in Europe (1.) and beyond (2) has been eroded and power to change currently rests with the financiers and not with the people. Turkeys however, do not vote for Christmas, and power will not be relinquished easily. From an Italian viewpoint, Guido Grossi proposes an alternative way to tackle the injustice of misplaced power and create a democratic federal EU.

Thanks to Prue Plumridge who provided the translation from Italian.

‘The sovereign citizens of Europe want more transparency and more democracy, not an absurd concentration of power in the hands of the usual bureaucrats. The European Commission, composed of non elected technocrats, excessively and shamelessly in the service of the financial markets, don’t give a damn about our real needs and about our aspirations. If Europe must be, let it find the courage to transfer its powers to the European Parliament which, however feeble, would be the only institution that might represent the wish of the European people. And, let if find the courage to draw up a Constitution that sets out the guarantee for real democracy. Until that moment have the decency to admit your shameful failure and step aside.’

Guido Grossi’s proposed Social Pact is echoed by another Italian leftist, Marco d’Eramo, who writes ‘The only solution would be to initiate a process of political unification, launch a common governing body to which much of national sovereignty in economic policy is given up, a government responsible to a truly federal (or confederal) elected parliament, not the parody of the Central Bank…’. (6)

However, in the article reprinted below (from REVOLTING EUROPE), Marco d’Eramo argues that under current conditions the only choice is between saving the Euro or saving European economies.

It is plain to all: monetary union is dividing Europe. The divide is political, social, economic in particular. The euro was designed as a tool to cement European political union and to anchor German prosperity to the rest the Continent. Instead, it has served to highlight the gap between town and country, led to economic collapse and exacerbated nationalism and xenophobia. A collateral by product, but no less devastating, is that the euro is undermining democracy, thwarting universal suffrage, cancelling two centuries of popular gains, erasing with a stroke of the pen essential elements of civilization. In the name of the common currency unbridgeable chasms are dug between one European country and another, and borders more impassable than the Berlin Wall are erected. It is no accident that, in the first round of French presidential elections Marine Le Pen received 18% of the vote with a campaign that was centred on opposing the ‘European Soviet Union.’ A spot-on slogan, even if indigestible. The common currency functions like a Warsaw Pact and the debt burden overwhelms like the armoured divisions of “brother countries”.

Nor could it be otherwise: very different economies have been forced to squeeze under the umbrella of a single currency without any means of harmonization. Spain will be subject to the same level of interest rates in Germany but with four times as many unemployed, unable to devalue to gain export competitiveness and unable to loosen credit to alleviate a banking system on the brink of collapse. The euro is paying for its original sin: having built a common currency without founding it on a common economic policy. Neither was it possible without a common decision-making centre, democratically elected and democratically controlled. Result: we found ourselves at the mercy of an imposed but highly unbalanced and divided Franco-German duumvirate. That the economic crisis of the European Union is due to a lack of political democracy is only lucidity stated, apart from Il Manifesto, by Barbara Spinelli**, whose voice echoes in the wilderness of the Italian press.

In this situation it is pointless (and unfair) to ask the German taxpayers to shell out money to an entity that is not their own (nor is it ours). The only solution would be to initiate a process of political unification, launch a common governing body to which much of national sovereignty in economic policy is given up, a government responsible to a truly federal (or confederal) elected parliament, not the parody of the Central Bank without key powers, first of which is lending to banks in their [Eurozone] area and buying government debt (as the U.S. Federal Reserve and the Bank of Japan do). This would be the only solution to save the euro and European economies. But this would require a European left or, rather, the emergence of a supranational European dimension of the left. Instead, these first ten years of the single currency have confined the left to their narrow national territories and horizons, making everyone deaf and blind to the worries of their neighbours.

We have been asking for months: what leader of the European left has gone to Athens or invited, at his time, of George Papandreou (when he proposed a referendum on austerity and was threatened with a military coup) and now Alexis Tsipras? In these ten years of the euro the European Left has soaked up, without realizing it, nationalism and Euroskeptiscism that the dictatorship of the spread has fuelled.

Maybe it would have been possible in 2001, but then nobody was ready to cede an ounce of its sovereignty. So now this solution – the only reasonably conceivable – is precluded. We cannot save both the single European currency and the various European economies.

There thus remains only one choice: save the Euro or save our economies.

