FacebookTwitterGoogle+RedditEmail

Who Will Pay For the Economic Collapse?

by SHAMUS COOKE

First Iceland, then Ireland, now Greece. Much of Europe is mired in inescapable debt and bankrupt nations, the result of crashing banks, bank bailouts, and soaring unemployment. The U.S. and U.K. watch from a distance, knowing their turn is next.

The European corporate-elite — like their American counterparts — lavished non-stop praise on the “bold yet necessary” decision to bail out the banks; the economy was supposedly saved from “impending collapse.” But every action has an equal but opposite reaction. Bailing out the banks saved the butts of dozens of European bankers, but now millions of workers are about to experience a thundering kick in the ass.

Unbeknownst to most Europeans, the public money that financed the bank bailouts created a massive public debt problem, to be solved by massively slashing public programs that benefit workers and the poor. This amounts to a blatant transfer of billions — maybe trillions of dollars — in public wealth, away from the majority of citizens toward a parasitic crust of bankers.

These “tough decisions” should act as warnings to the American working class, since the U.S. corporate-elite, too, has clear-cut plans for who is to pay for their colossal spending spree on bank giveaways and foreign wars (hint: it’s not them).

The massive amounts of government bonds printed to pay for the global bank bailouts were purchased by global investors (capitalists). For these vultures, government bonds are an excellent investment when the economy crashes, and gambling on stocks turns sour. Now, these investors want to be sure that the heavily indebted governments are able to pay up. And they’re becoming impatient.

A good peek into the mind of the global investor can be seen in any of the three global “credit ratings agencies” — Moody’s, Standard and Poor’s, and Fitch. These corporations give “grades” to debtors — federal governments, corporations, state and city governments, etc. — based on their “credit worthiness.” To have one’s grade lowered means that investors should back off and demand higher interest rates on loans, if loans are made at all. Receiving a “B” instead of an “A” can make the difference between a poor nation being able to build a highway, hospital, or school.

Recently, Moody’s released their notorious “misery index” — the nations that are most sunken in debt and least able to pay it back, requiring that “special measures” be taken to prove to investors that these governments are able to repay their loans. The biggest losers of the misery index were not surprises and included the above-mentioned European countries. However, ranking right behind bankrupt Iceland was the United States: the once-proud super-power is now a debt-ridden carcass, with investor vultures circling overhead.

Moody’s is warning rich investors to be wary of formerly rich countries defaulting on their loans, i.e., going bankrupt. Moody’s chief of rating nations’ credit, Pierre Cailleteau, explains why:

“This is mainly because of the crisis of public finances [bank bailouts plus unemployment] that has beset many rich countries in what Moody’s believes will be the final — and disturbingly long-lasting — stage of the crisis.” This is what passes for optimism nowadays.

Moody’s is demanding that less-rich nations like Greece, Ireland, Spain, etc., take immediate actions to make their rich investors happy. The Washington Post explains Ireland’s situation:

“More than $4 billion in cuts…will slash salaries for 400,000 government workers while making painful reductions in benefits for such groups as widows and single mothers to the blind and disabled children.” Unemployment benefits were also slashed by as much as 30%.” (December 22, 2009).

The U.S. and the U.K. need not make immediate cuts, but they must make immediate plans to make major cuts, explains Moody’s spokesmen Cailleteau:

“…this will be the year [2010] where both the U.S. government and the U.K. government will have to articulate a credible plan to address their problems of large debt.”

John Chambers of Standard & Poor’s was more blunt:

“The U.S. government, like the U.K. government, the Greeks and the Irish, is going to need to draw down fiscal stimulus, pare expenditures [make cuts], raise revenues [taxes] and probably take a look at [cuts] in their entitlement programs” — Social Security, Medicare, Education, etc.

This is not news to President Obama. While he was extending the Bush bank bailouts, Obama took time to calm the nerves of investors, who saw an exploding debt that would soon need to be dealt with. That is why Obama pledged to the Washington Post that he would “reform entitlement programs.” (January 16, 2009). This was to be done after the economy had stabilized.

It’s almost time.

The mainstream media will surely go on the offensive to support our corporate-owned President in his assault on the social programs long cherished by the American working class. We will be told that there are “no other options,” when in fact there are.

Not only could military spending be reduced by hundreds of billions of dollars per year, but taxes should be raised significantly for the very wealthy. If the top 1 percent of the richest Americans were taxed at 90 percent, hundreds of millions of Americans would benefit, since public education would be saved, alongside Medicare and Social Security.

