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Neoliberalism as a New, More Dangerous, Form of Corporatism

Neoliberalism = Casino Capitalism = "Transnational elites, Unite!"
(It is a neoTrotskyism with the word "proletarians" substituted by the word "elites" in famous "Proletarians of all countries, Unite!" slogan and "Color revolutions" instead of "Permanent revolution"  )

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Skeptisim and PseudoScience  > Who Rules America > Neoliberal Brainwashing

 
News Who Rules America Recommended books Recommended Links Neocolonialism as Financial Imperialism Neo-fascism Neocons as USA neo-fascists
Corporatism Casino Capitalism Neoliberal Brainwashing Neoclassical Pseudo Theories  Corruption of Regulators New American Militarism Anatol Leiven on American Messianism
Financial Crisis of 2008 as the Crisis of Neoliberalism and shift to neo-fascism Two Party System as polyarchy Audacious Oligarchy and "Democracy for Winners" Ayn Rand and Objectivism Cult The Deep State Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Neocons as USA neo-fascists
Elite Theory The Iron Law of Oligarchy Compradors Fifth column Color revolutions Anti-globalization movement Inverted Totalitarism
Super Capitalism as Imperialism Media-Military-Industrial Complex If Corporations Are People, They Are Psychopaths Jeremy Grantham On The Fall Of Civilizations Psychological Warfare and the New World Order Neoliberalism as a Cause of Structural Unemployment in the USA Neoliberalism and inequality
The Great Transformation Harvard Mafia Friedman --founder of Chicago school of deification of market Republican Economic Policy Monetarism fiasco Small government smoke screen Gangster Capitalism
Libertarian Philosophy Media domination strategy  John Kenneth Galbraith Alternatives to Neo-liberalism Globalization of Financial Flows Humor Etc


Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare. “There’s class warfare, all right, "Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning."

- New York Times

Make no mistake, the neo-Liberal fuckers are just as bad as the Stalinists

May '68 and its Afterlives [Review]

GB: once a great cultured nation, now a poorly-educated gangster mafia state, ruled by oligarchs and inhabited by soccer hooligans

The Kremlin Stooge


Introduction

Neoliberalism is a new form of corporatism based on the ideology of market fundamentalism, dominance of finance and cult of the rich ("greed is good") instead of ideology on racial or national superiority typical for classic corporatism. It might be more properly called neo-corporatism. It is a powerful ideology and political model that absolutize the value of competition in social systems and the power of tiny elite (top .1%) within abstract and non-existent ideologically charged construct called "free market" (why not "fair market" ?) .

Neoliberalism enjoyed strong political ascendance since 1980th, although ideology is much older and its origins can be traced to first decade after WWII; the seeds were firmly planted in 1965 with the establishment of free trade zones and maquiladoras (factories that produce for export) under the Border Industrialization Program.

In its essence neoliberalism is a counterrevolution aimed at destroying WWII compromise between workers and capitalists, which in the US was called the New Deal.  In most simple form neoliberalism can be defined as an attempt to restore the rule of international financial oligarchy over society.  Unlike classic forms of corporatism such as German and Italian fascism here we do not see the dominant nationalistic, far right political party that suppresses all the political opponents. Instead this is an organized movement top echelon of corporations and, first of all, global corporations, who decided to e practice form of political control over population polished within corporate environment and which  resembles Inverted Totalitarism or, as some call it, "fascism in velvet gloves".

Its essence is undistinguishable from classic corporatism -- complete dominance of large corporations over government, conversion of goals of multinationals into state foreign policy goals (achievable by war, if other means fail), usurpation of large multinationals of political life of the country (by buying politicians and and controlling all major political appointments, including the selection of Presidential Candidates). In a way the society became "occupied" in a very precise meaning of this word (and that's why "Occupy Wall Street" movement is misnomer; it should be called anti-occupation movement) , and its citizens transformed into indented servants of large corporations and their economic and political interests. The cannon fodder if necessary. This is often (but not exclusively) done via enforcing large unplayable debt.

In other words in 70th of the last century, the civilization made an interesting turn, returning to the state where a supranational structures, which in the middle ages were called religious orders, returned to the prime scène in the form of transnational corporations, with budgets that exceed the GDP of most States and political influence, exceeding traditional political influence of international institutions such as UN. UNESCO, etc.

In other words neoliberalism is corporatism that had outgrown national boundaries and became global.  An interesting nuance is that national three letter agencies also became important players in this new global governing corporatist alliance, acquiring a political role similar to transnational corporations as the key part of National Security State and forming the core of so called "deep state":

Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country according to consistent patterns in season and out, connected to, but only intermittently controlled by, the visible state whose leaders we choose. My analysis of this phenomenon is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day. Nor can this other government be accurately termed an “establishment.” All complex societies have an establishment, a social network committed to its own enrichment and perpetuation. In terms of its scope, financial resources and sheer global reach, the American hybrid state, the Deep State, is in a class by itself. That said, it is neither omniscient nor invincible. The institution is not so much sinister (although it has highly sinister aspects) as it is relentlessly well entrenched. Far from being invincible, its failures, such as those in Iraq, Afghanistan and Libya, are routine enough that it is only the Deep State’s protectiveness towards its higher-ranking personnel that allows them to escape the consequences of their frequent ineptitude. [2]

... ... ...

The Deep State does not consist of the entire government. It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street. All these agencies are coordinated by the Executive Office of the President via the National Security Council. Certain key areas of the judiciary belong to the Deep State, such as the Foreign Intelligence Surveillance Court, whose actions are mysterious even to most members of Congress. Also included are a handful of vital federal trial courts, such as the Eastern District of Virginia and the Southern District of Manhattan, where sensitive proceedings in national security cases are conducted. The final government component (and possibly last in precedence among the formal branches of government established by the Constitution) is a kind of rump Congress consisting of the congressional leadership and some (but not all) of the members of the defense and intelligence committees. The rest of Congress, normally so fractious and partisan, is mostly only intermittently aware of the Deep State and when required usually submits to a few well-chosen words from the State’s emissaries.

The American and British elite in 70th (starting with President Carter in the USA but coming into full force with President Reagan; Thatcher played similar role in GB) decided to  liquidate the New Deal coalition and to cover up the upward redistribution of income with a smokescreen of neoliberal ideology. Which also served as anesthetic for lemmings which were mercilessly deprived of most safety net that they acquired due to New Deal;-).

As Lames Levy noted in his comment to Why the Claims Neoliberals Make About Markets Are Wrong naked capitalism

 Jefferson’s notion of “marketplace of ideas” doesn’t apply to the ideology of the market. Bad ideas, like bad people, often thrive. Many of us were taught that this was not the case–good triumphs over evil, virtue is its own reward, and the arc of history is long, but it bends towards justice. The older I get, the more I doubt these things, the less evidence I see for them, and the less self-correction I see in scholarship

Like in case of Communism/Bolshevism/Trotskyism  a distinguishing feature of neoliberalism is its clincher argument: there is no alternative. Neoliberalism is as powerful ideology as communism (or radical Islam, if you wish ;-) because of its ideological extremism: it recognizes no competitors, and allows its adherents ignore the possibility of viable alternatives.

Ideology of Financial Elite

Historically neoliberalism emerged as an ideology of the financial elite, specifically as the ideology of financial revanchism,  brought to light as a band aid during the crisis of state capitalism in 70th. If socialism absolulitized state, neoliberalism fall into another extreme (and remember that extremes meet) -- absolutization of market and the law of jungle in competition (which means unconditional surrender of all power to the largest transnationals and first of all banks and rape and plunder of smaller firms and states, probably more fierce then under any form of state capitalism). As David Harvey noted in his book A brief History of Neoliberalism:

Redistributive effects and increasing social inequality have in fact been such a persistent feature of neoliberalization as to be regarded as structural to the whole project. Gérard Duménil and Dominique Lévy, after careful reconstruction of the data, have concluded that neoliberalization was from the very beginning a project to achieve the restoration of class power. (Chapter 1)

It was a false, misleading and pretty seductive ideology from the very beginning created with a specific goal to deceive by people who can be called intellectual criminals. Essentially it was custom created by and for financial elite, or, as they are called after 2008, for banksters. But it proved to be more relevant and long lasting then band aid covering financial revanchism of banksters, acquiring a life of its own. Gradually it became full fledged ideology, much like Marxism before (and it did borrowed a lot from Marxism, especially from Trotskyism, and first of all the idea of governing party and "permanent revolution"), a new  "secular religion", if you wish. As foundations of neoliberalism such as neoclassical economy and Trotskyism are disconnected from the reality, it requires from the followers blind, unquestioned  obedience like in high demand cults.  And, like always in such cases, very good money are paid for the top layer of the sect, especially in nations economic departments.

It is difficult to define neoliberalism more precisely then a restoration of unlimited power of financial oligarchy, The same power it enjoyed at the beginning of XX century and which was destroyed by the Great Depression. As such the neoliberal project has multiple dimensions all of which are supported by a hypertrophied, intrusive spying apparatus which reminds the Third Reich and an aggressive, militarized  police, a combination which make protests almost impossible.  In his article   “Protesting Youth in the Age of Neoliberal Cruelty”, Professor Henry A. Giroux points out that like communism,  neoliberalism can be viewed in three principal dimensions -- political, ideological and cultural:

As the latest stage of predatory capitalism, neoliberalism is part of a broader economic and political project of restoring class power and consolidating the rapid concentration of capital, particularly financial capital (Giroux 2008; 2014).

The real goal of neoliberalism is re-distribution of power. In this sense it is feudalism on a new stage of development (which is another similarity with Bolsheviks and USSR)  The neoliberal project is really about weakening the power of middle class in favor of maximizing the power of the tiny elite (the top 0.1%). 

As such, neoliberalism  is a broad strategy of economic (and first of all financial), political, cultural and military elites to destroy social-democratic state and to restructure power relationships, institutions, by injecting into the society, like narcotic, an artificial and a priory false ideology (civil religion), which is extremely beneficial for the promotion of interests of the top 0.1% (aka "super-elite", represented mainly by financial oligarchy).

Marx famous phase "Religion is the opium of the people" here acquires different and more modern and more menacing context.  The full quote from Karl Marx translates as: "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people".

Like communism before, it is an ideology with its own international movement, but if slogan of Communist International (aka Comintern) was "workers of all countries unite" the slogan of neoliberal revolution are both "Elites of all countries unite" and "viva the law of jungles" or "if you see that guy who is ready to fall push him in the back". Of course with the appropriate PR smoke screen about free choice, democracy and equal opportunity.

Like Marxism neoliberal ideology is the ideology of class hegemony (just for a different class ;-), which serves multiple roles

Some authors define neoliberalism differently. For example, Robert McChesney, defines neoliberalism as an economic paradigm that leaves a small number of private parties in control and able to maximize their profit at the expense of the other smaller players and the rest of population. It posits that business domination of society proceeds most effectively when there is a representative democracy along with a weak and ineffectual polity typified by high degrees of depoliticization, especially among the poor and working class. He notes that unlike in classic corporatism, which relies on mass mobilization, neoliberalism relies on the opposite trend: a distracted or apathetic or depoliticized public essentially "goes along" with this, using the dominance of consumerism as a Trojan horse of depolitization and the loss of community spirit. In sum, neoliberalism is the immediate and foremost enemy of genuine participatory democracy, not just in the United States but across the planet, and will be for the foreseeable future. Globalization is the result of powerful governments, especially that of the United States, pushing trade deals and other accords down the throats of the world's people to make it easier for corporations and the wealthy to dominate the economies of nations around the world without having obligations to the peoples of those nations

This stress of depolitization is very important. It proved to be as efficient as mass mobilization of classic corporatism and achieve the same purposes with less violence. It is commonly called Inverted Totalitarism. Indeed, suppression of eny and all discussion and the inability to have honest and candid debates about neoliberalism in the United States and elsewhere is one of its most striking features suggesting communality with medieval Catholicism. Neoliberalism's loudest message is that there is no alternative to the status quo, "there is no alternative".

David Harvey, the author of  A Brief History of Neoliberalism, defines neoliberalism as attempt to undermine power and sovereignty of governments by transnational corporations and establish the regime in which the power of financial oligarchy (aka power of "free market") is dominant in the society.  Neoliberalism has distinct tendency to convert state in national security states, in which as we noted before two distinct modes co-exists: permissive for capital and repressive for labor and social programs.  Here is one Amazon review of the book:

Malvin VINE VOICE on September 28, 2006 

Deconstructing neoliberalism's peculiar definition of 'freedom'

Format: Hardcover Verified Purchase

"A Brief History of Neoliberalism" by David Harvey is a concise and razor-sharp deconstruction of the neoliberal movement. Mr. Harvey convincingly demonstrates that neoliberalism is an ideology that has been wielded to enshrine elite privilege at the expense of people and the environment. Assiduously researched and cogently argued, Mr. Harvey offers a jargon-free and readable text that helps readers gain a greater understanding about the political economy of our neoliberal world and what this might hold for us in the future.

Mr. Harvey explains that neoliberal propaganda has succeeded in fixating the public on a peculiar definition of 'freedom' that has served to conceal a project of upper class wealth accumulation. In practice, the neoliberal state assumes a protective role for capital while it sheds as much responsibility for the citizenry as possible. Mr. Harvey details how neoliberal theory is ignored whenever it comes time to bail out corporate interests from bad decision making while the safety net for the working class has been gradually eviscerated. The author effectively intersperses the text with graphs to illustrate how thirty years of neoliberalist policies has resulted in rising inequality, slower economic growth, higher incomes among the upper class, and other measures that serve to convincingly support and prove his thesis.

Mr. Harvey's history of how neoliberalism has gained ascendancy mostly treads through familiar ground but also highlights some key events that are sometimes overlooked by others. For example, Mr. Harvey relates the well-known stories of how the Chilean coup in 1973 opened the door for Augusto Pinochet to implement the first national experiment in neoliberalism, followed by Margaret Thatcher in Great Britain in 1979 and Ronald Reagan in the U.S. in 1980. However, we also gain greater appreciation about the importance of the New York City bankruptcy in the 1970s. We learn how the city's financial crisis allowed for the imposition of neoliberal reforms in a manner that would prove to be a familiar template around the world: the rollback of labor rights, the privatization of public assets, cuts in public services, and increased policing, surveillance and political repression of a markedly polarized population.

Mr. Harvey surveys neoliberalism around the world to discover connections and to analyze its effects. He finds that the U.S. economy has benefited immensely from its ability to extract tribute from other nations, including the U.S. financial community's probable engineering of crises in developing nations in order to scoop up devalued assets on the cheap. The author discusses how economic restructuring programs imposed on poor countries has benefited U.S. and other foreign investors while it has bolstered or created a small but powerful class of wealthy individuals in Mexico, South Korea, Sweden and elsewhere. In China, Mr. Harvey remarks about the ease with which neoliberalism has found a home in an authoritarian state where the political elite have amassed their fortunes by exploiting a defenseless working class. The author is particularly concerned about the symbiotic relationship that has developed between the U.S. and China and muses about the potentially catastrophic financial situation that the two countries' mounting debts might pose for each other and the world economy.

In the final chapter, Mr. Harvey writes passionately about the need to continue building diverse democracy movements within the U.S. that are dedicated to social and economic justice. Although it is true that Mr. Harvey does not detail precisely what must be done, his thorough dissection of neoliberal ideology empowers us to effectively challenge those who hide behind false rhetorical devices in service to privilege. And for that, we should be grateful.

I give this outstanding book the highest possible rating and strongly recommend it to all.

There are also other definitions. But all-in-all any viable definition need to underline the fact that neoliberalism is about the transnational economic elite taking larger share of resources, income and political power in the society away from middle class. So it always means "class war", as well as blatant enrichment of top 1% at the expense of other 99%.

Those new masters of the universe in expensive suits managed to plunder almost the same number of countries on the globe under the smokescreen of  protection of human rights, as Western powers during acquisition of colonies in XIX century. Any even after creating the most acute economic crisis in 2008 in the USA they still managed to privatize public assets and socialize all the losses. BTW the defense of human right never preclude the alliance with the most odious political regimes on the planet if such an alliance is about cheap hydrocarbons. Recently under the slogan "let us not allow bastards Russian dominate in our beloved Europe, they managed royally "f*ck EU, by cutting it from Russian hydrocarbons,  as Victoria Nuland deftly admitted in her famous remark". After that the U.S. financial oligarchs deftly dropped the Euro to the floor and knocked any attempts of economic integration of EU with Russia.

In this "enrichment of top 1%" (which means first and foremost the US oligarchs and their British counterparts) aspect neoliberalism is based on a strategies of capital accumulation based on the pluder of weaker countries by transnational capital. The integration (or re-integration as is case with the USSR) of most countries in global production and financial system was based of forming a narrow strata of comprador elite (aka fifth column). Transnational fraction of local elites in competition with nationally-oriented fractions won the state power (that's what color revolutions were about). They utilized this acquired power to restructure national economy in the interest of transnational corporation, sell assets to transnationals for pennies on a dollar, put the countries into huge debt (see Ukraine, Greece, almost all Southern Europe) and merge them into the new global manufacturing and finance system with the center at the USA in the role of powerless vassals.

This a new global, transnational corporations based social system emerged by breakdown of First World Keynesian capitalism (welfare states) and Third World "developmentalist" capitalism by abolishing two key features:

Globalization became a new efficient strategy of capital accumulation as it allowed to shake off compromises and concessions that has been imposed by middle class with upper strata or industrial workers on national governments of G7 countries in the preceding epoch, when the USSR exists as a countervailing force and by the mere fact of its existence suppresses appetite of internal financial oligarchy.  With the demolishing of gold standard in 1973 financial capital acquired unprecedented mobility and became able to operate across the borders in a new ways, which allows to eliminate the power of trade unions and state intervention, altering the balance of power in favor of international corporations. Emerging transnational elites instituted polices of deregulation, "supply-side" economics and regressive taxation creating new incentives for capital. Labor force was de-unionized and pushed into deregulated conditions with elimination of full time positions and adoption of "flexible labor" schemes. Via neoliberalism the world has became just a unified playing table for global corporations and states that support them. Material and political obstacles were removed as all states which undergone neoliberal revolutions shifted from post-WWII Keynesian social contract to serving transnational capital and transnational elites.

Neoliberalism also signifies a new historical period in the development of capitalism, the period of dominance of "monopoly-finance capital," and associated "Stagnation-Financialization trap" (SF trap) that drives processes of financial expansion in the economy from one bubble to another due to desperate attempts to stave off the tendency for stagnation of the "real economy" under the neoliberal regime.

While ideological postulates behind neoliberalism (Washington consensus) were discredited after financial crisis of 2008, it now persists in "zombie stage" as there is no viable alternatives and because the ability of transnational elite to find and fund a sufficient part of national elite (compradors) proved to be overwhelming for most states. And it is a quite powerful zombie which still is able to attack and suck blood from other countries which was recently demonstrated in Libya and Ukraine (Maidan).

Since 2007 some Latin American countries got governments that openly oppose neoliberalism. Direct military invasion against them is now more difficult as the threat of communism (which justified such invasions in the past) is off the map. But we can expect attempts to stage color revolutions or classic Coup d'état to reverse those events. One such color revolution (White revolution in Russia in 2011-2012) recently failed. Another (Maidan in Ukraine) is ongoing.

For G7 nations the neoliberalism in zombie stage might have staying power to survive until the end of the period of "abundant hydrocarbons" whether it means the next twenty or the next two hundred years. In any case they, and first of all the USA and GB, bet their prosperity on the viability of neoliberal regime and they now can't abandon it without significant losses.

Still ideological crash of neoliberalism in 2008 has its effects and the rest of the world gradually becoming less and less enthusiastic about neoliberalism, although few dare to openly argue with the USA policies. And for now the USA remains the sole superpower (new Roman Empire) and can economically squeeze or destroy dissident as we are now observing with Russia. 

But it is intellectually bankrupt doctrine, no question about it. Not long ago, the cold war ended with the restoration and triumph of capitalism in the form of neoliberalism on a global scale, and then, less than three decades later, neoliberal form of capitalism is, in turn, became as intellectually bankrupt as communism was in 1990th. By all accounts, the financial catastrophe of 2008 was not only the worst since the Great Depression economic crisis, but a political crisis that somewhat reminds the crisis of Marxist ideology in the USSR in 1960th and 1970th.

As neoliberalism no longer can be sold as the only viable ideological model for other countries, it is now force fed using the strength of American economics and American and NATO bayonets. As well as the strength of transnational elite interested in maintaining status quo (Soros, Rockefellers, Rothschilds, etc)

The vast technological and cultural superiority of the West also matters, although to a lesser extent, as China now became the key factory for the world and as such possesses most of the modern technologies on its factories (which belong to foreign corporation, but still are on China territory).

Another factor that prolongs the life of neoliberalism is that no viable alternative exists, although attempts of partial restoration of the power of national states in a form of state capitalism (Russia, China, USA) and more balanced approach between interests of national population and international corporations are attempted in various forms in various countries (Hungary, many Latin American countries).

Trotskyism for the rich

  "Neoliberalism was a stunning utopia of economic determinism, one even more ambitious than that of Marx."

-- Logos

The simplest way to understand the power of neoliberalism as an ideology, is to view it as Trotskyism refashioned for elite. Instead of "proletarians of all countries unite" we have slogan "elites of all countries unite". Instead of permanent revolution we have permanent democratization.

In a way it is the revolt of the elite, instead of revolt of proletariat which Marxists expected. And it led to forming powerful Transnational Elite International (with Congresses in Basel) instead of Communist International (with Congresses in Moscow). Marx probably is rolling in his grave seeing such turn of events and such wicked mutation of his political theories.

Neoliberalism is also an example of emergence of ideologies not from their persuasive power or inner logic, but from the private interests of the ruling elite. As such it can be called Trotskyism for rich (so much for valiant efforts of Senator McCartney to fight Trotskyism in the USA :-). Political pressure and money created the situation in which intellectually bankrupt ideas could prevail much like Catholicism prevailed during Dark Ages in Europe. In a way this is return to Dark Ages on a new level. Hopefully this period will not last as long.

Among the ideas that neoliberalism borrowed from Trotskyism via renegades such as James Burnham we can mention the following:

  1. Like Trotskyism Neo-Liberalism has a totalitarian vision for a world-encompassing monolithic state governed by an ideologically charged "avangarde". One single state (Soviet Russia) in case of Trotskyism, and the USA in case of neoliberalism is assigned the place of "holy country" and the leader of this country has special privileges not unlike Rome Pope in Catholisim
  2. The idea (and reality) of "dictatorship of the financial oligarchy" replaces the concept of "dictatorship of proletariat". This dictatorship is often disguises as rule of creative class.
  3. The pseudoscientific ‘free-market’ theory which replaces Marxist political economy and provides a pseudo-scientific justification for the greed and poverty endemic to the system, and the main beneficiaries are the global mega-corporations and major western powers (G7).
  4. Like Marxism in general neoliberalism on the one hand this reduces individuals to statistics contained within aggregate economic performance, on the other like was in the USSR, it places the control of the economy in comparatively few hands; and might be neoliberalism's Achilles heel. Degeneration of the elite can be fatal for a society.
  5. The idea of Permanent revolution to bring to power the hegemonic class. In neoliberalism this takes that form of "export of democracy" as the method of achieving and maintaining world dominance of globalist elite (which in its role of hegemonic class replaces proletariat used in Trotskyism):
  6. The role of propaganda machine and journalists, writers, etc as the solders of the party that should advance its interests. Compete, blatant disregard of truth to the extent that Pravda journalists can be viewed as paragons of objectivity (Fox news)
  7. The idea of the party as an vanguard of the hegemonic class and representing its interests. Open desire to dismantle and privatize all the mechanisms of redistribution of income, including (in the USA) Social Security and Medicare.
  8. Creating and maintaining the illusion of "immanent threat" from powerful enemies for brainwashing the population (National Security State instead of "Dictatorship of proletariat").
  9. The idea of revolutionary situation for overthrow of "unfriendly" regimes (and artificial creation of it via color revolution methods); role of students in such a situation. Compradors instead of communist parties as the fifth column inside the societies.
  10. Like Trotskyites, Neoliberals are inherently hostile to competing non-liberal societies - which they see not simply as different, but as wrong. That include nationalistic regimes (Hussein, Kaddafi) as well as theocracies (with a notable exception of Saudis)
  11. The ideas of truth as "a class truth"; neoliberals reject the idea that there are any external moral values. They feel that these should be result of 'market of opinions' and the truth is the one that market favors.
  12. Use of academic science and "think tanks" for brainwashing of the population.
  13. Economic fetishism. Neoliberals see the market as a semi-sacred element of human civilization. They want to impose global market that favors transnational corporations. Everything should be profitable and run as a market. Including labor market. The idea of employability is characteristically neoliberal. It means that neoliberals see it as a moral duty of human beings, to arrange their lives to maximize their value on the labor market. Paying for plastic surgery to improve employability (almost entirely by women) is a typical neoliberal phenomenon -- one that would surprise Adam Smith.
  14. Reliance on international organizations to bully countries into submission (remember Communist International and its network of spies and Communist Parties all over the world). The global financial institutions are indeed a bastion of neoliberal ideology, and they can bully some poor countries into adopting neoliberal policies. The global financial institutions are an instrument of US policy - and if there is a quasi-imperial power, it is the United States.
  15. Capitalist International. Neoliberalism advocates the globalized unity of elites ( hierarchy to be exact under benevolent guidance of the US elite). At the same time conditions of population of countries with "globalized" elite go downhill and internal social protection mechanisms are dismantled. That creates resistance to globalism and neoliberalism.
  16. Like Marxism, neoliberalism tries to weaken, if not abolish, nation states replacing state sovereignty with international organizations dominance (for weaker countries typically using debt slavery to IMF and World bank). Neoliberalism reflect the nature of global capitalism as a hegemonic transnational phenomenon. By deemphasizing the role of the nation-state in the global economy and increasing the significance of transnational production and the rise of a transnational elite and the transnational corporations neoliberalism realizes dreams of Marx in a very perverted form.
  17. Finally, neoliberalism like Marxism in the past has become strongly associated with specific cultures (the US culture) and a specific language (English). But like Marxism, as an ideology Neoliberalism as is not tied to any culture or language. Theoretically any global language would suit, and it can be Esperanto. But in reality the English language, neoliberal policies, and pro-American foreign policy is a "package deal" for neoliberals and its fifth column supporters outside G7; this was especially true in Central and Eastern Europe. Kind of Neoliberal International (they call it "Washington Obcom" in Eastern Europe). That does not exclude corporatism-style jingoism, chauvinism, flag-waving and foreigner-bashing in the USA and other G7 countries. Tony Blair is probably the best example:
    Don't tell me that a country with our history and heritage, that today boasts six of the top ten businesses in the whole of Europe, with London the top business city in Europe, that is a world leader in technology and communication and the businesses of the future, that under us has overtaken France and Italy to become the fourth largest economy in the world, that has the language of the new economy, more brilliant artists, actors and directors than any comparable country in the world, some of the best scientists and inventors in the world, the best armed forces in the world, the best teachers and doctors and nurses, the best people any nation could wish for.

    Don't tell me with all that going for us that we do not have the spirit to meet all the challenges before us.

    Blair conference speech, 26 September 2000

This "capitalists counteroffensive" or "revolt of the elite" was pioneered in Britain, where Margaret Thatcher was elected leader of the Tory Party in 1975 and put into real shape by Ronald Reagan in 1981-1989 (Reaganomics). Margaret Thatcher victory was the first election of neoliberal ideologue (Pinochet came to power via supported by the USA military coupe de tat). Both Thatcher and Reagan mounted a full-scale counterattack against the (already weakened and fossilized) unions. In GB the miners were the most important target. In USA traffic controllers. In both cases they managed to broke the back of trade unions. Since 1985 union membership in the USA has halved.

Privatizing nationalized industries and public services fragments large bargaining units formed of well organized public-sector workers, creating conditions in which wages can be driven down in the competition for franchises and contracts. This most important side effect of privatization was dramatic redistribution of wealth to the top layer of financial and managerial elite (corporate rich).

Neoliberalism gradually gained strength since probably late 50th with free-market theorists like Friedrich Hayek and Milton Friedman as influential ideologues. Ann Rand also made an important contribution with her "greed is good" philosophy of positivism. Still many economists and policy-makers favored a ‘mixed economy’ with high levels of state intervention and public spending. That changed in the 1970s when the state capitalism run into rocks. In a way rise of Neoliberalism was the elite response to the Long Recession of 1973-1992: they launched a class war of the global rich against the rest. Shrinking markets dictated the necessity of cutting costs by sacking workers and driving down wages. So the key program was to reverse the gains made by the US lower and middle class since 1945 and it needed an ideological justification. Neoliberalism neatly fitted the bill. With outsourcing, the global ‘race to the bottom’ became a permanent feature of a new economic order.

At 1980th it became clear that the age of national economies and ‘autarkic’ (self-contained) blocs like the USSR block ended as they will never be able to overcome the technological and standard of living gap with the major Western economies. This inability to match the level of standard of living of western countries doomed communist ideology, as it has in the center the thesis that as a superior economic system it should match and exceed the economic level achieved by capitalist countries. Collapse of the USSR in 1991 (in which KGB elite played the role of Trojan horse of the West) was a real triumph of neoliberalism and signified a beginning of a new age in which the global economy was dominated by international banks and multinational corporations operating with little or sometimes completely outside the control of nation-states.

The rise of neoliberalism can be measured by the rise of the financial and industrial mega-corporations. For example, US direct investment overseas rose from $11 billion in 1950 to $133 billion in 1976. The long-term borrowing of US corporations increased from 87% of their share value in 1955 to 181% in 1970. The foreign currency operations of West European banks, to take another example, increased from $25 billion in 1968 to $200 billion in 1974. The combined debt of the 74 less-developed countries jumped from $39 billion in 1965 to $119 billion in 1974. These quantitative changes during the "Great Boom" reached a tipping point in the 1970s. Global corporations by then had come to overshadow the nation-states. The effect was to impose a relentless pressure on national elites to increase the exploitation of ‘their own’ working class. High wages became a facto that deters new investment and labor arbitrage jumped in full swing. Taxes on business to pay for public services or welfare payments became undesirable. As well as laws designed to make workplaces safe, limit working hours, or guarantee maternity leave. While from purely theoretic perspective the ‘free-market’ theory espoused by neoliberal academics, journalists, politicians, bankers, and ‘entrepreneurs’ is compete pseudoscientific Lysenkoism-style doctrine, it became very popular, dominant ideology of the last decade of XX century. It provides a pseudo-scientific justification for the greed, poverty, as well as economic crisis endemic to the system. It also justified high level if inequality of the political and business elite an a normal state of human society. In this sense, neoliberalism became an official ideology of the modern ruling elite.

Globalization of corporatism

The essence of neoliberalism is globalization of corporatism, which previously have distinct national boundaries and some forms of which were rabidly nationalistic (for example German national socialism). Just imagine a single global state with the capital in Washington with the typical for such a superstate flow of people to capital and you essentially catch the essence of the USA elite neoliberal dream -- Pax Americana.  There are also second class cities such as London, Berlin. Tokyo, etc which while not as attractive are much better then the "deep province", such as Prague, Warsaw or Sanct-Petersburg.

So the flow of people and commodities such as oil has distinct direction from the periphery to the center. To keep each country in the line and this flow of commodities uninterrupted, this "Capitalist International" relies on the part of national capitalist class and elite which is connected to international corporations serving the same role as Communist Parties or Communist International. Such as part is often called Compradors or Fifth Column of Globalization

And this "international elite" is even more responsive to pressure from Washington,  as its fortunes and often families reside if "first class cities" of G7. This way neoliberalism is able to suppress the other part of the elite of particular country which favors "national" development and typically resides inside the country. As a PR smokescreen neoliberalism pay lip service to national development, but in essence it is hostile to it and favor "underdevelopment" of nations outside G7. It's anti-social and has distinct schadenfreude attitude to weak nations: it derives pleasure from seeing the misfortunes of other nations and it try to exploit such moments ("disaster capitalism"). Vae victis as Romans used to say (Victor's justice).

And the winner in neoliberal revolutions is not the middle class and lower strata of population (although they might be sold on it and fight for it, being deceived by propaganda as is the case with the current generation of Americans), but international and local oligarchy represented via international corporations and banks. For bottom 90% population the hangover after the neoliberal revolution comes really quick. This affect was clearly visible after successful color revolution in Serbia, Georgia and Ukraine. In cases of Georgia and Ukraine the neoliberal leaders lost power after their term and there were efforts to put them in jail for abuse of power and corruption, which were not successful only due to USA pressure (only former Ukrainian Prime Minister Julia Timoshenko, the Joan of Arc of Orange revolution was jailed). In any case popularity of leaders of neoliberal revolutions drops to almost unheard levels with Victor Yushchenko commanding 2% approval rating in Ukraine before the end of his term.

Neoliberalism as a Part of American Messianism

Neoliberalism is not merely a new pseudo-religious, cult-like version of globalized corporatism. Like national socialism before it is also simultaneously a powerful ideological export product. It is the core of Pax Americana, which the USA tries to impose of the rest of world. As Samuel P. Huntington(1927 – 2008), the author of the concept of  Cleft country expressed this view, the idea of Pax Americana means that:

"a world without US primacy will be a world with more violence and disorder and less democracy and economic growth than a world where the United States continues to have more influence than any other country in shaping global affairs. The sustained international primacy of the United States is central to the welfare and security of Americans and to the future of freedom, democracy, open economies, and international order in the world."

Similar ideas were expressed in 1998 book The Grand Chessboard American Primacy And Its Geostrategic Imperatives by  Zbigniew Brzezinski. From one of Amazon reviews:

And ponder the meaning of these statements in a post-9-11 world:

While this is typically associated with neocon thinking, it is shared belief of the majority of the US elite. In 1992, the US Defense Department, under the leadership of Secretary of Defense Dick Cheney [later to be George Bush Jr.’s VP], had the Pentagon’s Under Secretary of Defense for Policy, Paul Wolfowitz [later to be George Bush Jr.’s Deputy Secretary of Defense and President of the World Bank], write up a defense document to guide American foreign policy in the post-Cold War era, commonly referred to as the “New World Order.”  The Defense Planning Guidance document was leaked in 1992, and revealed that,

“In a broad new policy statement that is in its final drafting phase, the Defense Department asserts that America’s political and military mission in the post-cold-war era will be to ensure that no rival superpower is allowed to emerge in Western Europe, Asia or the territories of the former Soviet Union,” and that, “The classified document makes the case for a world dominated by one superpower whose position can be perpetuated by constructive behavior and sufficient military might to deter any nation or group of nations from challenging American primacy.”

Further, “the new draft sketches a world in which there is one dominant military power whose leaders ‘must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role’.” 

As  the official state ideology of the USA where it became an integral part of American Messianism it was successfully exported to many countries.  And it now permeates many aspects of social cooperation and culture. Like in the USSR the whole generation of people in the USA had growth being brainwashed by this ideology. It dictates an extremely militant almost jingoistic (does not hesitate to exercise force or overthrows the governments), foreign policy (Trotskyites idea of export of revolution in full swing), it is as deceptive as bolshevism (what Washington means by the "spread of democracy" is actually spread of neoliberalism), missionary (regards itself as a monopolist of the "truth" and protector of "universal values" ) and colonizing (serving simultaneously the ideology behind Neocolonialism). Like Communism it is also messianic as in "the end justifies the means" and does not abstain from using dirty methods including black propaganda and color revolutions for achieving its goals. In the level of hypocrisy and methods used against "natives" it reminds British empire or the USSR (your choice ;-). 

It blackmails antagonists as depraved, primitive, and below par. A good sample of neoliberal blackmail can be extracted from the US press coverage of preparations to Iraq war( US press enlists for war on Iraq) and Libya coup d'état. Another good set of samples provides Guardia press coverage of Putin's Russia and Ukraine EuroMaidan events.  Funny but Russia occupies the middle ground between neoliberalism and resource nationalism, so in principle it coul be an alli of the USA and GB,  but as a large country and possible geopolitical opponent it also was in crosshairs of the US elite.  One of the reasons for Russia's defeat in Chechnya between 1994 and 1996, was an attempt by America in the 1990s, with tremendous help from the comprador part of Russian elite it managed to create, to turn Russia into a standard neoliberal vassal state, whose elites would be subservient to the US foreign policy and would exist to export raw materials to the West and to transfer money to Western bank accounts. That attempt failed with Putin coming to power. So now the level of animosity from the USA and British elites and serving them MSM now goes over the roof .

With the notable exception of the USA itself, neoliberalism is hostile to nationalism. That does not exclude flirting with neo-fascist elements in countries were neoliberalism is under attack from the left or from the resource nationalists. But those forces are viewed more like tactical allies (Ukraine is a good example) and can be thrown under the bus, when they do their dirty job. Inside the USA, the holy city of neoliberal ideology, it to a certain extent merged with American Exceptionalism; the USA is viewed as exemplarity neoliberal country, the shining city on the hill which has right to impose their views and interests on the rest of the globe with impunity, standing outside the law.

Redistribution of income and lowering the standard of living of the bottom 80% of population

While welfare state presuppose redistribution of income down, the "free market capitalism" presupposes even more powerful redistribution of income up, toward the most wealthy part of the population.

Unlike previous revolutions (with the exception of Bolsheviks revolution) the unique feature of neoliberal revolution is drastic lowering the standard of living of middle class and poor, along with dramatic enrichment of top 1% of population and international corporations. Standard of living of top 20% also grow, albeit not so dramatically. In a way it is equivalent to selling of local population into slavery to international corporations by local oligarchy. with the interesting Pareto style 80:20 split. In other words only 20% of population get something from neoliberal revolution with over 50% concentrated at, way, the top 5%, and lion share in top 1%. This "top 20%" of beneficiaries constitute "fifth column of neoliberalism" in the particular state.

Lower 80% of population standard of living typically dramatically drops after neoliberal revolution and never recover.  That does not mean that those capitalists who favor "national" development are considerably less brutal in exploiting lower 80% population, but at least the "spoils" of this exploitation are left by and large in the country and used to improve infrastructure, housing, education  and such while neoliberal model of exploitation often is sucking the vassal states dry. Former Eastern European countries such as Bulgaria, Rumania and Serbia provide especially interesting and educational example of how neoliberalism deforms the economy and impoverish population. Especially Bulgaria, this basket case of Europe.

There are some exceptions like China (which practice not pure neoliberalism bus a mixture of neoliberalism with national development, kind of "neoliberalism with Chinese face" ;-), but even in China this process of dramatic enrichment of top 1% is clearly visible although it is not accompanied with drastic lowering of standards of other 99% of population like happened in Russian, Ukraine and other post Soviet republics. Again in the level of decimation of local middle class and poor neoliberal revolutions have a lot in common with Bolshevik's revolution in Russia of 1917.

Here is a quote from insightful Amazon review by razetheladder of Chalmers Johnson book Blowback The Costs and Consequences of American Empire:

Johnson's strength is in recounting the specificities of US foreign policy; he's much weaker at an overall understanding of imperialism. He seems to think that American policymakers have naively built up the economic strength of their Japanese, Korean, and now Chinese competitors by focusing on maintaining their own military power. This is an old critique, resting on the notion that imperialism hurts the imperialists.

But Johnson is relying on the idea that "America" is a unitary entity, so that the hollowing out of industry hurts "America", not specific social groups within the country. In reality, US foreign policymakers work to advance the interests not of "America", but of those same business elites that have benefited from turning Asia into the world's sweatshop and undermining the unions that built their strength on American industry. American economic imperialism is not a failed conspiracy against the people of Asia, but an alliance between American elites and their Japanese, Korean, Indonesian, and Chinese counterparts - against the potential power of the working majority in all those countries.

But it's more complex than that, too, since the US seeks to prevent the emergence of an independent military challenge (especially China, but also Japan) to its Asia hegemony while seeking to expand the power of American commercial interests in the region, even as it tries to keep Asian elites happy enough with the status quo to prevent their rebellion against it.

Elite and the second and third world countries

Neoliberalism as an ideology can be succinctly defined as "Transnational elites Uber Alles". But it uses the concept of elite on the level of the of the countries too. Neoliberalism distinguishes between to types of countries, and. respectively, there are two forms of neoliberalism, one for G7 countries (elite) where while squeezing middle class it operates with "velvet gloves", and a more brutal practice from "prols" countries outside G7 (vassal countries with local elites as fifth column of globalization). Neoliberalism relies mainly on financial mechanisms and banks and use brute force only as a secondary weapon for subduing people and minor countries (you can get much farther with a kind neoliberal word and cruise missiles, then with just kind neoliberal word alone). In time, it generally coincides with computer and Internet revolution, which made globalization of labor via outsourcing of production and services to poor countries much more attractive.

In principle we can define two distinct types of neoliberalism: one for elite countries and the other every other country:

Actually some elements of the idea of "national superiority" were preserved by reserving for the USA special "shining beacon on the Hill" status (American Exceptionalism) and in a form superiority of "creative class" which includes capitalists, financial oligarchy, and "executives" (top layer of transactional corporate elite) plus narrow social strata of people who are serving them (and that includes most journalists, programmers and IT staff, and such).

In a way, neoliberalism considers this so called "creative class" to be a new Arian race. Everybody else are Untermensch and should be treated as disposables.  In other words it is more like a religion that claim  supremacy of particular ethnic group or a class.  See for example a Guardian reader comment made in 2011 (you need to brose the comments as direct link does not work; recently Guardian screwed its comment system completely):

ITS1789 13 Sep 2011 14:15

I'm not from the left, and I personally do really, really well out of the capitalist system, and enjoy a life of relative luxury, but then I can afford to give half my annual income away to charity and still live very well. I like capitalism, it's been very good to me, and my family for over two centuries, but the ghastly version that's swept the world over the last thirty years is something else.

I think neoliberalism is something close to a malignant cancer growing inside a healthy capitalism, and with equally disastrous consequences. So my criticism comes not from the left, but from the right, for what that's worth.

Neoliberalism is a kind of pseudo-religion, a dogma, which is passionately believed by its disciples, despite the evidence showing that it simply doesn't work in the real world, but like most religious fanatics, the real world doesn't matter much to them. Which is another reason they remind me of Stalinists in the old Soviet system.

... ... ...

For me neoliberalism is a primitive and dangerous delusion about society, economics, and human nature, comparable to extreme forms of socialism, which are equally hairbrained and destructive, and arguably just as bloody.

Thatcherism was classic, class-warfare politics, but launched from the extreme right instead of the left, and it was wildly successful, at least for those it benefitted, a narrow strata at the top of society. Now that the entire charade is collapsing, and taking the welfare state, the middle class, and probably capitalism itself, with it, it's time to pay the bill for this long, illusory, party.

Ideology of neoliberalism as the replacement of both Marxism and state capitalism

From political point of view neoliberalism vision is somewhat close to Communists vision. It also relies on state repression (despite demagogy of Washington consensus about "free markets") and generally can't exist without police state (or National Security State as we now call it; Total surveillance is just icing on  the cake). Under neoliberalism the state become more repressive toward lower 80% of population and, especially, labor, but much less repressive toward various forms of capital and, especially, large capital.

In this sense the only difference is the location of the capital: while the USSR was the holy land of communist world and Moscow its global capital, now the holy land of neoliberalism is the USA and the capital is Washington. With the USA government and Washington headquarters of IMF and World Bank making close analogy to Politburo of CPSU. Due to their strong tendency for political dictate US embassies in Eastern Europe and xUSSR space are sometimes called "Washington Obcoms".  As in following post in freerepublic.com

kronos77

Funny how clueless are foreigners about Russian commies. Putin plays tough man for better bargain positions while actually he accepts orders from Washington obcom (regional committee of CPSU). Putin serves to interests of oligarchs and conducts actually liberal anti-Russian policy. He like helps oligarchic vampires to suck out money from Russian economy and invest them in US economy and Western banks what is absolutely unacceptable for Russian commies.

Like with Comminist International, other states are just vassals who implement directions from benevolent "Washington Obcom" and install the leaders recommended by it, or face ostracism (YouTube) or, worse, direct military invasion... Funny, but it was the corrupt communist elite which put the major effort in helping to implement this vision via the dissolution of the USSR.

As Pope Francis noted that like Marxism in the past neoliberalism represents a new philosophy, new kid on the block. He see  principal feature of this new philosophy in what he called the "idolatry of money" and turning inequality into moral imperative (Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013):

No to the new idolatry of money

55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

Simultaneously neoliberalism proved to be the most capable ideology to fight and displace Marxism. It actually inherited quite a bit from Trotskyism (see below), so in a way it was "evil twin" of Marxism. And it was relevant and effective not because it was a "better ideology", but because Marxism as ideology self-destructed due to several major problems caused by actual experience with state socialism as implemented in USSR and other countries of Warsaw block:

Neoliberalism and cheap hydrocarbons

There essence of neoliberalism is not only dominance of finance over other

t of the economy, but also free movement of goods and people by global corporations without any respect for national borders. And that is the source of increasing efficiency and dropping prices on many categorie

good. An interesting question is how much the rise of neoliberalism was forced on humanely by the short historical period of availability of cheap hydrocarbons. Energy is important driver of globalization. Even the previous stage of globalization: the creation of colonial empires by Great Britain, France, Germany and Spain was at least partially based of steam power and coal.

Now it is an oil that serves the same role for the global neoliberal empire. The latter allow cheap global transportation, mass air travel and powers huge US military machine which has no equals in the globe and serves as a guarantor of security of neoliberal regimes all over the globe. Out of three major components of globalization -- the US as a sole superpower, cheap international shipping and air travel, and (to lesser extent) global telecommunication networks the first two definitely depends of cheap energy. And, BTW, Google is also not running of holy spirit; it is one of the top consumers of electrical energy in the USA.

While it is unclear to what extent neoliberalism will be affected by rising energy prices, it seems few things arouse more passions these days then "oil plato" (or how it is often, but incorrectly, called the oil peak) and how it affects the civilization and different countries. The key fact is that EROEI (energy return on energy invested) of oil extraction is rising dramatically for the last two decades and it looks like this trend will continue. The current world oil production has EROEI around 40 so you extract forty times as much of energy then you spend for extraction.

New oil discoveries have EROEI around 10 (with bitumen oil sand EROEI in single digits). And EROEI also the source of the current disconnect between the purchasing power of money and the resources available to back that up. Pessimists say that a further increase in fuel prices is inevitable, and sooner or later the world will face a kind of "offshoring apocalypse". That's unlikely as important part of neoliberal regime is the new level of global communications and this part will be by-and-large intact. But transportation costs will affect the globalization in a negative way without any dount. For example with EROEI in single digits mass air travel will come to a screeching halt.

At the same time the end of cheap hydrocarbons era might marks the start of fuel wars, which, as such, will be a drastic reversal of globalization, playing the same role as WWI. When each state will try to pull the energy blanket, globalization trends will definitely suffer.

Rise of cost of energy makes both offshoring of manufacturing and outsourcing of service jobs to other countries less viable. A growing number of American companies are moving their manufacturing back to the United States. This emerging "re-shoring movement" has to be kept in proportion. Most of the multinationals involved are bringing back only some tiny fraction of their production destined for the American market. Much of what they had moved over the past few decades remains overseas. Moreover some firms like Caterpillar decided to move research and development facilities in China as split between manufacturing and research badly affects both research and the quality of final products.

But re-shoring tendencies can't be easily dismissed. They are driven by powerful forces which might only get stronger with time. Boston Consulting Group (BCG) in April 2012, notes that 37% of those with annual sales above $1 billion are planning shifting production facilities from China to America. Of the very biggest firms, with sales above $10 billion, the number reached 48%. Among reason sites are rising Chinese labor costs and transportation costs. Many shipping companies slowed the speed of their ship (increasing the delivery time) in order to fight rising oil prices. As Economist, the flagship of neoliberal establishment thought in GB, noted (Reshoring manufacturing):

The Massachusetts Institute of Technology looked at 108 American manufacturing firms with multinational operations last summer. It found that 14% of them had firm plans to bring some manufacturing back to America and one-third were actively considering such a move. A study last year by the Hackett Group, a Florida-based firm that advises companies on offshoring and outsourcing, produced similar results. It expects the outflow of manufacturing from high- to low-cost countries to slow over the next two years and the reshoring to double over the previous two years. “The offshoring of manufacturing is now rapidly moving towards equilibrium [zero net offshoring],” says Michel Janssen, the firm’s head of research.

By contrast, pay and benefits for the average Chinese factory worker rose by 10% a year between 2000 and 2005 and speeded up to 19% a year between 2005 and 2010, according to BCG. The Chinese government has set a target for annual increases in the minimum wage of 13% until 2015. Strikes are becoming more frequent, and when they happen, says one executive, the government often tells the plant manager to meet workers’ demands immediately. Following labour unrest, wages at some factories have gone up steeply. Honda, a Japanese carmaker, gave its Chinese workers a 47% pay rise after strikes in 2010. Foxconn Technology Group, a subsidiary of Hon Hai Precision Industries, a Taiwanese firm that does a lot of manufacturing for Apple and other big technology firms, doubled pay at its factory complex in Shenzhen after a series of suicides. Its labour troubles are still continuing.

...As soon as 2015, says Hal Sirkin, a consultant at the firm, it will cost about the same to manufacture goods for the American market in certain parts of America as in China in many industries, including computers and electronics, machinery, appliances, electrical equipment and furniture. That calculation takes into account a wide variety of direct costs, including labour, property and transport, as well as indirect ones such as supply-chain risk.

...“Pay for senior management in several emerging markets, such as China, Turkey and Brazil, now either matches or exceeds pay in America and Europe”

So while production and service outsourcing overseas or offshoring can still provide substantial cost savings for many companies, the question arise whether those cost savings are sustainable (Can outsourcing overseas provide sustainable cost savings).

Neoliberalism as a strategy of class struggle for transnational elite

Bushonomics is the continuous consolidation of money
and power into higher, tighter and righter hands

George Bush Sr, November 1992

Neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a strategy of "class struggle" (in Marxist terms) designed to redistribute wealth upward toward an increasingly narrow fraction of population (top 1%). The essence of neoliberalism is well reflected in the listed above George Bush Sr. quote "...the continuous consolidation of money and power into higher, tighter and righter hands". Kind of revolt of the elite against common people, instead of revolt of proletarians against capitalists. The attempt to redistribute the wealth of nations in favor of the top 1% and especially top 0.01%.

From the very beginning neoliberalism was a project to restore of class power of US corporations owners and first of all financial oligarchy ("financial revanchism" was the major driver of neoliberalism), which was undermined by New Deal.

So it is not surprising the during neoliberal revolution (or more correctly counter-revolution) in the USA all redistributive postwar state capitalism policies that hurt financial elite came under attack. With the demise of the USSR, the necessity of such policies to ensure social peace disappeared and the elite (and first of all financial elite) got a carte blanch for decimating middle class, and redistributing the wealth up. Golden days of the US middle class not ended not exactly with the election of Reagan (remember his decimation of air traffic controller union) but with the election of Mr. Gorbachov. And they became a distant past under Clinton who sold Democratic Party to financial oligarchy and only become worse and worse under Bush II and Obama (who, social policy-wise, is just well-tanned Bush III). And on international arena brutal enforcement of Washington consensus became a norm. So Ukraine got under the same neoliberal steamroller.

Neoliberalism promises of "better future" for population outside top 1% were by and large political scam. In best case no more then top 20% of population can benefit from neoliberal policies. And that's in best case, which is applicable probably only to G7 countries. And the other bottom 80% experience a sharp decline of their standard of living. For "peripheral countries like Ukraine, Iraq, Chili, etc) instead of 80:20 the proportion in probably 90:10.

All-in-all neoliberalism as a social system always lower the average standard of life of people in countries which adopted it, never rise it. That happened even in countries which historically has very low standard of living of middle class such as former USSR republics and Eastern Europe. At the same time it tremendously improved standard of living of upper 10% (20% in case of G7 countries) of population, and, especially, the top 1% - the new aristocracy. And that top 10% has enough political power to keep and consolidate neoliberal counter-revolution and with help of G7 countries to spread it around the globe.

Transnational elite "International" proved be both more viable and durable then "proletarian International" envisioned by Marx and his followers. That does not mean that elites from other countries are treated as equal partners. No they are treated as "villagers that came to the city" but still they are given a chance to "merge" with local "aristocracy of wealth".

The USA is the center on neoliberal order, its capital. Neoliberalism is supported by projection of the USA military power and the use of US capital. It forces global economic integration on US terms at whatever costs to others. But with those reservations it is as close to "oligarchy of all countries unite" as one can get.

In a way Marx probably is turning in his grave, as his ideas were hijacked and implemented by the part of population he considered to be doomed. In other words Marxist idea of "class struggle" was turned to its head and converted into pervert "revolt of the elite" (and first of all financial oligarchy), unsatisfied with the piece of the pie it is getting from the society and stimulated by technological revolution (emergence of Internet and cheap mass produced computers). Neoliberal philosophy can be distilled into a single phrase: "Humanity begins at the rank of CEO" or as George Bush Sr, aptly said November 1992 it is "...the continuous consolidation of money and power into higher, tighter and righter hands."

Some authors like Colin Cronch in The Strange Non-death of Neo-liberalism consider it to be a new ruling class alliance. His basic idea is that at least in USA neoliberalism represents the shift of loyalty of the upper management class: following the Great Depression of 1930 a political alliance emerged between the upper management class and "salaried middle class" (which includes the top layer of blue and white collar workers, including quasi-management, clerical workers, and professionals, and which cannot be reduced to the traditional "working-class"). A severe profitability crisis of the 1970s with its inflationary excesses caused a fracture between upper management and "salaried middle class". From that point upper management allied with owners and financial oligarchy forming a new ruling class.

This neoliberal transformation of the society with the redistribution of wealth to the top 1% (or, more correctly, the top 0.01%) "have and have more" (as unforgettable G.W.Bush quipped) was completed in the USA in late 90th. The rest of population (aka moochers) and organization such as trade unions were undermined and decimated by financial oligarchy with near complete indifference to what happens with the most unprotected lower quintile of the population.

Like Russia in the past under Bolsheviks the USA became occupied country. And much like Bolsheviks in the past, the neoliberal reformers don't care about failures and contradictions of the economic system which drive the majority of country population into abject poverty. No they care about that their action such a blowing out financial bubble like in the USA in 2008 which definitely could move national economics toward the disaster ("off the cliff"). They have somewhat childish, simplistic "greed is good" mentality: they just want to have their (as large as possible) piece of economic pie fast and everything else be damned.

To that extent they have mentality of criminals and neoliberalism is a highly criminogenic creed, but it tried to conceal the racket and plunder it inflicts of the societies under dense smoke screen of "free market" Newspeak. That means that outside the USA and G7 countries which are the major beneficiaries of this "hyper globalization of élites" neoliberalism is an unstable social order, as plunder can't continue indefinitely. and as natural resources become more scarce, the fight for them might give advantages to "Asian" autocratic flavor of state capitalism.

Problems inherent in neoliberal model were also by-and-large masked for two decades by a huge shot in arms Neoliberalism got with the dissolution of the USSR. This particular event (which was just a decision of part on nomenklatura including KGB to join neoliberal counter-revolution) put on the dinner table of neoliberal elites half a billion people and quite a bit of resources to plunder. This gift of a century from Bolsheviks slowed down the process of plunder of G7 own population, especially in the USA. It is interesting to note that, like Bolsheviks in the past, neoliberal elite behaves more like occupiers of the country, then as a traditional, "native" aristocracy; this phenomenon was especially pronounced in Russia (privatization under Yeltsin regime) and other xUSSR countries. And in xUUSR space new neoliberal lords were almost as brutal as German occupiers during WWII.

So later neoliberalism in came under pressure even in G7 countries, including the USA, as slogan on a corner Wall Street cafe "Jump Suckers !" demonstrated so aptly in 2008 and later in Occupy Wall Street Movement (which probably should be named "get rid of Wall Street occupation of the country"). The latter was quickly undermined, dissipated by the emerging National Security State. Total surveillance makes opposition movements practically impossible.

Neoliberalism was also partially reversed in Chile (the first country on which neoliberal counter-revolution was launched), Russia, and several other countries. It was never fully adopted in northern Europe or Asian countries. The model of autocratic state capitalism used in Asian countries actually serves as the only viable and competing with the neoliberalism modern social organization. Move of manufacturing centers to China and other East Asian countries also moves political influence toward this region, away from the USA and G7. Recently China managed slightly push back western global brands in electronics (especially in Eastern European markets), producing competitive smartphones (Huawey, Fly, Lenovo), tablets (Lenovo), PCs and networking equipment such as routers and switches under this own brand names.

Neoliberalism was enforced under dense smoke screen of propaganda. One can see an example of this smoke screen in Thatcher's dictum of neoliberalism: "There is no such thing as society. There are only individuals and families." In foreign policy neoliberalism behaves like brutal imperialism (aka neocolonialism) which subdue countries instead of brute force either by debt slavery or combination of debt slavery with direct military intervention. In neoliberal view the world consist of four concentric cycles which in order of diminishing importance are

  1. Finance
  2. Economics
  3. Society
  4. Planet

In other words, finance and transnational financial institutions are considered to be the most important institutions of the civilization, the institutions which should govern all other spheres of life. It is clear that such one-dimensional view is wrong, but neoliberals like communists before them have a keen sense of mission and after they managed to accomplish its "long march through the institutions" (during which they gradually hijacked them in what is called Quiet coup) they changed the way Americans think (Using the "Four M" strategy -- money, media, marketing, and management)

A well-oiled machine of foundations, lobbies, think-tanks, economic departments of major universities, publications, political cadres, lawyers and activist organizations slowly and strategically took over nation after nation. A broad alliance of neo-liberals, neo-conservatives and the far right (including neo-fascists and religious right) successfully manufactured a new common sense, assaulted Enlightenment values and formed a new elite, the top layer of society, where this "greed is good" culture is created and legitimized.

As Crouch says in his book The Strange Non-death of Neo-liberalism:

a polity in which economic resources were very unequally shared would be likely to be one in which political power was also concentrated, economic resources being so easily capable of conversion into political ones. (Page 125)

... ... ...

...the state, seen for so long by the left as the source of countervailing power against markets, is today likely to be the committed ally of giant corporations, whatever the ideological origins of the parties governing the state. (Page 145)

"Greed is good" as the key ethical principle of neoliberalism

Its key ethical principle of neoliberalism (only for the elite, never for prols or middle class) is "Greed is good" (as Gordon Gekko the personage of Wall Street (1987 film) quipped in the film). This strata of people (which starts on the level of CEO of major corporation) who preach those principle is assumed to be Übermensch. People below are considered to be "under humans", or "inferior humans" (Untermenschen)

According to Wikipedia, the inspiration for the "Greed is good" speech seems to have come from two sources. The first part, where Gekko complains that the company's management owns less than three percent of its stock, and that it has too many vice presidents, is taken from similar speeches and comments made by Carl Icahn about companies he was trying to take over. The defense of greed is a paraphrase of the May 18, 1986, commencement address at the UC Berkeley's School of Business Administration, delivered by arbitrageur Ivan Boesky (who himself was later convicted of insider-trading charges), in which he said, "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself".

As Pope Francis notes glorification of greed is socially destructive. While in all previous "classic" religions (including such social religion as Marxism) excessive greed was morally condemned, neoliberalism employed a slick trick of adopting "reverse", Nietzschean Ubermench morality. Here is a relevant quote from his Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013

One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

No to a financial system which rules rather than serves

57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs”.[55]

Like Bolshevism and National Socialism before neoliberalism needs a huge propaganda machine comparable with the propaganda machines of Bolsheviks and the Third Reich. Neoliberal ethics is pushed through the throat by hundreds of radio stations, cable TV channels (with Fox as the most prominent stooge of neoliberal propaganda), magazines and newspapers (Wall Street Journal, NYT, etc). This ethics is presented as a specific philosophy of Randism which is an ultimate expression of neoliberal ethics.

Here analogy with Bolshevism became even more stark. When you think about the current Republican Party, you can distinguish a small circle of ideologues consisting by-and-large of Ayn Rand followers. In a way it reminds the original Ann Rand circle called "collective", which like Bolshevik's core consisted of Jewish intellectuals, such as Greenspan. And that is not a positive characteristic. Murray Rothbard, a member of Rand's circle for several months in 1958, described the Randroids as “posturing, pretentious, humorless, robotic, nasty, simple-minded....dazzlingly ignorant people.” (Sex, Ayn Rand and the Republican Party)

Like in Marxism the view of other classes (in this case lower classes) by this new alliance is hostile. They are parasites, moochers, etc (exactly like capitalist class in Marxism), all feeding from the state, which in turn deprives "masters of the university" the spoils of their ingenious activity. Neoliberalism professes open and acute hostility to "lower classes", as if modeled on Bolsheviks hatred of "capitalists". This hate (like hate in general) paradoxically gives neoliberalism a driving force: as Irish novelist Elizabeth Bowen quipped: "Some people are molded by their admirations, others by their hostilities."

And this Ubermench feature of neoliberalism attracts young people in the same way they were attracted to national socialism with its hate of racially inferior nations. In a way neoliberalism converted the concept of "Arian race" into the concept of morally and intellectually superior transnational elite.

Stages of development of neoliberalism

Neoliberalism was not an accident, it was a development that appeared slightly different forms in many countries, including such diverse as the USA (Reagan), GB (Thatcher), China (Deng Xiaoping was a neoliberal reformer), Chile(Pinochet), Russia (Yeltsin gang), and many other countries. Since the late 1970s, a shift of economic activity from the production of goods and non-financial services to finance has been adopted as mean to escape diminishing return on capital.  The oil crisis of the 1970s was probably another factor in the decision of the elite (and it was decision, a conscious choice, not an accident) to switch to neoliberal policies. 

During its history which starts around 70th (with the first major success the Pinochet's coup de etat in Chile, which was supported by the USA), neoliberalism undergone several basic stages of development:

 

Hegemony of the USA and its allies

The USA was and probably will remain the center of neoliberalism and firmly established as most important and the most powerful promoter of the doctrine (in some case, like with Serbia, Iraq and Libya, on the tips of bayonets).

After the dissolution of the USSR the US elite felt that "everything is permitted" and essentially started to pursue global Roman style imperial policy. The USA military forces are active over most of the globe: about 226 countries have US military troops, 63 of which host American bases, while only 46 countries in the world have no US military presence. This is a projection of military power that makes the Roman, British, and Soviet empires pale in comparison. In his 1919 essay, “The Sociology of Imperialisms,” Joseph Schumpeter wrote of Rome during its years of greatest expansion.

There was no corner of the known world where some interest was not alleged to be in danger or under actual attack. If the interests were not Roman, they were those of Rome’s allies; and if Rome had no allies, then allies would be invented. When it was utterly impossible to contrive such an interest—why, then it was the national honor that had been insulted.

The fight was always invested with an aura of legality. Rome was always being attacked by evil-minded neighbors, always fighting for a breathing-space. The whole world was pervaded by a host of enemies, and it was manifestly Rome’s duty to guard against their indubitably aggressive designs.*

As G. John Ikenberry, professor of geopolitics at Georgetown University noted in Foreign Affairs:

The new grand strategy [initiated by the Bush administration]…. begins with a fundamental commitment to maintaining a unipolar world in which the United States has no peer competitor. No coalition of great powers without the United States will be allowed to achieve hegemony. Bush made this point the centerpiece of American security policy in his West Point commencement address in June: “America has, and intends to keep, military strengths beyond challenges—thereby making the destabilizing arms races of other eras pointless, and limiting rivalries to trade and other pursuits of peace.”

…The United States grew faster than the other major states during the decade [of the 1990s], it reduced military spending more slowly, and it dominated investment in the technological advancement of its forces. Today, however, the new goal is to make these advantages permanent—a fait accompli that will prompt other states to not even try to catch up. Some thinkers have described the strategy as “breakout,” in which the United States moves so quickly to develop technological advantages (in robotics, lasers, satellites, precision munitions, etc.) that no state or coalition could ever challenge it as global leader, protector and enforcer (“America’s Imperial Ambition,” Foreign Affairs, October 2002).

Perhaps one of extreme expressions of this neo-Roman imperial policy became that book by The Grand Chessboard: American Primacy And Its Geostrategic Imperatives by Zbigniew Brzezinski. This is how Brzezinski views the (supposedly sovereign) nations of Central Asia (sited from Amazon review by "A Customer" Jan 3, 2002 as pawns in a greater game for geopolitical domination:

The quote "... the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together." (The Grand Chessboard p.40) is probably the most revealing. Just ponder the meaning of these statements in a post-9-11 world:

To most Americans the people of the world and other nations are just that -- people, just like us, with a right to self-determination. To Brzezinski, they are merely pawns on a chessboard. At the same time, despite the fact that the analogy are not perfect, Rome fell, Napoleon fell, Hitler fell, USSR fell. Countries with too aggressive foreign policy ultimately self-destruct, because they over-extend their own countries resources to the point when people wellbeing drops to the levels of some colonies. The USA have over million people with the security clearance. So in a way it is becoming a copy-cat of the USSR. And while the US military is busy fighting for oil interests all around the world, those wars were launched by borrowing money and it's unclear who will pay the bills.

