Category Archives: Wealth

Greek misery continues, no crash recovery yet


We begin with a dramatic graphic from Kathimerini, dramatic evidence that despite three rounds of bailout loans an ever-harsher austerity measures, the European economy hardest hit by the Great Recession is showing no signs of recovery as yet still more austerity is demanded:

blog-greece

The Greeks were left holding the string when the bubble popped, unable to pay loans to foreign banksters a lot of them in Germany. And the lenders wanted their money, even though the economy had crashed, unemployment skyrocketed, and the Greek industrial machine had ground to a halt.

To enable Greece pay the loans back, a Troika formed of the European Central Bank, th European Commission, and the International Monetary Fund imposed harsh austerity measures perfectly designed to ensure that the Greek people were reduced to serfs, sacrificing layoffs, pay, pension, and healthcare cuts for those lucky enough to keep their jobs.

Then there was the massive selloff of national assets, ranging from transit and power grids to ports and islands.

And still the troika wants more in exchange for another round of bailout loans.

From the London Telegraph:

Greece will need a fourth bailout as its debts remain utterly unsustainable despite years of austerity and attempted reforms, according to George Papaconstantinou, a former Greek finance minister.

A “radical liberalisation of the economy” is also necessary as the country needs to attract foreign investment because Greece lacks the domestic resources needed to grow its industries, he told an audience at the London School of Economics.

“Pretty much everyone agrees that Greek debt is not sustainable,” he said. “Is there a prospect of a fourth bailout? Yes. Even in the best case… I doubt that Greece will be able to stand on its own feet.”

Mr Papaconstantinou, who was Greece’s finance minister from 2009 to 2011, said that these measures have to be accompanied by serious economic reforms.

“Radical liberalization of the economy”?

Translate that as “more misery for the average Greek.”

The IMF lays down the law

Before taking the helm at the IMF, Lagarde served as Finance Minister for French President Nicolas Sarkozy.

In December a French court found her guilty of criminal negligence in her old job for arranging a payout of more than $400 million for businessman Bernard Tapie’s share of Addidas under questionable circumstances — though the court declined to impose either a jail sentence or a fine, rendering the guilt verdict moot.

The affair didn’t seem to bother either the French government or the IMF, so Lagarde kept her job.

More on her stance on the latest Greek bailout round from Bloomberg:

IMF Managing Director Christine Lagarde signaled that Greek debt restructuring can wait and the country should focus on overhauling its economy for the duration of its latest bailout, which expires in 2018.

Speaking in a German television interview after meeting Chancellor Angela Merkel in Berlin, Lagarde said “the volume of restructuring will clearly depend on how much reform, how much progress, how strong the Greek economy is” when the aid program ends.

What will probably be needed is a “significant” extension of maturities on Greek bailout loans and a “significant interest rate capping,” Lagarde told ARD television on Wednesday. “That will have to be discussed in greater detail later on” and “implementation of the debt restructuring will have to take place at the end of the program.”

The Washington-based fund is demanding additional debt relief measures as a condition for participating in the Greek bailout. Its participation, in turn, is a condition set by Germany when it agreed to help underwrite the latest aid package in 2015.

So who benefits?

Therein lies the rub.

Because much of the money won’t go to the banks who lent it to Greece.

Any of those lenders sold off their delinquent funds at a deep discount to that unique breed of banksters called “vulture funds,” speculators who buy up sovereign debt, then set about collecting it using all the ruthless ploys they can martial.

From the Committee for the Abolition of Illegitimate Debt:

The experience of the Greek debt restructuring of 2012 serves as a good example to show how vulture funds operate and the costs they can impose in a country and its population. The Greek case is quite interesting as not only involved the first major debt restructuring in Europe since 1953 but also it was the largest operation of its kind. The remarkable aspect of this episode is that the country decided to continue paying holdout creditors, and specifically vulture funds, in full. This was the case even though the process was organized with the support of the official creditors of the country. In this regard, it created yet another damaging precedent regarding the viability of the profits by litigation strategy followed by vulture funds.

>snip<

Just a month after the debt restructuring was completed, the government made an initial payment of 436 million Euros to a group of holdout investors led by Dart Management. This hedge fund, which had a long story of suing governments to get paid in full going back to the Brady plan in Latin America in the late 1980s, made a massive profit as it had bought the bonds on prices estimated between 60 to 70 cents on the Euro. By making that initial payment, the Greek government set a negative precedent as the rest of the holdouts were now able to use that decision to claim for equal treatment under a foreign court. The payments to holdouts continued uninterrupted afterwards parallel to the implementation of harsh austerity measures. For example, during 2013 the country paid a total of 1.7 billion Euros to holdout creditors. To date, most of the holdout claims have been paid in full by Greece. It is estimated that private investors currently have a total of 36 billion euros in government bonds that were either issued under the debt exchange of 2012 or in the debt issuance that took place in 2014.

