WORLD DEVELOPMENT REPORT 2014

Risk and Opportunity

Managing Risk for Development

The World Bank has finally declared that the international community must focus on risk management./world development report

 Five key insights on the process of risk management :

1. Taking on risks is necessary to pursue opportunities

for development. The risk of inaction may well be the

worst option of all.

2. To confront risk successfully, it is essential to shift from

unplanned and ad hoc responses when crises occur to

proactive, systematic, and integrated risk management.

3. Identifying risks is not enough: the trade-offs and

obstacles to risk management must also be identified,

prioritized, and addressed through private and public

action.

4. For risks beyond the means of individuals to handle

alone, risk management requires shared action and

responsibility at different levels of society, from the

household to the international community.

5. Governments have a critical role in managing systemic

risks, providing an enabling environment for shared

action and responsibility, and channeling direct support

to vulnerable people.

 Likewise, better insurance and protection

can make coping less difficult and costly.

The benefits of preparing for risk outweigh the

costs

Crises and losses from mismanaged risks are costly, but so are

the measures required to better prepare for risks. So, does preparation pay off? Evidence suggests that the benefits can outweigh the costs—sometimes overwhelmingly so. For example,

mineral supplements designed to reduce malnutrition and related

health risks may yield benefits at least 15 times greater

than the costs.

Risk management also requires evaluating different risks and

the relative need of preparing for each. Given limited resources,

setting priorities and making choices is both unavoidable and

necessary. For instance, a small country prone to torrential rains

and also exposed to international financial shocks must decide

how much to spend on flood prevention and how much to save

to cushion against financial volatility.

Not only trade-offs must be considered, but also synergies.

“Win-win” situations can both diminish risk (the possibility

of loss) and increase potential benefits. Prime examples

are investments in nutrition and preventive health; improvements

in the business environment; and disciplined monetary

and fiscal policies. Such synergies are widespread and

should be emphasized—which is not to say they are costless

or easy to implement.

People and societies struggle to manage risk

If risk management can have positive impacts and is cost effective,

then why aren’t people and societies better at manag-

ing risk? The specific answer varies from case to case, but is

always related to the obstacles and constraints facing individuals

and societies, including lack of resources and information,

cognitive and behavioral failures, missing markets and public

goods, and social and economic externalities

 The interlinked components of risk management

Knowledge

To understand shocks,internal and external conditions, and

potential outcomes, thus reducing uncertainty.

Coping

To recover from losses and make the most of benefits

Insurance

To transfer resources across people and over

time, from good to bad states of nature

Protection

To reduce the probability and size of losses and increase those of benefits

Preparation Coping.

This realization leads to an important message. Identifying risks is not enough: the obstacles to risk management must also be identified, prioritized, and addressed through private and public action.

An holistic approach to managing risk

Individuals’ own efforts are essential for managing risk, but

their success will be limited without a supportive environment. Most individuals are inherently ill-equipped to confront

large shocks (such as the head of a household falling ill),

systemic shocks (such as a natural hazard or a financial crisis),

or multiple shocks (such as a drought followed by a food

price shock). In such cases, risk management requires shared

action and responsibility at different levels of society, from the

household to the international community. These social and

economic systems can support people’s risk management in

different yet complementary ways.

• The household is the primary instance of support, pooling

resources, protecting its members—especially the vulnerable—

and allowing them to invest in their future.

• Communities provide informal networks of insurance and

protection, helping people deal with idiosyncratic risks and

pooling resources to confront common risks.

• Enterprises can help absorb shocks and exploit the opportunity

side of risk, contributing to more stable employment,

growing income, and greater innovation and productivity.

• The financial system can offer useful risk management tools

such as savings, insurance, and credit, while managing its

own risks responsibly.

• The state has the scale to manage systemic risks at the national

and regional levels, to provide an enabling environment

for the other systems to function, and to provide direct

support to vulnerable people. These roles can be achieved

through social protection (insurance and assistance), public

goods (national defense, infrastructure, law and order), and

public policy (regulation, macroeconomic management).

• The international community can offer expertise, facilitate

policy coordination, and pool resources when risks exceed national

capacity or cross national and generational boundaries.

These systems interact, often complementing and sometimes

substituting for each other’s risk management functions.

For instance, enterprises rely on macroeconomic stability, public

services, and financial products to remain dynamic and continue

to provide income and employment to people. The financial

system can provide tools of insurance, saving, and credit

only if enough households and enterprises are able to partici

pate in the system and the economy features a certain degree of

stability and predictability. Markets, in general, can provide risk

management tools and resources at a growing scale only if the

necessary public services, such as the rule of law and a sound

regulatory framework, are in place.

Mainstreaming risk management into

development programs

The World Development Report 2014 offers dozens of specific

policy recommendations to improve risk management at various

levels of society. Its overarching advice, however, is

that these recommendations should be implemented in a proactive,

systematic, and integrated way to optimize their effectiveness.

For this purpose, it advocates that countries establish

a national risk board, which can help mainstream risk management

into the development agenda. This could be a new

agency or come from reform of existing bodies: what is most

important is a change in approach—one that moves toward a

coordinated and systematic assessment of risks at the national

and even international levels. Implementing this recommendation

may require a substantial change in the way governments

develop and implement their general plans, considering

change and uncertainty as fundamental characteristics of

modern economies.

Five principles of public action for better risk

management

Analysis throughout the WDR 2014 suggests that the public

action essential to supporting people’s risk management can

usefully be guided by some key principles.

 A few facts about risk and risk management from around the world

Despite some progress, many people remain vulnerable:

• More than 20 percent of people in developing countries live on less

than $1.25 a day, and nearly 75 percent on less than $4.00.

• 70 percent of people in developing countries do not use formal

financial tools.

• Over 70 percent of the labor force in South Asia and Sub-Saharan

Africa are self-employed and do not benefit from risk-sharing

within firms.

• People living in fragile and conflict-affected countries made up 15 percent of the world population, and one-third of people living in extreme poverty in 2010.

When risk is mismanaged, crises ensue:

• More people die from drought in Africa than from any other natural hazard, whereas virtually no one has died from drought in

developed countries in the past four decades.

• The mortality rate from illness and injury for children under age

five is almost 20 times higher in low-income countries than in high income countries.

• 147 banking crises struck 116 countries from 1970 to 2011: the average

cumulative loss of output during the first three years of crises

in emerging markets was 26 percent.

• During 2011–12, the famine in Somalia claimed 258,000 lives,

despite 11 months of repeated warnings; opportunities for early

intervention were missed by the donor community to avoid political and security risks.

