US austerity? US 'fiscal cliff' would trigger cuts of up to 5.1% GDP

 

US debt clock (Alex Wong/Getty Images/AFP)

Source: Russia Today

http://rt.com/business/news/usa-debt-ceiling-opinion-798/

As US public debt is about to rise over the limit of $16.39 trillion, analysts warn of the drastic damage it could create. Should the debt limit remain unchanged, the US economy will have to suffer austerity measures worth around $804.5 billion.

The debt held by the public skyrocketed to about 102% of the US GDP in 3Q 2012. The ratio was higher only once in the US economic history – in 1945 when it reached 113% of GDP.Meanwhile, a new so-called “debt ceiling”, that was last raised by Congress in January 2012 to $16.394trln, seems to be not high enough, as the figures show that the room for further borrowing is becoming increasingly narrower.

Earlier this week the US Treasury said the country was set to hit the debt limit by the end of the year. Meanwhile the Treasury has continued to unveil borrowing plans that include massive bond issues, which will inevitably drive the US economy deeper into debt.

If the US Congress does not raise the debt ceiling in the next few months, it would result in an “onset of austerity measures worth 5.1% of American GDP,” or $804.5bn, Margaret Bogenrief from ACM Partners told Business RT.

“The world currently sits on the precipice of a debt cliff – the rate of debt growth for the United States is, economically, unsustainable and must be curbed within the next 5 years,” added Bogenrief. A combination of increased taxes and limited spending would pave the way out of the debt hole for the US, the ACM Partners expert added.

While the need to curb the extravagance of the US – a nation of debt lovers – is clear, a collision of the economic and political reasoning is now one of the main stumbling blocks, according to Bogenrief. Economically, continued growth of US debt will keep on weighing down and destabilizing the American economy. But politically, lower Government spending and higher taxes would not be popular among US citizens.

Also, there’s “a collision between what Americans say they want versus what they prefer in reality – it’s easy to say we need to cut spending and raise taxes – as long as we cut spending allocated to other people while raising other people’s taxes,” Bogenrief concluded.

While allowing a broader opportunity for increased consumption, excessive borrowing can pose a real economic threat long term, Max Wolff, a NYC-based economist, added to Business RT.

“Consistent US debt growth is a short term boom to the US and global economies. It allows greater growth and demand now in exchange for increased financial fragility and lowered growth and demand in the future. This is the essenece of debt. Debt moves purchasing power through time. It is sustainable when it pays for greater growth in incomes in the future. If this fails, it is very dangerous,” the economist explained.

“Some amount of borrowing is necessary for any industrialized economy. For the past four years, however, the United States has averaged $1trln +in annual deficits – the growth in debt is unprecedented in American history, unsustainable, and has no easy answer in sight,” Bogenrief concluded.

 

Greek police, firefighters, coast guards, medics protest against cuts

 

Greek police officers, firefighters, and coast guards protest outside parliament during an anti-austerity demonstration in central Athens on November 1, 2012.

Source: Press TV

http://www.presstv.ir/detail/2012/11/01/269989/1000s-of-greeks-hold-demo-against-cuts/

Thousands of Greek police officers, coast guards, firefighters, and medical professionals have held demonstrations to protest against the government’s austerity measures.

The protesters took to the streets in the capital Athens on Thursday, Reuters reported.

Thousands of police officers and coast guards from various Greek regions marched to parliament to protest against salary cuts expected to be included in a new austerity bill.

Next week, Greek Finance Minister Yannis Stournaras is likely to send the parliament a bill of labor reforms, which includes the officers' salary cuts.

In protest to the cuts, the police officers and the coast guards also handed out bowls of bean soup to the needy.

"[We say] 'No' to modern slavery. Our rage is overflowing. They lied to us again; those pre-election promises became dust after the elections, and will lead us to new medieval times," said Dimitris Sarantakis, the president of the Panhellenic Coast Guard Officers' Federation.

"Even if these measures pass the way they have arranged them, we will overturn them because we have not only reached our limits, we have now surpassed our limits," said Dimitris Vogiatzis, the president of the Police Officers' Federation.

A large number of Greek firefighters chanting anti-austerity slogans also marched on the parliament.

Earlier in the day, public hospital staff including doctors, nurses and ambulance drivers, walked off the job and staged a demonstration outside Greek Health Ministry headquarters. They said austerity cuts have weakened citizens' health and made their jobs more difficult.

They carried banners reading, "Austerity measures are bad for your health" and "Free public health care for all".

Greece has been at the epicenter of the eurozone debt crisis and is experiencing its fifth year of recession, while harsh austerity measures have left about half a million people without jobs.

One in every five Greek workers is currently unemployed, banks are in a shaky position, and pensions and salaries have been slashed by up to 40 percent.

Greek youths have also been badly affected, and more than half of them are unemployed.

The long-drawn-out eurozone debt crisis, which began in Greece in late 2009 and reached Italy, Spain, and France in 2011, is viewed as a threat not only to Europe but also to many of the world’s other developed economies.

Also on Thursday, a Greek court ruled that some of the spending cuts needed to secure more bailout funds for the near-bankrupt country are unconstitutional.

The Court of Auditors, which examines Greek laws before they are presented to parliament, said planned austerity measures such as raising the age of retirement to 67 and reducing pensions by 5 to 10 percent, could be against the constitution.

The court said the pension cuts for a fifth time since May 2010 violated many constitutional provisions, including the principles of individual dignity and equality before the law.

'Democracy kidnapped!' Spanish protesters surround Congress in Madrid

Source Video: Russia Today

Spain's "indignant" protesters take part in a demonstration to decry an economic crisis they say has "kidnapped" democracy, on September 25, 2012 in Madrid. (AFP Photo / Dominique Faget)

Source: Russia Today

Thousands of activists have begun to congregate in Madrid’s Plaza de Neptune, 100 meters from the Congress building, to protest Spanish austerity measures. The demonstrators pledged to march around the building, and called for new elections.

Watch the protests LIVE

Demonstrators waved banners with the slogan ‘No’ written on them, in reference to the austerity policies of the Spanish government, but so far the protest has been peaceful.

