Article 43


Thursday, November 15, 2012

Lessons From The Eurozone

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“My people are destroyed for lack of knowledge: because thou hast rejected knowledge, I will also reject thee, that thou shalt be no priest to me: seeing thou hast forgotten the law of thy God, I will also forget thy children.”
- Hosea 4:6

“Jesus entered the temple area and drove out all who were buying and selling there. He overturned the tables of the money changers and the benches of those selling doves.”
- Matthew 21:12

“An unconscious people, an indoctrinated people, a people fed only partisan information and opinion that confirm their own bias, a people made morbidly obese in mind and spirit by the junk food of propaganda, is less inclined to put up a fight, ask questions and be skeptical. That kind of orthodoxy can kill a democracy - or worse.”
- Bill Moyers

“The propagandist’s purpose is to make one set of people forget that certain other sets of people are human.”
- Aldous Huxley

“Not everything that is faced can be changed. But nothing can be changed until it is faced.”
- James Baldwin

“Cut. Economy shrinks. Firms don’t spend. People can’t. Debt dynamics worsen. So cut.”
- Gerard Lyons, Standard Chartered Bank

“You can’t cut your way out of a recession. You have to grow your way out of a recession.”
- George Soros

“Economics 101 tells you that when you have a massive economic crisis, the government must step in to fill the gap until the economy can recover. The United States government, unlike, say, a state or a country like Greece, does not have to balance its budget. The U.S. has its own currency and is well-equipped to provide stimulus money to states to make up for budget shortfalls. What gets in the way of meaninful action is political obstruction, not economics. Federal stimulus dollars and other grants have made up for some of the cuts to mental healthcare, but thanks to constant efforts to block adequate stimulus measures, not enough. And if conservatives have their way, budget cuts to programs like Medicaid will continue to ensure that high-risk people cant get help.”
- Lynn Stuart Parramore

“Solidarity has always been key to political and economic advance by working families, and it is key to mastering the politics of globalization.”
- Thomas Palley

Us BLIND and DUPED Americans can learn SOMETHING IMPORTANT from our neighbors acrosss the Atlantic.  Maybe A COUPLE of THINGS.

What happened yesterday?  Over a dozen countries in Europe spoke in one unified, loud voice against GOVERNMENT/BANKER led AUSTERITY.  Here in America democrats, and even some republicans agree that AUSTERITY programs are counter-productive.

So what did President Obama do while all this was going on yesterday?  He sold out the American people and BACKED UP AUSTERITY.  He said on TV “There’s no doubt that our first order of business is going to be to get our deficits and debt under control.” That means the massive federal BUDGET CUTS set for Jan 2, 2013 will likely happen, resulting in thousands and thousands of layoffs at Boeing, Lockheed, etc, while badly-needed federal programs to help the LONG-TERM UNEMPLOYED GET BACK TO WORK - are out of the question.  To say nothing of social security, medicare and medicaid.

While we IGNORE the voice of REASON echoed by a billion Europeans, and IMPLEMENT similar counter-productive POLICIES, more and more Americans are DESCENDING from middle-class into POVERTY, while SOCIAL SAFETY NETS ARE CUT.

And the BANKERS are still BENEFITTING AT THE EXPENSE of the people, along with their cousins in BIG BUSINESS.

There ‘s NO SIGN government REALLY WANTS to do what it takes to get us off THIS ROAD that’s riding us down the path of economic and social ruin.

In the coming days we’re gonna hear a lot of politicians throwing the words “fiscal crisis” around to scare us, and no doubt some of us will INTERPRET the LIES as truth, PROJECT OUR FEAR on the POOR and NEEDY, and continue to TARGET people like YOUNG COLLEGE GRADS THAT CAN’T FIND THEIR FIRST JOB, or our FINANCIALLY and EMOTIONALLY ruined LONG-TERM UNEMPLOYED FRIENDS - with spears of DISDAIN, INDIFFERENCE, and HEARTLESSNESS.

Looks like President Obama and Congress are about to fool the American people AGAIN.

How much more AWAKENING does society need before things START CHANGING, or we TAKE MATTERS in OUR OWN HANDS?


