What Do I Know?

Happy Independence Day! All Is Forgiven!

A bust of King George III at Kew Palace

The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. —Thomas Jefferson, The Declaration of Independence, 1776

It's Independence Day in the United States, the day that the colonies declared their independence from their British overlords. Or was that the 2nd? 

Regardless, the day is greeted with fireworks and fired-up grills in what is now the United States of America. Here in Britain, it's greeted with nothing more than a reminder that stock markets are closed in the US. 

I get the sense there's not much lingering animosity over that whole Revolutionary War thing. Maybe because people here are too busy enjoying the benefits of American tourism, especially now that the dollar is high against the pound. Welcome, sneaker wearing American tourists! May your backpacks overflow with Mind the Gap memorabilia!

Or more likely, it will be Royal memorabilia that fills those backpacks. Every American I know (well, every one who comes here) is obsessed with British Royalty. Yes, the descendants of hated George III, who our forefathers rebelled against, are objects of awe to the royalty-deprived Americans. 

Sometimes I think if the Founding Fathers knew how Americans would one day go gaga over British Royalty, they wouldn't have bothered. I mean, what do we care about trial by jury and "transporting us beyond Seas" when our self-made celebrities aren't nearly so fascinating?

American media websites are saturated with stories about the eminent Royal birth. There's far more breathless speculation there, in fact, than on British media sites. (At least the ones I go to—I don't read the Daily Mail or the Telegraph.) What is it with Americans' fascination with all things Royal? How soon they forget that whole taxation without representation thing. Those "injuries and usurpations" are just water under the bridge now.

So what if the King plunders our seas, ravages our coasts, burns our towns, and destroys the lives of our people—Kate Middleton's having a baby! And Prince Harry dances so well! And Queen Elizabeth has such a warm, friendly smile, doesn't she? She couldn't possibly want to transport large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny. That would be totally unworthy of the Head of a civilized nation.

Ah well. Bygones, and all that. All is forgiven. Because Kate Middleton wears really cool footwear.

I'm actually more fascinated by the dead royals than the living ones. (I even went to see Diana's grave.) I love going to palaces and stately homes, but I care nothing at all about how Kate is decorating her Kensington Palace digs. 

As long as she and Wills don't plan to "Quarter large bodies of armed troops among us," I'm cool.

Despite the fact our blood runs red, white and blue, we don't do much celebrating here. Our Irish dog doesn't appreciate the fireworks, although he might appreciate the sentiment of Independence Day. We'll probably take him for a walk, let him run free in honor of the day we tore off the choke collar of our English tyrants. 

Now, don't go cutting off our trade with all parts of the world while our backs are turned. 

Flying High with Jeffrey, or Maybe George, Osborne

The REAL Jeffrey Osborne

So apparently Barack Obama mistakenly referred to George Osborne as "Jeffrey" not once, but three times during the G8 meeting. 

What does this say about your "special relationship" when one of you can't even remember the other's name? Apparently Barack was thinking about this Jeffrey Osborne...in fact, he said as much, when he realized his mistake. 

Flying high, upon the wings of love...that sounds pretty "special" to me. (Confession: This was "our song" way back when. Sweet tune, even after all these years.)

But to confuse George, who attended the exclusive boy's school St Paul's in the eighties, for Jeffrey, an R&B singer from the eighties... I think it's an indication that George's name doesn't come up very often in cabinet meetings. Which doesn't surprise me. Why on earth would Jack Lew and the rest of the economic team refer to George Osborne and his terrible austerity economic plan? That shit won't fly, not even on the wings of love.

When contacted, the real Jeffrey Osborne replied: 

"I was really not aware that he was that much of a fan that he would call the Chancellor Jeffrey Osborne.

"Tell the Chancellor when I come over I will have to hook up with him and we will do a duet of On The Wings Of Love or something."

We have that to look forward to, the beginning of a whole nother special relationship. 

Don't Call This A Flash Mob

I know, flash mobs jumped the shark a long time ago, even before the phrase "jumped the shark" jumped the shark. 

So I don't click on them any more. But this one slipped through my flash mob videos Twitter screen, and then it showed up on the arbiter of good ideas Andrew Tobias's website. 

And now I'm sharing. 

It's a flash mob in Spain. In an unemployment office. Spain, where the unemployment rate is 26.6%. No, you didn't read that wrong; more than a quarter of the working population is no longer able to find work. 

Things are tough in Spain. 

But here comes the sun, anyway. 

It's all right.

Race to the Bottom

There are many things that America does better than the UK. Chinese food, for instance. Plumbing. Car parks. 

But its safety net, i.e. social spending, is not something to emulate. As an American, losing your job means losing your health care; often it means losing your home. Public spending on higher education is minimal in the United States, in fact, there's an entire system of private schools and universities that just doesn't exist in the UK (where free or nearly free education has been the norm). Infrastructure is crumbling; libraries are closing; schools are aging.

Yet as the chart prepared by the IMF shows, if the UK continues on the austerity track of the Cameron government, public sector spending in the UK will fall precipitously below that in the US sometime in the future, all things being equal (assuming no upcoming US administration succeeds in passing an austerity budget, an assumption I wouldn't bet on). 

The article accompaning the graph describes the situation thus: 

Particularly striking is the fact that Britain will end up spending less as a proportion of its national income than even the US, the international byword for a decrepit public sector.

"Decrepit public sector". How do you like that, America? Think all those Olympic golds mean the world looks to us in envy? Think our giant parking lots and supersized Wal-Marts are admired from abroad, while our public sector is described as "decrepit"? No one in their right mind wants US-level public spending, particularly when it comes to health care. We are, quite frankly, the laughing-stock of the world, even after the addition of Obamacare, which puts a band-aid (a plaster, if you will) on the pathetic corporatized health care system in place in the US.

