Taxation

A Financial Transaction Tax (FTT) for Ireland

MoneyHolegc2reddit-logoOff the keyboard of Graham Barnes

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on FEASTA on January 27, 2016

http://1.bp.blogspot.com/_RwdH5DTKRas/TA1gn-1eWnI/AAAAAAAADEE/lqigjuAO7b0/s1600/robin+hood.jpg

Discuss this article at the Economics Table inside the Diner

Around 40 Irish civil society groups and NGOs (including Feasta) have expressed their support for RobinHoodTax.ie, an initiative led by Claiming Our Future aimed at introducing an FTT in Ireland. The launch event yesterday at the Mansion House in Dublin featured speakers from Stamp Out Poverty and the Nevin Economics Research Institute plus, inevitably, a large number of Lincoln Green hats with red feathers for the apres match photo-opportunity.

A Financial Transaction Tax levies a (small to miniscule) percentage tax on financial transactions such as share and bond purchases and derivatives. The idea is as old as the hills (well 1930s) but it has recently reappeared on the political horizon, as ten EU countries work together to flesh out a European implementation under a so-called ‘enhanced co-operation‘ [1] regime – an occasionally used device for facilitating agreement of a subset of EU members when full consensus is not possible in the short-term. David Hillman of Stamp Out Poverty gave a rundown of progress on this front, ending with a ‘you are not alone’ message.

The Irish government has taken a passive aggressive stance on the proposal – lining up (but less vociferously) with the UK and Sweden in the anti-lobby. The last detailed discussion in the Dail looks to be in 2013 [2].

The second presentation at yesterday’s event was from Micheál Collins of the Nevin Economic Research Institute (NERI). He is in the process of completing a quantitative analysis of the likely tax receipts of an FTT in Ireland, based on the emerging European model. Estimates stand at a net positive annual tax receipt effect of 320-360 million euros. Full results are scheduled to be revealed at a NERI seminar on February 10th [3].

So what are the messages that would most likely hit the spot with policy makers? This is difficult territory for me because while I admire policy advocates, I have no deep belief in the power of ideas carrying all before them. The thoughts that follow therefore are more in the tradition of Harry S Truman’s advisors [4].

Fairness. After many years of privatised megaprofits, the losses associated with the 2008+ financial crisis have been socialised. Thats a coded way of saying that the corporations who caused the problems didn’t pay for them, citizens did. The residual resentment at that unfairness is deeply entrenched in society, and despite calls for an end to banker-bashing from the 1%, they are still part of the zeitgeist. The #MakeBankersPay hashtag is therefore understandable.

Whether it is wise is another matter. It identifies with the activist strand within the FTT lobby. If we believe that policymakers are more likely to identify themselves with the 1% than with street demonstrators [7], it may invite a further retrenchment into that embattled minority, and encourage existing confirmation bias against all and any activist agendas. So it may be a good message for recruiting activist support and a bad one for influencing policy makers.

This is not to say there is no fairness issue here, clearly there is. But it may be best approached via a plea for rebalancing the economy. With the prevailing neoliberal self-sufficient self-interest narrative, ‘not fair’ is the complaint of the playground weakling. Sad and deeply disappointing as that is.

Rebalancing. There is a clear sentiment in society at large that the financial economy tail has been wagging the real economy dog for too long. There are also some indications that this sentiment extends into the mindset of many politicians. They are constrained however by the ‘race to the bottom’ between nation states as they seek to compete for the attention of multinationals by deregulating, lowering corporation tax and generally bribing to achieve FDI (Foreign Direct Investment). Arguably FTT gives these nation states a mechanism for embarking on the beginnings of a rebalancing – if – and only if – they can be reassured that their resident financial corporations will not migrate to pastures new at the first mention of the tax. As they will no doubt threaten.

So there’s the rub. At yesterday’s event David Hillman defended the laughably low levels of tax (for example a tax of 0.01% on derivatives) by saying it was easier to get it accepted at that level and then increase it once it was established. This has indeed been the pattern with taxes, and that much will be obvious to the financial lobby who will see it as the thin end of the wedge and resist it tooth and nail. In this context it becomes vital to be able to rebut the FUD (fear, uncertainty, doubt) agenda that will be offered up. FUD is proving a reliable strategy for those seeking to preserve the status quo. It worked well for the electoral reform referendum in the UK and for the Scottish independence vote, and will take some countering here.

NERI’s work is vital because it will break down the taxation receipts by instrument, allowing an analysis of the likely effects of a tax at a per instrument level. It seems likely that virtually all the costs will fall on financial institutions and that the potential for them to pass on these costs to consumers will be limited by competition. This is the way the FTT is designed. In 1936 when John Maynard Keynes floated the idea of an FTT, he saw it as a tax on excessive speculation [5]. If a detailed analysis by instrument can reinforce this strategic positioning, there may be a chance. This brings us to the final message – of increased stability and resilience.

Stability. If, as Keynes envisaged, and the more enlightened politicians hope, an FTT dampens some of the excessive speculation/ gambling that takes place in the casino economy, it can be developed as an intervention mechanism for policy makers. Having discovered that control of the interest rate does not give them the power they once thought it did, they have very few tools left in their toolbox and may well welcome one more. To say such a tax could do away with the boom-bust cycle is going too far. Other systemic monetary changes will be necessary for that including the resumption of strategic guidance over the allocation of credit-as-capital [6]. But an FTT could well give potential for a smoothing effect. Policy-makers who must feel like eunuchs in a brothel at present, may well like the idea of having another meaningful instrument at their disposal.

