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Late degenerate capitalism and the eurozone crisis

By Kellie Tranter - posted Thursday, 24 May 2012


What happens if the lenders to our banks suddenly want their money back? To what extent have banks here borrowed short and lent long? It will be interesting to see how interest rates go as European banks repatriate their capital, and commodity prices fall in our rubble economy.

To translate this back from money to people, this whole situation brings to mind the effects of the "ownership society". In 2005, a conservative publicist James Gleeson wrote in the "Ownership Society" issue of the magazine of the American Enterprise Institute that:

Studies show home ownership boosts civic participation and educational success and reduces behavioural problems for kids. Ownership, of any sort, makes people more conservative, both personally and politically.

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This sort of thinking makes it easy to understand why governments and banksters have a common interest in getting us all signed up for a lifetime of financial obligation. No need to roll out the water cannon or call in the riot squad for these people, who are so heavily invested in the status quo. And the only real risk of default by such conscientious borrowers lies in a systemic collapse, which the banksters know from experience will lead to their losses being quarantined and socialised.

Ask yourself why we're kept in the dark about opaque markets and bodgy financial arrangements. In November 2011, Michael West reported that the Reserve Bank of Australia and the federal Treasury have been systematically purging public information from their databases at the request of the big banks. Almost all detail relating to more than $100 billion in taxpayer-guaranteed funding has vanished. Why?

And, in December 2011, it was reported that a freedom of information request for Australian Prudential Regulation Authority risk registers was rejected because of the dangers to the economy if the registers were to be released. So much for free markets, level playing fields and information equality.

Australia does have the advantage that it can print money, so it is unlikely our banks will be allowed to fail. The problem is that banks realise that. But what will the crisis mean for interest rates or inflation or unemployment, for the person on Main Street? It's a dangerous sign when the shadow treasurer is already playing the "end of the age of entitlement" tune.

Professor Mitchell sums it up in this way:

... Australia's problem is the current government. The other problem is the next government. Australia has the fiscal and monetary capacity to ensure that everybody has a job in Australia; to ensure that we have an adequate welfare state, which doesn't mean we support sloth, but it means we support need; we have the capacity to generate an environmentally sustainable future through properly targeted industry policies and we can maintain all of it, our regions, in good shape, if we want to. What we're doing is choosing not to and are electing a sequence of governments that undermine our future. My latest estimate of teenage unemployment is 38.8 per cent once you take into account those who have dropped out of the labour force, those who are underemployed, and those who are officially unemployed. Since February 2008, which was the end of the last cycle, and the start of the downturn before we had growth again, teenagers overall lost jobs. Full time jobs lost since that time are about 90,000. The Government bats on about the need to save up for our future because we have an ageing population, etc. Well, we're undermining our future every day by not engaging with our teenagers into education. We're undermining our education. When the Gonski report came out in late March and said we needed $5 billion straight away to bring our public education system up to standard - not to improve it, to bring it up to standard - from its appalling state in literacy and numeracy and the rest of it, the first thing the responsible minister, Peter Garrett, said was that our priority is a budget surplus...

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We can suffer these sorts of plays and tricks and do nothing, until one morning we will have to wake up to greet each other, "Welcome to the world of the austerity", and hope like hell we aren't the one on its receiving end. Or, instead of being pushed to austerity, we can use adversity as the opportunity to push for a more cooperative approach, bearing in mind that the current system is built for growth, not sustainability nor stability: for money to be taken out of politics, for trading operations that call themselves investment banks to be kept separate from banking proper, for the end of speculative currency trading, and for corporations no longer being seen as people.

Some would go as far as nationalising the banks and scrapping derivatives altogether, and even though these options now sound extreme to our neoliberally conditioned ears, they should all be considered and debated.

Austerity inevitably will lock us into a badly flawed economic order, but instead we can use adversity to fan the winds of change.

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About the Author

Kellie Tranter is a lawyer and human rights activist. You can follow her on Twitter @KellieTranter

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