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Emet m'Tsiyon

Wednesday, July 29, 2015

The Greek Crisis Shows the Stupidity of the Euro Currency Itself

Just a few thoughts that I have about the Greek debt crisis which is a crisis of the euro currency and the Eurozone itself.

Greek mismanagement of its state finances was a problem. But the main problem is the notion of the single currency itself. The euro was a bad idea whose time had come. The economic disparities between the member states of the eurozone were great, not to mention lack of a common tax system, pension system, state budget, labor laws, etc etc, plus Greece's special defense needs vis-a-vis Turkey, etc.
What happened to Greece was inevitable and could have happened to other eurozone states. After the Greek debt crisis became known in 2010 it was handled all wrong by the Eurozone which insisted on reforms --due to German domination--- rather than debt relief which at that time could have taken the form of eurobonds at a low interest rate which Greece could have paid at that time. Instead Greece was left to borrow for regular needs --as many countries, including the USA, do-- on the open market where interest rates on Greek debt inevitably shot up, and that should have been foreseen. So the Greek debt is much higher today than 5 years ago. And that is the fault of the eurozone, especially Germany/Schaeuble/Merkel etc.
Reforms yes, but not without an easy credit facility plus funds for investment in growth. Lebowitz is right but does not go far enough. Greece has offshore energy resources which Europe needs and could have invested in in order to help both Greece and the EU as a whole. But instead of funds for growth there was excessive austerity which destroyed rather than creating conditions for growth and getting out of the debt straitjacket

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Monday, July 20, 2015

John Kerry Lies to the Media and Public about the Surrender to the Ayatollahs' Destructive Nuclear Urges

We know that Obama is an artist of smooth, well-spoken lies. I cannot think of anybody who lies so well with a straight face. But secretary of state John Kerry lies too, albeit not as smoothly as his boss.

The fact is that Iran is in violation of the Nuclear Non-Proliferation Treaty [NPT] signed years ago. Rather than negotiating with Iran, the USA and other states in the P5+1 group should have been working to force Iran to comply with its obligations under the NPT. But as we know Obama and other politicians wanted to negotiate with Iran over its nuke bomb endeavors. In this case, negotiating means compromising on the original provisions of the NPT.  The nuke deal with Iran from last week also excuses Iran from compliance with previous UN Security Council resolutions, as we see below.

Omri Ceren, one of the good guys in the fight against the Iranian nuke project, took up Kerry's brazen lies on the US Sunday news interview shows. Omri sent this around as a fact sheet for the Israel Project where he works. The problems are not only Iran's nuke project. Consider item 2) below and bear in mind that Iran has been developing long-range ballistic missiles [ICBMs intercontinental ballistic missiles] the better to deliver any future bomb and not just on Israel:

The administration is scrambling to justify collapsing on conditions related to the three overarching areas of the JCPOA [= Joint Comprehensive Plan of Action] debate:
1) will it work to keep Iran away from a nuclear weapon for a decade (the verification debate); 
2) even if it works, is it worth the cost of empowering Iran with advanced weapons and hundreds of billions of dollars (the arms embargo debate);
3) doesn't the deal make Iran into a nuclear power – the opposite of what it was supposed to do – because it expires and allows Iran's breakout time to go to zero (the sunset clause debate).
. . . . .
By far the most unexpected concession made at Vienna involved the Americans bowing to new Iranian-Russian demands to eliminate the United Nation arms embargo. Restrictions on conventional weapons will now expire in 5 years and ones on ballistic missiles will expire in 8 years. The collapse - which has been wrapped into how Iran is also receiving a short-term $150 billion windfall and long-term sanctions relief - was discussed on every one of the Sunday shows [a][b][c][d][e].

Kerry and Moniz had three different responses sprinkled across the shows: (1) that the administration had no choice but to concede on the arms embargo, and it was actually an American diplomatic victory because it's being phased out rather than lifted immediately (2) that dropping the arms embargo doesn't matter - "a mountain is being made out of a mole hill" - because there are other restrictions on Iranian arms transfers (3) that Iran won't get sufficient relief to exploit the arms embargo being lifted.
(1) The administration had no choice but to concede on the arms embargo, and it was actually an American diplomatic victory because it's being phased out rather than lifted immediately -
ABC This Week
KERRY: The United Nations resolution which brought about the sanctions in the first place said that if Iran will suspend its enrichment and come to negotiations, all the sanctions would be lifted. Now, they've done more than just come to negotiations. They've actually negotiated a deal. And three of the seven nations thought they shouldn't therefore be held to any kind of restraint. We prevailed and insisted, no, they have to be.

CBS Face the Nation
KERRY: ... [T]he reason that we were only able to limit them to the five and eight, which is quite extraordinary that we got that, was that three of the nations negotiating thought they shouldn't have any and were ready to hold out to do that. And we said under no circumstances, we have to have those...

