European Revolt Against Austerity Picks Up Steam

Strikers in Italy resist austerity.

It seems apparent that European politicians somehow missed out the economics class where they explain how massive cuts to public spending in the middle of an economic contraction makes things worse. They also missed the one about how simultaneous across-the-board austerity can cause resistance to spread from sector to sector and country to country, leading to a generalized revolt that could further destabilize profit-making.

Well, if they missed those classes while they were working on their MBAs, they're certainly learning those lessons now.

From Greece to Italy to Spain to Britain, the resistance to austerity is heating up. With meetings and protests and flash mobs happening this month in Toronto to try and halt our own austerity-loving mayor, it's worth seeing that this struggle isn't one that's isolated to us but is global in scope. If they can win in one country, it can inspire people in another country, which can lead to a domino-effect of anti-austerity struggles.

Perhaps the highest point of anti-austerity struggle is in Greece, which has now been feeling the hammer blows of massive cuts and attacks on jobs and pensions for well over a year. After a recent series of general strikes and battles with the police the government managed to pass a second round of austerity cuts through parliament. It seemed like they had won but students clearly thought otherwise. There are now something like 200 universities under occupation against government plans to not only bring the private sector into public education but to also attack and limit democracy on campus. This is a very important symbol in Greece, where the campuses led the fight against the Greek dictatorship in the 1970s. Since that time police have not been allowed to enter campuses without special permission from elected councils on campus. There is a big demonstration on September 8 that will include teachers from primary and secondary schools who will join the occupations in solidarity.

In Italy, Berlusconi has just voted through a massive austerity package worth $70 billion. Some of the unions in Italy have accepted that "there is no alternative" but the largest union in the country, the CGIL, called a general strike on the day that the austerity package was voted on. Up to 3 million people took part with 70,000 demonstrating in Rome and tens of thousands more taking to the streets around the country.

On Tuesday in Spain there was a protest strike and a demonstration by up to 25,000 in Madrid against a constitutional amendment that forbids budget deficits except in "emergencies". Spain has seen a protest movement, called Los Indignados (the Indignant) that exploded onto the scene in early summer, taking over public squares across the country in imitation of the Arab Spring across the Mediterranean. That movement seems to have subsided somewhat but hopefully this protest action by unions signals that it has spread into the previously acquiescent union movement.

In Britain, things are moving slowly towards a boil. Last fall there was a huge explosion of student protests and strikes against the tripling of university fees. The energy and anger of that movement spurred the union leadership - which had organized nothing to resist the Tories - into action. First there was a protest by hundreds of thousands of trade unionists and supporters in March. Then a number of unions held a coordinated one day strike in the summer, involving up to 750,000 workers. Now this fall is set to see some big protests - in Scotland, and at the Tory and Lib Dem conventions (they govern together in a coalition) - followed by an even bigger coordinated strike in November. The issue that has galvanized industrial action has been pension and this round of strike action could involve up to three million workers. This will be the biggest industrial action in Britain in decades.

A breakthrough in any of these countries could easily spur the growth of struggles in other countries. And, as Greece shows, a temporary victory by the politicians and bankers doesn't necessarily spell the end of the struggle, merely shifting it to another terrain. Here at home, we have our own opportunity to take on "austerity flu" on September 26 at Nathan Phillips Square at 5pm. Make the effort to be there - be part of an international movement for a better world.

Italy Votes To Kill Its Economy To Save Its Debt Rating

The parasites and rumour-mongers who run the debt ratings agencies, having done their work getting the Greek government to screw their population, have moved on to Italy. Let's be honest, the ratings agencies are just the propaganda arm - fully funded - of the American financial "services" industry. They issue reports and recommendations entirely based upon the needs of their masters. When that need was giving AAA ratings to the bags of doodoo that the investment banks quaintly named "collateralized debt obligations", they were there to do so. When the CDOs went tits up, taking Lehman Brothers and the insurer of choice, AIG, as well as numerous pension plans with it, the ratings agencies raised their hands and said "hey, it was just our opinion, you didn't have to listen." Given the transparent service that they provide to the big banks in fucking over the rest of the population, one wonders why anyone would listen to a damn word that they say. Actually, it's not that surprising; the rating's agencies help to organize the financial sector's response - read: assault - on those sectors of the global economy, corporate or national, that aren't doing the bidding of almighty banks.

