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Assange, Varoufakis, Brexit

Assange, Varoufakis, Brexit

Max Ernst The Angel of the home or the Triumph of Surrealism 1937

A friend of mine here in Athens, Greece, named Wayne Hall, who’s of Australian descent but moved here at about the time Napoleon headed for St. Petersburg, and works as a translator and language teacher, sent me a mail a few days ago that I thought was interesting.

In particular, Wayne referred to a video I didn’t know existed, of Julian Assange hosting a get-together in the Ecuadorian embassy in London on the night of the Brexit referendum, June 23, 2016, that includes a video (sound) link to Yanis Varoufakis who was in Rome at the time.

Julian was receiving visitors and broadcasting! How times have deteriorated, it’s heart-rendering, and it’s so painfully good to see him here in better days…. That video is below. The sound quality of Varoufakis speaking is really bad, and I don’t have the equipment here to work on that, but Wayne was kind enough to transcribe it. See also below.

What I found especially intriguing is the difference in view between the two: Varoufakis wanted (wants) the UK to stay in the EU, in order to reform it from within. And he thinks (thought) that his cross-European party, DiEM 25, can play a role in that. Even though it has no seats in the EU parliament, not then, and not now.

Assange, on the other hand, was pretty much pro-Brexit. He was quite clear about this (a few hours before the referendum results were in):

[..] if there is a Leave or even if the vote is very close, which it surely is, it is something that calls into question the political legitimacy of the European Union in the way it has been conducted so far. And really it’s quite incredible that it came to this. 

 …click on the above link to read the rest of the article…

Ann Pettifor: If I governed the Bank of England, here’s what I do

Ann Pettifor: If I governed the Bank of England, here’s what I do

The radical economist outlines how she’d overhaul the UK’s broken economy.

If such an implausible appointment were ever to be made by a Labour chancellor, I would regard it as a great honour. The Bank of England stands at the pinnacle of Britain’s monetary system, which I regard as one of Britain’s great public goods. It is as vital to our economic health as the sanitation system is to public health. The development of the monetary system and the founding of the Bank of England in 1694 represented – despite all its flaws – a great civilisational advance. As the £1,000 billion bailout of the banking sector in 2007-9 proved, thanks to our monetary system, there need never be a shortage of money. We need never lack the money for all that society regards as vital to economic, social, political and ecological stability. I write that with feeling, having worked in countries that lack a developed monetary system, and therefore have no money.

The Bank of England, explained the governor Mark Carney recently, is ‘the only game in town’. The bank’s power – or at least the power of its civil servants and monetary policy committee members – was greatly enhanced during the Blair government. Under Gordon Brown’s watch one of the most important economic tools available to any government – the power to determine the rate of interest (bank rate) – was delegated to a committee of unelected men (and the occasional woman) at the Bank of England. Brown made clear in 1997 that the monetary policy committee was expected to wield this great power independently of parliament’s scrutiny.

…click on the above link to read the rest of the article…

Argentine President Admits “More Poverty” To Come, Announces Price Controls, Higher Taxes, Smaller Govt

Having been told by The IMF that he must stop using their bailout funds to prop up his currency (which has been utterly futile), Argentine President Mauricio Macri addressed the troubled nation this morning to announce his plans to satisfy Christine Lagarde’s demands in order to receive the next tranche of bailout cash sooner.

Things have not worked out so well since The IMF “bailed them out”…

In his address, there was good news, bad news, and ugly news.

“Everyone has to make sacrifices,” Macri implored of his nation’s citizens – who have lost 50% of their wealth year-to-date due to the collapse of the peso, which he also attributes to being “exaggerated by Turkey and Brazil weakness.”

Having blamed “mostly external factors” for the collapse of the economy (not bingeing on too much dollar-denominated debt in order to manufacture a smoke-and-mirrors-based boom), Macri notes that investors “have started doubting” Argentina’s ability to function.

The Good News

Macri has promised to dramatically shrink the size of the government, eliminating several ministries entirely, adding that Argentina must “set a goal not to spend more than we have.”

