Saturday, September 24, 2011


One hour ago, at 10 pm EST US September 24, 2011: All the government finance ministers, the European Central Bank and the IMF met over Greek default and worker demands that have pressured government finance ministers into finding other ways to turn one euro into five euros in the next trillion euro dollar bonanza bail out.

They will collect 21% of a rescue fund of 2 trillion from bond holders spread over time through government monthly payments starting in November. The (banks)were willing to accept the losses in lieu of the losses being paid through cutting pensions, wages, hours, salaries, and services. The big group of three financial institutions included Treasury Chief Geithner, basically they gathered to hash out another way to cover the loan in part because the debt default threatens the capitalist system through 'contagion' and in part because the workers forced them to come up with another plan. Greece is a testing ground for how much European workers are willing to sacrifice for the crude compromise offered.

Finance ministers will not drop their push for cuts in government spending. Their jobs under pressure from banks to find ways to cut spending in the workers' incomes is as on going as their terms in office remain in effect. This fight is not over. Not by any stretch of the imagination.

In a revealing sentence Greek Finance Minister Evangelos Venizelos said, "In return, it has pledged deep austerity measures but negotiators are frustrated at what they say is Greece's slow reform pace." In other words, the workers are putting up a real good fight! The banks and finance ministers having second thoughts about where the money is coming from! They can not get workers to submit to the deal the banks want.

The 'slow reform pace' refers to the riots and strikes Greece's workers have staged in recent months. The unifying rally cry is no sacrifice from the banks as the chief cause of the default crisis of the 2007-8 themselves is false blame. The banks who stand to lose the entire loan from a default have been trying their best to get government ministers to get workers to pay for the losses and loans up front is a lesson the American worker has to learn, and quick. If workers take it sitting down cuts in their hard earned savings in pensions, cuts in wages and salaries, hours and new austere conditions at work, medicare and even cutting social security if Perry gets into office will be a painful unjustified reality.

Unless workers take action and the type of action needed is massive opposition to cuts is the only pressure a diametrically opposed Congress would respond to. Americans need to get Congress to charge the banks, the rich and wealthy corporations for the cost of a Jobs Bill. The same ethical reasons for this are present as they are in the 'Euro zone' that the financial institutions originated this crisis has damaged and altered the economy from shocks to the system cannot recover. Shocks which threatens to become a full scale depression but more importantly reveal the contradictory extremes in the whole society . It is not hard to see anyone of our candidates taking a sharp turn to the right under republican pressure to shift the cost of the Obama Jobs Bill on workers incomes if passed while he remains in office. I can see Obama taking a sharp turn to the right if it means saving the 'Free World' from the contagion of default collapse is how in the center he stands on all issues economic.

The US is in the same situation and the same crude compromise is voiced through Ryan's plan for social security and getting their hands on those funds is a popular theme on the Republican side of the aisle. Cutting people off from the funds in social security, services cuts, medicare cuts, wage, salaries and pension losses. If this isn't class war then I do not know what class war is! American workers have not pressured Congress to enforce strong independent so called 'pro-consumer regulations' on Chase, Wells Fargo, Mellon et al. None of the financial stock houses and their CEO's under which credit default swaps, traded from Wall Street from 1993 forward led to the collapse of the housing market and still presents a mortgage foreclosure crisis dragging the economy downward and many more millions into poverty and homelessness.



Wednesday, September 21, 2011


Impossible! That the Fed step aside to let the economy recover on its own. If employers were hiring then the Fed can step aside. Investors and employers are buying Treasuries instead of investing in companies and companies are not hiring to encourage investors to buy and sell their stocks. The cycle of decline reaches the end of the line. This action is a move on the part of the Fed to encourage banks to lend money to employers to hire and expand businesses and consumers to refinance mortgages at lower rates. It does not address individual banks and their current opposition to lending and refinancing restrictions. But it does hit them where it hurts, no more money kept in Treasuries with higher yields where capital can be parked.

