Showing posts with label soverign debt. Show all posts
Showing posts with label soverign debt. Show all posts
Monday, March 25, 2013
Tuesday, March 19, 2013
Cyprus, Not Cyprus Hill Negro
One of the biggest news stories thus far this year was the lead for the top German, Brazilian, Japanese and Canadian Television outlets yesterday. But it wasn’t even mentioned in the coverage offered by CNN, MSNBC, ABC, NBC, or CBS via broadcast transcripts - Thank God for PBS and the News Hour. Not to mention it wasn’t even a consideration for coverage by African American political bloggers or news sites the likes of The Root, Politics 365, The Grio or any other supposedly political news site that is run by African Americans. And no it was not Obama in Israel, or even Keisha Cole and Beyoncé, rather the run on banks and the EU central bank actions toward Cyprus. Yes to get a bailout from the EU central banks, banks are now allowed to take money from all bank depositors – all account holders.
Now I know many will ask, “What does that have to do with me?” A lot and I will attempt to explain, albeit I know it may be difficult for many of us African Americans because we never heard of Cyprus, care or know anything of substance of the Eurozone sovereign debt crisis, but such should be no excuse. See what happened over the weekend was that a group of EZ leaders, the IMF and newly elected President of the small tiny island nation with a GDP the size of Vermont and a population the size of Philly agreed to force all with a bank account to pay for the government’s debt. Banking will never be the same if folk can’t truth the banks and since they saw the could not trust the EZ, IMF, government or the banks they started to pull all of their loot out.
The EU central bank has decided it is ok for big banks to take money out of the accounts of private citizens to pay for the debt of the nation they live in. Yes that right, all under the guise of it being a new tax. Strange since taxes are the result of political legislation and don’t go back in time. But that is what the large global banks are doing and if they can do it there, they can do it here, especially given Obama’s lack of gonads to even prosecute and arrest bankers. Even funnier is the fact that the banks are taking citizen’s money for loans they did not ask for and which the banks knew were bad when they first made them to the government of Cyprus.
Some will naively assert that this is America and it could or would never happen here. Surprise, it already did, last year from on one of Obama’s boys – John Corzine of MF Global. What Corzine did is what we see happening in Cyprus right now – bank account seizure (tax) without due process. Thus if it can be done in Cyprus, it can and will be done in Italy, Ireland, Spain and even the US, since bankers who caused all this nonsense with the assistance of inept politicians will seek to get all their money from the governments they loaned them too to cover for the losses of the zillions of different complex papers they created that were then and still today basically worthless. But yawl don’t hear me though.
What I can say factually that the present Administration, as the last four are for the fat cat bankers and Corporations. Just from IRS statistics we know that Americans who made over $10 million in 2010 paid on average just under 24 percent of their incomes in federal income tax, less than a third what they paid in 1950. The end result of such practices is a nation in which corporate profits are setting records while typical workers continue to make less than they earned a dozen years ago.
You know there was a time in America when corporations paid taxes, no lie. Not anymore even when corporate profits have been growing per annum at a 20 percent rate. In fact, to find a year when corporations were grabbing as great a share of America’s income as they’re grabbing now, you have to go back to 1950. In the 1950s, the average corporation paid about 40 percent in annual taxes. Now, major U.S. corporations actually pay about 12 percent in taxes. Why is this a problem, well in 2011, the Institute for Policy Studies, reported that 25 major U.S. corporations paid their CEOs more than they paid in corporate income taxes. Then we can take alook at NYC where the number of residents receiving food stamps has more than doubled over the past decade under Mayor Bloomberg, according to data released yesterday. Now, 1.8 million receive food stamps, a jump from 800,000 in 2002, and the Independent Budget Office data show. But 99 percent of African Americans believe their President even against fact that the economy is growing. But it is not and if I accept this premise, then for whom is it growing?
First, the cost of the federally funded food-stamp program in places like NYC had increased dramatically to $3.4 billion from $1.28 billion over the past decade. True, naysayers and other average minded individuals reinforced on reciting lessor proofs proffered my weaker minds will say look at the stock market. I in return will say, yes, look at it. But reality notes that the stock market is not a good indicator for overall wealth of Americans since the average American’s wealth, if the happen to own a home is in home equity - real estate values are still down about $5.5 trillion from their peak. So thinking about, one has to ask if the economy is doing so well and growing as Obama describes it, why then are there over 47 million people in the US living on food assistance to survive. It is clear they are not obtaining any of this wealth.
