主播大秀

Thought for the day: "Those who cannot remember the past are condemned to repeat it." - George Santayana (The Life of Reason, 1905)
Official issue of US treasury debt is US Department of the Treasury, which is not the central bank (the Fed). Treasury pays interest on US debt to all holders be they individuals, foreign institutions, & even the US Federal Reserve Board. Although interest paid the Fed is a bit different. The Fed uses its interest earnings to fund its operations- pay its economists & analysts, data collection, fund independent research, etc. This is why the Fed - for good or ill - is able to maintain its independence from political populism: It is funded by earnings on its own assets, not taxes. Any interest income left over is rebated back to the Dept. of the Treasury.
A LARGE FRACTION OF THE US GOVT DEBT IS HELD BY THE US GOVT. The buying and selling of Treasuries by the Fed is the primary tool Fed uses to control the money supply. If the trillions were distributed to the public, the public would be filthy rich, but the public is not filthy; yet, somebody has got to be filthy rich.
When US forces attacked Afghanistan, 1/7 nations had a Rothschild controlled central bank. By 2005, this figure was incredibly down to only 5 countries: Iran, North Korea, Sudan, Cuba, & Libya. Since the Libya affair & US entry into Sudan, it is now down to 3 in entire world: Iran, North Korea, and Cuba.
As for the Bank of England, I cannot be sure what it is doing, but it generally follows US pattern.

How about 1948, when the US launched the $13 billion Marshall Plan. Yes, how about that? The Marshall Plan = American economic imperialism, an attempt to gain control over Western Europe just as the Soviets controlled Eastern Europe - a kind of stand-off. In a review of West Germany's economy from 1945 to 1951, German analysts concluded foreign aid was not crucial in starting the recovery or in keeping it going. In fact, the economic recoveries of France, Italy, & Belgium predated the implementation of the Marshall Plan. Belgium experienced the fastest recovery. Though I generally do not have many good things to say about former US. Chairman of the Federal Reserve Bank Alan Greenspan, he gives most credit to Ludwig Erhard for Europe's economic recovery. In his memoire, Greenspan writes that Erhard's economic policies were the most important aspect of postwar Western Europe recovery - far outweighing the contributions of the Marshall Plan. He states it was Erhard's reductions in economic regulations that permitted Germany's miraculous recovery.
US President George W. Bush told his Argentine counterpart N茅stor Kirchner upon being told a "Marshall Plan" would be a solution for Latin America problems, that the "Marshall Plan is a crazy idea of the Democrats".
In any case, Kirchner chose a different path: THE ARGENTINE SOLUTION, auditing, writing off all odious debt, and repaying only what was valid = extraordinary ARGENTINE RECOVERY.
Criticism of the Marshall Plan also aims at showing that it began a legacy of disastrous foreign aid programs. For example, Alberto Alesina and Beatrice Weder, summing up economic literature on foreign aid and corruption, find that aid is primarily used wastefully & self-servingly by government officials, and ends up increasing governmental corruption. Noam Chomsky wrote that the amount of American dollars given to France & the Netherlands equaled the funds these countries used to finance their military forces in southeast Asia. The Marshall Plan was said to have set the stage for large amounts of private US investment in Europe, establishing the basis for modern transnational corporations. Other criticism of the Marshall Plan stemmed from reports that the Netherlands used a significant portion of aid to re-conquer Indonesia in the Indonesian National Revolution.
Give me the Argentine Solution any day!

Germany to "assume its responsibilities"

What responsibility? Others borrowed too much.

