Submitted by Leo Kolivakis, publisher of Pension Pulse.
A follow-up to yesterday’s comment on the giant experiment, someone sent me a WSJ blog article stating that Cerberus’s equity stake in Chrysler’s auto company to be eliminated:
Cerberus Capital Management will lose its equity stake in Chrysler LLC’s struggling automotive company as a condition of the Treasury Department’s bailout deal with the U.S. auto maker, according to several people familiar with the matter.
The New York private-equity firm purchased an 80% stake in Chrysler in 2007, promising to bolster the auto maker’s performance by operating as an independent company. The plan, however, collapsed due to an unprecedented slowdown in the U.S. auto industry and a lack of capital at the auto maker to weather the storm.
One Obama administration official, speaking on the condition of anonymity, said Cerberus’s equity stake no longer holds value and said the firm’s ownership will come to an end. In term sheets released by the Treasury Department on Monday, the government said Chrysler’s restructuring “at a minimum will require extinguishing the vast majority of Chrysler’s outstanding secured debt and all of its unsecured debt and equity.”
Cerberus will maintain a controlling stake in Chrysler’s financing arm, Chrysler Financial, according to two people briefed on the plan. Cerberus will utilize the first $2 billion in proceeds from its Chrysler Financial holding to backstop a loan allocated to Chrysler automotive in December by the Treasury Department.
In December, when Chrysler was lobbying Congress for financial support, Cerberus said it would make considerable concessions in order to encourage the government to prop the auto maker up, including surrendering equity, foregoing profits and giving up board seats.
“A viable long-term restructuring of Chrysler’s auto manufacturing business will require concessions by all relevant constituencies,” Cerberus said in a statement at the time. “In order to achieve that goal Cerberus has advised the Treasury that it would contribute its equity in Chrysler automotive to labor and creditors as currency to facilitate the accommodations necessary to affect the restructuring.”
Cerberus still holds a portion of Chrysler’s secured debt, and that likely will also be restructured under new terms the Obama administration is laying out for Chrysler.
The Treasury Department lent Chrysler $4 billion in December, and is considering lending billions more to keep it afloat.
The move comes as Mr. Obama’s auto task force is looking to hammer out over the next 30 days an alliance between Chrysler and Italian auto maker Fiat LLC. The government is offering an additional $6 billion in capital if the two sides can hammer out an acceptable deal.
Fiat would take a stake in Chrysler in exchange for giving the auto maker technology, such as fuel-efficient car platforms and engines. Under the deal, Fiat would be required to build cars and engines in the U.S., and Chrysler would have to pay back the $6 billion before Fiat can take control of Chrysler.
Global Pensions reports that interim loans advanced to General Motors by the governments of Canada and Ontario cannot be used to shore up underfunded pension liabilities:
In a joint statement, the two governments said they would advance up to C$3bn (US$2.4bn) to General Motors of Canada and C$1bn for Chrysler Canada to assist the companies while they undertake additional work as part of their ongoing restructuring efforts.
But it said the loans could not be used for pension scheme funding or to pay off debts to parent companies or taxes.
Canada minister of finance Jim Flaherty said: “Together with the Government of Ontario, we are working in conjunction with the US Government to create a viable industry and to maintain Canada’s share of Canada-US production going forward.
“The interim loans to General Motors and Chrysler reflect our priorities to both protect our economy and exercise firm oversight over taxpayer dollars.”
Canada minister of industry Tony Clement said: “While the restructuring plans represent progress, they do not go far enough to ensure the long-term viability of these companies.“Therefore, we are not certifying their proposals. Together with our US counterparts we believe that further fundamental changes are needed.”
In conjunction with the US Government, the governments of Canada and Ontario are requesting that both companies undertake additional work to ensure their future competitiveness and that all stakeholders contribute appropriately to improving the overall cost structures in their plans.
It will be interesting to see how unions handle the contentious issue of underfunded pensions at the big auto companies. All I can say is that they’d better take a closer look at the health of their pension plans and get outside expert advice to make sure they are being properly managed.
In other pension news, Dutch pension funds ABP and PME announced their recovery plans:
The €208bn (US$281bn) ABP pension fund will increase contributions by 3 percentage points, withhold indexation and de-risk some of its investments in a bid to return to solvency within five years.
The scheme, which saw its coverage ratio fall dramatically as a result of the financial crisis, announced a 1 percentage point increase to contributions as of 1 July this year, with a further 2 point increase between January 2010 and 2014, and changes to its risk allocation.
Doing so, ABP said it hoped it would be able to protect member benefits and not have to cut payments, although it added indexation would not take place.
The fund also said it would reduce the risk of its investments during the recovery period, as required by the FTK law which governs pension plans.
In a statement, ABP chairman of the board of governors Elco Brinkman said “We must now take measures to make ABP healthy again in both the short and long term. We will do all we can to avoid reductions of pension rights.
