tagged w/ Debt Crisis
-
3 Things The Government Is Not Telling You And Your Family check this out, this is very scary.3 Things The Government Is Not Telling You And Your Family check this out, this is... more
-
-
Yet another wave of credit rating downgrades has hit the EU – with Moody’s, one of the big three raters, slashing the scores of Italy, Spain and four other nations. This as the bloc labors to erect a debt-barrier around Greece, amid hopes that extreme austerity there will halt any possible contagion.Yet another wave of credit rating downgrades has hit the EU – with... more
-
-
INFORMATION FROM
http://useconomy.about.com/od/fiscalpolicy/p/US_Debt.htm
Which President of the United States increased the debt the most since 1980?
Source: The US Treasury.Forget that question, why should we vote for a Republican at all?
The U.S. debt is more than $15 trillion, and is the sum of all outstanding debt owed by the Federal Government. Nearly two-thirds is the public debt, which is owed to the people, businesses and foreign governments who bought Treasury bills, notes and bonds.
The rest is owed by the government to itself, and is held as Government Account securities. Most of this is owed to Social Security and other trust funds, which were running surpluses. These securities are a promise to repay these funds when Baby Boomers retire over the next 20 years.
(Source: U.S. Treasury, Debt to the Penny; Debt FAQ) The Size of the U.S. Debt:
The U.S. debt is the largest in the world. How did it get so large? Purchasers of Treasury bills still reasonably expect the U.S. economy to recover enough to pay them back. For foreign investors like China and Japan, the U.S. is such a large customer it's allowed to run a huge tab so it will keep buying exports. See U.S. Debt to China
Even before the economic crisis, the U.S. debt grew 50% between 2000-2007, ballooning from $6-$9 trillion. The $700 billion bailout helped the debt grow to $10.5 trillion by December 2008. The debt is tracked by the national debt clock.
The U.S. Debt Level: The debt level is the debt as a percent of the total country's production, or GDP, which was $15.176 trillion as of the third quarter 2011. The debt level is nearly 100% of GDP, up from 51% in 1988.
Interest on the debt was $454 billion in Fiscal Year 2011, the highest ever. That's despite lower interest rates. The interest on the debt is the fifth largest Federal budget item, after Defense and Security spending ($890 billion), Social Security ($730 billion) and Medicare ($490 billion).
(Source: U.S. Treasury, Interest) How Did the Debt Get So Large?: Government debt is an accumulation of budget deficits. Since the Reagan Administration, the federal government has been cutting taxes while increasing spending. Spending includes the economic stimulus package, the 2008 government bailout measures and the roughly $800 billion a year military spending. The deficit is also caused by reduced income from the recession, as well as the EGTRRA and JGTRRA tax cuts and the Alternative Minimum Tax patch.
In the short run, the economy and voters benefited from deficit spending. Usually, however, holders of the debt want larger interest payments to compensate for what they perceive as an increasing risk that they won't be repaid. This added interest payment expense usually forces a government to keep debt within reasonable limits.
The U.S. also has a debt ceiling, which attempts to limit the debt. However, Congress usually raises the ceiling to prevent the negative consequences of a debt default.
The U.S., however, has been the beneficiary of two unusual factors. First, the Social Security Trust Fund took in more revenue through payroll taxes leveraged on Baby Boomers than it needed. Ideally, this money should have been invested to be available when the Boomers retire. In reality, the Fund was "loaned" to the government to finance increased deficit spending. This interest-free loan helped keep Treasury Bond interest rates low, allowing more debt financing. However, it's not really a loan, since it can only be repaid by increased taxes when the Boomers do retire.
Second, foreign countries increased their holdings of Treasury Bonds as a safe haven, also keeping interest rates low. These holdings went from 13% in 1988 to 31% in 2011. During the recession, countries like China and Japan increased their holdings of Treasuries to keep their currencies low relative to the dollar. Even though China warns the U.S. to lower its debt, it keeps buying more Treasuries. For more, see How China Affects the U.S. Economy.
Of the total foreign holdings ($4.49 trillion), China owns $1.1 trillion and Japan owns $900 billion. The U.K. owns $300 billion, while Brazil, the oil exporting countries, Hong Kong, Russia and Canada own between $100-$280 billion each. The Bureau of International Settlements suspects that much of the holdings by Belgium, Caribbean Banking Centers and Luxembourg are fronts for more oil-exporting countries, or hedge funds, that do not wish to be identified.
(Source: Foreign Holding of U.S. Treasury Securities, April 2011; U.S. Treasury report ”Petrodollars and Global Imbalances”, February 2006)
How The U.S. Debt Affects the Economy: Over the next 20 years, the Social Security funds must be paid back as the Baby Boomers retire. Since this money has been spent, resources need to be identified to repay this loan. That would mean higher taxes, since the high U.S. debt rules out further loans from other countries. Unfortunately, it's most likely that these benefits will be curtailed, either to retirees younger than 70, or to those who are high income and therefore theoretically don't need Social Security.
Second, many of the foreign holders of U.S. debt are investing more in their own economies. Over time, diminished demand for U.S. Treasuries could increase interest rates, thus slowing the economy. Furthermore, anticipation of this lower demand puts downward pressure on the dollar. That's because dollars, and dollar-denominated Treasury Securities, may become less desirable, so their value declines. As the dollar declines, foreign holders get paid back in currency that is worth less, which further decreases demand.
The bottom line is that the large Federal debt is like driving with the emergency brake on, further slowing the U.S. economy.INFORMATION FROM
http://useconomy.about.com/od/fiscalpolicy/p/US_Debt.htm
Which... more
-
-
Athens -- Facing a debt burden that could enslave its citizens for decades to come, Greece has gone on the offensive, declaring it will halt the production of gyros worldwide if it’s not given a larger line of credit.
