Tintin In Belgian Political Wilderness

A bourgeois democracy without an elected government

Crowning a crisis unprecedented in the history of bourgeois democracy essentially fractured Belgium has not yet collapsed. Elections have failed to produce a government there in the country with a history of compromises by its ruling classes. “Belgium is in a coma. The patient is clinically dead”, said a Flemish Christian Democrat.

Failure to accommodate contending interests has come out starkly in the bourgeois democracy with a crown. “Belgium no longer works. It is a nation that has failed”, said Bart De Wever, leader of the New Flemish Alliance (N-VA), the party calling for independence for Dutch-speaking Flanders. By securing 27 seats in the 150-seat parliament N-VA appeared as the strongest political party. In Flanders, a region of 6.5 million people that accounts for almost 60% of the population, 45% voted for the N-VA and other separatists.

Since the June 2010 elections, the ruling classes have produced an unfinished political power equation that consequently generated a world record of a country without an elected government, when economic recovery is fragile, unemployment is hovering around 8.5%, and the euro is in crisis. On May 19, the Chamber of Representatives adopted the 2011 budget submitted by the unelected government. The right-wing Vlaams Belang and the Flemish and Walloon Greens voted against the budget while the New-Flemish Alliance and the Flemish Socialists abstained. A bourgeois practice by a government without a mandate!

Iraq, a few months back, possessed a record without a full-fledged government for 249 days. For 353 days, between July 17, 2003 and July 15, 2004, Cambodia was without government. In 1977, the Netherlands set the European record of 208 days. Belgium had similar experience in October 1978-April 1979. A caretaker government ruled the country termed as an “accident of history” by Yves Leterme four years ago. After the June 2007 election, it took nine months to produce a coalition government. Yves Leterme now rules Belgium with decrees from the monarch although his Flemish Christian Democrat party was routed in the elections in a country whose constitution of 1831 was considered as a model of bourgeois-liberal government.

There are dictations. Standard & Poor’s has threatened that the country’s credit rating could be downgraded if a government is not formed within months. Fitch has also issued almost similar threat to the third highest debt burdened country in Europe with public debt 97.2% of annual output in 2010. But, the financial crisis, and the historic political impasse has not deterred the unelected rulers from sending war planes to strike in Libya in the name of “saving” humanity.

Bifurcation of the country that attracts more than 10% of all logistical foreign investments in Europe (Ernst & Young, Barometer of Belgian Attractiveness) into Flanders and Wallonia, that housed 75,600 persons owning more than $1 million in 2010 of whom 750 to 1,000 were super-rich owning more than $30 million, a 9.8% increase from previous year, (World Wealth Report) is not a contradiction between sunset industries, mainly coal and steel in the south, and sunrise industries, chemicals, high-tech, and services in the north, but the dominant Flemish aspiration, a hunger of a section of a capital. While the world dominating capitals try to trample national borders and finalize its world-winning adventure – globalization – its one part prefers a small corner, a contradiction within itself.

With the shift of power, economic, and consequently political, from Wallonia to Flanders, strong Flemish separatist sentiment is unwilling to feed the less affluent Wallonia. Actually, the section of the capital prefers to free its hands and feet for greater gain. The Francophone Walloons prefer unity. The French, on the other hand, would embrace Wallonia if it secedes and likes to join France. Capitals have respective equations for further accumulation. The question of dominance by a particular language in the country’s socio-cultural life reflects the issue of dominance in an economy that in terms of inward FDI flows was among the top ten ranked countries in 2009.

With one of the most productive workforce per hour worldwide, low real estate costs, tax incentives including reduction of the effective corporate tax rate in many cases to less than 25% and a special reduction of 80% in taxation of royalties Belgium, as Denise Rutherford, president of AMCHAM Belgium said, “has become more attractive for U.S. investment”. (On the occasion of the release of the organization’s 2007 investment report.) The US, the main foreign investor, mostly has poured money in the finance and insurance, and in chemical, automotive assembly, petroleum refining and pharmaceutical sectors. Investment in the service sector including law firms, accounting firms, advertising agencies, computer and management services, public relations, and executive search firms has more than tripled since 2000. The EU’s single-market program attracted many US law firms and lawyers to Brussels.

Having least contradiction with the Empire in the arena of trade and economy, and a close collaborator in the Empire’s activities in Afghanistan, Africa, the Balkans, Iraq and Lebanon the country backs NATO’s central and eastern European expansion. Involved with the Organization for Security and Cooperation in Europe Belgium contributed AWAC crews for surveillance flights over the US. Other than the NATO and EU headquarters, NATO’s military headquarters is also in the country.

Its early occupiers, the Romans, the Spanish, the Austrians, the French, the Dutch, the Germans, have made the Belgians critical of any form of authority. But capital has made the Belgian workers much efficient, squeezing out their labor power most brutally, raising its industrial productivity much higher than the US, Germany and Japan. US dollar produced per hour per worker in Belgium is 55.9 while it is 51.8 in Ireland, 50.3 in Italy, 45.0 in Germany, 42.0 in the UK, 53.0 in Norway, 37.3 in Japan and 49.6 in the US. On the other hand, International Metalworkers’ Federation informs: Belgian worker requires working time to buy beef: 82 minutes, bread: 9 min, chicken: 21 min, fish: 84 min and milk: 4 min. Its principal trade unions either repudiate class struggle or aim to achieve Christian principles or uphold business interests. Its ruling classes have co-opted a section of the labor leadership, and have sent industrial unrest to one of the lowest in the EU.

