Some Keynes quotes.
Gold Standard or Gold-Exchange Standard: What’s the Difference?
David Glasner | Economist at the Federal Trade Commission
Over a year ago, and long before he became the mascot for fraught negotiations between Greece and its creditors, Yanis Varoufakis penned a lengthy essay on what might happen should the Greek government decide to stand firm in the face of pressure from Brussels, Frankfurt, and Berlin....
This bait-and-switch was typical of Latin American heads of state during the Washington Consensus era: Neoliberal reforms were quite unpopular with the electorate, so campaigning against them was often a prerequisite to election. However, indebtedness to Western creditors, compounded by political pressure from Washington, left them with little choice but to create investment-friendly policies and to emphasize debt servicing over social service provision.
Ecuador was typical in this regard. Since the 1980s, the country had received dozens of loans from Washington-based international financial institutions - loans that included structural adjustment conditions, such as trade and financial liberalization, spending cuts and privatization of state-owned industries. Moreover, Ecuador relied on the United States for most of its foreign direct investment and depended on US-based importers to buy the bulk of its exports over this period. Indebtedness and economic dependency left Ecuador with little choice but to implement Washington Consensus-type domestic policies.
That Rafael Correa's presidential campaign in 2006 promised a shift away from the Washington Consensus should have surprised no one familiar with bait-and-switch politics in Latin America. The surprise was that he, unlike Bucaram and Gutiérrez, actually followed through on these promises. Much to the chagrin of Washington, the Correa administration has raised taxes, increased social service provision, brought regulatory reforms to the public and private sector and written off much of the country's external debt....Truthout | Op-Ed
Ecuador’s government denounced on Wednesday plans by the country’s right-wing opposition to overthrow the government during protests being held on Thursday. The plans included the blockade of the airports of Quito and Guayaquil, the bridges located on the Colombian (Rumichaca) and Peruvian (Huaquillas) borders, while enclosing the palace of government, said Minister of Interior Jose Serrano in a press conference in the capital. He added that opposition lawmakers Andrés Paéz and Lourdes Tibán coordinated a strategy with former colonel Mario Pazmiño to cause chaos during Thursday’s protests....
They also planned to publish two letters in national newspapers, El Universo and La Hora, and to organise letters against the government to be sent to the Pope Francis seeking to undermine his forthcoming visit. Serrano said the aim “if they were not able to seize power,” was that they “would have created national chaos for the Pope to cancel his visit (…) and maintain an indefinite protest.”....
A wave of opposition protests, initially calling for the ending of new tax laws on the wealthiest, have demanded the ousting of the Correa government with some protests turning violent.
But who are behind these protests and what is their goal? The demonstrations were initially sparked by opposition activists against two proposed laws, one that would tax inheritances and another that would tax capital gains on illegitimate land speculation. As President Rafael Correa has explained, 90 percent of Ecuador's largest companies are held by two percent of the population, and usually ownership over these highly profitable corporations is inherited. Opposition lawmakers, media, activists and businessmen alike, repeatedly argue that both taxes will negatively affect the middle and working classes. Yet these new progressive taxes only hit the wealthiest hardest 2 percent of the population, with the bill proposing a 47.5 percent tax on inheritances from US$849,600 dollars up....
Whatever the initial justification, the demonstrations soon clearly began to call for the “ousting” of President Correa who they describe as a “dictator.” Protesters adopted a black flag, to symbolize their mourning over the supposed “death of democracy.” This has been the slogan of frustrated opposition groups for years now, emerging soon after President Correa took office in 2007 and throughout the nine electoral victories for Correa and his alliance of supporters.Who's Behind Ecuador's Demonstrations?
The municipal elections in Delhi, capital of India, on February 7th raised interest in a few journals but not nearly as much as they should have done. There is a reason for this. Many countries are struggling to cope with non-traditional parties challenging the establishment and gaining popular support. What happened in India, one of the most important emerging powers, may have consequences neither governments nor compliant mainstream media anywhere wish to contemplate....
In India, one of the world’s new economic powerhouses, the voters of the nations capital’s put the Aam Admi Party (AAP), or “Common Man’s Party” into power. It wasn’t even close: the AAP won 67 out of the 70 seats, and unseated the local leaders of both the currently-ruling Janata Party, or BJP, and the traditionally ruling Congress Party, the CPI....
The AAP is advocating nothing new. It is seeking to introduce practices which are well established in the Western democracies India has always seen as models.
