If you don’t already understand that headline, you are missing the primary goal of neoliberal capitalism over the past nearly 40 years.
Stop assuming the 1% wants growth economies…please. Just stop.
The 1%’s interest is only in supporting the “keep all I got” model. Accept this as a rule and you are halfway to enlightenment, and you will pierce the technocratic lie that “economics is too hard to understand”.
Merkel: Still juggling Neoliberal recipes while the Titanic heads straight for the ice.
Yet the fundamental misconception that high finance actually wants a “high-growth” model - but just can't figure the darn thing out - is likely to persist. This is fostered by the mainstream media’s longtime deification of economic growth rates; but the recent twist is their newfound insistence that the 1.7% predicted 2017 Eurozone growth rate constitutes a turnaround, recovery, success story, blah blah blah. (1)
Talk to the man on the street and they don't know what recovery is being bandied about. Heck, Cuba does better than 1.7%, even with an international blockade!
This growth rate deification was never preordained - other alternatives were rejected: real unemployment rate (which includes underemployment), poverty rate, purchasing power index, etc.
Let's play their game: surely they have been able to win according to their fixed rules?
Obviously…no. Or as they like to say: “Not just yet.”
So when are France and the Eurozone going to experience serious, broad growth? As the world’s largest macro-economy their stagnation is, after all, slowing the economies of the entire (non-socialist planning) globe.
In a nutshell, I can guarantee you that the Eurozone’s current near-depression/recession will not relent until wages and working conditions are drastically reduced, as is the collective ability to demand the minor redistributions of wealth permitted under capitalism.
My two guarantees are, after all, essentially what Juncker, Merkel, Schauble, Macron, Draghi, Dijsselbloem (Who? Exactly.) and other Eurozone leaders have repeatedly admitted…people just don’t want to believe it (or re-broadcast it). Economics, you see, are not forced by economic imperatives, but by political and cultural choices.
I would like to return to a quote by former Greek Finance Minister Yanis Varoufakis - I have used his 2016 book, “And The Poor Suffer What They Must?” as the jumping-off point for this 7-part series, which is now concluding. The first article of this series lambasted him for preferring to be a rock star instead of a true leftist. The second article replaced his fake-leftist analysis of the formation of the Eurozone with a truly leftist one. But, for the most part, the rest of the series has commended, re-broadcast and expanded upon his admirable whistleblowing regarding the appallingly corrupt and dangerously precarious nature of the Eurozone today.
Varoufakis related a discussion he had with an ECB & IMF interlocutor on the economically self-defeating nature of raising the value-added tax (sales tax) on a country like Greece. I place it here to show that the introduction of clearly counterproductive and ineffective economics - the policies of austerity - is by design. But what is the design?
“’Someone whose views matter here wants to demonstrate to Paris what is in store for France if they refuse to enact structural reforms.’”
To take a timely quote from the essential modern economist Michael Hudson - from his new, superb, comprehensive article on The Saker, “Socialism, Land and Banking: 2017 compared to 1917”:
"The word ‘reform’ as used by today’s neoliberal media means undoing Progressive Era reforms, dismantling public regulation and government power – except for control by finance and its allied vested interests.” (emphasis added)
This series was to be a call to arms in France, but the war is already over
This series was mostly written at the end of August, when the news is always slow.
It was expected that France would return from summer vacation and demonstrate like hell against the labor code “reforms” of the neoliberal concoction Emmanuel Macron. But it is early November and the fight is long over. “For now, he’s winning the game, no point in hiding it,” said Jean-Luc Mélenchon, France's most famous leftist politician, last weekend.
Macron signed his labor code rollback into law by decree in late September. Not only was it not approved by the legislative branch, it was not even debated there. But some in the French government media would not completely hold their tongue regarding the phony claim that unions and grassroots groups helped write the law: “…the ‘social partners’ had just two hours to read the final 159-page version of 36 changes to French labour law.”
Macron had moved extremely swiftly. It was quite intelligent…but not so intelligent that I wasn't asking everybody in August: “Why are the unions and leftist groups and Mélenchon waiting until late September to schedule their protests? It will obviously be too late!”
