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Europe’s permanent austerity crisis will soon be America’s

3:25 am in Uncategorized by fairleft

The European and U.S. problem is not only the year-after-year reality of high unemployment and slow or negative growth, it’s that results be damned most of us ‘still’ believe in austerity. The masters have reason to believe and even love austerity, because they get rich off moving wealth from the middle to the top, but dammit most of us chumps believe too. Read this December 14 U.S. Rasmussen Report and weep:

Overall, 73% of Likely Voters nationwide believe the federal government should cut spending rather than increase it in reacting the nation’s current economic problems. The latest Rasmussen Reports national telephone survey shows that just 18% are looking for an increase in spending.

That’s crazy in this economy, but it’s what 73% believe.

The belief in the medicine that will kill us is so pervasive it of course infects the news. An example is an article on tighter EU budget rules that will take effect on January 1. The common sense of this is plain: the rules if followed make austerity permanent because they prevent application of Keynesian solutions to economies in deep recession, as more and more European nations are. Here are paragraphs two through four with my comments between each paragraph:

Finalized in March, 25 of the 27 EU member states accepted a “balanced budget rule” in the compact to ensure that governments would no longer run the massive budget deficits which drove the debt crisis and nearly sank the euro.

But of course the original crisis was a ‘banker stupidity on a monumental scale’ crisis, and it was the multi-trillion dollar bank bailout — ‘required’ by European and U.S. big banks after they bet everything on the real estate bubble — that created those debts and continues to do so. But that history has been disappeared and now, for all mainstream readers, we have a debt crisis. The economies of the European south, of course, were not deficit-ridden before the bank bailouts. And in fact debt — deficit spending — is the only way out of austerity. So news on our current economic crisis describes the solution, ‘debt’, as the problem. Are you getting why I describe the European austerity crisis is permanent?

The Fiscal Stability Treaty also laid down penalties for those who breached the rules to limit deficits and debt, providing for a degree of central EU oversight to keep miscreants in line.

Damn, keep in line you juvenile delinquent, you ‘miscreant’ — synonyms include wrongdoer, criminal, villain, rogue, sinner, rascal, scoundrel, vagabond, reprobate, malefactor, blackguard, and evildoer. An economic minister who applies the standard Keynesian remedy to his country’s austerity-generated recession/depression is a scoundrel? Michael Hudson becomes Hudson the Rogue, Paul Krugman The Malefactor Krugman, were either allowed to determine economic policy.

And this is just the news, no intended agenda, just an inside the brain look at how most people think and what they believe. How do you escape disinformation so deep and multilayered? You don’t?

Notably, the balanced budget provision has to be written into national law, and preferably, enshrined in the national constitution, to make it very hard to change or get around in future.

Yeah, ‘enshrine’ this madness baby, make it ‘very hard’ for common sense anti-recession measures, the only ones that will work, ever again to be employed inside the EU. Economic austerity permanent, anyone?

And it is not just 73% of the population, or their news sources, that believe in the austerity lie. It’s also epidemic among most of ‘the mainstream left’: for example, Howard Dean, labor boss Andy Stern, and the ‘leftist’ Guardian’s finance editor. Bill Black writes (emphasis added):

It is hard enough countering Pete Peterson’s billion dollar campaign to inflict austerity and unravel and privatize the safety net. Peterson funds myriad front groups. We also have to counter the Wall Street wing of the Democratic Party, which dominates Treasury, OMB, the Justice Department, and the office of the Chief of Staff and favors austerity and unraveling the safety net. We should not have to deprogram progressives indoctrinated into repeating neo-liberal economic dogmas.

And yet we must, but that would only be a first step and without practical impact. Let’s face it, despite the catastrophic and consistent bad news everywhere produced by austerity policies and neoliberal economics, we’re _losing_ the influence battle. Badly. And so, uh, see the title of this article. Read the rest of this entry →

Robert Reich: “I haven’t figured out Obama is a Republican”

5:49 am in Uncategorized by fairleft

That might as well be the title of his new column at Truthout, Why Is the White House’s Council of Economic Advisers Helping the Republicans? I mean, come on:

If the President’s strategy is to hold his ground and demand from Republicans tax increases on the wealthy …

Now Hold On There Bob,

What makes you think that is Obama’s strategy? On economic/financial matters — Wall Street and the rich people stuff — has he ever given the impression he’s anything but a Republican? Knowing that the President is a Republican, carrying forward the legacy of his hero, Ronald Reagan, your apparent confusions (I assume you aren’t really confused but are instead engaging in self-thought control in order to keep your ‘mainstream card’) in the following paragraphs are very easy to answer:

If the President’s strategy is to hold his ground and demand from Republicans tax increases on the wealthy, presumably his strongest bargaining position would be to allow the Bush tax cuts to expire on schedule come January – causing taxes to rise automatically, especially on the wealthy.

