Europe is facing a near-terminal monetary and economic crisis with very little hope of regaining growth or stability. Capital has been finding little room to expand other than through what Ben Bernanke called ‘global integration’, which is a fancy term for integrating low-wage workers in Southeast Asia into the labor market, reducing the bargaining power and earnings of Western wage workers. But then our friends in the financial sector have found the ultimate solution to the intractable lack of growth, i.e. the expansion and massive leveraging of credit, which increases the debt obligations of private individuals (especially in America and Britain) and governments (especially in Southern Europe). This, in turn, has increased the likelihood of bank failures who are then pointing their guns at sovereign governments, who supply those financial institutions with ample credit financed by austerity measures on the people as well as more fiat currency especially in the US. The banks are expecting major European nations to default and hike the interest rates on the sovereign debt of European countries, Greece last time I checked stands at 35% bond yield!!! Thanks to this measure they have done what they were compelled to do in expectation of threatened balance sheets, but merely have compounded the crisis.
The crisis of capitalism and its logical extension, global finance capitalism, is reaching unbelievable heights. One very simple logic in any economic system is that any capital investment that wants to yield profits is exclusively dependent on the strength of the commons, i.e. the people that make the system work through their labor. If you have smart-ass financial experts, whose job it is to trade money and make money off of it without strengthening the vital interests of the commons, in order to bring us the “sustainable growth” which the West has not been seeing since the stagflation of the 1970s (and to run it from a Marxist point, we have never seen since capitalism’s inception), then you will see a massive unraveling, the commons is permanently looted, i.e. people will not be able to retrieve their pension investments or even their bank accounts, then they face unemployment, because the credit system has collapsed, and run into the helpful hands of the government, which incidentally is owned by large corporations and financial institutions, who are lining up with their giant welfare checks, so that eventually the government can’t even help out the unemployed only the banks, who in the capitalist logic are more important for the survival of the capitalist empire than the worker, when in fact the worker is more important for the capitalist empire than the capitalist institutions, i.e. banks and financial institutions.
The contradiction can and will not be resolved until the people’s movement from Cairo to Tunis to London to Boston to New York to Moscow to Berlin to Paris to Athens will take back their democracy and subject the financial institutions to their rightful place. Nationalize the financial institutions or let them fail, let the government insure all the deposits and cancel most of the debt obligations for countries. Then craft a new plan for investments in restoration of the Western economies. The elites operating under their delusion of “saving the banks (and screwing the people)=saving the system” will not implement the change, the people will need to get out of their comfort zone.
Ultimately, I also think that the West can only get out of its crisis by increasing their cooperation with China, India and Brazil, who are doing well. It can not happen, however, only at the state official/capitalist level, but the working class, which demands global solidarity.
Here is an article on the intricacies of the European and global financial problems.
“European summits – over twenty at last count – have produced little. The planned summit on 9 December 2011 may well be the last chance for Euro leaders and Euro-crats to avoid a financial disaster. Unless European leaders overcome their common sense deficit, which is proving as intractable as budget and trade deficits, this may not end well.
The last comprehensive and final plan – the fourth in the last 18 months – failed to mollify investors and markets. The crisis is now engulfing Italy, Spain and now re-infecting Ireland and Portugal. Stronger countries like France (at risk of losing its AAA credit rating) and Germany are increasingly vulnerable.
What happens in Europe will not stay in Europe. The shock will be rapidly transmitted through trade, investment and the financial system to the rest of the world. Problems in international money markets will not be welcome for America businesses and the Federal government, which relies on foreign investors for financing. It may truncate the nascent American recovery.
(…) Historically, growth in the two economies is highly correlated. A slowdown in Europe is generally reflected in lower growth in the US reflecting the economic linkages. US growth may slow in response to Europe’s problems.
(…) The ECB will probably slash Euro interest rates and lengthen the term of emergency funding of banks to say two years with easier collateral rules. European central banks may provide money to the IMF to provide money to beleaguered nations. But IMF funding would rank above ordinary creditors and impede the receipt’s access to commerical funding complicating the problem.”