Tag Archives: austerity

Saturday Matinee: I fight, therefore I am

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I fight therefore I am (in french: Je lutte donc je suis) is a documentary film about social and political struggles in Greece and Spain which provides an overview of the struggles in Europe against austerity, capitalism and fascism. A musical journey celebrating Resistance from one end of the Mediterranean to the other. The title is made from the aphorism of the philosopher René Descartes Cogito Ergo Sum (I think therefore I am). Although it hasn’t been distributed by any mainstream company, it has enjoyed great success, and has been shown to numerous theaters, festivals, in France and in Europe.

For Economic Truth Turn To Michael Hudson

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By Paul Craig Roberts

Source: PaulCraigRoberts.org

Readers ask me how they can learn economics, what books to read, what university economics departments to trust. I receive so many requests that it is impossible to reply individually. Here is my answer.

There is only one way to learn economics, and that is to read Michael Hudson’s books. It is not an easy task. You will need a glossary of terms. In some of Hudson’s books, if memory serves, he provides a glossary, and his recent book “J Is for Junk Economics” defines the classical economic terms that he uses. You will also need patience, because Hudson sometimes forgets in his explanations that the rest of us don’t know what he knows.

The economics taught today is known as neoliberal. This economics differs fundamentally from classical economics that Hudson represents. For example, classical economics stresses taxing economic rent instead of labor and real investment, while neo-liberal economics does the opposite.

An economic rent is unearned income that accrues to an owner from an increase in value that he did nothing to produce. For example, a new road is built at public expense that opens land to development and raises its value, or a transportation system is constructed in a city that raises the value of nearby properties. These increases in values are economic rents. Classical economists would tax away the increase in values in order to pay for the road or transportation system.

Neoliberal economists redefined all income as earned. This enables the financial system to capitalize economic rents into mortgages that pay interest. The higher property values created by the road or transportation system boost the mortgage value of the properties. The financialization of the economy is the process of drawing income away from the purchases of goods and services into interest and fees to financial entities such as banks. Indebtedness and debt accumulate, drawing more income into their service until there is no purchasing power left to drive the economy.

For example, formerly in the US lenders would provide a home mortgage whose service required up to 25% of the family’s monthly income. That left 75% of the family’s income for other purchases. Today lenders will provide mortgages that eat up half of the monthly income in mortgage service, leaving only 50% of family income for other purchases. In other words, a financialized economy is one that diverts purchasing power away from productive enterprise into debt service.

Hudson shows that international trade and foreign debt also comprise a financialization process, only this time a country’s entire resources are capitalized into a mortgage. The West sells a country a development plan and a loan to pay for it. When the debt cannot be serviced, the country is forced to impose austerity on the population by cutbacks in education, health care, public support systems, and government employment and also to privatize public assets such as mineral rights, land, water systems and ports in order to raise the capital with which to pay off the loan. Effectively, the country passes into foreign ownership. This now happens even to European Community members such as Greece and Portugal.

Another defect of neoliberal economics is the doctrine’s denial that resources are finite and their exhaustion a heavy cost not born by those who exploit the resources. Many local and regional civilizations have collapsed from exhaustion of the surrounding resources. Entire books have been written about this, but it is not part of neoliberal economics. Supplement study of Hudson with study of ecological economists such as Herman Daly.

The neglect of external costs is a crippling failure of neoliberal economics. An external cost is a cost imposed on a party that does not share in the income from the activity that creates the cost. I recently wrote about the external costs of real estate speculators. https://www.paulcraigroberts.org/2018/04/26/capitalism-works-capitalists/ Fracking, mining, oil and gas exploration, pipelines, industries, manufacturing, waste disposal, and so on have heavy external costs associated with the activities.

Neoliberal economists treat external costs as a non-problem, because they theorize that the costs can be compensated, but they seldom are. Oil spills result in companies having to pay cleanup costs and compensation to those who suffered economically from the oil spill, but most external costs go unaddressed. If external costs had to be compensated, in many cases the costs would exceed the value of the projects. How, for example, do you compensate for a polluted river? If you think that is hard, how would the short-sighted destroyers of the Amazon rain forest go about compensating the rest of the world for the destruction of species and for the destructive climate changes that they are setting in motion? Herman Daly has pointed out that as Gross Domestic Product accounting does not take account of external costs and resource exhaustion, we have no idea if the value of output is greater than all of the costs associated with its production. The Soviet economy collapsed, because the value of outputs was less than the value of inputs.

Supply-side economics, with which I am associated, is not an alternative theory to neoliberal economics. Supply-side economics is a successful correction to neoliberal macroeconomic management. Keynesian demand management resulted in stagflation and worsening Phillips Curve trade-offs between employment and inflation. Supply-side economics cured stagflation by reversing the economic policy mix. I have told this story many times. You can find a concise explanation in my short book, “The Failure of Laissez Faire Capitalsim.” This book also offers insights into other failures of neoliberal economics and for that reason would serve as a background introduction to Hudson’s books.

I can make some suggestions, but the order in which you read Michael Hudson is up to you. “J is for Junk Economics” is a way to get information in short passages that will make you familiar with the terms of classical economic analysis. “Killing the Host” and “The Bubble and Beyond” will explain how an economy run to maximize debt is an economy that is self-destructing. “Super Imperialism” and “Trade, Development and Foreign Debt” will show you how dominant countries concentrate world economic power in their hands. “Debt and Economic Renewal in the Ancient Near East” is the story of how ancient economies dying from excessive debt renewed their lease on life via debt forgiveness.

Once you learn Hudson, you will know real economics, not the junk economics marketed by Nobel prize winners in economics, university economic departments, and Wall Street economists. Neoliberal economics is a shield for financialization, resource exhaustion, external costs, and capitalist exploitation.

Neoliberal economics is the world’s reigning economics. Russia is suffering much more from neoliberal economics than from Washington’s economic sanctions. China herself is overrun with US trained neoliberal economists whose policy advice is almost certain to put China on the same path to failure as all other neoliberal economies.

It is probably impossible to change anything for two main reasons. One is that so many greed-driven private economic activities are protected by neoliberal economics. So many exploitative institutions and laws are in place that to overturn them would require a more thorough revolution than Lenin’s. The other is that economists have their entire human capital invested in neoliberal economics. There is scant chance that they are going to start over with study of the classical economists.

Neoliberal economics is an essential part of The Matrix, the false reality in which Americans and Europeans live. Neoliberal economics permits an endless number of economic lies. For example, the US is said to be in a long economic recovery that began in June 2009, but the labor force participation rate has fallen continuously throughout the period of alleged recovery. In previous recoveries the participation rate has risen as people enter the work force to take advantage of the new jobs.

