Wednesday, July 27, 2011
'It Was Always Understood the European System Would Evolve'
In retrospect, it is clear that a currency union requires more attention to the fiscal policies of the member countries than was provided. More central capacities to address issues in the financial system are required. But it was always understood that the European system would evolve through events and that is what is happening right now.
all the political support in the world will not repeal the laws of economic arithmetic
In any financial crisis, one has to recognize that just vengeance and the promotion of confidence are likely to be in conflict. As a consequence, just as in successful wars, there are unintended victims. In successful bailouts or support programs, there are unintended and maybe even unjust beneficiaries. So the challenge is not simply a moral one of assuring that those who have invested badly are punished. It is also a deeply pragmatic one of assuring that financial systems continue to function, that economies continue to grow and that stability is maintained. Policy judgments have to reflect both those imperatives. And usually it will be found that the desire to punish is insufficient as a primary guide to policy.
I think responsible Italian officials would be the first to recognize that there is a great deal that Italy has to address in both the fiscal and the structural area, given the difficulties the Italian economy has had in generating growth over the last 15 years. At the same time, most market observers would agree that there are elements of psychology, of crowd following and of contagion reflected in developments in Italy over the last several months.
There is also no question that, given the magnitude of Germany's current trade surplus and the strength its economy has derived from exports, the country has benefited enormously from the workings of European integration. It is important to remember that not every nation can run a trade surplus, and that if some nations adjust towards surpluses in order to repay debts, it will be necessary for other nations to reduce their surpluses or even move into deficit. And so I think it will be important for the German economy in particular to recognize that the counterpart of less deficit and borrowing in some parts of Europe will have to be less surplus and saving in other parts of Europe.
I do not think there is any question the United States has serious structural fiscal problems that have to be addressed. But I find the behavior of those who take the creditworthiness of the country as hostage to drive a particular political agenda almost inexplicable. It is one thing to not pay debts because you cannot. It is a very different thing to not pay taxes because you default. Those who want to accept a default are taking great risks with the potential consequences for American borrowing costs or the integrity of the American financial institutions.
The US federal tax collections are in the 15 percent range, an historical low -- even as health care costs trend upwards, even as the society ages, even as the world becomes a more dangerous place, even as debt burdens and the associated interest payments have increased. So, I cannot imagine how to sustain any form of fiscal responsibility at the current tax levels. Government revenues need to increase.
The decision seven months ago to extend the tax cuts for two more years was a very appropriate one in the context of an economy that has not yet reached the kind of escape philosophy from recession that one hopes for. Without this decision to provide for payroll tax cuts, which was part of the deal, we might well have been looking at the risk of a double-dip recession now.
We need to be focused on the jobs deficit as much as we need to be focused on the budget deficit. For the immediate future, our concern has to be strengthening demand. By strengthening demand you improve the performance of the economy and put people back to work.
Summers: There should be a set of measures, whether you want to call it a stimulus or not. I think the payroll tax cuts should be extended. I believe the country is badly underinvesting in infrastructure. We are not even spending enough on basic road maintenance. There is also a strong case for state and local governments to be supported at a time when many kids only go to school four days a week because the funding for schools has been cut so much.
Summers: That is a huge problem. The longer this downturn is perpetuated, people who are out of work for a long time might lose their qualifications. And it is a huge structural problem: A statistical projection based on current trends suggests that one out every five men between the age of 25 and 54 will be out of work after the economy has fully recovered.
Summers: In some sectors and parts of the country we have indeed seen significant reductions of labor costs. Ultimately, it is important to remember that the vast majority of new jobs in the American economy will be in the service sector. Manufacturing is going through the transition agriculture went through in the 1920s in which tremendous technological progress is enabling us to produce more and more with less and less people.
Summers: History suggests that presidents are re-elected not on the basis of any single indicator but on the basis of whether the country feels that they have a strategy and are taking the nation forward. Voters also compare that vision with that of the opposition. And while it may be hard for some people to see, President Obama averted what could have been a financial catastrophe and he has moved the country forward in important areas like health care or financial reform. So I am very optimistic about his political future.
