USuncutMN says: Tax the corporations! Tax the rich! Stop the cuts, fight for social justice for all. Standing in solidarity with http://www.usuncut.org/ and other Uncutters worldwide. FIGHT for a Foreclosure Moratorium! Foreclosure = homelessness. Resist the American Legislative Exchange Council, Grover Norquist and Citizen's United. #Austerity for the wheeler dealers, NOT the people.
USuncutMN supports #occupyWallStreet, #occupyDC, the XL Pipeline resistance Yes, We, the People, are going to put democracy in all its forms up front and center. Open mic, diversity, nonviolent tactics .. Social media, economic democracy, repeal Citizen's United, single-payer healthcare, State Bank, Operation Feed the Homeless, anti-racism, homophobia, sexISM, war budgetting, lack of transparency, et al. Once we identify who we are and what we've lost, We can move forward.
Showing posts with label klusterfuck. Show all posts
Showing posts with label klusterfuck. Show all posts
Friday, October 14, 2011
Thursday, September 29, 2011
Finger-Tapping As Even German Government Expects Greek Default | The Prudent Investor
Finger-Tapping As Even German Government Expects Greek Default | The Prudent Investor
Wednesday, September 28, 2011
Gasping at the highest possible speed of standstill in Euro bailout negotiations, we have entered the finger-tapping phase.
Only political denial of the inevitable breakdown and official hopes for a breakthrough on the unsolvable question of a Eurozone bailout with Germany as the main contributor at the umpteenth emergency meeting will hold up markets another 2 days.
It can be safely expected that the Troika experts visit in Athens will not yield any news other than that EU, ECB and the IMF want to roll on with their plans of Eurobonds. This will not work as 80% of Germans are against a bailout.
Market expectations of the future of European banks reflect the futility of long dead-locked discussion on the political level best, this chart of 600 banksshows, which is back to levels last seen at the beginning of the biggest debt bubble in history in the early 1990s.
Connect this with widespread layoffs in the financial industry where even Goldman Sachs cuts the bacon and this is a strong indicator that the coming system collapse is an accident waiting to happen, despite or because of zero interest rate policies.
Here is the latest daily digest on the non-progress of the Eurozone bailout fromopeneurope.
The situation does not improve by throwing smoke bombs like renewed EU talks on a financial transaction tax (FTT) - that will go nowhere due to UK opposition - or the recent six-pack enablement of more centralized economic governance under Eurocrat guidance. Forget about it; this is just a diversion from the real debt mountain that grows with every minute.
The Prudent Investor's Early Warnings
Nothing in the European debt disaster comes unexpected and was clearly visible since years.
Checking this blog's archive first warning posts on the European crisis date back to 2007, voiding all excuses that developments came by surprise.
Here are the key posts:
a first warning was first-hand information on the European property bubble as early as June 2007:
And this post from 2010 is more valid than ever:
I have nothing to add at this point of time and remain finger-tapping as the collapse is inevitable.
Click here to go to the The Prudent Investor homepage for more interesting posts.
Only political denial of the inevitable breakdown and official hopes for a breakthrough on the unsolvable question of a Eurozone bailout with Germany as the main contributor at the umpteenth emergency meeting will hold up markets another 2 days.
It can be safely expected that the Troika experts visit in Athens will not yield any news other than that EU, ECB and the IMF want to roll on with their plans of Eurobonds. This will not work as 80% of Germans are against a bailout.
Market expectations of the future of European banks reflect the futility of long dead-locked discussion on the political level best, this chart of 600 banksshows, which is back to levels last seen at the beginning of the biggest debt bubble in history in the early 1990s.
 |
| STOXX600Banks back to 18-year lows |
Here is the latest daily digest on the non-progress of the Eurozone bailout fromopeneurope.
The FT reports that, according to senior European officials, splits are opening up between eurozone leaders over whether to revise the second Greek bailout package. Germany and the Netherlands, along with up to five other eurozone members, are leading the calls for bondholders to take bigger write downs on their holdings of Greek debt, while France and the ECB are fiercely resisting such a move.
German government privately expects a Greek default by December
The news is likely to dampen the recent market rally in Europe, especially for European banks. Reuters reports on concerns that the completion of the EU/IMF/ECB review mission in Greece will reveal higher funding needs than estimated under the second Greek bailout plan. German Chancellor Angela Merkel said to Greek state TV NET, "We have to wait and see what the troika...finds and what it will tell us [whether] we will have to renegotiate or not." Bild reports that the German government privately expects a Greek default by December. According to an unnamed source, Merkel told CDU MPs in a meeting recently, "We are trying to avoid a Greek insolvency. I can however not exclude this any longer.”
The Greek parliament yesterday voted to approve the new property tax aimed at raising an extra €2bn a year, although reports suggest the vote sparked riots in Athens. The move will allow the EU/IMF/ECB review mission to return to Greece today, with a final decision on whether to release the next tranche of Greek bailout funds not expected until mid-October.
Meanwhile, the Bundestag will vote to approve the expanded EFSF tomorrow and although the proposal should pass with opposition support, it is still unsure whether Merkel will gain the majority support from her governing coalition which she has demanded. The coalition can stand to lose up 19 votes and still maintain a majority, however, with the number of junior coalition FDP MPs planning to abstain or vote no still uncertain, the outcome is yet to be assured. Handelsblattreports that the Slovakian parliament vote on the expanded EFSF may be delayed until 22 October or later, and is not guaranteed to pass, with the parties again failing to reach a compromise on the topic last night. Finland will vote on the issue today, and is expected to approve the proposal, while Slovenia passed the plan yesterday.
Debate continued over the state of an increased eurozone bailout fund, with a clear proposal yet to emerge. French Finance Minister Francois Baroin said, “It is out of the question to put forward, three days from the Bundestag vote, the issue of whether we should increase the fund…Let’s not open Pandora’s box on something that is a red flag for Germany.”
German Finance Minister Wolfgang Schaeuble also termed proposals to increase the fund or even leverage it as “stupid”, according to the Telegraph.Markets will widely swing or not until then, but the ultimate direction is down, due to the weak economic outlook in all worldwide regions. It will now be finger-tapping until the default of Greece or a cross-border bank that will stand at the beginning of the domino called European debt.
The situation does not improve by throwing smoke bombs like renewed EU talks on a financial transaction tax (FTT) - that will go nowhere due to UK opposition - or the recent six-pack enablement of more centralized economic governance under Eurocrat guidance. Forget about it; this is just a diversion from the real debt mountain that grows with every minute.
The Prudent Investor's Early Warnings
Nothing in the European debt disaster comes unexpected and was clearly visible since years.
Checking this blog's archive first warning posts on the European crisis date back to 2007, voiding all excuses that developments came by surprise.
Here are the key posts:
a first warning was first-hand information on the European property bubble as early as June 2007:
- Have a Look at the Spanish Property Bubble (June 2007)
- ECB Will Continue To Print Money by the Truckload - So Who Is About to Fail? (August 2007)
- ECB Balance Sheet Signals Sinking Quality of Credit Collateral, Jan 25, 2008
- Is Europe's Banking System Broken Beyond Repair?, January 29, 2008
And this post from 2010 is more valid than ever:
I have nothing to add at this point of time and remain finger-tapping as the collapse is inevitable.
Click here to go to the The Prudent Investor homepage for more interesting posts.
More on this topic (What's this?)
Germany's Secret Plan For Greece: Is Greece East Germany? (Shocked Investor, 9/28/11)
When Will Europe’s Molotov Cocktail Explode? (Wall Street Daily, 9/26/11)
Saturday, September 24, 2011
RANT OF THE DAY: TO MSNBC, love US Uncut MN
We, the real 99% of people, versus the 0.01% who rule this country. THEY have stolen not only our money but our civil rights. It grows worse by the day, as any self-respecting politician running for office who cares about social justice cannot get the money TO run OR they find that the right wing money (esp. via the K-K-K-Kochs and K-K-K-Karl Rove) moves in to revile them.
WE HAVE LOST TOO MUCH - hopes, dreams, rights, the social safety net is unravelled. In the street, we are all EQUAL and there is no "glass ceiling."
Why doesn't MSNBC talk about the People's Assembly? Why doesn't it mention how many states are organizing support occupations? OccupyMN, OccupyLA, occupyChicago, OccupySF, etc. Why doesn't it mention how much caring social media is at work? Why can't it realize that it is a multifaceted story with legs? I'll tell you something - our local Fox News outlet does better reporting than MSNBC, by a loooong shot, too.
I do a paper.li paper on US Days of Rage Minnesota Daily. Folks, take a look at it. Watch the videos that are posted. Read the articles. Decide which is more Important - People or Profit$? Fooling one's self that oppy is just around the corner OR sticking up for yourself and your loved ones?
We are all sick of Grover Norquist, the American Legislative Exchange Council (Kochs, too), graft, corruption, #austerity, high co$t$ of higher education, fear mongering, endless war$, escalating poverty, privatization of prisons/executions, bailouts, sociali$m for the rich, voter fraud, gutting of the EPA, consumerISM, rampant individualISM and "optimism", voodoo economics, xenophobia/ Islamaphobia, WAR CRIMES, torture, campaign RHETORIC, tax loopholes, offshoring, corporations holding trillions of dollar$ in asset$ as a liquidity hedge, hedge fund$, the Federal Reserve Bank, the Chamber of Commerce, the Supreme Court 5, Tim Greithner, the hahaha Super committee which is a junta of 13, laws against umbrellas and masks in NYC, Big Pharma, GMO frankenfood, hydrofracking, the teabagger stoopidity, Citizens United, imperialISM, racISM, sexISM, homophobiak, child abuse and BAD JOURNALISM - a bought off media. The three legs of FASCISM; military, money, MEDIA.
