Follow the Money Behind Europe’s Debt Crisis
It offers some refreshing reminders as to why fake fiscal emergencies and resulting ‘austerity measures’ are nothing but a sham.
Worse, just as they did in 2008-09, governments are rushing to rescue rickety banks with public funds. That’s why the European Central Bank, the IMF and Europe’s leading powers keep bailing out ailing states like Greece, Ireland and Portugal.
Again: follow the money. When debt-strapped governments receive hundreds of billions in new loans, that money is immediately sent into the coffers of private banks as payments on past loans. The whole situation, observes one writer in the Financial Times, “resembles a pyramid or Ponzi scheme” in which original lenders are paid back with new loans.
The difference is that the new loans are coming from public funds, which is another way of saying that private banks are being rescued once more by the people. Just as in the global bank crisis of 2008-09, bank profits are private, but their losses are public. Not exactly the free market. But it’s a nice deal for profligate bankers.
Any finance minister – including Jim Flaherty – that pretends there are different and more pressing issues behind this building crisis risks their credibility as people wake up to the reality that the big transfer – shifting our funds to the big banks – has to come to a quick end.
It’s important that we all resist austerity measures – fake fiscal emergencies designed to crush public services and public service – in the wake of this knowledge.