In April the unemployment rate is claimed to have fallen to 3.9 percent, but the participation rate fell also. Neoliberal economists explain away the contradiction by claiming that the falling participation rate is due to the retirement of the baby boom generation, but BLS jobs statistics indicate that those 55 and older account for a large percentage of the new jobs during the alleged recovery. This is the age class of people forced into the part time jobs available by the absence of interest income on their retirement savings. What is really happening is that the unemployment rate does not include discouraged workers, who have given up searching for jobs as there are none to be found. The true measure of the unemployment rate is the decline in the labor force participation rate, not a 3.9 percent rate concocted by not counting those millions of Americans who cannot find jobs. If the unemployment rate really was 3.9 percent, there would be labor shortages and rising wages, but wages are stagnant. These anomalies pass without comment from neoliberal economists.

The long expansion since June 2009 might simply be a statistical artifact due to the under-measurement of inflation, which inflates the GDP figure. Inflation is under-estimated, because goods and services that rise in price are taken out of the index and less costly substitutes are put in their place and because price increases are explained away as quality improvements. In other words, statistical manipulation produces the favorable picture required by The Matrix.

Since the financial collapse caused by the repeal of Glass-Steagall and by financial deregulation, the Federal Reserve has robbed tens of millions of American savers by driving real interest rates down to zero for the sole purpose of saving the “banks too big to fail” that financial deregulation created. A handful of banks has been provided with free money—in addition to the money that the Federal Reserve created in order to take the banks’ bad derivative investments off their hands—to put on deposit with the Fed from which to collect interest payments and with which to speculate and to drive up stock prices.

In other words, for a decade the economic policy of the United States has been run for the benefit of a few highly concentrated financial interests at the expense of the American people. The economic policy of the United States has been used to create economic rents for the mega-rich.

Neoliberal economists point out that during the 1950s the labor force participation rate was much lower than today and, thereby, they imply that the higher rates prior to the current “recovery” are an anomaly. Neoliberal economists have no historical knowledge as the past is of no interest to them. They do not even know the history of economic thought. Whether from ignorance or intentional deception, neoliberal economists ignore that the lower labor force participation rates of the 1950s reflect a time when married women were at home, not in the work force. In those halcyon days, one earner was all it took to sustain a family. I remember the days when the function of a married woman was to provide household services for the family.

But capitalists were not content to exploit only one member of a family. They wanted more, and by using economic policy to suppress pay while fomenting inflation, they drove married women into the work force, imposing huge external costs on the family, child-raising, relations between spouses, and on the children themselves. The divorce rate has exploded to 50 percent and single-parent households are common in America.

In effect, unleashed Capitalism has destroyed America. Privatization is now eating away Europe. Russia is on the same track as a result of its neoliberal brainwashing by American economists. China’s love of success and money could doom this rising Asian giant as well if the government opens China to foreign finance capital and privatizes public assets that end up in foreign hands.

Neo-Liberalism and the Retreat of Democracy

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By David Schultz

Source: CounterPunch

Democracy across the world is under siege. This according to the latest Freedom House report documenting that for 2017, “democracy faced its most serous crisis in decades” as seventy-one countries experienced declines in freedom or fair government, including the United States, and only thirty-five an improvement. This was the twelfth consecutive year of decline in democracy world-wide.

The question is why? Why has confidence in democracy retreated? Freedom House does not provide an answer, but there is a reason. It is democracy’s marriage to neo-liberal capitalism has fostered the conditions leading to its own undoing, similar to the way Karl Marx once described in the Communist Manifesto the “gravedigger thesis” (What the Bourgeoisie therefore produces, above all, are its own grave diggers”) where capitalism would produce the conditions that would undermine its own existence.

From the 1960s until the early 1990s democracy was in the upswing internationally. African de-colonization produced initially popularly elected governments. In South America the demise of strongmen led to a wave of democratic regimes. And the fall of the Berlin Wall in 1989 and the break up of the USSR in 1991 produced the dismantling of communist authoritarian or totalitarian governments that made it possible for Francis Fukuyama to proclaim that democracy had won and emerged as the last grand global political meta-narrative.

Yet several problems upset this rosy picture. Most prominently, it was the marriage of these new emerging democracies with free market capitalism and the victory of neo-liberalism. Internationally as post-colonial and post-communist countries emerged, international organizations such as the World Bank and the IMF forced them to adopt market reforms, often pushing them into what was then called “shock therapy.” Shock therapy involved rapid privatization of state owned enterprises and rapid dismantling of welfare states. This shock therapy was often accompanied by significant corruption as a few rich oligarchs emerged who came to own these newly privatized state enterprises.

Simultaneously, emerging democracies were rapidly pushed into what sociologist Immanuel Wallerstein would call the world-capitalist system. This system turned politically to right in the 1970s and 1980s as Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States pushed neo-liberalism or market fundamentalism as an alternative to the Keynesian welfare state that had dominated the west since the 1930s. It was adopted both for ideological reasons and because of what political economist James O’Connor would call the fiscal crisis of the state tht affect economics across the world in the 1970s. This was a crisis of declining profit among private businesses and therefore declining revenue for states to fund welfare programs. Something had to give, and it was the welfare state.

Neo-liberalism is a political economic theory of the state committed to the laissez-faire market fundamentalism ideology that traces back to Adam Smith and David Ricardo. It includes a belief in comparative advantage, a minimalist state, and market freedom, and is, as articulated in the 1990s and 2000s, driven by finance capital. At the state level, neo-liberalism defines a theory of public administration. If neo-liberalism includes a commitment to market fundamentalism, then that also means that it is dedicated to a politics of limited government. This includes privatization, deregulation, and a scaling back of many traditional functions that capitalist and communist states had performed since at least World War II. But neo-liberalism as a theory transcends the state, providing also an international economic theory committed to free trade and globalism.

This emergence of neo-liberalism in the 1970s and its linkage to democracy is central to the crisis affecting the latter. As neo-liberalism retrenched the welfare state and pushed globalism it was accompanied by a dramatic increase in economic inequality in the world, as Thomas Piketty has pointed out. This occurred in the US and much of the western world. But it also impacted newly emerging democracies in Africa, Eastern Europe, and South America. Pressures for shock therapy market reforms, austerity, and open borders meant export of jobs to other countries, dismantling of social safety nets, and other economic pressures placed on governments and ruling parties.

Politically voters turned on globalism and free trade. This happened here with Trump voters in 2016, but also in Brexit in the UK. But many voters also blamed immigrants for the loss of jobs or social unrest in places ranging from France, to Italy, to Hungary. The increasing economic gap between rich and poor and, more importantly, the erosion of the economic conditions of the working class soured them on democracy. This paved the way for the emergence of strongmen as political leaders, the rise of far-right nationalist parties, and disenchantment with democracy and democratic structures to deliver the economic goods.

