Pesky voters ignore markets, vote against austerity

When an anti-austerity, anti-establishment internet-based political movement with few policies and led by a comedian, gets 25% of the vote in a general election, you know for sure that the political system is travelling on a one-way ticket to disintegration.

Beppe Grillo's Five Star Movement (M5S) won 54 seats and cashed in on Italians’ hatred for a corrupt, incompetent state that has cut their pensions, living standards and left record numbers of young people out of work.

Deadlock is what the markets didn’t want. That’s why Mario Monti was appointed by the European Central Bank to head a caretaker government 15 months ago as Italy’s debt mountain threatened to overwhelm the euro. But given half a chance, the electorate rejected his policies.

The ex-Goldman Sachs banker only got 10% of the vote when he put his austerity programme to the electorate. And with Silvio Berlusconi also raging against Brussels and promising everyone a tax cut, many voters backed a man who has somehow evaded prison.

As a result there is no immediate prospect of a stable government to manage Europe’s third largest economy. And the markets don’t like the stalemate at all. After initial polls showed the centre-left alliance winning, the markets rallied.

Then when the electoral deadlock was confirmed, black turned to red on trading screens around the world. Italian bonds were sold off, trading in the major banks was suspended, the stock markets plunged and the euro crisis returned with a vengeance.

“This looks like a recipe for total gridlock,” commented Nicholas Spiro, a sovereign debt analyst. “On current projections, financial markets are facing the worst of both worlds in Italy: a full-blown political crisis in the eurozone’s third largest economy and a severe setback for the liberal economic agenda championed by Mr Monti.”

Pesky voters!

Enrico Letta, deputy leader of the Democrat party, concluded that the “absolute majority of Italians have voted against austerity measures, the euro and Europe,”.  This, he claimed, sent a “a very clear signal to Brussels and Frankfurt”.

But is anyone listening at the headquarters respectively of the European Union and the European Central Bank? No they’re not. The EU and the ECB is desperately to prop up a weak currency and austerity, austerity and yet more austerity is the mantra. No matter that it doesn’t work. They have no alternative.

Spending your way out of the crisis is no good because it’s a global economic recession that is already dependent on large-scale printing of money to prevent a full-blown depression. It’s not just the political system that’s broken.

Grillo’s Five Star Movement is hostile to Brussels and the indecently corrupt Italian establishment. It wants to reform parliament by halving its size and a new electoral law based on proportional representation. Other than that, it has little to say.

Grillo – called everything from “sans-culotte satirist” to “populist, extremist and very dangerous” –  hands it back with interest. His nickname for Berlusconi is “the psycho-dwarf”, while he refers to the technocrat Monti as “rigor Montis”.

Grillo told the Financial Times last year: “We are occupying a void, which in other places like Greece has been filled by Nazis and extremists. We are a response to government ‘parasitism’, corruption, a system of political diarrhoea.” Recent scandals include arrests at the top of state-controlled Finmeccanica to corruption probes into the Eni and Italy’s third-largest bank.

Grillo does not appear on television or take part in debates. His movement – it’s definitely not a party – is driven by the use of social media. He runs Italy’s most-read blog and the M5S organises on two levels – internet and local grassroots.

He used the social network “meetup”, which was already active in Italy, to set up local support groups across the country. There are now more than 700 such meetup groups, with more than 100,000 members.

In Britain too, the establishment and the state is also mired in a variety of scandals. The old politics is dying right across Europe and further afield as the recession coincides with  a crisis at the top.

A new politics, a democratic transformation of political systems, is not only possible – it’s absolutely necessary.

Paul Feldman

Communications

Italy bosses call for 'shock therapy' as recession takes its toll

The south of Europe is fast becoming engulfed in political turmoil as the economic contraction deepens. After protests against soaring electricity prices, austerity and corruption turned violent Bulgaria’s government has collapsed. "I will not participate in a government under which police are beating people," says prime minister Boiko Borisov.

In Greece, Bulgaria’s southern neighbour, workers are once again taking to the streets in the first general strike against austerity for 2013, joining farmers who have been blocking roads for nearly a month, protesting at high production costs and fuel prices.

Despite more than 20 general strikes, economic conditions continue to deteriorate. Claims by the government of Antonis Samaras that the country has now turned the corner would be considered laughable if the situation wasn’t so serious.

