Another
factor is that most people simply don't want to think or admit that there's
something this corrupt about their political leaders. Bank CEOs are leaders in the business
community. If you let yourself come to
believe that the CEOs (of businesses that are really fundamental to the economy)
are corrupt, you then have to begin thinking about the need for a very serious
restructuring of the entire business and financial system, and that's a very
scary prospect for most people, and they are simply not intellectually prepared
to do that -- it's much easier and much more comfortable for them to simply block
out any thought of any of this.
What hand has Wall Street had in what's
going on in Italy, Greece, and Spain today and why should we care?
Goldman
Sachs helped Greece cover up how serious its deficits were, which is a
situation very similar to Jefferson County, by the way.
The big
reason that you have a sovereign debt crisis in Europe is that the governments there
had to borrow a tremendous amount of money in the wake of the worldwide
financial crisis that originated in the USA.
Problem is, the euro zone is not well set up to adapt to that enormous
indebtedness.
When a state
has a budget problem that suddenly requires them to think about cutting costs
and taking draconian measures, they can usually do it successfully. But such steps are much more difficult for
the biggest economy in the world -- Europe's -- without having it turn into a
downward spiral, where cuts in spending lead to ever less income for citizens
as a whole. Deficits then get worse
rather than better. And the reason that
Europe had that problem was very directly the result of the financial crisis
that originated in the USA. Then, when
the crisis hit, you had both a big drop in tax revenues and you had bank bailouts. Then,
since these countries had decent social safety nets, things like unemployment
insurance went up. So the budget crisis
they're having is the direct result of the financial crisis. Yet it's somehow being treated as if they're
separate events -- like somehow these governments were profligate and that
borrowers were irresponsible.
As a result,
social safety nets are going to take the brunt of the pare-back. The most direct example here in America was a
lot of institutional investors like unions and state pension funds that were
primary victims of the fraud scheme to sell fraudulent mortgage-backed
securities. A lot of these institutional
investors were buying these bad mortgages, huge pools of them, from all these
big banks. And then when these
securities decreased in value, suddenly it was harder for these investors to
meet their obligations, and suddenly the public finger was pointed at them, and
everyone was saying, "Oh, look at those state pensioners and look at those
union employees, they're costing us too much money, so we have to cut their
services. We have to cut pensions. We have to pare them back."
But the real
problem was that they had been buying a fraudulent product from Wall Street and
that's why they got into such bad shape.
Yet politically, the chant of the powers-that-be is: "Let's blame the little
guy instead, i.e. the guy on the pension, the woman on the pension. Never point the finger in the other direction,
back at us."
The
implications of this are actually quite grim, and they're not being discussed
honestly. We're talking about old people
dying faster. We're talking about
children going homeless and not getting an education. Yet they're not even part of the discourse. Look at Greece as the extreme example of this. But in Greece, the hospitals, too, are
breaking down. Garbage is not being
picked up. And if you look at the
results of the last election, what you saw is that even with the efforts to
scare people into staying with the euro, you see this polarization where the
Nazi Party got 7% of the vote, even after there was an incident in a TV station
where there was literally an on-air fight in which a Nazi Party member beat up somebody
on camera. So you've got a real social
polarization with radicalization going on.
Greece is basically on the knife edge of total breakdown.
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