Future of the World

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80watts

Well-known member
May 20, 2004
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Victoria
What are we as humans going to be like in 20,50, 100 or 500 years?
Will the rich rule everything, will people be the slaves of the rich and laws made by the rich?
Will democracy still be around, or just in name only?

Most people are usually only concerned for their own well-being... Ask a stranger on the street this without a camera present, you get a different answear then the one from when you have a camera... So are people being truthful? Do they actually care about the future. Do they care about breathing clean air? Do they put their garbage in a trash can or do they dump it into the street?
 

froggyfroggy

Member
Nov 7, 2010
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Humans will have gone extinct in 50 years (or less).... so I guess we won’t have to worry about these things!
 

licks2nite

Active member
Nov 30, 2006
658
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Where are British Columbia app writers? Uber and Lyft apps siphon 25% of the fare straight out of the British Columbia economy. Haven't British Columbians learned anything from money laundering? You can't send the manufacturing jobs offshore for somebody else to do at slave labour wages and not expect to see the wealthy immigrant slave-masters come in, bid up the price of real estate and put British Columbians out on the street to sleep on sidewalks and Oppenheimer Park.
 

Finewine60

Active member
Jan 20, 2019
323
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Read the book Sapiens it tells us the best times for humans was 10,000 years ago and we’ve been working like dogs ever since thinking we are the in the best of times all an illusion.
Anyway a good book!
Basically if we can survive the next 100 years then we might have a great future, but personally it is doubtful
Artificial Intelligence will change everything.
Short term the world has too much debt and it will end badly with some kind of economic reset.
 

Cock Throppled

Well-known member
Oct 1, 2003
4,712
572
113
Upstairs
Humans, and most animals are resilient, and somewhat adaptable, but I really don't see mankind lasting another 50 years.

Besides the myriad ways we create to kill our fellow man, and our desecretion of the environment, I think the biggest threat will be the come-back of diseases and infections we never even think are dangerous, but will become more so as antibiotic resistance increases.

We're already seeing increases in deaths from measles, flus, pneumonias and flesh-eating illnesses.
Add in the spread of the really, really bad things like Ebola and Degue Fever, and our days are numbered.
 

licks2nite

Active member
Nov 30, 2006
658
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The $6 Trillion Pension Bailout Is Coming
Thu, 07/25/2019 - 09:00
Authored by Lance Roberts via RealInvestmentAdvice.com,


Fiscal responsibility is dead.

This past week, Trump announced he had reached an agreement with Congress to pass a continuing resolution which will suspend the debt ceiling until July 2021.

The good news is that it will ONLY increase spending by just $320 billion.

What a bargain, right?

It’s a lie.

That is just the “starting point” of proposed spending. Without a “debt ceiling” to constrain spending, the actual spending will be substantially higher.

However, the $320 billion is also deceiving because that is on top of the spending we have already committed. As I noted just recently:

“In 2018, the Federal Government spent $4.48 Trillion, which was equivalent to 22% of the nation’s entire nominal GDP. Of that total spending, ONLY $3.5 Trillion was financed by Federal revenues, and $986 billion was financed through debt.

In other words, if 75% of all expenditures is social welfare and interest on the debt, those payments required $3.36 Trillion of the $3.5 Trillion (or 96%) of revenue coming in.”

Do some math here.

The U.S. spent $986 billion more than it received in revenue in 2018, which is the overall “deficit.” If you just add the $320 billion to that number you are now running a $1.3 Trillion deficit.

Sure enough, this is precisely where I forecast we would be in December of 2017.

“Of course, the real question is how are you going to ‘pay for it?’ On the ‘fiscal’ side of the tax reform bill, without achieving accelerated rates of economic growth – ‘the debt will balloon.’

The reality, of course, is that is what will happen because there is absolutely NO historical evidence that cutting taxes, without offsetting cuts to spending, leads to stronger economic growth.”

More importantly, Federal Tax Revenue is DECLINING. Such was NOT supposed to be the case, as the whole “corporate tax cut” bill was supposed to lift tax revenues due to rising incomes.

More spending, less revenue, equals bigger deficits, which equates to slower economic growth.

“Increases in the national debt have long been squandered on increases in social welfare programs, and ultimately higher debt service, which has an effective negative return on investment. Therefore, the larger the balance of debt becomes, the more economically destructive it is by diverting an ever growing amount of dollars away from productive investments to service payments.

The relevance of debt versus economic growth is all too evident, as shown below. Since 1980, the overall increase in debt has surged to levels that currently usurp the entirety of economic growth. With economic growth rates now at the lowest levels on record, the growth in debt continues to divert more tax dollars away from productive investments into the service of debt and social welfare.”

“The irony is that debt driven economic growth, consistently requires more debt to fund a diminishing rate of return of future growth. It now requires $3.02 of debt to create $1 of real economic growth.”

Over the next 12-18 months, spending will expand, and the deficit will quickly approach $2 Trillion.

But, here’s the worse part: The projected budget deficits over the next couple of years are coming at the end of a decade-long growth cycle with the economy essentially at full employment. This is significant because, while budget deficits can be helpful in recessions by providing an economic stimulus, there are good reasons we should be retrenching during good economic times, including the one we are in now.

As William Gale stated:

“As President Kennedy once said, ‘the time to repair the roof is when the sun is shining.’ Instead, we are punching more holes in the fiscal roof. The fact that debt and deficits are rising under conditions of full employment suggests a deeper underlying fiscal problem.”

During the next recession, revenue will drop sharply, deficits will explode, and the Government will be forced into another round of bailouts.

Congress is already committing you to pay for it.

The $6 Trillion Bailout

I previously penned an article discussing the “Unavoidable Pension Crisis.”

“An April 2016 Moody’s analysis pegged the total 75-year unfunded liability for all state and local pension plans at $3.5 trillion. That’s the amount not covered by current fund assets, or future expected contributions, or investment returns at assumed rates ranging from 3.7% to 4.1%. Another calculation from the American Enterprise Institute comes up with $5.2 trillion, presuming that long-term bond yields average 2.6%.

