| Politicians 'Lying Through Their Teeth' on Greek Aid (and Everything Else Too) Posted: 11 Jun 2011 10:02 PM PDT Everyone understands that Jean-Claude Junker, the head of euro-zone finance ministers is a liar. He has openly admitted such. To what extent are other politicians lying? Der Spiegel explains Politicians 'Are Lying Through Their Teeth' on Greek AidGerman commentators on Friday take a look at the latest efforts to save Greece, with a focus on the ECB's opposition to debt restructuring.
The center-right Frankfurter Allgemeine Zeitung writes:
"This time around, Schäuble seems to have at least won the support of Chancellor Angela Merkel for his idea of a 'soft' debt restructuring involving private creditors. But the whole thing reeks of internal political maneuvering designed to keep the growing number of skeptics in the coalition ranks in line. It's hardly surprising that the financial markets remain unsure and have no confidence in the rescue efforts. Instead of being the motor of European integration, the single currency now looks more like a bomb ticking away within the EU."
"Amid the sea of uncertainty, only one thing is certain: The EU is at a crossroads. It has become clear that the economic and monetary union does not have the tools at its disposal to act quickly and decisively in crisis situations. The crisis also shows just how far the financial and economic interdependence of the EU's member states has developed in recent decades. Countries are happy to receive the advantages of this integration, such as free movement of labor, development funds from the Brussels pot or low interest rates on the capital markets, even for highly indebted countries. But they also like to circumvent those things that they should accept in return, such as fiscal discipline and tougher competition. Only now has it become clear to everyone that you cannot simply pull threads out of the fabric of European integration without risking tearing the entire thing apart."
The Financial Times Deutschland writes:
"When it comes to the construction of the next bailout for Greece, all the stakeholders are lying through their teeth to such a degree that one hardly knows who one should point the finger at first. The thing that unites them is that none of them want a solution that will really involve private creditors, irrespective of whether you want to call that a default, rollover or debt restructuring."
"The decision in favor of another rescue package is based more on political will than on a sober analysis of the data. To their shame, the troika did not even try to find out whether the conditions that they had previously set for help have been fulfilled. In theory, an analysis should provide information about whether Greece has any chance of getting back on its feet in the medium term with the help of loans. The fact that the troika has so far avoided carrying out that analysis can only mean one thing: The rescuers do not want to know the answer, because they fear the consequences of an inconvenient outcome."
The center-left Süddeutsche Zeitung writes:
"Under Jean-Claude Trichet, the ECB purchased Greek sovereign bonds on a large scale, which are now rapidly losing value. It would have been better off leaving this rescue effort to national governments, because it has now made the ECB into a stakeholder with its own interests, just like the Greek government or Deutsche Bank."
"Faced with the question of whether a debt restructuring for Greece will help the country get out of its crisis, or if it will unleash a firestorm across Europe, ordinary people need the help of an independent opinion, because governments and commercial banks are pursuing their own interests. But the ECB is no longer independent. As one of Athens' major creditors, a haircut on Greek debt would cost it a lot of money. As a result, its warning about a debt restructuring are not credible."
The left-leaning Die Tageszeitung writes:
At the end of the day, the ECB would not exist without the euro, so it can be assumed that the central bank will do everything possible to save the single currency. As the Austrian economist Stephan Schulmeister told this newspaper back in January, institutions' self-preservation instincts should not be underestimated." Greek Dilemma Lies and Questions About Possible Lies AboundJean-Claude Junker openly admitted " When it becomes serious, you have to lie." That admission came shortly after he denied there was meeting that he was actually attending. Jean-Claude Trichet made a huge mistake buying Greek and Irish debt. To what extent is Trichet attempting to save his reputation to the detriment of a real solution? Neither the Fed nor the ECB has shown any humility over clearly visible and grievous mistakes. Is there any reason to believe any EU official? Is there any reason to believe the Fed? Geithner? Obama? I await a global leader who steps up to the microphone and says "Things look bad, but they are even worse than they look. Sacrifices must be made and everyone has to share including the banks, the public unions, the military, and all special interest groups. ..." Instead we have lie, after lie, after lie by politicians whose only concern is getting reelected. We also have lie, after lie, after lie by central bankers whose only concern is bailing out the banks at taxpayer expense while absolving themselves of blame for the mess we are in. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Illinois Insanity: State Spend $365K Taxpayer Dollars to Teach People How to Fish; Hands Out $4 Million in Free Tuition to AFSCME Public Union Workers Posted: 11 Jun 2011 05:32 PM PDT Illinois has a budget deficit of $8 billion and has billions of dollars in unpaid bills. Those problems persist after the largest tax hikes in history. However, Illinois is wasting millions of dollars in programs that many would consider absurd even in good times. For example, please consider $365K In Taxpayer Dollars To Teach People How To Fish?In his winter budget address, Gov. Pat Quinn pledged that "all unnecessary state spending will be eliminated." Now it appears the state is preparing once again, to spend a third of a million dollars – taxpayer dollars – to teach people how to fish.
