NY Times and My Greek Debt Crisis Timeline
06/29/2015, Pago Pago, American Samoa
December 2009 Credit ratings agencies downgrade Greece on fears that it could default on its debt.
May 2010 Europe and Greece reach a $146 billion rescue package, conditional on austerity measures. Some economists say the required cuts could kill the patient.
October 2011 Banks agree to take a 50 percent loss on the face value of their Greek debt.
January 2015 Greek voters choose an anti-austerity party. Alexis Tsipras becomes prime minister.
May 2015 Greece quells fears of an imminent default, authorizing a big loan payment to the I.M.F.
June 2015 Greece defers a series of debt payments until the end of the month.
June 2015 Creditors and IMF make new and austere creditor demands
June 2015 Negotiations collapse
June 2015 EU cuts off Greek continuing bail out monies after collapse
June 2015 Greek closes down its banks, stock exchange and imposes capital controls. Greek ATM withdrawals limited to 60 Euros
June 2015 Greece simultaneously calls a referendum on whether to accept creditor/IMF austerity demands or in effect leave the EU or the Euro
June 2015 Too late, creditors and IMF agree to compromise their austerity demands
How and Why the Economy Has Become Much More Finacialized
06/29/2015, Pago Pago, American Samoa
It is well known that the US economy has become much more financialized. Less well known is what that means and why it has occurred. Financialization refers to the developments attending efforts to reduce all value that is exchanged between a buyer and seller of anything (whether tangible or intangible, future or present pr, etc.) down to expressions in some forms of financial instruments. A farmer no longer has simply bought or rented his neighbor's plow orally, he acquired an unconditional title or recorded lease agreement to the flow. A lawyer or perhaps a notary became involved.
As part of the process, investment bankers and others learned that exchanges could be disaggregated into their sub-component parts so the plow sale agreement could be broken down to include, for example, the right to receive the interest on the plow payments, the right to receive the principal payments on the plow, and perhaps a third party would agree, for a premium payment, to assume the risk of the buyers default on interest, principal or both. All of these are derivative contracts, that is , agreements deriving from the original sale agreement, but most often when we think of derivatives we think of risk assuming agreements, risk of default on interest payments and/or on principal payments. Two third party agreements are possible here. Of course, fees are incurred for doing this additional work. That is how the financial industry makes its money. They have an incentive to financialize.
Then of course, as the derivative agreements are made more standardized and uniform in type, the financial industry has been able to create markets to buy and sell such agreements, complete with brokers, information exchanges, clearing mechanisms and employees to attend to those efforts. One can see, by this explanation, how we had "lift off" of the financialization process as a natural extension of financial intermediation, but more is involved as well.
I submit that the Fed's prolonged zero interest rate policy has pushed the prices of financial instruments up by reducing the internal discount rates for carrying costs and present valuing with the expected result that, as the relative price of anything rises, so will the amount or quantity of it supplied in the relevant markets.. In other words, the Fed's zero bound policy here has significantly increased financialization of the US economy. High priced and multiple financial instruments can more readily bear the cost of greater or increased financial intermediation than verbal farmer plow agreements. In significant part, I believe, the Fed has hugely increased the financialization of the US economy, building, to be sure, on other causal factors as well. Most economist and other people do not understand this or realize what has occurred here. And I doubt the Fed does either.
As a result, financialization activity and its remuneration have risen hugely as a percentage of GDP. The problem with financialization, as economist Michael Hudson has explained, is "that the financial sector's receipts are not turned into fixed capital formation to increase output. They build up increasingly on the opposite side of the balance sheet, as new loans, that is, debts and new claims on society's output and income." Not a good result at all, I submit. Think of the analogy of leeches on productive effort and capital. The Fed has not helped here at all, but is instead a major culprit.
