Ten years ago global capitalism crashed. Late in 2008 into 2009, 2010 and 2011 the system wobbled
in a way it had not for almost a century, since the Great Depression of the 1930s. Nowhere did
this collapse hit harder than in Europe. There it took the form of a European debt crisis.
The capacity, or rather the lack of capacity, of Spain, Italy, Greece, a number of other countries,
a number of other regions to pay the enormous debts that they had accumulated in what they
thought was the previous period of prosperity but in hindsight became the time when things were done
that would cost an entire generation. Those peripheral countries in Europe,
the poorer ones, were in debt to the big banks in Germany, France, and Britain,
and even to some extent in the United States. And they couldn't pay the debts because the economic
system had crashed and they didn't have the money to do it. To the rescue came the German and French
banks. They understood very well that if the debts of Greece to those banks, or Italy to those banks,
etc., couldn't be paid the banks would go bankrupt and they would take down with them the entire
European capitalist system. They were (even though they didn't use this phrase the way their American
counterparts did), "too big to fail," and they cashed in on it. The terrified leaders of Germany
and France came to the rescue. They gathered public money, taxpayer money, central bank money,
and lent it to Greece and the rest of the debtors on condition that they would use the public money
to pay off their private creditors: those big French and German and British banks,
which they did. That left these countries with enormous unpaid debts only now they were debts
to the public authorities of Europe rather than to the private banks who could continue to function
(if poorly, at least they hadn't gone out of debt and they hadn't gone out of operations).
So what was then to be done with the unpaid debts of Greece, and Spain and Italy and so on? Greece
was made the whipping boy. Greece was made the sacrificial lamb. They would have to behave
properly, not run up any more debts, pay down some of those debts. And to do that, the wealth of
Greece was taken from the Greek people. The growth of Greek output wasn't used for Greek income,
but instead (like the wealth of Greece) moved to pay off the debts to those public authorities.
This came to be known as "austerity," imposed on Greece with savagery, and savage results. But
imposed everywhere in Europe. No economic growth because wealth was siphoned off to the countries
that needed at least: Germany, France, etc. Well, ten years ago was also the beginning of Economic
Update, the program we have committed ourselves to here and that has grown beyond our wildest dreams.
So we've decided to celebrate the 10th anniversary of Economic Update by looking at the last 10 years
choosing certain events (like the crash of 2008, 2009, and 2010. 10 years ago.)
and talking about their ramifications here and now. One of the most important ramifications
can be stated this way: the world never really finished
exiting the crash of 2008, 2009, and 2010. Before we could finish recovery we were in the next one.
And just as the collapse of capitalism back then was called "the subprime mortgage crash" as if the
mortgages caused the crash rather than capitalism, so today we refer to the Covid-19 crash as if it
were the disease that caused the problem this time rather than capitalism's uncured, never cured,
instability. It crashes on average every four to seven years and it has done that for 300 years.
Nowadays we see also the rapid accumulation of debt, like we did in the years
leading up to the crash of 2008, 2009, and 2010. Once again, governments [are] borrowing
unheard of amounts of money. Trump did that in the United States during his presidency
and Joseph Biden is going much beyond in the amounts of money he's borrowing, as
are governments around the world as they cope with the combination of a capitalist crash and a public
health pandemic. And their outcome is likely to be similar: inability to pay debts. For example,
we have allowed (because we had to) millions upon millions of Americans
to suspend payment of their rent because they have not the jobs to earn their incomes to pay their
rent. We can't have 20, 30, 40 million people on the streets of this country. So you can't evict.
But the end of eviction is coming and the accumulated months of unpaid rent suggests
that we are headed into another catastrophic breakdown. We did not develop the US economy,
or many others around the world, even to the point of overcoming all the losses of the crash of 2008,
2009, and 2010, and here we are with another even worse catastrophe on our hands. And accumulating
debt was not and is not a solution. It presents the United States now with this
staggering problem. If you spend vast amounts of money to get out of the crisis,
where are you going to get it from? Politically, the wealthy and the corporations prevent you from
taxing them. So where are you going to go? You can't tax the mass of the people, they can't pay.
So you're going to borrow. And who do you borrow from? The corporations and the rich,
because they're the only ones you can borrow from. Thereby deepening your debt to this small,
powerful part of this society. That doesn't solve anything. It makes a bad situation worse. It
worsens inequality, it worsens debt. Governmental debt in the United States, and corporate debt,
are at unheard of unprecedented levels, threatening the viability of the entire rest of
the economic system that sits on the foundations of those debts. You can call those derivatives,
if you like. That word became well known in the aftermath of the crash of 2008. We live in very
difficult times, and what happened ten years ago is a key part of that story. So let me ask you,
enable us to continue being one of the voices that tells it like it is,
that explains what's going on, that doesn't shrink from pointing the finger at an economic system
that isn't working for the vast majority of the people. Please help us grow another 10 years.
Consider joining our monthly donors because that kind of reliable
inflow of revenue is crucial for us to plan. And please learn of the many ways
to participate and to support what we do at our website democracyatwork.info. Thank you.