Kicking the Cannes Down the Road – by Stephen Lendman
They met. They talked. They agreed to talk more and solved nothing. A November 4 Guardian editorial headlined, “G20 summit: slumping to the occasion,” saying:
“Yes they Cannes? Sadly, in the end, no they couldn’t.” It’s well known these summits are more talk than substance. Everything important is agreed in advance when possible. Technocrats do heavy lifting, not political leaders dependent on them.
Nonetheless, economic crisis demands better. Eurozone dealmakers failed. So did G20 leaders. As a result, they’re “doomed to have to try again,” but given their banker uber alles agenda, defeat again is sure. Only reckoning day delay is possible, not turning things around responsibly.
The best from Cannes was that:
“We all commit to further structural reforms to raise output in our countries.” But who commits to what for whose benefit? “We will ensure the IMF continues to have resources to play its systemic role to the benefit of its whole membership.”
IMF solutions are trouble, not ways out of it. Operating as loan shark crooks of last result, bad problems get worse.
The Guardian summed up Cannes, saying leaders “provided few answers. All the big questions still remain on the table for next time” under worse crisis conditions because who’s willing to solve them responsibly.
If Eurozone leaders had a motto it would be sacrifice people and economies to pay bankers. Agendas that destructive assure bad endings. What’s ahead may be unprecedented. Ordinary people, of course, suffer most. Already pain levels are extreme.
Nonetheless, high level meetings discuss ways to increase it with more layoffs, pay and benefit cuts. On November 7, Eurozone finance ministers met on whether to give Greece another eight billion euros ($11 billion). Later they’ll consider much more, dependent on new social benefit cuts on top of others up to now.
Also considered were ways to boost European Financial Stability Facility (EFSF) funding to handle greater expected trouble. Already, multi-trillions are needed, more than all Europe can provide. Moreover, the longer crisis conditions fester, the greater the amount needed to keep troubled economies from collapsing.
In mid-2013, a European Stability Mechanism (ESM) will replace EFSF, going from bad to worse. Run by a Luxembourg-based Board of Governors, it’s a supranational monetary and fiscal authority, bypassing elected governments to run Eurozone countries like despots.
As a result, elected leaders will be shut out. People across Europe have no say anyway. Neither do Americans. Western media scoundrels are silent. Millions know nothing about planned ESM dictatorship. Most understand little about causes and extent of today’s crisis.
Everything tried so far failed. Financial crisis grips Europe. Italy may be next after Greece. Prime Minister Silvio Berlusconi’s coalition faces possible collapse.
Bond yields tell much. Those on Italian debt instruments exceed 7.3%, and spreads off bunds near 600bps are perilously close to levels, precipitating Greek, Irish and Portuguese bailouts.
They’re small economies. After Germany and France, Italy is Europe’s third largest. Its multi-trillion dollar trouble threatens Europe, America, and other global economies.
Greek, Irish, and Portuguese contagion is spreading. Comprehensive solutions don’t exist. Debt levels are too great to manage. Major European and US banks are insolvent.
Besides other issues, a $600 trillion derivatives time bomb affects them, around 10 times global GDP. By some estimates, it’s much higher. Five Wall Street giants hold 96% of them, but major world banks are interconnected, especially America’s and Europe’s.
An old song goes, “We’ll All Go Together When We Go.” Start humming because reckoning day approaches. As Greece goes, so do Eurozone partners. As they go, so does Europe, and as it goes, so do global economies.
Stratfor’s George Friedman sees European integration disintegrating. “Europe will spend the next generation sorting through this,” he believes. “Even if things (get no) worse, the situation already has been transformed beyond what anyone would have imagined in 2007. Far from emerging as a unified force, (at issue is) how divided Europe will become.”
At the same time, banker and political priorities ignore the mother of all approaching train wrecks. Progressive Radio News Hour regular Bob Chapman explained:
“The bottom line is that the financial problems of the US, UK and Europe are unsolvable. The purge will come sooner or later, bringing decades of social unrest and perhaps revolution.”
Growing rage across America and Europe expresses public anger with Wall Street crooks and complicit politicians, destroying their lives and futures.
Weak economic data aren’t helping. In Europe, German factory orders plunged 4.3% and production fell 2.7% in September. Spain’s industrial output fell 1.7% year over year, and France’s composite October PMI (Purchasing Managers Index) at 45.6 hit a 30-month low, signaling downturn.
Falling Euro retail sales added more confirmation. Markit Group’s October Eurozone private sector economic index hit 46.5, its lowest point since November 2008.
Europe’s debt crisis persists intractably. On November 5, Barron’s contributor economist Carl Weinberg headlined, “As Cash Runs Out, Greece Teeters,” saying:
Greece defaulting is “only a matter of time.” It’s baked in the cake. Nothing can stop it. Delay only is possible. Throwing good money after bad assures greater trouble, not less. Debt problems aren’t solved by more of it.
As a result, “(o)ur base is grim,” said Weinberg. “If we read Greece’s political mood correctly, a default seems (more) imminent….than ever. There are enough unprepared and undercapitalized banks in Europe to create systemic risk.”
“Unless governments” figure out responsible solutions, “financial-system failure and depression lie in Euroland’s near future.”
Economist David Rosenberg’s view is also grim, saying “(t)here is no Eurozone resolution.” White knight BRIC countries aren’t lining up to help.
China won’t without attractive returns and key demands met. Brazil President Dilma Rousseff said, “I have not the slightest intention of contributing directly to the EFSF. If (Eurozone countries) are not willing to do (enough), why should I?”
America’s economy is weakening, including production, non-manufacturing, employment, and chain store sales most recently.
As for Europe, Rosenberg called Eurozone rescue plans farcical. MF Global’s demise, the fifth largest US financial industry bankruptcy, may signal much worse to come.
So does out-of-control debt. US GDP is $14.6 trillion. Public debt way exceeds Federal Reserve Flow of Funds reported $9.7 trillion. Excluded was another $7.6 trillion from Fannie Mae and Freddie Mac. Combined, $17.3 trillion comprises $118.3% of GDP and rising.
Moreover, Wall Street, other corporate, household, and state and local debt is America’s highest ever. In 1970, was 154% of GDP. Currently it’s 360%, affecting all aspects of US life adversely. So going forward believes Rosenberg, “the business of America is debt reduction.”
In addition, despite massive money printing and heavy government borrowing, more private credit is being destroyed than created. From January 1, 2009 – June 30, 2011, nearly $3.2 trillion was lost. At issue is counterproductive policies assuring bad results.
According to Rosenberg, “There is not, under any reasonable forecast, a growth outlook in the developed world that could trump the debt destruction that will be required for the credit collapse to come to completion. In the absence of growth, debt is eliminated via some combination of austerity and default.”
In late 2007, financial breakdown began. Unresolved contradictions persist. Money power in private hands to make more of it at the expense of sustainable economic growth and job creation exacerbate them.
Solutions proposed assure greater trouble. All the king’s horses and men couldn’t help Humpty Dumpty.
Neither can money power in private hands fix troubled economies by trashing them and households for their benefit.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.