Thursday, October 27, 2011

Where is Europe?

People can keep occupying Wall Street if they want, and most of us sympathize with at least some of the goals of that movement, but you also have to give Wall Street some credit. Sometimes Wall Street seems to understand what is important better than the rest of us. Wall Street understands, for example, that the most important event that happened yesterday was the deal to resolve the Greek debt crisis. That caused the Dow to jump 340 points today!

But you wouldn't know much about the most important news of the day if you spend your time watching the cable news shows. I was only flipping past those news channels last night because the World Series game was postponed, but what I saw was Rachel Maddow going on and on about the Koch brothers using stock images in their videos; and Lawrence O'Donnell heating up his private feud with Donald Trump; and Ann Coulter over on Fox demonizing the Democrats; and Anderson Cooper whining about something or other. Was any of this important? No, it was not. What was important was that the Europeans may have gotten their act together to prevent a crisis that has been threatening to take down the whole Euro zone experiment and send the entire world economy into another recession. I guess Americans aren't supposed to know or care about any of this. We think that the whole world revolves around us, and that our little political feuds are all that matter. It's no wonder we think that, because the media encourages us to think that what is going on in the rest of the world is not even important enough for us to know about or understand.

But if we could learn to step back for just a minute from our own domestic policy battles, and view them in the context of a complex global economy, maybe we would understand that there are much larger forces at play than the ones we are paying attention to. And maybe that kind of perspective would make it a tiny bit easier to resolve our country's political squabbles.


  1. I will take the position of a lot of OWS.

    Wall Street recognizes what is important to Wall Street. What happened was that Greece had 50% of their debt written down -- 100% of that debt will never be paid. Meanwhile, Europe, like the Federal reserve, invented a trillion dollars that nobody knows where it came from. They simply kicked the can down the road. And it's only little old Greece, not Spain or Portugal or Italy. The haunt is not gone, only delayed.

    Stockholders in America are happy just as they were in 2008 when the Feds invented massive money. They are pleased that our GDP went up 2.5%. But our GDP only measures transactions. It doesn't measure what those transactions are for. Since banking transactions now account for 65% of our GDP and most of those are BS gambling with on derivitives. There is no productive value in them other than to make banks more wealthy. This is where OWS has it entirely correct.

    But don't worry, us tax payors will finance it all. We pay the rent for the use of our own money. It's no wonder that while GDP went up 2.5% consumer confidence is at an all time low.

  2. You know, that still doesn't sound so bad when you consider that the alternative might have meant the collapse of the European Union.

  3. European investors are rejecting the idea that they should invest in bond markets of Italy and that is the only way the region will be able to borrow money. They are in deep doo doo on the other side of the Big Pond.

    It's almost a message from above to Americans. Expansion of government spending, massive debt and a move toward the European model are mistakes. It is puzzling; as Europe wants to move toward our model.

    I am trying to understand why so many on the left are so eager to self sabotage. Europe can see us in their rear view mirrors. We can still turn off the road.

    Our stock market is currently not an indicator of sound policy at home or overseas. In tough times it is as rigged as sports gambling. Only the wise guys can win.

  4. Liberals are not in favor of massive debt, except to pull ourselves out of recession. Over the longer term, the Democrats have a much better record of reducing debt than Republicans. The difference is that Democrats are more willing to raise the taxes we need to support the levels of spending that we have already voted for, while Republicans over the past 30 years have developed such an aversion to taxes that they are willing to tolerate massive deficits.

    As far as spending, it is a myth that the right is more against government spending than the left. Both parties support government spending. The difference is only in spending priorities. The right supports more government spending for the military, and for prisons and police. The left supports more government spending for social welfare programs.

    As far as the "European model", it might not be be a good idea to generalize too much. The Greek model is different from the Swedish model, which is different from the German model. It's too simplistic to say we should just reject everything that is done in Europe. We should instead pick and choose what is working.

  5. Good points about the European model. Philosophically, we agree on some issues. On taxes, I am willing to pay more taxes and even put off retirement if we made changes to Social Security. My family income is so low I will never be part of increased taxes if we limited increases to families who make over $250,000. It wouldn't effect me.

    Still, I would vote to pay more taxes if I thought my tax dollars would be wisely spent. I think both parties have been ignorant with my tax dollars. I am getting close to qualifying for Medicare and Social Security. I would delay those benefits if it were to make them whole and ensure they remained in place for my children. We probably part ways there.

    << The right supports more government spending for the military, and for prisons and police. The left supports more government spending for social welfare programs. >>

    A bit over simplified. And even if it isn't, the days when the left or right represent a majority of American opinion are long gone. There needs to be change to the military, in prisons, for the police, to our tax code and within our social welfare programs. It's not a left or right issue.

  6. I like what NY Times editorial writer Ross Douthat has to say. He presents the feelings of middle class families like mine. No matter how much money you make or anyone else makes, we (the people) can't happily sit next to somebody who is screwing us. That goes for big banks, some corporations, some public sector union pension benefits and any other group who is killing the majority of the middle class and keeping the poor, poor.

  7. As I predicted, the wise guys made money Thursday and Friday in the stock market and everyone else ate shit on Monday and Tuesday.

    As far as the dirth of news about the deal by the Euros regarding Greek debt -- I agree. There should have been more; but for opposite reasons. Still, there was fine news coverage on Thursday night about how ineffective the deals would probably be. My guess is that we hear what we want to hear.

    I am pained by ideologues on both sides so interested in supporting their own beliefs that they miss the real news, or worse, choose to ignore it because it doesn’t serve their view.

    Both parties are corrupt. The smartest people on both sides need to shed their ideology and begin a group battle of survival. How is it that Congress, from 2008 to 2010, increased their net worth by 25% when the rest of us lost about 30%?

    Too bad Corzine wasn't re-elected as Governor of New Jersey. Then thousands of people at MF Global might have avoided losing their life's savings; and saved him a prison sentence.

    "Under Corzine’s leadership, MF Global bet $6.3 billion on debt issued by Italy, Spain and other European nations with troubled economies. Those bonds have lost value in recent weeks as fears have intensified that some European countries might default.

    Regulators said in September that MF Global was overvaluing some of its European debt investments. It required the company to raise more cash, according to court papers filed on Monday.

    MF Global reported its biggest ever quarterly loss last week, mainly because of losses on proprietary trading. Credit rating agencies downgraded the company’s bonds to junk status. And business partners demanded that it put up more cash to guarantee its trades. The result was a cash crunch that forced MF Global into bankruptcy court."

    Notice, I didn’t say Dem controlled Congress or Dem Gov of New Jersey. Why? Because both parties are flush with money from special interests and are bending the entire country over. You and I and people like Jack Camwell and LD Jackson and Harrison and Deborah ought to be working together.

  8. My point was that we should be paying more attention to what is going on in Europe, whether the news is good or bad. Because the banking crisis in Europe is going to affect the world economy more than any of the political issues that we are so focused on in the U.S. Compared to Europe, we don't even have a debt problem here. Greece, and Italy, and Japan, have two or three times the debt level we do, and they don't have anywhere near the same ability to borrow more money. They are pretty close to maxed out. Our financial problems at this point are relatively easy to solve compared to what they are dealing with in Europe. But maybe that's why it still seems so impossible for the Congressional committee to make a deal, because it is not life and death yet.

    Can we draw any lessons from companies like MF Global going under? I don't know. I thought that was how good old-fashioned unregulated capitalism was supposed to work. When you gamble, sometimes you win and sometimes you lose. Of course if it turns out that they misused their customers' accounts, they may have some legal problems.