What did happened to Cenk anyway? We hate insiders in the Beltway, btw. We LOVE Cenk who exposes Wall Street CRIME and CRIMINALS.
There's more to come . You can bet on it. As in Tunisia, Egypt and other places - Revolution 2.0 will be tweeted, "liked" and shared. We will win.
Shared at this link:
http://world-news.newsvine.com/_news/2011/09/24/7945486-80-arrested-at-occupy-wall-street-protest?pc=25&sp=50&threadId=3230346#discussion_nav Page 3
WE HAVE LOST TOO MUCH - hopes, dreams, rights, the social safety net is unravelled. In the street, we are all EQUAL and there is no "glass ceiling."
Why doesn't MSNBC talk about the People's Assembly? Why doesn't it mention how many states are organizing support occupations? OccupyMN, OccupyLA, occupyChicago, OccupySF, etc. Why doesn't it mention how much caring social media is at work? Why can't it realize that it is a multifaceted story with legs? I'll tell you something - our local Fox News outlet does better reporting than MSNBC, by a loooong shot, too.
I do a paper.li paper on US Days of Rage Minnesota Daily. Folks, take a look at it. Watch the videos that are posted. Read the articles. Decide which is more Important - People or Profit$? Fooling one's self that oppy is just around the corner OR sticking up for yourself and your loved ones?
We are all sick of Grover Norquist, the American Legislative Exchange Council (Kochs, too), graft, corruption, #austerity, high co$t$ of higher education, fear mongering, endless war$, escalating poverty, privatization of prisons/executions, bailouts, sociali$m for the rich, voter fraud, gutting of the EPA, consumerISM, rampant individualISM and "optimism", voodoo economics, xenophobia/ Islamaphobia, WAR CRIMES, torture, campaign RHETORIC, tax loopholes, offshoring, corporations holding trillions of dollar$ in asset$ as a liquidity hedge, hedge fund$, the Federal Reserve Bank, the Chamber of Commerce, the Supreme Court 5, Tim Greithner, the hahaha Super committee which is a junta of 13, laws against umbrellas and masks in NYC, Big Pharma, GMO frankenfood, hydrofracking, the teabagger stoopidity, Citizens United, imperialISM, racISM, sexISM, homophobiak, child abuse and BAD JOURNALISM - a bought off media. The three legs of FASCISM; military, money, MEDIA.
What did happened to Cenk anyway? We hate insiders in the Beltway, btw. We LOVE Cenk who exposes Wall Street CRIME and CRIMINALS.
There's more to come . You can bet on it. As in Tunisia, Egypt and other places - Revolution 2.0 will be tweeted, "liked" and shared. We will win.
Shared at this link:
http://world-news.newsvine.com/_news/2011/09/24/7945486-80-arrested-at-occupy-wall-street-protest?pc=25&sp=50&threadId=3230346#discussion_nav Page 3
Sunday, September 4, 2011
Ralph Nader on the proposed Keystone XL pipeline + 1,252 arrested in front of the White House
Ralph Nader on the proposed Keystone XL pipeline + 1,252 arrested in front of the White House
Posted on September 4, 2011 by dandelionsalad
Image by tarsandsaction via Flickr
StopKeystoneXL on Sep 2, 2011
www.tarsandsaction.org/
Ralph Nader: On the proposed Keystone XL pipeline
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BrianMerchant on Sep 2, 2011
Ralph Nader Interview Tar Sands Pipeline
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videonation on Sep 2, 2011
Hundreds of people continue their nonviolent protest outside the White House, urging President Obama to not approve the potentially environmentally disastrous Keystone XL pipeline. The Keystone XL pipeline, which if approved would run from Alberta, Canada to the Gulf of Mexico and carry some 900,000 barrels per day of crude oil refined from bitumen in the Canadian soil, has been denounced by environmentalist Bill McKibben and NASA scientist James Hansen and many other experts. But last week the State Department issued an assessment of the project that concluded that there would be “no significant impact” on natural resources near the pipeline route, while also downplaying the potential for increased greenhouse gas emissions.Protesters to Obama: Stop the Tar Sands Pipeline
The Nation’s George Zornick captured the scene at the White House this week, and documented the arrests of protesters.
For more video, visit TheNation.com
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RTAmerica on Aug 31, 2011
For more than a week hundreds have gathered outside the White House to protest the Keystone pipeline. The planned pipeline will cost approximately $13 billion according to the TransCanada.com. Some critics claim Canada is trying to jump into the oil export business and others say that this will reduce our dependence on Middle Eastern oil. Brant Olson, communications manager for Rainforest Action Network, tells us what could happen if this pipeline is built and at what cost.Hundreds arrested in front of the White House
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Action Alert
“The tar sands represent a catastrophic threat to our communities, our climate, and our planet. We urge you to demonstrate real climate leadership by rejecting the requested permit for the Keystone XL pipeline and instead focus on developing safe, clean energy.”***
via 350 | Stand in Solidarity – Stop the Tar Sands!
September 3 Press Release: “Movement being born”
Tar Sands Action
Sept. 3, 2011
WASHINGTON– The largest environmental civil disobedience in decades concluded at the White House this morning with organizers pledging to escalate a nationwide campaign to push President Obama to deny the permit for a new tar sands oil pipeline.
“Given yesterday’s baffling cave on ozone standards, the need for a fighting environmental movement has never been more clear,” said Bill McKibben, who spearheaded the protest. “That movement is being born right here in front of the White House and reverberating around the country.”
The proposed Keystone XL pipeline has become the most important environmental decision facing President Obama before the 2012 election and sparked nationwide opposition, from Nebraska ranchers to former Obama campaigners. A petition with 617,428 names opposing the pipeline will be delivered to the White House today.
Over the course of the two-week sit-in 1,252 people were arrested, including top climate scientists, landowners from Texas and Nebraska, former Obama for America staffers, First Nations leaders from Canada, and notable individuals including Bill McKibben, former White House official Gus Speth, NASA scientist Dr. James Hansen, actor Daryl Hannah, filmmaker Josh Fox, and author Naomi Klein.
“Back home we are fighting to protect our land and water. This week, we decided to bring that fight to the President’s doorstep,” said Jane Kleeb, Director of BOLD Nebraska, who led a delegation of Nebraskans who were arrested this morning. “We are acting on our values and expect our President to act as well.”
McKibben also announced at the protest that the movement will continue organizing, with a Phase Two announcement within 48 hours. Click here to be the first to know details when they’re announced: www.tarsandsaction.org/next-steps
Protest organizers are already planning ways to capitalize on the surge of energy the sit-in has created. In a number of cities, people have already begun to visit Obama for America offices to tell the campaign they will volunteer and donate only after President Obama stands up to Big Oil and denies the Keystone XL permit. Along the pipeline route, groups are preparing to drive turnout to State Department hearings later this month. Thousands are expected to descend on Washington, DC for the final hearing on October 7.
Last week, nearly every major environmental group in the country signed on to a letter demanding President Obama deny the pipeline permit. “There is not an inch of daylight between our policy position on the Keystone XL pipeline, and those of the protesters being arrested daily outside the White House,” wrote the groups in their letter.
Vice President Al Gore also added his support to the protest, writing, “the leaders of the top environmental groups in the country, the Republican Governor of Nebraska, and millions of people around the country—including hundreds of people who have bravely participated in civil disobedience at the White House—all agree on one thing: President Obama should block a planned pipeline from the tar sands of Alberta to the Gulf of Mexico. The tar sands are the dirtiest source of fuel on the planet.”
Many of the people arrested at the White House wore Obama 2008 buttons as they were taken away in handcuffs.
“We are not going to do President Obama the favor of attacking him,” said McKibben. “We are going to hold the Obama campaign to the standard it set in 2008. Denying this pipeline would send a jolt of electricity through the people that elected this president.”
Executive director of the 1.4 million-member Sierra Club, Michael Brune, warned of the consequences if President Obama approved Keystone XL: “We will see an enthusiasm deficit. We won’t see our members volunteering 20 or 25 or 30 hours a week. We won’t see the same passion and intensity.”
Courtney Hight, a former Youth Vote Director in Florida and White House Council on Environmental Quality staffer, now co-director of the Energy Action Coalition, said, “Young people mobilized in record numbers in 2008 to elect a leader they believed would fulfill his promise. Yesterday, I was arrested with other young voters to call on President Obama to fulfill his promise and stand up to Big Oil.”
The White House is receiving pressure from citizens north of the border, as well. Activists in Ottawa are planning a civil-disobedience protest on Parliament Hill this September 26.
“The Canadian government is acting as the global advertising agency of the tar sands oil industry,” said author and activist Naomi Klein, who was arrested Friday. “Canadians have come to appeal directly to President Obama, to demand that he stop this pipeline and make good on his 2008 election promises.”
The proposed 1,700 mile Keystone XL pipeline would carry dirty, tar sands oil from Canada to the Gulf of Mexico. A rupture in the pipeline could cause a BP style oil spill in America’s heartland, over the source of fresh drinking water for 20 million people. NASA’s top climate scientist says that fully developing the tar sands in Canada would mean “essentially game over” for the climate.
