Swiss UBI Pummeled at the Polls + The Left's Piss Poor Answer to Brexit + Recession Looms

Yesterday the Swiss overwhelming rejected a proposal to create a universal basic income. Raphael Minder reports in "Guaranteed Income for All? Switzerland’s Voters Say No Thanks" that 

About 77 percent of voters rejected a plan to give a basic monthly income of 2,500 Swiss francs, or about $2,560, to each adult, and 625 francs for each child under 18, regardless of employment status, to fight poverty and social inequality and guarantee a “dignified” life to everyone.

Switzerland was the first country to vote on such a universal basic income plan, but other countries and cities either have been considering the idea or have started trial programs.

Winning less than 25% in a public vote is about as bad as it gets. The good news, as Minder goes on to note, is that other countries in Europe are considering a UBI:

Finland is set to introduce a pilot program for a random sample of about 10,000 adults who will each receive a monthly handout of 550 euros, about $625. The intent is to turn the two-year trial into a national plan if it proves successful.

In the Netherlands, Utrecht is leading a group of municipalities that are experimenting with similar pilot projects.

One pro-UBI "man on the street" in Geneva who Minder quotes gets it right, I think:

“We’re losing all our values, creating countries that no longer need workers but still need consumers, but how can we expect people to buy anything if they can’t earn a salary tomorrow?” asked Olivier Duchene, a musician and street entertainer.

While the Swiss UBI went down in flames, referendums in Europe have delivered some stunning victories recently, as Minder helpfully catalogs:

Referendums are gaining ground in other European countries that normally rely on a system of parliamentary democracy. 

Last year, Greece held a referendum on a bailout plan, and the Netherlands introduced a referendum law under which voters rejected a European Union agreement with Ukraine in April. Britain is set to vote in a referendum this month on whether to leave the European Union a year after Scotland voted to stay in the United Kingdom.

Other than the Scottish vote to stay part of the UK, all those votes were big wins. I have no sense of how the June 23 Brexit vote is going to go down. The reporting I have read in The London Review of Books has been nuanced to the point of turgidity. Case in point is Jan-Werner Muller's "Europe's Sullen Child."

The problem for the anti-Brexit left is it is arguing to stay in the European Union based on a romantic ideal that has proven fictitious:

In many ways the EU is already incoherent. For the time being, it is in a situation where failing policies are neither reversed nor properly fixed. With the Eurozone, governments created a single currency; with Schengen, they created one border. But nobody has been willing fully to accept what has to follow from these major forms of integration: namely, one fiscal policy, with at least some modest redistribution to address imbalances across the Eurozone; and a shared asylum and border policy. This would not in itself create a federal state, but it could be a step in that direction.

***

. . . Brexit would make Germany even more powerful, and Germany’s continued attempts to keep Europe British without Britain would create even more conflict and resentment. A UK that remained and co-operated selectively with Berlin might just make the EU more stable, better able to project power, and less toxic. Eventually, after what is likely to go down in history as a lost decade for Europe, the EU might even become an area of hope again.

So that's what the "stay" argument boils down to after all those column inches: If the UK stays, maybe Britons will make the EU more stable and eventually "an area of hope again." That's some awfully thin soup.

Why the idea of a UBI is so timely is that it looks like the West is headed toward another recession. The May jobs report was dire (Patricia Cohen and Binyamin Appelbaum, "Sharp Fall in U.S. Hiring Saps Chance of Fed Rate Increase in June"). Even Dem cheerleader-in-chief Paul Krugman thinks so ("A Pause That Distresses"). Only 38,000 jobs were created in the month, and the jobs numbers for March and April were revised downward. As Wolf Richter notes in "What Makes This Jobs Report So Truly Ugly":

This is what was “expected”: 

The Labor Department was expected to report, according to Wall Street economists, a “moderate” gain of 158,000 jobs in May, “moderate” given that the Verizon strike kept 35,000 workers off their jobs. The “whisper number” was around 200,000 jobs. 

And this is what we got:

The BLS reported that the economy had added 38,000 jobs, the lowest since September 2010. Furthermore, the April job gains of 160,000 were chopped down by 37,000 and the March job gains of 208,000 were chopped down by 22,000. Hence, with 59,000 jobs revised away, and with only 38,000 jobs “created” in May, the net total in today’s report was a net loss of 21,000 jobs. We haven’t seen that since the Financial Crisis. 

“Shockingly weak,” and “In one word, ‘Ouch’” is how MarketWatch put it so elegantly. 

It was ugly all around. A number of sectors, including manufacturing, shed jobs, and the labor participation rate dropped for the second month in a row, to 62.6%. Just about the only good number was the magic headline unemployment rate, which fell sharply, from 5% in April to 4.7%, the lowest since the Great Recession began, leaving some folks scratching their heads and searching for answers.

Richter sees the drop in temp hiring as the canary in the coal mine:

But here’s where the report really spread gloom:

The number of temporary jobs plunged by another 21,000. Temporary employment is a harbinger for future employment trends, on the way up and on the way down.

The temporary-help sector was a major – and much lamented – driver of jobs growth after the Financial Crisis. The sector began adding jobs in September 2009. It was an early sign that companies were starting to hire again but didn’t want to commit to more permanent jobs, even as the economy overall continued shedding jobs until February 2010.

From the low point in August 2009 at 1.75 million temporary jobs, the sector added 1.2 million jobs by December 2015, when it peaked at 2.94 million. But then it started shedding jobs. With May’s loss of 21,000 jobs, the sector is down 63,800 from December.

This also happened in 2007, when the temporary help sector started shedding jobs even as the overall economy was still adding jobs until right up to the official beginning of the Great Recession. And it happened in 2000, before the 2001 recession kicked it.

Staffing agencies are cutting back because companies no longer need that many workers. Total business sales in the US have been declining since mid-2014. Productivity has been crummy and getting worse. Earnings are down for the fourth quarter in a row. Companies see that demand for their products is faltering, so the expense-cutting has started. The first to go are the hapless temporary workers.

Some the reporting of the G-7 meeting in Japan a couple weeks back mentioned Abe's rebuffed call for a unified commitment to stimulus spending. Nothing much more was said about it. But I figured that something ominous must be in the formative stages. Can you imagine the impact of another recession when we have yet to dig our way out of the post-Lehman Long Recession?

The Opium of the White Masses: OxyContin and Donald Trump

Wife and husband Anne Case and Angus Deaton have published a paper, "Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century," that has provided grist for the commentariat the last couple of days. On Sunday, conservative columnist Ross Douhat weighed in with "The Dying of the Whites," while yesterday liberal lion Paul Krugman stepped into the ring with "Despair, American Style." The abstract to the Case-Deaton paper reads as follows:

This paper documents a marked increase in the all-cause mortality of middle-aged white non-Hispanic men and women in the United States between 1999 and 2013. This change reversed decades of progress in mortality and was unique to the United States; no other rich country saw a similar turnaround. The midlife mortality reversal was confined to white non-Hispanics; black non-Hispanics and Hispanics at midlife, and those aged 65 and above in every racial and ethnic group, continued to see mortality rates fall. This increase for whites was largely accounted for by increasing death rates from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis. Although all education groups saw increases in mortality from suicide and poisonings, and an overall increase in external cause mortality, those with less education saw the most marked increases. Rising midlife mortality rates of white non-Hispanics were paralleled by increases in midlife morbidity. Self-reported declines in health, mental health, and ability to conduct activities of daily living, and increases in chronic pain and inability to work, as well as clinically measured deteriorations in liver function, all point to growing distress in this population. We comment on potential economic causes and consequences of this deterioration.