Economic Prospects For Instability in the US Economic System
06/29/2015, Pago Pago, American Samoa
Those who focus on such things, include one entire Facebook website of which I was a member until they decided I looked at and wrote about too much else, should regularly read the minutes of the joint meetings of the Federal Open Market Committee (FOMC) and the Board of Governors of the Federal Reserve System The Fed does pay attention now to such considerations. Indeed, in their meeting minutes for April 29, 2015, the Board observed --
"The staff provided its latest report on potential risks to financial stability. A number of factors appeared to limit the vulnerability of the U.S. financial system to adverse shocks. Leverage in the banking system remained relatively low, and increases in household debt stayed modest and continued to be associated primarily with borrowers with strong credit scores. However, some indicators suggested that valuations remained stretched for some asset classes. An estimate of the expected real return on equities moved down, reflecting an increase in stock prices and downward revisions to forecasts of corporate earnings, and corporate bond spreads declined somewhat. The staff also noted changes in the structure of some fixed-income markets that could increase volatility. In addition, the staff discussed the risks to financial stability associated with the possibility of substantial unanticipated changes in longer-term U.S. interest rates, including the scope for a sharp increase in such rates to affect financial conditions in emerging market economies. A number of other risks were noted, including geopolitical tensions and the potential for an increase in financial strains related to the negotiations between Greece and its official creditors."
The points I found of particular interest were 1) the Fed's awareness stocks are overvalued relative to earnings forecasts, 2) its recognition it has little control over long term interest rates, especially in light of economic debt problems in developing nations and 3) its uncertainty about whether there will be a Grexit and what the impact of that event might be. I think the Fed is slightly 1) and 3) and not properly up to speed here. There was no discussion at all about how 3) might impact 1). The Fed needs to study Minsky much more. They are all to much neo-classically trained and there are relationships and problems they overlook.
Republican Cuckoos Take Flight Over Court's Gay Ruling
06/27/2015, Pago Pago, American Samoa
The Supreme Court has decided Gays can marry just like heterosexuals. Republicans are upset, to say the least. Scalia, in the dissenting minority, fumed, Thomas searched for some analogy to slavery, Insanitormium called for open defiance of the law, and the ever-daft Huckabee claimed the decision was tantamount to overruling God or the laws of gravity.
Oddly enough Wisconsin Gov. Scott Walker had one the better but totally irrelevant comments on the ruling: "I call on the president and all governors to join me in reassuring millions of Americans that the government will not force them to participate in activities that violate their deeply held religious beliefs," he said. "No one wants to live in a country where the government coerces people to act in opposition to their conscience." Irrelevant, I say, because gay marriage was allowed by the Supreme Court, not made mandatory.
And these are the creatures who want to run our country. We are a joke of international proportions. No other advanced nation has so many prominent nut cases.
A Note on Our Macro Economic Mess
06/27/2015, Pago Pago, American Samoa
It is not well understood among economists, nor Fed officials and hardly at all by the general public that the Fed has caused systematic, persistent and massive falsification and distortion of financial and other asset prices at every risk and yield level and throughout all sectors of the financial and other markets.The single most important component in determining prices in all of capitalism is the money market rate of interest. It sets the cost of carry and the present valuing discount rate in all asset markets, and therefore indirectly and largely fixes or determines the bid prices for all debt, equity and derivative securities in the global financial system especially.
By its systematic policies targeting zero interest rates, the Fed has interfered massively and erroneously in all such markets and created huge distortions in and false asset pricing. Lower interest and therefore discount rates cause the present values of the income streams from all assets to be inflated and with that the prices of those assets, resulting in bogus price increases or distortions. Readjustment back toward true market determined interest rates and attending asset prices will inevitably be horrific and disastrous.
To fuel these distortions and false asset prices and do what it thought was necessary to promote private investment and consumption and reach its target inflation rate of 2%, the Fed has provided huge quantities of liquidity to the banking and financial system in the forms of reserves for the banks and open market purchases of non or marginally performing financial assets for the financial system, rendering the balance sheets of its eight private member banks insolvent.
The impacts of these misguided policies, beyond distorting and falsifying financial and other asset prices, has not been to increase private investment or consumption as hoped, but has been to hugely augment the wealth of the wealthy and derivatively income inequality in the US, with the result of much more hoarding of income by the wealthy, negating any real impact on investment or consumption. Even the very rich only have so much time to buy things and those they need are zip. The wealthy have too largely been the beneficiaries of the price distortions and increased liquidity provided by the Fed because they hold most the financial and other assets the prices of which have been bubbled up by the Fed. However, absent significantly increased aggregate demand, the asset price distortions and the attending economic changes and uncertainty, have actually undermined investment expenditure in the US.
