18 Oct - baNama Republic

LQD: Stiglitz lambastes baNama republic
http://www.eurotrib.com/story/2009/10/15/93726/392

by Frank Schnittger
Thu Oct 15th, 2009 at 10:55:26 AM EST
David McWilliams, one of the best Irish economists has a good piece on an interview he did with an old acquaintance in Ireland recently - Joe Stiglitz, winner of the Nobel Prize in economics, former chief economist of the World Bank, and the head of former US president Bill Clinton's Council of Economic Advisers who presided over the US's sustainable boom of the 1990s.  It's worth reading in full, but here is an extract.
Nama is highway robbery | David McWilliams

    When asked whether he would implement a Nama-style bailout for the banks, he responded: ``No, this is the kind of highway robbery which we see happening all over the world, with guns pointing at the heads of the political leaders and the bankers claiming the sky will fall down and the economy will be devastated unless they get this money."

    He went on to compare the employment of mass fear as the single justification for bank bailouts with the same weapon of mass fear that was deployed by President George W Bush after 9/11.

    ``It was invoked to justify anything the president wanted to do, such as the Iraq invasion," Stiglitz said. ``Well, the bankers now use 15/9 [September 15, 2008 was the day Lehman Bros went bankrupt] as the new weapon of choice to force politicians into the huge bailouts, which will bring us enormous debts on our balance sheets with no real assets on the other side. But the bankers will be saved. When we gave them the money, the bankers said `don't worry, you will get your money back', but no one believes that now."

Nama is highway robbery | David McWilliams

    When asked if letting the banks go would be the end of the world, which is the default position of Ireland’s current government and banking and economic establishment, Stiglitz laughed.

    ‘‘This is nonsense,” he said. ‘‘Countries which allow banks to go under by following the ordinary rules of capitalism have done fine. The US has let 100 banks go this year alone, as did Sweden and Norway in their crises. In the US, it’s just the big, politically-powerful banks that have not been allowed to go down, for political reasons.

    ‘‘The important thing to remember about financial markets is that they are forward-looking, but what they do remember is the size of your national debt.

    If you spend money in bailing out banks without taking all the equity, you will end up having a huge national debt, a liability with no assets to show for it. Now that will scare off investors in the future.

    “[In Ireland], this bank bailout is a simple transfer from taxpayers to bondholders, and it will saddle generations to come. The only thing that might give you solace is that, as chief economist of the World Bank, we see this type of thing happening in banana republics all over the world. Whenever a banking crisis happens, the financial sector uses the turmoil as a mechanism to transfer wealth from the general population to themselves. I’ve been very disappointed to see that it has happened, not only in banana republics, but in advanced industrialised countries.”

General Strike In Puerto Rico
http://www.eurotrib.com/story/2009/10/15/104332/29

 What might have been characterized as the opening salvo of the resistance of the American working class against the economic crisis [which has seen the sacrifice of the working class in favor of employers], is actually more likely grounded in local politics.  Nevertheless, this is newsworthy as it shows that the working class is far from silent on this economic debacle which has been thrust upon it.
Puerto Rico is getting ready for the national strike on Thursday, October 15. Since governor Luis Fortuño layed-off about 17,000 government employees the first week of October, there has been tremendous mobilization from different sectors of the civil society: workers and members of trade unions, women, environmentalists, students, and professors, among others. There have been multiple demonstrations and acts of civil disobedience to protest the economic policies that the government has assured are necessary due to the financial crisis. In total this year, the recently elected government has laid off around 25,000 public employees.
Luis Guillermo Fortuño-Burset, whose current government is fingered as originator of this crisis:

    ...is the ninth and current Governor of the Commonwealth of Puerto Rico, an unincorporated territory of the United States.[1] Fortuño is also the president of the pro-statehood New Progressive Party of Puerto Rico (NPP) and a member of the United States Republican Party.

    In the 1990s, Fortuño served as Puerto Rico's first Secretary of the Puerto Rico Department of Economic Development and Commerce, as the Executive Director of the Puerto Rico Tourism Company and as the President of Puerto Rico's Hotel Development Corporation (HDC) during the administration of Governor Pedro Rosselló.
According to the San Juan Daily Sun Newspaper:

    Fortuño ran for office on a "no layoffs" platform, making it a point to assure that "the next January 2nd the only one we are going to throw out is Acevedo Vilá," referring to former Gov. Aníbal Acevedo Vilá.

