Austerity! What is it good for? (Absolutely nothing!)
Because reality right now is telling us that austerity is not only painful but wholly counterproductive. Here's an excellent report from the Wall Street Journal on the wide social unrest that austerity has caused in Greece:
Greece shook global markets, intensifying fears of a default, as tens of thousands of demonstrators protested a new round of budget-cutting plans and its prime minister offered to step down to try to preserve them.
Protests across the capital sometimes turned violent as Prime Minister George Papandreou sought an agreement with opposition parties on austerity measures demanded as the price of a new bailout by euro-zone nations and the International Monetary Fund.
The report also notes that austerity has actually exacerbated the sovereign debt crisis and hasn't made bond holders any more willing to buy Greek bonds at lower interest rates:
Yields on Greek government bonds leapt to new highs, with two-year paper yielding 29%. Bond yields on other troubled euro-zone economies like Portugal and Ireland also moved higher, and stock markets in the U.S. and Europe sank as fears of contagion picked up. The euro plunged 1.9% against the dollar.
Needless to say, it's not only the wacky anarchist college kids who are pissed off about all this. Mama and Papa Greece are none too pleased either:
John Petru, 41 years old, said he had come to block parliamentarians from arriving to debate the budget cuts. "We do not trust them," he said of the politicians. The recession has eaten badly into his cleaning-service business. "Business is down, and prices are up, and we are not sure about anything," he said.
Greeks have already suffered multiple rounds of budget cuts since last year, but they have failed to build confidence in the economy. The budget deficit has turned out to be wider than projected then, with the government failing to cut spending or raise revenues as much as promised. But the biggest gap in its finances has opened up because private investors have refused to buy new Greek government bonds at interest rates the government can afford.
Many protesters said they had gone along with previous budget cuts and wage reductions on the belief that those sacrifices would be enough to right Greece's fortunes. "They have asked us to reduce our wages, to live another standard of life," said Angeliki Kachrimani, a 42-year-old worker for Greece's postal service. She accepted a 15% wage cut; her husband, a history teacher, is unemployed.
And look, this is all pretty simple to understand: Greece is in this mess right now both because its government lied for years about its budget deficits (with an assist from everyone's favorite investment bank Goldman Sachs) and because its monetary policy options are limited by the European Central Bank. In other words, investors know Greece can't print its own money and thus will never be able to pay them back. The problem is exacerbated by the austerity measures that result in cuts to government jobs, cuts to wages and a drop in overall demand. These things aren't exactly making investors feel good about Greece's future economic prospects either.
"Why should I give a damn about this?" you ask. Well, it's pretty obvious that America's own austerity backers, led by Paul Ryan, have similar plans for us as well. And it would behoove us to point to the examples of Greece and Ireland and the U.K. and shout at the top of our lungs, "AUSTERITY DOESN'T WORK, YOU TOOLS!!!!!" Because frankly, I'm not looking forward to widespread social unrest. God forbid the streets of America come to resemble third-world hellhole streets like those of Vancouver.
Austerity = Fascism.
Bailout and Handouts and Socialism for the Corporations. Disaster Capitalism for the working people. It's absurd and shouldn't even be taken seriously.
The journalists and people get what they deserve though. If you aren't willing to look into the Anthrax attacks or the reality of false flag terrorism you get what you deserve.
"In 2006, Indiana Governor Mitch Daniels was advised by none other than Goldman Sachs to sell the road. He did, signing a deal with foreigners to lease it for 75 years ... In the last two years the tolls for truckers have doubled, and there's an automatic toll increase every year."
America for Sale: In Chicago, it's the sale of parking meters to the sovereign wealth fund of Abu Dhabi. In WI it's public health & food programs, in CA it's libraries. It's water treatment plants, schools, toll roads, airports, & power plants. It's the sale of public assets to private investors.
America Is Being Raped ... Just Like Greece and Other Countries
Figure it out. History repeats itself.
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
will not even lead to any reduction in the deficits.
With unemployment over 9% (officially, unofficially it is much higher), cutting the funds to those most likely to spend it right away will lead to further declines in economic activity and thus tax receipts.
It's hypocritical, heartless, and stupid.
~
http://october2011.org
Where's Crooks and Liars?
http://www.october2011.org/media
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
Please try not to step on the toes of the millions who've been standing there since June 14th demanding the resignation of the bernanke.
History shows there's only one way to accomplish regime change. Read up on it.
Humpty Dumpty was pushed.
http://www.october2011.org/organizations
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
rally, maybe we could get some of those Greek protesters over here to shake things up.
Look at all the red states in the bottom half of this list:
http://visualizingeconomics.com/2010/02/17/fe...
You would think the right-wingnut politicians representing these states would be bright enough to realize what lower taxation and spending at the federal level would mean for their constituents. In reality they are the biggest fans of the welfare state . . literally!
