As people wander the towns and cities of Greece and Spain
today looking for work, food and simply the means of survival, in California a company
that makes no profits at all will sell its shares for over $100 billion.
Mark Zuckerberg and the other people behind Facebook will be
richer beyond their wildest dreams, billionaires many times over, by close of
business as the corporation goes from a private enterprise to a public one by selling
shares on the stock exchange.
While the Greek Olympic Committee humiliatingly had to find
sponsorship from a German car firm to stage the torch handover yesterday
because the country is bankrupt, Zuckerberg are his friends are laughing all
the way to the bank.
The contrasts between Facebook and the rest of us don’t just
border on the obscene – they are way beyond that. In the United States
itself, the real unemployment rate is said by experts
to be closer to 14% than the 8% cited by official figures. Hundreds of
thousands are homeless and many millions below the poverty line.
The Facebook “flotation” is also another prime example of
fantasy finance, the same stuff that drove the debt-laden boom of the first
years of the century and eventually helped to bring the global economy down.
Millions of small investors, drawn by the prospect of easy
money are, however, likely to get their fingers burnt
as the major financiers move in.
With the global economy on a knife-edge the unreality
persists. Still the bankers are paid in telephone numbers (on top of their
bonuses) while 25% are out of work in Spain and the Greek standard of living
has fallen off a cliff as a result of austerity demanded in exchanged for
loans.
The eurozone crisis is intractable. It’s not a matter of if
but when Greece
either leaves or is ousted from the single currency. Fresh elections next month
seem certain to propel the left-wing Syriza into government. Its leaders have
pledged to renegotiate
the bail-out terms with the EU and European Central Bank but stay in the euro.
They can dream on.
As in Spain ,
where 16 banks were downgraded overnight, people in Greece are beginning to take their
money out of the banks just in case they wake up one Monday and find their
euros have been replaced by the New Drachma or the New Peseta at much lower
values.
Judging by the near hysteria from prime minister Cameron in London , the impending
break-up of the euro will precipitate an economic slump as well as a banking
crash that according to the BBC’s Robert Peston was only narrowly
avoided at the end of last year.
Martin Wolf, the Financial
Times’ leading analyst, confirms this. He wrote last night: “These perils
are not of concern to the eurozone alone. Taken as a whole, this is the world’s
second-largest economy, with the largest banking system. The risk that a bigger
eurozone upheaval would cause a global crisis is real. As frightening is the
likelihood that eurozone crises would become permanent features of the world
economy.”
There is no future for the majority along this road. The
capitalist system is actually broken and beyond repair. There is no choice but
to think along the lines of reconstructing the economy along lines of
co-operation, mutuality and not-for-profit, democratically-owned enterprises.
That would involve cancelling all sovereign debt. Bond
markets that are presently holding countries to ransom would be shut down,
along with the stock markets. Investment bank speculation would become a thing
of the past. All the expertise in the financial industry would be put towards
creating new, equitable monetary arrangements between countries.
This scenario undoubtedly seems a long way to most people.
But with the crisis reaching a tipping point, these are the sorts of
considerations we will have to apply ourselves too in the near future.
Paul Feldman
Communications editor
