The news out of Spain is that their budget deficit was surprisingly bigger than anticipated after they implemented more austerity this year: massive social spending cuts and higher taxes in the context of over 20% unemployment and rising.
Economist Mike Norman says the new government announced that even more austerity is coming in order to cut the deficit. See the pattern?
Austerity only makes deficits bigger by decreasing aggregate demand and output, and aggravating unemployment: thus with higher unemployment that means lower tax revenues and higher transfer payments = bigger deficit.
Spain, Portugal, Ireland, Italy and Greece must be allowed to spend more to fight unemployment and must maintain higher deficits, not lower.
These countries need to grow their economies back to stability, and I believe this entails a transition out of the euro and an orderly default on foreign debts.
Noam Chomsky has advice for the Occupy movement, whose encampments all over the country are being swept away by police. The occupations were a “brilliant” idea, he says, but now it’s time to “move on to the next stage” in tactics. He suggests political organizing in the neighborhoods.
The Occupy camps have shown people how “to break out of this conception that we’re isolated.” But “just occupying” has “lived its life,” says the man who is the most revered radical critic of American politics and capitalist economics.
Chomsky gave his counsel answering questions in a small group after a speech Monday evening, December 12, in the 1000-seat Westbrook Middle School auditorium (a/k/a Westbrook Performing Arts Center), which was filled to capacity. The speech was sponsored by the University of New England’s Center for Global Humanities.
The Occupy movement’s repression, which Chomsky decried, has a saving grace, he said: the opportunity for it to expand more into “the 99 percent” by engaging people “face to face.”
“Don’t be obsessed with tactics but with purpose,” he suggested. “Tactics have a half life.”
In 2001, Argentina’s government made the courageous decision to default on its foreign debt, and end its peg to the US Dollar, against the demands of the IMF and other political and financial elites. The facts show that after a brief recession, the Argentinian economy, freed from unsustainable and unrealistic debt obligations, focused on growth, unemployment, and social equality, and they’ve achieved tremendous results in all major indicators.
Their foreign creditors have mostly (Paris Club aside) restructured their agreements with Argentina and written down much of the outstanding debt.
Argentina’s experience calls into question the popular myth, as noted above, that recessions caused by financial crises must involve a slow and painful recovery.
…because the default freed the country from having to be continually hamstrung by a crippling debt burden and by pro-cyclical policies imposed by creditors.
Terrific report from Mark Weisbrot and the Center for Economic Policy and Research.
Is there a need to keep the Ireland, Portugal, Greece, Spain, and Italy on their current path to depression and mass emigration, when Argentina has shown there’s a different way forward?
“it’s criminal that so little is asked of people who are getting so much. I don’t mind paying more. I really don’t mind paying more taxes. I’d rather pay for taxes than cut ‘Reading is Fundamental’ or Head Start or some of these programs that are really helping kids. This is the greatest country in the world; is it really that much worse if you pay 6% more in taxes? Give me a break. Look at what you get for it: you get to be American.”—Matt Damon on taxes and education spending cuts.
So that people don’t get the wrong idea, I don’t reblog Robert Reich because I agree with his solutions, he is just an example of the “mainstream” or “establishment” Democrats who want to still appear like they stand for the working class so they talk about inequality and injustice, but like all establishment Democrats, he won’t rock the boat and say what actually needs to be said.
Just one example: Reich mentions that NOBODY has gone to jail from the Wall St elite who ruined the financial system, so why doesn’t he call out the President or Attorney General Eric Holder?
Reich is right about one thing in this upcoming election, it’s not about the size of government, it’s about what government’s for, and in this next election, we’ll have two parties who have failed to prosecute the financial criminals that wrecked the economy of the U.S. and the world, and got away with it.
We have an atomic bomb that we can use in the face of the Germans and the French: this atomic bomb is simply that we won’t pay.
Debt is our only weapon and we must use it to impose better conditions, because recession itself is what is stopping us complying with the (EU-IMF Troika) accord. We should make the legs of the German bankers tremble.
”—Pedro Nuno Santos, vice-president of the Socialist Party in the Portuguese Parliament, UK Telegraph
Can I ask you one more thing, from a Canadian to an American?? The reason I feel like no one around me cares could be because I live in Canada, where not much has happened yet on the political front, what with new laws/bills, etc. But in America, or at least where you are, are people outraged?? Does the majority understand what is really going on, and are they waking up to the media and governments lies? I am really curious. Have you felt a shift in awareness of the people around you?
Yes, people are starting to wake up, and the Occupy movement is the largest proof that people, especially the youth, but also older types in the unions and among the unemployed, are waking up and demonstrating against our corrupted and unjust political-economic system.
So yes, it is very inspiring that people across this country are grasping the reality that we face. However, millions are still not woken up to this, we just have to wait and they will start fighting harder”…
It will take many more years, and probably another crisis and more hardships before the people wake up completely, and that is why what is happening now is a pre-revolutionary movement for a moment to come in the future.
President Obama’s speech yesterday in Kansas, in which he said many nice things about the need to fight income inequality and work together for a shared prosperity for all Americans, would be uplifting if we didn’t see this all before.
As someone who voted for him in 2008 under the mistaken impression that he would fight for progressive change, count me now as someone who’s turned completely against him and is downright skeptical or hostile to any statement or position he advocates. I don’t think I’m alone among those who voted for him in 2008 either.
Firstly, President Obama gives good speeches. That’s obvious. He reads the teleprompter well and knows when to emphasize his points. Secondly, he generally says the right things that a mainstream liberals and probably independents even would like to hear.
But when he starts to criticize the actions of Wall Street, or the Republican Party, or the health insurance industry, is when I don’t believe, and when you shouldn’t believe, a single word he says.
When he talks about the need to work together to fight income inequality, President Obama seems intent on making us forget that his policies, his actions, and his breathtaking inaction on certain issues, have actually ensured even more inequality and even more Wall Street abuses at the expense of working people.
Meanwhile, activists from the Occupy Wall Street movement and housing rights advocates successfully re-occupied a home yesterdaythat was foreclosed upon by Bank of America. I might be exaggerating but I think that’s more homes saved in one day by OWS and community activists than in three years by the Obama Administration.
To close, when you have a President criticize the excesses of Wall Street and the inequality created by their greed, yet you fill your inner circle with Wall Street insiders and psychophants who helped create the economic crisis in the first place, and further to let them have new authority to create new financial and economic policy that continues to favor the financial elites over working people and industry and manufacturing…
…goes the title for a piece from The Economist back on October 1.
I’ll be focusing a big on Hungary’s economic situation this month and from now on in general.
So, a major development in early October was the decision by Hungarian Prime Minister Viktor Orban’s government to allow homeowners who took foreign currency mortgage loans (mostly in Swiss Francs) to repay them in Hungarian Forints at their previous exchange rate (before they depreciated during the course of the economic crisis.)
The article author for The Economist claims the new reforms “will do little to help economy”…
But apparently is unaware that the more money that Hungarian families are using to pay down inflated mortgages, the less money they can use on goods and services in the real economy.
This is the essence of debt deflation..Irving Fisher knew all about it over 80 years ago. But mainstream economics, which is what The Economist practices, still doesn’t get it.