Since then, we have gotten some updated estimates. Surely, after 3-years of surging stock market returns things have gotten markedly better, right?

“Moody’s Investor Service estimated last year that the total pension funding gap in the US is $4.4 trillion. A few months ago the American Legislative Exchange Council estimated it at nearly $6 trillion.”

Apparently, not.

Don’t worry, Congress has your back.

In “The Next Financial Crisis Will Be The Last” I stated:

“The real crisis comes when there is a ‘run on pensions.’ With a large number of pensioners already eligible for their pension, the next decline in the markets will likely spur the ‘fear’ that benefits will be lost entirely. The combined run on the system, which is grossly underfunded, at a time when asset prices are declining will cause a debacle of mass proportions. It will require a massive government bailout to resolve it.”

Fortunately, Congress has made some movement to get ahead of the problem with the Rehabilitation for Multiemployer Pensions Act. The legislation, if passed, is an attempt to address the multi-trillion dollar problem of unfunded pension plans in America.

By the way, this isn’t JUST an American problem, it is a $70-Trillion global problem, as noted recently by Visual Capitalist.

“According to an analysis by the World Economic Forum (WEF), there was a combined retirement savings gap in excess of $70 trillion in 2015, spread between eight major economies…

The WEF says the deficit is growing by $28 billion every 24 hours – and if nothing is done to slow the growth rate, the deficit will reach $400 trillion by 2050, or about five times the size of the global economy today.”

This is why Central Banks globally are terrified of a global downturn. The pension crisis IS the “weapon of mass destruction” to the global financial system, and it has started ticking.

While pension plans in the United States are guaranteed by a quasi-government agency called the Pension Benefit Guarantee Corporation (PBGC), the reality is the PBGC is already nearly bust from taking over plans following the financial crisis. The PBGC is slated to run out of money in 2025. Moreover, its balance sheet is trivial compared to the multi-trillion dollar pension problem.

The proposal from Congress is simply to use more debt. According to the new legislation, whenever a pension plan runs out of funds, Congress wants the pension plan to borrow money in order to keep making payments to beneficiaries.

Think about that for a moment.

Who would loan money to an insolvent pension fund?

Oh, that would be you, the taxpayer.

In other words, the Government wants you to bail out your own retirement fund.

Genius.

But it’s going to get far worse.
We Are Out Of Time

Currently, 75.4 million Baby Boomers in America—about 26% of the U.S. population—have reached or will reach retirement age between 2011 and 2030. And many of them are public-sector employees. In a 2015 study of public-sector organizations, nearly half of the responding organizations stated that they could lose 20% or more of their employees to retirement within the next five years. Local governments are particularly vulnerable: a full 37% of local-government employees were at least 50 years of age in 2015.

The vast majority of these individuals, when they retire, will depend on their pension (if they are in the 15% of the population that has one, and Social Security for a bulk of their living expenses in retirement.

The problem is that pension funds aren’t going to be able to keep their promises. Social Security, according to its own annual report, will run out of money in 15 years. Medicare has a massive underfunded problem as well.

But yet, the current Administration believes our outcome will be different.

More debt, and lack of any budgetary controls, will somehow lead to surging levels of economic growth despite no historical evidence of that being the case.

The reality is that the U.S. is now caught in the same liquidity trap as Japan. With the current economic recovery already pushing the long end of the economic cycle, the risk is rising that the next economic downturn is closer than not. The danger is that the Federal Reserve is now potentially trapped with an inability to use monetary policy tools to offset the next economic decline when it occurs. Combine this with:

A decline in savings rates to extremely low levels which depletes productive investments
An aging demographic that is top heavy and drawing on social benefits at an advancing rate.
A heavily indebted economy with debt/GDP ratios above 100%.
A decline in exports due to a weak global economic environment.
Slowing domestic economic growth rates.
An underemployed younger demographic.
An inelastic supply-demand curve
Weak industrial production
Dependence on productivity increases to offset reduced employment

The combined issues of debt, deflation, and demographics will continue to push the U.S. closer to the “point of no return.”

As the aging population grows becoming a net drag on “savings,” the dependency on the “social welfare net” will continue to expand. The “pension problem” is only the tip of the iceberg.

It’s an unsolvable problem.

It will happen.

It will devastate many Americans.

It is just a function of time.

“Demography, however, is destiny for entitlements, so arithmetic will do the meddling.” – George Will

But here is the real question that needs to be answered:

“Who is going to buy all the debt?”
 

badbadboy

Well-known member
Nov 2, 2006
9,576
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In Lust Mostly
Republicans in the US Senate killed two bills to counter foreign interference in the 2020 election. No reason was given other than 'moving on'.

Four more years

#45puppet #moscowmitch
 

johnnydepth

Average Sized Member
Nov 14, 2015
1,686
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winnipeg
50 years left for humans? Not sure about that but I would definitely say total government collapse and the disappearance of the current monetary system in less than 50 years. Might even be so bold as to say in the next 20 years.
Far too many have nots in the world today for these systems to continue without military force. Even then...
 

jgg

In the air again.
Apr 14, 2015
2,454
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83
Varies now
Reading this, I think I'll go fuck as many women as I can and die in an orgasm coma.
 

jgg

In the air again.
Apr 14, 2015
2,454
381
83
Varies now
Can I have the list of the women that put you in that coma?
Being dead that might be tough.....but we should plan accordingly.
Good idea! Always have a plan.
 

licks2nite

Active member
Nov 30, 2006
658
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The European Union's Other Periphery
Sun, 07/28/2019 - 23:00

Authored by Frank Lee via Off-Guradian.org,

We’ll start with the 10 per-capita poorest-countries in the whole of Europe. In rank order:

Moldova – US$2560

Ukraine – US$3560

Kosovo – US$3990

Albania – US$4450

Bosnia and Herzegovina – US$4769

Republic of Macedonia – US$5150

Serbia – US$5820

Montenegro – US$7320

Bulgaria – US$7620

Romania – US$9420

Average per capita income in Europe as a whole is US$37,317 (2018 figures).

What is noticeable is that most of these states are situated in either the Balkans or South-Eastern Europe. But that is not the end of the story.

