UK Austerity to cut 10 billion pounds in Social Benefits

By LUIS MIRANDA | THE REAL AGENDA | OCTOBER 9, 2012

The British Minister of Economy, George Osborne, said Monday that he intends to cut another 10,000 million pounds in spending by cutting the expenses on social benefits by 2016-17. Osborne said the goal is to reduce the deficit.

While speaking to a crowd of Tories, Osborne said that he wants to eliminate aid to large families and housing subsidies for people who are under 25 years of age.

These cuts would be in addition to the reduction of 18,000 million pounds taken from government obligations through the approval of a bill announced in 2010, which affected pensions and subsidies and has involved hundreds of thousands of layoffs in the public sector.

In his speech to the militants “Tories” who met during the annual Conservative Party gathering, the Minister of Economy insisted on saying that while the wealthiest people should bear the  brunt of the crisis, it is also “fair” that the cuts are distributed throughout the whole population, including citizens who are dependent on state-sponsored programs. Osborne refused in multiple occasions to impose higher taxes on the richest people in the UK.

He promised however, to limit the income of citizens receiving social benefits, as well as aid given to the unemployed, the young, single mothers, disabled and low-income families; so that these people do not receive anymore help than those who go out looking for work.

Osborne announcement of the reduction of social benefits was immediately received with criticism dependent groups, while the minister said he will rule out raising taxes on high incomes. How is it that the wealthiest will bear their brunt of the crisis then?

He also dismissed the idea of ​​a new tax on mansions of more than two million pounds (2.47 billion euros), an idea first introduced by the Liberal Democrats, partners in the coalition government.

The minister warned the people that he would combat tax evasion in order to increase revenues. He said that he would fight “mercilessly” tax evasion and penalize those who attempt to evade payment by way of accounting maneuvers.

“We will finish what we started,” Osborne said to his fellow party allies, as he reminded the crowd about the government’s plan to reduce the deficit and debt which he associated with cutting help to the neediest people, while the size of government remains the same.

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Massive Austerity causes Wave of Protests in Europe

Is this the beginning of a mass wake up against the tyranny and irresponsibility of the bankers and elites of the planet?

AP

Anti-austerity protests erupted across Europe on Wednesday – Greek doctors and railway employees walked out, Spanish workers shut down trains and buses, and one man even blocked the Irish parliament with a cement truck to decry the country’s enormous bank bailouts.

Brussels International Airport stop to a halt on September 26. (AP)

Tens of thousands of demonstrators poured into Brussels, hoping to swell into a 100,000-strong march on European Union institutions later in the day and reinforce the impact of Spain’s first nationwide strike in eight years.

All the actions sought to protest the budget-slashing, tax-hiking, pension-cutting austerity plans of European governments seeking to control their debt.

In an ironic twist, the march in Brussels comes just as the EU Commission is proposing to punish member states that have run up deficits to fund social programs in a time of high unemployment across the continent. The proposal, backed by Germany, is expected to run into strong opposition from France.

“It is a bizarre time for the European Commission to be proposing a regime of punishment,” said John Monks, general secretary of the European Trade Union Confederation, which is organizing the Brussels march.

“How is that going to make the situation better? It is going to make it worse,” Monks said in an interview with Associated Press Television News.

Unions fear that workers will become the biggest victims of an economic crisis set off by bankers and traders, many of whom were rescued by massive government intervention.

Several governments, already living dangerously with high debt, were pushed to the brink of financial collapse and have been forced to impose punishing cuts in wages, pensions and employment – measures that have brought workers out by the tens of thousands over the past months.

Transportation has been affected in Spain, where workers decided to protest against cuts. (AP)

“There is a great danger that the workers are going to be paying the price for the reckless speculation that took place in financial markets,” Monks said. “You really got to reschedule these debts so that they are not a huge burden on the next few years and cause Europe to plunge down into recession.”

In Spain, Prime Minister Jose Luis Rodriguez Zapatero’s Socialist government is under severe pressure because of the hugely unpopular measures put in place to save Europe’s fourth-largest economy from a bailout like one that saved Greece from bankruptcy.

The cuts have helped Spain trim its central government deficit by half through July but the unemployment rate stands at 20 percent, and many businesses are struggling to survive.

The strike Wednesday was Spain’s first general strike since 2002 and marked a break in the once-close relationship between unions and the Socialist government.

