Tag Archive: Deficits

Feb 06 2013

John T. Harvey: “The Coming Recession: How Fiscal Responsibility is Economic Suicide”

As you might have heard the economy is contracting while unemployment remains high inching higher especially in real terms again while Washington is too stupid or corrupt across the board to notice. I can’t say I didn’t see this coming even as just an above average layman. All this focus on austerity is detrimental. After all, spending is actually income and so are deficits which are the life blood of the private sector in the economy when it comes to those sectoral balances you hear me always harping about.

And on that point I refer to Post Keynesian economist Wynne Godley as he along with MMT economist L. Randall Wray predicted this crisis in 2000 and that matters. Therefore it’s safe to say the Post Keynesian school is pretty much vindicated. And part of this tradition can be read in Forbes magazine every month. Imagine that! I have thanks to discovering the work of the most excellent Post Keynesian/MMT economist John T. Harvey.

I have to thank NY brit expat for introducing me to John whom is not only a brilliant economist, but an all around cool guy who is very approachable and has an awesome taste in music. He stresses that the economics discipline hasn’t made economics very understandable to the general public and he’s right; however, you wouldn’t know that by reading his many excellent pieces on why everything people think they know about debt and deficits is absolutely wrong. As John points out, it’s not only wrong, it pervades this entire ignorant and corrupt political debate happening right now over this stupid sequester that was a creation of the White House and Congress.  

As you will read down below, this horrible self induced debt ceiling pro austerity political show where never is heard an encouraging word like full employment, but instead for Peter Peterson’s enjoyment, idiotic words praising deficit terrorism(budget balance and cutting our safety net) rule the day. It only amounts to economic decay and a likely recession on the way depending on how much deficit spending is cut in the coming days.

Jan 23 2013

FAIL! There Will Be Austerity Kabuki Every 3 Months

There seems to be a lot of celebrating without actually understanding much of what has happened as of late. One reason is that it looks like House Republicans will agree to raise the debt ceiling but only for 3 months until the budget gimmick of all Congressmen supposedly either passing a budget or denying their own pay as if that will ever happen. There will be infighting on whether there should be heavy or light deficit terrorism terrorizing the unemployed as usual, but now we can expect these dysfunctional austerity celebrating battles to go on and on.  And as I pointed out when I predicted all of this 3 years ago, when this is the debate in Washington DC we have already lost.

We’ve Already Lost So Cancel Any Perceivable Celebration

This budget gimmick fight is already on top of what the last debt ceiling fight created with the negotiations coming up over the self induced sequester on the basis that 4 trillion bipartisan austerity is awesome. That is the problem for all debates and all fake “progressive” political rhetoric in DC we heard at the Inauguration even though it was a great speech.

The plans to kick this austerity shit can down the road continually every few months is not a victory; it’s also not even a clean debt ceiling raise because it’s not even going to be for a fiscal year. It also means the White House was really posturing as I said they were when they claimed they wouldn’t negotiate on the debt ceiling; this shows that all this so called new-found post reelection “strength for progress” is a myth. That also means that all the hyp being bandied about, about the low-balled 60 billion to merely 9 billion Sandy relief bill passing weeks late and 51 billion dollars short breaking the Hastert rule did not have the significance of the spin behind it at all. It’s simple: John Boehner was looking out for his own ass as speaker(shocking!). That’s it.

The idiotic bipartisan sequester created by the last grand self induced standoff over the last debt ceiling fight will come to a head on March 1. I don’t expect a lot of defense cuts despite the posturing and fully expect more cuts to SS and Medicare to be floated and bargained with within multiple negotiations that show nothing but contempt for the public. Yves Smith goes into the real reasons why a Republican grand standoff on the debt ceiling looks like it won’t happen despite the coming miniature ones every few months that will happen where plenty of deal making and deficit terrorism will take place.

All Good Democrats Applaud Republicans Rearranging Battle Lines in Austerity Phony War

It’s not quite that simple.

First, if you widen the frame, the budget jockeying is largely kabuki: which team is going to score more points that appeal (or more accurately, can hopefully be spun to appeal) to their base? The reality is that both parties are fully committed to imposing austerity. The only question is whether we get Dem Lite or Republican Hi Test. But rest assured, neither version will be good for ordinary Americans.

