Tag Archives: Greece

Meanwhile: What We Aren’t Talking About

World Map I have this miserable feeling that what is purported to be a debate including foreign policy on October 19th in Las Vegas, NV will devolve into a session about emails/Benghazi… both manufactured outrages which are GOP specialties.

Meanwhile in our very real world there are some important issues which are not being addressed, not being explained for the American public.  Here are a few —

Greece.  If we thought this issue of a European Union country in dire financial straits as over – think again.  There is currently more happy talk about the restoration of the Greek economy, but yet more bail out money is in the offing.  Another $3.1 billion loan has been authorized to the government.

“Greece’s debt stands at about 180 percent of Gross Domestic Product and the International Monetary Fund has been arguing that the primary surplus targets set by Athens’ creditors to secure the massive rescue loans will prove too tough to respect. It remains unclear whether the IMF will take part in future loans without some form of debt reduction, something the 19-nation eurogroup is reluctant to discuss, given the many billions already spent on keeping the country afloat.” [USNWR]

In other words the economic/foreign policy questions related to the Greek economic crisis and its implications hasn’t been resolved, it’s merely been postponed.  I’d like to hear candidates discuss how the US should address problems created in the Greek/Eurozone economy by the aggregation of debt and the reluctance of bond holders to reduce their interest rates or renegotiate the rates. I don’t think we’re going to hear it.

China. There will probably be some references to China in terms of US trade, and the balance of trade between the US and China – but let’s guess that there will be radio silence on the freedom movement in Hong Kong.  The democracy movement is still alive in that area, the vestiges of the Umbrella Revolution survive, but the delicate balance of interests has implications for US policy in the region.  Will the fate of the Umbrella Revolution be referenced in foreign policy debates? Probably not.

South China Sea.  Here’s a situation fraught with consequences for the region, and for US interests.  China seeks to expand its influence in the area, the position of the Philippine government remains unclear.  China has made inferences to US ‘intervention’  in the area, and has told New Zealand to ‘butt out.’ [NZHerald]  Meanwhile, Indonesia has made a show of force in the South China Sea, and Japan is joining US patrols.  Singapore has expressed concern over the safety of fishermen and coast guard patrols, even though it is not a claimant in any territorial disputes.  Explication? Again, likely not.

Democratic Republic of Congo.  The election disputes turned deadly in late September.  President Kabila’s term is supposed to end in December, but elections have been put on hold, precipitating the violence.  The Vatican has weighed in, calling for a peaceful resolution of the election issues.  The US State Department issued a revised travel warning for the country five days ago.

“The potential for civil unrest remains high in Kinshasa and other major cities. In addition armed groups, bandits, and some elements of the Congolese armed forces continue to engage in murder, kidnapping, and robbery in a number of areas of eastern DRC. Very poor transportation infrastructure throughout the country and poor security conditions make it difficult for the U.S. Embassy to provide consular services anywhere outside of Kinshasa.” [USSoS]

Is the US prepared to react to continued civil unrest in the Democratic Republic of Congo?  At what point does the US express its position, and make it clear we’d support UN initiatives to secure a peaceful transition of power?  We aren’t likely to find out during campaign season.

Turkey.  The coup attempt in Turkey created problems for US – Turkey relations.  [Fortune]  The relationship was complicated in the first place, and isn’t likely to get simplified any time soon. [WaPo]   Subtopics include our relationship with the Kurds, our relationship with the Erdogan government, our relationship with NATO.  And then there are Pentagon discussions about arming the YPG.  The situation is further complicated by talks between Russia and the Erdogan government over a pipeline.  

Russia and Eastern Europe.  Two days ago the Polish government expressed its disapproval of Russian missiles being deployed in Kaliningrad, in an area bordering Poland and Lithuania. [Reuters]  The Estonians weren’t pleased by the moving of the Iskander-M missiles either. [Guardian] The situation became more ‘touchy’ with Estonian charges of Russian incursions into Estonian air space. [EuOnline]  These aren’t issues to be minimized especially in light of Russian activities in Ukraine.

