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Jack interviews eyewitness account, as of last week, of the rising protests by workers and students in France against its government’s edict imposing labor market ‘reforms’ on French workers. Talk of general strike to prevent the reforms is growing.

To listen to this interview go to:

http://prn.fm/category/archives/alternative-visions/

or to:

http://www.alternativevisions.podbean.com

SHOW ANNOUNCEMENT

Jack Rasmus interviews Alan Benjamin, eyewitness to developing events in France, where workers and students are protesting and striking against government attempts to impose by edict changes in France’s labor code that will allow corporations to fire and lay off workers more easily, undermine unions and collective bargaining, and privatize broad sectors of the French economy. Traveling to France on numerous occasions in recent months, and just returning from a week ago, Benjamin describes the growing opposition in France to the so-called ‘labor market reforms’ imposed by Presidential edict by the Hollande government there. Growing one day, rolling strikes, and spreading student-worker protests across the country are resulting in growing government violence against the protestors. Discussions are intensifying within France’s labor union federations to consider a general strike to get the government to back off of its proposed labor ‘reforms’. A recent country-wide poll in France shows 78% opposed to the reforms, as the government declares it will not back down. Jack explains how ‘labor market reform’ in France and Europe today is a reflection of similar changes in jobs occurring globally—including shift to part time, temp, contract work, offshoring and relocation of full time employment to emerging markets, shift to low pay/no benefits service work, and emerging trends like ‘gig’ economy, no pay internships, and privatization of social benefits.

Alan Benjamin is a delegate of the San Francisco Labor Council and member of the OPEIU, who works in Europe and the US. He is also a member of the US ‘Labor Fightback Network’ of unionists in the US. More information on events in France is available at http://www.laborfightbacknetwork.org and at http://www.socialistorganizer.org.

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To listen to the podcast of this Alternative Visions May 13, 2016 radio show, host Dr. Jack Rasmus, go to:

http://prn.fm/category/archives/alternative-visions/

or go to:

http://www.alternativevisions.podbean.com

SHOW ANNOUNCEMENT
Jack Rasmus welcomes CWA Local 1400 president and union bargaining committee member, Don Trementozzi, to report the facts about the current Verizon strike, now in its fifth week, by 40,000 CWA union members, from New England to Virginia. Don explains the main issue, and union demand ,to save 20,000 union call center workers’ jobs that Verizon wants to offshore from the US to the Philippines and elsewhere, where the company pays workers only $1.78/hr., despite having made $18.6 billion in profits last year. Violence by replacement-scab workers hired by the company in the US and in the Philippines are described by Trementozzi. Jack notes the recent Pew Study showing incomes of middle class US workers now falling in 203 of 226 regions in the US, and how the ‘triple onslaught’ by companies—job offshoring, creating tens of millions of part time-temp-contract low pay jobs, and now the ‘gig’ economy—has been devastating US jobs and middle class incomes, that have been declining the past six years as companies like Verizon have been distributing $5 trillion in dividends and stock buybacks to their wealthy investors since 2010. Trementozzi describes the growing support for the strikers throughout the northeast and internationally, in this historic strike to save jobs and call a halt to the ‘triple onslaught’ destroying US middle class incomes.
Guest: Don Trementozzi is president of CWA local 1400 in New England and a member of the union’s regional bargaining committee. For more information about the strike and negotiations go to http://www.cwa.org or to http://www.cwalocal1400.org websites.

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(This article was published May 7 in TelesurTV, English Edition)

With his win last week in Indiana’s Republican primary, it appears increasingly likely that Donald Trump will now be the Republican nominee to run for president. However, Republican party elites are coming around only slowly to that prospect and are still having a hard time accepting that reality. They could still “shoot themselves in the foot,” as the saying goes, by engineering an 11th hour contested nominating convention. Not likely, but still possible.

Republican Elite Still Undecided about Trump

Or they could accept Trump as the nominee, and withhold their financial support beyond just a token commitment, and instead focus on retaining control of the Senate and US House of Representatives.