The Administration is a top down machine just like it was when Ronald Reagan started the practice. The US financial system is buttressed upon trillions of dollars of bailouts and loan that result in risky speculation that cause incessantly financial bubble after bubble. Right now, America has a record debt of $16.7 trillion. Maybe this is why as quiet as it is kept, the Obama administration has announced policy that would allow the federal government to control private citizens 401k’s.
Plainly stated, it is the cost of borrowing money itself that has bankrupted Cyprus, Ireland, Spain and Italy. As it stands, the same shackles of debt are on the hands and feet of the US government and if history is any indication from a policy purview, the people will be the ones to pay for it. But this won’t happen, Obama and Bernanke are so stuck on “quantitative easing” even when they know and data points out that it is just making money out of thin air via a few zeroes added via a computer monitor. The problem with today’s QE is that it has put money into the pockets of the big fat Wall Street bankers but not into the pockets of consumers. What we need is to obviate all public debt and let the corporations and banks keep theirs and let them deal with the problems they created as a fiat. I mean default on the public debt has worked in Iceland, Argentina, Ecuador, and Russia, among other countries.
But this all makes too much sense and we African Americans don’t care if it hasn’t anything to do with a singer, rapper or anything on television. I know, I asked all of my classes if they were aware of what had occurred in Cyprus: one asked, “you mean Cyprus Hill?” I responded “naw Negro, Cyprus not Cyprus Hill.” Cyprus may be just the start. As of now banks are closed until Thursday. We will have to see if a run starts again and if it spreads to other European nations, if so, it could be the end of the Eurozone and the start of the demise of the US economy. Two years ago we exported 40 percent of our goods and services, this year its down to 21 percent.
Now I know many will ask, “What does that have to do with me?” A lot and I will attempt to explain, albeit I know it may be difficult for many of us African Americans because we never heard of Cyprus, care or know anything of substance of the Eurozone sovereign debt crisis, but such should be no excuse. See what happened over the weekend was that a group of EZ leaders, the IMF and newly elected President of the small tiny island nation with a GDP the size of Vermont and a population the size of Philly agreed to force all with a bank account to pay for the government’s debt. Banking will never be the same if folk can’t truth the banks and since they saw the could not trust the EZ, IMF, government or the banks they started to pull all of their loot out.
The EU central bank has decided it is ok for big banks to take money out of the accounts of private citizens to pay for the debt of the nation they live in. Yes that right, all under the guise of it being a new tax. Strange since taxes are the result of political legislation and don’t go back in time. But that is what the large global banks are doing and if they can do it there, they can do it here, especially given Obama’s lack of gonads to even prosecute and arrest bankers. Even funnier is the fact that the banks are taking citizen’s money for loans they did not ask for and which the banks knew were bad when they first made them to the government of Cyprus.
Some will naively assert that this is America and it could or would never happen here. Surprise, it already did, last year from on one of Obama’s boys – John Corzine of MF Global. What Corzine did is what we see happening in Cyprus right now – bank account seizure (tax) without due process. Thus if it can be done in Cyprus, it can and will be done in Italy, Ireland, Spain and even the US, since bankers who caused all this nonsense with the assistance of inept politicians will seek to get all their money from the governments they loaned them too to cover for the losses of the zillions of different complex papers they created that were then and still today basically worthless. But yawl don’t hear me though.
What I can say factually that the present Administration, as the last four are for the fat cat bankers and Corporations. Just from IRS statistics we know that Americans who made over $10 million in 2010 paid on average just under 24 percent of their incomes in federal income tax, less than a third what they paid in 1950. The end result of such practices is a nation in which corporate profits are setting records while typical workers continue to make less than they earned a dozen years ago.
You know there was a time in America when corporations paid taxes, no lie. Not anymore even when corporate profits have been growing per annum at a 20 percent rate. In fact, to find a year when corporations were grabbing as great a share of America’s income as they’re grabbing now, you have to go back to 1950. In the 1950s, the average corporation paid about 40 percent in annual taxes. Now, major U.S. corporations actually pay about 12 percent in taxes. Why is this a problem, well in 2011, the Institute for Policy Studies, reported that 25 major U.S. corporations paid their CEOs more than they paid in corporate income taxes. Then we can take alook at NYC where the number of residents receiving food stamps has more than doubled over the past decade under Mayor Bloomberg, according to data released yesterday. Now, 1.8 million receive food stamps, a jump from 800,000 in 2002, and the Independent Budget Office data show. But 99 percent of African Americans believe their President even against fact that the economy is growing. But it is not and if I accept this premise, then for whom is it growing?