The Bad News

In an effort to close its budget gap, Macri will raise taxes on its one positive economic attribute – its exporters.

The Ugly News

Amid the hyperinflationary regime shift that is occurring, Macri will resort to price controls of some essential foods. When has that ever ended well.

All of which, as Bloomberg notes, is intended to signal a shift in the government’s strategy as it heads into talks on Tuesday with the International Monetary Fund to speed up the disbursement of cash from a $50 billion credit line.

Macri is now caught between the ‘rock’ of pleasing investors by cutting spending, and the ‘hard place’ of ensuring that the belt-tightening of austerity doesn’t cause social upheaval ahead of next year’s election.

These measures, Macri warned “will lead to more poverty.”

For now, the peso is stable (modestly weaker)…

This is Italy. This is not Sparta.

Nikolay Dubovsky Became Silent 1890

“European Stocks Surge Celebrating New Spanish, Italian Governments”, says a Zero Hedge headline. “Markets Breathe Easier As Italy Government Sworn In”, proclaims Reuters. And I’m thinking: these markets are crazy, and none of this will last more than a few days. Or hours. The new Italian government is not the end of a problem, it’s the beginning of many of them.

And Italy is far from the only problem. The new Spanish government will be headed by Socialist leader Pedro Sanchez, who manoeuvred well to oust sitting PM Rajoy, but he also recently saw the worst election result in his party’s history. Not exactly solid ground. Moreover, he needed the support of Catalan factions, and will have to reverse much of Rajoy’s actions on the Catalunya issue, including probably the release from prison of those responsible for the independence referendum.

Nor is Spain exactly economically sound. Still, it’s not in as bad a shape as Turkey and Argentina. A JPMorgan graph published at Zero Hedge says a lot, along with the commentary on it:

The chart below, courtesy of Cembalest, shows each country’s current account (x-axis), the recent change in its external borrowing (y-axis) and the return on a blended portfolio of its equity and fixed income markets (the larger the red bubble, the worse the returns have been). This outcome looks sensible given weaker Argentine and Turkish fundamentals. And while Cembalest admits that the rising dollar and rising US rates will be a challenge for the broader EM space, most will probably not face balance of payments crises similar to what is taking place in Turkey and Argentina, of which the latter is already getting an IMF bailout and the former, well… it’s only a matter of time.

…click on the above link to read the rest of the article…

When America’s Fiscal Crisis Hits, Be Forewarned that Tax Increases Will Make a Bad Situation Worse

When America’s Fiscal Crisis Hits, Be Forewarned that Tax Increases Will Make a Bad Situation Worse

When America’s fiscal crisis hits, remember that raising taxes will only exacerbate the problem.

At some point in the next 10 years, there will be a huge fight in the United States over fiscal policy. This battle is inevitable because politicians are violating the Golden Rule of fiscal policy by allowing government spending to grow faster than the private sector (exacerbated by the recent budget deal), leading to ever-larger budget deficits.

I’m more sanguine about red ink than most people. After all, deficits and debt are merely symptoms. The real problem is excessive government spending.

But when peacetime, non-recessionary deficits climb above $1 trillion, the political pressure to adopt some sort of “austerity” package will become enormous. What’s critical to understand, however, is that not all forms of austerity are created equal.

The crowd in Washington reflexively will assert that higher taxes are necessary and desirable. People like me will respond by explaining that the real problem is entitlements and that we need structural reform of programs such as Medicaid and Medicare. Moreover, I will point out that higher taxes most likely will simply trigger and enable additional spending. And I will warn that tax increases will undermine economic performance.

Regarding that last point, three professors, led by Alberto Alesina at Harvard, have unveiled some new research looking at the economic impact of expenditure-based austerity compared to tax-based austerity.