What we see today then in terms of the decline in support for democracy across the world is a product of its marriage to neo-liberalism. Capitalism and democracy always had an uneasy co-existence, but the neo-liberal democracy variant demonstrates the powerful contradictions in them. Either their linkage is producing outright rejection of democracy or a populist, rightist version that is merely democracy in form but not in substance.

America’s Dystopian Future

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By Robert Hunziker

Source: CounterPunch

Imagine a privatized America where rugged individualism reigns supreme within a vast network of corporate America, Inc., similar to 19th century wild west lifestyle, no social security, no Medicare, no Medicaid, no public law enforcement as individuals stand their own ground. Read all about it in Scott Erickson’s History of the Decline and Fall of America (Azaria Press, 2018).

Erickson’s newly released semi-fictional satire of American history and subsequent decline into deepening pits of despair is a sure-fire treasure trove of Americana, at its best. It’s a page-turner par excellence, rich in accurate textured American history and jam-packed with imagery of a dystopian future that is simply unavoidable based upon America’s character and development over the past two centuries. The dye was cast long before onset of dystopian existence.

The History of the Decline and Fall of America highlights and exposes inherent limitations of democratic capitalism whilst explaining in full living color a future American dystopia that is fully expected based upon America’s beginnings from the time of Captain John Smith at historic Jamestown (1607). The history lesson therein is superb, not missing a beat of what shaped America up to the final tipping point of neoliberal dogma and beyond into a deep dark world order.

This beautifully written and conceived historical fiction is a witty tour de force of America past, present, and future, weaving together all of the historical elements into one coherent story from the widely accepted version of American “business success ” of the early period, but over time wistfully morphing into abject failure!

That process of failure, the root causes, is what intrigues, for example, “Americans were not only inventing a country but inventing what it meant to be an American.” Indeed, America came into being as a brand new experiment in capitalistic democracy. Within that quest for a new way forward, inclusive of equality and fraternity amongst equals, Erickson discovers and reveals unique American traits that belie that mission, leading to a neoliberal/privatization hellhole that goes horribly wrong.

That fascinating pathway is explained via enchanting quips, for example, de Tocqueville’s remarkably astute comment: “ I know of no country, indeed, where the move of money has taken a stronger hold on the affections of men.” This one isolated statement from the 1830s tells a tale of American character molded by artificiality of wealth creation simply for the sake of possessing it. America’s pursuit of happiness was the “pursuit of affluence” and remained its dominant trait for the “remaining 200-plus years of American history.”

Indeed, those predominant American character traits are flushed-out and analyzed in the context of eventual failure, of a dystopian world order emanating out of America’s clumsy experimentation with empire-building and constantly striving for the pot at the end of the rainbow, meaning economic growth above all else. It was a frontier spirit that fed into elusive goals of preeminence: “The frontier resulted in Americans being doers rather than thinkers….”

Real scenes of real American cocksuredness, as well as the clumsiness associated with raw ignorance, come to life, e.g., during the presidential race between Ike and Adlai Stevenson in 1954: “A revealing incident occurred while Stevenson was campaigning for president. A citizen shouted to Stevenson that he ‘had the vote of every thinking person.’Stevenson replied, ‘That’s not enough. We need a majority!”
This is excellent history, comparable to a textbook, as well as a peek into the future shaped via trends rooted throughout Americana. Erickson’s lessons in American history are genuine and accurate, which gives the book depth and a powerful sense of significance well beyond similar treatises that try to lay the challenging groundwork leading to how a nation turns sour into a dystopian society.

He weaves the path of Manifest Destiny all the way from 1840s to the planting of the American flag on the surface of the moon. Until the 1970s when American pre-eminence tipped downward, humiliated in Vietnam in what future generations came to know as The Vietnam Syndrome,” the psychological attempt to live with the unacceptable reality that it was possible for America to not win.

Not only was America no longer a winner in war, its “unparalleled level of affluence… began to decline.” The 1970s marked the high point, forever downward into a bottomless septic tank, a cloaca of messy foul shit earmarking America’s final destiny, third world status within a realm of excessive, pretense of wealth glistening behind spiked electronic gates.

The signs of decline were easy to spot by the early-mid 2000s: “… the situation had declined dramatically. According to statistics from 2015, among industrialized nations, America was notable for having the highest poverty rate, the lowest score on the UN index of ‘material well-being of children,’ the highest health care expenditures, the highest infant mortality rate, the highest prevalence of mental health problems, the highest obesity rate, the highest consumption of antidepressants per capita, the highest homicide rate, and the largest prison population per capita. By international standards, the rural counties of southern West Virginia and eastern Kentucky qualified as developing countries, as did large sections of American cities such as Detroit, Cleveland, Gary, and many others.” (Pg. 112)

Thereafter, America’s youth no longer embraced the long-standing belief that they would have more than their parents. No, they knew it would be less and less. America entered a “permanent recession” cycle.
By the late 2030s American experienced a series of extreme crises. A number of cities declared bankruptcy. Houston, America’s 4th largest city goes bankrupt. Cleveland goes bankrupt. The head of the Federal Reserve quits and becomes a banjo player in a bluegrass group. America’s banking system collapses under the weight of fishy loans and massive crazed derivatives all permitted by increasingly hands-off regulations. The brutal hand of libertarianism smears a once proud republic.

Regular citizens, entire families carry torches surrounding Wall Street in protest of loss savings, ATMs not functioning, banks closed. An economic death spiral unleashed. The Save America Act followed, consisting of pure right wing neoliberal fix-its to save corporate America, to save Wall Street, turning to America, Inc. as the only answer to all that ails.

And, as the financial markets unravel in the face of nationwide bankruptcies, the government convincingly informs the public: “We need to defy the Constitution in order to preserve it… Americans were so thoroughly confused about the relationship between government and economics that most of them thought that the terms democracy, free-enterprise, and capitalism were the same thing.” (Pg. 165)

As time progresses, America’s Labor Day is changed to Management Day, and the Catholic Church is permitted to re-name the Statue of Liberty as “Our Lady of Perpetual Economic Growth.” America the nation turns into America, Inc. It is the only way the establishment knows to drive the country out of its doldrums. As such, The Star Spangled Banner is changed to The Free Market Ramble.

Privatization of the entire country in harmony with massive tax cuts alongside elimination of Social Security, Medicare, Medicaid, public education, law enforcement, postal service, and maintenance of roads and infrastructure, thereafter, people take care of themselves from birth to the death, alone with family backing. Self-directed medical care becomes a beacon of survival of the fittest of the fittest. Those that participated as y0ungsters in Boy/Girl Scouts have a leg up in a society that increasingly places emphasis on rugged individualism. However, the many, many weaklings stumble in rows after rows of slimy gutters.

