Posts Tagged ‘ceo bonuses’
by stuartbramhall in Challenging the Corporate Media, The Global Economic Crisis
(This is the last of four posts debunking the myths we are told about the global economic crisis.)
The Solution to the $100 Trillion Global Debt
There seems to be broad agreement among both classical corporate economists and latter day non-corporate ones that the $100 trillion global debt is suffocating the world economy. The large amount of debt banks carry on their books severely restricts their ability to issue loans for the business creation and expansion needed to create jobs. At the same time consumers, who are losing jobs or taking wage cuts aren’t spending money. Because of massive drop in consumer demand, corporations are finding other uses for their record profits (CEO bonuses, for example), rather than reinvesting them in new factories or retail outlets.
Where the two economic schools part ways concerns the solution. Externalizing costs (getting someone else to pay for your messes) is a basic pillar of classical, corporate economics. In the case of the global economic system, the investment bankers who crashed the system through greed, fraud and speculation want the middle class, youth and the poor to pay for their recklessness. Although mainstream economists like Ben Bernanke agree that debt reduction and austerity cuts aren’t enough, they refuse to officially endorse “monetization” as part of the solution. This is why he calls it something else (QE1, QE2 and QE3 – which are short for quantitative easing) and fudges on the true amount of monetization that is occurring.
Ending Debt-Based Money, Perpetual Growth and Ecosystem Destruction
On the other side, most latter day, non-corporate economists (for example Ellen Brown, Steve Keen, Deirdre Kent, Thomas Greco, among others) call for an end to our debt-based monetary system and perpetual economic growth, along with a “downsizing” of the economies of the industrialized north in line with dwindling resources and rapid ecosystem destruction. They make a strong case that the citizens of western society are living beyond their means and must drastically reduce consumption if we are to preserve the human species. The problem is figuring out how to get there without creating an intolerable level of human suffering for disadvantaged groups who already struggle to meet basic survival needs. It’s much easier for mainstream corporate economists, who have already decided to reduce the global debt burden on the backs of the middle class and young people, dooming an entire generation to becoming a marginalized underclass. Instead of doing any belt tightening themselves, the richest 1% are using the economic crisis as an excuse to further increase their personal wealth.
Political Reform Must Accompany Economic Reform
Most latter day economists are committed to the principle that belt tightening is only tolerable if it’s shared equally. Here is where a discussion of solutions becomes really hypothetical. There is no political commitment at present for the ruling elite and special interests to share in the belt tightening. Thus true economic reform is highly unlikely so long as corporations continue to dominate and control western democracy. It’s possible that the economic and ecological crises that confront humankind can’t be fixed without dismantling capitalism itself, a view shared by many in the Occupy movement. Others believe that channels can be created (through constitutional conventions or similar national gatherings) to establish direct participatory democracy and make corporations accountable to local, state and national authorities. It’s only in this context that economic and monetary reform has any chance of being meaningful and effective.
Latter Day Economic Solutions to the Debt Crisis
Where there is political will to share the costs equally for fixing the financial crisis, there are a handful of straightforward policies which, if enacted together, could restore global economic stability within months. Monetization (the good kind, where new government money is spent directly into the economy) is a major one, but monetization alone is unlikely to be enough. As the Germans proved after World War I and the Japanese after their 1989 economic collapse, monetization on its own only makes things worse – either by creating hyperinflation or increasing debt and deflation. To work, monetization must be enacted simultaneously with other basic debt reduction measures:
- The world’s largest economy (the US) must end their deficit spending, not via austerity cuts, which will only worsen deflation, but by ending their deficit-financed wars in the Middle East, by repealing Bush’s tax cuts on upper income earners and by ending corporate tax avoidance.
- Western governments must require global investment banks to forgive the sovereign debt they have incurred by assuming their toxic assets (their valueless subprime mortgages). This extent of forgiveness (referred to as a “hair cut”) must depend on the amount of toxic debt these banks still carry on their books and the extent to which they have insured themselves via Credit Default Swaps. Banks that become insolvent in this process need to be nationalized, rather than bailed out, to protect depositors and pension funds with major bank shareholdings.
- World governments must agree to end the private debt-based monetary system and replace the Federal Reserve and other central banks with national government banks charged with creating and controlling the money supply.