Portugal, the poorest country in western Europe with GDP standing at US$238billion, is just pipped by the Czech Republic (now Czechia which is actually in the centre of Europe) as the star performer of the East whose national income stands at US$240.1 billion.

Thus, in terms of per capita income the Czech Republic is the sole representative of the ex-Soviet states in Europe. This geopolitical and economic cleavage could hardly be starker. These two Euro-zones replicate the division of North and South between the US/Canada and central and Latin America.

Much of the attention to European development – or the lack of it – has been preoccupied with the gap between the West and South of Europe. This present schism is attributable to tried, tested, and failed economic strategies promulgated by the various institutions of globalization: the International Monitary Fund (IMF), World Bank (WB), World Trade Organization (WTO), and so forth.

The single currency, the euro, became legal tender on 1 January 1999 and was adopted by most of the countries in the Euro area. But this proved to be the undoing of the political economy of the South.

When different sovereign states are responsible for their own economic policies and are able to print and issue their own currencies on world markets, any distortions and maladjustments which occur in trade balances is alleviated by changes in exchange rate values – in short, devaluation. This will hopefully restore such imbalances and return to a trade equilibrium.

However, this policy is, now, no longer available to the Southern European states since they no longer have their own currencies and, in addition, are under the tutelage the European Central Bank (ECB). The Southern periphery are now are using the same currency as the Northern European bloc, the euro, and required by the ECB to take on a one-size fits all monetary policy.

Devaluations are therefore ruled out.

Given the higher productivity levels and lower costs of Germany, Holland, Sweden, France and so forth, the Southern peripheral states have begun to run chronic balance of payments deficits. The only avenue left open to them is what is termed ‘internal devaluation’ – i.e., austerity.

This results in low growth, high unemployment, high migration, depopulation, cuts in public spending and the rest of the IMF’s Structural Adjustment Policies – policies which have failed just about everywhere. So much for the southern periphery.

Focus on Eastern Europe sheds light on a different set of problems. Most Eastern European countries, Bulgaria, Croatia, Czech Republic, Hungary, and Poland kept their own currencies; apart that is from basket cases like Latvia whose government, unlike the people, went where angels feared to tread – into the Eurozone and the euro.

(N.B. Some Western European countries, e.g., the UK, Denmark, Switzerland and Norway did – wisely – keep their own currencies.)

Excluding Russia, of course, these Eastern European states – termed ‘transitional economies’ – have become stalled in economic stagnation which so far has been difficult if not impossible to overcome. These obstacles have been specific to the Eastern periphery.

The European Union now consists of 28 states. No fewer than 10 of these are former states of the Eastern Bloc, and this proportion is set to grow with the impending accession with some minor Balkan nations. Although Georgia and Ukraine are in line for membership of the EU, they are also expected to join NATO as has become customary for aspirant EU states.

Whether they obtain either is a matter of conjecture, however, as this would be almost certain to cross Russia’s red lines and result in a major geopolitical flareup. Europe’s centre of gravity is shifting. And while the process of joining the European Union is driving change within these countries, it is also changing the nature of Europe itself.

WHERE’S MY PORSCHE?

Those Eastern European states which emerged from the break-up of the Soviet Union had been led to believe that a bright new world of West European living standards, enhanced pay levels, high rates of social mobility and consumption were on offer.

Unfortunately, they were sold an illusion: the result of the transition so far seems to have been the creation of a low-wage hinterland, a border economy on the fringes of the highly developed European core; a Euro version of NAFTA and the maquiladora, i.e., low tech, low wage, low skills production units on the Mexican side of the US’s southern borders.

This has had wider political and social ramifications for the entire European project. The Brave New World envisaged did not have any basic guiding principles or planning other than the usual neoliberal prescriptions of privatisation-deregulation-liberalisation, the well-thumbed policy triad of the neoliberal playbook.

Central to this policy implementation was a controversial prescription called ‘shock-therapy’. The fact that this policy had already been tried in Russia and failed spectacularly, didn’t seem to worry the powers-that-be. Such is always the case with religious beliefs.

The doctrine itself had become popular among the ingenues and opportunists of the old ‘workers states’. Shock-therapy was designed to wipe-away all the old fuddy-duddy notions about state interventionism, welfarism, social and national protection; measures included the sudden removal of subsidies, fire sales of state assets (privatisation), and the abrupt removal of the controls and subsidies that had formerly applied to wages and prices.

But the neoliberal militants insisted upon a policy of ‘freeing up’ the markets which, according to them, would maximise growth and development. Predictably of course, these policies also opened these countries to maximum – and often predatory – western penetration and influence.

The shock was timed to occur before the establishment of financial markets within the region and, in the absence of investment capital, restructuring efforts became focused on labour – on reducing the unit cost of labour in order to become “competitive”. It should be understood that in neo-liberal, supply-side, economics the road to wealth and prosperity entailed policies that actually make their populations poorer. There seems to be a slightly Orwellian flavour here. ‘Poverty is Wealth.’

The wave of mass unemployment that this generated in the early 1990s goes well beyond the experiences of British recessions of the 1980s, with unemployment in some regions reaching 80 per cent. Shock therapy deliberately engineered a slump in the economies of the region, by shattering the region’s economic links, and then creating a massive domestic recession.

SHOCK-THERAPY – ALL SHOCK NO THERAPY

Regardless, the show must go on. The neoliberal religion taken up in many of these states, often by former members of the Communist nomenklatura, which resulted in high levels of structural unemployment were actually meant to do that, at least in the short-term. Painful as it was bound to be, this was the necessary shakeout of an inefficient and cosseted workforce and therefore the absolute precondition which would catapult these formerly backward economies into lean and mean competitors on Europe’s markets and the prelude of an entry into the developed economies on the Western European and US model. Yeah, right.

In the real-world Michael Hudson analysed just how this process panned out in Latvia.

Like other post-Soviet economies, Latvians wanted to achieve the prosperity they saw in Western Europe. If Latvia had followed the policies that built up the industrial nations, the state would have taxed wealth and income progressively to invest in public infrastructure.