The reality was a different one.  The Government Development Bank reported that Puerto Rico [PDF]:

    ...is experiencing a fiscal crisis as a result of the structural imbalance between recurring government revenues and expenses. The structural imbalance has been exacerbated during fiscal years 2008 and 2009, with recurring government expenses significantly higher than recurring revenues, which have declined as a result of the multi-year economic contraction mentioned above. In order to bridge the deficit resulting from the structural imbalance, the government has used non-recurring measures, such as borrowing from Government Development Bank for Puerto Rico (―GDB‖) or in the bond market, and postponing the payment of various government expenses, such as payments to suppliers and utilities providers. As discussed..., the estimated structural deficit for fiscal year 2009 is projected to be $3.2 billion.
Hence, the San Juan Daily Sun continues:

    In what has been characterized as "an act of cowardice" by laid off workers and labor and opposition leaders, Gov. Fortuño addressed Puerto Ricans in a prerecorded message hours after administration officials announced the biggest layoff of government employees in Puerto Rico's history. "All the cutback measures to reduce expenses that we have implemented have permitted a reduction in the number of government employees laid off ... much fewer than what we had initially estimated. Nevertheless, the Fiscal Restructuring and Stabilization Board had to announce a new round of layoffs today," Fortuño said in his recorded message. "These are difficult times not only for those laid off, but for all of Puerto Rico," added Fortuño, Reiterating the layoffs were a necessary measure to solve the $3.2 billion fiscal deficit inherited from the previous administration, Fortuño went over the alternatives that he would not have considered as valid to reduce the deficit, such as taxing cell phone calls, gas or increasing the sales tax.

The situation has snowballed since then resulting in the current predicament:

    In the last months hostility has grown between the government and different civil society groups: eviction orders in socially and economically disadvantaged communities, police brutality, and the dismantlement of community initiatives such as the Fideicomiso del Caño Martín Peña. There have also been a string of comments from government officials considered offensive and insensitive, such as the now sadly famous "such is life", and more recently, when the Governor's designated Chief off Staff Marcos Rodríguez Ema compared demonstrators to terrorists.

Pol/Econ: Our Kleptocracy: Saving the American economy by looting it
http://www.bitsofnews.com/content/view/10451

Paul Krugman recently pointed out that wages are falling across America. A week earlier the Treasury Department reported that tax revenue was collapsing at a 14% rate.

  It's easy to see the correlation between these two trends. But what do they have to do with this statement? Everything.

  Sen. Dick Durbin (D-Ill.) has been battling the banks the last few weeks in an effort to get 60 votes lined up for bankruptcy reform. He's losing.
      "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place,"

  The first thing to understand is that the banking industry adds nothing to the economy. It doesn't sow crops, make widgets, build homes, or fix your computer. The financial industry sits on top of the real economy in the same way a fungus grows on a tree. In fact, as famous investor John Bogle said a few years before the massive bailouts, the financial sector actually subtracts from the economy.

  "My estimate is that the financial sector takes $560 billion a year out of society," Bogle explains to Bill Moyers. "Banks, money managers, insurance companies, certainly annuity providers. They're all subtracting value from the economy."

  If you add Senator Durbin's comments with John Bogle's, you have a classic case of the tail wagging the dog. The real problem happens when the tail has no regard for the welfare of the dog. We passed that point in the 1980's and only now we are seeing the effects of making that decision.
   Sixteen years ago Nobel-prize economist George Akerlof wrote that investors in the S&L scandal “acted as if future losses were somebody else’s problem. They were right.” Someone trying to make an honest buck would have "operated in a completely different manner." Instead, they looted.

  Does this sound familiar? If it doesn't, you haven't been paying attention.

Pol/Econ: People are asking the wrong question 
Sept 2008 
  Japan's "Lost Decade" is extremely similar to our recent history. It involves an overvalued stock market, an extremely overvalued real estate market, both of which were caused by a near total collapse in lending standards. Initially the Japanese government responded with stimulus packages totaling about 6% of GDP between 1992 and 1993.
In 1998, Japan decided to "recapitalize" its banks to the tune of 60 trillion yen, or 12% of the GDP of Japan. Just 6 months later another 7.5 trillion yen of taxpayer money was dropped into 15 banks.
   These are similar numbers to what is being passed around Washington this week. Which brings up the important question of - how well did the bailout work?