Two-thirds of employees in the private sector no longer receive regular pay. Unemployment has passed 27% and is predicted to reach 30% this year. More than 60% of young people are without a job. Benefits run out after one year, so now only 225,000 jobless Greeks are currently receiving monthly state assistance.

Last summer, all but the lowest-paid employees were hit with an emergency bill in additional taxes, often for several thousand euros. Further charges were levied on electricity bills, with households that failed to pay disconnected from the power grid. And another round of tax increases took effect this year, the price of further bailout funds secured in December.

Savas Robolis, professor of economics and public policy at Panteion University in Athens, and the head of research at the General Confederation of Greek Workers says: "The standard of living of the average Greek worker between 2009 and 2012, in a span of 36 months, has declined by at least 50 percent."

GDP is expected to contract by a further 4.1% this year, and Robolis warns that that country is fast approaching a tipping point in which “Greek workers and unemployed people may soon not have enough money left to pay taxes while covering their basic needs. If that happens, it would be the worst possible outcome for the Greek economy and Greek society."

Figures show a sharp fall in the country’s trade deficit, but the published figures so far don’t tell us whether the fall in imports is due to a reduction in capital imports which would signal yet a further sharp contraction.

An election in Italy this weekend is set to replace the appointed technocratic government of Mario Monti. The new government which, amazingly, could see the return of Silvio Berlusconi, due back in court to face sex charges after the election, will take charge of what many call the sickest economy in Europe.

Italy, the eurozone's third-biggest economy, has been in recession since the second half of 2011. After 14 years of near-zero growth it is now smaller than in 2001 and shrank most out of the rich G7 countries last year, its GDP contracting by a bigger than expected 2.7%. 

But as the latest snapshots from the OECD club of rich countries show, a return to growth in Italy or anywhere else is ruled out as the global capitalist recession deepens. Economic output across the OECD's 34 member states fell by 0.2% in the three months to the end of December, representing the first contraction since early 2009. The OECD said that the contraction was "particularly marked" in the European Union, where GDP fell by 0.5%  in the fourth quarter.

Marcella Panucci, director-general of Italy’s big employers’ federation, Confindustria, is pushing for a stable government, that she hopes will pursue “shock therapy” policies to restore growth. This open call to destroy living standards is a real sign of a deepening political and social crisis not just in Italy, but throughout Europe.

Gerry Gold

Economics editor

Olympic dream and reality

It’s exactly a year since inner-city riots swept London and other parts of the country. They were sparked by bottled-up anger at the arrogance of the police and rapidly spread into a brief orgy of looting and general destructiveness that took many, including the police, by surprise.

As the medals stack up, politicians backed up by the tabloids are hailing the London Olympics as a great British success story draped in endless Union Jacks. So does the hiatus as millions are drawn into the spectacle mean that the alienation which lay behind the riots has been replaced by a new sense of community, as some would have it?

It’s true that the London Olympics are a showcase for aspects of the British character and mass behaviour not normally apparent in the hardscrabble struggles of daily life. In addition to the prowess of the athletes, thousands of young people have made it as a chance to be friendly and helpful to visitors.

It may be asked where has this great surge of sporting talent and determination, which saw British athletes win six gold medals in one day, come from?

It all starts with an inherent desire in people to excel and to prove that the extraordinary can be achieved. Add to this the support of an enthusiastic home crowd which helped lift some athletes to excel beyond expectations.

Incredible dedication is vital to take part in the Olympics, let alone win a medal. But determination on its own is only half the story. A huge amount of long-term team-work is required, involving coaches, psychiatrists, dieticians, sports medics, good facilities and – last but not least financial resources.

The chief medal successes so far are in rowing and cycling. These sports are based on a hot-house regime involving a scientific approach to training. Much of this was financed by the National Lottery.  So, behind the fantasy of a “level playing field” where all you need is talent and determination are more complex and often harsher realities. 

The top medal winners tell a different story of countries and sponsors prepared to dedicate serious money for sporting achievement. Poor countries like Bangla Desh and most of Africa simply don’t get a look in. “Blade Runner” Pistorius is indeed an inspiration – but he attended a historically white school with lavish playing fields.

It is far from being down to some mythical British work ethic and “sense of belonging” as The Guardian’s Jackie Ashley believes. The Olympics have cost some £9.3bn of taxpayers’ money. This is an amount that many small nations could not even dream of. It has been lashed out by successive governments at a time when the prime minister says austerity cuts could last until 2020 and beyond.

