Monday, 17 October 2011
The Wrecked Economy - What's Fair and Whose is Whose Part 2
"So...you got that $600 trillion in your back pocket, right? Otherwise we're all going to look really stupid."
Two columns ago, I came out against some of the tactics and gaps in logic used by certain public sector unions and I would like to clarify those remarks in case they left anybody thinking I’m a callous or belligerent rich person. Something happened after the fact which has bothered me since and I just need to clear the air. I was speaking with somebody whose 13 member union was busted and locked out this year because the services they provide are for a student body and as such, the student government is their board they have to negotiate their contract with every year. Well, this year the student government is a bunch of grinning, frat boy business student Kevin O’Leary wannabes who claim the money used to pay people to run 200+ student programs is better spent on beer at the pub. They have taken to the twitter sphere regularly to brag about this while making it impossible for the 13 employees to make their living by refusing to negotiate at all. I just wanted to strike down any perception anybody may have had that I identify in any way, shape or form with douche bags like the ones the current Simon Fraser University student government is composed of. The difference between this case and the well-funded, PR-deploying teacher, cop and firefighter unions in Ontario who make up a nouveau-elite slice of our society is enormous, and I don’t like the way that these powerful guys cynically try to lump their interests into the broader “us against them”, “99% vs. 1%” argument with those of impoverished or disadvantaged people, or the masses upon masses who’ve got a patently raw deal.
I will not take part in the professional left’s endless bellyaching about the middle class and jobs, and the sneering of the right wing/business cabal at the Occupy Wall Street movement is a lesson in false pride if there ever was one. We are living in strange times and if we have a common enemy it is dogma. We need to understand what is happening in our world. Europe is, economically speaking, boiling over. While North America rushed to the aid of the old continent in other decades of the twentieth century because of ethnic fighting and warfare, the bill that has come due this time is not one of reckoning over broken treaties, nationalist tensions, or genocide. It is an actual, physical bill that needs to be paid. The world has realized that it was economic suicide to have countries with low birth rates, generous social programs, and little work (Greece, Ireland, Italy) share a currency with exporting, fiscally responsible countries that could actually afford their generous social programs like Germany and, to a lesser degree, France.
This is not the specific reason why the bubble of capitalism is about to burst, though. It is just that this has caused "anxiety" in the global stock markets, which causes "confidence" to fall. The main thing people need to have confidence in for capitalism to function properly is the solvency of banks, in this case European banks, which like banks all over the world don't actually possess the assets on their balance sheet. In simple terms, if everyone went into the bank for their money at the same time, they wouldn't get it. Although this fact is public knowledge, easily accessible with a Google search (it’s called a fractional reserve banking system), it for some reason has not wrought serious havoc up until now. But it has started to the last couple years, maybe because of all the ponzi schemes being layered on top of ponzi schemes in America with ABCPs, MBS, and CDSs and the like. The bailouts of 2008 did not make these things go away; on the contrary, in the eyes of the elite they set a new precedent where even blatant fraud and economy undermining activity like this could be rewarded with taxpayer rescue funds.
Now, when it looks like there is going to be a run on a bank, its leadership, the government of the country it operates in, and international bodies like the G20 speak of the need to “re-capitalize” or even “nationalise” it. This is a euphemism for stealing a bunch of money from the taxpayers, who will be stuck with the bill for the re-capitalization in the form of compound interest debt, to create the perception that the bank has the money it is supposed to have. But if you followed the bank through the scenario I just described, it was clear that it never had all the money before the recapitalization and it doesn’t have it after it either; the only thing that changed is the future generation of taxpayer whose lives were mortgaged away. This, dear reader, is what you need to know when you’re trying to make sense of the cryptic declarations of your country’s politicians, the head of the IMF, and the Occupy Wall Street protests.
