Monday Reads: Can we get back to real Economics now?Posted: May 7, 2012 Filed under: Austerity, Economy, Elections, morning reads | Tags: Austerity Econmics, French Elections, Greek Elections, Paul Krugman, Remaking Capitalism, Robert Reich 40 Comments
It certainly has been a tough few years for reasonable people. We’ve had to endure a repeat of the same old things that didn’t end the Great Depression the first time remixed and put into failed policies in both Europe and the U.S.
The very act of believing something doesn’t make it real or true. Yet, a group of so-called conservatives have been recently led by blind faith in tropes and canards. They followed all the failed policies instead of what we’ve learned that works when dealing with market economies and their cycles over the last 100 years.
It seems voters in a lot of countries are waking up and voting out all those second comings of Herbert Hoover. Austerity economics hasn’t worked for the majority of us.
Paul Krugman has been outspoken about the wrong thinking that’s contaminated the political class here and Europe. There appears to be a group of people out there determined to un-write the history of the 1920s and 1930s. His new book tries to outline what we’ve known since the Roosevelt years and why the plans foisted on us by so-called conservatives were bound to fail. I have no idea why discredited economic thoughts were brought back into vogue by the banking classes, the investment classes, and pushers of bad pulp fiction narratives like Paul Ryan and his slavish Randian/Austrian ideology. Why do modern politicians pick up the economic version of flat-earth geology and then expect the economic equivalent of a successful launch of a rocket to Mars?
The Austerian desire to slash government spending and reduce deficits even in the face of a depressed economy may be wrongheaded; indeed, my view is that it’s deeply destructive. Still, it’s not too hard to understand, since sustained deficits can be a real problem. The urge to raise interest rates is harder to understand. In fact, I was quite shocked when the OECD called for rate hikes in May 2010, and it still seems to me to be a remarkable and strange call.
Why raise rates when the economy is deeply depressed and there seems to be little risk of inflation? The explanations keep shifting.
Back in 2010, when the OECD called for big rate increases, it did an odd thing: it contradicted its own economic forecast. That forecast, based on its models, showed low inflation and high unemployment for years to come. But financial markets, which were more optimistic at the time (they changed their mind later), were implicitly predicting some rise in inflation. The predicted inflation rates were still low by historical standards, but the OECD seized on the rise in predicted inflation to justify a call for tighter money.
By spring 2011, a spike in commodity prices had led to a rise in actual inflation, and the European Central Bank cited that rise as a reason to raise interest rates. That may sound reasonable, except for two things. First, it was quite obvious in the data that this was a temporary event driven by events outside of Europe, that there had been little change in underlying inflation, and that the rise in headline inflation was likely to reverse itself in the near future, as indeed it did. Second, the ECB famously overreacted to a temporary, commodity-driven bump in inflation back in 2008, raising interest rates just as the world economy was plunging into recession. Surely it wouldn’t make exactly the same mistake just a few years later? But it did.
Why did the ECB act with such wrongheaded determination? The answer, I suspect, is that in the world of finance there was a general dislike of low interest rates that had nothing to do with inflation fears; inflation fears were invoked largely to support this preexisting desire to see interest rates rise.
The Europeans have had it with the nonsense. They’ve watched their economies and jobs be drained by bankers drunk on casino style betting in financial markets that pass their chits to taxpayers. The first major European leader–Nicholas Sarkozy–has been replaced. Will the French be able to put the out-of-control financial sector back into its proper place?
Mr Hollande – the first Socialist to win the French presidency since Francois Mitterrand in the 1980s – gave his victory speech in his stronghold of Tulle in central France.
He said was “proud to have been capable of giving people hope again”.
He said he would push ahead with his pledge to refocus EU fiscal efforts from austerity to “growth”.
“Europe is watching us, austerity can no longer be the only option,” he said.
After his speech in Tulle, Mr Hollande headed to Brive airport on his way to Paris to address supporters at Place de la Bastille. His voice hoarse, he spoke of his pride at taking over the mantle of the presidency 31 years almost to the day since Socialist predecessor Francois Mitterrand was elected.
“I am the president of the youth of France,” he told the assembled crowd of tens of thousands of supporters, emphasising his “pride at being president of all the republic’s citizens”. “You are a movement that is rising up throughout Europe,” he said.
Mr Hollande has called for a renegotiation of a hard-won European treaty on budget discipline championed by German Chancellor Angela Merkel and Mr Sarkozy.
Robert Reich writes that this is a chance to reform capitalism. It is highly unlikely that France will move to make public any private assets. What it will do is turn its economic future to what works for growth for a country and not the enrichment of the wealthy and powerful few. Financial Markets should not be turned into gambling casinos via government engineering.
During the Depression decade of the 1930s, the nation reorganized itself so that the gains from growth were far more broadly distributed. The National Labor Relations Act of 1935 recognized unions’ rights to collectively bargain, and imposed a duty on employers to bargain in good faith. By the 1950s, a third of all workers in the United States were unionized, giving them the power to demand some of the gains from growth. Meanwhile, Social Security, unemployment insurance, and worker’s compensation spread a broad safety net. The forty-hour workweek with time-and-a-half for overtime also helped share the work and spread the gains, as did a minimum wage. In 1965, Medicare and Medicaid broadened access to health care. And a progressive income tax, reaching well over 70 percent on the highest incomes, also helped ensure that the gains were spread fairly.
