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"New Austerity" Threatening Global Recovery?
- Alan Greenspan
- Bond
- Capital Formation
- Central Banks
- Creditors
- European Central Bank
- Evans-Pritchard
- Gambling
- George Papandreou
- George Soros
- Greece
- Gross Domestic Product
- International Monetary Fund
- Latvia
- Market Crash
- Obama Administration
- Personal Income
- President Obama
- Purchasing Power
- Real estate
- Reality
- Recession
- recovery
- Trichet
- Unemployment
- Wall Street Journal
- White House
- World Bank
Earlier
this week, George Soros said German
fiscal policy endangers the European currency union:
“The
German policy is a danger for Europe, it could destroy the European
project,” Soros was quoted as saying. “If the Germans do not change
their policy, their exit from the currency union would be helpful for
the rest of Europe,” he added, according to the report.
Soros
also said that one “can’t rule out a collapse of the euro,” Die Zeit
said.
Collapse of the euro? Obviously Soros is short
euros, but he's not the only one concerned about Europe's fiscal
policies. In counterpunch's weekend edition, Michael Hudson writes, Europe's Fiscal
Dystopia: the "New Austerity" Road:
Europe
is committing fiscal suicide – and will have little trouble finding
allies at this weekend’s G-20 meetings in Toronto. Despite the
deepening Great Recession threatening to bring on outright depression,
European Central Bank (ECB) president Jean-Claude Trichet and prime
ministers from Britain’s David Cameron to Greece’s George Papandreou
(president of the Socialist International) and Canada’s host,
Conservative Premier Stephen Harper, are calling for cutbacks in public
spending.
The United States is playing an
ambiguous role. The Obama Administration is all for slashing Social
Security and pensions, euphemized as “balancing the budget.” Wall
Street is demanding “realistic” write-downs of state and local pensions
in keeping with the “ability to pay” (that is, to pay without taxing
real estate, finance or the upper income brackets). These local
pensions have been left unfunded so that communities can cut real
estate taxes, enabling site-rental values to be pledged to the banks of
interest. Without a debt write-down (by mortgage bankers or
bondholders), there is no way that any mathematical model can come up
with a means of paying these pensions. To enable workers to live
“freely” after their working days are over would require either (1)
that bondholders not be paid (“unthinkable”) or (2) that property taxes
be raised, forcing even more homes into negative equity and leading to
even more walkaways and bank losses on their junk mortgages. Given the
fact that the banks are writing national economic policy these days,
it doesn’t look good for people expecting a leisure society to
materialize any time soon.
The problem for U.S. officials is that Europe’s sudden
passion for slashing public pensions and other social spending will
shrink European economies, slowing U.S. export growth. U.S. officials
are urging Europe not to wage its fiscal war against labor quite yet.
Best to coordinate with the United States after a modicum of recovery.
Saturday and Sunday will see the six-month mark
in a carefully orchestrated financial war against the “real” economy.
The buildup began here in the United States. On February 18, President
Obama stacked his White House Deficit Commission (formally the National
Commission on Fiscal Responsibility and Reform) with the same brand of
neoliberal ideologues who comprised the notorious 1982 Greenspan
Commission on Social Security “reform.”
The
pro-financial, anti-labor and anti-government restructurings since 1980
have given the word “reform” a bad name. The commission is headed by
former Republican Wyoming Senator Alan Simpson (who explained
derisively that Social Security is for the “lesser people”) and Clinton
neoliberal Erskine Bowles, who led the fight for the Balanced Budget
Act of 1997. Also on the committee are bluedog Democrat Max Baucus of
Montana (the pro-Wall Street Finance Committee chairman). The result is
an Obama anti-change dream: bipartisan advocacy for balanced budgets,
which means in practice to stop running budget deficits – the deficits
that Keynes explained were necessary to fuel economic recovery by
providing liquidity and purchasing power.
A balanced budget in an economic downturn means
shrinkage for the private sector. Coming as the Western economies move
into a debt deflation, the policy means shrinking markets for goods and
services – all to support banking claims on the “real”
economy.
The exercise in managing public
perceptions to imagine that all this is a good thing was escalated in
April with the manufactured Greek crisis. Newspapers throughout the
world breathlessly discovered that Greece was not taxing the wealthy
classes. They joined in a chorus to demand that workers be taxed more
to make up for the tax shift off wealth. It was their version of the
Obama Plan (that is, old-time Rubinomics).
On
June 3, the World Bank reiterated the New Austerity doctrine, as if it
were a new discovery: The way to prosperity is via austerity. “Rich
counties can help developing economies grow faster by rapidly cutting
government spending or raising taxes.” The New Fiscal Conservatism aims
to corral all countries to scale back social spending in order to
“stabilize” economies by a balanced budget. This is to be achieved by
impoverishing labor, slashing wages, reducing social spending and
rolling back the clock to the good old class war as it flourished
before the Progressive Era.
The rationale is
the discredited “crowding out” theory:
Budget deficits mean more borrowing, which bids
up interest rates. Lower interest rates are supposed to help countries –
or would, if borrowing was for productive capital formation. But this
is not how financial markets operate in today’s world. Lower interest
rates simply make it cheaper and easier for corporate raiders or
speculators to capitalize a given flow of earnings at a higher multiple,
loading the economy down with even more debt!