"I don't think teaching people how to fish in urban areas or rural areas is a core government service," says CEO John Tillman. And he complains that in this year's budget, "they've increased it from $351,000 to $365,000." Get Out the Veto PenA review by the Illinois Policy Institute found that the budget passed by the House left overall spending levels largely unchanged from last year. Additionally, many low-priority projects are slated to receive millions of dollars – dollars that deficit-plagued state government doesn't have to spare. Please consider Get Out the Veto Pen by the Illinois Policy Institute. Illinois lawmakers have been patting themselves on the back for supposedly holding the line on spending and getting rid of wasteful projects. Should taxpayers buy into this new-found "fiscal responsibility?" No.
A review by the Illinois Policy Institute found that the budget passed by the House left overall spending levels largely unchanged from last year. Additionally, many low-priority projects are slated to receive millions of dollars – dollars that deficit plagued state government doesn't have to spare.
Low Priority State Spending in Fiscal Year 2012 Budget Passed by the General Assembly
1. $4,037,500: Upward Mobility Program
Available only to state employees who are union members represented by the American Federation of State, County and Municipal Employees, or AFSCME, the Upward Mobility Program pays 100 percent of tuition costs at public institutions and a set amount per credit hour at select private universities. Participants can also receive financial assistance to pay for textbooks, fees, proficiency tests, remedial classes, licensure review classes and licensure examinations. After completing the program state employees are given "special consideration in the filling of vacancies" of targeted state job titles. Illinois is in the midst of a massive budget crisis. Workers who hold state positions in Illinois already are well paid, receive generous benefits and enjoy high job security. Illinois needs to prioritize spending on core government services over union perks.
2. $1,057,500: DuQuoin State Fair and Illinois State Fair entertainment and award costs
The DuQuoin State Fair and the Illinois State Fair have a long record of incurring expenditures that outweigh their revenues. Between fiscal years 2001 and 2009, the two fairs lost a combined total that exceeded $41.8 million. While turning a profit may not be the purpose of the state fairs, it is unacceptable for the state fairs to lose millions of dollars each year.
States such as South Dakota, Ohio, Colorado and Kansas have reduced their fair spending to deal with budget shortages, while Michigan recently shut down its government-run state fair. Meanwhile, Texas has shown that a privately-run state fair that operates without government subsidy can be successful.
3. $4,214,400: Grants to Art Organizations and Individuals
When the state is strapped for cash – and when taxpayers and core services are suffering – certain items do not make the state's top-priority list. Grants to art organizations and individual artists may be nice, but they're not necessary.
....
6. $23,836,900: Tourism Promotion
Many of the tourism promotion allotments have been questionable; in recent
years, tourism grants from the DCEO have included:
- $29,550 for a Lois Lane statue in Metropolis, Ill.
- $334,093 to Rockome Gardens for renovations including the addition of Amish cheese and ice cream production facilities.
- $100,000 to the Municipal Clerks of Illinois for the International Institute of Municipal Clerks 2009 Conference.
- $200,000 for the costs associated with hosting Fashion Focus Chicago 2009.
- $32,681 for promotion of Fashion Focus 2008.
....
10. $9,000,000: Renewable Energy Resources Program and the Illinois Renewable Fuels Development Program
Illinois's wealth of energy resources should be utilized to provide Illinois's families and businesses with reliable sources of power. However, Illinois state government is distorting energy prices and driving up overall government
spending by awarding tax dollars to certain energy sectors via special government programs.
In recent years, solar, wind, and biomass/biogas grants from the Renewable Energy Resources Program have included:
- $450,000 for the University of Illinois to "implement the Biogas and Biomass to Energy program."