The income inequality resulting has left the middle class slightly worse off and disadvantaged in regard to its capacity to consume. The Fed's sustained inability to reach its target rate of 2% inflation, because of threatening deflation, and our bubbled up financial markets show us how precarious our economic position is. Unwinding and readjusting slowly is not something anyone understands how to do well or wants do. Income inequality and hoarding directly relate to the Fed repeatedly missing its inflation target because both compromise on aggregate demand which creates deflationary pressures that cut against the Fed's targeting efforts.
On balance, we sit in a new "lower low" for aggregate demand and will stay there until we have a horrific unwinding of these distortions and bogus prices most likely by a financial crash accompanied as before with a recession or worse.
Obamacare Saved Again
06/25/2015, Pago Pago, American Samoa
The Supreme Court just decided King v. Burwell upholding the Affordable Care Act or Obamacare and protecting millions of people who depend upon the ACA for financial assistance from the federal government for their health insurance. Without that money, most of them would have had to give up coverage altogether. Two of the court's conservatives, Chief Justice John Roberts and Justice Anthony Kennedy, joined the Court's four liberal justices in rejecting the lawsuit in a 6-3 decision. Roberts delivered the opinion for the majority.
The decision is a major defeat for the mean-spirited conservative jerks who brought the suit and the three worst conservative Justices on the Court. I am ashamed to say that, like Obama and Kagan, Scalia was also teacher at my law school.
Why Bernie Sanders Is Not a Bolshevik as Conservatives Allege
06/25/2015, Pago Pago, American Samoa
Conservatives are claiming Bernie Sanders is a Bolshevik. But this can't be. The Bolsheviks, led by Lenin and others, believed in forceable seizure of government, national socialism, including central planning, government ownership of all productive capacity, except labor, political oppression of dissident opinion, the rejection of Marxian communism, a political class separate from the workers, etc. Sanders does not come close to believing any of these essential elements of Bolshevism, except for the rejection of Marxian communism.
Sanders does believe in collective solutions for collective problems that private action, even when paralleled, cannot and does not solve. That is only sensible. A key example here is U.S. national health care where parallel private action, with profits as the motivation, requires Americans pay double the cost on average and get overwhelmingly inferior health care outcomes on average (only noteworthy exception is cancer) all relative to the national, health care systems in all other advanced nations on average.
Conservatives believe exclusively in private action for all problems even when it conspicuously fails and does not work. They are ideologically dogmatic about it and blind to the facts. They live in denial and ignorance and call others like Sanders names which are wrong.
Reason, Empathy, Human Action and Anti-intellectualism
06/24/2015, Pago Pago, American Samoa
Reason, empathy and human action are the operative elements of greatest social concern. Whenever reason, empathy or both become disconnected from or irrelevant to human action, we should have concern about untoward social consequences. When reason and empathy are well developed and in full play, human action is much better and more acceptable. These are the key, operative elements.
The most significant factors disconnecting these elements, or separating reason and empathy from human action, are drugs, alcohol, pathological hatreds, mistaken prejudices and discriminations, retardation, uncontrolled anger, and some psychotic conditions. The Roof tabernacle murders involved drugs, pathological hatred and mistaken prejudice, destroying Roof's reasoning and empathy in that context and leading to the actions he took. Most criminal acts entail one or more of these disconnecting factors being involved.
Anti-intellectualism is a different and broader concept. However, it also arises when the foregoing factors intervene to impair reason and compromise empathy in regard to action. But anti-intellectualism also reaches to thoughtless behavior generally, including that governed by convention and habit as well. Thinking things through first hand, before hand and carefully, with full consideration of the interests of others and the likely impacts of our action, is contrary to anti-intellectualism but not the end of it.
When we say Americans are anti-intellectual, what we mean in smaller part is we don't much think about our actions or others in advance. We often just let conventions and habit govern. It also more largely means, independently of proposed action, our interest in matters that don't immediately impact us or our own lives, and our interest in the larger world of ideas around us is atrophied and minimal. Our thinking is limited more toward what we want, within conventional social bounds. Habit and convention can substitute for much thought. That is their role and perceived virtue, but they can also create anti-intellectualism by impeding first hand thought about a broader less immediately range of human action and about the larger world of ideas as well.