Second, the Republicans have not dropped the deficit ceiling cudgel, but they seem to recognize that it is a mutual assured destruction weapon, and therefore not as useful as they once thought. They seem to still be coming to grips with the negotiating implications. As the New York Times reports, the Republicans are willing to extend the deficit ceiling for three months, but that increase was conditioned on having the Democrats approve a budget (during the Obama administration, no budget has been approved; the government has carried on because Congress has passed spending resolutions). Notice that while Obama has said that he would not discuss deficit cuts under a debt ceiling sword of Damocles. But if he accepts this deal (which includes a gimmick, of having Congresscritters go unpaid if they can’t agree on a budget on the normal timetable), he will still be doing that. So why is this a victory of sorts?

The more important part of the New York Times story on the Republican climbdown is that Dave Camp, the House Ways and Means Committee chairman, disabused his fellow party members of the idea that the government could limp through hitting the debt ceiling by using tax proceeds to pay only debt obligations, Social Security, the military, and other critical needs. So the Republicans can’t refuse to raise the debt ceiling and not do serious damage, pronto. And everyone would blame them for their intransigence. So unless they want to play Major Kong, they will probably continue to play ball with the Democrats on debt ceiling increases while trying to save face about it.

Jan 09 2013

Mr. President, Mint that Coin and Keep that Option. Don’t Sell Us Out

We know by now that fake tough talk from the President on letting the Bush tax cuts above those making $250,000 expire being an absolute was just that, fake. So there’s absolutely no reason to believe that Republicans do not have all the leverage in this upcoming debt ceiling fight coming up. They do.

US Double-Dip Death Watch Continues

Jay Carney’s press conference today leaves no doubt that the situation is substantially as I described it in my previous post.  The White House commitment not to negotiate on the debt ceiling is mainly fluff.  Their public position is that the Congress must lift the debt ceiling with a “clean” vote first, before a deal can be struck on the massive spending cuts that will take place automatically in March.  Carney implores listeners to believe that the debt ceiling and sequester are “separate” issues, and insists that “this not a negotiation the White House is going to have.” But of course the entire press conference is itself a public gambit in an ongoing negotiation that obviously includes back-channel talks.

There’s also no reason to believe the President won’t put up huge cuts to our safety net just to raise the debt ceiling thanks to what we know from the austerity memo from Jack Lew’s office when he was head of Obama’s OMB in 2011.

This was all thanks to the gross incompetence of not adding a raise in the debt ceiling in the original 2010 deal that extended the Bush tax cuts as I have repeatedly pointed out. However more than half of you already know this, so let’s get to the here and now; there are only two options.

There is the 14th amendment challenge to the SCOTUS option and there is the minting of a 1 trillion platinum coin to start off with. We know the 14th amendment challenge is the least likely scenario to be pursued now. So given the lack of appetite there, there is only one other option and the President better consider it because no one believes the fake posturing about a debt ceiling raise “not being for debate.” Too late. It is.

It didn’t have to be, but the President made it that way by trusting John Boehner with the full faith and credit of the US so now political default(the only way it could happen as a currency sovereign) is a possibility thanks to this mess. So a Trillion Dollar Coin (TDC) is the first step and a small chance at redemption that suddenly is bigger than the blogger and the blogs talking about it thought it would be. It suddenly got real and thank goodness it did because we need to go further. To defeat austerity for the future we also should go from a Trillion Dollar Coin (TDC) towards Platinum Coin Seigniorage(PCS) and think about minting coins of a higher value up to 60 trillion. Therefore, as a firts step, I urge all of you to instruct the President to…

Direct the United States Mint to make a single platinum trillion dollar coin!

Jan 02 2013

It’s Not 11th Dimensional Chess. The President Wants Working People to Clean Up His Mess

Once we realize there is no fiscal cliff and the whole premise is a myth, you think about why it was created. It was created so we can mop up after the 1% which owns all three branches of government including the President. Obama didn’t add a raise in the debt ceiling to the Obama Bush tax cut deal he made in 2010 which created this political mess we are in right now.

Yet the poor and middle class are supposed to “stop whining and complaining” and just mop it up as if it’s one of the menial 60% of low wage jobs created that were part of this “recovery” where 93% of the income it went to the top 1%? I don’t think that’s fair. He needs to ask his Wall St buddies in his Treasury Department to share sacrifice. We have sacrificed enough in the name of the fantasy evil deficits from the land of Mordor causing fantasy default. Think about this when Nancy Pelosi was lying to you about this sellout ultimately helping the middle class last night.

