το μεγάλο κόλπο

Here’s what you are not going to read in the newspapers. This is not a sovereign debt crisis. That’s baloney. Government debt has always been guaranteed. Until now. The decision NOT to guarantee government debt was a political decision, not an economic one. Governments’ always underwrite their debt because governments represent the collective interests of the people. And with sovereignty comes certain perks, like printing one’s own money if need-be. So, if a government like Italy gets into a jam and needs to either weaken its currency or lower interest rates; it can do-so by either printing more money or buying its own bonds to keep rates low. That means, there’s always some risk of inflation, but never any risk of default. And, that’s what matters, because investors don’t buy gov. debt to get rich; they buy it because it’s safe.

The scamsters at the ECB refuse to guarantee government debt because it’s not in their interests. What they want is a bigger share of the economy to go to big finance and corporate elites. And the easiest way to achieve that is by allowing bond yields to rise enough so the politicians can be blackmailed into doing whatever the banksters want. And we know what they want. They want more for themselves and less for everyone else.

This is Draghi’s game. He’s giving away the farm to his bankster friends and giving working people the finger.

The $600 Billion Ripoff

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ολοταχώς

«Ωστόσο η πολιτική απάντηση (στην κρίση) είναι αρκετά αναιμική και καθυστερημένη για να μην πω κάτι περισσότερο» αναφέρει χαρακτηριστικά ο Στίγκλιτζ. Γνωστός για την κριτική του στα προγράμματα εξοντωτικής λιτότητας ο αμερικανός οικονομολόγος εκτιμά ότι το πιο πιθανό σενάριο για το 2012 «θα είναι η αναπαραγωγή του ίδιου σχεδίου: λιτότητα, αποδυνάμωση της πραγματικής οικονομίας, περισσότερη ανεργία και διαιώνιση των δημοσιονομικών προβλημάτων». Ο ίδιος επισημαίνει το παράδοξο της πολιτικής που ακολουθείται από τους ευρωπαίους ηγέτες οι οποίοι διακηρύσσουν τη δέσμευσή τους για στήριξη του κοινού νομίσματος αλλά ταυτόχρονα το υποσκάπτουν εν γνώσει τους καθώς ομολογούν ότι τα εφαρμοζόμενα μέτρα οδηγούν σε ύφεση. «Η μέρα της Κρίσης, τότε που το ευρώ θα καταρρεύσει ή η Ευρώπη θα λάβει τα ριζοσπαστικά μέτρα που απαιτούνται για να λειτουργήσει το κοινό νόμισμα, θα έρθει πιθανότατα το 2012. Όμως όπως όλα δείχνουν οι ηγέτες θα κάνουν ό,τι περνά από το χέρι τους για να μεταθέσουν αυτή τη μέρα. Η Ευρώπη όπως και ο υπόλοιπος κόσμος θα υποφέρει».

Στίγκλιτζ: Μακάρι να διαψευστώ αλλά το ευρώ οδεύει σε κατάρρευση

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my friend Kostas gets attention from big media

27 Dec 2011 02:11 PM

A Day After Boxing Day Gift

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the new revolt

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Twelve Months of Protestby Elissa Curtis

From January in Tunisia to December in Russia, a dozen photographs from a year of dissent.

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Αθήνα, Δεκέμβριος 2011
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"They Are Stealing Our Lives"

Greece in Chaos

by NOËLLE BURGI

“Who knows what tomorrow will bring?” people ask in Athens, Salonika and right across Greece. There’s a sense of collective imprisonment, individual uncertainty and impending catastrophe. Yet Greece has had a turbulent history, and the Greeks have always seen themselves as a gifted people, sturdy and accustomed to adversity. “There have always been difficult times, and we always made it through. But now, all hope has been taken from us,” said a small business owner.

While the austerity measures are piling up, an avalanche of laws, decrees and edicts is sweeping aside the social, economic and administrative frameworks. Yesterday’s reality is crumbling. As for tomorrow — who knows?

Greek citizens are subject to a Kafkaesque bureaucracy, with its incomprehensible, fluctuating regulations. Addressing colleagues, a civic employee in the Cyclades said: “People want to conform to the law, but we don’t know what to tell them, [the authorities] haven’t given us any details.” A man had to pay € 200 and present 13 papers and proofs of identity to renew his driving license. Salary cuts among public employees have disrupted the public sector. “When you call the police to alert them to a situation, they reply, ‘it’s your problem, you deal with it’,” said a retired engineer officer from the merchant navy. Tensions are rising. Reports show a big increase in domestic violence, theft and murder (1).

Salaries are falling (by 35-40% in some sectors) while new taxes are invented, some backdated to the beginning of the calendar year. Net incomes have fallen drastically, in many cases by 50% or more. Since the summer, a solidarity tax (1-2% of annual income) and an energy tax (calculated on the consumption of petrol and natural gas) have been levied. Further novelties include the lowering of the tax threshold from € 5,000 to € 2,000, and a property tax of € 0.5 to € 20 per square metre levied as part of electricity bills, payable in two or three instalments (failure to pay results in power cuts and penalties).

ΜΟRE

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Europe’s Deadly Transition From Social Democracy to Oligarchy

by MICHAEL HUDSON

The easiest way to understand Europe’s financial crisis is to look at the solutions being proposed to resolve it. They are a banker’s dream, a grab bag of giveaways that few voters would be likely to approve in a democratic referendum. Bank strategists learned not to risk submitting their plans to democratic vote after Icelanders twice refused in 2010-11 to approve their government’s capitulation to pay Britain and the Netherlands for losses run up by badly regulated Icelandic banks operating abroad. Lacking such a referendum, mass demonstrations were the only way for Greek voters to register their opposition to the €50 billion in privatization sell-offs demanded by the European Central Bank (ECB) in autumn 2011.