As the Greek population continues to struggle under the imposition of harsh austerity measures and the debt burden of the country remains “highly unsustainable”, as the IMF characterizes it, it is evident that the decision to continue paying the holdouts was a mistake. It represented nothing short of rewarding dangerous speculators while transferring the costs of their actions on to the Greek people. Even more troublesome is the fact that the relationship between Greece and the vulture has not ended yet. In the aftermath of the debt restructuring of 2012, it is estimated that hedge funds have bought nearly 15 billion Euros in government bonds. As a new debt restructuring, or even unilateral default, is simply a matter of time is worth nothing that the country can still set a precedent against the actions of vulture funds. The country could begin by enacting a law, similar to that adopted in Belgium in 2015, to limit the actions of vulture funds. Furthermore, given the dire social situation in the country, it should declare the non-application of the 3rd memorandum and non-payment of all illegal, odious, illegitimate and unsustainable debts. After all it is never too late to state that sovereignty and the respect of human rights will always precede debt.

So the troika is really all about making sure predatory speculators collect their pound of flesh.

Emails confirm new EPA chief a tool of the Kochs


Why are we not surprised?

From the New York Times:

During his tenure as attorney general of Oklahoma, Scott Pruitt, now the Environmental Protection Agency administrator, closely coordinated with major oil and gas producers, electric utilities and political groups with ties to the libertarian billionaire brothers Charles G. and David H. Koch to roll back environmental regulations, according to over 6,000 pages of emails made public on Wednesday.

The publication of the correspondence comes just days after Mr. Pruitt was sworn in to run the E.P.A., which is charged with reining in pollution and regulating public health.

“Thank you to your respective bosses and all they are doing to push back against President Obama’s EPA and its axis with liberal environmental groups to increase energy costs for Oklahomans and American families across the states,” said one email sent to Mr. Pruitt and an Oklahoma congressman in August 2013 by Matt Ball, an executive at Americans for Prosperity. That nonprofit group is funded in part by the Kochs, the Kansas business executives who spent much of the last decade combating federal regulations, particularly in the energy sector. “You both work for true champions of freedom and liberty!” the note said.

Mr. Pruitt has been among the most contentious of President Trump’s cabinet nominees. Environmental groups, Democrats in Congress and even current E.P.A. employees have protested his ties to energy companies, his efforts to block and weaken major environmental rules, and his skepticism of the central mission of the federal agency he now leads.

A tools of the plutocracy

The documents, though redacted, make clear that Pruitt serves not the interests of the citizens he has sworn to serve but the billionaire patrons who have greased the skids for his political career.

More from the Center for Media and Democracy, the organization which battled for and won release of the documents, which are posted at the link:

As a result of an Open Records Act request and lawsuit filed by the Center for Media and Democracy, on Tuesday night the Oklahoma Attorney General’s office released a batch of more than 7,500 pages of emails and other records it withheld prior to Scott Pruitt’s nomination as EPA Administrator last Friday.

The AG’s office has withheld an undetermined number of additional documents as exempted or privileged and submitted them to the Judge Aletia Haynes Timmons for review. A number of other documents were redacted, and CMD will be asking for the court to review those as well. On February 27, the AG’s office has been ordered to deliver records related to five outstanding requests by CMD.

“Despite repeated attempts by Pruitt and the Oklahoma AG’s office to stonewall CMD and the public, we’ve won a major breakthrough in obtaining access to public records that shine a light on Pruitt’s emails with polluters and their proxies,” said Nick Surgey, research director at the Center for Media and Democracy. “The newly released emails reveal a close and friendly relationship between Scott Pruitt’s office and the fossil fuel industry, with frequent meetings, calls, dinners and other events. And our work doesn’t stop here – we will keep fighting until all of the public records involving Pruitt’s dealings with energy corporations are released – both those for which his office is now asserting some sort of privilege against public disclosure and the documents relevant to our eight other Open Records Act requests.”

“There is no valid legal justification for the emails we received last night not being released prior to Pruitt’s confirmation vote other than to evade public scrutiny,” said Arn Pearson, general counsel for CMD. “There are hundreds of emails between the AG’s office, Devon Energy, and other polluters that Senators should have been permitted to review prior to their vote to assess Pruitt’s ties to the fossil fuel industry.”

