Nov 232014
 

By Eric Toussaint, 99GetSmart

We don’t owe, we won’t pay

We don’t owe, we won’t pay

This article reviews a number of developments that occurred between 2000 and 2014 related to the debt issue, various aspects of the international crisis |1|, international financial institutions, the scope of attacks against social and economic rights, and CADTM priorities.

Several changes have occurred since the end of the 1990s.

1. Several countries in the South have moved away from neoliberal policies

After over twenty years of neoliberal policies and multiple forms of resistance, towards the end of the 1990s and at the beginning of the new millennium, several Latin American nations disposed of their neoliberal presidents thanks to massive social mobilisations and elected heads of state who implemented policies that meet the people’s interests. The people of those countries wanted to free themselves from measures derived from the ‘Washington consensus,’ as imposed by the IMF and the World Bank (privatisations, cuts in public services, ‘liberalisation’ of trade that deprives small local producers of any protection, enforced commodification, destruction of decent jobs, cancellation of subsidies for food staples and services such as water, electricity, gas, and transport). These policies were implemented on the pretence of repaying their public debts, much of which was illegitimate or illegal, as was the case in Venezuela, Ecuador, Bolivia… |2| Ecuador’s government took a remarkable initiative in 2007-2008 when it carried out a complete audit of its debt with the active participation of representatives from social movements |3|. On the basis of this audit, it then suspended repayment of the part of the external debt identified as illegitimate, and imposed a significant reduction of the debt to its creditors |4|. This made it possible to increase social spending. Unfortunately, this initiative did not snowball as had been hoped, since other countries in the area did not follow suit.

On the upside, let us note that the governments of these three countries also increased taxation on large foreign corporations that exploit these countries’ natural resources. This development significantly boosted their tax revenues, and made it possible to increase social spending.

Moreover, citizens in these three countries democratically adopted new Constitutions, which include a measure on the removing of elected representatives at mid-term.

Finally, it should also be added that Bolivia in 2007, Ecuador in 2009, and Venezuela in 2012 took the wise step of leaving the WB International Centre for Settlement of Investment Disputes (ICSID).

The International Centre for the Settlement of Investment Disputes (ICSID),The ICSID was founded in 1966, with the purpose of providing a means of conciliation and arbitration to settle investment disputes between contracting States and nationals of other contracting States. To put it simply, it is an international arbitration tribunal, which deals with disputes arising between a private investor from a contracting party State and the State where the investment is based. The Centre’s jurisdiction (article 25) extends to disputes of a legal nature, relating directly to an investment, between a contracting State (or a government organisation or body dependent on that State and designated by it to the Centre) and a national from another contracting State.

The Centre is usually designated as competent to deal with disputes arising within the context of bilateral investment agreements. Thus, almost 900 bilateral treaties on the promotion and protection of investments explicitly name the Centre as the instance for settling disputes between the private investor of a contracting party, on the one hand, and the State where the investment concerned is based, on the other. The Centre’s arbitral sentence is mandatory and cannot be appealed (article 53). The ICSID is a member of the World Bank Group, but from an institutional point of view, it is an autonomous international organisation, which completes the Bank’s range of intervention.

There is no obligation to have recourse to the ICSID for conciliation or arbitration. However, once the parties are engaged, neither may withdraw unilaterally from the ICSID’s arbitration. Once the ICSID has made a decision, all the countries that have ratified the convention, even if they are not involved in the dispute, must acknowledge and apply the decision. Since 1978, the ICSID’s area of jurisdiction has been extended. A whole new set of rules allow it to intervene in cases that do not fall within the domain of the convention. Thus, it can now intervene in arbitration procedures even when one of the parties to the dispute is a State or the national of a State that has not ratified the convention. It can also be called on to bear witness on facts in a case.

Until the mid-1980s, the disputes dealt with by the ICSID arose from agreements made under investment contracts. Since then, it has dealt increasingly with disputes arising from agreements made under bilateral treaties.

The World Bank’s spider web 

The World Bank’s subsidiaries (the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID)) have been designed to weave an even tighter web.

Let us take a theoretical example to illustrate the effects of their policies. The World Bank grants a loan to the government of a country if it promises to privatise its water distribution and purification system. In this process, the public company is sold to a private consortium including the IFC, a World Bank subsidiary.

Then the population affected by the privatisation protests against the sudden sharp increase in rates and the fall in the quality of the service provided, and the government turns against the predatory transnational company, the dispute is dealt with by the ICSID, which thus finds itself on both sides of the judge’s bench.

A situation has been reached where the World Bank Group is present at every level: it imposes and finances privatisation via the IBRD and IDA, it invests in the privatised company through the IFC, it provides the company with guarantees covering it against political risk, through the good offices of the MIGA, and it judges any disputes that may arise through the ICSID.

This is exactly what happened in El Alto, Bolivia, between 1997 and 2005.

2. Increases in raw materials prices and currency reserves

In 2003-2004, the prices of raw materials and agricultural products began to rise |5|. This situation enabled the developing countries |6| exporting such products to increase their revenues, especially in strong currencies (dollar, euro, yen, and pound). Certain developing countries used the additional revenues to increase social spending, while most of them accumulated foreign exchange reserves |7| or purchased US Treasury Bonds—thus contributing to financing the leading world power. In other words, they increased their loans to the world’s principal economic power, thus contributing to maintaining its domination by providing it with the means to continue living on credit and maintaining a large trade deficit. An explanation for this is that the US borrows large amounts from countries that are prepared to purchase its debt instruments (US Treasury Bonds).

The table below indicates the volumes of US Treasury Bonds and other treasury bonds held in March 2014 by a number of developing countries. China alone has lent the USA $1,270 billion (from its foreign reserve exchange accumulated through its trade surplus with the USA), and therefore holds more than one fourth of US external public debt.

Developing countries that are creditors of the USA: values of US Treasury Bonds (in $billionsdollars) held in March 2014 |8|

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The yield on US Treasury Bonds and other government bonds is from 0 to 2.57% in function of the maturity (one month = 0.01%, while 10 years = 2.57%) |9|. Given the inflation rate in the US, the real yield is very low, or even negative, which enables the US to finance itself at a very low cost.

3. The loss of power of the World Bank and IMF vis-à-vis certain developing countries

The increase in foreign exchange reserves and the decision of some governments in the South to use part of them to increase social spending and infrastructure investments have contributed to decreasing the influence of the IMF, World Bank, and most industrialised countries over some of the developing countries |10|. This loss of influence also comes from the fact that China and the other ‘BRICS’ (Brazil, Russia, India, China, and South Africa), especially Brazil, have greatly increased the number of their loans to certain developing countries.

4. China becomes a powerful creditor

Another factor has reinforced this phenomenon: a rapidly expanding China has become the world’s workshop, and has accumulated huge currency reserves (mostly in dollars). In December 2013, China’s foreign exchange reserves reached $3,821 billion |11|. It has significantly increased its international trade, particularly with developing countries on various continents. It has also increased very significantly its loans to African, Latin-American, and many Asian countries. Its loans are now competing with those of the World Bank and the IMF, other multilateral financial institutions and the governments of the most industrialised countries. That has reduced the ability of these institutions and of countries in the North to exert pressure on some developing countries. However, we should remain vigilant regarding these large debts taken on by developing countries. China is a new capitalist power, which does not give anything away, and its investments are aimed at ensuring its control over the raw materials it needs and over the markets to which it exports its manufactured goods.

5. In 2014, the BRICS (Brazil, Russia, India, China, and South Africa) announced the creation of a multilateral bank that would belong to them |12|

If this bank begins doing business one day (which is not sure), it will not be an entity capable of offering a positive alternative for developing countries, because the governments founding it are seeking to create a bank which will directly serve their interests (ensuring sources of raw materials and outlets for their exportations) and not those of the people.

6. Increases in internal public debt

Over the past 20 years, internal public debt has increased significantly. In a significant number of developing countries, it has become greater than external public debt (see table below on Argentina, Brazil, Colombia, Ecuador, and Mexico). This is true for all of the richest developing countries, particularly for the so-called ‘emerging’ economies.

Comparison of external and internal public debt (in $billions and as a % of total debt) for some Latin American countries (2000-2013) |13|

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However, we should not be fooled. The domestic banks that issue loans to the public authorities of their country in the local currency are often in fact subsidiaries of foreign banks, and the loans in local currency, in many cases, are pegged to a strong currency (generally the dollar). This means that if the local currency is devalued or the value of the strong currency increases, the amount to be reimbursed increases considerably |14|. It also means that the major foreign banks are making large profits from the internal public debt. For example, Santander, the principal Spanish bank, makes enormous profits from the loans granted by its subsidiaries in Brazil |15| and other Latin American countries to public authorities by buying government securities from them. The same is true of other banks like Citigroup/CitiBank, which have a strong presence in Mexico, and the Spanish bank BBVA, present in several Latin-American economies, not to forget the British bank HSBC, which is particularly active in Asia.

7. The food and climate crisis

In 2007-2008, the peoples of the developing countries were faced with a sharp increase in the price of foodstuffs. This situation resulted in food riots in 18 countries. The number of people suffering from hunger, which was approximately 900 million before the crisis, increased by nearly 120 million, bringing the total to over one billion in 2009. As we will see farther on, that figure has gradually been reduced, but the fact can only alert us to the incredible vulnerability of hundreds of millions of people. This dramatic situation is directly linked to other factors related to the global crisis and the debt system. One thing is certain: the rising price of food staples and increasing number of human beings suffering from hunger are not the result of a lack of food resources throughout the world. Some of the factors behind this global food crisis, which is keeping one out of eight humans in a permanent state of hunger, are financial speculation on the prices of basic food items (and fuels) on the over-the-counter market in Northern countries, as well as the promotion of agro-fuels in Northern and some Southern countries— including Brazil —, land grabbing, the ‘free-trade’ agreements imposed on Southern countries, the end of subsidies for basic food staples and to local producers in Southern countries, and the priority given to cash crops intended for exportation to the detriment of local market gardening… |16|

In addition, the effects of the ongoing climate crisis are increasingly dramatic in developing countries. Here again, the policies rolled out by the World Bank in particular, and the productivist capitalist system in general, are part of the problem and not part of the solution |17|.

8. Debt is one of the core concerns in Northern countries, where it is considered to be the consequence of the crisis that erupted in 2007-2008

The crisis caused by major private banks in the US and Europe has generated a strong increase in the debt of the countries concerned. Private and public debt have become core concerns in Northern countries, particularly within the European Union and the United States. That is why the CADTM has engaged in more studies and actions targeting the countries of the North, while still not neglecting the South. The lessons drawn from the Third World debt crisis in 1980-1990 are very valuable for understanding the events that followed the crisis of 2007-2008 and taking action in its aftermath |18|. The countries in the North where people have been the most severely affected are Greece, Ireland, Iceland, Portugal, Spain, Cyprus, Romania, Hungary, the Baltic Republics, Bulgaria, and Italy. The policies being applied by creditors in the most industrialised countries in the North today closely resemble those that were imposed on the countries of the South in the 1980s, which caused and exacerbated third world debt.

9. Centre/Periphery relations within the European Union based on domination 
The existence of a common economic, trade, and political zone enables European transnational corporations and the economies of the Centre of the eurozone to profit from the debt crisis in the Periphery countries (Spain, Greece, Portugal, Ireland, Cyprus, and countries in central Europe and the Balkans), as well as in Italy, to make their companies more profitable and make points in terms of competitiveness with respect to their North American and Chinese competitors. At the current stage of the crisis, the aim of countries in the Centre of the eurozone is not to relaunch growth and reduce asymmetries between the strongest and weakest economies in the EU.

In addition, European leaders believe that the collapse of Southern Europe is going to translate into opportunities to privatize corporations and public goods massively at cut-rate prices. The intervention of the Troika and the active complicity of governments in the Periphery are helping them. The dominant classes in the countries in the Periphery are in favour of these policies, because they are counting on getting a part of the cake they have been drooling over for years. The privatisations in Greece and Portugal prefigure what is going to occur in Spain and Italy where the public commodities up for grabs are far more lucrative, given the size of these two economies.

The close ties between government leaders and Big Capital are no longer even concealed. Individuals from the world of high finance, and in particular the investment bank Goldman Sachs, are now at the head of several governments, in key ministerial positions, and President of the ECB |19|.

10. The crisis and the increase in public debt are misleading arguments exploited in the greatest offensive against human rights in Europe since the end of WWII.

Governments and employers use countless deceitful arguments in the greatest offensive in Europe since WWII against the economic and social rights of most people. Increasing unemployment, more and more debt to repay, the constraint of balanced budgets and the competitiveness of the European countries, between themselves, and on the world markets, are all used as postulates to attack and whittle away at social spending and public services.

For the Capitalists the agenda is greater insecurity for the workers, to reduce the worker’s capacity to organise and resist, while imposing lower wages and less benefits, at the same time as maintaining big differences between EU workers in order to increase the competition between them, and to precipitate them into the debt trap.

The report ‘Safeguarding human rights in times of economic crisis’ by Nils Muiznieks, Commissioner for Human Rights at the Council of Europe (4 December 2013) draws an unforgivable picture of the consequences of the austerity measures applied in Europe. The sectors of education, health, employment, justice, housing, water distribution, and subsistence are all damaged by the nefarious effects of these policies. Nils Muiznieks stresses the inefficiency of austerity plans and their counter-productive results, which in the long term will cause necessary increases in public spending |20|.

Here are the opening paragraphs of the introduction to this important report: ‘Europeans are living through the deepest economic recession since World War II. What began as a meltdown in the global financial system in 2008 has been transformed into a new political reality of austerity, which threatens over six decades of social solidarity and expanding human rights protection across Council of Europe member states.

Austerity measures have exacerbated the already severe human consequences of the economic crisis marked by record levels of unemployment. The whole spectrum of human rights has been affected and many vulnerable groups of people have been hit disproportionately. Poverty, including child deprivation, is deepening and is likely to have long-term effects.’

11. This is a worldwide attack on Labour by Big Capital.

What wage earners, pensioners and beneficiaries are going through in Cyprus, Ireland, Greece, Spain, and Portugal, among others, was imposed on the populations in developing countries during the debt crisis in the 1980-1990s. In the 1990s, during and after the Reagan presidency, the workers in North America were attacked, the Thatcher regime in the UK attacked British workers and similar policies were then applied throughout Europe, including in the ex-eastern bloc countries, which were subjected to the harsh policies imposed on them by their governments and by the IMF. According to the International Labour Organisation’s Global Wage Report 2012-13 ‘In Russia, for example, the real value of wages collapsed to less than 40 percent of their value in the 1990s, and it took another decade before wages recovered to their initial level.’ |21|. Then starting in 2003-5, although less harshly than in the Third World countries (the World’s poorest countries and the emerging economies), the attack turned against German workers. The harmful effects are still felt today by many people, even if Germany exports and the explosion of part-time work has limited the number of unemployed and part of the working class has not been directly affected.

This offensive, which started at the beginning of the 1980s, has intensified since 2007. The International Labour Organisation has analysed a shorter period (1999-2011) and made the following interesting remark: ‘Between 1999 and 2011, average labour productivity in developed economies increased more than twice as much as average wages. In the United States, real hourly labour productivity in the non-farm business sector increased by about 85 per cent since 1980, while real hourly compensation increased by only around 35 per cent. In Germany, labour productivity surged by almost a quarter over the past two decades while real monthly wages remained flat.’ |22|. Further on, the ILO indicates: ‘The global trend has resulted in a change in the distribution of national income, with the workers’ share decreasing, while the share of income earned by Big Capital has increased in most countries. Even in China, a country where wages roughly tripled over the last decade, GDP increased at a faster rate than total wages, and hence the share going to labour went down.’ |23|

Evolution of wages as a percent of global GDP (1980-2011) |24|

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This significant global trend is the demonstration of the increased added-value extracted from Labour by Capital.

12. Illegitimate personal debts

The CADTM has started focussing on a new field of analysis and intervention in the ‘debt system’. While whole populations are direct victims of the ‘debt system’, so are individuals: Indian farmers are being driven to suicide (more than 270,000 between 1995 and 2011 |25|), hoping to free their family from the burden of debt; millions of families are being dispossessed by the repossession of their homes by the creditor banks, mainly in the US (since 2007, 14 million families, unable to pay their mortgages, have been evicted from their homes by banks). The same is true in Spain, where about half a million families have been evicted |26|, in Ireland, in Iceland, in several central European countries and the Balkans. Women (men too) are victims predatory micro-credit systems in the South. English, Chilean, and North American students are over-indebted and needy or in downright misery, (the total amount of student debt in the United States exceeds $1 trillion, the equivalent of the external public debt of Latin America and Sub-Saharan Africa combined).

In fact, if one goes beyond appearances, it is not a collection of individual victims of injustice. These individuals are part of the classes being exploited and robbed by the capitalist system: the small farmers of the South, urban and rural proletariat of the North and South, educated youth from the working classes … Among the victims, women are the most exposed to class and gender exploitation: patriarchy and Capitalism work hand-in-hand to perpetuate a system of oppression and exploitation.

13. Lower interest rates in the United States and Europe have decreased the cost of debt in the South, creating a dangerous feeling of security

The lower interest rates imposed by the central banks of the most industrialised countries starting in 2007-2008 |27|, in order to help their major private banks and capitalist corporations, resulted in a lower cost to refinance the debt in developing countries. The combined low interest rates and high revenues from the exportation of raw materials have created a dangerous feeling of security for the governments of developing countries. However, the situation may be reversed in the near future: the price of raw materials could drop and interest rates may finally go up again |28|.

We must pay careful attention to this situation, and ask the governments in Southern countries to take advantage of the current economic situation that is relatively favourable to their country, and put in place policies in favour of basic human rights and nature protection. In sum, we must make a radical break with the current model of development.

14. Public and private debt has increased throughout the world, and the BIS itself has spoken of the ‘debt trap’

Private and public debt have skyrocketed in an extremely dangerous way since the beginning of the 2000s. First, there was an enormous increase in private debt (of financial corporations (banks in particular), non-financial corporations, and households), principally in the most industrialised countries. Then public debt literally exploded because of how the crisis was managed in the interest of Big Capital. In the most developed countries, public debt has increased by about 40% since 2007 |29|. Meanwhile, the debt of non-financial corporations has risen 30% throughout the world. Household debt has decreased (in response to attacks on buying power, jobs, and general living conditions, those ‘at the bottom’ have paid off their debts). The debts of financial corporations (major private banks in particular) remain the highest (they are much great than public debt), because their books have not really been cleaned up contrary to the reassuring speeches delivered by government leaders. The Bank for International Settlements (BIS), which is a forum for the principal central banks on the planet, launched an alert in its Annual Report published in June 2014 by speaking of the ‘debt trap’! Obviously, we are not astonished to learn that the BIS recommends we should continue pursuing neoliberal policies |30|, whereas in reality we must make a radical break with them.

15. The debt of developing countries, which represents a tiny portion of world debt, also increased

It is important to highlight that the total debt of all developing countries (internal + external public and private debt combined) represents only about 5% of total world debt. Meanwhile, public and private debt in the most industrialised countries, where only 15% of the world population lives, account for 95% of total world debt. The external public debt of all the developing countries (about $1.8 trillion), where 85 % of the world population lives barely represents 1% of total world debt. These figures clearly show how easy it would be to cancel this debt.

In reality, more than ever before, developing countries are net financial creditors of the most developed economies. These figures do not include the ‘ecological and historic debts’ people in developing nations could demand from the dominant classes of the most developed countries (and from the dominant classes in the developing countries, who have been complicit with those in the North).

Overview of the evolution of public debt

Evolution of the external public debt of developing countries from 1980 to 2012 (in billions of dollars) |31|

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* PECOT = central and eastern European countries + Turkey

We observe that external public debt continued to rise from 2000 to 2012, particularly in Latin America, and in the countries of central and eastern Europe + Turkey (PECOT) as well as in south Asia.

Evolution of the external debt of developing countries and of the resources used to pay it back from 1980 to 2012 (in $billions) |32|

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We observe a constant increase in the total volume of external debt. In terms of repayments, between 2005 and 2012, it is especially the ones made by private companies that increased. That means that private companies (industrial, commercial, banking, and so on) took on large amounts of external debt, and if there is a crisis, there is a very high risk that these debts will have to be paid back by the government, which has already occurred many times in the recent past.

16. Poor countries issue and sell external debt bonds on international markets

Rwanda and Senegal, two poor and heavily indebted countries, have sold public debt bonds on the financial markets of the North. This has never been seen before in the last 30 years. The Ivory Coast, having emerged from a situation of civil war just a few years ago, has also issued bonds although it is also one of the poor and heavily indebted countries. Kenya and Zambia have also issued debt bonds. This testifies to a highly peculiar international situation: the financial investors of the North hold huge cash assets, and faced with very low interest rates in their region, are on the lookout for higher yields. Senegal, Zambia, and Rwanda promise a yield of 6 to 8% on their bonds. They therefore attract financial companies, which seek to place their cash on a provisional basis even if the risks are high. The governments of these poor countries become euphoric and try to make their people believe that happiness is just around the corner although the situation may take a dramatic turn. These leaders are accumulating debt in a completely irresponsible way, and when the economic situation deteriorates, it will be their people who will have to foot the bill.
Furthermore, the bonds they issue are linked to contracts including clauses that could be real time bombs. We must require public authorities to make the contents of these contracts accessible to the public.

