Archive for the ‘Oligarchy’ Category
Free Trade and Unrestricted Capital Flow: How Billionaires Get Rich and Destroy the Rest of Us
Excellent article at Naked Capitalism: Free Trade and Unrestricted Capital Flow: How Billionaires Get Rich and Destroy the Rest of Us
tho I wonder if some who could benefit from reading this would quit too early because of finance-specific language? Take heart! read at least as far as this part:
There’s a straight line between “free-trade” — a prime tenet of both right-wing Milton Friedman thinking and left-wing Bill Clinton–Robert Rubin neoliberalism — and wealth inequality in America. In fact, if the billionaires didn’t have the one (a global free-trade regime) they couldn’t have the other (your money in their pocket). And the whole global “all your money are belong to us” process has only three moving parts. Read on to see them. Once you “get it,” you’ll get it for a long time…
And this part:
In its simplest terms, “free trade” means one thing only — the ability of people with capital to move that capital freely, anywhere in the world, seeking the highest profit. It’s been said of Bush II, for example, that “when Bush talks of ‘freedom’, he doesn’t mean human freedom, he means freedom to move money.” (Sorry, can’t find a link.)
At its heart, free trade doesn’t mean the ability to trade freely per se; that’s just a byproduct. It means the ability to invest freely without governmental constraint. Free trade is why factories in China have American investors and partners — because you can’t bring down manufacturing wages in Michigan and Alabama if you can’t set up slave factories somewhere else and get your government to make that capital move cost-free, or even tax-incentivized, out of your supposed home country and into a place ripe for predation.
Welcome to the Brave New World of pump and dump.
related: Cyprus Has the Global Money Elite’s Fingerprints All Over It
and another: When Capitalism only works for the wealthy
Hope: its infinite value and why it changes you from the inside out
Maybe this all seems self-evident to me because I worked with the CETA program in 1974 etc and saw many who had convinced themselves that sitting on the corner was what they wanted to do, instead sign up for subsidized training for real jobs that had a future. (Most had to sit on a waiting list for 6 months, then show up daily for another 6 months of training before job placement. And they did it.)
The Economist May 12th 2012 Hope springs a trap
An absence of optimism plays a large role in keeping people trapped in poverty
THE idea that an infusion of hope can make a big difference to the lives of wretchedly poor people sounds like something dreamed up by a well-meaning activist or a tub-thumping politician. Yet this was the central thrust of a lecture at Harvard University on May 3rd by Esther Duflo, an economist at the Massachusetts Institute of Technology known for her data-driven analysis of poverty. Ms Duflo argued that the effects of some anti-poverty programmes go beyond the direct impact of the resources they provide. These programmes also make it possible for the very poor to hope for more than mere survival.
She and her colleagues evaluated a programme in the Indian state of West Bengal, where Bandhan, an Indian microfinance institution, worked with people who lived in extreme penury. They were reckoned to be unable to handle the demands of repaying a loan. Instead, Bandhan gave each of them a small productive asset—a cow, a couple of goats or some chickens. It also provided a small stipend to reduce the temptation to eat or sell the asset immediately, as well as weekly training sessions to teach them how to tend to animals and manage their households. Bandhan hoped that there would be a small increase in income from selling the products of the farm animals provided, and that people would become more adept at managing their own finances.
The results were far more dramatic. Well after the financial help and hand-holding had stopped, the families of those who had been randomly chosen for the Bandhan programme were eating 15% more, earning 20% more each month and skipping fewer meals than people in a comparison group. They were also saving a lot. The effects were so large and persistent that they could not be attributed to the direct effects of the grants: people could not have sold enough milk, eggs or meat to explain the income gains. Nor were they simply selling the assets (although some did).
Turley: 10 Reasons The U.S. Is No Longer The Land Of The Free
Ron Paul is the only Presidential candidate in recent memory to speak up for freedom and the Constitution. Below Turley lists the incredible and increasing powers of the Executive to ignore the Bill of Rights, due process and the rule of law. These Stasi-like and draconian powers will not go unused.
