Default
The third topic of thunderous geopolitical import I’ve needed lately to write about after Fukushima, which keeps getting worse, and the regression of American politics, which probably can’t get any worse, is the Eurozone debt crisis which will later, if not sooner, see Greece, as the first of several countries, default on its debts or at minimum force a restructuring of its debt.
The IMF and European Central Bank think they are bending over backwards to help Greece avoid default. In the event, their prescriptions for recovery and the onerous conditions placed on their ‘generosity’, only delay the inevitable. By the time the latest bailout is added to their debt, it’ll equal more than 160% of GDP and debt service an unsustainable 6% plus of GDP. In contrast, US debt is about 100% of GDP and debt service about 1.2%. If the US were paying debt service equivalent to Greece’s that would come to about $1 trillion a year. The total US budget is now about $3.4 trillion.
Part of the problem is the high interest rates – 5.5% - the monetary agencies are charging Greece. The money made available to the ECB and IMF to help countries in distress should be doled out at low interest rates, they are, after all, not commercial banks looking for profits, but public entities financed with public money established for the public good. Why then would the IMF want to make money from a country that is dealing with social unrest, political upheaval and imminent default? Their mindset is so far from humanitarian they don’t even know they’re being assholes and helping to bring the country down instead of saving it.
That is combined with required austerity measures which, ostensibly, are to rein in excess government, but in reality add greatly to unemployment, and thus reduce tax revenue. Since affluent Greeks are adept at avoiding taxes it’s only the commoners that pay and only when they are working. Moreover, with the economy going downhill those who do have jobs aren’t spending in fear they might join the ranks of the unemployed. The finance community is participating in bringing the country down and making it impossible for Greece to ever pay its debt.
When an individual reaches an equivalent level of debt and it’s clear that they’ll never have the ability to pay, they declare bankruptcy. Their remaining assets are divvied up amongst creditors and they start over. Once you’ve gone that route, you’re on your own, you’ve no choice but to live within your means since borrowing is no longer an option.
The head of the ECB said Greek default is unthinkable because that would mean recapitalizing the big banks that have invested in Greek bonds. When the masses face unemployment and poverty, they’re told to buck up and tough it out. When banks and investors stand to lose out because they gambled (that’s what investing is) on the wrong investments, they get money thrown at them. Germans are widely opposed to bailing out Greece, but if they don’t, they’ll be bailing out their banks.
Greek prime minister Georges Papandreou has warned default will be catastrophic. Very true, but sometimes that’s exactly what’s needed to right the ship of state. For the Greek people who’ve been let down by their government and in some ways their culture, whether they go down by way of default or unsustainable debt, it’ll be catastrophe either way. They were let down by their government (the previous conservative administration) because it used Goldman Sachs’ expertise in deceit and underhandedness to hide the amount of debt they were accumulating. Let down by their culture because of a bloated civil service and widespread tax avoidance where doctors are able to claim annual incomes of $25,000 because they’ve bribed the tax authorities to look the other way.
It’s important to note that the Greek government could’ve continued on its merry profligate debtor’s way if the financial crisis of 2008 hadn’t intervened to throw a lightening bolt into the endless growth bubble. That’s why you’re supposed to save for a rainy day, make hay while the sun shines, bury your acorns in fall to get through the tough times of winter. Most people are aware of the half of Keynesian economics which says countries should deficit spend in times of recession to keep their economies going, but few remember the other half where he said they should put money aside during good times to have available during hard times.
The problem of excessive sovereign debt has arisen because dominant bankster economic philosophy over the past few decades requires that taxes on the wealthy and corporations be low which serves to starve government of revenues and simultaneously make it easy for governments to borrow because those with money have a lot of it laying around needing to do something with it. As mentioned previously, it’s a lot easier to use borrowing to make an economy look good than actually raise the necessary money through taxation. The borrowing is justified by assuming that a growing economy will make it easy to service the debt, and to a certain point, it will… until it stops growing, which inevitably must happen since nothing can grow indefinitely.
If world financial institutions actually wanted to help the people of Greece, they’d provide low or no interest loans to consolidate debt and an equivalent amount to finance infrastructure improvements and sustainable energy production to put people to work. They’d also force creditors to restructure their loans by extending their payback dates and lowering interest rates. Instead they are punishing the people with pay cuts, worsening working conditions, very high unemployment and increased taxes, all while the country’s elite continue to shirk their responsibility to help fund government. They are forcing a debt death spiral.