This time, though, the nation has taken no similar steps. Quite the contrary: A resurgent right insists on even more tax breaks for corporations and the rich, massive cuts in public spending that will destroy what’s left of our safety nets, including Social Security and Medicare and Medicaid, fewer rights for organized labor, more deregulation of labor markets, and a lower (or no) minimum wage.
This is, quite simply, nuts.
Krugman reminds us that Spain was a prudent and financially responsible government prior to the speculative mortgage bubble brought on by banks. It did them no good in their current downturn.
For this is really, really not about fiscal irresponsibility. Just as a reminder, on the eve of the crisis Spain seemed to be a fiscal paragon:
What happened to Spain was a housing bubble — fueled, to an important degree, by lending from German banks — that burst, taking the economy down with it. Now the country has 23.6 percent unemployment, 50.5 percent among the young.
And the policy response is supposed to be even more austerity, with the European Central Bank, natch, obsessing over inflation — and officials claiming that the incredibly foolish rate hike last year was actually something to be proud of.
Greece too has voted against the Austerity Agenda.
Alexis Tsipras became the surprise package of the Greek election by telling Angela Merkel to get lost.
“The people of Europe can no longer be reconciled with the bailouts of barbarism,” Tsipras, 37, said on state-run NET TV late yesterday after his Syriza party unexpectedly came second in the country’s election. “European leaders, and especially Ms. Merkel, should realize that her policies have undergone a crushing defeat.”
Tsipras’s calls to tax the rich, delay debt repayments and cut defense spending struck a chord with voters angry at austerity measures imposed by the European Union and the International Monetary Fund in return for bailouts. As far as euro membership is concerned, Tsipras told voters that a Greek exit would put the currency itself in jeopardy and they shouldn’t feel “blackmailed” into more austerity.
The result put Syriza ahead of the Socialist Pasok party, potentially derailing efforts to implement the terms of the country’s financial lifeline. Syriza, which means Coalition of the Radical Left, won 16 percent of the vote, projections showed. That exceeded the 13 percent won by Pasok, one of the two pillars of the political establishment since 1974. New Democracy, led by Antonis Samaras, topped the poll with 20 percent.
Rachel Maddow borrows some analysis from Ezra Klein to show how the UK has been tanking its own economy with its austerity agenda and how closely our own problems resemble the UK government induced recession.
Once President Obama took office and the Recovery Act/stimulus began putting capital back into the economy, the U.S. economy began growing again. In the U.K., the economy started to improve, right up until British officials began implementing an austerity agenda — at which point the national economy stagnated and slipped back into a recession.
Obama rejected austerity, and as a result, American growth, while fragile and insufficient, is easily outpacing Europe’s and UK’s, where austerity measures have ruled the day.
Americans should care about this, if for no other reason because of interconnectivity of the modern global economy. But there’s also a purely political perspective to keep in mind: namely, the problem of Republican predictions.
In short, American conservatives got everything backwards. When Obama’s policies began, Republicans said they wouldn’t generate economic growth, but GOP officials got it backwards. When David Cameron’s austerity policies began, Republicans were not only certain they would work, they pleaded with American policymakers to follow the Tories’ lead.
And we now know GOP officials had this backwards, too.
The remarkable thing is, Republicans aren’t the least bit chastened by their track record of failure.
They said Clinton’s economic policies would fail miserably, but that’s not what happened. They said Bush’s economic policies would produce extraordinary prosperity, but that’s not what happened. They said Obama’s economic policies would make the Great Recession worse, but that’s not what happened. They said Cameron’s economic policies in the U.K. would work brilliantly, but that’s not what happened.
And now these same Republicans are saying they deserve Americans’ votes in 2012 because they have credibility on the economy.
Here’s one last Krugman analysis of what the austerity agenda has done in the U.S. Private employment has recovered to pre-recession levels. That’s not true for public employment.
Here’s a comparison of changes in government employment (federal, state, and local) during the first four years of three presidents who came to office amid a troubled economy:
That spike early on is Census hiring; once that was past, the Obama years shaped up as an era of huge cuts in public employment compared with previous experience. If public employment had grown the way it did under Bush, we’d have 1.3 million more government workers, and probably an unemployment rate of 7 percent or less.
Here’s evidence that Obama is not growing the public sector as Mittens claims. These numbers represent thousands of teachers, health workers, scientists, highway workers. and public safety officials.
Here’s one last thought from the Economist: “The election will determine whether a nasty dose of austerity can be avoided.”
AMERICANS have watched austerity sweep Europe with a certain Schadenfreude. But eight months from now they may get a dose of the same medicine. The political compromises that have produced much of America’s deficit of 8% of GDP are programmed to go into reverse at the end of the year, two months after the election. A stimulus package consisting of a payroll-tax cut, investment tax credit and enhanced unemployment insurance expires then, as do George W. Bush’s tax cuts (which have already been extended by two years from their original end-date of 2010). At the same time an automatic, across-the-board cut in domestic and defence spending, called a “sequester”, takes effect, cutting about $100 billion from government spending next year.
