Tag: TMC Politics

European officials are weighing up a bailout programme for Spain that would aid its fragile domestic banking sector while imposing only “very limited conditionality” on Madrid, a concession that could make a reluctant Spanish government more willing to accept international assistance.

Unlike earlier bailouts for Greece, Portugal and Ireland, the proposed Spanish rescue would require few austerity measures beyond reforms already agreed with the EU and could even dispense with the close monitoring by international lenders that has proved contentious in Athens and Dublin, according to people familiar with the plans.

EU support would instead be contingent on increased external oversight and accelerated restructuring of the Spanish financial sector to address lingering concerns about political interference and cronyism in the cajas, the regional savings banks that loaded up on questionable real estate loans during the housing bubble.

Mario Draghi, president of the European Central Bank, added to the pressure building on EU and Spanish officials on Wednesday, after he left interest rates unchanged and put the onus to solve the eurozone debt crisis squarely on the continent’s politicians. While saying the ECB stood “ready to act”, Mr Draghi insisted that most of the problems befalling the eurozone have “nothing to do with monetary policy”.

The question has seemingly become one of when, and not if, Spain’s banks will receive assistance from European countries, with investors on Wednesday predicting an imminent rescue and pushing up stocks and bonds on both sides of the Atlantic.

Spain, the euro zone’s fourth-largest economy, is too big to fail and possibly too big to steamroll, changing the balance of power in negotiations over a bailout. Political leaders in Madrid are insisting that emergency aid to their banks avoid the stigma in capital markets that has hobbled countries like Greece, Portugal and Ireland after accepting tough rescue terms. They are also fighting to slow the pace of austerity and economic change that have pushed those smaller countries into deeper recessions.

Spain has the added advantage of seeking help in a changed political environment in which calls for growth have begun to outweigh German insistence on austerity. Unlike Greece, Spain’s government did not run large budget deficits before the crisis, giving it leverage to argue that European aid to its banks should not come weighed down with a politically delicate loss of decision-making power over its own economic and fiscal policies.

Yves Smith take on what to do about the teetering European Banks:

Although markets reacted as if a deal was imminent, the FT makes it sound as if quite a few details need to be ironed out. And no wonder: the ECB, the one institution that could act unilaterally, has indicated it will only play a limited role and is leery of making long-term loans to Spanish banks or buying their debt. In addition, Spain appears to be taking an unwise posture, of asking for as little money for its banks as it thinks it will need. Rumors from Spanish officials come in at €40 billion, while European officials are looking at numbers more than twice that large. The big rule of fundraising is always raise a good bit more than you think you need in the first round; it will be vastly more expensive if you need to come to the well later.

Given that the shape of a Spanish bank rescue is very much in play, posts by European experts may well influence the outcome. While some of these recommendations might sound like the banking versions of apple pie and motherhood, it’s important to recognize that few of these basic principles have been adopted in recent bailout programs.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Wednesday is Ladies’ Day

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Margaret Kimberley: Freedom Rider: Criminal Injustice System

If police states are ranked by the number of persons imprisoned, then the U.S. is the world’s worst and biggest police state. The system runs on greed and racism. “Being ‘tough on crime’ is a metaphor for keeping black people under control.” It is a place where being a “big black guy” means conviction, and where “prosecutors routinely overcharge defendants with long sentences, and force innocent people to plead guilty in order to avoid decades behind bars.”

There are so many things amiss in the United States that one hardly knows where to begin discussing them all. Yet of all the calamitous situations faced by Americans, the cruelest by far is the criminal justice system. America is the world’s prison capital, and just one state, Louisiana, has an incarceration rate 13 times higher than China’s and 5 times higher than Iran’s.