Now, in the land of “Belgian compromise”, ability to contrive complex solutions conciliating competing concerns, a section of capital aspires to proclaim the end of the country with the national motto “Strength Through Unity” that once crowned a monarch invited in from the House of Saxe-Coburg Gotha in Germany. “[W]e don’t know if it will be possible to reach a compromise between them [the north and the south]”, said Marc De Vos, the head of the Itinera Institute, a Brussels-based policy think tank. (Time, Jun. 14, 2010) Vadim Prozorov, Associate Professor of History, Moscow State University doesn’t “rule out the split of Belgium.” “If the EU suffers more than it does now and the economic crisis affects the basis of the EU, Belgium is one of the first candidates for the split. In such circumstances, it will be quickly discovered that the country […] is not viable.”

On January 23, opposing possible collapse of the country, thousands of citizens in Brussels protested against the political anarchy. On February 17, students in Brussels, Antwerp, Liege, Bruges and Ghent tried to resolve unresolved political contradiction by rallying in defense of their country’s integrity. They named it “Potato Revolution”. A section of people, it seems, stands against a section of capital. There were also other suggestions to protest including denial to shave beard and abstain from making love. But the reality is tough for nourishing love for the European model of federalism, where no “national” party with activity on both sides of the linguistic line exists, where the Christian democrats, socialists, liberals and the Greens are divided along Francophone and Flemish lines. Actually there is no single capital that can dominate the economy, where 73% of the work force is engaged in the service sector and 25% in industry. With a trade union density, as OECD’s Employment Outlook tells, standing around 54% business services offshoring has positively influenced industry-level productivity in Belgium (1995-2004). (Bernhard Michel, “The impact of offshoring on employment and productivity in Belgium”, April 29, 2011)

“In Belgium, we have a split in the political system”, said Philippe Van Parijs, a philosophy professor at Catholic University of Louvain (Time, Jan. 24, 2011) The “split in the political system” of the 20th economy in the world, and the 10th exporter of goods globally, as the WTO informs, has cropped up in the field of an economy of uneven development, one of the attributes of capitalist economy. This feeds a particular form of social psychology. A February report by the US Institute of Peace says that the political elites are now fanning up tensions and exploiting linguistic differences to push a parochial political agenda. “Over the past few years, resentment has only grown between Belgium’s Dutch and French speakers. […] In some Flemish communes … children are banned from speaking French on the playground, prospective house buyers cannot purchase property if they don’t speak Dutch, and locals are encouraged to report businesses that do not employ Dutch speakers. The Flemish […] see the French speakers as feckless, inefficient and even corrupt. […] ‘[…] Belgium is one state composed of two countries,’ says Carl Devos, a political scientist at Ghent University.” (Time, Jun. 14, 2010)

Time asked: how long can Belgium continue to reconcile its conflicting constituents? (Jun. 30, 2010) Requirement and ability of its corrupt ruling class will produce the answer. Till then, Tintin, Suske and Wiske, fox “Reynard”, lion-king Nobel, bear Bruyn and wolf Isengrim will wander in political wilderness created by the ruling classes of the country once Marx once dubbed “the paradise of Continental Liberalism”. The “Flanders’ fields” that witnessed many battles is now waiting for another engagement, not less significant than the older ones.

The dominant capital’s aspiration, Belgium- bifurcation, will not hurt it. Break-up of densely populated Belgium, “located at the heart of one of the world’s most highly industrialized regions and reaching 140 million European consumers within a radius of 300 miles”, will not produce an immediate cataclysm, but will create a intra- and inter-capital chain reaction and political implication, and exemplify a dominant capital’s hunger and limitation, a dwelling with opposites, of a bourgeois democracy.

The Great Financial Crisis: Scot-Free Culprits Expose Class Solidarity

Sacrosanct capitalism searches causes behind the Great Financial Crisis among individuals instead of in the system it owns and operates, and fails to nab the culprits, the individuals involved with the crisis. The act and the failure reiterate the fact mentioned many years ago: the entire capitalist system safeguards capital, and governing machines – finance regulatory, law enforcement or whatever it is – are not class-neutral. The failure to nab culprits, the system’s in-built friend-foe-within, signifies class solidarity of capital’s ruling machine.

Reports by the US governing system, and from media, an ideal sample for study, tell reality of class solidarity. Based on (and liberally quoted from) these reports the old pattern of failure and collaboration is reiterated: as class-tool, state’s first job is to defend dominating interests.

Wall Street and the Financial Crisis: Anatomy of a Financial Collapse (WFC), the 650-page report released in mid-April, 2011, describes finance capital-friendly practices, improper even according to governing standards set by capital, at different levels, and the governing standards were ignored, in different styles and through different work methods and procedures by the speculating capital and its regulators. Higher rate of quicker profit in a stagnant economy made them reckless. The report focuses on a number of players in the speculation game – Washington Mutual, the Office of Thrift Supervision (OTS), Standard & Poor’s, Moody’s Investors Service, Goldman Sachs and Deutsche Bank – while it provides evidence of collaboration that enters the den of criminality.

Senator Levin, co-chairman of the Senate Permanent Subcommittee on Investigations that released the report said: “The report pulls back the curtain on shoddy, risky, deceptive practices on the part of a lot of major financial institutions.” “[T]hose institutions deceived their clients and deceived the public, and they were aided and abetted by deferential regulators and credit ratings agencies…They gained at the expense of their clients and they used abusive practices to do it.” (New York Times, Apr. 13, 2011) Others including a Time story (the report on 25 blame-worthy, and referred in The Age of Crisis), quite some time back, also made almost similar observations and presented facts.

