Nov 042016
 

By 99GetSmart

Originally published at MintPressNews:

Bystanders wait to be handed bags of oranges during a free distribution of fruit and vegetables as a protest by farmers and vendors over proposed pension reforms, in Athens on Wednesday, Jan. 27, 2016. Greece’s leftwing government is facing an escalating wave of protests over its proposed pension overhaul that has been demanded by bailout creditors. (AP Photo/Petros Giannakouris)

Bystanders wait to be handed bags of oranges during a free distribution of fruit and vegetables as a protest by farmers and vendors over proposed pension reforms, in Athens on Wednesday, Jan. 27, 2016. Greece’s leftwing government is facing an escalating wave of protests over its proposed pension overhaul that has been demanded by bailout creditors. (AP Photo/Petros Giannakouris)

ATHENS — This has been another eventful year in Greece. Almost one year after it turned its back on the July 2015 referendum result which rejected further austerity, the Syriza-led government has pushed forward a program of even harsher austerity, spending cuts, and privatizations.

Following the British vote to proceed with “Brexit,” or a departure from the European Union, fears that Greece might follow suit led Greece’s lenders to demand even more austerity measures from a country already mired in an economic depression.

In this interview, Dr. Jack Rasmus, a professor of economics and politics at St. Mary’s College of California, analyzes these issues and the many challenges facing the Greek and European economies today.

The author of such books as “Looting Greece” and “Systemic Fragility in the Global Economy,” Dr. Rasmus shares his insights into the consequences of austerity for Greece and other peripheral European economies, and presents his proposed solutions for an end to the crisis and austerity.

MintPress News (MPN): In September, Greek Prime Minister Alexis Tsipras gave his annual “state of the nation” address, where he boasted that the Greek economy has turned the corner, that unemployment is going down, that salaries will be increased, and that the country is returning to growth. Is this what Greece’s economic indicators actually show?

Protesters march to the Greek Parliament in Athens on Tuesday Nov. 6, 2012. Greece’s unions are holding their third general strike in six weeks to press dissenters in the country’s troubled coalition government not to back a major new austerity program that will doom Greeks to further hardship in a sixth year of recession. Two days of demonstrations are planned to start Tuesday, continuing until lawmakers vote late Wednesday on the bill to slash euro13.5 billion ($17.3 billion) from budget spending over two years. (AP Photo/Dimitri Messinis)

Protesters march to the Greek Parliament in Athens on Tuesday Nov. 6, 2012. Greece’s unions are holding their third general strike in six weeks to press dissenters in the country’s troubled coalition government not to back a major new austerity program that will doom Greeks to further hardship in a sixth year of recession. Two days of demonstrations are planned to start Tuesday, continuing until lawmakers vote late Wednesday on the bill to slash euro13.5 billion ($17.3 billion) from budget spending over two years. (AP Photo/Dimitri Messinis)

Dr. Jack Rasmus (JR): No, not quite. Greece’s debt is still the same as it was in 2011, roughly 180 percent of GDP. Unemployment has come down by only 3 to 4 percent, so instead of 27 percent, it’s about 23 to 24 percent. That’s depression-level unemployment. All the other indicators in the economy are flat or declining, so I don’t see anywhere that Greece is really “recovering,” and neither, really, is the entire eurozone economy. It’s been bouncing along the bottom.

As I said in my book “Systemic Fragility,” it’s a case of chronic stagnation. [The eurozone] might grow a little, 0.5 percent or 1 percent above GDP, mostly as a result of Germany’s growth, then it flattens out or goes below. Most of the periphery economies in Europe are stagnant or in a recession, as they have been for quite some time.

As far as raising wages, Greece cannot raise, at least in the public sector, any wages without the approval of the troika [Greece’s three major lenders: the European Commission, European Central Bank, and the International Monetary Fund]. It’s a real stretch to say that Greece is recovering. It’s kind of moving sideways, in the condition of still chronic economic depression.

MPN: One of the perceptions that has been prevalent in global public opinion with regard to the economic crisis in Greece is that the country has been “bailed out” with billions upon billions of euros in free money. Is this really the case, and where has the so-called “bailout” money to Greece actually gone?

JR: Countries don’t get bailed out. Governments, banks, businesses, and sometimes, though not so frequently, households get bailed out. So the question is, who got bailed out here, in the debt restructuring deals of 2010, 2012, 2015, and this past spring? The banks got bailed out several times. Foreign investors and speculators in Greek bonds and other securities clearly got bailed out in 2012. If you look at where the money has gone, there’s $400 billion in debt in Greece still, that they have to pay off, with an economy that is less than half that size, so it’s impossible.

Where has all this money gone? Recent studies by the European School of Management and Technology documenting the 2010 and 2012 bailouts indicate that 95 percent of all the loans to “bail out” the Greek government, which then bailed out the Greek banks — 95 percent of that went back to Northern Europe, mostly to the German and Northern European banks that had loaned so much money to Greece. [Bailout funds also went] to the troika, particularly the European Commission, that then distributed it to the banking system and investors in turn. The EC is the big player here, and to some extent the European Central Bank, and to a minor extent now the International Monetary Fund. So, 95 percent of all the money loaned to Greece went right back to [Europe] and less than 5 percent of that went back into the Greek economy. Greece has been subsidizing the financial system elsewhere in Europe.

A supporter of the communist-affiliated union PAME takes part in an anti-austerity rally in front of the parliament in Athens, Monday, Oct. 17, 2016.

A supporter of the communist-affiliated union PAME takes part in an anti-austerity rally in front of the parliament in Athens, Monday, Oct. 17, 2016.

MPN: What do you believe needs to be done about the Greek debt?

JR: You might ask what needs to be done about debt throughout the eurozone, because it’s not just Greece. Greece is perhaps the most serious case, but other places in the periphery of Europe are still heavily indebted. You cannot sustain, with austerity measures designed to pay the interest and principal on debt, a $400-plus billion debt based on an economy that’s less than $200 billion. Even the IMF has come to that conclusion and is maneuvering with the other troika members on that particular point.

Is [the debt] legitimate? Well, you have to understand the origins of this debt. It was originally private sector debt that was created as a result of the formation of the eurozone in 1999, the ECB as part of that creation, and other elements of the eurozone agreements, particularly the Lisbon Strategy that Germany adopted. Germany and other Northern European businesses and bankers pumped money and capital into the periphery, including Greece, from 2005 onward. Germany had a strong competitive advantage in exports, so a lot of the money and capital was pumped into the periphery, including Greece, in order to purchase German and other exports. So the money went in and circulated around, leaving a pile of private sector debt in Greece, Italy, and other places.

Then we had the crash of 2008-2009 and the debt could not be repaid, and the troika stepped in to [offer] the governments of Greece and other countries money in order to continue to bail out the private sector and enable the repayment of the private debt. So it starts out as private debt, because of this great imbalance in exports within the eurozone, and then that gets converted to government debt, and then the big crash of 2008-2009 adds even more debt, and then you have the recession of 2011-2013 in the eurozone and the 2012 bailout, which piled on more debt in order to pay the old debt, and then in 2015 the same thing. So the troika’s piling more debt on Greece in order for Greece to pay the previous debt, and that’s totally unsustainable. They’re going to have to expunge some of that debt.

Of course, the Germans, Wolfgang Schauble [the German finance minister] and the coalition in the north, does not want to allow that. And they don’t really want to change the eurozone, because the eurozone, while very imbalanced for the periphery, has benefited Germany significantly. [The Germans] dominate the finance ministers’ council in the EC and they dominate the ECB, and they’re just keeping the situation the way it is because it’s profitable for them.

Demonstrators hold a poster against the austerity policy of Germany prior to a special session of the parliament Bundestag on negotiations with Greece for a new bailout in Berlin, Germany, Friday, July 17, 2015. (AP Photo/Markus Schreiber)

Demonstrators hold a poster against the austerity policy of Germany prior to a special session of the parliament Bundestag on negotiations with Greece for a new bailout in Berlin, Germany, Friday, July 17, 2015. (AP Photo/Markus Schreiber)

MPN: Why must Greek banks be nationalized, in your view?