- $253,350 for solar thermal hot water systems to heat Northern Illinois University's swimming pools.
- $132,198 for the Pacific Garden Mission to install a solar thermal hot water system at its new facility in Chicago.
- $82,006 for six grants to individuals for small-scale wind energy conversion systems.
- $32,000 to the Illinois Solar Energy Association to "promote solar energy in Illinois through the Illinois Solar Tour, the Heliographs newsletter, and by studying the potential to aggregate renewable energy credits for small-scale solar photovoltaic energy systems."
- $13,358 to the Phi Kappa Theta fraternity house at Northern Illinois University for a solar thermal energy system in order to "increase the utilization of alternative energy technology in Illinois."
New subsidies for energy projects should not be enacted, and current subsides need to be removed. Across Illinois, private companies provide funding for their own marketing, promotion, and research and development; firms in the energy industry should be treated in the same way. More Misguided PoliciesThe list of graft, stupidity, and union handouts in Illinois is nearly endless. For example, please consider Illinois Doesn't Pay Bills; Crisis Pushes Businesses to Edge of BankruptcyJust this May, Governor Quinn Holds Illinois Cities Hostage Over Budget Proposal; Cities Face Massive Cash Crunch In spite of the biggest tax hikes in the history of Illinois, the state is still $8 billion in a budget-deficit hole. Instead of cutting expenses, Governor Quinn wants to borrow $8.75 billion to pay the bills. Currently, Illinois is just starting to pay bills from November 2010.
To get approval for his preposterous proposal, Quinn threatens cities' revenue sharing unless they hop on board his plan. Currently $1 billion a year is distributed from state income tax collections to cities, based on population.
Amazingly, Quinn's budget director says this is "not a hostile message". Madigan honored with "prevailing wage" awardInstead of acting to help cities, Governor Quinn strengthened prevailing wage laws several times as noted in Madigan honored with "prevailing wage" awardIllinois Attorney General Lisa Madigan accepted an award from the state's Building Trades Council in Bloomington for her previous pro-union legislation. The Reuben G. Soderstrom Prevailing Wage Award is given annually. Madigan says she's honored and will continue with the same work. She says she's now working on a bill to enhance penalties for criminal violations of the prevailing wage act. Madigan says under the law, violations would be a class four felony.
"I think the real impact would be, that it would provide for debarment," Madigan said. "In other words, employers, contractors who are found to have criminally violated the Illinois Prevailing Wage Act will not be allowed to bid on contracts for a period of four years." Democrats Running Illinois Into the Ground For DecadesLisa Madigan is daughter of Michael Madigan, Speaker of the Illinois House every year since 1983 except 1994-1996. Clearly Democrats have been running Illinois into the ground for decades. Instead of attempting to fix those structural problems, Governor Quinn with "leadership" from Michael Madigan ... - Hiked the personal income tax rate from 3% to 5% (a 67% hike in rates).
- Hiked the corporate income tax rate from 4.8% to 7% (a 46% hike in rates).
Note that corporations also have to pay a 2.5% " personal property replacement tax" effectively making the state corporate income tax rate 9.5%. Blatant Lies By Governor QuinnThe Daily Herald notes that On the campaign trail, Gov. Pat Quinn told voters he'd veto any income tax hike that would raise Illinois' rate over 4 percent. I believe that is one of the fastest proven lies in political history. Illinois has not paid some bills since November, has a budget deficit of $8 billion, yet funds inane fishing programs, state fairs, swimming pools, and other nonsense. Such is the sad state of affairs in the worst-run state in the nation. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Junker Throws Hissy Fit, Lashes out at US and Japan; Merkel Toes the Trichet Line, Warns Against Inaction Posted: 11 Jun 2011 01:07 PM PDT German Chancellor Angela Merkel is going down in flames with ECB president Jean-Claude Trichet. Members of Merkel's own party are in a major dispute with the Chancellor about more Greek bailouts. Finland has had enough too. In spite of the Open Revolt Against Trichet wherein German Politicians Demand "Private Creditor Involvement", Merkel is proving to be as stubborn as Trichet. Merkel Warns Against InactionPlease consider Merkel Warns Against Inaction in Debt Crisis German Chancellor Angela Merkel said Saturday that it was important to help indebted European countries in order to assure that a global economic upswing, and Germany's economic health, were not undermined by further debt woes in the Euro zone.