Meanwhile we have two political parties united in their support of Corporate domination and citizen submission. Clearly only those who bow to these powers are (usually) allowed to run.
Jonathan Turley January 15, 2012
Below is today’s column in the Sunday Washington Post. The column addresses how the continued rollbacks on civil liberties in the United States conflicts with the view of the country as the land of the free. If we are going to adopt Chinese legal principles, we should at least have the integrity to adopt one Chinese proverb: “The beginning of wisdom is to call things by their right names.” We seem as a country to be in denial as to the implications of these laws and policies. Whether we are viewed as a free country with authoritarian inclinations or an authoritarian nation with free aspirations (or some other hybrid definition), we are clearly not what we once were.
Every year, the State Department issues reports on individual rights in other countries, monitoring the passage of restrictive laws and regulations around the world. Iran, for example, has been criticized for denying fair public trials and limiting privacy, while Russia has been taken to task for undermining due process. Other countries have been condemned for the use of secret evidence and torture.
Even as we pass judgment on countries we consider unfree, Americans remain confident that any definition of a free nation must include their own — the land of free. Yet, the laws and practices of the land should shake that confidence. In the decade since Sept. 11, 2001, this country has comprehensively reduced civil liberties in the name of an expanded security state. The most recent example of this was the National Defense Authorization Act, signed Dec. 31, which allows for the indefinite detention of citizens. At what point does the reduction of individual rights in our country change how we define ourselves?
While each new national security power Washington has embraced was controversial when enacted, they are often discussed in isolation. But they don’t operate in isolation. They form a mosaic of powers under which our country could be considered, at least in part, authoritarian. Americans often proclaim our nation as a symbol of freedom to the world while dismissing nations such as Cuba and China as categorically unfree. Yet, objectively, we may be only half right. Those countries do lack basic individual rights such as due process, placing them outside any reasonable definition of “free,” but the United States now has much more in common with such regimes than anyone may like to admit.
These countries also have constitutions that purport to guarantee freedoms and rights. But their governments have broad discretion in denying those rights and few real avenues for challenges by citizens — precisely the problem with the new laws in this country.
The list of powers acquired by the U.S. government since 9/11 puts us in rather troubling company……..read entire article
Jeffrey Sachs on the American Corporate State
The Economist Nov 12, 2011 
Homeward bound
How to turn America around
The Price of Civilisation: Reawakening American Virtue and Prosperity. By Jeffrey Sachs. Random House; 336 pages; $27. Published in Britain as “The Price of Civilisation: Economics and Ethics after the Fall”. Bodley Head; £20. Buy from Amazon.com, Amazon.co.uk
JEFFREY SACHS is an American economist best known for his prescriptions for economically diseased poor countries. The country he now considers most in need of his diagnostic gifts is his own. “Something has gone terribly wrong in the US economy, politics, and society in general,” Mr Sachs writes in “The Price of Civilisation”. American politicians are the stooges of corporations, he says. And American voters have been tranquillised into obesity by saturation advertising.
Such sentiments would appear unremarkable if spouted by an Occupy Wall Street protester. But Mr Sachs, a professor at Columbia University, is a respected, mainstream macroeconomist. Mr Sachs catalogues the familiar problems that beset the American economy: unemployment stuck at 9%, an exploding budget deficit, America ceding technological leadership to China, poorly educated American children.
But this is not principally a work of economics. Mr Sachs blames America’s problems on politics. In the 1960s, southerners began to desert the Democratic Party and Republicans began to build an insurmountable congressional barrier to more activist government, which Mr Sachs deeply regrets. He despises Barack Obama’s Democratic Party almost as much as he does Ronald Reagan’s Republicans: “On many days it seems that the only difference between the Republicans and Democrats is that Big Oil owns the Republicans while Wall Street owns the Democrats.” He is particularly scathing of the “revolving door” between Mr Obama’s administration and Wall Street.
