quinta-feira, 9 de março de 2017

How the financial system captures Humankind through debt (2)

That debt ascribed to us by the financial system and the political class is not ours. It is illegitimate because nothing to the people’s benefit comes from it, and to accept it is to legalize the robbery of our future.
Contents

0 – Introduction
1 – The parties’ free will
2 – A primordial political illegitimacy  
3 – Illegitimacy as to the objective  
3.1 – Occultation, the mother of all swindles
3.2 – Conditions for evaluating legitimacy


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0 – Introduction

In the first part of this text we strived to jot down some notes on how the financial system imprisons Humankind by using direct and indirect debt, the latter arising through the State and the political classes’ intermediation.
This process, of Dantean dimensions and painful effects to peoples’ lives, demands a matched solution – the suppression of capitalism, as plague, slavery, or feudal bonds disappeared or became marginal – as decisions pertaining to collective needs must emanate from, and be under the constant scrutiny of, populations, with the abolition of the political aristocracies.
We are aware of the insufficiency or inexistence of anticapitalistic popular movements. Furthermore, that absence has been preventing a serious and broad discussion of the situation or the evaluation of the capitalist process’ internal limitations, which generate profound inequalities resulting in the segmentation into areas of leading edge technologies and high productivity, and regions based upon low qualifications, miserable wages, as miserable are the life and work conditions.
In all complex political processes there are always those seeking the sufficiency of the small steps logic – absorbable by the system – without confronting face to face the problems’ seriousness and the radicalism of the solutions which may, or may not, be feasible in the short term.  It is part of the reforms’ logic, of the convincing, naïve or opportunistic, that participating in government bodies or using the laws of a nation-state can reverse the tendencies inherent in capitalism’s pressure which, furthermore, is exerted with a global scope.
Hence, we will try to point out the limitations of the approach described in the previous paragraph which, while it may cause some inconvenience to the financial system’s institutions or to the political class, does not particularly ruffle any global capital’s feathers, nor of the “representative” political system’s architecture. Still, it may instill upon society the idea – dangerous and false – that those approaches and practices may be able to shake the capitalistic power of the political class in its entirety.
Starting from a more polarized approach, upstream of the capitalism’s systemic analysis in its neoliberal and financial predominance phase, when a state takes on a debt there is a chain of vectors to be considered in order not to accept it. 
1 – The parties’ free will
In the Portuguese case, as in the case of other European peripheral countries, there have been, and still are, external and internal political constraints such as: the national banks’ pressure to occurrence of public intervention, to their recapitalization or transfer of bad assets to state entities; governments’ connivance; the unequal severity (“France is France!”); and the European Commission’s demands for continuing indebtedness in the name of an homogeneity of policies which is ill adjusted to the huge inequalities known to exist within the EU and, in particular, within the Euro Zone.
In what concerns the creditor party, the banks, and the global institutions which convey the financial system’s interests (IMF, European Commission, ECB or Eurogroup,) one should not expect the claiming of external constraints in order to constitute debt. On the contrary, that statement has every reason to come from the debtor party, the people and their presumed representatives (governments, parliaments, political classes).
Any external imposition upon a people, by its very exceptionality, cannot ever be considered as an act of current management by any government.  It can be admitted that, under a given political conjuncture, the majority of the political class, the government and the parliament, reject those impositions before the financial capital’s representatives; as it is admissible to suppose that, with greater probability, the market democracy institution’s decisions, comprised, in general, of conniving governments and parliaments, corruption practitioners, defenders of capitalism and markets’ predominance, will be those of accepting that imposition or of devaluing its effects on the masses.
Within the latter context, there are reasons for a people to democratically express itself about those impositions through a referendum (without any perverting tricks from the political class) and decide, with sovereignty, to accept or not to pay the effects of the financial markets’ dysfunctional mechanics.
 2 – A primordial political illegitimacy
The legitimacy question has both a political and an ethical character and is tied with the existence of an extremely violent international and domestic legal order within which the peoples well-being loses all dignity, crushed by the capitalistic accumulation, and the financial system is predominant, in a guise which is quite distinct from the one observed at the beginning of the XX century.  That violence, resulting in a debt whose full payment cannot ever be reached, does not contemplate, inherently, the payment of a defined number of installments. On the one hand, the perpetuity of the capitals drained from the peoples is like a forced rental which cannot be rescinded, and for which rent payments are demanded. On the other hand, taking into consideration that debt is imposed upon peoples by state violence, it would be better to designate that operation as a capture or conquest and the rents as a product of ransacking or spoliation.
The illegitimacy inherent in theft situations is a result of this violence, and to claim or admit, at a global level, a restructuring, amounts to ennobling the thieve and its accomplices, and transforming the pillage into a contract between peers.
If a creditor, despising the most elementary rigor in assessing the debtor’s economic and financial situation, ceaselessly instills in it the assumption of a debt, that creditor takes on a malicious role that, in a situation of debtor insolvency, nullifies its reimbursement rights. The UN General Assembly’s resolution dated from September 10, 2015, “urges debtors and creditors to “act in good faith and cooperation spirit in order to achieve consensus in the adjustmentsto sovereign debts”.
Based on the cited UN General Assembly view, 19 economists, among which Picketty, Varoufakis, and Galbraith, signed a resolution proposal aiming the debt’s restructure, envisaging a conceptual view of that restructure that goes far beyond the narrow understanding assumed by that Portuguese political class’ branch which is less rightwing. So, that group of economists formulated a set of nine principles – sovereignty, good-faith, transparency, impartiality, equitable treatment, sovereign immunity, legitimacy, sustainability and general restructuring.
As in other situations pertaining to the Portuguese case – the adoption of the Constitution, IMF interventions in the XX century, joining the EEC, joining the euro, signing the Lisbon Treaty… governments assume that the populations do grant them unrestricted mandates and should be kept away from governance that, given its complexity, can only be tackled by the privileged brains endowing the political class. This assumption draws an essential cleavage between the overwhelming majority of the population and the partisan and entrepreneurial gangs that lower wages and pensions and, on the other hand, burden them with austerity, cuts, and an asphyxiating fiscal puncture having as background that everything is justifiable by the payment of the public debt and, above all, its obligations.
The current political regime, of falsified representation, with irrevocable mandates, is well synthetized in the Constitution’s 10th article which institutes the political parties as the organizers and the expression of the popular will, taking away from the population the direct manifestation of its will and choices. The overwhelming majority of the population is given the abstract power of the vote; but, if it is exercised, it is conditioned by choices defined by the political directorates, since the right to stand for election for political functions, directly and without the constraints of the cited article 10 is – effectively – withdrawn from population. Wherever that happens there is no democracy; and where there is no democracy there is no legitimacy of those exerting political functions, coming from a minority chosen in the bosom of closed, hierarchical, and mobster structures. Therefrom, in what concerns debt’s obligations, amongst others, all contestation by the injured ones is admissible, above all by those not participating in the electoral circles of the market democracy.
In the case of public debt establishment, in general, and is aggravating swelling, we are before a continued, systematic policy, distributed across annual[1] exercises, that obliges and burdens several future generations and that is substantiated in a sheepish submission to the financial capital’s wishes.  This submission configures a heavy and unceasingly worsening yoke, even if the wishes of renegotiation and restructuring manifested by the political system’s leftwing, and which are no more than mediatized ways of showing service to their militants and sympathizers. Greeks, for the worst reasons, announce in advance what the restructuring admissible by the financial system and earmarked for isolated countries is, and how much it is worth, without any supposition of a negotiation, given the bonds of obedience and ideological straightjacket that the political classes live in.
Given this context, it is fair that a people refuse the harmful compromises assumed by those parts of the political class which take turns controlling the pot.
3 – Illegitimacy as to the objective