Whistle-blowing picketers blocked trucks from delivering produce at the main wholesale markets in Madrid and Barcelona. Strikers hurled eggs and screamed “scabs” at drivers trying to leave a city bus garage in Madrid.

The salary cuts for civil servants, pension reforms and new laws that make it easier for companies to fire workers were rushed into law quickly in Spain, without traditional negotiations between management and workers.

Greece, which had to be rescued by the euro-nations this spring to stave off bankruptcy, has also been forced to cut deep into workers’ allowances, with weeks of bitter strikes and actions as a result.

Bus and trolley drivers walked off the job for several hours while Athens’ metro system and tram were to shut down at noon. National railway workers were also walking off the job at noon, disrupting rail connections across the country, while doctors at state hospitals were on a 24-hour strike.

Greece has already been suffering from two weeks of protests by truck drivers who have made it difficult for businesses to get supplies. Many supermarkets are seeing shortages, while producers complaining they are unable to export their goods.

Truck drivers’ unions voted late Tuesday to continue their protests against plans to liberalize their tightly regulated profession, despite a government threat to force them back to work or cancel their licenses.

Greece’s government has imposed stringent austerity measures, including cutting civil servants’ salaries, trimming pensions and hiking consumer and income taxes. Several other EU nations are also planning actions.

In Dublin, a man blocked the gates of the Irish parliament with a cement truck to protest the country’s expensive bank bailout. Written across the truck’s barrel in red letters were the words: “Toxic Bank” Anglo and “All politicians should be sacked.”

Police arrested a 41-year-old man but gave few other details.

The Anglo Irish Bank, which was nationalized last year to save it from collapse, owes some euro72 billion ($97 billion) to depositors worldwide, leaving Irish taxpayers with a mammoth bill at a time when people are suffering through high unemployment, tax hikes and heavy budget cuts.

Many experts say, no matter what unions try, the towering government debt across the continent will force drastic changes in Europe’s labor situation.

“The party is over,” said former EU Commissioner Frits Bolkestein at the financial Eurofi conference in Brussels. “We shall all have to work longer and harder, more hours in the week, more weeks in the year, and no state pension before the age of 67.”

The unions say, however, the party was only there for society’s upper crust, and workers are being forced to pay the bills. The crisis has left 23 million people unemployed in Europe, Monks said.

Goldman Sachs Defrauded Investors, sent bailout outside U.S.A

by Karen Mracek and Thomas Beaumont

Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night.Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia.

 Asked the significance of the list, Grassley said, “I hope it’s as simple as taxpayers deserve to know what happened to their money.”

 He added, “We thought originally we were bailing out AIG. Then later on … we learned that the money flowed through AIG to a few big banks, and now we know that the money went from these few big banks to dozens of financial institutions all around the world.”

 Grassley said he was reserving judgment on the appropriateness of U.S. taxpayer money ending up overseas until he learns more about the 32 entities.

 SETTLEMENT: Goldman Sachs admits it misled investors, pays $550M fine

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JUDGEMENT: Final judgement of defendant

 Goldman Sachs (GS) received $5.55 billion from the government in fall of 2008 as payment for then-worthless securities it held in AIG. Goldman had already hedged its risk that the securities would go bad. It had entered into agreements to spread the risk with the 32 entities named in Friday’s report.

 Overall, Goldman Sachs received a $12.9 billion payout from the government’s bailout of AIG, which was at one time the world’s largest insurance company.

 Goldman Sachs also revealed to the Senate Finance Committee that it would have received $2.3 billion if AIG had gone under. Other large financial institutions, such as Citibank, JPMorgan Chase and Morgan Stanley, sold Goldman Sachs protection in the case of AIG’s collapse. Those institutions did not have to pay Goldman Sachs after the government stepped in with tax money.

 Shouldn’t Goldman Sachs be expected to collect from those institutions “before they collect the taxpayers’ dollars?” Grassley asked. “It’s a little bit like a farmer, if you got crop insurance, you shouldn’t be getting disaster aid.”

 Goldman had not disclosed the names of the counterparties it paid in late 2008 until Friday, despite repeated requests from Elizabeth Warren, chairwoman of the Congressional Oversight Panel.

 “I think we didn’t get the information because they consider it very embarrassing,” Grassley said, “and they ought to consider it very embarrassing.”