Fox News Sunday
KERRY: This is a nuclear negotiation about a nuclear program. The United Nations, when they passed the resolution, contemplated that if Iran came to the negotiation and they ponied up, all the sanctions would be lifted. We didn't lift all the sanctions. We left in place despite the fact that three out of seven countries negotiating wanted to do away with them altogether. We won the five years for the arms and eight years for the missiles.

CNN State of the Union
KERRY: ... [T]his UN process that started the – that allowed the sanctions to be put in place in the first place contemplated the lifting of all sanctions once Iran had lived up to its obligations with respect to the NPT. So if the IAEA found in X number of years that they've lived up to this, then all the sanctions would be gone. So we, in fact, succeeded against three countries that didn't think they should have to do anything.

NBC Meet The Press
KERRY: And by the way, even though the arms and the missiles were put to – by the – they were thrown in as an add-on to this nuclear agreement. It was always contemplated that if Iran did come and deal on their nuclear program, that was going to be lifted.
This claim is false on at least a couple of levels. First, the condition for lifting the arms embargo was not that Iran "come to negotiations." UNSCR 1929 stipulated that the embargo was to remain in place until Iran had complied with UNSCR 1929 plus past UNSCRs 1696, 1737, 1747, and 1803 ([f] - ctrl-f down to "to persuade Iran to comply with resolutions"). The UNSCRs obligated Iran to stop all uranium enrichment, cease all heavy water plutonium work, and halt all development of proliferation sensitive ballistic missiles. So the arms embargo was to remain in place until Iran dismantled its nuclear program, not until it agreed to negotiate.

Second, there was nothing forcing U.S. to agree to lift the embargo. The JCPOA allows Iran to continue doing all of the activities prohibited by previous UNSCRs. The Americans could and should have argued that Iran was already receiving a Get Out Of Jail Free Card on its UNSCR obligations via sanctions relief, and that there was no reason to also gift them with the removal of the arms embargo.

(2) Dropping the arms embargo doesn't matter - "a mountain is being made out of a mole hill" - because there are other restrictions on Iranian arms transfers -
ABC This Week
KERRY: But we have ample other resolutions that allow us to hold them accountable for moving any weapons. President Obama is committed to doubling down on the enforcement of those measures. So I really think that a mountain is being made out of a molehill here.

CBS Face the Nation
KERRY: ... [T]hey add on to additional mechanisms that we have to hold them accountable on arms and missiles. We have the missile control technology regime. We have other missile restraints on them. We also have other UN resolutions that prevent them from moving arms to the Houthi, prevents them from moving arms to the Shia, prevents them from – to the Shia militia in Iraq, prevents them from moving arms to Hizballah.

CNN State of the Union
QUESTION: ... Why is lifting the embargo part of this deal?
KERRY: Well, we're not lifting it. It has eight years out of a 10-year component of the UN resolution. Eight years it will be applied, and we have other UN resolutions and other mechanisms for holding Iran accountable on missiles.

Fox News Sunday
KERRY: But we have many other sanctions still applicable, and we can bring other sanctions to push back against any of their behavior. They're not allowed to send arms to Hizballah. That's a separate resolution. They're not allowed to send arms to the Shia militia in Iraq. A separate resolution. They're not allowed to send arms to the Houthis. Separate resolution. So we, in fact, have a huge ability to be able to bring any number of efforts against Iran for any bad behavior here whatsoever.
This claim is misleading because the JCPOA will make it functionally impossible to reimpose economic pressure on Iran, regardless of what laws remain on the books [g]. 
Paragraph 25: "If a law at the state or local level in the United States is preventing the implementation of the sanctions lifting as specified in this JCPOA, the United States will take appropriate steps... with a view to achieving such implementation." 
Paragraph 26: "The EU will refrain from re-introducing or re-imposing the sanctions that it has terminated implementing under this JCPOA... The United States will make best efforts in good faith to sustain this JCPOA and to prevent interference with the realisation of the full benefit by Iran of the sanctions lifting specified in Annex II." 
Paragraph 29: "The EU and its Member States and the United States, consistent with their respective laws, will refrain from any policy specifically intended to directly and adversely affect the normalisation of trade and economic relations with Iran inconsistent with their commitments not to undermine the successful implementation of this JCPOA."

The punchline is the very last line of the very last paragraph of the main agreement, which gives Iran its own snapback mechanism against the United States by allowing it to return to enrichment if sanctions are even partially reinstated. 
Paragraph 37: "Iran has stated that if sanctions are reinstated in whole or in part, Iran will treat that as grounds to cease performing its commitments under this JCPOA in whole or in part." Maybe the administration will say that the passage was only intended to refer to nuclear sanctions. That's not how it's written, and the Iranians have a 100% success rate of winning interpretation debates vs. the Americans over vague language in agreements and factsheets.

