Unknown Army of the James at completed Dutch Gap canal, James River, Virginia 1864
Potential big deal. Hollande’s chance to show -independent- leadership. France is pivotal to Europe, but it must speak up to make that count.
French President Francois Hollande received an appeal from a group of lawmakers including some from the ruling Socialist Party and other political figures to end the “financial blackmail” of Greece by its European creditors. The message of France “cannot be a docile reminder of the rules at a time when the house is burning,” the lawmakers said in an open letter to Hollande published on the website of France’s Communist Party. “We are asking you to take the initiative to unblock the talks between the euro group and the Greek political authorities.” The letter highlights the domestic political pressure Hollande faces to help broker a deal between Greece and its creditors as the region’s most indebted nation is on the brink of a default.
German Chancellor Angela Merkel and Hollande spoke by phone on Friday after a meeting of euro area finance ministers failed to advance toward an agreement with Greece. So far the two biggest economies in the 19-nation euro bloc have presented a united front against Greek Prime Minister Alexis Tsipras, who has spent his five months in power trying to roll back the austerity policies underpinning the country’s bailout. At the finance minister’s meeting in Luxembourg on Thursday, French Finance Minister Michel Sapin pressed hardest for a compromise, while his German counterpart, Wolfgang Schaeuble stayed largely silent and ministers from other countries stepped up the pressure on Greece, according to two people familiar with the matter.
The French lawmakers, including Socialists such as Pouria Amirshahi and Fanelie Carrey-Conte, told Hollande to place France “at the side of the people of Greece.” “Bring explicit support to the healthy measures taken by the Greek authorities, notably those addressing the humanitarian crisis in the country” they said. “Accept the principle of a restructuring of Greek debt, of which a large part is notoriously illegitimate.”
“There Is No Europe Without Greece.”
Nikos Athanassiou, a 61-year-old Athenian pensioner, is at the heart of Greece’s struggle to maintain its fragile 14-year membership of the euro. Like many of his compatriots, Nikos took early retirement having worked most of his life labouring in the country’s now defunct construction industry, aged 58. He is one of the 2.6m pensioners in Greece who have become the unlikely battleground in the latest game of brinkmanship between the radical Left government and its paymasters. A member of Communist Party of Greece (KKE), Nikos spends his retirement resisting Troika-imposed cuts to public services as a union representative for his local district in northern Athens “It is my duty to demand dignity for Greeks. We are collapsing as a country,” says Nikos.
His resolve is not unusual in a society where the bulk of proposed cuts will hit the elderly and newly retired. The IMF is demanding the Greek government slash €1.8bn in pensions spending in 2016. At 16.2pc of GDP, Greece’s outlay is highest in the eurozone. Even with overhauls to the retirement age and spending cuts, this will still only fall to 14.3pc in 45 years time – the third highest in the EU. Nikos’s pension is €750 a month. He is among nearly half of all Greek pensioners who provide the sole source of income to support three generations of one family. But his pension is barely enough to provide for his seven-year old granddaughter and her parents. “When I think about my granddaughter’s future, I panic. I want her to live in an independent Greece – not a protectorate.”
Resentment against creditors’ determination to suck more funds from the country’s pension system is rife. Greeks have already seen a 40pc fall in their pension provision over five years – a shrinkage that has been ruled unconstitutional by the country’s highest administrative court. One of the reasons the spending ranks so highly is due less to generosity of individual pensions than it is the extreme recession that has shrunk GDP to almost pre-euro levels. Greece’s radical Left government has vociferously defended pensions as one of the last remaining safety nets in a country where 45pc of the elderly live below the poverty line. The issue has become the immovable “red line” in Greece’s struggle to finally end what the ruling Syriza party have dubbed a “ritual humiliation.”
One week in the life of a shattered society.
Sunday: Five years is a long time to be in crisis. It’s freefall by a thousand cuts; loss in myriad ways, hard choices that never get easier. Last week, as Greece descended into drama, a young man appeared on the marble steps of the neoclassical building opposite my home. Head in hand, he sat there from Sunday to Wednesday, in the beating sun, a wheelie bag in front of him, a slice of cardboard perched on top that read: “I am homeless. Help please!”