Putin is now claiming that Russian was “forced” to defend Russian speakers in eastern Ukraine, “Putin had denied sending troops into Crimea, before annexing it in 2014, and issued similar denials regarding Donbas. However, he has issued statements seemingly admitting to armed Russian presence in both regions since.”   Said Putin, stating the obvious.  The situation is rendered more tenuous as Germany is downplaying the idea of Four Way Summit on Ukraine. [Reuters]  There are talks scheduled for this Thursday and Friday, but evidently not much hope for any progress toward ending Russian incursions or the ‘separatist’ movement in eastern Ukraine.  The fighting continues.  

Without a better and fuller discussion of foreign policy issues in the political arena, Americans may have to live up to the old saw, “War is God’s way of teaching Americans geography.”

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Coffee and the Papers

Oh my, the story concerning Nevada über-lobbyist Harvey Whittemore has all the Big Names — Ensign, Ernaut, Sandoval, Reid, Heller, Berkley — and a flight of campaign donations returned. [full story Las Vegas Sun] Perhaps leading to the conclusion that Hell hath no fury like a business partner scorned?

Someone might want to tell Senator Rubio (R-FL) that he really doesn’t get to have it both ways.  He can’t devote a full paragraph to his family’s flight from Castro’s Cuba [Rubio] in his Congressional biography, which is a little strange since his parents left in 1956* (and then attempted to return, or visited, or something in ’61),  campaign as one who  “always publicly identified with the exile community and has a strong following within it. In a campaign ad last year, he said: “As the son of exiles, I understand what it means to lose the gift of freedom,” [CSM] [WaPo] and then get touchy when Senator Harry Reid (D-NV) calls him out for stonewalling the confirmation of Mari Carmen Aponte as ambassador to El Salvador in order to pressure the Obama Administration into changing policy toward Cuba and Nicaragua. [LV Sun]  *Fidel Castro did not take over until February 16, 1959.

The Yucca Mountain Breakdown. Another slip of the tongue from Mark Amodei (R-NV2) “While nobody wants a nuclear landfill in Nevada, we probably ought to at least talk about it,” Amodei said. “Well if that is breaking ranks, then yes I did.” At which point former Nevada Governor Richard Bryan came down upon the freshman representative like a ton of toxic dirt. [full story Nevada News Bureau]  Just asking, but if nobody in Nevada wants it — what is the point of talking about it?

No matter how many Democrats jump on board, the cleverly named CPU Act is a bad idea.   The bottom line is that enactment of this legislation would cut tech workers’ pay and allow employers to cut overtime pay. [More at Economic Policy Institute]

A bankruptcy is a bankruptcy… Governor Romney is having some difficulty in Michigan with the auto bailout rhetoric.  And, then’s there’s Bain in the mix:

“The managed bankruptcies that Romney had in mind in early 2009 for the two car companies pretty clearly were liquidations that would then allow Bain Capital or other venture capital firms to buy small parts of these companies, eliminate union workers, and … I’m not sure.  A weird, incoherent ad his campaign’s been running on the local news broadcasts actually hints at the elimination-of-union-workers thing, while actually advertising that “liberals” got “Obama” to save the auto industry.  Seriously.” [Angry Bear]

Not. So. Fast.  Senator Pat Toomey (R-Club for Growth) was incensed that anyone would believe his taxation plan would require tax increases for those earning less than $200,000 annually.  Except Senator Toomey’s tax plan would require tax increases for those earning less than $200,000 annually.

“The math is irrefutable.  Senator Toomey told O’Brien that, while reducing their deductions and credits, he also would cut tax rates for people below $200,000 so that they would face no net tax increase.  But that can’t be.  If the tax plan is supposed to produce a net increase in revenues, and if it loses revenue from people making over $200,000, then it simply must raise revenue from people making less than $200,000.”  [CBPP]

Financialist Follies.  John Paulson, he of the Hedge Fund Titans who helped create the Wall Street Casino, is worried about a Greek default:

“We believe a Greek payment default could be a greater shock to the system than Lehman’s failure, immediately causing global economies to contract and markets to decline,” the hedge fund said in the letter, a copy of which was obtained by Bloomberg News. The euro is “structurally flawed and will likely eventually unravel,” it said.?  [Bloomberg]

Look carefully at Paulson’s terms.  “Shock to the system” as in a shock to the financial markets.  “Causing global economies to contract” as in investment banks particularly in France and Germany will find themselves in another bind.  “Markets to decline,” at this point Paulson isn’t talking about the market for automobiles, homes, refrigerators, or agricultural products — the only “market” in which he is interested is the Stock Market.