Protesters said that today is a key day to level criticism against politicians and the Spanish government. The city stationed armored police vehicles bumper-to-bumper around the parliament building, and announced that around 1,300 police would be deployed to counter the protesters.

The organizers of the protest dubbed their movement ‘Surround Congress,’ and expressed hopes that thousands would turn out. The protestors called themselves ‘indignants’ and claimed that their democracy had been ‘kidnapped,’ calling for new elections and rallies against the austerity measures enacted by Mariano Rajoy’s government.

Some 200 demonstrators gathered near the city’s main railway station chanting “Rescue democracy,” and “This is not a crisis, it’s a swindle.”

Carmen Rivero – a 40-year old photographer who travelled overnight by bus from the southern city of Granada – said, “We think this is an illegal government. We want the parliament to be dissolved, a referendum and a constituent assembly so that the people can have a say in everything.”

Another 100 protesters were scattered across the city’s main square, the Plaza de Espana.

“This is not a real democracy. This is a democracy kidnapped by the parties in collaboration with the economic powers and the people have no say in it,” said Romula Barnares, a 40-year-old artist wearing sunglasses with a dollar sign on one lens and a euro sign on another.

But Miguel-anxo Murado, a journalist and writer, told RT that he thought their demands are too vague and that they would not be successful, “it seems that they are back with the same very vague and ambitious platform and in-fact they have been over shadowed by a different constitutional challenge, which is for the independence movement in Catalonia, which is more likely to change the constitution, although in a different way, so I’m afraid they will probably not have a huge success today.”

Spain is in the middle of its second recession in two years, and faces a 25 percent unemployment rate.

Madrid introduced the controversial austerity measures in a gesture meant to show that it intends to fix its debt and budgetary shortfalls. The European Central Bank granted Spain a 100 billion euro rescue loan for its banks, but the country has not decided whether to seek another bailout.

Europe’s financial leaders are pleading for Spain to reduce volatility in its markets by deciding whether or not to request the second loan.

During a September 15 protest, waves of some 50,000 anti-austerity demonstrators converged in downtown Madrid, blowing whistles and hoisting banners that read, “They are destroying the country, we must stop them.” Representatives from over 230 civic and professional organizations also turned out amid cries of “lies,” and “enough.”

People gather at the Plaza Espana square before taking part in a demonstration organized by "indignant" protesters to decry an economic crisis they say has "kidnapped" democracy, on September 25, 2012 in Madrid. (AFP Photo / Dominique Faget

Spanish protesters hold demo against new austerity cuts

People march during a demonstration against health and education cuts recently announced by the Spanish government, Madrid, Spain, Sunday, April 15, 2012.

Source: Press TV
http://www.presstv.ir/detail/236470.html

Thousands of protesters have taken to the streets of the Spanish capital of Madrid to protest the government’s planned spending cuts in the health and education sectors.

The protesters carried banners with anti-government slogans and chanted, “Mariano, Mariano you won’t make it to the summer,” referring to the country’s Prime Minister Mariano Rajoy.

”I’m here to protect my son’s health and education, it’s basic for any society to cover those needs,” Reuters quoted one of the protesters as saying on Sunday.

The demonstration comes following the government’s announcement to make new cuts in the health and education sector worth 10 billion euros.

“For the working classes, this means the destruction of all the rights acquired over the last 40 to 50 years. It’s going to come in chapters, one day one thing, the next another and the next another,” said Manuel Fernandez, one of the protesters.

Meanwhile, a recent poll in Spain’s daily El Pais showed that support for Rajoy had witnessed a dramatic drop in April, due to the planned spending cuts.

Battered by the global financial downturn, the Spanish economy dipped into recession in the second half of 2008, taking millions of jobs with it. Many believe that Spain has entered its second recession.

US House of Representatives approves plan to destroy Medicare, Medicaid and food stamps

Source: Global Research
http://www.globalresearch.ca/index.php?context=va&aid=30045

The US House of Representatives has adopted a budget resolution that calls for privatization of Medicare and the elimination of Medicaid, food stamps and many other federal entitlement benefits. The resolution is part of a bipartisan campaign to slash spending on social programs.

All but ten of the Republican majority in the House backed the resolution—and those ten wanted even bigger cuts. All Democrats voted against the resolution, while offering their own proposals that called for somewhat less drastic cuts in spending and token tax increases on the wealthy.

Not a single resolution was offered that called for increasing spending to meet social needs as the American economy staggers through a fifth year of economic slump and mass unemployment.

The budget was drafted by House Budget Committee Chairman Paul Ryan of Wisconsin, who last year offered the first-ever proposal for the complete abolition of Medicare. It passed the House but not the Senate.

This year’s resolution was even more sweeping and reactionary. It calls for $5.3 trillion in spending cuts over the next decade. Part of the savings would be used to reduce the federal deficit, but the bulk of them would go to reward the wealthy with new tax breaks, including abolition of the estate tax and the Alternative Minimum Tax, making the Bush tax cuts for the wealthy permanent, and lowering the top income tax rate from the present 35 percent to 25 percent.

The major spending cuts in the budget resolution are focused on programs for the poor and the lower-paid sections of the working class. According to a study by the Center on Budget and Policy Priorities, 62 percent of the $5.3 trillion in spending cuts come from “programs that serve people of limited means.” If implemented, the cuts would drastically increase income inequality and poverty.

The CBPP analysis found the budget provides for $800 billion in cuts for Medicaid, $1.6 trillion from repealing the expansion of Medicaid and subsidies for low- and moderate-income people, $134 billion in cuts from food stamps, and $463 billion from other programs for low-income individuals and families, including an estimated $166 billion from Pell Grants for low-income college students.

According to other accounts, the budget would cut 200,000 children from Head Start, deny food stamps or WIC food commodities to 1.8 million infants, children and pregnant or nursing women, cut transportation financing by up to $50 billion, and cut unspecified billions from federal employee pensions.

The resolution proposes to turn back the clock on federal programs by more than half a century, capping federal spending at 19 percent of gross domestic product, about the level that prevailed in the 1950s, before the establishment of Medicare and other social welfare programs adopted under the Johnson administration.

