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Why There’s No Political Fix

Tuesday’s markets really liked hearing that Greece’s new “radical-left” leaders had, once in office, backpedalled on their demand for debt restructuring. Now they apparently just want the country’s unmanageable debt to be rescheduled. See Hopes for Greek Debt Deal Rise After Athens Softens Tone.

This, of course, is just semantics. Either a big chunk of Greece’s debt somehow goes away or its economy implodes, so whatever they call the deal it will have to amount to a massive haircut if it’s to prevent a default in 2015.

Meanwhile, Syriza’s other policies include reversing electricity and oil privatizations, re-hiring of laid-off public sector workers, scrapping recently-streamlined labor laws, raising the minimum wage and restoring the practice of paying an extra month’s benefits to pensioners. In other words, if given free rein they’ll do exactly the things that always produce a bloated public sector that leads to excessive borrowing that in turn guarantees a currency crisis.

Now on to Spain, where that country’s version of Syriza, known as Podemos, just brought 100,000 people into the streets of Madrid and currently leads in public opinion polls. Its policies include a 35-hour work week, ramped-up public spending, and a lower age of retirement. Oh, and they’d like to ban profitable companies from firing workers.

This rebellion is fun to watch and easy to cheer. But the results of a rebel victory would emphatically not be fun. And the problem isn’t just with the left. A takeover by a right-wing party like France’s National Front would probably bring its own set of unworkable policies, like big cuts in government spending in the middle of a deflationary recession.

The hard truth is that when a country borrows too much money the existing tools of both left and right stop working. There is no policy mix that allows a system based on fiat currency and fractional reserve banking to survive long-term. So today’s amusing political theater is not the same thing as positive change. That comes — if it does come — only after the current system dissolves.

29 thoughts on "Why There’s No Political Fix"

  1. Pingback: The Küle Library
  2. The problem is lack of personel responsibilty by everyone,from the poorest of poor to the richest of rich.
    You cant spend more then you make or pay back, and you cant screw everyone into believing it.

  3. Legalized torture, legalized kidnappings, legalized drone-bombings of kids playing soccer 7422 miles away from here, secret courts, secret warrants, legalized police brutality, legalized financial fraud, massive wiretappings of absolutely everyone and everything, a worldwide web of clandestine detention/torture centers overseas, a state-controlled news media, legalized food poisoning, legalized electoral fraud, a corrupt judiciary, legalized highway robbery (aka Civil Asset Forfeitures), legalized market data manipulation, forcing the population to buy overpriced “healthcare” plans practically at gunpoint …the list of abuses, illegality and corruption is practically endless. All these actions performed at the behest of and for the exclusive benefit of Wall St.

    THAT’S ‘Why There’s No Political Fix’. Never will be.

  4. I know a fix arrest all the bankers and crooked politicians. EXECUTE THEM! Empower the people not enslave them. 80 families lay claim to half the earth including the people. Only because we let them I say execute the ” elite” they did this on purpose.

  5. ‘There’s no political fix’?

    I sure hope you’re right. I may regret it, but I would love to see a full scale global monetary and financial catharsis that purges all of this crap once and for all (until next time, maybe). I know it will happen eventually, but I want to experience it myself, even if I have to suffer a few singes. It’s like watching a long drawn out melodramatic movie and possibly not seeing how it ends. I’m really surprised at how slowly human experience evolves.

    Can the next piece be … please … that there is no “financial” fix either, or “monetary” or “fiscal”? Any drop of hope that this insanity will end within my lifetime?

    1. I’m with you. I’m eagerly looking forward to the impending death of the PetroDollar. Unfortunately Bruce, for you, me and many others – History warns of the bad things that can happen when a fiat currnc and its masters are backed into a corner….

      BTW, where’s SoCalBeachDude? Has that fucking ignoramus finally been booted?

  6. It is nice to see that Germany’s takeover of most of Europe is once again failing. If Greece were smart, they would declare themselves insolvent at the same time they roll out the Drachma and tell the EU to stick it where the sun don’t shine.

  7. My guess is John McCain, the Obomber, and Killary are already shifting their ISIS buddies to Greece as we speak. Oh, they’ll rue the day, I tells ya!

  8. The bankers steal trillions, the politicians steal billions, why would they want any change?
    This will go on forever until some day it breaks.

