JAPAN'S DIFFICULTIES VERSUS COLLAPSE OF THE USA:
Let me quote from Paul Krugman blog, as part of this interesting biofeedback we are engaged in. Krugman extensively quotes Adam Posen, "who really really knows what went down during Japan’s lost decade:
"What the Obama team is proposing is disconcertingly similar to the actions of Japanese Prime Ministers Hashimoti, Obuchi, and Mori in 1995 and 1998: Rather than ask the legislature for straightforward recapitalization money, you have the political leadership preferring to risk overpaying current owners of toxic assets rather than forcing sales. For all of Japan’s supposed intervention in markets, its government still lacked the stomach for taking over banks, let alone closing them."
And Krugman to add: "To be fair: the Obama team really does face huge political obstacles in doing the right thing. Maybe it really can’t be done; as Rahm Emanuel said about me, “[unprintable].”"
Krugman concludes: "But we shouldn’t kid ourselves. Japan is us."
OK, let me add now my grain of salt. President Obama himself has evoked Japan's "Lost Decade", to justify nothing drastic, like firing the influence peddlers and financial scam artists in tight orbit around him. As I pointed out before, though, and as Krugman reminds us, it is politically dangerous for Obama to do the right thing before he has done the wrong thing, and shown the average US citizen that he got it all wrong, in nearly all ways.
In Japan real GDP per person went up during the "lost decade". In the USA, real GDP per person has been going down for a full decade prior to the economy tipping out of control in the last six months. That why I call this slump made in the USA, a depression, not a recession.
So "Japan is us" is too rosy a scenario. Japan has a distinct oligarchy, but it did not fall into outright plutocracy since W.W.II. Financial rewards at the top have been kept reasonable, all along. Japan remembered that its oligarchy led it to disaster by attacking China, South East Asia, and then the USA, during W.W.II. Ever since, it has kept tight reins on it.
The French oligarchie (14 century) comes from the Greek oligarkhia "government by the few", from oligoi "few, small, little" and arkhein "to rule". Plutocracy means that it is the wealthy, and the underground, that rules. This is the case in Banana Republics, and, now, in the USA.
Sending trillions of dollars to the corrupt hedge funds-bank holding companies complex, "without keeping track" while millions of US citizens are threatened with foreclosure, and the Obama administration stresses out about a few dozen billions for the car industry, is par for the course.
How does one get rid of a plutocracy when it's firmly in control of the state? Well, revolution. Or then one elects someone one could hope was out of the system: Obama. So, as the Economist wrote it in its latest lead editorial: "lead, damn it".
Instead the young chief of staff, "Three seconds away from the president", got 16 millions in two years from a bank. Among ethical people, we call that a bribe from the bank holding companies, so that, when the guy is chief of staff, trillions can be sent to bank holding companies, while claiming disingenuously that the USA is the only country that ever was, which does not know how to temporarily nationalize banks. As long as this sort of enormity is not fixed, the economy of the USA will not be fixed.
Geithner on ABC news this weekend claimed that he "always worked in public service". Either he deliberately lied, or he has lost track of reality. Many of those guys have such a wrapped notion of reality that, when they work for a "consultancy" such as "Kissinger and Associates", as Geithner did, for years, they envision themselves as in public service.
Patrice Ayme
http://patriceayme.wordpress.com/
Tuesday, March 31, 2009
Friday, March 27, 2009
REACHING FOR THE HEIGHTS.
In Chinese philosophy blossomed an explicit appeal to the splendor of the mountains and the discipline of the climbs. Nietzsche used to be a habitual solo climber. Although they were no climbers that we know of, Socrates, Xenophon, Archimedes, Marcus Aurelius, Julianus, Boetius, Descartes, and several French philosophers killed by the Nazis, were men of the sword. Other major philosophers, such as Abelard, Giordano Bruno, or Galileo Galilei, lived a life of combat. There are more: a bit before Bruno, a French philosopher was burned on top of his books.
Why the connection between the fight, the climb, and the philosophers? Why the climbing, why the fighting? Is that wise?
As the ground falls away, the climber enters an ever higher, grander world... What bouldering, and simple common life, does not have as much of, is a massive world falling away, ever smaller and disturbingly insignificant. No need to go into orbit, going up a rock, fighting a good war is plenty enough.