Neoliberalism beginning as ideology start was pretty modest. It was never considered a "right" ideology, ideology for which people are ready to fight and die. It was just an "ideology of convenience", an eclectic mix of mutually incompatible and incoherent mosaic of various ideologies (including some ideas of Trotskyism and national socialism) that served as useful tool to counter communist ideology. This is the tress of Friedman pretty weak opus "Capitalism and Freedom" -- which can be considered to be close analog of Communist Manifesto for neoliberalism. It also was useful for fighting some Keynesian excesses. Only later it become favorite ideology of financial oligarchy.

So in fight against "Godless communism" which does not respect private property and used "all-powerful" state, it idealized private property ownership, the role of "free" (as in free shooting) market and stressed the necessity to control the size of the government. As a tools to fight communist ideology those were reasonably effective tools. But at some point this deeply flawed, but useful for the specific purpose framework went out of control and became the cult of the deified markets and explicitly stated the necessary of diminishing the role of the state to minimum to ensure the high level of inequality the new neoliberal elite strived for (note not optimizing for a given historical conditions and technology available, but unconditionally diminishing to the point of elimination). Reagan famous phase "Government is not a solution to our problem, government is the problem." is a perfect example of how to "Throw out the baby with the bath water". But the meaning is more sinister: it meant "throw out of the water middle class".

That happened when financial oligarchy understood that a tool created for fighting communism is perfectly suitable for fighting elements of "New Deal". And it proved to be pretty effective in dismantling of set of regulations of financial sector that were the cornerstone of "New Deal". That was a very smooth ride "deregulatory" ride until 2008. But after 2008 the USA (citadel of neoliberalism) faces the set of problems that at least on the surface look similar to the problem that USSR faced before its disintegration, although the USA still have much more favorable conditions overall and disintegration is not among the current threats. Among them:

Still there are important difference with Marxism: despite extremely flawed to the point of being anti-scientific neoliberal ideology is still supported by higher standard of living of population in selected Western countries (G7). If also can rely on five important factors:

  1. Military dominance of the USA and NATO. There are very few countries in the globe without explicit or implicit USA military presence.
  2. Financial dominance of USA and its allies. The role of dollar as world currency and the role of USA controlled global financial institutions such as World Bank and IMF
  3. Technological dominance of USA and G7. Continuing brain drain from "Third world" and xUSSR countries to G7 countries.
  4. Cultural dominance of the USA (although this is gradually diminishing as after 2008 countries started of assert their cultural independence more vigorously).
  5. Ideological dominance, neoliberalism as yet another major civic religion

Military dominance of USA and NATO

The American society and the U.S. armaments industry today are different then it was when Dwight Eisenhower in his farewell speech (Eisenhower's Farewell Address to the Nation) famously warned Americans to beware the "military-industrial complex." See also The Farewell Address 50 Years Later. The major opponent, the USSR left the world scene, being defeated in the cold war. That means that currently the USA enjoy world military dominance that reminds the dominance of Roman Empire.

The USA now is the world's greatest producer and exporter of arms on the planet. It spends more on armed forces than all other nations combined -- while going deeply into debt to do so.

The USA also stations over 500,000 troops, spies, contractors, dependents, etc. on more than 737 bases around the world in 130 countries (even this is not a complete count) at a cost of near 100 billions a year. The 2008 Pentagon inventory includes 190,000 troops in 46 nations and territories, and 865 facilities in more than 40 countries and overseas U.S. territories. In just Japan, the USA have 99,295 people who are either members of US forces or are closely connected to US. The only purpose is to provide control over as many nations as possible.

Funny but among other thing the Pentagon also maintain 234 golf courses around the world, 70 Lear Jet airplanes for generals and admirals, and a ski resort in the Bavarian Alps.

Military dominance of the USA and NATO were demonstrated during Yugoslavia bombing and then invasion of Iraq. It's clear the Yugoslavia bombing would be out of question if the USSR existed.

Neoliberalism and militarism

Under neoliberalism, markets are now fused with the logic of expansion and militarization is the most logical was of securing expansion, improving global positions, and the ordering of social relations in a way favorable to the transnational elite.

Under neoliberal regime the United States is not only obsessed with militarism, which is shaping foreign policy , but wars have become real extension of the politics, the force that penetrates almost every aspect of daily life. Support of wars became a perverted version of patriotism.

As Henry A. Giroux noted in his interview to Truth-out (Violence is Deeply Rooted in American Culture), paradoxically in the country of "advanced democracy" schools and social services are increasingly modeled after prisons. Four decades of neoliberal policies have given way to an economic Darwinism that promotes a politics of cruelty.

Police forces are militarized. Popular culture endlessly celebrating the spectacle of violence. The Darwinian logic of war and violence have become addictive, a socially constructed need. State violence has become an organizing principle of society that has become the key mediating force that now holds everyday life together. State violence is now amplified in the rise of the punishing state which works to support corporate interests and suppress all forms of dissent aimed at making corporate power accountable. Violence as a mode of discipline is now enacted in spheres that have traditionally been created to counter it. Airports, schools, public services, and a host of other public spheres are now defined through a militarized language of "fight with terrorism", the language of discipline, regulation, control, and order. Human relations and behaviors are dehumanized making it easier to legitimate a culture of cruelty and politics of disposability that are central organizing principles of casino capitalism.

The national news became a video game, a source of entertainment where a story gains prominence by virtue of the notion that if it bleeds it leads. Education has been turned into a quest for private satisfactions and is no longer viewed as a public good, thus cutting itself off from teaching students about public values, the public good and engaged citizenship. What has emerged in the United States is a civil and political order structured around the criminalization of social problems and everyday life. This governing-through-crime model produces a highly authoritarian and mechanistic approach to addressing social problems that often focuses on the poor and minorities, promotes highly repressive policies, and places emphasis on personal security, rather than considering the larger complex of social and structural forces that fuels violence in the first place.

The key reference on the topic is the book The New American Militarism (2005) by Andrew Bacevich. Here is one Amazon review:

In his book The New American Militarism (2005), Andrew Bacevich desacralizes our idolatrous infatuation with military might, but in a way that avoids the partisan cant of both the left and the right that belies so much discourse today. Bacevich's personal experiences and professional expertise lend his book an air of authenticity that I found compelling. A veteran of Vietnam and subsequently a career officer, a graduate of West Point and later Princeton where he earned a PhD in history, director of Boston University's Center for International Relations, he describes himself as a cultural conservative who views mainstream liberalism with skepticism, but who also is a person whose "disenchantment with what passes for mainstream conservatism, embodied in the present Bush administration and its groupies, is just about absolute." Finally, he identifies himself as a "conservative Catholic." Idolizing militarism, Bacevich insists, is far more complex, broader and deeper than scape-goating either political party, accusing people of malicious intent or dishonorable motives, demonizing ideological fanatics as conspirators, or replacing a given administration. Not merely the state or the government, but society at large, is enthralled with all things military.

Our military idolatry, Bacevich believes, is now so comprehensive and beguiling that it "pervades our national consciousness and perverts our national policies.

" We have normalized war, romanticized military life that formally was deemed degrading and inhuman, measured our national greatness in terms of military superiority, and harbor naive, unlimited expectations about how waging war, long considered a tragic last resort that signaled failure, can further our national self-interests. Utilizing a "military metaphysic" to justify our misguided ambitions to recreate the world in our own image, with ideals that we imagine are universal, has taken about thirty years to emerge in its present form.

It is this marriage between utopians ends and military means that Bacevich wants to annul.

How have we come to idolize military might with such uncritical devotion? He likens it to pollution: "the perhaps unintended, but foreseeable by-product of prior choices and decisions made without taking fully into account the full range of costs likely to be incurred" (p. 206). In successive chapters he analyzes six elements of this toxic condition that combined in an incremental and cumulative fashion.

  1. After the humiliation of Vietnam, an "unmitigated disaster" in his view, the military set about to rehabilitate and reinvent itself, both in image and substance. With the All Volunteer Force, we moved from a military comprised of citizen-soldiers that were broadly representative of all society to a professional warrior caste that by design isolated itself from broader society and that by default employed a disproportionate percentage of enlistees from the lowest socio-economic class. War-making was thus done for us, by a few of us, not by all of us.
  2. Second, the rise of the neo-conservative movement embraced American Exceptionalism as our national end and superior coercive force as the means to franchise it around the world.
  3. Myth-making about warfare sentimentalized, sanitized and fictionalized war. The film Top Gun is only one example of "a glittering new image of warfare."
  4. Fourth, without the wholehearted complicity of conservative evangelicalism, militarism would have been "inconceivable," a tragic irony when you consider that the most "Christian" nation on earth did far less to question this trend than many ostensibly "secular" nations.
  5. Fifth, during the years of nuclear proliferation and the fears of mutually assured destruction, a "priesthood" of elite defense analysts pushed for what became known as the Revolution in Military Affairs (RMA). RMA pushed the idea of "limited" and more humane war using game theory models and technological advances with euphemisms like "clean" and "smart" bombs. But here too our "exuberance created expectations that became increasingly uncoupled from reality," as the current Iraq debacle demonstrates.
  6. Finally, despite knowing full well that dependence upon Arab oil made us vulnerable to the geo-political maelstroms of that region, we have continued to treat the Persian Gulf as a cheap gas station. How to insure our Arab oil supply, protect Saudi Arabia, and serve as Israel's most important protector has always constituted a squaring of the circle. Sordid and expedient self interest, our "pursuit of happiness ever more expansively defined," was only later joined by more lofty rhetoric about exporting universal ideals like democracy and free markets, or, rather, the latter have only been a (misguided) means to secure the former.

Bacevich opens and closes with quotes from our Founding Fathers. In 1795, James Madison warned that "of all the enemies of public liberty, war is perhaps the most to be dreaded, because it comprises and develops the germ of every other." Similarly, late in his life George Washington warned the country of "those overgrown military establishments which, under any form of government, are inauspicious to liberty, and which are to be regarded as particularly hostile to republican liberty."

Financial dominance

With dollar role as the primary world reserve currency the USA still rides on its "Exorbitant privilege". But there are countervailing forces that diminish dollar importance, such a euro. Financial dominance under neoliberalism became the primary tool of ensuring the control over the nations. See Neocolonialism as Financial Imperialism

US and Western banks dominate the globe with New York and London as two world financial centers.

Things little changed after 2008 despite the fact that the US economy in entered a deep debt crisis, which is amplified by the level of destruction of real economy by offshoring and outsourcing achieved under the umbrella of neoliberalism during previous four decades. While the USA remains the sole super power its imperial problems now reached such a level that they may start to affect the foreign policy. Troubles of organizing an invasion in Syria are probably symptomatic. It proved to be more difficult undertaking that similar invasion of Iraq a decade earlier.

Economic troubles have important side effect: the ideological dominance, achieved by the USA during 1989 till 2008 is now under attack. There are a lot of skeptic and in a way neoliberalism goes the way of Marxism with the major difference that there were probably some sincere followers of Marxism at least during the first 30 years of its development.

Centrality of transnational financial flows (including emerging countries debt) and financial oligarchy in neoliberal regime

Since the late 1970s, there was a radical shift of economic activity from the production of goods and non-financial services to finance with the rapid growth since then of the share of financial profits in total corporate profits. Also reflective of this process of "financialisation of the Economy" was the explosive growth of private debt as a proportion of gross domestic product, and the piling of layers upon layers of claims with the existence of instruments like options, futures, swaps, and the like, and financial entities like hedge funds and structured investment vehicles.

With financialisation, the financial masturbation -- speculation directed on making money within the financial system, bypassing the route of commodity production, increasingly became the name of the game. Using Marxist terminology the general formula for capital accumulation, M-C-M', in which commodities are central to the generation of profits, was replaced by M-M', in which money simply begets more money with no relation to production.

This is related to the reason which brought on the financialization of the economy in the forefront: beginning with the sharp recession of 1974-75, the US economy entered a period of slow economic growth, high unemployment/underemployment and excess capacity. That happened after around 25 years of spectacular ascent following the second world war. So financialisation was thought a s a remedy to this "permanent stagnation" regime. And for a while it performed this function well, although it was done by "eating the host".

Finance under any neoliberalism-bound regime can be best understood as a form of warfare, and financial complex (typically large Western banks as locals are not permitted, unless specially protected by remnants of the nation state) as an extension of military-industrial complex. Like in military conquest, its aim is to gain control for occupying country of land, public infrastructure, and to impose tribute putting the country in debt and using dominance of dollar as world reserve currency. This involves dictating laws to vassal countries (imposing Washington consensus, see below) and interfering in social as well as economic planning using foreign debt and the necessity to service the foreign loans as a form of Gosplan.

The main advantage of neoliberalism in comparison with the similar practice of the past is the conquest is being done by financial means, without the cost to the aggressor of fielding an army. But the economies under attacked may be devastated as deeply by financial stringency as by military attack when it comes to demographic shrinkage, shortened life spans, emigration and capital flight. Actually following s successful attack of neoliberalism and conquest of the country by neoliberal elite Russian economy was devastated more then during WWII, when Hitler armies reached banks of Volga river and occupies half of the country.

This attack is being mounted not by nation states alone, but by a cosmopolitan financial class and international financial institutions such as World bank and IMF with full support of major western banks serving as agencies of western governments. Finance always has been cosmopolitan more than nationalistic – and always has sought to impose its priorities and lawmaking power over those of parliamentary democracies.

Like any monopoly or vested interest, the financial "Trojan horse" strategy seeks to block government power to regulate or tax it. From the financial vantage point, the ideal function of government is to enhance profits via privatization and protect finance capital from the population to allow “the miracle of compound interest" to siphon most of the revenue out of the country. Some tiny share of this revenue is paid to compradors within the national elite. In good years such tactic keeps fortunes multiplying exponentially, faster than the economy can grow. This "paradise for rentiers" last until they eat into the core and cause deindustrialization and severe debt crisis. Eventually they do to the economy what predatory creditors and rentiers did to the Roman Empire.

Technological dominance

The globalist bloc of Western countries led by the USA achieved hegemony in the end of the twentieth century because it managed to become the center of technological progress and due to this acquired a commanding influence over industrial production and social life around the world, including the ability to provide rewards and impose sanctions. One or the reason of technical backwardness of the USSR just before the dissolution were technical sanctions imposed by the West via COCOM. As most of global corporations belong to G7 this lead to "natural" technological hegemony of this block. As Thatcher used to say "There is no alternatives", although she meant there is no alternatives to neoliberalism, not to Western technology from G7 nations. Only recently Asian countries started to challenge this status quo in some areas.

Global corporation managed to create a situation in which the same goods are used in most countries of the globe. Western brand names dominate. American and European airliners, Japanese, American and German cars, Korean and American smartphones, Chinese and American PCs, etc.

China became world factory and produces lion share of goods sold under Western brands.

Dominance in Internet and global communications

The debate about the USA dominance in internet and global communications reemerged in June 2008 due to revelations make about existence of the Prism program and similar program by British security services. For example, Jacob Augstein used the term "Obama's Soft Totalitarianism" in his article Europe Must Stand Up to American Cyber-Snooping published by SPIEGEL. The NSA's infrastructure wasn't built to fight Al Qaeda. It has a far greater purpose, one of which is to keep the USA as the last superpower.

The USA has capabilities of intercepting of lion share of global internet traffic and with allies tries to intercept all the diplomatic communication during major conferences and trade talk in direct violation of Vienna protocols. Latin American countries were one of the recent victims of this activity during trade talks with the USA. There were reports about snooping on UN personnel communications in NYC.

Here is an interesting comment of user MelFarrellSr in The Guardian discussion of the article NSA analysts 'willfully violated' surveillance systems, agency admits (August 24, 2013):

Here's the thing about the NSA, the GCHQ, Yahoo, Google, Microsoft, et al...

We all have to stop commenting as if the NSA and the GCHQ are in this thing on their own; the reality is that no one was supposed to know one iota about any of these programs; the NSA and the GCHQ began and put in place the structure that would allow all internet service providers, and indeed all corporations using the net, the ability to track and profile each and every user on the planet, whether they be using the net, texting, cell, and landline.

We all now know that Google, Yahoo, and the rest, likely including major retailers, and perhaps not so major retailers, are all getting paid by the United States government, hundreds of millions of dollars of taxpayer money, our money, to profile 24/7 each and every one of us..., they know how we think, our desires, our sexual preferences, our religious persuasion, what we spend, etc.; make no mistake about it, they know it all, and what they don’t currently have, they will very soon…

These agencies and indeed all those who are paid by them, will be engaged over the next few weeks in a unified program of "perception management" meaning that they will together come up with an all-encompassing plan that will include the release of all manner of statements attesting to the enforcement of several different disciplinary actions against whomever for "illegal" breaches of policy...

They may even bring criminal actions against a few poor unfortunate souls who had no idea they would be sacrificed as one part of the "perception management" game.

Has anyone wondered why, to date, no one in power has really come out and suggested that the program must be curtailed to limit its application to terrorism and terrorist types?

Here’s why; I was fortunate recently to have given an education on how networks such as Prism, really work, aside from the rudimentary details given in many publications. They cannot, and will not, stop monitoring even one individuals activity, because to do so will eventually cause loss of the ability to effectively monitor as many as 2.5 Million individuals.

Remember the “Two to Three Hop” scenario, which the idiot in one of the hearings inadvertently spoke of; therein lies the answer. If the average person called 40 unique people, three-hop analysis would allow the government to mine the records of 2.5 million Americans Do the math; Internet usage in the United States as of June 30, 2012 reached a total of over 245,000,000 million…

The following link shows how connected the world is… http://www.internetworldstats.com/stats2.htm

We should never forget how the Internet began, and who developed it, the United States Armed Forces; initially it was known as Arpanet, see excerpt and link below…

"The Internet may fairly be regarded as a never-ending worldwide conversation." - Supreme Court Judge statement on considering first amendment rights for Internet users.

"On a cold war kind of day, in swinging 1969, work began on the ARPAnet, grandfather to the Internet. Designed as a computer version of the nuclear bomb shelter, ARPAnet protected the flow of information between military installations by creating a network of geographically separated computers that could exchange information via a newly developed protocol (rule for how computers interact) called NCP (Network Control Protocol).”

http://inventors.about.com/library/weekly/aa091598.htm

There is no government anywhere on the planet that will give up any part of the program…, not without one hell of a fight...

Incidentally, they do hope and believe that everyone will come to the same conclusion; they will keep all of us at bay for however long it takes; they have the money, they have the time, and they economically control all of us...

Pretty good bet they win...

That includes industrial espionage:

EntropyNow:

Or industrial espionage?

Absolutely. See EUROPEAN PARLIAMENT report dated 11 July 2001 (Note it was before the 9/11 attack in the US).

7. Compatibility of an 'ECHELON' type communications interception system with Union law

7.1. Preliminary considerations
7.2. Compatibility of an intelligence system with Union law

7.2.1. Compatibility with EC law
7.2.2. Compatibility with other EU law

7.3. The question of compatibility in the event of misuse of the system for industrial espionage
7.4. Conclusion

EntropyNow -> StrawBear

The fact that they snoop on us all constantly, that's the problem. I agree that the indiscriminate surveillance is a problem. However, with such vast powers in the hands of private contractors, without robust legal oversight, it is wide open to abuse and interpretation. I believe we need to pull the plug and start again, with robust, independent, legal oversight, which respects fundamental international human rights laws In the US, the NDAA is a law which gives the government the right to indefinitely detain US citizens, without due process, without a trial, if they are suspected to be associated with ‘terrorists’. Now define ‘terrorism’?

Section 1021b is particularly worrying, concerning “substantial support.” It is wide open to interpretation and abuse, which could criminalize dissent and even investigative journalism. See Guardian’s excellent article by Naomi Wolf, 17 May 2012::

As Judge Forrest pointed out:

"An individual could run the risk of substantially supporting or directly supporting an associated force without even being aware that he or she was doing so. In the face of what could be indeterminate military detention, due process requires more."

In an excellent episode of Breaking the Set Feb 7 2013 Tangerine Bolen (Founder and Director, Revolutiontruth) stated that ‘Occupy London’ was designated a ‘terrorist group” officially. There are independent journalists and civil liberty activists being targeted by private cyber security firms, which are contractors for the DOD, they are being harassed and intimidated, threatening free speech and liberty for everyone, everywhere. As Naomi Wolf concludes:

“This darkness is so dangerous not least because a new Department of Homeland Security document trove, released in response to a FOIA request filed by Michael Moore and the National Lawyers' Guild, proves in exhaustive detail that the DHS and its "fusion centers" coordinated with local police (as I argued here, to initial disbelief), the violent crackdown against Occupy last fall.

You have to put these pieces of evidence together: the government cannot be trusted with powers to detain indefinitely any US citizen – even though Obama promised he would not misuse these powers – because the United States government is already coordinating a surveillance and policing war against its citizens, designed to suppress their peaceful assembly and criticism of its corporate allies.”

MadShelley

It seems to me that potential terrorist threats come in two sorts: the highly organised and funded groups that could commit catastrophic destruction, and the local schmucks that are really just old-fashioned losers-with-a-grudge adopting an empowering ideology.

The first group would be immensely cautious with their communications, and fall outside this sort of surveillance. The second group, if Boston and Woolwich are any evidence, are not effectively detected by these measures.

It appears very clear to me that this is runaway state power, predictably and transparently deflected with cries of "terrorism". And, perhaps most worrying, that definition of terrorism is now as wide as the state requires. Anything that embarrasses or exposes the evils of our states, including rendition, torture, and all manner of appalling injustice, is classified as a matter of 'national security', which must not be exposed lest it aid the enemy.

I know Orwell's name gets tossed around too much... but Jesus! I really hope we're not bovine enough to walk serenely into this future.

General_Hercules

...The NSA's infrastructure wasn't built to fight Al Qaeda. It has a far greater purpose, one of which is to keep the USA as the last superpower and moral authority for the rest of the time humanity has in this world.

All this muck is hurting bad. Obama is having a tough time from all sides. All the moralists think he is a villain doing everything he promised to change. All the secret society members think he is a clown who has spilled out every secret that was painstakingly put together over decades....

Cultural dominance

The temples of neoliberalism are malls and airports ;-). And they are build all over the glone is a very similar fashion. A drunk person accidentally transfered from New Jersey to, say Kiev and put in one of mjor malls can never tell the difference :-).

English became the major international language. Both language of technology and commerce. Much like Latin was before.

In developing countries goods are sold at considerable premium (up to 100%) but generally everything that can be bought in the USA now can be bought say in Kiev. Of course affordability is drastically different, but for elite itis not a problem. That create another opportunity for the top 1% to enjoy very similar, "internationalized" lifestyle all over the globe.

Hollywood films dominate world cinemas. American computer games dominate gaming space. In a way the USA culturally is present in any country. It was amazing how quickly remnants of communist ideology were wipes out in the xUSSR countries (Globalization, ethnic conflict and nationalism Daniele Conversi - Academia.edu):

Contrary to the globalists or ideologues of globalization (Steger 2005), both Marxists and liberals have highlighted the ‘ pyramidal ’ structure underlying globalization. This metaphor applies well to cultural dissemination.

An elite of corporate, media, and governmental agencies sits at the pyramid’ s top level, small regional intermediary elites sit immediately below, while the overwhelming majority of humans are pushed well down towards the pyramid’ s bottom. In the realm of ‘ global culture ’ , this looks like a master-servant relationship with much of the world at the boot-licking end. Whether such a relationship really exists, or is even practical, this metaphorical dramatization can nevertheless help to understand collective self-perceptions. The consequences in the area of ethnic conflict are significant. Such a hierarchical structure makes it impossible for global exchanges to turn into egalitarian relationships based on evenly balanced inter-cultural communication and dialogue.

On the contrary, cultural globalization is not reflected in a genuine increase of inter-personal, inter-ethnic and inter-cultural contacts. As I shall argue, in most public areas ‘ cultural globalization ’ really means the unreciprocated, one-way flow of consumerist items from the US media and leisure machine to the rest of the world.

This top-down distribution ensures that a few individuals and groups, nearly all in the USA, firmly establish the patterns of behaviour and taste to be followed by the rest of mankind. Is this congruent with the view that there is a form of ‘ global centralization ’ in cultural-legal matters leaning towards Washington, DC? As for a supposed ‘ global culture ’, the symbolic capital would ideally be located in Hollywood, rather than Washington.

In fact, the term ‘ Hollywoodization ’ insinuates a media-enforced hierarchical structure with immediate symbolic resonance. It also offers a more cultural, perhaps less sociological, focus than the Weberian concept of bureaucratic ‘ McDonaldization ’ (Ritzer 1996).

Competing terminologies include ‘ Disneyfication ’ / ’ Disneyization ’ , with its stress on extreme predictability and the infantilization of leisure (Bryman 2004), ‘Walmarting ’ as the streamlining of the retail sector (Fishman 2005, Morrow 2004), or earlier Cold War terms like ‘ Coca-Colonization ’ (Wagnleitner 1994). We previously saw how the term ‘ McGuggenization ’ has been used to indicate art-related cultural franchising and other forms of Americanization in the Basque Country (McNeill 2000).

 All these equally refer to socio-economic trends originated in the USA and are hence forms of Americanization. However, ‘ Hollywoodization ’ has broader implications for ethnic relations and nationalist conflicts.

In practice, Hollywood-inspired simplifications have become the daily staple for millions of peoples around the world in their leisure time. In the area of ethnicity, ‘ Hollywoodization ’ has been elevated to the only known reality and the unique source of information about the outside world for increasing numbers of people, not only in the USA. Thus, the world is more likely to get its stereotypes of the Brits  from US movies like The Patriot or Saving Private Ryan than via British productions.Similarly, most of the world is likely to see Scotland through the lenses of US-made Braveheart , as the larger public can barely afford any access to Scottish cultural productions.

This monopoly of global stereotyping and ethnic imagery has serious implicationsf or the spread and continuation of ethnic conflict.

The tools of primary socialization were once under firm control of the family, either nuclear or extended. They were subsequently assumed by the state in the industrialization ‘ phase ’ , notably with post-1789 mass militarization and compulsory schooling (Conversi2007, 2008).

Under neo-liberal globalization, primary socialization has been seized by unaccountable cash-driven corporations and media tycoons. This has further reduced the space of inter-generational transmission and family interaction. If a community can no longer socialize its children according to its culture and traditions, then the very bases of local, regional, and national continuity are all visibly at stake. This threat to a group's survival is often seized upon by patriots and ethno-nationalists, whose political programs are founded on providing a new sense of social cohesion and security – even if the targets are often hapless and unprotected minorities.

That is partly how nationalism and xenophobia have expanded in tandem with globalization. Ethno-nationalism not only persisted through change, but is perceived by many as a response to the growth of globalization, providing a prêt-à-porter hope for national resistance and resilience. By depending on Hollywood as unique conveyor of ‘ globalization ’, inter-ethnic interaction is inevitably undermined. In some instances, international communication has practically evaporated.

... ... ...

I have described, and subsequently dismissed, the profit-oriented ideology that globalization, intended as Mcdonaldization and Hollywoodization, can contribute to better international understanding. On the contrary, it has ushered in a process of planetary cultural and environmental destruction, while hampering inter-ethnic communication and fostering human conflict. The notion of cultural security, so central to international relations and peaceful coexistence, has undergone unprecedented challenges.

...Insofar as cultural globalization is understood as uni-dimensional import of standardized cultural icons, symbols, practices, values, and legal systems from the United States, it can simply be re-described as Americanization (rather than Westernization in the broad sense), or ‘ globalization by Americanization ’ (Hilger 2008). This is of central importance for the study of ethnic conflict.

In fact, the outcome is scarce hybridization, amalgamation, and metissage . Rather than providing an inter-cultural bridge, this unilateral drive has often eroded the basis for mutual understanding, impeding inter-ethnic, inter-cultural, and international interaction. Given the current vertical, pyramidal structure of the ‘ cultural world order ’ , the opportunity of distinctive groups to communicate directly and appreciate each other’s traditions has decreased, except in the virtual area of long-distance communication. For an increasing number of individuals, an American mass consumer culture remains the only window on the world. Hence, to know and appreciate one ’ s neighbours has become an ever-arduous task. To recapitulate my point, wherever cultural globalization appears as synonymous with Americanization, it engenders conflicts on a variety of levels.

Because the process is one-way and unidirectional, the result is unlikely to be a fusion between cultures or, evenless, the blending of ethnic groups. Contrary to the globalist utopia, the imposition of more and more American icons means less and less possibility for direct inter-ethnic encounter and communication among nations. Together with the collapse of state legitimacy, this substantially contributes to the spread of ethnic conflict and nationalism.

Incorporation of "globalist" parts of national élites as second class citizens of the transnational ruling class

Another aspect of cultural power of neoliberalism is that it accepts national elites (on some, less favorable then "primary" elites conditions) as a part of a new transnational elite, which serves as the dominant class. By class, following classic Marxism we mean a group of people who share a common relationship to the process of social production and reproduction, positioned in the society relationally on the basis of social power.

The struggle between descendant national fractions of dominant groups and ascendant transnational fractions has often been the backdrop to surface political dynamics and ideological processes in the late 20th century. These two fractions have been vying for control of local state apparatuses since the 1970s.

Trans national fractions of local elites swept to power in countries around the world in the 1980s and 1990s. They have captured the “commanding heights" of state policymaking: key ministries and bureaucracies in the policymaking apparatus — especially Central Banks, finance and foreign ministries — as key government branches that link countries to the global economy.

They have used national state apparatuses to advance globalization and to pursue sweeping economic restructuring and the dismantling of the old nation-state–based Keynesian welfare and developmentalist projects.

They have sought worldwide market liberalization (following the neoliberal model), and projects of economic integration such as the North American Free Trade Agreement (NAFTA), the Asia Pacific Economic Cooperation (APEC) forum, and the European Union. They have promoted a supra-national infrastructure of the global economy, such as the World Trade Organization, as we discuss below.

In this new, transnational social system transnational corporations are intermixed with nation-states which they have special privileges. And the state itself now serves not the people of the country (which historically were upper classes) but primarily service the interests of the transnational corporations (and, by extension, narrow strata of "comprador" elite, much like aristocracy of the past). It is now extension and projection of corporate power ("What is good for GE is good for America"). Both the transactional elite (and first of all financial oligarchy) and transnational corporation enjoy tremendous privileges under such a regime (corporate socialism, or socialism for the rich). Like Bolshevik state was formally dictatorship of proletariat but in reality was dictatorship of the elite of an ideological sect called Communist Party (so called nomenklatura), transformed nation-states like the USA, GB, France, Russia, etc now to various degrees look like dictatorships of transnational elite (transnational bourgeoisie like Marxist would say ;-) while formally remaining sovereign democratic republics. Like with Communist Parties in various countries that does not excuse antagonism or even open hostilities.

That does not eliminates completely the elites competition and for example the EU elite put a knife in the back of the US elite by adopting the euro as completing with the dollar currency (so much about transatlantic solidarity), but still internalization of elites is a new and important process that is more viable that neoliberal ideology as such. Also for any state national elite is not completely homogeneous. While that is a significant part of it that favor globalization (comprador elite or lumpen elite) there is also another part which prefer national development and is at least semi-hostile to globalism. Still the comprador part of the elite represents a very important phenomenon, a real fifth column of globalization, the part that makes globalization successful. It plays the role of Trojan horse within nation states and the name "fifth column" in this sense is a very apt name. This subversive role of comprador elite was clearly visible and well documented in Russian unsuccessful "white revolution" of 2011-2012: the US supported and financed project of "regime change" in Russia. It is also clearly visible although less well documented in other "color revolutions" such as Georgian, Serbian, and Ukrainian color revolutions. comrade Trotsky would probably turn in his coffin if he saw what neoliberal ideologies made with his theory of permanent revolution ;-).

Great propaganda success of neoliberalism

As professor David Harvey noted in his A Brief History of Neoliberalism neoliberal propaganda has succeeded in fixating the public on a peculiar definition of "freedom" that has served as a smoke screen to conceal a project of speeding upper class wealth accumulation. In practice, the neoliberal state assumes a protective role for large and especially international corporations ("socialism for multinationals") while it sheds as much responsibility for the citizenry as possible.

The key component of neoliberal propaganda (like was the case with Marxism) was an economic theory. Like Marxism it has three components

For more information see

Ideological dominance, neoliberalism as yet another major civic religion

There is no question that neoliberalism emerged as another major world civic religion. It has its saints, sacred books, moral (or more correctly in this case amoral) postulates and the idea of heaven and hell.

Neoliberalism shares several fundamental properties with high demand religious cults. Like all fundamentalist cults, neoliberalism reduces a complex world to a set of simplistic dogmas (See Washington Consensus). All of society is viewed through the prism of an economic lens. Economic growth, measured by GDP, is the ultimate good. The market is the only and simultaneously the perfect mechanism to achieve this goal. Neoliberalism obsession with materialism have become normalized to the degree that it is hard to imagine what American society would look like in the absence of these structural and ideological features of the new and militant economic Darwinism that now holds sway over the American public. The mantra is well known: government is now the problem, society is a fiction, sovereignty is market-driven, deregulation and commodification are the way to a bright future, and the profit is the only viable measure of the good life and advanced society. Public values are a liability, if not a pathology. Democratic commitments, social relations, and public spheres are disposables, much like the expanding population of the unemployed and dispossessed. Any revolt is the threat to the neoliberal regime of truth and should be dealt with unrestrained cruelty. The market functions best with minimal or no interference from government or civil society and those who don't agree will be taken by police to the proper reeducation camps. All governments with possible exception of the US government should be minimized to allow unrestricted dominance of global corporations. The genius of neoliberalism as a cult, was its ability to cloak the US pretences of world hegemony in an aura of scientific and historical inevitability. Which again makes it very similar and in a way superior to Marxism as a cult. The collapse of the Soviet Union was the supreme, heaven sent validation of Margaret Thatcher’s claim that there was no alternative. There is only one blessed road to prosperity and peace and outside it there is no salvation, nor remission from sins.

The great economic historian Karl Polanyi observed, “The idea of a self-adjusting market implied a stark utopia.” And neoliberalism was a stunning utopia of economic determinism, one even more ambitious than that of Marx.

With all the big questions thus settled, history appeared to be at an end. There was one and only one route to prosperity and peace. All that was required was to make sure the model was correctly applied and all would be well. We all settled into our assigned roles. Capitalists retreated to the role of technocrats, eschewing risk themselves while shifting and spreading it throughout society. The rest of us were relegated to the roles not of citizens, but of consumers. Using our homes as ATMs, we filled our lives with Chinese-made goods, oblivious to the looming environmental and social costs of a runaway, unregulated consumer-driven society. Only a marginalized few questioned the basic economic structure. It was the era of homo economicus, humans in service to the economy.

Now that perfect machinery lies in pieces all around us and the global economic free fall shows no signs of ending any time soon. The fundamental reasons underlying the collapse aren’t all that difficult to discern. Central to the whole neoliberal project was the drive to rationalize all aspects of human society. Relentless efforts to cut costs and increase efficiency drove down the living standards of the vast majority, while the diminution of government and other non-commercial institutions led to increasing concentration of wealth at the very top of society. As high paying jobs in the industrial and technical sectors moved from developed countries to low wage export-based economies in the developing world, capacity soon outstripped demand and profits in the real economy began to sag. Not content with declining earnings, wealthy elites began to search for investments offering higher returns. If these couldn’t be found in the real economy, they could certainly be created in the exploding financial sector.

Once consigned to the unglamorous world of matching those with capital to invest with those with enterprises seeking to grow, finance became the powerful new engine of economic growth. No longer stodgy, bankers and brokers became sexy and glamorous. Exotic new financial instruments, called derivatives, traded on everything from commodities to weather.

This speculative frenzy was supported by a central bank only too happy to keep credit extremely cheap. Debt exploded among consumers, businesses and government alike. Creating new debt became the source of even more exotic investment vehicles, often bearing only the most tenuous of connections to underlying assets of real value, with unwieldy names such as “collateralized debt obligations” and “credit default swaps.”

All the debt and the shuffling of fictional wealth hid the underlying rot of the real economy. It was a house of cards just waiting for the slight breeze that would send it all crashing down. And a collapse in housing prices in 2008 laid bare the economic contradictions.

The fundamental contradiction underlying much that confronts us in the age of crises is an economic and social system requiring infinite growth within the confines of a finite planet. Any vision seeking to replace neoliberalism must take this contradiction into account and resolve it. The overriding market failure of our time has nothing to do with housing. It’s the failure to place any value on that which is truly most essential to our survival: clean air and water, adequate natural resources for the present and future generations, and a climate suitable for human civilization.

No such new vision is currently in sight. That this leaves everyone, neoliberals and their foes alike, in a state of uncertainty and doubt is hardly surprising. The seeming triumph of neoliberalism was so complete that it managed to inculcate itself in the psyches even of those who opposed it.

We find ourselves unsure of terrain we thought we knew well, sensing that one era has ended but unsure as to what comes next. We might do well to embrace that doubt and understand its power to free us. Our doubt allows us to ask meaningful questions again and questioning implies the possibility of real choice. Removing the intellectual straitjacket of neoliberal orthodoxy opens up the space necessary to reconsider the purpose of an economy and its proper role in a decent human society and to revisit the old debate over equity versus efficiency. It calls into question the assumption most central to homo economicus; that all humans act only to maximize their own interests.

It seems clear that the world emerging over the coming decades will look quite different from the one we now inhabit. Of necessity it will evolve in ways we can’t fully understand just yet. Old battle lines, such as the ones between capitalism and socialism, will likely fade away. Both of those models arose in a world of abundant and cheap fossil fuels and within the confines a planet with a seemingly endless capacity to absorb the wastes of our conspicuous consumption. New battle lines are already beginning to take shape.

The Revolution is Upon Us The Age of Crisis and the End of Homo Economicus Logos

I think that like is the case with Marxism, the staying power of neoliberalism is that propose the religion picture of world with its "creation history", saints, and way of salvation. In a way it plays the role similar to the role of Catholicism in middle ages (aka Dark Ages). The greed of catholic clergy in Middle ages (trade in indulgencies) is a match of the greed of neoliberals( with financial derivates replacing indulgencies ;-). It is equally hostile to any attempts to analyze it, with the minor difference that heretics that question the sanctity of free market are not burned at the stake, but ostracized. It support "new Crusades" with the same mechanism of "indulgences" for small countries that participate.

The level of hypocrisy is another shared trait. The great irony is that the USA, the world's leading proponent of neoliberalism (with the US President as a Pope of this new religion), systematically is breaking the rules when it find it necessary or convenient. With high deficit spending and massive subsidizing of defense spending and financial sector, the United States has generally use a "do as I say, not as I do" approach. And with the amount of political appointee/lobbyists shuttling back and forth between business and government, Adam Smith's "Invisible Hand" looks more and more like a crushing fist of corporatist thugs. It involves dogmatic belief that the society is better off when ruled by a group of wealthy financiers and oligarchs, than by a group of professional government bureaucrats and politicians with some participation of trade unions.

The USA also dominates the cultural scene:

The United States' position as the leading maker of global culture has been basically unchallenged for the last century or so, especially in the Western world. Yet the economic power of the Western world is waning even as new nations, with new models of economic and social life, are rising. Might one -- or several -- of these nations like China, India or Brazil become new centers of global culture?

I believe that the answer to this question for the foreseeable future is "no." While the U.S.'s cultural prominence is partially related to its political, military and economic power, such power is not the only cause of America's global cultural hegemony. Rather, the U.S. offers a unique convergence of several factors, including economic opportunity, political freedom and an immigrant culture that served as a test bed for new cultural products.

Let me offer a brief account of the rise of the American film industry to suggest the way political, economic and immigrant forces shaped American cultural hegemony. In the U.S., the film industry started as commercial enterprise largely independent of state control. Movies had to adapt to market conditions to earn profit for their producers. In order to achieve this goal, American movies needed to appeal to a diverse population made up of both native-born and immigrant citizens.

As a consequence, filmmakers had to make movies that could appeal to international audiences simply to meet domestic demand. This fact helped the American film industry become globally preeminent well before the U.S. became a superpower. In other words, while U.S. military and economic power strengthened the position of the U.S. movie industry as globally dominant, that position was not dependent on U.S. military and economic power. Instead, American producers had a competitive advantage in global markets that was later cemented in place by the U.S. post-war economic and military hegemony in the West.

After the dissolution of the USSR, the USA became natural center of the "neoliberal religion" a dominant force in the new world order (the world's only superpower). And they used their newly acquired status against states which were not "friendly enough" very similar to Catholicism with its Crusades, launching a series of invasions and color revolutions against "nonbelievers" in a globalist neoliberal model. The level of plunder of Russia after the dissolution of the USSR looks like a direct replay of Crusades with the siege of Constantinople as primary example (despite stated goals, Crusades were by-and-large a monetary enterprise of the time with fig leaf of spread of Catholicism attached). This period of neoliberal crusades still continued in 2013, sometimes using various proxy to achieve "the regime change" by military means.

As we already refereed to neoliberalism as a cult an interesting question is whether neoliberalism can be viewed new "civic religion". The answer is unconditional yes, and I think that like Marxism before it should be considered to be yet another civic religion. It has it's set of holy books, Supreme being to worship, path to salvation and set of Apostils. Like communism before it propose humanity grand purpose and destiny.

Approliving:

Theistic and civic religions are also similar in that they both offer visions of humanity’s grand purpose and destiny.

There are also significant differences between theistic religions and civil religions. Theistic religions explicitly rely on claims of divine authority for their validity, while civil religions rely on reason and the interpretation of commonly-accepted historical knowledge. Followers of theistic religions stress the importance of faith in times of adversity, while followers of civil religions tend to have a more pragmatic attitude when reality casts doubt on their beliefs.

Civil religions are more like big social experiments than actual religions because their central claims are much more falsifiable, and their followers show evidence of holding this perception (e.g. references to “the American experiment"; the voluntary abandonment of Communism throughout Eurasia when it became clear that it wasn't working).

Communism bears so much resemblance to Christianity because, as you mentioned last week, the Western imagination was thoroughly in the grip of Christianity when Communism emerged. Communism is similar to Christianity out of practical necessity: had it not been based on the Christian template, Communism probably would have been too intellectually alien to its Western audience to have ever taken off. Luckily for the founders of Communism, they were also subjected to this Christian cultural conditioning.

With all this in mind, and given that religion is evolving phenomenon, I think that civil religion is actually a distinct species of intellectual organism which has (at least in part) evolved out of religion.

Like Marxism, neoliberalism is first and foremost a quasi religious political doctrine. But while Marxism is aimed at liberation of workers , a political doctrine neoliberalism is aimed at restoring the power of capital. Neoliberalism originated in the rich countries of Anglo-Saxon world (GB and USA) so along with open despise of poor, it always has a distinct flavor of despise for peripheral countries. In global politics, neoliberalism preoccupies itself with the promotion of four basic issues:

As such, neoliberalism, in its crudest form, is crystallized in the Ten Commandments of the 1989 Washington Consensus (policy of debt slavery set for the world by the US via international financial institutions). While pushing the democracy as a smoke screen, they implicitly postulate hegemony of the financial elite (which is a part of "economic elite" that neoliberalism defines as a hegemonic class). Financialization of the economy also serves as a powerful method of redistribution of wealth, so neoliberalism generally lead to deterioration of standard of living for lower quintile of the population and in some countries (like Russia in 1991-2000) for the majority of the population. This is done largely via credit system and in this sense neoliberalism represents "reinters paradise". Neoliberal globalization was built on the foundation of US hegemony, conceived as the projection of the hegemony of the US capital and dollar as the dominant reserve currency. As such it is critically dependent of the power and stability of the US and the financial, economic, political and military supremacy of the US in every region. For this purpose the USA maintains over 500 military bases (737 by some counts) and over 2.5 million of military personnel.

But there are also important differences. Unlike most religions, neoliberalism is highly criminogenic (i.e., having the quality of causing or fostering crime). It is more criminogenic in countries with lower standard of living and in such countries it often lead to conversion of a "normal", but poor state into a kleptocratic state (Yeltsin's Russia is a good example) with the requisite mass poverty (Global Anomie, Dysnomie and Economic Crime Hidden Consequences of Neoliberalism and Globalization in Russia and Around the World). Unfortunately architects of this transformation (Harvard Mafia in case of Russia) usually avoid punishment for their crimes. Corruption of the US regulators which happened under neoliberal regime starting from Reagan is also pretty well covered theme.

While economic crisis of 2008 led to a crisis of neoliberalism, this is not necessary a terminal crisis. The phase of neoliberal dominance still continues, but internal contradictions became much deeper and the regime became increasingly unstable even in the citadel of neoliberalism -- the USA. Neoliberalism as an intellectual product is practically dead. After the crisis of 2008, the notion that finance mobilizes and allocates resources efficiently, drastically reduces systemic risks and brings significant productivity gains for the economy as a whole became untenable. But its zombie phase supported by several states (the USA, GB, Germany), transnational capital (and financial capital in particular) and respective elites out of the sense of self-preservation might continue (like Bolshevism rule in the USSR in 70th-80th) despite increasing chance of facing discontent of population and bursts of social violence.

Cornerstone of neoliberal regime, the economic power of the USA is now under threat from the rise of Asia. This is one reason of mutation of neoliberalism into aggressive neoconservative imperialism that we witness in the USA.

While intellectually neoliberalism was bankrupt from the beginning, after 2008 believing it in is possible only by ignoring the results of deregulation in the USA and other countries. In other words the mythology of self-regulating "free market" became a "damaged goods". In this sense, any sensible person should now hold neoliberal sect in contempt. But reality is different and it still enjoy the support of the part of population which can't see through the smoke screen. With the strong support of financial oligarchy neoliberalism will continue to exists in zombie state for quite a while, although I hope this will not last as long as dominance of Catholicism during European Dark Ages ;-). Still the US is yet to see its Luther. As was noted about a different, older sect: "Men are blind to prefer an absurd and sanguinary creed, supported by executioners and surrounded by fiery faggots, a creed which can only be approved by those to whom it gives power and riches".

Like communism in the USSR it is a state supported religion: Neoliberalism enjoys support of western governments and first of all the US government. Even when the US society entered deep crisis in 2008 and fabric of the society was torn by neoliberal policies it did not lose government support.

Market fundamentalism as an ideology of neoliberalism;
Washington Consensus

Market fundamentalism is an ideology of neoliberalism and represents a pseudo-scientific approach to economic and social policy based on neoclassical theories of economics that absolutized the role of the private business sector in determining the political and economic priorities of the state and consider privatization as the ultimate solution of all problems in the society.

Like social theories behind Italian and German versions of corporatism ideology of neoliberalism is pretty eclectic. It is discussed at some additional length at pages related to the topic Casino Capitalism on this site.

We need to note, there the neoliberal ideology adoption and implementation patterns varies from country to country, like it was actually with the classic corporatism as well. In the USA this form of corporatism emerged in most radical form. Another center of neoliberalism was GB in which it also has had a more radical form then, say, in Spain or Italy.

And we called the US version of neoliberalism radical, it is not a metaphor: corporatism under General Franco is a pale shadow of corporatism under Bush-Obama regime.

This new stage of capitalism development is often called "corporate socialism" of "socialism for rich" or "socialism for banks". The latter name is applicable because the key component of transnational elite is financial oligarchy. All of those terms reflect the key fact that at this stage of capitalism development it is the transnational elite and first of all financial oligarchy which completely dominates power structures of the society. Due to the role of financial oligarchy in this new elite this social system was also nicknamed Casino Capitalism.

Neoliberalism should probably be viewed as a further development of a form of corporatism that emerged in the USA in late 60th. It came to power in Ronald Reagan administration which was in a way Quiet coup. And it became completely dominant after the collapse of the USSR during Clinton regime during which Democratic Party also adopted neoliberalism as an official platform.

The term itself emerged in the 1970s, when some Latin American economists began using "neoliberalism" to designate their program of market-oriented reforms. It has come into wide use starting with 1973 Chilean coup d'état. After triumph of neoliberalism in Chile under Augusto Pinochet (from 1973) neoliberalism spread to Great Britain under Margaret Thatcher (from 1979) and then to the United States under Ronald Reagan (from 1981). Broadly speaking, neoliberalism seeks to transfer control of the economy from the public to the private sector with the state providing guarantees only to corporations and not to individual citizens like under socialism. That's why is often called "corporate socialism".

After dot-com bust of 2000-2002, however, the term "neoliberalism" had become a pejorative used to denigrate prostitution of economics performed by Milton Friedman and Chicago school . This trend increases after financial crisis of 2008-2012. So it is probably fare to say that right now neoliberalism entered the stage of decline. The last important victory of neoliberalism was probably navigating Russia into joining WTO, which happened in summer of 2012.

It has neoliberal Newspeak that include such terms as "free market", efficiency, consumer choice, transactional thinking and individual autonomy. In essence this is an modernized ideology of merger of state and corporate power that was hallmark of classic corporatism, with an additional twist of emphasizing the Arian style theories of inferiority of lower classes (reflected in promoting the "class of creators", entrepreneurs( Randism), etc) and "ultimate justice" of redistributing wealth to the top 1%.

On state level it tries to abolish social programs and completely shift the risks to individuals (replacing pensions with 401K plan in the USA), while fully providing social protection to corporations, especially financial giants involved in casino style gambling. In other words it socialize private losses and privatize social program that benefits of individual citizens.

Neocolonial aspects of neoliberalism are often called "Washington Consensus", a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations (like the International Monetary Fund (IMF) and World Bank) and directed on making developing nations "debt slaves" of the industrialized nations. This policy got tremendous impetus with the dissolution of the USSR when the principal foe, which to certain extent limited the level of greed in such deals due to fear of "communist infiltration" if case deal is too one sided, folded.

The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C. The list created by Williamson's included ten points:

  1. Legal security for property rights;
  2. Financialization of capital.
  3. Fiscal policy Governments should not run large deficits that have to be paid back by future citizens, and such deficits can only have a short term effect on the level of employment in the economy. Constant deficits will lead to higher inflation and lower productivity, and should be avoided. Deficits should only be used for occasional stabilization purposes.
  4. Redirection of public spending from subsidies to people to subsidies to corporations (tax breaks, preferred regime, etc). Especially hurt were classic socialist programs, which neoliberal call "indiscriminate subsidies" that neoliberal deem wasteful. They are limited to those what benefit corporations such as primary (but not university) education, primary health care and infrastructure investments. Pensions and other social problems need to be privatized.
  5. Tax reform– broadening the tax base by shifting tax burden to the poor and middle classes and adopting low taxes for corporations and top 1% with the states goal to encourage "innovation and efficiency";
  6. Interest rates that are market determined and positive (but moderate) in real terms;
  7. Floating exchange rates;
  8. Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by law and relatively uniform tariffs; thus encouraging competition and long term growth. Financial liberalization under the smoke screen of trade liberalization and complete dominance of foreign banks in local financial systems of developing countries.
  9. Liberalization of the "capital account" of the balance of payments, that is, allowing people the opportunity to invest funds overseas and allowing foreign funds to be invested in the home country
  10. Privatization of state enterprises; Promoting market provision of goods and services which the government can not provide as effectively or efficiently, such as telecommunications, where having many service providers promotes choice and competition.
  11. Deregulation – abolition of regulations that impede market entry or restrict competition, except for (G7 only) those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions;

A Decade Long Triumph of Neoliberalism after the Dissolution of the USSR

As we mentioned before, the greatest triumph of neoliberalism was the dissolution of the USSR in 1991. After this event, there was a period of "triumphal march of neoliberalism", which lasted probably till 2005, when each year it claimed as a victory yet another country (Yeltsin neoliberal gang rule in Russia lasted till 2000, all former socialist countries were converted to neoliberal regimes shortly after, Kosovo in 1999; Serbia in 2000; Iraq in May, 2003; Georgia in December 2003; Ukraine in 2004). It also managed to stabilize and improve the situation in the USA. Plunder of Russia and other xUSSR states along with Internet revolution were two factors that influenced relative prosperity of the USA in 1994-2000.

And like Catholicism in Europe in Middle Ages, in 90th neoliberalism looked like an incontestable ideology propagated by "sole superpower" (" anew holy Roman Empire") with the help of vassals and subservient financial institutions such as World Bank and IMF. The dominance on the USA in 1991 looked rock-solid and if somebody told me in 1999 that in less then 20 years the USA would be on ropes both politically and financially I would just laugh. Still after the dissolution of the USSR neoliberalism managed to dissipate most of the gains in approximately 20 years and in 2008 entered the phase of structural crisis. As of 2013 the idea of self-regulating market is dead and even solidarity of international elites, the hallmark of neoliberalism, is under question.

The first cracks in neoliberalism facade were caused by Clinton's attack on Yugoslavia in 1999, the first armed neoliberal crusade attempted under the smoke screen of protecting the right of Kosovo Muslims in Serbia. It failed to implement "regime change" in Serbia and despite overwhelming military superiority of NATO forces has shown that bringing neoliberal regime on the tips of bayonets is a costly and high risk exercise. It took another several years and a color revolution in Serbia to achieve those goals. It did established the second Muslim state in Europe (effectively NATO protectorate), which was a part of the plan.

Color revolution in Serbia started a series of other successful color revolutions in Serbia (Serbia's Bulldozer Revolution in 2000) ,Georgia (Saakashvili regime came to power in November 2003 as a result of "Rose revolution"), Ukraine (Viktor Yushchenko regime came to power in 2004 via Orange Revolution) and several other countries.

After those successes, there were several setback: color revolutions failed in Belorussia and Russia. Results of color revolution in Ukraine were partially reversed by government of Viktor Yanukovych who ousted Yushchenko government defeating Yulia Tymoshenko in 2010 election (with Yutchshenko personally having less the 3% support). They are close to partial reversal in Georgia where Saasaskvily regime is hanging in the air.

Fear of population and establishment of "National Security State"
to protect the interest of transnational elite

Politically neoliberalism correlates with growth of political power of financial oligarchy and media-military-industrial complex. Growth of political power of financial oligarchy among national elite has led to the dramatic growth of inequality and created growing fear of the top 0.01% (oligarchs) over preserving their power and financial gains.

That naturally leads to the establishment of National Security State" state, militarization of police and introduction of total surveillance over the citizens under the pretext of fighting against terrorists.

In the article GCHQ taps fibre-optic cables for secret access to world's communications by Ewen MacAskill, Julian Borger, Nick Hopkins, Nick Davies and James Ball, the authors describe blanket surveillance regime (21 June 2013, The Guardian) in comparison with which KGB and even STASI looks like complete amatures:

Britain's spy agency GCHQ has secretly gained access to the network of cables which carry the world's phone calls and internet traffic and has started to process vast streams of sensitive personal information which it is sharing with its American partner, the National Security Agency (NSA).

The sheer scale of the agency's ambition is reflected in the titles of its two principal components: Mastering the Internet and Global Telecoms Exploitation, aimed at scooping up as much online and telephone traffic as possible. This is all being carried out without any form of public acknowledgement or debate.

One key innovation has been GCHQ's ability to tap into and store huge volumes of data drawn from fibre-optic cables for up to 30 days so that it can be sifted and analysed. That operation, codenamed Tempora, has been running for some 18 months.

GCHQ and the NSA are consequently able to access and process vast quantities of communications between entirely innocent people, as well as targeted suspects.

This includes recordings of phone calls, the content of email messages, entries on Facebook and the history of any internet user's access to websites – all of which is deemed legal, even though the warrant system was supposed to limit interception to a specified range of targets.

As Glenn Greenwald wrote in his article Are all telephone calls recorded and accessible to the US government? (May 4, 2013, The Guardian):

Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications.

It would also help explain the revelations of former NSA official William Binney, who resigned from the agency in protest over its systemic spying on the domestic communications of US citizens, that the US government has "assembled on the order of 20 trillion transactions about US citizens with other US citizens" (which counts only communications transactions and not financial and other transactions), and that "the data that's being assembled is about everybody. And from that data, then they can target anyone they want."

Despite the extreme secrecy behind which these surveillance programs operate, there have been periodic reports of serious abuse. Two Democratic Senators, Ron Wyden and Mark Udall, have been warning for years that Americans would be "stunned" to learn what the US government is doing in terms of secret surveillance. Strangely, back in 2002 - when hysteria over the 9/11 attacks (and thus acquiescence to government power) was at its peak - the Pentagon's attempt to implement what it called the "Total Information Awareness" program (TIA) sparked so much public controversy that it had to be official scrapped. But it has been incrementally re-instituted - without the creepy (though honest) name and all-seeing-eye logo - with little controversy or even notice.

In his book "Brave New World Order" (Orbis Books, 1992, paper), Jack Nelson-Pallmeyer identifies seven characteristics of a such a state:

  1. The military is the highest authority. In a National Security State the military not only guarantees the security of the state against all internal and external enemies, it has enough power to determine the overall direction of the society.
  2. Political democracy and democratic elections are viewed with suspicion, contempt, or in terms of political expediency. National Security States often maintain an appearance of democracy. However, ultimate power rests with the military or within a broader National Security Establishment.
  3. The military and related sectors wield substantial political and economic power. They do so in the context of an ideology which stresses that 'freedom" and "development" are possible only when capital is concentrated in the hands of elites.
  4. Obsession with enemies. There are enemies of the state everywhere. Defending against external and/or internal enemies becomes a leading preoccupation of the state, a distorting factor in the economy, and a major source of national identity and purpose.
  5. The working assumption is that the enemies of the state are cunning and ruthless. Therefore, any means used to destroy or control these enemies is justified.
  6. It restricts public debate and limits popular participation through secrecy or intimidation. Authentic democracy depends on participation of the people. National Security States limit such participation in a number of ways: They sow fear and thereby narrow the range of public debate; they restrict and distort information; and they define policies in secret and implement those policies through covert channels and clandestine activities. The state justifies such actions through rhetorical pleas of "higher purpose" and vague appeals to "national security."
  7. The church is expected to mobilize its financial, ideological, and theological resources in service to the National Security State.

You can probably safely replace the term "military" with the term "finance" in the above list to make it more applicable to contemporary neoliberal societies. And if you think about, it finance is a new form of warfare. In any case National Security State is now reality and by-and-large displaced the previous form, called Inverted Totalitarism which existed from late 40th to late 80th.

Criminogenic effects of neoliberalism

The fact the neoliberalism is highly criminogenic is well established. The postulate "greed is good" implicitly assumes that the legal system is perfect. In order to distinguish greed from enlightened self-interest, we will define greed is self-interest taken to an extreme or unseemly degree. A “greedy” market participant that seeks to gain at the expense of others and the society at large. So in essence this is a parasitic behavior. This might be done within the legal framework exploiting loopholes in it, but most commonly it involves a violation of the law that is difficult to enforce and are supported internally by corporate brass (A Troubling Survey on Global Corruption - NYTimes.com):

A new survey of corporate officials and employees in 36 countries — in Europe, Africa and the Middle East, as well as India — indicates that there is plenty of corruption that needs investigating.

Over all, 20 percent of the respondents said they knew of incidents at their own companies within the previous year that could be construed as cooking the books — moves to either understate expenses or overstate revenue. Among senior managers and directors, the figure was 42 percent.

It is typically difficult to determine what the optimal set of laws is; lawmakers must make their best guess, and in most cases they pass laws that are proved to be suboptimal over time. Holes in those laws can be systematically exploited. Also law always lags behind market and technological developments; it is difficult for lawmakers to know how to regulate things like new products or new investment vehicles. That creates another opportunity to engage in destructive for the society as whole behavior without fear of punishment by the law. Neoliberalism also is "sociopath friendly" regime in a sense that sociopathic qualities became a desirable for the top brass. And with sociopathic leadership in place it is difficult to imagine what the improper business is. "Creative destruction" in this case becoming something like a pack of wolves against a sheep.

Wall Street also developed two step combination: first weaken the law, and then engage in criminal behavior that is now decriminalized. In other words, if one argues that it is perfectly acceptable for people to be greedy, the problem is that there is no mechanism to constrain greedy people so that they can do no harm to others. As history demonstrates pretty convincingly (with the 2008 crisis as the most recent example), the legal system typically fails to place the appropriate constraints on such market behavior. That's why additional mechanisms are important for society survival and prosperity, and that's why most world religions consider greed to be a vice. This brings us to works of John Kenneth Galbraith and his discussion of the necessity of countervailing economic forces. Neoliberalism destroyed those countervailing forces over the last several decades.

Since the legal system can not and never in reality guarantee that markets function efficiently, there is a role for other institutions to foster a more enlightened self-interest as a social norm and thus improve efficiency. It's mostly about how self-interest is channeled that makes the difference, since eliminating self-interest seems similarly sociopathic (the USSR is a perfect example here). We would be a lot better off to channel self-interest in financial sector productively, than let it run wild foraging on speculation, arbitrage, and monopolization.

But it is those institutions that can channel self-interest in a more productive way, that neoliberalism systematically tries to weaken. In this sense neoliberalism is not only criminogenic, it is self-destructive. Moreover, unethical behavior is arguably more of the rule of corporate conduct rather than the exception. As such it represents a systemic flaw of neoliberalism as a flavor of corporatism. And the Great Recession of 2008 is a direct manifestation of this systemic flaw. In other words it was not accidental, it was not the first and it is not the last.

Example of Russia neoliberal revolution of 1989-1994 is probably one of the most terrifying examples of this trend. But the situation in the USA after 2008 is structurally even worse as it entails much more sophisticated layers of corruption and first of all almost complete corruption of the government by financial oligarchy (nobody was prosecuted for the financial crisis of 2008). It signified the creation of two separate caste of citizens with the upper caste being above the law, much like it was with Nomenklatura in the USSR.

Neoliberalism also exploits fundamental problem that in any large bureaucracy dealing with huge sums of money people have bad and/or contradictory incentives and lack of accountability creates opportunity for corruption. So in way it is using corruption for the purposes of maintaining the neoliberal regime, which is pretty unique feature. And, despite appearance, all large bureaucracies are prone to corruption.

One of the key mechanisms of corruption that is used under neoliberal regime is so called "the revolving door". It works in both direction: from top corporate seats to government and back.

Typically people who moved to government from private industry are not forgetting your former friends, especially in crisis (Paulson is a very good example here, but any Secretary of Treasury probably is not much worse example either). There are also implicit incentives to help your former employer, when there is an opportunity for a multimillion dollar deal. Also in this variant of "revolving door" regime, those who are coming to the government or to the public service have the incentive structure and morale they acquired in their prior employer -- a large corporation.

When a long time government servant is expecting to join a corporation after leaving the government there is a strong, but implicit incentive not to hurt future friends. Income inequality is probably one of the root causes for this. If incomes in public and private sector were not so much out of balance, few people would be motivated to sell themselves out so shamelessly.

But with the current level on income inequality this mechanism works wonders to emasculate regulatory agencies top brass. The mechanism that efficiently replicates this governance systems and keeps it in place one of the central part of criminality of neoliberalism: the conscious breaking down of institutional capacity of state to regulate business activity. Thus creating the situation of "mafia state", with the oligarchy instead of regular Mafiosi.

The other key mechanism is bribing the press corps to present (often close to criminal) actions favorable to oligarchy (in a words of Margaret Thatcher), as "There Is No Alternative" (TINA). BTW in Russian "tina" is the highly viscosious, amorphous substance on the bottom of the lake or swamp. In the latter case it can swallow people or animals. This effect is the same as for "Neoliberal TINA". Typically "TINA" works by remapping the debate to exclude anything not favorable to the financial elite (Journalists in the service of Pete Peterson Remapping Debate). Here is how stealing from Social Security to preserve recent gains by financial elite was presented during debates on (note the terminology) "curbing the country’s “unsustainable” debt and deficits.":

  • Maria Bartiromo, 2011 (host, CNBC’s “Closing Bell with Maria Bartiromo”)
  • Tom Brokaw, 2012 (former anchor and managing editor, NBC Nightly News)
  • Erin Burnett, 2012 (host of CNN’s “Erin Burnett OutFront”)
  • John F. Harris, 2012 (editor-in-chief of Politico)
  • Gwen Ifill, 2011, 2010 (senior correspondent of “PBS NewsHour”)
  • Ezra Klein, 2011 (columnist, Washington Post)
  • Jon Meacham, 2010 (former editor-in-chief, Newsweek)
  • Bob Schieffer, 2010 (host, CBS “Face the Nation”)
  • Lesley Stahl, 2010 (reporter, CBS “60 Minutes”)
  • George Stephanopoulos, 2012 (host, ABC’s “This Week”)
  • David Wessel, 2012, 2011 (economics editor, Wall Street Journal)
  • George Will, 2011 (columnist, Washington Post)
  • Judy Woodruff, 2012, 2011 (host, “PBS NewsHour”)
Peterson, however, is hardly a disinterested and dispassionate observer of such discussions. In fact, he is now beginning his fourth decade of arguing that there is no alternative to enacting “entitlement reform” (read: cut Social Security and Medicare) and “tax reform” (read: raise regressive taxes and lower progressive ones) in the name of curbing the country’s “unsustainable” debt and deficits.

