The Origin of the Sovereign Debt Crisis
Austerity for the many in the interests of the profligate few is the order of the day; the rape of southern Europe proceeds with this magisterial hypocrisy behind it, many other nations may be forced into this new order.
The sovereign debt crisis is blamed on welfare spending, which is a paper-thin excuse given the exponential rise of debt. Capital speculation that has been wild, destructive and sustained over decades is the only thing that explains the actual magnitude of the debt—because welfare spending does not. On that point, at least, recent history, simple maths and the debt graphs all persuasively agree.
Gigantic sovereign debt was created by international loans borrowed by domestic financiers which were secured by the state—there is no mystery in this it is a well known fact. That these publicly guarantor loans were squandered in speculation, land grabs, and all forms of mis-investments, was the product of an alliance between the parties of government, and financiers (domestic and international). The same parties of government that now impose public austerity under the guise of fiscal responsibility; a responsibility they utterly failed to exercise over the loans themselves when state bonds were issued.
However, the parties of government and its friends are in the scale of things simply a matter for future judgement and judicial sanctions—the core problem remains, which is not the existence of sovereign debt, but its origin. The origin of the loans shows the actual effect of defaulting and this may, after all, be a global good, rather than any sort of catastrophe.
It is a matter of simple logic that there are two partners in any debt; the debtor and the creditor. We hear much of the ultimate debtor (the nation state), but nothing of the ultimate creditor. And in asking this the scale of the question raises well beyond the level of any nation state. The scale is planetary and involves many trillions of imported capital; the question is where did this come from?
