Tag: ek Politics

Suckers.

That’s what they call the people at the bottom end of a failed Ponzi Scheme and this, unlike Social Security is in fact a Ponzi Scheme.  You see, Social Security pays out 85% of it’s benefits (15% haircut) after 35 years if nothing is done like, oh… say raising the income cap.

Greek Bonds start at a 50% haircut and spiral rapidly to kitty litter.

Road Map to Prepackaged, Orderly Default That Keeps Greece in Euro: View

By the Editors, Bloomberg News

Sep 27, 2011 8:00 PM ET

European leaders swear a Greek default isn’t in the cards. Their parliaments debate whether to bolster an inadequate rescue facility. The International Monetary Fund sends delegates to Athens to make sure it deserves its next tiny tranche of bailout aid. German Chancellor Angela Merkel regularly declares fealty to the euro.

They’re all in denial. Almost no one believes Greece is solvent, not with an economy — and tax receipts — shrinking and debt ballooning to 180 percent of gross domestic product, a burden that no amount of belt-tightening will make bearable. The question now is whether Europe can arrange a controlled and orderly default, or will allow a Greek bankruptcy that is chaotic and destructive to the global economy.

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Expelling Greece from the euro would cause more economic, political and social chaos than the world can bear. The possibilities range from runs on European banks to violent rioting in the streets of Athens — or even civil war. True, leaving the euro would allow Greece to do something it can’t do now — devalue its currency — to be more competitive. But it would also paralyze a drachma-tized economy. One big reason is that companies with euro debts would be hard-pressed to pay them back with a deeply devalued drachma, and would face bankruptcy.

Exiting would also be more expensive than staying. Willem Buiter, the chief economist at Citigroup, says a euro exit would mean a 100 percent write-off of Greek bonds, while staying would mean writing down their value by 60 percent to 80 percent. Greek bonds now trade at discounts of 40 percent to 65 percent of face value.

Without a growth plan, the EU faces financial Waterloo

The latest eurozone rescue scheme may save Greece for now, but it fails on a basic rule of classical economics

Simon Jenkins, The Guardian

27 September 2011

A bad-tempered weekend at the IMF in Washington has reportedly led to a ghost of a plan that makes sense. It involves halving Greece’s debts to German and French banks, repeating the 21% “haircut” default of last July. This in turn will hurt the banks more than they might stand, so the second part of the plan props them with urgent subsidies. In a third part, some 2 trillion euros would be tipped into the European central bank, somehow to “firewall” the sovereign debts of Portugal and Ireland and perhaps even Italy and Spain.

This plan is first aid at the scene of the accident. But when all bad options have failed, desperate men turn to worse ones. The summer’s stress tests, bail-outs, Greek promises and quantitative easings are dead in the water. Europe’s weaker governments have gone on spending and borrowing, and banks lending. Greece’s chief paymaster, Germany, is fed up and Greece is on the brink of bankruptcy. Its workers will soon not get paid and its government might fall – an echo of Weimar.

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The plan currently in circulation makes short-term sense. But it is a rescue plan, not a growth plan. The frightening realisation is that, at a time of recession, the economic conversation is back to the 1930s, as if Keynes had never preached the woes of austerity. In the past three years, 20 million people have lost their jobs worldwide. This staggering waste of human resources is entirely due to human error, to the political mismanagement of economies, which makes Ed Balls’ boasting in his conference speech on Monday the more inexcusable.

The western economy is in the grip of a textbook liquidity squeeze. There is cash everywhere. British companies alone have some £700bn on deposit, which they are unable or unwilling to invest for lack of demand. The Bank of England has printed some £200bn of quantitative easing, mendaciously claiming it will “kick-start the economy”. It has merely added to the pile, and is proposing to add more. It cannot explain where the money has gone, or show one constructive idea as to how to boost demand to mop up this lake of liquidity. The bank is back in the dark ages, starving today to inflate tomorrow.

Where have the government’s Tory monetarists gone? Where are their graphs of M1, M2 and M3 and their equations of the velocity of cash in circulation? The liquidity squeeze is nothing to do with George Osborne’s public sector cuts, which are mild, but with the laws of classical economics. In a recession, you do not save, you spend. Why is Osborne building a cash mountain? If nothing is done to ease the constipation in the British economy, when the rest of Europe recovers it will grow and Britain will merely stumble into stagflation.