Life is better and more interesting by far when it is controlled by focused thought and empathy generally and when habits and conventions are relegated to more minor and routine matters like brushing one's teeth and saying hello to a passer by.. Some conventions can serve us well, but often they can be usefully challenged or modified by better thought and action. The more our interests and thinking reach beyond our immediate lives, beyond habits and conventions and beyond what we need to think about and the more they reach into the realms of ideas, histories and systems of all kinds, including of thought, the less we succumb to the charge of anti-intellectualism.
The Proper Assessment of Obamacare
06/24/2015, Pago Pago, American Samoa
I wrote an article on why so many Americans still oppose Obamacare, but my computer ate it. I have no desire to rewrite it, but have decided to summarize its contents in this second, smaller effort.
About 50% of Americans oppose the ACA and 40% approve. The two interesting aspects of those numbers are they have held constant for some time now and, secondly. the split is along partisan lines, with liberals on the 40% side and conservatives on the other. Inasmuch as there are more liberals than conservatives, the numbers flip tends to be attributed to liberals and independents disliking the ACA because it did not go far enough and make all the health care reforms needed. But the truth is, with its deficiencies, Obamacare is better than that so why are its approval number still so low?
Research shows Americans indiscriminately and strongly tend to blame all of the problems of America's health care system on Obamacare, not really understanding what the ACA does and doesn't do. They blame rising premiums, higher deductibles, greater non-coverage and the like on Obamacare, but the truth is these figures were seriously on the rise before Obamacare. So why the mistaken blame?
The answer is Americans are not very analytically discriminating. They compare the situation, in static regards, to what it was before Obamacare to what it has become since. But that is not the proper comparison. The correct comparison for the ACA is not before and after, but between our situation now and what our situation now would have been without Obamacare. The truth is in that regard the ACA has on balance improved health care matters in America, not hugely, but more than marginally so. The larger truth remains that we pay double for poorer health care and seriously need to get profits and the profit motive out of American health care and have a national, single payor health care system like all the other advanced nations do. We are the silly know-it -all loners here.
Notice also and more generally, because Americans lack judgmental discernment in such areas, they tend to simply align their views with their political party of choice. That is very much the case regarding economic matters, too. They are not able to adequately inform themselves more generally and make proper system-wide judgments. But that is to be expected where the public is most comfortable reading at a sixth grade level. We are a gum smacking, bubble gum bubble popping crowd too little removed from high school with American cinema strongly reflecting our tastes.
Unpopular Observations on Being Fat.
06/21/2015, Pago Pago, American Samoa
We have an obligation to ourselves, arising out of self respect and concern for our own good health, to control our food intake and to keep our bodies sufficiently trim by physical and mental activity of one and another type so as not to become significantly over weight and out of shape. We desecrate ourselves if we do otherwise.
Being too much over weight or obese is a clear sign of such self desecration. It tells the world we do too little and eat too much. It is a badge we wear that declares our lifestyle and says we care too little about ourselves and our health and don't sufficiently appreciate what others think of us. It is a disservice to ourselves. It is a hallmark of a clear lack of self control, especially regarding our eating habits, but also of our unwillingness to physically and mentally do more. Gluttony, one of the seven deadly sins, heralds sloth, another of those sins, as I will explain here. In a way, they are opposite sides of the same coin. More colloquially put, obesity "disrespects ourselves" to use black vernacular. It tells the world who we really are.
Many don't consider these views. They don't think about it or simply don't care. They too much don't give a damn about these matters, how they themselves live or the health consequences of their obesity for their bodies. They compulsively want their food excesses and that is the beginning and the end of it. The resulting obesity of course then works to reduced their physical activity thereby compounding the problem. They yell more and don't do what they should because of the increased bother and work of getting up to talk with others less nearby and of dealing with more remote matters that require direct physical attention. They are therefore induced to become more sloppy in both their thinking and manner by obesity. They rarely consider that their obesity says this much about themselves to others because thinking, like physical work, can burn calories too.
