Europe is crumbling from the shockwaves unleashed by Wall Street in 2008

Yanis Varoufakis, the former finance minister of Greece, writes: In the past two years, the debate in Europe has focused exclusively on issues that sound technical and minor: will there be “conditionality” attached to the purchases of Italian and Spanish bonds by the European Central Bank? Will the ECB supervise all of Europe’s banks, or just the “systemic” ones?

These are questions that ought to be of no genuine interest to anyone other than those with a morbid interest in the interface between public finance and monetary policy. And yet these questions (and the manner in which they will be answered) will probably prove as important for the future of Europe as the treaties of Westphalia, Versailles or even Rome. For these are the issues that will determine whether Europe holds together or succumbs to the vicious centrifugal forces that were unleashed by the crash of 2008.

Even so, they are not issues that are worth expounding upon here. All they do is to reflect a tragic, underlying reality that can be described in simple lay terms without the use of any jargon whatsoever: Europe is disintegrating because its architecture was simply not sound enough to sustain the shockwaves caused by the death throes of what I call the Global Minotaur: the system of neoliberal capitalism centred on Wall Street, extracting tribute from the world after 1971.

It is quite obvious that the insolvency of Madrid and Rome had nothing to do with fiscal profligacy (recall that Spain had a lower debt than Germany in 2008 and Italy has consistently smaller budget deficits) and everything to do with the way in which the eurozone’s macroeconomy relied significantly for the demand of its net exports on the Global Minotaur. Once the latter keeled over in 2008, and Wall Street’s private cash disappeared, two effects brought Europe to its knees. [Continue reading…]

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Sixty years ago, half of German war debts were cancelled to build its economy

Nick Dearden wrote: Sixty years ago today [February 27, 2013], an agreement was reached in London to cancel half of postwar Germany’s debt. That cancellation, and the way it was done, was vital to the reconstruction of Europe from war. It stands in marked contrast to the suffering being inflicted on European people today in the name of debt.

Germany emerged from the second world war still owing debt that originated with the first world war: the reparations imposed on the country following the Versailles peace conference in 1919. Many, including John Maynard Keynes, argued that these unpayable debts and the economic policies they entailed led to the rise of the Nazis and the second world war.

By 1953, Germany also had debts based on reconstruction loans made immediately after the end of the second world war. Germany’s creditors included Greece and Spain, Pakistan and Egypt, as well as the US, UK and France. [Continue reading…]

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Staying shut is the best option for Greek banks — but time is running out

Leslie Budd, The Open University

The issue of liquidity in Greek banks is one of the most pressing now that the referendum is over. As widely reported, Greek banks are running out of reserves – even with capital controls in place since June 28 putting a €60 cap on the amount Greeks can withdraw from their accounts. There are a number of pressing issues that, if not resolved, could lead to a Grexit.

With a freeze on the amount of emergency assistance being provided by the European Central Bank (ECB), Greek banks remain unable to reopen. A short-term solution would be for the banks to issue IOUs backed by the Bank of Greece. This, however, would effectively be a parallel currency and would be the first stage of reintroducing the drachma. It would also be a big step toward leaving the eurozone.

The ECB is withholding the amount of emergency liquidity assistance (ELA) it is providing Greece in lieu of a bailout deal that will guarantee (in their eyes) Greek solvency. Pending the ECB stepping in to stabilise banks with more ELA, Greek banks will remain shut – and their reserves will quickly diminish.

The clear and present danger is that Greece’s creditors will maintain an attitude of “euro-hubris”. This attitude is displayed in an inflexible commitment to obeying fiscal rules irrespective of their socio-economic outcomes. Consequently, the ultimate price to pay for the Greek No will be a Grexit.

[Read more…]

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In Syria, the weakness of ISIS and U.S. strategy on display

The Washington Post reports: The unexpected rout of Islamic State forces across a wide arc of territory in their northeastern Syria heartland has exposed vulnerabilities in the ranks of the militants — and also the limits of the U.S.-led strategy devised to confront them.