Instead, Latvia’s Baltic miracle assumed largely predatory forms of rent-seeking and insider privatisation. Accepting the US and Swedish advice to accept the world’s most lopsided set of neoliberal tax and financial policies. Latvia levied the heaviest taxes on labour. Employers had to pay a 25% tax on wages plus a 24% of social service tax, whilst wage-earners pay another 11% tax. These three taxes making up to a 60% flat tax before personal deductions.

Additionally, in order to make labour high-cost and uncompetitive, consumers must pay a high value-added sales tax of 21% (raised sharply from 7%) after the 2008 blowout. No Western economy taxes wages and consumption at that level.

Latvia’s heavy taxation of labour finds its counterpart in a mere 10% on dividends, interest and other returns to wealth and the lowest property tax rate of any other economy. Thus, Latvian fiscal policy retarded growth and employment whilst concurrently subsidising a real estate bubble that is the chief feature of Latvia’s “Baltic Miracle”.

Now Latvia was to open up its economy to foreign capital inflows – hot money – from foreign bank affiliates, mainly Scandinavian, whose chief interest was to finance the property boom. Of course, these cash inflows needed to be serviced and in doing so became a financial tax on the nation’s labour and industry. Other sources in overseas monies came in the form of privatisation of Latvia’s public sector stock. Sweden became a major source of these rent-seeking inflows.

Yet with all of this money flowing into Latvia absolutely no effort was made to restructure industry and agriculture to generate foreign exchange to import capital and consumer goods not produced at home. Having lost export potentialities during the COMECON period the existing production linkages were uprooted, industrial plants were dismantled for their land value scrapped or transformed into real estate gentrification.

The Baltic miracle had been nothing more than a property debt-bubble financed by foreign capital inflows. When the flows reversed the extent of debt deflation, deindustrialisation and depopulation (see below) became apparent.

The Austerity programme … Latvia was suffering was the world’s steepest one-year plunge in house prices which had peaked in 2007. Despite having emerged debt-free in 1991, Latvia had become Europe’s most debt-strapped country, without using some of its borrowed credit to modernize its industry or agriculture.”

What was true of Latvia was also generally the case in the rest of Eastern Europe’ Thus by 2008 it had become apparent that the post-Soviet economies had not really grown as much as they had been financialized and indebted.

Forbes economist Adomanis calculated in 2014 that convergence of these economies with those of the West…

…continues at its 2008-13 pace (about 0.37% per annum) it would take the new EU members over 100 years to match up to the core countries average level of income …to the extent that Central Europe’s most rapid and sustained burst of convergence coincided with a credit bubble that is highly unlikely to be repeated, it seems more likely than not that the regions convergence will be slower in the future than it was in the past.”

BUDDY CAN YOU SPARE A EURO

With the decimation of indigenous industry, the role of financialization and debt became crucial, as the new capitalist economies required a financial services industry that could support the growing tendencies towards property speculation and asset manipulation.

Different vulnerabilities arose from the actions of different institutions, but the overall effect was to create state dependency upon foreign direct investment (FDI), and support from the World Bank, IMF and the specially created European Bank for Reconstruction and Development (EBRD).

The general financialization of the region led to huge increases in debt, both personal and institutional. Western banks in a number of smaller states, most notably Austria and Sweden, sought to boost their profits through increasing their market share in the Central and Eastern Europe (CEE) region, by aggressive lending to households.

Drawing on the general expectation of CEE countries’ membership of the EU to borrow on the wholesale money markets and taking advantage of financial deregulation and poor consumer protection standards in the region, they lent money denominated in Euros, Swiss Francs and Japanese Yen. This allowed them to offer consumers lower interest rates than those available for borrowing in domestic currencies. And this borrowing has driven eye-watering increases in levels of personal household debt – especially in Hungary, Romania, Bulgaria and the Baltic States.

Another consequence of shock-therapy was the pressure that it would generate on the European Union to open up western European markets to the Central and Eastern Europe countries. The model that peripheral states adopted – of being low-wage export-based economies – depended on access to EU markets.

However, in order to sell on EU markets, it is necessary to have something to export. But these states simply did not and do not have the industrial and/or financial capacity to compete with Western European states and are not likely to have in the foreseeable future. Being subordinated to a set of rules empowered by global institutions, the IMF, WB, WTO – neoliberalism – makes such development impossible.

Of course, there has been some Western investment in Central and Eastern Europe but without wishing to be cynical – moi? Never! – not all of this investment has been for Central and Eastern Europe's benefit, most of it was purely predatory.

For example, the US Transnational Conglomerate, General Electric, after sniffing out worthwhile opportunities for a quick buck decided upon buying a lighting company, Tungsram, in Hungary. They swiftly closed profitable product lines and were thus able to remove a source of domestic competition from the market.

Similarly, the Hungarian cement industry was bought by foreign owners, who then prevented their Hungarian affiliates from exporting; and an Austrian steel producer bought a major Hungarian steel plant only in order to close it down and capture its ex-Soviet market for the Austrian parent company. For a voracious appetite try Volkswagen.

VW acquired a controlling stake in SEAT in 1986, making it the first non-German marque of the company, and acquired control of Škoda (see below) in 1994, of Bentley, Lamborghini and Bugatti in 1998, Scania in 2008 and of Ducati, MAN and Porsche in 2012.

But VW’s cherry-picking didn’t stop there.

Case Study: VWs takeover of Skoda

Five months after the fall of Communism and before of any kind shock-therapy had been launched Citreon, GM, Renault, and Volvo were clamouring for Skoda. VW won the bid promising DM7.1 billion, promising to raise production to 450,000 cars per year by 2000. Engine parts were to be manufactured in Bohemia and a promise was made to use Czech suppliers. The Czech workforce was to be retained. The Czech government was favourably disposed to this sort of Foreign Direct Investment (FDI) and gave VW a protected position in the home market in addition to a two-year tax holiday writing off Skoda’s debts.

Things turned sour, however, when VW reneged on its debts and promises. The original investment of Deutschmark(DM)7.1 billion was reduced to DM3.8 billion, there would be no Czech engine plant, and no commitment to produce 405,000 cars by year 2000. The labour force would be cut to 15,000 followed by more redundancies, and VW would increasingly to German parts suppliers rather than Czech subsidiaries, bringing in 15 such firms to replace their Czech competitors.