17. The Fed is destabilizing emerging market economies

When the US Federal Reserve System (the Fed) hinted in May 2013 that it would gradually normalize its policy, there was an immediate negative impact on the ‘emerging’ economies. What changes were proposed?

1. Reducing purchases of toxic assets |33| from the US banks, made to relieve them of this burden.
2. Reducing the acquisitions of US Treasury Securities from these banks, which the Fed does in order to give them cash injections |34|.
3. Raising interest rates (0.25% today).

This announcement itself was enough to lead major financial companies in the US and other countries (banks and their satellites in the shadow banking system, mutual funds, etc.) to pack-off some of their liquid investments from the emerging market economies (EMEs). This destabilized those economies: plunge in stock markets and currency depreciation (Indonesia, Turkey, Brazil, India, South Africa …) |35|. In fact, the low interest rates prevailing in the US and Europe, combined with the central banks’ massive cash injections in the economy, have always set financial companies on the trail of maximum profit by investing in the EMEs, which offer better returns than the North. The outflow of financial investment from the EMEs towards the most industrialized economies can be explained by the fact that the financial companies expected attractive returns in the North as soon as the Fed hiked interest rates |36|. These companies thought that other ‘investors’ would withdraw their capital from these countries and it was better to act first. A herd mentality response resulted in a self-fulfilling prophecy.

Finally, the Fed did not raise interest rates and waited till the end of 2013 to reduce purchases of structured securities and treasury bills from banks. The dust has almost settled.

The situation in June 2013 gives some idea of ​​what might happen if the Fed increases interest rates significantly. The Bank for International Settlements (BIS), the central banks’ central bank, says ‘Capital flows could reverse quickly when interest rates in the advanced economies eventually go up or when perceived domestic conditions in the host economies deteriorate. In May and June 2013, the mere possibility that the Federal Reserve would begin tapering its asset purchases led to rapid outflows from funds investing in EME securities’ (BIS, 84th Annual Report, 2014, p. 76, http://www.bis.org/publ/arpdf/ar201…)

The BIS brings to light a worrying trend: financial companies that invest part of their assets in EMEs do so in the short term. They can swiftly withdraw their funds if they discover other profitable avenues. The BIS says, ‘A higher proportion of investors with short-term horizons in EME debt could amplify shocks when global conditions deteriorate. Highly volatile fund flows to EMEs indicate that some investors view their investments in these markets as short-term positions rather than long-term holdings. This is in line with the gradual shift from traditional open or close-end funds to exchange- traded funds (ETFs), which now account for around a fifth of all net assets of dedicated EME bond and equity funds, up from around 2% 10 years ago… ETFs can be bought and sold on exchanges at a low cost, at least in normal times, and have been used by investors to convert illiquid securities into liquid instruments.’ (BIS, 84th Annual Report, 2014, p. 77, http://www.bis.org/publ/arpdf/ar201…).

In short, the wellbeing of the EMEs depends a great deal on the policy followed by the most industrialised economies (especially the US, Europe, and Japan). A hike in interest rates in the US may result in a significant outflow of volatile capital invested in EMEs with higher returns in mind.

In addition, roughly 10% of the debt securities maturing from 2020 or later are callable, and an unknown proportion have covenants that allow investors to demand accelerated repayment if the borrower’s conditions deteriorate.’ (BIS, 84th Annual Report, 2014, p. 76. http://www.bis.org/publ/arpdf/ar201…) This means that financial companies that purchased debt securities maturing in a relatively distant future (2020 or later) can demand accelerated and full repayment from a crisis-hit country. Obviously, this can only aggravate the situation of an indebted country: all inflows will stop simultaneously. This is another reason why the populations of developing nations need to be aware of the serious dangers posed by their country’s public debt. Payment of the illegitimate portion of the debt must be challenged immediately.

The decline in revenues from raw material exports is another factor that might lead to a fresh and acute debt crisis in developing countries, since China – a major consumer of raw materials for its manufacturing industry – has reduced its huge imports. A drop in the price of raw materials can be fatal to the economic health of developing countries, which depend mainly on exports. In this respect, raw materials prices might also drop if the Fed increases interest rates, as this reduces speculation responsible for high prices. The combined effect of a hike in interest rates and a decline in raw material prices could produce a situation similar to what happened in the early 1980s, when the debt crisis exploded in developing countries. It is imperative to learn from that crisis and to act, so that the Southern people do not have to foot the bill again.

18. Vulture funds |37|

Public debt has become the target of the speculative strategies of ‘litigating creditors, known as ‘vulture funds’. These are private investment funds, most of them located in tax havens, which specialise in buying up debt securities from States that are in default or on the verge of default. They then sue these States in the courts of English-speaking countries, demanding that they reimburse their debt at its nominal value, with the addition of interest, penalties for late payment, and court costs. Unlike traditional creditors, they refuse to participate in any negotiation and restructuring operation, preferring judicial solutions, and in case of non-payment, seizure of debtors’ assets (diplomatic properties, revenues from exports, and various assets invested abroad). Since the 2000s, some twenty States that are among the most heavily indebted on the planet have fallen prey to these strategies, in South America (Argentina, Nicaragua, Honduras, and Peru) and Africa (Sierra Leone, the Republic of the Congo, and Uganda), during major judicial-financial battles that are still in progress today. Since 2007, the phenomenon has been directed against countries in Southern Europe (Greece, Spain, and Portugal). In the future, vulture strategies are likely to prosper in the South and North. Newly issued debts continue to be placed under American or British law, which is favourable to creditors, and certain countries are again contracting debt on the international capital markets and show a preference for indebtedness to China, which will encourage future debt repurchases on secondary markets.

Argentina was in the spotlight in 2014, when the US Supreme Court rejected an appeal by the Argentine government, and ruled in favour of the vulture funds NML and Aurelius, forcing Argentina to pay them $1.33 billion. Argentina adopted a law on 10 September 2014 aimed at providing it with a mechanism to defend itself against vulture funds. The CADTM would like to point out, however, that the best defence against them consists in refusing to recognise the competence of foreign courts in settling claims with creditors and inserting a clause in contracts stipulating that the local courts have jurisdiction.

19. Citizen audits

In recent years, movements have developed to work towards conducting a citizen audit to identify illegitimate, odious, and illegal debts. These movements in several countries |38| provide an opportunity for interesting and enriching reflection to clarify which parts of public debt should not be paid. With no claim to being exhaustive, we can propose the following definitions:

a) Illegitimate public debt: debt contracted by government authorities with no concern for the general interest or in such a way as to be detrimental to it.

b) Illegal public debt: debt contracted by the government authorities in flagrant violation of the prevailing legal order.

c) Odious public debt: credits extended to authoritarian regimes or which impose conditions for reimbursement that violate fundamental social rights.

d) Unsustainable public debt: debt whose reimbursement condemns the people of a country to impoverishment and deterioration of health and public education, increased unemployment, or problems of malnutrition. In other words, debt whose reimbursement makes it impossible for government authorities to guarantee fundamental human rights.

A citizen audit of public debt, combined in certain cases with unilateral sovereign suspension of its payment, can enable the illegitimate, unsustainable, and/or illegal part of the debt to be abolished/repudiated and the remaining part to be greatly reduced. It is also a way of discouraging this type of indebtedness in the future.

20. By way of conclusion: the impact of the ‘debt system’ – more topical than ever

The ‘debt system’ exploits public resources to pay creditors, to the detriment of people’s needs and fundamental rights. The relationship between creditors and debtors is therefore terribly unbalanced in favour of the former. One aspect common to the Latin American external debt crisis that erupted in 1982 and the euro crisis since 2010 is that in both cases the first reaction was to deny the evidence and do nothing. Subsequently, the measures taken are set up in favour of the creditors’ interests. In order to try to inverse the public deficit trend and thus be able to pay off the debt, adjustment or austerity policies are applied, whatever the price to be paid by the people, who are victims of the crisis. The creditors, supported by local elites, demand that the debt be reimbursed and that the adjustments be made to prioritise this repayment instead of all social needs, thus negatively affecting people’s most basic rights. The measures put in place also prove to be counter-productive, because they only make the problem worse. Excessive indebtedness becomes a structural problem.

The ‘debt system’ aggravates inequalities. Debt enables a privileged minority to monopolise a series of financial revenues that enable it to increase its wealth permanently. By consequence, the State loses resources necessary to satisfy people’s fundamental needs. The richest minority accumulates wealth, inequalities grow, and the increased power of the few enables them to exert greater pressure on public authorities with regard to policies. The rise in debt, and its concentration in a few hands, leads to a redistribution of income in favour of the richest members of society, which in turn is both the cause and consequence of heavier exploitation of labour and natural resources. In response, the CADTM, together with other organisations, argues that it is essential to audit public debt under citizen control in order to clarify its origins and determine which part should be considered illegitimate and/or illegal and therefore cancelled.

However, the CADTM is denouncing the entire debt system. It is the same mechanisms of domination and exploitation that govern public debts and illegitimate private debts, respectively subjugating people as collective subjects and as lower social class individuals (indebted small-scale farmers, families expelled from their homes by banks, women trapped by the micro-credit system in Southern countries, over-indebted students, etc.)

Of course, cancelling all illegitimate debts needs to be backed by other measures. For example, the socialisation of the banking and insurance sector to transform it into a public service, a radical reform of the tax system in favour of the overwhelming majority of the population, the expropriation of the energy sector and transformation into a public service, a radical reduction of working hours combined with job creation and increases in salary and social benefits, the improvement and extension of public services, the improvement of redistributive retirement pension systems, effective equality between men and women, and radical political reforms including changed constitutional processes. The aim is for these measures to be part of a vast plan for social, ecological, and political transition in order to get out of the devastating capitalist system. The struggle against the ‘debt system’ as a whole, more necessary than ever in both southern and northern countries, is part of the much broader-based struggle for a world freed from all forms of oppression and exploitation.


Translation by Christine, Snake, Mike, Charlie and Adam. Thanks a lot to all of them !

Footnotes

|1| For want of space, some aspects of the crisis, such as the climate crisis, are merely mentioned. The text does not cover every aspect of the international context. N.B. all figures are expressed in US dollars = $, unless specified.

|2| Éric Toussaint, Bank of the South An alternative to the IMF World Bank (CADTM, 2014). Available on line: http://www.scribd.com/doc/235391487…. We can also mention the massive and victorious mobilisation of the Argentine people in December 2001 in order to oust Fernando De la Rua’s neoliberal government.

|3| The CADTM participated directly in the presidential commission that led the audit of the Ecuadorian debt. Éric Toussaint, « An III de la révolution citoyenne en Équateur », 22 October 2009, http://cadtm.org/An-III-de-la-revol… (not available in English).

|4| Éric Toussaint, « Les leçons de l’Équateur pour l’annulation de la dette illégitime », 29 May 2013, http://cadtm.org/Les-lecons-de-l-Eq… (not available in English). Recently, however, Ecuador’s government seems to have shifted back to a more traditional (and harmful) approach: loans from China, a first loan from the World Bank (since 2005) in 2014, new issue of Ecuadorian securities on the financial markets led by Citibank and Crédit Suisse. This is worrying.

|5| This was a reversal of the previous trend. Generally speaking, the prices of raw materials dropped sharply as of 1981 and remained low until 2003-2004.

|6| Note on terms used: In the text that follows, the terms ‘developing countries’ (DCs) and ‘developed countries’ are simply the terms already used by the international institutions– because most of the data analysed comes from these institutions. The terms used to designate the countries targeted for World Bank development loans have changed throughout the years. At first, they were known as ‘backward regions’, then ‘under-developed countries’, and finally, ‘developing countries’, some of which are now called ‘emerging countries’. Nonetheless, it is important to recall the ideological and Western-centric connotations of this terminology. Indeed, essentially it takes into account only the economic dimension of development, and implies that there is only one model of development (the Western industrial and ‘extractivist’ capitalist model), and that certain countries are ‘behind’ and must catch up with other countries who are ‘further ahead’. The CADTM vehemently rejects this vision of the world. Likewise, when we make use of the terms such as ‘Southern countries’ and ‘Northern countries’, we are conscious that they are incorrect from a strictly geographic point of view.

|7| Bank for International Settlements (BIS), 84th Annual Report 2014, Basel, June 2014, p. 102, table V.1. Annual changes in foreign exchange reserves.

|8| Calculated by CADTM on the basis of US Treasury Department data, Major foreign holders of treasury securities, March 2014,  http://www.treasury.gov/ticdata/Pub…

|9| See the yields published by the US Treasury: http://www.treasury.gov/resource-ce… (accessed 24 September 2014 ).

|10| The IMF has, however, succeeded in returning to the forefront of the scene in western Europe with the crisis that has severely affected the weakest Eurozone countries (Greece, Ireland, Portugal, Cyprus, Slovenia, and two Baltic Republics, Estonia and Latvia).

|11| Bank for International Settlements (BIS), 84th Annual Report 2014, op.cit.

|12| See Daniel Munevar’s (CADTM economist) critical analysis, ‘BRICS Bank: Is it an alternative for development finance?’, 28 July 2014, http://cadtm.org/BRICS-Bank-Is-it-a…. See also, Benito Pérez/Éric Toussaint, ‘The alternative, would be a Bank of the South, not the BRICS Bank’, interview of Éric Toussaint, Le Courrier, 19 August 2014 (http://cadtm.org/The-alternative-wo…).

|13| Inter-American Development Bank (IADB), Latin American Macro Watch Data Tool. http://www.iadb.org. The data for Argentina’s debt correspond to 2012 instead of 2013.

|14| That is what happened between May and December 2013 for countries such as Turkey, Indonesia, and Brazil.

|15| In the case of Brazil, in 2014, government officials borrowed from private banks at an interest rate of 11%, while inflation was 6.5 %, which means hefty profits for the bankers.

|16| Éric Toussaint, ‘Une fois encore sur les causes de la crise alimentaire,’ (‘More on the causes of the food crisis’), 9 October 2008, http://cadtm.org/Une-fois-encore-su… (in French). See also: Damien Millet and Éric Toussaint, ‘Pourquoi une faim galopante au XXIe siècle et comment l’éradiquer ?’ (‘Why is hunger still rampant in the 21st century and how to eliminate it?’), 24 April 2009, http://cadtm.org/Pourquoi-une-faim-… (in French); Éric Toussaint, ‘Banks speculate on raw materials and food’, 10 February 2014, http://cadtm.org/Banks-speculate-on…

|17| Éric De Ruest and Renaud Duterme, La dette cachée de l’économie, Paris: Les Liens qui Libèrent, 2014. See  http://cadtm.org/La-dette-cachee-de… (in French).

|18| Éric Toussaint, « Du Sud au Nord : crise de la dette et programmes d’ajustement », 4 June 2014, http://cadtm.org/Du-Sud-au-Nord-cri… (not available in English).

|19| Éric Toussaint, ‘Bankocracy: from the Venetian Republic to Mario Draghi and Goldman Sachs’, 11 November 2013, http://cadtm.org/Nouvelle-traductio…

|20https://wcd.coe.int/com.instranet.I…

|21| ILO Global Wage Report 2012-2013, Executive Summary, Geneva, December 2012.

|22| ILO, ibidem, pp. VI-VII.

|23| ILO, ibidem, p. VII. The same report also underscores the increasing differences between low and high incomes in each country.

|24| UNCTAD, Trade and development report 2013, United Nations, New York and Geneva, 2013, p.15. Available at http://unctad.org/en/PublicationsLi…

|25| According to Law in India, normally, if the head of a family dies, his debt cannot be transmitted to his family. This is one of the reasons some Indian agricultural smallholders commit suicide hoping to thus free their families from debt. However, this does not always work in practice. Swallowing pesticides is one of the most common methods used to commit suicide. It is also worth nothing that outside India, in Europe, especially in France there is an alarming rate of suicide among small farmers.

|26| Éric Toussaint, ‘Banks and the New “Too Big to Jail” Doctrine’, 9 March 2014, http://cadtm.org/Banks-and-the-New-…; ‘Bank abuses in the real estate sector and illegal foreclosures in the United States’, 4 April 2014, http://cadtm.org/Bank-abuses-in-the…

|27| In November 2014, the key interest rate of the US Federal Reserve stands at 0.25 %, that of the European Central Bank is 0.05 %, the Bank of England 0.5 %. The rate of the Bank of Japan has been 0% since the country entered a crisis in 1990.

|28| For raw materials, the price of a barrel of oil dropped significantly from May to November 2014. As I am writing these lines on 9 November 2014, the price of a barrel of oil was $105 on 1 May, 2014 and reached its lowest level in 13 years on 7 November 2014 ($83 dollars). As for interest rates, since June 2014 the US Federal Reserve has been suggesting they will soon increase. Although the Fed’s key rate is very low today (0.25%), the situation must be monitored closely. To that effect, see point 17 about what happened in 2013 when the economies of certain emerging countries were strongly shaken up.

|29| This is the estimate provide by the Bank of International Settlements (BIS): 84th Annual Report, op.cit., p. 10, Figure I.1. (June 2014)

|30| Bank of International Settlements (BIS), Ibidem, page 17.

|31| World Bank, International Debt Statistics, http://databank.worldbank.org/data/…

|32| World Bank, op.cit. Debt servicing is the total amount of repayments for interest and capital.

|33| The Fed has bought huge amounts of Mortgage-Backed Securities (MBS) from US banks. Its purchases of such assets between 2008 and early 2014 were worth more than $1.5 trillion. During 2012-2013, it purchased toxic assets worth $40 billion per month from banks and real estate agencies that guarantee mortgages, to reduce their burden. By the end of 2013, it started to make fewer purchases, which went up to $35 billion per month by March 2014. By October 2014, the Fed was holding $1.7 trillion in MBS, or about 21% of the total volume of such assets, an enormous amount. The Fed finally stopped purchasing MBS in November 2014.

|34| By October 2014, the Fed was holding US Treasury Securities worth $2.45 trillion. Please note, contrary to popular belief, the Fed does not buy Treasury Securities directly from the Treasury, it buys them through open market operations from private banks which had acquired them previously. See the US laws on this matter: http://www.federalreserve.gov/about…

|35| The Bank for International Settlements (BIS) describes this situation as follows: – ‘The first episode was abrupt and generalised in nature, with sharp asset price movements ending a period of fairly stable interest and exchange rates. As the sell-off spilled over from advanced economies, EMEs experienced a sharp reversal of portfolio flows, especially in June 2013. . . EME equities fell by 16% before stabilising in July, and sovereign bond yields jumped more than 100 basis points, driven by rising concerns over sovereign risk… At first, the indiscriminate retrenchment from EMEs affected many currencies simultaneously, leading to correlated depreciations amid high volatility. The currencies of Brazil, India, Indonesia, South Africa and Turkey depreciated by more than 10% against the US dollar during the first episode…. Brazil, India, Indonesia and Russia each lost more than $10 billion in reserves. Countries with rapid credit growth, high inflation or large current account deficits were seen as more vulnerable and experienced sharper depreciations.’ (BIS, 84th Annual Report, 2014, pp. 27-28). http://www.bis.org/publ/arpdf/ar201…

|36| For an analysis of what happened in 2013, please read Daniel Munevar’s “Inestabilidad en los mercados emergentes: El fin de un ciclo?” available only in Spanish here : http://cadtm.org/Inestabilidad-en-l… (1st part) and http://cadtm.org/Inestabilidad-en-l… (2nd part).

|37| I would like to thank Louise Abellard for her contribution to this point.

|38| Brazil, Spain, Portugal, France, Belgium, and others.

Éric Toussaint is a historian with a doctoral degree in political science. He is the spokesperson for CADTM International, and the author of several books translated into English, including Bankocracy (Merlin Press, 2015), The Life and Crimes of an Exemplary Man (CADTM, 2014), A Glance in the Rear View Mirror. Neoliberal Ideology from its Origins to the Present (Haymarket Books, Chicago, 2012), and The World Bank: A Critical Primer (Pluto Press, London, 2008).

Nov 212013
 

Posted by greydogg, 99GetSmart

* PLUTOCRACY AND CORRUPTION: HARMING THE AVERAGE U.S. CITIZEN

In today’s society, plutocracy and political corruption go hand in hand, especially in Washington.

