Tag: Austerity

Cross posted from The Stars Hollow Gazette

Last Thursday Mario Draghi, the president of the European Central Bank, won almost unanimous support for an unlimited bond purchase that would relieve the pressure on financial troubled countries by spreading the repayment of debt to Euro Zone countries as a whole:

The central bank’s program will not solve the deep structural problems of the euro, Europe’s common currency. But it will buy time for the political leaders of the 17-nation euro zone to follow through on their past promises to discipline each others’ spending more closely and work harder to relax labor regulations and barriers to business creation that are regarded as impediments to growth.

The central bank will buy bonds on open markets, without setting any limits, in contrast to an earlier bond-buying program that proved too hesitant to be effective. The bank said it would act only after countries agreed on certain conditions with the euro zone rescue fund, the European Stability Mechanism. That fund, known as the E.S.M., would buy bonds directly from governments, taking responsibility for imposing the conditions, while the central bank would intervene in secondary markets. [..]

The one dissenting vote came from Germany’s central bank, the Bundesbank, that was cast by Jens Weidmann despite Chancellor Andrea Merkel’s support for the plan.

But no so fast. The plan relies heavily on Spain and Italy to ask for help from the ECB. Both governments expressed reluctance for fear of political back lash at home and the harsh policy changes that they would have to accept. Spanish  Prime Minister Mariano Rajoy took the stance that Spain would not be forced into asking for assiatance from the ECB until the conditions were made “crystal clear”:

After Mario Draghi, European Central Bank governor, made clear that any assistance from the central bank to reduce Spanish borrowing costs would come with “strict and effective” conditionality, the Rajoy government remained steadfast in its view that a request would only be made if, and when, it is ready. High quality global journalism requires investment.

“There is no urgency,” a Spanish official said following a joint press conference between Mr Rajoy and Angela Merkel, where the German Chancellor deftly avoided a series of questions over possible new conditions for Spain. [..]

The Spanish prime minister is aware of the disastrous political consequences a direct request for a bailout would have on a nine-month-old government that was elected on a pledge to avoid the fate of Greece, Portugal and Ireland.

At the FDL News Desk, David Dayen gives his analysis:

Basically, Rajoy is saying “do your worst.” And he has some leverage. The Eurozone might be able to survive without Greece, but Spain is too big to fail. Draghi is adamant that he will not rescue the bond yields of any state that does not comply, but that has not been confirmed by events. So we have a game of chicken. And Rajoy, who campaigned on avoiding the fate of Ireland and Greece and Portugal, has political reasons to remain steadfast. He wants to keep the troika out of Spain; it’s political suicide if they come in and tell him how to manage the Spanish economy.

The knowledge among bondholders that Rajoy could at any time sign up for aid may be enough to keep them at bay relative to Spanish debt, and the debt of other sovereigns. That’s my hope, anyway. Because forcing Spain into more brutal austerity will turn out just the way it has turned out in Britain and any other country with a fragile economy.

From the annual Ambrosetti Forum at Lake Como on Friday, economist Nouriel Roubini gave his assessment:

“The ECB move is helpful but is not a game-changer. The eurozone is still in crisis,” said Nouriel Roubini, head of Roubini Global Economics.

“Unless Europe stops the recession and offers people in the peripheral countries some light at the end of the tunnel – not in five years but within 12 months – the political backlash will be overwhleming, with strikes, riots and weak governments collapsing.”

Professor Roubini said the German Bundesbank and will insist that “severe” conditions are imposed on Spain once the country requests a rescue from the eurozone EFSF/ESM bail-out funds and signs a memorandum ceding budgetary sovereignty.

“Plenty of accidents can still occur. There is austerity fatigue in the periphery and bail-out fatigue in the core. Eveybody is restless,” he said [..]

This current plan only kicks the can down the road. There are structural problems of the Eurozone system that must be addressed to adequately resolve this crisis:

There is a structural contradiction within the euro system, namely that there is a monetary union (common currency) without a fiscal union (e.g., common taxation, pension, and treasury functions). In the Eurozone system, the countries are required to follow a similar fiscal path, but they do not have common treasury to enforce it. That is, countries with the same monetary system have freedom in fiscal policies in taxation and expenditure. So, even though there are some agreements on monetary policy and through European Central Bank, countries may not be able to or would simply choose not to follow it. This feature brought fiscal free riding of peripheral economies, especially represented by Greece, as it is hard to control and regulate national financial institutions. Furthermore, there is also a problem that the euro zone system has a difficult structure for quick response. Eurozone, having 17 nations as its members, require unanimous agreement for a decision making process. This would lead to failure in complete prevention of contagion of other areas, as it would be hard for the Euro zone to respond quickly to the problem.

