Sunday, January 29, 2012

Worth the time.

Learn why we are in such trouble.

http://billmoyers.com/

This runs on WNET.





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@10:53, 01/29/12 2

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There is a parable about debt that I learned as a child:
If you owe the bank one hundred dollars and can't pay, you have a problem.
If you owe the bank one million dollars and can't pay, the bank has a problem.

The banking system has a terrible problem.
Greece is sovereign and cannot go bankrupt.
The Euro zone has no mechanism to expel a state.
If Greece is found to be in default the European Central Bank (ECB) will fail.
Germany can admit Keynes was right, the liquidity trap exists, or they can allow the world financial system failure.
So far they are going for failure.

http://krugman.blogs.nytimes.com/2012/01/29/destructive-austerity-usa/

"January 29, 2012, 9:20 am

Destructive Austerity, USA

Jared Bernstein has been emphasizing, rightly, the extent to which our weak recovery is being undermined by cutbacks at the state and local level:
But it’s even worse than he says. Why? Because if you look at what’s being cut, it’s heavily focused on investment:
That is, we’re sacrificing the future as well as the present. Oh, and the cuts that aren’t falling on investment in physical capital are largely falling on human capital, that is, education.
It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.

What an utter disaster."

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Saturday, January 28, 2012

@09:40, 01/28/12 4 Copy

I see that you have reworked  your list.  I have been doing the local tasks and
trying to figure out the sovereign debt negotiations.


TimesPeople recommended a user:
Jan 27, 2012
R. Henri Clay
Henry recommended a blog post:
Mar 7, 2011
Does IMF Stand for Impressive Macroeconomic Flexibility?
So the IMF is holding a meeting on rethinking macroeconomic policy (I was invited but couldn’t make the timing work.) And the Fund’s chief economist has already made it clear that he’s open to some serious revision of the prevailing paradigm.


http://hat4uk.wordpress.com/2012/01/28/greek-sovereignty-heist-why-the-scale-of-injustice-here-is-mind-boggling/#comments
Viking Jack
January 28, 2012 at 2:23 pm
Things are warming up – or not!
“Ultimatum: Greece rejects discussion about it
28.01.12, 14:48
Greece has deposited an informal paper to the EU in which the German demands for a surrender of fiscal sovereignty are categorically rejected.
Athens is not prepared to relinquish control of its budget to the EU. According to a report by Italian news agency AGI, a Greek government official said that Greece has already “presented an informal statement to the Euro-Group.” The content: “Greece will not even discuss such a possibility (fiscal control through the EU; editor’s note). This is absolutely excluded. Such competencies fall under national sovereignty.” Such a possibility, said the official further, would require a change of the EU treaties.
In preparation for the EU summit on Monday Germany has presented a paper which, in an unprecedented hardness, demanded the transference of the fiscal rights of Greece to a fiscal Commissioner from the Euro-Group (more here). One of the reasons for the hard approach is, from the German perspective, the Greek lack of propensity to save. A few days ago the EU had set a trial balloon in motion and launched the idea that the Commission could supersede the Greek government in fiscal matters (more here).”

 http://www.bbc.co.uk/news/world-europe-16773974

A leaked plan from the German government proposes a eurozone "budget commissioner" to take control of Greece's tax and spending, reports say.
The Financial Times, which has a copy of the plan, calls it an "extraordinary extension" of EU control.
Greek Education Minister Anna Diamantopoulou called the German plan "the product of a sick imagination".
The European Commission said the budget "must remain the full responsibility of the Greek government".
A German official told the Associated Press eurozone finance ministers were discussing the plan.

Analysis

image of Stephen Evans Stephen Evans BBC News, Berlin
The leaked document is a draft and the European Commission has already voiced its unease. But it clearly reveals the direction of German thinking: much tighter control of Greek policy-making. To control big economic decisions is to control much else.
But questions arise: what if a decision by a democratically elected government in Athens were vetoed by an unelected budget commissioner in Brussels, perhaps seen as the voice of Berlin? How might a decision be enforced?
The German government believes the nub of the Greek situation is that the government in Athens has over-spent, so must cut its spending.
But politics may be less black and white. Democratic legitimacy plus the feeling of ordinary people are also factors - in a potent political mixture.
Greece has failed to meet targets set by its international lenders.
It is currently negotiating a second bailout, worth 130bn euros (£109bn; $172bn), with its creditors.
If no agreement is reached in the next few days, Greece will not receive the next tranche of funds from its first bailout.
It needs the money to pay off a significant number of bondholders whose bonds mature in March. Without the bailout funds, Greece could be forced into an uncontrolled default from the euro.
'Disappointing compliance' Under the German proposal, a budget commissioner would have veto powers over Greek budgetary measures if they were not in line with targets set by international lenders.
"Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time," the Financial Times quotes the German plan as saying.
Under the proposals, European institutions already operating in Greece should be given "certain decision-making powers" over fiscal policy, a German official told the Reuters news agency. He was speaking on condition of anonymity.
Some German lawmakers have welcomed the idea of the EU taking control of Greece's finances.
"In view of the fact that many of the proposals for Greece have not been implemented, the suggestion for more control and supervision goes in the right direction," Norbert Barthle, a budget policy leader for the centre-right CDU party of Chancellor Angela Merkel, told Reuters.
Germany, France and other euro zone states have so far described the 130bn-euro figure agreed in October as a red line that must not be crossed. However, the German magazine Der Spiegel carries a report saying Greece's creditors fear an extra 15bn euros will be needed.