- These national banks must be allowed to create and spend new money directly into the economy to create jobs and repair infrastructure, make good on depositors savings and repay unforgiven debt. To avoid incurring new debt (i.e. borrowing from future generations), it may be necessary to temporarily increase taxes (above 39% in the US) for millionaires and billionaires.
by stuartbramhall in Challenging the Corporate Media, The Global Economic Crisis
Unpacking the Lies About the Global Economic Crisis
The only way I know to make sense of the global economic crisis is to assume, until proven otherwise, that everything Obama, Wall Street and the corporate media tell us is a lie. The economy Obama, US Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke talk about is a fairy tale economy that bears no relation whatsoever to the real world. Obama, like most western leaders, makes out that the only way to “solve” the debt crisis is to tighten our belts and destroy the middle class via wage, benefit and social service cuts. Thanks to Occupy Wall Street, a new narrative about the global economic crisis is beginning to emerge. And guess what? Once people get a clear view of what’s really happening, they come up with some fairly straightforward and painless solutions.
Debunking the Fairy Tale:
1. When is a recession not a recession? When it’s really a deflationary spiral.
Obama, Geithner and Bernanke keep telling us the current economic crisis is a recession. It’s not. It’s really a deflationary spiral. Deflation occurs when the economy shrinks. The US economy is clearly shrinking, just as Japan’s economy has been doing for the last two decades. The US economy lost 10-20% of its real wealth in 2008 and has been slowly shrinking ever since. Consumer buying power continues to decrease, as Americans deplete their savings and experience wage and benefit cuts. Because people have less money to purchase goods and services, many businesses have quit producing them. This, in turn, causes more workers to be laid off.
2. The $15 trillion debt taxpayers owe Goldman Sachs represents money that never existed.
Contrary to popular misconception, the government doesn’t issue money. Nearly all new money is created by private banks when they generate new loans. On average, most banks have only 7% of a new loan on deposit. The rest is generated out of thin air. This system started in 1694 when the Bank of England was created.
The federal government came by most of the $15 trillion debt by assuming – through bailouts and other means – the toxic debts of Goldman and other major investment banks that were technically bankrupt. They were bankrupt either because they created trillions of dollars of toxic debt (out of thin air) for subprime mortgages for over-valued real estate that could never be repaid or because they bought this toxic debt from other banks.
The other thing Obama doesn’t tell us is that there are still billions of dollars of toxic debt (again created out of thin air) that have yet to be “written down” (i.e. “written off” and subtracted from banks’ balance sheets). In 2008, trillions of dollars of toxic debt that wasn’t transferred to government balance sheets was hidden by transferring it from weak banks to strong ones.
Any business other than a bank would be required to deduct these bad debts from their earnings in their annual report, when they declare their profits, dividends and CEO bonuses. Yet to protect the stock prices of bank prices, Obama colludes with Wall Street to keep this information secret.
3. The true unemployment figure.
Obama et al tell us the US unemployment rate is 9%. It’s not. According to the Department of Labor’s own numbers, it’s really about 16% – or one out of every six Americans.
4. The US economy is in recovery – NOT!
For more than a year Obama and the corporate media assured us we were in recovery. They seem to have backed away from that claim in the last few months. There has been no improvement whatsoever in the unemployment numbers, and bankruptcies and foreclosures continue to increase.
5. The difference between $700 billion and $12.5 trillion.
The figure we were giving for bank and corporate bail-outs was $700 billion. The true number, as Senator Bernie Saunders exposed last December, was $12.5 trillion. The Federal Reserve (using taxpayer money from the US Treasury) also issued billions of dollars in bail-out loans to foreign banks and car makers and individuals (including my New Zealand bank Westpac – thanks for that). All this was done unconstitutionally without Congressional knowledge or approval. In fact, the Obama administration filed suit in federal court to prevent the release of these records and lost.
6. The US economy is shrinking, rather than growing.
Obama et al tell us that the US economy has started growing again, by a little under 1% per year. It hasn’t. According to John Williams at www.shadowstats.com, it actually shrank by 1% in 2010
7. It will be easy to repay global debt once growth returns to pre-2007 levels. Yeah right.
Repaying the $100 trillion debt (total of all government, household, bank and business debt) when total global wealth is $60 trillion is mathematically impossible, even with global growth levels of 3%.