Effective risk management can improve resilience to negative shocks and the ability to take advantage of positive shocks:

• Between 1990 and 2010, the share of people in developing countries with access to improved sanitation increased from 36 to 56 percent, while the immunization rate for measles doubled. Infant and maternal mortality fell by more than 40 percent.

• Farmers in Ghana and India—among other countries—who have

rainfall insurance have increased their investments in fertilizer,

seeds, and other inputs.

• Whereas a decade ago most developing countries suffered from

a pro-cyclical bias, now more than one-third of them conduct

recession-reducing countercyclical macroeconomic policies.

 Do not generate uncertainty or unnecessary risks

The state should strive to lessen uncertainty and reduce risks—

or, at minimum, not worsen them. Why or how would a government do that? First, it may perpetuate social norms that

discriminate against certain groups, such as women or ethnic

groups, making them more vulnerable. Second, it may favor

the group that supports it politically against the legitimate interests

of others. Third, a government that is internally fragmented

and disorganized may adopt ambivalent policies or

implement policies ineffectively. Finally, the government may

be guided by ideology, wishful thinking, or simple desperation

when confronting difficult problems, instead of relying on

measures based on good evidence and analysis.

 Provide the right incentives for people and institutions

to do their own planning and preparation, while avoiding

imposing risks or losses on others

The right incentives are critical to avoid cases in which some

benefit at the expense of others. Bailouts should be avoided,

but if they occur, they should be designed to prevent providing

the wrong incentives. Turkey’s experience after the 2000–01

banking crisis (and especially the unwavering stance of the

country’s bank regulatory agencies) offers a prime example.

Social protection can be criticized for not encouraging selfreliance

and posing an unsustainable burden on the state.

These problems can be avoided by a design that takes people’s

incentives directly into account. Well-designed safety nets—

such as conditional cash transfers or workfare programs in

Bangladesh, Brazil, India, and Mexico—have promoted better

household practices in education, health, and entrepreneurship,

while remaining fiscally sustainable. Two changes in

people’s mindset related to individual and social responsibility

are critical for effective risk management: moving from dependency to self-reliance, and from isolation to cooperation.

Providing the right incentives can contribute in both regards.

 Keep a long-run perspective for risk management

by building institutional mechanisms that transcend

political cycles

Institutional mechanisms are needed that induce the state

to keep a long-run perspective that outlasts volatile shifts in

public opinion or political alliances. For instance, the state’s

provision of health services must be funded on a continuous

and sustainable basis to succeed. Thailand and Turkey offer

successful examples with their recent shift to universal health

insurance programs. The financial system must strike the

right balance between inclusion and stability. In Malaysia, the

central bank, the finance ministry, and the private sector are

preparing a long-run strategy for the financial sector. Countercyclical monetary and fiscal policies also require a long-run perspective. To this effect, Chile, Colombia, and Norway have

been targeting a long-run budget balance.

 Promote flexibility within a clear and predictable

institutional framework

Flexibility in adjusting to new circumstances is essential to

promoting resilience and seizing opportunities.

 Selected policy recommendations from the WDR 2014

For the household:

• Public health insurance, run in partnership with the private sector,

with emphasis on preventive care and treatment of contagious

diseases and accidents

• Public education, run in partnership with the private sector, with

focus on flexible skills, adaptable to changing labor markets

• Targeted safety nets for the poor, for instance, conditional cash

transfers with payments directly to women

• Enforceable laws against domestic abuse and gender discrimination

For the community:

• Public infrastructure for the mitigation of disaster risks, built in consultation with surrounding communities

• Transportation and communication infrastructure, especially to

integrate and consolidate isolated communities

• Police protection against common and organized crime, especially targeted to communities under threat

• Enforceable laws against racial or ethnic discrimination

For the enterprise sector:

• Secure and respected private property rights

• Streamlined and predictable regulations for taxation, labor markets, and entry and exit of firms

• Enforceable regulations for workplace safety, consumer protection, and environmental preservation

• Consider the possibility of delinking social insurance (that is, health insurance and old-age pension) from work status

For the financial system:

• Sound financial infrastructure (payment systems, credit information) to facilitate financial inclusion and depth

• Enforceable regulations that foster both consumer protection and

competition among financial institutions

• Macroprudential regulation, for the financial system as a whole, to lessen financial crises and avoid bailouts

• A national financial strategy that addresses trade-offs between

financial inclusion, depth, and stability

For the macroeconomy:

• Transparent and credible monetary policy, oriented to price stability and conducted by an autonomous central bank

• For the majority of countries, a flexible exchange rate regime, in a context of transparent and credible monetary policy

• Countercyclical and sustainable fiscal policy, aided by an independent fiscal council

• Provision for contingent liabilities, such as natural disasters, financial crises, and pensions of an aging population

For the international community:

• Engagement in bilateral, regional, and global agreements to share

risks across countries, enhance national capacity, and confront

common risks, favoring proactive and coordinated interventions

• For elusive global risks, such as climate change, formation of a

“coalition of the willing” with like-minded country governments,

creating incentives for other countries to join in.

economic trends, and innovation by enterprises in the face of

technological and demand shocks. A challenge for the state is

to promote flexibility while preserving a sensible, transparent,

and predictable institutional structure. For enterprises,

the Danish model of “flexicurity” offers such balance, combining

labor market flexibility alongside a strong social safety

net and reemployment policies. For the macroeconomy, inflation

targeting regimes with floating exchange rates offer

a good model of flexible yet institutionally sound monetary

policy.

 Protect the vulnerable, while encouraging self-reliance

and preserving fiscal sustainability

For households that remain highly vulnerable to shocks, the

state can provide safety nets. These are possible even in lowincome countries, provided the support is clearly targeted to

vulnerable populations and is designed to encourage work effort.

Ethiopia’s Productive Safety Net System protects millions

of households from food insecurity while investing in community

assets. The international community can also provide

resources and expertise to vulnerable populations. Although

much criticized, foreign aid has been successful when provided

in coordination with accountable local institutions, as

occurred in Indonesia after the 2004 tsunami. Effective risk

management, by promoting sustained growth, can lessen vulnerability and help eliminate extreme poverty.

SKU 32799

THE NEED FOR BANKING REFORM 2014

 BANKING IS A CON?

 MONEY IS A FANTASY?
BANKERS AS CRIMINALS.?

The collapse of the global banking system 2007/2008 revealed  that the regular crises of the financial services industries are fundamentally due to dubious practices by banks. I have been puzzling about these practices and their implications for bankers and fund managers, and the needs for banking reform.The biggest puzzle is the cash delusion. I have found it very difficult to come to terms with the facts that we talk 'cash', but deal in numbers. The Global economy has expanded in the face of digital money, and that we no longer depend upon 'hard cash'. Indeed, we could not possibly deal in  quadrillions $ or GBP as cash. We can only use 'digital entries' that are created out of nothing!