In order to accomplish this goal, the Ryan plan would raise the age of eligibility for Medicare from 65 to 67, and end Medicare as a federal entitlement for all those now younger than 55. Anyone who turns 65 after 2023 would be relegated to buying private health insurance with a government grant that would be capped, shifting costs to the individual.

Unlike last year, however, Ryan modified his Medicare plan slightly to obtain a Democratic co-sponsor, Senator Ron Wyden of Oregon. The Ryan-Wyden plan would give those under 55 the option to stay with traditional Medicare, but only under financing options that would make the federal program unviable.

As Washington Post columnist Ezra Klein noted, the Ryan plan establishes the identical mechanism for the elderly to purchase private insurance—state-run insurance exchanges—that the Obama administration has made the center of its healthcare reform program. Obama proposed this method to cut the cost of healthcare for the government and corporate employers. Ryan proposes the same means to cut the cost of providing healthcare for the elderly.

The other significant feature of the Ryan budget resolution is that it reneges on the agreement reached last August between the Obama administration and congressional Republicans, setting spending levels for the 2012 and 2013 fiscal years. The White House embraced significant cuts in discretionary spending in return for an increase in the federal debt ceiling. This raises the prospect of a new legislative deadlock over the adoption of appropriations bills for fiscal year 2013, and a partial shutdown of the federal government October 1, on the eve of the presidential and congressional elections.

The Obama White House mildly criticized the Ryan budget plan in language that all but begged for an agreement. Senior Obama adviser David Plouffe, appearing on multiple television talk shows last Sunday, reiterated the claim that the Republican resolution “fails the test of balance and fairness and shared responsibility.”

Adding just a touch of populist demagogy, Plouffe continued, “It showers huge additional tax cuts on the wealthy that are paid for by veterans and seniors and the middle class.”

None of the competing budget resolutions debated and voted on by the House Wednesday and Thursday, however, provided any serious alternative.

A proposal based on the Obama administration’s own budget numbers, offered by Republican Congressman Mick Mulvaney of South Carolina in order to ridicule it, was voted down by 414 to zero, without a single Democratic vote.

Three measures offered by various factions of the Democratic Party were all voted down—the Black Caucus budget was defeated 107-314, the Progressive Caucus budget 78-346, and a Democratic leadership budget 163-262.

Significantly, all of these budget resolutions adhered to the spending levels set last August in the bipartisan White House deal. In other words, the Democrats, even in their most liberal guise, accepted the budget cuts endorsed by Obama last year.

The House also defeated, by a vote of 136-285, an alternative to the Ryan budget resolution with even greater cuts, proposed by the Republican Study Group, a caucus of ultra-right and Tea Party members.

One other budget resolution was voted on, and despite its lopsided defeat, the measure was politically significant. A bipartisan group of right-wing Democrats and moderate Republicans proposed a budget plan based on the report of the Simpson-Bowles commission, which Obama appointed to devise a deficit-reduction program.

The resolution was overwhelmingly defeated, by 38 to 382, because few Republicans would vote for a resolution calling for tax increases on the wealthy, and few Democrats wanted to publicly support sizeable cuts in Medicare and Social Security in a bill that was certain to be defeated.

Nonetheless, the bipartisan measure indicated where a deal is to be had once the charade of the November elections is completed. Whatever the configuration of the two parties, in terms of control of the White House, Senate or House of Representatives, there will be a bipartisan deal to slash spending on the poor and working class, while preserving, with only token changes, the enormous tax boondoggles for the wealthy.

This will be presented to the American people, either by President Obama or his Republican successor, as a measure providing “equal sacrifice” or “shared responsibility” for the fiscal crisis of the federal government.

Patrick Martin is a frequent contributor to Global Research.

Global Research articles by Patrick Martin
http://www.globalresearch.ca/index.php?context=listByAuthor&authorFirst=Patrick&authorName=Martin

Spanish government reveals harsh budget cut plans for 2012

Spaniards protesting against the government’s new labor reform on March 29, 2012.

Source: Press TV
http://www.presstv.ir/detail/233840.html

The Spanish government has unveiled harsh budget cuts one day after a nationwide general strike against tough new labor reforms paralyzed the country.

Spain’s Deputy Prime Minister Soraya Saenz de Santamaria announced on Friday that the government plans to save more than 27 billion euros in its 2012 budget through freezing civil servant salaries and ministerial spending cuts.

"The ministries will see an average reduction of 16.9 percent ... there will be adjustments of over 27 billion euros through revenues and through spending," she added.

Madrid says the spending cuts are needed to reduce the country's deficit to 5.3 percent of gross domestic product (GDP) this year from 8.5 percent last year.

The Spanish government announced 15 billion euros in cuts in December. Prime Minister Mariano Rajoy warned that the country is facing a “very, very austere budget” in which billions more is expected to be cut.

On Thursday, anti-austerity strikers took to the streets of several cities across the country to protest against the government's tough new labor reforms, which facilitate lay-offs.

The labor Reforms, approved by Rajoy's government on February 11, allow Spanish companies to pull out of collective bargaining agreements and have greater flexibility to adjust employee schedules, workplace tasks and wages, as well as making it easier and less costly to fire workers.

Spain's unemployment rate hit a 17-year high of 22.85 percent at the end of 2011, giving the country the highest rate among the 27 EU member states.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking down millions of jobs with it. Analysts say Spain's economy is expected to enter into a new recession in the first two quarters of 2012.

Anti-austerity protests sweep across Europe

Thousands of Czech university students rally in central Prague on February 29, 2012 .

Source: Press TV
http://www.presstv.ir/detail/229280.html

Massive demonstrations across Europe have taken issue with the austerity measures adopted by the European governments against economic adversity.

The protests were held on Wednesday in the Czech Republic, France, Greece, Belgium, and Spain against government economic reforms aimed at dealing with the unprecedented debt crisis plaguing the European Union.

Trade union leaders gathered outside the European Council in Brussels, Belgium to demand an end to austerity measures.

In Spain, protests turned violent as police clashed with anti-austerity protesters in the country’s the second largest city, Barcelona. Police in riot gear beat the protesters with batons and a number of arrests were made.

Students have staged demonstrations and sit-in protests across the country to demand an end to Madrid’s austerity measures, labor market reforms, and police violence.