Krugman is right to compare what is going on now in the U.S. for whites to what happened in Russia after collapse of the Soviet Union:

Even more striking are the proximate causes of rising mortality. Basically, white Americans are, in increasing numbers, killing themselves, directly or indirectly. Suicide is way up, and so are deaths from drug poisoning and the chronic liver disease that excessive drinking can cause. We’ve seen this kind of thing in other times and places – for example, in the plunging life expectancy that afflicted Russia after the fall of Communism. But it’s a shock to see it, even in an attenuated form, in America.

Sadly, for aging white America, the savior waiting in the wings is no Vladimir Putin; he is, as Douhat remarks, Donald Trump:

Yet here, too, Deaton and Case’s data is somewhat confounding, because if economic stress were all, you would expect the mortality crisis to manifest itself more sharply among black and Hispanic Americans — who have consistently higher unemployment rates than their white neighbors, and lag whites in wealth by far.

But in fact the mortality rate for minorities in the U.S. continued to fall between 1999 and 2013, mirroring the trend in Europe, and the African-American death rate in particular fell hugely. Amid the stresses of the dot-com bust and the Great Recession, it was only white Americans who turned increasingly to drugs, liquor and quietus. 

Why only them? One possible solution is suggested by a paper from 2012, whose co-authors include Andrew Cherlin and Brad Wilcox, leading left and right-leaning scholars, respectively, of marriage and family. 

Noting that religious practice has fallen faster recently among less-educated whites than among less-educated blacks and Hispanics, their paper argues that white social institutions, blue-collar as well as white-collar, have long reflected a “bourgeois moral logic” that binds employment, churchgoing, the nuclear family and upward mobility.

But in an era of stagnating wages, family breakdown, and social dislocation, this logic no longer seems to make as much sense. The result is a mounting feeling of what the American Conservative’s Rod Dreher calls white “dispossession” — a sense of promises broken, a feeling that what you were supposed to have has been denied to you. (The Donald Trump phenomenon, Dreher notes, feeds off precisely this anxiety.)

The Walmarting of America, the blasting to smithereens of towns and small cities by big box outlet stores, the offshoring of U.S. industrial capacity, a political class that suckles exclusively on the corporate tit, all this and more explains the rise in morbidity in less-educated whites. If they can put away their Budweiser and OxyContin long enough to make it to the polls, Donald Trump will be the next POTUS.

Carson's moment in the spotlight is fast fading. And it appears that with the two main contenders for the establishment GOP crown on the threshold of mutually assured destruction, The Donald is once again in the catbird seat.

The Future of Work + Hillary's Suicidal Southern Strategy + the Biden Decoy

On this Labor Day, give yourself a sense of the perilous times we are in by scanning the weekly Popular Resistance newsletter put together by Kevin Zeese and Margaret Flowers. What jumped out at me is "The Future of Work" section:

The Future of Work 

There are some major trends that indicate we are in the midst of a radical transformation of what work means and how people will have income. 

The most significant trend involves robotics, artificial intelligence and software that will do most current jobs. The research firm Gartner predicts that “one in three jobs will be converted to software, robots and smart machines by 2025.” Oxford University researchers estimate that 47 percent of U.S. jobs could be automated by 2033.  Already the official unemployment rate hides the fact only 63% of working-age adults are actually working. 

These changes are happening alongside the demise of unions and worker power; as well as globalization resulting in lost jobs and a race to the bottom of low paid workers.  Workers are already in politically and economically weak positions to survive the onslaught of robots. 

It is time for these issues to rise to the top.  The transformation of jobs and what to do about them is not even discussed in the 2016 elections, other than reforms like raising poverty wages. A broader discussion is needed.

The authors go on to advocate for a universal basic income and worker cooperatives.

One thing is for sure, the economy is not working for most people. Official unemployment is down to 5.1 percent, what many mainstream economists believe to be the "natural" rate of unemployment, but wages are still broadly stagnant. This fact is succinctly explained in Doug Smith's "Labor Day? Let's Tell the Truth and Call It 'Assets Day' ": "Take heart. Through your self-denial, executives, owners, and shareholders have grabbed all the productivity gains of the past quarter century for themselves."

Krugman's Labor Day column, "Trump Is Right on Economics," addresses the root of Trump's popularity: He is the only Republican addressing this issue of the systemic lack of work in the globalized neoliberal economy:

And here’s what’s interesting: all indications are that Mr. Bush’s attacks on Mr. Trump are falling flat, because the Republican base doesn’t actually share the Republican establishment’s economic delusions.

The thing is, we didn’t really know that until Mr. Trump came along. The influence of big-money donors meant that nobody could make a serious play for the G.O.P. nomination without pledging allegiance to supply-side doctrine, and this allowed the establishment to imagine that ordinary voters shared its antipopulist creed. Indeed, Mr. Bush’s hapless attempt at a takedown suggests that his political team still doesn’t get it, and thinks that pointing out The Donald’s heresies will be enough to doom his campaign. 

But Mr. Trump, who is self-financing, didn’t need to genuflect to the big money, and it turns out that the base doesn’t mind his heresies. This is a real revelation, which may have a lasting impact on our politics. 

Again, I’m not making a case for Mr. Trump. There are lots of other politicians out there who also refuse to buy into right-wing economic nonsense, but who do so without proposing to scour the countryside in search of immigrants to deport, or to rip up our international economic agreements and start a trade war. The point, however, is that none of these reasonable politicians is seeking the Republican presidential nomination.

Like Trump, Bernie Sanders is also bringing the neoliberal temple down, except for the Democratic half of the duopoly. Sanders only gets a fraction of the media attention though; nonetheless, at this point, the Clinton camp has basically acknowledged that it is going to lose Iowa and New Hampshire. That was the point of yesterday's "Hillary Clinton Relying on Southern Primaries to Fend Off Rivals," by Patrick Healy and Amy Chozick:

Hillary Rodham Clinton’s presidential campaign is methodically building a political firewall across the South in hopes of effectively locking up the Democratic nomination in March regardless of any early setbacks in the Iowa caucuses and the New Hampshire primary.

Mrs. Clinton’s advisers, struck by the strength of Senator Bernie Sanders in those two states, have been assuring worried supporters that victories and superdelegate support in Southern states will help make her the inevitable nominee faster than many Democrats expect. They point to her popularity with black and Hispanic voters, as well as her policy stances and the relationships that she and her husband, former President Bill Clinton, have cultivated. Mrs. Clinton was similarly confident at this point eight years ago, before Barack Obama and his superior organizers began piling up delegates, including in many Southern states.

In interviews, advisers said the campaign was increasingly devoting staff members and money to win the South Carolina primary on Feb. 27 while laying the groundwork to sweep Alabama, Arkansas, Georgia, Oklahoma, Tennessee, Texas and Virginia on March 1. Those Super Tuesday states are highlighted in red on maps in the offices of Mrs. Clinton’s senior aides in Brooklyn.

The eight primaries will deliver several hundred delegates for Mrs. Clinton, advisers believe, toward the goal of more than 2,200 needed to clinch the Democratic nomination. The campaign is barraging superdelegates in the South with requests for support — sometimes even jumping the gun by sending pledge forms prematurely — in hopes of adding scores of these party leaders who can bring their votes to the Clinton column at the Democratic National Convention.

The Southern firewall also includes Florida, Louisiana, Mississippi and North Carolina, which vote through mid-March. If Mrs. Clinton wins big in the Michigan and Ohio primaries that month, her advisers and supporters believe, the nomination will essentially be hers (though crossing the total delegate threshold takes time).

