European revolt, American echoes?
By Max J. Castro
majcastro@gmail.com
Enough austerity!
That was the clear message that Greek and French voters sent their leaders at the ballot box last weekend.
Greeks for some time have been in open rebellion against the savage cuts imposed on the Hellenic version of the 99 percent by international financial institutions and Europe’s two largest economies, Germany and France.
Finally the Greeks had the chance to use a more potent weapon than street protest to punish the politicians who succumbed to the threats by the financial titans: pay up or we will sink the country’s economy and expel the nation from the Euro-zone. Come up with the money to pay creditors – mostly big banks and wealthy investors – by the only means possible: by squeezing it out of the Greek people.
The new weapon was the ballot box, and the Greeks made good use of it. Facing fresh demands for deeper austerity, Greeks threw the two leading parties out of office, sending a clear message to whatever coalition is eventually put together to run the country: we won’t put up with any more German-imposed crap.
One financial analyst, apparently given to understatement, commented that the prospect for “deeper reforms” of the Greek economy appears dim. Indeed, the austerity measures forced upon have the country have only driven it deeper and deeper into recession.
That comes as no surprise as an economy in recession requires more, not less, public spending in order to reestablish. The forced reductions in pensions, salaries, and government jobs predictably led to a shrinking of the economy, which means less tax revenue, and less money to pay the debt. That prompts calls for deeper austerity which means another turn in an endless the vicious circle leading to the bottom. No wonder the Greeks are mad.
The markets, those deities of global capitalism, including the supreme deity, the bond market, went all nervous after this weekend’s developments. Adding to the anxiety is the fact that it may take weeks or months for the Greek political situation to be sorted out, and what economic policies the new government will adopt is anybody’s guess.
Beside the discomfort borne of uncertainty, many creditors are just not willing to wait that long. They will try to punish Greece, and they may succeed. But even that is not certain. Faced with an even worse crisis, Argentina gave creditors the finger, defaulted on its debts, and subsequently enjoyed many years of prosperity. Whether the Greeks can pull off the same thing is doubtful but not impossible.
But the victory of Socialist Francois Hollande over Nicolas Sarkozy in the French presidential election has frayed the nerves of the deities much more than the defiance of a small economy like Greece. Hollande, a moderate, nevertheless has been sharply critical of austerity. He may be forced to become more radical if the left wins next month’s parliamentary elections.
Sarkozy’s defeat will not only affect French economic policy but more generally change the balance of forces arrayed for and against austerity. The outgoing French president’s alliance with Germany’s fiscal hardliner Chancellor Angela Merkel strengthened Merkel’s iron hand as the chief enforcer of austerity. From now on, Merkel will stand alone. That will be very uncomfortable: a Germany that attempts to dictate to the rest of Europe would revive bitter memories.
What significance does this have for the United States? First, there is the likely adverse effect on the stock market and to a lesser extent on the economy as a whole. That’s bad news for President Obama.
James Carville, the former campaign guru for Bill Clinton said it best on the subject of what decides most American presidential elections: “It’s the economy, stupid.” More bad news: Even before last weekend’s events, the data had been signaling that the slow motion recovery – or what technically passes for a recovery but is not perceived by most Americans as such – is slowing down even more.
On the other hand, the Greek and French elections contain a message for Mitt Romney and the Republicans as well. There is a threshold beyond which people will rebel against the politicians responsible for systematically meting out pain to the 99 percent on behalf of the moneyed interests.
Americans, mired in the national myths of individualism, self-reliance, and American exceptionalism, are much slower than Europeans in making the connection between their individual troubles and class-driven public policies. But, eventually, even Americans catch on. Ask, if you can summon his spirit from the grave, Herbert Hoover. But will they catch up quick enough to save Obama?
There is also a striking parallel between Mitt Romney and Nicholas Sarkozy. The instant analysis in Europe is that Sarkozy lost the election for three reasons: his championing of austerity, his penchant for favoring the rich and flaunting his own lavish lifestyle, and the fact that many people just can’t stand his personality.
Sound familiar? If the endless Republican nomination made one thing clear is that –forget independents and Democrats – a vast number of Republicans, as many as 75 percent, just don’t like Mitt Romney.
Romney, who has justified tying his dog to the top of his car for a twelve-hour road trip by saying that his dog just loves it up there; who has said “I like firing people” and who as a businessman absolutely proved that to be a true statement; whose support of American auto workers extends to his wife owning two Cadillacs; who proposes $10,000 bets on the fly but isn’t concerned about the very poor at a time of extreme poverty, especially among children; who thinks undocumented immigrants should be made to “self-deport;” has richly earned his Sarkozy-like repulsion.
On any simpático scale, Romney would score near the bottom. Among Latinos – Cuban-Americans excepted – Romney would define the lowest point of the statistical distribution. In contrast, while there is a significant number of racists and others who belong to what Bill Press calls “the Obama hate machine,” many Americans who disagree with him on policy like Barak Obama. Ask a college student, a nurse, an auto worker, who would you rather hang out with for a couple of hours, Romney or Obama? No contest.
Romney’s hope is that the election will turn not on a popularity contest with the president but rather reflect people’s reflexive anger against the guy in the White House when the economy is in the dumps.
The prospect of Obama losing over the economy is rife with irony. It has been the GOP that has systematically obstructed every attempt by Obama and the Democrats to revive an economy that tanked during a Republican administration, including the 2009 stimulus package, which the Democrats had to shrink and misshape in order to get Congress to pass it.
The Republicans, through their obstructionism, have imposed a de facto austerity package on the nation every bit as brutal as the European. On this, Romney has been in tune with GOP economic dogma every step of the way. But will the American people connect the dots or just lash out at the guy in charge of the country?
Here is the clincher. Romney has said he would present to Congress the budget proposed by GOP Representative Paul Ryan on his first day in office. Ryan’s budget amounts to a savage attack on the poor, a coup de grace to what is left of a safety net for the middle class (Social Security, Medicare), and a bonanza for the very rich. Ryan, in a nutshell, puts all the European fiscal hawks combined to shame.
But will the American people understand that a Romney election will portend the mother of all austerity packages and a whole lot more pain for the 99 percent? Given the huge gap on likeability, the fact that the polls show Romney is running almost even with Obama suggests that the American people aren’t factoring in the grievous harm that the policies of a Romney/Ryan team would inflict on the people. If they were, Obama would be ahead by a mile.
But he is not. Too many of the American people still don’t get it. Will they wake up by November? The future of the nation hangs on the answer.
