Greece must default, dump euro

by Peter Morici
UPI
September 13, 2011

European efforts at economic integration haven’t delivered sustainable prosperity in poorer nations like Greece and Portugal. Instead, these have left Mediterranean governments teetering on bankruptcy and at the mercy of Germany and other rich states that exploit European unity to live well at the expense of their poorer brethren.

The 1992 Maastricht Treaty, which considerably harmonized product and safety regulations and methods of taxation across Europe, was supposed to remove untold barriers to growth. It didn’t, because it didn’t moderate European labor laws and social programs that discourage individual ambition and investment.

The euro, created in 1999, floats against the dollar and yen and its value reflects an average of the competitiveness of its entire membership. This leaves higher productivity economies like Germany with an undervalued currency and trade surpluses and lower productivity economies like Greece with an overvalued currency and in constant need to borrow from foreign investors.

With Maastricht and the euro, German manufactures and technology became more valuable in a more integrated European market. However, Greece, Portugal and others aren’t able to use their lower labor costs to capture assembly plants to the degree, for example, that the U.S. South attracts automotive and high-end electronics manufacturing.

Moreover, Germany and other rich states continue subtle forms of protection that discourage outsourcing even to other EU member states and this frustrates the EU single market promise to more effectively equalize employment opportunities and prosperity between the prosperous core and southern Europe.

Affluent Germany, unburdened by an obligation to share tax revenues with poorer EU states, provides generous pensions, gold-plated employment security and jobless benefits and the shortest workweek on the planet. Meanwhile, governments in Greece and other poorer EU states struggled to keep up and borrowed extensively from banks in Germany and France and other rich countries to keep up.

Now unable borrow anymore in private markets, Greece and other poorer governments are forced to seek emergency loans and concessions from richer states and private creditors. They are being compelled by Germany and others to slash government spending and social benefits, dramatically raise taxes and sell off public assets.

None of this will work, because the private sectors of these economies are so dependent on government spending to maintain employment that austerity will only cause more layoffs among both private businesses and public agencies, thrust their economies into deep recessions and significantly reduce, rather than enhance, their governments’ capacity to tax and pay interest on their debts.

Moreover, to service their restructured debts, poorer governments must pay richer governments and foreign creditors in euros and this will require their economies to accomplish significant trade surpluses by developing new export industries. This would require Germany and the rich countries to let manufacturing activities and jobs migrate south that they heretofore have blocked from moving to lower-wage economies.

With a single currency, building new export industries would require rather substantial cuts in Greek and other poorer country wages and for the Germans and others to relinquish subtle forms of protection that guarantee them higher wages and favorable trade balances.

It is doubtful Greeks are willing to let their economy sink to Third World status to perpetuate the myth of European unity. As important, the Germans too much like lecturing the world about the virtues of Teutonic thrift and efficiency to let go of mercantilism, and to let debtor nations accomplish trade surpluses and obtain the euro needed to repay their debts.

If Greece had its own currency, it would still have had to reduce government spending, increase taxes and cut wages but not by nearly as much as richer EU states and the ECB now demand because Greece could also devalue its currency against those of richer EU economies to make its exports more competitive, accelerate growth and increase debt servicing capacity.

In the end, necessity will trump pan-Europeanism. The Greeks will default on their debt and, if they are smart, eventually dump the euro.

Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former chief economist at the U.S. International Trade Commission.

Welcome to Poor America. 43 Million and counting

History repeats itself as corporate colonialism claims another nation-state.  The United States is a prisoner on its knees waiting to be shot on the head.

Washington Post

One in seven Americans is living in poverty, the highest number in the half-century that the government has kept such statistics, the Census Bureau announced Thursday.

Last year was the third consecutive year that the poverty rate climbed, in part because of the recession, rising from 13.2 percent in 2008 to 14.3 percent, or 43.6 million people, last year.

Asians were the only ethnic group whose poverty rate did not change substantially; every other race and Hispanics experienced increases in poverty rates.

In addition, 51 million Americans were uninsured, as the number of people with health insurance dropped from 255 million to less than 254 million — the first decrease since the government started keeping track in 1987. The number would have been worse because 6.5 million fewer people got insurance through their jobs, but it was offset by a leap in government-backed health insurance. More than 30 percent of Americans now get coverage from the government.

“Given all the unemployment we saw, it’s the government safety net that’s keeping people above the poverty line,” Douglas Besharov, a University of Maryland public policy professor and former scholar at the American Enterprise Institute, told the Associated Press.

The grim statistics reflect the depth of the recession that began almost three years ago and could have an impact on midterm elections less than two months away.

“These numbers should be a wake-up call,” said Peter Edelman, a Georgetown University professor and co-director of the Georgetown Center on Poverty, Inequality and Public Policy. “These are deeply disturbing numbers.”

At organizations where the unemployed come to get help finding a job or seek food, the numbers were no surprise.

“In the decade I’ve been doing this work, this is a low point,” said Jason Perkins-Cohen, executive director of the Job Opportunities Task Force in Baltimore. “We’re getting a real feeling of desperation. For sheer numbers, it’s a new, unhappy world.”

At the nonprofit Action Though Service in Prince William County late Thursday morning, the shelves of the agency’s pantry were starting to empty, as the line for help snaked out the door with a few dozen people seeking assistance.

Prince William resident Carol Williams said she has come to the shelter once a month since January, when she was laid off from her job at United Medical Center due to budget woes.

“I worked since I was 15, and, now, for the first time I don’t have a job and I can’t feed my family,” said Williams, 55. “I have a degree; doesn’t matter. The jobs aren’t there.”

Williams said she has been applying for dozens of jobs a week and had about 20 interviews since January. “I think people are scared to hire someone who is not working,” she said, adding there also is just a lot more competition because of the high unemployment rate.