The Olympics do offer a glimpse of the unlimited nature of human potential and brilliant organisation. But it is a limited operation which applies only for a short time. The reality of austerity and economic crisis has not gone away. Italy’s prime minister Mario Monti has warned of a “psychological break-up of Europe” due to the Eurozone crisis even while the Chinese economy continues to slow down.

For the global corporations the Olympics are purely and simply a desperately needed form of marketing. Seventeen-year-old US gymnastics champion Gabrielle Douglas, for example, was signed by Procter and Gamble before the London Games. Soon to be the face on Kelloggs Cornflakes boxes, she is seen as “having the potential to earn millions” by sponsorship consultants. Jessica Ennis’ website says she is “is proud to be sponsored by several popular brands” – they include BP, Adidas, Omega and British Airways.

Behind the conditions that produced last year’s riots was a general contempt for the political system. State institutions and the custodians of law and order are seen as preserving the status quo of corporate power. The Olympics will do nothing to give them credibility.

Corinna Lotz

A World to Win secretary

Goldman Sachs adds Italy and Greece to its portfolio

When trader Alessio Rastani told the BBC that "governments don't rule the world, Goldman Sachs rules the world", jaws dropped in the news room at his brazen candour. Seven weeks later, Rastani is looking more right than ever.

The global investment bank’s advisors have in the past week taken control of the Italian and Greek governments, replacing elected administrations with faceless economists, academics and bureaucrats.

These events are nothing less than corporate-driven coups in the heart of Europe, through which the financial markets have demanded and got the heads of government on a platter.

George Papandreou and Silvio Berlusconi were what they were, politically speaking. Their mistake was to try and ignore the European Central Bank (ECB), International Monetary Fund (IMF) and the leading lights in the European Union, Germany and France, in dealing with their respective debt crises.

So they had to go.

In Italy, Mario Monti, former EU competition commissioner and advisor to Goldman Sachs for the last six years, was appointed prime minister by the ageing president Giorgio Napolitano, who undoubtedly got his marching orders from somewhere in the Brussels region. Monti is planning a cabinet entirely made up of unelected appointees.

In Greece, prime minister Papandreou was ousted by Lucas Papademos, yet another advisor to Goldman Sachs and former vice-president of the ECB. Both men are going to try and impose savage cuts in living standards to keep the international loan sharks – aka the bond market – at bay, temporarily.

Normally, when governments collapse, a date is set for a general election. But this right is also being denied the Greeks and Italians. Chancellor Merkel and President Sarkozy, together with the markets, have declared that elections will take too long and may not even lead to a conclusive outcome. As for Papandreou’s plan for a referendum, don’t even go there.

Just in case you think this process doesn’t apply to Britain, let’s not forget that weekend in May 2010 after the general election here produced a stalemate. The Tories and Lib Dems were literally propelled into a shotgun marriage by the cabinet secretary, Gus O’Donnell.

He made it perfectly clear that the financial markets would not tolerate weeks of political instability in Britain. The ConDem coalition – a government without a mandate and for which no one voted - was the result.

The financial markets have effectively “bought” capitalist democracy, turned it into a commodity. They demanded and got deregulation from the politicians. And when they went bust, they demanded and got bail-outs. When governments have proved incapable of imposing the debt crisis on their people, an out-and-out takeover is the result in Athens and Rome.

So the democratic achievements of past generations in terms of the right to vote and influence course of events through parties committed to reform are negated. There is even less meaning to voting than ever before, as the people of Spain will discover next Sunday.

The corporate coups should drive us to renew the struggle for democracy. The global occupation movement, the revolutions in North Africa and the real democracy movement in Spain point the way forward.

As the present political system is ossified, alienated and generally in someone else’s pockets, then it follows that entirely new forms of democracy are needed. The assemblies that have been a feature of 2011’s uprisings are an experiment in democracy that actually works.

Democracy here is not an add-on, to obscure some other power relations but a conscious effort to do things better. The general assemblies have the potential to go further than the spaces they currently occupy. People’s Assemblies can become not just the voice but also the power of the silenced, disenfranchised 99%

They could reach out to neighbourhoods and communities and offer new forms of representation, participation and direct democracy. A network of assemblies could begin to draw up strategies and plans for a democratic alternative to the power and rule of the market capitalist economy.

Utopian? Yes. Possible? Undoubtedly. Necessary? Absolutely!

Paul Feldman
Communications editor