"Camel cigarette advertisement at Times Square, New York City"
Ilargi: Well, the coups have been successful: Greece changed Papa's, and Italy's going to get its Full Monti. If the financial world can't get the votes, it simply chases away chosen leaders and appoints its own guys in their place. Woe the people of Athens and Rome. Who still have no clue, if one can go by the support both non-elected leaders of only-in-name democracies have received at home. Don't say you weren’t warned.
Italy sold €3 billion in 5-year bonds at 6.29% today, and that is a victory how again? Italy can't afford to pay almost 5 times as much interest as Holland or Germany do, not for long. The EFSF, according to the Telegraph, even had to buy its own debt in its first ever issue. The fund has denied the report, but who do you believe, them or your lying eyes?
Everyone and their pet parrot are by now clamoring for the ECB to step in and buy everything under the sun, but that horse is already dead tired. The ECB itself doesn't want to be lender of last resort, Germany doesn't want it to be, and it also happens to be plain illegal to let it, under EU law and probably under that of some of its members as well.
European Council president van Rompuy is said to be working on treaty changes that should make it all possible, but I can guarantee you that one or more member countries will insist on at least a referendum on such issues. And Europe doesn't have the time for that, let alone the gusto.
So what to do? It's really very simple. It may lead to economic pain and political chaos, but other than that, it's not that hard at all.
Europe needs to grow a pair. It needs to refuse to bail out financial institutions that can no longer stand on their own two feet without bail outs to prop them up. It then needs to demand full discovery of any and all assets in the bank vaults. It can offer temporary support to those banks that remain viable as going concerns once all their paper has been marked to market, insure any and all deposits from citizens and businesses, and subsequently close the doors on those banks that are going concerns no more.
Washington and Wall Street will shout fire, murder and brimstone, but you know what? Let them take care of their own for once. The notion that -future- European taxpayer revenue must be put at risk to save Wall Street banks needs to be put out by the curb. It doesn't work, not for the European taxpayer.
Both Wall Street and European banks that hold too much American and European private debt, sovereign debt and/or derivatives, need to be purged from the system. Europe can make a start, and if America knows what's good for it, it will follow suit. If not, tough luck.
It's high time to come clean, to stop the incessant lying. To stop pretending things are a bit hard right now, but otherwise just fine. They're not. Extend and pretend works only so long. Then it snaps back in your face with a vengeance. That's why the bond markets are so successful in bringing down Italy and Greece. Not because the ECB doesn't step in, since that would only serve to cover up reality for a little bit longer, but because they've both lied for so long about their real predicaments.
No, just stop lying. The consequences and challenges will be formidable, but they’ll be that anyway. You can't cover up the debt and the losses forever. And the chances of growing your economies out of the cesspit are zero, if not below.
One thing no more lying will achieve is this: it will re-establish confidence in the markets -or what'll be left of them-. And isn't that what you guys always say you want to accomplish? Well, I can assure you, it's the only way to do it: cut the fairy tales. Take a breath of fresh air and get to work. Do something real and rewarding for a change, and for a living.
Oh, and one other thing that must stop something urgent: stop talking about economic growth. There ain't none, and we need to wonder hard and loud why we still and always unquestioningly assume and accept that we need it. No, the Greek economy will not grow its way out of its misery. Neither will Italy's, or France's or America's. There's too much debt to grow out of.
But perhaps this is hard to fathom without resorting to more philosophical questions. For those of you who've never read or heard Professor Albert Bartlett's work on exponential growth (since that is what we're talking bout), get moving. Bartlett is a physicist. That means he's an actual scientist, and capable of understanding the inevitable endgame of exponential growth. People like Papademos and Monti, as well as just about any political and economic leader on the planet, don't understand the science involved. Either that or they’re willfully blind to it.
And there's another layer to the question, one that goes beyond the easy to understand impossibility of endless and eternal growth. That is, when we look around our respective places on the planet, why do we think we need to grow more? Why do we feel we haven't grown enough? And perhaps more quintessential: what is it that we want to grow into? At what point, if we do want more growth, will it be enough for us? Have we even thought about that?
We are fed the constant growth story because it is indeed a necessity in our present system. When all money issued carries interest i.e. is issued as debt, you will need to grow your GDP at least as much a that interest rate to play even. Just as easy to understand as the exponential growth conundrum. Or so you would think.
But that doesn't mean that you can always keep issuing enough money to meet your interest payment requirements. Not when a huge part of it is issued as for instance mortgage loans, but very few people buy homes. Not when money is created when banks issue fresh credit to industries, but industries find no market for their products and instead contract.
In other words: if we don't grow, we will shrink. And that, we are told, is the very definition of armageddon. But why couldn't we shrink a little and still be comfortable? In theory we could perhaps, but first of all the human mind isn't made for shrinkage, and second the money we create as credit is virtual, and can disappear as fast as it was created, and into the same nothingness.
If we would for instance consciously choose to shrink by 5%, we'd run a very real risk that we would cause 50% of the money to vanish. The system based on credit will have the tendency to go down like so many dominoes. It has very little resilience and is thus enormously fragile, something we don't pay attention to when we have growth, and are therefore not prepared for when we no longer do.
These days we can find a lot of 2012 growth predictions in the media. Just about every single one contains a revision to the downside. 0.5%, 1%, that's all that's left. And that's not enough to pay the interest. It's always instructive to look at the terminology used in the news. Economic growth will be reported as meager vs healthy, robust vs lagging, weak vs strong.
More is always better. A 1% growth number for a modern western economy just doesn't cut it. Even though it's just as much of an exponential growth number as any other. And exponential growth inevitably leads to disaster. Still, the system's proponents seem to think there's such a thing as too little exponentiality.
Now, of course I recognize that more philosophical musings such as these are easily discarded. You can't change the system overnight, I hear you say. It worked well for a long time. We are much better off than we were before. Than our parents and grand parents were.
That last one is a bit of a stretch. In her lectures, TAE's Nicole "Stoneleigh" Foss puts the highest point of our wealth as a society (EU and US) at 1982 at the latest. As in for instance: what percentage of your income, wealth, went to pay for education, health care, then as opposed to now? It's probably a few years earlier still: mid-70's. When the world started processing Nixon's decision to take the US off the gold standard (which I don't want to discuss here).
After that, and we're talking some 35 years ago, more than a generation, the money as debt system really took off. It took a while for the psychopaths among us to realize the possibilities, but it's 2011 now and boy, have they ever realized it. And so have we, of course. Jay Hanson once wrote something like (I paraphrase) : "Democracy only works until voters realize they can vote themselves an ever larger piece of the pie".
It's 2011, and Greece and Italy have just put their fate and faith in the hands of non-democratically appointed leaders. Over the past 35 years, they may have gotten a bit richer, but those days are gone, and are the Greeks and Italians today really happier than the preceding generation?
But, yes, the system worked for a while, even if not really for a long time. And yes, you can't change the system overnight.
I guess what irks me most when I read all the "return to growth" stories, whether they address the US or Greece or any other nation, is that it's such a one-dimensional notion. I never see anyone asking questions about the core issue. And most of all, I never see a politician or economist addressing the question of what would happen to us, and what we should do, if we can not return to growth.
Surely we can all agree that political decisions and measures would in all likelihood be very different if we, if even hypothetically, considered a no-growth scenario. For now, it's treated as a doomsday tale, to the extent that anyone gives it any thought at all.
And that at a time when I am personally simply not able to see any way at all to get our societies back to what is considered "healthy" economic growth. Certainly not if we all keep lying, and accepting lies, about where we are. Shed daylight on the paperwork and let's look it over. If it all turns out to be relatively benign, all the better. But if it doesn't, at least we’ll know what to prepare for and work on.
The fact that 800 pounds a day of funny accounting is used to cover up losses all over the place is probably a good indicator of our reality. Which means we'd better start talking about what to do when growth is no longer a viable option. And get rid of this quasi-religious clinging to it as something some immovable deity handed to us atop a removed mountaintop.
Because that's it, in the end, isn't it: the growth religion makes us destroy not only our economies, but the very world we live in. And that is embarrassing, if nothing else. For onr thing, how does that define as growth? It makes us look just about infinitely stupid. Luckily for us, we can do something about it: start thinking about and discussing why we want growth; if we need it, why we want it.
Stop your leaders from lying, and stop lying to yourselves. At the very least, you’ll feel less embarrassed. And ask yourself: what do you want to grow into? What's missing?
Merkel: Europe in toughest hour since World War II
by Noah Barkin and Stephen Brown - Reuters
Chancellor Angela Merkel said on Monday that Europe must move step-by-step towards political union, calling the euro zone debt crisis the continent's "toughest hour since World War Two".
In a one-hour address to thousands of delegates from her Christian Democrats (CDU), Merkel offered no new ideas for resolving the crisis that has forced bailouts of Greece, Ireland and Portugal, and has stirred worries about the survival of the 17-state currency zone.
But she made clear that Germany will have to make more sacrifices. "The challenge of our generation is to finish what we started in Europe, and that is to bring about, step by step, a political union," Merkel told the party congress in the east German city of Leipzig. "Europe is in one of its toughest, perhaps the toughest hour since World War Two," she said.
The two-day party meeting was supposed to focus on education policy but was dominated from the outset by the euro zone's debt crisis, which showed no signs of abating despite the naming of new technocrat governments in Greece and Italy.
Merkel, who came to power in 2005, does not face an election until 2013, but knows she could easily become another victim of euro turmoil unless she plays her cards right. The CDU is the party of Helmut Kohl, who led Germany into the euro.
Nearly 13 years on, many German conservatives are uneasy with taxpayer-funded bailouts of weak euro states, deeply resent fiscal backsliding in countries such as Greece and worry the crisis may compromise the independence of the European Central Bank. Some in the party believe the whole project was a mistake which must now be undone.
But Merkel argued that Germany had a responsibility towards its partners and was vulnerable itself if other euro zone states were dragged into the crisis, reminding the party that 60 percent of German exports go to the European Union . "Irish problems are Slovak problems, Greek problems are Dutch problems, and Spanish problems are our problem," Merkel said. "Our responsibility does not end at our borders."
At the same time she made clear there are red lines Germany was not prepared to cross, rejecting joint euro zone bonds and other quick fixes which Germany believes would discourage euro states from running responsible fiscal policies.
"Tough Road Ahead"
"The hard part is that this crisis was not created overnight, it is the result of decades of mistakes, and we can't solve it in one fell swoop. We have a long, tough road ahead of us," she said.
Merkel was walking a fine line at the party congress in Leipzig which ran under the banner "For Europe - For Germany".
The main resolution from the CDU leadership sent two seemingly contradictory messages: that Germany has benefitted hugely from the euro, must gird for more burdens to save it and be ready to give up sovereignty to Brussels, and that member states that violate European fiscal rules must be dealt with harshly, and may even leave the bloc.
It is not only her euro policy which has sparked dissension in CDU ranks. After the Fukushima disaster in Japan earlier this year, Merkel abruptly abandoned the party's long-standing support for nuclear power, enraging the CDU's business wing. Last month she made another surprising about-face, backing the introduction of a nationwide minimum wage, a policy she had publicly opposed for years.
Both reversals are part of a deliberate strategy by Merkel to co-opt the positions of rival parties, as she did on evironmental and family policy in her first term, and increase her coalition options for 2013, when partnerships with the Social Democrats (SPD) or Greens may be her only hope of retaining power.
Since becoming chancellor six years ago, she has overseen a dramatic transformation of the CDU that has made it nearly unrecognisable from the free-market, business-friendly party that gathered in the same city of Leipzig back in 2003.
Back then Merkel was often likened to Britain's hard-charging reformist Prime Minister Margaret Thatcher, a comparison no one makes anymore after her sharp turn left. But if the euro zone crisis blows up before the next German vote, forcing one or more countries out of the bloc and hammering the region's economy, then even the most canny political maneouvres and reinventions probably will not save her.
Merkel Says EU Must Forge Closer Union to Sway Bondholders
by Tony Czuczka and Brian Parkin - Bloomberg
German Chancellor Angela Merkel said it’s time to embrace a "political union" in Europe to send a message to bondholders that euro-area leaders are serious about ending the sovereign debt crisis.
Speaking on the eve of her Christian Democratic Union party’s annual congress in the eastern German city of Leipzig, Merkel said that she wants to preserve the euro with all current 17 members. "But that requires a fundamental change in our whole policy," she said.
"I believe this is important for those who buy government bonds: that we make it clear that we want more Europe step by step, that is that the European Union, and the euro area in particular, grows together," Merkel said in an interview with ZDF television late yesterday. "Otherwise people won’t believe that we can really get a handle on the problems."
Merkel will address her party at about 11 a.m. today after weeks of crisis fighting during which she raised the prospect of ejecting Greece from the euro and joined with French President Nicolas Sarkozy to call on Italy to hold to its budget pledges. After leadership changes in Italy and Greece, the chancellor is turning her attention to shaping the euro and EU’s future.
'Sweeping Through'
"Big political changes are now sweeping through the euro zone, putting -- at least for now -- the many skeptical political observers to shame," said Erik Nielsen, chief global economist at UniCredit SpA in London. In Italy, Greece and Spain, which holds elections on Nov. 20, "people want ‘more Europe,’ not less."
Asian stocks rose the most in a week as Italy and Greece recommitted to the reform path. The MSCI Asia Pacific Index climbed 1.3 percent as of 2:57 p.m. in Tokyo, after losing 2.4 percent last week. The euro rose for a second day and was at $1.3755 as of 7:01 a.m. in London from $1.3750 in New York on Nov. 11. It reached a one-month low of $1.3484 on Nov. 10.
In her interview, Merkel said that the next step to bolster investor confidence means what was begun by the euro’s founders must be completed with "a fiscal union, and then turn it step by step into a political union." "That is the lesson of the crisis and this will still require a lot of effort," she said.
December Summit
Euro leaders are due to meet in Brussels on Dec. 9, when they have asked EU President Herman van Rompuy to present them with a report on a "timeframe for the further strengthening of the euro zone" that should include "the question of possible treaty changes," the German Finance Ministry said Nov. 9.
"Merkel wants far more centralized euro fiscal oversight so that something like Greece can never happen again," Jan Techau, director of the Brussels-based European center of the Carnegie Endowment for International Peace, said by phone. That means euro governments will have to cede some sovereignty over budgets, he said. "There seems to be some kind of deal between Merkel and Sarkozy on this."
Michael Meister, the CDU’s parliamentary finance spokesman, raised the prospect of joint euro-area bonds following on. "An integrated fiscal policy" in the euro region would mean "we can discuss the question of joint liability," he said in an interview on Nov. 10. "The sequence of events is important."
The euro crisis now entering its third year is the main theme occupying Germany’s ruling party as more than 1,000 delegates gather in Leipzig. The convention’s main motion is on the euro.
Solidarity, Encouragement
Euro members that get financial support must reduce debt and strengthen their economies, according to the draft text of the motion to be debated today. "Some countries will achieve this quickly, while others will need our solidarity and our encouragement for years," it says.
The chancellor addresses the convention with domestic public opinion going her way. Merkel’s handling of the debt crisis is backed by 56 percent of Germans, up from 45 percent in early October, according to an FG Wahlen poll for ZDF television published Nov. 11. Merkel’s overall approval rating also rose. The Nov. 8-10 poll of 1,278 people has a margin of error of as much as 3 percentage points.
Merkel will use her speech to issue a "warning" that it’s necessary to do everything to move toward a "stability union," the CDU’s Meister said. "We mustn’t just draft rules, we need to patrol them and enforce them," he said. "We need more discipline." Merkel will deliver that message "loud and clear."
Eurozone bail-out fund has to resort to buying its own debt
by Harry Wilson and Kamal Ahmed - Telegraph
Europe's €1 trillion (£854bn) rescue fund has been forced to buy its own debt as outside investors become increasingly concerned about the worsening eurozone sovereign debt crisis.
The European Financial Stability Facility (EFSF) last week announced it had successfully sold a €3bn 10-year bond in support of Ireland. However, The Sunday Telegraph can reveal that target was only met after the EFSF resorted to buying up several hundred million euros worth of the bonds.
Sources said the EFSF had spent more than € 100m buying up its own bonds to help it achieve its funding target after the banks leading the deal were only able to find about €2.7bn of outside demand for the debt.
The revelation will be seen as a major failure and a worrying sign of future buyers strike after EFSF officials and their bankers had spent recent weeks travelling the world attempting to persuade key investors, including China's national wealth fund and Japanese government funds, to buy its bonds.
Chinese and Japanese money was crucial to last year's first bond sales by the EFSF, but they have since been dismayed by the eurozone's failure to resolve the worsening debt crisis and alarmed at how fund has morphed from being a rescue facility for European banks into a potentially €1 trillion leveraged first-loss insurer for eurozone governments.
Other European Union funds are also understood to have supported the EFSF's bond sale. The failure of the EFSF will increase pressure on the European Central Bank to effectively become the lender of last resort for the eurozone, a move it has strongly resisted.
At a private breakfast organised by PI Capital last week, Mark Hoban, the Treasury minister, said: "What it doesn't do is provide the next stage of the solution, which is how do you stop this from happening again?" he said.
The move, by the European Investment Bank, will cause more disquiet among non-eurozone EU members who have become concerned about their growing exposure to the cost of rescuing the currency bloc.
EFSF Denies It Is An Illegal Pyramid Scheme
by Tyler Durden - ZeroHedge
If there is one thing one can say about the insolvent European continent is that despite everything, it is a bastion of truth, and a knight of see-thru disclosure.
After all, who can forget such brutally honest statements as "Greece will not default", or the follow ups: "Ireland is not Greece", "Portugal is not Ireland", "Spain is not Portugal", "Italy is fine", "Italy has turned down money from the IMF", "The IMF has never offered any money to Italy", and then the old standbys, "the ECB will not be a lender of last resort", "the EFSF will use 4-5x leverage", wait, make that "the EFSF will use 3-4x leverage", and last but not least, "Europe is not America" and "it is all the fault of evil CDS speculators."
Well we have one more to add to the list: "the EFSF is not an illegal ponzi scheme" - because after the mindboggling report in the Telegraph yesterday that the EFSF has bought hundreds of millions of its own bonds, exposing the scam in the heart of the Eurozone for anyone to see, the European rescuer of last resort (at least until the ECB comes out monetizing and Eurobonds are issued)has no choice but to join in the parade of truths and as Reuters reports "said on Sunday that it did not buy its own bonds last week, denying a British newspaper report that it spent more than 100 million euros ($137 million) to cover a shortfall of demand.
"The EFSF did not buy its own bonds and the book was 3 billion euros," an EFSF spokesman said, referring to the 3 billion euros raised in last Monday's 10-year bond issue."
We are certain that in order to dispel rumors about its fraud-i-ness, the EFSF will promptly submit a full breakdown of the entities that received bond allocations (we know that Japan is good for €300 million, that China is good for €0.0, and that as Merkel said one week ago, "hardly any countries in G20 have said they will participate in the EFSF."
So, because we believe everything that comes out of Europe, we are patiently waiting to see just who it was that bought EFSF bonds when nobody else did. And yet what is most troubling to us, is that it took the world 5 minutes to completely agree that the EFSF is a ponzi scheme, with nobody doubting this supposedly "refuted" disclosure for even a second. Perhaps that tells you more about the current state of Europe than anything else...
These bailouts aren't democracy. What's worse, they aren't even a rescue
by Heather Stewart - Observer
The idea that Italy's and Greece's new technocratic governments will be apolitical is nonsense. And it's becoming clear that, in Athens, austerity is already turning a crisis into a disaster
Investors are breathing a sigh of relief after a tumultuous week, with at least a semblance of stability restored to Italy and Greece. But the past seven days have also flipped the euro to reveal a new face – and it wasn't a pretty one. The deeply undemocratic nature of the euro project had already been laid bare in Cannes by the European elite's outraged response to George Papandreou's announcement that he would hold a referendum on the latest "rescue" package for his country.
Papandreou may have had his own tactical reasons for demanding a vote. But given that the bailout package involves further hardship for an already restless populace, it didn't seem unreasonable that, in order to avoid the nation becoming ungovernable, he felt the need to ask for a fresh mandate.
Last week, it was Italy's turn to face intense pressure from financial markets – and, in turn, from its eurozone partners. As Berlusconi showed few signs of carrying out his promise to resign, France began openly calling for regime change in Rome. Now, there's no doubt that Silvio Berlusconi is both odious and ineffectual; but for Italy's neighbours to be demanding the departure of its democratically elected leader was hardly a shining moment for European democracy.
Of course, the fig leaf is that Berlusconi's Yale-trained successor, Mario Monti, will lead a "technocratic" government that will implement drastic spending cuts and necessary structural reforms to nurse the economy back to health. Exactly the same story is being told about ex-central banker Lucas Papademos in Greece. But there are two major flaws in this argument.
First, there's no such thing as a harmless, neutral technocrat; and second, the plan they are toting won't work. The recipe of privatisation, deregulation and welfare cuts that is being presented as the only solution to Italy's woes is a deeply contentious one.
Decisions on how the professions should be regulated, how easy it should be to fire staff, and how much of the national infrastructure should be owned by the state, for example, will be fiercely contested, and have profound implications for the distribution of resources in society. Sir Mervyn King may be a fine monetary policymaker, but would you want him in charge of deciding how many Sure Start centres should be shut? He would say it wasn't the kind of decision he should make.
As Peter Chowla of the Bretton Woods Project, which monitors the work of the IMF, says: "You need an understanding of what these crises mean for different segments of the population."
Older British politicians remember the humiliation of having to answer to the IMF for the Treasury's spending plans after the UK's 1976 bailout. But the austerity-plus-reform package imposed on the bailed-out eurozone members reaches far deeper into national life.
In case there was any doubt that Italy faces joining Greece, Portugal and Ireland as closely monitored protectorates of Brussels, economic and monetary affairs commissioner Olli Rehn wrote to the Italian finance minister last week, demanding details about each one of the 39 reform measures Italy has promised to take.
And it won't have gone unnoticed among the eurozone's poor relations that Germany and France haven't themselves always embraced the reforms they are now recommending. In a paper for the pro-Europe Centre for European Reform last week, Simon Tilford and Philip Whyte said: "The punishing (and self-defeating) economic adjustments imposed on debtor countries contrasts with the self-righteous complacency shown in the creditor countries."
The second problem with "technocratic government" as detailed in an excellent new report by economists from Research on Money and Finance, austerity has been comprehensively proven to fail. Greece has offered up the scalps of 30,000 civil servants, raised taxes, cut public sector salaries and put a cornucopia of state assets up for sale.
The result? A cumulative 10% decline in output through 2010 and 2011, and an unemployment rate of 18.4%. Greece's debt-to-GDP ratio has actually risen, not fallen, since the "rescue" package was implemented, and forecasts from the commission show debt hitting a Japanese-style 198% of GDP by 2013. On its own terms, the programme has been self-defeating.
Ireland is often touted as the success story among the bailed-out euro states, but critics point out that much of its growth has resulted from profits made by multinationals that base their headquarters in Ireland to take advantage of its rock-bottom corporation tax rate, but create few jobs. The Dublin government is predicting that unemployment will still be 11.6% by 2015.
As Stephen King at HSBC puts it: "Far from putting a firewall around Greece, the eurozone has instead ended up with a 'scorched earth' policy where contagion is threatening not just the periphery but the core too."
Italy is now being prescribed more of the same medicine, but with all of its euro partners tightening their belts at the same time, the end result is likely to be a long period of stagnation, high unemployment and political and social conflict over the painful reforms demanded, in what Brian Reading at Lombard Street Research refers to as "Merkozy's pound of flesh".
He rightly insists that restoring growth must come before reforms: "growth eases the passage of structural reforms that bring future benefits. Immediate and brutal retrenchment is medieval bloodletting in hope of a miraculous cure."
Barring such a miracle – or a large-scale intervention by the ECB, which still looks a long way off – there are two paths facing Italy and Greece. They could accept their penance, and effectively become protectorates of Berlin and Brussels.
Or they could seize the opportunity already hinted at by hardline northern Europeans and start to plan for a new economic life outside the single currency. It would be a painful and messy business, involving debt default and capital controls, but at least the inevitable devaluation would hold out some plausible hope of growth.
The single currency began with lofty aims of cementing political unity and building a powerful economic bloc. But far from the hoped-for convergence, the ensuing two decades have exacerbated the competitiveness gap between the wealthy core and the struggling periphery, while reckless cut-price lending by the under-regulated banks helped to paper over the cracks. The tragedy now is that living in an economy strangled by remote-control austerity might cause a resurgence of nationalism.
The great euro Putsch rolls on as two democracies fall
by Ambrose Evans-Pritchard - Telegraph
Europe’s scorched-earth policies have begun in earnest. The inherent flaws of monetary union have created a crisis of such gravity that EU leaders now feel authorized to topple two elected governments.
As I long feared, the flood of cheap credit into Southern Europe and the slow death of Club Med industry by currency asphyxiation have together created such a dangerous situation for world finance that informed opinion is willing to turn a blind eye to EU sovereign trespass. Some even applaud.
The Greeks were ordered to drop their referendum on measures that reduce their country to a sort of Manchukuo, with EU commissars "on the ground", installed in each ministry, drawing up lists of state assets to be liquidated to pay foreign creditors.
Europe had the monetary and fiscal means to contain the EMU debt crisis long enough for Greeks to give or withhold their crucial assent to this ultimatum in December. It chose - under German-Dutch pressure - not deploy those means. Instead it forced Greece to capitulate by cutting off an agreed loan payment.
In Italy, the European Central Bank has engineered the downfall of Silvio Berlusconi by playing the bond markets, switching purchases on and off to enforce compliance with its written dictates ("La Lettera"), and ultimately allowing 10-year yields to spike to 7.45pc to drive him out. Europe’s president Herman Van Rompuy swooped in to Rome to clinch the Putsch. "Italy needs reforms not elections," he said.
We are not that far from use of EU judicial coercion, and then EU police power, and ultimately EU "border troops" - for those old enough to remember Soviet methods of fraternal assistance. Chancellor Angela Merkel tells us that peace in Europe can no longer be taken for granted, and she is right. Her own Gothic actions and her inflexible imposition of 1930s Gold Standard contraction and debt-deflation on Southern Europe is itself preparing the ground for Europe’s civil war (hopefully pacific), a rebellion by the South against the North.
Italy’s youth are turning. Watch the footage of students chanting "democracy" and brandishing their "95 Theses" of Wittenberg revolt as poet Van Rompuy tried to speak in Fiesole. "No to Austerity," starts the Luther List: "Troika out of Greece", "IMF and ECB out of Italy, Ireland, and Portugal", it goes on. "The EU has become ever less accountable to the people of Europe. The undemocratic structures have infiltrated the very structures of the Union," they said.
Behold "the EU’s furious reaction to the Greek government’s effort to seek popular consent over the financial stranglehold imposed on the country. No longer are expressions of popular consent simply ignored, it is now impermissible to consult citizens."
Let us agree that Greece’s Lucas Papademos and Italy’s Mario Monti are excellent men (Mr Monti has been picked for the task by President Giorgio Napolitano, himself a former Stalinist who later switched his loyalties to the sublime Project). But the two good men also represent the EU enforcement machine. Papademos was ECB vice-president. Monti was an EU commissioner for ten years.
Professor Monti enjoys great goodwill in Rome but it is far from clear that he can put together a durable government able to implement Project demands. Antonio di Pietro’s Party of Values has spurned a technocratic regime that lacks democratic legitimacy, saying Italy is "under EU tutelage". La Lega Nord’s Umberto Bossi has denounced the stitch-up.
"The game is getting dangerous," said Il Sole. Some suspect that the Berlusconi camp would not do too badly in snap elections, if allowed, campaigning against the "hated euro and EU bosses". Is that why Brussels is now so afraid of Italy’s voters?
If Mr Monti relies on the Left, how can he comply with EU orders to break the power of the trade unions and impose "Anglo-Saxon" wage-bargaining? A large bloc in parliament will die in a ditch to defend Article 18 of the labour code. Labour minister Maurizio Sacconi warned last week that careless handling of this issue threatens to unleash another round of terrorism in Italy. It is only nine years since Marco Biagi was assassinated by the Red Brigades for threatening the sacred cows of the Sindicati.
No doubt Italy needs a blast of Thatcherism. The country has fallen down the World Bank rankings in ease of doing business from 74 (2009), to 76 (2010), to 80 (2011). Its average economic growth rate has been 0.6pc over the last decade. Productivity and per capita income have declined, and this before the demographic crunch hits with a vengeance.
The old age dependency ratio will reach 59pc by mid-century, compared to 56pc for Germany, 45pc for France, and 38pc for the UK, according to Commission data). But those of us who wrote years ago that Italy’s sclerosis and inflation proclivities were going to cause a train-wreck within the rigours of EMU were told by Europe’s authorities to curb our insolence.
In 2009 the European Commission praised Italy’s "spectacular job creation" and its "greater resilience to external shocks". In 2008 it said Italy was making "good progress" on the Lisbon reform agenda. In 2007 it said Italy’s debt sustainability risk was "broadly in line" with France and Germany.
Italy’s four sets of pension reforms were held out as a shinging example. Finance minister Giulio Tremonti was feted in Brussels, lauded for his iron discipline and primary budget surplus.
And now these same EU bodies tell us that Italy’s failure to grasp the nettle of reform and tackle its debts is so egregious that Europe must step in to overthrow an elected government.
Let us end this EU lie - propagated by Berlin’s uber-bully Wolfgang Schauble - that Italy is suddenly guilty of economic crimes and debt debauchery. What has changed is the industrial recession in Italy that began over the late summer and the likelihood of full-blown depression next year. As you can see from this chart below, all three monetary aggregates in Italy have been collapsing for months, a lead indicator of Hell to come.
