Culture of Life News Tue 2010-03-30 16:01 EDT

Empires Must Regulate Trade And Finances

Elaine Supkis

I keep harping on the trade deficit issue since all of the other messes revolve around this misbalance...The `Me, Myself, and I' ethos is self-centered, childish and foolish. It comes out of living inside a major empire. The individual puffs up him or herself and decides, thanks to being fairly free inside of this empire, that the empire is stupid and doesn't need to be coaxed, nurtured or controlled. Instead, various individuals work day and night to evade taxes that support the imperial superstructure. They bribe politicians to allow looting of the purse via inflated war costs, corruption in buying services, tweaking laws so they channel all collective wealth into a few individual pockets, etc...The people are a collective. If they are individuals, they will be eaten by internationalist wolves or other empires that are not individuals. This is a harsh historical lesson: individuals eventually lose to organized groups...Mostly, throughout history, the freest people have been the CITIZENS of an empire (NOT the victims being oppressed by the empire). Free nations exist only in the shadows of an empire...This is why growing and preserving empires is more important than pretending to be an individual who has no ties to anything. Seriously, when major empires fall, the ability to roam the planet at will vanishes pretty fast...

Culture; Empire; finance; Life News; regulate trade.

New Deal 2.0 Tue 2010-03-09 17:23 EST

Wall Street's War Against Consumers and Labor Heats Up

Michael Hudson

...Throughout the world, scaling back the 20th century's legacy of progressive taxation and untaxing real estate and finance has led to a public debt crisis. Property income hitherto paid to governments is now paid to the banks. And although Wall Street has extracted $13 trillion in bailouts just since October 2008, the thought of raising taxes on wealth to pay just $1 trillion over an entire decade for Social Security or health insurance is deemed a crisis that would lead Wall Street to shut down the economy. It is telling governments to shift to a regressive tax system to make up the fiscal shortfall by raising taxes on labor and cutting back public spending on the economy at large. This is what is plunging economies from California to Greece and the Baltics into fiscal and financial crisis. Wall Street's solution - to balance the budget by cutting back the government's social contract and deregulating finance all the more - will shrink the economy and make the budget deficits even more severe. Financial speculators no doubt will clean up on the turmoil.

0; consumer; labor heats; new dealing 2; Wall Street's War.

Sun 2010-02-28 13:32 EST

GEAB N°42 is available! Second half of 2010: Sudden intensification of the global systemic crisis -- Strengthening of five fundamental negative trends

Marie-Helene Caillol

LEAP/E2020 is of the view that the effect of States' spending trillions to <<; counteract the crisis >> will have fizzled out. These vast sums had the effect of slowing down the development of the systemic global crisis for several months but, as anticipated in previous GEAB reports, this strategy will only have ultimately served to clearly drag States into the crisis caused by the financial institutions. Therefore our team anticipates, in this 42nd issue of the GEAB, a sudden intensification of the crisis in the second half of 2010, caused by a double effect of a catching up of events which were temporarily <<; frozen >> in the second half of 2009 and the impossibility of maintaining the palliative remedies of past years...The sudden intensification of the global systemic crisis will be characterised by the acceleration and/or strengthening of five fundamental negative trends: . the explosion of the bubble in public deficits and a corresponding increase in state defaults . the fatal impact of the Western banking system with mounting debt defaults and the wall of debt coming to maturity . the inescapable rise in interest rates . the increase in issues causing international tension . a growing social insecurity.

2010; available; fundamental negative trends; GEAB N°42; Global systemic crisis; strengthen; Sudden intensification.

Fri 2010-02-05 11:29 EST

Michael Hudson: Myths of Recovery

...Obama's most dangerous belief is in the myth that the economy needs the financial sector to lead its recovery by providing credit. Every economy needs a means of payment, which is why Wall Street has been able to threaten to wreck the economy if the government does not give in to its demands. But the monetary function should not be confused with predatory lending and casino gambling, not to mention Wall Street's use of bailout funds on lobbying efforts to spread its gospel...The pro-financial mass media reiterate that deficits are inflationary and bankrupt economies. The reality is that Keynesian-style deficits raise wage levels relative to the price of property (the cost of obtaining housing, and of buying stocks and bonds to yield a retirement income). The aim of running a ``Wall Street deficit'' is just the reverse: It is to re-inflate property prices relative to wages. A generation of financial ``ideological engineering'' has told people to welcome asset-price inflation (the Bubble Economy). People became accustomed to imagine that they were getting richer when the price of their homes rose. The problem is that real estate is worth what banks will lend -- and mortgage loans are a form of debt, which needs to be repaid.

Michael Hudson; myth; recovery.

