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Saturday, November 19, 2011

Occupy the Eurozone!

The sovereign debt accumulation which has created the problem is similar in many ways to the sub-prime business of the recent past. In both cases, far, far too much money was lent with no clear understanding of how-in-the-name-of-heaven was the funds' recipient going to pay them back... short of some sort of gentlemens' understood agreement that Government (in the USA) or the Governments and Eurozone Institutions (in Europe) were somehow going to back up the re-payment of the loans.

Any loan has risk. The whole process we observe and have observed is a process designed to remove the risk of default from the loans, thereby saving the lenders.

The austerities visited upon Italy will cause economic activity to shrink, but they will preserve - for a time - the quasi-sacred status of the loans, which will be paid back: that is, they will be paid back in that period of time during which the austerities are imposed and life continues, but the floor of the economy has not yet fallen out from beneath the Italians' feet. However, it is obvious to the most menial of us that any loans of such questionable nature - and the nature becomes questionable when the amounts loaned far exceeded the capabilities of the lender to repay the loans - are the fault of the lending institutions themselves.
These Banks and Institutions should be allowed to feel the wrath of capitalism at its fullest, but once again they are rescued by the Governments they have essentially bought and paid for. We have been calling this Socialistic Capitalism wherein  the risks are socialized to the population at large, while the benefits accrue to the Capitalist class. It might be more correct to call it Aristocratic Capitalism, thereby avoiding the political pitfalls of using poorly understood words - like "socialism" and "capitalism" - which possess iconic properties and lead to bar fights.

It is countered that if the Banks fail, everything goes....
Well, I agree. I just think that it is stupid that we all agree to live under such an idiotic system of periodic destruction and impoverishment of 99% of the population.


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