These are examples of the ways in which the “peripheral economy” status of the CEE region was imposed. An exploitative relationship between East and West. The Skoda experience of the negative outcome from opening up of the leading sectors of a target’s country’s (the Czech Republic) production apparatus into the global strategy of a Western TNC is not unique and is a common feature of foreign direct investment flows.

After only a couple of years of “shock-therapy”, much of the core industrial infrastructure of the peripheral states had fallen into the hands of multinational companies – from chains of shops, to power generating plant and steelworks. Two political/social phenomena resulted from the asset-stripping (whoops, I mean productive investment).

POLITICAL

Since the advent of the shock therapy, it would have been expected that East European voters would have voted en masse for parties of the left for the usual reasons. Namely to mitigate the worst social and economic effects of the capitalist transition.

But these parties themselves had become Blairised, i.e., heavily committed to the pseudo-reformist ‘third-way’ along with the orthodoxies of neoliberal economics, as this was seen as part of their commitment to European accession. Into the ideological vacuum and emerging across the region came populist and right-wing movements, in Poland and Hungary in particular as well the semi-fascist Baltics where they have always had a presence.

These groups have attempted to harness people’s discontent. Political forces that flourished in the time of the Austro-Hungarian empire have re-emerged – such as anti-Semitic “Christian socialism” and patriotic “national liberalism”. and perhaps more important came mass migration and depopulation in the whole area…


Full article: https://nationandstate.com/2019/07/29/the-eus-other-periphery/
 

apl16

Well-known member
Jul 26, 2011
1,271
299
83
Look left. Way left.
The European Union's Other Periphery
Sun, 07/28/2019 - 23:00

Authored by Frank Lee via Off-Guradian.org,

We’ll start with the 10 per-capita poorest-countries in the whole of Europe. In rank order:

Moldova – US$2560

Ukraine – US$3560

Kosovo – US$3990

Albania – US$4450

Bosnia and Herzegovina – US$4769

Republic of Macedonia – US$5150

Serbia – US$5820

Montenegro – US$7320

Bulgaria – US$7620

Romania – US$9420

Average per capita income in Europe as a whole is US$37,317 (2018 figures).

What is noticeable is that most of these states are situated in either the Balkans or South-Eastern Europe. But that is not the end of the story.

Portugal, the poorest country in western Europe with GDP standing at US$238billion, is just pipped by the Czech Republic (now Czechia which is actually in the centre of Europe) as the star performer of the East whose national income stands at US$240.1 billion.

Thus, in terms of per capita income the Czech Republic is the sole representative of the ex-Soviet states in Europe. This geopolitical and economic cleavage could hardly be starker. These two Euro-zones replicate the division of North and South between the US/Canada and central and Latin America.

Much of the attention to European development – or the lack of it – has been preoccupied with the gap between the West and South of Europe. This present schism is attributable to tried, tested, and failed economic strategies promulgated by the various institutions of globalization: the International Monitary Fund (IMF), World Bank (WB), World Trade Organization (WTO), and so forth.

The single currency, the euro, became legal tender on 1 January 1999 and was adopted by most of the countries in the Euro area. But this proved to be the undoing of the political economy of the South.

When different sovereign states are responsible for their own economic policies and are able to print and issue their own currencies on world markets, any distortions and maladjustments which occur in trade balances is alleviated by changes in exchange rate values – in short, devaluation. This will hopefully restore such imbalances and return to a trade equilibrium.

However, this policy is, now, no longer available to the Southern European states since they no longer have their own currencies and, in addition, are under the tutelage the European Central Bank (ECB). The Southern periphery are now are using the same currency as the Northern European bloc, the euro, and required by the ECB to take on a one-size fits all monetary policy.

Devaluations are therefore ruled out.

Given the higher productivity levels and lower costs of Germany, Holland, Sweden, France and so forth, the Southern peripheral states have begun to run chronic balance of payments deficits. The only avenue left open to them is what is termed ‘internal devaluation’ – i.e., austerity.

This results in low growth, high unemployment, high migration, depopulation, cuts in public spending and the rest of the IMF’s Structural Adjustment Policies – policies which have failed just about everywhere. So much for the southern periphery.

Focus on Eastern Europe sheds light on a different set of problems. Most Eastern European countries, Bulgaria, Croatia, Czech Republic, Hungary, and Poland kept their own currencies; apart that is from basket cases like Latvia whose government, unlike the people, went where angels feared to tread – into the Eurozone and the euro.

(N.B. Some Western European countries, e.g., the UK, Denmark, Switzerland and Norway did – wisely – keep their own currencies.)

Excluding Russia, of course, these Eastern European states – termed ‘transitional economies’ – have become stalled in economic stagnation which so far has been difficult if not impossible to overcome. These obstacles have been specific to the Eastern periphery.

The European Union now consists of 28 states. No fewer than 10 of these are former states of the Eastern Bloc, and this proportion is set to grow with the impending accession with some minor Balkan nations. Although Georgia and Ukraine are in line for membership of the EU, they are also expected to join NATO as has become customary for aspirant EU states.

Whether they obtain either is a matter of conjecture, however, as this would be almost certain to cross Russia’s red lines and result in a major geopolitical flareup. Europe’s centre of gravity is shifting. And while the process of joining the European Union is driving change within these countries, it is also changing the nature of Europe itself.

WHERE’S MY PORSCHE?

Those Eastern European states which emerged from the break-up of the Soviet Union had been led to believe that a bright new world of West European living standards, enhanced pay levels, high rates of social mobility and consumption were on offer.

Unfortunately, they were sold an illusion: the result of the transition so far seems to have been the creation of a low-wage hinterland, a border economy on the fringes of the highly developed European core; a Euro version of NAFTA and the maquiladora, i.e., low tech, low wage, low skills production units on the Mexican side of the US’s southern borders.

This has had wider political and social ramifications for the entire European project. The Brave New World envisaged did not have any basic guiding principles or planning other than the usual neoliberal prescriptions of privatisation-deregulation-liberalisation, the well-thumbed policy triad of the neoliberal playbook.