In addition, as of June 2012 there was no “banking union” meaning that there was no Europe-wide approach to bank deposit insurance, bank oversight, or a joint means of recapitalization or resolution (wind-down) of failing banks. Bank deposit insurance helps avoid bank runs.

So countries like Greece, Ireland, Italy, Spain and Portugal, who find themselves in a financial crunch, must rely on the not so “goodwill” of countries like Germany who are reluctant to share the pain.

The tens of millions of Americans planning to vote for Romney and Republican candidates or Obama and Democratic candidates still don’t seem to understand how broken the political system is, they still can’t seem to grasp that there isn’t much point in voting when Wall Street owns 90 percent of the politicians.  They don’t like to think about politics, they can’t see the relentless corporate agenda behind all of the two-party system posturing, but they’ve seen plenty of movies, so maybe it can all be explained to them this way . . .  

The two-party system has torched you like The English Patient, your civil liberties are Gone With the Wind, open your newspaper and all you see is Pulp Fiction.  Nixon said he’d bring us together again, but we got Haldeman and Ehrlichman and their Little Shop of Horrors, Reagan promised morning in America, but we got Dog Day Afternoon, Bush promised compassionate conservatism, but we got the Texas Chain Saw Massacre, the bankers and corporations promised jobs and prosperity, but we got Apocalypse Now.  

Put your popcorn down and tell me, do you understand what’s been happening here YET?

No?

Well here’s a red-white-and-blue clue for you . . .

Cross posted from The Stars Hollow Gazette

I found this informative discussion at naked capitalism. It’s in two parts with links that are educational, especially for those of us who have a minimal understanding of economics. The first article by Michael Hoexter of New Economic Perspectives is prefaced by Yves Smith:

The discussion of tribal allegiances in economics in this post helps illustrate why it is so difficult to push back against failed ideas when they are dear to the mainstream. It is also a useful ethnographic guide.

Is an Anti-Austerity Alliance of Left Neo-Classicals and Post-Keynesians Possible? Is it Desirable? (Part 1)

I drafted the “Mixed Economy Manifesto” as one attempt to create a common basis for anti-austerity economists and non-economists to argue against, in the clearest terms possible, the waves of government spending cutbacks that are advocated by misguided elites, by the right-wing and by right-leaning neoclassical economists. The 87 “theses” listed at the end of the Manifesto enumerated empirically and logically sound propositions about the economy as it now exists with its mixture of government and private institutions that can under many circumstances productively interact with each other. (I may attempt or others may attempt to expand the arbitrarily numbered 87 to 95 theses which would then be suitable for nailing on doors.) The Mixed Economy Manifesto also contained many statements that would appeal to Left Neo-classicals or New Keynesian economists, while maintaining a basis in what I perceive to be the more realistic ideas about the economy that have been put forward by post-Keynesians, MMTers, and the institutionalist tradition, including Thorsten Veblen and John Kenneth Galbraith.

As it stands, the world appears to be heading into a policy-induced exacerbation of the ongoing Second Great Depression that may pale in comparison to the policy mistakes of 1937 in the US, when President Roosevelt listened too much to the hard-money ideologues of his day and cut spending only to weaken the ongoing recovery from the Depression of the 1930’s. It would seem to make sense to create an alliance of as many intellectual and political tendencies as possible against a repeat of these mistakes. One major problem is that the public is largely unaware that there is a choice, so has not yet joined the struggle, except in countries like Greece and Spain where austerity is now in full force.

