Tyranny of the Austerity Budget

From Athens to Los Angeles, Sacramento and Beyond

By James Preston Allen, Publisher

To the cash-strapped consumers of America watching TV, it seems odd to see the people of Athens, Greece rioting over what, a budget crisis? I mean after all this isn’t like the political tyrannies of other Mediterranean countries like Syria, Egypt or Libya where oppression has been enforced under the heals of brutal tyrants. After all Greece is a democracy and hell we’ve had a budget crisis here in California forever and no one is out in the streets throwing rocks at the police because the Democrats and Re- publicans can’t agree on balancing our state budget—at least not yet.

What is actually happening in Greece amounts to nothing more than a coup d’etat by the troika of banks that control its sovereign debt. These three groups are the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB). These financial institutions are using the threat of cutting off credit to the Greek government on their $112 billion debt to force their parliament to change their social spending and political sovereignty. I am told that “our good friends” at Goldman Sachs had something to do with getting the Greeks up to their necks in debt in the first place.

The justification offered by one Greek economist, who is also a former member of the IMF was, “There really is no alternative however painful the [austerity] measures are.” It just makes sense to cut all of these social welfare programs because we just don’t have the money, is what the bankers are saying and of course this somehow all makes sense—or does it? One does wonder where all that money went.

We are being fed the same lines here in America, the mantra of the conservatives is “that we can’t spend what we don’t have,” Well, that would have been a great thing to propound back when Bush was in office running up the debt on his war in Iraq. It would have been even better to remind the Wall Street bankers about this when their subprime mortgage house of cards collapsed and damned near froze our entire monetary system. And now just two years later the U.S. Department of Justice, which only lives up to its name occasionally, has only prosecuted a few of the fraudsters and Wall Street crooks, letting the really big banks off with few millions of dollars in settlements. One ultimately has to ask, “In whose benefit is the passage of austerity budgets?” Or why haven’t more people gone to jail?

Greece has escaped imminent bankruptcy, by the skin of its teeth by caving in to the IMF troika but in the years to come this “austerity program will only plunge their country into a deeper recession as the parliament is convinced to privatize and sell assets, spending more on servicing its debt and less on its people—perhaps the IMF would like to own the Parthenon? Watching the Greek parliament kneel to the gods of international finance is like watching a modern day Greek tragedy in which the hero severs his own head in the delusion of saving his body from further torment.

This tragedy is one to be watched as it serves as the harbinger of things to come our way. It is the exquisite exercise of severing the people’s control over their money from their finances. It is the final act of allegiance to the universal monetary system controlled, not by nations or their legislatures, but by the banking system that is not beholden to the will of the people but only the greed of the market place.

If all of this seems slightly abstract to you let me make it simple with a personal example—one many of you can identify with. In 2008 about the time of the Wall Street crisis American Express, the company that advertises that it helps small businesses, cut my credit by $10,000 for no apparent reason other than its own assessment of its risk. Since then, I returned the favor by paying only the minimum due. However, recently, I thought better of this and paid them half of what was owed on this account realizing that the interest payments were eating up more than it was worth. Last month, I missed a payment as the bill was lost under a stack of already paid bills and as a consequence, my business friendly AmEx just raised my rate by five points, once again lowered my credit to just above what I owe them and has become so adversarial that I no longer trust doing business with them. They are at the top of my enemies list. They have become more of a threat than a benefit to the survival of my business!

This is precisely the relationship our governments, large and small, have with their banking institutions. From Los Angeles to Sacramento to Washington, D.C. the banks’ own risky invest- ments, which were covered largely by U.S. Treasury and the Federal Reserve, have now come back to haunt the very people who saved them from bankruptcy. And these very same financial institutions who rating systems failed to recognize the inherent “risks” of subprime mortgage bonds are now using this same system to leverage or hammer us with “austerity” measures to balance our budgets. This is the perfect example of the use of the “shock doctrine” to influence the political hegemony of the majority by institutions that have no accountability to the people. This is an economic coup d’ etat separating our legislatures from the control of their monetary policies that ultimately inflict pain by cutting social spending. “There is really no alternative,” the conservatives say once again.

Well lets see if this really passes the smell test. First of all I challenge the comptrollers of our various governments to add up all of the losses from the pension funds that were invested in the subprime mortgage market and then I would ask them to recalculate our debt if those losses were replaced. You see, the government has a responsibility to maintain those funds for the benefit of the retirees even when those investments lose value and that comes directly out of the operating account that pays for everything else like schools. The banks and investment houses that invest those funds for the public have a fiduciary responsibility to invest them safely and they did not—many of them knowingly and fraudulently—and we should be demanding our money back!

Secondly, instead of cutting social security or Medicare or schools with more “austerity programs” we should end a couple of foreign wars we are fighting at the tune of hundreds of billions a year. We could also include a third war that we have been losing for the last 40 years started by President Nixon called the War on Drugs—a recent report on this misguided venture reveals that it has been an abject failure and done nothing more than fuel large sums of money to the drug cartels, placed thousands of drug users in prison at a huge cost to society and done nothing to cure their ad- dictions.

Thirdly, what about taxes? Is there something sacrosanct about an oil severance tax in California that keeps that option off the table? And what about taxing the $42 billion in imports that comes through the local ports from China? The war we are losing is the trade war with countries who take advantage of our “free trade” policies while artificially manipulating the value of their own cur- rencies, who then invest their public monies in manufacturing for export while “dumping” products at a loss on the open market in direct viola- tion of multiple treaties, and stealing our technology and pirating our copy rights. Tell me about why American businesses can’t compete in the world market!

Left to their own ideologies the no-tax Republicans, the “free market” neo-cons and the world bankers would have us believe that, “there really is no alternative to austerity budget cuts” and that even with this kind of unfair trade advantage by countries like China and India, that has fundamentally shrunk American manufacturing, our gov- ernment spending has to shrink to stay in line with our shrinking economy. This is complete nonsense! These people are drinking Milton Friedman’s Kool Aid, they want to reeducate our children in the theory of “trickle down economics” and in the end they want to avoid any discussion of “class warfare,” which is what this actually is because they know if the majority of Americans woke up one day and voted for their own enlightened self interests, we would take back our country, put the bears and bulls of Wall Street on a leash and we would outlaw the gaming tables from our banks and force them to once again make money the old fashion way—lending it to the people from whom they receive their deposits. One last thing before I sign off—the reason to elect someone like Janice Hahn to Congress in the July 12 special election is because she actually believes in the mission of government, which is to do for the people that which they cannot do for themselves. Why would we elect anyone who didn’t believe in this fundamental American creed?