“Unfortunately, the measures have consequences for our participants and former participants. We have strived to distribute the worst effects in as balanced a manner as possible between employers, employees, former participants and pensioners.”
ABP said it projected a return to minimum solvency in four years and expected to reach a funding ratio above the minimum 105% within five years, reducing the need for drastic measures.
At the end of 2008 its coverage ratio stood at around 90%. It added, even without alterations to its contribution, indexation and risk policies, it would return to solvency in this time.
The fund added it hoped to return to ‘full’ funding of 125% within 13 years and would monitor the situation. If the economy improved more rapidly than projected, it would revise its recovery plan and reduce contributions accordingly.
Should the situation deteriorate, it reserved the right to make further changes.
Under Dutch law, all pension funds with a funding level below 105% must submit a recovery plan to the Dutch pensions regulator De Nederlandsche Bank (DNB) ahead of 1 April.
In late February by the Dutch government announced an extension to the recovery period, from three years to five, as a result of the severity of the crisis and uncertainty over the global economic outlook (Globalpensions.com; 23 February 2009).
The €18.7bn Dutch metal workers’ pension scheme PME also announced details of its recovery plan.
The fund, which saw its coverage ratio fall from 135% at the end of 2007 to 90% by the end of 2008, said it expected to reach 105% solvency in five years.
It would achieve this through a 1 percentage point increase in contributions, from 22% to 23%, and by not offering indexation on pension payments while the coverage ratio remained below 105%.
Yesterday, the health service retirement system PFZW announced details of its own recovery plan, which would see pension indexation frozen for four years (Globalpensions.com; 30 March 2009)
As you can read above, Dutch laws take pension funding very seriously. If a pension fund is underfunded, it has to present a recovery plan to authorities and follow-up on its progress on returning to minimum solvency again.
But there are bigger issues at hand. As leaders prepare to meet in London for the G20, the London Times reports that France’s President Nicolas Sarkozy threatened to walk out of the global summit:
President Sarkozy yesterday threatened to wreck the London summit if France’s demands for tougher financial regulation are not met.
France will not accept a G20 that produces a “false success with language that sounds good but contains no commitments”, his advisers said.
Asked if this meant a possible walk-out, Xavier Musca, Mr Sarkozy’s deputy chief of staff for economic affairs, said: “A basic rule with nuclear deterrence is that you do not say at what point you will use the weapon.”
The French threat dramatically raised the temperature hours before President Obama arrives in London today. If carried through, it would ruin a summit for which Mr Brown and Mr Obama have high ambitions, believing it vital to international recovery.
Mr Sarkozy, who blames the “Anglo-Saxons” for causing the economic crisis, told his ministers last week that he would leave Mr Brown’s summit “if it does not work out”.
A deal to tighten regulation will be one of the key features of the G20 accord but France wants a global financial regulator, an idea fiercely opposed by the United States and Britain. Mr Brown has described the notion as ridiculous.
Germany and other nations are reported to be against a global regulator and sources said that President Sarkozy must know that the proposal would not make progress.
Instead, countries will agree that their national regulators should cooperate more. So-called colleges of supervisors are likely to be established to monitor the activities of companies that operate in several countries.
British officials said it looked as if Mr Sarkozy was picking a fight he could present as a victory back home.
Mr Sarkozy’s threat underlines the emerging splits between world leaders. Germany and France have led opposition to plans to coordinate public spending, championed by the Administration of President Obama.
The importance of action to ease the economic decline will be underlined today by a report from the OECD, the umbrella group for Western democracies. It now expects the economies of its 30 member nations to slump by 4.3 per cent this year, against the 0.4 per cent drop that it forecast last November.
The group also warns that unemployment will reach 10 per cent by next year in most developed nations.
The Toronto Star reports that British Prime Minister Gordon Brown called today for a new morality in the halls of high finance as he sought to set a positive note for the sharply divided meeting of G20 world leaders:
Brown has been grasping for ways to bring a sense of unity to Thursday’s meeting of the G20, which includes major economies from around the globe.
But his hope that leaders would agree to kick-start their economies with massive new government spending has been pushed aside after strong objections from European nations led by Germany and France.
And, on the eve of the summit, a report on French President Nicolas Sarkozy’s attitude toward the whole exercise has added to the internal tensions within the G20. The French daily Le Figaro is saying that Sarkozy has told associates he will walk out ofthe conference if nations do not agree to his radical proposal to bring financial markets under international regulation.
The idea is a non-starter with the United States, Britain and some other G20 countries.
With many of the leaders – including U.S. President Barack Obama and Canadian Prime Minister Stephen Harper – scheduled to arrive in London later today, Brown continued his intense efforts to set the stage for the meeting on the global economic recession.
