Political Leadership in Europe and the Debt Crisis
http://thedianerehmshow.org/shows/2011-11-14/political-leadership-europe-and-debt-crisis
In Europe, Italy's newly appointed premier, Mario Monti, takes on the task of pushing Italy into a new era of austerity. The administration of his predecessor, Silvio Berlusconi, survived a series of scandals, but over the weekend became yet the latest political casualty of the debt crisis roiling Europe and, potentially, much of the globe. Political moves in Italy mirror changes elsewhere, most recently Greece, but the crisis in Italy is on a much larger scale - Italy is the third largest country in the eurozone and the fourth largest debtor nation in the world. Join us to discuss ongoing efforts to save the euro.
Guests
Michael Hirsh
chief correspondent, National Journal magazine; author of "Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street."
Liaquat Ahamed
a professional investment manager and a former economist at The World Bank and author of "Lords of Finance: The Bankers Who Broke the World"
Heather Conley
senior fellow and director, Europe Program
Center for Strategic and International Studies
Comments
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Change in political leadership aside... one thing for certain, that won't work is Austerity:
"The other thing you need to know is that in the face of the current crisis, austerity has been a failure everywhere it has been tried: no country with significant debts has managed to slash its way back into the good graces of the financial markets. For example, Ireland is the good boy of Europe, having responded to its debt problems with savage austerity that has driven its unemployment rate to 14 percent. Yet the interest rate on Irish bonds is still above 8 percent — worse than Italy".
http://www.nytimes.com/2011/11/11/opinion/legends-of-the-fail.html?_r=1&...
austerity works fine... MAJOR cause of last three wars AND depressions... oh you meant as a non lethal adjustment to economic resources did you NOT?
Apologies good eunich- er- unit. People. Person !
yES THOSE RESOURCES(countries) PLUNDERED AND EXHAUSTED. tHE 'MONSTER' has evolved... no longer of US now... and yet IT moves and grows larger... such a worldly monster- US proud
lotsa FAT Americans to feast upon for the holiDAZE too
life IS good for sum... Soylent Green- '99 percent' pure- governments guaranteed.
wasted veteran, pink floyd, Semi- Anomyous are all the same person. Get a life bud.
Debt-fueled spending binge on luxuries has come to an end. Austerity is the only option. Good luck dealing with economic realities in this fantasy land.
The sovereign-to-bank vicious circle is broken.
Devaluation only works if you've got something somebody else wants. Greece doesn't. Italy could exit the Euro and default on their debts, which would torpedo their banks and kill their new isolationist economy.
.
Money makes the world go 'round, money, money money money money money
it will be interesting to see how long it is before the powers that be decide to do an extreme makeover on the world's monetary system so they can get it all
Italy, Greece, et al., have within their hands the ability to torpedo the euro by exiting and devaluing to the benefit of their own citizens.
Why do they not face down Germany and France with this threat?
Similar games here in the USA have been won by the Republicans (debt ceiling) and banks (financial crisis) employing this strategy to win. Why not also the peripheral countries?
Are there any examples of those who brought European nations to the brink of collapse being held accountable? Prosecuted?
I'm wondering if the people in Italy and Greece who oppose the austerity measures are making arguments like those being made by some in the United States: that banks and corporations are not assuming their share of the burden of resolving economic problems that they created or that the wealthiest are not paying their share of taxes?
Prof William K Black (He was the Executive Director of the Institute for Fraud Prevention from 2005-2007) recently spoke at the Occupy LA Teach in.
http://www.youtube.com/watch?v=N_AuvLTJNh0&feature=related
He brings much needed attention to how not one person has been held accountable for bringing the US economy to the brink
"Black “We can prosecute these frauds. The Federal Housing Finance Administration has just filed complaints saying 17 of the largest banks in America committed massive fraud. Endemic fraud.. And that there is a paper trail proving that they did so.”
“Where is the Justice Dept?”
“Why is is not indicting these frauds?”
ARE THERE ANY EXAMPLES IN EUROPE OF THESE FRAUDSTERS BEING HELD ACCOUNTABLE FOR BRINGING THE EUROPEAN ECONOMY TO THE BRINK? CONNECTED TO THE BANKING FRAUD IN THE US?
William Black
http://law2.umkc.edu/faculty/black.htm
I think I just heard Micheal Hersh say that the "governments role was a minor one" in regard to this economic crisis. Is that what he said?