In the face of this what is Peter Orzag’s recommmendation (you remember, he was Barack Obama’s Citigroup Budget Director)?

Peter Orszag’s Bid to Get Politicians Out of Policy

By: David Dayen, Firedog Lake

Tuesday September 27, 2011 12:22 pm

Peter Orszag caused a bit of a stir with his call for an enlightened technocracy, and, literally, “less democracy.”

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The very serious technocrats have been wrong about everything in their own right, from the OECD to the ECB to the Fed and on down the line. This is a dodge, an attempt to get elites off the hook for their complete failure to guide the economy by saying that they’re being stymied by “democracy.”

Does Economics Still Progress?

Paul Krugman, The New York Times

September 27, 2011, 4:03 pm

I’ve never liked the notion of talking about economic “science” – it’s much too raw and imperfect a discipline to be paired casually with things like chemistry or biology, and in general when someone talks about economics as a science I immediately suspect that I’m hearing someone who doesn’t know that models are only models. Still, when I was younger I firmly believed that economics was a field that progressed over time, that every generation knew more than the generation before.

The question now is whether that’s still true. In 1971 it was clear that economists knew a lot that they hadn’t known in 1931. Is that clear when we compare 2011 with 1971? I think you can actually make the case that in important ways the profession knew more in 1971 than it does now.

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What I’d add to that is that at this point it seems to me that many economists aren’t even trying to get at the truth. When I look at a lot of what prominent economists have been writing in response to the ongoing economic crisis, I see no sign of intellectual discomfort, no sense that a disaster their models made no allowance for is troubling them; I see only blithe invention of stories to rationalize the disaster in a way that supports their side of the partisan divide.

Brilliant!

BP Gulf Drilling Plan Criticized by Environmentalists, Lawmakers

By Katarzyna Klimasinska and Brian Swint, Bloomberg News

Sep 26, 2011 8:43 AM ET

BP was “ultimately responsible” for the accident on the Deepwater Horizon rig that killed 11 and started the leak, though rigowner Transocean Ltd. and Halliburton Co (HAL), which provided cement, share some of the blame, a U.S. report said Sept. 14. The 212-page document issued by the Interior Department and Coast Guard said BP managers were distracted by cost overruns and personal conflicts.

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Gulf of Mexico oil is more than twice as profitable as production from the rest of BP’s portfolio, yielding about $60 in profit to the company when oil prices are $100 a barrel. In 2010, the Gulf of Mexico accounted for 28 percent of the company’s cash flow and just 10 percent of production, according to research by Citigroup Inc. analyst Alastair Syme.

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BP’s Dudley said July 26 that BP is eager to “get back to work” in the Gulf, working closely with regulators, and that the pace of BP’s return depends on getting approvals for new wells. He said the U.S. Bureau of Ocean Management says BP won’t be held to a higher standard than its peers in its applications.

What could possibly go wrong?

Study shows dispersants BP used in oil spill may cause cancer

Kimberly Blair, Pensacola News Journal

12:00 AM, Sep. 26, 2011  

The report indicates that the 1.8 million gallons of oil dispersants – including Corexit 9500 and 9527 – sprayed on or dumped into the Gulf of Mexico after the spill could contain cancer-causing agents, endocrine-disrupting chemicals and hazardous toxins.

And the chemicals mixed with the sweet Louisiana crude that flowed into the Gulf for 87 days from the Deepwater Horizon oil well may have created a brew that is more harmful to marine life, humans and the environment than the oil.

Gulf oil spill could cause lasting damage to fish populations, study finds

By Juliet Eilperin, Washington Post

Published: September 26

Fish living in Gulf of Mexico marshes exposed to last year’s oil spill have undergone cellular changes that could lead to developmental and reproductive problems, a group of researchers reported Monday in the journal Proceedings of the National Academy of Sciences.

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“Their biology is telling us that they’ve been a), exposed to these chemicals and b), affected by them in negative ways,” said Andrew Whitehead, an associate professor of biology at LSU and the paper’s lead author. “Very low-level exposures can cause these toxic effects.”