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For more information, please visit tarsandsaction.org.
see
more videos: http://vodpod.com/dandelionsalad/tag/tar%20sands
We have no bargaining power with Obama by Ralph Nader
The Election March of the Trolls by Chris Hedges
Derrick Jensen: How the West Has Won
Ecological and Economic Reality by Chris Clugston
The Sky Really Is Falling by Chris Hedges
Peak Oil
Free Energy on Dandelion Salad
Friday, August 19, 2011
Michael Hudson: The Case Against the Credit Ratings Agencies
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College
In today’s looming confrontation the ratings agencies are playing the political role of “enforcer” as the gatekeepers to credit, to put pressure on Iceland, Greece and even the United States to pursue creditor-oriented policies that lead inevitably to financial crises. These crises in turn force debtor governments to sell off their assets under distress conditions. In pursuing this guard-dog service to the world’s bankers, the ratings agencies are escalating a political strategy they have long been refined over a generation in the corrupt arena of local U.S. politics.
Why ratings agencies public selloffs rather than sound tax policy: The Kucinich Case Study
In 1936, as part of the New Deal’s reform of America’s financial markets, regulators forbid banks and institutional money managers to buy securities deemed “speculative” by “recognized rating manuals.” Insurance companies, pension funds and mutual funds subject to public regulation are required to “take into account” the views of the credit ratings agencies, provided them with a government-sanctioned monopoly. These agencies make their money by offering their “opinions” (for which they have never been legally liable) as to the payment prospects of various grades of security, from AAA (as secure government debt, the top rating because governments always can print the money to pay) down to various depths of junk.
Moody’s, Standard and Poor’s and Fitch focus mainly on stocks and on corporate, state and local bond issues. They make money twice off the same transaction when cities and states balance their budgets by spinning off public enterprises into new corporate entities issuing new bonds and stocks. This business incentive gives the ratings agencies an antipathy to governments that finance themselves on a pay-as-you-go basis (as Adam Smith endorsed) by raising taxes on real estate and other property, income or sales taxes instead of borrowing to cover their spending. The effect of this inherent bias is not to give an opinion about what is economically best for a locality, but rather what makes the most profit for themselves.
Localities are pressured when their rising debt levels lead to a financial stringency. Banks pull back their credit lines, and urge cities and states to pay down their debts by selling off their most viable public enterprises. Offering opinions on this practice has become a big business for the ratings agencies. So it is understandable why their business model opposes policies – and political candidates – that support the idea of basing public financing on taxation rather than by borrowing. This self-interest colors their “opinions.”
If this seems too cynical an explanation for today’s ratings agencies self-serving views, there are sufficient examples going back over thirty years to illustrate their unethical behavior. The first and most notorious case occurred in Cleveland, Ohio, after Dennis Kucinich was elected mayor in 1977. The ratings agencies had been giving the city good marks despite the fact that it had been using bond funds improperly for general operating purposes to covered its budget shortfalls by borrowing, leaving Cleveland with $14.5 million owed to the banks on open short-term credit lines.
Cleveland had a potential cash cow in Municipal Light, which its Progressive Era mayor Tom Johnson had created in 1907 as one of America’s first publicly owned power utilities. It provided the electricity to light Cleveland’s streets and other public uses, as well as providing power to private users. Meanwhile, banks and their leading local clients were heavily invested in Muni Light’s privately owned competitor, the Cleveland Electric Illuminating Company. Members of the Cleveland Trust sat on CEI’s board and wielded a strong influence on the city council to try and take it over. In a series of moves that city officials, the U.S. Senate and regulatory agencies found to be improper (popular usage would say criminal), CEI caused a series of disruptions in service and worked with the banks and ratings agencies to try and force the city to sell it the utility. Banks for their part had their eye on financing a public buyout – and hoped to pressure the city into selling, threatening to pull the plug on its credit lines if it did not surrender Muni Light.
It was to block this privatization that Mr. Kucinich ran for mayor. To free the city from being liable to financial pressure from its vested interests – above all from the banks and private utilities – he sought to put the city’s finances on a sound footing by raising taxes. This threatened to slow borrowing from the banks (thereby shrinking the business of ratings agencies as well), while freeing Cleveland from the pressures that have risen across the United States for cities to start selling off their public enterprises, especially since the 1980s as tax-cutting politicians have left them deeper in debt.
The banks and ratings agencies told Mayor Kucinich that they would back his political career and even hinted financing a run for the governorship if he played ball with them and agreed to sell the electric utility. When he balked, the banks said that they could not renew credit lines to a city that was so reluctant to balance its books by privatizing its most profitable enterprises. This threat was like a credit-card company suddenly demanding payment of the full balance from a customer, saying that if it were not paid, the sheriff would come in and seize property to sell off (usually on credit extended to customers of the bankers).
The ratings agencies chimed in and threatened to downgrade Cleveland’s credit rating if the city did not privatize its utility. The financial tactic was to offer the carrot of corrupting the mayor politically, while using the threat of forcing the city into financial crisis and raising its interest rates. If the economy did not pay higher utility charges as a result of privatization, it would have to pay higher interest.
But standing on principle, the mayor refused to sell the utility, and voters elected to keep Muni light public by a 2-to-1 margin in a referendum. They proceeded to pay down the city’s debt by raising its income-tax rate in order to avoid paying higher rates for privatized electricity. Their choice was thoroughly in line with Book V of Adam Smith’s Wealth of Nations provides a perspective on how borrowing ends up with a proliferation of taxes to pay the interest. This makes the private sector pay higher prices for its basic needs that Cleveland Mayor Tom Johnson and other Progressive Era leaders a century ago sought to socialize in order to lower the cost of living and doing business in the United States.
The bankers’ alliance with the Cleveland’s wealthy would-be power monopoly led it to be the first U.S. city to default since the Great Depression as the state of Ohio forced it into fiscal receivership in 1979. The banks used the crisis to make an easy gain in buying up bond anticipation notes that were sold under distress conditions exacerbated by the ratings agencies. The banks helped fund Mayor Kucinich’s opponent in the 1979 mayoral race.
But in saving Muni Light he had saved voters hundreds of millions of dollars that the privatizers would have built into their electric rates to cover higher interest charges and financial fees, dividends to stockholders, and exorbitant salaries and stock options. In due course voters came to recognize Mr. Kucinich’s achievement have sent him to Congress since 1997. As for Mini Light’s privately owned rival, the Cleveland Electric Illuminating Company, it achieved notoriety for being primarily responsible for the northeastern United States power blackout in 2003 that left 50 million people without electricity.
The moral is that the ratings agencies’ criterion was simply what was best for the banks, not for the debtor economy issuing the bonds. They were eager to upgrade Cleveland’s credit ratings for doing something injurious – first, borrowing from the banks rather than covering their budget by raising property and income taxes; and second, raising the cost of doing business by selling Muni Light. They threatened to downgrade the city for acting to protect its economic interest and trying to keep its cost of living and doing business low.
The tactics by banks and credit rating agencies have been successful most easily in cities and states that have fallen deeply into debt dependency. The aim is to carve up national assets, by doing to Washington what they sought to do in Cleveland and other cities over the past generation. Similar pressure is being exerted on the international level on Greece and other countries. Ratings agencies act as political “enforcers” to knee-cap economies that refrain from privatization sell-offs to solve debt problems recognized by the markets before the ratings agencies acknowledge the bad financial mode that they endorse for self-serving business reasons.
Why ratings agencies oppose public checks against financial fraud
The danger posed by ratings agencies in pressing the global economy to a race into debt and privatization recently became even more blatant in their drive to give more leeway to abusive financial behavior by banks and underwriters. Former Congressional staffer Matt Stoller cites an example provided by Josh Rosner and Gretchen Morgenson in Reckless Endangerment regarding their support of creditor rights to engage in predatory lending and outright fraud. On January 12, 2003, the state of Georgia passed strong anti-fraud laws drafted by consumer advocates. Four days later, Standard & Poor announced that if Georgia passed anti-fraud penalties for corrupt mortgage brokers and lenders, packaging including such debts could not be given AAA ratings.
We have fallen into quite a muddle when ratings agencies take the position that packaged mortgages can receive AAA ratings only from states that do not protect consumers and debtors against mortgage fraud and predatory finance. The logic is that giving courts the right to prosecute fraud threatens the viability of creditor claims endorses a race to the bottom. If honesty and viable credit were the objective of ratings agencies, they would give AAA ratings only to states whose courts deterred lenders from engaging in the kind of fraud that has ended up destroying the securitized mortgage binge since September 2008. But protecting the interests of savers or bank customers – and hence even the viability of securitized mortgage packages – is not the task with which ratings agencies are charged.
Masquerading as objective think tanks and research organizations, the ratings agencies act as lobbyists for banks and underwriters by endorsing a race to the bottom – into debt, privatization sell-offs and an erosion of consumer rights and control over fraud. “S&P was aggressively killing mortgage servicing regulation and rules to prevent fraudulent or predatory mortgage lending,” Stoller concludes. “Naomi Klein wrote about S&P and Moody’s being used by Canadian bankers in the early 1990s to threaten a downgrade of that country unless unemployment insurance and health care were slashed.”
The basic conundrum is that anything that interferes with the arbitrary creditor power to make money by trickery, exploitation and outright fraud threatens the collectability of claims. The banks and ratings agencies have wielded this power with such intransigence that they have corrupted the financial system into junk mortgage lending, junk bonds to finance corporate raiders, and computerized gambles in “casino capitalism.” What then is the logic in giving these agencies a public monopoly to impose their “opinions” on behalf of their paying clients, blackballing policies that the financial sector opposes – rulings that institutional investors are legally obliged to obey?