“Go ahead and laugh, but I can assure you your local Greek diner or deli has at most a four-day supply of Gyro ingredients,” said Mikos Demetrius, Greece’s Minister of Sandwich Provisions. “Once that’s gone, you will no longer taste the deliciousness of the Gyro unless more credit is served up to Greece.”
At issue is the cylinder of meat that is spun roasted and sliced to become the signature ingredient of a Gyro.
Some say it is a mixture of minced lamb and beef. Others say its phallic shape is an obscenity. But Mr. Demetrius contends the meat comes directly from the giant gyrus, a distant cousin of the giraffe, which reportedly can be found only in the Greek highlands.
“We are asking the world’s financial powers to be like giraffes, to look above and beyond this little debt debate and see the big picture,” the Greek minister said. “Credit has its limits, but Gyros are forever.”
In a related development, the futures markets for white yogurt sauce were thrown into chaos as the result of the threat of a Gyro ban. Initially, the price went up to over $100 a barrel. Then it plummeted to $2.50, when traders realized that without the gyrus there is no Gyro, and therefore no need for yogurt sauce.
The McDonald’s Corporation, meanwhile, recently began test marketing a new sandwich called the McLambwich. However, the product was pulled from the menu after several diners began coughing up wool balls.
Mr. Demetrius was philosophical about entire situation: “Greece has gone from being the cradle of democracy to becoming the world’s number one party nation. It is only fitting that a sandwich will save us. Do you want hot sauce on yours?”Athens -- Facing a debt burden that could enslave its citizens for decades to come,... more
-
-
Rome - The most famous video game character the world has ever known has been appointed Prime Minister of Italy. In the latest attempt to get Italy’s debt crisis under control, Nintendo’s Mario has been put in charge of Europe’s third-largest economy.
A plumber by trade and an unlikely superhero by profession, Mario has an unprecedented track record in wrenching happy outcomes from world threatening disasters.
Mario has rescued the Mushroom Kingdom from certain doom countless times. And he has proven to be the only superhero who can consistently kick Donkey Kong’s ass.
But according to Italy’s Chief Finance Minister, Garibaldi Tuttsi, the Italian government is particularly interested in one of Mario’s other unique talents.
“We plan on having him hit the reset button on our $2.6 trillion in debt,” the minister said. “That way we could start the whole game over again and have Mario rack up millions of points for the future. Hey, does anyone know the exchange rate for magic mushrooms and euros?”
As expected, the lender nations are less than thrilled with the idea of having Italy zero-up what it owes. In fact, they have already announced counter strategies. Germany plans to appoint to its military characters from the video game Blitzkrieg.
“We have run down the boot of Italy before, and we will do it again if necessary,” said Germany’s defense minister Rudolf Zinster. “This time we will find the golden buckle, and remove it to the German treasury. Heil... I mean have a good day.”
In the US, that nation’s financial industry has selected the video game series Halo to counter Italy’s Mario move. “We will actually be wearing halos to seem wise and beneficent,” said Lloyd Blankfein, chairman of Goldman Sachs. “Of course, that doesn’t mean we won’t get tough.”
“You saw what we did to those Occupy Wall Street punks,” added Jamie Dimon, CEO of J.P. Morgan Chase. “We shouldn’t have any problem with that roly-poly plumber.”
Great Britain has pledged to take care of any military intelligence that may be required, placing the entire Murdoch family and the Board of Directors of News Corp. in charge.
Japan, the world’s chief exporter of nuclear radiation, just plans to send a little higher dosage Italy’s way.
Military strategists warn that such actions could set off World War III. “But on the other hand, war would help jumpstart the world’s economy,” one expert said. “That is, what’s left of it.”Rome - The most famous video game character the world has ever known has been... more
-
-
http://yanisvaroufakis.eu/2011/11/18/the-serpents-egg-hatchlings-in-greeces-postmodern-great-depression/
A brief history of the racist/fascist/neonazi penetration of Greece’s new ‘technocratic’ government
It will prove George Papandreou’s ugliest legacy: that his last-minute childish maneuvering to maximise his waning hold on power (while negotiating his eviction from the PM’s job), has brought into the new ‘national unity’ government four self-declared racists (some of whom are neo-Fascists and one a neo-Nazi of some renown). It is also wildly ironic: for Mr Papandreou’s best quality has traditionally been his ardent cosmopolitanism, his demonstrated anti-nationalism, a genuine commitment to minorities and a deep seated intolerance of racism. Alas, such is the lure of power, it seems, that the entry into the new government of one minister and three junior ministers representing LAOS (a small ultra-right wing party) was cynically judged as a smaller price to pay than handing more control of the new regime to Mr Papandreou’s political opponents in the two major parties – his own PASOK and New Democracy, the conservative opposition.
To non-Greeks watching breathlessly the swearing into government of the serpent’s egg latest hatchlings, these news from Greece will surely resonate terribly. As they should! For yet again a Great Depression has given fascism another twirl. And while Greece is small and ought to be irrelevant, its past has spawned great perils for the world at large. Lest we forget, the Cold War did not begin in the streets of Berlin but in the alleys of Athens back in December 1944. Greece was also one of the first countries to have established a fully fledged fascist regime after the Crash of 1929: the Metaxas dictatorship in 1936. More recently, a CIA-backed coup brought Greek fascists in power six years before General Pinochet rolled his tanks against the Presidential palace in Santiago, quite obviously inspired by the ‘success’ of his Greek brethren. Nowadays, with Greece leading the chorus of Europe’s headlong dive into a new recession, and a renewed disintegration complete with racial overtones (Germans loathing the Greeks and vice versa), it is time for the world to take note. Feeling the irony of Papandreou’s tragic end will simply not do. Progressives around the world must remain vigilant.
