Why are members of the euro zone like lobsters in a pail? A 1-clown news item.

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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This falls under the category: “When you’ve tried everything wrong maybe, just maybe, you eventually will try something right. The euro zone is coming closer, but still no cigar:

Euro zone may drop bondholder losses from ESM bailout
(Reporting by Julien Toyer, John O’Donnell and Luke Baker in Brussels, Andreas Rinke in Berlin and Mike Shields in Vienna; writing by Luke Baker; editing by Rex Merrifield, John Stonestreet), 11/25/11

BRUSSELS (Reuters) – Euro zone states may ditch plans to impose losses on private bondholders should countries need to restructure their debt under a new bailout fund due to launch in mid-2013, four EU officials told Reuters on Friday.

A good sign. Imposing losses on private bondholders would exacerbate the ridiculous austerity of the euro nations. Taking money out of private hands is economic suicide. (Hello, U.S. debt hawks. Are you listening?)

Euro zone powerhouse Germany is insisting on tighter budgets and private sector involvement in bailouts as a precondition for deeper economic integration among euro zone countries.

Bad sign, for the above reasons.

Commercial banks and insurance companies are still expected to take a hit on their holdings of Greek sovereign bonds as part of the second bailout package being finalized for Athens. But clauses relating to PSI in the statutes of the European Stability Mechanism (ESM) – the permanent facility scheduled to start operating from July 2013 – could be withdrawn, with the majority of euro zone states now opposed to them.

The concern is that forcing the private sector bondholders to take losses if a country restructures its debt is undermining confidence in euro zone sovereign bonds.

Well, of course. Any time you screw a lender, he is less interested in lending again. Commercial banks and insurance companies are lenders. This is what passes for deep insight in the EU.

Berlin wants all 27 EU countries, or at least the 17 in the euro zone, to provide full backing for alterations to the treaty before it will consider giving ground on other issues member states want it to shift on, officials say.

Germany is under pressure to soften its opposition to the European Central Bank playing a more direct role in combating the crisis, and member states also want Berlin to give its backing to the idea of jointly issued euro zone bonds.

Bad sign. Forcing monetarily non-sovereigns to guarantee the debts of other monetarily non-sovereign nations is exactly like forcing New York and California to guarantee the debts of Illinois.

Actually, the ten EU nations, not using the euro (and therefore Monetarily Sovereign) easily could back the debts of the euro nations – if those ten understood they are Monetarily Sovereign (which they don’t.)

While most euro zone countries just want to forget about enforced private sector involvement, some are adamant that there must be a way to ensure banks and not just taxpayers shoulder some of the costs of bailing countries out.

Hey, I hate the banks as much as anyone (See: Brake the Banks), but pulling euros out of the banks merely serves to impoverish an entire economy by reducing the money supply.

The euro zone continues to flirt with the only solution short of dissolution: The EU, being Monetarily Sovereign, must give (not lend) euros to member nations as needed. The EU sort of, kind of, almost wants the European Central Bank (ECB) to provide these euros, but just as they reach out to that solution, they pull back with monetary non-sovereignty ignorance.

Like virtually all U.S. politicians, media and citizens, and most old-line economists, the EU cannot understand the difference between Monetary Sovereignty and their own personal, kitchen-table finances.

To borrow an overworked analogy, the euro nations are like lobsters in a pail. The reason lobsters can’t escape from a pail is because every time one tries to climb out, the others pull it back down.

I award the EU one clown (formerly dunce cap), not only for economic ignorance, but for the humorous visualization of a bunch of lobsters pulling each other down. I now am running the equivalent of a 1351 clown deficit, still with no danger of bankruptcy nor need for austerity. I’m clown sovereign.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

–A new group: Brake the Banks

The Tea Party was a recent phenomenon that managed to convince mostly Republicans (but many Democrats, too), along with the popular media and even some old line economists, that by some mathematical magic, reducing the money supply (aka cutting the federal deficit and reduced federal spending), could reduce unemployment and grow the economy. They are the most notorious believers in the myth, anemia can be cured by bleeding the patient.