Any one hear study the words of John Perkins?
http://www.youtube.com/watch?v=yTbdnNgqfs8
Or Naomi Klein and her description of Shock Doctrine Politics?
http://www.youtube.com/watch?v=eHrEH5G90wo
Anyone willing to get at the roots of these problems and not just pitter around the surfaces of this fake left vs. right paradigm. We need more people willing to dig deeper. It's easy all you have to do is follow the examples above. Or watch this:
The Money Masters.
The Secret of Oz.
I consider politics as a way to define and solve problems. What are the solutions? That is the question.
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
I was just going to say, it's time to re-read "Confessions of an Economic Hitman." This all sounds eerily familiar.
So the whole Greek mess is caused by 1) an evil lying government, and 2) an evil ECB? So it's all a conspiracy by evil elites?
Absurd, unsustainable conditions for public workers, as well as irresponsible demands by voters have nothing to do with it? Unions did not have any role to play? Seriously? Have you ever seen what kinds of benefits Greek civil servants get compared to private sector employees? And how unproductive they are?
There is plenty of blame to go around, and successive governments have certainly been irresponsible and politically corrupt. But to act as if the "normal greek voter" is simply a victim of elites is ridiculous... when will bloggers like you accept that "teh people" have not exactly behaved responsibly either?
I'm so tired of this kind of populist drivel...
No I haven't. Why don't you go ahead and post a link to your data? I'm sure we'd find it worth a read, and that might sway us to start blaming the victims. Could you also link to the percentage spent on civil servants vs. the total debt owed?
I'll wait.
I suggest you do your own homework if you're genuinely interested, rather than accusing me of "blaming the victims". If you honestly look into the matter, you will see that the public sector in Greece cannot be compared the teh situation in the US.
Of ocurse the economy has been badly managed by political elites, but the excorbitant demands from unions and voters in general should not be compared. Otherwise history will indeed repeat itself over and over again.
Anyway, from the top of my head some general pointers:
- Public expenditure is a little over 40% of GDP (not that high compared to other nations), but of that, close to 80% goes to wages and related payments of public workers. That is an extremely high percentage.
- It is effectively impossible to fire public workers in Greece. Only in the most egregious cases can workers be dismissed (hardcore corruption, sexual assault...) . There is hardly any standard that needs to be met, which means that Greece has the lowest productivity per public sector worker in the EU, as measured as a workers per euro spent.
- The official retirement ages is 61. Early retirement (which most people take) stands at 57, but there are many exceptions that permit people to retire even sooner.
Look, I'm neither Greek nor American, and I consider myself liberal/left wing (I in fact have always voted for the Green Party in my country, which would be communist by American standards). But being left wing does not mean that one is a warrior against "the man". If we ever want to get out of this whole mess, we need to be sensible and stop populist nonsense.
I thought so...
Really? I'm very curious as to what you do think it means? Seriously.
in any sense of the word, at least not on this issue. You are an apologist for the central banks, the banksters, and their bondholders. You are left wing just like Hank Paulson is left wing.
You are not left wing if you dismiss the plight of the marginalized as "populist nonsense."
And none of the "sensible" solutions discussed so far by the ECB/IMF have anything to do with the left wing.
why is every country across the ideological spectrum in the West and most of the developing world in the same position, roughly? Why is Ireland and Iceland in the same position as the US and the UK? Why has the debt of the developing world and the US exploded in recent decades, even though their economies couldn't be any different? What has happened in Latvia, for example, that you see as a solution moving forward since you seem to be in favor of similar policies for other countries? What has Latvia done that will benefit them moving forward?
If financial interests have mounds of cash that isn't going towards the productive economy and if they have been bailed out with trillions of tax payer dollars the world over, do you not think we could take money out of the financial system and start directing it towards the productive economy? Whatever our opinions, clearly the status quo of financially dominated capitalism is not sustainable on any level.
At what point does a system have to so horribly fail for people like you to think that radical changes are needed, and by that I don't mean an even more radical neo-liberal set of policies? I liken people like you to Communists who didn't leave after Stalin's crimes were admitted to. There will always be true believers and people with no imagination and knowledge of alternatives. I see no point in having these people continue to run economic policy however any more than I think the Communists in Eastern Europe should have been supported after THEIR pet policies crumbled under their own weight.
until the IMF (aka mutilnational bankers) starting sniffing around.
What would happen if this became public to the world?
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
"Populist drivel", huh? You won't be as dismissive when austerity comes to your door step or to others in your family.
The point of these posts is that the so called bailouts are making the situation worse and consigning the people to economic slavery for decades. Even if you don't feel an ounce of empathy for the little guy, any rational economist not sucking off the central bank tit knows that these bailouts are a bad idea and that they are merely postponing the inevitable. You don't even need to have empathy to realize that austerity is a bad idea. Or can you identify an economist who advocates austerity in the middle of a severe depression?