鈥淗istory is written by the victors.鈥� Winston Churchill quotes (British Orator, Author and Prime Minister during World War II. 1874-1965)
In Greece too, they remember the past.
In June 1948, the Soviet Union broke off relations with President Josip Broz Tito of Yugoslavia. In one of the meetings held in Kremlin with Yugoslav representatives, during the Soviet-Yugoslav crisis, Joseph Stalin stated his unqualified opposition to the "Greek uprising". Stalin explained to the Yugoslav delegation that the situation in Greece has always been different from the one in Yugoslavia, because the US & Britain would NEVER PERMIT Greece to break off their lines of communication in the Mediterranean. What business was it of US or Britain?
After a year of increasing acrimony, Tito closed the Yugoslav border to the DSE (Democratic Army of Greece) in July 1949, & disbanded its camps inside Yugoslavia. In the summer of 1948, DSE Division III in the Peloponnese suffered a huge defeat; lacking ammunition support from DSE headquarters, & having failed to capture ammunition depots belonging to the National Army at Zacharo in the western Peloponnese, its 20,000 fighters were doomed. Almost 100,000 ELAS fighters (The Greek People's Liberation Army) and communist sympathizers, able to serve in DSE ranks, were imprisoned, exiled or, in some cases, executed. This deprived the DSE of the principal force able to support its fight.
Western Allied governments saw the end of the Greek Civil War as a victory in the Cold War against the Soviet Union; left-wingers countered that the Soviets never actively supported the Communist Party's efforts to seize power in Greece.
Greece was in ruins, even greater economic distress than it had been following the end of German occupation.
After the collapse of the military junta, came the conservative government under Constantine Karamanlis, which guaranteed political freedoms, individual rights and free elections. In 1981, in a major turning point in Greek history, the center-left government of PASOK allowed DSE veterans who had taken refuge in communist countries to return to Greece and reestablish their former estates; this greatly helped diminish the consequences of the Civil War in Greek society. The PASOK administration also offered state pensions to former partisans of the anti-Nazi resistance; Markos Vafiadis was honorarily elected as member of the Greek Parliament under PASOK.
The next time you hear the name "PIIGS" applied to Greece, remember this turmoil, this history. Greece remembers too...

China would become involved (invested) IF it could just see where the EU was going; after all, it is already holding tons of US bonds which it foresees will lose their value.
Was the creation of a single currency a step too far?
No, this mistake was in the process.
The mistake was not doing a complete Commission Audit prior to each country's entry into the Eurozone. This would have allowed the segregation of odious debt (to be written off) from valid debt (subject to repayment); otherwise known as the Argentine Solution, which I still believe in. It is not too late for all EU countries to submit - not to useless bank stress tests - but to Commission (independent) audit, and thereafter take action to write-off the odious debt.
I am still puzzled as to why this was not done in the first place, but I think it most likely had something to do with the gambling casinos, the banks too big to fail, that would have taken a severe hit based on their derivatives, CDOs and other nefarious financial products. It was save the banks, or save the countries, and we all know how the banks (who rule the world) chose to go.
You can indeed have a multitude of countries inside the Eurozone, IF they are made healthy and cleaned up before entry or during membership. This should be done, must be done - unless of course we are happy that banks rule the world.
US, with its single currency, is still struggling through its own very messy debate about how to deal with an eye-watering amount of Federal government debt. Just wait for the input from the Super-Committee because believe me, you ain't seen nothing yet!
Lucas Papademos, the new Greek PM; Mario Monti, the former EU Commissioner who's now being tipped as Italy's next PM, both should immediately call for an Independent Audit Commission, write-off the odious debt, and thence stop the austerity, which is only necessary to save the banks.
I disagree that Germany should "assume its responsibilities" (ie use more of German taxpayers' money to bail out the Greeks, Italians, Spanish, Portuguese and Irish); this is not necessary. There are trillions in odious debt which do not belong on PIIGS balance sheets, or Germany's for that matter. Do you think the ECB is not well-aware of odious debt. The question should be: Why is the Eurozone not doing to fair thing, the right thing? Why is it killing its people with austerity? Why?
Who is being saved thereby?

Come on Robin, 'Lessons from History'!

The most similar situation of a property fuelled debt bubble and crash is the 1870s Depression (1873 to 1896) in the UK. ( I've written about this endlessly so I will not repeat it here yet again). I also like the analysis of Rosa Luxemburg with regard to the situation in Poland and, of course, Marx.

This is one of the entirely predictable crises in Capitalism. It produces a 20 to 30 year Depression because of the structure of the debt and the interlinked natures of the markets. This is unavoidable. (Again I'll not repeat the mechanisms of the Depression.)

This is our world NOW. The ignorance and stupidity of our regulators let this happen by their inactions over the last decade or more. Their education has been dire. We are still in denial and we still haven't done the right thing - that is sack them.

The way ahead and its timing is entirely forecastable in gross terms - the debt had to be de-leveraged / deflated as per the 1930's experience as soon as the debt is gone then jobs can be created again. That is after all the purpose of capitalism.

