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“Greece’s Economy Is A Lesson For Republicans In The U.S.”: The Toxic Combination Of Austerity With Hard Money

Greece is a faraway country with an economy roughly the size of greater Miami, so America has very little direct stake in its ongoing disaster. To the extent that Greece matters to us, it’s mainly about geopolitics: By poisoning relations among Europe’s democracies, the Greek crisis risks depriving the United States of crucial allies.

But Greece has nonetheless played an outsized role in U.S. political debate, as a symbol of the terrible things that will supposedly happen — any day now — unless we stop helping the less fortunate and printing money to fight unemployment. And Greece does indeed offer important lessons to the rest of us. But they’re not the lessons you think, and the people most likely to deliver a Greek-style economic disaster here in America are the very people who love to use Greece as a boogeyman.

To understand the real lessons of Greece, you need to be aware of two crucial points.

The first is that the “We’re Greece!” crowd has a truly remarkable track record when it comes to economic forecasting: They’ve been wrong about everything, year after year, but refuse to learn from their mistakes. The people now saying that Greece offers an object lesson in the dangers of government debt, and that America is headed down the same road, are the same people who predicted soaring interest rates and runaway inflation in 2010; then, when it didn’t happen, they predicted soaring rates and runaway inflation in 2011; then, well, you get the picture.

The second is that the story you’ve heard about Greece — that it borrowed too much, and its excessive debt led to the current crisis — is seriously incomplete. Greece did indeed run up too much debt (with a lot of help from irresponsible lenders). But its debt, while high, wasn’t that high by historical standards. What turned Greek debt troubles into catastrophe was Greece’s inability, thanks to the euro, to do what countries with large debts usually do: impose fiscal austerity, yes, but offset it with easy money.

Consider Greece’s situation at the end of 2009, when its debt crisis burst into the open. At that point Greek government debt was near 130 percent of gross domestic product, which is definitely a big number. But it’s by no means unprecedented. As it happens, Greece’s debt ratio in 2009 was about the same as America’s in 1946, just after the war. And Britain’s debt ratio in 1946 was twice as high.

Today, however, Greek debt is over 170 percent of G.D.P. and still rising. Is that because Greece just kept on borrowing? Actually, no — Greek debt is up only 6 percent since 2009, although that’s partly because it received some debt relief in 2012. The main point, however, is that the ratio of debt to G.D.P. is up because G.D.P. is down by more than 20 percent. And why is GDP down? Largely because of the austerity measures Greece’s creditors forced it to impose.

Does this mean that austerity is always self-defeating? No, there are cases — for example, Canada in the 1990s — of countries that slashed their debt while maintaining growth and reducing unemployment. But if you look at how they managed this, it involved combining fiscal austerity with easy money: Canada in the ’90s drastically reduced interest rates, encouraging private spending, while allowing its currency to depreciate, encouraging exports.

Greece, unfortunately, no longer had its own currency when it was forced into drastic fiscal retrenchment. The result was an economic implosion that ended up making the debt problem even worse. Greece’s formula for disaster, in other words, didn’t just involve austerity; it involved the toxic combination of austerity with hard money.

So who wants to impose that kind of toxic policy mix on America? The answer is, most of the Republican Party.

On one side, just about everyone in the G.O.P. demands that we reduce government spending, especially aid to lower-income families. (They also, of course, want to reduce taxes on the rich — but that wouldn’t do much to boost demand for U.S. products.)

On the other side, leading Republicans like Representative Paul Ryan incessantly attack the Federal Reserve for its efforts to boost the economy, delivering solemn lectures on the evils of “debasing” the dollar — when the main difference between the effects of austerity in Canada and in Greece was precisely that Canada could “debase” its currency, while Greece couldn’t. Oh, and many Republicans hanker for a return to the gold standard, which would effectively put us into a euro-like straitjacket.