Alan Greenspan parroted the World Bank announcement
almost word for word in a June 18 Wall Street Journal op-ed.
Running deficits is supposed to increase interest rates. It looks like
the stage is being set for a big interest-rate jump – and corresponding
stock and bond market crash as the “suckers’ rally” comes to an abrupt
end in months to come.
The idea is to create an artificial financial crisis,
to come in and “save” it by imposing on Europe and North America a
“Greek-style” cutbacks in social security and pensions. For the United
States, state and local pensions in particular are to be cut back by
“emergency” measures to “free” government budgets.
All this is an inversion of the social philosophy that
most voters hold. This is the political problem inherent in the
neoliberal worldview. It is diametrically opposed to the original
liberalism of Adam Smith and his successors. The idea of a free market
in the 19th century was one free from predatory rentier
financial and property claims. Today, an Ayn-Rand-style “free market” is
a market free for predators. The world is being treated to a travesty
of liberalism and free markets.
This shows
the usual ignorance of how interest rates are really set – a blind
spot which is a precondition for being approved for the post of central
banker these days. Ignored is the fact that central banks determine
interest rates by creating credit. Under the ECB rules, central banks
cannot do this. Yet that is precisely what central banks were created
to do. European governments are obliged to borrow from commercial
banks.
This financial stranglehold threatens
either to break up Europe or to plunge it into the same kind of poverty
that the EU is imposing on the Baltics. Latvia is the prime example.
Despite a plunge of over 20 per cent in its GDP, its central bankers
are running a budget surplus, in the hope of lowering wage rates.
Public-sector wages have been driven down by over 30 per cent, and the
government expresses the hope for yet further cuts – spreading to the
private sector. Spending on hospitals, ambulance care and schooling has
been drastically cut back.
What is missing from this argument? The cost of labor
can be lowered by a classical restoration of progressive taxes and a
tax shift back onto property – land and rentier income. Instead, the
cost of living is to be raised, by shifting the tax burden further onto
labor and off real estate and finance. The idea is for the economic
surplus to be pledged for debt service.
In
England, Ambrose Evans-Pritchard has described a “euro mutiny” against
regressive fiscal policy. But it is more than that. Beyond merely
shrinking the economy, the neoliberal aim is to change the shape of the
trajectory along which Western civilization has been moving for the
past two centuries. It is nothing less than to roll back Social
Security and pensions for labor, health care, education and other
public spending, to dismantle the social welfare state, the Progressive
Era and even classical liberalism.So we are
witnessing a policy long in the planning, now being unleashed in a
full-court press. The rentier interests, the vested interests
that a century of Progressive Era, New Deal and kindred reforms sought
to subordinate to the economy at large, are fighting back. And they are
in control, with their own representatives in power – ironically, as
Social Democrats and Labor party leaders, from President Obama here to
President Papandreou in Greece and President Jose Luis Rodriguez
Zapatero in Spain.
Having bided their time for
the past few years the global predatory class is now making its move
to “free” economies from the social philosophy long thought to have
been irreversibly built into the economic system: Social Security and
old-age pensions so that labor didn’t have to be paid higher wages to
save for its own retirement; public education and health care to raise
labor productivity; basic infrastructure spending to lower the costs of
doing business; anti-monopoly price regulation to prevent prices from
rising above the necessary costs of production; and central banking to
stabilize economies by monetizing government deficits rather than
forcing the economy to rely on commercial bank credit under conditions
where property and income are collateralized to pay the
interest-bearing debts, culminating in forfeitures as the logical
culmination of the Miracle of Compound Interest.
This is the Junk Economics
that financial lobbyists are trying to sell to voters: “Prosperity
requires austerity.” “An independent central bank is the hallmark of
democracy.” “Governments are just like families: they have to balance
the budget.” “It is all the result of aging populations, not debt
overload.” These are the oxymorons to which the world will be treated
during the coming week in Toronto.
It is the
rhetoric of fiscal and financial class war. The problem is that there
is not enough economic surplus available to pay the financial sector on
its bad loans while also paying pensions and social security.
Something has to give. The commission is to provide a cover story for a
revived Rubinomics, this time aimed not at the former Soviet Union but
here at home. Its aim is to scale back Social Security while reviving
George Bush’s aborted privatization plan to send FICA paycheck
withholding into the stock market – that is, into the hands of money
managers to stick into an array of junk financial packages designed to
skim off labor’s savings.
So Obama is
hypocritical in warning Europe not to go too far too fast to shrink its
economy and squeeze out a rising army of the unemployed. His idea at
home is to do the same thing. The strategy is to panic voters about the
federal debt – panic them enough to oppose spending on the social
programs designed to help them. The fiscal crisis is being blamed on
demographic mathematics of an aging population – not on the
exponentially soaring debt overhead, junk loans and massive financial
fraud that the government is bailing out.
What really is causing the financial and fiscal
squeeze, of course, is the fact that that government funding is now
needed to compensate the financial sector for what promises to be year
after year of losses as loans go bad in economies that are all loaned up
and sinking into negative equity.