By the way, this "populist drivel" is just getting started.
cousin.
Trust me, not as tired as I am of sanctimonious people, like you, who think blaming the victim an argument deserving of condescension makes. As an "European" (LOL) you make a great American reactionary.
When were "teh voters" in Greece wrong exactly? When they elected the conservatives which started this mess, or when they went socialist in the past elections and things kept going South?
When you consider a living wage, and I quote "an unsustainable condition," you have to start considering where you took the wrong turn on board the conservative kooaild express...
CTHULHU 2012 "Why vote for a lesser evil?"
Well, I'll stop posting. You guys are right, I am wrong. The people have spoken. I apologise for any inconvenience caused, and shall no longer polute your existence with my ignorance.
However, my girlfriend just saw me frantically typing away, started reading the page, and has started to call me "American reactionary". She seems to find it funny. Thanks a lot.
Where every school drop out is an expert, every bored housewife is a supermodel, every kid looking for adult friends is an undercover cop, you get to pretend to be an Euro leftie with a girlfriend, and arguments to authority in an anonymous forum are supposed to mean shit.
Because nothing spells "romance," better than spending a summer Friday night trolling a random leftie blog on the interwebs... you must be quite a catch, of that I am sure she reminds you every day.
In any case, for a supposed european leftist you certainly can spew American conservative talking points with the best of them. Congratulations?
CTHULHU 2012 "Why vote for a lesser evil?"
in your sarcastic attempt to frame the issue you whistle right on past the actual conspiracy--namely:
"In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means."
"As in the American subprime crisis and the implosion of American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.... Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country's liabilities."
http://www.nytimes.com/2010/02/14/business/gl...
of the reality-less, history-less right wing drivel. Come back and provide an example, just one, in history where an economy like Greece has benefited from austerity WHILE they were in a depression. You won't because it doesn't exist. Greece has many problems that have nothing to do with social programs or unions. They have had, for decades, no systematic tax collection. They are part of the EU, where a strong Euro can destroy a country like Greece's industry (far less so than the much stronger German industry). The previous right wing government, with the help of Western banks, hid their true financial state from the heads at the ECB. There there are things like this, from 2004 (does this failed economic philosophy sound familiar?):
http://www.bloomberg.com/apps/news?pid=newsar...
Portuguese Prime Minister Jose Manuel Durao Barroso cut the corporate tax rate to 25 percent from 30 percent. Greece plans to reduce the tax rate on retained earnings by 10 percentage points to 25 percent. The EU's average corporate tax rate declined to 31.7 percent last year from 32.5 percent in 2002 and 39 percent from 1996, as accession talks gained pace, according to KPMG LLP
http://en.wikipedia.org/wiki/Taxation_in_Greece
Beginning in 2007, the rate of corporate tax is 25%. Starting in 2010 the corporate tax rate will fall 1% annually until it reaches 20% in 2015.
Social programs CAN be maintained, but they can't be maintained at current levels if the government is taking a part in the race to the bottom, like other neo-liberal disasters, with tax cuts and lax tax enforcement.
Regarding the ECB, the ECB cannot create money itself nor lend to the governments or buy their debt directly, that is up to the financial markets and the private banks. They are completely under the boot of the private financial interests. So when a country is going through a recession there aren't many options, like counter cyclical measures, that the countries in the EU can implement. The right wing ECB has been talking about setting up a council that will override what people chose democratically if it essentially doesn't benefit the creditors. They don't actually say that directly, they but that is what it would do.
Regardless, the policies that the pro-austerity crowd wants will make a bad situation worse. They will cause a downturn in the real economy, which will make it harder for the countries to pay back their debt. The debt will then grow, the debt to GDP ratio will grow and their credit rating will get worse and worse. The only way for a country to get out of a situation like Greece's is either for the debts to reduced down to the level of the ability to pay or by instituting policies that will help the real economy grow so it can pay back the debt it owes. That would entail the exact opposite of austerity.
By the way, if it is the big bad unions and the big bad government to blame, how do you explain Ireland? Was Ireland not being lauded by the IMF as the "free market" model to follow? Wasn't it the "Celtic Tiger"? Please explain:
http://enoughcampaign.org/2011/04/14/why-does...
Ireland during the Celtic Tiger years was the poster-child of globalised, deregulated, neoliberal capitalism as multinational corporations flocked to take advantage of its low corporation tax rates. A policy of light-touch financial regulation saw the banking sector finance a monstrous housing bubble. Then the bubble burst. The collapse of the construction industry sent the economy into a tailspin, while plunging home prices left many people owing more than their houses were worth. Now Ireland is, per capita, the most indebted country in the EU, with a deficit of 32 percent.
http://www.greenleft.org.au/node/46634
Tax rates on companies had been reduced to 12.5% and the rate actually paid by the transnational corporations that had set up business there was between 3 and 4% — a CEO’s dream! By comparison, the company tax rate is 39.5% in Japan, 39.2% in Britain, 34.4% in France and 28% in the US.
