September 29, 2011 archive

As Scorn for Vote Grows, Protests Surge Around Globe

By NICHOLAS KULISH, The New York Times

Published: September 27, 2011

Increasingly, citizens of all ages, but particularly the young, are rejecting conventional structures like parties and trade unions in favor of a less hierarchical, more participatory system modeled in many ways on the culture of the Web.

In that sense, the protest movements in democracies are not altogether unlike those that have rocked authoritarian governments this year, toppling longtime leaders in Tunisia, Egypt and Libya. Protesters have created their own political space online that is chilly, sometimes openly hostile, toward traditional institutions of the elite.

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In the wake of the Soviet Union’s collapse in 1991, a consensus emerged that (neo) liberal economics combined with democratic institutions represented the only path forward. That consensus, championed by scholars like Francis Fukuyama in his book “The End of History and the Last Man,” has been shaken if not broken by a seemingly endless succession of crises – the Asian financial collapse of 1997, the Internet bubble that burst in 2000, the subprime crisis of 2007-8 and the continuing European and American debt crisis – and the seeming inability of policy makers to deal with them or cushion their people from the shocks.

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Mr. Hazare’s anticorruption campaign tapped a deep chord with the public precisely because he was not a politician. Many voters feel that Indian democracy, and in particular the major parties, the Congress Party and the Bharatiya Janata Party, have become unresponsive and captive to interest groups. For almost a year, India’s news media and government auditors have exposed tawdry government scandals involving billions of dollars in graft.

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The political left, which might seem the natural destination for the nascent movements now emerging around the globe, is compromised in the eyes of activists by the neoliberal centrism of Bill Clinton and Tony Blair. The old left remains wedded to trade unions even as they represent a smaller and smaller share of the work force. More recently, center-left participation in bailouts for financial institutions alienated former supporters who say the money should have gone to people instead of banks.

The entrenched political players of the post-cold-war old guard are struggling. In Japan, six prime ministers have stepped down in five years, as political paralysis deepens. The two major parties in Germany, the Christian Democrats and the Social Democrats, have seen tremendous declines in membership as the Greens have made major gains, while Chancellor Angela Merkel has watched her authority erode over unpopular bailouts.

In many European countries the disappointment is twofold: in heavily indebted federal governments pulling back from social spending and in a European Union viewed as distant and undemocratic. Europeans leaders have dictated harsh austerity measures in the name of stability for the euro, the region’s common currency, rubber-stamped by captive and corrupt national politicians, protesters say.

“The biggest crisis is a crisis of legitimacy,” Ms. Solanas said. “We don’t think they are doing anything for us.”

Why Liberals Are Lame: McCarthyite Identity Politics as Cover for Bankrupt Policies

Yves Smith, Naked Capitalism

09/28/2011

The latest desperate strategy of Obama’s spin-meisters highlights the rot at the core of the Democratic party: the heavy handed use of identity politics as a cover for neoliberal policies that betray the very groups the party purports to represent.

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(A)s Obama’s economic policies have failed to pull the economy out of its crisis-induced deep malaise, he has done nothing different save get more pissy and double down on his failed strategy of selling out the middle class. His recent, and no doubt desperation-induced effort to rekindle the support of his badly abused base via gestures like a millioniares’ tax, are likely to go the way of past promises of change: they will be watered down to thin gruel so as not to ruffle his moneyed backers. It is remarakbly disingenuous for Harris-Perry to contend that dissatisfaction with Obama results from racism, as opposed to (among other things) ineffective policy responses to substantial and widespread economic stress.

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The left is obsessed with what ought to be peripheral concerns, namely, political correctness and Puritanical moralizing, because it is actually deeply divided on the things that matter, namely money and the role of the state. The Democrats have been so deeply penetrated by the neoliberal/Robert Rubin/Hamilton Project types that they aren’t that different from the right on economic issues. Both want little regulation of banking and open trade and international capital flows. Both want to “reform” Medicare and Social Security. Both are leery of a welfare state, the Republicans openly so, the Rubinite Dems with all sorts of handwringing and clever schemes to incentivize private companies that generally subsidize what they would have done regardless (note that Americans have had a mixed record in providing good social safety nets, but a big reason is our American exceptionalism means we refuse to copy successful models from abroad).