Endurance and persistence are not just human qualities, they are those that any mind needs as it rises to the highest occasions...
And thus, since ever, the Lords of the Heights of Thought have looked favorably up the mountains and down the valleys...
It is to us to give a sense to the cosmos, and it may as well be grand.
Patrice Ayme
(P/S: This no endorsement of the so far somewhat harebrained US war in Afghanistan/Pakistan; as I said many times, a good trick to divide the Taliban and the tribes would be to make licit some of the poppy cultivation; to deal with Pakistan a serious effort of nuclear disarmament is urgent, lest we want to risk a massive nuclear war.)
Why the connection between the fight, the climb, and the philosophers? Why the climbing, why the fighting? Is that wise?
As the ground falls away, the climber enters an ever higher, grander world... What bouldering, and simple common life, does not have as much of, is a massive world falling away, ever smaller and disturbingly insignificant. No need to go into orbit, going up a rock, fighting a good war is plenty enough.
Endurance and persistence are not just human qualities, they are those that any mind needs as it rises to the highest occasions...
And thus, since ever, the Lords of the Heights of Thought have looked favorably up the mountains and down the valleys...
It is to us to give a sense to the cosmos, and it may as well be grand.
Patrice Ayme
(P/S: This no endorsement of the so far somewhat harebrained US war in Afghanistan/Pakistan; as I said many times, a good trick to divide the Taliban and the tribes would be to make licit some of the poppy cultivation; to deal with Pakistan a serious effort of nuclear disarmament is urgent, lest we want to risk a massive nuclear war.)
Wednesday, March 25, 2009
WHY HEDGE FUNDS SHOULD BE CUT DOWN TO SIZE.
ERRONEOUSLY FUNDED ECONOMIC THEORY HAS ALLOWED VULTURES TO GROW BIGGER THAN CARRION.
***
Hedge funds and traders of exotic financial products could be under stricter governmental supervision, U.S. officials say. And to give a list of obvious measures, such as registering with the SEC, etc.
Besides the obvious propositions of the Obama administration, the following should be done:
The mathematics of the entire derivative market should be changed so that it can attenuate perturbations to the system, instead of augmenting them as it does nowadays.
In particular non commercial operators should see their leverage severely restricted.
Trading limits should be put on anything that is traded, to provide a speed limit similar to the speed of light in physics. This way information could reach all market participants equally and not just the first responders and professional manipulators. [Modern technology would allow to do this is in a fair and efficient manner.]
Another way to limit speculation would be a tiny tax on any transaction.
The rights of CEOs to sit on each other's boards should be limited. Not doing this creates a CEO class, a subset of the plutocracy. [Maybe union representatives should be sitting on the board, as in Germany]
Countries should be required to pay their way. In particular the USA, should raise taxes on consumption of good and energy to become self sufficient financially, instead of having dubious feudal arrangements with non democracies to pay tribute (an allusion to China). This is no good for all parties involved, and condemns democracy, for all parties involved.
Legend has it that hedge funds and private equity using tremendous leverage provide "liquidity". Whatever that is. what we see in this crisis is that they provide inextinguishable debt.
In general the argument could be made in serious economics that, ultimately money represents energy. If this is true (and it is), money should be finite in amount. The fundamental error that caused the present crisis is not to have believed that this was so.
Thus, as the highly leveraged hedge funds and private equity grow, they take energy OUT OF the rest of the economy. Hence their leverage should be seriously constrained, and made to vary according to the public utility of what they invest in (For example, more leverage for green energy investments).
More details and justifications are found in: "Reforming World Finance", November 28, 2008, http://patriceayme.wordpress.com/2008/11/
Patrice Ayme
patriceayme.wordpress.com
***
Hedge funds and traders of exotic financial products could be under stricter governmental supervision, U.S. officials say. And to give a list of obvious measures, such as registering with the SEC, etc.
Besides the obvious propositions of the Obama administration, the following should be done:
The mathematics of the entire derivative market should be changed so that it can attenuate perturbations to the system, instead of augmenting them as it does nowadays.
In particular non commercial operators should see their leverage severely restricted.