Investment bankers and fund managers have been concerned for a long time to manipulate other people’s money to maximize profits, and minimise risk. Finance companies like JPMorgan, Goldman Sachs, Lehmans , MorganStanley, Barclays, RBS, DeutscheBank, worked out schemes that enabled them to increase the range of their clients, and invest their monies for the best returns, and highest fees and bonuses. The development of de-regulated markets following President Reagan in the USA, and Prime Minister Thatcher in the UK, led not only to more innovations in the financial services industries, but more dubious practices; and bankruptcies and the collapse of the global financial system! It is not surprising that from 2007/8, and the global banking crisis, bankers have been called ‘banksters’: bankers as criminals!

This is not new. It is easy to forget that in the past, banking was a crime. In particular, lending and charging interest was forbidden by Christians. It was known as usury, and was classified as a sin. Of course, this did not mean that money exchange and loans did not happen. It did mean that only specific groups, such as Jews, were permitted to be bankers and described as usurers. Jews as usurers led them into social and political disrepute, best represented by Shakespeare’s Shylock., in the Merchant of Venice.

               Today, we have come to think of bankers as ‘crooks’, and fraudsters’ in the light of  millions of people across the world  losing their savings, or defaulting on their loans, and banks losing money, and investment bankers being busy paying themselves million dollar fees and bonuses. In fact as the poor have got poorer, the rich are getting richer.

Bankers  are part of the ‘loan cycle’.   One of the first steps that bankers take is to create new money in the form of loans. An interesting trick is that modern banksters are allowed to create money out of nothing.  They do not depend upon the availability of  customers savings or deposits.  How do they do that? simply by writing numbers in a ledger and  charging you interest for the transaction and paying themselves a bonus for the business.  For example, you  pay into the bank $1000 and they can lend you 54,000 or 70,000 at 8% compound interest. Banks are allowed to leverage the money they create 54 to 1 or 70 to 1, or even 100 to 1, [if they are unregulated] on the assumption that the loans and interest will be recovered within a specified time limit, generating profit.  The more loans that are allocated the more profits are generated and the more interest paid. There is a world-wide market for loans.  The loans are new money. They do not consist of coins and notes. They are ‘digital’. This is part of the overall ‘scam’ that is ‘banking’. It is highly likely that disreputable bankers simply create numbers to trade. Bankers talk cash, but deal in numbers. They do have to make sure that the statements of account balance in the day book. But some do not bother.  Traders in investment banks make and transfer and exchange money as number entries on statements of account. They bet against each other in various markets: stocks, shares, bonds, currencies, commodities, derivatives, credit default swaps; buying and selling so as to make profits.

Loans are bound by contracts but not by cash.  ‘Banksters’ protect their cash monies by creating new money. It is only when new money is greater than earned income, or traded products and exceed GDP, that problems arise. If loan money is $20 trillion and ‘products’ only generate $2 trillion, the loan cycle survives only when there are no default events. It is estimated that the current markets create more than $700 trillion. New money/digital money is far greater than cash: at a ratio of 97 to 3.

Fund managers are using ‘saver’s money’ to invest in government projects and corporation stocks and shares They focus on maintaining and increasing the funds. And of course the savers have similar demands: often depending on the funds for their pensions.

Fund managers want to encourage people to join their funds, and increase the capital and generate interest. These demands lead fund managers into ‘evil’, into fraud! Into dubious practices, when unregulated.

The classic fraud is to operate a ‘Ponzi scheme,’ whereby the capital invested by new members is used to meet the demands for  payments by other members. Ponzi schemes promise high returns with no risk. But what is kept secret is that the fund managers do not invest any of the deposits.   But as soon as the deposits decline, and the demands for payments increase, the scheme will collapse! and holders will lose their money. Of course the scheme could set up a Credit Default Swap and promise to cover losses on accounts.

Legal Pension Fund managers, who control many millions of savings deposits, are desperate to find investments that are safe, and capable of growth. It is reported that Fund Managers respond positively to ‘hedge funds’ which are limited partnerships for ‘millionaire’ investors. Hedging these funds is the attempt to reduce risk, and maximize returns by carefully managing the fund. Indeed, they need the hedge fund manager to manage meticulously with insight to anticipate variations, and protect the value of the investments.

When the financial markets are volatile with all items going up and down in value, it is important for fund managers to be able to place their monies into other items, such as  futures, swaps, options such as oil, currencies, wheat, rice. They will set up derivative contracts to buy or sell at a given time, for a given price and thus hedge their bets, and ensure the value of the funds. In the past, it was common for derivative contracts to be made against the price of rice. Implicit in the dealings is that the items would go up in value. And the skill is in identifying when the prices go up, and being able to manage the trading, and the prices. If they went down, the investment funds would lose value. The manager would have gambled and lost!

Credit Default swaps came into operation because of these risks. CDS’ are a contract to compensate you in case of a credit default.  In view of the millions of pounds/$ in circulation looking for appropriate investments, fund managers would make financial contracts for compensation, in case of default, arranging for swaps or options to exchange monies for commodities/items. Money managers can be involved in buying or selling stocks and bonds; and currencies;or commodities.

It is worth noting that in every case the deal would be to safeguard the value of funds, not to promote the success of trading companies or production companies. The capitalist investment is designed to increase the funds.

Most deals in ‘derivatives’ would take place over the counter. They would be beyond the regulation of an exchange. The trade was previously valued at $700 trillion, and now in 2014, at $1.2 quadrillion. The trade is unregulated, and subject to illegal manipulation.

Credit default swaps have been described as ‘pretend insurance’. The contracts may have been drawn up carefully so that the ‘swaps’ will be made, and the investments retrieved in the case of a default. But  Credit Default Swaps have been also been accused by Jeff Neilson in Canada as a $600 trillion  ‘paper Ponzi scheme’- that is, a fraud designed by Wall Street syndicates that have no intention of honoring the contracts. The syndicates receive payments, initiate default, and refuse to pay compensation.