In a speech at London’s historic St. Paul’s Cathedral, he sought to speak to the growing public conviction in Britain and elsewhere that the current financial meltdown was the result of unrestrained greed and risk-taking by banks and financial houses with an international reach.
“I believe that the unsupervised globalization of our financial markets did not only cross national boundaries – it crossed moral boundaries,” he said. “Most people want a market that is free, but not values-free, a society that is fair but not laissez-faire.
“And so across the world, our task is to agree global economic rules that reflect our enduring values.”
Restoring faith in financial markets will be one of the key aims of G20 leaders. Although the summit is unlikely to adopt the French idea of international control of banks, the leaders will endorse the imposition of a new era of tighter control of financial institutions by individual governments.
The meeting begins with a working dinner hosted by Brown tomorrow night, followed by formal discussions on Thursday.
The G20 has its work cut out for them. According to the latest IMF forecast, global activity is expected to decline by around ½ to 1 percent in 2009 on an annual average basis, before recovering gradually in the course of 2010:
Turning around global growth will depend critically on more concerted policy actions to stabilize financial conditions as well as sustained strong policy support to bolster demand.
- Restoring confidence is key to resolving the crisis, and this calls for tackling head-on problems in the financial sector. Policymakers must resolve urgently balance sheet uncertainty by dealing aggressively with distressed assets and recapitalizing viable institutions.
- Since financial market strains are global, greater international policy cooperation is crucial for restoring market trust. Monetary policy should be eased further by reducing policy rates where possible, and supporting credit creation more directly.
Delays in implementing comprehensive policies to stabilize financial conditions would result in a further intensification of the negative feedback loops between the real economy and the financial system, leading to an even deeper and prolonged recession.
Two additional issues will have a significant impact on the outlook: the effectiveness of the fiscal policy response to the crisis; and external financing risks and banking sector vulnerabilities in emerging economies.
The G20 needs to unite and tackle the most serious global economic slowdown in post-war history. In doing so, it needs to consider ways it can curb the negative effects of Casino Capitalism on the real economy and on retirement plans.
On October 10th, 2008, I asked whether the G7 will prevent Dow 3600. So far, it looks as if that disaster was averted.
But we are not out of the woods yet. The leaders of the G20 need to reconcile their differences, fight mounting protectionism, and come up with a coordinated response to this global crisis.
As the masses gather in London to march and protest, there is a global awakening happening across the world. People are fed up with the way politicians have handled this crisis, pandering to the financial oligarchy.
Finally, take the time to read Michael Hudson’s latest counterpunch article, Financing the Empire. I quote the following:
The financial oligarchy’s idea of “regulation” is to make sure that deregulators are installed in the key positions and given only a minimal skeleton staff and little funding. Despite Alan Greenspan’s announcement that he has come to see the light and realizes that self-regulation doesn’t work, the Treasury is still run by a Wall Street official and the Fed is run by a lobbyist for Wall Street. To lobbyists the real concern isn’t ideology as such – it’s naked self-interest for their clients. They may seek out well-meaning fools, especially prestigious figures from academia. But these are only front men, headed as they are by the followers of Milton Friedman at the University of Chicago. Such individuals are put in place as “gate-keepers” of the major academic journals to keep out ideas that do not well serve the financial lobbyists.
This pretence for excluding government from meaningful regulation is that finance is so technical that only someone from the financial “industry” is capable of regulating it. To add insult to injury, the additional counter-intuitive claim is made that a hallmark of democracy is to make the central bank “independent” of elected government. In reality, of course, that is just the opposite of democracy. Finance is the crux of the economic system. If it is not regulated democratically in the public interest, then it is “free” to be captured by special interests. So this becomes the oligarchic definition of “market freedom.”
The danger is that governments will let the financial sector determine how “regulation” will be applied. Special interests seek to make money from the economy, and the financial sector does this in an extractive way. That is its marketing plan. Finance today is acting in a way that de-industrializes economies, not builds them up. The “plan” is austerity for labor, industry and all sectors outside of finance, as in the IMF programs imposed on hapless Third World debtor countries. The experience of Iceland, Latvia and other “financialized” economies should be examined as object lessons, if only because they top the World Bank’s ranking of countries in terms of the “ease of doing business.”
The only meaningful regulation can come from outside the financial sector. Otherwise, countries will suffer what the Japanese call “descent from heaven”: regulators are selected from the ranks of bankers and their “useful idiots.” Upon retiring from government they return to the financial sector to receive lucrative jobs, “speaking engagements” and kindred paybacks. Knowing this, they regulate in favor of financial special interests, not that of the public at large.
