Roubini calls for a Greek default, Argentina-style, and a return to the drachma

i have been a first-hand witness to developments in argentina following the 2001 economic collapse and have posted on it repeatedly here... i've never ceased to admire the guts it took for argentina to unilaterally kiss off the world bank, the imf, the global banks and the super-rich elites that they serve and go its own way... needless to say, the howls of outrage and disbelief from the holders of the world's capital were deafening... but argentina kept on keepin' on and has enjoyed growth rates averaging 9% a year since then, while at the same time accumulating a current accounts surplus that allowed them to totally pay off $10B worth of imf debt THREE YEARS EARLY - IN CASH...

the downside, unfortunately, is that the endemic corruption that is part and parcel of every level of argentine government survives untouched, the rich continue to get richer, the real inflation level hovers at 27% (despite the "official" government figures that peg it at less than 10%) and argentina is in the process of selling its heart and soul (farmland, oil, gas and minerals) to china...

nonetheless, i think roubini is 100% correct... greece should do what's right for greece and its citizens and refuse to be held hostage to those same super-rich elites and their bankster buddies just so they can stay in the eurozone...

roubini in the ft...

Greece is stuck in a vicious cycle of insolvency, low competitiveness and ever-deepening depression. Exacerbated by a draconian fiscal austerity, its public debt is heading towards 200 per cent of gross domestic product. To escape, Greece must now begin an orderly default, voluntarily exit the eurozone and return to the drachma.

The recent debt exchange deal Europe offered Greece was a rip-off, providing much less debt relief than the country needed. If you pick apart the figures, and take into account the large sweeteners the plan gave to creditors, the true debt relief is actually close to zero. The country’s best current option would be to reject this agreement and, under threat of default, renegotiate a better one.

Yet even if Greece were soon to be given real and significant relief on its public debt, it cannot return to growth unless competitiveness is rapidly restored. And without a return to growth, its debts will stay unsustainable. Problematically, however, all of the options that might restore competitiveness require real currency depreciation.

The first of these options, a sharp weakening of the euro, is unlikely while the US is economically weak and Germany über-competitive. A rapid reduction in unit labour costs, through structural reforms that increased productivity growth in excess of wages, is just as unlikely. Germany took 10 years to restore its competitiveness this way; Greece cannot wait in depression for a decade.

The third option is a rapid deflation in prices and wages, known as an “internal devaluation”. But this would lead to five years of ever-deepening depression, while making public debts more unsustainable.

Logically, therefore, if those three options are not possible, the only path left is to leave the eurozone. A return to a national currency and a sharp depreciation would quickly restore competitiveness and growth, as it did in Argentina and many other emerging markets that abandoned their currency pegs.

Of course, this process will be traumatic. The most significant problem would be capital losses for core eurozone financial institutions. Overnight, the foreign euro liabilities of Greece’s government, banks and companies would surge. Yet these problems can be overcome. Argentina did so in 2001, when it “pesified” its dollar debts. America actually did something similar too, in 1933 when it depreciated the dollar by 69 per cent and repealed the gold clause. A similar unilateral “drachmatisation” of euro debts would be necessary and unavoidable.

Major eurozone banks and investors would also suffer large losses in this process, but they would be manageable too – if these institutions are properly and aggressively recapitalised. Avoiding a post-exit implosion of the Greek banking system, however, may unfortunately require the imposition of Argentine-style measures – such as bank holidays and capital controls – to prevent a disorderly fallout.

< wipes away crocodile tears thinking about bank losses >

also, thinking about greece and argentina reminded me that it was only one month and one year ago that i spent nearly two weeks with dear macedonian friends on the beach on the halkidiki peninsula in northern greece... i remember remarking at the time how similar the greek and the argentine mindsets seemed to me... both argentines and greeks, imho, are unequaled champions at living in the moment... when they're enjoying their free time, nothing else - and i mean NOTHING - else gets in the way... at any time of day, every greek family i saw had a large table either outside on the grass or on a terrace or balcony, complete with plenty of chairs, lots of food and drink, and no end of family and friends gathered around and my time in argentina is replete with memories of the same scenes...

