Wednesday, June 29, 2011

How Do They Get Respect? Mention "Dung Heap of History" Time for U.S. - You're Committed - Greece Gets Off the Pot? More Treachery at the Fed?

And you better be prepared to have your head bashed in because no one does it better than those hired by the rich. They will literally kill to protect their god-given right to rob you. They don’t like unions because unions make it possible for the people to be organized and protected from their greed.
Finally! Someone else is talking about the necessity for pitchforks and righteous house-clearing (make that Congress-clearing) anger. (Emphasis marks added - Ed.)
Like rubes at a Carnival Side Show we listen to the “two-party” Democrat(ic)/Republican political barkers yelping at us to come into their tent every election year and every election year the results are equally disappointing, regardless the tent we choose. Are we always going to be suckers, or will 2012 be the year we say HELL NO?

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A comment by Homeroid, here on FDL (FireDogLake) started me thinking: Try as you might i doubt it will do much. Nothing will change from the degrading of our rights till the pitchforks come out and the streets are filled.

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If you consider the people’s clashes with the rich in America down through the years, a good case can be made for the point that it does take violence in the streets to effect real change in the USA. And you better be prepared to have your head bashed in because no one does it better than those hired by the rich. They will literally kill to protect their god-given right to rob you. They don’t like unions because unions make it possible for the people to be organized and protected from their greed. Look at the Two Party Side Show that we have going on at this moment starring millionaire elected officials, John Boehner and Barack Obama, over raising the Debt Ceiling. Raising the Debt Ceiling is no solution and the majority of Americans know that. All raising the debt ceiling will do is increase our already staggering national debt and provide more revenue for Wall Street banksters to play with. Boehner has it half right in resisting raising the debt ceiling, but his solutions reflect an evil and greedy purpose of the rich to destroy entitlement programs which are independently funded by taxpayers and have NOTHING to do with the budget or deficit.

So the two of them put on their ridiculous sideshow. We already know how this farce will end. Boehner will allow the debt ceiling to be raised a little and Obama will allow the rich to take yet another bite out of Americans who can least afford it. Obama and the Democrats will pat themselves on the back for being “bipartisan.”

The Real Solutions to the National Debt?

1. End the $2 billion dollar a week war in Afghanistan. BINGO! $104 billion in one year

2. End all but the $500 million in farm subsidies paid to small farmers who still live on their land. BINGO! $19 billion in one year.

3. Start collecting taxes that are owed but not paid. BINGO! In the USA tax evasion added $3 trillion to the deficit over the past decade alone, an average of $300 billion a year, according to IRS data. This isn’t revenue lost from legal tax write-offs, like the mortgage interest deduction. It’s not even, as the IRS notes, “taxes that should have been paid on income from the illegal sector of the economy.” That $300 billion represents the amount of revenue lost from people deliberately cheating on their taxes every year. This includes underreporting income, hidden offshore bank accounts, sham trusts, and other ways to illegally stiff the IRS.

4. How about taking back what’s left of that $100 billion the American Taxpayers forked over to IMF in 2009?

These are only four suggestions off the top of my head that could raise hundreds of billions of dollars and I didn’t even mention repealing the Bush tax cuts for the rich.

And two of the top three highest elected officials in the USA who purport to represent the majority are quibbling over cutting benefits on Seniors whose Social Security income averages $1,000 a month? What fakes! Both of them! They both should be kicked out of office.

What will it take for the pitchforks to come out?
. . . Maybe it will be people like you and me telling the truth again and again and again until finally a critical mass has been reached. Calling them out for who they are and what they are doing. I don’t know what it will take. Already today all of the top 10 highest poverty rated cities in the USA have poverty rates that exceed the poverty rate of Egypt (23%) and Egypt took to the streets for their revolution months ago. Sometimes I think that hope is the greatest enemy of the American people. There is that hope of “hitting it big”, winning the lottery, grabbing the brass ring that keeps people in their places. Revolution won’t happen in the USA until more Americans realize that their ability to grasp the brass ring is totally in control of the carnies in DC and the “prizes” they give out are never worth the price you and I pay.