When you live in Athens you do not flinch at the signs of decay: to do so would be to give in. But somehow the sight of this forlorn figure – a waif of a man, eyes fixed only at his feet, the embodiment of wounded pride, brought home as never before that Greeks are in crisis. Was he giving up or making a hard choice? If he was 22, and he barely seemed that, his entire adult life had been spent in crisis. This is the great tragedy of Greece. It has not only been needlessly impoverished – it now eats up its own. The elderly woman who occasionally rifles through the rubbish bins on the corner of the square my office overlooks – often carrying a Louis Vuitton bag – is so glad she was born at the end of the 1946-49 civil war. “At least then it could get better. Today it can only get worse.”
Monday: For five years we have all felt as if we are on a runaway train, hurtling into the unknown. Sometimes the train picks up speed, sometimes it slows down, but never enough to stop. This week, as the drumbeat of default, impending bankruptcy and disastrous euro exit thudded ever louder, the train felt as if it might derail altogether. Had a lunatic got hold of the controls? On Monday morning it began to feel like it. For me, the day started at 2am when I received a text from Euclid Tsakalotos, the point-man in negotiations between Athens and the troika.
“We made huge efforts to meet them halfway,” he wrote hours after talks reached an impasse over a reform-for-cash deal that could save Greece. “But they insisted on pension and wage cuts.” By mid-morning, global stock markets were tumbling. By midday, the world had learned that, without an agreement, Greece might not be able to honour an end-of-month debt repayment to the IMF worth €1.6bn. By midnight, newscasters, looking decidedly nervous, had broken their own taboo: many were talking openly of euro exit.
“..unnecessary cowardice, confusion and hubris..”
Original decision to provide a bail out is the source of the current crisis. Time for Europe to share the blame and financial consequences.
With everyone talking about Greece being on the verge of exiting the euro after Monday’s summit meeting, it seems to be forgotten that the current crisis is not really about Greece’s currency arrangements at all. The Greek people are not demanding a return to the drachma and few within the country are arguing for the competitive benefits a currency devaluation would entail. And there are no formal rules that Greece is breaking that must lead to an exit from the euro because, legally, the euro is a fixed and irrevocable currency union. This crisis is about more basic things: Debt and power. Indeed, the current stand-off looks a lot more like the classic gunboat diplomacy conflicts of the 19th century than it does the currency crises of the 20th century.
Europe’s governments and the IMF made an enormous mistake in bailing out Greece’s private creditors in 2010 and then overseeing a botched debt restructuring in 2012. In turn, the Greek governments of this era made the mistake of accepting official loans to pay off private creditors, perhaps not realising they were jumping out the frying pan straight into the fire. Now the Greeks are learning that defaulting on private creditors is one thing (not so hard it turns out, once you’ve got Lee Buchheit in your corner) but defaulting on governments of rich European countries is quite something else. Blaming the euro for the current impasse is actually pretty strange because the euro’s founding fathers explicitly warned member states to not to get themselves into this situation.
The story of the demise of Europe’s “no bailout clause” is an interesting one. Rather than an inevitable crisis, one can credibly argue that the decisions that landed us in the current situation did not need to be taken and were taken as a result of unnecessary cowardice, confusion and hubris. I reviewed many papers on prospects for the euro written by economists in the 1990s. I was struck by the consensus that the fiscal limitations of the Stability and Growth Pact would generally be honoured, that euro members that got into fiscal troubles would not be bailed out by other countries and this would lead to sovereign defaults when countries did get into fiscal problems.
By and large, the policy heavyweights of the day, such as Rudi Dornbusch, believed there was a “categorical no-bailout injunction.” As such, it was expected that markets would understand that European governments were more likely to default once their devaluation option was taken away and that financial markets would price the sovereign debt of countries differently depending on the health of their public finances.
Note the pattern: Spain ‘recovers’ through increasing inequality.
While the big picture is undoubtedly improving – big investors are returning to a country that barely three years ago was widely expected to need a Greece-style sovereign bailout – Spain is still mired in a period of transition. Even the IMF report that welcomed Spain’s impressive growth rate – one of the strongest in Europe – also stressed the shaky jobs outlook, noting that unemployment was “still painfully high” and that “vulnerabilities remain”. “Spain has returned to about 95% of where it was in 2008,” says Professor Javier Diaz-Giménez of the IESE business school in Madrid. “That means 2008 is still a benchmark people look back at with nostalgia. At current growth rates, the economy will get back to where it was in 2008 at the end of next year. It’s a very late recovery.”
