The German concept of liquidity
COMMENT: Previous posts have highlighted the profound influence of Prussian military theoretician von Clausewitz on the evolution, theory and practice of German power structure. We have also noted that the German insistence on austerity has had the effect of decimating the societies subjected to that doctrine and driving their populations in the direction of totalitarianism.
Recall that it was German chancellor Heinrich Bruning’s insistence on budgetary austerity that helped pave the way for the rise of Hitler.
As the European debacle continues, we are in a position to further evaluate the depth and scope of the social destruction stemming from it.
A recent report notes that Europe faces several “lost generations” as impoverished young people incur the damage resulting from “austerity.” Interestingly and significantly, large numbers of desperate, unemployed youth are seeking work in Germany.
Ultimately, this figures to have the effect of increasing the social stress and pressure on the German workforce, who will face increased and intense competition for available jobs. “Anti-immigrant” sentiment has proved an effective recruiting tool for the far right around the world.
The dire circumstances in Greece have fueled the rise of the Golden Dawn–a Greek neo-fascist party that successfully exploits the social chaos in that country to increase its ranks. Golden Dawn has begun actively recruiting among Greek expatriates who have moved to Germany in search of work.
The National Action Party, a Turkish fascist/nationalist party established a presence in the ’70’s and ’80’s among the “guest workers” in Germany. Golden Dawn may be attempting to re-create the success of the NAP.
Numerous posts and programs have discussed the European Monetary Union as the realization of the Third Reich’s goal of a German dominated economic union as a vehicle for world conquest.
Will the “lost generations” of Europe become the cadre for the successful rise of “Euro-fascism?” Is that precisely the goal of the Underground Reich and its economic foundation, the Bormann capital network? It would be foolish to overlook the possibility.
Recalling the theoretical tenets of von Clausewitz, what we are seeing is, quite literally, the continuation of war by other means.
. . . . The end of battle in 1945 had signaled the start of a new kind of war–a post-war. Germany’s classical military theorist, von Clausewitz, is famous for having declared that “war is the continuation of diplomacy by other means.” In dealing with a Germany which had gone to school with von Clausewitz for generations, we knew that, conversely, a post-war is the continuation of war by other means. Since Bismarck, wars and post-wars have formed a continuous series, changing the quality of the events only slightly from year to year, with no such thing as a clear distinction between heat of battle and calm of peace. This post-war of the German occupation was different from the “cold war” between the United States and Russia, which broke out at about the same time. The latter complicated the diagnosis, like a man getting typhoid fever and pneumonia at the same time. . . .
EXCERPT: Children across Europe are being driven into poverty by harsh government austerity and youth unemployment is soaring, threatening to create “lost generations” that could fire up a new continental crisis.
Global charity Caritas said on Thursday that around three out of every 10 children in Greece, Ireland, Portugal, Italy and Spain are in or have been pushed to the brink of poverty.
Greece said its youth unemployment had now exceeded 60%. Spain’s is above 50% and Portugal has just topped 40%.
Think tank Bruegel said the problem extended well beyond the debt-laden peripheral eurozone economies and could come back to reverse Europe’s slow recovery from financial crisis.
In a report, Caritas said eurozone countries that have received international loans — plus Italy, which hasn’t — are creating a huge class of poorly-educated and poorly-fed young people with low morale and few job prospects.
“This could be a recipe not just for one lost generation in Europe but for several lost generations,” Caritas said, citing the European Union’s own statistics.
While these countries’ future workers may suffer a loss of morale, qualifications and prospects, those that struggle through are likely to take their talents elsewhere.
Those with qualifications are already leaving in droves to seek work elsewhere, particularly in Germany where the number of Spanish and Greek jobseekers almost doubled during the first half of 2012.
Bruegel economist Zsolt Darvas said the relentless rise in youth unemployment not only destroyed morale at an important age of development but also threatened to reignite an economic crisis that appeared to be easing.
“This is not just a problem for these (peripheral) countries. This is a European problem,” he said. Thirteen of the European Union’s 27 member states have youth unemployment above 25%.