When
politicians let the financial sector run the show, their natural
preference is to turn the economy into a grab bag. And they usually
come out ahead. That’s what the words “foreclosure,” “forfeiture” and
“liquidate” mean – along with “sound money,” “business confidence” and
the usual consequences, “debt deflation” and “debt peonage.”Somebody must take a loss on the economy’s bad loans –
and bankers want the economy to take the loss, to “save the financial
system.” From the financial sector’s vantage point, the economy is to
be managed to preserve bank liquidity, rather than the financial system
run to serve the economy. Government social spending (on everything
apart from bank bailouts and financial subsidies), disposable personal
income are to be cut back to keep the debt overhead from being written
down. Corporate cash flow is to be used to pay creditors, not employ
more labor and make long-term capital investment.
The economy is to be sacrificed to subsidize the
fantasy that debts can be paid, if only banks can be “made whole” to
begin lending again – that is, to resume loading the economy down with
even more debt, causing yet more intrusive debt deflation.This is not the familiar old 19th-century class war of
industrial employers against labor, although that is part of what is
happening. It is above all a war of the financial sector against the
“real” economy: industry as well as labor.
The
underlying reality is indeed that pensions cannot be paid – at least,
not paid out of financial gains. For the past fifty years the Western
economies have indulged the fantasy of paying retirees out of purely
financial gains (M-M’ as Marxists would put it), not out of an
expanding economy (M-C-M’, employing labor to produce more output). The
myth was that finance would take the form of productive loans to
increase capital formation and hiring. The reality is that finance
takes the form of debt – and gambling. Its gains were therefore made
from the economy at large. They were extractive, not productive. Wealth
at the rentier top of the economic pyramid shrank the base
below. So something has to give. The question is, what form will the
“give” take? And who will do the giving – and be the recipients?
The Greek government has been unwilling to tax the
rich. So labor must make up the fiscal gap, by permitting its socialist
government to cut back pensions, health care, education and other
social spending – all to bail out the financial sector from an
exponential growth that is impossible to realize in practice. The
economy is being sacrificed to an impossible dream. Yet instead of
blaming the problem on the exponential growth in bank claims that cannot
be paid, bank lobbyists – and the G-20 politicians dependent on their
campaign funding – are promoting the myth that the problem is
demographic: an aging population expecting Social Security and employer
pensions. Instead of paying these, governments are being told to use
their taxing and credit-creating power to bail out the financial
sector’s claims for payment.
Latvia has been
held out as the poster child for what the EU is recommending for Greece
and the other southern EU countries in trouble: Slashing public
spending on education and health has reduced public-sector wages by 30
per cent, and they are still falling. Property prices have fallen by 70
percent – and homeowners and their extended family of co-signers are
liable for the negative equity, plunging them into a life of debt
peonage if they do not take the hint and emigrate.
The bizarre pretense for government budget cutbacks in
the face of a post-bubble economic downturn is that the supposed aim is
to rebuild “confidence.” It is as if fiscal self-destruction can
instill confidence rather than prompting investors to flee the euro.
The logic seems to be the familiar old class war, rolling back the
clock to the hard-line tax philosophy of a bygone era – rolling back
Social Security and public pensions, rolling back public spending on
education and other basic needs, and above all, increasing unemployment
to drive down wage levels. This was made explicit by Latvia’s central
bank – which EU central bankers hold up as a “model” of economic
shrinkage for other countries to follow.
It
is a self-destructive logic. Exacerbating the economic downturn will
reduce tax revenues, making budget deficits even worse in a declining
spiral. Latvia’s experience shows that the response to economic
shrinkage is emigration of skilled labor and capital flight. Europe’s
policy of planned economic shrinkage in fact controverts the prime
assumption of political and economic textbooks: the axiom that voters
act in their self-interest, and that economies choose to grow, not to
destroy themselves. Today, European democracies – and even the Social
Democratic, Socialist and labour Parties – are running for office on a
fiscal and financial policy platform that opposes the interests of most
voters, and even industry.
The explanation,
of course, is that today’s economic planning is not being done
by elected representatives. Planning authority has been relinquished
to the hands of “independent” central banks, which in turn act as the
lobbyists for commercial banks selling their product – debt. From the
central bank’s vantage point, the “economic problem” is how to keep
commercial banks and other financial institutions solvent in a
post-bubble economy. How can they get paid for debts that are beyond
the ability of many people to pay, in an environment of rising
defaults?
The answer is that creditors can get
paid only at the economy’s expense. The remaining economic surplus
must go to them, not to capital investment, employment or social
spending.
This is
the problem with the financial view. It is short-term – and predatory.
Given a choice between operating the banks to promote the economy, or
running the economy to benefit the banks, bankers always will choose
the latter alternative. And so will the politicians they support.
Governments need huge sums to bail out the banks
from their bad loans. But they cannot borrow more, because of the debt
squeeze. So the bad-debt loss must be passed onto labor and industry.
The cover story is that government bailouts will permit the banks to
start lending again, to reflate the Bubble Economy’s Ponzi-borrowing.
But there is already too much negative equity and there is no leeway
left to restart the bubble. Economies are all “loaned up.” Real estate
rents, corporate cash flow and public taxing power cannot support
further borrowing – no matter how wealth the government gives to banks.
