Wednesday, August 14, 2013
sigurdur thordarson: greazy grima wormtongue serving the all seeing eye...,
By CNu at August 14, 2013 0 comments
Labels: wikileaks wednesday
Wednesday, July 03, 2013
snowden: statement and asylum applications...,
By CNu at July 03, 2013 0 comments
Labels: 2parties1ideology , wikileaks wednesday
Tuesday, June 11, 2013
icelandic legislator: I'm ready to help NSA whistle-blower eric snowden seek asylum
By CNu at June 11, 2013 3 comments
Labels: information anarchy , micro-insurgencies , People Centric Leadership
Sunday, March 24, 2013
the cypress crisis isn't what it seems...,
- Russia – Losing its monopoly and ability to manipulate political events in Europe and the Middle East
- OPEC – The Arab nations fear losing their influence on Europe and the ability to manage prices and deprive Israel of not just energy independence but financial freedom from Europe and the United States; it is quite possible that the Arabs are pressuring Russia to threaten the European Union to prevent completion of this pipeline complex in favor of their supply via Turkish territory
- The Fed/ECB banking cartel – Without the ability to control natural resources and the independence of economies in North America and Europe, regardless of size, their ability to profit from advances or misery within the economies disappears and the independence which results weakens their geopolitical influence
Last hope now appears to lie with Russia
By CNu at March 24, 2013 0 comments
Labels: banksterism , The Great Game
Monday, February 25, 2013
inside job
By CNu at February 25, 2013 10 comments
Labels: agenda , Collapse Crime , elite , establishment
former federal reserve governor and columbia economist lying for $$$?
By CNu at February 25, 2013 3 comments
Labels: deceiver , elite , ethics , What IT DO Shawty...
Monday, October 29, 2012
monetary fascism - the rise of the financial industrial congressional complex
By CNu at October 29, 2012 37 comments
Labels: banksterism , global system of 1% supremacy
Monday, August 27, 2012
people before parasites: iceland was right, the imf was wrong...,
Following three years of this continuous, uninterrupted failure, Greece has already defaulted on 75% of its debts, and its economy is totally destroyed. The UK, Spain and Italy are all plummeting downward in suicide-spirals, where the more austerity these sadistic governments inflict upon their own people the worse their debt/deficit problems get. Ireland and Portugal are nearly in the same position.
Now in what may be the greatest economic "mea culpa" in history, we have the media admitting that this government/banking/propaganda-machine troika has been wrong all along. They have been forced to acknowledge that Iceland's approach to economic triage was the correct approach right from the beginning.
What was Iceland's approach? To do the exact opposite of everything the bankers running our own economies told us to do. The bankers (naturally) told us that we needed to bail out the criminal Big Banks, at taxpayer expense (they were Too Big To Fail). Iceland gave the banksters nothing.
The bankers told us that no amount of suffering (for the Little People) was too great in order to make sure that the Bond Parasites got paid at 100 cents on the dollar. Iceland told the Bond Parasites they would get what was left over, after the people had been taken care of (by their own government).
The bankers told us that our governments could no longer afford the same education, health care and pension systems which our parents had taken for granted. Iceland told the bankers that what the country could no longer afford was to continue to be blood-sucked by the worst financial criminals in the history of our species. Now, after three-plus years of this absolute dichotomy in economic policymaking, a clear picture has emerged (despite the best efforts of the propaganda machine to hide the truth).
In typical fashion, the moment that the Corporate Media is forced to admit that it has been serially misinforming us for the past several years; the Revisionists are immediately deployed to rewrite history, as shown in this Bloomberg Businessweek excerpt:
...the island's approach to its rescue led to a "surprisingly" strong recovery, the International Monetary Fund's mission chief to the country said.
In fact, from the moment the Crash of '08 was orchestrated and our morally bankrupt governments began executing the plans of the bankers, I have written that the only rational strategy was to put People before Parasites. While I wouldn't expect national policymakers to take their cues from my writing, when I wrote out my economic prescriptions for our economies I didn't base my views on compassion, or simply "doing the right thing."
Rather, I have consistently argued that it was a matter of simple arithmetic and the most-elementary principles of economics that "the Iceland approach" was the only strategy which could possibly succeed. When Plutarch wrote 2,000 years ago "an imbalance between rich and poor is the oldest and most fatal ailment of all Republics," he was not parroting socialist dogma (1,500 years before the birth of Socialism).
Plutarch was simply expressing the First Principle of economics; something on which all of the modern capitalist economists who followed in his footsteps have based their own theories. When modern economists produce their own jargon, such as the Marginal Propensity to Consume; it is squarely based on the wisdom of Plutarch: that an economy will always be healthier with its wealth in the hands of the poor and the Middle Class instead of being hoarded by rich misers (and gamblers).
So when the Bloomberg Revisionists attempt to convince us that Iceland's strong (and real) economic recovery was a "surprise"; this could only be true if none of our governments, none of the bankers and none of the media's precious "experts" understood the most-elementary principles of arithmetic and economics. Is this the message the media wants to convey?
By CNu at August 27, 2012 5 comments
Labels: micro-insurgencies , People Centric Leadership
Monday, May 07, 2012
icelandic anger brings debt forgiveness
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.
“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”
The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.
The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.
Crisis Lessons
“The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 110 percent agreement was here,” said Thorolfur Matthiasson, an economics professor at the University of Iceland in Reykjavik, in an interview. “It’s the broadest agreement that’s been undertaken.”
Without the relief, homeowners would have buckled under the weight of their loans after the ratio of debt to incomes surged to 240 percent in 2008, Matthiasson said. Fist tap Dale.
By CNu at May 07, 2012 0 comments
Labels: debt slavery , People Centric Leadership
Wednesday, November 02, 2011
consent needed for debt repayments
By CNu at November 02, 2011 2 comments
Labels: debt slavery , states rights
Wednesday, August 24, 2011
cuba of the north
Video - Gil Scott Heron explains "the revolution will not be televised"
As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example. Here's why:
Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.
Contrary to what could be expected, the crisis resulted in Icelanders recovering their sovereign rights, through a process of direct participatory democracy that eventually led to a new Constitution. But only after much pain.
Geir Haarde, the Prime Minister of a Social Democratic coalition government, negotiated a two million one hundred thousand dollar loan, to which the Nordic countries added another two and a half million. But the foreign financial community pressured Iceland to impose drastic measures. The FMI and the European Union wanted to take over its debt, claiming this was the only way for the country to pay back Holland and Great Britain, who had promised to reimburse their citizens.
Protests and riots continued, eventually forcing the government to resign. Elections were brought forward to April 2009, resulting in a left-wing coalition which condemned the neoliberal economic system, but immediately gave in to its demands that Iceland pay off a total of three and a half million Euros. This required each Icelandic citizen to pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis a vis other private parties. It was the straw that broke the reindeer’s back.
What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents. The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would have made Iceland’s citizens responsible for its bankers’ debts, and accepted calls for a referendum.
Of course the international community only increased the pressure on Iceland. Great Britain and Holland threatened dire reprisals that would isolate the country. As Icelanders went to vote, foreign bankers threatened to block any aid from the IMF. The British government threatened to freeze Icelander savings and checking accounts. As Grimsson said: “We were told that if we refused the international community’s conditions, we would become the Cuba of the North. But if we had accepted, we would have become the Haiti of the North.” (How many times have I written that when Cubans see the dire state of their neighbor, Haiti, they count themselves lucky.)
By CNu at August 24, 2011 0 comments
Labels: states rights , The Straight and Narrow
Thursday, August 11, 2011
british youths the most unpleasant and violent in the world?
Video - PM Cameron promises action against protesters
Anthony Daniels, a retired prison doctor and psychiatrist who has worked in some of the hardest-hit areas on the planet, said the British were now in great fear of their own arrogant, knife-wielding children.
The author said Britain's young had a 'sense of entitlement' and were unwilling to change their ways for anyone else - with the only difference between the rich and the poor being that the former had the money to buy what they wanted, whereas the poor had to 'wheedle, cajole, swindle and steal it'.
Writing for the New York Daily News in a comment piece on the riots, he said: 'Of course it is true that not all young Britons are unattractive in appearance and conduct, only a far higher proportion of them than of the young of any other nation.
'It requires but an overnight stay on a Friday or Saturday in any British city to prove it. Even Russians are appalled by what they witness.
'The rioting is only the extreme end of the spectrum of bad behaviour by British youth and young adults.'
Mr Daniels, who often writes for The Spectator under the pseudonym Theodore Dalrymple, said the riots 'did not emerge from a cultural vacuum' but was rather 'the British way of life'.
He claimed many American visitors to the UK were astounded at how quickly Britons became angry over trifling matters.
And he revealed that it was now 'quite literally' difficult to 'distinguish the sound of people enjoying themselves from that of someone being murdered.'
He said: 'Recently in Manchester, I woke at 1 on a Wednesday morning in my hotel to hear drunken screaming and shouting down below on one of the city's main streets, the sound of which continued until 4.30.
'Lo and behold, when I left the hotel at 8 in the morning, I discovered that a man had been savagely beaten nearly to death at about 2 am and was still in a coma - but the drunken revelling had continued nonetheless, uninterrupted by the police.
'So the sheer viciousness and destructiveness of the riots certainly do not surprise me.'
He ended his piece by saying that the only thing that will stop the 'not well-educated' rioters is 'boredom or exhaustion'.
Mr Daniels' piece, which will be consumed by a worldwide audience, heaps further embarrassment on the UK, which has today again made headline news across the world.
Newspapers from Ireland, Iceland and even Iran have used the sickening images of the looting on their front pages.
In the U.S. the popular Washington Post, New York Daily News and New York Times all dedicated extensive coverage to the events.
Even regional newspapers, such as the Arkansas Democrat-Gazette, which covers Little Rock in Arkansas, led on the riots with the headline 'British add 10,000 police as rioting starts a 4th
The financial daily Handelsblatt said: 'The riots reveal fundamental societal problems that extend far beyond London and England.
'They are too deep for the short-term austerity measures to have had much influence. There wasn't just looting in troubled areas, but also in the affluent district of Notting Hill and among the middle class in trendy Clapham.
'The riots reveal the decay of society at its edges, brought on by deeply cemented inequality, the erosion of social norms, great frustration and a lack of opportunity for the lower class.'
The Financial Times Deutschland added: 'The British elite has systematically compromised itself in recent years. They claimed to be a role model, or at least trustworthy.
'In the economic crisis the financial establishment declared bankruptcy, and British politicians became mired in the expenses scandal of 2009. Then this year the media and politicians have been damaged by the Murdoch scandal.
'When the country's elites don't take the law seriously, why should we? No question is more dangerous for a society.'
Left-leaning Berliner Zeitung said: 'The country has lost faith in every authority: the banks, politicians, the media, the police. The corruption has reached even the smallest unit - the family. There is a generation growing up without values of any kind.'
Finally, the conservative Die Welt commented: 'The unrest in London is a form of hooliganism by losers who are living in a society which no longer has anything left to offer losers. Among the arsonists are people who no longer possess any values.
By CNu at August 11, 2011 20 comments
Labels: Collapse Casualties , Collapse Crime , reality casualties
Monday, June 13, 2011
how financial oligarchy replaces democracy
The euro also had other serious fiscal and monetary problems at the outset. There is little thought of wealthier EU economies helping bring less productive ones up to par, e.g. as the United States does with its depressed areas (as in the rescue of the auto industry in 2010) or when the federal government does declares a state of emergency for floods, tornados or other disruptions.
As with the United States and indeed nearly all countries, EU “aid” is largely self-serving – a combination of export promotion and bailouts for debtor economies to pay banks in Europe’s main creditor nations: Germany, France and the Netherlands. The EU charter banned the European Central Bank (ECB) from financing government deficits, and prevents (indeed, “saves”) members from having to pay for the “fiscal irresponsibility” of countries running budget deficits. This “hard” tax policy was the price that lower-income countries had to sign onto when they joined the European Union.
Also unlike the United States (or almost any nation), Europe’s parliament was merely ceremonial. It had no power to set and administer EU-wide taxes. Politically, the continent remains a loose federation. Every member is expected to pay its own way. The central bank does not monetize deficits, and there is minimal federal sharing with member states. Public spending deficits – even for capital investment in infrastructure – must be financed by running into debt, at rising interest rates as countries running deficits become more risky.
This means that spending on transportation, power and other basic infrastructure that was publicly financed in North America and the leading European economies must be privatized. Prices for these services must be set high enough to cover interest and other financing charges, high salaries and bonuses, and be run for profit – indeed, for rent extraction as public regulatory authority is disabled.
This makes countries going this route less competitive. It also means they will run into debt to Germany, France and the Netherlands, causing the financial strains that now are leading to showdowns with democratically elected governments. At issue is whether Europe should succumb to centralized planning – on the right wing of the political spectrum, under the banner of “free markets” defined as economies free from public price regulation and oversight, free from consumer protection, and free from taxes on the rich.
The crisis for Greece – as for Iceland, Ireland and debt-plagued economies capped by the United States – is occurring as bank lobbyists demand that “taxpayers” pay for the bailouts of bad speculations and government debts stemming largely from tax cuts for the rich and for real estate, shifting the fiscal burden as well as the debt burden onto labor and industry. The financial sector’s growing power to achieve this tax favoritism is crippling economies, driving them further into reliance on yet more debt financing to remain solvent. Aid is conditional upon recipient countries reducing their wage levels (“internal devaluation”) and selling off public enterprises.
The tunnel vision that guides these policies is self-reinforcing. Europe, America and Japan draw their economic managers from the ranks of professionals sliding back and forth between the banks and finance ministries – what the Japanese call “descent from heaven” to the private sector where worldly rewards are greatest. It is not merely delayed payment for past service. Their government experience and contacts helps them influence the remaining public bureaucracy and lobby their equally opportunistic replacements to promote pro-financial fiscal and monetary policies – that is, to handcuff government and deter regulation and taxation of the financial sector and its real estate and monopoly clients, and to use the government’s taxing and money-creating power to provide bailouts when the inevitable financial collapse occurs as the economy shrinks below break-even levels into negative equity territory.
Regressive tax policies – shifting taxes off the rich and off property onto labor – cause budget deficits financed by public debt. When bondholders pull the plug, the resulting debt pressure forces governments to pay off debts by selling land and other public assets to private buyers (unless governments repudiate the debt or recover by restoring progressive taxation). Most such sales are done on credit. This benefits the banks by creating a loan market for the buyouts. Meanwhile, interest absorbs the earnings, depriving the government of tax revenue it formerly could have received as user fees.
The tax gift to financiers is based on the bad policy of treating debt financing as a necessary cost of doing business, not as a policy choice – one that indeed is induced by the tax distortion of making interest payments tax-deductible.
Buyers borrow credit to appropriate “the commons” in the same way they bid for commercial real estate. The winner is whoever raises the largest buyout loan – by pledging the most revenue to pay the bank as interest. So the financial sector ends up with the revenue hitherto paid to governments as taxes or user fees. This is euphemized as a free market.