Banks, Building Societies, [in the UK] or Savings and Loans companies [in the US] act as mortgage brokers. Over the last 20 years in the USA, in particular, mortgages were increasingly given to poor families who had little hope of repaying the full mortgage, and a high likelihood of defaulting on their loans. They were called sub-prime mortgages. This was possible as a result of new schemes of insurance supported by government agencies. The mortgages were credit default options whereby ‘default’ was covered by insurance and the sale price of the property at auction. In effect the mortgage brokers received payments of interest from the clients, and insurance payments from the Insurers, and auction value of property. The Banks created new money as loans on many millions of property. However, once the mortgage holders started to default, and payments stopped, the Insurance groups, such as AIG, were the first to suffer. They were unable to keep up with the insurance payouts, and soon became bankrupt. In the UK, customers demanded cash from Building Societies, causing a ‘run on the bank’. In this way the financial crisis unfolded in the USA and the UK, and later in the EU. It became clear that many of the principal global Banks had been actively involved in the ‘sub-prime’ scheme: buying and selling mortgage options across the world; putting loans together as bonds and selling them as investments. As soon as the sub-prime schemes failed, and the poor families defaulted on their loans, many banks became bankrupt and appealed for help from governments. The failure of the financial sector was the direct result of their dubious practices in unregulated markets.

In the past money as ‘cash’ was tangible, solid, handled, moved, carried, transferred, exchanged, created and distributed:  created by Central Banks from copper, silver, gold, and paper, or plastic, and used by the citizens, governments and bankers for payments of services and products.

Many citizens are convinced that all ‘money is cash’ and that all dealings are in cash. They go to the bank, take cash out to pay for items or services or they receive cash in payment and take the cash to the bank. All dealings are in cash!  Citizens, including myself, experience a ‘cash delusion’.

Irrespective of what we may think, financiers in the UK inform us that only 3% of money dealings are ‘cash’. 97% of money dealings are ‘digital.’ Global banking is ‘cashless’ internet banking. All transactions are digital and involve altering the number entries in the statements of accounts. Transactions and exchanges can now be done in a few seconds. Money is transferred, exchanged in millions, simply by clicking a keyboard and altering the numbers.

In a computer system, ‘digital numbers’ represent cash/gold/silver/ bank notes, cheques and bonds. Many people now pay for things and services by credit cards. The transactions are digital and cashless.

Nevertheless, it is assumed that cash reserves are available to cover the transactions. It is assumed that the digital transactions are based on the ‘cash’ in your bank account, and the ‘cash’ that will be transferred to your account in the future. These assumptions ignore the fact that there is no cash in bank accounts. The only cash in the bank is the banknotes in the ATM, printed and delivered by the Central Bank.

It is true that many  countries  do have gold reserves, and their wealth is judged in terms of the balances  between their reserves and their spending. 

The USA has the largest gold reserves of any country at $361.8 billion; followed by the IMF $125.7billion,. Germany $34.9 billion; Japan $34.6 billion; the Netherlands $27.2 billion; the UK $13.8 billion. Gold reserves are normally used to under write the cash demands of banks. Gold is used as collateral for the monies created by banks. Gold is the basis of digital money. But these reserves are inadequate for the digital money demands of the global money funds. For example, the total gold reserves do not cover the $1.2 quadrillion traded in derivatives markets.  

97% of money in circulation is ‘digital’. It is ‘bank created money’.

It is used to buy houses/ equipment/vehicles/transport/ to pay wages,etc.. This  money is created  as a loan, out of nothing. For each loan that the banks arrange, digital money is created. The ‘numbers’ are treated as if they were ‘cash’. They are talked about as if they were cash. Digital numbers are regarded as ‘cash’ and to have the value of ‘gold’, simply because we think them to be!  The numbers in our bank accounts are cash simply because we think they are. Given that we never see the cash, nor the gold, but only the numbers, perhaps it doesn’t matter that there is no hard cash. The digital money is easy to handle, easy to manipulate, easy to calculate, easy to transfer, easy to protect, easily available on computer systems. If most of the transactions are ‘digital’, and the entries are simply numbers, banking becomes a game of arithmetic! A banking casino!

The essential aspect of all these bank transactions is that the numbers ‘balance’ in the ‘day book’. There has to be balance between debits and credits; loans and cash; debts and income.

The Central Banks and the governments have to judge as to whether the finances of a country are in balance. They must regulate the creation of money. However, when it is necessary for banks to possess ‘cash’, they simply arrange with the authorized government, and Central Banks, to make and print the coins and notes they need. In effect, all countries are in debt. They do not have enough money to cover their expenses.

 In 2013, the USA borrowed up to $17 trillion; in 2012, Japan borrowed  $11.7trillion;  the 27 countries of the EU, $16.4 trillion, with Germany, France, Italy and the UK having the biggest debts. China, with one of the largest GDP, has international debts of $2.5 trillion.

At this point we have to confront the fact that the sovereign debt of the USA and Japan, and other countries, is greatly in excess of their gold reserves. They are not able to cover their debts. Are they all ‘bankrupt’?

In contrast, out of a world population of 7.2 billion people, there are 12 million who are valued at $46.2 trillion.  There are 1,426 billionaires who have an estimated  wealth of $5.4 trillion.

In North America, 3.73 million people have $12.7 trillion.  

In Asia, there are 3.68 million with $12 trillion.

In Europe, 3.4 million individuals have $10.9 trillion.

It is clear that some individuals have access to larger sums of money than many countries. But we have to confront the fact that these riches are not cash money. They are

digital money created as loans by banks, and entered on bank accounts. We conclude that banking systems are digital, cashless, internet banking in which numbers represent cash. And few people have ready access to cash. We work in systems in which there is little cash. The total gross wealth of $54 trillion is on paper in numbers. This digital money is not covered by cash. The total gold reserves are $1.02 trillion. We are operating a capitalist system in which digital money is greatly in excess of cash money: and in which all money is created by banks, regulated by governments.  The money is ‘leveraged’ 54 to 1: that is, if the bank has one pound it can create 54.

What we think of as money is created out of nothing by banks. What we think of as cash is created by Central Banks with the authority of governments. Banks create money as loans out of nothing, and make paper profits out of the interest charged  for the loans. The capitalist system is based on ‘leveraged money’, which is created by banks, and is best regarded as ‘fantasy money’  and is best described as ‘digital money’.

It is difficult to be clear  about what the financial services think they are doing. Why was Greece penalized so severely by the EU and the IMF and the World Bank for having a sovereign debt far less than many other countries in Europe? The penalties seemed to deny the fact that  countries and corporations depend upon loans. Their development and growth are a product of debt. If they had to have money as cash, growth would be a slow process.  The austerity imposed by the Troika made the crises in Greece worse, restricting all access to hard cash and loan cash; and condemning the Greeks as spendthrifts!

THE FUTURE REVOLUTION IS DEMOCRATIC.

War and Empire.

Peace and Democracy.

[Roar.mag. has been looking at the nature of State violence, security, and democracy. I want to place this debate in an historical context]

The United Nations tells us that there are 196 countries in the world, all of whom are eligible to be members of the Organisation.