Decrepit. Think of that next time you tool down the Interstate in your sweet SUV, dodging potholes and holding your breath over bridges. 

But don't worry; you won't be alone for long in your decrepit-ness, as you can see from the graph above. Britain will be right there with you, wallowing in aging infrastructure and a health care system that will systematically begin denying care, a la its American cousin, if the Tory austerity program continues. 

On the other hand, we can all move to Germany, which had the foresight to offer workers who'd otherwise be laid off subsized part time work at their previous positions, so that when the economy bounced back, the workers would be in place. Not wasteful government spending; rather, simply smart thinking  "Decrepit" isn't the word that comes to mind when I think of German roads, either. 

So, if the Tory government would like a bit of advice, coming from an American who's been there, done that, do try to avoid cuts to schools, roads, and health care, especially when the economy is in recession. Halt this race to the bottom, because that way lies broken infrastructure.

And we all know what happened when London Bridge came falling down.

Welcome To The Damp Olympics!

Along with our miserable weather, we now have one more thing to add to the Worst Summer Ever: The Olympics. 

Athletes began arriving at Heathrow yesterday, making it the busiest day ever at the world's busiest airport. Not even the prospect of getting off this gloomy island would make me venture anywhere near the M4 exit for H'row now. 

Likewise, traffic lanes leading into London have been designated "Games Only". Ordinary mortals and their ordinary cars must keep to the slow lanes, which will undoubtedly move slower than the passport control line at Heathrow. Wait times for the Underground are predicted to be an hour in some places. I can't even imagine what it will take to get a table at a restaurant. Probably a medal of some sort.

And it's not as if I even like sports. My anti-competitive nature is repulsed at the idea of humans pitted against each other in a game involving athletic skill. Perhaps I'm resentful because I possess no athletic skill myself: I'll never forget how that "D" in PE class brought down my GPA.

Serious injuries can occur in team sports. When my daughter played basketball, I always brought a magazine and dark sunglasses to her games, so no one would see me cry whenever one of the girls went down. That part where the opposing team's fans clap when an injured player walks off the field? Makes me want to curl up in a ball and weep at the sheer goodness of humanity. The emotional highs and lows of sports—who needs it? I'd rather watch a soap—there's less melodrama in Hollyoaks than in any Wimbledon match with Andy Murray.

I used to be a fan of college sports—in particular the Lady Techsters, my college women's basketball team, who were perpetually nationally ranked. I remember shouting myself hoarse when they came to play in Austin while I lived there. Later, I felt silly. Especially when they lost the Final Four. Who cares, anyway? It was just a game. A silly, stupid game, and winning it isn't important, it's how you watch the game. Or something. 

After that I gave up sports altogether. Living in England, it's easy to hate sports: I don't understand the rules for most of the games they play here. Add befuddlement to my general loathing of competitiveness and I end up with plenty of free weekends, when I can shop in peace while the locals gather in front of TV's to watch overpayed men adorned with corporate logos kick a ball around something called a pitch. 

Women here are too smart, apparently, to play any team sports. Or maybe it's the lack of a Title IX, which guaranteed girls in the US equal opportunity to sports in school. (There's a lack of a written constitution here, too, but I notice someone did bother to write down the rules of croquet.)  

I was pleased to read that Saudi Arabia is finally sending female athletes to compete in the games. Two women will be arriving with the Saudi team. They'll be the only ones dressed appropriately for the weather. 

I don't even want to think about those beach volleyball players, freezing in their skimpy costumes at the Horseguards sand pit. Temperatures haven't broken out of the sixties here since our warm-ish spell in May, and rain has become a permanent component to our atmosphere. Even when it's not actually raining the air is damp, clinging to your skin like a sweaty O2 jersey. 

I might watch gymnastics, if there's an underdog to cheer for. Some kid who hasn't been training under some dire coaching regime, a natural talent from a poor family in a sunny country where athletes aren't supported by corporations or a repressive government. Does Greece have a team? Portugal? I made it a rule to only root for PIGS countries during Euro2012, the European football/soccer tournament that recently ended.

That's because I've replaced a love of sports for a love of politics, and instead of admiring a team's strategy I admire a country's economic pluck. So, while you guys watch the games and admire the athletes' skill, speed, and ability to attract corporate sponsorship, I'll continue to worry about important stuff, like who's winning among Ohio female voters in the important 35-50 demographic. And whether or not Hollande has arm-wrestled Merkel to defeat in Brussels.

But if those Saudi girls come on TV, someone let me know, okay? I'll be happy to cheer myself hoarse for them. 

Taxes For Me But Not For Thee?

Tax Day (in the US) is almost upon us. And in both the US and the UK there's been a lot of news about millionaires and their taxes—or lack of them. 

Here in the UK, Chancellor George Osborne has recently discovered that lo, very rich people don't pay much in taxes! They hire accountants to find tax loopholes, sometimes disguised as charitable deductions, to avoid paying the rates that lesser mortals do. According to the BBC, "The Daily Telegraph reported that a study by HM Revenue and Customs showed the very rich had reduced their average income tax rate to just 10%."

While the Chancellor proposes to do something about that—i.e. close the loopholes, he also wants to lower the top tax rate on income over $150,000 to 45p from 50p.

(This is where I'm supposed to applaud the Chancellor, bravely waving a red flag at the enraged millionaires and their accountants while he tosses treats to them with the other hand.)

In the US, the situation is even more egregious. Many millionaires and billionaires, with incomes alone over a million a year, pay lower taxes than, well, secretaries. This is why one of the richest men in the world, Warren Buffett, has complained—yes, complained—that he pays a lower tax rate than his secretary (who, in fairness, is probably a well-paid administrative assistant).

