U.S. and European Economic Collapse

Britain Tries on a Big Heart in Times of Little Cash

December 31, 2011

The Christian Science Monitor - In Britain, necessity has become the mother of good intentions.

With a fiscal crisis requiring radical cuts in government, Prime Minister David Cameron has advanced a radical remake of society. In a paper unveiled Dec. 26, his coalition laid out a vision to rally more people to donate time, money, and skills to community work and to charities.

It’s a bold and untested idea, being watching closely in the equally budget-challenged United States, despite a strong American tradition of volunteering and giving. Can social action become the social norm — and even a substitute for many government services?

Critics of Mr. Cameron’s “big society” agenda — which includes pushing power to local governments — doubt if public generosity can be ginned up quickly, or at all, before massive budget cuts hit in a few months. Only 8 percent of people account for about half of all giving in the UK.

But an equal cynicism has set in about the cold, distant, and often ineffective nature of a central government dispensing services.

“Too many people thought, ‘I’ve paid my taxes — the state will look after everything,’ ” said the prime minister, a Conservative who took office last spring in a coalition government. “But citizenship isn’t a transaction in which you put your taxes in and get your services out. It’s a relationship — you’re part of something bigger than you.”

The proposals in his so-called Giving Green Paper (a longer “white paper” is due in the spring) are certainly innovative, to say the least. Here are a few:

• Let charities ask for a small donation every time someone uses a cash machine, uses a credit/debit card, or requests a government service such as a license.
• Use an eBay-style website to trade one’s time – “microvolunteering” – for a comparable service by someone else.
• Train 5,000 community organizers to build up neighborhood groups for social action.
• Set up a “national community service” for 16-year-olds to hone their skills through volunteering.
• Spend government money to match private donations to charities.
• Honor particularly big givers on national TV – such as lottery winners who give away their money – thus inspiring others to contribute.
• Provide incentives for businesses to let employees volunteer for good causes.

And the list goes on, like a catalog of social experiments.

Polls show people in the United Kingdom are more inclined to give money than their time to good causes (three-quarters give to charity while only about a quarter volunteer). Unfortunately, many charities are dependent on government for money. Cameron has proposed a special fund to wean them off this dole.

To turn government into the facilitator of giving, rather the giver, will take years. It is a cultural shift, bred of a financial crisis, but made easier by digital technology that can link people together and remind them of others’ needs. (About 58 percent of adults shop on the Internet, but only 7 percent of donors give money online.)

Shifting the care of society to more local and private control goes against the trend of the last century for bigger, more centralized government. But then that model has hardly solved social problems.

Britain’s grand experiment should be especially followed closely by America’s tea party movement, which pushes old-fashioned individualism. Cameron’s vision of “mutual responsibility” within a caring society better fits the trends of the 21st century.

Entire American Middle Class Will Fall Under the Poverty Line in Five Years

December 31, 2010

Press TV - The entire middle class Americans will fall under the poverty line in five years, as the gap between the rich and the poor is widening in the United States, says an investigative journalist.

“The middle class, I am afraid, in the United States is not going to exist in another five years and everybody is going to be driven down to the lower poor class,” said Wayne Madsen in a Press TV interview.

“They are going to be working, as many people do, maybe two or three minimum-wage jobs just to feed their families,” he emphasized.

“I think it is all part of the steady drift of the United States into a corporate fascist type society. We have seen that through history before, when very small elite has most of the wealth,” Madsen added.

The journalist quoted a Democratic Party economic advisor as saying that the US commercial real estate will witness a huge collapse in the near future.

“When we see the commercial real estate market collapse, it is going to make the residential real estate market pale, in comparison with that collapse, and this promise is just going to keep compounding,” Madsen further explained.

A new report by the Economic Policy Institute (EPI) has revealed that the gap between the rich and the poor in the United States is stretching, standing at its largest level since the survey began in 1962.

The report shows that the richest one percent of US households are 225 times richer than the average household.

According to the survey, the figure has almost doubled since the 1960s. The last survey, conducted in 2007, had indicated that the richest one percent had 181 times more money than the average household, whereas in the 1960s the figure reflected a 125-fold wealth gap between the richest and average household.

The global economic recession has also hit the average US citizens much harder, with their assets declining 41 percent since 2007. The rich only lost 27 percent in the same time period.

