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Gary Edwards

Barack Obama's Stimulus Plan Will Get Little Value for Money - WSJ.com - 0 views

online.wsj.com/...SB123396623933859023.html

finacial-crisis

shared by Gary Edwards on 09 Feb 09 - Cached
  • This is so manifestly false that we doubt Mr. Obama really believes it. He has to know that it matters what the government spends the money on, as well as how it is financed. A dollar doled out in jobless benefits may well be spent by the worker who receives it. That $1 of spending will count as economic activity and add to GDP. But that same dollar can't be conjured out of thin air. The government has to take that dollar away from someone else -- either in higher taxes, or by issuing new debt in the form of a bond. The person who is taxed or buys the bond will have $1 less to spend. If the beneficiary of that $1 spends it on something less productive than the taxed American or the lender would have, then the net impact on growth will be negative.
  • Gary Edwards on 09 Feb 09
     
    The stage was thus set for the popular President to forge a bipartisan consensus that combined ideas from both parties. A major cut in the corporate tax favored by Republicans could have been added to Democratic public works spending for a quick political triumph that might have done at least some economic good. Instead, Mr. Obama chose to let House Democrats write the bill, and they did what comes naturally: They cleaned out their intellectual cupboards and wrote a bill that is 90% social policy, and 10% economic policy. (See here for a case study.) It is designed to support incomes with transfer payments, rather than grow incomes through job creation. This is the reason the bill has run into political trouble, despite a new President with 65% job approval. The 11 Democrats who opposed it in the House didn't do so because they want to hand Mr. Obama a defeat. The same is true of the Senate moderates of both parties working to trim their $900 billion version. They've acted because they can't justify a vote for so much spending for so little economic effect.
Paul Merrell

Euro plummets as global oil prices collapse - Europe - Al Jazeera English - 0 views

www.aljazeera.com/...llapse-201515223845848495.html

economy Eurozone Greece Syriza election

shared by Paul Merrell on 08 Jan 15 - No Cached
  • The euro has plunged to a nine-year low against the dollar on worries that a victory in Greece by the far-left Syriza party in the January 25 election will result in the country's departure from the European Union. The EU currency's value, which dived on Monday to $1.1864, a level last reached back in 2006. was also dented by growing expectations of quantitative easing, or economic stimulus, from the European Central Bank. "Greek problems may spell trouble for the eurozone (and) may impact energy demand out of Western Europe -- especially with press suggesting German politicians are talking about Grexit," said analyst Anthony Cheung.
Paul Merrell