Submit To Propeller
Tweet

[Permalink] 0 comments

U.S. family indebtedness, U.S. national debt, country-by-country indebtedness

some highly illuminating graphics...

from a bankruptcy law firm...

America Is A Country In Debt

from u.s. debt kleptocracy...

A Visualization of U.S. Debt

from the economist...

World debt guide

although it took me a while to wake up to the fact, i've now known for some years that encouraging individuals, families, governments and nations to build up massive amounts of debt is really a strategy for enslavement - and our super-rich elites are no fools when it comes to strategies for enslavement...

all the solicitations for credit cards that poured in to our mailboxes by the bushel over the past twenty years, the endless stream of tv ads exhorting us to build up our credit ratings (turn on any channel to find the supremely odious ben stein shilling for a sleazy "free" credit score outfit), all the automobile and furniture commercials pushing no money down and no interest until some comfortably distant time in the future, are all calculated to extend and deepen our slavery...

we may think that slavery is a thing of the past but if we really stop to think about it, being in debt is very much the same as "being owned" by someone else... and the societal and legal penalties for reneging on debt are deliberately swift and harsh... after all, ya can't have the sheep straying too far from the herd... they might get to thinking they're not really sheep and god knows where THAT might lead...

Submit To Propeller
Tweet

[Permalink] 0 comments

Scott Horton: The American empire must be stopped

no comments necessary... just watch...

Submit To Propeller
Tweet

[Permalink] 0 comments

Hypocrisy, double-speak and denial ran amok in the SOTU

robert scheer...

The speech was a distraction from what seriously ails us: an unabated mortgage crisis, stubbornly high unemployment and a debt that spiraled out of control while the government wasted trillions making the bankers whole. Instead the president conveyed the insular optimism of his fat-cat associates: “We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.” How convenient to ignore the fact that this bubble of prosperity, which has failed the tens of millions losing their homes and jobs, was floated by enormous government indebtedness now forcing deep cuts in social services including state financial aid for those better-educated students the president claims to be so concerned about.

His references to education provided a convenient scapegoat for the failure of the economy, rather than to blame the actions of the Wall Street hustlers to whom Obama is now sucking up. Yes, it is an obvious good to have better-educated students to compete with other economies, but that is hardly the issue of the moment when all of the world’s economies are suffering grievous harm resulting from the irresponsible behavior of the best and the brightest here at home. It wasn’t the students struggling at community colleges who came up with the financial gimmicks that produced the Great Recession, but rather the super-whiz-kid graduates of the top business and law schools.

What nonsense to insist that low public school test scores hobbled our economy when it was the highest-achieving graduates of our elite colleges who designed and sold the financial gimmicks that created this crisis. Indeed, some of the folks who once designed the phony mathematical formulas underwriting subprime mortgage-based derivatives won Nobel prizes for their effort. A pioneer in the securitization of mortgage debt, as well as exporting jobs abroad, was one Jeffrey Immelt, the CEO of GE, whom Obama recently appointed to head his new job creation panel.

not much left of that hopey-changey thingy, eh...?

Submit To Propeller
Tweet

[Permalink] 0 comments

We ask that you allow tax cuts on incomes over $1,000,000 to expire at the end of this year as scheduled

well, well, well... whaddaya know... millionaires are stepping up for fiscal responsibility...

Patriotic Millionaires for Fiscal Strength

Submit To Propeller
Tweet

[Permalink] 3 comments

We are dealing with shameless demagogy - the financial End Time has arrived

michael hudson in counterpunch via alternet...

We are dealing with shameless demagogy. The financial End Time has arrived, but Mr. Obama’s happy-talk pretends that “two years” will get us through the current debt-induced depression. The Republican plan is to make more Congressional and Senate gains in 2012 as Mr. Obama’s former supporters “vote with their backsides” and stay home, as they did earlier this month. So “two years” means forever in politician-talk. Why vote for a politician who promises “change” but is merely an exclamation mark for the Bush-Cheney policies from Afghanistan and Iraq to Wall Street’s Democratic Leadership Council on the party’s right wing? One of its leaders, after all, was Mr. Obama’s Senate mentor, Joe Lieberman.