So either I'm a genius, or they are incompetent, or there is collusion, or the French have decided to be content with only ending the multi-decade reign of the Socialist and conservative parties, and only had the political energy to throw themselves on the mercy of Macron.
Bad idea….Despite constant polling showing significant majority opposition to the changes, Macron grinned in our face as he signed them into law even earlier than anticipated and on live TV.
So…anyway…back to part 7 - the true goal of “reforms”.
Varoufakis’ “structural reforms” have not been invented in France, of course. I think we all already have a very good idea about the pro-neoliberal capitalist/anti-socialist nature regarding the measures which have been implemented across the Eurozone in recent years despite massive democratic opposition.
So there's no point to get into explaining them - after six years of results in France we have a big enough data set to draw solid conclusions: These reforms and austerity measures are self-defeating in terms of creating growth, and even the future achieved growth will necessarily be limited: you cannot make firing people easier and not expect that to offset some of your planned job gains, no?
My two proposed conditions for ending austerity - the gutting of worker wages/conditions and the assured inability to renegotiate - combined with the inability to democratically discontinue this policy, make it inevitable that the Eurozone will soon achieve a “Lost Decade”. And then also a “Lost Score”, just as Japan did.
In both of these major economic regions, recession has been fabricated in order to wage a social war against the 99%. Return to Dr. Hudson's quotation above for a more in-depth explanation.
Why does the West believe that Japan is on another planet?
Another of our very few truly indispensable modern economists is Richard Werner. He is known for having developed the term Quantitative Easing, but his greatest contribution is in bridging the gap between Europe and Japan, two economic giants. His book “Princes of the Yen” is a first-hand account of Japan's sudden shift from economic powerhouse to economic sick man - they went from being poised to buy the entire world, to perpetual stagnation. The 2001 book is so good that it did the impossible: it was an economics book that went to #1 on the sales charts (in Japan).
Perhaps it is because I am Iranian and am used to hearing about to hearing about the glories of 500 BC, but I feel that even an era as long as 16 years ago may still have things to teach us today….
But Varoufakis does not mention Werner; does not appear to have an international view of capitalism, socialism or economics; even evinces a Eurocentric prejudice. In his book he mentions the Bank of Japan just twice:
“From the late 1990s onwards, Europe’s banks copied the practices of the Anglosphere’s all-singing, all-dancing financial sector without having the safety net of a Federal reserve, a Bank of England or even a Bank of Japan to catch them when the inevitable fall from grace occurred.”
That’s a fine quote, but what on earth is “even a Bank of Japan”? Since when is being the longtime 2nd-largest economy small potatoes? It’s no shame to get passed by China, and the BoJ is certainly far more powerful than the Bank of England. The only reason for this casual dismissal of Japan that I can think of is - Eurocentrism. And this casual dismissal is from an alleged Marxist…and an alleged economist!
But if all of us would study Japan’s recent economic choices it gives us no doubt about two key issues: The Eurozone is following in Japan’s foolish footsteps, and that bankers are the same everywhere. Yes, those 1917-era caricatures are still correct….
The rise, replacement & decline of the Japanese model
I must repeat: these “reforms” were not invented in Europe. Instead, Europe is enacting/ has enacted the same reforms with the same ideology, goals and tools as in “Lost Score” Japan - the only differences are in skin color, eye shape and per capita rice consumption.
Much like postwar Germany, Japan was tapped as the US’s choice for regional manufacturing powerhouse…even though both nations wreaked such immoral, imperialist havoc during decades of suffering and repression. But both were defeated and thus easy to manipulate; both countries still host the highest number of American forces in the world today, even more than an “occupied” nation like Afghanistan.
Until 1985 Japan’s industrial/banking system worked superbly, with well-known results. It was a stronger version of France’s “mixed economy” model, with even more government direction about where, to whom and how much money to lend in order to create broad growth.
What changed was the decline of the dollar’s dominance, the end of Bretton Woods and the US’s creation of neoliberal economics in order to maintain American domination.
With the Plaza Accord of 1985, Japan adopted the US-orchestrated neoliberal changes that were designed to suck the surpluses from Japan back into the United States. ((West) Germany, France, the US & the UK also signed, but Japan had accumulated the most to lose.) From a capitalist, 1% point of view it made perfect sense and worked perfectly well, which is why Japan’s 1% adopted it. But from a nationalist or 99% point of view it was economic suicide.