The "loophole" in the US is no loophole at all; it's a lower rate for capital gains—money made from investments, such as stock, rather than income from labor. Capital gains are only taxed at 15%, and when combined with loopholes, the effective tax rate is often lower than 15% for people like Mitt Romney and Warren Buffett. 

While Buffett thinks this is wrong, Mitt Romney and the GOP think it's just fine. They argue that rich people are the ones doing the hiring, and in times of low employment taxing rich people doesn't make sense. I heard one GOP pundit stating it thus: "When's the last time a poor person hired anyone?" 

This is like looking at a plum tree, heavy with fruit, and not realizing there's a root system underneath. Rich people (and corporations, who in effect pay them) hire workers when they sell lots of goods and services. And who buys goods and services? Middle class and poor people, who spend a significant portion of their paycheck on goods and services, like, say, cars. And meals out. And rent. Things that increase dividends for rich people. Things that make rich entrepreneurs richer. 

There's another facetious argument I've heard about the proposed "Buffett rule" that's making its way through Congress now (in vain, alas, since no Republican in the House will vote for it). If millionaires like Warren Buffett, and several others who've spoken in favor of the new tax proposal, wish to pay higher taxes there's nothing stopping them from voluntarily paying more to the IRS. 

Call me a rabble raiser, but I don't like the idea that rich people get to voluntarily pay taxes but I must mandatorily pay them, and at a higher rate! The same argument goes in the UK, where millionaires are able to deduct millions given to charities on a voluntary basis. Suppose I decide to donate a million pounds to the Donkeys Trust. A worthy charity, to be sure, but is it more worthy than my taxes going to pay for roads, schools, benefits for the disabled, or police pensions? Or if I live in the US, and want to endow Toad Hall University with an amount that will cause them to name their new baseball diamond after me, should I be able to claim that as a deduction on my taxes? 

Economist Jared Bernstein has put together some figures if you want more information on the Buffett Rule, including these startling facts:

–In 2009 (most recent data) 22,000 millionaire-and-up households paid less than 15% in federal income taxes, and about 1,500 paid nothing.

–The 400 richest Americans, with average incomes over $100 million, paid 18% in federal income tax.

–These average tax rates have fallen sharply over the years, due both to cuts in the basic income tax rates, and particularly to much larger cuts in taxes on asset-based incomes, like capital gains. According to the White House’s release on this: “the wealthiest 1-in-1,000 taxpayers pay barely a quarter of their income in Federal income and payroll taxes today—half of what they would have contributed in 1960.”

Fair? Certainly not. A boon to the economy? No, in fact the economy's been more sluggish than ever since the Bush tax cuts which ushered in the 15 capital gains tax rate.

And for even more information about the Paying A Fair Share Act (i.e., the Buffett Rule), Ezra Klein has the details. Turns out it doesn't even go into effect fully for incomes between 1 and 2 million; instead it's eased in. Wouldn't want to shock those millionaires into having heart attacks when their accountant gives them the full bill.

Unlike, say, a teacher, who finds out her rent is going up but her paycheck isn't. 

The Buffett Rule, which, again, has no chance of being passed by this Congress, would raise revenue of around $160 billion. That's a fair chunk of change. (And even after that, millionaires' tax rates would still be lower than in the UK.) 

Unless you've just won the MegaMillions* jackpot or EuroMillions, you're probably in favor of millionaires and billionaires paying higher taxes, on either continent, than the paltry amounts they're paying now.

*(Full disclosure: I myself was a winner in the recent MegaMillions. I won $2, which entitles me, I believe, to deduct the $10 I spent on tickets. But I'll have to ask my accountant to be sure.)

Cheap Wine, Because the Government Says So!

A graph to peruse while sipping that 2009 Bordeaux

I have no problem with government policies that raise the price of beer to reduce alcohol comsumption and its adverse effects—namely, drunk driving. (That's partly because I can't stand lager or cider—both of which taste like cold piss.)

But here's a policy I like even better: Cheap wine! Yes, it turns out lowering the price of wine means fewer adverse effects of alcohol, in particular binge drinking. 

Seems people don't binge drink wine. (No? Pass that Medoc!) That means fewer traffic fatalities as wine becomes a larger share of total alcohol consumption. 

This research came about by looking at states that allow wine to be sold in supermarkets, versus states that require you to go to a state liquor store to purchase wine. (Thank god I never lived in one of those states!) Those that allow supermarket purchases of wine have lower prices on wine, since supermarkets offer competitive wine pricing. 

So David Cameron, along with increasing the price of Stella, should considering lowering the price of Bordeaux. We'll all live healthier, longer lives, and when Southern England is warm enough to produce decent wine, we'll see a lot more economic benefit.

A Kentish red anyone?

Who's To Blame For the Euro Gloom?

I hate to say it, but I'm fast coming down on the Blame Deutchland side of the Euro Blame Game. I know, I know—Greece and their profligate ways and lazy work habits! They're the ones who started this whole mess!

Except that's not quite the truth. As for lazy, Greeks are no more lazy than the rest of the world, with the exception of South Korea. According to Forbes in 2008, Greece was ranked the second hardest working country in the OECD. And profligate? Sure, the country's government spent more than it took in, but its government budget as a share of GDP was 48.05 percent, only slightly more than Germany's 45.79 percent. This is quite a telling figure: The real problem in Greece wasn't government spending, it was lack of government revenue. Greeks may not be lazy, but they surely don't like paying taxes. 

But even more than these basic facts, there's the German's gung-ho attitude for the common currency. As Ezra Klein, Washington Post business writer, explains, the Germans have an almost maniacal obsession with a unified Europe, perhaps due to their history (while at the same time being reluctant to embrace German power). He also compared Germany's insistence that the periphery countries amend their fiscal policies before any European Central Bank intervention can occur to a doctor insisting that his patient lose weight before he'll treat her for a heart attack. 