Bryce Covert: How the Paycheck Fairness Act Can Help Democrats Win Elections for Years to Come

The latest shot across the bow in the battle for women’s hearts and votes: a push for the passage of the Paycheck Fairness Act. The Senate will begin debate on the bill later today now that it’s back in session, with a vote lined up for tomorrow. The bill is expected to fail, and it looked even more doomed after the House voted not to consider it on Thursday. Yet this bill doesn’t just make policy sense for all the women earning less than their male counterparts. It makes political sense for Democrats, giving women a reason to head to the polls and, perhaps more important, more financial firepower to spend on political campaigns for years to come.

The act is undoubtedly sound policy. The gender wage gap has barely budged in recent decades, and the bill aims to help reduce it by protecting workers from retaliation if they compare wages. The Institute for Women’s Policy Research has found that nearly half of all workers are either forbidden or strongly discouraged from sharing that information, yet “pay secrecy makes it difficult for women and men to find out whether they are paid fairly, and undermines attempts to reduce the gender wage gap.” As Irin Carmon wrote last week, this secrecy is likely a root cause of the lack of pay discrimination cases brought against employers. It may be illegal to pay women differently for the same work, but they’ll be in the dark about what’s going on unless they can compare their pay to their coworkers’.

Last week the Irish voted against their own (s)elf interest, which according to Yanis Varoufakis, professor of economics at the University of Athens, when they “voted in favour of the EU’s fiscal compact which specifies that which is both impossible to attain and catastrophic if it is attained“:

So, why did the Fine Gael-led Dublin government push so powerfully in favour of this piece of crippling idiocy? And why did the smart, decent Irish voters said Yes, despite their tradition of saying No to euro-silliness? The answer is simple: They were blackmailed. Ireland’s voters were told: Vote No and the flow of money from the troika will cease. And so they voted Yes, even though I suspect that no government minister, no rank and file Fine Gael or Labour Party member, no man or woman on the street believes that the Fiscal Compact they voted for makes sense. [..]

If on 17th June Greeks voted like the Irish did last week (that is, against their reasoning and guided by fear and blackmail), the Eurozone will become history, with terrible consequences for the global economy. This is not the case of the Philosopher Kings blackmailing the plebs to do what is right. This is the case of ‘madmen in authority’, to quote Keynes, who are not only steering the vessel toward the rocks but who are, in the process, punching holes in the life vests that may carry us to safety once the shipwreck is complete. [..]

To conclude, Europe’s peoples are being marched into a catastrophe. They know that this is their predicament. They can see their march is leading them off a mighty cliff. But they are too afraid to veer off, in case there are beaten back into line, in case they get lost in the woods, for reasons that sheep know best. However, the only way this hideous march can end is if someone summons up the courage and does it. And steps out, showing the others that this march can stop and must stop – for everyone’s benefit. Who is that someone? We, Europeans, do not have many options. As I wrote above, the Irish people had a chance but did not take it. In two weeks, the Greeks have their chance. Voting for Syriza would offer us (and by ‘us’ I mean all Europeans) a chance of this circuit-breaker. A chance to say: Enough! Time to change course in order to save the Eurozone, so as to prevent the Great Postmodern Depression which lurks once the euro-system fragments formally.

Varoufakis gives his reasons for supporting Sariza: first, that Sariza is the only party that understands that Greece needs to stay in the EuroZone and that the Eurozone won’t survive if it doesn’t give up austerity; second, the economic team that will negotiate on Greece’s behalf are good and persuasive with a clear understanding of the situation; and third, Syriza will not be the sole arbiter of the Greek government. It will be a coalition, so there is no need to fear the party’s extreme leftism.

I hope the Greeks’ come to their senses unlike the Irish and Wisconsins.

MSNBC and other news outlets are calling the Wisconsin recall of Republican Governor Scott Walker for Gov. Walker.

Scott Walker, the embattled Republican governor of Wisconsin, narrowly survived a recall vote on Tuesday, defeating a union-led effort to remove him from office for pushing laws to restrict the collective bargaining rights of state workers.