European Workers Stage Austerity Protests

BBC News
November 14, 2012


General strikes in Spain and Portugal halted transport, businesses and schools and led to clashes between police and protesters in Madrid.

Smaller strikes were reported in GREECE, Italy and Belgium, and rallies were planned in other countries.

Hundreds of flights have been cancelled in Spain and Portugal.

Airlines are recommending passengers check the schedules before setting out to airports.

The European Trade Union Confederation has co-ordinated the Europe-wide action.

The confederation’s Judith Kirton-Darling told the BBC that AUSTERITY IS NOT WORKING.

“It’s increasing INEQUALITIES, it’s increasing the social instability in society and it’s NOT RESOLVING the economic crisis,” she said.

Some 40 groups from 23 countries are involved in Wednesday’s demonstrations.

There is just no work

UNIONS in Spain and Portugal started strikes at midnight to protest against AUSTERITY MEASURES that have combined tax rises with cuts in salaries, pensions, benefits and social services.

Marchers came out late on Tuesday in Spain, where 25% are unemployed, the highest rate in Europe.

“I have TWO SONS in my house, one is getting subsidies, the other has been at home for the last three years,” said protesting housewife, Paqui Olmo.

“It is not that he doesn’t want to work, there is just NO WORK.”

In the first reported clashes of the day, picketers and police fought at a Madrid bus depot where demonstrators were trying to stop buses from leaving.

There were outbreaks of violence in other Spanish cities, and the interior ministry said more than 30 arrests had been made.

THE GOVERNMENT has played down the strike, saying the electricity grid is registering 80% of its normal usage.

But unions claim the operations of several large companies, including Danone and Heineken, have ground to a halt.

In neighbouring Portugal, demonstrators took to the streets in the early hours, carrying banners denouncing the European Union, International Monetary Fund and European Central Bank.

The so-called troika has bailed out Portugal to the tune of 78bn euros ($100bn; 62bn), and demanded deep austerity measures in return.

The BBC’s Chris Morris in Lisbon says public transport has come to a virtual standstill, and many schools and public offices are expected to be closed.

In Italy, unions have called for a series of rolling four-hour strikes through the day which were expected to affect road, rail and air transport.

Correspondents said early signs were that the impact had been fairly limited.

In Greece, the strike action is the third major walkout in two months.

Successive governments have been pushing through deeply unpopular spending cuts and tax rises in order to receive bailout payments from the IMF and EU.

Earlier this week, MPs backed a fifth austerity package of salary and pension cuts and labour-market reforms, as well as a stringent budget for next year.

The IMF and EU had demanded the measures in return for the next 31.5bn-euro instalment of the bailout.

The government, which is being forced into short-term financing in the bond markets, says it needs the bailout to avoid bankruptcy.

Athens police said they expected about 10,000 people to protest, which is a relatively small demonstration by the standards of Greece.



IN FRANCE, the CGT union has called for public sector strikes, but there are questions about how many workers will stay away.

The strikes are not anti-government, analysts say, but rather a way of showing that workers in France are in solidarity with their fellow-workers elsewhere in Europe.

While some Belgian unions have told the BBC they will not be striking, all have expressed solidarity with the day’s protests.

Protesters are expected in Brussels outside the embassies of Germany, Spain, Greece, Cyprus, Portugal and the Republic of Ireland.

And Eurostar has warned of delays or cancellations and advised passengers wanting to travel from London to Brussels not to travel on Wednesday.




Europe’s Workers Stage Austerity Protests

By Raf Casert
Associated Press
November 14, 2012

Workers across the European Union sought to present a united front against rampant unemployment and government spending cuts Wednesday with a string of strikes and demonstrations across the region.

However, while austerity-hit countries such as Spain and Portugal saw a high turnout of striking workers, wealthier countries like Germany and Denmark experienced only piecemeal action.

To combat a three-year financial crisis over too much debt, governments across Europe have had to cut spending, pensions and benefits and raise taxes. As well as hitting income and living standards, these measures have also led to a decline in economic output and rapidly rising unemployment.