Ironically, default will change Greece in just the manner prescribed by the bankster community. The difference is that a lot of rich people will also share the pain and get hits in their deep pockets. Wouldn’t that be nice. And isn’t it about time. The banking system will be in crisis and lots of investors will get haircuts… well great, there’s too much money at the top, time to cut the elite down to a fairer, more equitable size.
The workers and salarymen and women will get hit hard, but they’ll also be able to start fresh and create a new society. Think about it: If a country is getting 40% of its budget from borrowing and suddenly that money is no longer available (that’s the percentage for America, I don’t know the exact figure for Greece) it will be a formidable challenge to keep the country afloat. The outsized civil service will be pared drastically. All government functions will be sliced to the bare bones. With the public sector starved for cash, the tax collectors will be, or should be, out doing their jobs with a vengeance. At least they won’t be spending a huge portion of their income on debt service.
It’ll be chaos and turmoil in the beginning with mass unemployment and poverty. In two or three years they’ll be back to some semblance of normality. In seven to ten years they’ll be going strong, starting from a much stronger, more equitable base. And it’ll be a warning to other countries to keep their books in order – including the US. And a warning to banksters and investors that they won’t always get bailed out.
Friday, June 24, 2011
Thursday, June 16, 2011
GET A BRAIN, MORANS!
GET A BRAIN, MORANS! or Doubling Down on Crazy
Those of you who frequent progressive websites like commondreams.org, dailykos.com, truthdig.com, alternet.org are familiar with the former statement which appeared on a sign carried by a smug, smiling young Teapartier. It speaks to the abysmal level of political discourse in America today.
The other seminal statement of regressive moranic politics; ‘Keep the government’s hands off my Medicare’, was shouted out by an old geezer at a town hall meeting held by his congressman.
Considering how well-liked Medicare is even amongst Repuglicans, even amongst idiot wingnuts who don’t even know it’s equivalent to socialized medicine, you’d think Repug leaders in congress would tread lightly when considering changes to the program. But no, they’re so full of themselves and giddy from their victory in the last congressional elections they’ve completely lost touch with reality and so Rep. Paul Ryan, head of the house budget committee, has come up with a grand plan to ‘save’ Medicare and reduce government expenditures by thoroughly gutting the program.
His plan, touted by the mainstream media and conservative punditocracy as a bold move to balance the budget involves replacing government guaranteed benefits with a voucher system in which seniors receive a fixed (inadequate) amount of money and are sent out into the private insurance market to get coverage. The fact that the medical insurance companies are widely despised by the population doesn’t seem to register with the Repugs so they voted en masse, in both the House and Senate, to back Ryan’s Medicare disaster.
The reason why they needed to gut Medicare was so they’d have the money to provide additional tax breaks to the corpses and the wealthy, supposedly to create jobs. Considering the many corporations that are enjoying record profits today that are not only not paying taxes but getting refunds, how much lower can taxes go? Moreover, American corpses are sitting on $1.6 trillion of cash reserves they don’t know what to do with because so many of the people who ordinarily buy things don’t have any money. When they do create jobs they’re mostly in other countries.
The US now has the greatest income disparity of any developed country. The wealthy have so much more than they can productively use, that most of it goes to speculation. Americans can thank tax policy that favors the flush for a large portion of high gas and food prices. Whereas in normal times most commodities futures contracts are purchased by end users, today 70% are bought by speculators.
Oh, I forgot, the reason why the Repugs want to slash any program that has anything to do with helping the people at large is because the budget is out of balance and the deficit needs to be tamed. That’s also why they want to reduce taxes on the wealthy… Aha! You don’t get the connection between lowering taxes and balancing the budget? Don’t worry, it’s called Voodoo Economics and thus a bit complicated for those of us non-morans.
In order for the Repugs to play to their dingbat base they’re getting themselves so far out on a limb, it’ll take a heroic rescue on Obama’s part to save them from electoral disaster. But not to worry, Mr. O is so good at compromising principles he either never had or only pretended to have for the purpose of campaigning, he’ll do a fine job at either saving the Repugs’ asses or giving up so much to wingnut fanaticism it’ll be the same as them winning.
Whereas Ryan’s budget doesn’t even pretend to balance the budget for another 50 years or so, there is a plan put forth by the 81 member congressional progressive caucus that would get the country’s books in order in about ten years. It’s simple really; tax stock transactions, capital gains, corporations and the wealthy; reduce military spending; set up a public option for health care and negotiate better prices for prescription drugs and presto, just like magic, the budget is fixed. Chances are, if you get your news from the corporate media, you’ve never heard of it: It doesn’t fit their worldview so gets no air time.