The point is that if you really worry that the U.S. might turn into Greece, you should focus your concern on America’s right. Because if the right gets its way on economic policy — slashing spending while blocking any offsetting monetary easing — it will, in effect, bring the policies behind the Greek disaster to America.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, July 10, 2015

July 11, 2015 Posted by | Austerity, Greece, Republicans | , , , , , , , , , | Leave a comment

“Ending Greece’s Bleeding”: Europe’s Self-Styled Technocrats Are Like Medieval Doctors Who Insisted On Bleeding Their Patients

Europe dodged a bullet on Sunday. Confounding many predictions, Greek voters strongly supported their government’s rejection of creditor demands. And even the most ardent supporters of European union should be breathing a sigh of relief.

Of course, that’s not the way the creditors would have you see it. Their story, echoed by many in the business press, is that the failure of their attempt to bully Greece into acquiescence was a triumph of irrationality and irresponsibility over sound technocratic advice.

But the campaign of bullying — the attempt to terrify Greeks by cutting off bank financing and threatening general chaos, all with the almost open goal of pushing the current leftist government out of office — was a shameful moment in a Europe that claims to believe in democratic principles. It would have set a terrible precedent if that campaign had succeeded, even if the creditors were making sense.

What’s more, they weren’t. The truth is that Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients — and when their treatment made the patients sicker, demanded even more bleeding. A “yes” vote in Greece would have condemned the country to years more of suffering under policies that haven’t worked and in fact, given the arithmetic, can’t work: austerity probably shrinks the economy faster than it reduces debt, so that all the suffering serves no purpose. The landslide victory of the “no” side offers at least a chance for an escape from this trap.

But how can such an escape be managed? Is there any way for Greece to remain in the euro? And is this desirable in any case?

The most immediate question involves Greek banks. In advance of the referendum, the European Central Bank cut off their access to additional funds, helping to precipitate panic and force the government to impose a bank holiday and capital controls. The central bank now faces an awkward choice: if it resumes normal financing it will as much as admit that the previous freeze was political, but if it doesn’t it will effectively force Greece into introducing a new currency.

Specifically, if the money doesn’t start flowing from Frankfurt (the headquarters of the central bank), Greece will have no choice but to start paying wages and pensions with i.o.u.s, which will de facto be a parallel currency — and which might soon turn into the new drachma.

Suppose, on the other hand, that the central bank does resume normal lending, and the banking crisis eases. That still leaves the question of how to restore economic growth.

In the failed negotiations that led up to Sunday’s referendum, the central sticking point was Greece’s demand for permanent debt relief, to remove the cloud hanging over its economy. The troika — the institutions representing creditor interests — refused, even though we now know that one member of the troika, the International Monetary Fund, had concluded independently that Greece’s debt cannot be paid. But will they reconsider now that the attempt to drive the governing leftist coalition from office has failed?

I have no idea — and in any case there is now a strong argument that Greek exit from the euro is the best of bad options.

Austerity hasn’t worked. Five years is enough! It’s time to try something new. The financial elites resist with an obduracy that defies…

Imagine, for a moment, that Greece had never adopted the euro, that it had merely fixed the value of the drachma in terms of euros. What would basic economic analysis say it should do now? The answer, overwhelmingly, would be that it should devalue — let the drachma’s value drop, both to encourage exports and to break out of the cycle of deflation.

Of course, Greece no longer has its own currency, and many analysts used to claim that adopting the euro was an irreversible move — after all, any hint of euro exit would set off devastating bank runs and a financial crisis. But at this point that financial crisis has already happened, so that the biggest costs of euro exit have been paid. Why, then, not go for the benefits?

Would Greek exit from the euro work as well as Iceland’s highly successful devaluation in 2008-09, or Argentina’s abandonment of its one-peso-one-dollar policy in 2001-02? Maybe not — but consider the alternatives. Unless Greece receives really major debt relief, and possibly even then, leaving the euro offers the only plausible escape route from its endless economic nightmare.

