Revista Mensual y Gratuita
Nº117, mayo 2013
While Southern Europe is in a depression and subject to political wild cards, Germany (and Northern Europe) are complacent. Germany has it both ways because it sustained its own growth by lending to the South, and now that those customers can’t pay their bills, the imposition of German-driven austerity will help solve the Fourth Reich’s looming labor shortage.
E pluribus unum. To make one out of many is the challenge of every nation that wants to call itself a Union. In North America, the Union was forged by blood and tears in the War of Independence and later in the Civil War. Something similar occurred with the Latin American nations. But Europe cannot bring itself to forge a Union with more solid bases than instrumental treaties. It lacks the true foundations of sovereignty and democratic legitimacy.
Foreign aid has been getting a bad press this year – and not without reason. For a long time bilateral aid in particular has been seen as too small and scattered, too politically motivated, too supportive of the interests of donors (especially of the business interests of donor countries) rather than oriented to real benefits for intended recipients. Now, governments of poor developing countries that were earlier grateful for any crumbs from the rich countries’ table are less welcoming, especially of aid that comes tied to various economic and political strings. The improvement in their terms of trade over the past six years, as well as the emergence of new markets and new sources of aid and investment from other emerging nations and oil-exporting countries, have all played a role in this changed perception.
A new risk has risen as the year begins: we have entered an interdependent world which is both post-democratic, dysfunctional, and with no one at the helm. Only the collective subject named “the markets” steer the system, and they do not steer it well.
The root of the Euro crisis lies in both the inadequate institutional set up of the Eurozone, which lacks a genuine lender of last resort and sufficiently coordinated fiscal and wage policies, and on an over-liquid and under-regulated international financial market that was more than happy to finance any imbalance - no matter how unsustainable it was.
Brazil has accomplished spectacular growth and has known how to use the exports’ ‘tailwind’ with a productive integration of underprivileged sectors, a decrease in social inequity, and an industrial dynamism that it now needs, first to defend, and then to deepen in order to seize the competitive advantages that its technology, natural resources and demographic profile have in store for Brazil in the twenty-first century.
The Spanish crisis has become a faithful mirror for a greater crisis: the European crisis. The ghost of disintegration hunts both.
An overall explanation of the process through which financial capital imposes its dominance at the core of worldwide economic operations.
Capitalism’s tendency is towards concentration. In its late phase, that concentration is fundamentally financial, which causes the distortion of the entire economy, as it becomes oligarchic and all for profit. The resulting inequality ultimately mines the system, for whose bailout elites resort to progressively more absurd and unfair solutions. Only a democratic, public and massive response will manage to thwart this unholy tendency.
Recession does not fold in Europe. Particularly, unemployment in the Euro Zone set a new historic record again after reaching 11.1%. Evidence of the profound deterioration added to extra-zone pressure, including President Obama and the International Monetary Fund, mobilized the bureaucratic scaffolding of the European Union. With the measures adopted in the Brussels Summit and the fall in the interest rate announced by the European Central Bank to a 0.75% -the lowest level since the EU was formed- a certain regain of trust was achieved. Markets celebrated with sharp rises the Monday following the Summit but the thrill caved in less than a week. The question is, how much of that trust will live on in a few months or perhaps in a few more weeks? I believe that if the process of transformations towards a Fiscal, Banking and Politic Union supported by a strong statutory base does not continue, the situation could worsen again. Let us reflect upon the accomplished improvements and what was left in the Summit’s agenda to be passed in upcoming meetings.
Opinion Sur Collection
Introducing three new additions to our collection
Getting out of the Crisis towards a sustainable development
STORM: The ways of the crisis and the ways out of it
International Crisis: Adjusting the Course and Improving the Systemic Functioning