Global growth (even with the help of China and India) will never return to pre-2007 levels because of fossil fuel scarcity and the skyrocketing cost of energy. The availability of cheap fossil fuels has allowed mankind a century of undreamed of scientific and technological innovation. All the cheap oil and natural gas is gone now. It’s clear from Obama’s energy policy, which promotes and supports risky high cost extraction techniques (deep sea oil drilling, fracking and tar sand extraction), that the President knows this. He just chooses not to share this information with the American public.
8. Guess who’s printing money?
Obama et al tell us that “monetization,” in which the federal government prints new money to pay for jobs and infrastructure programs, is out of the question because all “monetization” does is create hyperinflation. This is actually two lies rolled into one. Not only does “monetization” not create hyperinflation, but the Federal Reserve has been secretly “monetizing” the US debt since 2009. As of last week the Federal Reserve (using newly created US Treasury dollars), not China, is the biggest holder of US debt. See http://cnsnews.com/news/article/fed-now-largest-owner-us-gov-t-debt-surpassing-china
To be continued.
by stuartbramhall in Challenging the Corporate Media, Mind Control and Disinformation
It’s extremely heartening to see Americans’ fascination with the popular uprisings in the Middle East, as well as speculation across the blogosphere about the potential to replicate them in the US. Massive turnout in Madison and other state capitals is very promising, as American workers realize that they are being punished for the Wall Street greed and criminality that caused the 2008 economic collapse. Many are beginning to believe, as I do, that Wall Street and their friends in government are deliberately using the “economic crisis” to justify a massive attack on the working class.
It seems a logical conclusion, given the soaring profits and stock prices of Wall Street banks and corporations, especially as they are the result of major cost cutting in the form of mass lay-offs and wage cuts. American workers would have to be pretty gullible not to question why they are being told to tighten their belts, while the banksters responsible for the collapse are rewarded with a $12.5 trillion secret bailout (see http://stuartbramhall.aegauthorblogs.com/2011/02/13/bernie-sanders-filibuster-and-the-secret-12-5-trillion-bailout/), billions of dollars of CEO bonuses and tax cuts. In addition to facing the likelihood that some of us (including many young people under 24) are now permanently unemployed and/or homeless, the rest of us face another round of lay-offs and home foreclosures, wage freezes/cuts, longer work hours, increased workloads, Social Security and Medicare cuts, a likely increase in the retirement age to 70 – and even more cuts in critical public services, including school, library and clinic closures; police and teacher lay-offs; and cutbacks in street lighting and road and bridge repairs.
The Way Forward
As we have seen in Europe, the Middle East and Europe, the only effective way to challenge these relentless attacks against working people is by banding together to fight them through industrial action and mass mobilization. As individuals waiting for politicians to do the right thing, we are relatively powerless. However, as we have seen in Egypt, Tunisia and elsewhere, when we join together in unions and grassroots organizations, we have the ability to bring society to a standstill.
Over the past three decades, such collective action has been rare in the US. Americans from all walks of life seem much more reluctant than their foreign counterparts to join any community groups or organizations, much less unions or political causes. This, I believe, relates mainly to constant bombardment (mainly via the media) with highly sophisticated political messaging prompting Americans to see themselves as “consumers” rather than engaged citizens in a participatory democracy. Wall Street has created an entire industry – the public relations industry – around creating such messages. Ironically, as the late Alex Carey describes in Taking the Risk Out of Democracy (http://www.hartford-hwp.com/archives/25/006.html), the original purpose of “pubic relations” was to discredit union organizing and strikes and simultaneously undermine strong pro-worker sentiment among the American public.
Below are five of the most paralyzing anti-organizing messages Americans are bombarded with on a daily basis:
- Being labeled or associated with “workers,” “working class,” or “unions” equates with low social status. In the US, everyone with a full time job is automatically “middle class.” Because class differences have been abolished in the US, there is no need to join or form unions or to protest and/or strike.
- The US and Americans are distinctly different (better) than the rest of the world. Living standards are (and will always be) much better for American workers than for their foreign counterparts.
- The proper role of workers under fifty is supporting and/or looking after their families. If they strike or protest, their children will suffer.
- There is no alternative – corporations, corporate controlled government and the corporate controlled media are all too powerful for ordinary people to bring about change. Organizing is pointless because we are helpless to change anything.
- Politics and economics are too complicated for ordinary people to understand. We can only make things better by going shopping and taking care of our families while we wait for honest, wise political leaders to get us out of this mess.
To be continued.