Asset prices have plunged into negative equity territory. Debt
deflation is shrinking markets, corporate profits and cash flow. The
Miracle of Compound Interest dynamic has culminated in defaults,
reflecting the inability of debtors to sustain the exponential rise in
carrying charges that “financial solvency” requires.
If the financial sector can
be rescued only by cutting back social spending on Social Security,
health care and education, bolstered by more privatization sell-offs,
is it worth the price? To sacrifice the economy in this way would
violate most peoples’ social values of equity and fairness rooted deep
in Enlightenment philosophy.
That is the
political problem: How can bankers persuade voters to approve this
under a democratic system? It is necessary to orchestrate and manage
their perceptions. Their poverty must be portrayed as desirable – as a
step toward future prosperity.A half-century
of failed IMF austerity plans imposed on hapless Third World debtors
should have dispelled forever the idea that the way to prosperity is
via austerity. The ground has been paved for this attitude by a
generation of purging the academic curriculum of knowledge that there
ever was an alternative economic philosophy to that sponsored by the
rentier Counter-Enlightenment. Classical value and price theory
reflected John Locke’s labor theory of property: A person’s wealth
should be what he or she creates with their own labor and enterprise,
not by insider dealing or special privilege.
This
is why I say that Europe is dying. If its trajectory is not changed,
the EU must succumb to a financial coup d’êtat rolling back
the past three centuries of Enlightenment social philosophy. The
question is whether a break-up is now the only way to recover its
social democratic ideals from the banks that have taken over its
central planning organs.
I am
more optimistic than Michael on Europe. There will be short-term pain,
workers will be squeezed, but longer-term, if Europe survives this
crisis, these reforms will put it back on solid footing for many years
to come. This doesn't mean the Euro can't go lower (I think it will),
but I feel that doomsayers are premature pronouncing Europe's death.
Of
course, if the G20 only focuses on austerity measures and ignores
growth and how to tackle long-term structural problems like high
unemployment, then the world economy will slip into a protracted
deflationary death spiral.
Finally, take the time to watch
Bloomberg's interview with Rod Smyth, chief investment strategist at
Riverfront Investment Group and Richard Regan of Protradingcourse.com (click here to watch).
Below, RT's Anissa Naouai interviews Ella Kokotsis to get her take on
what we can expect from this weekend's meeting.
- advertisements -



The worse, the better. Globally the welfare state is being exposed for the Ponzi that it is. This epic fail will ultimately have salutary effects, a primary one being the decimation of magical thinking about the state by its subjects. Soros is funny. He is so obviously talking his book. But he doesn't look well. You'd think such a high-ranking demon could have something done for those Dorian Grey eye bags.
How can you commit suicide when you're already dead?
Forget Pensions
Memento mori
The exponential function is breaking up on the shores of reality. 30 pieces of silver could never be put to a compound interest function for 2k years.
The new problem is the transfer of the TRUST function. Where will it flow? To a likeness of Ben or 'O printed on rag paper? Will the US population really embrace a yuan paper likeness of an oriental overlord. I think not.
The economy will not rise from top down directed stimulus injections. Unfortunately they don't understand (or it is beyond their natural capacity to envision that which they are not). Most western nations recognize gold as 'legal tender', or whatever their equivalant legal-speak is for that subject. Thus an Austrian Philharmonic in Euro denomination is recognized. Who uses it? Anyone who does, denominates the transaction accordingly. Still doesn't run at the retail level.
Shouldn't the quotation marks be around recovery instead of new austerity?
Leo, have you ever been X-rayed to determine how much colon restiction you have?
I would go for a look tomorrow if I were you.
The American Public was not the brightest crayons in the box to begin with… and the education system here has in fact been successful at accomplishing what it was designed for… dumbing down, even further… the American Public.
http://www.youtube.com/watch?v=Bx4pN-aiofw
http://www.youtube.com/watch?v=fJuNgBkloFE
because the masses in all Countries… are stupid as well. Not just here in America but the World over the masses are encouraged and dare I say taught / learned to be most stupiderestly…
Austerity??? German then? Makes for the cute sound bites, that the wanna be high brow pseudo-economist crowd here would regurgitate all over these boards… Buy Gold! The Nazi’s had it right… Austerity Bitches!!! Yada, yada fucking yada…
http://www.youtube.com/watch?v=ONCrE4IoSsY&feature=related
You mean like this?
***** "ATHENS, Greece (AP) — Riots over harsh new austerity measures left three bank workers dead" *****
http://www.cbs8.com/Global/story.asp?S=12430337
Or... Like This?!
***** "Europe's Trillion Dollar Bailout Dilemma: The Defacing of the Euro" *****
http://seekingalpha.com/article/205176-europe-s-trillion-dollar-bailout-dilemma-the-defacing-of-the-euro
Or.................... Like This?!
***** "EU Tumbles Toward Failure?.. Greek Unrest May Spread - Gold Speculator" *****
Just kidding that was for the Bottom Feeding Gold Salesmen here... who jerk off while praying for the Rapture to come scoop them up and away from their fat ugly wives!
Back to for real.. for reals tho.... Like this?!
***** "The Haggling Begins: Greece Attempts To Renegotiate Terms Of ..."
http://www.zerohedge.com/article/haggling-begins-greece-attempts-renegotiate-terms-austerity-package
So? Austerity? The mere mention of the Word brings doom and gloom to any and all within ear shot.