The convergence between the parties, says Mr Sachs, has led to policies that systematically favour capital over labour, keep tax rates low on footloose multinational corporations and starve government programmes that benefit the poor and the unemployed. This, he claims, flies in the face of popular will: he cites polls that find the majority of Americans favour more activist government and higher taxes on the rich.
Mr Sachs’s analysis can be doctrinaire and one-dimensional, but it is almost always grounded in solid economics. Capital, he argues, has prospered more than labour during the era of globalisation. And America’s per head GDP is inflated by spending on an inefficient health-care system and the armed forces. Mr Sachs’s prescriptions are also admirably precise: the federal government should spend an additional 0.5% of GDP on worker training and the same again on early-childhood development; the top tax rate should be raised to 39.6%, which, neatly enough, he says, would raise the equivalent of 0.5% of GDP……….
Our Fragile “Hothouse” Economy
by Charles Hugh Smith Of Two Minds November 3, 2011
Financialization has led to a “hothouse” global economy where the slightest disruption in central bank/Central State intervention will cause the sickly flowers to wilt and expire.
Of the three great financial truths that have been left unspoken for the past four years out of sheer dread, lest their mere mention collapse our economy, let’s start with the most obvious: if the Federal Reserve and Federal government ever crimped the dripline of “easing” and bailouts, America’s financial sector would promptly roll over and expire.
Does this strike you as a robust, flexible, transparent system? Of course not. Rather, it is a “hothouse” financial sector, one that needs constant injections and a carefully controlled environment just
to keep it alive.
And since the U.S. economy has been fully financialized, it is now dependent on financial machinations and skimming for its “growth,” profits and the debt expansion that fuels everything else, including the metastasizing Savior State, a gargantuan aggregation of an unaccountable National Security State with crony-capitalist cartels and a dependency-inducing Welfare State.
Without the debt conjured into existence by the Fed, Treasury and the financial sector, even the mighty multi-tenacled Savior State would quickly starve.
As a result of our dependence on financialization and exponential debt, our entire economy has become a weak, sickly “hothouse” economy which can only survive in a narrow band of temperature, debt injections and opaque manipulations of data and what’s left of the nation’s shriveled markets.
Once exposed to Nature, i.e. “wild” transparent markets that are allowed to discover the price of all assets naturally, then both the nation’s financial sector and its economy would implode.
The second great financial truth is that the financial sector has long been detached from the real economy. The real economy is for chumps; the “no-risk” skimming of monetary legerdemaine is the raison d’etre of the entire financial sector, a point brilliantly made in this “must read” essay posted on Zero Hedge: MF Global Shines A Light On Monetarism’s Incapacity To Enhance The Real Economy
Granted, some of the financialization schemes described are not that easy to grasp, but here’s the primary point:
That is why this system has to change at some point. It is exactly designed to be misleading, and the reason is so very simple. In any fractional system there will be a desire to amplify that fraction to the maximum degree. But in doing so, participants recognize that the process of maximization entails creating negative human emotions and perceptions since history is not really that kind to this manner of fractionalization. So the system has institutionalized, abetted by the very regulators that are supposed to cap fractions and leverage, these methodologies of hiding just how much financial entities have engaged in maximizing themselves under the cover of mathematical precision.
The Panic of 2008 was supposed to correct these excesses and remedy the fact that risks have not been accurately priced for decades. Yet the system has resisted every effort, simply settling for redefining the appearance of safety yet again. Somewhere in that mathematical pursuit of maximum fractions, the very goal of finance changed, as if traditional banking was no longer sufficient to support the pursuit’s ever-growing ambitions. So the financial economy has broken away from the real economy, using the ironic cover story of enhancing price discovery to the process of intermediation.
The fact that money is disconnected from the real economy never enters the consciousness of monetarists since money is always the answer. But make no mistake, the primary reasons for this global malaise are that money has lost its productive capacity and its proper place as a tool within the system.