Another major problem in creating such an alliance is that there are significant intellectual and institutional divisions among those economists who endorse counter-cyclical spending by government and/or mobilizing the resources of government to help the unemployed and the marginally employed. These economists disagree with each other about fundamental issues and, if listened to by the public closely and in sequence, can produce either confusing or not particularly decisive advice for anti-austerity activists. This in turn makes it difficult to create a mass political movement that opposes austerity measures before they take full effect or, furthermore, after some future political victory for anti-austerity forces, for policymakers to institute policies based on a consistent new economic thinking. The most consistent critics of austerity and the economic foundations of austerity thinking have been Post-Keynesians, a diverse grouping of schools that claim to be both heirs and critics of Keynes, including the growing Modern Monetary Theory school (MMT). Post-Keynesians are generally excluded from the centers of power within the economics profession, though are not as marginalized as biophysical, steady-state/ecological, and Marxist economists. “New Keynesianism” is a much more mainstream school that integrates certain aspects of Keynes into the dominant neoclassical economics taught in college Econ 101 courses. Often the publicly-identifiable Left of mainstream economics, for instance Paul Krugman and Joe Stiglitz, can be identified as New Keynesian and therefore fundamentally neoclassical.

Post-Keynesians and MMTers often direct their sharpest critiques at New Keynesian or Left Neo-classical economists, though there are also efforts at comity from the side of Post-Keynesians. On the other side, the more orthodox and “establishment” New Keynesians/Left Neoclassicals for the most part do not offer Post-Keynesians the professional respect of acknowledgement and/or serious intellectual critique of Post-Keynesian/MMT ideas. There are signs that this “Chinese wall” is breaking down, as the global Depression drags on, but often in ways that indicate that isolated terms from or fragments of Post-Keynesianism and MMT may be taken and reconfigured to fit the orthodox model and academic “lifestyles” of Left Neo-classical economists. This was the intellectual “move” that Paul Samuelson executed in the late 1940’s, validating those parts of Keynes that would fit with neoclassical orthodoxy, while leaving out the aspects of Keynes’s work that suggested that neoclassical orthodoxy should be fundamentally questioned or overturned.

Is an Anti-Austerity Alliance of Left Neo-classicals and Post-Keynesians Possible? Is it Desirable? (Part 2)

United as they are in their critique of neoclassical economics, it would be a mistake to portray post-Keynesians as united among themselves, a further complication for the emergence of any unified message from anti-austerity economists. Post-Keynesian Thomas Palley has recently likened MMTers proposal that government institute a WPA-style “job guarantee” program to the policies of the Tory Cameron government that unemployment benefit recipients work for free. Palley’s concern is that the MMT job guarantee will undermine public sector unions but MMTers dispute that Cameron’s policy is a job guarantee program. Palley’s objections to the job guarantee and MMT were also the subject of a caustic review by Randy Wray, a prominent MMT economist. Steve Keen, who calls himself as “Monetary Circuit Theorist”, has shown an interest in finding points of commonality with MMTers while maintaining at other times a distance from it. MMT, perhaps because it has a popular following and momentum, seems to be a particular target of criticism and self-differentiation by non-MMT post-Keynesians. Perhaps this criticism is meant to be constructive but at times the disputes are often conducted in relatively heated exchanges in blogs and on Twitter, where ultimately outsiders to these disputes will remain confused and will perhaps throw up their hands.

The question then remains whether these two groups of economists can work together and fight against austerity as a loosely coordinated group, even if they themselves are not even in agreement among themselves. From the perspective of those outside of the economics profession, the prime consumers of the output of economists, a cogent and unified message against austerity would be a great help. Political movements and political actors require a unified message to achieve power. As well, to be ultimately a success if they ever achieve power, they need to have a realistic policy alternative to offer. As it stands, the voices of the Left Neoclassicals are heard much more widely, yet their vision ultimately does not offer political leaders and political activists on the ground a portable vision and argument to reshape overall policy and popular views. Post-Keynesians, in particular MMT, are working on a more realistic vision of how the economy and government work and work together that potentially is comprehensible by a wider group of people. Yet this vision, though now gaining a wider audience, has not yet achieved critical mass in the public discussion. [..]

If some prominent economists from orthodox and heterodox tendencies could agree that it would be possible to come up with a list of three to five anti-austerity principles which do not offend any “side” to this debate, this might be a way forward. These principles could then become “talking points” for economists to campaign in the media and in meetings with the powerful for an anti-austerity solution. Creating an anti-austerity “echo-chamber” would be a step in the right direction. As an independent commentator on economics not currently affiliated with an academic institution, I do not have the status to get the ball rolling on this process.

If economists, like cats, cannot be “herded” into producing a workable statement of anti-austerity principles, then the diffuse strategy of producing articles, blog posts, testimony, and media appearances becomes second best but offers a glimmer of hope that the perversity of austerity will be communicated to the broader public.