The 17 countries that use the euro are expected to fall into recession when official figures are released Thursday. Meanwhile, unemployment across the eurozone has reached a record 11.6 percent with countries like Spain and Greece hitting the 25 percent mark.

With NO END IN SIGHT to the economic hardship, workers were trying to take a stand on Wednesday.

“There is a social emergency in the south,” said Bernadette Segol, Secretary General of the European Trade Union Confederation. “All RECOGNIZE that the policies carried out now are unfair and not working.”

Spains General Workers’ Union said the nationwide stoppage the second this year, was being observed by nearly all workers in the automobile, energy, shipbuilding and constructions industries. The country, left reeling by a series of austerity measures designed to prevent it from asking for a full-blown international bailout, mired in recession with 50 percent unemployment among the under-25s.

“Of course its a political strike, against the policies of a suicidal and anti-social government,” said Ignacio Fernandez Toxo, a CCOO Spanish union leader.

The Spanish strike shut down most schools and while hospitals operated with a skeleton staff. Health and education have both suffered serious spending cutbacks and increased moves toward privatization.

In neighboring, bailed-out Portugal, where the government intends to intensify austerity measures next year, the second general strike in eight months left commuters stranded as trains ground to a virtual halt and the Lisbon subway shut down. Some 200 flights to and from Portugal - about half the daily average were canceled.

Hospitals provided only minimum services in Portugal, and municipal trash was left uncollected overnight.

Airports across Europe suffered from the strikes, forced to cancel flights to and from striking nations.

In Belgium, a 24-hour rail stoppage and scattered strikes through the south of the nation disrupted daily life. Both the Thalys and Eurostar high-speed rail services that connect Brussels with London and Paris were severely disrupted.

Austerity means cuts in the public services and public companies and also cuts in the buying power for the working class,” said Belgian socialist union leader Filip Peers. “Austerity means recession and it deepens the crisis.”

However, Philippe de Buck , the chief of Eurobusiness the Brussels-based EU employers’ federation, took a different view.

“If you start striking at national level and in companies you only will harm the economy,” he said. “And it is not the right thing to do today.”

“It costs billions of euros,” he said, adding that Europes reputation as a hotbed of trade union action would not attract global investors.

Europe has a long history of union action and workers’ rights and benefits have been one of the cornerstones of its welfare state, with its guaranteed medical care, unemployment benefits and often generous pensions.

The union action was not felt across the entire region, however, with countries where austerity has not hit as hard experiencing little disruption.

“So far, there are only symbolic demonstrations here in Germany, because we were able to avoid the crisis,” said Michael Sommer, the head of Germanys main labor union federation.

In Denmark, too, there were no strikes, since cooperation between workers and employers have largely survived the crisis so far.

“The employers speak the same language as we do and we UNDERSTAND EACHOTHER’S NEEDS and demands,” said Joergen Frederiksen, a 69-year-old retired worker and a former shop steward. “There are GOOD VIBES between us and that means a lot.”

Ciaran Giles from Madrid, Geir Moulson from Berlin, Jan Olsen from Copenhagen, Mike Corder from The Hague, Barry Hatton from Lisbon, Colleen Barry from Milan and Elena Becatoros from Athens contributed to this article.end of story marker



Europe unites in austerity protests against cuts and job losses
Millions take part in strikes, stoppages and marches on day of co-ordinated action as eurozone teeters on return to recession

By Tom Kington in Rome, Helena Smith in Athens, Kim Willsher in Paris and Martin Roberts in Madrid
The Guardian
November 14, 2012

Hundreds of thousands of Europeans mounted one of the biggest coordinated anti-austerity protests across the continent on Wednesday, marching against German-orchestrated cuts as the eurozone is poised to move back into recession.

Millions took part in Europe-wide strikes, and in city after city along the continent’s debt-encrusted Mediterranean rim, thousands marched and scores were arrested after clashes with police.

There were banners declaring “Austerity kills,” Occupy masks, flares, improvised loudspeakers and cancelled flights. But there was also a violent, even desperate edge to the demonstrations, particularly in Madrid and several Italian cities. In the Spanish capital, police fired rubber bullets to subdue the crowd; in Pisa, protesters occupied the Leaning Tower, and in Sicily cars were burned.