As Michael Hudson related in 2008, Japan was, “acting as the Thirteenth Federal Reserve District and Republican Re-Election Committee” by going along with a plan which was clearly against its own national interests and sovereignty. Such an assessment should inflame our Japanese readers, as well as the victims of American imperialism worldwide. But it is textbook communism that the 1% cares more for money than their hometown neighbors, whether the 1% is in Japan or elsewhere.
What was the biggest specific change (and mistake) Japan made? Making the Bank of Japan “independent” from the Ministry of Finance, i.e. from the government…i.e. from accountability, oversight, The People, law, justice, morality, the influence of democratic votes, etc.
Deride communism as ‘government domination’, but examine the opposite
The core foundation of neoliberal capitalism means one thing which we will all agree on: government stands in the way of money (its power, and the ability for individuals to make it).
Therefore, the surest system to aid big money is to have a government which is politicians and not bureaucrats/civil servants.
You may have heard a lot of bad things about government workers, but they often actually know their limited terrain better than any ivory tower technocrat or special interest lobbyist/researcher. And - crucially - at least they aren’t in it only for the money. Can anyone say that about the revolving door of “politics/lobby/business” of Western politics?
Nobody will honestly or justifiably claim that that ALL socialist civil servants are “corrupt”, of course. The mainstream narrative is that socialism produces endemic corruption, but especially at the highest level.
But (and I assume we all know this but just won’t discuss it) in Western capitalism it is only not called “corruption” because the vices of capitalism - unilateralism (personal initiative), greed, “creative” destruction, a mafia-inspired “family over society” which is the barest exception to untrammeled individualism, ignoring the weak and the old, and too many other sins to name - are hailed as virtues. All we gotta do is unleash those “animal energies” of the economy, right…?
The core foundation of finance capitalism which cannot be denied is: shareholders and bankers rule (central bankers, too).
That’s why getting rid of independent finance ministers is a real goal - the good ones are not working for profit, but for the People. Bankers can be certain of what motivates other bankers; they are not sure where people like Varoufakis are coming from (to his great credit).
So we all know that the decoupling of finance/lending banking in the US took a major step forward with the repeal of the Glass-Steagal Act, and that reduction of government oversight caused the subprime housing crisis in the US.
But how many remember this “ancient history” a few years further back and across the Pacific? What happened when Japan divorced government oversight from banking following the Plaza Accord? Japanese bankers created the Asian Tiger Boom and the Asian Tiger Bust.
How? They flooded the area with easy credit, and then revoked it. Not being able to pay your bills is indeed a crisis….
And who organized the European Sovereign Debt crisis in the PIGS countries? Northern European bankers: by flooding the area with credit and then revoking it.
Many are saying the Eurozone Sovereign Debt Crisis is over, despite all the evidence to the contrary. (The previous six parts of the series have tried to marshal as much proof as possible for that thesis.)
So the multinational, regional parallels between the Southeast Asian and European crises are unmistakable.
But now we must add in the US: they have flooded their own market with housing debt, then car and appliance debt, and then credit card debt in order to cannibalize within its own rich borders.
So one would think that the lesson should be clear by now, because we clearly see the same results in all three regions which are the outgrowth of the same motivations - neoliberal capitalism.
In all three the government could have used its powers to end the crisis, but did/are not. The reason is encapsulated in my headline: Forced recession as a tool of social war against the 99%, or, enacting “reforms”.
Call the end goal whatever you like - modern debt peonage, new serfdom, the Modern Manor System - it is undeniable that Westerners live (suffer) at the apex of capitalism’s global dominance.
But the Eurozone is far, far worse off than Japan, and getting worse
This is because the European Central Bank, created amid the heyday of American neoliberalism and the death of the USSR, unfortunately has independence enshrined in its charter. LOL, given what I have related - you have to laugh to keep from crying!
The ECB cannot be constrained by any national parliament, nor can their offices be searched – they are totally above the law…so like the UN, minus the internationalist solidarity. The future of the Eurozone is so hopeless because the ECB is more purely controlled by bankers - and by foreign bankers - than Japan or the US ever was.