The second pretense is that cutting taxes for the super-rich is necessary to win Republican support for including the middle class in the tax cuts. It is as if the Democrats never won a plurality in Congress. (One remembers George W. Bush with his mere 50+%, pushing forward his extremist policies on the logic that: “I’ve got capital, and I’m using it.” What he had, of course, was Democratic Leadership Committee support.) The pretense is “to create jobs,” evidently to be headed by employment of shipyard workers to build yachts for the nouveau riches and sheriff’s deputies to foreclose on the ten million Americans whose mortgage payments have fallen into arrears.

hudson engages in a re-naming exercise that is sadly appropriate...

The National Commission on Fiscal Responsibility and Reform might better be called the New Class War Commission to Scale Back Social Security and Medicare Payments to Labor in Order to Leave more Tax Revenue Available to Give Away to the Super-Rich.

and sums up the situation in a most sobering fashion...

Mr. Obama’s appointees are turning the U.S. economy into a Permanent Emergency, a Perpetual Ponzi Scheme requiring injections of more and more Quantitative Easing to to rescue “the economy” (Mr. Obama’s euphemism for creditors at the top of the economic pyramid) from being pushed into insolvency. Mr. Bernanke’s helicopter flies only over Wall Street. It does not drop monetary relief on the population at large.

naturally, being a u.s. citizen, i am focused more on what's happening in my own country... however, as someone who also spends a great deal of time outside the u.s., i can state with certainty that this same scenario - the super-rich elites looting every last molecule of the world's natural and financial resources - is being played out in every country i have had the pleasure of visiting...

Submit To Propeller
Tweet

[Permalink] 0 comments

Woo-Hoo...! A $14.3 TRILLION federal debt limit...!

great gawd almighty... we're sooooo screwed...

Senate approves raising federal debt ceiling by $1.9 trillion Chamber approves boost in the amount of debt the federal government can take out.

The bill, which passed 60 to 40, would establish the new limit at $14.3 trillion -- equal to about $45,000 for every American.

is there anyone alive who can relate to numbers like this...

Submit To Propeller
Tweet

[Permalink] 0 comments

The United States is not only not saving nuts, it’s eating the ones left over from the last winter

oh, yeah... paybacks are hell...

The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

this next little snippet is to laugh...

The surge in borrowing over the last year or two is widely judged to have been a necessary response to the financial crisis and the deep recession, and there is still a raging debate over how aggressively to bring down deficits over the next few years. But there is little doubt that the United States’ long-term budget crisis is becoming too big to postpone.

"widely judged to have been a necessary response" by freakin' WHO, i'd like to know...? it wasn't you or me, that's for damn sure...

Submit To Propeller
Tweet

[Permalink] 0 comments

Adrian Salbuchi, Argentine economist, 'splains the global financial meltdown for ya

good viewing and a pretty good explanation for exactly what we're seeing play out in front of our eyes, offered by someone who's lived through it himself during argentina's economic collapse in 2001...

An Argentine opinion on the Global Financial Crisis, describing the whole Global Financial System as one vast Ponzi Scheme. Like a pyramid, it has four sides and is a predictable model. The four sides are: (1) Artificially control the supply of public State-issued Currency, (2) Artificially impose Banking Money as the primary source of funding in the economy, (3) Promote doing everything by Debt and (4) Erect complex channels that allow privatizing profits when the Model is in expansion mode and socialize losses when the model goes into contraction mode.

Global Financial Collapse - Part 1



Global Financial Collapse - Part 2

Submit To Propeller
Tweet

[Permalink] 0 comments

Nationalizing the Federal Reserve - an idea whose time has come

actually, the goddam institution should have never been created in the form it now exists and we've now been handed the perfect opportunity to make things right...

Ellen Hodgson Brown has a solution for you.

Nationalize the Federal Reserve.

The lawyer and author of The Web of Debt: The Shocking Truth About Our Money System And How We Can Break Free told the Lone Star Iconoclast that the idea is more American than apple pie, mom, and baseball.

