Regressive Alert! Euroland and NYT!!!!

[JayB]

http://www.nytimes.com/2010/05/23/world/europe/23europe.html?hp

"Europeans Fear Crisis Threatens Liberal Benefits

 

PARIS — Across Western Europe, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II.

 

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.

 

Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. “The Europe that protects” is a slogan of the European Union.

 

But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.

 

With low growth, low birthrates and longer life expectancies, Europe can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant changes. The countries are trying to reassure investors by cutting salaries, raising legal retirement ages, increasing work hours and reducing health benefits and pensions.

 

“We’re now in rescue mode,” said Carl Bildt, Sweden’s foreign minister. “But we need to transition to the reform mode very soon. The ‘reform deficit’ is the real problem,” he said, pointing to the need for structural change.

 

The reaction so far to government efforts to cut spending has been pessimism and anger, with an understanding that the current system is unsustainable.

 

In Athens, Aris Iordanidis, 25, an economics graduate working in a bookstore, resents paying high taxes to finance Greece’s bloated state sector and its employees. “They sit there for years drinking coffee and chatting on the telephone and then retire at 50 with nice fat pensions,” he said. “As for us, the way things are going we’ll have to work until we’re 70....

 

The easy days are over for countries like Greece, Portugal and Spain, but for us, too,” said Laurent Cohen-Tanugi, a French lawyer who did a study of Europe in the global economy for the French government. “A lot of Europeans would not like the issue cast in these terms, but that is the storm we’re facing. We can no longer afford the old social model, and there is a real need for structural reform.”

 

Etc, etc, etc, etc, etc, etc, etc.

 

 

 

 

[Hugh Conway]

What's the difference between Aris Iordanidis and an American 25 year old?

 

Aris realizes he's fucked and is pissed about it.

[j_b]

Don't tell us you are surprised that the corporate media, including the New York Times, is pushing the neoliberal narrative about debt and austerity. I have been telling you for years that the NYT wasn't liberal on issues that really mattered like the economy and foreign policy. "Librul media" my ass.

 

Anyway, the Canadian author of the following article described last Fall what you guys would be telling us today. It's about Canada but it could be said about every OECD nations today, like it was said for all countries that were raided by neoliberal looters during the 80's (Latin America, Asia, Africa, ..):

 

Parting Shots: The Coming Austerity

 

November 2, 2009

 

Neoliberalism isn’t dead - it’s just resting

By Simon Enoch

 

With the Financial Times lamenting the “end of the era of liberalization” and the “death of global free-market capitalism” and Newsweek declaring “we are all Socialists now,” one could be forgiven for believing that the worst excesses of neoliberalism have been relegated to the dustbin of history. But for all the talk of resurgent Keynesianism, reports of the death of neoliberalism - the pathological fear of all things public and the idolatrous worship of the market - are greatly exaggerated. While the advocates of free-market orthodoxy have remained uncharacteristically quiet during the current economic crisis, neoliberalism has merely gone underground, biding its time until it can resurface with renewed ferocity.

 

It would seem that the neoliberal resurgence is already upon us, as governments around the world begin to deploy the all-too-familiar rhetoric of deficit and debt crises to prepare their citizens for the inevitable attack on what remains of the public sector. In the morbidly ironic words of Queensland Premier Anna Bligh - who has initiated a sweeping public-sector wage freeze and benefit clawback, coupled with the sale of over $15 billion in state assets - “public services have to come first in the dire global economic crisis.”

 

Canadians have seen this before. During the supposed “debt crisis” of the 1990s, the common refrain was that Canada would face outright bankruptcy and International-Monetary-Fund-imposed austerity unless it pursued a vigorous gutting of all things public. Paul Martin’s infamous 1995 budget did just that, sacrificing 45,000 civil service jobs, privatizing CN Rail and Petro-Canada, slashing federal transfers to the provinces and transforming unemployment insurance into the woefully inadequate program it is today.

 

Progressive economist Jim Stanford argues that much of this belt-tightening was not only unneces­sary, but ultimately damaging to the Canadian economy. As Stanford documents, Canada could have reached its deficit reduction targets through economic growth alone, without having to endure the draconian cuts to our social programs. Stanford concludes that the $50 billion in public programs and assets that were sacrificed to the deficit gods would have “made an incredible difference to the concrete quality of Canadians’ lives” had they remained invested in public services and assets.

 

What Stanford and others emphasize is that the gutting of our public services was not an economic necessity, but rather an ideologically driven political gambit. We would be wise to remember this when the inevitable calls for belt-tightening and self-sacrifice in the name of fiscal responsibility once again rear their heads. Though the current deficit is smaller (relative to GDP) than what we faced in the 1990s, we are already hearing the early warning signs of the coming austerity from the Harper Conservatives.