The economic impact of this fiscal cliff is a matter of some debate. The Congressional Budget Office reckons that the combined effects of the sequester and the expiring tax cuts would add up to 3.6% of GDP in fiscal 2013. But David Greenlaw of Morgan Stanley, which puts the total effect at almost $700 billion at an annual rate, argues that the calendar-year impact is much larger, at around 5%. Others think the effect would be smaller, noting that some people will not experience the full tax hit until they file their returns in 2014.
Even the lower estimates could easily be enough to tip the economy back into recession.
These tax cuts have not been as successful as other forms of fiscal policy might have been. However, austerity measures taken in many states has been somewhat offset by these Federal Policies. It will be interesting to see how long the economy will hold out under current conditions if and when these things expire. It’s simply been a mind boggling process to watch so many countries unleash unregulated financial innovations and low interests rates then bail out for the financial sector after its bets went bad. It’s been even worse to watch the victims of this excess be forced to pay for the results of government supported speculative bubbles. I’m wondering exactly what the results of these elections will bring to Europe and how our own electorate will act in the fall.
So, I depressed you with a lot of dismal science stuff today. What’s on your reading and blogging list?
Tuesday Reads: Gordon Gekko for President?Posted: January 10, 2012 Filed under: 2012 presidential campaign, Barack Obama, Hillary Clinton, Mitt Romney, morning reads, Newt Gingrich, Republican presidential politics, U.S. Economy, U.S. Politics, unemployment | Tags: Citizen's United, corporate raiders, leveraged buyout firms, Massachusetts Governor's race 2002, Mitt Romney, New Hampshire primary, Newt Gingrich, Robert Reich, Roberts Court, SCOTUS, Wall Street 27 Comments
Good morning! Today is the New Hampshire primary. We’ll live blog the returns later tonight. As of last night,
Gordon Gekko Mitt Romney had a big lead in the polls, with Ron Paul second and John Huntsman and Rick Santorum tied for third place.
Romney, the former governor of neighboring Massachusetts, holds a 24 percentage point lead over his closest rival, with 41 percent of likely Republican primary voters indicating they’d vote for him, the WMUR New Hampshire Primary Poll said.
U.S. Rep. Ron Paul from Texas was favored by 17 percent of likely primary voters, followed by former Utah Gov. Jon Huntsman and former U.S. Sen. Rick Santorum of Pennsylvania, each with 11 percent, and former House Speaker Newt Gingrich collecting 8 percent.
Several polls indicated Gingrich would finish in the top three.
“All of the candidates behind Romney have a good chance finishing anywhere between second and fifth place,” said Andrew Smith, director of the UNH Survey Center in Durham.
Yesterday Romney stepped in it again when he told an audience that he really likes firing people.
The final day of campaigning saw Romney under fire for a comment about health insurance that quickly became fodder for criticism.
Asked about the issue in Nashua, New Hampshire, Romney said he wanted a person to be able to own his or her own policy “and perhaps keep it the rest of their life.”
“That means the insurance company will have the incentive to keep you healthy. It also means if you don’t like what they do, you can fire them,” he said.
“I like being able to fire people who provide services to me,” Romney added. “If someone doesn’t give me the good service I need, I want to say I am going to get somebody else to provide that service to me.”
Romney complained that everyone was taking his remarks out of context, but when you’re a former corporate raider worth $250 million, it’s probably a good idea to watch what you say about putting people out of work.
Anyway, the latest meme about Romney is that he’s Gordon Gekko brought to life. I think it’s a pretty good comparison. I don’t know if you recall the quote from the recent Vanity Fair profile of Romney that I included in a recent post:
Romney described himself as driven by a core economic credo, that capitalism is a form of “creative destruction.” This theory, espoused in the 1940s by the economist Joseph Schumpeter and later touted by former Federal Reserve Board chairman Alan Greenspan, holds that business must exist in a state of ceaseless revolution. A thriving economy changes from within, Schumpeter wrote in his landmark book, Capitalism, Socialism and Democracy, “incessantly destroying the old one, incessantly creating a new one.” But as even the theory’s proponents acknowledged, such destruction could bankrupt companies, upending lives and communities, and raise questions about society’s role in softening some of the harsher consequences.
Romney, for his part, contrasted the capitalistic benefits of creative destruction with what happened in controlled economies, in which jobs might be protected but productivity and competitiveness falters. Far better, Romney wrote in his book No Apology, “for governments to stand aside and allow the creative destruction inherent in a free economy.” He acknowledged that it is “unquestionably stressful—on workers, managers, owners, bankers, suppliers, customers, and the communities that surround the affected businesses.” But it was necessary to rebuild a moribund company and economy.
That sure sounds Gekko-like, doesn’t it?
Yesterday, Rick Klein of ABC News addressed the Romney/Gekko issue.
Virtually all of Romney’s rivals are now sensing a powerful issue. Jon Huntsman said today that the firing comment shows that Romney is “completely out of touch” with the American economy.