First, the cost of the federally funded food-stamp program in places like NYC had increased dramatically to $3.4 billion from $1.28 billion over the past decade. True, naysayers and other average minded individuals reinforced on reciting lessor proofs proffered my weaker minds will say look at the stock market. I in return will say, yes, look at it. But reality notes that the stock market is not a good indicator for overall wealth of Americans since the average American’s wealth, if the happen to own a home is in home equity - real estate values are still down about $5.5 trillion from their peak. So thinking about, one has to ask if the economy is doing so well and growing as Obama describes it, why then are there over 47 million people in the US living on food assistance to survive. It is clear they are not obtaining any of this wealth.
The Administration is a top down machine just like it was when Ronald Reagan started the practice. The US financial system is buttressed upon trillions of dollars of bailouts and loan that result in risky speculation that cause incessantly financial bubble after bubble. Right now, America has a record debt of $16.7 trillion. Maybe this is why as quiet as it is kept, the Obama administration has announced policy that would allow the federal government to control private citizens 401k’s.
Plainly stated, it is the cost of borrowing money itself that has bankrupted Cyprus, Ireland, Spain and Italy. As it stands, the same shackles of debt are on the hands and feet of the US government and if history is any indication from a policy purview, the people will be the ones to pay for it. But this won’t happen, Obama and Bernanke are so stuck on “quantitative easing” even when they know and data points out that it is just making money out of thin air via a few zeroes added via a computer monitor. The problem with today’s QE is that it has put money into the pockets of the big fat Wall Street bankers but not into the pockets of consumers. What we need is to obviate all public debt and let the corporations and banks keep theirs and let them deal with the problems they created as a fiat. I mean default on the public debt has worked in Iceland, Argentina, Ecuador, and Russia, among other countries.
But this all makes too much sense and we African Americans don’t care if it hasn’t anything to do with a singer, rapper or anything on television. I know, I asked all of my classes if they were aware of what had occurred in Cyprus: one asked, “you mean Cyprus Hill?” I responded “naw Negro, Cyprus not Cyprus Hill.” Cyprus may be just the start. As of now banks are closed until Thursday. We will have to see if a run starts again and if it spreads to other European nations, if so, it could be the end of the Eurozone and the start of the demise of the US economy. Two years ago we exported 40 percent of our goods and services, this year its down to 21 percent.
Saturday, May 26, 2012
Americas Biggest Threat is EU Sovereign Debt Crisis not AQAP
Okay, let’s get this straight. The injudicious assertions promulgated by political charlatans on both side of the aisle from Obama to Congressman Pete King that America’s biggest threat is Al-Qaeda in the Arabian Peninsula (AQAP) is feculent and even dangerous. In fact it is one of the more laughable jactitations proffered in recent years and ranks up there with the suggestion that America is post racial or even that Wall Street and bankers can police themselves.
In all honesty as things stand, our truest and greatest threat is the European sovereign debt crisis and not AQAP. For if the chickens come home to roost, with the chickens in this sense being the massive preponderance of complex financial papers and derivatives which remain without a true valuation and inundate the global markets, and then we have seen nothing yet in terms of an economic disaster. I means, what is on the horizon given what is occurring in Europe will eventually demonstrate that what we just observed with regards to JP Morgan-Chase and Jamie Dimon will be just a drop in the bucket.
But instead of giving these events the attention they require and other signals, we ignore them and continue with the small thinking myopia that would advance a HR 1838 (SWAP Bailout prevention act) on behalf of Republicans or an HR 3784 (Gas Price Spike Act of 2012) on behalf of democrats. The later under whom oil companies would be taxed at 50 to 100 percent of profits considered to be “higher than reasonable.” Notwithstanding other distractions whether they concern Mayor Cory Booker’s honest remarks on private equity or the President’s personal opinion on Gay marriage, we never seem to be able to be proactive and address real issues that will impact us more than any of the aforementioned in aggregate. Fact is gay marriage has nothing to do with the US economy.
Bush, followed by the Obama administration implemented massive stimulus that were supposed to grow the economy. Unfortunately, such has not manifested as promised by the Keynesian heavy Obama administration (Bernanke, Krugman and Geithner). By their logic the stimulus was supposed to produce fifty cents of GDP growth for each stimulus dollar spent. But instead of increasing demand, what they did was discourage consumption and investment by the private sector who based on all this talk, rightly expect tax hikes to finance the stimulus somewhere in the near future. Meaning that the stimulus actually squashed the private sector spending it desired to stimulate.
This may be why the CBO recently reported the strong chance of another US recession soon. They predict that the US Gross National Product (GNP) will go negative for at least two quarters, given the eventually ending of the Bush-era tax cuts, the extended unemployment benefits and the reinstating of the payroll tax rates back up to 6.2 percent from the current 4.2 percent. Not to mention that currently as a nation, we spend $454 billion a year just on servicing the interest on the national debt alone. Then there is the $642 billion spent on the Afghan war (this includes this year’s spending). And let us not forget the 11 million homeowners in the US with in excess of $800 billion in negative home equity and you can see we have a big mess on our hands without the problems in Europe.