...Colmant said Belgium needed to change the legal and institutional framework so as to become a platform for international capital, just like Ireland. A few short weeks later, the Celtic Tiger was crying mercy. In Ireland, financial deregulation triggered a boom in loans to households, especially in real estate. On the eve of the crisis, household indebtedness had reached 190% of gross domestic product (GDP).
...On the social level, the austerity plan is nothing short of disastrous. It includes:
• cutting 24,750 positions in the civil service (8% of the workforce);
• newly recruited public employees earning 10% less;
• lower family and unemployment allowances, a significant reduction in the health budget, a freeze on retirement pensions;
• a rise in taxes, to be borne mostly by the majority of the population, already a victim of the crisis: notably a value added tax (similar to GST) increase from 21% to 23% in 2014; creation of a real estate tax (affecting half of the households that were formerly tax-exempt);
• a 1 euro reduction in the minimum hourly wage (from 8.65 to 7.65, or 11% less).
Conspiracy Theories do exist. That's the bottom line.
The Bankers and their Bailouts. The War Machine. The Election Scandals. The Political Movements.
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
The best educational cartoon ever, for history, The American Dream
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
and spend the money. They need to turn dead/speculative money into live money. Tax the stuff rich people buy and have if you can't tax their income effectively. They need to grow themselves out of this mess.
Bank On It: How Cash-Starved States Can Create Their Own Credit
http://www.commondreams.org/view/2009/03/04-12
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
neoliberal austerity: works (to help further the transfer of wealth upwards)
economic policy without political consensus (ie EU): works (to help further the transfer of wealth from the peripheral to the core)
things will get worse--especially now that the germans have conceded to french demands that private investors not share in the burden of helping greece. once again the people are asked to sacrifice to make the investor class whole.
Forget the Republicans and the Democrats.
The Working Families Party.
America Is Being Raped ... Just Like Greece and Other Countries
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
oh really? so what's up? is it the dead hand capital weilding the hammer of the gods nailing people to the wall? good thing clinton is going to the world bank or the IMF or whatever, i am sure she will straighten this out.
you know what? maybe if we had political leaders who would stand up, give a prime time speech detailing who owns what, who makes what profits, what percentage of those profits are taxed, the truth, nothing but the truth.
until we break the iron grip of capital we will go further down the road of fascism, and the iron boot will be firmly on our throats. because you know what? it is just like the punkin's say,
"Secret destroyers, hold you up to the flames
And what do I get, for my pain?
Betrayed desires, and a piece of the game
Even though I know - I suppose I'll show
All my cool and cold - like old job
Despite all my rage I am still just a rat in a cage
Despite all my rage I am still just a rat in a cage"
In these discussions, I have yet to see offered an alternative to austerity for Greece's debt crisis. They could restructure their debt by changing bond term lengths and to some degree they've already done that with private investors on a voluntary basis. Forcing it is tantamount to declaring bankruptcy. Their credit rating is in the pits (S&P CCC), thus the possibility of future private investment is nearly zero. The EU can continue to issue debt, but at some point the member countries are going to call it quits--we've already seen significant resistance by Germany.
At some point in the near future Greece will lose the ability to obtain loans critical to ensuring the continued operation of their government institutions (policing, roads, electricity, welfare, pensions, etc.).
Yes, the political system is broken. Yes, some politicians were criminal and most were inept. But the smoke has not cleared, this is not the appropriate time for assigning blame. You can be assured, that time will come.
The reality is: without significant--voluntary--spending reductions, Greece will soon face significant--involuntary--cuts.
they could go by way of the argentine-route--default.
reject the euro, and put greece's economic future in the hands of the greek people. painful, definitely. but one must ask just when neoliberal austerity actually led to economic development and improvement...
leaving the Euro would be rather suicidal, Argentine was not part of a relatively interwoven monetary union.
CTHULHU 2012 "Why vote for a lesser evil?"
but, as mark weisbrot puts it, "You can be sure that the European authorities would offer Greece a better deal under a credible threat of leaving the euro zone."
than Germany and co need Greece, for example. And the Northern European countries at this point are controlling most of the strings of this puppet.
It is a bad position to be in for Greece, since most threats are viewed as idle at best.
CTHULHU 2012 "Why vote for a lesser evil?"
and i think that is what causes some people to scratch their heads about the situation: why doesn't greece just do what they need to do in order to get another "rescue" package--namely folding to the demands of germany/france/etc and imposing harsh austerity measures
but the labor strikes and protests are causing papandreou to tread carefully. and i think that many of the protesters are aware of the dangers of austerity, and the potential that wage cuts/govt service cuts/tax increases won't lead the greek economy out of turmoil, but only further depress the economy. and, for now, it doesn't appear that papandreou is prepared to go to the mat for international finance while his political skin is on the line.
thus the impasse. and i think that is where the pressure could be for the greek govt seek a better deal from the EU.
but something tells me this situation will limp along until there is a classic 'shock doctrine' solution that will be forced on the greeks.
that does little to address the systemic problems.