Rick Perry, skipping ahead a state, is calling it the “ultimate insult for Mitt Romney to come to South Carolina and tell you he feels your pain, because he caused it.”
Gingrich is equating Romney’s business style with finding “clever legal ways to loot a company.” Rick Santorum’s stump speech includes a line about not needing a CEO as president, and he suggested at ABC’s Saturday night debate in New Hampshire that Romney’s background calls into question whether he “can inspire and paint a positive vision for this country.”
Romney hasn’t made matters easier for himself as he’s tried to connect with voters on the economy. The son of a millionaire business titan said over the weekend: “I know what it’s like to worry about whether or not you are going to get fired.”
Klein claims it’s too late for any of this to affect the New Hampshire primary results. I wouldn’t be so sure. New Hampshirites are famous for making up their minds at the last minute. Remember Hillary’s surprise win in 2008?
Romney has been expecting the Gordon Gekko comparisons, so you have to wonder why he hasn’t managed to curb some of these Gekko-like remarks. I guess he just can’t help himself.
Mitt Romney says he knows a photo in which he appears with other executives at Bain Capital LLC posing with cash in their hands, pockets and mouths will be used against him if he wins the Republican presidential nomination.
The 1980s image — called the “Gordon Gekko” photo by some Democrats, a reference to the Michael Douglas character in the movie “Wall Street” — offers an easy attack line at a time of high unemployment and sharp rhetoric against the nation’s top money managers, investors and bankers.
“We posed for a picture, just celebrating the fact that we had raised a lot of money and then we hoped to be able to return it with a good return,” Romney said on “Fox News Sunday.”
Here’s Romney’s defense of the photo on Fox News Sunday.
Andrew Leonard of Salon also discussed the comparison of Romney with Gekko.
Like Gekko, Romney made his fortune buying and selling companies; and like Gekko, he believes that his “greed is good” version of rough-and-tumble creative destruction is a positive force for America, weeding out the bad performers and nurturing lean-and-mean profit engines. If you are looking for the paradigmatic exemplar of the new style of capitalism mogul launched by the Reagan revolution, Romney is your man. Michael Douglas’ Gordon Gekko is merely ersatz.
But what Leonard finds so amazing is that this attack on Romney and his leverage buyouts is being led Newt Gingrich.
The shock is to see Newt Gingrich and his financial backers channeling the Oliver Stone critique so passionately and wholeheartedly. If you have not seen the three-minute advertisement “When Romney Came to Town,” the soon-to-be debuted documentary lambasting Romney as the enemy of the American worker, prepare to be flabbergasted.
“Their greed was only matched by their willingness to do anything to make millions in profits.”
“This film is about one such raider and his firm.”
“His mission: To reap massive rewards for himself and his investors.
“Romney took foreign seed money from Latin America, and began a pattern exploiting dozens of American businesses.”
And so on. Michael Moore doesn’t sting this hard, and MoveOn isn’t this angry. If Romney, as expected, ends up winning the Republican nomination, Obama’s campaign team can relax. Their work has already been done.
Here’s the trailer for the 27-minute documentary that Gingrich backers have purchased.
Politico calls it “the Bain Bomb.”
While conservatives look unlikely to unite around one alternative to Romney, the campaigns themselves are uniting around the theme that the former head of Bain Capital looted companies, tossed people out of jobs and is now exaggerating his success at the venture capital firm.
In the context of this moment in American politics, in which frustration with the privileged is boiling hot, the attack, from Republicans on one side and the Obama campaign on the other, will test Romney. If he ends up looking more like an opportunist who profited for the few than like a man who created jobs for the many, it’s hard to imagine his polls numbers won’t drop.
Conservative bloggers, who generally can’t stand Romney have begun defending him against his rivals attacks, and Dana Millback called Romney “the Scrooge McDuck of the 2012 presidential race. Bloomberg reports that buyout firms are getting nervous about damage to their reputations.
This could be fun to watch. I thought Newt’s attack on Romney yesterday was spot on.
Is Romney full of shit or what? He even makes Newt Gingrich look good. I hope Newt sticks around and continues letting it all hang out. Every single word he said about Romney was the truth.
I’m going to wrap this up with a more serious take on Romney from Robert Reich: Mitt: Son of “Citizen’s United.” I had forgotten that Reich ran for governor of Massachusetts in the the Democratic primary in 2002. Please go read the whole thing and try not to weep while you’re doing it.
As Reich says, Romney is the ultimate big money candidate. He was in 2002, and now with the help of the Roberts Court, he has more money than any candidate ever dreamed of before. If you thought Obama was the candidate of Wall Street–and he was in 2008–Romney is soooo much more so. He has money and connections that make Obama’s fundraising look pathetic. And none of this money even needs to be reported–it could be coming from overseas, even from foreign governments, and we’d never know.
Tonight we’ll find out of any of this barrage of Gordon Gekko/Mitt Romney comparisons will have any effect. I’m rooting for Romney to be taken down a peg. And then on to South Carolina!
Please share your links in the comments, and I hope to see you tonight for the live blog.