The problem of speculative capital movements goes beyond drawing up a set of specific regulations. It concerns the scope of national government power. The International Monetary Fund’s Articles of Agreement prevent countries from restoring the “dual exchange rate” systems that many retained down through the 1950s and even into the ‘60s. It was widespread practice for countries to have one exchange rate for goods and services (sometimes various exchange rates for different import and export categories) and another for “capital movements.” Under American pressure, the IMF enforced the pretence that there is an “equilibrium” rate that just happens to be the same for goods and services as it is for capital movements. Governments that did not buy into this ideology were excluded from membership in the IMF and World Bank – or were overthrown.
The implication today is that the only way a nation can block capital movements is to withdraw from the IMF, the World Bank and the World Trade Organization (WTO). For the first time since the 1950s this looks like a real possibility, thanks to worldwide awareness of how the U.S. economy is glutting the global economy with surplus “paper” dollars – and U.S. intransigence at stopping its free ride. From the U.S. vantage point, this is nothing less than an attempt to curtail its international military program.
Michael has written a series of excellent articles on the financial crisis and it’s too bad none of the G20 pea brains read any of them. I also doubt they are aware of the pension crisis threatening public finances across the world.
I remain deeply skeptical that the leaders of the G20 will come up with any serious solutions to this global financial crisis. The masses will march and protest in vain as their voices will not be heard.
Who knows, if they’re lucky, they might get to hear another live concert by Coldplay (see video below). That might help distract them till the next G20 meeting where they’ll be fed more empty promises.
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The French insistence on a global regulator makes sense if you recognise that the current EU system without an EU supervisors and a patchwork of colleges of supervisors instead has proven inadequate for this crisis.
The EU Internal Market requires an EU regulator. Some recognised that a long time ago, before the crisis, but that was politically impossible to sell at the time.
Hence, there was a difference between what made sense and what was politically doable. It is only now that the EU, including France, is getting serious about true about some form of (not full) EU financial supervision.
It is not impossible that we are seeing the same thing in connection with G 20. As often said on these pages, markets are global but current supervision is fragmented or even non-existent, which has been a big contributing factor to the current crisis. Without serious reform of global supervision, beyond what until now has been thought “possible”, may be necessary in order to avoid future crisis in the same way as separation of financial institutions into utilities and casinos may be necessary.
I will not defend the French proposal because I do not know the the details of it. However, if you look at the G 20 conclusions from Washington in November they are, as I recall, clear on the need for profound reform of (global) supervision. If Obama and Brown now are backing down from that pledge, the French threat should be viewed in that light.
If the Realpolitik of the situation is that the U.S. and the UK are saying “non” because of internal, domestic, political considerations, perhaps they deserve to be walked out upon by the French.
We will see clearer in a couple of days time.
For the record: The last time the French said “non” to the U.S. and the UK in a similar way was in the UN Security Council in the run-up ot the Iraq war. I will leave it to you all to consider whether you think that that was the right approach AT THE TIME.
As the French say; Mieux vaut un échec qu’une faux succès.
I have been reading Michael Hudson for years. He is very original and offers some pretty keen insights. I am glad you discovered him. Unfortunately he comes with an agenda. He is basically a marxist or neo-marxist or whatever you call it. He is also fairly obscure in his writing which makes it sound more profound than it it. This style of writing is popular with the left.
Also he is bad at math and often makes incorrect mathematical arguments. For example, he once claimed that y=x^2 was an exponential function (y=2^x is exponential).
But I still enjoy his writing. I recommend this piece by him.
http://www.michael-hudson.com/articles/debt/0406SavingInflationDeflation.html
The decidedly negative depiction of our prospects appeared sound since last fall. At the same time I’d propose that all hope is not lost for real political change, even if we are in a financial oligarchy. Hear me out:
The perpetuation of the current system relies on a pretty big assumption: Finance can only be trusted to financiers and academics. This will only hold so long as people consider financial products as fundamentally similar to industrial products. Put another way, the co-optation of governments will only be tolerated so long as we believe that simply because people have money they are fundamentally better equipped to make decisions about money.
Once that myth is busted politicians are freed from this crushing ideological constraint. This doesn’t mean they will do anything with this new freedom, or that cognitive capture will magically disappear, but it satisfies a necessary condition for the large scale social change needed to address the heart of the crisis.
Yes, some of this is simple Marx, but sometimes I think people forget that Americans truly do believe that if you’re poor you’ve done something to deserve your poverty, and if you’re rich you’ve done something to deserve your fortune. This monetization of morality has had more significant and subtle effects on the structure of society than you might imagine – note that the only people who are even allowed to seriously discuss this concept are academics, immediately labeled Neo-Marxist and often part of marginalized disciplines. It’s all connected, unfortunately.
I always thought Hudson to be a Georgist, which is a lot different from being a Marxist.