The ECB could have prevented this monetary implosion in Italy. Instead it tightened further, without a squeak of protest from the governor of the Banca d‘Italia, then Mario Draghi.
Europe’s own policies of synchronized fiscal and monetary contraction are surely to blame for this sudden lurch downwards in Italy’s prospects.
We all agree that Italy’s economic model is unfit for the 21st Century, but it was also unfit for EMU. The Schumpeterian shock was needed before Italy locked its self into the D-Mark forever.
It is too late now for Italy to claw back 40pc in lost labour competitiveness against Germany within the constraints of monetary union. Any attempt to do so by grinding debt deflation will prove self-defeating for a country with a public debt stock of 120pc of GDP.
Such a policy - already tested to destruction in Greece - will itself cause Italy’s debt dynamics to spiral out of control. There is no possible way at this late stage to reconcile Italy’s needs for massive devaluation with Germany’s hard-money doctrines. One or the other must give.
Germany Resists Austerity in Budget
by William Boston, Andreas Kissler And Matthias Rieker - Wall Street Journal
As Germany puts the final touches on its 2012 budget, it is becoming increasingly clear that Europe's largest economy is a glaring exception at a time when a worsening debt crisis is forcing other major capitals to pull their belts ever tighter.
Berlin is enjoying its lowest unemployment in decades and the government is still finding money to spend on infrastructure and income tax cuts and to preserve German influence in the French-German aerospace group European Aeronautic Defence & Space Co. by buying shares in the company.
But in France, Europe's second-largest economy, the government has presented two austerity budgets as it tries to preserve its triple-A credit rating. Greece's government has been forced to slash public-sector wages and shut down vital public services, even closing some hospitals. And Italy, one of the world's biggest economies and a member of the Group of Seven leading industrialized nations, is being monitored by the International Monetary Fund.
Of course, Germany can't escape the global economic slowdown. Growth in German gross domestic product is expected to grind nearly to a halt, falling to just 0.8% next year after about 2.9% this year, the European Commission forecast this week. Yet even as growth slows, Germany remains on track to balance its budget by 2016 and even has money to spend.
"We now have stronger tax revenues, rising wages and our companies are more competitive. That is why we can consider doing these things now," said Peter Altmaier, chief parliamentary whip for Chancellor Angela Merkel's Christian Democrats.
The German parliament put the final touches on the 2012 budget on Friday. Bolstered by strong tax revenues, the final deficit this year will fall to €22 billion from a projected €48 billion. Parliament also cut the forecast budget deficit for 2012 to €26.1 billion from an original forecast of €27.2 billion. Federal spending is expected to be unchanged at about €306 billion.
Germany's robust job market—unemployment is 7%—is creating a windfall in employment taxes. As a result, federal tax revenue is expected to be €2.7 billion higher next year than previously forecast, at about €250 billion.
The government is also taking steps to bolster its finances. The new budget earmarks about €5 billion in revenue from privatizations, which could include shares held in telecommunications giant Deutsche Telekom AG and the postal agency Deutsche Post AG. And the government will continue to cut public-service employees, reducing the number of government workers by 1,300 to 254,200.
One area of public service won't suffer, however. The finance ministry will see its staff increase "as a result of increasing tasks involved in stabilizing the euro," the budget committee said.
Despite its fiscal health, Germany isn't planning significant new spending on major projects, but it does have leeway on spending. The government announced Friday, for example, that it would earmark €1 billion (about $1.36 billion) in the 2012 budget to purchase a 7.5% stake in EADS in order to preserve Germany's influence on the board. The stake is now held by Daimler AG, which wants to sell the shares.
Germany has also found €1 billion for repairs to the national railway system and highways. And in an apparent political trade-off, the government is considering creating a special €1 billion fund to help communities hit by the closure of military bases, a move to buy political support from the states and local communities for a controversial plan to streamline the German military.
In a nod to families, the government is also considering a new €100-a-month subsidy for parents who send their children to private nannies or day care rather than state-sponsored day-care centers.
And to thank German citizens for the burdens they have shouldered during the euro-zone debt crisis, leaders of Ms. Merkel's center-right ruling coalition last week agreed to restructure income tax rules in a way that would result in an effective tax cut of about €6 billion in 2013, just in time to give a boost to Ms. Merkel's re-election campaign that same year.
In the face of growing public outrage over the rise of a new class of working poor in Germany, Ms. Merkel has done an about-face on the issue of minimum wages. Germany has no statutory minimum wage like the U.S. or many European countries. Instead, unions and employers work out minimum pay on a sector-by-sector basis.
But there are still many low-paying workers such as florists, hairdressers and sanitation workers, who earn such low wages that they often have to supplement their income with social-welfare payments. In some parts of the country full-time florists and gardeners earn as little as €2.75 an hour.
In the past, Ms. Merkel has opposed a minimum wage. Now, she is considering establishing a commission of unions and employers who would be charged with establishing minimum wage levels for those industries that don't have them now.
The issue won't cost the government a single euro, but Ms. Merkel's switch here shows that she believes Germany's economy is strong enough to force small companies to pay employees a liveable wage. The move has drawn opposition within her Christian Democrat party, but is supported by a large majority of German voters.
As much as national budgets are created to pay a country's bills, budgets are also intensely political affairs. And while the rest of Europe groans under the weight of the debt crisis, Ms. Merkel is using the 2012 budget to demonstrate to her voters that even in the midst of the worst global economy in decades most German citizens have never had it so good.
Berlin Prepares for Possible Greek Exit from Euro Zone
by Spiegel
The German government has been simulating a range of scenarios to prepare for a possible exit of Greece from the euro zone. Under a worst-worst-case scenario, the country could descend into a vicious circle of misery that could last decades.
The German government is preparing for Greece's possible exit from the euro zone in the event that the country's new government decides not to continue with the previously agreed austerity programs. Experts at the German Finance Ministry have been simulating a variety of scenarios based on different assumptions, SPIEGEL has learned.
A so-called baseline scenario is based on the expectation that the situation does not get too bad. Under this scenario, Greece's exit from the monetary union could even contribute to the strengthening of the euro zone in the long term, following an initial period of turbulence. The thinking goes that the currency union could be more stable without its weakest member.
Admittedly, peripheral euro-zone members like Spain and Italy would still face challenges, but the assumption is that they would be better able to tackle their problems without the additional burden of the Greek crisis. According to the assessment of German government experts, these countries may currently be struggling to get access to money, but unlike Greece they are not close to insolvency.
Under the Finance Ministry experts' worst-case scenario, developments in the euro zone would be less favorable. In this case, Italy and Spain would find themselves in the crosshairs of the global financial markets, and their borrowing costs would rise.
In this simulation, the European backstop fund, the European Financial Stability Facility (EFSF) would be forced to supply those countries with fresh money. For this to succeed, the experts argue, the EFSF should be expanded as quickly as possible so that it has an effective lending capacity of €1 trillion ($1.4 trillion).
Vicious Circle
In addition, the government experts also looked at a so-called worst-worst-case scenario. In this model, Greece's new currency would dramatically devalue against the euro. That would have the positive effect of making the country's exports cheaper, but the negative effects would outweigh the benefits. The country's national debt would rise despite a haircut, because Greece's debts would still be denominated in euros.
The country's credit rating would be immediately downgraded again, and Greek companies would struggle to get access to money because the country's banks would also be cut off from international capital markets.
Many firms would go bankrupt because their debts would also be denominated in euros, with the result that many more workers would lose their jobs. Domestic consumption would collapse, aggravating the downturn. The country could take decades to free itself from this vicious circle, and other nations might also be drawn into the vortex. The German government experts do not, however, consider this scenario to be the most likely one.
Down with the Eurozone
by Nouriel Roubini - Project Syndicate
The eurozone crisis seems to be reaching its climax, with Greece on the verge of default and an inglorious exit from the monetary union, and now Italy on the verge of losing market access. But the eurozone's problems are much deeper. They are structural, and they severely affect at least four other economies: Ireland, Portugal, Cyprus, and Spain.
For the last decade, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were the eurozone's consumers of first and last resort, spending more than their income and running ever-larger current-account deficits. Meanwhile, the eurozone core (Germany, the Netherlands, Austria, and France) comprised the producers of first and last resort, spending below their incomes and running ever-larger current-account surpluses.
These external imbalances were also driven by the euro’s strength since 2002, and by the divergence in real exchange rates and competitiveness within the eurozone. Unit labor costs fell in Germany and other parts of the core (as wage growth lagged that of productivity), leading to a real depreciation and rising current-account surpluses, while the reverse occurred in the PIIGS (and Cyprus), leading to real appreciation and widening current-account deficits.
In Ireland and Spain, private savings collapsed, and a housing bubble fueled excessive consumption, while in Greece, Portugal, Cyprus, and Italy, it was excessive fiscal deficits that exacerbated external imbalances.
The resulting build-up of private and public debt in over-spending countries became unmanageable when housing bubbles burst (Ireland and Spain) and current-account deficits, fiscal gaps, or both became unsustainable throughout the eurozone's periphery. Moreover, the peripheral countries’ large current-account deficits, fueled as they were by excessive consumption, were accompanied by economic stagnation and loss of competitiveness.
So, now what?
Symmetrical reflation is the best option for restoring growth and competitiveness on the eurozone's periphery while undertaking necessary austerity measures and structural reforms. This implies significant easing of monetary policy by the European Central Bank; provision of unlimited lender-of-last-resort support to illiquid but potentially solvent economies; a sharp depreciation of the euro, which would turn current-account deficits into surpluses; and fiscal stimulus in the core if the periphery is forced into austerity.
Unfortunately, Germany and the ECB oppose this option, owing to the prospect of a temporary dose of modestly higher inflation in the core relative to the periphery.
The bitter medicine that Germany and the ECB want to impose on the periphery – the second option – is recessionary deflation: fiscal austerity, structural reforms to boost productivity growth and reduce unit labor costs, and real depreciation via price adjustment, as opposed to nominal exchange-rate adjustment.
The problems with this option are many. Fiscal austerity, while necessary, means a deeper recession in the short term. Even structural reform reduces output in the short run, because it requires firing workers, shutting down money-losing firms, and gradually reallocating labor and capital to emerging new industries.
So, to prevent a spiral of ever-deepening recession, the periphery needs real depreciation to improve its external deficit. But even if prices and wages were to fall by 30% over the next few years (which would most likely be socially and politically unsustainable), the real value of debt would increase sharply, worsening the insolvency of governments and private debtors.
In short, the eurozone's periphery is now subject to the paradox of thrift: increasing savings too much, too fast leads to renewed recession and makes debts even more unsustainable. And that paradox is now affecting even the core.
If the peripheral countries remain mired in a deflationary trap of high debt, falling output, weak competitiveness, and structural external deficits, eventually they will be tempted by a third option: default and exit from the eurozone. This would enable them to revive economic growth and competitiveness through a depreciation of new national currencies.
Of course, such a disorderly eurozone break-up would be as severe a shock as the collapse of Lehman Brothers in 2008, if not worse. Avoiding it would compel the eurozone's core economies to embrace the fourth and final option: bribing the periphery to remain in a low-growth uncompetitive state. This would require accepting massive losses on public and private debt, as well as enormous transfer payments that boost the periphery’s income while its output stagnates.
Italy has done something similar for decades, with its northern regions subsidizing the poorer Mezzogiorno. But such permanent fiscal transfers are politically impossible in the eurozone, where Germans are Germans and Greeks are Greeks.
That also means that Germany and the ECB have less power than they seem to believe. Unless they abandon asymmetric adjustment (recessionary deflation), which concentrates all of the pain in the periphery, in favor of a more symmetrical approach (austerity and structural reforms on the periphery, combined with eurozone-wide reflation), the monetary union's slow-developing train wreck will accelerate as peripheral countries default and exit.
The recent chaos in Greece and Italy may be the first step in this process. Clearly, the eurozone’s muddle-through approach no longer works. Unless the eurozone moves toward greater economic, fiscal, and political integration (on a path consistent with short-term restoration of growth, competitiveness, and debt sustainability, which are needed to resolve unsustainable debt and reduce chronic fiscal and external deficits), recessionary deflation will certainly lead to a disorderly break-up.
With Italy too big to fail, too big to save, and now at the point of no return, the endgame for the eurozone has begun. Sequential, coercive restructurings of debt will come first, and then exits from the monetary union that will eventually lead to the eurozone’s disintegration.
Greece and Italy Seek a Solution From Technocrats
by Rachel Donadio - New York Times
Under the white-hot pressure of the bond markets and the glare of European leaders, both Greece and Italy snapped into action on Thursday, looking to technocratic leaders to pull them back from the brink of chaos.
Greece named Lucas Papademos, a former vice president of the European Central Bank, interim prime minister of a unity government charged with preventing the country from default. In Italy, momentum was building behind Mario Monti, a former European commissioner, to replace the once-invincible Prime Minister Silvio Berlusconi as early as Monday.
The question now, in both Italy and Greece, is whether the technocrats can succeed where elected leaders failed — whether pressure from the European Union backed by the whip of the financial markets will be enough to dislodge the entrenched cultures of political patronage that experts largely blame for the slow growth and financial crises that plague both countries.
Some said there was cause for optimism. "First, the mere fact that they have been asked in such difficult circumstances means that they have a mandate," said Iain Begg, an expert on the European monetary union at the London School of Economics. "Granted, it’s not a democratic one, but it flows from disaffection with the bickering political class."
The conventional wisdom from European Union leaders in Brussels has been that greater political consensus in Greece and a change of leadership in Italy could help restore market confidence in the euro. But with investors increasingly viewing European sovereign debt as a toxic asset, it seems doubtful that the markets will truly calm down until both Italy and Greece do more than apply fiscal bandages and until the European Union can put more firepower in its bailout mechanisms.
On the surface, Greece and Italy seem remarkably alike. Both countries have entrenched patronage networks that predate the European Union by centuries and suffocating regulations and work rules. And both Mr. Papademos, 64, and Mr. Monti, 68, the president of Bocconi University in Milan, have close ties to European Union officials, who are taking a strong hand in managing the affairs of both countries because the fate of the euro hangs in the balance.
Both face daunting changes. In Italy, a new government will be asked to carry out labor and tax reforms and other growth-enhancing measures. It will also have to write a new electoral law.
In Greece, the government must push through unpopular wage cuts and public sector layoffs in exchange for more foreign aid, and then try to make more structural changes during its brief mandate than the country has introduced in 30 years.
But the similarities end there. Greece is effectively bankrupt and needs a steady hand to guide it. Prime Minister George A. Papandreou ran out of political capital trying to impose austerity on a restive country. Some have criticized him for failing to carry out reforms fast enough, while no party alone has wanted to bear the political cost of stepping into his shoes.
Mr. Papademos must also negotiate with the European Union and banks on the terms of a delicate voluntary write-down of Greek private debt so as to avoid a default — amid a deep recession, a credit crunch and a climate of growing social unrest.
In Italy, where the economic fundaments are far stronger than those of Greece, there is a new wind of optimism mixed with trepidation this week, as the debt crisis led to the abrupt end of the Berlusconi era.
"It’s a historic moment," said Roberto Napoletano, the editor in chief of the business daily Il Sole 24 Ore, which has been running campaigns to alert Italians that their savings and businesses are at risk without credible leadership. "Italy has to act, but it can do it."
Indeed, Italy pulled back from the brink on Thursday as investors gained confidence that Mr. Berlusconi would be gone by Monday, replaced by Mr. Monti, an economist with an international reputation. That impression was underscored by the sight of Mr. Monti arriving at the Quirinal Palace on Thursday, where he met for two hours with Italy’s president, Giorgio Napolitano, who is responsible for picking a new head of government. Mr. Berlusconi himself sent Mr. Monti a telegram wishing him "fruitful work in the interests of the country," the news agency ANSA reported.
In contrast to Greece, which resents outside interference, Italy has often looked to technocratic leaders backed by outside powers in moments of political transition. It did so in the early 1990s, after the collapse of the postwar political order, and again in the mid-1990s, when a unity government pushed through changes that helped Italy into the euro.
Today, many in the governing class see a technocrat backed by the European Union as the only force strong enough to dislodge an entrenched culture of political patronage that has grown worse under Mr. Berlusconi, despite the fact that he was elected three times on a reform platform.
"We have lost a capital of confidence," Mr. Napoletano said, adding that it was time for the country to "invest politically in a government of people who have the capacity to do what for 20 years no one has done in Italy."
By that, he said, he meant making the structural changes that economists say Italy needs to quicken growth and stay competitive, including making its labor market more flexible, creating a more efficient tax code and tax collection system, and cutting red tape. Since it was re-elected in 2008, the Berlusconi government has done virtually none of those things.
While Italy is highly indebted and suffering anemic growth — projected at only 0.1 percent in 2012 and 0.7 percent in 2013, according to the European Commission — it has considerable assets. It has a high domestic savings rate and a manageable budget deficit, and the northern industrial region is considered among the wealthiest areas of Europe.
But no one doubts the need for shaking things up. Asked this week why there was no figure like Margaret Thatcher in Italy, Mario Baldassarri, the chairman of the Senate Finance Committee, singled out the political class, saying, "Because in Italy there are 3,000 or 4,000 people who count on waste and theft of public spending and now they are more powerful than 60 million people."
But there were signs on Thursday that the status quo was giving way. The breakthrough came when a bloc in Mr. Berlusconi’s People of Liberties party appeared ready to support a government led by a nonpolitician, which would require a majority in Parliament. That goal seemed to be within reach, since the main opposition Democratic Party has already said it would back such a government, as would several crucial centrist groupings.
There is much work to do. "I’m afraid the costs of disassembling a system of privileges and advantages, not just of the political class but also many people is hard," said Beppe Severgnini, a columnist for Corriere della Sera and the author of "Mamma Mia!" a new book about Mr. Berlusconi. "The E.U. is only a babysitter," he added, "it’s not a magician."
Greece is a far different, and far more challenging, situation. Greeks have greater antagonism toward the European Union, and, to date, greater antagonism to structural changes. Although the urgency of the debt crisis may yet change the picture, past efforts at unity governments have been unsuccessful in a volatile society still scarred by a civil war between right and left in the late 1940s and a military dictatorship from 1967 to 1974.
Some see the incoming prime minister, Mr. Papademos, as too beholden to the foreign lenders who helped bring Greece to its knees. Others say that as a technocrat, he will be less corrupt than the political class and may actually effect change.
The fear among members of the Greek political class is that if Mr. Papademos fails, they will take the blame, and if he succeeds — by laying off tens of thousands of public workers, cutting pensions and privatizing state properties — they will lose their power.
There is also skepticism about the extent of Mr. Papademos’s powers in the face of the country’s ills. "If unemployment is 20 percent at the end of the year, no politician, no political system, no technocrat can sustain such a mess, such a social burden," said Stelios Kouloglou, the director of an independent news Web site, tvsx.gr, in Athens. "That’s the problem."
Fitch Cuts Hungary’s Outlook
by Veronika Gulyas - Wall Street Journal
Hungary on Friday evening saw Fitch Ratings, the last ratings firm that still had a positive outlook on the country, turn gloomy and cut its forecast to negative, just like Standard & Poor’s and Moody’s.
Hungary already feared a downgrade of its sovereign-debt rating to junk category by the latter two agencies, so the Friday-night blow came from the blind side. Fitch Ratings, unlike the other two, hasn’t sent its team to Hungary to assess the situation over the past few weeks, making the decision all the more unexpected.
Fitch said a worse-than-anticipated economic slowdown, evidence of private-sector capital outflows or problems in the banking sector, a rise in the risk premium or fiscal financing pressure could lead to a downgrade on Hungary’s credit, adding to material weakening in the government’s commitment to fiscal consolidation.
Hungary’s economic growth has indeed slowed significantly, with analysts forecasting growth of only around 1.5% this year, and even less next year—if we don’t count those who foresee recession in 2012. Hungary, a small and open economy, suffers from slowing euro-zone economic growth, stagnating household consumption, as well as heavy taxes and government austerity measures.
The cabinet, which has pledged to keep to strict deficit targets of below 3% of GDP this year and next, is trying to manage the squeeze. But at times it has applied unorthodox measures such as extraordinary "crisis" taxes in certain sectors, or special mortgage-repayment options for households with foreign-currency home loans.
The government was quick to say it disagrees with Fitch’s outlook change late Friday, saying it’s committed to cutting public debt further to 73% of GDP by the end of this year, versus Fitch’s forecast of 76% of GDP. The economy ministry also said it will take all measures to reach the 2.5% of GDP budget-deficit target next year.
The ministry said it expects Fitch will revise its "overtly pessimistic" view on Hungary at the beginning of 2012 when the final data on the government’s foreign currency mortgage scheme, and the final budget figures are published.
Chinese ratings agency threatens US with new debt downgrade
by Peter Beaumont - Guardian
The head of China's biggest ratings agency, Dagong Global Credit Rating, is warning that it may downgrade the US's sovereign debt rating again because of Washington's failure to tackle the federal budget deficit. The remarks by Dagong's chairman, Guan Jianzhong, to be broadcast in an interview with al-Jazeera on Saturday morning, come at the end of another week of deep turmoil for the world economy.
Dagong, which has maintained a pessimistic outlook on US fiscal policy, has been leading the charge to downgrade US debt over the last 12 months, lowering the US rating from AA to A+ a year ago. In August it downgraded US debt again, to A. Days later, Standard & Poor's followed in its wake, becoming the first western agency to downgrade US debt after the threat of a default was narrowly avoided following weeks of political squabbling in Washington over whether President Obama should be allowed to raise the US debt ceiling.
Guan's intervention comes as another embarrassing political standoff over budget policy looms in Washington. The cross-party "supercommittee" given the job of finding ways to cut the budget deficit is reportedly deadlocked, with Republicans refusing to countenance the tax rises being suggested by Democrats. The committee is due to report by 23 November, but there are fears they could fail to reach agreement, prompting a new crisis.
Founded in 1994 by the Chinese government and the People's Bank of China, Dagong is the only credit ratings agency in China that grades foreign sovereign debt and bonds. In an interview with Talk to Al-Jazeera, Guan agrees that it is almost inevitable that his agency will cut America's debt rating once again, arguing that the only solution open to the US economy is further quantitative easing.
"The measures available to them [the US] cannot be effective so they have another way out which is to depreciate the US dollar, to print more money," he says. "And that will also make it a lot worse, this has affected their credit and it is negatively affecting their credit prospects – so that their overall ability to pay back their debt will continue to go down. Asked directly if he believed another ratings cut was inevitable, Guan replies: "I think so."
He goes on to say: "We are continuing to monitor this closely. First of all we need to look at this year's economic growth and then predict next year's trends. If in the year 2012 the overall projections are not very good, meaning that the sources of payment – and liabilities – are bad and cannot be changed, or change for the worse, then we will lower the rating once again. Any further downgrading of the US credit rating, while making more US borrowing more expensive, would also be a matter of concern to Beijing.
China is the largest foreign buyer of US government debt – accounting for around third of all foreign-held US securities – despite the fact it has gradually reduced its holdings since the S&P downgrade and has also lost heavily on its large holdings of US currency.
Since the summer – and the debt-ceiling crisis – China has become ever more vocal about what it describes as the US "addiction" to debt, warning in August that more "devastating credit rating cuts" and global economic turmoil were around the corner unless Washington learned to live within its means.
The Xinhua news agency issued a commentary that cautioned: "The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone."
Bank of England to downgrade UK growth forecast
by Angela Monaghan and Kamal Ahmed - Telegraph
The Bank of England is set to give a gloomy update on the state of the British economy, sharply downgrading growth forecasts and issuing a stark warning on the eurozone debt crisis.
The Bank is expected to cut its 2011 and 2012 growth forecast to about 1pc from its August forecast of about 2pc when it publishes its latest quarterly Inflation Report on Wednesday. Sir Mervyn King, the Bank’s Governor, is likely to emphasise there are serious downside risks to the UK growth outlook because of the threat posed by the eurozone’s continued problems.
On the domestic front, the manufacturing PMI survey showed the sector unexpectedly shrank in October, boding ill for the economy in the fourth quarter. A squeeze on household incomes caused by low wage growth, high inflation and rising unemployment, as well as fiscal austerity, is also expected to weigh on consumer spending.
A spokesman for the Treasury said yesterday: "The National Institute of Economic and Social Research last week stated that the UK economy continues to grow. But what is clear is that the UK is not immune from the problems faced by its trading partners, including in the eurozone.
"The Government is doing all it can to protect the UK economy and make sure that it remains a relative safe haven in the face of international instability and uncertainty, whilst also putting in place the longer-term conditions needed for strong and sustainable growth."
Whitehall sources have revealed that there is increasing frustration within David Cameron’s inner circle over the lack of substance in the Government’s growth plan, which is due to be announced alongside the Chancellor’s Autumn Statement on November 29. "Every time we try and put something in, the Liberal Democrats say that we should take it out," one source said.
One particular area of tension is employment law, where the Conservatives would like to see changes to the present system which is seen as being weighted in favour of the employee. The Prime Minister wants to make it easier to sack under-performing staff and ensure that people who take unsuccessful employment tribunals against their employers have to pay at least part of the costs. "It is not as if Nick Clegg is coming up with a load of ideas of his own," said one official of the tensions within the Coalition.
The Bank of England is also expected to say that inflation will fall sharply in 2012, as temporary factors, including January’s VAT rise, fall out of annual comparisons. Data published by the Office for National Statistics on Tuesday is expected to show inflation eased slightly to 5.1pc in October. Lower petrol and food prices and lower shop price inflation are expected to offset price rises among some utility companies.
Bond market vigilantes turn on Italy
by Tom Stevenson - Telegraph
I remember a former editor of this newspaper instructing the City desk in 2006 to get up to speed on collateralised debt obligations (CDOs). Most of the people in the room at the time had not even heard of these. Even less did they have any idea what they were or how toxic they would turn out to be. We soon found out, however, as the unfolding financial crisis forced us to get to grips with the language of derivatives.
Today, it's bonds you need to understand. The global bond market is worth $100 trillion (£62 trillion). That's around twice the size of the world's equity markets and a number so large it is scarcely comprehensible.
Last week, the bond market's so-called vigilantes turned their fire on Italy and, as with Greece before it, they quickly drove the cost of borrowing for its government to unsustainable levels. Yet again, the bond market forced politicians to think the unthinkable, casually stepping over every line they attempted to draw in the sand.
I think the markets are about to step over another critical line, forcing a rethink of the idea that the European Central Bank (ECB) is not the eurozone's lender of last resort. Until last week, it could plausibly pretend it was not, but the storm has blown across the Ionian Sea to a country that is peripheral only in terms of its geography.
That has changed everything. Accounting for more than a sixth of European GDP and fully a quarter of the eurozone's outstanding government bonds, Italy is beyond the reach of any institution with less than the ECB's unlimited firepower in the sovereign bond market.
It is widely held that there are only two possibilities for Europe now. Either Germany gets over its historically understandable fear of inflation and frees the ECB to underpin the price, and so drive down the yield, of Italian bonds, or the single currency is dead.
Forget the constitutional constraint on the ECB bailing out individual countries; only the really big bazooka of open-ended quantitative easing can hold the eurozone together now. The fundamental problem in Europe today is actually not one of liquidity, it is one of growth and a chronic lack of competitiveness.
Measures which obsess over austerity and fail to kick-start the region's sclerotic economy are doomed to failure because you cannot deflate your way to sustainable growth. Europe is already heading into recession, which can only make the fiscal outlook worse.
The big question is what it will take for Germany and the ECB to accept that the only way to make monetary union work is to move towards fiscal and political union backed by a real central bank.
What will trigger the hard-liners' capitulation, I think, is when the crisis ships up on Germany's borders, threatening catastrophic bond market losses on the banks and insurers that control the country's vast savings.
What does this mean for investors? Certainly, it means more volatility in the short term, although a quicker than expected move towards quantitative easing (QE) could create a painful spike for anyone sitting on the sidelines. That said, capital preservation will be key and that means paying less attention to what a company does than how well financed it is.
Fortunately, many companies are in much better shape than their governments, and that is not always reflected in the prices of either their shares or bonds. Default rates could be lower than the market implies, which might make some high-yield bonds attractive. Meanwhile, the dividends on blue-chip shares provide good support.
Investors must also pay attention to where a company's customers are. Weaker global growth could help governments in countries like China and Brazil step back from monetary tightening as inflation dips again.
The long-term growth in consumption in those markets, which has been an unfashionable story this year, could gain momentum if risk assets come back into favour. Finally, investors must begin to think seriously about the likelihood of inflation in developed markets becoming entrenched further down the track if and when there is more QE on both sides of the Atlantic. Time to extend that bond market education to index-linkers, I think.
EU turmoil revives calls for referendum
by Bruno Waterfield - Telegraph
David Cameron is to face renewed pressure to call a referendum after senior European Commission officials said the overhaul of the eurozone would trigger a national poll in Ireland.
European leaders will redraft key treaties to ensure that beleaguered economies cannot borrow or spend too much in future as a condition of receiving billions of euros in rescue packages.
However, the treaty changes will involve a transfer of sovereignty, triggering an Irish referendum. The Irish vote, to be proposed at a European Union summit next month, will increase demands in Britain for a popular vote on Europe, setting off calls for referendums across Europe in countries such as Holland, Finland and France.
The Government fears the pace of developments in Europe, including the imposition of "technocrat governments" in Greece and Italy, combined with a German demand for treaty change, will make a campaign for an EU referendum unstoppable. Ministers have stopped saying that they plan to use treaty change to take powers back from the EU. This follows private warnings from Germany that it is not willing to trade eurozone "fiscal union" for British opt-outs.