By Margaret Elkis, EconomyInCrisis

plutocrat2

Simply put, plutocracy is a government ruled controlled by wealthy individuals. It is no secret that wealth buys power, and that is exactly what we are seeing today. Unfortunately, with wealth and power often comes corruption. Author J.R. Martin stated in chapter nine of his book, Selling U.S. Out, that political scandal and corruption are not new. They have always existed. Indeed, all one has to do is read the news to learn of the corruption and greed taking place between the big players of our government:

  • political parties: Republicans and Democrats
  • lobbyists and overpaid consultants
  • the mainstream media

Over the past forty years, power, money and greed have corrupted our elected government officials at every level. What’s most alarming is that the blatant corruption has been tolerated and accepted by the American people. Unfortunately, members of both parties act as if their jobs are nothing more than a big political game. They’re so focused on insulting the other side and getting their own agendas passed that they forget they’re supposed to be working for the U.S. public.

As J.R. Martin writes:

“Neither party represents the interests of the American people since both are controlled by foreign and domestic corporations and special interest groups that provide the majority of their funding…both parties practice dishonest, divisive politics aimed at dividing and manipulating public opinion instead of seeking to build an honest national consensus on important issues confronting our nation.” […]

READ @ http://economyincrisis.org/content/plutocracy-corruption-harming-the-average-u-s-citizen

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* FAKE EMPLOYMENT NUMBERS – AND 5 MORE MASSIVE ECONOMIC LIES THE GOVERNMENT IS TELLING YOU

By Michael Snyder, TheEconomicCollapse

Employment-Population-Ratio-November-20131-425x255

According to a whistleblower that has recently come forward, Census employees have been faking and manipulating U.S. employment numbers for years.  In fact, it is being alleged that this manipulation was a significant reason for why the official unemployment rate dipped sharply just before the last presidential election.  What you are about to read is incredibly disturbing.  The numbers that the American people depend upon to make important decisions are being faked.  But should we be surprised by this?  After all, Barack Obama has been caught telling dozens of major lies over the past five years.  At this point it is incredible that there are any Americans that still trust anything that comes out of his mouth.  And of course it is not just Obama that has been lying to us.  Corruption and deception are rampant throughout the entire federal government, and this has been the case for years.  Now that some light is being shed on this, hopefully the American people will respond with overwhelming outrage and disgust.

The whistleblower that I mentioned above has been speaking to John Crudele of the New York Post.  In his new article entitled “Census ‘faked’ 2012 election jobs report“, he says that the huge decline in the unemployment rate in September 2012 was “manipulated”…

In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington.

The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated. […]

READ @ http://theeconomiccollapseblog.com/archives/fake-employment-numbers-and-5-more-massive-economic-lies-the-government-is-telling-you

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* THE EURO CRISIS AND THE CONTRADICTIONS BETWEEN COUNTRIES IN THE PERIPHERY AND CENTER OF THE EUROPEAN UNION

By Eric Toussaint, CADTM

2010-2011_Greek_protests_collage

The crisis that started in the United States in 2007-2008, hit the European Union head on in 2008, and has been causing major problems in the eurozone since 2010. |2| Banks from the strongest European countries are responsible for spreading this plague from the United States to Europe, because they had invested massively in structured financial products. It is important to explain why this crisis has struck the European Union and the eurozone harder than the United States.

18 of the 28 countries in the European Union share a common currency, the euro. |3| The population of the EU is about 500 million people, |4| about half the population of China, Africa, or India, 2/3 of Latin America, and 50% more than the USA.

There are major differences between countries in the European Union. Germany, the United Kingdom, France, the Netherlands, Italy, Belgium, and Austria are the most highly industrialised and powerful countries in the EU. 11 countries are from the ex-Eastern European bloc (3 Baltic Republics — Estonia, Lithuania, and Latvia; Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, and Romania, which were part of the Soviet bloc, and Slovenia and Croatia, which were part of Yugoslavia). Finally, come Greece, Portugal, Ireland, Spain, and Cyprus, which have been brutalised by the eurozone crisis.

Large private corporations are taking advantage of wage discrepancies

Wage discrepancies are very significant: the minimum wage in Bulgaria (in 2013, the gross monthly salary is 156 euros) is less than one tenth of what it is in countries like France, Belgium, and the Netherlands. |5| Wage discrepancies within European Union countries can also be very significant. In Germany, 7.5 million employees earn a paltry monthly salary of 400 euros, whereas the normal monthly salary in Germany is more than 1200 euros (there is no national legal minimum wage in Germany).

This discrepancy enables major European corporations, particularly German industrial corporations to be very competitive, because they outsource part of their production to countries like Bulgaria, Romania or to other Central and Eastern European countries, and then transport the parts back to Germany where they are assembled into final products. Finally, they export within the EU or to the global market after having cut the cost of wages to the bone. To top it all off, they pay no import/export taxes within the EU. […]

READ @ http://cadtm.org/The-euro-crisis-and-contradictions

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* FROM IRELAND TO GREECE: EUROPE’S YOUTH TAKE THE CUTS

The recent decision by the Irish government to cut jobseekers’ allowance for under-25s is just the latest in a series of discriminatory policies against young people that have been introduced in Europe in the last few years.

By James Higgins, CafeBabel

7253b452-fd2c-11df-b83c-00144feab49a.img

It’s not easy to be young in Europe these days, particularly if you are among the 5.5 million young people in the EU that are unemployed. With the scourge of youth unemployment constantly in the headlines, and increasing demands for concerted action, governments are hitting back. But instead of focusing all their energy on the labour market inequalities, financial corruption, greed and cronyism that created and exacerbated the crisis, some are hitting back at the young people themselves.

Like it or lump it

On 16 October the Irish government announced that it would reduce jobseekers’ allowance for new entrants aged under-25 to €100 per week as part of its budget for 2014. People aged 25 will also get a reduced rate of €144, and only those aged 26 and upwards will get the full jobseekers’ rate of €188. In the Dáil (Irish parliament) some of the opposition parties and independents expressed concern at these measures, which smack of discrimination. Thankfully parliamentarians on the government benches explained that they wanted to ‘incentivise’ youth employment, and save young people from lying around watching flat-screen TVs all day. To make such a comment about any another age group would be unthinkable, but it seems that young people are fair game.

The National Youth Council of Ireland have labelled the cuts “disproportionate and unfair” and have warned that they will create further hardship for young jobseekers and accelerate the number of young people emigrating from the country. Shortly after the budget was announced, youth campaigners formed a mock airport queue outside the Irish parliament to compel the government to reverse the decision, but the protests fell on deaf ears. Young people would have to like it or lump it. […]

READ @ http://www.cafebabel.co.uk/society/article/from-ireland-to-greece-europes-youth-take-the-cuts.html

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* BARCLAYS BANK ‘HELPS’ AFRICA LOSE MORE IN TAX AVOIDANCE EACH YEAR THAN IT GAINS IN AID

Source: ScriptoniteDaily

DSC01189_3

Every  year, tax avoidance costs the continent of Africa lost revenues of $63bn a year.  This is more than Africa receives in overseas development aid – and enough to deliver the UN Millennium Goals of universal primary education, universal healthcare, and upgrade Africa’s entire road network.  Instead, banks are helping to spirit this money into offshore tax havens.  Barclays Bank is the largest retail bank in Africa, and today ActionAid is launching a campaign to tell Barclays to clean up its act on tax havens.

Why is Africa so Poor?

Africa suffers extreme poverty, and by some measures things are getting worse.  Between 1990 and 2011, the number of new born babies dying rose from 1 million to 1.1million a year, and the number of hungry people rose from 175 million to 239 million.

Much of this poverty and destitution is as a result of the myth of development.  Western creditor nations (mostly ex-colonial) extended credit to African nations in the name of ‘development’, after the Second World War.  In reality, it was merely to keep a surplus of petro-dollars making more money from the interest on loan payments, than in savings accounts during a time of high inflations (which would wipe the value).  Later, when the interest rates became unpayable – the creditor nations offered ‘bridging loans’ often to despots, with extraordinary interest rates and conditions attached. These loans were called ‘Structural Adjustment Programmes’ and administered through the IMF.  This became know as the Debt Trap – and once you understand the Debt Trap, you immediately see the concept of ‘development’ as a myth.  The West is not helping to develop Africa, Africa is helping to develop the West.

This comment from Martin Griffiths in International Relations: The Key Concepts summerises the issue perfectly:

“Between 1982 and 1990 $927bn was advanced to debtor states, but $1,345bn were remitted in debt service alone. The debtor states began the 1990’s 60% more in debt than they were in 1982. Sub-Saharan Africa’s debt more than doubled in this period.  When the issue of debt forgiveness is raised, Western banks have argued that it would create what economists call ‘moral hazard’ – failing to honour debts would simply encourage poor states to keep borrowing in the expectation that they would never have to repay their debts.  On the other hand, some commentators argue that moral hazard should cut both ways.  Over borrowing is over lending, and creditors should pay their fair share of the costs of mistakes made in the 70’s.

By 1997 Third World Debt totalled over $2.2trn.  The same year $250bn was repaid in interest and loan principal. The debt trap represents a continuing humanitarian disaster for some 700 million of the world poorest people.  During the last decade, the world’s most heavily indebted continent, Africa, has experienced falling life expectancies, falling incomes, falling investment levels and rising infant and maternal mortality rates” (Griffiths, 2008) […]

READ @ http://www.scriptonitedaily.com/2013/11/20/barclays-bank-helps-africa-lose-more-in-tax-avoidance-each-year-than-it-gains-in-aid/

Aug 072013
 

Posted by greydogg, 99GetSmart

* FIRST CONGRESSMAN ALLOWED TO READ SECRET TREATY SAYS, “THIS … HANDS THE SOVEREIGNTY OF OUR COUNTRY OVER TO CORPORATE INTERESTS”

By Tyler Durden, zerohedge

[…] Yesterday, Congressman Alan Grayson (who knows how to read legislation … he was a successful lawyer before he was elected to Congress, and has written and co-sponsored numerous bills himself including the bill to audit the Federal Reserve and – most recently – the “Mind Your Own Business Act” to stop NSA spying) announced that he had been allowed to read the text of TPP – and that it is  an anti-American power grab by big corporations:

Last month, 10,000 of us submitted comments to the United States Trade Representative (USTR), in which we objected to new so-called free trade agreements. We asked that the government not sell out our democracy to corporate interests.

Because of this pressure, the USTR  finally let a member of Congress – little ole me, Alan Grayson [anyone who's seen Grayson in action knows that he is formidable] – actually see the text of the Trans-Pacific Partnership (TPP). The TPP is a large, secret trade agreement that is being negotiated with many countries in East Asia and South America.

The TPP is nicknamed “NAFTA on steroids.”  Now that I’ve read it, I can see why. I can’t tell you what’s in the agreement, because the U.S. Trade Representative calls it classified. But I can tell you two things about it.

1)    There is no national security purpose in keeping this text secret.

2)    This agreement hands the sovereignty of our country over to corporate interests.

3)    What they can’t afford to tell the American public is that [the rest of this sentence is classified].

***

I will be fighting this agreement with everything I’ve got. And I know you’ll be there every step of the way.

***

Courage,

Congressman Alan Grayson

Grayson also noted:

It is ironic in a way that the government thinks it’s alright to have a record of every single call that an American makes, but not alright for an American citizen to know what sovereign powers the government is negotiating away.

***

Having seen what I’ve seen, I would characterize this as a gross abrogation of American sovereignty. And I would further characterize it as a punch in the face to the middle class of America. I think that’s fair to say from what I’ve seen so far. But I’m not allowed to tell you why!

Remember that one of the best definitions of fascism – the one used by Mussolini – is the “merger of state and corporate power”. Our nation has been moving in that direction for a number of years, where government and giant corporations are becoming more and more intertwined in a malignant, symbiotic relationship.   TPP would be the nail in the coffin for free market economics and democracy.

Note to progressives who support public banking: This is a key battle.

Note to those who oppose to what they call “one world government” or a “new world order”: This is the big fight.

READ / VIDEO @ http://www.zerohedge.com/contributed/2013-06-19/first-congressman-allowed-read-secret-treaty-says-“-hands-sovereignty-our-cou

MORE INFO ON THE TRANS PACIFIC PARTNERSHIP AGREEMENT (TPP) @ http://99getsmart.com/?p=3715

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* 8 WAYS PRIVATIZATION HAS FAILED AMERICA

By Paul Buchheit, CommonDreams

Privatization is fascism repackaged

Privatization is fascism repackaged

Some of America’s leading news analysts are beginning to recognize the fallacy of the “free market.” Said Ted Koppel, “We are privatizing ourselves into one disaster after another.” Fareed Zakaria admitted, “I am a big fan of the free market…But precisely because it is so powerful, in places where it doesn’t work well, it can cause huge distortions.” They’re right. A little analysis reveals that privatization doesn’t seem to work in any of the areas vital to the American public.

Health Care

Our private health care system is by far the most expensive system in the developed world. Forty-two percent of sick Americans skipped doctor’s visits and/or medication purchases in 2011 because of excessive costs. The price of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany. Some of the documented tales: a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars; an $8,000 special stress test for which Medicare would have paid $554; and a $60,000 gall bladder operation, which was covered for $2,000 under a private policy. […]

Water

A Citigroup economist gushed, “Water as an asset class will, in my view, become eventually the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals.”

A 2009 analysis of water and sewer utilities by Food and Water Watch found that private companies charge up to 80 percent more for water and 100 percent more for sewer services. A more recent study confirms that privatization will generally “increase the long-term costs borne by the public.” Privatization is “shortsighted, irresponsible and costly.” […]

READ @ http://www.commondreams.org/view/2013/08/05

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* A 280,000% MARK UP FOR … WATER? A LOOK INSIDE THE BOTTLED WATER INDUSTRY

By Tyler Durden, zerohedge

fijibottledwater-copy-62

Imagine there was a time when bottled water didn’t exist in our catalog of popular commodities. Perhaps the trend started in 1976 when the chic French sparkling water, Perrier made its introduction. There it was seductively bottled in its emerald green glass amongst the era of disco and the spectacle of excesses… who could resist right?! What could be more decadent than to package, sell and consume what most consider (in the western world) a common human right easily supplied through a home faucet! It’s absurd that the cost of designer water is at a “280,000% markup” to your tap water and it’s reaching record heights in consumption.

15 The Beginning of the Insanity

It wasn’t until the 1990s when bottled H2O became an everyday common sight and a symbol of our cultural desire towards fitness and “health-consciousness”. Even today health enthusiasts claim drinking water often helps to “detox and boost the metabolism!”

There have been controversies about chemicals leeching into the water from the soft plastic material of bottles, but the FDA determined the containers “do not pose a health risk to consumers.” IBISWorld reports that the “U.S. is the largest consumer for bottled water in the world, followed by Mexico, China, and Brazil”.

14 The Bottled Water Scheme 

Regular drinking water competes with itself in a bottle, but reviewing the cost difference, you’ve got to wonder why or how? As for the water piped into your home or work place, it costs less than one penny per gallon! Fairfax Water organization, (FCWA) states, “The average price of water in the U.S. is about $1.50 for 1,000 gallons.”

Let’s look at your favorite 20 oz. bottled H2O, it will run you up to $3 per bottle at the corner convenience store and up to $4 at a posh restaurant or nightclub. If you buy bulk at Costo or other markets, the price averages are .31 cents per bottle, but that still remains enormously expensive when compared to tap water. Granted many don’t like tap water quality, but modern technology allows for an array of water filters.

In the mid-1990s, soda companies found that the niche market for bottled water could be huge, why not? The profits were obvious! Pepsi and Coca-Cola jumped into a race with their brands Aquafina and Dasani; they led the way to making bottled water what it is today. […]

READ @ http://www.zerohedge.com/news/2013-07-29/280000-mark-water-look-inside-bottled-water-industry

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* BANKS: FUDGED HEALTH REPORT

By Eric Toussaint, CADTM

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Part 9 of the series : Series: Banks versus the People: the Underside of a Rigged Game! and follow up of Banks bluff in a completely legal way, published the 19 June available here.

Neoliberal euphoria and Basel II

The Basel II accords were drafted at a time of neoliberal euphoria when capitalist bankers had obtained the cancellation of the few prudential rules that still remained from the 1930 Great Depression.

Basel II coincided with Alan Greenspan, chairman of the Federal Reserve, the US central bank, |1| speechifying about the ability of financial markets to regulate themselves and recommending the suppression of any constraint that still shackled the said bankers’ ‘creativity’.

The Basel II accords were implemented in 2004-2005, just before the outbreak of the financial crisis in 2007, and are still valid in 2013-2014. The Basel III accords that were drafted in 2010 as the crisis was deepening, and revised in 2011, |2| are still only at the stage of interpretation and negotiation. They are not to be fully implemented until 2018-2019. This is why it is really worth beginning by taking the time to understand the Basel II accords, whereas most commentators focus on the Basel III measures as though they were already effective. Supervising authorities, governments in cahoots with major private banks, and most of the media attempt to convince citizens that constraints have been imposed on the finance industry. This is a lie. As we shall see even the Basel III measures will not really change the slack regulations that allow banks to act as they please. Indeed banks will still be able to cook their books and fiddle their health reports thanks to the system whereby their assets are weighted relative to the degree of risk. They will also be allowed to legally trade off the balance sheet, and thus be prompted to take more risks. These two facts alone are enough to undermine the array of small measures that have been widely and loudly advertised. To show how harsh the Basel III standards are, banks grumble and try to get the authorities to soften the measures or delay their implementation. This is just taking the public for a ride. Leaders and supervisory authorities show how complicit they are with large private banks.

Before we turn to Basel III, let us examine the Basel II accords that are currently effective. […]

READ @ http://cadtm.org/Banks-Fudged-health-report

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* REDISTRIBUTING WEALTH IS THE WRONG WAY TO FIX A RIGGED GAME

By Conor Friedersdorf, The Atlantic

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In my review of Twilight of the Elites, Chris Hayes’s thoughtful critique of American meritocracy, I largely agreed with his contention that the current system is frequently rigged by those at the top.

How should that be fixed? I’d prefer a polity constantly attuned to abuses of power and committed to tweaking the rules of the game in a constant effort to make them as neutral, fair, and equitable as possible. With apologies for the violence a one-sentence summary necessarily does to a subtle, book-length argument, Hayes emphasized the need for affirmative action and redistribution of wealth. Discouraged about the prospects of remedying unfairness, he wanted to address its consequences, causing me to worry that alleviating the symptoms would make the disease easier to ignore.

As I put it at the time:

If rich Americans are gaming the system to illegitimately increase their wealth, if they are pulling up the ladder so that they can never be replaced as elites, if they are too socially distant from the people over whose lives they wield great influence, and if they aren’t even punished like regular people when they break the rules, surely there are urgent policy changes needed that are a lot more targeted to reforming the elite than ‘raise their taxes and spread the wealth.’

Better to eliminate ill-gotten gains than to redistribute them. […]

READ @ http://www.theatlantic.com/politics/archive/2013/08/redistributing-wealth-is-the-wrong-way-to-fix-a-rigged-game/278391/

Aug 032013
 

Posted by greydogg, 99GetSmart

* BOMBSHELL: PLUTOCRATS BRAZENLY COLLUDE TO HURT STATE ECONOMIES AND SCREW WORKING PEOPLE

By Lynn Parramore, AlterNet

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Illinois fatcats discuss plan to sabotage state bond ratings in scheme to destroy pensions.

These days, many Americans walk around feeling like no matter how hard they work, how much they manage to save or how carefully they plan for the future, the game is rigged against them. They suspect that behind closed doors, CEOs and Wall Street honchos are eagerly scheming to rip them off.

Their worst fears of corruption and collusion just came true in Illinois, where corporate titans were caught red-handed in the act of Rigging the Game.

Let’s step inside a recent gathering of the corporate-backed Union League Club of Chicago, where former Illinois Attorney General Ty Fahner, who now leads a band of plutocrats known as the “Civic Committee of the Commercial Club of Chicago,” recently launched into an hour-long diatribe on the evils of state pensions.

Fahner, a top GOP fundraiser, can’t abide the notion that teachers, firefighters, nurses and other public workers in the state of Illinois can still expect a decent retirement. Not a luxurious retirement, mind you — the average pension is $32,000 a year, and most state employees will not receive Social Security. But even a modest retirement for hard-working people is too much for today’s fatcats.

Fahner is part of a virulent strain of public raiders and economic crackpots who have become dominant in the Republican Party (and increasingly among the Democrats, too) who are hell-bent on destroying unions and attacking public employees. Ultimately they wish to privatize everything and reduce their tax responsibilities down to nothing.

That’s why Fahner has declared war on pensions and is promoting a pension crisis in order to justify it. He has called for cost of living cuts, raising the retirement age, capping pension earnings and shifting the cost of the pension obligation of teachers to local school districtsmany of which are too poor ever to payHe styles himself as a savior who wants only to protect the public from debt, when in reality he is a brutal plutocrat who will stop at nothing to line his pockets at public expense and reduce his and his friends’ taxes.

