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mother earth

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Member since: Wed Nov 10, 2004, 05:08 PM
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From Nov. 2014, Predictors of ’29 Crash See 65% Chance of 2015 Recession

Nov. 10 (Bloomberg) -- In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.

Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession -- the slump began two months later.

The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.

That call runs counter to the forecasts of Morgan Stanley and Goldman Sachs Group Inc. The two banks posit an expansion that has plenty of room to run.

“Clearly the direction of most of the recent global economic news suggests movement toward a 2015 downturn,” chairman David Levy told clients in an Oct. 23 edition of a monthly forecasting report, which at over 60 years purports to be the oldest of its kind.

Why the gloom? Levy argues the U.S. and many advanced economies still have balance-sheet excesses exposing them to renewed financial crisis. There is limited room for policy makers to reverse any slump, and low inflation risks tipping into deflation in many parts of the world.

U.S. Exposure
While the U.S. is doing relatively well, Levy is worried that at about 13 percent of gross domestic product, U.S. exports represent their largest share ever.

American companies also are getting a historically large proportion of earnings from abroad and households are vulnerable to any bear market because their ratio of stocks to disposable income is higher than at any point aside from the start of this century, he said.

Granted, there have been some misfires. In September 2010, Levy told Bloomberg Television that he saw a 60 percent chance of another U.S. recession. Instead the world’s largest economy has gained in strength.

The upshot of the latest forecast is that even if a slump is avoided, the Federal Reserve will keep interest rates near zero until the next decade, according to Levy.

“Without first strengthening substantially, we think it highly unlikely that global financial stability will hold together long enough for the Fed to signal and execute a rate increase,” he said.

Syriza - a Necessary Compromise or Avoiding an Inevitable Conclusion?

Dimitri Lascaris and Leo Panitch discuss the Greek government's negotiating strategy and whether it should be preparing to leave the Eurozone - March 15, 2015

Excerpt from: http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=13412

LASCARIS: I don't know whether they're going to actually survive from a fiscal perspective until beyond March, let alone a year or months down the road. They have to make a choice. It's unfortunate that there being put to this choice, these very extraordinary and difficult circumstances, but that's the choice confronting them. And they can either continue down this path, or they can liberate themselves from the straitjacket of the Eurozone and recover some degree of sovereignty and have some degree of latitude to address the humanitarian crisis, or they can continue to see a contraction of their GDP, they can continue to see an increase in poverty, they can continue to see a rise in the suicide rate. That's the choice confronting them, unfortunately. They don't have the luxury of time.
JAY: Leo, quick final word.
PANITCH: I don't think it's that simple, I must say. I agree with you, Dimitri, yeah, I agree that Europe is not going to give them a lot of breathing space. I think they're going to have some. I think the big difference between them and the previous government is that they are going to be implementing this, rather than a set of reactionaries. And I think that does make some difference.
And one has to weigh that against what the implications would be for the Greek people of pulling out. And when you speak of a humanitarian crisis, you need to speak of a country that, unlike Venezuela, did not have high oil prices to fund its social solidarity program. That's the country you're speaking of. And you need to then--you need to think through what a wealth tax and what some nationalization would give them in order for the humanitarian crisis not to get worse when they pull out.
So I'm not necessarily disagreeing with you. I just think one needs to be [incompr.] going to be honest, one needs to not only say they haven't got that much space in Europe; one needs to ask how much--what will be the short-term implications and be honest about it in terms of being cut off at the moment. But I'm not sure in the end that they won't have to go. I just don't think one can expect this to be determined within weeks of the election.


An interesting interview further explaining the rise of the far right throughout Europe due to austerity. The far right very definitely will cause the collapse of the EU and are calling for it. The reality is there is no compromise by Germany to bring an end to austerity, which remains completely unsustainable, so the question remains for Syriza, for Greece, to stay within unsustainable austerity or to leave, all of which will likely play out over the coming weeks. It seems there is only one way through all of this, either an exit through chaos and a far right takeover, or an exit due to no compromise via Germany's stranglehold and Syriza's lead. Leaving the EU means more pain, but with no let up of austerity measures, there would be seen a light at the end of the tunnel. While there is a seeming stalemate at hand, it seems an exit is still very much ahead for Greece.

Shall we see total revolt & a far right exit, or perhaps a more reasoned exit via Syriza? Certainly the people have overwhelmingly rejected austerity and that rejection is sweeping throughout Europe. Germany, you have forgotten the mercy shown you in your darkest moment, and you are forcing what lies ahead.

Prof. Richard D. Wolff, Global Capitalism: March 2015 Monthly Update


Sanders On Fed & Greece

While a delay/band-aid is on the situation, Sen. Sanders words (as always) remain strong, pertinent & reach in to the crux of the matter.

TRNN, Prof. Wolff: U.S. Workers Returning to Labor Force with PT Jobs & Stagnant Wages

Economist Richard Wolff discusses the latest unemployment figures and says the raising of interest rates by the Federal Reserve during a weak recovery would be disastrous for our heavily indebted society - March 8, 2015


The Department of Labor released its jobs report for February, and the press is hailing it as a strong sign that the economy is flexing some muscles after adding 295,000 new jobs in the month of February. The unemployment rate dropped to 5.5 percent, which is its lowest level since May 2008. That's back in the early days of the recession.

Now joining us from New York City to give us the story behind these figures is Richard Wolff. Richard is a professor of economics emeritus at the University of Massachusetts Amherst, and he's currently a visiting professor at the New School University in New York.

DESVARIEUX: So, Rick, the labor market is getting better--at least that's what the numbers are telling us. But is that the whole story?

WOLFF: No, and it's not only that, the whole story. It's not even the most important part of the story of unemployment. And let me explain. First of all, sure, that we've added almost 300,000 jobs is a lot better than adding 100,000 or cutting thousands of jobs, which is what has happened for much of the last five or six years. So it's better than where we have been. But it is very, very far short of what a functioning economy ought to do.

And let me explain. The minute you break down these numbers--which, by the way, newspapers that do this properly have been able to do. And I've actually mentioned the Wall Street Journal for having given a list of charts to help people understand what these numbers means. One of those charts shows that the increase in jobs that they're talking about has overwhelmingly been part-time jobs, not full-time jobs. And when you look at full-time jobs, we're not even back to where we were seven or eight years ago, because that is how bad this depression or recession, whatever you want to call it, has been.

Second most important reality: wages have gone nowhere. There's been no increase in wages. That means if you put together that the wage averages have been the same, but in effect what you're doing is giving people part-time jobs, not full-time jobs, then you begin to see that this is not an economic recovery. What has actually happened is over the last eight years of this economic crash since 2008, millions of Americans have suffered unemployment, often for one, two, and three years. Little footnote: unemployment is lasting longer now than at any other downturn since the Great Depression. What you've done is put people through long, painful unemployment, using up their savings, using up the resources of their family, using up all unemployment compensation that they're eligible for, so that now they are forced to go back to work part-time instead of full-time, and at lower-wage jobs that they had before.

You put all this together, and what you're seeing is an economic slump that continues. It's not as bad as it was in late 2008, 2009, and 2010, but to compare that, where we are now, with what the worst was is not the right way to go. It's to compare us now with what we could have and should have been all along and what we should have now made up for. What happened in the last seven years, nothing like that has is shown by these numbers.

DESVARIEUX: But, Rick, I'm going to challenge you a bit, because at the end of the day there has been real growth. In the construction industry, they've added 29,000 jobs, the restaurant industry added 59,000 jobs, both of them in the service industry. And the Bureau of Labor found that unemployment decreased in every state, all 50 states, including D.C., during the year 2014. That sounds, at least on the surface, as good news. I mean, that hasn't happened since 1984. So, for you, I want to ask you: what do you think is at the root of this growth? Are we actually seeing the private sector deciding to reinvest in the economy? And can you at least say that this is a minor victory?

WOLFF: Again, it depends in comparison to what. Is it better than losing jobs? Yes. Is it better than a growth of jobs that's slower? Yes, no question. I'm glad these people have been getting jobs. But I know as an economist that if you put people mostly into part-time jobs, and if you put them mostly into low-paying jobs, and if you look at where the growth in jobs has been, not just in the month of February, but for the last several years, it's very clear that we're moving from a high-wage, high-benefit, secure-job economy to a low-wage, low-benefit, precarious economic situation for the majority of our workers. That is not a recovery. That is going to a new place in this economy far inferior to what we had both before this crisis and during it. It's basically saying to the American working class, we have put you through a proverbial economic hell in the last seven years of unemployment. At the end of that title, what awaits you is a poorer job with fewer benefits that is less secure than you had before we put you through this economic disaster. That's why focusing on the fact that over a few month period the numbers go up instead of down distracts the attention of the people from the larger, broader reality, which is one that they ought to be very, very concerned about rather than having themselves on the back for this number.

DESVARIEUX: So, Rick, for you, then, what would be a economic indicator that would represent a healthy economy?

WOLFF: For me it would be using the term full employment for what it means in simple, honest English, and that would be one percent, one and a half percent of our people out of work, because basically they're moving from one job to another. There's always a certain amount of friction like that. But that's it. The rest is what we're not solving as a problem. And that is in fact getting worse.

And let me explain really simply what I mean. We currently have, depending on how you count, between 10 and 20 million Americans who are not able to work in a proper full-time job that they want to have and that they want to do. At the same time, the Federal Reserve teaches a statistic called capacity utilization: what portion of the tools, equipment, machines, floor space, factory space, office space, what part is being left idle, not used? And the answer is: about 20 percent these days, which means we have more than enough tools, equipment, and raw material for those 10 to 20 unemployed millions of Americans to work with. If we put those people to work with the equipment and tools and raw materials available, we could produce a wealth of output that could do a major job in rebuilding the destroyed cities of the United States, providing for the elderly that we are increasingly a part of our population, providing the daycare that we ought to have and that finds us far behind other countries like us, and make a real contribution to overcoming poverty in around the world, which would be a lot more successful a foreign policy than the one we pursue. We have the capacity to do it. But we have an economic system that can't, that fails to put together the people who want to work with the tools and equipment they need to produce the wealth we all know would make this a better society. That's the catastrophe that these numbers distract attention from, which is why I'm so concerned to put them back in the context they deserve so that they can be understood in terms of the real crisis we still are living in.

DESVARIEUX: Alright. Let's go back and talk about the Federal Reserve that you mentioned. So if the economy is deemed to be at full employment, which some headlines are even saying after these unemployment figures came out, or at the very least it's on its way back to a pre-recession sort of labor market, could this news potentially affect interest rates? And more importantly, what would this mean for everyday people?

WOLFF: Yes. The conservatives in both parties, who are, unfortunately, the majority in both parties, the conservatives have been pushing for raising interest rates. I won't go into the disputable theory and science that this is the basis for, but that's what they want. And they need public signs that can allow them to increase the pressure on Janet Yellen at the Federal Reserve and on the whole Federal Reserve board to begin to raise interest rates.

This kind of statistic, especially when it's hyped in the way you have quite correctly characterized, will give them a bit more ammunition to put pressure on the Federal Reserve even to raise interest rates or to raise them sooner, etc. And if the Federal Reserve does it, then that will increase the cost of homes because your mortgage rates will go up, of automobiles because your car payments will go up, of the cost of our education because student loans will likely go up, and credit card debt.

This is a very dangerous in an over-indebted economy. It means production and demand for goods and services will be cut back. That's not good for production. And so it's quite understandable that the chief at the Federal Reserve, Janet Yellen, is very nervous about these kinds of statistics pushing her and the board to raise interest rates.

And here's what it reveals. They know better than the headlines we're discussing now how very weak the current recovery is, how the majority of Americans have not been allowed to participate in it, and therefore how dangerous it would be to raise interest rates above the near-zero level that they're at now, because anything that could disturb as weak and uneven a recovery as we have is too scary to contemplate. Therein lies the real recognition that this hoopla over 5.5 percent is meant to distract people from.


In The SU, Capitalism Triumphed Over Communism, In This Country Capitalism Triumphed Over Democracy


Fran Lebowitz: Capitalism Triumphed Over Both Communism and Democracy

A photoshopped image of journalist and author Fran Lebowitz (not to be confused with Annie Leibovitz the famed photographer) has been making its away around the internet. The image may be created on software, but the quotation from Lebowitz is unerringly accurate: "In the Soviet Union, capitalism triumphed over communism. In this country, capitalism triumphed over democracy.”

Perhaps one can argue that there is still hope for democracy, the kind of faint pulse that an experienced paramedic detects when others have declared a person found lying in the street dead. Perhaps there is the chance that defibrillation or emergency surgery can yet resurrect an actual robust democracy and not just the appearance of one. In short, the last rites haven't yet been given to democracy in the US, but the priest is hovering near the body.

Lebowitz's quotation suggests the fundamentally overarching reality that a global oligarchical system has, at an accelerated pace, been steering democracies to achieve plutocratic goals. They are an unaccountable force deciding the future of the world's economy - and within that framework - it's political direction. Plutocrats, the likes of those who meet at Davos every year and those whom The World Bank and IMF represents, are the new superseding political force in the world. The plethora of trade agreements give corporations, for example, sovereign powers over certain areas. More significantly, economic issues favoring the ultra-wealthy and corporations are the key focus of governmental entities such as the G-8 and G-20.

Democracy still exists in nations such as the United States from a technical standpoint. However, it plays out in a context of what has been called "manufactured consent" that is crafted by those with vast fortunes to influence election outcomes. George Orwell's emphasis in his classic novel "1984" was on the pervasive presence of image generators that would basically embed a subservient world view in the minds of the general population. That is not hard to see today in the omnipresence of plasma television screens in our homes, restaurants, airports and even taxis, which blare out a 24-hour cycle of headlines constructed to provoke fear and hatred or to distract the viewers with sensationalized celebrity news.

News, such as it is determined by the corporate mass media, is primarily embedded in us as emotional reactions to headlines and stories that cause us to react viscerally instead of cerebrally. As BuzzFlash at Truthout has noted before, choosing the frame of what is considered news in a journalistic world where advertising determines profitability is largely dependent upon engaging the viewer emotionally. This is also true of political advertising, faux think tank studies from the right, talking point memes from the likes of Frank Luntz, etc.

In short, much of what constitutes a debate within democracy about public policy is largely restricted to the confines of issues that evoke an emotional reaction in us, not thoughtful reflection. In a public where a large segment of the population is misinformed or only aware of the world through the images transmitted through visual media such as television, this allows the wealthy corporate forces behind television - and the political advertising and third-party "issue" ads that TV heavily profits from - to shape the contours of a democracy that exists in a very narrow fast-paced highway of "manufactured consent."

The limited width of that highway of "news" that benefits the wealthy and the ruling elite leads to pre-determined policies, such as happened with the manipulation of the public leading up to the Iraq War or the feverish rounds of tax cuts over decades. Those who benefit the most from capitalism - the 1% and the government that safeguards the wealth of the oligarchy - channel us like cattle into confined pens of “conventional wisdom.”

This, in large part, is the triumph of capitalism over democracy, as Lebowitz calls it. Through the corporate mass media - particularly television news (and particularly cable TV news) - the "masters of the universe" capitalists embed a world view in enough voters to create the semblance of a democracy. In reality the real decisions are being made upstairs, where the money is counted and continues to pile up to the rafters.

Wolff, on the big "Game"....that rigged game, lessons of the past & today.

ACLU SoCal, L.A. Progressive and Occidental College hosted Richard Wolff for a discussion on economic rights and reform, on February 10, 2015 at Occidental College.


Posted by mother earth | Sat Mar 7, 2015, 12:17 PM (6 replies)

Re-engineering Society in the interests of corporations...Naomi Klein & why she wrote Shock Doctrine

Published on Apr 23, 2012

Naomi Klein on the end of "El Modelo."