Bill Cash, chairman of the Commons scrutiny committee, said last night he was concerned that the emergence of French plans for a twin-track Europe, regular eurozone summits and German domination of EU decision-making amounted to a serious change in Britain's place in Europe.
"Despite all the talk about it being a limited treaty change this is real fundamental change," he said. "Germany is pushing with determination to have a Europe made in its own image. The changes are a fundamental change in the relationship between Britain and Europe. A referendum is absolutely demanded."
Douglas Carswell, the Tory MP for Clacton, said the pace of change, with France and Germany raising the idea of expelling Greece from the eurozone last week, "shows that the Westminster tribe and the mandarins are completely out of their depth". He has called on the Prime Minister to spell out the British strategy in Europe and to reshuffle the team of negotiators involved in EU treaty talks.
"Unless we are to be overwhelmed, we need a strategy," he said. "Cameron must fire our useless dealmakers and put any new deal to the people."
On Wednesday, Nick Clegg, the Deputy Prime Minister, talked with EU officials in Brussels to see if treaty change and calls for popular votes could be averted. He warned Herman Van Rompuy, the European Council president, that his plan to present a report on "limited treaty change" to an EU summit in December would open a "Pandora 's box" across Europe.
"It is not just a British thing," he said. Similar fears would be expressed by politicians in Austria, Finland, Ireland or even France, "where they have had pretty unhappy experiences with referendums on Europe in the past".
Catherine Day, the secretary-general of the European Commission, said treaty change proposals to remove sovereignty over national budgets for euro members will need to be passed by a popular vote in Ireland.
The proposed changes would amount to a "big transfer of sovereignty", said an unnamed commission official, working for the EU-IMF "troika" running Ireland, Greece and Portugal. "Personally, I would not support something like this if it did not have democratic sanction," he told the Irish Times.
Ms Day, an Irish national and the most senior official in the commission, has conceded that a vote in Ireland would be necessary under the country's constitution.
Irish voters have twice rejected European treaty changes in referendums but on both occasion they were passed after the EU demanded second votes. Last week, the Irish government warned that it would have "great difficulty" passing a new treaty at a time when Ireland was undergoing a deeply unpopular EU-IMF austerity programme.
David Rosenberg: We Are In Year 4 Of A 7-10 Year Depression
by Cullen Roche - Pragmatic Capitalism
David Rosenberg of Gluskin Sheff joined Consuelo Mack on Wealth Track this weekend to discuss his outlook for the economy.
Rosenberg isn’t just bearish. He say the US economy is in a modern day depression similar to what Japan has suffered from for the last 20 years. He bases this view on the idea that de-leveraging tends to coincide during a prolonged period of economic weakness that is not merely consistent with recession.
Rosenberg says we’re just 4 years into a depression that will likely last 7-10 years. He says the economy is likely to begin contracting again in 2012 and that the employment situation is going to deteriorate further. He calls the MF Global bankruptcy the Bear Stearns of 2011.
Contrary to common misconception, Rosenberg is not bearish on everything. After being a long-time US Treasury bull, Rosenberg is sounding a bit less bullish on government bears. He says the love affair is over. He now prefers corporates and income at a reasonable price.
BofA Says Regulators May Limit Transfer of Merrill Derivatives
by Hugh Son - Bloomberg
Bank of America Corp. may be prevented by regulators from shifting derivatives contracts into the books of a deposit-taking unit, potentially forcing the lender to hand over more collateral to counterparties.
The lender has designated the retail-deposit unit, Bank of America NA, as the new counterparty on some Merrill Lynch contracts after the company's credit ratings were cut in September, it said last week in a filing. The Federal Reserve and Federal Deposit Insurance Corp. have disagreed over the moves, and they are now discussing whether to allow future transfers, according to people with knowledge of the matter.
"Our ability to substitute or make changes to these agreements to meet counterparties' requests may be subject to certain limitations, including counterparty willingness, regulatory limitations on naming Bank of America NA as the new counterparty, and the type or amount of collateral required," the lender wrote in the quarterly regulatory filing.
At stake for Bank of America is the power to curb billions of dollars in collateral payments to counterparties that could be required after a credit-rating downgrade. The company, which has lost more than half its market value this year amid rising expenses from soured mortgages, is vulnerable to further rating cuts, the bank said in the Nov. 3 regulatory filing.
Limits on moving contracts from Merrill Lynch to the deposit unit could "adversely affect" results of operations, the Charlotte, North Carolina-based bank said in the filing. The transfers lower collateral obligations because the retail unit still has a higher rating than the Merrill Lynch subsidiary after the Sept. 21 downgrades from Moody's Investors Service.
Shifting Risk
"It's a game of 'move the risk,'" said Mark Williams, a former Federal Reserve examiner who lectures on financial-risk management at Boston University. "It makes sense for Bank of America, but the broader implication is that it makes the retail operations potentially riskier. If there is another downgrade, you have the possibility of falling off a credit cliff."
The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, people familiar with its position said Oct. 18. The FDIC, which would have to pay depositors in a failure, objected, the people said.
The other two major ratings firms, Standard & Poor's and Fitch Ratings, are re-evaluating Bank of America and may also cut its credit grades, the lender said in the quarterly filing. The full scope of damage from a credit-rating downgrade is "inherently uncertain" because it depends upon the behavior of counterparties and customers, the bank said.
Collateral Estimates
Derivatives are financial instruments used to hedge risks or for speculation. They're derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates. The contracts often require counterparties to post collateral in amounts that can increase if their creditworthiness deteriorates.
Bank of America's holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of the contracts at the end of June, according to data compiled by the Comptroller of the Currency. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades. The company is the second-largest U.S. lender by assets.
In August, the bank said a two-level downgrade by all ratings companies would require it to post $3.3 billion in additional collateral and termination payments, based on agreements as of June 30. As of Sept. 30, the bank could have been required by counterparties to produce $4.9 billion beyond what it had already posted, according to last week's filing. Of that, $3.2 billion resulted from the Moody's downgrade.
JPMorgan's Holdings
Bank of America also said the impact of further downgrades would be more severe than in previous projections. A two-level cut could have amounted to $6.6 billion in collateral demands as of Sept. 30, it said. The firm held cash and securities collateral of $93 billion as of Sept. 30, and had posted $87.8 billion, about 30 percent more than the end of 2010.
Bank of America's rating is now four grades below the one Moody's assigned to JPMorgan Chase & Co., which became the biggest U.S. bank by assets this year, and a level below the rating given to Citigroup Inc., the No. 3 lender. JPMorgan's deposit-taking entity, JPMorgan Chase Bank NA, contained 99 percent of the New York-based firm's $79 trillion of notional derivatives, according to the OCC.
'Not FDIC Insured'
Andrew Gray, a spokesman for the FDIC, declined to comment today on Bank of America's filing. The Fed [was closed Friday] for the Veteran's Day holiday, and Barbara Hagenbaugh, a spokeswoman, didn't respond to messages seeking comment. "These derivative trades are not FDIC insured," said Jerry Dubrowski, a Bank of America spokesman. "Other financial institutions hold higher derivative balances in their banking entities."
Bank of America Chief Financial Officer Bruce R. Thompson discussed the transfers on a conference call with analysts last month after Bloomberg News reported that federal regulators were at odds over the movements.
"We had worked very hard over the course of the last nine months to be prepared to the extent that we did receive a downgrade, and feel very good about the way that we've minimized the potential impact," he said on the Oct. 18 call. The moves are part of "the normal course of dealings that we've had with counterparties since Merrill Lynch and BofA came together."
Geithner tells Europe to "move quickly" as instability hurts US and Asia
by Josephine Moulds - Telegraph
Europe must "move quickly" to control its spreading debt crisis, because the volatility it is causing is the "central challenge" to global growth, US Treasury Secretary Timothy Geithner said.
Speaking at the Asia Pacific Economic Cooperation (APEC) summit in Hawaii this weekend, Mr Geithner said: "We are all directly affected by the crisis in Europe, but the economies gathered here are in a better position than most to take steps to strengthen growth in the face of these pressures from Europe."
Mr Geithner added that the basic framework for the European recovery was good."But we need to see it put in place with the speed that markets require and with the force that restores confidence," he said. "They’re moving ahead. We just need to see them move a little more quickly and with a little more force behind it."
Despite being thousands of miles away, Europe has been the main preoccupation at the meeting of Pacific Rim leaders in Honolulu. At the annual summit, hosted this year by US President Barack Obama,Mr Obama had hoped to focus on a free-trade pact for the region, but debates were often hijacked by concerns about Europe.
The 21 countries that make up APEC promised no direct measures to help European countries, although they recognised the threat the European crisis posed to global growth. Singapore’s Prime Minister Lee Hsien Loong, said: "We are preoccupied, and I think for the time being rightly so, with problems off-stage, elsewhere, with Italy and Europe."
There was a general feeling that Europe had to sort out issues internally before other countries would be willing to step in with financial help. Zhu Min, deputy managing director of the IMF, said: "That the European crisis is a global crisis that needs global cooperation and a global solution has become ever clearer. But before that, the Europeans have to make efforts to provide a clear picture and provide a solution and put their hands on their own issues."
This sentiment was echoed by the business community. Dennis Nally, chairman of PwC, said: "First of all, I think Europe has got to help itself. "Some of the difficult decisions that have to be made in Europe have to get made. And quite frankly the longer it goes on with those decisions not getting made, I think it’s going to raise serious questions about the economic recovery."
Above all, the leaders who were gathered in Honolulu sounded frustrated with the pace of implementing measures to deal with the crisis. Philippines finance minister Cesar Pursima said: "It is not being dealt with forcefully."
However the politicians and business leaders at APEC had not written Europe off entirely. Donald Tsang, chief executive of the Hong Kong Special Administrative Region of China, said he still hoped the euro could become a reserve currency to ease reliance on the dollar, although he accepted that it could not perform that task at the moment. In the long haul, he said the Chinese renminbi would be the third reserve currency.
Europe Disaster Headed to U.S.
by Niall Ferguson - Newsweek
Can America withstand the death spiral of debt?
As an author who has just published a book on the crisis of Western civilization, I couldn’t really have asked for more: simultaneous crises in Athens and Rome, the cradles of the West’s law, languages, politics, and philosophy.
Yet most Americans are baffled by the ongoing economic pandemonium in the European Union. For them, places like Greece and Italy are primarily tourist destinations they’ll visit at most once. The finer points of Mediterranean politics leave them cold, except insofar as they’re funny. After all, who could resist the opera-buffa character of Silvio "Bunga-Bunga" Berlusconi?
But only a few weirdos really feel their pulses quicken when they hear news like: the new Greek prime minister is a former central banker called Papademos! Ever tried to explain to a New Yorker the finer points of Slovakian coalition politics? I have. He almost needed an adrenaline shot to come out of the coma.
So why should Americans care about any of this? The first reason is that, with American consumers still in the doldrums of deleveraging, the United States badly needs buoyant exports if its economy is to grow at anything other than a miserably low rate. And despite all the hype about trade with the Chinese, U.S. exports to the European Union are nearly three times larger than to China.
Until March, it seemed as if exports to Europe were on an upward trajectory. But the euro-zone crisis has stopped that. Governments that ran up excessive debts have seen their borrowing costs explode. Unable to devalue their currencies, they’ve been forced to adopt austerity measures—cutting spending or hiking taxes—in a vain effort to reduce their deficits. The result has been Depression economics: shrinking economies and unemployment rates approaching 20 percent.
As a result, according to the new president of the European Central Bank, Mario Draghi, a "double dip" recession in Europe is now all but inevitable. And that’s lousy news for U.S. exporters targeting the EU market.
But there’s more. Europe’s problem is not just that governments are overborrowed. There are an unknown number of European banks that are effectively insolvent if their holdings of government bonds are "marked to market"—in other words, valued at their current rock-bottom market prices. In our interconnected financial world, it would be very odd indeed if no U.S. institutions were affected by this.
Just as European institutions once loaded up on assets backed with subprime U.S. mortgages, so most big U.S. banks have at least some exposure to euro-zone bonds or banks. One institution—MF Global, run by former Goldman Sachs CEO Jon Corzine—just blew up because of its highly levered euro bets. Others are biting their fingernails because it is suddenly far from clear that the credit-default swaps they have bought as insurance against, say, a Greek default are worth the paper they are written on.
But the third reason Americans should care about Europe is more important even than the risk of a renewed financial crisis. It is the danger that what is happening in Europe today could ultimately happen here. Just a few months ago, almost nobody was worried about Italy’s vast debt, which amounts to 121 percent of GDP. Then suddenly panic set in, and Italy’s borrowing costs exploded from 3.5 percent to 7.5 percent.
Today the U.S. gross federal debt stands at around 100 percent of GDP. Four years ago it was 62 percent. By 2016 the International Monetary Fund forecasts it will be 115 percent.
Economists who should know better insist that this is not a problem because, unlike Italy, the United States can print its own money at will. All that means is that the U.S. reserves the right to inflate or depreciate away its debt. If I were a foreign investor—and half the debt in public hands is held by foreigners—I would not find that terribly reassuring. At some point I might demand some compensation for that risk in the form of ... higher rates.
Athens, Rome, Washington ... The shortest route from imperial capital to tourist destination is precisely this death spiral of debt.
Pressure on the ECB grows as Mario Monti rides to rescue
by Ambrose Evans-Pritchard - Telegraph
The European Central Bank (ECB) is under intense pressure to step up purchases of Italian bonds after premier Silvio Berlusconi finally relinquished power in Rome, clearing the way for former EU commissioner Mario Monti to form an emergency government of technocrats.
The "halo effect" of Mr Monti helped bring Italian bond yields back from the brink of a catastrophic spiral on Friday but the gains are likely to be tested again as the new team faces the stark reality of Italy's fractured politics.
"The ECB must make it clear that it will not allow Italy's bond yields to rise above 5pc, however much it costs," said Thomas Mayer, chief economist at Deutsche Bank. He described the current policy of half-hearted bond purchases as "a recipe for failure", signalling to markets that the ECB is not willing to see the job through with overwhelming force.
Britain's Business Secretary, Vince Cable, echoed the calls for bolder action, blaming the ECB's passive stand for the dramatic escalation of the crisis last week that pushed Italy's €1.8 trillion to brink of meltdown and spread contagion to France. "The central bank has to have unlimited powers to intervene to support economies, and indeed banks, to prevent collapse," he told the BBC.
"It's very clear that in addition to the disciplines that the southern Europeans are going to have to adopt, the Germans are going to have to play their role in supporting the eurozone. That's either directly or through the central bank, making absolutely sure that the big countries that are subject to speculative attack are properly supported with adequate liquidity."
The EU's €440bn rescue fund (EFSF) is supposed to take the baton from the ECB so it can step back, but the fund is not yet ready and is itself struggling to raise money at a viable cost.
The replacement of Mr Berlusconi with a credible leader committed to the deep reforms demanded by the EU makes it much easier for the ECB to justify help for Italy, but it is far from clear that the bank is willing to give Mr Monti a "dowry" of lower borrowing costs to lighten his task.
Jens Weidmann, head of Germany's Bundesbank and a pivotal ECB governor, has further dug in his heels against any extension of bond purchases. "We have a mandate and we have to stick to our mandate. Fixing an interest rate for a country is certainly not compatible with our mandate," he said over the weekend.
"The eurosystem must not be a lender of last resort for sovereigns because this would violate Article 123 of the EU treaty. I cannot see how you can ensure the stability of a monetary union by violating its legal provisions."
Investors are betting on a torrid relief rally across global asset markets this week on hopes that new leaders in Italy and Greece will at least break weeks of deadlock, but it is already clear that politics will remain messy.
Mr Berlusconi warned that his People of Liberty Party intends to exercise a de facto veto in Italy's Senate, maintaining its grip on power behind the scenes. "We are ready to pull the plug," Mr Berlusconi allegedly told supporters. He aims to block any form a wealth tax or bank account levy.
Mr Monti faces a difficult task, forced to work with shifting alliances and bitterly opposed parties on one issue at a time. "We won't give you a blank cheque," said Umberto Bossi from the Northern League.
Whose Economy Has It Worst?
by Ian Bremmer and Nouriel Roubini - Wall Street Journal
With Europe, China and the U.S. in crisis, the real question is which of them will stumble firstIt's no wonder that global markets are so jittery. The world's three largest economies can't continue along their current paths, and everybody knows it. Investors watch nervously for signs that China is headed toward a hard landing, that America will sink back into recession, and that the euro zone will simply implode.
In all three cases, kicking the can down the road has staved off disaster so far, but the cans are getting bigger and heavier. Which economy will be the first to stumble on its problems?
In Europe, the tough decisions have been put off because the principal players don't agree on how or why the trouble began. Germany and the other better-off countries blame the profligacy of Greece, Portugal and Italy and fear that an early bailout would relieve pressure on them to mend their ways. For their part, the debtor nations believe that the entire euro zone is out of balance and that more prosperous countries like Germany should export less and consume more to set things right.
Other Europeans say that a shared currency cannot survive indefinitely when monetary policy is centrally managed but each government decides how much to tax and spend. Still others warn that access to market capital requires a form of collective insurance, preferably in the form of a euro bond. Not surprisingly, Germany resists this solution because it implies a gradual transfer of wealth from the core economies to the periphery, a "transfer union" from rich to poorer states.
Yet another European view holds that the austerity plans now envisioned by Germany and the European Central Bank are worse than the disease. The Continent needs growth, not just reform and belt-tightening, they argue, and only a surge of stimulus across the entire euro area can achieve it.The 17 countries and four European institutions now entangled in the euro zone crisis will continue trying to muddle through, but their dawdling can't be sustained. Markets are already losing confidence in piecemeal reform. Doubts about Italy, an economy too big to bail, will only add to the volatility.
Europe will be the first to drop out of the game of kick the can: Expect a disorderly debt default in Greece, more trouble for European banks and a sharp recession across the continent.
In China, the need for economic reform also has become obvious. It has been four years since Premier Wen Jiabao first warned that the country's economic model is "unstable, unbalanced, uncoordinated and ultimately unsustainable" and three years since the financial crisis made clear that China's growth remains dangerously dependent on exports to Europe, America and Japan.
To ensure long-term economic expansion (and political stability), Beijing must figure out a way to encourage Chinese consumers to buy more of the products that local manufacturers make. This will demand a massive transfer of wealth from the state and China's state-owned companies to Chinese households.
But Beijing is moving in the opposite direction. The leadership responded to Western market turmoil not by boosting consumption but by increasing state and private spending on fixed investment, which now accounts for nearly half of China's growth. The result has been an explosion in residential and commercial real estate, more state spending on infrastructure and more cheap loans from state-owned banks to state-owned enterprises.
Indeed, a key obstacle to reform is that China remains so heavily invested in its state-managed model of capitalism. Of the 42 Chinese companies listed in the 2010 edition of the Fortune 500, 39 were state-owned enterprises, and three quarters of China's 100 largest publicly traded companies are government controlled. Party officials with a stake in the success of state-owned enterprises have amassed considerable power within the leadership, and they ferociously resist efforts to transfer away their wealth to private enterprises and ordinary citizens.
China has the cash and foreign reserves to postpone a crisis. But growth is slowing, financial stresses are rising, and there is good reason to fear that China's days of can-kicking are numbered as well.
Which leaves the U.S. No one can restore confidence in America's long-term fiscal health without a credible plan to cut spending on entitlements and defense while raising revenues, which are now at a 60-year low as a share of GDP. But don't expect any immediate solutions from Washington. The campaign season will only exacerbate petty partisanship and political gridlock, which means that the structural problems of the U.S. economy are likely to persist.
But the longer-term future appears much brighter for the U.S. than for either Europe or China. America is still the leader in the kind of cutting-edge technology that expands a nation's long-term economic potential, from renewable energy and medical devices to nanotechnology and cloud computing. Over time, these advantages will yield more robust economic growth.
The U.S. also has a demographic advantage. In Europe, declining birthrates and rising sentiment against immigration point toward a population that will shrink by as much as 100 million people by 2050. In China, thanks in part to its one-child policy, the working population has already begun to contract. By 2030, nearly 250 million Chinese will have passed the age of 65, and providing them with pensions and health care will be very costly.
Despite debate over illegal immigration, the U.S. population will likely rise from 310 million to about 420 million by midcentury. Between 2000 and 2050, according to Mark Schill of Praxis Strategy Group, the U.S. workforce is expected to grow by 37%. China's will shrink by 10%. Europe's will contract by 21%.
Finally, despite the rising exasperation of the American public, the U.S. is significantly more likely than Europe or China to quit kicking the can down the road. Nothing much will change during the election year, but 2013 offers a chance for real fiscal reform.
Next November, Republicans are likely to win both houses of Congress. If a Republican is elected president, the GOP will face enormous public pressure to deliver on its reform promises. Even if President Obama is re-elected, the outlook for a grand bargain is bright. He would be free of the most immediate demands of electoral politics, and like other second-term presidents, he could begin to consider his legacy.
Make no mistake: The challenges that the U.S. faces are formidable, and persistent political gridlock could delay badly needed fiscal and structural reforms. But everything is relative, and the best can to be kicking down the road just now is undoubtedly the one made in America.
Subtle Details Loom Large in Italian growth Plan
by Christopher Emsden - Wall Street Journal
The Italian government's plan to boost growth includes headline-grabbing measures such as raising the retirement age and tweaking the country's inflexible labor laws, but the more pertinent points of the package European officials are expecting of Italy are far less sexy.
They involve shaking up local authorities' control over public-service contracts, the liberalization of professions such as in the law and architecture and a plan to privatize public real estate in a way that could relieve pressure on the country's banks. The growth initiatives come at a time of sharp fiscal austerity in the euro zone's third-largest economy, which the European Commission warned would grow just 0.1% next year.
Inserted as an amendment to the 2012 budget bill, which Parliament is expected to approve this weekend, the growth measures respond to demands from the European Union and the European Central Bank, key counterparts if Italy is to obtain needed relief on its sovereign borrowing costs. EU authorities have given guarded approval of the plans as a first step toward boosting Italy's growth potential, saying the key thing is they are implemented.
As for the ECB, which is coming under increasing pressure from the international community to backstop the single currency, the expected arrival of Mario Monti as prime minister is likely to offer an initial guarantee of real change. The initiatives to boost jobs and investment include payroll holidays for youth apprenticeship programs and tax credits for highway building.
All those measures carry a fiscal cost at a time when Italy's sharply slowing growth means the government may have to push through further budget squeezes to comply with the EU's stringent debt rules. Yet many of Italy's problems aren't linked to cash restraints. For example, economists at BNP Paribas say Italy's infrastructure investments are roughly the same as those in other EU countries, but the return is less because initial budgets are typically exceeded by 40% and the projects completed 20% late.
Measures that don't raise costs are likely to prove to be the most important of the new proposed measures. One example: The budget amendment abolishes mandatory fees for lawyers, architects and other professionals. It also allows them to set up their services on an incorporated basis. That measure is aimed at tackling the guild-like structures that limit access to jobs.
"Italy no longer needs to have a legal entity governing all ski instructors," Economy Minister Giulio Tremonti recently said. Mr. Tremonti is a member of the ski-instructor guild.
If passed, the budget would also give incentives to local authorities to privatize public-service companies in areas like sanitation and transportation and encourage those companies to broaden their geographic scope. The bill also gives the Italian Economy Ministry the right to accept government bonds instead of cash as payment for state real-estate assets.
That innovation, people in the government and financial industry say, provides Italian banks an opportunity to decrease their holdings of Italian government bonds known as Buoni del Tesoro Poliennali, or BTP, without having to accept losses due to their current market prices.
Such transactions would allow banks to improve the quality of the assets on their balance sheets and potentially lower their need to raise fresh capital under new European rules, while also giving the banks a new asset they could collateralize and use to refinance at the ECB. Net proceeds from such sales will be used to reduce Italy's public debt, and bonds used instead of cash would simply be retired.
The current plan is likely to be followed in coming months with further measures, most notably in the delicate area of employment law, where virtually guaranteed lifetime contracts keep productivity gains low and youth unemployment high.
David Cameron hit by double whammy on growth and jobs
by Patrick Hennessy, Kamal Ahmed and Angela Monaghan - Telegraph
Britain is on course for a double economic blow this week, with the Bank of England set to downgrade its growth forecast and youth unemployment likely to hit one million for the first time.
The news, coupled with the crisis gripping the eurozone, is likely to hand David Cameron one of his worst weeks since the Coalition was formed in May 2010. The Prime Minister and George Osborne, the Chancellor, are preparing a fightback this weekend.
Their efforts, however, are being hampered by a series of stand-offs with Nick Clegg, the Deputy Prime Minister, and his Liberal Democrat party. "It’s not that there is a row over the growth strategy, it’s that there isn’t really a strategy yet. Every time we try to put something in, the Liberal Democrats say that we should take it out," a senior Whitehall source told The Sunday Telegraph.
The Italian parliament yesterday voted through an austerity package, paving the way for prime minister Silvio Berlusconi to resign. The eurozone countries hope this will reassure the bond markets, which had pushed the country’s borrowing costs to crisis point.
As British ministers prepared for a grim week, it emerged that:
- The Bank of England is preparing to cut its forecast of growth in 2011 from close to two per cent to as low as one per cent on Tuesday. It is also preparing to reduce its 2012 forecast of just over two per cent, again to about one per cent. The Bank is likely also to warn that a failure to resolve the crisis affecting the eurozone may make things much worse in Britain because of its reliance on trade with the rest of Europe.
- The number of people aged between 16 and 24 out of work is set to break the one million barrier on Wednesday for the first time since figures began to be calculated almost 20 years ago.
- Ministers kept up a series of warnings of the dire effects of the eurozone crisis. William Hague, the Foreign Secretary, said: "The jobs and the life savings of tens of millions of people in Europe may be at stake." Mark Hoban, the Treasury minister responsible for planning Britain’s detailed response to the crisis, admitted to business leaders at a private breakfast: "The instability in the euro area does have a chilling effect on the UK economy."
- Coalition tensions were blamed for a lack of progress over drawing up a growth strategy to be unveiled in Mr Osborne’s Autumn Statement on November 29. A meeting last week did not come to any firm decisions because of lack of "substantive" policies to announce, the senior source said.
It is the latest example of tensions between the Coalition partners that have recently flared up in other policy areas as well as the economy, including human rights, NHS reform and tax.
Mr Clegg is understood to have blocked suggestions in a report into deregulation by Adrian Beecroft, a venture capitalist, which would have allowed employers to sack poorly performing staff without fear of unfair dismissal cases.
Ministers are preparing a fightback over youth unemployment with an emphasis on apprenticeships and a planned expansion of a flagship scheme that allows young unemployed people to do eight weeks of work experience without losing benefits.
However, a report by the Institute for Public Policy Research (IPPR) will this week suggest that apprenticeships are failing. The report, seen by The Sunday Telegraph, says employers are using Government cash meant for apprenticeships to subsidise training for older workers instead. According to the IPPR, 40 per cent of new apprenticeships went to over-25s last year.
Labour has accused Mr Cameron of dodging criticism over his record. A short parliamentary break means there will be no Prime Minister’s Questions on Wednesday when the figures are released. The Prime Minister is expected to tour European capitals this week to put more pressure on EU leaders to find a solution to the eurozone crisis.
Mr Hoban sent out a warning to France, Germany and others among the 17 eurozone nations not to vote in the EU’s Council of Ministers – the main decision-making body – as a caucus, effectively seizing control of key areas of policy-making vital to Britain’s interests, including over the City of London.
At the private breakfast, organised by PI Capital, he said: "The challenge is, as we work on the institutional arrangements, to be very clear those matters which are the preserve of the 17 'ins’, and those matters which should be the preserve of all 27 member states. "We’ve made it very clear that things like the single market, competition policy, financial services, should be dealt with by all 27 and not by a caucus of 17."
Will the ECB and Mario Draghi save Europe?
by Angela Monaghan and Philip Aldrick - Telegraph
Less than two weeks into his new role as President of the European Central Bank, Mario Draghi is already facing an even bigger job: saviour of Europe.
As eurozone leaders have tried but failed miserably to convince markets that they have either the will or the way to solve the region's sovereign debt crisis, a growing number of world leaders and economists are calling on the ECB to step in and fight the raging fire.
They argue that as the region lurches from one crisis to another, with Italy its latest focus, the ECB is the region's best chance of drawing a line under this terrible chapter by agreeing to act as lender of last resort to its governments through the large-scale purchase of sovereign bonds.
Yet Mr Draghi is strongly opposed to the suggestion. He insists that such a move would compromise the central bank's independence and amount to a bail-out for individual countries which is not the role of the ECB. Instead, he and his fellow policymakers would like to continue to focus on the ECB's remit of targeting below 2pc inflation.
But as days and weeks pass without a resolution of the crisis - which is plaguing the region, weighing down on the global economy and threatening to bring down the European Monetary Union - it may now be the only credible option.
The problem is not going to go away. Among major European economies, a total of €1.1 trillion of debt will mature in 2012. Question marks over Italy's ability to honour its debts pushed the Italian government's borrowing above 7pc this week, an unsustainable level which forced fellow eurozone countries including Greece and Ireland to be bailed out. So who is going to come to the rescue?
"This really is Europe's Lehman's moment and it is make or break," according to Danny Gabay, a former Bank of England economist and director at Fathom Consulting.
Although the Italian parliament yesterday voted through austerity measures, political uncertainty and huge debt burdens have not been wiped away,
Some believe that Italy is already past the point of no return. When the government's borrowing costs soared past 7pc, the country put itself in the bail-out club as fears about its ability to fund itself coalesced and branded it with a stigma that cannot be erased. The lesson from Greece, Ireland Portugal is that there is unlikely to be any escape.