Promoting the financial sector at the economy’s expense
The resulting debt leveraging is not a solvable problem. It is a quandary from which economies can escape only by focusing on production and consumption rather than merely subsidizing the financial system to enable players to make money from money by inflating asset prices on free electronic keyboard credit. Austerity causes unemployment, which lowers wages and prevents labor from sharing in the surplus. It enables companies to force their employees to work overtime and harder in order to get or keep a job, but does not really raise productivity and living standards in the way envisioned a century ago. Increasing housing prices on credit – requiring larger debts for access to home ownership – is not real prosperity.
To contrast the “real” economy from the financial sector requires distinctions to be drawn between productive and unproductive credit and investment. One needs the concept of economic rent as an institutional and political return to privilege without a corresponding cost of production. Classical political economy was all about distinguishing earned from unearned income, cost-value from market price. But pro-financial lobbyists deny that any income or rentier wealth is unearned or parasitic. The national income and product accounts (NIPA) do not draw any such distinction. This blind spot is not accidental. It is the essence of post-classical economics. And it explains why Europe is so crippled.
The way in which the euro was created in 1999 reflects this shallow vision. The Maastricht fiscal and financial rules maximize the commercial loan market by preventing central banks from supplying governments (and hence, the economy) with credit to grow. Commercial banks are to be the sole source of financing budget deficits – defined to include infrastructure investment in transportation, communication, power and water. Privatization of these basic services blocks governments from supplying them at subsidized rates or freely. So roads are turned into toll roads, charging access fees that are readily monopolized. Economies are turned into sets of tollbooths, paying out their access charges as interest to creditors. These extractive rents make privatized economies high-cost. But to the financial sector that is “wealth creation.” It is enhanced by untaxing interest payments to banks and bondholders – aggravating fiscal deficits in the process.
By CNu at June 13, 2011 0 comments
Labels: agenda , debt slavery , egregores , elite
Monday, May 23, 2011
spain's icelandic revolt
The following Saturday Torfason’s initiative brought dozens of people back to the same spot. Those Saturdays in the autumn of 2008, rallying to the People's Voices movement, led to the proclamation to dissolve Parliament on January 23, 2009, and to hold elections. Now the murmur of the Icelanders has reached the throats of the thousands of demonstrators that gathered in several cities around Spain on 15 May: “Spain arise, another Iceland", "Our model – Iceland" were some of the yells from the crowds.
The Icelanders didn’t leave it at this. They shook the foundations of the government, went after the bankers who led them into bankruptcy and said ‘No' in a referendum on repaying debts of some four billion euros to the UK and the Netherlands. Better still: they formed an assembly of 25 citizens elected to carry out constitutional reform. It was an entirely silent revolution that, while the media was focused overwhelmingly on the Arab uprisings, was rescued from oblivion by a web of social networks beyond the control of a state.
A movement spawned by the internet
But those voices calling for real democracy are not just being raised in Iceland, a country of about 320,000 inhabitants. Here in Spain, the umbrella organisation for various Spanish movements – Democracia Real Ya (Real Democracy Now) – already lists among its proposals some 40 points ranging from controlling parliamentary absenteeism to reducing military spending through to abolishing the so-called Sinde law (a law restricting on-line infringements of copyright).
To this federation some 500 organisations from all sectors have rallied. But not one single political party. Not one union, either. The demonstrations have broadened spontaneously, as was the case for those who rallied under the umbrellas of the "alternative globalisation" movements, and have evolved, one decade after the World Social Forum in Porto Alegre, Brazil, on a more modest stage than the one demonstrators faced in the past at the World Economic Forum of the global elite in Davos, Switzerland.
All this is happening at astonishing speed via the Internet, which has amplified the echo of discontent and opened the lanes of cyberactivism to groups such as Anonymous, notable for intervening against companies like PayPal and Visa during the advocacy campaign for Wikileaks chief Julian Assange. Yet it was also there at the beginning of the revolts in the Arab world, to help people get round the censorship of the Tunisian and Egyptian dictatorships.
When we grow up, we want to be Icelanders
Revolts that have grown and matured while French, Italian, English and Greek youth have been surging into the streets to oppose plans for the social welfare cuts that have been Europe’s response to the sharp economic downturn. Spain was waiting for its moment.
By CNu at May 23, 2011 1 comments
Labels: micro-insurgencies , People Centric Leadership
the althing
The constitution of Iceland provides for six electoral constituencies with the possibility of an increase to seven. The constituency boundaries are fixed by legislation. Each constituency elects nine members. In addition, each party is allocated seats based on its proportion of the overall national vote in order that the number of members in parliament for each political party should be more or less proportional to its overall electoral support. A party must have won at least five percent of the national vote in order to be eligible for these proportionally distributed seats. Political participation in Iceland is very high: usually over 85 per cent of the electorate casts a ballot (87.7% in 2003). The current president of the Althing is Ásta Ragnheiður Jóhannesdóttir.
By CNu at May 23, 2011 3 comments
Labels: People Centric Leadership
Wednesday, May 11, 2011
should the irish do what the icelanders did?
