The Reasoned Review

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Posts Tagged ‘france

More EU/IMF Confusion

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The Times gets credit for scooping the new plans for Germany and France to help Greece after all. I guess all those big bad threats to leave Greece to the mercy of the IMF weren’t really serious.

In one sense, it really doesn’t matter whether Germany or the IMF ends up on the hook for Greece’s bailout (which is supposed to cost 22 billion Euros, or something like $38 billion). The point is that Greece is not going to be the last country who needs this kind of assistance. As I mentioned previously, Britain, France, Portugal, Ireland, Belgium, Italy, and Spain all have debt crises looming on the horizon. Whoever cleans up after Greece will likely end up mopping up all of Europe. So it’s natural that neither Germany or the IMF want to set the precedent alone.

Again, I cannot stress Wall Street’s complicity in this affair. They were the ones selling Greece absurd amounts of debt on one hand and then buying credit default swaps against that debt on the other. That’s bandit behavior, and they shouldn’t be allowed to walk away from this colossal imbroglio they created without any repercussions. I think it’s clear that Wall Street deserves to pay for some of this mess, if not all of it.

But herein lies the paradox! If Wall Street pays up to bail out Greece, it’s really the US doing it, since all five of the major bank-holding companies are still on TARP life support. So it’s really a no-win situation, unless you happen to be a major bank-holding company on government life support. Then you win.

Written by pavanvan

March 25, 2010 at 11:43 pm

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?

Greece to Get $41 Billion Bailout

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The Wall Street Journal reports today that Greece will get a $41 Billion “financing” package from Germany and France, who, I hasten to point out, aren’t exactly swimming in liquidity themselves.

The plan seems to be that Germany and France will soak up some of this Greek debt via public markets and state-owned banks, due to a EU bylaw that prohibits member states from owning the debt of other members. What’s astounding to me is that no one is asking Wall Street to pony up any of this cash. They, after all, are almost entirely responsible for this Greek debt crisis, and they made hundreds of millions of dollars watching Greece go down in flames.

Goldman Sachs alone, who was arguably the single biggest catalyst for Greece’s downward spiral, paid out more than $21 Billion in sheer bonuses to its employees. AIG, another  major player in this, paid out more than $100 million. I mean, shouldn’t some of this money go toward cleaning up the mess they caused? The Times printed an excellent series of articles on Wall Street’s complicity in this just one week ago.

Javier Hernandez  even reported that major bank shares swung upward on rumors of a pending EU Bailout to Greece. So they’re blatantly profiting from their crimes. I mean, how is this legal?

Oh yeah, I keep forgetting. The banks own Congress. They make the laws.

Written by pavanvan

February 28, 2010 at 2:34 pm

How Do Americans Like Your Country?

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A new Gallup Poll:

I wonder if Iran’s low approval has anything to do with the ceaseless, virulent propaganda directed against it. After all, Egypt has just as repressive a government  (some might say more so) to Iran’s – but then, they happen to be a US-Funded dictatorship – so that makes all the difference, I guess. Israel, for that matter, is only once step removed from an outright state-sponsor of terrorism, what with its frequent, devastating raids on the Gaza strip (the last one killed more than 1,500 civilians), its continual blockade of Gaza (which starves the Gazan citizens and has been defined as a war crime), and its agressive expansion into the occupied territories (remember when aggression was considered “the supreme international crime”?)

So I guess all this poll really shows is how effective US propaganda is. Americans like countries that are “friendly” to the US, and dislike countries who are “unfriendly” – facts be damned!

Written by pavanvan

February 21, 2010 at 10:38 am

Russia: Nuclear Dumping Ground?

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Greenpeace with some great original reporting:

Last night three teams of Greenpeace activists blocked a train transporting nuclear waste to Cherbourg, the heart of the French nuclear reprocessing industry. From Cherbourg it was due to be loaded onto the transport ship Kapitan Kuroptev, destination Russia.   We’ve taken action to tell them that “Russia is not your dumping ground.”

Six Greenpeace activists chained themselves to the railway, at two locations en route to the fuel reprocessing facility. A third team of Greenpeace activists placed a truck on the rails in the centre of Cherbourg, along with a banner saying “Russia is not a nuclear dumping ground”. The train came to a halt just 50 meters short of our activists. For delaying the transport of the illegal nuclear waste they were taken into custody by the police.

The blocked train was carrying 500 tonnes of depleted uranium, just a fraction of what has already been dumped in Russia. The French nuclear companies AREVA and EDF claim there is nothing wrong with these transports, that the material is not waste but a resource that will be processed in Russia, and returned to France as fuel. Unfortunately that’s just not the case.

France is running into the same problem we all will if we begin switching our electricity production from coal to nuclear. What to do with the waste?

Written by pavanvan

January 26, 2010 at 11:11 am

Haiti’s Earthquake and America’s Shame

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President Obama delivered a speech yesterday morning in which he offered his “condolences” to the Hatian people and offered a vague and unspecific amount of “aid”. The speech was short on actual promises, but I’m sure the Hatians can trust America’s good intentions. I mean, it’s not like the US supported a murderous father and son dictatorship in their country for more than three decades, right? Oh wait…

So let’s see what President Obama intends to do:

I have directed my administration to respond with a swift, coordinated, and aggressive effort to save lives.