So that would be my prescription for messages – stability, rebalancing and yes,ok, fairness. The final message, which most FTT proponents emphasise and which I called unkindly in the introduction dogoodability is also important. Emphasis is usually placed on the use of FTT receipts for (say) climate change work and international development. As delegates yesterday pointed out, such hypothecation of tax receipts is normally resisted by policy makers as a constraint on their decision-making. But as an appeal to a wider society audience it has it place. And there are precedents in Ireland with some environmental taxes, so why not?

Claiming our Future are to be congratulated for spearheading FTT adoption in Ireland. If NERI can put together some detailed technical rebuttals on a per-instrument basis, we may yet see a proposition for re-empowering economic policy-makers on the back of a societally-beneficial FTT. Used and adjusted actively such a tax can help restore financial resilience – a valuable quality that has been sacrificed in favour of efficiency for too long.

References

[1]: http://www.euractiv.com/topics/enhanced-cooperation which also has an article on banking industry response.
[2]: http://oireachtasdebates.oireachtas.ie/Debates%20Authoring/DebatesWebPack.nsf/committe etakes/FIJ2013100200003?opendocument#C00350
[3]: http://www.nerinstitute.net/events/2016/02/10//
[4]: “Give me a one-handed economist! All my economists say, ”On the one hand? on the other.'” Harry S. Truman
[5]: “Speculators may do no harm as bubbles on a steady stream of enterprise. But the situation is serious when enterprise becomes the bubble on a whirlpool of speculation.” J M Keynes
[6]: see for example: Richard Werner at http://republicirelandbank.com/?p=601
[7]: http://www.commondreams.org/views/2016/01/26/volcanic-core-fueling-2016-election

Featured image: “Here begynneth a gest of Robyn Hode”, 16th century. Source: https://commons.wikimedia.org/wiki/File:Here_begynneth_a_gest_of_Robyn_Hode.png

 

 

The War on Cash

usdollarcollapsegc2Off the keyboard of Tom Lewis

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on the Daily Impact on October 23, 2015

dollar decimated

I’m sorry, sir, your cash has expired and we are obliged to confiscate it. (Photo by photosteve101/Flickr)

Discuss this article at the Economics Table inside the Diner

For a couple of years now the Masters of the Universe have been massing their armored laptops on the borders of insanity to conduct a blitzkrieg against physical cash, to wipe every vestige of paper money and coinage from the face of the earth. Mutterings about the offensive began, as far as I know, six months or so ago on the financial-conspiracy and -contrarian websites. And now Lo! and Behold! the Plastic Curtain is on the verge of falling over two whole countries, Sweden and Denmark. And the softening-up process, the preliminary bombardments of explosive factoids,  and the eruption of fifth columns, is well under way around the world.

Large banks such as J.P. Morgan Chase have told their customers they may not keep cash is deposit boxes (can’t wait to see how they’re going to enforce that). Public transportation companies in London, Sweden and Denmark will not accept cash, only cards activated by computer or cell phone (things that poor people, who disproportionately rely on public transportation, disproportionately lack). The amount of cash that we can withdraw without invoking scrutiny from the Authorities, legally $10,000, is steadily being ratcheted downward.   

A brief, unauthorized biography of money will show us that we should have seen the War on Cash coming. Money stands for something else, something we can eat or wear or burn or otherwise use to live, or to make more money. It was at first a convenience for people whose wealth was in, for example, grain, and instead of moving all the bulky stuff around they could trade it simply by presenting a stick or a tablet that represented the grain. The stick could be traded many times before the end user got it and went for the grain.  

Such a system was eminently hackable, as present-day holders of gold certificates either know or will soon find out. What if the stick didn’t represent anything at all, but was just a stick? The answer was currency with inherent value, gold or silver coins that were themselves worth their denomination. Terrific if you’re primitive, but way too clumsy if you’re bent on becoming a Master of the Universe, and have to get an oxcart of gold coins to the betting window at the Coliseum by 5 o’clock.

The next step was paper currency that was guaranteed, honest, to represent a bit of gold held on your behalf by your government. But the storing of that gold, and the physical limit on the money supply imposed by the necessity to find and refine gold, became way too inconvenient for the wheelers and dealers, so we all went off the gold standard and let cash be free. It also set the banks free to create cash (not to print it, as is often said, but simply to imagine it). Banks are obligated to keep available only a fraction of the money deposited with them, and are allowed to invest (or gamble) with many multiples of the cash actually entrusted to them.

Now, even this has become too restraining on the high rollers. There is still way too much physical cash out there — about 10% of the currency that is in circulation via computer — for their convenience and protection. Which has nothing to do, of course, with our convenience and protection. To the contrary, our political leaders, wholly owned and -operated by the Masters, are coming to believe that we are deriving way too much convenience and protection from the pittance of physical cash that remains in our possession. Among their problems with it:

  • We can spend and receive physical cash without paying taxes;
  • Cash in our possession cannot (usually) be confiscated without pesky legal procedures;
  • Authorities don’t know what we’re doing with our physical cash, or how much we have;
  • In the event of a run on the bank, when all the depositors want their cash back and there’s only a fraction of it that even exists, the bank can’t unilaterally confiscate our physical cash (it’s called a “bail-in.” Isn’t that cute?) to keep itself afloat. Not even with a pesky legal procedure, because there isn’t one. Yet.

