The (Washington) Post Makes Stuff Up in the News Section to Push Its Deficit Reduction Agenda

[Hannah Bell]

Saturday, 08 May 2010 07:02


The Washington Post (a.k.a. Fox on 15th Street) pulled out the stops in pushing its deficit reduction agenda today. Its news section includes a lengthy story on the euro crisis that makes things up in order advance the Post line about evil budget deficits.

It starts by misrepresenting the central problem: "and the currency that was designed to rival the U.S. dollar for power and influence is foundering because of a lack of fiscal discipline among its weakest members." While Greece's problems can be attributed in large part to a lack of fiscal discipline, this is clearly not the case with Spain and Ireland, both of whom had budget surpluses and low debt to GDP ratios prior to the downturn. Portugal is a more ambiguous case. The euro would not be facing a crisis if only Greece and Portugal, two relatively small economies, were facing difficulties.

The euro's problem stem from the fact that many economies across Europe were driven by a housing bubble. The European Central Bank (ECB), like the Fed, thought that bubbles were fun and opted to ignore the growth of dangerous housing bubbles in many countries.

For this reason, the sentence: "The euro, created 11 years ago, has always stood upon two unequal legs: a disciplined European Central Bank that has set interest rates for the entire monetary union and a wide variety of national budgets and economic policies ranging from prudent to profligate," could perhaps be more accurately written: "The euro, created 11 years ago, has always stood upon two unequal legs: an incompetent European Central Bank that has set interest rates for the entire monetary union and a wide variety of national budgets and economic policies ranging from prudent to profligate." Had the ECB done the proper job of a central bank it would have taken steps to pierce the bubble (which could have involved many measures other than raising interest rates) before it grew to such dangerous proportions.

It is worth noting that the Post consistently ignored the economists who warned of the dangers of the housing bubble in the build up to the crisis. It is continuing to ignore the bubble even after its collapse led to the worst economic crisis in 70 years...

This is the key point, the issue is less the budget problems, but rather that the fixed exchange rate precludes and effective process of economic adjustment to a period of lower budget deficits. Because Greece and the other troubled countries are stuck in the euro zone, they can neither lower interest rates nor decrease the value of their currency to offset the contractionary impact of deficit reduction. As a result, deficit reduction can lead to a downward spiral in which lower output leads to a higher budget deficit, requiring further cuts, and therefore causing a further drop in output.

http://www.cepr.net/index.php/blogs/beat-the-press/the-post-makes-stuff-up-in-the-news-section-to-push-its-deficit-reduction-agenda/

[fasttense]

1. And yet no one notices what the banksters are busily doing.

You know, back in March the banksters threatened to take down the euro. What is happening is an orchestrated speculative attack by zombie banks and cheats like Goldman Sachs with some help from the shadow banking system to take down the euro for fun and profit. Greece is their 1st target.

Back in March they were bragging about doing this. This is nothing short of economic warfare and nations under attack are too tied up in neoliberal and "free" trade mythology to notice, not to mention many of their politicians are bought off.

The only way for a country to protect itself is to make it illegal. To bring the shadow banking system out in the open and to make this kind of financial weapons of mass destruction illegal. Until regulations are once more put into place to control these out of control banksters no country, no state is safe.

"Greece does not need a bailout from Germany, the sinister International Monetary Fund, or from anyone else. Least of all does Greece need to accept the advice of Austrian school or Chicago schools charlatans who recommend the catharsis of a deflationary crash that would destroy an entire generation through unemployment, poverty, and despair. Greece needs to defend itself with a 1% Tobin tax on all derivatives and other financial transactions. Greece should take the lead in outlawing credit default swaps, which amount to issuing insurance without meeting the capital requirements of being an insurance company. Greece needs to enforce EU and national antitrust laws."

At that February meeting where the excessively wealthy met to coordinate their attack, they mentioned California and Great Britain. Be afraid, because until nations get these terrorist under control, no one is safe.

http://nwotruth.com/soros-goldman-hedge-funds-attack-greece-euro/

[Hannah Bell]

2. k

[blindpig]

3. Grover Norquist lives

in the basement of the White House.

k&r

[ipaint]

4. +1. nt

[ShortnFiery]

5. Love the nickname: Washington Post = Fox on 15th Street.

;) :thumbsup: