Mish's Global Economic Trend Analysis |
Posted: 12 Mar 2011 09:13 AM PST Several seriously misguided socialist fools sent me links to a Michael Moore video clip appearance on the Rachel Maddow Show. They thought the video was some kind of "proof" that public unions were being mistreated. Please consider Michael Moore Reacts To Wisconsin Union Vote: "This Is War" Michael Moore is enraged after the Wisconsin State Senate voted to strip public unions of the ability to collectively bargain. Speaking on MSNBC's "Rachel Maddow Show," Moore said "they think they can get away with this."Self-Serving Claptrap Please click on the above link to see the video. The sad reality is Moore makes hundreds of millions with his self-serving political claptrap and students are all the worse off for it. Student loans and public unions drive up the cost of education. Moreover, public unions drive up taxes and that is why parents of many of these kids are in serious economic trouble. Finally, as noted in Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You! the issue is one of slavery. No matter what grievances (legitimate or not) that Moore may have, slavery is never the answer. Yet Moore supports slavery as the solution. If this is "War", I say it's about time. The nation needs to abolish slavery, and the action in Wisconsin is a good start. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
European "New Deal" Debt Agreement is Same Useless Peer Pressure Model Posted: 12 Mar 2011 12:52 AM PST Eurozone leaders met in Brussels on Friday hoping to solve the European sovereign debt crisis. At the last minute Europeans Reach New Deal to Fight Debt Crisis. European leaders agreed early Saturday to new measures intended to end the euro zone debt crisis, offering the debt-laden Greece a cut in its interest rate and injecting more flexibility into the way a bolstered bailout fund for the euro can be used.Trichet's Rulebook Two-Step In clear violation of the "no-bail-out clause" in the Maastricht Treaty, the group voted to allow the ECB to directly purchase sovereign bonds. Note that the ECB is is already stuffed with sovereign bonds. It bought them in the secondary market because buying them in the primary market was against the rules. Flashback May 4, 2010: Trichet, a Monetarist Pussycat at Heart, Throws ECB Rulebook Out the Window While the ECB is prohibited from buying assets directly from authorities, it can buy them on the secondary market. Trichet said on May 2 that "at this stage, we have absolutely no decision on the purchase of government bonds."I said at the time "No Decision" means pussycat-hearted Trichet is considering it. And so it was. "No decision" quickly became a decision, in clear violation of the intent of the treaty. With strong objections from German central bank president Axel Weber, Trichet started loading up the ECB's balance sheet with garbage. Now the EU has voted to allow the ECB to buy bonds in the primary market but not the secondary one. As noted above, this bond buying debacle is not part of the Maastricht Treaty. Thus German voters need to ratify this provision. In effect, German Chancellor Angela Merkel just sold Germany down the river to meet her political goals. She will not survive this. Greece Gets Interest Rate Reductions, Ireland Doesn't The EU group also decided to stick it to Ireland, refusing to lower its interest rate although it did agree to modify the terms for Greece. Bloomberg reports Europe Boosts Bailout Fund With Primary-Market Purchases, Eases Greek Pact Euro-area leaders retooled their rescue fund to stamp out the debt crisis, authorizing the facility to spend its 440 billion-euro ($611 billion) capacity and enabling it to buy debt in primary markets, while cutting the cost of bailout loans to Greece.Kenny Holds The Line Will the real Kenny please stand up? The previous article makes it appear Kenny is about to collapse. A second Bloomberg article below makes it appear otherwise. Please consider Ireland Bid for EU Relief Rejected as Kenny Holds Line on Increasing Taxes. Euro-area leaders rebuffed Irish Prime Minister Enda Kenny's bid for easier bailout terms, demanding that Ireland raise tax rates in return, as they rewarded Greece with a cut in its rescue-loan costs.Raising Corporate Taxes a Foolish Tradeoff Kenny is a fool for putting himself in this position. Somehow the discussion is about pissy reductions in interest rates in return for unwise corporate tax hikes. The discussion ought to be on how big the haircuts will be. If Kenny comes to his senses, which is by no means certain, he should put the issue of haircuts to a vote. I think somewhere in the neighborhood of 15 cents on the dollar is about right. If put to a vote, German and French banks would be lucky to see anything at all. Watered Down Proposals In spite of all this talk about agreement to a new deal, no real issues were solved. It makes little difference if the ECB stuffs itself with garbage via the primary or secondary market. Neither way makes any sense. Moreover, Germany wanted strict rules on raising retirement ages, aligning corporate tax rates and on debt limit enforcement mechanisms. Instead, "after objections from a host of smaller countries, the proposals were loosened to allow countries to set their own targets. Sanctions are not envisaged, and the commitments nations enter into will be subject to peer pressure instead." Agreement To Do Nothing One way to get agreement is to agree to do nothing, which is essentially what happened. There is no agreement on tax rates, on retirement age, or on sanctions. As before, everything boils down to "peer pressure". Yet one of the reasons Europe is in a mess is that peer pressure does not work. Also note that we have not yet heard from Irish citizens who will be irate over favoritism to Greece. Perhaps they will force Kenny to get a backbone. The same applies to Merkel's willingness to play loosey-goosey with German voters and the Maastricht Treaty. Thus, for all the brouhaha about a "New Deal", nothing has changed except Greece has a slightly lower interest rate, and a few more years in which to "not" pay back its debts. Odds are still high that Greece and Ireland default. The only question is whether default occurs sooner rather than later. For additional information, please see yesterday's article ECB Stuck in Sovereign Debt Garbage, Seeks German Help to Unload It; Anger in Greece, Ireland; Germany Sets High Price for Bailout Changes Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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