But consider the wonders of a (physical) cash-free society:

  • A bank in trouble can give its depositors a haircut simply by declaring a negative interest rate;
  • Authorities will know instantly what you are buying, where you are, who you owe and who owes you, because every single transaction will be on the electronic record.
  • Every exchange can be — make that will be — taxed, and charged a fee.

Freedom from cash would at the same time exacerbate the disparity between rich and poor; and prove in the end to be a great equalizer. The poor lack credit cards, bank accounts, and smart phones (not to mention cash) and would find life a great deal more difficult every day under regulations the rest of us, as a practical matter, would barely notice.

On the other hand, when the electric grid goes down, every man, woman, child and business will be instantly and utterly without money. Solidarity at last.     

Die Off of the Top Predator

Off the keyboard of Ugo Bardi

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on Cassandra’s Legacy on February 13, 2014

BigFishLittleFish

Discuss this article at the Energy Table inside the Diner

The post below, by Dmitry Orlov, is the result of an exchange of e-mails about the similarities between the collapse of the Soviet Union (30 years ago) and the ongoing collapse of several Mediterranean countries, including Italy. Read Orlov’s post to understand his interpretation of a phenomenon that I tend to see as the result of the behavior of the so called “Apex Predators” (or “Top Predators”). If you work with socioeconomic systems, you can’t miss the similarity these systems show with ecosystems. In particular, in a socioeconomic system you can identify the top predator as the government; that is, the entity that controls the police and the army and which has the power of levying taxes on citizens without any specified limit. Now, in these systems, there exists a tendency of going in “overshoot”, when a predator takes more preys than the capability of the prey population to reproduce itself, or when the preys destroy the resource on which they depend. In this case, the predator eventually destroys the prey population and, at that point, is left without resources and no other choice than disappearing in turn. Models show that, in this case, the top predator population is the last to disappear. That is, the government of a country tends to persist as long as citizens own something that can be taxed. But if the wealth of citizens depends on non renewable resources, such as fossil fuels, then in the long run most citizens are spoiled of everything they have and there remains nothing to tax for the government. At this point, we can see the government as a predator without prey: it has no other choice than to go extinct. It folds over and leaves; the state structure collapses and disappears. That could be a good interpretation of what’s happening today in many countries. (UB) 

How To Time Collapses 

by Dmitry Orlov

Douglas Smith
Zeus

Over the past half a decade I’ve made a number of detailed predictions about collapse: how it is likely to unfold, what its various manifestations are likely to be, and how it will affect various groups and categories of people. But I have remained purposefully vague about the timing of collapse and its various stages, being careful to always append “give or take half a decade” to my dire prognostications. I wasn’t withholding information or being coy; I really had no way of calculating when collapse will happen—until five days ago, when, out of the blue, I received the following email from Ugo Bardi:

Hi Dmitry,
You may be interested in this post of mine.

Starting from this post, I’m trying to draw a parallel between the collapse of the Soviet Union and the impending collapse of Italy. There are, as always, similarities and differences. In particular, the Soviet Union collapsed almost immediately after that oil production flattened out and started declining. On the contrary, the Italian government survives despite a loss of 36% in oil consumption.

My impression is that it is all related to different taxation methods. I understand that the Soviet tax system was based mainly on commodity taxes and on taxes on production. When production stalled, people had nothing to buy and the government had nothing to tax because most people owned nothing and had little or no savings in banks. So, the government had no choice but to fold over and disappear.

Instead, the Italian system is based largely on income tax and property tax. The government is losing revenues on commodity taxes (e.g. on gasoline) but it can compensate with property taxes. Italians, on the average, are “rich,” in the sense that they have savings in banks and most of them own their homes. So, the government can tax their properties and their savings. As long as Italians still have something taxable, then the government will survive. It will disappear only when it has managed to strip citizens completely of everything they have.

Do you agree with this interpretation? (BTW, Italy as a state may be even more culturally diverse than the old Soviet Union was.)

Ugo

 

I wrote back:

Hi Ugo,

Very interesting article. Yes, the entire southern tier of the EU is in some early stage of collapse, but so far it hadn’t occurred to me to draw parallels between it and USSR. Now that you mention it, the parallel is obvious: it is financial collapse triggered by something having to do with oil, but with polarities reversed, and delayed by a period of wealth destruction.

In the case of USSR, taxation wasn’t really a source of government revenue. The national economy was based on government ownership of everything, central planning and budgets, and a system of assigning ministerial contracts to enterprises owned by the ministries. The external economy was a matter of exporting hydrocarbons in exchange for foreign currency, which was used to buy grain—mostly feed grain for cattle, without which the population would become protein-deprived and malnourished. Over the so-called “stagnation” period of the 1980s the Soviet economy became hollowed out because of several trends. Too much spending on defense was one of them. Another was that investment in capital goods (machinery, plant and equipment) reached the point of diminishing returns, which is very difficult to characterize but not so difficult to observe. Lastly, Solzhenitsyn and the dissident movement had done irreparable damage to Soviet prestige, destroying morale. The coup de grace, when it came, consisted of two pieces. One was the inability to expand oil production given the state of Soviet oil extraction technology of the era. The other was the fall in oil prices, down to $10/bbl at one point, because North Sea and Alaska both went on stream, and the Saudis pumped as much oil as they could based on a tacit agreement with the US to depress oil prices and thus crush the Soviets. In this they largely succeeded. The USSR became heavily indebted to the West, and, at the very end, needed Western credit to keep the lights on in the Kremlin. One of the final scenes featured Gorbachev on the phone with [West Germany’s Chancellor] Helmut Kohl asking him to ask the Americans to release some funds.

