Another searing indictment, delivered here in a speech in Germany about the failure of the EZ due to financialization. Long, but worth read all the way through.
A political and ideological coup d’état is replacing democracy with financial oligarchy, transferring government power to banks and bondholders. The new policy is not for governments to tax the wealthy but to borrow from them – at interest, which is to be paid by taxing labor, consumers and industry all the more. To proceed down this path would reverse Europe’s Enlightenment and the past three centuries of economics. It is called classical economics – and even “free market economics” – but it is a travesty to impose this policy in the name of the patron saints of classical political economy. The Physiocrats, Adam Smith, John Stuart Mill, Wilhelm Roscher, Friedrich List and Progressive Era reformers urged just the opposite path of what now is being taken, and indeed which the world seemed to be following until World War I and for a few decades after World War II.
The euro was crippled at the outset, financially and fiscally
The European Union was created largely as a project to end war, but the way the Eurozone has been shaped has opened an unanticipated form of warfare and tribute-seeking: a conquest waged by bankers and their major rentier clients to create a financial oligarchy ruling via “technocrats” installed much as proconsuls used to serve in the Roman Empire. Acting on the prime directive that all debts must be paid, willy-nilly, this administrative class is willing to plunge economies into austerity and depression to create an opportunity to break the power of labor unions and roll back social spending under force majeure conditions. Reversing the past two centuries of European Enlightenment, financial interests are fighting to reverse the Progressive Era’s reforms of a century ago and the social democracy that followed World War II.
Europe is being pushed into depression, but it is not a cyclical business downturn or a result of natural phenomena. It is not economically necessary, and certainly not the result of labor being overpaid – except to the extent that it is paid more to cover its payments to the banks. The sovereign debt crisis is being used as an opportunity to force privatization sell-offs and dismantle the power of governments to regulate and tax wealth. Budget deficits are used not to revive employment, Keynesian-style, but to save banks and bondholders from having to take a loss.
Michael Hudson
Financial Predators v. Labor, Industry and Democracy