One of the biggest worries for those yet to see any improvements in their lives is whether even a sustained recovery will be enough to repair the damage. Jobs are starting to return, currently at a rate of 400,000-500,000 a year, but more than three million were lost during the downturn, so the new jobs represent only a small improvement in an unemployment rate, which is still running at almost 24%. In Greece, which now finds itself on the edge of the economic precipice, the rate is 26%. Inequalities, meanwhile, are deepening, leaving some to wonder whether the crisis is even over at all. “The economy is certainly not improving for those without a job or a home,” says Lotta Tenhunen, a social activist in Madrid. The group she works with, PAH, campaigns on behalf of those evicted after falling into arrears on their mortgage payments, and became especially prominent at the height of the recession. In Vallecas, it still meets every week: “People and families are still being driven out of their homes – and the rate is still rising.”
Prospects for the young are particularly bleak. About half of under-25-year-olds in the labour force are without a job, and this threatens to leave the country with a listless lost generation for whom unemployment is the norm. The ranks of the long-term jobless are also swelling. “It is not just the headline unemployment figure that is worrying; it is also the type of unemployment,” says Antonio Barroso of consultancy Teneo Intelligence. “40% of unemployed people are over the age of 45, so difficult to retrain and bring back into the labour market. You also have to look at the types of jobs being created. Most new positions are temporary contracts, where people are left in a precarious position with very few rights – this does not breed confidence.”
“Speculation is rife that Greece’s creditors at the EU, ECB and IMF would offer a six-month extension of the bailout programme..”
The race to save Greece from economic collapse intensified on Saturday night as its beleaguered leader conducted a flurry of behind-the-scenes negotiations before an EU summit on Monday that is expected to decide the country’s fate. Alexis Tsipras, the prime minister, met senior officials in an attempt to devise a package of reforms that would secure emergency funds and avoid the nation defaulting on its massive debts. It will be the third such proposal that Athens has made to its creditors in as many weeks. “We will try to supplement our proposal so that we get closer to a solution,” Greece’s minister of state, Alekos Flabouraris, told broadcaster Mega TV. “We are not going [to the summit] with the old proposal. Some work is being done to see where we can converge, so that we achieve a mutually beneficial solution.”
Flabouraris, widely seen as a mentor to the young prime minister, said Tsipras would hold crucial talks with the head of the European commission, Jean-Claude Juncker. The Greek cabinet will meet in an emergency session on Sunday with Tsipras also dispatching senior officials to Brussels. The frantic diplomacy came as Greece’s eurozone partners warned that, after five months of fruitless talks, the game was up for Tsipras’s radical leftwing government. The country, which has been thrown two lifelines since 2010, has until 30 June to secure €7.2bn (£5.1bn) in bailout funds. Failure to release the loans will result in default, as Greece owes €1.6bn to the IMF at the end of the month. Among the measures that the Syriza-led coalition was reportedly working on on Saturday were reductions in early retirement schemes.
Pension and VAT reforms, along with labour deregulation, remain sources of friction between the two sides. Speculation is rife that Greece’s creditors at the EU, ECB and IMF would offer a six-month extension of the bailout programme – disbursing more than €10bn in aid to tide the country over the summer – if agreement was reached. Discussions over a third bailout Athens will inevitably also require would be kicked down the road. Speaking to the Observer, Athens’s chief negotiator, Euclid Tsakalotos, described the prospect of a short-term deal as perhaps the worst possible outcome. Prolongation of the political uncertainty – and scenarios of Greece’s enforced exit from the euro – would, he said, do nothing for the country’s economic recovery.
Coppola still leaves me with a host of questions. Yanis wrote yesterday that his proposals were never even read because that would mean they’d need to be sent to Bundestag. Whether that automatically implies a vote, I don’t know.
The Greek finance minister, Yanis Varoufakis, has stirred up something of a hornet’s nest. He has spilled the beans on the less-than-transparent negotiating tactics of the EU institutions – the European Commission and the ECB. The Irish finance minister, Michael Noonan, complained that he had not seen the proposals put forward by the EU institutions for consideration by the Greek government. This is a serious criticism. Failure to brief finance ministers adequately before a Eurogroup meeting is negligent, although perhaps understandable in a rapidly-changing situation. It means that the ministers are unable to make informed decisions, so they must either rubber-stamp proposals without considering then properly, or defer everything.