NEPKC | Voters in Iceland have rejected their government’s attempt to foist on them the costs of bailing out foreign creditors. Iceland’s oversized big banks had made bad loans throughout Euroland and when they failed uninsured depositors were on the hook. Governments in countries like the UK and the Netherlands bailed out their depositors and demand that Iceland reimburse them. However, Icelandic voters have now rejected that proposition twice. They feel they have suffered enough already from a financial crisis created by largely unregulated financial institutions that lent indiscriminately in foreign currency. Iceland does not use the euro and its tiny economy cannot be expected to cover all the euro-denominated debt run-up by private financial institutions. Those foolish foreigners who took risks by holding uninsured euro-denominated deposits in Icelandic banks with no access to a government back-stop in euros should take the loss. In my view, the voters have responded in a rational and responsible manner. After all, that is what market discipline and sovereignty are all about. If a saver does not like risks, she should hold only safe assets guaranteed by a sovereign power.
What about Ireland—which is now facing a similar situation—should its voters reject a taxpayer bailout of foreign creditors? Like Iceland, it faces a crushing debt because its government took on the liabilities of its oversized banks who also had lent indiscriminately throughout Euroland. However, unlike Iceland, Irish bank liabilities are denominated in the currency used in Ireland, the euro.
Ireland abandoned its sovereign currency when it joined the Euro. Effectively, it became like a US state—think Louisiana—within the EMU. This means it has little domestic policy space to use monetary or fiscal policy to deal with crisis. If we go back to 2005, Ireland’s government had the second lowest ratio of debt to GDP (national output or income) in the EU-15, with only Luxemberg having a lower debt ratio. The government paid an interest rate similar to that paid by the French and German governments; it had a strong AAA rating on its debt. In fact, it was running a huge government surplus of 2.5% of GDP (similar to that run by the Clinton administration in the late 1990s in the US).
Fast forward to this spring. The government deficit ratio was about 12.5% of GDP and credit default spreads on the government’s debt (equivalent to betting on default) reached almost 43 basis points over those of Germany, and it paid 6 percentage points higher to borrow than Germany did (on March 22 the spread on two year bonds hit a record 835 basis points—8.35 percentage points—over the rate on equivalent German debt).
Here’s the problem. There is a fundamental relation between economic growth and ability to pay interest to service debt. To be safe, a non-sovereign government should not pay an interest rate that significantly exceeds its growth rate. (A country that pegs its currency, operates a currency board, adopts a dollar standard, or adopts a foreign currency is by my definition “non-sovereign”.) If we compare Ireland today to the situation of Germany, because the Irish government pays 6 percentage points more, it needs to grow 6 percentage points faster than Germany does. To be sure this is a rough rule of thumb and there is some leeway. But the prospects for Ireland to grow that much faster than Germany—say 8 percent growth rate for Ireland versus 2 percent for Germany—approach a zero probability.
Indeed, the conventional way to generate government revenues needed to service debt is to cut government spending and raise taxes—which will only hurt Irish growth. Further, what Ireland needs is to increase the flow of euros in its favour through its foreign balance, i.e. by reducing imports and increasing exports to the EMU. The conventional prescription is slow domestic growth to reduce imports and enhance international competitiveness. This, too, further reduces domestic growth even further below the interest rate paid on government debt.
And that is precisely the plan adopted by Europe’s policy elite: the “Review of Labour Cost Competitiveness” released by Forfas on 29 October 2010 makes wage reduction its primary goal, while a report, “Ireland-Stability Programme Update”, was presented to the European Commission last month with a plan to “restore order to the public finances” through “an ambitious programme of structural reform” by increasing “competitiveness”. It is clear that the plan is to crush the economy to reduce living standards sufficiently to make Ireland a low-cost producer relative to the rest of Europe.
However, with the exception of the BRICs (Brazil, Russia, India and China) recent economic data across the globe have not been good. That makes it harder for Ireland to export its way out of debt—which is the least painful path. I do not see alternatives means of earning the needed euros that are without substantial suffering. Yet, many other EU nations are in a similar situation (even if some are less dire)—and will be competing with Ireland’s rush to the bottom. This is not a battle Ireland is likely to win.
Unfortunately, slow growth of the economy usually means slow growth of tax revenue. It is fairly easy to imagine a scenario in which domestic austerity actually makes the budget deficit worse, which raises interest rates on government debt. A vicious cycle can be created, with debt service blowing up as growth continues to slow and interest rates rise with credit ratings agencies downgrading government debt.
What I am going to say next will sound quite controversial. Ireland transitioned from a government budget surplus of 2.5% of GDP to a deficit of 12.5% of GDP, which I am arguing is a disaster. The US government has had a nearly identical transformation (from 2.5% surplus in the late 1990s to a deficit near 12.5% of GDP today) but it faces no insolvency constraint and no default risk. The reason this is controversial is because we do face deficit hysteria in the US and a threat by credit ratings agencies to downgrade US government debt. Congress nearly refused to extend the self-imposed debt limit on the federal government—and it is still possible that the government might get shut down if Congress refuses to raise the limit in the future. So it might look like the US and Ireland are in a similar pickle.