In short, we might want to take a deep breath and contemplate what another self-induced panic by the Wall Street wizards might mean for credit access for American consumers and businesses.   Remember: Those investment banks could have invested in plant expansion, infrastructure projects, manufacturing upgrades, or entrepreneurial enterprises — it was THEIR choice to invest in Greek debt.

Brute Force, that’s how a Citigroup whistle blower described the firm’s attempt to paper over its bad loans. [C&L]

“Instead of reporting the defects to the Federal Housing Administration, the bank saddled the agency with losses by falsely declaring the loans fit for its federal insurance program, according to a complaint filed yesterday by the U.S. Attorney’s Office in Manhattan. Citigroup agreed to pay $158.3 million to settle the claims, and admitted that it certified loans for FHA backing that didn’t qualify.”  [Bloomberg]

And, how was this accomplished?

“Efforts to quash negative quality-control reports about mortgages continued into 2011, according to the complaint. That January, at a quarterly staff meeting that Hunt said 1,000 people attended, CitiMortgage managers gave a “Star Players Award” to workers who had successfully challenged negative reviews during meetings with quality-assurance workers and others, according to the complaint.”  [Bloomberg]

The press release from the Department of Justice, USAO Southern District of NY is available here for those who want more details. (pdf)

The Urban legend of those Terrible Health Care Costs.  Oops, the facts just don’t fit the narrative.

“In fact, the recent trends are mildly favorable. As J. D. Keinke of the American Enterprise Institute writes today in the Wall Street Journal, the idea of runaway health spending is a “myth” because “new data show that health spending over the past several years has been normalizing toward the rate of general inflation, rather than growing higher and higher, as had been the case almost continuously since the 1970s.” … [EconView]

Faux New tries and fails to get the author of the book on the Obama Administration to fill in the blanks with misinformation.  Find the entertaining and illuminating video here.

WalkerGate gets more interesting as investigators are probing into the possibility of real estate bid rigging in Wisconsin while Scott Walker was Milwaukee County Executive. [BlueCheddar] [MJS 1/25] Walker has asked for two more weeks for reviewing recall petitions. [MJS]  This, while a three judge federal panel excoriated Wisconsin Republican lawmakers and told them:

“…to turn over 84 documents to a group of Democrats in a blistering order that said Republicans had engaged in an “all but shameful” effort to keep its efforts hidden from the public.

The court promptly released the documents that showed, among other things, that Republicans who drew new election maps last year largely orchestrated the public testimony given in support of them.

The three federal judges – two of them appointed by Republicans – were unanimous in their decision. It came after a string of orders against the Republicans and just five days be fore the judges will preside over a trial in Milwaukee to determine whether the maps adhere to the U.S. Constitution. [MJS]

But, the saddest feature of the attacks on Wisconsin citizens and their rights is to be found in this article, including:

“Before Sunday’s sermon in many churches in Milwaukee, ministers and religious leaders will ask those sitting in the pews to pull out their photo identification as a step to make sure that their members can vote in Tuesday’s primary election.” [MJS]

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Filed under Amodei, Berkley, Ensign, Health Care, Heller, labor, Reid, Romney, Sandoval, tax revenue, Taxation, Vote Suppression, Yucca Mountain

Beware of Politicians Speaking of Greeks: Updated

If the current situation playing out in Athens were a melodrama it would be difficult to pick out the protagonists from the antagonists.  The Greeks, after all, gave us these theatrical terms and now we are watching the drama of a Parliament giving in to the austerity measures demanded by the international bankers, Athens on fire, and a host of serious questions unanswered.  [Bloomberg]  Here is a sample:

(1) If we don’t pay down our national debt are we going the way of the Greeks? Quick answer: NO.  Longer answer:  For starters, Greece has the 41st largest economy in the world, if we measure by GDP.  That would put it in the $325 billion range. [CIA] By contrast, the U.S. Department of Commerce estimates that the GDP of California was $1.89 trillion in 2009. [EconPost] Structurally, Greece depends on its public sector (40%?) and tourism, which accounts for about 15% of its total.  Again, the contrast between the two economies, one not even enough to put it into a Top Ten List of U.S. state economies, with the total U.S. output of $12.982 billion (December 2011 GDP) and there is obviously no comparison. [BEA]