I never have seen any substantiation for this wild-ass hypothesis, but it is widely followed, not only in America, but through much of the world. Ask your own friends if the deficit and debt are too high, and they will tell you, “Yes.” But ask them if there is too much money in the economy, and they likely will tell you, “No.” Such is popular ignorance.

The #Occupy Wall Street (#OWS) group is an even more recent phenomenon, that rightly believes the so-called “1%” is cheating the “99%,” but wrongly believes this situation can be cured by closing the income gap (or is it the wealth gap?) and taking money from the rich – a Robin Hood solution.

They have not yet achieved the initial, wide-spread acceptance of the Tea Party, partly because they haven’t expressed a coherent plan, and partly because they are young and tend to look scruffy – and perhaps partly because many people understand the Robin Hood solution would do nothing to benefit the economy.

If #OWS would take the trouble to learn Monetary Sovereignty, and use it to propose specific solutions, they could be a powerful force for economic growth. But will they? Probably not.

So, I suggest the time is nigh for a third group. This is the background:

1. Banks intentionally gave mortgages to unqualified people, then sold those worthless mortgages to Ginnie Mae and Freddie Mac, which bundled them into worthless bundles.
2. Banks intentionally sold these worthless bundles to unsuspecting investors, under the theory that ten pounds of garbage smells better than one pound of garbage.
3. Banks set about foreclosing on homes for which the bank held no mortgage. In many instances, the banks would invade the wrong homes, steal the furniture and refuse to allow the rightful owner access.
4. Banks also pretended to work with home owners on the government’s Home Affordable Modification Program (HAMP). Home owners were shuffled around from voice mail to voice mail, kept on hold for hours, repeatedly asked for the same documentation, and overall given the run-around for years, until the poor home owners were forced into default, at which time the banks took over the property. (In some cases, banks even falsely recommended default to home owners, as a way to move the HAMP process along.)
5. Banks used “robo-signers” – people who signed thousands of documents a day – to cheat on laws requiring individual bank employees personally to inspect and sign mortgage papers.
6. Banks, not having legal title, forced courts into foreclosure mills – where judges rubber-stamped hundreds of foreclosures each day, without allowing home owners the opportunity for defense.
7. Banks, having caused trillions in losses, both for their customers and themselves, appealed to friends in the administration for financial assistance. Treasury Secretary, Timothy F. Geithner, a notorious friend of banks, was pleased to bail out virtually any, large troubled bank or other financial institution. In a handful of cases, other large companies (GM, for instance), but no small companies were bailed out, but the vast majority of help went to the very banks that caused the recession.

To this date, no CEO, CFO or other decision-maker for any large bank has been investigated for their crimes, much less tried, much less convicted, much less sentenced, much less served any time. In the Obama America, banks and their officers are immune from the law.

Do you see a commonality? Yes, the banks stole billions and were the prime cause of the recession. They were “punished” by being rewarded with more billions. Unless action is taken, the banks will continue to steal and continue to be rewarded by Geithner, Obama et al, or by the next administration, as Republicans are equally beholden to banks as are Democrats..

So I propose the formation of a new group, perhaps called “Brake the Banks.” The goal of Brake the Banks would be to do exactly as its name suggests: Put the brakes on the banks, so they can’t continue to steal. Some thoughts:

1. Restore The Glass-Steagall Act, which prohibited commercial banks from engaging in the investment business. Unfortunately, the Gramm-Leach-Bilely Act repealed the Glass-Steagall Act’s restrictions on bank and securities-firm affiliations. It also amended the Bank Holding Company Act to permit affiliations among financial services companies, including banks, securities firms and insurance companies. The new law sought financial modernization by removing the very barriers that Glass-Steagall had erected. (New York Times, Friday, November 25, 2011)

or better yet:

2. Nationalize all banks licensed to do business in the United States. The profit motive caused banks and bank leaders to ignore public safety and responsibility. Instead, banking became a cesspool of personal greed, where sales commissions, not service, were the goal. Government owned banks, with neither private shareholders nor sales-rewarded employees, would be less subject to profit and greed motivations.