Almost always ignored, but the foremost fact is: public-deceived. The speculating capitalists, as Marx and Engels retorted, have “expropriated” property, the holiest love capitalists worship, in billions of dollars, although they despise the act of expropriating property if working people initiate. But the superrich get enriched by appropriation and expropriation, which is actually thievery, a regular proud act of capitalists. Inner workings of democracy of capital involved in this Great Gambling have also been re-exposed by these reports.

“At least 10,500 people with criminal records”, noted the Financial Crisis Inquiry Commission, “entered the [mortgage-broker] field in Florida, including 4,065 who had previously been convicted of such crimes as fraud, bank robbery, racketeering, and extortion.”

Before committing the first $85 billion to salvage AIG, the government “failed to exhaust all options” said the US Congressional Oversight Panel in one of its monthly reports in mid-2010. As AIG went to the verge of collapse, Fed and the Treasury jumped on to save it with more than $100 billion. The report was not certain that whether taxpayers will ever be repaid in full. The Panel said: AIG had an “insatiable appetite for risk” but “blindness to its own liabilities.”

Is not the appetite the historically proven character of capital?

During hearings of the US Financial Crisis Inquiry Commission (FCIC) in 2010, an AFP report (Jan. 14, 2010) said: the bankers admitted mistakes as they accumulated risks that led up to the crisis. Lloyd Blankfein, Goldman Sachs chairman, said: “accumulation of risk” was “the biggest problem” that financial institutions faced ahead of the crisis. “These are all exercises in risk management.” John Mack, Morgan Stanley chairman, informed that many firms were “too highly leveraged, took on too much risk and did not have sufficient resources to manage those risks.” Brian Moynihan, Bank of America president, admitted the “lot of damage” the banking industry caused. Jamie Dimon, JPMorgan Chase chairman had the same admission: “We made mistakes.” But Blankfein cautioned against overregulation: “Taking risk completely out of the system will be at the cost of economic growth.” After hearing these frank confessions and valuable observations, Phil Angelides, chairman of the FCIC, said: “It sounds …like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars. It doesn’t seem to me that’s a practice that inspires confidence.”

Capital, it seems, involved in speculation has made risk a commodity; it speculated on risk; and the risk-commodity has established a number of relationships that connects individuals, institutions, practices, procedures, regulations. But still it – risk-commodity – is difficult to define. “A commodity is … a mysterious thing…,” says Marx (Capital, I, ch. 1, sec. 4) Monopoly-finance capital, which is now engaged with speculation with risk and illusory financial products, has made financial-commodity, it produces and trades with, more mysterious. It is not a simple commodity. In it “human brains and nerves, and muscles,” as Marx tells, “and in this sense are human labour” (ibid. sec. 2) is spent. State machines, directly and indirectly, formally and informally, serve them, for which the machine has been assembled.

Countrywide Financial, IndyMac and Washington Mutual were considered as “constituents” by OTS officials. It supervised them; it relied on bank executives to remedy problems; and it was reluctant to interfere with “even unsound … practices” at Washington Mutual, said the WFC. Two risk managers at the bank were marginalized and one of them was fired as the manager informed the regulator that loss estimates provided by the executives were outdated. In 2004-’08, the regulatory office identified more than 500 serious deficiencies at Washington Mutual. But the bank was not forced to improve its lending operations. In Sept. 2008, as the Federal Deposit Insurance Corporation (FDIC) moved to downgrade the bank’s safety and soundness rating, the OTS director, referring to the FDIC chairperson, angrily e-mailed to a colleague: “I cannot believe the continuing audacity of this woman.” Washington Mutual failed within weeks, informs the WFC.

In 2007, the WFC said, Goldman with its power to drive prices to its desired direction tried to build its bet against housing, actually an act of manipulation: drive down the cost of shorting the mortgage market by squeezing those making negative bets, try to put on the squeeze, so that it can add to its negative bets in a cheaper way and protect itself against the housing collapse.

Greg Lippmann, a trader focused in the WFC, was vocally negative about housing as early as 2005 and brought his idea of shorting the market to professional investors. He described risky mortgage securities as “pigs”. Once he was asked to buy one such mortgage security. His response: he “would take it and try to dupe someone”. He persuaded Deutsche Bank to let him build a large short position that reached $5 billion by 2007. Lippmann considered the bank’s operation a “CDO (collateralized debt obligation) machine” and characterized such securities as “Ponzi scheme.” Lippmann claimed that he persuaded the AIG to stop writing insurance on mortgage securities. He informed the committee that the head of the Deutsche that put together CDOs was upset when Lippmann persuaded AIG to exit the business in 2006 as it would be harder to keep these lucrative factories humming without AIG to insure the instruments.

According to WFC, Deutsche and other banks made $5 million to $10 million for every deal like Gemstone, a CDO these banks created. In 2006 and 2007, banks created about a trillion dollars of CDO deals, a casino economy appliance that ignited the lending lust.

As examples of not looking deeply into acts of profiteering with risk and bundling questionable loans and selling, creating illusory profits, etc. the New York Times cites a number of incidents: Merrill Lynch understated its risky mortgage holdings by hundreds of billions of dollars. Mozilo, the chief executive of Countrywide Financial, publicly praised his company’s practices, which were at odds with derisive statements he made privately in e-mails as he sold shares. The stock subsequently fell as its losses became known. Lehman Brothers executives assured investors in the summer of 2008 that its financial position was sound, although they counted as assets some holdings pledged to others. Bear Stearns executives may have pocketed revenues that should have gone to investors. “But the Justice Department has decided not to pursue some of these matters — including possible criminal cases against Mr. Mozilo of Countrywide and Joseph J. Cassano, head of Financial Products at A.I.G., the business at the epicenter of that company’s collapse.” Brad Bondi and Martin Biegelman, two assistant directors of the commission, specifically named Countrywide and Mozilo while outlining their recommendations for investigative targets and hearings in a memo. They noted that subprime mortgage executives like Mozilo received hundreds of millions of dollars in compensation even though their companies collapsed. A message reached the officials: Countrywide was off limits. Phil Angelides, the commission’s chairman, told his deputies that Countrywide should not be a target or featured at any hearing. Chris Seefer, an investigating FCIC official, said: Countrywide had not been given a pass. Angelides said a full investigation was done on the company, and that a hearing was planned to feature Mozilo. It was canceled because Republican members of the commission did not want any more hearings. Accounting firm Ernst & Young helped Lehman “engage in massive accounting fraud.” E&Y was sued in 2010. But to date, Lehman or any of its executives has not been sued. (Apr. 14, 2011)