That's apt, considering the attention being paid this week to France and Germany's reworking of the entire eurozone treaty. Is fiddling with rules at this late date, rules that can't be enacted for years, really the most important focus right now? Especially when the original rules were ignored (in favor of the 'higher goal' of European unity) not only for Greece but also for Germany when they failed to keep within fiscal restraints. 

Kevin Drum offers a closer look at how the entire Euromess came about, and it turns out it was the core economies (Germany, France, etc.) who encouraged the instability of the periphery. 

The primal sin here is that for years supposedly sophisticated investors in the core shoveled money into the periphery with abandon, ignoring the obvious risks of doing so.

Why would they do this? Because not only were investors making money from the high interest rates the overheated periphery economies were offering, but the industrial output of countries like Germany increased when the Greeks and Italians and Portugese bought Volkswagons and vacuum cleaners made in Mannheim.

You can't really blame them for that, though—everybody wants to sell vacuum cleaners, right?

Or you could cast about even further for blame: you could argue that the United States, with its property bubble and lax banking rules that allowed junk deriaviatives to be sold and shorted, is really to blame, since it was the 2008 financial crisis that originated with Lehman's collapse that exposed the weakness of the euro zone. 

You could even blame the original founders of the euro zone, those idealistic Europeans hoping to unite their sister countries in an effort to compete more effectively with the United States and China. They ignored the inconvenient fact that countries that can't devalue their currency are at a disadvantage when they have account imbalances.

But in the end, there's really no point assigning blame: the euro crisis will be resolved when Germany loosens its hold on the ECB and the eurozone is tidied up, bailed out, and wrapped with a large EU blue ribbon. 

I just wish they'd do it before we actually reach the brink of worldwide economic collapse.

Look! Over There! It's...Pepper Spray.

I just returned from a visit to the US, where the lack of media coverage of the eurozone crisis suprised me. I'm not sure if it was the holidays, with all the tryptophan-induced comas, or the Black Friday madness, but no one in the US is talking about what's sure to be the biggest blow to the global economy since Lehman Brothers collapsed.

While here in the UK the euro crisis is all anyone is talking about (well, anyone on Radio 4), there's hardly any awareness of the coming disaster in the US. 

On the other hand, they have their own madness to worry about. Sure, the US economy is showing signs of improvement, with unemployment creeping down and GDP inching up, and Black Friday (so-called because the day after Thanksgiving is when retail stores traditionally go "into the black" on their balance sheets) producing record sales (up 9% over last year). Yet Black Friday was also accompanied by evidence Americans have gone mad: one customer at Wal-Mart pulled out a can of pepper spray and doused fellow shoppers in order to make off with bargain X-boxes.

Meanwhile, other superstores found themselves awash in yellow crime tape rather than red Christmas bows after Black Friday shootings occurred in their parking lots. 

Considering American broadcast media isn't keen to produce quality, informative news programs even during the best of times, it's no surprise the mere mention of "pepper spray" and "Wal-Mart" managed to knock out any mention of the approaching Euro-Armageddon. Not even Nancy Grace wavered from her fixation on Natalie Wood to mention what is surely a bigger crime, as political leaders in Europe continue to refuse to fix the mess they made.

So America sleeps in its turkey-fueled haze, while the disgruntled pack armaments in their handbags as they hunt for loss-leadered merchandise. I tried to warn a few ancient relatives about what was coming, as the euro crisis nears a final denouement, but all I got were yawns. 

America does not feel your pain, Europe. But you'll feel theirs—if you get anywhere near that X-box. 

Arrivederci, Germany?

Roman ruins in Germany, a relic of the previous Eurozone

Last week it looked like the eurozone might be saved. Today, it looks like the eurozone might be toast—err, crostini. 

Last week was about Greece, with its tiny economy and tiny political problems (which looked enormous last week). This week, it's about much larger Italy, with its rather large economy and political problems that make last summer's US debt ceiling shenanigans look like a lecture at the Rose Society.

Silvio Berlusconi has been compared to Nero, fiddling while Rome burns, but he's ruled more like Hadrian, doling out favours designed to keep him popular. (History lesson: upon coming into power, Hadrian actually burned the wax tablets containing "promissory notes", the debt of political cronies, to show debtors what a great guy he was. He also, like Berlusconi, spent a lot of time with his young lover.) 

Berlusconi, a former cruise ship crooner, is incapable of understanding his country's financial problems, much less solving them. Yet he hangs on to power by a thread, despite a vague promise to resign. Surely his $4 billion fortune is enough to start a new life somewhere—perhaps there's a Greek island he could buy.

Meanwhile in Greece, George Papandreou has officially resigned and a new government is to be formed, partly made up of the political party who previously helped to hide Greece's debt. That doesn't exactly bode well, does it? 

But the real political problem actually is Germany, and its stern chancellor, Angela Merkel. In the eurozone, mighty Germany calls the shots. While Germany is committed to keeping the eurozone intact, it's even more committed to avoiding its old nemesis, inflation. (History lesson: hyperinflation in the 1920s led to hyperausterity, which led to Hitler.)

If the eurozone is going to survive, it will have to devalue its currency, and print some notes to help its poor periphery neighbors—Greece, Portugal, Spain, and now Italy. (Italy, despite the current problems, isn't really so poor—they export a lot of pasta to their neighbors and could grow their way out of this, if they had their own currency. A devalued lira would mean the world buys more pasta.) That means Germany will have to accept a higher level of inflation, which will have the added benefit of making those euro debts worth less. 

Yet Germany can't bring itself to go there. Nor can they stomach the idea of doling out euronotes to their profligate neighbors, the only other option to saving the eurozone (at least that was an option before Italy and its oversized obligations came knocking at the euro door).

Angela and her countrymen are going to have to make a stark choice: Accept some inflation, or figure out how to live without the eurozone. That's why an offhand suggestion I heard last week, that the real solution to the Euromess would be for Germany to leave the eurozone, makes an ironic sort of sense. 

