Sunday, August 14, 2011

Exploiting ANY Crisis To Its Pinnacle: US A Parasite On World & World Knows And Thinks US "A Looter" (Taxpayers Bend Over & Kiss Their World Bye-Bye!)

I've always loved Paul Krugman's ability to pinpoint common sense solutions pretty easily (even in hot crowded rooms of the badly confused and dithering), call 'em as he sees 'em, and have no care about who's being offended (okay, maybe a little care, but less and less lately). He hasn't changed, but the people now being offended by his judgments reside at the highest levels of government and business (and they are forming a phalanx of warriors getting ready to attack the Krugman of nimble intellectual virtuosity (but exposed position at the New York Times)). Paul does everything here except use the "F" word. Yes. "Fascist."

The Hijacked Crisis By Paul Krugman August 12, 2011 NY Times

Has market turmoil left you feeling afraid? Well, it should. Clearly, the economic crisis that began in 2008 is by no means over. But there’s another emotion you should feel: anger. For what we’re seeing now is what happens when influential people exploit a crisis rather than try to solve it. For more than a year and a half — ever since President Obama chose to make deficits, not jobs, the central focus of the 2010 State of the Union address — we’ve had a public conversation that has been dominated by budget concerns, while almost ignoring unemployment. The supposedly urgent need to reduce deficits has so dominated the discourse that on Monday, in the midst of a market panic, Mr. Obama devoted most of his remarks to the deficit rather than to the clear and present danger of renewed recession. What made this so bizarre was the fact that markets were signaling, as clearly as anyone could ask, that unemployment rather than deficits is our biggest problem. Bear in mind that deficit hawks have been warning for years that interest rates on U.S. government debt would soar any day now; the threat from the bond market was supposed to be the reason that we must slash the deficit now now now. But that threat keeps not materializing. And, this week, on the heels of a downgrade that was supposed to scare bond investors, those interest rates actually plunged to record lows. What the market was saying — almost shouting — was, “We’re not worried about the deficit! We’re worried about the weak economy!” For a weak economy means both low interest rates and a lack of business opportunities, which, in turn, means that government bonds become an attractive investment even at very low yields. If the downgrade of U.S. debt had any effect at all, it was to reinforce fears of austerity policies that will make the economy even weaker. So how did Washington discourse come to be dominated by the wrong issue? Hard-line Republicans have, of course, played a role. Although they don’t seem to truly care about deficits — try suggesting any rise in taxes on the rich — they have found harping on deficits a useful way to attack government programs. But our discourse wouldn’t have gone so far off-track if other influential people hadn’t been eager to change the subject away from jobs, even in the face of 9 percent unemployment, and to hijack the crisis on behalf of their pre-existing agendas. Check out the opinion page of any major newspaper, or listen to any news-discussion program, and you’re likely to encounter some self-proclaimed centrist declaring that there are no short-run fixes for our economic difficulties, that the responsible thing is to focus on long-run solutions and, in particular, on “entitlement reform” — that is, cuts in Social Security and Medicare. And when you do encounter such a person, you should be aware that people like that are a major reason we’re in so much trouble. For the fact is that right now the economy desperately needs a short-run fix. When you’re bleeding profusely from an open wound, you want a doctor who binds that wound up, not a doctor who lectures you on the importance of maintaining a healthy lifestyle as you get older. When millions of willing and able workers are unemployed, and economic potential is going to waste to the tune of almost $1 trillion a year, you want policy makers who work on a fast recovery, not people who lecture you on the need for long-run fiscal sustainability. Unfortunately, giving lectures on long-run fiscal sustainability is a fashionable Washington pastime; it’s what people who want to sound serious do to demonstrate their seriousness. So when the crisis struck and led to big budget deficits — because that’s what happens when the economy shrinks and revenue plunges — many members of our policy elite were all too eager to seize on those deficits as an excuse to change the subject from jobs to their favorite hobbyhorse. And the economy continued to bleed. What would a real response to our problems involve? First of all, it would involve more, not less, government spending for the time being — with mass unemployment and incredibly low borrowing costs, we should be rebuilding our schools, our roads, our water systems and more. It would involve aggressive moves to reduce household debt via mortgage forgiveness and refinancing. And it would involve an all-out effort by the Federal Reserve to get the economy moving, with the deliberate goal of generating higher inflation to help alleviate debt problems. The usual suspects will, of course, denounce such ideas as irresponsible. But you know what’s really irresponsible? Hijacking the debate over a crisis to push for the same things you were advocating before the crisis, and letting the economy continue to bleed.

