The Great International Depression of 2008 & Beyond /

Very difficult to compare a fixed benefit public pension with an equities based private one. If the State goes bankrupt the discussion will become academic, as public sector pensions would be unpayable. Perhaps that thought might encourage a more flexible approach from public sector workers.

For your interest:

Quote :

Friday, December 12th, 2008

Senate to Middle Class: Drop Dead ...a message from Michael Moore

Friends,

They could have given the loan on the condition that the automakers start building only cars and mass transit that reduce our dependency on oil.

They could have given the loan on the condition that the automakers build cars that reduce global warming.

They could have given the loan on the condition that the automakers withdraw their many lawsuits against state governments in their attempts to not comply with our environmental laws.

They could have given the loan on the condition that the management team which drove these once-great manufacturers into the ground resign and be replaced with a team who understands the transportation needs of the 21st century.

Yes, they could have given the loan for any of these reasons because, in the end, to lose our manufacturing infrastructure and throw 3 million people out of work would be a catastrophe.

But instead, the Senate said, we'll give you the loan only if the factory workers take a $20 an hour cut in wages, pension and health care. That's right. After giving BILLIONS to Wall Street hucksters and criminal investment bankers -- billions with no strings attached and, as we have since learned, no oversight whatsoever -- the Senate decided it is more important to break a union, more important to throw middle class wage earners into the ranks of the working poor than to prevent the total collapse of industrial America.

We have a little more than a month to go of this madness. As I sit here in Michigan today, tens of thousands of hard working, honest, decent Americans do not believe they can make it to January 20th. The malaise here is astounding. Why must they suffer because of the mistakes of every CEO from Roger Smith to Rick Wagoner? Make management and the boards of directors and the shareholders pay for this.

Of course that is heresy to the 31 Republicans who decided to blame the poor, miserable autoworkers for this mess. And our wonderful media complied with their spin on the morning news shows: "UAW Refuses to Give Concessions Killing Auto Bailout Bill." In fact the UAW has given concession after concession, reduced their benefits, agreed to get rid of the Jobs Bank and agreed to make it harder for their retirees to live from week to week. Yes! That's what we need to do! It's the Jobs Bank and the old people who have led the nation to economic ruin!

But even doing all that wasn't enough to satisfy the bastard Republicans. These Senate vampires wanted blood. Blue collar blood. You see, they weren't opposed to the bailout because they believed in the free market or capitalism. No, they were opposed to the bailout because they're opposed to workers making a decent wage. In their rage, they were driven to destroy the backbone of this country, not because the UAW hadn't given back enough, but because the UAW hadn't given up.

It appears that the sitting President has been looking for a way to end his reign by one magnanimous act, just like a warlord on his feast day. He will put his finger in the dyke, and the fragile mess of an auto industry will eke through the next few months.

That will give the Senate enough time to demand that the bankers and investment sharks who've already swiped nearly half of the $700 billion gift a chance to make the offer of cutting their pay.

Fat chance.

Yours,
Michael Moore

"The unspeakable in pursuit of the unemployable". Mathew Norman writes acidly about the new media and political blood sport of attacking the newly unemployed:

http://www.independent.co.uk/opinion/commentators/matthew-norman/matthew-norman-it-takes-a-rich-man-to-pour-such-scorn-on-the-poor-1061132.html

Aragon wrote:

"The unspeakable in pursuit of the unemployable". Mathew Norman writes acidly about the new media and political blood sport of attacking the newly unemployed:

http://www.independent.co.uk/opinion/commentators/matthew-norman/matthew-norman-it-takes-a-rich-man-to-pour-such-scorn-on-the-poor-1061132.html

My reading of this is its about the British move to remove benefits from the long-term unemployed. The article gives a good flavour of Nearly New Labour.

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The fact that nothing significant will change – that this Bill will have its teeth filed down to the stumps by that gallant cabal of backbenchers who remember why they joined the Labour party in the first place – is not the point. Nothing important will change because in this area nothing ever does. Soon after taking power, in the week he chartered a 747 to Seattle for £700,000, Mr Tony Blair floated the intention to trim "workshy" single mothers' benefits by £11 per week. He earned a few nice headlines, and the reflex disgust from the centre-left that was also mother's milk to him, but the political price of such malevolence was too high, and the proposal was quietly buried.