That’s why asking the G20 leaders to solve the same global "crisis" they presided over the manufacturing of is like asking an 90 year old man to be a sperm donor for a single woman in her late thirties who feels her biological clock ticking. He may get a "rush" of appearing like a hero when he's asked to perform the action of a hero, but sooner or later reality will sink in for both parties. His "stuff" will not get the job done, and the job will not get done until some real stuff can be obtained. “Real” in this case would be an economy based on reasonably valued goods and services based on organic supply and demand. What we have now is a “Performance-enhanced” economy where the “juice” is the trickery and thievery of permanent ZIRP (zero interest rate policy that robs savers), bailouts and subsidies, orchestrated by the highest levels of government and finance.
The group think practiced by diverse economic sages like NY Times columnist Paul Krugman and Fed Reserve Chairman Ben Bernanke: that piling on more debt, deficit, and stimulus to the record amounts that were produced from thin air in 2008/2009 will "kick-start confidence and growth" and "get the stalled recovery in gear", continues to be parroted by various media outlets, including the Toronto Star. The sad thing is, the lingo, the buzzwords, and the bluster are not cutting through to the heart of the problem anymore, and more and more people are realizing it. Further indebting the taxpayer to pretend that the economy is “recovering” and “growing” is a scam, and anybody can see that. That’s why these protests are starting to gain steam.
You’d never know it, though, with the speed the finance minister Jim Flaherty and other members of the Canadian body politic take to the airwaves every other day to assure us that everything’s fine and they’re out hectoring the world in its and our own best interest. Prime Minister Harper himself even wrote this gem for the Globe and Mail, I’m guessing on the back of a McDonald’s paper bag in the back seat of his limo judging by the amount of substance it contains. He and Flaherty both browbeat Europe non-stop on the need to take “decisive action” to “restore confidence and growth” and at the same time “get their deficit under control ASAP”. Because this article by Harper contains 100% rhetoric/adjectives and zero specifics, we can’t know what he's thinking when insisting a continent perform this physically impossible feat. We can only speculate on what he means when he says “Our challenges our great but our will to overcome them is greater”. But based on Flaherty’s demand to Europe a few weeks ago that the continent increase its bailout fund from 400 billion to a trillion Euros, I’m assuming the “will to overcome” is actually the will to demand the European Central Bank to put a new 600 billion euro debt on the heads of unborn Slovaks, Croatians, Lithuanians, Maltese, and the children of the other 23 nations of the great, old continent. Or to make this example more concrete, the Canadian Prime Minister and his allies all over the world - arrogant, dismissive, rich pricks like Kevin O’Leary - figure the silver haired banker guys in Europe who wear silk ties and fitted suits and live in their posh apartments in the toniest areas of Dublin and Paris deserve to maintain their standard of living. In their minds, if they snow the under classes living in high rises grappling with 40% unemployment on the fringes of these same cities, their victims probably a) won’t notice it or b) deserve it for being poor.
The two Canadian con artists in chief will have at least one staunch ally when they head to Europe for G20 negotiations in three weeks: British Prime Minister David Cameron. His country, whose currency, the pound sterling depreciated considerably after its government threw good taxpayer money after the bad housing bubble money at its banks, will put its collapsing economy shoulder to shoulder with Canada’s at the meeting. He and Harper seem to have made a secret agreement – Cameron to be the cross Atlantic “ethical oil” shill for the Tar Sands, Harp to do this bizarre and pathetic reframing of Canadian government branding and priorities around the Queen and the Royal family. Stay tuned for more antics from the Windsor family’s two new Stooge Twins in Chief. After Cameron’s recent aloud musing of needing a “big bazooka” to tackle his country’s debt, I don’t think you’ll have to wait long. The last public figure to use that word was then-U.S. treasury secretary Hank Paulson in 2008. He wanted his “bazooka” to be over a trillion; the bazooka being, of course, the $700 billion Wall Street Bailout that was tacked onto the U.S's then record 11 trillion national debt (it's now cracked 15 trillion).
That brings us to American Politics, and Wall Street, and its occupation. But rather than risk losing you here, I will devote to those subjects the detail they deserve – in my entire next column, because they are so crazy they really deserve all our attention right now.