WASHINGTON, Jan 27 (Reuters) – The U.S. Treasury on Thursday initiated the first in what is likely be a series of maneuvers aimed at preventing it from hitting a legal debt limit as a political battle over spending intensified.
The action to reduce the amount of money the Treasury holds in a special account at the Federal Reserve marked only a small step in freeing up new borrowing capacity, but was symbolically important as the Obama administration and Republican lawmakers stake out ground in a wider budget debate.
As of Tuesday, Treasury’s remaining borrowing authority was down to $279 billion — all that remained before it bumps against a legally set $14.294 trillion debt ceiling. link
The New York Times reports on a poll that shows while “Americans overwhelmingly say that in general they prefer cutting government spending to paying higher taxes”
Yet their preference for spending cuts, even in programs that benefit them, dissolves when they are presented with specific options related to Medicare and Social Security, the programs that directly touch the most people and also are the biggest drivers of the government’s projected long-term debt.
Nearly two-thirds of Americans choose higher payroll taxes for Medicare and Social Security over reduced benefits in either program. And asked to choose among cuts to Medicare, Social Security or the nation’s third-largest spending program – the military – a majority by a large margin said cut the Pentagon. . . . . .
Asked what Congress should focus on, 43 percent of Americans say job creation; health care is a distant second, cited by 18 percent, followed by deficit reduction, war and illegal immigration.
If Medicare benefits have to be reduced, the most popular option is raising premiums on affluent beneficiaries. Similarly, if Social Security benefits must be changed to make the program more financially sound, a broad majority prefers the burden fall on the wealthy. Even most wealthy Americans agree.
The Republican privatization attempt was thought to have contributed significantly to that party’s Congressional losses in 2006. Yet the president refuses to say that he won’t cut Social Security, and he continues to have kind words for the reckless, inhumane, and unneeded proposals of his Deficit Commission co-chairs (the Commission was unable to agree to a plan).
In this climate, with these numbers, any attempt by the president to cut Social Security could only be described in one phrase: Political malpractice. Is that where he’s headed? Or will he surprise us all by delivering a stirring, unequivocal defense of Social Security? After all the suspense and fear over this issue, that would be a political moment for the ages.
But if he’s going to have a change of heart, he better act fast. The damage is already considerable. As Social Security Works explains, the 20-point advantage Democrats had on this issue for the last 15 years has evaporated, and trust in President Obama is roughly half of what it was for President Clinton on the same issue. Obama’s performance is even worse among those much-sought-after independent voters. Only 18 percent of them trust him on this issue.
It won’t bode well for the Senate Democrats either:
It would be comforting to be able to say that this is all a misunderstanding and that the president will keep his promise to defend Social Security. But we can’t do that. His silence about Social Security, especially after Harry Reid’s stemwinding defense of the program, is disturbing. Reid and other members of the Senate and House are on the front line, and any attempt by Obama to triangulate and propose “bipartisan” cuts will devastate them. That’s why there are reports like The Hill‘s of a strategic split between the president and Democrats in Congress: They’re afraid he’s going to sell them out for a personality-driven reelection campaign that suits his needs, not his party’s or the country’s.
Obama will be committing political suicide and taking the Senate Democrats with him if he doesn’t start listening to his base, now.
It now seems likely to be one of the most tragic and inevitable global trends for 2011: food riots.
People are burning stores in India, Chili, China, Egypt, and Algeria.
The recent overthrow of the Tunisian dictator was about a lot of things, including corruption and unemployment, but it was also about food prices too. Protest signs in Tunis included examples like, “WE WANT bread and water and no Ben Ali.” Some protesters waved loaves of bread to emphasize their point.
Meanwhile, governments are taking desperate measures in the face of soaring prices.
India has banned the export of onions after vegetable prices have risen 70% in the past year. China is implementing price controls and building up a strategic supply of foodstuffs. South Korea is lowering import tariffs on food. Many arab governments are resorting to tax cuts and hand-outs to defer popular protests.
The scary thing is that everyone expects food prices to keep increasing.
Beef and pork prices are at record highs, but, if forecasts prove accurate, consumers have only just begun to see higher prices for food and fuel.