But they are not. All problems in the US are self-imposed. Irish problems are largely imposed by “markets”—by market assessment that there is a very real chance of involuntary default. That is why Irish borrowing rates are rising, while US government interest rates actually fell (!) after the threatened downgrade. The only path to US default is political—failure of Congress to raise debt limits. The path to Irish default is “economic”—spiralling interest rates with low growth rates.
If Ireland had its own sovereign currency, the size of the government deficit or debt ratio would not be relevant to ability to pay. I will return to that below. But since Ireland gave up its currency in favour of the euro, it is not in the position of a USA or a Japan or a Turkey. It has far less domestic policy space—to run up budget deficits to boost growth, and to set low domestic interest rates. Nor can Ireland devalue the currency—the value of its euro is set at equal to the euro used throughout the EMU. As we have seen, crises in various EMU nations (Greece, Portugal, Spain, Ireland) do not cause the euro to depreciate. That might sound counterintuitive but what matters is that there are relatively safe havens for those who want to buy euro-denominated debt, such as Germany. The “periphery” nations have to pay big premiums over the interest rates paid by Germany—and the euro remains (too) strong.
But let us look at how Ireland got into this mess. As I mentioned earlier, Ireland was the “paragon of virtue” just 6 years ago—its total outstanding government debt was just 8 months of tax revenue (publicly held debt was only 21% of GDP) and it was actually running budget surpluses. Then the financial crisis hit. That would have worsened the budget balance significantly—and probably would have generated a budget deficit. However, the government chose to guarantee its banks—which were vastly oversized relative to the size of the economy. That “busted the budget” and generated the current problems. In important respects, Ireland reproduced the Icelandic problem, with similar results. As we know, the people of Iceland have recently voted to undo the bank bail-out.
The question is how Ireland might respond to the will of its voters. Any rational response should try to undo the mess created by guaranteeing bank debt.
A recent report by Finnish bank expert Peter Nyberg avoids naming names (by contrast, the US official report on the crisis—the Financial Crisis Inquiry Report does so) but says that guaranteeing the banks was based on “insufficient information”. Well, that information is now sufficient to conclude that the bail-out was a mistake. It needs to be unwound. The documents must be made public. The guilty need to be prosecuted. Funds need to be recovered. Guarantees of crooks need to be withdrawn.
The case for Ireland to withdraw guarantees of bank liabilities is even stronger than the case for Iceland. Iceland wanted to guarantee only the deposits of its domestic residents, while allowing banks to default on those held by foreigners. In the case of Ireland, foreign creditors held large sums of subordinated debt and uninsured deposits. For years they had received higher returns on those inherently risky claims; but when the chickens came home to roost, foreign governments like the UK and the Netherlands chose to bail-out these holders (in many cases, their banks were the holders). That is bad policy, but it was their choice. Obviously, it rewards excessive risk taking, that presumably was already once rewarded by high returns. But now those governments want the Irish government to reimburse them for their foolish policy.
I do not (yet) want to recommend outright default on government debt. Public hearings on the bail-outs need to be undertaken immediately to determine what role fraud played in creating the government debt crisis. I’m not a lawyer, but government actions based not just on “insufficient information” but rather on “fraudulently constructed information” need to be undone. Exactly how that will play out through the courts I cannot forecast. As for the foreign government claims, Ireland ought to welcome them to pursue their case in court. Their claims appear to me to be without merit—but one never knows how courts will rule. At the very least, Ireland could buy a lot of time by going to court.
Meanwhile, Ireland needs jobs. A universal job guarantee is the best approach. The jobs would pay basic wages and benefits with a goal to provide a living wage. It would take all comers—anyone ready and willing to work, regardless of education, training, or experience. Adapt the jobs to the workers—as the late Hyman Minsky said, “take the workers as they are” and work them up to their ability, and then enhance their ability through on the job training.
The program needs to be funded by the central government. Wages would be paid directly to the bank accounts of participants for working in the program. Some national government funding of non-wage costs could be provided. I would decentralize the program, to allow local governments and not-for-profit service organizations to organize projects.
Now here is the problem. A sovereign government with its own currency can always financially afford such a program. Ireland could fund such a program with its own sovereign currency. In current circumstances this is problematic because Ireland abandoned its currency in favour of a foreign currency, the euro.
The big advantage of a sovereign currency is that government can “afford” anything for sale in its own currency. To keep our analysis simple, government then spends through “keystrokes”, crediting bank accounts.
Before all the Zombie Zimbabwean hyperinflation warriors attack, let me say that too much government spending can be inflationary and can create pressures on the currency. But by design a job guarantee program only hires people who want to work because they cannot find higher paying jobs elsewhere. It sets a wage floor but does not drive wages up. As such, it can never cause hyperinflation—it hires “off the bottom” at the program fixed wage, only up to the point of full employment. It never drives the economy beyond full employment.
What is the best way to guarantee long-term stability for the Irish economy? Full employment with reasonable price stability—something a universal job guarantee program can deliver.