A second point should be made for all those who are attempting to compare economic apples with ideological oranges.  Headlines like “US debt now bigger than (fill in the blank with some year’s GDP)” aren’t really helpful.  The point isn’t the size of the debt, it’s the ability to pay it off.  The BBC provides this handy graph:

Now, let’s look at another chart from the BBC report:

If the ratio were the sole determinant, what to make of the fact that the probability of repayment is less for Spain than for the United Kingdom which actually has a higher debt ratio?  The answer lies in the strength and diversity of the underlying economy allowing it to eventually pay off its obligations.

The “budget deficit” part of the graph doesn’t explain the probabilities in graph One either.  Again, Spain has almost the same deficit ratio as the U.K but is above it in terms of probability of payment.  Once more, it’s not the ratios that determine the direction, but the likelihood that the underlying economies of Germany, the U.K, and the U.S. can sustain obligations much more capably than the less dynamic and diversified economies of Italy, Greece, Portugal, and Ireland.

(2) Will austerity measures solve the Greek problem?   Short answer: Maybe.  And, then again maybe not.  Longer answer:  We need to look at the individual austerity measures, and then ask how productive these initiatives might be.  The package calls for (a) a 22% cut in the minimum wage; (b) 150,000 public sector jobs cut by 2015; (c) pension cuts by $370 million this year; and (d) the enaction of laws making it easier to lay off workers, and (e) spending cuts for health care services and defense. [TDJ]

The first question we might want to ask is if the Greek minimum wage was artificially inflated?  What we find is that the comparison of the Greek minimum wage to other European countries is difficult because several like Germany, Sweden, Finland, the Czech Republic, and Italy don’t have statutorily mandated minimum wages.  What the EuroStats information does tell us is that as of 2009, the Greek minimum wage level was comparable to that in Spain and Portugal, but higher than that in what used to be the Eastern European bloc. [EuroStat pdf]

If the Greek minimum wage isn’t already substantially higher than other members of the Eurozone, then what might the impact be of cutting it by 22%-22%?  Here we come to the part where the rubber meets the road and realities diverge from economic ideologies.

For all the glitzy graphs and equally glittering generalities on offer, there is one problem economists cannot solve with their models — there is no way to establish the one, the crucial, and the absolutely necessary, component in scientific research — the control.  It isn’t like we can divide nations into a control group with no austerity programs and no wage cuts, and establish a test group with comparable austerity programs, and then statistically compare the two groups.  Without a control group there is no scientifically definitive way to control for causality, or even to find rational correlations.  And, if we can’t even measure correlations, then we’re left at our starting point — taking economic proposals as articles of faith. [See also: GuardianUK]

One side will propose that creating a more “business friendly environment” with lower wages, lower or no pensions, and more latitude for corporate management will cause economic growth, which will in turn drive increased capacity to meet indebtedness.  The other will argue that depressing consumer spending by decreasing wages will simply serve to drive the economy downward, prolonging the hard times.  [FalseEconomy] At least one major  piece of “meta-research” appears to lend credence to the latter, [IPPR pdf] but without any control we’re still arguing possibilities not statistical probabilities.

(3) Will the Greek problem spread to the U.S?  Short answer: Not necessarily. Longer answer: It depends on the problems in the financial sector.  To test the waters, we might first observe who’s freaking out about the Greek situation?   The answer may be that the more exposure to Greek debt, the greater the possible  Freak Out factor.

1. Spanish government debt exposure to Greece is about $502 million, with a total lending exposure of approximately $1.5 billion.  2. The Swiss government’s exposure is about $529 million, with a total lending exposure of $3 billion. 3. The Belgian government has $1.9 billion, with a total lending exposure of $10.5 billion.  4. The U.S. government has an exposure of $1.94 billion, with a total lending exposure (including private sector) of $8.7 billion.  5. The Italian government exposure is $2.4 billion, with a total exposure of $4.5 billion.  6. The British government has an exposure of $3.96 billion with a total lending exposure of $14.7 billion. 7. The French government is exposed to some $13.4 billion, with a total lending exposure of $56.94 billion.  8. German government exposure totals $14.1 billion, while its total lending exposure equals $23.8 billion.  [BusInsider] * See charts added below.