“There is a social emergency in the south,” said Bernadette Sgol, the secretary general of the European Trade Union Confederation. “All recognise that the policies carried out now are unfair and not working.”

Swingeing austerity in Greece, Italy, Spain and Portugal has sent unemployment soaring there are now more than 25 million unemployed Europeans, and about one in every eight people in the eurozone is jobless. Figures to be released on Thursday are expected to show that the eurozone has tipped back into recession.

Across northern Europe, protesters turned out more in sympathy than in anger. Several thousand gathered at the Brandenburg Gate in Berlin, and there were stoppages and marches in Belgium and France. But it was southern Europe that bore the brunt.

In Italy, students were in the front line in noisy and often violent anti-austerity marches. In Naples and Brescia, protesters occupied railway tracks; in Genoa, the entrance to the ferry port was blocked. In Turin, a police officer was hit with a baseball bat. Trento, Trieste and Palermo also saw protests. In Padua, two police officers were injured in clashes, and 10,000 people marched in Bologna. There were clashes in Milan, and in Venice protesters draped a bank with banners reading: “You are making money out of our debts”. In Rome, where there were four separate marches, traffic was brought to a standstill following clashes on the banks of the Tiber after far-right students tried to get round a police line to reach parliament.

In Spain, police helicopters began flying low over central Madrid as soon as the strike started at midnight and stayed there all day. Riot police out in force in the emblematic Puerta del Sol square, where protesters have gathered for centuries, but particularly since the “indignant” movement sprang up 18 months ago.

Many shops and banks in central Madrid closed for the day, or put up security shutters, and police formed a cordon around the offices of the governing People’s party, and several department stores. Public transport and state radio services were patchy as workers heeded the strike call. Long queues formed at bus stops and the radio relied on recorded fillers. The afternoon news on Spain’s RTVE channel was interrupted by protesters waving banners in front of outside broadcast cameras.

Traffic jams formed in the evening as noisy demonstrators filled Madrid’s main artery, the Castellana, toting banners protesting at budget cuts and backing public services. Many of them chanted “Public health has to be defended, not sold off”.

In Athens, the turnout was thinner than usual, perhaps because of last week’s two-day strike. Protesters described a country running out of reserves. Many have survived three years of recession and austerity by relying on family support or handouts. “But when that dries up, and it will with these latest measures, there will be no reason not to descend en masse on to the streets,” said Kostas Kapetanakis, a young sociologist holding a banner in Syntagma Square demanding free education, health and welfare system. “There will be a revolt because we will have absolutely nothing to lose.”

Nikos Bokaris, the president of the national foresters’ association standing with other civil servants outside parliament, feared Greece was being pushed towards a huge explosion.

“Civil servants feel they have been very unfairly singled out,” he said. “I am very afraid that the country is heading for a massive social upheaval with huge consequences for public safety and order. All it will take is a spark.”



Devastate The Economy

By Brian Beutler
Talking Points Memo
May 23, 2012

A giant austerity bomb is timed to go off at the beginning of next year, and the threat of significantly higher taxes and lower spending has Republicans running around the Capitol sounding more like John Maynard Keynes than John Boehner.

Automatic, across-the-board reductions to domestic and defense spending, combined with the looming expiration of the Bush tax cuts, will dramatically consolidate the budget in the next calendar year, if Congress does nothing. And despite bemoaning deficits throughout the Obama years, the GOPs suddenly come around to the view that cutting government spending is a job killer.

Just listen to Sen. John Cornyn (R-TX).

“Just when you thought the economic news could not get much worse with slow economic growth, with reduced wages because of higher costs, and with many people simply giving up looking for work with the lowest labor participation rate we’ve had in some time,” Cornyn warned reporters in the Capitol Tuesday, “we have an entirely predictable and preventable jobs crisis approaching in January, where because of the SEQUESTRATION [automatic spending cuts], my state alone will lose 91,000 private sector jobs - and there are about a million private sector jobs at risk if the sequestration goes into effect on January 2.”