So you’d think part of that strategy would be reassure the rest of the public that the fiscal cliff isn’t so bad or so steep, and that at the start of January Democrats will introduce in Congress a middle-class tax cut whose effect is to prevent taxes from rising for most people (thereby forcing Republicans to vote for a tax cut for the middle class or hold it hostage to a tax cut for the wealthy as well).

Okay then, here it is, in the unlikely event the great Robert Reich is authentically confused: The President’s goals are to cut Social Security, Medicare and Medicaid. He wants to do this with a bare minimum of symbolic and avoidable ‘tax increases’ on his and his party’s main campaign donors, the rich. The best leverage for attaining the preceding expires on January 1, when there would be, as you note, automatic tax increases on the rich (his and his party’s main campaign donors (oh, I mentioned this already)).

In order to achieve his real goals, President Obama and his people are now and always have been on the same team as the Pete Peterson campaign against Social Security, the same team as the debt fearmongers, and the same team as the ‘we love austerity’ folks. And so, as you would reasonably expect, his Council of Right Wing Economic Ideologues is fearmongering the fake fiscal cliff.

You’re a helluva smart guy, your Keynesian/New Deal take is right on, and so I’m sorry for even slightly pretending you don’t understand all of the above. I’m sure it was that impermissible narrative thing that made you sound like a clueless idiot in your latest piece.



Time: Greece Meaning is ‘Austerity for All’

7:51 am in Uncategorized by fairleft

Established wealth propaganda publication Time offers an unsigned editorial ‘analysis’ today, telling us that ‘austerity for all’ is unavoidable. As soon as the bankers are done with Greece and the ‘periphery’, they’re plannning to come after the rest of us (emphasis added):

Whatever happens as the crisis unfolds – whether Athens defaults or not, whether the country sticks with the euro or ditches it – years of painful reform and austerity measures to straighten out the nation’s finances are unavoidable. …

It’s a tragic end that most of the world’s richest countries may face as well. What’s happening in Greece is a window into the future of the West. True, the U.S., U.K. and other debt-heavy nations may never tumble into crises as severe as Greece’s. America, for a host of reasons, is not Greece. But the Americans, Brits, French, Italians and most other Westerners can’t avoid the budget cuts and potentially lower living standards the Greeks are suffering through today as governments across the developed world will inevitably be forced to restore order to their shattered finances. It’s the price of living beyond our means like the Greeks have done.

What means? What beyond? None of that last sentence is true — it was not overborrowing but mainly the collapse of the real estate bubble, the world financial crisis, the taxpayer rescue of the banks, and the recession that caused budget deficits in Europe and elsewhere — and austerity is absurd rather than inevitable with technology and worker productivity on a constant upswing. The only real question is whether the people being re-distributed away from by the banks and their wealthy clients, that means US, are gonna take it.
Read the rest of this entry →

Michael Hudson & One-sided Media/Politics/Economics on What Really Matters

8:56 am in Business, Financial Crisis, Media, Politics by fairleft

"Because clearly TARP and the stimulus package have worked."

– MSNBC’s Stephanie Miller this morning on her Democratic Party line radio program, which some consider ‘progressive’.

A two-party media/political system sucks. No, Steph, TARP hasn’t worked, and the stimulus package haven’t worked. Except for its finance sector, the U.S. is in tremendously deep shit. All the states are broke, and in-power politicians are simply, desperately trying to delay the storm till after the November elections. I don’t follow all the details, but one small example: in Illinois current plans (by our Democratic Party governor and legislature) are to impose 40-student class sizes on Chicago’s public elementary schools. And, again, these huge local and state government cutbacks are rapidly going to be overwhelming economic anti-stimulus, and countering that? Well, Obama’s our nation’s leading ‘deficit hawk’ . . .

So, no, things are not working out but, hey, if things are fine in Manhattan, NY, or Georgetown, DC, how are you supposed to know what’s going on in the rest of the country? Or the rest of the world.

And two-party media/politics offers nothing neoliberal economics. (Well, not as bad as Britain, where three-party media/politics offered only neoliberalism.)

As usual in the U.S. and Europe, we still need citizen-oriented economics and are not getting it. That economics is in the person of Michael Hudson. I sure hope _everybody_ read this:

May 11, 2010
Greece Today, US Tomorrow
The People v. the Bankers


Financial lobbyists here in the U.S. are using the Greek crisis as an object lesson to warn about the need to cut back public spending on Social Security and Medicare. This is the opposite of what the Greek demonstrators are demanding: to reverse the global tax shift off property and finance onto labor, and to give labor’s financial claims for retirement pensions priority over claims by the banks to get fully paid on hundreds of billions of dollars of recklessly bad loans recently reduced to junk status.

