If you thought the “Transportation Security Administration” would limit itself to conducting unconstitutional searches at airports, think again. The agency intends to assert jurisdiction over our nation’s highways, waterways, and railroads as well. TSA launched a new campaign of random checkpoints on Tennessee highways last week, complete with a sinister military-style acronym–VIP(E)R—as a name for the program.
As with TSA’s random searches at airports, these roadside searches are not based on any actual suspicion of criminal activity or any factual evidence of wrongdoing whatsoever by those detained. They are, in effect, completely random. So first we are told by the U.S. Supreme Court that American citizens have no 4thamendment protections at border crossings, even when standing on U.S. soil. Now TSA takes the next logical step and simply detains and searches U.S. citizens at wholly internal checkpoints.
The slippery slope is here. When does it end? How many more infringements on our liberties, our property, and our basic human rights to travel freely will it take before people become fed up enough to demand respect from their government? When will we demand that the government heed obvious constitutional limitations, and stop treating ordinary Americans as criminal suspects in the absence of probable cause?
The real tragedy occurs when Americans incrementally become accustomed to this treatment on the roads just as they have become accustomed to it in the airports. We already accept arriving at the airport 2 or more hours before a flight to get through security; will we soon have to build in an extra 2 or 3 hours into our road trips to allow for checkpoint traffic?
Worse, some people are lulled into a false sense of security and are actually grateful for this added police presence! Should we really hail the expansion of the police state as an enhancement to safety? I submit that an attitude of acquiescence to TSA authority is thoroughly dangerous, un-American, and insulting to earlier freedom-loving generations who built this country.
I am certain people will complain about this, once they have to sit in stopped traffic for a few extra hours to allow for random searches of cars. However, I am also certain it merely will take another “foiled” plot to silence many people into gladly accepting more government mismanagement of safety.
Vigilant, observant, law-abiding, gun-owning citizens defend themselves and stop crimes every day before police can respond. That is the source of real security in America: the 2nd Amendment right to defend oneself. The answer is for people to be empowered to protect themselves. Yet how many weapons might these checkpoints confiscate? Even when individuals go through all the legal hoops of licensing and permits, the chances of harassment or outright confiscation of weapons and detention of citizens when those weapons are found at a TSA checkpoint is extremely high.
Disarming the highways and filling them full of jack-booted thugs demanding to see our papers is no way to make them safer. Instead, it is a great way to expand government surveillance powers and tighten the noose around our liberties.
The pro-Western corporatist media outlets are hurriedly trying to help spin every aspect of the murder of Moammar Gadhafi and the ongoing rape and pillage of the Libyan people’s assets.
Yesterday Paul Richter of the LA Times wrote an article claiming that Moammar Gadhafi was the richest man in the world, holding some $200 billion dollars in assets hidden all over the globe. Buried deep within the body of his article, the truth finally comes out…
“But subsequent investigations by American, European and Libyan authorities determined that Kadafi secretly sent tens of billions more abroad over the years and made sometimes lucrative investments in nearly every major country, including much of the Middle East and Southeast Asia, officials said Friday.
Most of the money was under the name of government institutions such as the Central Bank of Libya, the Libyan Investment Authority, the Libyan Foreign Bank, the Libyan National Oil Corp. and the Libya African Investment Portfolio. But investigators said Kadafi and his family members could access any of the money if they chose to.
The new $200 billion figure is about double the prewar annual economic output of Libya, which has the largest proven oil reserves in Africa.” Paul Richter
All of the money was invested in Libyan enterprises presumably for the Libyan people but because “investigators” claim Gadhafi could have accessed it, the globalist spin on this wealth owned by the Libyan people, is that it was Gadhafi’s and not theirs. The difference is that if this money belongs to the people of the Socialist People’s Libyan Arab Jamahiriya, then it must be returned to them and cannot be touched. If it were to belong to Gadhafi then it simply becomes spoils of war and can be seized by whomever claims it.
The $200 billion dollar figure represents (as Richter points out) “about $30,000 for every Libyan citizen”. This is the amount that is about to be stolen from the people of Libya.
The US has still got somewhere around 29.3 billion dollars of Libyan money it took at the beginning of this conflict. Other NATO partners also turned a profit thus far in this conflict.
U.S. and European authorities said Friday that they intended to quickly hand over frozen assets to the transitional Libyan government. But so far, the U.N. has authorized release of only $1.5 billion from accounts in the U.S., and the Obama administration has turned over $700 million of that amount, said Marti Adams, a Treasury Department spokeswoman.
Though 200 billion would seem to be a lot of money (and God only knows whose pockets it will eventually fall into – is anyone really paying attention to all that Haitian Relief money that Hillary Clinton put her husband in charge of?) the fact is, more will be made when the garage sale of Libyan assets is held sometime in the very near future. Public assets will be sold for pennies on the dollar at best to corporate cronies, friends of the various administrations who pushed for this illegal invasion of Libya. It’s been done so many times in the past it’s ridiculous to believe anything different will take place. Especially if you remember that heads of certain corporations met with NATO leaders at the beginning of this staged conflict, surely to hash out who gets which slices of the Jamahiriya Pie. The Chicago Boys are probably already in Libya working their special neoliberal magic on the unsuspecting “rebels”.