The sign that things are returning to a more benign situation will be that money regain its prudential price of at least inflation. In fact this is also a pre-requisite for the recovery in jobs.

So the steps are:

Fire the regulators who created the problem. Then stick the price of money back up to a prudential level. Let the banks fail as their continued struggles to exist are holding the World back. Let asset prices falls in all countries to international levels so that wages can also do so and everyone can again be competitive. Hey presto ten rather than thirty years later and all this is behind us.

For the UK we have to regain as much influence as we can so we must participate fully with our friends and neighbours in Europe (incl the Euro) - We'll need a National Government not just this two party coalition!

I am having difficulty deciding where and how to begin in discussing the many points Robin has introduced --on the one side there is an openness and the other includes opposite traits. The reasons for this, only Robin himself can explain.

The paragraph -- "In Germany, they remember the past....... No, they have not"
--is an example of the later.

The many 麓elderly麓 Germans I have discussed with over the years DO thank America for all that it has done -- from the defeat of the Nazis, to the 麓Care麓 packages, the Marshall plan and the 麓Raisin bombers麓.


"Did Europe echo to the sound of its people's UNDYING gratitude for US generosity?".

There were riots in Germany when (after WWll) -- the then German government considered forming a defensive army. There were more riots when America placed nuclear missiles on German territory. Not only had Germans sworn that 麓never again麓 would they risk that a war coming from their territory -- but now they had the risk of a nuclear war being fought over it -- no matter if the Soviets or America fired first.

Joining NATO was yet another German societal dilemma -- which again after 9/11, Germany (and NATO) were coerced by America into fighting Afghan tribesmen.

-- The poppies of Flanders --and now the poppies of Afghanistan ?

Robin, how far should UNDYING gratitude go ?

-- to the death -- and forever ?

--or until misused -- more than once ?

To be continued.

2.

I recently attempted discussing the EU and the Eurozone with young people (under 30 years old) -- a more frustrating experience cannot be imagined -- but we were ourselves in a similar position at that age trying to make sense of the history-- before our birth.

What is even more disturbing is the Schadenfreude at the present apparent demise of the EU and Eurozone --both from many blog contributors and some 主播大秀 journalists ( Robin is NOT included in the list).

True, with hindsight -- it may have been better to have remained with the Common Market -- but does that premise take into account the quickly changing Europe from the 70麓s onward ?

The Dictators of Greece, Spain and Portugal had 麓left the scene麓 and the populations were clamoring -- for them NEVER to return. Communism fell and the populations were clamoring -- that it NEVER return. Never mind those who had suffered from a weak currency and abject poverty under some of the fore-mentioned.

How could all get their wish ? -- the only answer was the EU --while America was clamoring for NATO expansion to Russia麓s borders.

--and the Euro ? -- That appears to have been a condition by France (Der Spiegel) -- for the acceptance of German re-unification --the nightmare of not 60 million but 80 million Germans in the Industrial Juggernaut was too much to bear with the D-Mark on the loose.

-- And now the Schadenfreude -- at what ?

--- Can some American or British citizen ( those most guilty) --please explain ?

To be continued.

3.

To those who say --"we told you so -the Euro will fail" --the argument still used, is that governments should have the possibility to devalue.

True ---as before ?

Italy was lobbing off a zero now and then, Greece had high inflation and money for business was practically non-existent at reasonable interest rates or only in Hard Currencies.

The problem was never the Euro -- but governments and populations who NEVER learned to handle money ( as Robin has implied).

The Euro offered a stable currency --with wealth, stable currency and financial security for many -- and those who needed it the most --blew it!

--- as both governmental and the level of private debt shows -- poverty would have been their fate -- no matter which currency was used.

-- more Schadenfreude ?

4.

For years I have been following the frustrations and (oft few and far between and respected by me) serious contributions from John_from_Hendon ) concerning Britain麓s role in the EU.

--apart from the British government and 麓Establishment麓 leaving out nothing for attack other than the EU麓s CAP, I fail to see anything else that justifies --

"For the UK we have to regain as much influence as we can-- "

-- With 4 opt-outs and 麓Bring back our Sovereignty麓 -- surely that suggests that in our lifetimes nothing of the sort will occur ?