Thanks to Varoufakis’ whistle-blowing, praised in part 3 of this series, that horrendously undemocratic bankers’ cabal called the Eurogroup has been pushed into the light.
So we should now understand that those at the helm in Brussels/Eurogroup have always had the resources, the potential, and the will to be even more purposely destructive in a capitalist fashion as their colleagues in New York City and Tokyo.
And this is what they have done with that power:
(As the next section will illustrate further) Exactly like Japan, the Eurozone’s nearly decade-long failure of its austerity policies is now producing enough apathy, fear, desperation, and acquiescence to force through major “reforms” to Europe's hard-won postwar social safety net and societal/labor structure:
Workers’ and trades unions’ rights will not be increased while mass dismissals have been made easier; workers will not have confidence to demand their fair share of the profits produced when they can't even get a full week of work; when “full unemployment” (the mainstream never mentions “underemployment”) does return it will be without the stability of long-term contracts, the norm in places like France; the knowledge that refugees will be happy to leave their tent and take your job - when combined with anti-socialist racism - will be another divisive card for the bosses to play; and how can the standard of living “fall” when the 99% is all falling together? All of this will be the new “normal” and, of course, a success…for the 1%.
It does get even worse: Yet another crisis is coming for Europe - a political crisis. A multi-speed Europe has already been announced by the four major economies in a major betrayal of the 1991-era promises. The lender countries will simply take their money, go home, start sending monthly bills, and I recount this indisputable trajectory in part five of this series, “The Eurozone has likely entered its final calendar year, contraction coming”.
At some point Asia is going to re-decouple from the West
But not yet. I guess it's because socialist China is still not strong enough to offer a better partner? Japan should realize that with friends like these, who needs enemies?
Japan’s Shinzo Abe can be seen as a clear precursor to Macron: after 15 years of near-recession, a beaten, desperate and misled populace voted in Abenomics, which is based on quantitative easing and structural “reforms” of the type of the French had resisted for so long.
Abe has just been reelected as Prime Minister this week. QE has, just like in Europe today, been celebrated as a champion merely by achieving the pathetic goal of “avoiding recession”. He also benefited from the recent manufactured North Korea crisis to gain a typical election bump in highly nationalist Japan. He only won power in 2012 when the long-dominant “fake-leftist” party was finally punished for continuing the conservative, regressive and despised post-Plaza Accord economic choices.
The results of Abenomics are clear: dismal by capitalist standards, criminal by socialist standards.
Abe’s QE - putting aside the accompanying societal changes to the labor structure - is astronomical when compared with the ECB and Fed: as a percentage of the country's GDP it is three times larger than that of his Western counterparts, nearing 100%.
But if you were thinking that Japan is worse off than Europe you are mistaken - the reason is economic nationalism, perhaps the only defense left against globalization (assuming you foolishly reject Socialism, the solution):
The fact is that Japanese people own Japanese debt. 95% of government debt is owned by Japanese citizens; capital flight is thus not a risk; citizens are not going to dump their bonds; you cannot foreclose on both your grandmas because then you have nowhere to spend your holidays; Japan’s government thus has tremendous flexibility to print its way out of a problem (the problem is they are not printing for productive investments); Germany, the US or China cannot impose their will on Tokyo like they did with Athens.
Therefore, Japan's problem is not international capitalists, but national capitalists; if they could ever subdue their 1%, the world would be following their lead just as much as many are following Beijing’s.
Japan, it has often been written since they were “opened” to the West in the late 19th-century, apparently still has some sort of inferiority complex regarding the West: they have chosen to pathetically ape it for the benefit of their 1%, only. They should be reading Franz Fanon to understand the psychology of the colonized, which they are culturally even if not economically.
Back to the point of this series - the Eurozone’s near-future outlook: Japan provides a clear model of expectation:
Japan’s growth rate since 1990 is nearly the same as France’s since 2010 – always around 1%. That’s enough to avoid the bad-press headline of “recession” but not enough to produce genuine growth. It is enough for clueless politicians to say that good times are “just around the corner”, and enough for “ever busier putting food on the table” citizens to pray they are finally right.
Whether in Japanese or French, the capitalist media and official government responses are the same. The common thread is that they have all embraced 1980s style neoliberal capitalism, the worst form of capitalism implemented in the post-industrial era. This is also known as “the American way,” or globalization.