Islamic State fighters have been driven out of a third of their flagship province of Raqqa in recent weeks by a Kurdish-led force that has emerged as one of the most effective American partners in the war. The offensive, backed by U.S. airstrikes, has deprived the militants of control of their most important border crossing with Turkey and forced them onto the defensive in their self-proclaimed capital of Raqqa city, something that would have been unthinkable as recently as a month ago.

The advance has shifted the focus of the fight from Iraq to Syria for the first time in months. A blitz of 18 coalition airstrikes against Raqqa over the weekend took out bridges and roads used by the Islamic State to move supplies to battlefronts elsewhere. The air attack was one of the most intense in Syria, according to a Pentagon statement and activists in Raqqa.

On Monday, President Obama cited the recent gains in Syria as evidence of progress. “When we have an effective partner on the ground, ISIL can be pushed back,” he said in Washington after the Pentagon briefed him on the status of the war.

“ISIL’s strategic weaknesses are real,” he added, using an acronym for the Islamic State.

But the absence of reliable local forces to press the fight deeper into the Islamic State’s home turf has revealed the weakness of the U.S. strategy, analysts say. And rising tensions between Arabs in the area and their purported Kurdish liberators risk jeopardizing the gains.

The offensive is taking Kurdish forces far beyond traditionally Kurdish territory and into areas where Syrian Arabs are in the majority, drawing allegations from Syrians and also the Turkish government that the Kurds are taking advantage of the U.S.-led air war to carve out a Kurdish state.

The Syrian opposition has accused the Kurds of driving Arabs from their villages to consolidate their control. [Continue reading…]

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Egypt anti-terror bill speeds trials, tightens hand on media

The Associated Press reports: After a series of stunning militant attacks, Egypt’s government is pushing through a controversial new anti-terrorism draft bill that would set up special terrorism courts, shorten the appeals process, give police greater powers of arrest and imprison journalists who report information on attacks that differs from the official government line.

The draft raised concerns that officials are taking advantage of heightened public shock at last week’s audacious attacks to effectively enshrine into law the notorious special emergency laws which were in place for decades until they were lifted following the 2011 ouster of autocrat Hosni Mubarak. Rather than reviewing security policies since the attacks, officials have largely been focusing blame on the media for allegedly demoralizing troops and on the slowness of the courts.

The 55-article bill has not been officially made public but was leaked to the Egyptian press over the weekend. A judicial official who vetted the draft confirmed its contents to The Associated Press on Monday. The bill is currently in a review process, leaving it unclear when it will be issued or whether changes could be made. Since Egypt has not had a parliament for more than two years, laws are issued by the president, Abdel-Fattah el-Sissi, after going through the Cabinet. In the absence of parliament, any debate is largely through media or behind closed doors. [Continue reading…]

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California cuts emissions below 2000 levels while GDP grows — on track for 2020 targets

The Climate Group: Member of The Climate Group States & Regions AllianceCalifornia – is well on track to achieving its 2020 emissions reduction target. State-wide greenhouse gas (GHG) emissions continue to be reduced while the economy grows, the California Air Resource Board reports.

The state of California first set out its emissions reduction target in the landmark 2006 Assembly Bill 32 (AB32), referred to as the Global Warming Solutions Act of 2006, which The Climate Group played a key role in creating.

The state is now well on its way to reaching its interim target of reducing emissions to 1990 levels by 2020. The latest edition of the state’s Greenhouse Gas Inventory shows emissions in California fell by 1.5 million metric tons in 2013 compared with 2012, while the economy grew at a rate greater than the national average. [Continue reading…]

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Muslims raise money to rebuild black churches because ‘all houses of worship are sanctuaries’

Quartz reports: A group of Muslim organizations in the US have launched an online campaign to raise funds to help rebuild the eight black churches that burned down in Tennessee, South Carolina, North Carolina, Florida, Ohio, and Georgia after the June 17 deadly shooting in a Charleston, South Carolina church.