Kicking cans down the road is of course a Eurogroup specialty, but it really shouldn’t be forced on finance ministers through inadequate briefing. Exactly why Mr. Noonan was not briefed is unclear. Did he miss the briefing? Was it an oversight by hard-pressed bureaucrats? Were other ministers briefed? We don’t know. But it is worrying that a mistake like this can be made in such finely balanced negotiations. One false move could spell disaster. The EU negotiators must be more careful. But Mr. Varoufakis added another complaint to Mr. Noonan’s. He said that he had been prevented from briefing EU finance ministers on his own proposal ahead of the meeting. And he blamed the Germans:
In fact, as our German counterpart was later to confirm, any written submission to a finance minister by either Greece or the institutions was “unacceptable”, as he would then need to table it at the Bundestag, thus negating its utility as a negotiating bid.
I find this hard to believe. In effect, it means that anything presented to the Eurogroup in writing is deemed by the Germans to be a firm recommendation requiring a vote by the German Parliament. If this is true, then it makes negotiations far more difficult. Complex proposals have to be written down, even if they are not the final word, because otherwise there is a significant risk of misunderstanding. Even more importantly, it raises serious questions about the role of the Eurogroup. If all the Eurogroup can ever see is a finished product, they can never do more than rubber-stamp decisions made by unelected bureaucrats behind the scenes. This is not a good way of running a supposedly democratic polity. Mr. Varoufakis makes a very similar criticism:
The euro zone moves in a mysterious way. Momentous decisions are rubber- stamped by finance ministers who remain in the dark on the details, while unelected officials of mighty institutions are locked into one-sided negotiations with a solitary government-in-distress. It is as if Europe has determined that elected finance ministers are not up to the task of mastering the technical details; a task best left to “experts” representing not voters but the institutions. One can only wonder to what extent such an arrangement is efficient, let alone remotely democratic.
And in his final paragraphs, he accuses the Eurogroup of being not fit for purpose. Hmm. Whether or not this criticism is justified, I can’t for the life of me see how saying it publicly is helpful to the Greek cause. It’s only going to annoy people.
Shame on you!
Child poverty is on course for the biggest rise in a generation, reversing years of progress that began in the late 1990s, leading charities and independent experts claimed on Saturday. The stark prognosis comes before the release of government figures which experts believe will show a clear increase for the first time since the start of the decade. It also comes as the chancellor George Osborne and work and pensions minister Iain Duncan Smith announced they had agreed a plan to slash a further £12bn a year from benefits spending. In a joint letter they pledged to attack the “damaging culture of welfare dependency”, and said it would take “a decade” or more to return the welfare budget to what they called “sanity”.
The introduction of the bedroom tax and cuts in benefits between 2013 and last year are blamed for fuelling the rise in the number of families whose income is below 60% of the UK average – the definition of relative poverty. Calculations from the Institute for Fiscal Studies (IFS) have suggested that progress between the late 1990s and 2010 has been reversed and that the number of children living in relative poverty rose from 2.3 million in 2013 to 2.6 million in 2014. The Child Poverty Action Group says that with the government committed to implementing another £12bn of cuts in a new round of austerity, the problem will grow.
As tens of thousands of people joined an anti-austerity march through London on Saturday, Alison Garnham, the charity’s chief executive, said ministers were failing too many children. “The government can no longer claim that deficit reduction is about protecting children’s futures now that it’s being made to confront a child poverty crisis, with the biggest rise in a generation now expected of its own making,” she said. “With child poverty expected to rise by nearly a third in the decade to 2020 as a result of its policies, it’s clear the government’s approach is failing.”
Pretty soon, we’ll all be Greeks.
The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress. Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock. “Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money. The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts.
But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager. His concern is that global debt – particularly mortgage debt – has been pumped up to record levels, made possible by exceptionally low interest rates that could soon end, and he is unsure how well banks could cope with the shocks that may await. He pointed out that a saver was covered only up to £85,000 per bank under the Financial Services Compensation Scheme – which is effectively unfunded – and that the Government has said it will not rescue banks in future, hence his suggestion that some money should be held in physical cash. He declined to predict the exact trigger but said it was more likely to happen in the next five years rather than 10.
The current woes of Greece, which may crash out of the euro, already has many market watchers concerned. Mr Spreadbury’s views are timely, aside from Greece. A growing number of professional investors (see comment, right) and commentators are expressing unease about what happens next. The prices of nearly all assets – property, shares, bonds – have been rising for years. House prices have risen by 26pc since the start of 2009, and by 68pc in London. The FTSE 100 is up by 75pc. Although it feels counter-intuitive, this trend of rising prices should continue if economies remain weak, because it gives central banks licence to keep rates low and to carry on with their “quantitative easing” programmes.