Threats to downgrade the U.S. and other national economies to force pro-financial policies
At the point where claims for payment prove self-destructive, creditors move to their fallback position. Plan B is to foreclose, taking possession of the property of debtors. In the case of public debt, governments are told to privatize the public domain – with banks creating the credit for their customers to buy these assets, typically under fire-sale distress conditions that leave room for capital gains and other financial rake-offs. In cases where foreclosure and forced sell-offs are not able to make creditors whole (as when the economy breaks down), Plan C is for governments simply to bail out the banks, taking bad bank debts and other obligations onto the public balance sheet for taxpayers to make good on.
Standard and Poor’s threat to downgrade of U.S. Treasury bonds from AAA to AA+ would exacerbate the problem if it actually discouraged purchasers from buying these bonds. But on the Monday on August 8, following their Friday evening downgrade, Treasury borrowing rates fell, with short-term T-bills actually in negative territory. That meant that investors had to lose a small margin simply to keep their money safe. So S&P’s opinions are as ineffectual as being a useful guide to markets as they are as a guide to promote good economic policy.
But S&P’s intent was not really to affect the marketability of Treasury bonds. It was a political stunt to promote the idea that the solution to today’s budget deficit is to pursue economic austerity. The message is that President Obama should roll back Social Security and Medicare entitlements so as to free more money for more subsidies, bailouts and tax cuts for the top of the steepening wealth pyramid. Neoliberal Harvard economics professor Robert Barro made this point explicitly in a Wall Street Journal op-ed. Calling the S&P downgrade a “wake-up call” to deal with the budget deficit, he outlined the financial sector’s preferred solution: a vicious class war against labor to reduce living standards and further polarize the U.S. economy between creditors and debtors by shifting taxes off financial speculation and property onto employees and consumers.
As the main advocate and ultimate beneficiary of privatization, the financial sector directs debtor economies to sell off their public property and cut social services – while increasing taxes on employees. Populations living in such economies call them hell and seek to emigrate to find work or simply to flee their debts. What else should someone call surging poverty, death rates and alcoholism while a few grow rich? The ratings agencies today are like the IMF in the 1970s and ‘80s. Countries that do not agree sell off their public domain (and give tax deductibility to the interest payments of buyers-on-credit, providing multinationals with income-tax exemption on their takings from the monopolies being privatized) are treated as outlaws and isolated Cuba- or Iran-style.
Such austerity plans are a failed economic model, but the financial sector has managed to gain even as economies are carved up. Their “Plan B” is foreclosure, extending to the national scale. By the 1980s, creditor-planned economies in Third World debtor countries had reached the limit of their credit-worthiness. Under World Bank coordination, a vast market in national infrastructure spending for creditor-nation bank debt, bonds and exports. The projects being financed on credit were mainly to facilitate exports and provide electric power for foreign investments. After Mexico announced its insolvency in 1982 when it no longer could afford to service foreign-currency debt, where were creditors to turn?
Their solution was to use the debt crisis as a lever to start financing these same infrastructure projects all over again, now that most were largely paid for. This time, what was being financed was not new construction, but private-sector buyouts of property that had been financed by the World Bank and its allied consortia of international bankers. There is talk of the U.S. Government selling off its national parks and other real estate, national highways and infrastructure, perhaps the oil reserve, postal service and so forth.
S&P’s “opinion” was treated seriously enough by John Kerry, the 2004 Democratic Presidential nominee, as a warning that America should “get its house in order.” Despite the fact that on page 4 of its 8-page explanation of why it downgraded Treasury bonds, S&P’s stated: “We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act,” was one of the three senators appointed to the commission under the debt-ceiling agreement. He chimed in to endorse the S&P action as a helpful nudge for the country to deal with its “entitlements” program – as if Social Security and FICA withholding were a kind of welfare, not actual savings put in by labor, to be wiped out as the government empties its coffers to bail out Wall Street’s high rollers.
No less a financial publication than the Wall Street Journal has come to the conclusion that “in a perfect world, S&P wouldn’t exist. And neither would its rivals Moody’s Investors Service and Fitch Ratings Ltd. At least not in their current roles as global judges and juries of corporate and government bonds.” As its financial editor Francesco Guerrera wrote quite eloquently in the aftermath of S&P’s bold threat to downgrade the U.S. Treasury’s credit rating: “The historic decision taken by S&P on Aug. 5 is the culmination of 75 years of policy mistakes that ended up delegating a key regulatory function to three for-profit entities.”
The behavior of leading banks and ratings agencies Cleveland and other similar cases – of promising to give good ratings to states, counties and cities that agree to pay off short-term bank debt by selling off their crown jewels – is not ostensibly criminal under the law (except when their hit men actually succeed in assassination). But the ratings agencies have made an compact with crooks to endorse only public borrowers that agree to pursue such policies and not to prosecute financial fraud.
To acquiescence in such economically destructive financial behavior is the opposite of fiscal responsibility. Cutting federal taxes and Social Security payments to obtain a more positive S&P “opinion” would give banks an ability to “pull the plug” and force privatization and anti-labor austerity plans by refraining from rolling over the U.S. debt – and cutting taxes Tea-Party style rather than funding spending by taxation on a pay-as-you-go-basis.
The present meltdown of the euro provides an object lesson for why policy-making never should be left to central bankers, because their mentality is pro-creditor. Otherwise they would not have the political reliability demanded by the financial sector that has captured the central bank, Treasury and regulatory agencies to gain veto power over who is appointed. Given their preference for debt deflation of the “real” economy – while trying to inflate asset prices by promoting the banks’ product (debt creation) – central bank and Treasury solutions tend to aggravate economic downturns. This is self-destructive because today’s major problem blocking recovery is over-indebtedness.
In today’s looming confrontation the ratings agencies are playing the political role of “enforcer” as the gatekeepers to credit, to put pressure on Iceland, Greece and even the United States to pursue creditor-oriented policies that lead inevitably to financial crises. These crises in turn force debtor governments to sell off their assets under distress conditions. In pursuing this guard-dog service to the world’s bankers, the ratings agencies are escalating a political strategy they have long been refined over a generation in the corrupt arena of local U.S. politics.
Why ratings agencies public selloffs rather than sound tax policy: The Kucinich Case Study
In 1936, as part of the New Deal’s reform of America’s financial markets, regulators forbid banks and institutional money managers to buy securities deemed “speculative” by “recognized rating manuals.” Insurance companies, pension funds and mutual funds subject to public regulation are required to “take into account” the views of the credit ratings agencies, provided them with a government-sanctioned monopoly. These agencies make their money by offering their “opinions” (for which they have never been legally liable) as to the payment prospects of various grades of security, from AAA (as secure government debt, the top rating because governments always can print the money to pay) down to various depths of junk.
Moody’s, Standard and Poor’s and Fitch focus mainly on stocks and on corporate, state and local bond issues. They make money twice off the same transaction when cities and states balance their budgets by spinning off public enterprises into new corporate entities issuing new bonds and stocks. This business incentive gives the ratings agencies an antipathy to governments that finance themselves on a pay-as-you-go basis (as Adam Smith endorsed) by raising taxes on real estate and other property, income or sales taxes instead of borrowing to cover their spending. The effect of this inherent bias is not to give an opinion about what is economically best for a locality, but rather what makes the most profit for themselves.
Localities are pressured when their rising debt levels lead to a financial stringency. Banks pull back their credit lines, and urge cities and states to pay down their debts by selling off their most viable public enterprises. Offering opinions on this practice has become a big business for the ratings agencies. So it is understandable why their business model opposes policies – and political candidates – that support the idea of basing public financing on taxation rather than by borrowing. This self-interest colors their “opinions.”
If this seems too cynical an explanation for today’s ratings agencies self-serving views, there are sufficient examples going back over thirty years to illustrate their unethical behavior. The first and most notorious case occurred in Cleveland, Ohio, after Dennis Kucinich was elected mayor in 1977. The ratings agencies had been giving the city good marks despite the fact that it had been using bond funds improperly for general operating purposes to covered its budget shortfalls by borrowing, leaving Cleveland with $14.5 million owed to the banks on open short-term credit lines.
Cleveland had a potential cash cow in Municipal Light, which its Progressive Era mayor Tom Johnson had created in 1907 as one of America’s first publicly owned power utilities. It provided the electricity to light Cleveland’s streets and other public uses, as well as providing power to private users. Meanwhile, banks and their leading local clients were heavily invested in Muni Light’s privately owned competitor, the Cleveland Electric Illuminating Company. Members of the Cleveland Trust sat on CEI’s board and wielded a strong influence on the city council to try and take it over. In a series of moves that city officials, the U.S. Senate and regulatory agencies found to be improper (popular usage would say criminal), CEI caused a series of disruptions in service and worked with the banks and ratings agencies to try and force the city to sell it the utility. Banks for their part had their eye on financing a public buyout – and hoped to pressure the city into selling, threatening to pull the plug on its credit lines if it did not surrender Muni Light.
It was to block this privatization that Mr. Kucinich ran for mayor. To free the city from being liable to financial pressure from its vested interests – above all from the banks and private utilities – he sought to put the city’s finances on a sound footing by raising taxes. This threatened to slow borrowing from the banks (thereby shrinking the business of ratings agencies as well), while freeing Cleveland from the pressures that have risen across the United States for cities to start selling off their public enterprises, especially since the 1980s as tax-cutting politicians have left them deeper in debt.
