Join Up The Dots Time

Sunday Business Post | Irish Business News

But it is the bank bailout that is most shameful. Make no mistake about it: this is society at large coming to the aid of people who had sufficient income to hoard money in bank deposits or who were sufficiently prosperous themselves, or through their pension funds, to lend money to the banks.

The transfer of €90 billion of dodgy assets from the banks to the National Asset Management Agency transfers the risks associated with those assets from the banks to the public. It is a certainty that the public will be stuck with a deficit as a result -probably in the region of €10 billion to €15 billion.

That deficit will be the pretext in future years for falling social welfare payments, cuts in healthcare and education, and rising unemployment.

Their crisis, our challenge – Red Pepper

Does this crisis signal the end of neoliberalism? My answer is that it depends what you mean by neoliberalism. My interpretation is that it’s a class project, now masked by a lot of rhetoric about individual freedom, liberty, personal responsibility, privatisation and the free market. That rhetoric was a means towards the restoration and consolidation of class power, and that neoliberal project has been fairly successful.

One of its basic principles that was set up in the 1970s was that state power should protect financial institutions at all costs. This is the principle that was worked out in the New York City crisis in the mid-1970s, and was first defined internationally when Mexico threatened to go bankrupt in 1982. That would have destroyed the New York investment banks, so the US Treasury and the IMF combined to bail Mexico out. But in so doing they mandated austerity for the Mexican population. In other words, they protected the banks and destroyed the people – and this has been the standard practice in the IMF ever since. The current bailout is the same old story, one more time, except bigger.

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