  9. There’s a reason why a red state like Oklahoma has not privatized their electrical grid. There’s a reason why in California PG&E has had trouble with their privatized gas lines. And the reasons are that you can’t trust that the government regulators will oversee the corporations that run your utilities in an efficient manner and that it’s better to leave them in the public’s hands where there is less overhead and direct control. It’s easier to investigate public utilities than to investigate corporations that have bought off the regulators. Corporations have had a free rein the last 30 years and have had a poor record in the public sector, as well as the private sector, because the government refuses to prosecute anyone.

  10. The problem with Greece and Spain is too much greed by the already rich and powerful. It’s the same in the U.S.

    In Greece, the rich got away with decades of tax avoidance. In Spain, investors got carried away with cheap money and lack of organized, monitored, building and investing. Carte Blanche, for those that have the money, so they can make more, without regard for society’s capacity or needs.

    Tax avoidance in America from 90% in the 1950’s to 39% or 24% depending how you “earn” your money is deadly for Government and society when combined with a Middle Class that is being destroyed through lack of livable wages.

    No one is complaining about Germany or the Nordic countries going broke through Socialism.

    1. Re: Canada. I was wondering when the Vancouver and Toronto housing markets were going to come back to Earth. Apparently, the first part of the correction at least, is taking the form of a currency devaluation. Houses in Vancouver are still worth one million Loonies, but now ONLY $800,000 US, instead of a million greenbacks when the Can. and USA dollars were close to on par with each other as recently as a year or two ago.

  11. The secret of economics is this: money is not real, it is imaginary – a trinket that we say equals past work. Could be gold, could be clam shells, could be pieces of paper. We have built an entire society around the belief that money is a real thing that is more important than people, and literally more important than the entire planet.
    Soon (by 2029 at current rates) computers will be as intelligent as humans. This will result in no jobs for anyone at all. Not even CEOs, psychiatrists or doctors. Computers and robots with this level of intelligence will make all human work completely unnecessary. For awhile this will result in massive profit margins for corporations as their only goal is to minimize cost of production, and maximize price to the consumer. However, when we get to near 100% unemployment there will be no consumers to buy.
    35 hour work weeks will be a necessity, then we will need to reduce further to 10 hour work weeks, then zero hour work weeks. Money will have to be abolished in the long term as there will be no jobs and therefore no way to distribute money that makes any sense.

  12. There is no political solution to the world’s economic disintegration, because this sad global excuse for a ‘monetary’ system is in automatic expansion. No matter what politicians or bankers in every country do, inflation and debt must grow or the whole thing implodes. ‘Dollar’, ‘yuan’, ‘ruble’, ‘franc’, et cetera, are nothing more than ‘brand-label’ Plantation Scrip, all in one grand monolithic banknote scheme.

    ‘Currencies’ (of absolute necessity) are loaned into existence in principal amount only. The sole way the interest can be created to service the debt, is for those funds to also be borrowed into existence … as more loaned principal … accruing still more interest … vice-versa ad infinitum.

    Neither less spending nor increased taxes change the underlying fact that currency and debt are on an infinite Positive Feedback Loop of expansion and once enough Peoples decide to stop borrowing themselves into abject penury, causing Terminal Debt Saturation, the scheme has nowhere else to go but into an irreversible implosion of a debt default cascade.

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  13. Heres a solution to the problem. Provide every Greek citizen a small plot of land for free. Start work programs where all Greeks devote a certain number of years working to help construct housing farms and ranches for free. Housing will be practical and self sufficient as possible. Compensation for work is the free home/farm/ranch. Alternatively, community ranches and farms could be developed. Government officials would administer the program for free and receive no more and no less. This might seem drastic but it beats war and cannibalism.

    1. nobody anywhere wants drastic……..everyone wants a free ride……..this will not end until it must and then does.
      “it’s not my fault I cannot accept responsibility”

  14. Apparently you fools claim there is a deflationary recession in France, gov spending the problem as with regs and taxes apparently you fools know nothing about economics, economics production and trade, all your phony socialist economies is nothingness, debt, squalor, and inflationm=

    1. Sure, Ashley, we’re all fools, except its your peeps who are doing exactly what you think is right, that are in trouble. Feel free to blame that on us, though. You’re not a DHS troll, are ya? If so, you won’t have job security much longer because we’ll be walking on your ashes before this is over.

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