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Bazooka Economics


By Stephen Lendman - Posted on 04 August 2012

  Bazooka Economics

 

by Stephen Lendman

 

Did he or didn't he? ECB president Mario Draghi promised "whatever it takes." Great expectations arose. August 2 was D-Day. 

 

Fizzle followed sizzle. Bazooka plans stalled. More on Draghi's pronouncement below and what it means.

 

Europe's economy is broken. Monetary intervention solved nothing. Core problems fester and grow. Contagion spreads everywhere. Effective solutions are absent.

 

Bankers are prioritized over sound economics. Western policy makers march to the same drummer. Ordinary people suffer. Poverty, unemployment, and deprivation grow exponentially. Nothing ahead looks promising.

 

On August 2, Draghi spoke. Markets want instant gratification. Disappointment followed. Der Spiegel headlined "ECB Disappoints Investors with No Euro Action," saying:

 

Promises became hope and uncertainty. It doesn't matter what Draghi said. He can't deliver. At best he can delay an eventual day of reckoning. Unaddressed systemic rot draws it closer.

 

Draghi said "(t)he Governing Council....may undertake outright open market operations of a size adequate to reach its objective. We will consider further non-standard....measures....In the coming weeks, we will design the appropriate modalities for such policy measures."

 

Implementation takes time, he stressed. Markets "only adjust once success becomes clearly visible." Governments must "activate the EFSF/ESM (European Financial Stability Facility/European Stability Mechanism)."

 

EFSF borrowing authority exists. It's capped well below what's needed. The late Bob Chapman estimated $6 trillion. What's available and likely is a drop in the bucket. Chapman predicted a certain train wreck. Only its timing is unknown. 

 

ESM authority is proposed. It's not in place. It's a permanent bailout fund. Creation depends on Germany's Constitutional Court and parliament. Judges must agree to change German constitutional law. 

 

Doing so requires national referendum approval. Perhaps legal requirements will be twisted to avoid it.

 

Parliament must then act. Doing so is planned for September. Betting odds suggest surrender. Chancellor Merkel long ago sold out to Brussels. 

 

Draghi wants authority to buy toxic sovereign debt. Doing so reshuffles a sinking ship's deck chairs. ECB's mandate prohibits it. Draghi's back door strategy failed. 

 

He loaned Eurozone banks $1.2 trillion. Hoped for sovereign debt purchases didn't materialize. Plan B calls for Draghi to do what troubled banks won't.

 

Conservative opposition is vocal. Senior German Finance Committee member Hans Michelbach said:

 

"The central bank under the leadership of Mario Draghi has pursued increasingly adventuresome contortions to get around the prohibition against state financing."

 

According to Christian Social Union general secretary Alexander Dobrindt:

 

"If the ECB buys sovereign bonds, it would be akin to state financing through the back door. The ECB would be leaving the path of monetary stability."

 

Concern is over triggering an inflationary spiral. Germans know their troubled history. Cooler heads want repeating what preceded the Great Depression, Hitler, and WW II avoided. Anything is possible when policy makers are unrestrained.

 

Draghi is a predatory banker. Once a Goldman Sachs alum, always one. People needs aren't his concern. Sovereign debt buying has strings. Crushing austerity is mandated.

 

Nations accepting aid must agree to Memorandum of Understanding terms. Doing so means surrendering fiscal sovereignty. Lower wages, higher unemployment, fewer social benefits, gutted pensions, and perhaps blood in the streets follow.

 

Key also is that everything tried so far failed. New policies rework old flawed ones. Failure again is certain. Half life successes get shorter.

 

Germany's Bundesbank opposes Draghi's scheme. So do conservative Bundestag legislators. Free Democrats (FDP) finance spokesman Frank Schaffler called the ECB "a state within a state, beyond any legal and political accountability."

 

Draghi goes his own way with full money power backing and most politicians willing or cowed to go along.

 

Reports from Germany say people are spending old D-marks. Retailers obligingly take them. The longer Europe's debt crisis festers, the more likely reinstatement is possible.

 

On January 1, 2002, euros officially replaced D-marks. They lost their legal tender status. Billions were retained. Germans again use them. 