 These countries of the world are not natural entities, occupied and organized by their native communities into ‘states’. Some countries are monarchies, ruled by royal families; many are governed by a wealthy elite – plutocracy; or at the will of  individuals, autocracy/ dictatorship;  the rules of a religious sect – theocracy. Few countries operate as democracies, governed by the votes of all citizens, in the interests of all the citizens.

Empires in time and space.

 Over the last 3000 + years the lands of Europe, Arabia, the Americas, Africa, Asia have all been dominated at one time or another by military/religious/ trading Empires; and  sometimes occupied by vast and violent armies whose leaders and kings were determined to colonise, enslave,  and to exploit the resources of their lands.

For example, Julius Caeser [50BC] led the Romans from Italy to Babylon, to Britain; to Spain, to France, Germany, Egypt, Arabia to establish the Roman Empire, later to become the Holy Roman Empire.  The Norsemen [1060AD] and the Vikings, spread from the Baltic to Canada, to Britain, Ireland, France, Germany, Italy, Sicily and established the Norman Empire. The Portugese, the Spanish, and the British [from 1415 to the present day] used their maritime powers, including pirates, privateers/trading companies, to conquer the world for trade, setting up  companies, colonies and enslaving the natives.

 The British Empire became the largest in the world.  Assyrians [1000BC], attacked  Persia, Iraq, Syria, Saudi, Jordan, Turkey, Egypt. The Byzantine Empire [550AD], centred on Greece, controlled the Mediterranean Basin. The Ottoman Empire [1300AD to 1914] extended its dominance from Constantinople in Turkey, to Russia, Greece, the Balkans, Austria, Spain, France, Egypt, the whole of North Africa, Caucasus, Jordan, Arabia. The French Empire [1800] during the time of  Napoleon Bonaparte controlled Europe.  The Mongol Empire [1200AD] under the rule of Ghengis Khan, and his family,  spread from Mongolia, to China, Siberia, Ukraine, Poland, Austria, Russia, Korea, Tibet, Afghanistan,Vietnam to become the largest land Empire in history.

Along with all the other empires that have existed over time and territory, there are very few lands and peoples that have not been occupied, attacked, colonized and enslaved by Imperial armies. At the points where one empire encroached on another, there would be constant and horrific violence.

The centres of violence today were the centres of  imperial invasion in the past. For example, recent reports describe  the struggles of Egypt, Tunisia and Yemen as well as Syria to gain independence and democracy as if they had been taken over recently.  Such reports pay little attention to the fact that they have been invaded and occupied for a very long time by many different  attackers, from 1000BC to 2000AD.

 Imperial conquest was associated with the religious wars between the Christians [Catholics/Protestants/Orthodox] and Muslims [Shiite/Sunni], Jews and Buddhists, Hindus and Sikhs. Jordan, and the city of Jerusalem, [the so called Holy Land] was the site of the Crusades between the Christians of the Holy Roman Empire and the Muslims in the Middle Ages. For example,  Richard the Lionheart  became well known for his crusades against Saladin [1187AD].

During the times of ‘empire’, and Holy Wars, democracy was not relevant. In many cases the Empires were totalitarian or authoritarian. The ruling powers were determined to impose their will upon the peoples of their empire. In some cases in history, for example, during the Roman Empire and Norman Empire and Ottoman Empire,  this meant chopping off the feet and hands, noses and ears, heads, of any opponent or terrorist, and crucifying anyone who protested and challenged the authority of the Emperors: To do so was to declare opposition to their ‘Gods’. Throughout history, Empires have been set up and maintained by military leaders, determined to enforce the supremacy of the rulers. In such states, the citizens were suspect, deprived,  lacking any rights; destituent, destitute.  For a long time, the forces of state were directed to maintain the power of dictatorship. These states have always been plutocracies, ruled by a powerful, ruthless, wealthy elite. These states have been about ‘control’. It would be normal for the governments  to suppress the citizens,  to prevent troubles amongst hostile communities, and manage all outbreaks of protest.

As we have seen, ‘Empires’ have existed over at least 3000years. It is worth noting that the demand and the  search for ‘empire’ continues. In 1884, Leopold of Belgium, and Bismarck of Germany set up the notorious Berlin Conference, intent on the partition of Africa on behalf of the Germans and the Belgians; the Portugese, the Spanish, French, British, and Dutch. The allocation of territories was done by drawing lines on a map, without any regard for the location of native communities, but a total regard for resources and riches.

From 1914 to the present day, Austria, Hungary, Serbia, France, Turkey, Greece, Spain, Italy, Britain, China and Japan pursued conflicts in order to confirm their claims to ‘empire’; and the Germans, and later the USA, waged wars to establish their claims to ‘empires’. The Germans failed in defeat, while the Americans established their hegemony across the world with thousands of military bases, and unequalled economic power.

What kind of state do we live in now?  It is without doubt that during these ‘Empire days’ very few states operated as ‘democracies’: And even those that claimed to be should be described as plutocracies.  

The  recent  ‘Occupy’  movements in the USA and the EU,  and ‘new democracy’ protests in North Africa and Arabia have led to renewed debates about ‘democracy’ and ‘state power’.

Those territories that have been subjugated by Imperial forces over time have all  been controlled by wealthy military elites, who have expressed full support for the Emperors and the Empire. In North Africa, Mauritania, Morocco, Tunisia, Algeria, Libya, Egypt, Sudan  have all been subjects of Imperial rule: whether  by Assyria/Roman Empire/Byzantine Empire/British Empire/ Ottoman Empire over 2000 years, and they will not know what it is to be ‘independent’, nor to be ‘democratic’. It was clear that President Morsi of Egypt saw his election as giving him absolute power.  In future, for these countries, it will be essential for them to learn how to rule themselves in peace and how to organize a democracy in which the interests of the majority, and the minority, are served in peace?  and has nothing to do with conflict or war. Democracy depends upon voting, negotiating, discussion, compromise in peace.

Even in those countries that are considered to be ‘modern’, independent, industrial, innovative, with electronic systems of government and finance, it is difficult to identify ‘democracies’.

The rule by the 1%

What has become clear over the last ten years is that 80% of the wealth of the globe [GDP] is controlled and managed by 0.01% of the global population.  $45 trillion is the property of 12 million people. It is declared that 7.2 billion people across the globe [plus or minus 12 million] have access to $11 trillion. This majority is poor.

 So whatever the history of many countries, they are still ruled by a wealthy minority elite: the 1%.

One of the implications of ‘Empire’, whether the rulers or the ruled, is that the majority are subdued, controlled, governed, managed by a wealthy minority elite.

