Using Debt to Crush Democracy: How Financiers Are Waging Warfare Against Nations

[marmar]

Michael Hudson's blog / By Michael Hudson

Using Debt to Crush Democracy: How Financiers Are Waging Warfare Against Nations
Recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies and crushing national self-determination.

December 6, 2011 |


*This article appeared in the Frankfurter Algemeine Zeitung on December 5, 2011.


Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by canceling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts <1>. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs. ...........(more)

The complete piece is at: http://www.alternet.org/economy/153338/using_debt_to_crush_democracy%3A_how_financiers_are_waging_warfare_against_nations/

[bhikkhu]

1. In the EU, government forced banks to write-down 50% of Greek debt

That was about $150 billion. It was notable in demonstrating who was in charge, and also that there was no suggestion of fraud or misbehavior on the part of the banks that swallowed the losses. I know that doesn't fit the narrative of the OP, but that's one of the big things that has happened so far.

The other has been the collapse of irresponsible governments that ran their economies into the ground - such as Berlusconi. He was more like bush dreamed he could be.

http://www.dw-world.de/dw/article/0,,15491234,00.html