Dallara: Start Greece's engines of growth

Charles Dallara, Managing Director, Institute of International Finance

Bank lobby chief Dallara in favor of giving Greece more lenient deficit reduction targets

ATHENS, Greece — Greece needs more lenient targets to reduce its budget deficit so that its economy can return to growth more quickly, the head of an international banking lobby said Wednesday.

Charles Dallara, managing director of the Institute of International Finance, said the 17 eurozone countries should find a better balance between policies that favor debt reduction and those that help growth.



An over-emphasis on budget cuts will cause the risk of a “protracted era” of recession or low-growth, he warned at a banking event in Athens.

Greece is approaching its sixth year of recession as it keeps cutting spending and raising taxes to comply with the demands of its international bailout.

“It’s my view that everything must be done to avoid this reality,” Dallara said of the deepening recession. “What is needed instead in my view is to ease the case of fiscal adjustment.”

Dallara led negotiations with Greece earlier this year to restructure the country’s debt held by the private sector, wiping some €100 billion off the national debt.

Despite that writedown, Greece’s debt load is still not falling quickly enough.

Its bailout creditors — the 16 other eurozone states and the International Monetary Fund — agreed in principle to give Greece more time to complete its current austerity measures, from 2014 to 2016. But they are still divided over whether to give Greece more time — until 2022 rather than the currently planned 2020 — to bring its debt down to a manageable level of 120 percent of GDP.

To help Greece, Dallara argued that the International Monetary Fund could increase its contribution in the bailout program and provide concessional rates reserved for poorer countries.

He said Greek governments had shown “impressive willingness to bear short-term pain for long-term gain” in passing a major new round of austerity cuts, approved last week and worth €13.5 billion ($17 billion).

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Source

Dallara calls for lower Greece rates

14 Signs That The World Economy Is Getting Weaker

The United States is not the only one with massive economic problems right now. The truth is that just about wherever you look around the globe things are getting even worse. China is experiencing a substantial economic slowdown, and Japan has resorted to yet another round of money printing in an effort to keep the Japanese economy moving. Unemployment in Europe continues to get even worse, and the riots this week in Spain and in Greece have been absolutely frightening at times. In the United States there are a whole host of signs that another recession is approaching, and the number of American CEOs that say that they plan to eliminate jobs in the coming months is rapidly rising. The world economy is more interconnected today than ever before, and that means that we are all in this together. Just remember what happened back in 2008 and 2009. The economic pain that started on Wall Street was felt in every corner of the planet. So anyone that believes that the United States (or any other major nation for that matter) is going to escape the next wave of the economic crisis is simply not being realistic. Why do you think central banks all over the world are in "panic mode" right now? They are firing all of their ammunition and printing money like there is no tomorrow in an attempt to keep the system together. Unfortunately, it is not going to work.

Quantitative Easing Did Not Work For The Weimar Republic Either

 

Did printing vast quantities of money work for the Weimar Republic? Nope. And it won't work for us either. If printing money was the secret to economic success, we could just print up a trillion dollars for every American and be done with it. The truth is that making everyone in America a trillionaire would not mean that we would all suddenly be wealthy. There would be the same amount of "real wealth" in our economy as before. But what it would do is render our currency meaningless and totally destroy faith in our financial system. Sadly, we have not learned the lessons that history has tried to teach us. Back in April 1919, it took 12 German marks to get 1 U.S. dollar. By December 1923, it took approximately 4 trillion German marks to get 1 U.S. dollar. So was the Weimar Republic better off after all of the "quantitative easing" that they did or worse off? Of course they were worse off. They destroyed their currency and wrecked all confidence in their financial system. There was an old joke that if you left a wheelbarrow full of money sitting around in the Weimar Republic that thieves would take the wheelbarrow and they would leave the money behind. Will things eventually get that bad in the United States someday?

Of course we are not going to see hyperinflation in the U.S. this week or this month.

But don't think that it will never happen.

The people of Germany never thought that it would happen to them, but it did.

