UNISONActive is an unofficial blog produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective.

Thursday, 30 June 2011

The Shock of Debt

Countries all over the world continue to real from the banking crisis of 2008 in Greece the government faced with a total meltdown of its public services and its economy without further loans was forced into agreeing to more austerity measures.

At Claridge's Hotel in London this past Tuesday a grotesque sale of Greece's infrastructure took place...Greece put up for sale 39 airports, 850 ports, railways, motorways, sewage works, a couple of energy companies, banks, defence groups, thousands of acres of land for development, casinos and Greece's national lottery. The problem grew when no one bought anything in the instant sale of the Greek economy's infrastructure! http://www.guardian.co.uk/business/2011/jun/28/greeces-fire-sale-shunned

George Christodoulakis, Greece's special secretary for asset restructuring and privatisations, said the sell-off would raise €50bn (£44bn) to help pay back the country's €110bn bailout debt.

In the US the IMF has warned that of a “severe shock” to global financial markets if the US does not move quickly to increase its borrowing authority, adding pressure on Congress and the White House to clinch a deal on fiscal policy. The US government has hit the legal limit of borrowing and if it does not increase that in the near future the US will run out of cash to pay its obligations and could default as early as August 2. http://www.ft.com/cms/s/0/d59381b4-a26d-11e0-9760-00144feabdc0.html?ftcamp=rss&ftcamp=crm/email/2011629/nbe/InTodaysFT/product#axzz1QjqGXkV7

But Republicans and Democrats in Congress and the White House have so far been unable to break the political impasse surrounding fiscal policy as they spar over spending levels and taxation.

Republicans have been resisting an increase in the debt ceiling to extract deeper spending cuts and fiscal reforms, while opposing any tax increases. After the IMF statement on the US was released, John Lipsky, acting managing director, said: “It should be self-evident a debt default by the US government would have very serious, far-reaching, dramatic repercussions.

But interstingly the IMF cautioned against deep and immediate savings, instetad of raising the debt limits saying “an excessively large upfront fiscal adjustment could also weaken domestic demand”. That's not what they have told the Greeks!

What we are witnessing is the continued events of 2008 when the banking system almost collapsed. The debts incurred have been passed on to the public sector and the general populations.

This process of course has no solution it is just moving the debts around while the banking system continues to go on unreformed building up for another crash. The limitations of a debt money system are begining to become self evident issuing money as debt requires the debts to grown in order to pay back the principle plus the interest.

There is a limit to this process perhaps we are almost there. The solution lies in the state taking over the functions of money supply to issue money debt free so that we can pay down the debts and let the economy function at the same time.

Cutting back on spending just reduces the money supply which means debts can't be paid and our economies collaspe into reccessions...they are self defeating exercises in gross stupidity.

The demand for reform of our money supply system must be rasied by the trade unions so that the general population can understand exactly where our problems lie and how they can be solved, all of the major political parties are wedded to debt and bankers, they have no solutions except the improvishment of our communities.