JR: Look at the debt negotiations of 2010, 2012, and 2015. What happened was the ECB, which pretty much controls the Greek central bank — the ECB is just a council of central banks dominated by the Bundesbank [the German central bank] and its allies, so they have control — and what you saw in the negotiations is that in 2015, the ECB put the screws to the Greek economy, and Syriza collapsed and agreed each time the screws were tightened, bringing the economy to a halt. They couldn’t deal with the squeeze on the economy by the ECB. This brought the economy to a halt, squeezing it and of course not releasing loans that [the troika] had agreed to provide Greece under previous agreements. There was an economic squeeze that Syriza did not have a strategy to deal with, and eventually it capitulated.

You’ve got to nationalize, make the Greek central bank and the banking systems independent of the ECB. Gain control over your economy once again, and that is one of several key steps to prevent the squeeze every time you attempt to renegotiate the debt or restructure the debt. Without an independent, Greek, people-controlled banking system, the eurozone and the troika will squeeze and bring Greece to its knees every time. We’ve seen that three times. You’ve got to nationalize the banking system, including the central bank, or if you want to just leave the central bank as part of the ECB structure, go ahead, but create an independent central bank authority elsewhere in the Greek government.

In the U.S. during the Great Depression, the U.S. central bank had screwed up badly, and [President Franklin Delano] Roosevelt took over and had his Treasury Department take over and run the economy. Greece would have to set up a parallel central bank in its finance sector, and isolate and bypass the influence of the ECB through the Greek central bank. You would have to create a parallel currency as part of this and impose serious controls on bank withdrawals and capital flows outside the country, which Syriza did not really do, because the ECB and the troika opposed it. When you have all the capital, bank withdrawals and capital flight is another way of squeezing the country economically.

FILE – In this Sunday, Oct. 18, 2015 file photo, a man walks past street art depicting Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel in Athens, Greece. Tsipras’ decision to sign off on a bailout led to many in his left-wing Syriza party to quit in protest.

FILE – In this Sunday, Oct. 18, 2015 file photo, a man walks past street art depicting Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel in Athens, Greece. Tsipras’ decision to sign off on a bailout led to many in his left-wing Syriza party to quit in protest.

MPN: The current government in Greece has been continuing a policy of massive privatizations of Greek public assets, with profitable airports and harbors having been privatized in the past year, in addition to the recent selloff of the Greek national railroad for a total of €45 million ($49 million). What are the short- and long-term impacts of the privatization of such public assets?

JR: The short-term is that when you privatize them, under the aegis of the troika, if you sell below market prices, which a lot of these assets are being sold at, that’s profit on the sale for the investors who are buying up these assets. But once the assets are in private hands, where does the revenue go? Does it go back into Greece or does it go back into the pockets of the investors and the corporations and the banks outside Greece that are buying it up? Well, it goes out. It’s a form of capital flight. Money that is needed in Greece flows out of Greece.

This is a new form of financial imperialism, wealth extraction in other words, that is being structured and managed on a state-to-state basis. It’s not 19th century British imperialism where they set up a factory in India, paid them low wages, and brought the textiles back to London to re-sell at a higher price. It’s not that kind of production imperialism. This is financial imperialism imposed on Greece, and it’s a new form that’s emerging everywhere, where you indebt the country and then you force the country to engage in austerity in order to pay the principal and interest on the debt, and you extract the income from the country. Privatizations are another form of that.

You privatize public goods, you get them at fire-sale prices, and then the income flows from those assets flow back to the coffers of the private companies or the banks, outside of Greece.

The other consequence is when you privatize, they come in and they cut costs, which means they lay off people in mass numbers, they put a hold on wages, they get rid of benefits, and they do everything else to maximize their revenue.

Finally, longer term, it means that Greece has less control over its own economy if it can’t control its infrastructure and everything is owned by foreigners. Then you can’t influence it as much, and if you’re part of the eurozone, you’re legally prohibited from what you can do to make sure that these foreign-owned infrastructure companies are behaving in terms of the benefit for the public sector, for the rest of Greece.

MPN: You have argued in your book, “Systemic Fragility in the Global Economy,” that there are nine major trends which account for the economic troubles that are seen on a global scale. What are some of these trends?

JR: Everywhere, and particularly since 2008, we see central banks and monetary policy to be ascendant, and that means creating money, pumping it into the economy to bail out the financial systems, the financial institutions, the banks and the shadow banks, meaning speculators, hedge funds, private equity firms, asset management companies, and so forth. We’ve seen bailouts of tens of trillions of dollars since 2008. All of that liquidity injection into the economy has driven interest rates down to zero or even, in Europe and Japan and elsewhere, negative rates, and that fuels debt. With rates that cheap, corporations and businesses float new corporate bonds, and they use the money not to invest necessarily, they use it to buy back the stock and drive up the stock prices and pay out dividends, or they sit on it, they hoard it, or they send it to emerging markets. That’s a problem everywhere, and that’s the result of massive liquidity injections, which have really been escalating since the 1980s, when controls on international capital flows were eliminated everywhere.

After the 1970s, when the Bretton Woods system collapsed and central banks took over, the combination of those has led to the financialization of the global economy in the 21st century, where profits are far greater for investing and speculating in financial securities than they are in investing in real assets and real things that create real jobs and real income and real consumption. We’re becoming dependent on debt more and more. The economy is increasingly credit- and debt-driven, and that’s the result of this massive liquidity injection, and it also leads to a shift from real asset investment — investing in real things that create jobs that people need — toward financial asset investment. That means that real investment collapses over time and productivity collapses over time as well, and we see that happening everywhere.

That’s a major point that I argued about in my book, “Systemic Fragility,” this financialization of the global economy based on liquidity and debt and squeezing out. It’s diverting money and capital from real investment into financial speculation. What’s going on in Greece is a concrete expression of this, the reliance on financial means and financial manipulation. The periphery in the eurozone is at a great disadvantage to Germany and others, and they’re being manipulated financially. All the payments on interest and the debt flow back to the north. This is all flowing through the EC to the private sector, and it’s a nice constant money capital flow from interest payments and privatization and speculation on government bonds and securities and stocks in these countries as the volatility occurs.

It’s a reflection, in Greece, of what’s happening on a broader scale elsewhere in the global economy, and that’s why we haven’t seen much of a recovery in the global economy. Global trade is stagnant and real investment everywhere is drifting toward zero, productivity is negative almost everywhere, even in the U.S., and we’re seeing growth rates of barely 1 percent, 1.5 percent, at best, when it should be double that. We see these growing, non-performing bank loans, almost $2 trillion in Europe, the worst in Italy with about $400 billion. We see the same thing in Japan and in China. We’re becoming more systemically fragile financially because of this shift to financial speculation.

In this July 5, 2012 file photo President of the European Central Bank Mario Draghi speaks during a news conference in Frankfurt, central Germany. (AP Photo/dapd, Mario Vedder, File)

In this July 5, 2012 file photo President of the European Central Bank Mario Draghi speaks during a news conference in Frankfurt, central Germany. (AP Photo/dapd, Mario Vedder, File)

MintPress: What is your outlook for the eurozone economy and the difficulties that it is currently facing?

JR: The European banking system has never fully recovered from the 2008-2009 crash. The ECB is pumping money into the banking system in various ways, long-term refinancing options and all the bailout funds and qualitative easing and negative interest rates and so forth. They’re desperately pumping money into the banking system, but the banks aren’t really lending, at least to those businesses that would reinvest in real assets to create jobs. It’s far more profitable to make money now. Investors make more money from financial speculation than they do from investing long-term and expecting to get a return over 10 to 20 years for investment in a real company that creates real things.