And let’s be clear: if Greece ends up leaving the euro, it won’t mean that the Greeks are bad Europeans. Greece’s debt problem reflected irresponsible lending as well as irresponsible borrowing, and in any case the Greeks have paid for their government’s sins many times over. If they can’t make a go of Europe’s common currency, it’s because that common currency offers no respite for countries in trouble. The important thing now is to do whatever it takes to end the bleeding.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, July 5, 2015

July 7, 2015 Posted by | Austerity, European Union, Greece | , , , , , , , | Leave a comment

“The Exceptions”: How To Be A Walking ‘Confirmation Bias’ (Role Model: Mia Love)

Representative Mia Love, Republican of Utah, appeared on the January 4 edition of the ABC News program This Week With George Stephanpoulos to defend House Majority Whip Steve Scalise of Louisiana in the wake of revelations that he once addressed a white supremacist group.

Have you ever been in a debate with your right-wing uncle and when you ask him for proof of his wild claims, he pulls up a Fox News article? Instinctively, you roll your eyes. Of course he sought out Fox News as a source—it’s a haven for people like him. Everything he already thinks about minorities, LGBTQ people, Muslims and single moms is there. Automatically turning to Fox News to search for information that he knows will affirm what he already believes is called a confirmation bias.

On December 29, news broke that Representative Steve Scalise of Louisiana, the new House majority whip, had addressed a white supremacist group in 2002. Former Ku Klux Klan leader David Duke founded the European-Unity and American Rights Organization, or EURO, in 2000, and Scalise, then a member of the state legislature, rallied the support of EURO members to oppose a proposed new tax. Amid critics’ demands that Scalise be pushed from his leadership role in the House, his fellow Republicans half-heartedly expressed support for him, calling his appearance before the group a “mistake,” while Democrats offered a mixed response. The most vocal support from inside Congress, however, came from Mia Love, who represents a district in Utah.

Love recently made history by being the first black woman elected to Congress as a Republican. Despite her personal history as a child of Haitian immigrants, she holds extremely right-wing views on immigration and now, apparently, white supremacy. Congresswoman Love essentially gave Scalise a pass, saying that he should stay in his new leadership position. “He has been absolutely wonderful to work with. He’s been very helpful for me and he has had the support of his colleagues,” Love said on the January 4 edition of ABC’s This Week.

What Love and other black conservatives like Ben Carson and Allen West may not realize is that their very presence serves as every racist’s confirmation bias. When blacks and other people of sound mind decry Scalise over associating with a racial hate group, right-wingers can point to Love and say, “See? Good black people are totally cool with a top elected official palling around with white supremacists!”

Members of minority groups who seem to be blind to racism—or purposefully ignore it—are either looking for political gain or have internalized society’s bigotry. It is likely that Love and others like her desire the approval of their white peers and have bought into the idea that they’re “not like the others” of their own racial or ethnic group. They’ve bought into the dominant culture’s bias against their own people, and deemed themselves to be righteous exceptions to the trumped-up rule.

Writing off Mia Love and Allen West as out-of-touch right-wingers is easy, but the truth is that these very visible blacks hurt the cause—the ongoing quest for equality. As long as they continue to disregard racism, and side with those who would pander to white supremacists, racists with an agenda will always have a valuable token to confirm their biases.

 

By: Nathalie Baptiste, The American Prospect, January 7, 2015

January 13, 2015 Posted by | GOP, Racism, Steve Scalise | , , , , , , , | Leave a comment

“A Glaring Symbol Of What You Stand For”: Hey GOP, Please Keep Steve Scalise At The Top Of Your Junk Pile

The Republican Party’s strategy for reaching across the cultural and racial divide, in an effort to expand its tent for the next major national election, is to throw its full support behind embattled Louisiana Congressman Steve Scalise who, by his own admission, spoke in 2002 to The European-American Unity and Rights Organization (EURO), a white supremacist group founded by former Ku Klux Klan leader David Duke. Scalise claims he did not at the time know the origin of the group or Duke’s involvement.

Scalise, who as Majority Whip is the GOP’s 3rd highest ranking representative, told a reporter almost 20 years ago while running for office that he was like “David Duke without the baggage.” Was this simple pandering to a key voting block or a much clearer window into the man’s political and moral psyche? Either way, he knew exactly who he was targeting.