…we started from detailed information on the consolidations implemented by 16 OECD countries between 1978 and 2014. …we group measures in just two broad categories: spending, g, and taxes, t. …We distinguish fiscal plans between those that are expenditure based (EB) and those that are tax based (TB)… Measuring the macroeconomic impact of a plan requires modelling the relationship between plans and macroeconomic variables.

Here are their econometric results.

…click on the above link to read the rest of the article…

Eleven Saudi Royals Arrested For Protesting Against Austerity

Members of Saudi Arabia’s royal family have apparently learned nothing from their cousin’s authoritarian tendencies. To wit, Saudi authorities on Saturday detained 11 princes after they gathered at a royal palace in Riyadh to protest austerity measures imposed by their cousin and the state’s de facto leader: Crown Prince Mohammad bin Salman, aka MbS.

Saudi

Crown Prince Mohammad bin Salman

As part of the latest wave of cutbacks forced by still-low oil prices, bin Salman suspended payment of royals’ utility bills. The decision triggered a backlash among the royals who weren’t prosecuted during the Crown Prince’s “corruption crackdown”/cash grab from late last year, and they swiftly assembled at the Qasr a-Hokm, a historic royal palace, to demand the cancellation of a royal decree that stopped state payment of water and electricity bills for royal family members. The move was a rare act of defiance against the Saudi crown, per Reuters. They were also demanding compensation for a death sentence issued against a relative, local media  reported.

In light of recent “events” in Saudi Arabia, it was a rather poor decision.

The identities of the princes taken into custody have not been released. However, the leader of the group has been identified by the initials S.A.S.”Everybody is equal before the law and anyone who does not implement regulations and instructions will be held accountable, no matter who he is,” a local media website added.

Late last year, MbS imprisoned dozens of royals at the Riyadh Ritz Carlton until they agreed to fork over substantial chunks of their wealth in exchange for their freedom. The shakedown resulted in one former general being tortured to death after refusing to give in to MbS’s remunerative demands – the princes spoke up, and were promptly taken into custody.

…click on the above link to read the rest of the article…

The Greek Fraud Reads Like a Crime Novel


Tamara de Lempicka The refugees 1937
Note: I feel kind of sorry this has become such a long essay. But I still left out so much. You know by now I care a lot about Greece, and it’s high time for another look, and another update, and another chance for people to understand what is happening to the country, and why. To understand that hardly any of it is because the Greeks had so much debt and all of that narrative.

The truth is, Greece was set up to be a patsy for the failure of Europe’s financial system, and is now being groomed simultaneously as a tourist attraction to benefit foreign investors who buy Greek assets for pennies on the dollar, and as an internment camp for refugees and migrants that Europe’s ‘leaders’ view as a threat to their political careers more than anything else.

I would almost say: here we go again, but in reality we never stopped going. It’s just that Greece’s 15 minutes of fame may be long gone, but its ordeal is far from over. If you read through this, you will understand why that is. The EU is deliberately, and without any economic justification, destroying one of its own member states, destroying its entire economy.

A short article in Greek paper Kathimerini last week detailed the latest new cuts in pensions the Troika has imposed on Greece, and it’s now getting beyond absurd. For an economy to function, you need people spending money. That is what keeps jobs alive, jobs which pay people the money they need to spend on their basic necessities. If you don’t do at least that, there’ll be ever fewer jobs, and/or ever less money to spend. It’s a vicious cycle.

…click on the above link to read the rest of the article…

Monetary Imperialism

Monetary Imperialism

Photo by Nathaniel St. Clair

In theory, the global financial system is supposed to help every country gain. Mainstream teaching of international finance, trade and “foreign aid” (defined simply as any government credit) depicts an almost utopian system uplifting all countries, not stripping their assets and imposing austerity. The reality since World War I is that the United States has taken the lead in shaping the international financial system to promote gains for its own bankers, farm exporters, its oil and gas sector, and buyers of foreign resources – and most of all, to collect on debts owed to it.

