538 Ambrose Evans-Pritchard calls for Public Debt to Central Banks to be written off

Ambrose Evans-Pritchard calls for Public Debt to Central Banks to be
written off

(1) Ambrose Evans-Pritchard calls for Public Debt to Central Banks to be
written off
(2) Conventional economics has failed, because it ignores the role of
money, debt and banks - Steve Keen
(3) Corporations impoverish us; No option but Revolt - Chris Hedges
(4) Occupy Wall Street's "liberal" creed
(5) If Japan Is Broke, How Is It Bailing Out Europe? - Eamonn Fingleton
(6) China show trial: capitalist roaders conspire to bring down
socialist leader Bo Xilai

(1) Ambrose Evans-Pritchard calls for Public Debt to Central Banks to be
written off

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100019130/the-collapse-in-us-manufacturing-and-services-shows-that-things-could-be-about-to-get-a-lot-worse/

Wednesday 22 August 2012

Weimar solution beckons as manufacturing crashes in US Fifth District?

By Ambrose Evans-Pritchard

Last updated: July 25th, 2012

As Britain tanks by 0.7pc in the second quarter (much worse than Spain
at 0.4pc), it is worth keeping a close eye on the very ominous turn of
events in the US.

The Richmond Fed's twin indices of manufacturing and services – a very
good indicator at the onset of the Great Recession – collapsed this month.

They are now falling at a steeper pace than in early 2008. Current
activity in manufacturing fell 16 points from -1 to -17. That is a major
shock.

My apologies to those (mostly American) readers who have already seen
this, but I was bogged down in Europe all of yesterday.

So here are the charts for British and Continental readers. They cover
the Fifth District of the US.

Manufacturing:

Services:

We will find out soon what the US GDP numbers are for Q2. The
preliminary reading will no doubt be positive, creating a false sense of
relief.

But remember, the GDP data was massively wrong at the inflection point
in early- to mid-2008. The first read of Q2 2008 was solid growth of
1.9pc. Only later did it become clear that the US recession began in
late 2007, and was much deeper than originally thought.

The Richmond survey is grist to the mill of bears at the Economic Cycle
Research Institute (ECRI) and others who insist that the US tipped into
recession in the late spring (under the NBER official definition).

If so, we can all have a ferocious argument – yet again – about what to
do next to avoid a global depression (if we are not in a "contained"
variant already).

Needless to say, I will be advocating 1933 monetary stimulus à
l'outrance, or trillions of asset purchases through old fashioned
open-market operations through the quantity of money effect (NOT
INTEREST RATE 'CREDITISM') to avert deflation – and continue doing so
until nominal GDP is restored to its trend line, at which point the
stimulus can be withdrawn again.

And the Austro-liquidationists (whom I love during bubbles, and hate
during busts) can all hurl shoes at me.

We can also argue about another sneaky idea. If the central banks are
able to buy fistfuls of bonds right now without a ripple effect on
inflation – and investors are still rushing into the safe havens, Bunds,
Gilts, Treasuries, JGBs, etc – why not just quietly write off those
central bank holdings and seize the moment to slash public debt by
non-inflationary fiat?

Now it really gets dirty. Weimar without Weimar, so to speak; a
victimless crime. I have not made up my mind on this. But the topic is
creeping onto the agenda, so prepare a stack of old shoes just in case.

(2) Conventional economics has failed, because it ignores the role of
money, debt and banks - Steve Keen

Steve Keen <sk@debunkingeconomics.com> 20 August 2012 07:37

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(3) Corporations impoverish us; No option but Revolt - Chris Hedges

http://truth-out.org/opinion/item/11032-truthout-interviews-chris-hedges-about-why-revolt-is-all-we-have-left

Truthout Interviews Chris Hedges About Why Revolt Is All We Have Left

Wednesday, 22 August 2012 00:00 By Mark Karlin, Truthout | Interview

Chris Hedges, a former New York Times reporter, has become perhaps the
foremost media scribe and most prolific advocate of a need for
revolutionary change in our current institutional oppression and control
of the government by the oligarchical and political elite. Hedges writes
with a reporter's detail, a prophet's eloquence and a compelling sense
of urgency. This is evident in his latest book, which visits the
"sacrifice zones" of America. Get the just-released "Days of Destruction
Days of Revolt" (with illustrations by Joe Sacco) directly from Truthout
right now by clicking here. Make a minimum donation and support
progressive writers and Truthout. ...