Comments:

montereydan

The bourgeoise, or the elite, the super rich - whatever you want to call them - have captured the political process in the US over the past 30-40 years. They regard all money/wealth as rightfully theirs and feel that any wages higher than starvation wages or any benefits at all (such as Social Security, unemployment insurance, Medicare, public education, etc.) is just taking bread out of their children's mouths. We are witnessing the final, full-frontal assault of the bourgeoise on the reforms of the New Deal through the 60's. The communists (the only ones who were willing and able to explain about the class struggle to working people) were eliminated from our society 55-65 years ago, resulting in a populace that, although it senses that something is wrong, doesn't even know that there is a class war on, much less that it is losing it.

Cisco812

Excellent post! Right on the money. Thanks. When the fascists took over Congress after WWII they passed the Taft-Hartley Law and got the American public believing that it was illegal to be a communist or socialist or even a unionist.

Daniel Henninger speaking in the pages of Thursday's Wall Street Journal addresses Krugman and any other economists foolish enough to think that the lower classes shouldn't be made to pay for the risk-taking of their betters. (Henninger, it should be kept in mind, is not just any old reporter. He's the Deputy Editor of The Wall Street Journal's editorial page, and if you read his online resume he bears a resemblance to those wunderkinds who arose full blown from the fake 9/11 reportage. Oh, and he is a graduate of Georgetown University's School of Foreign Service so he's studied under the tutelage of the CIA-bred folks as well.) Can't have much better role models for the American Empire, can we?
Going back at least to the Clinton presidency, Democratic policy analysts have promoted, as a middle way, various Western European "mixed-economy" models for the U.S. — generous national systems for health and welfare, with the economy kept going by tax-supported "investments" (spending) in infrastructure, education, research and the like. This of course is what Barack Obama has sought from day one.
wl0811
M.C. Cohen
The Democratic argument has been that the country could maintain its remarkable economic success while performing all these social goals, though with cutbacks in defense spending. But there has never been any sort of coherent economic argument for how we could spend all this money and maintain the U.S.'s long-term growth trend. The S&P downgrade is at bottom a repudiation of 50 years of Democratic economic theory, or its absence.

What they've offered is essentially a dream, often described by them as such. But if the dream requires that Washington must somehow manage spending on the scale now, then clearly the middle-way dream isn't working.

The U.S. is not Germany or Denmark. Follower nations can afford to do no more than maintain contented populations. The U.S. bears inescapable global responsibilities. President Obama's explicit intention — Libya is Exhibit A — has been to back off America's No. 1 footprint in the world to free resources for the domestic dream.

What we're going to learn from this crisis is that American exceptionalism means something more than a vague claim to special status. More substantively, it means the necessity to find peculiarly American solutions to American problems.

A central attribute of our exceptionalism has been flexibility. U.S. economic success is a story of adaptive, efficient responses to history's headwinds and speed-bumps—until now. A national infrastructure bank would be the opposite of that tradition. It'd be too big and too slow. The Obama health-care plan, run through the 46-year-old turbines of Medicare, is wholly at odds with the needs now of a huge, complex country.

Washington is not America, and so optimism is possible. Out in the country, some states are showing with their public-pension reforms that government flexibility in the face of economic crisis is possible. A Washington able to recognize the immediate needs of the downgraded superpower would lift every identifiable burden from the states and the private economy.

Here are two headlines from one day this dreadful week: "U.S. Productivity Falls" and "Truck Makers Face Fuel-Efficiency Rules." That is the path to being less than No. 1. It doesn't taste right.