We owe it to ourselves to watch our weight and balance our food or caloric intake to the levels of our physical and mental activity so we do not become fat and afflicted in the attending manners I describe here. Obesity is not a badge we should want to wear willingly, if we think about it. If we do think about it, as I describe here, but cannot fix the problem ourselves, we likely suffer from a compulsive disorder and require mental health assistance for it.
Obama on the Charleston Massacre
06/21/2015, Pago Pago, American Samoa
President Barack Obama responded to the shooting at a historically black church in Charleston, South Carolina, that left nine dead by saying --
"Any death of this sort is a tragedy, any shooting involving multiple victims is a tragedy," he said. "There is something particularly heartbreaking about death happening at a place in which we seek solace and we seek peace. . .
"I've had to make statements like this too many times [In fact, Obama has made statements like this 14 times during his presidency.] Communities have had to endure tragedies like this too many times," he continued. "Once again, innocent people were killed in part because someone who wanted to inflict harm had no trouble getting their hands on a gun . . . We as a country will have to reckon with the fact that this type of mass violence does not happen in other advanced countries."
Just think of America as the land of fruitcakes, nuts and other conservatives and Republicans. The lack of good educations are their hallmarks and what they are most all missing.
Our Oceans Are in Trouble
06/20/2015, Pago Pago, American Samoa
They are being badly over fished. Many stocks are badly compromised and in trouble. The free-rider problem attends all treaty efforts to curb the problem. Cheating on treaties is also a problem. As bad, harbors are loaded with trash which makes its way to sea. Trash vortexes are numerous in our oceans and over burdened with floating trash. When currents go from the surface under water they leave trash which floats in piles on the surface. Plastics are the main problem. Clean up efforts, when they occur tend to be limited to harbors where trash is most visible to many. Ocean clean up efforts are rare, but the piles out there are huge.
Also, acid rain impacts our oceans as well and our oceans ability to absorb more CO2 is declining. Reefs which generate plankton are being damaged and compromised by boat traffic, waste contaminates including CO2 and deep net fishing. Plankton is food, directly or indirectly through other creatures, for most of our fish stocks. Our ocean's ability to refresh and renew itself is being over burdened, but too little international effort is expended to address these problems. Instead, efforts are targeted on compromising protected areas to a greater degree so fishermen can take more fish to keep their yields and margins up and market prices down.
The squabbling among Asian nations over off-shore uninhabited islands is not so much about the islands territories themselves, but about the off-shore fishing rights extending many hundreds of miles off-shore from those islands. That is the real crux of those matters. It is really about who gets the fish. Fishing rights create disputes that raise tensions and can even lead to military skirmishes, if not wars.
Our oceans' prospects are not good. Populations grow and increasingly concentrate in coastal areas. Demand for fish rises. Free-rider problems abound. Cheating is on the rise. Trash and waste dumping increase. Many coastal areas are off-limits or monitored for swimming. Our oceans struggle. We are of too little help. The prognosis is not good or what it could be. The earth is expected to add several additional billions of people to its population over the next several generations. That cannot help. Programs and increased awareness are needed. Efforts are presently too few.
Unusual and Truthful Eloquence
06/19/2015, Pago Pago, American Samoa
Although he has been both lauded and criticized as a military general, there is little historical doubt about his character. In an address before the Southern Historical Society in Atlanta, Georgia in 1874, Benjamin Harvey Hill described Confederate General Robert E. Lee in this way:
"He was a foe without hate; a friend without treachery; a soldier without cruelty; a victor without oppression, and a victim without murmuring. He was a public officer without vices; a private citizen without wrong; a neighbor without reproach; a Christian without hypocrisy, and a man without guile. He was a Caesar, without his ambition; a Frederick, without his tyranny; a Napoleon, without his selfishness, and a Washington, without his reward."
Why Republicans and Conservatives Are in Denial on Racism
06/19/2015, Pago Pago, American Samoa
Dylann Roof, in a rampage, shot 9 blacks in the Emanuel African Methodist Episcopal Church in Charleston, South Carolina--killing all nine-- reportedly as he told black churchgoers, "You rape our women, and you're taking over our country, and you have to go." Fox news, struggling hard, said this wasn't racism; it was an attack on Christianity. No matter that Roof was an avowed white supremacist with patches on his jacket to prove it. But you see, Fox is in conservative Republican denial on the issue of racism. Their lore has it racism no longer exists in America.