This effort, however, should not compromise or derail the long-term epistemological project to build a better social science and a better economics that can help prevent concurrent disasters like the present ones. Temporary political victories can only buy time but ultimately cannot solve the problems of governing and managing mixed economies, the type of economy in which we live and that has sorely challenged conventional wisdom.

Cross posted from The Stars Hollow Gazette

You know it’s bad when even the neo-conservatives admit it.

Austerity lovers of the world take note: Cutting government spending hurts the economy and it’s not just the Paul Krugmans of the world that say so.

The American Enterprise Institute, a conservative-leaning think tank, has some data out indicating that cutting government spending may be off-setting private sector growth. That’s notable, especially when coming from an organization with the motto “Freedom. Opportunity. Enterprise.”

Public sector GDP — a measure of the goods and services produced by the government — has shrunk for eight consecutive quarters, according to AEI. At the same time, private sector growth has increased for 12 quarters in a row, indicating that America’s slow overall GDP growth may mostly be a result of a drop in government spending.

In just the last year, federal spending has fallen more than 3 percent, and the cuts may be countering private-sector growth, the Wall Street Journal reports.

The findings show that slashing government spending may not exactly be the best way to boost the economy, even though that’s exactly what lawmakers around the world are considering. That some of the data comes from conservative-leaning AEI adds fuel to the arguments of progressive economists, who argue that painful austerity measures don’t help economies in trouble; they hurt them.

Would somebody please wake up and smell the coffee?  

     Bankers in the basement,            

     Mixing up the medicine,

     I’m on the pavement,

     Thinking about the government.

     The pols in the empty suits,

     Acolytes of Abramoff,

     Say we got a deficit,

     Want to get it paid off.

     Look out kid,

     It’s something you did,

     God knows when,

     But you’re a parasite again.

     Better blink away the pepper spray,

     Duck back down the alley way,

     Your job creator master,

     To pay for his disaster,

     Wants ninety dollar bills,

     You only got ten.

     Obama comes fleet foot,

     Asking for our input,

     Talking ’bout transparency,

     Freedom and democracy,

     But taps our phones anyway,

     Get used to it, ’cause many say,

     They must watch us every day,

     Orders from the NSA.

     Look out kid.

     Look out, look out, look out.

Cross posted from The Stars Hollow Gazette

As Atrios said, not at all unexpected when “you put the put a bunch of evil skimmers and the stupidest f#%$ing man on the face of the planet in charge of your economy.”

Britain’s economic output collapsed by 0.7% in the second quarter of 2012 as the country’s double-dip recession extended into a third quarter [..]

The first double-dip recession since the mid-1970s – when the UK was beset by high inflation and rising unemployment – meant GDP in the second quarter of 2012 was 0.8% lower than in the same three months of 2011. [..]

The news will come as a fresh blow to the chancellor, George Osborne, whose deficit reduction plans have been thrown off course by the poor performance of the economy. Output has declined in five of the last seven quarters. [..]

The data shocked City analysts. Howard Archer of IHS Global Insight said the figures were “a very nasty surprise indeed”. And Labour were swift to criticise the chancellor. Rachel Reeves, the shadow chief secretary to the Treasury, tweeted that the 0.7% contraction was a “disastrous verdict on George Osborne’s failed plan”.

The reason for Osborne’s sticking to his austerity guns is the AAA rating from the same discredited ratings agencies that rated Lehman Brothers and AIG as safe investments right before their crash in 2008. His policy has just exacerbated Britain’s “deep-rooted economic problems”

In his response to today’s terrible GDP figures (the economy shrunk by 0.7% in the second quarter), George Osborne wisely resisted blaming the eurozone, the weather or the Jubilee for the third successive quarter of contraction. Instead, he dwelt on the UK’s “deep-rooted economic problems”. Britain has many long-term problems – an economy too dependent on finance, a lack of long-term investment, and persistently high levels of youth unemployment – but the charge against Osborne is that he has made them worse, not better. [..]

At times of recession, when consumer spending is depressed and businesses are hoarding cash, the state must act as a spender of last resort and stimulate growth through temporary tax cuts and higher infrastructure spending. Yet it is precisely this option that Osborne has rejected at every turn, dismissing well-intentioned critics as “deficit deniers”. Today’s figures are his reward. [..]