Illinois has real problems. However, Fahner desperately hopes the public will not catch on to the fact that states are having difficulty paying out pensions because of the lack of revenue caused by a Wall Street-driven financial crisis and the deep recession it set off, regressive taxes, and the myriad bond scams financiers have already inflicted on states, cities, towns, and municipalities which have triggered funding crises for pensions and other programs. (See “How Wall Street Fraudsters Plunder Public Finances, And 5 Ways to Fight Back.”)

Fahner has tried a number of dirty tricks to attack pensions in his career. But his most recent admission is absolutely breathtaking in its brazenness: He boasted of working to scam the Illinois bond rating.

During Fahner’s talk to the Union League Club, an unidentified person in the audience suggested that pressuring credit agencies to rig the state bond ratings in order to attack pensions might be a jolly good idea. Fahner gleefully replied that he had already thought about that — and his group has tried it.

Audience member: “Maybe sometimes you gotta be irresponsible to be responsible. If a political solution really doesn’t produce a favorable outcome, maybe you really need a market solution. And a market solution, I don’t mean bankruptcy, I mean actually talking down the state rating even further so the state’s bonds essentially become below investment grade. And it drives up the borrowing cost to the state and all of us to a significant level enough that you really feel the public pressure…”

Fahner: “The Civic Committee, not me, but me and some of the people that make up the Civic Committee… did meet with and call – in one case in person – and a couple of calls to Moody’s and Fitch and Standard & Poors, and say, How in the hell can you guys do this?”

Fahner went on to take credit for downgrades to Illinois credit ratings, saying, “If you watch what happened in the last few years, it’s been steadily down.” […]

READ @ http://truth-out.org/opinion/item/17917-bombshell-plutocrats-brazenly-collude-to-hurt-state-economies-and-screw-working-people

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* CHICAGO NEXT? WINDY CITY CASH BALANCE PLUMMETS TO ONLY $33 MILLION AS DEBT TRIPLES

By Tyler Durden, zerohedge

Chicago Mayor / neoliberal tool, Rahm Emmanuel

Chicago Mayor / neoliberal tool, Rahm Emmanuel

While everyone’s attention is focused on the Detroit bankruptcy, and just what assets the city will sell in lieu of raising a DIP loan, perhaps it is time to refocus attention to the city 300 miles west: Chicago. According to the Chicago Sun Times citing year-end audits, Obama’s former right hand man, Rahm Emanuel, closed the books on 2012 with $33.4 million in unallocated cash on hand — down from $167 million the year before — while adding to the mountain of debt piled on Chicago taxpayers. In addition to a liquidity problem, Chicago may also be quite insolvent as the city’s total long-term debt soared to nearly $29 billion. That’s $10,780 for every one of the city’s nearly 2.69 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338 per resident. Of course, in a world in which debt is “wealth”, this is great news… at least until debt becomes “bankruptcy.”

Ironically last year, now-retiring City Comptroller Amer Ahmad argued that the city’s debt load was not “troubling” because, “We still have a very strong bond rating. Our fiscal position is getting better every year and we are aggressively managing our liabilities and obligations” (very much awhat the ECB’s Mario Draghi tells the world when he gives the periodic monthly update of European capital markets during the central bank’s press conference). It is ironic because last week, Moody’s downgraded Chicago from Aa3 to A3 in an unprecedented three notch cut in the city’s bond rating, citing Chicago’s “very large and growing” pension liabilities, “significant” debt service payments, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Emanuel.

Moody’s noted that the city’s total fund balance at the close of 2012 was $231.3 million and that Chicago has just $625 million in “leased asset reserves.” Had the city fully funded its $1.5 billion “actuarially required contribution” to its four under-funded city employee pension funds in 2012 alone, “these two reserves would have been entirely depleted,” Moody’s said.

The “unassigned” balance is $33.4 million. Experts recommend a cash cushion of at least $200 million for a budget the size of Chicago’s, according to the Civic Federation. The city ended 2009 with an unallocated checkbook balance of just $2.7 million. […]

READ @ http://www.zerohedge.com/news/2013-07-28/chicago-next-windy-city-cash-balance-plum

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* BANKS VERSUS THE PEOPLE: THE UNDERSIDE OF A RIGGED GAME! (PART 1)

By Eric Toussaint, CADTM, London Progressive Journal

Translation: “Snake” Arbusto

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Since 2007-2008, the major central banks (the ECB, Bank of England, the “Fed” in the USA, and the Swiss National Bank) have been making it their absolute priority to attempt to avoid a collapse of the private banking system. Contrary to what has been said more or less everywhere, the principal risk threatening the banks is not that a government will suspend payment of sovereign debt |1|.

None of the bank failures since 2007 have been caused by that kind of payment default. None of the bank bailouts organized by the various governments has been made necessary by suspension of payment by an over-indebted State. What has threatened the banks since 2007 is the structured private-debt holdings they have gradually built up since the major deregulations, which began in the late 1970s and culminated during the 1990s. The balance sheets of private banks are still packed with bad assets |2] which range from completely toxic assets – veritable time bombs – to non-liquid assets (meaning they cannot be sold or shifted on financial markets), and include assets of which the value is completely over-estimated in the banks’ balance sheets. The sales and depreciations of assets banks have booked until now in order to reduce the weight of these explosive assets have been insufficient. A significant number of them depend on short-term financing (either provided or guaranteed by the Public Authorities with taxpayers’ money) to stay afloat |3] and handle debts that are themselves short-term. That explains why the Franco-Belgian bank Dexia, which in fact amounts to a very large hedge fund, has been on the brink of bankruptcy three times in four years – in October 2008, in October 2011 |4|, and again in October 2012. During the most recent episode, in early November 2012, the French and Belgian governments provided aid amounting to 5.5 billion euros (53% of which was borne by Belgium) to recapitalize Dexia SA, a moribund financial company whose equity has melted away.

According to Le Soir: “The equity of the Dexia parent company dropped from 19.2 billion to 2.7 billion euros between the end of 2010 and the end of 2011. And at group level, total equity has become negative (-2.3 billion euros on 30 June 2012).” At the end of 2011, Dexia SA’s immediately outstanding debts amounted to 413 billion euros, and the amounts due under derivative contracts stood at 461 billion. Added together, those two figures amount to more than 2.5 times Belgium’s GDP! And yet Dexia’s senior executives, Belgian vice-prime minister Didier Reynders, and the dominant media are still claiming that the problem afflicting Dexia SA is largely caused by the sovereign debt crisis in the southern part of the Euro zone. The truth is that Dexia SA’s holdings in Greece did not amount to more than 2 billion euros in October 2011 – 200 times less than the amount of its immediately outstanding debts. In October 2012, Dexia’s shares were worth approximately 0.18 Euros – 100 times less than in September 2008. Despite this, the French and Belgian governments have decided once again to bail out this uncharitable organization at the cost of increasing the public debt in their own countries. In Spain, the near failure of Bankia was also caused by unsound financial packages, and not by a default on the part of any government. Since 2008, the same scenario has been replayed at least thirty times in Europe and the United States. Each time, the public authorities have come to the aid of the private banks (as they systematically do) by financing their bailouts with government debt.

Return to the beginning of the crisis in 2007

The gigantic private-debt house of cards began to collapse when the speculative real-estate bubble in the United States burst (followed by Ireland, the UK, Spain, etc.). The real-estate bubble burst in the United States when the price of homes, of which there was an oversupply, began to fall because more and more homes were without buyers.

The interpretations given by the mainstream media were dominated by partial – or deliberately fallacious – explanations for the crisis that struck the United States in 2007 and had a tremendous contagious effect, mainly on Western Europe. Regularly in 2007 and during the better part of 2008, it was explained to the public that the crisis had started in the United States because low-income people had gone into too much debt to acquire homes they were not able to pay for. Irrational behavior on the part of the poor was pointed to as the cause of the crisis. But beginning in late September 2008, after the failure of Lehmann Brothers, the dominant narrative changed and the finger was pointed at certain black sheep of the world of finance who had perverted the virtuous operation of capitalism. But the lies and partial explanations continued to circulate. Low-income families were no longer responsible for the crisis; it was the rotten apples in the capitalist class – Bernard Madoff, who put together a 50-billion-dollar swindle, or Richard Fuld, the boss of Lehmann Brothers.

The beginnings of the crisis go back to 2006, when the drop in real-estate prices began in the United States, caused by overproduction, itself caused by the speculative bubble that inflated real-estate prices and drove the construction sector to overheat and increase its activity far in excess of solvent demand. The collapse of real-estate prices is what caused the increase in the number of households unable to meet their payments on subprime mortgages. In the United States, households often refinance their mortgages after 2 or 3 years when home prices are trending upward in order to get more favorable terms (especially since, in the subprime-loan sector, the credit rate for the first two or three years was low and fixed, around 3%, before increasing sharply and becoming variable in the third or fourth year). When real-estate prices began to drop in 2006, households who had contracted subprime loans were no longer able to refinance their home loans favorably, and payment defaults began to multiply greatly starting in early 2007, causing the failure of 84 mortgage companies in the USA between January and August 2007.

As is very often the case, whereas the crisis is explained simplistically by the bursting of a speculative bubble, in reality the cause lies both in the production sector and in speculation. Of course, the fact that a bubble was created and eventually burst only multiplies the effects of a crisis that began with production. The entire rickety structure of subprime loans and structured products that had been under construction since the mid-1990s, collapsed, which had terrible repercussions on production in various sectors of the real economy. Austerity policies then amplified the phenomenon further by leading to the extended period of recession-depression in which the economies of the most industrialised countries are now floundering.

The impact of the real-estate crisis in the United States and the banking crisis that followed has had an enormous contagious effect internationally, due to the fact that numerous European banks had invested massively in US structured products and derivatives. Since the 1990s, growth in the United States and in several European economies had been supported by hypertrophy of the private financial sector and by a huge increase in private debt – household debt |5] and debts of financial and non-financial companies. On the other hand, public debt had tended to decrease between the second half of the 1990s and 2007-2008.

Thus there was a hypertrophy of the private financial sector. The volume of assets of European private banks compared to gross domestic product ballooned extraordinarily beginning in the 1990s to reach 3.5 times the GDP of the 27 member countries of the European Union in 2011 |6|. In Ireland in 2011, banks’ assets amounted to eight times the country’s gross domestic product.

The debts of the private banks |7] in the Euro zone also amounted to 3.5 times the Zone’s GDP. Debt in the British financial sector has reached unheard-of heights in proportion to the GDP – it is 11 times greater, whereas public debt represents approximately 80% of GDP.
The gross public debt of the countries of the Euro zone amounted to 86% of the GDP of the 17 member countries in 2011 |8|.

Greek public debt was 162% of Greece’s GDP in 2011, while debts in its financial sector amounted to 311% of GDP – double the amount of public debt. Spain’s public debt was 62% of GDP in 2011, whereas debts in the financial sector were at 203%, or three times the amount of public debt. […]

READ @ http://londonprogressivejournal.com/article/view/1559/banks-versus-the-people-the-underside-of-a-rigged-game-

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* PLUTOCRACY AND CORRUPTION: HARMING THE AVERAGE U.S. CITIZEN

By Margaret Elkis, EconomyInCrisis

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In today’s society, plutocracy and political corruption go hand in hand, especially in Washington.

Simply put, plutocracy is a government ruled controlled by wealthy individuals. It is no secret that wealth buys power, and that is exactly what we are seeing today. Unfortunately, with wealth and power often comes corruption. Author J.R. Martin stated in chapter nine of his book, Selling U.S. Out, that political scandal and corruption are not new. They have always existed. Indeed, all one has to do is read the news to learn of the corruption and greed taking place between the big players of our government:

  • political parties: Republicans and Democrats
  • lobbyists and overpaid consultants
  • the mainstream media

Over the past forty years, power, money and greed have corrupted our elected government officials at every level. What’s most alarming is that the blatant corruption has been tolerated and accepted by the American people. Unfortunately, members of both parties act as if their jobs are nothing more than a big political game. They’re so focused on insulting the other side and getting their own agendas passed that they forget they’re supposed to be working for the U.S. public.

As J.R. Martin writes:

“Neither party represents the interests of the American people since both are controlled by foreign and domestic corporations and special interest groups that provide the majority of their funding…both parties practice dishonest, divisive politics aimed at dividing and manipulating public opinion instead of seeking to build an honest national consensus on important issues confronting our nation.” […]

READ @ http://economyincrisis.org/content/plutocracy-corruption-harming-the-average-u-s-citizen

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* 44 FACTS ABOUT THE DEATH OF THE MIDDLE CLASS THAT OBAMA SHOULD KNOW

By Michael Snyder, The Economic Collapse blog

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As Obama parades around middle-America, promoting hope-and-change amid a “Better-Bargain for the middle-class,” it seemed only appropriate to lay out a few ‘facts’ before his next pronouncement …

What is America going to look like when the middle class is dead?  Once upon a time, the United States has the largest and most vibrant middle class in the history of the world.  When I was growing up, it seemed like almost everyone was “middle class” and it was very rare to hear of someone that was out of work.  Of course life wasn’t perfect, but most families owned a home, most families had more than one vehicle, and most families could afford nice vacations and save for retirement at the same time.  Sadly, things have dramatically changed in America since that time.

There just aren’t as many “middle class jobs” as there used to be.  In fact, just six years ago there were about six million more full-time jobs in our economy than there are right now.  Those jobs are being replaced by part-time jobs and temp jobs.  The number one employer in America today is Wal-Mart and the number two employer in America today is a temp agency (Kelly Services).  But you can’t support a family on those kinds of jobs.  We live at a time when incomes are going down but the cost of living just keeps going up.

As a result, the middle class in America is being absolutely shredded and the ranks of the poor are steadily growing.  The following are 44 facts about the death of the middle class that every American should know…

1. According to one recent survey, “four out of five U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives”.

2. The growth rate of real disposable personal income is the lowest that it has been in decades.

3. Median household income (adjusted for inflation) has fallen by 7.8 percent since the year 2000.

4. According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.

5. The home ownership rate in the United States is the lowest that it has been in 18 years.

6. It is more expensive to rent a home in America than ever before.  In fact, median asking rent for vacant rental units just hit a brand new all-time record high.

7. According to one recent survey, 76 percent of all Americans are living paycheck to paycheck.

8. The U.S. economy actually lost 240,000 full-time jobs last month, and the number of full-time workers in the United States is now about 6 million below the old record that was set back in 2007.

9. The largest employer in the United States right now is Wal-Mart.  The second largest employer in the United States right now is a temp agency (Kelly Services).

10. One out of every ten jobs in the United States is now filled through a temp agency.

11. According to the Social Security Administration, 40 percent of all workers in the United States make less than $20,000 a year. […]

READ @ http://www.zerohedge.com/news/2013-07-31/44-facts-about-death-middle-class-obama-should-know-about

Jul 012013
 

By Nilton Viana, CADTM

João Pedro Stédile Interviewed by Brasil de Fato

arton9257-a407bBrasil de Fato — It is time for the government to ally itself with the people or pay the price in the future. This is one of the evaluations of João Pedro Stedile, national coordinator of the Movement of Landless Rural Workers (MST) on the recent mobilisations across the country.

According to Stédile, there is an urban crisis installed in Brazilian cities, provoked by the current stage of financial capitalism. “For people, large cities have becoming a living hell where they lose three or four hours a day in transit, which they could instead be using to spend with their family, studying or participating in cultural activities”, he says. For the MST leader, reducing public transport fare prices was of great interest to all the people and this was what the Free Fare Movement got right by calling for mobilisation on behalf of the interests of the people.

In this exclusive interview with Brasil de Fato, Stédile talks about the character of these mobilisations, and puts a call out: we must be conscious of the nature of these protests and go all out onto the street to fight for hearts and minds and politicise this youth who have no experience of class struggle. “The youth are tired of this way of doing bourgeois and money-driven politics”, he notes. And he issues a warning: the worst thing is that the parties of the institutional left, all of them, have adapted to these methods. Old and bureaucratised. Popular forces and leftist parties need to put all their energies to going out onto the street, because in every city, in every protest, there is now an ongoing ideological dispute between different class interests. “We need to explain to the people who are the main enemies of the people.”

Brasil de Fato: What is your analysis of the protests that have shaken Brazil in the last few weeks? What are the economic roots of these events?

Joao Pedro Stédile: There have been many opinions as to why these protests occurred. I agree with the analysis of Professor Erminia Maricato, who is one of our best specialists in urban issues and has worked in the Ministry of Cities under Olivio Dutra. She defends the thesis that there is an urban crisis in Brazil’s cities, a result of the current stage of financial capitalism. Due to an enormous amount of housing speculation, rent and land prices have increased 150% in the last three years. Without any government control, financial capital has promoted the sales of cars in order to send profits overseas and transformed our traffic into chaos. And in the last 10 years there has been no investment in public transport. The housing program “My home, my life” has driven the poor out to the periphery of the cities, where there is no infrastructure.

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All this has generated a structural crisis where for people, large cities have becoming a living hell where they lose three or four hours a day in transit, which they could instead be using to spend with their family, studying or participating in cultural activities. Added to this is the poor quality of public services, especially health and education, from the primary and secondary level, where children leave without being able to write. And university education has become a business, where of 70% of university students’ diplomas are sold on credit.

And from the political point of view, why did this occur?

Fifteen years of neoliberalism plus the last 10 years of a government of class conciliation has transformed politics into a hostage of capital’s interests. Parties became old in their way of functioning and have been transformed into mere acronyms that mainly bring together opportunists interested in winning public posts or fighting over public resources for their own interests.

All the young people who were born after the right-wing parties were no longer in government have not had the opportunity to participate in politics. Today, to compete for any public post, for example, to become a local councillor, a person needs to have more than 1 million reales; to become a deputy costs around 10 million. The capitalist pay and the politicians obey. The youth are tired of this way of doing bourgeois and money-driven politics.

The worst thing is that the parties of the institutional left, all of them, adapted themselves to these methods. Which is what has generated repulsion towards the way parties behave among the youth. Young people are not apolitical; on the contrary, they are so much so that they took politics to the streets, even if they were not conscious of what this signified. But what they were saying is that they no longer tolerate seeing these political practices on television, seeing peoples’ votes taken hostage by lies and manipulation.

And why did the protests only explode now?

It was probably more a product of diverse factors regarding the psychology of the masses, than the result of some pre-planned political decision. We have the climate created by everything I have talked about, as well as the denunciations of corruption in relation of the stadiums being built, which was a provocation for the people. For example: Red Globo received 20 million reales of public money from the state government of Rio and the mayor’s office to organise a show of barely two hours around the match draw for the Confederations Cup. The stadium in Brasilia cost 1400 million and there are no buses in the city!

It is an explicit dictatorship that FIFA has imposed and all the government have subordinated themselves to.

The reinauguration of the Maracaná was a slap in the face of the Brazilian people. The photos were clear, in the most important temple of world football, there was not a single black or mestizo person!

And the increase in bus fares was the straw that broke the camel’s back. It was the spark that set alight the generalised sentiment of revolt, of indignation. Finally, the youth have stood up.

Why has the working class still not come out onto the streets?

It’s true; the working class has still not come out onto the streets. Those who have come out onto the streets are the children of the middle class, of the lower middle class and some youth of what Andre Singer calls the sub-proletariat, who study and work in the service sector, who have improved their purchasing power, but who want to be heard.

Reducing the fare was of great interest to all the people, and therein lies the success of the “free fare” movement, which knew how to call protests that were held in the name of the interests of the people. And the people supported the protests, as was expressed in their level of popularity among the youth, above all when they were repressed.

The working class takes it time to mobilise, but once it moves, it directly affects capital. Something that has not happened yet. I believe that the organisations that act as mediators for the working class have still not comprehended the moment we are in and are a bit timid. But I believe that the class, as a class, is also willing to fight. Look at the number of strikes for wage increases which have returned to 1980s level. I think it’s just a question of time, and if the right demands are raised that can motivate the class to mobilise.

In the last few days, we have sensed that in some of the smaller cities and in the periphery of the larger cities, mobilisations with very localised demands have begun to emerge. And that is very important.

And the MST and campesinos also have not mobilised yet …

That’s true. In the capitals where we have settlements and farming families live close by, we are participating. Moreover, I witnessed the warm reception we received when we arrived with our red flag and our demand for land reform and cheap and health food for all. I believe that in the next weeks we could see even bigger numbers joining in, including through staging campesino protests in the streets and municipalities of the interior. Among our activists all of them are going crazy wanting to enter into the fight and mobilise. I hope they are able to move quickly …

What is your opinion as to the origins of the violence that has occurred in some of these demonstrations?

First, we should put this in context. The bourgeoisie, via its television stations, has used the tactic of scaring people by only broadcasting propaganda that shows troublemakers and rioters. They are a minority and insignificant in front of the thousands of people that are mobilising. The right wing has a vested interest in convincing people that all this simply amounts to chaos, and in the end, if there is chaos, put the blame on the government and demand the presence of the armed forces. I hope that the government does not commit the brutish crime of calling on the national guard and the armed forces to repress the protesters. That is exactly what the right is dreaming about!

