Last Saturday, 250,000 Britons marched against Austerity -- something the newly re-elected David Cameron believes is good for the UK. Which raises the question, Who is austerity good for? Duncan Cameron writes:
Both social democratic and neoliberal market economists defend austerity, but the reasoning (do not spend more than you receive in taxes) behind the policy is not strong enough to explain why the doctrinaire approach was adopted.
Big capitalists support austerity, but cutting public spending is bad for business. Mainstream media sell austerity as if it were new and true, even while it undermines audiences and readership, and drives away advertisers.
The remarkable willingness to pursue austerity, despite its destructive consequences, originates in the people who run the bond market: investment bankers, hedge-fund operators, pension-fund managers, and wealthy rentier capitalists of all stripes.
The people who profit from austerity are behind it.
We live in a world where bond dealers are king:
The game for the bond-market dealers is to make money selling corporate debt, since that is where the bankers' fees add up the fastest.
The more government bonds dealers have to sell, the less the need for pension funds and investors to load up on corporate debt, and the lower the profits for the investment houses that sell corporate bonds.
Government deficits create the need for borrowing so the financial market "austerians" rant about the need to balance government budgets, so as to maintain the value of existing government debt, and leave room for new corporate debt.
Private companies rely on selling bonds to finance business expansion. The bond market overshadows the stock market. Stock markets, where money is raised through selling ownership shares, is limited to well-established companies with a record of profit-making.
The international bond market is huge; outstanding securities amount to a whopping $20.89 trillion; and that does not include domestic bonds.
Bond used to be the name of a man who had a license to kill. It has since become a name for financial madness.