EU: Why Europeans should think Big and think Bold "instead of harnessed by outdated capitalism" by Yanis Varoufakis

After the United States had lost its surpluses, some time in the late 1960s, the system of fixed exchange rates and highly regulated capital movements, which had nurtured capitalism’s Golden Age, was condemned. Its inevitable collapse could not but push the dollar down, release the bankers from their thirty-year-old restraints, and wind back rights and services that labour had wrestled from capital since the war.

In 2008, the pyramids of private money, that Wall Street and the City of London had built on the back of this constant tsunami of capital, crashed and burned. At first, continental Europeans smiled, allowing themselves an ‘I told you so’ moment, directed at the Anglo-saxons who had spent a decade or two sneering at the Continent’s antiquated commitment to manufacturing. Alas, that moment proved very brief. Soon, they realised that their own banks were replete with toxic assets and that their bankers had been allowed to run debts (or ‘leverage’) twice as great as those in the Anglo-sphere. Put simply, Mrs. Thatcher bubble had been surreptitiously exported to Frankfurt, Paris, Rome, Madrid, Brussels etc. As had the ‘model’ of building up competitiveness by squeezing wages until the local economies, behind the glitzy suburbs and the globalised jet set, were in a permanent state of slow-burning recession.

Post-2008, while the United States and Britain sought to bailout the bankers with a combination of taxpayers’ money and quantitative easing that aggressively sought to re-inflated the deflated toxic assets, Europe was making a meal of the same project. Having rid themselves of their central banks, the Eurozone’s politicians did their utmost to shift all the stressed bank assets onto the shoulders of the weakest amongst the taxpayers, thus causing a horrid recession and putting the European Union on a path leading toward certain disintegration.

Nevertheless, and despite the significant differences between Britain and the Eurozone, the broad picture remains the same: The establishment responded to the financial crisis by inflating bank and real estate assets (that were best left alone) and squeezing the majority of the population with soul and income sapping austerity. In short, the Thatcher model on steroids.

Growth is not the issue. The Left understands that there are many things whose growth must be stumped: toxic waste, toxic derivatives, ponzi finance, coal production, consumption that leaves the consumer unfulfilled and the planet worse for ware, etc. No, the issue is eclectic growth in the technologies and goods that contribute to a more successful life on a sustainable planet. The Left has always known that markets are terrible at providing these technologies and goods sustainably, and in a manner that sets prices at a level reflecting their value to humanity. What the Left was never very good at was in the conversion of that gut feeling into workable policy that the beneficiaries of this policy (i.e. the vast majority) would back.

A spectre is haunting Europe. It is the spectre of Bankruptocracy. A curious regime of rule by the bankrupt banks. A remarkable political arrangement in which the greatest extractive power (vis-à-vis other people’s income and achievements) lies in the hands of the bankers in control of the financial institutions with the largest ‘black holes’ on their asset books. It is a regime that quick-marches the majority of innocents into the trap of austerity-driven hardship that serves the guilty few, while Parliament and civil society are held at ransom. While 2008 was meant to raise ‘regulatory standards,’ we now know that nothing of substance has been done to reform finance.

This is not to say that we are anywhere near ready to replace capitalism. Indeed, realism commands us to recognise that, if anything, Bankruptocracy is well and truly in command of the European continent and the only political forces on the march are those of the bigoted, ultra Right. The Left must not err again, as it did in the 1930s, thinking that capitalism’s great crisis will naturally lead to something better. It may very well bring about the most hideous dystopia. This is why it is of the essence to stabilise capitalism (through banking regulation, a link between central banks and public investment, and a wider social safety net) while struggling to revive democracy at the local, national and European levels. Our success in this limited but crucial goal is a prerequisite for forging a sustainable future in which most people are gainfully employed in innovative enterprises of which they are the sole shareholders.

Read more: Why Europeans should think Big and think Bold

Turkey - let's get real - a far bigger and more serious problem than Crimea - by RM

 








While the world  focuses on Crimea and the comical  "tick-tac-toe" between President's Obama and Putin,  there is another geo-political  problem, which in terms of scope and strategic importance to the West, is far more critical than Crimea.

That problem is called Turkey, on the opposite side of Crimea, with the Black Sea in between .

Here we are now facing a corrupt and paranoid PM and his government, who have gone power crazy and totally out of control, taking Turkey down the road of potentially violent public disturbances and economic meltdown.

Even though, in all fairness Erdogan's accession on to Turkey's political scene more than 10 years ago "raised many eyebrows right from the start, most Turks gave him the benefit of the doubt and overlooked Erdogan's hard-line reputation, and the religious undertone of his AKParty given the apparent prosperity the country was experiencing under his leadership. 

Then came a change, the "Genie got out of the bottle", and the AKparty and Erdogan became more and more dictatorial, eliminating all forces of opposition, including those in the powerful Turkish military, the press and many other organizations.