CH: We are seeing the conscious and deliberate creation by the corporate
state of a permanent, insecure and terrified underclass within the wider
society. They have had a lot of practice in refining these techniques in
the sacrifice zones, such as West Virginia, we wrote about. The
corporate state sees this permanent and desperate underclass as the most
effective weapon to thwart rebellion and resistance as our economy is
reconfigured to wipe out the middleclass and leave most of us at
subsistence level. Huge pools of unemployed and underemployed
effectively blunt labor organizing, since any job, no matter how menial,
is zealously coveted. The beating down of workers, exacerbated by the
refusal to extend unemployment benefits for hundreds of millions of
Americans and the breaking of public sector unions, the last redoubt of
union power, has transformed those in the working class from full
members of society, able to participate in its debates, the economy and
governance, into terrified people in fragmented pools preoccupied with
the struggle of private existence.

The determining factor in global corporate production is now poverty.
The poorer the worker and the poorer the nation, the greater the
competitive advantage. With access to vast pools of desperate,
impoverished workers eager for scraps, unions and working conditions no
longer impede the quest for larger and larger profits. And when the
corporations do not need these workers they are cast aside. Those who
are economically broken usually cease to be concerned with civic
virtues. They will, history has demonstrated, serve any system, no
matter how evil, and do anything for a pitiful salary, a chance for job
security and the protection of their families. There will, as the
situation worsens, also be those who attempt to rebel. I certainly
intend to join them. But the state can rely on a huge number of people
who, for work and meager benefits, will transform themselves into
willing executioners.

MK: Of course, your chapter on the squalid, economically abandoned
Camden, New Jersey, points to a particularly egregious example of an
entire city that has been sucked of any hope. Financially, it has been
written off by the "Masters of the Universe" economic agenda, its
citizens parasites of the government, according to Paul Ryan. Even
Barack Obama has been the first president in decades not to mention
poverty in his State of the Union Addresses. But isn't Camden just
representative of blighted urban areas, particularly minority
neighborhoods, that have been left without jobs for decades? This goes
back to before the urban riots of 1968 and the Kerner Report about what
caused them. Isn't this structured poverty?

CH: The corporations and industries that packed up and left Camden and
cities across the United States for the cheap labor overseas are never
coming back. They have abandoned huge swathes of the United States,
turned whole sections of American cities into industrial ghost towns.
The unemployment and underemployment, the disenfranchisement of the
working class, and the assault on the middle class, are never factored
into the balance sheets of corporations. If prison or subsistence labor
in China or India or Vietnam makes them more money, if it is possible to
hire workers in sweatshops in Bangladesh for 22 cents an hour,
corporations follow the awful logic to its conclusion. And as conditions
worsen the corporate state, which controls the systems of information
and entertainment, renders the poor and cities like Camden invisible.
This is what Joe's illustrations are so crucial to the book. The goal of
the book is to make these people visible.

MK: In the book, you bluntly write: "The American dream, as we know it
is a lie. We will all be sacrificed." You speak of the spreading
transnational corporate virus. Are you, in essence, saying the worst is
yet to come, that the forsaken communities you profile are an ominous
portent of what waits for so many of us except the privileged class?

CH: Yes. This is why we wrote the book, as a warning of what is about to
befall us all. It is no more morally justifiable to kill someone for
profit than it is to kill that person for religious fanaticism. And yet,
from health companies to the oil and natural gas industry to private
weapons contractors, individual death and the wholesale death of the
ecosystem have become acceptable corporate business.