QE4? The Big Wall Street Banks Are Already Complaining That QE3 Is Not Enough

 

QE3 has barely even started and some folks on Wall Street are already clamoring for QE4. In fact, as you will read below, one equity strategist at Morgan Stanley says that he would not be "surprised" if the Federal Reserve announced another new round of money printing by the end of the year. But this is what tends to happen when a financial system starts becoming addicted to easy money. There is always a deep hunger for another "hit" of "currency meth". Federal Reserve Chairman Ben Bernanke was probably hoping that QE3 would satisfy the wolves on Wall Street for a while. His promise to recklessly print 40 billion dollars a month and use it to buy mortgage-backed securities is being called "QEInfinity" by detractors. During QE3, nearly half a trillion dollars a year will be added to the financial system until the Fed decides that it is time to stop. This is so crazy that even former Federal Reserve officials are speaking out against it. For example, former Federal Reserve chairman Paul Volcker says that QE3 is the "most extreme easing of monetary policy" that he could ever remember. But the big Wall Street banks are never going to be satisfied. If QE4 is announced, they will start calling for QE5. As I noted in a previous article, quantitative easing tends to pump up the prices of financial assets such as stocks and commodities, and that is very good for Wall Street bankers. So of course they want more quantitative easing. They always want bigger profits and bigger bonus checks at the end of the year.

Greece Caught Underreporting Its Budget Deficit By Nearly 50%

There was a time about a year ago, before the second Greek bailout was formalized and the haircut on its domestic-law private sector bonds (first 50%, ultimately 80%, soon to be 100%) was yet to be documented, when it was in Greece's interest to misrepresent its economy as being worse than it was in reality. Things got so bad that the former head of the Greek Statistics Bureau Elstat, also a former IMF employee,faced life in prison if convicted of doing precisely this.

A year later, the tables have turned, now that Germany is virtually convinced that Europe can pull a Lehman and let Greece leave the Eurozone, and is merely looking for a pretext to sever all ties with the country, whose only benefit for Europe is to be a seller of islands at Blue Aegean water Special prices to assorted Goldman bankers (at least until it renationalizes them back in a few short years). So a year later we are back to a more normal data fudging dynamic, one in which Greece, whose July unemployment soared by one whole percentage point, will do everything in its power to underrepresent its soaring budget deficit.

The Federal Reserve Is Systematically Destroying Social Security And The Retirement Plans Of Millions Of Americans

 

Last week the mainstream media hailedQE3 as the "quick fix" that the U.S. economy desperately needs, but the truth is that the policies that the Federal Reserve is pursuing are going to be absolutely devastating for our senior citizens. By keeping interest rates at exceptionally low levels, the Federal Reserve is absolutely crushing savers and is systematically destroying Social Security. Meanwhile, the inflation that QE3 will cause is going to be absolutely crippling for the millions upon millions of retired Americans that are on a fixed income. Sadly, most elderly Americans have no idea what the Federal Reserve is doing to their financial futures. Most Americans that are approaching retirement age have not adequately saved for retirement, and the Social Security system that they are depending on is going to completely and totally collapse in the coming years. Right now, approximately 56 million Americans are collecting Social Security benefits. By 2035, that number is projected to grow to a whopping 91 million. By law, the Social Security trust fund must be invested in U.S. government securities. But thanks to the low interest rate policies of the Federal Reserve, the average interest rate on those securities just keeps dropping and dropping. The trustees of the Social Security system had projected that the Social Security trust fund would be completely gone by 2033, but because of the Fed policy of keeping interest rates exceptionally low for the foreseeable future it is now being projected by some analysts that Social Security will be bankrupt by 2023. Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years. Yes, you read that correctly. The collapse of Social Security is inevitable, and the foolish policies of the Federal Reserve are going to make that collapse happen much more rapidly.

Spain should seek aid, Greece needs more time to pay: IIF

By Nick Edwards

BEIJING (Reuters) - Greece should get cheaper rates on its 130 billion euro aid deal and at least two more years from the European Union and International Monetary Fund to repay them, the chief negotiator of the country's private sector creditors said on Tuesday.

But better terms could only come after Athens delivers on commitments it has made to fiscal reform, Charles Dallara, managing director of the Institute of International Finance (IIF), told a news conference while on a trip to Beijing.

"Once that has been done, and I am confident it will be done, Europe and the IMF should move quickly to extend the adjustment period for at least two years and provide the modest additional financial support for that extension to be effective," Dallara said.

The Fed Has Failed, Failed, Failed

Bernanke knows QE3 will fail to revive the real economy, but he doesn't care; his real job is to protect the Fed's political power and the banking sector's wealth

.

