The European sovereign debt crisis which has been gestating for years seems ready to come to a head as the IMF met last weekend in Washington that were dominated by talks about Greece, debt, and the risk of global contagion.
Amidst tense talks about the future of the Eurozone in which the idea of allowing Greece to default on its insurmountable half-trillion dollar debt was floated, even the usually staid US Treasury Secretary, Timothy Geithner, warned that “cascading default, bank runs, and catastrophic risk” was a real possibility. G20 Finance Ministers and central bank governors are now calling for the European Central Bank to double their existing bailout fund to create a trillion Euro emergency stockpile to recapitalize European banks and fund Spain and Italy as their economies teeter on the edge of a Greek-like meltdown.
For now, the next step in this unfolding crisis lies with the German parliament, where lawmakers are preparing for a vote on whether to expand the existing European Financial Stability Facility. The bill is expected to pass, but is deeply unpopular with the German people, who have shouldered most of the burden of the Greek bailout already and are now being asked to pay even more to prop up what many see as an unsalvageable economic mess.
Earlier this week, I had the chance to talk to financial analyst Bob Chapman of The International Forecaster about the next step in the Eurozone crisis, and what the long-term fallout from these bailouts is likely to be.
So far, the European Central Bank’s answer to the unfolding crisis has been to urge indebted nations to impose strict austerity measures as a condition for obtaining bailout funds.
As protests in country after country throughout the summer have shown, however, the citizens of these indebted nations find it difficult to understand why they should be held responsible for the profligate spending of corrupt politicians in collusion with major corporations and financial institutions. This sense of injustice has been compounded by the willingness of national governments to provide bailouts to banks at the expense of the taxpayers with the justification that large financial instutions are “too big to fail.”
Just as the US government’s TARP program in 2008 was met by widespread protest from the overwhelming majority of voters, so too are the governmental institutions of Europe ignoring the fierce backlash these bailout programs and austerity measures are generating.
Although it is commonly understood that large scale quantitative easing, recapitalization, bailout, and lending operations by central banks are an opportunity for large financial institutions to make even more money at the expense of the average taxpayer, this reality is seldom mentioned in the establishment media. A recent admission that the ongoing financial crisis in fact benefits the financial institutions, however, did get airtime on the BBC last week.
That the ongoing economic collapse is a consciously manipulated transfer of wealth to a few institutions at the top of the economic pyramid is by no means a new idea. In 2009 I had the chance to interview Professor Michel Chossudovsky of the Centre for Research on Globalization on the meaning of the 2008 bailout in which he addressed this very topic.
n a sign of the growing awareness of the wealth transfer embedded in these bailout operations, as well as growing distrust of unaccountable international institutions like the IMF and the European Union which have been embolded by this crisis, thousands of concerned citizens have taken to the streets of New York in a campaign dubbed Occupy Wall Street which has so far received scant attention from the establishment media.
The campaign, now in its 12th day, has garnered attention for incidents of police violence against those participating, as well as being blocked by Yahoo Mail in an incident that Yahoo is describing as an innocent error. Now the idea is spreading to other cities in what is threatening to become a widespread grassroots movement to direct the attention of the public away from the political theatre that is used to distract the citizenry from the key issues of economy and finance.
In a sign that the Federal Reserve is taking these issues quite seriously, it was recently revealed that the Fed is now soliciting software to monitor social media such as tweets, Facebook posts and YouTube comments to analyze what people are thinking and saying about the United States’ privately-owned central bank.
The Request for Proposal, entitled “Sentiment Analysis and Social Media Monitoring Solution” was officially opened on September 16, 2011 with responses due by September 28th. The document states that “There is a need for the the Communications Group to be timely and proactively aware of the reactions and opinions expressed by the general public as it relates to the Federal Reserve and its actions on a variety of subjects.” It goes on to identify key functionalities of the desired software, including the ability to monitor social media conversations in real time, provide “sentiment analysis” of conversations to determine whether people are talking about the Federal Reserve in positive, negative, or neutral terms, and provide summaries and overviews of specific topics.
This is not the first time that high-level governmental interest in the public’s awareness of the Federal Reserve has been displayed. In 2009, leaked US Army Reserve command documents revealed that Army Reserve personnel had been dispatched to monitor a series of “End the Fed” protests outside of the main Federal Reserve branches in November of 2008.
It remains to be seen whether this growing public awareness of the manipulation of the current economic crisis in the interest of elite financial interests will grow into a meaningful political movement, or if these protests can be co-opted and the concerned citizens placated by more official obfuscations and temporary stopgap measures.