Germany needs to take her toys and go home, and let France and the European Central Bank sort out the Euromess. Otherwise, there may be no one left to sell BMWs to.

(For more detailed analysis, read Martin Wolf at Financial Times, Ezra Klein at The Washington Post, or Paul Krugman at the The New York Times. All three come to similar conclusions: this is Germany's eurozone to lose.)

My Big Fat Greek Dilemma

Will Greece vote to remain in the eurozone or will there be a big fat Greek default?

In 2002 My Big Fat Greek Wedding was released, quickly becoming one of the year's most popular films. Also in 2002, the first euro note was printed, quickly becoming popular with tourists and traders. 

According to IMBD, the film is about "A young Greek woman (who) falls in love with a non-Greek and struggles to get her family to accept him while she comes to terms with her heritage and cultural identity." Greece itself had the same problems: its new eurozone family failed to understand its heritage and cultural identity. 

When the eurozone was formed in 1999, there was no question that Greece would not be included. Greece was the birthplace of democracy, and the leaders of modern Europe value democracy very highly. They owe their jobs to democracy, after all.

So they ignored the truth: Greece had cooked its books and was not in a financial position to share a currency with its neighbors. Successive Greek governments continued to cook their books, and Greek citizens continued to participate in their national sport, evading taxes. 

Meanwhile, the government very democratically doled out jobs to its citizens and allowed them to retire early with full pensions. No one cared, because the books were cooking away on the stove, disguising Greece's precarious position while a booming EU economy (and the infrastructure spending of the 2004 Greece Olympics) made it easy for others to ignore the truth. European financial institutions quite happily extended credit to Greece (similar to the way American mortgage underwriters extended credit to migrant farm workers in American sand states).

But then came the world financial crisis of 2008 (begun when banks in the US did a little cooking of their own, mixing bad loans with good ones in a smelly stew that eventually poisoned the entire world's financial system). And Greece got a new government, one that was determined to expose the past corruption and in the process, exposed the vile worm of democracy: elected leaders sometimes fail us. 

Greece is a tiny country by US and EU standards: its population of 10 million has a yearly gross national product of around $300 billion—a figure that has been falling in recent years as Greece struggles with recession. But it owes around 150% of that, and its credit rating is in the toilet—which makes the debt impossible to pay off with new lending, which is how most nations pay off their debt.

"That's it? That's the whole plan?" via The Guardian

The details of the recent deal called for Greece's creditors to take a 50% haircut on the loans, and for Greece to be given another 109 billion euro loan. But Greece would have to agree to another round of painful austerity (a favorite word in Europe these days) which hasn't gone over too well so far. Daily strikes and demonstrations have ground Greece to a halt. And if workers either aren't working or can't work—unemployment is around 12%—GDP will continue to fall, making it even harder for Greece to meet its obligations.

Now Greece's elected government wants to—surprise—put this deal to a democratic vote. But did Europe really not see this one coming? Or are they so ignorant of Greece's heritage and cultural identity that they figured Greek citizens would go along with whatever plans they made for Greece to avoid default and keep the eurozone intact?

If workers are to return to work and if taxes are to be paid and debts paid off, the people must feel they have exercised their democratic right to approve the plan.

The alternative to the plan of course is default—a big fat Greek default. 

For that's really at the heart of Greece's dilemma, a dilemma they will vote on in a few weeks. (A dilemma is a Greek word that refers to "a problem offering at least two possibilities, neither of which is practically acceptable".) If Greece defaults the eurozone will fail, as other countries are dragged down, including precariously situated Italy and France, whose banks own a lot of Greek debt. (Fifty percent, after all, is better than zero percent.) 

The EU never thought to take away a member's sovereign right to tax its citizens and reward them in whatever way they saw fit—health care, education, roads, or pensions for government workers. No one would have joined this deal, and the eurozone would never have printed its first note in 2002. 

Yet the failure to control members like Greece—and to essentially ignore its economic state of affairs—has put the entire eurozone right at the precipice of default. 

Whose fault is that?

No one has an easy answer to that: Europe shouldn't have extended loans to Greece that couldn't be payed off, and Greece certainly shouldn't have continued its profligate ways while allowing its citizens to evade taxes.

In My Big Fat Greek Wedding, Toula, the heroine, worries about her fiancé: "Any second now he's gonna look at me and go, "Ha. Yeah, right, you're so not worth this." 

It's possible Greece will decide those euro notes aren't worth the pain inflicted by their creditors, or that Europe will decide that Greece isn't worth bailing out on any terms but theirs. More likely, their reaction will be the same as Toula's father: "Yes, you are." 

A Simple Graph With Not So Simple Effects

I'm not sure, but I think this might possibly be why people are occupying Wall Street right now: 

Also, I think it's why so many people were attracted to the Tea Party movement. 

Discuss. 

Via www.connectthedotsusa.com.

Additional reading: CEO Pay: Still Skyrocketing, Still Undeserved.

Some Facts About the Debt Ceiling and Housekeeping

Ceiling Cat eyes the cat food. Read on to find out why.

Some facts about the debt ceiling:

• No other country has a debt ceiling. (Martin Wolf from Financial Times called the debt ceiling "ridiculous" just now on BBC Radio 4. But this is an opinion, so it's going in parentheses.)

• The debt ceiling was invented in 1917, as a way to provide cover for President Wilson to issue Liberty Bonds to pay for WWI. (And it's been used for political purposes ever since, though not as drastically and cynically as today.)

• Congress has voted 74 times since Kennedy was president to raise the debt ceiling. 

• Mitch Daniels, Republican governor of Indiana and former George W. Bush budget director, once called raising the debt ceiling mere "housekeeping" and urged Congress to do so, despite the hesitations of some Democrats, including Barack Obama. Congress did raise the debt ceiling (without too much grumbling) 7 times during the Bush administration. 

