Banks rob people to avoid euro collapsing

Time of article published Mar 27, 2013

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Remember the good old days when people used to rob banks and the elderly were regarded as vulnerable and deserving of special care?

Of course that’s the way it still is in South Africa, but over in Europe things have been turned on their head.

Over there banks rob people in order to secure financial market stability and, after five years of unrelenting austerity measures that have had a devastating impact on the most vulnerable members of society, the comparatively well-organised elderly are no longer regarded as part of the most vulnerable group.

Increasingly in EU countries, where youth unemployment is above 25 percent and social support for them is being cut back, the tradition of “pensioner discounts” is being challenged by the young who believe older folk have benefited sufficiently. It should be youth discounts not pensioner discounts, claim the young.

Almost six years into the financial crisis there is growing evidence that those who are suffering most from the consequences of destructive, ill-regulated and bonus-driven behaviour by banks are certainly not the bankers or the regulators.

The people who had absolutely nothing to do with any of it are the people who are suffering most. And so we have the bizarrely unfair situation that far from being punished for bringing an economic and social system to its knees, the financial sector is emerging comparatively wealthier and more powerful than it was when the whole sorry mess began.

The extent of just how distorted the response to the financial crisis has been was highlighted at a recent seminar hosted by Stellenbosch University’s socioeconomic rights and administrative justice project. Aoife Nolan, a professor of international human rights law at Nottingham University, told the seminar how individual EU states had sought to achieve the “expenditure consolidation” required by the International Monetary Fund and European Central Bank in a way that has had a disproportionate and devastating impact on already vulnerable groups.

Adjustment policies being used include “cutting or capping the public sector wage bill, phasing out or removal of subsidies on goods such as fuel and other basic goods and services, cuts to social protection programmes and regressive tax measures”.

Although Nolan does not state it as such, these “budget reform” measures have essentially resulted in the theft by governments of services and subsidies that were provided to vulnerable people.

What Nolan did state in her thought-provoking seminar was that legal challenges in both the UK and Ireland supported the government’s efforts to deprive citizens of their economic and social rights. Significantly in “continental Europe”, the courts have been more supportive of vulnerable groups.

The Constitutional Court in Latvia found that legislation providing for pension reductions in a bid to reduce the state’s budget deficit was unconstitutional and a violation of an individual’s right to a pension.

In Germany, the court was required to scrutinise the process by which a budget-stressed government set the levels of welfare and unemployment assistance deemed necessary to “reform” the social welfare system.

The court held that Germany’s “Basic Law” ensured to each person in need of assistance “the material prerequisites which are indispensable for his or her physical existence and for a minimum of participation in social, cultural and political life”.

And so it is evident that the “great European project” is looking decidedly less great by the day. It increasingly looks as though not enough thought was put into the design and implementation phases of this massively ambitious project, in particular into the euro arm of the project.

The euro has been dangerously pro-cyclical throughout its 13-year existence. From its inauguration in 2001 to the financial crisis in 2007 it encouraged and enabled companies and countries to chase hyper levels of growth. During that period rising tides lifted most boats.

In the six years since the folly of the boom strategy became blindingly obvious in 2007, companies and countries across the EU have, in unison, shrivelled into a no-growth mode.

The tide is now well out and the only boats still floating belong to bankers and politicians with the odd pensioner hanging onto the side.

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