As Europe grinds out yet another doomed banking system rescue plan, it might be helpful to examine the underlying assumption, which is that we need these big banks.
Do we really? If Goldman Sachs, JP Morgan Chase, Deutsche Bank, Crédit Lyonnais and five or six of their peers ceased to exist tonight, what would happen? Would their absence change the number of factories, hospitals, farms, biotech research labs, oil wells, or gold mines? Would there be fewer houses or cars? Would computers get slower or TVs lower-def? No. The world of tomorrow morning would have exactly the same amount of real wealth and productive capacity as it does today. The main thing it wouldn’t have is a lot of arcane financial instruments that don’t produce anything edible, and a hundred thousand or so bankers making inordinate amounts of money moving this paper around. To the extent that those bankers would have to take jobs making real things, the post-Goldman world would arguably be richer and more productive.
The big banks’ disappearance might, admittedly, leave some ripples in the pond. Interest rates might rise and stock prices fall as countries like the US and Japan have to suddenly live within their means. Military budgets, public services and pensions would shrink dramatically. But there would be compensations. Where today’s low interest rate regime is devastating to retirees living on the proceeds of bank CDs and Treasury bonds, higher interest rates would give them back their personal incomes, probably more than offsetting lower Social Security and Medicare benefits. For young families, falling real estate prices (also due to higher interest rates) would bring starter homes within closer reach. And all those soldiers now occupying foreign countries, or training to, would be freed up to take real jobs alongside the ex-bankers.
People who have leveraged themselves to the hilt to buy various assets would have to sell, of course, but savers — especially those with a lot of precious metals — would snap up those assets and put them to productive use. Apple and Warren Buffett’s Berkshire Hathaway between them have over $100 billion of ready cash, which they’ll use to acquire and deploy cheap assets. Community banks that focus on mortgages, business loans, and customer service(!) will thrive as depositors abandon Bank of America for local institutions. Farmers markets and local farms will grow to replace a disrupted global agribusiness supply chain. Freed from all those financial sector campaign contributions, politics might even get a little cleaner.
Viewed this way, the process looks a lot less threatening, and might even be a path to the kind of world most rational people would prefer. So relax, let the big banks go, and let’s see what happens.
Among the effects of the recent and now renewed credit strains in the global economy is that investors have lost touch with relative magnitudes. For example, a billion dollars effectively represents about $3.20 for every adult and child in the U.S., while a trillion dollars represents about $3,200 dollars per person. From our standpoint, among the most important research coordination that government provides comes from the National Institutes of Health (NIH), which funds basic medical research in cancer, diabetes, multiple sclerosis, Alzheimer’s, autism, and other conditions, and where the total annual budget is about $31 billion annually (roughly $100 per American). Add in just over $7 billion in research through the National Science Foundation, and about $120 per citizen a year is spent by the government on essential medical and non-military scientific research through these agencies. These figures pale in comparison to the amounts that are increasingly demanded in order to make bondholders whole on their voluntary, bad investments. The Federal Reserve provided an amount equal to the entire NIH budget simply to backstop the rescue of Bear Stearns, which allowed Bear Stearns bondholders to receive 100 cents on the dollar, plus interest. In return, the Fed got questionable assets that it pouched into a shell company called “Maiden Lane,” which were later reported to have “underperformed.”
Incomprehensibly large bailout figures now get tossed around unexamined in the wake of the 2008-2009 crisis (blessed, of course, by Wall Street), while funding toward NIH, NSF and other essential purposes has been increasingly squeezed. At the urging of Treasury Secretary Timothy Geithner, Europe has been encouraged to follow the “big bazooka” approach to the banking system. That global fiscal policy is forced into austere spending cuts for research, education, and social services as a result of financial recklessness, but we’ve become conditioned not to blink, much less wince, at gargantuan bailout figures to defend the bloated financial institutions that made bad investments at 20- 30- and 40-to-1 leverage, is Timothy Geithner’s triumph and humanity’s collective loss.
The most depressing display of math-illiteracy by investors last week was the excitement over a report suggesting that France and Germany had agreed to a 2 trillion euro bailout package for Europe, which triggered a “risk-on” tone for the rest of the week, even after the report was retracted as inaccurate. It was almost beyond belief that investors took that report seriously, but people have become so tolerant of unbelievably large figures that virtually any bailout number can now be tossed out without triggering the least bit of scrutiny. Notably, 2 trillion euros is more than the GDP of France, and is half the GDP of Germany and France combined. Moreover, Europe has just gone through a tooth-pulling process just to approve 440 billion euros for the European Financial Stability Fund (EFSF) from all EU members combined.
So barring new dedicated funds from Germany and France, which had zero chance of being forthcoming, the only way you could morph 440 billion euros into 2 trillion euros was for each of those 2 trillion euros to really be only 22 euro cents of protection. In other words, you could only say that the EFSF would “protect” 2 trillion euros in European debt by limiting the protection to about 20% of face value, without using any of the funds to recapitalize banks or deal with much deeper probable losses on Greek debt (50-60%). Those losses alone will gulp down a large chunk of the EFSF (not to mention post-default needs to stabilize Greece over the longer-term, which the Troika estimates at another 450 billion euros).