Mozilo tired with the demands of the OCC found an easy escape route: Countrywide changed charters to go under the purview of OTS, a “considerate” regulator. According to Connie Bruck of The New Yorker, the OTS actually lobbied Countrywide to make the switch. West Virginia tried to sue Capital One for credit card abuse in 2005; the company applied for a national charter with the OCC; and Capital One escaped West Virginia’s jurisdiction. The state lost authority to pursue the case. The OCC stopped Georgia as it tried to enforce predatory lending laws. New York regulators were intervened while pursuing discriminatory lending investigations. The FCIC head told John Dugan, former OCC head, “You tied the hands of the states and then sat on your hands.”

The case with the Bank of America has been settled by the SEC, and none of its executives were charged for their unholy acts. A civil fraud lawsuit against the former chief executive and the former chief financial officer has been filed. The case is pending. Last spring, new mortgage-related subpoenas to eight large banks have been issued. But no case has been brought on this matter. (NYT, Apr. 14, 2011)

Giant banks paid big bonuses immediately after their bailout. That money was not brought back. Those bonus figures were only made public to make the beneficiaries shameful. (ibid.) But big money and shame are not hostile to each other.

After the Bear Stearns collapse, in-depth search for fraud throughout the mortgage palace was suggested by some law enforcement insiders. The FBI expressed concerns about mortgage improprieties in 2004, identified about two dozen areas the fraud was assumed going unrestrained, and made a plan to investigate major banks and lenders. Robert S. Mueller III, FBI director, approved the plan. [Time, May 9, 2011 carries a report on Muller and surrounding situation.] “We were focused on the whole gamut: the individuals, the mortgage brokers and the top of the industry,” said Kenneth W. Kaiser, the former assistant director of the criminal investigations unit. “We were looking at the corporate level.” Days after the memo was sent, prosecutors at some Justice Department offices began to complain that shifting agents to mortgage cases would hurt other investigations. “We got told by the DOJ not to shift those resources,” he said. About a week later he was told to send another memo undoing many of the changes. Some of the extra agents were not deployed. A spokesman for the bureau said that a second memo was sent out that allowed field offices to try to opt out of some of the changes in the first memo. The FBI scaled back a plan to assign more field agents to investigate mortgage fraud. That summer, the DOJ also rejected proposal to create a task force for mortgage related investigations. As a result, these cases remained understaffed and poorly funded. A broader financial crimes task force was formed much later. (ibid.) “[T]he FBI has seen a radical cut in the number of agents available to investigate financial crime. …During the savings and loan crisis, 1,000 FBI agents worked the financial-crimes scene. Today, just 240 do.” (Morgan Housel, “Why So Few Ended Up in Jail After the Financial Crisis?”, Fool.com, Apr. 26, 2011)

Civil actions by the government were limited. The SEC’s broad guideline in 2009, never made public, made it cautious about pushing for hefty penalties from banks that had received bailout money. “The agency was concerned about taxpayer money in effect being used to pay for settlements.” (NYT, Apr. 14, 2011)

Setting up a financial fraud task force to scrutinize the mortgage industry was considered by the DOJ. Michael B. Mukasey, a former federal judge in New York who had been the head of the Department, discussed the issue with his deputies. He decided against a task force. Last year, the FCIC asked Mukasey that whether he was aware of requests for more resources for investigating fraud, Mukasey said, he did not recall internal requests. Mukasey’s spokesperson said that he had no knowledge of the FBI memo. A year later, several lawmakers decided that the government needed more people tracking financial crimes; Congress passed a bill, providing a $165 million budget increase to the FBI and DOJ for investigations in the area. But only about $30 million in new money was provided. (ibid.)

In July 2008, the SEC staff received a phone call from Scott Alvarez, general counsel at the Federal Reserve in Washington, to discuss an SEC investigation into improprieties by the largest US brokerage firms. Their actions had hammered thousands of investors holding the short-term investments known as auction-rate securities that UBS, Goldman Sachs and similar companies operated propagating them as highly liquid investments. Investors holding hundreds of billions of dollars of these securities could no longer cash those in as the crisis spread. As the SEC investigated these events, some SEC officials argued that the banks should make all investors whole on the securities, because banks had marketed them as safe investments. But Alvarez suggested that the SEC soften the proposed terms of the auction-rate settlements. His staff followed up with more calls to the SEC, cautioning that banks might run short on capital if they had to pay billions of dollars required to make all auction-rate clients whole. The SEC wound up requiring eight banks to pay back only individual investors. For institutional investors including pension funds that bought the securities, the SEC told the banks to make only their “best efforts.” (ibid.)

The FDIC sued Killinger, Washington Mutual’s former chief executive, and two other officials, accusing them of piling on risky loans to grow faster and increase their compensation. This is one of the few exceptions. The SEC extracted a $550 million settlement from Goldman Sachs for a mortgage security the bank built. (ibid.) Probably, somewhere some understanding failed.