Barack Obama will soon be pursuing a policy that George Bush Jr. would never dare try. He must be resisted at every step. American unions should look to Europe for inspiration for how to deal with the coming onslaught: mass demonstrations and united strike action will be the only way to put sufficient pressure on a government enforcing a solidly right-wing corporate agenda. The political instability that is currently engulfing Europe is soon to be exported to the United States — we must not be caught off-guard.

The issue of the day is clear: somebody must be made to pay for the economic crisis. The corporate-elite is planning to push this burden on to the working class. The working class must push back. Unions and community organizations should begin organizing now in anticipation, with demands to tax the rich and corporations, and to save Social Security, Medicare, and public education.

SHAMUS COOKE is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org).  He can be reached at shamuscook@yahoo.com

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org). He can be reached at shamuscooke@gmail.com

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
February 24, 2017
Friday - Sunday
Pierre M. Sprey - Franklin “Chuck” Spinney
Sleepwalking Into a Nuclear Arms Race with Russia
Ajamu Baraka
Malcolm X and Human Rights in the Time of Trumpism: Transcending the Master’s Tools
Jeffrey St. Clair
Roaming Charges: Exxon’s End Game Theory
John Laforge
Did Obama Pave the Way for More Torture?
Mike Whitney
McMaster Takes Charge: Trump Relinquishes Control of Foreign Policy 
Paul Street
Liberal Hypocrisy, “Late-Shaming,” and Russia-Blaming in the Age of Trump
Patrick Cockburn
The Coming Decline of US and UK Power
Louisa Willcox
The Endangered Species Act: a Critical Safety Net Now Threatened by Congress and Trump
Vijay Prashad
A Foreign Policy of Cruel Populism
John Chuckman
Israel’s Terrible Problem: Two States or One?
Matthew Stevenson
The Parallax View of Donald Trump
Norman Pollack
Drumbeat of Fascism: Find, Arrest, Deport
Stan Cox
Can the Climate Survive Electoral Democracy? Maybe. Can It Survive Capitalism? No.
Ramzy Baroud
The Trump-Netanyahu Circus: Now, No One Can Save Israel from Itself
Edward Hunt
The United States of Permanent War
David Morgan
Trump and the Left: a Case of Mass Hysteria?
Pete Dolack
The Bait and Switch of Public-Private Partnerships
Mike Miller
What Kind of Movement Moment Are We In? 
Elliot Sperber
Why Resistance is Insufficient
Brian Cloughley
What are You Going to Do About Afghanistan, President Trump?
Binoy Kampmark
Warring in the Oncology Ward
Yves Engler
Remembering the Coup in Ghana
Jeremy Brecher
“Climate Kids” v. Trump: Trial of the Century Pits Trump Climate Denialism Against Right to a Climate System Capable of Sustaining Human Life”
Jonathan Taylor
Hate Trump? You Should Have Voted for Ron Paul
Franklin Lamb
Another Small Step for Syrian Refugee Children in Beirut’s “Aleppo Park”
Ron Jacobs
The Realist: Irreverence Was Their Only Sacred Cow
Andre Vltchek
Lock up England in Jail or an Insane Asylum!
Rev. William Alberts
Grandiose Marketing of Spirituality
Paul DeRienzo
Three Years Since the Kitty Litter Disaster at Waste Isolation Pilot Plant
Eric Sommer
Organize Workers Immigrant Defense Committees!
Steve Cooper
A Progressive Agenda
David Swanson
100 Years of Using War to Try to End All War
Andrew Stewart
The 4CHAN Presidency: A Media Critique of the Alt-Right
Edward Leer
Tripping USA: The Chair
Randy Shields
Tom Regan: The Life of the Animal Rights Party
Nyla Ali Khan
One Certain Effect of Instability in Kashmir is the Erosion of Freedom of Expression and Regional Integration
Rob Hager
The Only Fake News That Probably Threw the Election to Trump was not Russian 
Mike Garrity
Why Should We Pay Billionaires to Destroy Our Public Lands? 
Mark Dickman
The Prophet: Deutscher’s Trotsky
Christopher Brauchli
The Politics of the Toilet Police
Ezra Kronfeld
Joe Manchin: a Senate Republicrat to Dispute and Challenge
Clancy Sigal
The Nazis Called It a “Rafle”
Louis Proyect
Socialism Betrayed? Inside the Ukrainian Holodomor
Charles R. Larson
Review: Timothy B. Tyson’s “The Blood of Emmett Till”
David Yearsley
Founding Father of American Song
FacebookTwitterGoogle+RedditEmail