As long as we allow the millionaire and billionaire carnies to be in charge, they will always win because they are the ones who rig the game.

I've noticed that anytime I talk about, give figures indicating, etc., that the U.S. is approaching its "end date" (as a democratic republic) that I lose readers. No one wants to hear the news. (Big Surprise in the Land of Denial.) Although, only this type of news will stop the slide. And Paul Krugman has some very good advice concerning what to do about Greece ending its slide and the way it's economic choices are affecting Europe (and everybody eventually).
Paul Krugman's blog

(Image: CartoonArts International / The New York Times Syndicate)

The reaction of European leaders and institutions to the Greek crisis is a sight to behold. Essentially, it boils down to the fact that default would be very inconvenient, both as a practical matter and in terms of prestige. Therefore, default must not be considered a possibility, even though it has long been obvious that nondefault is not an option.

So will they kick the can down the road once again? I don’t know. What I do know is that the costs of this strategy of delay are themselves badly misunderstood.

I keep seeing statements along the lines that delaying a full resolution of the Greek situation is costing hundreds of billions of euros, because estimates of the size of the needed financial rescue fund keep going up. But such calculations totally miss the point. The European Stabilization Fund isn’t a transfer program; it’s a credit line designed to provide struggling euro-zone nations with enough liquidity

to get past a temporary cash squeeze. Since that’s not the actual problem, the size of the fund is a measure of European delusion, not a bailout cost.

Nor is Greece like a Texas thrift in the 1980s, using deposit insurance plus deregulation to make ever bigger gambles, and thereby blowing up the eventual cost of the bailout.

So what are the real costs of kicking the can down the road? I’d say that you want to think of it two ways: the costs to Europe as a whole, including Greece, and the costs to Europe ex-Greece.

For Europe including Greece, the costs of delay are the real costs to the Greek economy: delaying a realistic resolution of the debt problem means extending the period of high unemployment and depressed output. Add up the cumulating Greek output gap, and there’s one estimate of the true cost of delay.

For Europe ex-Greece, the costs of delay are whatever that delay does to reduce the amount that Greece will eventually pay its creditors. I think there’s a good case to be made that at this point demands for even more austerity are counterproductive, even in terms of creditors’ interests: the Greek economy is suffering long-term damage, the Greek political scene is being radicalized, and the chances of Greece just telling its creditors to take a hike while it devalues the new drachma are rising.

In any case, what you have to ask now is what Europe is waiting for. Why will six months more of credit lines and suffering make the situation any better?