MK: Your fourth chapter is entitled "Days of Slavery" and it is about
what you quote Bernie Sanders as calling "the bottom of the race to the
bottom." It is about the exploited (and that seems an understated word
given the circumstances) tomato pickers in Immokalee, Florida. It is
indentured servitude and just short of slavery. But isn't there a
glimmer of hope in the activism of the Immokalee workers' movement for
better pay and working conditions?

CH: You cannot use the word hope if you do not resist. If you resist,
even if it appears futile, you keep hope alive. And in every sacrifice
zone we visited, including Immokalee where the Coalition of Immokalee
Workers have organized tomato workers, we saw heroic struggles to fight
back. But at the same time it is vital to remember that we cannot
achieve significant reform or restore our democracy through established
mechanisms of power. The electoral process has been hijacked by
corporations. The judiciary has been corrupted and bought. The press
shuts out the most important voices in the country and feeds us the
banal and the absurd. Universities prostitute themselves for corporate
dollars. Labor unions are marginal and ineffectual forces. The economy
is in the hands of corporate swindlers and speculators. And the public,
enchanted by electronic hallucinations, remains largely passive and
supine. We have no tools left within the power structure in our fight to
halt unchecked corporate pillage. ...

CH: The importance of the Occupy movement, and the reason I suspect its
encampments were so brutally dismantled by the Obama administration, is
that the corporate state understood and feared its potential to spark a
popular rebellion. I do not think the state has won. All the injustices
and grievances that drove people into the Occupy encampments and onto
the streets have been ignored by the state and are getting worse. And we
will see eruptions of discontent in the weeks and months ahead.

If these mass protests fail, opposition will inevitably take a
frightening turn. The longer we endure political paralysis, the longer
the formal mechanisms of power fail to respond, the more the extremists
on the left and the right - those who venerate violence and are
intolerant of ideological deviations - will be empowered. Under the
steady breakdown of globalization, the political environment has become
a mound of tinder waiting for a light.

MK: You write, "Revolt is all that we have left. It is our only hope."
Most revolt from oppressive powers has come from the working class. But
except for the Wisconsin uprising, the working class appear to view
movements like Occupy as not representing them. And even in Wisconsin,
the GOP was able to split the unions from the non-union working class.
How do you see progressive revolts linking up with the working class?

CH: The movement in Wisconsin made a fatal mistake. It allowed its
energy to be channeled back into a dead political system by the
Democratic Party and the labor movement, or at least what passes for a
labor movement in this country. It could not compete with corporate
power and corporate money. And it will be hard now to regroup. They
willingly played the game and lost, although of course the rules were
rigged. The split between labor and non-labor is only one divide. Occupy
is essentially a white, middle class movement led by college educated
men and women who have found no place in the wider society. The working
class and the poor deeply distrusts liberals, especially
college-educated liberals, who since the Clinton administration have
repeatedly betrayed them in the name of liberalism. Those who support
Occupy will have to rebuild bridges to our impoverished working class,
and more importantly to those of color who live in marginal communities
and who also have been abandoned by the traditional liberal elites. But
this skirts an even bigger and more important problem. In the
traditional sense of a working class, i.e. one that is organized and
manufactures goods, we no longer have one. Workers have been reduced to
toiling at two or three jobs in the service sector. I don't know how we
are going to fight back effectively without an organized work force.
That is one of my greatest concerns. ...

MK: You conclude "Days of Destruction" with an anecdote about your
experience as a boxer fighting men who were professionals and pummeling
you, but you kept fighting and eventually the crowd cheered you on as
the underdog. How does this relate to achieving a successful revolt
against a status quo with unlimited financial power and military/police
powers?