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Whitehead said the results show that just because fish from the gulf have passed federal inspections, it does not mean these species are unaffected by the spill.

“You can have a fish that’s safe to eat but is still not healthy,” he said, adding that as sediment containing hydrocarbons is dredged up by storms, it could expose species over time. “The sediments are going to act as this long-term reservoir of oil, of potential exposure.”

Docs show US gov’t bias to Keystone XL during environmental study

by Lynn Herrmann

Sep 26, 2011

Washington – New documents reveal the US State Department was “doing favors” for TransCanada during a government review of the controversial Keystone XL pipeline and sheds light on a White House bias in favor of the pipeline.

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Among the initial batch of 34 documents (pdf) released, all originating from the Office of the Secretary, are concerns over State Department “bias” and Clinton’s comment herself before the required environmental review had been completed in which she stated she was “inclined” toward project approval.

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Other documents reveal State Department officials helped TransCanada by “providing information about State’s internal thinking and by coaching TransCanada on what to say” in response to the draft Environmental Impact Statement (EIS), Friends of the Earth notes.

In another email correspondence (pdf) from December 6, 2009, Elliott offered to have TransCanada lobby the Canadian government on behalf of the State Department, with Elliott stating “TransCanada executives spend a great deal of time with Ottawa government officials” and added “TransCanada can be an asset for the state department and I hope you might see us as such.”

Rewarding Good Rhetoric

by David Atkins (“thereisnospoon”), Hullabaloo

9/26/2011 07:30:00 AM

Obviously, the so-called “Obama Wars” in the blogosphere are more complicated than this: the President could surely take a stronger negotiating position so that the final compromise position with Republicans to avert disaster would have a decidedly more left-leaning skew. Certainly, the President could always have been doing much more with executive decisions, bypassing the Legislature to achieve more progressive results. The President’s rhetoric over the last couple of years could no doubt have been far more forceful. And it would be easier to give the President the benefit of the doubt were there not ample evidence that he actually believes conservative claims that Social Security and Medicare require cutting in order for the nation to solve its deficit problems. Changing all of these things would have helped dramatically, and the criticism the President has received from progressives on these fronts has been more than valid.

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Progressives are rightly furious with the President over what he has done–and perhaps more importantly, what he has not done over the past two years.

But the reality is that from now until November 2012, the President is not going to be able to accomplish much of anything in the legislative arena. The Republicans simply won’t allow him to claim any sort of legislative victory, no matter how small.

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Is that a political ploy to win back the progressive base? Probably. But what of it? First of all, rhetoric matters. When the President speaks, the people listen. And if the President is telling the progressive story in an aggressive way, that itself constitutes action in its own way.

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(G)iven that for better or worse Mr. Obama will be the Democratic standardbearer in 2012, a progressive activist seeking to reward good behavior and punish bad behavior would be wise to praise this newfound aggressive rhetoric as not only a good first step, but truly the only real step possible at this point given the political dynamic at work.

Of course, once election season is over, there has to be follow through.

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But for now and for the next year, rhetoric will be 90% of what we have to judge this President on. It’s fairly impossible to tell whether Mr. Obama has had a real change of heart regarding his negotiating strategy with Republicans or not.

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It’s important that this change of pace in his rhetoric be rewarded. We have little else to go on at this point, and little other leverage to use.

Wrong!  And here is why-

For Voters to Believe Obama’s Second Term Will Bring About Change, He Needs to Acknowledge What Needs to Change in Himself

Arianna Huffington, The Huffigton Post

Posted: 9/18/11 11:29 PM ET

We’ve now seen the ways in which the president went about trying to effect that change over the last three years. So while his ideas about the changes the system needs in his second term are welcome and necessary, there is another kind of change he needs to talk about if the change he proposes is to be believed. He needs to make clear the changes he intends to make in himself, in the way he governs, and in the way he approaches the big, systemic changes he claims to want to see.

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Obama has continued to make eloquent speeches about the need for change — but it’s the between-the-speeches-about-change part that needs some change of its own. Because, at this point, it’s abundantly clear that the system isn’t going to change unless Obama’s method of bringing about change changes first.