The state’s labor movement had marshaled widespread anger earlier this year to force a recall vote just two years into Mr. Walker’s four-year term. Democrats collected close to one million signatures in the petition drive to oust him.

That effort led to the closely-watched rematch between Mr. Walker and the Democratic opponent he beat in 2010, Tom Barrett, the mayor of Milwaukee. In the voting Tuesday, Mr. Walker once again bested Mr. Barrett for the state’s top job.

The results were a victory for the national Republican Party and conservative groups from around the country, which had rallied behind Mr. Walker with tens of millions of dollars. Mr. Walker will now complete his term.

Unless, he’s indicted.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Richard (RJ) Eskow: “Middle-Class Millionaires”? Dissecting a Democrat’s Misguided Move

Once again, a Democrat’s letting the Right set the terms of the debate. This time it’s House Minority Leader Nancy Pelosi, who’s undercutting her party’s tax policy in an odd way: by redefining “middle class” so that it includes people making a million dollars a year.

Pelosi’s proposal would be great for millionaires — and bad for everyone else.

It hurts the nation economically by depriving the government of revenue when it should be providing more stimulus funding. It also muddies her party’s messaging, and reinforces the unpatriotic idea that taxes are punishment rather than a fair exchange. Nancy Pelosi is better than this.

Robert Kuttner: Can Merkel Be Moved?

Berlin — Ever since the march to European union began in the late 1940s, French-German collaboration has been at the heart of the project. Until the recent defeat of French President Nicolas Sarkozy, his close alliance with German Chancellor Angela Merkel continued this tradition, albeit on behalf of policies that have driven Europe deeper into depression and inflicted brutal austerity on smaller nations such as Greece and Portugal.

With the May 6 election of French Socialist Francois Hollande on an anti-austerity program, Paris and Berlin are now at odds. If a Social Democratic-Green coalition wins next year’s German elections, expected in September 2013, that would create a progressive Paris-Berlin axis.

There are, however, two huge problems. September 2013 is an eternity away and the European project could go up in smoke in the meantime. The other problem is German public opinion.

After the latest gambling losses by JP Morgan Chase with its “London Whale” deal, the FDIC is still trying to sell the fantasy that they can resolve the problems created by the megabanks. Yves Smith at naked capitalism takes on that myth that was propagated by acting FDIC Chairman, Martin Gruenberg to continue with business as usual:

The guts of the latest FDIC scheme is to resolve only the holding company and keep the healthy subsidiaries, including all foreign subsidiaries, going on a business-as-usual basis:

   …the most promising resolution strategy from our point view will be to place the parent company into receivership and to pass its assets, principally investments in its subsidiaries, to a newly created bridge holding company. This will allow subsidiaries that are equity solvent and contribute to the franchise value of the firm to remain open and avoid the disruption that would likely accompany their closings. Because these subsidiaries will remain open and operating as going-concern counterparties, we expect that qualified financial contracts will continue to function normally as the termination, netting and liquidation will be minimal.

The subsidiaries would be moved over to a new holding company; the equity in NewCo would become an asset of the holding company now in receivership. The old equityholders would likely be wiped out and the bondholders may wind up taking losses.

This all sounds wonderfully tidy and neat, right? Problem is it won’t work. [..]

Remember that in the US, banks (ex Morgan Stanley) have their derivatives booked in the depositary, which means any losses to depositors as a result of derivatives positions gone bad would be borne by taxpayers. And as we’ve written at excruciating length with respect to the Lehman bankruptcy, the magnitude of the losses cannot be explained by overvalued assets plus the costs resulting from the disorderly collapse. Derivatives positions blowing out (as well as counterparties taking advantage of options in how contracts can be closed out and valued) were a major contributor to the size of the Lehman black hole. [..]