CH: You do not fight tyrants because you are going to win. You fight
tyrants because they are tyrants. Yes, we do not have the tools or the
wealth of the state. We cannot beat it at its own game. We cannot ferret
out infiltrators. The legal system is almost always on the state's side.
If we attempt to replicate the elaborate security apparatus of our
oppressors, even on a small scale, we will unleash widespread paranoia
and fracture the movement. If we retreat into anonymity, hiding behind
masks, then we provide an opening for agents provocateurs who deny their
identities while disrupting the movement. If we fight pitched battles in
the streets we give authorities an excuse to fire their weapons.

All we have, as Vaclav Havel wrote, is our own powerlessness. And that
powerlessness is our strength. The survival of the movement depends on
embracing this powerlessness. It depends on two of our most important
assets - utter and complete transparency and a rigid adherence to
nonviolence, including respect for private property. This permits us, as
Havel puts it in his 1978 essay "The Power of the Powerless," to live in
truth. And by living in truth we expose a corrupt corporate state that
perpetrates lies and lives in deceit.

This attempt to "live within the truth" brings with it ostracism and
retribution. Punishment is imposed in bankrupt systems because of the
necessity for compliance, not out of any real conviction. And the real
crime committed is not the crime of speaking out or defying the rules,
but the crime of exposing the charade.

(4) Occupy Wall Street's "liberal" creed

http://occupywallst.org/

OccupyWallStreet NYC Protest for World Revolution

Occupy Wall Street is leaderless resistance movement with people of many
colors, genders and political persuasions. The one thing we all have in
common is that We Are The 99% that will no longer tolerate the greed and
corruption of the 1%. We are using the revolutionary Arab Spring tactic
to achieve our ends and encourage the use of nonviolence to maximize the
safety of all participants.

(5) If Japan Is Broke, How Is It Bailing Out Europe? - Eamonn Fingleton

If Japan Is Broke, How Is It Bailing Out Europe?

Eamonn Fingleton

Forbes Magazine, April 23, 2012

http://www.forbes.com/sites/eamonnfingleton/2012/04/23/will-the-real-japan-please-stand-up-2/

Not so long ago Japan was being portrayed as the deadbeat of the world
financial system. Seems there is still some life — and money — in the
island empire.

TOKYO. If you want to understand Japan, try watching what people do
rather than listen to what they say. More even than in other parts of
the world there is a difference — and what people do is, of course, a
far more useful insight into their true situation. It is interesting
therefore to note that as the International Monetary Fund wound down
its semi-annual meeting in Washington yesterday, the Japanese government
emerged as by far the largest single non-eurozone contributor to the
latest euro rescue effort. Yes, this is the same government that has
been going round pretending to be bankrupt (or at least offering no
serious rebuttal when benighted American and British commentators
portray Japanese public finances as a trainwreck).

Japan is putting up $60 billion. That is equal to 14 percent of the
total of $430 billion in pledges drummed up by the IMF’s overworked
managing director Christine Lagarde. By comparison the United Kingdom
with almost half of Japan’s population is throwing in a mere $15
billion, or one-quarter as much. And the U.K. actually looks generous by
comparison with the United States and Canada, neither of which is
prepared to proffer so much as a single brass cent. Besides Japan, the
most significant contributors are Saudi Arabia and South Korea.

This is not the first time that Japan has stepped up to the plate as
lender of last resort to the world financial system. At the height of
the global panic in 2009, the Tokyo Ministry of Finance more or less
single-handedly rescued this system when it injected $100 billion into
the IMF.

How can a nation whose government is supposedly the most overborrowed in
the advanced world afford such generosity? To say the least there seems
to be a paradox here — but then paradoxes have always been a dime a
dozen in the West’s understanding of the Japanese government.

The betting is that Japan’s true public finances are far stronger than
the Western press has been led to believe. What is undeniable is that
the Japanese Ministry of Finance is one of the most opaque in the world
— and rarely speaks fully frankly to the Japanese press, let alone the
foreign press. Opaqueness is a big help in batting off domestic interest
groups pressing for handouts. It also helps in politely waving away
third world nations seeking overseas development aid.