Re: “CAPITALISM ISN’T WORKING”
And again the stupid masses are blaming capitalism, which is exactly what the “elites” want. Governments and government protected class of looters (called “capitalists” by idiots) have caused the current crisis. And now the unwashed masses are calling for more government! And they will get it, coupled with more power for the “elites”
YVES, I do thoroughly follow and enjoy your unsurpassing analysis and commentary. I recognise that these times call for a sceptic view and a critical eye, to be able to make sense of what is going on around us.
However, I think that your quotes and own personal views are beginning to shift too strongly to the left for my liking.
Pity, I would say! What would be the point in advocating yet again a proven dead end social solution? Would it not be better instead to carry on trying to “fix” what we have with clear, clever, concise and unbiased rational analysis?
Or perhaps, this has always been the actual underlying tone and I just failed to notice it! Bugger!
3:28, you don’t pay much attention.
First, this is a guest post.
Second, you are calling left leaning solutions “a proven dead end?” Let’s see, the US, which embraced deregulation (both by liberalizing rules and neutering the regulators) has driven the GLOBAL economy over the cliff? It’s the right that looks dead end to me.
Germany, which Americans like to deride, had good growth, good social safety nets, great infrastructure, and has been an export powerhouse despite the shock of having to absorb Eastern Germany.
But no, you prefer fact free ideology.
Maybe we should stick to discussing issues instead of labels?
“Americans truly do believe that if you’re poor you’ve done something to deserve your poverty, and if you’re rich you’ve done something to deserve your fortune”
Exactly. It is kind of ironic that American ancestors immigrated from Europe partly because of rather strict and rigid class society with haves and have-nots.
Now they have created very similar class society with Economic Royalty. American society today is much more rigid than most western European ones. Little upward social mobility, meaning poor stays poor, contrary to the popular myth of “American Dream”.
3:39 Ives, but that was your guest post! And I guess you manage your content to be in line with the overall character of your blog. There cannot possibly be any other way, as there is simply too much online content and the resources are simply too scarce!
But anyway, you must be kidding right? Of course there have been made huge mistakes, primarily concerning the (mis)running of the financial markets. But today’s crash is simply the result of a very long road of economic and social development.
Maybe the US, in leading the way, got it wrong, but would you deny that in the meantime the whole world had a jolly good free ride while it lasted? Or are you arguing that Germany, France, Russia, China, Brazil and the rest could have gotten to where they are and so fast in particular, independently of global finance and the more general globalisation trends?
C’mon, did you ever spend some time in the USSR, Cuba, China, etc? Have you ever red anything about the successes of central planning?
I guess we are going off track here. But maybe you get my point. I guess I am more concerned in learning about what went wrong and how can we tweak it to make it better, rather than going back to the eternal debate between left and right!
The soup was awful thin here, but at least they knew how to move em’ in and out.
Benny finally turned the corner and got an instant reprieve from the arctic blast that made his eyes tear and his cane wobble from side to side.
Most of the people in his line stared down at the ground and shuffled forward. Any sound they made was lost to the howl of the wind rush down the cavernous street behind him.
But not all sound was lost.
Benny stared across the street to the other line, which today was nearly as long as his. A few in the other line noticed the old man staring, and soon a chorus of rude taunts and gestures from the line of middle-aged men across the street were being hurled his way.
Benny couldn’t imagine being a parent of one of those men; the shame would break his heart.
He looked at the fine suits worn by the other men; suits once cut to fit but now falling off the shoulders of more than a few. He looked at his own clothes and rubbed the stubble on his cheeks and noticed most of the others in his own line looked the same.
Ahead, the end of the line. It was occupied by a hawk-nosed man with an uncompromising ladle and a dour look. The soup man had grey skin, the color long washed out by the dull fluorescent light he lived under.
Benny thought about the man at the end of the other line.
A clamor erupted across the street and Benny saw the problem right away; a kid, just some kid, was standing in that line valiantly resisting all the pushing and shoving trying to get him out.
Foul language echoed between the tall buildings as they told the kid he didn’t belong in the line. The kid kept one toe sacredly planted at his place in line as he was pushed this way and that. Out of the kid’s line of sight, an athletic-looking man with a smile plastered to his face snuck up behind the boy in a creeping crouch. He came up out of his crouch and took three giant strides before coming off his feet to deliver a vicious kick to the middle of the child’s back.
The boy still had a toe pointed down as he sailed through the air and landed well into the street.
The kick would have killed Benny but the boy got right up and gave his assailant the finger while tears rolled down his cheeks.
Howls of laughter erupted from across the street and the assailant was roundly congratulated. Benny caught pieces of his bragging that he learned martial arts from some famous name or another.
Even now, the line of ex criminal banksters and ex Wall Street executives displayed their primal need to sport their brand-name existence as they stood in line to demand their entitlements from Santa.
Even now they could be heard mocking Santa and his socialist ways.
Coldplay is terrible.