How's that for a mouthful of propaganda? You've been hit with so many counterattacks that you didn't even know someone had offered counter-solutions until then. They don't take long to mount full-throttle countermeasures, do they? (Reminds me of my days in radar.) And "50 years" of "Democratic economic theory" triumphant? I guess his math skills need some sharpening up too in the face of the last 30 years of that theory being brought to us through Republican interpretation as Rethuglican Congresses did the express bidding of its "bourgeoisie owners." And if you can make any sense of that "Libya" sentence, please let me know as I'm a willing listener to rightwing nonsense ably interpreted. Maybe we'll get a real clue about what they have in store for us then as he sounds like a valuable insider mouthpiece. Another favorite thinker who comes to my mind at times like these is Paul Craig Roberts, the somewhat reformed Raygunist (and sponsor of that 30 years of Republican Rule) who now sees the error of his past ways (or perhaps not, but who cares when he starts in on the NeoCons?). He has some rather harsh words for our national leaders today - both Democratic and Republican, and I like it!
A Parasite On The World

Paul Craig Roberts August 12, 2011 If Russian prime minister Putin’s recent description of America as “a parasite on the world was reported by the US media, little doubt but that most Americans were infuriated. We are the virtuous people. Without us good guys to police the world there would be mayhem and wars everywhere, not merely the ones we started in the Middle East, Asia, and North Africa. Without the American white hats people everywhere would be starving and dying from natural disasters. It is us chosen ones who provide the rescue operations and good deeds. How dare the former KGB monster to slander our country! Is it merely a coincidence that on August 11 the Swiss announced that they were discarding their monetary constitution that has prevented inflation in Switzerland and that has made their currency a safe haven for people everywhere who desired to protect their wealth, both small and large, from the predatory inflation practices of their own governments? Or is the Swiss announcement a result of America’s financial irresponsibility, the behavior of a parasite? The Swiss said that they are forced to violate their monetary constitution, because the irresponsible practices of the United States and European Union monetary authorities are driving so many dollars and euros into Swiss francs that the franc has appreciated to astronomical heights and is threatening Switzerland with the collapse of their export markets and Gross Domestic Product. The EU says it has no choice but to bail out its private banks as that is the policy of Washington, DC, and that it must print euros in order to bail out the banks. This policy is in violation of the charter of the European Central Bank, but what do rules and laws mean in today’s world? Nothing whatsoever. Obviously, Washington is threatening the world not merely with war but also with inflation. After announcing a massive printing of Swiss francs to absorb the inflow of dollars and euros so that the exchange value of the franc would not rise further, the Swiss government announced that it would peg its franc to the euro. That means that the Swiss will defend the pegged rate of exchange by printing enough francs to offset the inflows of euros. I think that the Swiss chose the euro as the peg over the US dollar because the majority of Swiss exports are to Europe rather than to the US. Years ago China pegged its yuan to the US dollar, not to protect its currency from rising as a result of flight from the dollar, but in order to demonstrate that the money of what was seen as a questionable communist currency was “as good as the US dollar.” Not long ago China was forced off the fixed peg by the amount of Chinese money creation necessary to maintain the peg. China substituted a “moving peg” that allows the Chinese currency to slowly appreciate against the dollar. The Chinese currency is rising as the dollar falls, but the “floating peg” is behind events. Consequently, China’s currency is under-valued with regard to the “superpower” dollar, and China is importing inflation by having to create yuan in order to maintain the floating peg as the dollar is declining faster than the peg. Oil producing countries such as Saudi Arabia and Qatar have their currencies in a fixed peg to the dollar. If the dollar depreciates too much in currency markets, the price of oil tends to go up. In other words, oil producers can compensate for US dollar devaluation by hiking the oil price of their main export. So, we can begin to see what Putin means. If the Americans are irresponsible with their monetary policy, if American banks have loans and credit default swaps to threatened European banks that require bailouts from the European Central Bank in order to protect the US banks as well as the solvency of the European private banks, if the price of oil, which is priced in dollars, goes up to the rest of the world because of US monetary irresponsibility, the entire world suffers from the Americans’ inability or unwillingness to put their house in order. If anything, Putin understated the burden that America is on the world. How much longer will the world put up with “the virtuous nation?”