-- the changes necessary for Britain to be an 麓equal麓member would destroy most of its 麓Monarchial parliamentary structure 麓-- never mind the possible challenges in the European Court to 麓axiomatic麓privileges (for some) present.

--while the Common Market and the CAP could be accepted into the present UK structure -- the EU and the Euro are simply too many shoe sizes larger.

-- and it would (as has been often shown) -- be incapable of doing so.

Will the 主播大秀 force Robin Lustig to follow the line put out by the EU that these new governments, that are going to pop up in more countries before long, are technocratic?

Please just use the words undemocratic, EU appointed, junta.

After all as far as the electorate are concerned what is the difference between unelected technocrats or unelected generals?

#11 Kit Green

"After all as far as the electorate are concerned what is the difference between unelected technocrats or unelected generals?"

-- Go to Spanish, Portuguese or Greek blogs for an answer you may believe.

-- After that, ask the South American and African blogs.

-- If all that fails --let me know.

John_from_Hendon

-- this may be of interest to you--

Well, maybe had the governments remembered the numerous times that banks and investment firms have rigged a system to fail while they made money at both ends, this could have been avoided. Had Lehman not forged the rating of Greece and their cohorts in crime not created the fuzzy financing of the housing bubble, and had the elected officials who were told in 2001 that the derivatives and default swap instruments were destined to sink the financial markets taken appropriate regulatory actions...maybe things wouldn't be where they are today. This is and has been about political and financial corruption and neither of the responsible parties will accept any responsibility. Until the governments are truthful with the people and the people elect truthful governments, nothing will change.

13. quietoaktree wrote:

"John_from_Hendon -- this may be of interest to you--"

I am always curious about multi-lingual media and in particular the way the sub-editors choose to edit the headlines... This case is quite usual in that way.

Take the English, French and German versions for example. (selection: because I have a reasonable chance of natively understanding all three!)

English

"As the eurozone crisis deepens, the countries outside of it are trying to come up with ways not to lose control of their destinies inside the EU. "

French

Du Royaume-Uni ... un jour. (or it'll get moderated for excessive us of a 'foreign language'!)

or in English

"From the United Kingdom to the Czech Republic, the ten countries of the EU who are non-members of the Euro area are very different. But in these times of crisis of the single currency, all are thinking about the opportunity of adopting it one day." (my translation")

German

"Weil sich die Krise ... zu verlieren. "(or it'll get moderated for excessive us of a 'foreign language'!)

or in English

"As the crisis of the Eurozone has intensified, the non-members are trying to find ways and means of not loosing control of their destiny in the EU. " (my translation - I'm better at French!")

These differing editorial views speak loudly indeed! They give completely differing impressions - one might be reading entirely different articles! The French are having their fear of the perfidious English reinforced whilst the Germans do not bother with such matters.

I've tried to blog not only in English but French too and it is illuminating (haven't dared to try to do so in German - mine is not good enough)

The structures of the language do dictate how one feels about things is quite subtle ways - I suspect very much in the same way as one would feel if writing in Welsh or Scots Gaelic or any other language.

By the way where on earth did the third English sub heading come from mentioning Hungary which only appears in the first section!

Sorry, I guess you wanted me to pay attention to the content rather than the translation!

We Europeans are really all one homogeneous group with very similar concerns, hopes, fears and backgrounds - despite the wedges the politicians fight to maintain so as to divide us. This really is the historic tragedy of Europe and continues to be so - a people divided and regularly auto-butchered at the behest of the petty small minded nationalist politicians and their incompetent generals! Better to put the politicians to the proverbial electoral sword than let them do the same to the people! We, the people of the EU, really do need to struggle for pan European universal suffrage on the basis of one person one vote. We need to escape the hegemony and dictatorship of the petty nationalist politicians.