(3) Iran won't get sufficient relief to exploit the arms embargo being lifted
Fox News SundayQUESTION: Under this deal, we lift the arms embargo on Iran being able to buy weapons and even ballistic missiles between five and eight years. And the sanctions against General Soleimani, head of the Iranian Revolutionary Guard's Qods Force, are also lifted. What we end up with, Secretary Kerry, is an Iran with billions, hundreds of billions of dollars more, able to buy weapons, and a Revolutionary Guard with fewer restraints. Isn't that potentially an even more dangerous state sponsor of terror in the Middle East?
KERRY: First of all, Chris, don't exaggerate. It's not hundreds of billions of dollars. It's $100 billion.
QUESTION: That's in the first year.
KERRY: But – it's their money that they have had frozen.
QUESTION: I understand. But it's a hundred --
KERRY: Well, let me – but let me just finish.
QUESTION: A hundred fifty billion is the first year.
KERRY: Please. Chris, this is not supposed to be a debate. You're supposed to ask a question and we're supposed to be able to answer it.
This is a strange stance to take. The $100 - $150 billion windfall will occur within months of the deal being implemented, but while that happens the sanctions regime will be shredded, allowing the Iranian economy to skyrocket to the tune of hundreds of billions of dollars. The lifting of economic sanctions will trigger a gold rush into Iran [h]. The administration used to claim that worries over Iranian noncompliance would dampen enthusiasm - because no company wants to enter the market if they have to leave a year later - but the final JCPOA has a loophole so snapback doesn't apply to companies that set up shop in Iran before noncompliance [i]. Snapback is a fiction anyway [j]. Meanwhile the delisting of banks will remove the last economic lever that the West has over Iran, and those financial sanctions are never coming back [k].
- - - - - - - - - - - - - END of Omri Ceren's Factsheet for The Israel Project - - - - - - - - - - - - - - - - - - - - - - 

Once upon a time, the so-called "Left" opposed nuclear proliferation. Cathy Ashton, the mentally challenged former commissioner of foreign affairs for the EU commission, had even been a hired employee of the British supposed anti-nuke outfit, the Campaign for Nuclear Disarmament. Then when she started work with the EU and negotiated with Iranian representatives she became in fact an agent of nuclear proliferation and was effectively scoffing at the principle of nuclear disarmament. Obama is identified with the "Left" but we don't know anymore what those terms, left and right, mean. In the 1950s, officials of the Republican Eisenhower administration were quite complacent about nuclear weapons and "peaceful uses of atomic energy." Nowadays, the so-called "Left", led by Obama is actively facilitating nuclear proliferation to Iran and indirectly provoking Sunni Arab states like Saudi Arabia and Egypt to set up or restart their own nuclear programs [as in Egypt's case] as a defensive measure against Iran. Hence, Obama is instrumental in bringing  about a dread nuclear arms race. And Obama and his minions have the hhutspah to insinuate that opponents of the nuke deal with Iran are warmongers. 
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Former Saudi ambassador to US chides Obama for making the nuke deal with Iran which he indicates is worse than Clinton's nuke deal with North Korea. [here & here]
For those who are not aware, Saudi Arabia has been consulting with Israel for some time now in trying to work together to counter Obama's pro-Iran nuke deal, despite all of the other issues that divide the two countries.

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Sunday, July 05, 2015

Germany benefitted from debt relief but it is ruled out when for Greece's benefit

UPDATING 7-13-2015 at bottom

The Greeks are still voting on the referendum whether or not to accept proposals by the creditor institutions for getting another tranche [slice] of loan money to pay off previous loans. Note that Greece was not offered money to finance growth, such as in developing Greece's off shore hydrocarbon deposits. Greece is being offered money to pay previous debts to those who are offering new loans. So Greece is in a vicious circle or trap.

The help that Greece needs is debt relief and funds to aid growth and development. Indeed, former Italian Prime minister Berlusconi --interviewed yesterday [by TG com 24]-- wished Greece to have a future of growth and sviluppo [= development]. But the creditor offers to Greece did not include aid for growth, without which Greece cannot pay off old loans in the future. Instead, they insist that old loans be paid. Debts must be paid is the principle that they pretend to uphold. But how short are their memories, especially those of the Germans!!!

