Tuesday, October 9, 2012

Yeah, we knew that

It should come as no surprise to anyone that all these "bailouts" of the southern European countries have nothing to do with the well being of the Greeks or Spaniards and everything to do with the health of the German bankers.  Or for that matter, that the privatization schemes designed to "save" Social Security have nothing to do with the care of the elderly and everything to do with giving the moneychangers another pile to play with.

Even so, it is a surprise when folks who stand to gain from these schemes actually come out and admit what they are doing.

Merkel Advisor: We Are Rescuing Spain in Order to Rescue German Banks


Jürgen Donges, a member of Germany’s 5 strong Council of Economic experts, said clearly that when Germany is rescuing Greece or Spain, it is thinking of rescuing German banks with exposure to in these countries.

His words caused a stir in the twittersphere and in Spanish papers and add to the already tense relations between Berlin and Madrid, as the discussions about a Spanish bailout request heat up.

Donges, 72, was born in Seville, Spain, and is a long serving member of the Council, sometimes dubbed in Germany as the “Wise Men”. He released these crude statements to Jordi Évole, the director of a show called “Salvados” on the Spanish channel LaSexta. Donges added a few more masochistic statements on the program, quoted here. More Spanish coverage is here.

As in every country, bankers possess a lot of power and influence. When Germany demands about necessary austerity and economic reforms, does this come to mask the actual motivation for the bailouts?

Many, including this site, pointed out the circular nature of the bailouts. which was the clearest in Ireland’s case, which is extremely similar to Spain:

The government wasn’t suffocating from high debt, until it “adopted” the banks. So then, Ireland was “saved”.  Funds from the EU, IMF and from Irish taxpayers went into Irish banks, that in turn went into German, French and British banks.

Iceland took a different path when banks were in trouble: it let them fall. Spain had a choice between walking in Ireland’s shoes or in Iceland’s shoes. It seems to have to chosen the Irish path, but the hour may not be too late.

After such an angering statement, Spain may just let its banks fall – this is a very strong card, a card that Greece doesn’t have, and a card that may change the balance of power.

Without a Spanish bailout, there’s no ECB money and more fear of “convertibility” – a euro breakup. Fear alone could weaken the euro.

Where Did All Our Pensions Go?

10/07/2012  Jackie Tortora

A total of 84,350 pension plans have vanished since 1985. This figure shocked Pulitzer Prize-winning authors Donald L. Barlett and James W. Steele, who just released their latest book, "The Betrayal of the American Dream." Their chapter on retirement chronicles the heist of the American dream's secure retirement by the financial elite and is a very important section of the book, says Steele, who spoke with the AFL-CIO about the retirement crisis. Steele says there is another number we should pay attention to: $17,686. That's the median value of 401(k) accounts in 2011. For most working people, the amount in their 401(k) account would pay them less than $80 a month for life.

"What's happening with retirement is almost parallel to what you see happening in other parts of the economy," says Steele.

The elite has its agenda to eliminate pensions with the shift to 401(k)s, which cost companies less. Now, there's a revenue stream for Wall Street and an obligation shift to people with little or no experience understanding how to deal with their own retirement issues....This is typical of all the other things the economy elite has been doing for decades with deregulation, unrestricted free trade and tax cuts—these things are all related.

"In the '50s, '60s and '70s, the amount of workers with access to pensions was significantly rising," says Steele. "We fully underestimated the speed in which the downturn would occu, and how Congress went along and encouraged it."

Barlett and Steele write that the shift from defined-benefit pension plans to 401(k)s began in the 1980s. Companies realized 401(k)s would substantially reduce corporate costs. Workers were told that pensions no longer made sense and were outdated since people moved around from job to job. The 401(k) was marketed as more “portable.”

Steele says 401(k)s were engineered by corporations as another way for the wealthy executives to set aside money. They were never intended to be a principal retirement plan, only a supplement.

"Once corporate America got on to this, the idea took root," says Steele. "The entire obligation shifted to the employees."

Congress ignored the concerns raised by trade unions and other pension rights organizations. And the consequences are dire for middle- and lower-income workers.

"This is so typical of what has been happening over the last two to three decades," says Steele. "This is the slow, steady erosion of economic security Americans had (or thought they had)....Now economic pundits, corporate folks and Wall Street people are saying people just have to work longer, in part because retirement plans now in place will not provide much security to people as they get older."

Barlett and Steele feature stories of average people who did everything right (saved, worked hard) but are still living on the edge of poverty because of policies that enhance the rich at the expense of everyone else.

Over and over again, people thought they had something good. They were working hard and then, through no fault of their own, lost it all. Most people we talked to in the book are employed.

People thought it was something they had done to lose their job or benefits....They didn’t realize it was part of a broader pattern. There are great swaths of working people who are affected and we think it's our fault. For most of these people, it's not their fault, it's just the way policy has been organized. Systematically dismantling pensions and retirement is the perfect example.

With the decline of pensions, it's even more important to strengthen, not cut, Social Security benefits. Although the country dodged a bullet in 2005, when Bush's plan for Social Security privatization fizzled, Steele says we still need to be vigilant to protect our benefits from the Wall Street casino.

Don and I make this point that the 2008 recession wouldn't look a whole lot different from the Great Depression if we didn't have Social Security and Medicare because there was no safety net then.

The economic elite, says Steele, attack Social Security because it's a large pool of money for Wall Street to play with.

Nobody should kid themselves that they're not going to come back and try to implement some parts of that [privatization]....The amount of money at stake is too good and that’s all they care about—access to that money, not American workers. more

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