(Dr. Roberts was Assistant Secretary of the Treasury in the Reagan administration and associate editor and columnist at the Wall Street Journal.)

Woooo! Head still on straight? How's that for giving you something else to think about in these troubled times? And do you get the idea that I just like the name "Paul?" (It's not true. I just love the way they express themselves. Right.) Professor Michael Hudson reminds us once again of why the Europeans, with their much older civilizations, continue to outthink US about the ongoing financial theft. They've seen it all before. Exactly the same bad actors (banks, etc.,) seeking favoritism over and over again, and their expectation of taking it out of those at the bottom.
German Taxpayers Willingly Subsidise Bankers Michael Hudson

NY Times, August 11, 2011

A Debate Between Five Economists on “Why Aren’t Germans Protesting?”

Rightly Disgusted at the Banks

August 12, 2011

A bailout, like any other government expenditure, is a tax. Someone must pay all this money. And it is unfair to tax the broad population to pay for a special interest. Instead of being a progressive tax policy, bailouts enable bad behavior by the financial elite, sticking taxpayers with the cost.

Bailouts are unpopular among Europeans who see them as a tax being paid by the population as a whole to financiers at the top of the pyramid. These bankers have lived in the short run, taking large risks of capital for short-term gains to outperform their rivals. It is a game that most individuals have not played with their own savings, and they don’t think that governments should compensate banks for taking these risks.

The bonds in question are held largely in German and French banks in Europe, and by U.S. banks. Germans are especially angry by reports that U.S. Treasury Secretary Timothy Geithner intervened in opposition to the insistence of Germany’s chancellor, Angela Merkel, that bondholders should take a loss on their irresponsible investments. News reports say that as many as half the troubled securities are held by U.S. money market funds or subject to derivatives gambles. So it is not only European banks that are being bailed out, but also risk-taking U.S. speculators.

Banks bought these bonds to earn high rates of interest; they took a risk, and now the taxpayers will pay. This is morally repugnant.

The tendency among German voters is to favor tangible investment and employment over financial speculation. Indeed, throughout Europe there is a feeling that bank executives are acquiring too much political power, pushing for regressive taxes that serve their own interests at odds with those of domestic populations.

This in part helps explain the rise in nationalist parties throughout Europe, most noticeable a month ago when populist Finnish nationalists opposed the bailouts.

As in the United States, the financial mentality in Europe is to take the money and run. The bankers who have made the bad loans pay themselves exorbitant salaries and bonuses, and then look for the other highest-return possibility in some other country.

This mentality flies in the face of a perceived national interest, and it subsidizes the emergence of a very unpleasant, greedy and increasingly loathed oligarchy. Worst of all, the bankers will use a large amount of their money to buy even more control of politicians serving their interests and arguing their case for why populations should pay even higher taxes to subsidize financial wealth at the top of the pyramid.

But the most important reason for opposing the bailout is economic: there is growing awareness that the bailouts must fail in the end. The debt simply is too large for governments who issued the bonds to pay by taxing their populations — without forcing them into stark austerity.

One German professor who follows financial markets told me that bailouts in the form of buying Greek and other government bonds from banks under present conditions “are like removing water from a leaking ship. They will not succeed when the damage is too big and more water comes in than goes out. At a point, the captain has to give up the ship and let it sink. Take the lifeboat and flee; there will be other ships around to take you in. Life will go on without the debts being paid to the banks. Let their bondholders lose.”

The problem is that the debts have grown too high to be paid without wrecking the economy. So someone will have to lose in the end. Banks bought these bonds to earn high rates of interest. They took a risk, and now want to take the money — and make taxpayers pay. This is morally repugnant.

(Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971).)

U.S. Consumer Confidence Drops to Three-Decade Low Amid Economic Headwinds ____________________

2 comments:

TONY said...

Depressing reading but Stevie Miller cheered me up. :)

Suzan said...

Me too, Tony. That's why I ran him and always try to find some pleasant tunes to lighten the bloody load.

So to speak.

Nice to hear from you!

S