It’s a vicious circle of hypocrisy: Americans dependent on the safety net are urged to “get a job” by the same free-market system that pays them too little to avoid being dependent on the safety net. According to the Economic Policy Institute, $45 billion per year in federal, state, and other safety net support is paid to workers in the bottom 20% of wage earners. Thus the average U.S. household is paying almost $400 to employees in low-wage industries such as food service, retail, and personal care. Paul Ryan said that social programs “turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency.” But 63% of eligible working-age poor Americans are employed, and 73% are members of working families.
Yet in a show of hypocrisy by some of the leading safety net critics, Congress has killed or blocked or ignored numerous attempts to create better jobs for underemployed Americans. A Demos study found that raising wages to $25,000 per year (about $12.50 per hour) for full-time retail workers would lift 734,075 people out of poverty. It would probably help a lot more. An analysis of Bureau of Labor Statistics data reveals that about 22 million workers are underpaid (about a sixth of the total), over half of them in food service, cashiering, personal care, and housekeeping. Paying everyone $12.50 (assuming full-time) would cost an extra $80 billion. That’s about 3% of total 2014 corporate profits. Three%, compared to the 95% spent by S&P 500 companies on investor-enriching stock buybacks and dividend payouts.
About two-thirds of low-wage workers are employed by large corporations with over 100 employees. The very worst offender is probably Walmart, which pays its estimated 1.4 million U.S. employees so little that the average Walmart worker depends on about $4,400 per year in taxpayer assistance, for food stamps and other safety net programs. As Walmart was depending on us, the taxpayers, to pay $4,400 a year to each of its employees, the company was spending the equivalent of $5,000 per U.S. employee for price-boosting stock buybacks.
The EU will split on this soon enough.
The Russian Foreign Ministry has slammed the EU’s “pushy sanctions strategy” as “political blackmail,” and said it is “absolutely hopeless” as it won’t make Russia give up its “national interests and principled position.” Coming in response to the EU’s extension of sanctions over what Brussels called “the illegal annexation of Crimea and Sevastopol,” the Russian statement said “it was time” to accept that those territories are an “integral part of the Russian Federation” and that the situation “can’t be changed by methods of economic and political blackmail.” Sanctions against Russia are “absolutely hopeless,” the ministry said, adding that “it is a mistake to expect that [the sanctions strategy] will make us sacrifice national interests and [our] principled position on key issues.”
As the prolonged restrictions target Crimea and the city of Sevastopol, the Foreign Ministry sees the sanctions as unacceptable “discrimination” against people in Crimea “on a political and territorial basis.” Recalling “historical examples,” the ministry condemned the move as “a collective punishment” of “the residents of the [Crimean] peninsula who made a free choice” for reunification with Russia. “It was hard to imagine that Europe would face this in the 21st century,” the Foreign Ministry’s statement said. On Friday, the EU extended economic sanctions against Crimea until June 23, 2016, and said it still doesn’t recognize Crimea’s reunification with Russia, calling it an “illegal annexation.”
The restrictions include a ban on imports from Crimea or Sevastopol into the EU, investment and tourism services, as well as the export of certain products and technology to Crimean companies. The EU sanctions against Russia were imposed over the Ukrainian crisis. They targeted access to foreign loans and the oil and gas industry. Moscow responded with countersanctions that hit European food producers. However, the toll the conflict is taking on the EU economy is higher than Brussels initially anticipated.
German media should be way more vocal on this. And the rest of Europe too.
In the coming weeks, Kiev will receive the €600 million tranche of the third EU loan package for Ukraine. It will be a new financial burden for ordinary EU taxpayers because there is no hope that the debt will be paid off, a German business newspaper reports. The €600 million euro tranche of financial aid for Ukraine is taking money from ordinary European taxpayers with no chance to return, the German newspaper Deutsche Wirtschafts Nachrichten reports. Earlier, Johannes Hahn, European Commissioner for European Neighborhood Policy and Enlargement Negotiations, said the EU completed all the procedures for the new tranche. “I’m very glad that the Verkhovna Rada [the Ukrainian Parliament] ratified the memorandum on the third package of financial aid of €1.8 billion.