The unleashing of QE3--unlimited money-printing in support of the financial Status Quo-- is proof the Fed has failed, failed, failed. If anything the Fed has done in the past four years had actually had a positive consequence in the real economy, Bernanke would have identifed that policy and expanded it in a measured response.

How QE3 Will Make The Wealthy Even Wealthier While Causing Living Standards To Fall For The Rest Of Us

The mainstream media is hailing QE3 as a great victory for the U.S. economy. On nearly every news broadcast, the "talking heads" are declaring that Ben Bernanke's decision to pump 40 billion dollars a month into our financial system is definitely going to help solve our economic problems. The money for QE3 is being created out of thin air and this round of quantitative easing is going to be "open-ended" which means that the Federal Reserve is going to keep doing it for as long as they feel like it. But is this really good for the average American on the street? No way. Despite two previous rounds of quantitative easing, median household income has still fallen for four years in a row, the employment rate has not bounced back since the end of the last recession, and new home sales have remained near record lows. So what have the previous rounds of quantitative easing accomplished? Well, they have driven up the prices of financial assets. Those that own stocks have done very well the past couple of years. So who owns stocks? The wealthy do. In fact,82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans. Those that have invested in commodities have also done very nicely in recent years. We have seen gold, silver, oil and agricultural commodities all do very well. But that also means that average Americans are paying more for basic necessities such as food and gasoline. So the first two rounds of quantitative easing made the wealthy even wealthier while causing living standards to fall for all the rest of us. Is there any reason to believe that QE3 will be any different?

QE3: Helicopter Ben Bernanke Unleashes An All-Out Attack On The U.S. Dollar

 

You can't accuse Federal Reserve Chairman Ben Bernanke of not living up to his nickname. Back in 2002, Bernanke delivered a speech entitled "Deflation: Making Sure 'It' Doesn’t Happen Here" in which he referenced a statement by economist Milton Friedman about fighting deflation by dropping money from a helicopter. Well, it might be time for a new nickname for Bernanke because what he did today was a lot more than drop money from a helicopter. Today the Federal Reserve announced that QE3 will begin on Friday, but it is going to be much different from QE1 and QE2. Both of those rounds of quantitative easing were of limited duration. This time, the quantitative easing is going to be open-ended. The Fed is going to buy 40 billion dollars worth of mortgage-backed securities per month until they have decided that the economy is in good enough shape to stop. For those that get confused by terms like "quantitative easing" and "mortgage-backed securities", what the Federal Reserve is essentially saying is this: "We're going to print a bunch of money and buy stuff for as long as we feel it is necessary." In addition, the Federal Reserve has promised to keep interest rates at ultra-low levels all the way through mid-2015. The course that the Federal Reserve has set us on is utter insanity. Ben Bernanke can rain money down on us all he wants, but it is not going to do much at all to help the real economy. However, it will definitely hasten the destruction of the U.S. dollar.

And the Federal Reserve is apparently very eager to get QE3 going. Purchases of mortgage-backed securities are going to start on Friday.

The Revolution From Above ~ Paul Craig Roberts

 

Today the Western peoples are experiencing the destruction of their well being that is comparable to what the one percent in Rome imposed on Roman citizens and conquered peoples. Here is how John Williams (shadowstats.com, 9-12-12) phrases the wipeout of Americans’ hopes:

“Consumers simply cannot make ends meet. Inflation-adjusted, or real, median household income declined for the fourth-straight year, plunging to its lowest level since 1995. Deflated by the CPI-U, the 2011 reading actually stood below levels seen in the late-1960s and early-1970s.”

Is the U.S. election keeping Greece in the euro?

 

Editor's note: Yanis Varoufakis is professor of economics at the University of Athens, visiting professor that the University of Texas, Austin and author of "The Global Minotaur: America, the true causes of the financial crisis and the future of the world economy."

Athens, Greece (CNN) -- My first memory of anything to do with a U.S. presidential election lurks in the mists of my Athenian childhood.

It was a warm June evening. My mother had taken me for a walk around the ancient stadium where the first modern-era Olympics were staged in 1896.

Suddenly I saw her eyes fill with tears after hearing a newsboy screaming, at the top of his voice, that someone called Bobby Kennedy was dead.