A brief history of LAOS
The junior member of Mr Lucas Papademos’ government is a party called LAOS. Its acronym stands for Popular Orthodox Rally but forms the Greek word for ‘People’, or the equivalent of the German ‘Volk’. Its leader is a certain Mr George Karatzaferis; a former third grade TV journalist with an eye to the benefits of appealing, via right wing populist means, to the right of the conservative party. Back in the late 1890s, when his TV career was refusing to take off in the big league channels, he shrewdly invested in a small TV channel of his own (called Telecity) which he used, American style, as his personal fiefdom. On the basis of TV rants with substantial racist overtones, he managed, unperturbed by the awful quality of his programs, to secure a small band of loyal lower class right wing viewers. Three were his weapons:
unrestrained attacks against the socialist party, PASOK; especially of Andreas Papandreou (George’s father)
an unbridled racist campaign that fanned the apprehension of a Greek society caught out by the sudden influx of immigrants, especially Albanians (following the implosion of Greece’s neighbouring country in 1991)
the wave of national anger and self-loathing spearheaded by the post-1991 breakup of Yugoslavia which led the southern former Yugoslav state of Macedonia to seek independence under the name Republic of Macedonia; a turn of events that unleashed mass nationalist hysteria in Greece, not confined (it must be said) to the Right of the political spectrum.
At first, Karatzaferis operated as a populist within the mainstream conservative party, New Democracy. Indeed, courtesy of his TV station and its small but loyal band of followers, he managed to get elected in Athens as a New Democracy deputy with clear majorities. Nevertheless, New Democracy’s leadership, while trying to keep him on a leash, never gave him a role in the party’s higher echelons. And when the party entered a period of intense internal divisions (as a result of PASOK’s great electoral successes in the 1990s), Karatzaferis seemed to have backed the wrong horse thus finding himself marginalised within. [His eventual parting with New Democracy came when he targeted the party's spokesman, a young handsome man that was politically close to the then New Democracy leader, insinuating unequivocally that he was gay.] At that point, Mr Karatzaferis took the bold decision to get out of New Democracy and use the combined firepower of his position as MP and of his lamentable (quality-wise) TV channel to start a new ultra-right party. The choice of acronym, LAOS, appealed to the Greek Orthodox church (the O in LAOS stands for ‘orthodox’) while his anti-immigrant rants were intended as means of bringing into the fold (a) despondent Greeks (the unemployed, the distressed petty-bourgeois etc.) and (b) assorted neo-Fascists.
Judging by the peronnel he peopled LAOS with, it would have been very easy to dismiss LAOS as a non-starter. None of them had any political kudos in mainstream politics. They comprised geriatrics who waxed lyrical about some non-existent glorious Greek past, remnants of the old Royalists (estranged since 1975 from the mainstream Right, when the latter’s leadership espoused republicanism), a small band of supporters of the 1967-1974 fascist junta and, most importantly, a small but dynamic band of younger supporters who were keen to find a political home for their explicit anti-migrant narratives (which polite society had no time for). Crucially, within this mish-mash of rightist groups lacking any serious ideological compass, two figures stand out: Mr Voridis and Mr Plevris. Two young men with an uncompromising ideological position and definite plans for LAOS.
Two examples of LAOS stalwarts
While Mr Karatzaferis is an accidental leader, and is probably not more racist than many politicians in the mainstream political parties (in the sense that he only formed LAOS when he judged that his private fortunes were better served that way, rather than by staying in mainstream New Democracy; and then gave it a racist spin to differentiate his ‘product’), this is not so for some of LAOS’ leading lights. Here are two telling examples.
Plevris is the son of the foremost postwar Greek Nazi ideologue. Please note that the use of the Nazi epithet here is not an attempt to attach a term of abuse to him. For Mr Plevris was proud of it (National Socialist was, I must admit, his preferred term, though he did not balk at being labelled Nazi). His books and publications strove to defend the ‘national socialist’ version of history, including the ardent persecution of Jews (as a natural defence of Aryan people from the Jewish conspiracy), Holocaust denial, a systematic defence of the Nazis’ occupation of Greece etc. etc. Indeed, father Plevris had formed a number of neo-Nazi organisations after 1974 and had shown a remarkable determination to stand his neo-Nazi ground at a time when the Greek Left was resurgent and the ultra Right was in retreat. Had Mr Plevris been younger, he would have played an active role in LAOS. The next best thing, as it turned out, was that he promoted his son within the new party – the result being that Plevris Junior is now an MP. While it is important not to presume that a son must necessarily bear responsibility for his father’s views and political activities, in the case of Plevris Junior he has not questioned (at least in public) his father’s considerable legacy.http://yanisvaroufakis.eu/2011/11/18/the-serpents-egg-hatchlings-in-greeces-postmodern-... more
-
-
Washington DC - With the stroke of a pen, President Barack Obama has rescued the world from a catastrophic economic meltdown.
The president signed into law today The Quantitative Time Act, effectively freeing every man, woman and child on the planet from any debt that they might have signed-up for over the past three decades.
Better known as the Cover Your Assets Directive, the new law resets the fiscal calendar to 30 years ago so that all banking and investment transactions are back dated to 1981. That means any car loan, mortgage, home equity line or other debt less than 30 years old has already been paid in full in the real-time world of 2011.
“This is like daylight savings time on steroids,” Obama explained. “The Quantitative Time Act means there are no more toxic loans out there, Greece can go back to being Greece, Trump and go back to being a douche, and the banking and investment gangs can move on to new scams and frauds.”
… More…Washington DC - With the stroke of a pen, President Barack Obama has rescued the world... more
-
-
The Vatican - The prayers of the world’s bankers and investment firms have been answered. The Bank of God has agreed to cover all global debt in exchange for what God is calling “The Ten Commitments.”
“We tend to forget that God is a shrewd money manager,” said God’s spokesman, Pope Benedict XVI. “Remember how he shorted those money changers in the temple? This new deal makes that look like an ATM transaction.”
The Pope explained that the world’s debt would disappear over the next 10 years “through the miracle of divine easing.”