Or, they could do what the Democratic party leadership did in 1972, when the Democrat party elite faced a grassroots populist revolution from below in the form of the George McGovern’s challenge to party leaders and McGovern’s eventual winning of the 1972 Democratic party nomination. That is, just as ex-president Lyndon Johnson and other high level Democrat party leaders quietly threw their support behind McGovern’s Republican opponent at the time, Richard Nixon, in the 1972 election, key leaders of the Republican party establishment could indirectly support Trump’s opponent in 2016. They could support Hillary, in other words.

The Republican party elite is quite capable of doing that in Trump’s case. A growing number of Republican party leaders are already coming to believe that Hillary is not all that bad an option for them. More Republican billionaires are considering the same. For example, the notorious Koch brothers, ultra-conservative multi-billionaires in the US, have already signaled publicly they could support Hillary if Trump becomes the Republican nominee. And Hillary’s husband, Bill, is reported to be aggressively courting with some success-other billionaire Republicans, seeking money and support for Hillary in exchange for what in return one can only guess.

The Trump-Ryan Exchange

That the Republican party leaders have still not decided what to do about Trump was reflected in the past week’s verbal exchanges between Trump and Republican U.S. House Speaker Paul Ryan, one of the top leaders of the party. Last month Ryan was clearly being discussed by the “insiders” of the party as the Republican nominee if Trump failed to get the nomination on the first ballot at the convention, and there was a need to select a candidate other than Trump. Ryan was at the top of that list.

Ryan’s initial public statement after Trump’s opponents, John Kasich and Ted Cruz, dropped out of the race this past week was that he, Ryan, could not yet support Trump’s policies or his nomination. Nor would he meet with him. Ryan was clearly speaking on behalf of the rest of the Republican establishment. They were probably testing Trump. Would he come to them and tell them what they wanted to hear, supporting free trade, cutting social security, providing more tax cuts for big business, repeal Obamacare, etc. Refusing to be upstaged by Ryan, however, Trump quickly retorted publicly that he was not ready to support Ryan’s policies either, and was not interested in meeting with Ryan in any event. In short, the Trump-Republican leadership relationship remains fluid, and it is not yet clear what the Republican elite has decided to do with Trump, their presumptive party nominee now that Kasich and Cruz dropped out.

Trump As ‘Outside the Outsiders’

What the Trump-Ryan exchange this past week reflects is that Trump never loses an opportunity to position himself ‘outside’ the two party system, including his own Republican party. U.S. presidential candidates typically like to run as “Washington outsiders” in U.S. presidential elections. Blame all the problems of the country on the “insiders,” i.e. the politicians in Washington. That was Cruz’s strategy, even though he himself was a Washington “insider” as a Senator. But Trump “out-Cruzed” Cruz in the primaries and went one step further, positioning himself as outside the two party system itself, not just the Washington establishment. It’s what voters wanted to hear.

In this year’s election, that’s a theme that has great appeal whether on the left or the right: attack the party system itself as corrupt and non-responsive to average Americans’ interests, not just the Washington establishment. The unresponsive party system has become a kind of proxy for an unresponsive political system itself, which more voters are coming to think is basically corrupt, both politically and economically, undemocratic, and increasingly disregarding of the needs of the majority of U.S. middle and working class households. The parties are only concerned about the interests of bankers, corporations, and the wealthiest 1 percent.

A majority of American voters — on both the left and the right — are increasingly fed up with both political parties. That has become a U.S. voter “hot button” that Trump discovered early in the campaign and has never lost an opportunity to push. Ryan and the rest of the Republican party establishment haven’t quite figured that out yet. They keep playing into Trump and he wastes no opportunity to “push the button” and attack them in return as representatives and reflections of a system that is no longer responsive to average Americans. Sometimes Trump will even bait one of them, charge them with having done great harm to U.S. national security by attacking Iraq when there was no proof of weapons of mass destruction there, as in the case of Trump’s accusation aimed at former president, George W. Bush; or draw out former Republican presidential candidate, John McCain, questioning his former Vietnam prisoner of war status; or some other party “elder” who was previously considered untouchable.