The scenes of violence are being provoked by the way in which the military police are intervening. There are organised rightist groups that are focused on creating provocations and looting. In Sao Paulo, fascist groups are active in the protests. In Rio de Janeiro, the organised militias that protect conservative politicians are also involved. It is also evident that there is a layer of lumpens that turn up to any popular mobilisation, whether in the stadiums, carnivals, even church parties, and try to make the most of it for themselves.

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So we are faced with a class struggle in the streets or are we simply dealing with a youth that it demonstrating its indignation?

It is evident that there is a class struggle going on in the streets, even if for now it is at the level of an ideological dispute. What is worse is that the mobilised youth themselves, due to their class origins, are not conscious of the fact that they are participating in an ideological struggle.

Look, they are doing politics in the best way possible, in the streets. And they are writing on their placards: we are against parties and politics? That is why the messages on their placards have been so widely disseminated. In every city, in every protest, there is a permanent ideological dispute of struggle between class interests. There is a struggle to see if whether the ideas of the left or right will win over the youth. The ideas of the capitalists or the working class.

What are the objectives of the right and their proposals?

The ruling class, the capitalists and their ideological spokespeople whot appear on television every day have one big objective: wear down as much as possible the support for the Dilma [Rousseff] government, weaken the organisational forms of the working class, weaken the proposals for structural changes to Brazilian society and win the 2014 elections in order to reimpose their total hegemony over the command of the Brazilian state which is currently in dispute.

To achieve these objectives they are still testing, alternating their tactics. Sometimes they provoke violence in order to distract from the objectives of the youth. Sometimes they put messages on the placards of the youth. For example, in the demonstrations on June 22, even if small, in Sao Paulo it was totally manipulated by rightist sectors who put forward a sole focus on the struggle against PEC 37 [a proposal to amend the constitution and remove the power of the public ministry to investigate crimes], with the same placards … the exact same placards. No doubt the majority of the youth did not know what this was about. And it is a secondary issue with the working class, but the right wing is trying to raise the banner of morality, just like the National Democratic Union did in times gone by.

I have seen in the social media networks controlled by the right, that its banners are, as well as PEC 37: Expel Renan from the Senate, CPI [Commission of Parliamentary Inquiry] or transparency in spending on the World Cup; declare corruption to be a grave crime and put an end to the special protections for politicians. The fascist groups are already saying Dilma Out! and raising a number of accusations. Happily, these issues have nothing to do with the living conditions of the masses, even if the corporate media can manipulate them. And objectively, that are a shooting themselves in the foot. In the end, it is the Brazilian bourgeoisie, its business owners and politicians who are the most corrupt and corrupting. Who has appropriated the exaggerated spending on the World Cup? Red Globo and the contractor companies!

What are the challenges facing the working class, popular organisations and left parties?

There are many challenges. First, we must be conscious of the nature of these demonstrations and all go out onto the streets to fight for hearts and minds and politicise this youth that has no experience in the class struggle. Second, the working class needs to mobilise. Come out onto the streets, protest in the factories, farms and construction sites, as Geraldo Vandré would say. Raise their demands in order to resolve concrete problems of the class, from the political and economic viewpoint.

We need to take the initiative and guide public debate towards demanding the approval of laws to reduce the working week to 40 hours; demand that the priorities for public investment be health, education, land reform. But to do this the government must reduce interest rates and reallocate the resources from the primary surplus, those 200,000 million that each year go to only 20,000 rich people, rentiers and creditors of an internal debt that we never contracted, and reallocate them for productive and social investment.

It must approve an emergency decree so that for the next election a progressive political reform has been put in place, one that as a minimum institutes exclusive public funding for campaigns, the right to recall elected officials and the ability for the people to convoke popular referendums.

We need tax reform so that once again ICMS [a state sales tax] is paid on primary exports and the wealth of the rich is penalised while taxes are reduced for poor, who currently are the ones who pay more.

We need the government to suspend the auctioning off our oil and all private concessions for minerals and other public areas. There is no point investing all the royalties from oil in education if those royalties only represent 8% of the oil rent, and the remaining 92% goes to the transnational companies that will get control over the oil in these auctions!

A structural urban reform that once again prioritises quality and free public transport. It has already been proven that it will not be expensive or difficult to introduce free transport for the people in the capitals. And control housing speculation.

And finally, we need to make use of and approve a project for a national conference on media and communication, one that is broadly representative, to discuss democratising the media. To put an end to Globo’s monopoly, and ensure that the people and its popular organisations can have wide access to means for communication, to create their own media with public resources. I have heard from a diversity of youth movements that are organising the marches that perhaps this could be the one issue that unites them all: down with Globo’s monopoly!

But for these issues to reverberate more broadly in society and put pressure on the government and the politicians, we nee to mobilise the working class, this is the only way.

The social movements sent a letter asking to meet with President Dilma and she accepted and responded on television, what issues are you going to take to her?

I have faith that the meeting will happen soon. And there all of the social movements will send their young representatives that where in the streets, and will bring along a platform like the one I outlined. I hope that she has the sensibility to listen to the youth.

What should the government do now?

I hope that the government has the sensibility and intelligence to make use of this support, this clamour that is coming from the streets, which is simply a synthesis of a consciousness that exists more broadly in society that it is time to change. And change to benefit the people. For this, the government needs to confront the dominant class, in all aspects. Confront the rentier bourgeoisie, reallocating interest payments to investment in areas that resolve the problems of the people. Promote as soon as possible political and tax reforms. Sent in motion the approval of a law to democratise the media. Create mechanisms for massive investment in public transport, with the aim of making it free. Speed up land reform and a healthy food production plan for the internal market.

Guarantee the shift application of 10% of GDP towards public resources for education at all levels, from childcare centres in the big cities, quality primary education all the way to the universalisation of access to public university for young people.

Without this, people will feel deceived, and the government will have handed over the initiative over demands to the right, which will lead to new protests aimed at wearing down support for the government up until the 2014 elections. It is time for the government to align itself with the people, or pay the price in the future.

And what perspectives could these mobilisations bring for the country in the next few months?

Everything is still unknown. Because the youth and the masses are in dispute. That is why popular forces and leftist parties have to put all their energies towards coming out onto the streets. Protest, push to raise as banners of struggle demands that are in the interests of the people. Because the right will do the same, raising its conservative, backward demands of criminalisation and stigmatisation of the ideas of social change.

We are in the midst of an ideological battle, one which no one knows what the result will be. In each city, each protest, we need to fight for hearts and minds. And those that remain on the sideline, will be sidelined in history.

Translated for Links International Journal of Socialist Renewal by Federico Fuentes

May 062013
 

Posted by greydogg, 99GetSmart

* THERE’S A REVOLUTION AND IT’S NOT BEING TELEVISED

By David Swanson, NewClearVision

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Hundreds gathered in Dallas to reject the Bush Lie Bury, and three went to jail.  I flew from Dallas to Syracuse, where hundreds protested Obama’s drone-murder program, and 32 went to jail and are still there (and will stay until trial unless bail can be raised)

some of them risk major jail time because they violated a protective order that the commander of a U.S. military base gained to protect himself from nonviolent peace activists.  Another drone protester in Missouri, Brian Terrell, is just finishing a six-month sentence.  Climate activist Tim DeChristopher just got out.  The people locked in Guantanamo are refusing to eat, and groups around the world are making plans to fast with them.  The people of Vieques, Puerto Rico, rallied on May 1st to demand that the U.S. military truly depart their island.  Big plans are being made to rally for Bradley Manning on June 1st.  This week I’m heading to the National War Tax Resistance Coordinating Committee’s meeting in North Carolina, after which — just over in Tennessee — three courageous activists go on trial, facing major time in prison, for having entered and protested a nuclear weapons facility.

The revolution will not be televised.

Oak Ridge, Tenn., was created during World War II as a secret city (actually two, it was segregated by race) for producing nuclear weapons.  Nuclear weapons have a history that marches hand-in-hand with U.S. human experimentation programs.  I just had a chance to read Susan Griffin’s A Chorus of Stones, and she recounts a nuclear test in 1957, when the U.S. government was still marching Marines to various distances from nuclear explosions in Nevada to find out what would become of them.  Marines with their eyes closed saw the bones in their hands.  They died of leukemia years later, but not before speaking about what else they saw: 10 or 12 people in a stockade formed by chain link fence and barbed wire, their faces and hands deformed, their hair falling out, their skin peeling off. Or this: men on the ground in agony, the smell of burning flesh, blood running from mouth, ears, and nose, a man trying to tear away wires that had been attached to his head. […]

READ @ http://www.newclearvision.com/2013/05/02/the-fruit-of-justice/

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* WHAT TO DO ABOUT DEBT AND THE EURO

By Michel Husson, Daniel Albarracín, Nacho Álvarez Peralta, Bibiana Medialdea, Francisco Louça, Mariana Mortagua, Stavros Tombazos, Giorgos Galanis, Ozlem Onaran, Manolo Garí,, Antonio Sanabria, Jorge Fonseca, Teresa Pérez del Río, Lidia Rekagorri Villar, CADTM

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A manifesto

Daniel Albarracín, Nacho Álvarez, Bibiana Medialdea, Manolo Garí, Antonio Sanabria, Jorge Fonseca, Teresa Pérez del Río, Lidia Rekagorri Villar (Spain)
Francisco Louçã, Mariana Mortagua (Portugal)
Stavros Tombazos (Cyprus)
Giorgos Galanis, Özlem Onaran (Great Britain)
Michel Husson (France)

To sign the manifesto

The crisis

Europe is sinking into crisis and social regression under the pressure of austerity, recession and the strategy of “structural reforms”. This pressure is tightly coordinated at the European level, under the leadership of the German Government, the ECB and the European Commission. There is a broad consensus that these policies are absurd and even “illiterate”: fiscal austerity does not reduce the burden of the debt but generates a spiral of depression, more unemployment and despair among the European peoples.

Yet, these policies are rational from the point of view of the bourgeoisie. They are a brutal way – a shock therapy – for restoring the profits, for guaranteeing the financial rents and for implementing the neoliberal counter-reforms. What is going on is fundamentally the validation by the states of the financial claims on future production and GDP. That is why the crisis takes the form of a sovereign debt crisis.

A false dilemma

This crisis reveals that the previous neoliberal project for Europe was not viable. It presupposed that the European economies were more homogeneous than they actually are. Differences between countries increased due to their place in the global market, to their sensitivity to the euro exchange rate. Inflation rates didn’t converge and low real interest rates favored intense capital flows among countries and financial and housing bubbles. All these contradictions – exacerbated with the implementation of the monetary union – existed before the crisis but they have exploded with the speculative attacks against the sovereign debts of the most exposed countries.

The social and popular alternatives to this crisis require a daring refoundation of Europe, because European and international cooperation are required for the reconstruction of the industrial pattern, the ecological sustainability and the employment structure. But as such a global refoundation seems out of reach in the immediate relationship of forces, the exit from euro is proposed as an immediate solution in different countries. The dilemma seems to be between a risky ‘exit’ from the eurozone and a utopian European harmonization emerging out of the workers’ struggles. In our view, this is a false dichotomy and it is important to work for a viable political strategy for the immediate confrontation. Any social transformation implies the questioning of dominant social interests, their privileges and their power and it is true that this confrontation takes place primarily within a national framework. But the resistance of the dominant classes and their possible retaliatory measures exceed the national framework. The strategy of leaving the euro does not necessarily concentrate on this effort for a European alternative and in this sense, a strategy of rupture with “euroliberalism” is required in order to generate the means for an alternative policy. This text is not about the program for this rupture but rather concentrates on means to implement such a program.

What should a left government do?

We are in the midst of what can be technically called a “balance-sheet crisis”. This is a crisis triggered by private sector deleveraging and debt minimization, caused by the accumulation of an enormous amount of fictitious assets, not backed with real fundamentals. In practical words, it means that citizens have to pay for the debt or in other terms validate the claims of the finance on current and future production and taxes. The European states, in an action strictly coordinated at European and even at the global level, have decided to nationalize the private debts by converting them into sovereign debt and to impose austerity and transfer policies in order to pay for such debts. It is the justification, the motivation and the opportunity for the implementation of “structural reforms” whose objectives are classically neoliberal, shrinking the public services of the welfare state, cutting social spending and flexibilizing the labour markets, in order to lower the direct and indirect wage.

In our view, the political strategy of the left must concentrate on the fight for a majority for a left government, able to get rid of this straightjacket. […]

READ @ http://cadtm.org/What-to-do-about-the-debt-and-the

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* CORRUPT GOVERNMENT OFFICIALS – MANY OF WHOM ARE ATHEISTS – USE THE MOST EXTREME FORMS OF RELIGION TO DIVIDE AND CONQUER US

Source: Washington’s Blog

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Preface: Fundamentalist Christians, Jews and Muslims all think they are in a “holy war” against the other guy. As shown below, fundamentalists are being manipulated by the powers-that-be – many of whom are actually atheists – as part of a divide-and-conquer strategy to disempower people.

The 2,000 Year Old Strategy

The strategy of dividing and conquering one’s foes is ancient.

Ancient Roman emperor Julius Cesar successfully used it thousands of years ago.

The application of the strategy in controlling one’s own people – divide and rule – has been used for just as long. As Wikipedia notes:

Elements of this technique involve:

  • creating or encouraging divisions among the subjects to prevent alliances that could challenge the sovereign
  • aiding and promoting those who are willing to cooperate with the sovereign
  • fostering distrust and enmity between local rulers [or groups]
  • encouraging meaningless expenditures that reduce the capability for political [organization or opposition] …..

In discussing the use of “divide and rule” in the U.S., Wikipedia discusses the “Use of left-right politics“.

Indeed – even though the Founding Fathers warned us against the danger of a two-party system to divide the nation – left-right partisan divisions have successfully been deployed to distract and weaken the American people for centuries.

Religion has been used for the same purpose:

England invaded Ireland in 1170, but for the first 439 years it was a conquest in name only. In 1609, however, James I founded the Plantation of Ulster, imported 20,000 Protestant settlers, and introduced religious strife as a political tactic. By favoring Protestants over the native Catholics in politics and economics-the so-called “Ulster Privilege-the English pitted both groups against one another.

The tactic was enormously successful, and England used it throughout its colonial empire. Nowhere were the British so successful in transplanting the Irish model than in India. […]

READ @ http://www.washingtonsblog.com/2013/05/when-religion-is-used-to-divide-and-conquer-us.html

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* 3 TROUBLING THINGS TO KNOW ABOUT BILLIONAIRE PENNY PRITZKER

By David Moberg, InTheseTimes

On May 2, 2013, in the White House Rose Garden, U.S. President Barack Obama announces his nominee for Secretary of Commerce, Hyatt hotel heir Penny Pritzker. (SAUL LOEB/AFP/Getty Images)

On May 2, 2013, in the White House Rose Garden, U.S. President Barack Obama announces his nominee for Secretary of Commerce, Hyatt hotel heir Penny Pritzker. (SAUL LOEB/AFP/Getty Images)

Despite her business-friendly history, billionaire heir Penny Pritzker, President Obama’s nominee for Secretary of Commerce, will likely face standard Republican flak in her Senate confirmation hearings.

But progressive Democrats are the ones with real reasons to be upset with her record and that of her family, which is among the wealthiest in America. Here are just a few:

1) Union-busting. Pritzker’s family businesses have often engaged in anti-union practices. She is a director of the Hyatt Hotels, which fired and then replaced long-time room cleaners in its Boston hotels with non-union subcontracted workers. Hyatt has refused to settle several contract disputes with UNITE HERE, some lasting nearly four years, on terms similar to those accepted by other big hoteliers.

2) Conflicts of interest. The family’s $20 billion empire was built on a diverse base of businesses, including Hyatt, Marmon (an industrial conglomerate), the TransUnion credit rating agency, and many others in industries such as container leasing, insurance and travel.

The family has long had a reputation for not only accumulating its wealth through elaborate schemes of tax evasion, including offshore accounts, but also for using its political clout to win favored treatment.

For example, community and teacher union critics berated Pritzker, who recently resigned from the Chicago Board of Education, for supporting the closing of dozens of public schools because of financial pressures. At the same time, the highly profitable Hyatt was receiving financial assistance from a Tax Increment Finance fund (a pool of money intended to support blighted neighborhoods in the city) whose assets effectively had been diverted from support of the schools.  Pritzker also has drawn fire for her leading role in promoting privately operated charter schools, including networks of non-profits to which she has contributed.

While some Pritzkers support Republicans, others, like Penny, are active patrons of corporate-oriented Democrats. Penny Pritzker, who knew Obama before he ran for president, served as financial chair of his first campaign and is credited with bringing in millions of dollars in donations. Many observers see her appointment to the relatively weak—if symbolically still important—commerce post as typical campaign spoils for big contributors.

But if she is approved, it will burnish her reputation and increase her potential influence. The Pritzkers, who have contributed large sums to education, medicine, architecture and the arts in their hometown of Chicago and elsewhere, gain protection from the fallout of their questionable business practices through their public image as philanthropists.

3) Shady business dealings. The Pritzkers have a long history of business malfeasance at the expense of people of modest means. In one notable case, Congress passed legislation in 2003 to address issues raised by widespread charges that the Pritzker’s credit rating agency, TransUnion, had made serious flaws in its credit reports on individuals—and then failed to correct them upon discovery. […]

READ @ https://inthesetimes.com/article/14948/3_troubling_things_about_billionaire_penny_pritzker/

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* HERO OF THE AMERICAN LEFT, PROFESSOR NOAM CHOMSKY, DENOUNCES THE OBAMA ADMINISTRATION

By Sam Rolley Personal Liberty Digest

Professor Noam Chomsky

Professor Noam Chomsky

Notable left-wing polemicist Professor Noam Chomsky has made a career of writing and speaking out against government abuses of civil liberties in the United States and abroad. In the 2008 Presidential election, the professor endorsed Barack Obama but contended that the youthful Presidential candidate would have little positive or negative impact on civil liberty.

Chomsky now says he is surprised and disgusted by the current President’s inexplicable “attack” on civil liberties, which he said goes beyond anything he could have ever imagined.

In an interview, Chomsky told the liberal blog Alternet

I personally never expected anything of Obama, and wrote about it before the 2008 primaries. I thought it was smoke and mirrors. The one thing that did surprise me is his attack on civil liberties. They go well beyond anything I would have anticipated, and they don’t seem easy to explain. In many ways the worst is what you mention, Holder vs. Humanitarian Law Project. That’s an Obama initiative and it’s a very serious attack on civil liberties. He doesn’t gain anything from it — he doesn’t get any political mileage out of it. In fact, most people don’t even know about it, but what it does is extend the concept of “material assistance to terror” to speech. […]

READ @ http://personalliberty.com/2013/04/30/hero-of-the-american-left-professor-noam-chomsky-denounces-obama-administration/

Apr 302013
 

Posted by greydogg, 99GetSmart

* THE MANIFESTO OF THE MEDITERRANEAN MEETING IN TUNISIA

Source: CADTM

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We, the representatives of progressive political parties from the Mediterranean region, gathered in Tunis from March 23 to 24, 2013, at the call of the Popular Front, and adopted the following resolution.

1. – For more than a quarter of a century, neoliberal capitalist globalization has extended its dominance over the entire planet. The processes launched have accelerated the commodization of the world in favour of a minority and have confiscated peoples´ citizenship and nations´ sovereignty. They are exacerbating economic insecurity and social inequality in the North and South and further widening the gap between the rich countries and the so-called poor countries.

Peoples of the South are subjected to a particularly devastating regime of structural adjustment policies and free trade policies which impedes a fair development, destroys the environment and deprives them of their sovereignty, thus weakening them even more and exacerbating their dependence on dominant economic areas of the North.

The fate of humanity is now decided by a handful of transnational corporations and by the international financial institutions over which people have no control.

Since 2008, in the midst of a crisis of the world capitalist system, structural adjustment policies have been extended to the countries of the northern Mediterranean, the so-called contemptuously PIGS.

In Tunisia, these policies have been imposed since 1986 by the World Bank and the International Monetary Fund. In 1995, these were reinforced by the Association Agreement imposed by the European Union and its Member States. The political dictatorship has ensured the application of such policies.

At present, the various neoliberal capitalist globalization actors intend to carry on with these policies, trying to take advantage of the revolutionary crisis, by strengthening and expanding their scope. Thus they seek to block the path that leads to the development of aspirations and the desire for radical change massively expressed by the masses, particularly youth, during the revolutionary uprising of December- January 2011.

2. – The removal of the dictator has disarmed the local neoliberal capitalist order without reversing it have led to some progress. The social system which is the historical product of imperialist domination and, more recently, of the restructuring of the neoliberal capitalist world, is still standing. But the revolutionary crisis that initiated the insurgency remains active. The victory of the democratic, social and national revolution in Tunisia, as in other countries in the region, still remains a possibility.