Each time this global system has broken down over the past century, the major destabilizing force has been American over-reach and the drive by its bankers and bondholders for short-term gains. The dollar-centered financial system is leaving more industrial as well as Third World countries debt-strapped. Its three institutional pillars – the International Monetary Fund (IMF), World Bank and World Trade Organization – have imposed monetary, fiscal and financial dependency, most recently by the post-Soviet Baltics, Greece and the rest of southern Europe. The resulting strains are now reaching the point where they are breaking apart the arrangements put in place after World War II.

The most destructive fiction of international finance is that all debts can be paid, and indeed should be paid, even when this tears economies apart by forcing them into austerity – to save bondholders, not labor and industry. Yet European countries, and especially Germany, have shied from pressing for a more balanced global economy that would foster growth for all countries and avoid the current economic slowdown and debt deflation.

…click on the above link to read the rest of the article…

The Only Real Europe is Greece


Eugene Delacroix Greece expiring on the Ruins of Missolonghi 1826
European Commission president Jean-Claude Juncker, famous for his imbibition capacity and uttering -not necessarily in that order- the legendary words “when it becomes serious, you have to lie”, presented his State of the Union today. Which is of pretty much limited interest because, as Yanis Varoufakis’ book ‘Adults in the Room’ once again confirmed, Juncker is nothing but ventriloquist Angela Merkel’s sock puppet.

But of course he had lofty words galore, about how great Europe is doing, and how that provides a window for more Europe, in multiple dimensions. Juncker envisions a European Minister of Finance (Dutch PM Rutte immediately scorned the idea), and he wants to enlarge the EU by inviting more countries in, like Albania, Montenegro and Serbia (but not Turkey!).

Juncker had negative things to say about Britain and Brexit, about Poland, Prague and Hungary who don’t want to obey the decree about letting in migrants and refugees, and obviously about Donald Trump: Brussels apparently wants ‘to make our planet great again’.

What the likes of Jean-Claude don’t seem to be willing to contemplate, let alone understand or acknowledge, is that the EU is a union of sovereign countries. The meaning of ‘sovereignty’ fully escapes much of the pro-EU crowd. And if they keep that up, it will break the union into pieces.

The European Court of Justice has ruled that Poland, the Czech Republic and Hungary must accept their migrant ‘quota’, as decided in Brussels, and that, too, constitutes an infringement on these countries’ sovereignty. And don’t forget, sovereignty is not something that can be divided into separate parts, some of which can be upheld while others are discarded. A country is either sovereign or it is not.

…click on the above link to read the rest of the article…

Not Nearly Enough Growth To Keep Growing

 


Jackson Pollock Shooting Star 1947

It’s amusing to see how views start to converge, at the same time that it’s tiresome to see how long that takes. It’s a good thing that more and more people ‘discover’ how and why austerity, especially in Europe, is such a losing and damaging strategy. It’s just a shame that this happens only after the horses have left the barn and the cows have come home, been fed, bathed, put on lipstick and gone back out to pasture again. Along the same lines, it’s beneficial that the recognition that for a long time economic growth has not been what ‘we’ think it should be, is spreading.

But we lost so much time that we could have used to adapt to the consequences. The stronger parties in all this, the governments, companies, richer individuals, may be wrong, but they have no reason to correct their wrongs: the system appears to work fine for them. They actually make good money because all corrections, all policies and all efforts to hide the negative effects of the gross ‘mistakes’, honest or not, made in economic and political circles are geared towards making them ‘whole’.

The faith in the absurd notion of trickle down ‘economics’ allows them to siphon off future resources from the lower rungs of society, towards themselves in the present. It will take a while for the lower rungs to figure this out. The St. Louis Fed laid it out so clearly this week that I wrote to Nicole saying ‘We’ve been vindicated by the Fed itself.’ That is, the Automatic Earth has said for many years that the peak of our wealth was sometime in the 1970’s or even late 1960’s.

…click on the above link to read the rest of the article…

Degrowth by designed disaster?

How the conflation with neoliberalism and austerity unfairly reduces the idea of degrowth to absurdity – and where the degrowth movement can turn for answers to the crisis.