The banks and ratings agencies told Mayor Kucinich that they would back his political career and even hinted financing a run for the governorship if he played ball with them and agreed to sell the electric utility. When he balked, the banks said that they could not renew credit lines to a city that was so reluctant to balance its books by privatizing its most profitable enterprises. This threat was like a credit-card company suddenly demanding payment of the full balance from a customer, saying that if it were not paid, the sheriff would come in and seize property to sell off (usually on credit extended to customers of the bankers).
The ratings agencies chimed in and threatened to downgrade Cleveland’s credit rating if the city did not privatize its utility. The financial tactic was to offer the carrot of corrupting the mayor politically, while using the threat of forcing the city into financial crisis and raising its interest rates. If the economy did not pay higher utility charges as a result of privatization, it would have to pay higher interest.
But standing on principle, the mayor refused to sell the utility, and voters elected to keep Muni light public by a 2-to-1 margin in a referendum. They proceeded to pay down the city’s debt by raising its income-tax rate in order to avoid paying higher rates for privatized electricity. Their choice was thoroughly in line with Book V of Adam Smith’s Wealth of Nations provides a perspective on how borrowing ends up with a proliferation of taxes to pay the interest. This makes the private sector pay higher prices for its basic needs that Cleveland Mayor Tom Johnson and other Progressive Era leaders a century ago sought to socialize in order to lower the cost of living and doing business in the United States.
The bankers’ alliance with the Cleveland’s wealthy would-be power monopoly led it to be the first U.S. city to default since the Great Depression as the state of Ohio forced it into fiscal receivership in 1979. The banks used the crisis to make an easy gain in buying up bond anticipation notes that were sold under distress conditions exacerbated by the ratings agencies. The banks helped fund Mayor Kucinich’s opponent in the 1979 mayoral race.
But in saving Muni Light he had saved voters hundreds of millions of dollars that the privatizers would have built into their electric rates to cover higher interest charges and financial fees, dividends to stockholders, and exorbitant salaries and stock options. In due course voters came to recognize Mr. Kucinich’s achievement have sent him to Congress since 1997. As for Mini Light’s privately owned rival, the Cleveland Electric Illuminating Company, it achieved notoriety for being primarily responsible for the northeastern United States power blackout in 2003 that left 50 million people without electricity.
The moral is that the ratings agencies’ criterion was simply what was best for the banks, not for the debtor economy issuing the bonds. They were eager to upgrade Cleveland’s credit ratings for doing something injurious – first, borrowing from the banks rather than covering their budget by raising property and income taxes; and second, raising the cost of doing business by selling Muni Light. They threatened to downgrade the city for acting to protect its economic interest and trying to keep its cost of living and doing business low.
The tactics by banks and credit rating agencies have been successful most easily in cities and states that have fallen deeply into debt dependency. The aim is to carve up national assets, by doing to Washington what they sought to do in Cleveland and other cities over the past generation. Similar pressure is being exerted on the international level on Greece and other countries. Ratings agencies act as political “enforcers” to knee-cap economies that refrain from privatization sell-offs to solve debt problems recognized by the markets before the ratings agencies acknowledge the bad financial mode that they endorse for self-serving business reasons.
Why ratings agencies oppose public checks against financial fraud
The danger posed by ratings agencies in pressing the global economy to a race into debt and privatization recently became even more blatant in their drive to give more leeway to abusive financial behavior by banks and underwriters. Former Congressional staffer Matt Stoller cites an example provided by Josh Rosner and Gretchen Morgenson in Reckless Endangerment regarding their support of creditor rights to engage in predatory lending and outright fraud. On January 12, 2003, the state of Georgia passed strong anti-fraud laws drafted by consumer advocates. Four days later, Standard & Poor announced that if Georgia passed anti-fraud penalties for corrupt mortgage brokers and lenders, packaging including such debts could not be given AAA ratings.
Because of the state’s new Fair Lending Act, S&P said that it would no longer allow mortgage loans originated in Georgia to be placed in mortgage securities that it rated. Moody’s and Fitch soon followed with similar warnings.
It was a critical blow. S&P’s move meant Georgia lenders would have no access to the securitization money machine; they would either have to keep the loans they made on their own books, or sell them one by one to other institutions. In turn, they made it clear to the public that there would be fewer mortgages funded, dashing “the dream” of homeownership.The message was that only bank loans free of legal threat against dishonest behavior were deemed legally risk-free for buyers of securities backed by predatory or fraudulent mortgages. The risk in question was that state agencies would reduce or even nullify payments being extracted by crooked real estate brokers, appraisers and bankers. As Rosner and Morgenson summarize:
Standard & Poor’s said it was taking action because the new law created liability for any institution that participated in a securitization containing a loan that might be considered predatory. If a Wall Street firm purchased loans that ran afoul of the law and placed them in a mortgage pool, the firm could be liable under the law. Ditto for investors who bought into the pools. “Transaction parties in securitizations, including depositors, issuers and servicers, might all be subject to penalties for violations under the Georgia Fair Lending Act,” S&P’s press release explained.The ratings agencies’ logic is that bondholders will not be able to collect if public entities prosecute financial fraud involved in packaging deceptive mortgage packages and bonds. It is a basic principle of law that receivers or other buyers of stolen property must forfeit it, and the asset returned to the victim. So prosecuting fraud is a threat to the buyer – much as an art collector who bought a stolen painting must give it back, regardless of how much money has been paid to the fence or intermediate art dealer. The ratings agencies do not want this principle to be followed in the financial markets.
We have fallen into quite a muddle when ratings agencies take the position that packaged mortgages can receive AAA ratings only from states that do not protect consumers and debtors against mortgage fraud and predatory finance. The logic is that giving courts the right to prosecute fraud threatens the viability of creditor claims endorses a race to the bottom. If honesty and viable credit were the objective of ratings agencies, they would give AAA ratings only to states whose courts deterred lenders from engaging in the kind of fraud that has ended up destroying the securitized mortgage binge since September 2008. But protecting the interests of savers or bank customers – and hence even the viability of securitized mortgage packages – is not the task with which ratings agencies are charged.
Masquerading as objective think tanks and research organizations, the ratings agencies act as lobbyists for banks and underwriters by endorsing a race to the bottom – into debt, privatization sell-offs and an erosion of consumer rights and control over fraud. “S&P was aggressively killing mortgage servicing regulation and rules to prevent fraudulent or predatory mortgage lending,” Stoller concludes. “Naomi Klein wrote about S&P and Moody’s being used by Canadian bankers in the early 1990s to threaten a downgrade of that country unless unemployment insurance and health care were slashed.”
The basic conundrum is that anything that interferes with the arbitrary creditor power to make money by trickery, exploitation and outright fraud threatens the collectability of claims. The banks and ratings agencies have wielded this power with such intransigence that they have corrupted the financial system into junk mortgage lending, junk bonds to finance corporate raiders, and computerized gambles in “casino capitalism.” What then is the logic in giving these agencies a public monopoly to impose their “opinions” on behalf of their paying clients, blackballing policies that the financial sector opposes – rulings that institutional investors are legally obliged to obey?
Threats to downgrade the U.S. and other national economies to force pro-financial policies
At the point where claims for payment prove self-destructive, creditors move to their fallback position. Plan B is to foreclose, taking possession of the property of debtors. In the case of public debt, governments are told to privatize the public domain – with banks creating the credit for their customers to buy these assets, typically under fire-sale distress conditions that leave room for capital gains and other financial rake-offs. In cases where foreclosure and forced sell-offs are not able to make creditors whole (as when the economy breaks down), Plan C is for governments simply to bail out the banks, taking bad bank debts and other obligations onto the public balance sheet for taxpayers to make good on.
Standard and Poor’s threat to downgrade of U.S. Treasury bonds from AAA to AA+ would exacerbate the problem if it actually discouraged purchasers from buying these bonds. But on the Monday on August 8, following their Friday evening downgrade, Treasury borrowing rates fell, with short-term T-bills actually in negative territory. That meant that investors had to lose a small margin simply to keep their money safe. So S&P’s opinions are as ineffectual as being a useful guide to markets as they are as a guide to promote good economic policy.
But S&P’s intent was not really to affect the marketability of Treasury bonds. It was a political stunt to promote the idea that the solution to today’s budget deficit is to pursue economic austerity. The message is that President Obama should roll back Social Security and Medicare entitlements so as to free more money for more subsidies, bailouts and tax cuts for the top of the steepening wealth pyramid. Neoliberal Harvard economics professor Robert Barro made this point explicitly in a Wall Street Journal op-ed. Calling the S&P downgrade a “wake-up call” to deal with the budget deficit, he outlined the financial sector’s preferred solution: a vicious class war against labor to reduce living standards and further polarize the U.S. economy between creditors and debtors by shifting taxes off financial speculation and property onto employees and consumers.
First, make structural reforms to the main entitlement programs, starting with increases in ages of eligibility and a shift to an economically appropriate indexing formula. Second, lower the structure of marginal tax rates in the individual income tax. Third, in the spirit of Reagan’s 1986 tax reform, pay for the rate cuts by gradually phasing out the main tax-expenditure items, including preferences for home-mortgage interest, state and local income taxes, and employee fringe benefits—not to mention eliminating ethanol subsidies. Fourth, permanently eliminate corporate and estate taxes, levies that are inefficient and raise little money. Fifth, introduce a broad-based expenditure tax, such as a value-added tax (VAT), with a rate around 10%.Bank lobbyist Anders Aslund of the Peterson Institute of International Finance jumped onto the bandwagon by applauding Latvia’s economic disaster (a 20 percent plunge in GDP, 30 percent reduction of public-sector salaries and accelerating emigration as a success story for other European countries to follow. As they say, one can’t make this up.