Italy, led by a right wing dirtbag with a taste for underage prostitutes, bribery and political alliances with neo-fascists, has dutifully jumped to the tune of the rating agencies in less time than it takes to order a pizza. The Italian parliament today passed an austerity package that will immediately cut $67 billion and will lead to privatization of state-controlled enterprises, no doubt at fire sale prices that will be a big windfall for profiteers.

Well, here's a newsflash - this panic selling and austerity signal will cause consumers to retrench, will lead to a contraction of the economy and, probably, higher debt as tex revenues decline. That adds to the fact that, under Berlusconi, Italy has stagnated for a decade or more, with youth unemployment stuck at around 25% and a general perception of decline, even as Il Duce Nuevo frolics at his infamous "bunga bunga" sex parties and changes the laws to prevent himself from being found guilty on any of the long list of crimes for which he has been charged. Even the conservative Economist Magazine wants to see the back of Berlusconi, describing him as "the man who screwed an entire country." It seems that Italy isn't so much a country but a private party for its richest citizen. And now that the bill has come in for all the liquor and party favours, it's the serving staff who are being sent the bill. One can only hope that the Italians, justly famous for their penchant to strike and protest, find some will to do so now. Otherwise, they'll have to watch as their economy sinks while Berlusconi screws the daughters of their poorest citizens and raises a toast with the American ratings agencies.

Italian senate approves austerity package - Europe - Al Jazeera English

Greece: Bigger Than Lehman Brothers

What a frigging disaster. Back in 2008, the US Federal Reserve let the Lehman Brothers investment bank - which held more than a bellyful of toxic debt, go to the wall. It was meant to bring "calm" to increasingly panicked financial markets. That will probably go down in the books as one of the more stupid decisions of the first decade of the new millenium. Rather than calming anyone, it caused the global financial system to lock up as banks lost trust in each other and in the solvency of large borrowers more generally. Everyone was potentially tainted and unstable. Business literally couldn't run because there was a money strike. It was a concrete example of how much the global system had come to depend upon credit for its basic functioning.

Global capitalism seemed to hang in the balance for days and weeks. Ben Bernanke went to the US Congress and told them they had two days to sign off on a $700 billion bailout package or it was game over. Then AIG went to wall - it provided insurance for the toxic debt that turned out to have no value - and the government had to bail them out, to the tune of close to $100 billion. By the time the panic was over, the US debt had doubled.

The extent of the Lehman Brothers bad debt is unclear - in fact, part of the problem that led to the lockdown of the credit system was that the whole derivative structure of the shadow banking system was completely opaque, mixing good and bad debts together in "collateralized debt obligation" packages. However, prior to the bankruptcy declaration, Lehman's had about $65 billion in commercial and residential real estate debt, much of it toxic. They'd also recently borrowed $138 billion from JP Morgan - a debt that the US government dutifully covered for them.

The Greek government has significantly more debt than that, about $470 billion. And if Greece goes, it raises questions about Italy, Spain, Ireland, and Portugal, which involves trillions of dollars. This is mammoth and unprecedented. In Italy, the newest country to be put under severe borrowing pressure, the immediate response of the right wing government of Silvio Berlusconi is to propose an austerity package to slash the budget deficit.

But the rush to austerity is to throw gas on a fire - as Greece has discovered. Massive cuts to government expenditure have an impact upon the real economy, depressing consumption as workers are laid off and business contracts. And when the economy contracts, fewer tax dollars make their way into government coffers, which increases the debt, leading to further pressures for austerity.

It is also to blame the wrong people for the crisis. Workers haven't created this debt load, it has been the greed of the wealthy who have benefited from deregulation and tax cuts over the past three decades, leading to greater debt and greater instability. It has also been a product of the imbalances built into the European Union, which tries to mimic a unified state but is still riven by rival nation-states that compete with each other. It also suffers from imbalances in levels of development. Germany is a manufacturing powerhouse with significant trade surpluses to its European neighbours. Greece, Spain, Ireland buy German goods but could only pay for them as a result of the asset bubbles that saw property prices go through the roof for the better part of a decade. But when those bubbles burst back in 2008, governments were saddled with debt.

