Popular Unity head Lafazanis says new party supports orderly #Grexit and does not accept #Greece being blackmailed by Merkel & Schäuble.
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Globalized Crisis
Globalized Crisis
If there is a bright side to the turmoil that has roiled the global economy since 2008, it is that not every part of the world has erupted simultaneously. The first blow was the subprime mortgage crisis in the United States, to which Europeans responded with self-satisfied reflections on the superior resilience of their social model. Then, in 2010, with the outbreak of the European debt crises, it was America’s turn for schadenfreude, while Asian countries pointed to the over-extended welfare state as the root of the problem.
Today, the world is obsessed with the slowdown in China and the woes of its stock market. Indeed, to some, what is happening in China may be a modern version of the American stock-market crash in 1929 – a shock that shakes the world. And it is not only the Chinese economy that has hit turbulence; Russia and Brazil are in much worse shape.
As globalization connects far-flung people and economies, the consequences are not always what was expected – or welcome. And, with the economic crisis becoming ever more global in nature, the next challenge for policymakers will be to try to mitigate its effects at home – and to contain their constituents’ impulse to reduce engagement with the rest of the world.
By now, it has become clear that every success story has its dark side, and that no economy is likely to continue to rocket upward indefinitely. But, to paraphrase Leo Tolstoy, it is important to remember that every unhappy economy is unhappy in its own way, and that a fix for one country’s problems might not work for another’s.
Europe’s problems, for example, cannot be attributed to a simple, single cause – such as the adoption of a common currency. In the run-up to the euro crisis, Italy had undergone a long period of stagnation, while Spain had experienced an American-style housing bubble and Greece was suffering from too much government-fueled growth. The uniting factor was that each had adopted unsustainable policies that required corrective action.
Read more at http://www.project-syndicate.org/commentary/globalized-economic-crisis-by-harold-james-2015-09#f5oBvDqv7Zb9mM5A.99
Will Uncle Sam Confiscate Gold Again?
Will Uncle Sam Confiscate Gold Again?
Investors suffered financial losses in recent weeks as stocks globally came under pressure in August and had their worst month in the last three years.
In one of the most volatile trading periods since the global financial crisis, August saw a massive $5.7 trillion erased from the value of stocks worldwide. No major stock market was left unscathed and the risk of financial and economic contagion became evident again.
There are growing concerns internationally that in the event of another Wall Street or global stock market crash and a new systemic crisis – a Eurozone debt crisis or another Lehman Brothers collapse – there could be enforced bank closures or extended bank holidays in the EU and U.S. as seen in Greece recently.
In this scenario, deposit boxes and vaults in U.S. banks and financial institutions could be sealed and gold confiscated again.
There is a legal precedent for this. April 5th, 1933 – at the height of the Great Depression – was the day when U.S. President Franklin Delano Roosevelt instructed all American citizens to hand over all their gold coins and bars to the Federal Government.
Every coin, bar and certificate had to be handed in to Roosevelt’s government or else one would face a very large fine of $10,000 or 10 years in jail. That is whopping fine of $180,000 fine in today’s money.
Gold was money at the time as dollars were backed by gold so in effect Roosevelt was confiscating the safest and most valuable form of money that people owned for the benefit of the state. Under the Gold Confiscation Act of 1933 Roosevelt ordered all gold be handed to the authorities. At the time, gold was valued at $20 per ounce. Once the gold was confiscated from the citizens and in the government coffers they revalued gold and devalued the dollar to $35 per ounce.
…click on the above link to read the rest of the article…
Third Greek Bailout Suddenly In Jeopardy: Creditors Warn Cash May Be Delayed If Elections Don’t Go As Desired
Third Greek Bailout Suddenly In Jeopardy: Creditors Warn Cash May Be Delayed If Elections Don’t Go As Desired
Just when everyone was convinced that the main “risk off” event of the summer, namely the Greek bailout, was safely tucked away and that having abdicated its sovereignty to its creditors and Germany in particular, who now hold the Greek banking system hostage courtesy of draconian capital controls, that Greece would continue to receive its monthly cash allotment just so it could repay creditors from its first two bailouts and would notmake headlines for the foreseeable future , Market News just reported that suddenly even the Greek bailout is no longer on autopilot as a result of the upcoming elections in three weeks, whose outcome is anything but assured.
According to Market News, “Greece’s international creditors may delay the first review of the country’s bailout until November, multiple EU sources told MNI Tuesday, pushing talks on potential debt relief further down the road as Greece prepares for snap national elections on September 20.”