This marks the return of the Defense Keynesians Republicans who admit that government spending supports job growth in a weak economy, if and only if that spending is directed toward the military.

As luck would have it, a new Congressional Budget Office concludes Republicans are right about the economic consequences of defense cuts - but that their other fiscal priorities are just as perilous for economic growth.



Its Not A Fiscal Cliff - It’s An Austerity Bomb. Will Unions Get Hit?

By Ned Resnikoff
November 14, 2012

If there’s one thing both parties agree on, its this: Congress and the president need to act right away to stop America from plunging off the FISCAL CLIFF\. Any deal to that effect, Democrats and SOME PROMINENT REPUBLICANS AGREE, should rein in long-term deficit spending through a combination of budget cuts and revenue increases.

But according to Nobel Prize-winning economist Paul Krugman, the Washington consensus is exactly wrong. Cutting the deficit now, he says, could actually hurt our economy. Furthermore, “fiscal cliff” is a misnomer; what REALLY THREATENS the American economy’s recovery is the austerity bomb (an expression he ATTRIBUTES to TPM reporter Brian Beutler).

“The cliff stuff makes people imagine that it’s a problem of excessive deficits when its actually about the risk that the deficit will be too small,” WRITES KRUGMAN in a post on his New York Times blog. By framing the problem as a ”FISCAL CLIFF,” he writes, Washington insiders are performing a “bait and switch” which allows them to argue the problem can be solved through deficit reduction measures like cutting entitlements.

In reality, that “solution” would only make matters worse. It would amount to swapping out one form of austerity - the kind to be triggered by what people are calling the fiscal cliff - for another, planned version of the same. Krugman - citing John Maynard Keynes - says that the right time for austerity measures is during a boom, not a bust.

Despite this, both Democrats and Republicans have accepted deficit reduction as a major priority for the beginning of Obamas second term. When asked shortly before the election what was on the agenda for his second term, the president himself REPLIED, “Theres no doubt that our first order of business is going to be to get our deficits and debt under control.”

The labor movement and affiliated organizations to the president’s left flank are organizing to ensure that a final FISCAL CLIFF deal includes tax hikes on the rich and no major entitlement cuts. Leaders from the country’s top labor unions met with President Obama on Tuesday, and that night SEIU President Mary Kay Henry praised him as incredibly serious and focused.

But labor historian Nelson Lichtenstein told MSNBC he expects the president to make organized labor SWALLOW A COMPROMISE which includes some austerity measures. I suspect that they’re going to have to eat some stuff, you know, like limits on Social Security, or some tinkering around entitlements programs, he said.

The question, then, is not whether the austerity bomb will detonate: it’s what the size of the blast radius will be.



The Austerity Bomb

By Paul Klugman
NY Times
November 14, 2012

Brian Beutler of Talking Points Memo seems to have been the first to use the phrase ”AUSTERITY BOMB” for whats scheduled to happen at the end of the year. It’s a much better term than “fiscal cliff”. The cliff stuff makes people imagine that its a problem of excessive deficits when i’s actually about the risk that the deficit will be too small; also and relatedly, the fiscal cliff stuff enables a bait and switch in which people say so, “this means that we need to enact Bowles-Simpson and raise the retirement age!” which have nothing at all to do with it.

And it can’t be emphasized enough that everyone who shrieks about the dangers of the austerity bomb is in effect acknowledging that the Keynesians were right all along, that slashing spending and raising taxes on ordinary workers is destructive in a depressed economy, and that we should actually be doing the opposite.

Meanwhile, in Europe, which has had much more austerity in aggregate than we have, grim new industrial production numbers and a worsening unemployment crisis.



Trust Your Instincts
November 15, 2012

The FDR Framework is the backbone for a 21st century financial system. Under this framework, governments ensure that every market participant has access to all the useful, relevant information in an appropriate, timely manner. Market participants have an incentive to analyze this data because they are responsible for all gains and losses.