The degrowth movement has been developed in response to neoliberal reality, neoliberalism’s comically reductive view of human nature, its ecological blindness and the rise in social inequality it has brought about. Austerity politics embodies one of the most aggressive manifestations of neoliberalism, but curiously, the degrowth movement has been exposed to criticism from the (both liberal and Marxist) Left associating it with such politicsThis prompted many degrowth activists to insist that “your austerity is not our degrowth.” Despite the ideological variety and the occasional intellectual ricochets within the movement, I considered this so self-evident that I was somewhat bewildered to see an actual advocate of degrowth openly claim more or less the opposite. In his article on “Austerity and Degrowth” André Reichel attempts to redeem the ideas of neoliberalism and austerity from a degrowth perspective, suggesting that its mode of economic reasoning facilitates a transition to degrowth. I would like to seize this opportunity to reflect on the relationship between capitalism, austerity politics and degrowth.

The crisis as a dilemma for the degrowth movement

Reichel’s point of departure happens to be a formidable challenge for the degrowth movement bringing up the following questions: What would be an appropriate degrowth response to the economic crisis in Greece? Could Greece reasonably enter a degrowth path now – or do we have to grudgingly accept the need for growth-oriented Keynesian solutions for the time being, in order to avoid further economic hardship for the Greek population?

…click on the above link to read the rest of the article…

$3 Trillion Black Hole Could Destroy Economy: “True Extent of Pension Problem Has Been Obscured”

$3 Trillion Black Hole Could Destroy Economy: “True Extent of Pension Problem Has Been Obscured”

global crisis

Yet another reason why taxes are going up,  cities and states are going broke, and the world is approaching financial implosion…

As if the world needed another dangerous and volatile factor in the mix of looming economic downturn.

Unfunded liabilities for pensions have been a problem for a while now, but as investors continue to face fleeting returns, many states and cities are facing the music… and when it stops, there won’t be enough money to go around.

Someone will lose their savings, their standard of living, their retirement and maybe their future. Others will be taxed to death to clean up the mess of the many places were the system is cracked, fissured and falling apart.

According to FT:

The US public pension system has developed a $3.4tn funding hole that will pile pressure on cities and states to cut spending or raise taxes to avoid Detroit-style bankruptcies.

[…] the collective funding shortfall of US public pension funds is three times larger than official figures showed, and is getting bigger.

Devin Nunes, a US Republican congressman, said: “It has been clear for years that many cities and states are critically underfunding their pension programmes and hiding the fiscal holes with accounting tricks.”

Mr Nunes…  added: “When these pension funds go insolvent, they will create problems so disastrous that the fund officials assume the federal government will have to bail them out.”

Large pension shortfalls have already played a role in driving several US cities, including Detroit in Michigan and San Bernardino in California, to file for bankruptcy. The fear is other cities will soon become insolvent due to the size of their pension deficits.

The inevitable result is, of course, tax increases and spending cuts – potentially on important and vital services.

…click on the above link to read the rest of the article…

Let Me Tell You About the Very Rich

Let Me Tell You About the Very Rich

Let Me Tell You About the Very Rich

It’s not like we didn’t know what was going on. But the “Panama Papers,” the largest-ever document leak and one that implicates political leaders and business executives around the world, confirms it — cementing a widespread distrust of public and private institutions in the global economy.

It remains to be seen whether the scale of the revelations, whose full scope is only slowly starting to emerge, will be a catalyst for positive change or just more fodder for curmudgeonly conspiracy theorists. But one thing is clear: The debate over global economic policy is going to be deeply affected for a while to come.

The epic document dump, which includes 11.5 million files from the Panamanian law firm Mossack Fonseca, implicates a string of world leaders, their families, and close associates in an intricate web of shell companies constructed for the sole purpose of hiding money from tax authorities.

Following the Great Recession and world financial meltdown, policymakers have fallen broadly into two camps: those who see a significant role for official intervention through fiscal and monetary stimulus policies, and those who see government as the problem and push for structural changes to push it out of the way.

