Saturday, April 28, 2012

Austerity is a Tool for Shifting Wealth from the Many to the Few

[excerpted] — "Since the beginning of the debt crisis in Europe more than two years ago, defenders of the euro currency union have stuck to a basic argument: if the euro zone’s weaker economies would only keep pursuing policies of austerity, even as growth collapsed and job losses mounted, they would be rewarded by investors more willing to buy their bonds.

Yes, the social cost would be high, but over the long term economies would benefit from the lower interest rates that can come with the seal of approval from global bond investors. Or so goes the argument.  

That approach, though, has failed in Greece, Ireland and Portugal. And now it is being severely tested in Spain, where the more the government promises to cut its budget deficit, the more foreigners are unloading their Spanish bond holdings...."
Majia Here: Austerity has failed everywhere it has been applied. This is a known fact. The reason austerity keeps being applied despite its failures to resolve economic problems is because it essentially operates to shift wealth from the many to the few.

If you haven't seen Naomi Klein's Shock Doctrine video, watch it now because this doctrine is being applied in Europe and the U.S. 

Joseph Stiglitz, former President of the World Bank, when interviewed by Greg Palast, describes the "IMF Riot" that occurred after the imposition of austerity measures in developing countries:

The Globalizer Who Came In From the Cold

[excerpted] Step One is Privatization - which Stiglitz said could more accurately be called, 'Briberization…

 After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is 'Capital Market Liberalization.' In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the "Hot Money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.
"The result was predictable," said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries.
At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water and cooking gas.
This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, "The IMF riot."
The IMF riot is painfully predictable. When a nation is, "down and out, [the IMF] takes advantage and squeezes the last pound of blood out of them.... [end excerpt]

Majia here: You can also watch this interview: World Bank Causing Poverty: featuring Stiglitz and Palast

Austerity is an asset grab! 

Here are a few of my previous posts on austerity as a strategy of dispossession:

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