Thousands of Czech university students rallied in the capital Prague, slamming the country’s Education Ministry for introducing tuition fees and boosting the number of government representatives in academic bodies.

The Czech government says the reforms are necessary to boost educational standards and secure more funding.

In France, main unions gathered forces for a day of protest action against austerity measures being imposed across the European Union.

In Greece, unions staged nationwide walkouts hours after the parliament approved new spending cuts to secure a new EUR 130 billion (USD 170 billion) bailout package promised by international lenders and meant to prevent the country from going bankrupt.

The Greek and French protests are part of a day of action called by European labor organizations to pressure the leaders of the 27-member EU into adopting pro-growth measures when they gather for a summit in Brussels over Thursday and Friday.

The eurozone economy is heading into its second round of recession in just three years. The bloc’s last recession was in 2009, when its economy contracted by 4.3 percent.

The Europe plunged into financial crisis in early 2010.

Amid the debt crisis, the European Commission has predicted that the eurozone currency bloc faces double-dip recession while the wider EU economy stagnates in 2012.

S&P downgrades Greece's sovereign credit rating to selective default

Source: Press TV
http://www.presstv.ir/detail/229011.html

Standard & Poor's Ratings Services has downgraded Greece’s sovereign credit rating to 'selective default' in response to the country’s decision to involve the private sector in its comprehensive debt restructuring.

Greece’s move “constitutes the launch of what we consider to be a distressed debt restructuring,” the US ratings agency said on Monday.

Greece has become the first eurozone member in its 13-year history to be officially rated in default, down from its previous rating of ‘CC’.

However, S&P said that once the debt swap is concluded, it will likely raise Greece's sovereign credit rating to the 'CCC' category.

Greece has negotiated the biggest debt restructuring in history as it seeks to reduce national debt to 120 percent of gross domestic product by 2020, from 160 percent last year, and to meet the terms of a 130-billion-euro ($170 billion) international bailout.

The private sector involvement entails a “debt swap” which aims to slice 100 billion euros off more than 200 billion euros of privately held debt if all investors participate.

The Greek government said the move was expected and would not hurt the banking industry.

"This rating does not have any impact on the Greek banking system since any likely effect on liquidity has already been dealt with by the Bank of Greece," the Greek Finance Ministry said in a statement issued on Monday.

Greece has the highest debt burden in proportion to the size of its economy in the 17-nation eurozone. Despite austerity measures and the bailout funds, the country has been in recession since 2009.

German parliament approves second Greek bailout

German Chancellor Angela Merkel (C) casts her ballot during a session at the Bundestag in Berlin on February 27, 2012

Source: Press TV
http://www.presstv.ir/detail/228993.html

The German parliament has overwhelmingly approved the second bailout package for Greece to help the heavily indebted country stabilize and avert bankruptcy.

On Monday, German MPs voted 496 to 90, with five abstentions, to approve the 130-billion-euro (174.4-billion-dollar) rescue package.

Just before the vote, Chancellor Angela Merkel addressed the Bundestag, or lower house of parliament, warning the lawmakers of the consequences of not coming to Greece's aid.

"The risks of turning away from Greece now are incalculable," Merkel told the 591 MPs of the Bundestag.

"No one can assess what consequences would arise for the German economy, on Italy, Spain, the eurozone as a whole and finally for the whole world,” she added.

The parliament was certain to back the motion after two opposition parties -- the Social Democrats (SPD) and Greens -- said they would support the plan.

Despite the motion's approval, German skepticism about Greece remains.

"The Bundestag will in the foreseeable future be dealing with a third (rescue) package for Greece," said SPD member Peer Steinbrueck, a former finance minister, adding that only strong economic growth would stabilize Greece.

German Interior Minister Hans-Peter Friedrich has openly called for Greece to leave the eurozone, saying it would have a better chance to make its economy competitive if it was outside the monetary union.

According to an opinion poll released on Sunday, 62 percent of Germans opposed the new rescue package for Greece.

The poll was conducted by the Emnid institute for the newspaper Bild am Sonntag.

British Chancellor begs private sector for money

Source: Press TV
http://www.presstv.ir/detail/228926.html

Britain’s Chancellor George Osborne acknowledges that the country has run out of the much-needed money and cannot afford debt-fuelled tax cuts or extra spending.

The Chancellor made the stark warning ahead of next month’s budget, noting that “there was little the coalition government could do to stimulate the economy”, British media reported.

“The British government has run out of money because all the money was spent in the good years,” the Chancellor said adding “the money and the investment and the jobs need to come from the private sector.”

Osborne’s bleak assessment echoes that of Liam Byrne, the former chief secretary to the Treasury, who bluntly joked that Labour had left Britain broke when he exited the government in 2010.

Osborne is under severe pressure to boost growth, amid signs the economy is slipping back into a recession.

The Institute of Fiscal Studies has urged him to consider emergency tax cuts in the budget to reduce the risk of a prolonged economic slump.

But, the Chancellor has said he would stand firm on his effort to balance the books by refusing to borrow money.

“Any tax cut would have to be paid for,” Osborne said. “In other words there would have to be a tax rise somewhere else or a spending reduction.

“In other words what we are not going to do in this Budget is borrow more money to either increase spending or cut taxes”, added Osborne.

The Chancellor’s tough words were echoed by Liberal Democrat Jeremy Browne, the foreign minister, who warned that Britain faced “accelerated decline” without measures to tackle its debt and increase competitiveness.

“Britain’s market share in the world used to be dominant but was now in freefall compared with the soaring economies of Asia and South America. This situation has been becoming more acute for years.

It is now staring us in the face. So we need to take action”, he wrote in an article published by The Daily Telegraph.

US postal service to cut 35,000 jobs as mail plants close

Source: Press TV
http://www.presstv.ir/usdetail/228318.html

The U.S. Postal Service, which predicts an annual loss of $18.2 billion by 2015, plans to eliminate 5.4 percent of its workforce by closing almost half its mail-processing facilities to decrease costs.

The service plans to shut 223 of its 461 mail-processing plants by February 2013, Postmaster General Patrick Donahoe said in a telephone interview on Thursday. The closings will cut about 35,000 jobs, said David Partenheimer, a spokesman.

