. “Debt servitude”This is far from ancient history. Ask the college graduate or potential college student today about the toxic cloud of debt hovering above them, and wonder at a political and economic system that makes bankruptcy or “forgiveness” of college debt all but illegal.
The RIGHT of INCREASED DEBT & THE SECOND COMING OF THE GFC = BAILOUT THE BANKS AFTER THEY HAVE TAKEN THEIR PROFIT.
Global banks were supposed to be bullet-proof after boosting capital ratios but the regulatory buffers were never stress-tested for such a shock. They risk becoming the “amplifier” of the downturn as rising bad loans force them to pull back, starving the real economy of credit.
A cyclist wearing a protective face mask as a precaution against the coronavirus moves past the Rocky statue outfitted with mock surgical face mask at the Philadelphia Art Museum in Philadelphia, Tuesday, April 14, 2020. (AP Photo/Matt Rourke)
As the day unfolded: Scott Morrison says COVID-19 restrictions could be lifted in four weeks, global cases surpass 2 million, Australian death toll stands at 63
Even if the worst is avoided and there is no secondary financial crisis, there will not be a swift return to normal. Mohamed El-Erian from Allianz said the rescue measures offer liquidity but cannot prevent the slow burn of defaults. Nor can they kick start the economy when companies refuse to invest because they have no idea what is going to happen.
The GFC saved the Banks from irresponsible lending. Now Trump is supplamenting the Corporate Tax Cuts with massive rescue packages. In the meantime individuals can borrow more money at credit card rates if the have cards (ODT)
We could use a roving gang of indignant citizens today to confront the shameful greed of such corporate scammers as Boeing, American Airlines and Marriott, as well as such billionaire hucksters as Jeff Bezos and Elon Musk. They are among a new breed of pandemic profiteers that have rushed to Washington, shoving aside millions of workers, small businesses, poor people, students, nonprofits, farmers, cities and all other devastated victims of the COVID-19 crisis, demanding that corporations be first in line for a massive government rescue.
Debt is the time bomb but those that aren’t in debt will be made to pay just as they did in the GFC (ODT)
It’s simply a case of giving the rich mo0ney and having the poor pay (ODT)
Morrison seems to be on a different page to the experts. In 6 years the managed to double our debt that took almost a Century to build. (ODT)
Thousands of small businesses around Australia have been caught in the alleged scam which involves paying $430 a month to a finance company, under a three-year contract which will cost up to $15,500.
Small business owners like Harvey Levy, who owns lawn mower repair business Help Gardener, were told Viewble and its associated business The Shoppers Network would pay them $430 a month in advertising revenue for displaying the television which showed ads for local businesses.
Mr Trent said he became alarmed when he realised Viewble’s clients thought they were receiving the television for free because they would receive a rebate through advertising.
The universities that are the hardest to get into may not be delivering the best experience or employment outcomes for their students, new research shows.
The IMF says growth has been too low for too long and benefits have reached too few. But that doesn’t mean we need trade barriers or cuts to immigration
To all the conservatives who decry debt and taxes and laud mother England, you might be surprised to hear that it was big spending that kept the French at bay all those years ago and allowed the Brits to settle in Australia.
Here are four reasons not to worry about our foreign debt.
Guest blogger Peter Martin offers a common sense solution to the new left wing Greek government’s ‘debt crisis’.
Peter Martin is not in anyway associated with, or should be mistaken for, the columnist of the same name who writes for Fairfax.
If debts cannot be repaid they will not be repaid. Debts, in the commercial world, usually end up being settled. If they aren’t settled it is nearly always because debtors cannot pay rather than because they have chosen not to pay. There is a well recognised procedure, in civil law, recognising this truism, which can end up in the bankruptcy of the debtor if a suitable settlement with creditors cannot be satisfactorily negotiated.
Bankrupting a country like Greece when it gets into financial difficulty, however, is not a political option. Unless we want to start another war between Greece and Germany that is! So what are the options? Apart from carrying on, in both senses of the term, in the the present irrational manner there is only one. If Germany (plus other countries such as Holland who also own Greek debt) requires Greece to repay its debts, Germany has to recognise that Greece has to pay in something other than euros, at least not directly, as it clearly does not have anywhere near enough and has fewer now after the application of the supposed economic remedy (punishment?) by the troika than it had previously.
