A new stage in the attacks on the European working class

[Steven Gaal]

"When Greece has 1.5 mln unemployed, 700,000 families with no breadwinner, we cannot be polite to those who have caused the crisis" -Tsipras (CLICK LINK)

Read more: whatreallyhappened.com http://whatreallyhappened.com/#ixzz3NUWr49yg

Edited December 31, 2014 by Steven Gaal

[Steven Gaal]

This is the making of a lost generation. #Italy's Nov youth unemployment rate rises to 43.9%; New Record (CLICK LINK)

Edited January 7, 2015 by Steven Gaal

[Steven Gaal]

The light dawns … on the failure of austerity to overcome recession

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A complete understanding of great events will often have to wait until well after the shouting and the tumult die away and a longer perspective permits a more objective assessment of what really happened. Even then, though, greater elucidation proceeds at a glacial pace.

Today, we may well find ourselves again at the beginning of just such a process. Just as it took a decade and a Second World War to achieve a broad consensus as to what had really caused the Great Depression in the 1930s, we can now begin to survey the events that led to the Global Financial Crisis, and the response that has been made by orthodox policy to the recession that followed, and to assess them in the light of the accumulating evidence of actual outcomes since those events.

The evidence is surely mounting that the remedies to recession proposed by orthodox policy have failed. The German insistence on austerity, smaller government and eliminating deficits has led directly to the travails of the euro zone and the real threat of renewed recession, with the result that countries like Greece and Spain are in desperate straits and the continued viability of the euro itself is at risk.

The British, despite all George Osborne’s chest-beating, have endured five years of austerity and the longest and deepest recession in modern times. Living standards have still not returned to pre-2008 levels and such prospects as there are for the future rest on an unsustainable consumer boom and asset inflation in the housing market.

The more moderate approach, the relaxed monetary policy and greater government involvement put in place by President Obama have produced, by contrast, at least a partial recovery in the American economy. The comparison compels conclusions that call into question the whole thrust of policy around the globe over the last three decades.

It is not just that neo-classical economics have failed to produce a solution to the problems created by the Global Financial Crisis. It is rather that the policies that were put in place before the GFC – and that we are now beginning to see were responsible for bringing it about in the first place – are now being pursued all over again, with every likelihood that they will produce the same outcomes.

The simple certainties that were the basis of the monetarist revolution that began in the 1980s – that national economies were just like private businesses, that there was little role for government, that the market could safely be left to produce optimal outcomes, that restraining inflation through controlling the money supply could and should be the only goal of macro-economic policy – are now being looked at in a different light.

The questioning is still piecemeal, still nibbling at the edges rather than constituting a full-scale assault, but there is no doubt that future historians will mark this decade as the point when the counter-revolution began. At the heart of that new thinking will be a re-assessment of what monetary policy is and should be about. Already, we see governments (for example, Shinzo Abe’s government in Japan), central banks (even the Bank of England, with New Zealand’s Reserve Bank deserving an honourable mention), and leading academic economists beginning to understand that a monetary policy instrument that is only ever used rather ineffectually to damp down asset inflation is absolutely missing the point.

That can be seen very clearly when we look again at the seminal paper published in the Bank of England Quarterly Review in March last year. That paper conceded (the first such concession made by any major central bank) that 97% of the money in the UK economy was created out of nothing by the banks; a similar proportion would be found in many western economies, including New Zealand.

The whole basis of monetarist policy was thereby revealed to be a charade. Governments may cut spending and impose austerity, and may raise interest rates in a vain attempt to control the money supply (while doing unnecessary damage in passing to investment in the real economy), but the banks go on printing money as though there is no tomorrow. The greater part of that new money is created – not for productive investment – but for house purchase, and all of it for private profit rather than the public good.

This huge increase in the volume of money, most of it directed into the housing market and unbacked by any corresponding increase in real production, has inevitably created a huge asset inflation, a dangerous bias in the economy in favour of speculation and against productive investment, a major driver of inequality between those who own property and those who do not, and an economic policy that is totally ineffective in the hands of governments that do not have the slightest understanding of what they are doing.

As for the banks, their profits soar, the bonuses they pay themselves multiply in size, and their ability to create wealth out of nothing means that the asset bubbles that eventually burst to bring about the Global Financial Crisis are again being inflated as we watch.