It wants an independent ombudsman who can impartially investigate complaints of government corruption and protect those who make them. It also wants to devolve power to local authorities and populations, change the law so that if the majority of voters choose the “None of the Above” option on the ballot paper no candidate is elected, and give citizens the right to recall their representatives, the process by which Arnold Schwarzenegger ended up as Governor of California....New Eastern Outlook
As the US and Europe push forward with continued sanctions against Russia, an intriguing economic battle is taking shape, one which will have significant repercussions for years to come. While Washington and Brussels seek to divide Russia from Europe in order to maintain Western hegemony – blocking Eurasian integration by definition – Moscow is counteracting this strategy by leveraging its economic power in the form of energy exports and cooperation....
Over the last several decades, inflation-adjusted CEO compensation increased from $1.5 million in 1978 to $16.3 million in 2014, or 997 percent, a rise almost double stock market growth. Over the same time period, a typical worker’s wages grew very little: the annual compensation, adjusted for inflation, of the average private-sector production and nonsupervisory worker (comprising 82 percent of total payroll employment) rose from $48,000 in 1978 to just $53,200 in 2014, an increase of only 10.9 percent. Due to this unequal growth, average top CEOs now make over 300 times what typical workers earn....Let's round that 997% to 1000%.
The problem, as many mainstream observers now acknowledge, is that such a strategy aimed at perpetuating U.S. global supremacy at all costs was always destined to result in what Yale historian Paul Kennedy, in his classic book The Rise and Fall of the Great Powers, unforgettably termed “imperial overstretch.” As he presciently wrote in that 1987 study, it would arise from a situation in which “the sum total of the United States’ global interests and obligations is… far larger than the country’s power to defend all of them simultaneously.”
Indeed, Washington finds itself in exactly that dilemma today. What’s curious, however, is just how quickly such overstretch engulfed a country that, barely a decade ago, was being hailed as the planet’s first “hyperpower,” a status even more exalted than superpower. But that was before George W.’s miscalculation in Iraq and other missteps left the U.S. to face a war-ravaged Middle East with an exhausted military and a depleted treasury. At the same time, major and regional powers like China, India, Russia, Iran, Saudi Arabia, and Turkey have been building up their economic and military capabilities and, recognizing the weakness that accompanies imperial overstretch, are beginning to challenge U.S. dominance in many areas of the globe. The Obama administration has been trying, in one fashion or another, to respond in all of those areas -- among them Ukraine, Syria, Iraq, Yemen, and the South China Sea -- but without, it turns out, the capacity to prevail in any of them.
Nonetheless, despite a range of setbacks, no one in Washington’s power elite -- Senators Rand Paul and Bernie Sanders being the exceptions that prove the rule -- seems to have the slightest urge to abandon the role of sole superpower or even to back off it in any significant way. President Obama, who is clearly all too aware of the country’s strategic limitations, has been typical in his unwillingness to retreat from such a supremacist vision. “The United States is and remains the one indispensable nation,” he told graduating cadets at West Point in May 2014. “That has been true for the century past and it will be true for the century to come.”
How, then, to reconcile the reality of superpower overreach and decline with an unbending commitment to global supremacy?....
In this overheated environment, the 2016 presidential campaign is certain to be dominated by calls for increased military spending, a tougher stance toward Moscow and Beijing, and an expanded military presence in the Middle East. Whatever her personal views, Hillary Clinton, the presumed Democratic candidate, will be forced to demonstrate her backbone by embracing similar positions. In other words, whoever enters the Oval Office in January 2017 will be expected to wield a far bigger stick on a significantly less stable planet. As a result, despite the last decade and a half of interventionary disasters, we’re likely to see an even more interventionist foreign policy with an even greater impulse to use military force....
Back, then, to our original question: What is a declining superpower supposed to do in the face of this predicament?
Anywhere but in Washington, the obvious answer would for it to stop pretending to be what it’s not. The first step in any 12-step imperial-overstretch recovery program would involve accepting the fact that American power is limited and global rule an impossible fantasy. Accepted as well would have to be this obvious reality: like it or not, the U.S. shares the planet with a coterie of other major powers -- none as strong as we are, but none so weak as to be intimidated by the threat of U.S. military intervention. Having absorbed a more realistic assessment of American power, Washington would then have to focus on how exactly to cohabit with such powers -- Russia, China, and Iran among them -- and manage its differences with them without igniting yet more disastrous regional firestorms....But that would assume acting rationally.
