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Goldman Sachs’ Blankfein issues Obama his orders

12:57 am in Uncategorized by fairleft

Lloyd Blankfein a few hours ago:

“Broadening the personal income-tax base by closing loopholes will generate substantial additional revenue while minimizing increases in marginal rates that could stifle risk-taking and robust growth.”

Republican Senator Boehner talked the loopholes scam a week ago and I assumed “his side’s” initial negotiating position would be President Obama’s final one, but now the money has spoken and said the same as Boehner.

So, we can be certain — markets, are you listening? — here’s how it will go down:

In the end Obama will enthusiastically extol ‘closing loopholes’ — which will take the rich and their tax attorneys five minutes to figure out how to get around — and that will be what ‘our side’ gets. No change in tax rates on the 1%. On the other hand, the 1% Democrats and Republicans will get definite and painful cuts in Medicaid and Medicare, and a perhaps smaller cut in Social Security that won’t be called a cut (it’ll be called ‘a change in the way cost of living adjustments are calculated’), but that will amount to a 3% slash after ten years, 6% after twenty, and so on.

If Romney were President I don’t think he would be able to get away with this … but he was worser evil-wise, apparently.

$50 Million Priorities: TVs on Back of Stadium Seats? 35 Students per Class?

12:51 am in Uncategorized by fairleft

An airplane interior with televisions on the seatbacks.

Photo: Casey Serin / Flickr

(File under “The NFL is the f#$@king 1%!”) Not completely sure who’s right on the legal technicalities, but this is our world, where mainstream ‘news’ tells us we should be shocked over the following:

Out of nowhere, Santa Clara County officials have yanked $30 million in tax funds promised for the San Francisco 49ers’ new Santa Clara stadium, saying they would rather spend the money on teachers than install “little televisions in the back of stadium seats.”

But, in this economy, pulling back $30 million on a deal where the city of Santa Clara — population 116,000 – borrowed $850 million (from Goldman Sachs, Bank of America and U.S. Bank) to build a $1.2 billion dollar stadium for the San Francisco 49ers? I mean whose side is your heart on? Even if you’re a Niners fan?

In fact, the article indicates the new Santa Clara County board of supervisors is within its rights to take from the rich and give to the teachers and schools in this instance. Hey, good for them! County tax collector George Putris, who proposed the idea, states his understanding that the Niners

want to spend $50 million to install televisions on the back of seats like those on airliners … He said the need was greater at other public agencies, such as school districts.

“We’re talking about schoolteachers, whether they get laid off, whether there are 35 kids in a classroom, whether there are seismic retrofits,” Putris said.

Final comment by wash_eagle at SFGate:

I’m shocked, shocked that public funds would be diverted from a private project to public education.

9:25 PM on June 24, 2012

Another $1 trillion bailout for the bankers!

5:05 pm in Uncategorized by fairleft

Yeah, seen this before, a trillion dollars and markets reassured, whoooh!, but just for now . . . They’ll get hungry again and we’ll have to feed ‘em, maybe with Social Security here in the States; whatever, no alternative . . .

Free Money For Rich People

It’s important to remember, as it’s usually obscured, that the massive European bailout is mostly a massive bailout of European banksters. As was the case here, it can be argued the bailout is the best course, but it also rewards rich people for fucking up.

-Atrios 11:09

About the Euro Crisis: The Experts Are Wrong, the German People Are Right
Fabius Maximus
May 10, 2010 4:20PM

The great and wise tell us that the European unification project — of which the Euro is now center state — is good. And the foolish German people are short-sighted and foolish to oppose aid to Greece that’s necessary to preserve it. They’re wrong. The German people are right. . . .

From Eurointelligence’s coverage of the crisis: . . .
* “Greek aid is unbelievably unpopular, with 86% opposed according to a poll published last Sunday. Come to think of it, there are not many issues in a democracy on which 86% of the people agree on.”

. . . In fact the system is rotten to the core and doomed to fail. A common currency without a strong nation cannot function, for reasons well-understood at the beginning (see this post from July 2008). Europe’s leaders gambled that they could build this structure from the top down. But Europe remain separate nations where it counts, in their people’s minds and hearts.

What does this tell us about the crisis?

