Joint statement by Puerta del Sol Economics Working Group and Syntagma

The citizens of Puerta del Sol and Syntagma Square express our indignation and invite all the ‘indignados’ in all the squares around the world to join us

7 September 2011

From the USA to Brussels, from Greece to Bolivia and from Spain to Tunisia, the crisis of capitalism is on the rise. A crisis caused by the same culprits who are imposing the reforms to get over it: pumping public funds into private financial institutions while forcing the citizens to foot the bill. Rather than lifting us out the crisis, their structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

plans sink us even deeper in.

In the EU, financial markets are on the offensive against sovereign debts, blackmailing spineless governments and shanghaiing Parliaments into accepting unjust measures behind the backs of their own people. Far from taking a firm political stance against the financial sharks, European institutions are lining up with them instead.

From the beginning of the crisis we have watched while private debt was transformed into public debt, exemplifying how public profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. -making ventures are flagrantly privatized, only to be bailed out with public money when they fail.

The high interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
we are incurring for funding has nothing to do with doubts abouts our solvency, but rather with money-market manoevres by large financial corporations in league with Rating Agencies Rating agency
Rating agencies
Rating agencies, or credit-rating agencies, evaluate creditworthiness. This includes the creditworthiness of corporations, nonprofit organizations and governments, as well as ‘securitized assets’ – which are assets that are bundled together and sold, to investors, as security. Rating agencies assign a letter grade to each bond, which represents an opinion as to the likelihood that the organization will be able to repay both the principal and interest as they become due. Ratings are made on a descending scale: AAA is the highest, then AA, A, BBB, BB, B, etc. A rating of BB or below is considered a ‘junk bond’ because it is likely to default. Many factors go into the assignment of ratings, including the profitability of the organization and its total indebtedness. The three largest credit rating agencies are Moody’s, Standard & Poor’s and Fitch Ratings (FT).

Moody’s :
to increase their fortunes.

The economic cutbacks come together with restrictions on democratic freedoms such as controlling and expelling migrants and restricting free movement of Europeans within the EU. Only the euro and speculative capital enjoy free movement and open borders.

In Spain we are being collectively hoaxed. Public debt (60% of the GNP Gross National Product
The GNP represents the wealth produced by a nation, as opposed to a given territory. It includes the revenue of citizens of the nation living abroad.
) is not a problem, yet it is being used as an excuse to make us believe that it is a dangerous situation which merits theses serious attacks against our rights and our national assets – attacks which threaten to get worse. On the other hand, private debt (240% of the GNP) is a problem, but instead of applying austerity to the banks, they award them with all sort of loans and pay-offs at the expense of the public purse. The biggest ‘help’ given to them was handing over half of our savings banks and profitable companies for next to nothing.

Meanwhile, the police deny access to the Puerta de Sol, the epicentre of the 15M, violating basic rights.

A Memorandum of Understanding (MOU) has been imposed on Greece. They claim that the cutbacks, austerity and new taxes on the people are sacrifices required to find the country’s way out of the crisis and lower its debt. Liars!

Every day new measures are taken, salaries chopped, unemployment rockets and young people leave the country. Yet the debt keeps on growing as the new loans are used to pay off the enormous interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. owed to our creditors. The deficits of Greece and other countries in southern Europe are turning into the capital surplus of the banks of Germany and other wealthy northern countries.

Salaries and pensions are not to blame for inflating the debt. It stems from the hefty tax reductions, capital grants and the financial binge on pharmaceutical and military spending.

They ruin us only to inflict more destructive measures and cutbacks, selling off public land and assets for peanuts.

To this we say:

- Withdraw the Memorandum. Get lost! We don’t want to be governed by the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
and the Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

- Nationalize the banks. With the rescue packages, the State has already paid more than their stock exchange value just so they can carry on speculating.
- Make the accounting records transparent so the people know where the money has gone.
- Radically redistribute wealth and change the tax policies so those who have the most pay: banking institutions, capital and the Church.
- We demand people’s control over the economy and production.

Considering all these points, both squares declare that:

- The policies of cut-backs that they are applying will not lift us out of the crisis – on the contrary, they push us even further in. They are stretching us to the limit, applying present and future bail-outs which in reality go to the creditor banks and result in serious attacks on our rights, family finances and our national assets.
- We must stand up and protest against these violations. We are the15M movement in Sol and the Popular Assembly of Syntagma .
- Stop adjustment plans and bailouts.
- No to the payment of illegitimate debt . This is not our debt. We owe nothing, we sell nothing, we pay nothing.
- For real and direct democracy NOW.
- For the defence of public interests. Not one sale of public property or services.
- Let all indignados in all the squares join together.



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