Starting with the UK, Britain's economy contracted by 0.3% in the first three months of the year, faster than previously thought and pushing the country back into another recession and equal to the contraction in the final quarter of 2011. There has been no growth in manufacturing after last year the sector exhibited a decline of 0.7% at the end of last year. The banking sector also contracted, by 0.3%.
Then there is Spain. Spanish banks’ total loan losses could range between 218 billion and 260 billion Euros, more than currently expected according to estimates by the Institute of International Finance. Spain’s economy is in critical condition with 23 percent unemployment of which 50% percent of those under 24 are unemployed (the highest in the Euro zone) and they are in their second recession in three years. Spain like all the European countries that, are uncompetitive, have high debt levels, and suffer from low savings rates that have been forced down in over the past years - one reason why 16 Spanish banks were downgraded last week.
The picture is no different in Italy which saw Moody‘s Investors Service downgraded 26 Italian banks, where investors are needing higher risk premiums for Italian government bonds on fears that Greece may exit from the euro zone and Italy's double-dip recession . Italy is estimated to have around a debt burden of €1.9 trillion (about 120% the size of its gross domestic product), or about $2.6 trillion).
The reality is all the talking and meeting the G-8 just did wasn’t anything and empty, especially without Russia, China and India in attendance. The realty remains that a Greek euro exit is very likely and soon. If it happens, it will lead to runs on Spanish and Italian banks, resulting in the need for the ECB to give out more credit to keep the banks from collapsing. Although the problem isn’t Greece, but rather that Greek banks are undercapitalized. Greece cannot crash the euro zone alone. But what it may lead to can. If they are allowed to leave, the same will be true for other nations.
Ben Bernanke and the politicians in Washington DC speak of recovery while the facts do not support their contention. Not to forget that it was in the 1970s when Nixon enabled bankers and politicians to print and spend at liberty without a gold standard and a Central Bank owned by Wall Street, has resulted in a country where the cost of things we need to live have risen at twice the rate of our income. The truth is that real inflation has been running 5% higher than government is telling us in spite of what is being told to us by Paul Krugman (that there are very few Americans living on a fixed income being impacted by Bernanke’s zero interest rate policy). Maybe this is why Krugman is so bent on another $4 trillion of debt and a debt to GDP ratio of 130% to get our economy back on track.
Yes we cannot see the big picture. The real US deficit is over $5 trillion. Our policy appears to ignore Greece, which after several years of austerity are in the midst of a full-blown economic depression and they still do not have a balanced budget. The Greek economy has contracted by 8.5 percent over the past 12 months and the unemployment rate in Greece is up to 21.8 percent, is already experiencing a depression that will only get worse. If or when they leave, investor confidence in the euro zone will be damaged forever. Already as a nation America has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
Europe is our largest trading partner, especially as it pertains to exports. Yet our efforts are all over the place. Paul Ryan supposed spending cuts really only slow spending to 3 percent annually while Obama increases spending 4.5 percent a year in his budget. No to mention that like the EU zone banks who are undercapitalized and heavily burden with the uncertainty of how much banks actually hold in bad assets, and the potential need for the government to bail them out at the expense of a bigger debt burden, the same is true for US banks.
Economic growth is stalled both in Europe and in America plus there seems to be a lack of concern here and little if any coordination between the EU and US. None of the nations including the US are recalibrating either fiscal or monetary policy which is a must. Reform not stimulus is the answer if we look at the real world examples here and abroad. Both the ECB and Federal Reserve seem to focus on the nations and not the banks and the Obama administration has only tackled the issue from a short term perspective. So what there is a newly revealed Al Qaeda video that calls on followers to launch cyber attacks on Western targets that has Sens. Susan Collins and Joe Lieberman, chairman of the Senate Homeland Security Committee, scared, it aint got nothing on what’s going on across the pond and is nowhere as big a threat to America as the European sovereign debt crisis. Take note you heard it here first.
In all honesty as things stand, our truest and greatest threat is the European sovereign debt crisis and not AQAP. For if the chickens come home to roost, with the chickens in this sense being the massive preponderance of complex financial papers and derivatives which remain without a true valuation and inundate the global markets, and then we have seen nothing yet in terms of an economic disaster. I means, what is on the horizon given what is occurring in Europe will eventually demonstrate that what we just observed with regards to JP Morgan-Chase and Jamie Dimon will be just a drop in the bucket.
