Shutdown of US govt & ‘debt default’: Dress rehearsal for privatization of federal state system?

Shutdown of US govt and ‘debt default’: Dress rehearsal for privatization of federal state system?(RT).

The inevitable scenario established in the wake of the 2008 crisis is fiscal collapse, leading to “the possible phasing out and/or curtailment of social programs, the privatization of large sectors of public sector activity.”

The fiscal ceiling having now been reached, possibly with a deadline, the government is being pressured by its Wall Street handlers – who control decision-making in the US Congress – to curtail and downsize social programs, as well as initiate the transfer of public assets and institutions into the hands of private corporations. There is also a movement to cut as well as privatize social security and Medicare.
The privatization of public monuments, museums, national parks, the post office etc. has been raised in recent media reports as a possible ‘solution’ to the debt crisis. But let us not be misled: the process of acquisition of federal public property including infrastructure and state institutions is likely to go much further.

The public sector is up for grabs. Wall Street will eventually go on a buying spree picking up state-owned assets at rock bottom prices.

Ironically, the money transferred by the US government to Wall Street under the bailouts in 2008-2009 can now be used by Wall Street to buy out state property and assets. What this means is that the federal government not only finances its own indebtedness, it is also financing the privatization program (at taxpayers’ expense), leading to the demise of federal government programs.
This process of privatization of the state is nothing new, it has been applied in developing countries under the helm of the IMF, whereby state corporations are auctioned off and transferred into the hands of foreign corporations. It has also been applied in Eastern Europe, as well more recently in several countries of the European Union
The proceeds of the privatization program are channeled to the state treasury to meet outstanding debt obligations. In Brazil in the 1990s, important state assets in mining and forestry were purchased by Citi Group, which was Brazil’s largest foreign creditor bank. Ironically, the proceeds of the privatization of the assets purchased by Citi Group were channeled back to Citi Group in the form of debt servicing.
Existing state programs are transferred to private corporations either through outright sale of state assets or through outsourcing of government services to the private sector.
Large numbers of government employees would be laid off as a result of restructuring and privatization. Government services would be sold to the public at a much higher price.

Privatization of American cities

The takeover of State assets in America is well under way largely at the municipal and state level. We recall Orange County, California, which went bankrupt in 1994, Jefferson County, Alabama, which filed for Chapter 9 bankruptcy in 2011, and more recently Detroit, Michigan, in 2013. In these and other county/municipal bankruptcies, public assets, lands and infrastructure are sold off to private investors. Across the US, more than 100 municipalities are facing bankruptcy.
The bankruptcies of local level governments immediately backlash on pension funds. The privatization of federal State assets on a significant scale, as well as the takeover and privatization of public services is the next stage of this socially devastating economic restructuring process.

Speculative onslaught

There is another related agenda, which will be the object of a forthcoming article.
The uncertainty underlying the government shutdown and debt default is the object of a wave of speculative activity on major markets.
Wall Street financial institutions not only exert a decisive influence in the formulation of the administration’s fiscal and monetary agenda, they also control the movement of currency markets, commodity and stock markets through large scale operations in derivative trade.
Most of the key actors in the US Congress and the Senate involved in the shutdown debate are controlled by powerful corporate lobby groups including, of course, Wall Street. The latter are those which ultimately decide on the outcome. They are not only in a position to influence the results of the congressional process, they also have foreknowledge of the nature and timing of key decisions and they are in a position to reap multibillion dollar speculative gains in the derivative markets by speculating on policy outcomes of which they have advanced knowledge.
Those who determine the government’s debt policy, namely the Wall Street creditors, also have ‘inside information’ or prior knowledge of the chronology and outcome of the government shutdown impasse. They will make billions of dollars in windfall profits 
While Wall Street is instrumental in triggering the debt ceiling impasse, major financial institutions will also be placing their bets in large scale speculative transactions.