But it was just as much fun to watch the Republican presidential candidates duck and dodge the racial issue too, talking about the Charleston black murders, even though the Justice Department has opened a civil rights investigation on the matter.Jeb Bush, Scott Walker, and Marco Rubio tweeted their condolences but side-stepped the racial aspect. Rick Santorum told a New York radio host, "This is one of those situations where you just have to take a step back and say we--you know, you talk about the importance of prayer in this time and we're now seeing assaults on our religious liberty we've never seen before." That was the Fox news pitch. Not racism, but an attack on religion.
Marco Rubio made no mention of the shooting during his speech at today's Faith and Freedom Coalition Conference that also featured Rand Paul and Ted Cruz. Paul talked about the shooting very briefly, but didn't bring up race. "What kind of person goes in a church and shoots nine people?" he said. Both he and Rubio, however, proceeded to spend the lion's share of their remarks talking about the importance of protecting religion in America. But then Paul got closer by giving the matter a Republican slant, saying, "You can be a minority because of the color of your skin--or the shade of your ideology." Victim-hood for Republicans too. Companions in sorrow.
It is an article of faith among Republicans and conservatives that racism in America no longer exists. The conservative justices of the supreme court as much as said so too in striking down the key feature of the Voting Rights Act requiring prior Justice Department approval of voting restrictions in selected mostly southern states. But the racism in America is obvious so why deny it? That is the question.
The best answer I think is they do not want to be seen as coming to the aid of or being sympathetic to a problem primarily of blacks, a group which votes overwhelmingly democratic. Blacks are not their constituents or compatriots. Republicans serve the oligarchy. They don't want to concern themselves with blacks interests or problems. Of course they know racism is a problem in America but for this reason they always want to see incidents of racism that cannot be ignored as something else which affects them as well -- like in this case, an attack on religious freedom.
It is a lizard brained way of dealing with what they perceive as a general area or source of a threat to their way of life and thought.
We Are a Slipping Superpower
06/18/2015, Pago Pago, American Samoa
That is America's lot, currently. We failed and dither in Iraq. We are useless in the disputes surrounding the Sea of China and in the Asian Pacific. We are cranked around and out of shape by a small ally we doggedly help regardless -- namely, Israel. We are useless in Yemen, little better in Syria, where Putin carried the day on chemical weapons, and have a growing gap with the Saudis whose bad behavior we have too long ignored. The ISIS, that the Republican party and Obama created, marches forward against our wishes, significantly unabated. Our last Iraqi war was a disaster. So was our effort in Afghanistan. A resolution in the Ukraine eludes us. China is out maneuvering us in Africa, all as we squabble over the inane stupidity of what happened in Benghazi.
Our foreign policy is a wet noodle. Obama is singularly no good at it. The Republicans are out to lunch and the Democrats don't really care. It is a house of cards in shambles and collapse. The emerging American business model, from Wall Street on down to the latest Facebook scams, is becoming too much just plain vanilla fraud. Law is too much out the window as it is unenforced, except against black kids stealing beer and cigarettes. Others get away with murder.
The only real bright spot beyond our borders that we are involved in is Kerry's effort with Iran and that can still fail notwithstanding the huge effort Kerry and his team have put into it. Hillary never even rose to the challenge as Secretary of State. She was too busy messing with and muddling up her emails.
Our government is getting out muscled by the U.S. private sector, aided by Republicans, as well as out muscled by foreign powers that have conflicting interests. Obama provides insufficient leadership and too much capitulation and joinder to even slow these developments. He doesn't require the Justice Department and especially the SEC to enforce the laws, in part out of political favoritism toward friends and friends of friends and in part out of his own apathy and desire not to rock the boat. As a result, he and we are simply being run over, which started with the death of the antitrust laws. It has been down hill since then. We now have well developed sensibilities atuned toward ignoring laws and how to do that.
We are in a major mess and are failing. American leadership is in collapse.