It would have been much better for the authorities to make a full bore effort to discourage the use of products that have limited social value and contribute to the excessive integration of firms and markets. Credit default swaps and complex over-the-counter derivatives top our list. But despite the severity of the crisis, regulators and politicians were unwilling to challenge the primacy of the bankers, with the result that the FDIC continues to pretend that an inadequate approach like Dodd Frank resolutions will work. With distress in Europe rising and Morgan Stanley looking wobbly, we are likely to see sooner rather than later how much the failure to implement real reforms will cost us all.

If this sounds all too familiar, it’s because this is just a repeat of the old an stale propping up of TBTF that got the economy into this mess in the first place. In other words, the tax payers will foot the bill for the megabanks gambling losses once again. Obama needs a whole new council of economic advisors with people who have better ideas like Paul Krugman and Yves.

   Thomas Mann of the Brookings Institution and Norman Ornstein of the American Enterprise Institute make their first appearance on a Sunday news program since the release of their controversial new book, “It’s Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism.” Mann and Ornstein talk with Up host Chris Hayes and panelists Michelle Bernard, of the Bernard Center, and MSNBC political analyst Michael Steele talk about what they say is the extreme rightward drift of the Republican Party.

From Raw Story:

Mann explained that the separation of powers provided for by our Constitution deliberately creates a situation in which that Congressional majorities are unable to act without some degree of cooperation with the other party. Now that “one of those political parties has veered off the tracks” and become “aggressively oppositional,” it has many tools available to prevent legislation from being passed or enforced.

Ornstein singled out the filibuster as a large part of the problem, because it is being “used routinely,” even on non-controversial legislation. However, he also pointed to Republicans voting even against their own bills in order to avoid giving President Obama anything that would look like a victory.

The elephant in the room is that ideology and obstruction may now be the norm but the Democrats had the opportunity, and still do, to stop the filibuster in the Senate. Thus, the Democrats become the enablers of bad behavior.  

The vote to recall Wisconsin’s Republican Tea Party Governor Scott Walker is tomorrow. The latest Public Policy Polling results has his challenger Milwaukee Mayor Tom Barrett with a slight lead over Walker:

   PPP’s final poll on the Wisconsin recall finds Scott Walker ahead, but also a race that’s tightening. Walker leads Tom Barrett 50-47. That’s down from 50-45 on a PPP poll conducted three weeks ago and it’s also down from a 52-45 lead that Walker posted in a Marquette Law poll released last week.

   Barrett is actually winning independent voters by a 48-46 margin. The reason he continues to trail overall is that Republicans are more excited about voting in Tuesday’s election than Democrats are. Our projected electorate voted for Barack Obama by only 7 points, even though he took the state by 14 in 2008. If the folks who turn out on Tuesday actually matched the 2008 electorate, Barrett would be ahead of Walker by a 50-49 margin. It’s cliche but this is a race that really is going to completely come down to turnout.

This week’s Up with Chris Hayes devoted its first segments to what is at stake for not only Wisconsin but the rest of the country.

Up with Chris Hayes panelists Michael Steele, former chairman of the Republican National Committee; Randi Weingarten, president of the American Federation of Teachers; Michelle Bernard, founder, president and CEO of The Bernard Center for Women, Politics and Public Policy; and Bob Herbert, former New York Times columnist and now a distinguished senior fellow at the progressive think tank Demos, discuss the ferocious recall election in Wisconsin, and its implications for national politics.

John Nichols, Washington correspondent for The Nation, joins thepanel to talk about the tidal wave of dark money flowing in from special interests in the Wisconsin recall election.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: This Republican Economy

What should be done about the economy? Republicans claim to have the answer: slash spending and cut taxes. What they hope voters won’t notice is that that’s precisely the policy we’ve been following the past couple of years. Never mind the Democrat in the White House; for all practical purposes, this is already the economic policy of Republican dreams.

So the Republican electoral strategy is, in effect, a gigantic con game: it depends on convincing voters that the bad economy is the result of big-spending policies that President Obama hasn’t followed (in large part because the G.O.P. wouldn’t let him), and that our woes can be cured by pursuing more of the same policies that have already failed.