Last week, the yield on one-year Greek debt closed at 183%, a new record, and up from 169% the prior week. Yet on Friday, the market rallied on hopes of a comprehensive “solution” to the European debt crisis, and took heart that part of an 8 billion euro hold-over loan to Greece was approved. The 1-year Greek yield pushed 3 percentage points higher. As I’ve noted before, this limited amount of immediate relief is needed to buy time preparatory to a default. A clean solution to the European debt problem does not exist. The road ahead will likely be tortuous.
The way that Europe can be expected to deal with this is as follows. First, European banks will not have their losses limited to the optimistic but unrealistic 21% haircut that they were hoping to sustain. In order to avoid the European Financial Stability Fund from being swallowed whole by a Greek default, leaving next-to-nothing to prevent broader contagion, the probable Greek default will be around 50%-60%. Note that Greek obligations of all maturities, including 1-year notes, are trading at prices about 40 or below, so a 50% haircut would actually be an upgrade. Given the likely time needed to sustainably narrow Greek deficits, a default of that size is also the only way that another later crisis would be prevented (at least for a decade, and hopefully much longer).
Gradually, but eventually, European leaders are beginning to recognize that you can’t solve a sovereign debt crisis by expanding the quantity of sovereign debt, when even the strongest countries are already bloated with it. You can’t get “Out” by walking through yet another door marked “In.” The markets aren’t quite to that realization, hoping for some easy “final” resolution that will simply make the problem go away, but that dawn will come.
The Troika report released over the weekend notes that “the situation in Greece has taken a turn for the worse … Deeper PSI [private sector involvement - i.e. loss-taking], which is now being contemplated, also has a vital role in establishing the sustainability of Greece’s debt*. To assess the potential magnitude of improvements in the debt trajectory, and potential implications for official financing, illustrative scenarios can be considered using discount bonds with an assumed yield of 6 percent and no collateral. The results show that debt can be brought to just above 120 percent of GDP by end-2020 if 50 percent discounts are applied… *Footnote: The ECB does not agree with the inclusion of the illustrative scenarios concerning a deeper PSI in this report.”
That footnote is interesting – it’s not that the ECB disputed the deeper loss-taking scenarios – it just didn’t want to include them in the report.
My guess is that European leaders will force a bank recapitalization within days – probably 100 billion euros, preferably 200 billion, but the larger number is doubtful because at present market values, European banks would have to sell new shares in nearly the same quantity as their current outstanding float in order to acquire the new capital. Yet Stratfor correctly notes that even in the event of a 200 billion recapitalization, a 50% haircut on Greek debt “would absorb more than half of that 200 billion euros. A mere 8 percent haircut on Italian debt would absorb the remainder.” So a good chunk of the present EFSF could end up recapitalizing banks, especially if too little is raised from private investors. This would leave little ammunition against any further strains, should they develop.
Of course, Europe wouldn’t need to blow all of these public resources or impose depression on Greek citizens if bank stockholders and bondholders were required to absorb the losses that result from the mind-boggling leverage taken by European banks. It’s that leverage (born of inadequate capital requirements and regulation), not simply bad investments or even Greek default per se, that is at the core of the crisis.
The bottom line is a) European leaders will likely initiate a forced bank recapitalization within days; b) Greece will default, but the new hold-over funding may give the country a few more months; c) the EFSF will not be “leveraged” by the European Central Bank; d) banks are likely to take haircuts of not 21%, but closer to 50% or more on Greek debt; e) much of the EFSF will go toward covering post-default capital shortfalls in the European banking system following writedowns of Greek debt; f) the rest will most probably be used to provide “first loss” coverage of perhaps 10% on other European debt, which may be sufficient to limit contagion provided that implied default probabilities on Italian and Spanish debt don’t breach that level and the global economy stabilizes; g) uncertainty following a Greek default is likely to create significant financial strains, even in the absence of a recession; h) all bets for stability are off if the global economy deteriorates markedly from here, which is unfortunately what we continue to expect.
On the subject of bank capital, I can’t stress enough that the proper approach is for government to restrict even temporary, fully-collateralized assistance only to those institutions that are clearly solvent, and to promptly restructure the other institutions. What the global economy needs most is not bank bailouts, but to establish and enforce a legal and regulatory structure that allows the streamlined bankruptcy of insolvent institutions (Title II of Dodd-Frank addresses this with a more comprehensive policy than existed in 2008, but it doesn’t read as a “clean” solution in my view – putting too many cooks in the kitchen – particularly the Fed and the Treasury).
Again, again, again, the “failure” of a financial institution only means that the institution fails to pay off its own bondholders. Depositors typically lose nothing. For example, “saving” Bear Stearns meant primarily that Bear Stearns’ bondholders would be made whole. Saving Dexia a few weeks ago meant the same thing for Dexia’s bondholders. The key is not to prevent “failure,” but to prevent disorderly failure and piecemeal liquidation. Washington Mutual was a seamless, and therefore nearly unmemorable “failure.” Lehman was disorderly and jarring. The difference was that there was a legal and regulatory structure to quickly cut away stockholder and bondholder liabilities in the Washington Mutual instance (which was handled by the FDIC), while there was no similar way to restructure non-bank financials like Lehman in 2008.