 

 

 

 

Now, I can see parallels to this in what is happening now in the US and in the EU, but with all the polarities reversed: here oil flows in and money flows out, and the coup de grace [will be] high oil prices rather than low. Instead of failures of central planning, which failed to allocate production effectively, we have failures of the globalized market, where production is effectively globalized but consumption is ineffectively localized among the wealthy and the formerly wealthy, and has to be fueled by credit. Instead of diminishing returns from deployment of capital goods, we have diminishing returns from deployment of capital itself, where a unit of new debt now produces much less than a unit of economic growth. The damage to reputation and morale is mostly on the US side of the Atlantic, where in place of Solzhenitsyn and the dissident movement we have Abu Ghraib [scandal], [Wikileaks’ Julian] Assange and [Edward] Snowden. With the EU, most of the damage has to do with [the] experience of economic disparities between the rich core and the increasingly impoverished periphery, and the recent move in Ukraine to walk away from the EU, and the ensuing Western-financed mayhem in Kiev, show that the bloom is off the EU rose as well. The runaway military spending is likewise mostly a US issue, although epic failures in Afghanistan, Libya and Syria, in which the EU is complicit, are likely to have some effect as well.

 

 

 

Comparing USSR to Italy is difficult because of the disparity of scale: 1/5 of the planet’s dry surface versus a smallish peninsula; an economy that slowly decayed in isolation versus an integral part of the EU; a country where the choice is between burning hydrocarbons or dying of exposure versus one where the choice is between riding a scooter or taking the bus; a country with a ravaged agricultural sector unable to grow enough protein calories versus a nation of foodies where corner groceries make worthy subjects for oil paintings. But I think that when it comes to the actual collapse, when it finally comes, there will still be identifiable similarities. Financial collapse always comes first: all sorts of financial arrangements unravel as the center becomes unable to float the periphery, and in response the periphery starts to withhold economic cooperation. The result is a breakdown in supply chains, shutdown of production, and, shortly thereafter, shutdown of commerce. In the case of the USSR, this unfolded in 1989-91 as the various republics and regions refused to cooperate with Moscow. I suspect that this will also happen in the EU, at some point. But I think that you are exactly right that whereas the average Soviet citizen could not be fleeced, Italy, and much of the EU, still have plenty of fat sheep that the government can shear to keep things running. Thus we are looking at a few more years of steady decline before the lights start going out. This, then, is the key distinction: the USSR collapsed promptly because it was already skin and bones, whereas the US and the EU still have plenty of subcutaneous fat to burn through. But they are, in fact, burning through it. And so, the conclusion is, collapse will come, but here it will take a little longer.

 

 

 

-Dmitry
Ugo responded:
 

 

I agree with you, of course. It makes perfect sense to me and it is the main point I was making: the Soviet government couldn’t tax Soviet citizens too much because they owned very little.


The Italian government instead has some luck in the sense that Italians have some savings and most of them own their homes. So, the government is progressively strangling their citizens to squeeze out of them all that they have—while they still have something.

The last round of tax increases in Italy is targeting homes and it is really, really hurting, especially the poor. You can be poor here, and still own a house that you inherited from your parents. Now the government asks you to pay as if that house were revenue! That is truly evil. People who don’t have the money to pay this property tax can only indebt themselves with banks (or worse). Eventually, they’ll have to sell their homes or give them to the bank (or to the Mafia)—the result is disaster for everybody, including for the banks, and even the government. But the whole thing has a perverse logic. It has the advantage that it generates some immediate cash which is badly needed, then the hell with the future.

The [next] phase will be to target bank accounts. Then, when there will be nothing left, the government will decamp and say bye to everybody. Hell, what a planet I landed in…..

All the best,

Ugo

 