This latest sub-Thatcherite, far right-wing political posturing may come loosely disguised in the raggedy cloak of stick-and-carrot philanthropy, but it would come at a higher price still. The wilful stupidity of the timing, with at least a million poorly paid jobs about to vanish, needn't detain us. The concept of punishing the poor for receiving the assistance that is their right, by making them dig the gardens of the better off, feels like a pastiche of the vindictive nihilism of the rock-breaking Alabama chain gang.

What stinks worse than the idea is the tone. From the pious, cruel-to-be-kind brayings of the Freud-Purnell pantomime donkey, every word emanating from the rear end, they seem confused into thinking that the jobless have a lesser stake in this society than the employed, and believe in the deserving and undeserving poor. To watch a minister with a plumply padded pension and a free widescreen telly and, of all creatures, an investment banker threaten those on £69 per week is to observe the unspeakable in pursuit of the unemployable

The downturn was easily predicted.

The bad news is it is going to get worse. What is being done at the moment will lead to at least 4 billion less people by 2020.

The most amazing thing is to see how everyone is being suckered.

The 35 republican senators are the only ones that are making sense.

Michael Moore is a leech feeding off stupid people. Someone should ask him why he does not start a company building cars for the 21st centuary. Then he could pay 80 dollars an hour and as much health care as he likes.

He is not a fool, he is a millionaire, but anyone that pays attention to him is a fool.

Ireland could be fine but my bet is that the Irish will follow Cowen right into starvation. Cowen will be fine though.

Some think that Cowen gives a shythe about them. Is it not better to let those people die off to improve the gene pool anyway.

youngdan wrote:

Cowen will be fine though.

Some think that Cowen gives a shythe about them. Is it not better to let those people die off to improve the gene pool anyway.

I don't think Brian Cowen fits into any superios gene pool to be frank. I'm no expert on eugenics but I can tell you that much.

Cowen is not the one I meant who was dying off. In fact he appears to be thriving with the largest salary of any leader in the Universe.

The fools who believe him are the ones who are about to become malnourished.

Did not Cactus say they could not buy the groceries.

Audi

Following on from previous and need for bottom up and also regional regeneration:

Often we hear that economies are out of synchronisation with each other and all sorts of standard political platitudes come forth. However often within countries there are regions that are out of sync with the rest of the country. I was pondering if it would be possible to have differential interest rates based on post code. So if you are buying a house or running a business in central London and there is over heating in that area it has higher base rates from say Carlisle which is stagnating?

You could have banding based on economic data and variable interest rates across the country or Europe. Local areas could have their own bonds etc. Shouldn't be that difficult to do.

PS Did like the Germany guy. Very sound.

Squire wrote:

Audi

Following on from previous and need for bottom up and also regional regeneration:

Often we hear that economies are out of synchronisation with each other and all sorts of standard political platitudes come forth. However often within countries there are regions that are out of sync with the rest of the country. I was pondering if it would be possible to have differential interest rates based on post code. So if you are buying a house or running a business in central London and there is over heating in that area it has higher base rates from say Carlisle which is stagnating?

You could have banding based on economic data and variable interest rates across the country or Europe. Local areas could have their own bonds etc. Shouldn't be that difficult to do.

PS Did like the Germany guy. Very sound.

There are arguments for and against spreading development around - in the main, don't property prices rise and fall dependent on access to jobs and income-earning opportunity? In Ireland, tax incentives were given to encourage development in areas that were non-viable - like rural county Leitrim. A lot of these houses are standing empty now.
Where I do agree is that it would be less damaging to have raised interest rates in high demand areas than giving tax incentives in the back of beyond.

I was thinking if development is rocketing into a bubble in Dublin and commuter belt and flat in Leitrim etc then the same interest rate policy does not suit all.

It may also mean that businesses in depressed areas would be better able to compete and yet we could also use the same tool to keep prices down in the over heated areas.

I am not particular found of interest rates being used as the main weapon against inflation; very blunt tool and politicians abrogate their responsibility, to maintain the economy, to central banks.

