mercoledì 29 febbraio 2012

Democracy versus Debt-Bondage

Greek Lessons: 
Democracy versus Debt-Bondage

Global Research, February 28, 2012
Socialist Project - 2012-02-26

It is a truism to say that democracy began with the Greeks – less so to say that it originated in popular rebellion against debt and debt-bondage. Yet, with the Greek people ensnared once more in the vice-grip of rich debt-holders, it may be useful to recall that fact. For the only hope today of reclaiming democracy in Greece (and elsewhere) resides in the prospect of a mass uprising against modern debt-bondage that extends the rule of the people into the economic sphere.

Across virtually all the ancient world, to fall into irretrievable debt was to enter into bondage to the rich. For millennia, the poor typically had no collateral for loans beyond their bodies and their labour. The result in ancient Greece, as Aristotle acknowledged, was that “the poor ... were enslaved by the rich.”[1]

Beginning more than 2,600 years ago, a succession of upheavals by the Athenian poor – or the demos – broke the power of the aristocracy and began a drawn out democratic revolution. Squeezed by debts and the spread of debt-bondage the common people rendered their aristocratic society effectively ungovernable. In 594 BC, in an effort to restore stability, huge concessions were made to the demos: all debts were cancelled and debt-bondage abolished. For the first time, poor men acquired meaningful rights to political participation. And they used those rights to systematically curtail the unaccountable power of aristocrats, accomplished by elevating the popular Assembly and its direct democracy above all other institutions.[2] So interconnected were the principles of democracy and economic justice for the demos that Aristotle identified “the rule of the poor” as the essence of a democratic state. “In democracies,” he explained, “the poor have more sovereign power than the rich.”[3] For this reason, struggles by the rich to increase their social and economic power invariably took the form of struggles against democracy.

Notwithstanding enormous differences in social and historical context, a similar battle is wracking Greece today. To be sure, the ancient landed aristocracy has been replaced by a capitalist “financial aristocracy.”[4] Yet, war between the modern aristocracy of debt-holders and the forces of democracy once again grips Greek society.

From the earliest days of the recent ‘debt crisis’ – caused, let us recall, by the global bank bailouts and the recessions that followed the financial crash of 2008 – international financial institutions have been on a collision course with democracy. Time and time again, the interests of global banks have over-ridden the will of the people. Consider just the following events of early November:

On November 3rd of last year European Union leaders browbeat and humiliated Greek Prime Minister George Papandreou for having pledged to hold a popular referendum on a proposed austerity deal. The confidence of financial markets being unable to abide consultation of the Greek people, Papandreou was quickly forced from office.[5]

One week later, the former head of the Bank of Greece and former vice-president of the European Central Bank, Lucas Papedemos, never having been elected to any public office, was installed as Greek PM.

Two days after that, a non-elected prime minister was appointed in Italy, in the form of former Goldman Sachs executive, Mario Monti. Defending this end-run around basic liberal-democratic procedure, the country's president explained that “Italy could not afford elections at a time of market crisis.”[6]

Speaking of elections, the people of Spain found themselves in the midst of one at the very time Greece and Italy were receiving non-elected prime ministers. Yet, as one perceptive journalist reported, the public displayed a distinct lack of interest. “If scarcely anyone is taking any interest in the election,” he noted, “it's because the result is seen as largely irrelevant: it's the markets that rule.”[7]

The Rule of Markets

Since then, the recognition that “it's the markets that rule” has grown, and with it the decline of even the most elementary forms of democracy. Nowhere has the assault on democracy been more brazen than in the negotiations leading to the most recent ‘bailout’ of Greece – which, of course, is really just another bailout of Europe's banks.[8] As the price of paying back the banks while impoverishing its people, the Greek government has been forced to accept nothing less than outright colonization by the European Central Bank and the International Monetary Fund. In fact, the ‘bailout’ agreement states that:

Greece is required to rewrite its constitution to give priority to debt repayment. A political document meant to enshrine the rights of the people will now be amended to give priority to the rights of banks.