And so here is the outline of the method for calculating the timing of collapses:
1. Find out when the collapse clock starts running by looking for a significant drop in energy consumption
2. Calculate how long the clock is going to run by dividing the total wealth of the citizenry by the economic shortfall of the shrinking economy
For any industrial economy the collapse clock starts running as soon as the consumption of fossil hydrocarbons starts dropping appreciably. It is sometimes difficult to tell whether this has already happened if the country in question is still a major hydrocarbon producer. Gross production numbers can still be holding steady or even seem to go up a bit, but once you subtract all the energy that is being expended on energy production itself, and on the unprofitable mitigation of its many undesirable consequences, you might be able see a decline sooner rather than later. Notably, the net energy yield, or EROEI, is very low for all the newer unconventional sources that have been trumpeted as panaceas in recent years, such as ones that require hydrofracturing and drilling in deep water, tar sands and so on. (The so-called “renewables,” such as wind, solar and biofuels, are an even bigger joke, because all of them with the exception of hydroelectric plants have net energy that is too low to sustain an industrial economy, plus they all depend on technologies that are “nonrenewable” unless the country maintains a vast industrial base which happens to run on fossil fuels.) And so the drop in net energy consumption is clear for Italy, which produces 7% of the oil it consumes and imports the rest, whereas the picture is somewhat less clear for the US, which still manages to supply around a third of its oil.
Since all industrial economies literally run on fossil fuels, lower energy consumption immediately translates into a lower level of economic activity and a shrinking economy. The gap between the expectations of economic growth that are dialed into all of the financial arrangements, and the reality of economic decline driven by lower energy availability, has to be plugged with the population’s savings. There are a number of ways of expropriating wealth, generally proceeding from various kinds of stealth taxation measures, to more overt measures, to outright expropriation. Taking the US as the example (since I am most familiar with it) the expropriation cascade is proceeding as follows:
1. Central bank policy of zeroing out of interest rates on savings combined with massive money-printing. This forces money into speculative markets (stocks, real estate, etc.) creating huge financial bubbles; when these bubbles pop, savings are said to be destroyed, but in reality that money has already been spent by the government or used to fill the private coffers of those closely associated with the government.
2. Government policy of canceling retirements or short-changing retirees. The federal government has worked hard to make its official measure of inflation all but meaningless so that it can justify its policy of making cost of living adjustments to social security payments that are far less than the the real increases in the cost of living. Another federal expropriation scheme is via guaranteed student loans, which cannot be discharged through bankruptcy, and which have created an entire class of indentured servants. At the more local level, state and municipal governments are curtailing or canceling retirement programs by virtue of going bankrupt.
3. Ever more onerous reporting requirements for financial transactions, especially for those who try to leave the country and expatriate their savings. All foreign bank accounts must now be reported, and people who work abroad are now forced to file voluminous annual reports that cost thousands of dollars to prepare. Those who decide to repudiate their US citizenship are made to pay a hefty exit tax. Nevertheless, record numbers of US citizens have been doing just that. Just having a US passport often makes it impossible to set up accounts in foreign financial institutions, which have little desire to comply with US demands for financial disclosure.
These are the measures that are already in place. Looking at what’s been tried before, here and elsewhere, we can see what other measures are in the works. Among them:
1. So-called “bail-ins” where insolvent financial institutions are rescued by confiscating depositor funds. We can expect the script to be similar to what happened in Cyprus: politically connected depositors get word ahead of time and yank out their money forthwith; everybody else gets shorn.
2. Limits on bank withdrawals. You might still “have” money in the bank, but that’s the only place you can “have” it. The semantics of the verb “to have” can be quite tricky, you see…
3. Ever-increasing taxes on property resulting in property confiscation. It works like this: government prints money and hands it out to its friends; its friends use it to temporarily bid up property values; property taxes go up to a point where the property owners can’t pay them; owners lose their properties. A staggering 63% of real estate purchases in Florida last December were cash purchases.
4. Various kinds of sudden, new, super-complex regulations, noncompliance with which results in very large fines. In turn, nonpayment of these fines results in forfeiture of assets. The US has some very curious laws according to which inanimate objects such as cars, boats and houses can be charged with a crime, seized and auctioned off. We can expect lots more of such property grabs in the future.
5. Gold confiscation, which happened once in the US already, so there is a precedent for it. Yes, I know that this will make a number of people upset, but I am yet to hear a convincing argument for why the US government would not resort to gold confiscation when that turns out to be one of the few remaining cards it can play.
This list is by no means comprehensive. If you feel that I have missed something major, please submit a comment, and I will consider it for inclusion.
Now, it would be nice if all of these measures worked like clockwork, always producing the right amount of wealth confiscation to levitate the government, and the financial scheme on which it is based, for a little while longer. Alas, as with most things, something is bound to go wrong at some point, most likely when you least expect it. And it seems like a dead certainty that something will in fact go wrong well before every last American citizen is relieved of every bit of their accumulated wealth and is living peacefully in a roadside ditch, wearing an attractive loincloth and a stylish mudpack for a hat, quietly perfecting a nouvelle cuisine that features snails au jus and dandelion salad au chaume. Maybe you can imagine it, but I can’t. Beyond a certain point, I can only imagine reports of widespread “public disturbances” followed by “breakdown of law and order.”
Still, I hope that this framework will allow us to set an upper bound for how long collapse can be deferred for any given country. Once hydrocarbon consumption drops appreciably, the clock starts running. Then it is possible to estimate how long the clock can theoretically run by dividing the remaining net worth of the population by the size of the hole in the economy created by falling energy consumption.
But after that things get messy. Some countries will hollow themselves out quite peaceably, and go softly into the night, while others will explode and fast-forward though the financial-commercial-political collapse sequence. And so perhaps the most useful thing to know is whether the collapse clock is already running for any given country, because if it is already running, then it becomes a fool’s game to wait around for the inevitable outcome.
One reasonable approach is to get another passport and quietly relocate to another country. It is important that this country be one for which the collapse clock is not running and won’t be for a long time yet. Ideally this would be a financially secure, politically stable, energy independent, militarily invincible, underpopulated, non-extradition country which will be among the last to be severely disrupted by climate change and where you could have lunch with Edward Snowden. But this approach doesn’t appeal to everyone, and I understand that.
And so another approach is to adapt to what’s coming while remaining in the US, or in any other country for which the collapse clock is running, by making yourself, and your wealth, should you have any, illegible. Here is a very nice article by one smart cookie by the name of Venkatesh Rao on the concept of illegibility. And here is his very nice primer on being an illegible person. This kind of illegibility has nothing to do with bad handwriting; it is about hiding in plain sight. Please read these as homework, because I will have more to say on this topic in the near future. And I would love to see a list of countries for which the collapse clock is running, along with first-order estimates for how long it could possibly run for each one, based on their population’s net worth and the country’s economic shortfall. But since this post has just gone over 3000 words, I am leaving this as an exercise for the reader.