But instead of giving these events the attention they require and other signals, we ignore them and continue with the small thinking myopia that would advance a HR 1838 (SWAP Bailout prevention act) on behalf of Republicans or an HR 3784 (Gas Price Spike Act of 2012) on behalf of democrats. The later under whom oil companies would be taxed at 50 to 100 percent of profits considered to be “higher than reasonable.” Notwithstanding other distractions whether they concern Mayor Cory Booker’s honest remarks on private equity or the President’s personal opinion on Gay marriage, we never seem to be able to be proactive and address real issues that will impact us more than any of the aforementioned in aggregate. Fact is gay marriage has nothing to do with the US economy.
Bush, followed by the Obama administration implemented massive stimulus that were supposed to grow the economy. Unfortunately, such has not manifested as promised by the Keynesian heavy Obama administration (Bernanke, Krugman and Geithner). By their logic the stimulus was supposed to produce fifty cents of GDP growth for each stimulus dollar spent. But instead of increasing demand, what they did was discourage consumption and investment by the private sector who based on all this talk, rightly expect tax hikes to finance the stimulus somewhere in the near future. Meaning that the stimulus actually squashed the private sector spending it desired to stimulate.
This may be why the CBO recently reported the strong chance of another US recession soon. They predict that the US Gross National Product (GNP) will go negative for at least two quarters, given the eventually ending of the Bush-era tax cuts, the extended unemployment benefits and the reinstating of the payroll tax rates back up to 6.2 percent from the current 4.2 percent. Not to mention that currently as a nation, we spend $454 billion a year just on servicing the interest on the national debt alone. Then there is the $642 billion spent on the Afghan war (this includes this year’s spending). And let us not forget the 11 million homeowners in the US with in excess of $800 billion in negative home equity and you can see we have a big mess on our hands without the problems in Europe.
Starting with the UK, Britain's economy contracted by 0.3% in the first three months of the year, faster than previously thought and pushing the country back into another recession and equal to the contraction in the final quarter of 2011. There has been no growth in manufacturing after last year the sector exhibited a decline of 0.7% at the end of last year. The banking sector also contracted, by 0.3%.
Then there is Spain. Spanish banks’ total loan losses could range between 218 billion and 260 billion Euros, more than currently expected according to estimates by the Institute of International Finance. Spain’s economy is in critical condition with 23 percent unemployment of which 50% percent of those under 24 are unemployed (the highest in the Euro zone) and they are in their second recession in three years. Spain like all the European countries that, are uncompetitive, have high debt levels, and suffer from low savings rates that have been forced down in over the past years - one reason why 16 Spanish banks were downgraded last week.
The picture is no different in Italy which saw Moody‘s Investors Service downgraded 26 Italian banks, where investors are needing higher risk premiums for Italian government bonds on fears that Greece may exit from the euro zone and Italy's double-dip recession . Italy is estimated to have around a debt burden of €1.9 trillion (about 120% the size of its gross domestic product), or about $2.6 trillion).
The reality is all the talking and meeting the G-8 just did wasn’t anything and empty, especially without Russia, China and India in attendance. The realty remains that a Greek euro exit is very likely and soon. If it happens, it will lead to runs on Spanish and Italian banks, resulting in the need for the ECB to give out more credit to keep the banks from collapsing. Although the problem isn’t Greece, but rather that Greek banks are undercapitalized. Greece cannot crash the euro zone alone. But what it may lead to can. If they are allowed to leave, the same will be true for other nations.
Ben Bernanke and the politicians in Washington DC speak of recovery while the facts do not support their contention. Not to forget that it was in the 1970s when Nixon enabled bankers and politicians to print and spend at liberty without a gold standard and a Central Bank owned by Wall Street, has resulted in a country where the cost of things we need to live have risen at twice the rate of our income. The truth is that real inflation has been running 5% higher than government is telling us in spite of what is being told to us by Paul Krugman (that there are very few Americans living on a fixed income being impacted by Bernanke’s zero interest rate policy). Maybe this is why Krugman is so bent on another $4 trillion of debt and a debt to GDP ratio of 130% to get our economy back on track.
Yes we cannot see the big picture. The real US deficit is over $5 trillion. Our policy appears to ignore Greece, which after several years of austerity are in the midst of a full-blown economic depression and they still do not have a balanced budget. The Greek economy has contracted by 8.5 percent over the past 12 months and the unemployment rate in Greece is up to 21.8 percent, is already experiencing a depression that will only get worse. If or when they leave, investor confidence in the euro zone will be damaged forever. Already as a nation America has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
Europe is our largest trading partner, especially as it pertains to exports. Yet our efforts are all over the place. Paul Ryan supposed spending cuts really only slow spending to 3 percent annually while Obama increases spending 4.5 percent a year in his budget. No to mention that like the EU zone banks who are undercapitalized and heavily burden with the uncertainty of how much banks actually hold in bad assets, and the potential need for the government to bail them out at the expense of a bigger debt burden, the same is true for US banks.