Regulators failed to compile information that could have helped frame criminal cases. Weak regulation made it difficult to pursue fraud. The SEC slowed down the investigative work on other cases. In 2009, the DOJ announced a task force to focus on financial crimes. But the department received no additional resources. Lawyers opined that Countrywide exemplifies the difficulties of mounting a criminal case without assistance and documentation from regulators. The FCIC decided not to make an in-depth examination of the company. Non-prosecution of Countrywide, the largest mortgage lender in the US, puzzles legal experts. Last month, the office of the US attorney for Los Angeles dropped its investigation of Mozilo after the SEC extracted a settlement from him in a civil fraud case. Mozilo paid $22.5 million in penalties, without admitting or denying the accusations. (ibid.)

Citing data from Syracuse University’s Transactional Records Access Clearinghouse the NYT said: in 1995, bank regulators referred 1,837 cases to the DOJ. In 2006, it was 75. The following four years saw it slide to 72 a year on average. The declining trend began under Clinton. The Bush administration maintained it. Prosecutions for Enron, WorldCom, Tyco and others were exceptions. From the summer of 2007 to the end of 2008, OTS-overseen banks with $355 billion in assets failed. But OTS has not referred a single case since 2000. The Office of the Comptroller of the Currency has referred only three in the last decade. Mostly small banks face civil enforcement actions. There is no stiff penalty. No senior executives have been charged or imprisoned, and no collective government effort has emerged. (ibid.)

Concerned with Countrywide’s reckless lending, Robert Gnaizda, former general counsel at a nonprofit consumer organization, advised John Reich, a former banker and Senate staff member appointed by George W Bush, to set up a hot line for whistle-blowers inside Countrywide to communicate with regulators. Countrywide switched oversight to the thrift supervisor, and that agency was overseen at the time by John Reich. “John was uninterested. He told me he was a good friend of Mozilo’s.” Reich said that he did not recall the conversation with Gnaizda. (ibid.)

William Black, law professor, University of Missouri, said: “There were no criminal referrals from the regulators. No fraud working groups. No national task force. There has been no effective punishment of the elites here.” David Skeel, law professor, University of Pennsylvania, said: “It goes to the whole perception that Wall Street was taken care of, and Main Street was not.” Henry Pontell, criminology, law and society professor, University of California, Irvine said: “When regulators don’t believe in regulation and don’t get what is going on at the companies they oversee, there can be no major white-collar crime prosecutions. If they don’t understand what we call collective embezzlement, where people are literally looting their own firms, then it’s impossible to bring cases.” (ibid.)

In a capital dominated world system, capital’s profit making motive is “not” crime! Capital loots instead of making investment into manufacturing as profit from manufacturing is lower than loot! The situation “makes” loot legal! The need to sue for loot “doesn’t” arise as loot drives economic activity! Prosecuting capital is not the job of capital’s governing machine! Capital’s crimes are “not” crimes and capital’s corruptions are “not” corruptions until its crimes and corruptions corrode capital.

But these also are ignored as higher profit comes in quicker speed although this produces perilous moments of meltdown. It corrupts the political system, which is essential for its existence. “The financial services industry”, Paul Krugman writes, “has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. … The vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole. … But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion. … At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. (NYT, “The Madoff Economy”, Dec.19, 2008)

The profiteering from risk-activity by the capital made more than seven million Americans jobless and about 25 million Americans unemployed/underemployed. It pushed out more than two million families from their homes in the last three years. During that period, more than 10 million were in the foreclosure process. It was a harmony of chaos and catastrophic failure made by capital with deep uncertainty in the lives of the people. McClatchy Newspaper reported: attorneys for hundreds of injured workers informed that AIG was dragging out insurance payments that their clients need to cover home mortgages, failing to pay full compensation benefits and refusing to pay medical bills. (June10, 2010) An insurer spreading and accelerating uncertainty among people! The report said: AIG, the company linked to major financial firms around the world and through which more than $90 billion in federal money flowed out the back door to some of the same Wall Street banks whose risky behavior fueled the nation’s financial crisis, is now being accused of short-changing its customers.

Dominating definitions of legality made the capital’s accounting tricks legal (i.e., Lehman’s repo 105 accounting method) although those were unethical. Its ethics and legality do not collide as one stands on the other. Probably this led Morgan Housel to write: Not only was this stuff legal, but lucrative. Many executives walked away rich. … This was heads they win, tails you lose, and in either case, jail remains elusive. You can almost hear them laughing now. (Fool.com, April 26, 2011)

“[T]hree years after our [in the US] horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail …” (Charles Ferguson, director, Inside Job documentary, while accepting the Oscar for best documentary in 2011, quoted by Housel) Morgan Housel informs in his column: “After the savings and loan crisis of the early ’90s, 800 financial executives went to prison. Not only have most bank execs avoided prosecution this time around, but many are still gainfully employed by the banks that ran the economy into the ground.” (Fool.com, Apr. 26, 2011) The NYT queried: “It is a question asked repeatedly across America: why, in the aftermath of a financial mess that generated hundreds of billions in losses, have no high-profile participants in the disaster been prosecuted?” The NYT replied: “Answering such a question — the equivalent of determining why a dog did not bark — is anything but simple. (Apr. 14, 2011)

The system is concerned with stabilizing and shoring up its institutions, a day dream in long term. The capital involved with the crisis has established a relationship between victors, on the Wall Street, and victims, on the Nowhere Street, a relationship between deceived and deceiver, dominant and dominated, powerful and powerless, plundered and plunderer, a relationship determined by plunderocracy, a relationship of plunder, enjoy and marginalize the majority, a relationship carrying many contradictions, a relationship creating crisis of credibility of the governing system. While covering the bail out bill in the Congress Time told this credibility crisis in related story “The Bail Out Defeat: A Political Credibility Crisis”. The credibility crisis has still not come out with its full face and force. Recent surveys on mass psychology show part of that face.

