February, 23 2012, 08:40am EDT
New Paper Argues Greece Should Consider Default and Exit From Euro
Looks at Greece’s Prospects With "Internal Devaluation"
WASHINGTON
A new paper from the Center for Economic and Policy Research (CEPR), "More Pain, No Gain for Greece: Is the Euro Worth the Costs of Pro-Cyclical Fiscal Policy and Internal Devaluation?" looks at Greece's recent experience with "internal devaluation" and finds that there is a high risk of continued prolonged recession. Updating the IMF's most recent projections, the authors find that Greece's GDP will have shrunk by 15.8 percent before it is forecast to begin growing. This would make Greece's loss of output among the worst of financial crises going back to the Great Depression. But the paper argues that Greek losses are likely to be even worse.
"The IMF has consistently underestimated the depth of the Greek recession," said Mark Weisbrot, CEPR Co-Director and lead author of the paper. "At some point, it becomes rational for Greeks to ask, is the euro worth this kind of punishment?"
The authors argue that the most important problem with the commitments that Greece has made to the European authorities is that its fiscal policy is pro-cyclical - that is, the government has been, and is committed to, tightening its budget while the economy is in recession. In 2010-11, the Greek government adopted measures to cut spending by 8.7 percent of GDP. This is comparable to cutting U.S. federal spending by $1.3 trillion.
Greek unemployment hit a record of 20.9 percent in November and the IMF forecasts that it will still be at 17 percent in 2016. Employment as a percentage of the working age population is now less that it was in 1994.
The Greek government has agreed to reduce public employment by 150,000 workers by 2015, to cut the minimum wage by 20 percent (and by 32 percent for those under the age of 25); and to weaken collective bargaining. All of this will have the effect of reducing living standards for workers and redistributing income upward.
The economic theory behind these changes is that of "internal devaluation," in which wage costs, lowered by the recession and high unemployment, are pushed down far enough so that the economy becomes more competitive internationally and can recover through exports. But after four years of recession and reaching record-high unemployment, there has still been no internal devaluation.
The authors also look briefly at the alternative of a planned default and exit from the euro, considering that such an outcome might happen in any case due to recurrent crises and continued recession. They look at the case of Argentina, which unsuccessfully tried an internal devaluation with a deep recession from 1998-2001, as a relevant comparison. After default in December 2001 and devaluation a few weeks later, the Argentine economy shrank for just one quarter (a 4.9 percent loss of GDP), but then recovered and grew by more than 63 percent over the next six years.
"Argentina's success after its default and devaluation show that rapid recovery is possible," said Weisbrot. "It was not, as many claim, a commodities boom, or even export-driven growth. Argentina recovered rapidly because it was able to abandon the kinds of destructive economic policies that Greece is following today, and switch to pro-growth policies."
The paper notes that Argentina reached its pre-recession GDP in just three years, while Greece is expected to take at least a decade to reach that benchmark.
The authors suggest that if the European authorities are unwilling to consider other alternatives, a planned default and exit from the euro is one alternative that should be considered.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.
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'Barbaric': Whistleblowers Further Expose Israel's Torture of Detained Palestinians
"What we know about Gaza is only tip of atrocity iceberg."
May 10, 2024
Three Israeli whistleblowers who worked at the notorious Sde Teiman prison camp in the Negev desert offered horrifying accounts of the treatment of Palestinians held there, tellingCNN that the facility's doctors have amputated limbs due to handcuffing injuries, allowed detainees' wounds to rot, and carried out vicious beatings.
A medic who worked at Sde Teiman's field hospital said that Palestinian detainees there are stripped "of anything that resembles human beings" and that the harassment and torture are done not to "gather intelligence" but "out of revenge" for the October 7 attacks.
Israel has detained thousands of Gaza residents since October, with many of them held under a recently amended law that empowers Israeli authorities to imprison people indefinitely without charge or due process. Human rights organizations have documented Israeli forces' brutal and degrading treatment of Palestinian detainees, including women and children.
At the field hospital, CNN reported, "wounded detainees are strapped to their beds, wearing diapers and fed through straws."
One Israeli whistleblower took a photograph of a room at the facility, which the person said was filled with a "putrid stench" and the sound of "men's murmurs" as they were "forbidden from speaking to each other."
"We were told they were not allowed to move," the whistleblower said. "They should sit upright. They're not allowed to talk. Not allowed to peek under their blindfold."