The situation got even worse after Erdogan  got into a "spat" with his Guru and Mentor, Muhammed Fethullah Gülen, who lives in Pennsylvania, USA, as an exile and from there also  controls a global network of schools and organizations under the banner  "Moderate and Peaceful Islam.".   

Obviously back in Pennsylvania Muhammed Fethullah Gülen, was not very happy his "pupil"  Erdogan had stopped listening to him and rumors and evidence began circulating about the billions Erdogan and his croonies in government had swindled.

Erdogan pointed his finger at his former buddy Muhammed Fethullah Gülen claiiming that it was him who had created a  parallel state within the state that wanted to topple his government. 

Unfortunately for Erdogan despite his illegitimate reshuffling of thousands of police officers and hundreds of judges and prosecutors, he nor his government were able to track down a single piece of evidence of what he called a "parallel state".

In light of all these signs of corruption, it has also become evident to many people in Turkey that the whole parallel state argument by Erdogan  was an imagined enemy that Erdogan, like Don Quixote, used in his fight against the "windmills".

But Erdogan still has quite a few cards to play. As a result of the Turkish electoral and voting system Erdogan and his party still control the Turkish parliament.  Consequently Erdogan's AKParty is approving new laws on a daily basis to consolidate and strengthen his grip on every level of the Turkish  society. 

Mr Erdogan's other major fobia is that he is totally intolerant of criticism from whatever source it comes and has not hesitated to use his powers to have anyone he considers "a threat to the Republic" thrown into jail.

Turkey now has more journalists in prison than just about any other country in the world.

Turkey ranked 154th out of 180 countries surveyed in the World Press Freedom Index released by the Reporters Without Borders Association on Feb. 12, even behind China and  war-torn nations such as Afghanistan and Iraq.  The report noted further that “the Gezi Park revolt highlighted the repressive methods used by the security forces, the increase in self-censorship and the dangers of the prime minister’s populist discourse,”

More recently, audio recordings that appear to be of Erdogan have shown how deeply he is involved in government corruption, were posted on Twitter by an anonymous account holder, just weeks before the March 30 local elections in the country.

 Even though Erdogan denied that these recordings were legitimate he apparently decided it was better to be 'safe than sorry' and just get rid of Twitter altogether.

On Thursday, March 20 Erdogan made good on his promise to wipe out Twitter in his country, and Turkish tweeters are now reporting that they are unable to access the service.

Twitter published a message on its service that same day advising users in Turkey that it was still possible to send Tweets on twitter using mobile phone text messaging. 

Erdogan has previously also called social media a "menace to society" and threatened to ban YouTube and Facebook.  Last year, at least 25 people were arrested for tweeting messages of protests against Erdogan and his government. It now also appears that Facebook is being shut down in Turkey.

Indeed, the world, and particularly the EU should wake up and "smell the roses"  about the situation in Turkey, 

Like it or not, Turkey is a powerful economic ally of the West, a member of NATO and a candidate member of the EU with a population of 81.7 million. 

In contrast Crimea and its  2.3 million people, which since 700 BC  has been changing hands many times including being part of the Cimmerians, Bulgars, Greeks, Scythians, Romans, Goths, Huns, Khazars, Kievan Rus, the Byzantine Empire, Venice, Genoa, Kipchaks, the Golden Horde, the Ottaman Empire, the Russian Empire, the Soviet Union, Germany, Ukraine and now Russia again. 

Crimea or Turkey - Come on EU Commission and EU-Parliament - You don't need to be Einstein to figure that one out ?

As to Crimea, let's be frank - Crimeans voted fair and square they don't want to be part of Ukraine anymore. Maybe the simple solution would be for President Obama to shake hands with President Putin, wish Crimea well, and tell  President Putin not to start messing with Ukraine in the future,  or else. 

Let's get real - its time to focus on Turkey. .

EU-Digest

Netherlands: Geert Wilders "a racist A-hole" screams headline of the AD newspaper - Is he? - "Absolutely" say majority of Dutch voters

Geert Wilders may have blown his chances in the European elections, writes Robin Pascoe in the Dutch News.NL following his racist statements last night in the Hague.

Even though Wilders party the PVV  fielded candidates only  in The Hague and the city of Almere, Wilders must have hoped it was going to be his night in the Hague, just like in 2010.

The party was pretty well assured of remaining the biggest in the polder city of Almere and looked set to dominate in fhe Hague as well.

It did not work out for Wilders as he had hoped.

Support for the PVV fell in both places - almost one percentage point in Almere and 2.6 percentage points in The Hague. Only Government coalition partners Labour and the VVD did worse in the city of peace and justice.

Before the results became known, however, Wilders was prepared to triumph. He entered the party meeting in The Hague - once again - as he called it, "the eye of the Tiger",  from the theme of the movie Rocky. He wanted to be the classic underdog looking to deliver a knock-out blow to the political establishment in The Hague.