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 The initial $85 billion to bail out AIG was supplemented by an additional $49.1 billion from the Troubled Asset Relief Program, known as TARP, as well as additional funds from the Federal Reserve. AIG’s debt to U.S. taxpayers totals $133.3 billion outstanding.

 “The only thing I can tell you is that people have the right to know, and the Fed and the public’s business ought to be more public,” Grassley said.

 The list of companies receiving money includes a few familiar foreign banks, such as the Royal Bank of Scotland and Barclays.

 DZ AG Deutsche Zantrake Genossenschaftz Bank, a German cooperative banking group, received $1.2 billion, more than a quarter of the money Goldman paid out.

 Warren, in testimony Wednesday, said that the rescue of AIG “distorted the marketplace by turning AIG’s risky bets into fully guaranteed transactions. Instead of forcing AIG and its counterparties to bear the costs of the company’s failure, the government shifted those costs in full onto taxpayers.”

 Grassley stressed the importance of transparency in the marketplace, as well as in the government’s actions.

 “Just like the government, markets need more transparency, and consequently this is some of that transparency because we’ve got to rebuild confidence to make the markets work properly,” Grassley said.

 AIG received the bailout of $85 billion at the discretion of the Federal Reserve Bank of New York, which was led at the time by Timothy Geithner. He now is U.S. treasury secretary.

 “I think it proves that he knew a lot more at the time than he told,” Grassley said. “And he surely knew where this money was going to go. If he didn’t, he should have known before they let the money out of their bank up there.”

 An attempt to reach Geithner Friday night through the White House public information office was unsuccessful.

 Grassley has for years pushed to give the Government Accountability Office more oversight of the Federal Reserve.

 U.S. Rep. Bruce Braley, a Waterloo Democrat, said he would propose that the House subcommittee on oversight and investigations convene hearings on the need for more Federal Reserve oversight. Braley is a member of the subcommittee.

 Braley said of Geithner, “I would assume he would be someone we would want to hear from because he would have firsthand knowledge.”

 Braley also noted that the AIG bailout was negotiated under President George W. Bush, a Republican.

 He said he was confident that the financial regulatory reform bill signed by President Obama this week would help provide better oversight than the AIG bailout included.

 “There was no regulatory framework in place,” Braley said. “We had to put something in place to begin reining them in. I’m confident they will begin to be able to do that.”

Europeans are fed up with the elites and get to the streets

Spain’s parliament has passed a €15bn (£12.7bn) austerity package by just one vote, leaving the Socialist government nakedly exposed to popular fury.

Telegraph

Its glaring lack of political solidarity is the latest sign of rising resistance to deflation policies across the eurozone.

Prime minister Jose Luis Zapatero had to rely on the abstention of Catalan nationalists to push through public sector wage cuts of 5 percent this year and a freeze in 2011.

The 1930s-style pay squeeze was effectively imposed upon Spain by Brussels as a quid pro quo for the EU’s €750bn “shield” for euro zone debtors. It is a bitter climb-down for a workers party that vowed to resist salary cuts. Public sector unions have called a strike on June 8 to protest an act of “ultimate aggression” against the people.

The conservatives voted against the measures, prompting a fiery rebuke from finance minister Elena Salgado. “Unpatriotic, irresponsible, and hardly very European: one day they will pay for this,” she said.

The measures include cancellation of the €2,500 “baby cheque” and lower pension benefits. Mr Zapatero hopes to cut the deficit by an extra 1.6pc over GDP over two years, though unemployment is already 20 percent. The deficit will fall from 11.2pc in 2009 to 6pc this year.

Raj Badiani from IHS Global Insight said cuts may not be enough. The government is relying on growth projections that are “far too optimistic” to do the heavy lifting of the deficit reduction.

In Italy, the main CGIL trade union is launching two sets of strike in June to protest “unjust and unsustainable” cuts announced on Tuesday night, claiming that axe falls squarely on ordinary workers. “Those who earn over €500,000 won’t have to put up a single cent,” it said.

Premier Silvio Berlusconi said the sovereign bond scare sweeping the euro zone had forced Italy to build up a security buffer. “This crisis has been provoked by speculation and is like no other. These sacrifices are necessary to save the euro,” he said.

The €24bn austerity package (1.6pc of GDP) over two years aims to cut the bloated bureaucracy, chiefly by reducing grants to regional governments.

“Italy’s spending is out of control: this irresponsible system worked as long as we could devalue the currency,” said Mr Berlusconi. “