Yes, Greece does need to clean up their house. But the structural flaws in capital-driven systems are starting to show glaringly.
CTHULHU 2012 "Why vote for a lesser evil?"
glaringly enough where i need a pair of those sunglasses like in your avatar-picture-thing
start drinking heavily ;-)
CTHULHU 2012 "Why vote for a lesser evil?"
.. and Venezuela helped Argentina .. probably not going to help Greece.
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
is to pay back the mountain of debt that Greece owes, do you not think it would make sense to put into place policies that will help the REAL economy grow? How else will the debts be paid back (if that is even possible at this point)? When has austerity EVER worked in situations like this? I would argue that if Europe didn't make Germany pay the way it did after WWI (Michael Hudson has written a lot about this if you are interested), Hitler might have never gained power.
I also think it is naive to the extreme to think that there is no ideological component and no self serving component to this. Could it be that the creditors who control the ECB want certain policies in place that they know will further indebt countries like Greece, and that they might ask for Greece's resources, utilities, pensions, industries, to pay back a debt everyone knows can never be paid back?
You asked for an alternative, well, the policies chosen aren't chosen because they are the only possible ones, they've never worked. The ECB IS controlled by the creditors and these policies are simply going to make a bad situation worse.
I need to know though, why do people not question why countries across the ideological spectrum are in the same position? Why is the radical neo-liberal Ireland is in the same position as more social democratic countries? Why has finance taken over for industry to the extent it has in modern capitalism? Why have ALL segments of society in the US and the EU seen their debt explode in recent decades? In the US, for example, household debt went up by a third between 1995 and 2003. Household and corporate debt has grown a lot in recent decades and finance has also grown in size within the economy? Why is that? Why is it that no one asks, especially the ideological right, about any fundamental problems we see in the market economy in the West? The reason is that it is a Pandora's box. Asking questions like this leads to a lot of uncomfortable truths about the people really in charge of governmental economic policy and the politicians.
There are certainly reasons why Greek stimulus and American stimulus are not the same thing. I'm just going to give a hand waving explanation--sorry. Most of their speculative boom was spent building houses and other land-based assets--for which is there little to no demand now. The construction industry has flopped. While the boom times were very similar to America, Greece does not have the economic base of America, less service, industry, and manufacturing with which to generate income. It isn't about giving the commercial sector enough time to turn things around because they may as well not have a commercial sector. They do little in the way of exports, so must rely all the more on internal demand. Civil servants are 2% of Greece's population but take a disproportionate amount of Greece's public spending in the form of salary and pensions. Many can retire in their 40s.
But let's assume stimulus would work. Where will the money come from? Private investors are reasonably circumspect and unlikely to provide significant funding. The IMF and ECB will not provide stimulus without austerity. If Greece leaves the EU, their debt rating is so low that their currency would be worthless. Without buyers of debt to cover an expansion of the money supply, Greece will hyperinflate their currency. As Germany aptly demonstrated in the 1930s, that will lead nowhere good.
As nice as stimulus sounds, it's not realistically going to happen. No one has enough faith in the Greek government to pump money in no-strings-attached. Frankly, I don't blame them.
Seize assets of Greek politicians and Goldman Sachs, return to Greek government.
Every other suggestion ignores the reality of the cause of the problem.
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
Well, for one, I was talking in general terms. If the goal is to pay back the debt, the only way to pay the debt back is for the real economy to grow. That is just straight ahead logic. If Greece can't pay back its debt then either the banks will take a hit, there will be a debt write down, Greece will be impoverished for a generation or Greece will need help form outside to pull its economy out.
As I said above though, for different reasons, ALL countries across the ideological spectrum are in horrible shape. These countries have moved in the same direction on economic policy, even though they began at different points and didn't go equally as far. They also are at different levels of development. So it is complex and each country has its own problems.
None the less, what is called "neoliberalism" has been been a horrible failure. No country is now in a position to go forward without sacrifice and without some pain. Even if we are to reverse the finanancializaiton, which we need to do if we are to have a functioning economy, it will involve a painful transition.
As far as where the money will come from, who knows. Someone brought up Argentina earlier, but Argentina's debt was smaller and Argentina had Venezuela to help them. Greece would need someone to play the role Venezuela did. Maybe a group of left wing countries can come to their rescue, but under what terms?
"The IMF and ECB will not provide stimulus without austerity."
No, they will not provide stimulus, period. That's not what they do. They say, basically, oh, you're in debt. Here's some debt to pay off your debt. If you can't pay off our debt we'll just take your utilities, services, resources, land, etc. The ECB has no powers to implement counter-cyclical measures, even if it wanted to.