After the general destruction caused by WW2, a German war, in all the countries attacked, and in Germany itself as well, West Germany, occupied by the USA, UK, and France, was loaned $15 billion in Marshall Plan money when a billion dollars was worth much more than today. All but a small part of that loan was forgiven and the rest stayed in Germany as so-called counterpart funds which were used by the USA to finance projects in Germany to help Germany. Moreover, under US leadership, the formerly German-occupied countries agreed to forego reparations payments. They gave up on their demands for compensation from Germany for material damages. Peter Coy describes the spirit of US policy:
On Sept. 6, 1946, U.S. Secretary of State James Byrnes gave a speech in Stuttgart, Germany. A movement was afoot to penalize the Germans for their role in World War II by deindustrializing the country. Byrnes opposed anything resembling economic spite and promised the country a fair chance to rebuild. “Germany is a part of Europe,” Byrnes said, “and recovery in Europe will be slow indeed if Germany with her great resources of iron and coal is turned into a poorhouse.” It became known as the Speech of Hope. [Peter Coy in BloombergBusinessWeek]
Greece too was led by the US to give up its demands for compensation as well as for return of gold reserves and forced loans taken by the German occupation army from the Greek state central bank.
Hence, we see that Germany enjoyed and benefitted from debt forgiveness after the vast destruction caused by WW2. But today Greece must not benefit from debt forgiveness nor even from debt restructuring to extend pay back periods and/or to reduce interest on old debt.

What's more nobody seems to want to recall that after WW One, also a German war, Germany agreed to pay reparations to France. The sum was huge and it seemed so to the German governments in the 1920s.  So what did the German govts of the time do to alleviate their debt, that is, to get debt relief?
They devalued their own currency, the deutschemark, and the French were paid off in cheap, nearly worthless deutsche marks. Greece cannot do that since its debt is denominated in euros and Greece's govt does not control the value of the euro which it cannot devaluate by its own decision.

Here is another example of how Germany benefitted from debt relief which it rules out when it is for the benefit of Greece. And the other major countries in the Eurozone go along with the present absurdity of creditors trying to squeeze blood from a stone.

Can Israel expect any humane treatment from diamond-hearted, self-righteous hypocritical Europeans?
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Also see links below:
European Union knows what is best for everybody else but cannot or does not want to solve some of its own problems. [here]
Eurozone is stingy with Greece, generous with Arabs claiming the Land of Israel [here]
Eurozone betrays its Greek Eurobrethren. What would they do to the Jews? [here]
Why Greece should vote No [here].
Was it deliberate policy to impoverish Greece by putting it into a debt straitjacket? [here]
See analysis by Committee for Abolition of Third World Debt towards bottom of link [here]
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UPDATING 7-13-2015 Investment fund manager David Einhorn sees political motives in the
Eurozone working to have Greece fail even if it hurts the rest of the Eurozone.
David Einhorn, founder of Greenlight Capital, said Europe’s leaders are prepared to let Greece fail to discourage other countries from electing populists.
“Europe is unwilling to allow Syriza a face-saving compromise, even if that means Greece collapses and the rest of Europe suffers” [Bloomberg here]

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Friday, July 03, 2015

The Eurozone Put Greece in a Debt Straitjacket - Was It Deliberate?

It's obvious to almost everybody that the Eurozone never "rescued" or "bailed out" Greece from its debt crisis in 2010. Instead, the Eurozone or Eurogroup put Greece into a debt straitjacket or debt trap in which Greece's state debt soared because it was left to borrow on the open market where the interest rates demanded by private investors/lenders were sure to rise fast. Later, but too late, it was openly realized  --about 2012-- that Greece needed to borrow on easy terms because its state debt was soaring. But Greece was already in the debt straitjacket or trap from which it cannot get out. Someone estimated that it would take 180 years for Greece to pay off the debt mountain.

Now evidence has emerged that suggests --not absolute proof to be sure, which is not likely to emerge for many years-- that putting Greece into a debt trap may have been deliberate German policy. The purpose seems to have been to use the Greek example as a whip to scare other economically weak Eurozone member states. German finance minister Wolfgang Schaeuble is quoted as telling US secretary of the Treasury, Timothy Geithner, as reported by Peter Coy of Bloomberg Businessweek:
The upshot is that events are unfolding roughly as foreseen by the wily German finance minister, Wolfgang Schäuble: The disaster befalling Greece is scaring other European nations into following the straight and narrow. According to former Treasury Secretary Timothy Geithner in his book Stress Test: Reflections on Financial Crises, Schäuble told him in 2012 that—in Geithner’s words—some people were arguing “that letting Greece burn would make it easier to build a stronger Europe with a more credible firewall.”

This surmise of mine explains a lot, if true. Why do Germany and the Eurozone keep on insisting that Greece pay off debts made at inflated interest rates, debts which it cannot pay off for more than a century?
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Also see here, and below --
The economist Paul Krugman pointed out that Greece was in: "a vicious circle, with fears of default threatening to become a self-fulfilling prophecy."  here. Interestingly, former Italian prime minister, Silvio Berlusconi, also pointed out that Greece was in a "vicious circle" that it should be helped to get out of. He favored mutualization of state debt within the Eurozone.
European hypocrisy about human rights according to Michael Rubin on the Commentary blog, "The Lie that Europe Cares about Human Rights"  [here]

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