Indignant indignity

The pots, pans and ladles are back, ringing noisily in the streets of Madrid.

Los Indignados, an inchoate mass movement to protest the economic injustices heaped on people since 2008, is returning to the politics of banging utensils to oppose Spain’s latest lurch into the abyss — a bailout that will increase the public debt from 80 per cent of the GDP to 90 per cent. The brave heart citizens who emerged as the “15-M” protesters in 2011 (named after the launch date of May 15), have nothing left to lose after being pounded by austerity policies justified as necessary for Spain to balance its budget and to remain creditworthy in the international capital markets.
Following painful cuts to social spending, which yielded neither economic growth nor respite from the bond market lenders who are constantly hiking interest rates for borrowing, Spain is back to square one as the next big basket case in the euro zone. Record levels of unemployment and the utter failure of a “technocratic” government under Prime Minister Mariano Rajoy to turn the excessively deregulated Spanish economy around have convinced Spanish people that they need a new type of politics that is radical and uncompromisingly antithetical to financial power elites.
Following the massive bailout of the private bank, Bankia, where over $24 billion of taxpayers’ money was pumped in to save an institution which gambled with people’s lives in the real estate bubble, Los Indignados reorganised across Spain this month asking why Bankia was a bigger priority than health and education for citizens in depressed socioeconomic conditions since the financial crisis began in 2008.
The questions such social movements in Spain and other crisis-beaten countries in Europe and the US are asking have no credible answer except that the banking system must be saved for the sake of “stability” of the economy and continuity of the state itself (given the history of mutual lending relations between sovereign governments and private banks).
For Spain’s one million or more homeless people, who lost roofs over their heads once the bank-fuelled real esate bubble burst, it is inconsolable to hear from their investor-friendly government that the banks have to be injected with scarce capital from the public exchequer in the hope that the economy will get better. The youth who are jobless are being forced by the extreme barbarity of the economic crisis to dream of a different system where the economy can recover by restoring employment and social security. As one demand of Los Indignados after Spain applied for a $126 billion bailout from the European Union went: the private banks which are responsible for Spain’s woes should be wound up and the proceeds distributed amongst the poor.
Conservative opinion makers have been spinning a yarn that the euro zone’s main disease is bad public finances, i.e. overspending by governments with bloated welfare and labour patronage systems.
Spain has recently joined the long list of weak European economies with high public debt, but the reason for its descent into more and more government indebtedness has less to do with out-of-control welfare spending and more with bailouts and transfers to private banks. “Corporate welfare” — a dubious phenomenon where neoliberal regimes have given tax concessions and subsidies to the well off, and winked at greedy profiteering by giant private banks — is a leading cause of the mounting fiscal deficit spectre in the euro zone.
The bailout of Spain is not only another freebie thrown at local Spanish private banks that ran like casinos, but also a boon for banks and insurance companies from northern Europe which lent heavily to the former when the property sector betting was at its peak. Instead of these northern European lending institutions taking some “haircuts” (i.e. writing off debts) as comeuppance for their risky loan-making, their insistence on being “made whole” (i.e. repaid in full capital amount with interest) is being secured by the EU’s intergovernmental bailout of Spain. The finance minister of Luxembourg candidly admitted that “if Spain got into a catastrophic situation, you could forget French and German banks.” So as was the case with Greece, Ireland and Portugal, the governments in Berlin and Paris are at last rushing to Spain’s rescue as an indirect form of rescuing their own banks.
Here is the typical on-going route of the wealth transfers: the European financial stability funds take German and French taxpayers’ savings and infuse them into Spain’s ailing private banks, which in turn will repay German and French banks that are in a state of nervous breakdown. The political propaganda in Germany has been rehashed on the lines that southern European countries are fiscally undisciplined and that they do not deserve to be bailed out by more hardworking northern European taxpayers. Parodies about “lazy” southerners have stunted the quantity and timeliness of German aid and left the “PIGS” economies (Portugal, Ireland, Greece and Spain) in perpetual crisis. But the ultimate beneficiaries of these bailouts, however inadequate and belated, are northern European banks. Ordinary people are being divided on the grounds of regional stereotypes between north and south, but the transfers are taking place in a coordinated fashion to protect entrenched financial investors across the continent.
Some of the bond holders of so-called “junior debt” (i.e. debt that will be repaid by Spain only after it repays the intergovernmental EU bailout money), are jittery that their loans will become bad, leaving Spain as vulnerable as before to rising interest rates for borrowing from capital markets, in spite of the bailout. Thus, the vicious cycles inherent in the conservative crisis-response policies keep running, unless there is a clean break forced by mass agitation. Analysts have been suggesting various technical “circuit breakers” to disentangle sovereign debt from private banking debt since the crisis began, but what Europe needs is a political break which redirects state priorities towards basic democratic accountability to society.
Los Indignados have seen through the now-perfected game of economic crisis management which always ends up anointing the same winner — the banks, local and international — which had been the initial causers of the meltdown. Criminality and immorality by a bevy of interconnected financial firms brought most advanced industrialised economies to their knees in 2008, but the politicians ruling these countries (including some nominally “socialist” regimes) have been too trapped by or integrated with the financial sector to tighten the reins and force it to suffer for its own misdeeds. Only revolutionary political change that places people first can conclusively end the depression.