A single mother, Williams has five mouths to feed — children and grandchildren– ranging in age from 17 months to 28. Williams said she was able to raise three sons on her own, but she now turns to the food pantry at ACTS and her father and friends for help.

“We had no bread, no nothing last Friday because the pantry was closed,” she said. “Luckily a friend helped me or we would have had no food for the weekend.”

Advocates said they’re seeing a lot more people like Williams.

“We have definitely seen many more individuals who are very well-educated, with high degrees, where it’s the first time to ever be in a situation to ever have to ask for help for food or shelter,” said Vickie Koth, executive director of Good Shepherd Alliance in Loudoun County.

Koth recalls one family of four in particular, where both parents were highly educated — the mother was a lawyer, and the father was a mortgage broker. “They were in the business of buying and selling homes, and they had three foreclosures within the same span of time and were homeless for the first time.

“We’re full all the time and we turn people away every day, and that’s always been true. But the types of people that call have changed,” Koth said. “Time after time I’ve heard individuals say, ‘I’ve given to shelters, I’ve volunteered at food pantries. I’ve never thought I’d be here myself.’ “

40 million people in the United States are on Food Stamps

Reuters

Nearly 40 million Americans received food stamps — the latest in an ever-higher string of record enrollment that dates fromDecember 2008 and the U.S. recession, according to a government update.

Food stamps are the primary federal anti-hunger program, helping poor people buy food. Enrollment is highest during times of economic distress. The jobless rate was 9.9 percent, the government said on Friday.

The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday.

“This is the highest share of the U.S. population on SNAP/food stamps,” said the anti-hunger group Food Research and Action Center, using the new name for food stamps, Supplemental Nutrition Assistance Program (SNAP). “Research suggests that one in three eligible people are not receiving … benefits.”

Enrollment has set a record each month since reaching 31.78 million in December 2008. USDA estimates enrollment will average 40.5 million people this fiscal year, which ends Sept 30, at a cost of up to $59 billion. For fiscal 2011, average enrollment is forecast for 43.3 million people.

Human Farming: The Story of your Enslavement

Uzbek Women Being Sterilized by Stealth

Times Online

WHEN her baby died soon after delivery, Gulbahor Zavidova, 28, a poor farmer’s wife, longed to be pregnant again. After months of Population Controltrying she and her husband visited a doctor who told her she could never have another child because she had been sterilised.

The procedure had been performed immediately after she gave birth, by doctors who did not ask her consent. On learning she could not bear children, her husband left her.

“Not a day passes without me crying,” she said. “I was outraged when I found out what they had done. How could they do such a horrible thing without asking me?”

According to human rights groups, tens of thousands of young women like Zavidova have been sterilised without their consent in the authoritarian former Soviet state of Uzbekistan.

Uzbek sources say the measure was ordered by Islam Karimov, the president, who has ruled with an iron fist for 20 years. The policy is aimed at keeping down the country’s poor population — with 28m people, it is Central Asia’s most densely populated state.

Activists say mass sterilisation began in 2003, but was eased after two years following an outcry. It is said to have restarted in February this year, when the health ministry ordered doctors to recommend sterilisation as an “effective contraceptive”. Critics claim every doctor was told to persuade “at least two women” a month to have the procedure. Doctors who failed faced reprisals and fines.

“We estimate that since February, about 5,000 women have been sterilised without consent,” said a local human rights campaigner who fears detention if she is named.

In many cases, doctors opt for delivery by caesarean section and then perform a sterilisation without telling the woman. Widespread rumours of the practice have resulted in women opting for home births to avoid the risk.

Doctors visited Hidojat Muminova, a 26-year-old cotton picker, at home several months ago. They told the mother of two she should visit a local hospital for a check-up, at which she was diagnosed with a potentially fatal cyst in her fallopian tubes.

“They scared me into believing I needed an urgent operation,” she said. “I was surprised as I’d never had any pain but I was worried and agreed to the surgery. When it was over they told me they’d performed a sterilisation. I could not stop crying. They tricked me and treated me like an animal.”

Another victim, Mahmuda Usupova, 30, said doctors had sterilised her after she gave birth to her third child by caesarean several months ago. She learnt she could no longer have children during a visit to her gynaecologist.

Uzbek authorities deny that sterilisations are carried out without consent, but a report by the United Nations Committee Against Torture reported a “large number” of cases three years ago. According to the UN, Uzbekistan’s fertility rate has fallen from 4.4 babies per woman to 2.5 since Karimov came to power.

Under the 72-year-old Karimov, Uzbekistan has become highly repressive. Opponents have been jailed, tortured and killed. Two critics of the regime, who were accused of being Islamic militants, were scalded to death after boiling water was poured over them.

Hundreds of civilians died when the police and army fired indiscriminately into a large crowd of protesters in Andijan in 2005. The Sunday Times has been denied entry to Uzbekistan ever since because its coverage is considered “unfriendly”.

The sterilisation programme has been relaunched despite efforts by Karimov’s two daughters to improve the lives of Uzbek women and children. Lola, 31, the president’s younger daughter, is a Unesco ambassador and head of a children’s charity.

Her sister Gulnara, 38, who was recently appointed ambassador to Spain, supports a number of charities. Known as “the princess of Uzbeks”, she is a Harvard graduate, martial arts expert and jewellery designer.

Under the name GooGoosha — apparently her father’s pet name for her — she has released pop videos. Her parties in Moscow, where she lived until recently, attracted members of the elite.

The women’s health days advertised on her website provide free access to medical specialists from Israel for women suffering “diseases related to reproductive functions”.

The Uzbek embassy in Moscow insisted that all sterilisations were carried out at the patient’s request and after the woman’s husband had been told of the consequences.

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