Mike Whitney has a few words closer to home. As if we care about anybody else (emphasis marks added - Ed.).
Mike Whitney
Global Research June 24, 2011
No one expects the Fed to announce a rate-hike at the end of the today's FOMC meeting, but that doesn't mean there won't be a few surprises. The problem is that the recovery has stalled and the Fed can't decide whether we've just hit a "soft patch" or if it's something more serious. If it is more serious, then the Fed will need a contingency plan for kick-starting the economy. So, what's it going to be; another round of Quantitative Easing (QE), rate caps on short-term Treasuries or something else altogether? That's what the financial media will want to know, and only Fed chairman Ben Bernanke knows the answers. But before we get to that, let's look at the economy. First quarter growth has been revised to an anemic 1.8 percent and economists are currently shaving their estimates for Q2. Some think that the high number of "black swan" events (Tsunami in Japan, debt problems in the eurozone) are mainly responsible for the poor growth, but that doesn't explain the sharp downturn in hiring, manufacturing, housing and consumer confidence. The US is experiencing a dropoff in demand at the worst possible time, just as Obama's $800 billion fiscal stimulus and Bernanke's $600 billion monetary stimulus are running out of gas. That means even less support for an economy that can barely stand upright as it is. Here's an excerpt from an article by Nouriel Roubini with a rundown on the economy: "...there are good reasons to believe that we are experiencing a more persistent slump.... the factors slowing US growth are chronic. These include slow but persistent private and public-sector deleveraging; rising oil prices; weak job creation; another downturn in the housing market; severe fiscal problems at the state and local level; and an unsustainable deficit and debt burden at the federal level.... If what is happening now turns out to be something worse than a temporary soft patch, the market correction will continue further, thus weakening growth as the negative wealth effects of falling equity markets reduce private spending." ("That Stalling Feeling", Nouriel roubini, Project Syndicate) More and more mainstream economists have joined Roubini in thinking that recent sluggishness is more than a soft patch. They think we may be headed for a double dip recession. Surprisingly, former chief economic advisor to the president, Lawrence Summers, has joined the Cassandras and is warning of stiffer headwinds just ahead. Here's a clip from Summers recent op-ed in the Financial Times: "...the US is now half way to a lost economic decade.....the problem in a period of high unemployment, as now, is a lack of business demand for employees not any lack of desire to work is all but self-evident... When demand is constraining an economy, there is little to be gained from increasing potential supply. ... What, then, is to be done? This is no time for ... traditional political agendas. ... The fiscal debate must accept that the greatest threat to our creditworthiness is a sustained period of slow growth. Discussions about medium-term austerity need to be coupled with a focus on near-term growth.... Substantial withdrawal of fiscal stimulus at the end of 2011 would be premature. Stimulus should be continued and indeed expanded by providing the payroll tax cut to employers as well as employees... We averted Depression in 2008/2009 by acting decisively. Now we can avert a lost decade by recognizing economic reality." ("How to avoid stumbling into our own lost decade", Lawrence Summers, Financial Times) Consider the irony of Summers - who designed Obama's $800 billion stimulus package and rejected the warnings of other prominent economists who said the stimulus was "too small" - recanting in the FT and pleading for a second round. Pretty shameless, eh? But the point is the leading economic indicators are pointed down, hiring has slowed to a crawl, household spending and personal consumption have tapered off, wages remain flat, and lending is barley staying even. In other words, the Fed's efforts to stimulate demand have failed. The economy is in another funk. So, what is Bernanke going to say at today's meeting? Ahhh, that's where the surprise comes in, but there was a clue in an article last week on Bloomberg News. Here's an excerpt from the article: "Federal Reserve officials are discussing whether to adopt an explicit target for inflation, a strategy long advocated by Chairman Ben S. Bernanke .... An inflation target could help quiet critics of record monetary stimulus and anchor public expectations for consumer prices should the Fed in coming months try to spur the recovery by keeping interest rates close to zero for longer. “My sense is that this may be a done deal, though not one likely to be implemented soon, and perhaps not until economic conditions return to closer to normal,” said Laurence Meyer, senior managing director and co-founder of Macroeconomic Advisers LLC and a former Fed governor. “The chairman is obviously for it, and it is hard to find anybody on the FOMC who now is really opposed to it.” ("Fed Officials Said to Discuss Adopting Inflation Target Backed by Bernanke", Bloomberg) So, an inflation target is a "done deal"? Really? But what does that mean? Once the Fed sets an "explicit inflation target", then (if the CPI is below the target and rates are already at zero, as they are