• The debt ceiling was not raised during the later years of the Clinton presidency because there was no need to: The Clinton administration ran budget surpluses, thus paying down long term debt. (And Clinton also created 22 million jobs, but that's another parenthetical political point.)

• The Bush tax cuts that Congress recently voted to extend, even though they were about to expire, cost $4 trillion. Currently, the debt ceiling needs to be raised about $2 trillion in order for the government to continue to pay its debts.

• US debt grew 50% between 2000 and 2007. 

• The Republican budget plan, passed by the House of Representatives in April, would require the debt ceiling to be raised.

• The U.S. currently pays the lowest interest rate in the world on its debts. That's because everyone wants a piece of it, because it's considered the safest in the world. (Sort of like your FICO score, which allows you to borrow at a lower interest rate if you've proved you always, always, pay your debts.) 

• In a recent survey, 70% of small business owners predicted a negative impact for their businesses if the debt ceiling weren't lifted. (Could this be why hiring fell in June?) 

• U.S. taxes are at the lowest level as a percentage of GDP since the 1950s. (Yet Republicans have flat refused to raise any taxes at all during the negotiations they've insisted on having over raising their debt ceiling.)

• If the debt ceiling is not raised, ("housekeeping", remember) among the dire consequences will be an increase in interest rates to the current US debt (the bond market), which, remember, are the lowest in the world. 

• Currently, debt payments are the fifth largest item in the federal budget, behind defense spending and entitlements like Medicare and Social Security. 

• If the debt ceiling is not raised, interest rates on consumer debt, including mortgages, will likely rise—during a "technical default" in 1979 interest rates rose by .6%, and stayed up.

• If the federal government cannot spend money it's contractually obligated to beyond August 2, some 45% of federal expenditures will cease. No one knows how the Treasury department will decide to allocate the money it can pay out, but bond holders will be the first to be paid (see above). 

• If the debt ceiling is not raised, companies will likely hoard money (even more than they are now) and people who depend on a federal salary or Social Security check will start eyeing the cat food. 

In summary, the debt ceiling is a meaningless construct invented to provide political cover to a long-dead president for a war that many thought at the time wasn't worth fighting. Today, the consequences of not lifting it are dire, yet Republicans are holding the debt ceiling as a hostage in a crass political attempt to lower the size of the federal government while refusing to even consider a single tax increase, despite the fact much of the debt occurred on their watch, or as a result of the Great Recession, which began on their watch and continued into the early months of the Obama administration.

Are we clear now? All this fuss is over "housekeeping", and as it turns out, if the debt ceiling is not raised many of us won't be keeping our houses.

Armageddon. Next Door to Waterloo?

I fell asleep as history was being made last night. Literally, on the sofa, while watching the debate on Sky TV's live streaming of CSPAN on one of their alternate channels. 

It's a little anti-climactic, waking up this morning to read the results on Twitter, on blogs, on news sites I've clicked on, month after month, during this long slog to the history books.

Congratulations, America. The rest of the world isn't sure why you're so excited—after all, they've had universal health care for decades. And, in the case of many countries like Britain, it was the generosity of the US after World War II that made their own universal health care system possible. Even Iraq has benefited from US funds designated for their health care system.

So finally, America gets what even emerging eastern European countries take for granted: access to health care for all. No longer will Americans have the unique fear of losing their home when they get sick. Or losing the ability to go to the doctor for a cough when they lose their job. Or losing a baby when prenatal care isn't available.

But through it all I've lost a lot of respect for my fellow Americans. The rhetoric coming from Republican leaders yesterday was bombastic—Armageddon! Baby killers!—and downright stupid. Do they even know the definition of socialism? Totalitarianism? Deficit spending? Okay, that one they're familiar with, since they drove the deficit up to record levels with, among other things, their own attempts at health care reform—namely, the unfunded and donut-hole-ridden Medicare Part D.

I don't know if John Boehner and Eric Cantor and all the other Republicans who are now leading their party really believe the nonsense they're spouting, or if they're simply shouting out to the gullible tea party element of their party. Watching them come out on the House balcony yesterday with photos of Nancy Pelosi in hand and thumbs pointed down put me in mind of Evita Peron trying to sell snake oil. There were plenty of buyers among the tea party crowd, who seem to hate grandmothers as much as they hate niggers and faggots, because they went wild with anger. 

Frankly, the lack of decorum in the debate left me disgusted. Imagine if a Democratic congressman had shouted "Baby killer!" to a Republican colleague who spoke in favor of the Iraq war. David Frum, a Republican speech writer who's become disenchanted with the conservative outrage, calls this the Republican Waterloo. And that was before Baby Killer (the shouter of which has yet to come forward, probably because even he's ashamed). 

The "conservative entertainment industry"—the Rush Limbaughs, the Fox "News" anchors—have succeeded in making Americans angry enough to tune in, but in the process they've destroyed something precious. The reasoned arguments our founders envisioned have been replaced by ignorant rants. Decorum has been replaced by disgrace.

Americans were never blindly loyal to their leaders, not since George Washington turned down the opportunity to be called "King". But now they openly hate them, coyly wish them dead, and believe the government is ushering in Armageddon by offering health insurance to their neighbors. 

Something right happened in America yesterday, but something very, very wrong is thriving. Congratulations, Fox News. May your days be numbered, as they say.

Bobby Jindal Endorses Dem Health Care Plan

Very few Republicans have signed on to the Democratic health care reform bills that have passed through the committees in Congress, and those who have are either not currently in office (Bill Frist, Bob Dole) or are not in a position to run for president: Arnold Schwarzenegger. In other words, they have no partisan ax to grind and are willing to simply speak out for what's right, not what's politically expedient.

