Tag: Economics

In an address at Edward M. Kennedy Institute for the United States Senate in Boston, established by her late predecessor, Sen. Ted Kennedy, Sen. Elizabeth Warren (D-MA) got to the heart of the Black Lives Matter movement and what everyone should be doing to end racial inequality.

Transcript for the speech as it was written can be read here

By Le Gauchiste

The term “Neoliberal” is used a lot here at Daily Kos: 203 posts included the term during the first half of 2015 alone, a little more than one every day. Many of these posts stimulate lively discussion, especially regarding the alleged neoliberalism of various Democratic Party figures, most notably President Obama and Hillary Clinton.

Quantity is not always a sign of quality, however, and many of these discussions suffer from a failure to define neoliberalism adequately or even at all, leading to understandable confusion and misplaced accusations that the term is meaningless. This post will try to avoid that pitfall by proposing a definition of neoliberalism that emphasizes its nature as an ideology, and will then apply that definition to one of Clinton’s most important recent speeches, in which she was widely reported to have returned to traditional liberalism.

By NY Brit Expat

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only (Charles Dickens, 1859, A Tale of Two Cities, Book I, Chapter 1).”

All that is left for Greece is to eat worms and it still would not satisfy Kaiser Merkel. #ThisIsACoup

A list of draconian new austerity demands handed to the Greek government in Brussels Sunday ignited a global backlash against Germany, German Prime Minister Angela Merkel and finance minister, Wolfgang Schaeuble.

#ThisIsACoup became the top trending hashtag on Twitter worldwide – and is #1 in Germany and Greece.

The tag was attached to tens of thousands of angry comments denouncing Germany’s aggressive demands that the Greek parliament pass new severe austerity laws within days to raise taxes, privatize public assets and cut back on pensions. [..]

Here are the EU proposals that outraged many around the globe:

1. Streamlining the VAT

2. Broadening the tax base

3. Sustainability of pension system

4. Adopt a code of civil procedure

5. Safeguarding of legal independence of ELSAT – the statistic office

6. Full implementation of spending cuts

7. Meet bank recovery and resolution directive

8. Privatize electricity transmission grid

9. Take decisive action on non-performing loans

10. Ensure independence of privatization body TAIPED

11. De-Politicize the Greek administration

12. Return of the Troika t0 Athens (the paper calls them the institutions)

Those are the demands that must be approved by Wednesday. The only thing they forgot to ask for is resignation of the prime minister, his cabinet and the Greek parliament.

From Ian Welsh

Basically the Greeks offered the EU everything they had asked for before and then some, but the EU won’t take it, they want their pound of flesh for being embarrassed by the referendum.

I get that Syriza and some Greeks don’t want Grexit, and will do virtually anything to avoid it, but I’m hoping (probably vainly) that there might be some depths to which they will not sink, some abasement they will not endure, some calamity they will not inflict upon the weakest and poorest in their own society.

Probably not. Not quite sure why I still have faith in humanity to ever do the right thing when any other option exists.

“OK, now that you’re crawling, down on your belly!”

Worms.

Most of us didn’t even notice the New York Stock Exchange went “dark” for over four hours after a computer, or something, hiccuped. This isn’t something new and it probably won’t have nay impact on trades or the market itself. MSNBC host Rachel Maddow and her guest Kelly Evans, host of CNBC’s Closing Bell explain the past history of outages and the causes, mostly squirrels.

The new host of CBS’ “The Late Show,” Stephen Colbert, aka Supply Lord of The Afterscape, gives his reaction to the black out and how to survive “Apocalypse Dow.”

Get your survival kits and bulk supplies from Costco.

On Sunday Greek voters went to the polls to vote on a simple referendum on a bail out deal proposed by the country’s international creditors, which demanded new austerity measures in return for emergency funds. A simple yes or no. The voters gave a resounding NO to the deal.

The win for the “no” camp constituted a major victory for Greek Prime Minister Alexis Tspiras, who had campaigned heavily against the deal put forward by the European Central Bank, the International Monetary Fund and the European Commission. But it also raised uncertainty about the country’s financial future and its place in the eurozone.

“Even in the most difficult circumstances, democracy can’t be blackmailed — it is a dominant value and the way forward,” Tsipras tweeted on Sunday night, adding that Greece intends to restart negotiations with Europe next week.