I suggest that Brake the Banks would be a worthy, third group, even more economically and positively effective than the Tea Party or #OWS.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

MONETARY SOVEREIGNTY

–Thank you Russia for helping to save our economy.

Thank you Russia for helping to save our economy.

The super committee “failed,” meaning it did not succeed in cutting $1.2 trillion from our money supply, thereby causing the worst recession, possibly depression, ever. So with that so-called “failure,” we now can breathe a temporary sigh of relief.

Yes, the economy won’t improve much, it probably will decline for lack of money, but at least it may not immediately crash and burn as the result of a super committee deficit-cutting “success.”

However:

Huff Post
Super Committee Failure Complicates 2012 Election
Jim Kuhnhenn,11/23/11

Beginning in 2013, the federal government faces two oncoming trains. When the supercommittee was unable to find agreement by Wednesday, it triggered spending cuts of $1.2 trillion starting in January 2013 and extending over 10 years. Half of the cuts would come from defense spending, the other from education, agriculture and environmental programs, and, to a lesser extent, Medicare.

At the same time, tax cuts adopted during the presidency of George W. Bush will expire at the end of 2012, meaning an increase for every taxpayer.

Defense Secretary Leon Panetta has said the cuts would “tear a seam in the nation’s defense.”

So unless Congress does something positive (try to visualize that), defense, education, agriculture, environment and Medicare will take a hit. And there will be a tax increase. Understand that in debt-hawk terms, all of the above money cuts somehow, by some unknown magic, will reduce unemployment and improve the economy!

Anyway, Congress cares only for votes, not programs. And where are the votes? Medicare has votes, but Congress will be sneaky. It won’t cut benefits. It will delay benefits.

Taxes have votes, so Congress will raise taxes some, but not as much as a complete reversal of the Bush tax cuts – so the 99% will be assuaged. Voters will be told that only a partial reversal of Bush tax cuts actually is sort of, kind of, like a tax cut, and based on history, the voters will buy into it. (Hey, voters already think cutting the money supply will help the economy recover, so why not?)

As for education, agriculture and the environment, who cares? Certainly not Congress. How many votes do these programs have? A few teachers? A few tree huggers? A couple of parents who actually understand the adverse, economic effects of deficit reduction? Unimportant.

And then we come to defense:

Medvedev: Russia may target US missile shield
By Vladimir Isachenkov MOSCOW (AP), 11/24/11 — Russia’s president threatened on Wednesday to deploy missiles to target the U.S. missile shield in Europe if Washington fails to assuage Moscow’s concerns about its plans, a harsh warning that reflected deep cracks in U.S.-Russian ties despite President Barack Obama’s efforts to “reset” relations with the Kremlin.

So thank you, Russia. Our war-hawks will out-posture our debt-hawks, and demand that “something be done,” because the Russians are coming, the Russians are coming. (Remember, it was Russia’s Sputnik that sent us to the moon, and having beat Russia there, we never did much of significance, again.)

We seem to need Russia to force Congress to spend the money that stimulates our economy. (It is NASA’s most fervent hope that Russia will send someone to Mars. That would revive federal spending on space and the many related sciences.)

Now, Russia’s latest threat virtually assures no cuts in defense spending, and maybe even some growth, which would help grow our moribund economy, although employment-crushing cuts in other programs, along with tax increases, may well overshadow any increases in defense spending.

By the way, before readers tell me how awful defense spending is, let me assure you, I hate war as much as you do. I also hate poverty, unemployment, homelessness, sickness and illiteracy, recessions and depressions, all of which will result from the federal deficit reduction insanity being proposed by the Tea-whipped.

So again, thank you, Russia. Keep up your threats and we yet may recover from this recession.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

–See the #OWS bat signal. They believe, sincerely believe, the 1% are screwing the 99%. Do you?