Tue 2010-01-12 23:31 EST

Here Comes the Screw Job

Garrett Johnson

...Like America, Argentina sold off its public enterprises for pennies on the dollar in privatization schemes. Like America, Argentina had an artificially inflated currency which crushed its industrial base and led to an over-sized trade deficit. Like America, Argentina tried to disguise these problems by borrowing from foreign creditors. In the end, the Argentine government seized the retirements savings of their own citizens in order to continue to function after foreign creditors abandoned them. They shoved that savings into treasury-like bonds and then massively devalued their currency. In so doing, 70% of the retirement savings of the Argentinian people was wiped out overnight...

comes; screw job.

Ambrose Evans-Pritchard - Finance and business comments Thu 2010-01-07 19:00 EST

Global bear rally of 2009 will end as Japan's hyperinflation rips economy to pieces

The contraction of M3 money in the US and Europe over the last six months will slowly puncture economic recovery as 2010 unfolds, with the time-honoured lag of a year or so. Ben Bernanke will be caught off guard, just as he was in mid-2008 when the Fed drove straight through a red warning light with talk of imminent rate rises -- the final error that triggered the implosion of Lehman, AIG, and the Western banking system. As the great bear rally of 2009 runs into the greater Chinese Wall of excess global capacity, it will become clear that we are in the grip of a 21st Century Depression -- more akin to Japan's Lost Decade than the 1840s or 1930s, but nothing like the normal cycles of the post-War era. The surplus regions (China, Japan, Germania, Gulf ) have not increased demand enough to compensate for belt-tightening in the deficit bloc (Anglo-sphere, Club Med, East Europe), and fiscal adrenalin is already fading in Europe. The vast East-West imbalances that caused the credit crisis are no better a year later, and perhaps worse. Household debt as a share of GDP sits near record levels in two-fifths of the world economy. Our long purge has barely begun.

2009; Ambrose Evans Pritchard; Business Comment; ending; finance; Global Bear Rally; Japan's hyperinflation rips economy; pieces.

zero hedge Mon 2009-12-28 15:05 EST

Guest Post: Deficit Doubles for Government's Pension Benefit Guaranty Corp.

TraderMark

...let's take a look at the Pension Benefit Guaranty Corp - another Ponzi scheme in a country now running a series of them, full tilt, concurrently. Also known as "prosperity". The PBGC bailout will just be a pebble versus what could be faced in the greater pension system as a whole... $1 trillion?

deficit double; Government's Pension Benefit Guaranty Corp; Guest Post; Zero Hedge.

naked capitalism Mon 2009-12-21 15:58 EST

Obama's demand that fat cats lend is no ode to Samuelson

Edward Harrison

...to-do about President Obama's fat cat remarks and his meeting with bankers exhorting them to lend...we are getting a bunch of populist rhetoric which is pure politics to induce banks to lend recklessly and save the economy when basic economics would tell you that there is a deficit of lending capacity and demand for credit. It is the absurd kabuki theater of depression economics...David Rosenberg...sees something altogether more cynical -- an orchestrated campaign to shame and bully banks into going against their fiduciary responsibility and lending irresponsibly again!...Easy money is not the solution, it is the problem. Jobs are the solution...fiscal policy is more effective than monetary policy in a depressionary environment. Quantitative easing is overrated.

fat cats lend; naked capitalism; Obama s demands; Ode; Samuelson.

naked capitalism Sun 2009-11-29 12:53 EST

Obama: Debt could cause a double dip recession

Edward Harrison of Credit Writedowns

Barack Obama has now come clean about his thinking on why his administration has decided to focus first on reducing the deficit and next on jobs. He fears a double-dip recession will occur if foreigners lose confidence in the U.S. dollar, causing interest rates to spike. This is nonsense and it demonstrates how much at odds Obama's economic thinking is with reality. This is the clearest indication that the Obama Administration doesn't understand how modern money works. In fact, by focusing on deficit reduction, he has increased the chances of a double dip instead of decreasing them.

caused; debt; double-dip recession; naked capitalism; Obama.

Ambrose EvansPritchard Finance and business comments Thu 2009-11-19 10:33 EST

It is Japan we should be worrying about not America

Ambrose Evans-Pritchard

Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's secondlargest economy has been able to borrow cheaply from a captive bond market feeding its addiction to Keynesian deficit spending - and allowing it to push public debt beyond the point of no return.

Ambrose EvansPritchard Finance; America; Business Comment; Japan; Worries.

zero hedge Thu 2009-11-19 10:22 EST

The Dollar And The Deficits

Great read from C. Fred Bergstein, Director of the Peter G. Peterson Institute for International Economics, on the role of the dollar in the current environment: the paper reviews both positive and negative implications for the dollar as the world's reserve currency, what that has meant, the impact adverse actions have had upon the United States and how to progress forward.

Deficit; Dollar; Zero Hedge.