Since 2010, Greece, Ireland, and Portugal have received billions of euros in loans from the EU and the International Monetary Fund in return for spending cutbacks and tax rises. Spain has had its banks bailed out. . . .
... In 2010, 37.6% of children were at risk of poverty or exclusion in Ireland and 28.9% in Italy. Figures for 2011 are not available.
Children are defined as nearing poverty and exclusion if they live in families with 60% or less the median income or have parents with little or no employment or lack basic essentials such as protein-rich foods, heating and clothes.
Caritas said governments must ask themselves what these trends will mean for children in the long run.
Studies show children from poor households are more likely to underperform at school and to struggle to find or keep a job.
“They are looking at a future where the prospect of unemployment is stretching out ahead of them,” de Burca said.
EXCERPT: German and Greek rightwing extremists have been forging close contacts in Germany in an attempt to strengthen their power base in Europe, according to German officials.
Members of the Greek neo-Nazi party Golden Dawn are believed to have set up a cell in the southern German city of Nuremberg with the aim of recruiting young Greeks who have flocked to the country in search of work.
Greek community leaders in Germany have condemned the arrival of the party, also known as Chrysi Avgi, and called on authorities to clamp down on a group that they said had shown its readiness to use violence in Greece and could attempt to do the same in Germany.
Golden Dawn, which has close to 20 seats in the Greek parliament, has described the move on its website as the “answer of expat Greeks to the dirty hippies and the regime of democratic dictatorship in our homeland”.
In a statement, the Bavarian office for the protection of the constitution said: “We are keeping an eye on developments.”
It said Golden Dawn had “an international network of contacts, including contacts with neo-Nazis in Bavaria. These contacts are cultivated via mutual visits as well as at meetings at rightwing extremist events in Europe.”
It confirmed that members of Golden Dawn and far-right German groups had organised reciprocal visits to each other’s countries as well as meeting at rightwing extremist meetings outside Germany and Greece. . . .
... An estimated 380,000 Greeks live in Germany, mainly in the industrial Ruhr valley, though the actual figure, as – many do not register with the authorities – is believed to be nearer 900,000. Roughly-speaking in modern times they have come in three waves – after the second world war and then during the Greek dictatorship, when many Greek communists were given refuge, particularly in East Germany.
The third wave is occurring now as many, particularly young Greeks, come to Germany looking for work and to escape unemployment at home.German neo-Nazi groups, such as the Bavarian-based Freies Netz Süd, have been following the political successes of Chrysi Avgi for some time, making open reference to the Greek party on their websites.
The anti-Nazi organisation Nuremberg Union Nazi Stop said it would be monitoring Golden Dawn’s activities in Germany.
Over the past months Golden Dawn, which is widely considered to be racist and antisemitic, has been held responsible for numerous attacks on foreigners in Greece. The party, whose symbol resembles the swastika, won 18 parliamentary seats in last year’s election. Its popularity currently stands at around 12%. . . .
Even MORE Fun With Science: Earthquake Weaponry
And another country facing imploding banks and looming austerity negotiations appears to have decided that voting for the right-winger is the way to go:
Given that the ECB’s board members appear to be demanding state asset privatizations it’s also noteworthy that Anastasiades has been able to successfully sell himself as the candidate best able to negotiate bailout terms with Europe’s leaders. After all, he’s been endorsed by Merkel. That’s, uh, kind of a “red flag” when you’re selecting a bailout negotiator:
An endorsement by Merkel may seem like an unlikely badge of honor in a country facing bailout terms, but it was Nicas Anastasiades’s dad that recently received an even more unlikely badge of honor. Chrysanthos Anastasiades, it turns out, was one of the leaders of the 1974 coup that trigger the Turkish invasion and divided the island. He was also given an award from the “Friends of Police” for a lifetime of service. This is an example of why reunification is normally the big issue of the day when the economy isn’t melting down: Coups can create complicated historical memories:
So Cyprus is about to elect the son of a coup-leader that’s been backed by Angela Merkel in order to extract favorable bailout terms austerity. And Cyprus just happens to have recently discovered perhaps hundreds of billions of dollars in natural gas reserves sitting off of its coast but the question who gets the rights to those reserves still needs to be worked out. Good luck with those austerity negotiations!