      So far, 25 trillion yen in tax money has been spent, or $238 billion at current exchange rates, on a government overhaul of the financial system, out of $666 billion allocated for that purpose in 1998. Even more has been spent to prop up banks and other financial institutions indirectly, through credit-guarantee programs and the like.

      "We are standing at the same divide where we were standing two years ago, when we recapitalized the banks," said Yasuhisa Shiozaki, a youngish legislator from the governing Liberal Democratic Party, who has been a rather lonely advocate of painful financial restructuring. "We can either recapitalize the banks again, or we can just let them go bust."
    [...]
    Mr. Shiozaki doubts that the government has the will for a second round of refinancing in the wake of Sogo's collapse, when a plan to spend close to $1 billion to waive debt and keep the company afloat was swamped in an outcry of public disapproval.

    Ruling-party politicians quickly scrapped the plan, and Sogo failed, blowing away the fig leaf that covered Japan's supposedly resolved bad-debt problems. "What we found out with Sogo and afterward is that the essential and fundamental problems of the Japanese economy were still there or perhaps even worse," Mr. Shiozaki said.

Pol/Econ: Deregulation and the Triumph of Wall Street
http://www.bitsofnews.com/content/view/10878

With most of the media focused on Obama's speech about health care on Wednesday, this item got largely overlooked.

Sweeping regulatory reform of the financial sector-thought to be a 2009 legislative given just four months ago-may now come down to a piece-meal approach, with the White House and its allies happy to see a couple prized components signed into law this year.
  "I think it's unraveling,' says former FDIC Chairman William Isaac. "It is hard for me to see how this legislation gets done this year."

One year removed from a catastrophic, global, economic meltdown, and 26 months removed from the start of the credit crisis, our political establishment is either unwilling or unable to reform the system and punish the perpetrators of this debacle. The situation is so far beyond the pale that it makes one wonder if another catastrophe is even avoidable.

"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."
  - Sen. Dick Durbin

The proposals also challenged the status quo of the financial services industry, which publicly supported the reforms in general but lobbied against many of the particulars behind closed doors.
  "There's a lot of problems with this regulatory reform, so it could easily slip to next year," says one knowledgeable industry representative.

In fact the proposed changes are extremely mild in comparison to the deregulations that preceded them in the previous decades. But Wall Street simply can't wait to return to the speculative frenzy of the recent credit bubble, and now that most of the risk has been offloaded onto the American taxpayer, Good Times Are Here Again.
So after trillions of bailouts and guarantees at the taxpayer expense, banks have used that taxpayer money to thwart any reform legislation, while returning to risky investment practices at an even greater level than ever. And when things blow up again, we can expect an even larger bailout than before. Or another Great Depression. Or both.

The Independent On Sunday Calls It Against Blair
http://www.eurotrib.com

Jane Merrick's article quotes at some length interesting comments by former Blair advisor Stephen Wall, and puts forward the Stop Blair! petition as evidence of the impopularity of Blair's candidature:

Blair for President? 'Not necessarily a good idea,' says his former adviser - Europe, World - The Independent

    Research by The Independent on Sunday suggests a democratic discrepancy between voters and national leaders – who wield the votes for the new president. The findings are supported by a European-wide petition to stop Mr Blair taking the post, which comes with a string of perks. Nearly 38,000 people have signed the petition, yet he remains a favourite with bookmakers and with a growing number of EU leaders.
    ...
    Some 18,845 Britons have signed the petition. The rest are made up of 2,882 Belgians, 2,777 French, 1,538 Austrians, 1,417 from Spain and 1,409 from Germany. Others are from the Netherlands, Portugal, Greece, Italy and Ireland.