I’m sure that within several weeks Kiev will receive the first tranche of €600 million,” Hahn said. “Thus, there is a new financial burden for our taxpayers. There is no hope that the money will return,” the newspaper claims. In May, Ukraine’s National Railroad Company declared bankruptcy. Part of its debt is due to be restructured. In total, its debt has reached $500 million. During the last year only, European taxpayers lost €200 million to save the company, the article reads. The Ukrainian protective wall along the border with Russia is also funded by EU taxpayers. The electrified barrier with mines and barbed wire is planned to be 2,000-kilometer-long and will cost nearly €100 million, DWN points out.
“..there is a war party in every capital and even in the White House itself.”
RT: A few weeks ago US Vice President Joe Biden said that “everybody wants an end to this conflict in Ukraine, but the question is on whose terms and how will it end.” Are the terms to end this conflict are still being negotiated and if so what options are on offer?
Stephen Cohen: My perspective is different from that of Vice President Biden. We are now after all in almost two years – a year and a half – of a new Cold War between the US and Russia – an exceedingly dangerous confrontation over Ukraine, which I think and I’ve said this for months could easily become as dangerous as the Cuban missile crisis was. The politics of this have now spread far and wide including in Europe. It seems to me, and this is my fundamental analysis, that in almost every capital – Washington, Brussels and certainly in Kiev, and even to some degree in Moscow – there is what I call a peace and a war party.
The Minsk agreements, which were agreed upon by the Chancellor of Germany, the President of France, the President of Ukraine and of course President Putin of Russia represented then a peace party. It set out in addition to a ceasefire in Ukraine very far reaching, fundamental terms of negotiation to end the civil war in Ukraine, to end the proxy war between the West and Russia. It’s clear to me that there are powerful people in the West and in Kiev who do not want a negotiated settlement.
RT: Vice President Biden, who recently said that he talks to either PM Yatsenyuk or President Poroshenko on almost a weekly basis – that’s what he said – do you think that Biden belongs to the peace or war camp when he is on the phone with them? Does he preach reconciliation?
SC: He says he talks to them three times per week not once a week. But we have evidence, something very dramatic just happened. As you know, in late May Secretary of State John Kerry went to Sochi. First he met with Russian Foreign Minister Sergey Lavrov and then, remarkably, he met for four hours with President Putin. It was absolutely clear from what was said in Sochi at the press conferences afterwards that Kerry’s mission had been to say that the US, the Obama administration, now fully backed the Minsk agreement. That would put Kerry in the peace party.
It was kind of a surprise because he had been taking a very hard line. However, look what then happened. Kerry was attacked, literally criticized, for having gone to Sochi by members of the Obama administration. The most vivid example reported in the New York Times last Sunday I think was that a former very close policy aide to Vice President Biden told the reporter they didn’t know why Kerry had gone to Sochi, and that he had sent bad messages and that his trip had been counterproductive. So you conclude from this – and it confirms my thesis – that there is a war party in every capital and even in the White House itself.
For those who still needed confirmation.
Eric King: “You mentioned that we are in unprecedented times. And the concern is that when the 2008 collapse unfolded there was all this money printing and the banks were bailed out. It really fell on the shoulders of the taxpayers, but the concern as you said is that this leverage is growing. There are over one quadrillion dollars of derivatives. With the leverage totally ramped up in (terms of) the central banks’ (balance sheets), who will save the financial system (this time around)? Who will save the banks? There are all these bail-ins that have been written into law in the West and it seems like the next move is just to steal money from the public. Who will save the system this time when it implodes?
Nomi Prins: “When it implodes it will implode more dangerously. The IMF and the Fed have different ideas about whether rates should stay low or go up. In this particular round the IMF won. They want rates to stay low because they don’t know what’s going to happen to the global financial system if the availability of cheap money goes away…. “Right now everyone knows, whether they admit it or not, that (cheap money) is the only thing that’s keeping this (global financial) system afloat. It isn’t production. It isn’t savings of individuals because nobody has any money to save. So there is no there, there.
The only policy that these central banks have is to continue to do more of the same. And the only thing that does is continue to push this next crisis, or the second leg of the current crisis as I look at it, down the road. There is no saving this (global financial) system. All they can do is continue to push the current policies to make it look as if things are operating functionally — as if these banks are solvent and as if these markets are somehow elevated on the basis of value and not on the basis of the cheap money that they are infusing into the system. That’s all they can do. They just hope that somewhere along the line this will work out.”
