EU: Why Europeans should think Big and think Bold "instead of harnessed by outdated capitalism" by Yanis Varoufakis

After the United States had lost its surpluses, some time in the late 1960s, the system of fixed exchange rates and highly regulated capital movements, which had nurtured capitalism’s Golden Age, was condemned. Its inevitable collapse could not but push the dollar down, release the bankers from their thirty-year-old restraints, and wind back rights and services that labour had wrestled from capital since the war.

In 2008, the pyramids of private money, that Wall Street and the City of London had built on the back of this constant tsunami of capital, crashed and burned. At first, continental Europeans smiled, allowing themselves an ‘I told you so’ moment, directed at the Anglo-saxons who had spent a decade or two sneering at the Continent’s antiquated commitment to manufacturing. Alas, that moment proved very brief. Soon, they realised that their own banks were replete with toxic assets and that their bankers had been allowed to run debts (or ‘leverage’) twice as great as those in the Anglo-sphere. Put simply, Mrs. Thatcher bubble had been surreptitiously exported to Frankfurt, Paris, Rome, Madrid, Brussels etc. As had the ‘model’ of building up competitiveness by squeezing wages until the local economies, behind the glitzy suburbs and the globalised jet set, were in a permanent state of slow-burning recession.

Post-2008, while the United States and Britain sought to bailout the bankers with a combination of taxpayers’ money and quantitative easing that aggressively sought to re-inflated the deflated toxic assets, Europe was making a meal of the same project. Having rid themselves of their central banks, the Eurozone’s politicians did their utmost to shift all the stressed bank assets onto the shoulders of the weakest amongst the taxpayers, thus causing a horrid recession and putting the European Union on a path leading toward certain disintegration.

Nevertheless, and despite the significant differences between Britain and the Eurozone, the broad picture remains the same: The establishment responded to the financial crisis by inflating bank and real estate assets (that were best left alone) and squeezing the majority of the population with soul and income sapping austerity. In short, the Thatcher model on steroids.

Growth is not the issue. The Left understands that there are many things whose growth must be stumped: toxic waste, toxic derivatives, ponzi finance, coal production, consumption that leaves the consumer unfulfilled and the planet worse for ware, etc. No, the issue is eclectic growth in the technologies and goods that contribute to a more successful life on a sustainable planet. The Left has always known that markets are terrible at providing these technologies and goods sustainably, and in a manner that sets prices at a level reflecting their value to humanity. What the Left was never very good at was in the conversion of that gut feeling into workable policy that the beneficiaries of this policy (i.e. the vast majority) would back.

A spectre is haunting Europe. It is the spectre of Bankruptocracy. A curious regime of rule by the bankrupt banks. A remarkable political arrangement in which the greatest extractive power (vis-à-vis other people’s income and achievements) lies in the hands of the bankers in control of the financial institutions with the largest ‘black holes’ on their asset books. It is a regime that quick-marches the majority of innocents into the trap of austerity-driven hardship that serves the guilty few, while Parliament and civil society are held at ransom. While 2008 was meant to raise ‘regulatory standards,’ we now know that nothing of substance has been done to reform finance.

This is not to say that we are anywhere near ready to replace capitalism. Indeed, realism commands us to recognise that, if anything, Bankruptocracy is well and truly in command of the European continent and the only political forces on the march are those of the bigoted, ultra Right. The Left must not err again, as it did in the 1930s, thinking that capitalism’s great crisis will naturally lead to something better. It may very well bring about the most hideous dystopia. This is why it is of the essence to stabilise capitalism (through banking regulation, a link between central banks and public investment, and a wider social safety net) while struggling to revive democracy at the local, national and European levels. Our success in this limited but crucial goal is a prerequisite for forging a sustainable future in which most people are gainfully employed in innovative enterprises of which they are the sole shareholders.

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European Banking Union: Deal on Banking Union Will Test Goal of United Europe - by Andrew Higgens and David Jolly

Battling to defend its credibility after a series of troubled bank failures across the Continent, the European Union hoisted a long banner on the outside wall of its Brussels headquarters last year to trumpet Europe’s march “toward a genuine economic and monetary union.”

It was hardly a rousing battle cry. But it did at least acknowledge that despite the adoption of a common currency, the euro, Europe still had much to do to achieve real economic and monetary integration, a central pillar of the so-called European project since the early 1990s.

Shortly before midnight on Wednesday, after months of meetings in Brussels that often dragged into the wee hours, European finance officials finally reached a deal on how to plug a gaping hole in Europe’s economic defenses, agreeing to a centralized system to shut down sickly banks in the 17 member nations that use the euro.

But as with many of Europe’s grand ambitions, the construction of what was conceived as a solid banking union has been crimped by the often contradictory interests of different countries. The exercise has yielded more of a muddle than a unifying mission. A banking union has often been described as Europe’s most ambitious project since its decision in 1992 to establish a common currency. But the effort to create one has highlighted how difficult it is to act ambitiously for a bloc that has grown from six to 28 member states.

It has no clear shared view on whether it is the nucleus of a future European state, a free-trade zone, or merely an intergovernmental organization that irons out disagreements between countries. Add to this the fact that the bloc’s leaders have starkly different views of what caused Europe’s financial crisis and the long economic malaise that followed, and “it is no wonder the E.U. finds it so hard to take decisions,” said Charles Grant, director of the Center for European Reform, a policy research group.

“You have a sick patient on the bed and doctors gathered around who cannot decide on the nature of the illness or the medicine required to cure the patient.

Read more: Deal on Banking Union Will Test Goal of United Europe - NYTimes.com