From blatant robbery to money laundering, here are the biggest scandals of 2012 banking history.

#9. Middle-Class Wealth declines by 35 percent

On July 18, 2012, the U.S. Bureau of the Census made it official: The middle-class is getting poorer. The median family — that family exactly at the mid-point of the wealth ladder  — saw its net worth collapse. (Net worth is all assets minus all liabilities.) In 2005, the median family’s wealth was valued at $102,844 (in inflation adjusted dollars.)  By 2010, the latest Census figures showed a drop of 35 percent to $66,740.

And we’re supposed to celebrate this?  

Dec 12 2012

Obama and Boehner’s Grand Betrayal: Gullible Democrats Buy Into Good Cop, Bad Cop Theatre

Yes, we know what is driving the latest performance behind this fiscal sham.

It’s basically good cop, bad cop; or bad cop, worse cop theatre to get you to sign off on this grand betrayal as UKMC economist William K. Black aptly calls it.

Dec 05 2012

No, This Fiscal Scam Won’t Be Different Than 2011. Stop Deluding Yourselves

Of course that can be easy to do with corporate media hacks parading around as “journalists” basically working to preserve the corrupt machine they feed off of. They’re feeding people revisionist nonsense about the so called fiscal cliff; nonsense like how because of the President was reelected he has more leverage this time. As if Democrats ever use leverage after they win elections like how they kept funding the Iraq war in 2006 after their opposition to the war gave them those mid term victories. Nancy Pelosi also took impeachment of the war criminal GWB off the table so future war crimes could be committed.

And then in 2008 after winning an unprecedented majority in both Houses of Congress, higher than at anytime leading up to that point on the GOP’s end, we were told we didn’t have a mandate for progressive polices despite the fact that the right’s neoconservative Laissez-faire ideology had been fully discredited.

The Mandate Manipulation Machine Enters Stage Right

As I predicted a while back, the Partisan-Industrial Complex in Washington, D.C. has deployed its quadrennial Mandate Manipulation Machine to make sure that the 65 million Americans who voted for Barack Obama remember that America giving more than 340 electoral votes to an African American billed as a Islamic Marxist terrorist means there is no mandate for real change in this, a country obviously more conservative than ever.

A cursory glance at the newspapers today shows the media teeming with stories quoting incoming Obama administration officials, Democratic Party leaders and spokespeople for corporate front groups insisting that actually, no real change can be made, and what small-bore changes can happen, will have to happen in the very distant future, not soon. My favorite was the one-two punch from Senate Majority Leader Harry Reid (D-NV) and Democratic National Committee chair Howard Dean. Upon hearing of his bigger senate majority, Reid said on Tuesday, “This is not a mandate for a political party or an ideology.

And of course we now know that was Democrats’ way of telling us they would waste the crisis that elected them, keep TBTF, not prosecute anyone who caused the crash, dump the EFCA, enact Dolecare instead of a public option or Medicare Buy In, and go half ass on all qualitative legislation. This is what actually led up to the mid term losses in 2010. And keep in mind this 2012 election victory doesn’t even compare to the victory in 2008.

And yet they tell us we will see a new reinvigorated President and Congress. They tell us they are confident this time. They tell us that this time Democrats know they have a mandate for progress so things will be different than when the debt ceiling debacle made fools of them all. No, this is actually what the White House is telling us; the same thing as after the 2008 election victory now in 2012.

Axelrod: Talk of mandate ‘foolish, generally untrue’

Obama senior campaign adviser David Axelrod downplayed talk of an election mandate on the “fiscal cliff” on Thursday.

Axelrod said presidents always talk after an election about a mandate, but he called such talk “foolish.” President Obama and congressional Republicans are bracing for talks on tax hikes and spending cuts that are now set to be implemented in January.

“Everyone’s going to have to come to the table in the spirit of getting things done, but on this issue of particularly the fiscal cliff – presidents always say, ‘I have a mandate’; that’s a foolish word and generally untrue,” Axelrod told MSNBC’s “Morning Joe” on Thursday.

