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Archive for March 18th, 2010

Germany Flip-Flops on Greek Bailout

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Well, I certainly didn’t expect this. It looks as though Germany is going to rely on the IMF to bail Greece out should the dreaded moment arrive (hint: it will). This does not bode well for the European Union, and indeed, until now, many thought the only way to preserve the integrity of the Euro would be to treat this Greek crisis as an in-house affair. Resorting to IMF loans would do very little to assure investors that the EU is good for its members’ debt, as this basically signals to the rest of the world that Germany (virtually the only healthy economy left in the EU) is either unwilling or unable to shoulder the entire partnership’s burden.

Remember: France, Britain, Spain, Italy, Portugal, Ireland, and Belgium are all facing debt crises of their own, many just as deep, though not as visible, as that of Greece. Germany’s indication that it will not help Greece is effectively a pre-emptive warning to the rest of these countries that when their own respective economies collapse, not to come banging on Germany’s door. Bloomberg reports today that Greece’s Prime Minister has set a deadline for Germany to bail it out, before it goes to the IMF for help. Germany has already indicated that it’s going to let the IMF solve Greece’s problem, effectively rendering that threat moot.

This is big news for several reasons. With Germany, the last healthy EU economy, refusing to bail Greece out, we may be seeing the end of the European Union as a cohesive economic entity. The Euro has been taking a beating ever since fears of a Greek default arose (it’s down more than 10% since this crisis began), and it’s sure to drop further on today’s news. It is unlikely that Greece will default or be forced out of the economic partnership, but if the IMF gets its fingers into Greece, it will only be a matter of time before the rest of the EU comes to the IMF, arms outstretched. Greece will not be the last European country to undergo a debt crisis, as I hope I have shown.

If Greece accepts IMF help, it will be forced into far worse “austerity measures” than anything Germany would have imposed. “Austerity” is generally a euphemism for cutting off social services and indiscriminately firing middle class workers while the rich make off like bandits. Already these measures have caused massive riots and general strikes in Greece, and these are sure to continue if the IMF gets its way.

As always, one can draw a straight line between economic collapse and Wall Street. Many sources have already reported on how Wall Street helped Greece hide its debt for years, and, in fact, encouraged them to take on more debt via “securitized” trades.

But that isn’t all. Wall Street’s “innovative financial instruments” – its Collateralized Debt Obligations and other over-the-counter derivatives – proliferated throughout the European economy, and are at the heart of the myriad debt crises. They made billions selling Europe these worthless junk bonds, and now they’re slowly walking away, whistling, as though they had nothing to do with it. Greece should be demanding massive reparations for the unprecedented fraud of which they, and the rest of the EU, were the victims.

It’s difficult to see where this will end. The IMF bails out Greece instead of Germany – but then what? Portugal, Italy, Spain… then France? What if Britain needs a bailout? Does the IMF have such resources? Are they just going to print the money? Does anyone know what they’re doing?

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The Coming Totalitarianism

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Chris Hedges in Alternet with one of the most well-written dissections of our modern politics I’ve ever read:

Democracy, a system ideally designed to challenge the status quo, has been corrupted and tamed to slavishly serve the status quo. We have undergone, as John Ralston Saul writes, a coup d’état in slow motion. And the coup is over. They won. We lost. The abject failure of activists to push corporate, industrialized states toward serious environmental reform, to thwart imperial adventurism or to build a humane policy toward the masses of the world’s poor stems from an inability to recognize the new realities of power. The paradigm of power has irrevocably altered and so must the paradigm of resistance alter.

Too many resistance movements continue to buy into the facade of electoral politics, parliaments, constitutions, bills of rights, lobbying and the appearance of a rational economy. The levers of power have become so contaminated that the needs and voices of citizens have become irrelevant. The election of Barack Obama was yet another triumph of propaganda over substance and a skillful manipulation and betrayal of the public by the mass media. We mistook style and ethnicity – an advertising tactic pioneered by the United Colors of Benetton and Calvin Klein – for progressive politics and genuine change. We confused how we were made to feel with knowledge. But the goal, as with all brands, was to make passive consumers mistake a brand for an experience. Obama, now a global celebrity, is a brand. He had almost no experience besides two years in the senate, lacked any moral core and was sold as all things to all people. The Obama campaign was named Advertising Age’s marketer of the year for 2008 and edged out runners-up Apple and Zappos.com. Take it from the professionals. Brand Obama is a marketer’s dream. President Obama does one thing and Brand Obama gets you to believe another. This is the essence of successful advertising. You buy or do what the advertisers want because of how they can make you feel.


