The irresistible force of the global economic and financial crisis is outstripping attempts by
Confusion reined as first an emergency meeting of eurozone finance ministers scheduled for today was cancelled, sending stock markets tumbling around the world. Then European Union political leaders announced they would proceed with their summit. Nobody breathed a sigh of relief.
German chancellor Angela Merkel is staunchly defending German banking interests and the Italian coalition government is crumbling as it struggles with the EU demands for cuts which are needed, allegedly, to keep speculators in the country’s debt at bay. The far right Northern League is opposed to proposals to raise the pension age.
So-called vulture funds have been seen circling over
In the shadows lies a real terror of the consequences for the
If the proposed 60% reduction of Greek government debt owed to private sector banks is made compulsory, and the country still defaults, the insurance clauses will be invoked and no one knows what the consequences will be.
But if the reduction or “haircut” is left as a voluntary option, hedge funds will be able to clean up, stoking the fury of the mounting protests as they learn the scale of profits being made out of the Greek tragedy at the heart of
Meanwhile, yesterday in the
“Yesterday morning at 5am over 500 police in riot gear from cities all over central
The protestors are regrouping, but the forces against them are mounting. In an opinion piece in the Financial Times hedge fund owner Ray Dalio turns up the political heat as the capitalist contraction gets seriously under way.
Dalio is owner of
“Mobs are at the doors of bankers and others in the financial system, screaming to politicians to put these people in jail while the vote-seeking politicians are fanning the flames.
“Our character and our political and social systems are now being tested in ways that have typically been tested in past deleveragings. In deleveragings bad economic conditions typically lead to emotional reactions, social and political fragmentation, poor decision-making and increased conflict.
“When this occurs in democracies, the checks and balance system, which is intended to yield the best decisions for the whole, can stand in the way of thoughtful leadership and lead to ineffective ‘mob’ rule. This dynamic can lead to a self-reinforcing downward spiral.”
Dalio warns that the “ineffectiveness of government” creates the “perceived need for someone to gain control of the mess” and says that this was the reason the Nazis were elected to power in
These should not be taken as idle musings but as an indication of the nervousness in ruling class circles about the consequences of the catastrophe staring global capitalism in the face.
Under conditions of political and social crisis, the capitalist state has in the past dispensed with its democratic shell to maintain the rule of the corporations. What Dalio is saying is that that could happen again. We ignore his warning at our peril and double our efforts to win the argument for an entirely new political democracy around people’s assemblies in place of the decayed, anti-democratic state we now endure.