It might seem like a very logical way to rein in on one’s runaway sovereign debt, but will draconian austerity measures eventually result in widespread poverty?
By: Ringo Bones
From my perspective, it does seem appear to be the most logical step a sovereign country can take in order to rein in on runaway sovereign debt, but will it result in initiating an even deeper recession or perhaps a full-blown economic depression? Tenured economists even think that this could initiate that dreaded double-dip recession that the global economy is desperately trying to avoid in our still fragile post-credit crunch global economy. Sooner, rather than later, the EU will be facing the problem of how to make sound fiscal decisions with ever-dwindling tax revenue brought about by those draconian austerity measures.
Fortunately at present, EU style draconian austerity measures adopted by heavily indebted Euro zone member countries had not yet become in vogue in the United States. Every economist worth his or her salt perceives that austerity measures seems to run counter with what we’ve learned about Keynesian Economics that had bailed the global economy from the Great Depression of the 1930s.
There is this somewhat strange and not-so-old adage that goes: “Before any of us can cut out pieces of the pie, somebody has to make it.” Or that oh-so-true share-the-wealth paradox that goes: “We can’t share the wealth until we create the wealth.” I’ve first heard these “jingoism” during the transition phase of President George H.W. Bush to President Bill Clinton back in 1992 – unfortunately, it still holds true today. Euro zone policymakers should concentrate more on reforming their inefficient taxation system that allows the extremely rich to get away scot-free when it comes to paying their fair share of taxes.
Will EU austerity measures eventually compromise the wealth generating aspect of their economy – i.e. manufacturing – and instead turn the Euro zone into a wealth manipulation based economy of bankruptcy remediation where the ever shrinking wealth are yet again redistributed in vanishingly small quantities? When the wealth creation side of a typical sovereign nation suffers, this usually results in lower tax revenues – thus endangering a sovereign government’s ability to serve its citizens. Let’s just hope that EU style austerity measures never become a global phenomena or that Eurozone countries realize their folly before every country Europe starts saving their way into economic stagnation. Present austerity measures – like the recently approved quantitative easing measures – had mainly affected the Euro zone’s working class.
Showing posts with label Sovereign Debt. Show all posts
Showing posts with label Sovereign Debt. Show all posts
Thursday, June 17, 2010
Monday, April 19, 2010
Vulture Funds: Threat to an Egalitarian Globalization?
The clarion call of globalization preaches that every nation deserves economic prosperity, will vulture funds ruin this egalitarian economic idealism?
By: Ringo Bones
In a perfect world, any country wishing to embrace globalization is guaranteed economic prosperity. In the real world, through the rigmarole-like machinations of a globalization-based economy, poor countries often get the bad end of a business contract. Vulture funds had gained the attention of the mainstream press when poor countries in Africa – first Zambia then Liberia – wind up using their international aid money to service debts they don’t even know that they have. Sadly, the financial misery was hatched up by unscrupulous Wall Street types during the turbulent “nation building” phase of a number of poor African countries during the 1970s and the 1980s.
When these poor African countries where still under the stranglehold of their respective megalomaniac dictators, they racked up massive debt via their respective military built-up programs. When the dictators got deposed, Wall Street speculators managed to pick up almost worthless debt bonds that enabled these unscrupulous entrepreneurs via the rigmarole of gray area business contracts to later collect the sovereign debt of these starving African countries. And these unscrupulous Wall Street types do intend to collect their debt – even via international development aid money – at the expense of those poor countries’ starving citizens.
Recently, Number 10 Downing Street had initiated an international ban on the trade of vulture funds. But a Wall Street based financial firm trading in vulture funds called F.H. International fell under investigation when its CEO Eric Hermann had taken advantage of Liberia’s international debt reduction program. Through the Hamsah Fund transfer, Mr. Hermann supposedly made a Vulture Fund on Liberian sovereign debt seem official. Before the vulture fund debacle was uncovered, a significant portion of international aid money destined for the rehabilitation of post civil war Liberia was diverted to service vulture funds. Globalization was supposed to help poor countries attain economic prosperity, instead it had a legal loophole that made vulture funds a reality. Making vulture funds probably the most unethical and the most socially irresponsible way to make money. Vulture funds could probably turn out to be very useful to repressive regimes, just imagine what it could do if the Beijing governments communist party functionaries would use it against the Uyghur uprising, the Free Tibet Movement, or organizations spreading awareness of the June 4, 1989 Tiananmen Square Massacre, Google, etc.
By: Ringo Bones
In a perfect world, any country wishing to embrace globalization is guaranteed economic prosperity. In the real world, through the rigmarole-like machinations of a globalization-based economy, poor countries often get the bad end of a business contract. Vulture funds had gained the attention of the mainstream press when poor countries in Africa – first Zambia then Liberia – wind up using their international aid money to service debts they don’t even know that they have. Sadly, the financial misery was hatched up by unscrupulous Wall Street types during the turbulent “nation building” phase of a number of poor African countries during the 1970s and the 1980s.
When these poor African countries where still under the stranglehold of their respective megalomaniac dictators, they racked up massive debt via their respective military built-up programs. When the dictators got deposed, Wall Street speculators managed to pick up almost worthless debt bonds that enabled these unscrupulous entrepreneurs via the rigmarole of gray area business contracts to later collect the sovereign debt of these starving African countries. And these unscrupulous Wall Street types do intend to collect their debt – even via international development aid money – at the expense of those poor countries’ starving citizens.
Recently, Number 10 Downing Street had initiated an international ban on the trade of vulture funds. But a Wall Street based financial firm trading in vulture funds called F.H. International fell under investigation when its CEO Eric Hermann had taken advantage of Liberia’s international debt reduction program. Through the Hamsah Fund transfer, Mr. Hermann supposedly made a Vulture Fund on Liberian sovereign debt seem official. Before the vulture fund debacle was uncovered, a significant portion of international aid money destined for the rehabilitation of post civil war Liberia was diverted to service vulture funds. Globalization was supposed to help poor countries attain economic prosperity, instead it had a legal loophole that made vulture funds a reality. Making vulture funds probably the most unethical and the most socially irresponsible way to make money. Vulture funds could probably turn out to be very useful to repressive regimes, just imagine what it could do if the Beijing governments communist party functionaries would use it against the Uyghur uprising, the Free Tibet Movement, or organizations spreading awareness of the June 4, 1989 Tiananmen Square Massacre, Google, etc.
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