In order to sew up the nomination, Hillary is relying on votes in states Democrats have slim chance of winning in 2016, votes based on ignorance of Bernie Sanders' positions vis-a-vis Clinton's. This is her "Southern Strategy." If it is to pay off and she is to win the nomination, it will almost certainly be a Pyrrhic victory. Winning a nomination based on the ignorance of voters who reside in states most of which will not be in play for Dems next year is a prescription for disaster. How can Hillary juice turnout and return the Obama coalition to the polls if she is relying on public ignorance and superdelegates to push her across the finish line?

As for the Biden, after reading the coverage of his jaunt to Florida and Georgia, it is clear to me he is not going to run. Seventy-two is 72 and not an age that allows for a late-entry, come-from-behind win of a presidential nomination. Biden exists as a decoy to keep rank-and-file Democrats from giving Bernie a look and thereby to keep as many Dem voters on the Clinton reservation as possible. Clinton's support is fast disappearing. To slow things down the Democrat power elite have introduced a Biden mirage.

Huge Win for Greece, Varoufakis Sacked, Troika Unlikely to be Placated

Greek Prime Minister Alexis Tsipras' first move following the landslide anti-austerity "Oxi" vote in yesterday's referendum was to toss his finance minister and chief troika critic, Yanis Varoufakis, on the pyre. Varoufakis announced his resignation today with the blog post, "Minister No More":

Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today. 

I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum. 

And I shall wear the creditors’ loathing with pride. 

We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government. 

The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning.

There is no indication at this point that the eurozone power brokers are feeling any change of heart after a super-majority of Greeks rejected their last proposal. Jack Ewing reports from the European Central Bank headquarters in Frankfurt that there is a wait-and-see attitude on Greece's access to emergency liquidity assistance (ELA):

The no vote by Greeks on Sunday makes it even more difficult for the European Central Bank to continue propping up Greece’s commercial banks, whose solvency is closely linked to that of the country’s government. 

But the central bank has so far avoided taking action that could force Greece out of the eurozone, a possible outcome if the banks fail. Without a banking system serving as a conduit for euros and a platform for transactions, Greece might have little choice but to begin printing its own currency.

“Pressure has increased further for the E.C.B. to revoke Greek banks’ access to central bank liquidity,” said Mujtaba Rahman, the Europe director for the Eurasia Group, a political risk consulting firm. “Still, the E.C.B. is very likely to keep its liquidity lifeline open for the time being.”

While the central bank probably will not cut off credit to the Greek banks on Monday, it is also unlikely to increase the amount available to them from its current level of 89 billion euros, or about $99 billion. The 25 members of the Governing Council will not want to increase the central bank’s exposure to Greece until there is tangible progress toward an accord with eurozone creditors and with the International Monetary Fund.

Without an increase in credit, Greek banks are in imminent danger of running out of cash to dispense to depositors. They are unlikely to open tomorrow, despite promises to the contrary by Athens.

“The Greek no puts the European Central Bank in a most difficult position,” Holger Schmieding, chief economist at Berenberg, a German bank, said in a note to clients. “We look for the E.C.B. to tread very cautiously, though, perhaps even seeing to it that small amounts of euro cash could still be withdrawn from Greek cash machines for a while until the political outlook becomes clearer.”

In other words, the historic "Oxi" vote by the Greek people means nothing to ECB apparatchiks. This attitude is also prevalent in Brussels where James Kanter quotes European Commission VP Valdis Dombrovskis saying "Oxi" will make things worse for Greece:

“The commission is ready to continue its work with Greece,” Mr. Dombrovskis told a daily news conference in Brussels. “But to be clear, the commission cannot negotiate a new program without a mandate from the Eurogroup.” 

Mr. Dombrovskis was referring to the name of the group of finance ministers from countries that use the euro.

The hurdles to a formal resumption of talks, including any official decision by the Eurogroup to begin negotiations on Greece’s third international bailout in five years, were high, Mr. Dombrovskis warned.

“The ‘no’ result unfortunately widens the gap between Greece and other eurozone countries,” he said. 

“There is no easy way out of this crisis,” he added. “Too much time and too many opportunities have been lost.”

Once again, to the eurozone power elite the "Oxi" vote means nothing; in fact, worse than nothing. The democratic referendum, we are told, has raised the costs of the any new bailout deal by tens of billions of euros.

What the "Oxi" vote reveals is the weakness of the "big lie." Greek voters saw clearly what was happening: Banks were shut because the European Central Bank capped ELA when Tsipras called the referendum. The ECB did this in an attempt to shock Greeks and stampede them in the direction of a Yes vote. It failed stupendously. Now, as Krugman outlines in his column, "Ending Greece’s Bleeding," for the ECB to increase ELA would be to acknowledge that the cap on lending was a political intervention meant to topple Greece's Syriza-led government:

The most immediate question involves Greek banks. In advance of the referendum, the European Central Bank cut off their access to additional funds, helping to precipitate panic and force the government to impose a bank holiday and capital controls. The central bank now faces an awkward choice: if it resumes normal financing it will as much as admit that the previous freeze was political, but if it doesn’t it will effectively force Greece into introducing a new currency. 

Specifically, if the money doesn’t start flowing from Frankfurt (the headquarters of the central bank), Greece will have no choice but to start paying wages and pensions with i.o.u.s, which will de facto be a parallel currency — and which might soon turn into the new drachma.

But the big lie must be protected. That is all neoliberalism is at this point. Krugman is not sanguine about the possibility of a new debt deal emerging quickly; and without this, Krugman sees no better alternative for Greece than abandoning the euro:

In the failed negotiations that led up to Sunday’s referendum, the central sticking point was Greece’s demand for permanent debt relief, to remove the cloud hanging over its economy. The troika — the institutions representing creditor interests — refused, even though we now know that one member of the troika, the International Monetary Fund, had concluded independently that Greece’s debt cannot be paid. But will they reconsider now that the attempt to drive the governing leftist coalition from office has failed?

I have no idea — and in any case there is now a strong argument that Greek exit from the euro is the best of bad options.

Of course, Greece no longer has its own currency, and many analysts used to claim that adopting the euro was an irreversible move — after all, any hint of euro exit would set off devastating bank runs and a financial crisis. But at this point that financial crisis has already happened, so that the biggest costs of euro exit have been paid. Why, then, not go for the benefits? 

Would Greek exit from the euro work as well as Iceland’s highly successful devaluation in 2008-09, or Argentina’s abandonment of its one-peso-one-dollar policy in 2001-02? Maybe not — but consider the alternatives. Unless Greece receives really major debt relief, and possibly even then, leaving the euro offers the only plausible escape route from its endless economic nightmare.

And let’s be clear: if Greece ends up leaving the euro, it won’t mean that the Greeks are bad Europeans. Greece’s debt problem reflected irresponsible lending as well as irresponsible borrowing, and in any case the Greeks have paid for their government’s sins many times over. If they can’t make a go of Europe’s common currency, it’s because that common currency offers no respite for countries in trouble. The important thing now is to do whatever it takes to end the bleeding.

Basically we are back to where we were when negotiations first started between Greece and the troika. Absent significant debt write-offs there appears to be no rational alternative to a Grexit.

But a Grexit doesn't appear to be Tsipras' goal; axing Varoufakis is proof of that (though the finance minister didn't seem too broken up about it; at the end of the day, a scholar prefers the quiet of the cloister). Why the troika doesn't grab at the offer Tsipras made last Wednesday after Greece failed to make its repayment to the IMF and be done with the crisis can only be explained by a perception in Brussels, Berlin, and other European capitals (not to mention Washington D.C.) that protecting the big lie of neoliberalism -- at all costs -- is paramount, and this demands that a leftist party like Syriza must go.

The Present Age: Freak Out of the 1%

It quickly got dark Sunday morning after the day dawned with bright sunshine.