An essential and successful element of the Peterson strategy is to create an environment where it is widely if not universally believed that there is no alternative to his vision. The conceit is that those with “courage” will see past narrow, partisan concerns and embrace an ideal: a bipartisan consensus that has the strength to demand “shared sacrifice” from a childish and selfish populace. A review of the proceedings of the Fiscal Summits of the last three years makes agonizingly clear that most of the journalists who conducted interviews or moderated panel discussions both reflected and amplified the Peterson worldview...

So, for example, Lesley Stahl, the CBS “60 Minutes” reporter, was fully a part of the Erskine Bowles and Alan Simpson deficit-cutting team during her interview with both men: “You are going to have to raise taxes and cut things, big things, put restrictions on Social Security. Everybody knows that.”

Virtually none of the reporters thought to ask about or suggest an alternative path, such as preserving Social Security benefits and bolstering the system’s reserve by raising the cap of wages subject to Social Security taxes (currently annual wages above approximately $110,000 are not subject to any Social Security tax).

And most questioning proceeded either on the false assumption that deficits were derived from excessive spending on entitlements or as though they had mysteriously, but inevitably, come to pass.

Many journalists fairly shouted their personal desire to see greater cooperation and “compromise,” with groups realizing the importance of submerging their interests to the greater good. Who should do the submerging? In 2012, Tom Brokaw had a suggestion in the form of a question to former President Bill Clinton: after Wisconsin Governor Scott Walker pushed through a bill undermining the right of union members to collectively bargain, shouldn’t those workers have just sat down and negotiated with Walker as, Brokaw said, “has been traditionally done in this country” instead of “gather[ing] outside the capitol”?

There were a couple of exceptions to the rule. In a session moderated by Ezra Klein of the Washington Post in 2011, Klein posed a number of questions that reflected an unwillingness to operate from within the Peterson framework. For example, Klein asked New York Times columnist David Brooks whether, instead of blaming Americans for simply wanting benefits without paying for them, the causes of the debt should be located in the Bush tax cuts, two unfunded wars (Iraq and Afghanistan), and the federal government’s emergency response to the financial crisis.

Judy Woodruff, of the PBS NewsHour, generally asked questions from within the Peterson frame, but, at one point in 2012, posed a question that perhaps all the journalists should have been thinking about as well. She asked Rep. Christopher Van Hollen, Jr. (D-Md.) if “Democrats like you, by participating in forums like this one that is all focused on austerity, on cutting the deficit and the debt…really become also window dressing for a conservative agenda that is anti-jobs and anti-recovery and wrongheaded economics?”

Over the course of the three years of fiscal summits that Remapping Debate examined, the other journalist interviewers and moderators hewed strictly to the conventional Peterson wisdom. What follows are annotated illustrations of this recurring problem.

Neoliberalism as a key contributor to growth of amorality and economic crimes

Although neoliberal regime is not necessarily a kleptocracy (although Yeltsin regime definitely was), the difference is only in a degree. It does use corruption and criminality to stabilize the neoliberal regime and protect it from backlash that follow economic crisis caused by excessive appetite by financial oligarchy (if I am sounding like a communist here it is not accidental; as people of former USSR observed: communism was all wrong about socialism, but it was surprisingly realistic in its views of capitalism). And as for corruption it is pretty ironic that the USA tried to position itself as a leader of anti-corruption crusade, because as Niall Ferguson noted (quoted from Zero Hedge):

“It is corruption when corporations can buy regulation. It is corruption when laws are sponsored by Wall Street.

It is a sad state when the current level of corruption of the U.S. government is what was once only associated with third world countries ruled by dictators. The problem is that corruption of major institutions and first of all regulators is predicament for any country which adopted neoliberal model, and the US in no exception. Niall Ferguson called it "suffering from a third world disease.". In his new book The Great Degeneration he states the central question of the “great degeneration” is whether our institutions, and first of all institution which should uphold the rule of law are degenerating. He thinks that there are four symptoms of degeneration:

Quite frankly, like in the case of international financial capital, the most necessary constituents that define organized crime are in place so the difference in only in degree:

Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run for the purpose of engaging in illegal activity, most commonly for monetary profit

Quoting Wikipedia:

In the United States, the Organized Crime Control Act (1970) defines organised crime as "The unlawful activities of [...] a highly organised, disciplined association [...]".[3] Criminal activity as a structured group is referred to as racketeering and such crime is commonly referred to as the work of the Mob. In the UK, police estimate organized crime involves up to 38,000 people operating in 6,000 various groups.[4] In addition, due to the escalating violence of Mexico's drug war, the Mexican drug cartels are considered the "greatest organised crime threat to the United States" according to a report issued by the United States Department of Justice.[5]

By all estimates Mexican grug cartels dwarf the size and wealth of the US financial sector.

If you think that the increasing level of penetration of Mexican mafia into the US is the result of external forces think again. In a way Reagan regime was a clear invitations for any self-respectful international crime syndicate to start operating in the US territory. And the exposition of crime that was a side effect of neoliberal counterrevolution in Russia has a distinct blowback effect in the USA. The same reasoning is applicable to various sophisticated financial crimes including computer related. What you expect unemployed or semi-employed for 300 dollars a month programmers to do to in order to provide a living for themselves and their families.

Neoliberalism and propaganda of amorality

As Will Hutton noted in The Guardian neoliberalism doctrine entail direct propaganda of amorality( Across Europe, political leaders have lost the trust of their people:

There was a time when to live a life virtuously was well understood. It embraced personal integrity, commitment to a purpose that was higher than personal gain, a degree of selflessness and even modesty. Those at the top may have got there through ruthlessness and ambition, but they understood that to lead was to set an example and that involved demonstrating better qualities than simply looking after yourself.

No more. Perhaps the greatest calamity of the conservative counter-revolution has been the energy it invested in arguing that virtue, whatever its private importance, has no public value. The paradox, the new conservatives claim, is only through the pursuit of self-interest can the economy and society work best. Responsibilities to the commonweal are to be avoided.

The retreat of virtue has become the plague of our times. Greed is legitimate; to have riches however obtained, including outrageous bonuses or avoiding tax, is the only game in town. But across the west the consequences are becoming more obvious. Politics, business and finance have become blighted to the point that they are dysfunctional, with a now huge gap in trust between the elite and the people.

In the USA it took more then three decade to eliminate morality and to establish "law of jungle" mentality in the population. In other countries such as Russia this process was much quicker and run deeper. And in no way this newly acquired level of criminally is reflected in incarceration statistics. Most of "neoliberal-style: crimes are financial crimes and as such they are difficult to direct and difficult to procedure. sometimes they are impossible to procedure either because of the political influence of the players or potential effect on the economy if particular persons and institutions are brought to justice. The latter factor was acknowledged by the US justice department.

Neoliberalism propagates criminal behavior by creating acute means-ends discrepancies and due to excessive cultural emphasis on monetary or material success goals ("greed is good" mentality) for members of society. At the same time mobility is restricted and majority of members of the society has no realistic chances to attain those goals. Still media brainwashing incites the desire more than they have. Success stories of going from rags to riches make the American Dream more believable, despite the fact that it is deeply and irrevocably fake. As this cultural meme is internalized it creates a strain, which combined with the culturally induced underemphasize on the proper methods, stimulates deviance of various types. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path. This process creates a vicious circle toward higher rates of deviance and widespread anomie under neoliberal regime. Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions within the neoliberal doctrine and affects deviance in two ways. One is associated with strain, relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable. Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising or insider trading or running a prostitution ring. While those criminogenic effects of neoliberalism became prominent in the USA as was demonstrated by 2008 financial crisis, when most of financial players involved were engaged is behavior that is deeply and irrevocably asocial and amoral. However, a very similar process is now being reproduced throughout the world. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. This high criminogenic impact of globalization and neoliberal policies is extremely difficult and costly to reverse.

Moral relativism and concept of "Justice for some"

Moral relativism means that anything that helps to achieve the goal is moral. It was actually pioneered by Marxism in context of means to be used to achieve "proletarian revolution". It is a part of Randism as a ersatz version of Nietzschean Philosophy.

Corruption, facilitated by the credibility trap, is the biggest problem facing the West today. That is the real subsidy, the most debilitating entitlement.

It is the belief of the elite that the power of their office is an achievement that rewards them with the right to lie, cheat and steal, both for themselves and their friends.

Although it is most important to understand that they would be shocked and insulted if one uses those words, lie, cheat and steal, to describe what they are doing. They view themselves as exceptionally hard working, as obligated by their natural gifts and superiority.

Through a long indoctrination that starts sometimes in their families, but is most often affirmed in their elite schools and with their circle of privileged friends, they learn to rationalize selective moral behaviour not as immoral but as 'the entitlement of success.' And they are supported by a horde of morally ambivalent enablers who will tell them whatever they wish to hear.

There are one set of rules for themselves and their friends, and another set of rules for the rest.

Few who actually do evil consciously choose to be evil. They rationalize what they do in any number of ways, but the deceit often hinges on their own natural superiority, and the objectification and denigration of the other. We are makers, and they are takers. Although many may work hard, they see their own work as having special value and merit, while the actions of the others are inconsequential and unworthy.

Given enough time, their rationalizations become an ideology, desensitized to the meaning and significance of others outside their own select group. This supremacy of ideology empties their souls, and opens the door to mass privation and even murder, although rarely done by their own hands.

This is what Glenn Greenwald calls 'justice for some.' Or even earlier what George Orwell captured in the slogan, 'Some animals are more equal than others.'

And just to be clear on this, with regard to the Anglo-American political situation, the tragedy is not that just some are corrupted, which is always the case. The tragedy is that the Democrats and the Labor Party learned that they could become as servilely corrupted by Big Money as the Republicans and the Conservative Party, while maintaining the illusion of serving their traditional political base.

And it has rewarded them very well in terms of extraordinarily well-funded political power, and almost unbelievable personal enrichment afterwards.

In such a climate of corruption, political discourse loses the vitality of ideas and compromise for the general good, and take on the character of competing gangs and crime families, engaged in aggressive schemes and protracted turf wars, tottering from one pitched battle and crisis to another.

As Jesse put in his blog Jesse's Café Américain
"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

The problem which the modern world has not yet grappled is how to react to the rise of a global elite, which considers itself to be above national restraints, and a law unto themselves.

Their success has been propelled by the dominance of Anglo-American financialization, and the rise of oligarchies in Russia, China, Latin America, and India. Countervailing power has been co-opted and in many cases eliminated. Any opposition has become marginalized and isolated.

The new oligarchs are supported by fiat currencies of respective national goverements, which together the increase of insubstantial 'cashlessness' in wealth. The latter provides much greater ability to reallocate wealth.

Legal arbitrage

Legal arbitrage is a powerful instrument for transnational corporations to press government into compliance. As soon as government tries to impose some restriction on their operations they threaten to leave.

This behavior is by-and-large conditioned by the low price of oil. With price of oil above, say $200 per barrel, transportation costs became big enough to make this behavior less likely

Globalization and deregulation supports selective justice, to the extreme detriment of local legal regimes (outside G7), and individual choice and freedom. The new global elite consider themselves to be a new Arab sheiks, a law unto themselves, above what they consider subhuman restraint. Or using Nietzschean terminology, Übermenschen.

“Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn't succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves...

A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble."

Chrystia Freeland, The Rise of the New Global Elite

The Consequences of Neoliberalism in Third World Countries and xUSSR space: stagnation instead of growth

Being an implementation of the "law of jungles" on international scene with the USA as a 100 pound gorilla, the neoliberal regime has distinct criminogenic character both within the USA (unpunished financial crimes made by top management of leading Wall Street banks and investment firms) and, especially, in "newly liberalized" countries of former USSR ("a New Latin America"). Which is the main "sphere of influence" of international corporations from G7 countries.

Along with internationalization of economies and integration of elites there was internalization of organized crime and growth in sophistication of criminal methods of appropriation of wealth, including those used by international corporations.

In this discussion we will follow key points of the article Global Anomie, Dysnomie, and Economic Crime Hidden Consequences of Neoliberalism and Globalization in Russia and Around the World

Introduction

TRANSNATIONAL CRIME HAS RECENTLY ACQUIRED A PROMINENT PLACE IN PUBLIC debates. It is commonly presented as the most significant Crime problem at the turn of the millennium (Myers, 1995-1996; Shelley, 1995). Many have even suggested that it represents a serious domestic and international security threat (Paine and Cillufo, 1994; Williams, 1994). The argument is also made that a wave of transnational crime undermines policies and the functioning of an increasing number of market economies around the globe (Handelman, 1995; Shelley, 1994). As a consequence, the proposed remedies are often quite drastic and involve undercover operations, privacy-piercing approaches, and the participation of intelligence services in the fight against global crime (Andreas, 1997; Naylor, 1999; Passas and Blum, 1998; Passas and Groskin, 1995).

Yet, little attention and virtually no systematic research has been devoted to understanding the causes, structure, extent, and effects of serious cross-border misconduct (Passas, 1998). The risks it poses may be grossly exaggerated (Naylor, 1995; Lee, 1999). The draconian measures being contemplated and implemented in different countries, therefore, are essentially an exercise in shooting in the dark. Chances are good that the target will be missed and substantial "collateral damage" may be caused by ill-conceived policies in this "war" on crime. This risk is particularly high in countries in transition toward a market democracy. It would be much wiser, thus, to carefully study the problem before taking ineffective and possibly damaging actions.

This article seeks to make a contribution by concentrating on the causes of transnational economic crime. The main argument is that, contrary to conventional wisdom, neoliberalism and globalization contribute to processes leading to global anomie, dysnomie, and, ultimately, economic misconduct. They do so by activating the criminogenic potential of economic, political, legal, and cultural asymmetries, as well as by creating new such asymmetries (Passas, 1999). These asymmetries cause crime by furnishing opportunities for misconduct, by generating motives for actors to take advantage of such opportunities, and by weakening social controls. More specifically, means-ends disjunctions are systematically created, as neoliberal policies foster new needs and desires that are all too often left unfulfilled. Promises of more freedom, prosperity, and happiness for a larger number of people have turned out to be chimerical. Economic and power inequalities have widened within and across countries in the last two decades . The number of poor has reached unprecedented levels, while welfare programs and safety nets are reduced or abolished. Enormous populations have become more vulnerable to exploitation, criminal victimization, and recruitment in illicit enterprises or rebel and fundamentalist groups. Normative standards and control mechanisms are weak or completely absent exactly when they are needed the most.

This article begins with some basic conceptual clarifications and outlines the theoretical framework so far applied to the analysis of U.S. organizational and individual deviance. Then, the main features of globalization and neoliberalism are presented, followed by a contrast of promises made by proponents of neoliberal policies and their actual consequences. Attention then shifts to specific criminogenic effects of these outcomes and the case of Russia, which illustrates the different stages in the processes leading up to serious misconduct and anomie. The chief policy implication of this analysis is that the recently unleashed forces of neoliberalism need to be reined in and held in check, while government policies ought to better shield the least privileged from the adverse effects of globalization.

Some Conceptual Clarifications

Although there is no universally accepted definition of transnational crime, many commentators seem to think of it as a globalized form of the stereotypical "organized crime." This, however, leaves out corporate and governmental crimes, whose effects can be far more harmful than those of "professional" criminals and ethnic groups involved in the business of illegal goods and services. We therefore need a definition that is inclusive enough without becoming too relativistic and subjective. For our purposes, transnational crime refers to cross-border misconduct that entails avoidable and unnecessary harm to society, is serious enough to warrant state intervention, and is similar to other kinds of acts criminalized in the countries concerned or by international law. Crime will be viewed as transnational when the offenders or victims are located in or operate through more than one country (Passas, 1999).

Globalization is another term that is often used without clear definition. In the simplest sense, it refers to a growing interconnectedness and multilateral linkages across national borders. According to Keohane and Nye (2000: 104), globalism is a state of the world involving networks of interdependence at multicontinental distances. The linkages occur through flows and influences of capital and goods, information and ideas, and people and forces, as well as environmentally and biologically relevant substances (such as acid rain or pathogens).

Globalism has several dimensions, such as economic, cultural, environmental, or military, not all of which take place at the same time. So, whenever globalism increases and becomes thicker or more intense, we can speak of globalization. When globalism decreases, we can speak of de-globalization.

Finally, the term "criminogenic asymmetries" refers to structural discrepancies and inequalities in the realms of the economy, law, politics, and culture. Such asymmetries are produced in the course of interactions between unequal actors (individual or organizational) or systems with distinctive features. All asymmetries contain some criminogenic potential. Durkheim argued that crime cannot be eliminated, because we are and always will be different from each other. Even in a society of saints, minor deviations would be considered serious offenses. In modern societies, crimes are those behavioral differences (asymmetries) that have been outlawed by legislative bodies. There is always the opportunity for powerful actors to victimize less privileged ones (economic, political, and power asymmetries). This potential is not always materialized. Criminal opportunities are not necessarily taken advantage of. Mostly this is because actors do not always seek or wish to make use of illegal opportunities. They may not regard such action as appropriate (due to socialization, internalization of norms) or fear adverse consequences. The criminogenic potential is most likely to be activated when opportunities, motives, and weak controls are all present.

For example, a combination of legal/regulatory asymmetries with economic and political asymmetries has given rise to a huge illicit market for toxic waste disposal. Many Third World countries either did not regulate toxic waste or did so much less rigorously than did industrialized states. This provided an opportunity for maximum-profit-seeking companies to getrid of their hazardous waste in areas where rules were lax or nonexistent (Center for Investigative Reporting and Moyers, 1990; Critharis, 1990). Power and economic asymmetries between rich and poor countries have led waste recipients to allow this to go on because of their dependence on foreign investment, the need for cash to service external debt, or the desire to create jobs (Korten, 1995). Economic and knowledge asymmetries also shaped the motivation of local participants in this questionable trade. The decision to go along reflects an incomplete understanding of the extent or nature of the hazard, their desperate need for additional income, an effort to be competitive and attractive to foreign companies (race to the bottom), or corruption.

Anomie and Deviance

Both Durkheim (1983) and Merton (1968) have stressed how high rates of deviance should be expected when social expectations are out of balance with realistic opportunities to reach the desired goals. According to Durkheim, this means-ends discrepancy is caused by society's inability to regulate people's naturally limitless desires. This problem was particularly acute in the commercial and business sector, in which anomie was chronic during the industrial revolution, opening up new horizons and undermining society's ability to contain aspirations. A similar situation can be observed in contemporary societies, where electronic, information, and biological technologies constantly redefine what is possible and break new ground.

According to Merton, unrealistic hopes and expectations are not simply natural, but socially constructed and promoted. Structural problems are at the heart of the means-ends disjunction. The U.S. culture and the ideology of the American Dream encourage lofty expectations, while society fails to provide equal access to legal opportunities. Meanwhile, there is a cultural overemphasis on success goals at the expense of normative behavior (as further elaborated by Messner and Rosenfeld, 1994). Both of these factors make for deviance and anomie.

Without ignoring the differences between the two sociologists, it has been possible to use an elaborated version of their anomie theories to explain corporate crime in the context of capitalist economies (Passas, 1990). Regardless of whether people strive for "more" due to natural drives or because of cultural encouragement, the point is that market economies cannot perform without lofty aspirations, consumerism, emphasis on material/monetary goals, and competition. All this leads to the pursuit of constantly moving targets and systematic sources of frustration. A synthesis of anomie theory with reference group analysis made clear how means-ends discrepancies are socially generated and experienced by people in all social strata. It also showed how this theoretical framework is applicable to the analysis of crime without strain or problems (i.e., anomie theory is not a strain theory) and to "organized crime" even after discrimination or blockage of legitimate opportunities no longer affects minority groups (Passas, 1997).

In brief, the dynamic social process leading to structurally induced strain, anomie, and deviance without strain is as follows. Means-ends discrepancies are caused by a strong cultural emphasis on monetary or material success goals for all members of society, while a good number of them do not have a realistic chance to attain them. Socially distant comparative referents are constantly introduced and sustained through the school, family, politics, workplace, media, advertising, and even religion (Passas, 1994). Regardless of their social background and the social capital available to them, people are urged to desire more than they have. Success stories of going from rags to riches make the American Dream even more believable. As this cultural theme is internalized, competitive forces and consumerism foster normative referents on what is "normal" and appropriate. The widely internalized egalitarian discourse clashes in practice with widespread inequality (power and economic asymmetries). Consequently, those m embers who fail to meet such comparative and normative standards are likely to experience relative deprivation and frustration. This strain, combined with the culturally induced overemphasis on goals and the concomitant under-emphasis on the proper methods, makes for deviance of various types (see Merton's typology). A good part of the deviance is an individual search for a solution to these structural problems. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path -- even though the original source of strain has by now been eclipsed. Unless effective control measures are taken, this process continues in a vicious circle toward higher rates of deviance and widespread anomie (for a schematic representation of this process, see Figure 1 at the end of the article).

In the literature, anomie is often conceptually confused with its causes or effects. To keep its explanatory potential, this mistake should be avoided. Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions and affects deviance in two ways. One is associated with strain, the other is not. The former is caused by relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable (Aubert, 1968; Sykes and Matza, 1957). Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising without experiencing any prior frustration or problem.

Globalization and Neoliberalism

These structural problems have been most prominent in the USA. However, a very similar process is now being reproduced throughout the world through globalism and neoliberalism. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. The horizontal lines in Figure 1, rather than representing controlling influences, at the global level point to the criminogenic impact of globalization and neoliberal policies.

Nowadays, globalism and neoliberalism seem to be indistinguishable empirically or even conceptually (Cox, 1993; Stewart and Berry, 1999). Nevertheless, I think it is useful to try to separate them analytically. As noted earlier, globalism refers to the degree of interconnectedness and the increase or decrease of linkages. By contrast, neoliberalism refers to an economic and political school of thought on the relations between the state on the one hand, and citizens and the world of trade and commerce on the other. Because it espouses minimal or no state interference in the market and promotes the lifting of barriers to trade and business transactions across regional and national borders, it certainly becomes a motor of globalization.

Globalization in the last two decades shows clear signs of deeper and thicker interconnections that affect many more people than ever before. The effects are now much faster, as shown by the financial crisis in Thailand in 1997. The world has shrunk and become "one place," with global communications and media, transnational corporations, supranational institutions, and integrated markets and financial systems that trade around the clock (McGrew, 1992; Sklair, 1995). The cultural landscape has changed under the influence of mass media. Through their ads, TV programs, movies, and music, they contribute to cultural globalism, target young children, and foster consumerism (e.g., "Image Is Everything," "Just Do It," or "Coke Is It"). Information technology is making for "distant encounters and instant connections" (Yergin and Stanislaw, 1998). Fresh normative and comparative ideals are thus promoted, legitimated, and presented as attainable. Scholars attribute the momentum of this process to the forces of capitalism (Wallerstein, 1983), technology (Rosenau, 1990), the presence of a hegemon (Gilpin, 1987), or a combination of them all (Giddens, 1990).

Neoliberalism, in particular, has made a major contribution to the dynamic and contradictory processes of globalization since the elections of Ronald Reagan, Margaret Thatcher, and Helmut Kohl. During the 1950s and 1960s, the dominant concerns revolved around distributive justice, neocolonialism, and dependency theory. These were displaced in the 1980s and into the 1990s by discourses of "free markets," individualism, and self-help (Woods, 1999). Policies of deregulation, privatization of state assets, and removal of tariffs implemented the doctrine that the state should get out of the way of free enterprise. Unemployment, inequality, and poverty were no longer explained by structural contradictions or constraints. The problems became individualized and blamed on corrupt administrations or on the poor themselves. The proposed medicine was more liberalization of the economy, free competition, privatization of inefficiently managed government agencies, abolition of capital controls, and permitting foreign capital to enter all markets.

The ideological underpinning of globalization, thus, has been the primacy of economic growth, which is thought to be benefiting the whole planet. Consistent with that prime directive, country after country has been persuaded (or forced) to promote "free trade" and consumerism, to reduce government regulation of business, and to adopt the same economic model regardless of local specificities and differences between industrialized and developing countries (Bello, 1999; Mander, 1996).

More specifically, shifts in the North, the East, and the South have been quite remarkable. In the North, the welfare state that used to care for citizens "from cradle to grave" has been replaced by a "pay as you go" social service system. Even public utilities have been privatized and have begun to charge "economic prices," as former subsidization systems were abolished. Further, "industrial interventionism and labour protection have given way to laissez-faire; and tax systems whose major purpose was to correct inequalities have been transformed into systems mainly intended to promote incentives and economic efficiency" (Stewart and Berry, 1999: 151).

In developing countries, similar shifts took place as a result of hegemonic influences from the North. Western-educated Third World "technocrats" returned to their home countries eager to introduce neoliberal policies (Burbach et al., 1997: 86; Newsweek, June 15, 1992). As the bandwagon of liberalization took off, few countries wished to be left out. As a World Bank official warned, "lagging countries risk being left farther behind....For economies that remain inward-looking, the risk of being marginalized is greater than ever" (cited in Klak, 1998: 21).

Yet, the shifts have not always been voluntary. A host of measures and conditions consistent with the neoliberal agenda were imposed on countries through international institutions, such as the International Monetary Fund (IMF), the World Bank, the OECD, the European Union, the G7, etc. Countries drowning in external debt sought additional loans to pay off their older ones -- chiefly to banks from the industrialized world. Billions of dollars were made available to them, but only if they introduced Structural Adjustment Programs (SAPs). Despite important differences among the various economies, SAPs shared the same basic elements: long-term "structural" reforms to deregulate the economy, liberalization of trade, removal of restrictions on foreign investment, promotion of an export orientation of the economy, wage reductions and controls, privatization of state enterprises, and short-term stabilization measures such as cutbacks in government spending, high interest rates, and currency devaluation (Bello, 1996 ; 1999).

Changes along these lines also took place in the East, where the switch from state-managed economies toward "free market" and parliamentary democracy has been quite drastic and swift (Glinkina, 1994; Woods, 1999). The problem is that the introduction of global neoliberalism has brought about enormous economic and political asymmetries, as its promises and theoretical expectations remain unfulfilled.

The Promises of Global Neoliberalism

The supporters of global neoliberalism make a series of claims. For instance, the world is shrinking following greater connectivity (IBM claims to offer "solutions for a smaller planet"). The distinction between core and periphery states is presumed to be getting fuzzier and irrelevant, as there are only winners from now on. Investment, trade, and development opportunities are more widely distributed around the world. There is a marked convergence into one world economy, in which everyone can find a market niche. Media and cultural influences are more widespread and multilateral, as foods, music, and art are imported to the North and integrated into local cultures. Finally, people are more integrated thanks to telecommunication technologies and immigration (Klak, 1998).

To [neoliberal] economists, all these trends are positive, even if short-term hardship is deemed necessary for some parts of the population. Global welfare is expected to be enhanced, as the forces of free competition within and between countries will encourage more efficient resource allocation and bring about higher productivity (Oman, 1999). A more open, trade-creating world should, therefore, benefit everyone, if unevenly. Trickle-down effects of wealth creation would ensure that virtually everyone will participate in this welcome trend (Korten, 1996).

The objective of SAPs was to render developing economies more efficient, drive up growth rates, and provide foreign exchange that could be used to repay debt. Higher growth rates are empirically associated with comparatively more equal income distribution (Alesina and Rodrik, 1994). Hence, neoliberal policies would bring about not only more economic growth, productivity, a better division of labor (multistate production and wider participation), lower unemployment, more wealth and prosperity, but also more democracy, less poverty, and fewer inequalities. Unfortunately, in most countries, these virtuous circles did not occur.

The Consequences of Global Neoliberalism

Throughout the world, the expectations raised by neoliberal theorists have not materialized despite the extensive application of their policy recommendations. Instead, most economies "fell into a hole" of low investment, decreased social spending and consumption, low output, decline and stagnation. Both the World Bank and the IMF retreated from SAPs and acknowledged their failure (Bello, 1999; Katona, 1999; Multinational Monitor, June 2000; Watkins, 1997).

In the North, GDP growth was lower in the 1980 to 1990 period than in the 1950s and 1960s. We also witness a higher volatility in growth (e.g., booms and busts). Lost in all the talk about huge technological advances ushering in the computer and Internet era is the fact that productivity growth now is half that of levels in the 1950s and 1960s. Unemployment in OECD (Organization for Economic Cooperation and Development) countries has risen from eight million in 1970 to 35 million in 1994. In the midst of U.S. prosperity and economic expansion, inequalities increased. The number of people living under the officially defined poverty level grew from 11.4% of the population in 1978 to 13.5% in 1990. Almost one in four new babies in the U.S. are born into poverty, while the top one percent of Americans saw their real income shoot up by 50% (Levy, 1998; Wilterdink, 1995). Also noteworthy is that U.S. and Western European international trade relative to GDP was greater a century ago than in recent years (Hirst and Thompson, 1996).

Neoliberal dreams proved to be even more chimerical in the South. Role models, like South Korea, Malaysia, and Indonesia plunged into crises in the 1990s. Mexico and Brazil, which faced their own scary periods, experienced growth of three percent in the last two decades, whereas that rate was six percent during the dirigiste period of 1950 to 1980. Wage gaps widened. Even in Costa Rica and Chile, models of success in Latin America, the results have been an unmitigated disaster for the lower social classes. The number of Costa Ricans below the poverty line rose from 18.6% in 1987 to 24.4% in 1991, while 42% of all Chileans are also living in poverty (Burbach et al., 1997: 86). Half of the investment flows to developing countries went to just three countries (China, Mexico, and Argentina). In addition, some investments had negative local effects. For instance, as diverse agriculture was converted into monocultures or to export-oriented flower plantations, self-sufficiency was undermined (Clinard, 1990; Klak, 1 998).

Moreover, the core-periphery distinction is as relevant as ever. Its real meaning relates to power, authority, and the accumulation of wealth, where the gaps (asymmetries) are increasing. Although production (of certain items) is more dispersed, the concentration of power, control, and benefits has become more pronounced. In 1991, 81% of the world stock of direct foreign investment was in the core triad of the USA, the European Union, and Japan -- up from 69% in 1967. The appearance of integrated markets also obscures the fact that 80% of all world trade is within the core triad, in which resides less than 20% of the planet's population (Hirst and Thompson, 1996; Klak, 1998).

In Latin America, debt jumped from $230 billion in 1980 to $600 billion in 1997. Capital had been fleeing those countries up to the early 1990s, when net inflows were the result of casino capital -- seeking short-term gains and likely to abandon those countries at the first hint of trouble. Consequently, new debts were created with a new round of borrowing (Robinson, 1998-1999). An important reason why developing countries cannot pay off their debt is that trade protectionism in the North has kept them from penetrating those markets. Trade liberalization has been inconsistent in that rich countries demand more open markets abroad, while continuing to subsidize their own economic sectors, such as agriculture (Andreas, 1999; UNDP, 2000; Watkins, 1997). Compounding these problems, aid to poor countries has been cut back. Whatever assistance is offered comes with strings attached, including the reduction of state intervention, which could have softened the effects for the most vulnerable (Watkins, 1997; Woods, 1 999). These policies further undercut food security, cause poverty, and increase economic and power asymmetries. For instance, the cost of living in the Caribbean and the U.S. is quite comparable. In 1997, however, per capita income in Trinidad and Tobago, the richest Caribbean state, was less than half that of Mississippi, the poorest U.S. state. The gap between skilled and unskilled workers widened even more: Haitian workers made clothing with Disney logos for less than 60 cents per hour, while Disney's CEO made $9,700 per hour (Klak, 1998).

The claim of multilateral and even cultural influences also masks tremendous asymmetries. Even though we listen to reggae in the North, 95% of TV programs in St. Lucia come from the U.S. The most widely read newspaper in the Caribbean is the Miami Herald. Consequently, U.S. affluence and opportunity, often romanticized, is especially well-known, deeply ingrained, and alluring to the Caribbean...[where] people are prone to set their living standard goals in accordance with what the U.S. media ascribe to the United States. And the imbalance in media flows is increasing with the Caribbean's economic crisis and neoliberalism, as local media have been slashed (Klak, 1998: 11).

As dreams of consumption are disseminated, 86% of total private consumption expenditures is accounted for by 20% of the world's people in industrialized countries (UNDP, 1998). For the people who live outside the consumption geographical area, big banks offer credit to only 10% of the people in developing countries, whereas ads for credit cards and consumer items are omnipresent (Barnet and Cavanagh, 1994). Well over one billion people are deprived of basic consumption needs. For hundreds of millions, basic sanitation, clean water, adequate housing, and health services are unattainable luxuries. Two billion people live on less than two dollars a day and 1.3 billion on less than one dollar a day (ICFTU, 2000). Struggling to survive, some decide to sell their body parts to make ends meet, which is the ultimate symbol of commodification (ScheperHughes, 2000).

A negative effect of the Internet is that it alters the relationship between our place of residence and our cultural preferences, experiences, and identities. A spreading global virtual reality disconnects locality from culture, weakens the bonds to particular communities, and estranges people from each other (Minda, 2000). Ladakh, a Himalayan province that prospered for a millennium despite harsh weather conditions, illustrates how (especially cultural) globalization devastated local communities (Norberg-Hodge, 1996). In 1962, isolated Ladakh was linked to the rest of India by an army-built road. The modernization that began in 1975 took about a decade to change the pride Ladakhis felt until then into a collective inferiority complex. Tourism and the media conveyed a picture of wealth, technology, power, and work that was alien and irresistible to them. Village life by comparison began to appear "primitive, silly, and inefficient" (Ibid.: 35). Ladakhis felt ashamed of their culture and strove for consumer items that symbolize modern life, such as sunglasses and Walkinans. As Western educational standards penetrated Ladakh, the intergenerational learning experience that helped them provide for themselves in their rough terrain gave way to schools that used texts imitating Indian and British models that were completely irrelevant to their lives (e.g., figuring out the angle of the Tower of Pisa and learning how to keep a London-like bedroom tidy). There used to be no such thing as a "paying job"; there was no money economy. Gradually, however, unemployment -- previously nonexistent -- became a serious problem, because naturally available resources were abandoned, cheap imports made local farming redundant, and people flocked to the cities to compete for scarce jobs. Radios and TVs chased away the traditions of singing together and group story telling. The points of reference ceased to be real people living nearby, but geographically and socially remote ideals. Consumerism bred new "needs," which could hardly be materialized. Family and other bonds disintegrated and divisions emerged between old and young, Buddhists and Muslims. The result was unprecedented violence, community breakdown, and anomie.

Criminogenic Effects: Systemic Strains and Global Anomie

What makes the ideology of the American Dream unique is a focus on money and material goods, a strong emphasis on "winning" (often, by all means), and success for everyone in a society where many opportunities for material advancement are available and plenty of "rags to riches" stories lend legitimacy and credibility to the egalitarian discourse. Legal opportunities, however, for achieving the lofty goals are inaccessible to most Americans. In such a consumption-driven culture, which highly values competition and individualism, the means-ends disjunction has entailed a significant criminogenic risk, much greater than in the rest of the world. Crime has been the flip side of economic growth, innovation, and better living standards for certain segments of the population. What sheltered other countries from this negative potential were things absent or minimized in the USA, such as rigid social stratification, low rates of social mobility, less materialism and time spent before TV boxes, safety nets for the underprivileged, more emphasis on other priorities (e.g., solidarity), etc.

This made it possible to explain the higher crime rates in the U.S. compared to other developed or developing countries. These protective factors, however, are now being gradually lost. Disjunctions between socially induced goals and legal means are few in societies that do not encourage high social mobility. In such societies, people may not feel that they are lacking anything, even when they are "objectively" deprived. Economic or other asymmetries are unknown or not experienced and perceived as intolerable. Global neoliberalism breaks down societal barriers and encourages new needs, desires, and fashions. It promotes the adoption of non-membership reference groups for comparisons that can be unfavorable and upsetting. New normative reference groups define what is "cool" to do. People's ideals in the South and the East may not be about getting from "a log cabin to the White House." However, they are being systematically driven to abandon old ways and values in order to consume. They do not necessarily think that they can be "like Mike," but they do fancy those pricey athletic shoes. So, fresh normative and comparative models create new "needs," together with the expectation that the fulfillment of such needs is vital and achievable.

Yet, as needs and normative models are "harmonized," people become conscious of economic and power asymmetries, and directly experience their impact. Globalization and neoliberalism heightened this awareness, further widened the asymmetries, and fostered the interpretation of them as unnecessary and changeable. In the end, most people realize that the attainment of their lofty goals and lifestyles is beyond reach, if they are to use legitimate means. The success in spreading neoliberalism has brought about a series of failures: more poverty, bigger economic asymmetries, ecosystem deterioration, slower and unsustainable growth patterns. At the time that societies most needed the shield of the state to cushion these effects, welfare programs, safety nets, and other assistance to the poor (individuals, companies, and states alike) forcibly declined or disappeared. Thus, global neoliberalism systematically causes relative deprivation as well as absolute immiseration of masses of people. In effect, it has generated new sources of criminogenesis and removed existing antidotes to it.

All this provides multiple motivations for criminality, as many would turn left and right for solutions and illicit opportunity structures become more international and accessible. At the same time, many weak states lose their autonomy, come to depend more on international organizations and transnational capital, and are unable to cope with emerging crime threats from criminal enterprises and powerful corporations. So, globalism and neoliberalism replace the "egalitarian discourse" of the American Dream in the scheme represented in Figure 1 in a process occurring in the industrialized world, developing countries, and those in transition from Communism to market democracies. Nowhere are these results more clearly visible than in the former USSR.

The Case of Russia

No one argues that there was no appetite for consumer goods in the years of the USSR or that such goods were widely available. Crime, corruption, illegal markets, and even underground factories could be found behind the official facade of the command system before glasnost and perestroika, although black marketers were not numerous and lived modestly. The government turned a blind eye to these activities, because they served as a safety valve in an inefficient system (Gleason, 1990; Handelman, 1995; Naylor, 1999b). Discontent, enormous structural problems, and an inability to deal with them characterized the pre-transition years. This is particularly true for the 1960s, when Khrushchev pledged that the USSR would overtake the U.S. in the production of industrial goods by the 1980s. Yet, as inefficiencies precluded such progress, demands for more consumer items "from an increasingly educated, by now self-assured, population, started to put pressure on government...as a loyal expression of the citizens' request for the gradual delivery of promised well-being" (Castells. 2000: 25).

In the 1990s, however, the rates of fraud, prostitution, drug trafficking and abuse, alcoholism, smuggling, white-collar crime, violence, and corruption skyrocketed (Castells, 2000; Handelman, 1995; Holmes, 1997; Lee, 1994; Shelley, 1994). To be sure, Russia is unique in the degree of chaos and disintegration that accompanied the transition to a market economy and the implementation of neoliberal reforms. Few countries have experienced the speed and intensity of privatization, deregulation, and the lack of political leadership and administrative skills we witness in Russia. Indeed, it is the closest we can come to a social state of anomie, without a total collapse and anarchy. This does not mean that Russia is atypical. Very similar, albeit less intense, processes have occurred throughout the world (Lee, 1999; Mander and Goldsmith, 1996; van Duyne et al., 2000). Nevertheless, precisely because it is such an extreme case, it illustrates the theoretical points made here and the process toward anomie and economc crime.

Enter Neoliberalism

In the 1985 to 1989 period, reforms took place while the Communist Party was still in control. The Law on Cooperatives (1986) and the Law on Individual Labor Activity (1987) paved the way for further reforms, such as legalization of small businesses in 1989. Between 1990 and 1991, the USSR Supreme Soviet, with Yeltsin as chairman, introduced laws that made state and private enterprises equal, allowed state companies relative independence from government managers, abolished mostrestrictions on property bought by citizens, promoted privatization, and allowed foreign companies to operate in Russia. Such reforms did not take place at the same pace throughout the USSR. This set Russia apart from the Union and Yeltsin from Gorbachev. Legal asymmetries made the task of law enforcers impossible, as they did not know which laws to prioritize and apply (Afanasyef, 1994). Up to the 1991 coup and the collapse of the USSR, reforms were cautious and gradual, and had not challenged the core of the command economy system. F ollowing the failed coup and under Yeltsin, however, this changed dramatically. Demagogy and erroneous judgments on the feasibility of a swift transition to a market democracy compounded the problem. The Russian government was warned of the dire consequences of a speedy transition to a market economy without previous establishment of the necessary institutions and legal infrastructure. The chairman of an international advisory committee, which repeatedly issued warnings in 1992, was told that "forces in the Kremlin" favored a less "regulatory approach that would provide greater freedom of manoeuvre. Gaidar, supported by the IMF, believed firmly in the intrinsic capacity of market forces to remove obstacles by themselves, and people could use their vouchers to acquire shares" (Castells, 2000:188). Prices were liberalized, imports and exports became free, domestic trade restrictions were abolished, government intervention was minimized, and public property was massively privatized. By June 1994, officials were self-congratulatory over the fact that 70% of state assets had passed into private hands (Kuznetsova, 1994).

New Normative and Comparative Referents

The reforms initiated by Andropov and Gorbachev (perestroika and glasnost) allowed some freedom of speech and openness that let globalization and media influences into the USSR. The post-1991 changes, however, offered new hope out of the severe problems people were facing. Russian leaders fostered heightened aspirations by declaring that the country would soon be modernized and join the "civilized world." Authorities in the former Soviet republics made the same promise, arguing that '"since we gotrid of the Russians,' all obstacles to prosperity have been removed and Western standards are within reach" (Burbach et al., 1997: 118). There were forceful and impressive presentations of consumerist lifestyles as "desirable," "modern," and feasible. Distant comparative and normative referents were thus promoted by the media and advertising. Indeed, the yearning for Western lifestyles and consumption items made the initial acceptance of neoliberalism by the population much easier (Ibid.). Neoliberalism strengthened that desire and made consumerist dreams appear realistic. Even young Russians now would like to be like Mike and wear the same type of shoes or eat the same breakfast. As Glinkina (1994: 385) put it, an important factor contributing to the criminalization of the economy has been "a drastic stratification of the population's standard of living with a simultaneous loss, in a considerable part (especially among the youth), of socially important goals --replacing them with consumption ideals...."

It must be noted that the normative shift was far more radical in the former USSR and Eastern Europe than it was in Third World countries. The transition from socialism to capitalism by overzealous authorities espousing the new dogma of neoliberalism has had its own direct anomic effects, as will be seen below.

The Consequence: Means-Ends Discrepancies

The worldwide consequences of neoliberal policies were replicated in Russia. However, the effects have been far more disastrous than elsewhere: lower productivity, high unemployment, much steeper inequalities, increased levels of absolute poverty, disappearance of familiar safety nets, and administrations paralyzed by ineptness and corruption. The ensuing means-ends discrepancies are far more than a theoretical construct. They are painfully experienced by large numbers of people who realize that they simply cannot attain their goals. Within one year, inflation wiped outmost people's life savings, while the buying power of most wages dropped to the level of the 1950s. In the winter of 1993, funds were often insufficient to heat residential buildings (Burbach et al., 1997; Handelman, 1993).

As a new bourgeoisie emerged from the ashes of the Communist regime, one-third of the population became impoverished. The gap between the rich and the poor opened up suddenly and grew out of proportion. Official data indicate that in 1994 the difference between them was elevenfold. Researchers argue that the difference between the top 10% and the bottom 10% is 28-fold (Kuznetsova, 1994). Even the chair of the Privatization Commission admitted that the process created "pauper-proprietors" who "cannot survive without state protection" (cited in Burbach et al., 1997: 120).

Relative and Absolute Deprivation

The rising expectations of the 1960s led to disenchantment with Communism and paved the way for radical social change. The abandonment of the Soviet conservative model and very rapid implementation of neoliberal policies fueled hopes that a much better future was within reach. Russians rejected rigid stratification and strove for a socially mobile ideal. As has been noted, [the middle classes] believed that capitalism could offer even more. Thus, the modernization that had been promised by the neoliberals was perceived by the majority of the population as the modernization of consumption.... The Western model of consumption has finally triumphed, at least in the main cities. But for the majority of the people, the price is that even the former Soviet way of life has become an unattainable dream (Burbach et al., 1997: 124).

The aspiring yuppies have ended up as "dumpies," while a growing polarization makes them see a few of their compatriots enjoy luxuries attained by looting the remnants of the former USSR.

Thus, the post-Soviet Russian dream turned out to be a nasty nightmare (Handelman, 1995). As happened in many other countries, austerity, belt tightening, and lower (in some cases, no) salaries were imposed as consumerism took hold. The impact of these experiences on personal feelings is much more widespread, intense, and unpleasant due to the higher expectations. Even people who are not objectively deprived now feel relatively deprived. Comparisons between their present and past situations are unfavorable: "Formerly privileged sections of the Russian population, such as teachers, doctors, miners, and workers in the oil and gas industry, went on strike, for they could no longer survive on 50 to 70 dollars per month salaries" (Burbach et al., 1997: 125-126).

East-West political and administrative asymmetries, economic asymmetries, and relative deprivation in the aftermath of the collapse of the USSR and disillusionment with Western policies and capitalism have been clearly criminogenic (Handelman, 1994; Shelley, 1994). Motives for various types of crime became abundant, illegal opportunity structures multiplied, and control systems have been seriously damaged and undermined. The Mertonian category of "conformity" has almost become a rarity, as crime rates increased sharply. Even worse is the problem of economic crime. Recorded economic crimes rose almost 23% during the first seven months of 2000, compared with the same period in 1999 (Radio Free Europe/Radio Liberty, August 17, 2000). Strains and discontent have translated into a range of predatory misconduct, corruption, political violence, a variety of illegal markets, and expressive misconduct.

Search for Solutions and Anomie

In this context, many can be expected to "innovate," to employ illegal methods for survival or the satisfaction of their basic and newly acquired needs. Methods range from petty property crimes and prostitution to criminal enterprises and white-collar crime, depending on the social position of the offender. An electronics engineer, for example, could not live on his three dollars per month and moonlighted as a taxi driver. When his taxi broke down, he turned to selling poppy straw (OGD, 1996). Unpaid and depressed professionals with access to more valuable commodities, such as nuclear material, pose an even more serious threat (Lee, 1999). Consumerist teasing increased demand for goods made unavailable (e.g., cars or electronics) by the economic collapse, fueling smuggling operations, black market networks, and associated illegal enterprises. Shortages of other desired goods are artificially created by quickly adapting entrepreneurs.

Similar conditions outside Russia explain the illegal car trade between Eastern and Western Europe (van Duyne et al., 2000) and the illegal trade in various commodities between China and Hong Kong before unification (Vagg, 1992). In Russia, many took advantage of such supply-demand asymmetries, including the vory v zakonye (commonly described as "thieves in law"), who had been the dominant type of professional offenders in the USSR. Structural changes and globalization, however, brought about more competition from ethnic groups (Armenians, Azeris, Chechens, Georgians, etc.) in drugs and arms trafficking, as well as from loose and ad hoc associations of criminals in certain locations or industries. Unsettling reports assert a symbiotic relationship between criminal groups and active or retired intelligence officials. Deteriorating economic conditions have facilitated recruitment for employees in growing illegal markets. Criminal enterprises, for instance, have "...invested heavily in the opium business, financing much of the new cultivation by hiring peasants and even entire villages to plant and protect the poppy crops" (Lee, 1994: 401).

Another source of criminal opportunities sprang from the disintegration of institutions and the disarray in law enforcement. Legitimate businesses are exposed to blackmail and other criminal victimization, but the authorities are unable to assist them. Consequently, many domestic and foreign companies deal with criminal groups and seek their protection, rather than rely on the government (Lee, 1994). Not surprisingly, the majority of Russian experts consider the strengthening of criminal groups to be a "very significant" social consequence of the market reforms introduced in 1992 (Afanasyef, 1994).

Other illicit opportunities were furnished by the privatization process, such as selling state assets at extremely low prices or driving down the prices of privatized companies so as to cheaply purchase vouchers owned by individuals desperate to make ends meet. Privatization in countries with an existing bourgeoisie and experienced managers and entrepreneurs facilitated certain corporate crimes and abuses of power by respected professionals. In Russia, the mix of offenders was different: former company directors, the nomenklatura, professional criminals, and new entrepreneurs with a black market background (Glinkina, 1994; Kuznetsova, 1994; Shelley, 1994). The attempt of former Communist officials to dominate this field did not prove lasting. Many were not competent to run private businesses and had to sell them or lose control. The main beneficiaries seem to be former black marketers and outsiders to the old order (Naylor, 1999b). The abuse of privatization has had an anomic effect as the impunity of offenders became widely known, to the point that Russians began to refer to privatization (privatizatsiya) as prikhvatizatsiya, which means "grabbing" (Handelman, 1995: 104).

Crime and corruption in the midst of privatization fervor are not unique to Russia. (On other previously Communist states, see Popescu-Birlan, 1994; on Latin America, see Saba and Manzetti, 1996-1997.) As a former World Bank official put it, "everything we did from 1983 onward was based upon our new sense of mission to have the south privatized or die; towards this end we ignominiously created economic bedlam in Latin America and Africa" (cited in Katona, 1999). Another similarity with other parts of the world is the degree of authoritarianism that accompanied neoliberal policies. While stimulating rapid accumulation of private capital, the role of the state is reduced to implementing financial austerity. When people started to oppose such measures, "Yeltsin resorted, with Western support, to establishing a semi-authoritarian regime. Making Russian 'reformers' invincible to political and legal challenges inside the country contributed to further criminalization of the Russian State, which acquired an oligarchic character" (Beare, 2000:6). As similar processes occurred around the world, from Pinochet's Chile to Suharto's Indonesia, one wonders if such reforms would have been possible in a democracy.

Legal organizations also "innovate" by cutting corners and breaking the law due to the environment created by unsystematic legal reforms. Unable to navigate a sea of legal gaps and inconsistencies, "...most managers of private as well as state-owned enterprises cannot run their businesses without committing crimes" (Afanasyef, 1994: 437). Many companies cannot handle the competitive challenges generated by globalism and require state protection. The subsidization of privatized companies, however, introduces further regulatory and price asymmetries that foster the smuggling of goods across newly created borders within the former USSR (see below on nonferrous materials). Enterprises that do not enjoy state intervention are at a disadvantage and may be forced into bankruptcy or crime as a last resort. This is analogous to the situation in all countries that abolish trade barriers, let transnational corporations in, and eliminate preferential treatment for domestic industries.

High-level corruption and banking crimes have become quite common, as the networks of mobsters, financiers, businessmen, and high-level officials extend beyond Eurasia (Beare, 2000). The ongoing investigations into billions of dollars (possibly IMF-provided funds) laundered through the Bank of New York have expanded to include British, Swiss, and Italian entities and actors.

Moreover, pyramid schemes and other frauds have devastated gullible investors, as is the case with other post-Communist countries. Independent Oil, Lenin Trade and Financial Corporation, Aldzher (a security corporation), and other companies defrauded more than a million depositors and investors. Just as the Lincoln Savings and Loan frauds were committed in midst of obsessive deregulation in the U.S. against "the weak, the meek, and the old," Russian pensioners have been the main fraud victims (Glinkina, 1994).

Economic asymmetries among countries produce another set of criminal opportunities, as many become strongly motivated to flee the problem and search for a better future in the West, where the "goodies" are available. However, neoliberalism has promoted the free movement of everything but labor. Quotas and restrictions in promised lands generate demand for illegal services such as the smuggling of humans (Chin, 1999). This leads to opportunities for criminal exploitation, corruption, child/cheap labor, slavery, and forced prostitution.

Women, who are increasingly breadwinners but make up two-thirds of the newly unemployed in Russia, are even more vulnerable in this respect. Economic desperation drives many of them to prostitution or high risk taking. Lack of opportunity makes Russians and East Europeans softer targets for human traffickers. They are more likely to be lured to the West with promises of well-paying, respectable jobs only to end up blackmailed, beaten up, and forced into prostitution (Bruinsma, 1999; Shelley, 1994). The same problems faced by Thai, Mexican, and other women in the U.S. have led to a public hearing before the House Subcommittee on International Operations and Human Rights (September 14, 1999).

Relative deprivation and experience of injustice have a revolutionary potential too. International communications convey the message that injustice and inequality are avoidable. Events in one corner of the earth affect feelings and encourage people elsewhere to rebel against aggression. This may inspire change and foster rebellion. Just as the ideals of the French Revolution led to rebellions in the Balkans against the Ottoman rule (Hovannisian, 1994), the independence of the Baltic states and the U.N. response to Iraq's invasion of Kuwait inspired the East Timorese to fight against the Indonesian autocratic rule (Dunn, 1994). The uprising of Zapatistas in Mexico was deliberately started on January 1, 1994, the day NAFTA went into effect, "as a highly symbolic way to protest neoliberalism and globalisation in Mexico and Latin America" (Robinson, 1998-1999: 123-124).

Repressed nationalism, globalism, and bad times have jointly contributed to several armed conflicts and rebellions in the former USSR (the Caucasus, Moldova, Crimea, Tajikistan, and Chechnya). Rebellion and illegal markets become interconnected, as armed conflicts necessitate training, weapons, intelligence, and financing. The cases of Chechnya, Tajikistan, Afghanistan, and Colombia show how political revolts are associated with corruption, money laundering, the traffic in arms, drugs, and even nuclear material and other crimes that go unpunished (Kuznetsova, 1994: 445; Lee, 1999; Naylor, 1999b; OGD, 1996). Chechnya, which survives thanks to donations from criminal organizations based in other parts of Russia, has become such a paradise for these activities that some depict the war there as "a crusade against a 'mafia republic,'" while others think of it as "a conflict between opposing criminal elites for the control of oil and the financial resources held by the government in Grozny" (Politi, 1998: 44).

Finally, "retreatism" is the only option left to those lacking access to illegal opportunities or who are unwilling to assume the associated risks of violence and arrest. Hence, expressive crimes could be expected. More important, the rates of alcohol and drug abuse (further facilitated by the decriminalization of drug use in Russia in 1991) increased geometrically, especially in the cities, and fueled the demand for things provided in illegal markets (Lee, 1994; OGD, 1996).

Anomie

The transition from a command to a market economy practically legalized large parts of the black market and made legal business dependent on criminals' protection. The dismantling of borders and increased contact among previously isolated ethnic groups contributed to the formation of new, wider networks of illegality (Politi, 1998). The result was that one could hardly tell criminals from businessmen, particularly when some outlaw groups act on instructions from government officials or the police (Handelman, 1993). Given official efforts to ensure that the transition to a market economy would occur before substantial opposition could build and that the changes would be irreversible, too many shady actors were allowed to take advantage of this official shield (Glinkina, 1994; Naylor, 1999b). In this light, common views on government-criminal interfaces and symbiosis are plausible, although difficult to prove. Surveys in 1994 showed that the concern of Russians over organized crime was second only to their fears of triple-digit inflation (Afanasyef, 1994). At the perceptual level, therefore, this interface is real and has real consequences: demoralization and anomie.

The corrupted process of privatization has generated widespread rationalizations, such as, "it is OK to steal from the state" or "everyone is doing the same thing." Taking an example pointing to international security risks, Lee (1999: 21) has noted that, "perhaps the most serious problem is the growth of a privatization mentality within the nuclear complex. Economic reform has meant a license to steal. This has resulted in broad systemic corruption and a variety of insider threats and conspiracies."

An additional sign of anomie is what has been described as a "culture of urgency" among young killers:

For them there is no hope in society, and everything, particularly politics and politicians, is rotten. Life itself has no meaning, and their life has no future.... So, only the moment counts, immediate consumption, good clothing, good life, on the run, together with the satisfaction of inducing fear, of feeling powerful with their guns (Castells, 2000: 210).

Only effective social controls can halt the process toward further deviance and a higher degree of anomie (deviance without strain). Unfortunately, in Russia and elsewhere, a decreased level of autonomy for certain states, the increased power of international organizations and transnational corporations, and dysnomie add to the fuel.

Dependence, Deregulation, and the Race to the Bottom

"Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.... I've always thought that underpopulated countries in Africa are vastly under-polluted; their air quality is vastly inefficiently low compared to Los Angeles or Mexico City" (1991 memo attributed to World Bank official Lawrence Summers, who later became U.S. Secretary of Treasury; it is widely believed that he did not write it, even though he has accepted responsibility for it. At any rate, this illustrates the neoliberal mindset).

The loss of autonomy and reduced sovereignty of the state relative to capital referred to earlier (Korten, 1996; Watkins, 1997) is particularly acute in the former Communist countries. Speculative capital will quickly flee each country at the first sign trouble or wavering over neoliberal reforms. External debt grew in all former Communist countries, but especially in Russia, which bears the marks of Africa-like dependent capitalism and "colonial subjugation. The country exports fewer and fewer industrial products and more and more raw materials. Meanwhile, it imports low-quality mass consumption goods, obsolete and hence cheap technology, luxury items and radioactive waste" (Burbach et al., 1997: 120-121). An instance of the direct and blatant interference of foreign governments and transnational corporations in domestic matters was when Chase Manhattan urged the Mexican government to crush the Zapatista rebellion to calm down U.S. investors (Silverstein and Cockburn, 1995; see also Clinard, 1990).

Ironically, the higher degree of dependency in the South and East has lowered the accountability of politicians and corporations. They can now blame globalization for the loss of jobs and lower wages, and prescribe more "efficiency," deregulation, short-term austerity, and declining levels of public spending so as to keep capital in place or attract more. Thus, economic and political leaders appear to be protectors of the public interest and a stabilizing force, while they dismantle existing safety nets (economic neoliberalism has also undermined political liberalism; Klak, 1998).

The Russian government's aversion to regulation (Glinkina, 1994) is observable in other countries, where deregulation turned into competitive deregulation and a race to the bottom. Even in the U.S., the savings and loan disaster and the asymmetric regulation of hazardous wastes demonstrate how criminogenic this process has been. This made it possible to dump legally in Pennsylvania what was prohibited in New Jersey, in what has been termed "crimes without law violations" (Passas, 1999). Such crimes are most likely in the global context given the overwhelming influence of TNCs over national laws and macroeconomic policies. This has prompted some to speak of "rationalized corporate colonialism" (Mander, 1996). Such asymmetries of power make for legal norms that allow overseas that which is, for good reason, criminalized in the base country (e.g., toxic waste dumping, testing drugs on humans, bribery, tax evasion, as well as the patenting of life forms by biotechnology companies and other outrageous practices) (see King and Stabinsky, 1998-1999; Shiva, 1997). The legal asymmetries and uneven power of transnational corporations that create or perpetuate these and other asymmetries give rise to crimes without law violations. Thus, entire countries become vulnerable to victimization by TNCs, a significant problem that is often neglected in conventional discussions of transnational crime. The volatile combination of low wages, bad working conditions, tax breaks only for the rich/corporations, lower environmental standards, deregulation, and less corporate and political accountability with the government relegated to the protection of the international free trade system has predictably made for crises (e.g., Korea, Malaysia, Indonesia, Mexico, and Brazil). It also makes for dysnomie.

Dysnomie and Further (Global) Anomie

Dysnomie literally means "difficulty to govern" and obtains when the following three conditions are present: a lack of a global norm-making mechanism, inconsistent enforcement of existing international rules, and the existence of a regulatory patchwork of diverse and conflicting legal traditions and practices. Russia is in this respect a microcosm that reflects what is happening in the entire world.

Since reforms took place at an uneven pace in each Soviet Republic, an asymmetry grew wider following the collapse of the USSR. In addition, this collapse suddenly created thousands of miles of new borders that had to be policed, just as state resources were diminished. This made for porous borders that offered no resistance to smugglers. This is how Estonia became the largest exporter of nonferrous materials, even though it does not produce any (Glinkina, 1994). Extensive legal changes accelerated the transition to a market economy, but they were marked by inconsistencies and lacked the necessary legal and institutional infrastructure (Handelman, 1995). For example, the law against private entrepreneurship and commercial mediations was repealed only on December 5, 1991. The law against black market transactions, which defined them as "the buying up and reselling of goods or other items for profit-making," was first amended in February 1990 to increase penalties for certain offenses, was then officially rein terpreted to refer only to trade in commodities sold at state-fixed prices (October 1990), and was finally repealed in February 1991 (Afanasyef, 1994: 429). Lack of resources made the problem worse, as underpaid, ill-equipped, and outgunned police could not be expected to do an effective job.

Weak controls allow criminals to get away and to regard themselves as successful. Deviant "solutions" came to be seen as keys to "success." Successful deviance then becomes a normative referent, contributing to a wider normative breakdown and overemphasis on goals at the expense of normative means. In the context of massive cultural shifts -- from the criminalizing of private profit and the hiring of labor outside the household to making them central values for a new social order -- the sense of right and wrong became fuzzy. As the deputy minister of Internal Affairs admitted at a 1992 press conference, "even our specialists find it difficult to determine the legal from the illegal -- to determine, for instance, what is profiteering and what is honest trade" (cited in Handelman, 1993). Corruption grew so much that up to 30% of illegal gains are reportedly paid to government officials (Glinkina, 1994; Lee, 1999). In the end, distinctions between white-collar crime, organized crime, corruption, and legitimate business are almost impossible to make. Lawbreaking behavior and success are fused. As a businessman told Handelman (1995: 139), "the truth is, everything you see around you, all our success, is not thanks to our wonderful economic laws. It's thanks to the fact that we do not obey them."

Dysnomic conditions also bring about anomie at the global level. As argued elsewhere (Passas, 1999), international law is more essential now than ever for the maintenance of world order and security. Yet, big powers are reluctant to contribute to the required pooling of sovereignty and have been blocking the development of an international criminal code and specific legislation to restrain their corporations. Dependent on rich countries for its operations, the U.N. has not been overly aggressive in pursuing these aims or in establishing a permanent international criminal tribunal. Globalism has thus run ahead of the creation of a desperately needed normative and enforcement infrastructure.

Existing international laws are applied selectively and never against one of the permanent members of the U.N. Security Counsel. This ad hoc approach and the extraterritorial application of national laws undermine the legitimacy of current laws and procedures. We are left with a legal patchwork of inconsistent and conflicting rules. An example of the effect of such asymmetries is the secrecy and anonymity available in certain jurisdictions that hinder investigative work by covering the tracks and proceeds of global offenders, de facto shielding them against prosecution and punishment. By exploiting the cracks between diverse state rules, companies continually commit crimes without law violation. Globalism also leads to a relativization of norms and facilitates law violations with a clear conscience (rationalizations and techniques of neutralization).

Finally, the border-policing problem in the former USSR is not unique, even if the underlying causes were specific to it and other European countries (Yugoslavia, Czechoslovakia). More generally, borders become porous, as technology and mobility enabled people, money, goods, and ideas to travel quickly and cheaply. Criminals can take advantage of this shrinking world, but law enforcement agencies are constrained by parochial laws and procedures. Though the reasons for the porousness may differ, the process and results are the same.

Conclusion

Tremendous structural strains have overwhelmed even the usually patient and submissive Russians. The economic situation deteriorated further, hopes were dashed, opportunities for criminal gain and for looting the USSR's assets multiplied, and the anomic societal context offered no assistance to anyone seeking to restore some law and order. In Russia and around the world, the neoliberal operation was successful, but the patients are being systematically frustrated, are starving, and subject to exploitation by corporations, criminal enterprises, and corrupt politicians. In short, globalization and neoliberalism spread analytically similar criminogenic processes that were once unique to the U.S. culture of the American Dream in a context of structural inequalities. Just as the world supposedly became freer, wealthier, more democratic, more enjoyable, and more equal, people find themselves poorer, more exploited, and facing increased hardships. Just as the need for strong normative guidance grows, norms break down or lose their legitimacy. Just as effective controls become necessary to slow down or stop the vicious cycle leading to higher rates of crime, a dysnomic regulatory patchwork remains in place largely because of nationalist insistence on sovereignty and states' unwillingness to allow the introduction of common principles and law enforcement mechanisms.

Two main points need to be reiterated here. First, it appears that global neoliberalism and serious crime go hand in hand. However, it would be erroneous to argue that stereotypical organized criminals are giving capitalism a bad name and undermining neoliberal policies. The implication is that, were we to rid ourselves of some very bad apples, everything would be fine. Rather, it appears that serious organizational misconduct is a consequence of such policies. Second, when we discuss transnational crime, we should bear in mind that it is not just the stereotyped ethnics who cause most problems. It may be that the biggest threat emanates from legitimate corporations and other organizations.

Detailed discussion of policy implications is beyond the scope of this article. The horizontal arrows in Figure 1 hint at the points of possible policy intervention. Myriad concrete ideas can be found in the literature, ranging from legal changes to informal controls, grass-roots movements, integration of economic growth with environmental and social protection, relocalization of production and consumption, etc. The most important ray of hope, however, is implicit in the foregoing analysis. Neoliberal policies and globalization are largely the fruit of (some) governments. They affect and are affected by governance. Therefore, governments have the ability to reverse some of these processes and to mitigate their adverse consequences. Otherwise, the current processes of globalization and neoliberalism will prove to be unsustainable and at a huge cost.