How did all this come about? The answer is simple. In the 1980s, financial services were deregulated, governments withdrew from macro-economic policy, banks moved in to displace building societies as the main suppliers of mortgage finance, restrictions on capital movements were removed. The result? The banks discovered that lending on house purchase was hugely profitable and almost risk-free, and that there was in practice no limit to how much money they could create; the only constraint was the presence or otherwise of willing borrowers. While governments strained every sinew to “control the money supply” and their own spending, the banks’ ability to create new money through the stroke of a book entry continued unabated.

A recent study by the National Bureau of Economic Research in the US of bank lending in twenty countries and over long periods shows an undeniable link between the increase in the money supply (though even these expert authors seem not to quite understand how that increase happens) on the one hand and asset inflation in the housing market and an increased risk of financial crises on the other.

The outcomes of this huge shift in economic power, away from governments and in favour of banks, are felt everywhere in our daily lives – in housing costs, in jobs, inflation, government spending, growth rates, balance of payments. Yet the change is hardly remarked, let alone understood. That is about to change – and not before time.

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This article also appeared at Bryan Gould’s own blog (LINK)

Edited January 20, 2015 by Steven Gaal

[Steven Gaal]

Greece - By The Numbers (LINK)

Greece is reeling from the effects of the biggest economic crisis in its recent history. Here are 12 statistics, via The Wall Street Journal, underscoring the severity of the crisis now reaching into all aspects of Greek life...

Edited January 22, 2015 by Steven Gaal

[Steven Gaal]

Greek election: Syriza says 'hope has won' – live updates (LINK)

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With 100% of data processed: MRB exit poll for Star TV, give Syriza 10-point win, seat projection 148-154

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GREECE HAS VOTED NO TO AUSTERITY

Edited January 25, 2015 by Steven Gaal

[Steven Gaal]

Today's Food for Thought Germany’s Debt is More than Double that of Greece’s!

A recent article in Forbes underscores the flawed accounting underlying the lethal fiscal policy imposed on the citizens of the "cradle of democracy." An unconventional accounting method has been used to calculate that Greek debt is 175% of GDP, the statistical foundation for the crushing austerity that afflicts that country. In fact, it is 18%, when calculated using the standard "Ipsas" accounting method. Germany's on the other hand, is 46%, when calculated under that standard! All of the contents of this website as of 12/19/2014--Dave Emory's 35+ years of research and broadcasting--as well as hours of videotaped lectures are available on a 32GB flash drive. Dave offers his programs and articles for free--your support is very much appreciated. Read more »

News & Supplemental

• Germany’s Debt is More than Double that of Greece’s! Jan 28 A recent article in Forbes underscores the flawed accounting underlying the lethal fiscal policy imposed on the citizens of the "cradle of democracy." An unconventional accounting method has been used to calculate that Greek debt is 175% of GDP, the statistical foundation for the crushing austerity that afflicts that country. In fact, it is 18%, when calculated using the standard "Ipsas" accounting method. Germany's on the other hand, is 46%, when calculated under that standard! All of the contents of this website as of 12/19/2014--Dave Emory's 35+ years of research and broadcasting--as well as hours of videotaped lectures are available on a 32GB flash drive. Dave offers his programs and articles for free--your support is very much appreciated. Read more »

[Steven Gaal]

Weekend Edition Jan 30-Feb 01, 2015

http://www.counterpunch.org/

Greece, the US and the Neo-Liberal Coup

by ROB URIE

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Since the onset of economic calamity in the West beginning around 2007 ‘official’ response has been framed as modest successes with a few policy errors while the reality is of remote elites and their agents enacting punitive policies under the guise of material economic constraints. In this context the election of Alexis Tsipras and Syriza in Greece appears a radical left turn while the actual economic proposals under discussion appear to be the middle-of-the-road textbook economics that preceded the neo-liberal coup of the 1970s in the U.S. And while Mr. Tsipras has greater understanding of this economics and strategies of economic resolution than do the European and American leadership classes, the levers of resolution remain firmly with this (mis)leadership.

