Greece Struggles to Stay Afloat as Debts Pile On
Rachel Donadio and Niki Kitsantonis, The New York Times
Ever since Greece’s credit rating was downgraded last week, its new Socialist government has fought back, saying it has the mettle to tackle the soaring deficit and structural woes that have earned the country a reputation as the weak link in the euro zone.
“We will reduce the deficit, we will control the debt and there will be no need for a bailout,” the Greek finance minister, George Papaconstantinou, said in an interview in his office here this week. “We are not Iceland; we are not Dubai.”
But Mr. Papaconstantinou may have good reason for the traditional Greek metal worry beads he fingered during the interview. Outside his office, garbage was piled high in Syntagma Square, a result of a two-week strike by trash collectors that ended Friday.
A student demonstration was advancing on the square a day after pensioners had taken to the streets. This week, protests for the first anniversary of the death of an Athenian teenager shot by the police turned violent, but did not cause as much damage as disturbances last year.
Common in Greece even during better times, such protests are expected to increase drastically once the government introduces austerity measures in its 2010 budget, including wage freezes and measures to scale back public sector hiring, steps it says are needed to bring Greece’s finances under control.
As Mr. Papaconstantinou suggested, the problem is not Greece’s alone: heavily indebted countries, including Ireland, Britain and Spain, are under pressure to show that they can stimulate growth and grapple with debt burdens at the same time. Investors and European monetary officials are skeptical…
(11 Dec 2009)
Obama and Rubin at the Bada Bing
ilargi, the automatic earth
Let’s take a look at what Obama says versus what he does, and what he has done since becoming president. For that last part we can turn to this week’s “Obama’s Big Sellout” by Matt Taibbi in Rolling Stone, for the first let’s take a look at this Agence France Presse article, “Obama slams ‘fat cat bankers'”.
“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Obama said Friday in excerpts of an interview with CBS television to be aired on Sunday. With unemployment still hovering at around 10 percent, amid a recession triggered in part by the excesses of financial institutions, Obama voiced frustration that “some people on Wall Street still don’t get it.”
Excuse me, Mr. President, but I’m pretty sure it’s either you who still doesn’t get it, or it’s the American people who still don’t get it. I think the bankers do get it. And the lowest approval rating in history for a president after 1 year might just indicate that the American people are starting to get it too. According to Mr. Taibbi and me, ALL you’ve done since assuming office is help out a bunch of fat cat bankers.
On Friday, the US House of Representatives approved the most sweeping regulatory overhaul of the financial sector since the Great Depression of the 1930s, one of Obama’s key goals. Lawmakers voted 223-202 to pass the 1,300-page legislation, a package of measures Obama’s Democratic allies crafted in response to the global financial meltdown of 2008.
The legislation gives regulators the power to dismantle giant financial firms and lays out a systematic way to unwind them in case of collapse that ensures shareholders and unsecured creditors, not taxpayers, bear the losses. It also reinforces the powers of the Securities and Exchange Commission to detect irregularities that could provide an early warning of fraudulent investment schemes…
(13 Dec 2009)
Cleaners ‘worth more to society’ than bankers – study
Martin Shankleman, BBC News
The research, carried out by think tank the New Economics Foundation, says hospital cleaners create £10 of value for every £1 they are paid.
It claims bankers are a drain on the country because of the damage they caused to the global economy.
They reportedly destroy £7 of value for every £1 they earn. Meanwhile, senior advertising executives are said to “create stress”.
The study says they are responsible for campaigns which create dissatisfaction and misery, and encourage over-consumption.
The Foundation has used a new form of job evaluation to calculate the total contribution various jobs make to society, including for the first time the impact on communities and environment.
Eilis Lawlor, spokeswoman for the New Economics Foundation, said: “Pay levels often don’t reflect the true value that is being created. As a society, we need a pay structure which rewards those jobs that create most societal benefit rather than those that generate profits at the expense of society and the environment”.
She said the aim of the research was not to target individuals in highly paid jobs, or suggest people in low paid jobs should earn more.
“The point we are making is more fundamental – that there should be a relationship between what we are paid and the value our work generates for society. We’ve found a way to calculate that,” she said…
(14 Dec 2009)
related: A Bit Rich: Calculating the Real Value to Society of Different Professions
A Tax By Any Other Name Gains Wider Support
Tom Jacobs, Miller-McCune
Environmentalists tend to use the terms “carbon tax” and “carbon offset” interchangeably. Both, after all, refer to the same concept: Increasing the price of certain goods and services to reflect the environmental damage they cause.
Just-published research suggests such a structure could have widespread support among Americans — or create another partisan split between Republicans and Democrats. It all depends upon what it is called.
A research team led by Columbia University psychologist David Hardisty came to this conclusion after conducting a series of studies, described in the journal Psychological Science. The 245 to 337 participants (depending upon the study) had an average age of 41. Thirty-six percent described themselves as Democrats, 25 percent Republicans and 37 percent Independents.
In the first study, Hardisty and his colleagues presented participants with a one-page explanation of the carbon tax/carbon offset concept. The description was identical except for a single sentence at the end, where the idea was described as either a tax or an offset…
(15 Dec 2009)
Gulf petro-powers to launch currency in latest threat to dollar hegemony
Ambrose Evans-Pritchard, The Telegraph
“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.
The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.
Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.
The Emirates are staying out for now – irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman.
The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.
The project is inspired by Europe’s monetary union, seen as a huge success in the Arab world. But there are concerns that the region is trying to run before it can walk…
(15 Dec 2009)
Adventures in Capitolism
John Mecklin, Miller-McCune
In the wake of the 2009 elections — really, ever since the stimulus plan passed early last year — a pair of conflicting narratives has dominated the U.S. politico-media landscape. Though told in many ways and forms, the double-story actually boils down to a simple either/or proposition:
either …
President Obama is an able, courageous leader who’s trying to accomplish, all at once, many difficult, fundamental changes needed to keep America the world’s leading economy.
or …
President Obama is a silver-tongued, overambitious politician who is stealthily extending the federal government into the private sector, strangling American innovation and bankrupting the Treasury.
This kind of two-headed narrative is well suited to the context-averse 24/7 news cycle of the early 21st century. Most any policy can be analyzed through these opposed monocles, and harried journalists don’t have to worry about the difficult business of weighing the truthfulness of either proposition. When the administration proposes to do something, reporters can just call a recognizable Democrat, who’ll suggest Obama is the green FDR, and then get a corresponding Republican on the line to imply the president is an overambitious Jimmy Carter, only more socialistic.
I’d like to suggest a different point of view, one that plays against both off-the-shelf narratives: Though it seems ambitious, the Obama agenda — the simultaneous remaking of the country’s health, energy, transportation and education sectors — is actually a bare minimum of what is needed for the U.S. to continue as the world’s indispensable economy. The problem isn’t that the agenda represents socialistic overreach; it’s that accomplishing the minimum retooling needed to correct decades of economic slide requires a wide-ranging competence that U.S. government has previously been able to muster only in fits and starts, usually during major wars and only in deep partnership with business. The administration isn’t reaching too far; it’s just relying too much on a clumsy federal bureaucracy, and too little on the nimble entrepreneurs and financiers who will stage a green revolution, if it occurs…
(16 Dec 2009)