All aspects of the Great Financial Crisis have still not been identified, debated and discussed. This is needed as the crisis is making impact, on the one hand, on the lives of the people, and on the other hand, on capitals, and classes that own these capitals, and dominate the present geoeconomy and geopolitics. These will make far-reaching impact on the ruling classes and peoples’ struggles in many lands. 

Greek Game: General Strike, Government Goes Down

Amidst an angry Athens razing with petrol bombs, a general strike, and defections in own rank the Papandreou government in Greece has essentially collapsed as he offered to resign and form a national government. Conflict of bankers’ interests is pushing the Greek crisis further deep down while the finance-oligarchy is trying to prevent the eurozone’s first ever default, and handing over the gift of hunger and unemployment to the Greek people.

Producing a failure in the eurozone finance ministers’ Brussels meeting to resolve the French-German row over the Greek crisis the future of eurozone is now being feared. EU commissioners have a “profound sense of foreboding” about Greece and the future of the eurozone. “[T]he markets would now ‘smell blood’”. (BBC, Joe Lynam, June 15, 2011) Belgium and Spain are siding with France and the ECB. Now, in Berlin, Sarkozy and Merkel will try to solidify common, but competing interests. Soros assumes that there is effort to buy time instead of tackling the Greek problems. “[T]hey are making a mistake”, said Soros.

Stock markets across Europe were rattled as top European shares fell and the US markets went down. Now, three European banks – Credit Agricole, BNP Paribas and Societe Generale – face the threat of downgraded rating because of their exposure to Greek debt. The euro posted its biggest percentage decline against the dollar since last August.

While the Greek parliament witnessed fruitless debate on brutal austerity measures aimed at the Greek people tens of thousands of demonstrators, faced by violent police, besieged the parliament building. Making a blanket of tear gas and flash bombs and injuring the demonstrators were part of police-action. A crippling general strike, third in this year, paralyzed ports, banks, hospitals and state-run companies that rocked the government.

The Greek game, extrapolated by the growing rift between France and Germany, being played by competing bankers triggered alarm across Europe. The future of the euro and the eurozone are at stake. French and German banks hold very high stakes, to the range of billions, in the Greek economy in deep recession. The financial battleground is increasingly turning brutal.

Now, role of banks including Goldman Sachs are being questioned again. With financial tricks they helped hide the extent of Greek deficit. “[S]ome of those same banks were using credit default swaps to bet on the likelihood of a fault, trades that had the effect of making it harder for Greece to borrow, thereby pushing it closer to a financial cliff.”

Humiliation

Profit-hungry bankers, in their act of benevolence, are handing over humiliation to the Greek people. Days ago, Papandreou said: “We will not surrender.”

But the reality is opposite as bankers want to subjugate everything, and Papandreou has no power to make an about turn from the destiny the bankers decide. Greece is experiencing the same “thing” Third and Fourth World countries experience: Humiliation.
Gavin Hewitt writes: “Greeks are being humiliated. … Their fate is being decided elsewhere, by unelected officials from the EU or the IMF. … One demonstrator spoke of a country ‘being torn to pieces’. The IMF and EU send in accountants and economists who occupy space in the finance ministry. When it comes to selling off state assets - intended to raise 50bn euros … - there is debate as to whether this should be overseen by a non-Greek body. It would have been the final humbling. There were suggestions, too, that foreigners should run Greek tax collection. Those ideas may have been sidelined but the resentment has not gone away.”

“Some say that”, he continues, “Greece has become a protectorate of the EU. Certainly the intervention from outside in Greece’s internal affairs is unprecedented. The Greek Prime Minister, George Papandreou, flies off to meetings to learn the terms of his surrender. He had promised no more cuts, but in return for Greek Bail-out II he will have to take the axe to public sector jobs. … State assets are being sold off. The crowds shout ‘we won't sell!’ – but that’s precisely what the government has been told to do. … Perhaps … German and European officials have spoken of Greece selling off its islands.” (BBC, “Debt-laden Greece mired in anger and humiliation”, June 15, 2011)

Hunger & Suicide

“[T]here is a human cost. The social services organisation Klimaka runs a food kitchen that feeds 3,000 people a day – many are now from the middle classes. There are 30 calls a day to its suicide line. Some, like former Prime Minister Stefanos Manos, warn of a social explosion.” (ibid.)

“The pain might have been endurable if it had worked. A year after Greek Bail-out I (worth 110bn euros) Greece has seen industrial production slump by 11%. Unemployment is up to 16%. The number of Greeks out of work is up 40% from a year earlier. And the debt mountain has ballooned - heading towards 153% of GDP.” Bankers’ interests never have worked in favor of people.

This is the fate the finance-oligarchy plans to impose on humanity. Yesterday, it was in African, Asian, Latin American countries. Today, it is in Greece. And, tomorrow, it will be, probably, in Spain, Portugal, Ireland, Georgia, Latvia, and in other lands. But, ultimately, the oligarchy is feeding peoples’ anger, fueling psychology for resistance. And, it will indulge in its acts till greater, wider, deeper and class-conscious revolt, free of spontaneity, brings in ruins on the oligarchy, and thus frees it from a life of sin.

Greece Gyrates

Greece is now buying time as it gyrates on its debt-axis. The Standard & Poor’s have pushed Greece to the lowest level in the world, lower than Ecuador, Jamaica, Pakistan and Grenada. And, the Greek people are paying prices as the finance oligarchy is putting the burden of the crisis on the working people, and the bankers are preparing to have bigger chunks of public properties. The fear is that a formal default by Greece would widen and deepen the financial crisis.