The third great unspoken truth is that the conventional Status Quo– the financial punditry, the Cargo Cult of Keynesianism, the
incestuous academic community, the PhDs in the Fed and Treasury, the politico lackeys, the self-serving think-tanks of both empty ideologies (“which is better, Bud or Bud Light?”), not to mention the lobbyists, revolving door toadies and all the other hangers-on in New York and Washington– have no Plan B and certainly no Plan C. In other words, they are utterly clueless about what
to do when their abject and total failure becomes unavoidably obvious.
It is of course a crisis of self-service; nobody dares put their own status, wealth, power and perks at risk by thinking independently, much less speaking All That Cannot Be Spoken Lest This Sucker Implode.
But it is also a monumental lack of imagination; the lackeys and toadies cannot imagine any other Beast other than the one whose teat they have sucked all their lives. They live in mortal fear not of being ignorant or lacking in imagination–those deficiencies are too obvious to contest–but of the truth of the system’s increasing weakness and vulnerability being openly revealed.
America’s (and the world’s) financial sector is a fragile, sickly hybrid which will shrivel and expire the moment it is placed in the real, dynamic world. And because the global economy has become dependent on the slouching beast of financialization, it too is fragile and sickly, sensitive to the slightest perturbations and exquisitely vulnerable to any disruption of the constant life support offered by central banks and Central
States.
It is neither capitalism nor socialism, but a twisted hybrid of the worst traits of each.
I happened to catch a brief interview on DW TV (German TV, with English announcers and subtitles) of one of the few ECB (European
Central Bank) officials with the integrity to resign in protest at the ECB’s blatant interventions in the bond market (buying Italian bonds to prop up a market that would implode the second ECB support vanished) and the central bank’s slippage toward money-printing as the answer to every problem.
This gentleman said that the ECB had to monitor the global economy 24 hours a day lest some tiny policy mistake bring the entire shaky edifice down.
Does that strike you as a description of a robust, adaptable, capitalist system based on transparancy and price discovery of assets? Of course not; it describes a hothouse economy, always on the ragged edge of collapse if its central bank and Central State minders make the tiniest error in its care.
For four precious years we have been force-fed nothing but lies, obfuscation, misdirection, fear-mongering, spin, sins of omission, misinformation, propaganda, false rumors and false hopes. The hothouse is slowly falling apart, and the sickly global financial sector is wilting. The financial media is heralding every “save” and every “rescue” with ever-shriller enthusiasm, lest a contagion of truth spread through the hothouse like a chill wind.
But we can be sure of one thing: those who know better have already sold, and it is now the job of the politico lackeys and the
toadies of the Mainstream Media to convince the bagholders to hold on and not sell, because “everything’s been rescued.” Distilled to its essence,
that is their one and only job: to convince you not to sell. That keeps the bid up for their Masters to sell into.
If history is any guide, the final collapse will be triggered by an apparently “controllable” event, something like the bankruptcy of MF Global. All eyes are on Greece’s referendum, apparently scheduled for December 4 or 5; but regardless of the vote, does a “yes” or “no” change that nation’s fundamental insolvency? No, it doesn’t.
Does the passage of some toothless law in Italy magically render that nation solvent? No, no, a thousand time no; none of these public-relations tricks can change the fact that all these nations are insolvent, the banks are insolvent, and even France and Germany are staggering under unprecedented burdens of debt.
The smart money sold in May, 2010, and the disbelievers among the Power Elite sold in May 2011, or perhaps August. Now those below the
smart money (but still above the dumb money) are sniffing the fetid hothouse air, where the rank, sweaty desperation of the minders is now everpresent.
So the apparatchiks and foot soldiers have been ordered to keep the dumb money from selling, until their “betters” can sell into a rumor-juiced bid. This explains the sudden jump in the S&P 500 on every rumor of rescue, as if an over-indebted and leveraged-26-to-1 financial system can be rescued with “belt-tightening” and ECB intervention with taxpayer money.