Austerity and politics: a convincing economic alternative remains elusive

In an EDITORIAL, the Guardian looks at the current global financial situation, sees Western economies stuck in an economic slump as neither austerity or Keynes-lite has worked and asks what is the convincing economic alternative to get out of the current situation.

Regular readers know what the Guardian editors are seeing is the result of policymakers and financial regulators pursuing the Japanese model for handling a bank solvency led financial crisis.  Under this model, bank book capital levels and banker bonuses are protected at all costs.

As a result, the real economy is made to carry the debt service burden of the excess debt in the financial system.  This causes capital to be diverted from reinvestment and growth to debt service.  A diversion that puts the real economy in a downward spiral.

To offset this decline in the real economy, governments pursue expansionary fiscal and monetary policies.  Unfortunately, these policies, like zero interest rates and quantitative easing produce their own economic headwind.

The result of pursuing the Japanese Model is policymakers and financial regulators have condemned the real economy to a Japan-style economic slump.

There is a convincing economic alternative.  The alternative is to adopt the Swedish Model for handling a bank solvency led financial crisis.

Under the Swedish Model, banks are required to absorb the losses on the excess debt in the financial system.  This removes from the real economy the debt service burden of the excess debt.  As a result, rather than channel capital into debt service, capital is channeled into reinvestment and growth.

With capital being channeled back into the real economy, there is no need to pursue monetary policies that create their own economic headwinds.  As these policies are abandoned, the removal of their economic headwinds creates more growth in the real economy.

That the Swedish Model works is very well known.

It was first tried by the FDR Administration and according to the NY Fed, it broke the back of the Great Depression.

Most recently Iceland tried it and their economy is one of the best performing economies in the world.

Here is the news, in three parts. Tens of thousands of European workers take to the streets in a historic concerted action to protest soaring unemployment and unprecedented austerity. The Bank of England’sMervyn King warns that Britain’s slump will be longer and more painful than he and the government had imagined. American newspapers burst with talk of a looming “fiscal cliff” of tax rises and spending cuts: if the squabbling politicians in Washington fall off that New Year’s eve ledge, runs the conventional view, they will bring the US and the world economy crashing down with them.

Three flashpoints in three distinct parts of the global economy in just one day. There was a time when even one of these would have been guaranteed front-page fodder, but four years into this slump the worst the west has faced since the 1930s ֖ we are well used to bad news coming in threes, fours or more.

And it is easy to see common threads drawing together these separate crises. First, it is slowly dawning on policy-makers in each region just what a mess they are in. Mervyn King warns that, five years after the collapse of Northern Rock, Britain is still only halfway through its crisis even while Angela Merkel talks ofanother half a decade of misery in the eurozone. Even in America, which on headline economic figures would appear to be best-off, the unemployment rate is stuck nearly two percentage points above where Barack Obama’s top advisers forecast it would be by now.

But it is not just the scale of the slump, it’s also the sense among policy-makers of having run out of options.

Hopefully the policy-makers have run out of options other than adopting the Swedish Model.  After four years of slump it is time to end this financial crisis.

In Wednesday’s inflation report press conference, Mr King hinted yet again at the shortcomings of the bank’s policy of pumping more money into the bank system....

The governor’s opposite number in Washington, Ben Bernanke, has got round the ineffectiveness of the Federal Reserve’s QE programme by getting more and more experimental ֖ and less and less convincing. ....

As for the eurozone, the strike action only confirms what the figures suggest: that austerity is hurting rather than working. And yet the only European solution is to keep doing more of the same, as summed up this week by chief economist at Standard Chartered bank, Gerard Lyons: “Cut. Economy shrinks. Firms don’t spend. People can’t. Debt dynamics worsen. So cut.” ...

And in all cases, the outline of a convincing economic alternative beyond either austerity or Keynes-lite - remains disastrously, dangerously elusive.

The Swedish Model isn’t elusive.  Policy makers haven’t adopted it because they are relying on the bankers who caused the financial crisis for advice on how to end the crisis. The last thing the bankers are going to recommend is making the banks take their losses and seeing their cash bonuses reduced to zero.


Posted by Elvis on 11/15/12 •
Section American Solidarity
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