CNN finally sheds light on Israel's shocking and barbaric torture chambers: thousands of people, detained for months:
Strapped down, blindfolded, held in diapers: Israeli whistleblowers detail abuse of Palestinians in shadowy detention centerhttps://t.co/XuOL4IaFQS
— Nimer Sultany (@NimerSultany) May 10, 2024
The whistleblower accounts, according to CNN, "paint a picture of a facility where doctors sometimes amputated prisoners' limbs due to injuries sustained from constant handcuffing; of medical procedures sometimes performed by underqualified medics earning it a reputation for being 'a paradise for interns'; and where the air is filled with the smell of neglected wounds left to rot."
The testimony provided to CNN is consistent with details that a doctor at the camp's field hospital included in a recent letter to top Israeli officials. The doctor described unlawful and inhumane conditions; in a single week, the person said, "two prisoners had their legs amputated due to handcuff injuries, which unfortunately is a routine event."
A report published last month by Al Mezan, a Palestinian human rights organization, also documented "harrowing accounts of torture and inhumane treatment" of people detained by the Israeli military.
"A 19-year-old detainee told an Al Mezan lawyer that he was tortured from the moment he was arrested," the group said. "He described how three of his fingernails were removed with pliers during interrogation. He also stated that investigators unleashed a dog on him and subjected him to shabeh—a form of torture which involves detainees being handcuffed and bound in stress positions for long periods—three times over three days of interrogation. He was then placed in a cell for 70 days, where he experienced starvation and extreme fatigue."
Mohammed Al-Ran, a Palestinian doctor who was arrested by Israeli forces in December, told CNN that he was "stripped down to his underwear, blindfolded and his wrists tied, then dumped in the back of a truck where... the near-naked detainees were piled on top of one another as they were shuttled to a detention camp in the middle of the desert."
Al-Ran was held by Israeli forces for 44 days. Just before his release, he told CNN, "a fellow prisoner had called out to him, his voice barely rising above a whisper."
According to CNN: "He asked the doctor to find his wife and kids in Gaza. 'He asked me to tell them that it is better for them to be martyrs,' said al-Ran. 'It is better for them to die than to be captured and held here.'"
Omar Shakir, Israel and Palestine director of Human Rights Watch, said in response to the new reporting that "what we know about Gaza is only tip of the atrocity iceberg."
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Climate Movement Cheers Michigan AG's Plans to Sue Big Oil
"Pursuing this litigation will allow us to recoup our costs and hold those responsible for jeopardizing Michigan's economic future and way of life accountable," said the state attorney general
May 09, 2024
Advocates of holding fossil fuel giants accountable for their significant contributions to the climate emergency welcomed Michigan Attorney General Dana Nessel's Thursday announcement that she intends to sue the polluting industry.
"Big Oil knew decades ago that their products would cause catastrophic climate change, but instead of doing the right thing they lied about it," declared Richard Wiles, president of the Center for Climate Integrity. "The people of Michigan deserve their day in court to make these companies pay for the massive harm they knowingly caused."
Dozens of municipalities and attorneys general for the District of Columbia and eight states—California, Connecticut, Delaware, Massachusetts, Minnesota, New Jersey, Rhode Island, and Vermont—have already filed climate liability suits against Big Oil in recent years.
"Our 'Pure Michigan' identity is under threat from the effects of climate change," said Nessel, whose state was praised last year for passing clean energy legislation. "Warmer temperatures are shrinking ski seasons in the UP and disrupting the wonderful blooms of Holland's Tulip Time Festival. Severe weather events are on the rise."
"These impacts threaten not only our way of life but also our economy and pose long-term risks to Michigan's thriving agribusiness," she continued. "The fossil fuel industry, despite knowing about these consequences, prioritized profits over people and the environment. Pursuing this litigation will allow us to recoup our costs and hold those responsible for jeopardizing Michigan's economic future and way of life accountable."
The Democratic attorney general's office explained that she is "seeking proposals from attorneys and law firms to serve as special assistant attorneys general to pursue litigation related to the climate change impacts caused by the fossil fuel industry on behalf of the state of Michigan."
The Detroit Newsnoted that "Nessel took a similar tact in suing drugmakers for the opioid crisis, farming out much of the work to outside law firms in Michigan, Texas, and Florida."
According to the newspaper:
Nessel's office is working with other state departments to assess the costs associated with climate change, such as the cost of expanding storm water systems to handle flooding caused by stronger storms, responding to natural disasters, or supporting northern Michigan tourism economies dealing with dwindling ice and snow.
"This is going to be a massive discovery effort to find out exactly what our Michigan damages are now already and what can we expect to see in the future as a result of climate change," she said.
"I don't know that there's a bigger issue facing the state of Michigan than climate change," Nessel told the outlet. "We are talking about billions and billions of dollars in damages and we're already starting to see that on a day-to-day basis. We know this is only going to get worse."