Trading limits should be put on anything that is traded, to provide a speed limit similar to the speed of light in physics. This way information could reach all market participants equally and not just the first responders and professional manipulators. [Modern technology would allow to do this is in a fair and efficient manner.]
Another way to limit speculation would be a tiny tax on any transaction.
The rights of CEOs to sit on each other's boards should be limited. Not doing this creates a CEO class, a subset of the plutocracy. [Maybe union representatives should be sitting on the board, as in Germany]
Countries should be required to pay their way. In particular the USA, should raise taxes on consumption of good and energy to become self sufficient financially, instead of having dubious feudal arrangements with non democracies to pay tribute (an allusion to China). This is no good for all parties involved, and condemns democracy, for all parties involved.
Legend has it that hedge funds and private equity using tremendous leverage provide "liquidity". Whatever that is. what we see in this crisis is that they provide inextinguishable debt.
In general the argument could be made in serious economics that, ultimately money represents energy. If this is true (and it is), money should be finite in amount. The fundamental error that caused the present crisis is not to have believed that this was so.
Thus, as the highly leveraged hedge funds and private equity grow, they take energy OUT OF the rest of the economy. Hence their leverage should be seriously constrained, and made to vary according to the public utility of what they invest in (For example, more leverage for green energy investments).
More details and justifications are found in: "Reforming World Finance", November 28, 2008, http://patriceayme.wordpress.com/2008/11/
Patrice Ayme
patriceayme.wordpress.com
Monday, March 23, 2009
ONLY IN THE USA
CHANGE THEY CAN CASH IN:
***
Part of the comment below is critical of the Geithner plan, and of Summers. It was censored by the New York Times. The next day, unsullied by this sort of nastiness, the market rallied 7%. I am happy that the market rallied, but the fact remains that the plan is both incredibly unfair, and, even worse, cannot work, in the long run: one pail of water will not this fire extinguish.
***
Bush was financially bad. Bush poured gasoline on the financial crisis. For example he allowed (in 2004) banks to go to a leverage of 40. In July 2007, Bush removed the no selling short on a down tick rule (after that the hedge funds were free to bear raid the entire market).
But Bush did not start the fire. The guy who started the fire is the guy who refused to regulate the Credit Default Swaps in 1998, screaming after the lady heading the U.S. Commodity Futures Trading Commission to prevent her to regulate, as she wanted. This is exactly why AIG had no provisions to cover its extravagant betting with the Credit Default Swaps. In 1999 that same incompetent character abrogated the Banking Act of 1933 (that maintained a distinction between banks and investing on Wall Street, among other things). That guy who started the fire was Summers, his assistant was Geithner.
Summers and Geithner should not be giving orders to society and advice to the president. They should be prosecuted under RICO. They are the origin of the fire, and Obama should learn to distinguish between arsonists and firemen.
Instead, the administration finally came up with its plan to restart the banking system. It consists into lending one trillion dollars of taxpayer money to the class of people who caused the problem to start with.
***
Patrice Ayme
http://patriceayme.wordpress.com/
***
Addendum (Not sent to NYT): In exchange for a trillion dollars of public money, the private investors are supposed to contribute thirty billion dollars of private money to the party. Thus the government of the USA will create, with public money, the largest hedge fund ever, with a leverage of 33. That privately managed hedge fund will entice the banks to surrender their “toxic assets”. Between friends, many tender things may happen. "Toxic assets" could be massively overvalued, for example, since they are paid with public money, using tremendous leverage.
After, and if, the private investors have grabbed the “toxic assets”, they will enjoy the income stream coming from them (since many of these “toxic assets” are made of mortgages glued up and all mixed together they bring the cash flow of these mortgages). If they unload and walk away after enjoying that income flow, it’s no problem, no problem for them, because the trillion dollars loan is “non recourse”, which means that the borrower can call it quits whenever so desired, without any consequences whatsoever.
Will one trillion do the trick? No. The bank holding companies' losses are at least 5trillions (say Goldman and PIMCO), and maybe as much as twenty trillions (say others). So what is the solution? Nationalizations (there are many ways to do them). Hedge funds do not like those. But they like trillions of public money to call their own. Is there trick to try before nationalizations? Yes, I have one, and it goes through the G20.