So has the European sovereign debt crisis been solved or postponed by Draghi?
This entire series is based around the idea that Draghi has to end QE sometime, and that when he does the bond markets will go back to the crisis of 2012 because nothing has fundamentally improved since 2012.
On October 25 the ECB’s Mario Draghi gave his long-awaited speech. So was it more “free money” to the 1%, or will they start looking for other ruthless, capitalist, speculative investments?
So….drumroll please…
Postponed!
Draghi refused to use the scary word “tapering”, but the ECB is doing just that by going from €60 billion to €30 billion in bond-buying per month, for nine months. This will bring the total holdings of the ECB to approximately €2.6 trillion. Draghi really had no choice as far as the length of nine months - QE must end because there are almost no more national bonds to buy under the current rules.
So this is just a postponement, and an admission that the Eurozone economy is still not prepared to stand alone without government banker bailouts, daily. But make no mistake - nothing has been delivered for the 99%.
When they run out of national bonds, maybe they will change the rules in order to buy more…? Unlikely, because die-hard capitalist (West) Germany is tired of postponing the obvious - an oh-so-profitable Troika-led gutting of more than just Greece.
Or, the ECB might move on to buying corporate bonds? Maybe that will appease the speculators temporarily, but it will not change the fact that the Eurozone’s national bond markets - totally uncoupled from each other despite living in a multinational project - will be back to where they were in 2012 by next September. Governments will still need to sell bonds….
So Draghi’s announcement did not rattle the bond markets because the status quo has not been changed - the can has been kicked down the road again.
But nothing changes the crucial fact that five years of QE has gone towards the 1%, the stock market, and assets like real estate, jewelry and artwork, instead of productive investment geared towards producing jobs, growth and prosperity for the 99%… or anything which would have improved the “real economy” and thus reduced the chances for another crisis.
Voila….That is where the Eurozone stands today - as the biggest link in the global economy, and still the weakest link.
Thanks for reading this series and let's postpone our rendezvous.
See you next September, Mario! You may be hoping for a miracle, but high finance will not grow a conscience by then. Buy Bitcoin while it’s still in 4 figures!
Sorry to add here that I have not even discussed how the three Western regions of the United States, the Eurozone and Japan have no viable plan to sell all of this massive QE debt to the private sector. They will flood the market at the same time, where enough demand cannot possibly exist, and thus will have real difficulties getting these debts off their books. Somebody is taking a haircut - under capitalism it is always the People. But…because the People have already bailed out the banks, the haircut is coming from your wages and stability.
So where does this “unloading QE haircut” come from, then? You tell me….
Planned mistakes aren’t ‘mistakes’ - thus socialist economic governance is needed
In the end, there is no way out: government spending is the only way. We will always collect taxes, after all.
But there is government spending in capitalist countries (where bankers decide where the money goes - their pockets), and then there is government spending in socialist countries (where elected/appointed/recallable/imprisonable bureaucrats decide where the money goes): you decide which is better.
Both Werner and Hudson (with his vital modern critique of the FIRE sector that is usuriously bleeding the West dry, just as they did it in 500 BC, 500 AD, 1500 AD and at all points in between) do not denounce quantitative easing per se - they denounce that it is being used to benefit only the 1%. That is simple economics and simple economic history….
Regarding political history and the pan-European project: It is common knowledge that Europe’s founding fathers hoped that a monetary union would lead to a political union, in order to support said monetary union. It is also clear they hoped that an economic crisis would provoke efforts towards a closer political union.
But this is not a democratic plan in the slightest! This is blackmail of the European People!
This is the undiscussed, undemocratic secret at the foundation of the pan-European project, akin to slavery in the US, imperialism in the French Republic, and perhaps foot binding in modern Imperial China. Only one of these regions has forced a modern peoples’ revolution to throw off this sinful system….
And you can call it hostage-taking, opportunism, and just plain sadistic cruelty, because Europe’s capitalist elite knew that when the next financial crisis inevitably came along in capitalism, great suffering would be produced worldwide by the ill-prepared monetary union.
