This is another bailout memo. In light of some of the pitiful clucking directed against yesterday's protestors in the media, I thought it might be worth summarising the issues:
1. The dynamic process underlying the growth phase has been the transfer of notional wealth from labour to capital.
This process has subsisted alongside a more or less consistant division of output. This distribution is hard to change because of political and technical structures that are hard to change.
2. The first process eventually impacted on the structure of the real economy - the costs of socially necessary debt became unserviceable - hence the first process ground to a halt.
This has a deflationary impact on notional capital wealth since capitalists ought to seek to diversify away from insecure unprofitable investments.
This is mitigated by a tendency for capitalists to hold on in anticipation of a further social/political change allowing the first process to continue - i.e. the breakdown of the "homeowner democracy" - or for want of suitable alternative investments.
3. Political power, however, is unduly influenced by banking interests and financialised capital (e.g. the car industry). The banks, through incompetence and systematic fraud are bust if notional wealth is allowed to deflate.
Hence governments are compelled to redistribute money to the finance sector to attempt to counteract the effects of the free market
This is the precise opposite of a fiscal stimulus per the Keynesian/Kaleckian model in which money is redistributed in favour of labour. Here money is redistributed in favour of capital. It has the likely effect of further reducing demand and increasing inflation.
4. The whole point is to carry through a wave of proletarianisation at the expense of damaging the real economy. Big capital may be able to survive, and even profit from this situation by cannibalising small capital.
The general public - the working class, the salaried middle class and the petit bourgeoisie such as it exists - would be better served with piecemeal solutions to the various problems brought up - bank fraud, savings recovery, winding up of the banks, measures against precaritisation. It is surprising that nothing much has been organised.