Economic growth is stalled both in Europe and in America plus there seems to be a lack of concern here and little if any coordination between the EU and US. None of the nations including the US are recalibrating either fiscal or monetary policy which is a must. Reform not stimulus is the answer if we look at the real world examples here and abroad. Both the ECB and Federal Reserve seem to focus on the nations and not the banks and the Obama administration has only tackled the issue from a short term perspective. So what there is a newly revealed Al Qaeda video that calls on followers to launch cyber attacks on Western targets that has Sens. Susan Collins and Joe Lieberman, chairman of the Senate Homeland Security Committee, scared, it aint got nothing on what’s going on across the pond and is nowhere as big a threat to America as the European sovereign debt crisis. Take note you heard it here first.
Thursday, December 08, 2011
Wednesday, November 02, 2011
The Kim Kardashian syndrome: Why Black Pay More Attention to Things That Don't Impact Them
If you go on twitter, it is not hard to see what the average African American considers as being important and worthy of incessant attention. For that matter, you can also conclude why our community is in the state of disarray it is. Our main problem is not being able to prioritize in concert with not engaging our attention to matters and issues that proffer a tangible importance to our collective well-being.
Ask the average black person about Greece, they may something about the debt crisis, but for certain than can speak astutely on its salads and yogurt more than the former. Comparatively speaking, ask them about anything related to Ms. Kim and some self-absorbed rapper, they can speak with the prowess of a Neil Bohr on particle physics. This is what I find problematic: occupation with mundane idiocy that has nothing to do with our lives than those issues that do.We question why African American youth perform poorly academically in schools, or why we don’t attend or graduate from college, yet we never examine our own practices and behaviors that contribute to this. For the way I see it, it would be more reasonable to attend to the high unemployment and dropout rates in our community than what one Kardashian does.
This is not funny. Now I know folks say I am piling up on my folk, but really I am not. It reminds me of the student I may have in my class who is failing who ask for extra credit at the last moment just to pass, when they did not attend class regularly, did not do their homework and didn’t take notes when they did attend.This is equally comparable to our inattention to the Greek and European sovereign debt crisis.
For the record, the European sovereign debt crisis has more of an impact on our daily lives and is way more import than any Kardashian or Jay-Z and Kanye West Concert will ever have. Sadly I want to believe people know this, but more sadly is the possibility that they do and still don’t care to inform themselves on the topic as much as they do the Kardashian or the concert.
To put is plainly. Countries like Greek and Ireland and Spain and Italy have borrowed lots of money from other European nations and now they cannot pay it back. America in turn does business, a lot of business with Europe so it will hit us making us suffer just as bad also. Why because the global market is based on the massive buying, selling and trading of bonds and complex papers that bundle risk that folks buy in hopes of making a profit.
As it stands, short term Greek Bonds are still trading at 50% or less of face value. With the new Plan announced last Thursday the Bonds should be trading close to, or at par but they won’t since the Greek Prime Minister just announced that he will place acceptance of the Eurozone bailout up for a popular vote. A vote many Greek citizens equal to blackmail.
If they refuse, it means Greece and Germany will not agree to the conditions of the new Plan and that Greece won’t get an 8 billion-euro payment in mid-November that would most likely run out during January that would leave the government with no funds to function. This is not a good look for American citizens. And seeing that more than 60 percent of Greek citizens do not desire a bailout, and that G20 leaders are trying to get China to drop some loot to help folk out if all goes to ####.
Greek Prime Minister Papandreou, whose PASOK party has pushed sweeping austerity measures through parliament while protesters rally in the streets, has asked for major budget cuts. Now Italy Bonds are trading at the largest spread between Germany bonds in history because of the exposure contained by the major banks of Europe. Shares in France's Society General tumbled 17 percent and Credit Agricole was down almost 12.5 percent.
We can see the impact right here just by looking at MF Global Holdings Ltd. Like other major US banks, the folks who run these massive pension and hedge funds have provided most of the wealth of banks via negative rates of interest that guarantee their liabilities, and that in effect bailed them out unconditionally with our invested money. This means as Greece goes so do all of the other debtor nations, like the US. The more we ignore the importance of these events in Europe, our large indebted and over leveraged economy accomplished by our propensity for investing in financial instrument widely used by speculators to discredit government bonds, and undermine the country's weakening creditworthiness like credit default swap (CDS)., the more danger we are in.