It won’t be easy. The closer we get to the 2012 election, the more voters tend to dismiss all rhetoric as mere electioneering. So given this rhetorical depreciation — an election speech loses half its value the second you drive it off the lot — this time it’s going to take more than Obama trumpeting change as the goal. This time we need to hear more about exactly how he intends to change the ways he intends to bring about change. This requires acknowledging that change is not just needed in the country, but in himself.

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(T)he president’s problem going forward is explaining the shift: If you’ve been taking one approach and then you abruptly change without acknowledging why, or even that you did, or what lessons were learned that caused you to make the change, it just doesn’t ring true.

Of course, acknowledging mistakes and course-correcting are the hardest things for a leader to do. But in order for voters to believe that things will be different in the president’s second term, there has to be some recognition of what didn’t work in the first. Otherwise, any future talk of change will be like hearing a song without the music. And the more often words of change are used without real change happening, the more devalued they will become.

Arianna on what Obama needs to do

By John Aravosis, Americablog

9/22/2011 12:45:00 PM

I’m posting this because this is exactly what I’ve been telling people the past few days. I want to believe that the President’s shift towards being a fighter and not a lover is real. And he’s made some good moves and should be lauded for it. But I’m not sure whether it’s entirely real because it doesn’t quite make sense. What changed? How do you one day wake up and become a different person? I think it’s possible to change, but I think it usually takes some kind of personal epiphany, brought on by seriously bad circumstances, and I guess I’d like to know more about what that epiphany was, in order to believe that it’s real. That’s why Arianna’s words above hit a chord for me.

Obama making big push to win back minorities and other core Democratic voters

By John Aravosis, Americablog

9/25/2011 08:00:00 AM

A lot of us predicted this two years ago, and really more than two years ago. We warned that core constituencies were getting seriously ticked off, and that the President’s desire for comity was making him look, well, like a wimp (we just didn’t use the word because it wasn’t polite).  And in response, we were called “bedwetters,” and more generally belittled by senior presidential aides.

I’m glad the President appears to be changing direction these past few weeks.  But if it’s only based on the current polls, and the fear of not being re-elected, then how do we know we won’t be back to where started (the phrases “f’g retards,” “professional left,” and “Internet left fringe” come to mind) the day after Barack Obama is re-elected? That’s a core concern the campaign, and the White House, need to address.

We want to see an epiphany, not just a temporary tactical correction that will end on November 7, 2012, regardless of who wins.

Obama’s small financial donors not showing interest this time

By Chris in Paris, Americablog

9/25/2011 05:55:00 PM

Sounds like quite a few people who expected “change” and aren’t seeing it. The “professional left” is possibly a bit larger than the White House team imagined. So now that the Wall Street people who donated heavily to Obama in 2008 think that he’s a socialist, the youth vote is disillusioned and the small donors feel that he gives in too easily, will this finally make a difference? The recent tone sounds like an improvement but at this point, most want more than just a few days of tough talk.

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This issue is what really has stood out for me in the last few weeks of travel in the US. Friends and family who were among the most supportive of Obama in 2008 are disgusted with the constant crumbling on issue after issue. It hardly sounded like it was a casual concern, but instead, very deeply rooted with voters. Reading this NY Times piece, it sounds like it’s a very serious problem that needs to be addressed.

And of course, as TheMomCat pointed out previously, Obama isn’t even able to give up his progressive bashing rhetoric for a whole solid week.

So the question on the table is- do you want to vote for a Conservative Republican?

Or a Conservative Republican who’s also an opportunistic liar?

Harry Truman gave us the answer to that-

Given the choice between a Republican and someone who acts like a Republican, people will vote for the real Republican all the time.

Better than anything you’ll see from the talking heads up their asses.

Evidently untrue.

Berlusconi boasts of sleeping with eight women in one night

Silvio Berlusconi was at the centre of further sordid revelations about his sex life on Saturday after the Italian leader was caught boasting of having sex with eight women in one night.

By Nick Squires, The Telegraph

8:58PM BST 17 Sep 2011

The taped conversations also suggested for the first time that Mr Berlusconi gave money to the women he allegedly slept with, contradicting his repeated insistence that he has never paid for sex.