While Osborne’s arbitrary targets are of little economic importance they are of immense political significance. Should he abandon his debt rule, the UK could lose its AAA credit rating. Standard & Poor’s, for instance, has previously warned that our top rating is conditional on Osborne meeting his fiscal mandate. But why should we listen to the discredited agenices that rated Lehman Brothers and AIG as “safe investments” days before the crash? The answer is simple: we shouldn’t. But this doesn’t alter the fact that Osborne did. Having adopted the UK’s credit rating as his metric of success (he once boasted that we were “the only major western country which has had its credit rating improve”) he can hardly change tact now.

The Cameron government should be fired and sent packing to a special asylum for treatment of “Austerity Insanity.”

Cross posted from The Stars Hollow Gazette

Insanity: doing the same thing over and over again and expecting different results.

~Albert Einstein~

Europe losing battle against debt crisis

Europe is fighting losing battles on two fronts. The debt crisis which began in Greece almost three years ago has spread to other countries. The recovery from the global financial crisis is ending, and the region will be in recession during the rest of the year. To combat the debt crisis, Greece, Ireland and Portugal have received bailout funds from the EU, European Central Bank and the International Monetary Fund (the “troika”), but are required to reduce borrowing through cuts in spending and higher taxes. To offset the recessionary impact of the fiscal tightening, the ECB has repeatedly eased monetary policy to encourage lending to the private sector.

Neither measure has worked as intended. The eurozone’s latest unemployment figure of 11.1 per cent in May is the highest in the euro era. Spain, the country recording the region’s highest unemployment rate of 24.6 per cent, announced a €65bn fiscal tightening programme this month. The new austerity measures will result in a deeper recession and even higher unemployment.

On the monetary front, the ECB implemented two repurchase agreements totalling €1tn with the region’s banks. While the aim was to ease the liquidity crisis that the banks experienced in November, the ECB move had the perverse impact of making those banks the principal purchasers of their own governments’ debt as foreign investors exited. This raises the risk for banks in case their governments default on their debt, or restructure payments. After a cut in the deposit rate the ECB pays the banks to zero on July 5, the central bank expected the banks to increase loans. Instead, they appear to be sitting on the funds.

The austerity measures that Germany has insisted on imposing on financially strapped countries as a requirement for bailing out the banks that caused it all, is coming back to bite the hand that fed it.

Germany Under Cloud From Euro Zone Woes

FRANKFURT – Germany’s stellar credit rating has been thrown into doubt because of the cost of holding together the euro zone, potentially making it more difficult for Chancellor Angela Merkel to muster political support to aid Greece and Spain.

Moody’s Investors Service said late Monday that it was changing the outlook on Germany, as well as on the Netherlands and Luxembourg, to “negative,” citing what it said was an increased risk that those countries will have to bear the cost of propping up Spain and Italy.

That helped push up borrowing costs Tuesday for both Germany and Spain ahead of talks late in the day between the finance ministers of both countries in Berlin.

While Germany’s bond yields remain near record lows, Spain’s have reached levels that are considered unsustainable for long, raising fears that it will have to ask for aid that its European partners cannot afford.

Austerity’s Big Winners Prove To Be Wall Street And The Wealthy

Governments in Europe, most notably the United Kingdom, have also pursued tax cuts for the rich while imposing austerity measures on the working classes. And the European financier class has benefited even more directly than their American counterparts from these budgets.

Every time the European Union has reached a crisis point on the debt carried by Greece or Spain, EU leaders, especially German Chancellor Angela Merkel, have come to the rescue with bailout funds. That money goes to the banks that own Greek and Spanish debt, whose holdings would take a hit if either country were unable to repay. But the bailout comes with harsh austerity requirements intended to encourage budgetary discipline, so it’s ordinary citizens who end up taking the hit. The most vulnerable populations are harmed by the bailouts, while the well-paid financial professionals who made the deals to finance Greek and Spanish deficits in the first place continue profiting handsomely.

“Imposing pain on Greeks is … a blood price for the ever-repeated bailouts whose actual beneficiaries are said to be Greeks, but are in fact French and German bankers,” said (James) Galbraith.

Eventually it will all come to an end. Then what?

There’s room at the top they are telling you still,

But first you must learn how to smile as you kill.