Saturday evening as I reclined on my mattress on the floor reading Ed Sanders' The Family: The Story of Charles Manson's Dune Buggy Attack Battalion, the chapter where Tex Watson and Charlie's girls -- Linda Kasabian, Patricia Krenwinkel and Susan Atkins -- butcher the occupants of the Polanski household on 10050 Cielo Drive in Los Angeles' Benedict Canyon the early morning of August 9, 1969, sounds of Seattle's Capitol Hill Pride celebration wafted through my open windows.

The theme to this year's Pride was "Stonewall, Never Forget." The sounds were of Steppenwolf; a guy who sounded like John Kay led a band through all Steppenwolf's big hits, including the ones that appeared in Easy Rider (1969), "The Pusher" and "Born To Be Wild." Suddenly the past wasn't gone. I was in the present but 46-years back in 1969 with the Manson Family, Stonewall and Steppenwolf. Very strange.

The present world we live in is indeed very strange. Unlike the world of 1969, there is no drug-fueled freak out and rebellion of the masses, no massification of bohemia, no disruptive culture of protest. Instead, what we have is a "freak out" by those in power as they try to maintain their domination.

The efflorescence of takfiri jihadis, seemingly spontaneous, has more to do with the constituent countries of the GCC trying to beat back the spirit of the Arab Spring. When all is said and done, the rise of ISIS is the direct result of actions by states such as Turkey, Saudi Arabia, and, yes, the United States. and the pathological desire to see an ally of Iran, Syria, toppled.

The blowback to this policy freak out is already being felt in Europe, as the European Union finds itself in stasis on how to deal with the refugees flocking to its shores from wars in Africa and the Middle East.

But no better example of the addledness of the current leadership is the attitude of the eurozone powers towards Greece. Paul Krugman has a tremendous column this morning, "Greece Over the Brink," in which he provides a pithy, succinct synopsis of the Greek debt crisis. Krugman properly places all the post-2010 blame on the troika:

Greece should vote “no,” and the Greek government should be ready, if necessary, to leave the euro. 

To understand why I say this, you need to realize that most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus. 

So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.

Krugman thinks Greece, by declaring a bank holiday and instituting capital controls, has already taken the most difficult step. He worries that a Yes vote will destroy the Syriza-led government and maintain the pestilential fiction of troika-dictated austerity. Interestingly, Krugman sees the current impasse as most radical leftists do -- a political attempt to destroy the not-sufficiently-neoliberal Syriza of Alexis Tsipras and Yanis Varoufakis:

So have I just made the case for “Grexit” — Greek exit from the euro? Not necessarily. The problem with Grexit has always been the risk of financial chaos, of a banking system disrupted by panicked withdrawals and of business hobbled both by banking troubles and by uncertainty over the legal status of debts. That’s why successive Greek governments have acceded to austerity demands, and why even Syriza, the ruling leftist coalition, was willing to accept the austerity that has already been imposed. All it asked for was, in effect, a standstill on further austerity.

But the troika was having none of it. It’s easy to get lost in the details, but the essential point now is that Greece has been presented with a take-it-or-leave-it offer that is effectively indistinguishable from the policies of the past five years. 

This is, and presumably was intended to be, an offer Alexis Tsipras, the Greek prime minister, can’t accept, because it would destroy his political reason for being. The purpose must therefore be to drive him from office, which will probably happen if Greek voters fear confrontation with the troika enough to vote yes next week. 

But they shouldn’t, for three reasons. First, we now know that ever-harsher austerity is a dead end: after five years Greece is in worse shape than ever. Second, much and perhaps most of the feared chaos from Grexit has already happened. With banks closed and capital controls imposed, there’s not that much more damage to be done. 

Finally, acceding to the troika’s ultimatum would represent the final abandonment of any pretense of Greek independence. Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable.

So it’s time to put an end to this unthinkability. Otherwise Greece will face endless austerity, and a depression with no hint of an end.

There is some reason to hope that the battle-hardened Greeks will vote No, even though elections are usually fear-based, lowest-common-denominator exercises. The fact that markets are down this morning but not enormously is another hopeful sign.

The Staying Power of Neoliberalism and U.S. Unipolarity

Krugman was in Athens recently to survey the damage the troika has wrought and to offer his idea for a solution.

No keen insight will be found in reading "Greece on the Brink." Krugman, one of the preferred thinkers of the Democrats, begins his column tut-tutting the perception held by Greeks that a bloodsucking neoliberal establishment is out to get them:

"Don’t you think they want us to fail?” That’s the question I kept hearing during a brief but intense visit to Athens. My answer was that there is no “they” — that Greece does not, in fact, face a solid bloc of implacable creditors who would rather see default and exit from the euro than let a leftist government succeed, that there’s more good will on the other side of the table than many Greeks suppose.

Krugman then basically performs a somersault and acknowledges that Greeks have a point: a way forward is clearly visible; Greece recently achieved a budget surplus; all that needs to be done is to freeze the implementation of further austerity measures -- cuts to pensions and labor rights -- and let the country stabilize; but the troika appears to be in no mood to bargain in good faith:

The shape of a deal is therefore clear: basically, a standstill on further austerity, with Greece agreeing to make significant but not ever-growing payments to its creditors. Such a deal would set the stage for economic recovery, perhaps slow at the start, but finally offering some hope.

But right now that deal doesn’t seem to be coming together. Maybe it’s true, as the creditors say, that the new Greek government is hard to deal with. But what do you expect when parties that have no previous experience in governing take over from a discredited establishment? More important, the creditors are demanding things — big cuts in pensions and public employment — that a newly elected government of the left simply can’t agree to, as opposed to reforms like an improvement in tax enforcement that it can. And the Greeks, as I suggested, are all too ready to see these demands as part of an effort either to bring down their government or to make their country into an example of what will happen to other debtor countries if they balk at harsh austerity. 

To make things even worse, political uncertainty is hurting tax receipts, probably causing that hard-earned primary surplus to evaporate. The sensible thing, surely, is to show some patience on that front: if and when a deal is reached, uncertainty will subside and the budget should improve again. But in the pervasive atmosphere of distrust, patience is in short supply. 

It doesn’t have to be this way. True, avoiding a full-blown crisis would require that creditors advance a significant amount of cash, albeit cash that would immediately be recycled into debt payments. But consider the alternative. The last thing Europe needs is for fraying tempers to bring on yet another catastrophe, this one completely gratuitous.

So in the end Krugman obliquely endorses the Greek belief that their country is being sacrificed on the altar of neoliberal orthodoxy.

A particularly good read from this past weekend but one sure to depress those who like myself see a fast-approaching collapse to the U.S. neoliberal global hegemony is Tariq Ali's "The New World Disorder: They Knew Exactly What They Were Doing."

Ali argues that U.S. unipolarity has more staying power than is commonly acknowledged and "declinism" as a school of thought is superficial and overrated; he then takes the reader on a brief  yet magisterial global tour to emphasize that U.S. leadership while maybe not waxing is certainly not waning.