Grand Bargain Betrayal Coming

Off the keyboard of Steve Lendman 

Published on Steve Lendman Blog on November 10, 2012

Discuss this article at the Epicurean Delights Smorgasbord inside the Diner

 
Obama’s economic record includes nearly 25 million unemployed, around 23% of working age Americans without jobs, poverty, homelessness, and hunger at record levels or close to it, and the greatest wealth disparity in US history.
 
Privileged elites benefitted enormously on his watch. They’ll get plenty more ahead. Others are enduring protracted hard times. Bipartisan complicity calls for making things worse, not better. Huge budget cuts loom. Social programs will be hit hardest. More on that below.
 
America’s compromised progressive left hailed Obama’s victory. Condemnation should have been headlined instead. Nation magazine lost its soul long ago. 
 
Throughout its history, it pretended to have one. It scorns truth. It turns reality on its head. It ducks responsible reporting on issues mattering most.
 
On November 7, it headlined “A Progressive Surge,” saying:
 
“While President Obama’s re-election inspires varying degrees of hope among progressives, it has evoked one common sentiment: relief. Democracy may not be reborn, but a living symbol of plutocracy was defeated by the voters on November 6.”
 
It’s hard believing so-called progressive editors would publish outrageous rubbish this offensive. Obama matches Romney’s anti-populist agenda blow for blow. 
 
They agree on most everything benefitting corporate favorites and rich elites at the expense of all others. They scorn social America. They don’t give a damn about people needs. Pretending otherwise is unprincipled, reprehensible, and stupid.
 
Nonetheless, Nation editors celebrated “exhilarating wins” for Obama and likeminded Democrats. Hail to the party of the rich. It replicates the other rich man’s party. America’s duopoly calls progressivism a four-letter word.
 
“We are glad the 1 percent (was) rebuffed at the polls,” said Nation editors….”We are glad that progressive politics….made the difference.”
 
Perhaps they meant Venezuela’s election instead. In October, people power defeated privilege. Letting Obama lead America’s Money Party for another four years assures worse for ordinary people than in term one. It’s baked in the cake. 
 
Too bad Nation readers weren’t told the truth. Nor regular New York Times adherents. On November 7, its editorial headlined “An Invigorated Second Term,” saying:
 
“Without question, (Obama) intends to build on and improve the significant accomplishments of the last four years….to keep the economy growing.”
 
His first term record might make some despots blush. His economic policies are weapons of mass destruction affecting ordinary people. He’s got further mass immiseration in mind for term two. He also plans more war on humanity globally.
 
Times editors want his mandate used to “broaden his agenda.” How much more scorched earth hell can people stand? They’ll shortly find out straightaway.
 
Top domestic policy is massive social benefit cuts. Newspeak terminology substituted “grand bargain” for “austerity.” 
 
“Fiscal cliff” language refers to expiring yearend tax breaks and unemployment benefits, as well as looming $1.2 trillion in largely discretionary sequestered cuts to address them.
 
The 2011 Budget Control Act mandates them. Automatic reductions will affect vital social programs. Medicare, Medicaid, public pensions, food stamps, and other important ones will be hit hard.
 
The sequestered $1.2 trillion is for starters. Around $4 trillion over the next decade was agreed on. At issue isn’t deficit cutting. Key is protecting corporate handouts and Bush era tax cuts, as well as expanding them for business and upper-bracket earners.
 
Bush era tax cuts cost America at least $3.5 trillion in vital revenue. Important domestic needs were sacrificed. If maintained or increased for 10 more years, another $3.5 trillion or more will be lost. 
 
At the same, deficits will rise. Conservative projections show it. More realistic ones reveal ominous numbers.
 
America’s duopoly already agreed on cuts and increases in principle. When publicly announced, newspeak duplicity will conceal the severity of what’s coming. Initial cuts are expected on January 1 or shortly thereafter. 
 
Neither party worries about deficits or debt. Saying so is duplicitous deception. Obama, most Democrats, and Republicans want corporate friends and super-rich elites protected.
 
Working Americans and seniors will bear the burden. Increased corporate and upper-bracket earner benefits are planned. Cuts affecting ordinary people were agreed on months ago. Timing remains to be decided. 
 
It’s not about amounts, who pays, and who benefits. Key also is assuring Bush era cuts are preserved and sweetened.
 
From now through yearend, four major issues must be resolved:
 
(1) extending the 2% payroll tax deduction another year. In fact, it’s a stealth drain of hundreds of billions of dollars from Social Security’s Trust Fund reserves. 
 
Revenue already lost irreparably weakened its ability to pay future benefits. Lose more and the entire program may be lost. Privatization assures it.
 
Obama fully concurs on driving a stake through the heart of Medicare, Medicaid, Social Security and public pensions. He’s no progressive. He’s a corporatist hardliner. He never would have become president otherwise. Populists needn’t apply.
 
(2) extending expiring unemployment benefits for millions of laid off workers.
 
(3) another one-year Alternative Minimum Tax (AMT) fix.
 
(4) delaying the 29% cut in doctors fees for serving Medicare patients.
 
Expect Republicans to drive a hard bargain like they always do. Democrats pretend they care. In fact, they’ve already sold out. Obama’s reelection hinged on it. 
 
He talks tough, then caves at the 11th hour. He did repeatedly throughout his first term. Both parties are in lockstep on defending privilege. 
 