We can see the strains now with the non-performing loans, in particular in Italy. Of course, we know the situation with the non-performing bank loans in Greece. Portugal is in bad shape as well in terms of non-performing loans, and now we see even institutions like [Germany’s] Deutsche Bank and others beginning to feel this strain, and the further impact on the European banking system of the “Brexit” [the departure of Great Britain from the European Union].

The problem is that the private banks are either hoarding the cash, they won’t invest in real growth, or they’re sending their money offshore to emerging markets, or they’re using it, as in the U.S., to buy back stock and pay out dividends and loaning money to companies to do just that. The global economy has changed dramatically in ways that make it much more fragile than ever before. A lot of debt has been building up everywhere: Over $50 trillion in additional debt has occurred since 2009, and when the next recession comes, how are they going to pay that debt?

When times are stable or growing, you can add debt without a great crisis emerging, but when you have a recession or a downturn that’s significant, where are you going to get the money capital to pay the principal and interest on the debt? Then you start seeing defaults and you start seeing financial asset price collapses going on, and now you’re back in 2008-2009. That’s the picture of the global economy.

A farmer tries to protect himself as he clashes with a riot policeman during an anti-government protest at central Syntagma square in Athens, Wednesday, Nov. 18, 2015. Greek farmers protesting over planned tax and pension reforms demanded by the country’s bailout creditors have clashed outside parliament with police, who used tear gas to disperse them. (AP Photo/Yorgos Karahalis)

A farmer tries to protect himself as he clashes with a riot policeman during an anti-government protest at central Syntagma square in Athens, Wednesday, Nov. 18, 2015. Greek farmers protesting over planned tax and pension reforms demanded by the country’s bailout creditors have clashed outside parliament with police, who used tear gas to disperse them. (AP Photo/Yorgos Karahalis)

MPN: What would be the steps for Greece to follow, in your view, in order to escape the spiral of economic depression and austerity?

JR: Syriza made it clear, when it came into power, that it was not in favor of “Grexit” [a Greek departure from the eurozone], and it has always maintained that position. An unprepared, “we’re leaving the eurozone and the euro” kind of decision would cause a collapse of values, particularly among those who have investments in some savings in Greece. To some extent, Syriza was caught between a rock and a hard place here. They couldn’t or didn’t want to advocate an exit, and at least those who had investments didn’t want it because of the potential effect on their investments. The broader Greek populace thinks, still, that to be European you have to be in the eurozone. That’s a big mistake.

I think what Greece and Syriza should have done is to create a parallel currency and to take over its banking system. In other words, make the banking system truly independent, including the Greek central bank, and if that was not possible, bypass the Greek central bank and set up a central banking function in the finance ministry, as the U.S. has done at different times. Create a parallel currency, and policies and programs to get people to convert their euros into the parallel currency. Maybe declare that henceforth all taxes to the Greek government will be paid with the parallel currency, and that means that people would then trade in their euros for the parallel currency to pay their taxes.

Then tell the troika [the EC, the ECB, and the IMF — collectively, Greece’s lenders] that we’re going to pay you in your euros, but if we run out of euros here as a result of the conversion, well, tough luck, we don’t have a way of paying you, let’s negotiate a final deal where you expunge some of it and we pay you off and we go our separate ways. Of course, you would have to create significant capital flow controls, which has always been a problem every time there’s been a crisis; the money flows out of Greece. Take the economy out of the control of the troika without a formal exit.

That could have been done, but for some reason Syriza and its finance advisers either didn’t want to do that or didn’t know how to do that.

MPN: Arguments that have been heard against a parallel currency include the claim that the existence of two currencies would create a situation where there would be “haves” and “have nots” — between those who would hold a stronger, hard currency, compared to those holding a weaker, devalued currency. How do you respond to this?

JR: There are policies and approaches you can take that entice and require people to convert their euros into the new currency. That would raise the demand and therefore the value, the price of the new currency. If you just had the currency and you didn’t have this forced trade-in, then of course you would have “haves” and “have nots,” the new currency would collapse, and pretty soon no one would want to use it. But, for example, saying that taxes could only be paid with the new currency, would force people who had corporations and businesses and so forth to purchase the new currency with the euro. It would undermine the value of the euro in Greece and it would raise the value of the new currency in Greece as well. That might set off a parallel elsewhere in the eurozone with other countries thinking the same thing, which would undermine the value of the euro and put the squeeze on the troika for once. Greece never put the squeeze on the troika, it was just the opposite in all of these negotiations that occurred, they never really hurt the troika in negotiations, and that’s the only way you prevail in negotiations. You’ve got to make it unpleasant for the opposition. Syriza never did that, they played along and made concession after concession.

Syriza thought that their example would strike a spark elsewhere in Europe of other social democratic forces and governments. They thought that they would get the rest of the social democracies behind them and together they would reform the eurozone. That was a fiction, a fantasy thought on the part of Alexis Tsipras and others, but that was the core of their whole strategy. European social democracy is a dying force, and that’s why you see the growth on the fringes, both to the right and the left.

Tsipras and [former Greek finance minister] Yanis Varoufakis’ problem was that they thought they could get all these elements behind them and that together they would have enough weight to force Schauble and other finance ministers to make concessions. Well, Schauble and the other ministers, the “German faction,” as I call it, within the finance ministers’ council in the EC, remained dominant. At every step along the way, whenever Syriza and its few allies tried to make a compromise where some concessions were made to them, the German faction squelched it. We saw that, for example, at the very end, when [Greece held] the referendum in July 2015. Greece held the vote, and the vote said “go back and negotiate a better deal for us,” and what did Tsipras do? He totally caved in to the Schauble faction, and then the Schauble faction said, “The offer we made last week is now off the table, you’re going to have to accept an even worse one.” So they put the screws to Syriza, and Syriza looked to its allies in the EC, and they totally caved in as well. Things just got worse and worse until you had the final [austerity] agreement on August 20, 2015.

It was a step-by-step retreat from [Syriza’s election in] January 2015, because Syriza had the wrong strategy and was not engaged in certain necessary tactics. Of course, the troika itself had a lot of cards to play. It would have been an uphill fight for Syriza. The time where they might have been able to strike some concessions from the troika was 2012, but New Democracy [the center-right party in power at the time in Greece] was totally in the pocket of the troika, so that was impossible.

[This past spring], the IMF and the troika were worried about “Brexit” and what impact that might have on renewing “Grexit.” So they put the screws to Greece again, raised the debt even more, austerity even more, and I think another round of that is coming, because the IMF wants out of the troika deal. We’ll see what happens at the IMF meeting, but they haven’t endorsed even the 2015 agreement because they know it’s unsustainable. I think the IMF is maneuvering to have the EC to buy its portion of the debt, and once that happens, the EC will demand even more austerity from Greece.

President of France Francois Hollande, U.S. President Barack Obama, Britain’s Prime Minister David Cameron and Germany’s Chancellor Angela Merkel attend the Transatlantic Trade and Investment Partnership (TTIP) meeting at the G20 the G-20 leaders summit in Brisbane, Australia, Sunday, Nov. 16, 2014.

President of France Francois Hollande, U.S. President Barack Obama, Britain’s Prime Minister David Cameron and Germany’s Chancellor Angela Merkel attend the Transatlantic Trade and Investment Partnership (TTIP) meeting at the G20 the G-20 leaders summit in Brisbane, Australia, Sunday, Nov. 16, 2014.

MPN: In the event that a parallel currency is implemented and steps are taken to maintain or strengthen its value, could that be a prelude to a switch to a national, domestic currency?

JR: Yes. At some point, one currency will become dominant. You can’t have two equal currencies like that. Another advantage of the new currency is that it will start out at less value than the euro, and that will be used as the trading currency. That will stimulate Greek exports to elsewhere, outside the eurozone.

Part of the problem is that the periphery in Europe is so dependent on exports and imports to Germany and the north, that it can’t really engage in its own independent export strategy without cutting wages. Throughout Europe, you have what’s called “internal devaluation,” when you are stuck with a currency and someone else’s central bank, the ECB and the euro. You can’t really engage in independent monetary policy to stimulate your economy and you can’t engage in lowering your currency in order to gain some advantage in exports. You’re stuck, and only the most powerful country that’s most efficient and has the lowest costs is able to take advantage of global exports, and that’s Germany. The weaker economies of the periphery will always be at a disadvantage to Germany when it comes to trying to push their exports anywhere else outside the eurozone.