For a sovereign currency nation the interest rate is a policy variable and has no impact on solvency. Government can keep rates low (it sets the overnight rate directly, and can if it desires issue only short maturity bonds near to that rate) and pays interest through “keystrokes” by crediting bank accounts with interest. It can never run out of keystrokes so will never fail to make interest payments unless it chooses to do so for noneconomic reasons.
For Ireland, this is a very serious problem. It does not have a sovereign currency. It cannot control its borrowing rates, which are set in markets. Nominal interest rates should not exceed nominal GDP growth rates. But as we know, markets have pushed rates to 10%. For Ireland to service debt at 10% interest rates, it will need Chinese growth rates. That seems unlikely.
So how should the government deal with loan repayments to the EU? As I discussed, I would encourage the government to unwind its guarantees of bank debt. If this cannot be done, then Ireland must have a bail out and debt relief provided by the ECB or the EMU through some other entity. That is actually in the interest of the EMU since much of the bank debt guaranteed by Ireland’s government is held externally by EU banks. The last resort alternative is default on debt and possible expulsion from the EMU. That will be painful. There isn’t anything Ireland can be expected to do without support from the EU—except for default.
So Ireland can learn from the Icelandic example. Both are heavily indebted because their banks were far too large and made too many foreign loans. A difference is that Iceland still has its own currency; however its banks made loans in foreign currencies. But in important respects, so did Irish banks since the euro is a foreign currency from the perspective of Ireland. Iceland’s citizens are pressuring its government to undo the bail outs. Ireland’s population can learn by example.
The Irish voters should demand accountability of government, including investigation of the bail out of banks. Government should pursue debt relief on all fronts. Voters should resist austerity programs. If all else fails, they should demand either default or withdrawal from the EMU (in practice these probably amount to the same thing).
And they demand jobs at decent pay. A Universal Job Guarantee program either funded by a newly sovereign Irish government, or funded by the ECB or other EMU institution is necessary to help revive the economy and to relieve suffering caused by high unemployment.
By CNu at May 11, 2011 0 comments
Labels: The Hardline
the greece fire never did go out..,
Several European ministers tried to deny this, but there are now confirmations leaking out.
Folks, there's no way for Greece to "voluntarily" restructure that makes sense. Their only hope is to do what Iceland did, which is to tell the banksters to blow it out their asses and leave the currency union.
Yes, this will thrash foreign banks - especially German ones - and the ECB. It damn well should.
The fact of the matter is that buying someone's debt on the premise that they will be bailed out (not because you think it's a good investment) is idiotic and if you do that you deserve to lose every penny you put in.
Well, now that may happen. And given how government bonds have a habit of becoming the tools of leverage, the impact of this action is likely to be extraordinarily severe.
For Merkel, Trichet and the Banksters, here 'ya go:
By CNu at May 11, 2011 0 comments
Labels: Livestock Management , The Hardline
Tuesday, April 12, 2011
little iceland panics big banks
The problem is aptly summed up by a splendid little article in the Wall Street Journal (excerpted above) by Hannes H. Gissurarson out of Reykjavik, Iceland. He explains the evolution of the contretemps as follows:
How Icelandic taxpayers got stuck with this bailout bill is a strange saga. When the international financial crisis hit bottom in the fall of 2008, it became clear that the Icelandic Insurance Fund for Depositors could not cover all the liabilities of the foreign branches of the private Icelandic bank Landsbanki. In order to avoid a general run on their own banks, the British and the Dutch governments decided to reimburse depositors, for not only the principal, but also the interest due, in Landsbanki branches in their countries, up to a certain level.
These two governments then presented the bill to the Icelandic government: £3.5 billion. For the tiny Nordic nation of 320,000, this was an enormous sum, amounting to half of its annual GDP. It would be equivalent to a £700 billion claim on the British government. The Icelandic government protested that it was not responsible for deposits in private banks. It had fully complied with European law in setting up the Icelandic Insurance Fund for Depositors, financed by a levy on the banks.
If the fund could not meet its obligations, it was a problem for those who, at their own risk and for a quick profit, had entrusted their money to Landsbanki. But under threats from the British and the Dutch governments, supported by the European Union and the International Monetary Fund, at the end of 2009 Iceland reluctantly signed a treaty according to which it had to pay the total sum, with stiff interest rates, to the United Kingdom and the Netherlands.
The import of the above unfairness is powerful for those who believe (as we do) that the 21st century is marked by a clash between the truth-telling of the Internet and the dominant social themes – the fear-based promotions – of the Anglo-American elite that seeks a One-World Order. The power elite, which has been attempting to create global government for nearly a century now, or perhaps longer, needs to project a certain inevitability. Iceland's two rejections of attempts to force its citizens to pay for the financial mistakes of others must be causing nausea in the City of London and upending the sense of inevitability that is so important to the wretched bullying that has become the trademark signature of the European Union.
By CNu at April 12, 2011 1 comments
Labels: micro-insurgencies
why iceland voted NO!!!
