For those who have read about or vaguely remember the stolid British tribe of Dunkirk, the Battle of Britain and the Blitz, which held out in its “finest hour,” last week brought a disgusting sight.
Mobs in Parliament Square set fire to the statue of 19th century statesman Lord Palmerston and urinated on the statue of Winston Churchill. Charlie Gilmour, son of Pink Floyd guitarist David Gilmour, was swinging by a rope from the Cenotaph that memorializes the 700,000 British dead of the Great War.
At night, hundreds of these anarchists peeled off to appear on Regent Street as the Rolls-Royce carrying the Prince of Wales and the Duchess of Cornwall, Camilla Parker-Bowles, entered. The Rolls was pounded with boots, bottles, sticks, fists and paintballs, as the mob howled “Tory scum!” and “Off with their heads!”
A sign was pushed through an open window into Camilla’s side. So precarious was the situation, Charles’ security detail was close to drawing guns to protect the first in line to the throne.
What was the mob protesting? Tuition increases for students who pay less for college than the parents of American students. In Parliament, the ruling coalition’s 83-vote margin, after defections, was cut by three-fourths on the vote to raise the tuition fees.
And Europe is only at the beginning of this age of austerity.
Across the Irish Sea, the 50,000 protesters have departed from the General Post Office where the Rising of 1916 took place. But the government’s budget to meet the demands of the European Union for a bailout of Ireland passed in the Dail by just five votes, 82-77.
This is “the budget of a puppet government … doing what they have been told to do by the IMF, the EU Commission and the European Central Bank,” said Michael Noonan, the probable finance minister in a new government after coming elections.
Noonan said Dublin’s letters to the IMF and European Central Bank read as though the government had been “waterboarded” into signing them.
Irish rage at having to suffer to save Europe’s bondholders of Irish banks, the anarchy in England, riots in France to protest a rise in the retirement age to 62, the violence that wracked Greece, the precarious condition of Portugal and Spain, the anger of Germans at having to bail out their profligate EU partners — raise the question:
Can Europe’s welfare states be downsized without violence surging, governments falling and populists coming to power who will default on debts rather than force the masses that elected them to suffer to save the bank investors?
Can European democracy deal with the gathering storm?
Is not a national default and a collapse of banks across Europe inevitable? And could such a collapse be contained in Europe when America’s big banks are all transnational institutions?
And America is not without her own crises.
This weekend, The New York Times reported on affluent Nassau County on Long Island: “Now, with its bonds suddenly downgraded and a state oversight agency preparing to seize its checkbook and credit cards, Nassau is on the verge of a full-fledged fiscal crisis.”
California, Illinois, New Jersey and New York are facing historic deficits, as the stimulus money that enabled them to survive 2009 and 2010 runs out.
Illinois is facing a shortfall of $15 billion, a third of the state budget. California is being compared to Spain. A default by either could do to the credit rating of states what a default by Italy or Spain would do to the European Monetary Union.
Now the U.S. government is moving again in a direction opposite of where the people voted to go on Nov. 2.
The deficit is not shrinking, but growing. Even before the Barack Obama tax compromise — price tag $857 billion — the 2011 deficit is surging.
In November alone, the U.S. government spent $150.4 billion more than it took in. For the first two months of FY 2011, which began Oct. 1, the feds spent $585.7 billion and took in $294.9 billion, a deficit for just one-sixth of the fiscal year of $290.8 billion.
Spending is approaching 200 percent of revenue.
Obama’s deficit for the first quarter of 2011 alone will be the same size as the largest annual deficit George W. Bush ever ran. Michael Fereli of JPMorgan Chase projects the 2011 deficit at $1.5 trillion, after $1.4 trillion in 2009 and $1.3 trillion in 2010.
And the bond markets are flashing warning signals.
After Obama’s tax deal was announced, U.S. government bond prices tanked. Some folks are getting out to get into stocks. Others think U.S. bonds just became a riskier investment.
U.S. cities and states and the U.S. government, as well as the governments of Europe, are facing a crisis of confidence. Can their elected politicians reassure investors who bought their bonds in good faith that those bonds are still worth what they cost?
Or should bondholders bail out before they are burned?
We may be entering a crisis of democratic capitalism.
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