That’s the lesson. The lesson is that you’ve got a 1999 agreement in which you have this quasi-central bank, the ECB, and you have [the euro], and that arrangement significantly benefits the most efficient, low-cost producer, which is Germany, at the expense of the periphery. Until you have a true central bank and fiscal union to some extent, that will pump the money into the periphery to help it grow when it doesn’t, you will always have the situation you have in Europe right now.

Compare that to the U.S., where there’s a fiscal union, so that if certain states have economic problems … the federal government can pump money into those specific locations. If you don’t have a true federal government and fiscal union, you can’t do that, and if your central bank is dominated by the largest economy — Germany — even the monetary policy has no effect. And if it’s a single currency, it’s to the advantage of the stronger economy at the disadvantage of the weaker.

The eurozone economy is structured to emphasize the growth of the strongest economies at the expense of the weaker, and that’s not going to change. It’s built into the eurozone. You cannot create a currency union and a customs union without a true banking union and fiscal union. More and more countries in the eurozone are beginning to come to that conclusion, but it was foreordained. Economists knew this from the beginning, and that’s the tragedy. Greece has tied its tail to the eurozone, dominated by Germany, and it can never get out of this situation as long as Germany dominates the institutions, which it does, because the whole arrangement is great for Germany.

A protesters carries a protest sign during a rally prior to the opening of the new European Central Bank (ECB) headquarter in Frankfurt, Germany, Wednesday, March 18, 2015. At least four police cars were set alight and two officers injured Wednesday as authorities confronted violent anti-austerity protesters ahead of the inauguration ceremony for the European Central Bank’s new headquarters (AP Photo/dpa, Arne Dedert)

A protesters carries a protest sign during a rally prior to the opening of the new European Central Bank (ECB) headquarter in Frankfurt, Germany, Wednesday, March 18, 2015. At least four police cars were set alight and two officers injured Wednesday as authorities confronted violent anti-austerity protesters ahead of the inauguration ceremony for the European Central Bank’s new headquarters (AP Photo/dpa, Arne Dedert)

MPN: Tell us about your most recent book, “Looting Greece.”

JR: It’s really a case study of the consequences of financialization and globalization and integration. I argue that there is this phenomenon of the smaller economies being tied into the larger economies through free trade agreements, which lead to currency unions, which lead to banking unions, and then you’ve got a situation like Greece and the euro periphery and the problems associated with that.

The book also takes a historical look at the origins of the Greek debt, that starts in 1999 with the [creation of the] eurozone, the adoption of the euro by Greece in 2002 and the consequences of that, how the debt developed, first in the private sector because of German export domination and then conversion of the private debt in 2008-2009 to the public debt, and then the collapse of 2008-2009, which added to the government debt. Then you had the 2012 agreement where the private sector was bailed out, and that added more debt, and then 2015 and so forth. All this is described in detail in the early chapters, and then most of the book is a step-by-step look at the negotiations between Syriza and the troika, from [Syriza’s January 2015 election] through the spring of 2016, and what were the strategic and tactical errors of Syriza and the strategic and tactical moves by the troika which enabled it to prevail.

At the end, [the book discusses] how this is a form of a new emerging financial and wealth extraction from smaller economies by the larger economies, because of the globalization and integration arrangement that exists, the emergence of financial extraction and financial exploitation, and how central banks are feeding that all. This will lead to my next book, which is about global central banks and the problems they’ve created as we move to another crisis, which I think is coming in the next five years.

Demonstrators dressed as clowns pass by a burning police car Wednesday, March 18, 2015 in Frankfurt, Germany. Blockupy activists try to blockade the new headquarters of the ECB to protest against government austerity and capitalism. (AP Photo/Michael Probst)

Demonstrators dressed as clowns pass by a burning police car Wednesday, March 18, 2015 in Frankfurt, Germany. Blockupy activists try to blockade the new headquarters of the ECB to protest against government austerity and capitalism. (AP Photo/Michael Probst)

 

 

Dec 172012
 

Posted by greydogg, 99GetSmart

* AUSTERITY EXPLAINED: A POCKET GUIDE TO THE EU CRISIS

By Collettivo Prezzemolo, ROARmag

TNI-Pocket-Guide

By blaming the crisis on public spending, politicians’ and bankers’ only solution was to impose austerity. This has predictably worsened the debt crisis.

Excerpt via the Transnational Institute in Amsterdam.

“We are punishing the innocent through austerity, and we are rewarding the guilty because the banks are continuing to receive huge privileges and subsidies from our governments. That is why we must defeat this austerity treaty, and all the measures that come with it unless we want Europe to be retrograded to, shall we say, the 19th century.”

Susan George, President of the Board of the Transnational Institute, author of Whose Crisis, Whose Future?

Austerity measures have never worked, and have led growth to collapse across the EU. Greece witnessed its battered economy shrinking by 6.2% in the second quarter of 2012, and is forecast to enter its sixth straight year of recession in 2013. Austerity means less national income from taxation, reducing governments’ capacity to pay back spiraling debts, leading to even higher debts. […]

Download the full ‘EU Crisis Pocket Guide via the Transnational Institute.

READ @ http://roarmag.org/2012/12/transnational-institute-eu-crisis-pocket-guide/

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* THE INSUFFERABLE HUMAN DRAMA OF EVICTIONS IN SPAIN

By Jerome Roos, ROARmag

Juana-Madrid-04

With 500 families being evicted in Spain every day, foreclosures have become a source of great suffering. But luckily, there are still those who resist.

Throughout this crisis, there has always been a certain alienating quality to the pronouncements of European leaders and technocrats. Sometimes one is led to wonder if these people are actually talking about the same continent — or the same universe, for that matter. Just today, for instance, the European Central Bank announced that “the eurozone is starting to heal.” Indeed, the major weakness the central bankers could detect from the commanding heights of their glass-and-steel tower in downtown Frankfurt was “falling bank profits.”

But this morning, huddled together with activists and independent journalists in a small apartment in Madrid, the eurozone seemed to be far from healing. Together with Santiago Carrión from the Associated Whistleblowing Press, we were there because the Platform for those Affected by their Mortgage (PAH), which runs the Stop Desahucios (Stop Evictions) campaign, had called on the city’s indignados to protect Juana Madrid and her two daughters of 21 and 17, who were about to be evicted from their humble home in the poor neighborhood of Orcasur. The atmosphere, of course, was tense.

The living room was full of people, most of them photographers, while outside the first chants of activists could be heard as people prepared to physically block the entrance to the apartment. Nervously dragging on her cigarette, Juana’s baggy and dark-ringed eyes said it all: this was a woman on the verge of a breakdown. Her voice was calm and subdued, but her facial expression exuded despair. “We have nowhere to go,” Juana’s 21-year-old daughter Isa told us in the kitchen. “If they evict us today we will end up on the street tonight.”

Sadly, the story of Juana and her daughters is by no means an exception. Ever since the start of the crisis in late 2008, over 350.000 families have been evicted from their homes. According to government figures, Spain currently faces a staggering wave of 500 evictions per day — 150 of them in Madrid alone. The vast majority of these involve families whose main breadwinner lost his or her job in the recession and who have inadvertently fallen behind on their mortgage payments to the bank. At 25.02%, Spain’s unemployment rate is the highest in the developed world, higher even than in the U.S. at the peak of the Great Depression. […]

READ @ http://roarmag.org/2012/12/spain-evictions-suicide-bankia-rajoy/

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* POVERTY AND SOCIAL EXCLUSION RISING IN GREECE

By Leonidas Oikonomakis, ROARmag

Greece-poverty

[…] In Greece, we know well who is paying for the crisis. A good question to ask would be: who gains? Apart from Greece’s private creditors, could it be the multinational corporations, which are now swooping in to benefit from the country’s dramatically reduced labor rights and privatization schemes? Again, I will give you an example that I recently read in the press. Kostis Hatzidakis, the Minister of Development, announced proudly that Unilever, an Anglo-Dutch multinational consumer goods company, will from now on produce 110 of its products that it used to produce abroad, in Greece. He also mentioned that this will boost employment and that his government wants to create a business-friendly environment in Greece in order to attract “investments” for “development”.

