We Are All Grexit Now
By Jeff Berg
22 July, 2015
Countercurrents.org
Something occurred to me today in terms of framing the issues in Greece.
When one is in business, big or small really. And one is dealing with a competitor. If you get in a position where you can crush that competitor and take their customers then that is precisely what you do. Well maybe not you per se but that is the m.o. of business. It is what you are supposed to do, taught to do, what your bosses wants you to do. What your shareholders want you to do. And so. In the vast majority of cases that is precisely what happens. Now somewhere along the way after the destruction of the Bretton Woods system there was a switch that was turned by capital against countries.
Previously currencies including the U.S. were pegged to gold. The reason for this is that Keynes and Galbraith and the economists of the time knew that there would have to be currency stability in order for there to be development. They wanted to avoid 'competitive devaluations' and they knew there would have to be capital controls in order for their to be economic stability and the avoidance of economic crisis.
To put it as simply as possible. It worked. For one thing there were NO international economic crisis during this period. ZERO. Contrast that to the time since. They are now a regular if dreaded part of our economic universe. Also in stark contrast to today in N.A. prosperity and productivity gains were not only unprecedented but also for the first time in history they were shared equally among the five demographic quintiles. I.e. Lower class, lower middle class, middle class, upper middle class and upper class.
Furthermore even Africa and Latin America saw impressive gains. Of course there was still a cold war going on against China and Russia and they were shut out from the global financial system. Nonetheless in Russia there were still gains towards modernity that were if anything even more impressive than what was being achieved in the rest of the 'developing' world.
In this same time period Wall Street investment banks were essentially boutique operations for the ultra rich. Accounting for a tiny percentage of corporate profits in America. 1% to 2%. In addition for every dollar that was involved in speculation on the market 10-15 were involved in capital projects. This ratio obtained in no small part because of the Glass-Steagall Act.
After Nixon abrogated Bretton Woods the world was forced to find a new financial system. Necessity being the mother of invention it of course did. Unfortunately for all of us not of the platinum spoon heritage that invention included the dissolution of Glass-Steagall, In short. Wall Street got its hands on Main Street's money.
The results that have come out of these inventions we are seeing all around us.
For every dollar involved in capital projects today somewhere around a hundred is involved in speculation. This at a time when we need to completely revamp the whole of our energy and transportation infrastructure. Not to mention our manufacturing, and building stock, and housing stock, and educational system. (and, and, and, and.....) And oh yea, our waterworks and bridges are pretty much toast as well.
At such a crucial moment in world history instead of making financial rules so as to make the money flow to where we need it to - for a return on its investment keep in mind- Obama instead remade Wall Street back into the very same image that had plunged us into the abyss in the first place. According to Bloomberg Financial News, using $14 trillion in public money to do so. The man is Teddy Roosevelt to the marrow of his bones. I.e. The ultimate protector of the status quo. He doesn't have an ounce of Franklin Roosevelt in him. I.e. The man who said of the banksters :"I welcome their hatred".
Along the way what was also done was the downgrading of national sovereignty to nothing more than another financial consideration. I.e. The lower the banks can value it the better for them. Along with this all of the people of the country, and all of the things they built were also downgraded to nothing more than balance sheet item to be haggled over.
Even if it is true that they've built their country over the last few thousand years. Even then the whole of the country and all of its people are no more than a commercial enterprise of the moment. And like every commercial enterprise that may mean their moment has passed. Aka. The logic of the marketplace. What does that mean for all people everywhere? "Hey, it may be time to relocate."
To where is of course not their concern.
Similarly if like any other commercial enterprise you find yourself in a weak position in relation to your competitor. I.e. The banks versus those who actually do something for a living. Then they expect you to not be surprised when they take that position of advantage to crush you. To take you for everything you are worth. After all that is what their bosses want, what their shareholders want. Nothing personal, it's just business.
This is what we have allowed to happen since the 70's. Reaganomics, Friedman economics, All of it has led to this very unpretty pass. And what is driving the ECB to put Greece on the 'rack'. It doesn't matter that they've solved none of the economic problems of Greece. That is not what they are trying to do. Economics is not their purview. What is their purview is maximizing the return to their shareholders. And so the worse things are for the Greeks. The more distressed is the country's economy and its people - the better. The better the fire sale prices. The better the 'yield', the better their return on investment,
It is a series of catastrophically 'logical' decisions. Of course they couch it in terms like 'prosperity through austerity'. What else are they going to say? "We are here to fuck you in the ass but you should like that in any case cause your Greek!" That wouldn't go over, Leads to riots and killing and chaos like the Middle East. And as the Americans have proved in that particular socio-economic-military petri dish that just isn't great for business. So you use other words.
The results however are absolutely the same. The problems are purposely not resolved. Are instead purposely exacerbated so that the 'competitor' - aka an entire country and its people - is in an even worse position which is of course all the better for you. Nothing personal, it's just business.
I gotta think though that the family that loses the mother in childbirth. Or the mother that loses the child at birth. Or the kids that watch their grandparents live in squalor are all going to have something to say.
On the whole it seems obvious that this relentless pursuit of advantage with no recourse to the calibration that comes out of the concern for the common good cannot continue. The seeds of its own destruction are sown into its every action. Most especially at this juncture in history. I.e. The reformation of the petroleum age.
As the kids say today. "Just saying
Jeff Berg is Chair of Post Carbon Toronto
www.postcarbontoronto.org
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