In the end, and similar to America’s 2008-09 financial collapse, which was only a warm up for much bigger things to come: “The decisive trigger, the one that pushed America beyond the point of no return, was the total collapse of the economy. It had been something of a miracle that the doomed economy had not collapsed long before. Toward the end it had been sustained by little more than momentum, since according to all economic indicators it should not have been functioning at all. The economic system based on infinite growth had reached the point where it could grow no more. American banks could not pay off previous debt by making further loans to generate more money. The pyramid scheme was over… An eerie calm descended upon all those involved in economics and finance.”

Convenient Tales About Riches Within Reach

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By Sam Pizzigati

Source: OpEdNews.com

The world at large knew virtually nada about Sylvia Bloom for 96 years. Then she died in 2016. Now, just a little too late, Sylvia Bloom is getting her belated — yet richly deserved — 15 minutes of worldwide fame.

The New York Times has just published a heart-warming story of the caring, upright life Sylvia Bloom lived, and the remarkable — and hidden — fortune she quietly accumulated over the course of her 67-year career as a Manhattan legal secretary.

That fortune totaled, in the end, over $9 million. The bulk of that wealth, the Times account reveals, is going — per Bloom’s wishes — to help students from poor families advance their educations.

None of Bloom’s surviving relatives or law firm colleagues or fellow volunteers at the Henry Street Settlement, the social services agency set to get $6.24 million from her bequest, had any idea that their unassuming loved one and friend had saved anything remotely close to multiple millions.

Counting Pennies

Bloom lived frugally all her life in Brooklyn and commuted, by subway, to her job. The “high life” never interested her in the least. She led a simple existence. She counted her pennies. In the end, she put them all to good use.

Stories like Bloom’s have been popping up regularly over recent years. Leonard Gigowski, a Wisconsin shopkeeper, died three years ago at age 90, and left behind a “secret $13 million fortune” that’s currently funding scholarships. Grace Groner passed away in 2010 at age 100. She spent most of her life in a one-bedroom Illinois home, shopped at thrift stores, and left $9 million for her alma mater.

Convenient Tales

Our popular culture can’t seem to get enough of these life-affirming tales of modest multi-millionaire seniors. These stories make us feel good. They also, unfortunately, reinforce a message that our society’s richest — and their cheerleaders — find enormously convenient.

You don’t have to be money-hungry, commit vile acts or have remarkable talents to become wealthy, the tellers of all these stories of hidden millions suggest. You just have to be frugal; almost anybody, in other words, can become rich.

And if you don’t happen to become rich, the media coverage of these stories not so subtly hints, just look in the mirror for the reason why. You, too, could have resisted temptation and counted your pennies.

You, too, could have built a huge personal fortune. Shame on you. You chose not to.

The Millionaire Next Door

A couple of decades ago, two academic researchers — Thomas Stanley and William Danko — made themselves not insignificant personal fortunes by wrapping up that same theme in reams of statistics. Their 1996 book, The Millionaire Next Door, has so far sold over 4 million copies.

That thrifty fellow down the block with a six-year-old Ford, The Millionaire Next Door related, could well be worth millions. And those millions, the book stressed, all begin with frugality.

Conservative pundits have always loved this basic frugality-pays thesis. Stanley and Danko, the argument goes, have served up the ultimate secret to getting rich. “Hardly any” of the self-made rich the pair profiled in The Millionaire Next Door, as one commentator noted a few years ago, “had expensive tastes.” Instead, these millionaires avoided “new homes and expensive clothes” and “often invested 15 to 20 percent of their net income.”

Any of us could follow that lead, this analyst would add, so long as we understand “that building wealth takes discipline, sacrifice, and hard work.”

Reaping Rewards

But if “discipline, sacrifice, and hard work” build wealth, why do so many millions of disciplined, sacrificing, and hard-working Americans today have so little of it? Why is the “millionaire next door” — especially for our millennial generation — becoming a vanishing species?

Sylvia Bloom’s life offers some clues. Yes, Bloom lived frugally, sacrificed, and worked hard. But she also matured in a society — mid-20th century America — that endeavored to help disciplined, sacrificing, and hard-working people.

That help came in many different forms. Sylvia Bloom attended Hunter College, part of a system of free public higher education in New York City. She and her husband, a firefighter and later teacher, lived in a rent-controlled apartment. She commuted, for just a few dimes per day, on the world’s most extensive public transit system.

Sylvia Bloom’s young adult counterparts today? They confront a totally different reality. The sky-high costs of attending college have turned 21st-century young adults into life-long debtors. To find an affordable place to live, they squeeze into tiny apartments close to their jobs or plop themselves in distant exurbs, fighting traffic jams all the way to work — if not paying big bucks daily for scarce transit options.

Austerity Trumps Frugality

These millennials aren’t living the frugal life. They’re living the austere life — and not by choice. Our elected leaders have thrust this austerity upon them, with decades of public policies that have rewarded the rich with tax cuts at every turn and whittled away public services at every opportunity.

If Sylvia Bloom had been born a millennial, she’d be pinching pennies today to pay off her college debts. She’d be looking forward to years of hard work and sacrifice, with no hope of ever saving up enough to become a significant invester.

In her actual life, Sylvia Bloom had the good fortune to live her early adult years in a society much more caring than ours. She cared back — and chose to devote her own financial good fortune to helping others to the same support that so helped her.

Sylvia Bloom’s life does indeed offer up inspiration. Let’s not let our rich turn that life into a rationalization for their riches.

What You May Not Know About Today’s Economic War

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By Phil Butler

Source: New Eastern Outlook

Many people believe the world is spiraling in a downward freefall toward Armageddon. At the same time billions on Earth feel the sting of crippling poverty, sanctions, and austerity imposed by the elites – the numbers of billionaires have risen geometrically. And so have those billionaire’s profits. It’s time we took a closer look at where we stand as of 2018, if we are to be left anything at all to cling to. From the steppes of Russia to the ancient lands of the Minoans, economic terror now reigns.

When I left Germany for Greece several months ago, the common belief there was that the “lazy Greeks” were part of the cause of Deutsche banker discomfort. My neighbors in Germany’s oldest city of Trier honestly believe the bailout of Greece is because Greeks unwilling to work hard. The bitter irony of this believe lies in the fact the average German would melt under the workload of the average citizen here in Heraklion on Crete. As an American what I witnessed in Germany can only be considered a “part-time” employment state. But here in Greece the average person works seven days a week, and usually at more than one job. This microeconomic perception is one that has been implanted by state and corporate controlled media in Germany. There’s a very good reason for this, which I will now explain.