Therefore, it has to pay in real goods and services: Tourism. Olives. Feta cheese. Ouzo. Shipping. Whatever Greece makes, does and sells, Germany needs to buy to enable the debt to be settled. And it needs to buy more from Greece than it sells to Greece. That way Greece ends up with the euros, which pays the Greeks for growing the olives, running the tourist hotels, making the cheese etc . This enables the Greek economy to provide jobs for the unemployed, improve its Government’s tax revenue base, grow its economy, and also enables the Greeks to service, and eventually settle, their German debts.
The same naturally goes for Spain, Italy and even France. In other words, German debts get repaid when, and only when, Germany decides to accept real goods and services instead of euros. This in turn means that Germany has to run an economy more along the lines of the UK and the USA economies and import more goods and services than it exports.
If you made a list of countries you hope have learned from their past hundred years of mistakes, Germany would have to be at the top. Happily, the staunch opposition to a nativist fringe that the nation’s government and citizenry have shown in recent weeks makes it clear, again, that Germany understands the costs of bigotry and the virtues of tolerance.
Unhappily, it has not learned the costs of a mad adherence to fiscal orthodoxy, despite the fact that its prosperity is rooted in the decision of its World War II adversaries to allow West Germany’s postwar government to write off half of its debts.
Harold Meyerson writes a weekly political column that appears on Thursdays and contributes to the PostPartisan blog. View Archive
Indeed, the policies that Angela Merkel’s government have inflicted on the nations of Southern Europe could not be more different from those that European leaders and the United States devised in the early 1950s to enable West Germany to rebuild its damaged economy. Since the crash of 2008, Germany, as Europe’s dominant economy and leading creditor, has compelled Mediterranean Europe, and Greece in particular, to sack their own economies to repay their debts.
Germany’s insistence has reduced Greece to a condition like that of the United States at the bottom of the Great Depression. Unemployment has soared to 25 percent, and youth unemployment to more than 50 percent ; the economy has shrunk by 26 percent and consumption by 40 percent. Debt has risen to 175 percent of the nation’s gross domestic product. And the funds from the loans that Germany and other nations have extended to Greece have gone almost entirely either to cover interest payments or repay past loans; only 11 percent has actually gone to Greece’s government. Stuck on a treadmill of debt repayment and anemic economic activity, Greece, as the Financial Times noted, has been reduced to a “quasi-slave economy” run “purely for the benefit of foreign creditors.”
Not surprisingly, when Greek voters went to the polls Sunday, they elected a new government that is demanding a renegotiation of its debt. German and European Union officials have responded with adamant opposition to any such changes.
Fortunately for Germany, its own creditors took quite a different stance after World War II. In the London Debt Agreement of 1953, the 20 nations — including Greece — that had loaned money to Germany during the pre-Nazi Weimar Republic and in the years since 1945 agreed to reduce West Germany’s debts by half. Moreover, they agreed that its repayments could not come out of the government’s spending but only and explicitly from export income. They further agreed to undervalue the German mark, so that German export income could grow. By the consent of all parties, the London Agreement, and subsequent modifications, were crafted in proceedings that made West Germany an equal party to its creditors: It could, and sometimes did, reject the creditors’ terms and insist on new negotiations.
The United States was particularly insistent on making the terms of West Germany’s repayments as lenient as possible. It needed the nation to be a strong ally in the Cold War. Besides, West Germany’s government, headed by Christian Democrat Konrad Adenauer, was (presumably) Nazi-free. To further punish Germany, its onetime mortal enemies concluded, was strategically — and, just maybe, morally — unwise.
No such scruples have informed Germany’s current policies toward Greece. As a member of the euro zone, Greece cannot undervalue its currency, and rather than enabling Greece to increase its exports, Germany has done everything possible to increase its own trade balance with Greece and its European neighbors. Far from rebuilding the economies of Southern Europe, Germany pillaged them in the name of fiscal rectitude.
But the considerations that informed Germany’s creditors six decades ago are just as pertinent today. Strategically and economically, it would be a disaster for Germany if Greece were compelled to repudiate its debts and leave the euro zone, as such a move would threaten the zone’s continued existence. The new Greek government represents at least as clean a break with Greece’s previous mis-rulers as the Adenauer government did with Hitler’s. Its early appointments signal a novel development in Greek governance: a fight against the corruption and crony capitalism that have long corroded the nation’s economy.
Why can’t Germany apply the lessons of its own past to today’s economic challenge? As Jurgen Kaiser noted in a brilliant paper for the think tank of Germany’s Social Democrats, “little knowledge about Germany’s debt relief is to be found among the broader public in Germany.”
The world will be a better place when Germans know their history — all of it.
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