Monday, May 5, 2014

Today's Links

1---How to stop the EZ's slide into deflation, Yanis Varoufakis


The European Council could authorize the European Investment Bank and the European Investment Fund to embark upon a large investment-led recovery program for the whole of the Eurozone, to the tune of 8% of Eurozone GDP. This can be fully financed by net bonds issues by the European Investment Bank, waiving the stipulation of matching funds from the member-states (national contributions). Instead, so as to ensure that the value of these bonds remains high (and their yields low), the ECB could immediately begin a large purchase program of these EIB bonds in the secondary market, to a tune necessary to keep their prices above a certain level. This way, the ECB’s quantitative easing will support proper investments directly into Europe’s real economy and will not have to deal with the problem (that is currently baffling the ECB council’s members) of which bonds or loans (and their nationality) to buy. EIB bonds are triple-A eurobonds (i.e. bonds issued on behalf of the whole of Europe) and, therefore, eminently acceptable paper assets for Europe’s central bank to buy.


2---Bursting Bubble Alert, Testosterone Pit


For years it seemed nothing could slow down the tsunami of junk debt. Yield-desperate investors, driven to near insanity by iron-fisted central-bank interest-rate repression, were holding their nose and closing their eyes while grabbing the riskiest paper under the crappiest conditions from the bottom of the barrel in their no-holds-barred chase to get a tiny little bit of extra yield....


Private equity firms – the ultimate smart money – have profited from this insatiable demand via an ingenious trick that the infamous dumb-money investors in leveraged-loan mutual funds were never meant to see. PE firms make their already overleveraged, junk-rated portfolio companies borrow even more money, but not to invest in productive projects. Instead, PE firms suck this money out of their portfolio companies via special dividends. A form of immensely profitable financial strip-mining.


When the portfolio company topples under the weight of this debt, those who hold the debt – for instance, the conservative-sounding leveraged-loan mutual fund in your portfolio – have a good chance of losing it all, while the PE firm, loaded with this cash, can be found reminiscing gleefully about the banner year they’d had.


But something happened in mid-April, and investors in leveraged-loan mutual funds ran scared and started pulling their money out. After 95 weeks in a row of money inflows, these funds suddenly saw outflows for the second week in a row, modest still, of $320 million and $160 million respectively. That reversal of the money flow left skid marks: at least three companies pulled their leveraged loans in April, Bloomberg reported; that “insatiable” demand had suddenly evaporated.


3---American Government Backed Ukrainian Nazis … Same Group Supported By the Leader of the Protests which Toppled the Ukrainian Government In February, washingtons blog


When the Germans were driven out of the Ukraine, many OUN members who had served the Nazis’ police formations and execution squads fled with them, but several thousand retreated into the Carpathian Mountains to fight another day against the hated Soviet government. It was this remaining Nightingale group that fascinated the CIA and was recruited essentially en bloc. To bring its leaders to the United States for training and indoctrination required special bureaucratic exertions, as well as an immigration law permitting the admission of one hundred such immigrants per year, provided the Director of the CIA, the Attorney General, and the Commissioner of the Immigration and Naturalization Service all personally stated that the action was vital to national security.” As one army intelligence officer noted sardonically, one wing of the CIA was hunting Ukrainian Nazis to bring them to trial at Nuremberg, while another wing was recruiting them.
***
After training in the United States, the Nightingale leaders were parachuted into the Ukraine to link up with their compatriots and to carry out measures of subversion, agitation, and sabotage, including assassination.
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[United States Secretary of the Navy and Secretary of Defense James Forrestal] vigorously supported the program and presumably participated in the approval of the basic NSC charters as a member of the National Security Council.
The leader of the Nightingale group was Stepan Bandera.


4---The capitalist crisis and the fight for socialist internationalism, David North, wsws


The political principle that governs contemporary capitalist society is that of oligarchy, not democracy. The oligarchs in the United States and Britain have nothing to learn from their lesser imitators in Russia and China. The social pressures generated by the malignant growth of social inequality—bound up with intensified exploitation of the working class—cannot be managed within the traditional structures of bourgeois democracy. Within the United States, the invocations of democracy clash ever more openly with reality. Not a single banker went to jail for the sociopathic behavior responsible for the economic meltdown of September 2008. But a deeply corrupted legal system shows no mercy to the poorest and most vulnerable sections of American society, whose desperate conditions are the direct consequence of the economic system that enriched the financial speculators and rewarded their criminality.


5---Is the Fed near its target?, econbrowser


The number of Americans who have been looking for work for longer than 6 months is still higher than it had been even at the worst of any previous postwar recession....


And last month’s improvement in the unemployment rate came entirely from a drop in the labor force participation rate. Some individuals who reported in March that they were out of work and actively trying to find a job (in which case the BLS counts them as “unemployed”) instead reported in April that they are still not working but did not actively look for a new job within the last four weeks (in which case the BLS counts them as “not in the labor force”). To be sure, much of the decrease in the participation rate seems attributable to long-term demographic factors, as the decline was evident well before the Great Recession


6---Council on Foreign Relations, Leslie Gelb, called for the Pentagon to massively arm the Kiev regime against Russia. The arms he mentioned were similar to those supplied to the Al Qaeda-linked forces mobilized by Washington against the Syrian regime of President Bashar al-Assad., wsws


The installation of a rabidly anti-Russian regime in Ukraine was itself part of a broader campaign to destabilize and dismember Russia, while placing America and Europe on a permanent war footing. With this extraordinarily reckless policy, which risks triggering a global war involving nuclear weapons, the financial aristocracies of the various imperialist powers aim to maintain their supremacy in world politics....