Squire wrote:

I was thinking if development is rocketing into a bubble in Dublin and commuter belt and flat in Leitrim etc then the same interest rate policy does not suit all.

It may also mean that businesses in depressed areas would be better able to compete and yet we could also use the same tool to keep prices down in the over heated areas.

I am not particular found of interest rates being used as the main weapon against inflation; very blunt tool and politicians abrogate their responsibility, to maintain the economy, to central banks.

There are a lot of instruments that can be used to redistribute development, but big urban areas exert an enormous pull and it is hard to counteract that. It is still early days to see if internet access will reduce the pull to the centre. I think it will to some extent, as it makes it possible to earn a good living in much more remote locations than was previously the case.

Here is an interesting read. All about the bailout and 'transparency'.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aGvwttDayiiM&refer=exclusive

Squire

The programme "The Ascent of Money" showed that there have been very high peaks of indebtedness before, but they were related to war loans. The position was recovered, slowly and painfully, in post war booms.( I wonder is the content of that programme available so we could look at it here?). This massive debt incurred in peace time looks to be without precedent.

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In the last two years land prices in Ireland went up by multiples. How could that be when the market had clearly flattened off and AIB itself sold all its properties?

The picture is this: Bank loan staff pushed out multiple loan offers to different developers who were going to bid against each other at land auctions. They encouraged them to take up borrowings, without business plans for the lands, that permitted them to bid each other up to crazy prices. The loan staff directly benefitted from increased commission.

I just wanted to add to that that the loan book of the Irish banks doubled since the beginning of 2005 (David McWilliams mentioned this on RTE this morning). A single developer is going down to the tune of !.2 or more billion indebtedness.

I think it was Ecuador that defaulted on its foreign debt yesterday. There will be more national defaults.

Beautiful sharp, clear frosty morning here today (off topic)

Just half way through that article Squire. Did you watch the youtube of Max Keiser on the front ? He's talking about financial black holes into which the liquidation of the United States would fit and then some more on top.

2 trillion and they can't divulge it .... that's war talk.

Auditor #9 wrote:

Just half way through that article Squire. Did you watch the youtube of Max Keiser on the front ? He's talking about financial black holes into which the liquidation of the United States would fit and then some more on top.

2 trillion and they can't divulge it .... that's war talk.

Someone keeps saying that to me here too. It is hard to see how they can avoid it, but they should not be allowed.

Audi

Yip I did watch Max. I have been saying, in a joking manner, for some time, that the USA would need to sell of Alaska to pay for its balance of trade deficit. You just cannot run a household or country on borrowings for ever. I can't see the scale of the debts currently being chalked up ever being repaid.

Hopefully with the departure of that clown Bush we will see an end of the voodoo that was his alleged economic policy, but the damage that the last 8 years has done is on a power with the likes of Nero. Obama will be saddled with debt. That said much of the problems go back a lot further through Clinton and back to Regan, it just got so much worse under Bush, who really does not care.


Cauctus.

Had a longer reply, but seem to have lost it. This web of secrecy further reinforces the view that this is a scam. Sub prime is the scape goat for a wider problem and if I knew there was problems afoot more than 3 years ago you can bet that many others did as well. The sudden nature, and the urgency of the requested bailout, has all the hall marks of a classic sting. We are watching the unfolding of the biggest fraud in history and few are saying boo.

The consequence could result in a major realignment of global power. Certainly the USA is in sharp decline and we need an alternative to the dollar as a trading currency. Voicing such opinion is more of a threat to the US than oil supply! The US is a bought economy many could now undermine it if they so desired. So what are the political implications? It is a real house of cards.

[quote="cactus flower"]Squire

The programme "The Ascent of Money" showed that there have been very high peaks of indebtedness before, but they were related to war loans. The position was recovered, slowly and painfully, in post war booms.( I wonder is the content of that programme available so we could look at it here?). This massive debt incurred in peace time looks to be without precedent.

Quote :

In the last two years land prices in Ireland went up by multiples. How could that be when the market had clearly flattened off and AIB itself sold all its properties?