Who knows what will happen. All I know is that we are witnessing, in slow motion, the death of a horrible economic model the world over. I just worry that it will bring us down with it.
Then Greece will descend into chaos and anarchy. Without some means to recover from this mess, as things get worse and worse, people will eventually say; "Screw this! I want something better! Even if I have to fight for it!" It is one way how violent revolutions get started. I hope that does not happen.
....because over at William Black's site, Prof. Hudson has an excellent post up about how austerity isn't just counterproductive as you point out, IT'S COMPLETELY UNNECESSARY!
http://neweconomicperspectives.blogspot.com/2...
That would be "to talk", not "tot alk". Fast fingers caught me again.
You want money? Go take it back from the greedy wealthy fucks who horded it all.
austerity is a bad idea. What I'm keen to know is who you plan to force to lend Greece money so they won't have to implement austerity measures. Does anybody here know anything about economics? Here's the bad idea about un-linking monetary and fiscal policy: Greece would never have had the troubles they have if they had kept their own currency for the simple reason that no one would have loaned them the stupendous amounts of money they borrowed once they converted to the Euro. Even with their bailout package their bonds are crud. And they can't print Euros. So what's the plan Mr Reed? How do they spend money they don't have and can't borrow?
Hasa Diga Eebowai
How did that process work, exactly?
CTHULHU 2012 "Why vote for a lesser evil?"
Investors can look at any country's GDP, assess the strength of their currency and how much may be safely lent. The lenders can adjust interest rates to the risk. But when you have a pooled currency that allows countries like Greece to spend as if they had the per capita GDP of Germany when they actually have the the per capita GDP of Greece then shit is going to happen. And that's what they did. They have zero monetary control and they can't devalue the Euro can they? Hence the decision of Poland to steer clear. They are being wise.
Hasa Diga Eebowai
Greece, Germany, etc still have separate GDPs. People were not buying Greek bonds thinking they were getting German returns. That is not what the Euro implies. In fact that is part of the big issue right now, that the current Greek debt rating is shit..
The Eurozone did indeed imply easier borrowing, Greece included, but not because the reasons you stated.
Esp. since being part of the Eurozone implies specific spending limits to be met, the conservative Greek government at the time tried to pull a fast one on the EU regulators: they lowered tax rates (following the conservative mantra that if you lower taxes they will come), while expecting Common EU funds to make up for the reduced income. The idea being that Greece could have their spending limits unaltered.
Supply side economics being never wrong, the Greek government went as far as lying to the EU regulators because the certain economic growth which was bound to happen due to the lowered taxes was about to kick in any minute now. Alas... the banking crisis happened, and the Greek government were left with their ass up in the air. Shit hits the fan, and then it starts to be very expensive for the Greek gov to issue debt, and the situation spirals out of control since the people who were there for the low taxes do what they usually do: flee at the first sign of panic.
That is why the so-called "austerity measures" are nothing but a veiled attempt at blaming the victim. Greece went into debt, not because of the majority of the citizens of Greece went on spending binges or their public employees dine caviar every day. But because of the ingrained corruption in their system, and a very very flawed supply sided economic policy. So the many have to pay dearly for the sins of the few who made out with most of that money, again.
Yes, systemic reforms will be needed in Greece. But austerity for the shake of austerity is suicidal, esp. in such a pronounced economic downturn, it simply leads to an out of control spiral. Unless, of course, if your intent is not to rescue a country, but to get assets at fire sale value...
CTHULHU 2012 "Why vote for a lesser evil?"
Maybe it's time for these 'blame the victim' types to read Shock Doctrine, and watch 'Capitalism: A Love Story.' Maybe they need to understand that the 'neoliberals' (those vile hedonists that I call the corporate megalomaniacs) view debt as just another money-making commodity. Maybe they need to suss out the corporatists' agenda to understand the likely economic outcome of this brouhaha.
As far as the violent insurrection hinted at hereinabove, I've long suspected that I'll witness this blowback in my lifetime. I remain hopeful that our species can transition into an egalitarian economic paradigm before we relegate ourselves to extinction, like the thousands of other species we've wiped off this planet.
1) Goldman Sachs & Greek politicians colluded in fraudulent off-the-ledger loans to make Greece look sufficiently solvent to join the Euro Zone. You have it exactly backwards. Greece started borrowing Euros AFTER the initial crime(s) that created their problems.
2) Goldman Sachs & the Greek politicians who committed that fraud should be in prison and all their assets stripped from them and returned to Greece - and every other entity Goldman Sachs defrauded.
It's THAT simple.
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
If you look at the value of transactions and bonds in which GS was involved and the overall value of their debt you will find a stupendous difference. That is like blaming Fannie Mae and Freddie Mac for the whole housing bubble. Goldman Sachs was one of many players who assisted Greece, indeed all the PIGS, in borrowing money they could not hope to repay in the event of a recession. That doesn't alter the the situation at all in any event. Greece doesn't have any money and no one will lend them any. Be thankful the US is not in the same position. You can borrow money. The US is still a good credit risk. Economic stimulation is still a valid option even if the idiotic tea baggers and tax cutting Republicans disagree.