From my perspective, weak regulation of bank leverage, inadequate capital requirements, and the need for prompt, streamlined restructuring for insolvent banks are among the most urgent problems that the global economy faces. Consider this. The Financial Times reported on Friday that in 2008, Dexia lent 1.5 billion euros of its capital to two institutional investors, who used the cash to buy newly issued shares in … wait for it … Dexia. Remember that as a bank, Dexia operated at leverage of about 50 times its tangible shareholder equity (see last week’s comment ). So Dexia’s maneuver made it possible to meet regulatory capital standards and take on a huge amount of additional leverage, without actually raising any bona-fide capital. As FT noted, “The unorthodox funding move, which roused Belgian regulators’ concern at the time, amounted to Dexia borrowing money from itself to finance a capital increase. This is illegal in most jurisdictions and is now banned in the European Union, but did not break Belgium’s existing laws.”
On a similarly outrageous note, Bloomberg reported last week that ” Bank of America , hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits… The Federal Reserve and the Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by the counterparties. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC is objecting. The bank doesn’t believe regulatory approval is needed.” Well, other than that it goes against Section 23A of the Federal Reserve Act , but then, the Fed can make an exemption whether the FDIC likes it or not . And that’s what we’ve come to – government of the banks, by the banks, and for the banks (because banks are people too) .
The Bloomberg report continued, “Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA [the FDIC insured entity], according to the data, which represent the notional values of the trades. That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives.”
Note that the figures are in trillions, not billions (U.S. GDP is $15 trillion). That said, the vast majority of the “notional value” of derivatives in the financial system represents multiple fully-hedged links in a long chain between final users who actually take the risk, so Bank of America’s true risk is most probably a tiny fraction of that notional amount. Unless those derivatives include unhedged short positions in credit default swaps on Greek debt (which we can’t really rule out), it’s not clear that the derivatives themselves are underwater. The real problem, in my view, is that the transfer is clearly driven by the intent to get around capital adequacy regulations, and runs precisely opposite to the right way to create a good bank and a bad bank . It saddles the good bank – the taxpayer insured one – with the questionable liabilities, while “giving relief” to the holding company. This is really preposterous. … Full article
More than 450 economists from over 40 countries have called on the G20 finance ministers, who are meeting in Paris this week, to take urgent action to stop financial speculation in commodity markets driving up food prices and fueling hunger.
‘Excessive financial speculation is contributing to increasing volatility and record food prices, exacerbating global hunger and poverty,’ say the economists in a letter to the finance ministers. ‘With around 1 billion people enduring chronic hunger worldwide, action is urgently needed to curb excessive speculation and its effects on global food prices.
Economists from top universities including Cambridge, Oxford, Berkeley, Cornell and the London School of Economics have signed the letter, adding their voices to an escalating international campaign.
The G20 agriculture ministers have also called on their finance counterparts to introduce tighter regulation. Speculation is one of a range of issues to be discussed at the finance ministers’ meeting.
The US has moved to control speculation, and European proposals for similar rules are expected to be announced next week. But the UK government is set to block European legislation.
Neil Kellard, Professor in Finance at the University of Essex, who signed the letter, said today:
Over-speculation can steer commodity prices away from fair levels indicated by the supply and demand for food and push the poorest further into chronic hunger. Conversely, very little evidence exists that the recent high levels of commodity investing are necessary to meet hedging demand or promote pricing efficiency in financial markets. Position limits can be set to dampen commodity price movements whilst maintaining and probably enhancing market function.”
Deborah Doane, director of the World Development Movement, said today:
Excessive lobbying from the finance sector seems to be delaying political action, both here in the UK, and elsewhere. This is despite the obvious suffering caused by speculation on this most basic human need, and despite the growing number of voices calling for action. Instead of propping up cynical financial gambling by speculators, the G20 finance ministers must act to ensure that strict rules are put in place to limit the hold of bankers over the world’s food markets.”
Historically, Greeks are very good at constructing myths. The rest of the world? Not so much. Reading the press, one gets the impression of a bunch of lazy Mediterranean scroungers, enjoying one of the highest standards of living in Europe while making the frugal Germans pick up the tab. This is nonsensical propaganda, designing to justify the continued collective execution being inflicted on Athens for the sins of its fathers and grandfathers. As if Greece is the only country ever to cook its books in the European Union! The heart of the problem is in the antiquated revenue system that supports that state, which results in a budget shortfall consistently about 10 per cent of GDP. The top 20 per cent of the income distribution in Greece pay virtually no taxes at all, the product of a corrupt bargain reached during the days of the junta between the military and Greece’s wealthiest plutocrats. No wonder there is a fiscal crisis.
So it’s not a problem of Greek profligates, or an overly generous welfare state, both of which suggest that the standard IMF style remedies being proposed here are bound to fail, as they are doing right now. In fact, given the non-stop austerity being imposed on Athens (which simply has the effect of deflating the economy further and thereby exacerbating the very problem the Greeks are trying to eliminate), the Greeks really are getting close to the point where they should just default and shift the problem back to those imposing the austerity. It can’t be worse than the slow execution they are facing today.