What Hatzidakis did not mention are the conditions under which the future employees of Unilever — and whatever other multinational decides to “invest” in Greece bringing its production facilities or, maybe, buying its state owned enterprises — will have to work. Let me present them to you: Unilever’s Greek employees will be paid slave salaries (586 euros is the minimum wage today, down from 751 euros before the crisis, while for young workers under the age of 25 it stands at 510 euros: below the poverty threshold!). They will only have minimum labor rights. They will have to work 6 and maybe 7 days a week. They will only have a minimum of 11 hours rest before getting back to work (from 13 that it was so far). And they will be extremely easy to fire without compensation — as the government effectively rid itself of pesky labor rights. […]

READ @ http://roarmag.org/2012/12/poverty-and-social-exclusion-rising-in-greece/

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* SPECIAL REPORT: GREECE’S TRIANGLE OF POWER

By Stephen Grey and Dina Kyrakidou, Reuters

In late 2011 the Greek finance minister made an impassioned plea for help to rescue his country from financial ruin.

“We need a national collective effort: all of us have to carry the burden together,” announced Evangelos Venizelos, who has since become leader of the socialist party PASOK. “We need something that will be fair and socially acceptable.”

It was meant to be a call to arms; it ended up highlighting a key weakness in Greece‘s attempts to reform.

Venizelos’ idea was a new tax on property, levied via electricity bills to make it hard to dodge. The public were furious and the press echoed the outrage, labeling the tax ‘haratsi’ after a hated levy the Ottomans once imposed on Greeks. The name stuck and George Papandreou, then prime minister, felt compelled to plead with voters: “Let’s all lose something so that we don’t lose everything.”

But not everyone would lose under the tax. Two months ago an electricity industry insider revealed that some of the biggest businesses in the land, including media groups, were paying less than half the full rate, or not paying the tax at all. Nikos Fotopoulos, a union leader at power company PPC, claimed they had been given exemptions. […]

READ @ http://uk.reuters.com/article/2012/12/17/us-greece-media-idUKBRE8BG0CF20121217

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* TAIBBI, SPITZER FUME OVER HSBC SETTLEMENT

Source: Eliot Spitzer’s Viewpoint

VIDEO @ http://current.com/shows/viewpoint/videos/matt-taibbi-on-hsbc-settlement-i-think-even-people-on-wall-street-were-blown-away-by-the-result/

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* NOAM CHOMSKY: US INTELLECTUAL CLASS IS MORALLY DEGENERATE

By Noam Chomsky and Eric Baily, InformationClearingHouse

Eric Bailey: The last four years have seen significant changes in American federal policy in regards to human rights. One of the few examples of cooperation between the Democratic and Republican parties over the last four years has been the passing of the National Defense Authorization Act (NDAA) of 2012. This bill has given the United States military the power to arrest American citizens, indefinitely, without charge, trial, or any other form of due process of law and the Obama administration has and continues to fight a legal battle in federal court to prevent that law from being declared unconstitutional. Obama authorized the assassination of three American citizens, including Anwar al-Awlaki and his 16-year-old son, admittedly all members of Al Qaeda — all without judicial review.

Additionally, the Guantanamo Bay prison remains open, the Patriot Act has been extended and the TSA has expanded at breakneck speeds. What is your take on America’s human rights record over the past four years and can you contrast Obama’s policies with those of his predecessor, George W. Bush?

Noam Chomsky: Obama’s policies have been approximately the same as Bush’s, though there have been some slight differences, but that’s not a great surprise. The Democrats supported Bush’s policies. There were some objections on mostly partisan grounds, but for the most part, they supported his policies and it’s not surprising that they have continued to do so. In some respects Obama has gone even beyond Bush. The NDAA, which you mentioned, was not initiated by Obama (when it passed Congress, he said he didn’t approve of it and wouldn’t implement it), but he nevertheless did sign it into law and did not veto it. It was pushed through by hawks, including Joe Lieberman and others.

In fact, there hasn’t been that much of a change. The worst part of the NDAA is that it codified — or put into law — what had already been a regular practice. The practices hadn’t been significantly different. The one part that received public attention is what you mentioned, the part that permits the indefinite detention of American citizens, but why permit the indefinite detention of anybody? It’s a gross violation of fundamental human rights and civil law, going all the way back to the Magna Carta in the 13th century, so it’s a very severe attack on elementary civil rights, both under Bush and under Obama. It’s bipartisan! […]

READ @ http://www.informationclearinghouse.info/article33336.htm

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* ANOTHER GOLDMAN CREATURE GIVEN VITAL GOVERNMENT POST

By Matt Taibbi, Rolling Stone

Big news yesterday in the United Kingdom, where the citizenry surveyed its domestic banking system and discovered that it couldn’t find a single person trustworthy enough to put in the top job at the Bank of England. So they went to Canada and stole that country’s central banker, Mark Carney, who just happens to be a former Goldman, Sachs executive – he was once Goldman’s managing director of investment banking.

Carney’s appointment may be seen as an admission that the British banking sector is now so tainted, only an outsider can be trusted to govern them. Almost all of the major English banks have been dinged by ugly scandals. The LIBOR mess, in which banks have been caught messing around with global interest rates for a variety of sordid reasons, has most infamously implicated Barclays, but the Royal Bank of Scotland is also a cooperator in those investigations.[…]

READ @ http://www.rollingstone.com/politics/blogs/taibblog/another-goldman-creature-given-vital-government-post-20121206

Dec 132011
 

 

* OCCUPATION SEEKS TO HALT FORECLOSURES NATIONWIDE! ( 3 ITEMS )

I.

Arrest for Occupy Bremerton foreclosure protest
For the second week in a row, Occupy Bremerton protesters have attempted to disrupt an auction of foreclosed homes.
The Associated Press
http://seattletimes.nwsource.com/html/localnews/2016991403_apwaoccupybremerton.html

II.

Faced with evictions, occupy movement protesters look to new tactics
By Mark Guarino | Published Mon, Dec 12 2011 8:31 am
http://www.minnpost.com/worldcsm/2011/12/12/33748/faced_with_evictions_occupy_movement_protesters_look_to_new_tactics

III.

Occupy Homes: New Coalition Links Homeowners, Activists in Direct Action to Halt Foreclosures
November 11, 2011
http://www.democracynow.org/2011/11/11/occupy_homes_new_coalition_links_homeowners

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* THE WAR IN IRAQ IS OVER. LONG LIVE THE WAR ON TERROR!

By Liz Armstrong, Vice.com

Even though the president just declared an official end to the war in Iraq–aka a good hunk of our so-called War on Terror–the paranoia hotline is still on fire. Over the past months troupes have been coming home after the nine years spent fighting for something a lot of us didn’t think ever made any sense, and yet the Senate still passed the National Defense Authorization Act. This hands over domestic terror investigations and individual inquiry to the military, which means it’s cool to send anyone suspected of terrorism—not just the non-US citizens targeted in the Patriot Act—off to special prison without a trial for the duration of this “war on terror.” Which is supposedly over by the end of this month. This, combined with the discovery last week that FEMA’s put out a help-wanted ad for subcontractors to provide “temporary camp services” for facilities all over the country, is fairly alarming news.

It’s not new news, though. The government subcontracts anything from health insurance for local employees in Nigeria to building airplanes to producing maps. Winning a contract with FEMA, according to instructional DIY site eHow, is “moderately challenging,” and right now they’ve got a contingency call for companies who can respond quickly to a call for temporary fencing and barricades, hand-washing stations, refuse collection, potable water, and other elements that, when added up, seem to equal big-ass pop-up jails.