Neoliberal globalization as a catalyst for the rise of ultra-nationalism and neo-fascism

In 2014 a lot of people here condemned excesses of Ukraine nationalism, especially the part of Galician nationalism the has clear neo-fascist flavor and that now attempts to colonize South and Eastern Ukraine in a kind of replay of Drang nach Osten.

But rise of nationalism is a pan-European phenomenon now. And it is observable in almost any county, including but not limited to France, Germany, Poland, Hungary, Greece, and even UK.

Is not this is a (somewhat pervert) reaction to excesses of neoliberalism and neoliberal globalization? In other words is not the key side effects of neoliberal globalization is the rise of ultra nationalist and neo-fascist movements all over the world?  Many researchers think that yes (Globalization, ethnic conflict and nationalism Daniele Conversi - Academia.edu):

The force of nationalism has spread well over the nineteenth century into the age of globalization. There are thus parallels between modernization and globalization as sti-mulating factors for nationalism and ethnic conflict. Although the reach of globalizationis historically unprecedented, some of its features accompanied the rise of modernity andthe advent of the modern nation state. In particular, both resulted in the demise of older boundaries and the construction of new ones. Whereas industrialization destroyed localand regional boundaries by superimposing national boundaries on them, globalizationdestroyed national boundaries by superimposing a plethora of supra-national and corpo-rate networks on them, including mafias, organized crime, and multi-national corpora-tions (MNCs), none of which are as easily identifiable on a political map as sovereign, countries still are. The adoption of planetary rules to comply with the standards set by the International Monetary Fund (IMF) and the World Bank has unsurprisingly resulted in global disempowerment, at least according to the perception of influential NGOs activists (Korten 2001).

Has all this also led to a decline in national identities? Not at all. Partly because nationalcultures have been seriously damaged or reshaped by globalization, we have seen a global intensification of ethnic belligerence. Moreover, the formation of new elites and the spread of capitalist wealth have led to nationalist self-assertion, while cultural impoverishment spurred a generalized need for compensatory ethnic assertiveness.

... ... ...

If nationalism cannot be explained independently from the onset of modernity andmodern state-making, both are enmeshed in the expansion of warfare. Nationalism manifested itself in an era of inter-state competition, the collapse of boundaries, economic expansion, mass migration, general insecurity, political centralization, obsessivelaw-making, societal policing, and drastic militarization, finally leading to war. In them eanwhile, the Pax Britannica ensuing Waterloo provided the impetus for colonialexpansion while fomenting inter-imperial rivalries and competition (Conversi 2007).Thus, just as Europe was accumulating wealth, power, and armaments in anticipation of the unprecedented conflagration, its global economic reach affected broader and broader areas of the world. Economic competition and destructive warfare were just beingexported beyond European borders. Linda Colley notes:

the profit and the price of this hundred-year partial European peace was unprecedented Western, and especially British, freedom to concentrate on global empire. In 1800, the European powers, together with Russia and the United States, laid claim to some 35 percent of the globe’s total land area. By 1914 [their] proportion of the globe … had risen to 84 percent (Colley 2002:311).

By 1914, the West had also accumulated enough economic wealth and weapons of mass destruction to unleash the greatest manslaughter in human history. The totalitarian era following the First World War has been described as the culmination of a pattern of mass dislocation founded on modernity (Arendt 1958; Bauman 1989). As we shall see later, the emergence of totalitarianism in Europe coincided with the first wave of deep Americanization, including the triumph of Hollywood, cigarette consumption, the car culture, and other US products meant for mass distribution.

... ... ...

The expansion of nationalism throughout the globe is hence the spreading out of aWestern idea. In other words, nationalism is an essential component of Westernization.As I have argued, nationalism cannot be understood outside the devastating impact of modernity, particularly industrialization, with its demise of traditional lifestyles, skills,cultures, and communities (Gellner 2006). Such a devastation was suciently all-pervasiveto argue that the victory of nationalism represented the victory of a surrogate sense of community, which for some was a colossal
‘ fraud’ (Gellner 2006) or an invented tradition (Hobsbawm 1983). Thus, for Gellner the nationalists spoke in defence of a hypo-thetical Gemeinschaft, but actually practiced the construction of a novel Gesellschaft, the two being largely incompatible. For both Gellner and Hobsbawm nationalism was not much less than a form of cultural
brainwashing. For others, the whole process was not only counterfeit, it was based on the conspiracy of emerging rapacious economic and political elites, which used selected elements of popular tradition while invoking nationhood, just as populists often invoke the defence of the people. For instance, the role of secret societies like the Italian carbonari is a widely known and omni-present feature of nineteenth-century century mobilization. Secret paramilitary groups of patriots played a pivotal role in the spread of most nationalist movements. Karl Marx’s characterization of nationalism as a form of false consciousness manipulated by the bourgeoisie is a well-known example of this conspiracy approach. Traditionalist, anarchical, conservative, and even liberal approaches often share similar views of nationalism as a strategy of elites. The broader trend is often known as instrumentalism(Smith 1998),because it emphasizes the mere instrumentality of nationhood. Nations do no exist assuch; they are simply cultural tools in the hands of elites or proto-elites who seek to mobilize the masses on the basis of an emotional appeal to a common but fictitious nationality.

As we shall see, in its current shape cultural globalization is often understood as a one-way importation of standardized cultural items and icons from a single country, the United States of America, to the rest of the world regardless of the fact that most of theitems are actually made in China. For many, globalization is synonymous with Westernization (la Branche 2003, 2005, Latouche 1996) or, more accurately, Americanization.The international consequence of Americanization is a widespread sense of cultural insecurity vis-à-vis an unfathomable force that nobody seems capable of containing(Amin 2004). Because this perception has been so far unable to produce organized, rational and universal responses, it tends to express itself through visceral, rudimentary,and unpredictable forms of anti-Americanism (Barber 1995).

Former Secretary of State Madeleine Albright showed insights about the US full-spectrum dominance cultural policy when she said that Cultural factors play a pivotalrole in many of the international challenges we face
our cultural programs are central -- and I underline that —  central to the success of American foreign policy
(Albright2000). Once out of office, she adopted a more cautious position, considering the risks and damages infl
icted by extreme forms of Americanization. For Bacevich (2002), the economic openness implicit in neo-liberalism produces a form of globalization that is inevitably synonymous with Americanization, since it is predicated on a national security approach founded on global dominance.

Conclusions

Situation with neoliberalism in the USA now is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence. Chris Hedges made an apt analogy with The Fall of Berlin 1945

I came across a nice, compact interview with Chris Hedges which illuminates his thesis of the decline of the American Empire and the illusions and the end of rational thinking that accompanies it. Empires seem to give off quite a bit of flash in their latter stages, rather like the last gasp of a dying star.

The interviewer, Allan Gregg, does a particularly nice job of drawing Hedges out.

I would like to add an observation I came to in thinking further about the Sophie Scholl piece which I put up earlier today. Perhaps there is something about gardening that focuses the mind.

The almost frenetic preoccupation and adherence to the Nazi ideology in the latter stages of the war, when it was obvious to any rational observer that they could not win, is remarkable. I had been particularly struck in my reading some time ago with the 'wolf packs' of Nazis who had raged through Berlin, rounding up old men and even boys who had not joined the Volkssturm, and hanging them, even while the Russians were shelling the Reichstag. It never made sense to me until today.

"The radio announced that Hitler had come out of his safe bomb-proof bunker to talk with the fourteen to sixteen year old boys who had 'volunteered' for the 'honor' to be accepted into the SS and to die for their Fuhrer in the defense of Berlin. What a cruel lie! These boys did not volunteer, but had no choice, because boys who were found hiding were hanged as traitors by the SS as a warning that, 'he who was not brave enough to fight had to die.'

When trees were not available, people were strung up on lamp posts. They were hanging everywhere, military and civilian, men and women, ordinary citizens who had been executed by a small group of fanatics. It appeared that the Nazis did not want the people to survive because a lost war, by their rationale, was obviously the fault of all of us. We had not sacrificed enough and therefore, we had forfeited our right to live, as only the government was without guilt."

Dorothea von Schwanenfluegel, Eyewitness account, Fall of Berlin 1945

I was reminded of this phenomenon by the trial of Sophie Scholl, and her words to the judge Roland Freisler, as he ranted his virulent condemnations at them. 'Soon you will be in our place,' she said to him. He did escape the hangman's noose at Nuremburg, but only by virtue of an Allied bomb in 1945. When his body was brought to hospital an orderly remarked, 'It was God's verdict.' He was buried in an unmarked grave, without ceremony and unmourned. Much like his beloved Fuhrer.

This is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence.

If the ideology had been a lie, then they are not heroes and gods on earth, but monsters and criminals, and their life has been self-serving and meaningless, without significance and honor. And that is the credibility trap.

And this is the US financial system today.

So the legitimacy of neoliberalism is gone since events of 2008 and consequences of this epochal event are still unclear. As chances that the USA will get rid of neoliberalism voluntarily are slim, we might be present in a crush of yet another empire. That might mirror the destiny of the USSR which fell when its ideology became delegitimized. With the key difference that the USA elite is much more aggressive and ready to use whatever means possible to preserve its status when it is under threat.


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[Jul 01, 2015]Syriza can't just cave in. Europe's elites want regime change in Greece

"...But it has nothing to do with morality and everything to do with a dysfunctional currency union, a destructive neoliberal economic model enforced by treaty and an austerity regime maintained to ensure a return to profitability on corporate terms."
.
"...No, I think Berlin and Brussels are behaving abominably, not so much in terms of what is decided, but, as Pope Francis implied (there you are) without any consideration for the dignity of the Greek people. Shaming, blaming, demonizing, threatening, giving the cold shoulder, to a small marginal country who is supposedly part of your union."
.
"...I am against Syriza mate, but many commentors ignore the socioeconomic impact on the Greek population and simplify or generalize things. Syriza is in power the past 3 or 5 months. The previous gov were in power since 1974. Two parties, two families. Nepotism in politics is strong. "
.
"...Seamus is correct in his analysis. What is happening in Greece is akin to Democratic asphyxiation by financial means. And those of us that believe in basic Democracy should be standing with Syriza and the Greek people at this time. Neo-liberal dogma was always ugly. It's practical application is even uglier. This will have serious implications for the Left in Europe as a whole but more imminently for the British referendum vote due pretty soon."
.
"...After all, based on a leak of series of emails , Greek government was strictly following the instructions of Troika during the past 5 years. "
.
"...we wouldn't be having this conversation if the private companies that lent money to Greece had been made to eat their own losses.

But then neoliberalism isn't capitalism, not in the traditional sense. As has been proven beyond reasonable doubt, neoliberals magically turn into socialists at the drop of a hat. Gains privatised, losses socialised. In other words, they use the power of the state to collect economic rents. To call this sure thing investing or risk-taking is pure propaganda.
"

.
"...I agree the EU élites are out to topple Syriza. The invective against Tsipras and ruthless shut down of bank support to strike fear in the population show that clearly enough. Syriza is a mortal threat to the noe-liberal order. I don't agree that Syriza is innocent in this drama, though. Its crisis management has been abysmal. They know, or should, what is coming. when they threaten the EU élites."
.
"...This is a clash of ideologies. It's obvious if you listen to the spokepersons of Syriza and the Left compared with the clapped out so-called politicians of ND and the Right. The Greeks and the Spanish are the only countries where there's a popular moblisation against the robber barons who created the crisis and are continuing to profit from the consequences. The left have been emasculated throughout Europe "
.
"...My fear is that Syriza has lost the momentum, they have been unable to make the subject what it should be, Neoliberal ideological economics. The fear mongering and the bank run neatly engineered by Draghi and now the threat of shutting down the entire banking system - I'd be scared too. That's hardball politics - but the main thing is people obey authority and the EU has authority as far as the Greek people are concerned and they will back them into their very own graves."
.
"...Don't forget they are beyond the Great Depression now in terms of the economic catastrophe. Population has been sliding since 2010."
.
"...Greeks elected Syriza out of desperation. The rest is just the usual anti-left cliches, not that there's anything wrong with anti-left, however your understanding of the situation would be greatly enhanced if you spent a minute Googling origins of this crisis. Perhaps EU/EZ is a bit complex for you."
.
"...The reason why the Troika objected to increases in certain taxes as part of Greece's economic plans is twofold: (i) due to this historical lack of tax collection, increased revenue projections based on increased taxes would be almost entirely illusory, and (ii) they targeted weak industries that Greece needs to prosper and grow, and risked making Greece's economic situation worse. Many of the larger and stronger of these multinational industries also had the capability of simply leaving Greece. Tsipras refused to discuss sources of real and easy tax revenue, like tourism on the Greek islands. "
.
"...This is another round of banking bailouts using public money, cynically misnamed as bailing out Greece. The troika need to launder the money through Greece to give to the banks. Greece get to keep a very small percent for their troubles and taking more blame than they should."
.
"..."Europe is not under obligation to Greece" is nonsense. If Greece is a member state then EU is indeed under obligation to support it, and it should do this effectively. It should not carry out a policy that undermines its economy. Even if EU officials do not do this out of principles, they should to do it to avoid loosing the support of the EU project."
.
"...The preliminary report of the Greek debt investigation (yes, there is one) will be out shortly. From what I've read, much of the debt went to Greek banks and their foreign partners that indulged in an aggressive loaning orgy and created a debt bubble inside the Greek economy. The banks were recapitalised during the bailout with €80bn of state money that ended up as sovereign debt."
.
"...I had thought that Angie, Wolfie and Christine were perhaps just inept, but now I'm afraid they may be executing a well laid plan. Perhaps they want to form a new entity: The People's Neo-liberal Puppy Republic Of Greece. The steps: Blame all others; extort impossible amounts of invented "debts";people who oppose you are labeled as traitors; prioritize German and French banks so they can be saved from their own shitstorm and nationalize (i.e. charge the ordinary punter) all the fantasy cash that no-one's ever seen; call a national emergency and impose martial law. Next is destroy all opposition and hand everything over to private industry. A week ago, this would be very far-fetched, but now??"

Jul 01, 2015 | The Guardian

It's now clear that Germany and Europe's powers that be don't just want the Greek government to bend the knee. They want regime change. Not by military force, of course – this operation is being directed from Berlin and Brussels, rather than Washington.

But that the German chancellor Angela Merkel and the troika of Greece's European and International Monetary Fund creditors are out to remove the elected government in Athens now seems beyond serious doubt. . Everything they have done in recent weeks in relation to the leftist Syriza administraton, elected to turn the tide of austerity, appears designed to divide or discredit Alexis Tsipras's government.

They were at it again today, when Tsipras offered what looked like almost complete acceptance of the austerity package he had called a referendum on this Sunday. There could be no talks, Merkel responded, until the ballot had taken place.

There's no suggestion of genuine compromise. The aim is apparently to humiliate Tsipras and his government in preparation for its early replacement with a more pliable administration. We know from the IMF documents prepared for last week's "final proposals" and reported in the Guardian that the creditors were fully aware they meant unsustainable levels of debt and self-defeating austerity for Greece until at least 2030, even on the most fancifully optimistic scenario.

That's because, just as the bailouts went to the banks not the country, and troika-imposed austerity has brought penury and a debt explosion, these demands are really about power, not money. If they are successful in forcing Tsipras out of office, a slightly less destructive package could then be offered to a more house-trained Greek leader who replaced him.

Hence the European Central Bank's decision to switch off emergency funding of Greece's banks after Tsipras called the referendum on an austerity scheme he had described as blackmail. That was what triggered the bank closures and capital controls, which have taken Greece's crisis to a new level this week as it became the first developed country to default on an IMF loan.

The EU authorities have a deep aversion to referendums, and countries are routinely persuaded to hold them again if they give the wrong answer. The vote planned in Greece is no exception. A barrage of threats and scaremongering was unleashed as soon as it was called.

One European leader after another warned Greeks to ignore their government and vote yes – or be forced out of the eurozone, with dire consequences. Already the class nature of the divide between the the wealthier yes and more working-class no camps is stark. The troika's hope seems to be that if Tsipras is defeated by fear of chaos, Syriza will split or be forced from office in short order. The euro elite insists it is representing the interests of Portuguese or Irish taxpayers who have to pick up the bill for bailing out the feckless Greeks – or will be enraged by any debt forgiveness when they have been forced to swallow similar medicine. The reality is the other way round.

... ... ...

Tsipras and Syriza's determination to stay in the eurozone come what may has seriously weakened Greece's hand. The economic dislocation of jumping off the euro train would doubtless be severe in the short term, though the costs of permanent austerity would almost certainly be greater thereafter.

But Syriza insiders say there is little preparation for what anyway may be forced on them. The relentless pressure of the EU bureaucracy demands a strong and clear-headed response. Right now, for example, that means the Athens government immediately taking control of its banks, currently shutting down all transactions.

The worst outcome of this crisis would be for Syriza to implement the austerity it was elected to end. A yes vote in next weekend's referendum, , if it goes ahead, would probably lead to the government's fall, and almost certainly new elections.

Papistpal rredge 1 Jul 2015 21:21

"Implicit in your argument"

Always a ploy of course, when you find implicit, tacit, implied arguments in someone else's thought, and then argue with it. No, I am not saying anything about the money.
No, I think Berlin and Brussels are behaving abominably, not so much in terms of what is decided, but, as Pope Francis implied (there you are) without any consideration for the dignity of the Greek people. Shaming, blaming, demonizing, threatening, giving the cold shoulder, to a small marginal country who is supposedly part of your union. There is NO excuse for your behavior

Ritoras Tijger 1 Jul 2015 20:57

I am against Syriza mate, but many commentors ignore the socioeconomic impact on the Greek population and simplify or generalize things. Syriza is in power the past 3 or 5 months. The previous gov were in power since 1974. Two parties, two families. Nepotism in politics is strong.

As said, because none answers your question that doesn't mean no is the answer.

Be open minded and less emotional. Few of the questions you ask you can google them and share the findings with us. That will be more convincing!

peekaboo -> summicron 1 Jul 2015 20:54

The public in the 18 countries have not been consulted. Critical decisions affecting all other members need direct approval. In fact referendums have almost never been held for EU membership in candidate countries.

ineluctable2u -> tsimshatsui 1 Jul 2015 20:50

That's naive. Merkel is only making the Greek people suffer now in the hope that they will lose their will and vote yes. This is ruthless politics by the troika and Merkel in particular.

martyc73 -> Gearóid Ó Loingsigh 1 Jul 2015 20:49

The North is a diversion - it cant raise taxes and relies on subvention from the British State etc and you know this so don't be using that as an argument. The bank guarantee was also sold in a totally different way to what was rolled out subsequently. And you know this too. Hums and Haws???

Seamus is correct in his analysis. What is happening in Greece is akin to Democratic asphyxiation by financial means. And those of us that believe in basic Democracy should be standing with Syriza and the Greek people at this time. Neo-liberal dogma was always ugly. It's practical application is even uglier. This will have serious implications for the Left in Europe as a whole but more imminently for the British referendum vote due pretty soon.

Ritoras Tijger 1 Jul 2015 20:46

Bud, first of all you repeat you you you, it is very instructional, chill. Bravo to you as well for making so focussed comments. I mean it even though you put all the fault on the Greek gov.. Don't see you challenging yourself enough? Are the rest of stakeholders here perfect?

But, how do you know what Greece has done and what not?

Why the Troika have not reacted the same and with the same persistence as it does now during the last 5 years to correct the direction of travel? You're 100% right about the Lagarde list. The ministers who did not do nothing are in trials now.. However, I was in fact hoping that the Troika could play a more active role in this and exercise influence to clear corruption. After all, based on a leak of series of emails , Greek government was strictly following the instructions of Troika during the past 5 years.

About the military expenses. I like defense and the military in fact. But! In a recession, the Troika should have first said, save money there to invest in sectors like healthcare, education etc. After all, Greece is very well equipped and supposedly is backed up by NATO allies.

calsation miceonparade 1 Jul 2015 20:43

I must say I enjoyed your takedown of oldships immensely. It seems he doesn't realise we wouldn't be having this conversation if the private companies that lent money to Greece had been made to eat their own losses.

But then neoliberalism isn't capitalism, not in the traditional sense. As has been proven beyond reasonable doubt, neoliberals magically turn into socialists at the drop of a hat. Gains privatised, losses socialised. In other words, they use the power of the state to collect economic rents. To call this sure thing investing or risk-taking is pure propaganda.

Papistpal 1 Jul 2015 20:40

Never thought I'd agree with you, but I have to say, from this American capitalist perspective, Berlin and Brussels have no sense of fair play and no respect for democracy. How can the EU call itself a democracy if Germany has a veto because it has the big bucks. The US, I admit, would like to do something similar, but we are constrained by maintaining at least some vestige of democratic practice and sensibility. What is with the moralism, anyway. "Greece is wrong, so we get to do whatever we want to them." Moralistic platitudes are not policy statements. Damn Merkel to hell


TheNerveInstitute 1 Jul 2015 20:36

Greeks must not cave in. This is interesting !

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=14132

lawrenceab 1 Jul 2015 20:29

I agree the EU élites are out to topple Syriza. The invective against Tsipras and ruthless shut down of bank support to strike fear in the population show that clearly enough. Syriza is a mortal threat to the noe-liberal order.

I don't agree that Syriza is innocent in this drama, though. Its crisis management has been abysmal. They know, or should, what is coming. when they threaten the EU élites. Why for instance did they not impose capital controls the very first weekend after coming to power?? The the country could have put up its defenses at a time of its own choosing, husbanded its resources while negotiating - paid the IMF, keep banks open during this crucial referendum week. You don't negotiate with 17 adversaries who all want to crush you, with one hand tied behind your back and € billions flowing out weekly. In three months you are on the floor.


castalla 1 Jul 2015 20:17

This is a clash of ideologies. It's obvious if you listen to the spokepersons of Syriza and the Left compared with the clapped out so-called politicians of ND and the Right. The Greeks and the Spanish are the only countries where there's a popular moblisation against the robber barons who created the crisis and are continuing to profit from the consequences. The left have been emasculated throughout Europe ... let's hope the OXI vote wins the day and Syriza gets a mandate to argue for a restructure of the debt programme.

someoneionceknew -> FactPatrol 1 Jul 2015 20:10

The – European Social Model – is built on the fundamental principles built into Treaty establishing the European Community (TEC):

… promotion of employment, improved living and working conditions … proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment and the combating of exclusion.

It combines with the EU Charter of Fundamental Rights to define an "underlying principle is one of solidarity and cohesion: that economic growth must serve to boost overall social wellbeing, and not take place at the expense of any section of society".

The ILO book says that while "there is no official definition of the European Social Model" there is a long history of practice and dialogue that allows one to map out the main characteristics.

The ILO define "six main pillars":

1. "Increased Minimum Rights on Working Conditions".

2. "Universal and Sustainable Social Protection Systems".

3. "Inclusive Labour Markets".

4. "Strong and Well-Functioning Social Dialogue".

5. "Public Services and Services of General Interest".

6. "Social Inclusion and Social Cohesion".

miceonparade -> Exodus20 1 Jul 2015 20:08

Remember what Greece were like before joining the euro, in the 1990's?

Greece in the 1990s did not have 30% unemployment or 60% youth unemployment or a depression. Things can only begin to get better after exiting the euro and reclaiming fiscal sovereignty which can be used to put Greek people back to work.

someoneionceknew FactPatrol 1 Jul 2015 20:07

The European Social Model in Crisis: Is Europe losing its soul?

PDF 52 page precis.

while the European Social Model may have been called into question here and there before the crisis, the list of changes in most elements and pillars of the European Social Model since the crisis is formidable. While there are a few exceptions … all other trends show a general withdrawal of the state from social policy, first through massive cuts in social expenditure and reduced funding of education, health care and other public services, and second through radical reforms in a number of areas, such as social dialogue, social protection, pensions, labour market and social cohesion in general …

the changes are particularly severe in those countries that implemented an austerity package under the direct influence of the Troika …


Hill0fBeans sjorsnotmine 1 Jul 2015 20:05

There are no poor Greeks in Greece any more...

You're a disgrace. Instead of trolling, read some facts every now and then.

- like the 4 out of 10 Greek children living beneath the poverty line

- or 44.8% of pensioners living on less than 665 euros/month

- or the 27% unemployed

Go crawl back underneath your bridge. This is not a place for trolls.

camerashy 1 Jul 2015 19:56

The closet fascists are all out in force to get rid of a democratically elected government! Rule by corporations and banks is what you deserve and is what you are going to get in next 5 years ... so enjoy it.

deskandchair -> Danny Sheahan 1 Jul 2015 19:56

It can't go any other way, fiscal control means political control. The tragedy is that the EZ was formed in the first place.

Lafcadio1944 1 Jul 2015 19:52

My fear is that Syriza has lost the momentum, they have been unable to make the subject what it should be, Neoliberal ideological economics. The fear mongering and the bank run neatly engineered by Draghi and now the threat of shutting down the entire banking system - I'd be scared too. That's hardball politics - but the main thing is people obey authority and the EU has authority as far as the Greek people are concerned and they will back them into their very own graves.


xsyfer John Smith 1 Jul 2015 19:51

It has that already. Don't forget they are beyond the Great Depression now in terms of the economic catastrophe. Population has been sliding since 2010. There will be friends. I reckon UK, us and Sweden might do something bilateral after the mess to keep Greece away from Russia.

Might be too late then though


deskandchair Markdoug1 1 Jul 2015 19:51

You don't live in EZ or EU (although superficial thinking isn't exclusive to those outside EZ) however you're correct, Greeks elected Syriza out of desperation. The rest is just the usual anti-left cliches, not that there's anything wrong with anti-left, however your understanding of the situation would be greatly enhanced if you spent a minute Googling origins of this crisis. Perhaps EU/EZ is a bit complex for you.


Eleutheros 1 Jul 2015 19:46

But it has nothing to do with morality and everything to do with a dysfunctional currency union, a destructive neoliberal economic model enforced by treaty and an austerity regime maintained to ensure a return to profitability on corporate terms.

And that's the essence of the current situation, not just in the EU, but most "western" societies, including Australia, where I live; our present government follows the policies of Thatcher and Reagan and is trying to bring austerity to a rich and prosperous country.

Excellent article Seumas Milne, thank you.


Oscarinho 1 Jul 2015 19:43

Yes, there is a potential danger of a right-wing, if not neo-nazi, turn in Greece (and maybe, only maybe in other places, too). But just tell me why does the author doesn't mention that without the support of the right-wingers and neo-nazis called Anel and Golden Dawn Syriza would not have a majority in their own country??? Syriza does not represent a European leftist alternative (ask Renzi) but mere 2 million Greek voters supported by the far right that are taking their own society hostage playing the nationalistic card.

Yes, we need another haircut and, yes, this radical austerity policies needs to be changed. It's just not sustainable as we learned the hard way- But Syriza is looking for a system change by any means with any partners (Golden Dawn, Putin's Russia, and even Erdogan). No thanks.


Forthestate ID5590609 1 Jul 2015 19:40

you and others believe that Greeks are now somehow inherently entitled to this new and vastly improved standard of living...

Just more bollocks! How do you square "this new and vastly improved standard of living" with the reality since the crisis hit? Most analysts agree that the decline has seen Greece lose everything that it acquired during the years you refer to, and more, and I repeat, it is a decline probably unparalleled in peacetime. Where is the recognition of the catastrophe that has hit the Greek people in your ridiculous assertion that they are enjoying a new and vastly improved standard of living?


John Smith 1 Jul 2015 19:32

Looking at the headline photo of Merkel, the caption: Who will rid me of this troublesome Greek
popped into my head.

Then I read the article above.

Nothing would please the Euromeddlers more than a military coup, or a revolt by the coalition partners.

Because what this crisis is exposing is how after five fruitless years, the geniuses at the heart of the EU, couldn't grasp that among their many errors of judgement, it's no good loaning a bankrupt money to pay off debt, the Euro has actually worked against the economic expansion of the Eurozone both before and after the crash, and by failing to spot the dishonesty of previous Greek administrations or act, it has shown the world that their system is weak, cannot tackle a crisis, and despite years of rhetoric will have to do the one thing it said would never ever happen, expel a member state and write off tens of billions of wasted euros.

In my earlier analysis I have already explained why the Euro was a currency launched half cocked, and that without taking into account the needs of individual nations, it is doomed in the long term, to fall to pieces.

I fear that whatever happens now, Greece is going to find itself with few friends, and at least five years of pain and emigration of its youth.

ID5590609 Forthestate 1 Jul 2015 19:26

The level of Greek tax collection from all sectors and classes in Greek society is abysmal. Tspiras and Varoufakis do not deny this is a problem, and other than pride or foolishness, I question why you do. Some economists suggests that as much as 39% of the Greek economy is effectively underground. The other purported statistics are simply red herrings to confuse this simple fact (and also avoid dealing with the rampant other corruption and incompetence inherent in the Greek economy).

The reason why the Troika objected to increases in certain taxes as part of Greece's economic plans is twofold: (i) due to this historical lack of tax collection, increased revenue projections based on increased taxes would be almost entirely illusory, and (ii) they targeted weak industries that Greece needs to prosper and grow, and risked making Greece's economic situation worse. Many of the larger and stronger of these multinational industries also had the capability of simply leaving Greece. Tsipras refused to discuss sources of real and easy tax revenue, like tourism on the Greek islands.

The fact that Greece's economy has contracted over 25% is also not particularly relevant. The larger GDP since joining the Euro represented a tremendously bloated bubble based on irresponsible public and private debt. The current GPD still has ample room to decrease before it accurately reflects the true size, scope and productivity of the Greek economy (and even reflects Greece's pre-Euro GDP). Also noteworthy is the fact that Greek incomes nearly tripled since it joined the Euro Apparently, you and others believe that Greeks are now somehow inherently entitled to this new and vastly improved standard of living (more impressive than some other Eurozone members who are poorer and helped fund Greece's bailout) despite the fact that it was entirely unearned and based on fraud and the largesse of the taxpayers of other nations.


Exodus20 Tijger 1 Jul 2015 19:26

This is another round of banking bailouts using public money, cynically misnamed as bailing out Greece. The troika need to launder the money through Greece to give to the banks. Greece get to keep a very small percent for their troubles and taking more blame than they should.


JordiLlull neilmack 1 Jul 2015 19:24

Who are "Most people"? I dont think there are polls, but few people in Europe believe that the fault lies exclusively on a government who has been there for 6 months, and is trying to prevent the policies that have led to a 25% loss of GDP. Particularly since the troika has made it damn clear that it does not plan to accept ANY plan. Sure, some have bought Daily Mirror arguments that the Greeks spent the bailouts on Ouzo, but informed people know that the vast majority was used to pay back interests, and that Greek retirement pensions are around 300 euro/month. I would rather argue that "most people" in Europe who have traditionally supported EU are starting to raise questions about what EU's role in this crisis.

"Europe is not under obligation to Greece" is nonsense. If Greece is a member state then EU is indeed under obligation to support it, and it should do this effectively. It should not carry out a policy that undermines its economy. Even if EU officials do not do this out of principles, they should to do it to avoid loosing the support of the EU project.

deskandchair truecomrade 1 Jul 2015 19:22

Fiscal control = political control, it can be no other way.


FourtyTwo sjorsnotmine 1 Jul 2015 19:21

More than 30% of the population are officially below the poverty line.

http://www.enetenglish.gr/?i=news.en.article&id=2040


FourtyTwo Exodus20 1 Jul 2015 19:17

The preliminary report of the Greek debt investigation (yes, there is one) will be out shortly. From what I've read, much of the debt went to Greek banks and their foreign partners that indulged in an aggressive loaning orgy and created a debt bubble inside the Greek economy. The banks were recapitalised during the bailout with €80bn of state money that ended up as sovereign debt.

MTSK87 privateindustry44 1 Jul 2015 19:13

You are an ignorant piece of work aren't you Sir? Look at the facts before spreading lies. The Greeks work (the ones still in employment that is) work more hours than any other EU citizen ( http://www.bbc.co.uk/news/magazine-17155304 ), the rich and powerful did not pay taxes no, but your average 20-30 something year old with a wage of 400 euros a month that has to go back to living with his/her parents can barely afford coffee never mind pay taxes. And free money? Please the "creditors" have NEVER given anyone "free" money. Germany never gave away anything for free (see treaties imposed on Greece to buy old German weapons). Greece was manipulated and suffered for that "free money".

emordnilap Mark Riggle 1 Jul 2015 19:10

I had thought that Angie, Wolfie and Christine were perhaps just inept, but now I'm afraid they may be executing a well laid plan. Perhaps they want to form a new entity: The People's Neo-liberal Puppy Republic Of Greece. The steps: Blame all others; extort impossible amounts of invented "debts";people who oppose you are labeled as traitors; prioritize German and French banks so they can be saved from their own shitstorm and nationalize (i.e. charge the ordinary punter) all the fantasy cash that no-one's ever seen; call a national emergency and impose martial law. Next is destroy all opposition and hand everything over to private industry. A week ago, this would be very far-fetched, but now??

[Jul 01, 2015] Path to Grexit Tragedy Paved by Political Incompetence

"...I think the Germans think that if things get bad enough in Greece, they'll kick out Tsipras and elect a government more willing to deal."
Jul 01, 2015 | Economist's View

Ellis said...

How many austerity plans do the Greek people have to suffer through? How much unemployment? Half the young population? Is the plan to to cut living standards in half?

And for what? To repay a debt that the Greek people had nothing do with! To reimburse usurious interest rates that cut the economy in a trap by the banks!

What a bunch of predators!

djb said in reply to Ellis...

i like how the advocates of austerity get all pissed off at the greek people as if they are just being obstinate

its like someone is trying to punch someone else in the face and they are getting all pissed off at the other guy because he keeps lifting his hands to block the punches

"come cut it out, just let me get good shots in at you , whats a matter with you"

And Greece will not go to the drachma - Greeks are now demanding paper Euro notes, and everyone outside Greece shipping into Greece is demanding paper Euro notes up front. Greeks are now not able to get food and medicine and fuel if they don't have Euro currency.

But let's be clear - the Greeks are to blame because they refuse to pay Greeks to work by buying only Greek production, or by trading Greek produced goods for imported goods.

Charles Carlstrom said...

Strikes at first glance don't seem rational. But they occur. Somestimes you swerve too late to avoid ruin.
But even now it appears Greece is starting to swerve.

DrDick said in reply to Charles Carlstrom...

Only if you are a member of management. For the workers they are the only logical recourse. When management will not provide safe/decent working conditions or pay you what you are worth, your best recourse is to withhold your labor.

anne said...

http://www.nakedcapitalism.com/2015/07/tsipras-accepts-most-terms-as-merkel-insists-on-referendum.html

July 1, 2015

Tsipras Accepts Most Creditor Terms as Merkel Insists on Referendum
By Yves Smith

Post-bailout expiration dynamics are likely to produce even worse outcomes for Greece than it had on offer from the creditors last month. It isn't just that the bailout funds of €7.2 billion are gone; it's that Greece has gone over an event horizon with stringent capital controls on and the European Central Bank ready and able to push the Greek banking system over the brink.

Greece's weak negotiating position is even weaker now. Even with a boost via a "no" vote on the referendum this Sunday, if the Greek government were to take a firmer stance, the creditors have the means and the incentives to keep crushing the economy via financial strangulation. The ruling coalition would not be able to hold on to power for more than a month or two as the economy continued to decay at an accelerating rate.

This is a ruthless, brutal power play in progress. Too many key actors are driven by their own narrow imperatives, most important of all, their domestic politics, as well as institutional rigidities. Those constraints work against taking a broader view and recognizing that the immolation of Greece will blow back and damage the European project and their own economies. But that would require much bolder, visionary thinking and action. The current crop of leaders has instead become habituated to incremental patches even though it is widely recognized that the architecture of the Eurozone is incomplete and wobbly. But no one is willing to move to a higher level of integration, in large measure because, particularly for Germany, that entails the loss of power and privilege at the national level.

Tsipras has recognized the weakness of his position too late. Yesterday, he tried making a desperate, last-minute deal to ward off an IMF default and secure the bailout funds before the program expired. But that clearly could never happen. It would require approval from all of the other 18 states in the Eurozone, including parliamentary approval in Germany. There was no way that would occur without German legislators having had Greece pass legislation before they voted on the release of funds; the Greek government had been told that that was a requirement and that needed to be done by the end of last weekend, June 28. *

Moreover, Germany wasn't even the most hardline country; Portugal, Spain, and Latvia are more hostile to cutting Greece any slack since their leaders had their citizens wear the austerity hairshirt. Given that it was obviously impossible at that late juncture for the other Eurogroup members to release the bailout funds before they went poof (at a bare minimum, there was no way the Germany MPs would approve it), the Tsipras appeal was a sign of utter desperation or delusion. And that in turn was an admission of tremendous weakness. Less than two days of capital controls and a bank holiday, and the ruling coalition was folding....

* Some pundits have depicted these deadlines as artificial. They weren't. There are many areas where the lenders' conduct can correctly be called unreasonable, but the hard deadlines were the result of past agreements and Eurozone procedures make them extremely difficult to change. This is one reason for the current creditor hostility. Greece consumed an enormous amount of time, running up against deadlines in what the other side saw as brinksmanship, which was a bizarre strategy given that Greece had a weak bargaining position. But the lenders felt compelled to accommodate Greece on that front as much as possible because the optics would be terrible if they didn't, particularly if the situation were to devolve into a Grexit. Compounding that problem, an lawyer with considerable knowledge of European practice pointed out by e-mail: "Europeans have a very hidebound and literal view about their EU rules and documents. Americans see a contract as a basis for negotiation."

Fred C. Dobbs said in reply to anne...

'Germany wasn't even the most hardline country; Portugal, Spain, and Latvia are more hostile to cutting Greece any slack since their leaders had their citizens wear the austerity hairshirt.'

Every country in the EU is angry with Greece.

In Greece's bailout talks, why it's 18 eurozone countries versus one http://on.wsj.com/1B7hOIy via @WSJ

... Some eurozone governments—Ireland, Portugal, Spain and the Baltic states—see themselves as having swallowed tough, politically costly but ultimately successful medicine and see no reason why Greece should be spared such rigor. Some, like Slovakia and the Baltic states, are poorer than Greece and pay their workers a lower minimum wage.

Another element is that further debt relief for Greece in whatever form means losses for governments—Athens owes other eurozone governments €195 billion ($212 billion)—and therefore for eurozone taxpayers. Germany is owed the largest sum—more than €60 billion—followed by France and Italy. But, as a percentage of their gross domestic product, other countries have more on the line than Germany. According to a Bloomberg Brief analysis, Greece's debts to Slovenia exceed 3% of Slovenian GDP, compared with 2.4% for Germany. ...

DeDude said in reply to Fred C. Dobbs...

"see no reason why Greece should be spared such rigor"

Yes their rulers have convinced them that the depression they threw Greece into is no big deal compared to what they themselves have suffered. As long as your corporate media hide the facts from people, you can convince them of all kinds of stuff.

"debt relief for Greece in whatever form means losses for governments"

Yes - and the real story there is that almost all the debt that was held by private banks and plutocrats back when this problem surfaced (and the debt should have been written down) is now owned by governments. But that is not the debate in the corporate media - instead it is about how terribly irresponsible the Greek government is (I guess you can fool the fools every time).

Nathanael said in reply to anne...

Yves has been mis-analyzing the Greek crisis from beginning to end. It's seriously lowered my opinion of her, and I think she's a complete idiot at this point.

Syriza has played this out exactly right, whether intentionally or not.

Given that the Troika will never, ever make a functional offer of major fiscal stransfers to Greece, and has as much as said so, default was inevitable.

Greece doesn't have to leave the euro, of course; Greece could unilaterally print euros (in violation of the Troika's insane deflationary policies) and wait for Germany to leave the euro. But it has the same effect.

GIVEN that default is inevitable, Syriza needs to be seen as:
(1) Trying as hard as it can to offer a deal
(2) Not knuckling under to the foreign powers

They've done this.

The referendum will either go "yes" or "no".

If it's "yes", then Syriza will resign. The new government of Greece will implement stupid policies forced by the Troika which will make their situation even WORSE; they will be blamed for it and will be thrown out. Syriza survives.

If it's "no", Syriza can exit and allow the economy to recover through devaluation.

The worst case scenario for Syriza was that the Troika accepted one of Syriza's overly generous offers of surrender; the economy continued to get worse; Syriza was blamed for this and thrown out of office; and Golden Dawn was elected.

Golden Dawn would, of course, immediately leave the euro and revive the economy. By pressganging, if necessary. :-P Having a glowing example of successful fascist economic management in Europe is the LAST thing the world needs. Thank goodness we seem to be avoiding that.

anne said in reply to anne...

Yves Smith has from my perspective been remarkably sensitive to the needs of the Greek people, thorough in reporting and analysis, and evidently, however sadly, all too correct in analysis compared with other Greek-sympathetic economists.

I am aware that the analysis of Smith has been criticized, but I am also aware and impressed that even leaders of liberal Podemos in Spain have shared in criticisms of Syriza.

paine said in reply to anne...

Just a side comment

The private greek banks can go to hell in a chariot for all I care

The greek government should worry about small dipositors only

paine said in reply to paine...

Eichenberry seems poorly briefed
On the negotiations here

Syriza has not acted incompetently

The troika is out for regime change

Reply Wednesday, July 01, 2015 at 02:24 PM

anne said in reply to paine...

Eichengreen seems poorly briefed
On the negotiations here

Syriza has not acted incompetently

The troika is out for regime change

[ Understood as to what the European leadership is after, but Syriza has puzzled me. ]

ilsm said in reply to paine...

ecb the usa of the europa.

troika deals like nukes.

widespread drone strikes without deflation.....

Chris Herbert said...

I have a problem with the exit=disaster scenario. As a monetary sovereign and with a central bank, both recapitalization and devaluation can be accomplished without the armageddon stuff. China's currency, for example, is not traded on Forex. China's central bank pegs its value by fixing what it will pay in its currency for another currency--and its currency is the only one that can be used in China. Once Greece goes back to the drachma and once they've got a central banker and a currency that is exclusive to domestic commerce (no Forex speculative trading) I think a good central banker can do a lot to help Greece maintain its balance. Even better, said recapitalization can be debt free. I'm not saying it won't cost anything, I'm just saying a monetary sovereign need not issue debt. Greece could put people to work doing infrastructure improvements, which build assets not liabilities. Without issuing debt. Greece has to learn how to collect taxes, obviously. And some reforms to government size is probably in order. But the 'end of days' scare is just that, a scare.

pgl said in reply to Chris Herbert...

I have a similar problem with the criticism is Grexit. Let's roll the tape back to 1967 when Prime Minister Harold Wilson decided to devalue the UK pound:

http://news.bbc.co.uk/onthisday/hi/dates/stories/november/19/newsid_3208000/3208396.stm

The UK did not suffer a financial crisis. It did manage to raise its net exports. So why can't the Greeks do the same?

am said in reply to pgl...

Fine, so why do the Greek people want to keep the euro as the official currency. Professor Krugman mentioned as a reason that people like to have a strong currency. They have had the drachma before and it was never very good and neither was the economy. I suggest the reason they want to keep the euro is it is strong in the sense of a stable currency and inflation is kept low in Greece as most of their imports are in euros. With a weak drachma they just get inflation on imports. With the euro they get steady prices. Add in to that payment of salaries and pensions in euros and then you have the advantage of earning in the currency of import purchases. Hohum, I'm probably wrong.

Chris Herbert said in reply to mulp...

Leaving the euro is not cost free. The dollar/drachma after Grexit is set by the central bank. Maybe Greece needs to become more efficient in their use of energy. Maybe Russia will sell oil to them at advantageous prices. A central bank can price the drachma advantageously between different suppliers. And don't forget the Greeks have a primary surplus right now and Grexit will eject its creditors, which is what I think Greece needs to to. The collapse scenarios are scare stories aimed at the Greeks. They should reject them and become independent. Only by being a monetary sovereign can Greece regain control of its economy. Right now they are in debtors prison.

Peter K. said in reply to am...

with the Euro they get humanitarian disaster. You know the economic stats, don't you?

am said in reply to Peter K....

Yes but why do they want to keep the euro, as is reported. They may suddenly change that in the referendum vote but it is reported that the euro is what they want.

foofootos said in reply to am...

easy, the depositors want to keep the euro because they don't have a lender of last resort. They will loose their deposits. That's all, that and scare tactics.

Paine said in reply to foofootos...

Yes that's a good part of it

But I'd like to know the value of euros held on deposit now
by the bottom three quarters of the population

Dan Kervick said in reply to am...

I don't think it's really entirely economic. They view the euro symbolically as a special European club membership, and don't want to be excluded from that club.

anne said in reply to Chris Herbert...

http://www.cepr.net/blogs/beat-the-press/who-uses-the-euro

July 1, 2015

Who Uses the Euro

The Washington Post ran a map * showing which countries in Europe use the euro and which use other currencies. The map is wrong. It shows Montenegro and Kosovo as using currencies other than the euro. This is not accurate, both countries do use the euro as their official currency although they are not have been accepted into the euro zone.

This is important in the context of the discussions on Greece because it illustrates the point that Greece cannot be forced off the euro. The European Commission and the European Central Bank can impose incredibly onerous conditions on Greece, but they cannot prevent the country from using the euro if it so chooses. The decision to leave the euro could only be made by the Greek government, not its creditors.

* https://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/30/7-questions-about-greeces-huge-crisis-you-were-too-embarrassed-to-ask/

-- Dean Baker

John Cummings said in reply to Anonymous...

I never saw the "big" Greece problem before the Euro. The problem is the credit bubble starting in 73 creating a redic surge in consumer products that really took hold in the 80's/90's for the US and spread after that. It created the "look" of growing personal wealth via personal assets, but it was a bubble. Without this borrowing, the US economy probably would have struggled to grow much in the 80's as inflation fighters went on a rampage(which is what partially triggered the bubble to grow faster). They still maintain much of the growth from the bubble, only thanks to the market being scared to live without it. About the only thing it did, was force Russia away from the Stalin era Soviet fast, but now, they are stepping back while no one is watching. This is late capitalism.

The 80's and 90's would have been a lot more Escape from New York rather than Morning in America.

Nathanael said in reply to Anonymous...

Argentina's main problems were US-backed military coups and fascism. Argentina has quite impressively managed to get itself out from under both of those problems -- seemingly permanently.

foofootos said in reply to Anonymous...

Greece only got to comparable trouble after the Balkan wars (they defaulted), during the second world war, and then during civil war. Hardly a counter-example of "drachma troubles". Many a time I see Greece described as a serial defaulter. And then I read the History of the Greek state after it's independence from the Ottoman empire, and I see a war happening every 15-20 years or so. It seems this way of looking the Greek economy just goes with the Greek stereotype.

ilsm said in reply to foofootos...

Greece seems to spend about 150% of the NATO standard war spending for GDP. While the rest of the EU spends <75% of NATO standard.

Still only 3% compared to US' 5 to 7% according to how you count.

US spends more in VA than total of Russia, China and UK for their military.

Darrell in Phoenix said in reply to anne...

Pegging to the Euro will not counter trade imbalances, which is the real source of Greece's troubles.

They need a currency that floats. They need to decrease imports and increase exports (or more likely tourism) to eliminate their trade imbalance, which is the root cause of their debt.

pgl said in reply to Darrell in Phoenix...

Exactly!

foofootos said in reply to Darrell in Phoenix...

Greece currently has a balanced current account.

pgl said in reply to foofootos...

Link? Evidence? Even if this is true, it is mainly because of the imposed austerity and weak economy.

pgl said in reply to foofootos...

Darrell in Phoenix notes:

"Check the CIA world factbook for Greece.

Exports $35B. Imports $62B.

Trade imbalance of $27B compared to GDP of $290B = 9.5%!"

Your source?

am said in reply to anne...

In Simbabwe which has no currency of its own apart from small coins for change shop goods are priced in US dollars. So consumers can buy a basket of goods and then pay the value of the us dollars in us dollars, south African rand, Botswanan pula, euro or pound. These are all calculated up by a routine in the software system operating at the checkout. The tax which is vat is then sent up to the government. The government staff are paid in us dollars. But the government can't do stimulus because they can't print any of these currencies and they don't have one of their own. But for an interim solution it is workable.

Darrell in Phoenix said in reply to am...

And the dollars flow out of the country, and them when there are no dollars left, the economy collapses.

What you need is exactly what Ben Franklin argued for nearly 300 years ago. A government issued script currency that can be used to pay your taxes, and taxes high enough to create sufficient demand for the script to give it value. You then let the value of that government issued script currency to float on the international exchange markets to balance trade.

OH, and NEVER take on debt denominated in a foreign currency.

Nathanael said in reply to Darrell in Phoenix...

That's even a good rule for households, frankly. I never take debt denominated in a currency I can't print. :-)

Peter K. said in reply to Chris Herbert...

What the critics of the Greek fail to mention is that before the Troika began bringing the hammer down on Syriza and refused to negotiate with them, the Greeks were running a primary surplus.

Krugman pointed to this. That is, they were in the black without interest payments. With default and saying no to the bailout packages they are free of the interest payments and free of the onerous austerity measures which killed their economy.

What the critics of defaults say is that the defaulters will never be able to borrow again, but in the real world that hasn't been the case. They're just blowing smoke to bully the Greeks into more, fruitless austerity measures.

Dan Kervick said in reply to Peter K....

Agreed. There will always be attractive economic opportunities in Greece. Even if Greece defaults, there will be new investors willing to gamble that they wont default again.

pgl said...

"Instead, the creditors first calculated the size of the primary budget surpluses that Greece would have to run in order to hypothetically repay its debt. They then required the government to raise taxes and cut spending sufficiently to produce those surpluses.They ignored the fact that, in so doing, they consigned the country to an even deeper depression. By privileging their own balance sheets, they got the Greek government and the outcome they deserved."

This is precisely the problem Keynes warned about after WWI when the French demanded too much from the Germans. Of course the Germans never really did pay all of those cursed repatriations. Modern day European leaders have forgotten everything Keynes tried to teach us.

Darrell in Phoenix said in reply to pgl...

The austerity proponents are following the typical NeoCon mind-set of ignoring macroeconomic principles. "Keynesian hokum" is their preferred name for macroeconomics I believe.

DrDick said in reply to pgl...

This is exactly why Eichengreen's piece is pure garbage. Greece made lots of compromises, too many in fact. It was the creditors who refused to compromise. Every bank that had made irresponsible loans (and their were huge numbers of these) in Greece should have been forced to eat all their losses. After all, they had charged a risk premium to cover this already. Instead the Troika has decided that they should be fully indemnified and only the Greeks should suffer.

Peter K. said in reply to DrDick...

Yeah it's almost as if he criticizes the Greeks so he can criticize the Troika even more.

"Still, this incompetence pales in comparison with that of the European Commission, the ECB and the IMF."

Nonetheless I agree with you and disagree with Yves Smith and the like. Syriza and the Greeks did the best they could under impossible circumstances.

The Troika's plan didn't work and they refused to negotiate. The problem is Greeks want to stay in the Eurozone nonetheless. Sunday we'll find out if they still do no matter what.

pgl said in reply to DrDick...

This is why I prefer what Krugman wrote.

DrDick said in reply to pgl...

Likewise, and the same for Stiglitz, who is quite good on this.

Paine said in reply to pgl...

Running these nakedly in humane pub sec pruning exercises was the entire project

The debt
A pretext

Let that be a lesson to you long run fiscal space fuss budgets

Paine said in reply to Paine ...

A yes on Sunday simply means

Go back and get the best deal you can

Darrell in Phoenix said...

Exchange rates fluctuate to counter trade imbalances. The concept of a common currency, without controls to ensure no trade imbalances exist, is fundamentally flawed.

Money flows out of Greece. THE ONLY way money can get back into Greece is debt.

Trade imbalances cannot be persisted indefinitely. They result in the buildup of debt on the side with the deficit, and interest on the debt just widens the trade imbalance until the debt collapses.

Either Europe needs to take MAJOR steps to reverse existing trade imbalances, or the Euro is ultimately doomed to collapse under unrepayable debt.

RGC said in reply to Darrell in Phoenix...

"Either Europe needs to take MAJOR steps to reverse existing trade imbalances, or the Euro is ultimately doomed to collapse under unrepayable debt."

Yep. Varoufakis had a "Modest Proposal" to fix this:


4. THE MODEST PROPOSAL – Four crises, four policies

The Modest Proposal introduces no new EU institutions and violates no existing treaty. Instead, we propose that existing institutions be used in ways that remain within the letter of European legislation but allow for new functions and policies.

These institutions are:

· The European Central Bank – ECB

· The European Investment Bank – EIB

· The European Investment Fund – EIF

· The European Stability Mechanism – ESM

Here are the four policies that will re-deploy the above institutions in a manner that deals a decisive blow at, respectively, (1) the banking crisis, (2) the public debt crisis, (3) the under-investment and internal imbalances crisis, and (4) the social emergency crisis afflicting countries were absolute poverty is becoming a major issue...

http://yanisvaroufakis.eu/euro-crisis/modest-proposal/4-the-modest-proposal-four-crises-four-policies/

Chris Herbert said in reply to Darrell in Phoenix...

Darell writes "Money flows out of Greece. THE ONLY way money can get back into Greece is debt." Not so with a monetary sovereign. Euros are worth what the Greek central banks says they are worth, in drachmas. And only drachmas can be used in domestic commerce. You have squirreled away euros in Swiss bank accounts? Fine. Spend them anywhere but in Greece. If you have cheated on taxes, and for sure you have if you are Greek and rich, then face extradition for crimes in Greece. A monetary sovereign does not have to issue debt. It can recapitalize without debt. Look at China, which has used this banking system successfully for more than two decades! China understand the difference between liabilities and assets. It's not the debt that matters it's what you build that matters.

Darrell in Phoenix said in reply to Chris Herbert...

Chris, I was saying now... With Greece on the Euro and unable to print their own currency.

Yes, if they return to drachma, they can issue money. Until then, the only way they have been able to make their economy liquid in the face of large trade deficit is with debt.

Darrell in Phoenix said...

Check the CIA world factbook for Greece.

Exports $35B. Imports $62B.

Trade imbalance of $27B compared to GDP of $290B = 9.5%!


Of, Germany LOVED loaning Greece money so they could buy German products.... but the problem is that the debt can't possibly be repaid unless the trade imbalance is reversed. Germans have the money that Greece needs to repay the debt!


This echos the problems in the USA. The poor go into debt, creating money that they spend, which then flows through into the economy into the hands of billionaires. It is mathematically impossible for the poor to repay the debt unless the rich first spend the money! Oh, we say it is a legal, moral and social obligation to repay the debt, but suggest it is a moral and social obligation (and should be a legal obligation through a steeply progressive income tax code with deductions for most spending and capital investments) and OH HOW THE RICH SCREAM!

pgl said in reply to Darrell in Phoenix...

Good research - and analysis.

RueTheDay said...

I struggle to understand the path forward from the referendum. Putting aside the obvious question of "what exactly are they voting on", there are some serious logistical challenges.

It will likely take a day or two (or three) for the votes to be counted and the result certified. Assuming a best case scenario of a YES vote, Tsipras will likely resign, a snap election will be called, and a new government will have to form. How long will this take? What if Syriza is re-elected? What if there is no clear winner and we're back to having to form a coalition government, which may or may not happen?

Time is one thing this situation does not have. There are significant upcoming dates:
-July 10 €2B Rollover of treasury bills
-July 13 €452M IMF
-July 14 €73M in Japanese Samurai bonds due
-July 17 €1B Rollover of treasury bills
-July 20 €2.1B ECB
-July 20 €1.4B National central banks
-July 20 €25M European Investment Bank

I can't imagine any scenario under which the ECB can avoid having to yank the ELA if the July 20 payments are missed. But there are plenty of opportunities for an accident before then. It is assumed that the treasury bill rollovers will not be an issue since they are almost entirely held by Greek banks. Is it really safe to assume that? I might be thinking about a switch into safer, more liquid assets if I were a Greek banker. Or are they just going to avoid an auction altogether and deem the bills rolled over by fiat? The Samurai bonds are tiny, but they are still a commercial obligation, will require money the Greek government likely will not have, and a default will not be able to be brushed aside as easily as the missed IMF payment. Speaking of which, the IMF will be unable to assist in any way throughout this period, unless the arrears are cleared.

But wait, there's more. With the previous programme having expired, there will need to be a new MoU, a vote by the Greek Parliament, a vote by other European parliaments, including Germany. This is no longer something Finance Ministers can decide at a late night meeting.

Yet, the official position is no more talks until after the referendum.

Darrell in Phoenix said in reply to RueTheDay...

I think the Germans think that if things get bad enough in Greece, they'll kick out Tsipras and elect a government more willing to deal.

A vote of NO to the "Should we accept these terms?" means the Greek people support Tsipras's hardline demand for write downs. This puts the Germans in the position of having to accept his terms or face Greece leaving.

In short, the referendum may take the "well just wait until the Greeks replace you, then deal with the new guy" threat off the table.

Reply Wednesday, July 01, 2015 at 11:53 AM

RueTheDay said in reply to Darrell in Phoenix...

My point is that regardless of which way the vote goes on Sunday, by the time the results are in there simply may not be enough time left to avoid a default. Note well that default does not automatically imply Grexit, but it certainly ratchets things up a notch.

Reply Wednesday, July 01, 2015 at 11:59 AM

Peter K. said in reply to RueTheDay...

It's all up to the ECB and Troika. The money involved is small to them. It's all political. Looks like they want a regime change in Greece. Either that will happen or there will be Grexit.

Syriza caved on austerity but wanted more taxes and less spending cuts. The Troika said no. And the Troika spins it like the Greeks left the negotiation table. The Troika said no and then the ECB refused to back Greek banks as the "deadline" passed causing the bank holiday.

Darrell in Phoenix said in reply to RueTheDay...

Oh, I think default is inevitable. All the referendum does is clarify the options AFTER that.

If it fails, and the Greeks vote that they want to accept the Eurozone offer, then there will be a change in Greek government, a new round of austerity, and a delay of another year before the crisis explodes again.

If it passes with a resounding vote of "NO, we're not paying" then Eurozone will have to take major cuts in the debt or accept Greece leaving the Eurozone.

Nathanael said in reply to Darrell in Phoenix...

Darrell has the analysis correct.

The political key here is that SOME party is going to either leave the euro. (Or massively and permanently default and start printing euros. If they simply ignore all the ECB rules entirely, they may be able to stay in the euro. Same thing; in this case, Germany is the one who leaves the euro.)

In a sense, the democratic parties are handcuffed in their options relative to the fascist parties, so it's harder for Syriza to succeed than for Golden Dawn.

And it's really REALLY bad if Golden Dawn becomes a big economic success by defaulting or leaving the euro!!!

Paine said in reply to RueTheDay...

Default is a label easily applied and un applied
In arrears delinquent these are objective terms
Use em instead of the Halloween word default

[Jul 01, 2015] A Short History: The Neocon Clean Break Grand Design The Regime Change Disasters It Has Fostered

zerohedge.com

Submitted by Dan Sanchez via AntiWar.com,

To understand today's crises in Iraq, Syria, Iran, and elsewhere, one must grasp their shared Lebanese connection. This assertion may seem odd. After all, what is the big deal about Lebanon? That little country hasn't had top headlines since Israel deigned to bomb and invade it in 2006. Yet, to a large extent, the roots of the bloody tangle now enmeshing the Middle East lie in Lebanon: or to be more precise, in the Lebanon policy of Israel.

Rewind to the era before the War on Terror. In 1995, Yitzhak Rabin, Israel's "dovish" Prime Minister, was assassinated by a right-wing zealot. This precipitated an early election in which Rabin's Labor Party was defeated by the ultra-hawkish Likud, lifting hardliner Benjamin Netanyahu to his first Premiership in 1996.

That year, an elite study group produced a policy document for the incipient administration titled, "A Clean Break: A New Strategy for Securing the Realm." The membership of the Clean Break study group is highly significant, as it included American neoconservatives who would later hold high offices in the Bush Administration and play driving roles in its Middle East policy.

"A Clean Break" advised that the new Likud administration adopt a "shake it off" attitude toward the policy of the old Labor administration which, as the authors claimed, assumed national "exhaustion" and allowed national "retreat." This was the "clean break" from the past that "A Clean Break" envisioned. Regarding Israel's international policy, this meant:

"…a clean break from the slogan, 'comprehensive peace' to a traditional concept of strategy based on balance of power."

Pursuit of comprehensive peace with all of Israel's neighbors was to be abandoned for selective peace with some neighbors (namely Jordan and Turkey) and implacable antagonism toward others (namely Iraq, Syria, and Iran). The weight of its strategic allies would tip the balance of power in favor of Israel, which could then use that leverage to topple the regimes of its strategic adversaries by using covertly managed "proxy forces" and "the principle of preemption." Through such a "redrawing of the map of the Middle East," Israel will "shape the regional environment," and thus, "Israel will not only contain its foes; it will transcend them."

"A Clean Break" was to Israel (and ultimately to the US) what Otto von Bismarck's "Blood and Iron" speech was to Germany. As he set the German Empire on a warpath that would ultimately set Europe ablaze, Bismarck said:

"Not through speeches and majority decisions will the great questions of the day be decided?—?that was the great mistake of 1848 and 1849?—?but by iron and blood."

Before setting Israel and the US on a warpath that would ultimately set the Middle East ablaze, the Clean Break authors were basically saying: Not through peace accords will the great questions of the day be decided?—?that was the great mistake of 1978 (at Camp David) and 1993 (at Oslo)?—?but by "divide and conquer" and regime change. By wars both aggressive ("preemptive") and "dirty" (covert and proxy).


"A Clean Break" slated Saddam Hussein's Iraq as first up for regime change. This is highly significant, especially since several members of the Clean Break study group played decisive roles in steering and deceiving the United States into invading Iraq and overthrowing Saddam seven years later.

Perle-Richard-AEI

The Clean Break study group's leader, Richard Perle, led the call for Iraqi regime change beginning in the 90s from his perch at the Project for a New American Century and other neocon think tanks. And while serving as chairman of a high level Pentagon advisory committee, Perle helped coordinate the neoconservative takeover of foreign policy in the Bush administration and the final push for war in Iraq.

douglas_feith

Another Clean Breaker, Douglas Feith, was a Perle protege and a key player in that neocon coup. After 9/11, as Under Secretary of Defense for Policy, Feith created two secret Pentagon offices tasked with cherry-picking, distorting, and repackaging CIA and Pentagon intelligence to help make the case for war.

Feith's "Office of Special Plans" manipulated intelligence to promote the falsehood that Saddam had a secret weapons of mass destruction program that posed an imminent chemical, biological, and even nuclear threat. This lie was the main justification used by the Bush administration for the Iraq War.

Feith's "Counter Terrorism Evaluation Group" trawled through the CIA's intelligence trash to stitch together far-fetched conspiracy theories linking Saddam Hussein's Iraq with Osama bin Laden's Al Qaeda, among other bizarre pairings. Perle put the Group into contact with Ahmed Chalabi, a dodgy anti-Saddam Iraqi exile who would spin even more yarn of this sort.

news-graphics-2007-_647148a

Much of the Group's grunt work was performed by David Wurmser, another Perle protege and the primary author of "A Clean Break." Wurmser would go on to serve as an advisor to two key Iraq War proponents in the Bush administration: John Bolton at the State Department and Vice President Dick Cheney.

The foregone conclusions generated by these Clean Breaker-led projects faced angry but ineffectual resistance from the Intelligence Community, and are now widely considered scandalously discredited. But they succeeded in helping, perhaps decisively, to overcome both bureaucratic and public resistance to the march to war.

On the second night of war against Iraq, bombs fall on government buildings located in the heart of Baghdad along the Tigris River.  Multiple bombs left several buildings in flames and others completely destroyed.

The Iraq War that followed put the Clean Break into action by grafting it onto America. The War accomplished the Clean Break objective of regime change in Iraq, thus beginning the "redrawing of the map of the Middle East." And the attendant "Bush Doctrine" of preemptive war accomplished the Clean Break objective of "reestablishing the principle of preemption"


But why did the Netanyahu/Bush Clean Breakers want to regime change Iraq in the first place? While reference is often made to "A Clean Break" as a prologue to the Iraq War, it is often forgotten that the document proposed regime change in Iraq primarily as a "means" of "weakening, containing, and even rolling back Syria." Overthrowing Saddam in Iraq was merely a stepping stone to "foiling" and ultimately overthrowing Bashar al-Assad in neighboring Syria. As Pat Buchanan put it:

"In the Perle-Feith-Wurmser strategy, Israel's enemy remains Syria, but the road to Damascus runs through Baghdad."