...budget deficits were the result of the policies implemented by states with the aim of preventing the economic crisis from morphing into a depression as well as the result of the reduced fiscal revenues and increased social spending provoked by the 2008-9 recession. The overall result has been to transfer the bulk of the bad debts that were threatening the banks onto the states that bailed them out, thus simply displacing the problem. The euro crisis of spring 2010 was the practical demonstration of this. Speculation over whether the banks were insolvent was transformed into speculation about the solvency of sovereign entities. And while every state is subject to pressures coming from the financial markets rapidly to reduce its exposure to debt, this pressure is much stronger on small and weak states, like Greece for example. What is more, the fact that the huge deficits brought to the centre of attention the capacity of each state to pay back its debts exposed the flawed nature of EMU.

What will happen now? It is likely that panic will continue to spread as European leaders remain deadlocked about what to do about the spreading default hysteria. Germany may well use its clout to attempt to force through a solution more aggressively than it has up till now. Certainly, any solution from the political and business leadership of Europe will involve pain for the working class. What is also certain is that combined with some serious inflation problems in China and a moribund US economy, we are headed back into recession.

The real question is whether workers, so soon after accepting a kick in the teeth to "do their part" in the "last" recession in 2008 (did it really end?), will accept for austerity and rollbacks. We've some magnificent fightbacks in the past year - from Greece to Madison, Wisconsin and even to Hamilton, Ontario, where Steelworkers have been fighting against attacks on pensions. But none have broken through. Sooner or later, workers struggle will have to break through or political leaders in Europe and North America will austerity us into the ground and the economy will continue to fail. The real problem is not that workers earn too much or work too little or have pensions that are too fat. The real problem is a system based upon insane and uncontrolled greed, where the priorities are increasingly based upon financial gambling of the most craven sort. 

Greece set to default on massive debt burden, European leaders concede | Business | The Guardian

Is It The End Of NATO?

I suggested the other day that NATO was basically a zombie and that they had already lost - at least in terms of intended political consequences - the war in Libya. It hadn't occurred to me that within a few days there would be infighting, including between core European members of the alliance. Yet that's exactly what we're seeing. Amr Moussa, former head of the Arab League and a big proponent of the original operation is quoted in today's Guardian newspaper as calling for an immediate ceasefire. Moussa is angling for a kick at the Egyptian presidency this year or next and the optics just don't look very good of European fighter jets dropping bombs on an Arab country.

More seriously, Italy is now calling for an immediate ceasefire, while France is calling for an intensification. Italy - along with Germany - has the biggest European economic presence inside Libya. With it looking very unlikely that NATO will be able to oust Gaddafi, those two countries stand the most to lose if Libya retaliates by seizing the property of companies from belligerent countries. Italy has major oil investments in Libya.

If Italy's call for a ceasefire is picked up again by Germany, this could easily create an unstoppable momentum towards a solution that leaves the country looking exactly like it did before NATO came in and blew the hell out of the place - except that Gaddafi's hand has likely been strengthened by his ability to pose as an anti-imperialist. And if NATO leaves Libya with its tail between its legs, this will be the second in a row failure on the battlefield, after Afghanistan. The latter war is looking increasingly like it is starting to wind-down and that a settlement of some sort will be reached with the Taliban, allowing them into government or giving them control of part of the south of the country (according to commentary on Asia Times Online, this was the American proposal, which the Taliban rejected).

NATO has no pretensions of being like the UN, some kind of world parliament (where the big powers get a veto). It is solely a military alliance. But if the military alliance couldn't whup the widely despised dictator of a developing country with a population of six million; and if it can't subdue a ragtag insurgency led by a poorly armed and mostly illiterate guerilla army - then what the hell kind of military alliance is it? Not one that is of any use to America, I'm guessing. Already, departing Defence Secretary Gates has questioned the value of NATO. Look for some tedious soul-searching in the coming months. With the likely default in Greece - potentially a fatal blow to the euro - the discrediting of another venerable European institution is the last thing the ruling classes of Europe need.