A New Secret Economic Weapon – Organized Failures

The International Monetary Fund, the German and American bankers, the globalist elites who control financial systems in the so-called “west” – they’ve been on a mission since 2008. The “meltdown” of markets when Barack Obama first took office as American president was not some random and chaotic economic mistake. Wall Street and the global markets were turned upside down on purpose. In his book “Secret Weapon”, the CEO of Freeman Global Holdings and a New York Times bestselling author Kevin Freeman presents a persuasive chain of evidence pointing to the fact the crash of September 2008 was the result of a deliberate and well-prepared act of sabotage. Even though the author blames competing governments like China and Iran for what he terms “economic terrorism”, his proofs and theories are correct in so far as the “meltdown” being on purpose. The fact Freeman is founder and chairman of the NSIC Institute, and a Senior Fellow of the Center for Security Policy suggests his work may be a double dealing by the financial community to obscure the real perpetrators. But for my report it’s more important to follow the trail of financial chaos to our financial reality.

Freeman is not alone in his suggestion the economic crisis was a conspiracy. The financial disaster of 2008 costs Americans nearly $20 trillion dollars, as framed in this Forbes piece by investment banker and former Forbes editor, Robert Lenzner. In the report the financial guru inadvertently points the finger at Goldman Sachs and Citigroup, claiming the Greenspan Treasury allowed them to “master their own appetite for profits,” which in turn led to the various collapses that forced the American people to bail out the banks. Lenzner, to his great credit, goes on to describe the lurking dangers for total collapse we still face. But what about Greece, the rest of Eastern Europe, the Germans and the rest of the indebted world? Who can we blame for destroying the futures of a billion people? When I’m done your come to realize the Nazis never lost World War II. Read on.

Win-Win or Lose-Lose for Ukraine

Ukraine was turned into a “scorched Earth” when Hitler’s operation Barbarossa threatened Russia. When the armies commanded by Joseph Stalin during the German Army’s invasion of the Soviet Union in the Second World War destroyed crops and goods in their path, the invaders found nothing to fuel their advance. Today Ukraine is laid waste by an economic Barbarossa where the Russians had no opportunity to defend the steppes. Some will remember Vice President Joe Biden’s son taking a position to reap Ukrainian energy benefits. Other readers may recall when a Franklin Templton investment fund, one controlled by the Rothschild bankers, bought up 20% of Ukraine’s debts at junk bond prices. You see, the US orchestrated situation in Ukraine is not simply about events on the Maidan and the ongoing war in the Donbass as a byproduct of the geopolitics of the United States seeking to cut off Ukraine from Russia. Agri-giant Monsanto and other GMO companies had targeted Ukraine long before the events on Maidan Square, and the fact Ukraine is a Central hub in the supply of Russian gas to Europe cannot be under-stressed. Where foreign profiteering in Ukraine is concerned, this story on my blog tells of an Oakland Institute report where more than 1.6 million hectares of land in Ukraine went under the control of foreign-based corporations. This quote from the report makes my case for economic terrorism by the west for me:

“International financial institutions swooped in on the heels of the political upheaval in Ukraine to deregulate and throw open the nation’s vast agricultural sector to foreign corporations….Monsanto, Cargill, and DuPont, and how corporations are taking over all aspects of Ukraine’s agricultural system.”

These stories were more than two years ago. Today we see the catastrophic effects of the Euromaidan far from the battle front and the Donbass region’s pro-Russian separatists.

When I first learned that the forests in the Ukrainian Carpathians were being chopped to the ground back in 2016, the impending ecological disaster perpetrated by these globalist blood suckers hit home hard. This Counterpunch story tells the tale of a brand of liberty and democracy no Ukrainian can afford. Despite the aerial photos and other proofs Ukraine’s forests were being stolen from under the people, the Lviv Regional Forestry and Hunting Agency denied all such reports in customary Eastern European mafia form. The fact is, the Petro Poroshenko assisted in selling out Carpathian forests. Ecologists now predict an ecological Armageddon for western Ukraine. These photos from Censor.net prove the disaster in progress. This RT story on the firesale by the Poroshenko regime of 22 out of 34 state assets being put up for sale at a 60 percent discount leads us into the Greece situation, where the legacy of a people is up for grabs.

Those lazy Greeks! Funny, I just walked around the corner to the bakery here in Heraklion to get a coffee from the same lady I get coffee from every day. She was there Christmas, and I am sure she’ll be there behind the counter New Year’s Eve and New Year’s Day. The shopkeeper across the street, he sees Alexis Tsipras on TV and shoves an open hand toward Greece’s Prime Minister shouting; “Malaka!”, which can only be translated coldly as “jerk-off”. Also in the hotel lobby, at the donut house in the city center, and at each-and-every shop along Heraklion’s many retail districts, Greece officials are all Malakas (in ancient Greek – mentally ill) or worse. I’ll bet most Germans don’t know or care to know that the VAT in Greece is now 24%, and that the average shopkeeper pays 37% – 45% in income tax on top of the VAT for the goods they purchase. As crazy as it sounds though, Cretans are still especially friendly toward foreigners like me. If they only know what the German and American bankers did to them.

The Greece Fire Sale – A Tsipras Sellout

I just made a report about the great Greek sellout of privatization on my travel news site Argophilia Travel News this morning. Researching it prompted me to do this piece for NEO. The long and short of the Greek economic crash that was assisted by none other than Goldman Sachs, is that the same privatization the globalists had in store for Russia during the Yeltsin years is being exacted on Greeks. The latest sellout by Tsipras, who swore he’d end privatization, the Germans and Americans snapping up the Thessaloniki Port and the future of LNG shipments to Europe through Greece. I found it interesting that one of the principals in this sale, South Europe Gateway Thessaloniki (SEFT) Limited Director, Alexander von Mellenthin Has a distinguished German name. I’m not certain, but I believe he is a close relative of both General of the artillery, Horst Alexander, Alfred Paul von Mellenthin, and his brother, Major General Friedrich Wilhelm von Mellenthin, who served as Hitler’s chief of staff of the XXXXVIII Panzer Corps in the occupied Soviet Union, including the Battle of Kursk, the Battle of Kiev, and the spring 1944 retreat through the western Ukraine. The term “irony” will simply not do if Mellenthin is the son or grandson of a key Nazi general. Financial Blitzkrieg, Financial Armageddon, and the Fourth Reich finalizing the rape of Greece! Wow.