 

Despite Finance Minister Jim Flaherty’s past insistence that the deficit can be resolved without cuts to programs or tax increases - a position from which he appears to be retreating day by day - the Tories have already shown their preference for the public sector to bear the brunt of fiscal austerity through their attempts at eliminating pay equity and the right-to-strike in the public service. Couple this with the Tories’ Crown asset review, wherein any public asset not deemed self-sustaining could face the auction block, and the writing is on the wall. Due to their minority status, the Tories have had to move carefully on these fronts, but rest assured that when it comes to a choice between reversing their ill-conceived and ill-timed tax cuts or cutting public sector jobs and social programs, the public sector will lose.

 

Those who would use the deficit to resurrect neoliberalism will deploy the same shopworn rhetoric of the past. We will be exhorted to “do it for the children,” lest we leave them our bills to pay, while simultaneously being praised for our courage as we are asked to sacrifice for the good of the nation. The gutting of the public sector is one choice among many; there is always an alternative.

 

In many ways, the deficit crisis of the 1990s locked Canada into the straitjacket of neoliberal policy, destroying what was left of the fragile post-war social contract that had held sway for close to 50 years. The 1995 deficit-busting budget inaugurated Canada’s wholesale embrace of neoliberalism; the current deficit must not be used to revive that same failed ideology.

http://briarpatchmagazine.com/the-coming-austerity/

 

 

 

[j_b]

So what's your explanation for Euro countries with the most aggressive neoliberal policies (Ireland, Iceland, UK, Baltic countries, Spain, ...) being among the most exposed to the debt crisis? Whereas Northern Europe and Germany that have generous welfare states in comparison are among the least threatened?

 

That picture doesn't jive at all with your favorite rhetoric according to which social safety nets and public sectors are responsible for the debt. What are you going to do about it? My guess is you'll just ignore that inconvenient truth.

[JayB]

The real criminals here are people who generate real savings by consuming less than they produce and refuse to loan it to countries that have little or no hope of repaying it.

 

It's not clear who is worse, these criminals or the neocon regressive warmongers who claim that the interest rate a country pays to borrow money has to be less than the rate at which that country's economy grows or it's literally impossible for them to reduce their debt load. What nonsense! There's an entire branch of progressive mathematics - which the regressive shills in the corporocrat media have attempted to squelch - in which literally thousands of sociology professors have used propositions from Bruno Latour, Jaceques Lacan, and others to *prove* that 2% compound growth will always generate an absolute value greater than 5+% compound interest, no matter how large the initial value of the debt is relative to GDP.

 

Thanks to neocon goons like Mareen Dowd and Frank Rich and their crusade to prop up the dying neoliberal agenda and prevent its inevitable collapse, the ignorant sheeple spoon fed propaganda from math textbooks, financial calculators, and regressive functions embedded in Excel spreadsheets and actuarial tables, will continue to believe the lies that these instruments of the corporate machine feed them.

[JayB]

Regressivecorporocratwarmongershillneocon HATE MANUAL!!!!!!

[JayB]

So what's your explanation for Euro countries with the most aggressive neoliberal policies (Ireland, Iceland, UK, Baltic countries, Spain, ...) being among the most exposed to the debt crisis? Whereas Northern Europe and Germany that have generous welfare states in comparison are among the least threatened?

 

That picture doesn't jive at all with your favorite rhetoric according to which social safety nets and public sectors are responsible for the debt. What are you going to do about it? My guess is you'll just ignore that inconvenient truth.

 

 

Spending in excess of revenues is responsible for the debt. They can borrow more because they make more money and have a greater stock of capital. This has been the case since before the word "capitalism" was coined and has less to do with the merits of the modern welfare state than it does the particular historical evolution of each state. If higher public sector spending was the key determinant of economic growth, East Germany would have been bailing out West Germany.

 

No one with real savings to lend to borrowers via the bond market cares about how much a country spends on public services so long as their economic output is sufficient to fund the said spending and pay back the money they've borrowed. When that is no longer the case, eventually no one will be willing to lend them money to pay for their social services. Greece has reached that point.

 

When and if Northern European countries reach a critical debt-to-GDP threshold, the same thing will happen. The threshold will probably be higher for Germany, because people with money to lend are of the opinion that Germans are more likely to have the will and the means to honor their debts than Greeks, Spaniards, the Portuguese, etc. This - as has manifested in public sector payroll and other cuts in Ireland - is why Ireland can still borrow from the market at reasonable rates and Greece can't, despite the fact that their fiscal positions are both dire.