In reality, the Greeks have one of the lowest per capita incomes in Europe (€21,100), much lower than the Eurozone 12 (€27,600) or the German level (€29,400). Further, the Greek social safety nets might seem very generous by US standards but are truly modest compared to the rest of the Europe. On average, for 1998-2007 Greece spent only €3530.47 per capita on social protection benefits–slightly less than Spain’s spending and about €700 more than Portugal’s, which has one of the lowest levels in all of the Eurozone. By contrast, Germany and France spent more than double the Greek level, while the original Eurozone 12 level averaged €6251.78. Even Ireland, which has one of the most neoliberal economies in the euro area, spent more on social protection than the supposedly profligate Greeks.
One would think that if the Greek welfare system was as generous and inefficient as it is usually described, then administrative costs would be higher than that of more disciplined governments such as the German and French. But this is obviously not the case, according to Eurostat. Even spending on pensions, which is the main target of the neoliberals, is lower than in other European countries.
Furthermore, if one looks at total social spending of select Eurozone countries as a per cent of GDP through 2005 (based on OECD statistics), Greece’s spending lagged behind that of all euro countries except for Ireland, and was below the OECD average. Note also that in spite of all the commentary on early retirement in Greece, its spending on old age programs was in line with the spending in Germany and France.
In fact, Greece has one of the most unequal distributions of income in Europe, and a very high level of poverty, as the following table shows. Again, the evidence is not consistent with the picture presented in the media of an overly generous welfare state—unless the comparison is made against the situation in the US.
Of course, these facts don’t matter. The prevailing myth is that Greece is in the words of the FT’s John Authers, “a country that was truly profligate”, with little in the way of data to support that assertion. The country, however, is truly stuck: they can’t devalue, they can’t pay their way, at current prices, and nobody will voluntarily finance them. So they must exit and devalue or drop their domestic prices. The massive default, though inevitable, is just a step along the way.
To make the problem worse, export earnings also seem to face their own structural cap that is consistently exceeded by import spending, which means that the debt that finances the government shortfall is increasingly held abroad. The debt is issued under Greek law, but now it is payable in Euros which Greece is powerless to print. In this sense, ironically, the fiscal crisis is a consequence of Greece’s success, after a long preparation, in joining the European Union, and hence giving up its own currency.
The point is that, if this analysis of the source of the problem is correct, then standard IMF austerity policy is unlikely to do much to help. If the problem is not the level of wages, or the size of the welfare state, then pushing wages down and shrinking the welfare state is not going to do much. Greece, after all, is still a democracy and if one is to judge from the intensifying riots in the country, it is far from clear whether Greece (or any other euro zone member for that matter) is really willing to cut spending and raise tax rates enough to make a difference. This much is implicitly being conceded by the “Troika” – European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB), which was submitted to the EU Summit yesterday, and will no doubt be a part of the deliberations in the Greek debt restructuring proposals to be hammered out by Oct. 26th.
On the first page of the document is not only a pretty open and blatant admission that expansionary fiscal consolidation (EFC) has proven to be a contradiction in terms, at least in Greece, but there is also a serious policy incompatibility problem, at least over the intermediate term horizon, with efforts at internal devaluation (ID) – that is, attempting nominal domestic private income deflation in order to improve trade prospects when one has a fixed exchange rate constraint.
While they stop short of recognizing that their demands and the actions they have imposed on Greek policymakers are setting off a debt deflation implosion of the Greek economy (never mind rupturing any semblance of a social contract, and ripping the social fabric to shreds as well – this is, after all, the jackboot version of neoliberal “reform” designed to stamp out any last vestige of social democracy and organized labor in the eurozone) this is a very large concession for the Troika to have taken.
To admit that EFC is not working, and that pursuing ID will aggravate matters further, including the ability of Greece to hit fiscal targets, is a fairly large step in the recognition of the reality of the situation. This is not something the faith based neoliberal economists in the Troika organizations are often prone to do. It is not what their incentive structures, formal and informal, tend to encourage them to do.
So why pursue it? Well, let’s face it: this has far less at this stage to do with Greece (even as the prevailing mainstream myth continues to perpetuate the picture of a lazy, unproductive country full of profligates and scroungers), than punishing other potential fiscal recalcitrants. They are scapegoating the Greeks – in order to make sure that should Greece take the rumored “hair cut” on its debt and restructure, the other peripheral countries – especially Italy – won’t get any ideas and be tempted down the same path. This is the strategy to prevent what is euphemistically called the “contagion impact”. In reality, it is also called the principle of collective guilt, destroying the livelihoods of thirteen million people for political reasons. Given their own history, the Germans above all other nations, should understand this phenomenon.
If the prevailing mix of fiscal austerity policies continue, there will be spill-over effects to nations that export to Greece. To be sure, Greece is a tiny market in Euroland, but its fiscal problems are by no means unique. As the bigger economies like Spain and Italy also adopt austerity measures, the entire continent can find government revenue collapsing – even Germany, where economic deceleration has become markedly more noticeable in the past few months. Worse, exports to neighbors will be hurt by reduction of demand. Finally, if austerity succeeds in lowering wages and prices in one nation it can lead to competitive deflation, only compounding the problem as each country tries to gain advantage in order to promote growth through exports. What is most remarkable to us is that the largest net exporter, Germany, does not appear to recognize that its insistence on fiscal austerity for all of its neighbors will cook its own golden egg-laying goose.