The picture is this: Bank loan staff pushed out multiple loan offers to different developers who were going to bid against each other at land auctions. They encouraged them to take up borrowings, without business plans for the lands, that permitted them to bid each other up to crazy prices. The loan staff directly benefitted from increased commission.

I just wanted to add to that that the loan book of the Irish banks doubled since the beginning of 2005 (David McWilliams mentioned this on RTE this morning). A single developer is going down to the tune of !.2 or more billion indebtedness.

I think it was Ecuador that defaulted on its foreign debt yesterday. There will be more national defaults.

Beautiful sharp, clear frosty morning here today (off topic)

Consider Bernard Madoff and his little swindle. What exactly were the regulators doing? Says all you need to know about US financial institutions and what little regulation remains.

The scale of these frauds is staggering and the consequence for many will be dire. Thousands of people's lives will be ruined. I think we need sentences that reflect the magnitude of the crime. The only thing that these economic psychos value is their life. Of course they also think that they are so clever that they will never get caught.

So we have a Bank Guarantee that is not deliverable
A "recapitalisation" plan that doesn't actually seem to exist
A five year plan launched today but with details to be provided some time after Christmas...

I'm beginning to think that someone is taking the P.

One suggestion for dealing with the crisis

By not helping the their domestic car industry in some way, is America not committing a form of economic suicide?

Fiat was in a worse position a few years ago, GM bought them over and made changes, but because the results didn't happen quickly enough they decided to pay €1 billion to get rid of the company again (proving the short term view of US/UK shareholders), but the company is back on its feet again.

As we in Ireland don't have a car industry, its hard for us to understand how important a car industry is to large economies. France, Germany etc depend heavily on theirs.

We should be thanking the Lord and all his fluffiest little angels that we DON'T have a car industry. Even the Germans are being massacred, and someone in one of the papers said that 1/7 German jobs are indirectly or directly related to the car business.

Can't help wondering if we're all gonna have to wipe the slate clean at some point... declare all debts null and void, start a new currency and begin again?? Certainly, I don't believe Gordon and his warship building will do anything other than mortgage the as-yet-unborn UK subject for years to come. Unless he plans to join the Somalis in a secret business venture?

North Sea revenue is plummetting along with the oil and gas pumped there... the UK ain't gonna have no money to repay those debts. Thatcher got through the 80s better than us on the back of the rise of those revenues.

I doubt Madoff will be the last unveiled Ponzi operator, more's the pity.

I've been hunting you on the other thread but this one is more appropriate so thanks for moving it here.

Do you think it's a problem of over-production of the likes of cars ? I bought a nice second-hand car a year ago and then 6 months later/ago the same car was half the price - I'm talking about a good couple of grand here.

Cactus had a good line about over-production before I think on another thread about "Quantitiative Easing" and I'll find it but the gist was - the problem isn't production now but distribution of the stuff already there.

It's totally ceased up and will be like that for half a dozen years anyway if not longer.

There is of course historical precedent for the total forgiving of debts, quite how it would work in the modern era where there is no universal order is unclear though. It is probably impossible. In Jewish history they used to cancel debts and free indentured workers every 50th year, known as a year of jubilee, it came at the end of every 7th Sabbatical Cycle (7 years x 7 cycles). It was copied by the Catholic Church in the 14th century but heavily tied to indulgences and spiritual salvation.

The Jubilees of the Hebrew Law were the basis for the Jubilee 2000 Campaign of the late 1990s which sought greater debt cancellation for the developing world. People may remember celebrity supporters included the usual suspects, Bono, Geldof, Quincy Jones and in addition Muhammad Ali. The organisation has been subsequently superceded by others such as Make Poverty History.

This is very well said below I think :

cactus flower wrote:

This paper money won't solve a thing. There are fundamental problems of a collapsed rate of profit. We are its seems on a global basis too good at producing stuff: people don't have enough money to buy what is produced, so they borrowed to buy when credit was available. The whole thing was compounded by concentration of profits into a small number of hands - these people were simply not able to spend and recirculate as much as they were able to acquire for themselves.

Cactus Flower - Reinflating the Economy - Use Your Imagination !

Johnfás

Not forgiving, just turning the interest off and the thumbscrews for a few years.