Exactly how this was to work is baffling. As the document admitted, although both were Baathist regimes, Assad and Saddam were far more enemies than allies. "A Clean Break" floated a convoluted pipe dream involving a restored Hashemite monarchy in Iraq (the same US-backed, pro-Israel dynasty that rules Jordan) using its sway over an Iraqi cleric to turn his co-religionists in Syria against Assad. Instead, the neocons ended up settling for a different pipe(line) dream, sold to them by that con-man Chalabi, involving a pro-Israel, Chalabi-dominated Iraq building a pipeline from Mosul to Haifa. One only wonders why he didn't sweeten the deal by including the Brooklyn Bridge in the sale.

As incoherent as it may have been, getting at Syria through Iraq is what the neocons wanted. And this is also highly significant for us today, because the US has now fully embraced the objective of regime change in Syria, even with Barack Obama inhabiting the White House instead of George W. Bush.

Washington is pursuing that objective by partnering with Turkey, Jordan, and the Gulf States in supporting the anti-Assad insurgency in Syria's bloody civil war, and thereby majorly abetting the bin Ladenites (Syrian Al Qaeda and ISIS) leading that insurgency. Obama has virtually become an honorary Clean Breaker by pursuing a Clean Break objective ("rolling back Syria") using Clean Break strategy ("balance of power" alliances with select Muslim states) and Clean Break tactics (a covert and proxy "dirty war"). Of course the neocons are the loudest voices calling for the continuance and escalation of this policy. And Israel is even directly involving itself by providing medical assistance to Syrian insurgents, including Al Qaeda fighters.


Another target identified by "A Clean Break" was Iran. This is highly significant, since while the neocons were still riding high in the Bush administration's saddle, they came within an inch of launching a US war on Iran over yet another manufactured and phony WMD crisis. While the Obama administration seems on the verge of finalizing a nuclear/peace deal with the Iranian government in Tehran, the neocons and Netanyahu himself (now Prime Minister once again) have pulled out all the stops to scupper it and put the US and Iran back on a collision course.

The neocons are also championing ongoing American support for Saudi Arabia's brutal war in Yemen to restore that country's US-backed former dictator. Simply because the "Houthi" rebels that overthrew him and took the capital city of Sanaa are Shiites, they are assumed to be a proxy of the Shiite Iranians, and so this is seen by neocons and Saudi theocons alike as a war against Iranian expansion.

Baghdad is a pit stop on the road to Damascus, and Sanaa is a pit stop on the road to Tehran. But, according to the Clean Breakers, Damascus and Tehran are themselves merely pit stops on the road to Beirut.

According to "A Clean Break," Israel's main beef with Assad is that:

"Syria challenges Israel on Lebanese soil."

And its great grief with the Ayatollah is that Iran, like Syria, is one of the:

"…principal agents of aggression in Lebanon…"


All regime change roads lead to Lebanon, it would seem. So this brings us back to our original question. What is the big deal about Lebanon?

The answer to this question goes back to Israel's very beginnings. Its Zionist founding fathers established the bulk of Israel's territory by dispossessing and ethnically cleansing three-quarters of a million Palestinian Arabs in 1948. Hundreds of thousands of these were driven (sometimes literally in trucks, sometimes force marched with gunshots fired over their heads) into Lebanon, where they were gathered in miserable refugee camps.

In Lebanon the Palestinians who had fled suffered an apartheid state almost as rigid as the one Israel imposed on those who stayed behind, because the dominant Maronite Christians there were so protective of their political and economic privileges in Lebanon's confessional system.

In a 1967 war of aggression, Israel conquered the rest of formerly-British Palestine, annexing the West Bank and Gaza Strip, and placing the Palestinians there (many of whom fled there seeking refuge after their homes were taken by the Israelis in 1948) under a brutal, permanent military occupation characterized by continuing dispossession and punctuated by paroxysms of mass murder.

This compounding of their tragedy drove the Palestinians to despair and radicalization, and they subsequently lifted Yasser Arafat and his fedayeen (guerrilla) movement to the leadership of the Palestine Liberation Organization (PLO), then headquartered in Jordan.

When the king of Jordan massacred and drove out the PLO, Arafat and the remaining members relocated to Lebanon. There they waged cross-border guerrilla warfare to try to drive Israel out of the occupied territories. The PLO drew heavily from the refugee camps in Lebanon for recruits.

This drew Israel deeply into Lebanese affairs. In 1976, Israel started militarily supporting the Maronite Christians, helping to fuel a sectarian civil war that had recently begun and would rage until 1990. That same year, Syrian forces entered Lebanon, partook in the war, and began a military occupation of the country.

In 1978, Israel invaded Lebanon to drive the PLO back and to recruit a proxy army called the "South Lebanon Army" (SLA).

1101820816_400

In 1982 Israel launched a full scale war in Lebanon, fighting both Syria and the PLO. Osama bin Laden later claimed that it was seeing the wreckage of tall buildings in Beirut toppled by Israel's "total war" tactics that inspired him to destroy American buildings like the Twin Towers.

In this war, Israel tried to install a group of Christian Fascists called the Phalange in power over Lebanon. This failed when the new Phalangist ruler was assassinated. As a reprisal, the Phalange perpetrated, with Israeli connivance, the massacre of hundreds (perhaps thousands) of Palestinian refugees and Lebanese Shiites. (See Murray Rothbard's moving contemporary coverage of the atrocity.)

60

Israel's 1982 war succeeded in driving the PLO out of Lebanon, although not in destroying it. And of course hundreds of thousands of Palestinian refugees still linger in Lebanon's camps, yearning for their right of return: a fact that cannot have escaped Israel's notice.

The Lebanese Shiites were either ambivalent or welcoming toward being rid of the PLO. But Israel rapidly squandered whatever patience the Shiites had for it by brutally occupying southern Lebanon for years. This led to the creation of Hezbollah, a Shiite militia not particularly concerned with the plight of the Sunni Palestinian refugees, but staunchly dedicated to driving Israel and its proxies (the SLA) completely out of Lebanon.

Aided by Syria and Iran, though not nearly to the extent Israel would have us believe, Hezbollah became the chief defensive force directly frustrating Israel's efforts to dominate and exploit its northern neighbor. In 1993 and again in 1996 (the year of "A Clean Break"), Israel launched still more major military operations in Lebanon, chiefly against Hezbollah, but also bombing Lebanon's general population and infrastructure, trying to use terrorism to motivate the people and the central government to crack down on Hezbollah.

This is the context of "A Clean Break": Israel's obsession with crushing Hezbollah and dominating Lebanon, even if it means turning most of the Middle East upside down (regime changing Syria, Iran, and Iraq) to do it.


9/11 paved the way for realizing the Clean Break, using the United States as a gigantic proxy, thanks to the Israel Lobby's massive influence in Congress and the neocons' newly won dominance in the Bush Administration.

Much to their chagrin, however, its first phase (the Iraq War) did not turn out so well for the Clean Breakers. The blundering American grunts ended up installing the most vehemently pro-Iran Shiite faction in power in Baghdad, and now Iranian troops are even stationed and fighting inside Iraq. Oops. And as it turns out, Chalabi may have been an Iranian agent all along. (But don't worry, Mr. Perle, I'm sure he'll eventually come through with that pipeline.)

This disastrous outcome has given both Israel and Saudi Arabia nightmares about an emerging "Shia Crescent" arcing from Iran through Iraq into Syria. And now the new Shiite "star" in Yemen completes this menacing "Star and Crescent" picture. The fears of the Sunni Saudis are partially based on sectarianism. But what Israel sees in this picture is a huge potential regional support network for its nemesis Hezbollah.

060731_DOMCNNL1R1

Israel would have none of it. In 2006, it launched its second full scale war in Lebanon, only to be driven back once again by that damned Hezbollah. It was time to start thinking big and regional again. As mentioned above, the Bush war on Iran didn't pan out. (This was largely because the CIA got its revenge on the neocons by releasing a report stating plainly that Iran was not anything close to a nuclear threat.) So instead the neocons and the Saudis drew the US into what Seymour Hersh called "the Redirection" in 2007, which involved clandestine "dirty war" support for Sunni jihadists to counter Iran, Syria, and Hezbollah.

When the 2011 Arab Spring wave of popular uprisings spread to Syria, the Redirection was put into overdrive. The subsequent US-led dirty war discussed above had the added bonus of drawing Hezbollah into the bloody quagmire to try to save Assad, whose regime now finally seems on the verge of collapse.

The Clean Break is back, baby! Assad is going, Saddam is gone, and who knows: the Ayatollah may never get his nuclear deal anyway. But most importantly for "securing the realm," Hezbollah is on the ropes.

shocking-images-iraq-war-001 3.23.13

And so what if the Clean Break was rather messy and broke so many bodies and buildings along the way? Maybe it's like what Lenin said about omelets and eggs: you just can't make a Clean Break without breaking a few million Arabs and a few thousand Americans. And what about all those fanatics now running rampant throughout large swaths of the world thanks to the Clean Break wars, mass-executing Muslim "apostates" and Christian "infidels" and carrying out terrorist attacks on westerners? Again, the Clean Breakers must remind themselves, keep your eye on the omelet and forget the eggs.

Well, dear reader, you and I are the eggs. And if we don't want to see our world broken any further by the imperial clique of murderers in Washington for the sake of the petty regional ambitions of a tiny clique of murderers in Tel Aviv, we must insist on American politics making a clean break from the neocons, and US foreign policy making a clean break from Israel.

World Oil Energy Consumption by Sector, 1973-2010

World Oil Energy Consumption by Sector, 1973-2010

Oil can be put to a variety of uses, with transportation accounting for a growing share of the oil consumed. While the transport sector consumed 42% of the oil in in 1973 this share climbed to 61.5% in 2010. The growing level of global motorization is a core component behind this relative growth, particularly the growth of international trade. Non-energy uses mostly relate to the petrochemical industry where petroleum is used to manufacture products such as plastics or fertilizers. Other sectors concern agriculture (powering farm equipment), commercial and public services (power generation) and residential (heating oil).

[Jun 30, 2015] The Limits to Growth and Greece Systemic or Financial collapse

Jun 30, 2015 | resilience.org

The results of the "standard run" (or "base case") scenario of "The Limits to Growth" 1972 study. Could it be that the ongoing Greek collapse is a symptom of the more general collapse that the model generates for the first two decades of the 21st century?

So, we have arrived to an interesting point, to be intended in the Chinese sense of a curse. It is the point where the people of Greece are being asked to choose between starvation and slavery and this is supposed to be a triumph of democracy

As the tragedy unfolds, people take sides, aiming their impotent rage at this or that target; the Euro, the bureaucrats of Brussels, the Greek government, Mr. Tsipras, some international conspiracy, and even Mr. Putin, the usual bugaboo of everything.

But, could it be that all the financial circus that we are seeing dancing in and around Greece is just the effect of much deeper causes? The effect of something that gnaws at the very foundations not only of Greece, but of the whole Western World?

Let's take a step back, and take a look at the 1972 study titled "The Limits to Growth" (LTG). Look at the "base case" scenario, the one which used as input the data that seemed to be the most reliable at the time. Here it is, in the 2004 version of the study, with updated data in input.

[Jun 30, 2015] Greek failure to make IMF payment deals historic blow to eurozone

I can only imagine the intensity of "consultations" between Washington and Berlin now...
.
"...The present circumstances in Greece were inherited by the current government from the previous right-wing government, which managed to bring them out by faithfully following the austerity prescriptions of the Troika. However both left and right-wing governments of the past, who created and hid the enormous debt, are also to blame."
.
"...The documents show that the IMF's baseline estimate – the most likely outcome – is that Greece's debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded. "
.
"...This is nothing more than a large-scale payday loan scam. Greece will never get past the loan sharks and will constantly have to borrow just to pay off the interest. I'd rather default and eat beans for a year while starting fresh than eat beans for 20 years paying off old debt. You can call them lazy, you can call them thieves but - if they play their cards right - you can also call them "debt free"."
.
"...The public debt of Greece existed BEFORE the recent election. The cruel conditions inflicted upon Greece by its "partners" existed BEFORE the recent election. The crisis existed BEFORE the recent election."
.
"...Lending more billions to Greece so they can repay the interest on previous billions loand and those new loans repayed by cuts to pensions and more privatisation of public assets...blatant transference of cash from those who can't afford it to those who don't need it. Hopefully the Greek people give a resounding middle finger to the EU/IMF. And if I hear another muppet crack on about 'the Greeks ought to pay their taxes' I'll bloody lose my temper. D some reading for gawds sake. It really isn't that hard."
.
"...I would have thought that a "senior german conservative politician" telling the Times that whatever happens Tsipras must be forced from office is an historic blow to the EU. Now, at least, people know what it is and who it is for."
.
"...If they actually wanted payment, they'd be reasonable. But payment isn't their priority, these organisations want power over Greece."
Jun 30, 2015 | The Guardian

ShibbyUp -> peter nelson 30 Jun 2015 21:30

The Greek banks and former conservative governments, you mean.

You and plenty of other brainwashed idiots around here seem to think that individual, working class Greeks had something to do with this. Of course, as always, the banks and politicians who actually caused this got off scott free, with taxpayer money, to cause the next big financial crisis.

HaroldP -> Nottodaymate 30 Jun 2015 21:29

Banksters, what did you expect, honesty, morality, humanity, financial expertise? Bailouts from citizens, that's what you expected? The poor darlings can't even run a bank when they can print money. Incompetant scum. Regards, Harry.


Jazzfunk23 -> workingclass2 30 Jun 2015 21:28

In recent years most of this mess was presided over by liberal conservatives...

https://en.wikipedia.org/wiki/New_Democracy_(Greece)


PeregrineSlim 30 Jun 2015 21:25

Germania offers a regime of permanent debt servitude to pay for its failed banks:

The documents, drawn up by the so-called troika of lenders, support Greece's argument that it needs substantial debt relief for a lasting economic recovery.

The documents show that the IMF's baseline estimate – the most likely outcome – is that Greece's debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded.

clematlee Danny Sheahan 30 Jun 2015 21:25

What you have in the USA is TENS of millions of people who don't have any US dollars while in Manhattan flats sell for millions.


AlamoSexual 30 Jun 2015 21:20

This is nothing more than a large-scale payday loan scam. Greece will never get past the loan sharks and will constantly have to borrow just to pay off the interest. I'd rather default and eat beans for a year while starting fresh than eat beans for 20 years paying off old debt. You can call them lazy, you can call them thieves but - if they play their cards right - you can also call them "debt free".


UnevenSurface Danny Sheahan 30 Jun 2015 21:12

Greece will still be here. There will of course be enormous poverty (in various forms) in the short term - but even the FT says that the GDP will bounce up 6% quite quickly. After that, they'll be the cheapest holiday destination in Europe, exporting the cheapest wine and olive oil. The GDP could expand by 25%, up to pre-austerity levels. Excluding macro economic factors out of our control, I would be truly surprised if they aren't better off - overall - within five years.

HaroldP -> owl905 30 Jun 2015 21:12

The public debt of Greece existed BEFORE the recent election. The cruel conditions inflicted upon Greece by its "partners" existed BEFORE the recent election. The crisis existed BEFORE the recent election. Obviously Tsipras did not "wreck his country." His fellow citizens elected his party to fix an existing crisis. He won the election with a proposal of how to do that. He has deviated only slightly from his promises. I find him to be a "hero" in that he could teach the political class of Europe the importance of keeping the agreement between the state and the citizens. It is heroic indeed to be the honest politician of Europe. He has my respect. Regards, Harry.


Paul Collins 30 Jun 2015 21:12

Lending more billions to Greece so they can repay the interest on previous billions loand and those new loans repayed by cuts to pensions and more privatisation of public assets...blatant transference of cash from those who can't afford it to those who don't need it. Hopefully the Greek people give a resounding middle finger to the EU/IMF.

And if I hear another muppet crack on about 'the Greeks ought to pay their taxes' I'll bloody lose my temper. D some reading for gawds sake. It really isn't that hard.


malenkylitso -> owl905 30 Jun 2015 21:08

Greece was forced into a corner, then took a bailout which less than 10% went to the Greeks. The rest went to the banks.
Sounds like a protection racket.


SystemD 30 Jun 2015 21:07

This is not just about Greece; the impact of a Greek default go much wider. The IMF (and the Troika) has to be seen to be taking a hard line. If they don't, then their credibility with the rest of the world diminishes, particularly in Africa. The Germans are worried about the Euro as a currency; the Deutchmark was given up on the promise of stability, and the 1920's are still - just - within living memory. There is a lot of fear behind their stance. Stock markets generally are worried about the instability the situation is causing. They don't want Greece crushed - they just want a stable situation with predictable outcomes. Volatility is not in their interest. And Greece needs money and help to try to cure the cancer of corruption in its economy.

Greece cannot pay back its debt. Unless the creditors agree to a very long term of repayment (at least 50 years) at reasonable rates, the only real options are for Greece to leave the Euro zone and go back to the drachma, or the debt must be written off, with the proviso that there will be no new loans, and Greece will have to rebuild and finance its economy from its own resources.

Stanley Wallings 30 Jun 2015 21:06

I feel sorry for the Greek people - they've had 5 hard years and for nothing. Grexit will be horrible for those who have to stay in Greece. The 'haves' have already moved their money and can just hop on a flight out. I hope Tsipras isn't driving the bus over a cliff for no reason other than to piss off the Troika. I hope he has a plan C

medicynic RobWilson73 30 Jun 2015 21:06

What a great idea! Let's get rid of pensions worldwide, then no one has any cause for complaint. I'm pleased to see that you are one of those who, when pensions in the UK increase say: "No thanks. I don't need it and don't deserve it. It only makes me fat anyway".
In my experience in British industry, workforces are rife with 'tax-dodging, CSA dodging, mendacious, lazy wankers', a lot of who deserve a cut in wages never mind a pension.

Monkeybus 30 Jun 2015 21:06

SQUEEZE THE GREEKS, WRING THEM OUT, RINSE THEM. Other xenophobic pronouncements are available. SHIFTLESS, LAZY, FECKLESS. Can't they print their own money like more advanced nations?

We are all in this together, err, hang on.

Imagine if Gordon Brown had taken us into the Euro after all?


clematlee FakeyWilson 30 Jun 2015 21:06

and the west arms heart eating loonies in North Africa and invades and kills millions of people in the process, Vietnam, Iraq, Libya, Grenada, Korea, Panama, Syria and the list goes on. Watch the EX USA secetary of state on youtube saying the starvation of 500,000 children was a price worth paying, by the west imposed on Iraq. It was starvation to death. Her name was Madalin Allbrite. Don't worry about losing some so called freedoms to stop Allbite and her ilk.


Tappert Heintz 30 Jun 2015 21:03

"Greek failure to make IMF payment deals historic blow to eurozone"

Sounds like the Daily Mail. Nonsense.


owl905 Iheartbill 30 Jun 2015 21:02

They're not barred from international trade, but it's really scewed to cash and barter. There simply isn't the mechanism to manage the exchange rates. No one outside the country will want rapidly devaluating and 'only-good-in-Greece' drachmas. Greeks don't realize what's coming after 15 years of Euro stability.

One big surprise from them is that pipeline deal with Russia. That needs a lot of capital - Russia is walking into even more problems if it starts forwarding debt financing to Greece to get the pipeline built.

The tourist industry won't be hit by it (except for foreign import items that are part of the industry) - it will be hit by the drachma, that has the profit from the industry shrink to nothing.


Danny Sheahan Justitiadroit 30 Jun 2015 21:01

Look at the Eurozone growth rates for the last 5 years, its a basket case.

The Greeks have messed up over the years but the Euroland is no case study in growth.


rberger ArundelXVI 30 Jun 2015 21:00

Actually there is very little debt servicing involved. The 29 billion actually includes debt repayments (principal, not interest). Greece is not paying any interest for most of its bailout money until after 2020, but of course needs to pay interest on the bonds that it has issued itself.


ScanDiscNow Danny Sheahan 30 Jun 2015 21:00

Pre Euro Greek total production increased by some 600% between 1960 and 2001 while German total production increased by a mere 255%. However, throw in the Euro and the subsequent 15 years has German total production up 20% while Greece total production is down 26%
ZeroHedge.


Anthony Apergis owl905 30 Jun 2015 20:57

And herein lies the issue my friend! The strictly monetary considerations that underpin your rationale betray the disintegration of what started in Rome as a visionary peace project for the peoples of Europe to an economic, neoliberal construct whose only concern is %s and profits. Surely, you must be able to see this. I would strongly advise you to read the preamble to the Treaty of Rome (1957).

MonsieurBoombastic FilthyRichBanker 30 Jun 2015 20:54

The capital controls in Greece apply to cash withdrawals and overseas transfers so this won't affect things like internet banking where cash is transferred within the system. The things you mention are probably still going on in most cases.

moderatextremist 30 Jun 2015 20:51

When Greece joined the EU, the corrupt government went on a spending spree of EU money, and used Goldman Sachs to cover it up. It is those politicians and Goldman Sachs, the vampire squid on the face of the world, that should be put on trial. I fear this development will be hurtful to an awful lot of good people, while the arseholes that created the mess will get away with it...... yet again.


sefertzi7 30 Jun 2015 20:48

The worst possible outcome. Now the crooks who caused the debt mountain in the first place (Papandreou x2, Simitis, Karamanlis, Samaras et al) will come back to power, reluctantly do what they are told with the quid pro quo of a blind eye turned while they carry on in their corrupt old ways.

Call that a revolution? More like crash and burn to me.

raymundlully -> Kaiama 30 Jun 2015 20:45

If the debt is forgiven and goes away.
Greece has in arrears to private pharma companies ,I doubt they'll extend credit orwant paying in toy Drachmas.

Cash-strapped Greece has racked up mounting debts with international drugmakers and now owes the industry more than 1.1 billion euros ($1.2 billion), a leading industry official said on Wednesday.

The rising unpaid bill reflects the growing struggle by the nearly bankrupt country to muster cash, and creates a dilemma for companies under moral pressure not to cut off supplies of life-saving medicines.

Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations, told Reuters his members had not been paid by Greece since December 2014. They are owed money by both hospitals and state-run health insurer EOPYY.


MalleusSacerdotum 30 Jun 2015 20:45

If Greece were a private or public company and continued to 're-finance' in the manner proposed by the IMF, its directors would be charged with insolvent trading.

They are getting a lot of stick for admitting that they are effectively bankrupt.

It is at least an honest admission of the state of play.


Omniscience Jazzfunk23 30 Jun 2015 20:42

They turned a primary deficit into a surplus within the last 5 years

Greece have never run a primary surplus.
http://www.forbes.com/sites/timworstall/2015/02/16/greece-still-has-a-vast-problem-it-doesnt-have-a-primary-budget-surplus/


Dannybald George Purcell 30 Jun 2015 20:40

Right wing conservative neo-libs corrupt elitists. The Troika is refusing to allow Greece to tax the wealthy corrupt tax avoider thieves, while forcing more of the workers into poverty.


Vee1984 30 Jun 2015 20:40

It is a well known fact that many Greeks like to avoid paying taxes just as there are many other European countries who avoid paying tax whether on an individual or on a company basis.

The European Union has created this problem over a long period of time by allowing countries to borrow more than required and funds being used to build eg airports in Spain which are unused and unnecessary due ro their geographical location and many speculative projects undertaken throughout the EU. The reason for lending such sums, with a total disregard as to how interest payments can be repaid, never mind repaying the loans, has been done to enrich the lenders who, as we all know, love to gamble on how much money can be made. A risk game, played out every day, and, I suspect, some bets even being placed on the odds of Greece defaulting in some hedge fund offices somewhere in Europe. It should be noted that Spain and Italy have loaned money to Greece. How can this be when both countries have loans via the EU etc? Again, investors after interest on the loans with a total disregard as to their own countries finances. Greece is a democracy and should not give in to the rhetoric coming from the IMF or ECB. Why not? Neither can afford to and neither can Germany. Interesting days ahead. I truly hope that in the name of Democracy, the Greek people will vote NO in the referendum no matter the increasing hardship this will bring. The EU really need to be extremely mindful of the fact that abject poverty and the continuation of austerity gives rise to discontent and a surge in popularity to right-wing extremist views.


Anthony Apergis Justitiadroit 30 Jun 2015 20:39

Indeed, the EU has mutated from a union of the peoples of Europe, into a market-driven transnational institution governed by bankers and solely concerned with GDP growth rates (and I mean this in a strictly non-communist/leftist way).


Dannybald DavidRees 30 Jun 2015 20:36

As a German voter I would never vote for the right wing neo-lib corporatist Fascist scum in government. The hypocrisy of this regime is turning millions of Europeans against Germany and rightly so. The London conference of 1953 halved German debt owed for destroying Europe. Greek debt was 100% of GDP in 2008 and that had nothing to do with Tspiras.

The 'Eurogroup' only cares about a tiny elitist group of Europeans and not about the majority of it's people. Wake up DavidRees and the rest of you indoctrinated half wits.
http://www.theguardian.com/commentisfree/2013/feb/27/greece-spain-helped-germany-recover


Omniscience 30 Jun 2015 20:35

If the EU are the enemy now, imagine the bed wetting and howls of protest if Greece had to make real repayments.

http://uk.reuters.com/article/2015/06/28/uk-eurozone-greece-debt-factbox-idUKKCN0P80XU20150628

Euro zone countries have already extended the maturities of their loans to Greece from 15 to 30 years and reduced the interest rates on some to just 0.5 basis points above their borrowing cost. They also granted Greece a 10-year moratorium on interest payments on the second bailout loan from the euro zone rescue fund.


FlashRat 30 Jun 2015 20:35

I would have thought that a "senior german conservative politician" telling the Times that whatever happens Tsipras must be forced from office is an historic blow to the EU. Now, at least, people know what it is and who it is for.

PennyForYourComment DavidRees 30 Jun 2015 20:35

Which is why the Eurozone concept is fundamentally broken.

Imagine if every time one US went into a bad recession, all the other states had to vote on whether to send them money, with all the governors having to agree... and then trying to post their own conditions on how that States economy be run before the money were delivered. It would be an unworkable mess, especially given acrimony and resentment between states and regions (North vs. Deep south vs. midwest, vs. west coast, etc)... The country would sooner or later fall apart as States started rebelling and quitting. It would be absurd.

But somehow Europe is supposed to run on exactly this system. If you are going to have a single currency, then you need common fiscal mechanism binding the areas together, because these act as automatic financial stabilizers when there's a regional crash. If Florida's economy crashes, money automatically pours in from everywhere else to cover unemployment insurance, etc, via the Federal government. No similar thing happens with Greece in Europe.

BunyipBluegum theoldgreyfox 30 Jun 2015 20:34

The default you are referring to is a recent one (2014) - I was referring to the previous default in 2001, which was followed by a significant period of economic growth and recovery. I am not suggesting that a default is always the best solution in such circumstances, nor that the immediate fallout won't be problematic. However in any case the example of Iceland clearly demonstrates that a default can be the best option economically in some circumstances.

It's the same principle as bankruptcy: if your debts reach a level that can never be paid back, it's better to wipe the slate clean and start again, even though the cost of doing this may be to slide back down the snake to the bottom of the board.


Anthony Apergis 30 Jun 2015 20:33

To sum up:
Roughly €170b initial Greek debt +
Roughly €150b financial aid to Greece aimed at repaying initial creditors (NOT the restructuring of the Greek economy) + austerity measures while doubling an already unsustainable debt = EU solidarity to a member- state.
And the above does not even take into account whose economy did the initial debt prop up. I cannot believe that the people of Europe cannot see what the REAL problem is.
The EU - and by extension Europe - is truly in trouble.


raymundlully Franco87 30 Jun 2015 20:32

UK had third world inflation in the 1970s it took the IMF medicine broke the unions in the 80s and created a home fit for bankers.

www.whatsthecost.com/historic.cpi.aspx

1980, 18.00%. 1979, 13.40%. 1978, 8.30%. 1977, 15.80%. 1976, 16.50%. 1975, 24.20%. 1974, 16.00%. 1973, 9.20%. 1972, 7.10%. 1971, 9.40%. 1970, 6.40%

Danny Sheahan Omniscience 30 Jun 2015 20:31

What about economic slums like Portugal and Italy.

They are much worse off now than Greece was at the start of its crisis. It will not take much to have Italy in crisis.

Portugal is heading for an abandoned state after its crisis so its not much of a threat now, how it will pay its debt in the future is anyone's guess. Though it is safe to presume that a country in such decline will have less people paying tax.

They'll want more than billion.


RGBargie 30 Jun 2015 20:31

It looks like Greece might soon be sailing into uncharted waters.

I can just imagine what the consequences will be for the EZ if Greece goes alone, and then makes a success of their new found freedom. I imagine there might well be others ready to abandon ship if that happens.

Westmorlandia BunyipBluegum 30 Jun 2015 20:31

Point taken, but whatever the Greeks don't pay back to the EFSF will have to be paid by other Eurozone countries, as that's how the EFSF guarantees work. So it isn't just about whether it's fair for Greeks to pay for what their government borrowed, but whether it's more fair for Greeks to pay or for everyone else in the Eurozone to pay for what elected Greek governments borrowed.

Reality has said for some time that Greece can't pay, and therefore some of it should have been written off. But that's more about pragmatism than fairness.

FilthyRichBanker Wily Ways 30 Jun 2015 20:30

He could do what the rest of Europe does and make paying taxes compulsory rather than voluntary for a start.

Cut the bloated Public sector and halve the defence budget in line with the rest of Europe - and sell off the $50bn of assets they previously agreed to.


Bardamux Michael Richard Allen 30 Jun 2015 20:29

Ignorant it is then. So i'll explain it to you step by step.

1) If you deposit money in a bank, you are loaning the bank your money. And in many countries you will get a small interest rate for it.
2) it is considered a short term loan, because you can withdraw it at (almost) any time.
3) Remember Icesave in the UK ? That bank did not pay its depositors
4) Other banks received hundreds of billions of euro's / pounds / dollars
5) Banks could loan money at almost 0% even with terrible collateral to help them survive
6) Greece will pay its debt if they receive half or even less help than the Dutch and UK banks did.

Get it now or do you need more steps to help you out ?

Omniscience Danny Sheahan 30 Jun 2015 20:29

Most of the Debt is dormant thanks to the EU

http://uk.reuters.com/article/2015/06/28/uk-eurozone-greece-debt-factbox-idUKKCN0P80XU20150628

Euro zone countries have already extended the maturities of their loans to Greece from 15 to 30 years and reduced the interest rates on some to just 0.5 basis points above their borrowing cost. They also granted Greece a 10-year moratorium on interest payments on the second bailout loan from the euro zone rescue fund.


Omniscience 30 Jun 2015 20:27

To be fair, they have only been lying about reform since joining the Euro.

2005 : Greece faces up to taxing times

Greece plans to offset a projected shortfall this year in tax revenues with a €2bn securitisation deal, in spite of European Commission strictures against the use of one-off measures to reduce the budget deficit. George Alogoskoufis, finance minister, said in an interview with the Financial Times that the transaction would enable Greece to achieve this year's budget deficit target. He also stressed securitisation was "a temporary measure that will give us time to bring about permanent structural corrections".
Joaquin Almunia, the European Union's budget commissioner, signalled acceptance of this year's planned transaction during a visit to Athens last week but urged Greece to accelerate structural reforms next year.

http://www.ft.com/intl/cms/s/0/0c99809c-3abd-11da-b0d3-00000e2511c8.html


TerryChandler OnTheRobertELee 30 Jun 2015 20:26

The problems of Greece haven't happened since "a radical populist party" was elected. On the contrary, the present government was elected because of the problems.


Danny Sheahan outsiderwithinsight 30 Jun 2015 20:23

Not at all, it means that Italy and Portugal are next.

If Greece leaves and its hard to see how they will not at this stage then the Euro has become a non-permanent currency arrangement that the EU or ECB will not defend its integrity.

That marks it out as different from every other currency in the world. Only currencies that have allowed that in the past went on to be all failed entities.

CambridgeAfterDark 30 Jun 2015 20:25

Splendid, send a message to all banker gangsters everywhere.
Best way to deal with a bully, is hit them back.
Guess the right-wing trolls on here look pretty silly now, all saying last week the FTSE would rally upwards upon a Grexit!


BunyipBluegum robbyevans 30 Jun 2015 20:20

The present circumstances in Greece were inherited by the current government from the previous right-wing government, which managed to bring them out by faithfully following the austerity prescriptions of the Troika.

However both left and right-wing governments of the past, who created and hid the enormous debt, are also to blame.

coxinutant 30 Jun 2015 20:16

A continued austerity programme makes it unlikely that Greece will be able to grow economically. Continued economic pain-> lower ability to repay debt. So all those people who get on their hig horse and demand that Greece repay its debts should keep in mind that debt cannot be repaid when you have 25% unemployment, when wages plummet and people cannot spend to make the economy grow. If austerity had been the miracle cure, it would have worked years ago. So stop bandying about terms like 'communist' and 'marxist' and all that BS. The current government in Greece did not create the crisis, the austerity, the 25% unemployment. The crisis was created by an irresponsible banking sector, which was then bailed out by your money (yeah ordinary Joe, looking at you). Austerity was hatched by The IMF, against the advice of sensible economists...

And it hasn't worked. And I am sure the 'marxist' policies of Syriza did not create the enormous unemployment that Greece faces. Last time that occured in Europe, fascist governments came to power, aided by pro-fascist symptahies in France and the UK...


BunyipBluegum -> peter nelson 30 Jun 2015 20:14

It was the Greek governments of the mid 2000s, who were corrupt and nepotistic. If it was them and their wealthy friends who were going to carry the can for this, then I'd say well deserved.

But the whole reason why Syriza is against the austerity program is that it doesn't greatly affect these people, but it DOES greatly affect ordinary Greeks, especially the working class, elderly and vulnerable.

Also it hasn't worked. If you were prescribed a foul medicine by your doctor that made you feel sick and weak, and then failed to cure your problem, would you be inclined to go back for another dose?

AtomsNest -> echoniner 30 Jun 2015 20:14

If they actually wanted payment, they'd be reasonable. But payment isn't their priority, these organisations want power over Greece.

[Jun 30, 2015]Russian culture minister calls for tax on Hollywood films

Jun 30, 2015 | The Guardian

DavidEG 30 Jun 2015 00:26

They (Hollywood staple) should be taxed the same way as tobacco or controlled substances. Full of violence, harmful to mental well-being of children an adults alike.

HollyOldDog wereallfuckedboy 29 Jun 2015 18:54

The UK government should have given the Hollywood WWW2 films the the J rating for JUNK.

Doors2distant 29 Jun 2015 18:29

What an excellent idea, the quality can only improve. No car chases, cop porn, war porn or saccharin sentimentality.

Ieuan 29 Jun 2015 17:15

" he wants to introduce a sales tax that will be used to increase funds for local productions."

In just about every market Hollywood films gross the most. But in many markets (fewer and fewer as US companies take over their own local distribution) they are distributed by local distributors, who then invest some of their profits into local productions - hence some of the Hollywood blockbusters' moneymaking gets routed into supporting the local industry.

If (as I suspect) the Russian distributors of Hollywood product are owned by Hollywood studios, and do not produce anything locally, then I think it's fair enough that the government steps in and routes some of the money made into local industry.

olliemaple 29 Jun 2015 16:52

Exceptionally right decision indeed. It's only fair that whoever watches that Hollywood crap should be extra taxed in favor of positive domestic productions. Not unlike cigarette sales.

Alderbaran 29 Jun 2015 10:36

Many Russian films could be considered to be great and to me trump much of what comes out of Hollywood. However, it was a shame that Medinsky saw no merit in Leviathan and I'm probably one of many who see Medinsky's actions as political in nature, especially given the criterea for state funding of films in Russia.

It is a shame to see the state increasingly policing the film industry in Russia but I'm certain that creative directors will still be able to work within the constraints.

Tilipon -> dropthemchammer 29 Jun 2015 08:24

countries who passed through state coup. Look in root but not in a peak...

/guardial_slips Financial*/ Polit*/ /imf_ Propaganda/ Neoliberalism/ Neocolon*/ /predator_state. /casino_capitalism.

[Jun 30, 2015] Stiglitz: Troika has Kind of Criminal Responsibility

"...Alexis Tsipras must be stopped: the underlying message of Europe's leaders. Germany's vice-chancellor has become the first senior EU politician to voice the private views of many - that the Greek PM is a threat to the European order
By Ian Traynor - Guardian"
.
"...Tsipras is only a symbol of what must be stopped. What must be stopped is democratic interference in the affairs of finance capital. What do "the people" know about such important matters? Besides, they might favor their own interests over those of the system (meaning those of the oligarchs)."
.
"...For finance capital, the stakes in Greece are high. They must make the Greeks pay a very high price for defiance. If not, Spain, Portugal, etc. will try the same thing.
What good is the "will of the people" and democracy when it goes up against the banks?"

.
"...Finance capital now MUST take untenable speculative risks. The state now MUST bail out finance capital when their bubbles burst. The international institutions now MUST enforce draconian austerity to pay for the bailouts. ...because otherwise there wouldn't be enough value produced for the finance sector to appropriate and accumulate. This is the END GAME a perpetual smash-and-grab operation by the plutocrats. "
Jun 30, 2015 | economistsview.typepad.com

From Time:

Joseph Stiglitz to Greece's Creditors: Abandon Austerity Or Face Global Fallout: ... "They have criminal responsibility," he says of the so-called troika of financial institutions that bailed out the Greek economy in 2010, namely the International Monetary Fund, the European Commission and the European Central Bank. "It's a kind of criminal responsibility for causing a major recession," Stiglitz tells TIME in a phone interview.
Along with a growing number of the world's most influential economists, Stiglitz has begun to urge the troika to forgive Greece's debt – estimated to be worth close to $300 billion in bailouts – and to offer the stimulus money that two successive Greek governments have been requesting.
Failure to do so, Stiglitz argues, would not only worsen the recession in Greece – already deeper and more prolonged than the Great Depression in the U.S. – it would also wreck the credibility of Europe's common currency, the euro, and put the global economy at risk of contagion. ...
JohnH said...

Some background on the stakes in Greece AKA why Greece must be made to heel--Aegean gas, banking and oil company profits, and, yes, the Clintons.
http://seekingalpha.com/article/782961-the-u-s-looks-to-exploit-the-greek-re-default

pgl said in reply to JohnH...

Note when Stiglitz writes this:

"Of course, the economics behind the program that the "troika" (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country's GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece's rate of youth unemployment, for example, now exceeds 60%."

The troika economics he is condemning was the refusal of the ECB to do QE earlier. Troika's bad economics is exactly what you have been advocating for the US for a long time. Just in case you missed this.

mulp said in reply to pgl...

Should Congress give Puerto Rico $150 billion to get it out of debt?

Or should Puerto Rico be forced out of the dollar zone and thus face drastic spending cuts.

Larry said in reply to pgl...

Agree on QE. But even that would not have fixed Greece. It doesn't belong in the EZ and never did.

pgl said in reply to Larry...

I agree. Cyprus made a mistake by entering the EZ as well.

Dan Kervick said in reply to pgl...

And yet economists have been extremely slow to react to this massive economic derailment with anything close to the kinds of bold emergency recovery plans they would be ginning up if the same disaster was taking place in their own countries.

Why aren't the kinds of figures Stiglitz just cited the headlines here? Why has the Great Greek Depression been treated by the media, and most economists, as though it is fundamentally just a disagreement between Greece and its creditors?

What is the plan for putting the 20% of the Greek over-15 population that is not working, but should be working, back to work?

Maybe people think that millions and millions of Greek people without jobs is just Greece being Greece? That profound economic dysfunction and failure is a case of "well, what do you expect from those people?"

Economists seem to have been so zombified by the inscrutable bureaucratic rhetoric and psychopathic insanity of the Eurocrats, and the bumbling incoherence of the Greek government, that most of them aren't able to think clearly. The Euros have convinced them all that any outside-the-narrow-box thinking will cause chaos, panic, unraveling, The Unthinkable, the Complete End of Europe as We Know It and the Return of the Satanic Hordes. So they sit on sidelines hoping that someone will make some deal that allows Greece to keep paying forever, grindingly, in a way that isn't too, too, too, too painful.

Part of the problem maybe is that mainstream economists have too many buddies in the Eurocracy. They can't believe that all those nice people they went to graduate school with have gone so bonkers.

The situation with the Eurocrats reminds me a little bit of Alec Guinness in The Bridge on the River Kwai. A noble project (in this case, the Europe project) evolves over time into a demented and fanatical religion whose ultimate purpose is forgotten by its architects, who lose the capacity to adapt to evolving circumstances with common sense.

Larry said in reply to Dan Kervick...

McArdle notes today that US pundits have been more supportive of Greece than the Europeans. Proximity breeds contempt?

Dan Kervick said in reply to Larry...

It's not surprising. European governments own most of the debt now and want to get paid; and they don't want any special deals that weren't available to them.

And the Greeks themselves are in denial. They haven't yet come to grips with what it's going to take to rebuild their collapsed economy.

Dan Kervick said in reply to pgl...

Krugman has been better than most in calling out some of the bad actors, but what is Krugman's plan for ending Greece's depression?

Is it the same plan he would recommend to American leaders if America were in Greece's position?

Would Krugman, an expert on depressions, advocate that the US run a surplus in a depression - just not a very big one - so it can pay its creditors?

Dan Kervick said in reply to Dan Kervick...

His column today on crippling austerity is pretty good though. The problem, as he says, is the grip of the notion that leaving the Euro is "unthinkable".

A lot of Europeans have gotten too tied to the idea that one country leaving the Euro is some kind of continental catastrophe. To read some of the hysteria - such as a recent Guardian piece - Greeks first leave the euro and then its back to Bolsheviks, Nazis, trench warfare slaughter or Mongol invasions or something.

But the euro isn't the UN Charter or the Magna Carta or the Treaty of Versailles. It's just money. The unity of Europe does not stand or fall on whether a country decides to use a particular form of money. There are several EU members, in perfectly good standing, who do not use the euro. Big deal.

I understand that most of the Greeks themselves cannot wrap their heads around this idea. But economists can easily.

Anyway, Greece and the rest of the world have gotten themselve so tangled up in the obsessive attention to the secondary matter of the Greek "debt crisis" that they don't seem to have time to think about the primary crisis - the Nobody has a Job and Our National Output is in the Toilet Crisis.

Benedict@Large said in reply to pgl...

QE? Oh nonsense. The Euro banks knew Goldman had washed Greece's books, and that Greece was not a suitable candidate for the initial loans, much less the subsequent ones. This is onerous debt, and is simply uncollectible. Banks must relearn to live and die by their ability to make good loans. And if the elites get burned in the process? Maybe they'll learn to stop staffing their banks with assclowns.

JohnH said in reply to pgl...

The Troika won't allow Greece to use Aegean gas as collateral precisely because Greece is supposed to hand over its wealth without much if any compensation...

pgl said in reply to JohnH...

I despise this Troika. Whether they are evil or whether they are dumbass liquidionists like you are - it does not matter. They are being very destructive. OK, you are not evil but you are stupid with your fear of using aggregate demand stimulus. Same horrific results.

Sandwichman said...

Joe! Joe! Joe!

(and as for "Chief Economist" Blanchard: M-I-T... I-M-F... M-O... U-S-E: Mickey Mouse).

http://econospeak.blogspot.com/2015/06/m-i-teee-squeeze-you-next-week-i-m-f.html

Sandwichman said in reply to Sandwichman...

No to austerity! Yes to democracy!

http://www.altersummit.eu/accueil/article/no-to-austerity-yes-to-democracy?lang=en

"Europe is at a crossroads. The institutions of the Troika are not only trying to destroy Greece; they are trying to destroy us all. Now is the time to raise our voices against this blackmail by the European elites.

"Next Sunday the Greek people will be able to vote to reject the blackmail that is austerity and vote for dignity – with hope for another Europe. This historic moment requires everyone in Europe to speak up and take a stand.

"We all say NO to austerity, pension cuts, and VAT increases; We all say NO to poverty and privileges; We all say NO to blackmailing and to the dismantling of social rights; We all say NO to fear and the destruction of democracy.

"We all say YES to dignity, sovereignty, democracy, and solidarity with the citizens of Greece.

"This is not a conflict between Greece and Europe. It is about two antagonist visions of Europe: our Europe of solidarity and democracy, created from below and without closed borders; and their vision, which denies social justice, dismantles democracy, opposes the protection of the weakest and the taxation of the wealthy."

Basta ! Enough ! Another Europe is possible !

DrDick said in reply to Sandwichman...

He certainly nailed this one. The Troika are demanding that the Greek people protect the plutocrats (mostly foreign) for paying any price for their reckless and feckless action and democracy (and the "little people" be damned.

mulp said in reply to DrDick...

We should not have expected debt repayment from Mexico in 1994?

More important, all the debt of Puerto Rico should be forgiven and then we should give them all the money they ask for to keep the country afloat?

DrDick said in reply to mulp...

People who cannot pay their debts will not pay them. Everything else is a pipe dream. You cannot privilege capital over human welfare.

Peter K. said in reply to Sandwichman...

Agreed. The IMF research dept had been looking good. (And the IMF asked the Fed not to raise rates this year).

But their behavior regarding Greece is criminal.

anne said in reply to Paine ...

http://time.com/3939621/stiglitz-greece/?xid=tcoshare

If the Greek economy collapses without the euro, "you have on the edge of Europe a failed state," Stiglitz says. "That's when the geopolitics become very ugly."

By providing financial aid, Russia and China would then be able to undermine Greece's allegiance to the E.U. and its foreign policy decisions, creating what Stiglitz calls "an enemy within."

[ This is xenophobic rubbish, showing a mean-spirited and wrong-headed disdain for China and Russia. ]

anne said in reply to anne...

http://www.theguardian.com/world/2015/jun/29/alexis-tsipras-must-be-stopped-the-underlying-message-of-europes-leaders

June 29, 2015

Alexis Tsipras must be stopped: the underlying message of Europe's leaders. Germany's vice-chancellor has become the first senior EU politician to voice the private views of many - that the Greek PM is a threat to the European order
By Ian Traynor - Guardian

Sandwichman said in reply to anne...

Except that Tsipras is only a symbol of what must be stopped. What must be stopped is democratic interference in the affairs of finance capital. What do "the people" know about such important matters? Besides, they might favor their own interests over those of the system (meaning those of the oligarchs).

mulp said in reply to Sandwichman...

You are saying "yes, the Greece and Puerto Rico can drain my retirement savings because Stiglitz says its democratic"?

I speak as someone who had lots of savings in BofA which bought the bank that bought my local bank listening to people calling for BofA to be liquidated and all the debt it held written off.

Jeffrey Stewart said...

It never ceases to amaze the number of human lives must be destroyed through unemployment and poverty due to "austerity" so that financial capitalists are repaid in full.

JohnH said in reply to Jeffrey Stewart...

It's how they keep the rest of the world under their thumbs...

Ellis said...

For finance capital, the stakes in Greece are high. They must make the Greeks pay a very high price for defiance. If not, Spain, Portugal, etc. will try the same thing.

What good is the "will of the people" and democracy when it goes up against the banks?

Sandwichman said in reply to Ellis...

"For finance capital, the stakes in Greece are high."

Yes, the stakes are high for finance capital. The choice is between euthanasia of the rentier and suicide-bomber-style financial terrorism. Finance capital opts for the latter.

We should all be clear on what the choices are and why finance capital chooses the reckless strategy it does. Finance capital CANNOT win this fight to the death. There is no win-win compromise that will enable the continuation of business-as-usual to be sustainable.

'Tis the final conflict. Greece is only an episode but there will be episode after episode based on the same scenario. The "wages-rut system" no longer has the "beautiful" capacity of ensuring the continued accumulation of capital merely through an imbalance in the economic power of labor and capital.

Sandwichman said in reply to Sandwichman...

Finance capital now MUST take untenable speculative risks. The state now MUST bail out finance capital when their bubbles burst. The international institutions now MUST enforce draconian austerity to pay for the bailouts.

...because otherwise there wouldn't be enough value produced for the finance sector to appropriate and accumulate.

This is the END GAME a perpetual smash-and-grab operation by the plutocrats.

Glen said in reply to Ellis...

It's well understood in modern economics that when banks and ultra rich speculators make horrible investments that wreck the world economy, then the innocent must pay. That whole capitalism risk/reward thing is so passe.

Ellis said in reply to Glen...

What's behind the debt? In 2004, the government paid through the nose to host the Summer Olympics. The Greek military sucks up 3 or 4 per cent of GDP buying expensive weapons and ammo from the U.S. Germany and France. When Greece entered the EU, it employed the services of Goldman Sachs to hide their debt -- paying a pretty penny for their services. And when the crisis hit in 2008, the fear that Greece might default boosted interest rates for the Greek government to usurious levels. In other words, it's pillage pure and simple.

And now, the IMF figures that the best way forward is to starve the population even more.

[Jun 30, 2015]Joseph Stiglitz: how I would vote in the Greek referendum

"...Actually 90% of the money went off to pay the private creditors (French and German banks who had invested in Greece). Only 10% amount of the loan ever went into the Greek economy but that was more than balanced by the the damage that austerity politics did to the country."
.
"...So the IMF and the Eurozone have in effect been playing debt collectors for French and German banks, and have attempted to bestow the costs on Greece. Is there any way that could possibly ever have worked?"
.
"... Lagarde, is getting smacked and rightly so; she, Merkel et al, all thought they could dictate to and bully Greece, and Greece would roll over, well it hasn't."
.
"...Only because the banks were too big to fail and therefore letting them crash would have crashed the entire economy. If you ignore that, in theory holding the banks responsible for the crisis they created and making them insolvent instead of using QE to bail them out could theoretically have been something that held the right people to blame, and didn't punish ordinary people with austerity.
It's pretty smart of the banks as they got themselves into a position where, when they screw up, other people have to pay the price."
.
"...Tsipras called them "criminals". I guess it is more close to the truth."
.
"...Greece cannot pay, but no one can say that as it undermines the whole financial system, which is based on confidence. We can't 'write off Greek debt' (as Jeremy Corbyn helpfully suggests) as no indebted countries would feel the need to pay off debts again - they'd just wait for the 'Greece' solution."
Jun 30, 2015 | The Guardian

colin2d -> colin2d 30 Jun 2015 10:10

The big problem right now in Greece is lack of liquidity to operate the economy. There simply is not enough money in circulation.

If newly issued Greek euros are not traded on international markets and they are legal tender in Greece and the Greek government accepts them as tax payments, there is no market value. You have an assigned value, like in other controlled systems. So you can have a high velocity of circulation as people spend them quickly, but no problem of devaluation - unless the Greek government would issue Greek euros to total excess.

Suppose you are a shopkeeper in Greece and your pensioner customers pay you in Greek euros. And suppose, the Greek law says you can pay your suppliers in Greek euros and the supplier can pay his taxes in Greek euros. In that case, the Greek government will need capital controls to ration the supplier's euros to buy imports. But that's likely to stimulate local production and be a plus for the Greek economy.

Local fiat currencies do work.

It is a rather different and probably not very acceptable example, but the Cuban 'CUC', is not backed at 1:1 against the US dollar in an open market. Its value is the fiat of the Cuban government. No open market trading means no devaluation by market forces.

Trumbledon 30 Jun 2015 10:03

We never had an advanced economy actually asking for that kind of thing, delayed payment

They still haven't - Greece is no more an advanced economy than a person who buys a houseful of luxury items using credit cards is a wealthy person.

Greece has virtually no industry worth mentioning and virtually no agriculture; the Greek economy is almost entirely reliant on tourism.

Greece has a smaller GDP than Thailand or Argentina, Greece's economy is roughly half the size of Vietnam's. How on earth can Greece be considered an 'Advanced economy'? That's claptrap.

mikeyk1 Omniscience 30 Jun 2015 10:03

Actually 90% of the money went off to pay the private creditors (French and German banks who had invested in Greece). Only 10% amount of the loan ever went into the Greek economy but that was more than balanced by the the damage that austerity politics did to the country.

Adam Fo 30 Jun 2015 09:57

It's probably worth adding here that Argentina did pay off it's IMF loans in full as well as the modest amount of interest charged. One of the reasons they could do that is they are a more resource based economy than Greece. Increasing commodity prices during that period helped them.
Like Greece holders of Governments bonds saw massive haircuts. 50% (100 billion euro) in the case of Greece in 2012.

Thalia01 ThinBanker 30 Jun 2015 09:55

Only because the banks were too big to fail and therefore letting them crash would have crashed the entire economy.

If you ignore that, in theory holding the banks responsible for the crisis they created and making them insolvent instead of using QE to bail them out could theoretically have been something that held the right people to blame, and didn't punish ordinary people with austerity.

It's pretty smart of the banks as they got themselves into a position where, when they screw up, other people have to pay the price.

Hottentot 30 Jun 2015 09:40

Sorry, but the Guardian can't compare Argentina, Zimbabwe, Somalia and Sudan, to Greece, as none of them were / are in the Euro. Lagarde, is getting smacked and rightly so; she, Merkel et al, all thought they could dictate to and bully Greece, and Greece would roll over, well it hasn't. It's about time others started telling the IMF (interesting that it's referred to as the Washington-based organisation) and the EU who are all about 'protecting' their interests, to sod off.

So the IMF and the Eurozone have in effect been playing debt collectors for French and German banks, and have attempted to bestow the costs on Greece. Is there any way that could possibly ever have worked?

bonkthebonk -> Adam Fo 30 Jun 2015 09:50

True, but how many of them are in a flawed currency union that actively contributed to their demise, saw their mainly foreign reckless, speculative lenders' liabilities socialised and how many of these poorer countries have been lent ever more money just to service the their debts and nothing more?

CaptainGrey -> colin2d 30 Jun 2015 09:26

Calling it a Greek Euro as opposed to a new Drachma won't make any difference. It will crash overnight. Greece has no reserves to prop it up.

optimist99 30 Jun 2015 09:24

The Greeks need to look hard at Argentina - once one of the richest countries in the world....

"By 1908 it had surpassed Denmark, Canada and The Netherlands to reach 7th place—behind Switzerland, New Zealand, Australia, the United States, the United Kingdom and Belgium. Argentina's per capita income was 70% higher than Italy's, 90% higher than Spain's, 180% higher than Japan's and 400% higher than Brazil's". (Bolt & Van Zanden 2013)

Now it is number 55....

(At the moment Greece is at 44 - similar to Portugal).

CaptainGrey -> EricthePenguin 30 Jun 2015 09:24

Mexico didn't default, it devalued. Completely different. As I note above/below (depending on your settings)

Argentina was shut out for a decade, but was able to get through it thanks to it's vast natural reserves of mining, farming and forestry, plus strict financial discipline. Greece has none of those things.

Default could be a disaster for a generation of more.

Actually, nobody knows for certain how bad a default will be. But it will not be a walk in the park

ThinBanker -> Gelion 30 Jun 2015 09:24

"But of course that's not debt, that's just a way of lowering currency values to keep your exports competitive and put your citizens into Austerity"

Huh? Without QE, 'austerity' would have been all the greater ...

PeterHG 30 Jun 2015 08:50

It seems inconceivable to me that Greece will leave the Euro. The loss of face to the Brussels European Union bureaucracy would be too great for them to bear . Such a happening is beyond their imagination so they will find some means to keep Greece in. The Greek politicians sense this and that knowledge dictates their actions.

ApfelD -> Johanes 30 Jun 2015 09:13

Tsipras called them "criminals". I guess it is more close to the truth.


optimist99 -> sandywinder 30 Jun 2015 09:15

"is that borrowing and spending too much will always get you in the end. In case people have forgotten, the UK has a £1.5 trillion national debt."

But the folk who lend money to the UK are perfectly happy to continue to do this... So it's not "borrowing and spending too much" in the UK... (HMG can borrow money over 30 years at less than 3% interest...).

kentspur 30 Jun 2015 08:36

It's a default.

This semantic dancing on a pinhead just shows the absurdity of the situation. Greece cannot pay, but no one can say that as it undermines the whole financial system, which is based on confidence. We can't 'write off Greek debt' (as Jeremy Corbyn helpfully suggests) as no indebted countries would feel the need to pay off debts again - they'd just wait for the 'Greece' solution.

[Jun 29, 2015] Top Private Equity Reporter CalPERS is Either Lying or Has a Massive Breakdown in Financial Controls

Jun 29, 2015 | naked capitalism
Tom Stone June 29, 2015 at 7:12 am

These are not mutually exclusive categories, dishonesty and incompetence are frequent companions.

Demeter June 29, 2015 at 7:44 am

plus, it's California. What more does one expect?

Rhondda June 29, 2015 at 7:37 am

"The general partners have managed to convince even powerful investors like CalPERS that they must play nicely with the general partners or they'll be late on the list to be solicited for investment, which in theory could mean they'd miss being in a hot fund (in practice, this theory is absurd since private equity fund outperformance does not persist)."

To my eyes it seems that "play nicely" really just means looks the other way while we skim off your participants' money.

diptherio June 29, 2015 at 8:48 am

Can't you be sued for dereliction of fiduciary duty? Can't someone be held personally accountable for being so willfully stupid? Most of the CalPERS board, for instance, seems liable…

flora June 29, 2015 at 9:15 am

If Yves earlier case is any indication, the CA courts seem CalPERS friendly. So a suit by pensioners would have an extra hill to climb. my opinion. But, yes, this situation does call for remedial action.

Sluggeaux June 29, 2015 at 11:47 am

The California Judicial Retirement System, JRS, is wholly administered by CalPERS. The state judiciary has a powerful incentive to keep CalPERS solvent, and I can assure you that the scores of California judges with whom I am personally acquainted are very aware of where their retirement contributions are going.

TheCatSaid June 29, 2015 at 9:39 am

Yves, the quote from Phalippou in the endnote seems very important. I don't have enough familiarity to understand what the impact would be of the various scenarios he mentions.

Please consider posting a table with worked out simple examples for the sample scenarios, showing how the different fine-print calculation methods impact fees and/or the billed cost & return paid out to investors such as CalPERS. (And also a table showing how the various calculation methods might impact the financials of the PE firm. So we can understand what terms are in their best interest.)

Without understanding the implications of the various fee methods, it's hard to ask questions or read a contract with sharp enough eyes to spot crucial terminology and understand what is or isn't in a pensioner's or investor's best interest.

Such a table could be of immeasurable value to NC readers, allowing people to ask smarter questions and apply pressure more effectively on PE firms, pension fund board members, etc.

Sluggeaux June 29, 2015 at 10:01 am

I just love the phrase so often used here at NC: "It's a feature, not a bug."

I've been a CalPERS contributor for over 30 years, and hope to become an annuitant in a couple of years hence. I also have colleagues who have left government employment to work with firms that place or invest CalPERS money. A dozen years ago I came to the realization that campaign contributions from placement agents and PE firms to the various Governors, Senators, and Assembly-members is the grease that lubricates the wheels at CalPERS. Staff have no intention of answering JJ Jelincic's questions — obscuring the over-paying of fees is how the graft works here in California. Investments always just happen to go to the "friends" of those in political power in Sacramento.

Unfortunately, in the Age of ZIRP there is no more "slop" left in the system like there was during the various bubbles blown by Wall Street's looting of the economy over the past 40 years. Historic rates of return can no longer be realized. I just hope that I can draw my pension for a while before graft gets turned off and those politicians who have been living off of the corruption turn into looters themselves.

[Jun 29, 2015]Russian sanctions blockback

Fern , June 29, 2015 at 3:21 am
It would take a heart of stone not to laugh. What's the word I'm looking for? Ah yes, schadenfreude:-

"In 2015, the German economy is estimated to lose up to 290,000 jobs and receive $10 billion less than it could due to restrictive measure imposed on Moscow, the Committee on Eastern European Economic Relations told Contra Magazine. German exports to Russia last year fell by $7.2 billion.
"The current developments exceed our worst fears," committee chairman Eckhard Cordes said.
This nasty short-term implication of an unreasonable Western policy towards Russia is affecting many European countries, not only the largest economy in the EU. In total, the European Union could potentially lose as much as $110 billion and up to 2 million jobs from the anti-Russian sanctions, according to the committee's estimates.

But the long-term consequences are far more profound and damaging. German businesses now fear that their reliable and long-time Russian partners have pivoted to Asia, specifically China.

German businesses are concerned that this shift could be permanent. By the time restrictive measures are lifted, former ties and partnerships could be long gone."

http://sputniknews.com/business/20150629/1023973728.html

"Former ties and partnerships could be gone". You bet. What's it gonna take before Europe's so called leaders wake up to the fact that US sanctions aren't just about trying to destroy Russia's economy, but also about doing serious, possibly terminal damage to the European one?

[Jun 29, 2015]Could Armenia Be The Next Ukraine

Jun 29, 2015 | finance.yahoo.com

...As in other former Soviet countries, the energy behemoth ENA remains a heavily mismanaged enterprise. This was confirmed by a recent probe, in which the energy regulator has found that suppliers and traders often use shady intermediaries to push energy managers to inflate procurement costs or steal electricity. This has led to more than EUR 70 million in losses for the company in just the last three years, according to the energy ministry.

The company's overall debt has reached $250 million. Initially, ENA has suggested a 40 percent increase in electricity tariffs in order to cover its obligations. The government of the pro-Russian president Serge Sargsyan and the quasi-independent energy regulator initially refused but ultimately had to accept a 16.7 percent rise after a series of high-level visits from Moscow. Although the government has confirmed the results of the regulator's investigation, it has decided to look the other way.

Even after the hike, power tariffs would still be just EUR 0.11 cents/kWh, or about half of what average EU households pay. At purchasing power parity, though, their impact on household budgets is much greater. According to a World Bank study, Armenians spend around 8% of their income on energy use, while consuming three times less energy per capita than people in Central and Eastern Europe, also a region where energy poverty is a widespread phenomenon.

In addition, if accepted, this would be the third consecutive power price hike in two years at a time when the economy is facing slow growth and high unemployment rate. The Armenian economy, which is heavily dependent on Russia, has faced a major downturn since the start of economic troubles for its powerful neighbor to the north. Russia is the key destination for labor migrants, who contributed more than 20% of the national income in the form of remittances in 2013 and 11 percent in 2014. In the first five months of 2015, cash transfers have halved.

The economic link with Russia is most profound in the energy sector. Apart from ENA, the Russian state, through Gazprom, owns 100 percent of the country's wholesale gas supplying company. The bulk of FDI inflows also have Russian origin, and 40 percent of them are targeting the energy sector.

In addition, Armenia imports almost all of its gas from Russia and natural gas imports comprise around 80 percent of all energy imports. Furthermore, 60 percent of the country's total primary energy supply is derived from natural gas, which is responsible for the majority of residential energy use, especially in big cities.

However, the increase in gas import prices in 2010 and the subsequent 40 percent hike in household gas tariffs pushed some urban residents to switch from natural gas to electricity for heating, which became comparatively cheaper (about one-fifth of Armenia's electricity is generated from natural gas, with the rest supplied by a number of hydro power plants and a nuclear power plant, which is currently being modernized). Hence, when power prices began to increase, the outrage in the capital, Yerevan, was easy to understand.

According to the protest leaders, the rallies are not anti-Russian in nature and the main demand of the people is a reversal to the government's power price decision. President Sargsyan seemed have backed down after he told senior officials on 26 June that the government will cover the difference between the old and the new price with budget subsidies until the end of a comprehensive audit of the ENA's activities.

Protesters, however, seem determined to stay on the streets. Deep-seated mistrust in the government's ability to implement reforms could trigger an impulse for a regime change. This is the biggest fear in Moscow, which sees the current Armenian government as an important ally in its natural backyard. Russia has been able to preserve its influence in the small Caucasian state by expanding its control over key economic sectors. This was done by recruiting senior government officials, who used Russia's influence to limit outside competition and preserve the dominant position of Russian companies in the energy sector.

If there is a change of guard in Yerevan, the established connections that have served Moscow so well, could crumble. Not surprisingly, similar to the aftermath of Ukraine's Maidan rally in early 2014, Moscow's propaganda has presented the street protests in Yerevan as a Western plot to contain Russia's influence.

In a sign of full support, Moscow provided the government with $200 million in military aid on 26 June. Armenia relies for its security on the 3,000 Russian troops stationed in the country, which have so far deterred efforts by Azerbaijan to try to reclaim the separatist republic of Nagorno Karabakh, occupied by Armenia during a bloody five-year war in the early 1990s.

Paradoxically, Russia's attempts to secure its influence and, more importantly, its energy interests in the neighborhood could backfire. While Armenian demonstrators have largely limited, domestic aims, the Russian insistence on turning the protests into an East-West clash could incite protesters to demand that the Armenian government take a sharp turn away from Moscow.

Faced with such a choice, president Sargsyan might have to abandon his close ties with Kremlin in an attempt to stay in power. This is likely to lead to economic retaliation from Russia such as gas supply cuts. The alternative, though, may be to follow the path of Ukraine's former president, Victor Yanukovych.

