Farewell. The Flying Pig Has Left The Building.

Steve Hynd, August 16, 2012

After four years on the Typepad site, eight years total blogging, Newshoggers is closing it's doors today. We've been coasting the last year or so, with many of us moving on to bigger projects (Hey, Eric!) or simply running out of blogging enthusiasm, and it's time to give the old flying pig a rest.

We've done okay over those eight years, although never being quite PC enough to gain wider acceptance from the partisan "party right or wrong" crowds. We like to think we moved political conversations a little, on the ever-present wish to rush to war with Iran, on the need for a real Left that isn't licking corporatist Dem boots every cycle, on America's foreign misadventures in Afghanistan and Iraq. We like to think we made a small difference while writing under that flying pig banner. We did pretty good for a bunch with no ties to big-party apparatuses or think tanks.

Those eight years of blogging will still exist. Because we're ending this typepad account, we've been archiving the typepad blog here. And the original blogger archive is still here. There will still be new content from the old 'hoggers crew too. Ron writes for The Moderate Voice, I post at The Agonist and Eric Martin's lucid foreign policy thoughts can be read at Democracy Arsenal.

I'd like to thank all our regular commenters, readers and the other bloggers who regularly linked to our posts over the years to agree or disagree. You all made writing for 'hoggers an amazingly fun and stimulating experience.

Thank you very much.

Note: This is an archive copy of Newshoggers. Most of the pictures are gone but the words are all here. There may be some occasional new content, John may do some posts and Ron will cross post some of his contributions to The Moderate Voice so check back.


Sunday, October 23, 2011

One step forward, one step back

By BJ Bjornson

A couple of stories I came across yesterday that give me little hope that the Eurozone crisis is going to be resolved in anything approaching a reasonable manner.

The first is actually kind of positive, so long as you�re not heavily invested in European banks, the decision of the EU�s finance ministers to tell their banks to raise a lot of extra capital and write off a quite considerable chunk of Greece�s overwhelming debts.

EU finance ministers neared agreement Saturday on forcing banks to raise just over �100 billion to ensure they have enough cushion to weather further losses on their Greek bonds as well as market turmoil, a European official said.

The eurozone's 17 finance ministers have agreed that banks must accept substantially bigger losses on their Greek bonds, and a new report suggests that writedowns of up to 60 per cent may be necessary.

The report from Greece's international debt inspectors, which was discussed at the finance ministers' meeting Friday, says in order to keep a second international bailout of Greece to the �109 billion ($150 billion U.S.) level tentatively agreed upon in July, Greece's debt would have to be cut 60 per cent.

Even that would leave the country's debts at 110 per cent of economic output in 2020.

Not quite optimal, but with everyone worried about whether or not the banks can even absorb the losses for the stupid loans they made, it is at least a nod in the direction of having those who made the bad loans absorb the cost of their decisions should Greece go bankrupt.

Of course, any thoughts that the powers that be might be bowing to the inevitable and not continuing to look for ways to enrich themselves would be very much dashed by the second story, via LG&M:

German industry and politicians have attacked a proposed French warship deal with the near-bankrupt Greek government, according to the magazine Spiegel.

State-owned French naval shipyard DCNS is offering to deliver up to four new stealth frigates to the Greek Navy but defer the 300 million euro ($412 million) payments for five years and even allow the Greeks to hand the warships back, the German magazine reported Oct. 17. Under the deal, Greece will have the option of paying up after five years with a 100 million-euro discount, or even returning the warships to be used by the French Navy, the magazine says.

According to Spiegel, the rival German ThyssenKrupp group, which is also competing for the deal, has complained to the German government that the vessel purchase, in effect, will be co-financed by German taxpayers who are mainly footing the bill for restructuring Greece's huge national debts.

So while the French and German governments are leading the charge to force painful austerity measures on the Greek government over the quite fierce objections of the Greek people on one hand, they are working with their other hand to push unaffordable military toys on them. Whatever the sweet terms being offered for the purchase, I have little doubt that somebody will be making money off the deal.

Despite the nearly unprecedented mess the EU finds itself in thanks to the problems in the PIIGS, the leadership still seem to be treating things like a rigged game they can win. The crash is going to be ugly when it comes.