Towards the end of his essay he comes to Europe:

What is the situation in Europe? The first point to be made is that there isn’t a single country in the European Union that enjoys proper sovereignty. After the end of the Cold War and reunification, Germany has become the strongest and strategically the most important state in Europe but even it doesn’t have total sovereignty: the United States is still dominant on many levels, especially as far as the military is concerned. Britain became a semi-vassal state after the Second World War. The last British prime ministers to act as if Britain was a sovereign state were Harold Wilson, who refused to send British troops to Vietnam, and Edward Heath, who refused to allow British bases to be used to bomb the Middle East. Since then Britain has invariably done the Americans’ bidding even though large parts of the British establishment are against it. There was a great deal of anger in the Foreign Office during the Iraq War because it felt there was no need for Britain to be involved. In 2003, when the war was underway, I was invited to give a lecture in Damascus; I got a phone call from the British embassy there asking me to come to lunch. I thought this was odd. When I arrived I was greeted by the ambassador, who said: ‘Just to reassure you, we won’t just be eating, we’ll be talking politics.’ At the lunch, he said: ‘Now it’s time for questions – I’ll start off. Tariq Ali, I read the piece you wrote in the Guardian arguing that Tony Blair should be charged for war crimes in the International Criminal Court. Do you mind explaining why?’ I spent about ten minutes explaining, to the bemusement of the Syrian guests. At the end the ambassador said: ‘Well, I agree totally with that – I don’t know about the rest of you.’ After the guests had left, I said: ‘That was very courageous of you.’ And the MI6 man who was at the lunch said: ‘Yeah, he can do that, because he’s retiring in December.’ But a similar thing happened at the embassy in Vienna, where I gave a press conference attacking the Iraq war in the British ambassador’s living room. These people aren’t fools – they knew exactly what they were doing. And they acted as they did as a result of the humiliation they felt at having a government which, even though the Americans had said they could manage without the UK, insisted on joining in anyway.

The Germans know they don’t have sovereignty, but when you raise it with them they shrug. Many of them don’t want it, because they are over-concerned with their past, with the notion that Germans are almost genetically predisposed to like fighting wars – a ludicrous view, which some people who should know better have expressed again in marking the anniversaries of the First World War. The fact is that – politically and ideologically and militarily, even economically – the European Union is under the thumb of the global imperial power. When the Euro elite was offering a pitiful sum of money to the Greeks, Timothy Geithner, then US secretary of the treasury, had to intervene, and tell the EU to increase its rescue fund to €500 billion. They hummed and hawed, but finally did what the Americans wanted. All the hopes that had been raised, from the time the European idea was first mooted, of a continent independent of the other major powers charting its own way in the world, disappeared once the Cold War ended. Just when you felt it might be able to achieve that goal, Europe instead became a continent devoted to the interests of bankers – a Europe of money, a place without a social vision, leaving the neoliberal order unchallenged.

The Greeks are being punished not so much for the debt as for their failure to make the reforms demanded by the EU. The right-wing government Syriza defeated only managed to push through three of the 14 reforms the EU insisted on. They couldn’t do more because what they did push through helped create a situation in Greece which has some similarities with Iraq: demodernisation; totally unnecessary privatisations, linked to political corruption; the immiseration of ordinary people. So the Greeks elected a government that offered to change things, and then they were told that it couldn’t. The EU is frightened of a domino effect: if the Greeks are rewarded for electing Syriza other countries might elect similar governments, so Greece must be crushed. The Greeks can’t be kicked out of the European Union – that isn’t permitted by the constitution – or out of the Eurozone, but life can be made so difficult for them that they have to leave the euro and set up a Greek euro, or a euro drachma, so that the country keeps going. But were that to happen conditions would, at least temporarily, get even worse – which is why the Greeks have no choice but to resist it. The danger now is that, in this volatile atmosphere, people could shift very rapidly to the right, to the Golden Dawn, an explicitly fascist party. That is the scale of the problem, and for the Euro elite to behave as it’s doing – as the extreme centre, in other words – is short-sighted and foolish.

And then there’s the rise of China. There’s no doubt that enormous gains have been made by capitalism in China; the Chinese and American economies are remarkably interdependent. When a veteran of the labour movement in the States recently asked me what had happened to the American working class the answer was plain: the American working class is in China now. But it’s also the case that China isn’t even remotely close to replacing the US. All the figures now produced by economists show that, where it counts, the Chinese are still way behind. If you look at national shares of world millionaire households in 2012: the United States, 42.5 per cent; Japan, 10.6 per cent; China, 9.4 per cent; Britain, 3.7 per cent; Switzerland, 2.9 per cent; Germany, 2.7 per cent; Taiwan, 2.3 per cent; Italy, 2 per cent; France, 1.9 per cent. So in terms of economic strength the United States is still doing well. In many crucial markets – pharmaceuticals, aerospace, computer software, medical equipment – the US is dominant; the Chinese are nowhere. The figures in 2010 showed that three-quarters of China’s top two hundred exporting companies – and these are Chinese statistics – are foreign-owned. There is a great deal of foreign investment in China, often from neighbouring countries like Taiwan. Foxconn, which produces computers for Apple in China, is a Taiwanese company.

The notion that the Chinese are suddenly going to rise to power and replace the United States is baloney. It’s implausible militarily; it’s implausible economically; and politically, ideologically, it’s obvious that it’s not the case. When the British Empire began its decline, decades before it collapsed, people knew what was happening. Both Lenin and Trotsky realised that the British were going down. There’s a wonderful speech of Trotsky’s, delivered in 1924 at the Communist International, where, in inimitable fashion, he made the following pronouncement about the English bourgeoisie:

Their character has been moulded in the course of centuries. Class self-esteem has entered into their blood and marrow, their nerves and bones. It will be much harder to knock the self-confidence of world rulers out of them. But the American will knock it out just the same, when he gets seriously down to business. In vain does the British bourgeois console himself that he will serve as a guide for the inexperienced American. Yes, there will be a transitional period. But the crux of the matter does not lie in the habits of diplomatic leadership but in actual power, existing capital and industry. And the United States, if we take its economy, from oats to big battleships of the latest type, occupies the first place. They produce all the living necessities to the extent of one-half to two-thirds of what is produced by all mankind.

If we were to change the text, and instead of the ‘English bourgeois character’ say the ‘American bourgeois character has been moulded in the course of centuries … but the Chinese will knock it out just the same,’ it wouldn’t make sense.

Ali does not provide much in the way of hope other than the assertion that when people get truly fed up with neoliberalism there will be change. But how many lives will be lost in the process? All we need do is look to Yemen to see that the U.S. and its client states are more than willing to embrace genocide to maintain full-spectrum dominance.

Ali concludes his piece with some fine words from third century BC Sparta:

It’s a mixed and confused world. But its problems don’t change – they just take new forms. In Sparta in the third century BCE, a fissure developed between the ruling elite and ordinary people following the Peloponnesian Wars, and those who were ruled demanded change because the gap between rich and poor had become so huge it couldn’t be tolerated. A succession of radical monarchs, Agis IV, Cleomenes III and Nabis, created a structure to help revive the state. Nobles were sent into exile; the magistrates’ dictatorship was abolished; slaves were given their freedom; all citizens were allowed to vote; and land confiscated from the rich was distributed to the poor (something the ECB wouldn’t tolerate today). The early Roman Republic, threatened by this example, sent its legions under Titus Quinctius Flamininus to crush Sparta. According to Livy, this was the response from Nabis, the king of Sparta, and when you read these words you feel the cold anger and the dignity:

"Do not demand that Sparta conform to your own laws and institutions … You select your cavalry and infantry by their property qualifications and desire that a few should excel in wealth and the common people be subject to them. Our law-giver did not want the state to be in the hands of a few, whom you call the Senate, nor that any one class should have supremacy in the state. He believed that by equality of fortune and dignity there would be many to bear arms for their country."

Iranian Nuclear Deal D.O.A.

Obama is likely headed for full-fledged lame duck status by Memorial Day.

Now that Hillary has announced, and, as Paul Krugman points out in his column today, the Fourth Estate will be preoccupied by "endless attempts to psychoanalyze the candidate, endless attempts to read significance into what she says or doesn’t say about President Obama, endless thumb-sucking about her 'positioning' on this or that issue," Obama will necessarily become an ever-diminishing figure from this point forward.

