Posts Tagged ‘geithner’
by stuartbramhall in The Global Economic Crisis
(This is the second of three posts about the new female head of the IMF, which the business press is promoting as a “rock star of the economic world,” and how we are being deceived about the real cause of the debt crisis in Europe)
LaGarde isn’t without her critics. Former IMF chief economist Simon Johnson refers to her appointment as “the fox guarding the henhouse.” Johnson, like former World Bank economist Joseph Stiglitz, has been highly critical of the extreme concentration of financial power and it threat it poses to the global economy. This is the subject of Johnson’s recent book, Thirteen Bankers.
His criticism of Lagarde centers mainly around her proposal to solve the Eurozone crisis by issuing additional loans to the debt-ridden “peripheral” countries (Greece, Spain, Italy, Portugal and Belgium). He maintains all these countries are looking at a default scenario, no matter how much money she throws at them. He accuses her of allowing EU leaders to use the IMF to conceal from their voters major flaws in the Eurozone structure. As senior fellow at a Washington DC think tank (Peterson Institute for International Economics), he also complains about the unfairness of expecting US taxpayers to bail out the IMF for the sake of European politicians (and Greeks “who don’t like to pay taxes”). In Johnson’s view instead of spending other peoples’ money on struggling Eurozone economies, the EU leadership needs to make some a hard choice – either to integrate their fiscal systems in a way that allows fiscal transfers to poorer, less competitive countries or to create two tiers of Eurozone participation, in which only tier 1 members can borrow from the European Central Bank (see Fox in the Hen House and The Problem with Christine Lagarde).
Lagarde Gets the Cold Shoulder
Thus far Johnson’s arguments have resonated with most non-European IMF member countries. Despite Lagarde’s aggressive lobbying to add $500 billion to the IMF rescue fund at the recent G20 meeting in Mexico City, she came away empty handed. Most finance ministers agreed with the response U.S. Treasury Secretary Timothy Geithner gave her: the European Central Bank must make a much larger financial commitment before asking other G20 countries for money.
Fairy Tale Economics
The problem with mainstream media coverage, which continues to center around Lagarde and her “rock star” persona is that it’s a fairy tale – complete with a fairy princess – that never addresses the fundamental structural problems that caused the world economic collapse. The corporate media never tells the back story – that fossil fuel scarcity has effectively ended global economic growth, rendering our debt-based monetary system totally inoperable. Richard Heinberg convincingly makes the case that Peak Oil is responsible for the global economic collapse in his 2011 The End of Growth, as do Richard Douthwaite David Korowicz, Chris Vernon and Tom Konrad in Fleeing Vesuvius (see Will Peak Oil Spell the End of Capitalism?).
Instead the mainstream media promotes cruel myths about lazy Greek workers and a Greek middle class that refuses to pay taxes, obscuring the reality that much of the Greek debt is likely “odious; and fraudulently incurred.
To be continued.
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
In the last few weeks I have been perusing “free market” libertarian websites and blogs in an effort to get my head around similarities and differences between free market and left libertarians.
The first major stumbling block I have encountered is an alarming tendency by many right wing libertarians to appeal to common popular prejudices that certain groups of people – by virtue of their ethnicity, religion, nationality or other group identifiers – pose an inherent threat to the freedoms or integrity of the American people.
We tend to hear this type of illogical thinking mainly from right wing talk show hosts, such as Glenn Beck and Rush Limbaugh – usually in reference to Moslems or immigrants (of either Hispanic or Arabic origin) – or feminists. However Sarah Palin, who as the former governor as Alaska should know better, comes out with a lot of this stuff, too. In fact she persists in portraying Obama as a Muslim Marxist extremist – which is utter nonsense – because she knows it will inflame the passions of some of her right wing supporters.
The Guilt by Association Fallacy
In formal logic, this is referred to as an argumentum ad hominem fallacy. The “guilt by association” diatribes I find most troublesome are the anti-Semitic ones. This surprises me because I naively believed that we closed this ugly chapter of American history – namely the campaign by auto magnate Henry Ford and his followers to stereotype Jews as devious, money grubbing and power hungry – decades ago. I simply cannot fathom that any serious 21st century commentator would argue from the premise that someone’s Jewish background or religion would motivate them to undermine or circumvent the American democratic process to further specific causes or projects.
In the spirit of open mindedness, I am willing to entertain there is a group of Jewish bankers somewhere conspiring against our democratic form of government. What I object to is arguing from the assumption that such a group exists. I would expect all serious commentators to offer proof that there is something innate in a person’s Jewish heritage or religion that makes them do such things – just as I expect to see proof when scientists argue whether or not climate change is genuine.
Deflecting Blame from the Real Culprits
Unfortunately I am finding quite a lot of right wing websites and blogs that blame (without evidence) a faceless elite of international Jewish bankers for plotting to undermine or circumvent American democracy. Once again I believe this is an effort to distract disgruntled Americans from the real culprits – real life banks such as Morgan Stanley, Goldman Sachs, Bank of America and the dozens of others who have just made off with trillions of dollars of taxpayer money – and the federal regulators (who also have names like Geithner, Paulson and Bernanke ) who are directly responsible for the bail-out and a decision not to investigate or prosecute overtly criminal behavior.
A good example is a recent paper on Rense.com about a (mainly Jewish) conspiracy to develop the atomic bomb and deploy it against Japan as part of their 5,000 year desire to rule the entire world. It’s a rather complicated conspiracy. In addition to the Rothchilds and their various banking lackeys, it also involves the Masons (President Truman was a Masonic organizer), Yale’s secretive Skull and Bones group (although all the Skull and Bones alumni I know of are Protestant) and J.P. Morgan and the Rand Corporation (which have no Jewish connections at all that I know of). Even more concerning is that the article has been reprinted on a number of right wing and libertarian websites.
Libertarian bloggers who pander to this kind of superstition and prejudice need to be challenged loudly and regularly. Besides making serious discussion of the real issues impossible, it also gives the pro-Israel lobby license to accuse human rights advocates of anti-Semitism when they try address serious legal and human rights issues connected with the Israeli occupation of Palestine.