He spoke of what a great night it was - even though the results that interested him were not yet out - and then came the chanting. 'Do you want more or fewer Moroccans in your city and in the Netherlands?,’ Wilders asked the crowd. They chanted ‘fewer, fewer, fewer’. 'We're going to organize it,' Wilders said with a faint smile.

"It ain't going to happen - you racist A-hole", said a political opponent. .

EU-Digest

Netherlands: Municipal elections - Government coalition parties suffer major loss - Wilders PVV also among losers

The Dutch government coalition parties all suffered major losses in Wednesdays municipal elections.

With 77% of the votes counted the biggest loser was the government coalition party PVDA ( Labour party) which lost more than 243 council seats around the country ( dropping from 863 to 620 seats) . The other government coalition party VVD (Conservative Party) lost 104 council seats country-wide, dropping from 1002 to 898 seats

Biggest winners were the Socialist party  (SP) who gained 159 seats, going from 186 to 345 seats and the D66 ( Democratic party) which gained more than 200 seats - going from  414 to 614 seats.
Wilders right-wing Eurosceptic anti-Muslim party dropped  from a total of 17 to 16 seats.  

EU-Digest

Banking Industry: The Truth Is Out: Money Is Just An IOU, And The Banks Are Rolling In It - by David Graeber

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn’t know how banking really works, because if they did, “there’d be a revolution before tomorrow morning”.

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called “Money Creation in the Modern Economy“, co-authored by three economists from the Bank’s Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

To get a sense of how radical the Bank’s new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. 

True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don’t suffice, private banks can seek to borrow more from the central bank.

The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes.

It’s this understanding that allows us to continue to talk about money as if it were a limited resource like bauxite or petroleum, to say “there’s just not enough money” to fund social programmes, to speak of the immorality of government debt or of public spending “crowding out” the private sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: “Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits” … “In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.”

In other words, everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again. 

So for the banking system as a whole, every loan just becomes another deposit. What’s more, insofar as banks do need to acquire funds from the central bank, they can borrow as much as they like; all the latter really does is set the rate of interest, the cost of money, not its quantity. Since the beginning of the recession, the US and British central banks have reduced that cost to almost nothing. In fact, with “quantitative easing” they’ve been effectively pumping as much money as they can into the banks, without producing any inflationary effects.

What this means is that the real limit on the amount of money in circulation is not how much the central bank is willing to lend, but how much government, firms, and ordinary citizens, are willing to borrow. Government spending is the main driver in all this (and the paper does admit, if you read it carefully, that the central bank does fund the government after all). So there’s no question of public spending “crowding out” private investment. It’s exactly the opposite.

Why did the Bank of England suddenly admit all this? Well, one reason is because it’s obviously true. The Bank’s job is to actually run the system, and of late, the system has not been running especially well. It’s possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.

But politically, this is taking an enormous risk. Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.

Historically, the Bank of England has tended to be a bellwether, staking out seeming radical positions that ultimately become new orthodoxies. If that’s what’s happening here, we might soon be in a position to learn if Henry Ford was right.

Read more: The Truth Is Out: Money Is Just An IOU, And The Banks Are Rolling In It

Greece reaches long-delayed deal on bailout loans - by Elena Becatoros and Nicholas Paphitis

Greece concluded seven months of tortuous negotiations with its international debt inspectors Tuesday, reaching a deal that will allow it to access a long-delayed rescue loan installment.

The deal does not require Greece to impose any new austerity policies, Prime Minister Antonis Samaras insisted, as he outlined a series of relief measures for the most needy. "Today a long period of tribulations has ended, and a new beginning is being made," Samaras said. 

Greece has depended on its bailout from other European countries and the International Monetary Fund since mid-2010. Payment of the rescue loans depend on the country meeting criteria in spending cuts, tax increases and reforms. Greece's progress in meeting the targets is reviewed regularly by the debt inspectors, collectively known as the 'troika'.

Greece began this latest round of negotiations in September. Talks had snagged on several issues, including public sector firings and market reforms.

"These were seven very, very difficult months," said Finance Minister Yannis Stournaras, adding that the text of the agreement was being written up.

Read more: Greece reaches long-delayed deal on bailout loans - Yahoo News

Insurance Industry: Hot Topics Making News

The Spring issue of SURE!,  a free electronic publication by the Dutch KOSTER Insurance company takes a look at a variety of issues which got the attention in Europe during the past months, Some of the issues covered by SURE! include:

• The European Parliamentary Elections, to be held in all member states of the European Union on May 22-25 this year.
• The ongoing EU-US Trade Negotiations which is keeping both the EU and the USA on their toes and already has run into several roadblocks.
• The Solvency II EU Internal Insurance Guidelines that has the European Insurance industry and some EU member states up in arms.
• The dangerous sovereign exposure by the European Banking Industry which could have a long term negative effect on the economy of the Eurozone.
• And of course, a variety of news items related to the Insurance Industry around the world, including Brazil, Britain, Germany, Iran, Sweden, the Netherlands, Ukraine and the USA.

Click here for more from SURE !