Angela Merkel likes to say that no real economic union is possible if one party to the union (Greece) works shorter hours and takes longer holidays than another (Germany). What she should say is that no real economic union is possible if the governing plutocrats of ALL nations (not just the billionaire Greek shipowners who probably have already moved their money offshore, but also wealthy bankers who have suffered no consequence of their own fraudulent and willfully destructive lending practices) consistently evade their fair share of the cost of that party’s own state expenditure, expecting the union either to pay the bill itself, or to force the bottom 80 per cent to pay it.
Greece is not a special case, but rather a case in point of what happens when you impose fiscal consolidation on countries with high private debt to GDP ratios, high desired private net saving rates, and large, stubborn current account deficits. What is needed is a way to redistribute demand toward the trade deficit nations—for example, by having the trade surplus nations spending euros on direct investment in the trade deficit nations. Germany did this with East Germany. Such a mechanism could be set up under the aegis of the European Investment Bank very quickly. Effective incentives to “recycle” current account surpluses in this manner via foreign direct investment, equity flows, foreign aid, or purchases of imports could be easily crafted. If it could be accomplished, it will be a way Greece and the others could become competitive enough to secure their future through higher exports.
Failure to embrace this kind of growth option will ultimately give the Greeks little alternative but to default, leaving the euro zone’s policy makers with an even bigger and costlier mess on their hands. Admittedly, this will not fully solve Greece’s problems as they would likely have to leave the euro zone as well and reintroduce the drachma. This would entail capital controls, which will cause people to head for the exits (this is, after all, a country with lots of boats). If they default, it would be more akin to a “Samson moment” for the entire euro zone. Like Samson in his last days, blinded and beaten by the Philistines, Greece is weakened, blind and bound. Default would represent one last defiant burst of strength with which it “pulls down the temple” (in this case the euro zone) via default and takes down everybody. Myth-making at the expense of the Greeks does not serve anybody’s interests, as there will be a cascade of defaults everywhere, and a Soviet style collapse in incomes, hardly an enticing prospect for the global economy. Not an attractive ending, but this is the kind of outcome which the troika’s self-surviving, immoral and cruel policies could lead to. The Greeks, and the vast majority of Europe’s citizens, deserve better.
MARSHALL AUERBACK is a market analyst and commentator. He can be reached at MAuer1959@aol.com
Nablus – Palestinian villages across the West Bank are undertaking their annual olive harvest this October, amid fears of harassment and violence from Israeli settlers and soldiers.
While the Palestinian olive harvest is a tradition that stretches back countless generations, the phenomenon of settler violence during the olive harvest is only as old as the illegal Israeli settlements themselves. Every year around October, grandparents, parents and children saddle up the donkey and, tree by tree, day by day, methodically comb, scrape and pick sack-fulls of olives from their family’s allotted portion of the 10 million olive trees that dot the hills and mountains of the West Bank and Gaza.
According to an Oxfam report, “more than 80 percent of olive farmers are small-medium scale farmers, owning olive orchards equal to or less than 25 dunams (a dunam is the equivalent of 1,000 square meters) in size … olive cultivation provides employment and income for around 100,000 farming families who are olive oil producers … in a good year, the olive oil sector contributes over $100 million income annually to some of the poorest communities” (“The Road to Olive Farming: Challenges to Developing the Economy of Olive Oil in the West Bank,” October 2010 [PDF]).
This way of life, vital for the economic survival of countless Palestinian families, is becoming increasingly threatened — both by the hostility and violence of settlers who live near Palestinian villages, and by the crippling restrictions and regulations of the Israeli military.
Surrounded by settlements
The village of Burin, near Nablus, offers a prime example of the dangers faced by the 2011 olive harvesters. Burin’s 4,000 inhabitants live in a valley, surrounded on all hilltops by Israeli settlements — Yitzhar, Har Bracha, and a Yitzhar “outpost.” Last month, settlers from Yitzhar, proud birthplace of the “price-tag” campaign of racist violence, burned 200 olive trees as villagers were celebrating a wedding (“Yitzhar settlers violently crash Burin wedding, military watches,” International Solidarity Movement, 6 September 2011).
This followed a similar attack in late June, described by Burin residents as the worst attack in 10 years, as 2500 olive trees on more than 900 dunams of land were destroyed, according to a report by the Monitoring Israeli Colonizing activities in the Palestinian West Bank and Gaza project (“Israeli colonists Set tens of Olive Fields Alight in Burin,” 2 July 2011).
Ghassan Najjar, director of the Burin Community Center, told The Electronic Intifada that “every year it is getting worse, and this year it is a lot worse. It used to be they burned trees once a year, but this year they have burned trees four times since April. Since April, they have cut down and burned entire areas to clear the land so we can use nothing.”