Austerity measures... here in the U.S.? How about Bush cutting funding to his American Dream Home Programs 2 years to early?
The Federal monies, guaranteed to come thru the door where pulled... so all of those 50 to 1 leverage deals that where Government guaranteed? fell over, from being to, too top heavy.
December 16, 2003. The American Dream Downpayment Assistance Act authorizes up to $200 million annually for fiscal years 2004 - 2007.
http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/
HOME is the largest Federal block grant to State and local governments designed exclusively to create affordable housing for low-income households. Each year it allocates approximately $2 billion among the States and hundreds of localities nationwide. The program was designed to reinforce several important values and principles of community development:
http://www.hud.gov/offices/cpd/affordablehousing/programs/home/
Which was part of: HOME is authorized under Title II of the Cranston-Gonzalez National Affordable Housing Act, as amended. Program regulations are at 24 CFR Part 92.
Which Daddy Bush pushed thru...
Now, after pumping all of these dollars in... Bush cut funding, never mind the shit head idiot dems v. reps...
Let’s call it $2 Billion a month in benefits paid out... just for conversational proposes...
$750 Billion (TARP) =’s 375 Months… or 31 plus years of benefits?
I think we all can agree that the stimulus Packages… or monies being poured into the AAA Rated Corporations coffers exceeds the trillion dollar mark in multiples…
So, is the burden of debt really a bunch of couch potatoes milking the system? Or is the real problem or the real burden the amount of monies being poured into Wall Street?
The real problems are belittled daily by a bunch of wanna be Republican Conservatives… who pontificate about people pulling themselves up by their own boot straps or abortion... while the Country is Robbed Blind!
Drill Baby! Drill!!
Austerity Measures! For / or Against the un-employed / fellow American Country Men and / or Women… while we (as a Country) offer Tax Breaks to Companies who move Jobs Offshore / out of the United States.
The Democrats continue on the same path as laid by Bush… The Lobby controls our Government in Total! The Lobby owns US! ALL!! No exceptions!
The un-employed benefits being paid is NOT! the drag that is holding US! As a Country! Back…
The Democrats continue on the same path as laid by Bush
Who continuted on the same path laid by Clinton (Rubin, Summers, etc.). Plenty of blame to be spread to both the Red Shirts and the Blue, JW. And don't forget, all of the problems in the world didn't begin on 1/21/2001, either.
more wood for the fire.
.
http://www.whowhatwhy.com/the-game-that-goes-on-and-on.html
.
THE GAME THAT GOES ON AND ON:
A SWISS BANK, A PRESIDENT, AND THE PERMANENT GOVERNMENT
By RUSS BAKER
Published: April 21, 2010
.
..."
In a filing last June, New Hampshire's securities regulator charged UBS with "dishonest and unethical" practices in selling notes from the now-defunct Lehman Brothers, causing New Hampshire investors $2.5 million in losses. Wrote one securities lawyer on Forbes’ website: “UBS is going to have to account for why it continued to aggressively market Lehman notes to retail customers as highly conservative investments at the very same time its institutional side was facilitating transactions designed to mask Lehman's financial troubles.”....
..
etc..
That's like the old joke about raffling off the dead mule... except the winner didn't get his $2 back!
sheee it man! what a way to go.
the choice is becoming starker every day.
use taxes to pay for poor loans, fat bonuses and the theory of failed economic policy or pay pensions, provide healthcare, pay for teachers and lock-up criminals.
of course invading iran would distract things for a while, maybe with a nuclear (spent uranium warheads) on the revolutionary guards with some collateral (no parallel to loans intended) damage.
roll on the evolution of common sense into mainstream politics!
and maybe this one.
CongressmanwithGuts.com.
http://maxkeiser.com/2010/06/27/ote60-on-the-edge-with-michael-hudson-26-june-2010/
.
and here another link worth the effort.
.
http://video.google.com/videoplay?docid=-8484911570371055528#
Bernanke, Summers, Geithner, Obama et al are so OLD AMERICA. Serving only the interests of the banks, the military complex and supported by their fascist corporate media whores.
The NEW EUROPE is like that young German soccer team that defeated the Brits 4:1 today.
Young, dynamic and successful.
Old America ... only surviving with one credit card limit increase at a time.
Try and take away the leverage and America is toast.
I find Greg Copley's (GIS & ISSA) take on Europe a little more cogent (and concise!). He says the same for Australia and the US.