By Martin Vladimirov for Oilprice.com

[Jun 29, 2015] Greek Tale(s)

"...From a macroeconomic viewpoint, the Greek saga is one of austere budget polices imposed on the Greek government by the "troika" of the International Monetary Fund, the European Commission and the European Central Bank in an attempt to collect payment on the government's debt. "
.
"...The debt/GDP level, which was supposed to fall to about 155% by 2013, actually rose to 170% because of the severity of the contraction in output. The IMF subsequently published a report criticizing its participation in the 2010 program, including overly optimistic macroeconomic assumptions."
.
"...Moreover, government pensions are important to a wide number of people. The old-age dependency ratio is around 30%, one of the highest in Europe. The contraction in the Greek economy means that the pension is sometimes the sole income payment received by a family. It is hardly surprising, therefore, that the pension system is seen as a "red line" which can not be crossed any further in Greece."
.
"...... if the European governments insist that Greece must also pay back all its outstanding debt, then there is only one possible ending for this saga, and it will not be a happy one."
June 27, 2015 | Angry Bear

by Joseph Joyce

No matter what new twist the Greek debt crisis takes, there can be no question that it has been a catastrophe for that country and for the entire Eurozone. The Greek economy contracted by over a quarter during the period of 2007 to 2013, the largest decline of any advanced economy since 1950. The Greek unemployment rate last year was 26.5%, and its youth unemployment rate of 52.4% was matched only by Spain's. But who is responsible for these conditions depends very much on which perspective you take.

From a macroeconomic viewpoint, the Greek saga is one of austere budget polices imposed on the Greek government by the "troika" of the International Monetary Fund, the European Commission and the European Central Bank in an attempt to collect payment on the government's debt. The first program, enacted in 2010 in response to Greece's escalating budget deficits, called for fiscal consolidation to be achieved through cuts in government spending and higher taxes. The improvement in the primary budget position (which excludes interest payments) between 2010-11 was 8% of GDP, above its target. But real GDP, which was expected to drop between 2009 and 2012 by 5.5%, actually declined by 17%. The debt/GDP level, which was supposed to fall to about 155% by 2013, actually rose to 170% because of the severity of the contraction in output. The IMF subsequently published a report criticizing its participation in the 2010 program, including overly optimistic macroeconomic assumptions.

To address the continuing rise in the debt ratio, a new adjustment program was inaugurated in 2012, which included a writedown of Greek debt by 75%. Further cuts in public spending were to be made, as well as improvements in tax collection. But economic conditions continued to deteriorate, which hindered the country's ability to meet the fiscal goals. The Greek economy began to expand in 2014, and registered growth for the year of 0.8%. The public's disenchantment with the country's economic and political status, however, turned it against the usual ruling parties. The left-wing Syriza party took the lead position in the parliamentary elections held this past January, and the new Prime Minister, Alexis Tsipras, pledged to undo the policies of the troika. He and Finance Minister Yanis Varoufakis have been negotiating with the IMF, the ECB and the other member governments of the Eurozone in an attempt to obtain more debt reduction in return for implementing new adjustment measures.

The macroeconomic record, therefore, seems to support the position of those who view the Greek situation as one of imposed austerity to force payment of debt incurred in the past. But because of the continuing declines in GDP, the improvement in the debt/GDP ratio has remained an elusive (if not unattainable) goal. (For detailed comments on the impact of the macroeconomic policies undertaken in the 2010 and 2012 programs see Krugman here and Wren-Lewis here.) Another perspective, however, brings an additional dimension to the analysis. From a public finance point of view, the successive Greek governments have been unable and/or unwilling to deal with budget positions—and in particular expenditures through the pension system—that are unsustainable.

Pension expenditures as a proportion of GDP have been relatively high when compared to other European countries, and under the pre-2010 system were projected to reach almost 25% of GDP by 2050. Workers were able to receive full benefits after 35 years of contributions, rather than 40 as in most other countries. Those in "strenuous occupations," which were broadly defined, could retire after 25 years with full benefits. The amount that a retiree received was based on the last year of salary rather than career earnings, and there were extra monthly payments at Christmas and Easter. The administration of the system, split among over 100 agencies, was a bureaucratic nightmare.

Much of this has been changed. The minimum retirement age has been raised, the number of years needed for full benefits is now 40, and the calculation of benefits changed so as to be less generous. But some fear that the changes have not been sufficient, particularly if older workers are "sheltered" from the changes.

Moreover, government pensions are important to a wide number of people. The old-age dependency ratio is around 30%, one of the highest in Europe. The contraction in the Greek economy means that the pension is sometimes the sole income payment received by a family. It is hardly surprising, therefore, that the pension system is seen as a "red line" which can not be crossed any further in Greece.

The challenge, therefore, is for the government to establish its finances on a sound footing without further damaging the fragile economy. This will call for some compromises on both sides.

... if the European governments insist that Greece must also pay back all its outstanding debt, then there is only one possible ending for this saga, and it will not be a happy one.

cross posted with Capital Ebbs and Flows

[Jun 29, 2015] Capped

Jesse's Café Américain

With the VIX soaring and the US equity markets seeing their first 2% correction in many moons, the capping on the precious metals was determined and obvious.

So much for 'Greek capitulation.'

I think Syriza realized they were being presented an untenable solution, the 'generous offer' of extend and pretend by Merkel and the Eurocrats, with the IMF playing heavy. This bailing out of private creditors while extracting a pound of flesh from the Greek people, facilitated by corporate friendly governments, was exactly how Greece came into this situation in the first place.

I thought forcing of a bank closure on Greece by the EU was a bit tough, and probably senseless. Showing them the lash to get them to fall to heel and all that.

Most economic commentators in the US are completely clueless about money these days, and global economics as well.

More surprises will therefore be coming I am sure.

US equity markets had about a two percent correction, with the SP 500 testing its 200 DMA.

Forget the domestic economic news, it was all geopoliticals and mostly about Greece.

The markets do not like the uncertainty of what will happen in Greece, as well as Puerto Rico and the Ukraine, not to mention the wavering financial assets bubble in China.

I am treading slowly through the commentary and news about Greece. The least helpful are those who are mostly projecting their egos or some ideology.

This is primarily a political problem. Greece has a left wing government that the Western powers find unattractive compared to the puppet governments which have facilitated the bailing out of Greek's private creditors while sustaining an unsustainable economic situation.

I am puzzled by Jeffrey Sachs who suggest that Greek default on their debt, but remain in the Eurozone. I am not quite sure how they might do that, and while Jeff says their is no mechanism to actually kick them out it does seem a bit too cute. The EU does not have a mechanism for forgiving one member's debts ...

[Jun 29, 2015]European Leaders Insist Greek Deal Is Still Possible

The neo-liberals running Europe have too much to lose by giving the Greeks a break -- especially the 'socialists' who have acquiesced in the suffering of their traditional supporters since the economic crisis began in 2007.
.
"...Austerity is precisely the opposite of policies required to revitalize a depressed economy. But it is exactly what a predatory financial cabal uses to squeeze the lifeblood out of victims it manages to snare with its promises of money now, pay later."
.
"...Sharpies in expensive suits take three-martini lunches at the expense of millions of people ensnared in their delightful little game and suffering to fund their luxuries for them. Debt is such a wonderful product. The gift that keeps on giving. You can even blame your victims by waging a moralistic finger at them: "You never should have borrowed the money in the first place!" What a rotten, selfish, greedy, antisocial game."
.
"...The theory seems to be that competing with Third World workers requires the 99% to accept Third World salaries and conditions... how else can the 0.1% keep their multi-billion dollar lifestyles?"
Jun 29, 2015 | NYT

Jerry Harris, Chicago

European bankers can't stand the idea of a democratic vote on economic problems that impact millions of people. Neo-liberalism is a zombie economic policy, alive long after it should be dead. How much more suffering must the Greek people endure before anti-austerity policies are accepted as the only way out of the crisis?

Todge, seattle 36 minutes ago

When Merkel and Juncker say "compromise", it means " do what we tell you" . Tsipras recognizes that the creditor nations have a double standard and is calling it.

The EU leaders are not happy. Unclear why. It's only Greek pensioners who'll have to eke out a misery on $250 a month.

Sherry Jones, Washington 4 minutes ago

Far too little attention has been paid to the darkest cloud on the horizon, the rise of right-wing extremism in Europe. As a result of austerity measures forced on Greek workers, such as reducing the standard minimum wage of $750 by 22 percent, people are increasingly, and quite rightly, bitter and angry. Punishing the working class and ignoring its 25 percent unemployment rate energizes destructive political forces in Greece such as the Golden Dawn party, which channels working class rage into rage against the "other", such as minority citizens and immigrants. This is a particularly bad time for anti-immigrant sentiment to take hold. It is worrisome to watch European leaders in this debt crisis fueling such nationalist and racist extremism.

Tommy, yoopee, michigan

It's unfortunate that the European Union will dissolve simply because European oligarchs refuse to pay higher taxes. This type of sickness that has occurred in the U.S. has apparently spread overseas.

Sad to say, but even the rich are so blind to know that they won't have a pot to urinate in if the earth is burning up and the people are in revolt. Austerity worked in this country, meaning it worked to keep America in a prolonged depression after they first tried it in 1937. Will we ever learn? If history is a guide, the quick answer is 'no'.

george, coastline

Last week the Troika insisted that Greece further cut pension benefits and not raise taxes, If Syriza had agreed to that, they would have been discredited by their own electorate. One wonders if that wasn't the real goal of Europe's leaders- to send a message to the Spanish who vote in November and can express their opinion of austerity by giving power to Podemos.

Now they're shocked and petrified that the Greeks will vote on their own destiny and say they are willing to compromise. But in the end, the neo-liberals running Europe have too much to lose by giving the Greeks a break -- especially the 'socialists' who have acquiesced in the suffering of their traditional supporters since the economic crisis began in 2007.

condo, France

I'm afraid today's slump in the markets has cost much much more than the money expected from Greece. Ideology has overcome economics in this instance, but pointing the finger at Ms. Merkel is not fair: the worst seem to be the visionless technocrats of the Eurogroup, not mentioning the IMF

Jason, DC 6 minutes ago

""Europe cannot give permanent financial aid with no conditions," he said."

But, they aren't asking for that. They are asking for a specific amount of aid with different conditions than what you want.

condo, France

I'm afraid today's slump in the markets has cost much much more than the money expected from Greece. Ideology has overcome economics in this instance, but pointing the finger at Ms. Merkel is not fair: the worst seem to be the visionless technocrats of the Eurogroup, not mentioning the IMF

Jason, DC

""Europe cannot give permanent financial aid with no conditions," he said."

But, they aren't asking for that. They are asking for a specific amount of aid with different conditions than what you want.

Bill Appledorf, is a trusted commenter British Columbia

Austerity is precisely the opposite of policies required to revitalize a depressed economy. But it is exactly what a predatory financial cabal uses to squeeze the lifeblood out of victims it manages to snare with its promises of money now, pay later.

American homeowners suckered with teasers to purchase balloon mortgages that cost them their homes; college students roped into lifelong indebtedness with student loans issued by financial institutions that never in a million years would pay their fair share of taxes to fund free public education; third world countries driven to financial ruin by the tried-and-true strategy being employed in Greece: transnational PayDay loans on which interest payments are only made possible by rolling them over in perpetuity and loaning just enough to pay that interest every time another tranche is issued.

Sharpies in expensive suits take three-martini lunches at the expense of millions of people ensnared in their delightful little game and suffering to fund their luxuries for them. Debt is such a wonderful product. The gift that keeps on giving. You can even blame your victims by waging a moralistic finger at them: "You never should have borrowed the money in the first place!"

What a rotten, selfish, greedy, antisocial game.

dolly patterson, silicon valley

I really don't understand what the big deal is about keeping Greece in the Eurozone...their economy only makes up 2%. They can still stay in the EU along with 9 other countries who don't trade the euro dollar.

If the EZ gives in to Greece, it set a precedence for others like Italy and Spain, etc., to not have to pay their dues.

Jason, DC

"If the EZ gives in to Greece..."

Exactly...all those countries should be conquered, not treated like they were part of an equal union.

Matthew, Auckland

At least Merkel gets that berating/telling the Greek people what to vote in their own referendum proooobably won't help. The rich, angry technocrats doing the berating? Er, not so much.

tony silver, Kopenhagen

The Capitalist West lent billions of Dollars, for Greece to realize its Olympic Games, knowing that it was a risk, as Greece is one of the poorest country in EU.

Now they demand their money back? Seems unrealistic.

If Greece has no more money to pay its obligations, then someone should have transferred it to foreign banks. Money cannot evaporate like smoke.

Billions of Dollars were driven by European and American money-men and invested in their banks.

David, Sacramento

Money can evaporate. Recall the Great Depression where stock prices plummeted between 1930 and 1932. That's when people jumped out of high-rise buildings, not 1929-1930.

change, new york, ny 39 minutes ago

Are we that careless and gullible? Greece does not have the money to pay today or at the end of the year. Kicking the can down the road is only for political reasons. Economically nothing will change.

The Europeans are looking for something to stem the fallout, something they themselves created. The best for the Eurozone is for Greece to quietly exit from the group. The fallout will be less damaging for all if the Europeans are willing to make a simple but hard choice.

That Greece will exit, should not be seen as a failure on the part of the Group. That is exactly what they are making this crisis to be.

anon,

Heather, a civil war would add MORE problems! Who wants more problems?

I'm surprised no one has in-depth investigated a population of 11M people has over 350B euro debt in its euro lifespan. I believe savvier crooks have left them with their debts also.

If Cyprus was offshore Asset banking, Greece appears to be offshore Debt banking. Not fair for 11M people to live like they abused the EMU by the decisions of a few. What is the history of Greek financials? Were they solvent before entering the Euro?

What if crooks got Greece into the Euro, performed numerous financial crimes, used Greece, robbed Greece, deposited the money into Cyprus and crooked banks of Greece and Cyprus. In recent years Europe has confiscated illegal money and closed illegal banks. Greek bankers and businessmen look crooked also. So they play the part, while others ran off with over 300B euros.

If you were to balance the funds, where did the 350B euros go? Each Greek should be a rich on the average. Only the average citizen suffers. THIS is a recurring pattern.

KeithNJ, NJ

Greek banks did not 'overlend'. The excessive lending to the Greek government was by non-Greek banks (perhaps the Greek banks knew better?).

The Greek government used the money to double state worker's salaries over less than ten years and greatly expand the headcount. Some money was left over for benefits to the public.

The Greek people, not surprisingly, apparently see their State as hopelessly corrupt and avoid funding it if at all possible. Now, other Europeans have come to the same conclusion.

So the question was, and remains, what will the Greek people do about their State? That question does not go away regardless of whether they stick with the Euro or devalue with the Drachma. Either way the State cannot fund itself and has run our of people willing to plug the gap, whether Greek or non-Greek.

su, ny

As of today, If Greece leaves Eurozone, Greece some part of population will leave Greece permanently too. so Meanwhile EU incompetent bureaucrats couldn't even figure out how to deal with Mediterranean immigrants, now in their hand there is a legitimate prospective millions immigrant Greek people.

EU is showing it's inner workings and that say only one thing :INCOMPETENT.

su, ny

No body in the world can say that 500 billion USD credit is given with under normal banking and financial procedures to 10,815.000 population country.

That is not right.

EU cannot wash its hands, this is entirely Greek's problem, EU and it's lenders are in this game and they did this to Greece knowingly and intentionally and now they are trying to capitulate a nation in pretext of World War one time Europe mentality.

This is a very nasty game and power play, nothing else.

German's bankers and Greek politicians collaborative work nothing else.

P.S: some credit in this scheme also goes to Goldman Sachs.

Carlos, Long Island, NY

Tsipras responded to their 'take it or else' ultimatum with a referendum; what's wrong with it? What are the EU leaders afraid off? I would said that after 5 years of austerity that only shrunk their economy, Greek people have a good reason to say no more.

They will go into a very bad couple of years but even that is better than eternal austerity with no economic growth. After the economy stabilizes, they will start growing and will do better. Just look what happened in Argentina.

Simon, Tampa

The Greeks need to call it a day and reject the Trioka's blackmail.

Jon Davis, NM

The Greeks need to exit the euro, align themselves economically with Russia, and lead NATO but remain neutral. Let the rest of Europe worry about Ukraine, ISIS and the flood of immigrants into southern Europe via Spain and Italy.

NYCLAW, Flushing, New York

Tsipras just called Merkel's bluff. By closing the Greek banks and stock exchange, Tsipras is signaling that he is willing to take great risk to get a deal that he and his voters can live with. Merkel, on the other hand, maybe was assuming that the Greeks would never risk an EU membership and accept further cuts.

Caveat to Merkel: the Chinese have a old saying: "Those wear shoes are better off not stepping on the barefooted ones." Watch out, Ms. Merkel, the Greeks may have been pushed to a point that they have nothing to lose.

Peter Czipott, is a trusted commenter San Diego

It seems that Krugman, in his op-ed today, must be right: it's not about analysis but about power. Analysis of the problem would yield a solution that, while not ideal, minimizes losses for all parties involved -- or, equivalently, maximizes the ultimate payout to creditors over time. That alternative dictates setting up a situation facilitating the eventual regrowth of the Greek economy, to the point where it can (a) provide for its own citizens' well-being, and (b) repay as much as possible of its outside debts.

Instead, Merkel and company, ostensibly representing the interests of their citizens, lay down terms that, as Krugman says, lead to endless Greek austerity and a depression of unforeseeable duration, which also harms the interests of the very citizens Merkel is presuming to protect.

And all for what? To assert the moral upper hand? It's counterproductive to the point of craziness; and Merkel, as a physicist and problem-solver, used to dealing with quantitative data, should know better: perhaps better than some of her economic advisers.

Michael Collins, Oakland

Greece will never be able to pay it's debt with an unemployment rate of 25%. Young Greeks are leaving in droves to find opportunity elsewhere. While it's true that Greek still needs to implement some economic reforms, like cutting down on tax evasion and cutting back on pensions, it's also clear that purpose of austerity is punishment without regard to viability.

Austerity will be the end of the Greek Economy, so why not exit?

If the Europeans are serious about keeping Greece (and Spain, and Portugal) in the EU, they need to temper Austerity with a serious plan to raise employment and give the younger generation a reason to stay in their home country.

John M, is a trusted commenter Oakland, CA

Indeed - Greece has suffered through a full-on depression for 5 years, and all the Troika said in response was "more of the same." To my mind, the whole purpose of this exercise is to force massive social safety net cuts and privatization not only upon Greece, but upon all of Europe - including Germany.

This is not merely a European perspective - look at the way pensioners were treated in Detroit, and how the Governor of Illinois proposes to treat Chicago city workers' pensions: bankruptcy, and then massive pension cuts. The theory seems to be that competing with Third World workers requires the 99% to accept Third World salaries and conditions... how else can the 0.1% keep their multi-billion dollar lifestyles?

Bob Dobbs, Santa Cruz, CA

In following a politically expedient course that utterly ruins a country considered "expendable," the European Community sowed the wind. And as you suggest, it may reap the whirlwind.

Europe's leaders are apparently no wiser or better than they were in 1919, when they imposed the same sort of austerity on -- Germany. Whose leaders also seem curiously blank on the matter.

[Jun 29, 2015] Shares slide as deepening Greek crisis shakes global markets

Jun 29, 2015 | The Guardian

The commission reiterated on Monday that the door remained open to a deal.

Jean-Claude Juncker, the European commission president, was expected on Monday to appeal to Greece to return to the negotiating table, but would not make any fresh proposals.

On Sunday, the commission took the unusual step of releasing the draft bailout agreement that creditors had been negotiating with Greece before talks broke down.

"We are some centimetres away from an agreement," tweeted Pierre Moscovici, France's European commissioner, adding that there was an open door to further talks. "We must find a compromise. I want a reformed Greece to stay in the eurozone without austerity."

A bank manager explains the situation to pensioners waiting outside a branch of the National Bank of Greece hoping to get their pensions.

A bank manager explains the situation to pensioners waiting outside a branch of the National Bank of Greece hoping to get their pensions. Photograph: Yannis Behrakis/Reuters

Meanwhile, Angela Merkel will hold emergency talks with senior German politicians on Monday afternoon.

The German chancellor spoke to the US president, Barack Obama, on Sunday, with the two leaders agreeing it was "critically important to make every effort to return to a path that will allow Greece to resume reforms and growth within the eurozone", according to a White House statement.

The US Treasury secretary, Jack Lew, spoke to his counterparts in Germany and France, as well as Tsipras and the head of the IMF, Christine Lagarde. The US is urging all sides to resolve the crisis: it has called for Greece's creditors to discuss debt relief ahead of Sunday's referendum, but is also counselling Athens to adopt "difficult measures to reach a pragmatic compromise".

In a brief, televised address to the nation on Sunday night, Tsipras blamed the eurozone leaders. He did not say how long the banks would remain shut, nor did he give details of how much individuals and companies would be allowed to withdraw once they reopened.

In the early hours of Monday morning, Tsipras published a decree in the official government gazette setting out the capital controls to be imposed. The decree – entitled "Bank Holiday break" – was signed by Tsipras and the Greek president, Prokopis Pavlopoulos.

It said all banks would be kept shut until after the referendum on 5 July and that withdrawals from cash machines would be limited to €60 – about £40. Cash machines were not expected to reopen until later on Monday.

Foreign transfers out of Greece are prohibited, although online transactions between Greek bank accounts are to continue as normal. Tsipras insisted that pensions and wages would be unaffected by the controls.

Greece's finance ministry later announced that the strict ATM withdrawal limits would not apply to holders of credit or debit cards issued in foreign countries. This was viewed as a necessary move as tourists were spotted joining locals in front of ATMs on Sunday. Any similar restriction would hurt tourism, Greece's sole thriving industry, which accounts for at least a fifth of economic activity.

Tsipras said Saturday's move by the eurozone's finance chiefs to halt Greece's bailout programme was unprecedented. He called it "a denial of the Greek public's right to reach a democratic decision".

The commission said on Monday that Greece's capital controls were "necessary and proportionate", but free movement of capital would need to be be reinstated "as soon as possible in the interests of the Greek economy, the eurozone and the European Union's single market as a whole".

Tsipras added that the finance ministers' initiative had prompted the ECB to curb its assistance, forcing the government's hand. The Greek prime minister, who has always insisted the crisis can only be solved at the highest political levels, said he had once again appealed for an extension of the bailout until after the referendum, sending his proposal to the president of the European council, Donald Tusk, the leaders of the other 18 member states of the single currency, the commission and the ECB.

[Jun 29, 2015] Greece crisis: markets begin to tumble as investors flee

Jun 29, 2015 | The Guardian

Markets suffered across Asia on Monday as Greece shut down its banks for a week ahead of an increasingly likely debt default.

Oil prices declined and the euro edged down against the dollar, while Tokyo's Nikkei 225 index fell 2% to 20,283.98 points. The Shanghai Composite Index was off 0.4% at 4,178.56 despite China's surprise weekend interest rate cut.

Hong Kong's Hang Seng lost 1.7% to 29,192.67. Seoul's Kospi shed 1.6% to 2,057.52 and Sydney's S&P/ASX 200 was off 1.8% to 5,447.80. Market benchmarks in Taiwan, Singapore and New Zealand also fell sharply.

Turmoil in Asia had been widely expected after the failure of 11th-hour talks in Europe over the weekend raised the possibility of a Greek exit from the eurozone.

More than $35bn was wiped off the Australian stock market in the first hour of trading on Monday as investors braced for what could become a torrid week.

Earlier the euro dropped more than 3% to 133.80 yen, its lowest level for five weeks. The common currency fell as much as 1.9% to $1.0955, its lowest level in almost a month.

More on this topicGreek debt crisis: the key points of Athens bank controls

The US Treasury secretary, Jack Lew, stressed the need for Greece "to take necessary steps to maintain financial stability" ahead of the referendum.

He told the Greek prime minister, Alexis Tsipras, on Sunday that Athens and its creditors needed to continue working toward a resolution ahead of a Greek referendum on 5 July on the creditors' demands for austerity.

US stock futures dived 1.8%, hitting a three-month low, while US Treasuries futures price gained almost two points.

A cash-strapped Greece looks certain to miss its debt repayment on Tuesday as Greece's European partners shut the door on extending a credit lifeline after Greece's surprise move to hold a referendum on bailout terms.


robtal 29 Jun 2015 08:43

We can print all the money we want all over the world to save every banker, financial wizard, and insurance company . But one little country like Greece is the scape goat these financial criminals use to bring fear and control to the rest of the world. These are evil less than human monsters that run these world banks.


Paul Hawkins 29 Jun 2015 08:31

The World is being run by a group of financial gangsters such as the Rothschilds and 30 to 40 of the richest people in the world: Karen Hudes is a graduate of Yale Law School and she worked in the legal department of the World Bank for more than 20 years. In fact, when she was fired for blowing the whistle on corruption inside the World Bank, she held the position of Senior Counsel.

She was in a unique position to see exactly how the global elite rules the world, and the information that she is now revealing to the public is absolutely stunning. According to Hudes, the elite uses a very tight core of financial institutions and mega-corporations to dominate the planet.

Austerity is a lie as Countries use the Fiat monetary system and can produce money when they want, such as quantitative easing. It is the greed of the banks, that had to be bailed out across the world, that is causing the problem.

The sooner these greedy selfish power hungry bankers are brought to book the sooner the financial markets would recover.


Mark Foster Kenneth Stephen Besig 29 Jun 2015 08:17

A large part of Syriza wanted out of the Euro because they were sure the Troika would not compromise on it's insane 'reforms' which had already destroyed most of the economy. Debtors prison's were abolished years ago in the UK, primarily because creditors realized it meant they would never get any compensation for losses while debtors were in gaol. Yet by insisting on repayments on an odious debt, we effectively put the whole of Greece into a debtors prison, and insisted on all the wrong IMF/ECB reforms that have always failed to resurrect economies in the past. We are still caught up in the idiotic Washington consensus/Jeffrey Sachs/ Hernando de Sotos models of development.

In truth Greece should have left the failed euro project years ago. Iceland had the sense to get out of the Banks clutches, file bankruptcy and impose capital controls and start again. For the most part that as worked very well for them. Some will say Greece isn't Iceland, or nonsense like the Greeks are lazy (they work longer hours than the Germans), Greece has deep problems for sure and i'm not saying I'm confident Syriza have the program to fix them. But I'm 100% confident the demands of the Troika would only cripple them further.


Myrtle7 29 Jun 2015 08:14

Save Greece! A Kind Request to the EU Leaders and Creditors (Myrtle 7)

I am writing this because today we are hours before a bitter end, perhaps, for Greece and the beginning of problems for the EU.
A lot has been said about the Greeks living above their income for a long time or partying for a long time and these may have been true in many cases but the Greeks should not be punished now as they followed the example and attitude of some of their leaders. And, moreover, now, it is the poorer people, those with lower income, that are suffering, those that did not have the right "connections."

The referendum arranged by the government seems like a democratic move but in fact it will be a desperate choice as the Greek people are asked to choose between suicide by drowning and suicide by hanging.

If Greece goes into default it will be a catastrophe for the country; there is no currency to devalue. They have to re-create the drachma (it will take perhaps a year or more) which will be immediately devalued. How would these people, who are suffering already, cope? And if Greece defaults, I am not sure whether the Creditors will get their money within the next 50 years, anyway. Most seriously, the tense situation in the defaulted country, the low morale and possible disorder, would invite & unleash unforeseen dangers for Greece first, for other European countries later and the EU eventually; as we all know such situations can spread to the detriment of the people. Historic recurrence is here: the specifics and the actors change, but the result is similar. Moreover, it is common knowledge that there are forces, (they have their own agenda) which, wish, discuss in conferences, and even envision, the break up of the European Union, even as 'we speak'. If I am aware of this, I am sure the European leaders are aware too, for, as wise leaders, are conscious (or should be) of emerging situations long before they get out of hand. With around 6 million Muslims outside its northern borders, (excluding Turkish territories), Greece, will be an open, unprotected theatre for anyone who wants an easy passage to the west.

The Creditors are part of the leadership or the Hegemony of European Union as they form the powerful financial aspect of it; usually, leaders who push think they facilitate progress; in fact they are blocking it. Yet, there are certain characteristics that wise leaders have and magnanimity is the most important one. They do not expect a poor, proud nation to fall on their knees. They would always offer opportunities for relief and growth. Lawrence Summers, US Treasury Secretary, suggested something which sounds as a good solution: the Creditors can write off a small amount of the debt now and perhaps ask for something that Greece, could, comfortably, add to their plan that would help growth; e. g. taxing certain accounts many Greeks keep in Swiss banks. Such a move by the Creditors would be wise, intelligent and humane.

With this magnanimous act the Greeks would feel uplifted and stronger to face the odds. In my view, the most important attitude of the Leader is to make people feel they mean something within the group, but I may be wrong.


John Kakkos DazzlingKarina 29 Jun 2015 07:04

Lazy Greeks is a very racisti thing to say, espesially since Greeks work-hours exceed that of oher EU countries (including Germany). War reparations agreement was not accepted. Since in 1942, the Greek Central Bank was forced by the occupying Nazi regime to loan 476 million Reichsmarks at 0% interest to Nazi Germany. In 1960, Greece accepted 115 million Marks as compensation for Nazi crimes. Nevertheless, past Greek governments have insisted that this was only a down-payment, not complete reparations. The 300 bn were not given to Greeks but to banks. 30% of Greeks are iving below the povery line. Unemployment is 26% (60% to young) and 16% cant even provide daily food needs. EU is not to blame, nor it is Greece. This financial system is just not working.


Aboutface 29 Jun 2015 06:47

There are "invisible hands" weaving the thread of EU-Euro through the IMF needle in this Greek tradegy. One of the comment here by Steven Tracy on the Rothschilds and Rockerfeller seems about right...a force majeure / fire sale of prime assets and not to dismiss, there are very wealthy Greeks with offshore accounts, like vultures over a soon to be cadaver. Next move, the "Alexis Tsipras surprise" call option.


pauline7883 29 Jun 2015 06:40

the greek people have the right to this referendum they have to decide if the deal is acceptable whether they can cope with the continuing austerity. the financial institutions of europe have acted disgracefully
the greek government should begin an audit of the books looking at the loans/debts owed by greece to see if there was any illegality and prosecutions should follow

SEADADDY 29 Jun 2015 06:35

So, as Greece slips into the financial abyss, it's the common man/woman that gets the pain, the punishment and the price tag of bankers ineptitude, greed and Houdini escapism. The bankers, corporate investors and politicians get away with grand gambling and larceny of incredible scale, without so much as a slap on the wrist. It wasn't the small man in Greece that caused the crisis. It was the Niarchos's and the Onassis's & etc that caused the downfall, with getting away with not paying their fair taxes, flags of convenience, double dealing and tax havens world wide. It's high time that some government agency woke up and
NorthernFella,29 Jun 2015 06:00

They weren't ready to join the EU...

I would say, weren't ready to join the euro. Interesting that you don't mention anything about the role of Goldman Sachs in this big scam.

"Humiliation" - what idiocy.

If accusing all the Greek of the ongoing (bank)crisis, using austerity (cuts directed to the disadvantaged groups mostly) as a medicine and calling them lazy is not humiliating I don't know what is.

And the idea that they were being 'starved by austerity' is ridiculous. They were starved by their corrupt practices.

Let's take measures of that how much the neoliberalist austerity policy has affected those in the most vulnerable position and let's compare it to the times before austerity. Sure the situation has been bad for a long time before the crisis but austerity brought real hell.


Luckyspin marcus_rm 29 Jun 2015 05:34

The Greeks accuse the IMF of colluding in an EMU-imposed austerity regime that breaches the Fund's own rules and is in open contradiction with five years of analysis by its own excellent research department and chief economist, Olivier Blanchard.

Objectively, it is acting as an imperialist lackey. The IMF enforced brute liquidation without compensating stimulus or relief. It claimed that its policies would lead to a 2.6 % contraction of GDP in 2010 followed by brisk recovery.

What in fact happened was six years of depression, a deflationary spiral, a 26 % fall in GDP, 60 % youth unemployment, mass exodus of the young and the brightest, chronic hysteretic that will blight Greece's prospects for decades to come, and to cap it all the debt ratio exploded because of the mathematical – and predictable – denominator effect of shrinking nominal GDP.


George Vasilakakos deskandchair 29 Jun 2015 05:27

very poorly served Greece is by its media

That's the key point. You see the Greek media groups are run by the same oligarchs who've been buying our politicians. They owe hundreds of millions to the Greek banks, along with the political parties, between them it must be around a billion. The banks were unwilling to collect on those debts, got bailed out and we are footing the bill...

NorthernFella Phil Murray
Well, that's why I'm writing about "near-racism". Greece is schizophrenically seemed as the cradle of democracy and the Western culture but as Gerold reveals the opinion of many by the comment:

Nonsense. The Greek nation and people have failed to grow into a modern responsible state. They are still living like an Ottoman Province, trying to short-change the Sultan.

Many are still romanticizing the ancient times and are disappointed as they see the times have changed. Many are wondering (bitterly) how the modern day Greek are so different from the ancient times. In one book (a Finnish version of Traveler's history of Greece, I think) it was written (in introduction) something like this: "are those hot-tempered noisy people really descended from the ancient Greek?".

When adding to it Gerold's views on Greece as a nation that is still living like "an Ottoman Province" it's easy to extend near-racist stereotypes even further. Now we're talking about "lazy Greek who just lie down under the palm trees, waiting for the next bailout". Of course there are stereotypes related to each nation but they get always stronger when we are going to the south and they are told by "harder-working northerners" ...

I'm looking forward to the Greek people correcting their previous election error

Should the Greek vote only for "rationalist", pro-euro, business-oriented right-wing parties who are ready to starve their own people to death? It sounds travesty of democracy and would prove that economy has replaced democracy.


Theo Krom 29 Jun 2015 05:14

The markets. already have lost much more money than if they were agree to restructure, not necessarily write-off, the Greek debt. If we count the profits the markets would gain after such deal would have been announced then it seems that whatever is happening is a clear and utter irrational thinking orchestrated by the allegedly proponents of rational economic thinking...

Policy for the contemporary markets, seems to be much more important than free markets. Free market is an illusion, an excuse for the banks to suffocate democracy, using pseudo-politicians as their most valuable gatekeepers....Well, the actual neo-liberalism has been implemented in a very distorted manner, exactly as happened with socialism... Actually, both lead to utter misery!!!

;
This is what the private FMI corporation owned by the private federal reserve corporation of USA has planned for ALL our countries. I's the Rothschields, the Rockfellers etc... The 1% that are behind all this.

Can't you see USA is deep in debt and nearly bankrupt, just like most of the western countries and Africa. They lend us money, put us deeper in debt, and we pay them back only the interest of the debt ???

This has all been carefully planned since the creation of the private federal reserve corporation in 1913 to rob our assets and control us.

One example. Watch Karen Hudes, former lawyer of the FMI for 20 years, reveal it all : https://www.youtube.com/watch?v=MhTvsDuP-rg

This is why the BRIC countries have come together to ditch the US dollar.

Better than Eduard Snowden on the NSA.


GRJones Mark Foster 29 Jun 2015 04:51

Iceland is often held up on these pages as a shining example of the wealth and riches that flow to you if you reject austerity. It shouldn't be. Iceland suffered enormous economic contraction after its rejection of bailout conditions, and while the economy is growing, GDP is at about the level it was in 2004, unemployment is still well above pre-crash levels, and prices are 50% higher than they were before the crash. The steep devaluation of the currency by 50% meant that everyone in Iceland took an enormous hit in terms of real wages, and because most Icelandic mortgages are linked to the Euro theses have effectively doubled, while their homes have halved in value, leaving much of the population in negative equity. They have enacted massive austerity, more than any country in Europe bar Greece, slashing their deficit from 15% to less than 1%. The fall in living standards has been severe enough that the Icelandic people voted the parties that came into power after the rejection of bailout terms out of office, and reelected the party that was in power before the crash. The lesson to be learned from Iceland is that economic collapse means pain, no matter what you do.

someoneionceknew ID5590609 29 Jun 2015 04:50

Do you realize that the European rules prevent the ECB from funding member countries, as well as prohibiting national bailouts

Sure. But why aren't you Germans subject to the rules too?

The rules don't work. They can be changed fairly easily. Why not if it stops people starving and otherwise being persecuted through no fault of their own?


ID5590609 mjmizera 29 Jun 2015 04:38

Creditors already took a 50% haircut on Greece debt, and the conditions of Greece's bailout loans were extremely generous, with very low interest rates and exceptionally long payment terms. The terms and conditions were better than what was offered to Spain, Portugal and Ireland, and those countries actually implemented the demanded austerity reforms and are now experiencing growth.

Greeks don't need their debt forgiven. Greeks need to start paying taxes and reforming and managing their economy like a respectable first world nation, not some banana republic. Why should Europeans and others show solidarity with Greeks when Greeks fail to show solidarity with their own people and their democratically elected government?


Overdog81 29 Jun 2015 04:36

The past Greek politicians are responsible for bringing this debt to current levels. There's no doubt about this.

However, the current government found itself at the edge of a cliff. 6 months of negotiations and the issue of restructuring or writing off a non viable debt never came on the table by Greece's creditors. Basically Greece is begging for money that only go towards paying this huge debt and never into the real economy. Austerity measures are applied just to pay the debt's interest which has become huge (twice the size of Ireland's and Portugal's combined) .

What Syriza is doing now is the only option it has in order to make the debt viable and end austerity for its people. The timing of the referendum on friday night and capital controls on Sunday night (banks closed for a week and stock market closed on Monday) point towards this way. Its a huge gamble in order to reach an agreement but possibly the only hand Greece could play in order to shake off the markets and thus its creditors.

I truly hope an agreement is reached before the referendum so that everyone walks out happy especially Varoufakis and the Greek people who would get the best deal they could ever dream of. On the other side, a debt relief decision seems the only road for the imf and eu partners. Its a debt that could never be paid anyway so why risk?


Arthur Buse 29 Jun 2015 04:36

I had thought it was only Samuri that chose harakiri. But Alexis has done the EU a great kindness by throwing the Greek people to the dogs of famine. He has helped the cause of breaking up the Euro and even, dare we hope, the EU. Ever closer union was always a grave danger. It never went well for the USSR and it ended in tragedy. The EU will eventually go the same way. The USA is quite different. They adopted a common language before trying for a common currency and common Federal taxes. The EU will not manage the former and has not got the will to manage the latter. The Euro was therefore always doomed and now the EU needs to return to individual currencies and the EEC.

> ID5590609

Germany is the largest net contributor to the EU. They will bear the brunt of any aid extended to Greece.

If Germans bear any loss then it is their own foolishness for trusting their politicians. Why are Germans on the hook for bailing out their own banks?

Greece has been an economic failure for their entire modern history, including well before they joined the Euro. They want to be live and be treated like a rich first world economy, yet run their country like banana republic. It's readily apparent that other Europeans will no longer fund or subsidize a lifestyle that Greeks cannot independently afford. Greece essentially partied on northern European largesse, but the bill is now due.

That's just cut and paste racist cant. Germans should know better given their history.

Your feelings about capitalism

Oh, you still don't understand what mercantilism means? Good lord.

but what do you think is going to happen when Greece is "independent" and has to reintroduce the Drachma.

Depends on many factors I'd say. But what are you offering?

ID5590609 someoneionceknew 29 Jun 2015 04:23

Germany is the largest net contributor to the EU. They will bear the brunt of any aid extended to Greece. That is why the opinion of the Germans is so important when considering any action on Greece.

Greece has been an economic failure for their entire modern history, including well before they joined the Euro. They want to be live and be treated like a rich first world economy, yet run their country like banana republic. It's readily apparent that other Europeans will no longer fund or subsidize a lifestyle that Greeks cannot independently afford. Greece essentially partied on northern European largesse, but the bill is now due.

Your feelings about capitalism notwithstanding, things must drastically change in Greece. You claim to oppose the Eurogroup's and IMF's purportedly cruel demand for austerity and reform. That's fine, but what do you think is going to happen when Greece is "independent" and has to reintroduce the Drachma. Socialist solidarity is not going to fund imports of food, fuel, medicine and other essentials. There will be austerity in Greece, either organized with their European partners, or resulting from the chaos of financial incompetence. Greece is going to have to continue to painfully adjust to a lifestyle commiserate with their true GDP, earnings and economic value. The good old days are gone.

> ID5590609

They're not asking for money or aid?

They are not asking for Herr Schauble's (or his ilks') money or aid.

major economic reforms

More counterproductive austerity. More poverty, more privation, more labour bashing, more suicides.

"mercantilism" (which I assume is meant as a juvenile reference to capitalism)

So I'm dealing with an idiot.

Germany has generally learned the political and economic lessons from their own unfortunate history, everyone from WW1 reparations and the risks of inflation, the horrors of WWII,

Clearly it has not. Quite the opposite.


Carlo47 29 Jun 2015 04:03

Only the American Treasure understood the gravity of the situation, but it's odd that they don't give appropriate instructions to the IMF and namely to the chauvinist Ms Lagrande, who continues in its absurd hard line more on measures that on the debt.

On the other end Mr Schäuble and Mr Dijsselbloem must be happy that investors flee.

They have only have a bit of patience, until the contagion will arrive in Germany and Holland.

Anyhow, if they are honest, both should resign for clear inability to do their job and to understand the heavy drawbacks of their dummy hard line, as supposed and false financial experts.

The German Government and the EU heads should slap the door in their face and send them away.


CanadaChuck ID9492736 29 Jun 2015 03:53

I had thought that Greece was unimportant overall in the EU. What will happen when Italy and Spain collapse? I guess the UK won't have to bother leaving the EU.


Ian Crowther slingsby1000 29 Jun 2015 03:49

Agreed Slingsby, so a lot depends on the post management of crisis as we see in Argentina and Turkey, its not plain sailing, far from it. But being enslaved is worse, and paying on the never never, feeding German and French income is not the way to go Fault lies on both sides, nobody comes out of this smelling of roses.

The EU construct was a nonsense form the very start, a union of unequals, instabilities and too many externalities to manage that technocrats have little idea on how to manage in complex situations.


Lanceowenmorgan Kompe75 29 Jun 2015 03:42

Ya the Forth Reich is coming and it seems Putin is the only one smart enough to see it


ID9492736 29 Jun 2015 03:40

Barely half an hour after opening, the German Stock Exchange index (DAX) is down almost 5%, which is dangerously close to a system meltdown. The German moneymasters are trying to intervene by pumping money into the exchange, but it's like putting a band-aid on the collapsing levee. The German nuclear reactor is overheating uncontrollably.


Xenkar Stivell 29 Jun 2015 03:34

True, ordinary people in Europe need to stand up and support the people of Greece, but sadly as spiceof so eloquently put it

"These little conformists, the lowly prison guards of the elites, are the lowest form of humanity. Spiteful and small minded, they always want to "punish" those who dare raise their heads and complain."

MrEurope Lupick 29 Jun 2015 03:31

You do realize that what you wrote is beyond ignorance...? While I agree that the way market-news is brought is excessively dramatic, markets ARE for a large part a reflection of human productive activity, and productive activity tends to be... you know... the stuff that makes people money. Jobs. Earnings... roof over your head, and so forth... these things quite obviously matter.

The problem is that humans absolutely suck at understanding the long term consequences and impact of small, tiny little (negative, but also positive) changes that accumulate over time.

You know the famous example that if Jesus would have put one dollar in his bank account, he would (assuming 3% per annum interest) by the year 1000 he would have 7,080,467,438,104.71 dollars. (and more money than ever has or will exist in the history of Earth by 2015...) 3% does not sound like much... but all these small little additions do add up. And so if you're living in a world where every week or two there is a minor crisis here or there.... eventually it starts to matter. A lot. People put off investing. They spend less. There are less jobs... (which in turn compounds the problems...) and on it goes.

Bottom line is - you and I know fuck all about advanced economics, just like the vast majority of posters here.


Stivell 29 Jun 2015 03:28

Lagarde and the European leaders have forced Greece into this corner and really should expect nothing more than the Greeks turning and baring their teeth. Ordinary people in Europe need to stand up and support the people of Greece against these relentless scaremongering money-obsessed bastards. Go Greece, bite that hand!


Kompe75 29 Jun 2015 03:25

If the Schaueble , Merkel and Jean Claude don't resign after the upcoming fiasco , then the investors will fire them.Remember my prediction.They will have a bitter end than DSK.


D9492736 royaldocks 29 Jun 2015 03:16

If you really, seriously believe that EU economy is so competitive that it can turn on the dime and adjust to the coming global economic meldown to its advantage and do so in the current political and economic timespace , I have a BIG surprise for you: you are dangerously delusional.

First of all, the prices of ALL commodities, raw and unprocessed material EU economy needs to keep going are going to get sky-high because EUR will be hemorrhaging value until cows come home. And even if Mario Draghi and the idiots from Eurogroup come back to their senses tomorrow, it will have been too late: they already committed an act of economic suicide, and it is really too late to stop the head exit wound from bleeding to death now. Secondly, with the investors quitting the stock bubble like crazy, the amount of discretionary spending and funded demand is going to go down like a rock: Europe will be hit with AT LEAST a quadruple -whammy: (a) rigid and dogmatic austerity and money-supply strangulation (b) supply chain disruption (c) extremely weak demand and massively negative growth and (d) catastrophic consumer confidence index. Add to this list of nightmares a never-ending flow of migrants and refugees, ever-increasing pressure on social services, cost of funding of wars and military operations in Iraq, Syria, Libya, Aghanistan and elsewhere, the massive losses caused by the American-imposed sanctions against Russia (by most accounts, somewhere between $100 and $150 billion), the cost of containing the situation in Ukraine and bankrolling the bankrupt Ukrainian government and - on top of it all - servicing the sovereign debt, and you get a much clearer picture. There is absolutely no way - not even a hypothetical chance - that European economy can weather out this tsunami unaffected and unharmed. EU should consider itself lucky if they do not lose 20-30% of its entire economy in the next month or so.

If I were a German retiree, I would be queuing up at the local ATMs as we speak. Because, yes, it's the end of the Eurozone as we know it.


spiceof 29 Jun 2015 03:12

Amazing how the Greek subject matter brings forth the establishment sadists out en masse, demanding that punishment, penury and the bubonic plague be visited upon that rebellious country.

These little conformists, the lowly prison guards of the elites, are the lowest form of humanity. Spiteful and small minded, they always want to "punish" those who dare raise their heads and complain.

iruka Lupick 29 Jun 2015 02:56

Important point.

Of course it's worth bearing in mind that people like StrategicVoice213 aren't really concerned with contrasting good people and bad people, lazy people and hard-working people, etc..

Take a closer look, and 99 times out of 100 it's amply clear that their only real interest is in defending the authority and legitimacy of the institutions that they see being threatened or insulted by those they're calumnying.

The actual behaviour or character of this person or that nation is of no real consequence to 213's . Any old lie, projection or blinkered misconstruction will do.

It's the need to preserve sanctified hierarchies of power that engages them.

Or more accurately (since they're clearly all sad little creatures of no importance whatsoever, and no capacity to preserve anything, for whom an identification with power provides them with something clearly lacking in their actual lives) it's the need to glorify power, and all its ways and entitlements.


Lanceowenmorgan slingsby1000 29 Jun 2015 02:55

Who the fuck was the dumb ass(es) who would lend Greece all that money?
€386,000,000,000 to a country with a population of what 6-10 million? That's mathematics son you can argue with me but you can't argue with figures. Apologies to Foghorn Leghorn. But I think all comes down to greed.


truthbetold13 borninthe80s 29 Jun 2015 02:50

Such a pathetic cliche, a real twatcherite/conmoron lie. By bloated public sector you just mean that more things are run by the government instead of by big business. Nobody here being ripped off by utilities/ rail/private landlords etc thinks this is a better arrangement. What you have is higher prices, worse service, less equal pay within those sectors, systemic tax evasion by business and its bosses. Give me a state controlled service any day.


JohnnyMorales 29 Jun 2015 02:45

This should be the quote of the day:

Mitsuo Shimizu, deputy general manager at Japan Asia Securities Group in Tokyo, told Bloomberg News: "In the face of pressure from the eurozone to accept austerity measures, the Greeks answered that it's hard to live just on water."

The Japanese have never been considered softies. If they are describing the EU demands as too much, then they are definitely too much.


FactualEvidence 29 Jun 2015 02:45

The EU needs Britain to stay in the EU for one reason only and its financial.

The EU have ploughed in billions and billions of tax payers money into several different countries bailouts not just Greece, including Portugal, Spain, Cyprus, Ireland, Hungary, Latvia and Romania.
A total amount of 487.75 BILLION Euros has been given to these countries and that's since just 2008.
So rather than the EU getting stronger as united nation's it is getting worse.

The EU Commission, MEP's, LIBLABCON parties and BBC don't tell you that information. You have to research it yourselves on Wikipedia.

So my three questions to all those Europhiles are.
If being in the EU is so great how come so many countries have to rely on hand out?

If so many countries need billions to even provide essential services to survive. Where is this great trading economy?

Why is it not working for so many millions of people?

Go to Wikipedia and see how the monetary crisis is getting worse for all the countries not better.
Google : European Debt Crisis, and check out the chart around the middle of a very long page.

Were would the EU be without the billions we put in to it and on top of that all the VAT tax they get from us, YES VAT. Did you know that it was through EU ruling you pay VAT on your utility bills?


philbo Miamijim 29 Jun 2015 02:36

The IMF is mainly responsible for this mess.

ID9492736 stringvestor 29 Jun 2015 02:36

http://www.reuters.com/article/2015/06/29/markets-global-idUSL4N0ZE0IK20150629

betrynol 29 Jun 2015 02:32

Good thing Europe is ring-fenced to the risk of contagion....

The ECB will have to buy more Spanish and Italian bonds this week than the entire Greek debt, and then bailout these countries so they can buy back the bonds (Greek style). Oh well, if they say they've got it covered, it's fine I suppose... (shakes head in haughty derision).

ID9492736 29 Jun 2015 02:32

A picture worth $60 trillion words:

http://www.allstocks.com/markets/World_Charts/world_charts.html

The only markets still in the black are the markets that haven't opened yet. When DAX and FTSE open, the shit tsunami is REALLY going to hit the austerity fans.


JohnnyMorales 29 Jun 2015 02:29

The loss of value across the world even if most of it is just temporary is many many times more than Greece's entire debt.

Yet because the EU troika wanted to win a moral battle and teach a wayward Greece a moral lesson and make impossible demands and accept the humiliation entailed in caving they opted to create those losses.

Greece only asked for some extra help. They did not make outrageous demands like the troika.

If anything good comes out of this may it be the end of the careers of those who think the financial world is the proper place to stage morality plays devoid of any financial purpose which cost far more than the alternative.


Ian Crowther 29 Jun 2015 02:28

This is the end game, and has been Greece's plan from the new Government taking power. The left want Grexit, and they will get what they wish for now, independence from a failing political and financial EU construct.

This may work well for Greece in the mid term, sure, its going to be tough on the people, but at least the Government will not be debt slaves now, reset the currency, devalue the economy so it can compete again, lower taxation to bring in big business, and begin to build a new economy based on what the Greek people want, rather than 85% of the money Greece leant eventually being paid back to the rentiers from which the cash came. Now zero will be repaid, and EU banks will have to suffer the losses, a drop in recapitalisation, and a hit to the recovery.


Lanceowenmorgan ID9492736 29 Jun 2015 02:24

I agree. FUCK ALL YOU NEOLIBERAL & NEOCON mother fuckers


LeonardPynchon borninthe80s 29 Jun 2015 02:24

Some perspective in the below piece - might help you:

https://theconversation.com/greece-woes-show-how-the-politics-of-debt-failed-europe-42787

The Financial Times' leading commentator Martin Wolf recently argued that "the vast bulk of the official loans to Greece were not made for its benefit at all, but for that of its feckless private creditors", that is, primarily, European banks and financial institutions. After exposing the futility of austerity, ex-IMF economic advisor Jeffrey Sachs recently declared: "Europe's leaders are hiding behind a mountain of pious, nonsensical rhetoric" risking an economic and social disaster "in order to insist on collecting some crumbs from the country's pensioners".

Describing the treatment of Greece as "the Iraq War of finance", Daily Telegraph's Ambrose Evans-Pritchard wrote: "rarely in modern times have we witnessed such a display of petulance and bad judgement by those supposed to be in charge of global financial stability."


dzogchen 29 Jun 2015 02:23

Five lost years for the Greeks it seems. From the market's perspective those years have been all about maneuvering the banks from out of risk. Now that work is done as the losses are laid squarely in the public lap. The markets of course don't give half a toss about Greek people, empathy isn't part of their nature, so might as well do what should have been done five years ago. All the best to the people who will pay the price for all this shenanigans. Kali tihi!

BeamEcho Tim Roberts 29 Jun 2015 02:21

This is not new for the IMF, their mandate includes providing policy advice to their members. They review the economic policies of their members. When they lend money they require economic policy changes...

Ian Crowther IndependentScott 29 Jun 2015 02:18

Greece will not have to repay the debt, they will walk away, default and never repay. It is the banking system and rehypothecated debt that will suffer, and the banks that have leant the money to France and Germany. European banks have only just been recapitalised, and losing another €300-400bn will hit the Euro recovery hard at a time when QE is being rolled out. The answer will be print more money.

Normin 29 Jun 2015 02:17

The banksters are just waiting for a scapegoat to pin their non sustainable economic system failure on. Meanwhile the elite will profit as the masses bleed. It can't go on like this forever it's just a matter of when.

Kompe75 29 Jun 2015 02:14

Juncker announces a campaign to support "YES" at the greek referendum..

Another sign these people consist the out-of-touch neoliberal elite..

Does he really believe Greeks , who have suffered enormously , will sign a appalling deal that's going to define the misery of generations for the next decades ? Just because he wants to remain President in the dictatorship of Brussels ? I live for the moment Juncker comes in Athens...the whole place will go up in flames.

john4108 29 Jun 2015 02:09

yes all going acording to plan the sacred " markets" are indulging in the usual lemmng like behaviour while the banksrs try to convince everyone that,the have the medicine that we all need . Casino capitalism writ large. Eventually, unless we want endlessly repeated crises and utter destruction on this plant, mankind will have to come up,with a more resilient economic system.

Islam is waiting in the wings and usory is a crime in the Koran. Of course Jesus threw the money lenders out of the temple....but Judeo-christianity has conveniently forgotten that.

[Jun 29, 2015] The current round of sanctions, it reports, was designed not to have too much impact on the Russian economy so that a threat of harsher sanctions could be applied.

"...A good indication that MH17 was made to order by NATO."
Patient Observer , June 27, 2015 at 6:20 am
Did we expect anything less?
http://rt.com/news/251889-us-russia-war-attrition/

Apparently things went sour with Russia when:

" US diplomats say Russia changed the cooperative stance it assumed after the collapse of the Soviet Union and is now using force to defend its national interests, the paper said. The change is attributed to the personality of Russian President Vladimir Putin, who, Washington expects, will remain in power until at least 2024.

The change became apparent with the conflict in Ukraine, but was emerging since at least the 2008 conflict in South Ossetia, when Russia used military force after Georgia sent its army to subdue the rebellious region, killing Russian peacekeepers in the process.

Washington's solution to the new Russia is keeping sanctions pressure on it while luring its neighbors away with economic aid and investment, La Stampa said. The current round of sanctions, it reports, was designed not to have too much impact on the Russian economy so that a threat of harsher sanctions could be applied. "

Very fiendish plan indeed except for one small problem – the US economy is floating in the toilet and the Russians and the Chinese are about to pull the lever via dedollarization. Oh well.

kirill, June 27, 2015 at 6:45 am
The western media produces nothing but propaganda. The US stages a coup in Ukraine and then has its quislings launch a war of terror in the Donbas where at least 25,000 civilians are dead as a direct, intended result but all we hear is about Putin and his aggression. What sick, delusional shit for "analysis". By helping Donbas residents defend themselves from an obvious ethnic cleansing attempt, Russia is the "aggressor". This is pure 1984 newspeak in action.

The US is going off the deep end because its economy is going to collapse. All the offshoring of jobs has a price. The trickle down economy of merchant resale of Chinese imports can't really substitute for the original economy since all the good jobs lost.

marknesop, June 27, 2015 at 4:08 pm
Yeah, right. We were just kidding about sanctions – those were just the kiddie sanctions. We were hoping not to have to do the real ones.

In actuality, the USA poured on as much leverage as it could get away with, without its European partners screaming like girl scouts who see a snake. The U.S. government knows that what you need is momentum, so a good hard punch to start things off and then you just wade in swinging until your man goes down. If they didn't follow that pattern it's because they couldn't, not because they didn't want to or felt merciful.

ThatJ , June 27, 2015 at 5:39 pm
I agree, the sanctions were no joking matter. The US targeted the energy, arms and finance industries in a single blow after Russia didn't "cooperate".
marknesop, June 27, 2015 at 8:21 pm
Precisely. They meant to make Russia stagger, and then to keep up the momentum until it fell over. Not to say they could not have imposed worse sanctions, but not without directly and visibly affecting European economies as well, to a degree the European public would not tolerate.

Worse sanctions are just bluster – the effort has failed, and keeping the campfire-girls sanctions they have already in effect will constitute a long-term benefit to Russia and long-term damage to the EU, as Russia establishes other markets. Brand loyalty only lasts until customers find something else they like.

kirill, June 27, 2015 at 9:05 pm
The really hilarious thing is that it was the US and its propaganda factory media that undermined the sanctions long before they were ever implemented. They scared off investment in Russia and Russian investment in the west. So all the pain they were expecting from "cutting Russia off" never happened. The west is truly led by retards.
astabada, June 28, 2015 at 3:58 am
but not without directly and visibly affecting European economies as well, to a degree the European public would not tolerate.

This is, incidentally, the reason why the US badly needs an open Russian intervention in Ukraine.

Let's remember once again that the first round of sanctions was passed on the aftermath of MH17. A round of tougher ones would require a bigger tragedy still.

kirill, June 28, 2015 at 6:53 am
A good indication that MH17 was made to order by NATO.

[Jun 28, 2015] Former Finance Minister of Cyprus on the Greek Crisis

"...The troika clearly did a reverse Corleone — they made Tsipras an offer he can't accept, and presumably did this knowingly. So the ultimatum was, in effect, a move to replace the Greek government. And even if you don't like Syriza, that has to be disturbing for anyone who believes in European ideals...."
.
"...This is nothing more than a neo-liberal play. They just don't want to strip their pensions, but infrastructure as well. They should be making the requirements of the loan for deep pension cuts and money for investments which would help build up Greece's economy and the end for these bailouts. The fact they aren't doing that, but trying to confiscate it instead, which is the real issue. "
.
"..."IMF and Germany Are Hell-Bent on Finishing Off Even a Moderate Left in Greece" "Indeed, the leftist Greek government failed to see that what Europe's neoliberal elite was after, especially after being fully aware of the fact that Athens had no alternative plan, was not merely a humiliating Greek deal for the Syriza-led government but finishing them off completely to send a message to all potential "troublemakers" in the euro area of the fate awaiting them if they dared challenge the neoliberal, austerity-based orthodoxy of the new Rome." "
.
"...Panicky depositors spent the weekend pulling an estimated one billion euros from the banking system, stashing the cash in their houses or exchanging them for bulging bags of gold coins."
.
"...There are not as many hedge funds in Greece as there were a year ago, when it is estimated that around 100 foreign funds were sitting on big investment stakes. Their bet was that the previous Greek government would be able to complete the arduous process of economic reform in Greece that started five years ago."
.
"...Most of the hedge fund money in Greece is invested in about 30 billion euros of freshly minted Greek government debt securities that emerged from the 2012 restructuring of private sector bonds."
.
"...Among the most dubious of these, was a 10 percent equity stake, then worth about $137 million, that Mr. Paulson's hedge fund took last year in the Athens water monopoly. The company had little debt and was slated to be privatized, making it an attractive prospect at the time."
Jun 28, 2015 | Economist's View
Peter K.:

Mr Sarris seems a little like a Davos Man.

http://www.nytimes.com/2015/06/29/business/dealbook/panic-among-hedge-fund-investors-in-greece.html

Panic Among Hedge Fund Investors in Greece

By LANDON THOMAS Jr.

JUNE 28, 2015

ATHENS — For investors around the world looking at Greece, there was but one question Sunday: What is going to happen when the markets open on Monday?

That question is particularly acute for the hedge fund investors — including luminaries like David Einhorn and John Paulson — who have collectively poured more than 10 billion euros into Greek government bonds, bank stocks and a slew of other investments.

This weekend, Nicholas L. Papapolitis, a corporate lawyer here, was working around the clock comforting and cajoling his frantic hedge fund clients.

"People are freaking out," said the 32-year-old Mr. Papapolitis, his eyes red and his voice hoarse. "They have made some really big bets on Greece.

But there is no getting around the truth of the matter, he said. Without a deal with its European creditors, the country will default and Greek stocks and bonds will tank when the markets open.

On the ground here, the surprise decision of the Greek prime minister, Alexis Tsipras, to hold a referendum has turned what was a bank jog into more of a sprint with most Greeks now fearing that the country's depleted banks will be closed on Monday.

Panicky depositors spent the weekend pulling an estimated one billion euros from the banking system, stashing the cash in their houses or exchanging them for bulging bags of gold coins.

The yields on Greek government bonds, now around 12 percent are expected to soar as investors rush to unload their positions in a market that of late has become extremely hard to trade.

Bank stocks, if the stock market, in fact, opens, will also be hit with a selling wave, as they cannot survive if the European Central Bank withdraws its emergency lending program.

There are not as many hedge funds in Greece as there were a year ago, when it is estimated that around 100 foreign funds were sitting on big investment stakes. Their bet was that the previous Greek government would be able to complete the arduous process of economic reform in Greece that started five years ago.

When it became clear that a radical Syriza government under Mr. Tsipras would come to power, many investors quickly turned heel, dumping their Greek government bonds and bank stocks in large numbers before and after the election.

But a brave, hardy few stayed put — around 40 to 50, local brokers estimate — taking the view that while the new left-wing government could hardly be described as investor friendly, it would ultimately agree to a deal with Europe. It would be a bumpy ride for sure, but for those taking the long view that Greece would remain in the eurozone, holding onto their investments as opposed to selling them in a panic seemed the better course of action.

For now, at least, that seems to be a terrible misjudgment, especially if Greece defaults and leaves the euro.

Most of the hedge fund money in Greece is invested in about 30 billion euros of freshly minted Greek government debt securities that emerged from the 2012 restructuring of private sector bonds.

The largest investors include Japonica Partners in Rhode Island, the French investment funds H20 and Carmignac and an assortment of other hedge funds like, Farallon, Fortress, York Capital, Baupost, Knighthead and Greylock Capital.

A number of hedge funds have also made big bets on Greek banks, despite their thin levels of capital and nonperforming loans of around 50 percent of assets.

They include Mr. Einhorn at Greenlight Capital and Mr. Paulson, both of whom have invested and lost considerable sums in Piraeus Bank. Fairfax Financial Holdings and the distressed investor Wilbur Ross own a large stake in Eurobank, one Greece's four main banks.

Big positions have also been taken in some of Greece's largest companies. Fortress Capital bought $100 million in discounted debt belonging to Attica Holdings, Greece's largest ferry boat holder. York Capital has taken a 10 percent stake in GEK Terna, a prominent Greek construction and energy firm.

In 2014, Blackstone's credit arm bought a 10 percent chunk of the Greek real estate developer Lamda Development. And Third Point, one of the earliest, most successful investors in Greek government bonds, has set up a $750 million Greek equity fund.

Many of these forays were made during the heady days of 2013 and early 2014 when the view was that, in a rock bottom global interest rate environment, risky Greek assets looked attractive, especially if the reform process continued.

Among the most dubious of these, was a 10 percent equity stake, then worth about $137 million, that Mr. Paulson's hedge fund took last year in the Athens water monopoly. The company had little debt and was slated to be privatized, making it an attractive prospect at the time.

But the privatization process is now frozen and the monopoly is struggling to collect payment on its bills from near broke government entities, making it unlikely that Mr. Paulson will get much of his money back.

To be sure, many of these hedge funds are enormous and their Greek investments represent a fairly small slice of their overall portfolio.

Mr. Papapolitis, who used to work at Skadden Arps law firm in New York structuring exotic real estate deals, moved back to Greece in 2008 and has led some of the biggest hedge fund deals in the market.

Of the same age and generation as many of his clients, he feels their pain.

"These guys are my friends," he said. "They invested in Greece when the economy was improving. And now this happens — I feel obliged to be there for them."

He is not the only point man for hedge funds coming to Greece.

Last week, a group of about 12 of the largest remaining hedge funds arrived in Athens to attend a seminar organized by George Linatsas, a founding partner of Axia Ventures, an investment bank that specializes in Greece, Cyprus, Portugal and Italy, as well as shipping.