Put differently, the economic suffering of so many is largely gratuitous, economic predation carried out under the pretense of material constraints. As with Argentina in the early 2000s, Greece has an ‘internal’ kleptocracy with ‘external’ alliance to international bankers through the economic lever of external debt. While the U.S. leadership could have conjured the funds ‘out of thin air’ to put the unemployed in the U.S. to work and chose not to, Greece’s membership in the E.U. precludes this potential solution. As was largely the case with the mortgage relief and Federal Reserve asset buying programs in the U.S., subsequent European loans to Greece went to rebuild European bank coffers on the backs of the Greek people.

Graph (1) above: as of December, 2014 over six million potential workers in the U.S., people who want to work but have given up looking because of the weak job market, are estimated to exist. The Economic Policy Institute compared baseline estimates of job market growth to actual growth and the missing six million workers are the difference. Because this method already took into account expected retirees and others likely to exit the job market the state of the economy is mainly left to explain the missing workers. As FDR showed with the New Deal work programs in the 1930s, the U.S. government can create jobs for these people if the U.S. (mis)leadership cared to. Much as with the predominant German view of Greece, the view among American elites is that the unemployed simply lack the motivation to find work. Units are missing workers. Source: EPI.

The rise of Syriza in Greece is a welcomed development if Mr. Tsipras and his colleagues understand what they are up against and act accordingly. Whether the commitment to stay with the E.U. project is sincere or tactical, the currency union precludes much constructive action other than internal reorganization of the Greek economy. Internal reorganization, reigning in the kleptocracy and making it pay its way and using the gains in public resources to fund social spending, runs head on into the policies of extraction being inflicted on Greece by the Troika. What is framed by Western liberals as bad economics, ‘austerity,’ can otherwise be seen through the experience of the last half-century of austerity policies enacted by the I.M.F. (International Monetary Fund) to assure that banks are paid no matter the social catastrophe that results.

This longer history gives context to the policies inflicted on Greece. The American ‘model’ in South and Central America was / is to install ‘pro-business’ despots, internal kleptocrats, supported by the C.I.A., to loot ‘their’ countries while keeping order for U.S. business interests. Nominally leftist neo-liberal tool Carlos Menem led Argentina in the run-up to the Argentine crisis of the early 2000s. At the IMF’s behest, Mr. Menem implemented austerity policies that led to the collapse of the Argentine economy and ultimately to the collapse of the (subsequent) Argentinian government. It wasn’t until the Argentinian people rebelled and refused I.M.F. imposed austerity that economic resolution was possible.

Likewise, the I.M.F. led much of East Asia and Russia to economic ruin in the 1990s with nominal ‘development’ policies premised in neo-liberal dogma backed by austerity policies when things inevitably went wrong. While there were no doubt true believers amongst the bankers promoting the neo-liberal program then, much as there are in the E.C.B. today, the actual policies being implemented were banker ‘workouts,’ programs of debt repayment inflicted on delinquent ‘debtors’ without regard to their public policy implications. This is to say that the economic theories claimed to support I.M.F. policies tended to be ‘theoretical,’ requiring that several centuries of imperial history be overlooked, rather than based in reasoned examination of ‘the facts.’

In Argentina in the early 2000s there was little confusion as to whose interests the I.M.F. served. The ‘public’ debt the I.M.F. was working to get repaid was formerly private debts that were socialized, bank and corporate liabilities converted to obligations of the Argentine people, not unlike the trillions in bank ‘assets’ dumped by the (George W) Bush and Obama administrations into Federal government agencies to save Wall Street in 2008. This conflation of private with public debt is a primary component of neo-liberal extraction. And the ‘privatization’ of Greek ‘assets’ now being repudiated by Syriza was used to loot Argentina by this international kleptocracy as a core I.M.F. policy. This is to suggest that the Troika’s austerity programs for Greece have little to do with theoretical economics and everything to do with Western imperial ambitions. The policies may have ‘logic’ as economic theory, but the logic emerged from several centuries of imperial practice.

