Machholz's Blog

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The fundamental problem facing the global economy is not slow economic growth but political inequality.

It’s striking: as economies stagnate, the top tier is living even larger while the low-income masses sink further into marginalized poverty. I call this widening divide between the vested interests/wealthy and the rest of society prosperity amidst the ruins.

How can the top slice prosper while the rest of the populace suffers from higher taxes, stagnant wages and a collapse of employment/enterprise opportunities?

Just as Greece led the way in the sovereign debt crisis a few years ago, it is also leading the way in showing how oligarchies can expand their wealth and power even as their populace slides deeper into poverty. A recent article, Misrule of the Few: How the Oligarchs Ruined Greece, lays out the key dynamics.

It is self-evident that these same dynamics are playing out in the rest of Europe, the U.S., Japan, China and most if not all of the developing world.

Writer Pavlos Eleftheriadis pulls no punches:

“Greece has failed to address (rising wealth/income inequality) because the country’s elites have a vested interest in keeping things as they are. Since the early 1990s, a handful of wealthy families — an oligarchy in all but name — has dominated Greek politics. These elites have preserved their positions through control of the media and through old-fashioned favoritism, sharing the spoils of power with the country’s politicians. Greek legislators, in turn, have held on to power by rewarding a small number of professional associations and public-sector unions that support the status quo. Even as European lenders have put the country’s finances under a microscope, this arrangement has held.”

This is the same script being used by vested interests everywhere:

1. Control the media so it focuses exclusively on manufactured “good news” (“the stock market hit a new high today, blah blah blah”) and ignores the perverse incentives built into the system and the destructive consequences of crony-capitalism/crony socialism.

Anything that undermines the dominant narrative (i.e. thanks to your political-financial elites marvelous management, we have self-sustaining “growth”) is buried, discredited or ignored.

2. Buy political favors and influence to insure that “reforms” are superficial public relations exercises rather than than actual reforms that change the power structure.

3. Rig the accounting, regulations and reporting so any scrutiny is misdirected or blunted. This enables the status quo to continue on unfazed, despite the erosion of the economy’s fundamentals and the widening gap between those with power and those who are powerless, i.e. the middle class and the marginalized poor.

This simple script is working in China, the U.S. Japan–everywhere.

But this is exactly backward. As Eleftheriadis observes:

“The fundamental problem facing Greece is not slow economic growth but political inequality. To the benefit of a favored few, cumbersome regulations and dysfunctional institutions remain largely unchanged, even as the country’s infrastructure crumbles, poverty increases, and corruption persists. Greek society also faces new dangers. Overall unemployment stands at 27 percent, and youth unemployment exceeds 50 percent, providing an ideal recruiting ground for extremist groups on both the left and the right. Meanwhile, the oligarchs are still profiting at the expense of the country — and the rest of Europe.”

All the blather about “growth” and GDP is just propaganda to misdirect our attention from the real problem: the total domination of governance and finance by a class of vested interests and mega-wealthy cartels/oligarchies………………

full article at source: http://www.oftwominds.com/blog.html

Comment :

The same can be said about Ireland!

 


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A peopels manefesto is what we need for the next general election !

2014-11-01 13.11.18

By Thomás Aengus O Cléirigh

The time for begging these corrupt parasites to do the right thing has long past, It is time we had an alternative to the current corrupt, self-serving political party system! We the people should not be waiting for the political parties to place their promises in their manifestos before the next General Election that they will later disregard when they are in power! We the people need to put our own manifesto before every person who wants to put themselves forward, we do not have any thrust in the political party system as they are all one and the same and with the whip system the individual has no say ! The party hacks have all the power and it discharges jobs for the boys and girls as long as they do what they are told we must rid ourselves of this corrupt and deceitful system! It has betrayed the people of Ireland and we are now slaves. We need to get used to the idea that we are the masters and the politicians are there to carry out the wishes of the people and so it is we the people should put together a people’s manifesto now! Or are you going to wait for Fianna Fail or F G or SF or the lying Labour rats to present to you once again their empty promises??? I say NO > Do as they did in Iceland let the people decide what the politicians are to do for them in the next Dáil! We do not need more career politicians!


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Why Monetizing Debt Could End In Revolutions

Much has been made of the decision by the Japanese government to inject another $700 billion into their ailing economy. While some may see this as an earnest attempt to save Japan from further stagnation and deflation, even some of the mainstream media (e.g. Bloomberg) are questioning the wisdom of this reckless act.

Over the last few decades, since the crash of 1989, Japan has injected billions into its banks and stock-market to help its economy but all of it has been a miserable failure. America has, via the Federal Reserve, increased its national debt to formerly unthinkable numbers with almost no effect on its ailing economy. Most of Europe has huge public debt as a result of bank bailouts, but still suffers from stagnating or shrinking economies.