This we all more or less recognize: yesterday a headline in the New York Times read: ‘A Tempting Rationale For Leaving The Euro’. We know that the choice is not between bad and worse, but between worse and disastrous, and that both dilemmas promise a scary near future.

It is very fashionable these days to recall when in 2001 Argentina abandoned parity of its currency with the US dollar (parity, which it had maintained with great pain for ten years). This virtually wiped out the savings of its citizens, real wages fell and social spending was decimated: in 2002 GDP fell by 11%.

But since then growth has been swift and uninterrupted for a decade. While we know with certainty that the austerity imposed on us from Brussels and Berlin promises us only a decade of recession, impoverishment and barbarism.

Ps. What short memories we have. No one seems to remember that the diktat of the ECB and the European Commission seem borrowed from the recipes that the International Monetary Fund and World Bank prescribed “sick” economies of Third World. And nobody wants to remember the outcomes of those treatments that cured the diseases, but killed the patients. (6)

IN THE RADICAL PRESS / IL MANIFESTO

17.05.2012

Guido Grossi’s blueprint for a new democratically constructed Social Pact is reprinted in full below (with thanks to Prue Plumridge).

A New Social Pact (Guido Grossi, Translated by Prue Plumridge)

Priority No 1 for Italian citizens

The public debt generates social anxiety and aggravates uncertainty. Presently, there are two competing arguments:

  • Austerity is necessary to raise the resources and pay back the creditors
  • We might resort to a more or less controlled default

The proposed medicine plugs the problem but increases anxiety and aggravates social uncertainty, above all amongst the underprivileged.

Do better solutions exist?

Let’s start off with a fact. Italy is a rich country: we have public assets and private savings amongst some of the best in the world. It is envied and sought after. Let’s use these resources in an intelligent manner and without running the risk of getting them snatched from us.

Let’s put the public debt bonds in the hands of Italian families and free ourselves from the blackmail of the finance markets, present and future, without causing suffering.We want to make it attractive and do it without taxation. We can achieve this immediately using two mechanisms:

a) Using public assets to guarantee the state bonds acquired by Italian families. At the present moment the debt is not guaranteed. The creditors will become ‘privileged’, a position to be envied by American, German or Japanese citizens. The spread should be reversed.

b) Convincing holders of illegal capital to underwrite the public debt. Using the carrot and stick method.

Carrot

  • Payment of a tax on the capital between 10-15% (instead of 30-40%)
  • Obligation to use at least 70% of these sums to underwrite bonds with long due dates and incomes held down, guaranteed by state assets.
  • Decriminalisation of past offences or unlawful behaviour.

Stick

  • Provision for a new offence for those who don’t comply with the initiative :
  • Sanctions equal to 120% of the sum uncovered
  • Prison ranging from 5-10 years

Many countries are proposing international measures for hitting secret bank accounts and the use of tax havens. The risk of being discovered becomes real. There is an enormous collateral advantage. Some might propose placing our public assets as security for institutional investors, often abroad. And through this we would risk losing our precious national assets. As a first step we want them to be secured by Italian families. And tomorrow, even European families, if we succeed in going beyond a Europe of ‘finance dealers’ to build a Europe of people and citizens.

We need to be careful. Public assets must be placed as a security, only for bonds acquired and held by Italian families. Otherwise we risk losing our patrimony.

Priority No. 2 – Italian citizens

But how will this money be used? More corruption, environmental degradation, waste and privilege? Both individual and social uncertainty create anxiety and desperation among the weakest and sense of guilt among the more fortunate, and yet we put up with the intolerable. Why is it so difficult to make a better world? Today Italian society is split into many interest groups in acute conflict with each other, each exclusively defending its own ‘privileges’, both large and small. They are frozen in time and obstacles to change.

The solution: A new social pact

We want to restore effectiveness, using the method of democratic control and active participation of citizens. Make conflicts of interest transparent. To be able to ask each one – by using stick and carrot – to give up his/her own privileges, big and small, in exchange for a stronger, more balanced and sustainable society which will be rich in the fullest sense of the word.

The way:

  • Fiscal system to be rendered simple, transparent and just. Progressive, as is laid down by the Constitution. Efficient: taxes are paid …. or else.
  • Public expenditure is rendered transparent and directed towards:

a) Satisfying the needs of citizens according to their order of priority.

b) Sustaining productive investments. Creating employment and businesses which increase the wellbeing of all by creating not only economic wealth but also social and environmental capital.

