By Tom Ferguson, Professor of Political Science at the University of Massachusetts, Boston. Cross posted from New Deal 2.0
Gridlock is not a reflection of ‘the way things have always been’. It’s the result of a GOP-conjured tide of money that emerged in the mid-80s and 90s, leaving us polarized and paralyzed.
Read more...One of the interesting features of the seemingly unending Eurozone crisis is that the half life of rescue measures is decreasing.
The elephant in the room, which we will put aside to focus on the current state of play, is that everyone knows the Greek debts must be restructured. To have Greece pay out punitive rates on past debt will simply grind the economy into a deeper hole, worsening its debt to GDP ratio and eroding its physical and human infrastructure. All the delay of the inevitable does is allow for more extend and pretend while Western financial firms strip the economy for fun and profit. And this is terribly inefficient looting; their profits from this pilferage will be small relative to the pain inflicted on the Greek populace.
Late last week, various commentators made a bit too much of the clearing of one obstacle to the extension of yet another short lifeline to Greece, namely, that Angel Merkel had relaxed one of conditions that stood in the way of a planned €12 billion credit extension. She had wanted private creditors to share in the pain, and agreed that a rollover of currently maturing debt would do. Before she had insisted on a full bond exchange, which would have resulted in a much more significant hit to investors.
This concession did not go over well in Germany.
Read more...It’s a sign of the times that your humble blogger is having to create finely stratified typologies for the various types of propaganda dubious research being deployed to promote the idea that rule by our new financial overlords, despite the considerable evidence to the contrary, really is for our own good.
We’ve already instituted the Frederic Mishkin Iceland Prize for Intellectual Integrity for special-interest-group- favoring PR masquerading as research.
However, Mishkin is a Respected Personage, and the initial Mishkin Iceland Prize recipients, Charles Calomiris, Eric Higgins, and Joe Mason, presumably knew they were writing utter bunk and were handsomely compensated for attaching their names to less than credible arguments. That suggests we need a separate category for the more mundane, bread-and-butter shilldom that is dressed up to look like serious academic work. Let’s call it the Lobsters Really Want to be Your Dinner Prize.
Read more...By Philip Pilkington, a journalist and heathen currently living in Dublin, Ireland
Belligerent ghouls
Run Manchester schools
Spineless swines
Cemented minds
– The Smiths, The Headmaster Ritual
Human beings have always and probably will always construct moral systems around which they structure their thoughts and actions. Some of these are quite simple and basic – for example: laws that prohibit murder. But some are remarkably complex – massive theological, metaphysical and religious systems that are disseminated in varied forms among countless numbers of men.
But here’s a question: to what extent is economic theory – I mean: the ‘highest’ tenets of economic theory – an arbitrarily constructed, yet extremely intellectually sophisticated moral system? By that I mean: a system of postulates constructed to limit and restrict our actions and thoughts. And if we find that economics is simply an arbitrary system of thought, no different in essence from the theologies of yore, is there an alternative approach that won’t have us slipping into dogma?
In order to get a clearer view of this we must first try to understand what the purposes of moral systems of thought are and how they are constructed. For that we will briefly turn to the field of anthropology.
Read more...By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College
Financial crashes were well understood for a hundred years after they became a normal financial phenomenon in the mid-19th century. Much like the buildup of plaque deposits in human veins and arteries, an accumulation of debt gained momentum exponentially until the economy crashed, wiping out bad debts – along with savings on the other side of the balance sheet. Physical property remained intact, although much was transferred from debtors to creditors. But clearing away the debt overhead from the economy’s circulatory system freed it to resume its upswing. That was the positive role of crashes: They minimized the cost of debt service, bringing prices and income back in line with actual “real” costs of production. Debt claims were replaced by equity ownership. Housing prices were lower – and more affordable, being brought back in line with their actual rental value. Goods and services no longer had to incorporate the debt charges that the financial upswing had built into the system.
Financial crashes came suddenly. They often were triggered by a crop failure causing farmers to default, or “the autumnal drain” drew down bank liquidity when funds were needed to move the crops. Crashes often also revealed large financial fraud and “excesses.”
This was not really a “cycle.” It was a scallop-shaped a ratchet pattern: an ascending curve, ending in a vertical plunge. But popular terminology called it a cycle because the pattern was similar again and again, every eleven years or so. When loans by banks and debt claims by other creditors could not be paid, they were wiped out in a convulsion of bankruptcy.
Read more...Yves here. I’ve been looking for simple, practical ideas on what can be done to stem what seems to be a hopeless slide downward in our standards of conduct. I’d be interested to get reader reactions, particularly if any of you were in organizations that had sanctions that were implemented along these lines.
