Why We Are In Political Gridlock: The Private Sector Is Dying http://www.forbes.com/sites/stevedenning/2011/11/21/why-we-are-in-political-gridlock-the-private-sector-is-dying/

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The Destruction of Economic Facts – Financial crisis wasn’t just about finance, but about the lack of knowledge http://www.businessweek.com/print/magazine/content/11_19/b4227060634112.htm
Cf. Reader comments http://app.businessweek.com/UserComments/combo_review;jsessionid=FA242695A0DC6ACABD095E9280C13911.ny04tls?action=all&style=wide&productId=127293&productCode=spec

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Tyler Cowen

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Paul Wolfowitz on #Libya : “It is shameful to be sitting on our hands” http://blog.american.com/?p=27379

Cf. “As persons we shall [9.] pacify those who attack.” http://theunitedpersons.org/constitution/statement/cs9

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Mass Atrocity Prevention and Response Operations: “The new initiative aims to retask the military’s massive fleet of overhead-surveillance gear — drones, blimps, spy planes, satellites — to place watchful eyes on the perpetrators of mass atrocities. And that’s just the beginning. Jammers might stop the radio transmissions of aspiring genocidaires. Text and social media could alert the American forces about civilians at risk of being slaughtered.” http://www.wired.com/dangerroom/2011/02/drones-vs-darfur/

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“There is a much more general or global phenomenon in which powerful people cooperate to build an economic model that provides growth based on a great deal of debt. When the crisis comes, those who control the state try to save their favorite oligarchs, but there aren’t enough resources to go around. [...]

In fact, the Irish leadership has every incentive to delay until other countries can be dragged into turmoil. The crisis will become euro-zone wide, at which point all eyes will turn to some combination of the European Central Bank, the German taxpayer, and the IMF. But the ECB can’t pay and the German taxpayer won’t pay. Does the IMF have the resources to tackle Spain, let alone a bigger country like, say Italy or even France? [...]”

http://www.bloomberg.com/news/2010-11-19/ireland-crisis-might-give-china-break-it-seeks-simon-johnson.html

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“2. Key Proposals

2.1 Financial and Monetary Reform

• Stop the banking bailouts. Remove the bank guarantee for bondholders in while retaining it for depositors when the current guarantee runs out.
• Instruct NAMA to sell off non-Irish loan properties and selected high value Irish properties subject to strict criteria. Create LLPs (Limited Liability Partnerships) to develop and hold key resilient estates.
• Public Debt Proposal 1: Campaign for ECB to disburse debt-free Euro to EMU governments on a per capita basis. €1 trillion should be disbursed immediately with a further 5% of EMU GDP distributed per annum.
• Public Debt Proposal 2: Insert a provision stating that in the event of default – the bearer on demand can use those defaulted securities to pay government taxes.
• Reform bankruptcy laws from 12 years to 3 years ban on directorships and garnishment of income and legacies.
• Reform landlord and Tenant legislation to allow for retrospective reduction of rents to market level.

2.2 Tax Shift or Environmental Taxation Reform (ETS)

• Implement an annual Site Value Tax (SVT) covering developed and zoned land
• Start preparations for Land Value Tax (LVT) covering the remaining non- zoned agricultural, forests, and peatland for budget 2013.
• Raise the Carbon Tax (or Cap and Auction Permits) to equivalent of €50 per tonne Co2 per annum to cover all fossil fuel users and share receipts with adult residents.
• Roll out domestic water metres for annual domestic water charges. Introduce charges on water effluent / pollution and water abstraction.
• Introduce comprehensive charging for the use of all the natural commons, increasing charges as use declines to maintain revenue and positive behavioural changes as identified by the EEA
• Prepare new Fiscal and Market mechanisms to address the immediate threats to Fisheries and Marine Biodiversity Commons
• Reform environmentally damaging subsidies
• Expose the true costs of services and utilities and reduce cross subsides

2.3 Public Sector Spending and Services Reform

• Reduce by 40% the salaries of all elected national and local representatives starting with the President to match levels in other European States.
• Terminate pension payments to elected representatives retired public /civil /semi state servants that have not reached 65 years and/or are still serving or employed whether under PAYE or by contract.
• Introduce a new very high rate, i.e. 75% of income tax for privileged workers earning over €75k pa until pay and benefits are reduced to EU levels and where the highest paid gets no more than 8 times the lowest paid.
• Remove public sector pension privileges.
• Tax Lump-sum public pension payments at the top rate
• Adjust all other the special Tax Expenditures / Relief as identified by TASC.
• Remove citizenship from Irish tax exiles.
• Reform funding of public services to be citizen-centred with choice of public, private and not-for-profit service provider