“To many it is clear that these are attacks on Black culture, Black religion and Black lives,” says the campaign’s website, organized by MuslimARC, the Arab-American Association of New York, and Ummah Wide, a digital media startup focused on Muslim issues. “We want for others what we want for ourselves: the right to worship without intimidation, the right to safety, and the right to property.” Three of the fires have been ruled as arson by investigators, with the others under investigation to determine the cause.

Since launching on July 2, the Respond with Love campaign’s more than 500 supporters have already surpassed its $20,000 funding goal, reaching roughly $23,000 as of this posting. The initiative will continue through July 18, with money going to churches based on need in consultation with pastors and church leaders, according to the campaign. [Continue reading…]

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As Hollywood lobbied State Department, it built free home theaters for U.S. embassies

By Robert Faturechi, ProPublica, July 2, 2015

This story was co-published with The Daily Beast.

Hollywood’s efforts to win political clout have always stretched across the country, from glitzy campaign fundraisers in Beverly Hills to cocktail parties with power brokers in Washington.

Last year, the film industry staked out another zone of influence: U.S. embassies. Its lobbying arm paid to renovate screening rooms in at least four overseas outposts, hoping the new theaters would help ambassadors and their foreign guests “keep U.S. cultural interests top of mind,” according to an internal email.

That was the same year that the Motion Picture Association of America, which represents the six biggest studios, reported it was lobbying the State Department on issues including piracy and online content distribution. Hollywood’s interests 2013 including its push for tougher copyright rules in the Trans-Pacific Partnership trade pact 2013 often put the industry at odds with Silicon Valley.

[Read more…]

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Greg Grandin: How endless war helps Old Dixie stay new

“They finally shot the nigger!” the sparrow-slight soldier whooped. Nicknamed “Georgia” for the obvious reason, that’s what he apparently ran around shouting once word of Martin Luther King, Jr.’s assassination wound its way out into the electric-green paddy fields of South Vietnam. I was told the story more than once by a member of his unit and often imagined what it must have been like, especially for his black brothers-in-arms, to be smacked with that news and that epithet all at once. Yet, on some level, it wasn’t the least bit shocking. Labeled a “total racist” by a fellow member of his unit, Georgia was one of many white soldiers hailing from the former Confederate States of America whose bigotry was on full display during the Vietnam War.

As “soul brothers” and “bloods” across South Vietnam embraced emerging ideas about black consciousness, black pride, and black power, racist white troops responded by donning Ku Klux Klan robes, burning crosses, and embracing other symbols of white supremacy. Reflecting on his decision to join the militant Black Panthers after returning from Vietnam, Reginald Edwards, who served as a rifleman with the Marines, recalled: “We had already fought for the white man in Vietnam. It was clearly his war. If it wasn’t, you wouldn’t have seen as many Confederate flags as you saw.” Dwyte Brown, who served in the Navy, told journalist Wallace Terry that, in the barracks at the U.S. base in Cam Ranh Bay, “there would be nothing but Confederate flags all over the place.”

In the midst of the recent Confederate flag fallout following the massacre in Charleston, TomDispatch regular Greg Grandin revisits this much-neglected history and so much else that came before and after. Tracing the sordid story of the Old South’s battle flag, that symbol of bitter-end racism, from its raising by Marines on Okinawa during the Second World War to more recent appearances in Iraq and Afghanistan, Grandin shines a light on a larger and more troubling military embrace of the Confederacy — something the Pentagon would, no doubt, rather keep hidden from view.

Georgia, the soldier who cheered King’s 1968 murder, seemingly conformed to all the stereotypes you might imagine. “He had a little tape player. And all he had was one tape of every Hank Williams song there ever was and he played them constantly whenever we were in base camp,” I was told. But what he did out in the field — where the stifling heat of the day gave way to dank nights in cool, clammy foxholes — shocked me. “Georgia was this little white racist and Mitchell was this great big black guy, and when it would rain and get cold, they’d get in and sleep together to stay warm,” a fellow unit member told me. Perhaps racists are like atheists and can’t be found in foxholes. Or perhaps Georgia’s and Mitchell’s bunker brotherhood is a reminder that there’s always reason for hope.