Thursday Reads: Power to the People!Posted: November 3, 2011 Filed under: #Occupy and We are the 99 percent!, Foreign Affairs, France, Germany, Greece, Italy, morning reads, Spain, U.S. Economy, U.S. Politics, unemployment | Tags: Angela Merkel, austerity, democracy, Eurodammerung, George Papandreau, Greece, Nicolas Sarkozy, Oakland general strike, Paul Krugman, Robert Reich 40 Comments
Good Morning!! Over the past couple of days, I’ve become really fascinated with the situation in Greece. It’s a pretty fluid situation at the moment. On Tuesday Robert Reich wrote a pretty good primer on what is happening and expressed his view that letting the Greek people decide their own fate is the best idea. Here’s a bit of it:
Greek Prime Minister George Papandreou decided in favor of democracy yesterday when he announced a national referendum on the draconian budget cuts Europe and the IMF are demanding from Greece in return for bailing it out.
(Or, more accurately, the cuts Europe and the IMF are demanding for bailing out big European banks that have lent Greece lots of money and stand to lose big if Greece defaults on those loans – not to mention Wall Street banks that will also suffer because of their intertwined financial connections with European banks.)
If Greek voters accept the bailout terms, unemployment will rise even further in Greece, public services will be cut more than they have already, the Greek economy will contract, and the standard of living of most Greeks will deteriorate further.
If Greek voters reject the terms and the nation defaults, it will face far higher borrowing costs in the future. This may reduce the standard of living of most Greeks, too. But it doesn’t have to. Without the austerity measures the rest of Europe and the IMF are demanding, the Greek economy has a better chance of growing and more Greeks are likely to find jobs.
Shouldn’t Greek citizens make this decision for themselves?
Reich argues that it would have been better in the long run if the American people had been consulted about the bank bailouts here.
If Americans had been consulted about the 2008-2009 Wall Street bailout, I doubt it would have happened the way it did. At the very least, strict conditions would have been placed on the banks in return for the money. The banks would have had to eat the losses of the predatory mortgages they sold, and help homeowners reduce those mortgages. They’d be required to improve the capitalization of small banks in communities across the country. They’d be forced to accept stringent new regulations, including resurrection of Glass-Steagall
But we weren’t consulted. The wishes of the American people were considered irrelevant by the oligarchs who run this country. And the European oligarchs are hoping to prevent the Greek people from claiming a right to make a democratic decision.
Of course if the Greek people do decide to default on their debts, there will be serious consequences–for them and for the rest of Europe. Krugman calls it “Eurodämmerung.” He argues that
…the euro was an inherently flawed idea that can work only given a strong European economy and a significant degree of inflation, plus open-ended credit to sovereigns facing speculative attack. Yet European elites embraced the notion of economics as morality play, imposing across-the-board austerity, tightening money despite low underlying inflation, and have been too concerned with punishing sinners to notice that everything was going to blow apart without an effective lender of last resort.
The question I’m trying to answer right now is how the final act will be played. At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.
Yikes! But Fortune also says Italy and France are in trouble if Greece defaults. And Spain could go bust too.
What worries is that Spain and Italy are not in the Greek situation but they could be. Greece is bust and Spain and Italy could be driven bust. They both have a lot of debt and each year some of that debt has to be repaid. Now governments almost never do repay debt, they just borrow some more and use the new money to pay off the old. Bit like swirling what you owe around a few credit cards.
Which is just fine: except, if interest rates rise then they have to pay more interest on this new debt that they’re issuing to pay off the old. And if interest rates rise enough then they do go bust, as the interest payments they have to make take too much money out of the budget. Switching money around on zero interest introductory rate cards is very different from doing it when you’re being charged 30%.
Now, the general agreement is that when the interest rates are above 6% then Italy and Spain are in danger of going bust. When they’re over 7% they will do so. But of course, when people see that Italian interest rates are above 6% then they become more wary of lending Italy any more money and so interest rates keep on rising to possibly above 7% and game over.
It’s still not clear what Greece is going do in their referendum. Dakinikat says they need to ask the people if they want to leave the European Union or not. German Chancellor Angela Merkel and French President Nicolas Sarkozy have said that the referendum must ask the Greek people if they want to opt out of the Euro, but not the EU itself. Meanwhile, the offer of a bailout of Greece has been called off until after the vote on the referendum is taken. From Naked Capitalism:
The Eurocrats have decided to try to push Greece into line, threatening expulsion from the Euro (note, not the EU) if Greece does not back down. From a practical matter, if the Greeks were to turn down the bailout package, it would lead to a banking crisis, making a Eurozone exit a not that much more traumatic incremental move with considerable upside. And under the Maastrict treaty, Greece cannot unilaterally exit (although as various commentors have pointed out, Nato is not going to send in tanks if the Greeks were to do so).
But this may be an appeal to the Greek public, or more likely, an effort to break Greek prime minister’s Papandreou’s thin coalition on the eve of a vote of no confidence.
So that’s another possibility–that Papandreau’s government might fall. More on the European reaction from Bloomberg:
Led by Germany and France, Europe’s economic and political anchors, the euro’s guardians yesterday cut off financial aid for Greece until a vote they said would be on Dec. 4 or Dec. 5 determines whether it deserves a fresh batch of loans needed to stave off default.