The youth-led Sunrise Movement applauded Nessel's plans and asserted that U.S. President Joe Biden—who is seeking reelection in November—and the Department of Justice "must follow suit."
The group's call echoed similar demands that emerged last week in response to the U.S. Senate Budget Committee's hearing about a three-year investigation into "Big Oil's campaign of deception and distraction."
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Critics Compare Biden's Proposed Asylum Rule to 'Failed Trump-Era Policies'
"The Biden administration and Congress must not erect any more unjust barriers to asylum that will sow further disorder and result in irreparable harm," said one migrant rights advocate.
May 09, 2024
Immigrant rights advocates on Thursday slammed the Biden administration's proposal to fast-track the rejection of certain migrants seeking asylum in the United States.
On Thursday the U.S. Department of Homeland Security (DHS) proposed a rule that would empower immigration officials to disqualify certain asylum-seekers during their initial eligibility screening—called the credible fear interview (CFI)—using existing national security and terrorism-related criteria, or bars.
DHS said the rule would apply to noncitizens who have "engaged in certain criminal activity, persecuted others, or have been involved in terrorist activities."
"I urge President Biden to embrace our values as a nation of immigrants and use this opportunity to instead provide relief for the long-term immigrants of this nation."
Homeland Security Secretary Alejandro Mayorkas called the proposed rule "yet another step in our ongoing efforts to ensure the safety of the American public by more quickly identifying and removing those individuals who present a security risk and have no legal basis to remain here."
However, Greg Chen, senior director of government relations for the American Immigration Lawyers Association, argued that while "bars are an important feature of our immigration laws to ensure that dangerous individuals are not allowed into the country," they must be "accurately applied where warranted."
"This change could make the process faster by excluding people who would not be entitled to stay," he noted. "However, due process will likely be eroded by accelerating what is a highly complex legal analysis needed for these bars and conducting them at the preliminary CFI screening."
As Chen explained:
At that early stage, few asylum seekers will have the opportunity to seek legal counsel or time to understand the consequences of a bar being applied. Under the current process, they have more time to seek legal advice, to prepare their case, and to appeal it or seek an exemption. Ultimately to establish a fair and orderly process at the border, Congress needs to provide the Department of Homeland Security with the resources to meet its mission and also ensure the truly vulnerable are not summarily denied protection without due process.
Democratic lawmakers—some of whom held a press conference Wednesday on protecting undocumented immigrants in the U.S.—also criticized the proposal.
"As the Biden administration considers executive actions on immigration, we must not return to failed Trump-era policies aimed at banning asylum and moving us backwards," said Sen. Alex Padilla (D-Calif.), referring to former Republican President Donald Trump, the presumptive 2024 GOP nominee to face President Joe Biden in November.
"I urge President Biden to embrace our values as a nation of immigrants and use this opportunity to instead provide relief for the long-term immigrants of this nation," he added.
One year ago, critics accused Biden of "finishing Trump's job" by implementing a crackdown on asylum-seekers upon the expiration of Title 42—a provision first invoked during Trump administration at the onset of the Covid-19 pandemic and continued by Biden to expel more than 1 million migrants under the pretext of public safety.
Earlier this week, the advocacy group Human Rights First released a report detailing the harms of the policy on its anniversary. The group held a press conference to unveil the report and warn of the dangers of further anti-migrant policies.
"The interviews with hundreds of asylum-seekers make clear that the asylum ban and related restrictions strands in danger children and adults seeking asylum, punishes people for seeking protection, leads to the return of refugees to persecution, spurs irregular crossings, and denies equal access to asylum to people facing the most dire risks," Human Rights First director of research and analysis of refugee protection Christina Asencio said during the press conference.
"The Biden administration and Congress must not erect any more unjust barriers to asylum that will sow further disorder and result in irreparable harm," Asencio added.
On Wednesday, three advocacy groups—Al Otro Lado, the Civil Rights Education and Enforcement Center, and the Texas Civil Rights Project—sued the federal government on behalf of noncitizens with disabilities seeking more information regarding CBP One, the problem-plagued Customs and Border Protection app migrants must use to schedule asylum interviews at U.S. ports of entry.
"We have and continue to see migrants with disabilities facing unlawful discrimination and unequal access to the asylum process due to the inaccessibility of the app," said Laura Murchie, an attorney with the Civil Rights and Education Enforcement Center involved in the case.
"CBP needs to release these documents so we can advocate for and ensure compliance with the law so asylum-seekers with disabilities do not continue to be harmed by CBP's disregard for rights that are guaranteed by federal disability law," she added.
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