But the mortal wound for Obama will come when the Senate Foreign Relations Committee begins crafting an Iran sanctions review bill on Tuesday. The principal goal of the legislation, as Jonathan Weisman and Jennifer Steinhauer explain in "Seeking Voice in Iran Deal, Lawmakers Are Set to Act," is to give Congress the ability to block Obama's lifting of some its sanctions, thereby scuttling the deal on Iran's nuclear program:

The Iran review legislation is complex and often misunderstood. It would prevent the president from waiving any economic sanctions against Iran for 60 days as lawmakers review a final accord. After that review, lawmakers could vote to approve or disapprove the lifting of sanctions Congress imposed in 2010 — or take no action. The president would then be able to veto that resolution of disapproval.

Supporters of the bill say the measure would not stop Mr. Obama and the five other nations negotiating with Iran from concluding an accord limiting Iran’s nuclear program in exchange for a loosening of sanctions. It would do nothing to stop the European Union or United Nations from lifting its sanctions, or the president from waiving sanctions imposed by executive action. In a phased loosening of economic penalties, a final lifting of congressional sanctions could be put off until after Mr. Obama left office.

An override of a veto on the Iran Nuclear Agreement Review Act would not mean the votes would necessarily be there to override a subsequent veto of a resolution against the final lifting of sanctions, supporters say.

But White House officials say any action could have major repercussions as diplomats try to turn the ambitious framework reached this month into a final agreement by the end of June.

The Iranians would walk away from the tentative deal reached two weeks ago if suddenly in the eleventh hour they were confronted with new conditions and essentially the introduction of a new party, the Israeli/Saudi controlled U.S. Congress, to the P5+1 negotiations, particularly after Khamenei made it clear that Iran expects all sanctions to be promptly removed once a final agreement is signed in June.

The Republicans and their Likudnik allies in the Democratic Party know this. The biggest barrier at this point to scuttling the Iran nuclear accord is overreach:

But the biggest threat to the bill might come from committee Republicans, whose amendments could strengthen Mr. Obama’s argument that the bill would torpedo international negotiations. Senator Marco Rubio, Republican of Florida, is expected announce his candidacy for president on Monday and then fly back to Washington on Tuesday to introduce an amendment making approval of the deal dependent on Iran’s recognition of Israel’s right to exist.

Senator Johnny Isakson of Georgia, another committee Republican, will push an amendment demanding Iranian compensation for the victims of the hostage taking at the United States Embassy in Tehran 35 years ago.

“As we debate our foreign policy toward Iran, it seems more appropriate than ever that we compensate the victims of the Iran hostage crisis, who were forced to endure unimaginable fear, despair and torture for 444 days,” he said.

This coming from a country that officially acknowledged the role it played in the 1953 coup of Iran's democratically elected prime minister Mohammad Mossadegh, installing in his place the Shah, a brutal dictator.

The important takeaway here is that some sort of Congressional oversight is going to emerge from the Senate. Team Obama is hoping that it will be so bellicose that when he vetoes it the veto will not be overridden:

For now, the White House — which is increasingly realizing that it cannot prevent some form of congressional oversight — must pin its hope less on Democratic efforts to dilute the legislation than on Republican efforts to toughen it so much that it loses its veto-proof support. At least 50 amendments by both parties are ready to go.Continue reading the main story

“The more we see the true agenda of the right wing coming out, which is war with Iran, I think the better it is for us to try and stop this, because I know Americans don’t want another war,” said Senator Barbara Boxer of California, a senior Democrat on the Foreign Relations Committee.

Boxer is right. Americans don't want another war. But she assumes that Congress answers to the American people. It does not. Most know this. That is why Congressional approval ratings are at an all-time low.

Even if Obama is able to maintain his veto, significant damage will have been done. Confidence that Iran is a safe place to make an investment will be undermined given that every current front-runner for the White House is more hawkish on Iran than Obama.

Right now I'd say Obama has a 50-50 chance of maintaining a veto, but that this in no way guarantees a final agreement with Iran. I think the odds of that are looking worse. Saudi Arabia's ongoing assault on Yemen,with the active support of the United States, promises to make the next two months very dangerous.

Syriza Wins, Now Comes the Hard Part

In the end there was nothing to be worried about. Greeks were deaf to the fear-mongering of New Democracy. Syriza won big. According to Liz Alderman and Jim Yardley, "After Victory at Greek Polls, Leftist Politician Forms Coalition Government":

With nearly all the votes counted, Mr. Tsipras’s Syriza party had won 36.3 percent of votes and secured 149 seats in the Greek Parliament, short of the 151 that he needed to secure an outright majority. 

New Democracy, led by the defeated incumbent prime minister, Antonis Samaras, took 27.8 percent of the votes. The neo-facist Golden Dawn party, whose popularity has increased amid economic hardship, won 6.3 percent of votes, coming in third. 

Syriza has become the first anti-austerity party to take power in a eurozone country and to shatter the two-party establishment that has dominated Greek politics for four decades.

(The former governing socialist party Pasok trailed fascist Golden Dawn. What does that tell you about the health of the political status quo?)

Alexis Tsipras, leader of the Coalition of the Radical Left (Syriza), promptly formed a governing coalition with Independent Greeks, a right-wing anti-austerity party that won 4.7 percent of the vote. This is a good sign, proof that Syriza has a plan and that plan is first and last based on renegotiation of the bloodsucking, murderous troika bailout agreement.

Greece in a nutshell is a laboratory of neoliberal orthodoxy. The idea being tested, that idea that austerity -- government spending cuts during a recession -- is stimulative, that the private sector will react positively (what Paul Krugman has termed the "confidence fairy") and invest more, has proven to be a spectacular failure. The Greek economy has shriveled and depression-level unemployment is now endemic. Greece requires ever-more loans to pay off the prior bailout loans when they come due. It is a sadistic fantasy to think that austerity will ever lead to a way out of this vicious circle.

Today Paul Krugman outlines all of this in "Ending Greece’s Nightmare":

The Greek government is collecting a substantially higher share of G.D.P. in taxes than it used to, but G.D.P. has fallen so quickly that the overall tax take is down. Furthermore, the plunge in G.D.P. has caused a key fiscal indicator, the ratio of debt to G.D.P., to keep rising even though debt growth has slowed and Greece received some modest debt relief in 2012.

Why were the original projections so wildly overoptimistic? As I said, because supposedly hardheaded officials were in reality engaged in fantasy economics. Both the European Commission and the European Central Bank decided to believe in the confidence fairy — that is, to claim that the direct job-destroying effects of spending cuts would be more than made up for by a surge in private-sector optimism. The I.M.F. was more cautious, but it nonetheless grossly underestimated the damage austerity would do. 

And here’s the thing: If the troika had been truly realistic, it would have acknowledged that it was demanding the impossible. Two years after the Greek program began, the I.M.F. looked for historical examples where Greek-type programs, attempts to pay down debt through austerity without major debt relief or inflation, had been successful. It didn’t find any. 

So now that Mr. Tsipras has won, and won big, European officials would be well advised to skip the lectures calling on him to act responsibly and to go along with their program. The fact is they have no credibility; the program they imposed on Greece never made sense. It had no chance of working. 

If anything, the problem with Syriza’s plans may be that they’re not radical enough. Debt relief and an easing of austerity would reduce the economic pain, but it’s doubtful whether they are sufficient to produce a strong recovery. On the other hand, it’s not clear what more any Greek government can do unless it’s prepared to abandon the euro, and the Greek public isn’t ready for that. 

Still, in calling for a major change, Mr. Tsipras is being far more realistic than officials who want the beatings to continue until morale improves. The rest of Europe should give him a chance to end his country’s nightmare.