Steady increases in the costs of grain and energy since last fall are drawing comparisons to the summer of 2008, when corn and soybean prices set a record and gasoline topped $4 a gallon, said Purdue University farm economist Chris Hurt.
Unlike in 2008, however, grain prices are up before the first seeds go into the ground, and fuel costs are rising well ahead of the spring-summer driving season.
The key question is “why”? Why is food price inflation suddenly so high?
Neither the weary, disciplined […] soldiers, ranked along the west bank, nor the anxious, helter-skelter tribes amassing on the east bank could have been giving much thought to their place in history. But this moment of slack, this relative calm before the pandemonium to follow, gives us the chance to study the actors on both sides of this river and to look backward on what has been and forward to what will be.
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[I]ts foundations were unassailable, sturdily sunk in a storied past and steadily built on for eleven centuries and more. There was, of course, the prophecy. Someone, usually someone in his cups, could always be counted on to bring up that old saw: the Prophecy of the Twelve Eagles, each eagle representing a century, leaving us with- stubby fingers counting out the decades in a puddle of wine- only seventy years remaining! Give or take a decade! Predictable laughter at the silliness of the whole idea. But in seventy years exactly, the empire would be gone.
While America was distracted with issues of guns, political rhetoric, and domestic violence, the sovereign debt crisis in Europe reached its next tipping point.
Alan Wilde, head of fixed income and currency at Baring Asset Management, said: “The crisis is reaching another key phase with debt auctions this week. It seems unlikely that Portugal can avoid a bail-out.”..
In a further blow to Mr Sócrates, António Bagão Félix, a respected former finance minister and rightwing politician, said on Monday that it was no longer a question of “if” Portugal would have to turn to the European financial stability facility, the EU bail-out fund, for help, but “when”.
The cost to the country of high bond yields was increasing every day, he said. “The situation is unsustainable.”
The European Central Bank was forced to intervene on Portugal’s bond market on Monday when investors came close to abandoning the country’s debt entirely. The yield on 10-year bonds reached a near high of 7.18%, a rate similar to that which triggered the bailouts of Ireland and Greece.
Economy looking dismal? You’re running low on hope? Motivation next to non-existent? Job market worse? Bills piling up on you? Collection agents hounding you? They repo’d your car and wall street took your house? You’ve had it with sleeping on the sidewalk? Your dealer won’t front you anymore?
You know in your heart that your impoverishment is all your own fault for being too lazy and shiftless to even pick up the phone, don’t you? Ask any television anchor or politician or any other self help guru and they’ll all tell you that.
But there is one solution left you haven’t tried yet, or you wouldn’t be wallowing in that pit of self pity.
Before you jump, try out your last resort, the one option that has been time and time again historically proven to always work, every time! Without fail!
Bend over, pull up your socks, grab your bootstraps, and get yourself some…
ALGIERS, Algeria – Riots over rising food prices and chronic unemployment spiraled out from Algeria’s capital on Thursday, with youths torching government buildings and shouting “Bring us Sugar!”
At no time since records have been kept has the cost of eating been so expensive. The last time prices were this high there were food riots in 32 nations, and that has some people worried.
“We are entering danger territory,” said the UN Food and Agriculture Organisation’s chief economist, Abdolreza Abbassian.
Global food prices have risen for the sixth month in succession. Wheat has almost doubled since June, sugar is at a 30-year high, and pork is up by a quarter since the beginning of 2010.
Make no mistake, there are a myriad of reasons why the rich get richer and the poor get poorer, and only a few apply to any one instance. That doesn’t prevent generalization from being made. The defenders of the status quo explain it as thus:
The rich get richer and the poor get poorer because the rich learn to become stewards of the talents given to them. The poor have squandered their talents and are not given more.
Clean and simple. The poor are poor because they’ve brought it upon themselves. The rich are just better than you. Case closed. It’s a very convenient philosophy if you’re rich.
In reality there is only one reason for the growing wealth disparity that applies to practically every instance, and it isn’t because one group is better, or smarter, or more amoral than another group.
It’s not a hidden secret. Everyone is aware of it, but few understand it as well as they think they do.