We don’t believe that there is a ‘problem with young people’ to resolve. That we need them is absolutely undeniable. Only ‘generational exchange’ (i.e. employment turnover between the generations) makes the change possible and effective. Beyond the moral duty, to make it easier for the younger generation to have full access to the world of production and social management, we have a practical interest. That is a real interest in obtaining their active, informed and responsible participation in the functions of democratic control over the execution of activities of collective concern.

The process: In bite size

Let’s guarantee the transparency of information and the participation of citizens by:

  • Creating an Institution of Public Organisations of Democratic Control which makes possible immediate access to information about key management operations within public administration with an interactive mechanism.
  • Strengthening the institutions of direct democracy – to guarantee real possibilities for correcting and directing the action of representatives.

Let’s eliminate the privileges with deeds and not words by:

  • Recovering the money lost through tax evasion: by simplifying and making the tax system more just; by simplifying and making the certification and the enforcement process more just. Providing for severe punitive sanctions, including jail.
  • Eliminating the black economy: actions aimed at making the regular economy more advantageous. Currently it is not.
  • Cutting the costs and privileges in politics: costs of corruption; individual economic privileges. We do not want, however to reduce representation.
  • Liberalising the professions; abolishing and changing the structures which today impede generational exchange and keep costs artificially high for citizens.

Let’s redesign the world of production by:

  • Separating Finance from Commercial Credit in order to move investments from speculative bubbles to production of real goods and services.
  • Using happiness indicators in place of the GDP. They demonstrate that citizens attribute importance not only to the economy but also more human values.
  • Giving substance to article 41 of the Constitution: Law of Social Responsibility and Commercial Enterprise and Law of Social Responsibility of Financial Enterprise.
  • Transforming the civil service and local government: eliminating the bureaucratic model. Establishing the principle of the predominance of substance over form and the obligation to be transparent. Freeing up resources to bring them directly under the control of a ‘different and effective’ public service to citizens and to production. Dependent on democratic control. The citizens want efficient public services.

Recover a sense of dignity in employment: fight against employment insecurity by:

  • Creating regular and useful work and allocating resources for activities that guarantee increased opportunity for regular work and which produce real goods and services that will be valued by citizens. (eg renewable energy, environmental protection, digital infrastructure , food processing, recycling.)
  • Making it easier for young people to start up new businesses
  • Encouraging ‘generational’ exchange (employment turnover) in particular amongst the professions, public administration as well as in the fields of law and justice, schools and research.
  • Restructuring and codifying access to work contracts into a single legal model which is guaranteed. With respect to the demands of production let’s fight in a standardised way against ‘employment insecurity’
  • Urging labour organisations to guarantee effective democratisation of action and integrity of representation.
  • Bringing the pension system into balance: eliminating lifetime pension annuities ( payable to Italian MPs with minimal years of service contributions); reducing substantially the highest pensions which do not correspond to actual contributions; reducing pensions however high they are; increasing the minimum pensions and protecting them from inflation.
  • Maintaining and increasing old age pensions to favour generational exchange. Linking them to a clearer relationship between time served and amount received (first to go, less you take).
  • Eliminating pension funds that have acted as a reservoir for speculation and bring together all the management into a single pot, under democratic control.
  • Making information transparent, by distinguishing the resources which serve to guarantee future pension funds from those necessary for welfare support (accidents)

Regulate immigration by:

  • Facilitating family reunion and social integration whilst respecting cultural diversity and identifying employment in the black economy.
  • Concentrating foreign aid on North Africa. With commercial agreements and direct investments even if it means no economic return so as to make life in these countries sustainable. Redirect funds from military missions abroad.
  • Fighting against clandestine immigration.

Let’s ensure environmental sustainability by:

  • Activating within schools a culture of eco-knowledge: awareness of the risks; knowledge about alternative solutions.
  • Bringing the measurement of the ecological footprint within the sphere of public administration and business balance sheets. Let’s use it to direct our action.
  • Creating an urgent national plan for energy efficiency aimed at reducing energy wastage.
  • Creating an urgent national plan for the development of renewable energy, using a broad model which respects the country, the landscape and the indefeasible right to health.
  • Eliminating petrol and carbon subsidies.