In a message apparently intended to convince a skeptical German public that Greece and other struggling economies should not be allowed to default, Mrs. Merkel asserted that Germany's own economic recovery could be endangered. "If we don't act right, that could happen," she said in her weekly video podcast, "but that's exactly what we want to avoid."
"That's why we say that we cannot simply allow an uncontrolled bankruptcy by a country," Mrs. Merkel said, adding that Europe needed to see how it could help struggling countries improve their competitiveness and also allow them to reduce their debts. She did not mention Greece by name.
"We must do nothing that endangers the global upswing as a whole and would then put Germany in danger again," she said.
Wolfgang Schaeuble, the German finance minister, is pushing for Greece to get more rescue loans only if investors agree to get repaid seven years late on their Greek bonds. That would give the country more time to get a handle on its debt of 340 billion euros ($491 billion).
However, the European Central Bank, concerned about the reaction of the markets, says that Greece must not change the terms of its debt in ways that would put it in official default. Nevertheless, the head of a group that represents Germany's private-sector banks signaled readiness to discuss the proposal. Inaction IronyDid you catch the irony in the "Inaction" headline? Schaeuble wants action. So does the German parliament. So does Finland. Merkel does not want "action" per se. Nor does Trichet. Instead both want the type of action that amounts to a "free lunch". There is no free lunch, nor can bold holders have their cake and eat it too. Trichet and Merkel Need to Join Real WorldWhat cannot be paid back won't. Bondholders deserve to be punished for making stupid bets and taking stupid actions. At the insistence of Trichet, the ECB took stupid actions of buying Greek and Irish debt against the advice of the German central bank. The ECB should be punished for its action. Little kids who get caught with their hands in the cookie jar get punished. Trichet and Merkel are like whining crybabies throwing temper tantrums out of fear they cannot have their cake and eat it too. It's time both join the real world. Trichet in particular acts as if he is above the law. The law being the Maastricht Treaty. Junker Throws Hissy Fit, Lashes out at US, JapanJean-Claude Juncker, president of the Eurogroup finance ministers, is in competition with Trichet for winner of the coveted "Biggest Hissy Fit Award". Please consider Juncker: Greece Needs 'Soft' Debt RestructuringHighly indebted Greece needs a "soft, voluntary restructuring" of its debt, said Jean-Claude Juncker, the head of the group of countries using the euro as a common currency, in a radio interview Saturday.
At the same time, he lashed out at the U.S., calling their debt level "disastrous."
Backing proposals by German Finance Minister Wolfgang Schäuble, Mr. Juncker told Inforadio Berlin Brandenburg that private lenders need to participate in a fresh aid program for Greece, but only on a voluntary basis.
Also, any such move has to be made in a way that credit ratings agencies don't interpret as a credit default, he said. And it needs to be done without the "danger of infecting" other euro-zone members.
In exchange for any fresh program, Greece needs to make sure it reaches its 2011 fiscal targets, Mr. Juncker added. "If Greek policies continue as they have in the first six months [of this year], then they won't reach the budget target," he said, adding that any additional aid would be linked to very strict conditions.
Not withstanding the euro zone's problems, Mr. Juncker said that both the deficit and overall debt in the U.S. and Japanese economy are substantially higher than in Europe.
"The debt level of the USA is disastrous," Mr. Juncker said. "The real problem is that no one can explain well why the euro zone is in the epicenter of a global financial challenge at a moment, at which the fundamental indicators of the euro zone are substantially better than those of the U.S. or Japanese economy." Expect More Hissy Fits Is Junker's lashing out at the US and Japan supposed to calm the markets? What about Junker's repeated call for "soft restructuring"? We have seen a lot of creative names recently, including "reprofiling" However, default by any other name is still default. Recall that Trichet threw a fit and walked out of the meeting the last time Junker proposed "soft restructuring". Junker wants to help, but Trichet does not want that kind of help. Nor does Merkel who is in the same sinking boat with Trichet. Ironies, finger-pointing, and temper tantrums abound. Everyone wants "action" but there is no consensus as to what that action will be (except of course from the bond market that is signaling default). Signs point to more hissy fits this weekend and next week as well. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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