In fact, any privately owned central bank that has undertaken monetization policies (creating more public debt) has failed to improve their nation’s economy and merely created a transfer of wealth from the general public to corporate hands.

Of course, government owned banks such as in China and Russia are and do take somewhat different actions given that they are owned by the public (state owned) and not private individuals or corporate entities. Therein lies the crux of the matter – private ownership means private interests, therefore the needs of the country and the populace are of no concern at all.

All that the Fed, BoJ (Bank of Japan), the Bank of England etc. have been concerned with is the preservation of private banks and the continued propping up of stock markets. None of these institutions really care about the real-world economy, real-world inflation or the ability of individuals to maintain their lives in a prolonged period of economic contraction.

While monetizing is all great news for the banks and stock-markets it is terrible news for any people that do not receive well over average earnings – this is because monetizing debt (printing money) causes inflation. As with everything else connected with the economy, governments cook the books on inflation to the extent that the CPI is a total fantasy designed to give falsely low inflation rates.

Even the most foolish of people can see that month by month food, fuel, utilities, clothing and just about everything is going up in price. Part of this is due to factors such as environmental/weather disasters and conflict that can affect production and therefore prices. However, the continual currency wars – a race to the bottom to expand and devalue the US dollar, Euro, Pound, Yen etc is the fundamental cause of runaway inflation that is affecting most households.

When you couple high real inflation with stagnation or reduction in wages over the years since the 2008 crash then real-world buying power of most individuals is drastically reduced. This doesn’t just make people depressed, it makes them angry – hardworking people do not expect or deserve to be thrust into poverty.

Governments press blindly on, printing money, propping up the financial sector and saddling their voters with more and more debt that must be paid for in taxes. They know that the public is unhappy, but they are more interested in placating their corporate partners than listening to a public that is increasingly poor, increasingly angry and increasingly close to open revolt.

Stimulus has failed to produce any ‘green shoots’ simply because it has been directed to where it is of no benefit (except to the already rich) and not at where it desperately needs to go. Throwing good money after bad is not going to change anything unless it is redirected to the bottom and middle earners who are the lifeblood of any consumer society.

Quoting Raul Ilargi Meyer’s recent article: ‘Any stimulus must be directed at the bottom, or it must of necessity fail… it’s very simply that an economy cannot function without its poorer 90% of citizens spending.’

If this is true, which I believe it is, then more monetizing debt can only lead these ailing economies into further ruination and further beggaring of the masses. If this continues then the bulk of the population will become poor enough and angry enough to demand change on their own terms.

This will begin with mass protest and if it is ignored or suppressed then continued attempts to retain the status quo will lead to insurrections and possibly violent revolutions. One can only hope that governments will act soon in the interest of the people for once instead of lining the pockets of corporations and those that own them.

source: http://www.zerohedge.com/news/2014-11-23/guest-post-why-monetizing-debt-could-end-revolutions


People are being told that things are getting better! well read this!

ByLuke ‘Ming’ Flanagan TD

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Please share. We don’t really expect much. An odd good summer and for the children not to have to take the boat when they’re reared. People are being told that things are getting better. People are not stupid. It’s getting worse.
I had to use a ‘local’ A&E the other night. We got a letter from our GP and headed for our destination with a screaming 7 week old child. Before we left we explained to the baby sitter that our other two daughters were not to use the tap water when brushing their teeth due to it being contaminated with cryptosporidium. We arrived at the hospital at around 7pm to be met by very helpful staff. We got in line. Baby still screaming. After an hour we got to see a very helpful nurse and were then sent back into a waiting room. After another two hours we were brought into an area to see a doctor. Baby still screaming. It was wall to wall with people on trollies. Some had been there for two days.

So what eh! Sure this is normal. After all things are improving! The war zone hospital scene in front my two eyes is this governments idea of improvement. Even Terry “twist it” Prone couldn’t find a collection of words to make this place look acceptable. The people on the trollies looked both sick and sickened. When you are sick you want at least to be buffered from stress. All I could see and feel was stress. Doctors and nurses trying to manoeuvre around a maze of trollies packed into corridors. Howya Ming said one man. “Ashamed” I said. We didn’t need to elaborate. Another man approached me and said “my wife tried kill herself last night with tablets”. The first line of treatment for this couple in unimaginable trauma was to be subjected to even more. Not even a space to themselves. I had felt more dignity the evening I was committed to Castlerea prison.

At this stage we needed to call home as our other two children would be worried. We called but failed as there was no signal. I went out to the middle of the car park until I finally got one but I still couldn’t ring as our baby sitters mobile was out of range. You see unless we leave the phones in one particular part of our house then they can’t be contacted. By the way we live in the middle of a town.

As it turned out our daughter was fine. With cryptosporidium in your water supply you never know. No matter how vigilant you are as a parent there’s always the worry that somehow the child’s bottle has been contaminated. The basic instinct of being able to run something under a tap to give it a clean is turned on it’s head.

