Enginering the doubledip

Standard and Poor’s is a self-interested corporate entity and it is acting in accordance with what it perceives its self-interest to be, in precisely the way that self-interested corporate entities will consistently do. To ask whether a privately owned corporate entity is passing the correct judgment on our political process is to obscure that underlying, anti-democratic fact. They have the power to do so because they’ve been given it: a “Nationally Recognized Statistical Rating Organization” must be “nationally recognized” for its ratings to have the force that it has, and the way the system of financial regulation is constituted is what defines that force. If you’re so inclined, you could even argue that this is all a good thing. God speed to you. As for me, to the secular theology of a “just market,” I am somewhere between a practical agnostic and an angry atheist. The finance market is certainly real and powerful, but the only important question is whether we think the self interest of these kinds of entities is the same as that of the American people, how we will regulate their ability to make decisions, and whether we will continue to cede them the power that they presently have and are using to impose their will on the US’s political economy.

Zunguzungu’s excellent link heavy post on Standard & Poor’s downgrade of US debt is must reading. If you can only read any post about this sorry spectacle, that’s the one to read. All that’s left for me to do is to snipe around the edges.

The paragraph above is the key to understanding not just why S&P downgraded US debt, but the whole second phase of the bankers’ crisis. The 2007/08 financial crisis was a mistake, a bubble that burst, which required governments all over the world to step in and try to save the financial markets from their own greed. This left them vulnerable through having had to take on massive new debts to keep their economies from melting down altogether. It took a few years for the fsckers who had been culpable for that first crisis (S&P not the least amongst them) to get their courage back, but once they did, they saw their chances to use this vulnerability as leverage, to force governments to follow neoliberal orthodoxy, to leave the financial markets alone and of course to make money from betting on e.g. the Greek economy to go down the drain. That’s what’s going on right now, a deliberately enginered crisis so “the market” can get what it wants.

Having Standard and Poor’s, a commercial organisation, as a “Nationally Recognized Statistical Rating Organization”, with the blessing and approval of the American state, make decisions on which debts, especially government debts, are trustworthy sounds absurd on the face of it, but it’s an essential part of the neoliberal structure build up in the past three-four decades. Such an important part of the financial infrastructure cannot be trusted to be under political control with people that might actually care that pronouncements on the risk debt might have on minor things like say, unemployment. That independence enables it to try and pull the trigger on any US attempt to fix the crisis in ways that “the market” didn’t appreciate.

Gen U

Generation Unemployment, the young bearing the brunt of the crisis

Move over Gen X and Y and go away millennials: gen U is here: generation unemployment. As the stats show, all over the western world it’s young workers who are paying the price for the economic crisis. Things didn’t look too good before 2008, but since then the spiral of economic depression and harsh saving measures by governments desperate to cut their way out of the crisis have hit young people hard. It’s not so bad in the Netherlands at the moment as it is elsewhere, but I do have the feeling that’s that because we’ve been in the eye of the storm and only now are going to feel the full brunt of it. We were lucky that when the crisis first hit, we still had a relatively moderate coalition governing the Netherlands that didn’t quite have the same neoliberal instinct to cut spending as our current minority rightwing government supported by fascists has. Didn’t mean that they did very much to combat the crisis in any recognisable Keynsian fashion, but they did put through several measures to dampen the worse effects of it.

No such luck anymore. We now have the same sort of government as every other European country, either slavering to start cutting everything they’ve disagreed with for decades, the crisis providing the perfect excuse for it, or forced to by the pressures of the financial markets and their fellow EU countries. So everybody’s cutting spending while the depression gets worse and of course it’s the most vulnerable, especially the young, who bear the brunt of it.

(Statistics via Mr Wonkish.)

Feel old now!

This is thirty years old now:



unemployment is rife. The political and economic parallels between Britain in 2011 and 1981 may be self-evident, but musical reactions to today’s tempestuous times are conspicuous by their scarcity. Thirty years ago, however, there was one anthem that defined that summer of discontent. On 11 July 1981, the Specials’ “Ghost Town” hit the top of the charts, where it stayed for three weeks – the day before it reached No 1, rioting erupted across Britain. It was an elegiac portrait of the band’s Coventry home town, but its message resonated far beyond the Midlands, chiming with a country feeling the bite of Thatcherite cuts and galvanised into unrest by April’s Brixton riots. “Government leaving the youth on the shelf … No job to be found in this country,” Neville Staple and Terry Hall memorably sang to a backdrop of strident brass, haunted-house organ and loping bass, the groove’s eerie Middle Eastern flavour as unsettling as the lyrics. Meanwhile, to compound the disquiet, the video offered a road trip through post-apocalyptically empty London streets.

Disaster averted

Negotiations for a rightwing government collapsed today, as the VVD and Wilders were no longer sure they could trust the CDA to keep up its part of the deal. Within the CDA critics of cooperation with Wilders had mounted a campaign against the coalition in the last week, with things coming to a head on Wednesday. Yesterday it may have seemed as if the conflict had been resolved, but since the three rebel CDA members of parliament could not commit to a guarantee to support the proposed government (which is not even constitutionally binding anyway), the VDD and Wilders pulled the plug on the negotiations.

It’s about the best result we could’ve gotten, even if this does mean that we’re back where we started, almost four months further and still no government. At the moment I’m not too unhappy about this anyway, as no new government means no spending cuts either. Had the VVD-CDA-Wilders coalition worked, we would’ve gotten two parties hell bent on slashing the welfare state combined with an out and out Islamophobe, not the best of combinations. Any other government can only be better, though I still expect cuts whatever combination of parties takes power.

Recipe for disaster

wilders picking his nose

Everyone involved with politics understands the current dynamic. It’s not hard to grasp. You take very tough economic times, add them to a heavy dose of political opportunism, and multiply both by the aggravating factor of a nihilistic commercial media, and what you get is ethnic scapegoating on a massive scale.

Matt Taibbi is talking about the teabaggers, but he could just have well been talking about Wilders. He started out as somewhat of a Fortuyn clone, but trading in much of Fortuyn’s anti-establishment vibe for more straightforward anti-Islam rhetoric, first within the VVD, then with his own party. Since the economic crisis reached the Netherlands however, he has not just talked about the dangers of Islamic terrorism and the Islamisation of the country, but also about the economic cost of non-western immigration to the Netherlands. So e.g. he takes a populist stance against raising retirement ages, but ties it to cutting down foreign aid.

The scary thing is that this shift in emphasis might just have been the key to his succes. Two elections ago, the first in which his party participated, he got only the same number of seats as had been shared between him and the remnants of Fortuyn’s old party (nine). This election he got twentyfour seats, making his party the third largest. And despite continuing conflict within the CDA, it seems likely the next government will have PVV support, if not participation, leaving Wilder in a position where he does not need to compromise yet can demand concessions for his support. So we would have the nice explosive mixture of a rightwing government wanting to push through huge cuts supported by an xenophobic party eager to start the scapegoating in earnest….