It is good to see Krugman come down forcefully on the side of Syriza; he has shown such a pro-establishment, Russophobic fervor of late, I was a little worried.

But his feeling that Syriza's prescription will be too modest to produce the kind of recovery necessary to pull Greece out of its long-running recession is seconded over at Naked Capitalism. Yves Smith has a long post today, "How Much Success is Syriza Likely to Have in Ending Austerity?," that is a must-read if only to get a handle on the timeline Tsipras is dealing with: "The current Greek bailout expires at the end of February. Greece has €10 billion of debt repayments due over the summer and has €7 billion of aid that is on hold unless and until it negotiates a new bailout deal."

Smith goes on to explains that Finland is dead set against any extension, but that the Germans and the Eurogroup led by Jeroen Dijsselbloem will engage Syriza in lengthy negotiations, which will allow Tsipras to walk back the expectations of the Greek electorate, possibly by allowing for some increased social spending.

This sounds about right to me. The neoliberals who lead the troika are not going to budge significantly. The only thing that might get them moving in a direction away from austerity is if they believed Tsipras was sincere in moving Greece out of the eurozone. But that is not Syriza's nor Podemos' position. They want to remain part of the eurozone.

The only hope one is left with after reading Smith's piece is that Syriza's victory yesterday is the front end of anti-austerity/anti-neoliberal political train that is hurtling down the European track. In other words, a revolution in party politics:

While the election results in Greece have sent shockwaves through European technocratic elites and have rattled investors, it is not clear how successful Syriza will be in getting big enough changes implemented in Eurozone policies and its own bailout terms to end the humanitarian crisis, rather than just create the sort of bounce off the bottom growth that analysts like to depict as progress. Indeed, once you walk though the likely bargaining positions of the various parties, there is little reason to be optimistic on Syriza’s behalf. 

Bear in mind that Syriza has yet to make any official statement as to what its negotiating position with the Troika will be. Both presumed prime minister Alex Tsiprias and one of his finance minister candidates, Yanis Varoufakis, articulated bolder positions a year ago, when they were further from power. In the runup to to the election, Syriza has tried to depict itself as an anti-austerity, yet pro Eurozone party. As Jamie Galbraith described it, via Mark Thoma: 

"The Syriza program is a pro-European program. It is, and I think Europe and Europeans, people are committed to the European project, can consider it a great stroke of luck that there has arisen in Greece, and consequently, partly consequently and subsequently, in Spain, as well as in the present government of Italy, a pro-European set of parties, whose objective is change, constructive change, to make the European project viable."

The nut of that problem, as we will see, is that while may be a very estimable-sounding position, it may not be as pragmatic as it appears. Greece likely has better odds of winning concessions if it is less reasonable, since the Germans and the even more implacable Fins are convinced that the periphery countries are immoral beggars who deserve to be ground into the dust if they cannot or will not pay their debts. Greece is unlikely to be able to shake the perception in the North that they have the upper hand and can force Greece to heel, giving at most only fairly minor concessions. 

Greece’s best hope is if it there is an upsurge in popularity of other anti-austerity and anti-Eurozone parties in the rest of Europe. And they are more likely to rally support in the rest of the Eurozone if they take bold positions rather than careful, studied ones. And even then, that may not be enough for them to resolve the deep-seated problems they face. It isn’t simply that they face a very difficult challenge politically vis-a-vis the Troika, but that even if they get most of what they want, their policies do not look likely to generate enough demand to pull Greece out of its ditch.

Now comes the hard part, a message that Pablo Iglesias, leader of Spain's surging anti-austerity Podemos, delivered in a stirring speech to an election rally in Athens on Thursday:

Winning the elections is far from winning power. That’s why we must bring everyone who is committed to change and decency together around our shared task, which is nothing more than turning the Universal Declaration of Human Rights into a manual for government. Our aim today, unfortunately, is not the withering away of the state, or the disappearance of prisons, or that Earth become a paradise. But we do aspire, as I said, to make it so that all children go to public schools clean and well-fed; that all the elderly receive a pension and be taken care of in the best hospitals; that any young person—independently of who their parents are—be able to go to college; that nobody have their heat turned off in the winter because they can’t pay their bill; that no bank be allowed to leave a family in the street without alternative housing; that everyone be able to work in decent conditions without having to accept shameful wages; that the production of information in newspapers and on television not be a privilege of multi-millionaires; that a country not have to kneel down before foreign speculators. In one word: that a society be able to provide the basic material conditions that make dignity and happiness possible.

These modest objectives that today seem so radical simply represent democracy. Tomorrow is ours, brothers and sisters!

I am hopeful that we are now at the beginning of something new and transformative, if only because the dominant neoliberal paradigm is so bankrupt.

Greece's Syriza Soon to Deliver a Mighty Blow to Empire

The announcement this morning (Niki Kitsantonis, "Greece Heading to Early Elections After Presidential Vote Fails") that Greek Prime Minister Antonis Samaras failed to force through the election of his candidate, Stavros Dimas, for president means that there will be early general elections by the end of next month. Syriza, the leftist party that for years has been seeking to renegotiate the bloodthirsty debt agreement with the troika -- the European Central Bank, the European Commission and the International Monetary Fund -- is favored to win:

Opinion polls show the leftists firmly ahead of Mr. Samaras’s conservative New Democracy party, although Syriza’s lead has narrowed in recent weeks as the prospect of protracted political and financial uncertainty has grown. The Athens Stock Exchange fell by 10 percent during the vote, trimming losses to 7.4 percent later in the day.

The yield on 10-year government bonds, which moves in the opposite direction to the price, spiked nearly a full point to 9.3 percent. The outcome of the parliamentary vote also weighed on markets in the overall eurozone, with the Euro Stoxx 50 blue-chip index losing about 1 percent. The euro was little changed at $1.2199. 

In an interview with state television over the weekend, Mr. Samaras pushed opposition legislators to align with the government in Monday’s vote, saying that failing to elect a president would be “political blackmail” and would result in “pointless upheaval” for the country. 

Despite furious lobbying by the government, Mr. Dimas received only 168 votes, the same number as in the second ballot last week and eight more than in the first vote on Dec. 17. [Votes needed: 180]

Mr. Samaras accused Syriza of “foolish bravado,” adding that the leftists’ economic program was “full of unilateral moves” that would upset Greece’s creditors and jeopardize the country’s fragile return to growth.

Mr. Samaras’s coalition government is working with the so-called troika of lenders, which has granted Greece two bailouts worth 240 billion euros, or about $292 billion, since 2010 to keep the country liquid. In return, the troika has demanded an array of austerity measures that has slashed household incomes by a third and pushed unemployment above 25 percent. 

Negotiations with the members of the troika — the European Commission, the European Central Bank and the International Monetary Fund — on a tough economic program have been dragging amid rising opposition in Greece to austerity. But eurozone officials have expressed their readiness to extend Greece a precautionary credit line next year.

The possibility of Syriza coming to power is threatening to upend the economic negotiations. Wolfgang Schäuble, the German finance minister and a champion of austerity in Greece and other countries, said in an interview with the German daily Bild on Saturday that any Greek government would have to honor existing agreements. 

“New elections won’t change anything about Greece’s debt,” he said, referring to a debt burden equal to 174 percent of gross domestic product, the highest rate in the eurozone. 

Mujtaba Rahman, an analyst at the London-based Eurasia Group, said the domestic troubles in Greece had the potential to once again bring broader consequences for Europe. 

“France and Italy will be vulnerable economically, as both have done little to reform since the days of the debt crisis,” he said, adding that the southern periphery would be more immune in economic terms. “They will be at risk politically, given their own troubles with populist parties.” [In other words, "Watch out, neoliberal elites. The people are pissed and aren't going to take it anymore."]