 

They'd gladly trade euros for D-mark stability. Germany appears more willing. The late Bob Chapman said authorities began printing them months ago. The hand writing's on the wall. Growing numbers think the game is up.

 

Draghi schemes delay day of reckoning time but can't stop it. He may be gone when it arrives. Germany is Europe's funder of last resort. Draghi depends on its resources.

 

Throwing good money after bad puts Germany's financial stability in play. Perhaps its solvency if it goes too far. Greece died months ago. Spain's on life support and expiring.

 

Its needs exceed what deep pockets can provide. Its crisis is threefold - banking, sovereign and regional. Troubled Catalonia is Spain's most indebted region. 

 

It's broke. It suspended social service payments. Hospitals and other medical priorities go begging. Earlier budgets were slashed sharply.

 

Other Spanish regions have similar problems. Crisis grips the country. Madrid is insolvent. So are major banks. They need hundreds of billions of euros to meet liquidity needs. What's possible under ideal conditions isn't enough.

 

Massive capital outflows highlight the problem. On July 31, new Spanish central bank figures showed May amounts quadrupled year-over-year. 

 

Since summer 2011, the equivalent of about one-fourth of Spain's GDP sought safer havens elsewhere. It sounds like an obituary - a run on the entire country.

 

It's bad and worsening. The ECB and Eurozone countries haven't enough firepower to address it. Italy, Greece, and other troubled countries need help. Banks and sovereigns need massive amounts.

 

EFSF funds are capped. They're far below needs. If ESM is established, Spain and Italy must provide 30% of its funding, Germany another 30%. 

 

How can troubled countries contribute anything? What's ongoing reads like a Shakespearian tragedy. Bad endings are easy to predict. SNAFU defines them: situation normal all f..ked up.

 

Bazooka economic promises are hollow. Eurozone dissolution is inevitable. Only its timing is unknown. Imagine how much worse things will be when day of reckoning time arrives.

 

It's not confined to Europe. Troubled America faces its own moment of truth. It'll replicate troubled Eurozone countries when it arrives.

 

A Final Comment

 

The late Gore Vidal got it right. He called The New York Times the "Typhoid Mary of American journalism." It proves it daily. 

 

It cheerleads US imperial wars. It ignores mass slaughter and destruction. It's silent on banksters stealing us blind. It's comfortable with money power running America. 

 

It supports wealth, privilege and power. Its August 2 editorial headlined "Manana Bankers" showed it.

 

It asked "(h)ow bad do conditions have to get before" central bankers intervene. It's mindless of the ocean of easy money they created irresponsibly. It went to bankers, not economic growth.

 

They used it for speculation and greater consolidation. They stole public funds for their own benefit.

 

The Times wants more of a bad thing repeated. Failure "means trouble for everyone," it said. What are they waiting for, it asked?

 

Instead of explaining what's wrong and how to fix things, The Times endorses what helps bankers most. Let ordinary people eat cake....if they can afford it.

 

A Final Comment

 

The July US jobs report beat expectations. At the same time, it woefully underwhelmed. The headline U-3 number was 163,000. Report details were soft.

 

The private payroll diffusion index fell for the second straight month. At 56.4, it's down from 56.8 in June and 61.3 in May. Despite last month's headline number beating June's, breadth was lower in July.

 

Hours worked were flat. Up 0.1%, average hourly earnings barely budged. Work-based income gained the same meager amount. In real terms, wages contracted.

 

Hourly earnings year-over-year fell from 2% in June to 1.7% in July. The comparable weekly pace dropped from 2.3% to 2%.

 

Incomes are declining. Jobs created are poor ones. They're mostly low pay/low benefit part-time or temp ones. 

 

Economic uncertainty prompted greater savings. The opposite effect is less spending. In real terms, it's negative.

 

U-3 unemployment rose from 8.2% to 8.3%. U-6 stands at 15%. Real unemployment as calculated in the 1980s approaches 23%. It adds uncounted long-term (one year or more) discouraged workers U-6 figures ignores.

 

Without fictitious birth/death ratio over-counting, U-3 gained 120,000 jobs or less. The broader Household Survey was dreadful. It fell 195,000. 

 

Virtually all jobs lost were full-time. They dropped 228,000. They're down for three of the past four months. The employment rate dropped from 58.6% in June to 58.4%. Labor force participation fell from 63.8% in June to 63.7%. 

