Posts Tagged ‘Debt’
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
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.
Richard Heinberg: the end of growth, and the natural gas controversy
Post Carbon Institute June, 2011
Last weekend, the New York Times published a series of articles that — through leaks from EIA officials and natural gas industry insiders — corroborated the findings of our landmark report, Will Natural Gas Fuel America in the 21st Century?: Don’t believe the hype about plentiful U.S. natural gas supplies.
Of course, the controversy over natural gas is far from over, and PCI continues to provide energy realism and literacy to the debate. This week, PCI Fellow David Hughes published an analysis of two contradictory studies assessing the greenhouse gas emissions of shale gas vs. coal. The conclusion? Shale gas is worse for the climate over a 30-50 year timeframe.
From hot air to deflating (economic) balloons… We were blown away to receive nearly 600 orders in the span of 12 hours for Senior Fellow Richard Heinberg’s newest book, The End of Growth: Adapting to Our New Economic Reality. In the video above, Richard Heinberg, author of “The Party’s Over” and leading peak oil educator, talks about the future of our ‘growth’ society.
Matt Stoller: Who Wants Keep the War on Drugs Going AND Put You in Debtor’s Prison?
June 24, 2011 Naked Capitalism
Matt Stoller is a current fellow at the Roosevelt Institute. His Twitter feed is @matthewstoller.
More than a third of all states allow debtors “who can’t or won’t pay their debts” to be jailed. In 2010, according to the Wall Street Journal, judges have issued 5,000 such warrants. What is behind the increased pressure to incarcerate people with debts? Is it a desire to force debt payment? Or is it part of a new structure where incarceration is becoming increasingly the default tool to address any and all social problems?
Consider a different example that has nothing to do with debts. Earlier this year, a Pennsylvania judge was convicted of racketeering, of taking bribes from parties of interest in his cases. It was a fairly routine case of bribery, with one significant exception. The party making the payoffs was a builder and operator of youth prisons, and the judge was rewarding him by sending lots of kids to his prisons.
Welcome to the for-profit prison industry. It’s an industry that wants people in jail, because jail is their product. And they have shareholder expectations to meet.
Privatized prisons are marketed to international investors as “social infrastructure”, and they are part of a wave of privatization washing over the globe. Multi-billion dollar prison companies are upgraded by analysts with antiseptic words like “prospects for global prison growth”, and these companies have built a revolving door and patronage machine characteristic of any government contractor. Only, in this case, the business they are in is putting people into steel cages (or “filling beds” as they put it), and they don’t care how, why, or whether the people in those beds should be there. They don’t care if you’re in prison for smoking pot, stealing cars, or being in debt. They just want people in jail.
Here’s the 2010 10k of the Corrections Corporation of America (PDF), the largest operator of private prisons in the country. It’s a pretty simple business model – more prisoners, more money. Or, as the company writes, “Historically, we have been successful in substantially filling our inventory of available beds and the beds that we have constructed. Filling these available beds would provide substantial growth in revenues, cash flow, and earnings per share.”
Chart of the Moment: Bush Tax Cuts, Wars Largest Cause (By Far) of Ballooning Federal Debt
By way of reminder, George W. Bush inherited a federal budget surplus from Bill Clinton in 2000, when the non-partisan Congressional Budget Office (CBO) had forecast that, at that rate, the debt would be entirely wiped out by 2012.
Any questions?
Joe Bageant: Waltzing at the Doomsday Ball
Capitalism is dead, but we still dance with the corpse
By Joe Bageant Deer Hunting with Jesus
July 6, 2010 Ajijic, Jalisco, Mexico
As an Anglo European white guy from a very long line of white guys, I want to thank all the brown, black, yellow and red people for a marvelous three-century joy ride. During the past 300 years of the industrial age, as Europeans, and later as Americans, we have managed to consume infinitely more than we ever produced, thanks to colonialism, crooked deals with despotic potentates and good old gunboats and grapeshot. Yes, we have lived, and still live, extravagant lifestyles far above the rest of you. And so, my sincere thanks to all of you folks around the world working in sweatshops, or living on two bucks a day, even though you sit on vast oil deposits. And to those outside my window here in Mexico this morning, the two guys pruning the retired gringo’s hedges with what look like pocket knives, I say, keep up the good work. It’s the world’s cheap labor guys like you — the black, brown and yellow folks who take it up the shorts — who make capitalism look like it actually works. So keep on humping. Remember: We’ve got predator drones.
After twelve generations of lavish living at the expense of the rest of the world, it is understandable that citizens of the so-called developed countries have come to consider it quite normal. In fact, Americans expect it to become plusher in the future, increasingly chocked with techno gadgetry, whiz bang processed foodstuffs, automobiles, entertainments, inordinately large living spaces — forever.