And prison privatization in general isn’t news either. Forty-nine percent of detainment centers for illegal immigrants (what’s up Arizona!) are owned by non-government entities. Most of these companies were started specifically to get into the prison biz. And in order to start a corporation to run something so massively expensive the government can’t even handle it, you need some help with money. In step large investment firms and banks such as Lehman Brothers and Wells Fargo, who’re notorious for financing internment start-ups, and here’s one shortcut to the complex answer as to why no one on Wall Street is in jail: If you have stakes in keeping the prison industry afloat, you won’t be visiting it, even if you’ve broken the law.

Obama just cited reasons why we’re ready to move forward in Iraq–namely that Iraqis are voting in democratic fashion, creating institutions that are transparent, and participating in an increasingly robust economy–and simultaneously quickly mentions continued efforts in fighting terrorism, lest we get too comfortable. The momentum in profiting off of fear is what made this war drag on for nine years, and why there’s no end in sight to counter-terrorism initiatives around the world. Nowhere is it more publicly apparent in this country than at the airport, any airport, in all steps taken, from entering through one and exiting out another. […]

READ @ http://www.vice.com/read/war-iraq-over-terror

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* DEFENSE AUTHORIZATION CONFERENCE MAKES FEW CHANGES TO DETAINEE PROVISIONS

By Marcy Wheeler, Emptywheel

According to a press release from Senator Levin’s office, the conference on the Defense Authorization has made few changes to the detainee provisions institutionalizing military detention of alleged terrorists.

With regards to Section 1031, which authorized the indefinite detention of alleged terrorists, the conference bill,

Reaffirm[s] the military’s existing authority to detain individuals captured in the course of hostilities conducted pursuant to the Authorization for the Use of Military Force. No change has been made to the Senate version of this provision, which confirms that nothing in the provision may be “construed to affect existing law or authorities relating to the detention of United States citizens, lawful resident aliens of the United States, or any other persons who are captured or arrested in the United States.”

Section 1032, which mandates presumptive military detention, adds language purporting not to change FBI’s national security authorities (though I don’t understand how that could practically be the case).

Require military detention – subject to a Presidential waiver – for foreign al Qaeda terrorists who attack the United States. This provision specifically exempts United States citizens and lawful resident aliens, authorizes transfer of detainees to civilian custody for trial in civilian court, and leaves it up to the President to establish procedures for determining how and when persons determined to be subject to military custody would be transferred, and to ensure that such determinations do not interfere with ongoing intelligence, surveillance, or interrogation operations. Language added in conference confirms that nothing in the provision may be “construed to affect the existing criminal enforcement and national security authorities of the Federal Bureau of Investigation or any other domestic law enforcement agency with regard to a covered person, regardless whether such covered person is held in military custody.” [my emphasis]

And the conference does change the breathtaking limits on Attorney General authority in the Senate bill I laid out here, apparently adopting the House formulation of requiring the AG to ask permission of the Defense Secretary before the AG does his or her job.

Require the Attorney General to consult with the Secretary of Defense before prosecuting a foreign al Qaeda terrorist who is determined to be covered under the previous section, or any other person who is held in military custody outside the United States, on whether the more appropriate forum for trial is a federal court or a military commission and whether the individual should be held in civilian or military custody pending trial.

It seems to me the language does enough to avoid a veto from the cowardly Obama, but still does terrible damage to both the clarity of national security roles and overall investigative expertise. […]

READ @ http://www.emptywheel.net/2011/12/12/conference-committee-makes-few-changes-to-detainee-provisions/

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* EVEN CONGRESS’S INSIDER TRADING REFORM IS A SCAM

By Barry Ritholtz, The Big Picture

Don’t be fooled by noise about reforming Insider Trading rules for Congress — its a scam, with lots of loopholes, says Yale law prof Jonathan Macey.

First, the background:

“Members of Congress already get better health insurance and retirement benefits than other Americans. They are about to get better insider trading laws as well.

Several academic studies show that the investment portfolios of congressmen and senators consistently outperform stock indices like the Dow and the S&P 500, as well as the portfolios of virtually all professional investors. Congressmen do better to an extent that is statistically significant, according to [a 2004] study . . . The trading is widespread.

These results are not due to luck or the financial acumen of elected officials. They can be explained only by insider trading based on the nonpublic information that politicians obtain in the course of their official duties.”

Now for the kicker:

“Congress’s rules would be clear and precise. And not too broad; in fact they are too narrow. For example, the proposed rules in the Stock bill are directed only at information related to pending legislation. It would appear that inside information obtained by a congressman during a regulatory briefing, or in another context unrelated to pending legislation, would not be covered . . .

If the law passes in its current form, insider trading by Congress will not become illegal. I predict such trading will increase because the rules of the game will be clearer. Most significantly, the rule proposed for Congress would not involve the same murky inquiry into whether a trader owed or breached a “fiduciary duty” to the source of the information that required that he refrain from trading.”

Is this what is meant by “Doing the people’s business?” No wonder why Congress’s approval ratings are at 9% — a record low. […]

READ @ http://www.ritholtz.com/blog/2011/12/even-congresss-insider-trading-reform-is-a-scam/

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* OBAMA: I CAN’T COMMENT ON WALL STREET PROSECUTIONS

By Glenn Greenwald, Salon

President Obama was interviewed by 60 Minutes‘ Steve Kroft last night. Kroft mentioned a new poll showing that 42% of Americans believe Obama’s policies most favor Wall Street rather than average Americans (only 35% believe the opposite). Kroft speculated that this was due in part to the fact that, as he put it, “there’s not been any criminal prosecutions of people on Wall Street,” and then asked Obama whether he was “disappointed” with that development. Obama replied:

I can’t, as President of the United States, comment on the decisions about particular prosecutions. That’s the job of the Justice Department, and we keep those separate so that there’s no political influence on decisions made by professional prosecutors.

If only that were what President Obama really believed and how he actually comported himself.

On January 12, 2009, The New York Times – under the headline: “Obama signals his reluctance to investigate Bush programs” — reported that “President-elect Barack Obama signaled in an interview broadcast Sunday that he was unlikely to authorize a broad inquiry into Bush administration programs like domestic eavesdropping or the treatment of terrorism suspects”; specifically, he expressed the “belief that we need to look forward as opposed to looking backwards” and announced that “part of my job is to make sure that, for example, at the CIA, you’ve got extraordinarily talented people who are working very hard to keep Americans safe. I don’t want them to suddenly feel like they’ve got spend their all their time looking over their shoulders.” On April 19, Obama’s Chief of Staff, Rahm Emanuel, went on ABC News and announced that the President opposes investigations not only for the CIA torturers themselves, but also high-level Bush officials who devised and authorized the policies:

STEPHANOPOULOS: Final quick question. The president has ruled out prosecutions for CIA officials who believed they were following the law. Does he believe that the officials who devised the policies should be immune from prosecution?

EMANUEL: . . . He believes that people in good faith were operating with the guidance they were provided. They shouldn’t be prosecuted.

STEPHANOPOULOS: What about those who devised policy?

EMANUEL: Yes, but those who devised policy, he believes that they were — should not be prosecuted either, and that’s not the place that we go — as he said in that letter, and I would really recommend people look at the full statement — not the letter, the statement — in that second paragraph, “this is not a time for retribution.” It’s time for reflection. It’s not a time to use our energy and our time in looking back and any sense of anger and retribution.

The following day, Obama’s White House Press Secretary, Robert Gibbs, announced that the President’s opposition to prosecutions includes Bush lawyers who authorized torture:

CNN’S ED HENRY: Just so I understand, you’re saying the people in the CIA who followed through on what they were told was legal, they should not be prosecuted? But why not the Bush administration lawyers who, in the eyes of a lot of your supporters on the left, twisted the law, why are they not being held accountable?