Why Cold play? THey aren’t even in the G20 Unofficial Playlist:
http://www.youtube.com/watch?v=VtDabC2QF0s
@Adam Smith…
That’s good fun, hah. The bastards.
Anyone got a link for a live feed of the summit?
If you had a global regulator what regulations would they pick. Would they pick some of the regulations that seem to work, like loan to values limited to 80 percent in Canada or the bank capital requirements of Spain. Having a global regulator means most countries have a minimal adjustment to make while the US economy just is not set up to work with a conservative approach to finance. It would be political suicide for Obama unless the adjustments were phased and even then it would be unpopular. Houses prices would have to fall significantly further and car production would continue to dive.
The message from the G18 will be the US needs to change and take a different attitude to finance, home ownership, car ownership and saving. This is why there will be very little except waffle from the G20.
It is quite possible that if nothing concrete comes out of this G20 meeting, it will be the last.
Wow.
Pictures of Euro Protest…followed by a Michael Hudson passage on “US as hegemon”…with the delicious topping of a Sweedish Lex call for a single, no doubt, Euro Regulator.
If I had to choose my favorite part of all this, it’s a toss up between the well-intentioned co-ed who evidently forgot the “s” at the end of “G20 are PEA BRAIN(s)” and just crammed it in the corner…or… checking out Michael Hudson’s oh so provocative newsletter.
Ooooh…The US is financing a military empire as it battles the Middle East…penetrating stuff!
I understand the nostalgia associated with Europe and the attendant Euro Envy…but please—if you have a problem with capitalism and/or the state of the global economy—please stop looking to Europe for answers. It’s a dead end.
Hudson is a Euro Envy Leftist who simply takes Marx’s view that it’s “all economics” and adds an addendum that “it’s all economics for military dominance”. It’s just not that insightful. It’s a soundbite around he can spew provocative nonsense.
Why don’t the Hudsons ever take even a moment to consider the economics of the fact that Europe in relation to its marginalized Arab and Persian citizens is essentially pre-apartheid South Africa?
If the Left thinks that Capitalism’s “Grow or Die” mantra has run into a wall of environmental sustainability—it’s certainly a fair and worthwhile argument.
But the Left will get nowhere in this debate by appealing to the dead, barren cultures that result from socialized democracies.
I know readers of this blog love to state how “empirical” they are…so I have to ask:
Why are so many countries who are both democratic and socialist-leaning dying demographically? And why, if you really want make a persuasive case for reform would you appeal to these dying cultures for guidance?
There’s a reason that Euro Leftists are so strongly influenced by a story like #1 in today’s April Fool’s Links: “The earth’s population exceeds its limits.”
That reason is Projection.
Why are so many countries who are both democratic and socialist-leaning dying demographically?
because birth rates are lower there. of course the US is also dying demographically, but has done well secondary to immigration.
or are you suggesting that we should emulate the places that are thriving demographically? specifically Africa, Latin America, and the Middle East?
should we adopt dictators or monarchs and live under religious regimes so that we can thrive demographically?
Yves, I’ve removed Naked Capitalism from my list of Favorites on my computer permanently because of Kolivakis’ referencing of that deranged Leftist site, Counterpunch.
If your site includes Kolivakis, the name should be “Naked Socialism.”
Yves, you let the positive impact a year or so of hard work and generally outstanding posts dissipate instantly when you opened your blog to ideas from Counterpunch.
“Yves, you let the positive impact a year or so of hard work and generally outstanding posts dissipate instantly when you opened your blog to ideas from Counterpunch.”
Yeah Yves, get rid of “Kolivakis” and all his socialist crap because it offends a few of your readers.
Give me a break! Counterpunch is one of the many sites I visit because it offers fresh perspectives that you simply will not read anywhere else.
I am not always in agreement with everything written there or anywhere else.
Let me state flat out that I am not a closet communist or socialist. A little book called “Animal Farm” convinced me of the failures of communism.
But the alternative economic system which has developed into brutal free market capitalism which only serves the needs of the few financial oligarchs is also doomed to fail.
Pushed to its limits, this type of “laissez-faire” capitalism will kill the system.
We need to expose the lies, the myths, the interests of the few elites and restore democracy to serve the many, not the few.
One thing worth noting is that inequality between the rich and the poor has widened under the Republicans and Democrats.
In fact, inequality is getting worse around the world, opening the door to social upheaval and a virulent nationalism.
The G20 has to address this by implementing policies that will promote prosperity for the many, not the few.
But I am not holding my breath. these meetings are great for PR, but little ever comes out of them.
Regards,
Leo Kolivakis
@Leo: Unfortunately far too many people in this country see everything through a simplistic black and white ideological lens. It’s quite sad, actually, and largely responsible for the predicament we’re in today. Keep up the good work.
im sure marx would like the sound of Government Motors
It’s so predictable that a person who sympathizes with ideas found on the far Left of the political spectrum starts whining about labels. Heh. Next will come the charges of McCarthyism. (Wait for it!)