***
Part of the comment below is critical of the Geithner plan, and of Summers. It was censored by the New York Times. The next day, unsullied by this sort of nastiness, the market rallied 7%. I am happy that the market rallied, but the fact remains that the plan is both incredibly unfair, and, even worse, cannot work, in the long run: one pail of water will not this fire extinguish.
***
Bush was financially bad. Bush poured gasoline on the financial crisis. For example he allowed (in 2004) banks to go to a leverage of 40. In July 2007, Bush removed the no selling short on a down tick rule (after that the hedge funds were free to bear raid the entire market).
But Bush did not start the fire. The guy who started the fire is the guy who refused to regulate the Credit Default Swaps in 1998, screaming after the lady heading the U.S. Commodity Futures Trading Commission to prevent her to regulate, as she wanted. This is exactly why AIG had no provisions to cover its extravagant betting with the Credit Default Swaps. In 1999 that same incompetent character abrogated the Banking Act of 1933 (that maintained a distinction between banks and investing on Wall Street, among other things). That guy who started the fire was Summers, his assistant was Geithner.
Summers and Geithner should not be giving orders to society and advice to the president. They should be prosecuted under RICO. They are the origin of the fire, and Obama should learn to distinguish between arsonists and firemen.
Instead, the administration finally came up with its plan to restart the banking system. It consists into lending one trillion dollars of taxpayer money to the class of people who caused the problem to start with.
***
Patrice Ayme
http://patriceayme.wordpress.com/
***
Addendum (Not sent to NYT): In exchange for a trillion dollars of public money, the private investors are supposed to contribute thirty billion dollars of private money to the party. Thus the government of the USA will create, with public money, the largest hedge fund ever, with a leverage of 33. That privately managed hedge fund will entice the banks to surrender their “toxic assets”. Between friends, many tender things may happen. "Toxic assets" could be massively overvalued, for example, since they are paid with public money, using tremendous leverage.
After, and if, the private investors have grabbed the “toxic assets”, they will enjoy the income stream coming from them (since many of these “toxic assets” are made of mortgages glued up and all mixed together they bring the cash flow of these mortgages). If they unload and walk away after enjoying that income flow, it’s no problem, no problem for them, because the trillion dollars loan is “non recourse”, which means that the borrower can call it quits whenever so desired, without any consequences whatsoever.
Will one trillion do the trick? No. The bank holding companies' losses are at least 5trillions (say Goldman and PIMCO), and maybe as much as twenty trillions (say others). So what is the solution? Nationalizations (there are many ways to do them). Hedge funds do not like those. But they like trillions of public money to call their own. Is there trick to try before nationalizations? Yes, I have one, and it goes through the G20.
Saturday, March 21, 2009
WHEN PROGRESSIVISM KILLS THE FREE MARKET.
THE SAD STORY OF THE PERSECUTED LORDS OF FINANCE.
Why is everybody complaining about the American financial system? Is it because it is not enough of a free market anymore? In the past American financiers could buy and sell people. That was really free and easy going. George Washington, an astute investor, owned three hundred people when he died. He obstinately refused to free them, in spite of his friend Lafayette's entreaties. That was American character at its best. It's not because you have a French friend, and four-fifths of your army was French, and 90% of your ammunition was French, and all your navy was French, that you should make your civilizational practices French too. That would be like, well, slavery. Now Washington is dead, but his spirit lives in the capital named after him. To the extent pesky French progressivism has allowed it to. But it has been a rough ride.
OK, slavery was rough, too. Now, though, there is a huge improvement, it's more like serfdom. American people work hard, and then send all their money to their American Lords of Finance. So why are people complaining so much? The Lords of Finance are the best and the brightest, remember?
