Destructive Neoliberal Austerity - by Stephen Lendman
Instead of vitally needed stimulus, Washington and European governments dictate austerity. The pretext of deficit reduction is being used to transfer more wealth to those already with too much, plus the usual canard over the urgency to save national banking systems.
In other words, make ordinary people bear the burden of bailing out banking giants responsible for the severest economic crisis since the Great Depression. How? The usual IMF solution, involving preservation of capital at the expense of workers - a package including wage and benefit cuts, less social spending, privatization of state resources, mass layoffs, deregulation, lower "onerous" taxes, maintaining corporate debt service, and harsh crackdowns against resisters.
In the 1980s, it was called Reaganomics, trickle down, and Thatcherism. Today it's destructive "shock therapy" called austerity, the same scheme pitting capital against people - disposable workers tossed out for big money's gain.
It's how predatory capitalism works, destructively for so many to enrich an elite few - snake oil peddled as an economic elixir, corrupted politicians and central bankers forcing harmful policies that, in fact, don't work.
Three years of failure showed imposed measures have hurt, not helped, and the longer they continue, the more sickness will spread and deepen, causing imposed poverty. It's why independent experts see long-term depression, rising unemployment, human deprivation, and bigger than ever bonuses for bankers until the inevitable house of cards collapses. Welcome to the new world order, phase two.
In America, the Fed furiously monitized debt. First QE I, now II, likely III and IV coming that could have worked the first time if constructively, not destructively used. An earlier article explained, accessed through the following link:
Swapping credit for toxic assets helps banks, not the economy. However, using it for productive investment works. In her September 8 Webofdebt.com article titled, "How to Reverse A Deflation: Helicopter Ben Needs to Drop Some Money on Main Street," Ellen Brown explained that:
"Running the government's printing presses to pay its bills has not seriously been tried since the Civil War, when President Lincoln saved the North from a crippling war debt at usurious interest rates by printing greenbacks (US notes, interest free). Other countries, however, have tested and proven this model more recently. They include Germany, which pulled itself out of a massive financial collapse in the early 1930s by printing a form of currency called "MEFO bills," and Australia, New Zealand and Canada, all of which successfully funded public works in the first half of the 20th century simply by advancing the credit of the nation. China, Malaysia, Guernsey, Jersey, India, Argentina, and other countries" also tried it successfully during hard times to revive their economies.
Why not ailing America and European ones today. Central bank money creation (credit) for public projects and other productive investments stimulates economic growth, creates jobs, and turns depression into prosperity - inflation free by keeping credit and productive investment in balance. Whenever and wherever it's been tried, it worked when done right.
Instead, sweeping austerity measures are dictated for America and Europe. Last spring, an EU summit announced a Greece bailout package, dependent on "budgetary discipline" and imposed poverty, the same IMF prescription for Latvia, Iceland, Hungary, Romania, and Ukraine. Now eurozone shock therapy, what economist Michael Hudson calls a:
"neoliberal experiment....to drastically change the laws and structure of how European society will function for the next generation. If (successful, they'll) break up Europe, destroy the internal market, and render that continent a backwater."
Calling it a "financial coup d'etat," he said "bankers are demanding (and getting governments to) rebuild their loan reserves at labor's expense," Washington using the same ugly scheme.
Throughout the West, neoliberals are empowered. "From Brussels to Latvia, (they) aim to shrink their economies (by) roll(ing) back wage levels by 30 percent or more - depression-style levels," making Europe and America banana republics.
In late September, EU countries, led by Germany, increased pressure on member states to cut deficits by lower public spending, Chancellor Angela Merkel, in fact, demanding sanctions on offenders and suspending their voting rights for continued policy breaches. At the same time, corporate taxes have been cut, continuing a burden shift to workers. Since 2000, 12 of the 27 EU countries raised VAT rates, Hungary, Denmark and Sweden now charging 25% for commodity purchases while wages and benefits are being slashed. Some new world.