The people of Occupy Wall Street (#OWS) believe, sincerely believe, the 1% are screwing the 99%. Do you? They camp in cold, damp parks. They face sometimes brutal police. They are condemned, disparaged and mocked by the 1%, for the inconvenience they cause, and the “99%” clothing they wear. Not too many Armani suits in that group.

Some of the 99% are so accustomed to obeying the 1%, they join in the disparagement, condemnation and mocking, against their own best interests.

Who are the police? They are the 99%, yet they willingly, enthusiastically do the bidding of the 1%. They vote their abject submission with MACE, pepper spray, nightsticks and SWAT uniforms. They beat down the very people who try to lift them. “Oh those bedraggled rowdies, why dare they disturb the peace so carefully crafted by our masters, the 1%?”

Who are the media, the newspaper, radio and TV barons? They are the 1%, who write the editorials and twist the news to suit their own privilege? Their fortunes come from the pockets of the 99%, yet they show no respect. For them, the 99% are fools, cows to be milked, and when there is no milk left, to be sent to slaughter.

Have you seen the wonderful, #OWS Bat Signal? Check it out. Feel the enthusiasm, not just of youth, but of a righteous cause. I remember these marchers. They marched against Vietnam. They were right about Vietnam. They were condemned and disparaged by Nixon and the media and the politicians and Nixon’s henchmen, some of whom went to jail. But not Nixon. He was too big to jail.

And not today’s bankers who stole far more than Bernie Madoff ever dreamed of. Bernie is in jail. The crroked bankers are not. The friends of Timothy F. Geithner are not. The friends of Eric H. Holder, Jr. are not. The friends of Barack H. Obama, Jr. are not. Why not?

And why does #OWS march? Why do they endure the slings and arrows of the outraged 1%? Are you among those firing those slings and arrows? Are you part of the 1%, or do you merely obey the 1%?

Yes, the #OWS has not expressed itself clearly. They need to articulate these specific goals. They need to understand Monetary Sovereignty so they can answer the question, “How will you pay for this?”

But they believe, sincerely believe. There are easier ways to live than camping in a hostile park, being pepper sprayed and herded about. Would you do it? Would you be ready to sacrifice your human comfort for an ideal? I wouldn’t, and most of the 99% wouldn’t either, though this ideal benefits them.

But there is something we can do. We can stand by #OWS. We can cheer rather than jeer. We can support rather than ignore. We can write to our Congresspersons and tell them we’re angry at those misguided attempts to reduce the federal deficit, as each cut will take money and benefits, not from the 1%, but from the 99%.

Cutting military budgets hurts the 99%, as does cutting Medicare, Social Security, Medicaid, food stamps, aid to the poor, construction projects, aid to education — they all hurt the 99% while barely laying a glove on the 1%.

The 1% try to brainwash you into believing the federal budget is like your personal budget, so must be reduced. It’s a lie, a damn lie. In August 1971, the federal budget became the exact opposite of your personal budget. Did the 1% ever let you know?

While you pay your bills by spending money, the federal government now pays its bills by creating money. You must live within your means. The federal government has no means to live within. You can run out of money. The federal government cannot. You need income, in order to spend. The federal government spends without needing income.

Make no mistake, this is not a class war. It is not the 99% versus the 1%. Destroying the 1% will not help you. This is the 99% versus the current status, which was created by the 1%. This is the 99% versus a lawless system, that presses down on the 99%. It is the system #OWS marches against. It is the system they hope you will oppose.

How? Write. Call. Demand. Vote. Support #OWS. Oppose anyone who says “the federal deficit must be cut,” because that is their code phrase for, “Your benefits must be cut, your life must worsen, your money must be taken from you and from your children and from your grandchildren.”

The deficit-cut austerity preached by the 1% will not be suffered by the 1%; it will be suffered by you.

So, march with #OWS, if not in person then in spirit. Write. Call. Demand. Vote. Support. Oppose government cuts. Oppose austerity. Oppose the gap. Demand prosperity. The 1% are cowards who will yield if they see your resolve. Your voice can be loud. Your life can be better. The tide of history is with you.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

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