| The Archived Columns of Conn M. Hallinan - 0 views

dispatchesfromtheedgeblog.wordpress.com

economies EU Greece anti-austerity oligarchs banksters privatization

shared by Paul Merrell on 02 Feb 15 - No Cached
  • Almost before the votes were counted in the recent Greek elections, battle lines were being drawn all over Europe. While Alexis Tsipras, the newly elected Prime Minister from Greece’s victorious Syriza Party, was telling voters, “Greece is leaving behind catastrophic austerity, fear and autocratic government,” Jens Weidmann, president of the German Bundesbank, was warning the new government not to “make promises it cannot keep and the country cannot afford.”   On Feb. 12 those two points of view will collide when European Union (EU) heads of state gather in Brussels. Whether the storm blowing out of Southern Europe proves an irresistible force, or the European Council an immovable object, is not clear, but whatever the outcome, the continent is not likely to be the same after that meeting.   The Jan 25 victory of Greece’s leftwing Syriza Party was, on one hand, a beacon for indebted countries like Spain, Portugal, Italy and Ireland. On the other, it is a gauntlet for Germany, the Netherlands, Finland, and the “troika”—the European Central bank, the European Commission, and the International Monetary Fund (IMF)—the designers and enforcers of loans and austerity policies that have inflicted a catastrophic economic and social crisis on tens of millions of Europeans.
  • The troika’s policies were billed as “bailouts” for countries mired in debt—one largely caused by the 2008 financial speculation bubble over which indebted countries had little control—and as a way to restart economic growth. In return for the loans, the EU and the troika demanded massive cutbacks in social services, huge layoffs, privatization of pubic resources, and higher taxes.   However, the “bailouts” did not go toward stimulating economies, but rather to repay creditors, mostly large European banks. Out of the $266 billion loaned to Greece, 89 percent went to investors. After five years under the troika formula, Greece was the most indebted country in Europe. Gross national product dropped 26 percent, unemployment topped 27 percent (and over 50 percent for young people), and one-third of the population lost their health care coverage.   Given a chance to finally vote on the austerity strategy, Greeks overwhelmingly rejected the parties that went along with the troika and elected Syriza.
  • Gerry Adams of Sinn Fein—now the third largest party in the Irish Republic—hailed the vote as opening “up the real prospect of democratic change, not just for the people of Greece, but for citizens right across the EU.” Unemployment in Ireland is 10.7 percent, and tens of thousands of jobless young people have been forced to emigrate.   The German Social Democrats are generally supportive of the troika, but the Green Party hailed the Syriza victory and Die Linke Party members marched with signs reading, “We start with Greece. We change Europe.”   Italian Prime Minister Matteo Renzi—who has his own issues with the EU’s rigid approach to debt—hailed the Greek elections, and top aide Sandro Gozi said that Rome was ready to work with Syriza. The jobless rate in Italy is 13.4 percent, but 40 percent among youth.
  • ...6 more annotations...
  • In short, there are a number of currents in the EU and a growing recognition even among supporters of the troika that prevailing approach to debt is not sustainable.   One should have no illusions that Syriza will easily sweep the policies of austerity aside, but there is a palpable feeling on the continent that a tide is turning. It did not start with the Greek elections, but with last May’s European Parliament elections, where anti-austerity parties made solid gains. While some right-wing parties that opportunistically donned a populist mantle also increased their vote, they could not do so where they were challenged by left anti-austerity parties. For instance, the right did well in Denmark, France, and Britain, but largely because there were no anti-austerity voices on the left in those races. Elsewhere the left generally defeated their rightist opponents.   If Syriza is to survive, however, it must deliver, and that will be a tall order given the power of its opponents.
  • The French Communist Party hailed the Greek elections as “Good news for the French people,” and Jean-Luc Melenchon of the Parti de Gauche called for a left-wing alliance similar to Syriza. French President Francois Hollande made a careful statement about “growth and stability,” but the Socialist leader is trying to quell a revolt by the left flank of his own party over austerity, and Paris is closer to Rome than it is to Berlin on the debt issue.   While the conservative government of Portugal was largely silent, Left Bloc Member of Parliament Marisa Matias told a rally, “A victory for Syriza is a victory for all of Europe.”
  • As convoluted as Greek politics are, the main obstacle for Syriza will come from other EU members and the Troika.   Finnish Prime Minister Alex Stubb made it clear “that we would say a resounding ‘no’ to forgive loans.” Merkel’s chief of staff, Peter Altmaier, says, “We have pursued a policy which works in many European countries, and we will stick to in the future.” IMF head Christine Lagarde chimed in that “there are rules that must be met in the euro zone,” and that “we cannot make special exceptions for specific countries.”   But Tsipras will, to paraphrase the poet Swinburne, not go entirely naked into Brussels, but “trailing clouds of glory.” Besides the solid support in Greece, a number of other countries and movements will be in the Belgian capital as well.   Syriza is closely aligned in Spain with Podemos, now polling ahead of the ruling conservative People’s Party. “2015 will be the year of change in Spain and Europe,” tweeted Podemos leader Pablo Iglesias in the aftermath of the election, “let’s go Alexis, let’s go!” Unemployment in Spain is 24 percent, and over 50 percent for young people.
  • At home, the Party will have to take on Greece’s wealthy tax-dodging oligarchs if it hopes to extend democracy and start refilling the coffers drained by the troika’s policies. It will also need to get a short-term cash infusion to meet its immediate obligations, but without giving in to yet more austerity demands by the troika.   For all the talk about Syriza being “extreme”—it stands for Coalition of the Radical Left— its program, as Greek journalist Kia Mistilis points, is “classic ‘70s social democracy”: an enhanced safety net, debt moratorium, minimum wage raise, and economic stimulus.   Syriza is pushing for a European conference modeled on the 1953 London Debt Agreement that pulled Germany out of debt after World War II and launched the “wirtschaftswunder,”or economic miracle that created modern Germany. The Agreement waved more than 50 percent of Germany’s debt, stretched out payments over 50 years, and made repayment of loans dependent on the country running a trade surplus.
  • The centerpiece of Syriza’s Thessaloniki program is its “four pillars of national reconstruction,” which include “confronting the humanitarian crisis,” “restarting the economy and promoting tax justice,” “regaining employment,” and “transforming the political system to deepen democracy.”   Each of the “pillars” is spelled out in detail, including costs, income and savings, and, while it is certainly a major break with the EU’s current model, it is hardly the October Revolution.   The troika’s austerity model has been quite efficient at smashing trade unions, selling off public resources at fire sale prices, lowering wages and starving social services. As a statement by the International Union of Food Workers argues, “Austerity is not the produce of a deficient grasp of macroeconomics or a failure of ‘social dialogue,’ it is a conscious blueprint for expanding corporate power.”
  • Under an austerity regime, the elites do quite well, and they are not likely to yield without a fight.   But Syriza is poised to give them one, and “the little party that could” is hardly alone. Plus a number of important elections are looming in Estonia, Finland, and Spain that will give anti-austerity forces more opportunities to challenge the policies of Merkel and the troika.   The spectre haunting Europe may not be the one that Karl Marx envisioned, but it is putting a scare into the halls of the rich and powerful.
  • Paul Merrell on 02 Feb 15
     