Even in 2014, we have to be careful as to how we define, develop, practice ‘democracy’. It is possible to argue that there are no ‘democracies’. There are many plutocracies, and autocracies, and monarchies, and some theocracies: all of which identify the minority elite.

What is more, if we accept that wealth is power, it follows that power is exercised by the wealthy minority who own most of the riches. In such political situations, it is impossible for the poor majority to have absolute power. As has been clear in Syria, it is possible for the wealthy ruling minority of the Alawites, led by the Assads, to organize  military forces and weapons so as to subdue and defeat all other communities. In Egypt the poor majority Muslim Brotherhood has been unable to control the minority military elite of al-Sisi.

These examples indicate that where the distribution of wealth is located, the wealthy minority elite is able to establish permanent positions of power.

The examples further illustrate that the allocation of territory and the identification of a State, lead to the exercise of political power by one  group over others in the form of a plutocracy  or a  theocracy or autocracy. In these cases, the formation of a State government has little to do with democracy; and  is often the expression of the assertion of  dominance  by the ruling group. The development of the State becomes the establishment of rules and regulations, and the organization of procedures, systems, institutions to secure the dominance of the ruling group.

In the past, the State is a system of control, designed to maintain the power of the ruling minority. The government is expected to take all action to prevent troubles, and to manage the power of the plutocracy. In these terms ‘the state’ exists to protect the interests of the ruling elite, and to manage the behaviour of the ‘ruled majority’.

We are still embroiled by the systems of ‘Empire’: the political, military, financial, religious elites.

In the future, we all have to learn how to establish, organize, operate a democracy in the interests of all citizens, and break the ties with the days of Empire! The ‘revolution’ must be ‘democratic’.

MORE IS LESS

Trends in global carbon emissions

 Having been distracted by the issues of democracy,  of conflict, and community development, I want to return to the central crisis of Global warming and Climate Change.

If we accept that human intervention is the cause of climate change, then we must recognize that human behaviour has to change. The increase in CO2 and methane emissions is the direct result of human enterprises, in the form of generators, furnaces, engine combustion.

The EC Joint Research Centre have recently presented a report in collaboration with the Netherlands Environmental Assessment Agency looking at the trends in Global CO2 Emissions.[November 2013]

The report makes it clear how difficult it is to identify such emissions and how to present findings that tell governments and corporations what is going on in terms of the pollution of the atmosphere, and creation of climate change and global warming. The researches indicate that while CO2 emissions are at their highest level, there is evidence that the levels are lower in the ‘developed world’; [that more is less.]

The trends are based on measurements taken in 2012. The actual global emissions were 34.5 billion tonnes, which was an increase of 1.4% over 2011, but was significantly less than the annual increase of 2.9% since 2000. [more is less].

The report noted that there was a global shift to more renewable energy, and increased energy saving along with less intensive fossil-fuel activities: oil gas, coal.

The report did not focus only on global trends, it also told us about regional developments. CO2 emissions increased in China [6.3%], India [7%], and Japan [6%], and decreased in the USA [4%], the EU [1.6%], Russia[1%].

The increases in carbon emissions in China for 2012 did represent a decrease compared to the 10% annual growth since 2000. This decrease was the result of the reductions in the generation of electricity from coal, and increases in the use of  hydro-power.

The decrease in carbon emissions in the USA is the result of  the use of more gas [shale gas]. The decrease is significant, given that  the USA  has the highest emissions levels in the world!

The decrease of emissions in the 27 countries of the EU are the direct result of  the economic recession and the reduction in the consumption of  oil and gas.

The report concluded that while there was a global shift from the use of  coal to gas, to bio-mass, and the development of carbon capture systems, there was a decrease of nuclear power in the face of the Fukushima disaster.

It was noteworthy that  renewable energy from hydropower, solar panels, wind mills, and bio fuels was increasing, at last !

Will there be continuous decreases in CO2 emissions over the next decade?

An important step is for the increasing use of gas: shale gas , LNG.

High prices of coal and gas will effect the fuel mix of public utilities.

A prolonged recession in the EU will reduce the use of fossil fuels.

A change to a service based economy in China will reduce the production of electricity by coal.

Whatever is happening to the levels of carbon emissions, the particles of carbon dioxide  continue to rise. In 1990 there were 355particles of CO2 per million particles . In May 2013 this had increased to 400 ppm.

. Ted Trainer, of the University of New South Wales, in his analysis, published in The International Journal of INCLUSIVE DEMOCRACY, (October 2008) argued that once the concentration of carbon dioxide and other gases has reached 450 parts per million,  the greenhouse problem cannot be solved without large scale reductions in the volumes of economic production and consumption.

He asserts that the greenhouse problem cannot be solved within a society committed to free market capitalism and affluent living standards, maximum levels of economic output, and economic growth.  Ted Trainer, has been arguing for half a century that consumer societies are fundamentally unsustainable. He argues that the alarming greenhouse/ energy/ equity problems now threatening us cannot be solved within any capitalist/consumer society but require a vast and radical transition to very different economic, political and value systems and structures. A simpler way is the only way forward. We must drastically reduce economic production and consumption. Is it possible to stop climate change and environmental pollution if we stop the emissions of heat trapping gases, such as carbon dioxide and methane? A report by the National Oceanic and Atmospheric Administration, as presented in the Proceedings of the National Academy of Sciences, January 2009, proposes that it is too late and that it will not be possible to stop climate change and environmental pollution. Many people who worry about global warming hope that once emissions of heat-trapping gases decline, the problems they cause will quickly begin to abate. Now researchers are saying that such hope is ill founded, at least with regard to carbon dioxide. Because of the way carbon dioxide persists in the atmosphere and in the oceans, and the way the atmosphere and the oceans interact, patterns that are established at peak levels will produce problems like inexorable sea level rise and Dust-Bowl-like droughts for at least a thousand years. According to this view, the damage has already been done!

CRISIS OF DEMOCRACY

Nozomi Hayase raises a great number of issues about the crisis of democracy in an  article in ROARmag. October 11. I want to examine the implications of some of the issues, and place them in a wider context.

The development of ‘existentialism’ as a philosophy and psychology has given rise to the assertion of individualism, and the expression of selfishness, and personal desires, needs, and wants as paramount.

Nozomi Hayase argues that the agencies of governments and corporations, in association with the media, are involved in the manipulation of individuals and their desires, needs, emotions, drives, ambitions. As a result of these actions there has been an increasing assertion of individual autonomy through the egotistical self; the existential self: what she has called the ‘empty self’. The empty self is filled by the rewards and punishments, the propaganda and projections of the agencies of control, government, manufacture, production, news, magazines, television, video.