Seems to me the captains of the ship America must have a strong compulsion to run it aground, not to mention trash the world at large, because they can’t all believe the drivel coming out of their mouths, can they? I mean, true morans aren’t that stupid, are they?
Those of you who frequent progressive websites like commondreams.org, dailykos.com, truthdig.com, alternet.org are familiar with the former statement which appeared on a sign carried by a smug, smiling young Teapartier. It speaks to the abysmal level of political discourse in America today.
The other seminal statement of regressive moranic politics; ‘Keep the government’s hands off my Medicare’, was shouted out by an old geezer at a town hall meeting held by his congressman.
Considering how well-liked Medicare is even amongst Repuglicans, even amongst idiot wingnuts who don’t even know it’s equivalent to socialized medicine, you’d think Repug leaders in congress would tread lightly when considering changes to the program. But no, they’re so full of themselves and giddy from their victory in the last congressional elections they’ve completely lost touch with reality and so Rep. Paul Ryan, head of the house budget committee, has come up with a grand plan to ‘save’ Medicare and reduce government expenditures by thoroughly gutting the program.
His plan, touted by the mainstream media and conservative punditocracy as a bold move to balance the budget involves replacing government guaranteed benefits with a voucher system in which seniors receive a fixed (inadequate) amount of money and are sent out into the private insurance market to get coverage. The fact that the medical insurance companies are widely despised by the population doesn’t seem to register with the Repugs so they voted en masse, in both the House and Senate, to back Ryan’s Medicare disaster.
The reason why they needed to gut Medicare was so they’d have the money to provide additional tax breaks to the corpses and the wealthy, supposedly to create jobs. Considering the many corporations that are enjoying record profits today that are not only not paying taxes but getting refunds, how much lower can taxes go? Moreover, American corpses are sitting on $1.6 trillion of cash reserves they don’t know what to do with because so many of the people who ordinarily buy things don’t have any money. When they do create jobs they’re mostly in other countries.
The US now has the greatest income disparity of any developed country. The wealthy have so much more than they can productively use, that most of it goes to speculation. Americans can thank tax policy that favors the flush for a large portion of high gas and food prices. Whereas in normal times most commodities futures contracts are purchased by end users, today 70% are bought by speculators.
Oh, I forgot, the reason why the Repugs want to slash any program that has anything to do with helping the people at large is because the budget is out of balance and the deficit needs to be tamed. That’s also why they want to reduce taxes on the wealthy… Aha! You don’t get the connection between lowering taxes and balancing the budget? Don’t worry, it’s called Voodoo Economics and thus a bit complicated for those of us non-morans.
In order for the Repugs to play to their dingbat base they’re getting themselves so far out on a limb, it’ll take a heroic rescue on Obama’s part to save them from electoral disaster. But not to worry, Mr. O is so good at compromising principles he either never had or only pretended to have for the purpose of campaigning, he’ll do a fine job at either saving the Repugs’ asses or giving up so much to wingnut fanaticism it’ll be the same as them winning.
Whereas Ryan’s budget doesn’t even pretend to balance the budget for another 50 years or so, there is a plan put forth by the 81 member congressional progressive caucus that would get the country’s books in order in about ten years. It’s simple really; tax stock transactions, capital gains, corporations and the wealthy; reduce military spending; set up a public option for health care and negotiate better prices for prescription drugs and presto, just like magic, the budget is fixed. Chances are, if you get your news from the corporate media, you’ve never heard of it: It doesn’t fit their worldview so gets no air time.
Seems to me the captains of the ship America must have a strong compulsion to run it aground, not to mention trash the world at large, because they can’t all believe the drivel coming out of their mouths, can they? I mean, true morans aren’t that stupid, are they?
Monday, June 6, 2011
Climate Change
Climate Change
Tepco, the operator of the Fukushima nukes has finally admitted that three of its reactors suffered meltdowns in the aftermath of the earthquake-tsunami. In fact, one of them started melting down from the earthquake alone before the tsunami hit. They keep pouring water into the reactors to try to cool what’s left of the fuel rods but there are leaks so the contaminated water is entering the environment. Radioactivity is 50 times normal in seaweed in the ocean near the plant.