Question: Why did you write Shock Doctrine?
Naomi Klein:It came out of reporting that I was doing in Iraq after the invasion the first year of occupation. But I guess it dates back earlier than that. I happen to have been in Argentina making a documentary film when the war in Iraq began. And it was a really amazing time to be in Latin America. This was 2002, 2003. And this was, I guess, the beginning of what we now think of as this pink tide that has swept Latin America. But it was a moment in Latin American history -- certainly a moment in Argentinean history -- where the economic model that Latin Americans call neo-Liberalism, Americans call the free market. But these policies of privatization; free trade . . . the so-called free trade deregulation in the interest of corporations; deep cuts to social spending; healthcare and education cuts; things like that, in Argentina they actually just call this "el modelo" -- the model. Everybody knows what the model is. It's the so-called Washington Consensus. It's the policies that have been imposed on Latin America first through military dictatorships, then as conditions attached to loans that were needed during economic crises . . . the so-called "debt crisis" of the 1980s. When I was in Argentina the model was collapsing, and Argentineans overthrew five presidents in three weeks. So it was this moment of incredible tumult and political excitement because people were trying to figure out what would come next. But it went beyond Argentina. In Bolivia they hadn't yet elected Evo Morales, but they had these huge protests against water privatization. And Bechtel had just been thrown out of Bolivia. And in Brazil they had just elected Lula. And of course Chavez was already in power in Venezuela, but he had successfully overcome a coup attempt. He had been brought back to power. So there were all of these things going on in Latin America that were all connected in this rejection of this economic model. So to be in Latin America when the invasion of Iraq began was a really unique vantage point from which to watch the war. I'm very grateful to have had that experience to have been able to watch that through the eyes of my Latin American friends who saw the war so differently from . . . from the way it was seen, I think, by so many of us in North America. They saw a real connection between their rejection of these economic policies and the fact that the same economic program was being imposed in Iraq through tremendous violence. And you really saw and felt those connections in Latin America. You know Bechtel just thrown out of Bolivia suddenly shows up in Baghdad with the exclusive contract to rebuild their water system. And what it felt like was that . . . was that there was a change going on; that this model that had been imposed coercively though peacefully through the International Monetary Fund, through the World Bank, through the World Trade Organization -- that that wasn't working anymore. People were rejecting it that the legacy of these policies . . . the legacy of inequality was so dramatic that the sales pitch of "Just wait for the trickledown" wasn't working anymore. And so now there was this new phase. And it wasn't even asking, and it wasn't negotiating. It was just imposing through raw violence. And that's where I came up with the thesis for the book, which is we have entered this new phase that I'm calling "disaster capitalism"; or the Shock Doctrine using a shock -- in this case the shock and awe invasion of Iraq -- to impose what economists call "economic shock therapy". So I think it was . . . It was definitely that experience of seeing it from Latin America -- a continent in revolt against these policies -- that made it easier to identify this as a new phase. And once I identified that I started to see these patterns recurring. After the Asian tsunami there was a very similar push to use the shock of that natural disaster to push through, once again, these same policies. Water privatization, electricity privatization, labor market ..., displacing poor people on the coasts with hotel developers. So a sort of social re-engineering of societies in the interest of corporations, which I think is what we've been doing under the banner of free trade. But now it's under the banner of post-disaster reconstruction. More in vid.

TYT Cenk Uygar Interviews Economist Prof. Richard Wolff

Marxian Economics vs Capitalism with Economist Prof. Richard D. Wolff

Great discussion, as always with Cenk, with very practical questions/answers.
Wolff provides points and considerations we may not have realized, always thought provoking.

For more info:


Latest radio show:

Posted by mother earth | Thu Mar 5, 2015, 03:26 PM (2 replies)

Austerity & Sharp Rise in Suicide Rates (US & Europe)

Austerity Seen as Culprit in Sharp Rise in Suicide Rate Among Middle-Aged People

Monday, 02 March 2015 09:17 By Yves Smith, Naked Capitalism | News Analysis

I’m surprised, but perhaps I shouldn’t be, that a recent study hasn’t gotten the attention it warrants. It points to a direct connection between the impact of the crisis and a marked increase in suicide rates among the middle aged. This link seems entirely logical, given how many citizens found themselves whacked by a one-two punch of job loss or hours cutbacks combined with the sudden plunge in home prices. Normally, a last ditch course of action for most middle and upper middle class income members in the pre-crisis days, when things got desperate, was to sell you house and cut costs radically by moving into a much more modest rental. But that option vanished in all but the most stable markets (as in some flyover states that the subprime merchants ignored) due to home price declines trashing equity for all but those with small or no mortgages.

And you have the further psychological toll of the difficulty of re-inventing yourself if you are over 35. I can point to people who had enough in the way of resources and took steps that seemed entirely logical, taking courses to prepare them for a new career in fields with good underlying demand (see this post for one example; I can cite others) and got either poor returns on their expenditure of time and effort or had no success at all.

And the ones with enough options (bigger savings buffers or relatives who were willing and able to help) are the lucky ones. For all too many middle to upper middle income workers in America, when you fall off the corporate/big firm meal ticket, the fall is far indeed. As readers know all too well, the prejudice against older candidates as well as the unemployed is substantial, even if the reason for the job loss in no way reflected on employee performance (as in business failure or working for an acquired company when, in typical practice, the buyer went through the ranks of the purchased business with a howitzer). People who thought that having a college degree and a steady history of good performance at white collar jobs gave them a measure of security had that illusion ripped from them.



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