For some economists, though, it's not all over for Italy. For a start, the country is not insolvent. According to the Italian Treasury, the book value of its assets is €1.8 trillion (£1.53 trillion) – barely less than its €1.9 trillion of debt. Of that, €45bn is tied up in listed companies such as oil group ENI and the utility Enel, €400bn in real estate and €140bn of gold in today's prices.
The country has assets to sell. On top of that is the €8.5 trillion of net wealth held by Italy's households, which could also be crow-barred into supporting the economy.
On the other hand, there are its financing requirements. Next year, €220bn of debt matures and the IMF calculates the country will need another €150bn to finance its borrowing costs. Half the maturing debt is owned by domestic investors, so ought to be rolled over – leaving roughly €250bn of refinancing. It is that debt hurdle that has spooked the markets.
However, Raj Badiani, IHS Global Insight senior economist, believes Italy "can endure several quarters of expensive debt auctions" assuming its borrowing costs stay below 7pc. Last week, it raised €5bn one-year money at 6pc.
Time is of the essence. According to Fabio Fois, economist at Barclays Capital, if Italy can use the time to demonstrate it is committed to reform, it can restore confidence and get its borrowing costs back down to levels that will allow the economy to outgrow its debt burden.
The point about the value of the state's assets and the vast wealth held by its people is that Italy does have options, unlike Greece. Asset sales and wealth taxes can be used to cut the Italian debt pile. Structural reforms to make the economy more competitive can stimulate growth, from the moribund sub-1% average of the past 10 years. That will be the challenge for Mario Monti, the new Italian prime minister, and his fellow technocrats.
In some ways, Italy is in pretty good shape. If you exclude the debt servicing costs, the government will take more in taxes this year than it spends, according to the IMF. Its primary surplus will be 0.5pc – better than Germany's, which is the only other major western economy to boast of a primary surplus. After paying the bill on its debts, though, the surplus turns into a 4pc deficit.
The catch is that, because its credibility is now in tatters, it will be left to the ECB to spend heavily to keep Italy's borrowing costs below 7pc.
Italy is deemed too big to fail, but yet it is also too big to bailout. It is not a peripheral eurozone country like Greece, it is the world's eighth largest economy. The European Financial Stability Facility (EFSF) and the International Monetary Fund do not possess the firepower which is likely to be required, and the markets know it.
"Policymakers could try to soldier on and pretend that Italy's size does not matter but, in all likelihood, they will have to try to find some sort of nuclear button to turn back the markets," says Steven Barrow, currency strategist at Standard Bank.
A growing number of economists expect the ECB to cut interest rates to 0.5pc from the current 1.25pc level early next year, but a bond purchasing programme would amount to a "nuclear" option, bringing down borrowing costs, increasing the money supply, and causing the euro to fall in value over time, thus improving the competitiveness of eurozone countries. "This could certainly work to end the crisis – if the ECB promised to buy unlimited amounts of debt from the outset," he said.
The EFSF has been unable to convince investors not to sell off sovereign debt – illustrated by a bond auction this week in which the rescue fund was forced to buy its own bonds due to lack of outside demand. But the ECB could succeed where the EFSF failed, possessing the ability to print an unlimited amount of new money. According to Peter Vanden Houte, chief eurozone economist at ING, markets will now only be reassured by a saviour with "very deep pockets".
The chief hurdle is the ECB itself, and its unwillingness to dig into those pockets. Mr Draghi's message was reiterated this week by Juergen Stark, a fellow ECB policymaker. "We are not the lender of last resort [to governments] and I do not advise European governments to ask the ECB to become a lender of last resort.
"From my personal perspective, and I think I speak on behalf of my colleagues on the Governing Council, we will not ask and we will refuse to have an extension of the mandate for the ECB to become lender of last resort to governments."
The ECB has already engaged in bond purchases on a relatively modest scale, but has so far stopped short of quantitative easing – the creation of new money to fund purchases. "Larger purchases would be seen as an unacceptable step into fiscal policy that would pose a serious threat to the Bank's independence," says Jennifer McKeown, senior European economist at Capital Economics.
The ECB's seemingly inflexible approach should be considered in the context of Germany's own fiscal and monetary history, after it was modelled closely on the German Bundesbank,
The Bundesbank was itself established as an independent central bank in the post-war era, committed to monetary discipline. Scarred by the hyper-inflation of the past, German policymakers are vehemently opposed to quantitative easing. Such a move by the ECB would only encourage countries to be ill-disciplined, thus storing up problems for the future. Those countries should not be given the easy way out.
Open Europe, a think tank, agrees on the latter point. Its economic analyst, Raoul Ruparel, said: "This money would be provided to states such as Italy and Spain without conditions, meaning the pressure to enact necessary economic and institutional reforms would be removed. It is vital that these countries enact such reforms if they have any hope if becoming competitive again and maintaining a sustainable debt load. Therefore, such a move by the ECB could end up being counterproductive."
German policymakers find it impossible to accept that a central bank should buy sovereign bonds on such a huge scale, even if the purchases would be made on the secondary market and not directly from governments. In German minds, it would amount to monetising the deficit, and go against the Maastricht Treaty, if not in letter then in spirit.
Other world leaders do not agree, and want to see decisive action from the ECB. David Cameron said there were now "real question marks" over whether eurozone countries could deal with their debts, and called on the "institutions of the eurozone" to act. US President Barack Obama and Russian Prime Minister Vladimir Putin have also called on the ECB to do more.
Peter Vanden Houte of ING believes the ECB is its own worst enemy, exacerbating the Italian bond sell off by refusing to act. Ultimately the ECB may consider a large-scale bond purchasing programme the lesser of two evils, with a collapse of the eurozone almost inconceivable.
"I can't imagine that if they were faced with a major financial collapse or the necessity of printing money [the ECB] wouldn't print money," said Jerry Webman, chief economist at OppenheimerFunds Inc. If the ECB does not act, Mr Draghi may find the eurozone's blood on his hands.
Italian Debt Threatens Europe's Savers
by Hester Plumridge - Wall Street Journal
Italy could deal insurers a lethal blow. Europe's insurers own an estimated €300 billion (about $408 billion) of Italian sovereign debt—equivalent to a large chunk of their €450 billion shareholders' equity, notes JP Morgan. While banks' exposure has been much debated, an Italian default or euro exit could devastate insurers' capital and in turn Europe's savings.
Insurers' holdings make up a sizeable chunk of Italy's €1.6 trillion government debt. Some insurers have cut exposure—Zurich Financial Services sold around €2.3 billion in the last quarter—but many are reluctant to crystallize big losses when they hold assets to maturity and a default is still an outside scenario. Finding enough long-dated assets to replace them and back their huge liabilities is tricky.
Italian insurers—among the sector's largest holders of the debt—are already suffering from low domestic bond prices and falling equity markets. Fondiaria SAI declared a €250 million asset write-down last month. An Italian default could be a potentially fatal blow. Trieste-based Assicurazioni Generali's gross exposure to Italian government bonds is more than double its shareholders' equity. Losses on bank debt and equity holdings would likely amplify the problem.
Foreign insurers, too, have sizeable Italian debt holdings and could face big hits to their capital. German-based Allianz, one of Italy's largest insurers, has a €26 billion gross exposure. If Italy were to leave the euro, domestic insurers might at least be able to re-denominate their policies into the new currency, but foreign players could face an additional currency risk. Much of their holdings back policies in other countries, meaning the assets would devalue but not the liabilities.
Shares in Europe's insurers have fallen between 5% and 10% in the past two weeks, but the sector still trades at or just below book value. It's difficult to price in an Italian default or euro break-up, which might prove an unmanageable capital event for many. Ultimately, politicians and regulators may find a solution that shields the industry.
But the effects would still likely be felt by savers. Policyholders in many life insurance products bear 80%-90% of any losses on insurers' investments unless minimum return guarantees are breached. If a country leaves the euro, devaluation and inflation could destroy much of the value of its domestic savings, with or without crushing its insurers.
Europe's Shrinking Core
by Richard Barley - Wall Street Journal
The core of the euro zone ain't what it used to be—at least so far as the bond markets are concerned.
The debt crisis has eaten its way through the periphery via Greece, Ireland, Portugal, Spain and Italy. Now, the gap between French and German government-bond yields is widening. That spells trouble for France—and the euro zone.
Franco-German spreads are at levels not seen since the early 1990s. French 10-year bonds yielded 1.71 percentage points more than similar German bonds at one point on Thursday, before the gap shrank somewhat to end Friday at 1.48 points.
French yields have moved in the opposite direction to Germany on three days this past week. On Thursday, they rose 0.25 percentage point when German yields rose just 0.05 point. France is no longer being treated as a safe haven. On "risk-off" days, France loses out, while on "risk-on" days, it gains—but not enough to reverse the widening trend.
There are two factors at play. France itself looks vulnerable, although it has hastened to implement policy aimed at protecting its credit rating. Its economy is slowing. It has the highest debt of triple-A euro-zone nations, at 87% of gross domestic product. France has to do more fiscal work to balance the books than Italy, RBS points out. To restore debt to 60% of GDP in 2030 requires fiscal tightening of 6.3% of GDP by 2020 in France versus 3.1% for Italy, according to the IMF. In addition, French bank exposures to Southern European debt are large.
The second factor is the euro, which facilitates rapid cross-border investment—and disinvestment—flows. The pool of safety for investors is shrinking. In 2007, seven of the euro zone's major bond issuers were triple-A, accounting for 73.7% of the currency bloc's GDP. Five of them remain triple-A, but in investors' eyes, only Germany, Finland and the Netherlands are safe havens now, accounting for just 35.6% of GDP. France is triple-A in name only, as is Austria, where concerns about Eastern European exposure have driven yield spreads wider.
The risk is that the widening yield gap begins to influence France's approach to the crisis. That poses a threat to the political alliance between France and Germany that has been at the heart of the European project, making the crisis harder to resolve. Economically, it poses the threat of a further pullback from cross-border lending, damaging growth.
The bond market, in effect, is breaking up the euro. France can no longer be assured of being in the core club.
Bond Market Rates Portugal CCC as Downgrades Loom
by John Detrixhe - Bloomberg
The bond market rates Portugal's creditworthiness at least six steps lower than either Moody's Investors Service or Standard & Poor's, suggesting lower ratings may be on the horizon for Europe's most indebted nations.
Investors charge Portugal the same for money as a borrower with a CCC ranking, according to data from Moody's Analytics. That's six levels worse than the Ba2 assigned by the credit- rating division of New York-based Moody's Corp.'s and eight levels below Standard & Poor's and Fitch Ratings' BBB- grades.
The discrepancy signals more gloom for Portugal, which saw its benchmark debt yield reach a record 13.44 percent this year and was forced to follow Greece and Ireland in seeking outside help to service its debt obligations. The rate on the Iberian nation's 10-year bond was 11.43 percent at 9:32 a.m. in New York. Sovereign downgrades can lead to cuts in the ratings of nations' banks, sparking higher borrowing costs and forcing them to provide more collateral to counterparties.
"Certainly you can see more downgrades" on the way, said Noel Hebert, a credit strategist at Mitsubishi UFJ Securities USA Inc. in New York. "Financial systems are dependent on accessing capital. If you can't access capital because investors believe the quality of the collateral is overstated, then it can cause a domino reaction."
Portugal, Cyprus, Italy, Spain, and Belgium have outlooks that are negative, on review for downgrade or are have a negative rating watch by the three biggest credit ranking firms, according to data compiled by Bloomberg.
Most Vulnerable
Between 2007 and 2009, Moody's downgraded 56 percent of borrowers whose bond-implied rankings were six or more steps lower than those assigned by the rating company, according to a September report by Moody's Analytics.
Portugal, Italy, Spain, Slovenia, Belgium and Cyprus have the biggest rating discrepancies among the 17 euro nations, according to Moody's Analytics data as of Nov. 9. The debt has grades by Fitch, S&P and Moody's that are at least six steps out of line with their bond-yield derived rankings.
A Bank of Italy study this month showed Portugal is the most vulnerable of seven of the biggest euro-bloc members to a budget crisis. It registers 0.61 according to a central bank gauge where a reading of more than 0.51 signals "the possibility of a budget crisis" based on "budget and macro- financial variables."
That compares with 0.6 for Greece, 0.41 for Italy and 0.52 for Spain. Germany's score is 0.18. Higher yields may affect banks' ability to raise cash through financial transactions in which they use those securities as collateral.
Bank Downgrades
"It's a vicious feedback loop," said Kathleen Gaffney, a money manager at Boston-based Loomis Sayles & Co., which oversees $157 billion. "The market is being very anticipatory. The longer politicians wait to provide clarity with regards to a resolution, the quicker the market is to assume that they're not able to get it done."
About 60 percent of Greek, Irish and Portuguese banks were downgraded after their host countries' ratings were cut, Alberto Gallo, head of European credit strategy at Edinburgh-based Royal Bank of Scotland Group Plc, said Nov. 9 in a conference call. The rate in Italy is about 20 percent, supporting the view its "banking system is more solid," he said.
Downgraded banks "would have a little more difficult time borrowing, presumably, if they wanted to issue any debt or commercial paper," Paul Kasriel, chief economist at Northern Trust Corp., said in a telephone interview from Miami. "A counterparty would reduce its line of credit if not eliminate it if there's a downgrade."
'Liquidity Crisis'
The ratings of Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and CaixaBank SA were reduced by Moody's on Oct. 19, a day after the company lowered Spain's ranking two levels to A1, the third cut in 13 months. Fitch downgraded Spanish banks on Oct. 11 after it reduced Spain's sovereign debt to AA- from AA+ on Oct. 7.
UniCredit SpA, Italy's biggest bank, said a downgrade of the company's credit worthiness is among factors that could spark a "liquidity crisis," according to an August filing. The bank is rated A2 by Moody's and A by S&P with a negative outlook by both, Bloomberg data show.
LCH Clearnet SA, Europe's largest clearing house, increased the deposit it demands for trading Italy's securities amid deepening concern the government of Prime Minister Silvio Berlusconi will struggle to enact austerity measures to reduce borrowing costs in Europe's second-most indebted nation.
ECB Funding
Italian government debt plunged on Nov. 9, sending the yield on two-year notes to more than the seven percent for the first time since before the euro was introduced in 1999. Greece, Ireland and Portugal sought outside aid after their bonds exceeded that level.
Italy's Senate will vote on debt-reduction measures today in an attempt to shore up investor confidence and pave the way for a new government that may be led by former European Union Competition Commissioner Mario Monti. The rate on Italian two-year notes was at 5.97 percent today, while 10-year yields were at 6.66 percent.
"The pressure's on Italy," Axel Merk, chief investment officer at Merk Investments LLC in Palo Alto, California, said in an interview with Lisa Murphy on Bloomberg Television's "Street Smart." "If they're able to show the market that there is leadership and there is confidence, then things can improve dramatically. It's in the hands of Italian politicians, if they can put politics aside and realize how serious the situation is."
'Out of Line'
While Moody's market-implied gauge, launched in 2002, tends to lead changes in Moody's Investors Service grades, its rankings are more volatile and match the traditional ratings about a quarter of the time, the analytics division said in a September report.
"Agency ratings tend to trend toward the market trading level," David Munves, a divisional managing director at Moody's Analytics said Nov. 9 in a telephone interview. "There have certainly been times when the market has been out of line."
Borrowing by Italian lenders from the ECB more than doubled to 85 billion euros between June and August. Greek and Irish banks each took about 100 billion euros from the ECB in August. Irish lenders also got 56 billion euros from their domestic central bank. Portuguese banks borrowed about 46 billion euros from the ECB, while Spanish banks took 52 billion euros in July.
"We're nearing some turning points that could result in adverse feedback loops," Gallo of RBS said Nov. 8 in a telephone interview. "Indicators of bank funding stress are rising across Europe, and there is not enough of a firewall set up as the backstop."
Bundesbank warns against intervention
by Ralph Atkins and Martin Sandbu - FT
The president of Germany’s powerful Bundesbank has firmly rebuffed international demands for decisive intervention in the bond markets by the European Central Bank to combat the eurozone debt crisis, warning that such steps would add to instability by violating European law.
Bundesbank president Jens Weidmann told the Financial Times that only politicians could resolve the crisis, and he rejected the idea of using the ECB as "lender of last resort" to governments.
He also criticised actions taken by eurozone governments as "inconsistent", and warned that their plans to involve private sector banks in rescue plans for Greece could add to the eurozone’s woes. Such private sector involvement, he said, could undermine market confidence in the eurozone’s crisis-fighting tools such as the rescue fund, the European financial stability facility.
The forthright comments by Mr Weidmann, who is one of the most influential voices on the 23-strong ECB governing council, come at a decisive moment for Europe’s 13-year-old monetary union, which in recent days has seen Italy’s borrowing costs soaring dangerously and the prime ministers of both Italy and Greece resigning.
To prevent the crisis erupting into a global economic shock, the ECB has been urged to intervene directly by economists and politicians around the world, including at the weekend by Russia’s Vladimir Putin.
Mr Weidmann highlighted the stance being taken by the Bundesbank by arguing governments, not central banks, were mainly responsible for ensuring financial stability. Mario Draghi, the ECB’s new president, has said it is not the ECB’s job to act as lender of last resort, but Mr Weidmann went further, saying such a step would breach Europe’s ban on "monetary financing" – central bank funding of governments.
"I cannot see how you can ensure the stability of a monetary union by violating its legal provisions," Mr Weidmann argued. "I don’t see how you can build trust in a system that violates laws."
Mr Weidmann said current Italian interest rates levels were "not such a big issue" in the short run. "What we are facing in Italy is an acute confidence crisis, and only the Italian government can resolve that crisis."
Since May last year, the ECB has been buying eurozone government bonds – a move opposed by the Bundesbank – but sees its role as limited and aimed only at ensuring functioning markets.
Mr Weidmann worried that repeated changes in eurozone plans for dealing with the crisis had simply undermined financial markets’ confidence. He also explained why he, along with other members of the ECB’s governing council, had expressed concern about Berlin-led attempts to secure a contribution from banks towards Greece’s bail-out costs – the so-called "private sector involvement".
"PSI might appear an easy way out of self-inflicted problems. If this is the case, you achieve the opposite of what you wanted to achieve. You will have more contagion instead of containment of the crisis because it’s seen as a potential model for other countries."
Mr Weidmann offered no clues on whether the ECB might cut interest rates further at its December meeting from the current 1.25 per cent. But he stopped short of reiterating past Bundesbank opposition to the ECB’s main interest rate falling below 1 per cent. "I won’t speculate about the future actions ... and limits to future action."
Fears rise over banks’ capital tinkering
by Brooke Masters, Patrick Jenkins iand Miles Johnson - FT
Concern is growing that banks in Europe and elsewhere are moving to meet new tougher capital requirements by tinkering with their internal models to make their holdings appear less risky.
Under the global Basel III rules, which will be phased in between now and 2019, banks have to hold top quality capital equal to 7 per cent of their assets, adjusted for risk. The biggest banks will also be hit with an additional surcharge of up to 2.5 per cent. Banks in the European Union will also have to hit a temporary 9 per cent ratio next year after discounting their risky sovereign debt holdings.
All of these requirements are aimed at making banks more resilient by forcing them to have more capital to absorb unexpected losses. But banks, faced with volatile markets and low share prices, are reluctant to issue equity right now.
So many of them are instead trying to reach the required ratios by reducing the denominator, through what they call "risk-weighted asset optimisation". In some cases, that means selling or running down risky assets, but in others, it means changing the way risk weights are calculated to cut the amount of capital that will be required.
Regulators, who must approve bank models, are alive to the problem and the European Banking Authority’s board has essentially set a floor on how low the risk weights can go when it comes to calculating the EU’s 9 per cent target. "The language of RWA optimisation is basically regulatory arbitrage," said one senior EU regulator.
But that hasn’t stopped many banks from doing their best to boost their ratios. A recent Morgan Stanley analysis of Lloyds Banking Group found the bank sharply reduced the risk weighting of its overseas retail mortgage portfolio in 2010, leading to a £16bn fall in risk-weighted assets.
Lloyds’ optimisation programme is understood to include selling and running off assets and also getting the agreement of the UK regulator to change risk weights on various loans so less capital needs to be placed against them.
UK bankers said that the Financial Services Authority was tougher about model changes than continental regulators. "This is a long, rigorous process that is particularly time consuming," one said.
Santander has said that it is currently in the process of "optimising" its risk-weighted assets even as Alfredo Sáenz, its chief executive, hit out at "fudges outside of Spain". Spain’s largest bank said it is focusing on the risk weighting of certain kinds of loans, such as unused lines of credit and loan commitments, as well as shrinking its balance sheet by writing off non-performing loans.
Germany’s Commerzbank reported in its third-quarter results that it is getting new models approved in the wake its merger with Dresdner and should see benefits in its risk-weighted asset totals.
Some of the optimisation is encouraged by the regulators. Banks effectively get an risk-weighted asset break when they switch from the old Basel I rules – which apply standardised risk weights to loans based on their category – to the "internal ratings based" system that is the basis for Basel II and III.
Under the internal ratings system, banks come up with models that predict the probability a particular loan will default and the likely loss if that occurs. The numbers are then plugged into a formula that assigns a risk weight. In general, using internal ratings produces somewhat lower risk weights – and therefore requires less capital – than the standardised approach because regulators want banks to build good models and improve risk management.
BBVA, Spain’s second-largest bank by assets, has been slowly switching to the internal ratings system since 2008 and last year got approval from the Bank of Spain for more models.
For now, the regulator has established an risk-weighted asset floor equal to the standardised approach, but the bank said it would expect that this floor could be removed in the coming months, which would lead to a drop in its overall risk-weighted assets. "What BBVA is doing is catching up with practices that are common elsewhere in Europe," the bank said.
But there is a second kind of optimisation that regulators are more concerned about. When banks create models, regulators then back-test them and will only approve those that produce probabilities of default and predicted losses that are higher than real-life experience.
But the current recession has produced lower loan default rates than past downturns – partly because interest rates are low – so many bank models are currently producing results that are significantly more conservative than real life.
That creates room for banks to tweak their models, and some are doing so in a deliberate effort to cut their capital needs, industry participants say. As a curb on the tinkering, the European Banking Authority board has turned to a sometimes neglected rule that no bank’s risk-weighted assets can drop below 80 per cent of where they would be under the Basel I standardised approach. "The EBA board of supervisors has agreed to apply the ... floors in a consistent and conservative manner across all the banks in the sample," it said.
Supervisors in the UK and elsewhere also said they will be looking carefully at bank plans to reach their new capital requirements and intend to come down hard to anything they see as cheating.
Europe’s Woes Pose New Peril to Recovery in the U.S.
by Annie Lowrey - New York Times
For the second time in two years, European debt troubles threaten to slow the momentum of the fragile recovery in the United States.
Although American financial institutions have taken steps to protect themselves from Europe’s long-simmering problems, the likely slowdown in Europe could damage consumer and business confidence in America and strengthen the dollar, making United States exports less competitive.
"Financial contagion can lead to the very rapid global spread of recession," said Chris Varvares, senior managing director for Macroeconomic Advisers, a forecasting company. "If trouble intensifies and spills over to equities and other U.S. risk assets, we could see a soft patch."
Economists say Europe’s troubles would need to worsen significantly before putting the United States economy, which has been strengthening lately, at risk of a new recession. The European Union and United States economies are the two biggest in the world and their financial institutions are deeply intertwined. They have the single largest bilateral trade relationship, together accounting for nearly a third of global trade flows.
On Thursday, the European Commission announced that it foresaw little or no growth in the European Union in the fourth quarter of the year, and a slight 0.1 percent contraction for the euro zone, the 17 countries using the euro currency. It forecast a scant 0.5 percent annual growth in 2012 for the union and warned that the Continent might be slipping into a "deep and prolonged" recession. As recently as this spring, the commission forecast that Europe would grow 1.75 percent for 2012.
Speaking on Thursday at the Asia-Pacific Economic Cooperation summit meeting in Hawaii, the Treasury secretary, Timothy F. Geithner, said: "The crisis in Europe remains the central challenge to global growth. It is crucial that Europe move quickly to put in place a strong plan to restore financial stability." He added, "We are all directly affected by the crisis in Europe."
United States financial institutions have tried to inoculate themselves by drastically cutting risk to the euro zone debt markets, partly in response to urging from policy makers.
For instance, prime money-market funds — a common and higher-yielding alternative to bank deposits, and the site of a freeze in the financial markets in October 2008 — have reduced their exposure to euro zone banks by more than half since May, according to a JPMorgan analysis released this week. "Most prime fund managers are allowing existing euro zone exposures to run off," the analysts wrote.
But these measures may not be enough in the event of a bank failure or bond market panic, which could have broad and unpredictable effects on global markets. "I don’t think we’d be able to escape the consequences of a blow-up in Europe," Ben S. Bernanke, the chairman of the Federal Reserve, said Thursday in Texas while answering questions after a speech.
Even with the recent moves, the United States financial system still has billions at risk to European institutions. In an extensive report to lawmakers in September, the Congressional Research Service estimated that the exposure of banks to Greece, Ireland, Italy, Portugal, and Spain — some of the most heavily indebted euro zone economies — amounted to $641 billion. It added, "a collapse of a major European bank could produce similar problems in U.S. institutions."
It further estimated American banks’ exposure to German and French banks at in "excess of" $1.2 trillion, equivalent to about 10 percent of total commercial banking assets in the United States. Similarly, the Bank for International Settlements reports that at midyear banks in the United States had $757 billion in derivatives contracts and $650 billion in credit commitments from European banks.
"Europe is very clearly in a Bear Stearns environment," said Stephen Wood, chief market strategist at Russell Investments, referring to the investment bank that collapsed in early 2008 without setting off broader financial panic.
"The question is: ‘Do they get to a Lehman environment?’ They’re not there yet, but the dark clouds are beginning to gather. Right now, we’re seeing the U.S. dollar and U.S. markets benefiting, relatively, as safe havens," Mr. Wood said. "But that wild card, that sword of Damocles, is going to be what the capital market implications are if there is a major credit event in Europe."
Because Europe’s troubles have been developing for more than two years, financial firms have had more time to prepare than they did for the 2008 crisis, when the collapse of Lehman Brothers almost caused credit markets to freeze. This preparation could prevent a repeat of the 2008 global crisis, even if the European troubles deepen.
Still, the woes in the euro zone will probably weigh on the broader American economy, economists say. Consumer confidence has nearly returned to its lows during the worst of the recession and financial crisis, in late 2008 and early 2009.
"If stock prices start falling, consumers are likely to cut back on spending, which would be sufficient to grind the recovery to a halt," said Ryan Sweet, a senior economist at Moody’s Analytics. "And business confidence is very fragile. Any weight on confidence could hurt hiring and lift the unemployment rate."
Europe’s troubles, including the possibility that the euro zone could break up, has caused the dollar to rally against the euro, which makes American exports more costly. On Wednesday, the euro hit a one-month low against the dollar before recovering slightly by the end of the week.
For the euro, "the downside risk is considerable and the current level doesn’t do a great job of exhibiting the extent of risk there," says Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "I’d argue there’s a lot more risk" that dollar-denominated goods will become relatively expensive.
In an interview Thursday with Reuters, John E. Bryson, the commerce secretary, said, "We’ve had such strong exports to Europe and now, with the European financial crisis, those will come down, appear to be coming down."
In the last few weeks, several companies with major European operations have lowered earnings forecasts because of the tumult. In a research note this week, Tobias Levkovich, Citigroup’s chief equity strategist, called some falling early sales indicators a "worrisome sign" for companies with significant business in Europe.
Such companies include General Electric and McDonald’s. The most at-risk sectors included auto components and automobile companies, which generate nearly 30 percent of their sales in Europe, as well as food and tobacco firms. General Motors said Wednesday that it expected to go into the red in the region this year. Daniel F. Akerson, the chief executive of G.M., blamed the European "morass" for a lowered outlook.
In light of the risk the European crisis poses to the United States, policy makers have urged Europe to deal with the issues immediately. Mr. Geithner said Thursday that European leaders had developed a "good framework" for dealing with the crisis late last month. "But we need to see it put in place with the speed that markets require and with the force that restores confidence," he said.
Let pensions fund homes for first time buyers, says Britain's CBI
by Graham Ruddick - Telegraph
Potential first-time buyers should be allowed to use their pension savings to buy homes, according to a new report on how the boost the housing market.
The number of property sales in the UK has crashed since the recession despite 5m people "languishing on waiting lists", the CBI claims today in its Unfreezing the Housing Market study. John Cridland, CBI director-general, said the fall in sales has accounted for a third of the 6pc drop in UK GDP during the recession. Boosting housing sales could be "a major game-changer for growth", he added.
Allowing young people access to their pension pot for mortgage deposits, which would help their chances of getting a mortgage, would drive this boost. The CBI also said a so-called "Mortgage Indemnity Guarantee" insurance scheme, which has been discussed by banks and housebuilders, would provide banks with more confidence to offer higher loan-to-value mortgages to first-time buyers. This would protect lenders from the risk of a default on mortgage payments through an industry and lender-backed insurance fund.
Mr Cridland added: "While we would not want to see a return to overly-risky lending practices and unsustainable personal debt levels, it is important that we get credit flowing to those who need it most." The CBI said housebuilding, which is at the lowest peacetime level for 90 years, also needed to be increased. It called on the Government to address "structural housing market failures" and allow offices to be turned into homes without planning permission.