The ‘loans’ bestowed on Greece will be placed in a special escrow account which can release funds only for the purpose of payments to banks. Spending these funds on pensions or healthcare is explicitly forbidden.

Foreign lenders will have the right to seize the gold reserves of the national Bank of Greece.

A task force created by the European Union will be given an “enhanced and permanent” presence in Athens, where it will monitor all financial and social policy activity of the Greek government.

Whatever semblance of democracy is possible in a capitalist society has now been shunted aside in Greece. The country's elected institutions now function as little more than fig leafs for the power of global capital. And its people are being subjected to modern forms of debt-bondage in which the bodies of poor and working-class people are sacrificed to debt payment.

Under the bailout package, for instance, the Greek minimum wage will be slashed by 22 per cent (and more for young workers); 150,000 public services jobs will be eliminated; pensions will be savaged. Living standards, which had already contracted on average by 30 per cent, will be pushed down a further 15 per cent. An economy that has been in recession for five years (and has shrunk by more than one-fifth) will be pushed into a further downward spiral. More than 60,000 small and medium-sized businesses will collapse, and a quarter of a million private sector jobs will evaporate. Youth unemployment will soar above 50 per cent.[9] Homelessness and street begging, already rising alarmingly, will worsen.

How long this can continue is anyone's guess. Since the economic crisis emerged in 2008-9, Greece has seen waves of general strikes, mass demonstrations, and fighting with riot police. Anger and frustration may well boil over. In the view of one trade unionist, “People are literally hungry and the number of homeless is growing every day ... soon they won't take anymore. There'll be a popular revolt.”[10]

Democracy and Economic Justice

If it is to have any chance of success, such a revolt will have to reclaim the ancient connection between democracy and economic justice. It will have to revive the meaning of democracy as “the rule of the poor” – all of the poor exercising real sovereign power in popular assemblies. And such a project of radical democracy will have to break decisively with liberalism through the deepening and extension of popular power and control into the economic sphere.

Liberal-capitalist democracy, observes Ellen Meiksins Wood, “leaves untouched vast areas of our daily lives – in the workplace, in the distribution of labour and resources – which are not subject to democratic accountability but are governed by the powers of property and the laws of the market.”[11] Those powers of property and the market have now shown their utter incompatibility with any kind of genuine democracy.

It thus falls to the radical Left to reclaim the project of democracy and to once again link it to popular struggles against new forms of debt-bondage. Not only does this mean learning from the ancient example of “the great democracy of Athens,” as C.L.R. James urged.[12] It also requires attending to the new practices of assembly-style democracy that have emerged at the highest moments of recent struggles from Tahrir Square to Occupy Wall Street.[13] All of this means building a radical Left uncompromisingly committed to deepening the project of direct democracy as an indispensable part of all popular movements against austerity and injustice.

David McNally teaches political science at York University, Toronto, and is the author of Global Slump: The Economics and Politics of Crisis and Resistance. He blogs at


1. Aristotle, The Constitution of Athens, Ch. 2. Scholars are uncertain as to whether this text was written by Aristotle or by one of his students.
2. See W. G. Forrest, The Emergence of Greek Democracy, Ch. 6, and the monumental study by G.E.M. de Ste. Croix, The Class Struggle in the Ancient Greek World. It is true, of course, that the participatory democracy they created was profoundly limited by the exclusion of women and slaves. Yet, as C.L.R. James, one of the great advocates of ancient democracy, declared, typically “those who are prone to attack Greek Democracy on behalf of slavery are not so much interested in defending the slaves as they are in attacking the democracy.” See James, Every Cook Can Govern: A Study of Democracy in Ancient Greece (section, “Slavery and Women”).
3. Aristotle, The Politics, Book VI, Ch. 2.
4. For the idea of a “financial aristocracy” in a capitalist society, see Karl Marx, “The Class Struggles in France, 1848 to 1850” in Marx,Surveys from Exile, pp. 36-38.
5. Not that Papandreou was any friend of Greek workers. He was utterly committed to the austerity agenda, but concerned to preserve some public legitimacy.
6. “Italy races to install Monti,” Financial Times, November 14, 2011.
7. Stephen Burgen, “Protests pointed to new way forward,” Guardian, November 12, 2011.
9. Eric Reguly, “Second bailout hasn't stopped the Greek time bomb,” Globe and Mail, February 25, 2012.
10. Ilias Iliopoulis, quoted by Helena Smith, “Greece lies bankrupt, humiliated and ablaze: is cradle of democracy finished?” Guardian, February 13, 2012.
11. Ellen Meiksins Wood, Democracy Against Capitalism, p. 234.
12. C.L.R. James, as in note 2 above.