Let’s rediscover a sense of justice and legality by:

  • Undertaking a drastic simplification of standards to bring everything from ‘form’ to ‘substance’
  • Ensuring that the sentences handed down reflect the seriousness of the crime in relation to the effects on society and that it is shared by the community.
  • Drastically reducing the length of time to bring actions to court and deal with them: making the best use of and rationalising resources. And dismantling the formal rules. From ‘form’ to ‘substance’ of procedural truth.

School and university research

  • Private schools should have freedom but cannot be subsidised
  • State schools must form in an impartial manner the social conscience of the citizen by creating the habit of exercising independent, critical skills. Economics and law as a taught subject in primary schools. Bring the world of work closer within secondary school education.
  • Pure research within universities should be free from private influence.
  • Applied research (which results in new products or working methods and which requires private investment) should be subject to democratic control with the aim of promoting good relationships with the private sector.
  • Promote ‘generational’ exchange (employment turnover).

Relationship with Europe

We want to export the model of the new social pact throughout Europe. We must without question go beyond a Europe of dealers and bureaucracy to promote a Europe of people and citizens.

We want to work for a Europe founded on:

  • Centrality of parliament
  • Open to the institutions of direct democracy even and above all in economic matters
  • Granting full monetary sovereignty
  • Provision of an efficient but controllable government with fiscal levers.

Perfectly aware of the necessity to find common solutions, we hope to find as much interest amongst the peoples and citizens of Europe. Ready to force the hand of the present institutions who are, without doubt, incomplete and hardly transparent, in order to drive the change to which we have a right.

1. Think Left Democracy in Europe is under threat

2. Capitalism Neoliberalism, Plutonomy and Neofeudalism

3. No wonder the working man despises the elites. Guardian

4. The facts are clear: This cruel austerity experiment has failed, Guardian

5. Tax Research UK (Richard Murphy) The European Parliament officially adopts the Tax Justice network’s agenda

6. There’s just one choice: save the Euro or save our economies

7. As Michael Hudson Predicted: The Euro-Reality of Austerity

As Michael Hudson predicted – The Euro-Reality of Austerity.

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It was two years ago, in June 2010, when Michael Hudson warned about the collapse of the Eurozone, describing the oligarchy, and  how  power held by few amounts to neo-feudalism.  Just like the last century, People and governments chose to ignore the warnings, greedily and foolishly believing that wealth could be theirs. The outcome in the last century was war, but then, this too is a war today , a financial war against working people.

Dr. Michael Hudson

And so we now witness Eurozone crumbling just as Hudson predicted. It was  the plan  of private banks that the European Central Bank would fail, in a war against labour, industry and governments. The eurozone sovereign debt emergency showed no signs of abating as the Spanish government desperately haggled over the terms of its expected bailout and the European Central Bank refused to ease monetary policy for the currency bloc, despite signs of stricken European economies sinking still deeper into recession.

Danger zone: How debt crisis is making itself felt

Independent, (3)

Spain A crushing property slump has left the economy on its knees. Losses linked to the real estate debacle are now threatening the banking system – which in turn has raised the prospect of a bailout for Spain as it struggles to prop up its lenders. The crisis took a new turn yesterday when the anti-corruption unit of Spain’s public prosecutor’s office opened an investigation into part-nationalised Bankia, one of the country’s largest lenders.

Germany Profligacy on Europe’s southern fringes may be the proximate cause of the debt crisis but its impact was felt in Germany when Moody’s lowered its credit ratings for six of the country’s banks. The move was “driven by the increased risk of further shocks emanating from the euro area debt crisis”, the agency said, underscoring the vulnerability of the German economy, despite strong exports and low unemployment.

Greece The recent elections failed to deliver a government. The country will go to the polls again later this month – and the result could determine whether it remains in the eurozone. The far Left wants a change in the conditions attached to the Greek bailout – an idea that Germany, for one, is vehemently opposed to. The country, meanwhile, remains in mired in the recession.

Portugal Lisbon has already had to be bailed out. But another rescue could be in prospect, amid surging unemployment. Although Portugal cleared one of the performance reviews under its rescue package earlier this week, its jobless rate of more than 15 per cent is the third highest in the eurozone, after Greece and Spain.