But at the same time, the expression of existentialism, and individualism has been countered by the growing awareness of the essentials of social interaction, and community action. I want to argue that community development is as important as individual autonomy!

In the future we need to liberate ourselves from the delusion and fantasy of autonomy and social independence by re-affirming our sense of community, interdependence, social interaction. We will have to discover who we are? and what  we want? Many communities are discovering what they have to do together to gain freedom of expression, and control over  governance .

The crisis of democracy today is that voters have come to realise that many of the people they have voted to be their representatives are serving their own interests and sacrificing the electorate to corrupt and illegal agendas. The emergence of the demands for ‘real democracy’ arise from the demands to be directly involved in their governance. For these demands to be met, it will be necessary for the establishment of active communities with the skills to enact the government of their locality, as well as their country. The skills necessary will include organizing meetings, agendas, discussion, negotiation, compromise, decision-making, planning and setting priorities. A ‘real democracy’ will involve the rejection of the central powers of the State, including civil servants and military forces. However, recent events in Egypt have shown how difficult this will be! 
President Obama and the USA are taken by Nozomi as examples of the totalitarian state pursuing dangerous, illegal, corrupt, and unconstitutional agendas. The murder of citizens in Syria since 2011 reveals that a military totalitarian government  can stifle any attempts at liberation by communities.

What is the nature of power in the USA? The recent embargo of the US government’s budget and the refusal by Congress to approve the  funding of any of the government’s plans brings into question the nature of the power of the President. If the President was a dictator, he would have ordered the military forces into the Congress to arrest all Representatives and Senators. Clearly the government is not totalitarian!  It can be easily blocked by the Congress. However one has to worry about the values of the Representatives and Senators.

State of the Union

The US government is one of the members of the G 8/20/G50 groups of trading partners. They have all been subjected to the consequences of the global banking fraud as led by Goldman Sachs, and JPMorgan as well as Lehmans and Royal Bank of Scotland along with a multitude of banks and hedge funds across the world. Why haven’t governments prosecuted ‘banksters’ for fraud? Whereas they have adopted ‘austerity’ strategies that in effect  punish their citizens!

The G20 and the UN Security Council and NATO have all taken global  actions to stop traitors and terrorists. The US is one of many countries, including UK, Germany, China, Russia, India, that are taking direct action to prevent terrorism.                                          

 We have to find out who are carrying out dangerous and illegal actions against their own citizens, or the citizens of other countries? Is it the elected representatives? Or the civil servants? Or the military officers? Or the security agents?

My impression from newspapers in the USA is that ‘fascism’ is alive and well in the USA. Despite the Civil Rights movement, Afro-American citizens are still discriminated against in employment and education. Native Americans are segregated into reserves and deprived of any equality of opportunity.  Migrants from Mexico and other parts of Central America are subject to human rights abuses. Many states in the USA  have passed anti-migrant laws, and place migrants in prison for minor offences. The abuse of civil liberties occurs across the US. The Governor of California recently repealed rules that prevented migrants from having driving licences, and being able to drive. Migrants in California can now drive cars, trucks, motorbikes on the public highways.

In the face of increasingly oppressive military regimes across the ‘developing world’, and the flight of refugees/migrants to the EU, the USA, the AU, Russia, the UK, Australia, Turkey, the ‘developed world’, we see a wave of  rigorous anti-migrant legislation, stopping them from seeking a better life in democratic regimes.

Finally, we may want to have a ‘free press’ whereby journalists should be able to investigate and reveal corruption and violence against citizens. But in the UK the Levenson Enquiry 2012/13 indicated that the rights of journalists to intrude into the private lives of families who have suffered tragedy and loss, such as the McCanns and the disappearance of their daughter; or individuals who are of minor interest to the public; must be carefully regulated. Evidence to the Enguiry revealed an extensive network of hacking, tapping, spying on families so as to generate enough information to create a story! In the UK, a free press has been brought into question by the behaviour of the journalists and their editors.

CLIMATE CHANGE

CLIMATE CHANGE.

OCEAN DEGRADATION.

OCTOBER 2013 REPORTS:

IPCC and IPSO

October saw the publication of two significant reports concerning climate change, the warming of the oceans, the release of  greenhouse gases, the emission of  pollutants. 

The first report was the 5^th. Assessment Report,  published by the IPCC [Intergovernmental Panel on Climate Change] . 

The second report was produced by IPSO, [the International Programme on the State of the Ocean].

Working Group 1 of the IPCC declared that there was clear evidence that the Earth climate system  is warming:

1. the oceans and the atmosphere have warmed;

2. amounts of snow and ice have decreased;

3. Sea level has risen;

4. greenhouse gases have increased;

5. heat waves have increased in Europe, Asia, Australia;

6. the troposphere has warmed since 1950 and become more disturbed by convection.

Their work revealed that ocean warming leads to increases in the energy stored in the climate system. The upper 75m of the oceans have risen in temperature, giving rise to greater evaporation, and increased salinity. Since 1971 the Greenland and Antarctic ice sheets have been losing mass. Glaciers have shrunk. Arctic sea ice, and Northern Hemisphere spring snow cover decreased. Permafrost will reduce.

Ocean warming has resulted in glacier mass loss, and ocean thermal expansion.  Sea level has risen every year since 1850. Working Group 1 suggests that ocean warming will continue during the 21^st Century and the heat will penetrate to deep ocean and effect the circulation, and initiate changes in the climate system.

The researches of the IPCC indicate that the atmospheric concentrations  of carbon dioxide, methane, and nitrous oxide have increased to levels not seen for 800,000 years. What is more, the increases since 1750 are due to human activity. The continued emission of greenhouse gases are the result of industrial processes by humans.

IPSO declared that ocean degradation is greater and faster than previously thought.

IPCC noted that the global ocean is absorbing much of the warming as well as unprecedented levels of carbon dioxide.

IPSO reported that there are decreasing levels of oxygen in the ocean as the result of climate change; nitrogen run-off; chemical pollution; rampant over fishing.

IPSO found that the ocean is subject to

7. De-oxygenation - the result of increases in coastal hypoxia with eutrophication; that is, lack of oxygen with too much organic matter such as sewage

8. Acidification - due to increasing levels of carbon dioxide and the lack of calcification resulting in the extinction of coral, and loss of bio-diversity;

9. Warming - leading to reduced seasonal ice zones; disappearance of sea ice; increased venting of methane from the Arctic seabed; increased anoxic and hypoxic events :too little oxygen associated with pollution; stratification of the ocean and temperature zones; oxygen depletion;

10. Over fishing undermines the survival of key species. World fish populations are unsustainably exploited.

IPSO identified actions that must be taken if ocean degradation is to be controlled.