The end result may be a freeze in the credit markets, similar to what we saw after the collapse of Lehman Brothers. Consequently, it will also result in a net-negative impact on the job creation reducing the ability of U.S. manufacturers to sell their goods in Europe. This will give European manufacturers a significant pricing advantage over US manufactures because of the decline in the exchange rate. Thus a weaker European economy means reduce demand for U.S. exports, because with no disposable income, European consumers will not be able to buy autos, appliances and other goods.
So the significance of the Greek sovereign debt crisis has a large impact on the average American citizen.Yet still, it seems that what happens to Kim Kardashian is more important to most African Americans than the aforementioned. I do not know why but I would like to call this the Kim Kardashian syndrome – the reason why black folk attend and care more about things that do not impact them than things that do.
Ask the average black person about Greece, they may something about the debt crisis, but for certain than can speak astutely on its salads and yogurt more than the former. Comparatively speaking, ask them about anything related to Ms. Kim and some self-absorbed rapper, they can speak with the prowess of a Neil Bohr on particle physics. This is what I find problematic: occupation with mundane idiocy that has nothing to do with our lives than those issues that do.We question why African American youth perform poorly academically in schools, or why we don’t attend or graduate from college, yet we never examine our own practices and behaviors that contribute to this. For the way I see it, it would be more reasonable to attend to the high unemployment and dropout rates in our community than what one Kardashian does.
This is not funny. Now I know folks say I am piling up on my folk, but really I am not. It reminds me of the student I may have in my class who is failing who ask for extra credit at the last moment just to pass, when they did not attend class regularly, did not do their homework and didn’t take notes when they did attend.This is equally comparable to our inattention to the Greek and European sovereign debt crisis.
For the record, the European sovereign debt crisis has more of an impact on our daily lives and is way more import than any Kardashian or Jay-Z and Kanye West Concert will ever have. Sadly I want to believe people know this, but more sadly is the possibility that they do and still don’t care to inform themselves on the topic as much as they do the Kardashian or the concert.
To put is plainly. Countries like Greek and Ireland and Spain and Italy have borrowed lots of money from other European nations and now they cannot pay it back. America in turn does business, a lot of business with Europe so it will hit us making us suffer just as bad also. Why because the global market is based on the massive buying, selling and trading of bonds and complex papers that bundle risk that folks buy in hopes of making a profit.
As it stands, short term Greek Bonds are still trading at 50% or less of face value. With the new Plan announced last Thursday the Bonds should be trading close to, or at par but they won’t since the Greek Prime Minister just announced that he will place acceptance of the Eurozone bailout up for a popular vote. A vote many Greek citizens equal to blackmail.
If they refuse, it means Greece and Germany will not agree to the conditions of the new Plan and that Greece won’t get an 8 billion-euro payment in mid-November that would most likely run out during January that would leave the government with no funds to function. This is not a good look for American citizens. And seeing that more than 60 percent of Greek citizens do not desire a bailout, and that G20 leaders are trying to get China to drop some loot to help folk out if all goes to ####.
Greek Prime Minister Papandreou, whose PASOK party has pushed sweeping austerity measures through parliament while protesters rally in the streets, has asked for major budget cuts. Now Italy Bonds are trading at the largest spread between Germany bonds in history because of the exposure contained by the major banks of Europe. Shares in France's Society General tumbled 17 percent and Credit Agricole was down almost 12.5 percent.
We can see the impact right here just by looking at MF Global Holdings Ltd. Like other major US banks, the folks who run these massive pension and hedge funds have provided most of the wealth of banks via negative rates of interest that guarantee their liabilities, and that in effect bailed them out unconditionally with our invested money. This means as Greece goes so do all of the other debtor nations, like the US. The more we ignore the importance of these events in Europe, our large indebted and over leveraged economy accomplished by our propensity for investing in financial instrument widely used by speculators to discredit government bonds, and undermine the country's weakening creditworthiness like credit default swap (CDS)., the more danger we are in.
The end result may be a freeze in the credit markets, similar to what we saw after the collapse of Lehman Brothers. Consequently, it will also result in a net-negative impact on the job creation reducing the ability of U.S. manufacturers to sell their goods in Europe. This will give European manufacturers a significant pricing advantage over US manufactures because of the decline in the exchange rate. Thus a weaker European economy means reduce demand for U.S. exports, because with no disposable income, European consumers will not be able to buy autos, appliances and other goods.
