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The problem of 2010 is ‘sovereign debt’ (well – one of them anyway!).

Western nations have profligately continued to fund social welfare measures — such as aged pensions, free health care, free education, unemployment benefits, child and family support, poverty alleviation … — as though they still lived in a regulated and protected world.

But the world has been deregulated, protection has been traded for globalisation. “Public debt sustainability has exploded as a serious issue in advanced economies”.

The social welfare component built into production and financial sector costs in Western nations is disappearing. Like the Cheshire cat, we are left with little but the grin! Deregulation has shifted the costs from ‘the economy’ to sovereign debt.

Western nation-states, once firmly in control of economic activity within their borders are, in the deregulated, privatised world of the 21st century, decreasingly able to shield their populations from the exploitative consequences of unregulated and internationalised financial manipulation.

Now, there is no international forum capable of limiting and directing the bargaining advantages of finance houses whose international financial dealings eclipse those of the countries in which they do business.

No longer is the economy the means by which communities meet their needs and wants. Now communities service an international network of independent financial corporations which need accept no reciprocal responsibilities for their welfare.

Nations which, prior to 2008, were largely coping with the costs of scaled down versions of earlier public social welfare costs, now find themselves with unsustainable debt. Another crisis similar to that of 2008 would introduce many of them to structural adjustment programs similar to that currently being implemented in Greece.

Western nations are beginning to understand what ‘structural adjustment’ really means in a globalised neoliberal world. They just did not take the problems seriously when Third World countries complained about the effects of such programs over the past thirty years.

How is it that over the past three years, nations could be held to ransom by international financial corporations?

Why weren’t both nations and international financial corporations alerted by the financial woes experienced in the so-called ‘Tiger’ economies of the 1990s and so prepared for the problems of the last three years?

How did we get ourselves into this mess?

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This entry was posted on Monday, June 7th, 2010 at 12:03 am and is filed under Capitalism. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.