 

Small downward revisions showed May and June combined created 12,000 fewer jobs.

 

The U-3 headline number belies economic decline. Soft data confirm it. Expect continued weakness ahead.

 

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. 

 

His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"

 

http://www.claritypress.com/Lendman.html

 

Visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

 

http://www.progressiveradionetwork.com/the-progressive-news-hour

It is becoming sobering clear that we must reverse milleniums of class systems, with its degenerating class cycles, sliding into enslavement, "Bazooka (class) economics and growing insanity, mass psychosis, produced by class nationalism, that almost always leads to mass slaughter and War.   We saw it in the insanity of World War I and II, when every Western class state was gripped by its own irrational class patriotism, which amounted to a fight between a den of thieves, Western fascists, slaughtering each other, falsely claiming they were fighting Fascism, when it was a fight for which class empire would enslave the rest of the world.   The Western world supported Fascist Capitalism, fascist austerity and Hitler's threats to the nominally, semi independent Stalinist states, until Hitler, one of the thieves in the Capitalist den turned against other pro fascist Western class states.   The West did not lift a finger to help true resistance to Fascism, the attack by Franco's, Spain, forces and German Fascism under Hitler, when socialists, democratic forces were slaughtered in the onslaught and mass slaughter against civilians at Guernica.  Only after Hitler turned against other Western class states, capitalist rivals, did the Western class thugs turn on each other, like a den of thieves. Contrary to the mass psychosis, insanity, induced by all Western class states, World War I and II was not a war to end all wars, but to re draw which class empire would come out at the top of the heap.


 Mad Dog Leaders Threaten Humanity


http://warisacrime.org/content/mad-dog-leaders-threaten-humanity


excerpt:


"A common thread defines Obama and Netanyahu. Their agenda threatens humanity. Both head modern-day Spartas.


Israel is very much involved in Washington's war on Syria. At issue is destroying another independent state, murdering thousands, planning more wars, and threatening the entire region and beyond.


 


Iran is next in line. Saber rattling combines with war by other means. It includes sanctions, subversion, instability, cyberwar, targeted assassinations, other disruptive actions, and relentless scoundrel media vilification and fearmongering.


On August 3, Haaretz headlined "King Bibi in trouble." Poll numbers show a 60% disapproval rating. It's not for institutionalized militarism and belligerence. It's about new budget cuts hardening neoliberal harshness.


 


Most Israelis are fed up with what harms their well-being. Their narrow definition omits likely blowback from regional wars and more planned. Conflict rages cross border in Syria. If attacked, Hezbollah can respond in kind.


Key is whether Israel plans bombing Iran's nuclear facilities. Doing so is lawless, madness, and self-destructive. Nonetheless, heated rhetoric suggests it's possible...."


 


As I wrote in my response to another article here, these class systems have been ongoing for milleniums of years, and Amerika's re-establishment of crippled class republics, class democracies, through Late Capitalism, restarted the degenerating class cycles and its proto fascist process that slides into totalitarianism, and mass psychosis, instigated by psychotic class politicians.   Fascist Germany used fascist austerity and mass psychosis, class nationalism to defend German totalitarian Captialism. Today, the Western world and other insane, political mad alliances are once again ready to produce the madhouse of class thugs, a den of thieves to destroy each other and possibly the world, using fascist austerity, fascist alliances in the false hope that one of them comes out at the top of the heap, when nuclear war wil end all wars, as falsely promised by these pscyhopathic class politicians. 



 

excerpt:

 


"....Obama, the democratic party, republican party, all class parties around the world have been involved in degenerating class cycles, a proto fascist process which begins with the crippled class republics, whether Plato's republic or the German, Weimar, capitalist regime devolving towards its own embrace of emergency, fascist laws until full police dictatorship comes into being.   Obama and Amerika have gone through this degeneating class cycles, proto fascist process, also embracing emergency, fascist police laws, forming global fascist, military alliances with NATO AND ISRAELI FASCISTS.   We are now on the cusp of WAR AND FASCISM, where all class politicians, routinely lie, create false propganda, provocations, economic war and covert War, that could lead to regional war STARTED OR PROVOKED BY WESTERN FASCISM OR EVEN THROUGH FALSE FLAG OPERATIONS, NON EXISTING events, as the Gulf Tonkin War started the Vietnam war which destroyed millions of Humans in their FASCISM..."



