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What planet are these people on? July 25, 2010

Posted by Garibaldy in Capitalism, European Union, The Right.
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Two recent stories make it still clearer just what an alternate universe those who control financial institutions and governments of the world live in. The first is the recent “stress tests” carried out on 91 banks by the Committee of European Banking Supervisors. 7 banks failed – 5 Spanish, 1 German and 1 Greek. Amazingly, AIB was passed as healthy, as well as the Bank of Ireland, the only two Irish banks included. The summary report is available here. The 7 banks that failed the test needed 3.5bn euro of new capital to meet the standards required.

In AIB’s case, passing the test assumes that it would succeed in a €7.4 billion plan to raise further capital by the end of the year.

I wonder where they got the idea it would be able to raise whatever extra capital it needed?

Let’s call this stress test what it was – an attempt by the European financial elite to con the public into believing that the capitalist system has resolved the contradictions that led to the recent crisis. They must think we are stupid, and that throwing a few sacrifical lambs to the wolves will give it added credibility. Nonsense. See the RTÉ report for Lenihan’s attempt at spin.

Speaking of whom, the second story that shows how the political elite remains trapped in the failed ideology of neo-liberalism is the planned privitisation of public assets such as the ESB, CIE, An Post, and Bord Gáis, with the “stock-taking” under the chairmanship of Colm McCarthy. This has been aptly described by WP President Mick Finnegan as “a firesale of the people’s assets”. The market has failed disastrously. So what is the answer these people propose? Take the semi-state companies that have been working well, and hand them over – cheaply of course – to the market, so that customer service standards can fall, the workers can see their working conditions devestated, and multi-nationals can make still more profits. This money can then be used to avoid increasing taxation on those best able to pay, and will also realise cash to throw into the black hole of the banks and property speculators should they need it. Awesome. Back to Mick Finnegan.

Having near bankrupted the country with reckless economic policies and crippled the next generation of our people with debt through the banking bailout, the government is now intent on selling the family silver. These state and semi-state companies were built over many years of public investment and hard work. They must not be sold off by a deranged government and there is an onus on the trade union movement, the left and anyone who believes in the future of this country to stand up and oppose this madness.

Exactly.

Comments»

1. Bernie Goldbach - July 25, 2010

I just wonder where all the money needed to run the State is going to come from.

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EWI - July 25, 2010

I just wonder where all the money needed to run the State is going to come from.

I think that outside of their praetorian guard – the courts, the police and the army – the interests they represent don’t particularly want or care for the State, and would rather cut it all in the name of ‘fiscal responsibility’.

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2. ec - July 26, 2010

I’m tempted to search the wikileaks file dump for mentions of shannon airport to find out more about their alternate universe.

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Bernie Goldbach - July 26, 2010

I think it’s efficient to combine the airport, Foynes port and Shannon Development into one agency. The problem–how to hive off the excess middle management.

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3. Garibaldy - July 26, 2010

I just wonder how much money would be raised by these privitisations. Less than what is needed to borrow in one year perhaps? Less than a quarter of the money raised for NAMA? And then they are gone for good, of no more benefit to the public over the following decades. This isn;t a solution to the state’s needs.

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ejh - July 26, 2010

I think I mentioned on a previous thread (no idea where, though ,so I can make the claim perfectly safely even if it’s untrue) that I’d expect privatisation to be stepped up round the world on the argument that “the government’s got no money, so why not sell this stuff off to raise some money and save on running costs”. Of course the sale prices will be particularly poor, for reasons the advocates of privatisation understand very well.

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Pope Epopt - July 26, 2010

@Garibaldy

As I’m sure you are aware, the point is not particularly to raise funds. The point is to sell off potentially highly profitable utilities as rock-bottom prices to the private sector because, as we all know, that’s where they rightly belong. They will, of course, expect regular subsidies / tax breaks when they are not making sufficient profit.

The neo-liberals have milked this crisis very efficiently, and the saps in the DoF and the Irish Meeja have lapped it up.

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4. Garibaldy - July 26, 2010

Pope I agree entirely. I was responding to Bernie’s question with one of my own.

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5. Pope Epopt - July 26, 2010

Answer: not the planet they think they are living on!

However there is a sense in which this bankrupt knee-jerk neo-liberalism is a comfort blanket for those who just ‘don’t have a clue’ ™.

I was much taken by an article by Bishler and Nitzan on the current financial crisis which might interest parishioners.

Some of the theses in a longish piece which repays reading in my opinion are:

– A rejection of the classical Marxian distinction between ‘real’ capital invested in production and commodities and ‘finance’ capital. “In its modern incarnation, capital exists as forward-looking capitalization, a universal financial ritual that discounts expected future earnings to a singular present value.”
– They give evidence that the algorithm of capital accumulation has experienced two breakdowns of confidence – in the 1930s and in the decade after 2001.
– The future of what they call ‘capitalisation’ rests on the expectation of continued obedience to the algorithm and a confidence in the infinite capacity to ramp up accumulation forever more.
– Capitalised assets are priced not by actual profits but by an almost religious expectation of future exponential earnings which are discounted into current prices.
– At some point the normal capitalist’s wariness of boom and bust cycles is replaced with a more deep-seated fear – the failure of system of capitalisation itself. In the 1930s and “since the late 2000s, the very ideology of capitalization has been put into question: the capitalist class seems to have lost confidence in its own theories and rituals – and, therefore, in its ability to rule.”
– Add to this the fact that the current system of capitalisation is the most complex that has always existed. If a major component (such as financial liquidity, or consensual illusions about asset values or again predictable energy prices) were removed, the entire system is prone to collapse in the way that ecosystems collapse with removal of key species. (See David Korowizc’s models for more on this.)

Hence the headless chickens.

(Perhaps the Bitzler and Nitzan essay warrants a post by itself).

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6. Pope Epopt - July 26, 2010

Sorry. Bitzler = Bishler = Bichler in reality. I have the proofreading capacity of a dyslexic marmoset.

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7. McCarthy revenant… « The Cedar Lounge Revolution - July 28, 2010

[…] never gone away. As could be read in the Irish Times last week…something Garibaldy noted in this post. Minister for Finance Brian Lenihan announced yesterday that he has appointed economist Colm […]

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