One technique for keeping outsiders at sixes and sevens is that the
Japanese budget is announced every year on Christmas Day. That is, of
course, the one day of the year when virtually all senior foreign
correspondents can be guaranteed to be otherwise engaged.

Let’s be frank: outsiders have little or no ability to delve into
Japan’s true government finances. Indeed many commentators who have been
particularly outspoken in promoting the story of the Japanese
government’s supposed bankruptcy cannot even read the Japanese language.

It is also questionable whether they can read a balance sheet.

Let’s note that a balance sheet has two sides. The Japanese government’s
liabilities may be large. But it is important to take a look at its
assets before resorting to extravagant denunciations of its financial
policy. What is clear is that the Tokyo Finance Ministry is increasingly
borrowing from the Japanese public not to finance out-of-control
government spending at home but rather abroad. Besides stepping up to
the plate to keep the IMF in business, Tokyo has long been the lender of
last resort to both the U.S. and British governments. Meanwhile it
borrows 10-year money at an interest rate of just 1.0 percent, the
second lowest rate of any borrower in the world after the government of
Switzerland.

Few Anglophone economic commentators are able to read the Japanese
government’s accounts in the original. But the yields on JGBs, as
Japanese government bonds are known to the cognoscenti, are printed
daily in the Western press. It is time the commentators took note.

Comments

tboontee 3 months ago

In a nutshell, Japanese government has been both opaque and pretentious,
happily borrowing money from the obedient Japanese to keep the nation going.

Who ever said Japan is broke? The people are being humble, polite,
non-revealing, and keeping secrets to themselves.

By the way, the $60 billion comes as a pledge, not a 100% commitment per
se. (mtd1943)

Rodger Malcolm Mitchell 3 months ago

There is no mystery here. The Japanese government is MONETARILY
SOVEREIGN. It has the unlimited ability to create its sovereign
currency, the yen. It never can run short of yen. Thus, it never can go
bankrupt (unless it wanted to).

If Japan ended all taxes, it still could give the euro nations all the
yen they want. No problem.

The problems faced by the euro nations are caused by them being
monetarily non-sovereign. They do not have the unlimited ability to
create euros. They can go bankrupt.

Those who do not understand the differences between Monetary Sovereignty
and monetary non-sovereignty, do not understand economics.

Rodger Malcolm Mitchell

ashaway 3 months ago

Hi Mr. Fingleton, I agree with you–there is a huge rift between the way
the media portrays things and reality when it comes to Japan. Yes, Japan
may be and secretive, but the US media is no less mendacious or
transparent–it has its own agenda in producing the popular image of Japan.
Take a recent article on CNET, for example, which bashes Sony and
electronics industry in Japan in general–the author obviously ignores
the facts that you bring up in your recent article on the Japanese
electronics industry, which is strange given that he claims to have
special knowledge about Japan having lived there in the 1980s. For
instance, he chastises Japan for focusing on hardware, when you
demonstrate that it is these industries that are truly sustainable. Of
course, he touts Apple as the antithesis to Japanese ineptitude, failing
to point out that 29 of 36 high-end components (including its capacitive
touchscreen) in the iPhone are from Japan–as you pointed out last month.
How can he praise Apple and put down Japan, when the former’s products
are fully dependent on Japanese technology and manufacturing. Somehow,
he also fails to note Apple’s recent 1.1 billion investment in Sharp to
develop next-gen touchscreens for iPad.
He pins Sony’s troubles on their failure to spend time on software. Yet
Samsung just surpassed Nokia in total phone sales, and passed Apple in
smartphone sales–even though Samsung depends on Android and has created
little of its own OS and does not have a media presence like Sony (which
has PSN, SEN online). Samsung is more like the old Japan, focused on
hardware–yet it’s sitting on top of the mobile gadget world.
It seems like he’s simply focused on bashing Japan, like so many others.

