The age of austerity posted by Richard Seymour

"One of the basic pragmatic principles that emerged in the 1980s, for example, was that state power should protect financial institutions at all costs. This principle, which flew in the face of the non-interventionism that neoliberal theory prescribed, emerged from the New York City fiscal crisis of the mid-1970s. It was then extended internationally to Mexico in the debt crisis that shook the country to the core in 1982. Put crudely, the policy was: privatise profits and socialise risks; save the banks and put the screws on the people (in Mexico, for example, the standard of living of the population dropped by about a quarter in the four years after the financial bailout of 1982). The result is what is known as systemic 'moral hazard'. Banks behave badly because they do not have to be responsible for the negative consequences of high-risk behaviour. The current bailout is this same old story, only bigger and this time centred in the United States." (David Harvey, The Enigma of Capital And the Crises of Capitalism, Profile Books, 2010, pp. 10-11)

"As the price of the bailout, the industrial giants of northern Europe want rigid rules on tax, spending and borrowing enforced.

Northern Europe has seized control of southern Europe - and for me, this completes a process of risk-transfer that's been under way since Lehman collapsed.

In the autumn of 2008 all the risk was in the banking system.

Then, states all over the world took on that risk and for a year they contained it.

Now the risk is passing from small states to big states. And it's passing to somewhere else - to the streets.

Those narrow streets around Exarchia Square are world-notorious for radicalism and bohemianism. But you will find the same social mix in the 1,000-year-old streets of Oviedo to Perugia to Bratislava.

A generation of adult workers who will now see their wages and pensions slashed. A young generation of college leavers who can see no future.

For them austerity, even if it saves the euro, may never bring back the lifestyle they were promised. And the risk is they might reject austerity." (Paul Mason, 'Will Europeans accept a generation of austerity?', BBC News, 27 May 2010)

Labels: austerity, bankers, capitalism, finance capital, neoliberalism, redistribution, ruling class, working class