Let good Americans look up to Warren Buffet, an owner of one of these two or three (American) credit rating agencies that rule the world. These agencies allowed other plutocrats to build the worldwide pyramid, that Ponzi scheme of stealing the savers' money, and giving it all to the wealthiest of the rich, the hedge funds and private equity. The credit rating agencies gave them the respectability necessary to do so, just as Mr. Buffet, with his grandfatherly looks, personally gives respectability to the lure of the plutocrat. So does the crocodile look like an old tree trunk, and drifts reassuringly down the lazy river. Interview the plutocrat, or the oligarch, and he will gush respectably about sports and the home team, showing that this is all what this simple man cares about. it's not about ripping you off, and drinking all your money, or your blood, heavens forbid. Just if you can't pay for health care, why should you get it? Is it not a free market? Pay as you go? Don't pay, well, just don't go and die. Mr. Buffet, the friend of Obama (they both said), has made a fortune in health care. If slavery was around, no doubt Mr. Buffet would make a fortune in slavery. But, sadly, slavery is no more. Thank God for hedge funds, though: they make slavery without chains possible at last...
Interest rates on credit of the order of 30%, high enough to justify execution of the lenders in some jurisdictions in the Middle Ages, are a reality of contemporary American life. So just let all good Americans look at the positive side, watch sports on TV, get totally critical and knowledgeable about their silly sport teams, and manage their anger like good little sheep. Let the French get all worked up about human rights, and demonstrate in their stead. The French are obviously antibusiness: when the French proclaimed the Universal Rights of Man, and outlawed slavery worldwide, they interfered with American business. 75 years later the free market in human beings was abrogated in the USA, causing huge losses for American business (the economy of the American South had been growing tremendously, thanks to the fast growing use of slaves in industry; the civil war, and the abrogation of slavery destroyed that). One trembles to imagine what new antibusiness measures Europe intends to torture the American Lords of Finance with.
Patrice Ayme
http://patriceayme.wordpress.com/
Why is everybody complaining about the American financial system? Is it because it is not enough of a free market anymore? In the past American financiers could buy and sell people. That was really free and easy going. George Washington, an astute investor, owned three hundred people when he died. He obstinately refused to free them, in spite of his friend Lafayette's entreaties. That was American character at its best. It's not because you have a French friend, and four-fifths of your army was French, and 90% of your ammunition was French, and all your navy was French, that you should make your civilizational practices French too. That would be like, well, slavery. Now Washington is dead, but his spirit lives in the capital named after him. To the extent pesky French progressivism has allowed it to. But it has been a rough ride.
OK, slavery was rough, too. Now, though, there is a huge improvement, it's more like serfdom. American people work hard, and then send all their money to their American Lords of Finance. So why are people complaining so much? The Lords of Finance are the best and the brightest, remember?
Let good Americans look up to Warren Buffet, an owner of one of these two or three (American) credit rating agencies that rule the world. These agencies allowed other plutocrats to build the worldwide pyramid, that Ponzi scheme of stealing the savers' money, and giving it all to the wealthiest of the rich, the hedge funds and private equity. The credit rating agencies gave them the respectability necessary to do so, just as Mr. Buffet, with his grandfatherly looks, personally gives respectability to the lure of the plutocrat. So does the crocodile look like an old tree trunk, and drifts reassuringly down the lazy river. Interview the plutocrat, or the oligarch, and he will gush respectably about sports and the home team, showing that this is all what this simple man cares about. it's not about ripping you off, and drinking all your money, or your blood, heavens forbid. Just if you can't pay for health care, why should you get it? Is it not a free market? Pay as you go? Don't pay, well, just don't go and die. Mr. Buffet, the friend of Obama (they both said), has made a fortune in health care. If slavery was around, no doubt Mr. Buffet would make a fortune in slavery. But, sadly, slavery is no more. Thank God for hedge funds, though: they make slavery without chains possible at last...
Interest rates on credit of the order of 30%, high enough to justify execution of the lenders in some jurisdictions in the Middle Ages, are a reality of contemporary American life. So just let all good Americans look at the positive side, watch sports on TV, get totally critical and knowledgeable about their silly sport teams, and manage their anger like good little sheep. Let the French get all worked up about human rights, and demonstrate in their stead. The French are obviously antibusiness: when the French proclaimed the Universal Rights of Man, and outlawed slavery worldwide, they interfered with American business. 75 years later the free market in human beings was abrogated in the USA, causing huge losses for American business (the economy of the American South had been growing tremendously, thanks to the fast growing use of slaves in industry; the civil war, and the abrogation of slavery destroyed that). One trembles to imagine what new antibusiness measures Europe intends to torture the American Lords of Finance with.