By James Andreoni, Professor of Economics, University of California, San Diego and Laura Katherine Gee, graduate student in Economics, University of California San Diego. Cross posted from VoxEU
How should a small organisation – a firm, a university, a sports team – encourage good behaviour? While punishment can often make things worse, this column proposes and tests a method the authors call the “hired gun”. By punishing only the worst offender, everyone is given an incentive to be the second-worst offender. If everyone follows that strategy, good behaviour soon follows.
Read more...By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College. Cross posted from CounterPunch.
Financial strategists do not intend to let today’s debt crisis go to waste. Foreclosure time has arrived. That means revolution – or more accurately, a counter-revolution to roll back the 20th century’s gains made by social democracy: pensions and social security, public health care and other infrastructure providing essential services at subsidized prices or for free. The basic model follows the former Soviet Union’s post-1991 neoliberal reforms: privatization of public enterprises, a high flat tax on labor but only nominal taxes on real estate and finance, and deregulation of the economy’s prices, working conditions and credit terms.
Read more...Readers may be aware of the firestorm this blog kicked off by criticizing the decision of the Roosevelt Institute to accept a grant from the Peterson Foundation (later disclosed to be $200,000) to have its Campus Network, a group of college students affiliated with the Institute, its Campus Network, to prepare a budget for a Peterson-funded event, the “Fiscal Summit”. The purpose of the exercise was to discuss ways to reduce the fiscal deficit, when the Roosevelt Institute has heretofore taken the position that budget cuts at this juncture are bad policy (we cited papers by Joe Stiglitz, Rob Johnson, and Tom Ferguson as examples;many other Roosevelt Fellows, including Bill Black, Jamie Galbraith, Randy Wray, Rob Parenteau, and Marshall Auerback, have made similar arguments).
The Roosevelt Institute has issued rebuttals on its own site (“Speaking Truth to Power” by Andrew Rich, the president of the Roosevelt Institute. Some people associated with the Institute have also spoken out in favor of the participation in the Peterson event, such as Mike Konczal, and Zachary Kolodin.
After writing a second post on this disgraceful episode, and cross posting one from Jon Walker, which analyzed the health care recommendations in the students’ budget and found them to be sorely wanting, I had wanted to step back from this fray a bit. However, readers continue to ask for an explanation as to how the Roosevelt Institute came to make the decision to cast its lot with Peterson.
Read more...Matt Stoller, the former senior policy aide to Alan Grayson, wrote an op ed for Politico, “Public pays price for privatization,” on infrastructure transactions. We’ve depicted this troubling trend as “tantamount to selling the family china only to have to rent it back in order to eat dinner.”
Stoller looks at the political consensus that in an earlier era was gung ho to build major public assets and now would rather rip fees from them by hocking them to investors:
Read more...By Jon Walker, a senior policy analyst at Firedoglake. Cross posted from Firedoglake.
Worrying about long term deficits with official unemployment over 9 percent and treasury bonds rates at near-record lows is inherently an act of madness. It is the antithesis of both progressive policy and basic logic. Left to their own devices, liberals would relegate reducing the deficit to a very low priority in this economic climate. Of course when you’re a billionaire like Pete Peterson and you’re willing to spend millions promoting deficit hysteria, your can convince “liberals” to play into your deficit fetish at even the most illogical of times. Hence the Peter G. Peterson Foundations 2011 Fiscal Summit.
I’ve berated all the so called “progressive” groups that took part in the Peter G. Peterson Foundation 2011 Fiscal Summit for including health care reform in their deficit reduction proposals, yet totally abandoning the traditional progressive solution: a single payer health care system. If the United States simply adopted a system that was roughly as efficient as France, Finland, Norway, Australia, Denmark, England, or New Zealand, we wouldn’t have a deficit. Yet the clear and demostrable global precedent set by these nations somehow managed to escape inclusion by these leading liberal economic lights.
The Roosevelt Institute’s deficit plan, however, deserves special attention. Of the three plans, it is particularly bad on the issue of health care.
Read more...This INET video focuses on how Ireland got into its mess as well as the domestic and international political dynamics as to how it is being resolved. There is an interesting tension between the cool talking head style and some of the coded descriptions of the stresses and the stark choices at hand.
Read more...Mark Ames referred me to the documentary “Lifting the Veil.” I’m only about 40 minutes into it and am confident it will appeal to NC readers, provided you can keep gagging in the sections that contain truly offensive archival footage (in particular, numerous clips of Obama campaign promises).
Ames’ mini-review:
Read more...It begins with John Stauber, one of the great anti-PR writers, and historian Sharon Smith laying out the flat rancid truth: That the Democratic Party of today is the Big Co-apter. The Republicans have always been the party of corporate interests; and the Democrats portray themselves as agents of social change and progressive/populist opposition to corporate power, but the Democratic Party’s job is to co-apt these anti-corporate movements and subvert them to the same (or a different faction of) corporate interests.
