Debt Rattle February 1 2015

[Raúl Ilargi Meijer]

William Henry Jackson Steamboat Metamora of Palatka on the Ocklawaha, FL 1902 • Europe’s Creditors Play With ‘Political Fire’ Pushing Greece To The Br
[See the full post at: Debt Rattle February 1 2015]

[Ken Barrows]

It’s clear that austerity is bad for the Greeks, but theirs and the world’s economic problems developed out of “anti-austerity,” taking on too much debt. If Greece (or the world soon enough) cannot “grow” out of its problem and austerity is a no-go, what’s left?

[Gravity]

Essentially, the monetary system is a volatile pyramid scheme requiring continuous increase of debt-based money to avoid self-liquidating collapse. This system used to work when credit was productively allocated, affording growth in GDP, but not anymore.
None can borrow their way to growth if interest payments on debt continue to outweigh the marginal productivity of spending credit, in such a debt-saturation any additional debt cannot be serviced and will directly contract productivity instead of growing it.

In the past 5 years Greece’s economy has contracted more than under a destructive military occupation, so genocidal austerity hasn’t paid off to make the country more solvent. Default has actually become more likely since the country has diminshed capacity to service its expanded debt. And much of this debt is totally odious.

There’s a persistent idea that greeks, especially the rich, don’t pay enough taxes, that tax collection is not efficient enough to minimally fund government programs. Its at least evident that productive activities have been taxed more than unproductive ones.
Syriza’s program does state that they intend to increase the upper income tax bracket to 75%, while property taxes have already outrageously increased to fund municipalities, which will only make the rich flee the country or hide their income and assets.
Instead, a 30% flat tax on all forms of activity but not property may be more equitable, since the secondary function of taxation is to finance government programs but its primary function is to diminish activity, and if no economic rationality exists to distinguish the quality of productive or consumptive activity, all should be diminshed equally.

Greece’s labor stimulus must focus on whatever productive activity its remaining social and industrial infrastructure is most uniquely suited to, excluding debt-fueled consumerism.
Its still a sunny country, besides promoting tourism, massively expanding solar generation could lessen reliance on costly electricity imports, and modernising agricultural production, water availability permitting, could help to create food and jobs. Some of the unemployed youth could be stimulated to emigrate to wherever demand for labor is higher, but there’s insufficient demand for labor in most of europe.

Growth cannot continue on its previous unsustainable trajectory, so therefore it can only continue in another direction entirely, financed by radical honesty instead of deception.
Thus, a comprehensive financial reformation encompassing the entire international banking system is necessary.

https://varoufakis.files.wordpress.com/2013/07/a-modest-proposal-for-resolving-the-eurozone-crisis-version-4-0-final1.pdf
This program proposes mechanisms to finance greece’s sovereign debt less deceptively, but it fails to adress the financial hegemony of the banking system or the notion of odious debt.

[davidveale]

Farrell’s article is excellent, but I do find it highly ironic that it appears in MarketWatch, where the readers are all presumably interested in investment in public corporations. This is the very force (the exclusive expectation of shareholder returns, sans any human ethos or morality) which drives much of the destruction and also much of the media meant to mislead us on these subjects.

[Greenpa]

We’re in one of those phases where significant news happens hourly; this just in:

https://www.bloomberg.com/news/articles/2015-02-02/consumer-spending-decreased-in-december-by-most-in-five-years

The real picture is complex; spending was up well for the quarter; but down in December. Eh? Basically retailers have been forced into a cycle of mutual throat cutting earlier and earlier; and instead of paying premium prices for last-minute gifts, consumers don’t bite unless offered 40%-60% discounts on such items – in November. And current bean-counters prefer to boost corporate profits by firing employees and cutting their wages, rather than boosting sales (“making” something of value is long, long gone.).

How soon before the newspapers adopt a “Greek Spring!” chant? If Spain follows- and they look like it to me- things will change. I would not be so rash as to predict an improvement in life for Everyman, however. The Owners certainly have contingency plans; including which of them will be dumped out of their lifeboats first…

[Author]

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