 

 

 

 

 

 

 

 

 

 

 

 

 

[billcoe]

Genius! Anyone who has read the last 200 jb posts that start with "you are a regressive corporate shill...." isn't going to understand it though. Brilliant.

 

The real criminals here are people who generate real savings by consuming less than they produce and refuse to loan it to countries that have little or not hope of repaying it.

 

It's not clear who is worse, these criminals or the neocon regressive warmongers who claim that the interest rate a country pays to borrow money has to be less than the rate at which that country's economy grows or it's literally impossible for them to reduce their debt load. What nonsense! There's an entire branch of progressive mathematics - which the regressive shills in the corporocrat media have attempted to squelch - in which literally thousands of sociology professors have used propositions from Bruno Latour, Jaceques Lacan, and others to *prove* that a 2% compound growth will always generate an absolute value greater than 5+% compound interest, no matter how large the initial value of the debt is relative to GDP.

 

Thanks to neocon goons like Mareen Dowd and Frank Rich and their crusade to prop up the dying neoliberal agenda and prevent its inevitable collapse, the ignorant sheeple spoon fed propaganda from math textbooks, financial calculators, and regressive functions embedded in Excel spreadsheets and actuarial tables, will continue to believe the lies that these instruments of the corporate machine feed them.

[gertlush]

I thought America was broke too? The Europeans spent their money on vacations and cushy pensions, America on misguided foreign adventures.

[Hugh Conway]

I thought America was broke too? The Europeans spent their money on vacations and cushy pensions, America on misguided foreign adventures.

 

the substance of JayB's rant is "but they're broker"

[olyclimber]

well the capitalist system is pure. like communism, it only sours when you add the human element.

[G-spotter]

Better to have your crisis early like Euroland than late like USA cause the bigger the bubble the bigger the pop. Wait till China liquidates their Treasury junk bonds.

[j_b]

I thought America was broke too? The Europeans spent their money on vacations and cushy pensions, America on misguided foreign adventures.

 

the substance of JayB's rant is "but they're broker"

 

He is wrong about that too. First, China isn't bankrolling Europe and there are the same fears of insolvency about the US (essentially, the entire OECD is at risk). The perceived difference is also moot as shown by their slashing the public sector here too. Just consider what's going on in California: the major causes of the crisis are the same as Greece (revenue shortfall due to regressive tax policies/widespread tax evasion and deficits made a lot worse by the recession/depression) and the solutions are the same (cutting wages and public sector jobs), but especially no more taxes for the wealthy.

[j_b]

The real criminals here are people who generate real savings by consuming less than they produce and refuse to loan it to countries that have little or no hope of repaying it. [..]

 

what drivel. As if anyone in developed nations had been saving significantly.

 

The real criminals are those who 1) bankrupted our economies by pursuing the race to the bottom labor cost and destroyed our tax base in the process, 2) pushed for huge tax cuts for the wealthy that we couldn't afford, 3) prevented effective anti-tax heaven policies notably the banning of transfer pricing, 4) committed trillions we didn't have to pursue foreign wars to control diminishing resources, 5) protected the growth of the giant financial casino to the point where financial speculation dwarfs real economic activity, 6) etc ..

[billcoe]

He is wrong about that too. First, China isn't bankrolling Europe and there are the same fears of insolvency about the US (essentially, the entire OECD is at risk). The perceived difference is also moot as shown by their slashing the public sector here too. Just consider what's going on in California: the major causes of the crisis are the same as Greece (revenue shortfall due to regressive tax policies/widespread tax evasion and deficits made a lot worse by the recession/depression) and the solutions are the same (cutting wages and public sector jobs), but especially no more taxes for the wealthy.

 

You must work for the gov't. Those folks think that there is an unlimited pool of money and all they have to do is say (to private sector folks) send it to us and we'll spend it for you. It's a recipe for disaster. We don't need the tax and spend dems any more than we need borrow and spend repub's running this country. I include Bush in the latter and exclude Clinton in the former.

 

Like most rational people, I thought that the Bush tax cuts to the wealthy should have been rolled back 5 min after the election if not sooner, but you are mistaken if you think that we can simply tax our way out of this - either for California or the country. More importantly, as Greece is learning, we also need to cut costs, and that means reduced government.

 

[j_b]

Genius! Anyone who has read the last 200 jb posts that start with "you are a regressive corporate shill...." isn't going to understand it though. Brilliant.

 

 

check out Bill doing his best pooddle impersonation. Don't ask him for any substance though.