In an essay in today's NY Times, Alan Cowell, writes about another time in the past when Europeans had to live with austerity. He quotes, British historian Tony Judt who reminisced about the time after WW II in debilitated Britain that was slowly ceding its empire and pre-eminence in the world. Judt remembered when "clothes were rationed, cheap and simple utility furniture was the only thing available and food was rationed." This was of course the case throughout Europe in those days and the only thing to look forward to was the US Marshall Plan which was made necessary by the looming threat of the Cold War. But Cowell says this time as Europe faces a new age of austerity, it seems to "have lost sight of the fact that it has been there before." "The difference now is that the taste for wealth, the aspiration to automatic betterment and the assumption of ever-expanding horizons have become universal, cemeted by the growth of the EU and the adoption of the single currency, the euro, that has spread a leavening of prosperity among the 17 countries in the union that uses it." Compared to the postwar conditions with its grinding deprivation of the aftermath of world war, "now the point of departure is prosperity, a fool's paradise in which Europeans came to see affluence as a birthright." The problem that politicians face today and which makes the challenge so explosive is not simply a question of economics but one of expectations. In my opinion, Cowell oversimplifies the situation, and fails to see the valid reasons for popular dissent that came out of the financial meltdown on Wall Street and its spread to Europe including Britain. Popular dissent has been quick to see that ordinary Europeans are being blamed for the conditions resulting from the meltdown and are being punished by drastic austerity measures on the economy. Although the details may be somewhat obscure, there is no doubt that it was the banking speculation and failures of regulation that led to the current economic situation. And in the case of the eurozone crisis, it is abundantly clear that the main motivation for the imposition of austerity measures is to save the banking system which became overextended in loans to the PIGS nations. So it is clear to me that Cowell's false consciousness about the insufficient humility and unrealism of the widespread and growing dissenters, should be rejected.

16. smartsceptic

I think that there are other lessons from history that may also have something to teach us:

For example: printing money>> Weimar inflation >> rise of simplistic right wing 'solutions'.

Wartime austerity is one thing but when the enemy is the banks and their supine regulators will the people put up with much more?

I also think that the ascribe the 'problem' to profligate government overlooks the real cause which is uncontrolled and excessive lending to the private sector in the form of asset secured loans. The states also spent too much and did not collect the taxes as they should have done and nor did they even try to reduce corruption - but the banks (assuming they were half competent - more on that later) lent the money.

The banks lent money that they should not have lent to both states and an even bigger sum to the private sector. They proceeded to take out exotic forms of quasi insurance and trade these as well as the debt itself - non of which was worth much even though they(the banks) also secured a AAA rating from the credit ratings agencies.

Isn't stopping this happening exactly why we pay Regulators? What were these people doing? Why were they proved to be so incompetent? Why haven't we got rid of them fro better educated and informed people? (Also why haven't the training institutions that created these ineffective incompetents been reformed? i.e.Harvard)

The real problem is neatly encapsulated in Las Vegas's (with a large dose of suburban Detroit's) housing market. The assets which underpin the global system are not performing and will never perform and yet nothing has been done to handle this. Furthermore the still overpriced US (and UK) housing market do not permit the lowering of workers pay so that their finances make sense in a global World.

We are in a global gambling empire where the bookies are seen as the only business in town. This cannot be sustainable. We need solutions and the only rational solution is to progressively castrate the gamblers. (to be clear the banks) What must remain is the trade supporting function of banks everything else is froth and needs to be progressively curtailed or taxed out of beneficial existence.

The banks are bust. They have produced, and lost, so much fake money they can not be rescued. We need policies that start banking again on a sustainable basis and until we take that step capitalism will not again work for us.

Money has to return to being prudentially priced before we are out of this morass of debt. Capitalism required prudentially priced money to function. We are still living in an economic perversion: a limbo between crash and the start of a recovery.

#15 John_from_Hendon

"Sorry, I guess you wanted me to pay attention to the content rather than the translation!"

--correct !

-- I offered the link with the hope of hearing your thoughts on the EU political situation and how it may develop. Knowing that you are very pro-EU and Euro, I was wondering how you are managing -- with many preaching to the negatively converted on both.

18. quietoaktree wrote: "--correct !"

The rise of the right and extremists was predictable as soon as the crash happened (and even before for those who had seen it coming for years). The easy solution of blaming someone else, indeed anyone else always prevails and forces its way to the top of the agenda when the global economy shudders. So I am not at all surprised, indeed it was to be expected.

My views have not altered as the logic of the EU and the Euro (a single currency) has not changed. The politics of running both have become problematic again as was to be expected. As to whether the rational position is, or is not, swamped by a tidal wave of internecine hatred is unknown and I will not attempt to predict it - just to say that is has happened before and that rational individuals need to redouble their efforts to prevent it occurring again.