GIBBS: The president is focused on looking forward. That’s why.

[During the same time period, the Obama White House worked to block plans by then-Speaker Nancy Pelosi for a Congressional investigation into those crimes, and also had its State Department pressure Spain to impede its own judiciary’s investigation into the torture regime.] […]

READ @ http://www.salon.com/2011/12/12/obama_i_cant_comment_on_wall_street_prosecutions/singleton/

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* SOPA IS ”UNCONSTITUTIONAL”, WOULD “CRIMINALIZE” THE INTERNET … MODELED ON CHINA

By Washington’s Blog

Harvard Law School professor Laurence Tribe is one of the top constitutional experts in the country, and wrote one of the main treatises on the subject. Tribe wrote a letter to Congress last week stating that SOPA (the Stop Online Piracy Act) is unconstitutional.

As the Hill notes:

Laurence Tribe, a constitutional law expert at Harvard Law School, argues [SOPA] violates the First Amendment in a memo sent to members of Congress on Thursday.

The bill would empower the Justice Department and copyright holders to demand that search engines, Internet providers and payment processors cut ties with websites “dedicated” to copyright infringement.

Tribe argues the bill amounts to illegal “prior restraint” because it would suppress speech without a judicial hearing.

Additionally, the law’s definition of a rogue website is unconstitutionally vague, Tribe writes.

“Conceivably, an entire website containing tens of thousands of pages could be targeted if only a single page were accused of infringement,” Tribe writes. “Such an approach would create severe practical problems for sites with substantial user-generated content, such as Facebook, Twitter, and YouTube, and for blogs that allow users to post videos, photos, and other materials.”

Google CEO Eric Schmidt said that the bill would criminalize the Internet:

An online piracy bill in the House would “criminalize linking and the fundamental structure of the Internet itself,” according to Google Executive Chairman Eric Schmidt.

Schmidt said the controversial [bill] would punish Web firms, including search engines, that link to foreign websites dedicated to online piracy. He said implementing the bill as written would effectively break the Internet.

“By criminalizing links, what these bills do is they force you to take content off the Internet,” Schmidt said, calling it a form of censorship.

***

He compared the proposal to the Web censorship practiced by repressive foreign governments like China and doubled down on that comparison when speaking with reporters after his remarks at the Economic Club of Washington.

Indeed, China is exactly what the bill is modeled on:

If you’re wondering why lawyers and Hollywood folks would get behind legislation to censor the Internet, you only need to listen to former Senator Chris Dodd [the same guy who killed any chance of financial reform – see this, this, this and this], now the head of the MPAA, who last week explained to Variety that the lobby is only asking for the same kind of power to censor the Internet as the government has in the People’s Republic of China:

“When the Chinese told Google that they had to block sites or they couldn’t do [business] in their country, they managed to figure out how to block sites.” […]

READ @ http://www.washingtonsblog.com/2011/12/sopa-is-unconstitutional-would-criminalize-the-internet-china-is-the-model.html

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* HOW THE FEDERAL RESERVE FIGHTS

By Matt Stoller, Naked Capitalism

Two weeks ago, Bloomberg released a significant story on the actions of the Federal Reserve as the lender of last resort during the crisis and the extent of that lending. The article, an homage to the late great reporter Mark Pittman, revealed lending and guarantees of roughly $8 trillion, and estimated government-granted profit garnered by the big banks of $13 billion.

More disturbing were inconsistent statements by Bernanke publicly claiming he was lending only to sound institutions when the Fed’s internal assessments of those same banks showed otherwise. This article prompted a remarkable back-and-forth between Bloomberg and the Fed, in which neither side backed down while coming close to calling the other a liar. Bloomberg essentially argued that the Fed gave ill-gotten profits to money center banks through facilities set up to flood the system with liquidity. The Fed responded that it charged “penalty” rates to these banks, that it was fulfilling a well recognized function of central banks by serving as the lender of last resort. […]

READ @ http://www.nakedcapitalism.com/2011/12/matt-stoller-how-the-federal-reserve-fights.html

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* FEARFULLY, THE U.S. TREASURY’S SECRET, 75-YEAR-OLD FUND AND ITS DARK HISTORY HAS BEEN EXPOSED

Staff Report, The Daily Bell

After months of work, the video series on the Treasury’s Exchange Stabilization Fund is finally finished! Why you should watch these five videos: It is impossible to understand the world today without knowing what the ESF is and what it has been doing. Officially in charge of defending the dollar, the ESF is the government agency which controls the New York Fed, runs the CIA‘s black budget, and is the architect of the world’s monetary system (IMF, World Bank, etc). ESF financing (through the OSS and then the CIA) built up the worldwide propaganda network which has so badly distorted history today (including erasing awareness of its existence from popular consciousness). It has been directly involved in virtually every major US fraud/scandal since its creation in 1934: the London gold pool, the Kennedy assassinations, Iran-Contra, CIA drug trafficking, HIV, and worse … ” – Market Skeptics

Dominant Social Theme: The US Government has taken over the world and the ESF has been its weapon of choice.

Free-Market Analysis: We’re not sure who Eric deCarbonnel is, but he has posted five YouTube videos that contain extraordinary allegations about the US Government’s Exchange Stabilization Fund. In aggregate, the series is called, “What I have been afraid to blog about: THE ESF AND ITS HISTORY.”

We were made aware of the series just last night by a considerate feedbacker who was puzzled by them. We used Google to find out about Mr. deCarbonnel, whose ESF thesis has been covered by GATA, where he contributes. He also contributes to some other alternative media websites and has received coverage there and elsewhere.

The videos don’t seem to have made a wide stir as of yet (not that we could tell, anyhow). But they are certainly interesting. Having listened to all five presentations, we will try to provide an analysis of what we might call “holistic” journalism, where someone tries to put a lot of different facts together to create a scenario not previously well known.

You might call him a practitioner of conspiratorial or directed history. Perhaps that’s why we’re drawn to it. Many of the problems of the modern world can be traced to the ESF, according to Mr. deCarbonnel. He proceeds to make the case for his argument in over an hour of insights and detail.

We have been reading and writing about the New World Order for decades but the information presented by deCarbonnel seems, in some ways, new to us. (That doesn’t mean it’s accurate, of course.) We would be remiss in not making the following point: According to Mr. deCarbonnel, he is also related to Frank Vanderlip, one of the founders of the US Federal Reserve system, so the series of videos can also be seen in some way, perhaps, as a defense of Vanderlip and private banking.

Anyway, let’s jump in. We will try to summarize Mr. deCarbonnel’s argument for those who don’t have the time or patience to sit through all five videos. Here are his arguments  – buttressed, to be sure, by a plethora of historical sources  – in approximate order in bullet points: […]

READhttp://www.thedailybell.com/3343/Fearfully-the-US-Treasurys-Secret-100-Year-Old-Fund-and-Its-Dark-History-Has-Been-Exposed-

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* THERE’S NOTHING TO STOP MORTGAGE SERVICE FRAUD BECOMING STANDARD BUSINESS PRACTICE

By Matt Stoller, Business Insider

n 2004, the FBI warned Congress of an “epidemic of mortgage fraud,” of unscrupulous operators taking advantage of a booming real estate market. Less than two years later, an accounting scandal at Fannie Mae tipped us off that something was very wrong at the highest levels of corporate America.

Of course, we all know what happened next. Crime invaded the center of our banking system. Wall Street CEOs were signing on to SEC documents knowing they contained material misstatements. The New York Fed, riddled with conflicts of interest, shoveled money to large banks and tried to hide it under the veil of central bank independence.

Even Tim Geithner noted that Lehman had “air in the marks” in its valuations of asset-backed securities, as the bankruptcy examiner’s report showed that accounting manipulation to disguise the condition of the balance sheet was a routine management tool at the bank. There’s a reason Charles Ferguson got an Academy Award for his work on the documentary Inside Job.