To complete our two-corporate-party farce, we have an alleged third choice, a so-called opposition “Third Party,” the largest “neither left nor right”/”neither Democrat nor Republican” third party for the past three decades. And that party is…ta-dum!…Libertarianism. Which was nothing but a corporate PR project designed to co-apt the whole realm of Third Party opposition and subvert it to the most radical corporate agenda of all. In other words, even our Third Party/outside-the-system party is nothing but the most purified, most extreme pro-corporate party of all!
At this point you have to assume that the oligarchy is just laughing at us. “Hey, here’s an idea–let’s make the opposition to our fake-two-party system nothing but our corporate wish-list we send to Santa every year, and package that as the radical opposition.” “No way Mr Koch, there’s no way they’ll buy it–everyone today who’s against the two-party system is on the radical Left.” “Just give me a couple of decades, and a few billion dollars, you’ll see…” CUT TO TODAY: “Holy shit, you were right, Chuck! Ah-hah-hah-hah! The suckers have nowhere to go but right into our mouths–doors one, two and three our ours! Mwah-hah-hah!”
As black activist Leonard Pinkney says, “The Democrats are the foxes, and the Republicans are the wolves–and they both want to devour you.” So what does that make Libertarians? Avian flu viruses?
I’m about to reveal that I am a hopeless Old Fart, but I don’t understand why anyone other that a public figure uses Facebook. It has been demonstrated that anything on Facebook can and probably will be used against you. If you have a dispute or someone took an obsessive romantic interest in them, it would normally take some doing (like hiring a private detective) to try to find dirt. By making what would have been private information pubic, Facebook greatly lowers the cost of people with bad intentions toward you making your life miserable.
One development overseas that may be coming to the US is using Facebook to send legal notices, such as foreclosure notices. As Bloomberg informs us (hat tip reader Buzz Potamkin), this practice has been accepted by courts in Australia, Canada, and the UK.
This article triggered my “planted story” detector, since the piece kept stressing how there were no privacy issues involved (well, that’s close to tautological given how Facebook works) and had virtually no negative views expressed about this practice being adopted in the US.
Read more...You know it’s bad when a significant court of one of your most loyal foreign allies issues a major slapdown.
David Sirota of Salon (hat tip reader Marshall Auerback) reports on a stunning case (and yours truly is not easily stunned) and serves to reveal the depth of corpocracy in the United States.
The very short form of this story is that Supreme Court of British Columbia ruled that Cisco and US police and prosecutors engaged in a “massive abuse of process” to have a former executive who had filed an anti-trust suit against Cisco imprisoned.
Read more...Yves here. This is a long and important post. Hudson reports that he has gotten a great deal of correspondence from Greece saying that articles like this arguing against the pending stripping of Greece by banks are being translated and circulated widely to provide moral support. If you cannot read this piece in full, please be sure to read the discussion at the end of how Iceland stared down its foreign creditors.
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College. Cross posted from CounterPunch.
Promoting the financial sector at the economy’s expense
When Greece exchanged its drachma for the euro in 2000, most voters were all for joining the Eurozone. The hope was that it would ensure stability, and that this would promote rising wages and living standards. Few saw that the stumbling point was tax policy. Greece was excluded from the eurozone the previous year as a result of failing to meet the 1992 Maastricht criteria for EU membership, limiting budget deficits to 3 percent of GDP, and government debt to 60 percent.
The euro also had other serious fiscal and monetary problems at the outset. There is little thought of wealthier EU economies helping bring less productive ones up to par, e.g. as the United States does with its depressed areas (as in the rescue of the auto industry in 2010) or when the federal government does declares a state of emergency for floods, tornados or other disruptions. As with the United States and indeed nearly all countries, EU “aid” is largely self-serving – a combination of export promotion and bailouts for debtor economies to pay banks in Europe’s main creditor nations: Germany, France and the Netherlands. The EU charter banned the European Central Bank (ECB) from financing government deficits, and prevents (indeed, “saves”) members from having to pay for the “fiscal irresponsibility” of countries running budget deficits. This “hard” tax policy was the price that lower-income countries had to sign onto when they joined the European Union…..
At issue is whether Europe should succumb to centralized planning – on the right wing of the political spectrum, under the banner of “free markets” defined as economies free from public price regulation and oversight, free from consumer protection, and free from taxes on the rich.
The crisis for Greece – as for Iceland, Ireland and debt-plagued economies capped by the United States – is occurring as bank lobbyists demand that “taxpayers” pay for the bailouts of bad speculations and government debts stemming largely from tax cuts for the rich and for real estate, shifting the fiscal burden as well as the debt burden onto labor and industry.
Read more...