Regardless of whether or not the kin of old Nazis are expanding the Fourth Reich or not, the fact the European Commission, the International Monetary Fund and the European Central Bank have insisted on Greek and other privatization schemes as a condition for much-needed loans for bailouts is a smoking gun held by the same elites who always fuel wars. The fallacy of the “lazy Greek” lives on because of those who would reap the vast financial rewards of yet another deconstructed economy. It’s no coincidence that the Greek privatization plan’s administrator — the Hellenic Republic Asset Development Fund (TAIPED) — so closely resembles Germany’s Treuhandanstalt, or the agency charged with the privatization of East Germany’s state-owned enterprises following unification. Few readers will recall Treuhandanstalt being accused of turning over to West German big business hundreds of billions of Deutsche Marks in national property for little or nothing. And, though a number of Treuhandanstalt managers were ultimately indicted for corruption and embezzlement, this brand of pillaging has escalated in the Greece situation. There was even a plan back in 2014 to convert much of Greece’s protected coastal areas into “composite tourist villages,” a move which would essentially privatize every inch of valuable Greek seaside. Former Greek Finance Minister, Yanis Varoufakis called the Treuhandanstalt-like plan for Greece “an abomination” in this Huff Post piece. Varoufakis, who resigned on principle from the Tsipras administration, goes on to frame the Greek debt debauchery, describing the real IMF scheme:

“The plan is politically toxic, because the fund, though domiciled in Greece, will effectively be managed by the troika. It is also financially noxious, because the proceeds will go toward servicing what even the IMF now admits is an unpayable debt. And it fails economically, because it wastes a wonderful opportunity to create homegrown investments to help counter the recessionary impact…”

Yanis Varoufakis proposed to the Germans and the Rothschild bankers of Luxembourg and Frankfurt a Greek plan for repayment of the staggering debt the Goldman Sachs bankers helped usher into Greece. But the IMF and the new Reich refused, of course. His plan was for Greece to cooperate via its own newly formed central holding company for some Greek assets. The IMF and the banksters would have nothing of it, they needed complete control of what, and for how much Greece was to be auctioned off. Tsipras betrayed his country, and the only decent politician the Greeks have had in decades stepped down.

Financialization, precarity and reactionary authoritarianism

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By increasing global competition, the precariousness wrought by financialization has laid the foundations for reactionary authoritarianism around the world.

By Max Haiven

Source: ROAR

Financialization: Fictitious Capital in Popular Culture and Everyday Life, released last month in paperback from Palgrave Macmillan. The book argues that financialization is not just the increasing power and authority of speculative capital over the global economy, but also the way the it seems into and is reflected in politics, social institutions and the realm of cultural meaning.

This section comes at the end of a chapter on the ways financialization both drives onward and depends on the increasing precariousness of workers, putting us into global competition with one another and also infecting our sense of value and success. Haiven argues that this situation produces a tendency towards reactionary authoritarianism based on a “forgetting” and a loathing of our shared human condition of precariousness. He concludes by asking us to consider other models for thinking about debt and precarity that stress radical interdependence.

It is followed by a brief authors’ note reflecting on the piece four years since it was first penned in 2013.

Precarious fear and loathing

Today precariousness is the norm, not the exception. Our current precarious moment, one dominated by market and financial forces and manifesting itself as a violent form of hyper-neoliberal austerity (which is producing ever more and deeper economic precariousness), is only one particularly pernicious manifestation of an underlying ontological condition. It is worse than many such manifestations precisely because it is so successful in privatizing precariousness through the logic of individualism and competition.

We come to blame ourselves, rather than the system, for our precariousness, in part because, unlike some rigid caste-based system or a slave society, we are (most of us) legally and technically free to escape precariousness (though, ironically, to escape by embracing precarity, by using every skill, talent and asset we might possess to leverage ourselves into fabled prosperity). It is a system that works by promising that we can, each of us, alone, escape our existential condition of precariousness by getting rich, by obeying the system’s axiomatic dictates and playing our role.

The constant barrage of images and tales of the lifestyles of the rich and famous, of celebrities and of others who have “made it” do not exist (as they did in a previous era) to show us the right social order and the natural superiority of certain sorts of people. Rather, these ubiquitous dream-images promise each of us a life without precariousness or, more accurately (if we think about the cinematic depictions of the Wall Street predator) a life where precariousness is mastered and leveraged.

This helps explain the virulent disdain that grows and grows towards the poor, the refugee, the  (almost always racialized) populations deemed to be “at risk.” To the extent that we succeed in leveraging ourselves out of the total liquidation of our lives by building up a life of financial prosperity and (the illusion of) security, we are compelled to close ourselves off to what Judith Butler, drawing on the work of Emmanuel Levinas, calls the “face” of the other: the empathetic image of existential suffering. In fact, to the extent participation in financialization has come afford us the privilege of forgetting our inherent shared condition of precariousness, we come to loathe the face of precarity, loathe the way it calls us back into a fellow precarious human body.

The colors of risk

As a result, we should not expect that the almost universal adoption of the free market will lead to any sort of peace or cosmopolitanism in the world, as neoliberal thinkers like Fredrich Hayek or Francis Fukayama believed. Nor should we assume that the financialized age of austerity will prompt such a wave of popular discontent that radical social transformation is inevitable. To the extent that we are made more and more precarious, we brew an existential anger, a self-loathing that can easily be displaced onto convenient others.

Ironically, it is not easily displaced onto the architects and beneficiaries of financialized capitalism, but instead gravitates towards the more precarious, the more abject: they who call us back into the shared precarious what Marx called our “species being,” our shared precarious condition as imaginative cooperative animals dependent on one another for joy and survival. While this may or may not manifest itself in the form of new nationalisms, it will manifest itself in the form of hatred towards the homeless, towards refugees, towards welfare recipients and towards others.

It is vital to note that, in North America and Europe, and in different ways elsewhere, this precarious vitriol cannot be separated from the history of race and racism. Older modes of racial enslavement, apartheid and segregation served the same function, similarly allowing those read as “white” to posit a superior form of humanity which both occluded a shared precariousness and elevated the material wealth and security of whites at the expense of immiserated, exploited and impoverished non-whites (in different ways, in different times and places).

Indeed, earlier moments of capitalism explicitly mobilized whiteness and its real and perceived benefits vis-a-vis precariousness to divide workers along color lines, a condition that fed, and was fed by, the existential precariousness of non-whites who, as second-class citizens, slaves, migrant laborers or perpetual “outsiders,” were not afforded the same personal safety or security (neither de jure nor de facto).

The current reigning assumption is that we have entered a “post-racial” moment, that racism is merely a marginal anachronism, and that racialized people face no systemic barriers to achieving a non-precarious life like “everyone else” — in other words, they are as free to enter the market as anyone else, and the market does not “see” race. The opposite is, in fact, the case: racism and racial inequality towards non-white people persist and, in some ways, are even worse thanks to the mechanisms of financialized market which also works to make those inequalities functionally invisible.

Banking on resentment

On another level, we might speculate that precariousness, in both image and concept, is already racialized, that our understandings of what it means to be precarious, and the negative associations with which this term resonates, are already coded as non-white and call up a legacy and a present of racialized images of abjection, destitution, subservience and shiftlessness. Indeed, we might ask to what extent political systems in the West base their legitimacy on the invisiblized darkness of precariousness. The politically expedient citation of the disappearance of “hard-working Americans” and “the middle class” (both of which are imagined as white) into a dark miasma of economic depression is indelibly associated with popular depictions of ghettos and menial racialized workers.