But now Bobby Jindal, the young governor of my home state of Louisiana and a possible contender for president in the future, has penned an editorial in the Washington Post that endorses the Democrats' health care reform plan. That's right, Jindal is on board with Obamacare.

Before Jindal's people call my people to protest, let me say he didn't exactly use the words "I endorse the Democrats' bills." But that's essentially what his editorial does, in calling for ten basic health care reforms. Nine—count 'em, nine—are already in the bills in one form or another, in fact, in at least one case, Jindal's prescription goes even further than what's in the bills. The tenth, tort reform, doesn't exactly belong in such a bill, nor does anyone who's looked at the matter seriously believe malpractice reform would lower costs, but regardless, President Obama has already said—on the very floor of the House and Senate—that he would be willing to add tort reform to the mix if that's what Republicans want.

One of Jindal's prescriptions deserves special mention. It's the one nearest and dearest to my own heart, since I have two daughters: The part about covering young adults on their parent's insurance plans when they graduate from college. (Currently they're kicked off their parent's plan, even if they can't find work or decide to go to grad school. This happened to my oldest, who was without insurance for over a year while she subbed in high school, and will soon happen to my youngest.) And yes, it's in the Democrats' plan, always has been.

Here's Ezra with more, and also the background on Jindal, who used to serve as President Bush's assistant secretary of Health and Human Services.

So why aren't Republicans in Congress lining up to endorse what one of the bright young leaders of their party thinks is a pretty nifty idea? Could it be that they don't really want any health care reform at all? Could it be that, like in 1994, when Clinton's failure to pass a health care plan doomed the Democrats to lose their majorities in Congress, Republican congress critters would prefer nothing at all to pass?

The answer is yes.

I suggest you ring your Republican congressperson and ask him or her why she or he isn't planning to vote for a plan that even Bobby Jindal is willing to endorse. And maybe, if Louisiana Senator David Vitter is in between sex scandals, Governor Jindal could give him a ring and tell him all about how swell Obamacare is.

Shocking News on Health Care Reform!

That's right, this deserves the scary headline. No one else has reported this, and believe me, I've looked.

Did you know that the INSURANCE COMPANIES are IN FAVOR of health care reform? And what's more, they endorsed or even WROTE much of what's in the current bills in Congress!

Okay, my pinkie's getting tired; no more scary all-caps. But isn't it shocking to find out that those death panel and evil rationing stories you're hearing from the far right are about a bill that the insurance industry wants to see happen?

Don't believe me? Watch this C-SPAN interview with Karen Ignagni, head of the health insurance trade association, AHIP. It will air tomorrow (Sunday) at 10 a.m. and 6 p.m. ET.

Here's the deal: Insurance companies are tired of being the meanies, and denying coverage to people with pre-existing conditions and denying expensive treatments to folks who need them. They know deep inside things have got to change. But they can't do it on their own. They need government to step in and force some regulations on them. In exchange, they get something they want: Universality. That's right, insurance companies want to see 100% of the population covered. Because that's the only way they can afford to make some of the concessions they realize they will have to make.

How? Because a significant proportion of those uninsured are young and healthy. Insurance companies need their premiums, as much as those uninsured people need to be covered, in case something bad happens. It's sort of a win-win proposition. (For a more complicated explanation of how universality is tied to insurance regulation and cost control, read Uwe Reinhardt on the "three-legged stool" of health care reform.)

And what about the soaring costs in health care? The insurance companies also want to see something done about that. Their current business model is unsustainable. As costs rise, employers drop coverage for their employees. This forces insurance companies to become even more mean, and figure out how to deny payment for treatment while at the same time raising premiums.

Now, I don't for a minute think insurance companies lie awake at night, worried about their mortal souls in the afterlife or even their reputations. They're purely motivated by profit, which is what their shareholders expect. So the fact that they're in favor of most of what's being proposed isn't shocking—there's a lot of good stuff in there for insurance companies, including the regulations that are being proposed. After all, these regulations will apply to all, equally. If AETNA isn't allowed to cancel your insurance when you get sick, neither is Blue Cross. And they get their greedy little paws on a whole new chunk of uninsured, who'll be mandated to participate so they don't free load on the system once they get sick.

This isn't speculation on the insurance companies' part, either. A lot of this has actually been done already—in Massachusetts, where they've achieved near universal health care coverage, and in the process, learned a lot of valuable lessons about how it can be achieved. (In the interview, Ignagni goes on at some length about the lessons learned in Massachusetts. You have watched it, right?)

So why are the right wing mobs so angry? One reason may be that part of the plan the insurance companies don't like—the so-called public option. The public option is included in the House bills, but will not likely be in the Senate version. By the time the bill goes to committee, something's got to give. Likely the public option will be severely watered down, or won't exist at all. That's a shame, because it's going to be very difficult to control costs if the public option isn't there. And liberals like me are very much in favor of controlling costs, so that resources can be spent on more important things, like early childhood education. 

But I don't think it's the idea of a public option that's got right wing mobs so riled up. I think it's the disinformation coming from people like Sarah Palin and other Republicans, who should know better. But they've decided to put partisan interests in front of the truth. They're even putting partisan interests in front of the business community, including small business owners who stand to benefit from this bill. (They'll be able to offer their employees the same low-cost insurance plans that currently are only available to large employers, through the insurance exchange.)

If this bill passes, the only losers will be Republican politicians. So they have to scare people about what the bill actually contains. They won't vote for it, or defend any parts of it, even though they've contributed much of the language in the bills. (You won't hear them admit that, either, but watch C-Span.)

I know this sounds odd coming from a liberal who's longed railed against all-powerful insurance companies, but if you really want to do your insurance company a favor, you'll phone your Congressperson and ask them to vote for the health care reform bill. It'll make Karen Ignagni happy, and it just might help a lot of Americans who currently don't have health insurance—and that could very well be you if insurance reform doesn't pass.