“The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?” German Chancellor Angela Merkel told reporters after crisis talks hours before a Group of 20 summit set to begin today in Cannes, France. French President Nicolas Sarkozy said Prime Minister George Papandreou’s government won’t get a “single cent” of assistance if voters rejects the plan.
The hardball tactics open the door for a nation to leave the currency bloc that at its setup in 1999 capped Europe’s progression from war to prosperity and was declared “irrevocable” by its founding fathers. Polls show most Greeks object to the austerity required for aid, yet more than seven in 10 favor remaining in the euro, a survey last week of 1,009 people published in To Vima newspaper showed.
They’re going to have to decide between two awful choices, and the rest of Europe will have to deal with the results of the vote–if there is a default, failures of banks that hold Greek debt and getting Italian, French, and German taxpayers to pay for more bank bailouts–unless Papandreau’s government falls. Read the whole article at Bloomberg to get a sense of how serious all this is.
In U.S. news, Occupy Oakland called for a general strike today. That situation is still fluid as of this writing, 11PM Eastern on Wednesday night.
OAKLAND – Protesters blocked streets near City Hall, smashed windows at a bank and gathered by the thousands in an attempt to shut down the nation’s fifth-busiest port Wednesday.
The Occupy Oakland protest was the largest in a series of rallies in several cities as the Occupy Wall Street movement that began Sept. 17 tried to grab national attention.
A group of about 300 protesters, many of them men wearing black, some covering their faces with bandanas and some carrying wooden sticks, smashed windows of a Wells Fargo bank branch while chanting “Banks got bailed out. We got sold out.”
Are you getting the feeling this genie can’t be put back in the bottle either? The Occupy demonstrations have shown us that we pretty much live in a police state at this point. There very little respect for the protesters’ constitutional rights by local governments or law enforcement. From Counterpunch, here is a report of what actually happened when police attacked protesters in Oakland on Oct. 25.
In a heavily armed pre-dawn raid, on Tuesday, Oct. 25, with back up from armored vehicles and helicopters, the Oakland Police Department in conjunction, with over 15 other police departments from Northern and Central California, stormed the sleepy Occupy Oakland Encampment.
Asleep inside tents of the makeshift Occupy encampment, were over a hundred men, women and very young children. The heavily armed police force, dressed in black ninja-like outfits, and special forces helmets, with full face-shields down, and armed with and assortment of latest riot gear, fired tear gas canisters and concussion grenades into the camp, as helicopters circled above.
Police then attacked and ransacked the entire encampment. In a short time, the camps library, soup kitchen, and children’s center were left in ruins, and over a hundred of the inhabitants were roughed up, arrested and held on high bail. The activists suffered many injuries, including broken bones.
Please read the whole thing–it’s an eyewitness account of a horrifying paramilitary action by police. As everyone knows, Iraq war veteran Scott Olson was critically injured in the melee.
Late last night as part of the general strike, Oakland protesters succeeded in shutting down the Port of Oakland.
Several thousand Occupy Wall Street demonstrators forced a halt to operations at the United States’ fifth busiest port Wednesday evening, escalating a movement whose tactics had largely been limited to rallies and tent camps since it began in September.
Police estimated that a crowd of about 3,000 had gathered at the Port of Oakland by early evening. Some had marched from the California city’s downtown, while others had been bused to the port.
Port spokesman Isaac Kos-Read said maritime operations had effectively been shut down. Interim Oakland police chief Howard Jordan warned that protesters who went inside the port’s gates would be committing a federal offense.
In New York, Los Angeles and other cities where the movement against economic inequality has spread, demonstrators planned rallies in solidarity with the Oakland protesters, who called for Wednesday’s “general strike” after an Iraq War veteran was injured in clashes with police last week.
Organizers of the march said they want to stop the “flow of capital.” The port sends goods primarily to Asia, including wine as well as rice, fruits and nuts, and handles imported electronics, apparel and manufacturing equipment, mostly from Asia, as well as cars and parts from Toyota, Honda, Nissan and Hyundai.
We knew there would eventually be civil unrest, and now we’re seeing it all over the world and here at home. What next? I’d say 2012 is going to be an eventful year.
With that, I’m going to wrap this up. I know there’s lots of other news, but these two stories–Greece and the general strike in Oakland–seem to me to symbolize what’s happening in the world today. People are sick and tired of being bilked by the super-rich, and ignored by the politicians. It’s so chaotic, yet I feel that the only hope we have is for the people to keep resisting as best they can. For so long, I was afraid nothing would wake American up, but I’m finally getting the feeling that we won’t go down without a fight. Let’s keep the elites nervous!
Sooooo… what are you reading and blogging about today?
Thursday ReadsPosted: October 6, 2011 Filed under: #Occupy and We are the 99 percent!, 2012 presidential campaign, U.S. Economy, U.S. Politics | Tags: Christopher Benfry, Elizabeth Warren, Erin Burnett, Ezra Klein, George Will, Glenn Greenwald, Larry McMurtry, Massachusetts Senate race, Mitt Romney, Occupy Boston, occupy Wall Street, Rick Perry, Robert Reich, Scott Brown 21 Comments
Good Morning!! I’m going to be heading back to Boston pretty soon, and I’m looking forward to following developments in Occupy Boston and in the Senate race. They haven’t started an Occupy Muncie protest yet, unfortunately. But you never know. This town is really suffering from the poor economy.
