[dropcap]T[/dropcap]en years ago my life was all screwed up by the economic crisis I had nothing to do with.
In August 2008 AFP (Agence France Presse) said that if I learned French they’d give me a job. I moved in with my parents and studied five hours a day seven days a week for five months. By the time I arrived in France in February AFP, along with everyone else, was no longer hiring. The crisis had started in September with the bankruptcy of Lehman Brothers.
So I had wasted all that time and effort. I was in France but sans job - a big problem on multiple levels. I could translate French copy into English adequately but I immediately realised I could not understand anything the French were saying to me, nor could I say hardly anything to them. I was a jobless, isolated, unneeded immigrant with no income and questionable prospects in an overcrowded field now undergoing a second recession (the internet provided the first recession in journalism jobs).
Ten years later, I consider myself lucky: that is hardly the worst story you’ve heard caused by capitalism’s ever-guaranteed, always-exacerbated failures.
What have we learned?
[dropcap]W[/dropcap]hy are you asking me? Well, I better have something to say because, very fortunately (and rather undeservedly, given the many better journalists here in Paris), for most of the last decade I seem to have been one of the busiest on-the-ground English-language TV reporters in Paris.Covering the Great Recession from Europe is, I think, far different than covering it from the United States because Europeans often insist that their democracy, economy and mindset is qualitatively different from those in America.
The Great Recession in America was just a case of bad getting worse - dilapidated infrastructure from the Depression or Eisenhower eras remaining dilapidated, widespread drug and alcohol addiction falling deeper into the rabbit hole, near-zero government assistance remaining near-zero, tons of crime devolving into tons of crime now committed by people with tattoos on their faces - i.e., no real change and no real hope for change.
So what have we learned in 10 years? Last month a former employer of mine reported on the correct price for the best bottle of wine - $558,000.
What on earth is that, besides grounds for a public near-lynching? That is asset inflation of the worst, most socially-useless type. In 2008, that same price got you 27 bottles of wine, which was then the highest price ever paid for a single lot.
This two reports perfectly describe what has been the West’s fiscal policy since the Great Recession began: using taxpayer money to inflate the assets only owned by the rich and the propertied class in order to increase only their wealth. They have spent 10 years re-creating a bubble for upper-class assets - wine is never worth $93,000 a glass any more than a bottle was worth $19,000.
Meantime, the hoi polloi can taste this excellent NAPA for a mere $7,000 a bottle. Guess who's in the market for that?
No, the rich have not let taxpayer trillions burn holes in their pocket: Our money has only re-pumped new bubbles in the primary asset classes of the 1% - luxury goods, real estate, stocks (overvalued companies) and investment funds.
I will get straight to the point: Because our trillions have gone into these wasteful investments, instead of investments which improve overall societal well-being, we are certainly WORSE OFF than ten years ago.
Not all bubbles or debt is the same, despite what German-minded minds will insist. Instead of creating bubbles or debt to do any of a million positive things - improving business efficiency through better infrastructure, inventing cheaper solutions via increased education and research & development, injecting money to circulate into the “real economy” just by giving Joe Schmoe a job to uselessly move a bag of dirt from point A to point B and back again - the lack of socialist central planning has allowed the real economy to be gutted in favor of the economy of the 1%….again.
Of course, there are other bubbles which affect more than just the 1%: Western inflation over the past 10 years has been much more impactful in sapping (my) wages than the upper class realizes, but the US housing market had no reason to have reached 11% above the July 2006 Housing Bubble peak in August 2018.
For those of us who hold no property in real estate or property in corporations (stocks), we are left out in the cold. We still are yoked to debt and can be bankrupted by bubbles, though.
But the bubbles and debt of the 99% are good and even necessary: we need houses to live in, we need our sub-prime auto loans not to lead to repossession, we need our medical bills paid for, we need our elderly care bills paid for because we simply cannot stand how loud Grandpa has the TV any longer. All of this is “good debt” which sends money into the real economy (even if you can’t hold on to it for more than one payday).