The service is shutting post offices and seeking congressional approval to end Saturday mail delivery as more people use the Internet to correspond and pay bills. Mail volume fell 6 percent in the quarter ended Dec. 31 and may drop 14 percent by 2016, led by declines in first-class mail, the most profitable, the Washington-based service said this month. Bloomberg

HIGHLIGHTS

The labor cuts will occur through attrition, said David Partenheimer, a spokesman. The service will eliminate about 30,000 full-time jobs with benefits. It will cut about 5,000 temporary positions, which include contract and part-time work and don't carry full benefits. sfgate.com

The Postal Service is in debt due to declining first-class mail volumes and a congressional mandate to prefund retirement healthcare benefits. moneycnn.com

Nearly every state is impacted and would lose a mail processing plant, according to the Postal Service list, which includes 14 in California, 12 in New York and 9 in Illinois. moneycnn.com

Mail processing plants closures can yield a particularly devastating toll on communities. A plant in Tulsa, Okla., slated to be consolidated, employs nearly 600 employees. moneycnn.com

The consolidations will affect four processing centers in Maryland: Cumberland, Easton, Gaithersburg and Waldorf. The Virginia sites are Lynchburg, Norfolk and Roanoke. washingtonpost.com

The cutbacks also mean the Postal Service would no longer be able to guarantee overnight delivery of some first-class mail. washingtonpost.com

Fitch drops Greek rating by two notches

People pass a begging man holding a cardboard reding' I'm hungry' in central Athens on February 21, 2012

Source: Press TV
http://www.presstv.ir/detail/228015.html

Fitch credit rating agency has further downgraded Greece from ‘CCC’ to ‘C,’ after the country said it may force losses on private creditors who do not voluntarily sign up to a debt deal.

The international agency said Wednesday that Greece's rating would drop further to 'restricted default' after the bond swap plan is completed and will be re-rated again "at a level consistent with the agency's assessment of its post-default structure and credit profile."

"The exchange, if completed, would constitute a 'distressed debt exchange'," Fitch said.

The bond swap deal with private creditors will see EUR 107 billion of Greece's debt held by banks and other private holders of government bonds written off.

According to Fitch, private bondholders will see a 53.5 percent cut in the nominal value of their credits, thus some creditors may not accept the deal voluntarily, meaning that Greece would adopt the collective action clauses (CAC).

CAC allows a supermajority of bondholders to agree to a debt restructuring that is legally binding on all holders of the bond, including those who vote against it.

On Tuesday, Eurozone finance ministers agreed to provide Greece with a new EUR 130 billion loan to help the heavily indebted country stabilize its debt-to-GDP ratio and avert looming bankruptcy.

Greece had earlier in the month approved the austerity cuts demanded by the troika of the European Union, the European Central Bank and the International Monetary Fund, which was required in order to unlock the new bailout package.

The announcement of the austerity measures caused days of violent demonstrations in Athens that led to tens of people being injured, more than 100 shops being looted and a number of buildings set on fire.

Greece has the highest debt burden in proportion to the size of its economy in the 17-nation eurozone. Despite austerity cuts and the bailout funds, the country has been in recession since 2009.

Eurozone ministers agree on 2nd bailout package for Greece

Eurozone finance ministers talk while attending a Eurogroup meeting at the European Union council headquarters, Brussels, February 20, 2012

Source: Press TV
http://www.presstv.ir/detail/227785.html

Eurozone finance ministers have agreed to provide Greece with a new bailout package to help the heavily indebted country stabilize its debt-to-GDP ratio and avert looming bankruptcy.

The long-awaited package worth 130 billion euros was sealed in Brussels on Tuesday morning after more than 12 hours of intensive negotiations.

The rescue loan is meant to bring down Greece’s debt to 120.5 percent of its gross domestic product (GDP) by 2020.

Eurozone officials had on Monday expressed concerns over how Athens could manage to reduce its debt, while imposing harsher austerity measures.

The deal, however, was vital for Greece’s coalition government to pay off a 14.5-billion-euro bond redemption payment on March 20. Athens risked going bankrupt without the rescue package as it did not have the necessary funds to make the payment.

Greece had earlier in the month approved the austerity cuts demanded by the troika of the European Union, the European Central Bank and the International Monetary Fund, which was required in order to unlock the new bailout package.

The cuts include a 22-percent reduction in the minimum wage, 150,000 civil service layoffs, and a 15-percent cut in supplementary pensions.

The announcement of the austerity measures caused days of violent demonstrations in Athens that led to tens of people being injured, more than 100 shops being looted and a number of buildings being set on fire.

Greece also implemented harsh austerity measures in return for a first 110-billion-euro bailout package received in 2010. Greeks have been turning up on the streets for anti-government demonstrations on numerous occasions since the austerity cuts were first implemented in early 2011.

The country has been in recession since 2009, despite the austerity cuts and the bailout funds, which are meant to stimulate growth for its troubled economy.

Greece’s debt stood at 161.7 percent of the GDP in 2011, which is the highest debt ratio in the eurozone. Moreover, the country witnessed its economy contracting by 7.0 percent in the fourth quarter of 2011. Unemployment currently stands at 20.9 percent in the European state. The Standard & Poor's credit rating agency rates Greece at CC, which is almost comparable to a default.

18 statistics that prove that the economy has not improved since Barack Obama became president

Source: Press TV
http://www.presstv.ir/usdetail/227771.html

Has the economy improved since Barack Obama became the president of the United States? Of course not. Despite what you may be hearing in the mainstream media, the truth is that when you compare the U.S. economy on the day that Barack Obama was inaugurated to the U.S. economy today, there is really no comparison. The unemployment crisis is worse than it was then, home values have fallen, the cost of health insurance is up, the cost of gas is way up, the number of Americans living in poverty has soared and the size of our national debt has absolutely exploded. Anyone that believes that things are better than they were when Barack Obama was elected is simply being delusional. Yes, things have stabilized somewhat and our economy is not in free fall mode at this point. But don't be fooled. This bubble of false hope will be short-lived. The problems we are seeing develop in Europe will erupt into another full-fledged global financial crisis and economic conditions in the United States will get even worse. When that happens, what possible "economic solutions" will Barack Obama have for us? We never even came close to recovering from the last great financial crisis, and now something potentially even worse is staring us in the face. This is not a great time to have a total lack of leadership in Washington.