And that entails what, exactly? The speech leaves it pretty vague: he says the people of Haiti will have the “full support of the US in the urgent effort to rescue those trapped beneath the rubble”, but I’m not sure what that means. Will we just be cheering them on? (“You can do it, Haiti!”) – or are we actually sending people to help?

Well, I guess we should look at Mr. Obama’s stated priorities to find out:

Right now our efforts are focused on several urgent priorities. First, we’re working quickly to account for U.S. embassy personnel and their families in Port-au-Prince, as well as the many American citizens who live and work in Haiti.

Okay, first things first – make sure the US citizens are safe! What next?

Second, we’ve mobilized resources to help rescue efforts. Military overflights have assessed the damage, and by early afternoon our civilian disaster assistance team are beginning to arrive. Search-and-rescue teams from Florida, Virginia and California will arrive throughout today and tomorrow, and more rescue and medical equipment and emergency personnel are being prepared.

Alright, that’s more like it – wait … civilian disaster team? You mean we won’t be lending Haiti the use of our professional disaster response? FEMA and whatnot? Oh well.

So this is a big deal, and it requires close collaboration with NGOs and the UN – but strangely, Mr. Obama declines to specify a dollar amount for our aid, despite the generous aid packages announced by Australia, China, Brazil, The World Bank, and even those soulless corporations . Huh.

At the end of the speech,  Mr. Obama inadvertently adds insult to Haiti’s already horrific injury. He says:

With just a few hundred miles of ocean between us and a long history that binds us together, Haitians are neighbors of the Americas and here at home. So we have to be there for them in their hour of need.

What does that even mean? “Haitians are neighbors of the Americas and here at home.” Aren’t you supposed to have written two books?

And I wouldn’t go trumpeting the “long history” that binds the US and Haiti together, as it’s one of overwhelming brutality and callousness on the part of the US. Starting in 1804, when the newly formed US helped France try to crush the slave revolt in Haiti (they failed, hence Haiti’s independence), the US has persistently and constantly meddled in Haitian affairs, much to the detriment of its population. After Haiti won independence, the US and France refused to recognize its government and forced them to pay 90 million gold Francs in “compensation” to the “landowners” (read: slavers) they just kicked off the island.

Later, in 1915, Woodrow Wilson occupied Haiti (illegally, of course) for 19 years. He was also instrumental in creating the Haitian army, which, from the moment of its inception, was used to crush the peasant population. Then, in 1957, we entered into a “strategic partnership” with Francois Duvalier, who had recently styled himself “president-for-life”, and killed, oh I don’ t know – 60,000 Haitians via death squads. Then in 1980 we gave a $22 million “aid package” to the Duvaliers, which really turned out to be a “bribe package”, since $16 million of the aid later went “unaccounted for”. Oh well, the Duvaliers were “anti-communist”, so how bad could they be, right?

Then, finally, in 1991 we allowed Haiti to have free elections. But the guy who won, Jean-Bertrand Aristide, was deemed “too soft” by US policy planners, so the CIA funded and armed a terroristic “opposition” organization called the “FRAPH (Haitian Front for Advancement and Progress)” which then proceeded to execute a reign of terror, slaughtering between 3 and 5 thousands Haitians. And the slaughter didn’t stop once they exiled Aristide and took power; in fact, it intensified.Oh yeah, I almost forgot – Aristide was extremely popular, rose from the slums (like a certain president we know today), and won the presidency in a landslide victory (almost 70-30). But yeah, he was way too soft.

Then Aristide somehow made a comeback in 2000 and ruled until 2004, when once again the US funded and sponsored a terroristic “counter-revolutionary” group to oust him from power, which they did in 2004. Why? Because he refused to “privatize” Haiti’s economy.

I’m sure Mr. Obama will consider whatever miserly aid package he chooses to deliver as a “boon to Haiti’s struggling people,” a “manifestation of our common humanity,” or whatever other grandiose titles he wishes to give it. But students of history (something which Mr. Obama professes to be) should, of course, know better.

Tax ’em!

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The Financial Times has a list of 14 reasons why US bankers should be taxed for their outsize bonuses. Both Britain and France have begun to do this.

1. People on Main Street are furious about Wall Street bonuses.

2. This anger is justified because the bonuses are based in large part on windfall profits. These profits derive from taxpayer-backed interventions that stabilised the financial system, paving the way for a  recovery in financial markets and collapse of risk spreads.

3. All banks benefited from this bailout – not just the ones that took or still have Tarp funds. Even the strong gained hugely from Fed liquidity and government actions to ensure none of their weaker counterparties failed (including but by no means limited to the AIG case).

4. In an ideal world, these interventions would have been structured up front in a way that ensured the value created did not leak out to banks and bankers. But they were not.

Written by pavanvan

December 13, 2009 at 8:19 pm