The effects of the FIRE economy - Finance, Investment & Real Estate - in the recent history of capitalism has been studied and popularized by American economist Michael Hudson, but we are about to find out AGAIN just how pernicious its influence has been.
The Lost Score: not the stash of swapped prescription medication you have misplaced
[dropcap]D[/dropcap]on’t think the Eurozone is lost? The Eurozone’s GDP is 12% lower than in 2008. China’s is up 266% over the same timeframe.Your problem must be that you believe what you read in the Western Mainstream media: China’s 6.5% growth in the 3rd quarter was “weak” to Reuters, while France’s 3rd quarter growth of just 0.4% was (per my would-be AFP colleagues) a “boost as economy rebounds”. Sure, Frenchy, sure, you’re a real star. Both of those articles are from the past fortnight, but it’s the same absurd spin I’ve reported on for nearly 40 economic quarters.
Europe’s Quantitative Easing was scheduled to end September 2017, so back then I wrote a 7-part series which showed how the world’s biggest macro-economy - the Eurozone (but China is about to surpass it - remains the weak link the global economy despite the “whatever it takes” (alleged) solution of European Central Bank President Mario Draghi in 2012. What I did was combine a decade of on-the-street reporting with some basic (leftist) economic sense (FYI, all economic sense is leftist) to write about what will happen when this bubble - the “bailed out by taxpayers” bubble - finally re-bursts. That is the biggest bubble, and it is about to pop.
Because they no doubt read and agreed with my analysis, the Eurozone’s leaders postponed the end of QE for 1 year. However, come January 1st, no more 30 billion euros in free money to high finance every month - they have been given 2.5 trillion euros in total. Again, we in the Eurozone have gotten zero from all that because the center- and right-wing forms of capitalism do not allow strings to be attached (such as delivering jobs, community betterment, etc.) in return for these fiscal gifts. CEOs, not workers, rule - the Eurozone has never been a socialist republic.
The problem is us
[dropcap]T[/dropcap][dropcap][/dropcap]his policy was not at all wanted by the Eurozone’s population…but this is a liberal democracy: that means public opinion is aggregated once every four or five years, and then the sheep must shut up and take it. That’s why it made no difference when Francois Hollande was elected on an anti-austerity platform: in classic modern liberal democracy form, he simply introduced a divisive, deflecting plan to approve gay marriage on the very same day - November 7, 2012 - that he announced his backtracking acceptance of austerity.It is only in socialist countries where pubic opinion is actually reflected in policy making - empowering the average citizen is one of the two pillars of socialism (redistribution of wealth being the other) and what do you think “empowering” means? Hint: it is not synonymous with “ignoring”.
The Chinese Communist Party, it has been accurately written, is the world’s biggest public polling firm. There is no doubt that Cuban socialists are reflecting the People’s will when they are counting up their few unblockaded pesos and prioritising education, housing, medicine and food. North Korea is not funding nuclear research because they want to, but because all North Koreans are in agreement that they were the most-attacked, most-threatened, most-surrounded nation in the 2nd-half of the 20th century. You are totally unaware if you think the Iranian Revolution has endured similar violence and menacing by wasting their oil money on policies which the Iranian People cannot immediately and tangibly see have improved their quality of life since 1979: Iran’s economy, essentially 100% state-controlled, reflects the People’s will to a great degree (it is structurally impossible for it to reflect the will of private Iranian CEOs).
However, the West’s beloved liberal democracies do not at all care or reflect popular opinion - liberal democracies are designed to please the bourgeois/aristocratic/top 10%/technocrat/brahmin/genetically-superior/culturally-superior class. We hold these truths to be more self-evident in 2018 than 2008.
But what will happen when QE ends in the Eurozone? My prediction last year was based on capitalist logic: high finance, no longer bought off by free money (and thus less able to pay for $500k wine), will go back to doing what they did at the height of the crisis in Europe - the 2012 Sovereign Debt Crisis - and start squeezing the poorer countries of the Eurozone in the bond market. This time, Italy and Spain will be in their sights. This will soon spark the same chaos and instability as back then.