The Pentagon now stands where South Carolina did just weeks ago. With a groundswell of grassroots activism, the U.S. military’s long-cherished symbols of racism and Confederacy-veneration might also be brought to the brink of welcome exile, if not banishment to history’s dustbin. If that ever comes to pass, one person we’ll have to thank is Greg Grandin, author of the much-anticipated Kissinger’s Shadow: The Long Reach of America’s Most Controversial Statesman. Nick Turse

The Confederate flag at war
(But not the Civil War)
By Greg Grandin

The Pentagon just can’t let go. In the wake of the Charleston Massacre, Amazon and Walmart have announced that they will no longer sell Confederate flag merchandise. Ebay says it will stop offering Confederate items for electronic auction. The Republican governor of Mississippi calls his state flag, which includes the Stars and Bars in the top left corner, “a point of offense that needs to be removed.” Even Kentucky’s Mitch McConnell, the majority leader of the U.S. Senate, agrees that a statue of Confederate President Jefferson Davis in his state’s capitol building belongs in a museum.

Yet the Department of Defense says it isn’t even “reviewing” the possibility of a ban on the flag, deciding instead to leave any such move to the various service branches, while military bases named after Confederate officers will remain so. One factor in this decision: the South provides more than 40% of all military recruits, many of them white; only 15% are from the Northeast.

[Read more…]

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Ending Greece’s bleeding

Paul Krugman writes: Europe dodged a bullet on Sunday. Confounding many predictions, Greek voters strongly supported their government’s rejection of creditor demands. And even the most ardent supporters of European union should be breathing a sigh of relief.

Of course, that’s not the way the creditors would have you see it. Their story, echoed by many in the business press, is that the failure of their attempt to bully Greece into acquiescence was a triumph of irrationality and irresponsibility over sound technocratic advice.

But the campaign of bullying — the attempt to terrify Greeks by cutting off bank financing and threatening general chaos, all with the almost open goal of pushing the current leftist government out of office — was a shameful moment in a Europe that claims to believe in democratic principles. It would have set a terrible precedent if that campaign had succeeded, even if the creditors were making sense.

What’s more, they weren’t. The truth is that Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients — and when their treatment made the patients sicker, demanded even more bleeding. [Continue reading…]

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Yanis Varoufakis explains why he resigned as Greece’s finance minister

Yanis Varoufakis writes: The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.

Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.

Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.

I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.

And I shall wear the creditors’ loathing with pride.

We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.

The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning.

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Greece votes No: experts respond

By Costas Milas, University of Liverpool; George Kyris, University of Birmingham; James Arvanitakis, University of Western Sydney; Marianna Fotaki, University of Warwick; Nikos Papastergiadis, University of Melbourne; Remy Davison, Monash University; Richard Holden, UNSW Australia; Ross Buckley, UNSW Australia, and Sofia Vasilopoulou, University of York

The Greek people have voted, saying a resounding No to the terms of the bailout deal offered by their international creditors. What will this mean for Greece, the euro and the future of the EU? Our experts explain what happens next.

Costas Milas, Professor of Finance, University of Liverpool

Greek voters have confirmed their support for their prime minister, Alexis Tsipras, who now has the extremely challenging task of renegotiating a “better” deal for his country.

Nevertheless, time is very short. Greece’s economic situation is critical. On July 2, Greek banks reportedly had only €500m in cash reserves. This buffer is not even 0.5% of the €120 billion deposits that Greek citizens have to their names. It is only capital controls preventing Greek banks from collapsing under the strain of withdrawal.