Let’s call the “Greek bailout” what it is: a TARP for German and other European bankers and global currency speculators. The money is being provided by other governments (mainly the German Treasury, cutting back its domestic spending) into a kind of escrow account for the Greek government to pay foreign bondholders who bought up these securities at plunging prices over the past few weeks. They will make a killing, as will buyers of hundreds of billions of dollars of credit-default swaps on the Greek government bonds, speculators in euro-swaps and other casino-capitalist gamblers. (Parties on the losing side of these swaps now will need to be bailed out as well, and so on ad infinitum.)

This windfall is to be paid by taxpayers – ultimately those of Greece (in effect labor, because the wealthy have been untaxed) – to reimburse Euro-governments, the IMF and even the U.S. Treasury for its commitment to predatory finance. The payment to bondholders is to be used as an excuse to slash Greek public services, pensions and other government spending. It will be a model for other countries to impose similar economic austerity as governments run up budget deficits in the face of falling tax collections from the financial sector being enriched by the translation of junk economics into international policy. So the bankers for their part will have little trouble meeting their bonus forecasts this year. And by the time the whole system collapses, they will have spent the money on hard assets of their own.

Bank lobbyists know that the financial game is over. They are playing for the short run. The financial sector’s aim is to take as much bailout money as it can and run, with large enough annual bonuses to lord it over the rest of society after the Clean Slate finally arrives. Less public spending on social programs will leave more bailout money to pay the banks for their exponentially rising bad debts that cannot possibly be paid in the end. It is inevitable that loans and bonds will default in the usual convulsion of bankruptcy.

Even more outstanding is the following PDF article by Hudson, outlining the shift to, really, far-right economics by the Democrats in the States and social democratic parties in Europe:

The Counter-Enlightenment, its Economic Program – and the Classical Alternative
By Michael Hudson
February 5, 2010

The last few years have seen demoralized Social Democratic and Labour parties fall into disarray throughout the world. Retreating from the economic program that powered their takeoff a century ago, they have lost their traditional constituencies. Their golden age was an outgrowth of classical political economy from Adam Smith via John Stuart Mill to Progressive Era reformers advocating progressive taxation of land and other wealth, public infrastructure investment at subsidized prices, price regulation of monopolies, and public banking reforms to socialize the financial system.

Industrial protectionists, nationalists and neocolonialists – the parties of heavy industry and military power – also endorsed a strong role for government. Across the political spectrum the wave of the future appeared to be a rising role for public oversight of markets, subsidies for capital formation and education, public health, social welfare and infrastructure spending. This program was most successful in the United States, Germany and Central Europe.

The guiding assumption of democratic political reform was that voters – with the working class most numerous – would act in their own interest to legislate tax and regulatory reforms aimed at raising productivity and living standards while making their economies more competitive in world markets. Banks and other financial institutions were expected to play a key role, in conjunction with government policy (and indeed, a military industrial buildup).

The question of who would be the major beneficiaries of pro-industrial economic reforms depended on who would control the government to administer tax policy and subsidies, tariff policy, social spending and infrastructure investment. The two main contenders were labor and industrial capital, and there were many areas ofoverlapping interest. The main loser was expected to be the landed aristocracy as the lower house of Parliament (or Congress) gained power relative to the upper House of Lords (or Senate). Finance was viewed as ancillary to industrial capital, not as an independent player except internationally. Public banking was the liberal alternative to finance capital’s proclivity for trust building and similar manipulations.

Today, the parties of the left and even the centre have reversed the reform agenda advocated a century ago in the Progressive Era. They have endorsed a tax shift off property and finance onto labor and consumers; privatization of public infrastructure and enterprises; and deregulation of monopolies, above all that of banking and high finance. The result is an almost universal anti-government (and indeed, pro-rentier) model that leaves resource allocation and planning centralized in the hands of a financial sector that is being deregulated rather than steered along the social lines anticipated a century ago.

Why did this happen? It wasn’t an intellectual process, of course. What has happened is a long-term political effort to turn economics departments, law schools, politicians and media heavies toward an orthodoxy that would encompass left, right and middle. Hudson and a few others (Dean Baker) are the remainder of what was once the dominant ‘neo-Keynesian’ economics of roughly 1935 to 1975. They were and are still right, but you _still_ don’t hear them on either side (here in the States) of the Democratic/Republican media.