Central to this policy implementation was a controversial prescription called ‘shock-therapy’. The fact that this policy had already been tried in Russia and failed spectacularly, didn’t seem to worry the powers-that-be. Such is always the case with religious beliefs.

The doctrine itself had become popular among the ingenues and opportunists of the old ‘workers states’. Shock-therapy was designed to wipe-away all the old fuddy-duddy notions about state interventionism, welfarism, social and national protection; measures included the sudden removal of subsidies, fire sales of state assets (privatisation), and the abrupt removal of the controls and subsidies that had formerly applied to wages and prices.

But the neoliberal militants insisted upon a policy of ‘freeing up’ the markets which, according to them, would maximise growth and development. Predictably of course, these policies also opened these countries to maximum – and often predatory – western penetration and influence.

The shock was timed to occur before the establishment of financial markets within the region and, in the absence of investment capital, restructuring efforts became focused on labour – on reducing the unit cost of labour in order to become “competitive”. It should be understood that in neo-liberal, supply-side, economics the road to wealth and prosperity entailed policies that actually make their populations poorer. There seems to be a slightly Orwellian flavour here. ‘Poverty is Wealth.’

The wave of mass unemployment that this generated in the early 1990s goes well beyond the experiences of British recessions of the 1980s, with unemployment in some regions reaching 80 per cent. Shock therapy deliberately engineered a slump in the economies of the region, by shattering the region’s economic links, and then creating a massive domestic recession.

SHOCK-THERAPY – ALL SHOCK NO THERAPY

Regardless, the show must go on. The neoliberal religion taken up in many of these states, often by former members of the Communist nomenklatura, which resulted in high levels of structural unemployment were actually meant to do that, at least in the short-term. Painful as it was bound to be, this was the necessary shakeout of an inefficient and cosseted workforce and therefore the absolute precondition which would catapult these formerly backward economies into lean and mean competitors on Europe’s markets and the prelude of an entry into the developed economies on the Western European and US model. Yeah, right.

In the real-world Michael Hudson analysed just how this process panned out in Latvia.

Like other post-Soviet economies, Latvians wanted to achieve the prosperity they saw in Western Europe. If Latvia had followed the policies that built up the industrial nations, the state would have taxed wealth and income progressively to invest in public infrastructure.

Instead, Latvia’s Baltic miracle assumed largely predatory forms of rent-seeking and insider privatisation. Accepting the US and Swedish advice to accept the world’s most lopsided set of neoliberal tax and financial policies. Latvia levied the heaviest taxes on labour. Employers had to pay a 25% tax on wages plus a 24% of social service tax, whilst wage-earners pay another 11% tax. These three taxes making up to a 60% flat tax before personal deductions.

Additionally, in order to make labour high-cost and uncompetitive, consumers must pay a high value-added sales tax of 21% (raised sharply from 7%) after the 2008 blowout. No Western economy taxes wages and consumption at that level.

Latvia’s heavy taxation of labour finds its counterpart in a mere 10% on dividends, interest and other returns to wealth and the lowest property tax rate of any other economy. Thus, Latvian fiscal policy retarded growth and employment whilst concurrently subsidising a real estate bubble that is the chief feature of Latvia’s “Baltic Miracle”.

Now Latvia was to open up its economy to foreign capital inflows – hot money – from foreign bank affiliates, mainly Scandinavian, whose chief interest was to finance the property boom. Of course, these cash inflows needed to be serviced and in doing so became a financial tax on the nation’s labour and industry. Other sources in overseas monies came in the form of privatisation of Latvia’s public sector stock. Sweden became a major source of these rent-seeking inflows.

Yet with all of this money flowing into Latvia absolutely no effort was made to restructure industry and agriculture to generate foreign exchange to import capital and consumer goods not produced at home. Having lost export potentialities during the COMECON period the existing production linkages were uprooted, industrial plants were dismantled for their land value scrapped or transformed into real estate gentrification.

The Baltic miracle had been nothing more than a property debt-bubble financed by foreign capital inflows. When the flows reversed the extent of debt deflation, deindustrialisation and depopulation (see below) became apparent.

The Austerity programme … Latvia was suffering was the world’s steepest one-year plunge in house prices which had peaked in 2007. Despite having emerged debt-free in 1991, Latvia had become Europe’s most debt-strapped country, without using some of its borrowed credit to modernize its industry or agriculture.”

What was true of Latvia was also generally the case in the rest of Eastern Europe’ Thus by 2008 it had become apparent that the post-Soviet economies had not really grown as much as they had been financialized and indebted.

Forbes economist Adomanis calculated in 2014 that convergence of these economies with those of the West…

…continues at its 2008-13 pace (about 0.37% per annum) it would take the new EU members over 100 years to match up to the core countries average level of income …to the extent that Central Europe’s most rapid and sustained burst of convergence coincided with a credit bubble that is highly unlikely to be repeated, it seems more likely than not that the regions convergence will be slower in the future than it was in the past.”

BUDDY CAN YOU SPARE A EURO

With the decimation of indigenous industry, the role of financialization and debt became crucial, as the new capitalist economies required a financial services industry that could support the growing tendencies towards property speculation and asset manipulation.

Different vulnerabilities arose from the actions of different institutions, but the overall effect was to create state dependency upon foreign direct investment (FDI), and support from the World Bank, IMF and the specially created European Bank for Reconstruction and Development (EBRD).

The general financialization of the region led to huge increases in debt, both personal and institutional. Western banks in a number of smaller states, most notably Austria and Sweden, sought to boost their profits through increasing their market share in the Central and Eastern Europe (CEE) region, by aggressive lending to households.

Drawing on the general expectation of CEE countries’ membership of the EU to borrow on the wholesale money markets and taking advantage of financial deregulation and poor consumer protection standards in the region, they lent money denominated in Euros, Swiss Francs and Japanese Yen. This allowed them to offer consumers lower interest rates than those available for borrowing in domestic currencies. And this borrowing has driven eye-watering increases in levels of personal household debt – especially in Hungary, Romania, Bulgaria and the Baltic States.