In revelations which are set to test Italian tolerance to the limit, the conversations also offered the strongest evidence yet that the scandal-prone billionaire used taxpayers’ money and state-owned aircraft to fly alleged prostitutes around Italy.

Last week Mr Berlusconi pushed through parliament a 54 billion euro austerity package which will hit pensions, public services and retirement ages, sparking violent clashes between riot police and demonstrators outside parliament in Rome.

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The taped conversations revealed in extraordinary detail how parties involving dozens of young starlets and escort girls were organised for the 74-year-old Italian premier by a middleman, Gianpaolo Tarantini, 36, a convicted cocaine dealer. Mr Tarantini is being investigated for allegedly recruiting young women, and has also been accused of blackmailing the prime minister in exchange for his silence over the alleged prostitution ring.

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The latest revelations will increase concerns in Italy over whether Mr Berlusconi can concentrate on rescuing Italy from its acute economic problems at a time when the country risks being sucked into the euro zone crisis.

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Mr Berlusconi already faces four trials on charges ranging from bribery, tax fraud and false accounting to paying for sex with Karima El Mahroug, a teenage exotic dancer who prosecutors claim was working as an underage prostitute.

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Mr Tarantini is currently in custody for allegedly extorting hundreds of thousands of euros from Mr Berlusconi. The premier says he gave money to Mr Tarantini and his wife, who was also arrested, because he is a generous man who was trying to help a “family in need.”

Brag as he might, Silvio is unlikely to beat the record of Wilt ‘The Stilt’ Chamberlain.

USA.  USA.

Update:

Italy’s tottering prime minister slipping into darkness

How much longer can Silvio Berlusconi go on?

The Economist

9/22/11

Already rocked by thousands of pages of evidence detailing his alleged whoremongering, Italy’s prime minister took a more serious hit on September 20th when Standard & Poor’s, a ratings agency, downgraded Italy and expressed grave doubts about the government’s ability to respond effectively to the crisis in the euro zone. Such views are widely shared in Italy. Most Italians seem to have realised that their prime minister is a liability. His approval rating has slumped below 25%. He lost the unions a long time ago; now employers have lost faith in his right-wing government’s handling of the economy.

What digby said–

It certainly does clear up any thought we might have had about whether or not the president is a real fiscal conservative or whether he was just flogging this deficit obsession for political effect. He’s a true believer. And we know this because of his reliance on other deficit hawks and because when the political bloodbath the jobless recovery had predicted came true, his first move was to validate the Republicans’ manufactured narrative about what had motivated their voters and launch his program of budget cuts and deficit reduction.

I have thought that his fetish for a Grand Bargain was mostly born of a delusional belief that he was someone who could bridge unbridgeable differences and be remembered as the man who brought cats and dogs together. But it looks as though he was just as motivated by the fact that he’s a true blue, Concord Coalition, Pete Peterson deficit hawk.

Obama’s Economic Quagmire: Frank Rich and Adam Moss Talk About What’s Really in Ron Suskind’s Revealing New Book About the White House

By Adam Moss and Frank Rich, The New Yorker

9/17/11 at 4:38 PM

Frank Rich: It’s the most ambitious treatment of this period yet because Suskind integrates the White House story with the Wall Street story, giving them equal weight rather than downsizing one to serve as the backdrop to the other. He is truly after the big picture, not just the petty stuff. He has no agenda of his own that I can detect, he had enormous cooperation from the White House, and he names sources (and avoids blind quotes) far more than the norm for a book of this Woodward genre. And even for someone like me, who’s read most of the overlapping books and reported on some of this myself, there are new revelations and details. A depressing book yes, but savvy and informative. And some of that depression will be temporarily alleviated by the doubtlessly entertaining circular firing squad that is likely to emerge in the next week once Summers, Geithner, Warren, Emanuel, Rubin, Volcker, Orszag, Rouse, Barney Frank (who does not fare well), and perhaps the president get their hands on it.

