The Never-Ending Bailout…..
Watching Newsnight last night (as you do) it struck me, as it reported the details of yet another bail-out for the embattled Greek economy, that we are stuck in a never ending cycle of bailouts.
One of the thing’s that came out in the questioning of Christine Lagarde, head of the IMF, is that the private sector is escaping scot-free in terms of providing cash for these bailouts and this partially explains why governments are so keen to push them through. They bear the risk and therefore your not just bailing out the system, which in reality is totally knackered beyond reasonable belief, but your bailing out whichever respective governments head happens to be on the chopping block. We are told they are absolutely necessary – which they doubtless are to the governments who’s neck depends on them – but the fact is that they are not helping ordinary people who never seen any of the bailout cash.
Economically, this cycle cannot continue forever because what these bailouts are effectively doing is bleeding money out of the ‘real economy’ ie, (public sector) jobs and peoples pockets and burying it in a big hole, one that is never satisfied and demands constant refilling. This then will obviously start to effect the private sector as people spend and consume less; people their start to lose their jobs, spend and consume less (and conversely need support through welfare etc; thus increase government expenditure and debt) and that is a microcosm of why this crisis could well bring capitalism pretty much finally to its knees.
In a specifically European context, this cycle and the necessity of continuing it is having a distinct side-effect – the crisis is bringing even tighter fiscal and economic and eventual political union into a single federal entity much closer. No doubt, the IMF, who seem extremely keen on this, will push the core European countries down this route and indeed, both George Osborne and Ed Balls are united in their approval. The left, will mistakenly, take this as an open invitation to run the other way; however, a Europe united beyond national borders would be a step-forward, even on capitalist terms, but its one that would need to be completed by through the democratisation of the European Union and it’s this that the left should divert its energies towards – not a narrow retreat into nationalism. Rather than look back, we have to be the people who chart the way forward and break this vicious circle which is propping up a completely failed system.