Greece's planned austerity measures

  • New pay and promotion system covering all 700,000 civil servants
  • Further cuts in public sector wages and many bonuses scrapped
  • Some 30,000 public sector workers suspended, wages cut to 60% and face lay off after a year
  • Wage bargaining suspended
  • Monthly pensions above 1,000 euros to be cut 20% above that threshold
  • Other cuts in pensions and lump-sum retirement pay
  • Tax-free threshold lowered to 5,000 euros a year from 8,000
The European Commission (EC), the EU's executive branch, has said it wants to "reinforce" monitoring of Greek public finances, boosting "capacity" in Athens, but that the Hellenic state must remain sovereign, the AFP news agency reports.
"The Commission is committed to further reinforcing its monitoring capacity and is currently developing its capacity on the ground," AFP quotes spokesman Amadeu Altafaj as saying.
Despite two weeks of intensive talks, Greece has yet to reach agreement on debt relief with private investors.
They are discussing a debt swap, under which private creditors take a 50% cut in the nominal value of their Greek bond boldings, in return for cash and new bonds. The debt swap would relieve Greece of about 100bn euros of its total debt of 350bn euros.
Talks broke up on Saturday without agreement, but the Institute of International Finance, which is negotiating on behalf of private creditors, says it hopes to reach a deal in the coming days.
Talks have foundered over the rate of interest Greece must pay on the new bonds, which are expected to mature after 30 years.
In return for the first bailout, Greece agreed to sharply reduce public spending, including cuts in pensions and wages for public-sector workers.
The austerity measures have angered many Greeks. In Athens on Friday, protesters tried to blockade inspectors from the "troika" of lenders - the EC, the International Monetary Fund and the European Central Bank - in their hotel.
Elections in Greece are due to take place in April.



http://krugman.blogs.nytimes.com/2012/01/28/the-worse-than-club/
"January 28, 2012, 1:47 pm

The Worse-than Club

Further thoughts on the observation that the current British slump has now gone on longer than the slump of the 1930s. Is Britain unique?
No, it isn’t.
The NIESR has developed a monthly GDP series for Britain, which lets it use real-time data for the comparison. I can’t replicate that, but I can use the Maddison historical data and IMF data — including projections for 2012 and 2013 — to do some comparisons. When you do this for the UK, the worse-than pops right out (I use annual data; year zero is 1929 or 2007, and real GDP is expressed as a percentage of the pre-crisis peak in each case):
And here’s Italy:
France and Germany are doing much better than in the early 1930s — but then France and Germany had terrible, deflationist policies in the early 1930s. (It was the BrĂ¼ning deflation, not the Weimar inflation, that brought you-know-who to power).
With two of Europe’s big four economies doing worse than they did in the Great Depression, at least in terms of GDP — and that’s three of five if you count Spain — do you think the austerity advocates might consider that maybe, possibly, they’re on the wrong track?"




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 That seems as far as I can copy.


































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@00:12, 01/28/12 2

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  • TimesPeople recommended an interactive graphic:
    Jan 27, 2012
    Your Street Style Photos: Houndstooth - The New York Times
    Be your own street photographer by showing us your style or someone else's in your current climate. Every week, the Styles section solicits street fashion photos based on a theme. The best photos will be published on Nytimes.com/fashion on Mondays...
  • TimesPeople recommended a user:
    Jan 27, 2012
    Angel Gabriel
    • Nick Bilton is following a user:
      Jun 12, 2010
      Tara Parker-Pope
      Sooner is better.  As soon as you can is best.
      • Henry recommended a blog post:
        Mar 7, 2011
        Does IMF Stand for Impressive Macroeconomic Flexibility?
        So the IMF is holding a meeting on rethinking macroeconomic policy (I was invited but couldn’t make the timing work.) And the Fund’s chief economist has already made it clear that he’s open to some serious revision of the prevailing paradigm.

        http://hat4uk.wordpress.com/2012/01/28/6-00am-greeks-stunned-as-troika-takes-power/