Every time Trump attacked a member of the Republican party establishment — whether Jeb Bush, Cruz, Rubio, or even party leaders not running against him like John McCain, Lindsey Graham, or others — he was de facto attacking the Republican party and its leaders who, with their Democrat counterparts, represent a failed party system in the mind of the U.S. voter. The Republican party elites could not — and still do not — understand why Trump is doing this. But Trump and the voters understood. And every time they criticized Trump in return for his attacks, he comes back at them declaring them part of a corrupt party system. Their criticisms don’t weaken Trump; they strengthen his appeal. And the more abusive of them Trump becomes, the more it resonates with U.S. voters.

Echoes of a Past Election

There are a number of “echoes” of past U.S. elections in this year’s U.S. election. In a number of important respects, Trump’s appeal is reminiscent of Reagan’s back in 1980. Not because their policies are similar. But because of their unabashed attack on what they proclaim is a failed political establishment. Reagan of course was pointing at the Democrats, but also indirectly at the ‘liberal’ Republican establishment in control of that party at the time. Trump attacks both and appeals directly to voters outside both the party structures.

Trump’s appeal should not be underestimated by progressives or liberals. Trump cannot be simply disregarded as “crazy” or some kind of fascist, the latter charge only revealing how little they understand fascism let alone Trump. It is true that Trump is more brash, crude, and outlandish in his public statements and his pandering to the ignorant ultra-conservative base in the US, when compared to Reagan. All that difference in tone reflects, however, is the general deterioration of U.S. public and political discourse in recent decades. Progressives and liberals today, who were not around in 1980 to experience the 1980 election, should know that Reagan in 1980 was no less “shocking” for the time with some of his extreme positions and proposals.

One of the several things that are unique in this 2016 electoral cycle is that a majority, if not a big plurality, of American voters are becoming increasingly fed up with the two party system — which is perhaps better described as two wings of a single Corporate Party of America system. Both wings, Republican and Democrat, have been flapping in unison the past 36 years, both delivering neoliberal economic policies that have been devastating average Americans’ standard of living, while enriching the wealthiest 1% households and their corporations to an obscene degree.

As a recent study by University of California, Berkeley professor, Emmanual Saez, has revealed using IRS data: no less than 97% of all the net gains in national income since 2008 have been captured by the wealthiest 1 percent households. That compares to 65 percent captured by the same during 2000-2008, and 48 percent captured in 1992-1999.

It may be the two party (aka two wings-single party) system today is the target of U.S. voter wrath in this particular election. But it may also be that the party system itself is a proxy for a growing, deeper discontent with the system itself that could eventually manifest more quickly than some think. It is not coincidental that in polls nearly half of young workers in the U.S. today speak sympathetically about, or identify in some way, with Socialism. They may not have a clear or historical understanding of the term, but to them it means “anything but the present” in some fundamental way.

Jack Rasmus is author of ‘Systemic Fragility in the Global Economy’, Clarity Press, January 2016, and the forthcoming ‘Looting Greece: An Emerging New Financial Imperialism’, Clarity Press, July 2016. He blogs at jackrasmus.com.

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To listen to Dr. Rasmus’s analysis and comment on most recent US Jobs and wage numbers, released today by the Labor Dept. Go to the ‘Alternative Visions’ show on the Progressive Radio Network at:

http://prn.fm/category/archives/alternative-visions/

or:

http://www.alternativevisions.podbean.com

SHOW ANNOUNCEMENT:

Jack comments on today’s US job creation numbers for April, which show a significant decline in new jobs created, to 160,000, compared to previous months. Some problems with how jobs are calculated are explained, including how new business creations, missing labor force, and the US labor department surveys often fail to account for jobs accurately or timely changes. Recent wage gains articles in the mainstream press are then challenged as well. Jack explains the differences in wages as a share of national income, total compensation, average hourly earnings, and average hourly wages all have their limits as indications of how American workers are actually doing in terms of take home pay after inflation. Economic Policy Institute studies show median worker real earnings in the US have been declining every year since 2010. Gains in wages have been skewed to the top 10%, pulling up ‘averages’ which are not an accurate indicator of wage income declines for the US working class. The show concludes with a review of global economic developments, including growing splits among economic elites in Europe and in Japan, as their economies continue to languish despite QE and negative rates. And how China continues to struggle with bringing its shadow banks and speculators under control.