Both Europe and the United States imposed considerable austerity on government finances despite prevailing modern economic thinking suggesting governments should spend more, not less, in times of economic weakness.

This budget-cutting approach to exiting the economic crisis, predicated on the dubious notion that fiscal prudence will boost confidence and hence growth, was sold to the public as a shared sacrifice across society. But as the Panama Papers appear to show, the very wealthy play by an entirely different set of rules than the average person when it comes to paying taxes.

…click on the above link to read the rest of the article…

World watching as Canada casts aside austerity and gambles on a fiscal surge

World watching as Canada casts aside austerity and gambles on a fiscal surge

A global economic debate plays out in Canada as our government goes from miser to spendthrift

Canada's Prime Minister Justin Trudeau and Finance Minister Bill Morneau are taking Canada into unknown waters, betting that spending will do what austerity has not.

Canada’s Prime Minister Justin Trudeau and Finance Minister Bill Morneau are taking Canada into unknown waters, betting that spending will do what austerity has not. (Reuters)

Canada has abruptly switched sides in one of the perennial political and economic battles over how to restart a sagging economy.

To put it in a way that would not please either side, it is the contest between the misers and the spendthrifts. After years of the penny-pinching approach, Canada has switched tack to become a big spender.

And despite some very strong feelings on either side, it is not absolutely clear which is the right path to prosperity. The world will be watching.

The clash over the best way to boost a moribund economy is by no means solely a Canadian argument. Nor is it just a modern debate.

Historical debate

Countries from China and Japan, to Greece and Ireland have taken different views on the subject.

Historically, the dispute has arisen repeatedly — notably during the Great Depression, when the first response of austerity was blamed for making the problem worse. But when governments then altered strategy, new spending failed to lead to a miracle recovery.

JAPAN-ECONOMY/CPI

Despite monetary stimulus and negative interest rates, Japan’s economy has lapsed into deflation and economic stagnation. (Reuters)

There is plenty of evidence on both sides. As I noted back in 2010, Japan and Ireland backed opposing strategies. But the countries’ circumstances are so different it is hard to declare a definitive winner.

China and Greece switched sides. Greece was driven by the ballot box toward bigger spending, then restrained by their stern European central bankers. China faced alternating worries, first cutting back on fears of overheating and then suddenly spurring new spending on fears of falling growth.

…click on the above link to read the rest of the article…

How Iceland Escaped From The One Bank

How Iceland Escaped From The One Bank

What have the governments of the corrupt Western bloc spent most of their time doing since the Crash of ’08? We can answer this question in three parts:

1)  Creating increasingly falsified “statistics” to fabricate the illusion that their economies were not on the verge of all-out economic collapse;

2)  Hacking and slashing every social program in sight in order to generate the false savings known as Austerity; and

3) Creating new funny-money and taking on new debt at an exponentially increasing rate in order to delaycollapse, since all that Austerity accomplished was an acceleration of these death spirals.

Making these points apparent to newer readers will require additional elaboration. The starting point is the Crash of ’08 itself. What caused these nations to go from being merely heavily indebted to hopelessly insolvent overnight? That can be summed up in a single euphemism of fraud and crime: “too big to fail.”

At the end of 2008, the West’s puppet governments succumbed to History’s ultimate act of blackmail at the hands of History’s largest and most rapacious crime syndicate: the One Bank “Give us all your money, or we’ll blow up your entire financial system.” That is the real meaning of “too big to fail”: institutionalized extortion, in perpetuity.

What was the real price tag for this massive extortion operation? Forget the phony numbers published by our corrupt governments and their mouthpieces in the corporate media. The total quantum for these extortion payments was in the tens of TRILLIONS . Obviously the Deadbeat Debtors of the West couldn’t raise more than a tiny fraction of that amount of blackmail money up front. Thus, most of this shakedown of (supposedly) sovereign governments came in the form of future tax breaks and “loss guarantees.”

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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