People needs don’t matter. It’s part of a longstanding plan to third worldize America. Safety net protection is someone else’s problem.
 
On November 6, Bill Black discussed what’s coming. His article headlined “Wall Street Urges Obama to Commit the Great Betrayal,” saying:
 
Top domestic policy is eroding safety net protections en route to eliminating them altogether.
 
“Only a Democrat can make it politically safe for Republicans who hate the safety net to unravel it (a process that would occur over a number of years) by legitimizing the claim that (it) must be cut.”
 
Obama was hand-picked to do it. “Wall Street’s unholy grail (is) privatizing Social Security.” 
 
Doing so will let financial predators “charge tens of billions of dollars in fees annually and the banks that administered the privatized program would be systemically dangerous institutions (SDIs) because the consequences of allowing bank failures to cause tens of millions of Americans to lose their retirement savings would require either that all such deposits be federally insured or that the failing banks be bailed out by the federal government.” 
 
“Privatization, therefore, is a convenient fiction. The banks’ profits will be privatized. Any catastrophic losses will be borne by the public.”
 
The Big Lie claims no acceptable alternative exists. Safety net cuts must be imposed. Obama’s sharpened knife is a dagger at the heart of what matters most to ordinary people. Their welfare, security and futures are up for grabs. They’re being destroyed in plain sight.
 
Force-fed austerity assures the worst of hard times. It’s responsible for what Black calls “the four horsemen of the economic apocalypse:”
 
  • economic decline;
 
  • job cuts and greater unemployment;
 
  • increased deficits and debt; and
 
  • destruction of safety net protections.
 
Combined assures third world status. Black said Obama prioritizes it. We’re forewarned but does it matter? Few Americans understand what’s coming. 
 
Grand bargain betrayal is planned. It’s come in stages like boiling a frog. It doesn’t know it’s dinner until too late. 
 
Social America is on the chopping block for elimination. It’s been happening incrementally for decades. Democrats are in league with Republicans. Their agenda assures intolerable pain and suffering for ordinary people.
 
Standard & Poor’s and other rating agencies endorse it. They’re corporate tools. They mostly represent Wall Street and other financial interests. S&P’s marching orders called for downgrading US credit to AA+. It did so in August 2011, saying:
 
“The markets have spoken and anyone who continues to insist that entitlements or taxes are off the table is condemning the US to second rate economic status and a permanent downgrade.”
 
“America’s credit rating is at a crossroads. We can choose to heed this message by finishing the deficit reduction job with a balanced plan that is composed mainly of entitlement cuts, closing tax loopholes and defense cuts, or we can squabble while our global standing continues to sink.” 
 
“The markets have spoken and anyone who continues to insist that entitlements or taxes are off the table is condemning the US to second rate economic status and a permanent downgrade.”
 
S&P targeted safety net protections. Including defense and tax loopholes reflected pro forma deception. Whatever benefits America’s imperium, Wall Street, other corporate favorites, and super-rich elites is sacrosanct and untouchable.
 
Expect fast and loose deception to conceal it. Obama’s an old hand at it. He’s a con man. He’s Wall Street’s man. They chose him and expect four more years of subservience. He won’t disappoint.
 
Forewarned is forearmed. “(W)e do not need to unravel the safety net and doing so would harm our nation,” said Black. Ideologues are wrong about what’s best for America. 
 
Throughout his political career, Obama’s been a stealth Republican. His voting record proves it. Reelecting him serves elitist interests well. They know what they want and got it.

Knarf plays the Doomer Blues

https://image.freepik.com/free-icon/musical-notes-symbols_318-29778.jpg

Support the Diner

Search the Diner

Surveys & Podcasts

NEW SURVEY

Renewable Energy

VISIT AND FOLLOW US ON DINER SOUNDCLOUD

" As a daily reader of all of the doomsday blogs, e.g. the Diner, Nature Bats Last, Zerohedge, Scribbler, etc… I must say that I most look forward to your “off the microphone” rants. Your analysis, insights, and conclusions are always logical, well supported, and clearly articulated – a trifecta not frequently achieved."- Joe D

Archives

Global Diners

View Full Diner Stats

Global Population Stats

Enter a Country Name for full Population & Demographic Statistics

Lake Mead Watch

http://si.wsj.net/public/resources/images/NA-BX686_LakeMe_G_20130816175615.jpg

loading

Inside the Diner

Bondi is still a plastic beach full of plastic people and tourists. Fires not near the coast. Most are out in the Western suburbs where the non-beautiful people live...Sydney is covered in smoke due to the lay of the land. Its a big basin surrounded b...

The government’s explanatory memo outlines how the bill’s far-reaching effects will change public life dramatically – in medical services, schools, offices and hospitalsThe second draft religious discrimination bill will have wide-ranging effec...

Quote from: BuddyJ on December 13, 2019, 06:36:02 PMQuote from: RE on December 13, 2019, 06:26:10 PMQuote from: BuddyJ on December 13, 2019, 06:20:47 PMSaudi America, the gift that just ...

Quote from: RE on December 13, 2019, 06:26:10 PMQuote from: BuddyJ on December 13, 2019, 06:20:47 PMSaudi America, the gift that just keeps crushing the oil companies. What do we call it when it is Saudi Nat...

Recent Facebook Posts

No recent Facebook posts to show

Diner Twitter feed

Knarf’s Knewz

Diner Newz Feeds

  • Surly
  • Agelbert
  • Knarf
  • Golden Oxen
  • Frostbite Falls

Doomstead Diner Daily December 14The Diner Daily i [...]