As the main advocate and ultimate beneficiary of privatization, the financial sector directs debtor economies to sell off their public property and cut social services – while increasing taxes on employees. Populations living in such economies call them hell and seek to emigrate to find work or simply to flee their debts. What else should someone call surging poverty, death rates and alcoholism while a few grow rich? The ratings agencies today are like the IMF in the 1970s and ‘80s. Countries that do not agree sell off their public domain (and give tax deductibility to the interest payments of buyers-on-credit, providing multinationals with income-tax exemption on their takings from the monopolies being privatized) are treated as outlaws and isolated Cuba- or Iran-style.
Such austerity plans are a failed economic model, but the financial sector has managed to gain even as economies are carved up. Their “Plan B” is foreclosure, extending to the national scale. By the 1980s, creditor-planned economies in Third World debtor countries had reached the limit of their credit-worthiness. Under World Bank coordination, a vast market in national infrastructure spending for creditor-nation bank debt, bonds and exports. The projects being financed on credit were mainly to facilitate exports and provide electric power for foreign investments. After Mexico announced its insolvency in 1982 when it no longer could afford to service foreign-currency debt, where were creditors to turn?
Their solution was to use the debt crisis as a lever to start financing these same infrastructure projects all over again, now that most were largely paid for. This time, what was being financed was not new construction, but private-sector buyouts of property that had been financed by the World Bank and its allied consortia of international bankers. There is talk of the U.S. Government selling off its national parks and other real estate, national highways and infrastructure, perhaps the oil reserve, postal service and so forth.
S&P’s “opinion” was treated seriously enough by John Kerry, the 2004 Democratic Presidential nominee, as a warning that America should “get its house in order.” Despite the fact that on page 4 of its 8-page explanation of why it downgraded Treasury bonds, S&P’s stated: “We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act,” was one of the three senators appointed to the commission under the debt-ceiling agreement. He chimed in to endorse the S&P action as a helpful nudge for the country to deal with its “entitlements” program – as if Social Security and FICA withholding were a kind of welfare, not actual savings put in by labor, to be wiped out as the government empties its coffers to bail out Wall Street’s high rollers.
No less a financial publication than the Wall Street Journal has come to the conclusion that “in a perfect world, S&P wouldn’t exist. And neither would its rivals Moody’s Investors Service and Fitch Ratings Ltd. At least not in their current roles as global judges and juries of corporate and government bonds.” As its financial editor Francesco Guerrera wrote quite eloquently in the aftermath of S&P’s bold threat to downgrade the U.S. Treasury’s credit rating: “The historic decision taken by S&P on Aug. 5 is the culmination of 75 years of policy mistakes that ended up delegating a key regulatory function to three for-profit entities.”
The behavior of leading banks and ratings agencies Cleveland and other similar cases – of promising to give good ratings to states, counties and cities that agree to pay off short-term bank debt by selling off their crown jewels – is not ostensibly criminal under the law (except when their hit men actually succeed in assassination). But the ratings agencies have made an compact with crooks to endorse only public borrowers that agree to pursue such policies and not to prosecute financial fraud.
To acquiescence in such economically destructive financial behavior is the opposite of fiscal responsibility. Cutting federal taxes and Social Security payments to obtain a more positive S&P “opinion” would give banks an ability to “pull the plug” and force privatization and anti-labor austerity plans by refraining from rolling over the U.S. debt – and cutting taxes Tea-Party style rather than funding spending by taxation on a pay-as-you-go-basis.
The present meltdown of the euro provides an object lesson for why policy-making never should be left to central bankers, because their mentality is pro-creditor. Otherwise they would not have the political reliability demanded by the financial sector that has captured the central bank, Treasury and regulatory agencies to gain veto power over who is appointed. Given their preference for debt deflation of the “real” economy – while trying to inflate asset prices by promoting the banks’ product (debt creation) – central bank and Treasury solutions tend to aggravate economic downturns. This is self-destructive because today’s major problem blocking recovery is over-indebtedness.
Thursday, August 18, 2011
Mr. Market Had a Really Bad Day
Yup, folks - it's here - and it's only the START.
I strongly suggest reading all the very fine comments, too. It's telling it like it IS and WILL BE.
Mr. Market Had a Really Bad Day
Yves Smith
You know things are not normal when a 4%-5% movement in equity markets looks routine.
I’ve been a bit surprised that it has taken investors this long to get the memo that the prospects for the economy (both domestically and internationally) are lousy. The stunning US GDP revisions of last month should have been a wake-up call, but they seemed to be swamped by the deficit ceiling/S&P downgrade theatrics.
In case anyone managed to miss it, advanced economies have decided to put on the austerity hairshirt, which assures near or actual deflation. The concern re the uptick in consumer inflation figures excludes the biggest input into goods costs, namely wages. Commodities inflation seems to be driven by a combination of speculative inflows (which is believed to include hoarding of storable materials, such as metals in China) and emerging economies, particularly China, running at over potential and being too slow to increase interest rates to cool off demand.
The US program of using monetary stimulus as a fix for a failure to reform the banking system, write down bad debts, and apply generous stimulus as an offset isn’t working out very well. The notion was to have the wealth effect of higher stock prices and hopefully stabilizing and improving housing prices restart consumer spending. But consumers were in retrenchment mode as a result of being overlevered, and the lousy job market is keeping them correctly very cautious. So QE-induced optimism goosed asset prices, like stocks and subprime debt, without doing much for the real economy.
But even though investors got ahead of themselves in the US, the real trouble spot is Europe. The latest EU attempt at confidence building by Sarkozky and Merkel on Tuesday wasn’t even kick the can down the road, it was pure smoke and mirrors. With a lack of any political consensus on moving to a fiscal union, the job of holding the Euromess at bay falls to the ECB. And as we’ve indicated, its Bundesbank mentality guarantees it won’t do a Bernanke and balloon its balance sheet to the €2-3 trillion level needed to do the job. It has already done roughly €96 billion of bond purchases to support periphery debt. Italy has €68 billion of debt maturing by the end of September, and market participants estimate the ECB would need to buy €100 billion of Italian debt to keep its borrowing rate at 5%. That would push the ECB’s purchases above the level than many think the bank is comfortable with. This is not a trivial issue. The ECB is already divided on further interventions; we are told by colleagues who speak to staffers that board meetings have devolved into screaming fights.
The assumption has been that if we have a Eurocrisis, the authorities will do what the markets think is the right thing and bail out the banks and provide generous liquidity. But any TARP-type facilities will have to be on a national level, and with austerity the order of the day, that would seem to be a non-starter. It also seems unlikely that the ECB would change stripes and create a raft of Bernanke-style emergency lending and asset-purchase facilities, or at least not quickly enough to halt an unraveling.
The other wild card is that the policy paralysis in the Eurozone means an eventual breakup, with some countries exiting and the rest remaining as a rump Euro area, seems more and more likely. Europe otherwise needs a vastly lower euro (Wolfgang Munchau has estimated .60 or .80 to the dollar) to alleviate the internal imbalances and give periphery countries a boost via increased exports. That does not seem likely, plus that magnitude of a currency move would have its own knock-on effects. A dissolution could take the form of a German bloc exiting, but given the denial among politicians, it would probably happen as a result of banking-related stresses becoming more acute, rather than as part of a program to remedy them.
I’d rather be proven wrong on this one, but days like today are likely to look tame relative to what is in store.
I’ve been a bit surprised that it has taken investors this long to get the memo that the prospects for the economy (both domestically and internationally) are lousy. The stunning US GDP revisions of last month should have been a wake-up call, but they seemed to be swamped by the deficit ceiling/S&P downgrade theatrics.
In case anyone managed to miss it, advanced economies have decided to put on the austerity hairshirt, which assures near or actual deflation. The concern re the uptick in consumer inflation figures excludes the biggest input into goods costs, namely wages. Commodities inflation seems to be driven by a combination of speculative inflows (which is believed to include hoarding of storable materials, such as metals in China) and emerging economies, particularly China, running at over potential and being too slow to increase interest rates to cool off demand.
The US program of using monetary stimulus as a fix for a failure to reform the banking system, write down bad debts, and apply generous stimulus as an offset isn’t working out very well. The notion was to have the wealth effect of higher stock prices and hopefully stabilizing and improving housing prices restart consumer spending. But consumers were in retrenchment mode as a result of being overlevered, and the lousy job market is keeping them correctly very cautious. So QE-induced optimism goosed asset prices, like stocks and subprime debt, without doing much for the real economy.
But even though investors got ahead of themselves in the US, the real trouble spot is Europe. The latest EU attempt at confidence building by Sarkozky and Merkel on Tuesday wasn’t even kick the can down the road, it was pure smoke and mirrors. With a lack of any political consensus on moving to a fiscal union, the job of holding the Euromess at bay falls to the ECB. And as we’ve indicated, its Bundesbank mentality guarantees it won’t do a Bernanke and balloon its balance sheet to the €2-3 trillion level needed to do the job. It has already done roughly €96 billion of bond purchases to support periphery debt. Italy has €68 billion of debt maturing by the end of September, and market participants estimate the ECB would need to buy €100 billion of Italian debt to keep its borrowing rate at 5%. That would push the ECB’s purchases above the level than many think the bank is comfortable with. This is not a trivial issue. The ECB is already divided on further interventions; we are told by colleagues who speak to staffers that board meetings have devolved into screaming fights.