Another consequence of shock-therapy was the pressure that it would generate on the European Union to open up western European markets to the Central and Eastern Europe countries. The model that peripheral states adopted – of being low-wage export-based economies – depended on access to EU markets.

However, in order to sell on EU markets, it is necessary to have something to export. But these states simply did not and do not have the industrial and/or financial capacity to compete with Western European states and are not likely to have in the foreseeable future. Being subordinated to a set of rules empowered by global institutions, the IMF, WB, WTO – neoliberalism – makes such development impossible.

Of course, there has been some Western investment in Central and Eastern Europe but without wishing to be cynical – moi? Never! – not all of this investment has been for Central and Eastern Europe's benefit, most of it was purely predatory.

For example, the US Transnational Conglomerate, General Electric, after sniffing out worthwhile opportunities for a quick buck decided upon buying a lighting company, Tungsram, in Hungary. They swiftly closed profitable product lines and were thus able to remove a source of domestic competition from the market.

Similarly, the Hungarian cement industry was bought by foreign owners, who then prevented their Hungarian affiliates from exporting; and an Austrian steel producer bought a major Hungarian steel plant only in order to close it down and capture its ex-Soviet market for the Austrian parent company. For a voracious appetite try Volkswagen.

VW acquired a controlling stake in SEAT in 1986, making it the first non-German marque of the company, and acquired control of Škoda (see below) in 1994, of Bentley, Lamborghini and Bugatti in 1998, Scania in 2008 and of Ducati, MAN and Porsche in 2012.

But VW’s cherry-picking didn’t stop there.

Case Study: VWs takeover of Skoda

Five months after the fall of Communism and before of any kind shock-therapy had been launched Citreon, GM, Renault, and Volvo were clamouring for Skoda. VW won the bid promising DM7.1 billion, promising to raise production to 450,000 cars per year by 2000. Engine parts were to be manufactured in Bohemia and a promise was made to use Czech suppliers. The Czech workforce was to be retained. The Czech government was favourably disposed to this sort of Foreign Direct Investment (FDI) and gave VW a protected position in the home market in addition to a two-year tax holiday writing off Skoda’s debts.

Things turned sour, however, when VW reneged on its debts and promises. The original investment of Deutschmark(DM)7.1 billion was reduced to DM3.8 billion, there would be no Czech engine plant, and no commitment to produce 405,000 cars by year 2000. The labour force would be cut to 15,000 followed by more redundancies, and VW would increasingly to German parts suppliers rather than Czech subsidiaries, bringing in 15 such firms to replace their Czech competitors.

These are examples of the ways in which the “peripheral economy” status of the CEE region was imposed. An exploitative relationship between East and West. The Skoda experience of the negative outcome from opening up of the leading sectors of a target’s country’s (the Czech Republic) production apparatus into the global strategy of a Western TNC is not unique and is a common feature of foreign direct investment flows.

After only a couple of years of “shock-therapy”, much of the core industrial infrastructure of the peripheral states had fallen into the hands of multinational companies – from chains of shops, to power generating plant and steelworks. Two political/social phenomena resulted from the asset-stripping (whoops, I mean productive investment).

POLITICAL

Since the advent of the shock therapy, it would have been expected that East European voters would have voted en masse for parties of the left for the usual reasons. Namely to mitigate the worst social and economic effects of the capitalist transition.

But these parties themselves had become Blairised, i.e., heavily committed to the pseudo-reformist ‘third-way’ along with the orthodoxies of neoliberal economics, as this was seen as part of their commitment to European accession. Into the ideological vacuum and emerging across the region came populist and right-wing movements, in Poland and Hungary in particular as well the semi-fascist Baltics where they have always had a presence.

These groups have attempted to harness people’s discontent. Political forces that flourished in the time of the Austro-Hungarian empire have re-emerged – such as anti-Semitic “Christian socialism” and patriotic “national liberalism”. and perhaps more important came mass migration and depopulation in the whole area…


Full article: https://nationandstate.com/2019/07/29/the-eus-other-periphery/
You got it. The old Eastern block countries got screwed.....from listening to the corporate owned politicians from the West and by their own corrupt leaders. It has been devastating to so many!
 

licks2nite

Active member
Nov 30, 2006
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You got it. The old Eastern block countries got screwed.....from listening to the corporate owned politicians from the West and by their own corrupt leaders. It has been devastating to so many!
Canada's screwing happened on a longer timeline. Would you believe that British Columbia had an aircraft manufacturing industry in the late 1940s and a television manufacturing industry in the early 1950s just when both these products were becoming popular for consumers? Throughout the late '50s and all the '60s Canadian media made frequent reference to Canada's "brain drain" and lack of research & development facilities. Canadians were too good it was inferred, having been a winner in World War II, to be producing products for the rest of the world. Canadian swallowed that argument and demanded high wages that gradually sent most Canadian manufacturing out of Canada, first to the United States and eventually to Asia. Today, from money laundering and the high price of necessities, real estate, rent, fuel, food, Canadians feel the brunt of a lost manufacturing sector.
 

licks2nite

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Nov 30, 2006
658
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Why Negative Interest Rate Policies (NIRP) Can Only Get Worse
Tue, 07/30/2019 - 09:51
Authored by Omid Malekan via Medium.com,


Economics is the only profession where the more an idea fails, the more it is believed. Consider the following theory:

Low interest rates lead to higher growth and higher inflation.

If it were true, then a decade of the lowest rates in recorded history would have seen the global economy go gangbusters. Instead it’s been mostly the opposite, leading any reasonable person to at least question this theory.

But wait a second! A wunderkind econ whippersnapper fresh from Davos interrupts.

If not for low interest rates, things would have been even worse!

This kind of defensive argument is popular among failed forecasters. And to be fair, I can’t prove that it isn’t true and low rates didn’t prevent some unforeseen calamity. That’s the beauty of the Hyperbolic Avoided Hypothetical (HAH! for short) and why it has become a favorite of the Central Banking elite. But it’s junk science, because you can’t disprove it either. For example: I just used my superpowers to prevent a zombie apocalypse. Go ahead and prove that I didn’t. (Do you see any zombies? No? You’re welcome.)