… more…The Vatican - The prayers of the world’s bankers and investment firms have been... more
-
-
Brussels - A committee of Europe’s leading economists, bankers and nutritionists have developed a simple solution to end the European debt crisis. They propose converting the Euro from a currency into a candy bar.
“Currently, we are printing euros just as fast as we can,” an EU spokesman said. “That lowers the value of the euro and reduces prices on our exports, so we can be more competitive on the world market.”
The trouble is, the millions upon billions of extra euros linger in the system to pose a future liability.
“But if the euro is made into a delicious candy bar, it will be consumed shortly after it is exchanged for services or goods,” the EU spokesman said. “It wouldn’t stick around, gumming up the system.”… More…Brussels - A committee of Europe’s leading economists, bankers and nutritionists... more
-
-
The structural causes that led to the Global Financial Crisis of 2008 are identical to the structural causes that are leading us to another systemic financial crisis in 2011.
The only difference is the kind of debt at the core of the looming crisis: Mortgage-backed securities in 2008, as opposed to European sovereign debt in 2011.
And of course, the debt hole in 2011 is bigger than in 2008—a lot bigger.
That’s why I am confident in predicting we are about to have another Global Financial Crisis—I’m calling it The Sequel: Same movie, same players, same story. Only this time around—like all good sequels—the financial crisis we are about to experience is going to be bigger, longer, and uncut by bailouts.
By the way, that is the key difference between 2008 and 2011: We’re not going to have a Hollywood Ending this time around. The governments of Europe and the United States, as well as their respective central banks, do not have any weapons to fight off this 2011 financial crisis, as they did in 2008, for the simple reason that they used them all up—they’re out of bullets, both monetarily and politically.
So when The Sequel hits the big screen, there won’t be a Big Daddy Government deus ex machina to come save the day in the third act twist. When The Sequel hits, we’re on our own.
Let’s discuss the structural similarities between the original and The Sequel:
In both 2008 and now 2011, you had unpayable debts at the center of a fragile financial system. In 2008, it was mortgage backed securities and collateralized debt obligations—the so-called “toxic assets”. I think we all know that story pretty well.
In 2011, we have European sovereign debt. And just like the toxic assets of 2008, the Euro-bonds might have been rated AAA, but they certainly aren’t blue-chip—they are more like brown-chip: That deep brown color peculiar to fast-sinking dog-turds.
In both 2008 and 2011, these unpayable debts—emitted over many years, accumulating silently and asymptomatically like plaque in the arteries—gave a false sense of prosperity in the years leading up to the respective crises.
In the lead up to 2008, the MBS’s and CDO’s gave the American homeowner a sense that their house was their personal private ATM sitting on their quarter-acre suburban lot. They also were a profit spigot for the financial sector, which bouyed the U.S. GDP growth, leading to a false sense of national prosperity, even as there were signs that the non-financial sector of the economy was diving.
In the lead up to 2011, on the other hand, the sovereign debt of the eurozone countries gave the European citizens a sense that they could afford to buy all the imported goods they could ever want, as well as the sense that their government could afford to pay for all the social welfare programs they were all promised—without having to pay for any of this by way of higher taxes. Hell, that was the entire Labour governments’ platform between 1997 and 2010: Blair and Brown gave the UK a welfare state and low taxes—all paid for with sovereign debt.
In both 2008 and 2011, you have banks exposed to these bad debts both directly and indirectly—and this exposure in 2011 threatens to topple the entire financial structure, just as it almost did in 2008.
In 2008, the financial institutions with direct exposure to the toxic assets—that is, the institutions that actually owned these crap bonds that would never be paid in full—were mostly American banks. Their capitalization depended on how pristine these toxic assets were. As it became increasingly clear that the toxic assets were exactly that—toxic—the banks holding this crap found themselves not only without the capitalization to pass regulatory muster, but in fact found themselves functionally insolvent—hence the suspension of FASB 157, coupled with the injection of $150 billion worth of capital by way of TARP.
In 2011, the financial institutions with direct exposure to toxic assets—in this case, the European sovereign bonds, especially from the PIIGS—are once again banks, this time around mostly European banks: UniCredit, Société Générale, Dexia.
Like 2008, these assets might be rated triple-A, but they’re dog-turds—and they threaten these banks with insolvency, if any of them default. A bankruptcy of any of the aforementioned European banks would have massive consequences for the rest of the global financial construct—it would not be a Europe-only problem, just as the bankruptcy of Lehman was most definitely not an America-only catastrophe.
And that’s just the direct exposure to the 2011 version of toxic assets.
The real danger in 2011 is the indirect exposure—that is, the liabilities that are triggered in the case of a debt default: Just like 2008.
In 2008, it was AIG and other assorted credit default swap sellers that got hit bad, when the toxic assets began to default—we all remember how the very ground we trod rocked as AIG stumbled and everybody had a collective nuclear-meltdown freak-out.
In 2011—you guessed it—it’s worse: We have Bank of America for sure has massive exposure to derivatives on European sovereign and debt, as well as . . . God Knows who else.
Why do I say “God Knows who else”? Because just like in 2008, the derivatives market is so opaque—not to say hermetic—that we are not going to know who’s going to go bust until it actually happens. In 2008, Hank Paulson and the Treasury Department didn’t find out about the AIG hole until the weekend before the company would go bust. Today, in 2011—even with the experience of how potentially deadly ignorance of the derivatives markets can be—there are no mechanisms in place to swiftly and accurately tally who has derivatives exposure to any particular bond or asset.
In other words, Tiny Timmy and Bailout Benny never implemented the one lesson learned from 2008: Make the markets transparent, so that you can see where the crisis is coming from before it falls on top of your head......
Continue at:
http://www.financialsense.com/contributors/gonzalo-lira/2011/08/15/the-sequel-how-2011-is-a-repeat-of-2008-only-bigger-longer-and-uncut-by-bailoutsThe structural causes that led to the Global Financial Crisis of 2008 are identical to... more
-
-
Paul Mason By Paul Mason Economics editor, Newsnight
In The Grapes of Wrath, John Steinbeck describes the harrowing journey of the Joad family - migrant workers forced to leave their home during the Great Depression - a story still relevant to those facing the realities of America's current economic crisis.