2.4 Employment and Investment in Resilience

• Initiate a reserve workforce through a Job Guarantee Programme to build social and environmental resilience and thereby stimulate the economy.
• The basic non-contributory pension should be raised to provide the greater part of pension for public sector, private and not-for-profit sector alike.
• Tax relief at the lowest income tax rate for a State Contributory Pension should be made available on an ‘opt-out basis’
• Pension tax relief at the highest rate should remain for funds that are 100% invested in local resilience building
• No tax relief should be available for pension savings or investment in non-Irish bonds and shares.
• Maximise Environmental, Social and Economic Value of State Assets to benefit citizens in perpetuity.” http://smarttaxes.org/wp-content/uploads/2010/11/Smart-Taxes-Budget-17.11.10.pdf

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“1. There was no substantive progress on anything to do with exchange rates. The “indicative guidelines” to be agreed next year are just a way to kick the can down the road. The Chinese are digging in hard on their exchange rate; this is headed towards a mutually destructive trade war.

2. There was less disagreement at the summit regarding the ”regulation” of global megabanks – but only because this had been gutted so effectively by the bankers’ lobby and officials who bought their specious arguments. There is nothing here that will prevent or limit the impact of another major worldwide financial crisis.

3. On IMF governance, over which there was substantial fanfare in advance, it turns out there has been a major step backwards. The Europeans have apparently signaled they are no longer willing to give up the job of Managing Director – they have always controlled this job and this is a major reason why IMF legitimacy remains weak. Unless and until an emerging market person gets this position, no one (outside of Europe) will want to rely on the IMF in an emergency. As a result all countries will want to “manage” their exchange rates – to the extent they can – along Chinese lines, aiming for a significant current account surplus (so as to build up foreign exchange reserves). See point #1 above for the likely consequences of that.” http://baselinescenario.com/2010/11/13/g20-profound-and-complete-disappointment-for-the-us-treasury

The G20 Seoul Summit Leaders’ Declaration November 11 – 12, 2010:

• Annotated original: http://online.wsj.com/article/SB10001424052748703305404575610321913647914.html
• Original: http://s.wsj.net/public/resources/documents/G20COMMUN1110.pdf
• Short: http://media.seoulsummit.kr/contents/dlobo/E1._Seoul_Summit_Leaders_Declaration.pdf

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Why the U.S. Has Launched a New Financial World War — and How the Rest of the World Will Fight Back http://www.alternet.org/economy/148481/why_the_u.s._has_launched_a_new_financial_world_war_–_and_how_the_rest_of_the_world_will_fight_back_?page=entire

What do you think?

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By Barry Ritholtz.

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The Full Soros Speech on ‘Act II’ of the Crisis “[...] the authorities had to do in the short term the exact opposite of what was needed in the long term: they had to pump in a lot of credit to make up for the credit that disappeared, and thereby reinforce the excess credit and leverage that had caused the crisis in the first place. Only in the longer term, when the crisis had subsided, could they drain the credit and re-establish macroeconomic balance.

This required a delicate two-phase maneuver just as when a car is skidding. First you have to turn the car into the direction of the skid and only when you have regained control can you correct course.

The first phase of the maneuver has been successfully accomplished — a collapse has been averted. In retrospect, the temporary breakdown of the financial system seems like a bad dream. There are people in the financial institutions that survived who would like nothing better than to forget it and carry on with business as usual. This was evident in their massive lobbying effort to protect their interests in the Financial Reform Act that just came out of Congress. But the collapse of the financial system as we know it is real, and the crisis is far from over.

Indeed, we have just entered Act II of the drama, when financial markets started losing confidence in the credibility of sovereign debt. Greece and the euro have taken center stage, but the effects are liable to be felt worldwide. Doubts about sovereign credit are forcing reductions in budget deficits at a time when the banks and the economy may not be strong enough to permit the pursuit of fiscal rectitude. We find ourselves in a situation eerily reminiscent of the 1930s. Keynes has taught us that budget deficits are essential for counter cyclical policies, yet many governments have to reduce them under pressure from financial markets. This is liable to push the global economy into a double dip. [...]

The European authorities face a daunting task: they must help the countries that have fallen far behind the Maastricht criteria to regain their equilibrium while they must also correct the deficiencies of the Maastricht Treaty which have allowed the imbalances to develop. The euro is in what I call a far-from-equilibrium situation. But I prefer to discuss this subject in Germany, which is the lead actor, and I plan to do so at the Humboldt University in Berlin on June 23. I hope you will forgive me if I avoid the subject until then.”

http://dealbook.blogs.nytimes.com/2010/06/10/the-full-soros-speech-on-act-ii-of-the-crisis/

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Roland Paris

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