So the significance of the Greek sovereign debt crisis has a large impact on the average American citizen.Yet still, it seems that what happens to Kim Kardashian is more important to most African Americans than the aforementioned. I do not know why but I would like to call this the Kim Kardashian syndrome – the reason why black folk attend and care more about things that do not impact them than things that do.
Friday, October 07, 2011
Monday, September 05, 2011
Humpty Dumpty Economics
I have come to accept that all the King’s horses and all the King’s men cannot rebuild and grow the US economy with the approaches being considered currently and the inability for adults occupying the political grounds within the beltway to accept the common groundwork that they work for the people, not themselves, corporation or K Street lobbyist. All that has been proposed or ignored, whether by the President or the congress misses the point completely, avoids a historical context for understand and is rooted on feculent assumptions.For starters we cannot deal with our soverign debt issues until we recognize the need to obviate the massive credit contraction we are expericing.se in point, it is a fact that the top five percent of the people in the US with respect to income account for nearly 40 percent of all US consumer spending. Just imagine if the annual salary of the top one percent is above $700,000, this group includes individuals earning more than $500,000 and up yearly. Coupled with the recent news that no, zero jobs were created in August and the prior months numbers were revised to show lower job creation, it is no way possible for any of the suggestion proffered by the Congress or Obama can work to create jobs without addressing the massive gap in consumption between the rich and poor, in particular if demand (more specifically lack of demand) is why there is minimal job growth. Now there are some who say Obama saved the country from a depression with his stimulus, but in 
fact it resulted in 2 million jobs vacated from the system, since the money went to the folks who already had money and desired to save it, or it went to those from foreign countries who currently own our debt and subsequently spent that money abroad and not here to create jobs.
Obama’s effort, even if more stimulus is introduced, will not produce any jobs. Likewise, the Republicans, who say they do not desire excessive regulations and want lower taxes, will not create jobs either, if history is any indication of what such policies evince. One reason is because over the past twenty years, household debt grew by more than thirty percent. Namely because of the lack of regulations proposed by the GOP for large corporations and Wall Street especially. Second, growing the economy, by reducing taxes for the top 2 percent while sales and payroll taxes for the masses continue to increase, will mean less money in the pocket of the average American, thus keeping consumer demand as it is or lowering it. Math shows us that US workers fortunate to be employed have increased in productivity, yet compensation and hourly wages have stagnated, not matching this productivity. Why, because just as prior to the great depression as it stands now, the majority of the wealth was in the hands of the top five percent. As Robert Reich notes in his book “Aftershock: the next economy and America’s Future” the top earners in the share of the nation’s total income reached their highest levels in 1928 and 2007 – both two years before major economic depressions. And Yes Virginia, a double dip recession as a kind way to say a depression.
Both Obama and the congress need to accept these facts. Obama needs to recognize big corporations are no longer singularly loyal to the US – they are global and have global interest. Republicans need to understand that deregulation places short-term profit gains over long-term economic. But I doubt if they will, seeing that House Majority Leader Eric Cantor wants to stop rules that regulate deadly mercury emissions and toxic coal ash from power plants suggesting that such regulations kill jobs (he fails to speak of the public health risk and loss of human life). I published a list four years ago that would grow the economy and create jobs, but what do I know, I just study history and do math.
I just wonder why places like India, China and Germany can do what we can’t – grow the economy and create jobs and increase earnings. German economic growth has outpaced the US for the past 15 years. Over the same period they have increased annual pay close to 30 percent while ours has increased almost 6 percent over the past fifteen years. The top 1 percent only takes 11 percent of the nation’s total income. Oh that’s right, they value education more, just as the other countries, and consistently out pace us in math and science aptitude, just as 26 other nations around the world.
Yes Obama has the second worse record to job creation of all US presidents, ranking only above Herbert Hoover. Yes, our attention deficit disorder having republican dominated congress seems to display the inability to comprehend that cutting taxes is not correlated to a decrease in the ratio of revenue to GDP. Not to forget a Treasury secretary who said the US credit rating would never be lowered, we have incompetence all around the nation’s capital.
Our economy suffers because in 2008 the chickens came home to roost – with no regulations, Wall Street, Banks and multi-national corporations were allowed to deal complex papers with unknown values like mortgage backed securities, which gave banks extra capital to enrich themselves by selling the same debt based securities of unknown value around the world. Simply because oligarch, people with great economic power and influence on politicians, republican and democrat equally, make the rules defining American economic policy to benefit themselves and ignore 95 percent of the nation. It not happen stance that The poorest 50% of all Americans now control just 2.5% of all the wealth in this country, or that the wealthiest 1% of all Americans now own over 50% of all the stocks and bonds.
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