Basic mathematical calculations reveal how desperate the situation is. There are roughly 9.9m registered Greek voters. Assume that – irrespective of whether they voted Yes or No – some 2.8m voters (that is, a very modest 28.2% of the total number of registered voters) decide to withdraw their daily limit of €60 from cash machines on Monday morning. Following this pattern, banks will run out of cash in three days and therefore collapse (note: 3 x 2.8m x 60 ≈ 500m).

There is therefore very little time for the Greek government to strike the deal with their creditors that will instantaneously give the ECB the “green light” to inject additional Emergency Liquidity Assistance (ELA) to Greek banks to support their cash buffer and save them from collapse. In other words, Greece does not have the luxury of playing “hard ball” with its creditors. An agreement has to be imminent.

Financial markets, expected to start very nervously on Monday morning, will probably stay relatively calm as the reality of the economic situation spelled out above is more likely than not to lead to some sort of agreement (provided, of course, that Greece’s creditors will listen to Tsipras). Whether this agreement is good for the Greeks, this is an entirely different story.

[Read more…]

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Backing down on Greece’s debt is the safest, most rational option

John Quiggin writes: Lots of people have raised the suggestion of applying game theory to the the Greek debt crisis. I haven’t attempted this, reflecting my general scepticism about game theory in the absence of a well-defined strategy space.

But now the Greek government and public have made what is, in effect, a final move.

In view of the No vote, Syriza can’t accept a deal that doesn’t include an explicit debt write-off, or one that obviously crosses its stated red lines. Within those parameters, it’s clearly eager for a face-saving compromise.

For the other side (effectively the Troika and the German government), since Syriza’s move has already been made, the problem has now been reduced to one of decision under uncertainty, which is something I am comfortable with.

More precisely, it’s a choice between a “safe” option, with an outcome that is fairly predictable, and a “risky” option where the outcome is uncertain.

The safe option for the European institutions is to back down, write off lots of debt and lose a lot of face. [Continue reading…]

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Episcopal church votes to divest from fossil fuels: ‘This is a moral issue’

The Guardian reports: The leadership of the Episcopal church has voted to withdraw from fossil fuel holdings as a means of fighting climate change, delivering an important symbolic victory to environmental campaigners.

Two weeks after the pope’s pastoral letter on the environment, the divestment decision by a major US Protestant denomination underscored that climate change is increasingly seen by religious leaders as a deeply moral issue.

The measure, adopted by the governing body at a meeting in Salt Lake City, commits the church to quit fossil fuels and re-invest in clean energy.

It covers only a small portion of church holdings, but encourages individual parishes and dioceses to begin moving funds in their control away from coal, oil and gas. [Continue reading…]

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Koch-backed group calls for no more national parks

Claire Moser writes: Just in time for the Fourth of July — when millions of people across the country will visit America’s national parks and other public lands — the Koch brothers are rolling out their latest campaign against these treasured places: pushing for no more national parks.

In an op-ed published in Tuesday’s New York Times, Reed Watson, the executive director at the Koch-backed Property and Environment Research Center (PERC), along with a research associate at the Center, call for no more national parks, citing the backlog in maintenance for existing parks.

“True conservation is taking care of the land and water you already have, not insatiably acquiring more and hoping it manages itself,” the op-ed reads. “Let’s maintain what we’ve already got, so we can protect it properly,” it concludes. [Continue reading…]

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Greek referendum No vote signals huge challenge to eurozone leaders

The Guardian reports: Five years of failed austerity policies in Greece and a total breakdown in trust between the leftwing Syriza alliance and the political leaders of its creditors climaxed in a national vote in which Greeks said no to the spending cuts and tax increases demanded by its lenders.

As the magnitude of the result became clear, thousands of no vote supporters began pouring into the central Syntagma Square in front of the parliament in Athens to celebrate, waving Greek flags and chanting “No, No.”