Farm in Oklahoma The drought in Oklahoma has been described as worse than the Great Dust Bowl days of the 1930s
"To the red country, and part of the gray country of Oklahoma the last rains came gently, and they did not cut the scarred earth…" That is how Steinbeck begins The Grapes of Wrath.
This year the last rains came in May to western Oklahoma. They lasted long enough to produce the last alfalfa crop but the winter wheat was already lost.
Brett Porter, who farms 3,000 hectares, unrolls the last of his hay in front of a thirsty line of prime Angus cattle. With just 18 bales left, and at $200 (£123) a bale on the open market, when he runs out he will have to sell the cows.
"I already sold half my mamma cows and I sent my calves to market early," he says.
He has been working on the herd's DNA for 12 years. If no rain comes, he will sell the rest for hamburger meat before high summer.
With the south-west in the grip of its worst drought for 60 years, old-timers here are beginning to talk about the Dust Bowl years, years Steinbeck chronicled in his Pulitzer Prize-winning book of migration, poverty and social injustice.
I decided to retrace the route Steinbeck's fictional family took from Oklahoma City to Bakersfield, just north of Los Angeles. I hired a boaty old Mercury and put my foot down.
Today the road is just one straight freeway, Interstate 40, though the old Route 66 of blues legend still weaves along as a forlorn side-road.(more at link to BBC)Paul Mason By Paul Mason Economics editor, Newsnight
In The Grapes of Wrath, John... more
-
-
By Scarecrow and Jane Hamsher. Cross posted from FireDogLake
The Politico headline says it all: U.S. credit downgrade worries Obama, Congress more than default
It’s not the default that strikes the most fear in the White House and Congress these days. It’s the downgrade
As Robert Reich notes, Standard and Poors is the “biggest driver in the deficit battle.” Why would anyone care what the corrupt and disgraced organizations who quite nearly brought down the world economy think about anything at this point? And yet, that is where elite opinion is focused right now:
[W]hat really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor’s, that Barack Obama could go down in history as the president who presided over his country’s loss of its gold-plated, triple-A bond rating.
[]
Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs, but it’s not just that. It would be a psychic blow to a nation that already looks over its shoulder at rising economic powers like China and wonders, what’s gone wrong? And it would give the president’s Republican rivals a ready-made line of attack that he’s dragging the country in the wrong direction.
This rumbling has been coming from Capitol Hill for a while, which made us start asking questions about what was really going on with Standard and Poors. It felt like there’s a story-behind-the-story driving S&P’s actions in the debt ceiling debate, which appear inexplicable at face value and go way beyond what Moody’s or Fitch have done. And the more we looked at the timeline of events, the more we wondered how the intertwining dramas of a) S&P downgrade threats, b) the liability that the ratings agencies may have for their role in the 2008 financial meltdown, and c) the GOP’s attempts to insulate the ratings agencies from b) are all impacting each other.
Timeline of Events
On July 21, 2010 President Obama signs Dodd-Frank into law. Prior to Dodd-Frank, the courts found that credit ratings are expressions of opinion that were protected under the first amendment, subject to a demonstration of actual malice:
The Dodd-Frank Financial Reform Act stripped away those protections, so that CRA’s were now subject to the same expert liability as an auditor or securities analyst, and required only a “knowing” or “reckless” state of mind for liability, rather than proof of scienter. It also repealed Section 436 of the Securities Act of 1933, which granted “safe harbor” for ratings, which were part of a prospectus.
Which, for obvious reasons, made the ratings agencies extremely nervous.
In October 2010 S&P issued its first threat to downgrade US debt: “If the U.S. government maintains its current policies for the next 40 years in the face of rising health care and pension spending pressure, it is unlikely that Standard & Poor’s Ratings Services would maintain its ‘AAA’ rating on the U.S.” The report paints a target on the back of Social Security and Medicare, says nothing about the wars, the Bush tax cuts, private health care costs or the absurdity of 40 year projections.
Ratings agencies are supposed to be reactive and analyze only what they see. They are not supposed to explicitly or implicitly give ”assurance or guarantee of a particular rating prior to a rating assessment.” By prescribing not only an austerity package for the United States, but stating that “in the long term, the U.S. AAA rating relies on reforms” of Social Security and Medicare, they most assuredly broke that rule.
S&P put forth no legitimate basis for their downgrade threat. As every reputable economist keeps reminding us (James K. Galbraith, Joe Stiglitz, FT’s Martin Wolf, Peter Radford, Bruce Bartlett, Krugman), the US is not Greece and does not face its risk of default. Unlike Greece(more at link and petition for S.E.C.) https://secure.firedoglake.com/page/s/investigate-sp?source=email&subsource=v1By Scarecrow and Jane Hamsher. Cross posted from FireDogLake
The Politico headline... more
-
-
While this dated article features numerous good suggestions, the "elephant in the room" fact is, to be able to fix this country, we must regain control of our government. To regain control of our government, we must do 4 essential things:
1. We must demand a voice in government with a National Referendum Vote!
( Congress has always striven to mute our voice and will by circumventing our direct vote with the electoral college, districting, and gerrymandering. This results in an expression of will only by those powers who can out maneuver all of the others, but never expresses the will of the PEOPLE, and that's why we are in the condition that we are. Only a National Referendum Vote will truly and accurately express our will on any single important issue like Medicare, Social Security, oil subsidies, subsidies for the rich and shipping our jobs overseas, and other critical issues. )
2. We must replace the Electoral College with One Person, One Vote elections!
( Again, the Electoral College was designed to dilute the PEOPLE'S vote at a time when people were largely uninformed and undereducated, and therefore not considered qualified by our elected officials to make direct decisions about their lives and the welfare of banks. Today, with national education [under threat from the criminally militant corporate right] mandatory and available to everyone, as well as internet information available to almost everyone, the PEOPLE are sufficiently informed and qualified to make decisions about their own lives, and the influence that corporations and banks may have upon them. )
3.We must restrict all politicians to Public Campaign Financing only, at both the State and Federal level!