NEP | The relevant EU directive states “that the cost of financing such schemes must be borne, in principle, by credit institutions themselves.” As priority claimants Britain and the Netherlands will indeed get the lion’s share of what is left from the Landsbanki corpse. That was not the issue before Iceland’s voters. They simply aimed at saving Iceland from an open-ended obligation to take the bank’s losses onto the public balance sheet without a clear plan of just how Iceland is to get the money to pay.
Prime Minister Johanna Sigurdardottir warns that the vote may trigger “political and economic chaos.” But trying to pay also threatens this. The past year has seen the disastrous experience of Greece, Ireland and now Portugal in taking reckless private sector bank debts onto the public balance sheet. It is hard to expect any sovereign nation to impose a decade or more of deep depression on its economy inasmuch as international law permits every nation to act in its own vital interests.
Attempts by creditors to persuade nations to bail out their banks at public expense thus is ultimately an exercise in public relations. Icelanders have seen how successful Argentina has been since it imposed a crew haircut on its creditors. They also have seen the economic and political disruption in Ireland and Greece resulting from trying to pay beyond their means.
Creditors did not give accurate advice when they told Ireland that it could pay for its bank failures without plunging the economy into depression. Ireland’s experience stands as a warning to other countries about trusting overly optimistic forecasts by central bankers. In Iceland’s case, in November 2008 the IMF staff projected yearend-2009 gross external public and private debt at 160% of GDP – but observed that an exchange rate depreciation of 30% would push the ratio to 240% of GDP, which would be “clearly unsustainable.” But the most recent IMF staff report (January 14, 2011) shows end-2009 gross external debt at 308% of GDP, and estimates end-2010 gross external debt at 333% – even before taking the Icesave and other debts into account!
The main problem with Iceland’s obligation to Britain and the Netherlands is that foreign debt is not paid out of GDP. Apart from what is recovered from Landsbanki (now with the help of Britain’s Serious Fraud Office), the money must be paid in exports. But there has been no negotiation with Britain and Holland over just what Icelandic goods and services these countries would be willing to take in payment. Already in the 1920s, John Maynard Keynes pointed out that the Allied creditor nation had to take some responsibility just how Germany could pay its reparations, if not by exporting more to these countries. In practice, German cities borrowed in New York, turned the dollars over to the Reichsbank, which paid Britain and France, which paid the money back to the U.S. Government for their Inter-Ally Arms debts. In other words, Germany tried to “borrow its way out of debt.” It never works over time.
By CNu at April 12, 2011 0 comments
Labels: micro-insurgencies
Saturday, March 26, 2011
we're number one!
To see where America stands not so proud, consider the advanced, well-to-do democracies of the Organization for Economic Cooperation and Development (OECD), the rich countries’ club. To focus on America’s peers, I am excluding the former Soviet bloc countries as well as Mexico, Turkey, Korea, Iceland, Luxembourg, and Greece. In the remaining group of 20 affluent countries, America is, indeed, Number 1 or close to it in a number of categories: the 26 indicators of poor performance listed below.
It’s a good idea to set aside the rhetoric of national greatness and ask ourselves how we dropped to the basement on so many important issues—and what we should do to climb out.
To our great shame, America now has:
- The highest poverty rate, both generally and for children;
- The greatest inequality of incomes;
- The lowest government spending as a percentage of GDP on social programs for the disadvantaged
- The lowest number of paid holiday, annual and maternity leaves;
- The lowest score on the UN’s index of “material well-being of children”;
- The worst score on the UN’s gender inequality index;
- The lowest social mobility;
- The highest public and private expenditure on health care as a portion of GDP, yet accompanied by the highest:
o Infant mortality rate
o Prevalence of mental health problems
o Obesity rate
o Portion of people going without health care due to cost
o Low birth weight children per capita (except for Japan)
o Consumption of anti-depressants per capita
- The shortest life expectancy at birth (except for Denmark and Portugal);
- The highest carbon dioxide emissions and water consumption per capita;
- The lowest score on the World Economic Forum’s Environmental Performance Index (except for Belgium), and the largest Ecological Footprint per capita (except for Belgium and Denmark)
- The highest rate of failing to ratify international agreements;
- The lowest spending on international development and humanitarian assistance as a percentage of GDP;
- The highest military spending as a portion of GDP;
- The largest international arms sales;
- The most negative balance of payments (except New Zealand, Spain and Portugal);
- The lowest scores for student performance in math (except for Portugal and Italy) (and far down from the top in both science and reading);
- The highest high school drop out rate (except for Spain);
By CNu at March 26, 2011 2 comments
Labels: Collapse Casualties , The Hardline
The Tik Tok Ban Is Exclusively Intended To Censor And Control Information Available To You
Mises | HR 7521 , called the Protecting Americans from Foreign Adversary Controlled Applications Act, is a recent development in Americ...
-
theatlantic | The Ku Klux Klan, Ronald Reagan, and, for most of its history, the NRA all worked to control guns. The Founding Fathers...
-
Video - John Marco Allegro in an interview with Van Kooten & De Bie. TSMATC | Describing the growth of the mushroom ( boletos), P...
-
Farmer Scrub | We've just completed one full year of weighing and recording everything we harvest from the yard. I've uploaded a s...