Europe Artificial, wealth-induced complacency following the end of the Cold War led to fury when economic collapse inevitably occurred in 2010, leading to draconian restraint in public spending in many societies, but particularly Greece and Spain. It is said that tourists are warned not to feed bears in Yellowstone National Park (in the US) because the bears do not understand when the tourists have run out of food. State-fed populations in Europe, the US, and Australia (see below) equally do not understand when the free ride is over, and work must recommence. Germany, France, and the United Kingdom have begun the arduous path back to recovery, but the euro may, as a currency, have been irrevocably damaged, and the European Union itself may have spent the term of its virility. Clearly, the wealth-induced complacency, which had the compounding effect of allowing a decline in a sense of national survival and national identity among the European Union (EU) component states, has led now to a revived -- but as yet unrealized -- sense of nationalism. This is beginning to lead to the recognition of the cohesive national efficiency required for survival and competitiveness. It can be said that the EU destroyed nationalism, without replacing it with any mechanism to create a new sense of social cohesion, thus removing Europe's capability for economic competitiveness, self-defense, or ability to define a new culture (and identity) to replace the national identities. Had the British Labour Party Government of outgoing Prime Minister Gordon Brown persisted in office with his slavishly doctrinaire governance -- and demonstrably unworkable socialism, led by a privileged élite of Labour mandarins wallowing at the trough -- it is possible that an economic recovery in the UK would have been problematic. It may still be problematic. And in this, Brown was a prototype Obama, with his rank sense of entitlement. Even now, the British political psyche is fractured along geographic lines, and, wealth-induced, considers itself effectively "post-industrial", and therefore beyond the need for a manufacturing (or even agricultural base). Thus, even though the UK is now far more dependent on a maritime trade base than at any time in its history, it is incapable of defending or projecting that maritime base; neither does it have the wherewithal to trade.
Fabulous insight. Thank you.
Let's simplify this....
Politics are stronger than good economics ?
Yes or No ?
Answer: YES
Why ? Look at where democracies are today....
They were all given a credit card....and if humans can....they will and did max them out....
....................
So....What is both political and economically feasible ?
To redesign debt....
How ?
To structure repayment at the lowest interest rate and the lowest payments possible....
For example....
The monthly government payments would be smallest on a very low interest rate 100 year bond...
............................
Why ?
Which would be better ? To pay out 5 to 10% of what is available...or 40% of what is available ?
Although this is oversimplified....It serves as the only way to be able to both pay off debts and live in the current day with the least disruption....
...............................
But it does not stop there...
........................
Now that the total credit and asset valuations have changed from 100/100 to 60/100....the question becomes how to re-create assets on the books...particularly for middle class private books....
Answer...reconstruct a fairer and more universal common stock exchange that heavily favors and rewards middle class retail....
Today cannot be compared to the past....The past did not have internet capabilities...
A book could be written about why the solution to the world's economic middle class prosperity is with a properly designed worldwide fully electronic direct access exchange...ie a giant BATS model.....whereby all shares have to transact...no dark pools or off exchange matching....with all information on a boiler plate wiki format...available to all....
Thought and the flow of energy are very powerful. A person can leave himself open to being boosted to his next higher plane of energy, thought, understanding and the corresponding physical manifestation of this higher plane. If we are vigilant we will recognize these opportunities and embrace them. It seems that these steps up are painful and require energy and perseverence to accomplish but once attained are invaluable. The strongest usually come in the form of suggestions or criticisms by others or by recognizing a higher plane in someone else and acquiring it. The most important part is to recognise a higher level and then to do whatever it takes to truly climb up on that higher level. Thanks for the link.
yes, i think so. de nada.
In which country were real estate taxes reduced? It hasn't happened in the U.S. in recent times. For example, here in the Peoples' Republic of Massachusetts, the signature promise of Deval Patrick's (sadly) successful gubernatorial campaign in 2006 was a promise to lower everyone's real estate taxes.
Now, it was an utterly hollow promise as they're set at the town and city level. But his campaign manager, a certain slimy fellow named David Axelrod, knew that this was a major source of voter discontent as they've been climbing and climbing.
And, no, they're only starting to come down this last year, as values plumment.
don't forget Plouffe - Ned
How do you see so clearly, Blindman?
i have been blessed with the company and
presence of brilliant and loving influences, some
digital and symbolic, some corporeal. in my posts
i try to share the links where possible. i have also
been gifted with some most unusual life experiences
and suffering but second hand mostly, as in the suffering
of those that you truly love and you are powerless to
alter . that experience informs me that there is a difference
between real unavoidable suffering and suffering due to stupidity,
or carelessness, or laziness or bad "leadership". some suffering
is needless and the mind can comprehend the cause and effect
and conduct an intervention, ultimately must do this.
also, i have been given a life that runs in reverse, as the circumstances
of my personal life ran way ahead of the cycle we are seeing now.
socio financial collapse, this i experienced first hand from birth, relatively
speaking, as i still can sleep and eat and "work". but i was born into a
family that was "peaking" and began it's decline during my first conscious moments
so... i guess i have a certain built in familiarity and tolerance for doom and
years of questioning along the lines of why and what is happening? and have
half-digested all manner of bullshit and lies as justification for what was
obviously something else, hence i believe the very young children have the
ability to see the truth better, in many cases, than their parents.
or something like that. follow the links and question everything but
insist on a coherent narrative that takes into account the facts as even
a child could appreciate.
i would say. i have learned to identify lies by the movement of
the lips. ? so the question becomes not is it a lie but what is the
function of the lie and at whose service does it perform, sorry to
report. it is just a dynamic of deflation and collapse that overtakes
many who think they can manage the process to their advantage, self
interests. ? some would say the perspective is jaded or cynical
but this is not correct.
i love the universe because, well, just be cause that is it's nature.
that is what the truly blind see.
thanks for asking.
.
http://verbewarp.blogspot.com/search?updated-max=2010-06-25T06%3A38%3A00%2B08%3A00&max-results=1
Destiny
You are your soul - You are an immortalOnly dust returns to dust - Only ashes return to ashes.