And just in case it was not clear that Greek sovereignty is now entirely conditional on the Greek people voting precisely as the Troika requires, and for a continuation of the austerity terms delineated in the 3rd Greek bailout, MNI reports that “officials will also stress that any new government that emerges from this month’s poll must meet the current bailout terms in order to release the E3 billion pending from the its first loan tranche and have already warned the interim government to continue with the implementation of prior actions set for September.”
In other words more of the same: Greece pretending to reform, creditors pretending to inject funds into the Greek economy:
“Realistically speaking, the inspectors’ return to Greece might be delayed and the first assessment could take place in November instead of October. In such an event I don’t expect talks about another Greek debt relief to run simultaneously,” a top Commission source said.
…click on the above link to read the rest of the article…
Whitewashing the IMF’s Destructive Role in Greece
Whitewashing the IMF’s Destructive Role in Greece
This autumn may see anti-austerity coalitions gain power in Portugal, Spain and Italy, while Marine le Pen’s National Front in France presses for outright withdrawal from the eurozone. These countries face a common problem: how to resist the economic devastation that the European Central Bank (ECB), European Council and IMF “troika” has inflicted on Greece and is now intending to do the same to southern Europe.
To resist the depression and debt deflation that the troika seeks to deepen, one needs to bear in mind the dynamics that make the IMF un-reformable. Its destructive role in Greece provides an object lesson for how southern Europe must shun its horde of ideologues, as Third World countries learned to avoid it by May 2013, the year that Turkey capped the world’s extrication from IMF “advice.” Already in 2008, Turkey’s prime minister Recep Tayyip Erdogan announced: “We cannot darken our future by bowing to the wishes of the IMF.”[1]Greek voters have now said the same thing.
To soften resistance to the IMF’s austerity demands, a public relations drive is being mounted to rehabilitate the myth that the Fund can act as an honest broker mediating between anti-labor finance ministers and the PIIGS – Portugal, Italy, Ireland, Greece and Spain. On Friday, August 28, three Reuters reporters published a long “think piece” trying to show that the IMF is changing and that its head, Christine Lagarde, has seen the light and seeks to promote real debt relief.[2]
The timing of this report seems significant. The IMF got “back in business” in 2010 when its head, Dominique Strauss-Kahn, overrode its staff and many Board members in order to join the troika and shift the country’s bad debt from French and German bankers onto the Greek people. That is the story I tell in Killing the Host, whichCounterPunch published in an e-version last week. (The hard-printand Kindle versions are now available on Amazon.)
…click on the above link to read the rest of the article…
Meanwhile In Greece, Pension Funds Tap Emergency Loans
Meanwhile In Greece, Pension Funds Tap Emergency Loans
This has not been a great year to be a pensioner in Greece.
Over the course of the country’s fraught bailout talks, Greece’s pension system was frequently in the troika’s crosshairs. As for PM Alexis Tsipras, pension cuts were generally considered to be a so-called “red line” and intractable disagreements over pension reform quite frequently resulted in the total breakdown of negotiations.
Meanwhile, the increasingly untenable financial situation and acute liquidity squeeze very often meant that payments to pensioners were in doubt, even as Athens went out of its way to assure the public that whatever funds were left in Greece’s depleted coffers would go to public sector employees before they would go to EU creditors or to Christine Lagarde.
The situation reached it’s “heartbreaking” low point on July 1 when Greek banks that had been shuttered after the institution of capital controls opened for a few hours to ration payments to long lines of pensioners who were forced to effectively beg for €120.
In theory, the bailout agreement – while promising more austerity and more pressure on the bloated pension system – should at least guarantee that there will be money in the banks to make monthly payments, but that assumption now looks to be in doubt because as Kathimerini reports, both IKA and ETAA are tapping a contingency fund that guarantees social security programs for fear that the provisions of the bailout will not provide for sufficient enough savings to fund the remainder of this year’s payouts. Here’s the story:
Greece’s state insurance funds are resorting to external loans to cover their needs as fears grow that the measures of the third bailout will not be enough to cover the rest of 2015’s liquidity needs.
…click on the above link to read the rest of the article…
Another Black Swan? Syriza Outcasts Form New Political Party, Will Push For Grexit
Another Black Swan? Syriza Outcasts Form New Political Party, Will Push For Grexit
Once upon a time, Panagiotis Lafazanis had a plan to save Greece.