Several situations can be considered here.
In a first approach, recourse to indebtedness can have an unassailable righteousness objective, such as a hospital, but the works’ financing contract can either be drawn within the normal and legal parameters or the same can be marked by constraints and unconscionable parameters indicating business corruption between the financers and the highest State representatives.
Another situation is when the objective has nothing to do with the satisfaction of collective needs (for instance, the bulldozing of a poor neighborhood, the poor to be relocated to the periphery, in order to enable building a luxury condominium or a golf field) in which case the financing might or not be stricken by fraudulent clauses that, when they exist, only highlight the assumed debt’s illegitimacy.
In addition to those situations including the assumption of a debt, there are others that, without explicitly including it, configure unnecessary public spending, politically condemnable and illegitimate. The debt was still to be the central element of the capitalist domination over Portugal and already illegal objectives could be discerned in the governmental (Sócrates) actions, with the right wing’s conniving and the distraction of the (regrettable) parliamentary[2] left wing. We refer to the Portuguese participation in the Afghanistan war which had a very clear set of unconstitutionalities, publicized by us at the time (2010), with the patent lack of interest of the pasty and tamed press. The same can be said about the deflection by Cavaco, during its consulate, of Social Security funds to the social action. Illegitimacy is present in governmental action whenever there is no popular sovereignty, with the decisions known and validated by the communities or susceptible of being nullified by the people; illegitimacy is an immanent characteristic of the current market democracies.
3.1 – Occultation, the mother of all swindles
Let us return to the debt. When an individual or a company applies for a credit, the financial institution asks for information about the life, estate, income and (our emphasis) the motives, the objectives justifying the loan application. As is obvious, when the requestor is a large company, or a powerful enterprise group with large sets of shares or deposits in a bank, the later goes easy on the operation’s analysis, hence the huge volumes of bad credit (where the cream of the Lusitanian entrepreneurship shines) that the EU decided to ascribe to the national states; meaning, the multitude of those paying taxes, forced to recapitalize the bankrupt banks (the famous bail-out).
As a rule, nothing like this happens to public debt. States, through their governments, take on debts before the financial system, both parties knowing that standing behind the debts there is a whole population as guarantors. The risk is minimal for the financial system, as can been seen in the case of European’s periphery countries, since the respective political classes, the European institutions and the IMF will  know how to be imposing enough to define coercive and looting measures of the populations, in order to avoid any defaults.  In other words, that said population acts as the financial capital’s implicit warrantor and, simultaneously, as the compulsive payer of the same capital; the political class is a normal executive agent charging, naturally, their fees through stewardships and corruption.
To the political class, within which the taking of the loan is decided, the matter of asking the payer of the loan and the loan’s interest – the population – if they agree to resort to credit,  how to apply it, and with the loan’s terms and conditions (interest rates, payment periods, instalments), is never raised.  The political class, through the State instrument, burdens the population with a debt without a priori asking it anything and without informing, even a posteriori, what will be the use of the loaned money; it will know to exempt itself of all responsibilities – personal or collective – and, in the worst of cases within the market democracy’s context, a change of protagonists will take place after a more or less heated discussion during an electoral campaign.
Any government can only be troubled enough to inform “the market” that it will be issuing for sale some debt certificates, simultaneously asking for the market’s attention and some nice interest rates.  For instance, for an €1000 M emission, each of the 10 M Portugal’s residents will assume, on that same day, an average debt of €100 plus its interest, without knowing why, to what end, and without losing her or his appetite for dinner when learning about the titles emission good reception by the “market”.
In the last years, the troika, supplied the Portuguese State with €12000, with its application earmarked for rescuing banks with difficulties[3], the reason for a whole population to be involved in such intermediation being a weird one, in a public and high risk compromise, totally alien to a juridical order that sanctifies the private enterprise and entrepreneurship according to which all responsibilities (correctly) will fall upon the partners or shareholders.
The poor’s bad “entrepreneurship” is sanctioned with bankruptcy or ruin and the neoliberal avatars will say that competitiveness was missing, that the management model had not been well prepared, without it being know whether or not the prestigious (??) IEFP[4] will find any employability for the bankrupt ones. When the case is the rich’s entrepreneurship’s failure, the State assumes the external debt in order to recapitalize it and forwards its costs to the poor. This is how the neoliberal business model works, dutifully fulfilled by the on duty branch of the political class, with the supervision of draghies, dijsselbloems or constâncios.
The Portuguese State Budget proposal for 2017 (OE2017), in its article 102, institutes: “1- In order to face the financing needs deriving from the execution of the State Budget, including those services and funds possessing financial and administrative autonomy, the Government is authorized to increase the direct liquid global debt up to a maximum amount of € 9 350 000 000,00”.  And further ahead, in its article 106, informs that the Government may resort to the emission of floating debt up to a maximum of €20000M; in the case of the latter debt it is known that it has a short term application, for the purpose of stabilizing the treasury’s balances.