A final tally of votes indicated that 61.31 percent of voters decided against the bailout deal. More than 60 percent of Greeks participated in the vote, well over the 40 percent turnout needed for the referendum to be valid.

Needless to say the responses to the vote and PM Tspiras’ decision to attempt to negotiate better terms cams fast and furious. First, Greece’s radical and outspoken Finance Minister Yanis Varoufakis resigned, stating that he had been made aware that his “style” was considered disruptive:

Mr. Varoufakis, an academic with no political experience before he joined the leftist Tsipras government, had consistently argued that Greece desperately needed debt relief more than anything else. While that view was shared by many economists, he quickly became a lightning rod among Greece’s creditors for his aggressive negotiating style and heated language. Before the referendum vote, he had publicly accused the creditors of “terrorism” against his country.

With Mr. Varoufakis gone, Greece’s eurozone creditors may be more willing to continue negotiations on a further aid package. His departure, apparently at the urging of Mr. Tsipras, could be seen as a concession to the sensibilities of other eurozone leaders. But the next few days could determine whether the gulf between Greece and its creditors is now too wide to bridge.

You can read his resignation statement here. He has been replaced by Euclid Tsakalotos, another academic economist, but not as vocal as Mr. Varoufakis and, apparently, more acceptable to Eurogroup participants.

Next came the markets’ reactions, not drastic but not good, either:

Global stock markets mostly dropped on Monday but did not plunge, as investors reacted with muted dismay to the results of the Greek referendum and showed nervousness about steep declines in China’s stock market over the past three weeks. [..]

At midday in New York, stocks were just below break-even. The Dow Jones industrial average was down 0.2 percent, while the Standard & Poor’s 500-stock index was off 0.3 percent.

The euro ticked down 0.4 percent to $1.1033.

Oil prices also fell on Monday, as traders placed bets that recent events could lead to slower global economic activity and weaker demand. [..]

In Asia on Monday, the Shanghai market jumped sharply in early trading as the Chinese government poured money into brokerage firms to help them and their customers buy shares. The market leapt 7.8 percent at the start, but it surrendered half of those gains in the first 10 minutes of trading and closed 2.4 percent higher. The smaller Shenzhen stock market also started strongly but fell 2.7 percent by the end of trading.

And the vote has only served to harden German Chancellor Angela Merkel’s stand:

The German government signaled a tough line towards Greece on Monday, saying it saw no basis for new bailout negotiations and insisting it was up to Athens to move swiftly if it wanted to preserve its place in the euro zone.

With opinion towards Greece hardening in Germany’s ruling coalition following the landslide rejection of European bailout terms in a Sunday referendum, the government indirectly raised the prospect of a Greek exit from the currency bloc.

Chancellor Angela Merkel’s spokesman said it was up to Athens to act so that it could remain in the currency bloc, and Vice Chancellor Sigmar Gabriel went further by saying the Greek government needed to improve on its previous proposals. [..]

Pressed on what concessions Berlin might be willing to make to Tsipras, a finance ministry spokesman dismissed the idea of a debt restructuring sought by Athens and favored by the International Monetary Fund (IMF).

Economic and political pundits responded as well:

Thomas Piketty: Germany Shouldn’t Be Telling Greece To Repay Debt

Thomas Piketty isn’t mincing words when it comes to the Greek debt crisis.

In an interview with German newspaper Die Ziet last month (and translated recently by business analyst Gavin Schalliol), the leading French economist pummeled Germany for its hypocrisy in demanding debt repayment from Greece. [..]

Greece on Sunday voted a resounding “no” on a bailout plan proposed by its creditors, making its continued membership in the eurozone more tenuous. German Chancellor Angela Merkel and French President Francois Hollande will hold an emergency summit on Tuesday to discuss the crisis.

But Piketty, who penned the blockbuster 2013 book on income inequality Capital in the Twenty-First Century, slammed conservatives who favor the economic austerity measures Germany and France are demanding of Greece, saying they demonstrate a “shocking ignorance” of European history.

“Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted,” Piketty said. “The first lesson that we can take from the history of government debt is that we are not facing a brand new problem.”

Germany, Piketty continued, has “no standing” to lecture other nations about debt repayment, having never paid back its own debts after both World Wars (pdf).