Citing Standard & Poor’s, a Reuters report informs: Greece is now the lowest-rated country in the world. “The cost of insuring Greek debt is now almost twice as much as the price of insuring Pakistani bonds.” The move is the latest blow for the country. Ratings of four Greek banks – National Bank of Greece, EFG Eurobank Ergasias, Alpha Bank, and Piraeus Bank – will probably be downgraded also. The capitalist European country with a “socialist” government was downgraded by the rating agency on June 13.

Simultaneously, there was a warning: “Any attempt to restructure the country’s debt would be considered a default.” A Greek default could trigger a widespread meltdown having dire consequences in the world banking system. The lower rating has put a massive blow on the government.

The Greek government was not happy with the latest rating. It said, the downgraded rating ignored its efforts to secure funding. The Greek Ministry of Finance said, “The decision ignores the intense consultations taking place … between the same institutions and the IMF aimed at designing a viable solution …” The ministry expressed its willingness, in the name of “all Greeks”, to remain within the euro zone. France’s Credit Agricole that owns the Greek bank Emporiki, and some other banks have stood in favor of rolling over their holdings of Greek debt. Germany’s banking association, a few days ago, backed the idea of private creditors participating in the rescue. A finance-circus is going on.

In this bankers’ game, the finance players are not unanimous on ways to deal the Greek problem. Many of the lenders are the French, German and other banks. Talks between the EU, eurozone countries and the IMF over a second bailout for Greece are facing problems with Germany’s preference of involving private investors. The positions expose competitions. The ECB and the French banks are among the worst exposed to a Greek debt restructuring. The ECB, IMF and EC are demanding control over the Greece economy: to be in charge of the privatization program that will sell out public properties and give the money to the banks.

To ensure continued funding, the Greek government is pushing cruel austerity measures with plans to sell stakes in a number of domestic corporations including the telecom firm OTE, state-owned Postbank and the ports of Athens and Thessaloniki, public pay cuts, civil service redundancy, regressive tax hike, etc. It is part of the “socialists’” privatization program. About 150,000 workers would be thrown out of jobs, and only one worker would be hired for every 10 retirements in an economy, where unemployment is 16% of the workforce. Among the 15-24 year age group, the rate is 42%.

New austerity plans in the shrinking economy with annual rate of 5.5% have sparked 20 days of protests in Athens. About 80,000 protestors have set up a tent city in an Athens square. The workers at state-owned utility PPC announced strikes to oppose the privatization of the company. Demonstrators including workers and students shouted in front of parliament: “Thieves, thieves, thieves”. Polls show that a large number of Greeks are against the policies. These are challenges to the forces of finance oligarchy. General strike is being planned by the Greek citizens.

Profit, Pollution And Poor

Profit is the biggest polluter. The economy that goes to any length for profit, the politics that stands for profit-thirsty economy, the conspicuous consumption-lifestyle that finds life in profit and considers nothing but self, and that is profit at any cost, pollute most. Ecology, environment, pollution, sustaining life on the earth, and all other issues between heaven and earth turns non-issues to profit-hunting.

Profit generates poverty. Profit pushes the multitude to a poverty-laden life, where the poor find nothing but the only way to scour and forage the dirt, the dust, the mud, the municipal garbage dumping grounds, the last portion of tree felled by the powerful, and all these are simply for survival in a world conquered by monster-profit. In their thirst for life, the poor save every drop of water, every piece of paper thrown away by the paper-rich, every piece of cans and plastic bottles, thrown away foods by the food-rich. They consume these, they use these, they recycle these, they earn by selling these to recyclers. Thus they contribute to the survival journey of this resource-poor planet. Thus they stand opposed to profit, to the rich, to the squandering life style of an irresponsible minority in society. Thus an antagonistic relation is established between profit and poor, between rich and ecology.

Excesses of the filthy rich are unsustainable. They live with $1,350 wedge-heel sandals, $18,400 leather tote bags, $80,000 BMW 750, $130,000 Maserati Quattroporte, $8,600 custom-tailored suit, day shirts in 350 colors, 35 fabrics, 10 different collars and 2 cuff styles, 127 million euro yacht, $35,000 intricately detailed canine palace with “recessed and interior lighting, air conditioning, dry-walled interiors and custom furnishing”, “Mughal-inspired kebabs topped with shaved pearls and plates trimmed with 24-karat gold leaf”, $1,200 a plate meal. (Newsweek, May 26/June 2, 2008) This is a miniscule, fractional-fraction of squandering by the energy-rich. The majestic mansions, the private jets and islands, the luscious parties, the blazing ornaments, the protected neighborhoods, the delicately designed detail arrangement for vacations of the rich exist as an obstacle to the changes the world needs immediately. Their vulgar lifestyle, ab ovo usque ad mala, from the beginning to the end, lives in a system. The shrewd system, economic and political, needed to feed and fuel this idiotic lifestyle is inefficient, energy-hungry, nature-gulping. The system devours environment and ecology. In this economy, it is profit, not necessities of life that determines allocation of resources. This market-driven allocation, as Professor Robin Hahnel explained, is inefficient. (“Against the Market Economy”) No doubt, it is an inefficient compulsion. This allocation, determined by compulsion for profit, all most all the time, contradicts with environment. Should not blame for the environmental crisis be laid on this inefficient, but profit-sensitive economy and the state and the society that this hungry economy creates?