Another way to see the issues is to ask where the U.S. Central Bank, the Federal Reserve, found the $4 trillion to buy financial assets through its QE (Quantitative Easing) programs? The money was conjured ‘out of thin air,’ by making digital entries against the assets being purchased. The E.C.B. similarly has fiat currency; it can conjure money at will. If an asset is needed to be booked to balance the Central Bank’s books, a nominal asset like the trillion dollar coin being proposed a while back in the U.S. would work just fine. The point is that the E.C.B. could technically, if not politically, resolve Greece’s public debt with a few keystroke entries. The debt is being used as a political and economic lever by the Troika, much as was the case in Argentina in the early 2000s and is currently the case in the U.S. The budget ‘deficit’ being used to sell austerity in the U.S. is a contrived fiction. It isn’t that the accounting isn’t ‘real,’ it is that it misrepresents for political purposes how government spending is really financed.

Graph (2) above: much as imperial facts are framed by economists and political theorists as theoretical disputes, as ‘good’ versus ‘bad’ policy choices, it is put forward as ‘coincidence’ that fiscal policies that would benefit the poor and middle classes are ‘impossible’ because of budget constraints but finding $4.5 trillion for the Federal Reserve to buy assets to benefit the very rich is possible. In recent decades capital gains from rising financial asset prices courtesy of the Fed have gone almost exclusively to the very rich. The Troika now pits German taxpayers against ‘profligate’ Greeks when the battle lines are between bankers served by the E.C.B. and the people of Greece. Source: Emmanuel Saez.

The point in uniting the victims of an engineered Great Depression in Greece with the plight of Argentinians in the early 2000s to that of the growing poor underclass in the U.S. is that the problems are social— class warfare, not a function of material limitations. Each of these circumstances represents a struggle for social resources; the differences are over economic distribution, not ‘natural’ limitations. E.C.B. bankers might really believe that ‘expansionary austerity’ policies would allow the Greeks to pay un-repayable debts. But by implementing policies that have long history as imperial plunder, they have that history to answer for. The serial capitulation by the so-called European left to these neo-imperialist policies only makes sense if Party leaders see themselves on the ‘inside’ of the imperial divide. Mr. Tsipras and Syriza can either forego such illusions or they will take the Greek people down with them.

The thinly veiled racist drivel coming from the European North claiming that Greece’s problem are the product of a ‘national character’ finds its twin in American elite views of the economic problems besetting the growing poor underclass in the U.S. Mitt Romney’s ‘makers versus takers’ frame is the received wisdom in banker and corporate executive ghettoes across the U.S. An effort is being pushed to audit Greek debt to understand how, and for what purposes, it was undertaken. As social services in Greece were being cut arms from German and French arms manufacturers continued to be purchased on the Greek people’s dime. When an audit of Argentina’s debt was conducted some 70% of it was found to be fraudulent, private debt undertaken by private interests for their own benefit that was turned into public debt to rob the Argentinian people.

The economic policies forced on Greece are being imposed by degree across the West. School systems in major U.S. cities like Chicago, Philadelphia and Detroit are being systematically looted by neo-liberal ideologues and self-serving ‘managers’ for their own benefit. The idea of economic ‘efficiency’ being pushed is operational efficiency— efficiency in terms of providing the least service at the highest level of revenues. Public and private pensions are being cut under claims of material scarcity when the taxes and pay that were intended to fund them have been cut to benefit the wealthy. And the Obama administration left millions of families who were defrauded by predatory mortgage loans with debts greater than the value of their houses while the banks that made the loans were restored on the public dime.

In Greece Mr. Tsipras is so far saying the right things (top link). And what he is saying is only ‘radical’ within the frame of the hard-right turn of neo-liberalism of the last forty years. The economic policies forced on Greece are more draconian than in the U.S. and European core, but be degree, not by type. Wall Street, which includes major German and French banks, has used manufactured crises to affect ‘soft’ coups around the globe for decades. Debt is used as a weapon. The Greek people have a very difficult battle to fight. But the neo-liberal coup is international. Americans and Northern Europeans who think they are on the ‘winning’ side just haven’t had their jobs and life savings stolen yet. To one degree or another, we are all Greeks now.

Rob Urie is an artist and political economist. His book Zen Economics is written and awaiting publication. A sampling of Rob’s art can be found here.