Another myth propagated by the right wing to dispel Americans is the printing or more paper currency in circulation. Charging the Fed with hastening the worthlessness of the dollar in relation to trade balances. This does not depreciate the value of the dollar. The quantity of money in circulation in relation to quantity of commodities produced divided by their average price only affects the speed with which goods and service fall out of circulation and their price (inflation). Personally I don't see how Congress can send a letter to the Fed warning inflation. They obviously don't have a handle on the micro economics. Unless they know something the Fed does not know such as employers do not intend to expand production no matter what! This would be consistent with big business backing people like Perry to make sure Obama is not re-elected as the political priority and not jobs. The past 35 years business and politics have forged alliances that this semblance of a conspiracy is entirely plausible. The letter is an ominous warning and excellent insight of class struggle strategies on the part of Republicans. That employers will raise commodity prices in lieu of high rates in T-Bills to realize their profits. They warn Bernanke that inflation will devastate the American people. In other words, inflation is either the nail driving their re-election hopes into the coffin as workers will fall deeper into poverty or will result in victory in the demise of the American government.

On Monday, September 19, 2011 the four highest-ranking Republicans in Congress sent Bernanke this letter cautioning the Fed against taking further steps to lower interest rates. Their letter suggested that lower rates could escalate the risk of high inflation. See:

Other laws govern the value of the dollar namely, economic laws in production. No jobs, no sales in august = 0% reflects the micro chasm between employers and workers. This chasm determines Trade Balances between Nations. Supply and demand only works when the system is working. But the system is not working! No one is working except the few who have jobs and are overworking. This chasm or what Marx called the class struggle in production and what Republicans term as 'Class Warfare' explains the motives of high ranking Republicans in their letter to the Fed. It explains why the IMF recommend governments not cut services too fast and not tax to quick. Proceed with caution! Consumers will not buy and employers will not hire and production will remain stagnant. Employers and workers were at a negative standstill in August producing 0 jobs and 0 hires. A negative equilibrium the Fed is trying to overcome with this recent move to pressure banks. That the Fed applies pressure on employers through a squeeze on banks offering T-Notes at a low yield is intended to encourage investment and discourage hoarding. It is a move to pressure banks to lend and refinance to get employers to expand and consumers to refinance their mortgages while interests rates are low. This strategy shows Bernanke unlike most of his predecessors, is a rationalist siding with workers in this class war realizing that employers are resisting to hire. American workers have a friend in the federal reserve and nothing but enemies in Congress.

The Debt to GDP ratio is a macro problem that without doubt needs to change. This relates to how governments do business in general. They borrow from central banks and spend to run government. Borrowing and spending is a system based on the cooperation et al, a 'social contract' between employers and workers. Banks will lend to government with the promise that both employers and workers agree on the terms for production, a New Deal was this social contract and banks knew government would be good for their money. For many decades the US paid its bills that is until spending shot through the roof mainly under Republicans. Hindsight shows that high deficit spending was a tactic in the class war and demolition of the New Deal and government generally to bring workers in line with employer demands. The social contract included government will tax both employers and workers and spend within its limits and be timely with their payments to their lender. Under the present class war the System of 'borrow to spend' is no longer viable. Employers are not willing to be taxed and workers are overtaxed in the United States and governments generally exceeded budgets through high war expenditures. All three parties breech the social contract, the workers being the innocent victims in the breech of the New Deal, their continual re-election of the same conservative brand of politics left them defenseless against the great breech of contract.

The chasm or class war between employers and workers, depending on the outcome of the next government shutdown and cliff hanger, rages forward. In the meantime, there are things this President will do through conscience to lessen the birth pangs on a macro level such cuts in war expenditures and moderate tax increases of employers. A the end of the day, the American people as Paul Sweezy predicted in 1974 will have to take on the battles their forebears died for in the class war of 1929 and bring the system down to reconstruct a new economy, leaving no stone unturned.