At Mother Jones, there is an interactive map of all the Occupy protests that have sprung up around the country. It’s pretty amazing. Funny thing. A few days ago MJ had a post by Lauren Ellis in which she looked down her nose at the #OccupyWallStreet protesters. Now they have a whole section on the Occupy Movement.
There are still plenty of so-called “journalists” dismissing the protests though. Yesterday, I posted a link to Andrew Ross Sorkin’s piece in the NYT in which he reports his trip to Zuccotti Park at the request of a anonymous nervous Wall Street CEO. Glenn Greenwald skewered Sorkin but good, concluding that Sorkin’s
CEO banking friend is right to be concerned: if not about this protest in particular then about the likelihood of social unrest generally, emerging as a result of their plundering and pilfering. That healthy fear on the part of the oligarchs has been all too absent.
Greenwald also linked to this example of “snotty, petty, pseudointellectual condescension” at The New Republic. Ugh! Read it if you dare.
Yesterday, Greenwald followed up by verbally destroying CNN’s new nighttime host, Erin Burnett.
On her new CNN show on Monday night, host Erin Burnett was joined by Rudy Giuliani’s former speechwriter John Avlon and together they heaped condescending scorn on the Wall Street protests while defending the banking industry, offering — as FAIR documented — several misleading statements along the way. Burnett “reported” that while she “saw dancing, bongo drums, even a clown” at the protest, the participants “did not know what they want,” except that “it seems like people want a messiah leader, just like they did when they anointed Barack Obama.” She featured a video clip of herself explaining to one of the protesters that the U.S. Government made money from TARP, and then demanded to know if that changed his negative views of Wall Street.
This is far from the first time Burnett has served as spokesperson for Wall Street; it’s basically what her “journalistic” career is. She angered Bill Maher a couple years ago when arguing that the rich have suffered along with the poor and middle class as part of the financial crisis, and that it would be wrong to “soak the rich” because they’re already paying so much taxes. She caused Rush Limbaugh to gush over her when she argued on TV in 2007 that all Americans benefit when the rich get richer: “the majority of Americans directly benefit from what happens on Wall Street,” she proclaimed, just over a year before the financial collapse.
In an interview last year with Vanity Fair, she insisted that people on Wall Street do not have private planes and that “there are a lot of stalwart, solid people on Wall Street. There are just a few shady people providing the fodder for big budget movies…”
Beltway Bob Ezra Klein has some advice for #OccupyWallStreet: they should immediately start taking advice from the liberal establishment and focus on developing policy and writing legislation in order to work through the system that they have already rejected.
The Wall Street protests seem to be gathering strength and expanding beyond the geographic limits of downtown Manhattan. The media, too, is finally amplifying the story. Whether they will grow larger and sustain themselves beyond these initial street actions will depend upon four things: the work of skilled organizers; the success of those organizers in getting people, once these events end, to meet over and over and over again; whether or not the movement can promote public policy solutions that are organically linked to the quotidian lives of its supporters; and the ability of liberalism’s infrastructure of intellectuals, writers, artists and professionals to expend an enormous amount of their cultural capital in support of the movement.
There’s lots more, but it’s basically a lecture from someone who just doesn’t get it. And speaking of people who don’t get it, George Will tries to school Elizabeth Warren in his latest column. According to Will, the “liberal project,” which Warren apparently speaks for is designed to destroy rugged individualism.
The project is to dilute the concept of individualism, thereby refuting respect for the individual’s zone of sovereignty. The regulatory state, liberalism’s instrument, constantly tries to contract that zone — for the individual’s own good, it says….
Such an agenda’s premise is that individualism is a chimera, that any individual’s achievements should be considered entirely derivative from society, so the achievements need not be treated as belonging to the individual. Society is entitled to socialize — i.e., conscript — whatever portion it considers its share. It may, as an optional act of political grace, allow the individual the remainder of what is misleadingly called the individual’s possession.
The collectivist agenda is antithetical to America’s premise, which is: Government — including such public goods as roads, schools and police — is instituted to facilitate individual striving, a.k.a. the pursuit of happiness. The fact that collective choices facilitate this striving does not compel the conclusion that the collectivity (Warren’s “the rest of us”) is entitled to take as much as it pleases of the results of the striving.
But isn’t that what Warren is pushing for? For more individuals to have opportunities to make it in America? Really, isn’t it time for George Will to retire?
Meanwhile Warren is leading in the race for the Massachusetts Democratic nomination for Senate, and she appeared in her first debate on Tuesday at my undergraduate alma mater, U. Mass Lowell.
In her first debate as a candidate for U.S. Senate Tuesday night, Harvard law professor Elizabeth Warren declined to criticize her fellow Democratic candidates, taking aim instead at Republican Sen. Scott Brown, whom the Democratic nominee will face, and Wall Street.