 Global Research Articles by David McNally

For the EURO, Democracy Is Dangerous

European crisis

For Europe's Single Currency, Democracy Is Dangerous

As a politician, you know you’re in a pickle when the thing you fear most is public opinion. Europe’s political and financial elites are still strongly committed to the euro. But the people of Europe are far less enthusiastic about the tighter integration that will be required to preserve the 17-nation common currency. Creditors, such as the Germans, don’t like opening their wallets and debtors, such as the Greeks, don’t like submitting to the dictates of the people with the money. So pretty much no one is happy.
The latest democratic threat to the euro comes from the Irish, who have a history of acting up. Prime Minister Enda Kenny said Feb. 28 that the government will name a date for a ballot in the coming weeks on ratifying the new European fiscal compact. Optimistically, he said it would give the Irish people a chance to reaffirm the nation’s commitment to the euro. Of course, it’s also possible that the vote will be “no.” Bloomberg’s Finbarr Flynn and Joe Brennan quoted Thomas Costerg, an economist at Standard Chartered in London, who said, “This referendum carries huge risks. … It may increase nervousness about the future of the euro area’s perimeter.”
There is one bright spot for Kenny. To make sure the Irish vote yes, the European powers may sweeten Ireland’s bailout program. “It does give the government some leverage,” Liam Dunne, an analyst at Bloxham in Dublin, told Bloomberg’s Flynn.
The dilemma for the officials who are striving to hold the euro zone together is that the more concessions they make to the likes of Greece, Ireland, and Portugal, the more they will enrage voters in Germany, the Netherlands, and Finland. And, of course, vice versa. Not a fun time to be a eurocrat.
Coy is Bloomberg Businessweek's Economics editor.

Goldman manager investigated in insider trade case

Goldman manager investigated in insider trade case -source

Wed Feb 29, 2012 4:57pm EST
* Technology hedge fund manager Loeb focus of probe
* Stems from case of ex-Goldman board member Rajat Gupta
* Goldman regulatory filing cites insider trading probes
NEW YORK, Feb 29 (Reuters) - U.S. prosecutors are investigating David Loeb, a managing director of Goldman Sachs Group Inc, as part of an insider-trading probe focusing on the company's hedge-fund clients, a person familiar with the case said on Wednesday.
Loeb works with technology hedge-fund employees, including an Asia-based analyst, Henry King, who is also under investigation, according to another source briefed on the case.
The sources declined to be identified because the matter is not public.
A spokesman for Goldman declined to comment on insider-trading probes and on the current employment status of Loeb and King. Neither Loeb nor King responded to emails seeking comment.
According to a regulatory filing and court records, employees of Goldman Sachs, Wall Street's most influential firm, have been pulled into the insider-trading case of a former board member, Rajat Gupta, who is preparing for trial on criminal and civil charges.
No one at Goldman has been accused of any wrongdoing.
Gupta, a former director of Goldman Sachs and Procter & Gamble Co, and a former global head of the McKinsey & Co consultancy, is to go on trial in May. He has denied charges that he tipped now-convicted Galleon Group hedge fund founder Raj Rajaratnam with Goldman and Procter & Gamble board secrets.
In an annual 10-K filing with the U.S. Securities and Exchange Commission on Tuesday, Goldman included an item "Insider Trading Investigations" that did not appear in regulatory filings a year ago or at the end of the third quarter. A 10-K gives a comprehensive summary of a public company's performance and includes issues that are material to securities investors.
"From time to time, the firm and its employees are the subject of or otherwise involved in regulatory investigations relating to insider trading, the potential misuse of material nonpublic information and the effectiveness of the firm's insider trading controls and information barriers," the filing said.
"It is the firm's practice to fully cooperate with any such investigations."
A spokeswoman for the office of the Manhattan U.S. Attorney, the prosecutor in a broad insider-trading probe of hedge funds in recent years, declined to comment. The U.S. Department of Justice says that out of 64 people charged in the crackdown dubbed "Perfect Hedge", 59 have either been convicted or pleaded guilty.
The Wall Street Journal first reported the inquiries about Loeb and King.
Loeb's name came up during proceedings in Manhattan federal court last November as a potential witness in the Gupta case. Others who could be deposed included Goldman Chief Executive Officer Lloyd Blankfein, Chief Financial Officer David Viniar and President and Chief Operating Officer Gary Cohn, according to court records.
Rajat Gupta's lawyer, Gary Naftalis, declined to comment on Wednesday, but in court he has asked prosecutors to share any information on possible Goldman inside sources that Rajaratnam and Galleon had.
"This is hot stuff for us," Naftalis told U.S. District Judge Jed Rakoff at a Jan. 20 hearing, according to a court transcript.
The lawyer said that if there were other people at Goldman or Procter & Gamble who provided Galleon with inside information about those companies or their clients "they constitute real exculpatory information" for the defense.
Rajaratnam, whose technology-focused hedge fund had $7 billion under management at its peak, was convicted last May and is serving an 11-year prison term, the longest ever imposed for insider-trading offenses. A judge also ordered Rajaratnam to pay $92.8 million to the SEC.