The entire euro “project” was a scam that enabled a vast new scale of financialization. Now that the “project” is falling apart, the bagholders who bought into the shuck-and-jive are nervous and fearful; has it all really been “saved”?
No, it hasn’t; it cannot be saved. The only “solution” available is to sell: sell now, while there is still a bid. Sell fast, sell hard, sell everything denominated in euros. That is precisely what the Status Quo fears the most: an awakening continent of bagholders and debt-serfs.
Anyone thinking the euro (and eurozone) can’t possibly go down until after the Greek referendum may well find their confidence in the
Status Quo’s “rescue” has been sorely misplaced.
The Collapse of Our Corrupt, Predatory, Pathological Financial System Is Necessary and Positive
500 Million Debt-Serfs: The European Union Is a Neo-Feudal Kleptocracy (July 22,
2011)
The Dynamics of Doom: Why the Eurozone Fix Will Fail (July 25, 2011)
The European Model Is Also Doomed (February 7, 2009)
When Debt-Junkies Go Broke, So Do Mercantilist Pushers (March 1, 2010)
Why the Euro Might Devolve into Euro1 and Euro2 (March 2, 2010)
Why the Eurozone Is Doomed (May 10, 2010)
Ireland, Please Do the World a Favor and Default (November 29, 2010)
Why The European Union Is Doomed (March 28, 2011)
Greece, Please Do The Right Thing: Default Now (June 1, 2011)
Why the Eurozone and the Euro Are Both Doomed (June 23, 2011)
Greece Is a Kleptocracy (June 28, 2011)
Globalization and Debt: a return to slavery?
Taibbi: “Orwellian” SEC May Have Been Hiding Big Wall Street Crimes
By Sarah Seltzer | AlterNet
By Naomi Klein / The Nation When you rob people of what little they have, in order to protect the interests of those who have more than anyone deserves, you should expect resistance.
Debt: The First Five Thousand Years
By David Graeber
Anthropologist David Graeber argues that it is only with a general historical understanding of debt and its relationship to violence that we can begin to appreciate our emerging epoch. Here he begins to fill in our historical knowledge gap
By David DeGraw | Amped Status
The Icebergs Cometh: Retaking the USA Titanic Before the 2012 Elections
By Victoria Collier and Ronnie Cummins 
August 8, 2011
“…[W]e no longer control our own democratic system. Puppet candidates have rigged themselves into office and manipulated our government to hand corporations the keys to the kingdom. We the People are now the rabble outside the gates, reduced to begging the rulers within to please be just a little less ruthless…
“Our elections have been bought or stolen for decades, but the People are only now waking up…But whether elections – or politicians – are literally stolen, or simply bought (including Barack Obama), the outcome is the same.
“The democratic system itself is rigged against us – and this rigging is not just another Progressive issue, like ending the Wars on Terror and Drugs, or securing universal healthcare, or getting the 100,000 toxic chemicals out of our bodies, or preventing Monsanto from taking over our food and seed supply…
“We must first outlaw the use of riggable computerized voting machines and institute a public paper ballot count with appropriate procedure and oversight. We must demand full media access for candidates. And we must threaten a full-blown Egypt-style revolution if Citizen’s United is not immediately overturned.”