( When current election laws compel every politician to compete for more corporate and banking campaign contribution money than their competitors are getting, and that is many, many times more money than they get from the public, then it is inevitable that our politicians will become the slave of, and obedient to, the corporate hand that feeds them the most. To both free our government, ourselves, and our country from the corporate and banking slave masters, and to learn how each candidate can budget and make the best use of our money, we must give each qualifying candidate the same amount of money to campaign with and restrict their campaigning to the use of those funds only. In order to prevent anyone from literally buying an office, we must outlaw any campaigner from using any of their own money, or any money other than that which the public has given them, to campaign with. If we achieve this, we will have taken back control of our politicians and our government, and freed us from the grip of corporate and banking influence. )
4. Every one of us must take to the streets in permanent protests, with our children, parents, sisters, brothers, neighbors, and anyone else possible, and demand that our will and these three issues be made law immediately! We must demand a National Referendum Vote on these three issues immediately, and not stop demanding until it is done! If we do this, and only if we do this, we CAN regain control of our lives, our government, and our country.
http://www.theminorityreport.org/2010/how-to-fix-our-country/While this dated article features numerous good suggestions, the "elephant in the... more
-
-
John Boehner, see what happens when you jump in the pigsty and wallow with the biggest, baddest sow around? Mud, as it turns out, sticks. Lessons on politics and teabaggers.John Boehner, see what happens when you jump in the pigsty and wallow with the... more
-
-
House Speaker John Boehner wants to unveil a plan to increase the U.S. debt limit and curb federal spending by Sunday afternoon to avoid any potential havoc in Asian financial markets, media reports said.
The Ohio Republican told GOP colleagues in a conference call Saturday afternoon that he still wants to cut as much as $4 trillion from the budget during the next decade, according to participants in the call, the reports said.
The afternoon call between Boehner and his fellow House Republicans came after crisis talks convened by President Barack Obama to avert a potential default in just 10 days ended Saturday after just under an hour.
The brief meeting with Obama came a day after negotiations to reach a broader deficit-cutting deal fell apart.
Later in the day, Senate Republican Leader Mitch McConnell (R., Ky.) said congressional leaders were dedicated to the task of keeping a default from happening.
“The president wanted to know that there was a plan for preventing national default,” McConnell said in a statement. “The bipartisan leadership in Congress is committed to working on new legislation that will prevent default while substantially reducing Washington spending,” McConnell added.
Negotiations between congressional Republicans and Democrats hit a logjam Saturday night over the size and timing of the debt-limit authorization, according to media reports.
Republicans reportedly were pushing for a two-stage approach, with an immediate increase of about $1 trillion and an additional amount next year to be determined by a commission that would be created to study the issue.
Democrats continued pushing for one authorization of about $2.4 trillion to extend U.S. borrowing authority beyond the 2012 presidential campaign and election into 2013, according to reports Saturday night.
Earlier Saturday, Boehner said during his conference call he wanted to avoid using a proposal from McConnell that would give Obama the sole authority to raise the debt ceiling, subject to congressional disapproval, GOP sources told Politico.
The Republican leader conceded in the call that he might not be able to get details of a plan to all members by the time he wants to make an announcement on Sunday, but cautioned colleagues their leverage in negotiations could be in jeopardy if something isn’t done by Aug. 2, the Politico report said.
Like McConnell, Boehner also issued a statement Saturday afternoon, saying, “Over this weekend Congress will forge a responsible path forward. House and Senate leaders will be working to find a bipartisan solution to significantly reduce Washington spending and preserve the full faith and credit of the United States.”
The White House, in a statement of its own, said Obama repeated his stance against a short-term extension of the debt limit, saying it would endanger the still-fragile economic recovery.
“It would be irresponsible to put our country and economy at risk again in just a few short months with another battle over raising the debt ceiling,” the White House statement said.
At the White House Saturday, Obama sat next to Boehner, according to pool footage, after the two men Friday night gave separate accounts over how talks to cut spending and hike the $14.3 trillion debt ceiling broke down. The body language from the video taken at the outset of the meeting showed the strains, with the two men barely looking at each other.
Other attendees at the meeting included Senate Majority Leader Harry Reid, a Nevada Democrat; McConnell; House Minority Leader Nancy Pelosi, a California Democrat; and Vice President Joe Biden.
http://www.marketwatch.com/story/obama-calls-leaders-to-meet-as-debt-talks-fail-2011-07-22House Speaker John Boehner wants to unveil a plan to increase the U.S. debt limit and... more
-
-
How the Super-Rich are Bleeding the Treasury
Understanding the Federal "Debt Crisis"
By SAM PIZZIGATI
Once upon a time in America, back a century ago, our nation's rich paid virtually nothing in taxes to the federal government. And that same federal government did virtually nothing to better the lives of average Americans.
But those average Americans would do battle, over the next half century, to rein in the rich and the corporations that made them ever richer. And that struggle would prove remarkably successful. By the 1950s, America's rich and the corporations they ran were paying significant chunks of their annual incomes in taxes — and the federal projects and programs these taxes helped finance were actually improving average American lives.
America's wealthy, predictably, counterattacked — and, by the 1980s, they were scoring successes of their own.
Today, the rich and their corporations no longer bear anything close to their rightful share of the nation's tax burden. The federal government, given this revenue shortfall, is having a harder and harder time funding initiatives that help average working families. The result: a "debt crisis."
This "debt crisis" in no way had to happen. No natural disaster, no tsunami, has suddenly pounded the United States out of fiscal balance. We have simply suffered a colossal political failure. Our powers that be, by feeding the rich and their corporations one massive tax break after another, have thrown a monkey wrench into our national finances.