11. If  temperature rise is to be controlled, global carbon dioxide emissions must be limited and reduced to 350 ppm at least;

12. Fishing must be managed so as to control the catch. Small scale fisheries are to be implemented;

13. the UN should implement structures for the governance of the high seas. For example, seas like the Baltic Sea should  be kept clear and clean, and not  left to become increasingly polluted, filling up with sewage!

The IPSO report has categorically placed the state of the Ocean as a key factor in planning for the conservation of the natural environment.[www.stateoftheocean.org].

Both reports have made it clear that while there are many factors in play in the climate system, human influence is paramount in generating green house gas emissions, and raising temperatures; as well as creating sewage pollution and depriving waters of oxygen and reducing biodiversity.

The researchers acknowledge that there are natural processes and cycles that contribute to changes in the climate system. But their effects are magnified by the consequences of  human activity across the globe. Any rises in temperature are increased by the emission of carbon dioxide. The degradation of the levels of oxygen in the oceans is exaggerated by the accumulation of sewage and bio-pollutants in river deltas, coastal zones, and inland waters.

The reports assert that the cycles of  rapid climate change are the result of human behaviour in the troposphere.

REPRESENTATIVE DEMOCRACY in Greece

REPRESENTATIVE  DEMOCRACY IN GREECE: FIT FOR PURPOSE?

THE RISE OF FASCISM

I am a European citizen, who came  to live in Greece in 2006.

I want to argue that the rise of   the Fascist movement  in Greece has been directly associated  with the bankruptcy of the Greek Government, the economic collapse of industry, and the imposition of  austerity.

During the time that I have lived in Greece, it has been in a state of humiliation: a ‘bankrupt’ appealing for bailouts to enable the Treasury to confront its debts, and to organize itself to become solvent. And yet at the same time rejecting the help offered as unnecessary interference! leading to civil disorder.

Its creditors, the  so-called Troika [the EU, the IMF, the World Bank] have insisted on the adoption of austerity measures and the severe reduction of spending, and costs.

As a result of spending cuts, many workers have lost their jobs.  Civil servants have not only lost their jobs, they have lost their privileges. Anyone who still has a job has to come to terms with lower wages and no pensions.      

During this time, the privileged elites [the rich and millionaires] have been able to freely move their monies from one investment centre to another so as to protect their wealth and to maximize their profits. They have been actively avoiding paying tax by placing their money in tax havens. They have been the direct targets of the Troika, who are determined to increase tax income for the Greek government and the EU.

During this time, these privileged elites have pursued  campaigns against the EU, the IMF, and the World Bank. They have been concerned to emphasise the viability of  Greek entrepreneurs, and the superiority of the Greek culure. Economic collapse has prompted political nationalism.

In a society in which the government has failed, and gone bankrupt, several times, and been subject to constant criticism and ridicule by the Germans, and French, Spanish, Italians, these campaigns have led to the emergence of Fascism against the Socialists, and  anti-German attitudes. The collapse of employment and the rise of unemployment within many Greek communities has given rise to anti-immigration politics and racist actions against any ‘foreigners’.

The development of fascism in Greece is directly linked to the imposition of austerity and the punishment of the bankrupts! It has been further emphasized by the necessity for the coalition ‘to do as they have been told’! if they want to be given the bailout loans.

In the last few days, the ruling coalition has moved against, and arrested the MPs of the new Fascist Party, Golden Dawn.

Their actions raise a number of issues concerning the nature of democracy in Greece.

If one is living in a society ruled according to a legal framework in which anyone and any group is free to stand for Parliament, and say what they want, and do what they wish, then it is to be expected, even acceptable, that Nazis/fascists/communists/racists/anti-equalitarian/ anti-homosexuals and any extreme group will be voted to Parliament. It would be normal for such groups as ‘Golden Dawn’, a nazi/fascist group to have representation.

But Greece is not that sort of Democracy. It is a constituent member of the European Community, the European Union.

The EU has set up a legal framework in which right-wing and left -wing groups are formally illegal, and any support for the Nazis, the purveyors of hatred and war, is prohibited. Expressions of Nazi ideas were prohibited in Europe following the defeat of the German Nazis after 1945, and the persecution of the Jews, Romanis, Slavs in the Holocaust [1933-1945].  Any political group must not express Nazi ideas-even though they are known to support National Socialism. It is to be expected that the 'Golden Dawn' will deny being a Nazi party - even though all their policies are Nazi!

Greece is intended to be a democracy in which all official political groups are open, democratic,  power sharing and not war-mongers. The emergence of Nazi parties is not to be allowed.

The ‘Golden Dawn’ party should not have come into existence. However……..

It came into existence…….. in the wake of  the bankruptcy  of the country; the imposition of austerity by the EU led by the Germans, French, Italians, Spanish.; the humiliation of the peoples of Greece through debt, and unemployment.

On reflection, it has become clear that the governments of the day [2005 -2013] did not feel confident to rule a country through economic collapse in the face of  the opposition of  political  nationalism. On the other hand, by a twist of fate, the governments have managed  the economic collapse  by organizing the support of political nationalism by means of  the help of  the Golden Dawn, a Nazi party. The Golden Dawn was supposed to be part of the solution but have become the problem! when that party  refused to cooperate, and  started to attack and murder its opposition, openly declaring its criminal intentions.

The ways in which the coalition governments have incorporated the fascists into the government, leads us to ask whether the coalition governments of Greece are fit for purpose? In operating a democratic government by promoting right wing fascism has threatened the very basis of representative democracy.

The next steps it has taken has challenged the whole concept of  voter representation. The present government has  arrested  and imprisoned  fascist MPs. In this way it has re-structured the House of Representatives and returned to the days of the Junta when MPs were voted for by the electorate, and then further selected by military forces.

If the coalition government had ruled according to democracy then the rights of citizens would have been upheld and extreme repressive groups kept out of Parliament The fascists would not be allowed to form political parties. Even now, in their attempts to remove extremist politics, by arresting MPs, the coalition has resorted to anti-democratic actions and called into question their ‘fitness to rule’.

In a democracy the arbiters of power  are the voters, not the voted.

But we have to confront the ‘catch 22’ situation that is operating in Greece at the moment whereby anti-democratic groups are well organized to gain democratic power  and challenge  the coalition government, and render the country bankrupt, If the coalition called an election now  it  may  have to confront more rigid  austerity, and more street violence!

The coalition government has to work to resolve the financial future of Greece without sacrificing the people to the demands of creditors.

Alternative economics is essential for a viable future.