But worse: as illustrated, the Eurozone is far, far weaker than in 2012. They have spent trillions but bought $500k wine instead of productive, economy-safeguarding, preparing-for-capitalism’s-next-inevitable-rainy-day investments for the 99%. How could anybody possibly see it differently? I guess it’s the same answer to how AFP can see France’s 0.4% Q3 growth as a “boost as economy rebounds”. Keep the faith - success is right around the trickle-down corner, LOL!
You cannot tell me that the bankers have been totally bought off and will be content to roll around in their filth for the next 50 years, because they never are: there is always some young, Martin Shkreli-like, hedge fund-managing punk who wants to make his billions, and he will gladly hold Spain and Italy hostage to do so. Shkreli was not jailed for changing a pill’s price from $13.50 to $750 - that’s totally legal in capitalism - he was jailed because of his big mouth. But his usury and his rapper-like ego is simply how he was raised (in a non-socialist, non-religious Western culture). Nobody can stop him in the capitalist system - there is no central planning, there is total opposition to the idea of a “collective”, and they have even lost that longtime feeling of “positive racism” which formerly lent a sliver of unity to Western imperialist societies (“I can’t ruin my Color tribe and will do some things in their general interest because I hate your Ethnic tribe and fear that Religious tribe could be right.”).
Mychal Kendricks: target of opportunity, expiatory goat.
And you can’t say that we are safer now because the criminals of 2008 have been brought to justice: look at the case of Mychal Kendricks, a 27-year old professional American football player convicted of insider trading.
Kendricks is the Black son of a crack addict, so from a socialist perspective his “class label” could not be more perfect - he succeeded despite tremendous obstacles, and he would be listened to with sympathy, targeted for public assistance and given affirmative action policies. He has admitted to insider trading and should be punished, but was the 2008 crisis orchestrated by football players, perhaps in between their concussion protocols and MRIs?
The case illustrates the priority of liberal democratic/bourgeois justice systems: Mychal Kendricks, from the bottom of the socio-economic ladder, faces prison while the 1%ers who gamed the system did much more than escape justice - they were hailed as our only saviours to financial ruin, as too important (big) to fail, and subsequently entrusted with many no-strings-attached trillions.
Corruption must be punished, but Kendricks is not the problem…..
The problem is the lack of socialist central planning, the lack of democratic input (worker empowerment) on public policy, and the lack of prioritising the bottom 90% - the top 10% is prioritised, lauded and excused, instead.
The lack of all those three things created Europe’s Lost Decade of economic growth; created a situation where little-old-me was one of the few journalists to do some basic economic math and to openly say it was a Lost Decade (but which was noticed only by a small group of powerless intelligentsia on the fringe); this lack created today’s reality where things have only gotten worse since 2008, that more crisis is coming, and that the next crisis will necessarily be even worse.
The age of European austerity can be summed up quite simply: creating such a desperate labor market that the 1% was able to roll back Europe’s better-than-average social safety net, regulations, wages and working conditions.
That’s all it was - a wilful economic depression in order to turn the EU’s work culture (and financial culture) into that of the US. The same process happened during Japan’s Lost Score - the Eurozone is now entering part two of their Lost Score.
These truths are more self-evident in 2018 than 2008. If you haven’t learned that, you obviously remain resolutely pro-capitalism and pro-liberal democracy/West European bourgeois democracy despite ten years of proof in your face.
Socialism has changed much in 10 years - a new generation of leaders in Cuba, the possible reintegration of North Korea into global affairs, a possible rapprochement between Iran and Europe (but not the US), the increasing acceptance of “socialism with Chinese characteristics” as a reproducible and admirable model - but if capitalism has changed at all it is only for the worse.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
[premium_newsticker id=”211406″]
Good stuff, Ramin!