Cyprus With all eyes on Greece and Spain, it is easy to forget about Cyprus, which is racing to save Cyprus Popular Bank. The lender is heavily exposed to Greek bonds – and if investors aren’t willing to supply the €1.8bn needed to shore up the bank, President Dimitris Christofias, below, will have to step in. The fear is that the country will struggle to find the cash (10 per cent of its economy), paving the way for an international bailout.

France Paris is also under pressure to rein in its finances. Analysts fired a warning shot earlier this year, when the country lost its prized AAA credit rating. Now, the focus is on its banks – and their exposure to troubled economies. Yesterday, Moody’s lowered its ratings on the Greek arms of Crédit Agricole and Société Générale, piling further pressure on two of France’s biggest lenders.

And what of the UK?

The current UK Government has inflicted on the ordinary people  a 2.5% VAT, 1-2% NI increase, the harshest public sector cuts in 60 years, trebling of tuition fees, public sector pay freezes and pension raids, an increase in pension age and so on.  (ONS)

Yet the bankers who caused the crash get from Osborne an abolition of the bonus tax, a reduction in business rates, a new law that allows them to avoid taxes on any foreign subsidiaries profits (Barclays and RBS have seven hundred of these tax avoiding vehicles and Barclays for example paid only 1% tax last year). See Guardian comment

Bankers carry on with business as usual and get an average pay increase of 20% last year and a £14 billion bonus. The public get a recession and the biggest drop in living standards in a century.

Thatcher’s policies  meant that manufacturing industries in the UK declined. The focus on the financial sector leaves the UK vulnerable to collapse – just as Hudson predicted.

(Andrew Haldane of the Bank of England) 

“For UK banks, the average annual subsidy for the top five banks (between 2007 and 2009) was over £50 billion – roughly equal to UK banks’ annual profits prior to the crisis. At the height of the crisis, the subsidy was larger still. For the sample of global banks, the average annual subsidy for the top five banks was just less than £ 60 billion per year. These are not small sums.” 

 In April, 2012 (6), Tax Research UK reported that the European parliament has officially adopted the policies of the Tax Justice network. The time for action to reclaim wealth stashed away in tax havens is well overdue and until this has been addressed no progress will be made.

1. Guardian Spain calls for Tax Pact to save the Euro

2. Guardian The facts are clear: This cruel austerity experiment has failed:

3. Independent:  Eurozone divided as time runs out for Spain

4. Estimated cost of Recession , Andrew Haldane

5. Michael Hudson – June 2010 – Europe’s The Financial Class War against Labour, Industry and Government – Video

6. Tax Research UK: (April 2012) European Parliament adopts policy of Tax Justice Network

7. Think Left: Captialism:  Neo liberalism, Plutonomy and Neo-feudalism

8. Think Left: Democracy in the Eurozone is under threat.

The Death of the Euro

For sometime the Euro has been off colour. That’s what we have been told – it’s fine, just a sniffle, and it will running round like normal soon.

Today it is clear that the Euro is in huge trouble. Finance Ministers from around the Euro zone are looking at the patient, as its lifeblood is slipping away by the minute. How can they save it? Could the Euro zone survive this loss? Where does that leave the whole EU project?

The Euro was a flawed idea. When the UK struggled with a two-speed economy, where for a long time the South East overheated helping to creating a house price bubble, alongside some regions that were faring much worse, a one size fits all interest rate was tough.

How could the whole of Europe align their economies when at one end you have a technological manufacturing economy like Germany, a world leader in manufacturing exports, alongside Greece, where the economy is slower, based on different sectors and where tax avoidance is a national past-time?

The answer is simple – the criteria to join the Euro was fudged.

We are now left with a situation where Greece is certain to default – all that is needed is for a way to default that doesn’t say default on the label.

Portugal and Ireland are living through Austerity measures that means economic growth sufficient to pay these debts and return to normal looks impossible.

Italy’s massive national debt is in focus, and if the bond markets keep increasing the rate of return they want, the mother of Euro bailouts beckons.

As Euro zone Finance Ministers look at the patient, surely they should let the Euro slip quietly away to a dignified death.

After the funeral life post-Euro can begin. This should lead to a new Europe – more democratic, not controlled by the European Central Bank, and each country returning to independent currencies to allow them to set the interest rates and tax regimes that suit the citizens of each country.

Perhaps we can return to the notion of a Europe where we trade freely with each other, work together on big issues like climate change and finally admit that economic and political union doesn’t work and is not wanted by the people of Europe.