The olive harvest is frequently a target for settler attacks in Burin. Between 9-16 October 2010, the Israeli human rights group B’Tselem reported four separate settler attacks against Burin olive harvesters (“List of incidents in which damage was caused to Palestinian olive trees or property,” 28 October 2010).
Over the course of the 2009 olive harvest, almost 250 olive trees were cut down by settlers, often with chainsaws, as activists with the Michigan Peace Team documented in October 2009 (“Burin tree massacre,” 3 October 2009).
“Like a sister to me”
Ibrahim El Buriny is a 27-year old olive harvester whose family has combed the trees on Burin’s hillsides for generations. “This land is like a sister to me,” he said. “My grandfather bought this land in 1975 from the village of Huwara. They have records. The papers are in the PA and Israeli databases.”
On the first day of this year’s harvest in Burin, he spoke of how settler attacks in the last five years have escalated. “Settlers are getting more radical as they are growing stronger,” he said. “They are growing in numbers and are better armed … Usually groups of 25 settlers come [from the hilltops down to] us, many with guns. [Or] settlers will get out of their car on the main road, curse at us and shoot at us. The soldiers come and defend the settlers … there are two alternatives — either run and leave all the olives, or stay. If we can, we scare them or chase them away.”
Settlers burn olive groves in an attempt to physically erase Palestinians’ claim to the land, and they attack olive harvesters intending to terrify Palestinians into submission and exile. One-third of Yitzhar sits on privately owned Palestinian land, according to data provided by the Israeli Civil Administration (“Guilty! Construction of Settlements on Private Palestinian Land,” Peace Now, March 2007).
For the settlers of Yitzhar, a burning Palestinian olive tree signifies exactly what a burning cross signified to the Ku Klux Klan in the US of the 1950s — in either case, the message is racial intolerance, and the purpose is ethnic cleansing. “The settlers use fear, they intimidate people to leave their homes … they say ‘we cut down the trees because a Palestinian touched this and made it dirty. This is our land and we can do whatever we want,’” Najjar said.
“We can’t leave”
For the Palestinians of Burin, the olive harvest — in the face of settler violence — becomes a political statement of resistance. “The land is like our mother and father,” said El Buriny. “We can’t leave our land, and who would leave their land? That’s the number one reason [we continue to harvest]. But in our situation, we also need [to harvest] this land for the money as well. [But] even if we had money we wouldn’t give up our land. Even if they forbid us from our land, we are not going to drink a cup of fear, and we’re not gonna stay quiet.”
Najjar echoed this determination emphatically. “Olives are the most important farming product here for us. Of course the olive harvest is important for the olives and for the resistance. We know for certain that if we leave the land they will steal it, and claim it is their land.”
As an aside, Najjar added, “we know for certain that it’s not their land, because they burn it.”
Oftentimes, settler attacks spark confrontations between farmers and settlers. El-Buriny, while stressing that villagers almost never retaliate, insisted on their right to repel the attacker, and to defend themselves, and their olive trees, if in danger. “How can we let someone come on our land, and not let us be on our land, and hit us, and curse at us, and stay quiet? … All we have is a rock to defend ourselves. We don’t have anything but a rock, our hearts, and God,” he explained.
As conflicts have escalated in recent years, the Israeli military has committed itself to administrative and on-the-ground interference in the olive harvest. Its stated intention has even been to protect Palestinian farmers from settler attacks.
In the words of the 2008 United Nations report “The Olive Harvest in the West Bank and Gaza,” “As a military occupying power, the [Israeli army] is obligated to ensure public order and life in the Occupied Territories and the Government of Israel has repeatedly committed to ensuring that Palestinian farmers have access to their fields … according to the Israeli authorities, the IDF and the police will be present at friction points for designated few-day periods to ensure protection for Palestinian farmers from settler harassment” (“The olive harvest in the West Bank and Gaza,” October 2008 [PDF]).
In reality, however, the presence of the Israeli army only offers a minimal amount of meaningful protection for Palestinian farmers, and serves rather to intensify the administrative barriers and physical dangers facing the farmers during their olive harvest.
In 2008, Omar Suleiman, an olive harvester from Kafr Qalil near Nablus, was harvesting with his son when, he told The Electronic Intifada, “six or seven settlers came over the hills with guns and said ‘this is not for you, this is for us, go!’ Since then, the military comes to protect us.”
To a certain extent, he said, “the soldiers are here to make sure there are no problems between settlers and Palestinians.” However, the presence of the Israeli army means that “now, for the last three years, we have to ask the army for permission [to harvest] … [and] if the settlers come to attack us again, the soldiers will help them.” Najjar echoed this claim that “the soldiers are there to protect the settlers. Most of the army are settlers anyway.”
To regulate the olive harvest, the Israeli District Coordination Committee (DCO) provides farmers with permits to access their own land with the “protection” of Israeli forces. Thus, Palestinian families often harvest their land in plain view of the military jeeps and white DCO vans parked on the adjacent hillside. Far from sheltering the Palestinians under a benevolent wing of protection, however, the army will frequently forbid families from accessing their land, usually with no explanation. Additionally, the DCO decides on which days farmers can legally access their land, and usually allots only one or two days for harvesting time, not nearly enough for the majority of families. Finally, if a family does not request a permit from the DCO, the army is given a pretext to prevent them from harvesting, especially if their land is close to a settlement.