Nov 28 2012

WH Advisor David Plouffe and Goldman Sachs CEO Agree That Medicare and Medicaid Must be Cut

Yes, it’s true. If the White House would like to disavow David Plouffe’s words now is the time. Time is running short but it’s pretty obvious that he speaks for the White House given that David Plouffe is the President’s closest confidante. If you have the stomach to sit through this forum it’s right there for you to see, but I’ll post the relevant portion that matches up with Lloyd Blankfein’s mentality that the 99% need to sacrifice Medicare and retire later for the fantasy deficit crisis he, the White House, and Congress are peddling to the American people.

The President’s closest adviser is telling his base that additional cuts to pay down the deficit(not the 716 billion to Advantage, fraud, or providers from the 2010 CBO baseline on the effects of the ACA) in Medicare and Medicaid are coming and to be ready for them.

Senior White House advisor David Plouffe warns Republicans and Democrats alike must take political hits in order for deal to be had

“The only way that gets done is for Republicans again to step back and get mercilessly criticized by Grover Norquist and the Right, and it means that Democrats are going to have to do some tough things on spending and entitlements that means that they’ll criticized on by their left,” Plouffe said at his alma mater in conversation with former McCain campaign manager Steve Schmidt.

[………]

Plouffe added that while the White House wants to engage in comprehensive tax reform, they know they must also “carefully” address the “chief drivers of our deficit”: Medicare and Medicaid.

Lloyd “Sell them shitty deals with the blessing of the US DOJ” Blankfein whole heartedly agrees with Plouffe. He’s also visiting the White House today. I have a feeling whatever good feelings labor and progressive groups had yesterday were perhaps misguided given the statement we just heard from David Pouffe. That and of course basically the priority of making capital whole on the backs of labor as 93% of the “recovery” goes into Lloyd Blankfein’s pocket since 2010.

Goldman Sachs CEO: Entitlements must be contained

BLANKFEIN: You’re going to have to undoubtedly do something to lower people’s expectations — the entitlements and what people think that they’re going to get, because it’s not going to — they’re not going to get it.



PELLEY: Social Security, Medicare, Medicaid?

BLANKFEIN: You can look at history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.

Nov 09 2012

Dear Mr. President, Social Security and Medicare are Not Grand Bargaining Chips

Yes, the grand bargain is coming up before the deadline by December 31st, 2012.

Social Security, Medicare, and Medicaid will be on the chopping block like it was last time. This is not a conspiracy theory, and it comes from solid sources involved in all of the deliberations if you read the source material provided. Sure, some can pretend it is CT. They can even cry it out loud from the rooftops while closing their eyes and plugging their ears, but the reality based community is all talking about this because this is confirmed reality, and the prospects are real like they were last time.

It’s really up to those that would deny this confirmed reality to prove the actual sources in the Senate are all liars in the WaPo peice. Either that or they have heads their heads in the sand for all of 2011 and this is just too much of a downer to acknowledge but it’s time to grow up. These are facts. Denying the factual historical record in 2011 disqualifies anyone writing about these matters at all. Yes, when the entirely self induced entirely avoidable fake fiscal cliff was made real through the stop go that was passed to raise the debt ceiling in Aug 5, 2011 it set this whole pathetic fiscal cliff debacle coming up.

Rick Pearlstein: Author of Nixonland details the Grand Bargain coming up as well.

America didn’t vote for a “grand bargain”

I heard Dick Durbin, the Illinois senator who is close to Obama, on the radio the next morning boasting that he was one of the Democrats on the Simpson-Bowles Commission to vote for its recommendations – recommendations that included, in addition to changes in the tax code meant to increase revenue (while also cutting tax rates), diminishing eligibility and benefits for Medicare and Social Security. Though the commission failed to reach consensus, making its proposals moot, it was aiming at just the sort of “grand bargain” that Obama has consistently and quietly spoken about as his sort of beau ideal for what a successful presidency would look like. Durbin went on to say he hoped a grand bargain might be wrapped up in the next calendar year, before congressmen and senators became preoccupied with reelection.

Jun 15 2012

Get Ready To Eat Cat Food

Here comes Simpson-Bowles to spare the bloated Pentagon budget and avoid letting the Bush/Obama Tax Cuts expire:

Geithner praises Simpson-Bowles framework as the way forward

U.S. Treasury Secretary Timothy Geithner recently suggested the Simpson-Bowles deficit reduction framework is the way forward in terms of balancing the federal budget. [..]

“We need to take advantage of the incentive created by the sequester and these expiring tax cuts to force this town to confront and take on the things that divide us now in these long-term fiscal reforms so we can go ahead and govern,” he said. “This is a place where people spend a lot of time worrying whether Washington can work again and for Washington to say, ‘We’re going to defer,’ I don’t see how that would be helpful to confidence.” [..]