Aside from its ardently Leftist viewpoint in economics, Counterpunch, in my humble opinion, is notorious as one of the venues on the web for Israel-bashing and Jew-bashing. In fact, right there on the home page today was an ad for Michael Neumann’s book, “The Case Against Israel.” They have also featured the disturbed views of Walt and Mearsheimer, who, more than a century after the Czarist forgery The Protocols of the Elders of Zion, continue to argue that Jews simply have too much influence.
What’s also disappointing is that Yves, as a liberal, cannot determine the point at which views become unacceptable in an intelligent forum like this one, which usually features highly rational discourse. Linking to Counterpunch is going over the edge. Linking to the very Liberal Huffington Post is not.
@Anon: It’s all so predictable someone under the handle “Anonymous” would bash others. Go away.
To:Leo Kolivakis at 1:14 AM
“As the masses gather in London to march and protest…”
These aren’t “masses.” They are a fun-seekers led by professional agitators and revolutionaries. We have trouble seeing them as “professionals,” not just because there is no recognized job title, but because most of us don’t have difficulty conceiving that there are people who choose to pursue the extremely low-probability but almost infinite-return career objective of becoming the new Stalin. Yet such exist, and it is they, not “the masses” who have organized the demonstrations and entice thousands of dupes and partiers to join them.
This may seem a small point, but it isn’t. It is necessary to reject not just the outcome, but the terminology and way of thinking, of those who would–should they get power–unleash mass murder.
OOPS Fixed errors.
To:Leo Kolivakis at 1:14 AM
“As the masses gather in London to march and protest…”
These aren’t “masses.” They are fun-seekers led by professional agitators and revolutionaries. We have trouble seeing them as “professionals,” not just because there is no recognized job title, but because most of us have difficulty conceiving of people who choose to pursue the extremely low-probability but almost infinite-return career objective of becoming the new Stalin. Yet such exist, and it is they, not “the masses” who have organized the demonstrations and entice thousands of dupes and partiers to join them.
This may seem a small point, but it isn’t. It is necessary to reject not just the outcome, but the terminology and way of thinking, of those who would–should they get power–unleash mass murder.
Let’s get it straight: Obama has been pushed by the bond vigilantes. Shock and awe!
Instead of a major haircut for GM bondholders, he’s gonna take it out of the hide of the Auto Workers to the tune of a 40% salary/benefit reduction! That’s why the market is rallying.
Obama will count on his Democratic and Midwest credentials to squash any resistance from UAW rank and file. He’ll also take full advantage of the horrendous state of the Michigan economy to twist their arms: like it or lump it, take the cut or you’re out on the street!
Delays in implementing comprehensive policies to stabilize financial conditions would result in a further intensification of the negative feedback loops between the real economy and the financial system, leading to an even deeper and prolonged recession.
Engineers everywhere cringe at yet another misunderstanding of “negative feedback” by a business major.
Am I allowed to read former Reagan administration official Paul Craig Roberts’ articles on Counterpunch? Or does that make me a Stalinist?
What a bunch of babies. Instead of resorting to name calling and temper tantrums, maybe you could identify specific issues you disagree with and offer a rebuttal?
And no one threw any tantrums over Simon Johnson’s recent article in The Atlantic, but he said a lot of the same things Hudson has been saying.
I understand Sarkozy’s concerns over the future welfare of France, the European Union and the world at whole. And perhaps there could be a tighter regulatory group presiding over the EU. But, honestly, a global regulation? Besides the fact that this would be difficult to actually operate or get started, it is a somewhat scary concept. To me, it sounds like too much control in the hands of too few. Brown and Obama sound like they have some good plans, at the very least. I watched a summary video on their meeting at the G20 summit today at newsy.com. It’s worth looking at:
http://www.newsy.com/videos/obama_brown_shoulder_to_shoulder_for_g20/
How many find social structure or are imprinted with it via mom and dad (community).
How many have lived in the various constructs for any time, to make observations and decide for them selves. Academic pondering of events and systems is engaging, but the person on the ground can actually see and feel the effects.
A book is a wonderful thing, but experience is the key to cementing opinion.
BTW who was the social mechanic that decided where the center of the scale is, therefore determining the the poles polarity and enable finger pointing.
Is the earth right side up or the other way around, it depends on the observers orientation in space eh.
Skippy…the Yank down under,
Leo you rock!
————-
Anon 11:48 – I read the following at; thepeoplesvoice.org. Are these ideas suitable for me to read and post?
Excerpt:
Stuart Littlewood argues that, as president of an internationally hated terrorist state that is godfather to thuggish and criminal regimes like Israel, President Barack Obama should stay at home and save our hard-earned tax money from being wasted in a frenzy of ridiculous security measures to protect the pretentious pomp and circumstance of his sinister presidential circus.