Credit Writedowns Sun 2009-10-11 17:41 EDT

The G20 Summit: Hijacked by neo-liberalism

Marshall Auerback

As a matter of national accounting, the domestic private sector cannot increase savings unless and until foreign or government sectors increase deficits. Call this the tyranny of double entry bookkeeping: the government's deficit equals by identity the non-government's surplus...

credit writedowns; G20 summit; Hijack; neo-liberalism.

Willem Buiter's Maverecon Sat 2009-10-10 14:00 EDT

Expect little and you may yet be disappointed

Willem Buiter

...the most disappointing development this year was the performance of president Barack Obama and his administration - and my expectations were modest to begin with...On the fiscal side, Barack Obama is presiding over the biggest peace-time government deficits and public debt build-up ever. According to my back-of-the-envelope calculations there is about a 10 percent of GDP gap between the medium and longer-term spending plans of the Obama administration and the taxes the Congress is willing and able to impose. The reality that you cannot run a West-European welfare state (with decent quality health care, decent pre-school, primary and secondary school education for all), rebuild America's crumbling infrastructure, invest in the environment and fulfill your post-imperial global strategic ambitions while raising 33 percent of GDP in taxes, has not yet dawned on the Obama administration or on the American people at large...Clearly, the qualities one needs to get elected to high office in western democracies are not qualities that are likely to be helpful once you have achieved high office and are expected to govern and lead. To survive the selection process to become president you have to be able to stitch together a coalition of special interests that can provide sufficient financial and sweat equity resources to win this grueling race to the top. Once you get there, you should shed the unfortunate baggage you accumulated on your way up and govern in the interest of all the people. Few can do that. Apparently Obama is not one of them.

disappointment; expectations; Willem Buiter's Maverecon.

naked capitalism Thu 2009-10-08 16:47 EDT

Latvia in Crisis; Threatens to Stiff Swedish Banks With Mini-Jubilee

Latvia and to a lesser extent Estonia and Lithuania had a massive and unsustainable current account deficit...Foreign benefactors have just put the choke collar on Latvia. The government was unable to roll over its debt this week...Sweden on Tuesday put pressure on the tiny Baltic nation to fulfill required spending cuts, threatening to withhold payments [from a] euro rescue loan put together by Nordic countries...But Latvia does not appear to be ready to accede to Sweden's demands. The immediate cause for concern is that Latvia will simultaneously devalue its currency and provide a mechanism for its consumers to partially default on mortgages held by foreign banks.

Crisis; Latvia; Mini-Jubilee; naked capitalism; Stiff Swedish Banks; threatens.

Mon 2009-10-05 11:23 EDT

New Bubble Threatens a V-Shaped Rebound

Andy Xie

...What we are seeing now in the global economy is a pure liquidity bubble. It's been manifested in several asset classes. The most prominent are commodities, stocks and government bonds. The story that supports this bubble is that fiscal stimulus would lead to quick economic recovery, and the output gap could keep inflation down. Hence, central banks can keep interest rates low for a couple more years...I think the market is being misled. The driving forces for the current bounce are inventory cycle and government stimulus. The follow-through from corporate capex and consumption are severely constrained by structural challenges. These challenges have origins in the bubble that led to a misallocation of resources. After the bubble burst, a mismatch of supply and demand limited the effectiveness of either stimulus or a bubble in creating demand...he structural challenges arise from global imbalance and industries that over-expanded due to exaggerated demand supported in the past by cheap credit and high asset prices. At the global level, the imbalance is between deficit-bound Anglo-Saxon economies (Australia, Britain and the United States) and surplus emerging economies (mainly China and oil exporters)...The old equilibrium cannot be restored, and many structural barriers stand in the way of a new equilibrium. The current recovery is based on a temporary and unstable equilibrium in which the United States slows the rise of its national savings rate by increasing the fiscal deficit, and China lowers its savings surplus by boosting government spending and inflating an assets bubble.

New Bubble Threatens; Shaped Rebound.

Tue 2009-09-29 11:39 EDT

The Health Care Deceit

Paul Craig Roberts, CounterPunch

...The health care bill is not about health care. It is about protecting and increasing the profits of the insurance companies. The main feature of the health care bill is the ``individual mandate,'' which requires everyone in America to buy health insurance. Senate Finance Committee chairman Max Baucus (D-Mont), a recipient of millions in contributions over his career from the insurance industry, proposes to impose up to a $3,800 fine on Americans who fail to purchase health insurance...The telltale part of Obama's speech was the applause in response to his pledge that ``I will not sign a plan that adds one dime to our deficits.'' Yet, Obama and his fellow politicians have no hesitation to add trillions of dollars to the deficit in order to fund wars...t was the war in Afghanistan, not health care, that President Obama declared to be a ``necessity.''

Health Care Deceit.