On July 14, just two days after Prime Minister Alexis Tsipras sold out the Greek referendum “no” vote by agreeing to a shockingly punitive bailout deal in Brussels, Lafazanis convened a meeting of Syriza party “rebels” at a hotel in Athens. There, he allegedly attempted to convince his fellow lawmakers to storm the Greek mint, seize the country’s reserves, and arrest central bank governor Yannis Stournaras. “Obviously, it was a moment of high tension,”one activist who attended the secret meeting later told FT.
Yes, “obviously.” Equally obvious once news of the meeting leaked was that Lafazanis would not be Energy Minister for much longer and sure enough, he was sacked by Tsipras as the premier sought to pave the way for a series of votes in parliament on bailout prior actions.
Earlier this month, as rumors started to circulate that Tsipras might not have the support to survive a confidence vote, Lafazanis announced he was forming his own political party, which was funny right up until Thursday when Tsipras resigned, setting off a series of events that will see Greeks head back to the polls in September. Now, Lafazanis has seized the opportunity to convince 28 other Greek lawmakers to join him and his new party which will be called “Popular Unity,” an ironic choice, given that it grew out of the desire to split with a party leader who had become decisively unpopular among Syriza’s Left Platform.
Tsipras Reportedly Set To Step Down, Call Snap Elections As Early As Today
Tsipras Reportedly Set To Step Down, Call Snap Elections As Early As Today
As Greece struggled to seal the deal on its latest bailout agreement with creditors, it became abundantly clear that embattled PM Alexis Tsipras was going to have a difficult time preserving his coalition government.
In short, the Syriza defections were mounting with each passing parliamentary vote and Tsipras was forced to rely on opposition lawmakers for support.
Realizing that implementing the bailout would be all but impossible considering the extraordinarily fractious political environment and lacking the support necessary to win a confidence vote, it looks as though Tsipras will call for new elections as early as today now that the country has made a critical payment to the ECB. Here’s The Telegraph:
Hello and welcome to live coverage of Greece’s political crisis, where it seems that Alexis Tsipras is on the verge of calling a snap on the same day his country managed to secure its first bail-out cash from international creditors in over a year.Greek state broadcaster ERT is reporting that the embattled prime minister will announce the vote later today. The PM has been meeting with government officials this afternoon and could resign from office having called the vote. September 13 and 20 have been touted as possible dates.
The 41-year-old Syriza leader remains the most popular politician in the country, despite presiding over six months of ill-tempered talks with creditors in which he was forced to capitulate when faced with the threat of a euro exit.
“Anything is possible” Earlier today, a Greek government official told reporters that “everything is possible,” when asked whether Tsipras could announce elections today.
According to Greek media, the PM has been holed up with his aides and officials in the Maximos Mansion in Athens deciding on what his next move will be.
…click on the above link to read the rest of the article…
Can Kickers United—–Why It’s Getting Downright Hazardous Out There
Can Kickers United—–Why It’s Getting Downright Hazardous Out There
It’s getting downright hazardous out there, and not just because the robo-machines were slamming the “sell” key today. The real danger comes from the loose assemblage of official institutions which claim to be running the world.
They might better be referred to as “can kickers united.” It is now blindly obvious that they have lapsed into empty ritualism, contrivance and double-talk in the face of a global economy and financial system that is becoming more unstable and incendiary by the day.
Who in their right mind would pile $95 billion of new debt on the busted remnants of Greece? Likewise, how can Japan possibly consider enacting still another round of fiscal stimulus when it already has one quadrillion yen of debt? And what geniuses are trying to fix the bankrupt finances of China’s local governments by swapping trillions of crushing bank loans for equivalent mountains of new municipal bonds?
Turning to the the home front it is more of the same. By what rational calculus can it be said, as the Fed did in its meeting minutes, that 80 months of free money has not quite yet done the job? And that is exactly what these mountebanks had to say:
The Committee concluded that, although it had seen further progress, the economic conditions warranting an increase in the target range for the federal funds rate had not yet been met.Members generally agreed that additional information on the outlook would be necessary before deciding to implement an increase in the target range.
Say again! We are now 74 months into a so-called “recovery” cycle that is well longer than the post-war average, yet the Fed is still manning the emergency fire hoses:
Even its own research department at the St. Louis Fed has just confessed that the whole rigmarole of QE and ZIRP has had no favorable impact on the main street economy.
…click on the above link to read the rest of the article…
Gullible Americans Forever
Gullible Americans Forever
“Next the statesmen will invent cheap lies, putting the blame upon the nation that is attacked, and every man will be glad of those conscience-soothing falsities, and will diligently study them, and refuse to examine any refutations of them; and thus he will by and by convince himself that the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception.” — Mark Twain
Listening to NPR news today I was reminded how throughly this once independent voice has sold out.