On 12 October this year, the Israeli military drove up to the fields of Burin at 9am and ordered the families, on the first day of harvesting, to leave their harvest. Soldiers refused to give an explanation. The military then stated that families would be allowed to return to their fields for the next three days. Two days later, however, the military returned to kick one family off of their land, declaring the area a closed military zone and again offering no further explanation.
Najjar was present with his family when they were ordered to stop harvesting on 12 October. “This is normal for us,” he said later that day. “We are used to it.”
He continued: “This is not the first time we have been kicked off our land. That is no reason for us not to go back and continue work. If my father was not there, I would have been angry and refused to leave. But in front of my father I controlled my emotions, and did not show that I was upset.”
Israeli army’s inaction toward settler violence
Realistically, the presence of the Israeli military during the olive harvest, far from meaningfully alleviating the threat of settler violence, works instead to thicken the layers of oppression through which the Palestinians must struggle in order to make it to their olive trees and back.
In October 2010, Oxfam noted that, “in the first six months of 2010, the United Nations reported that hundreds of dunams of agricultural land and thousands of olive trees and other crops had been damaged in settler-related incidents. Israeli NGO [non-governmental organization] Yesh Din, an Oxfam partner, recently published a study in which it did not find a single case where the Israeli authorities had taken action to bring those involved to court.” (“Palestinian olive oil profits in the West Bank could double if Israeli restrictions ended,” Oxfam, 15 October 2010).
As the settlers grow more radicalized and Israeli regulations grow more dense, October 2011 may be a rough olive harvest for Palestinians in the West Bank. However, Omar Suleiman from Kufr Qalil offered a glimmer of hope. While an Israeli military jeep, a DCO van, and a small group of settlers sit perched together on the opposite hillside, he continued to affirm the pride, steadfastness and determination of his people.
“This settlement [pointing to Har Bracha] came here 20, 30 years ago. Israel has been here for 60 years. My family has had this land for 4,000 years.”
Ben Lorber is an activist with the International Solidarity Movement in Nablus. He blogs at freepaly.wordpress.com.
Iowa-based investor Bruce Rastetter and fellow investors in the industrial agricultural corporation AgriSol Energy have their sights on 800,000 acres (325,000 hectares) of land in Tanzania that is home to 162,000 people.
The proposed site is inhabited by former refugees from neighboring Burundi. Most of the residents, several generations of families who have successfully re-established their lives by developing and farming the land over the last 40 years, will be displaced against their will. They will lose their livelihoods and their community. Once they are gone, Agrisol Energy will move in.
Despite rising international criticism of the proposed plan to evict the residents in the proposed lease areas for foreign investors, the Tanzanian government plans to move forward with the project.i
AgriSol has promoted this large-scale land acquisition as a project to transform Tanzania into a “regional agricultural powerhouse” by combining the country’s abundant agricultural natural resources with “modern” farming practices, including the use of genetically modified crops.ii Unfortunately, AgriSol’s plans–which include seeking Strategic Investor Statusiii from the Tanzanian government that would grant them tax holidays and other critical investment incentives (including waiver of duties on agricultural and industrial equipment supplies, export guarantees, and certainty for use of GMO and Biotech and production of biofuels), while generating tremendous profit for the investorsiv–will do little, if anything, for Tanzanians. On the contrary, it is likely that if this land deal goes ahead it will set a precedent for future land rights abuses.
More details can be found in the Oakland Institute Brief, AgriSol Energy and Pharos Global Agriculture Fund’s Land Deal in Tanzania.
We fear that this project could move quickly forward unless the Tanzanian government and the US investors realize that the world is watching. We ask that you join the Oakland Institute in holding Bruce Rastetter and AgriSol team accountable and send them the message that proceeding with their plans is not “socially responsible agricultural investment.”
NABLUS — Israeli forces made multiple arrests overnight Sunday and Monday morning in several districts across the West Bank, the Israeli army and Palestinian police said.
An Israeli army spokeswoman said six men were detained in Hebron, two southeast of Qalqiliya and two southwest of Bethlehem in the village of Umm Salamuna.
Palestinian police said in a statement, however, that nine men were detained across the West Bank, seven of whom were named.
Five were detained in Hebron, three north of Ramallah and one in the Qalqiliya district, police said.
Handhalah Yousif Rashid, 18, Majd Walid Abu An-Nujoum, 18, and Ramzi Hisham Natour were detained at a flying checkpoint Israeli forces erected at the entrance to Turmusayya, near Ramallah, the statement said.
In Hebron, Israeli forces erected a checkpoint near the Ibrahimi Mosque and detained 16-year-old Tariq Irsheid, police said.
Israeli forces also detained 37-year-old Farouq Issa Ashour and Hasan Badawi Abu Sneina, 21, from Hebron. Police identified the man detained in Qalqiliya as 34-year-old Fahd Ali al-Sheikh.
An Israeli army spokeswoman said the men will be taken for routine security questioning.
The prisoner rights group Addameer estimates that Israel has jailed 650,000 Palestinians since 1967.