Here’s that article:
http://news.cnet.com/8301-13924_3-57414373-64/sonys-fall-and-japans-hang-ups/

==

Comment (Peter M.): Japan is not broke, in the same way that Germany and
China are not broke. All three are Capital-exporters; they got their
Capital by accumulating Trade Surpluses, and, in particular, by building
what Fingleton calls "Hard Industries", in contrast to the
Anglo-American promotion of "Post-Industrial" Service Industries.

(6) China show trial: capitalist roaders conspire to bring down
socialist leader Bo Xilai
http://www.brisbanetimes.com.au/world/body-double-claim-a-part-of-show-trial-fear-20120816-24bj8.html

Body double claim a part of show trial fear

August 17, 2012

John Garnaut

BEIJING: The curious murder trial of Gu Kailai, the wife of the fallen
politician Bo Xilai, appears to have achieved the rare feat of uniting
Maoists and liberals.

Both sides of China's ideological war allege the trial was a badly
scripted show trial, riven with procedural and logical irregularities.

Doubts run so deep that the phrase "body double" was censored on the
Chinese internet, after netizens questioned whether the plump lady shown
in court on the television news was really the once-glamorous wife of Bo
Xilai.

"It's highly likely that an impostor Gu replaced the real Gu; this is
all a well-planned scheme," said Han Deqiang, co-founder of Utopia, a
stridently pro-Bo Xilai website that was unplugged soon after Mr Bo's
demise.

"It's a conspiracy against Bo Xilai," said Professor Han.

"Now I am more convinced about this."

The Hefei Intermediate People's Court is widely expected to convict Gu
of murder.

The indictment said evidence that she poisoned the Englishman Neil
Heywood was "irrefutable". But the court is expected to avoid giving the
death sentence because various mitigating arguments were treated
favourably in court.

Maoists such as Professor Han are convinced the evidence has been
fabricated to frame her for murder in a first step towards destroying
her husband.

Many liberals, however, believe the case has been twisted to avoid
having to execute one of China's leading wives, whose father was a
renowned general, and to avoid implicating powerful figures involved in
the family's corrupt transactions.

The roundly cynical response highlights the Communist Party's challenge
of conducting "show trials" in a modern age of assertive citizens and
relatively open information flows.

"Lies have to be used to cover up lies, leading to an impossible
situation where the story doesn't hold together and it becomes a satire
of justice," wrote He Weifang, professor of law at Peking University,
who had been at the forefront of a civil society backlash against Mr
Bo's abuse of law in Chongqing.

Beyond Gu and Mr Bo, the broadly accepted facts (at least outside the
Maoist camp) reveal an astonishing willingness on the part of top
Chongqing officials to facilitate a cold, calculated and apparently
pointless murder.

"The conduct, completion and attempted cover-up of murder was done
directly through the exercise of public power," wrote Chen Youxi, a
lawyer who is a prominent advocate for rule of law. "Such behaviour only
happened in the age of feudal fiefdoms and vassal states."

Hu Shuli, the editor of the magazine Caixin, said Gu assumed she would
"enjoy total immunity" until her husband's former police chief took the
remarkable step of giving the story to American diplomats in Chengdu.
The case offered "a starting point to examine recent events that could
shape China's history", she wrote in an editorial.

Details of the police chief's likely trial, probably for treason, have
been kept so quiet that a Hong Kong television station even reported
that it had already happened.

Gu's murder conviction could prepare the ground for criminal proceedings
against her detained husband, possibly in relation to covering up his
wife's part in the murder.

But doubts about the integrity of Gu's case will make it more difficult
to persuade the public about the misdeeds of her husband, who is loved
as much as he is loathed in China.

"The group of capitalist roaders [has] brought down the socialist
roader," Professor Han said. "This means crisis and turmoil for China."