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(The following article was published April 30, 2016, by TelesurTV media. For more audio commentary, listen to the Alternative Visions radio show, of April 29, listen below this blog entry)

This past week the U.S. government announced the country’s economy rose in the January-March 2016 at a mere 0.5 percent annual growth rate. Since the U.S., unlike other countries, estimates its GDP based on annual rates, that means for the first quarter 2016 the U.S. economy grew by barely 0.1 percent over the previous quarter in late 2015.
Growth this slow indicates the US economy may have “slipped into ‘stall speed’, that is, growth so weak that the economy loses enough momentum and slides into recession”, according to economists at JPMorgan Chase.

Has the U.S. economy therefore come to a halt the past three months? If so, what are the consequences for a global economy already progressively slowing? What will an apparently stagnating US economy mean for Japan, already experiencing its fifth recession since 2008? For Europe, stuck in a long term chronic stagnation? And for emerging market economies, struggling with collapsing commodity prices and currencies, rising unemployment, and long term capital flight trends? Once heralded as the only bright spot in the global economy, the US economy now appears to have joined the slowing global trend.

Some Interesting Trends

Last quarter’s 0.5 percent U.S. GDP may indicate the nation’s economy is even weaker than it appears. The economy of the United States’ recent 0.5 percent growth rate is the latest in a steady declining U.S. GDP growth trend over the past year. In the previous fourth quarter 2015, the US economy grew 1.4 percent, which was down from the preceding quarter’s growth of 2 percent and before that 3.9 percent. So the U.S. economy appears to be slowing rapidly over the past year.

Over an even longer period of more than eight years, since the previous peak growth in late 2007, the U.S. economy has grown by a cumulative total of only 10.1 percent. That’s a paltry annual growth of only 1.2 percent a year on average for the past 8+ years.

But even those figures are overestimated. In 2013, the U.S. redefined the way it estimated GDP, adding categories like R&D expenses and other intangibles that artificially boosted U.S. GDP estimates simply by redefining it. That “economic growth by redefinition” raised GDP by around 0.3 percent annually, and in dollar terms by roughly US$500 billion annually. So the real U.S. GDP may be actually growing by less than 1 percent on average per year since 2007; and during the most recent quarter, January-March 2016, the economy may not have grown at all, but may have stagnated, collapse, and come to a halt.

Behind the Wizard’s Curtain

The media and press like to define recessions as two consecutive quarters of negative GDP growth. Actually, U.S. economists tasked with declaring when a recession has begun or has ended don’t rely totally on GDP estimates, which are notoriously inaccurate and have become increasingly so, given U.S. and other governments’ penchant for changing how they define GDP.

Redefining GDP to boost the appearance of growth is not just a problem in the US in recent years. For example, there are few independent research sources that think China is growing at its officially announced 6.8 percent GDP rate. To note but a couple, both Capital Economics and Lombard Street research estimate that China’s GDP is growing at only around 4-4.5 percent based on close examination of other indicators like electricity usage, power generation, local transport volumes, and so forth. In recent years India officially nearly doubled its GDP overnight by redefining it. So did Nigeria. India bank researchers, whom this writer has talked to, say they have a rule of thumb: take the official government GDP rate and half it and that’s probably close to India’s actual GDP. In Europe, a number of economies, including Britain, which have been desperate to raise their GDP in recent years, now include drug smuggling and prostitution services in their estimates of GDP. How they come up with such estimates and the pricing of such services is, of course, interesting.

Not satisfied with the media-press definition of a recession as two consecutive quarters of negative GDP, US economists at the National Bureau of Economic Research, who are tasked with declaring the beginning and end of a recession, look at various economic indicators — like industrial production, retail sales, exports-import trends, and other sources. A recession may occur in just one quarter; or may require more than two.

Looking at these other indicators for this past January-March 2016 period, the US economy appears even more likely headed for a recession and sooner rather than later.

US industrial production (manufacturing, mining and utilities) declined at an annual rate of -2.2 percent this past quarter, after having declined -3.3 percent the preceding quarter. Industrial production has fallen six of the last seven months. US industrial capacity is now at its lowest point since 2010.