David Dayen at FDL News Desk adds his take on Geithner’s appearance before the Council on Foreign Relation:

The lame duck session has so many fiscal issues expiring at the same time that many view it as an opportunity to put together the long-sought “grand bargain” on deficit reduction. Erskine Bowles and Alan Simpson have recently come out of their shells and resumed a high-profile media tour in an effort to get their framework into the discussion for the lame duck session. The Bowles-Simpson plan does include tax increases of hundreds of billions above the Bush tax cut rates, albeit lower than what would occur if the Bush tax cuts were allowed to completely expire.

Because of this, Democrats like Nancy Pelosi have embraced Bowles-Simpson to tease Republicans for their opposition to higher tax rates. But that also puts Democrats on the hook for embracing cuts to the social safety net, including Medicare and Social Security. And on Wednesday, Geithner said that Bowles-Simpson is “the only path to resolution politically [and] growing essentially economically, and I think that’s where it’s going to end up.” He didn’t make the caveats on Social Security or other entitlements.

David also noted that Sen. Max Baucus (D-MT), chairperson of the tax writing Senate Finance Committee, would hold hearing in the next few weeks on Bowles-Simpson and Domenici-Rivlin, which combine revenue-raising tax reforms with restraint on entitlement spending. Baucus told The Hill:

“My view is everything’s on the table,” Baucus said. “That’s a psychology which I think is very important to keep people talking, keep people working.”

In his comprehensive article on Geithner’s alliance with JP Morgan CEO Jamie Dimon and Cat Food Commission co-chair former Sen. Alan Simpson (R-UT), Richard (RJ) Eskow had this to say about the coming of Simpson-Bowles:

Geithner said Simpson-Bowles was the perfect recipe: “tax reforms that raise a modest amount of revenue tied to spending savings across the government that’s still preserving some room to invest in things that matter to how we grow moving forward.” He added, “There’s no plausible way to get there economically or politically without that kind of balanced framework again that marries tax reform with broader spending reforms,”

Geithner is joining leading Democrats on the Hill like Sen. Max Baucus and Rep. Nancy Pelosi in backing the plan. And take careful note of the fact that they’re all using the phrase “tax reform” instead of “tax increases.” They don’t just plan to pay for the wealth and misdeeds of the Dimon crowd with your Social Security and Medicare benefits. They also plan to raise your taxes, not theirs. The Simpson Bowles plan would actually lower the top tax rate for people like Jamie Dimon, while “tax reform” would tax away tax deductions for the middle class’s health insurance, mortgages, and other expenses.

All our elected officials are completely out of touch with what Americans want and need. Yes, indeed, something wicked this way comes.

Apr 27 2012

The Good, the Bad and That Dead Fairy

The Confidence Fairy is Dead but its ghost is still haunting the halls of the European Union countries and the United States, as Herr Doktor notes:

This was the month the confidence fairy died.

For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. [..]

The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.

Krugman also pointed the de facto austerity policy of the Obama administration and Congress have added to the stagnant job market:

Here’s a comparison of changes in government employment (federal, state, and local) during the first four years of three presidents who came to office amid a troubled economy:

Public Employment in 3 Administrations

That spike early on is Census hiring; [..] If public employment had grown the way it did under Bush, we’d have 1.3 million more government workers, and probably an unemployment rate of 7 percent or less.

The job market is taking its toll on consumer spending which will continue to slow down any recovery:

More Americans than forecast filed applications for unemployment benefits last week and consumer confidence declined by the most in a year, signaling that a cooling labor market may restrain household spending. [..]

“There has been some slowdown in the labor market,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who correctly projected the level of jobless claims. “That makes consumers feel less confident, and makes them more cautious about their spending. We could see some weakness in April payrolls.”

And even though the predictions about the housing market have been optimistic don’t be fooled, there is a dark side as falling home prices drag new buyers under water

More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.

It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.

As of December 2011, the latest figures available, 31 percent of the U.S. home loans that were in negative equity – in which the outstanding loan balance exceeds the value of the home – were FHA-insured mortgages, according to CoreLogic.