Patrice Ayme
http://patriceayme.wordpress.com/
Tuesday, March 17, 2009
BLAME THE VICTIMS, IT FEELS GOOD.
US NOBEL LAUREATE KRUGMAN SUGGESTS TO DISSOLVE THE EUROPEAN UNION AND THE EURO TO SOLVE THE AMERICAN CRISIS.
***
Paul Krugman in its main New York Times editorial, insinuated that: "Does all this mean that Europe was wrong to let itself become so tightly integrated? Does it mean, in particular, that the creation of the Euro was a mistake?" That was after suggesting the EU did not answer the crisis appropriately because it, well, did not have enough of a political union. This below was my rebuke, and the New York Times posted it right away (thanks!)
***
It is a contradiction to bemoan, as Krugman does, that Europe is both not "unitary" enough, and then to claim that national interest rates in each European country should be freed to jump all around to serve the natives. When the later used to happen, dear professor Krugman, national unemployment rates and currencies also used to jump around, with wild speculative bubbles and busts. With a few wars thrown in. Why don't we do the same in the USA, and the Dollar, and dissolve them too? Last time this was tried, the Civil War made more than one million casualties (~ 3% of the population).
The mishandling of the present crisis, if any, simply shows that Europe has to be integrated more. Europe, and the Euro, were built for more fundamental reasons than satisfying local potentates (because when local elites can play with interest rates and currencies, that augments their local potentia (the Latin word for power, from which "potentate" derives).
That Spain and others will have somewhat difficult years ahead, sure. But Spain, Greece and Portugal are doing better now than they did under the fascist regimes, inspired by the USA, that the European Union kicked out (democracy is a precondition for entry in the EU). Spain had an enormous boom for decades, and now, well, a readjustment is called for. No big deal. Hopefully it will correspond to an economic switch out of tourism and construction. The Spanish government is keen to clean up the coast from too much concrete. So there is some deconstruction to do...
As I will argue more thoroughly on "patriceayme.wordpress.com", the French stimulus is not less than the Obama true stimulus, and kicked in early (2008). True the German government has been slow and self contradictory, but it's a coalition government and several elections are coming within months. Elements of that government are running against each other!
Now Germany mostly agree with France on everything, which is all what truly matters to find European solutions to European crises.
Both Germany and France want to regulate financial markets heavily. The USA wants to talk about something else, like Europe having a bad hair day. Why? Because New York and London profited enormously from their giant Ponzi scheme, and both cities, and the elites of the countries they have enriched with it, would like to refurbish it. Well, it will not happen.
The crisis in Europe should not be overestimated: some banks failed spectacularly, but many giant French banks had multi billion dollars profits in 2008, and real estate in Lyon is still peaking. Although governments are heavily in debt, the French deficit this year is expected to be 5.5%. The one in the USA is expected to be 12%. But the overall debt of individuals in Europe is much lower than in the USA. And ultimately, that is the most important factor: Europe does not depend upon savings from other countries (as the USA does).
The greatest danger to Europe would be an attack against the European construction. It will not happen, but countries in Eastern Europe will have to learn that their boss is not in Washington. I would not call that a crisis. I would call that a solution. And getting to know the truth of history. It is not France and Britain that gave Eastern Europe to Stalin. It is Washington.
Tyranosopher
http://patriceayme.wordpress.com/
patriceayme.com
P/S: A more detailled comment along the same veins will be posted on "patriceaymewordpress". It will explain why Europe did MORE, not less, than the USA, and why Amreican screaming against Europe is just self serving propaganda orchestrated by the greedy elite that feasts on the entire world population.
***
Paul Krugman in its main New York Times editorial, insinuated that: "Does all this mean that Europe was wrong to let itself become so tightly integrated? Does it mean, in particular, that the creation of the Euro was a mistake?" That was after suggesting the EU did not answer the crisis appropriately because it, well, did not have enough of a political union. This below was my rebuke, and the New York Times posted it right away (thanks!)
***
It is a contradiction to bemoan, as Krugman does, that Europe is both not "unitary" enough, and then to claim that national interest rates in each European country should be freed to jump all around to serve the natives. When the later used to happen, dear professor Krugman, national unemployment rates and currencies also used to jump around, with wild speculative bubbles and busts. With a few wars thrown in. Why don't we do the same in the USA, and the Dollar, and dissolve them too? Last time this was tried, the Civil War made more than one million casualties (~ 3% of the population).