Business investment is another trouble spot. Investment in business structures fell by -10.7 percent and investment in new equipment by -8.6 percent, the latter the biggest drop since the 2007-09 recession. Business inventories rose barely, by the smallest amount in two years, continuing a slowing trend of the past nine months.

And what about consumption, which constitutes about two thirds of the total US economy? US consumer spending has been growing at an average monthly rate of only 0.1 percent. Retail sales, the largest element of consumer spending, has fallen every month on average during the quarter. After having sustained retail sales in previous years, auto sales, a large component of retail sales, declined for the second consecutive quarter during the January-March period. The outlook for U.S. consumer spending recovery is also not too bright. A recent Gallup poll reported that 60 percent of those interviewed indicated the U.S. economy was “getting worse.” Reflecting the poor demand for consumer goods, U.S. consumer prices now hover on the brink of deflation, falling at an average monthly rate of -0.1 percent for the quarter.

Exports are declining, residential housing construction recently plummeted. In other words, not many of the economic indicators that comprise GDP show a promising picture. GDP should probably be even lower than the recently reported 0.5 percent annual and 0.1 percent quarter to quarter growth rates. The U.S. economy has obviously “stalled.” But it’s not the first time. In fact, it’s the fifth time it has since the official end of the last recession in June 2009.

What’s a Relapse?

The performance of the US economy this past January-March, a trend that appears is continuing into April, represents what this writer has called an ‘economic relapse’. A relapse is a collapse of economic growth for a single quarter, to near zero or even negative growth.
The U.S. economy has experienced now five such single quarter relapses since the 2007-09 recession was officially declared over. The economy collapsed to 0.1 percent in early 2011, to 0.2 percent in late 2012, declined again by -2.2 percent in 2014 and collapsed to 0.2 percent in 2015.

Relapses are the consequence of “epic” recessions such as occurred in 2007-09, which are typically characterized by short, shallow recoveries that slip repeatedly into periodic bouts of renewed stagnation. They are the result of near total reliance on central bank monetary policies that are designed to boost stock, bond and other financial markets — and thus the incomes of rich investors — but which fail to generate a sustained real economic recovery. Fiscal policies designed to stimulate consumption and good paying jobs are rejected. That almost perfectly describes U.S. economic policy the past eight years.

Politicians Wearing Rose-Colored Glasses

Despite the facts, U.S. government politicians and Federal Reserve bank officials continue to run around declaring that the U.S. economy is performing well. They like to cite the 200,000 jobs allegedly created in recent months. But a closer examination shows the jobs being created are part time, temp, contract, low paid, no benefit service jobs. Jobs that generate no overall wage increase for the economy and no real income gains for working people.

Young workers 30 years old or less are especially hard hit by this “‘well performing US economy.” A recent study by the Center for American Progress, for example, showed that 30 year old workers earn today the same pay, adjusted for inflation, that 30 year olds earned back in 1984.
Despite all that, President Obama continues to tour the country complaining that he doesn’t get enough credit for bringing the US back from the worst recession since the 1930s depression. He should tell that to the millions of millennial young workers, with low paid crappy service jobs, with no medical insurance, having to live at home with relatives because they can’t afford to rent an apartment, loaded with debt and with no prospects for meaningful change on the horizon. No wonder they’re rallying around Bernie Sanders, who continues to capture 85 percent of their votes in the presidential primaries. Obama (and Hillary) will have a hard time convincing them “all is well” — and an even harder time getting them to vote Democrat in the coming election in November.

Jack Rasmus is author of the recent, 2016 book “Systemic Fragility in the Global Economy,” by Clarity Press, soon translated into a Chinese edition, and the forthcoming June 2016 book, “Looting Greece: The Emerging New

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For my analysis (and confirmed prediction) that the US economy would collapse to virtual zero growth this past quarter, listen to my April 29 Alternative Visions radio show, at:

http://prn.fm/category/archives/alternative-visions/

or at:

http://www.alternativevisions.podbean.com

SHOW ANNOUNCEMENT:

Dr. Jack Rasmus dissects the latest report on US economic growth for first quarter 2016, showing a mere 0.5% annual GDP growth rate. The collapse confirms his prediction of early January 2016, and confirms the US economy remains on a ‘stop-go’ trajectory, having again slipped into a ‘stall speed’ that raises risks of US sliding into recession. Rasmus explains the longer term trends behind the 0.5%, and why the US 0.5% annual growth rate, when compared to the previous quarter, is an even lower 0.1% GDP or less. Averaging over 8+ years, the US economy has grown only 10.1%, or barely 1%, or even less per year after adjustments. Jack explains how the US and other countries have been redefining GDP to help the appearance of growth—including China, India and Europe as well as US. The more fundamental trends behind 1st quarter US GDP are then reviewed–including business investment, industrial production, exports, consumption, and prices, all of which suggest the US economy nearing the brink of another recession. Why the US economy keeps ‘relapsing’ periodically since 2009 is discussed, as well as the likely impact of the 1st quarter US slowdown on other global economies and markets. (For more information, listeners should read Jack’s recent Telesur media article on US GDP posted on the PRN network website—‘Is the US Economy Heading for Recession?’)

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(This article was published by the author in Telesur Media English Edition, April 17, 2016)

Last August 2015, after eight months of intense negotiations with Europe’s Troika financial institutions—the IMF, European Central Bank, and European Commission—the Greek Government capitulated to the Troika’s demands imposing more austerity on Greece and its people in exchange for another $98 billion in additional loans.

The $98 billion did not represent economic assistance to Greece, to stimulate its economy, but was earmarked almost exclusively to pay back interest to the Troika, Europe banks, and Europe investors for prior loans made to Greece in 2012, 2010, and before. But while the Greek people would see little real benefit, they would have to pay the price. In exchange for the $98 billion in new credit, the August 2015 debt restructuring deal required Greece to even further cut pensions, axe more government jobs and cut wages, raise taxes, accelerate the sales of public works (ports, airports, utilities, etc.) to private investors, and to in effect turn over Greek banks to the Troika and its northern Europe banker and investor friends.

To ensure Greece would not renege on the August 2015 deal, it would now also have to submit to vetoes by Troika representatives sent to Greece to oversee virtually all policy decisions made by Greece’s democratically elected Parliament or local governments. The Troika last year thus tightened its grip on Greece both politically and economically to ensure it would receive debt payments from Greece no matter how harsh the austerity terms.

The Greek government may have thought it had a debt deal, albeit a dirty one, last August 2015; but recent developments are now beginning to reveal it was only temporary. Worse is yet to come. The Troika grip on Greece is about to tighten still further, as revelations in recent weeks show Troika plans to renege on last year’s terms and demand even more draconian austerity measures. Leading the Troika attack on Greece once again is the International Monetary Fund, the IMF, one of the Troika’s three institutional partners.

IMF Secret Plans to Impose Further Austerity on Greece

This past April 2, 2016, Wikileaks released transcripts of a secret teleconference among IMF officials that occurred on March 19. In it, leading IMF directors expressed concern that discussions between Greece and the IMF’s Troika partner, the European Commission, on terms of implementing last August’s deal were going too slowly. The Eurozone and Greek economies have been deteriorating since last August. Still more austerity would thus be needed, according to the discussions among the IMF participants in the teleconference. And to get Greece to agree, perhaps a new ‘crisis event’ would have to be provoked.

The original August 2015 deal called for Greece to introduce austerity measures that would result in a 3.5% annual GDP budget surplus obtained from spending cuts, tax hikes, and public works’ sales needed to make the debt repayments to the Troika. But the IMF’s latest forecast for 2016 is that Greece in 2016 would have a -1.5% GDP budget deficit, not a 3.5% budget surplus. And 2015, for which numbers are not yet available, was probably even worse. Getting from -1.5% or worse to 3.5% was thus virtually impossible, according to the IMF discussants on March 19, and therefore additional austerity measures were necessary.

According to the IMF, the additional austerity would have to occur in the form of ‘broadening the tax base’—a phrase typically associated with making households with lower incomes pay more taxes instead of just raising tax rates on the top income households. The IMF thus rejected taxing the rich further, and instead taxing middle and working classes more. In addition, still more pension cuts would also prove necessary, as well as other measures.