3. - The Tunisian revolution marked the beginning of the Arab revolution. To date, four dictators, whose average time in power exceeded 30 years, have been eliminated. These political changes are, without a doubt, the most important occurrence that has taken place in the Arab region and Maghreb in decades. This is clearly a turning point in the history of Tunisia and the Arab region.

This is, in the proper sense of the term, a “historic” moment. In fact, for the first time in their history, the peoples of the Arab region, who have not stopped fighting, are standing up today against their direct oppressors, bursting onto the political scene to take hold of their destiny in their own hands.

4. – The debt -odious, illegitimate- used under the dictatorship as a tool for political submission and as a mechanism for the transfer of income from labour to local but above all to world capital, currently serves the counter-revolution to maintain the neo-colonial economy and imperialist domination in Tunisia. Furthermore, in Egypt, Morocco, Greece, Cyprus, the Spanish State and in many other countries of the Mediterranean basin, debt continues to serve the interests of a minority against the interests of the vast majority. It is everywhere, it is the pretext for the implementation of austerity policies imposed by international financial institutions and the capitalistic states that violate human rights.

5. – Everywhere, both in the North and the South, the same logics of profit, domination and destruction of the planet operate and continue to be imposed on the peoples and on nature. The Tunisian revolution, the Arab revolution, the heroic struggles of all peoples of the world against a neoliberal capitalist order, such as in Greece, Portugal, Catalonia, Basque country or the Spanish state, are the political founding acts of a new world order; one based on solidarity, that is democratic, feminist peaceful that ensures popular sovereignty and self-determination of the peoples and environmentally friendly- for which all our respective political parties are fighting.

6. – But standing in opposition of this popular will for a radical shift are the ruling classes, the transnationals and global finance institutions. They form a united front to counter-attack and to implement even more antisocial and undemocratic policies in order to break through this liberating popular impulse and momentum, and thus continue to make the costs of the global capitalist system crisis fall on the same shoulders, those of the working people and the planet.

7. – We, the representatives of progressive political parties from the Mediterranean region in the world, are convinced that we must unite our efforts and our actions, both regionally and internationally, to support and contribute to the struggles of the people and of the exploited and oppressed classes, in the region and worldwide, who yearn for freedom, dignity and social justice. We support the revolutionary struggle of the Syrian people to achieve freedom, democracy, social justice, equality and national dignity. We condemn any foreign intervention that goes against the achievement of these objectives.
In order to work together in this direction, we the progressive political parties from the Mediterranean region, that participated in this meeting in Tunisia against debt, austerity policies and imperialist domination, advocate for a free, democratic, social, solidarity-based and environmentally friendly Mediterranean region. We therefore commit to:

  • Support the process of mobilization and struggle of social movements, trade unions and social organizations for a citizen audit
  • Promote motions for non-payment of illegitimate debt and the external debt relief in the institutions in which we participate.
  • Incorporate in our political programs the NON payment of the illegitimate debt and the promotion of citizen audit and the support of the struggle for the sovereignty of peoples and self-determination.
  • Advance on the development of a network of mutual support between the nations to assist those who decided not to pay the illegitimate debt
  • Establish a permanent communication network for the exchange of information and experiences.
  • Develop a concrete cooperation aiming at developing tools for the struggle and mobilization necessary to achieve our goals.
  • Organize the next meeting in the Spanish State.

The progressive political parties in the Mediterranean region and other parts of the world that participated in the Tunisian Mediterranean Meeting welcomed the World Social Forum that was held in Tunis from March 26 to 30, and that allowed to advance towards the realization of the objectives enshrined in the Charter of Porto Alegre.

Finally, we strongly condemn the killing of Chokri Belaid, Secretary General of the Unified Democratic Patriotic Party and leader of the Popular Front, which we refer to as a political crime. We demand the truth to be told about all those involved in this heinous crime. […]

READ @ http://cadtm.org/The-Manifesto-of-the-Mediterranean

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* SCIENTIST CONFIRM! “AUSTERITY IS TOO BAD FOR YOUR HEALTH”

Source: KeepTalkingGreece

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Scientists confirm what we already know: that recession-driven austerity measures are not just bad for your wealth, they are also harming your health. It’s not only that your pockets are robbed causing sleepless nights, depression and heart attacks. The austerity cuts that primarily target the health sector boost infectious diseases as medicine and treatment become prohibitively expensive.

British scientists examined the impact of austerity to health issues and thus on the example of Greece and Great Britain.

The after-effects of the financial crisis is driving a wave of suicide, depression and infectious diseases as medicine and treatment become prohibitively expensive across Europe and North America, according to new research by academics.

After examining a decade of studies , Oxford University political economist David Stuckler and Sanjay Basu, an assistant professor of medicine and an epidemiologist at Stanford University, have concluded austerity is seriously bad for health.

More than 10,000 suicides and up to a million cases of depression have been diagnosed during what they call the “Great Recession” and the austerity that followed it , the pair conclude in a book due to be published this week.

They cite examples in Greece, which has seen the rate of the Aids-causing HIV virus increase by 200pc as the health budget have been cut. The more than 50pc youth unemployment rate has also seen drug abuse on the increase, hastening the spread of the virus.

Greece also experienced its first malaria outbreak in decades following budget cuts to mosquito-spraying programmes.

In Britain, the academics claim 10,000 families have been pushed into homelessness by the austerity budget, and in the US 5m people no longer have access to healthcare since the recession.

“Politicians need to take into account the serious – and in some cases profound – health consequences of economic choices,” said Mr Stuckler, a senior researcher at Oxford University and co-author The Body Economic: Why Austerity Kills.

“The harms we have found include HIV and malaria outbreaks, shortages of essential medicines, lost healthcare access, and an avoidable epidemic of alcohol abuse, depression and suicide,” he said in a statement. “Austerity is having a devastating effect.”

Previous studies by Mr Stuckler published in journals such as The Lancet and the British Medical Journal have linked rising suicide rates in some parts of Europe to austerity measures, and found HIV epidemics to be spreading amid cutbacks in services to vulnerable people.

But he and Mr Basu said negative public health effects are not inevitable, even during the worst economic disasters. (full story Telegraph)

 Greeks get really sick

Also Greek scientists have collected data on the impact of the austerity cuts on the people’s health. According to Christodoulos Stefanadis, cardiology professor at the University of Athens with experience at the country’s public hospitals:

Cardiovascular incidents increased by 20% in the last two years.

Increased is also the number of patients with high blood pressure.

One in six patients with cholesterol does not follow the prescribed treatment due to financial inability to come up with the self-participation  percentage on prescribed medicine.

Unemployment, stress at work and depression are risk factors for cardiovascular diseases equal to risk factors like smoking, lack of exercise and unhealthy eating habits. […]

READ @ http://www.keeptalkinggreece.com/2013/04/29/scientists-confirm-austerity-is-too-bad-for-your-health/

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* CIA’s ‘BAGS OF CASH’ FUELED AFGHAN CORRUPTION, BOUGHT LITTLE INFLUENCE

By Jason Ditz, Anti-War

A Decade Later, CIA Still Throwing Money at Karzai

afghan

If you’re a top Afghan official money comes awfully easy. For Afghan President Hamid Karzai, you don’t even have to ask for it or leave your office, and people will show up with plastic shopping bags full of cash for you.

The “sacks of cash” phenomenon was unveiled in 2010, when officials revealed that Iran was showing up with $1 million in cash a few times a year for Karzai. The US was and is doing it too. The CIA has notoriously been showing up all the time with “ghost money” aimed at buying influence.

“It came in secret, and it left in secret,” noted Karzai’s former chief of staff. Over a decade later, the cash is still coming and going, but what influence if any was ever actually bought is unclear at best.

Officials are critical of the policy, saying that tens of millions of US dollars with no paperwork were actually a big part of how Afghanistan became one of the most corrupt nations in human history. Though there is of course no way of tracking all this money, US officials believe that large amounts were used to bribe politicians and warlords.

This is how all political business gets done in Afghanistan to this day, and despite officials insisting that the money is incredibly counterproductive, the CIA bags are still showing up regularly. […]

READ @ http://news.antiwar.com/2013/04/28/cias-bags-of-cash-fueled-afghan-corruption-bought-little-influence/

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* THE GUANTANAMO MEMOIRS OF MOHAMEDOU OULD SLAHI

By Larry Siems, Slate

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Mohamedou Ould Slahi began to tell his story in 2005. Over the course of several months, the Guantánamo prisoner handwrote his memoir, recounting what he calls his “endless world tour” of detention and interrogation. He wrote in English, a language he mastered in prison. His handwriting is relaxed but neat, his narrative, even riddled with redactions, vivid and captivating. In telling his story he tried, as he wrote, “to be as fair as possible to the U.S. government, to my brothers, and to myself.” He finished his 466-page draft in early 2006. For the next six years, the U.S. government held the manuscript as a classified secret.

When his pro bono attorneys were allowed to hand me a disk labeled “Unclassified Version” last year, Slahi had been a Guantánamo detainee for more than a decade. I sat down to start reading his manuscript nearly 10 years to the day from the book’s opening scene:

“[Redacted] July 2002, 22:00. The American team takes over. The music was off. The conversations of the guards faded away. The truck emptied.”

We’re in the middle of the action. Slahi’s life in captivity had begun eight months earlier, on Nov. 20, 2001, when Slahi, then 30, was summoned by Mauritanian police for questioning. He had just returned home from work; he was in the shower when police arrived. He dressed, grabbed his car keys—he went voluntarily, driving himself to the police station—and told his mother not to worry, he would be home soon. [...]

READ @ http://www.slate.com/articles/news_and_politics/foreigners/2013/04/mohamedou_ould_slahi_s_guant_namo_memoirs_how_the_united_states_kept_a_gitmo.html

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* UNDERCOVER AT THE TAR SANDS

By Jerry Cleveland, Rolling Stone

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Editor’s Note: In recent months, many climate activists have focused their efforts on Canada’s tar sands and the companies set on extracting fossil fuels from them. With the debate raging louder than ever, Rolling Stone is in contact with one of the workers helping to build a pipeline to bring oil from the tar sands to the U.S. Read on for that anonymous correspondent’s first dispatch from one of the world’s most controversial jobs.

There’s something in the air in Fort McMurray, Alberta – and it’s not just fumes from the massive oil sands processing plants north of town. Spend enough time here, and you’ll pick up the pungent scents of machismo and money.

This is the heart of Canada’s controversial tar sands operation. If all goes as planned, this region will soon be sending its bitumen – the sticky, black petroleum byproduct colloquially known as “tar” – down the Keystone XL Pipeline. President Obama has yet to give the contentious project the green light, but work in the oil sands shows no sign of slowing down any time soon.

The region has 80,000 permanent residents, and hosts about 40,000 temporary workers at any given time – welders, pipefitters, heavy equipment operators, technicians, engineers and other hired hands who pass through Fort McMurray as the work ebbs and flows. I joined them this winter when, after hearing stories about Fort Mac for years, I signed on to help build a massive pipeline (not the Keystone XL). I was eager to see the tar sands for myself, experience life in Fort Mac firsthand – and, let’s be honest, I wanted to make some oil money, too.  I’m writing this story anonymously to protect my friends, my colleagues and myself.

The Fossil Fuel Resistance

Much of the work here relies on ice roads and freezing temperatures, so when spring comes, the work ends. The obvious irony is that the carbon economy itself is very likely contributing to the early springs, late winters and wacky weather that keeps interrupting our work.

Few in northern Alberta seemed to notice when thousands gathered in Washington, D.C. to protest the Keystone project in February. Instead, everyone was talking about the southern extension project coming up later this year, and the 14,000 jobs it would bring.

The recent rupture of an Exxon pipeline in Arkansas, spilling tens of thousands of Canadian crude, made some noise here. But most chalked it up to “bad timing” –folks are quick to point out that the pipeline in question was installed in the 1940s, and my foreman assured us that Exxon would “make sure everyone is taken care of.” The prevailing logic seems to be that if you throw enough money at a problem, it’ll go away. […]

READ @ http://www.rollingstone.com/politics/news/undercover-at-the-tar-sands-20130426

Apr 072013
 

By Marie Dufaux, Eric Toussaint, CADTM

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This is a historical moment. On 23 and 24 March 2013, a coalition of left secular Tunisian political parties (in which there are 11 political formations) organised a meeting of Mediterranean region progressive parties to call for the abolition of the odious and illegitimate debts of Northern and Southern Mediterranean countries. Two half-days of debate produced a final declaration and were followed by a grand public conference bringing together over one thousand people and all the strength of the left-wing groups united for a common cause. |1|

Below are highlights of Eric Toussaint’s speech at this first Mediterranean coordination meeting against debt, austerity policies, and foreign domination, and for a free, united, democratic, social, solidarity-based, feminist, and environmentally responsible Mediterranean region.

Eric Toussaint, President of CADTM Belgium stressed that this budding political alliance is the continuation of the struggle initiated by Thomas Sankara, President of Burkina Faso, who was assassinated on the 15 October 1987, after he called on the people of Africa and the rest of the World to unite in a common combat for the non-payment of the illegitimate debt. It also extends the struggle of the martyrs of the Arab Spring, including Chokry Belaid, assassinated on 6 February 2013, not to forget Ahmed Ben Bella, the first President of independent Algeria, who died in April 2012, |2| and who, towards the end of his life, had made the abolition of illegitimate debt one of his principal struggles.

This new coordination is facing another major challenge. All too often, left-wing parties limit their engagement to a radical denouncement of illegitimate debt without giving the question further importance in their day to day public activities. Once they start to approach positions of power, some of them abandon their promises to put an end to illegitimate debt, and end up agreeing with the terms of repayment.

Eric Toussaint presented the initial definition of odious debt as debt taken on by a dictatorial regime such as that of Ben Ali. According to international law, when such a regime falls, the part of the debt that is odious falls with it, and therefore should not in any case be repaid. Of course, we must often fight for international law to be respected. To achieve this goal, only a strong social movement can convince a government to suspend payments and repudiate odious debt. It is therefore essential to create a favourable balance of power in order to defy the creditors.

Today, international law defines odious debt in terms of three criteria: |3|
the non-consent of the people in the indebted state;
the lack of advantages for the people in the indebted state;
the creditors were aware that the loans they consented were not in the interest of the people and were not approved by them.

The debt “owed” to the Troika (European Central Bank, European Commission and the IMF) by countries like Greece, Ireland, and Portugal should be denounced because it corresponds to these criteria: 1. The people in the countries concerned did not give their consent, and many governments elected on anti-austerity programmes bend to the will of the Troika once they are in power; 2. This debt is not favourable to the people, on the contrary, it is linked to violations of their economic, social, and civil rights (reductions in social services and wages, large scale lay-offs, difficulty in gaining access to health services and education, repeal of collective bargaining agreements, disregard for the democratic choices made by electors, legislative power that bows down to the executive); 3. The creditors (the Troika and bankers), know perfectly well that the loans they advance are not in the interest of the people, because they are made in order to pay off the debt and in exchange for drastic austerity measures. It is the Troika itself that imposes these violations of human rights and dictates its conditions to governments and parliaments of indebted countries.

As for the governments that have come into power since 2011 after the dictators Ben Ali and Mubarak, they have themselves taken on new debt, which is much more to the advantage of the creditors than to the people. This is done to pay back the odious debts inherited from the previous dictatorial regimes and to pursue policies weakening their countries. Therefore, this new debt is also odious.

Tunisia and Egypt are currently negotiating new arrangements with the IMF. |4| This is a fruitless process. If these loans are granted, they will be illegitimate for at least two reasons: they will be used to continue making repayments on inherited odious debt, and they will be linked to policies that are contrary to the interests of the people in these countries.

Other elements that may make a debt illegitimate

On the one hand, the debt may be the consequence of unjust fiscal policies. In real terms, states accord fiscal advantages to big (national and international) companies and the wealthiest households, this reduces tax revenues and deepens public budget deficits. These practices increase public debt, because the governments must again borrow in order to finance their budget. Debt taken on in these conditions is illegitimate to begin with because it is socially unjust.

On the other hand, it may derive from bank bail-outs. Since 2007, governments of the most industrialised countries have flown to the assistance of private banks, that are responsible for the crisis, injecting billions of euros into their capital and/or providing other guarantees. Any debt taken on to finance these bail-outs is equally illegitimate.

Creditors and governments maintain that debt must always be repaid without questioning its origins, even if they are illegitimate. Then they justify the imposition of anti-social austerity policies by insisting on the effort necessary to balance the budget. It is within this context that a growing percentage of the people in Mediterranean countries (and beyond) are rejecting the repayment of illegitimate debt. In some countries (Tunisia, Greece, Portugal, Spain, and France) citizens audits have been called for in order to identify the illegitimate part of public debt. They are seeking to establish how, why, and by whom the debt was taken on, and if it has really been used in the interest of the people. These citizens audit committees are seeking to convince as many people as possible that illegitimate debt must be repudiated.

Saying “NO” to the Creditors

It is possible and necessary to defy the International Financial Institutions and the Troika, to refuse the diktats of the private creditors in order to create leeway for improving the situation of a country and its people. As we can see in the following examples of several countries that have dared to say “No” to their creditors, it is worth being adamant.

Argentina’s suspension of debt repayments

At the end of December 2001, after three years of economic recession (1999 – 2001) and pressure from a massive popular rebellion that caused the fall of President De La Rua, Argentina decided to suspend payments, amounting to about $90 billion. This represented an important portion of its commercial debt.

Part of the money freed up was reinvested in the social sector, particularly in benefits paid to unemployed ’Piqueteros’. Some would claim that the real reason why Argentina recovered as of 2003-2004 is only because of the increase in the prices of its exports.

This affirmation is, however, false, because if Argentina had not suspended its debt repayments, the revenue from exports would have been swallowed up by them. The government would not have had the means necessary to stimulate economic activity. In addition, thanks to this suspension of payments that lasted until March 2005, Argentina was able to impose a 50% reduction of this debt on its creditors.

The CADTM, as well as numerous social movements and leftist parties proposed to Argentina to abolish, not only the debt that concerned private creditors, but also the IMF and other public creditors. The Argentine government did not follow this recommendation.

It is important to note that Argentina has also suspended payment of $6.5 billion to the Paris Club since 2001. So we see that twelve years later Argentina is still holding out against the Paris Club. In spite of the 44 law suits brought before the World Bank and recent threats of expulsion from the IMF, Buenos Aires maintains its position. Argentina has not borrowed on the financial markets since 2001, but the country continues to function!

The Argentine experience must not be misinterpreted. It is not to be taken as an example, and we always need to adopt a frankly critical point of view. The Argentine government has maintained Argentina within the bounds of capitalism, no structural reforms have been undertaken, Argentine economic growth is largely based on the extraction and the exportation of primary products (genetically modified soya beans, ores,…). Nevertheless, what Argentina has demonstrated is that saying “No” to the creditors is possible. Elsewhere, an authentic left-wing government could go much further on the basis of this precedent.

Ecuador: audit and suspension of payment

Ecuador gives us another example. In July 2007, seven months after his election, the Ecuadorian President Raphael Correa decided to instigate an audit of the country’s debt and the conditions in which it was contracted. An audit commission, made up of 18 experts including the CADTM, was created for this purpose. Its final report was presented after 14 months of investigation. It showed in particular that numerous loans had been contracted in violation of basic rules. In November 2008, the new administration, on the basis of this report decided to suspend the repayment of bonds payable in 2012 and 2030. Finally, the government of this small country came out on top in the tussle with North American bankers and those holding Ecuadorian securities. It repurchased bonds for less than $1 billion, which had a nominal value of $3.2 billion. Public finance thus saved $2.2 billion dollars of debt stock to which must be added $200 million a year (between 2008 and 2030) in interest payments. This allowed the government to allocate more means to social projects in health, education, social assistance, and communication infrastructure development. The Ecuadorian constitution now prohibits private debt from being transformed into public debt and illegitimate debt from being contracted. |5|

In addition, Ecuador no longer recognises the World Bank’s jurisdiction in international disputes court. It has rejected free trade treaty propositions from the US and UE. The Ecuadorian President has announced his intention to audit the current bi-lateral investment treaties. Finally, the Quito authorities have put an end to the US military presence on its territory.

In the case of Ecuador, we must again be careful not to hold up this ongoing experience as a model to be emulated. Critical analysis remains indispensable. Nonetheless, the Ecuadorian audit and unilateral suspension of payments experience shows that saying “No” to creditors is perfectly possible, and there are advantages to be gained in terms of making more means available for public health, education, and other sectors.

Iceland’: refusal to pay the demands made by the Netherlands and the UK

After its banking system collapsed in 2008, Iceland refused to compensate the British and Dutch savers who had put deposits amounting to €3.9 billion into subsidiaries of Iceland’s failed private banks. The British and Dutch authorities covered the losses to their citizens and presented the bill to Iceland. Under popular pressure (demonstrations, occupations, and referendums), the Reykjavik authorities refused to pay. Britain put Iceland on its terrorist list, froze its assets and, in conjunction with the Netherlands, sued Iceland the EFTA court. |6| Meanwhile, Iceland has completely blocked the outflow of capital. In the end, Iceland is faring better than the other European countries that accepted the conditions imposed by creditors. Here again we must not present Iceland as a model to be imitated, but learn from its experience.

