Après Moi, le Déluge!

Leo Kolivakis's picture

Via Pension Pulse.

The Guardian reports, French strikes over Sarkozy's pension reform bill roll into second day:

French
unions extended a rail strike into a second day and blockaded oil
refineries in protest at pension reforms today, but there were signs
the stoppages could be losing steam as broad participation wavered.

 

With
the pensions bill due to be approved within days by the senate,
President Nicolas Sarkozy's conservative government stood firm on its
flagship reform, despite a national strike yesterday that brought more
than a million marchers on to the streets.

 

Union leaders said
local meetings throughout France had voted almost unanimously in favour
of extending the stoppage in the state railway sector, the bedrock of
the protests. But they acknowledged turnout had fallen.

Strong
support for an extended strike would raise the pressure on Sarkozy,
whose government would be significantly weakened by a climb-down ahead
of elections in early 2012.

 

"The stoppage has been extended until
at least Thursday, which will be a decisive day for its continuation,"
said Bruno Duchemin, the secretary general of the FGAAC-CFDT
railworkers' union.

 

France's state-run SNCF railways said only
about a quarter of its workers had walked out today, down from 40%
yesterday, with two-thirds of high-speed trains and more than half of
regional trains running normally. Some 135 schools were affected today,
compared with 357 yesterday, the education ministry said.

 

In the
energy sector, workers halted the transport of fuel from eight of
France's 12 refineries and blockaded a handful of the country's 160
fuel depots, raising the spectre of petrol shortages. With unions at
five refineries starting to shut down production and France's biggest
oil port at Marseille hit by a two-week-old strike, the oil sector
lobby UFIP has said localised fuel shortages could hit petrol stations
by the middle of next week.

 

The
government, which says 1.23 million marchers took to the streets
yesterday compared with union estimates of 3.5 million, said it would
press ahead with a reform its says is needed to restore state finances
to health and retain France's AAA credit rating.

 

"I'm not denying
there were a lot of people in the streets but at the same time what
can we do? Not reform the pension system?" the labour minister, Eric
Woerth, told RTL radio, saying only minor amendments were possible
before senate approval.

 

Sarkozy's
government says the reform is essential to balance a pension system
which would otherwise bleed €45bn (£39.6bn) a year by 2020. The
legislation raises the minimum retirement age from 60 to 62, and raises
the age at which workers become eligible for full pension from 65 to
67. Opposition and government senators said they hoped to end
discussion of the bill soon, possibly before the weekend.

 

Unions,
which overturned a 1995 attempt to reform the system with 24 days of
strikes, said protests would continue regardless of whether the bill
passed in the senate.

 

Analysts said
the main risk to Sarkozy was if protests spread to university students
and those angry at his broader agenda. In an attempt to defuse tension,
his UMP party said yesterday that it would review an unpopular tax
ceiling for the rich.

 

"There is an increasing probability the
government will seek deeper negotiations over the proposed reforms to
counter the increasing protests," said Barclays analyst Laurence Boone.

The
French and Greeks aren't shy about protesting against pension and
economic reforms. You got to admire their tenacity as they exercise
their democratic rights. Unlike the electronically lobotomized
population of North America, they still believe in fighting for social
justice.

Unfortunately, it's a lost cause. As I watch the Foreclosure-Gate scandal
play out, I'm starting to believe that this "epic" financial crisis was
in the making for years and will be used as an excuse to ram through
sweeping social and economic reforms. Meanwhile, Bubble Ben keeps the
printing press going, and the financial elite are reaping huge rewards:

Just
two years after the global financial crisis that threatened to destroy
the banking industry, Wall Street bonuses have hit a record high. According to The Wall Street Journal, employees at America's biggest banks are set to reward themselves with $144 billion in compensation and benefits this year — a 4 percent increase over last year's record haul. The
hefty bonuses come as many industries continue to struggle in the face
of difficult economic conditions and the jobless rate holds steady at
9.6 percent. Has Wall Street overstepped yet again? (Watch an MSNBC discussion about the record bonuses)

All this makes me wonder, is the end near? My good friend, Jonathan Nitzan, and his collaborator, Shimshon Bichler, will be presenting later this month at a conference on "Crisis of Capital, Crisis of Theory," Organized by the Forum on Capital as Power:

Is
capitalism about to collapse? Like every other mode of power,
capitalism rests on confidence in obedience: the confidence of the
rulers in the obedience of the ruled. Emperors are sure of their rule
over obedient subjects and slaves; lords are certain they can rule
their obedient vassals and serfs; and capitalists trust the obedience
of their underlying masses. The confidence of rulers is mediated
through their dominant dogma: when the dogma holds, the rulers are
hubristic, steadfast and ruthless; when the dogma disintegrates, the
rulers, gripped by systemic fear, become hesitant and lose their
ability to rule.