The IMF secret teleconference further revealed that the IMF was increasingly concerned that the European Commission, in the midst of discussions with Greece on the details of the implementation of the August deal with Greece, might agree prematurely to grant some kind of ‘debt relief’ to Greece. The IMF was strongly opposed to ‘up front’ debt relief. All talk of debt relief should be postponed for at least another two years, according to the IMF’s secret discussions.

The private teleconference also revealed the IMF was growing increasingly concerned that Greece’s major debt payment to the Troika due this coming July 2016 might not be paid. The default on the payment would come within weeks of a possible United Kingdom exit (Brexit) from the European Union, scheduled for a vote in the UK on June 23, 2016. If the UK exited, and Greece could not pay, it might raise renewed interest—the IMF feared—in a Greek exit (Grexit) as well as a UK ‘Brexit’. The IMF’s March 19 teleconference therefore raised the idea that further austerity should be considered and proposed on Greece and quickly, before the June 23 UK ‘Brexit’ referendum in that country.

The IMF’s April 15, Press Conference

The ‘firestorm’ over the leak of the IMF’s plans for new and more austerity for Greece, prompted public responses by Greece, as well as a clarifying press conference by the IMF’s European directors on April 15, 2016.

Greece’s prime minister, Alexis Tsipras, publicly replied, noting Greece was already undertaking “an ambitious reform of income tax and a major overhaul of the Greek pension system”—the former providing a revenue of 1% of GDP and the pension reform and even greater 1.5% by 2018. With pensioners carrying the greatest burden of the austerity terms, why should the very rich be given relief with more taxation imposed on the middle and working classes by ‘broadening’ the tax base—i.e. making it less progressive, Tsipras inquired?

Wolfgang Schaueble, hard line German finance minister, who led the forces imposing even more austerity on Greece in August 2015, responded that debt relief was “not necessary” and ruled out any debt relief whatsoever for Greece, in 2018 or at any time. Schauble added that IMF refusal to participate in the August 2015 Greek debt deal unless the terms of the deal were changed to suit the IMF (which did not sign the deal as yet), would collapse the 2015 deal altogether.

In the IMF’s press briefing of April 15, 2016 Poul Thomsen, head of the IMF’s European department, responded that the IMF could not participate in the bailout without debt relief in some form, but left the door open as to what debt relief actually meant. Thomsen repeated his proposal to “broaden the tax base” and not raise taxes further on the rich.

Behind the apparent Schauble vs. IMF disagreement is the implication that ‘debt relief’ would require some kind of what is called ‘haircut’ and reduction in interest and/or principal for those investors holding bonds issued by the Troika on Greek debt. That’s what Schauble and European bankers don’t want. The IMF thus assured that debt relief did not require ‘haircuts’.

The Meaning of the IMF’s New Attack on Greece

What the new developments reveal is that fractures are emerging within the Troika and the Euro elites in general over the Greek debt deal of last August, as Europe’s economy continues to falter. New crises have emerged in Europe, including the cost of refugee settlement and the great economic uncertainty associated with the possible UK ‘Brexit’ this June. Europe’s central bank monetary policies are also clearly failing in the face of a steadily slowing global economy.

At the same time, the IMF itself is facing additional challenges supporting an even worse economic crisis in the Ukraine, which it has also committed to bail out but which is collapsing faster than predicted. Meanwhile, on the horizon are growing stresses in emerging market economies that have accumulated $50 trillion in additional debt since 2009, which threaten to lay claims on the IMF in the not too distant future. The IMF is no doubt looking over its shoulder at even greater potential challenges than Greece.

In short, the deteriorating conditions in the global economy are beginning to converge, and the Troika, Europe, IMF are all feeling the heat as the economic temperature rises. Another debt crisis in Greece is inevitable. But it may occur at a juncture at which it appears the least of the economic problems facing the global economy.

Jack Rasmus is author of the recent book, ‘Systemic Fragility in the Global Economy’, Clarity Press, January 2016, and the forthcoming, ‘Looting Greece: The Emerging New Financial Imperialism’, Clarity Press, June 2016. He blogs at jackrasmus.com.

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