 


When the failed class state of Amerika put Late Capitalism back on its feet, it supported fascist, military, thugs/regimes, not democratic institutions and put it on a proto fascist course where we are at today, namely Global fascist austerity, global militarism, global psychotic class politicians, warmongering thugs, outright fascists, whether it is the democratic party, Obama, republicans, or any class party around the world. We are seeing two responses, one social, which uses words like insanity, psychosis, psychotic, sociopaths to describe the rotten outcome of another failed class system with its failed class states.  The other side only responds by becoming more lunatic, more reckless, as in this development, the rot of class nationalism by Western Security Council member class nations has spread to the General Assembly itself, because religious fascist nationalism, Sunni vs Shiite has insuated itself in a fascist alliance with the West, that is on the verge of World War III.


General Assembly Vote On Syria: World Gone Unipolar - And Mad


http://www.opednews.com/articles/2/General-Assembly-Vote-On-S-by-Rick-Rozoff-120803-429.html


excerpt:


On August 3 the United Nations General Assembly voted on a resolution written by Saudi Arabia condemning both the government of Syria for the preponderance if not all the violence in the country and Russia and China for not conceding to Western and Persian Gulf monarchies' demands for "regime change" in Damascus....


Along the lines of the fable by Aesop, the world's nations will either bell the cat or be devoured by it one by one..." 


(Translation: When you have secular fascist alliances like Israel, NATO nations, promoting totalitarianism, and Sunni fascists in an alliance with maintaining totalitarian monarchies, we have a den of fascist thieves ready to murder each other and the wold with it--comment by me/social change)


"........The Israeli official condemned the "Assad killing machine" and claimed "Assad's Council of Terror continues to operate ruthlessly in Damascus."


Again for anyone who believes that the General Assembly vote and its predecessors in the General Assembly, the Security Council and the Human Rights Council are targeted exclusively - or even primarily - at Syria, he added the absurd contention that "on Assad's advisory board sit Ahmadinejad and Nasrallah, who offer him guidance on how to butcher the Syrian people more effectively," in allusions to the Iranian president and the leader of Hezbollah. His accusations also included this: "The outside forces that have been instrumental in the slaughter in Syria speak in a Persian accent."


And, he continued to rant, "It is time for the international community to hold all three members of this "trio of terror' accountable for their crimes."


The resolution also called for the securing, perhaps the confiscation, of Syria's chemical and biological weapons. The Israeli envoy said in regard to that demand: "We shouldn't pretend a regime that cuts throats of children today will not be prepared to gas them tomorrow."


The 133 supporters of the resolution have not only singled out the Syrian government for the violence in the country, but in so doing have whitewashed not only the crimes of foreign-armed rebels but those of Israel, Saudi Arabia, the U.S. and its NATO allies who, moreover, slay thousands not on their own territory but on that of other nations.


Attention has been deflected from decades-long unresolved violence and injustice from Palestine to the Western Sahara in favor of portraying the Syrian government, in increasingly hysterical and bellicose tones, as the world's ultimate bete noir in order to pave the way for Iran to fill the role next and, even more ominously, as the gravest step yet in challenging and confronting Russia and China...."


 


Yes, the first social theorists in ancient Greece, predicted this course of proto totalitarianism, degenerating class cycles, from crippled class republics, crippled class democracies, which would morph into class tyranny, class "tyrants" and the permanent MASS PSYCHOSIS induced by psychotic class politicians that produces the permanent militarism, totalitarian alliances, today not only Western global fascists, but new challangers, Al Quaida, Sunni fascists in an alliance with FASCIST ISRAEL, FASCIST NATO, FASCIST AMERIKA, ALL ON A DEATH WISH, TO PROMOTE THEIR CLASS/RELIGIOUS DELUSIONS, WILLING TO DESTROY THE WORLD:


Friday's Jobs Report: More Lies From "Our" Big Brother


http://www.opednews.com/articles/Friday-s-Jobs-Report-More-by-Paul-Craig-Roberts-120803-70.html


                                                                                                                                                                                                                                                         

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