The whole scenario was played up as totally unexpected and impossibly unlikely so not worth considering in the construction of the plants or for that matter in the development of the surrounding urbanized areas. People, unfortunately have short institutional memories. Up on the hillsides facing the ocean in northeast Japan there are stone markers, some dating back to the 1600’s, which clearly state, Do not build below this line. Still, in a densely populated country like Japan, it’s hard to imagine they’d leave large areas of their coastal plains to low-value land uses such as farms, forests and recreation because of events that might happen only once every 300 or 400 years.
But they do happen and all indicators point to them happening with increasing frequency. That includes the frequency and intensity of earthquakes which some scientists believe are exacerbated by global warming. But not to worry, according to the fossil fuel industry, the US Chamber of Commerce and the Repuglican Party, climate change is either a hoax or something that’s a lot cheaper and easier to adapt to than change our lifestyles for. You know, if it gets too hot you just crank up your air-conditioner. If that means burning more coal, well, it’s the cheapest source of energy so we can’t forego its benefits just because it intensifies the effects of global warming.
Last winter America experienced its largest winter storm ever, but what’s the big deal; everybody gets a vacation from school or work and gets a little exercise shoveling snow. It may be blizzarding outside but you’ve got your fossil-fueled heater to snuggle up to.
The Mississippi River is experiencing a 100 year flood but events of that severity are likely to become regular occurrences so maybe the people there should adapt by raising all the buildings in the flood plain up on stilts. There’s probably only ten or twenty million of them. Of course, there’s always the small matter of surviving massive tornados in which houses on stilts wouldn’t fare too well. You’d probably need to rebuild all the structures in tornado prone areas with steel and concrete… hmmm, adapting seems not so simple.
Anyway, in order for the vast majority to live the good, profligate, carbon-rich life a small fraction will have to be sacrificed to the weather gods. It’s probably not worth spending all that money adapting to something that might happen only every 20 or 50 or 100 years, let alone try to reverse the march of global warming, so the answer, I guess, is to pray you’re not counted amongst the unlucky ones… Dear God, If it’s going to happen, please let somebody else get the shaft.
Tepco, the operator of the Fukushima nukes has finally admitted that three of its reactors suffered meltdowns in the aftermath of the earthquake-tsunami. In fact, one of them started melting down from the earthquake alone before the tsunami hit. They keep pouring water into the reactors to try to cool what’s left of the fuel rods but there are leaks so the contaminated water is entering the environment. Radioactivity is 50 times normal in seaweed in the ocean near the plant.
The whole scenario was played up as totally unexpected and impossibly unlikely so not worth considering in the construction of the plants or for that matter in the development of the surrounding urbanized areas. People, unfortunately have short institutional memories. Up on the hillsides facing the ocean in northeast Japan there are stone markers, some dating back to the 1600’s, which clearly state, Do not build below this line. Still, in a densely populated country like Japan, it’s hard to imagine they’d leave large areas of their coastal plains to low-value land uses such as farms, forests and recreation because of events that might happen only once every 300 or 400 years.
But they do happen and all indicators point to them happening with increasing frequency. That includes the frequency and intensity of earthquakes which some scientists believe are exacerbated by global warming. But not to worry, according to the fossil fuel industry, the US Chamber of Commerce and the Repuglican Party, climate change is either a hoax or something that’s a lot cheaper and easier to adapt to than change our lifestyles for. You know, if it gets too hot you just crank up your air-conditioner. If that means burning more coal, well, it’s the cheapest source of energy so we can’t forego its benefits just because it intensifies the effects of global warming.
Last winter America experienced its largest winter storm ever, but what’s the big deal; everybody gets a vacation from school or work and gets a little exercise shoveling snow. It may be blizzarding outside but you’ve got your fossil-fueled heater to snuggle up to.
The Mississippi River is experiencing a 100 year flood but events of that severity are likely to become regular occurrences so maybe the people there should adapt by raising all the buildings in the flood plain up on stilts. There’s probably only ten or twenty million of them. Of course, there’s always the small matter of surviving massive tornados in which houses on stilts wouldn’t fare too well. You’d probably need to rebuild all the structures in tornado prone areas with steel and concrete… hmmm, adapting seems not so simple.
Anyway, in order for the vast majority to live the good, profligate, carbon-rich life a small fraction will have to be sacrificed to the weather gods. It’s probably not worth spending all that money adapting to something that might happen only every 20 or 50 or 100 years, let alone try to reverse the march of global warming, so the answer, I guess, is to pray you’re not counted amongst the unlucky ones… Dear God, If it’s going to happen, please let somebody else get the shaft.
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