The mishandling of the present crisis, if any, simply shows that Europe has to be integrated more. Europe, and the Euro, were built for more fundamental reasons than satisfying local potentates (because when local elites can play with interest rates and currencies, that augments their local potentia (the Latin word for power, from which "potentate" derives).
That Spain and others will have somewhat difficult years ahead, sure. But Spain, Greece and Portugal are doing better now than they did under the fascist regimes, inspired by the USA, that the European Union kicked out (democracy is a precondition for entry in the EU). Spain had an enormous boom for decades, and now, well, a readjustment is called for. No big deal. Hopefully it will correspond to an economic switch out of tourism and construction. The Spanish government is keen to clean up the coast from too much concrete. So there is some deconstruction to do...
As I will argue more thoroughly on "patriceayme.wordpress.com", the French stimulus is not less than the Obama true stimulus, and kicked in early (2008). True the German government has been slow and self contradictory, but it's a coalition government and several elections are coming within months. Elements of that government are running against each other!
Now Germany mostly agree with France on everything, which is all what truly matters to find European solutions to European crises.
Both Germany and France want to regulate financial markets heavily. The USA wants to talk about something else, like Europe having a bad hair day. Why? Because New York and London profited enormously from their giant Ponzi scheme, and both cities, and the elites of the countries they have enriched with it, would like to refurbish it. Well, it will not happen.
The crisis in Europe should not be overestimated: some banks failed spectacularly, but many giant French banks had multi billion dollars profits in 2008, and real estate in Lyon is still peaking. Although governments are heavily in debt, the French deficit this year is expected to be 5.5%. The one in the USA is expected to be 12%. But the overall debt of individuals in Europe is much lower than in the USA. And ultimately, that is the most important factor: Europe does not depend upon savings from other countries (as the USA does).
The greatest danger to Europe would be an attack against the European construction. It will not happen, but countries in Eastern Europe will have to learn that their boss is not in Washington. I would not call that a crisis. I would call that a solution. And getting to know the truth of history. It is not France and Britain that gave Eastern Europe to Stalin. It is Washington.
Tyranosopher
http://patriceayme.wordpress.com/
patriceayme.com
P/S: A more detailled comment along the same veins will be posted on "patriceaymewordpress". It will explain why Europe did MORE, not less, than the USA, and why Amreican screaming against Europe is just self serving propaganda orchestrated by the greedy elite that feasts on the entire world population.
Wednesday, March 11, 2009
PLUTOCRATIC PROPAGANDA EXHIBITED
KNEEL AT THE FEET OF PRIVATE EQUITY AND HEDGE FUNDS, YOU LITTLE PEOPLE!
To enforce its perverse and self serving way of thinking, the plutocracy of the USA uses opinion makers who teach TRUE THINK. Thomas Friedman is one of these notorious servants of the wealthy. He pushed for the invasion of Iraq as much as he could, but he is not done yet. According to these supporters of wealth, most of the population of the USA is good if it serves the wealthiest of the Rich. By law, the present day USA is organized according to this credo: the richest pay a maximum of 15% tax when they invest in "hedge funds" and "private equity" structured investment vehicles reserved to them (by law again: in the USA law is by the Rich, for the Rich). The laws passed during the Great Depression against money making ever more money were repealed by the happy crew of Rubin-Summers-Geithner-Greenspan (with various "republicans" helping).
Some, of course, will say that I exaggerate, that I am biased, hard to take seriously. So here is Mr. Friedman, March 10, 2009, in the New York Times, faithfully mouthing the line of the Bush-Obama administration. Please read him:
"As for President Obama, I like his coolness under fire, yet sometimes it feels as if he is deliberately keeping his distance from the banking crisis ... This will likely require some degree of government subsidy to PRIVATE EQUITY GROUPS and HEDGE FUNDS to get them to make the first bids for these toxic assets by GUARANTEEING THEY WILL NOT LOSE. This could make great policy sense, but be a nightmare to sell politically. It will strike many as another unfair giveaway to Wall Street.