In an interview with The European Nobel Prize winning economist, Joseph Stiglitz said:

…When you look at America, you have to concede that we have failed. Most Americans today are worse off than they were fifteen years ago. A full-time worker in the US is worse off today than he or she was 44 years ago. That is astounding – half a century of stagnation. The economic system is not delivering. It does not matter whether a few people at the top benefitted tremendously – when the majority of citizens are not better off, the economic system is not working… [..]

The argument that the response to the current crisis has to be a lessening of social protection is really an argument by the 1% to say: “We have to grab a bigger share of the pie.” But if the majority of people don’t benefit from the economic pie, the system is a failure. I don’t want to talk about GDP anymore, I want to talk about what is happening to most citizens.

Meanwhile back in Europe with the distinct possibility that French President Nicholas Sarkozy may lose to the Socialist candidate Fran├žois Hollande, some leaders are getting the message but aren’t ready to give up totally:

Dutch Prime Minister Mark Rutte and Finance Minister Jan Kees de Jager struck a deal with the opposition and got a majority backing on an austerity package to meet the 3 percent budget deficit target in 2013, after seven weeks of talks with Geert Wilders’s Freedom Party failed and led to the collapse of the minority government.

The package increases the value-added tax to 21 percent from 19 percent, doubles the bank tax to 600 million euros ($791 million) and changes the financing of mortgages, De Jager said in a letter to parliament yesterday.[..]

The Labor Party, the Socialist Party as well as the Freedom Party of Geert Wilders didn’t back the agreement. “This is a bad package and the people with a state pension will pay the bill,” Wilders said in parliament.

In an editorial in Bloomberg News, the editors expressed their ideas how European leaders can “boost economic growth in the euro area”:

First, Europe’s leaders must recognize that common deficit rules alone will not guarantee the currency union’s survival. When countries such as Italy and Spain fall into a spiral of shrinking output and rising budget deficits, countries with stronger economies must be willing to help, either by transferring funds or by stimulating their own demand.

Currently, that would mean more German spending. [..] The Bundesbank would also need to live with a little more German inflation than the current 2.1 percent. Higher prices in Germany would help make other euro- area economies and their exports more competitive, reducing both their current account deficits and Germany’s surplus.

Second, the agreement should give Spain and Greece in particular more time to bring down debts piled up over the past 30 years. Requiring them to slash education, research and development, and other budgets will only stunt their future growth potential. To calm markets concerned about Spain’s deficits, the rest of Europe — Germany again — and the International Monetary Fund would have to provide more bailout funds.

Finally, the pact should acknowledge one of the most immediate requirements for a return to economic expansion: Recapitalization of private sector banks so that they can start providing businesses with more credit. Without that, Europe is doomed to anemic growth and a persistent confidence crisis, no matter what documents its politicians may sign.

Stiglitz in his interview makes two important points. First, “The question of social protection does not have to do with the structure of production

It has to do with social cohesion or solidarity. That is why I am also very critical of Draghi’s argument at the European Central Bank that social protection has to be undone. There are no grounds upon which to base that argument. The countries that are doing very well in Europe are the Scandinavian countries. Denmark is different from Sweden, Sweden is different from Norway – but they all have strong social protection and they are all growing.

Hear that, Mr President and Congress? Get your hands off reduction in the social safety net.

And second, that here in the US, “politics is at the root of the problem“:

Most Americans understand that fraud political processes play in fraud outcomes. But we don’t know how to break into that system. Our Supreme Court was appointed by moneyed interests and – not surprisingly – concluded that moneyed interests had unrestricted influence on politics. In the short run, we are exacerbating the influence of money, with negative consequences for the economy and for society. [..]

The diagnosis is that politics is at the root of the problem: That is where the rules of the game are made, that is where we decide on policies that favor the rich and that have allowed the financial sector to amass vast economic and political power. The first step has to be political reform: Change campaign finance laws. Make it easier for people to vote – in Australia, they even have compulsory voting. Address the problem of gerrymandering. Gerrymandering makes it so that your vote doesn’t count. If it does not count, you are leaving it to moneyed interests to push their own agenda. Change the filibuster, which turned from a barely used congressional tactic into a regular feature of politics. It disempowers Americans. Even if you have a majority vote, you cannot win.

The Europeans may well be the “game changers” because the election of their politicians doesn’t hinge on campaign contributions, long drawn out primaries or a rigid two party system that has degenerated into a lack of political choice. We need to kill the fairy once and for all and put governance in the hands of the American people.