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Thursday, May 24, 2012

Why it's all Greek to David Farrar

The bore of babylon, Government online propagandist and pollster, David Farrar isn't dreaming in color anymore, and he's not sure why.

In a column he wrote for the Herald last week, David got as close as he intellectually can to questioning the cause of the Greek crisis and the response by NZ. I say as close as he can because sadly for David and many of his right wing brethren the reality of what is happening goes well beyond the parameters of their free market dogma.

What David and the rest of the right can't admit is that this is a unique crisis of capitalism, akin to the 1929 stock market collapse. The full social impacts of that global economic meltdown caused by feral non-regulation weren't felt until the late 30's and required a global world war to re-establish hegemonic control. Our melt down from 2007/2008 has only just begun in terms of the social damage, but it has also cut to the very core of the neo-liberal Milton Fridman free market doctrine in a way that hasn't been accepted by his many acolytes yet.

This existential crisis has hit the right harder than a flawed Facebook launch. Friedman's infected theology argued markets were a natural thing of beauty and worked best when unmolested by any Government regulation. It has been this flawed belief that unregulated markets would magically balance themselves through the arcane magic of supply and demand that has dominated the global debate for corporate benefit. In the 1970's the real economy and the financial economy were evenly valued but 40 years of deregulation, low tax, free market Milton Friedman dogma has seen the real economy valued annually at $8 trillion while the financial economy is valued at $330 trillion. That disconnect between reality and the inflated bubble world of finance has gone pop, and we must reconsider the rules of the game because the unsustainable consumer culture of SUV's, plasma TVs and cosmetic surgery all on the credit card game is over.

Milton Friedman was wrong, the market left to itself is nothing but a greedy venal event horizon that will collapse upon itself, the lessons of Keyenes that David Farrar and the National Party work so hard to ignore is that managed capitalism is the only alternative to this flawed free market virus. Developmental policy and not austerity is the only way forward, democracy beat fascism and communism 60 years ago because it could promise it's supporters that their children would get a better deal than they did, austerity is not compatible with that promise. The splintering of the political spectrum throughout Europe (mirrored here by the rise of MANA and the Conservative Party) is the most obvious symptom of where this promise is being embraced or broken.

The top tax rate in NZ 25 years ago was 66%, it's now 33%, the richest have had their tax rate drop by 50% in quarter of a century. The reason the occupation movement and their anger at the 1% caught attention was because their grievance is so righteous and the other 99% know that.

The right will paint a picture of Greece that fits their ideological limitations. David will wag his finger about the feckless Greeks and their disgustingly socialist agenda of spending borrowed money while piously seeing their suffering as a cautionary tale of the dangers of left wing politics. The simplistic bullshit of this position denies the reality...

Goldman Helped Greece Hide Catastrophic Debt
(Newser) – Greece's budget problems were allowed to grow to their current monstrous size with the help of a Goldman Sachs deal worthy of an Oscar for creative accounting. Greek government officials—no strangers to number-juggling themselves—used the US bank to concoct a derivatives deal that allowed the country to circumvent EU rules requiring member nations not to run deficits exceeding 3% of GDP, Der Speigel reports. The deal, agreed in early 2002, circumvented EU rules with a credit swap in which government-issued bonds in dollars and yen were traded for debt in euros. Such transactions don't need to be reported to EU authorities. The Goldman-Greece deal exploited this loophole by inventing a fictional exchange rate, allowing Greece to borrow billions more and mask the true size of its debt. Greece's deficit problem will become even greater when the Goldman bonds mature over the next 10 to 15 years. Greece's exploding debt is now threatening to bring down the euro.

Taking their weapons of mass financial destruction Goldman Sachs were instrumental in the collapse of Greece. Goldman Sachs role in hiding billions of dollars worth of Greek debt, all the while betting that the Greek economy would collapse is like buying fire insurance for a house, leaving the gas on and inviting the owners around for a cigar evening. The role of Goldman Sachs is never mentioned when David is finger wagging at Greece.

The debt bogeyman which the right fall back upon as their last ditch attempt to justify austerity is the most disingenuous part of this. Labour did what any Government should in boom times, pay down the debt, it is the private debt that endangers NZs economic future now, and that private debt is the direct legacy of the user pays free market faith that the Washington Consensus (that none of us consented to) has inspired.

What David and National can not comprehend is that their main pillar of faith in the Temple of Milton, that deregulated free markets are flawless, has been structurally compromised and the global economy is in for a grinding correction beyond their limited solutions. It's like Christians being forced to accept the resurrection of Christ is just one big metaphor rather than gospel truth, the economic meltdown is an existential crisis at the very core of right wing mythology.

That's why David's utterances and Key's vacant optimism are the empty words of a priest in a hollow church.



At 24/5/12 10:26 a.m., Blogger AAMC said...

Their argument about Greece comes unstuck as soon as we throw Spain or Portugal or Italy in the mix. All of who's public debt was perfectly acceptable before Wall St blew up. The public debt is high because of socialization of the "free markets" debt and because of the bursting of property bubbles inflated via bank lending money into existence. (David likely still believes in exogenous money creation).

And that's before we even look at NZ's public vs private debt.

The right wing narrative around Greece as excuse for Austerity here is dangerous, will kill our economy as Austerity has proved to in the UK and rest of EU and is classic Shock Doctrine!

At 24/5/12 1:47 p.m., Blogger Unknown said...

Great piece.

At 24/5/12 7:17 p.m., Blogger Nitrium said...

You basically got everything right in this post. However, the solutions to this problem, sans austerity in one way or another just aren't credible. It honestly doesn't matter if you're left or right, that what CAN'T ultimately be financed WON'T ultimately be financed. Mathematics doesn't care one iota about what political colour you adhere to in this regard.
English's Budget is a disaster (as expected). Don't get me started.

At 27/5/12 10:52 p.m., Blogger cricket? said...

A great summation of the present world financial situation as a focus on NZ and what is coming to us
Of course up to the first fascist stamp on the post war world economy, the 1973 oil shock,we were living a great balance of right wing socialism which is about the only way I can see the ultimate protection of post war dominance by the US and Britain .
But the said oil shock really got the ball rolling for the fascist financial system to throw the world into chaos and panic of the growing threat of communism and the need for more war to balance the books of course in favour of capitalism because being right wing under threat they had to move further to the right right ?fuhrer OK Of which we have had a few The CIA the British and French secret service and some to pick on the Russians Gaddafi Nasser etc
Why I put this spin on it is if you take the Nazi economic gro wth package of the thirties it was a basic which has been tweaked to accommodate a few humanities to protect post war sanity of the victory nations
Just an out of it view any sparks


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