The following are 18 statistics that prove that the economy has not improved since Barack Obama became the president of the United States....

1] Today there are 88 million working age Americans that are not employed and that are not looking for employment. That is an all-time record high.

2] When Barack Obama was elected, the percentage of unemployed Americans that had been out of work for more than 52 weeks was less than 15%. Today, it is above 30%.

3] There are 1.2 million fewer jobs in America today than there were when Barack Obama was inaugurated.

4] When Barack Obama first took office, the number of "long-term unemployed workers" in the United States was approximately 2.6 million. Today, that number is sitting at 5.6 million.

5] The average duration of unemployment in the United States is hovering close to an all-time record high.

6] During the Obama administration, worker health insurance costs have risen by 23 percent.

7] Since Barack Obama has been president, the average price of a gallon of gasoline in the United States has increased by 90 percent.

8] Since Barack Obama has been president, home values in the United States have declined by another 13 percent.

9] Under Barack Obama, new home sales in the U.S. set a brand new all-time record low in 2009, they set a brand new all-time record low again in 2010, and they set a brand new all-time record low once again during 2011.

10] Since Barack Obama took office, the number of Americans living in poverty has risen by more than 6 million.

11] Since Barack Obama entered the White House, the number of Americans on food stamps has increased from 32 million to 46 million.

12] The amount of money that the federal government gives directly to Americans has increased by 32 percent since Barack Obama entered the White House.

13] According to the U.S. Census Bureau, the percentage of Americans living in "extreme poverty" is now sitting at an all-time high.

14] When Barack Obama first took office, an ounce of gold was going for about $850. Today an ounce of gold costs more than $1700 an ounce.

15] Since Barack Obama became president, the size of the U.S. national debt has increased by 44 percent.

16] During Barack Obama's first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.

17] During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

18] The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

Oh, but Barack Obama is promising that things will be much better very soon. Barack Obama is pledging that 2 million more jobs will be added to the economy in 2012.

Do you believe him?

Congress certainly seems to think that things will be getting better. Congress has reduced the maximum amount of time that the unemployed can receive unemployment benefits to 73 weeks. That change will go into effect later this year.

But there are still millions of very talented Americans that cannot find work after years of looking.

So what are they supposed to do?

A recent Business Insider article featured the story of Helen Hatat, a woman from southern California that has been unemployed since 2009....

She lost her job in public relationships in 2009 after more than 20 years of working in the entertainment industry, the Southern California resident said.

"When you don't have a job, you don't find a job, and when you don't have a job, you don't find a home," she said.

At first she tried moving into a homeless shelter, but left because they treated her "like garbage." Eventually she found a friend she could stay with, but this arrangement won't last forever.

"I've found you lose most of your friends, you know. If you have money people love you. If you don't have any money people hate you. They treat you like you are contagious."

As government finances get tight, things are going to get really tough for women like her.

When evaluating the health of the American economy, the key is not to focus on the short-term economic numbers. Sometimes they go up and sometimes they do down.

Instead, the key is to look at the long-term balance sheet numbers. When you do that, it quickly becomes apparent how appalling our economic decline has been.

The size of federal government debt is exploding, state and local governments all over the country are drowning in debt, our collective national wealth is decreasing and our ability to produce new wealth is also being reduced as our economic infrastructure is systematically gutted.

Of course all of the blame should not go to Obama. The truth is that the Federal Reserve has much more power over the economy than Obama does. But the American people are constantly told that the Federal Reserve is "not political" and that we should not criticize the Fed.

So it is kind of ridiculous that presidents are judged by the performance of the economy. Yes, Bush, Clinton, Bush and Obama have all greatly contributed to the mess that we are in, but they are not solely responsible for it.

In the end, however, the outcome of the next presidential election will probably be very heavily influenced by how the U.S. economy performs during the rest of 2012.

Sadly, as our economy declines it is bringing out the worst in many Americans. For example, "sugar daddy" websites are absolutely exploding in popularity. Young women that are hungry for cash are selling their "services" to sick older men who are willing to finance the lifestyles of these desperate young women in exchange for "companionship".

The following comes from a recent article in The Independent ....

In America's booming online dating market, few sectors are hotter than so-called "sugar daddy" sites, which help rich men to make "arrangements" with attractive and financially needy younger women. Between them, these specialist sites now account for 10 percent of the entire industry. That's no small beans, given that in the US the online dating business now generates profits estimated at $700m ($442m) per year and, according to the polling firm GlobeSpan, has helped just over one in five Americans to find their life partner.

As the economy gets even worse, millions upon millions of Americans are going to become extremely desperate and will do things for money that they never dreamed that they would do.

That is a very frightening thing.

America is changing, and not for the better.

You better get ready for what is ahead, because Barack Obama is not going to save you.

US in state of self-inflicted decline: Chomsky

legendary American academic Noam Chomsky (file photo).

Source: Press TV
http://www.presstv.ir/detail/226828.html

Renowned American academic Noam Chomsky condemns the concentration of wealth in the United States in the hands of the 1 percent, which he refers to as the “self-inflicted” American decline.

“The (US) policies are a failure for the large majority, the 99% in the imagery of the Occupy movements - and for the country, which has declined and will continue to do so under these policies,” Chomsky wrote in his article titled 'Losing' the world: American decline in perspective, part 1.”

From the 1970s, there has been a significant change in the US economy, as planners, whether private or state, shifted production off shores, partly due to the “declining rate of profit in domestic manufacturing,” then82-year-old senior academic noted.

He went on to say, “these decisions initiated a vicious cycle in which wealth became highly concentrated (dramatically so in the top 0.1% of the population), yielding concentration of political power, hence legislation to carry the cycle further: taxation and other fiscal policies, deregulation, changes in the rules of corporate governance allowing huge gains for executives, and so on.”

Whereas Chomsky maintained that “for the majority, real wages largely stagnated, and people were able to get by only by sharply increased workloads (far beyond Europe), unsustainable debt… creating paper wealth that inevitably disappeared when they burst (and the perpetrators were bailed out by the taxpayer).”