All commodities produced in this world system are not essential for life, are not consumed by the masses of common persons. Rather, a lot of commodities burden life, and take toll from nature while getting produced, but they make profit. Dominating interests enjoy a lot of those commodities. Those lots are also in smaller proportion. But those are needed by the capital to make profit. Section of powerful media manipulates mass psychology so that masses turn consumers of commodities produced for profit, but not essential for life.

Economic-political-social-information structure is so designed that often consumers and, in broader terms, broad society remains unaware of harmful effects of many commodities or material used or processes followed for manufacturing these commodities. The structure keeps them unaware of and incapable to calculate the total cost they pay for the commodity they consume and for the pollution the commodities create in manufacturing and use processes. Most of the time, the consumers remain unorganized that makes them incapable to resist polluting technology. (ibid.) As an arithmetic of profit, technologies that carry risk of reducing profit but helpful for environment are not introduced by capital in control of technology and innovation.

A section of environmental discourse ignores this intricate relation between economy, nature, society, environment, profit for few, welfare of all, politics, distribution system, consumption style, etc. The “Mickey Mouse” model, ozpolitic tells, treats economy as an entity non-dependent on society and environment while the “bullseye” model treats economy as dependent on society and environment. The model followed by mainstream is the “Mickey Mouse” model.

It is not that the pecuniary dominating classes are ignorant of the science, economics and politics of ecology. It is oligarchy’s, and now in countries, plutocracy’s class interest – light speed-super-ultra-profit – that keeps them indifferent to environmental problems, to environment-destitute, to ecology-poor, to climate-refugees, to unequal access to ecology, to injustices of inequality, to indecencies of life, to indignities of poverty. The system standing on immense wealth power excludes the poor. The poor are excluded from fora for voicing concern with the defaced ecology they live in, excluded from getting aware of ecological devastations that degrade their life to the level even miserable than the living condition of pet dogs and cats of the rich. Most of the time, the poor are kept unaware of this despicable reality of I-enjoy-you-to-doom. (Keeping the poor unaware is another complex story, told elsewhere.)

Dominating capital and the state machine it controls benefit from processes harmful for environment. (A. Dobson, Green Political Theory: An Introduction) There are cases in this world when state protects environment plunderers as the party of plunderers has assigned state the task. State faithfully carries on this assignment, at times, with a mask of a blind-deaf-dumb-inefficient-worthless-broken down-hapless machine, at times, turning captive to detail, imposing legal edifice its masters have erected, at times, suffering from scarcity of resources required to enforce steps essential for environment, at times, presiding over distribution of chunks of land to its masters and masters’ underlings, at times, “benevolently” concerned with imaginary-trickling down growth only. Although, there are times, states in this amazing world act swiftly, unerringly, efficiently, delicately, smartly, secretly, head-hands-legs not tied or smoothened by legalities and legitimacies. Those are moments for maintaining status quo. Those are issues and times for its survival of its masters, not for survival of environment of/for common community. At times, state turns ignorant; it does not know the way to use taxation-tool to fight pollution. But, at times, it knows smart ways to use tax-tool to benefit polluters, at least not to harm those actors.

For earning bread, the working people have to take dangerous jobs, jobs harmful for their health and head and for environment. Environmental problems severely affect the working class. Many reports, studies, books and essays including Rod Crompton and Alec Erwin’s “Reds And Greens: Labour And The Environment” in Jacklyn Cock and Eddie Koch’s Going Green, D E Morrison and R.E. Dunlap’s “Environmentalism And Elitism: A Conceptual And Empirical Analysis”, (Environmental Management, vol. 10, no. 5), K D van Liere and R E Dunlap’s “The Social Bases of Environmental Concern: A Review Of Hypotheses, Explanations And Empirical Evidence” (Public Opinion Quarterly, vol. 44, no. 2), State of India’s Environment, Citizens’ Reports, People’s Reports on Bangladesh Environment provide evidence of the suffering.

Resolving the crisis requires replacement of the system and relation of production that cannot sustain without expanding always and without devouring the nature, and the political arrangement that the relation and system build up. It has to be replaced by a society that organizes production and distribution democratically in the interests of all. The social system that now governs human society blindly stands against the indispensable changes as Hervé Kempf, environmental editor, Le Monde, tells in his book How the Rich are Destroying the Earth.

Reality that appears puts forth the following urgent, immediate task: seriously review the political and economic power, processes, institutions and relations that maintain and control inequality in distribution pinning down multitude to an ecologically intolerable life – ramshackle, dingy, windowless, dark hovel adjacent to or amidst heaps of garbage, where stagnant water subdued by mosquitoes dominates with its odor, where water and energy are extremely scarce, where unhealthy little kitchen and toilet are disproportionately shared by too many, where it turns difficult to identify whether drains are in courtyard or courtyard is drains, where sons of Adam consume bare minimum but work for hours and hours, where park, play ground and affordable amusement are unknown facilities, where fresh air is a forgotten dream, where similar innumerable descriptions make perception unmanageable. The review will lead to increased space – ecological, economic, political, information – for the poor.

Mainstream environment dissertate don’t go for this review, don’t raise the issue of remodeling distribution and consumption. It keeps itself busy and vocal with the very important task of saving trees and rivers while it forgets the issue of the living condition of the poor, an essential part of environment. It denies looking at the reasons behind reaching the critical ecological threshold. It is a denial of connivance.

Today’s ecological equity demands: increased consumption of the poorest, for the sake of their survival, and reversal of consumption of the insensitive top 20% of the world population consuming 80% of the planet’s wealth. Common persons have direct interest in environment. For having a dignified human existence, a vibrant ecology is common persons’ requirement. For their survival, they have to stand for it. Communities of common persons have to take initiative identifying sources of environmental crisis, fighting the crisis out, regenerate environment.