Perhaps the one point of this series is to prove that nothing has changed in the Eurozone since 2012, and that Spain and Italy still remain on the edge of a punishing Troika bailout. Just as the Asian Tigers and Greece were busted out - the bankers’/Troika’s toll is terrible, so terrible that “reforms” are being accepted in places like France in a plea for preventative mercy.
Which is why there is resistance: Brexit has been followed by Catalonia, which will be followed by the departure of Central Europe when “multi-speed Europe” arrives, which will be followed by some other -exit for as long as this atrocious status quo exists in Europe.
Communism is, after all, an entire cultural system and not just an economic point of view. Because the current aim of this particular pan-European project is so ruthlessly capitalist and yet has been so imbibed unthinkingly, it will take many years of re-education to learn what is true, harmonious pan-European solidarity.
The jury is out as to which will come first: solidarity or breakup.
Conclusion: You either aspire to the imperialist 1% or dare the socialist dream
I recently interviewed a prominent investment fund, as a part of my work for Press TV. After our 15-minute interview, I left thinking that I disagreed with everything the investment banker said - not surprising given my adherence to communism. We chatted afterwards as he smoked, and he rattled off a clichéd national stereotype to explain the economy of every global region. We needed to film his office to get some extra footage for our report and, probably because he saw that I was reading his investment magazines to pass the time, he printed out a 10-page article he had recently written. I turned the last page to read his conclusion, and here is his third to last sentence:
“When taking into account the level of stock market valuations, we find that the momentum can be found to firmly install the fiscal reforms which will - finally - put in place the American system.”
And this guy is French….I don't think “the American system” is what de Gaulle expected, or what the French fought the Germans for and, most crucially, what the French people want? That last point, due to the dictates of national sovereignty, may be more important than the key fact that the American model does not even work for the average person.
I think the investment banker’s final sentence reveals the obvious, ongoing collusion between high finance and central banks:
“It seems necessary to have a greater clarity on the monetary politics of the two central banks (US Fed & ECB) not only in the direction in which it is leading, but on the timing and amplitude of the direction.”
Rest assured that nobody in the investment, banker, or central banker community is reading this series.
If they even caught a whiff of it they would drop it immediately, as it would produce immediate and painful cognitive dissonance due to their false assumptions and self-serving conclusions.
Because they cannot tolerate different ideas, they live in a little insulated bubble, and they don't want anything to touch them physically or even intellectually. They seem to hope to earn a lot of money quickly, in order to escape the daily grind, the sweating masses, the idea that all labor is equal.
I will end this 7-part series with a quote from Varoufakis because, despite my on-the-ground experience as a daily, hack journalist (where breadth and urgency confer real virtues, although certainly not the only ones), people will take his (fake-leftist) word over mine.
“To believe that Europe’s problem was debt. Not the architectural design of the Eurozone. Not its unenforceable rules. But debt. Debt was never Europe’s problem. It was a symptom of an awful institutional design.”
The tragedy of the European austerity I have reported on and am living through is that it ensures that the indebted will never be able to repay: Greece will never ever pay off what they owe – believing that is just proof that you have been misled by the media.
They are being told “no bailout, and no bankruptcy”…this can only end in revolution or a stay of execution by their monetary masters. The Third World knows that the governor never calls in time….
European imperialism has finally turned inward. The lessons must be learned. The People must demand new rules. These rules cannot be capitalist. Socialism remains our only option.
***********************************
This is the final article I have written in a 7-part series on today’s Eurozone which will combine some of Varoufakis’ ideas with my 8 years of covering the crisis first-hand from Paris.
Here is the list of articles slated to be published, and I hope you will find them useful in your leftist struggle!
Varoufakis book review: Rock star economist but fake-leftist politician
Why no Petroeuro? or France’s historic effort to create a permanently anti-austerity Eurozone
The hopelessly corrupt structure of the Eurozone & the Eurogroup
The Eurozone: still as primed for collapse as ever
The Eurozone has likely entered its final calendar year, contraction coming
The English-speaking world’s fear of calling communism, ‘communism’
Forced recession as a tool of social war against the 99%
About the author
RAMIN MAZAHERI, Senior Correspondent & Contributing Editor, Dispatch from Paris
Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. His work has appeared in various journals, magazines and websites, as well as on radio and television.