But for any of this to happen, American policymakers would first have to abandon the pretense that the United States remains the sole global superpower -- and that may be too bitter a pill for the present American psyche (and for the political aspirations of certain Republican candidates) to swallow. From such denialism, it’s already clear, will only come further ill-conceived military adventures abroad and, sooner or later, under far grimmer circumstances, an American reckoning with reality.Tom Dispatch
Greece’s confrontation with the euro overlords will shape resistance to austerity – and the future of the whole European Union
It’s now clear that Germany and Europe’s powers that be don’t just want the Greek government to bend the knee. They want regime change. Not by military force, of course – this operation is being directed from Berlin and Brussels, rather than Washington.Class warfare.
But that the German chancellor Angela Merkel and the troika of Greece’s European and International Monetary Fund creditors are out to remove the elected government in Athens now seems beyond serious doubt. Everything they have done in recent weeks in relation to the leftist Syriza administraton, elected to turn the tide of austerity, appears designed to divide or discredit Alexis Tsipras’s government.
They were at it again today, when Tsipras offered what looked like almost complete acceptance of the austerity package he had called a referendum on this Sunday. There could be no talks, Merkel responded, until the ballot had taken place.
There’s no suggestion of genuine compromise. The aim is apparently to humiliate Tsipras and his government in preparation for its early replacement with a more pliable administration....
Already the class nature of the divide between the wealthier yes and more working-class no camps is stark.
A recent draft of the Trans-Pacific Partnership free-trade deal would give U.S. pharmaceutical firms unprecedented protections against competition from cheaper generic drugs, possibly transcending the patent protections in U.S. law.
POLITICO has obtained a draft copy of TPP’s intellectual property chapter as it stood on May 11, at the start of the latest negotiating round in Guam. While U.S. trade officials would not confirm the authenticity of the document, they downplayed its importance, emphasizing that the terms of the deal are likely to change significantly as the talks enter their final stages. Those terms are still secret, but the public will get to see them once the twelve TPP nations reach a final agreement and President Obama seeks congressional approval.
Still, the draft chapter will provide ammunition for critics who have warned that TPP’s protections for pharmaceutical companies could dump trillions of dollars of additional health care costs on patients, businesses and governments around the Pacific Rim. The highly technical 90-page document, cluttered with objections from other TPP nations, shows that U.S. negotiators have fought aggressively and, at least until Guam, successfully on behalf of Big Pharma....
Some of the most contentious provisions involve “patent linkage,” which would prevent regulators in TPP nations from approving generic drugs whenever there are any unresolved patent issues. The TPP draft would make this linkage mandatory, which could help drug companies fend off generics just by claiming an infringement.
In an April 15 letter to Froman, Heather Bresch, the CEO of the generic drug company Mylan, warned that mandatory patent linkage would be “a recipe for indefinite evergreening of pharmaceutical monopolies,”....Competitive markets are supposed to favor consumers by establishing a fair price through price discovery.
The critics say that extending linkage to biologics—which can have hundreds of patents—would help insulate them from competition forever.....
...Malpani of Doctors Without Borders said U.S. negotiators have basically functioned as drug lobbyists. The TPP countries have 40 percent of global economic output, and the deal is widely seen as establishing new benchmarks for some of the most complex areas of global business. Malpani fears it could set a precedent that crushes the generic drug industry under a mountain of regulation and litigation.
“We consider this the worst-ever agreement in terms of access to medicine,” he said. “It would create higher drug prices around the world—and in the U.S., too."U.S. negotiators have basically functioned as ... lobbyists." That's their job. They are just doing what they are tasked to do by the administration. Look at who Obama appointed Commerce Secretary. Penny Pritzker was a major backer of Barack Obama in his political career.
In 1989, Ms. Pritzker's late uncle, Jay Pritzker, purchased a 50% stake in Hinsdale, Illinois-based Superior Bank of Chicago from the Federal Deposit Insurance Corporation, which had taken over the bank when it failed. Penny Pritzker was Superior's chairperson from 1991–1994. In 1993, the bank "embarked on a business strategy of significant growth into subprime home mortgages," according to a report by the United States Treasury Department. In 2000, it became clear the bank was faltering. In the months leading up to 2001, the Pritzkers tried to work out a recapitalization plan. In July 2001, FDIC seized the bank after the recapitalization could not be resolved. Subsequently, the Pritzker family reached an agreement with regulators to pay $460 million. — WikipediaThen there is US Trade Representative Michael Froman, a Rubin protege.