The more you smile as you kill, the higher you go. In American politics. In American banking. In American business.  All of those smiling killers have been smiling even more in 2012, because they think the Occupy Movement is dying.  Dying like democracy is, dying like equality is, as dying like justice is.

William Rivers Pitt . . .

We are told that the Occupy movement is over, finished, and irrelevant, but I strongly disagree. It is relevant because it happened: the passion required to bring needed change to this nation is out there, all around you, and the evidence of that was there for all to see last year. That passion, that desire, and those numbers are still there, multiplying and gathering strength for the struggles to come.

Occupy, like all the other great movements in American history, is passing through its infancy. The civil rights struggle was an afterthought in the 1950’s and early 1960’s, until the slow and steady groundswell of popular support delivered the Civil Rights Act and the end of legalized Jim Crow racism in America. The anti-war movement was barely a blip on the screen of popular consciousness for many, many years, until it exploded everywhere, ended a war, and took down a president.

Occupy’s infancy will end, and when it does, we will be participants in and witnesses to another moment in history, a moment when the righteous tide will wash in and sweep away the filth that pollutes us as a people and a country.

Cross posted from The Stars Hollow Gazette

The economic crisis in Spain was supposed to have been resolved in an agreement reached June 29 EU Summit but clearly Germany missed the point of this part:

“We affirm that it is imperative to break the vicious circle between banks and sovereigns”

Instead of bailing out the banks without adding the burden of repayment on the Spanish government, Germany reversed that and place the burden for repayment entirely on the Spanish tax payers increasing the cost for Spain to borrow and causing the markets around the world to drop:

Analysts pointed to a combination of factors, including a decision by the Valencia regional government to seek a bailout from Spain’s central government as well as revised economic forecasts by Spain’s government. [..]

Strategists said market participants also registered disappointment with provisions of a bailout plan for Spanish banks approved by euro-zone ministers Friday. For now, liability for the package, which is expected to total as much as 100 billion euros ($123 billion), remains with the Spanish government.

That “will do nothing to break the ‘vicious circle between banks and sovereigns’ that EU policy makers asserted was ‘imperative to break’ in the statement that followed their June 29” summit meeting, wrote strategists at Capital Economics.

Spain’s approval of an austerity program didn’t help either:

AS David Dayen point explains Britain’s austerity measures haven’t eased their debt/deficit problem, instead has increased it:

Another austerity program in Spain, in a time of 24% unemployment, has no chance of succeeding, either in improving the economy or even reducing the debt. We have a test case of that today, in Britain:

   Chancellor George Osborne’s deficit-busting plans are struggling to keep up with full-year targets as official figures published today revealed another rise in Government borrowing.

   Public sector net borrowing, excluding financial interventions, such as bank bailouts, was £14.4 billion in June, up from a revised £13.9 billion the previous year, the Office for National Statistics (ONS) said.

So Britain, which is two years into its austerity program, is borrowing more money than ever. It’s not reducing the deficit, it’s exacerbating it. And that’s what you should expect in Spain.

The International Monetary Fund (IMF) has called on the European Central Bank (ECB) to “to cut interest rates, implement a “sizeable” package of quantitative easing, and wade into bond markets to drive down borrowing costs.”

The IMF expressed concern about “reinforced negative bank-sovereign linkages” – the increasingly close connection between struggling banks, many sitting on billions of euros of government bonds; and their home states, which in many cases have been forced to offer them aid.

This vicious circle “could further weigh on confidence, growth, and public debt trajectories”, the IMF suggested.

As Spain’s borrowing costs rose, Germany was able to borrow money at a negative real yield – suggesting investors are effectively willing to pay Berlin for holding on to their cash.

In its strongly worded report, the IMF warned that ultra-low bond yields in Germany and other “core” eurozone economies were a sign of malfunctioning financial markets that are depriving other countries of funds.

“Investors are withholding funding from member states most in need, moving capital ‘north’ and abroad to perceived safer assets. This has contributed to divergences in liquidity conditions and lending rates within the euro area, adding to already-severe pressures on many bank and sovereign balance sheets and raising questions about the viability of the monetary union itself,” it said.

The only country that has benefited from this crisis is Germany and all the talk at the EU Summit to stabilize the euro and end the crisis was useless because German Chancellor Angela Merkel never meant a word she said.  

Steal 15 trillion dollars?  No problem.  

Violate park rules?  Riot police will splatter your blood all over the street.