The problem is that Greece lacks the ready money to redeem its debts and pay the interest charges. The ECB is demanding that it sell off public assets – land, water and sewer systems, ports and other assets in the public domain, and also cut back pensions and other payments to its population. The bottom 99% understandably are angry to be informed that the wealthiest layer of the population is largely responsible for the budget shortfall by stashing away a reported €45 billion of funds stashed away in Swiss banks alone. The idea of normal wage-earners being obliged to forfeit their pensions to pay for tax evaders – and for the general un-taxing of wealth since the regime of the colonels – makes most people understandably angry. For the ECB, EU and IMF “troika” to say that whatever the wealthy take, steal or evade paying must be made up by the population at large is not a politically neutral position. It comes down hard on the side of wealth that has been unfairly taken.

Europe’s Deadly Transition From Social Democracy to Oligarchy

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Turner, Monet, Twombly

ιστορίες λιτότητας

Eurozone Crisis Enters New Phase

Austerity for Europe

by MARK WEISBROT

The house is on fire and the owners are arguing about what kind of safety regulations should be implemented in the future so as to prevent these types of fires. That is what appears to be going on in the eurozone right now, as European leaders try to reach agreement on a series of measures that would impose “fiscal discipline” on member states in the future.

Of course, these would-be fire marshals haven’t even identified the correct safety regulations, since it was not over-borrowing by governments that caused this crisis, but rather over-borrowing, bubble-driven growth, and other excesses of the private sector. But the most urgent problem right now is the fire itself – the eurozone is already in recession, according to the OECD, and their financial crisis is already slowing the world economy. This includes Brazil, which today announcedthat GDP growth for the third quarter has been zero.

However, we have entered a new phase of the crisis — although it has been barely noticed by the media — which is mainly focused on the proposed fire safety regulations. On Friday, the head of the European Central Bank (ECB), Mario Draghi, hinted for the first time that the ECB could play a bigger role in buying Italian and Spanish bonds. According to press reports, he justified this on the grounds that the ECB had a responsibility to maintain price stability “in either direction.”

Austerity for Europe

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The economist known as "Dr. Doom" for his 2008 recession prediction says the world may be headed for another financial crisis.

New York University professor Nouriel Roubini said Wednesday that Europe's debt troubles are so profound that the continent is falling into a "recession that will get worse and worse."

And a deep recession likely will lead to another financial panic that could spread around the world — an outcome that will be " very painful," he said.

Roubini spoke at a conference called, "U.S. Economy at Risk: What Can Be Done?," sponsored by the New American Foundation, a research group.

He is just back from Europe, where he says the debt crisis is reaching its climax. But he is not looking for a happy ending.

Government austerity programs, higher unemployment and reduced business and consumer confidence will combine to cut growth for at least two years, he says.

On Friday, European leaders will meet at a Brussels summit to establish a long-term commitment to defuse their debt bomb, restore fiscal credibility and save the euro as the currency of 17 European nations.

Roubini predicts Europe's leaders "will reach something of a compromise, but it won't be sufficient" to solve the problem of too much government debt.

They will agree that "fiscal austerity and reforms will be necessary," but those changes will only depress growth, leading to lower tax revenues and a deepening debt crisis. Eventually, investors in some European bonds "will see they are insolvent," he said.

"With Italy too big to fail, too big to save, and now at the point of no return, the endgame for the eurozone has begun," Roubini said in a recent written assessment.

He says a disorderly eurozone break-up would trigger a financial system shock as serious as the collapse of Lehman Brothers in 2008, if not worse.

Besides teaching, Roubini is chairman of Roubini Global Economics and co-author of the book "Crisis Economics."

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Killing the Euro

By PAUL KRUGMAN

Can the euro be saved? Not long ago we were told that the worst possible outcome was a Greek default. Now a much wider disaster seems all too likely.

True, market pressure lifted a bit on Wednesday after central banks made a splashy announcement about expanded credit lines (which will, in fact, make hardly any real difference). But even optimists now see Europe as headed for recession, while pessimists warn that the euro may become the epicenter of another global financial crisis.

How did things go so wrong? The answer you hear all the time is that the euro crisis was caused by fiscal irresponsibility. Turn on your TV and you’re very likely to find some pundit declaring that if America doesn’t slash spending we’ll end up like Greece. Greeeeeece!

But the truth is nearly the opposite. Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole. And their efforts to fix matters by demanding ever harsher austerity have played a major role in making the situation worse.

The story so far: In the years leading up to the 2008 crisis, Europe, like America, had a runaway banking system and a rapid buildup of debt. In Europe’s case, however, much of the lending was across borders, as funds from Germany flowed into southern Europe. This lending was perceived as low risk. Hey, the recipients were all on the euro, so what could go wrong?

For the most part, by the way, this lending went to the private sector, not to governments. Only Greece ran large budget deficits during the good years; Spain actually had a surplus on the eve of the crisis.

Then the bubble burst. Private spending in the debtor nations fell sharply. And the question European leaders should have been asking was how to keep those spending cuts from causing a Europe-wide downturn.

Instead, however, they responded to the inevitable, recession-driven rise in deficits by demanding that all governments — not just those of the debtor nations — slash spending and raise taxes. Warnings that this would deepen the slump were waved away. “The idea that austerity measures could trigger stagnation is incorrect,” declared Jean-Claude Trichet, then the president of the European Central Bank. Why? Because “confidence-inspiring policies will foster and not hamper economic recovery.”

But the confidence fairy was a no-show.

Krugman: Killing the Euro