        6.00am: GREEKS STUNNED AS TROIKA TAKES POWER

        Spearheaded by Berlin, the Troika engaged in overseeing Greek debt management effectively cut out the possibility of a disorderly default late yesterday. In a strongly-worded proposal circulated to EU finance ministers, a German proposal called for Greece to cede sovereignty while all Greek State income to go first to creditors – by law. This is, basically, the takeover of a sovereign EU member State in order to calm markets and protect exposed banks in the eurozone and elsewhere.
        Judging by the Greek media I’ve been scanning so far this morning, the average Greek has no idea as yet that the Troika of credit managers is effectively taking over the country. Needless to say, the BBC hasn’t got it, neither has Sky News. But reports are firming up and beginning to appear in German media, where headlines like ‘Greece asked to give up sovereign control’ are running. The FT has also obtained a copy of the German ‘recommendation’.
        The writing was on the wall yesterday when Christine Lagarde gave a pretty testy interview to Bloomberg, saying bluntly “Greek progress on budgets and reform is simply unsatisfactory”. She talked of “putting together a programme for the country” although there was no sign at this point that it would literally be done ‘for’ the Greeks, not by them.
        Last night, Athens News had a piece saying that ‘the threat of disorderly default is now concentrating minds across the EU’, but again there was no specific mention of a sovereign handover. But when she spoke with Bloomberg, we can be almost certain that Lagarde knew what was coming: EU finance ministers had already seen Berlin’s proposal.
        The text specifically says, ‘Budget consolidation has to be put under a strict steering and control system. Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time.’
        Note the dictatorial ‘has to’ in there. The proposal even more controversially demands that Greece pass a law ‘committing all State income first and foremost to debt servicing and reduction’.
        Three immediate issues spring to mind:
        1. What legal power does the EU have to enforce this?
        2. How will the Greek people react?
        3. Who else was in the loop apart from Troika and Finance Ministers?
        We can be fairly certain that Washington approved the move – it may even have suggested it via the IMF. And the Troika’s 15-pt reform plus action plan of Thursday was largely written by the IMF….a Washington-based concern.
        This act sends a message to EU States both inside and outside the eurozone: defaults vill be orderly at all timess: disorderly actions vill not be tolerated.
        Mind-boggling. It all needs thinking about.

        http://hat4uk.wordpress.com/2012/01/28/greek-sovereignty-heist-why-the-scale-of-injustice-here-is-mind-boggling/


  • TimesPeople recommended a user:
    Jan 27, 2012
    JoeNBC
    • JoeNBC posted to Twitter an article:
      Jul 20, 2011
      Push for Broad Budget Deal Intensifies Among Leaders
      “@nytimes Push for Broad Budget Deal Intensifies Among Leaders - http://nyti.ms/o3x9YA”
      Did not happen.
      http://topics.nytimes.com/top/reference/timestopics/subjects/f/federal_budget_us/index.html?scp=1-spot&sq=federal%20budget&st=cse

      Updated: Jan. 18, 2012
      Recent Developments
      Jan. 26 Meeting for the first time, members of a new bipartisan, House-Senate committee negotiating a final version of a yearlong payroll tax cut agreed that a deal had to be struck before the end of February, when a short-term extension that passed in December will expire. But it was clear that presidential politics and a push by both sides to include pet measures could turn negotiations into the next partisan donnybrook.

      Jan. 17, 2012 Members of the House returned to Washington, and both parties were largely in agreement on a yearlong extension of the Mr. Obama’s payroll tax cut. The fight ahead in Congress boiled down to how to pay for it, and Democrats appeared to hold an advantage.
      Overview
      Throughout 2011, Congressional Republicans battled President Obama and the Democrats who control the Senate over federal spending and taxes. In 2012, the fights are likely to continue and be complicated by the presidential election.
      Emboldened by the gains in the 2010 elections that gave them the House, Republicans pushed for steep cuts in discretionary spending and for reshaping entitlement programs like Medicare and Medicaid. The clashes brought the government within hours of a shutdown in April, threatened another shutdown in October, put the country within days of a possible default in August and required a last-minute change of heart by House Republicans in December to stave off a tax hike that would have hit 160 million Americans.
      Over the course of 2011, the two sides agreed on a series of short-term spending cuts but stalemated over longer term budgets. In July, talks on a “grand bargain’' proposed by President Obama to cut the deficit by $4 trillion over 10 years collapsed over Republican opposition to the $1 trillion in new revenue he was seeking. A deal allowing an increase in the debt ceiling moved that debate to a special deficit reduction committee that was asked to come up with $1.2 trillion in savings; the committee deadlocked in November.
      Earlier in the fall, Mr. Obama had proposed a $447 billion jobs bill, a mix of spending programs, tax cuts and tax increases meant to revive the flagging economy; it was rejected by Republicans who said its tax increases would kill more jobs than the package would create.
      The final fights of the year revolved around measures due to expire on Dec. 31: a payroll tax cut and extension of unemployment benefits that were part of a deal reached by Mr. Obama and Republicans in 2010, and an item that has been dealt with annually by Congress for years — the “doc fix’' to prevent steep cuts in Medicare payments to providers.
      Both sides wanted to extend the payroll tax holiday, but differed on how to pay for it, and House Republicans sought to attach a number of environmental measures to the bill. Senate leaders concluded that it would take too long to sort out their differences and passed a two-month extension of both measures; after briefly threatening to block it, House Republicans signed on.
      In late January, a conference committee of House and Senate members started work on finding a compromise before the extension expires at the end of February. At the same time, both parties started preparing for a new round of battles over taxes and spending. In his State of the Union message, Mr. Obama issued a plea for “tax fairness’' and renewed his call for the so-called Buffett tax on high-earning households. But with even some Democrats wavering, the prospects for action seemed uncertain, if not remote.























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