Nobel Prize winning economist and New York Times columnist, Paul Krugman, also “cheered” the vote:

The truth is that Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients – and when their treatment made the patients sicker, demanded even more bleeding. A “yes” vote in Greece would have condemned the country to years more of suffering under policies that haven’t worked and in fact, given the arithmetic, can’t work: austerity probably shrinks the economy faster than it reduces debt, so that all the suffering serves no purpose. The landslide victory of the “no” side offers at least a chance for an escape from this trap.

Renowned dissident Noam Chomsky spoke with [Democracy Now! ]’s Amy Goodman back in March aboutGreece and Spain the “savage response” to taking on austerity calling it a “class war.”

The “what next” is still very unknown. From Yves Smith at naked capitalism

After the momentous “No” vote in support of the Greek ruling coalition Greece’s lenders and most important, the Eurozone leaders of the countries that have made 60% of Greece’s outstanding loans, are officially still figuring out what to do. Merkel is going to Paris to confer with Hollande today. The Eurogroup has set a meeting for tomorrow at 1:00 PM

However, despite the responses of media outlets and many pundits that the Eurocrats will have to beeat a retreat and offer Greece concessions, it’s not clear that this event strengthens the Greek government’s hand with its counterparties. Remember, Tsipras enjoyed popularity ratings of as high as 80% and has always retained majority support in polls. And it’s all too easy to forget that “the creditors” are not Merkel, Hollande, Lagarde and Draghi. The biggest group of “creditors” are taxpayers of the 18 other countries of the Eurozone. The ugly design of the Eurozone means that the sort of relief that Greece wants most, a reduction in the face amount of its debt (as opposed to the sort of reduction they’ve gotten, which is in economic value, via reductions in interest rates and extensions of maturities) puts the interest of those voters directly at odds with those in Greece. Our understanding is that a reduction in principal amount, under the perverse budgetary and accounting rules of the Eurozone, would result in those losses showing up as losses for budget purposes, now. They would need to be funded by increased taxes. Thus a reduction in austerity for Greece, via a debt writeoff, simply transfers austerity from Greece to other countries. It’s not hard to see why they won’t go for that. And Eurozone rules require unanimous decisions.

Even though the ruling coalition had said it wanted to restart negotiations immediately upon getting a “no” vote, the lenders have asked Greece to send a new proposal, apparently deeming the one it submitted on June 30 to be out of date. It’s doubtful anything will happen before the Eurogroup meeting tomorrow.

Due to popular demand (which I cannot understand for the life of me), today’s piece will discuss chapters 4 and 5 in Karl Marx’s Capital, volume I. On the surface, these two chapters appear simple and in many senses unimportant.  

However, that would be erroneous to conclude. These two chapters clarify two important circuits that are essential to understand the capitalist economic system and to distinguish it from earlier modes of production. Trade and money existed before capitalism itself, so what distinguishes capitalism from ancient slave societies, feudalism, and pre-capitalist mercantile economies?

Karl Marx

In addition, Marx describes the different functions of money differentiating money as a unit of account or medium of circulation (circuit of commodities) from money in its role as capital (circuit of capital). Additionally, these chapters introduce the notion of surplus value, the self-expansion of capital, and the notion of a transfer of revenue between capitalists as distinct from the creation of surplus value and end on a cliff-hanger before Marx’s explanation of the creation of surplus value which links his discussion in chapter 1 on the value of commodities to the labour process itself.

All references come from Karl, Marx (1867) Capital Volume I,  Penguin Classics, 1990.

The Greeks have said enough! Hope has defeated fear and SYRIZA has won the election and have beaten New Democracy and the fear-mongers, as expected.  This is a major victory for anti-austerity forces which could change the economic and political landscapes.

However, they did not win an outright majority (they were short 2 seats) and were forced into coalition with a right-wing, nationalist (pro-Greek Orthodox) anti-austerity party, the Independent Greeks (referred to as ANEL from now on).  

Irrespective of this, we do have quite a lot to celebrate! The election of SYRIZA is a shot directly across the bow of neoliberalism and its flagship of ideas, aka as the austerity project. The European ruling class (which includes mainstream political leaders) are a wee bit shaken especially Germany.  Whether or not the Troika is forced to negotiate the debt successfully, this is a victory and it is forcing the ruling class in Europe to take stock over whether austerity (and destroying the working class) is more important than the EU project. The stakes are literally that high!