  1. That word "restructuring" covers a multitude of sins, doesn't it? I'm retired from the food business and if there is anything I know about it's baloney. And that's baloney no matter how you slice it.
    Credit once meant debt that was expected to be repaid over time in accordance with easy to grasp terms. But somewhere along the way credit has actually become another mechanism for creating cash. I think it started with credit cards. As long as retail vendors carried their own accounts receivable they always knew how much actual revenue they received from goods and services. Bookkeeping was straightforward. Among the earliest credit cards were department stores and others who soon discovered they could make as much or more by charging interest on the debts of their customers as they made on the markup difference over wholesale and other costs. Wow! That made sales more impressive than ever as the "profit" shifted from markup to interest on debt.
    Finally the day came when national credit cards replaced the store cars and immediately all credit transactions stopped being treated as receivables and shifted to cash sales. Voila! Cash got created with every transaction. From a monetary standpoint it was like planting yeast in bread dough. The loaf starts to rise as the sugar gets eaten and soon the size of the loaf is twice what it was at first. No extra weight, of course, but much bigger and a lot more appetizing.
    Thanks to the magic of modern banking variations on this illusion seems to know no limit. Credit creates money from nothing from the banking level, up through the investment and even national levels... then one day the bell rings and the world hits a big "oh-shit" moment as all at once everybody realizes there isn't any real money. Only debt. The amount of real money turns out to be minuscule compared with how much debt is outstanding.
    That realization is behind the desperate measures on the part of those at the top to amass as much as possible. At some level they realize that the "greater fool theory" is reaching critical mass and they are running out of fools. The credit nets being cast are coming in as empty as fishing boats after an oil spill. An mammoth economic catastrophe is unfolding and no one wants to face it.
    At the global level the old-fashioned way to deal with debt was to repay it with inflated dollars. The international impact was minimized by currency values that rose and fell as this or that country socked it to this or that foreign creditor.
    That last feature of global banking has been largely eliminated by imaginative measures such as quantitative easing and exquisitely crafted international trade agreements.
    Carry trading was and continues to be big business as currency traders skim small fortunes from what remained of international currency variations as a variety of fiscal policies have been aimed at keeping inflation down.
    But even that goose is about to stop laying eggs. The jury is still out on Iceland, but that little country may illustrate the best way back to the old days before the global economy was so interdependent. What we now call "sovereign debt" once popped up all over the world like fireworks on a holiday display. What the world is facing now, thanks to modern banking, is more like an IED about to explode.
    Go ahead. Restructure. Let's see what happens...

  2. Good Comment John,
    To quickly touch on one point, that old-fashioned method of dealing with sovereign debt by devaluing currency is at the heart of the Eurozone crisis. Iceland isn�t exactly a good example, since their debt crisis was more about refusing to back bank losses with sovereign credit, but they and another Nordic country, Sweden, do offer some lessons. Both are outside of the Eurozone, and so they were both able to use the old-fashioned method of a devalued currency to lower the value of whatever debt was held in said currency, increase the price of exports, and lower the cost of domestically-produced goods, thus helping shift trade balances into their favour and sparking local growth. As such, both Iceland and Sweden are now recovering nicely.
    The biggest problem facing Greece and the other PIIGS is that they�re all on the Euro, which they can�t deflate to deal with their local insolvency issues because its value is more closely tied to the more prosperous European core countries. They�ve basically been robbed of their safety valve and so have no way of getting out from under the massive debt they find themselves with. Dealing with the implications of this is pretty much what the whole crisis in Europe is now about.

  3. John Ballard has defined precisely the flaw in our modern economic model, in which 70% of our GDP is consumer spending, otherwise known as "consumption." When consumption is greater than production, the payment for goods exceeds the payment made to producers of goods, and the only way that can continue is either the continued buildup of debt or the creation of cash out of thin air. Since the former eventually reaches a limit, a point at which debt reaches an amount which cannot be repaid, we have adopted the latter, but in a ficticious manner by simply treating debt as if it were an asset. The mind games which went into that, which wound up with the unbelievably ridiculous term of "toxic asset" being coined, is simply astonishing, but somehow our financeers managed to do it.