We travelled home that night and both my wife and I spoke about the services in this country. You can’t drink the water. If your child does and gets sick then they must endure the torture of an overcrowded understaffed A&E. That’s if you can get there on time. You can’t ring home with news because the phones don’t work. When you try to get to and from the A&E you must put up with diabolical road conditions. When we got up the following morning we sent our children to a school with a pupil teacher ratio so high that crowd control is the best the teacher could possibly achieve. You basically have to teach them yourself when they come home. I pity the committed teachers who are expected to work in these conditions.

I hear the cry from government deputies that it is easy to be in opposition. No it’s not. It’s torture. It’s torture to watch everything falling around our ears while at same time our government tells us things are getting better. We are a warned about the sinister fringe. How much more sinister can it get than the way things are at the moment. While we struggle to provide basic services for our citizens we at the same time continue to bail out the European banking system. The interest alone on the odious bank debt is 1.6 billion per annum. So even when you pay to get services there are cut to the bone because the banker must be paid first.
The last few weeks have been inspirational. I have a hope that people are starting to expect more. Why shouldn’t you? Keep expecting and eventually you will get it. Keep it up. Bring on December 10th and bring this government to its knees. The alternative is to accept that barely surviving is the new thriving. Accept it now and you accept it forever.


Way cleared for Government to repay IMF loans early

The vote follows on from similar agreements made with the UK and Denmark. It has political backing from fellow euro zone Member States.
“I welcome the Swedish Parliament’s decision to agree to the waiver for Ireland’s proposed repayment of a portion of its IMF loan and the confirmation by the Swedish Government that was provided today. We have already received confirmation of waivers from the UK and Denmark. Our EU and bilateral lenders have been very supportive of the government’s objective of improving Ireland’s debt sustainability since I discussed this issue with them in early September,” said Mr Noonan in a statement.
“Significant progress has been made on this project since agreement in principle was secured at the informal Ecofin in Milan in September to replace expensive IMF loans with cheaper, low cost market funding. There are real and tangible benefits to Ireland from this transaction, and I would like to take the opportunity to thank Sweden for their continued support for Ireland,” he added.
Ireland plans to repay approximately €18.3 billion of IMF loans ahead of schedule. It is believed the Government is likely to follow the first repayment with a bond issue in January with a view to repaying a further €9 billion-€10 billion of the IMF debt early next year. The remainder of the IMF debt would not be paid off early as the relevant rate of interest – just above 1 per cent – is lower the than current market rate.
Separately, the NTMA said its auction on Thursday drew bids that amounted to €1.875 billion, approximately 3.75 times the amount on offer.
Typically, the NTMA’s short term paper has been issued with a maturity of three months.
Earlier this month the NTMA raised €3.75 billion in 15-year bonds , the first time it has issued debt of this maturity since 2009. The debt was issued at an interest rate of 2.487 per cent, the lowest level ever for Irish 15-year bonds.

source:https://www.irishtimes.com/business/economy/way-cleared-for-government-to-repay-imf-loans-early-1.2008877

Comment:

AAAA

This piece is well hidden in the Irish times as everybody is still focused on the Irish water fiasco but this is not good news! It is a betrayal of the Irish nation as this is an exercise by this traitor Noonan to legalize the odious debt forced on the people of Ireland by the previous gangsters of the last government! We the people of Ireland do not recognize this illegal move by this bought and paid for collaborator of the private gamblers /speculators and bondholders. We the people of Ireland were suckered into paying 47% of the cost of saving the EURO and we are no seeing Noonan try and wrap this odious debt into a legal obligation on to the next Government! We are been set up again and this traitor is cementing the next 3 generations into financial slavery!

The Next government must take legal proceedings against the ECB and any and all of its officers involved in the blackmailing of the Irish nation an exercise that made financial slaves of me and my children and their children! These proceedings must be taken to the European court of justice as such actions of the ECB are a direct violation of the spirit of the Lisbon treaty and all earlier treaty’s! A concerted PR effort should be mounted across the continent of Europe and the peoples of Europe must be made aware of this gross injustice (the financial enslavement of an entire Nation) and the hope is the peoples of the different nations will pressure their governments to pay back the people of Ireland and compensate us for the past 6 years of financial enslavement! Even the people of Germany think we took this enslavement lying down! Time for us now to get up off our knees and demand restitution and take back our self-respect!

Anyone who is willing to allow this political self-serving parasite continue in power is equally guilty of this appalling fraud on the Irish nation! We owe it to our children and the next generation to make a stand against a totally corrupt system! We must now make it clear that the next government must bring prosecutions against these collaborators and every one of these parasites must have their state pensions withdrawn and all of their personal assets taken away as they have accumulated this wealth through criminal actions! This is unbelievable, how much more are we going to take for God sake???

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