As House Republicans vote Tuesday to elect its leaders, many on the right have been all too quick to defend Scalise’s utterly implausible story, even blaming Democrats for the controversy. Speaking on MSNBC’s Hardball Monday evening, Republican strategist and former Dick Cheney advisor Ron Christie said: “I think the Democrats are being disgraceful in the way that they’re playing the race card. The Democrats are dividing this country…” he said, while specifically naming DNC chair Debbie Wasserman Schultz and White House press secretary Josh Earnest.

In a statement released Monday, Wasserman Schultz said: “As the new Congress begins, nothing discredits Republican claims of ‘outreach’ and bringing people together more than their decision to keep Steve Scalise at the top tier of the elected leadership of their caucus…Anyone living in this century should have known better than to attend and speak at a white supremacist event, particularly one founded and led by David Duke, and Scalise’s explanation that he wasn’t aware isn’t credible by a long shot.”

And Earnest, during Monday’s White House press briefing, said: “There’s no arguing that who Republicans decide to elevate into a leadership position says a lot about what the conference’s priorities and values are.”

So let’s get this straight: what riles Republican officials is not that their party has racists, who do and say despicable things, but rather the Democrats who make public their words and actions. Welcome to 2015, where condemning racism is playing the race card.

To the GOP I say, please keep Steve Scalise in his leadership post. Leave him up there as a glaring symbol of what your party stands for. Let Americans know who you support. Who you defend. Who you reward with power. Who you call a “man of character.”

 

By: Andy Ostroy, The Blog, The Huffington Post, January 6, 2015

January 7, 2015 Posted by | GOP, Racism, Steve Scalise | , , , , , , | 2 Comments

“The Strategy Of Confederate Republicans”: I’m Glad That The GOP Has Decided To Come Out Of The Closet As Openly Racist

Steve Scalise, the House Republican Whip-elect, appears to be surviving the flap over his appearance at a David Duke-organized event. It’s good to be able to welcome the New Year with a word of praise for the party I oppose. I’m glad that the GOP has decided to come out of the closet as openly racist.

The event itself has been misdescribed in the press as “white supremacist;” in fact, David Duke’s keynote speech didn’t even mention black-white issues, instead focusing on anti-Jewish themes. “Neo-Nazi” would give a much clearer picture of what EURO was really about.

Still – as even Erick Erickson has pointed out – there was never any doubt of what David Duke, the Klan Wizard, was about. He’s the kind of batsh*t-crazy racist who isn’t sure Jews are actually “white” (and, a generation or two ago, would have had the same doubts about the Irish and the Italians).

So what did Steve Scalise, aspiring Louisiana politician, have to say about David Duke?

The voters in this district are smart enough to realize that they need to get behind someone who not only believes in the issues they care about, but also can get elected. Duke has proven that he can’t get elected, and that’s the first and most important thing.

Well, that couldn’t be clearer, could it? “The first and most important thing” is to get elected. Politicians who frankly campaign on their hatred of blacks and Jews can’t get elected. So voters who “care about” hating blacks and Jews need to find politicians like Steve Scalise, who “believes in” Duke’s message but won’t say so explicitly, because such politicians can get elected.

That sums up the current strategy of the Confederate Republicans about as clearly as I’ve ever heard it summed up: seek the votes of bigots by winking at them, and by pursuing policies that are hostile to African-American interests without being explicitly racist. So it’s entirely appropriate that Scalise should have been chosen for, and remain in, the House Republican leadership.

It’s also entirely appropriate, of course, for those who don’t approve of bigotry not to be taken in. Somebody needs to explain that slowly to the ADL.

 

By: Mark Kleiman, Professor of Public Policy at The University of California Los Angeles; Ten Miles Square, The Washington Monthly, January 2, 2014

January 4, 2015 Posted by | GOP, Racism, Steve Scalise | , , , , , , , , | Leave a comment

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