Fighting an economic cold

Many of the pundits and newsreaders who refer to the current economic malaise threatening Europe use one term more than any other: contagion.

The suggestion is that the troubles that have afflicted Greece and now Ireland are a sort of water-borne disease, transmitted through the sewage-laden streams of international finance. And all we want to know is: how do we protect ourselves against this nasty infection? How do we beat the contagion?

The problem is that the crisis affecting Europe isn’t bacterial or viral at all. As Portugal, then Spain, Italy and France stand like dominoes waiting to be toppled, economic ministers (who often know nothing of economics) flail around looking for a vaccine. They don’t seem to realise that the contagion isn’t contagious at all. It’s a cancer.

The cancer of neoliberal capitalism has metastacised in multiple countries. It sucks the marrow from the bone and leeches the oxygen from the blood. The only way to get rid of it is surgically. By removing the financial sector from the centre of our national economies, we free ourselves from the carcinogenic effects of its vapours. We might be weakened after the operation but we’ll come back stronger.

If there is a spectre haunting Europe at the end of this miserable decade, it is the spectre of neoliberalism. And socialism is the doctor we need. Or the ghostbuster, or something.

8 thoughts on “Fighting an economic cold

  1. ”It sucks the marrow from the bone and leeches the oxygen from the blood. The only way to get rid of it is surgically. By removing the financial sector from the centre of our national economies, we free ourselves from the carcinogenic effects of its vapours.”

    As someone who works in financial services, I agree 100% with the above. We have become part of the problem.

    This is not contagion but the concerted (maybe this is the invisible hand as well) attempt to bring volatility up (and thus bid-offer spreads) across markets in a sequential basis so that the big investment banks and market makers can keep earning supernormal profits and pay absurd bonuses to their front office staff. I recommend reading John Kay [] to get an informed view about this stuff.

    I am not sure if socialism is the answer but I am certain that this is not the way it was supposed to work. We are being screwed for the sake of an elite of financial plutocrats. And the most depressing thing is that there is not a single mainstream political party willing to call their bluff.

    Ireland would be better off defaulting in their bank debt, and let those who lend the money take the pain.
    For once, someone from Bloomberg writes something sensical:

    Sadly I don’t have the time to write properly about this stuff or politics these days, hope to back blogging more frequently after the New Year.

    1. “I’m afraid some sort of banking system is necessary for any advanced economy” – I’ll be nice and assume that you weren’t trying to sound patronising here.

      Look, there’s no reason why national debts and similar structural parts of modern, ‘advanced’ economies can’t exist without a powerful financial sector calling the shots. National borrowing structures and so on predate the situation we’ve found ourselves in.

      My point is that the financial sector generates large amounts of phantom wealth, effectively valueless capital, by triggering economic shocks. That’s the current basic mechanism for generating these huge profits and bonuses.

      The financial sector doesn’t generate that much cash for our countries. Not really. In the UK, science generates as much but receives something like 10% of the government funding and support. And scientists don’t get bailed out to the tune of billions when an experiment goes wrong.

      It’s true that I disagree with capitalism in general and would like to see it replaced. But even if that doesn’t happen, I see no reason why anyone except those profiting from these economic shocks (and these are relatively very few people) should want to defend such a badly designed system.

      At the very least, the lesson learned from this crisis (which will likely get a lot worse before it gets better) must be that no national economy should ever again be built on high finance. It’s like building a house in the clouds.

      1. I agree that the financial sector played an active role in destabilising the economy and sending millions of people to the dole queue. I’m simply saying that apart from fucking up, the banks also provide people with capital which is essential for developing new things and keep everything going.

        Also, notice that while it’s true that they funded the “bubble” and made profits out of it, it was not them who actually created it. It was a massive speculative business in which loads of different people took part, including the public sector. I’m actually in favour of seizing the assets of all the people who lined their pockets, not only the bankers.

        I’m all in favour of seizing the assets of those who lined their pockets with speculati

  2. Just checking: did *anyone* get my spectre reference? Or was it so obvious, it needed no comment?

    Also: what thoughts on the double dip? It’s looking more likely in the UK, no?

  3. The Communist Manifesto reference was quite clear. I have only peripheral knowledge of economics and I got no clue about the likelyness of a double dip scenario. That said, the overall political situation can only be steering towards yet another crash: our politicians still bow to the crooks of the financial sector. Nothing has been improved.

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