China And Russia Are Ruthlessly Cutting The Legs Out From Under The U.S. Dollar

 

The mainstream media in the United States is almost totally ignoring one of the most important trends in global economics. This trend is going to cause the value of the U.S. dollar to fall dramatically and it is going to cause the cost of living in the United States to go way up. Right now, the U.S. dollar is the primary reserve currency of the world. Even though that status has been chipped away at in recent years, U.S. dollars still make up more than 60 percent of all foreign currency reserves in the world. Most international trade (including the buying and selling of oil) is conducted in U.S. dollars, and this gives the United States a tremendous economic advantage. Since so much trade is done in dollars, there is a constant demand for more dollars all over the globe from countries that need them for trading purposes. So the Federal Reserve is able to flood our financial system with dollars without it causing a tremendous amount of inflation because the rest of the world ends up soaking up a lot of those dollars. But now that is changing. China and Russia have been spearheading a movement to shift away from using the U.S. dollar in international trade. At the moment, the shift is happening gradually, but at some point a tipping point will come (for example if Saudi Arabia were to declare that it will no longer take U.S. dollars for oil) and the entire global financial system is going to change. When that tipping point comes the global demand for U.S. dollars is going to absolutely plummet and nightmarish inflation will come to the United States. If such a scenario sounds far out to you, then you have not been paying attention. In fact, China and Russia have been working very hard to move us toward exactly such a scenario.

Democracy loses in struggle to save euro

By Gideon Rachman



The European Central Bank has fired its magic bullet. By promising “unlimited” purchases of sovereign bonds, Mario Draghi, the ECB’s president, may have kept his pledge to do “whatever it takes” to save the euro. But in rescuing the currency, Mr Draghi’s magic bullet has badly wounded something even more important – democracy in Europe.

The Real Unemployment Numbers Are Worse Than You Are Being Told

According to the Obama administration, the unemployment rate in the United States has been slowly coming down over the past couple of years. But is that actually true? When you take a closer look at the data you quickly realize that the real unemployment numbers are much worse than we are being told. For example, if the labor force participation rate was the same today as it was back when Barack Obama first took office, the unemployment rate in the United States would be a whopping 11.2 percent. But every month the Obama administration has been able to show "progress" because of the fiction that hundreds of thousands of Americans are "disappearing" from the labor force each month. Frankly, the way that they come up with these numbers is an insult to our intelligence. Personally, I much prefer the employment-population ratio. It is a measure of the percentage of working age Americans that actually have jobs. I like to call it "the employment rate". So what happened to the "employment rate" in August? It fell slightly to 58.3 percent. It is lower than it was when the last recession supposedly ended, and it is almost as low as it has been at any point since the very beginning of this crisis. A few times during this economic downturn it has actually hit 58.2 percent. Needless to say, things are not getting any better. So why aren't the American people being told the truth?

Spinning Bad Financial News Into Good ~ Paul Craig Roberts

 

Friday’s payroll jobs report says that 96,000 new jobs were created in August and that the unemployment rate (U.3) fell from 8.3% to 8.1%. As 96,000 new jobs are not enough to keep up with population growth, the decline in the U.3 unemployment rate was caused by 368,000 discouraged job seekers giving up on finding employment and dropping out of the work force as measured by U.3. Discouraged workers are not included in the U.3 measure of unemployment, which makes the measure useless. The only purpose of U.3 is to keep bad news out of the news. the U.3 unemployment rate only measures those who have not been discouraged by the inability to find a job and are still actively seeking employment.

The Message From Both Parties Is That Americans Are Disposable ~ Paul Craig Roberts

 

If political conventions are ranked on a one to ten scale for intelligence, I give the Republican Convention zero and the Democrats one.

How can the United States be a superpower when both political parties are unaware of everything that is happening at home and abroad?

The Republicans are relying for victory on four years of anti-Obama propaganda and their propriety programed electronic voting machines. For nearly four years Republican operatives have flooded the Internet with portraits of Obama as a non-US citizen, as a Muslim (even while Obama was murdering Muslims in seven countries), and as a Marxist (put in power by the Israel Lobby, Wall Street, and the military/security complex).

Most Republican voters will vote against Obama based on these charges despite the curious fact that no committee in the Republican-controlled House of Representatives held a hearing to determine if Obama is a citizen. If Obama were not a citizen, why would the very aggressive House Republicans not capitalize on it. It would be easy for a Congressional committee to determine if Obama were a citizen. Despite the propaganda, the Republicans in office have shown no interest in the propaganda charges spread by Republican operatives over the Internet.