Your destiny is in your own Mind and your Mind is your Heart!
The Universe is alive due to cause - and cause is of Universal Intelligence
You are the Verbe! pjb
Very nice blindman. Glad I got a chance to read your post. Thank you.
Yep, Soros talking his book...
Not sure what his book is. While he very well may be short the euro, he is definitely long cash (as are most big HF managers). Soros' money is not like Bill Gates or Larry Ellison, tied up in stock whose current market value could not be realized; it's cash. Yet here we have Soros pushing for something that would stem the deflation that would be a bonanza for a cash-rich person.
it is pretty transparent. international private finance is just
organized crime that has managed to have sovereign law changed
to allow sovereign representatives participation in the global
looting from inside their local domains. (facilitate looting of their
domains). so fraud is really not even
criminal anymore, it is a systemic art form. (this is why the system will fail
spectacularly.) wormsy worms and decay.
.
in the fall of 2008 the fraud worm turned and it's fresh underbelly was
exposed and needed some cover. a tarp as they say, to keep it from
burning in the mid day sun. the on call tarp makers looked around and
found many dreaming and sleeping with materials in their closets so they
went to work confiscating and tarp making. now the worm, covered in
it's new found solvency and protected from the burning mid day sun
is demanding austerity put on the same populations that just bailed them out
and covered their fresh worm belly. ? can this even be possible?
an "industry" (parasite) based on fraud, security ratings and feedback loop
affecting market pricing and in violation of reserve requirements, gone "rogue",
makes billions peddling toxic fraud and then dishes it off to sovereign treasuries
at full value, thereby being financed by the peoples debt twice, then seeks to
take advantage of said people's finance by lending them back their own money at
much higher rates, thrice financed, and and annndddd..... then will advance the
notion of austerity to collapse assets, all assets public and private now that it, the worm,
has all the cash and all the capacity to regulate credit with no restrictions by nasty, bad,
socialist leaning "government", now stupidly endowed with toxic fraud securities. with
the people's own money the worm buys the people
and anything they make or value. i think that is the american dream, year 2010.
to be a worm. working wormsy work worthwhile.
let your elders eat cat food, neither the government or the real government, bankers,
will likely notice.
it may be that certain circles of people are just too insulated from the effects of
their decisions and actions. or it may be that they do not care about the well being
of anyone other than, or maybe including, themselves? life remains hard and
wondrous.
and don't forget , support your troops. they are fighting for your cat food and not for
your cat. wait one second, that isn't right. ......?
oh yea.. now i get it........
brilliant. thank you.
I note the SPX has been using its 200dma as a roof, while NDX and R2000 has been using 200dma as a floor. Moreover, while people were obsessing about the SPX going over the 200dma, they should have noticed it often peeks through the 200dma only to spring back as it has done. Lastly, the HYG, easily the most important index, never did penetrate its 200dma. Perhaps the PPT can manipulate equities, but let's see them manipulate the junk bond market.
http://finviz.com/fut_chart.ashx?t=6B&p=d1&s=m
Austerity is the new black baby :-)
Wow, a rant against everything by Michael Hudson - this guy has lost his marbles and/or is pushing some own political agenda.
"It is nothing less than to roll back Social Security and pensions for labor, health care, education and other public spending, to dismantle the social welfare state, the Progressive Era and even classical liberalism."
All with some truth in it, but who made the unachievable promises, and not to forget who believed them?
So let's destroy the currency instead, to punish the rich, and the few responsible middle-class savers with them!
A few more nutjobs like him and it becomes guaranteed my insurance in the form of physical gold will give a fantastic payout.
I am totally in favor to let big banks fail, nationalize and dismantle them, while rescuing the deposits of middle-class savers (but not the bond holders!).
But the social security / pension system is a completely different ball park.
-- Well maybe my last sentence is what Michael Hudson is actually trying to say.
As a final note, having grown up in Germany I can tell you the age of Enlightenment seemed to be underway of slowly ending for some decades now, as seen in the thoughts and understanding of the people...
yes. your "last sentence is what michael hudson is actually trying to say". and does in fact say.
Michael Hudson has been attempting to disseminate his simplistic philosophy on Counterpunch for years now. He is ideologically driven, and thus his "answers" are ideologically driven, as opposed to being based on something tangible, such as observation or history.
Despite the length of the article, it boils down to two options.
With the juggernaut heading our way, carry on as we have been, only with the accelerator pushed down even harder, or put the brakes on.
With the former the head on crash and carnage is inevitable, with the latter the odds of survival are massively increased. I know which I prefer.
DavidC
Hudson's article might be a bit overdone, but that's not the point. The problem is the outdated thinking. With people continue to live longer & healthier lives, why stick to pension old-style? No one is willing to think, god forbid plan, for the future.
Worse are the knee-jerk responses. Especially the "we have to rebuild our industrial base". I'd like to bring in 'Automation World'. Biased, I admit it, but I think they make a good point: http://www.automationworld.com/webonly-320 : manufacturing jobs are globally in decline.