The powerful influence of moneyed interests on the Democratic party has achieved the fondest aims of the right wing extremists of the 1970s: the party of FDR is now lukewarm at best in its support of the New Deal. Most Democrats are embarrassed to be in the same room with union types. They are often afraid to say that government can play a positive role. They were loath to discuss the costs of income inequality until it became so far advanced that it is now well nigh impossible to reverse it. After all, that sort of discussion might sound like class warfare, and God forbid anyone on the mainstream left risk sound like Marx.

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So the Democratic party (and remember, our two party system makes the Democrats the home by default for the left) pretends to be a safe haven for all sorts of out groups: women, gays, Hispanics (on their way to being the dominant group but not there yet), blacks, the poor. But this is stands in stark contradiction to its policies of selling out the middle class to banks and big corporate interests, just on a slower and stealthier basis than the right. So its desperate need to maintain its increasingly phony “be nice to the rainbow coalition” branding places a huge premium on appearances. It thus uses identity politics as a cover for policy betrayals. It can motivate various groups on narrow, specific issues, opening the way for the moneyed faction to get what it wants.

It took most people far too long to get that Obama was a phony because the presumption that a black man would be sympathetic to the fate of the downtrodden is a deeply embedded but never voiced prejudice (and this bias is exploited successfully by the right in depicting Obama as a socialist). Other elements of traditional Democratic associations played into the Obama positioning: his Administration is chock full of technocratic Harvard wonks, and the last time an Administration was so dominated by technocrats was under Kennedy, the last Democratic Administration to have a strongly positive (indeed romanticized) image. (Yes, the Clintons also liked fancy resume types, but they also placed a very high premium on loyalty, and with the result that long-standing supporters often wound up in surprisingly senior roles).

These traditional iconic symbols of liberalism – secular urban elitism, blackness, technocratic skill, micro-issue identity based political organizing groups – have been fully subverted in the service of banking interests. Obama is the ultimate, but not the only, piece of evidence that these symbols are now used simply to con the Democratic base out of their support and money.

Cross posted from The Stars Hollow Gazette

Valerie Plame, the outed CIA covert operations officer who was tracking Iran’s nuclear program, appeared with Keith Olbermann to discuss her involvement with Global Zero and reducing the number of nuclear weapons.

{}As a former CIA covert operations officer who specialized in nuclear counter-proliferation, I believe that this is the most urgent threat we face. As dire as the predictions are on this issue, the good news is that we are actually making progress! The recent ratification of the new START treaty demonstrates that there is real international political will to take us off the path of certain destruction by nuclear weapons if nothing is done. But, there is much work still ahead.

Let’s start with the known threat: Without doubt, terrorist groups are trying to buy, build or steal a bomb. Furthermore, there is enough highly-enriched uranium (HEU) in the world to build more than 100,000 weapons, and rogue individuals are selling technology on the black market. If terrorists get hold of HEU, they could not be prevented from smuggling it into a targeted city, building a bomb and exploding it.

To my mind, the only realistic solution to this danger is to lock down all nuclear materials and eliminate all nuclear weapons in all countries: Global Zero. I am now dedicated to achieving this goal as a leader of the Global Zero movement. This movement was launched in December 2008 in Paris by an international group of 100 current and former heads-of-state, national security officials, military commanders and business, civic and faith leaders — and in just two years has grown to 300 leaders and 400,000 citizens worldwide.

Sign the petition to Cut Nukes

World leaders will spend $1 trillion on nukes in the next 10 years

while cutting essential services that we all need! Will you take

1 minute to tell them what matters most to you?

Crossposted from The Stars Hollow Gazette

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!