We can march in Copenhagen. We can join Bill McKibben’s worldwide day of climate protests. We can compost in our backyards and hang our laundry out to dry. We can write letters to our elected officials and vote for Barack Obama, but the power elite is impervious to the charade of democratic participation. Power is in the hands of moral and intellectual trolls who are ruthlessly creating a system of neo-feudalism and killing the ecosystem that sustains the human species. And appealing to their better nature, or seeking to influence the internal levers of power, will no longer work.

The absurd idea that the marketplace alone should determine economic and political constructs led industrial nations to sacrifice other areas of human importance – from working conditions, to taxation, to child labor, to hunger, to health and pollution – on the altar of free trade. It left the world’s poor worse off and the United States with the largest deficits – which can never be repaid – in human history. The massive bailouts, stimulus packages, giveaways and short-term debt, along with imperial wars we can no longer afford, will leave the United States struggling to finance nearly $5 trillion in debt this year. This will require Washington to auction off about $96 billion in debt a week. Once China and the oil-rich states walk away from our debt, which one day has to happen, the Federal Reserve will become the buyer of last resort. The Fed has printed perhaps as much as two trillion new dollars in the last two years, and buying this much new debt will see it, in effect, print trillions more. This is when inflation, and most likely hyperinflation, will turn the dollar into junk. And at that point the entire system breaks down.

All traditional standards and beliefs are shattered in a severe economic crisis. The moral order is turned upside down. The honest and industrious are wiped out while the gangsters, profiteers and speculators walk away with millions. The elite will retreat, as Naomi Klein has written in The Shock Doctrine, into gated communities where they will have access to services, food, amenities and security denied to the rest of us. We will begin a period in human history when there will be only masters and serfs. The corporate forces, which will seek to make an alliance with the radical Christian right and other extremists, will use fear, chaos, the rage at the ruling elites and the specter of left-wing dissent and terrorism to impose draconian controls to ruthlessly extinguish opposition movements. And while they do it, they will be waving the American flag, chanting patriotic slogans, promising law and order and clutching the Christian cross. Totalitarianism, George Orwell pointed out, is not so much an age of faith but an age of schizophrenia. “A society becomes totalitarian when its structure becomes flagrantly artificial,” Orwell wrote. “That is when its ruling class has lost its function but succeeds in clinging to power by force or fraud.” Our elites have used fraud. Force is all they have left.

Written by pavanvan

March 18, 2010 at 8:28 pm

Quote of the Day

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I am convinced that some political and social activities and practices of the Catholic organizations are detrimental and even dangerous for the community as a whole, here and everywhere. I mention here only the fight against birth control at a time when overpopulation in various countries has become a serious threat to the health of people and a grave obstacle to any attempt to organize peace on this planet.

– Albert Einstein, letter, 1954

Written by pavanvan

March 18, 2010 at 7:54 pm

Posted in Uncategorized

Detroit City Employee: “I Borrow Money to Buy Food.”

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It’s true.

“I borrow money right now to buy food,” says Jackita Muhammad, a teller in the city’s finance department.  “I try to buy beans and other staples so I don’t have to ask family for money, but the truth is that if the mayor cuts my pay, I will have to declare bankruptcy.”

Muhammad, a single mother of three, has been employed with the city since the year 2000.  Ironically, during the day she handles thousands of dollars in checks and money that people come to her window with and pay for taxes and other costs.

Her plight, though precarious, is not unusual for people working full time in Detroit.  AFSCME workers make less than $30,000 a year on average and represent less than 40 percent of the city’s payroll budget.  The mayor’s pay cut will make many of them qualified for welfare benefits even though they work full time.

“It’s simply not fair,” says Muhammad.

Written by pavanvan

March 18, 2010 at 7:51 pm

Posted in Economy

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