I was also reminded of the Mark Twain quote above. NPR reported that Syrians were lined up in Turkey waiting on passage on inflatable rafts to Greece. According to the NPR report, there are 2 million Syrian refugees in Turkey and 250,000 Syrians have been killed. NPR said nothing about the cause of this murder and displacement of vast numbers of people. It was if the plight of these people materialized out of thin air. The fact that Washington sicced ISIS, al Qaeda, Turkey, the US and NATO Air Forces, and Washington’s Middle Eastern vassals on Syria was not mentioned. The view on NPR is the same as Washington’s — that if only Assad would resign and hand Syria over to Washington, everything would be fine.
Americans don’t go to bed every night unable to sleep from shame from the atrocities that the US government has inflicted on Syria. And on Iraq. And Libya. And Afghanistan. And Pakistan. And Yemen. And Somalia. And Ukraine. And Serbia. According to the prostitute media, all of these human catastrophes are the work of dark forces that America must combat. It is all a clever orchestration of public emotion in favor of the military/security complex’s bank balance.
…click on the above link to read the rest of the article…
Only The Date Is Unknown
The US and world economies are frauds that are coming unraveled. The Greek bailout is the most recent example of “kick the can down the road” solutions. The US housing bubble was an attempt to cover up/recover from the dot-com bust. Now the US is in a financial bubble engineered to recover from the housing bubble debacle. Soon this bubble will burst. Only the date is unknown.
Two predictions can be made with reasonable confidence:
- The stock market is likely to be halved and that might be optimistic. Only the date is unknown.
- The economy will eventually resemble the Great Depression. Only the date is unknown.
Nothing is ever certain. An experienced CFO told me at the beginning of my career that “even the impossible has a 20% probability.” In deference to him and years of empirical evidence, I put the the above two events as virtually certain, i.e., an 80% probability.
The Current Problem
Phoenix Capital provided reasons to expect horrible outcomes:
- The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.
- The derivatives market that uses this bond bubble as collateral is over $555 trillion in size.
- Many of the large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt. NO ONE knows to what degree this has been the case, but given that 20% of corporate CFOs have admitted to faking earnings in the past, it’s likely a significant amount.
- Corporations today are more leveraged than they were in 2007. As Stanley Druckenmiller noted recently, in 2007 corporate bonds were $3.5 trillion… today they are $7 trillion: an amount equal to nearly 50% of US GDP.
…click on the above link to read the rest of the article…
Austerity and degrowth – dealing with the economic crisis and the ecological crisis together
Austerity and degrowth – dealing with the economic crisis and the ecological crisis together
This article arises from increasing frustration and irritation about the way that the debate about Greece, and in general about austerity, is framed. My frustration is not only with the policy thugs who are implementing austerity, but also, to a degree, with their critics – which includes the failure of most of the critics of growth to actually get involved in this controversy and argue their own point of view. There have been attempts, for example by Nicola Hinton of the Post Growth Institute. It seems like a tough one to argue for degrowth in the context of the Greek crisis and as an alternative to austerity – but then all the more reason to try. Otherwise a movement for degrowth will never get out of the university lecture rooms into the real world. It will never become a guide or a narrative for the future of society to be realised in practical and popular politics.
Austerity – elite terrorism against ordinary people
So let’s start by reframing the debate about austerity. When Yanis Varoufakis describes what has happened to Greece as “Fiscal Waterboarding” he is part way in the direction that I mean. His description of austerity as a form of terrorism is also right.
The purpose of austerity is to create insecurity and instill fear in the general population in order to protect the finance and banking sector from popular rage against the crimes the participants of this sector have committed against ordinary people. This rage ought to have given rise a long time ago to legal actions and desperately needed fundamental reforms to take away from bankers the right to create money, a right which they have abused at tremendous cost to ordinary people.
…click on the above link to read the rest of the article…
When the next crisis comes, which movements will seize the opportunity?
When the next crisis comes, which movements will seize the opportunity?
You, too, could be caught in a situation where people are ready for an alternative, yet your group has none to offer.
It’s understandable. We who work for change seem years away from convincing a critical mass of people that it is both stupid and wrong to have a school-to-prison pipeline, or a rate of carbon emissions killing hundreds of thousands of people, or a “national security strategy” that mainly breeds insecurity.