The assumption has been that if we have a Eurocrisis, the authorities will do what the markets think is the right thing and bail out the banks and provide generous liquidity. But any TARP-type facilities will have to be on a national level, and with austerity the order of the day, that would seem to be a non-starter. It also seems unlikely that the ECB would change stripes and create a raft of Bernanke-style emergency lending and asset-purchase facilities, or at least not quickly enough to halt an unraveling.
The other wild card is that the policy paralysis in the Eurozone means an eventual breakup, with some countries exiting and the rest remaining as a rump Euro area, seems more and more likely. Europe otherwise needs a vastly lower euro (Wolfgang Munchau has estimated .60 or .80 to the dollar) to alleviate the internal imbalances and give periphery countries a boost via increased exports. That does not seem likely, plus that magnitude of a currency move would have its own knock-on effects. A dissolution could take the form of a German bloc exiting, but given the denial among politicians, it would probably happen as a result of banking-related stresses becoming more acute, rather than as part of a program to remedy them.
I’d rather be proven wrong on this one, but days like today are likely to look tame relative to what is in store.
Tuesday, August 16, 2011
As China Says No More Stimulus, Obama Comes Begging For More.... While Promising Even MORE Cuts In The Unknown Future
Proving once again that when it comes to the definition of Banana Republic, America really has no equal, we first read in China Business News that according to PBOC adviser Li Daokui, China will "basically" maintain its existing monetary policy direction, and won't likely introduce stimulus measures as it did in 2008. Sorry "Rest of the World", you are on your own: China will no longer act as the last recourse economic (confidence) dynamo (because who the hell knows just what is going on in the mainland aside from building empty cities and grounding its entire monorail fleet, an action that was accompanied by so-called objective rating agency Dagong giving the rail ministry a rating higher than that of China itself!... once a rating agency...).
However, this action of glaring sobriety does not stop our own fiscal monkeys from throwing feces at the stimulus wall in hopes something sticks. Just as last year the payroll tax was supposed to be the $100 billion gift that keeps on giving, yet crashed and burned miserable within months if not weeks, so this year we find that Obama is once again "recommending that the congressional deficit supercommittee back new measures to stimulate the lagging economy, people familiar with White House discussions said Tuesday." But that's not the funny part! No, the funny part is that even as he demands more alms, our munificent president would also "recommend the committee come up with a package that reduces the federal budget deficit by much more that its mandate of $1.5 trillion over the next decade, a senior administration official said, through changes in the tax code and social safety-net programs." So let us get this straight: more stimulus in the short-term, offset by quadrillions...nay... sextillions of savings at some point in the far future, long after the current administration is at the very bottom of the history books. Brilliant! But an even better idea: Obama should pull a Bryan Gardner and forge a money order from Hank Paulson, making Citi hand out a +/-$1 million check to every American, paid out of petty unaccounted for cash, as was the case before. Obviously, nobody noticed then; it is only Banana Republican that nobody will notice now.
More on this latest farce of short- vs long-termism from the WSJ:
So give Obama what he wants.
At this point the only thing that can save the system is if "they" just accelerate the status quo's crash course with fate, and just blow everything up to smithereens, thereby making a grand reset inevitable.
The longer we pretend something, anything can be fixed, the more pain, suffering and death will come to the people of this insolvent world.
So... unlike any time in the past decade, $1 in debt will result in >$1 of GDP, which in turn will result in less debt?
Is that about right?
Also, here is what happened to the first $800 billion (ARRA) stimulus.
You are right though, it was off from $1 trillion by $200 billion
However, this action of glaring sobriety does not stop our own fiscal monkeys from throwing feces at the stimulus wall in hopes something sticks. Just as last year the payroll tax was supposed to be the $100 billion gift that keeps on giving, yet crashed and burned miserable within months if not weeks, so this year we find that Obama is once again "recommending that the congressional deficit supercommittee back new measures to stimulate the lagging economy, people familiar with White House discussions said Tuesday." But that's not the funny part! No, the funny part is that even as he demands more alms, our munificent president would also "recommend the committee come up with a package that reduces the federal budget deficit by much more that its mandate of $1.5 trillion over the next decade, a senior administration official said, through changes in the tax code and social safety-net programs." So let us get this straight: more stimulus in the short-term, offset by quadrillions...nay... sextillions of savings at some point in the far future, long after the current administration is at the very bottom of the history books. Brilliant! But an even better idea: Obama should pull a Bryan Gardner and forge a money order from Hank Paulson, making Citi hand out a +/-$1 million check to every American, paid out of petty unaccounted for cash, as was the case before. Obviously, nobody noticed then; it is only Banana Republican that nobody will notice now.
More on this latest farce of short- vs long-termism from the WSJ:
"There's no reason to stop at $1.5 trillion," the official said.Oh please, what would he complicate? At this point only the morons at Fitch and Moody's buy anything coming out of the CBO. Zero Hedge is willing to place a bet of unlimited fiat amount that in 3 years, the CBO's current forecast for the 2014 deficit will be at least 50% off from the reality (obviously in the wrong direction), which in turn will mean that the entire debt ceiling farce was for nothing as the $2.1 trillion in 10 year savings will be swallowed by the tens of trillions in additional deficit funding that will mysteriously appear over the next several years, and be required to keep the US(S) PonzAAi from running into yet another iceberg.
Mr. Obama hasn't agreed to a set of proposals, people familiar with the discussions said, but the White House will begin to decide on elements of the plan in coming days. Mr. Obama is expected to make some decisions by Thursday.
Mr. Obama said in Iowa that when Congress returns from recess in September he will put forward "a very specific plan to boost the economy, to create jobs, and to control our deficit." He will unveil his plan before the Joint Select Committee on Deficit Reduction's first meeting on Sept. 16.
The White House is looking for ways to boost the sluggish economy and bring down unemployment that is now stuck above 9%. Mr. Obama, facing re-election next year, has been pushing Congress for months to adopt a variety of stimulus measures, some of which he could urge the committee to embrace. These include extending unemployment-insurance benefits and a payroll-tax cut for employees, which expire at year end and together cost more than $160 billion a year, and an infrastructure bank that could cost as much as $30 billion. The White House is also looking at a payroll-tax cut for employers, worth perhaps as much as roughly $110 billion, and other tax breaks for businesses of as much as $55 billion.
Mr. Obama's recommendations could complicate the committee's task because the stimulus measures, by increasing government spending and reducing revenue, would worsen the deficit in the short term. But Mr. Obama would recommend ways to offset those effects, and the whole package would still reduce the deficit over 10 years.
So give Obama what he wants.
At this point the only thing that can save the system is if "they" just accelerate the status quo's crash course with fate, and just blow everything up to smithereens, thereby making a grand reset inevitable.
The longer we pretend something, anything can be fixed, the more pain, suffering and death will come to the people of this insolvent world.
So... unlike any time in the past decade, $1 in debt will result in >$1 of GDP, which in turn will result in less debt?
Is that about right?
Also, here is what happened to the first $800 billion (ARRA) stimulus.
You are right though, it was off from $1 trillion by $200 billion
Saturday, August 13, 2011
The Next Debtpocalypse: Fiscal Meltdowns in the States
Inside the plan to gut state budgets and keep corporate America happy.
Fri Aug. 12, 2011 3:00 AM PDT
With the dust settling after the debt ceiling fight, Republicans—along with a few Democrats—are moving on to their next agenda item: blocking states from collecting millions in much-needed tax revenue from corporations.
The Business Activity Tax Simplification Act, or BATSA, passed out of the House Judiciary Committee in early July and is set to be taken up by the full House when Congress returns from its August recess. The bill, which is sponsored by Rep. Bob Goodlatte (R-Va.), would forbid state and local governments in the 44 states that collect corporate income taxes from taxing a sizable chunk of corporate profits. How sizable? The nonpartisan Congressional Budget Office, which scored a previous version of the bill in 2006, estimated that state revenue losses would explode to $3 billion annually within five years of enactment. Michael Mazerov, a senior fellow at the Center for Budget and Policy Priorities, says BATSA's current incarnation protects an even larger portion of corporate profits than the earlier bill, so state revenue losses could be even higher than the CBO projected. And here's the kicker: since no federal revenue is lost in the process, it's no skin off the backs of lawmakers in Washington.
The basic theory behind BATSA is that states shouldn't have the right to tax companies with permanent headquarters located in other states. The current bill allows for taxation of businesses that have employees within a state for more than 15 days, but that exception is actually very easy to avoid. Consider a bank with branches in multiple states that, like most major commercial banks, is an active player in the mortgage loan business. These kinds of banks often hire independent contractors to process mortgage applications. But under BATSA, a state wouldn’t be able to tax the bank for profits it reaped within its borders, because the contractors wouldn't count as "employees."
Congress has considered some version of BATSA every year since 2000. Each time, a coalition of groups—the National Governors Association, the Multistate Tax Commission, and a combination of state and local organizations and public employee unions—have managed to beat it back. But the tide could be turning. After the bill's markup in July—just the second time BATSA has made it out of committee—Americans for Tax Reform, Grover Norquist's anti-tax advocacy group, rejoiced.
