Saturday, July 21, 2012

The Pain in Spain. . . .Turns Violent

On 20 June 2012, I marched in a massive peaceful demonstration in Madrid. The vivid and clear gist of the demonstration: the megabanks were stealing from the public and no more cuts in social spending to feed the banks would be tolerated. The peaceful protesters marched along Paseo del Prado to Plaza de Cibeles to Puerta Del Sol. Those familiar with Madrid know that these landmarks constitute the heart of Madrid and the center of the tourist district.

I fully supported the main message of the demonstrations: that it is morally and economically reprehensible to allow the megabanks to consume all the resources of the state and to crowd out all other more productive spending such as education, health care and public welfare. We marched with teachers, nurses, firefighters, and union members in support of this message.

This was a middle class protest, with only a very small fringe of apparent extremists (anarchists, communists, etc.). While the demonstration attained only scanty media coverage worldwide, I advise governing political and economic elites to take note, and modify their relentless aggregation of massive wealth at the very tip top of the western economic order. These middle class peaceful protests will turn ugly as the economic reality worsens for the vast majority of world citizens. As I have emphasized in the recent past, and as more and more economists note, Europe is headed for a massive economic crash. Extremism will follow almost as certainly as night follows day.

This reality is readily apparent throughout European history. And, history also shows that extremism leads to mass death, bloodshed, pain and misery, and, almost by definition, the destruction of individual rights (property rights included).

Frankly, the worldwide credit crunch is rooted in North America and the US policy of massive financial deregulation. Further, the US was the primary architect of the reigning model of globalization, with its highly deflationary bias stemming from its goal of endless cheap labor as well as its structural compulsion for developing nations to hoard currency reserves and subsidize developed world debt. The global debt crisis results from globalization's pro-debt and anti-middle class construction.

Certainly, the Eurozone too has erred. Specifically, it too has favored its banks too much and neglected the need to foster growth through unified fiscal policy and middle class development.

But once one considers the prospects of political extremism in Europe, fault is irrelevant. All that matters is that governing elites realize that the cost-benefit calculus for allowing an economic collapse in Europe is deeply, almost infinitely, negative.

Spain, once again, foretells an historic storm. And, these images and reports of recent violence in Spain do not bode well for governing elites as the monster of their creation--a bank centric and cheap labor version of globalization--spins out of control.

Yesterday, Spanish debt yields soared to Euro era records. Despite the rhetoric of Eurozone leaders the storm churns on and gains more destructive power. Spain is sinking fast and may be beyond rescue, and that implies a  major Eurozone crack-up.

(All photos and videos courtesy of Professor Mary K. Ramirez)

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