Summers: There is no question that the ability of those with ideas to leverage them in the global economy has contributed to rising inequality and to more rewards for those very few with great ideas -- and less progress for average Americans. That is why universal access to health care or creating a financial system that protects middle class Americans have been such important achievements of the Obama administration.
the failure to be looked upon has been the choice of avoiding
to maintain the most of the debt within the community
due to the conflict of interest
of the "silent coup" of politicians in the pockets of bankers
it is a "clear" example of why the European monetary policy is a circus
a lack of consolidated community certificates has done the rest of the disaster
some of the central banks are privatized, so the "cancer"
has reached the control at the core
the effect of a Jekyll island like approach over a country is visible in the US
the privatization of central banks in Europe should have never been permitted
but maybe this scenario will be understood in Europe too one of this days
all is missing to make it clear is the assassination of a king or a president
unless the scalpel cuts the cancer before we get there
economics is not a science
economy at the best is empirical knowledge
and at the worse is a cult like religion,
not surprisingly as deceptive and as bloody
the laws of economics did not count so much on the sinking titanic
they only counted some place else, in wall street
the laws of economics tell us that five other planets should solve our problem
for now, the number is due to grow in future demand and "growth"
but looking is not like finding them on time
the same way as "believing" is not the same as "knowing"
that is really the point
in a close system nothing is made out of thin air
while it is in economics, physics don't have central bankers
that multiply fishes like the carpenter, and charge the public cow in inflation
if currency is a measure of value of energy
if the total energy in the system is decreasing
and the demand is increasing
in a "normal" situation
the "market" would adjust the balance
but "peak oil" is not a "normal situation"
(by the way we thank all the US institutions for 30 years of lies on peak oil)
somebody has defined peak oil
as "the most severe challenge humanity ever faced since being on earth"
"growing" is not a "reasonable" option any longer
the surgeon does not help the patient cancer "growing", or at least he should not
it is time to overhaul the financial system
it will collapse by itself before 2020 anyhow
unless some fool figures out a planetary genocide
the financial system, a Sumeria heritage, is obsolete
it has been proven that governments
use the financial system against their employers, "the citizens"
it has been proven that governments have facilitated predatory racketeering practices
it has been proven that banks defrauded governments and people worldwide
those are at this time historical "facts" not opinions
"and more may emerge"
Italy is locked in a godly middle age social model
with two political equally godly lines of opinions,
one a godly social-Bolshevist racket the other a godly social-Nazi racket
controlled from the top by the godly Christos-socialism racket
of the white guy king with a skirt and his holy secret societies and holy banks
changes in Italy only happen with wars and revolutions
and only last for a couple of decades
until the corruption of the forgiven sinners
allied with the forgivers of the sins
re-establish their racket
I am not very optimistic about Italy sort
it most likely will be civil war, more or less holy
Italy is some sort of a more solid holy south american republic
but still with the same type of arbitrary regime of an African one
pretty much ran as the cauliflower racket in Brecht work
everybody would expect that Germany would have wanted to pursue
a type of monetary policy to keep the Euro low enough
to keep them and their debtors competitive
everybody would expect that Germany would want to re-engineer
a Europe modeled after a resource based society and a logistic system
Germany still carries the sores of the cost of the reunification
and has a social democratic conscience
where in America "anything social is evil"
now in a projected spiraling world economy of the post peak oil age
there seems to be no reason to cut what works, and introduce what does not
just to please the wall street and indigenous banksters
given the above, some of the resistance on keeping low the Euro is quite surprising
but guess the bankers "interest" is "more equal" than the one of the people
we will see
the fiscal problem in the US is really serious
but it is nothing else than the result of brainwashing the people of falsities
at the end you get back what you put in it
that's how we have now a youth of criminals
and one third of active population unemployed or under-employed
all "planned", the racket of the police state needs more customers
for the oil lobby appropriation contracts
the racket of the bank cartel, needs more "interest"
if 55% City Bank practice in Buenos Aires is not usury, what is usury ?
this is the only place in the presumably "civilized" word
where they let people die in a street
because they can't afford paying wall street the skim on medical profits
this is the only place in the planet where the more you make
and the least you pay in taxes, all that "legally"
US corporations practically pay zero taxes
and collect a skim of fiscal revenue kickbacks under different other schemes
"free market" my donkey, this is legalized dumping, with "plausible denial'
this is not the only place, the other is Italy
where "tax exempt" religions are a business racket financed by the taxpayer
nice, so "godly"
cut grandma pension, give three trillions more to the banksters
and keep all this church and bonuses parasites fat
a picture worth a thousand words
possibly in the last 30 years no single job has been created by tax cuts
but the actor created ten thousand mac Donald jobs
now we may create another ten thousand minimum wage call center jobs
so far tax cuts produced slavery, illegal immigration and unemployment
think US in the 80s, think now, please feel free to compare
the only thing tax cuts have created in 30 years is "misery"
"taking the creditworthiness of the country as hostage"
seems more and more similar to a known past stance of "plausible denial"
is either a farce, where both agree and are just pretending
or something serious is cooking
and after the events of the last decade
a Latin America style "coup" in the US would not be "so" surprising
or it could be both,
just that one of the two does not know about the real intention of the other
we shall see soon
infrastructure is critical
especially dams, bridges and levies
but the most "puzzling" part of it, is the number of "useless" projects announced
versus the evident lack of needed maintenance of existing infrastructure
that points in my humble opinion to the usual "corporate welfare"
of the society of socialization of the losses and privatization of the profits
nothing new should be built in infrastructure
if not to replace something collapsed, for ten years
in 2020 then the picture will be more clear
what it needs to be done, is do the right maintenance to the existing infrastructure
Katrina anybody ?