“The Icebergs Cometh: Retaking the USA Titanic Before the 2012 Elections,”
- by Victoria Collier and Ronnie Cummins, August 8, 2011
Everybody Knows
Everybody Knows
By Leonard Cohen
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
Thats how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
Everybody knows
Everybody knows that you love me baby
Everybody knows that you really do
Everybody knows that youve been faithful
Ah give or take a night or two
Everybody knows youve been discreet
But there were so many people you just had to meet
Without your clothes
And everybody knows
Everybody knows, everybody knows
Thats how it goes
Everybody knows
Everybody knows, everybody knows
Thats how it goes
Everybody knows
And everybody knows that it’s now or never
Everybody knows that it’s me or you
And everybody knows that you live forever
Ah when youve done a line or two
Everybody knows the deal is rotten
Old black Joe’s still pickin cotton
For your ribbons and bows
And everybody knows
And everybody knows that the plague is coming
Everybody knows that it’s moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But theres gonna be a meter on your bed
That will disclose
What everybody knows
And everybody knows that you’re in trouble
Everybody knows what youve been through
From the bloody cross on top of Calvary
To the beach of Malibu
Everybody knows it’s coming apart
Take one last look at this sacred heart
Before it blows
And everybody knows
Everybody knows, everybody knows
Thats how it goes
Everybody knows
Oh everybody knows, everybody knows
Thats how it goes
Everybody knows
Everybody knows
Corporate efforts to control State legislatures exposed!
July 13, 2011 The Center for Media and Democracy has obtained copies of more than 800 model bills approved by corporations through ALEC meetings, after one of the thousands of people with access shared them, and a whistleblower provided a copy to the Center. We have analyzed and marked-up those bills and made them available at ALEC Exposed.
Tell the IRS to investigate!
About ALEC Exposed
An open letter from CMD’s Executive Director, Lisa Graves
In April 2011, some of the biggest corporations in the U.S. met behind closed doors in Cincinnati about their wish lists for changing state laws. This exchange was part of a series of corporate meetings nurtured and fueled by the Koch Industries family fortune and other corporate funding.
At an extravagant hotel gilded just before the Great Depression, corporate executives from the tobacco giant R.J. Reynolds, State Farm Insurance, and other corporations were joined by their “task force” co-chairs — all Republican state legislators — to approve “model” legislation. They jointly head task forces of what is called the “American Legislative Exchange Council” (ALEC).
There, as the Center for Media and Democracy has learned, these corporate-politician committees secretly voted on bills to rewrite numerous state laws. According to the documents we have posted to ALEC Exposed, corporations vote as equals with elected politicians on these bills. These task forces target legal rules that reach into almost every area of American life: worker and consumer rights, education, the rights of Americans injured or killed by corporations, taxes, health care, immigration, and the quality of the air we breathe and the water we drink.
The Center obtained copies of more than 800 model bills approved by companies through ALEC meetings, after one of the thousands of people with access shared them, and a whistleblower provided a copy to the Center. Those bills, which the Center has analyzed and marked-up, are now available at ALEC Exposed.
The bills that ALEC corporate leaders, companies and politicians voted on this spring now head to a luxury hotel in New Orleans’ French Quarter for ALEC’s national retreat on August 3rd. In New Orleans, Koch Industries — through its chief lobbyist — and lobbyists of other global companies are slated for a “joint board meeting” to approve the bills with a rookery of Republican legislators who are on ALEC’s public board. Before the bills are publicly introduced in state legislatures by ALEC politicians or alumni in the governor’s offices, they will be cleansed of any reference to the secret corporate voting or who really wrote them.
With CMD’s publication of the bills, the public can now pierce through some of the subterfuge about ALEC, and see beyond the names of the bills to what the bills really do, alongside the names of corporations that lead or have helped lead ALEC’s agenda and accompanied by analysis to help decode the bills.
Many of the bills have obvious financial benefits for corporations but little or no direct benefit to the constituents that a particular legislator was elected to represent. Still, it may be tempting to dismiss ALEC as merely institutionalizing business as usual for lobbyists, except that ALEC’s tax-free donations are linked to it not spending a substantial amount of time on lobbying to change the law. ALEC has publicly claimed its “unparalleled” success in terms of the number of model bills introduced and enacted. But seeing the text of the bills helps reveal the actual language of legal changes ALEC corporations desire, beyond what can be known by the PR in their titles. ALEC says it has created a “unique” partnership between corporations and politicians. And it has.
