‘This is like Titanic’, if there’s a sinking here, even the first class passengers drown’, Jose Manuel, Spain’s Foreign Minister. As Spain and Italy both get ready to come crashing back to the world’s attention, drawing our eyes away from Greece.
Hedge Fund managers have been betting against the Eurozone, and unlike the revelations that Goldman Sachs had been betting on failure resulting from situations they largely created, this is contributing to the impression that the limits of this madness are being reached everywhere. ‘Hedge Fund Managers make for unlikely supporters of Hollande’, says the FT, with a financier warning ‘If something comes along then it changes the sentiment in the market, if not the fundamentals’. The article reads like a form guide for betting against an austerity battered and blinded eurozone, which appears to be the only smart money now. Sarkozy now also finding the neo liberal adventure that was Libya becomes another albatross round his neck while Mr.Hollande with opposition to the ratification of the ‘fiscal discipline’ treaty at the core of his platform, and no sign that this is just campaign rhetoric yet.
The inevitable Europe wide redefinition of the political spectrum is benefitting the far right, in the way we are always threatened with, but Marine Le Pen is not the only option for an electorate who are choosing ‘between the plague and cholera’. The rhetoric about growth, reverting to the simple sound bites that comfort politicians, who appear perplexed about why an unresolved financial crisis on this scale has resulted in a democratic crisis with their heads on the block. Mario Monti casts a long shadow into the unknown western politicians have created outside their corrupt little bubbles. The Dutch coalition falling, has not prevented deficit reductions following the required track, but Romania’s government have been described as the latest victims of the ‘austerity backlash’ which may be more of the shoots of dissenting health visible in the cracks of democratic institutions across Europe. The expected wave of summer of activist investors causing havoc show that the democratic limits of neo liberalism are not just being felt inside political institutions.
Alistair Darling uses his comment piece in the FT, to rewarm a political illusion of growth based austerity measures. Saying the word Keynes, in the hope citing an economist whose model paved the way for the worst excesses of neo liberalism, will undo the reality that a Keynesian economic system was inadequate if we were to function in a global economy dominated by a different economic system. Especially when dominated by the whims of powers greater than ourselves. This is truer now than it was in mid-seventies when that superpower was a special buddy and in the ascendancy.
Constant repetition of Keynes’ name never really sold ‘austerity slower’, as an actual Keynesian platform. And even if it had, Keynes failed to recognise the scale of the threat unrestrained capital poses to democracy, or the risk he created. Darling is still under the impression starving yourself to fit into the response to a banking crisis, allows you to also gain weight AND treat the illness that required the stripping of everything to the bone… if you add the occasional stimulatory cheese sandwich.
‘We must tell the truth, there are no magic formulas. Reform takes time and so does the impact on growth and jobs, some people these days are creating the impression that a pro-growth policy is easy’ the former Belgian Prime Minister points out. I suppose when the economic wisdom is starvation creates growth like ignorance is strength, that is the case. This as US continues to see its growth prospects, undermined by the consequences of spending cuts. Competition from Europe is an issue that has been licked for a while. You apparently ‘shrink and grow’ an economy, by choosing differently labelled plates and bottles in Wonderland.
It is the ability to bring the banks to heel, which brings out the most breathless speculation from Mr.Darling. Concerns which never left, are still building over the difficulty of assessing how stable and solid our banking sector isn’t. ‘Investors don’t know how to manage these bruised entities’ says Paul Murphy at the FT. The RBS ‘shareholder swap’ has added density to a worryingly opaque situation, an expensive action without discernible benefit. Banks are due to start reporting figures next week, there are concerns about whether the contraction of our economy will have caused a spike in loan defaults
Luckily the plan was always to exploit inequality, deleveraging onto those least likely to hold those assets or those loans. Demonising young people, the sick, and the women whose labour doesn’t bring bonuses, deliberately aggravating emerging housing, personal debt, and social care crisis so our deleveraging plans could create capacity elsewhere…..and increasing authoritarianism as a response to measures which deliberately open up the ‘informal’ economy.
That spike may occur, but the size will be considerably smaller thanks to our spiteful targeting of those who couldn’t absorb the cost of the crisis safely. Our centre-left wondering if a quick shift of the narrative could turn the page on ‘Tory cuts’, leaving those whose lives have already been destroyed as collateral damage, while they pick up the mantel of saviours and continue down the same road.
If that spike that is too small, should worry analysts, but it won’t.