"The government used to create the money in the 18th century before the American Revolution. It was a brilliant system. The American colonists printed their own money, and the people think it is the government that creates the money, but it’s not. Today, it’s banks," she explained.

Right now, the Federal Reserve is a corporate institution owned and controlled by private banks chartered to create money through a process of fractional reserve lending to themselves. Money is created when these private banks lend up to 10 times their debt deposits from the Federal Reserve to public and private institutions plus interest. This money (aka debt) is, therefore, created out of thin air.

By "nationalization," Brown means having Congress turn the Federal Reserve into the acting central bank of the United States that prints money interest free.

[...]

"They’re never going to change the system when everybody is doing well," she said. "Everybody is ready for change, so we have to scramble in and make sure that change turns out the right way and doesn’t go into fascism and police state."

yeah...

Submit To Propeller
Tweet

[Permalink] 0 comments

Superb...!

and that's not a word i use lightly...!

lithiumcola in daily kos (with apologies to fair use)...

In the January issue of Harper's Magazine (not online yet), Linda J. Bilmes, lecturer in public finance at Harvard's Kennedy School, and Joseph E. Stiglitz, 2001 winner of the Nobel Prize in Economics and University Professor of Economics at Columbia, describe the cost of the Bush Presidency in an article titled "The $10 Trillion dollar hangover: Paying the Price for the Bush years."

The result of deficit spending is debt. When President Bush took office, the national debt was $5.7 trillion. Now it is $10.6 trillion -- and Congress voted in October to raise the debt ceiling to $11.3 trillion, the seventh such hike since President Bush to office and the second since last July. If, as is quite likely, we reach the new ceiling by January 20, the outgoing President will have managed to amass more debt than all of his predecessors combined.

Bilmes and Stiglitz further state, "the total bill for Bush-era excess -- the total new debt combined with the total new accrued obligations -- amounts to $10.35 trillion."

In that time -- that is to say, in the time that Washington was racking up that excess, using that money for something-or-other; the time from when President Bush took office to now -- the cost of a family health insurance premium has gone up 87%; the number of uninsured people has gone up 19%; the number of families living in poverty has gone up 19%; real median household income has dropped 1%; and corporate profits have gone up 68%.

[T]he worst legacy of the past eight years is that despite colossal government spending, most Americans are worse off than they were in 2001. This is because money was squandered in Iraq and given as a tax windfall to America's richest individuals and corporations, rather than spent on such projects as education, infrastructure, and energy independence, which would have made us all better off in the long term.

In this context, the opinion offered by Stephen Moore, a member of the editorial board of the Wall Street Journal, to Wolf Blitzer, on the Dec.14th airing of CNN's Late Edition, that the Big Three Auto companies should not be given a $14 billion dollar loan because "This is the natural order of things," is instructive.

The job of any propagandist is to make the situation that most benefits the client seem like "the natural order of things," as Edward Bernays pointed out in his 1928 book Propoganda. The idea is not to tell the population that should want something, but to so arrange the surrounding air of opinion as to make the wanting seem natural, the population's own idea. Mark Crispin Miller describes the process like this, in his introduction to the 2004 edition (viewable at Google book search:

Bernays's sold Mozart pianos, for example, not just by hyping pianos. Rather, he sought carefully "to develop public acceptance of the idea of a music room in the home" -- selling the pianos indirectly, through various suggestive trends and enterprises that make it de rigueur to have the proper space for a piano.

The music room will be accepted because it has been made the thing. And the man or woman who has a music room, or has arranged a corner of the parlor as a musical corner, will naturally think of buying a piano. It will come to him as his own idea.

pp. 19-20

The idea that a national or global parlor room, which is to say "the natural order of things," could be so constructed, was taken by Bernays from Walter Lippmann. Miller writes:

While Lippmann's argument is freighted with complexities and tinged with the melancholy of a disillusioned socialist, Bernays's adaptation of it is both simple and enthusiastic: "We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of." These "invisible governors" are a heroic elite, who cooly keep it all together, thereby "organizing chaos," as God did in the Beginning. "It is they who pull the wires which control the public mind, who harness old social forces and contrive to find new ways to bind and guide the world." . . . It is a sort of managerial aristocracy that quietly determines what we buy and how we vote and what we deem as good or bad. "They govern us," the author writes, "by their qualities of natural leadership, their ability to supply needed ideas and by their key position in the social structure."