In the approved OE2017, in the Table III.4.V.3.2., it is mentioned that the liquid financing needs will be on the amount of € 9609 M, contrasting with the € 13140 M estimated for 2016, a situation which, if it comes to pass, will be the lesser of evils.  By liquid needs it is understood that, in the debt’s gyrating door, there will be more entries than exits, more accruals than reductions, despite it being already known that the building is bursting.
This forecast, repeated year after year, always with little tranquilizing amounts, is made without the concrete application of the financing outcome being known, as has already been said.  The governmental gangs managing the State and the public indebtedness feel comfortable behind their coercive power over the population, and exempt themselves from providing explanations.  The population, on the other hand, ideologically dominated by the naturalness of its submission to the state’s power and governments, accepts the future payment of an invoice where the dispensed goods or services are not disclosed, only the amount.  The crowd[5] really is soft and pays, pays, pays…
To worsen the situation, the State provided services do not, in general, expose any benefits that can be linked with the recourse to the capitals “market”; to the contrary, it is the systematic recourse to indebtedness and interest payment that generates the flow of bankruptcies, unemployment, austerity, cuts, emigration, and degradation of the essential public services. 
3.2 – Conditions for evaluating legitimacy
In Spain, Zapatero and Rajoy, in 2011, decided to secure a change to the Constitution’s article 135, which assigns priority to the payment of interest and debt and, with whatever is left… it will be seen afterwards what the quality and quantity of public services will be.  The assigned hierarchy is clearly seen; hundreds of thousands of people, ravaged by unemployment, were forcefully evicted from their homes, with the police helping them to exit faster, in order to not harm the financial system’s estate interests.
In Spain, in face of the popular movement of 2011/13, the political class was forced to inscribe that priority in the law, however its equivalent is in fact being applied in Portugal without the need for any constitutional changes, given that the meekness, already quite present amongst the Portuguese, was at the time enhanced by provocateurs who shined in the stifling of the creation of autonomous social and political movements that could question the wellbeing of the “left wing” mandarins.
For a significant part of the debt, the absence of a direct link between it and the funds’ correct application makes it difficult to dispute its legitimacy, based solely in the presentation of technical arguments.  In other cases, however, there are debts consigned to investments of dubious utility, such as the football stadiums in the beginning of the century, or the scandalous commitments assumed in those public-private partnerships cases which blatantly favor those economical groups having a strong influence over the political parties with a governmental “calling”, and quite probably involving criminal actions. In this context of a direct connection, and given the secrecy that, traditionally, involves state management, it is very doubtful that the governments will provide data towards an assessment of presumed illegitimacies. Even admitting that those elements are supplied, without being truncated, what guarantees are there that governments will accept the popular verdict, their own condemnation, and move to nullify the contracts and condemn those responsible for the fraud?  The recourse to external audits, it is well known, aims essentially to replicate the conveniences of those who pay them; and, if judicial actions are involved, the judicial authorities’ usual slowness is also known, especially in situations of white collar crimes.  Finally, will the political class accept that popular committees penetrate extensively and intensively within the State’s heart, within the intimacy of the corruption’s production?
The State, as it appears to us, is a bunker; but it is a festivities hall to capitalists and mandarins.  The admission of extensive audits to a country’s state apparatus is only possible within the context of a wide contestation of a political regime; of the political class’ critique and removal, of a profound change in the political organization, with an assessment of the responsibilities in the establishment of the debt as an element of integration into the financial capital’s plot, as has been discussed in the present text’s first part and, that being said, without forgetting the civil servants’ huge relevance in the execution of such gigantic proportions task.
To admit extended, global audits without the above mentioned premises is either to naively point to the impossible or a way to divert contestation energies to side objectives.  The same can be said of those who talk about public debt restructuring in the ambit of negotiations where equality between parties is illusorily assumed, one being an isolated small or medium country, and the other the whole capitalist order, orchestrated by the financial capital[6].  The solution will have to come from a sufficiently vast set of determined countries, so that a significant part of the debt is accepted as null and void and, therefore, erased from the balance sheets of the financial system’s institutions, as part of the global finances’ deep healing.
If the states’ central apparatuses are particularly miser in what concerns transparency, so are the autonomic institutions, either regional or autarchic, even if in these cases, namely in the latter ones, the sums involved are relatively modest. Let us look at the relative relevancies, to Spain and Portugal, in millions of Euros and in GDP percentages.

