Banana republic

Glenn Greenwald hits the bullseye with a superb post on Salon.com comparing the US now to Russia and Argentina during past crises.   His article is a must read by any standards.

He starts by quoting Desmond Lachman, a former IMF official, who describes his experience of Russia and Asia.

I still recall the shock I felt at a meeting in Russia’s dingy Ministry of Finance, where I finally realized how a handful of young oligarchs were bringing Russia’s economy to ruin in the pursuit of their own selfish interests, despite the supposed brilliance of Anatoly Chubais, Russia’s economic czar at the time.

And.

I often heard Asian reformers such as Singapore’s Lee Kuan Yew or Japan’s Eisuke Sakakibara complain about how the incestuous relationship between governments and large Asian corporate conglomerates stymied real economic change.

Greenwald observes (following Yves Smith) that this is now also the road the US is on.

 … Citibank and Bank of America are now using TARP funds they received not to extend more loans (the ostensible purpose of the bailout), but rather, to buy up more and more of the very distressed assets that Geithner insists they need to be relieved of, because they now know that, under Geithner’s plan, they will be able to sell them at a substantial profit courtesy of public funds (i.e, the Government will buy those crippled assets at well above their current market price).  

Quite simply, this is looting of the public purse by a powerful elite.  Greenwald goes on to put his finger on the central problem.

The key dynamic underlying all of this — the linchpin that allows it all to happen and, historically, the primary hallmark of a deeply broken nation — is the total elimination of the rule of law for the ruling class, with a simultaneous intensification of the law as a weapon against the citizenry.  Does anyone expect there to be any widespread prosecutions for those most responsible for the looting, systematic fraud and grand-scale theft of the last decade? 

It’s not quite as bad as that here in Britain as yet but we need to be alert; it’s a very slippery slope. 

The choice is between holding unequivocally to the rule of law or becoming just another banana republic.

(H/T naked capitalism)

After the Referendum

As an ardent supporter of the ideal of the EU, I am delighted that the Irish have trashed the Lisbon Constitution (aka Treaty). In doing so, they have spoken for the many, including us Brits, who have not been allowed a vote.

For around 20 years I have been arguing that while I support the ideal of the EU, I could not in conscience, support this particular direction of constitutional evolution because it is, quite simply, fundamentally illiberal and undemocratic, centralizing and elitist.

Emerging reaction to the Irish vote only serves to underline this. As the BBC’s Mark Mardell notes in his blog:

But what will happen next? People are starting to back one of three options:

Ireland votes again;
Abandon Lisbon;
Move ahead without Ireland.

Luxembourg’s foreign minister has suggested that Ireland could be given assurances about defence and abortion: a clear prelude to a second vote.

The new Italian foreign minister, former commissioner Franco Frattini, said as he went in that the referendum was “a cold shower, but Europe does not stop for this”. Perhaps that is close to the third position.

Sadly, this is just as one has come to expect and continues a thoroughly ignoble tradition of carrying on regardless of public opinion, the rights of smaller countries and even the law.

The difficulty is that the EU has just grown like topsy from its beginnings as a very limited arrangement between just 6 countries in the 1950s. But the arrangements that its founders put in place back then are simply not scalable to a Europe of vastly greater ambitions and 27 members operating in the very different World of the 21st Century.

The EU establishment has simply not understood this ‘lack-of-scalability’ adequately, nor has it been able to suggest any alternative constitution to address it. (Arguably, the vested interests are such that they have little interest in alternatives which would inevitably upset their gravy-filled trough).

That is why they are so desperately trying to get the Lisbon Treaty adopted by fair means or foul – now mainly foul. But increasingly, I think the public does understand, albeit often in a confused way, that the EU is not working as it should, that it is too centralized, undemocratic and opaque. In short, it needs a restart with a radically different constitutional approach – one that is decentralized, democratic and transparent and which democrats of all stripes would be happy to support.

Those who cannot imagine any other plan, or indeed even that there COULD BE another plan, are in a terrible bind – soldier on in defiance of public opinion, law and common sense or give up on the whole European Project.

However, I sense that at long last there is a mood to think new and radical thoughts about Europe’s future. Am I right?