Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country’s already bloated deficit.
GERMAN FOREIGN minister Guido Westerwelle has called for the EU to proceed with plans for a European army under the Lisbon Treaty, which he dubbed “the beginning and not the end” of a common security and defence policy.
His remarks at the annual Munich Security Conference followed a call by Berlin’s defence minister Karl Theodor zu Guttenberg to end what he called Nato’s “absurd” practice of unanimous decision-making.
Germany’s top diplomat received backing for his plan from his Russian counterpart, Sergei Lavrov, who called for a “single European military-political space” in which no one country’s security was sacrificed for another.
(So Germany calls for a Pan-European army, eerie considering the historical precedent of Nazi Germany’s plans….)
Thousands of Greek civil servants have marched through Athens as they went on a 24-hour strike in protest against the government’s plans to freeze wages, gather more taxes and reform pensions.
The action on Wednesday left flights grounded and many schools and government offices closed, while public hospitals were expected to only take emergency cases.
Protests were said to be mostly peaceful apart from in one incident, where police fired tear gas at dozens of people who tried to break a cordon in the capital city.
The strike comes as the government moves to grapple with a debt crisis that has sent shock waves through the eurozone.
Greece is suffering from a budget deficit that is four times the European Union limit.
The socialist government has announced fresh measures to further cut the public salary bill and hike taxes, defying unions with plans to save the state $1.1bn this year.
“Today, the workers give their reply,” protesters said over loudspeakers in the capital’s central Syntagma Square, where hundreds of pensioners and striking workers began gathering on Wednesday for the demonstrations planned later in the morning.
“They had promised the rich would pay but instead they take the money from the poor,” Ilias Iliopoulos, general secretary of the public sector umbrella union ADEDY, said.
The European Commission has voiced concern that Greece’s fiscal crisis could affect other parts of the 16-nation eurozone and EU leaders were due to discuss the issue during a summit in Brussels on Thursday.
European governments have agreed in principle to support Greece and are considering various options, including bilateral aid, a senior German coalition source said on Tuesday.
Phillips said that if the EU decided not to help Greece, the other option would be the International Monetary Fund (IMF).
“The IMF has helped other eastern European countries like Latvia and Hungary over the last year but it hasn’t had to step into the eurozone itself,” he said.
If it did, that would be a significant humiliation for Greece and for Europe.”
An unnamed government official quoted by the Financial Times said it was more self-interest than altruism that was driving Berlin.
“We are thinking about what we should do if the crisis spills from Greece into other euro countries,” the official was quoted as saying.
(If Greece fails the domino effect would be the dreaded double-dip in this global recession.)
The European Union took steps Wednesday to rein in the fiscal chaos that has brought Athens to the brink of financial disaster in recent months. Leaders of EU member states agreed at a summit in December that Athens should be left to its own devices to deal with its deficit crisis, but the European Commission moved this week to invervene to fix Greece’s fiscal mess out of fear it could spiral into a systemic crisis for the euro.
...it appears the European Commission has come to the conclusion that Greece is Europe’s own version of Lehman — it is simply too big to fail.
Economically, of course, Greece is a dwarf, producing a meager 3 percent of the EU’s economic output. But a bankruptcy could have the same kind of knock-on effects as the bankruptcy of a major US investment bank. One couldn’t rule out a domino effect in Spain, Portugal and Italy. US economist Nouriel Roubini pessimistically wrote of “Europe’s sinking south.” It’s an experiment the EU cannot afford.
Greece’s problems are deep and it will take time to solve them. No European country would be able to do what is being asked of Greece: a complete reform of its health and pension systems and the streamlining of its economy within just a few years.
It remains to be seen whether the Greek population will go along with the tough measures announced by Prime Minister Giorgos Papandreou in a television address on Tuesday. The first step foresees the cutting of salaries in the public sector by 4 to 6 percent. The budgets of all ministries are to be slashed by 10 percent and the retirement age raised. Taxes on fuel, tobacco and alcohol will also rise.
Even Ireland, which ran into serious problems of its own last year, was better off. Public salaries there were cut by a whopping 20 percent, but civil servants in Ireland were among the best paid in Europe. Furthermore, the country had already made fundamental changes to its economy by focusing heavily on the service sector — changes that Greece has yet to address.
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week. The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
There is a tendency to think that what we see in the present moment will continue. We forget how often we have been astonished by the sudden crumbling of institutions, by extraordinary changes in people’s thoughts, by unexpected eruptions of rebellion against tyrannies, by the quick collapse of systems of power that seemed invincible. What leaps out from the history of the past hundred years is its utter unpredictability.
WASHINGTON — In a federal budget filled with mind-boggling statistics, two numbers stand out as particularly stunning, for the way they may change American politics and American power.
The first is the projected deficit in the coming year, nearly 11 percent of the country’s entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.
But the second number, buried deeper in the budget’s projections, is the one that really commands attention: By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020 — years after Mr. Obama has left the political scene, even if he serves two terms — they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.
For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.
Or, as Mr. Obama’s chief economic adviser, Lawrence H. Summers, used to ask before he entered government a year ago, “How long can the world’s biggest borrower remain the world’s biggest power?”
Here you will find hundreds of radical zines ready to print. You can also upload zines to the site ( zines with file sizes bigger than 7mb can be uploaded to http://indymedia.org and linked here). Feel free to comment and contribute.
