New Issue! Plus–Fed Rate Hike Explained


Our new issue is at the printers!  Print subscribers should get their copies in the first week of January (the holidays will delay things a bit), and I expect to email the issue to e-subscribers early next week.

We have posted one feature from the issue, Marty Wolfson’s The Fed Raises Rates–by Paying the Banks.  (For more on the Fed’s rate hike, see Gerald Epstein’s The Fed’s New “Operation Twist”:  Twisted Logic over at our sister blog, Triple Crisis.)  You can see the table of contents of the Jan/Feb issue here.  And here is our p. 2 editors’ note, which gives an overview of the issue:


In this issue, we paired the article “How Private Equity Works—And Why It Matters,” by Eileen Appelbaum and Rosemary Batt, with Dutch Renaissance painter Pieter Bruegel’s Avaritia, from his Seven Deadly Sins. Breugel depicts not only Greed (as a mythological figure), but a host of surrounding figures whose machinations illustrate the sin. And Bruegel lived in the 16th century, so he didn’t know the half of it.
Greed would appear to come up in this issue over and over again:
Appelbaum and Batt describe how private equity firms buy out target companies with borrowed money, load them up with debt, strip them of valuable assets, and pay themselves extraordinary dividends and fees. And it’s (mostly) legal.
In his article on the Federal Reserve’s recently announced interest-rate hike, Marty Wolfson explains that the Fed is planning on paying banks billions of dollars in interest (even though it need not). It’s a windfall for the banks, and just another example of how the public authority acts in the service of private “greed.” The Fed’s conduct of monetary policy is channeled through private banks and beholden to their interests. More, its decision-makers see it as their sacred mission to act as protectors and benefactors to high finance.
Matías Vernengo gives us yet another example, this one from Argentina. The country’s newly elected right-wing president has promised currency and spending policies that would be misguided—though could be rationalized—as responses to a serious international payments crisis. Yet there is no such crisis in Argentina! The only way to make sense of these policies is as a deliberate offensive, on behalf of the wealthy elite, against the laboring masses.
The neoliberalism that Vernengo recognizes as “resurgent” in Argentina, after an interlude of relatively pro-worker and pro-poor policies, meanwhile, has been the dominant tendency of capitalism worldwide for decades. As David Kotz argues in his cover story on “Neoliberalism, Its Crisis, and What Comes Next,” this epoch has seen the most predatory and destructive forces of capitalism unleashed from the restraints of labor organization and state regulation.
A critique of greed, a condemnation of it as a sin (as Breughel’s engraving frames it), however, simply does not suffice. In the medieval morality play, the social order torn asunder by sin is restored by purgation and repentance. In the police procedural of modern capitalist society, the social order upset by crime is restored by the administration of justice.
If sin is an offense against the social order, though, greed is no sin today. As Noam Chomsky put it back in the mid-1990s, amidst a surge in media criticism of “corporate greed”: “Talk about corporate greed is nonsense. Corporations are greedy by their nature. They’re nothing else. … You can’t make them more or less greedy.”
Far from being an offense against the order of contemporary capitalist society, greed is at its foundation. Greed is neither a sin whose perpetrators must fear for their souls, nor a crime whose perpetrators must fear earthly justice. And the battle against institutionalized greed seeks not to restore the social order, but to overturn it.

Mike-Frank Epitropoulos on SYRIZA Victory

See also Mike-Frank Epitropoulos’s pre-election piece, A Second Demonstration Project for Greece. Patti Smith’s song People Have the Power has been adopted as SYRIZA’s anthem.  SYRIZA’s twitter feed posted another YouTube version of the song (as reported by the New York Times), but that version can’t be viewed in the United States.

Anti-Austerity SYRIZA Wins Big—Now the Clash with the Crisis

The left, anti-austerity SYRIZA party scored a decisive victory in the Greek elections on Sunday, with margins exceeding those of most polls.  This is the first time that a left party has won Greece’s national elections, and Europe’s and the world’s attention is focused on how SYRIZA will combat the economic and humanitarian crises that the country faces in the wake of Troika-imposed austerity programs.

SYRIZA is projected to have won 149 of the 150 seats needed to secure a parliamentary majority (with 36-37% of the vote).  Party officials have indicated a willingness to work with any democratic, left, or anti-austerity forces, and have joined with the center-right anti-austerity party the Independent Greeks (ANEL) to form a government, since SYRIZA did not secure an outright majority.

The out-going New Democracy (ND)-led coalition government of Antonis Samaras garnered 27-28%, while their partners in PASOK brought up the rear in seventh place with about 4.5%.

The neo-Nazi Golden Dawn party left its mark as well, finishing third overall with just over 6%.

There is much discussion about how SYRIZA’s margin of victory exceeded expectations, including the notions of “hope” and “desperation” of large percentages of Greeks, especially the youth.  A subplot might well be that the unprecedented outside pressure and interference from some world leaders and financial sector institutions led to a backlash by the Greek citizens.

SYRIZA’s results represent a clear mandate, and its leader, Alexis Tsipras, made clear that the hard work for Greece starts tomorrow.  He made sure to put Greece’s elite and oligarchs on notice about changes that are likely to follow, including crackdowns on tax-evaders, increases in taxes on the higher strata, and a more active social state.

Tsipras also emphasized what any spectator of the celebrations of SYRIZA could see—a conspicuous presence of other left, anti-austerity parties from across Europe, including Spain’s, Podemos, and groups from Italy, Portugal, and other countries.  This is precisely the symbolic threat that the SYRIZA victory represents: the beginnings of networks of other anti-austerity, left groups connecting on an EU-level to fight the neo-liberal forces in the EU and the Troika.

Immediate reactions to SYRIZA’s victory, ranged from euphoric optimism and relief to cynicism and vicious attacks from other parliamentary parties.  Government hardliners of ND and PASOK warned that SYRIZA’s project would fail quickly because—they claim—“there is no alternative” to market discipline imposed by the financial sector.

But it’s clear that the Greek people did choose an alternative: democracy over the dictates of the markets. 

The Troika’s prescription of austerity and privatization was tragic for Greece, and the debt is insurmountable as it stands.  Now comes the hard work for SYRIZA and Greece.  It will require them to stick to their guns, to not succumb to mainstream pressure, and to keep the needs of the people at the fore.

Mike-Frank Epitropoulos teaches sociology and is the director of the Pitt in Greece and Pitt in Cyprus programs at the University of Pittsburgh.  He spent three years teaching in both private and public-sector higher education in Greece before returning to the United States in 2007.