Karl Marx, Soylent Green, and Middle Class Suicide

"Karl Marx once said that history always repeats itself, first as tragedy, then as farce; and it's true, the US Congressional Democratic Party, as if they were understudies at a community college summerstock production of "How not to run a country", has slipped into the role of its predecessors in the 1993-94 Congress, the institution which morphed into a giant tub of writhing Jello rather than vote on then first lady Hillary Clinton's healthcare initiative."

That's Julian Delasantellis writing in Asia Times, explaining the American health care system to, I guess, Asians who watch a lot of films.

He begins at the beginning, explaining how Roosevelt's attempt to include government funded health care in the New Deal failed, but with wage and price controls, employers learned to offer relatively cheap health insurance to workers instead of higher wages. It worked, for a while, until health insurance was no longer cheap and American factories were no longer operating as monopolies in a playing field destroyed by WWII. It no longer made sense for employers to offer generous health insurance packages to any but their most valuable employees, and consequently, we now have 47 million without insurance—many of them middle class workers.

To borrow an analogy, it's as if someone were shooting a movie, called How Not To Devise a Health Care System, but the really scary part is its sequel: It's called Soylent Green.

"Another future-as-hell epic, Richard Fleischer's 1973 Soylent Green, has New York City police detective Robert Thorn (Charlton Heston) investigating the source of a mysterious new food product, Soylent Green, designed to feed an overpopulated and starving world . He is none to happy to find out the truth.

"It's people. Soylent Green is made out of people. They're making our food out of people! Next thing they'll be breeding us like cattle for food. Soylent Green is people!"

Well, the American middle class is at present being voluntarily consumed so the rich can have their healthcare. Still, a great many of them oppose any Obama health plan; it's not easy to warn somebody that they're about to be eaten alive when you find them waiting patiently under the ketchup nozzle."

Read the whole thing. It's long, but worth it. It describes how the middle class, which for so long has been the prop upon which the American health care system rests, can no longer continue to do so when health care costs are rising faster than the rate of their productivity. Something's got to give, and what gives is the middle class worker, who loses their health care so that others may keep theirs.

Yet, like certain characters from certain fictional movies, they go along with it.

That's where the farce comes in—note that this article was written before the whole notion of "death panels" was invented by a certain former Alaskan governor. Can you spell "prescient?"

Who needs death panels when you have Soylent Green? And ketchup.

Some Pie With That Tea?

I'm trying really hard to put myself in their place. If Bush were president, and he ran up a huge deficit and raised cut my taxes, would I be mad enough to go to a demonstration called a "tea party" and toss away perfectly good tea in a protest derivative of the Boston Tea Party...okay, there's no if. Bush really did run up a huge deficit, squandering the budget surplus Clinton left him with. And he didn't cut my taxes, but he did cut taxes for the very wealthy and those who earn capital gains.

But I still didn't protest, at least not until he started that stupid war.

So, in my view, starting a stupid war where thousands die needlessly is a reason to protest. Raising taxes on the very wealthy, while cutting taxes on the middle class, is not. Spending billions to boost the economy and put people back to work is not a reason to protest, but spending trillions in Iraq building bridges and ill-will is.

This is making my head spin. Try as hard as I might, I can't understand the reasoning behind those protests yesterday. Except to blame it on partisan, Fox-induced rabble raising, with a touch of sore-loser thrown in. Is this what the next eight years are going to be like? It's sort of like watching a two-year old have a  tantrum; at first it's funny but then it gets really annoying.

For some sanity, you can read Robert Reich, who I turn to those times when I desperately need irony laced with good old-fashioned expertise.

And if you prefer a pie chart, here's a nice looking one that separates the cherries from the chaff:

An Idiot Tax

So not only does Louisiana have an idiot for a governor, but somewhere in Lafayette there's an idiot lawyer running around saying things like this:

A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law.  ...

"We are going to try to figure out how to make our income $249,999.00," she said.

"We have to find a way out where we can make just what we need to just under the line so we can benefit from Obama's tax plan," she added. "Why kill yourself working if you're going to give it all away to people who aren't working as hard?"

The attorney says that in order to decrease her income she'll have to let go of clients, some of whom she's been counseling for more than a decade.

"This means I'll have to tell some of my clients we can't help them and being more selective in general about who we help," she said. "I hate to do it."

Apparently LSU law school doesn't teach how tax rates work. Jonathan Chait does a pretty good job mocking the ignorance of wealthy taxpayers and then does it again for good measure, so I won't pile on.

Although, since they don't know the difference anyway, why don't we just tax them at the old rate of 70% and eliminate their deductions. Obviously they've never received a copy of the tax code in Louisiana, so they haven't heard of the Idiot Tax. Oh wait...I wasn't going to pile on. Nevermind.

Bailout for Me, But Not for Thee

So. When Wall Street bungles royally, they get bailed out to the tune of $700 billion. I didn't really have a problem with that; the alternative was the collapse of the worldwide financial system. Payback, which Wall Street's managers richly deserve, can wait.

But when Detroit's automakers, who directly and indirectly employ millions, stumble, the Republicans in Congress are unwilling to bail them out. Even though their dire straights are due partly to Wall Street's ineptitude. And Americans' demands for big, gas guzzling cars. While Detroit should have been prepared to offer fuel efficient cars, undoubtedly if they had, very few would have been buying. They'd have been accused of, uh, mismanagement.

Again, I don't agree with that placing of blame—you could argue they had a moral responsibility to offer fuel efficient autos even when the government and consumer demand didn't force them to, but that won't get you far in an Econ class.

To sum up, quickly, since I have to run, I think this stinks. Everyone who voted against the auto bailout bill ought to be sent to the unemployment line without supper.

More: John B. Judis on craven senators.