With all the large investment banks and law firms having largely given up on Greece, Mr. Linatsas and his team of analysts became the main port of call for hedge funds that started buying Greek government bonds in 2012.

Then, the bonds were trading at 12 cents on the euro and they soon shot up to 60 cents, making billions of dollars for those early investors.

"People made their careers on that trade," Mr. Linatsas said. "The problem now is politics and whether there is a government that can take this country to the next stage."

The outlook seems grim.

Indeed, in recent months these investors have spent little time breaking down balance sheets or discounting cash flows. Instead, they have spent every effort trying to figure out what the Syriza government is up to.

Some have tried to get an edge by listening to Greek radio. Others have hired outside firms to study video clips of Mr. Tsipras and his finance minister, Yanis Varoufakis, to try and discern from body movement and voice tone whether they are telling the truth. And an increasing number have resorted to begging journalists for inside scuttlebutt.

Because few Syriza officials will meet with the investors, a large number of them have banded together, an unusual occurrence in an industry that puts the highest of premiums on secrecy. They exchange tips and theories via emails when they are apart and over wine-soaked dinners in Athens during their frequent trips here.

At times the swankiest hotel in town, the Hotel Grande Bretagne (or G.B. as it is commonly known) is so chock full of hedge fund executives (mostly in their 30s) that some have called it the G.G.B. — the acronym for Greek government bonds.

In recent days, as it has become clear that the Syriza government was not going to accept the latest proposal from its creditors, stress and anxiety has, in some cases, turned to outright anger.

"I just can't believe these guys are willing to torch their own country," one investor with a large holding of Greek bonds lamented in an email. "They thought this was a game. Now, when the supermarkets run out of food, gas stations run out of gas, hospitals have no medicine, tourists flee, salaries don't get paid because banks shut — what are they going to do?"

Peter K. -> Peter K....

""I just can't believe these guys are willing to torch their own country," one investor with a large holding of Greek bonds lamented in an email."

How ideological do you have to be to not understand that the Troika already torched the country and that the Greeks voted in Syriza becasue 5 years on there was no light at the end of the tunnel.

I hope there's a Grexit even if the Troika forces it because the referendum took place after Monday's deadline. Syriza should really study all of the past defaults of other countries.

Paine -> Peter K....

This Sarris gent suggest the Syriza team should have proposed " bold reforms " early on


List em mr S... List em

He however seems to understands the original sin was
The elites decision to bail the private northern banks out

Of course the people of Greece must pay for that sin.

RGC:

"IMF and Germany Are Hell-Bent on Finishing Off Even a Moderate Left in Greece"

"Indeed, the leftist Greek government failed to see that what Europe's neoliberal elite was after, especially after being fully aware of the fact that Athens had no alternative plan, was not merely a humiliating Greek deal for the Syriza-led government but finishing them off completely to send a message to all potential "troublemakers" in the euro area of the fate awaiting them if they dared challenge the neoliberal, austerity-based orthodoxy of the new Rome."

http://www.truth-out.org/news/item/31596-imf-and-germany-are-hell-bent-on-finishing-off-even-a-moderate-left-in-greece

pgl:
Real GDP per person in Cyprus:

http://www.tradingeconomics.com/cyprus/gdp-per-capita

The crash has brought this done to where it was in 2000. Why did they join the Euro system in the first place? Why would anyone listen to the finance minister of this nation?

Paine -> pgl...

Precisely put

Only a corporate lackey corrupted stooge or stool pigeon

Peter K. -> Peter K....

Greece's own central banker, Yannis Stournaras said in a statement after the European Central Bank decision on Sunday that the Greek central bank would "take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances."

Before negotiations broke off on Saturday between Athens and its creditors, the Tsipras government had been hoping to reach terms that would free up a €7.2 billion allotment of bailout money that the country needs to meet its short-term debt obligations.

Because European officials said on Saturday that Greece's €240 billion bailout program would not be extended, the big question had been whether the central bank's president, Mario Draghi, would continue financing the country's depleted banks.

Guidelines of the European Central Bank dictate that it can keep supporting troubled banks as long as there is a possibility that the country in question will come to terms with its creditors on a bailout — as was the case with Cyprus.

If Athens and its creditors do not resume talks before Tuesday, the promise of European support for Greece may no longer be on the table. But the European Commission, the executive arm of the European Union and a key broker in the debt talks, seemed on Sunday to reach out to the Greek people, unexpectedly publishing the offer made to Greece before Prime Minister Alexis Tsipras ended the negotiations and announced a national referendum.

The publication was designed to show the lengths to which the creditors, including the I.M.F. and the European Central Bank, had gone to satisfy Athens's demands for a deal that avoided hurting ordinary Greeks, said one European Union official with direct knowledge of the decision to publish the offer. The official spoke on condition of anonymity because the institutions had not ruled out a resumption of talks with Mr. Tsipras on the sensitive issue of extending the bailout.

"This is a last bridge we are building for them," said the official. The goal of publishing the document was also to pressure "Mr. Tsipras to change course and choose to mount a 'yes' campaign" in the upcoming referendum, the official said.

The official acknowledged there was a slim chance that Mr. Tsipras would accede to the terms so soon after abandoning the negotiations. But if Mr. Tsipras did change course, that could lead to a meeting of leaders of the eurozone member states on Monday night to try one more time to reach a deal before the expiration of the bailout.

On Saturday, amid intense discussions between Greece and its creditors, officials representing the I.M.F., to which Greece owes €1.6 billion on Tuesday, were trying to persuade European leaders and Mr. Draghi to keep the bank emergency assistance flowing. And on Sunday, the head of the I.M.F., Christine Lagarde, waved an olive branch toward Greece.

In a statement, Ms. Lagarde expressed her "disappointment'' in the "inconclusive outcome of recent discussions on Greece in Brussels.''

"I shared my disappointment and underscored our commitment to continue to engage with the Greek authorities," she said, adding that the I.M.F. would ''continue to carefully monitor developments in Greece and other countries in the vicinity and stands ready to provide assistance as needed.''

Early Sunday, the Greek Parliament approved Mr. Tsipras's request for a public referendum on the proposal offer by Greece's creditors, with the vote to be held next Sunday. Mr. Tsipras and other Greek officials had asked European officials and Mr. Draghi to keep the central bank assistance in place until the vote.

The European Central Bank's decision on Sunday to cap the emergency loan program, as opposed to canceling it, "allows the Greek banks to remain in a sort of coma – not functioning but not dead," said Karl Whelan, an economics professor at University College in Dublin. That way, he said, the Greek financial system might be revived if at some later point if Greece secures a deal with its creditors.

Raoul Ruparel, an economist and co-director of Open Europe, a London-based research group, said the rupture between Greece and its creditors on Saturday was unlikely to mean a definitive end to negotiations, instead becoming "merely a prelude" to yet more talks in a week or so after Greece holds its referendum.

"I think we are just getting started on this merry-go-round," Mr. Ruparel said, predicting that Greek voters would probably vote to endorse proposals put forward by creditors and rejected by the Tsipras government. "We would then be back where we started, only in a worse situation," he added. Because the current program will have expired by then, Greece and its creditors would need to negotiate a new bailout — most likely a short-term deal — in an atmosphere poisoned by even deeper distrust than before.

"The whole thing is absolute nightmare,'' Mr. Ruparel said. ''I have been following this saga for five years, and it is depressingly tedious."

leoFromChicago:

Guy is totally business-as-usual.

I'm hardly an expert on Greece but if you were about to make a difficult decision -- say, exit the Euro -- you might want a dramatic display of public backing say, in the form of a referendum.

Peter K.:

For JohnH and Mr. Roger Fox:

http://www.cepr.net/blogs/beat-the-press/the-warnings-from-the-bank-of-international-settlements-have-been-ignored-because-they-have-been-wrong

The Warnings from the Bank of International Settlements Have Been Ignored Because They Have Been Wrong

by Dean Baker

Published: 28 June 2015

The Wall Street Journal passed along warnings from the Bank of International Settlements (BIS) that central banks should start to curtail monetary expansion and that governments need to reduce their debt levels. The piece tells readers:

"The BIS has issued similar warnings in recent years concerning an overreliance on monetary policy, but its advice has gone largely unheeded."

It is worth noting that the BIS has been consistently wrong in prior years, warning as early as 2011 about the prospects of higher inflation due to expansionary monetary policy:

"But despite the obvious near-term price pressures, break-even inflation expectations at distant horizons remained relatively stable, suggesting that central banks' long-term credibility was intact, at least for the time being.

"But controlling inflation in the long term will require policy tightening. And with short-term inflation up, that means a quicker normalisation of policy
rates."

Since that date, the major central banks of the world have been struggling with lower than desired inflation and doing whatever they could to raise the rate of inflation. It would have been helpful to readers to point out that the BIS has been hugely wrong in its past warnings, so people in policy positions appear to have been right to ignore them. This is likely still the case.

anne:

http://krugman.blogs.nytimes.com/2015/06/28/grisis/

June 28, 2015

Grisis
By Paul Krugman

OK, this is real: Greek banks closed, capital controls imposed. Grexit isn't a hard stretch from here — the much feared mother of all bank runs has already happened, which means that the cost-benefit analysis starting from here is much more favorable to euro exit than it ever was before.

Clearly, though, some decisions now have to wait on the referendum.

I would vote no, for two reasons. First, much as the prospect of euro exit frightens everyone — me included — the troika is now effectively demanding that the policy regime of the past five years be continued indefinitely. Where is the hope in that? Maybe, just maybe, the willingness to leave will inspire a rethink, although probably not. But even so, devaluation couldn't create that much more chaos than already exists, and would pave the way for eventual recovery, just as it has in many other times and places. Greece is not that different.

Second, the political implications of a yes vote would be deeply troubling. The troika clearly did a reverse Corleone — they made Tsipras an offer he can't accept, and presumably did this knowingly. So the ultimatum was, in effect, a move to replace the Greek government. And even if you don't like Syriza, that has to be disturbing for anyone who believes in European ideals.

A strange logistical note: I'm on semi-vacation this week, doing a bicycle trip in an undisclosed location. It's only a semi-vacation because I didn't negotiate any days off the column; I'll be in tomorrow's paper (hmm, I wonder what the subject is) and have worked the logistics so as to make Friday's column doable too. I was planning to do little if any blogging, and will in any case do less than I might have otherwise given the events.

anne -> anne...
http://krugman.blogs.nytimes.com/2015/06/28/grisis/

June 28, 2015

Grisis
By Paul Krugman

Clearly, though, some decisions now have to wait on the referendum.

I would vote no, for two reasons. First, much as the prospect of euro exit frightens everyone — me included — the troika * is now effectively demanding that the policy regime of the past five years be continued indefinitely. Where is the hope in that? Maybe, just maybe, the willingness to leave will inspire a rethink, although probably not. But even so, devaluation couldn't create that much more chaos than already exists, and would pave the way for eventual recovery, just as it has in many other times and places. Greece is not that different.

Second, the political implications of a yes vote would be deeply troubling. The troika clearly did a reverse Corleone — they made Tsipras an offer he can't accept, and presumably did this knowingly. So the ultimatum was, in effect, a move to replace the Greek government. And even if you don't like Syriza, that has to be disturbing for anyone who believes in European ideals....

* European Union Commission, EuropeanCentral Bank, and International Monetary Fund

Paine -> anne...

Pk has really shown a leadership side here
Not contrarian
Progressive leadership

Vote no !

Praise be to PK

Ben Groves:

This is nothing more than a neo-liberal play. They just don't want to strip their pensions, but infrastructure as well. They should be making the requirements of the loan for deep pension cuts and money for investments which would hel build up Greece's economy and the end for these bailouts. The fact they aren't doing that, but trying to confiscate it instead, which is the real issue. If Greece wants their fat pension system, that is their choice.

I don't see anything different than post WWI Germany. This is what Libertarianism will bring to the West if implemented. They would dismantle the current power structure and replace it with a privately controlled syndicate dictating wealth much like today. This is not new, it has been going on since the rise of Abrahamic religions in the west.

Fred C. Dobbs -> Lafayette...

Greece is doomed - Matt Yglesias - June 27 http://www.vox.com/2015/6/27/8856297/greece-referendum-euro via @voxdotcom

(Various useful links, at the link.)

... to understand the deeper causes of what's been going on since Tsipras' government swept to power in January, you really need to set the finance and economics aside and focus on the politics. Greece has been drawing dead this whole time, and the future outlook appears bleak for one simple reason — nobody else in Europe who holds power has any interest in making things anything other than painful for Greece.

1) Giving Greece a better deal would be a political disaster

Tsipras' fundamental miscalculation has been that he thought that by cloaking his specific requests for more lenient terms in the larger cause of anti-austerity politics, he could build a coalition of political support throughout Europe for his position. The reality was just the opposite. While politicians in Europe's creditor nations were naturally reluctant to grant Greece a better deal, politicians in Europe's debtor nations were even more opposed.

After all, if electing a bunch of far-left types to parliament so they can demand a better deal actually worked, then voters in Portugal and Spain and Italy and Ireland would take note of that fact. And the last thing the current crop of elected officials in Lisbon and Madrid and Rome and Dublin want is to all be turned out in favor of a bunch of far-left types.

2) Letting Greece default gracefully would be a disaster

Even if Greece's European partners weren't inclined to give Greece a better financial deal, they could have at least smoothed the path to default. A Greece that doesn't pay what it owes would be instantly cut off from credit markets and forced to run a very austere fiscal policy.

It's in Europe's interest to make things as hard as possible for Greece

Things could have been left at that. Instead, throughout the year, the European Central Bank has been saying that it will cut the Greek banking system off from emergency funding if Greece doesn't keep paying its debts. That means default will lead to the collapse of Greek banks, and the end of Greek membership in the euro.

That's a political decision the ECB isn't legally required to make. But politically it's the only possible decision. After all, if a default works out non-disastrously for Greece then other countries could be tempted to default. And international investors might worry that other countries could be tempted to default, raising interest rates and slowing the European economy. Only making default as painful as possible can safeguard the interests of other countries.

3) Letting Greece leave the Eurozone gracefully would be a disaster

Here's where the news gets really bad for Greece. Leaving the Eurozone could, in theory, go better or worse. But Europe needs it to go as badly as possible. After all, if Greece leaving goes pretty well, then other countries might be tempted to leave. And that raises the prospect of debt defaults, higher interest rates, and slowing European growth.

Once again, it's in Europe's interest to make things as hard as possible for Greece.

4) This is the time to fold 'em

The tragic irony, if you are Tsipras, is that his plan very well might have worked back in 2010 when his predecessors originally agreed to the terms of a bailout. Back then, the whole situation was considerably more fluid. Greece could have threatened to default and essentially commit a murder/suicide on the entire European economy unless it got better terms. That would have been a very risky strategy and you can see why the Greek government didn't pursue it. But it might have worked.

Yet as the song says, you need to know when to hold 'em and know when to fold 'em. ...

(Alternatively, persuade various major German
corps to re-locate to Greece, for tax-breaks,
warm weather, great beaches, warm weather,
'right-to-work' labor policies, tax breaks,
warm weather & great beaches, and - voilà - problem solved!)

Fred C. Dobbs:

The Next Few Days Have the Potential to Transform
Greece and Europe http://nyti.ms/1Nr7fbd via @UpshotNYT
NYT - Neil Irwin - June 28

As it turns out, the Greek crisis ends not with a bang, but with a referendum.

It has been easy to ignore the doings in Greece for the last few years, with the perpetual series of summits in Brussels that never seem to resolve anything. But it's time to pay attention. These next few days are shaping up to become a transformational moment in the 60-year project of building a unified Europe. We just don't yet know what sort of transformation it will be.

The immediate headlines that got us to this point are these: After an intractable series of negotiations over a bailout extension with Greece's creditors, the nation's left-wing government left the table Friday and said it would hold a referendum on July 5. Greek leaders think the offer on the table from European governments and the International Monetary Fund is lousy, requiring still more pension cuts and tax increases in a depressed economy, and intend to throw to voters the question of whether to accept it.

Whatever the exact phrasing of the question (and assuming the referendum goes forward as planned), it really boils down to this simple choice:

The Greek government, led by Alexis Tsipras, disputes this framing, and argues that Greece could in fact reject the creditors' offer to extend the bailout program while sticking with the euro. Events over the weekend show how untenable that is. Thousands of Greeks lined up to withdraw euros from money machines, and the European Central Bank said it would not increase the size of the emergency lending program that Greek banks have been using to secure euros.

Ergo, the Greek banks are, or will soon be, out of money, and the E.C.B. will be disinclined to open the floodgates again in the absence of a bailout deal. That's why the Greek government has effectively frozen its financial system, closing banks and the stock market on Monday. ...

Greece Will Close Banks to Stem Flood of Withdrawals http://nyti.ms/1QXdEB2

LANDON THOMAS Jr. and NIKI KITSANTONIS - JUNE 28

ATHENS — Greece will keep its banks closed on Monday and place restrictions on the withdrawal and transfer of money, Prime Minister Alexis Tsipras said in a televised address on Sunday night, as Athens tries to avert a financial collapse.

The government's decision to close banks temporarily and impose other so-called capital controls — and to keep the stock market closed on Monday — came hours after the European Central Bank said it would not expand an emergency loan program that has been propping up Greek banks in recent weeks while the government was trying to reach a new debt deal with international creditors. ...

College Is Wildly Exploitative Why Aren't Students Raising Hell

"..."Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase stocks, bonds, and real estate. ""
"...I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state apparatus of the modern capitalist state par excellance. The real purpose of the university was not to level the playing field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce itself. "
"...Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the Great American Workplace if they are caught protesting anything on camera."
"...Many of the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job."
"...In Chapter One of this book entitled "The Iron law of Liberalism and the Era of Total Bureaucratization" Graeber notes that the US has become the most rigidly credentialised society in the world where "
"...Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases in prices are health care and higher education."
"...Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year. The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free."
"...As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course."
"...At a basic level, I think the answer is yes, because on balance, college still provides a lot of privatized value to the individual. Being an exploited student with the College Credential Seal of Approval remains relatively much better than being an exploited non student lacking that all important seal. A college degree, for example, is practically a guarantee of avoiding the more unseemly parts of the US "justice" system."
"...My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands exactly that this is going on, but still …."

naked capitalism

Yves here. In May, we wrote up and embedded the report on how NYU exploits students and adjuncts in "The Art of the Gouge": NYU as a Model for Predatory Higher Education. This article below uses that study as a point of departure for for its discussion of how higher education has become extractive.

By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published at Alternet

Higher education wears the cloak of liberalism, but in policy and practice, it can be a corrupt and cutthroat system of power and exploitation. It benefits immensely from right-wing McCarthy wannabes, who in an effort to restrict academic freedom and silence political dissent, depict universities as left-wing indoctrination centers.

But the reality is that while college administrators might affix "down with the man" stickers on their office doors, many prop up a system that is severely unfair to American students and professors, a shocking number of whom struggle to make ends meet. Even the most elementary level of political science instructs that politics is about power. Power, in America, is about money: who has it? Who does not have it? Who is accumulating it? Who is losing it? Where is it going?

Four hundred faculty members at New York University, one of the nation's most expensive schools, recently released a report on how their own place of employment, legally a nonprofit institution, has become a predatory business, hardly any different in ethical practice or economic procedure than a sleazy storefront payday loan operator. Its title succinctly summarizes the new intellectual discipline deans and regents have learned to master: "The Art of The Gouge."

The result of their investigation reads as if Charles Dickens and Franz Kafka collaborated on notes for a novel. Administrators not only continue to raise tuition at staggering rates, but they burden their students with inexplicable fees, high cost burdens and expensive requirements like mandatory study abroad programs. When students question the basis of their charges, much of them hidden during the enrollment and registration phases, they find themselves lost in a tornadic swirl of forms, automated answering services and other bureaucratic debris.

Often the additional fees add up to thousands of dollars, and that comes on top of the already hefty tuition, currently $46,000 per academic year, which is more than double its rate of 2001. Tuition at NYU is higher than most colleges, but a bachelor's degree, nearly anywhere else, still comes with a punitive price tag. According to the College Board, the average cost of tuition and fees for the 2014–2015 school year was $31,231 at private colleges, $9,139 for state residents at public colleges, and $22,958 for out-of-state residents attending public universities.

Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases in prices are health care and higher education. Lack of affordable health care is a crime, Reich argues, but at least new medicines, medical technologies, surgeries, surgery techs, and specialists can partially account for inflation. Higher education can claim no costly infrastructural or operational developments to defend its sophisticated swindle of American families. It is a high-tech, multifaceted, but old fashioned transfer of wealth from the poor, working- and middle-classes to the rich.

Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year. The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free.

Meanwhile, NYU has spent billions, over the past 20 years, on largely unnecessary real estate projects, buying property and renovating buildings throughout New York. The professors' analysis, NYU's US News and World Report Ranking, and student reviews demonstrate that few of these extravagant projects, aimed mostly at pleasing wealthy donors, attracting media attention, and giving administrators opulent quarters, had any impact on overall educational quality.

As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course.

Many schools offer rates far below the average, most especially community colleges paying only $1,000 to $1,500. Even at the best paying schools, adjuncts, as part time employees, are rarely eligible for health insurance and other benefits. Many universities place strict limits on how many courses an instructor can teach. According to a recent study, 25 percent of adjuncts receive government assistance.

The actual scandal of "The Art of the Gouge" is that even if NYU is a particularly egregious offender of basic decency and honesty, most of the report's indictments could apply equally to nearly any American university. From 2003-2013, college tuition increased by a crushing 80 percent. That far outpaces all other inflation. The closest competitor was the cost of medical care, which in the same time period, increased by a rate of 49 percent. On average, tuition in America rises eight percent on an annual basis, placing it far outside the moral universe. Most European universities charge only marginal fees for attendance, and many of them are free. Senator Bernie Sanders recently introduced a bill proposing all public universities offer free education. It received little political support, and almost no media coverage.

In order to obtain an education, students accept the paralytic weight of student debt, the only form of debt not dischargeable in bankruptcy. Before a young person can even think about buying a car, house or starting a family, she leaves college with thousands of dollars in debt: an average of $29,400 in 2012. As colleges continue to suck their students dry of every dime, the US government profits at $41.3 billion per year by collecting interest on that debt. Congress recently cut funding for Pell Grants, yet increased the budget for hiring debt collectors to target delinquent student borrowers.

The university, once an incubator of ideas and entrance into opportunity, has mutated into a tabletop model of America's economic architecture, where the top one percent of income earners now owns 40 percent of the wealth.

"The One Percent at State U," an Institute for Policy Studies report, found that at the 25 public universities with the highest paid presidents, student debt and adjunct faculty increased at dramatically higher rates than at the average state university. Marjorie Wood, the study's co-author, explained told the New York Times that extravagant executive pay is the "tip of a very large iceberg, with universities that have top-heavy executive spending also having more adjuncts, more tuition increases and more administrative spending.

Unfortunately, students seem like passive participants in their own liquidation. An American student protest timeline for 2014-'15, compiled by historian Angus Johnston, reveals that most demonstrations and rallies focused on police violence, and sexism. Those issues should inspire vigilance and activism, but only 10 out of 160 protests targeted tuition hikes for attack, and only two of those 10 events took place outside the state of California.

Class consciousness and solidarity actually exist in Chile, where in 2011 a student movement began to organize, making demands for free college. More than mere theater, high school and college students, along with many of their parental allies, engaged the political system and made specific demands for inexpensive education. The Chilean government announced that in March 2016, it will eliminate all tuition from public universities. Chile's victory for participatory democracy, equality of opportunity and social justice should instruct and inspire Americans. Triumph over extortion and embezzlement is possible.

This seems unlikely to happen in a culture, however, where even most poor Americans view themselves, in the words of John Steinbeck, as "temporarily embarrassed millionaires." The political, educational and economic ruling class of America is comfortable selling out its progeny. In the words of one student quoted in "The Art of the Gouge," "they see me as nothing more than $200,000."

washunate June 26, 2015 at 10:07 am

Awesome question in the headline.

At a basic level, I think the answer is yes, because on balance, college still provides a lot of privatized value to the individual. Being an exploited student with the College Credential Seal of Approval remains relatively much better than being an exploited non student lacking that all important seal. A college degree, for example, is practically a guarantee of avoiding the more unseemly parts of the US "justice" system.

But I think this is changing. The pressure is building from the bottom as academia loses credibility as an institution capable of, never mind interested in, serving the public good rather than simply being another profit center for connected workers. It's actually a pretty exciting time. The kiddos are getting pretty fed up, and the authoritarians at the top of the hierarchy are running out of money with which to buy off younger technocratic enablers and thought leaders and other Serious People.

washunate June 26, 2015 at 10:17 am

P.S., the author in this post demonstrates the very answer to the question. He assumes as true, without any need for support, that the very act of possessing a college degree makes one worthy of a better place in society. That mindset is why colleges can prey upon students. They hold a monopoly on access to resources in American society. My bold:

Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits.

What does having a masters degree or PhD have to do with the moral claim of all human beings to a life of dignity and purpose?

flora June 26, 2015 at 11:37 am

There are so many more job seekers per job opening now than, say, 20 or thirty years ago that a degree is used to sort out applications. Now a job that formerly listed a high school degree as a requirement may now list a college degree as a requirement, just to cut down on the number of applications.

So, no, a B.A. or B.S. doesn't confer moral worth, but it does open more job doors than a high school diploma, even if the actual work only requires high school level math, reading, science or technology.

Ben June 26, 2015 at 1:11 pm

I agree a phd often makes someone no more useful in society. However the behaviour of the kids is rational *because* employers demand a masters / phd.

Students are then caught in a trap. Employers demand the paper, often from an expensive institution. The credit is abundant thanks to govt backed loans. They are caught in a situation where as a collective it makes no sense to join in, but as an individual if they opt out they get hurt also.

Same deal for housing. It's a mad world my masters.

What can we do about this? The weak link in the chain seems to me to be employers. Why are they hurting themselves by selecting people who want higher pay but may offer little to no extra value? I work as a programmer and I often think " if we could just 'see' the non-graduate diamonds in the rough".

If employers had perfect knowledge of prospective employees *and* if they saw that a degree would make no difference to their performance universities would crumble overnight.

The state will never stop printing money via student loans. If we can fix recruitment then universities are dead.

washunate June 26, 2015 at 2:22 pm

Why are they hurting themselves by selecting people who want higher pay but may offer little to no extra value?

Yeah, I have thought a lot about that particular question of organizational behavior. It does make sense, conceptually, that somebody would disrupt the system and take people based on ability rather than credentials. Yet we are moving in the opposite direction, toward more rigidity in educational requirements for employment.

For my two cents, I think the bulk of the answer lies in how hiring specifically, and management philosophy more generally, works in practice. The people who make decisions are themselves also subject to someone else's decisions. This is true all up and down the hierarchical ladder, from board members and senior executives to the most junior managers and professionals.

It's true that someone without a degree may offer the same (or better) performance to the company. But they do not offer the same performance to the people making decisions, because those individual people also depend upon their own college degrees to sell their own labor services. To hire significant numbers of employees without degrees into important roles is to sabotage their own personal value.

Very few people are willing to be that kind of martyr. And generally speaking, they tend to self-select away from occupations where they can meaningfully influence decision-making processes in large organizations.

Absolutely, individual business owners can call BS on the whole scam. It is a way that individual people can take action against systemic oppression. Hire workers based upon their fit for the job, not their educational credentials or criminal background or skin color or sexual orientation or all of the other tests we have used. But that's not a systemic solution because the incentives created by public policy are overwhelming at large organizations to restrict who is 'qualified' to fill the good jobs (and increasingly, even the crappy jobs).

Laaughingsong June 26, 2015 at 3:03 pm

I am not so sure that this is so. So many jobs are now crapified. When I was made redundant in 2009, I could not find many jobs that fit my level of experience (just experience! I have no college degree), so I applied for anything that fit my skill set, pretty much regardless of level. I was called Overqualified. I have heard that in the past as well, but never more so during that stretch of job hunting. Remember that's with no degree. Maybe younger people don't hear it as much. But I also think life experience has something to do with it, you need to have something to compare it to. How many times did our parents tell us how different things were when they were kids, how much easier? I didn't take that on board, did y'all?

sam s smith June 26, 2015 at 4:03 pm

I blame HR.

tsk June 27, 2015 at 4:42 pm

For various reasons, people seeking work these days, especially younger job applicants, might not possess the habits of mind and behavior that would make them good employees – i.e., punctuality, the willingness to come to work every day (even when something more fun or interesting comes up, or when one has partied hard the night before), the ability to meet deadlines rather than make excuses for not meeting them, the ability to write competently at a basic level, the ability to read instructions, diagrams, charts, or any other sort of necessary background material, the ability to handle basic computation, the ability to FOLLOW instructions rather than deciding that one will pick and choose which rules and instructions to follow and which to ignore, trainability, etc.

Even if a job applicant's degree is in a totally unrelated field, the fact that he or she has managed to complete an undergraduate degree–or, if relevant, a master's or a doctorate – is often accepted by employers as a sign that the applicant has a sense of personal responsibility, a certain amount of diligence and educability, and a certain level of basic competence in reading, writing, and math.

By the same token, employers often assume that an applicant who didn't bother going to college or who couldn't complete a college degree program is probably not someone to be counted on to be a responsible, trainable, competent employee.

Obviously those who don't go to college, or who go but drop out or flunk out, end up disadvantaged when competing for jobs, which might not be fair at all in individual cases, especially now that college has been priced so far out of the range of so many bright, diligent students from among the poor and and working classes, and now even those from the middle class.

Nevertheless, in general an individual's ability to complete a college degree is not an unreasonable stand-in as evidence of that person's suitability for employment.

Roland June 27, 2015 at 5:14 pm

Nicely put, Ben.

Students are first caught in a trap of "credentials inflation" needed to obtain jobs, then caught by inflation in education costs, then stuck with undischargeable debt. And the more of them who get the credentials, the worse the credentials inflation–a spiral.

It's all fuelled by loose credit. The only beneficiaries are a managerial elite who enjoy palatial facilities.

As for the employers, they're not so bad off. Wages are coming down for credentialled employees due to all the competition. There is such a huge stock of degreed applicants that they can afford to ignore anyone who isn't. The credentials don't cost the employer–they're not spending the money, nor are they lending the money.

Modern money makes it possible for the central authorities to keep this racket going all the way up to the point of general systemic collapse. Why should they stop? Who's going to make them stop?

Bobbo June 26, 2015 at 10:19 am

The only reason the universities can get away with it is easy money. When the time comes that students actually need to pay tuition with real money, money they or their parents have actually saved, then college tuition rates will crash back down to earth. Don't blame the universities. This is the natural and inevitable outcome of easy money.

Jim June 26, 2015 at 10:54 am

Yes, college education in the US is a classic example of the effects of subsidies. Eliminate the subsidies and the whole education bubble would rapidly implode.

washunate June 26, 2015 at 11:03 am

I'm very curious if anyone will disagree with that assessment.

An obvious commonality across higher education, healthcare, housing, criminal justice, and national security is that we spend huge quantities of public money yet hold the workers receiving that money to extremely low standards of accountability for what they do with it.

tegnost June 26, 2015 at 11:38 am

Correct, it's not the universities, it's the culture that contains the universities, but the universities are training grounds for the culture so it is the universities just not only the universities… Been remembering the song from my college days "my futures so bright i gotta wear shades". getting rich was the end in itself, and people who didn't make it didn't deserve anything but a whole lot of student debt,creating perverse incentives. And now we all know what the A in type a stands for…at least among those who self identify as such, so yes it is the universities

Chris in Paris June 26, 2015 at 12:07 pm

I don't understand why the ability to accept guaranteed loan money doesn't come with an obligation by the school to cap tuition at a certain percentage over maximum loan amount? Would that be so hard to institute?

Ben June 26, 2015 at 1:53 pm

Student loans are debt issuance. Western states are desperate to issue debt as it's fungible with money and marked down as growth.

Borrow 120K over 3 years and it all gets paid into university coffers and reappears as "profit" now. Let some other president deal with low disposable income due to loan repayments. It's in a different electoral cycle – perfect.

jrd2 June 26, 2015 at 11:50 am

You can try to argue, but it will be hard to refute. If you give mortgages at teaser rates to anybody who can fog a mirror, you get a housing bubble. If you give student loans to any student without regard to the prospects of that student paying back the loan, you get a higher education bubble. Which will include private equity trying to catch as much of this money as they possibly can by investing in for profit educational institutions just barely adequate to benefit from federal student loan funds.

jrs June 26, 2015 at 6:16 pm

A lot of background conditions help. It helps to pump a housing bubble if there's nothing else worth investing in (including saving money at zero interest rates). It helps pump an education bubble if most of the jobs have been outsourced so people are competing more and more for fewer and fewer.

Beans June 26, 2015 at 11:51 am

I don't disagree with the statement that easy money has played the biggest role in jacking up tuition. I do strongly disagree that we shouldn't "blame" the universities. The universities are exactly where we should place the blame. The universities have become job training grounds, and yet continue to droll on and on about the importance of noble things like liberal education, the pursuit of knowledge, the importance of ideas, etc. They cannot have it both ways. Years ago, when tuition rates started escalating faster than inflation, the universities should have been the loudest critics – pointing out the cultural problems that would accompany sending the next generation into the future deeply indebted – namely that all the noble ideas learned at the university would get thrown out the window when financial reality forced recent graduates to chose between noble ideas and survival. If universities truly believed that a liberal education was important; that the pursuit of knowledge benefitted humanity – they should have led the charge to hold down tuition.

washunate June 26, 2015 at 12:47 pm

I took it to mean blame as in what allows the system to function. I heartily agree that highly paid workers at universities bear blame for what they do (and don't do) at a granular level.

It's just that they couldn't do those things without the system handing them gobs of resources, from tax deductability of charitable contributions to ignoring anti-competitive behavior in local real estate ownership to research grants and other direct funding to student loans and other indirect funding.

Jim June 26, 2015 at 3:09 pm

Regarding blaming "highly paid workers at universities" – If a society creates incentives for dysfunctional behavior such a society will have a lot of dysfunction. Eliminate the subsidies and see how quicly the educational bubble pops.

James Levy June 26, 2015 at 2:45 pm

You are ignoring the way that the rich bid up the cost of everything. 2% of the population will pay whatever the top dozen or so schools will charge so that little Billy or Sue can go to Harvard or Stanford. This leads to cost creep as the next tier ratchet up their prices in lock step with those above them, etc. The same dynamic happens with housing, at least around wealthy metropolitan areas.

daniel June 26, 2015 at 12:07 pm

Hi to you two,

A European perspective on this: yep, that's true on an international perspective. I belong to the ugly list of those readers of this blog who do not fully share the liberal values of most of you hear. However, may I say that I can agree on a lot of stuff.

US education and health-care are outrageously costly. Every European citizen moving to the states has a question: will he or she be sick whilst there. Every European parent with kids in higher education is aware that having their kids for one closing year in the US is the more they can afford (except if are a banquier d'affaires…). Is the value of the US education good? No doubt! Is is good value for money, of course not. Is the return on the money ok? It will prove disastrous, except if the USD crashed. The main reason? Easy money. As for any kind of investment. Remember that this is indeed a investment plan…

Check the level of revenues of "public sector" teaching staff on both sides of the ponds. The figure for US professionals in these area are available on the Web. They are indeed much more costly than, say, North-of-Europe counterparts, "public sector" professionals in those area. Is higher education in the Netherlands sub-par when compared to the US? Of course not.

Yep financing education via the Fed (directly or not) is not only insanely costly. Just insane. The only decent solution: set up public institutions staffed with service-minded professionals that did not have to pay an insane sum to build up the curriculum themselves.

Are "public services" less efficient than private ones here in those area, health-care and higher education. Yep, most certainly. But, sure, having the fed indirectly finance the educational system just destroy any competitive savings made in building a competitive market-orientated educational system and is one of the worst way to handle your educational system.

Yep, you can do a worst use of the money, subprime or China buildings… But that's all about it.

US should forget about exceptionnalism and pay attention to what North of Europe is doing in this area. Mind you, I am Southerner (of Europe). But of course I understand that trying to run these services on a federal basis is indeed "mission impossible".

Way to big! Hence the indirect Washington-decided Wall-Street-intermediated Fed-and-deficit-driven financing of higher education. Mind you: we have more and more of this bankers meddling in education in Europe and I do not like what I see.

John Zelnicker June 27, 2015 at 1:36 pm

@washunate – 6/26/15, 11:03 am. I know I'm late to the party, but I disagree. It's not the workers, it's the executives and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards.

IMNSHO everyone needs to stop blaming labor and/or the labor unions. It's not the front line workers, teachers, retail clerks, adjunct instructors, all those people who do the actual work rather than managing other people. Those workers have no bargaining power, and the unions have lost most of theirs, in part due to the horrible labor market, as well as other important reasons.

We have demonized virtually all of the government workers who actually do the work that enables us to even have a government (all levels) and to provide the services we demand, such as public safety, education, and infrastructure. These people are our neighbors, relatives and friends; we owe them better than this.

/end of rant

Roland June 27, 2015 at 5:20 pm

Unionized support staff at Canadian universities have had sub-inflation wage increases for nearly 20 years, while tuition has been rising at triple the rate of inflation.

So obviously one can't blame the unions for rising education costs.

Spring Texan June 28, 2015 at 8:03 am

Thanks for your rant! You said a mouthful. And could not be more correct.

Adam Eran June 26, 2015 at 12:18 pm

Omitted from this account: Federal funding for education has declined 55% since 1972. … Part of the Powell memo's agenda.

It's understandable too; one can hardly blame legislators for punishing the educational establishment given the protests of the '60s and early '70s… After all, they were one reason Nixon and Reagan rose to power. How dare they propose real democracy! Harumph!

To add to students' burden, there's the recent revision of bankruptcy law: student loans can no longer be retired by bankruptcy (Thanks Hillary!)…It'll be interesting to see whether Hillary's vote on that bankruptcy revision becomes a campaign issue.

I also wonder whether employers will start to look for people without degrees as an indication they were intelligent enough to sidestep this extractive scam.

washunate June 26, 2015 at 1:54 pm

I'd be curious what you count as federal funding. Pell grants, for example, have expanded both in terms of the number of recipients and the amount of spending over the past 3 – 4 decades.

More generally, federal support for higher ed comes in a variety of forms. The bankruptcy law you mention is itself a form of federal funding. Tax exemption is another. Tax deductabiliity of contributions is another. So are research grants and exemptions from anti-competitive laws and so forth. There are a range of individual tax credits and deductions. The federal government also does not intervene in a lot of state supports, such as licensing practices in law and medicine that make higher ed gatekeepers to various fiefdoms and allowing universities to take fees for administering (sponsoring) charter schools. The Federal Work-Study program is probably one of the clearest specific examples of a program that offers both largely meaningless busy work and terrible wages.

As far as large employers seeking intelligence, I'm not sure that's an issue in the US? Generally speaking, the point of putting a college credential in a job requirement is precisely to find people participating in the 'scam'. If an employer is genuinely looking for intelligence, they don't have minimum educational requirements.

Laughingsong June 26, 2015 at 3:12 pm

I heard that Congress is cutting those:
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/12/10/congress-cuts-federal-financial-aid-for-needy-students/

different clue June 28, 2015 at 3:06 am

Why would tuition rates come down when students need to pay with "real money, money they or their parents have actually saved. . . " ? Didn't tuition at state universities begin climbing when state governments began boycotting state universities in terms of embargoing former rates of taxpayer support to them? Leaving the state universities to try making up the difference by raising tuition? If people want to limit or reduce the tuition charged to in-state students of state universities, people will have to resume paying former rates of taxes and elect people to state government to re-target those taxes back to state universities the way they used to do before the reductions in state support to state universities.

Jesper June 26, 2015 at 10:29 am

Protest against exploitation and risk being black-listed by exploitative employers -> Only employers left are the ones who actually do want (not pretend to want) ethical people willing to stand up for what they believe in. Not many of those kind of employers around…. What is the benefit? What are the risks?

Tammy June 27, 2015 at 4:35 pm

What is the benefit? What are the risks?
I am not a progressive, yet, there is always risk for solidary progress.

Andrew June 26, 2015 at 10:53 am

The author misrepresents the nature and demands of Chile's student movement.

Over the past few decades, university enrollment rates for Chileans expanded dramatically in part due to the creation of many private universities. In Chile, public universities lead the pack in terms of academic reputation and entrance is determined via competitive exams. As a result, students from poorer households who attended low-quality secondary schools generally need to look at private universities to get a degree. And these are the students to which the newly created colleges catered to.

According to Chilean legislation, universities can only function as non-profit entities. However, many of these new institutions were only nominally non-profit entities (for example, the owners of the university would also set up a real estate company that would rent the facilities to the college at above market prices) and they were very much lacking in quality. After a series of high-profile cases of universities that were open and shut within a few years leaving its students in limbo and debt, anger mounted over for-profit education.

The widespread support of the student movement was due to generalized anger about and education system that is dearly lacking in quality and to the violation of the spirit of the law regulating education. Once the student movement's demands became more specific and morphed from opposing for profit institutions to demanding free tuition for everyone, the widespread support waned quickly.

And while the government announced free tuition in public universities, there is a widespread consensus that this is a pretty terrible idea as it is regressive and involves large fiscal costs. In particular because most of the students that attend public universities come from relatively wealthy households that can afford tuition. The students that need the tuition assistance will not benefit under the new rules.

I personally benefited from the fantastically generous financial aid systems that some private American universities have set up which award grants and scholarships based on financial need only. And I believe that it is desirable for the State to guarantee that any qualified student has access to college regardless of his or her wealth I think that by romanticizing the Chilean student movement the author reveals himself to be either is dishonest or, at best, ignorant.

RanDomino June 27, 2015 at 12:23 pm

The protests also involved extremely large riots.

The Insider June 26, 2015 at 10:57 am

Students aren't protesting because they don't feel the consequences until they graduate.

One thing that struck me when I applied for a student loan a few years back to help me get through my last year of graduate school – the living expense allocation was surprisingly high. Not "student sharing an apartment with five random dudes while eating ramen and riding the bus", but more "living alone in a nice one-bedroom apartment while eating takeout and driving a car". Apocryphal stories of students using their student loans to buy new cars or take extravagant vacations were not impossible to believe.

The living expense portion of student loans is often so generous that students can live relatively well while going to school, which makes it that much easier for them to push to the backs of their minds the consequences that will come from so much debt when they graduate. Consequently, it isn't the students who are complaining – it's the former students. But by the time they are out of school and the university has their money in its pocket, it's too late for them to try and change the system.

lord koos June 26, 2015 at 11:42 am

I'm sure many students are simply happy to be in college… the ugly truth hits later.

optimader June 26, 2015 at 12:39 pm

http://www.marketplace.org/topics/life/education/compete-students-colleges-roll-out-amenities

Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate.

"As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says.

A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door.

"That's really nice compared to community bathrooms that I lived in last year," Conley says.

To be fair, granite countertops last longer. Tempur-Pedic is a local company — and gave a big discount. The amenities include classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar?

"Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder to recruit.

"If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have available to offer, we were very far behind."

Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says. They expect more privacy than previous generations — and more comforts.

"These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at San Diego State University and author of the book "Generation Me."

Those students could be in for some disappointment when they graduate, she says.

"When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening."

Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him.

"I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and get the dorm I'm in. It's perfectly fine."

In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of its residence halls.

So I wonder who on average will fair better navigating the post-college lifestyle/job market reality check, Noell or Josh? Personally, I would bet on the Joshes living in the 60's vintage enamel painted ciderblock dorm rooms.

optimader June 26, 2015 at 12:47 pm

Universities responding to the market

http://www.thefiscaltimes.com/Articles/2012/08/29/10-Public-Colleges-with-Insanely-Luxurious-Dorms

Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that "poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions.

PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms

Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review, College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting to show up on those reviews, too.

While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer students resort-like amenities.

Jerry Denim June 26, 2015 at 4:37 pm

Bingo! They don't get really mad until they're in their early thirties and they are still stuck doing some menial job with no vacation time, no health insurance and a monstrous mountain of debt. Up until that point they're still working hard waiting for their ship to come in and blaming themselves for any lack of success like Steinbeck's 'embarrassed millionaires.' Then one day maybe a decade after they graduate they realize they've been conned but they've got bills to pay and other problems to worry about so they solider on. 18 year-olds are told by their high school guidance councilors, their parents and all of the adults they trust that college while expensive is a good investment and the only way to succeed. Why should they argue? They don't know any better yet.

different clue June 28, 2015 at 3:09 am

Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the Great American Workplace if they are caught protesting anything on camera.

Today isn't like the sixties when you could drop out in the confidence that you could always drop back in again. Nowadays there are ten limpets for every scar on the rock.

seabos84 June 26, 2015 at 11:16 am

the average is such a worthless number. The Data we need, and which all these parasitic professional managerial types won't provide –
x axis would be family income, by $5000 increments.
y axis would be the median debt level
we could get fancy, and also throw in how many kids are in school in each of those income increments.

BTW – this 55 yr. old troglodyte believes that 1 of the roles (note – I did NOT say "The Role") of education is preparing people to useful to society. 300++ million Americans, 7 billion humans – we ALL need shelter, reliable and safe food, reliable and safe water, sewage disposal, clothing, transportation, education, sick care, power, leisure, … we should ALL have access to family wage jobs and time for BBQs with our various communities several times a year. I know plenty of techno-dweebs here in Seattle who need to learn some of the lessons of 1984, The Prince, and Shakespeare. I know plenty of fuzzies who could be a bit more useful with some rudimentary skills in engineering, or accounting, or finance, or stats, or bio, or chem …
I don't know what the current education system is providing, other than some accidental good things for society at large, and mainly mechanisms for the para$ite cla$$e$ to stay parasites.

rmm.

Adam Eran June 26, 2015 at 12:22 pm

Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S.

This suppression in China led to an increase in Mao's authority (obviously), but kept him delusional. For example, because China relied on Mao's agricultural advice, an estimated 70 million Chinese died during peacetime. But who else was to be relied upon as an authority?

Back the the U.S.S.A. (the United StateS of America): One Australian says of the American system: "You Yanks don't consult the wisdom of democracy; you enable mobs."

Tammy June 27, 2015 at 4:41 pm

Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing something comparable in the U.S.

Mao liked chaos because he believed in continuous revolution. I would argue what we're experiencing is nothing comparable to what China experienced. (I hope I've understood you correctly.)

Ted June 26, 2015 at 11:20 am

I am pretty sure a tradition of protest to affect political change in the US is a rather rare bird. Most people "protest" by changing their behavior. As an example, by questioning the value of the 46,000 local private college tuition as opposed the the 15k and 9k tiered state college options. My daughter is entering the freshman class next year, we opted for the cheaper state option because, in the end, a private school degree adds nothing, unless it is to a high name recognition institution.

I think, like housing, a downstream consequence of "the gouge" is not to question — much less understand — class relations, but to assess the value of the lifetyle choice once you are stuck with the price of paying for that lifestyle in the form of inflated debt repayments. Eventually "the folk" figure it out and encourage cheaper alternatives toward the same goal.

Jim June 26, 2015 at 3:18 pm

There's probably little point in engaging in political protest. Most people maximise their chances of success by focusing on variables over which they have some degree of control. The ability of most people to have much effect on the overall political-economic system is slight and any returns from political activity are highly uncertain.

jrs June 26, 2015 at 9:53 pm

How does anyone even expect to maintain cheap available state options without political activity? By wishful thinking I suppose?

The value of a private school might be graduating sooner, state schools are pretty overcrowded, but that may not at all be worth the debt (I doubt it almost ever is on a purely economic basis).

RabidGandhi June 27, 2015 at 7:57 pm

Maybe if we just elect the right people with cool posters and a hopey changey slogan, they'll take care of everything for us and we won't have to be politically active.

jrs June 26, 2015 at 10:04 pm

Of course refusal to engage politically because the returns to oneself by doing so are small really IS the tragedy of the commons. Thus one might say it's ethical to engage politically in order to avoid it. Some ethical action focuses on overcoming tragedy of the commons dilemmas. Of course the U.S. system being what it is I have a hard time blaming anyone for giving up.

chairman June 26, 2015 at 11:37 am

The middle class, working class and poor have no voice in politics or policy at all, and they don't know what's going on until it's too late. They've been pushed by all their high school staff that college is the only acceptable option — and often it is. What else are they going to do out of high school, work a 30 hour a week minimum wage retail job? The upper middle class and rich, who entirely monopolize the media, don't have any reason to care about skyrocketing college tuition — their parents are paying for it anyway. They'd rather write about the hip and trendy issues of the day, like trigger warnings.

Fool June 26, 2015 at 1:17 pm

To the contrary, they're hardly advised by "their high school staff"; nonetheless, subway ads for Phoenix, Monroe, etc. have a significant influence.

Uncle Bruno June 26, 2015 at 11:58 am

They're too busy working

Fool June 26, 2015 at 1:20 pm

Also Tinder.

collegestudent June 26, 2015 at 12:39 pm

Speaking as one of these college students, I think that a large part of the reason that the vast majority of students are just accepting the tuition rates is because it has become the societal norm. Growing up I can remember people saying "You need to go to college to find a good job." Because a higher education is seen as a necessity for most people, students think of tuition as just another form of taxes, acceptable and inevitable, which we will expect to get a refund on later in life.

Pitchfork June 26, 2015 at 1:03 pm

I teach at a "good" private university. Most of my students don't have a clue as to how they're being exploited. Many of the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job.

Incoming freshmen were born in the late 90s — they've never known anything but widespread corruption, financial and corporate oligarchy, i-Pads and the Long Recession.

But as other posters note, the moment of realization usually comes after four years of prolonged adolescence, luxury dorm living and excessive debt accumulation.

Tammy June 27, 2015 at 4:49 pm

Most Ph.D.'s don't either. I'd argue there have been times they have attempted to debate that exploitation is a good–for their employer and himself/herself–with linguistic games. Mind numbing… . To be fair, they have a job.

Gottschee June 26, 2015 at 1:34 pm

I have watched the tuition double–double!–at my alma mater in the last eleven years. During this period, administrators have set a goal of increasing enrollment by a third, and from what I hear, they've done so. My question is always this: where is the additional tuition money going? Because as I walk through the campus, I don't really see that many improvements–yes, a new building, but that was supposedly paid for by donations and endowments. I don't see new offices for these high-priced admin people that colleges are hiring, and in fact, what I do see is an increase in the number of part-time faculty and adjuncts. The tenured faculty is not prospering from all this increased revenue, either.

I suspect the tuition is increasing so rapidly simply because the college can get away with it. And that means they are exploiting the students.

While still a student, I once calculated that it cost me $27.00/hour to be in class. (15 weeks x 20 "contact hours" per week =
300 hours/semester, $8000/semester divided by 300 hours = $27.00/hour). A crude calculation, certainly, but a starting point. I did this because I had an instructor who was consistently late to class, and often cancelled class, so much that he wiped out at least $300.00 worth of instruction. I had the gall to ask for a refund of that amount. I'm full of gall. Of course, I was laughed at, not just by the administrators, but also by some students.

Just like medical care, education pricing is "soft," that is, the price is what you are willing to pay. Desirable students get scholarships and stipends, which other students subsidize; similarly, some pre-ACA patients in hospitals were often treated gratis.

Students AND hospital patients alike seem powerless to affect the contract with the provider. Reform will not likely be forthcoming, as students, like patients, are "just passing through."

Martin Finnucane June 26, 2015 at 2:10 pm

Higher education wears the cloak of liberalism, but in policy and practice, it can be a corrupt and cutthroat system of power and exploitation.

I find the "but" in that sentence to be dissonant.

Mark Anderson June 26, 2015 at 3:12 pm

The tuition at most public universities has quadrupled or more over the last 15 to 20 years precisely BECAUSE state government subsidies have been
slashed in the meantime. I was told around 2005 that quadrupled tuition at the University of Minnesota made up for about half of the state money that the legislature had slashed from the university budget over the previous 15 years.

It is on top of that situation that university administrators are building themselves little aristocratic empires, very much modeled on the kingdoms of corporate CEOs
where reducing expenses (cutting faculty) and services to customers (fewer classes, more adjuncts) is seen as the height of responsibility and accountability, perhaps
even the definition of propriety.

Jim June 26, 2015 at 3:23 pm

Everyone should read the introductory chapter to David Graeber's " The Utopia of Rules: On Technology, Stupidity and the Secret Joys of Bureaucracy."

In Chapter One of this book entitled "The Iron law of Liberalism and the Era of Total Bureaucratization" Graeber notes that the US has become the most rigidly credentialised society in the world where

"…in field after field from nurses to art teachers, physical therapists, to foreign policy consultants, careers which used to be considered an art (best learned through doing) now require formal professional training and a certificate of completion."

Graeber, in that same chapter, makes another extremely important point. when he notes that career advancement in may large bureaucratic organizations demands a willingness to play along with the fiction that advancement is based on merit, even though most everyone know that this isn't true.

The structure of modern power in the U.S., in both the merging public and private sectors, is built around the false ideology of a giant credentialized meritorcracy rather than the reality of arbitrary extraction by predatory bureaucratic networks.

armchair June 26, 2015 at 3:27 pm

Anecdote: I was speaking to someone who recently started working at as a law school administrator at my alma mater. Enrollment is actually down at law schools (I believe), because word has spread about the lame legal job market. So, the school administration is watching its pennies, and the new administrator says the administrators aren't getting to go on so many of the all expense paid conferences and junkets that they used to back in the heyday. As I hear this, I am thinking about how many of these awesome conferences in San Diego, New Orleans and New York that I'm paying back. Whatever happened to the metaphorical phrase: "when a pig becomes a hog, it goes to slaughter"?

Another anecdote: I see my undergrad alma mater has demolished the Cold War era dorms on one part of campus and replaced it with tons of slick new student housing.

MaroonBulldog June 26, 2015 at 7:15 pm

No doubt those Cold War era dorms had outlived their planned life. Time for replacement. Hell, they had probably become inhabitable and unsafe.

Meanwhile, has your undergraduate school replaced any of its lecture courses with courses presented same model as on-line traffic school? I have a pending comment below about how my nephew's public university "taught" him introductory courses in accounting and macroeconomics that way. Please be assured that the content of those courses was on a par with best practices in the on-line traffic school industry. It would be hilarious if it weren't so desperately sad.

Roquentin June 26, 2015 at 5:04 pm

I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state apparatus of the modern capitalist state par excellance. The real purpose of the university was not to level the playing field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce itself.

It certainly would explain a lot. It would explain why trying to send everyone to college won't solve this, because not everyone can have a bourgeois job. Some people actually have to do the work. The whole point of the university as an institution was to act as a sorting/distribution hub for human beings, placing them at certain points within the division of labor. A college degree used to mean more because getting it was like a golden ticket, guaranteeing someone who got it at least a petit-bourgeois lifestyle. The thing is, there are only so many slots in corporate America for this kind of employment. That number is getting smaller too. You could hand every man, woman, and child in America a BS and it wouldn't change this in the slightest.

What has happened instead, for college to preserve its role as the sorting mechanism/preservation of class advantage is what I like to call degree inflation and/or an elite formed within degrees themselves. Now a BS or BA isn't enough, one needs an Master's or PhD to really be distinguished. Now a degree from just any institution won't do, it has to be an Ivy or a Tier 1 school. Until we learn to think realistically about what higher education is as an institution little or nothing will change.

Jim June 26, 2015 at 8:14 pm

Any credential is worthless if everybody has it. All information depends on contrast. It's impossible for everybody to "stand out" from the masses. The more people have college degrees the less value a college degree has.

sid_finster June 26, 2015 at 5:49 pm

When I was half-grown, I heard it said that religion is no longer the opiate of the masses, in that no one believes in God anymore, at least not enough for it to change actual behavior.

Instead, buying on credit is the opiate of the masses.

MaroonBulldog June 26, 2015 at 6:58 pm

My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands exactly that this is going on, but still ….

This is how 21st century America treats its young people: it takes people who are poor, in the sense that they have no assets, and makes them poorer, loading them up with student debt, which they incur in order to finance a falsely-so-called course of university study that can't be a good deal, even for the best students among them.

I am not suggesting the correspondence courses have no worth at all. But they do not have the worth that is being charged for them in this bait-and-switch exercise by Ed Business.

MaroonBulldog June 27, 2015 at 1:39 am

After further thought, I'd compare my nephew's two courses to on-line traffic school: Mechanized "learning" – forget it all as soon as the test is over – Critical thinking not required. Except for the kind of "test preparation" critical thinking that teaches one to spot and eliminate the obviously wrong choices in objective answers–that kind of thinking saves time and so is very helpful.

Not only is he paying full tuition to receive this treatment, but his family and mine are paying taxes to support it, too.

Very useful preparation for later life, where we can all expect to attend traffic school a few times. But no preparation for any activity of conceivable use or benefit to any other person.

Spring Texan June 28, 2015 at 8:07 am

Good story. What a horrible rip-off!

P. Fitzsimon June 27, 2015 at 12:26 pm

I read recently that the business establishment viewed the most important contribution of colleges was that they warehoused young people for four years to allow maturing.

Fred Grosso June 27, 2015 at 4:55 pm

Where are the young people in all this? Is anyone going to start organizing to change things? Any ideas? Any interest? Are we going to have some frustrated, emotional person attempt to kill a university president once every ten years? Then education can appeal for support from the government to beef up security. Meanwhile the same old practices will prevail and the rich get richer and the rest of us get screwed.

Come on people step up.

Unorthodoxmarxist June 27, 2015 at 6:22 pm

The reason students accept this has to be the absolutely demobilized political culture of the United States combined with what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving any kind of middle class income.

Really your choices in the United States are, in terms of jobs, to go into the military (and this is really for working class kids, Southern families with a military history and college-educated officer-class material) or to go to college.

The rest, who have no interest in the military, attend college, much like those who wanted to achieve despite of their class background went into the priesthood in the medieval period. There hasn't been a revolt due to the lack of any idea it could function differently and that American families are still somehow willing to pay the exorbitant rates to give their children a piece of paper that still enables them to claim middle class status though fewer and fewer find jobs. $100k in debt seems preferable to no job prospects at all.

Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase stocks, bonds, and real estate. College administrators and their lackeys (the extended school bureaucracy) are propping up another part of the financial sector – just take a look at Harvard's $30+ billion endowment, or Yale's $17 billion – these are just the top of a very large heap. They're all deep into the financial sector. Professors and students are simply there as an excuse for the alumni money machine and real estate scams to keep running, but there's less and less of a reason for them to employ professors, and I say this as a PhD with ten years of teaching experience who has seen the market dry up even more than it was when I entered grad school in the early 2000s.

A Real Black Person purple monkey dishwasher June 28, 2015 at 9:13 pm

"Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase stocks, bonds, and real estate. "

Unorthodoxmarxist, I thought I was the only person who was coming to that conclusion. I think there's data out there that could support our thesis that college tuition inflation may be affecting real estate prices. After all, justification a college grad gave to someone who was questioning the value of a college degree was that by obtaining a "a degree" and a professional job, an adult could afford to buy a home in major metropolitan hubs. I'm not sure if he was that ignorant, (business majors, despite the math requirement are highly ideological people. They're no where near as objective as they like to portray themselves as) or if he hasn't been in contact with anyone with a degree trying to buy a home in a metropolitan area.

Anyways, if our thesis is true, then if home prices declined in 2009, then college tuition should have declined as well, but it didn't at most trustworthy schools. Prospective students kept lining up to pay more for education that many insiders believe is "getting worse" because of widespread propaganda and a lack of alternatives, especially for "middle class" women.

Pelham June 27, 2015 at 7:04 pm

It's hard to say, but there ought to be a power keg of students here primed to blow. And Bernie Sanders' proposal for free college could be the fuse.

But first he'd have the light the fuse, and maybe he can. He's getting huge audiences and a lot of interest these days. And here's a timely issue. What would happen if Sanders toured colleges and called for an angry, mass and extended student strike across the country to launch on a certain date this fall or next spring to protest these obscene tuitions and maybe call for something else concrete, like a maximum ratio of administrators to faculty for colleges to receive accreditation?

It could ignite not only a long-overdue movement on campuses but also give a big boost to his campaign. He'd have millions of motivated and even furious students on his side as well as a lot of motivated and furious parents of students (my wife and I would be among them) — and these are just the types of people likely to get out and vote in the primaries and general election.

Sanders' consistent message about the middle class is a strong one. But here's a solid, specific but very wide-ranging issue that could bring that message into very sharp relief and really get a broad class of politically engaged people fired up.

I'm not one of those who think Sanders can't win but applaud his candidacy because it will nudge Hillary Clinton. I don't give a fig about Clinton. I think there's a real chance Sanders can win not just the nomination but also the presidency. This country is primed for a sharp political turn. Sanders could well be the right man in the right place and time. And this glaring and ongoing tuition ripoff that EVERYONE agrees on could be the single issue that puts him front-and-center rather than on the sidelines.

Rosario June 28, 2015 at 1:18 am

I finished graduate school about three years ago. During the pre-graduate terms that I paid out of pocket (2005-2009) I saw a near 70 percent increase in tuition (look up KY college tuition 1987-2009 for proof).

Straight bullshit, but remember our school was just following the national (Neoliberal) model.

Though, realize that I was 19-23 years old. Very immature (still immature) and feeling forces beyond my control. I did not protest out of a) fear [?] (I don't know, maybe, just threw that in there) b) the sheepskin be the path to salvation (include social/cultural pressures from parent, etc.).

I was more affected by b). This is the incredible power of our current Capitalist culture. It trains us well. We are always speaking its language, as if a Classic. Appraising its world through its values.

I wished to protest (i.e. Occupy, etc.) but to which master? All of its targets are post modern, all of it, to me, nonsense, and, because of this undead (unable to be destroyed). This coming from a young man, as I said, still immature, though I fear this misdirection, and alienation is affecting us all.

John June 28, 2015 at 10:42 am

NYU can gouge away.

It's filled with Chinese students (spies) who pay full tuition.

[Jun 28, 2015] The Greek Tragedy: Curtain Closes On Most Absurd Act

moonofalabama.org

Nothing was posted here so far on the Greece tragedy. I did not touch the issue as there was excellent coverage elsewhere and what the whole issue produced so far was more absurd theater than serious economic policy. But one act of the drama is now coming to a preliminary end and the tragedy may now unfold into something new with potential serious geopolitical consequences.

Greece took up a lot of debt when banks were giving away money without caring for the ability of the debtor to pay back. When that game ran out, some six years ago, Greece could not no longer take up new credit to pay back its old debts. That is the point where it should have defaulted.

But the Greece government was pressed on to pay back the debt to the commercial banks even when it had no money and not enough income to ever do so. Bank lobbyists pressed other EU governments to raid their taxpayers to indirectly cover the banks' losses. These other governments then pushed Greece to take on "emergency loans" from their states to pay the foreign commercial banks.

Nothing of that money ever reached the people in need in Greece. Here is a gif that explains what happened to all those foreign taxpayer loans treats "given to the Greek".

To get these new loans Greece had to agree to lunatic economic measures, an austerity program and neoliberal "reforms", to fix its balance of payments. But austerity has never worked, does not work and will never work. It crashes economies, lowers tax incomes and thereby further hinders a government to pay back it debts. It creates a vicious cycle that ends in an economic catastrophe.

After six years of austerity nonsense the Greece voted for a new party that promised to end the cycle and stop the austerity measures. But the new Syriza government misjudge the situation and the nastiness and criminal energy of the other governments and organizations it was negotiating with. It early on said it would not default and thereby took away its own best negotiation argument. The negotiations failed. The creditors still demand more and more austerity. Now it will have to default but under circumstances that will make it much more difficult for Greece to get back on its feet.

Yesterday the Syriza prime minister Tsirpas, in a speech to his people, called for an end of the blackmail and for a referendum to decide on the way forward:

Fellow Greeks, to the blackmailing of the ultimatum that asks us to accept a severe and degrading austerity without end and without any prospect for a social and economic recovery, I ask you to respond in a sovereign and proud way, as the history of the Greek people commands.

To authoritarianism and harsh austerity, we will respond with democracy, calmly and decisively.

Greece, the birthplace of democracy will send a resounding democratic response to Europe and the world.

Paul Maison of Channel 4 news sees this as a positive and likely successful step. The people will vote no to austerity and the IMF, European Central Bank and various country governments will still keep giving fresh money to Greece. Yves Smith at Naked Capitalism does not believe that this will happen. She calls the referendum a sham. Greece will default and the only thing the referendum will do is to keep Syriza in the political business. She blames Tsirpas for having misjudged the situation and for being unprepared of what is likely to come:

Greek defiance of its creditors will make it more, not less dependent on them in the next year. How badly things turn out for Greece will depend in significant degree on how much they do to ameliorate the impact of the implosion of the banking system, whether they take extreme measures to keep Greece in the Eurozone, and if Greece tumbles out, how much they provide in humanitarian aid and targeted trade financing (most important, for petroleum imports).