[Jim]

As usual, the median likely has more relevancy than the extremes. Likely some of the EU countries, particularly Greece and France, will need to restructure their pension and retirement plans. Given the slow population growth and surge of retirements, some of the programs are not sustainable.

 

That said, the lack of univeral medical care and work 'till you're dead model in the US while spending billions on maintaining troops on grand adventures (when did WWII end and why do we still have troops in Japan?) seems just as unsustainable.

[j_b]

You must work for the gov't. Those folks think that there is an unlimited pool of money and all they have to do is say (to private sector folks) send it to us and we'll spend it for you. It's a recipe for disaster. We don't need the tax and spend dems any more than we need borrow and spend repub's running this country. I include Bush in the latter and exclude Clinton in the former.

 

spare us the propaganda. Effective taxation rates on capital are a fraction of what they used to be, even under Reagan btw.

 

Like most rational people, I thought that the Bush tax cuts to the wealthy should have been rolled back 5 min after the election if not sooner, but you are mistaken if you think that we can simply tax our way out of this - either for California or the country. More importantly, as Greece is learning, we also need to cut costs, and that means reduced government.

 

Why do you think the market crashed a couple of days ago even though they got the austerity commitment they wanted from Europe? because they themselves realized that cutting public spending during a depression is suicidal and will prevent any economic rebound for years to come.

 

Oh, and don't forget that we can also cut the exorbitant military spending (50% of the budget) too.

 

Have you heard of transfer pricing?

"optimal transfer pricing with optimal defined as transfer pricing that maximizes overall firm profits in a non-realistic world with no taxes, no capital risk, no development risk, no externalities or any other frictions which exist in the real world." http://en.wikipedia.org/wiki/Transfer_pricing

 

 

do you know that at least one corporation in 5 doesn't pay any taxes in any given year and many consider their tax department a revenue source?

[prole]

Wake up call, America! In order to keep this dinosaur wreck jalopy going for another generation you're going to have to TIGHTEN YOUR BELTS. Your labor is TOO EXPENSIVE. You educational system is TOO COSTLY. The bankers are NOT SATISFIED. Your government health programs are TOO GOOD ALREADY. Five days a week at eight hours a day for fifty years IS NOT ENOUGH. Corporate America is NOT AMUSED. The math IS UNDENIABLE. Regulations ARE COUNTER-PRODUCTIVE. Vacations ARE FRIVOLOUS. The investors are GETTING ANTSY. The economists DEMAND ACTION. The environment is a WASTE OF RESOURCES. The system IS NATURAL. History is IRRELEVANT. The actuarial tables SAY SO. Your future IS RIGHT NOW. Health and safety CAN WAIT. War is the AIR WE BREATHE. What's good for us is GOOD FOR YOU.

[tvashtarkatena]

I thought America was broke too? The Europeans spent their money on vacations and cushy pensions, America on misguided foreign adventures.

 

the substance of JayB's rant is "but they're broker"

 

and it's a hell of a lot better to be broke in Europe.

[j_b]

I thought America was broke too? The Europeans spent their money on vacations and cushy pensions, America on misguided foreign adventures.

 

the substance of JayB's rant is "but they're broker"

 

and it's a hell of a lot better to be broke in Europe.

 

and that's the entire reason for rhetoric like that found in the article that JayB posted. The entire world except for Europe has already gone through the neoliberal looting of the safety net and the commons. That's what is about to change if Europeans do not do something drastic like polish their pitchforks.

[prole]

What's most disturbing is the sociopathic glee he takes in delivering it. What up with that?

[j_b]

In the meantime ...

 

Wall Street's Victory Lap

by Simon Johnson

MIT Professor and co-author of 13 Bankers

Posted: May 26, 2010 08:56 AM

 

 

By now you have probably realized -- correctly -- that "financial reform" has turned into a victory lap for Wall Street.

 

When they saved the big banks, with massive unconditional support (both explicit and implicit) over a year ago, top administration officials promised they would be back later to fix the underlying problems. This they -- and Congress -- manifestly have failed to do.

 

Our banking structure remains unchanged, the rules will be tweaked at the margins, and the incentive and belief system that lies behind reckless risk-taking has only become more dangerous. (The back story, if you can still stomach it, is in 13 Bankers).

 

http://www.huffingtonpost.com/simon-johnson/wall-streets-victory-lap_b_590044.html

[j_b]

What's most disturbing is the sociopathic glee he takes in delivering it. What up with that?

 

IMO it's because he knows that neoliberals are winning and he is dancing on our collective grave (he has no problem with that kind of collectivism).

[prole]

"Another such victory and I am undone." Edited May 27, 2010 by prole