Suffice it for now to say that we can certainly see these trends as played out in largely white backlash movements which have arisen to confront non-white peoples’ or groups’ claims to social and economic justice. From anti-Muslim organizing in Western Europe (framed in terms of defending a white national heritage and white workers), to anti-Black “whitelash” in the United States (from the Detroit Riots to Rodney King to Trevon Martin), to the anti-Indigenous vitriol in my home country of Canada, these seemingly spontaneous “social movements” speak not only to the politics of ignorance and fear, but also to the socio-economic conditions of precariousness, as well as the perceived failure of the state to live up to its promises to prevent precariousness for white people, all coupled with a history that locates precariousness along the axes of race and racialization.

This deeper existential and ontological crisis and anger is joined by another: the crisis of the middle class. Those professional or semi-professional workers who have been taught to expect middle-class incomes and job security are quickly finding themselves disposable in a vast pool of precarious workers, leading highly indebted, precarious lives with little hope for reprieve. In the coming years, increasingly fascistic political powers will gain ground by offering hollow promises to rebuild the middle class and to end precarity, through neocolonial geopolitical adventure or by creating or maintaining localized under-classes of hyper-precarious migrant or abject workers.

The cult of risk management

What would a politics look like that promised not to end but to embrace precariousness, not as an inescapable economic “reality” (which is what our current system of financialized austerity pledges) but as a socio-ontological sine qua non?

The answer is yet to be determined. But, ironically, an answer may be emerging out of the financialized paradigm that has driven precariousness to a new level of universality and acuity. The speculative ethos that animates financialization is one intimately and irreducibly acquainted with the ontological realities of precariousness. “Risk” and “risk management” are, underneath all their trappings of quantitative and scientistic rigour, mythological constructs for engaging with, navigating through and manipulating the cultural fabric of precariousness. Investments are, at a certain abstract level, attempts to leverage precarious life into more advantageous out- comes.

Finance, as a broad sphere of activities, is a mechanism by which individuals and society at-large seek to gain agency over the precariousness and contingency of the future. It is a particularly perverse mechanism, and one whose logic and mechanisms are either occluded from sight, or so complex, rapid or vast to be fully grasped, even by their primary engineers and agents in hedge funds and investment banks. Yet finance reproduces itself by cultivating and mobilizing the energies, creativity and hope of almost everyone in their attempts to thwart or diminish precarity, and aggregates all these individual and institutional actions into a system which, tragically, only drives greater and greater precariousness.

Generative debts?

The silver lining is perhaps this: what financialization reveals is the inherent futurity of precariousness. The word itself derives from the Latin prex or prayer, with strong connotations of begging or soliciting: yearning for future outcomes, throwing oneself on the mercy of fate or divine provenance. What our financialized moment might reveal is that our shared precariousness, which is the condition both of disastrous authoritarianism (including the disorganized and diffuse totalitarianism of finance capital itself) and of solidarity, does not only emerge from our shared material and ontological conditions; it is also a horizon of shared futurity. That is, precariousness carries encrypted within it a shared relationship with the future.

In this sense, nascent anti-debt organizing in the United States and elsewhere bears a great deal of potential. As Richard Dienst, David Graeber and Andrew Ross all affirm, the politics of debt, if they are to be a radical challenge to the financialized empire, cannot simply be a demand for some libertarian fantasy of complete individual freedom. Rather, they must embrace a broader, more capacious concept of the ontological wealth of social bonds that make life possible, that render all of us precariously reliant on one another. In this sense, they, each in their own way, encourage us to envision an expanded notion of (non-monetary) debt beyond as a grounds for crafting and building common futures through the entanglement of our social relationships.

Likewise, Angela Mitropoulos insists on the importance of moving beyond the limited concepts of financial debt and “debt servitude,” which depend upon and exalt the ideal of the individuated (white, masculine) self, the esteemed, contract-making personage at the heart of Western liberal political and economic philosophy and law. She notes that behind today’s politics of debt there reside the unacknowledged debts germane to the worlds of social reproduction and affective labor on which we all rely, which today are increasingly commodified in the so-called service sector. Indeed, the growth of precarious, feminized service-based labor over the past few decades cannot be separated from the rise of debt as a means to discipline workers and extract surplus value. Beyond the hollow promise of an ideal state of freedom from all obligations, radical potentialities might emerge from the affirmation and recognition of shared interdependency, of the shared need for what today is misrecognized as “service.” As she puts it:

The question it seems to me is not whether our debts can be erased, but what the lines of indebtedness are, how debt is defined, whether it takes the form of a financial obligation or some other consideration of relational inter-dependence, of the forms of life that the routine accounting of debts lets flourish or those that it obscures behind propositions of a seemingly more natural order of individuation, dependence, and obligation.

Beyond the colonial bond?

Glen Coulthard articulates a radical Indigenous reenvisioning of obligation that goes well beyond the Western philosophical canon:

Consider the following example from my people, the Dene Nations of what is now the Northwest Territories, Canada. In the Yellowknives Dene (or Weledeh) dialect of Dogrib, land (or dè) is translated in relational terms as that which encompasses not only the land (understood here as material), but also people and ani- mals, rocks and trees, lakes and rivers, and so on. Seen in this light, we are as much a part of the land as any other element. Furthermore, within this system of relations human beings are not the only constituent believed to embody spirit or agency. Ethically, this meant that humans held certain obligations to the land, animals, plants, and lakes in much the same way that we hold obligations to other people. And if these obligations were met, then the land, animals, plants and lakes would reciprocate and meet their obligations to humans, thus ensuring the survival and well-being of all over time.

Coulthard’s articulation of a broader field of grounded land-based obligation, reciprocity and care demonstrates the radical potentialities that might emerge from a reconsideration of the bonds of debt and the conditions of shared precarity, were we open to re-envision their meanings beyond the hollow promises of security proffered by capital and the state.

Since the publication of Cultures of Financialization I have felt unhappily vindicated in my suspicion that financialization would give right to revanchist authoritarianism. But were I to approach the topic of this excerpt again, I would take more care to locate the origins of the loathing of precariousness within the specific histories of anti-Black racism. I would approach this by making more explicit the origins of finance capital in the trans-Atlantic slave trade and slave economies in the Americas. I would follow this tendency through to the present-day ways that anti-Black racism and white-supremacy, as the template and operating condition of all forms of modern racism, is manifested again and again in the machinations of the financial empire, from the continued neocolonial pillage of Africa to the racialized dimension of the sub-prime loan crisis which led to the single largest theft of Black family wealth since Reconstruction.

Were I to approach this topic again I would also stress more centrally the ways in which settler colonialism destroys and denigrates a cooperative relationship with land, most horrifically by seeking the systematic elimination of autonomous Indigenous presence and power on land. I would seek to understand (as I have elsewhere) how settler colonialism has always been a financialized project, and how financialization has, historically and in the present, been enabled by settler colonialism.

