Q. Why did the 100 billion euro loan to bailout Spanish banks recycled from the 27 members of the European Union via the European Financial Stability Mechanism go to the government rather than, as some wanted, direct to the banks where it is needed?
A. Because the people who run the EFSM act as ciphers for the needs of the global capitalist system. And they have to ensure that states – governments, civil administrations, legal system, armed forces including police – extract the repayments on the loans from their populations.
In the social, economic and political system that operates currently there’s no other way to make it happen.
If the people of a country elect a government that’s less than willing to enact the needs of global investors, the “international community” does everything in its power to ensure that it is replaced, by a more compliant power.
It’s a salutary warning as the people of Greece go to the polls again this Sunday, deciding whether to back Syriza’s policy of opposing the bail-out conditions imposed on the country by the EU, the IMF and the European Central Bank.
Within hours of the announcement of the loan to
the briefest period of market traders’ profit-taking euphoria, the reality of
the crisis returned. No amount of new credit can restore Spain, or any other part of the
global economy to growth.
Potential lenders, so-called “vulture” funds, pushed
Spain’s cost of
borrowing to a new record of 6.8%. A further 18 banks had their credit rating
Stephanie Flanders, the BBC’s Economics Editor put it like this: “It's largely the grim prospects for the Spanish economy that has led Fitch and other ratings agencies to downgrade so many Spanish banks in recent days. Emergency lending is helpful. But it can't make the recession go away, and it can't take away the need for many more years of fiscal austerity...the vicious circle is complete. And not just in
The second phase of the crisis that erupted five years ago is engulfing the world and the global economy is contracting. Unemployment levels are already higher in some countries than were reached in the worst period of the 1930s. Millions have lost their jobs and homes, millions more have had their wages slashed, seen pensions wiped out.
The only plans on the table from governments, central banks and international agencies like the IMF are far more doses of austerity which are certain to see more public services eliminated, and “restructuring” by which they mean wiping out surplus productive capacity.
The Greek heath service is in already in tatters increasingly unable to provide life-saving drugs, as pharmaceutical companies refuse supplies until bills are paid.
Zombie car manufacturing giant, GM, brought back from the dead in 2009, employs more than 200,000 world-wide and operates in 157 countries. With a return to growth off the agenda, GM is pushing to rid itself of responsibility for paying pensions to former workers.
Its CEO Dan Akerson, says that the European car industry has an overcapacity of 7-10 plants, and is in “constructive” discussion with unions which will see tens of thousands of job losses accompanied by savage wage and benefit cuts.
As recent history has shown, the spiral-down logic of capitalist contraction leads only one way – to forced labour. It’s no coincidence that the plight of unpaid security staff featured so prominently in the Royal Jubilee celebrations. The continued existence of the for-profit regime depends on unimaginable conditions for those in any kind of productive work, and the abandonment of the rest to their own fates.
The alternative to the profit system is one based on identifying and satisfying the needs of the 99%. To make it happen, we’ll have to replace the worn-out, compromised system of politics dominated by corporate interests, with a global network of People’s Assemblies which can take the productive resources into social ownership and set them to work under democratic control.