Some numbers — from an Institute for Policy Studies report released this past spring — can help us better visualize how monumental this political failure has been.
If corporations and households amassing $1 million or more in income each year were now paying taxes at the same annual rates as they did in 1961, the IPS researchers found, the federal treasury would be collecting an additional $716 billion a year.
In other words, if the federal government started taxing the wealthy and their corporations at the same rates in effect a half-century ago, the federal debt to investors would almost totally disappear over the next decade.
Similarly stunning numbers have just come, earlier this month, from MIT economist Peter Diamond and the University of California's Emmanuel Saez, the world's top authority on the incomes of the ultra-rich. These two scholars have calculated some fascinating "what ifs" that dramatize just how spectacularly the incomes of our wealthiest have soared over recent decades.
In 2007, Diamond and Saez point out, taxpayers in the nation's top 1 percent actually paid, on average, 22.4 percent of their incomes in federal taxes. If that actual tax burden were to about double to 43.5 percent, the top 1 percenter share of our national after-tax income would still be twice as high as the top 1 percent's after-tax income share in 1970.
So why aren't we taxing the rich? Why are we now suffering such fearsome "debt crisis" angst? Why are our politicos so intent on shoving the "fiscal discipline" of layoffs and cutbacks — austerity — down the throats of average Americans?
No mystery here. Our political system is failing to tax the rich because the rich have fortunes large enough to buy off the political system. Again, some numbers can help us better visualize the plutocratic big picture.
In 2008, the IRS revealed this past May, 400 Americans reported at least $110 million in income on their federal tax returns. These 400 averaged $270.5 million each, the second-highest U.S. top 400 average income on record.
In 1955, by contrast, America's top 400 averaged — in 2008 dollars — a mere $13.3 million. In other words, the top 400 in 2008 reported incomes that, after taking inflation into account, amounted to more than 20 times the incomes of America's top 400 a half-century ago.
But 1955's top 400 didn't just make far less than 2008's top 400. The rich in 1955 paid far more of their income in taxes than today's rich. In 2008, the new IRS data show, the top 400 paid only 18.1 percent of their total incomes in federal income tax. The top 400 in 1955 paid 51.2 percent of their total incomes in tax.
The bottom line: After taxes, and after adjusting for inflation, 2008's top 400 had a staggering $38.5 billion more left in their pockets than 1955's most awesomely affluent. Multiply that near $40 billion by the annual tax savings the rest of America's richest 1 percent have enjoyed over recent years and you have an enormous war chest for waging class war, billions upon billions of dollars available for bankrolling think tanks and candidates and right-wing media.
In the face of these billions, should the rest of us, America's vast non-rich majority, just throw in the towel and give up? Our counterparts a century ago certainly didn't. They challenged their rich, on every front imaginable. They eventually sheared their rich down to democratic size.
We can do the same.
http://counterpunch.com/pizzigati07202011.html
Sam Pizzigati, a veteran labor journalist, edits Too Much, the Institute for Policy Studies weekly newsletter on excess and inequality. To keep updated on the growing pushback against that inequality, sign up to receive Too Much in your email inbox and check Inequality.Org for more background on the groups working to narrow the economic gaps that divide us.How the Super-Rich are Bleeding the Treasury
Understanding the Federal "Debt... more
-
-
This critical documentary made by Greek artists and activists seeks the real causes of the country’s crippling debt crisis — and proposes an economically and socially responsible solution.
Exactly a year ago, Greece sank into the dark abyss of global capital markets and the EU and IMF reluctantly came to the ‘rescue’ with a 110 billion euro bailout.
Attached to the rescue package came the same draconian austerity measures that had previously triggered social crises and popular uprisings in Mexico, Argentina, Ecuador, Thailand and Indonesia. Once again, the neoliberal ‘medicine’ is threatening to kill the patient.
Now, the Greek debt crisis is flaring up anew amidst confirmations by EU officials that either a second bailout or a restructuring of the country’s debt will be necessary — and amidst rumors in the popular press that Greece is actually planning to leave the eurozone.
At this critical juncture comes Debtocracy, a spectacular crowd-funded Greek documentary made by artists and activists, and freely shared online under a creative commons license. The film reveals the shocking truth behind the neoliberal propaganda that has been so greedily spread by the mainstream media in Europe and the US.
The myth of Greek laziness is exposed for what it is — a racists ploy to distract the European people from the indelible reality behind the bailout: Germany and France wanting to save their banks. Rather than having Greece default on the reckless speculators at Deutsche Bank and BNP Paribas, Europe would like to see Greece defaulting on its own people.
And so millions are pushed into abject poverty — a recent estimate by a London School of Economics survey is that nearly a third of Greece’s 11 million people live near or under the formal poverty line — while public funding for crucial social services such as health and education are being cut across the board.
In a bizarre parody on even the wildest persiflage of the ‘immoral capitalist’, the EU even managed to include a clause in the bailout agreement that would see Greece continuing to buy up heavy military hardware from German and French weapons producers. The last shreds of Greek sovereignty and democracy have been crushed by the powerful forces of European capital.
Indeed, in a total aberation on the notion of European solidarity, we are forcing families earning less than 500 euros per month to cut back their spending while simultaneously forcing their government to keep spending its austerity-squeezed tax receipts on buying more weapons! How such nefarious practices are allowed to continue unabated remains one of the greatest mysteries and injustices of our time.
Yet there is an alternative to the inhumane denigration of Greek national sovereignty by the henchmen of the global financial industry. In the uplifting second part of this documentary, the filmmakers outline the concept of odious debt and the possibility for an Ecuadorian-style default.
After all, why would the Greek people have to pay for a debt they were never officially informed about and that didn’t benefit them one single bit?