Unfortunately, the president may have to look the American people in the eye and explain that “FAIRNESS IS NOT ON THE MENU ANYMORE.” All that’s on the menu now is whether or not we avoid a system meltdown — and this will require rewarding some new investors."
To this obscenity, I replied with the following (published as a comment to Friedman by the NYT, the same day):
Hedge funds and private equity are not the solution, they are the problem. The world economy is presently been destroyed because Summers and Geithner want to save those. No, they will not tell you this, and they will not look you in the eye.
Nationalizing the giant insolvent banks ought to mean that they would be separated from their bank holding companies, the hedge funds, the private equity, the CDS, the SIVs, etc. All deposits should be insured, whatever the amount (as in France). The nationalized banks would then be very profitable businesses, and plenty of buyers would show up (if nothing else, giant profitable banks from overseas). Then the USA as a State could sell them (at one time, or progressively). There are thousands of profitable banks in the USA with competent managements that would be delighted to take over pieces of Citigroup, B of A, JP Morgan... The four largest insolvent banks control now two-third of USA banking.
What to do with the craziest derivatives that presently sinking the banks? Just declare them null and void, because they were not lawful to start with. If this can be done on worldwide basis in London in April at the G20 summit. Problem solved. Who is in the way? Those who created the problem to start with, Geithner, Summers and company, 11 years ago.
Patrice Ayme
http://patriceayme.wordpress.com/
To enforce its perverse and self serving way of thinking, the plutocracy of the USA uses opinion makers who teach TRUE THINK. Thomas Friedman is one of these notorious servants of the wealthy. He pushed for the invasion of Iraq as much as he could, but he is not done yet. According to these supporters of wealth, most of the population of the USA is good if it serves the wealthiest of the Rich. By law, the present day USA is organized according to this credo: the richest pay a maximum of 15% tax when they invest in "hedge funds" and "private equity" structured investment vehicles reserved to them (by law again: in the USA law is by the Rich, for the Rich). The laws passed during the Great Depression against money making ever more money were repealed by the happy crew of Rubin-Summers-Geithner-Greenspan (with various "republicans" helping).
Some, of course, will say that I exaggerate, that I am biased, hard to take seriously. So here is Mr. Friedman, March 10, 2009, in the New York Times, faithfully mouthing the line of the Bush-Obama administration. Please read him:
"As for President Obama, I like his coolness under fire, yet sometimes it feels as if he is deliberately keeping his distance from the banking crisis ... This will likely require some degree of government subsidy to PRIVATE EQUITY GROUPS and HEDGE FUNDS to get them to make the first bids for these toxic assets by GUARANTEEING THEY WILL NOT LOSE. This could make great policy sense, but be a nightmare to sell politically. It will strike many as another unfair giveaway to Wall Street.
Unfortunately, the president may have to look the American people in the eye and explain that “FAIRNESS IS NOT ON THE MENU ANYMORE.” All that’s on the menu now is whether or not we avoid a system meltdown — and this will require rewarding some new investors."
To this obscenity, I replied with the following (published as a comment to Friedman by the NYT, the same day):
Hedge funds and private equity are not the solution, they are the problem. The world economy is presently been destroyed because Summers and Geithner want to save those. No, they will not tell you this, and they will not look you in the eye.
Nationalizing the giant insolvent banks ought to mean that they would be separated from their bank holding companies, the hedge funds, the private equity, the CDS, the SIVs, etc. All deposits should be insured, whatever the amount (as in France). The nationalized banks would then be very profitable businesses, and plenty of buyers would show up (if nothing else, giant profitable banks from overseas). Then the USA as a State could sell them (at one time, or progressively). There are thousands of profitable banks in the USA with competent managements that would be delighted to take over pieces of Citigroup, B of A, JP Morgan... The four largest insolvent banks control now two-third of USA banking.
What to do with the craziest derivatives that presently sinking the banks? Just declare them null and void, because they were not lawful to start with. If this can be done on worldwide basis in London in April at the G20 summit. Problem solved. Who is in the way? Those who created the problem to start with, Geithner, Summers and company, 11 years ago.
Patrice Ayme
http://patriceayme.wordpress.com/
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