    I'm struck again by the poltical brilliance of Russia's decision to drop the South Stream Pipeline in favor of a new pipeline through Turkey to the border with Greece. Russia has gained an ally in Greece in terms of fighting economic sanctions on Russia and reinstating trade between Russia and the EU. Greece has veto power in the EU on any new sanctions or renewal of existing sanctions, at least most of which have sunset provisions. Russia also made allies of two NATO members, Greece and Turkey. And Greece is positioned by its threat of refusal to repay debt to the troika banksters to break the absolute hold the banksters have on monetary policy in the Eurozone. Russia magnifies that threat by saying that it is open to a proposal to bail out the Greek government. Not yet known is whether a condition would be abandoning the Euro as Greece's own currency. Greece might conceivably reinstate the drachma with its value pegged to a basket of foreign currencies, including the ruble and yuan. In other words, Greece leaving the EU and NATO and joining BRICS is conceivable.
Paul Merrell

China and Japan in the Struggle for Regional Leadership | New Eastern Outlook - 0 views

journal-neo.org/...r-be-za-regional-noe-liderstvo

trade-agreements China Japan Australia

shared by Paul Merrell on 11 Mar 15 - No Cached
  • Early in January 2015 bilateral agreements on free trade between Japan and Australia entered into force, while China announced its intention to sign a similar agreement with Australia in the second quarter of 2015. It is expected that the agreement will enter into force before the end of 2015. Negotiations on a free trade zone between China and Australia have been under way since 2006. China’s desire to speed up the process of signing an agreement can be regarded not only as an attempt to minimize the downside risks to the country’s export earnings as a result of its regional neighbours’ reorientation of trade flows in favour of new integration associations implemented without the participation of China, but also as an attempt to preserve its commercial leadership in the Asian region by expanding its network of bilateral contacts. It is the entry into force of the FTA between Australia and Japan that may become the stimulus that China has lacked in recent years, and which is able to significantly speed up the negotiation process.First appeared: http://journal-neo.org/2015/03/09/rus-kitaj-i-yaponiya-v-bor-be-za-regional-noe-liderstvo/
Paul Merrell

Russia Expects to Ratify BRICS Bank Deal by March | News | The Moscow Times - 0 views

www.themoscowtimes.com/...515675.html

economic-warfare BRICS-Bank Russia de-dollarization

shared by Paul Merrell on 13 Feb 15 - No Cached
  • Russia is set to ratify an agreement on the creation of a bank for the BRICS bloc of large emerging economies this month or in March, the country's finance minister said. The establishment of the development bank, aimed at providing funds for infrastructure projects, has been slow in coming with prolonged disagreement over funding and management of the institution. Finance Minister Anton Siluanov said Russia was running ahead of the other BRICS nations. "We are ahead of everyone. Our ratification is possible for the end of February or at the latest March," Siluanov told reporters on the sidelines of a meeting of G20 finance chiefs on Tuesday. Russia is expected to commit $2 billion to the fund. The group has struggled to take coordinated action after an exodus of capital from Brazil, Russia, India, China and South Africa prompted by a scaling back of U.S. monetary stimulus.
Paul Merrell

How Russia plans to disentangle its economy from US dollar - RT Business News - 0 views

www.rt.com/...ssia-dollar-economy-dependence

war & peace economic-warfare de-dollarization Russia

shared by Paul Merrell on 09 Oct 18 - No Cached
  • The Russian Finance Ministry has announced a plan to wean the country of dollar dependence. It is expected to be a long and painful process. RT has asked analysts to explain how this could be done. According to the plan published this week, Russia seeks to de-dollarize the economy by 2024. The program is long and complicated, but its key point is that Russian exporters who use rubles instead of dollars would get huge taxation benefits including quicker VAT returns and other stimulus to ditch the greenback.
  • But there are also other ways to strengthen the role of the ruble in Russia. “It is necessary to gradually switch to such a system of international payments, which implies payment in rubles for Russia’s best and most popular goods on the world market like oil, gas and arms exclusively,” Andrey Perekalsky, analyst at financial institute FinIst, told RT.Russia should also unite with China and the European Union in creating a payment channel that can’t be controlled by the United States. The alternative to the SWIFT interbank settlement network that could bypass Iranian sanctions could be seen as a first step in that direction, the analyst notes.
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