today) the Fed can buy as many bonds as they please until their goal is reached. If that sounds a lot like Quantitative Easing; it's because it's the same thing. (Although this time it will probably involve rate caps on medium-term Treasuries) Is that what Bernanke is doing; announcing a third round of his controversial bond purchasing program without using the same name? It sure looks like it. In fact, any mention today of "inflation targeting" at today's FOMC meeting should be taken as a sign that Bernanke is planning another bond buying binge, despite the fact that the only people who really benefited from the program have been investors who've seen stock prices skyrocket from the money that's shifted out of bonds into equities. All the gains from QE2 went to Wall Street. As for inflation targeting, Bernanke is not just an advocate of the policy, he's its biggest booster. He's even written a book on the topic titled Inflation Targeting: Lessons from the International Experience with co-authors Thomas Laubach, Frederic S. Mishkin, and Adam S. Posen in 2001. There's every reason to suspect that the neoliberal credo that Bernanke espouses in his book helped shoehorn him into the top-spot at the Central Bank. It certainly
had nothing to do with his abysmal track record. So, what's so bad about an explicit inflation target anyway? Haven't other countries used the policy effectively? Yes, they have. But other countries (particularly in the EU) also have labor laws and a social safety net which tend to protect workers from the abuses of errant monetary policy. Not so in the US. If Bernanke executes his plan, high unemployment and slow growth will become a permanent feature of life in America. Here's an excerpt from an article by Nobel prize winning economist Joseph Stiglitz mulling over the effects of inflation targeting in other countries: "Today, inflation targeting is being put to the test — and it will almost certainly fail. Developing countries currently face higher rates of inflation, not because of poorer macro-management, but because oil and food prices are soaring, and these items represent a much larger share of the average household budget than in rich countries. . . . Inflation in these countries is, for the most part, imported. Raising interest rates won’t have much effect on the international price of grains or fuel. . . ." ("What's wrong with inflation targeting?", Joseph Stiglitz, Project Syndicate) But Stiglitz is talking about "developing countries". Does that same rule apply to the US? Yes, it does. If the Fed achieves its target rate, then Bernanke will raise short-term rates regardless of the effects on growth or employment. That's what inflation targeting is all about; it's a hat-tip to investors that the Fed will preserve their wealth at all costs, even if the broader economy has to be sacrificed. Here's a clip from an article by economist Dean Baker who draws the same conclusion as Stiglitz:
"Inflation targeting has led to an enormous economic and human disaster, likely costing the world more than $10tn in lost output and leaving tens of millions of people unemployed. If this experience is not enough to discredit a policy, it is difficult to imagine any possible set of events in the world that could lead the inflation targeters to change their minds.... ....the central bankers and others directing policy place the interests of the financial sector at the center of their concerns." ("Guess which policy your central bank will pursue", Dean Baker, Guardian.)
Get the picture? Inflation targeting is neoliberalism writ large, no different than "structural adjustment", "debt consolidation", "privatization of public assets" etc. It's another subsidy for speculators while ordinary working people get kicked to the curb. Here's one last blurb from economist James Galbraith who's even more skeptical of inflation targeting than Stiglitz or Baker. This excerpt is from Galbraith's blistering critique of Bernanke's book titled The Inflation Obsession: Flying in the Face of the Facts:
"....Inflation targeting in all cases coincided with high unemployment, and its main effect was to excuse central bankers from addressing this crisis.....("The Inflation Obsession: Flying in the Face of the Facts", James k. Galbraith, Foreign Affairs)
That's it in a nutshell. Bernanke wants to absolve himself of any responsibility to enact policies that will create "full employment". He'd rather shrug off the Fed's dual mandate ("price stability and full employment") and focus on inflation alone. That means that soaring unemployment and slow growth will be the norm for years to come. There's a reason why Stiglitz, Baker and Galbraith all oppose inflation targeting. It's bad policy.
Mike Whitney is one of the featured authors in the bestselling new book from Global Research, The Global Economic Crisis: The Great Depression of the XXI Century (Michel Chossudovsky and Andrew Gavin Marshall, Editors): ________________________


paine said...

speaking of george orwell
never trust a guy that considers rabelais morbid

Suzan said...


I guess if you've never read any of Orwell's works you might be solely mesmerized by his opinion of the writer of "Gargantua et Pantagruel."

Otherwise, you might like to review when Orwell was writing (and about what).

Not a happy time (and you probably know that), but I'm sure you have a point.

Thanks for commenting, Paine.

I just looked you up and see you are trying to make a name for yourself.

Good luck!