Featuring some of the heavyweights in critical political economy of our day (including David Harvey, Samir Amin, Alain Badiou and Manolis Glezos), this documentary is truly a must-see.This critical documentary made by Greek artists and activists seeks the real causes of... more
-
-
albyom
-
added this
-
11 months ago
- |
-
236 members of the US House of Representatives, 55%--a majority--have taken Grover Norquist’s pledge not to raise taxes. Simultaneously, our political discourse is stymied by public fears about the size of the national debt. The American government thus needs to pay down the debt to magnify the nation’s confidence in the economy and initiate a new wave of prosperity. Those at the table with Vice President Biden need new ideas to pay down the debt, ideas that the pledge-bearing 55% of the US House can safely and proudly vote for. Here they are:
1) A one year Debt Reduction Surcharge (DRS) of 1% on all purchases and services in the USA, except for healthcare services. It’s not a tax; it’s a surcharge to pay for money already borrowed by the taxpayers. It only lasts one year. It shares the sacrifice evenly. Hey, we can all do this for a year, right, to help our nation in a time of need?
2) A one year Debt Reduction Surcharge (DRS) of 25% on fees for all services, permissions, certifications, licenses, etc., provided by the federal government. It has already cost the federal government more to provide these services than the government has charged—hence, our debt. Ergo, it is appropriate to charge closer to fair market value, for at least one year, to pay for accrued borrowing that has allowed us to provide these services too cheaply in the past.
3) A 2 year Income Investment Incentive (III) – 1% of gross income for all individuals and corporations with incomes of more than 1 million dollars per year. This incentive encourages those with large sums of money to invest it wisely and intelligently. Without this incentive, those who have so much to invest have room to take serious risks—to make less wise investments—since they have money to burn, so to speak. This is the result of unusually low tax burdens on the wealthiest Americans and corporations. Such low taxes lack basic psychological wisdom, as they offer too much capital, too fast, to investors, and thus encourage high risk investment behaviors. Since we can’t easily raise taxes back to the sensible Clinton-era levels—which encouraged smart investments that produced better yields for everyone—we can instead incentivize investors psychologically to make smarter investments by directing the first 1% of their gross income to debt reduction. This is a wake up call to look at income more wisely (i.e., as more limited) and a constant reminder of the national debt that we all, including the investors, have accumulated and must manage collectively to ensure a healthy economy into the future.
4) Defense Cost Sharing (DCS) – identify US military bases in other nations where those nations clearly benefit from the presence of our base. Move to a more equitable 70%-30% personnel and cost sharing arrangement with the host countries—where they cover 30% of the costs in exchange for the ongoing defense benefits they are receiving from the presence of our state-of-the-art military.
5) Allow individuals under age 35, who are generally healthy, to buy into Medicare with a monthly premium that will actuarially bring revenue into the Medicare system.
6) Health Risk Offset Fee (HRO) – apply to beer at $1 per six-pack and cigarettes at $3 per pack. The HRO helps to reduce the public debt we are already carrying from paying for the medical costs of those who smoke and drink excessively. It’s only fair they pay for the risks and burdens their behaviors have placed on the rest of American taxpayers.
7) Finally—the Thank You Bill. Since the taxpayers saved the banks from bankruptcy by giving them one trillion dollars that taxpayers borrowed for this sole purpose, and since the banks are once again secure, they are looking for ways to say “thank you” to us. The Thank You Bill, passed by Congress, assists the banks in their gratitude by formally accepting a thank you gift in the amount of 1% on every bank-based financial transaction for one year. Naturally, the banks will not pass this cost onto consumers , because that would not be in keeping with the spirit of their gracious thank you to the American taxpayer.236 members of the US House of Representatives, 55%--a majority--have taken Grover... more
-
-
An investment banker from BarCap recently told the Forum of Economic News that he's got the solution to bring "competitiveness" back to the European Union.
Cut benefits by half, and make everyone work harder.
The comments from Hans-Jörg Rudloff, the head of the Management Board of investment bank Barclays Capital, will obviously infuriate the public, who will remember that BarCap paid out bonuses that were so good this year that bankers gathered at a bar immediately after work for a champagne toast to everyone receiving "at least a £600,000 bonus."
Here's a transcript of what he said:
"Europe is carrying a social rucksack, which makes us uncompetitive in this world. We have provided living standards for our populations which are unheard of, which no one ever thought would be possible, for the last 50 years."
"People do not want to give up these living standards."
"Populations are not ready to voluntarily discipline themselves in more work, less rewards, and less security. And it's only [natural] that the population would react like this and here, its a question of democratic leadership and a question of whether indeed we are able to reinvigorate ourselves and to state public ally in this world that that we want to be competitive."
This is what Rudloff says the EU has to do:
* Half of the social benefits have to go
* People have to work more, longer hours, longer years.
* Otherwise, it is impossible to continue to fund the present system of today.
* Promote communication and the free movement of people and the immigration from all European countries will push us to a much strong union.
Read more: http://www.businessinsider.com/hans-jorg-rudloff-barcap-work-more-less-benefits-2011#ixzz1HNBwJq00
(Can you believe the Gall of these fat cat Banksters they don't even bother to hide their greed and lack of human emotions ... disgusting pigs) there's a video at link)An investment banker from BarCap recently told the Forum of Economic News that... more
-
-
Related Articles:
Eurozone Debt Crisis 2.0: Dollar Sucks Less than Euro, Again
How In The World Did We Get To The Point Where The Federal Reserve Is Printing Money Out Of Thin Air Whenever It Wants?
Secret Walmart Survey Shows Inflation Already Here
QE2: It's the Federal Debt, Stupid!
The Death Of The Dollar? 11 Signs That We Could Be On The Verge Of A Global Currency Crisis
Related Video:
Banks to Cash-In Again on New Fed Plan (VIDEO)
http://globalpoliticalawakening.blogspot.com/2010/11/preparing-for-revolution-progressive.htmlRelated Articles:
Eurozone Debt Crisis 2.0: Dollar Sucks Less than Euro, Again... more
-