Pension fund investment sought by UK ministers to stimulate economy
by Allegra Stratton - Guardian
Up to £50 billion could be put in to projects to improve Britain's housing, power stations, super-fast broadband and roads
Ministers are finalising a radical plan to boost investment in UK infrastructure and stimulate the economy, with proposals to pool the vast assets held in British pension funds and use them to back an ambitious programme of road and house building. Pension and insurance funds are to be encouraged to invest up to £50bn in improving infrastructure, including private and social housing, power stations, super-fast broadband and motorway toll roads.
Government sources want UK pension funds to ape the financial activities of Canadian pension funds, which last November invested in the UK Channel tunnel rail link. Though pushed out by the Liberal Democrats on Sunday, the plan appears to have the support of ministers and officials across the coalition as they try to galvanise the economy without breaking the strict rules on public spending set out in the government's deficit reduction plan. This would see them accused by the opposition of resorting to a "plan B".
It is understood the government will create a "pension infrastructure fund" as part of the growth review, due for publication on 29 November. The situation is becoming increasingly critical as the Bank of England prepares to cut its growth forecasts for 2011 and 2012, revising down the forecasts for this year from the 1.5% predicted in August to just 1%. Ministers believe that as the pension funds could receive a share of the eventual revenue raised by the infrastructure building – via energy bills, tolls or rents – the plan is financially attractive.
Variants of this type of intervention have been championed by Oliver Letwin, the prime minister's chief policy adviser, and the idea was last included in a pamphlet by the business secretary Vince Cable for the thinktank Centre Forum in September, but Treasury officials suggested it be left out.
Since then, the idea has been taken up by both the Treasury and the Department for Business, of which Cable is head. A Tory source confirmed the idea was being actively pursued by the coalition, with the focus on how pension funds could be co-ordinated to enable them to act together. The new plan comes after battles between the Lib Dems and Conservatives over policy suggestions by the venture capitalist Adrian Beecroft.
Some Tories are keen to adopt suggestions by Beecroft, who was commissioned by the prime minister's head of strategy, Steve Hilton, including the ending of unfair dismissal claims. It is thought that Lib Dem leader Nick Clegg is resisting the compromise solution currently on the table that unfair dismissal be ended for young workers. The move could make employers more inclined to hire young people – on the basis that they were no longer scared of being locked into employment contracts they feared they might not be able to afford in months to come.
Clegg was due to make a speech on youth unemployment on Monday, but this has now been delayed because of the eurozone crisis, officials said. However policy debates on what Clegg's speech should include are continuing.
There is mild irritation within the government over Lib Dem tactics, with Tory sources blaming Lib Dems for a story which emerged last week suggesting the chancellor was now taking on Hilton over Beecroft's suggestions. It remains unresolved whether the funds contributing to the new pension infrastructure fund will take their own risk on the investment, with the prospect of good returns on their money, or whether the government will underwrite their investment.
If the latter, the government will be adding liabilities to the public books, and it is thought this could be done off the balance sheet. A decision to do that, however, would expose the government to accusations that it is repeating the tactics of the Blair-Brown years when, through public-private initiatives, the costs of improving state infrastructure were also left off the UK's balance sheet.
This comes alongside an expected major push on credit easing – where the Treasury buys company debt – which is also expected to be off balance sheet. A Treasury source fuelled this expectation, telling the Sunday Times: "We will not be changing the government's capital spending envelope and we will not be issuing new bonds to fund this." He said the mechanism would not affect the UK's balance sheet.
The government has already made clear it will push infrastructure spending in a bid to jumpstart the economy. In a speech earlier this year, Clegg spoke of the need to ensure infrastructure projects in receipt of money from Whitehall would actually take place, deploying the chief secretary to the Treasury, Danny Alexander, to ensure that the 40 projects that have been approved are completed.
In their conference speeches, both Alexander and the chancellor, George Osborne, announced that money clawed back from departmental underspend would go into infrastructure projects. The government put £500m into a "growing places fund" for infrastructure projects. The new £50bn pot marks a significant amplification of this strategy.
British pension funds will be encouraged to behave as their counterparts in Canada do. The Ontario teachers' and municipal workers' pension funds last year invested in Britain's Channel tunnel link, winning the contract to run the service for 30 years. Such funds find lengthy contracts financially desirable.
Cable told the Sunday Times: "We know there is a large amount of institutional investment in pension funds and insurance companies looking for a safe return. At the moment, it is extraordinary that foreign institutions will invest in British infrastructure but British companies won't.
"What we have to do is create a framework regulation so that private investors will have the confidence to invest in big projects and help get the British economy moving again." In his pamphlet, Cable called for a new programme of road building to be made a financially attractive proposition by allowing the contractor to bring in payment through road tolls.
Road building is also favoured by the Treasury because it increases the prospect, through the fuel duty paid by motorists, of increasing revenue further down the line. One possible new toll road is the A14 around Cambridge, which is in a heavily congested area and of critical importance to the economy because it brings lorries into the country from the port of Felixstowe in Suffolk.
192 comments:
Unlimited growth is the prime directive of a cancer cell.
We need more discussion of what a de-growth world looks like and what policies are required to manage the transition and to maximize our well being at the destination.
The only work I am aware of is that by Peter A. Victor http://www.pvictor.com/MWG/Home_MWG.html
but other people must also be working on it.
Perhaps you could write an article on this someday?
The market ticker has been the lonely voice speaking against growth. All growth is exponential.
I want to stress a few of your points.
Everyone and their pet parrot are by now clamoring for the ECB to step in and buy everything under the sun, ... it also happens to be plain illegal to let it, under EU law and probably under that of some of its members as well.
The EU and ECB have changed, bent, or broken rule after rule.
The USA has changed, bent, or broken rule after rule.
... stop talking about economic growth. There ain't none, and we need to wonder hard and loud why we still and always unquestioningly assume and accept that we need it. No, the Greek economy will not grow its way out of its misery. Neither will Italy's, or France's or America's. There's too much debt to grow out of.
... if we don't grow, we will shrink. And that, we are told, is the very definition of armageddon. But why couldn't we shrink a little and still be comfortable? In theory we could perhaps, but first of all the human mind isn't made for shrinkage, and second the money we create as credit is virtual, and can disappear as fast as it was created, and into the same nothingness.
Economic growth of .5 to 1% is not enough to pay the interest.
we'd better start talking about what to do when growth is no longer a viable option.
Stop your leaders from lying, and stop lying to yourselves. At the very least, you’ll feel less embarrassed. And ask yourself: what do you want to grow into?
What's missing?
answer:
Knowledge and awareness. Accepting that change will always be a persistent factor in life.
The journey may be long and hard but we must journey on until we come to our happy abode.
jal
In the immortalized words of pop icon Alanis Morissette, "Isn't it ironic?" Irony is hypocrisy with style (just heard that on TV).
Economic growth is what we seek, yet it was our aggressive pursuit of short-term, ever-accelerating growth that has made further growth practically impossible. If they had paced growth, made it a marathon instead of sprint, and devoted surplus value from growth towards equalizing its fruits, and building resilient, decentralized infrastructure to support a growing society from beneath, then perhaps we would have gradually reached the same scale of operation we have now, except sustainable, and decades down the line. Or perhaps not. But, the way it has evolved, globalized society was never really left a chance.
Fortunately, we can still construct a resilient infrastructure at smaller scales, from the individual all the way up to relatively large communities. It's the process of distilling the definition of individual components from the definition of the collective. De-homogenization, if you will. Evolving; growing in a different direction. Shedding our roles as liars and hypocrites; embracing the truth. Discovering or re-discovering a philosophy to live by.
But first... the markets must crash!
WHAT: International Conference on Degrowth in the Americas
WHEN: May 14 - 20, 2012
WHERE: Montreal
Twenty years after the Earth Summit in Rio, the linkage of sustainable development to economic growth requires profound rethinking. It has not offered a convincing solution to one of the most dramatic crises in history: how to avert ecological collapse while enhancing social justice and improving life's prospects. In advance of Rio plus 20, our Conference seeks to challenge and move beyond the sustainable development agenda. A degrowth perspective will help us visualize and build towards a truly prosperous world. Confirmed Participants: Herman Daly, Naomi Klein, Edgardo Lander, Joan Martinez-Alier, Serge Mongeau, William Rees, David Suzuki, Peter Victor
Conference Website: http://montreal.degrowth.org/
"If the financial world can't get the votes, it simply chases away chosen leaders and appoints its own guys"
Yeah, which cracked me up; they're both "eminent economists". Now THERE is news to instill confidence.
Ya'll here are used to me calling economists "econo-astrologers"; point being that both those "sciences" have an equal basis in reality, and equal value in predicting the future or understanding the universe.
But, now I'm not sure. Astrology has a truly ancient tradition behind it; millennia of purest respectability. Right up there with reading cracked shoulder blade bones and the entrails of goats.
"Economics", it now strikes me, is far more comparable to another science that popped up, was extremely popular for a few decades, and then was abandoned, when it was found to be- basically useless, and constructed out of whole cloth.
That would be - Phrenology; the science of reading the bumps on the head.
A much, much, closer parallel to Economics there. So; be prepared for me to be referring to the Econo-Phrenologists, and their Fauxbel Prizes. Hey, they read bumps! The ones on the graphs? And, they can just make up a graph, any way they want- and bingo, more bumps to pore over. The old Phrenology charts are fabulous; incredible amounts of information, all purely fabricated.
In terms of the people of Greece and Italy- it's pretty hard to see any improvement in their lot. Out of the hands of the professional politco-criminals, and into the hands of the professional bump-reader charlatans. Progress.
In terms of what to do about "growth"; this is not 100% congruent; but it's parallel. There's a feature article today on "Google Labs"; where they've been given bottomless resources and no instructions except to "work on significant stuff" - so, they're making humanoid robots. Godelpus. Here is my comment there; which I'm gratified to find is #4 most recommended at the moment-
http://tinyurl.com/7t6zu6x
Hey! Google folks!! Lissen up.
You're on the wrong track- altogether. Not kidding. The vast majority of your projects listed here follow a dream established for science and technology at least 300 years ago- "to make our lives easier."
You really need to re-examine that, entirely. For those in the First World- the case can be powerfully made that our lives are already too easy. We are over-fed; over-weight, and bored to death. Is your goal to make that beautiful achievement available to the Third World also?
You, of all people on the planet, have been given the true freedom to THINK- and act on your thoughts.
I suggest to you- our real problem today is finding ways for ALL people to lead satisfying lives. And that does NOT mean "easier."
Rob- about the shape of the future; there are lots of folks thinking about it, in many directions; here's a very recent one:
http://tinyurl.com/cc6kpyk
And the Transition Towns movement, in it's various intarnations:
http://transitionculture.org/
Your hope for "policies" that are "required" seems really, really optimistic to me. :-)
Brilliant opening essay Ilargi. In just a few short paragraphs you were able to bring together the whirlwind of thought fragments and concerns most of us have had spinning around in our heads for several years.
From now on when I try to get people to understand where we stand and the inter-related nature of our problems this will be what I have them read first.
Rob and Greenpa
As Yogi Berra put it, the future ain't what it used to be. I use to make a lot out of the prize in economics being a faux Nobel, but now that they have given Kissinger and Obama "real" Nobel's for peace, you cares? Are the current crop of neoliberal and Keynesians stupid or cognitively impaired enough to believe their own nonsense? Who knows? The psyche of the sociopath is a strange territory. However, I have no doubt that Mario and L-Pap know exactly what they are doing. Celente sums it up well. They are the knee breakers who want their bosses money back from the people of Greece and Italy. Don't have it? OK, we'll take your gold, your ports, your electric plants, your hospitals and your first born sons. The Gambinos don't have Ph.D.'s in economics or tenure in institutions of higher learning (if you exclude prisons), but they know how to do business just like Mario and L-Pap.
Gerald Celente gives good interview and reveals he got effed for big bucks by MF Global. Jeez, if they can rip off Gerald, do mere mortals stand a chance?
http://www.youtube.com/watch?feature=player_embedded&v=G3N2Ge4KsvU
Brandon Smith poses some big questions in a thoughtful manner and worth the read.
http://www.zerohedge.com/news/guest-post-economic-collapse-we%E2%80%99re-soaking-it
The Italian 10 year bond rose from 6.36 to 6.70% today. The ECB PPT probably still has 7.00 as the line in the sand. Spain's 10 year just broke 6.0% today. Will Germany really stop the ECB from buying every bond in sight and expand its balance sheet to many trillions or will they cave when the fear turn into a sprint for the wc? Or will Germany pull out first and let the chips fall where they may for the rest of the eurozone? But the New Mark would go through the roof and they would lose their export markets. Germany will be in recession as it is in the 4th quarter.
A sad synchronicity, Richard Douthwaite, the author of "The Growth Illusion: How Economic Growth Enriched the Few, Impoverished the Many and Endangered the Planet", has passed on.
Thank you Greenpa. I have read Astyk and Transition and find them both far too light weight.
Much must change in a no growth world such as a new monetary system, capital investment methods, home ownership, work sharing, retirement age, sharing with the less fortunate to avoid war, and much much more.
Was hoping to find someone who had worked out a reasonable path from here to there.
The Best of L-Pap's Speech.
Telegraph: "He claimed that estimates put the deficit at "around nine percent" of GDP in 2011, down from 15.7pc in 2009 and 10.6pc in 2010, but warned that public debt was increasing."
via Guardian (direct quote): "It is a fact that the crisis and the current policy have worsened recession and unemployment."
Definition of insanity is doing the same thing repeatedly and expecting different results. Or, doing the same thing repeatedly and expecting the same results. Either way, L-Pap is insane. Samaras, a bit more sane.
Guardian: "Addressing his MPs for the first time since he agreed to power-share in the three-party coalition, Samaras emphasised the "transitionary" nature of the interim administration and said New Democracy would not support any new austerity cuts that might arise when Athens thrashes out the finer details of a second bailout program with the EU and IMF in the coming weeks.
"This is not a coalition government," Samaras said in the much-anticipated speech. "It would only be a coalition if we had common policy goals. Our criticism of the policies followed by [the recently replaced George] Papandreou government does not end here," insisted the politician who has vehemently opposed the "growth through austerity" remedies meted out for Greece. "We have committed to helping the transitional government but we don not commit to anything else," said Samaras who has persistently argued that the country's recession-plagued economy needs to be kick-started with lower taxes and more emphasis on development and growth.
If foreign lenders were under any illusion that the leader might relent and sign on the dotted line by giving them a written assurance of his commitment to economic reforms, they were disabused of that, too. The EU and IMF have both said that they want "a clear and unequivocal written statement about the commitments to be undertaken by the Greeks authorities," so as to restore confidence in the crisis-hit nation's ability to ride out the storm ASAP.
Samaras told MPS that he would not sign a separate letter requested by EU officials saying "my signature on Greek official documents is enough."
@sensato
Thanks for the link. I'll probably be there since my wife is a student in one of the departments involved. That being said, what exactly even more talk of "decroissance" is going to achieve while the zeitgeist is for "ma criss d'job ben payanunte, pi l'croissaunce d'l'economie, osti! pi vite 'que sa preusse en tabarnak, j'po ete en Flouride c'tanee, pi 'chutanne, criss!" is a complete mistery to me.
More talk. No way out.
Oh, Ilargi can translate the Quebecois bits :)
el G, I haven't understood Germany's export success for ten years now.
They don't make a darn thing that I want and can't buy from some other first world country at better value for money and no snooty attitude that they're doing me a favor by condescending to deal with my sloppy disorganized anglo-saxon self.
Rob,
It sounds like you are interested in policy or semi-policy mechanisms that would help people become relatively resilient to the effects of a contracting economy, due to financial and/or industrial collapse (which are obviously inter-connected). If so, you may be interested in reading our "Diamond" articles published so far, and staying tuned for future ones. They presently include articles addressing:
North Dakota's independent monetary system
A revival of the Department of Subsistence Homesteads
Small-scale agriculture in rural economies (as best exemplified by Hardwick, VT)
@Ash
I like to hear your comment on how 'planned obsolescence', as a feature of modern capitalist industry, is baked into the economic cake because of the pressure of keeping up with the inherent built in interest charge in fiat money creation.
As the last century's economic expansion took place, the quality, at least of hand tools, degraded significantly.
As this century's economic contraction takes place, can we expect tool quality to go back up in the absence of corporate 'planned obsolescence'policy?
I've been going through flea markets for hand tools and some of these tools are so amazing well made, 100 years+ old, it strikes me as coming from not only a different industrial model, but a different mindset. That a quality tool is part of a culture's core heritage to it's next generation and the reflection of it's central values just as a piece of crap tool, meant only to last a few seasons, also speaks of it's makers ethics.
~
Growth is the Law, growth under Gravity.
Love the new banner.
When The stock markets go up and down and you get confused than just listen to this.
http://www.youtube.com/watch?v=h1YHVHXr1bY
@Rob
Sorry that so much of what you read is lightweight. Of course, these are people who are actually doing as opposed to people who hoped to find an effortless path from here to there.
I find dilettantes everywhere. They want a painless transition from doing little to earn their keep, to doing much to earn their keep, without the inconvenience of having to work a spade for a good part of a day.
There are a bunch of us out there who know about the sustained physical effort required to keep a household going, and I'll bet that you know all about that, intellectually.
I wish you good luck. Meanwhile, I'll be eating.
They don't make a darn thing that I want and can't buy from some other first world country at better value for money
IMHO, they are best at making tools that other use to make things. They have a vast number of companies that are world-best - each in its own little niche.
Forget about BMW, Daimler and VAG - they are mostly foreign labour.
Video for the comment above has been pulled off. It was much too dumbonic even for MSM. I deleted the comment.
Rob- if I understand you, your consideration that Transition etc is too lightweight is because they do not work with central government pathways? Yes? No?
If so; I've got to ask- where do you see a functional central government forming, in the near, or even visible, future? All the ones I can see are declining in effectiveness, really quite rapidly. Even those tending toward totalitarianism/oligarchy - are not EFFECTIVE in enforcing anything we'd call "policy" - particularly not any policies tending toward "the common good".
Who is going to establish and enforce your policies?
I need to share this experience. Quite frankly, I don't know where else I could share it as few would actually appreciate it. A few weeks ago, I opened some accounts at my local credit union. These were both personal and business accounts. The business accounts were particularly difficult to open and I had to bring in the normal documentation (incorporation papers, proof of tax id and etc.), but it took them nearly two hours to open the accounts because they had to “verify stuff”. When I inquired as to why, they told me that the banks were always sending in spies daily with faulty paperwork to trap them so they could report them to the authorities. So, I just opened the accounts with a minimal amount of money and figured I’d move everything else later. I normally don’t go inside banks as most of my business is handled through the drive up and most of my deposits are made electronically, so I have no reason to go normally, so while there, I was struck by the armed guard behind a station right at the front door. That struck me as odd then and still does, particularly in light of the fact that this credit union is located in a quiet suburban community with a crime rate next to nothing.
In any event, I decide to go ahead and begin transferring my money over today and I wound up going to another credit union branch. Again, this branch like the other is located in a relatively safe area, yet another armed guard is present. I give the lady a check that wasn’t especially large (about a couple of grand) drawn on the commercial bank account I’m closing for deposit into the new account I opened. The teller goes and speaks to the manager because the check amount is “over her limit” and comes back and tells me that they’d need to place a 7 day hold on the check. Well, I got bills to pay, so I tell them that doesn’t make sense because I know you guys clear the checks far quicker than that. They still insist that they’ve got to hold it and I tell them fine, since my old bank is right across the street, let me go over there and get a cashier’s check. Of course, I’m getting slightly pissed at this point.
I go across the street to the bank and the first person I run into is another guard in the lobby. This one’s unarmed from a guard company they’ve apparently contracted with. I tell them I want a cashier’s check and give them the check I was trying to deposit at the credit union. They ask for ID, which I give them and the teller again has a check “over her limit” and has to talk with a manager. She then comes back and tells me that it will cost me $ 10.00 for a cashier’s check because I have free checking. I say fine, but I don’t want to pay for my own money, so just give me the cash. Before she does that, she wants me to re-endorse the check in front of her so she can verify my signature----again this is after giving her a picture ID with a signature on it that matches the endorsement on the check. She’s satisfied after I re-endorse the check and counts out the cash to give to me. While all this is going on, I keep thinking about all of this and how I’m jumping through hoops just to withdraw and deposit my own money. Don’t get me wrong, I know that it’s necessary to safeguard against financial fraud and the like, but armed guards and a damn interrogation just to get and deposit my own money?
The thing that popped across my mind was the suggestion here about having money under one’s own control. There’s no difference between that and the bank anyway as not only are you not getting any interest, they’re dinging you with fees anyway. Moreover, I would have avoided this entire circus I went through today trying to change where my money is housed at.
I can see this getting worst---way worst over time.
I can see this getting worst---way worst over time.
As I already said: armed guard with your complete financial file on hand. Perhaps some thought I was jokingly exaggerating at the time, but it is coming...
Inside news:
http://tinyurl.com/7zm7yoh
"The cost-cutting at Goldman Sachs is reaching the top ranks of the firm.
"An unusually high number of partner retirements have been announced internally at the Wall Street bank in recent weeks, according to people briefed on the matter but not authorized to speak on the record. More than a dozen partners have announced plans to leave recently, a much higher number than in the same period in previous years.
"The executives leaving include some well-known names on Wall Street, like Kevin Kennedy and Jeff Resnick. Mr. Kennedy is a member of the firm’s executive committee and recently ran its Latin American operations. Mr. Resnik is head of commodity trading."
---------------------------
Well, isn't that interesting? There seems to be an aroma of rodents, floating about.
Nassim, I concede ignorance of heavy duty industrial stuff.
I buy hand tools and agricultural equipment. The only thing I buy that I concede they are best in world at is electric fence gear.
And in that teeny niche, the kiwis are 80% as good for less than half the money.
If you're making things with hand tools, British woodworking tools, and American mechanic's tools are both better than German, for seriously less money.
From "Candor strikes live on the Telly" Department: The Euro Collapse, featuring an FA instead of a trader. Sorry if it's been posted already, it's 3 days old, but I've not seen it.
#O Oakland by Glennda
As you know lots of Occupy villages were destroyed last night including Oakland's Hooverville. The only tent left is in a tree house built recently.
On Sunday a friend helped me deliver a huge box of Styrofoam cups and lids for the dining area. These were leftover from a large event before we banned Styrofoam. As we walked to the kitchen area a young black man offered help with the huge box to make it easier for us - we gave him our thanks. The area was peaceful with a few musicians playing in the afternoon sun on the steps of the plaza. There was a pleasant camaraderie in the air. One tent area had grown into a tall pavilion covering a number of tents and seeming to be a center of warmth for the cooler nights now (about 50 F).
What has struck me most about the encampment is the leveling of the playing field. Homeless people interact with teachers, students, local office workers and retailers. The sharing and outpouring of local support is warming for all.
Now that the camp has been removed, we will all gather at 4 pm a few blocks away in front of the Oakland Main Library (at 14th St. and Madison). I will be there for a few hours, before I need to go to a work meeting at 7 pm. As soon as it gets dark I expect more police brutality, but if they are wise, they will keep away.
I keep hoping for a location for a Hooverville; the thing is now that there is a whole community for the homeless and the Occupiers, I doubt the homeless will want to be segregated into a Hooverville. Likely next moves are: re-establishing the camp and/or occupying a large foreclosed building near city hall with an open space nearby for campers.
I hear complaints that the Occupy movement doesn't have a "demand". I can think of 100 things wrong with the country, and you can think of 100 things and if all of our demands were added together it would reach from coast to coast. What we need instead of demands are role models. What I see in the Occupy movement is a model of co-operation and community spirit. What I see is the warp and weft of a new fabric for our inner cities. These are people helping each other and talking to each other in ways I've never seen since the 60s. This new fabric is what we will need to wear in the coming hard times.
Greenwood,
That's a very interesting question. I haven't thought about it much, and haven't really read anything about it specifically, but here's my initial reaction.
I believe credit-backed fiat money systems are a natural evolutionary feature of the industrial capitalist system (to pull forward aggregate demand and generate profits through speculative ponzi finance), but that "planned obsolescence" really goes deeper than that. It goes to the heart of the capitalist dynamic - commodification. That, in turn, is intimately connected to what Marx called the "realization" of surplus value.
The Future of Physical Gold, Part III - The Final Realization
"In Part I and Part II of this series, Dialectic Foundations and The Evolution of Value, we discussed how the material conditions of human existence drove the evolution of the capitalist political economy, and how wealth came to be created through the production of "surplus value" from commodity inputs (= its objective "use-value" minus its "exchange-value"). The fruits of surplus value were increasingly concentrated among those who controlled productive assets and managed cash flows (finance) in the "wealth accumulation" circuit (M-C-M+).
However, this value cannot be realized without monetizing the exchange-values of finished products or services in a market. The realization of surplus value becomes a significant barrier to capitalist growth when workers cannot keep up pace through proportionally increasing wages in an unfriendly, time-constrained environment (only 24 hours in a day), while thousands are also displaced by technological gains and added to the "reserve labor army" of the unemployed. The latter process was heavily influenced by the discovery of fossil fuels, which allowed machinery capital to generate a higher ratio of surplus value than labor.
As the dialectic struggle between workers and capitalists progressed, certain political concessions had to be made by the latter so they could continue recycling surplus value in consumer and investment markets."
It goes on to talk about some "pro-labor" concessions that were made, but another aspect to circumventing the "realization problem" is manufacturing "needs" through "public relations", or market propaganda (as epitomized by Edward Bernays), to be satisfied by marketable products/services (commodification). I would say this process was kicked into high gear along with the development of easy credit policies after the neoliberal "revolution" of the 1970s.
Planned obsolescence, therefore, would be an industry that naturally evolves to support the process of manufacturing needs and commodification, and also becomes a more widespread corporate tactic over the last few decades. The problem is that, when the corporate system breaks down, it is in no small part due to the mass over-production of cheaply made goods and unaffordable services, due to the lack of credit money liquidity. That lack of cash flow may exacerbate the process of planned obsolescence, to reduce costs and increase sales volume.
Although oligopolies or monopolies may be fractured, there really won't be any smaller businesses with quality products to fill the void for some time, at least at relatively large scales. Businesses that can match large swaths of consumers with long-lasting products they really need and could really use in a time of contracting wealth. So, in short, my initial reaction is that it won't be nearly as simple as planned obsolescence reversing course and quality products popping up over the next 20 years.
Here’s a good interview that gives a sense of what I've seen.
http://www.democracynow.org/blog/2011/11/14/amy_goodman_interviews_occupy_oakland_man_before_police_raid_peaceful_camp_we_are_a_role_model
Amy Goodman Interviews Occupy Oakland Man Before Police Raid Peaceful Camp: 'We are a Role Model'
Before dawn on Monday morning, hundreds of police in riot gear raided the Occupy Oakland encampment in order to evict peaceful protesters. They arrested more than 30 people who chose to remain as an act of civil disobedience. Later in the day, Mayor Jean Quan’s chief legal adviser resigned over what he called the "tragically unnecessary" police raid. Democracy Now! host Amy Goodman visited the camp on Sunday, prior to the raid. One participant, Ali, told her he was there to protest the closure of libraries and schools, and the massive layoffs of teachers and other public workers.
ALI: My name is Ali. How are you all doing?
AMY GOODMAN: Hi. Have you been here from the beginning?
ALI: Pretty much. Pretty much, yeah.
AMY GOODMAN: And what do you want to see happen here?
ALI: Well, there’s a lot of things. You know, I’m from Oakland, you know what I’m saying? So that, for me, to see changes, it’s not a Wall Street thing, it’s not a bank thing, but it’s a social thing. You know what I’m saying? Everything that’s been going on in Oakland—the homicides, schools being closed down, libraries being shut down, teachers being cut off, public workers getting laid off, work furloughs—everything that the city is supposed to be taking care of its own is not being done. You know, that’s what I’m here, is trying to get them to start taking care of us as a people in Oakland, California. I mean, this is minute. You know, this is a small thing right now, if you look at it from Oakland’s perspective, OK? But this is not small: we are a role model for the whole world. And that’s what’s going on.
Greg,
Funny,my experience in change over to a com.cred union went like cake,and as a bonus,when the lady who was processing my change-over said,"I have to ask you,whats your rate on your mortgage?"....then saved me a cool 20k with a refie that shaved 2 points,cut to a ten year note...w/less than a 150$ difference in my per month payment.
Sweet...I LIKE credit unions.
I am doing my dead level best to cut all ties to Chase except the ones that profit ME.Screw them
This is going pretty much the way we have all expected,with the euro death-throws,...and strengthening of the dollar...[Kind like a shot of meth to a punch-drunk fighter,Short term gain...but will fade fast and crash. Hard.]
I am wondering if the summer will see the kind of resurrection of the "occupy" movement that will come with a spring of discontent here in the USA.Brother mine thinks,as this movement is based on social injustice...and its still there[Like the 150k PEOPLE a week that drop off the UN-employment line]...and we will not have a tide that raises all boats ever, ,ever,...again...that "the movement" will be there ,always poking at the most tender spots it can find of the body politic.Like MIKE capping Eric Cantor at Rice university.
There is a whole bunch of smart,over-educated,white kids who have No-Idea what they have just bought into.The girls with the cracked ribs at Berkly now has a idea.And the police crackdowns nationwide on occupy movement have just started...It will get weird from here out I think.Sam Adams will pay a big price here for what he pulled...but no rubber bullets.
Its not going to get better now.Ever Again.
Bee good,or
Bee careful
snuffy
@Rob,
Peter Victor actually modeled a steady state economy, not a de-growth economy. Herman Daly is the grandaddy of the steady state. However, Nicholas Georgescu-Roegen pointed out that steady state economies have the same problems with finite resources as growing economies, just slower. They still use non-renewables, just less fast. They are, therefore, unsustainable.
Here is a paper which discusses these two perspectives. Degrowth vs. Steady State.