William Rivers Pitt . . .

Buffalo Springfield was wrong. There’s something happening here, and it is exactly clear. We are, at this moment, in a savagely perilous place.

There are plenty of people out there who will flap the idiots currently running for the GOP in your face in order to dragoon you into supporting President Obama come November, and that’s fine. That’s their job, that’s what they do, and there is no doubt that the comparison favors them…but it is a stone-sharpened fact that, nationally, we are at this moment hedging true fascism as sharply as we were back in the ‘Bad Old Days’ of George and the boys, if not more so.

Some would argue that we are closer now to a true fascist America than we were then, because people of good conscience who fought against George W. Bush’s militant, media-succored fascism tend nowadays to be inclined to let this current happy-faced fascism slide. After all, it’s an election year, “Obama is better than Bush.”

Cross posted from The Stars Hollow Gazette

The heads of state of the EuroZone countries met in Brussels today for a two day summit to  try to come to an agreement on how to bail out two of its biggest members, Italy and Spain:

The 27 government chiefs will discuss buying Spanish and Italian government bonds to bring down borrowing costs that are near euro-era records, Finnish Prime Minister Jyrki Katainen said. He also proposed that bailout funds buy collateralized government debt in primary markets.

“I’ve come for very rapid solutions to support countries in difficulty on the markets,” French President Francois Hollande told reporters as he arrived in Brussels. Without specifying Spain or Italy, he said they “have made considerable efforts to deal with their public accounts.”

Leaders will consider short-term measures to stem the sovereign debt turmoil as EU President Herman Van Rompuy’s road map to strengthen the bloc’s common currency and financial oversight ran into immediate opposition from Germany. German Chancellor Angela Merkel has become increasingly isolated as Hollande, Italian Prime Minister Mario Monti and Spanish Premier Mariano Rajoy unite to push for quicker action to ease the crisis that emerged in Greece in late 2009.

Apparently all did not go German Chancellor Merkel’s way as she canceled her scheduled evening press conference. Or maybe she was watching her country’s football team get trounced by the Italians.

Euro 2012 Live Blogging: Italy 2 Germany 0

In the first part, I talked about the false comparison of Orwell to Huxley and how features of the writing made it easy to mistake each author’s purpose and scope. However, there is something else. Neil Postman was not alone in thinking, in 1984, that we dodged a bullet and instead took a pill. I understand the feeling and shared it. It seemed like, as Lord Boyd Orr had said in 1966, “Give the people a choice between freedom and sandwiches, and they’ll take the sandwiches,” but we had already been shot but did not know the blood stain.

We were aware, then, that the public of democratic nations was placidly accepting outrages that would lead to atrocities, but I would propose that it took 2003 and George W. Bush to demonstrate to us how well television and the fragmented Internet have made every year 1984. Indeed, the television, which Postman saw as an abstracted medium that forbade long-form discourse and non-pictorial conceptualizing, would eventually resemble the view screen of 1984 as much as the Soma of Brave New World, especially cable news, where anything not at full volume and alarm was mere caesura for a day of emotional extremes and informational abbreviation. The Memory Hole was far easier to achieve by accident than plan.

I criticized Postman for a misplaced emphasis on the fiction of 1984 whereby he missed the systemic critique of the novel. The novel’s appearance in the midst of a nation enacting a policy called Austerity, where everyone was to “pitch in” to get “England” back on its feet after the war, is conspicuous and screams out for a comparison. Specifically, within the fiction and outside of it, a System of power is above the people, and the people are the enemy of power itself. Big Brother is an image or visage for a system, but the true power is no person or party — just the continuing flow of resources and labor from the people to an indifferent end. This is what is frightening. The group in charge was never fascists or Stalinists or Churchill or anyone else: it was capital.

Austerity today (the “new Austerity” in Europe and deficit mania in the U.S.) is different in cause, but the same in effect. Both ask nations to turn their GDP over to repayment of debt rather than intervention in markets to stimulate employment. The language used in both instances is similar, too: “Get back on our feet” and “recovery.” However, nation states and capital have had quite a bit of time and learned a few lessons.

We can see, in the gap of attitudes and responses of the public, the effect of social and cultural mutation. If we can see a greater or lesser increase in the effects of social control, then we can understand, I believe, just how thoroughgoing Orwell’s book was a description of an ongoing project that has now succeeded.