In 2009, the richest one percent had an average of $14 million, while the average household had average assets of around $62,200.

In calculating household assets, the EPI includes house ownership. The average US citizen has suffered far more from the impact of falling property prices than the rich, the report said.

Euro Has 1-in-5 Chance of Lasting Decade

December 31, 2010

Reuters - The euro currency area has only a one-in-five chance of surviving in its current form over the next 10 years because of competitive imbalances between its members, a leading British think tank said on Friday.

The Center for Economics and Business Research said Spain and Italy would have to refinance over 400 billion euros ($530 billion) of bonds in the spring, potentially sparking a fresh crisis within the 16-nation euro area.

"The euro might break up at this point, though European politicians are normally able to respond to a crisis," said CEBR Chief Executive Douglas McWilliams in a list of 10 forecasts for 2011.

Sovereign debt crises in Greece and Ireland have rocked euro nations this year, leading some commentators to speculate that Germany could eventually lose patience with bailing out its more profligate neighbors, triggering a split in the currency bloc.

Chancellor Angela Merkel has repeatedly stressed Berlin's commitment to the euro and she said so again in her New Year message to the country on Friday.

"The euro is the foundation of our prosperity," she said. "Germany needs Europe and our common currency. For our own well-being and in order to overcome great worldwide challenges. We Germans assume our responsibility, even when it is sometimes very hard."

McWilliams argued that the deeper imbalances between the euro zone's stronger and weaker economies, which have become increasingly apparent since the 2008 financial crisis, would undermine the project in the long term.

"I suspect that what will break up the euro will be the failure of most of the countries to take the tough medicine necessary to make their economies competitive over the longer term," McWilliams said:

"We give it only a one in five chance of surviving in its present form for 10 years. If the euro doesn't break up, this could be the year when it weakens substantially toward parity with the dollar," he added.

Estonia Joins Crisis-hit Euro Club

January 1, 2010

Reuters – Estonia switched smoothly to the euro on Saturday, brushing off worries about a crisis in the currency club which is likely to put off bigger eastern European nations from joining for up to a decade. The Baltic state of 1.3 million became the 17th euro zone country at midnight and was the first former Soviet state to adopt the euro, capping 20 years of integration with the West.

Estonia sees the change as marking the end of its struggles since a 2009 recession lopped 14 percent off its output. It hopes to entice investors by removing fears of devaluation and make borrowing more secure for its people, many of whose mortgages are already in euros from top Nordic banks.

"It is a small step for the euro zone and a big step for Estonia," said Prime Minister Andrus Ansip, who was the first to take euros out of a specially installed cash machine.

"We are proud to be a euro zone member state."

The central bank, whose governor will now help decide euro zone interest rates, said the changeover was smooth.

"The money reached ATMs and retail stores in time at the end of the year," said deputy central bank head Rein Minka.

Estonia will be the currency club's poorest member but its debt and deficit levels -- the cause of the crisis for some euro zone members -- are among the lowest in the bloc.

In economic terms, the single currency bloc will barely notice the addition -- Estonia's GDP is 0.2 percent of the euro zone's 8.9 trillion euros.

Poland, Hungary and other eastern European EU states are skeptical about joining the euro. They have all promised to join one day but want to see how the debt problems of Ireland, Greece, Spain and Portugal are solved. They also fear that losing flexible exchange rates will make them less competitive and less able to fight financial crisis.

Polish central bank governor Marek Belka told newspaper Super Express Poland would join when there was "order" in the euro zone. "In the euro zone there are dramatic things happening, so why rush?" he said.

Czech Prime Minister Petr Necas has said the euro would not be to the country's advantage for a long time. Economists say the larger eastern EU nations may now not join before 2019-2020.

German Chancellor Angela Merkel and French President Nicolas Sarkozy used New Year addresses to show support for the euro.

"The euro is the foundation of our prosperity," said Merkel. "Germany needs Europe and our common currency ... We Germans assume our responsibility, even when it is sometimes very hard."

With a similar history of Nazi and Soviet occupation, all three Baltic states made joining Western structures their goals and joined NATO and the European Union in 2004. Latvia and Lithuania hope to adopt the euro in 2014 and have had their currencies pegged to the euro for years.

The kroon will be converted at the rate of 15.6466 at which the currency was pegged to the euro. They will circulate together as legal tender for two weeks.