It is a worrisome marriage of corporations and politicians, which seems to normalize a kind of corruption of the legislative process — of the democratic process–in a nation of free people where the government is supposed to be of, by, and for the people, not the corporations.
The full sweep of the bills and their implications for America’s future, the corporate voting, and the extent of the corporate subsidy of ALEC’s legislation laundering all raise substantial questions. These questions should concern all Americans. They go to the heart of the health of our democracy and the direction of our country. When politicians — no matter their party — put corporate profits above the real needs of the people who elected them, something has gone very awry.
As President Teddy Roosevelt observed in response to corporate money corrupting the democratic process a century ago, “The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth . . . . The citizens of the United States must effectively control the mighty commercial forces which they have called into being.”
–Lisa Graves, Executive Director, Center for Media and Democracy
P.S. ALEC anointed the billionaire Koch Brothers as two of the first few recipients of its “Adam Smith Free Enterprise Award.” Smith argued that self-interest promoted more good in society than those who intend to do good. “Greed is good!” is how Oliver Stone translated this concept to fiction on screen.
On that score, perhaps, the award was apt, except that ALEC apparently ignores Smith’s caution that bills and regulations from business must be viewed with the deepest skepticism. In his book, ”Wealth of Nations”, Smith urged that any law proposed by businessmen “ought always to be listened to with great precaution . . . It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”
One need not look far in the ALEC bills to find reasons to be deeply concerned and skeptical.Take a look for yourself.
Take Action! Send a letter today to ALEC’s corporate leaders telling them to DUMP ALEC!
See also:
How business lobbies bought all the laboratories of democracy
By Alex Pareene – ALEC’s dream of a world where industry writes every state law
Inconvenient Truths About The Debt Ceiling: None of US debt has been repaid for 51 years
“Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decreased on a year-over-year basis was 1960″
Zero Hedge by Tyler Durden on 07/10/2011
Bill Buckler presents an amusing compendium of facts, let us call them inconvenient truths, in the latest edition of his newsletter, some of which would make for entertaining anecdotes if presented at the Biden “deficit cutting” talks, which also, and very paradoxically, aim to cut US debt by increasing it.
- Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decreased on a year-over-year basis was 1960
- 97% of today’s funded debt has been accumulated since August 1971 – the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
- Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
- Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
- The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
- Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
- Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
- Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.
And the most inconvenient truth of all:
The Global Financial Crisis (GFC) is said to have been precipitated by the Lehman failure in 2008 which froze inter-bank lending on a global basis and almost brought down the system. It is said to have been prevented by a massive and global increase in new money creation. In reality, had economic nature been left alone to take its course, there is a good chance that the world would be fast emerging from its financial black hole by now. At a minimum, most of the malinvestments would have been discounted to the point where they would no longer act as a dead weight on future savings and investment.
Economic “miracles” (so-called) have happened before. The US emerged from a deep recession in 1920-21 because the government and the central bank did NOT interfere. Germany emerged from the actual physical rubble of WW II for exactly the same reason. So, to a lesser extent, did Japan. In all these cases, debts which could not be repaid were not held on life support by central banks, they were written off. In all these cases, creditors took very severe “haircuts” indeed while many debtors literally had to start again from scratch. In all these cases, the LACK of government impediments or government largesse meant that a recovery took place in a much shorter time frame than would otherwise have been the case.
Economic distortions today are HUGELY bigger than they were then. That means that the recession will be deeper and the recovery phase possibly longer. But until it is allowed to begin, there is no way out.
None of the above will be noted anywhere by the great diversionary media spin machine over the next two weeks, since July 22 is the date by which Congress says it needs to pass the debt ceiling legislation so it can get it to Obama’s desk for his signature by August 2.
See also:
Why QE2 Failed: The Money All Went Overseas:
On June 30, QE2 ended with a whimper. The Fed’s second round of “quantitative easing” involved $600 billion created with a computer keystroke for the purchase of long-term government bonds. But the government never actually got the money, which went straight into the reserve accounts of banks, where it still sits today.