Ron Paul Confronts Bernanke

Ron Paul Confronts Bernanke: 

“Do You Buy Your Own Groceries?”


Tense stand off as Congressman notes Fed is destroying dollar purchasing power
Steve Watson
February 29, 2012

GOP presidential candidate Ron paul took a break from campaigning today and diverted his attention back to his role on the House Financial Services Committee with the semiannual visit of Federal Reserve chairman Ben Bernanke.
In a scathing opening statement, Paul went on the offensive against the Fed:
“What we are witnessing today is the end stages of a grand experiment,” Paul said, adding that the Fed’s control over the nation’s money supply has directly caused economic bubbles and all but destroyed the purchasing power of the dollar.
Noting that the Fed will soon end because it is facilitating too much debt, the Congressman added “I’m anxiously waiting for this day… Reform has to come.”
Turning his attention to Bernanke, Paul asked the Fed chairman whether he did his own grocery shopping. A somewhat bemused Bernanke replied in the affirmative, to which Paul hit back “OK. So you’re aware of the prices,” before commenting on government denial of real levels of inflation.
“This argument of prices going up two percent, nobody believes it.” Paul said. “The old CPI says prices are going up at nine percent.”
“People on fixed incomes, they are really hurting. The middle class is really hurting. Because their inflation rate is very much higher than the government tries to tell them, and that’s why they lose trust in government.”
“You say inflation is about 2%, I say 9%, let’s just call it 5%,” Paul told Bernanke. “That inflation is taking money away from the people….Someone is stealing wealth and this is very upsetting”
The Congressman then pulled out a silver eagle, explaining that it has retained it’s real worth and that hard assets should be used as currency as outlined in the Constitution.
Telling Bernanke that in 2006, when he took over at the Fed, an ounce of silver bought about 4 gallons of gas, where as today it will buy 11 gallons. “That’s preservation of value,” said Paul.
Paul called for a competing currency to the dollar, stating that the laws should be changed to allow precious metals to settle contract disputes and other legal obligations.
Bernanke addressed Paul by jokingly saying “good to see you again, Congressman”, before somewhat derisively saying he would be happy to consider the Congressman’s ideas and help him work out what currencies to hold.
Paul hit back by saying the government goes after those who attempt to use gold and silver as alternatives to depreciating Federal Reserve notes as if they are criminals, telling Bernanke “the record of what you’ve done is destroy the currency,”
Watch the video below:
Steve Watson is the London based writer and editor for Alex Jones’, and He has a Masters Degree in International Relations from the School of Politics at The University of Nottingham in England.