France’s credit downgrade is timely, coming just five days before the anti-social summit [tripartite government, employer union meeting where Sarkozy expected to propose new attacks on workers’ rights]
The loss of the AAA rating by Standard & Poor’s will be used by Nicolas Sarkozy to justify the accelerated adoption of the golden (balanced budget) rule and hyper-austerity.
The stock market instead is serene, it is reported. Thus the credit rating agencies impose themselves again, brutally, in the Presidential debate: dictating the government’s political choices; striking fear into the population and reassuring the speculators, so that the former fattens the profits of the latter; and to aide Nicolas Sarkozy pursue his social and economic demolition job…
This government cannot take France out of the crisis because it submits to the domination of finance. With austerity, growth in the real economy will reduce as will tax revenues and employer social security contributions.
Enormous gifts made in recent years to companies and the rich, like the abolition of the taxe professionnelle [a local business tax], Euros 30 billion worth of exemptions from employers’ social security contributions and the reduction in the wealth tax, continue… There has been massive support to banks and public-debt financed support to financial markets, with no strings attached.
Corporations have been able to continue a process of relocating production overseas and massacre employment in France, or further increase their threats of taking this action in order to put downward pressure on wages.
And the banks have continued to speculate against public debt while at the same time turning off the taps to small and medium sized businesses. Even though French banks have just benefited, along with their main European counterparts, from Euros 500 billion in loans, offered at a rate of 1% for three years.
The deterioration in France’s credit rating will contribute directly to this monstrous enrichment of banks’ large shareholders as a result of the higher interest to be paid on public debt. Indeed a rise of one percentage point in the rate of interest paid, due to the loss of the AAA, will increase public debt by Euros 10 billion over a five year period.
The primordial obsession with cutting the debt, deficit and public spending is incompatible with the urgency of responding to social needs. It is both right and responsible for the Left to break with this obsession.
French banks need to be brought under immediate public control. Instead of casting public debt as an evil, let’s hold a citizen’s audit to sort the good from the bad debt. The European Central Bank must create all the money necessary to lighten the public debt burden in France and elsewhere in the Eurozone and create a social, solidarity and ecological development fund for Europe in order to finance the expansion of national public services and encourage their co-operation.
And it is possible. The European Central Bank can and must lend to France and other European states at zero percent interest rates.
To defeat Sarkozy we must confront the power of finance. That’s the alternative logic that is behind the candidature for President of the Left Front with Jean-Luc Mélenchon
Pierre Laurent, national secretary of the French Communist Party.
Source: L’Humanite newspaper