* This means the Europe’s economies remain distinct units. God Himself could not set an interest rate and level of the Euro that would work for both Germany and Greece. Here lies the cause of crisis.
* This means the central government, the EU and European Central Bank, remain foreigners. They lack legitimacy, and as such cannot impose harsh measures. Here lies the current problem, the rock on which the current prescriptions will fail.
* The massive EU and IMF loans will merely allow private investors to roll out of their bonds as they mature, with the debt moving onto the EU and IMF balance sheets — to suffer the eventual default (in some form). This bailout means that private investors again avoid the consequences of their foolish decisions, as SOP in our new system of State Capitalism.
* If the Greeks were cut loose from the Euro, their government could take the necessary harsh steps, buffered by the tools that have worked for others (in various combinations): IMF aid, fiscal austerity, currency devaluation, and monetary expansion.
Germany’s people know this, and rightly oppose bailout plans primarily designed to protect banks and other institutional investors. They want capitalism and free markets. Which means allowing the Greek people to re-build their financial system on firm ground — and giving them (not banks) aid to mitigate the shock. They’ll decide how to do so, and gain the resulting rewards (or pain). They cannot do this in the European Economic and Monetary Union.

The Greek crisis is just another chapter in the ongoing transition from the dying post-WWII economic regime. While the process will take years to complete, the sooner we open our eyes the sooner we can look for the facts and wisdom with which to build a new system.

What’s needed now is irresponsibility by nations afflicted by the ‘needs’ of the market. You can be inspired by Argentina’s relatively recent rejection of its debt, or be like Michael Pettis and bring up ancient history (cuz what difference is there between 2010 and 1920s economic orthodoxy (and whose interests they defend)?:

In fact by my reading it seems that during the 1920s many of those countries that were quickest to behave “irresponsibly” – to recognize that orthodox monetary policies were untenable – suffered the least during the subsequent years of the great economic crisis. This is not a vote for beggar-thy-neighbor devaluations, by the way, although it may seem like that. Rather it is a vote for recognizing when monetary conditions cannot be maintained, and then acting quickly to resolve them. The foreign exchange rate value of the currency matters.

Like France in the 1920s, the sooner Spain – and by extension the rest of southern Europe – admits that current monetary conditions are untenable, the less damage it is likely to suffer. The current system, in which fiscal authority is concentrated in Madrid and monetary policy is determined by the needs of the euro, will create insurmountable political opposition as many years of high unemployment turn the population to more radical solutions.

And he’s right about the solution for members of EU South (and, in time — as ‘the markets’ do these things — EU West, East, and North too). Either EU-ans have the right to run their nation’s economic/fiscal policy or they must return to being the individual nations that used to have sovereignty over that policy. Or, submit to the never satisfied demands of the markets.

P.S. — What does the Southern Europe crisis mean for Americans? Of course, as with all socio-economic crises these days, it means no alternative, bipartisan massive social welfare cutbacks. Which of course is absurd for anyone who understands basic economics, writes Marshall Auerback:

The cries of the deficit hawks grow louder: Repent all ye fiscal profligates, before the day of reckoning comes.

Let’s dial down the Biblical hysteria a wee bit while there’s still time for rational debate. The market’s recent response to the intensifying pressures in the euro zone suggests that investors are beginning to differentiate between countries that are sovereign issuers of currency, such as the US or Japan, and non-sovereign issuers, such as Greece or any other nations in the euro zone. The US dollar is rising in value, notwithstanding the federal deficit, while debt distress in the so-called “PIIGS” countries (ie Greece, Portugal, Spain and Ireland, especially Greece,) are intensifying, thereby driving down the euro to fresh 12 month lows against the dollar.

The relative performance of various currencies against the US dollar is highly instructive in this regard. Over the past 3 months, the Australian, New Zealand and Canadian dollars have all registered gains of some 4 per cent against the greenback. The worst performer? Not surprisingly, the euro, down 6.3 per cent over that period. Whether consciously or not, the markets are demonstrating that they understand the distinctions between users of currencies (who face an external funding constraint), and those nations that face no constraint in their deficit spending activities because they are creators of currency.

That the US has the reserve currency is an irrelevant consideration here. The key distinction remains user vs. creator. The euro zone nations are part of the former; Canada, Australia, the UK, Japan and the US are representatives of the latter.

Using Greece, Portugal, Spain and Ireland as analogues to the US or the UK, as Rogoff, Ferguson and countless other commentators do, is wrong. Their faulty analysis comes as a result of the deficit critics’ failure to distinguish between the monetary arrangements of sovereign and non-sovereign nations. Any sovereign government (none within the EMU enjoy that status any longer) can deal with a collapse in revenue and an increase in outlays from a financial perspective without invoking the sort of deadlocks that are now crippling the EMU zone. That is why, for example, the Japanese yen is not in free fall against the dollar, despite having a public debt to GDP ratio in excess of 200 per cent, almost 2.5 times that of the US. In fact, over the past few days the yen has actually appreciated against the dollar. Now why would that be, if the lesson we were supposed to learn was the evils of “unsustainable” government deficit spending?