The sweeping victory for Tsipras, who challenged the might of Germany, France, Italy and the rest of the eurozone, represented a nightmare for the mainstream elites of the EU. With Greek banks closed, withdrawals limited, capital controls in place and the country rapidly running out of cash, emergency action will be needed almost immediately to stem the likelihood of a banking collapse. But it is not clear whether the European Central Bank will maintain a liquidity lifeline to Greece and whether the creditor governments of the eurozone will sanction instant moves to salvage Greece’s crashing financial system.

Germany’s vice-chancellor and social democratic leader, Sigmar Gabriel, said Tsipras had burned his bridges with the rest of the eurozone. But the Greek leader believes he has strengthened his negotiating hand.

Tsipras campaigned for a no vote, arguing that this was the best way to secure a better deal, keeping Greece in the euro while obtaining debt relief from its creditors. The leaders of Germany, France and others stated the opposite, that a no vote meant the Greeks were deciding to become the first country to quit the currency, membership of which is supposed to be irreversible.

It is not clear which view will prevail. The EU mainstream hoped for a yes vote, not only because it would have represented democratic assent to the euro and acceptance of austerity, but also because the Tsipras government would have come under strong pressure to stand down. Negotiations between the two sides have gone nowhere for five months and have become particularly rancorous in the past month as bailout and debt repayment deadlines came and went, with Athens missing a €1.5bn repayment to the IMF. The country now faces a €3.5bn payment to redeem bonds at the European Central Bank in two weeks.

Eurozone confidence in Tsipras is at rock bottom and there is virtually zero faith that he will implement reforms needed to secure cash even if he agrees to them. For his part, the fiery Greek leader as recently as Friday accused his eurozone creditors of blackmail, extortion, and seeking to humiliate his country.

What happens next in the five-year saga that has shaken the eurozone to its foundations is sheer guesswork.

But the Greek vote is a huge blow to EU leaders, particularly the German chancellor, Angela Merkel, who has dominated the crisis management through her insistence on fiscal rigour and cuts despite a huge economic slump, soaring unemployment and the immiseration of most of Greek society.

“The failure of the euro means the failure of Merkel’s [10-year] chancellorship,” said the cover of the latest issue of Der Spiegel, the German weekly. It depicted her sitting atop a Europe in ruins. [Continue reading…]

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How Europe played Greece

Alex Andreou writes: “They have decided to strangle us, whether we say yes or no”, said a Greek woman to me yesterday. “The only choice we have is to make it quick or slow. I will vote “oxi” (no). We are economically dead anyway. I might as well have my conscience clear and my pride intact.”

Her view is not atypical among friends and relations I have canvassed in the last few days. Trust has evaporated. Faith in European Institutions is thin on the ground. Lines have been crossed. At times of financial strain, a country’s currency issuer, its central bank, should act as lender of last resort and prime technocratic negotiator. In Greece’s case, the European Central Bank, sits on the same side as the creditors; acts as their enforcer. This is unprecedented.

The ECB has acted to asphyxiate the Greek economy – the ultimate blackmail to force subordination. The money is there, in our accounts, but we cannot have access to it, because the overseers of our own banking system, the very people who some months ago issued guarantees of liquidity, have decided to deny liquidity. We have phantom money, but no real money. There is a terrifying poetry to that, since the entire crisis was caused by too much phantom money in the first place. [Continue reading…]

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Greece, honor and the ancient ties of wergeld

By Alexander Douglas, Heythrop College, University of London

On the surface, it seems the Greek crisis is all about money. The Greek government has defaulted on a €1.6bn loan repayment to the IMF and is seeking a new bailout programme. Meanwhile, the Greek people are to take part in a referendum that is being billed as a choice between the euro and the drachma.

In fact this crisis is not about money. Greece’s creditors are well aware that Greece cannot repay or even service its debt. They are happy to keep finding ways to refinance it, so long as Greece agrees to punitive austerity policies. They aim for punishment, not repayment. They care about honour and vengeance, not money.

Modern Europe is witnessing an enactment of an ancient law known as wergeld. Greece is expected to continue paying, not until its financial debt has been cleared, but rather until its creditors think it has suffered enough.

[Read more…]

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