The key to investor confidence, he said, will be the E.C.B. and whether it undertakes bond buying at the turn of the year. “If the E.C.B. does not deliver, this could be the trigger for a major reversal in Europe wide market sentiment,” Mr. Rahman said. 

Mr. Tsipras insisted over the weekend that his party’s program for tackling the “humanitarian crisis” in Greece was “not negotiable,” though Syriza has not explained how the Greek state would pay for the promised benefits.

Here the reporter, Niki Kitsantonis, is either being lazy or disingenuous because Tsipras does explain how Syriza will pay for a return of benefits that have been slashed to feed the austerity beast. ZNet recently published the Syriza program, "What the SYRIZA Government Will Do." Tsipras plans to negotiate a growth clause. Meaning that debt payments will come only after growth has returned to the Greek economy. Funds from the troika will be used to promote growth first:

THE CONTEXT OF NEGOTIATION 

We demand immediate parliamentary elections and a strong negotiation mandate with the goal to: 

• Write-off the greater part of public debt’s nominal value so that it becomes sustainable in the context of a «European Debt Conference». It happened for Germany in 1953. It can also happen for the South of Europe and Greece.

• Include a «growth clause» in the repayment of the remaining part so that it is growth-financed and not budget-financed.

• Include a significant grace period («moratorium») in debt servicing to save funds for growth.

• Exclude public investment from the restrictions of the Stability and Growth Pact.

• A «European New Deal» of public investment financed by the European Investment Bank.

• Quantitative easing by the European Central Bank with direct purchases of sovereign bonds.

• Finally, we declare once again that the issue of the Nazi Occupation forced loan from the Bank of Greece is open for us. Our partners know it. It will become the country’s official position from our first days in power.

On the basis of this plan, we will fight and secure a socially viable solution to Greece’s debt problem so that our country is able to pay off the remaining debt from the creation of new wealth and not from primary surpluses, which deprive society of income.

This is all Econ 101, nothing radical or something to be dismissed as frothing-at-the-mouth lunacy of an atavistic Marxist; it is the kind of reasoning often found in Paul Krugman's column. That's why it is troubling that the Gray Lady's reporter dismisses Syriza's program without comment.

One key predictor of how the Obama administration is going to react to Greece's early election -- and, therefore, how Empire is going to react -- is to see what Krugman says about Syriza. Krugman has been nothing if not consistent in debunking the "austerian" credo. He has written countless columns from the outset of the Great Recession pointing out the devastating consequences of slashing government budgets while the economy is contracting. For Krugman not to endorse Syriza's program for Greece means the fix is in.

But Krugman opposed Scottish independence. And recently he has engaged in pathetic Putin bashing. So it might well be that 1) he either avoids commenting altogether, or 2) he carries water for Obama yet again and bashes Tsipras.

While it is true that the Scots were made to buckle at the polls in September because of threats and scaremongering, it seems to me that Greeks who have lost a third of their household wealth will be more immune to such tactics.

What is certainly true, based on last May's European Parliament elections and the recent U.S. midterm poll, is that there is massive erosion in support of, belief in, allegiance to the large, established, mainstream political parties of the West.  These political formations have been completely captured by a corrupt, disconnected, neoliberal power elite and a majority of people have woken up to this fact.

A clue to the direction of where it will all end will be provided by Syriza in January. The people have reached a level of disgust with the status quo that is going to start manifesting itself positively. The real question is going to be, "How destructive will the Empire be in maintaining the status quo?"

I have to say, "Plenty."

The Coming Obamacare Backlash

A story, "On Health Exchanges, Premiums May Be Low but Other Costs Can Be High," appeared yesterday in the New York Times written by Robert Pear, the Gray Lady's longtime health care policy reporter. In it you will find an excellent synopsis of the fundamental failing of the Affordable Care Act: It is not affordable. Once people and the media get past the abominable failure of HealthCare.gov and realize that the $300-$600 per month policies purchased on the new exchanges carry with them deductibles on average of $5,000 for an individual and $10,000 for a couple there will a significant political backlash. Republicans in Congress will benefit.

Here's how Pear explains it:

Until now, it was almost impossible for people using the federal health care website to see the deductible amounts, which consumers pay before coverage kicks in. But federal officials finally relented last week and added a “window shopping” feature that displays data on deductibles. 

For policies offered in the federal exchange, as in many states, the annual deductible often tops $5,000 for an individual and $10,000 for a couple. 

Insurers devised the new policies on the assumption that consumers would pick a plan based mainly on price, as reflected in the premium. But insurance plans with lower premiums generally have higher deductibles. 

In El Paso, Tex., for example, for a husband and wife both age 35, one of the cheapest plans on the federal exchange, offered by Blue Cross and Blue Shield, has a premium less than $300 a month, but the annual deductible is more than $12,000. For a 45-year-old couple seeking insurance on the federal exchange in Saginaw, Mich., a policy with a premium of $515 a month has a deductible of $10,000. 

In Santa Cruz, Calif., where the exchange is run by the state, Robert Aaron, a self-employed 56-year-old engineer, said he was looking for a low-cost plan. The best one he could find had a premium of $488 a month. But the annual deductible was $5,000, and that, he said, “sounds really high.” 

By contrast, according to the Kaiser Family Foundation, the average deductible in employer-sponsored health plans is $1,135. 

“Deductibles for many plans in the insurance exchanges are pretty high,” said Stan Dorn, a health policy expert at the Urban Institute. “These plans are more generous than what’s prevalent in the current individual insurance market, but significantly less generous than most employer-sponsored insurance.”

The Obamacare plans might be more generous than what is currently offered on the individual market (though far less so than the average employer-provided plan), but if you are a young, healthy person you would normally never wade into the individual private insurance market to purchase health coverage. Now you are going to have to. How many young adults working part-time have an extra $300 a month to drop on health insurance or have $5,000 sitting in a savings account to pay off that high deductible? A low percentage I would guess.

Apologists for Obamacare like Paul Krugman will argue that subsidies exist for both premiums and deductibles, but according to Pear only about one of three people are qualifying so far for those subsidies:

Plans in the marketplace are separated into four categories — bronze, silver, gold and platinum — indicating the generosity of coverage, or the share of costs paid by insurance for an average enrollee. 

Many people buying insurance on the federal and state exchanges are expected to qualify for subsidies. But in the first month, for reasons that are not clear, only 30 percent qualified. The others must pay the full premium and will be subject to the full deductible.

Most people don't know what is going on. I talk to my coworkers -- informed Democrats who are politically engaged and who keep up on the news -- and the level of their knowledge about the Affordable Care Act is superficial. I photocopied the Pear article and handed it out. Over the next few months it will become more apparent that the grand achievement of Obamacare is to shunt an enormous number of people into a failed, costly health care system. The insurance companies will see their bottom lines engorged, but the complexity of the coverage and the high deductibles will prevent people from seeking medical attention.

Maybe after a period of time the wrinkles in the Affordable Care Act will be ironed out and more people will qualify for premium support and the federal government will be able to exercise control over rising health care costs. But bear in mind the baseline that we are beginning with -- a $300 premium with a $5,000 deductible for an individual -- is already out of reach for most people. Prices will not decrease. The system won't work. There is not that much disposable income available in the general populous. People will be angry when forced to pay and they will vote Republican, a party that has been nothing if not consistent in its denunciation of Obamacare.

(A good source of information on Obamacare is the Naked Capitalism blog. One of the bloggers regularly featured, Lambert Strether, called attention months ago to the exorbitantly high deductibles of the average Obamacare plan. Ever since, I've been telling people about it. And the response I usually get is a blank stare of incredulity.)