Hasa Diga Eebowai
but that's what happened.
No one is talking about forcing anyone to loan money to Greece. This is a strawman argument.
If you are asking for solutions, then the solution is that Greece needs to default immediately and wipe out the bond holders. At the unsustainable and usurious rates of their bonds, private parties are simply not justified in believing that they will be paid back - that is why the yields are so high.
The reason that Greece needs to default now as opposed to later is because they will have 30 billion worth of state collateral that they are about to lose under the bailout. They need to default, restructure, and then use their collateral to fund themselves while they get their own house in order. If they give up their state assets, then they will have nothing when it becomes apparent that kicking the can down the road did not work. Default is inevitable. The only question is whether they will have any bargaining chips left when they ultimately default.
In fact, barring massive intervention, it is just about inevitable now. Since their governmental revenues are insufficient to cover their spending, regardless of debt servicing, exactly why is my argument a straw man? Whether they default or not is irrelevant. They haven't got the moolah to cover their spending and, once again, they can't borrow it. You'd think people here think I'm applauding this situation. It sucks terribly for them but just saying austerity sucks doesn't provide you with cash to spend. The Greeks had better pray the EU doesn't cut them loose.
Hasa Diga Eebowai
because your statement was made from the perspective of the lenders, i.e., the unfairness of being "forced" to bailout Greece, when the issue at hand is what is best for the people. Austerity is not good for the people.
If you agree with me that default is inevitable, which it appears you do, then should also agree that it is never a good idea for a debtor to give up their only remaining assets in exchange for a bailout with terms that they will not be able to satisfy. The terms of the bailout require Greece to immediately delegate authority for privatizing 30 billion worth of state assets to pay off their debt.
Debt means nothing for an entity that will inevitably go bankrupt. The only thing that matters is hard assets. The central banks know this and that is why they are trying to fool Greece into giving away their assets now. Greece should use these state assets to fund themselves after they default and shed off their debt to rebuild. It is suicide to part with your only state assets when you are in a depression and subject to crippling bond yields.
"What I'm keen to know is who you plan to force to lend Greece money so they won't have to implement austerity measures. Does anybody here know anything about economics?"
Do YOU? The only loans that make sense at this point are loans that will lead the real economy to grow, to pay back Greece's debt. That would be the exact opposite of austerity and the ECB doesn't have the tools to implement that. That isn't what the loans are even trying to do. The simple fact is that the banks who lent Greece the money will have to lose money, Greece will probably have to default and have some of its debt written down. Any ideas about austerity will have to be ditched.
Whatever Greece's problems are, austerity will make it far, far worse. As I asked above Peter, why is it that all countries, across the ideological spectrum, are in this position? Care to answer that question?
Why is Ireland, who massively cut corporate and individual taxes, deregulated finance, privatized services (BEFORE the crisis, the IMF cheered them on and used them as an example) in horrible shape, just like countries with higher taxes, wages, etc? Why is Iceland in similar shape after they did similar policies?
Why is the far more social democratic Germany is struggling now just as the US, who has far lower taxes, regulation, far weaker unions, etc? You can't provide an answer without challenging your world view, but give it a try. Could it be that the market system itself has fundamental flaws and that the neoclassical ideologues who have controlled economics departments for decades have created horrible, horrible policies?
I'm reading an amazing book by Steve Keen called "Debunking Economics". Its amazing how much of modern economic theory has been thoroughly destroyed and yet the profession hasn't changed any of its basic assumptions or policy positions.
is that you analyze these situations individually, as if they are in a vacuum, and your prescriptions are always the same. You will say that Ireland should commit to austerity, privatizations and tax cuts for this, this and this reason. Then Greece, then Latvia. You never look at any overall trends.
If taxes have been reduced by all countries, if trade has been increasingly liberalized, if deregulation has moved forward, if privatizations have grown, then we have a systematic movement in a certain direction. What stops you from seeing the bigger picture?
If these countries moved as far to the left as they have to the right in recent decades and THESE were the effects across the board we would hear what we heard in the late 80's/early 90's. Socialism has failed, the system has failed.
I am sure there were Communists then who argued as you do in defense of their system. Poland failed for this, this and that reason. Eastern Germany for this and that reason. Those people, for ideological or self serving reasons, didn't or couldn't question the system itself. Everyone else though saw it for what it was, a systematic failure.
These policies have not failed one or two countries. They have failed all countries, for decades. Countries lead by left wing parties, right wing parties and centrist parties. Developing and developed countries. All have seen their debts explode, all have seen inequality explode, systematic corruption has become the norm, all have seen oligarchs rise up and control their economies and all have seen their financial markets grow very large relative to their real economies. All have seen a horrible corrosion of the commons and a collapse in the living standards of working people.