State
Autonomic/ Regional
Municipal
Total
Spain
(March 2016)
810.1
(74.4%)
264.2
(24.3%)
35.1
(3.2%)
1109.4
(100.5%)
Portugal
(October 2016)
238.7
(132.9%)
6.1 (2015)
(3.4%)
4.5 (2015)
(2.5%)
249.3
(137.8%)

In Portugal, even in those so called left wing autarchies, opacity dominates as well, benefiting from the inexistence of local groups that demand information and mobilize the population against suspicious or pharaonic expenses; occultation is the golden rule for partisan oligarchies, be them national, regional, or autarchic.  The municipal assemblies themselves, even when they are not restricted to the elected ones, see little participation by the population, wise of the chasm between ordinary people and the mandarins, although things are a little different on those where the population has diminutive volume and frequent relations, be them family , personal, or neighborhood, exist.
In the Spanish state’s case, blocking PACD (Platform for a Civilian Audit of the Debt – Plataforma para uma Auditoria Cidadã à Dívida) access to elements of the state and autonomic debts continues.  However, as a consequence of the latest elections, several alcaldes and alcaldesas (mayors) took office, and that fact opened doors, accounts, and autarchies’ archives, and there are several ongoing, or already completed, assessments of unconscionable contracts and illegitimate situations.  That group, of about 600 autarchy officials, has undersigned the Oviedo Manifest in order to create an united combat force against the already mentioned article 135 of the Constitution, the financial asphyxiation directed against autarchies and autonomous communities (the Montoro Law,) the devolution of the abusive interests collected by banks, and the cancellation of illegitimate debt.
Despite its limited number, in the context of the Spanish state’s total local and autonomic administrations, the Oviedo Manifest initiative can become a publicized example, since many of the signers were elected in the major cities.  In the Portuguese case, the absence of autarchy officials defending a similar position is notorious and, even rarer, the assumption in practice by any autarchy of an irregularities’ or illegalities assessment.  Even in those where the Lusitanian kleptocratic regime’s left wing dominates.  It would be an amazing thing, the oligarchs revealing the results of their corrupt actions or careless management.
In Catalonia, the CUP – Popular Union Candidacy (Candidatura de Unidad Popular), that has 10 parliamentary seats and has become a key element in the Generalitat’s management, has a radical debt repudiation stance; <<We will not pay your debt>>.  In its program, it proposes suspending <<immediately the debt payments and that the definitive non payment of the legalized usury be decreed in order to face the needs of the popular classes>>.  The CUP is not opposed to the execution of popular audits and decrees to be null and without effect any illegitimate debt payment on behalf of international investment funds and banks.  As can be easily seen, this debt’s yoke-liberating reality view sits in the antipode of the Portuguese parliamentary left which is satisfied with renegotiations, with meetings with the financial system’s representatives, and the rest will remain to be seen.  However, it is completely plausible that any effect resulting thereof will always be very limited, and that only an European-level examination of the debt problem, including a significant cancellation at the financial system’s expenses, can have real meaning to the lives of Southern Europe periphery’s peoples.