What is of interest, then, to one interested in democratic thought and conversation, will be those moments when the "managerial aristocracy" most demonstrably fails in its just-under-the-surface societal obligation to organize chaos, "to supply needed ideas," to construct a parlor room that anyone within shouting distance of their own right mind would consider acceptably "de rigueur."

The point here is not that it is at a moment like this when the public decides to break an unspoken contract with pundits and the politicians and the CEO's -- a contract under which we all agree to discuss only the issues they bring up, to debate these issues in the same terms as they do on TV. There never was any such contract. The point is that moments when the pundits and the politicians and the CEO's fail to create and discuss a minimally tolerable "natural order of things" are also the moments when the alleged contract just mentioned is most glaringly shown to be nothing more than a part of that fabricated natural order.

Ordinarily, a crisis for the population is not a crisis for the propagandist; it is simply a new thing to talk about. A crisis that can be described -- however labyrinthine the description -- as originating from somewhere other than the parlor room can be used to sell the population a new piano; and will be so used. Why would it not be? A 9/11 happens and the natural leaders find in it "various suggestive trends and enterprises" that seem to further our own chosen ends but do actually further a higher one we could not understand. This is as common as could be, and not a secret.

But when a crisis arises for which no such evasion is possible -- not even blaming minorities for buying houses will stick -- when the trouble comes with unavoidable obviousness from the parlor room itself, it becomes much less clear what the "natural order of things" is supposed to be and why we should assume that our signature on the societal contract is not just as forged as the Steinway we bought with it.

At moments like this, then, the conversation has a chance to become more authentically democratic. The more people realize they can write their own contract, decide for themselves what is worth talking about, and within what terms, the greater the chance that the "natural order of things" will come to include what we all decide together should actually go in it. Within that natural order, a more fully democratic order, let the pundits and politicians and CEOs talk. That, again, is the hope of the web. It is the hope that not every crisis is only for someone else's benefit.

i've read many of these wake-up calls and have attempted to articulate many of the same ideas myself on more than one occasion... this, however, is tip-top...

Submit To Propeller
Tweet

[Permalink] 0 comments

Missing context warning: the only permissible federal spending increases are for war, death and destruction

another context-challenged wapo story... instead of immediately putting the lie to what the white house is peddling with objective facts, they lead off with a statement from a democratic senator that makes it look like just another partisan ploy...

The White House threatened yesterday to use the president's veto to prevent Democrats from increasing spending on education, health care and other domestic programs.

[...]

"The administration does not believe that the first step on a path to a balanced budget should be a substantial increase in federal spending," [the president's budget director, Rob Portman] wrote, "yet that is precisely what is called for by the Democrats' budget plan."

they let senator conrad highlight the jaw-dropping hypocrisy...

"After racking up more than $3 trillion of new debt under its watch, the Bush administration now pretends to be fiscally disciplined by threatening to veto appropriations bills because they include investments in priorities like education and veterans' health care," Senate Budget Committee Chairman Kent Conrad (D-N.D.) said in a statement.

the good senator then suggests something so far beyond disingenuous, it's ridiculous...

"It is time for the administration to work with Congress instead of stubbornly insisting on everything being done its way."

it may be time, senator... in fact, it's so far past time, it's criminal, but it ain't gonna happen as long as they remain in office...

finally, in paragraph ten, some facts appear...

In March, the House approved a budget plan that would add about $24 billion to the president's $2.9 trillion spending request for fiscal 2008. The Senate's version would add about $18 billion.

note, however, that nothing was mentioned about what such massive increases were FOR... tsk, tsk, wapo...

Submit To Propeller
Tweet

[Permalink] 0 comments