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(T)he buck stops with Obama. There’s a poignant moment of sorts in December 2008 when the North Dakota senator Byron Dorgan implores the president-elect not to go with his economic team. “I don’t understand how you could do this,” he tells him. “You’ve picked the wrong people!” As indeed Obama did, under the tutelage of Robert Rubin, who also tried to finagle a White House guru role for himself, not unlike the perch from which he helped wreak havoc at Citigroup during its subprime orgy. So Suskind’s book often reads like Halberstam’s “Best and the Brightest,” with Summers and Geithner as McNamara and Bundy. But the quagmire isn’t a neo-Vietnam like Afghanistan – it’s the economy, and the casualties are measured in lost jobs. After the stimulus bill passed in February 2009, Suskind writes, “little else happened on the jobs front for a year and a half,” with proposals being “talked to death without resolution.”

What should the White House do? Panic!

By James Carville, CNN Contributor

updated 11:05 AM EST, Sun September 18, 2011

For God’s sake, why are we still looking at the same political and economic advisers that got us into this mess? It’s not working.

Furthermore, it’s not going to work with the same team, the same strategy and the same excuses. I know economic analysts are smart — some work 17-hour days. It’s time to show them the exit. Wake up — show us you are doing something.

Bill Daley struggles to fix Barack Obama’s slump

By GLENN THRUSH & JOHN BRESNAHAN & AMIE PARNES, Politico

9/16/11 6:54 PM EDT

The 63-year-old scion of Chicago political royalty was brought in as President Barack Obama’s chief of staff to provide fresh blood, corporate-world experience and adult supervision to a young, free-wheeling White House staff. But critics inside and outside the West Wing are questioning whether he is the tough, competent manager needed to shake up the operation and propel Obama into the 2012 election year.

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As a banker and former secretary of commerce, Daley’s ability to soothe relations with Republicans was a major justification for bringing him from Chicago – much to the disgust of many Democrats who wanted Obama to take a more combative approach after the 2010 elections. But Daley’s failure to achieve any negotiating successes has only intensified the chorus of criticism from Democrats that Obama is too willing to compromise.

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There’s also a primal scream aspect to the criticism, rooted in deep concerns among many Democrats about 2012, and, perhaps, the desire to find someone other than the man at the top of the ticket to blame.

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The irony, of course, is that Daley is doing what his boss wants. He takes his role of gatekeeper seriously, and has restricted the torrent of paper and people into the Oval Office. The decision to downsize and deprioritize Obama’s legislative affairs team was made before Daley ever entered the building on a blueprint from interim chief of staff Pete Rouse.

Yikes! ISS crew endures comms blackout during re-entry

By: William Harwood, CNET

September 16, 2011 6:33 AM PDT

A Russian Soyuz capsule carrying three of the International Space Station’s six crew members suffered an unexpected communications blackout just before plunging back into Earth’s atmosphere, completing a nail-biting descent in radio silence with repeated calls from flight controllers near Moscow going unanswered.

Finally, recovery crews spotted the Soyuz TMA-21’s braking parachute, communications with ground crews were established and the spacecraft touched down in Kazakhstan at 9:59 a.m. local time Friday (8:59 p.m. PT Thursday), tipping over on its side as it closed out an expedition lasting 164 days since launch April 4 from the Baikonur Cosmodrome.

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There was no immediate explanation for the communications dropout. The repeated, unanswered calls from mission control near Moscow were eerily reminiscent of the fruitless calls to the shuttle Columbia during the orbiter’s ill-fated descent to Earth in 2003.

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Engineers have traced the Soyuz-U engine failure to a kerosene fuel line blockage that disrupted the operation of a turbopump used to feed propellants to the main combustion chamber. A Russian commission investigating the failure reportedly has raised questions about quality control. But it’s not yet clear how that issue will be resolved.

U.S. Poverty Rate, at 15 Percent, Is the Highest Since 1993

By SABRINA TAVERNISE, The New York Times

Published: September 13, 2011

46.2 million people now live in poverty in the United States, the highest number in the 52 years the Census Bureau has been tracking it, said Trudi Renwick, chief of the Poverty Statistic Branch at the Census Bureau.

That figure represented 15.1 percent of the population, up from 14.3 percent in 2009, and 11.7 percent at the beginning of the decade in 2001. The poverty line in 2010 for a family of four was $22,113.

And in new signs of economic distress among the middle class, median household incomes adjusted for inflation declined by 2.3 percent in 2010 from the previous year to $49,400. That was 7 percent less than the peak of $53,252 in 1999.