Under the first U.S. income tax law that was passed in 1913, only 1 percent of Americans were required to file income tax returns, and to be liable to file you would have had to be earning an annual income of about $120,000 in todays dollars. It was passed during a period called the Progressive Era: “a period of social activism and reform that flourished from the 1890s to the 1920s” during which there were widespread “efforts to reform local government, education, medicine, finance, insurance, industry, railroads, churches, and many other areas” of American life.
It was a period of steady economic growth in the U.S. and produced a since unparalleled level of prosperity that lasted for decades. The politics of the era included the concept of an economy of high wages and the idea that American labor could undersell foreign labor by being highly paid, well clothed, well educated, healthier labor with high productivity. The concept of “free market” during the period was an entirely different concept than it is today.
Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and is the author of “Super-Imperialism: The Economic Strategy of American Empire” (1968 & 2003), “Trade, Development and Foreign Debt” (1992 & 2009) and of “The Myth of Aid” (1971).
ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East. Hudson acts as an economic advisor to governments worldwide, including Iceland, Latvia and China, on finance and tax law.
As an advisor to the White House, the State Department and the Department of Defense at the Hudson Institute, and subsequently to the United Nations Institute for Training and Research (UNITAR), Hudson has been one of the best known specialists in international finance. He also has consulted for the governments of Canada, Mexico and Russia, most recently for the Duma opposition to the Yeltsin regime.
Yesterday we heard Assistant Research Professor at the Political Economy Research Institute (PERI) Jeannette Wicks-Lim explain how currently most minimum wage earners in the U.S. can no longer the afford the basic necessities of life, and outline a proposal to combine minimum wage and earned income tax credit policies to guarantee a decent living wage for all.
Hudson here today talks with The Real News Networks’ Paul Jay and concludes that the the U.S economy can again outperform foreign economies with high wages, increased living standards, and with high top tier tax rates producing higher productivity – a progressive concept, like Wicks-Lim’s ideas, that is nearly the exact opposite of the free lunch economic ‘theories’ so widespread today that are behind wall street’s pillaging of the U.S. economy with the support of both major political parties.
No shit, really? Thank you CNN! Boy that’s a swell effin headline to read! But I think it’s just a teensy bit too subtle. Why not just run a headline that says:
Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and is the author of “Super-Imperialism: The Economic Strategy of American Empire” (1968 & 2003), “Trade, Development and Foreign Debt” (1992 & 2009) and of “The Myth of Aid” (1971).
ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East. Michael acts as an economic advisor to governments worldwide including Iceland, Latvia and China on finance and tax law.
Here Hudson talks with The Real News Networks’ Paul Jay about the 800+ empire of military bases the U.S. has established around the globe, about how all of the money that the military spends abroad is spent on foreign economies and is then “siphon[ed] up into the central banks. And the central banks would have nothing to do with these dollars but to keep their currency stable by recycling the dollars into US Treasury bills.” and about how “If it weren’t for the military deficit, America would have had to finance its own domestic budget deficit. It’s been foreigners that are financing the budget deficit.”
Hudson concludes here with the observation that “Now that foreigners are essentially saying, we don’t want any more dollars, we’re not going to fund your deficit, all of a sudden they think: who’s going to fund the deficit if not foreign central banks? The answer is: American labor, the American middle class and working families are going to fund it, not the military.”
The rest of the world has had enough of financing it’s own encirclement and subjugation by the U.S. military.
From here on in it is you who is going to be paying the bill…
By 1933 Americans were losing faith in the banking system. Banks had been failing by the thousands since 1930. When a bank failed it took everyone’s life savings with it.
The governors of Iowa, Tennessee and Kansas declared bank holidays in January, but it was Michigan that tipped the scales. It set off a nationwide panic that led to bank holidays in almost every state. On March 4, 1933, the Federal Reserve Bank of New York requested a statewide bank holiday be declared. On the same day that FDR was inaugurated as President of the United States, New York, Illinois, New Jersey, Massachusetts, and Pennsylvania all declared bank holidays.
The banking system had utterly and completely failed. In most counties there wasn’t a single working bank even before the bank holidays. Now the entire banking system simply vanished from the face of America despite years of federal government support.
No one was sure if any bank in America would ever open again.
When FDR instituted the Emergency Banking Act the following week there was no one to oppose it.
It was in this atmosphere of crisis that famous economist Irving Fisher proposed a radical new idea for money.