Someone should tell the anti-tax activists, though, that their support for the bill could undermine corporate America's long-term financial stability. Without BATSA, ATR argues, corporations "that receive no direct benefit from the state"—i.e., those that are based elsewhere—are forced to bear a bigger share of the tax burden. But the roads, bridges, and other elements of basic infrastructure that those tax revenues pay for help transform states into attractive places for private investment. Lower corporate tax rates, while keeping more money in shareholder pockets, also mean less money for states to spend on physical infrastructure and the manpower to maintain that infrastructure. Over the long haul, that makes states far less lucrative environments for companies to set up shop. By helping businesses shirk their tax obligations in the short term, in other words, BATSA threatens their prospects for future growth.
BATSA isn't the only revenue-gutting bill making its way through the Congressional pipeline. House Republicans aim to bring another half dozen-or-so bills like it—collectively known as "state tax preemption" bills—that offer corporations massive carve-outs while slowly chipping away at states' abilities to collect taxes. Most of them are vaguely worded and benefit companies with multi-state presences—in other words, very big businesses. They include the Permanent Internet Tax Freedom Act, which would prevent states and localities from taxing Internet service providers, and the Wireless Tax Fairness Act, which establishes a moratorium on any new taxes or fees on cell phone service providers.
Lars Etzkorn, the program director at the National League of Cities, which advocates for the interests of municipalities around the country, says that state tax preemption effectively neuters local governments. "You're taking local accountability and local decision-making from where we think it belongs, and where there's a history of good financial stewardship, and instead having people in Washington… imposing their system, their will on local governments," Etzkorn says.
So even as businesses rail against overtaxation and crippling regulation, it turns out that they still rely on the federal government to protect them from states and municipalities. "Business people understand very well that they're creating new loopholes" with these bills, Mazerov says. When it’s convenient, it seems, even corporate America doesn’t mind a little nannystateism.
Friday, August 5, 2011
Beware The Risen People, Part 1 of 3: Global Banking – A Criminal Syndicate Of Tyrants And Thieves!
I think this COULD have been better written. The point is someone (foolscrow) is seriously exposing a very serious issue on a particular wavelength which strongly support. People really must "get up to speed' on their knowledge re bank$ter$. I have done a banking dossier since 2007 on www.ladybroadoak.blogspot.com and a peak dollar, peak oil. (read: Klusterfuck) swicki on the same. Rarely have I seen articles taking the broad view of The Problem.
It's too long to publish in full, but it would make dynamite weekend reading for anyone willing to accept his somewhat black and white thinking. It is indeed a criminal syndicate above the law and not so much "evil." A full understanding of ponzi schemes is SO essential.
So a brief excerpt and then YOU hit the link .
ttp://foolscrow.wordpress.com/2011/07/21/beware-the-risen-people-part-1-of-3-global-banking-%E2%80%93-a-criminal-syndicate-of-tyrants-and-thieves/
It's too long to publish in full, but it would make dynamite weekend reading for anyone willing to accept his somewhat black and white thinking. It is indeed a criminal syndicate above the law and not so much "evil." A full understanding of ponzi schemes is SO essential.
So a brief excerpt and then YOU hit the link .
Beware The Risen People, Part 1 of 3: Global Banking – A Criminal Syndicate Of Tyrants And Thieves!
by Gabriel Donohoe
[On the evening before his execution by a British firing squad for his part in the Easter Rebellion in Dublin in 1916, Padraic Pearse etched a few lines from his own poem, "The Rebel", on the wall of his cell...
And I say to my people's masters: Beware
Beware of the thing that is coming,
Beware of the risen people
Who shall take what ye would not give...
Ye that have harried and held,
Ye that have bullied and bribed.
Tyrants… hypocrites… liars!
Beware of the thing that is coming,
Beware of the risen people
Who shall take what ye would not give...
Ye that have harried and held,
Ye that have bullied and bribed.
Tyrants… hypocrites… liars!
Pearse's words were directed at the rulers of the British Empire, but today they can be addressed to a cadre of criminal bankers and their political puppets who would impose financial slavery on us all.]
The World Awakens!
In a time of unprecedented global awakening, the peoples of the nations are rapidly becoming aware of how they’ve been kept in financial bondage for centuries. The veils of deception and fraud carefully woven by a malevolent Money Power[1] are being torn apart like spider web in a gale. The outrageous criminality imposed upon mankind for generations is finally exposed for all to see.
People are fast discovering how a cunning cabal of banksters[2] conned them into giving up their labour, their property, and their freedom. They now see how years of their precious energy and toil have been stolen from them by financial terrorists who have long kept humanity in a wretched state of debt, misery, and fear.
But now the tide of wakefulness is rising fast. A tsunami of anger and indignation is beginning to roll towards the banksters and their political camp followers. A worldwide revolution against villainy and corruption grows by the day. The masses are demanding truth and justice, and the cry of their fury is fearsome and foreboding.
Fraudsters beware! Beware of the hordes who are rising from their slumber. Beware of the people who have caught you pillaging. Beware of the wrath of the betrayed. Beware of the thing that is coming… tyrants… hypocrites… liars!
Fearful of the risen people, the criminal syndicates who run the world from behind the facade of governments and suborned global institutions are terrified of losing their ill-gotten wealth and privileges, and perhaps their lives.
Zbigniew Brzezinski, a Bilderberger and co-founder of the Trilateral Commission, recently addressed the Council on Foreign Relations in Montreal and warned his fellow elitist villains about this new “global political awakening”[3].
Brzezinski said: “For the first time in all of human history mankind is politically awakened – that’s a total new reality – it has not been so for most of human history.”
Brzezinski bewailed the fact that the whole world had awakened politically and was now “consciously aware of global inequities, inequalities, lack of respect, exploitation.” He lamented that an enlightened people would no longer tolerate financial slavery and serfdom nor would they allow the stealthy move towards a single world currency which would mean complete domination of the world by the international banksters.
Tuesday, August 2, 2011
The President Surrenders
The President Surrenders
By PAUL KRUGMAN
July 31, 2011
A deal to raise the federal debt ceiling is in the works. If it goes
through, many commentators will declare that disaster was avoided. But
they will be wrong.
For the deal itself, given the available information, is a disaster,
and not just for President Obama and his party. It will damage an
already depressed economy; it will probably make America’s long-run
deficit problem worse, not better; and most important, by
demonstrating that raw extortion works and carries no political cost,
it will take America a long way down the road to banana-republic
status.
Start with the economics. We currently have a deeply depressed
economy. We will almost certainly continue to have a depressed economy
all through next year. And we will probably have a depressed economy
through 2013 as well, if not beyond.
The worst thing you can do in these circumstances is slash government
spending, since that will depress the economy even further. Pay no
attention to those who invoke the confidence fairy, claiming that
tough action on the budget will reassure businesses and consumers,
leading them to spend more. It doesn’t work that way, a fact confirmed
by many studies of the historical record.
Indeed, slashing spending while the economy is depressed won’t even
help the budget situation much, and might well make it worse. On one
side, interest rates on federal borrowing are currently very low, so
spending cuts now will do little to reduce future interest costs. On
the other side, making the economy weaker now will also hurt its
long-run prospects, which will in turn reduce future revenue. So those
demanding spending cuts now are like medieval doctors who treated the
sick by bleeding them, and thereby made them even sicker.
And then there are the reported terms of the deal, which amount to an
abject surrender on the part of the president. First, there will be
big spending cuts, with no increase in revenue. Then a panel will make
recommendations for further deficit reduction — and if these
recommendations aren’t accepted, there will be more spending cuts.
Republicans will supposedly have an incentive to make concessions the
next time around, because defense spending will be among the areas
cut. But the G.O.P. has just demonstrated its willingness to risk
financial collapse unless it gets everything its most extreme members
want. Why expect it to be more reasonable in the next round?
In fact, Republicans will surely be emboldened by the way Mr. Obama
keeps folding in the face of their threats. He surrendered last
December, extending all the Bush tax cuts; he surrendered in the
spring when they threatened to shut down the government; and he has
now surrendered on a grand scale to raw extortion over the debt
ceiling. Maybe it’s just me, but I see a pattern here.
Did the president have any alternative this time around? Yes.
First of all, he could and should have demanded an increase in the
debt ceiling back in December. When asked why he didn’t, he replied
that he was sure that Republicans would act responsibly. Great call.
And even now, the Obama administration could have resorted to legal
maneuvering to sidestep the debt ceiling, using any of several
options. In ordinary circumstances, this might have been an extreme
step. But faced with the reality of what is happening, namely raw
extortion on the part of a party that, after all, only controls one
house of Congress, it would have been totally justifiable.
At the very least, Mr. Obama could have used the possibility of a
legal end run to strengthen his bargaining position. Instead, however,
he ruled all such options out from the beginning.
But wouldn’t taking a tough stance have worried markets? Probably not.
In fact, if I were an investor I would be reassured, not dismayed, by
a demonstration that the president is willing and able to stand up to
blackmail on the part of right-wing extremists. Instead, he has chosen
to demonstrate the opposite.
Make no mistake about it, what we’re witnessing here is a catastrophe
on multiple levels.
It is, of course, a political catastrophe for Democrats, who just a
few weeks ago seemed to have Republicans on the run over their plan to
dismantle Medicare; now Mr. Obama has thrown all that away. And the
damage isn’t over: there will be more choke points where Republicans
can threaten to create a crisis unless the president surrenders, and
they can now act with the confident expectation that he will.
In the long run, however, Democrats won’t be the only losers. What
Republicans have just gotten away with calls our whole system of
government into question. After all, how can American democracy work
if whichever party is most prepared to be ruthless, to threaten the
nation’s economic security, gets to dictate policy? And the answer is,
maybe it can’t.
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