Historic change does not always have the gradual-then-accelerating curve shown by the LGBTQ movement. At times, a system goes into crisis. In 2007-2008 financial sectors in many countries skidded toward the cliff; Iceland’s even went over the cliff. Crisis equals opportunity, for those who are ready to use it.
I asked a Washington, D.C., friend who works among progressive Democrats what he heard after the Wall Street disaster. Did people in his circle discuss organizing the strong, grassroots anger into a push for major reform? He knew of none. As it turned out, that anger was organized by the right and became the Tea Party. Polls show that even today many people identifying as Tea Party members express hostility to Wall Street.
All this missed opportunity should be seen in the context of Barack Obama’s presidency, since it was he who said, during his candidacy, that the Swedish solution to its own banking crisis had been correct: Seize the banks rather than bail them out. (In a recent New Yorker article on Greece, former finance minister Yanis Varoufakis said President Obama told him that the U.S. bailout was against his personal politics.)
Presidents do what they do, given the existing power realities they face. The lesson for us in the United States is: In 2009 we lacked a powerful movement that had a vision, and was willing to mobilize direct action on behalf of that vision.
…click on the above link to read the rest of the article…
Approaching a Global Deflationary Crisis?
Approaching a Global Deflationary Crisis?
Anyone with any sense for global economic trends ought to be worried. The signs are everywhere of a serious deflationary crisis. It is obvious that Chinese growth is falling. The prices for energy and the raw materials that feed the growth economy keep falling. The demand for Chinese exports is down too. Stock Markets in Asia are falling, despite attempts to prop them up. Countries are being tempted to export their problems abroad – for example by competitive devaluation. In Europe its obvious that a “solution” is being cobbled together for the Euro and Greek crisis even though no one at all believes that it will work. At the same time the policy response of “quantitative easing” which has kept interest rates down very low has reached the end of the road. With interest rates at or near to zero the scope for addressing the crisis through monetary policy (low interest rates) is exhausted. Many pundits believe that low interest rates have not encouraged productive investment but speculative bubbles – the creation of capacity in fields that in the long run will not pay, or fuelled a casino style speculation, a giant bubble of bets that could soon collapse, bringing the global economy down with it.
So what is going on? How do we explain the situation? In this paper I am going to argue that there are a number of ways of understanding and addressing what is developing into a global crisis. The desire to make the crisis understandable can convert into a temptation to make it seem simpler than it is. At its most banal we have the explanations that neo liberal German politicians are prone to – like the idea that the crisis is because of a lack of confidence and trust and that this can be resolved (in Europe) purely and simply by countries following the Eurozone rules. If the confidence and trust are restored then all will be well and the market will restore prosperity.
…click on the above link to read the rest of the article…
The Crisis Is Spreading: China, Australia, Brazil, Canada, Sweden…
The Crisis Is Spreading: China, Australia, Brazil, Canada, Sweden…
Earlier today, we posted an excerpt from IceCap Asset Management’s latest letter to investors focusing on the farce that is the Greek bailout #3, which can be summarized simply by the following table…
… and Keith Dicker’s assessment which was that “for Greece, it’s mathematically impossible to repay its debt” and that the Greek “economy continues to plummet to deeper depths and is now -33% less than where it was in 2008.”
But the truth is that for all the endless drama, Dicker continues, “the Greek debt crisis isn’t THE crisis. Rather it is simply a symptom of a much larger global debt crisis.”
The problem is that the “larger global debt crisis” is finally metastasizing and spreading to more places, all of which are large enough that they cannot be simply swept under the rug, like Greece.
* * *
IceCap’s Keith Dicker continues:
We’ve written before that governments all around the world have borrowed too much money and the weight of these debts are choking economic growth.
And to make matters worse – these very same governments and their central banks have implemented various plans that have only made matters worse.
Our view has not changed – the global debt crisis has escalated to a point where the government bond bubble has inflated itself to become the mother of all bubbles. It’s going to burst, and when it does it wont be pretty.
Further evidence to support our view is as follows:
Canada – the collapse in oil and commodity markets has pushed the country into recession and the Canadian Dollar to decline to levels lower than that reached during the 2008 crisis.
Oil dependent provinces Alberta and Newfoundland remain in deep denial. Since everyone in these provinces have only ever experienced a booming oil market, many naively believe things will bounce back – and quickly.
Meanwhile, both Toronto and Vancouver housing markets also remain in denial as they continue to go gangbusters. Buyers today are likely buying at all-time highs.
…click on the above link to read the rest of the article…