Among the documents released late yesterday, CMD has found:

Continue reading

Austerity bites: Greeks sink deeper into poverty


Poverty rate changes in the European Union, 2008-2015. From Reuters.

Poverty rate changes in the European Union, 2008-2015. From Reuters.

When the greed and unprosecuted crimes of Wall Street banksters and their allies in London brought the world to the brink of financial ruin nine years ago, it was the world’s poorer nation who paid — and are continuing to pay — the highest price.

Greece isn’t the only nation in the eurozone to see a poverty increase since the start of the Great Recession, but it’s the only one to see a near-tripling of the number of its citizens in poverty, a direction result of the austerity regime implemented by the austerity regime forced on Europe’s nations with the highest debt levels.

As part of that austerity, the Troika of the Euroippean Central Bank, the European Commission, and the Washington-based International Monetary Fund have mandated massive layoffs of public workers, pay and pension cuts, and the higher costs associated with the privatization and sell off of public transit and power systems.

The Troika has been holding off on its latest bailout loan, demanding yet more austerity measures. But when it comes, most of the money will go right back to lenders on Wall Street, London, and Germany.

More from Reuters:

[R]egardless of who is to blame for the collapse in living standards, poverty figures from the EU statistics agency are startling.

Greece isn’t the poorest member of the EU; poverty rates are higher in Bulgaria and Romania. But Greece isn’t far behind in third place, with Eurostat data showing 22.2 percent of the population were “severely materially deprived” in 2015.

And whereas the figures have dropped sharply in the post-communist Balkan states — by almost a third in Romania’s case — the Greek rate has almost doubled since 2008, the year the global crisis erupted. Overall, the EU level fell from 8.5 percent to 8.1 percent over the period.

>snip<

International organizations, including the Organisation for Economic Co-operation and Development, have urged the government to prioritize tackling poverty and inequality.

Unemployment has slipped from a peak of 28 percent of the workforce to 23 percent but the rate remains the highest in the EU. Since the crisis began, the economy has shrunk by a quarter and thousands of businesses have closed for good.

>snip<

Better living standards seem as far away as ever. Over 75 percent of households suffered a significant income reduction last year, a survey by business confederation GSEVEE and Marc pollsters found. A third had at least one unemployed member and 40 percent said they had to cut back on food spending.

And with the latest round of austerity now in negotiation, things can only get worse.

Remember that, just as in the U.S., the employment numbers don’t reflect totals paid in salaries and benefits.

With rising costs for healthcare, transportation, and other necessities, coupled with pay cuts, living standards have been drastically reduced even for those who are working.

But, hey, a banskster’s gotta make a living, right?

Map of the day: Where the world’s poorest live


From DevelopmentEducation.ie, the five countries housing the largest share of the 1.2 billion of our brothers and sisters living in extreme poverty:

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Note: We darkened the map considerably because the type for China was a yellow so pale as to be illegible. And why is it that graphics designers have switched from primary colors to pale pastels? We’ve had to darken an increasing number of charts, graphs, and maps because of a typographical madness sacrificing legibility for fashion.

Map of the day: European minimum wages


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From Eurostat, which reports:

As of 1st January 2017, 22 out of the 28 Member States of the European Union (EU) have national minimum wages: only Denmark, Italy, Cyprus, Austria, Finland and Sweden do not have one. The 22 EU Member States that have national minimum wages can be divided into three main groups based on the level in euro.

In January 2017, ten Member States, located in the east of the EU, had minimum wages below €500 per month: Bulgaria (€235), Romania (€275), Latvia and Lithuania (both €380), the Czech Republic (€407), Hungary (€412), Croatia (€433), Slovakia (€435), Poland (€453) and Estonia (€470).

In five other Member States, located in the south, minimum wages were between €500 and €1000 per month: Portugal (€650), Greece (€684), Malta (€736), Slovenia (€805) and Spain (€826).

In the remaining seven Member States, all located in the west and north of the EU, minimum wages were well above €1 000 per month: the United Kingdom (€1397), France (€1480), Germany (€1498), Belgium (€1 532), the Netherlands (€1 552), Ireland (€1563) and Luxembourg (€1 999).

For comparison, the federal minimum wage in the United States was €1192 per month in January 2017.

Panama Papers law firm founders arrested


Once in a while a single event provides a juncture between two ongoing stories we’ve been following.

First up, the legislative coup that ousted Brazilian President Dilma Rousseff and the subsequent criminal indictments filed against the coup participants as the result of a massive bribery investigation.