On May 2, 2013, Froman was nominated to serve as U.S. Trade Representative. Financial documents provided to the Senate Finance Committee showed he had nearly $500,000 in an offshore fund at Ugland House on the Cayman Islands, which Obama had once described as “the biggest tax scam in the world.”  In 2013 congressional testimony, Rep. Kevin Brady, Republican from Texas, criticized the EU low carbon fuel standard, where oil from tar-sands is classified by itself due to its higher carbon polluting impact compared to regular oil as a "discriminatory, environmentally unjustified" trade barrier, to which Froman responded, "I share your concerns," followed by a description of his work to "press the Commission to take the views of . . . U.S. refiners under consideration." Froman's role as in the drafting of classified trade deals (made public by WikiLeaks) is under scrutiny by lawyers and politicians alike. The U.S. Senate confirmed Froman in a 93-4 vote on June 19, 2013. One of the four dissenting senators was Massachusetts Democrat Elizabeth Warren, who faulted Froman for "refusing to commit to [...] standards of transparency in trade talks set by the George W. Bush administration". — Wikipedia
The eurozone has shown itself unable to manage its basic moral responsibilities....
It is an odd spectacle to watch a central bank with a treaty duty to uphold financial stability take the deliberate decision to precipitate the collapse of banks that it regulates. But the deeper point is that the insane construction of the euro - a naked currency union without fiscal and political foundations - must inevitably tend to authoritarian monetary dystopia in the end....I'd say the "game theorist" is winning. He has managed to trash neoliberalism and the eurocrats to the degree that only fools and fellow kleptocrats would do business with them now.
MONTVALE, N.J., July 1, 2015 /PRNewswire/ -- Mercedes-Benz USA (MBUSA) today reported record June sales for the Mercedes-Benz brand at 28,044, climbing 5.8% from the 26,506 vehicles sold during the same month last year. Sprinter delivered a 10.9% increase in June to 2,442, combining with 774 units at smart for a monthly total of 31,260 for MBUSA. On a year-to-date basis, Mercedes-Benz retails totaled 164,970, up 8.8%. Adding sales volumes of 13,534 for Sprinter and 3,624 for smart, MBUSA achieved a record grand total of 182,128 units for the first six months of 2015. Read more.
Now the IMF has published a timely IMF survey the stub of which reads:econoblog 101Strong and Equitable Growth: Fiscal Policy Can Make a DifferenceJeff Danforth, Eva Jenkner, and Rossen RozenovIMF Fiscal Affairs Department
From The Times, via The Australian:
Under the rules of the European Stability Mechanism, the euro’s bailout fund, the German parliament, or Bundestag, has a veto or blocking vote over any new program....
The senior German conservative said that Angela Merkel’s ruling Christian Democrat Union (CDU) and its Bavarian allies the Christian Social Union (CSU) would block any request made while the pair, described as “communists”, remained in power.J. W. Mason
Greek Prime Minister Alexis Tsipras will accept most of the bailout creditors’ conditions offered last weekend but is still insisting on a handful of changes that could thwart a deal, according to a letter he sent late on Tuesday night. Read more.
To conclude, Europe’s optimal strategy is to let Greece default, to allow the Greek government to find ways to live within its tax take for the next year or so and, at the same time, work out the overall solution to the euro crisis that was promised last year and never delivered. A Greek default will provide the clarity and the time-space to do this properly. The other two alternatives (more bailouts or a Greek exit) constitute cruel, unnecessary and unusual punishment. For the whole of Europe.It's what he is still saying.
As Greece prepares for a referendum on further austerity proposals, teleSUR explores the legitimacy of the Greek debt.teleSUR
The police deliberately denied Ferguson protesters the right to free speech using military-style tactics of crowd control last summer, the U.S. Justice Department says.teleSUR
Secret documents show creditors’ baseline estimate puts debt at 118% of GDP in 2030, even if it signs up to all tax and spending reforms demanded by troikaThe Guardian
Turkey on Tuesday said it was "ready to help" Greece out of its escalating financial crisis as its embattled neighbor edged closer to default.
"We are ready to help Greece survive its economic crisis with cooperation in tourism, energy, trade," Turkish Prime Minister Ahmet Davutoglu said in the capital, Ankara.
"We want Greece to be strong...
Therefore Turkey will be positive toward any proposal for cooperation," he said in televised comments.
Davutoglu added that a Turkish delegation would travel to Greece for a high-level cooperation meeting as soon as possible to consider joint steps on the financial crisis....