May Day, the high day of socialism, was marked yesterday by angry demonstrations in many cities. Some, including those in Istanbul and Athens turned violent. Unfortunately it is the nature of such protests by people whose intentions are entirely peaceful, that there will be a small hard core of violent individuals intent on exploiting the occasion to assault police and property.
However, leaving aside the behavior of such thugs, the rancor of the majority of demonstrators was impossible to ignore. Quite gone was the almost party atmosphere attending May Day parades a few years ago when the First World at least was still prospering. Now people have a lot to complain about. The recession is killing existing jobs and robbing the hopes of youngsters coming onto the markets. Property prices have collapsed worldwide, leaving millions of individual borrowers with huge debts that they often cannot pay. Except in so far that consumers who were almost begged by banks and credit companies to borrow ever more, must in the end hold themselves responsible for their lack of wisdom, the real guilt lies far beyond them.
The international financial system, along with the regulators who were supposed to supervise it, and the politicians who were supposed to empower the regulators, all came to believe that new high prices created by pure speculation actually represented real and sustainable increases in value. The sheer complexity of and way in which what regulators now accept were highly speculative deals were spread across financial markets was what screened them from reality until it was far too late. Trillions of dollars of false value was created and banks, insurance companies, pension funds and other investment institutions, gobbled up these securities that are now effectively worthless.
This financial madness was directly perpetrated by just a few hundred clever investment bankers. The investment professionals, who bought into the asset bubble when they were paid immense sums to know better, number a few tens of thousands. Along with shamed-faced failed regulators and politicians (who in good times were glad to claim every possible credit but now insist the crash was caused by international circumstances quite beyond their control) there may be a few thousand more. This means that the greed and stupidity of a relatively handful of individuals has jeopardized jobs and pensions throughout the developed world and is throwing economic growth in developing countries sharply into reverse.
You don’t have to be a dedicated May Day demonstrator to feel furious about this. Tempers are further shortened by the way in which so many of this guilty financial elite have not been called to account but have rather sashayed away with millions dollar payouts. The man in the street, who trusted these finance professionals, regulators and politicians, strongly suspects the establishment is once again looking after its own, while he and his family bear the consequences of these grave miscalculations. Worse, many expect that once the recession ends, the whole insane speculative dance will begin again and these financial hucksters will once again be styling themselves “Lord of the Universe”.
The shrinking elephant in US
If the Republicans want to become relevant again in US politics, the party must be rebuilt as a coalition, not a clique, said The Times of London in an editorial yesterday. Excerpts:
For American Democrats who gorged on victory last November, summer is arriving with the aroma of a fine sauternes. Their buoyant mood is sustained partly by positive assessments of Barack Obama’s first 100 days — but mostly by the historic disarray of the Republicans.
On Tuesday Sen. Arlen Specter, of Pennsylvania, a Republican since 1966, announced that he was switching parties. On Wednesday, Sen. Norm Coleman, of Minnesota, a Republican since 1996, learned that after multiple recounts he will almost certainly have to cede his seat to a professional comedian. That brought the Democrats closer to a strategic 10-seat Senate majority than they have been since 1978. It also leaves the party of Lincoln with just two senators in all seven New England states, and there was speculation yesterday that they, too, may be induced to desert to Obama’s Democrats.
The Republicans’ standing on the US electoral map is weaker than it has been in a generation. Obama, by some assessments, has more political leverage than any president since Franklin Roosevelt in 1937. But what is good for the president may not ultimately be good for America or for its international partners; the world’s most powerful democracy has no effective opposition, and it needs one.
Extensive Republican soul-searching was inevitable and necessary after last year’s crushing defeat. Recrimination on the scale seen since then was not. John McCain did not win the White House, but he did win 45 percent of the popular vote — a substantial constituency whose congressional representatives may be about to lose their ability to block legislation even with so-called filibusters. The party’s leaders have responded not with coherent opposition to the massively costly legislation that Obama is proposing, but by fighting among themselves.