Greg L: You are lucky it wasn't $10,000+ because then you would be a drug dealer laundering money and have the suits visit you. Nonsense you say ... happened to a friend and we were talking about it this morning. Move only a couple thousand at a time.
The regulation is that any bank cash transaction $10k or greater must be reported to the Visigoths. However, many banks choose to set it a $3k just to be pricks.
greenwood, from last thread, regarding the kunstler article on penn state. i find it deeply intolerant from top to bottom. it's also dishonest, opportunistic and dogmatic. he's dug a mass grave for our society and now he's spitting on it for sport. anyone bent on treating mainstream society like that in the meat world is looking to get chewed up and spit out after TSHTF.
he lies when he says paterno has covered up the allegations for nine years. he pathetically uses 'anal raping' as if it holds more significance than sodomy. and there's this:
"Sandusky went on to a lively career in serial child homosexual rape." what the fuck is that? lively career? homosexual? there's a really awful sports reporter, john canzano, who writes for the oregonian who couldn't have done worse. who does kunstler think he is?
his suggestion that college athletics is devoid of character building is ludicrous. I played D1, corporate basketball and I know it's not true, even though I didn't particularly like the coaching staff. when he goes on to say that aside from the rare exceptions, athletes only "pretend to be students" he might as well go on to say that anyone who hasn't prepped as much as him is only pretending to be a doomer. he's such an asshole.
and how cynical can he be? he asks if he was the "only person revolted by video of the phony "prayer" session held in the Penn State stadium." well here are two versions, tv first and fan second:
http://www.youtube.com/watch?nomobile=1&v=WP_vq0zwTS8
http://www.youtube.com/watch?v=kP093ZZNzpw
what exactly is so phony about that? is the tv guy supposed to express some anti-corporate sentiment? would that have dignified the moment?
nor does he have any concept of what shame is when he suggests that a genuine shame would have resulted in the dissolution of the football program. he's just intent on the extrajudicial shaming of 100,000 people.
I could go on.
Greenwood,
I hear you regarding hand tools. I share your disdain for cheap tools and all they represent.
For this reason among others, I learned blacksmithing at one of the local community colleges in order to be able to make my own quality hand tools. As one who loves wood and shuddered at the thought of car repairs or plumbing (I thought metal and I had some kind of elemental antipathy), I found a deep affinity for blacksmithing. The concept of making a tool that can be used to make other things... too cool.
I still surf the local flea markets and I totally agree with your assessment of old hand tools- some are marvels of skill and quality. And there are some tools (those with moving parts) that are just too difficult to make without equipment and knowledge that I do not possess- but edged tools I can manage.
I understand there are auctions in Pennsylvania (and probably other old states) where old tools of all types in profusion can still be found. There is a local man who supplements his income with regular trips to such auctions for tools which he then sells here in Western NC at the flea market.
Planned obsolescence is a scourge on the planet and upon the soul of humanity.
@progressivepopulist
Have you ever checked out the Gransfors Bruks axes and hatchets on Amazon.
Are they priced about right for their quality?
I am not a blacksmith and cannot forge my own.
~
>>>Funny,my experience in change over to a com.cred union went like cake,and as a bonus,when the lady who was processing my change-over said,"I have to ask you,whats your rate on your mortgage?"....then saved me a cool 20k with a refie that shaved 2 points,cut to a ten year note...w/less than a 150$ difference in my per month payment.
Sweet...I LIKE credit unions.<<<
I may very well just try another credit union. My experience with this one has been less than favorable and whole scene with an armed guard presence I find unnecessary and objectionable.
Moreover, it just struck me today how difficult all of this was. It begs the question of whether the "back yard" banking would just be better for all the grief I went through. I'm not one to lose it or raise my voice, but one could have easily done that and wound up getting arrested. You know what it reminded me of? The nation's airports and the crazy security that revolves around that. I live in a town of something like 4000 people, why would you need a armed guard in a credit union in a town that small? The branch I was at today is in a bigger town (about 80,000), but was located in a quiet residential area. Again, why the armed guard?
The entire scenario was a major turnoff and an eye opener.
Greenwood,
I am familiar with the brand/company. I've seen pictures, but I haven't held one in my hand. My guess would be that pretty much any time you have a company that is making quality tools by hand, you are going to get some pretty darned good quality. They aren't cheap, but when one considers the cost of labor, materials, equipment, etc. + the mark-up from the retailer, I don't reckon anyone is getting rich on these things.
Perhaps you've already read this from their website: "Responsibility for the total
What we take, how and what we make, what we waste, is in fact a question of ethics. We have an unlimited responsibility for the Total. A responsibility which we try to take, but do not always succeed in. One part of this responsibility is the quality of the products and how many years the product will maintain its durability.
To make a high quality product is a way to pay respect and responsibility to the customer and the user of the product. A high quality product, in the hands of those who have learned how to use it and how to look after it, will very likely be more durable. This is good for the owner, the user. But this is good as well as part of a greater whole: increased durability means that we take less (decreased consumption of material and energy), that we need to produce less (gives us more time to do other things we think are important or enjoyable), destroy less (less waste)."
If you have in mind to buy the Swedish Carving Axe or something similar for woodworking, I'm sure you'd be hard-pressed to find better. If you can find an old axe or hatchet that will serve your needs, you may get very serviceable quality- though it may require annealing, rehardening and retempering.
I am a furniture designer and builder in a simple oriental design and have been for a number of years.
Lie-Nielsen makes fine tools and charge fine prices. My point is that you can now buy new excellent quality hand tools. I have a couple planes and saws from them and they are top notch.
http://www.lie-nielsen.com/
I also have several hand tools from
http://www.leevalley.com/
and they also are excellent. In both cases they took the old patents and improved on them.
A few years ago, I got into Japanese tools (I also build shoji) and for some things a pull saw and their bimetal chisels are better. I also make specialty planes but I use Hoch commercial blades ... again excellent.
Cheap hand tools are poor and will never compare with the old ones. The old hand tools were used by craftsmen and they didn't tollerate poor quality or maybe the poor ones from then just dissappeared.
>>Greg L: You are lucky it wasn't $10,000+ because then you would be a drug dealer laundering money and have the suits visit you. Nonsense you say ... happened to a friend and we were talking about it this morning. Move only a couple thousand at a time.<<<
Lynford, I thought about this today and I also thought about how you can almost be treated like a criminal just to deal in cash, or for that matter, try to deal with moving your own cash. When I told the teller at the bank I wanted cash, it was a major deal. She had to check whether she had enough in the drawer, count it twice by hand and then put it into a mechanical bill counter before giving me the money and we're only talking about a couple of grand here. I can see someone really getting grief trying to withdraw $ 10,000, which I think technically shouldn't even get reported since it's clear you're withdrawing money from a known source as opposed to depositing 10K from an unknown source. It's clear to me that even moving sums like a couple of grand is difficult.
Sometimes I wonder whether or not they going to outlaw currency by going to virtual money on everything. First, the bankers get a slice of most of these transactions and that's reason enough to push it especially since loan demand is down while they're taking on losses from lending. They'll probably claim that they need to do this to prevent fraud after some "Gulf of Tonkin" fraud event occurs to scare everyone into accepting the idea.
Today's events are causing me to do some rethinking.
Lynford,
I concur on Lie-Nielson and Lee Valley. Japanwoodworker also has some fantastic tools of equivalent quality.
I once made a bi-metal socket-type mortise chisel and I can tell you, the prices one will pay for the amount of work that goes into such tools purchased from quality manufacturers/craftsmen is (as I'm sure you know, having made planes yourself) worth the money.
In Drumbeat discussions yesterday:
There's No Place Like Here: Liberty Tool
Redbriars, Greenpa, Ash,
Sorry for my poor choice of words. By light weight I mean after having read "go local", "grow food", "build relationships" a thousand times I am searching for some more substance. It might be useful in the future if some of us have developed answers to complicated questions if and when society starts asking the questions.
P.S. I have taken a course on small scale farming, we are growing food, I am driving less and walking more, etc.
Sorry if I sounded arrogant.
Ruben, thanks for the link.
Is this a venue that would benefit from a presentation by STONELEIGH?
Would a recommendation from a commentator, to invite her to make a presentation, be appropriate.
http://montreal.degrowth.org/contact.html
International Conference on Degrowth in the Americas
Montreal, Quebec, Canada | May 13-19, 2012
" Greenwood said...
@Ash
I like to hear your comment on how 'planned obsolescence', as a feature of modern capitalist industry, is baked into the economic cake because of the pressure of keeping up with the inherent built in interest charge in fiat money creation."-----
Scofulous butts in here:
Greenwood, for my two cents worth of frosting, I think what we are dealing with is a rather crooked economic cake! Otherwise there would be no 'inherent built in interest charge' or inflation that would have any traction. All us party goers just happily munching on the same cake just like fish in the same little pool not knowing what is water.
That aside, one thing that could happen with an otherwise'striaght up' kind of economic cake, that would build in your obselecence, would be the nature of humans to look for a less costly item, the result being the producer would try to give a cheaper (and crumbier) item in competition, for which we have human nature to blame. But of course we do have a crooked cake to contend with and that just means plain clever-ass thievery of your portion of the fruits of surplus value
@ Ilargi...
Thank you once again for consistent and quality commentary. :)
@ Board....
Good Evening.:)
Any justifications for why Paulson & Buffet have been investing in Bank of America?
Especially given the recent paper shuffle of derivatives under FDIC insurance umbrella.
Is B of A too big to fail? or is its failure expected and insiders are positioning themselves first in line for QE injections?
Or it could just be propaganda stunt ?
or Noise?
Could BofA be a "tool" by TPTB to destroy the FDIC prior to the "loss" of deposits at multiple large banks and thus Permanently destroying a majority of "saved demand" = demand destruction
Any reasons to invest in BofA?
Cheers
Frank,
By tools, I mean advanced stuff. For example, if you want an automated kiln to make bricks or whatever. Printing machinery. Speciality chemicals, paints, coating - things that go into other things.
I once worked for a private unlisted German chemical company that made around 17,000 different products - a company almost no one other than their customers and competitors has heard of, because their name was not on any final product. I knew their number of products because I developed their costing system which had to split up the overheads over all these products.
I am not familiar with hand-tools, but I suspect the Germans left the low-end stuff for others.
If you want to buy something as "simple" as nuts and bolts, you will find that a single German company virtually dominates the market - Würth nails down profit forecasts.
I don't think the people buying this expensive stuff are doing so because they don't know any better - far from it. :)
It is looking more and more like the attack on Iran is a go
http://tinyurl.com/bvq2wus
Craig Murray can't get a mainstream paper to touch this article.
Gore Vidal said years ago that the decision had been made to go into Syria and Iran. Current events would seem to support his claim.
I'm afraid this has WWIII written all over it.
occupy wall street just got raided. batons and chemical weapons.
re: Kunstler
ben,
I am glad Kunstler has found some other outlet for his vitriol. His discourse on the Middle East is usually very unpleasant, racist and dishonest so I gave up reading his stuff years ago.
Brunswickian,
I read the Craig Murray link. Very sinister. Thank you.
All I can say is that they seem like a bunch of public school boys planning to beat up another kid. Not very professional.
IMHO, an attack on Iran will lead to lots of surprises - very unpleasant ones. I don't think China and Russia will remain spectators. I can't see the Japanese being thrilled either.
nassim, i'm glad I found an outlet for my vitriol, too. :)
OWS updates from Yves:
http://www.nakedcapitalism.com/2011/11/zuccotti-park-being-raided-now-if-you-can-join-ows.html
Morning market update:
-Spanish 1Y bill auction failed to meet 3.5bn target, priced at 5%+ vs. 3.6% last month
-Mr. Monti finding it difficult to hustle Parliamentarians and get support for new technocratic, austerity-mandated gov't.
Italian 10Y - Back above 7%
Spanish 10Y - 6.3%
GBT/Bund 10Y spread - 530bps
OAT(French)/Bund 10Y spread - 180bps
DAX - (2.5%)
FTSE MIB - (2.6%)
On Spain.
The Guardian: "Spain's expected change of government could not be more different to that seen in Italy or Greece. It will involve the normal practise of democracy, with an orderly transfer of power from José Luis Rodríguez Zapatero's socialists to the PP. There is, another words, no panic involved, no imposition from outside the country and the resulting government should be totally stable.
...So why are the markets piling pressure on a country that began biting the bullet on austerity and reform in May 2010, has so far met its EU-agreed deficit targets, and is increasingly held up as an example of a well-behaved euro zone pupil?
(lists 2 possibilities)
...The other possibility is this: they think that even a reformist, market-loving, austerity-driven prime minister with the fulsome backing of voters and no electoral challenge for the next four years cannot fix Spain's problems in the current environment. That would be very glum."
Bingo!
Rob- I didn't find you arrogant, and my questions were serious- exactly what, more, are you seeking? And from whom?
Most thinkers see the world moving into a far more chaotic time, with huge power vacuums. Trying to live, survive, in that world means- you cannot rely on large forces, "government" "policies". Probably.
I think you might also find some of the deeper conversations you're hoping for, in the "comments". They are few, and far between; but sometimes there. I have the advantage that I've known both Sharon and Rob Hopkins since before the were Sharon and Rob. So to speak. And I've kind of naturally read their output, top to bottom, when I could.
It's vast. But I do recommend it. (My own, too, on occasion.)
An intrinsic difficulty with what you are seeking- serious thinkers don't HAVE many answers at the moment. Nobody really knows what happens next- so planning for it is exceptionally difficult.
And it's pretty difficult, as a writer seeking to keep readers, to put out an essay about "boy, we're all clueless, huh?" - and make it useful.
As someone here (Scandia, I think) blurted a couple months ago - "I don't know any answers; I'm still trying to figure out what the questions are."
Nail on the head. And that is where everyone I consider a sound thinker is, right now. The ones with answers are fools, charlatans, and con artists.
Your "questions" - are very sound ones. In view of the dearth of answers, I go to the next question- what KIND of answers do you hope for? Narrowing things down often helps with a little progress.
jal said...
Is this a venue that would benefit from a presentation by STONELEIGH?
Yes and no. Yes because they would have a lot to learn. No, because what she says defeats the purpose of having lots of seemingly important people talking just to hear themselves speaking and feel good about themselves.
Would a recommendation from a commentator, to invite her to make a presentation, be appropriate.
Since I.M.Nobody stopped commenting, I thought about changing my screen name to his. That would be because I.M.Really.Nobody. I know this was not directed at me, and that there are other readers from Montreal, but I`m powerless here, and my wife too.
@Jal, the degrowth conference for Montreal/2012 looks interesting. I'd like to attend.
@p01, Are you in Montreal? If I can gather the " readies " for the Mont'l conference it would be nice to organize a TAE meet-up.
scandia said...
@p01, Are you in Montreal? If I can gather the " readies " for the Mont'l conference it would be nice to organize a TAE meet-up.
I expect the public (the i.m.nobodys from MTL) attendance to the conference will be very close to zero. I really don`t see the purpose of bringing out of the area already in the know people for a meet-up, but I'll be there if MTL is still intact by coming May.
Greg L said "Sometimes I wonder whether or not they going to outlaw currency by going to virtual money on everything."
I think for many people that might be difficult since they do not have a computer nor use credit nor debit cards.
I know some people who may have SS check auto-deposited, but then draw-out cash for spending and write paper checks for the bills.
Perhaps if the financial institutions freeze-up in a global crisis, the only currency to use would be physical dollars and coins.
I guess it's best to plan for all scenarios.
Chaos watch; so far not on MSM radar:
http://tinyurl.com/7f2g7yg
in toto:
"Angry residents in flooded areas of Thailand have destroyed a defensive wall built by the government to divert floodwater around central Bangkok.
"A 5-kilometer wall of sandbags in northern Bangkok prevents water from running south, flooding the capital's central districts.
"But the barriers worsened the flooding in the north of the city.
"On Sunday, residents destroyed 10 meters of flood defenses near Don Muang Airport in northern Bangkok.
"One woman says her house has been under water for over one month because of the wall. She says residents in her neighborhood are all in trouble.
The floodwater is pouring in through the breached barriers.
"The Thai government says it will repair the wall. But experts say Bangkok's central districts may be inundated if residents break the wall again.
Tuesday, November 15, 2011 06:16 +0900 (JST)"
http://www.theglobeandmail.com/globe-investor/court-green-lights-transfer-of-mf-global-funds-to-rbc/article2235821/
The former customers of bankrupt futures brokerage house MF Global Canada Co. are about to regain access to their money and trades, after an Ontario court approved the transfer of the bulk of their accounts to RBC Dominion Securities – promising an end to two weeks of limbo for roughly $400-million of investor holdings.
Here is a good example of exponential growth.
NOOO problems in BC <--> hahaha!
http://www.vancouversun.com/news/Municipal+spending+grows+four+times+faster+than+population/5705022/story.html
Municipal spending grows four times faster than population
Local government outlay is up on average 46 per cent in 10 years, CFIB says
Ben,
I am not quite sure exactly what the substance of your rant against Kunstler is. Readers here know that I have my problems with him as well, and agree entirely with Nassim that his articles on the Middle East are, at best racially biased, and really quite useless. While I do read him occasionally, the moment I see Arab, I move on as quickly as I do with a Mish article where I see "union" not preceded by European. He also has a tendency to write in a somewhat hyperbolic fashion, but as I have the same tendency, I am more forgiving in this regard. But cutting to the chase in your rant on this thread and going past generalizations such as "dishonest" and "opportunistic":
"he's dug a mass grave for our society and now he's spitting on it for sport. anyone bent on treating mainstream society like that in the meat world is looking to get chewed up and spit out after TSHTF. "
Probably the majority of commenters here have done the same thing and few of us are expecting "mercy" when TSHTF. What aspects of current American MSM society would you wish to defend? The university/sport industrial complex?
"he lies when he says paterno has covered up the allegations for nine years. he pathetically uses 'anal raping' as if it holds more significance than sodomy."
Well, sodomy covers a lot of bases. He has a right to make the allegations more specific. While I am an animal rights advocate, I regard inviting a sheep into one's private quarters as a lesser crime than butt fucking a 10 year old boy. They both come under the label of sodomy.
I have not aquainted myself with all the sordid details of this affair nor do I wish to, but whether Paterno covered it up or not, he certainly did not pursue it with he vigor he should have. I mentioned earlier that I view child sexual abuse to be a crime more heinous than first degree murder. Perhaps you regard it more in the area of jaywalking.
""Sandusky went on to a lively career in serial child homosexual rape."
In case you haven't figured it out, homosexual involves Sandusky butt fucking little boys instead of little girls. Serial means he did it many times.
While I agree that university sports may have great value for individual athletes, I agree with Kunslter that at the administrative level it is fundamentally corrupt. As to a career, perhaps inaccurate as it appears to be a non-paying avocation.
"and how cynical can he be? "
Well, as Lily Tomlin famously put it, you still can't keep up.
"what exactly is so phony about that? "
What is phony about it is that corporate type religion in the USA is at the antipodes of what Jesus proclaimed. I come from a generation where "kill a Commie for Christ" was accepted dogma among most of the self proclaimed religious, but I can't find it in any of the Gospels.
Yes, Kunstler can be quite snarky - that is his style and it pays his bills. But in substance, I agree with most of what he had to say in the article.
Ben and Nassim,
I do not know what Ben is going about in this particular part of his statement:
"he [referring to J Kunstler] pathetically uses 'anal raping' as if it holds more significance than sodomy. "
I may be mistaken but, as I understand the situation, the incident referred to occurred between an adult and a child of 10 years of age. If Ben considers sodomy a wholesome endeavour that is his delectation, but to equate that act with the sexual interference of a child is an abomination.
While the NHK news feed often publicizes unfiltered blurts from primary sources; before they are hushed, they also illustrate some internal news filtering in Japan regarding nuclear catastrophe; most specifically the extent of the contamination. Today there is no mention, via NHK, of this bad piece of news from the BBC; of research published in the US Proceedings of the National Academy - our most prestigious source of science.
http://tinyurl.com/7eb7997
"New research has found that radioactive material in parts of north-eastern Japan exceeds levels considered safe for farming"
"Food production in the most contaminated regions, the researchers write, is likely to be "severely impaired", and that Fukishima's neighbouring regions, such as, Iwate, Miyagi, Yamagata, Niigata, Tochigi, Ibaraki, and Chiba are likely to also be affected"
Excellent map. Basically; yeah, a whole lot of Japan is contaminated, to the point where it's dangerous, and it's not going away in several lifetimes, and the officials in charge, aren't.
CHS does it again!
http://www.oftwominds.com/blog.html
The banks are not getting bailed out.
The gov. are not getting bailed out.
It all the saving accounts of the savers that got robbed and the theft is being covered up by gov. and banks.
jal
A good article by John Gray on the Occupy Movement:
http://www.guardian.co.uk/commentisfree/2011/nov/15/occupy-realists-europe-ruling-elites
Last night, I saw a van pull up to a dumpster. A well dressed, well fed man in his fifty got out and checked out the dumpster.
This got me to thinking and wondering about why he would do that. He didn't seem to be in financial need.
Here is a link that helped me and has me thinking of doing the same thing.
Here is a way of making a difference. If you look you could find a group of like minded people. You could end up with a community of survivalists.
http://urbandumpsterdiver.wordpress.com/
A developing boil on Obama's butt (or so it will be touted) - the $100M bonuses paid to Fannie/Freddie execs:
http://tinyurl.com/7rbs5xz
Now being investigated, by a committee near you. This one should be fun to watch. To me, it looks like a bunch of bankers are about to be thrown under the bus. To the cheers of millions.
IMHO all of the radioactive testing of the soils in Japan is suspect. It would seem that most of the radiation is in the top inch or less of undisturbed land. As soon as the land is tilled the radiation is incorporated into the top few inches of soil and perhaps several inches deep.
The crux of the testing is the probable radiation in the food produced. Plants have different absorption depths. Some are rooted mostly in the top few inches and some like alfalfa are very deep rooted.
To me, in addition to testing actual product as it arrives at market, it would seem reasonable to plant several test fields of differing varieties and testing the product for radiation. Further, there are concentrators like cows milk from radiation on surface grasses. These concentrators have to be accounted for through testing.
The situation in Japan is so sad. My son married a Japanese girl (1983) when stationed in Japan. We went over for the wedding and stayed with her parents who were farmers for a few days. The father said his family has been farming has been farming this land for 2000 years though only owning the land for since the shogun's land was dispersed. The soil was wonderfully organic. It smelled fresh and alive. They owned ~5 acres and supported the family with a large greenhouse growing strawberries as well as rice and lovely vegatable gardens. You saw them destroyed one after another as the tsunami hit.
LG,
so far you seem to be quite incapable of sympathizing with anyone who has sexually abused a child. what i'm hearing loudest from you is crime! crime! crime! until you indicate otherwise there's probably not much point in replying to the points you raised because it'll feel like talking politics with a democrat. I will anyway but first I will attach a link that was the first result of the search "confessions of a pedophile" with the hope that it helps facilitate our discussion.
http://www.google.com/m/url?client=ms-android-hms-tmobile-us&ei=8qTCTpCgOaSsiQLeKQ&gl=us&hl=en&q=http://www.secret-confessions.com/guilt/im-a-pedophile&source=android-browser-type&ved=0CBwQFjAC&usg=AFQjCNEj6UFoit-OckU7IZ4CqmqJot6c2g
One of the things I like about both Clemente and CHS is that neither is afraid to use the F word (fascism) where appropriate.
it appears that King Canute's rising tide has washed out the 7.00% line in the sand for 10 year Italian bonds. Maybe the ECB PPT took the day off to reload :-)
I think the battle between the NWO and the rest of humanity in the immediate future will center around whether the German electorate will stop the Owners from monetizing their bad debts. The strategy of R&R et al (Rockefellers and Rothschilds) is to let things deteriorate until such a point that what remains of the middle class is so scared shitless that they will give them carte blanche. Beer and popcorn.
What I find more appropriate about Penn State vis-a-vis this site is (once you review the superlative This American Life audio article linked above), one may come to the conclusion that millions of American students have sold themselves into a debt serfdom which cannot be broken through bankruptcy for four years of an ethanol purple haze. K A Fitts' semi insider comments in her recent interview indicate that the management of Sallie Mae were guilty of felony fraud because they were making loans which they were well aware could rarely if ever be paid back.
Ben
"so far you seem to be quite incapable of sympathizing with anyone who has sexually abused a child."
The simple response to this statement would be, "damn straight." There are many other causes that I would chose to donate my limited stash of sympathy to. Perhaps as the Rolling Stones suggested back in the '70's, to the Devil. And, agreed, discussing it further with you would be quite useless, as you have indicated, as you seem totally oblivious to the degree of torture and damage that these acts produce in the child throughout its life. As of geezer of 65, I have seen it first hand as well as studied it in the psychological literature. I must conclude that you either are, or choose to be for whatever reason, profoundly ignorant in this area.
Of course it is a crime! What could possibly be more of a crime? As to sympathy, I do realize that many perps were sexual abused themselves as children. But many sexually abused children did not grow up to become child abusers themselves. Maybe it gets to a question of free will.
As I said in my earlier comments, my primary concern is not punishment but prevention.
Out of curiosity, any other commenters here espouse Ben's blasé view of child sexual abuse? But this ends my comments on the subject unless a new commenter comes up with something really original.
LG,
"Probably the majority of commenters here have done the same thing and few of us are expecting "mercy" when TSHTF. What aspects of current American MSM society would you wish to defend? The university/sport industrial complex?"
spitting on a grave is a metaphor for the unfair passing of judgment. we don't get much of that here and when we do it generally gets called out, as it should. and i didn't say anything about mercy; i suggested that anyone who's intent on talking shit about people he doesn't know doesn't have a good survival plan; the people being everyone from sandusky to paterno to everybody else in that stadium, the implication being that they're all complicit in a way that they weren't before this scandal broke.
the people in that stadium don't belong to another species as it seems kunstler would have it. the aspects of american mainstream society i wish to defend, which includes the college sports complex, are the same aspects of TAE society i wish to defend. i'll spare you the warm and fuzzy buzzwords but i'll insist that real life examples of them exist. okay, the best example is greatness. regardless of its utility, if a young adult learns what greatness is by witnessing it first hand and what greatness requires and, furthermore, that it is achievable for everyone in their own right it can benefit the student athlete for the rest of his or her life. college athletics is no different in that respect from this comments section. i was intimidated here initially as i was at college playing basketball. i saw unquestionable greatness in my then teammate Steve Nash and i see the same in you. it is pirsig's Dynamic Quality.
as for regular old politics, of course university athletes should get a share of the revenue. the athletes who justifiably take the booster's ill-gotten gains are the prime example of the ones who get this, but most of them are just happy to be there balling and getting a full ride.
to be continued.
El GaL,
Maybe Christ would be more amenable to, what I imagine, is Ben's point of view, but as you might have gathered, I ain't Him and so would be unable to heal and say, "Go and sin no more". Guess it should be jail time and the rock pile unless there is a second coming at hand. Geez ... going by what has been happening in Europe, we might just be ready for that sort of end time event!
Resistance is NOT futile.
(via The Guardian's Helena Smith)
"Aleka Papariga, who heads the ultra-orthodox communist party the KKE, which has emerged as the biggest opposition bloc now that the two main parties and small LAOS group have joined forces in government, has told the 300-seat House that the coalition has been created to do the "dirty work of passing deeply unpopular measures." "None of these attempts at saving the economy will work. Greece, mark my words, will leave the euro zone," she said.
Alexis Tsipras, who heads the leftwing SYRIZA, said the government should prepare for mass resistance. "You say that the memorandum [outlining the tough conditions Greece has accepted in exchange for EU and IMF aid] is the only way, the only road. This is not true. There are other ways. Instead of making the poor, the unemployed, pay for this crisis, you could go for the rich, those who have, not the have-nots .... you could slap taxes on huge properties, on assets that the mega-rich own abroad. You choose not to, preferring instead to slap a tax on everyone and then threatening those who cannot pay with power cuts.
The [George] Papandreou government," he added referring to the previous administration, "fell ... because of us, mass demonstrations, pressure from the street. We will not only not give this new government a vote of confidence. We will resist en masse," he warned."
Precarious and testing, but not futile.
scrofulous,
I entirely support el g's position regarding the mistreatment of boys - whether it is done by a sports trainer, cricket commentator, Catholic priests or Jewish guardians.
As ben said, it is a crime which changes the personality of the victim and makes it much more likely that he will do it to others - when he grows older. An extreme historical example is Vlad the Impaler
In fact, I really don't understand why in so many jurisdictions it is considered less serious than raping an under-age girl. Perhaps it is for historic reasons - the girl could get pregnant. I don't know, but I don't think it should be so.
scrofulous
Have to disagree with Jesus´s outlook being more compatible toward Ben's concepts with his "Go and sin no more." Apparently Ben thinks:
1) Adults butt fucking 10 year old boys is not a sin.
2) One should feel sympathy for the perps but no mention of sympathy for the victims´ruined lives.
3) No mention of the "no more" implying my main interest of prevention of further damage to young people.
So, what are the common talks on the infamous TAE these day? are we going to be slaves to the NWO? or should we load up on tuna, seeds, water and bullets? please confirm as I have been absent for quite a while.
El Gal- there is one aspect to pedophilia you may not quite be grokking- pedophiles are almost universally people who were victims of pedophilia themselves.
It can be a positive feedback thing- and like addiction to heroin, intrinsically very difficult to break the cycle.
Not that it excuses. One of my all time favorite quotes; and I couldn't find the source, alas;
"Of all sins, the least forgivable is to try to ease your own hurt, by hurting others."
Which is a very sick and twisted thing to do- and very, very common; particularly among the hopeless.
