The Bankers Banquet

Today the Deutsche Presse Agentur reports that the Bundestag as well as the Länder have accepted the bill that would amend the German constitution to ban deficit spending.1 Of the sixteen Länder, only three voted in opposition. In Germany, all left forces are represented by Die Linke, which this past weekend held its party conference in preparation for the Bundestag elections later this year. It vigorously opposed the bill, but did not possess the power to prevent it. Now it has sought the advice of the Bundesverfassungsgericht in Karlsruhe, but it is not clear on what basis they seek to have them block the bill on their behalf.

The results can well be imagined. This rigid deference to economic dogma is likely to chain the beast of state until it can no longer move. But it will soon become clear to the Germans how difficult life is when one can neither save nor borrow. In California the result of a similar mindset has been disastrous already: there, ‘white’ taxpayers threw off the yoke of maintaining a humane lifestyle for the many immigrants to that state by passing an amendment effectively making any absolute increase in taxation impossible. Given the strong population growth from immigration over the decades, this had the obvious effect of utterly bankrupting the state. It is now forced to choose whether to auction off its future by shutting down its excellent state education system or whether to die heroically in the present by declaring bankruptcy and effectively committing suicide. It may be suspected a similar motive is behind this particular law in Germany. The very wealthy bourgeois of southern Germany in particular have long been incensed at ‘their’ money being spent on such fruitless endeavors as state improvements in the dilapidated eastern and northern parts of the country.

It is telling that the attempt by the European Union of the bankers to restrict nations to deficit spending of no more than 3% of GDP has failed entirely, with most major nations blithely ignoring the regulation: Germany itself already has a deficit worth 4% of its GDP. In 2005, a change in the regulation was passed that makes it for the most part nonoperative.2 If even the cautious German politicians see no value in placing themselves in an economic straight-jacket for the benefit of bank creditors, there is little reason to believe this law serves any other purpose than to ‘starve the beast’ in favor of feeding the wealthy. No surprise of course that precisely the poorest northeastern Länder Berlin, Mecklenburg-Vorpommern and Schleswig-Holstein opposed the bill.

Insiders are already quite aware that the European Central Bank’s policy is strongly based on the views and methods of the German central bankers, and their orthodoxy of economic dogma is infamous. Desiring to be ‘more Roman than the Pope’, their restrictive monetary policy has threatened deflation in a time of crisis, while consistently causing unemployment in the major industrial nations of the continent to be relatively high, even so much as a steady 7-10%. With the current crisis reaching its peak, in Spain unemployment is in fact already 17.4%, in France 8.8%, in Germany itself 7.6%.3 Until the current crisis, the United States had a lower unemployment rate, mostly thanks to its own central bankers being a lot less dogmatic in pursuit of its national interests. They knew full well the dangers of further social segmentation in as unequal a country as theirs. Only the fast industrial collapse and evaporation of capital caused by this crisis of capitalism, as well as the large-scale mismanagement and stock-jobbing fraud on the part of private bank management, has managed to raise unemployment in the United States to the higher level of the major European economies. Until recently it was also the case that those nations pursuing get-rich-quick schemes, relying on influx of very volatile financial capital to help them advance in the line of nations, managed to evade the phenomenon of large-scale unemployment. However, the problem with the policy of stock-jobbing and loansharking as basis for a national economy is that money that is quick to come in is equally quick to get out. Any downturn and the established capital evaporates faster than the steam of the geyser or the tones of the harp.

The nations with established niches as carrying-traders are essentially mere underlaborers for the major industrial powers and completely dependent on them. Examples of this can be found in the Netherlands, in Austria, in Denmark and so forth. These seem to have maintained their position for now, thanks to the vast sums of public money flung into the pit of capital’s loss write-offs in the industries of the major economic powers. If we allow for a switch in metaphors, this makes their position similar to that of the bird that lives on picking the leftovers from the crocodile’s teeth. Easy for them to go along with the beast, as they do not have to pay for its maintenance and yet can profit from it nonetheless. But this also means their actual economic significance on a larger scale remains limited, and with it their political independence. Remains to deal with the nations that hoard the black gold that enslaves the modern man as much as the yellow enslaved the Athenians in Shakespeare: those nations, whether Norwegians or Arabs, are to the economic powers what Timon of Athens was to his false friends. Their ending is likely no better: ours is to play the role of Apemantus at this bankers’ banquet.

2.COUNCIL REGULATION (EC) No 1056/2005.->
3.Schmitt, Rho & Fremstad, “U.S. Unemployment Now As High as Europe”, CEPR Issue Brief (May 2009). .->

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