For some reason, however, neither the press nor Mr. Obama’s political team has done a very good job of exposing the con.

(emphasis mine)

New York Times Editorial: Whose Welfare?

Every week the campaign dollars pile up, by the tens of millions, by the hundreds of millions, to a level never before seen in American political life. Outside groups now say they plan to spend $1 billion on behalf of Republicans in the November election, which will probably be twice the level raised by groups supporting Democrats. Even the slush-funders of the Watergate era would have been slack-jawed at the number of seven- and eight-figure checks pouring into groups with names like Crossroads and Americans for Prosperity.

The reason for these staggering numbers – and for the growing imbalance between the parties – is that the vast financial power of the business world has been loosed as a political tool by the federal courts. In pursuit of lower taxes and less regulation, businesses, led by the United States Chamber of Commerce, are determined to remove President Obama from office and return full control of Congress to the Republican Party. Executives and companies are the principal source of the unlimited checks that are fueling the rise of these outside groups.

Up with Chris Hayes panelists Colonel Jack Jacobs, MSNBC military analyst; Karam Nachar, an activist who has been working with opposition leaders in Syria; Jeremy Scahill of The Nation magazine; and Josh Treviño of the Texas Public Policy Foundation, discuss the international community’s inability to reach a consensus on how to stop President Bashar Al-Assad’s crackdown on protests in Syria.

In the second segment, the panel discusses whether civil war is inevitable in Syria, and whether there’s anything the United States and the world can do to stop it.

Syria’s President Bashar Assad, who took over power from is father in 2000, denied that government forces took part in last week’s gruesome Houla massacre and is accusing outsiders for fueling terrorists and extremist in the unrest that started 14 months ago.

In his hourlong address, Mr. Assad offered no specific response to Mr. Annan’s plea for bold steps to end the conflict.

Instead he repeated many of his earlier pledges to maintain a crackdown on opponents he described as terrorists added by interfering foreign governments and he again offered to sit down with opposition figures who have avoided armed conflict or outside backing.  [..]

Last month’s massacre in Houla of 108 people, mostly women and children, triggered global outrage and warnings that Syria’s relentless bloodshed – undimmed by Mr. Annan’s April 12 cease-fire deal – could engulf the Middle East.

Western powers have accused Syrian forces and pro-Assad militia of responsibility for the May 25 Houla killing, a charge Damascus has denied.

On Saturday, fighting killed 89 people, including 57 soldiers

The casualties also included 29 civilians and three army defectors killed in various regions of the country in shelling by regime forces or in clashes or gunfire, said the Syrian Observatory for Human Rights.

Asked about the high number of troops killed in recent days, the Observatory’s Rami Abdel-Rahman told AFP: “This relates to the sharp increase in clashes across the country. Troops are vulnerable to heavy losses because they are not trained for street battles and are therefore exposed to attacks.”

France has stated that it will not intervene in military action unless it is sanctioned by the United Nations:

French Defense Minister Jean-Yves Le Drian told an Asian security summit Sunday that the international community should increase sanctions and pressure in an effort to oust Syrian President Bashar Assad. An anti-government uprising has raged for more than a year in Syria.

The conflict is now spreading cross boarder into Lebanon with some heavy fighting in Lebanon:

Bloody clashes between pro- and anti-Syrian regime fighters raged on early Sunday in Tripoli, Lebanon, a day after the deadliest outburst of violence there in recent weeks indicated Syria’s turmoil continues spilling across borders.

Twelve people were killed and about 50 were wounded in fighting on Saturday, the state-run National News Agency reported. [..]

Clashes in both nations pit Sunnis, who make up the majority of the Syrian opposition and population, against Alawites and other Shiites, who are dominant in Syrian President Bashar al-Assad’s government.

There is no easy solution.