LG, from your latest comment,
"damn straight."
pfft - whatever, man. i much prefer it when you say that maybe it gets to a question of free will. that, finally, we can agree on.
but back to your previous comment:
"Well, sodomy covers a lot of bases. He has a right to make the allegations more specific. While I am an animal rights advocate, I regard inviting a sheep into one's private quarters as a lesser crime than butt fucking a 10 year old boy. They both come under the label of sodomy.
I have not aquainted myself with all the sordid details of this affair nor do I wish to, but whether Paterno covered it up or not, he certainly did not pursue it with he vigor he should have. I mentioned earlier that I view child sexual abuse to be a crime more heinous than first degree murder. Perhaps you regard it more in the area of jaywalking."
yeah, nice try. a lot of bases my ass. are talking about goats here? is that what we're talking about? are we talking about adults here, as scrofulous would have it? is that what we're talking about here, scrof? no it's not. we're talking about the sodomizing of a child. we all know what that means for fuck's sake. when's the last time you heard sodomy used when referring to oral sex?
now, "butt fucking" i don't have a problem with. it's a bit juvenile when talking about such a serious matter, but my problem as stated before is with "anal rape." firstly because kunstler used "homosexual" incorrectly. this along with the general nasty tone of the piece makes me suspect that he had motives for the phrase other than that of accuracy.
more specifically my problem is with "rape." rape is defined by a lack of valid consent. do we know that in the moment sandusky knew he didn't have the boy's consent. i know this is hard to swallow but, no, we don't. we just don't know. the science points to a higher prevalence of cognitive distortion in child sex abusers.
think about arousal. think about it. if, as the science indicates, pedophilia is simply another sexual orientation -- which makes our 31yr old example bisexual since he also likes adult women -- then wouldn't a clear refusal of consent from the boy thwart sandusky's arousal? according to the witness it appears the boy submitted perhaps incapable of refusing, and it is entirely possible that sandusky, in his unfortunate condition, and aroused, simply wasn't thinking straight and thought it was the tacit approval of a friend.
if you can't sympathize in any way with a person who has to deal with the consequences of that (hypothetical but entirely plausible) scenario for the rest of his or her life then so be it.
to be continued.
Again I have to use the Armenian word to make my point and sorry for boring you guys with that.
We are ancient and wise.
Our version of the story is always the truth.
Before Jesus Christ we had other beliefs that were sacred.
One of them was Mount Ararat.
Today Jesus is sacred but so is Mount Ararat.
We knew about all the other religions and those things people believed in.
We knew about the Jews and all the other stuff.
Our forefathers didn't like those things.
Churches may have given Christianity bad name but Jesus is still sacred.
Jesus is about love.
Today I look at other religions and I see evil writings in their books.
I am not going to give names but those people know who they are.
In our sacred books it does not say things like it is a good thing to kill your neighboord and make profit from it and not get caught doing that.
Again our version of the truth is always right.
LG,
"In case you haven't figured it out, homosexual involves Sandusky butt fucking little boys instead of little girls. Serial means he did it many times."
i guess i missed this one. unless you think kunstler has no qualms with homosexuality, this comment of yours is meatheaded. my point was that his sodomizing and otherwise abusing boys instead of girls has nothing to do with homosexuality. it is the result of pedophilia.
"What is phony about it is that corporate type religion in the USA is at the antipodes of what Jesus proclaimed. I come from a generation where "kill a Commie for Christ" was accepted dogma among most of the self proclaimed religious, but I can't find it in any of the Gospels."
maybe you can soften your beak on the actual prayer and not sharpen it on a lifetime of legitimate grievances. it is given by one of the coaches of the opposing team. it's good.
on grace
unfortunately the coach thinks gay sex is a sin, but no person is without context.
"Apparently Ben thinks:
1) Adults butt fucking 10 year old boys is not a sin.
2) One should feel sympathy for the perps but no mention of sympathy for the victims´ruined lives.
3) No mention of the "no more" implying my main interest of prevention of further damage to young people."
i think child sexual abuse has just as awful ramifications as you do. it was disingenuous of you to state otherwise so stop trying to throw me under the bus to everyone instead of talking about it as it actually exists in the world.
Could a moderator please ban any Penn State discussion? It has quickly become poisonous, and has no bearing on the purposes of TAE.
Could a moderator please ban any Penn State discussion?
I regret having started that one. I simply used it as an example of something weird going on with people thinking it is OK - so long as the team wins.
"Could a moderator please ban any Penn State discussion? It has quickly become poisonous, and has no bearing on the purposes of TAE.
I second that.
.
El Gal You say:
"Have to disagree with Jesus´s outlook being more compatible toward Ben's concepts with his "Go and sin no more."
You missed the first part, that of healing first and then forgiveness for those past deeds .
I don't belong to any Christian church but I can read their book. I think they talk a bunch about redemption in it? As well the French novel Les Miserables would illustrate the point.
This is not intended as a licence for licentiousness, me amigo! ... And thanks I've wanted to use that line for quite while. LOL!
"Could a moderator please ban any Penn State discussion? It has quickly become poisonous, and has no bearing on the purposes of TAE.
I third that.
More about #Occupy Oakland
At this moment people are starting a march up Telegraph Ave in Oakland to Sproul Plaza at the UC campus in Berkeley to support the movement there. This should be a news maker as a speaker was scheduled to talk about the 60s Free Speech Movement. That was moved out into the plaza to support the Occupiers there. This could be a big gathering.
News about the fall-out in Oakland. More of the mayors staff are quitting.
9:21 p.m. First interview with former Deputy Mayor Sharon Cornu
Deputy Mayor Sharon Cornu has resigned, effective immediately, the second member of the mayor's team to submit her resignation Monday and the fourth in a month.
She spoke with Oakland Tribune reporter Sean Maher about the decision:
"I felt I wasn't being effective," Cornu said in an interview, adding that her work didn't seem to be meshing well with the style of Quan's existing team. Cornu said she made her decision last week. She had been in the post a little less than a year.
...
"It was clear that a more effective team needed to be put together," Cornu said. She declined to directly address Quan's reputation among opponents as being difficult to work with and self-absorbed, but said she respects and believes in the mayor.
"Oakland really needs a political center, and I don't mean ideologically," Cornu added. "I mean a central place where people come to do the community's work and where people work together. That's going to be an enormous task, to build the relationships and create the trust that really launches Oakland into the future it can have. That's going to take a very different approach from everybody in City Hall, in labor and business and the community."
Quan needs people "that can really help her project her voice. It's a unique voice among mayors, coming from where she comes from, and having led the fights she's led," Cornu said.
Quan's longtime friend, confidant and legal adviser Dan Siegel also quit Monday, saying he couldn't support the mayor's choice to dismantle the camp. Police Chief Anthony Batts quit four weeks ago and public relations guru Nathan Ballard, a respected crisis communication expert hired by Quan in the wake Batts' departure, also quit.
City Hall sources said City Administrator Deanna Santana was ready to resign over how Quan handled the Oct. 25 police raid on the camp, but was talked out of it by another City Hall leader.
-----
great pictures
http://www.mercurynews.com/occupy-oakland/ci_19331753
LG,
"you seem totally oblivious to the degree of torture and damage that these acts produce in the child throughout its life. As of geezer of 65, I have seen it first hand as well as studied it in the psychological literature. I must conclude that you either are, or choose to be for whatever reason, profoundly ignorant in this area.
Of course it is a crime! What could possibly be more of a crime?"
i was sexually abused on one occasion, when i was nine. i don't know how long afterwards it was that i forgot it happened -- weeks? months? -- but i didn't remember it again until it emerged from my unconsciousness at the age of 18. 18 was also the age of the person when he abused me and i was told by a therapist that the ages were not necessarily coincidental. it was also at that point that i started exhibiting some signs of trauma. fortunately my sexual desires are normal -- rest assured this string of posts has not been a defense of myself in that sense -- if one can consider normal being at one end of the kinsey scale and only mildly kinky. i still cannot be sure that i know everything that happened as the images i have in my head may not be incomplete. i know that others have been affected much more severely - i shudder to think.
i do not know what has become of the abuser. the incident happened on holiday in the loire valley, staying with the my stepmom's penpal's family. when i remembered what happened i had my stepmom, who was of course horrified, write to the boy's parents, who were equally horrified. i decided that there was no point in pursuing the issue further. hopefully he is doing his best, like the 31yr old. some might say this "blase" attitude is a coping mechanism, or a character flaw. whatever the case -- i'm of the opinion it's philosophical in nature -- it's simply not in me to try and ensure somehow that he doesn't do it again.
i suppose i should say that if LG or anyone else is passionate enough about prevention to follow up on this matter in a manner acceptable to me i would be happy to come up with the necessary info.
by the way, my querying of judeo-christian culture was an earnest one. you yourself are mr. cannibals and kings. what of ancient greek culture and other indigenous cultures that had what open pedophilia? what do you make of that?
cheers mate. no hard feelings. :)
thanks everyone for your patience.
From Bluebird:
>>>>I think for many people that might be difficult since they do not have a computer nor use credit nor debit cards.
I know some people who may have SS check auto-deposited, but then draw-out cash for spending and write paper checks for the bills.
Perhaps if the financial institutions freeze-up in a global crisis, the only currency to use would be physical dollars and coins.
I guess it's best to plan for all scenarios.<<<<
There's a big push for virtual money. I read an article last year how they were figuring out a way for small purchases normally made in cash to be made via cell phone banking. As I recollect, they were actually testing such a system in rural Africa using some sort of portable satellite dish. The incentive for this is the transaction fees. Another point of reference is the dispensing of welfare benefits via a debit card--again this is a demographic that normally operates in cash and as I recollect, JP Morgan is a big player in contracting with state governments to provide this. In no small measure, the incentive for this are the transaction fees that the banksters get by inserting themselves as middlemen in every transaction, no matter how small.
I agree that we need to plan for all scenarios, but one thing that could jam having physical cash and coins is the move to outlaw it and there are any number of justifications running from counterfeiting to stopping terrorists---not to mention being able to literally shut someone down with a couple of keystrokes. Needless to say, I hope it never comes to that.
oh it's all good you guys. we're both from the NYC. we're just mixing it up a little bit and LG should be allowed to respond if he is so inclined. :)
thanks glennda for the updates. crazy!
Future discussions on Penn State can be held here. Not here.
Recommended reading from Chris Hedges.
This is What Revolution Looks Like
"The historian Crane Brinton in his book “Anatomy of a Revolution” laid out the common route to revolution. The preconditions for successful revolution, Brinton argued, are discontent that affects nearly all social classes, widespread feelings of entrapment and despair, unfulfilled expectations, a unified solidarity in opposition to a tiny power elite, a refusal by scholars and thinkers to continue to defend the actions of the ruling class, an inability of government to respond to the basic needs of citizens, a steady loss of will within the power elite itself and defections from the inner circle, a crippling isolation that leaves the power elite without any allies or outside support and, finally, a financial crisis.
Our corporate elite, as far as Brinton was concerned, has amply fulfilled these preconditions. But it is Brinton’s next observation that is most worth remembering. Revolutions always begin, he wrote, by making impossible demands that if the government met would mean the end of the old configurations of power. The second stage, the one we have entered now, is the unsuccessful attempt by the power elite to quell the unrest and discontent through physical acts of repression."
Greg L said
...not to mention being able to literally shut someone down with a couple of keystrokes. Needless to say, I hope it never comes to that.
Well, that is EXACTLY what TPTB want. It is their backup scenario if the 99% finally wake up and actively fight the inflation and taxation theft that the financial-political-judicial "troika" has put into high gear. Even now they have gotten so ballsy that they have resorted to outright theft (MF Global) and Fed-as-traitor theft (FDIC prioritizing BofA reinsurance of European bank debt). Much of our privacy and freedom only exists because we are able to engage in life activities through the mechanism of physical money. Greed/punitive fees and taxes on cash transactions are sure to amplify but are minor compared to how devastating complete virtualization of financial transactions would be to our freedom. Russo was right about the hand implant objective. The devil in action.
A scenario:
The gov. passes a law that as of Jan. 1 201? the only legal tender is electronic. On Jan. 2 the power grid suffers a massive failure.
re: Kunstler
"ben,
I am glad Kunstler has found some other outlet for his vitriol. His discourse on the Middle East is usually very unpleasant, racist and dishonest so I gave up reading his stuff years ago."
Nassim it wasn't you that got 'it' going it was likely me in reading your rather vitriolic attack on Kunstler. (I was sidetracked in amazement by Ben) I would say that if you wish to make a complaint about someone you should be more specific, rather than some nebulous, possibly libellous, broad brushed slur.
Considering that Mr Kunstler has done much to bring the problems of our civilization to public awareness I think he deserves at least that degree of respect.
Just watching in admiration the art work done in an automobile advertisement, Audi, and thinking what a waste of talent!
Maybe next time we will get it right.
Since I’m not the brightest among the commentators, I have a question.
Re. Taxing the rich
If the rich are taxed more and if the revenues are used to pay down debt and the interest, isn’t that just taking money from one hand and giving it to the other hand?
After all its only the rich who have lent money to the gov.
Did I miss something?
Re: Revolution.
I think the article is wishful thinking. Dissatisfaction is a country mile from revolutionary spirit. Revolutions are about taking power. Such actions tend to happen when the boot is slightly lifted from the neck, as too much repression in one country ends up handing competitive advantage to more liberal neighbours. In a single global system, the screws can be tightened continually as there is no actual alternative. A happy thought for y'all.
Hmm. I am legion. There are many Robs in my fathers house. I'll try and disambiguate when it's not so late. That was not the Rob you are looking for.
scrofulous,
I am not about to start reading Kunstler just to give you some examples. Do any search with words like Iraq, Afghanistan or Israel on his blog and you will quickly get my drift.
For me, it is quite enough that he has supported enthusiastically every military campaign against the indigenous peoples of the Middle East. He has also supported every effort by Israel to subvert, corrupt, militarise, occupy, threaten and subject its neighbours. The fact that around 1 million people have died in Iraq alone weighs less on his conscious than the loss of a single Israeli. He certainly gets no respect from me.
As regards Kunstler's writings about the possibilities of rebuilding parts of upstate New York and so on, rest assured that when TSHTF Mr Kunstler will leave for somewhere more congenial - somewhere like Melbourne. He is certainly not going to do any physical work himself. He comes from a long line of propagandists :)
TAE Daily,
Thanks, Hedges was in top form with that one. And unlike Rob, I am inclined to lend great credence to Hedges who is in my estimation one of the best journalists of our age and one who's analysis should not be taken lightly.
Today I went into the radio station prepared to discuss a very similar theme without having read this latest piece by Hedges, but was preempted by a visit from Bill Press's producer Peter Ogburn. Ogburn, a small cog in the Beltway media establishment, is of the (I believe mistaken) opinion that OWS has already burned itself out and squandered its credibility. I'm sure his opinion is largely rendered on the basis of a steady diet of MSM coverage of OWS. Below is a link to the show- Ogburn takes up the first 14 minutes answering questions from the host, I spent most of the next 25 offering a different viewpoint:
http://tinyurl.com/7gfalxr
Jal "
After all its only the rich who have lent money to the gov.
Did I miss something?"
Maybe, and maybe I am assuming I know what your 'lent money' means, but if I do then the answer to your query would be that you missed what is often considered hidden;)
As a kid at the Saturday afternoon movies did you not love Ben Gunn and his, "Them than hides can find and them that finds can hide."?
Greg L's credit union/bank story reminded me of a similar experience we had with some cash money.
I try to buy a ferry ticket with a $100.00 bill. The government employee at the booth won't take it. It's a 1973 bill and doesn't have a water mark.
We take the bill to our local chain bank. They pen test it and it comes out a muddy green. The manager steps in and declares it a bad bill and then hands it back to us like it's a souvenir (aren't they supposed to deal with suspected counterfeit money somehow?)
We take the bill down the street to our local regional bank. They pass it through their machine and it comes out clean. We ask to change it for some 20's (thank you very much) and they refuse to take the bill as legal tender! A teller makes a photocopy (!!!!????) and we leave, only to get a phone call later from her saying that she's talked with the local treasury office and that we should call the FBI agent that she'd spoken to about the bill. Apparently he had no record of the serial number.
So I'm freaking out. The FBI!? My husband talks with the guy, who decides, over the phone that the bill is good, and tells us to go back to the bank and let them know that they should accept our bill.
On that say so, (with out further checking with the FBI) the local bank trades the troublesome hundred for some well worn twenties and we heave a sigh of relief. Losing $100.00 isn't something we can afford!
So when you shift to that backyard bank, keep the bills on the small side! Apparently even the folks at the bank are having a hard time recognizing "real" money......
seychelles said...
Well, that is EXACTLY what TPTB want...Russo was right about the hand implant objective. The devil in action.<<<
You know, my friend, I've been thinking about this a lot along with the push for war with Iran which is certain to start a world wide conflagration. That would actually move us quickly toward virtualization of cash among other things. They need some catalyzing event that would make this more or less acceptable to the general populace. What better way to fight terrorists (and that will be anyone--including OWS) than to have some biometric marker to ensure that you are who you say you are.
Yesterday's events dealing with my credit union and my bank brought this in stark relief. Several thoughts crossed my mind including this thought---how would I prove I owned money if I had no ID? A biometric marker can easily be sold as a convenient solution just as debit and credit cards are currently convenient solutions for recordkeeping, getting refunds and etc.
You know, it's quite easy to dismiss the devil as some fairy tale akin to the epic type stories told by the ancients. In our modern world, unless something can be proven by scientific method, it doesn't exist and that means that the bible is discounted as a collection of tall tales---and the presence of some crazed religious types would seem to reinforce this. But science is necessarily a construct tied to man's interpretation of the world through his five senses and in that is its limitation. So, the non-physical world not seen, felt, smelled and etc is doesn't exist in that context, but the reality is another matter. The fact that something can't been determined to exist by man's limited methods doesn't negate its existence.
I'm convinced that evil exists in high places and that we're indeed in a spiritual battle with forces unseen, but existing nevertheless.
Island: "So when you shift to that backyard bank, keep the bills on the small side!"
definitely. Coulda told ya. 20's are the gold standard; so to speak. :-)
That and silver quarters.
Nassim
"For me, it is quite enough that he has supported enthusiastically every military campaign against the indigenous peoples of the Middle East. He has also supported every effort by Israel to subvert, corrupt, militarise, occupy, threaten and subject its neighbours. The fact that around 1 million people have died in Iraq alone weighs less on his conscious than the loss of a single Israeli. He certainly gets no respect from me."
Better, Nassim, but what did you do as an Australian when your country joined in those Iraqi war festivities?
And yes I will take a run through Kunstler's site, but for your information I was once termed a racist for taking a pro Palestinian stance with a former Premier of B.C.; he being a Jew would not even countenance the idea that the Palestinians had rights equal to Israelis. Other wise a very intelligent and pleasant fellow who I would not hesitate to invite to my house despite what I consider a rather nasty blind spot on his part.
Blindness in others is not cured by blinding ourselves.
Home sales, prices continued to rise in October.
"There was no shortage of headline news in October about global financial market volatility and economic uncertainty, but it doesn't appear to have dampened homebuyers' spirits,"
The growth paradigm works fine here, sais the Canadian homeowner. This is simply incredible.
Ha! remember my crack earlier in this thread about NHK just blurting stuff out? And here's a Fukushima related one, just blurted; and nowhere else I've seen- and I'd bet you don't.
http://tinyurl.com/72vnch4
"Officials took sand samples from 2 rivers in September.
"In northern Fukushima Prefecture, the upstream radioactive cesium levels were 3,200 becquerels per kilogram in the Niida River in a district of Iitate Village.
"The downstream levels of the same river in an area of Soma City were 13,000 becquerels.
"The upstream levels had fallen to one-fifth of those observed in May, but the downstream measurements had tripled."
Then they go on to say; gosh, looks like stuff is washing into the river- but as an ecologist with more than a smattering of hydrology; it stinks to me of increasing, ongoing, contamination of groundwater- working its way to the surface water in rivers. Tripled? Way, way too much for old runoff.
Better, Nassim, but what did you do as an Australian when your country joined in those Iraqi war festivities?
scrofulous,
I moved to Australia, from the UK, only two years ago. In the UK, I was living in a remote area. At that time, I made clear to anyone who was interested my opinion about the stupidity of invading Iraq. I am no propogandist - my interests lie elsewhere.
However, all of that is irrelevant. The facts are there for anyone who is interested to discover.
It is now public knowledge where Mr Obama gets his daily instructions from. The US Congress has also made it abundantly clear who decides US foreign policy in that region. As for the UK, they have an ambassador in Israel who has made it quite clear that his allegiances lie with Zionism rather than with his country.
As for MSM in the West - whose tune do you think it plays?
They are quite determined to start another war and this time it will be the big one.
As regards Australia. It is quite clear that the local politicians get their instructions from the USA. Here is today's example - Gillard's uranium backlash. Essentially, Israel/USA want India to be less dependent on Iranian energy. Here is an example from 4 days ago Obama to announce US marine base in Darwin and US bases in Australia ruled out. These two articles came out the same day and in the same newspaper and they are contradictory. The people in Australia do not wish to have a US military base so the propogandists are put to work to confuse the people and one day, lo and behold, there is a base.
This is an old process and if your read John Pilger's book of 1989, A Secret Country, you will realise that it always was so.
Jay Hanson once wrote something like (I paraphrase) : "Democracy only works until voters realize they can vote themselves an ever larger piece of the pie".
2 points:
1)This drawback to democracy was noticed and commented on back when the word was invented, in the time of the Greek city-states.
2)It doesn't seem to apply to what's happening now - income and wealth inequality is growing, not shrinking. No doubt this is because we do NOT have a democracy, because, in the words of Will Rogers (and read the Wikipedia bio of him - it's really interesting) we have the "best Congress money can buy."
And a third point - I read a saying in a book of Idries Shah: "You really own only that which would be safe in a shipwreck." In a spiritual sense, this was Marley's warning to Scrooge in Dickens' Christmas Carol - you own your character, your karma, the consequences of your good and evil actions - those are the only things you can take with you into the next life, if any.
But in a political-economic sense, it also applies - something is yours if you can keep it. And what you can get for what you've got (your skilled or unskilled labor, your crops, the mineral deposits on the land which "belongs to you"), and what you can count on keeping of that, is very much a function of the behavior of others. The significance of the OWS movement, which may perhaps be the first stirrings of the revolution, is that people are beginning to challenge the establishment understandings of the right way to do business. The sociopathic ruling elites are so obviously cutting themselves such large slices of the pie that "we, the many" have noticed that we do NOT have democracy, despite what we are constantly told.
May the Creative Forces of the Universe stand beside us, and guide us, through the Night (metaphorically speaking) with the Light from Above.
Nassim
"I moved to Australia, from the UK, only two years ago."
Not exactly chalk and cheese
"In the UK, I was living in a remote area. At that time, I made clear to anyone who was interested my opinion about the stupidity of invading Iraq. I am no propogandist - my interests lie elsewhere."
Like in this:
"
It is now public knowledge where Mr Obama gets his daily instructions from. The US Congress has also made it abundantly clear who decides US foreign policy in that region. As for the UK, they have an ambassador in Israel who has made it quite clear that his allegiances lie with Zionism rather than with his country.
"
Golly that sounds like a conspiracy of JEWS!
If that is how a person who, I think considers himself to be liberal minded, thinks then this , Out Of The Woodwork, mad diatribe by Kunstler makes some sort of bizarre sense ... I wouldn't feed either to the kiddies they might think them real food.
To be more plain spoken, a little breadth of mind on both your parts would be refreshing.
rob,
"Much must change in a no growth world such as a new monetary system, capital investment methods, home ownership, work sharing, retirement age, sharing with the less fortunate to avoid war, and much much more.
Was hoping to find someone who had worked out a reasonable path from here to there."
i would think you'd find SFV's latest conservation piece up your alley if you haven't already read it.
immovable object ... irresistible force?
"To be more plain spoken, a little breadth of mind on both your parts would be refreshing."
scrof, if you want some breadth of mind then don't draw too-narrow conclusions.
can't you distinguish a zionist conspiracy from a jewish one? or, for that matter, a liberal point of view from a radical one? the latter comes from latin.
radicalis: having roots.
All these 'growths' not one 'energy'...
As if all these economies run on air or unicorn farts instead of imported petroleum. All this €400 billion every year burned up for nothing.
Since there is no organic return the €400 billion has to be borrowed, no wonder the EU is bankrupt.
Any video of the streets of Athens show a city clogged w/ automobiles all scurrying around like rats. Where to go and what to do? Nothing! The Greeks are broke but can somehow manage to borrow or steal, so as to keep on with the fashionable waste.
Few of the drivers in Greece operate taxis or delivery services: what matters is Greek- and EU 'consumption'. The Greeks and others must find affordable energy to waste in the present in order to enable them to waste much more, later. This is of course insanity but the demands for 'growth' means the growth of waste and nothing else.
More nonsense: what do Greek 'industries' 'manufacture'? Feta cheese? The fantasy is that the PIIGS can compete with China at the same time becoming little Taiwans when Germany has its foot on their throats, cutting off their funding. This redefines asshattery a total new way. Germany wants captive customer base for its wasting machines, anything else the Germans say is lies like Tepco and its 'cold shutdown'.
Add to this is the additional €300 bn every year for militaries. What is the EU going to defend against? The Magyars, the Mongols? How about invaders from Outer Space? Libya? The Libyans were happy to sell crude oil to the Europeans and would continue to do so except for adventure v. Qaddafi. How is that working out? As well or better than buying from Qaddafi? €100 bn down the drain and what to show for it: Islamists and still no Libyan oil.
Here is almost a trillion euros per year burned up for nothing but the obvious problem to the Merkels and LaGardes is a teacher somewhere who makes a few euros too much, or some decrepit on a pension.
Too bad the morons in charge of things cannot find the same passion for their jobs that they find for their shiny, metal toys. What these people fail to see is the onrush of resource conservation being imposed upon themselves by their past waste, the force of events, of credit 'gone bad' and the absence of anything of value left to take to the pawnshop in return for some cheap 'convenience' and luxury.
The project becomes the seismic shift from the fetal position in front of the lying machine to the demands of hard physical labor and even harder thinking so as to earn a slice of moldy bread. Quite a shock for the pampered, lobotomized Euros but can't happen soon enough.
Golly that sounds like a conspiracy of JEWS!
You don't have to be Jewish to be a Zionist and you don't have to be a Zionist if you are Jewish. I am sure you know that perfectly well.
It is not at all far-fetched to believe that Zionism is behind a lot of these unnecessary wars - just read the papers and make up your own mind. Don't forget that it was the Zionists who made the indigenous Jews leave their Middle Eastern diaspora - countries they had lived in for many centuries. They could no allow these people to live in peace elsewhere as it was against the Zionist ideology.
@Steve from Virginia...WELL SAID!!!
Gerald Celente had his six figure gold account at MF Global vaporized by the " white shoe boys ".
Market update: Little changed from yesterday. 10Y yields/spreads across Italy (7.1%), Spain (6.4%), France (3.7%), etc. still drastically elevated, despite ECB buying Spanish and Italian bonds today. Probably not helping that Monti has not announced new government yet (and Italy refusing to release Q3 GDP statistics for another month... I wonder why?).
Back in Greece, still hard to figure out why so many people oppose the "debt relief" austerity package?
The Guardian: "11.46am: Will the Greek government in reality be much better off after the 'haircut' still being negotiated on its debt?
Negotiators from the Institute of International Finance, a consortium of Greek bondholders, have agreed to swap their current bonds for new ones worth just 50% of their current value, although the final figure has still to be thrashed out. But in return, they are understood to be demanding that the future interest rate on the new bonds will be around 8% a year.
As my colleague Patrick Collinson points out, this means that bondholders will receive almost the same amount of interest they are currently getting.:
In other words, the cost to the Greek government of servicing their giant debt may not fall by much, if at all. Yes, the crucial debt-to-GDP ratio will fall, but the portion of government spending eaten up by paying the interest on the bonds will stay much the same.
It's like changing your mortgage from £200,000 on 5% a year to £100,000 on 10% a year. You owe less, but the monthly amount coming out of your pay packet to service the loan stays the same, so you're no better off.
The negotiators for the IIF are also insisting that any future bonds issued by the Greeks come under British law, so that the Greeks won't in future be able to force any more haircuts on them.
Switching to smaller bonds will also mean that the amount Greece will then need to repay or roll over will be halved. But in the short term, it is hard to see how Greece's pain will be eased."
Gerald Celente had his six figure gold account at MF Global vaporized by the " white shoe boys ".
Not that I will shed a tear for Gerald "let's do something of value instead of trading futures" Celente, but how does Stoneleigh's message of taking your money out of the system sound now?
Gerald Celente + MF Global = Why you don't own paper derivative products with counter-party risk. In this case, counter-party = the broker itself.
Are deposit accounts any safer? (hint: look to B of A's derivatives book transfer)
Max K had a particularly interesting point on brokerage accounts and their 'safety' vs the same funds being in a bank.
"SPIC is a private/government sponsored company that insures brokerage accounts for up to $500,000 in securities and $100,000 for cash in case a brokerage firm goes bankrupt. While SPIC covers losses in stocks and bonds, it doesn't cover commodities futures contracts unless defined as specific property under certain conditions'..."
Gerald Celente loss his six figure futures contract in gold futures because of that clause in the SPIC coverage.
Max points out that distinguishing between different classes of investments (stocks bonds futures contracts) is impossible to discern nowadays because everything is a 'hybrid' blended investment vehicle done on 'dark exchanges and such.
So SPIC, the FDIC of account insurance for brokerages, can simply say none for your funds are covered because they are all partly 'futures contracts' due to their 'hybrid nature'.