And yet, no handcuffs. The big news on prosecutions in the traditionally high-powered Southern District of New York are convictions for relatively petty insider trading that are unrelated to the collapse of the economy. The criminal charges could have been filed in the 1980s. U.S. Attorney Preet Bharara has brought minor civil suits against banks, but nothing significant, and no criminal indictments for the Ponzi scheme of the last four years.

And what happens when this kind of fraud goes unprosecuted? It continues, even today. The same banks that ran the corrupt home mortgage securitization chain are now committing rampant fraud in the foreclosure crisis. Here’s New Orleans Bankruptcy Judge Elizabeth Magner discussing problems at Lender Processing Services, the company that handles 80 percent of foreclosures on behalf of large banks (emphasis added):

In Jones v. Wells Fargo, this Court discovered that a highly automated software package owned by LPS and identified as MSP administered loans for servicers and note holders but was programed to apply payments contrary to the terms of the notes and mortgages.

The bad behavior is so rampant that banks think nothing of a contractor programming fraud into the software. This is shocking behavior and has led to untold numbers of foreclosures, as well as the theft of huge sums of money from mortgage-backed securities investors. […]

READ @ http://articles.businessinsider.com/2011-11-28/wall_street/30449339_1_foreclosure-crisis-banking-system-lender-processing-services

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* SPECIAL REPORT: FORENSIC ANALYSIS FINDS VENANGO COUNTY, PA E-VOTING SYSTEM ‘REMOTELY ACCESSED’ ON ‘MULTIPLE OCCASIONS’ BY UNKNOWN COMPUTER

Battle for independent election investigation rages in rural Republican county, pitting renegade Election Board against County Commission, giant E-Vote firm ES&S…

By Brad Friedman, BradBlog

According to the Initial Report from a landmark independent forensic audit of Venango County, PA’s touch-screen voting system — the same system used in dozens of states across the state and country — someone used a computer that was not a part of county’s election network to remotely access the central election tabulator computer, illegally, “on multiple occasions.” Despite the disturbing report, as obtained by The BRAD BLOG and posted in full below, we may never get to learn who did it or why, if Venango’s County Commissioners, a local judge, and the nation’s largest e-voting company have their way. And that’s not all we won’t get to find out about.

The battle for election integrity continues in Venango, with the County Commissioners teaming up with e-voting vendor Election Systems & Software, Inc. (ES&S) on one side, and the county’s renegade interim Republican-majority Board of Elections on the other. The Commissioners and ES&S have been working to spike the independent scientific forensic audit of the county’s failed electronic voting machines that was commissioned by the interim Board of Elections. Making matters worse, the Board has now been removed from power by a county judge, a decision they are attempting to appeal as the three-person board and their supporters continue to fight the entrenched establishment for transparency and accountability in the rural Western Pennsylvania county.

The extraordinary battle began when the interim Board was appointed by a county judge to oversee elections in the Republican-leaning PA county last spring. Normally the County Commissioners serve as the Board of Elections. But when they themselves are up for election, as they were this year, the county court judge names a specially appointed Board to over the election and serve until the end of the year, or until they are dismissed by the same court.

When the interim Board of Elections — comprised of two Republicans and one Democrat — took power this year in Venango, they unanimously set about commissioning the landmark, independent forensic audit of the county’s 100% unverifiable ES&S iVotronic touch-screen voting systems, on the heels of sworn testimony from voters about several failed elections over recent years, beginning in 2008.

After months of legal wrangling, with County Commissioners in opposition, the special Election Board’s independent study of the County’s ES&S iVotronic voting system finally got under way in late September. At that time, a hard drive clone of the computer which runs the ES&S central tabulator system (known as the “Unity Election Reporting Manager”) was created and given, along with other data, to two Carnegie Mellon computer science professors who had volunteered to carry out the analysis on behalf of the Board. The Board also announced that the November election this year would be carried out on an optically-scanned paper ballot system, also made by the county’s vendor, ES&S, while the reported anomalies from their May 2011 primary election, run on the unverifiable touch-screen systems, were being examined by the scientists.

But now, as documents and letters obtained by The BRAD BLOG reveal, the voting machine company, Omaha-based ES&S, who had issued no objections prior to the start of the study, but who changed their mind quickly after it began (as we detailed in an Exclusive report in late October) has now hardened their position, sending threatening legal letters to both the county and the two computer scientists. The e-voting firm has warned them they are likely to face a lawsuit if they do not agree to complete confidentiality and if results of their analysis are released publicly without their prior review and approval.

Shortly after ES&S’ legal threats were issued last month, a county judge released the interim Board from their duties (a move now being appealed by the Board) and the County Commissioners, who had fought tooth and nail against the analysis even being undertaken in the first place, are now back at the helm. According to members of the interim Board, the County Commissioners seem likely to “white wash” and/or quash the entire analysis and a plan for continuing the investigation before it can be completed or even see the light of day.

The BRAD BLOG, however, has obtained a copy of the Initial Draft of one of the forensic studies by the Carnegie Mellon computer scientists. Findings from the report [linked in full below, along with ES&S’ threat letters], include a number of disturbing, and so-far unexplained revelations that should raise alarm bells for voters in virtually every corner of the nation as we head into another Presidential election year.

Among those findings: details on unexplained, out-of-sequence activity log entries in the computer tabulation system, indications that the system was mounted several times with a “USB ‘flash drive'” device, and, perhaps most troubling, evidence that the system was repeatedly accessed by an unidentified remote computer, for lengthy periods of time, on “multiple occasions”.

The entire affair has left members of the interim Board — which includes the Chair and Treasurer of the local Republican Party, as well as the former Chair of the Democratic Party — hopping mad. They’re asking questions about motivations of both the County Commissioners and ES&S and describing their actions as a “cover up”, even as they take legal action to try and complete the work they had begun months ago, after first hearing sworn testimony from voters, describing major failures with e-voting machines at the polling place in recent elections… […]

READ @ http://www.bradblog.com/?p=8986

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* PLANNED CHAOS OF THE EURO COLLAPSE?

Staff Report, The Daily Bell

EU debt deal may be divisive for Europe … Heads of state in Europe are congratulating each other for agreeing to a deal that will force fiscal discipline on European Union countries and impose sanctions on those that stray from the budget diktats of EU regulators. But the pact drafted largely by Germany and France and agreed to over dinner and drinks in Brussels must now be sold to average citizens, who are increasingly mistrustful of surrendering national sovereignty to the European Union, analysts said Sunday. The pact, then, could wind up forcing nations to choose between further European integration or disintegration. Leaders of 23 of the EU’s 27 nations agreed Friday to be part of a new fiscal union in which they would be sanctioned if they miss preordained targets on spending and borrowing. Britain declined to join the pact, while Czech Republic, Hungary and Sweden said they would have to seek approval from national parliaments. – USA Today

Dominant Social Theme: Too bad Britain faded away … The chaos is as undeniable as it is undesirable.

Free-Market Analysis: In today’s lead article we tried to point out once more (as before) that this global central banking order we have is not to the world’s benefit. What we call the Internet Reformation has made it more and more difficult for the powers-that-be to promote their fear-based dominant social themes.

It is these memes that the power elite has used in the past to frighten Western middle classes into giving up wealth and power to already-prepared globalist solutions such as the UN, IMF and World Bank. But these themes are foundering now as more people find out more about them.

Global warming, Peak Oil, even the War on Terror itself – all of these memes and many more are not so convincing as they once were, thanks to the unfurling of the Internet era, which is doing to power structures what the Gutenberg Press did 500 years ago.

The European Union itself is a power elite meme – the idea that increased centralization and globalization are necessary in the modern world. It is not true, of course. It merely supports the larger agenda of the power elite, which is world government.

In fact, the recent splitting-up of the Eurozone, between those that support further integration to salvage the euro and those that don’t, may be seen as part of this larger trend. And as we recently pointed out, the Anglosphere elites behind the EU probably didn’t want the split between Britain and mainland Europe. […]

READ @ http://www.thedailybell.com/3340/Planned-Chaos-of-Euro-Collapse