Monday, September 19, 2011



The reaction of business to the last federal stimulus and the next stimulus has been and will continue to be thank you for the incentive but no thanks!  When this happened in the 1930's, FDR told the private sector, if it won't hire the unemployed the government will! Americans can expect the same reaction from business in 2011 to this new round of stimulus for jobs, thanks but no thanks! Congress in the 1930's was more aggressive toward the private sector because they had an alternative in Keynesian economics, they could spend their way out of the depression. The economic system reached the lowest record level of unemployment in the 1950’s. The height of prosperity and any rational tax revenue plan to include all the social classes took a back seat from that point forward. The middle class supported the government’s spending through the ensuing several decades. The second world war provided a great incentive to re-tool factories and deficits never exceeded what the country could produce. But, the limit of borrowing has reached its end. The country's capacity to produce is equal to its 13 trillion dollar debt to the banks. The Congress of 2011 cannot afford to be as aggressive with the private sector as it was in the 1930’s. In fact, Congress in 2011 is moot on the crisis befalling the middle class and economic growth.  The end of prosperity that is punctuated by increasing impoverishment of the middle class, proves the two parties do not see beyond the Keynesian model. It is of no consequence that this Congress is pro-business. Legislative reforms enacted in the Supreme Court and Congress over the last 35 years by the right and the left, successfully positioned Big Business for the coming austerity measures they saw as the only way to continue lending to the federal government. But, this time the government would have to cut from its budget the more expensive programs as a guarantee of repayment or pay the interest on the current debt. These programs would include cuts in the services the declining middle class and the poor depend on for survival as poverty deepens in the United States. Therefore, an alternative party is an essential question!


This financial crisis is the same as the EU crisis. What is coming to a head in the EU is coming to a head in the US. The EU borrowed and minimally taxed the corporations and the rich for decades as did the US. Republicans and Democrats accepted the Keynesian practice of borrowing and spending as a permanent fix and prosperity voided the political incentive to reform the tax code that would serve to balance the budget through a real and practical taxation plan with pragmatic changes to the size of government and its role in the private sector. In a word, they avoided the problem. We observe from the unfolding of deficit woes that taxing the rich and corporations and the people refuse taxes. This stalemate is causing massive erosion of societies in Europe further hastening the process of decline. The EU governments react with more bail out, more borrowing and higher reserve capital in banks to shelter future mortgage shortfalls. Rather than to address the system as a whole the governments focus on the single cause that brought down the financial system in 2008, and attempt to shore up the housing market with the expectation of recovery. Governments go into hock to the banks and payment of the deficit over the long term excludes corporations and the rich with the crude compromise offered by parliamentarians to repay the total deficit through cuts in services. This same deal offered by our Congress, presents to the middle class with newcomers to Congress from the business sector, to replace career politicians. Career politicians who are reluctant to cut programs intended to shelter individuals and families from further destitution. And, as another round of foreclosure actions take place the programs become ever more indispensable.


While there is no Left opposition outside of government to force the Congress to tax the rich the fear of criticizing the whole system immobilizes the left inside Congress and the Right sweeps away with all the votes.

Taking no chances the private sector and the right opposition in Congress vis-a-vis the Tea Party; push the limits of this crude compromise of continued borrowing, cuts in spending and no taxes to the rich are incapable of criticizing the entire model of spending and borrowing. This is due to their financial ties to the private sector and the increasing role of powerful special interests in Congress. Through campaign reforms made in the past, new Democratic rivals are set up in Congress to force a bitter pill down the throats of the public in the guise of business sector experience and job creation. They propose cuts and no revenue streams from the private sector in addition to no changes in the system as a whole. That a plan for rational taxation and scaling down the size of government coupled with a plan to re-industrialize the economy, proves the two parties, focus like their EU counterparts, on a single pronged solution to fundamental economic problems of the middle class and the growing poor. Instead of changing institutionalized inequity they propose to leave intact the institutions encouraging the behavior.

The objective of the middle class, in response to their plight, ought to be a broad movement against short-sighted and special interest policies coming from both parties. A movement that surpasses single issued causes and proposes through an independent party a rational plan for taxation and spending of government that is wholly independent of moneyed interests. The two mainstream parties are indebted to the private sector and this cripples their ability to act in the best interest of the nation. Needed is a neutral Third Party that is not afraid of criticizing the system as a whole the way the mainstream Republican and Democratic parties fear rebuke from powerful lobby groups and cannot criticize economic practices and policies. A Third Party that can move the country forward into an ecological change on how our economy interacts with the environment that neither the mainstream parties take interest in. A Third Party that makes new demands on society and has a vision to replace a system that has come to the end of the line. A system of taxation and spending that has worked for a few but not all, and is now a chief cause of engulfing a majority into poverty. A Third Party that addresses the huge student loan endemic waiting to explode exceeds total credit card debt is unprecedented. A Third Party that focuses on long term stable economic growth and deficit elimination dividing the surplus into meeting needs in defense, reserve funds for natural disasters, research and development, health and education as the role of government in society and supported by all social classes in a fair and rational manner as the purpose of taxation. A Third Party serious about ending the Wars.