 

Systemic fear often culminates
in systemic collapse. The downfall of the last Babylonian emperor,
Belshazzar, the collapse of Easter Island, the French Revolution
against the ancien régime, the fall of Soviet Union and many more such
episodes were all preceded by systemic fear: for whatever reason, the
rulers lost faith in their dogma and confidence in their subjects’
obedience. But their systemic fear remained elusive: we know of it only
anecdotally, subjectively, and always retrospectively – after their
mode of power lies in ruins.

 

Modern finance
has made systemic fear transparent. For the first time in history, we
have an objective, numerical measure of the rulers’ confidence in
obedience – and this measure is available not in retrospect, but here
and now. The indicator in question is forward-looking capitalization:
the financial ritual with which capitalists discount to present value
their expected future profit. This ritual stands at the heart of the
modern capitalist dogma, and it is currently broken: for the past
decade, capitalists have been looking not forward to the future, but
backward to the past. In other words, capitalists no longer trust their
own dogma: they are no longer confident in the obedience of the ruled
or in their own ability to rule.

I invite my readers to download Jonathan and Shimshon's paper, Systemic Fear, Modern Finance, and the Future of Capitalism.
Before you dismiss it as neo-Marxist rhetoric, I warn you, Jonathan was
an Associate Editor of the BCA Emerging Markets team, and he's
extremely familiar with the frivolity of modern day portfolio theory and
the deficiencies of neoclassical economic theory which dominate our
classrooms. He's one of the smartest guys I ever met, and I just love
listening to him and Tom Naylor get into it at our Men's Club meeting
every quarter (last time I wrote about this "prestigious club" was when Bilderberg was plotting to sink the global economy).

I keep things simple. The power elite have every intention to keep Casino Capitalism going for as long as they possibly can. It's in their best interest to do so. That's why all of Wall Street is playing the 'Bernanke put'
taking on as much risk as possible to reap even more bonuses than the
previous year, prompting David Weidner of MarketWatch to rightly
observe, the death of pay for performance:

Clawbacks,
deferred compensation — they sounded like good ideas at the time. But
regulators, at the urging of the industry, shunned any long-term of the
review of Wall Street pay structure.

 

“Trust us,” Wall Street said.

 

And what has it brought? A new study of 2010 compensation by The Wall
Street Journal found that the industry will pay out a record $144
billion this year. The compensation represents a 4% increase from 2009.
It also slightly outpaces a 3% revenue increase at the big brokerages —
most earned in the early part of the year. See WSJ report on Wall Street pay.

 

The
numbers starkly contrast the reality for most Americans. Those lucky
enough to have work are seeing little, if any, rise in wages. The pay
figures also sharply underscore how reform, bailouts and aftermath of
the financial crisis failed to influence pay.

 

In the most heated days of the financial crisis, some banks moved forward. Morgan Stanley adopted
reforms that put more emphasis on deferred pay. Some banks in Europe
adopted clawback provisions or built bonus pools invested in toxic
securities.

 

But most Wall Street banks only
accepted pay rules forced upon them through the Troubled Asset Relief
Program, and even those rules were only targeted toward those which
received exceptional aid: American International Group Inc. , Bank of America Corp. , Citigroup Inc., General Motors and Chrysler.

 

How onerous was pay czar Kenneth Feinberg? Well, no one’s missed a meal.

 

That said, pay does seem to be changing in the financial world. Up
until the crisis, those who took inordinate risks resulting in
short-term profits took heaps of money home despite the long-term
consequences of their bets.

 

Today, it appears pay goes up whether or not those bets create any value at all.

The
distributional effects of this financial crisis are rarely discussed.
Americans got a  glimpse into the ultra secret world of
high-frequency trading on 60 Minutes this past Sunday, but that's only the tip of the iceberg.

The shadow banking business has not dried up. Pensions, in their insatiable quest for "alpha",
are still pumping billions into hedge funds and private equity funds.
And the Fed and other central bankers are pumping trillions into the
financial system.

And what's the end game?
Who knows? It's in every financial player's interest to keep this sucker
going for as long as possible. New bubbles in commodities
and other sectors are forming at this very moment. And political and
financial leaders like Sarkozy and Bernanke must be thinking, "Après moi, le déluge".