Plagiarism, Privilege, and Political Promotion (!) in the County of Poets and Thinkers

It keeps getting better. After a massive public outcry over zu Guttenberg's plagiarized doctoral dissertation which finally forced the former German defense minister and the country's most popular politician at the time to resign his post, a new plagiarized dissertation has resulted in another doctoral title being taken away from a popular German politician. And was the result the same: did the politician have to resign? No, in fact, ex-doctor Sylvana Koch-Mehrin has not only not had to quit her job as European parliament representative, she has been promoted to, get this, the Parliamentary Commission on Industry, Research, and Energy. Needless to say this is an insult bordering on the absurd, and consequently a petition calling for her dismissal has been launched. So it seems that in "Das Land der Dichter und Denker" (The Country of Poets and Thinkers), in order to succeed politically, one does not even have to have thoughts of one's own; it suffices to copy what others have said without attribution and to claim it for oneself. The more brazen the lie, the more galling the sense of entitlement that the ruling political class displays.  

Money Creation to Bail Out Wall Street's Bad Bets But No Money For Social Security

Economist Michael Hudson has long pointed out that the US taxpayer has basically been robbed at metaphorical gunpoint by Wall Street bankers, whose bad bets gone bad have been bailed out to the tune of $13 trillion by transferring their bad bets onto the public, that is the US taxpayer balance sheet. 

Here is an excerpt from a must read article explaining that the US can create money out of thin air and has done so to bail out banker's bets while claiming that there is no money for medicare, medicaid, social security etc., basically anything that would help the downtrodden, or poor, or even the middle class.

What has made the post-2008 crash most remarkable is not merely the delusion that the way to get rich is by debt leverage (unless you are a banker, that is). Most unique is the crash’s aftermath. This time around the bad debts have not been wiped off the books. There have indeed been the usual bankruptcies – but the bad lenders and speculators are being saved from loss by the government intervening to issue Treasury bonds to pay them off out of future tax revenues or new money creation. The Obama Administration’s Wall Street managers have kept the debt overhead in place – toxic mortgage debt, junk bonds, and most seriously, the novel web of collateralized debt obligations (CDO), credit default swaps (almost monopolized by A.I.G.) and kindred financial derivatives of a basically mathematical character that have developed in the 1990s and early 2000s.

These computerized casino cross-bets among the world’s leading financial institutions are the largest problem. Instead of this network of reciprocal claims being let go, they have been taken onto the government’s own balance sheet. This has occurred not only in the United States but even more disastrously in Ireland, shifting the obligation to pay – on what were basically gambles rather than loans – from the financial institutions that had lost on these bets (or simply held fraudulently inflated loans) onto the government (“taxpayers”). The government took over the mortgage lending guarantors Fannie Mae and Freddie Mac (privatizing the profits, “socializing” the losses) for $5.3 trillion – almost as much as the entire national debt. The Treasury lent $700 billion under the Troubled Asset Relief Plan (TARP) to Wall Street’s largest banks and brokerage houses. The latter re-incorporated themselves as “banks” to get Federal Reserve handouts and access to the Fed’s $2 trillion in “cash for trash” swaps crediting Wall Street with Fed deposits for otherwise “illiquid” loans and securities (the euphemism for toxic, fraudulent or otherwise insolvent and unmarketable debt instruments) – at “cost” based on full mark-to-model fictitious valuations.

Altogether, the post-2008 crash saw some $13 trillion in such obligations transferred onto the government’s balance sheet from high finance, euphemized as “the private sector” as if it were the core economy itself, rather than its calcifying shell. Instead of losing on their bad bets, bad loans, toxic mortgages and outright fraudulent claims, the financial institutions cleaned up, at public expense. They collected enough to create a new century’s power elite to lord it over “taxpayers” in industry, agriculture and commerce who will be charged to pay off this debt.

If there was a silver lining to all this, it has been to demonstrate that if the Treasury and Federal Reserve can create $13 trillion of public obligations – money – electronically on computer keyboards, there really is no Social Security problem at all, no Medicare shortfall, no inability of the American government to rebuild the nation’s infrastructure. The bailout of Wall Street showed how central banks can create money, as Modern Money Theory (MMT) explains. But rather than explaining how this phenomenon worked, the bailout was rammed through Congress under emergency conditions. Bankers threatened economic Armageddon if the government did not create the credit to save them from taking losses.

Even more remarkable is the attempt to convince the population that new money and debt creation to bail out Wall Street – and vest a new century of financial billionaires at public subsidy – cannot be mobilized just as readily to save labor and industry in the “real” economy. The Republicans and Obama administration appointees held over from the Bush and Clinton administration have joined to conjure up scare stories that Social Security and Medicare debts cannot be paid, although the government can quickly and with little debate take responsibility for paying trillions of dollars of bipartisan Finance-Care for the rich and their heirs.

He also points out that things are bad if Michelle Bachmann is the voice of reason. The galling nature of bailing out banker's bad bets while preaching austerity for everyone else is augmented when one is made aware that the US government is not constrained in any way shape or form. The Modern Money primer is a good place to start getting acquainted with the way money is created, and the implications of these facts for any discussion about government solvency, entitlement programs, benefits or austerity and "belt tightening" for everyone except financiers whose casino capitalism bad bets are being bailed out by the government.


Full article by Michael Hudson here.