I think that only with these in mind can we seek to understand how financialization has given rise not only to new forms of authoritarianism that promise (white people) respite from the precarity financialization has created, but which are fundamentally based on the acceleration and intensification of white supremacy and settler colonialism.

Finally, were I to approach this chapter again I would caution myself against a conclusion that could appear to call for a kind of new universalist embrace of shared precarity. I would have concerned myself with the way such a universalism, while noble in a certain abstract sense, can work to erase precisely the continued centrality of (anti-Black) racism and settler colonialism. Instead, I would have stressed that overcoming financialized precarity and these systems of oppression and exploitation will be based not only on high-minded virtues but meaningful relationships of militant solidarity and the collective invention of new forms of power, new institutions of care and new frames and practices of revolutionary thought and action.

In a highly indebted world, austerity is a permanent state of affairs

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By Mark Blyth

Source: Aeon

By 2010, everyone had heard the ‘austerity’ rallying cry. Immediately following the 2008 financial crisis, especially in Europe, it resounded: ‘Stimulate no more, now is the time for all to tighten!’ And tighten governments did, cutting public expenditure across continental Europe, and in the United Kingdom and the United States.

The logic behind ‘austerity’ holds that ‘the market’ – which the public had just bailed out – did not like the debt incurred when states everywhere rescued and recapitalised their banking systems. Unsurprisingly, tax revenues fell as the economy slowed and state expenditures rose. And what were once private debts on the balance sheets of banks became public debt on the balance sheet of states. Given this sorry state of affairs, states (policymakers and business leaders argued) had to take action to restore ‘business confidence’ – which is apparently always and everywhere created by cutting government spending. So governments cut.

Public debt, however, grew, because economies got smaller and grew slower the more they cut. The ‘confidence fairy’ as Paul Krugman named the expected effect, simply failed to show up. Why?

The reason is simple – and it is surprising anyone thought that anything else would happen. Imagine an economy as a sum, with a numerator and a denominator. Make total debt 100 and stick that on the top (the numerator). Make Gross Domestic Product (GDP) 100 and stick that on the bottom (the denominator) to give us a 100 per cent debt-to-GDP ratio. If you cut total spending by 20 per cent to restore ‘confidence’, the economy is ‘balanced’ at 100/80. That means the debt-to-GDP ratio of the country just went up to 120 per cent, all without the government issuing a single cent of new debt.

In short, cuts to spending in a recession make the underlying economy contract. After all, government workers have lost jobs or income, and government workers not shopping has the same effect as private sector workers not shopping. So the debt goes up as the economy shrinks further. States respond by cutting spending further. The pattern continues.

Having a common currency among different countries actually aggravates the problem because cuts in one state reverberate through many states, depressing them all. In 2008, euro area government debt as a share of the economy, including the already profligate Greeks, averaged around 65 per cent of GDP. Following budget cuts and monetary tightening (the European Central Bank twice pushed up interest rates in 2011) Euro Area government debt, by 2014, had risen to 92 per cent of GDP.

Greece is the poster child for this ‘denominator effect’. Under the auspices of ‘bailouts’ from the IMF and the EU, Greece cut more than 20 per cent of GDP in spending. It lost nearly 30 per cent in final consumption. Yet its debt increased from 103 per cent in 2006 to more than 180 per cent by 2014. That’s a 57 per cent increase in debt while spending is being cut.

Let’s look at the originating question again: how is destroying a third of the economy supposed to inspire consumer and business confidence? It won’t – unless you are a creditor – and that’s where the politics comes in.

If you are a holder of government debt (a creditor), three things hurt the value of your asset: if the inflation rate goes above the interest rate on your bond; if the exchange rate moves against you so that what the bond is worth vis-à-vis other currencies falls; and, of course, default – if the government takes the money and runs.

In the post-crisis world, despite major central banks putting trillions of dollars into the global money supply, there is almost no inflation anywhere in the developed world. Exchange rates (Brexit effects apart) are comparatively stable and ultimately move against each other relatively, so that’s not a huge worry. If the country whose debt you hold can have elections, and the public dares to vote against more budget cuts, the European Central Bank will shut down their banking system to make them revisit their choices. That’s what they did to Greece in the summer of 2015.

In this world, our present world, creditors will get paid and debtors will get squeezed. Budgets will be cut to make sure that bondholders get their money. And, in a highly indebted world, austerity – introduced as an ‘emergency’ measure to save the economy, to right the fiscal ship – becomes a permanent state of affairs.

As Britain’s former prime minister David Cameron said (standing beside a throne in a white bow-tie and tails) in 2013: ‘We need to do more with less. Not just now, but permanently.’ But here’s the question hidden in that blithe statement – are you and me part of the ‘we’ here?

Let’s go back to the huge jump in public debt that occurred when governments, ie the people, bailed out the banks. That debt was not, and is not, a liability. As difficult as it can be to make this reality part of the political conversation, public debt is an asset. Even at today’s low rates, it earns interest and retains value. No one is forced to invest in public debt, but every time bonds are issued investors show up and buy them by the truckload. By market criteria, public debt is a great investment.

But who pays for it? That would be the taxpayer. More generally, those who contribute to the payment of debts by not consuming government-produced services that have been cut. Basically, in most countries, this means that the bottom 70 per cent of the income distribution bears the cost of paying for public debt.

Over the past 25 years, to make up for chronically low wage growth, that same 70 per cent of the population has increased its personal indebtedness. Massively. Which means that in an economy deformed by austerity, they are the ones paying out – twice. With stagnant or declining wages, they have to service both the massive private debt they have accumulated to live and the public debt issued in their name.

Meanwhile, those whose assets the public bailed out – those with investible wealth, those who hold ‘all that debt’ and make money from it – do not suffer from the decline in public spending. Since they are net lenders, the hike in personal indebtedness does not trouble them either.

The result, and the situation in which we find ourselves, is a classic bad equilibrium. Those who can’t pay, and don’t earn enough, are being asked to pay the most to service debt, from which they do not and will not benefit. Those who can pay, and earn almost all the income, both contribute the least and benefit the most from ‘all that debt’.

Strip away all the electoral politics at the moment in the US, the UK, Italy, Spain and elsewhere, and that’s the underlying political economy. It’s a creditor/debtor stand-off where the creditors have the whip hand.

And yet, the more they crack the whip, the more the backlash against austerity, in all its forms, gains strength. Donald Trump, Jeremy Corbyn, Marine Le Pen, Pablo Iglesias: Left or Right, they are all riding debtor anger against creditor strength. It might be expressed as anger against, variously, ‘trade’ or ‘the elite’ or the ‘EU’. But what’s underneath all that is the politics of debt.

This is the ‘new normal’. It’s not about flat interest rates or anaemic growth rates. They are the consequences of austerity, not its causes. The new normal is the new politics of debtors versus creditors. It’s here to stay. As we already can see, it’s going to be anything but normal.