A quick and dirty analysis would say that the German government has the most exposure to the Greek indebtedness mess, while French bankers are up to their armpits in it.  Banks in the U.S. are much lower in this dubious ranking.  Of the eight countries with significant chunks of Greek debt, the U.S. is among the bottom four.   We might infer from this that the anguish expressed in the United States will be more a function of how major banks perceive the impact of a Greek default on their bottom lines than how much effect a potential default will actually have on the U.S. economy as a whole.

One effect we might well bet on is that should the Greek’s program fail there will be great gnashing of teeth and rending of cloth on Wall Street.   It’s probably safe to predict that the Stock Market would report a drop in stock prices in the event of a Greek failure, as The Herd sees an equally predictable decline in the financial sector’s estimated short term revenues.  The problem in the United States may be to engage in deep breathing while The Herd thunders and panics over its “exposure” and possible consequent decline in bonuses and executive compensation?

Just as the banks securitized every U.S. mortgage on which they could lay hands during the Housing Bubble and then sliced diced and traded the portions in unregulated derivatives to their detriment, they decided to lend some $8.7 billion to the Greeks — which may or may not be paid back.  Bluntly speaking this is more an example of “reduced lending standards” to be endured than a reason for U.S. citizens to pony up any coin of the realm to further bail out institutions which decry regulation while demonstrating exactly why they need it.

Update: The following charts illustrate the numbers provided in the text —

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Friday Roundup: New, Views, Bits, and Pieces

Don’t Leave Home Without It — a person might need to charge his Nevada inauguration expenses on it — Sandoval charged expenses on American Express. [LVSun] Great way to “itemize” without itemizing. Renown Nevada lobbyist Harvey Whittemore is under investigation for funneling campaign contributions. [RGJ]

Nevada casinos made  modest revenue gains in 2011. [NNB] Good news for state revenues. While in some other states there are some strange tax proposals being discussed. [CTJ] There’s also some good news for the western states from Brookings West’s 3rd quarter report. (pdf)

Contrary to all the rhetoric about an “entitlement society” 90% of federal benefits go to the elderly, the disabled, and to working families. [CBPP] There’s even a chart for this:

Worried that the Toxic Emissions rules will detract from job growth? Don’t be.

“Taking into account the new data from the regulatory impact analysis (RIA) of the final rule (EPA 2011b), this issue brief finds that the conclusions of the earlier report, based on the RIA of the proposed rule (EPA 2011a), largely stand: The toxics rule will lead to modest job growth in the near term and have no measurable job impact in the longer term.” [full report at EPI]

Meanwhile back at the housing mess… “Despite record low mortgage rates subprime borrowers are still getting screwed,” [Business Insider]  Ben Walsh explains why the CNBC rant about the mortgage foreclosure settlement was dead wrong, in “Five Reasons…

Careful with the causation.  The situation in Greece is a mess.  Stock prices dropped today when the consumer confidence report showed a downward tick AND there’s some not very good news about the situation in Greece.  [Bloomberg] [Reuters] Here’s an easy prediction: Should the Greeks choose to default on their indebtedness, Wall Street will take a bath. If Wall Street takes a bath, then the charge will be made from some quarters that “Obama’s economic policies have failed.”  Easy. Now. The Administration is responsible for DOMESTIC economic policy, while what happens in the Eurozone depends on the Europeans.  That the Wall Street Wizards waded into those waters isn’t the fault of American politicians, American workers, or American voters.

The Greek Mess may take years to resolve. [Bloomberg]  Four senior Greek members of the government have resigned, further complicating the problems. [BBC] And, the Greek problems continue unabated. [BBC]  There is an excellent background piece from the BBC on how the bankers and the Greek government worked a little magic to make their debt disappear before Greece joined the European Union.  The Germans are demanding Greeks take quick action. [DerSpiegel]  Stayed tuned to this topic.


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Filed under campaign finance reform, campaign funds, ecology, Foreclosures, Nevada economy, Nevada politics, Sandoval