You don't question the system for ideological reasons, but it has failed. Like Eastern Europe 20 years ago, moving forward with the same policies is not an option. It will just take much longer to realize this and acknowledge this, since the capitalist system is much larger and more powerful and since the capitalists own and control the media in most countries.
At some point the system will completely implode and the only thing left will be force.
I am compelled to quote Sahlins:
"The market-industrial system institutes scarcity, in a manner completely unparalleled and to a degree nowhere else approximated. Where production and distribution are arranged through the behavior of prices, and all livelihoods depend on getting and spending, insufficiency of material means becomes the explicit, calculable starting point of all economic activity. ... Consumption is a double tragedy: what begins in inadequacy will end in deprivation."
The Corporate Megalomaniacs are counting on most of us to strive assiduously to avoid the cognitive dissonance commensurate with realizing the BIG LIE that is capitalism.
It's pretty simple.
Neither the politicians who took the fraudulent loans nor the banksters who made the fraudulent loans have been held accountable - put in prison, forced to return the money.
It's THAT simple.
And what's the part of the Austerity Package being forced on Greece NO ONE wants to talk about?
It's not the cuts in wages or pensions - although those are real.
It's the MANDATED PRIVATIZATION of everything the Greek Nation OWNS - water, power, everything.
The Banksters who put Greece in this mess now want to "bail them out" by STEALING everything left.
Same thing happening here.
It's THAT simple.
Prosecute the Banksters - Seize their Assets - Put them in Prison
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
Okay people , lets get something straight here. The Vancouver riot happened after a hockey game. Nothing else! For media in your country to compare it to the problems in Greece or what is happening in your country is just a little over the top. Don't take my word for it, go to any Canadian news outlet , CBC, CTV, Global as well as any of the Canadian print media. None of the media in your country has bothered to report that Vancouverites showed up in the riot zone yesterday and started helping with the clean up on their own. News spread and soon there were over 400 people that had volunteered to help city crews clean up.
American Media don't tar us with the same brush you do everyone else
And it's great how the photos of the perps are posted and people in Vancouver are turning in the few assholes who ruined it for everyone. I'm very familiar with the Jim Chu's face after the last couple of days. And it's great to see the community of Vancouver pull together and help put the city back together.
There were riots in London in March 2011 against proposed austerity measures that messed up the status quo. Also London riots in Dec 2010 against tuition hikes (trebled in one go) at uni. Probably a more apt comparison.
me-oww!
to the seattle news media Miss Kitty. But they sadly are the exception to the rule I'm afraid. I have stopped watching most of your news media because of the slant they take on things. The only one I watch anymore is NBC but even then it is with a Pound of salt. Won't bother with ABC,CBS and CNN. Don't even ask me about FOX. We unfortunately have our own version now
I don't know if you can catch him or not. But it's generally a welcome relief for what we get down here as "news."
Austerity in Greece Meant to Break Workers' Resistance
http://www.youtube.com/watch?v=2rMkBCHPXX4
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
In college -- lo, these many years ago -- my favorite elective was Economic Anthropology. How enlightening it was to read about the genesis of our species' contemporary economic behaviors.
Now—in my mid-fifties—I watch as we humans struggle with the effects of overpopulation. I see how our myriad fears manifest as hatred, resentment, depression, and violence -- even as our vital resources become ever more scarce.
I listen as individuals explain our species' less savory traits as 'human nature,' as though proffering this dismissive palliative countermands our collective hubris. I've asserted hereinbefore my contention that our species is in its adolescence -- evolutionarily-speaking. I make no apologies for seeing this particular forest for the trees, nor for wishing I could witness our species' next spiritual quantum leap...
That each of us has shared traits is inarguable. We each fall somewhere on the spectrum of any given trait from one extreme to the other. Our social sciences assert that the vast majority of us are clustered smack dab around the means of each measure, with only a few intriguing outliers. Yet, look how hard we work to whinge about our differences--instead of celebrating our commonalities.
Maslow asserts that our species needs the esteem of our peers, and whatever creative outlet resonates for us, almost as much as we need food, shelter, and love. We humans LIVE to create. From whence, then, comes this fallacious adjuration that 'nothing would get done' if we didn't have profit? Are we so fearful of change that we cannot let go a self-destructive and oppressive economic paradigm? Are we so insufferably arrogant in our self-perceived knowledge of 'the way things are' that we cannot entertain ideas that upset our personal world view apple carts?
As we wallow around in the muck and the mire at the bottom of the abyss we've created through our own rigid defensiveness and externalization of personal responsibility, I dream of our species' potentialities. Capitalism is not the social construct in my dreams.
The photo , is that Vancouver BC ?
Insanity , it is what it is , there is no understanding it .
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