11 June 2013

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blyth_blows_it

I have previously commented on how Scottish “economist” Mark Blyth promotes austerity while pretending to oppose it.

Here is Blyth in recent comments he made (YouTube video below):

Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, (sic) they have advanced a policy of draconian budget cuts–austerity–to solve the financial crisis. We are told that we have all lived beyond our means, and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer.

Error #1: He says there was not an orgy of government spending, and also that there was an orgy of spending, in the form of bailing out banks and financial firms.

Error #2: He says that this “orgy of (bailout) spending” has created a “debt crisis” for Monetarily Sovereign governments.  Thus, he defends one of the central lies of austerity, namely that the U.S. government has a “debt crisis.”

Error #3: He says this federal “debt crisis” has been dumped onto taxpayers. Thus, he defends another central lie of austerity, namely that tax revenue pays for the U.S. federal government.

Error #4: Blyth fails to distinguish between the USA (which creates its own money from nothing) and the euro-zone (whose nations must borrow all their money, and thus have no choice but to impose austerity). Thus, he defends yet another central lie of austerity, namely that Monetary Sovereignty is irrelevant.

Who does Mr. Blyth work for? Pete Peterson? The Koch brothers?

That debt burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget. The problem is that austerity doesn’t work. As the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy.

Error #5: There is never any time when any state can “cut its way to growth.” Austerity causes recessions. ALWAYS AND EVERYWHERE, SINGULARLY AND IN GROUPS.

In the worst case, austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment.

Error #6:  No single power, or pair of powers, was “responsible for the Second World War.” Almost all nations participated in the madness. That’s why it’s called a “world war.” The USA blockaded Japan, starving it of oil and food, in order to force Japan into war.  Also the UK and USA began routinely firing on German vessels seven months before Pearl Harbor, again in order to force a war. (I can document this if anyone challenges me.) The point is that the USA and England were as “responsible” as any other nations.

The arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we recognize austerity for what it is, and what it costs us.

Error #7: This is a repeat of Error 5. By saying that austerity almost always does not work, Mr. Blyth leaves open the door for austerity, since all politicians claim that, “Our country is the exception.”

You can wade through this in the one-hour video below, which shows Mr. Blythe giving a speech. However I just condensed it for you above.

My problem is that people like Mr. Blyth, who claim to oppose austerity, are often the strongest defenders of lies that sustain austerity.

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troika_cop

Inspectors from the “troika” (IMF, ECB, and European Comission) are in Greece again, demanding still more austerity in return for still more debt bailout money.

They met with Greek finance minister Yannis Stournaras to talk about still more privatizations, still more property taxes, and still more layoffs (4,000) of public workers by the end of the year.

The IMF admitted that it made a “mistake” in imposing austerity, and is apologizing by demanding more austerity.

One man in Athens said: “They are making complete fools of us. They’re laughing in our faces.”

I laugh at you too, because you refuse to see the source of your problem, which is the euro currency.

TROIKA

The Greek government’s budget deficit was 10.9 billion euros during the first five months of 2012.

During the first five months of 2013, the budget deficit shrank by a catastrophic 64 percent to 3.9 billion euros.

The Troika says this is nowhere near enough. Greek politicians must cut spending and raise taxes even more.

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Tax revenues are 562 million euros less that what the Greek government had promised its Troika masters for the first five months of 2013.  So the Troika goons are down for a visit.

http://www.euronews.com/2013/06/10/troika-inspectors-press-greece-for-more-austerity/

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s_and_p

In August 2011 those zany clowns at S&P lowered their grading of U.S. T-securities from “AAA” to “negative.”

On Monday (9 June 2013) they reversed themselves, because of the apparent drop in the U.S. federal budget deficit. And also because  sequestration will cut will another $19 billion from discretionary spending programs in the coming fiscal year, which begins 1 Oct 2013.

In short, S&P upgraded America’s T-securities because of austerity. Specifically they rated long-term (e.g. 30-year) T-securities “AA+,” and short-term securities  “A-1+” — as though it actually meant something!

Ratings agencies have no influence whatever on the interest rate that the Federal Reserve sets for T-securities.  No buyer of T-securities pays any attention to ratings agencies, except maybe some fools in the secondary market.

Standard & Poor’s was one of the ultra-corrupt ratings agencies that gave “AAA” grades to fraudulent mortgage securities, in ordert for too-big-to-jail banks to perpetrate their scams.

No one in the ratings agencies was prosecuted, but what’s really amazing is that anyone listens to those clowns at all.

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