Last but not least: pension funds invested in stocks or treasuries and were supposed to pensions out of the gains. That model might be failing, so no wonder Leo Kolivakis is posting Hudson's article. As for cutting pensions, how low can you go? I'm sure in many countries unemployment benefit is higher than the pension. Unfortunately, the pensioner can't say "So what, I'm 75? I can still work! If no-one wants to employ me, I belong on unemployment!". Rules that made sense yesterday...
I think the countries of Europe will end up with some austerity, and nearly balanced budgets. This represents their actual wealth, not something artificial ginned up by crazy loans and printing money.
I can see that Germany will continue to use the Euro for exchange purposes, but it would not be a surprise if they and nearly all the other countries used something else to store wealth. I use my debit card for purchases because it is convenient. I use gold and DRIP stocks to preserve wealth. Germany can purchase gold, and natural gas futures, and completely avoid the problems of Greece.
Greece can get out of trouble by making sure that everyone in the wagon gets out and starts pulling the wagon. Make enormous tax benefits for small business and general investment. Make it easy to give part-time jobs to the elderly. Russia has already adopted a flat tax and no cap gains, they get it.
All these countries should start a massive immigration program for young, well-educated folks from the third world to come and start working, helping to smooth out the demographic curve.
In general, for the poor and elderly, assistance. For the able-bodied freedom and opportunity.
Not clearly defined, but could be something to work on...
Not clearly defined, but could be something to work on...
All these countries should start a massive immigration program for young, well-educated folks from the third world to come and start working, helping to smooth out the demographic curve.
Or just help their own. When they're prosperous, then they can think about calling folks from hellholes in.
yeah but it does beg the question he raises - - where did this "pension" B.S. start from ... was it just a headfake by the Free-Marketeers to say ... "go ahead work for low wages... but you'll be covered for life when you retire" and then the rug is pulled away. This is kinda the Hugh Hendry thing ... the Socialists are the ruling class... the create an ephemeral dependency and then, when it suits - - - they legislate that the "dependency/entitlement" has to end.
... and who are those Socialists? ... well, the people who profess "free markets" when it suits them ... but then say - well its you working class schleps... you're the ones who said you wanted pensons and jobs for life... and we, in our infinite benevolenece gave it to you ... and look what happened!
...its all a fucking game... and we should all ask just WHO is making the rules of that game (because it sure ain't the poor)
Socialists/Capitalists, it is simply a label to get your eye off the ball.
It all boils down to raw power of the few over the many. The method is always the same- bait and switch, then generate fear.
Naw, its all game theory at its finest. Bernanke and Geithner are more seasoned in their respective roles and with seasoning comes the confidence to act decisively.
Don't be surprised if the next move is the Fed announcing they will purchase European and Japanese short term securities (aka flood the world with dollars) in order to "provide the necessary liquidity to offset global fiscal tightening actions."
Neither is going to stand for Europe's indirect beggar thy neighbor approach.
For hells sake....just default...
There is no money to pay the pensioners or the rentiers.
A default of the Euro/dollar will collapse the international finance system-so what?
It is only the Soros of the world that need the current system to pillage off.
They rest of us will start anew rebuilding our local economics and industrial bases.
I say bring it on.....
Amen, as a father of two very young boys I am not ready to risk massive debts for my offspring, even if that means a wicked depression for me for the for the next five or ten years. It can hardly be worse than the last 20 years during which I have been pillaged by taxes, inflation and rigged markets.
you already have massive debt. the point is for what purpose? is it to employ workers who can't find work in a deflationary depression, to fund investment in new or better technologies to make the oil spill in the gulf obsolete? or is it to continue to service the bad real estate loans extended by the "private sector" during the housing bubble? that is the question rightly posed.
Leo is right that Europe will be okay, but I think for different reasons. In Continental Western Europe, people will not put up with being mauled past a certain point. French-led general strikes, populist mass revolutions if necessary. People power, it is still here. European citizens are ready to storm the Bastille once more.
So eerie how Michael Hudson seems to have the whole thing backwards ... he says it's the plot of the oligarchs to limit excessive government debt ... when many of us think it's the absurd excessive gov't debt that is the precise plot of the oligarchs at work ... maybe Michael Hudson and places like CounterPunch - pseudo-lefty web-zine - may be stealth devious tools of the oligarchs, trying to sell the increasing Japan-style debt levels that seem almost guaranteed to blow up the system and destroy these societies.
Yes, workers and labour should have and keep many of the European-style social protections ... but blowing up governments with absurd debt is not the way to protect that.
You make some good points, but I think you may be misunderstanding Prof. Hudson's point: it's the way in which government debt is structured which is what the oligarchs are behind.
At least, that's the way he's been stating it over many years, if I've been reading him correctly (and he's been right on target, as I've been reading his work for over thirty years).
it's all like a fight over the barbecue pit. one says
cook it hotter the other lower, more charcoal less
charcoal. but the cooking is taking place regardless.
to reap the value of the meat, to have it cooked just so,
is a matter of taste. not enough is raw, too much is dried
out, etc...
the more parties at the pit the more meat gets cooked
the more disagreement on the best way to cook it.
it reminds me of the corporate raiders of the mid 80's and the
old money new money wars, now on a global stage with more
meat in the pit. "civilized" predation of people and a big fire,
that is what the bankers love on Sundays. and the money(debt) that
comes from war.
Right on bgiB
That was a live cat bounce !