Nuts
I second Kathleen's sentiment on some of Michael Hersh's comments. What an irresponsible thing to suggest government had a minimal role in the economic crisis we face. How could it not when through freddie mac and fannie mae by securitising loans that would otherwise not be lent by a non government backed private market, people who did not have the savings and ware-withal to buy homes did so in ever increasing numbers and lead to the housing bubble that burst. Banks and other private institutions were reckless precisely because the risk was securitized by government. This will be a repeat with student loans federally backed through organizations like sallie mae with over 850 billion in student loans nationally, surpassing credit card debt. It is precisely because government helps guarantee loans that the price of education has gone up despite the economic downturn. How is it that students of the seventies and before payed upwards of 2000 per year to go to school while we pay upwards of 30k a year? So government has no role to play in distorting market rates? WAMU, please get some people on the show that understand economics and understand the role government has on the markets. I strongly suggest guests that hold an 'austrian economics' school of thought. Otherwise this station risks betraying a slanted view of the world.
"Michael H wrote:
I second Kathleen's sentiment on some of Michael Hersh's comments. What an irresponsible thing to suggest government had a minimal role in the economic crisis we face. How could it not when through freddie mac and fannie mae by securitising loans that would otherwise not be lent by a non government backed private market, people who did not have the savings and ware-withal to buy homes did so in ever increasing numbers and lead to the housing bubble that burst. Banks and other private institutions were reckless precisely because the risk was secularized by government.
November 14, 2011 - 12:03 pm"
That's not true. Because of the loss of competition and drastic Tax cuts, the Hogs were awash in money, with no place to invest it.
The,"non government backed private market(s)" were the worst offenders. First in the Great Refinancing Boom, then followed by the Great Mortgage Boom.
They were begging people to take their money.
The originators of the loans didn't generally have a stake in the game and nothing to lose either way, the guarantees were to reassure the ultimate Investors.
As to College Loans, the Institutions were partly responsible for the increasing cost of Education, but people needed the loans and were in no position to bargain.
If demand for food drives up prices, must we stop eating??
Monte Haun mchaun@hotmail.com
"Michael H wrote:
I second Kathleen's sentiment on some of Michael Hersh's comments. What an irresponsible thing to suggest government had a minimal role in the economic crisis we face.
November 14, 2011 - 12:03 pm"
He may not have felt he had time to build the underpinning of the statement he wanted to make.
Perhaps he meant to point out that those who blame Government for the Crisis usually mean Government regulation, Taxes, safety and other considerations that may reduce their Profits and freedom.
The real causes were the deranged financial manipulations (arising out of Repeal of the Glass-Steagall Laws) which were no longer under the purview of the Govt to prevent, which I think Hersh pointed out.
Monte Haun mchaun@hotmail.com
Hi Monte. Thanks for your reply.
At face value, your arguments seems compelling if I didn't know any better.
The hogs, by which you mean the investment and commercial banks who lent
out and traded the sub-prime loans, had plenty of credit, awash in money
as you say, as a result of the Federal Reserve quantitative easing
policies and through fractional reserve banking during the 2000-2003
years in an attempt to counter the tech bust. But thanks to the feds low
interest rates and policies that encouraged lending to at risk
borrowers, such as the 'community reinvestment act', led by Freddie Mac
and Fannie Mae, that credit didn't stay put for long. But you say the
non government sponsored institutions were the worst offenders even
though Freddie and Fannie accounted for an estimated 5 of the 9 trillion
in mortgage debt most of which was federally backed, which is some moral
hazard. It certainly didn't help that the fed chairman Mr. Greenspan in
a 2004 speech, encouraged the mortgage bankers association to lend more
variable-interest loans and suggested the fed along with the treasury
would back any losses! The 'hogs' that were the most famous of the banks
including the bailed Morgan Stanley and Goldman Sachs were by no means
alone in the market, as there were around 102 other banks that were
insolvent as a result of the debacle. And if you really believe the
originators of the loans had nothing to lose with the bust take a look
at the housing starts and purchases and compare it to figures leading up
to the housing crisis. How many do you suppose are still in business today?
...
(continued)
The price of tuition would not be so high had the supply of student
loans not been hyper inflated through government backed credit. Of
course most students couldn't negotiate because the credit was so easy
and in demand by students themselves. The comparison to food is not
really appropriate as it comes down to need vs want and for the simple
fact that you can find alternatives to student loans while nourishment
is a vital need. But let me entertain your final question, if a
rhetorical one, and say demand alone does drives up prices never mind
the laws of economics and the myriad of things that could have the same
effect. Well this would assume supply stagnates, and people stop looking
for ways to increase their supply, while at the same time increasing
their intake of food. This is somewhat of a problem as demand cannot
increase while supply remains the same.
I hope that helps explain my position. Take care.