These examples demonstrate that saying “NO” to creditors leads neither to catastrophe nor to the collapse of a country.

We must also recall that these experiences were preceded or accompanied by a popular movement that put pressure on the governments concerned. It is therefore important, as Eric Toussaint reminded us, that knowledge of this at times, complex question must conveyed to the whole of the population. The task of a public audit is to raise public awareness. The illegitimacy of public debt must become visible to the majority of people.

To conclude this workshop, Eric Toussaint repeated that the above examples are not to be taken to as political models to be followed, but that these experiences are a source of important political lessons!

Translation : Mike Krolikowski and Charles La Via

 

Footnotes

|1| See Pauline Imbach, “Tunis: Birth of a Common Front of Political Organisations Against Debt”,http://cadtm.org/Tunis-Birth-of-a-C…, published 25 March 2013.

|2| See Eric Toussaint, “Remembering Ahmed Ben Bella, first President of independent Algeria who passed away on the 11th April, 2012 at 96”, http://cadtm.org/Remembering-Ahmed-…, 12 April 2012.

|3| See CADTM, http://cadtm.org/Droits-devant, and in particular Stéphanie Jacquemont, “Que retenir du rapport de l’expert de l’ONU sur la dette et les droits humains ?”, http://cadtm.org/Que-retenir-du-rap… , 25 January 2013 (articles in French only).

|4http://www.imf.org/external/np/sec/…

|5| See Eric Toussaint, “La Constitution équatorienne : un modèle en matière d’endettement public”,http://cadtm.org/La-constitution-eq… , 27 December, 2010 (in French only).

|6| The EFTA (European Free Trade Association) court, which is in no way a progressive organisation, has judged in favour of Iceland’s position. See CADTM, “EFTA court dismisses ’Icesave’ claims against Iceland and its people”, http://cadtm.org/EFTA-court-dismiss…, 29 January 2013.

Mar 292013
 

Posted by greydogg, 99GetSmart

* PRIVATE SECTOR PARASITES: WHO ARE THE REAL WEALTH CREATORS?

Source: ScriptoniteDaily

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The private sector is evading its taxes, failing to pay workers a living wage, and becoming a burden on the tax payer for subsidies and bailouts.  At what point to we stop calling them wealth creators and start calling them parasites?

Neoliberal democracies around the globe have been using taxpayer money to underwrite and directly pay off phantom debts made by the banking sector.

In the bailout of 2008/9, the UK government had to guarantee funding to the banking sector, of 101% of GDP.  That is, the UK diverted over £2trn of tax payer money from public expenditure, to a handful of banks. This is equivalent to almost 3 times its entire annual budgettwenty years of NHS spending (£106.7bn a year); forty years of education spending (£48.2bn a year); or five hundred years of job seekers allowance (£4.9bn a year).

According to the Special Investigator General for the Troubled Asset Relief Program’s (SIGTARP) quarterly reports, the US government’s total layout in bailouts was $3.3trn whilst guaranteeing $16.9trn of future protections.  The GDP of the US currently stands at just $14.99trn, meaning the tax payer has guaranteed toxic bank debts to the value of 113% of their total annual earning capacity. This is equivalent to ten years of total federal spending ($6.3trn a year), sixteen years of pension payments ($1.1trn a year), twenty one years of total education spending ($0.8trn a year) or a whole twenty eight years of the entire welfare system ($0.6trn a year).

Most recently, the people of Cyprus have had the Eurogroup and the IMF place conditions on their bailout of the Cypriot Banking sector requiring Cypriot depositors (people holding their money in the banks) rather than bondholders (people investing in the banks).  This is the first time that the bailout of the banks has been made in such an explicit way.  The total sum required from Cyprus’ population of just 1.1 million people, is 5.8bn Euros. […]

READ @ http://scriptonitedaily.wordpress.com/2013/03/28/private-sector-parasites-who-are-the-real-wealth-creators/

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* EUROPE’S SOUTH RISES UP AGAINST THOSE WHO ACT AS SADISTIC COLONIAL MASTERS

The more you obey the more you get punished – that’s the troika’s way. But a second spring of discontent is in the air

By Costas Douzinas, Guardian UK

Cyprus protest

[…] The argument against austerity has been won in southern Europe. The continuation of austerity, a matter of survival for the ruling elites, can be achieved through ideological misinformation and police repression. We cannot predict the timing and location of the next flashpoint but its occurrence is certain. It is the result of systemic pressures and failures felt by all Europeans and exacerbated in the south. Three are the most prominent.

First, permanent work has been abolished. Part time and flexible work, long periods of unemployment following short periods of work are now the rule. In the past, a reserve army of unemployed was used to push wages down. Today technology and the transfer of industry to the developing world are making large numbers of people, particularly the young, superfluous. At the same time, we now have the most educated population in history. One thousand unemployed engineers, lawyers and architects are not likely to accept easily power’s broken promises .

Second, profit takes new forms: rent for services and interest for capital. As wages get pushed down in order to improve profits, late capitalism increasingly works through consumption fuelled by debt, making states, companies and individuals permanently indebted. Debt is first a social and moral relationship. Lifelong indebtedness is an effective control of the debtor’s conduct ensuring future conformity. Full of guilt and forbearance, the debtor must accept a lifestyle of obedience and redemption. Debt is the lubricant of consumption, capital desires and creates indebted populations. But when the banking greed and collapse makes money scarce, the indebted citizen abandons the vicious circle of debt and consumption followed inevitably by frustration and starts questioning the dominant model.

The third change is the extensive and violent privatisation of the commons. The commons of culture – music, poetry, art – and of nature – water, sea, electricity – are systematically sold off. We must rent back our common substance and our collective achievements. Everything that can be sold will be sold and then hired back to us in a process resembling the early modern enclosures of land. The recent wave of occupations reasserted the right to our common substance of life.

All three policies converge in Greece, the textbook case of neoliberal failure and popular resistance. After entry to the euro, the modernising socialists promoted consumption and hedonism as the main way of linking private interests with the common good. People were treated as desiring and consuming machines. Easy and cheap loans, bribing people to transfer their savings into stocks and shares, and an artificially inflated property market became the main instruments of economic growth and the criterion for individual happiness and social mobility. Austerity violently reverses priorities. The population is divided according to age, occupation, gender and race and radical behavioural change is imposed for the sake of “national salvation”. The politics of personal desire and pleasure turned into a strategy of saving the nation’s DNA by abandoning its individual members to the rigours of sin, guilt and punishment. No wonder fascism and xenophobia have risen to unprecedented levels.

Behind southern austerity is a top down re-arrangement of late capitalism with the north acting as colonial masters of an impoverished and disenfranchised south. The debt offered a convenient pretext for the brutal imposition and moralisation of these “reforms”. We were all “in it together” and must be punished. In Greece, the troika increases the punishment every time its policies and predictions go wrong. Like Freud’s superego, it is a sadistic, cold master, the more you obey the more you get punished. […]

READ @ http://greekleftreview.wordpress.com/2013/03/28/europes-south-rises-up-against-those-who-act-as-sadistic-colonial-masters/

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* TUNIS: BIRTH OF A COMMON FRONT OF POLITICAL ORGANIZATIONS AGAINST DEBT

By Pauline Imbach, CADTM

Mediterranean Conference of political parties against the debt in Tunis

Mediterranean Conference of political parties against the debt in Tunis

The first Mediterranean coordination against debt, austerity policies and foreign domination, and for a free, united, democratic, social, feminist and environmentally responsible Mediterranean region took place in Tunis on Saturday 23 and Sunday 24 March in the build up to the World Social Forum.

A score of political formations, coming from the Mediterranean perimeter gathered in response to a call by the Popular Front (a coalition of 11 radical left-wing political parties, associations and independent personalities, one of whom was Chokri Belaid, who was assassinated on 6 February 2013). Among those represented were the French parties, Front de Gauche (Left Front) and NPA (New Anti-Capitalist Party); from Spain came Izquierda Unida (United Left) and Izquierda Anticapitalista (Anti-Capitalist Left); others were Sortu from the Basque country, CUP from Catalonia, OKDE from Greece, the Left Block from Portugal, Sinistra Critica from Italy, Al Mounadil from Morocco; also taking part were representatives of organisations from other Mediterranean countries such as Egypt, Lebanon, Syria and Palestine. Organisations from Belgium, Haiti, Venezuela and a number of other countries were also present. This is the first time that political parties and organisations get together in the mediterranean area in order to cancel illegitimate debt.

This gathering was followed by a public meeting attended by over a thousand people, including many representatives of political parties from the Mediterranean region and beyond, a large number of whom were women and youths (although it is to be regretted that among the twenty or so speakers only three were women). The mood was electric, animated by slogans in Arabic, charged with passion, anger, joy and collective feeling, each affirming the ardent will of his or her party to work on the issue of the debt, to resist the dictatorship of the creditors, wipe out the capitalist system and struggle for the emancipation of the peoples by laying the foundations of a New World Order.

Numerous tributes were paid to different leaders, revolutionaries or progressive activists. Emotion was high during a film in homage to Chokri Belaid, who remains a popular personality and inspiration in the Tunisian revolution. Homage was also paid to Hugo Chavez and his commitment to the social transformations needed by his people.

For over 3 hours a number of different speakers hailed the Tunisian revolution and more largely the “Arab Spring” that led to the overthrow of the dictators Ben Ali and Moubarak. These historic events take on an international significance. The Tunisian revolution is, for several generations, the demonstration that revolution is not an idle word and that a people can choose their destiny. The public meeting was brought to a vibrant end by Hamma Hammami who developed an analysis of the debt that is entirely convergent with that of CADTM.

As mentioned in the preamble of the declaration of this Mediterranean reunion against debt, the fall of Ben Ali “has permitted the disarmament of the local capitalist structure without going so far as overthrowing it. The social regime, which is the historical result of foreign domination and, more recently, of the restructuring of worldwide capitalist globalisation, is still standing. The revolutionary crisis opened by the insurrection is still active. The victory of the Tunisian democratic and social revolution remains possible.” |1|

In this context the debt, which remains a central tool for the domination and oppression of the peoples must be cancelled. A real instrument for the transfer of riches and of political domination, this issue was at the heart of the debate. The speakers have affirmed the necessity of liberating ourselves from the dictatorship of the creditors and the international financial institutions, particularly the World Bank and the IMF. Several speakers mentioned as examples, Argentina, Ecuador and Iceland to demonstrate the possibility of resisting creditors so as to implement policies that favour the population. Public debt audits were also presented as possible strategies permitting the identification and cancellation of odious and illegitimate debts, with the stress on the need to mobilise on this question. This is the first time that such a common front has arisen. It is undoubtedly a historic step forward in the struggle against the debt, echoing the call made 26 years earlier by then President of Burkina Faso Thomas Sankara in Addis Abeba in 1987, “The debt cannot be repaid because if we do not pay the lenders will not die, that is certain,. On the other hand, if we do pay; it is we who will die. That is equally certain.” The groups gathered in Tunis have decided to create a follow-up commission and to meet again in Spain some time in 2013 or 2014.

CADTM founder, Eric Toussaint, speaking at the mediterranean conference of political parties against the debt

CADTM founder, Eric Toussaint, speaking at the Mediterranean Conference of political parties against the debt

Translation : Mike Krolikowski and Christine Pagnoule

Footnotes

|1| The final declaration will soon be published.

READ @ http://cadtm.org/Tunis-Birth-of-a-Common-Front-of

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* THE CYPRUS DEAL AND THE UNRAVELING OF FRACTIONAL-RESERVE BANKING

By Joseph Salerno, The Circle Bastiat

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The “Cyprus deal” as it has been widely referred to in the media may mark the next to last act in the the slow motion collapse of fractional-reserve banking that began with the implosion of the savings-and-loan industry in the U.S. in the late 1980s. This trend continued with the currency crises in Russia, Mexico, East Asia and Argentina in the 1990s in which fractional-reserve banking played a decisive role. The unraveling of fractional-reserve banking became visible even to the average depositor during the financial meltdown of 2008 that ignited bank runs on some of the largest and most venerable financial institutions in the world. The final collapse was only averted by the multi-trillion dollar bailout of U.S. and foreign banks by the Federal Reserve.

Even more than the unprecedented financial crisis of 2008, however, recent events in Cyprus may have struck the mortal blow to fractional-reserve banking. For fractional reserve banking can only exist for as long as the depositors have complete confidence that regardless of the financial woes that befall the bank entrusted with their “deposits,” they will always be able to withdraw them on demand at par in currency, the ultimate cash of any banking system. Ever since World War Two governmental deposit insurance, backed up by the money-creating powers of the central bank, was seen as the unshakable guarantee that warranted such confidence. In effect, fractional-reserve banking was perceived as 100-percent banking by depositors, who acted as if their money was always “in the bank” thanks to the ability of central banks to conjure up money out of thin air (or in cyberspace). Perversely the various crises involving fractional-reserve banking that struck time and again since the late 1980s only reinforced this belief among depositors, because troubled banks and thrift institutions were always bailed out with alacrity–especially the largest and least stable. Thus arose the “too-big-to-fail doctrine.” Under this doctrine, uninsured bank depositors and bondholders were generally made whole when large banks failed, because it was widely understood that the confidence in the entire banking system was a frail and evanescent thing that would break and completely dissipate as a result of the failure of even a single large institution.

Getting back to the Cyprus deal, admittedly it is hardly ideal from a free-market point of view. The solution in accord with free markets would not involve restricting deposit withdrawals, imposing fascistic capital controls on domestic residents and foreign investors, and dragooning taxpayers in the rest of the Eurozone into contributing to the bailout to the tune of 10 billion euros. Nonetheless, the deal does convey a salutary message to bank depositors and creditors the world over. It does so by forcing previously untouchable senior bondholders and uninsured depositors in the Cypriot banks to bear part of the cost of the bailout. The bondholders of the two largest banks will be wiped out and it is reported that large depositors (i.e. those holding uninsured accounts exceeding 100,000 euros) at the Laiki Bank may also be completely wiped out, losing up to 4.2 billion euros, while large depositors at the Bank of Cyprus will lose between 30 and 60 percent of their deposits. Small depositors in both banks, who hold insured accounts of up to 100,000 euros, would retain the full value of their deposits. […]

READ @ http://bastiat.mises.org/2013/03/the-cyprus-deal-and-the-unraveling-of-fractional-reserve-banking/

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* STUNNING FACTS ABOUT HOW THE BANKING SYSTEM REALLY WORKS … AND HOW IT’S DESTROYING AMERICA

Source: Washington’s Blog

Paintings by Anthony Freda: www.AnthonyFreda.com.

Paintings by Anthony Freda: www.AnthonyFreda.com.

Reclaiming the Founding Fathers’ Vision of Prosperity

To understand the core problem in America today, we have to look back to the very founding of our country.

The Founding Fathers fought for liberty and justice. But they also fought for a sound economy and freedom from the tyranny of big banks:

“[It was] the poverty caused by the bad influence of the English bankers on the Parliament which has caused in the colonies hatred of the English and . . . the Revolutionary War.”
- Benjamin Franklin

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.”
- John Adams

“All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.”
- John Adams

“If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied”.
— Thomas Jefferson

“I believe that banking institutions are more dangerous to our liberties than standing armies…The issuing power should be taken from the banks and restored to the Government, to whom it properly belongs.”
- Thomas Jefferson

“The Founding Fathers of this great land had no difficulty whatsoever understanding the agenda of bankers, and they frequently referred to them and their kind as, quote, ‘friends of paper money. They hated the Bank of England, in particular, and felt that even were we successful in winning our independence from England and King George, we could never truly be a nation of freemen, unless we had an honest money system. ”
-Peter Kershaw, author of the 1994 booklet “Economic Solutions”

Indeed, everyone knows that the American colonists revolted largely because of taxation without representation and related forms of oppression by the British. See this and this. But – according to Benjamin Franklin and others in the thick of the action – a little-known factor was actually the main reason for the revolution. […]

 READ @ http://www.washingtonsblog.com/2013/03/stunning-facts-about-how-the-banking-system-really-works-and-how-it-is-destroying-america.html

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* KEEP CASH IN BANKS? ‘BE WORRIED AS EURO THIEVES CAN STEAL IT ANY TIME’

Source: RT

EU ‘thieves’ will force people to think twice about where to keep their money, so that it isn’t confiscated like in Cyprus. The Middle East and Asia are the most likely places where these funds will travel next, Patrick Young told RT.

VIDEO @ http://www.youtube.com/watch?v=_IkmJxyLB5g&feature=em-subs_digest&list=TLrES9ulpLG9A

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* MARCH 16 DUBLIN

Source: youtube

How happy are you with your life, our society, the world?

In Ireland over 500 people commit suicide a year, many as a direct result of the financial crisis.

Over 300,000 houses in Ireland remain vacant while thousands of people are evicted and the banks are now looking to start evicting 1000 more families a year each.

Children are sitting in schools with no heating, many are also going to school hungry and soup kitchens are opening up all over the country.

Half of our youth are unemployed leaving university after studying hard for years.

Over 80,000 families wave goodbye to loved ones each year emigrating for work, not knowing when they will meet again.

Crime is rising as it automatically does with an increase in poverty and the government is closing stations, in particular leaving old people vulnerable in their own homes.

Michael Noonan admitted on Pat Kenny’s RTE show that the debt was illegal

World’s 100 richest people have increased there wealth by €241 Billion in 2012

All over the world people fighting against corruption and demanding a better world for you, are being beaten, jailed, shot and murdered, but still we remain silent.

Is this good enough? Is this what it means to be Irish, the great warriors from the land of saints and scholars?

Is it right that through our silence we allow this to continue?

In Spain, Greece, Portugal, Italy, the USA, Canada, Mexico, Britain, Slovakia, Slovenia, Albania, Argentina, Chile, Turkey, China, India, Libya, Egypt, Palestine, Bahrain, Syria, Saudi Arabia and many more countries around the world, the people are rising up, demanding freedom from oppression.

In Portugal thousands of protestors were chanting “Spain, Greece, Ireland and Italy, our struggle is international”

Iceland has shown only people peacefully on the streets can bring about the change needed.

Now is the time the Irish stood up and showed the world we are awake and “Ireland Says No”
We can create a better world.

A sustainable world designed for us to enjoy life, not for profit or greed.

A world we can be proud to leave to our children and grandchildren.

A world without war, poverty or oppression.

We can provide food and homes for everyone on this planet.

We have the technology for free energy.

We can provide everyone with a quality education.

We can collectively redefine right from wrong in our society.

We can collectively decide what is no longer acceptable in our society,

Demand an end to lies and secrecy from politicians

Stop the exploitation of our natural resources

End the destruction of our earth, our eco system

End the oppression of our brothers and sisters around the world

and cruelty to animals.

A better world is possible, but only when we rise up together and demand it.

Speaking out will cost you nothing, but your silence could cost everything.

United we stand, divided we fall.

VIDEO @ http://www.youtube.com/watch?v=4o93bheR_Sk

Mar 202013
 

By Renaud Vivien and Cécile Lamarque, CADTM

2012-10-10_debt_03

There are several legal arguments on which a suspension, or even a cancellation, of repayment of public debts can be based. In order to establish the invalidity of a loan agreement it is necessary to take into account not only the dispositions of the agreement but also the circumstances in which it was signed and the actual use of the borrowed money |1|. It will obviously be necessary to audit the debt to shed light on those various elements. Governments that wish to reduce their debts can use arguments from public international law, among which are those appearing below, in order to find legal grounds for cancellation/repudiation of part of their public debt |2|.
Defects of consent

The 1969 Vienna Convention on the law of treaties and the 1989 Vienna Convention on the law of treaties between States and International Organizations point to various defects of consent that can result in the loan agreement being void, among which are included:

absence of competence in a contracting party |3|. For instance, this violation was the legal motivation for Paraguay repudiating a debt amounting to USD 85 million in 2005. Indeed the Consul of Paraguay in Geneva who had signed the loan in the name of its government had no legal power to contract a loan with the private bank Overland Trust Bank |4| ;

direct or indirect corruption of a contracting party during negotiations |5|. An example could be contracts signed between Greece and the TNC Siemens, which has been charged by the German and Greek justice with paying Greek political, military and administrative officers commissions and bribes amounting to about one billion euro ;

coercion |6| through acts or threats of a contracting party. Coercion was used by the French in 1824 to force Haiti to pay a colossal ransom for the recognition of its independence. To this end thirteen French vessels with 494 cannons surrounded the island’s coasts with clear instructions: in case of refusal ports were to be closed by force. Coercion also raises the issue of a political balance of power that is favourable to creditors. Indeed when there is a lack of balance beteween the contracting parties, debtors’ freedom to negotiate is restrained, while creditors can have their way. This is how in 2010 the Greek government was under the pressure of the French and German authorities that wanted to guarantee their arms exports. The military-industria lobby managed to maintain an almost intact defence budget while the PASOK government agreed to major cuts in social expenditure ;

fraud |7|. If a State was led to contract a loan through the fraudulent conduct of another State or of an international organization that participated in the negotiations, it can point to fraud as invalidating its consent to be bound by the said contract. We can describe as fraudulent the acts of the IMF and of the World Bank considering the abyssal gap between their discourse and reality. Indeed in article 1 of its statutes the IMF defines one of its main purposes as to facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy |8|. In fact this institution, in coordination with the WB, does exactly the opposite and thus violates its own statutes. Unemployment steadily increases as a consequence of implementing measures that were recommended by the IMF and/or the WB. We can also notice a frequent diminution in the incomes of wage earners, small producers and the lower middle class. Not to mention widening social discrepencies in most countries where these institutions have been active |9|.