Edited January 31, 2015 by Steven Gaal

[Steven Gaal]

Did you know: 80% of the bailout money went to European Union banks that were Greek bondholders, and not the Greek economy. (LINK)

[Steven Gaal]

Economy

Austerity Is 'Complete Horsesh*t': Ivy League Prof Dismantles the Conservative Lie

Mark Blyth's new book explains the damaging consequences of austerity in Europe and the U.S.

http://www.alternet.org/economy/austerity-complete-horsesht-ivy-league-prof-dismantles-conservative-lie

[Steven Gaal]

'People lose trust in EU govts': German Euroskeptics take regional votes from Merkel's party (LINK)

[Steven Gaal]

http://www.opednews.com/articles/Ironman-Varoufakis-s-Revol-by-Mike-Whitney-Austerity_European-Debt-Crisis_European-Union_Eurozone-150219-626.html

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THE ONLY REASON TO LIE IS THAT TRUTH IS NOT ON YOUR SIDE .....

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OpEdNews Op Eds

2/19/2015 at 20:27:07

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Ironman Varoufakis's Revolutionary Plan for Europe (Don't Tell Anyone in Berlin)

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By Mike Whitney (about the author) Permalink

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Instead, they called "Time Out" and kicked the can a little further down the road. It was not a particularly proud moment for the European Union. But what's even worse, is the subterfuge that preceded the meetings; that's what cast doubt on the character of the people running EU negotiations. Here's the scoop: About 15 minutes before the confab began, Varoufakis was given a draft communique outlining the provisions of the proposed loan extension. He was pleasantly surprised to find that the document met all his requirements and, so, he was prepared to sign it. Unfortunately, the document was switched shortly before the negotiations began with one that backtracked on all the crucial points.

I'm not making this up. The freaking Eurogroup tried to pull the old switcheroo on Varoufakis to get him to sign something that was different than the original. Can you believe it? And it's only because Varoufakis studiously combed through the new memo that he was able to notice the discrepancy and jam on the brakes. As it happens, the final copy was just a rehash of the same agreement that Varoufakis has rejected from the onset. The only difference was the underhanded way the Eurogroup tried to slip it by him.

[Steven Gaal]

Revolt In Athens: Syriza Central Committee Member Says "Leadership Strategy Has Failed Miserably" (link)

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....."Let us begin with what should be indisputable: the Eurogroup agreement that the Greek government was dragged into on Friday amounts to a headlong retreat. The memorandum regime is to be extended, the loan agreement and the totality of debt recognized, “supervision,” another word for troika rule, is to be continued under another name, and there is now little chance Syriza’s program can be implemented.... Greece will be receiving the tranche it had initially refused, but on the condition of sticking to the commitments of its predecessors.... How is it possible that, only a few weeks after the historic result of January 25, we have this countermanding of the popular mandate for the overthrow of the memorandum?"

[Steven Gaal]

Almost 100 families evicted daily in Spain – statistics (LINK)

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At least 95 families were evicted every day in Spain in 2014, fresh statistics say as Spaniards struggle to meet mortgage payments. Home foreclosures have become a stark symbol of the 7-year economic crisis, with 2014 seeing a further rise in numbers.

Edited March 6, 2015 by Steven Gaal

[Steven Gaal]

LIFE IMITATES SATIRE AS THE MSM FINALLY GIVES UP EVEN THE PRETENCE OF ANALYSIS OR OBJECTIVITY

Submitted by IWB, on March 9th, 2015

BY JOHN WARD

Read more at http://investmentwatchblog.com/life-imitates-satire-as-the-msm-finally-gives-up-even-the-pretence-of-analysis-or-objectivity/#Vwt758wJ6zCo5s3h.99

Edited March 10, 2015 by Steven Gaal

[Steven Gaal]

Thousands of workers strike in Northern Ireland, joining ...

www.sott.net/.../293850-Thousands-of-workers-strike-in-Northern-Irelan...

• Cached

7 hours ago - Organized by Unite the Union, UNISON and GMB, leaders say austerity ... "Across Ireland, Britain and Europe people have had enough of austerity," she said.

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• Debt crisis: European Union workers stage anti-austerity ...

  www.telegraph.co.uk › ... › World news

  • Similar

  The Daily Telegraph

  14 hours ago - European Union workers stage anti-austerity protests and strikese

Edited March 14, 2015 by Steven Gaal