This is How a Society DiesAmerica and Britain are [...]

Florida man died from meth overdose before h... [...]

Doomstead Diner Daily December 13The Diner Daily i [...]

Interesting article I found, which is good about t [...]

Quote from: UnhingedBecauseLucid on March 18, 2019 [...]

CleanTechnicaSupport CleanTechnica’s work via dona [...]

QuoteThe FACT that the current incredibly STUPID e [...]

Scientists have unlocked the power of gold atoms b [...]

Quote from: azozeo on August 14, 2019, 10:41:33 AM [...]

Wisconsin Bill Would Remove Barrier to Using Gold, [...]

Under extreme conditions, gold rearranges its atom [...]

The cost of gold futures on the Comex exchange inc [...]

OK, I gave it to myself.    Guaranteed FREE Shippi [...]

The remission is OVAH!  The Cancer is BACK!  I got [...]

1 week, even 2 here in Alaska is total BULLSHIT! Y [...]

Now UP on GEI!  REposted on 01 December 2019A Worl [...]

Alternate Perspectives

  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

Missing In Action By Cognitive Dissonance     As a very young pup, whenever I was overdue and not ho [...]

Politicians’ Privilege By Cognitive Dissonance     Imagine for a moment you work for a small or medi [...]

Shaking the August Stick By Cognitive Dissonance     Sometime towards the end of the third or fourth [...]

Empire in Decline - Propaganda and the American Myth By Cognitive Dissonance     “Oh, what a tangled [...]

Meanderings By Cognitive Dissonance     Tis the Season Silly season is upon us. And I, for one, welc [...]

Event Update For 2019-12-12http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-12-11http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-12-10http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-12-09http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-12-08http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

With fusion energy perpetually 20 years away we now also perpetually have [fill in the blank] years [...]

My mea culpa for having inadvertently neglected FF2F for so long, and an update on the upcoming post [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

Daily Doom Photo

man-watching-tv

Sustainability

  • Peak Surfer
  • SUN
  • Transition Voice

First cut of the Madrid climate summit"“Buying an offset to fly here is absurd. It takes decades for a tree to grow enough to recoup [...]

"The drift towards near-term human extinction must be averted at all costs."I confess. I a [...]

"Since 2005, winters in Mexico have been my Hemingway Machine."  As winter descends upon m [...]

Waterboarding Flounder"Serious oxygen loss between 100 and 600-meter depths is expected to cover 59–80% of the ocean [...]

Of Warnings and their Ripple Effects"We need wooden ships, char-crete buildings, bamboo bicycles, moringa furniture, and hemp cloth [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

What extinction crisis? Believe it or not, there are still climate science deniers out there. And th [...]

My new book, Abolish Oil Now, will talk about why the climate movement has failed and what we can do [...]

A new climate protest movement out of the UK has taken Europe by storm and made governments sit down [...]

The success of Apollo 11 flipped the American public from skeptics to fans. The climate movement nee [...]

Today's movement to abolish fossil fuels can learn from two different paths that the British an [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

It depends on how much effort was required to source animal food, and how often it could be accessed [...]

I, too, am a light-skinned person with blue eyes. Vitamin D levels can be a problem for us too, part [...]

This part sounds like a fairy tale to me: Walburga Hemetsberger, CEO of SPE, said: “Solar in the Eur [...]

Optimal Foraging Strategy tells me most hunter gatherers were eating meat and tubers/root vegetables [...]

Interesting that spain breaks the exponential growth until saturation, then only trickle. On the oth [...]

Trump was born in 1946 so he's another stinkin' Boomer. Bernie and Biden were born during [...]

The millennial consensus is that Boomer is more a state of mind than an age. A lot of older millenni [...]

Bill Clinton was first boomer president, followed by Bush, Obama, and Trump. True, neither candidate [...]

Biden and Bernie are members of the Silent Generation. Neither one is a boomer. I think Trump is on [...]

RE Economics

Going Cashless

Off the keyboard of RE Follow us on Twitter @doomstead666...

Simplifying the Final Countdown

Off the keyboard of RE Follow us on Twitter @doomstead666...

Bond Market Collapse and the Banning of Cash

Off the microphone of RE Follow us on Twitter @doomstead666...

Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

Off the Keyboard of RE Follow us on Twitter @doomstead666...

Kurrency Kollapse: To Print or Not To Print?

Off the microphone of RE Follow us on Twitter @doomstead666...

SWISSIE CAPITULATION!

Off the microphone of RE Follow us on Twitter @doomstead666...

Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

Off the keyboard of RE Follow us on Twitter @doomstead666...

Merry Doomy Christmas

Off the keyboard of RE Follow us on Twitter @doomstead666...

Peak Customers: The Final Liquidation Sale

Off the keyboard of RE Follow us on Twitter @doomstead666...

Collapse Fiction

Useful Links

Technical Journals

Thermal environmental design in an outdoor space is discussed by focusing on the proper selection an [...]

The present work shows the experimental evidence carried out on a pilot scale and demonstrating the [...]

Climate change is expected to affect the occurrence of forest pests. This study depicts a method to [...]

The grapevine (Vitis vinifera, L.) has been long since recognized as an ozone-sensitive plant. Ozone [...]

Climate change imposes great challenges on the built heritage sector by increasing the risks of ener [...]