In other words, none of your assets in brokerage account are 'safe' now. Gerald Celente is finding this out the hard way. It should be a wake up call for anyone with any money with any brokerage house to get the hell out.
Funds at brokerage houses are probably even less secure than in a bank if that is possible.
Stacey goes on to bring up the 1% of the 1% (.1%) who until now believed themselves a cut above the riff-raff. Not so.
MF Global actually froze the accounts of NYMEX and it's traders! Those scumbags fleecing everyone else got hustled themselves. hahaha
The 1% of the 1% got plucked and phucked by John Corzine and his MF Global ponzi! This is great news. No honor among thieves to say the least and no SPIC/FDIC coverage for anybody, it's a hollow shell.
It means it's the 99.99% against the .01%
~
Obama making a bid for second Nobel.
Austrilia Agrees US Marine Deployment Plan
"Julia Gillard and Barack Obama announce details of the new military arrangement.
Australia has agreed to host a full US Marine task force in the coming years, Prime Minister Julia Gillard has announced at a news conference with US President Barack Obama in Canberra. She said about 250 US Marines would arrive next year, eventually being built up to 2,500 personnel.
The deployment is being seen as a move to counter China's growing influence. But Mr Obama said the US was "stepping up its commitment to the entire Asia-Pacific", not excluding China. "The main message that I've said, not only publicly but also privately to China, is that with their rise comes increased responsibility," he said.
"It is important for them to play by the rules of the road.""
@Greenpa
Catch this one? A bit dated, but thorough.
Radioactive leaks found at 75% of US nuke sites
"Radioactive tritium has leaked from three-quarters of U.S. commercial nuclear power sites, often into groundwater from corroded, buried piping, an Associated Press investigation shows.
The number and severity of the leaks has been escalating, even as federal regulators extend the licenses of more and more reactors across the nation.
Tritium, which is a radioactive form of hydrogen, has leaked from at least 48 of 65 sites, according to U.S. Nuclear Regulatory Commission records reviewed as part of the AP's yearlong examination of safety issues at aging nuclear power plants. Leaks from at least 37 of those facilities contained concentrations exceeding the federal drinking water standard -- sometimes at hundreds of times the limit."
I was hearing that an atomic bomb will be dropped by Iran in the near future, anyone else hear this? I'm currently taking a course on growing vegetables and how to take a chicken out without much stress. What have you guys been doing to prepare for the Mad max world we are about to enter?..I hope that video games will still be available, I need something to practice my shooting on before the looters come for my chicks and veggies..please share what you are doing in these sad times..I am getting depressed just writing this.
$16 Trillion in Secret Bailouts.
Surprised? Not only they won, they cleared the place clean. It's over, folks.
mike
Will Allen is a hero.
If you go on YouTube there are many people that have videos of him.
http://www.youtube.com/watch?v=VV1p7thOSDM&feature=related
He simplifies the idea of fish farming without chemicals.
The only problem is that you need a team to do this project.
---------
As for the Atomic bomb.
There are people that really believe in an Armageddon and things like Amaleks.
http://en.wikipedia.org/wiki/Armageddon
http://en.wikipedia.org/wiki/Amalek
When you believe in something so much and want something so much than you will eventually get that thing.
Also make some money at the same time.
mike said
please share what you are doing in these sad times
Manual work, long walks, lots of reading, weight lifting until I'm jello, eat clean, and as a consequence I sleep like a baby.
We must accept our mortality and the fact that these events cannot be prevented. Kings and warlords have tried and could not prevent societal collapse.
I think what you're doing is just fine, and it's more that 99% of the population does.
I can't say: "Be optimistic", because I'm not, but just accept we are stardust and it will all be easier.
Reason why Republican/Democrat establishment hates Ron Paul = anti-war and anti-Fed stance.
Also the reason why people support him more and more. "Fiscal concerns" are inseparable from anti-war.
Romney Two-Way Race Now Four-Way Republican Dead Heat in Iowa
"Herman Cain, Ron Paul, Mitt Romney and Newt Gingrich are in a dead heat as the top choices for Iowans likely to attend the Jan. 3 Republican presidential caucuses.
A Bloomberg News poll shows Cain at 20 percent, Paul at 19 percent, Romney at 18 percent and Gingrich at 17 percent among the likely attendees with the caucuses that start the nominating contests seven weeks away.
Economic issues such as jobs, taxes and government spending are driving voter sentiment, rather than such social issues as abortion and gay marriage, the poll finds. Only about a quarter of likely caucus-goers say social or constitutional issues are more important to them, compared with 71 percent who say fiscal concerns."
@ TAE Daily
I saw that and also noticed that they did not talk about Ron Paul. If they keep ignoring him he will sneek up through the middle and end up being the contender. heheheh
jal
jal,
I really hope you are right, but it is just hope at this point. The TPTB will also do everything they can to discredit him or otherwise sabotage his campaign, as they have been doing. The only other option is to corrupt him once in office. I'm confident, though, that the voting public will increasingly support RP, especially if current war mongering plans go ahead, such as those against Syria or Iran.
Syria: The West's Strategic Gateway For Global Military Supremacy
"The League of Arab States (Arab League) suspended the membership of Syria in the organization on November 12 as it had with Libya on February 22 of this year. In the case of Libya, whose membership was reinstated after NATO bombed proxy forces into power in late August, reports at the time indicated that member states Algeria and Syria had been opposed to the action but folded under pressure for a consensus from the eight Arab states governed by royal families - Bahrain, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which to all intents and purposes now are the Arab League, with the other formal members either victims of recent regime change of one sort or another or likely targets for such a fate.
...If indeed Syria becomes the next Libya and a new Yemeni regime is installed under the control of the Gulf Cooperation Council, then the only nations remaining in the vast stretch of territory known as the Broader or Greater Middle East, from Mauritania on the Atlantic coast to Kazakhstan on the Chinese and Russian borders, not tied to NATO through multinational and bilateral partnerships will be Lebanon (see above), Eritrea, Iran and Sudan."
@ TAE Daily
Austrilia Agrees US Marine Deployment Plan
You got to read behind the smoke screen.
These bases will become doomsteads for the elite.
jal
http://money.cnn.com/2011/11/16/real_estate/Midwest_farmland_prices/index.htm?iid=Lead
They rob the people blind and invest the money in something people will have to have.
Control the food system.
http://www.youtube.com/watch?v=ZA-JCLYeDro
It would be nice to get your opinions on this.
It is kind of related to our current problem that we have now.
While France and Germany have been at odds about the ECB's role for some time, EU's Juncker may taken it too far this time:
(Reuters flashes for now, via ZH)
* EU's Juncker says that German debt level is a cause for concern according to a German newspaper - RTRS
* EU's Juncker says Germany has higher debts than Spain but 'no-one wants to know about that' - RTRS
Watching this video from itulip http://www.youtube.com/watch?v=EWlAJe_zY8Y made me wonder if debtor's prisons shouldn't be preceded with usury prisons.
"Junk Bond" Juncker's statement, continued.
The Guardian: "Is Juncker right [German debt levels being higher than Spain's]? I just ran a quick check on the data available on the International Monetary Fund's website. It estimates that the Germany gross national debt will rise to €2,122bn in 2011 (or 82% of GDP), while Spain's will rise to €733.2bn (or 67% of GDP).
(however, adding in private debt puts Spain ~366%, and Germany at 284%)
Still a remarkable thing for Juncker to say. The immediate chatter in the City was that it might be a cunning ruse to get Bund yields rising, narrowing the spread with the rest of the eurozone."
So when it becomes serious, you have to fall back on a ridiculously risky "ruse".
Short-term benefit = intra-Euro Bund spreads fall; short to medium-term cost = Germany says "to hell with you", defects from union and/or goes to war. Great play, Juncker.
Jack: Reference Jews and Christians. Could it possible be that both sides of the argument are wrong? Or both sides right? If so, what's your point?
Already you have people pointing fingers at these guys for using dirty tactics for get to these levels.
http://www.youtube.com/watch?v=ttjNZcqejnA&feature=related
http://www.youtube.com/watch?v=67Ieyg48AkA&feature=related
The give the evil word a new meaning everyday.
Again this is a small group of people and we cant hold all of them responsible for what they are doing.
How to take a chicken out without much stress. Enjoy the music too.
http://www.youtube.com/watch?v=LZFQO3Cgdrw
@Mike
"What have you guys been doing to prepare[?]"
We own our house and land outright, carry no debt, have only enough money in the bank to pay our bills that require a check or automatic withdrawal. We try to operate in cash the rest of the time (even though we have very little of it), and we practice, practice, practice at being impoverished, which is easy because we are.
We grow, butcher and/or preserve most of our fats, meat, vegetables, some animal feed and dairy (inc. yogurt and cheese) and fruit for the year. We save some seeds, heat, cook and bake mostly with wood (I do have a propane cook top and a solar oven, besides the wood cookstove), own and maintain a wood lot, have several years worth of whole grains and encourage it's local production through trying to buy from local growers (we can't grow our grain ourselves).
We maintain several part-time small jobs using manual skills, home school our children, belong to the local gun club and practice, practice, practice.
And we live in a community where we know a lot of people on a first name basis and many are pursuing some of the same activities, not because of TSHTF, but because it's a GREAT way to live. It's beautiful, human-scale, fun, challenging and powerful.
And yet I know, and consider everyday, that it could all be taken away by even the slightest change in our circumstances---and some of it most likely will be stolen in some form or another. And because of this I practice the most important skill of all -- being truly, truly grateful for all that I have, every moment of everyday, no matter how little it might be.
Alf Fields keynote speech at the Sydney Gold Symposium, The Moses Principle.
THE BRUTAL TRUTHS
1. The slate needs to be wiped clean and a new sound monetary system introduced.
2. That will require the elimination of all debt, deficits, unfunded social entitlements, the US Dollar as Reserve currency, and the big one, the $600 trillion of derivatives.
3. To eliminate these problems by default and deflation will cause a banking collapse and untold economic pain, leading to riots and political change.
4. Politicians are appointed for relatively short terms and opt for the easy solutions.
5. While politicians continue to have the ability to create new money at will, they will do so in order to prevent a melt down on their watch.
6. Consequently the odds point to governments wiping the slate clean by generating enough new money to eventually destroy their currencies.
7. The new international monetary system is likely to involve precious metals. It will have to be money that people trust and that governments cannot create at will.
Lynford, hmmm! Interesting video, but IMO not the best way. The best way loosens the feathers and makes a bird easy to pluck, I learned how on a farm about 50 years ago in Manitoba. I would describe it but, also IMO, protein and mineral rich eggs are what poultry are for, not for flesh, so why should I make chicken processing easier? Struggle in your perversion you ecologically incorrect chicken pluckers. LOL
Lynford1933 said...
How to take a chicken out without much stress. Enjoy the music too.
When I was visiting the countryside, one of my aunts would just pick the fattest one and twist the neck as she was greeting us: "Come, let's make a good roasted chicken with garlic and some cornmeal, you must be hungry". Plucking time as soon as the greetings were over. :-)
@Scrofulous
Only problem is that hens are born with a limited number of eggs and at some point, if you don't cull her, you end up feeding a pet chicken.
I have a rotational system for culling my old layers, and for taking just a few birds at a time I skin instead of pluck. Old hens past laying prime make a wonderful chicken stock.
What about roosters? If you're hatching out your own laying flocks you get plenty of unwanted roosters. They make it pretty clear among themselves that each flock only needs one. You have to cull, before they end up killing each other!
Too many roosters is no fun for the poor hens either. You actually end up with fewer eggs due to all the harassment.
Knowing how to kill a chicken humanely is a crucial skill, IMO, for city or country dweller alike.
"People like Papademos and Monti, as well as just about any political and economic leader on the planet, don't understand the science involved. Either that or they’re willfully blind to it."
Politicians do what is best for politicians but are bound by democracy. It is people that do not understand the dangers of exponential growth. This new book tries to fill the gap:
The Depletion Wall: Non-Renewable Resources, Population Growth, and the Economics of Poverty
Since the hens we cull are older laying hens, for soup, not for roasting, we skin them instead of plucking. Much easier and there is still enough fat for a good broth.
Roast chicken is a treat for us, since it means buying one raised decently which costs more than the industrial garbage.
-Joanna
OT Funny:
I would like to have chickens and my wife really likes chickens. The reason we don't have any is simple. My wife told me,"When the hens are no longer producing, they go into a rest home" and I, of course, have to feed them. "And if they need a hip replacement, by God they will get it." and that's the reason we don't have chickens.
Lynford1933
LOL, bro, and all this time I was under the impression that my wife was an only child!
islandlife said...
"Only problem is that hens are born with a limited number of eggs and at some point, if you don't cull her, you end up feeding a pet chicken.
"
I have ducks and used to have slugs who ate my cabbages most extensively. New ducks, old ducks, they all eat slugs!
I eat duck eggs, often with sauerkraut.
We try to keep about the number of ducks that we need at three to five. There is always the occasional natural loss due to preditors etc. Extra eggs go to neighbours from time to time.
@ Scrofulous
We've just started with ducks for both eggs and slug control, too.
And you're right, getting a little help with those slimy creatures pouring out of the forrest and into my garden might well be worth the feed, even when they stop laying.
Although roast duck for dinner might make a nice change now and then.......
@islandlife
I haven't seen you posting on here before. But your insights into your self-sufficient lifestyle and community are fascinating. You're way ahead of the curve. Where have you been hiding?
i'd like to apologize for my arrogance yesterday. sorry.
Its a bit frustrating to me to read about people's homesteading progress while I live in a densely packed city at the end of complex logistical chains with no means of escape and little chance of gaining more control over the necessitites of life around here.
Im still in crippling debt which only seems to grow in real terms despite me paying it down, with expectations of vastly diminshed income in the near future.
I'd become envious to know people can become satisfactorily self-sufficient while I dont have the means, but Im happy that some at least will suffer less because of their prodigious work and collapsified foresight.
I'd much like to have a garden to work in, grow some of my own food and to keep chickens, but the local transition town initiative seems the only outlet to facilitate this in communal context. It has motivated about a dozen people to be more self-sufficient in this town, whihc really isn't enough, demand for such initiatives will only fully erupt in the larger population when those logistical chains break down.
Let's face it, the formerly rich West is not going to go back to growth. Why? Because it is lumbered under mountains of debt. It is also hampered by the pernicious dogma that even mentioning taxing the super rich according to ability, closing the tax loop-holes for large corporations, and diverting support away from the military industrial complex is a sin that will have you burn in hell. It is an intractable situation which is ending as we speak in a slow motion train wreck.
What is the solution to all this? The solution is optimum wealth. We have seen very clearly today that maximum wealth (i.e. for the few) is not sustainable. We have also seen that the absolute curtailment of wealth, as in the communist system, leads to absolute failure. We need optimum wealth.
How can a society generate optimum wealth? Simple. Write a constitution and enact laws that
1) encourage business start-ups and support local cooperative ventures
2) require banks of any size, and businesses above a certain size to be run as cooperatives
3) require businesses dealing with raw materials, infrastructure and utilities - including reserve banking - to be run by the local elected government on a no profit no loss basis
4) establish economic zones on the basis of economic potential within which the economy will be protected by
a) exporting only value added products, not raw material
b) not allowing outside corporations to operate
c) right of way to employment for people from within the zone
d) protecting against cheap imports by import tariffs
5) guarantee work with a living wage, adjust wage scales depending on social value, and prohibit the accumulation of wealth above a certain limit
Economic progress will be sustainable and will benefit all, not just a small financial elite or a far away industrial heartland. The availability of purchasing power amongst the great majority of the society will make it easier for entrepreneurial people to start and run businesses. Special support to the co-operative business model will enable many many people to gain more control over their economic lives as members of producer's and consumer's cooperatives. Private corporations will not be allowed to grow in power and influence to hijack the political system. This is real democracy - economic democracy.
avcobe,
Before dismantling the private sector and moving it over to a co-op model, perhaps the public sector should be cut down to size. By public sector, I include the banks, MIC, big pharma, medicare and everyone else who is, directly or indirectly, a beneficiary of big government.
gravity
I'd much like to have a garden to work in, grow some of my own food and to keep chickens, but ...
... demand for such initiatives [self sufficiency]will only fully erupt in the larger population when those logistical chains break down."
Well ,while you have time before those logistical chains break down, I think you can do a bit of reading. Maybe others here could add a favourite book as well. Here is an old one I found too many years ago to think about: Root Cellaring. This might seem a funny book for you in the city but, if you can't grow, you can store and there are a lot of books on how to process and can foods. This year we had a bad failure of our tomato crop so we went to a local farm stand and bought tomatoes in bulk, very cheaply, and canned those instead.
@Skipbreakfast re Islandlife
More of us out here. We don't know you Islandlife, but are also islanders and share a similar experience. Used to have a career, ditched it long ago. Not much $$ now, but a far far richer life.
Not as difficult as you might think if you make the transition voluntarily.
" ... getting a little help with those slimy creatures pouring out of the forrest and into my garden might well be worth the feed, even when they stop laying."
Islandlife,
Yes slugs galore up here in the Canadian Pacific NW and coddling moth in abundance. I think my ducks are finally getting the moth's number as well though, as this years apple crop was quite improved over the past ones. Bit of a hard time for them though in that regard as my neighbour's trees are quite neglected and off limits for my ducks. I would keep ducks even if they gave no eggs at all.
My partner & I still have state/union jobs and we are working down our homestead list as fast as we can while we still have paychecks. Right now we still have a mortgage and a truck payment, but we can make those on one income. Luckily my partner's job is pretty much guaranteed, and I can get on her insurance if I lose mine.
We started out as city folk (with farmer parents) and only got going on our homestead in 2005. You have to practice and give yourself time for trial & error before you need to depend on what you grow for your only food source. And it helps to live in a farm community. We have neighbors who don't share our political/social/religious views, but we all get along because we hold self-sufficiency so high.
It also helps that we live in a region that is top in this country for the buy local movement. Most folks do their best to buy from people in this county and it really helps support small farmers like my household.
The transition movement is really cool, but it depends on connections with people over growing your own. I don't think I could go back to city life after being a country mouse, but it's good that urban 'steaders are working things out as best they can.
This family has some great info on urban 'steading, though they've turned it into a big deal over the years - http://urbanhomestead.org/
Read anything by Gene Logsdon too. He has a practical outlook on food-growing. Check your local county extension for classes and advisors, anything from backyard chicken info to master canner certification.
-Joanna
Gravity: Scrofulous is correct about root cellaring. I find it quite simple to grow things even here in the high desert. You are working with nature and plants want to grow and produce. Provide soil, sun, water, nutrients and voila. You may have pests and disease but the plants are trying their hardest to produce. What comes after is NOT natural. Produce wants to rot and will without proper care in temperature, humidity and air movement. All the work to get the product and if you lose it in March and your next harvest is in September … you just don’t have that for a couple months.
Drying and canning are separate endeavors for storage. We had a bumper crop of apples in 2009, lost the last two years apples due to late frost but we had fresh apples for half of 2010 and have (solar) dried apples for snacks and canned apple pie filling enough to last till about 2012 harvest (hopefully). Almost everything including soups and nuts is available for canning.
There are way too many people here now and I think (hopium) as things deteriorate most will move California where the climate is easier.
Geese fight back. BTW, did you know they are used as alert/guard animals in rural villages? I got "attacked" more than once for being a stranger in their territory; actually attacked pretty badly while being a kid. They make delicious eggs, and are delicious themselves.
Blogger is on a roll of inserting funny stuff in my links; this is the good link for the geese:
www.youtube.com/watch?v=kd3ioueUNHI
Re: geese
We had geese on our place in eastern WA. They made lots of poop and were amazingly ferocious guard beasts.
Also had ducks, but it was depressing to see the males raping the females all the time.
Our hens do pretty well at cleaning up the garden bugs in the fall once the crops are out.
Survivors of concentration camps report that the secret to staying alive was often simple: those who were near the kitchen made it; those who were not didn’t.
In our modern, degenerate form of capitalism the secret is the same: you want to be near the kitchen...the place where the food is handed out. You want to be near the government. That’s why there are so many lobbyists in Washington. And why the only city in America where property prices are going up is Washington, DC.
The politicians collect money from all over the country. They give much of it away in the Washington, DC metropolitan area. Montgomery County, Maryland and Fairfax County, Virginia are two of the richest counties in the country. Why? They’re right next to the kitchen.
Capitalism the Washington Way
He makes the point so much better than my feeble attempt above. :)
Morning market update:
Spanish 10Y auction priced at 15 year high of 6.975% (round up to 7%?)
French 5Y priced at 2.82%, 50bps wider than last month.
Spain playing catch up with Italy (and no one cares about its government being replaced, which is set to happen this weekend anyway).
Euro markets aren't the only ones rioting today.
(via The Guardian)
Greece:
9.18am: "The Greek authorities are braced for violence today - on the 38th anniversary of the Athens Polytechnic uprising. 17 November 1973 was the day that the Greek army sent troops into the Polytechnic to crush a student protest - and was a crucial event in the ending of the Greek military junta which lost power the following year.
Helena Smith reports that tens of thousands of anti-austerity protesters expected to take to the streets of Athens. Around 7,000 police officers have been dispatched to the capital including 700 riots police."
Italy:
11.51am: "In Milan (Italy's financial capital, where the stock exchange is based) that hundreds of university students are protesting against the new government which was sworn in yesterday.
Rallies had been organised in both Milan and Rome to protest against budgetary cuts and the lack of job opportunities. Reports from the scene say that students in Milan chanted slogan against the "bankers government" created by Mario Monti, followed by scuffles with police - who apparently responded with a baton charge.
From Reuters:
'The students threw firecrackers at police trying to prevent them from approaching the Bocconi university, which is chaired by Monti and has become a symbol for his new executive of technocrats, formed to tackle Italy's debt crisis.
Police responded by charging the students with batons. One journalist was injured by a firecracker, police sources said.'
A local news agency is also reporting that the students threw eggs and fake dollar banknotes at the building of the Italian banking association.
Monti is expected to outline his new austerity measures shortly - but today's protests simply show how much opposition he will face."
It is my feeling that TPTB feel that the OWS movement has gone far enough and the word is out to (try to) STOP the movement today at any cost.
From now on the attempts to control the movement will get much rougher. Lots of new crowd suppression toys are available to try out on the proles.
Be prepared for many more serious injuries to peaceful protestors.
The big question - will the repression be violent enough to gain huge numbers of recruits for the movement?
I do not feel that any meaningful change will occur in the US as the result of peaceful protests. This is because TPTB feel certain the movement will die a natural death due to approaching winter and increasingly violent repression.
Unlike France, where TPTB have a near genetic memory of the power of the guillotine, TPTB in the US have no fear of retribution at this time in history. However, they must keep in mind the vast armory of weapons in houses all across the country. Those in power who ignore this do so at their own risk.
Change is needed and change will come. It is inevitable.
For those here seeking a way to bring change; we have an excellent example today; of how NOT to.
http://tinyurl.com/6lheef9
A 20 year old "woman" "activist" "blogger" in Egypt; posted a nude photo of herself as a direct "outcry" against the various forms of repression going on.
Hard to imagine a more poorly considered action. The poor kid. I would bet you she acted out of fury and frustration, thinking it might move a few people in a positive direction.
What she's done is make herself a target. Her life will now consist entirely of justifying this one action; she'll never be able to escape it- and the actual results are just as likely to be catastrophically negative as anything.
Poor poor dumb kid. Geez. Hey kids; this isn't a video game. You don't get extra lives. And if you paint a big target on your shirt, someone will shoot live ammunition at you.
The latest issue of the New Yorker has a long article titled The War on Planned Parenthood. There is also this.
http://www.newyorker.com/online/blogs/newsdesk/2011/11/planned-parenthood.html
Robert 2
FACT: Economists make predictions on sound theories and reliable data(just trust us on this one).
Exports From Mars
"Economists are constantly urging governments to adopt policies that would reduce global imbalances—which, in crude terms, means that China should slash its current-account surplus and America its deficit. Yet they ignore the biggest imbalance of all: the current-account surplus that planet Earth appears to run with extraterrestrials. In theory, countries’ current-account balances should all sum to zero because one country’s export is another’s import. However, if you add up all countries’ reported current-account transactions (exports minus imports of goods and services, net investment income, workers’ remittances and other transfers), the world exported $331 billion more than it imported in 2010, according to the IMF’s World Economic Outlook. The fund forecasts that the global current-account surplus will rise to almost $700 billion by 2014.
Joanna
"Also had ducks, but it was depressing to see the males raping the females all the time."
You do not need Drakes for ducks to produce eggs, only for reproduction.
We do not have a drake at the moment because he was attacking a new duckling, so gave him to a local vet who liked his looks. We will likely replace him this spring. We have not found with one drake to five females the problem you have had and find the Drake looks after his ducks and will stand guard while the ducks feed. When we by accident ended up with two drakes it did become an overly amorous situation for the ducks but there was one humorous moment when a totem pole of drake on drake on duck formed and after a few moments collapsed in a quacking heap.
We have raised chicken in the past but find them more of a problem in the spring garden than ducks and as well we had a rooster that decided for sure he was going to roost in the trees next to the neighbours bedroom window. We cursed that rooster while chasing it about and the neighbour joined in by cursing us.
Dick Bove never ceases to epitomize embarrassingly pathetic analysis. One can only hope he has reached his bottom.
US Banks Could Actually Benefit From Europe's Crisis: Bove
"Instead of being hurt by the European debt crisis, US banks could actually end up benefitting from the turmoil across the Atlantic, analyst Dick Bove said.
"Responding to a Fitch Ratings report on Wednesday that said US banks could take a big hit if euro zone nations default on their sovereign debt, Bove said there are two reasons investors shouldn't worry:
1) US banks have a relatively low level of exposure to European banks.
2) The problems facing European banks could actually drive business to healthier institutions in the US."
In the land of paper, the dollar is still king.
(or why paper gold is having a bad day)
Global Dollar Liquidity Freeze Leads To Pervasive Sell Off
"Just two charts confirming that we have entered a complete USD liquidity lock up, and that the global coordinated USD swap line rescue operation will be launched any minute: both the US FRA-OIS and the EUR Basis Swap are at multi year extremes. The entire dollar funding market is now at levels not seen since the Lehman collapse and is effectively frozen. Only this time it is much, much worse as never before has the global central bank cadre been assumed and implied to be backstopping the global liquidity cascade. Ex-out the implied backstop by the monetary authorities, and liquidity is now locked up more than ever in the history of capital markets. The liquidity crunch explains why everyone is liquidating the one asset that is performing best YTD to procure much needed dollars - gold."
@Ruben, thanks for the link to Kerschner's paper. Spot on.
In other news, there's a good audio interview with our favourite anti-economics economist, Prof Steve Keen, on KMO's latest C-Realm podcast.
It's about an hour long.
Barley sprout superfood for livestock
http://www.youtube.com/user/crlndy#p/u
I found this to be worth sharing.
The problem with the times we are living in is that you cant start any kind of business.
There are millions of ideas but when you start calculating the cost of starting and the amount you anticipate to make than you just forget about it.
Watching Europe and the markets today is certainly good incentive to keep honing DIY food production!
@ Scrofulous
Yeah we've pretty much got the 'how eggs are made' thing figured out after 4 decades of poultry-keeping. I just have negative associations with waterfowl in general, compared to chickens, after keeping a variety of species over the years.
We're also trying to keep our species count down, as it adds to the infrastructure and care needs of our 'stead. And my customers want chicken eggs, not duck.
My flock gets free run of the garden in the off season, and after the final spring tillage. That works pretty well to keep slugs & bugs to a minimum for the year.
"The liquidity crunch explains why everyone is liquidating the one asset that is performing best YTD to procure much needed dollars - gold."
This is where we say: told you so?!
FT ran a piece today saying central banks these days buy most gold in 40 years. Still, the gold price went from $1770 to $1710 today. The article talks about John Paulson having to sell gold to cover losses elsewhere. He's just the first big name in a long line to come. The truth about gold is coming out. Good long term, not so short and medium.
.
MF Global was indeed a strategically placed domino. Hell is breaking lose right about now. See Market Ticker and ZH recent posts.
"The truth about gold is coming out. Good long term, not so short and medium."
Geez have you not been singing that Golden Olde long enough? Isn't it time to start singing your jolly Christmas requiem? That one has made a lot of sense for many people.
Ran into one of your old time posters about a year ago with gold at 1100 and mentioned it as an investment and that I had bought at 650 and his reaction was that, "Oh Yes...", he would have bought at 650 but not at 1100. You sang the same song at 650 and all the way to here. In the meantime I have bought and sold peaks and dips and even if I had sat on my hands all that time would not have not been badly off today.
Besides what happens, in the long term, if you have not bought it in some sort of short or medium term? Want to take a wild ass guess?
I agree it is not the investment for those who can not hold long but the chap I talked to had the bucks and I think has missed an opportunity that may not come again.
scrofulous,
What would you say if spot gold was at say... 1100 a year from now? What would you tell your friends who used 50 cents of every dollar they saved to accumulate gold, starting a year or two ago? Tough luck, buddy, better start over from square one?
No one is saying that is an inevitability. But, given recent action in risk markets, do you not see how it is a distinct risk that must be seriously considered? Do you not see why it's not as simple as following the generic advice of ZH, or Max or whoever, and buying every ounce of phys gold you can afford?
I hope you do. I'm glad that you made some money off of gold, selling and buying the peaks and dips. Not everyone has your sense of timing, and, in terms of paper gold, not everyone wants to take the risk of ending up like Celente. Paper is for trading, until you end up face to face with a bankrupt counter-party.
New post up.
This is what happens when governments go bust
.
Post a Comment