Libya deaths trigger rift over NATO campaign - Africa - Al Jazeera English

As Plain As Berlusconi's (Broken) Nose

I FEEL LIKE I SHOULD SAY SOMETHING ABOUT THE ITALIAN PM, since there's a lot of traffic arriving at my blog because of a previous post on the broken-nosed dirtbag. The first thing, of course, is that whacking him with the souvenir trophy of a church may involve a certain amount of ironic pleasure - since he has been happy to use the church to whack his opponents - it is not a useful political act. If anything, it will give him a boost in his popularity in the short term as people, thankfully, identify with and feel sympathy for those who are the victim of violent attacks.
However, the second thing is: I have absolutely no sympathy for the man. He is an extremely vicious and merciless political animal. He is responsible for much worse than a broken nose. Berlusconi was premier when carabineri were sent to attack anti-globalization protesters outside of the G8 summit in 2001, that led to hundreds of injuries, allegations of torture and the death of Carlo Giuliani. He has sent Italian troops to assist in the bloody occupation of Afghanistan. He is responsible for attacks on women's rights, attacks on Italian unions, attacks on democracy, attacks on the left, and, in general, lining up with the most degraded elements of Italian politics, including open fascists. He has contributed to making Italy one of the least open places in the world, in terms of a free press. If he has generated so much polarization and anger that a wayward and unstable soul has engaged in an act of individual violence, we ought to not sympathize with Silvio but to condemn the policies that have created desperate souls in a country as wealthy as Italy. And, apparently, I'm not alone in thinking this:

Roberto Maroni, who as interior minister is in charge of police forces, said he had counted some 300 Facebook groups praising Tartaglia. He also mentioned Youtube videos showing the attack with comments inciting more violence.

Up To 1 Million Protest Berlusconi In Italy

NOT THAT LONG AGO, I WROTE THAT Italy's right-wing, billionaire Prime Minister, Silvio Berlusconi was losing his marbles under the pressure of upcoming corruption trials, a looming (and, likely, very costly) divorce and his fall in popularity. Well, I'm happy to report that his troubles have now broken out into open protests on the streets of Italy. According to organizers there were a million people there. Police said 90,000 but then cops are liars, so who listens to them?
This is a good sign, not only because the B man deserves to be shown the door. Even more important, the left has been in disarray since the last election that Berlusconi's coalition of regular right-wing slimers and open fascists won. In part his victory was a result of the main far left party, Rifondazione Communista, prioritizing electoral maneuvers with the center left, which discredited them, over popular mobilizations. Hopefully this will give a boost to the demoralized and depressed on the left. Nothing like making a right-winger go bananas to improve your sense of perspective.

Italy's Berlusconi Losing His Marbles

SILVIO BERLUSCONI, THE ULTRA-RIGHT SCUMBAG Premier of Italy, who governs with the support of open fascists, seems to be going off the deep end. At the moment there's a lot of pressure on him with political, personal and legal problems. His parliamentary immunity has been removed, meaning he has to face trial for tax evasion and corruption. His wife is also dumping him and wants a big chunk of his vast empire for her children by him - at present it is his older children by his first marriage who are the powerbrokers. There is speculation that she could ruin him by revealing some of his dirty dealings. And he won't get much sympathy from Italian women, it seems, since his publicly sexist shenanigans have finally pissed off the womenfolk that they've taken up a petition against, him garnering 100,000 signatures in a few days, after he stated that a female political opponent was "more beautiful than intelligent." This is a guy who once suggested that women “cook on Election Day and bring that to the polling station to be examined” rather than express political views. And his overall support has been falling - though it has been so slow that one wonders what is in the Italian drinking water and whether it's been shipped there from Canada or vice versa.
It is, in any case, truly entertaining to see Berlusconi come unhinged with comments like the following:

And this weekend it emerged that Berlusconi has been avoiding his usual Rome residence because he believes he is under threat from al-Qa'ida. "I am very worried," he was quoted as saying in Italy's main daily, Corriere della Sera, and other newspapers on Sunday. "There is someone who wants to blow me up."

Or this wacky broadside attack on Italy's magistrates - that almost led to a strike by the judges - for investigating his dubious business dealings:

"The real Italian anomaly is not Silvio Berlusconi," the premier said on TV. "The Italian anomaly are communist prosecutors and communist judges in Milan who have attacked him since Silvio Berlusconi entered politics and took (political) power away from communists."

Perhaps their suspicions have arisen because of the repeated and widespread links to the mafia that have emerged over the years. Or the fact that billionaire Berlusconi controls 90% of the media, leading Freedom House to downgrade Italy's media to only "partly free" because of his political interference. Perhaps it's his acknowledged use of prostitutes for entertainment at private parties. Whatever it is, this dirtbag has a long history of nastiness and his present conundrum may be the arrival of a perfect storm that damages him fatally. With talk of an election as a result of his difficulties, we can always dream...