here an example, instead, of "smart projects"
building new airports after peak oil would sound stupid even to a toddler
is quite amazing it does not in the political circles
nobody notices airlines scrapping the bottom of the barrel
and going bankrupt like mushrooms ? we need more airports ? , please
the issue of jobs is not approached in the right direction either
it seems that the generalized tendency is to apply theories of a system in expansion
to a system in contraction, does not seem to work that way
the historical reality is that before the age of oil
in the age of steam engines
95% of the population was self employed
but nobody seems to see a discrepancy there
why not encourage self employment with micro grants
why not build on local artisan tribal economy
instead than indoctrinate people for months in resume compilation classes
"mobility" is not guaranteed
we are constantly running at 30 days from the bottom of the barrel
a sunk supertanker can shake the country'
why not give incentive's for telecommuting ?
while giant egos are commonly found on this market
"mobility" is not guaranteed, as said
we are constantly running at 30 days from the bottom of the barrel
the answer seems obscure, maybe because most of the public sector
has no clue of business enterprise ? not sure again ...
not sure if he may be reelected, nor if somebody like Clinton would make it
Kucinich is smart, but unless he converts to Presbyterian
nobody will take him seriously in the nation under god
they are still complaining they elected Kennedy 50 years ago
apparently the Kristian Koalition Klan does not like Catholics either
maybe Bernie Sanders should run
in the facts, the Obama administration has pretty much solved
less than half of half the promises
on the other hands has given a taste to the public of some benefits
in a progressive vision of society
in a time where the disillusion has taken over
and the credibility of the political class is close to zero
in the mind of the electorate
in the world of the blind the one who has one eye is the king
doubt one of the current republican may be elected
so far have not seen one with common sense
the only exception probably Romney
a couple of people with ideas like McCain and Ron Paul are not going anywhere
their party friends would rather vote democrat than for them
Romney is probably the only one to have a chance
unless the party forces him to run with some wacko bimbo
then he is not going anywhere either
-the administration can be credited with saving the country economy and rating
from another 1929 stock exchange crash if some of this "budget play games republicans" were there, nobody knows
-the administration can be credited with one fifth of an health reform there is a long way to go
-the administration can be credited with going in a democratic direction
in pursuing civil liberties actions, such as resolving the issue of
sex preferences in the military and rights of de facto relations
-the administration has failed in restoring the habeas corpus, which itself
is a violation of its constitutional mandate
-the administration has failed in restoring mandatory application of the
Geneva convention, with so endangering and exposing its military to undue
further risks of torture whereas the international unspoken rule is "reciprocity",
and in so violating also an international treaty it has ratified
-the administration can be credited with introducing stimulus and funding for
improved programs of retraining for the workforce, most likely the partial
and stagnant recovery is a result of such policies
-the administration has failed in containing excessive useless "security" spending and excessive loss of rights of citizens, particularly and specifically permitting warrant-less violations of citizens rights
-the administration can be credited with one fifth of success in the attempt
to close an opium war in Afghanistan, that benefits nobody but Wall Street banking drug money laundering cartel
-the administration has failed in containing the financial corruption that is legally purchasing government officials and running the country unchallenged even if conflict of interest should not permit so, the supreme court sentence in this regard is very very worrisome, the principles of separation of powers and checks and balances, went out the door to help the big money in the pockets of wall street banksters racket.
and here we are talking of a democratic administration that comparably is more right wing than the Eisenhower administration, in a time where the GOP is ranging anywhere between the right wing of the Nazi party and the progressive Ayatollahs of Iran.
all together, the democratic administration has revealed to be the less worse of the two options, possibly trying avoiding a civil war and a dictatorship the GOP seems to be looking for with all means, as said in the world of the blind the one who has one eye is the king
so my personal conclusion, once more, is pinch your nose and vote democrat
Subscribe to Posts [Atom]