Will the citizens of Europe once again allow themselves to be led into slaughtering either their jobs or each other is unknown, but fervently to be opposed.

The pro EU and pro Euro arguments are very strong indeed as strong as they always were. As indeed are the crying need to actually do something sensible about economics and financial regulation and to do it quickly. I see these issues as inextricably linked.

The omens are not good, but it is the darkness before the storm and after the economic storm (which has yet to come) has abated then we will return to using capitalism fro it real purpose and that is to efficiently organise the use of resources - including providing jobs fro all our fellow Europeans. I feel that Europe maybe at risk of seeing the same type of environment as the USA experienced in the Civil War of 1861鈥�1865, but I hope this can be avoided. However it will not be avoided by abandoning the rational and logically rational argument that are centred around working with ones neighbours in as transactionally efficient and fair manner as possible.

Presently the UK is akin to the Confederacy clinging to outdated and fundamentally wrong ideas (I am over simplifying a bit.) The UK insists that the whole of the country is subservient to a few bankers and shall be sacrificed to keep a few bankers in luxury (the cotton plantation owners.) The Confederacy may have had several good songs but ultimately they were doomed, even from the outset, that is the present position of the Anti-Europeans and the Anti-Euro rabble. The anti rabble are fundamentally an anti-UK mob (and pro banker/cotton plantation owners.) Fundamentally the little Englanders are about destroying the UK and that will, eventually, not happen.

[ I chose to use the example of the US Civil War rather than the English Civil War or the French Revolution etc. - but I could have chosen any to draw lessons from.]

So in summary ,to paraphrase Catherine Tate's comic character, "Am I bovvered?" [implied answer NO!]

All historical financial collapses have the same root cause..unregulated and unsecured financial dealing by the banking industry and stock markets. These financial organs always argue that this is not a problem and that is will not happen again. As usual the people are blamed for having debt that the banks and financial industry has caused with approval of individuals and businesses that were unqualified but the financial industry could profit through fees and processing costs. Basically greed driven profits. Most interestingly is that nothing has really been done in the way of regulation since the financial collapse. Although warned of the use of derivatives and credit default swap instruments in 2001 the governments listened to the financial industry lobbyist and chose not to regulate. Today, the European governments are working with the banks to fund the national debts with the very same instruments that caused the collapse. As the banks pressure governments to remove elected leaders to be replaced with individuals more to their liking the entire democratic system is being shown as a corrupted process that is determined by the banks and not the people. The will of the people is no longer relevant in this world....unless it coincides with the desire of the bankers. Unlikely that those who perpetuated the problem are the ones who will solve it. The continued movement of wealth upwards will only cause more discontent.

Excellent article, spot on.
The perverted version of capitalism, that is now being imposed pretty much worldwide aims to protect the interests of those seduced by "moving the boundary stones" of prudence.
All those who lauded deregulation as the way forward, were false prophets.
Arrogance and delusion, systemically included in the western world financial philosophy. The banking multiplier alone, was outrageously optimistic, but the "hey I'm getting my bonus zeitgeist" dispelled simple common sense analysis.
Financial fascism, suborning democracy, is advancing to support the whole rotten mess. Very clever of the bankers, extensive power, intruding into the lives of the citizenry.

Not only has too little been done to regulate derivatives but historically roadblocks have been used to stop attempts at regulation. During the latter days of the Clinton administration, the head of the Commodity Futures Trade Council, Brooksley Born tried to get the most powerful people in the administration including Alan Greenspan, Robert Rubin, Arthur Leavitt, and Larry Summers to grant her the powers to start regulating derivatives which were threatening to get out of control. She was shouted down and warned to stay out of this area by her superiors and later forced to resign. More recently President Obama appointed or re-appointed Gary Gensler, who was an assistant secretary of the Treasury under Rubin and a former partner at Goldman Sachs, to head the CFTC which was given some extra responsibilities to regulate derivatives AFTER the financial meltdown by the Dodd-Frank regulatory reform statutes. Naturally, the Republicans in Congress have refused to give Gensler the funds to adequately resource the agency for this immense new responsibility.