The second story is the Panama Papers leaks, the documents proving the existence of and participants in a vast network of “black flag” operation concealing a great deal of the planet’s wealth.

From teleSUR English:

The two founders of Panamanian law firm Mossack Fonseca were arrested on Saturday, the attorney general’s office said, after both were indicted on charges of money-laundering in a case allegedly tied to a wide-ranging corruption scandal in Brazil.

Firm founders Jurgen Mossack and Ramon Fonseca were detained because of the risk they might try to flee the country.

Attorney General Kenia Porcell told reporters on Saturday that the information collected so far “allegedly identifies the Panamanian firm as a criminal organization that is dedicated to hiding assets or money from suspicious origins.”

Mossack Fonseca is also at the center of a separate case known as the Panama Papers, which involved millions of documents stolen from the firm and leaked to the media in April 2016.

The fallout from the leaks provoked a global scandal after numerous documents detailed how the rich and powerful used offshore corporations to hide money and potentially evade taxes.

Fonseca, a former presidential adviser in Panama, has previously denied that the firm had any connection to Brazilian engineering company Odebrecht, which has admitted to bribing officials in Panama and other countries to obtain government contracts in the region between 2010 and 2014.

Austerians threaten more cutbacks in Greece


This is one of those good news/bad news stories.

Greece was the European nation hardest hit by the greed of Wall Street banksters who brought the world to its knees eight years ago, triggering a Great Recession which still hasn’t ended and threatens to worsen yet again, as the United Nations noted in a report last month:

Although a modest global recovery is projected for 2017-18, the world economy has not yet emerged from the period of slow growth, characterised by weak investment, dwindling trade and flagging productivity growth, according to the United Nations World Economic Situation and Prospects (WESP) 2017 report launched today.

The report states that the world economy expanded by just 2.2 per cent in 2016, the slowest rate of growth since the Great Recession of 2009. World gross product is projected to grow by 2.7 per cent in 2017 and 2.9 per cent in 2018, a slight downward revision from the forecasts made last May.

For Greece, that means an unparalleled crisis may be imminent as the nation and its citens are still reeling from the current crisis the onerous costs of the current bailout.

The bailout package from the troika — the International Monetary Fund, the European Central Bank, and the European Commission — has eased the impacts on Greece, though at a huge price. The nation’s ports, transportation infrastructure, and energy grid have already been sold off to multinationals, pay and pensions have been slashed repeatedly, healthcare benefits cut, and much, much more.

And employment, though improved, still reaches staggering levels, especially for young workers, as indicated in the latest numbers from the Hellenic Statistical Authority:

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The current bailout isn’t done, and the troika is demanding still more cuts, though a deal may be near.

From Kathimerini:

Representatives of the country’s international creditors are expected to return to Athens this week for a resumption of bailout talks despite continuing tensions between Greece and its lenders, highlighted by Prime Minister Alexis Tsipras over the weekend.

In a speech before SYRIZA’s central committee on Saturday, Tsipras lashed out at Greece’s creditors, calling on them to revise their “irrational demands” of Greece.

“We will not agree to demands that are not backed up by logic and numbers,” he said.

He called on the International Monetary Fund in particular to revise its recent assessments of Greece’s economic prospects so that stalled bailout negotiations can resume at the technical level.

Tsipras also called on German Chancellor Angela Merkel to rein in Finance Minister Wolfgang Schaeuble and his “constant hostility” towards Greeks, accusing him of trying to create a “two-speed eurozone” and comparing him to a “pyromaniac… playing with matches in a warehouse full of explosives.”

More from Deutsche Welle [emphasis added]:

The new agreement would release a new tranche from its 86 billion euro ($91.5 billion) bailout fund. That, in turn, would enable Greece to meet a major debt repayment of 7.2 billion euros that is due this summer.

EU and IMF lenders want Greece to make 1.8 billion euros — or 1 percent of gross domestic product — worth of new cuts by 2018 and another 1.8 billion euros after that on measures focused on broadening the tax base and on pension reductions.

New cuts — especially to pensions, which have already been reduced 11 times since the start of the crisis in 2010 — are difficult to sell to a public worn down by years of austerity.

>snip<

Breaking the deadlock in the coming weeks is considered paramount, with elections in the Netherlands on March 15 and in France in the spring threatening to make a resolution even more difficult.

But [Eurogroup chief Jeroen] Dijsselbloem warned that the next meeting of eurozone ministers on February 20, which is seen as an unofficial deadline ahead of the votes, would still be too early for a breakthrough.