Many categories, quite a resource for resistance thinking and doing.
This division between capital and labor and the permanently high unemployment that it seems to encourage not only depresses wages, it depresses people; a large body of research shows they tend to withdraw from their communities and societies after being laid off (their spooked neighbors, encouraged to work ever harder, do too). Parental unemployment has huge negative consequences for children, making them more likely to fall behind in school, repeat grades, and exhibit anxiety disorders. During the Great Depression, such negative social consequences were partly buffered by a stronger civil society—attendance at churches, clubs, and community centers was greater than now. The worry today, say Reich, Soros, and political scientists such as Harvard’s Robert Putnam, is that fearful, vulnerable people will become more easy prey for ugly class politics, being drawn, as Reich puts it, to “populist demagogues on either side of the political spectrum.” Certainly during this recession there has been sniping at the usual targets of free trade and immigration. Many experts worry about the current trade and currency squabbles between the U.S. and China, which could easily spiral into the sort of protectionism that exacerbated the Great Depression. There could also be future political wars along demographic lines, as boomers worried about health care and Social Security fight for a shrinking slice of the public pie with younger people demanding more money for education and job training.
The situation could get even uglier if, as many predict, a depressed post-crisis landscape forces Americans to let go of the mythology of upward mobility. As Brookings fellows Isabel Sawhill and Ron Haskins point out in their new book, Creating an Opportunity Society, this myth hasn’t been true for some time: by international standards, intergenerational social mobility in the U.S. has been falling since the 1970s, and is lower than in countries such as Britain, Sweden, and Denmark. As everyone from de Tocqueville to the producers of MTV Cribs has observed, Americans generally have a high tolerance for inequality. Yet that tolerance may wane as we enter a new age in which young graduates can’t expect to do better than their parents—and one in which Wall Street is perceived as being able to continue business as usual while Main Street struggles. “Americans are OK with inequality,” says Reich, who believes we are at a tipping point, “as long as they feel the system isn’t rigged.”
The New Economics Foundation (Nef) said “unprecedented and probably impossible” carbon reductions would be needed to hold temperature rises below 2C (3.6F).
Scientists say exceeding this limit could lead to dangerous global warming.
“We urgently need to change our economy to live within its environmental budget,” said Nef’s policy director.
Andrew Simms added: “There is no global, environmental central bank to bail us out if we become ecologically bankrupt.”
None of the existing models or policies could “square the circle” of economic growth with climate safety, Nef added.
Magic bullets - such as carbon capture and storage, nuclear or even geo-engineering - are potentially dangerous distractions from more human-scale solutions,” said co-author Victoria Johnson, Nef’s lead researcher for the climate change and energy programme.
She added that there was growing support for community-scale projects, such as decentralised energy systems, but support from governments was needed.
“At the moment, magic bullets… are getting much of the funding and political attention, but are missing the targets,” Dr Johnson said.
“Our research shows that to prevent runaway climate change, this needs to change.”
The report concluded that an economy that respected environmental thresholds, which include biodiversity and the finite availability of natural resources, would be better placed to deliver human well-being in the long run.
Tom Clougherty, executive director of the Adam Smith Institute, a free-market think-thank, said Nef’s report exhibited “a complete lack of understanding of economics and, indeed, human development”.
“It is precisely this economic growth which will lift the poor out of poverty and improve the environmental standards that really matter to people - like clean air and water - in the process, as it has done throughout human history,” he told BBC News.
“There’s only one good thing I can say for the Nef’s report, and that’s that it is honest. Its authors admit that they want us to be poorer and to lead more restricted lives for the sake of their faddish beliefs.”
(Mr. Clougherty, could you point out for us a time in human history when economic growth wiped poverty clean from the planet and did no environmental damage?)
As Haitian families search for survivors and relief rolls in, Haiti is still staggering under $1 billion in old debts racked up by unscrupulous lenders and unelected governments of the past.
But in recent days, a worldwide outcry has grown to cancel Haiti’s debt — and while some key lenders are rumoured to be holding out, the IMF and some key governments have indicated that debt relief could be within reach.
More pressure is needed. The petition below will be delivered to the IMF and G7 finance ministers at their crucial meetings in coming days — sign and spread the word:
Petition to Finance Ministers, IMF, World Bank, IADB, and bilateral creditors:
As Haiti rebuilds from this disaster, please work to secure the immediate cancellation of Haiti’s $1 billion debt and ensure that any emergency earthquake assistance is provided in the form of grants, not debt-incurring loans.
Evan details the efforts to build apermaculture relief corps to help with disasters like the Haitian earthquake.Basically the idea of leaving people economically improved after a disaster is pretty cool (as opposed to our current razor/razor blade model). For example: Building sewage systems, composting toilets, compost and recyclying centers, rocket and solar stoves, temporary shelters (perma-yurts), water catchment and filtering, and plant nurseries. Rocket and solar stoves are key because the major ecological problem in Haiti which causes huge hardships from many angles is deforestation for fuel. Solar stoves use no wood and rocket stoves, which can be made out of old cans and pipes laying around, use almost no fuel and can cook with twigs.
noting both the yin and yang of futurity, watching cover ups as they happen, fighting back, and wooking pa nub in all de wong places. that's what i do.
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[the Other Outpost]