That’s right, might as well elect the biggest dunce.
Perhaps it has occurred to you as it has to me that the United States is no longer capable of producing political leadership. In the current issue of Trends Journal, Gerald Celente describes the eight candidates (at the time he went to press) for the US presidential nomination as “Liars, cowards, freaks & fools.” Celente put it well. If you look at the sorry collection that aspires to be the CEO of what continues to be described as the “exceptional, indispensable, most important country with the largest economy and military, the world’s only Superpower, the Uni-power,” you see a collection of nobodies. America is like the last days of Rome when contenting factions fought to put their puppet on the throne.
There is no known politician in America who measures up to Vladimir Putin’s ankle, or to the knee of China’s leaders, or to the waist of Ecuador’s, Bolivia’s, Venezuela’s, Argentina’s, Brazil’s, or to the chests of India’s and South Africa’s. In Europe, the UK, Australia, and Canada, the natural leaders are also frozen out of the corrupt system. In the US, “leadership” positions depend on financial support from the ruling economic interests. American presidents and politicians represent about six powerful private interest groups and no one else. After Celente went to press, Donald Trump announced to much mirth. A “con man” they say, but what else is the President of the United States? Do you think you weren’t conned by Clinton, George W. Bush, and Obama? What universe do you live in?
In actual fact, Trump might be our best candidate to date. By all accounts, he is very rich. Thus, he doesn’t need the office in order to become rich by selling out America to interest groups. By all accounts, Trump has a healthy ego. Thus, he could be capable of standing up to the powerful interest groups that generally determine the governance of the American serfs. Trump’s ego might even be strong enough for him to stand up to the Israel Lobby, something my former colleague, Admiral Thomas Moorer, Chairman of the Joint Chiefs of Staff, said publicly that no American President was capable of doing. As Celente makes clear in the current Trends Journal, all politicians are con men or con women.
We are going to have them regardless, so why not try a rich one who might decide to break with tradition and serve the interests of the citizenry. This would be a unique accomplishment, affording Trump the elevation in history books that would satisfy his ego. When a person reaches Trump’s state, does he need another couple of billion dollars or is historical recognition as the savior, however temporary, more valuable? This is not my endorsement of Trump for President. It is merely my speculations on how we might think of how large egos might be brought into our service. When we put the Clintons in office, they decided to make money so that they could outdo Hollywood and show their arrival with the $3 million they spent on their daughter’s wedding. For Trump, $3 million is pocket change.
Let’s first see where it goes.
The pope’s encyclical on climate change is a big deal. Sure, past popes have written on the importance of protecting the environment, on favoring the poorest and on rethinking our direction as a species. But this is a major piece of work, and an ardent call from one of our world’s major leaders for us to work together to address this existential problem. Most interesting and heartening to me is Francis’s linking of the fate of the poor and the future of climate change. This point is well documented in research on the injustice of climate change. For example, Bradley Parks and I found that the poorest nations of the world are far more likely to suffer the impacts of climate-related disasters, and are also far less responsible for the problem.
The timing of the pope’s remarks is also very important. This year countries are both negotiating to reach a global agreement in Paris in December and also individually putting forward their own pledges on what they will do, called INDCs (Intended Nationally Determined Contributions) in the cumbersome U.N. lingo. The pope’s statement puts it very plainly to those leaders of nations who might be laggards: It’s time to face climate change very thoughtfully, justly and aggressively. Finally, having this strong and very considered statement about the urgency and moral imperative of addressing climate change coming from a religious leader is very proper, and part of an important larger movement.
Just to put you on the wrong paw (do skippys have paws?).
All kangaroos are left-handed, according to new research. Previously it was thought that “true”-handedness, meaning predictably using one hand over the other, was a feature unique to primates. The new research, published in the journal Current Biology, not only negates that but also goes one step further: kangaroos are even more true-handed than we are. “According to a special-assessment scale of handedness adopted for primates, kangaroos pulled down the highest grades,” said project leader Yegor Malashichev in a press release. “We observed a remarkable consistency in responses across bipedal species in that they all prefer to use the left, not the right, hand.”