30 killed in Iran blast, Jundollah claims responsibility
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/news/world/04-iranian-military-officers-killed-in-attack-qs-08 

TEHRAN: A suicide bomber blew himself up on Sunday at a meeting in southeastern Iran of the elite Revolutionary Guards, killing seven commanders and 23 other people in an attack Tehran blamed on Washington.
Several tribal leaders at the meeting in Sistan-Baluchestan province — a hotbed of Sunni insurgency — also died in the blast which officials said additionally injured 28 people.Meanwhile, the ISNA news agency reported that Iran has summoned Islamabad’s envoy to Tehran over the bombing, claiming the attack had been launched from Pakistani soil.
Fars said that among the dead were General Nur-Ali Shushtari, deputy commander of the Revolutionary Guards ground forces, General Mohammad-Zadeh, commander of the Revolutionary Guards in Sistan-Baluchestan province, the Guards’ commander for the town of Iranshahr and the commander of the Amir al-Momenin unit.

 Three other commanders from the adjacent province of Kerman were also killed, according to Fars.

 One of the victims, Mohammad Ayoub Dehghani, who was wounded in the stomach, said the bomber ‘must have walked through the people to where the commanders and tribal heads were sitting.’The enemies of the Islamic Republic of Iran cannot tolerate the unity, so they hire mercenaries who are supported by the Zionists and arrogant powers to carry out these terrorist attacks,’ IRNA quoted him as saying.

 Iranian officials have previously accused Britain and the United States of supporting ethnic minority rebels such as Jundallah operating in the sensitive border areas, especially in Sistan-Baluchestan province.— AFP

CIA running black propaganda operation against Iran, Syria and Lebanon, officials say

June 7,2007    Some intelligence sources more wary of covert Pentagon operations

http://www.globalresearch.ca/index.php?context=va&aid=5903 Pentagon operation supporting terrorist group kept from Congress
Foreign intelligence sources say that economic pressure is aimed at Iran's oil-rich economy, with US efforts serving to “persuade” financial institutions, oil companies, and international investment interests to pull out of Iran and even drop already existing energy projects.

These sources cite the example of an unnamed company that is being denied financing for energy projects inside Iran by international banks, indicating that many more such examples exist.

http://aljazeera.com/news/articles/42/The_US_black_propaganda_campaign_against_Iran.html

• Backing terrorist groups June 14, 2007
  

In addition to the black propaganda campaign, the Pentagon is carrying out more aggressive covert operations to destabilize Iran. Stressing that such operations are far riskier than the activities of the CIA, intelligence officials said they started almost immediately after the 2003 invasion of Iraq. Because these operations can be deemed as part of a military campaign, they aren’t subject to Congressional approval as the activities of the CIA, intelligence sources say.  
This covert war of aggression has been approved by the National Security Council, and carried out by the U.S. Defense Department, largely steered by the Office of Vice President Dick Cheney and by then-Secretary of Defense Donald Rumsfeld.
The Raw Story mentioned one of these “off book” or black operations that started in 2003, when the Defense Department began working with terrorist and dissident groups in a bid to topple the Iranian government, bypassing traditional intelligence channels. One of these groups was a terrorist organization known as Mujahedeen-e Khalq (MEK), which has been used for intelligence gathering; an activity usually carried out by the CIA. Intelligence sources say the MEK was being “run” in two southern regional areas of Iran, including a Shia region where a series of attacks in 2006 claimed the lives of many people and wounded hundreds.
U.S. officials interviewed by the Raw Story all expressed grave concern over the lack of attention to the Pentagon’s covert operations. Some believe that such illegal activities are being hidden under the loophole of “traditional military activities” to avoid Congressional oversight.
Steven Aftergood, director for the Federation of American Scientists Project on Government Secrecy, says this loophole exists in Congressional oversight with regards to military covert activities. “CIA covert actions have to be authorized by a written presidential finding, which must be provided to Congress,” he says. “By contrast, DOD operations, including clandestine or covert operations, are not subject to this procedure... As a result, there may be a temptation to opt for a purely military action to take advantage of the loophole in congressional notification requirements.”



Feds may face own eHealth headaches,after scandal in Ontario
The eHealth scandal in Ontario that recently rocked the provincial government may have been a dress rehearsal for its larger counterpart at the federal level.

The troubled Canada Health Infoway Inc., which like its provincial cousin is trying to convert medical records into electronic form, gets a long-awaited report card next month from the auditor general of Canada.

And so far, the prognosis is poor for the secretive agency, which has already swallowed $1.6 billion of federal money and was promised $500 million more this year by Health Canada.

Created in 2001 as an independent non-profit agency, Infoway has been largely exempt from accountability restraints governing most other federal departments, including freedom-of-information and oversight by federal watchdogs.

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