Greece should have defaulted six years ago. Tsirpas should have prepared for default immediately after he became premier. He should have used it as a threat during the negotiations. Greece will now have to default in the worst possible situation and with little thought given to the consequences of the default.

But the consequences will not be limited to Greece.There will be consequences for the EU, for NATO and for the political balance in the Mediterranean. Greece may now decide to leave the "western" realm and thereby set an example others could follow.

The German and other European governments promised their taxpayers that Greece will not default and that the austerity program pushed onto it will succeed. They will now rightfully lose some of their political and economic credibility. The Greece default will be a somewhat harsh and expensive lesson for the voters in those countries too. Let's hope that they will draw the right conclusions.

Selected Skeptical Comments

Posted by: madrone | Jun 27, 2015 10:50:12 AM | 2

While there is nothing easy about the path forward I think finance minister Varoufakis has played things pretty well dragging it out letting the people get all those euros out of the banks to help contribute to rebuilding but most of all blocking the ability of the Banksters to "Cyprusize" Greece. The referendum obviously comes from the study of Iceland and anybody that studies Argentina can only come away thinking Syriza is doing the right thing.

Posted by: nmb | Jun 27, 2015 11:33:51 AM | 3

The global financial mafia fully exposed through Greece

[Jun 28, 2015] US Department of Imperial Expansion

Deeper down the rabbit hole of US-backed color revolutions.
by Tony Cartalucci

Believe it or not, the US State Department's mission statement actually says the following:

"Advance freedom for the benefit of the American people and the international community by helping to build and sustain a more democratic, secure, and prosperous world composed of well-governed states that respond to the needs of their people, reduce widespread poverty, and act responsibly within the international system."

A far and treasonous cry from the original purpose of the State Department - which was to maintain communications and formal relations with foreign countries - and a radical departure from historical norms that have defined foreign ministries throughout the world, it could just as well now be called the "Department of Imperial Expansion." Because indeed, that is its primary purpose now, the expansion of Anglo-American corporate hegemony worldwide under the guise of "democracy" and "human rights."

That a US government department should state its goal as to build a world of "well-governed states" within the "international system" betrays not only America's sovereignty but the sovereignty of all nations entangled by this offensive mission statement and its execution.

Image: While the US State Department's mission statement sounds benign or even progressive, when the term "international system" or "world order" is used, it is referring to a concept commonly referred to by the actual policy makers that hand politicians their talking points, that involves modern day empire. Kagan's quote came from a 1997 policy paper describing a policy to contain China with.

....


The illegitimacy of the current US State Department fits in well with the overall Constitution-circumventing empire that the American Republic has degenerated into. The current Secretary of State, Hillary Clinton, gives a daily affirmation of this illegitimacy every time she bellies up to the podium to make a statement.

Recently she issued a dangerously irresponsible "warning" to Venezuela and Bolivia regarding their stately relations with Iran. While America has the right to mediate its own associations with foreign nations, one is confounded trying to understand what gives America the right to dictate such associations to other sovereign nations. Of course, the self-declared imperial mandate the US State Department bestowed upon itself brings such "warnings" into perspective with the realization that the globalists view no nation as sovereign and all nations beholden to their unipolar "international system."

It's hard to deny the US State Department is not behind the
"color revolutions" sweeping the world when the Secretary of
State herself phones in during the youth movement confabs
her department sponsors on a yearly basis.

If only the US State Department's meddling was confined to hubris-filled statements given behind podiums attempting to fulfill outlandish mission statements, we could all rest easier. However, the US State Department actively bolsters its meddling rhetoric with very real measures. The centerpiece of this meddling is the vast and ever-expanding network being built to recruit, train, and support various "color revolutions" worldwide. While the corporate owned media attempts to portray the various revolutions consuming Eastern Europe, Southeast Asia, and now Northern Africa and the Middle East as indigenous, spontaneous, and organic, the reality is that these protesters represent what may be considered a "fifth-branch" of US power projection.

CANVAS: Freedom House, IRI, Soros funded Serbian color revolution
college behind the Orange, Rose, Tunisian, Burmese, and Egyptian protests
and has trained protesters from 50 other countries.


As with the army and CIA that fulfilled this role before, the US State Department's "fifth-branch" runs a recruiting and coordinating center known as the Alliance of Youth Movements (AYM). Hardly a secretive operation, its website, Movements.org proudly lists the details of its annual summits which began in 2008 and featured astro-turf cannon fodder from Venezuela to Iran, and even the April 6 Youth Movement from Egypt. The summits, activities, and coordination AYM provides is but a nexus. Other training arms include the US created and funded CANVAS of Serbia, which in turn trained color-coup leaders from the Ukraine and Georgia, to Tunisia and Egypt, including the previously mentioned April 6 Movement. There is also the Albert Einstein Institute which produced the very curriculum and techniques employed by CANVAS.

2008 New York City Summit (included Egypt's April 6 Youth Movement)
2009 Mexico City Summit
2010 London Summit

As previously noted, these organizations are now retroactively trying to obfuscate their connections to the State Department and the Fortune 500 corporations that use them to achieve their goals of expansion overseas. CANVAS has renamed and moved their list of supporters and partners while AYM has oafishly changed their "partnerships" to "past partnerships."

Before & After: Oafish attempts to downplay US State Department's extra-legal
meddling and subterfuge in foreign affairs. Other attempts are covered here.

Funding all of this is the tax payers' money funneled through the National Endowment for Democracy (NED), the International Republican Institute (IRI), the National Democratic Institute (NDI), and Freedom House. George Soros' Open Society foundation also promotes various NGOs which in turn support the revolutionary rabble on the ground. In Egypt, after the State Department's youth brigades played their role, Soros and NED funded NGOs began work on drafting Egypt's new constitution.

It should be noted that while George Soros is portrayed as being "left," and the overall function of these pro-democracy, pro-human rights organizations appears to be "left-leaning," a vast number of notorious "Neo-Cons" also constitute the commanding ranks and determine the overall agenda of this color revolution army.

Then there are legislative acts of Congress that overtly fund the subversive objectives of the US State Department. In support of regime change in Iran, the Iran Freedom and Support Act was passed in 2006. More recently in 2011, to see the US-staged color revolution in Egypt through to the end, money was appropriated to "support" favored Egyptian opposition groups ahead of national elections.

Then of course there is the State Department's propaganda machines. While organizations like NED and Freedom House produce volumes of talking points in support for their various on-going operations, the specific outlets currently used by the State Department fall under the Broadcasting Board of Governors (BBG). They include Voice of America, Radio Free Europe, Radio Free Asia, Alhurra, and Radio Sawa. Interestingly enough, the current Secretary of State Hillary Clinton sits on the board of governors herself, along side a shameful collection of representatives from the Fortune 500, the corporate owned media, and various agencies within the US government.

Hillary Clinton: color revolutionary field marshal & propagandist,
two current roles that defy her duties as Secretary of State in any
rational sense or interpretation.


Judging from Radio Free Europe's latest headlines, such as "Lieberman: The West's Policy Toward Belarus Has 'Failed Miserably' " and "Azerbaijani Youth Activist 'Jailed For One Month,'" it appears that hope is still pinned on inciting color revolutions in Belarus and Azerbaijan to continue on with NATO's creep and the encirclement of Russia. Belarus in particular was recently one of the subjects covered at the Globsec 2011 conference, where it was considered a threat to both the EU and NATO, having turned down NATO in favor of closer ties with Moscow.

Getting back to Hillary Clinton's illegitimate threat regarding Venezuela's associations with Iran, no one should be surprised to find out an extensive effort to foment a color revolution to oust Hugo Chavez has been long underway by AYM, Freedom House, NED, and the rest of this "fifth-branch" of globalist power projection. In fact, Hugo Chavez had already weathered an attempted military coup overtly orchestrated by the United States under Bush in 2002.

Upon digging into the characters behind Chavez' ousting in 2002, it
appears that this documentary sorely understates US involvement.

The same forces of corporatism, privatization, and free-trade that led the 2002 coup against Chavez are trying to gain ground once again. Under the leadership of Harvard trained globalist minion Leopoldo Lopez, witless youth are taking the place of 2002's generals and tank columns in an attempt to match globalist minion Mohamed ElBaradei's success in Egypt.

Unsurprisingly, the US State Department's AYM is pro-Venezuelan opposition, and describes in great detail their campaign to "educate" the youth and get them politically active. Dismayed by Chavez' moves to consolidate his power and strangely repulsed by his "rule by decree," -something that Washington itself has set the standard for- AYM laments over the difficulties their meddling "civil society" faces.

Chavez' government recognized the US State Department's meddling recently in regards to a student hunger strike and the US's insistence that the Inter-American Human Rights Commission be allowed to "inspect" alleged violations under the Chavez government. Venezuelan Foreign Minister Nicolás Maduro even went as far as saying, "It looks like they (U.S.) want to start a virtual Egypt."

The "Fifth-Branch" Invasion: Click for larger image.


Understanding this "fifth-branch" invasion of astro-turf cannon fodder and the role it is playing in overturning foreign governments and despoiling nation sovereignty on a global scale is an essential step in ceasing the Anglo-American imperial machine. And of course, as always, boycotting and replacing the corporations behind the creation and expansion of these color-revolutions hinders not only the spread of their empire overseas, but releases the stranglehold of dominion they possess at home in the United States. Perhaps then the US State Department can once again go back to representing the American Republic and its people to the rest of the world as a responsible nation that respects real human rights and sovereignty both at home and abroad.

Editor's Note: This article has been edited and updated October 26, 2012.

[Jun 28, 2015]The Troika pretends to suffocate Greece at all costs

"...Brussels has blocked any agreement that would help Greece's recovery; debt repayments are maximum priority"
.
"...Alexis Tsipras, prime minister, is practically "hands tied", he can't implement an alternative economic policy, this situation is contrary to his intentions, therefore it slowly diminishes the trust citizens have put into Syriza, his political party."
.
"...Greece has 10 days to liquidate the four monthly maturities of debt to the IMF (1.5 billion euros) and to open a new financing plan for 5.2 billion euros. By next July, Athens will have to pay 3.5 billion euros to the European Central Bank (ECB), 465 million euros to the IMF and 2 billion euros to additional creditors."
.
"...There is no doubt that if Tsipras decides abandoning the Euro, the consequences will be dramatic for Greece's economy and so for the rest of economies in the region [6], including of course, Germany and France. Berlin fears a massive spread. If Greece collapses, speculators will bet against the most fragile economies: Finland, Spain, Italy, Netherlands, Portugal, etc."
.
"...Panic would boost interest rates, severely shrinking the financial liquidity between countries."
.
"...Nevertheless, the Troika seems decisive on backlashing the left's economic program. Syriza have inaugurated the electoral failure of neoliberalism in Europe and due to that, it has become the lender's favorite prey, who are ready to impose their will at any price. However, the Greeks should trust themselves, establish partnership beyond its continental borders and aim for utopia."
Jun 28, 2015 | voltairenet.org/RT

the Central Bank of Greece surprised everyone with the publication of their monetary politics for 2014-2015. Besides revealing the consequences of the economic suffocation imposed by Brussels, it concluded that in case of not getting to a prompt deal with its European partners, a crisis of great proportions will be detonated.

"A crisis with a manageable debt as we are currently facing with the help of our partners will transform into an uncontrollable crisis, with great risk for the banking system and for the financial stability", it quoted [1]. It was the first time this institution seriously contemplated Greece's separation from the Eurozone.

The most influencing media immediately began to stress that the majority of Greek's population is against abandoning the Monetary Union. Approximately a 70% according to a recent poll published by the GOP. For keeping the "common currency" the norms in the Maastricht Treaty have to be complied, therefore the occidental media concludes that the Greek citizens are willing to accept the European authorities conditions: Austerity is the price for a membership in the Eurozone.

However, media emporiums omit mentioning that same majority opposes to measures that the Troika (formed by the International Monetary Fund, the European Central Bank and the European Commission) pretends to impose. That same majority is currently convinced that the original 245 billion euros rescue program has only brought economic affliction. The increase of inequality and poverty, lock of housing, mental illness and suicides, are evidence of the "humanitarian crisis" Greeks are daily suffering [2].

A change regarding to economic matters in urgent. In that sense, the Greek government has insisted in solving the more immediate needs (taxes on investment, creation of employment, a better distribution of income, etc.) and less in questioning terms of the debt. Despite this, Brussels has blocked any agreement that would help Greece's recovery; debt repayments are maximum priority [3].

Alexis Tsipras, prime minister, is practically "hands tied", he can't implement an alternative economic policy, this situation is contrary to his intentions, therefore it slowly diminishes the trust citizens have put into Syriza, his political party.

Disqualifications between the Greek government and the Troika were quite prompt on dates near the meeting with the Eurogroup. Tsipras addressed that the International Monetary Fund (IMF) had "criminal responsibility" for the crisis. He also repeated that his government wouldn't falter before the pressure imposed by the Troika. The objective of this proposal is to "humiliate Greece" and there he committed to reject the adjustment plans at every moment [4].

The finance minister, Yanis Varoufakis, has delivered the same message by declining on presenting proposals that would finally include a list of "credible" commitments for the creditors: raising the primary surplus, additional tax raises, dismantling the pension system, etc [5].

As consequence, the negotiations stalled once again [on July 18th, 2015, Editor's note] The Troika remains intransigent in applying its "structural reforms" no matter what, while Tsipras declines on betraying the Greeks. Therefore this dispute is ones more to be adjourned.

Greece has 10 days to liquidate the four monthly maturities of debt to the IMF (1.5 billion euros) and to open a new financing plan for 5.2 billion euros. By next July, Athens will have to pay 3.5 billion euros to the European Central Bank (ECB), 465 million euros to the IMF and 2 billion euros to additional creditors.

Debt and more austerity, in the end impose more debts, this situation puts Greece in a "depressive spiral" that seems not to have an end. How will the resources for complying with these commitments de delivered?

There is no doubt that if Tsipras decides abandoning the Euro, the consequences will be dramatic for Greece's economy and so for the rest of economies in the region [6], including of course, Germany and France. Berlin fears a massive spread. If Greece collapses, speculators will bet against the most fragile economies: Finland, Spain, Italy, Netherlands, Portugal, etc.

Considerably affected by the weak economic growth and the deflation (price breakdown), the Eurozone would loose even more confidence from international investors. The crescent 'aversion to risk' due to Greece's exit would provoke an increase in the performance of sovereign bonds (currently at minimum levels). Panic would boost interest rates, severely shrinking the financial liquidity between countries.

Uncertainty will increase and the capital flows would be victim of a 'butterfly effect': slight increase of volatility in sovereign bond markets, light drops in stock exchanges and any change in the monetary policy, would be enough to detonate huge turbulences in credit circuits.

Nevertheless, the Troika seems decisive on backlashing the left's economic program. Syriza have inaugurated the electoral failure of neoliberalism in Europe and due to that, it has become the lender's favorite prey, who are ready to impose their will at any price. However, the Greeks should trust themselves, establish partnership beyond its continental borders and aim for utopia.

Democracy was born in the ancient Greece and there is where the foundations of a new Europe, free from the 'dictatorship of the creditors' should be built, if there is any alternative…

[Jun 28, 2015] Keynes, The Great Depression And The Coming Great Default

Jun 28, 2015 | Zero Hedge
falak pema

you guys have it ALL wrong.

Keynes was there to check OLIGARCHY neo-feudalism. This crisis is about Oligarchy neofeudalism.

We need a balance between state and private enterprise. Right now we have "inverted totalitarianism" :an alliance between state and private Oligarchs where, unlike Mussolini model; its private enterprise that RUNS THE WORLD; the 1%.

The state is their slave; even FED belongs to its paymasters : the TBTF aka JP Morgan and now GS. Since Glass Steagall revoke; engineered by the GS squid cabal allowing Investment banks to rule the roost to MAXIMISE shareholder returns, the whole shooting match of supply side deregulated Reaganomics; all based on asset hiking based on short term quarterly reports; has morphed capitalism beyond recognition.

The world of capital changed in 1981...the day all that mattered was shareholder value based on short term steroid pumping that the 1971 "our money your problem" had initiated based on petrodollar hegemony fueled on perpetual DEBT.

The cumulative effect of 1971/1981/1991 outsourcing NWO mantra post Iraq 1 and SU default was what we have spawned today: a three step process where petrodollar debt + FIRE economy oligarchy enrichment+ NWO outsourcing based on cheap oil and cheap labour have built this casino capitalism model now compounded by derivative financialisation toxic shenanigans.

Now tell me WHAT has KEYNES got to do with this monetarist construct based on Friedman's 1971 mantra?

You guys deny the time line of facts and its irrefutable logic all based on petrodollar hegemony, and arms bazar supremacy.

[Jun 28, 2015] IMF and Germany Are Hell-Bent on Finishing Off Even a Moderate Left in Greece

"...Europe's neoliberal elite was after, especially after being fully aware of the fact that Athens had no alternative plan, was not merely a humiliating Greek deal for the Syriza-led government but finishing them off completely to send a message to all potential "troublemakers" in the euro area of the fate awaiting them if they dared challenge the neoliberal, austerity-based orthodoxy of the new Rome."
.
"...Mr. Tsipras and his one-night "superstar" finance minister tied up with a dog chain and paraded in front of the European political stage for all to see - utterly defeated and humiliated, with their political futures up in the air, whether they accept or reject a humiliating Greek deal."
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"...as it usually happens in situations of negotiations between ordinates and subordinates, master and slave, rich and poor, strong and weak, the more compromises the latter makes, the more compromises the former demands.""

IMF and Germany Are Hell-Bent on Finishing Off Even a Moderate Left in Greece

Jun 28, 2015 | Truthout

...Reflecting a political organization/party that had invited and accepted under the same roof extremely diverse political and ideological groups, the Syriza-led government not only failed to set out a clear strategic vision for getting the country out of its current crisis but walked straight into the trap that the euromasters and the "criminal IMF" were setting up for them throughout the course of the negotiations.

Indeed, the leftist Greek government failed to see that what Europe's neoliberal elite was after, especially after being fully aware of the fact that Athens had no alternative plan, was not merely a humiliating Greek deal for the Syriza-led government but finishing them off completely to send a message to all potential "troublemakers" in the euro area of the fate awaiting them if they dared challenge the neoliberal, austerity-based orthodoxy of the new Rome.

Working in collaboration with the IMF (whom Mr. Tsipras has charged with "criminal responsibility" for the economic and social catastrophe of Greece), Germany's plan (a nation that has failed to pay its debts repeatedly in modern times and had the bigger part of its foreign debt wiped off in 1953, yet has the audacity now to try to teach moral lessons to Greece) is to have Mr. Tsipras and his one-night "superstar" finance minister tied up with a dog chain and paraded in front of the European political stage for all to see - utterly defeated and humiliated, with their political futures up in the air, whether they accept or reject a humiliating Greek deal.

... ... ...

The members of the Greek government negotiation team had submitted a list of proposals for the June 22 Euro summit that were fully in line with the logic of the EU/IMF bailout program for Greece: more austerity and additional structural adjustments. All in all, the proposals they made amounted to over 8 billion euro in additional cuts between 2015 and 2016! The leftist Greek government even proposed a tax increase to incomes above 30,000 euro, thus suggesting that individuals in that income bracket rank among the wealthy! Basic food items and services were to carry a 23 percent VAT. The special VAT rate on Greek islands, which is so crucial for the tourist sector of the economy, was to be removed. The early retirement age was to be increased as of the start of 2016, and a benefit for low-income pensioners was to be gradually substituted, beginning from 2018.

The obvious capitulation on the part of the Syriza-led government to the euromasters and the IMF thugs, which was not the first one, was made just to get a deal done as time was running out for Greece (it has a huge payment to make to the IMF at the end of June in the tune of 1.6 billion euro) and thus to remove the dark clouds of a Grexit that had begun to spread dangerously over Greece, as it had finally become clear that Germany and the IMF were calling Syriza's bluff and were ready for the unthinkable, i.e., the possibility of a Grexit.

But as it usually happens in situations of negotiations between ordinates and subordinates, master and slave, rich and poor, strong and weak, the more compromises the latter makes, the more compromises the former demands.

Thus, the Greek proposals were found to be inadequate, and there were demands for more blood and tears. Germany and the IMF wanted to force the Syriza-led government to cross its last and final "red line," which was over additional antisocial measures in the nation's social security and pension system. Among other things, the Lagarde/Schäuble duo wants the benefit for low-income pensioners to be completed eliminated by 2017. This would mean that a person who receives today a monthly pension for the amount of 500 euro (close to 50 percent of Greek pensioners receive pensions below the official poverty line) would be deprived of about 200 euro, which come as a welfare payment of sorts.

... ... ...

Footnotes:

1. The political babel of Syriza consists of right-wing and ultra-nationalist camps (ie., the Independent Greeks party, Syriza's coalition partner in government) to defunct social democrats and outdated Keynesians who saw primarily the crisis in Greece as a threat to capitalism itself and were suggesting, accordingly, all sort of interventionist schemes to keep Greece in the euro area and the emergence of an alternative socio-economic system at bay, including recycling unemployment schemes with the minimum wage so as not to upset the exploitation rate in the private sector (!) and IOUs, and from remnants of euro-communism and the old communist left to post-leftism, postmodernist tendencies devoid of any true understanding of contemporary political realities and without structured support at the popular, working-class level. Indicative of its political nature, not even one large, mass protest or demonstration has ever been organized or successfully carried out by Syriza. Its official organ Avgi still sells thousands of copies less on a daily and a weekly basis than the official organ of the Greek Communist Party, which in the elections of January 2015 barely got over 5 percent of the popular vote.

2. Syriza had been converted long ago into an utterly confusing, "non-left" left political organization, and the restructuring of the Greek economy and its moribund political culture, the abandonment of outworn, antediluvian modes of political thinking and behaviors, and the transformation of capitalism and its transition to a socialist economy had been completely removed from its political radar. For an argument along those lines, see C. J. Polychroniou, "To Change Greece Requires Changing the Political Culture - and This Could Be a Tall Order, Especially for the Left." Truthout (September 1, 2013).

... ... ...

C.J. Polychroniou is a research associate and policy fellow at the Levy Economics Institute of Bard College and a former columnist for a Greek major national newspaper. His main research interests are in European economic integration, globalization, the political economy of the United States and the deconstruction of neoliberalism's politico-economic project. He has taught for many years at universities in the United States and Europe and is a regular contributor to Truthout as well as a member of Truthout's Public Intellectual Project. He has published several books and his articles have appeared in a variety of journals, magazines, newspapers and popular news websites. Many of his publications have been translated into several foreign languages, including Croatian, French, Greek, Italian, Portuguese, Spanish and Turkish.

[Jun 28, 2015] Tactless courtship—NSA's espionage in France by Anhvinh Doanvo

"...This sort of espionage is just as counterproductive as denials of its existence. While the briefings may provide a modicum of context on the allies' diplomatic positions, this context is wiped away as soon as the spying activities are revealed. The intrusion on the domestic political sphere of our allies will serve only to rattle our relations with them.
In a world where the power of the US is declining relative to the much faster growth of other developing nations, the credibility of relationships between the US and its allies is critical to the power hegemony our country holds as a moral force. But without some semblance of transparency and Wilsonian trust between our countries, we cannot hope to hold onto the power of goodwill from our allies."
"...Even if some additional context is provided for our allies' diplomatic positions by these intelligence reports, the costs are likely to outweigh the benefits so long as the NSA brazenly fails to address our allies' concerns."

TheHill
On June 23rd, WikiLeaks unveiled a number of documents from the National Security Agency's "Espionnage Elysée" program, that demonstrated the NSA's targeted espionage against high level French government officials, including ministers and three presidents of the French Republic. This espionage against U.S. allies is tactless and is likely to fray relations with U.S. allies and must be reformed.

This event has proven to be all too similar to revelations on the NSA's spying on German Chancellor Angela Merkel for all the wrong reasons. In both cases, the NSA targeted the few individuals likely to condemn surveillance should they be targeted: heads of state and the highest levels of government.

Just after Edward Snowden began releasing documents on the NSA's program, Chancellor Merkel praised the U.S. for being the "truest ally throughout the decades," until it was revealed that Merkel herself was targeted. Soon afterwards, she compared the NSA to Stasi, the Soviet Union's intelligence agency in East Germany.

Revelations on the NSA's targeting of President Francois Hollande, and his predecessors, Jacques Chirac and Nicolas Sarkozy, have similarly led to Hollande's emergency meeting with France's defense council on the 24th. The only targeted head of state that has backed away from condemning U.S. espionage, Brazil's President Dilma Rousseff, has done so only in a state of political weakness with Brazil's corruption scandal, and unsurprisingly following Brazilian legislation directly targeting the NSA's internet data collection.

According to the documents leaked, this spying has already been a previously noted "sticking point" in other negotiations as early as March 2010, when then French President Sarkozy was negotiating a bilateral intelligence agreement with the U.S. The documents were also said to have revealed few useful state secrets aside from the U.S.'s own intelligence mishap. Subjects discussed were hardly national security matters—they included France's concerns with Greece in the Eurozone crisis, a UN Secretary General appointment, UN resolutions on Palestinian statehood, and ironically, French complaints of NSA spying.

The Foreign Policy magazine has noted that in spite of the USA Freedom Act, Washington has failed to publicly mention any changes to espionage practices against foreign allies. Most U.S. statements have only been statements of denial, as in both Germany and now France. Such statements will prove to be counterproductive as the NSA continues to throw away its credibility with media reports continually contradicting its narrative.

"This sort of espionage is just as counterproductive as denials of its existence. While the briefings may provide a modicum of context on the allies' diplomatic positions, this context is wiped away as soon as the spying activities are revealed. The intrusion on the domestic political sphere of our allies will serve only to rattle our relations with them.

In a world where the power of the US is declining relative to the much faster growth of other developing nations, the credibility of relationships between the US and its allies is critical to the power hegemony our country holds as a moral force. But without some semblance of transparency and Wilsonian trust between our countries, we cannot hope to hold onto the power of goodwill from our allies.

Even if some additional context is provided for our allies' diplomatic positions by these intelligence reports, the costs are likely to outweigh the benefits so long as the NSA brazenly fails to address our allies' concerns. And though espionage against foreign citizens may be necessary, restraint placed on espionage against allied heads of state could have greatly reduced the outrage by politicians and media organizations given the patterns reactions of Brazil, Germany, and now France.

It is not in our interest to make enemies from friends and give political cannon fodder to our enemies through these spying programs. It's time the NSA acknowledged that the opinions our allies' leaders matter, for should they turn sour in our time of need, our challenges might become all too dire for any backstabbing realpolitik espionage program to remedy."

Doanvo is research assistant for the Global Initiative for Civil Society and Conflict.

[Jun 28, 2015] Thousands in Armenia protest steep hikes in electricity rates

WaPo reported initial events using standard "color revolution" template used in Ukraine.
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"..."The society is very polarized. The power is very weak, in terms of its legitimacy. And a significant number of people are not satisfied with the political system," said Alexander Iskandaryan, a political expert and director of the Caucasus Institute in Yerevan. "They are expressing their dissatisfaction, making statements against the president, against the police, against the ruling Republican Party. But in general, this entire complex reveals the total lack of trust in the political system.""
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"...Some Armenian opposition politicians supported the protesters Tuesday. Activists in Russia and Ukraine also cheered the rallies via social media, lauding them as the next generation of demonstrators against Russian President Vladimir Putin's post­-Soviet order. Some Russian media reports seemed to support that view, citing experts warning that the "hands of the USA" were behind the Armenian protests, which had the makings of a "color revolution." "
June 23, 2015 | The Washington Post

Thousands of protesters returned to a main thoroughfare of downtown Yerevan, Armenia, on Tuesday evening, facing down riot police to protest steep electricity price increases planned in the economically strapped country.

Protesters in the capital city marched toward the presidential palace on Marshal Baghramyan Avenue just hours after police had unleashed water cannons to disperse a peaceful overnight sit-in that had taken place in the same spot earlier in the day, detaining more than 230 demonstrators and journalists in the process. The protests, which have been growing over several days, are the most widespread public demonstrations in the Armenian capital since opposition activists rallied thousands against President Serzh Sargsyan's reelection in 2013.

The demonstrations against electricity prices are less structured than the post-election protests, but they still could resonate widely in the current political climate.

Armenia's unrest comes as the country is reeling from the protracted effects of the economic crisis that has gripped Russia's economy over the past year — and, in turn, affected the economies of former Soviet states that depend on Russian markets and the value of the ruble. Russia's economic troubles were complicated by pressure from Western sanctions imposed in response to Moscow's annexation of Crimea and involvement in eastern Ukraine, punitive measures that the European Union voted Monday to extend for six months.

Armenia receives more than 20 percent of its national income from Russian remittances and joined the Moscow-led Eurasian Economic Union earlier this year. It is especially dependent on the ebbs and flows of the Russian economy, and its currency, the dram, has suffered for it.

The Russia connection is even more acute in the energy sector.

Armenia's power grid is controlled by the Armenian Electricity Network, a subsidiary of the Russian company Inter RAO UES, whose major shareholders include Russian state-controlled entities. Last month, the Armenian subsidiary announced plans to raise the price of electricity by more than 16 percent beginning in August. The move was described as necessary because of the depreciation of the national currency, but protesters say the increase would be too much for regular people to afford.

"Spread the word, fill the streets and don't pay your electric bill," one organizer told the crowd gathered in Yerevan's Liberty Square on Tuesday. "If we all don't pay our electric bills, they can't do anything about it."

But the protests may not have gathered strength absent general dissatisfaction with the economic and political situation in the country.

"The society is very polarized. The power is very weak, in terms of its legitimacy. And a significant number of people are not satisfied with the political system," said Alexander Iskandaryan, a political expert and director of the Caucasus Institute in Yerevan. "They are expressing their dissatisfaction, making statements against the president, against the police, against the ruling Republican Party. But in general, this entire complex reveals the total lack of trust in the political system."

Tuesday's protesters were mostly young adults, and word of the demonstrations spread through social media instead of through the political opposition parties. The main group behind the past several days of protests is a civic group called No to Plunder.

Iskandaryan said it is difficult to predict how the protests will develop, given how relatively decentralized and underfunded they are. The demonstrations could continue, they could fizzle or the government could meet the demonstrators' demands.

"But whatever scenario will come to be, it will not solve the main problem. The main problems will remain," Iskandaryan said. "And then it will be possible to find another excuse for another rally."

How the Yerevan protests proceed depends in part on the state's response. Foreign diplomats expressed concern over how police detained journalists Tuesday morning, while angry protesters were likely galvanized by the use of violence and water cannons to quell and disperse the crowd.

Yerevan police seemed to be restraining themselves Tuesday night. Deputy police chief Valery Osipyan frequently warned protesters to control potential "provocateurs" who might start a confrontation, but he never called out the water cannons.

What happens next will depend on whether interest groups seize the moment created by the demonstrations.

Some Armenian opposition politicians supported the protesters Tuesday. Activists in Russia and Ukraine also cheered the rallies via social media, lauding them as the next generation of demonstrators against Russian President Vladimir Putin's post­-Soviet order.

Some Russian media reports seemed to support that view, citing experts warning that the "hands of the USA" were behind the Armenian protests, which had the makings of a "color revolution."

But the demonstrations largely avoided any overt political message about aligning with the East vs. the West, and most anti-Russian vitriol was reserved for Yevgeny Bibin, the chief executive of the electricity company instituting the price increases

Johnny Canuck, 6/25/2015 4:27 PM EDT

Take at look inside the real Russia outside the Kremlin region. This is what you will find.

The Kremlin needs money so they, like the USSR they will use whatever means are available to get funds into the Kremlin's Treasury.

According to data gathered by Bloomberg, the Kremlin has sufficient funds to keep the government budget and financial system relatively stable through 2015. However disagreements over future government spending will continue to divide Russia's elite.

This year Moscow will have to pay $52.9 billion to the Pension Fund of Russia to cover the shortfall.

Evidence shows that the government has taken $12.5 billion from the fund, using it for projects such as the construction of the Yamal liquefied natural gas facility and for economic development of Crimea.

Rosneft, has proposed that the government use the fund to extend credit to replace the company's Western financing, most of which has been cut off because of sanctions.

Throughout 2015 the Russian Government had numerous discussions, as Russia needs to resolve strong disagreements within its political elite over issues affecting important areas, such as pensions, raising the retirement age from 55 to 65, the defense sector, large firms and regional government spending on medical care, education and infrastructure.

Russia can draw from the total $508 billion in Reserves, that according to the IMF it stockpiled since 2000. So far this year it had drawn down $100 billion from its Reserve Fund.

Johnny Canuck, 6/25/2015 4:25 PM EDT

In the opinion many insiders, the current Kremlin debates have intensified over specific government spending on issues such as taxes, pension, retirement age, defense spending and medical and education expenses. Like most political disagreements between insiders over the divisions of budgets on spending – Putin and his loyal buddies, financial experts and the Federal Security Service – can switch their loyalties in response to both political and economic circumstances.

Russia's total spending on its military budgets, which includes not only Interior Military Forces but also all military spending, which is more that 45% of its GDP. The Kremlin must now face cuts in spending for the new T-14 Armata tank, defense spending on military exercises along its borders and naval shipbuilding and its space program.

Russia's regional governments are demanding that more regional revenues stay in the regions. Only 37 percent of the income generated in any given region is required to stay in each region, with the rest going to the federal budget. However the central government never returns more than 20 percent. Over the past 25 years these shortfalls have accumulated into 100 trillion rubbles, which negatively impacted regional health care, education and infrastructure needs. Low wages have forced households into more barter trading for survival.

The Kremlin knows that regional stability is crucial to the stability of the federal government and the Russian Federation as a whole. The last thing that the Federal Government needs is regional insurrections. This has many Putin supporters worried.

Axel Rea, 6/25/2015 9:30 AM EDT

hey washington post why you start the article with the word "Moscow", this is about the Armenia. If you do not have the sufficient knowledge please do not write the article. Armenia is a sovereign country, it dose not even have any border with russia.

LeonVav, 6/24/2015 6:03 AM EDT

A group of people on capital's street and THE WHOLE COUNTRY IS UNSTABLE NOW. That's silly. Maybe they're unsatisfied with what their politicians do, but why to tack Russia on this? It's Putin who refuses to give them free electricity? He is guilty again?

nanari123, 6/23/2015 9:39 PM EDT

I just don't like it when western media looks at everything wearing this black and white glasses. This is really not about Russia vs US or EU, Armenia's foreign policy has always been the most balanced in the entire post soviet region. Officially it is against the electricity price hike, but in reality, people are trying to show their dissatisfaction with politicians and especially the ruling republican party which has failed to fix the economy as a result of mismanagement and corruption. People there really don't give a hoot about Putin or Obama.

ANTIPINDOS, 6/23/2015 8:58 PM EDT

Armenians what are you doing?
Doesn't allow to manipulate itself
You want to repeat a mistake of Ukraine?
The USA prepare orange revolution against you

[Jun 28, 2015] Is a "color revolution" underway in Armenia

"Electric Yerevan" is Sliding Out of Control

by Andrew Korybko for Sputink

Armenians have taken to the streets to protest a planned 17-22% increase in their utility bills, initiated by the Armenian Electricity Network due to the Armenian dram's dramatic depreciation over the past year (about equal in percentage to the price hike itself). While it's understandable that some in the economically struggling country would be upset by the $85 or so cumulative increase in payments each year, many find it troubling that some individuals have resorted to arming themselves and aggressively attacking the police, and it's confusing that the participants would reject government appeals to negotiate if all they were really after was to repeal the electricity rate increase. After hundreds of arrests over the past few days for hooligan activity, groups of individuals are now blockading the capital's main avenue and have threatened to march on the Presidential Palace, eerily following in the footsteps of their EuroMaidan predecessors. More and more, what may have begun as a legitimate protest movement appears to have been hijacked into a Color Revolution attempt.

The Situation So Far

Opposition to the electricity rate increase had been brewing since May, but it was only on Monday that the "No to Plunder" initiative was able to bring thousands to the streets in protest. They gathered on Freedom Square, in the city's center, and demanded that the hike be reversed. President Serzh Sargsyan suggested that they choose five representatives to speak to him about it, but the mob refused. Later that night, internal provocateurs pushed the crowd into marching on the Presidential Palace, and when they refused law enforcement's repeated pleas to disperse their illegal manifestation, the riot police were forced to resort to water cannons and mass arrests to restore public order. The resulting tumult injured 11 police officers and 7 protesters, and some of the 237 who were arrested were reported to have been equipped with knives, knuckle dusters, batons, and metal rods.

The protests swelled the next day to 15,000 people, and the mob once more rejected President Sargsyan second request to negotiate. They may have felt emboldened by the US' official statement on the matter, which in a style reminiscent of its early response to EuroMaidan, stated that:

"…we are concerned about reports of excessive police use of force to disperse the crowd on the morning of June 23, as well as several reports of abuse while in police custody. In addition, we are troubled by reports that journalists and their equipment were specifically targeted during the operation. It is imperative that the Government conduct a full and transparent investigation of reports of the excessive use of force by the police to the full extent of Armenian law."

Just like in Ukraine, when the US supports an anti-government movement (which is what has essentially formed in Armenia), it completely opposes any attempt by the authorities to assert law and order in responding to their proxies' illegal provocations. The implicit statement of support for the disorderly activity was a signal to the Yerevan organizers to stage an occupation movement on Baghramyan Avenue, the central street leading to the Presidential Palace, and block it with a combination of garbage cans and a "living wall" on Wednesday. The Minister of Education and a few opposition MPs physically partook in this activity, indicating an emerging split within the government. The individuals behind the destabilization have since branded their movement 'Electric Yerevan', and this was a sign for their affiliated anti-government cells all across the country to simultaneously 'come out' and transform the capital's protests into a nationwide rebellion……

……Like all Color Revolutions, the backers of 'Electric Yerevan' are motivated by concrete geopolitical interests. They want to install an anti-Russian government that would withdraw Armenia from the Eurasian Economic Union and break the historical friendship between both states, following the model spearheaded by EuroMaidan's post-coup authorities. Pashinyan is highly critical of all aspects of Armenia's special relationship with Russia and has experience with anti-government organizing, hence his present designation as de-facto leader of the Color Revolution. The US also wants to drag Russia into a renewed military conflict over Nagorno-Karabakh, using post-coup newly installed nationalists like Pashinyan to aggravate the situation with Azerbaijan to the point of open warfare, which Russia, with its Collective Security Treaty Organization obligations to Armenia and its 102nd military base in Gyumri, would inevitably be sucked into. The US failed to coax a disastrous Afghan-esque military intervention out of Russia in Ukraine after the EuroMaidan events, but it doesn't mean that it won't try to do the same thing in the Caucasus after a potentially successful 'Electric Yerevan'.

http://rt.com/politics/269392-russian-senator-armenia-unrest/

"So far the situation appears to be developing as a conflict among people who are unhappy with their socio-economic well-being. But we should not deceive ourselves, all color revolutions developed in similar scenarios. Armenia is not guaranteed from such outcome," Kosachev said in comments with RIA Novosti.

The senior Russian senator also drew the reporters attention to the fact that about a hundred of various non-government groups were working with Armenian public opinion trying to incline it towards the pro-Western way of development. He noted that the very suggestion of a choice between East and West was an imposed move that could only lead to conflict.

"This is an absolutely artificial choice, a dishonest and unappealing political gamble," he noted.

Russia currently lists color revolution as a major threat to the national stability and international peace. In March this year the chairman of the Security Council and a former head of the Federal Security Service, Nikolai Patrushev, said that this body would develop a detailed plan aimed at preventing color revolutions or any other attempts of forceful change of lawfully elected authorities through mass street protest.

[Jun 28, 2015] The USA tries to stage a color revolution in Armenia

Jun 28, 2015 | marknesop.wordpress.com

Fern, June 27, 2015 at 8:22 pm

A very interesting article on the situation in Armenia. I don't agree with everything the writer says but much of it is spot-on:

Novices to political science and political activism may be lured by the spectre and spectacle of the Color Revolution method that has characterized ostensible movements for radical social change in the last generation. The symbols have become iconic and clichéd: the tent city, the die-in, the girl placing flowers in the gendarme's gun barrels, water cannons and tear-gas, the fist flag.

What is missing of course from this view is an understanding of the real social forces in a society, class and economic forces. For forty years, genuine activism, labor union militancy, has been marginalized. In place of direct action against the ruling class at the very places that make their wealth, is a strange simulation of late 1960's student activism; shown to us on a never-ending film reel loop.

http://fortruss.blogspot.co.uk/2015/06/electric-yerevan-and-lessons-on-color.html

Many of the analysts I've read on Armenia – including those quoted above – seem to think it unlikely that this new Maidan will succeed. I'm not so sure. Once it has its hooks into a country, the US is loathe to let go.

marknesop, June 27, 2015 at 8:32 pm
Like sanctions, the colour revolutions depend on momentum – getting it, and maintaining it by incremental pressure until the government folds up like a lawn chair. Governments have learned from the Orange Revolution not to let a revolutionary camp get established, and as soon as they see tents they get torn down; if people do not have shelter in which to sleep so they can stay on location, they quickly fragment and drift away.

But no colour revolution ever again reached the intensity of the Orange Revolution. It was up to the western media to create the appearance of momentum by injecting fake news about the government meeting with rebel leaders and filming the crowds from angles and frames which suggest they were much bigger than they actually are.

Yanukovych at Maidan is probably the worst possible example, and it gave the west unfounded confidence, because he capitulated in whole in less time than it takes to say it, folding like a steamed tortilla and giving the self-appointed leaders everything they asked for without even putting up a fight.

In retrospect, they probably could have sent Tetyana Chornovol in alone to beat him up until he wept for mercy and saved a great deal of effort and expense. But other leaders are tougher and smarter than Yanukovych, and are expecting to be colour-revolutioned. The secret is not to lose your head and start bargaining, because that's what the model is calculated to make you do.

ucgsblog. June 27, 2015 at 11:22 pm
There's also Russia releasing all of the tactics used in the Orange Revolution for every country's government to study. I doubt that they're will be a repeat, especially in Armenia.
yalensis , June 28, 2015 at 3:43 am
The Flores piece that Fern posted makes a really good point, about the difference between REAL activism (e.g., trade union strikes) and fake activism (e.g., student protests, hippie flower children, etc.)

When a trade union wins a bitter strike and gets a measly raise of, say, $.50 per hour, it is still a significant victory, because the money comes directly out (and in place of) of the capitalist's profits. As Flores notes, this is "direct action" at the very fountain of where wealth is created. As opposed to student protests, which do nothing to change anything at the base of the economic system.

But it IS notable that the current bunch of goons in charge of the U.S. government – people like Clinton, Nuland, etc., spent some of their student years in the 1960's doing various hippie-dippie protests, and the like. So, they are familiar with this method of protest, and use it as a cover for the actual big-power subversion, which they are doing behind the scenes. Subconsciously, they might even believe that "it's all good", because they have such fond memories of their own student years spent supporting various "good causes".

Oh, and another reason these "hippie-dippie" type protests are popular with a certain type of gilded youth, is because it allows them to indulge in their own physical narcisissm:
They get to paint their faces, wear funny costumes, show of their "creativity", preen in front of cameras, etc.
The sort of thing that many teenagers enjoy doing, but especially the more narcissistic types.

Fern, June 28, 2015 at 4:56 am
yalensis, yes, I think that's a really key point – the difference between activism that fundamentally changes or challenges economic relationships in a society and these so-called 'revolutions' which is nearly every state have led to the embrace of neo-liberal policies and worsening of the economic situation of many of its citizens. And, of course, it's a point that's completely missing from any western MSM analysis of what's taken place in Ukraine, Georgia and all the other places with colour or flower 'revolutions'. No questioning at all of why, exactly, the leaders of western countries such as the US or UK are so enthusiastic in supporting these movements abroad when they have done everything possible to destroy or marginalise agents for real change at home.
yalensis , June 28, 2015 at 3:31 am
It makes sense that U.S. is targeting Armenian government with color revolution.
Probably to punish Armenia for joining Eurasian Economic Union.
Jen, June 28, 2015 at 5:20 am
There could be many reasons and Armenia's entry into the Eurasian Union could be one of them. The US wouldn't initiate a colour revolution unless it presents an opportunity to kill several birds with one stone. A colour revolution leading to instability or an extremely nationalist government that reignites the Nagorno-Karabakh dispute with Azerbaijan would (supposedly) draw in Russia, to supply Armenia with aid or weapons, and that would open the door to greater US military investment in Azerbaijan on the pretext that Azerbaijan is being threatened. This gives the US an opportunity to go to the next step which would be to plan an invasion of or another Green revolution in Iran next door, or start colour revolutions in Kazakhstan and Kyrgyzstan.

Also 2016 is the start of a new election cycle in the US and Washington probably needs to get some action going against Russia and/or Iran to defect public attention away from an uninspiring field of presidential candidates and their lack of meaningful policies.

yalensis, June 28, 2015 at 4:34 am
As per the Gene Sharp handbook, Armenian demonstrators are starting to hint at violence, in the next phase or protests. Armenian media caughts shots of some demonstrators starting to wave wooden clubs.

Yerevan police chief Valery Osipian communicated, that the police have pictures of the people with the wooden clubs, and intend to find them, as this is illegal.

Osipian also communicated, that the protesters attempts to set up tents and food service have been thwarted. Setting up food and cooking, in particular, requires permits.

Is perfectly clear that Armenian authorities know exactly what is happening, and what is going to happen next. Probably the next phase is violence. There were some reports of Ukrainian neo-Nazis being flown in, but possibly there are also violent groups within Armenia who could be used as the shock troops.

But police seem to be savvy, and know what to do. Ukrainian police (=Berkut) were defeated only, because Yanukovych lost his nerve and would not allow them to win.

Jen , June 28, 2015 at 5:49 am
Perhaps if the Armenian government declared that anyone attending the demonstrations would not receive any results from end-of-term or end-of-year exams at school or college, and threaten to order educational authorities to withhold school or university graduation certificates and ceremonies as well, the protests might shrink to just the ringleaders and their more fanatical followers.

The reason that the Umbrella Revolution faltered in Hong Kong last year was that universities had just reopened after term break and exams were about to start, and the Hong Kong authorities only had to wait out the protests.

likbez , June 28, 2015 at 7:30 am
Don't be naïve. As Euromaidan had shown University professors, deans, etc themselves are an important part of fifth column supporting the protests. Departments of Economics and similar "social" departments are especially easy and cheap to seduce by grants, foreign trips, etc. and they have natural neoliberal leanings. In case of Euromaidan it was they who, if not asked students to go to the street, at least granted them "amnesty" from missing the classes. And they operated within the larger framework of staging color revolution, being just one element of complex infrastructure. The same was true in Hong Cong: certain professors actively encouraged the events and served as catalyst for students.

The start of color revolution means just a switch to active stage of of multifaceted, well prepared ongoing intelligence operation using the accumulated in embassies cash and well organized assets in the country such as NGO, journalists, fifth column within the government, etc. Operation which was prepared for long time..

Those extras that show up on the streets are mostly a stage for public consumption. Real events of infiltration that make color revolution possible happen on higher level and are hidden from the view. The goal is always to paralyze and neutralize both government and law enforcement by finding people who can be bought, coerced into supporting the coup d'état or at least profess neutrality. And without "breakthrough" in this direction the active stage on which protesters suddenly and en mass appear of the streets is never started.

Nuland and company probably made serious progress in creating the "color revolution infrastructure" and fifth column within the county elite. They probably are now keeping of short leash some corrupt officials both in law enforcement and government. Cash is now dispensed continuously to grease the wheels. "Militant protestor" in Kiev got around $30- $35 a night. Of course some radical nationalist elements participated "for free" but a lot of extras were paid.

So start of active phase first of all means the level of maturity and readiness of already formed fifth column within the government to topple the current government. In case of Ukraine it was Lyovochkin and elements within SBU and police (remnants from Yushchenko government), Also Nuland kept Yanukovich by the balls be threating to confiscate his assets in the West. I suspect that in some form this is also true the case in Armenia.

In other words the key feature of color revolution is the "elite betrayal" component. That's why often the actions of the government in "self-defense" are contradictory and inefficient..

[Jun 27, 2015] Greece: Its the Politics, Stupid!

"...The troika had two goals from the start. First to give the banksters and plutocrats enough time to exit the country they had plundered (with help from local plutocrats). There was a large amount of privately held debt that could not be unloaded during a crisis, so they needed a pretend bailout such that most of that private risk could be transferred onto public organizations. Second they needed to keep the public in the other European countries from understanding that the fault was with their own banksters and plutocrats, not the people of Greece; and that the bailout plan (rather than immediate debt restructuring) actually was a plan to move the inevitable cost away from the banksters and onto the taxpayers."
Jun 27, 2015 | Economist's View

Gloomy European Economist Francesco Saraceno:

It's the Politics, Stupid!: I have been silent on Greece, because scores of excellent economists from all sides commented at length...
But last week has transformed in certainty what had been a fear since the beginning. The troika, backed by the quasi totality of EU governments, were not interested in finding a solution that would allow Greece to recover while embarking in a fiscally sustainable path. No, they were interested in a complete and public defeat of the "radical" Greek government. ...
What happened...? Well, contrary to what is heard in European circles, most of the concessions came from the Greek government. On retirement age, on the size of budget surplus (yes, the Greek government gave up its intention to stop austerity, and just obtained to soften it), on VAT, on privatizations, we are today much closer to the Troika initial positions than to the initial Greek position. Much closer.
The point that the Greek government made repeatedly is that some reforms, like improving the tax collection capacity, actually demanded an increase of resources, and hence of public spending. Reforms need to be disconnected from austerity, to maximize their chance to work. Syriza, precisely like the Papandreou government in 2010 asked for time and possibly money. It got neither.
Tsipras had only two red lines it would and it could not cross: Trying to increase taxes on the rich (most notably large coroporations), and not agreeing to further cuts to low pensions. if he crossed those lines, he would become virtually indistinguishable from Samaras and from the policies that led Greece to be a broken State.
What the past week made clear is that this, and only this was the objective of the creditors. This has been since the beginning about politics. Creditors cannot afford that an alternative to policies followed since 2010 in Greece and in the rest of the Eurozone materializes.
Austerity and structural reforms need to be the only way to go. Otherwise people could start asking questions; a risk you don't want to run a few months before Spanish elections. Syriza needed to be made an example. You cannot survive in Europe, if you don't embrace the Brussels-Berlin Consensus. Tsipras, like Papandreou, was left with the only option too ask for the Greek people's opinion, because there has been no negotiation, just a huge smoke screen. Those of us who were discussing pros and cons of the different options on the table, well, we were wasting our time.
And if Greece needs to go down to prove it, so be it. If we transform the euro in a club in which countries come and go, so be it.
The darkest moment for the EU.
RGC said...

by MICHAEL HUDSON


Many readers of the European and American press must be confused about what actually is happening in the negotiations between Greece (Alexis Tsipras and Yannis Varoufakis). The European Troika (the IMF, European Central Bank and European Council now object to the name and want to be called simply "the Institutions") have stepped up their demands on Syriza. What is called "negotiation" is in reality a demand for total surrender. The Troika's demand is to force Syriza to go back on the campaign promises that it made to voters who replaced the old right-wing Pasok ("socialist") and Conservative New Democracy coalition, or else simply apply the austerity program to which that coalition had agreed:cutbacks in pensions, deeper austerity, more privatization selloffs, and a tax shift off business onto labor. In short, economic suicide.

Last weekend a group of us met in Delphi to discuss and draft the following Declaration of Support for Greece against the neoliberal Institutions. It is now clear that finance is the new mode of warfare. The creditors' objective is the same as military conquest: they want the land, the natural resource rights and monopolies, and they want tribute (in this case, debt service). And they don't want sovereign Greece to tax the economic rent from these assets. In short, the negotiation between The Institutions and Greece is a bold exercise in rent extraction.

http://www.counterpunch.org/2015/06/26/the-delphi-declaration/

Peter K. said...

I agree with what Saraceno wrote. "The troika, backed by the quasi totality of EU governments, were not interested in finding a solution that would allow Greece to recover while embarking in a fiscally sustainable path."

The austerity program they forced Greece to follow was a failure and the troika doesn't care what Syriza was elected to do. It can overrule democracy.

As good as the IMF research department has been regarding Keynesian policies lately, the IMF is coming off really bad here, just going along with insane policy.

If Greece doesn't pay by the 30th do they get kicked out? If they kicked out will they hold the July 5th referendum anyway?

Maybe the troika don't kick them out immediately and the referendum votes no on the bailout package. Then Greece defaults but possibly stays in the EU on the drachma with capital controls. Possibly Greece can rejoin the EU later on.

anne said in reply to anne...

What still puzzles me is whether and by what authority Greece can be forced to leave the European Union, even if Greece has to abandon the Euro.

As for the leadership of the European Union, no matter the title of the various governing parties, there has been an increasingly conservative political-economic bent to the leadership in domestic, Europe-wide and international affairs.

DeDude said in reply to anne...

They can not be forced to leave the European (political) Union. The may have to abandon the Euro currency, but a number of other EU countries have their own currency (enjoying the free trade and political advantages of being an EU country). They would likely be forced to either back out of the Euro or face a complete collapse of their banks and economy (without banks no business) if the ECB close their banks access to funds. But there is no way that they could be kicked out of the Euro if they refused to leave.

anne said in reply to Larry...

http://www.cepr.net/blogs/beat-the-press/greece-and-the-euro

June 26, 2015

Greece and the Euro

James Stewart has a piece * in the New York Times telling readers that if Greece were to leave the euro it would face a disaster. The headline warns readers, "imagine Argentina, but much worse." The article includes several assertions that are misleading or false.

First, it is difficult to describe the default in Argentina as a disaster. The economy had been plummeting prior to the default, which occurred at the end of the year in 2001. The country's GDP had actually fallen more before the default than it did after the default. (This is not entirely clear on the graph, since the data is annual. At the point where the default took place in December of 2001, Argentina's GDP was already well below the year-round average.) While the economy did fall more sharply after the default, it soon rebounded and by the end of 2003 it had regained all the ground lost following the default.

[Graph]

Argentina's economy continued to grow rapidly for several more years, rising above pre-recession levels in 2004. Given the fuller picture, it is difficult to see the default as an especially disastrous event even if it did lead to several months of uncertainty for the people of Argentina. In this respect, it is worth noting that Paul Volcker is widely praised in policy circles for bringing down the inflation rate. To accomplish this goal he induced a recession that pushed the unemployment rate to almost 11 percent. So the idea that short-term pain might be a price worth paying for a longer term benefit is widely accepted in policy circles.

At one point the piece refers to the views of Yanis Varoufakis, Greece's finance minister, on the difficulties of leaving the euro. It relies on what it describes as a "recent blogpost." Actually the post * is from 2012.

To support the argument that Greece has little prospect for increasing its exports it quotes Daniel Gros, director of the Center for European Policy Studies in Brussels, on the impact of devaluation on tourism:

"But they've already cut prices and tourism has gone up. But it hasn't really helped because total revenue hasn't gone up."

Actually tourism revenue has risen. It rose by 8.0 percent from 2011 to 2013 (the most recent data available) measured in euros and by roughly 20 percent measured in dollars. In arguing that Greece can't increase revenue from fishing the piece tells readers:

"The European Union has strict quotas to prevent overfishing."

However the piece also tells readers that leaving the euro would cause Greece to be thrown out of the European Union. If that's true, the EU limits on fishing would be irrelevant.

The piece also make a big point of the fact that Greece does not at present have a currency other than the euro. There are plenty of countries, including many which are poorer than Greece, who have managed to switch over to a new currency in a relatively short period of time. While this process will never be painless, it must be compared to the pain associated with an indefinite period of unemployment in excess of 20.0 percent which is almost certainly the path associated with remaining in the euro on the Troika's terms.

In making comparisons between Greece and Argentina, it is also worth noting that almost all economists projected disaster at the time Argentina defaulted in 2001. Perhaps they have learned more about economics in the last 14 years, but this is not obviously true.

* http://www.nytimes.com/2015/06/26/business/an-echo-of-argentina-in-greek-debt-crisis.html

** http://yanisvaroufakis.eu/2012/05/16/weisbrot-and-krugman-are-wrong-greece-cannot-pull-off-an-argentina/

-- Dean Baker

anne said in reply to Mel at onin...

Tsipras had only two red lines it would and it could not cross: Trying to increase taxes on the rich (most notably large corporations), and not agreeing to further cuts to low pensions. if he crossed those lines, he would become virtually indistinguishable from Samaras and from the policies that led Greece to be a broken State.

-- Francesco Saraceno

[ I believe that this passage is wrong. Prime Minister Tsipras, to my understanding, was willing and had offered to increase taxes on the rich or "large corporations."

I will try to find a reference, but I am fairly sure I read this in regard to the offer by Tsipras. I recall the insistence on preserving low pension levels came with an express proposal to increase taxes on those with relatively high incomes. ]

DeDude said...

The troika had two goals from the start. First to give the banksters and plutocrats enough time to exit the country they had plundered (with help from local plutocrats). There was a large amount of privately held debt that could not be unloaded during a crisis, so they needed a pretend bailout such that most of that private risk could be transferred onto public organizations. Second they needed to keep the public in the other European countries from understanding that the fault was with their own banksters and plutocrats, not the people of Greece; and that the bailout plan (rather than immediate debt restructuring) actually was a plan to move the inevitable cost away from the banksters and onto the taxpayers.

Unfortunately, European tribalistic politics (further inflamed by the second goal) forced such austerity upon the people of Greece that they rebelled and elected a socialist government. Now there is a third goal for the troika (as dictated by their plutocrat masters); to punish the people of Greece (and scare voters in other countries) for electing socialist leaders. Be ready for an all out war of sabotaging any and all Greek economic recovery. They are desperate to set the example and scare away any thought of rebellion against economic tyranny in countries like Portugal, Spain, Ireland (Italy, France). They are not even trying to hide their sabotage of the Syriza government – just compare what they demand to what Syriza is offering. The objectives are for the same goals, it is just that Syriza has a plan that can reach those goals without sinking the Greek economy into an even deeper hole.

Fred C. Dobbs said...


If you owe your bank a million euros
and can't pay, YOU have a problem.

If it's a billion euros, THEY have a problem.

If it's a trillion, *you* are back
to having a problem, as it turns out.

Who knew?

RGC said...

IMF policy re Greece and Ukraine:

Greece: IMF Warns No Leeway on Payment as Merkel Urges Greece to Bow

http://www.bloomberg.com/news/articles/2015-06-18/lagarde-affirms-greece-s-june-30-deadline-to-make-imf-payments

Ukraine: IMF Violates IMF Rules, to Continue Ukraine Bailouts

http://rinf.com/alt-news/editorials/imf-violates-imf-rules-to-continue-ukraine-bailouts/

Sandwichman said...

DS-K weighs in on the IMF not learning from mistakes

http://fr.slideshare.net/DominiqueStraussKahn/150627-tweet-greece?ref=https://fr.slideshare.net/slideshow/embed_code/key/yT0ZJNQMSAStzy

Reply Saturday, June 27, 2015 at 11:51 AM

anne said in reply to Sandwichman...

http://www.nytimes.com/2015/06/25/business/dealbook/businesses-worry-about-shouldering-burden-of-greek-debt.html

June 24, 2015

Businesses Worry About Shouldering Burden of Greek Debt
By LANDON THOMAS Jr.

THESSALONIKI, Greece — From the beginning, officials at the International Monetary Fund, one of the country's creditors, have criticized the proposal's reliance on raising corporate tax, arguing that such increases will only hurt the country's already fragile economy....

[ This is the IMF; sacrifice ordinary already damaged Greek people for the sake of corporate or relatively rich Greeks. ]

Reply Saturday, June 27, 2015 at 11:59 AM

Sandwichman said in reply to Sandwichman...

Unconfirmed rumors that DS-K was originally going to refer to "the IMF's rape of Greece" but decided that might backfire.

Reply Saturday, June 27, 2015 at 12:04 PM

anne said in reply to Sandwichman...

Having read the Dominique Strauss Kahn memo carefully again, I am not sure just what is being argued other than a little more generous debt forgiveness a little earlier.

Reply Saturday, June 27, 2015 at 02:39 PM

Sandwichman said...

"Jeroen Dijsselbloem, president of the eurogroup of finance ministers, said before the meeting he was 'disappointed' by the surprise plans to stage a popular vote on debt financing proposals.

"'It's a very sad decision for Greece because it's closed the door to further talks, a door that was still open in my mind,' he said."

Democracy? Can't have that! This is FINANCE.

Reply Saturday, June 27, 2015 at 12:24 PM

anne said in reply to Sandwichman...

I am reminded of "Yes, Minister" on the EU.

Reply Saturday, June 27, 2015 at 01:53 PM

mrrunangun said...

I think of my dad's friend Phil in these cases of indebtedness. Phil was a successful businessman who functioned as a lender of last resort for a number of his acquaintances. Phil wanted his money first and foremost. When a borrower could not pay on time, Phil gave a brief grace period. If the borrower still could not pay, Phil would counsel the guy to get an honest job if he didn't already have one or get a second job if he had one and only one. If the guy already had two jobs or was ineligible for honest work, he was advised to consult a pawnbroker. If necessary, stealing and fencing outside of Phil's network might be a last resort. If the borrower still could not pay, Phil was not above resorting to strong collection methods that might persuade the borrower to come up with some cash courtesy of friends and family. Like legal collection methods Phil's cost money so was only resorted to in unusual cases. If the borrower still could not come up with the money, Phil had to face the loss. Needless to say, no further credit would be forthcoming.

It may be impossible for Greece to pay its debts because its prospects for growth are inadequate given the nature of its politics, the size of the debt, and relatively small size of its economy. If its lenders have concluded that that is the case, Greece would have to default and take the consequences. Its lenders will have to take the consequences as well. Phil would not have felt obliged to continue to make loans to a customer who had demonstrated an inability to repay his loan after the usual forbearance.

Chris Herbert said...

Greece doesn't need any loans. Greece doesn't need any debt. Once you are a monetary sovereign you call the shots. Just ask the United States, or China, or Japan. Or Iceland. The central bank can recapitalize the economy with a new drachma, the only currency that can be used domestically. It can fund infrastructure projects that invigorate the Greek economy without issuing debt because it is producing assets, not liabilities. It can do so by avoiding what Keynes describe as 'a bookkeepers nightmare.' Keynes:

"The divorce between ownership and the real responsibility of management is serious within a country when, as a result of joint-stock enterprise, ownership is broken up between innumerable individuals who buy their interest today and sell it tomorrow and lack altogether both knowledge and responsibility towards what they momentarily own. But when the same principle is applied internationally, it is, in times of stress, intolerable - I am irresponsible towards what I own and those who operate what I own are irresponsible towards me. There may be some financial calculation which shows it to be advantageous that my savings should be invested in whatever quarter of the habitable globe shows the greatest marginal efficiency of capital or the highest rate of interest. But experience is accumulating that remoteness between ownership and operation is an evil in the relations between men, likely or certain in the long run to set up strains and enmities which will bring to nought the financial calculation....

National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford if we happen to want it. Are there sufficient good reasons why we may happen to want it? The decadent international but individualistic capitalism, in the hands of which we found ourselves after the War, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous - and it doesn't deliver the goods. In short, we dislike it and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed."

anne said in reply to Chris Herbert...

http://www.polyarchy.org/enough/texts/keynes.1933.html

1933

National self-sufficiency
By John Maynard Keynes

RC AKA Darryl, Ron said in reply to Chris Herbert...

Terrific!

anne said...

http://krugman.blogs.nytimes.com/2015/06/27/europes-moment-of-truth/

June 27, 2015

Europe's Moment of Truth
By Paul Krugman

Until now, every warning about an imminent breakup of the euro has proved wrong. Governments, whatever they said during the election, give in to the demands of the troika; meanwhile, the ECB steps in to calm the markets. This process has held the currency together, but it has also perpetuated deeply destructive austerity — don't let a few quarters of modest growth in some debtors obscure the immense cost of five years of mass unemployment.

As a political matter, the big losers from this process have been the parties of the center-left, whose acquiescence in harsh austerity — and hence abandonment of whatever they supposedly stood for — does them far more damage than similar policies do to the center-right.

It seems to me that the troika — I think it's time to stop the pretense that anything changed, and go back to the old name — expected, or at least hoped, that Greece would be a repeat of this story. Either Tsipras would do the usual thing, abandoning much of his coalition and probably being forced into alliance with the center-right, or the Syriza government would fall. And it might yet happen.

But at least as of right now Tsipras seems unwilling to fall on his sword. Instead, faced with a troika ultimatum, he has scheduled a referendum on whether to accept. This is leading to much hand-wringing and declarations that he's being irresponsible, but he is, in fact, doing the right thing, for two reasons.