Malashichev, a researcher from Saint Petersburg State University in Russia, and his team observed that wild kangaroos show a natural preference for their left hands when performing particular actions, such as grooming their noses, picking leaves, or bending tree branches. Left-handedness was particularly apparent in eastern grey and red kangaroos. The kangaroos that they studied were at various locations in the wild at Tasmania and Australia. The term “hand” really does apply here, because kangaroos have five-fingered hands that somewhat resemble human hands, save for the kangaroos’ long claws in place of fingernails. Not all marsupials were found to exhibit such handedness. The researchers determined that red-necked wallabies, for example, prefer their left hand for some tasks and their right for others.
Generally speaking, these wallabies use their left forelimb for tasks that involve fine manipulation and the right for tasks that require more physical strength. The researchers also found less evidence for handedness in species that spend their days in the trees. The discovery about kangaroos was unexpected because, unlike other mammals, kangaroos lack the same neural circuitry that bridges the left and right hemispheres of the brain. Now the researchers are very curious about marsupial brains, which differ from those of other mammals in additional respects too. Such studies could yield important insight into neuropsychiatric conditions, including schizophrenia and autism, the researchers said, noting links between those disorders and handedness.
Doesn’t leave much space for ‘interpretation’.
Just today, NASA released its global temperature data for the month of May 2015. It was a scorching 0.71°C (1.3°F) above the long-term average. It is also the hottest first five months of any year ever recorded. As we look at climate patterns over the next year or so, it is likely that this year will set a new all-time record. In fact, as of now, 2015 is a whopping 0.1°C (0.17°F) hotter than last year, which itself was the hottest year on record. Below, NASA’s annual temperatures are shown. Each year’s results are shown as black dots. Some years are warmer, some are cooler and we never want to put too much emphasis on any single year’s temperature. I have added a star to show where 2015 is so far this year, simply off the chart. The last 12 months are at record levels as well. So far June has been very hot as well, likely to end up warmer than May.
So why talk about month temperatures or even annual temperatures? Isn’t climate about long-term trends? First, there has been a lot of discussion of the so-called ‘pause.’ As I have pointed out many times here and in my own research, there has been no pause at all. We know this first by looking at the rate of energy gain within the oceans. But other recent publications, like ones I’ve written about have taken account of instrument and measurement quality and they too find no pause. Second, there has been a lot of discussion of why models were running hotter than surface air temperatures. There was a real divergence for a while with most models suggesting more warming. Well with 2014 and 2015, we see that the models and actual surface temperatures are in very close agreement.
When we combine surface temperatures with ocean heat content, as seen below, a clear picture emerges. Warming is continuing at a rapid rate.
What we do best.
Stanford biologist Paul Ehrlich calls for fast action to conserve threatened species, populations and habitat before the window of opportunity closes. There is no longer any doubt: We are entering a mass extinction that threatens humanity’s existence. That is the bad news at the center of a new study by a group of scientists including Paul Ehrlich, the Bing Professor of Population Studies in biology and a senior fellow at the Stanford Woods Institute for the Environment. Ehrlich and his co-authors call for fast action to conserve threatened species, populations and habitat, but warn that the window of opportunity is rapidly closing. “[The study] shows without any significant doubt that we are now entering the sixth great mass extinction event,” Ehrlich said.
Although most well known for his positions on human population, Ehrlich has done extensive work on extinctions going back to his 1981 book, Extinction: The Causes and Consequences of the Disappearance of Species. He has long tied his work on coevolution, on racial, gender and economic justice, and on nuclear winter with the issue of wildlife populations and species loss. There is general agreement among scientists that extinction rates have reached levels unparalleled since the dinosaurs died out 66 million years ago.
However, some have challenged the theory, believing earlier estimates rested on assumptions that overestimated the crisis. The new study, published in the journal Science Advances, shows that even with extremely conservative estimates, species are disappearing up to about 100 times faster than the normal rate between mass extinctions, known as the background rate. “If it is allowed to continue, life would take many millions of years to recover, and our species itself would likely disappear early on,” said lead author Gerardo Ceballos of the Universidad Autónoma de México.
Using fossil records and extinction counts from a range of records, the researchers compared a highly conservative estimate of current extinctions with a background rate estimate twice as high as those widely used in previous analyses. This way, they brought the two estimates – current extinction rate and average background or going-on-all-the-time extinction rate – as close to each other as possible. Focusing on vertebrates, the group for which the most reliable modern and fossil data exist, the researchers asked whether even the lowest estimates of the difference between background and contemporary extinction rates still justify the conclusion that people are precipitating “a global spasm of biodiversity loss.” The answer: a definitive yes.