Meanwhile, the political system in the US has been increasingly torn up, he said, as “both parties are driven deeper into corporate pockets with the escalating cost of elections.”

This is “a serious problem for working people and the middle classes, and a real disaster for the most oppressed, African Americans, who have never escaped the legacy of slavery and its ugly aftermath,” Chomsky concluded.

Chomsky’s comments come against the backdrop of months of Occupy protests in the United States. The Occupy protests owe their inspiration to the Occupy Wall Street (OWS) movement, which began when a group of demonstrators gathered in New York's financial district on September 17, 2011 to protest against the excessive influence of big corporations on the US policies and the high-level corruption in the country.

EU, Chinese officials meet to discuss eurozone debt crisis

EU President Herman Van Rompuy (C) shakes hands with Chinese Premier Wen Jiabao beside EU Commission President Jose Manuel Barroso at the Great Hall of the People during their summit, Beijing, Tuesday, February 14, 2012.

Source: Press TV
http://www.presstv.ir/detail/226629.html

Senior EU officials and the Chinese Premier Wen Jiabao have held a meeting in the Chinese capital of Beijing to discuss the eurozone’s sovereign debt crisis.

“China and Europe are all round strategic partners. In the face of difficulties and challenges we ought to have mutual understanding and collaborate towards common goals,” China’s Premier Wen Jiabao said on Tuesday while addressing the conference, adding that this relationship would “bring into harmony the basic interest of both sides.”

EU President Herman Van Rompay, who also attended the meeting as one of Europe’s senior officials, called for an increased market access for European companies in China.

“The times we are living in are challenging … we became so inter-dependent that change in the growth rate in one of the two strategic partners has a direct and palpable impact on the other one. Our economic destinies are interlinked,” Van Rumpuy said.

The meeting was also attended by the president of the European Commission Jose Manuel Barraso, who said that a closer cooperation would benefit both sides.

Since early 2009, Europe has been grappling with a financial crisis which has forced a majority of the continent’s governments to adopt harsh austerity measures and tough economic reforms. The implementation of austerity cuts have often been met with violent street protests, with the latest in Greece on Sunday.

Scores have been injured in the anti-austerity demonstrations, and many people have been arrested.

Meanwhile, the Chinese foreign ministry spokesperson Liu Weimin on Monday called on “the European Union to resolve this (debt crisis) issue” as the continent is China’s largest trade partner.

Rating agency downgrades six EU economies

Source: Press TV
http://www.presstv.ir/detail/226588.html

Moody’s Investors Service has lowered the debt ratings of six European countries over concerns with the eurozone’s ongoing debt crisis and also changed its outlook on Britain and France's ratings to “negative.”

The ratings agency on Monday cut the credit ratings of Italy, Spain, Portugal, Slovenia, Slovakia, and Malta.

Moody's also warned its top ratings on three other countries -- Austria, France and the UK -- could be at risk.

"The uncertainty over the euro area's prospects for institutional reform of its fiscal and economic framework" was one of the factors in the decision, Moody's said.

Spain was downgraded to A3 from A1 with a negative outlook. Italy was also downgraded a notch to A3 with a negative outlook and Portugal was downgraded to Ba3 from Ba2 with a negative outlook, Moody’s said.

The company said Malta, Slovenia and Slovakia also received one-notch downgrades and still have negative outlooks.

Monday's credit downgrades follow similar European rating cuts by Fitch and Standard & Poor's.

S&P lowers rating of 15 Spanish banks

Source: Press TV
http://www.presstv.ir/detail/226558.html

Standard & Poor's (S&P) has downgraded the credit ratings of 15 Spanish banks, one month after reducing the Spanish government’s overall rating.

S&P announced on Monday that it had lowered its credit ratings on 10 Spanish banks by one notch and cut its ratings of another five by two notches.

"We expect the Spanish banking system's profitability to remain below its historical average over the medium term as banks continue to operate in an unfavorable economic and financial environment," the ratings agency said in a statement.

Spain's biggest bank, Santander, was lowered to A+ from AA-, while BBVA, the country’s second-largest bank, was reduced to A from A+.

S&P reduced its rating on Spain’s long-term debt to A from AA- on January 13.

Earlier on Monday, Fitch Ratings also cut the credit rating of Santander and BBVA and two other large Spanish banks, Bankia and Caixabank.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs.

Analysts say Spain's economy is expected to enter into a new recession in the first two quarters of 2012.

The worsening eurozone debt crisis has raised Spain's financing costs and created fears that the European country might have to seek an EU bailout like Greece.

Barack Obama: Let's steal 150m dollars an hour from our children

Source: Press TV (US Desk)
http://www.presstv.ir/usdetail/226583.html

Do you think that someone could steal 150 million dollars and get away with it? Well, the truth is that such a theft is taking place every single hour of every single day. The federal government is stealing 150 million dollars an hour from our children and our grandchildren and Barack Obama thinks that is a good thing. The new Obama budget projects a $1.33 trillion federal budget deficit for the 2012 fiscal year. That is significantly higher than the $1.15 trillion that the Congressional Budget Office was projecting because it includes a whole bunch of stimulus spending that the Obama administration plans to do. So let's do a little math.

When you divide $1.33 trillion by 365 days, you get 3.6438356 billion dollars. So on average, the United States will be adding more than 3.6 billion dollars to the national debt every single day during fiscal 2012. And when you divide $3.6438356 billion by 24 hours, you get 151.8 million dollars. So on average, the U.S. national debt will be going up by more than 151 million dollars every single hour during fiscal 2012 if Obama has his way. This is a theft from our children and our grandchildren that is so vast that it is almost unimaginable.

The 2012 budget deficit that the Obama administration is projecting would be equivalent to approximately 8.5 percent of GDP. We simply cannot afford to be running these kinds of outrageous budget deficits year after year.

At the moment, the U.S. national debt is sitting at a grand total of $15,355,838,921,022.16. That is an amount that is so large that it is hard to even put into words.

At this point our national debt is greater than 100% of our national GDP. We are on the road to national financial disaster and yet our politicians keep piling up debt at a rate that is absolutely mind blowing.