Illicit or immoral cause of the contract

This legal ground can be found in the civil or commercial national law of several countries. Among the illicit or immoral causes invalidating a loan contract we find:

the acquisition of military equipment. Article 26 of the 1945 Charter of the United Nations specifies that States have to regulate arms trade and limit to a minimum the resources they dedicate to military expenditure. Now we know that military expenditure increases globally year after year in violation of the UN Charter;

tied aid. Confronted as they were with massive recession and unemployment in the 1970s, rich countries decided to give purchasing power to the countries of the South so as to prompt them to buy goods produced in the North by granting them state to state loans, often in the form of export credits: this is called tied aid. For the borrowing countries it results in a significant increase in the cost of purchased goods and services and higher levels of indebtedness. According to a survey by the WB, from 1962 to 1987 African countries paid more for imported steel products than industrialized countries (up to 23 % more in the case of France ). This practice is all the more illegitimate as in most cases those tied loans do not meet the actual needs of the country but the commercial interests of the creditor. This motivated Norway to unilaterally and unconditionally cancel the debts of five countries, namely Ecuador, Egypt, Jamaica, Peru, and Sierra Leone in 2006 ;

The example of Norway

On 2 October 2006, during a press conference in Oslo, the Norwegian minister for international development, Erik Solheim, announced the unilateral and unconditional cancellation of debts owed by the five following countries: Ecuador, Egypt, Jamaica, Peru, and Sierra Leone, thus ackowledging Norway’s responsibility in their illegitimate debt. These cancellations amounted to about USD 80 million |10|. The decision was motivated by the fact that ‘the claims derived from a failed development project – the Ship Export Campaign of the late 70’s’: This campaign represented a development policy failure. As a creditor country Norway has a shared responsibility for the debts that followed. In cancelling these claims Norway takes the responsibility for allowing these five countries to terminate their remaining repayments on these debts |11|. For the first time in history, a country of the North admitted to being responsible for inadequate loan policy and took measures to remedy what had occurred. The decision represented a break with today’s tacit consensus within the Paris Club. Norway’s move is a significant step towards the recognition of creditors’ responsibility in the process of illegitimate debts. │

financing conditioned to structural adjustment. As claimed by special rapporteur Mohammed Bedjaoui in his draft article on succession in respect of State debts for the 1983 Vienna Convention: From the standpoint of the international community, an odious debt could be taken to mean any debt contracted for purposes that are not in conformity with contemporary international law and, in particular, the principles of international law embodied in the Charter of the United Nations |12|. In this respect multilateral debts contracted in the context of structural adjustments are odious and therefore illicit debts since the damaging nature of such policies has been abundantly shown, notably by UN bodies. Conditionalities atached to these debts manifestly violate various texts on protection of human rights. Surrender of the sovereignty of States is further aggravated by dispositions in most international loan contracts that stipulate that jurisdictions in the North are competent and that rules favourable to creditors have to be applied in case of dispute among contracting parties. In Ecuador the Commission of integral audit of public debt (CAIC) highlighted that the enforcement of policies by the World Bank and other multilateral institutions via programmes they have financed and conditionalities attached to loans means denying state soveneighty and interfering into its internal affairs. Many multilateral loans also violate economic, social and cultural rights. In its recommendations the CAIC proposes to stop paying several debts cliamed by multilateral institutions ;

projects that are either unprofitable or detrimental to populations or to the environment. Included amongst these projects are « white elephants », such as the Inga dam in the DRC (ex-Zaïre) which has been of no benefit to the population whatsoever: to date, less than 10 % of the Congolese population has access to electricity. Examples of debt generating projects are equally common in the north. We can cite the scandal of the 2004 Olympic games in Greece, to name but one. Although the Hellenic authorities foresaw expenditure in the range of 1.3 billion dollars, the cost of these games in fact exceeded 20 billion dollars ;

private debt transformed into public debt. The financial crises which occured during the 90s in south east Asia, Equador, Argentina, Brazil and Russia originated from measures extolled by the World Bank and the IMF, who impose the deregulation of the financial system and the prohibition of State control of the movement of capital. The result is that as a consequence of the reduction in the profits perspective, foreign capital has fled from these countries, causing a chain reaction of bankruptcy of banks. The debts of these private banks then became the public debts of States under the impetus of those responsible for these crises: the World Bank and the IMF. The world crisis, which erupted in 2007, aggravated the situation with regard to public finances and accrued the level of public debt (mainly in the north), so that banks in the north intervened in order to save the banks that had gone into bankruptcy. The cause of this public indebtedness in the south and in the north (linked to the nationalisation of debts in the financial sector) is, at the very least, immoral, given that those directly responsible for these crises are international financial institutions and private banks. The staggering increase of this public debt is also the result of neoliberal politics practiced during the 80s and 90s, the main characteristics of which were to reduce the taxes of the rich and of large companies. The State revenue was no longer sufficient and it was necessary to resort to public debt in order to finance the State’s expenditure. In Equador the CAIC condemned the transfer of private debts to the State, which occured in 1983 and 1984 under pressure from the IMF and the World Bank, while the country was crippled by a severe financial crisis. After this operation, which was extremely damaging to the nation, was made public, the new Constitution of Equador, adopted in September 2008, expressly forbade the transformation of private debts into State debts ;

the repayment of old illegal loans. According to the judicial argument regarding continuity of an offence, an illicit debt does not cease to be illegal following a renegotiation or restructuration process. To this effect, it retains its original vice and the offence lasts through time. Consequently, all public loans aimed at repaying old illegal debts are themselves illicit. The debt audit will allow light to be shed on the original illegal debt. For example, the argument of continuity of an offence has been used by the Audit commission in Equador (CAIC) to denounce the numerous irregularities (since the socialisation of private debts, of the Brady Plan |13| and of the restructuration of debts… |14|) which has led to the issuing of bonds for the commercial debt. Based on the audit results, the Equadorian authorities refused to pay this commercial debt to private international banks (« Global 2012 and 2030 » bonds). In June 2009, after a showdown with the bankers who held the titles of the Equadorian debt, the holders of 91% of the bonds in question accepted their repurchase by Equador at a reduction of 65% of the nominal value;

the repayment of debts already paid. The obligation of a state to honor its debts is notably limited by broad legal principles, such as equity, good faith, abuse of rights or the accumulation of wealth without cause. Yet the debts of developing countries have been repaid several times over: according to the statistics provided by the World Bank, the governments of developing countries have already repaid the equivalent of 98 times of what they owed in 1970, but in the meantime their debt has been multiplied 32 times. This implies that developing countries have the right to repudiate their debt and reclaim what has been unduly taken by their debtors, on the basis that they have been accumulating wealth without cause. This is also the stance taken by several national civil codes: the Argentinian civil code in articles 784 and those following, the Spanish civil code in articles 1895 and those following, the French civil code in articles 1376 and those following. Developing countries, but also countries in the north, are trapped in a vicious circle in which they borrow each year in order to be able to meet their repayments. This situation is namely the consequence of the brutal and unilateral increase in interest rates by the United States in 1979, the application of usurious interest rates or of the capitalisation of interest (anatocism), which is moreover prohibited or strictly controlled in several national judicial orders, for example in Équador, France, Italy, Germany…

Illicit use of lent money

The destination of borrowed funds is a determining factor when it comes to deciding on the legality of a debt. For this it is necessary to examine the nature of the lending regime, its behavior in terms of human rights, as well as the actual allocation of these funds. To this effect the following cases are deemed to be illegal:

 debt born of colonialisation. During the 50s and 60s the World Bank granted several loans to colonial metropolis nations, such as Belgium, France, Portugal and Great Britain, for projects that permitted them to maximize the exploitation of their colonies. The majority of these debts of colonial power issued by the World Bank were subsequently transferred to the ex colonies at the moment of their independence in the 60s, without their consent. Yet these debts arising from colonialization are void in the eyes of international public law. The Treaty of Versailles of 1919 states in article 255 that Poland is exonerated from paying « the fraction of the debt of which the Reparation Commission attributes the origin to measures taken by the German and Prussian governments for German colonialization of Poland ». A similar stance was taken in the 1947 peace treaty between Italy and France, which declares « inconceivable that Ethiopia should take on the burden of debts contracted by Italy in order to assure her domination of the Ethiopian territory ». Article 16 of the Vienna Convention of 1978 which governs the law of the Treaties does not say anything different : « A newly independent state is not under obligation to maintain a valid treaty nor to be party to it merely because on the date of succession of States the treaty was valid with regard to territory referred to in the succession of States» ;

 loans granted to dictatorships. The dictatorial nature of a regime under which a debt has been contracted allows its repayment to be challenged, even if the State representative who has concluded the loan had the competence to do so, by virtue of internal state law. In effect, in international law, debts contracted under dictatorships take on the qualification « odious debt », according to the doctrine of the same name written by Alexander Sack in 1927 : « If a despotic power contracts a debt not for the needs and in the interests of the State, but in order to strengthen his despotic regime, to repress the population combatting it, etc, that debt is odious for the population of the entire state […]. This debt is not obligatory for the nation, it is a regime debt, a personal debt of the power that has contracted it, consequently it falls along with the fall of this power ». Alexander Sack adds that when the creditors of such debts are aware of the cause they are lending for, they « have committed a hostile act towards the people ; they cannot therefore assume that a nation liberated from a despotic power will take on the « odious » debts that are the personal debts of this power |15| ». The doctrine of the odious debt therefore gives scope for invalidating several loans such as those contracted by dictatorships in Latin America from the 60s to the 80s, in Africa, with the emblematic case of Mobuto’s Zaire (1965-1997), by former Soviet bloc regimes such as the dictatorship of Nicolae Ceaucescu in Roumania, the dictatorships of South East Asia and the Far East (Ferdinand Marcos from 1972 to 1986 in the Philippines, Mohamed Suharto from 1965 to 1998 in Indonesia, dictatorial regimes in South Korea between 1961 and 1981, in Thailand between 1966 and 1988), the military junta in Greece from 1967 to 1974, the dictatorships in North Africa which fell at the beginning of 2011, such as that of Zine el-Abidine Ben Ali in Tunisia (1987-2011) and Hosni Moubarak in Egypt (1981-2011). Commenting on this doctrine of odious debt, legal counsellors of the First National Bank of Chicago point out that « the consequences for the loan agreements of a change of sovereignty partly depend on the use of the funds by the former State. If the predecessor’s debt has been qualified as « odious », in other words, if the funds have been used against the population, the successor cannot be made responsible for the debt » and adds that « commercial banks have to be on their guard about this doctrine [...] because succeeding governments have invoked doctrines based on the « odious » or « hostile » use of funds. The lenders should describe in detail the use to which the lent funds shall be put and, as far as possible, involve the beneficiary in the representation, guarantee and surveillance of the use of said funds |16| » ;

 loans to supposedly “democratic” regimes which violate jus cogens . All debt contracted by governments violating the imperative norms of international law as per jus cogens are also null and void, without it being necessary to prove that the creditors intended to become complicit in the exactions of these regimes. This assertion is upheld by the Vienna Convention on the 1969 Law of Treaties, which, in its Article 53, provides for the nullity of acts contravening jus cogens, bringing together, amongst others, the following norms: the prohibition of waging aggressive war, the prohibition of practicing torture, the prohibition of committing crimes against humanity, and the right of peoples to self-determination. As such, any loan granted to a regime that does not respect the fundamental principles of international law, whether democratically elected or not, is null. For example, we can cite the regime of Apartheid in South Africa or the Israeli Government. In this case, the destination of the loan is not requisite in classifying the debt;

loans misused with the complicity of the creditors. The Odious Debt Doctrine also touches on this category: “loans incurred by members of the government or by persons or groups associated with the government to serve interests manifestly personal — interests that are unrelated to the interests of the State.” Indeed, “debts must be contracted and the ensuing funds must be used for the needs and in the interests of the State.” In order to illustrate this aspect of the doctrine, we can cite the arbitral award handed down in 1923 in a case between the United Kingdom and Costa Rica. In 1922, Costa Rica enacted a law annulling all contracts passed by the former dictator Federico Tinoco between 1917 and 1919, and thus refused to honor the debt that it had contracted from the Royal Bank of Canada. This was therefore a case in which the doctrine was applied to a commercial debt. The ensuing dispute between the UK and Costa Rica was arbitrated by the President of the Supreme Court of the United States, Justice William Howard Taft, who declared that the decision of the Government of Costa Rica was valid, highlighting: “The case of the Royal Bank depends not on the mere form of the transaction but upon the good faith of the bank in the payment of money for the real use of the Costa Rican Government under the Tinoco regime. It must make out its case of actual furnishing of money to the government for its legitimate use. It has not done so. More recently, the CAIC in Ecuador demonstrated that certain loans had been deviated from their original “development” aims. Indeed, three loans from the Inter-American Development Bank (IDB), which were supposedly intended to benefit the agricultural, financial and transport sectors, were partially used to purchase Brady Bonds.

For unilateral action against illegitimate debt

There is no absolute obligation to repay debts under international law. By contrast, international law does require state authorities to protect human rights as a priority. Given the burden of sovereign debt and the impact of austerity measures on the populations of the Global North and South, governments must use their right to unilaterally suspend the repayment of their national debt, following the example of Argentina (in 2001), and Ecuador (in 2008); the latter having done so partially. During this period of debt-payment suspension (with a freeze on interest rates), it would be in the interest of these governments to audit their sovereign debt, both internally and externally, in order to identify any irregularities tarnishing loan contracts. They can then call upon the provisions of public international law (amongst others) in order to unilaterally declare the nullity of any illicit debts, as Paraguay did recently, in 2005. This example is not an isolated case. Throughout history, many governments have refused to repay debts inherited from preceding regimes, arguing that this debt was only bound to the regime in question, and not to the State |17|.

These unilateral actions do not contravene international law, as the sovereign decision to annul/repudiate debt does, indeed, come under the category of unilateral actions, which are sources of international law and can be used against creditors |18|. The CADTM is, of course, in favour of this type of unilateral action to protect human rights.

In this respect, initiating international arbitration on debt is not desirable. Indeed, this mechanism can only be fair and effective if human rights take precedent over creditors and if the people are not confined to the simple role of “witness”. However, the current political balance of power in favour of creditors threatens being detrimental to the peoples of the Global South and North. The rules of procedure underpinning arbitration and subsequent rulings are the result of negotiations between creditors and debtors. In this context, the legal notions that we have put forward would certainly not be accepted by the majority of creditors. We will, of course, recall the hostility of the World Bank toward the Odious Debt Doctrine in its report published in September 2007, entitled “Odious Debt: Some Considerations |19|.” The same is true for other legal arguments such as the unfounded accumulation of wealth, wilful misrepresentation, the misuse of powers, equity, good faith, etc.

Beyond the controversy over the notions of “odious debt” and “illegitimate debt,” the quasi-general hostility of creditors toward establishing a link between debt and human rights should be noted. Here we can refer to an interview with the current UN Independent Expert on Foreign Sovereign Debt, held in 2009: “the States of the North believe that the debt problem is in no way related to human rights, that it is purely economic, and that it should therefore be dealt with outside of the Human Rights Council and the UN General Assembly […] The opinions of the officials of the World Bank with whom I have consulted differ on this matter. Some categorically refute a human-rights-based approach in order to only consider the economic aspects of debt |20|.”

Therefore, if an arbitration action were to be initiated, the people would certainly be the losing party. This is because, on the one hand, the ensuing ruling would risk legitimising debts classified as “odious” and “illegitimate” by the social movements or governments that had identified them as such via an audit. The government of the indebted country would then be bound by the ruling and thus have to repay these debts to the detriment of the fundamental needs of its population. On the other hand, these rulings would constitute international jurisprudence, which would serve as a source of inspiration when ruling on future actions. When applied in this way, to the benefit of creditors owing to the current political balance of power, these rules would not favour “responsible” lending policies.

For all of these reasons, it would therefore be in the interest of these governments to take immediate, unilateral action on debt. This aligns with the example of the jurists in attendance at the 1st International Conference of Jurists held in Quito in 2008: “We support the sovereign actions of States which, on legal grounds, declare the nullity of illicit and illegal national debt instruments and with it the suspension of payments. |21|” The classification used (“illicit debt” or “illegitimate debt”) is of little relevance, we call on all borrowing governments, and also lending governments, to repudiate/annul all debts and austerity policies that are not in the interests of the population.

This is why the CADTM is also encouraging legislative initiatives and referendums against laws, regulations or agreements that are contrary to popular sovereignty or the respect of fundamental rights, whether these are currently in force or under negotiation. Public consultations on the non-repayment of a debt, similar to the referendum held in Iceland on the “Icesave” Act , are another example of the mechanisms that must be promoted and of which the results must be heeded by state authorities |22|.

 

Footnotes

|1| The consequences of re paying debts on human rights can be called upon to suspend repaying debts up to declaring some debts void.

|2| We must be aware that States can also use their own (public and private) law, which is not discussed here.

|3| Article 46 of the 1969 and 1986 Vienna Conventions.

|4| See Hugo Ruiz Diaz, ‘La dette du Paraguay auprès des banquiers privés : un cas de dette odieuse,’ 2nd section in ‘L’audit citoyen de la dette : un instrument de démocratisation des relations économiques et de contrôle démocratique des actes des gouvernements,’ http://www.cadtm.org/L-audit-citoye…
Article 50 of the 1969 and 1986 Vienna Conventions.

|5| Article 50 of the 1969 and 1986 Vienna Conventions.

|6| Article 51 of the 1969 and 1986 Vienna Conventions. Article 52

|7| Article 49 of the 1969 and 1986 Vienna Conventions.

|8| See http://www.imf.org/external/pubs/ft…

|9| Éric Toussaint, The World Bank, a never ending coup d’état, VAK, Mumbai, 2007

|10| Contrary to current practice, this has fortunately not been included in the accounts of the Aid to Public Development (APD).

|11| See article, ‘Why Norway took Creditor Responsibility – the case of the Ship Export campaign’, written by Kjetil G. Abildsnes, March 2007. www.forumfor.no/noop/file.ph…

|12| Mohammed Bedjaoui, Ninth report on succession in matters other than treaties, Definition of an odious debt, 129, http://untreaty.un.org/ilc/document….

|13| In May 1989 the United States renouced the Baker plan (the call to private banks to finance only « well reputed » countries, to the advantage of the Brady plan which consists of reducing the debt, namely by creating parallel guarantees, and by applying tax relief on debts on the secondary market.

|14| These irregularities and illegitimacies have been underlined in the report presented by the sub commission of the commercial debt of the CAIC. See the CAIC website: www.auditoriadeuda.org.ec.

|15| Alexander Nahum Sack, Les Effets des Transformations des États sur leurs dettes publiques et autres obligations financières, Recueil Sirey, 1927.

|16| CAIC, Informe juridico, p. 191, available on the CAIC website
, www.auditoriadeuda.org.ec.

|17| CADTM, “Topicality of the Odious Debt Doctrine”, 2008, http://cadtm.org/Topicality-of-the-…

|18| Hugo Ruiz Diaz, “The Sovereign Decision to Declare Debt Null”, 2008, http://www.cadtm.org/La-decision-so… (Available in French only)

|19| See: http://siteresources.worldbank.org/…. This report, largely botched, biased and condescending toward organisations acting for fair solutions to debt, sparked strong reactions.

|20| Renaud Vivien, “Interview with the UN Independent Expert on Foreign Debt: “I encourage all States to carry out debt audits””, http://www.cadtm.org/Entretien-avec… (Available in French and Spanish only)

|21| Conclusions of the 1st International Conference of Jurists, Quito, 8-9 July 2008, http://www.cadtm.org/Conclusions-de…. (Available in French and Spanish only)

|22| For information on the legal aspects of public consultation, read Alejandro Teitelbaum, “International, Regional, Subregional and Bilateral Free Trade Agreements”, CETIM Report No. 7, 2010, p. 24, http://www.cetim.ch/en/documents/re…

Translation: Christine Pagnoulle, Ümit Hussein and Matt Jenkins

SOURCE @ http://cadtm.org/How-debts-can-legally-be-declared