In a remarkable article in the Daily Beast, the president emeritus of the US Council on Foreign Relations, Leslie Gelb, called for the Pentagon to massively arm the Kiev regime against Russia. The arms he mentioned were similar to those supplied to the Al Qaeda-linked forces mobilized by Washington against the Syrian regime of President Bashar al-Assad.


“This military aid should go through American special operations forces and be in the nature of roadside bombs (IEDs), mortars, grenades, other explosives, and effective small arms. US training should be provided, if not in Ukraine itself, then in nearby countries,” he said.
The provision of such weapons to groups like the Right Sector, which has fought alongside Chechen Islamist terrorist groups in Russia, would be a major step towards direct US military operations within Russia itself.


7---New York Times covers up fascist atrocity in Odessa, wsws


8---Job market: Fact and Fiction, zero hedge


While we are tired of seeing various numbers and charts "explaining" the US employment situation as much as the next guy, here is just one final, and decidedly simple chart, summarizing precisely where the US job market stands.


  • The good news: in April, 118.4 million Americans had a full-time job, the most since November 2008.
  • The bad news: in April 9.8 million Americans were unemployed, 92 million people were out of the labor force, and 27.3 million people had part-time jobs. A total of 129.1 million, the most since ever.


Shown in context:





And some further context: Facebook allegedly has 202 million users in the US and Canada


9---Britain’s economic growth is not a sign that austerity works, WA Post
      Lawrence Summers,


Second, in the face of deficit reduction’s potential damage to demand and economic growth, the British government has been forced to introduce extraordinary measures to support lending. Most significant is the so-called Help to Buy program that gives low, teaser-rate mortgages to some borrowers and guarantees the mortgages of others so that they can put only 5 percent down. There are also special programs to reward banks for lending to small business and to get the central bank involved in export finance.


Help to Buy manages to recapitulate most of the sins of the U.S. government-sponsored enterprises. The stated goal of the austerity program was to improve confidence in Britain as a sovereign credit. Yet guaranteeing mortgages en masse creates a huge potential government liability, as do other loan-guarantee programs. Moreover, subsidized credit for housing risks reinflating bubbles as house prices in London have risen much faster than GDP over the past year. And, of course, all programs for the benefit of homeowners rather than renters have perverse distributional consequences.


10---Summers to the IMF: "Get your act together",  WA Post


In an interdependent global economy, the impact of these measures together is likely to be substantially greater than the sum of their individual impacts. And the consequences of national policy failures are likely to cascade. That is why a global growth strategy framed to resist secular stagnation rather than simply to muddle through with the palliative of easy money should be this week’s agenda.


11---Student Debt and a Broken Financial System, House of Debt


The Class of 2009 had an unemployment rate of 18% — twice as bad as the Class of 2007 had when they graduated. The employment to population ratio also shows how bad the market was:
houseofdebt_201400505_2
This was horrible luck for students graduating in 2009 and 2010 — in some sense they were being punished for being born 22 years earlier in 1987 or 1988. You might guess that the punishment was short-lived — eventually these students would find good jobs once the economy recovers, right? Wrong. Research shows that there are long-run, persistent negative effects of graduating from college in the midst of a severe recession.
As mentioned above, many of the students in the Class of 2009 took on student debt. What happened to those interest payments? Unfortunately, the debt contracts taken on by the students didn’t care what the economy looked like upon graduation. Students had to either make the payments, or default and suffer the consequences.
Does this make any economic sense? The financial system is supposed to help the most vulnerable members of society insure themselves against unforeseen risks. But in this case, the student debt concentrated risk on young Americans trying to get ahead with a college degree.


13--Brzezinski on Ukraine, Info clearinghouse


RT: What do you make of the West’s response so-far to what happened in Odessa, the public response anyway. I don’t know what’s going on behind closed doors, but what’s being said publicly?

NC: Well, there’s been a deafening silence hasn’t there. Just imagine if this had taken place in Venezuela. Just imagine if the Venezuelan government had got armed militias to go to areas where anti-government protesters occupied buildings and they fire bombed them and over forty people were killed in a fire. Just imagine the reaction from John Kerry, from William Hague, from Francoise Hollande, had the Venezuelan government done this. But the Ukrainian Junta does this and there’s absolute silence, which shows you the incredible double standard doesn’t it. If the Venezuelans had been responsible, we would have calls for airstrikes, for humanitarian intervention to protect the civilians. They would be saying Maduro is killing his own people. So the double standards are absolutely off the scale.


15--Odessa False Flag, RT


Nebojsa Malic: According to all the evidence that I have seen, the entire thing in Odessa was a giant false flag operation. It was a provocation, it was one of those stage massacres that the pro-Western forces from Bosnia to Kosovo, now Ukraine excel at staging, intended to draw Russia to overreact to commit military forces so that the coup government as well as its sponsors in the West could have justification in saying, “Oh that is the case of Russian invasion, and everything we have been saying is correct.” I believe that the fact that they are willing to stage such a horrendous atrocity shows the depth of their desperation at this point.


16---Provocation gone wrong: Murky forces instigating Odessa violence?, RT


17--Rise of fascism , RT  you tube

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