The Obama administration is projecting that budget deficits will go down "in the future", but that is what our politicians always do. They always promise that the budget picture will improve "down the road", but that never actually happens.

According to the Bush administration, we were supposed to be swimming in huge budget surpluses by now.

So how did that work out?

Our politicians always promise to cut spending, but it never actually comes to pass. We are always told that cutting spending would be too damaging to the economy "right now" but that they will definitely start cutting things later on.

For example, just check out this recent quote from White House Chief of Staff Jack Lew....

"The time for austerity is not today," Lew told NBC News "Meet the Press." "If we were to put in austerity measures right now, it would take the economy in the wrong way."

They always put budget cuts off for another day. They never want to do anything that could hurt the economy right now and threaten their chances in the next election.

The Republicans were the same way. Vice President Dick Cheney once famously said "deficits don't matter", and the Bush administration ran up horrific budget deficits.

Both political parties have let us down horribly.

Both political parties have voted over and over to steal gigantic mountains of money from our children and our grandchildren.

But our founders never intended for this to be the case. In fact, Thomas Jefferson once stated that if he could add just one more amendment to the U.S. Constitution it would be a complete ban on all borrowing by the federal government...

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Thomas Jefferson believed that it was fundamentally immoral for one generation to run up debts which must be paid back by future generations. Basically, he believed that such debts represented theft on a grand scale ....

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

But that is what we are doing today. We are borrowing gigantic mountains of money which we expect our children and our grandchildren to pay back.

We have come to think of this as "normal", but the truth is that this theft is absolutely disgusting and if future generations get the chance they will curse us for what we have done to them.

Somewhere along the way, we seem to have lost all common sense when it comes to government spending.

The truth is that all of this does not have to be complicated. The following is what Clint Eastwood recently said about our budget problems....

"It's such a basic thing," Eastwood said. "Your parents always tell you when you don't have a dollar in your pocket, you don't spend two dollars. And that's kind of a basic philosophy of life."

Doesn't that make sense?

So why are we being so stupid?

When Ronald Reagan was elected, the U.S. national debt was less than 1 trillion dollars.

We are absolutely drowning in debt, and yet the Obama administration wants even more spending.

Some of his plans for "extra spending" during fiscal 2012 were detailed in an article posted on CNBC ....

For more immediate job programs, the White House will urge $350 billion in short-term job spending, as well as a six-year transportation and infrastructure program that would cost $476 billion. He will ask for $60 billion to refurbish at least 35,000 schools and help state and local governments hire and retain teachers, firefighters and police officers.

This is insanity.

Thanks to all of this debt, a national financial nightmare is an inevitability at this point. As I have written about previously, if the U.S. government stops spending so much money we are doomed, and if the U.S. government continues spending so much money we are doomed.

The problem that we are now facing was once beautifully described by Ludwig Von Mises when he made the following statement ....

There is no means of avoiding the final collapse of a boom brought about by credit expansion.

The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

We are rapidly reaching the "final and total catastrophe" once described by Ludwig Von Mises.

We inherited the greatest economic machine in the history of the world from our forefathers, and we will be known as the generation that totally destroyed it.

Future generations will inherit a collapsed economy and the biggest debt in the history of the world.

But we all prance around like we are the smartest people that have ever existed on the face of the earth.

The rest of the world is laughing at us.

So why don't some honest politicians step forward and tell the American people that we need to stop spending so much money?

Well, first of all there are very few honest politicians on the national level.

Secondly, most of the money that our government spends is money that is taken from the pockets of some Americans and transferred into the pockets of other Americans. Large segments of our population have become absolutely addicted to getting government checks, and it would be political suicide for any politician to propose significant cuts to those checks.

Well over 50 percent of the federal budget is spent on social programs that put dollars directly into the pockets of the American people…

…The American people tend to love politicians that feed their addiction to government money....

If we keep going into so much debt, how long can our system possibly continue functioning?

Well, as we have seen in Greece, a government debt spiral will keep on going until the day that it simply stops working anymore.

A day of reckoning is coming. We don't know if it will be this year or next year or several years from now.

But it is coming.

Our politicians should be doing something about it, but they continue to spend money like tomorrow will never come.

What we are doing to our children and our grandchildren is absolutely immoral.

How in the world can we steal 150 million dollars an hour from them?

We are literally stealing the future from those that will come after us.

Do you think that they will thank us for that?

Dormant social unrest looming for UK

Source: Press TV
http://www.presstv.ir/detail/226563.html

The dizzying unemployment figures in Britain coupled with a recent analysis of the cause of summer unrest that put the country on a state of emergency show the government should brace for more such actions in the coming months.

Youth unemployment is at an all-time high in Britain while the rates of underemployment - that is working in a job capacity considered not good enough by the worker - have hit levels unseen since the Great Depression of the 1930’s.

The record unemployment levels mean a whole generation of young adults have their hopes for their futures dashed, raising fears that the resulting outrage could lead to a repetition of the unrest that put Britain in a state of emergency back in August 2011.

The social clashes have been recently found to be rooted in unemployment and poverty as well as in police brutality against certain groups of citizens.

A Citizens’ UK study from 700 local people in the northern London Tottenham area where the unrest began found that the police fatal shooting of a 29-year-old black man on August 6 was the trigger for the crisis.

However, the survey said the ethnic minorities’ mistrust of officers and public despair at the grave economic situation were responsible for the wave of protests that spread like wildfire to the whole country.

The minority groups told the inquiry that the police use of the controversial stop and search powers has been “excessive and disrespectful.”

The report also said some locals identified the disorder as a rare opportunity to take concerted action at a time when one fifth of all youths were jobless.

“It finally felt like all the people (were) coming together, united to do something, even if that something was ultimately destructive,” a 17-year-old participant in the survey said.

Britain has been an epicenter of social unrest for more than a year, which has featured massive protests every few months, beginning with the hundreds-of-thousands-strong tuition fee rallies in London in 2010.

The latest of such huge public actions were the November 2011 mass strikes by some two million public sector workers over the pension reforms and the closely-linked poverty factor, which triggered the August unrest.

With the factors fueling the public anger still in place, analysts believe the government should act to address the shortcomings or risk further trouble that could shake the foundations of the British society.