Wednesday, April 8, 2015
Iceland & Greece Have it Right
Iceland is well on its way to a complete economic recovery. Greece has just started, but is on the right path. How are economies saved or returned to a healthy state? The answer to that has several facets; the solution to the problem must be based on History, Logic, and plain common sense...as follows.
1. Mega Banks are not the Holy Grail of Economics. If they run their businesses into the ground by making bad investments, they should be allowed to fail. Bailing out casino-type banks is a horrible idea... it saves the rich & powerful, not the economy. The "too big to fail (and jail)" banks here in the USA became 38% larger than they were before the 2008 Crisis. Most of them took their bailout money AND the trillions of dollars loaned to them at POINT 25 percent interest by the Fed Reserve and used it to: give huge bonuses to top management; engage in more casino capitalism; loan money back to the Fed Gov't; increase their lobbying efforts in DC; and buy up other banks. Did they create any jobs? Almost none. In general, Financialization does not create jobs or benefit the economy in the long term.
2. Whether owed by consumers or governments, in a crisis debts either should be written down to amounts that feasibly can be paid back, or totally forgiven. Selling off public infrastructure to private companies and/or instituting or coercing "austerity" will not benefit the economy or the People. About 70% of our economy here in America is driven by consumer spending; I'm guessing it's a similar figure in most other developed countries. For an economy to be saved or to recover, people have to have money to spend. Saving a bank that can afford to pay a $30 billion civil fine for FRAUD is not going to save the economy. Such a bank should be left to die, and the top management (where appropriate) should be sent to prison.
3. Stop drinking the Edward Bernays style Propaganda Kool Aid put out by Gov't elites and the Corporate Media saying that the sky will fall and the world economy will crash if speculative mega banks are not saved. That's a complete fairy tale... at best, it's ignorance... at worst, it's blatant deceit. Many economists agree that no such thing would have happened.
4. Never get involved with the IMF. It's nothing more than an oligarchical racket. If you're already involved, never accept their "structural adjustments". Years ago, several countries in South America learned that lesson the hard way.
5. Understand that Neoliberals in both the public & private spheres are creating economic structures that are rushing countries into NeoFeudalism. Very few politicians are opposing them.
6. In a very real sense, banks should be a public utility. They should be loaning money to encourage manufacturing on home soil, rather than gambling on derivatives, foreign currencies, and other insider scams that create no jobs. In terms of the economy, the bane of the last 30-40 years has been Financialization... paper shuffling for the benefit of the Super-Rich. We need public banks. Private, casino-capitalism type banks could still exist, but should not be allowed to use depositor funds for speculation OR to get beyond a certain size. Reinstate Glass-Steagall.
7. Understand that agreements such as the proposed TPP are a disaster for economies and the People. They benefit the Oligarchs at the expense of the rest of us. Don't believe politicians like Obama or McConnell, who both lie about the TPP. Even our new Secretary of Defense either is ignorant about the TPP or lying about it. See citizen.org/tpp
8. Stop being partisan in politics. Using America as an example, at the highest levels the politicians are almost ALL on the Neoliberal Team... the Team benefitting Oligarchs at our expense. Consider this: 80% of us are in favor of raising the minimum wage; 90% of us want the Mega Banks broken up; 80% believe our agreements regarding NAFTA and the WTO should be revised or dumped; and, a vast majority (I forget the %) of us want corporate criminals to be sent to prison...which usually does not happen here. So, what are our so-called "representatives" doing about all that... not much at all. 42% of Americans now are neither Republicans or Democrats; rather, they are Independents. The strategy of the Oligarchy, which is using hot-button social/cultural issues to Distract-Divide-Conquer us, is beginning to fail. Many, perhaps most people, are seeing that the economy is the number one issue in this country. They are fed up to the gills with stagnant wages while the Rich & Powerful have seen a 700% increase in their incomes in the last couple of decades.
9. Finally, this next statement is obvious, so consider it simply a reminder. To determine those responsible for any economic or financial crisis---and to get a clue as to how to reverse that crisis---just follow the money.
Not just my opinion. Be Well