“Forbes magazine named Scott Brown Wall Street’s favorite senator. I was thinking that’s probably not an award I’m going to get,” she said to applause and laughter from the audience at the University of Massachusetts-Lowell. Two recent polls put Warren and Brown in a statistical tie.
She also made the audience laugh and applaud with the second question, which asked each candidate how they paid for college, since Brown posed nude for Cosmopolitan to pay.
“I kept my clothes on,” she quipped. She added that she borrowed money to go to a public university and had a part-time job.
Warren also drew applause for her tough talk on Wall Street. “The people on Wall Street broke this country, and they did it one lousy mortgage at a time. It happened more than three years ago, and there has been no real accountability, and there has been no real effort to fix it. That’s why I want to run for the United States Senate,” she said.
Go Elizabeth go!!
Another voice for the middle class, Robert Reich, explains why Wall Street is extremely nervous about the economic crisis in Europe.
If you want the real reason, follow the money. A Greek (or Irish or Spanish or Italian or Portugese) default would have roughly the same effect on our financial system as the implosion of Lehman Brothers in 2008.
Financial chaos….a default by Greece or any other of Europe’s debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.
That’s where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.
The Street’s total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total.
And it’s not just Wall Street’s loans to German and French banks that are worrisome. Wall Street has also insured or bet on all sorts of derivatives emanating from Europe — on energy, currency, interest rates, and foreign exchange swaps. If a German or French bank goes down, the ripple effects are incalculable.
Read the rest at Huffpo.
There are a couple of interesting reads about Republican candidates at the New York Review of Books. The first is by novelist Larry McMurtry: The Rick Perry Hustle Here’s a brief sample:
What Perry has brought to the Republican muddle thus far is his abundant, if unfocused, energy. He rushes from debate to debate, gives many interviews, gets his picture on the cover of TIME; yet all his politicking is curiously affectless. He makes sounds, but where’s the personality? Hillary Clinton has a personality; so does Sarah Palin. Either of those women could cut Governor Perry off at the knees, and will if given the chance.
It’s not been said so I’ll say it: as a politician Rick Perry is fundamentally lazy, so far as actual governing is concerned, content to run things mainly by sound-bite. He makes lots of decisions but lingers on no issue very long; there’s little follow-through. Clemency, or its absence, is an example. Two hundred thirty-four humans have been executed in Texas on his watch and only recently has he been stirred to a review. He believes that the State Board of Pardons and Paroles is so infallible that there’s no reason for him to lose sleep over the fate of this or that prisoner. The Governor has much more confidence in the Board than the Board has in itself; its members are well aware that even, or especially in Texas shaky verdicts have come down. The Governor, a man with a notably short attention span, has a lot more to think about than the death chamber.
An irony of his sudden emergence as a front-runner is that his few humane decisions—the HPV vaccine, which is safe and helpful, and the tuition credit for the children of illegals, which could help keep gangs of feral children off our streets—are what may sink him with the Tea Party and his own rabid right wing. And this is the wing he has assiduously cultivated his whole political life.
The other NYRB article of interest is by Christopher Benfry: Mitt, We Hardly Knew Ye!
We’re feeling vulnerable and surly these days in western Massachusetts, as the leaves turn yellow, the Red Sox fade, and winter looms. Our corridor of New England along the Connecticut River endured, during the summer months, a ruinous tornado in Springfield, an earthquake, of all things, and Hurricane Irene, which knocked out roads and historic covered bridges in our hill towns and across neighboring Vermont, and left a lot of people homeless and adrift. It’s our Katrina moment, we sometimes think, with slightly grandiose self-pity, as Republicans in Congress demand budget cuts if FEMA is to pay for disaster relief in the blue states.
We don’t see much of Mitt Romney, our ex-governor, in these troubled times. Then again, we never did. Our most indelible memories are of Mitt leaving—“the sight of Mitt’s back,” as a friend of mine put it, as he went off to lay the groundwork for yet another campaign. Mitt ran for the Senate against Ted Kennedy in 1994, lost, and left the state to salvage the Salt Lake City Olympics. When he returned to run for governor in 2002, he had to go to court to prove that he sort of lived in Belmont, outside Boston. Then, after a couple of years in the state house, he left again to campaign for the presidency, spending two thirds of his time out of state in 2006. Mitt has sold his house in Belmont and now lives in the important primary state of New Hampshire (at his estate on Lake Winnipesaukee) or San Diego or maybe Utah—anywhere but Massachusetts.
In the Republican debates, Mitt pretends that his ties to Massachusetts are tenuous. Mitt’s greatest achievement as governor, the Massachusetts health care system (which passed with Ted Kennedy’s support and two dissenting votes in the state legislature), is now his greatest liability among Republicans, who see it as a stalking horse for Obamacare. Mitt now claims it was right for our quirky state but not for the nation. He has yet to explain why.
When Mitt trumpets his experience in American business, he rarely mentions that Bain, the consulting and investment conglomerate in which he amassed his $200 million fortune, is a Boston firm.
And so on…Romney used our state as a springboard and then denied even knowing us.
I’ll end there for today. What are you reading and blogging about?