You have to laugh.
Mr Obama comes to London for the G20 summit with 500 hangers-on, including 200 secret service goons and a guy with America’s nuclear missile launch codes in his briefcase. He arrives in Air Force One accompanied by cargo planes bringing an estimated 35 vehicles for the presidential visit including “The Beast”, the president’s armour-plated limousine.
This, the ultimate personal protection commuter vehicle, is fitted with a 5-inch steel plate floor and bodywork made of dual-hardness steel, titanium and ceramics to break up any incoming projectile. The doors are armour-plated and 8 inches thick, and the window glass will stop high velocity rounds and a .44 magnum at point-blank range. It is fitted with kevlar-reinforced tyres on steel rims with run-flat ability.
The Obamamobile is also armed with pump-action shotguns, tear gas cannons, night vision cameras and a GPS system. There are oxygen cylinders in the boot and a supply of presidential blood just in case…
So heavy is “The Beast” that its 6.5-litre diesel engine struggles to drag it from 0 to 60 mph in 15 seconds, even slower than my Aunt Bessy’s ageing Nissan Micra.
Then there’s Marine One, the helicopter that transfers Mr Obama from the airport to the US ambassador’s residence. Marine One never flies alone for security reasons. A number of decoy helicopters also take to the air in order to confuse imaginary terrorists.
Mrs Obama has her own bodyguards, who are part of her eight-strong support team.
The USS Theodore Roosevelt, nicknamed the “Big Stick”, is also on hand during the summit, cruising off Britain’s shores. The 90,000 ton super-carrier comes with a wing of 90 aircraft, including FA18 Super Hornet multi-role fighters and Sea Hawk helicopters.
They’ve just completed a seven month gung-ho tour supporting troops in Afghanistan, where the carrier’s aircraft flew 3,100 sorties dropping 60,000 lbs of ordnance as part of the International Security Assistance Force. So, we can count on these swell guys if there’s any local difficulty.
Is this Obama’s idea of cool? How eco-friendly is all this, just so that one person can go to a meeting? When the leader of the western world gets this twitchy, haven’t the terrorists won without detonating a single device?”
Anon 11:48, more if you can handle it …
http://www.thepeoplesvoice.org/TPV3/Voices.php/2009/04/01/this-is-un-cool-obama-best-stay-home
Deception is the strongest political force on the planet.
i on the ball patriot
anon @3:21 AM,
actually, capitalism is working just like it is supposed to, i.e. crises and depressions are exactly capital’s process of eliminating part of itself in order to allow renewed process of accumulation, which should not be taken to mean there are no absolute historical limits beyond which this system transforms from ‘creative destruction’ into one of increasingly destructive creation [i.e. barbarism],,or that the latter cannot – through social forces – be itself transformed into an improvement on the now quite senile capital system.
the people calling for, and getting, ‘more government’ as a type of state capitalism have not been ‘the unwashed masses’ but instead those who, whether directly or not, depend on those masses labor power.
the same forementioned people want nothing more than avoidance of a ‘withering away of the state’ which, by now should be perfectly evident, they depend upon. their ‘fear of freedom’ becomes extreme during moments such as the present. these folks cannot even begin to conceive of a system built on self-managing workers councils and practical democracy. sadly, neither can most of the demonstrators.
regards from a
paleo-marxist
‘….beyond which this system does not _unevenly transform_ into….’
Engineers everywhere cringe at yet another misunderstanding of “negative feedback” by a business major
Not this engineer. Because it conveys a concept so beautifully, I’m more than happy to parse it as the opposite of positive feedback.
See how easy that was? It’s one of the reasons I get laid a lot.
Re “Just another Social Scientist”. Yes, you are absolutely right about the feeling amongst the peasantry that the “rich” are more worthy than the poor (actually, more worthy than the peasants themselves) who deserve their “place”. The American peasants loath each other (peasant self-loathing, how sick is THAT).
I find it amusing to listen to the peasants I’m in daily contact with foam-at-the-mouth about the “Auto-Worker bailout” but not show the same fervor over the banksters. The peasants are like animals, jealous about which of them gets a bigger morsel of food from their keeper. How funny they don’t care what the keeper gets (but, also understandable, as an animal wouldn’t notice either).
Sadly, the Americans are mostly ignorant peasants, but personally I enjoy watching them get screwed by “their” banana-republic government, they deserver everything their gonna get too. Especially the ones who have been voting fascist for 30 years because they are still trying to “get even” for what “those people” did to `mmmmca. EEE-HA, gotta love the karma.
@12:46
“McCarthyism. (Wait for it!)”
That wasn’t too long a wait, only a few words really. 25, I counted.
McCarthyism, labels and Anti-semitism. End results are the same.