These twin tendencies of believing an idea that keeps disappointing and justifying it with all the worse outcomes that didn’t happen are the pillars of the global liquidity trap that is slowly pulling us all under. Ten years ago, there was a plausible theory that lower rates were a good idea. When they failed, rates were taken to zero (zero interest rate policy, or ZIRP). When that failed, they were taken negative (negative interest rate policy, or NIRP). At no point was it ever even considered that maybe, just maybe, it’s the theory that’s wrong.

My belief is that in the short term, artificially low rates are deflationary, as they result in investing booms that create excess capacity and misallocation of resources [i.e. cheap money spent on boondoggles] that hurts growth. Uber, Lyft, WeWork and AirBnb have caused plenty of deflation by constantly raising money to operate at a loss. Cheap debt enabled a fracking boom that’s flooded the oil market. Public companies that can borrow for nothing are more likely to spend that money on buybacks than wages.

But don’t say any of that to a central banker. In a profession where the things that didn’t happen matter more than the things that did, where giving free money to billionaires reduces income inequality and iPad prices matter more than the cost of food, the only thing that’s wrong with low interest rates is that they aren’t low enough.

And so, the ECB has just announced it will cut rates from negative 0.4% to negative 0.5%, because clearly what’s ailing Europe in the year 2019, a year of hard Brexits [UK leaving the European union], Yellow Vests [spontanious uprising in France] and right-wing uprisings is the fact that "negative interest rate policies" (NIRP) isn’t NIRPy enough, and should in fact be even NIRPier.

Here in the US we don’t have NIRP (yet) but the Fed is about to cut rates, despite the fact that unemployment is at an all time low, the stock market is at an all time high, and inflation is sitting just below the Fed’s own target. So why start easing? The Wall Street Journal asks the same question and concludes:

Federal Reserve Chairman Jerome Powell is leading his colleagues to cut interest rates this week for the first time since 2008, even though the economy looks healthy, partly because it isn’t behaving as expected.

Translation: The Fed’s economic models have once again failed to predict the behavior of millions of people, and that could only mean one thing: the people are wrong. It’s tempting to get on these economists for their folly, and lord knows they deserve it, but what we are witnessing is the all too common tendency among smart people to double down on a false belief when confronted with the limitations of their own intelligence. (Unfortunately, and unlike a degenerate gambler, Central Bankers get to double down with our money.)

The great philosopher Homer (Simpson, not the Greek dude) once toasted: “To alcohol: The cause, and cure, of all of life’s problems.” The same can be said for low rates. As the extremity of these policies continue to cause a widening wealth gap, social discord and populist uprisings, they will accelerate the feedback loop. As the drama unfolds, two assets, gold and crypto, will become increasingly sought after.

Yes, you can also use equities, venture capital and real estate to hedge against negative rates. And in fact, that’s exactly what Central Bankers want you to do, along with buying shit you don’t need and taking on debt you might not be able to repay. But too many of us lived through the financial crisis to forget its lessons, and stocks, startups and skyscrapers have already had an epic run anyway.

Gold has been a great hedge against insanity for thousands of years, and with crazy shit like the entire Swiss yield curve being negative out to 50 year being the new normal, these are historically insane times.

Crypto represents a lot of things to a lot of different people, and it remains to be seen whether it ends up being more of a store of value, medium of exchange, equity in decentralized network or some combination therein. But going forward, it will also start to act as a vote against the insanity, for the simple reason that it exists entirely outside of the traditional financial system. In that regard, it is rather undervalued.

Source: https://medium.com/@omid.malekan/why-nirp-can-only-get-nirpier-part-1-a2c8ac822f6
 

storm rider

Banned
Dec 6, 2008
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Canada's screwing happened on a longer timeline. Would you believe that British Columbia had an aircraft manufacturing industry in the late 1940s and a television manufacturing industry in the early 1950s just when both these products were becoming popular for consumers? Throughout the late '50s and all the '60s Canadian media made frequent reference to Canada's "brain drain" and lack of research & development facilities. Canadians were too good it was inferred, having been a winner in World War II, to be producing products for the rest of the world. Canadian swallowed that argument and demanded high wages that gradually sent most Canadian manufacturing out of Canada, first to the United States and eventually to Asia. Today, from money laundering and the high price of necessities, real estate, rent, fuel, food, Canadians feel the brunt of a lost manufacturing sector.
You can place the blame on unions.At one time unions were needed.With all of the workplace laws etc in force these days unions are not needed so much as employers are held accountable and face severe punishments.In the Private sector it is not so bad(ignoring the entitiled auto workers union) as for the Public Sector it is just plain fucking stupid.The level of inter-departmental bureaucracy that has been built up over the last 50 years is just nuts and this is for Civic/Provincial/Federal.

For all of the stupidity about "bike lanes" in Calgary the City added more employees to take care of the issue including a "manager" of the department.It is just a non stop cycle of engorgement of tax payer money at all levels with the goal of a bigger more inefficient bureaucracy that pisses tax payer money down the toilet for the sake of doing so.Public Art is one of the biggest waste of money.I mentioned this to a guy during a round of golf at Shaganappi when I pointed at the fancy/shiny copper flashing at the LRT station being built across the road and his response was "it is needed".....yeah and he was from fucking Europe and is a filthy Socialist.

Last week the City of Calgary announced they would be having "layoffs".....for all of the BS 120 people will be out of a job....the other 95 positions were lost due to attrition when people retired and the vacant position was not filled.That 120 jobs lost does not even come to 1% of Civic workers.......such a huge LOSS......yet well over 100,000 jobs have been axed in Alberta since 2014 and mostly in the energy sector.

The newly elected Kenney UCP government tried to stay wage negotiations with Public Sector Unions and they lost in court.Since that loss the same Government has cut MLA's pay by 10% and the Premiere took a 15% haircut.....as in lead by example.I see some seriously harsh times ahead for Provincial Public Sector unions...as for City of Calgary Public Sector unions is is pretty much the usual under Nenshi....tax and spend MORE.

SR
 
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