(to be continued)


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[1] IGCP – Portuguese Republic Financing Program – liquid financial requirements (founded debt, in euros): 2011 – 20000 M, 2012 – 17400 M, 2013 – 11500 M, 2014 – 11800 M, 2015 – 11000 M, 2016 – 7000 M. In turn, the State Budget for 2017, Table III.4.V.3.2 (OE 2017, Quadro III.4.V.3.2.) lists the requirements for 2015 – 11845 M, 2016 – 13140 M and 2017 –  9609 M.
[2] Translator note. In the original: par(a)lamentar. Word play between parlamentar (parliamentary) and para lamentar (regretable).
[3] According to the Public Accounts Tribunal, for the period of 2008/15, the capital expenses in support of the financial system reached €20083.4 M in 2012, the recorded estate at the end of the period being €15458.6. CGD’s recapitalization is waiting around the corner.
[4] IEFP – Acronym of the Professional Training and Employment Institute (Instituto do Emprego e Formação Profissional) (Translator note).
[5] Translator’s note. In the original: mole. Word play, as “mole”, in Portuguese, can mean both a crowd and soft.
[6] Apropos the swaps agreed between Portuguese public companies and the Santander Bank, two juridical instances in London asserted the bank’s reasons, and the Portuguese State may have to come to pay € 1800 M. Naturally, the Santander bank must have used a very well laid out procedure, designed by highly reputed specialists, that functioned as a trap to the other party, which does not have a matching technical capability but has, in contrast, a lot of levity.   

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