Austerity: “There is no way back, there is no alternative...”
Merkel’s cabinet just lowered barriers to the hiring of foreign workers. There appears to be a particular interest in foreign labor for technical jobs ranging from those requiring vocational training to engineers so it looks like trickle-up austerity is migrating to Germany’s tech sector. One of the interesting socioeconomic experiments that we get to see unfold with the eurozone is the emergence of middle-income-guest-worker-nomics in a large union of nations that all have their own versions of long-term healthcare/retirement/social welfare systems. How all of those systems of handling long-term liabilities manage to function in future decades remains to be seen now that an entire generation of young skilled workers from the ailing economies are going to be spending a significant part of their careers working (and spending) in Germany. In the eurozone, economic “harmonization” requires a brain drain:
Let’s hope the eurozone figures out how to maintain social-welfare systems that can provide for a decent long-term social contract in a “free movement of labor” world soon or later because these were pressing questions for a growing number of guest workers in the eurozone for a while:
Well here’s some potentially good news coming out the eurozone for a change: Angela Merkel is citing Germany’s reunification as an experience the eurozone can learn from while trying to craft a policy to deal with the still-ailing economies:
Yes, it’s not a surprise that Merkel would draw lessons from the German reunification given the number of parallels between what a newly reunified Germany faced and what the eurozone faces. For instances, East Germany from forced to suddenly transition away from a communist basketcase and into a merger with a much stronger neighbor and an artificially strong currency. As Merkel indicated, many structural reforms were inevitable and East Germany come out of it stronger than before. The $1.9 trillion in state subsidies probably helped too:
So does this mean that we can expect a new path for the eurozone’s “structural reforms”? One that involves things like a tax a new pan-eurozone “solidarity surcharge” income tax to finance sustained subsidies for the austerity-stricken members? Eh, well, judging by history, probably not:
As Angela says, it’s “not about liking to whip people”. And that’s probably the best reform we can we can for at this point: austerity will continue, but it might ease up a bit to avoid complete collapse and austerity-advocates leaders will no longer derive enjoyment from it. It’ll be purely utilitarian whipping from here on out.
Huh, so it looks like the official idea of “harmonizing” the eurozone economies via mandated austerity so that they all reach a similar level of economic “competitiveness” that we keep hearing as the justification for the eurozone’s suicide pact is getting replaced with a new vision: An endless race to the bottom:
And we have a new record! This is a desired achievement, right? I mean, why else would the eurozone’s leaders continue to insist on self-reinforcing austerity if these record results were not what they desired?
It’s always nice when you see a plan work.
Harvard economist and prominent austerity advocate Niall Ferguson just stepped in it: He made an off-the-cuff remark asserting that John Maynard Keynes was gay and therefore didn’t care about the future because he had no kids. The implication of the comment is that Keynsian economics is unsustainable and will inevitably lead to our grandchildren living in some sort of Weimar-like hellscape, so only someone without children could possibly justify such an abominable idea like stimulus spending in an economic downturn. People without children, obviously, must not care about the next generation because all sane people care only about themselves or direct family because family carries lots of their personal magical DNA that god thinks is extra special.
Ferguson has since apologized and retracted his comments but it’s great example of one of the inherent pitfall is using finance to guide your society. If you screw up the implementation of that financial regime — whether it’s flawed economic theories or some ideological mandate — you just might end up advocating policies that destroy the lives of your grandchildren. And you might look like an asshole while you’re doing it:
The original Financial Advisor report on this incident fleshes outs Ferguson’s happy comments:
Since our individual DNA contribution gets cut in half for each successive generation (e.g. your kids have half your DNA, grandkids get a quarter, great-grandkids an eighth, etc), you have to wonder where the cutoff point is for people that care about the future only if it’s a future involving people with bits of their own special DNA. Would they still care about their great-great-great grandkids? Afterall, even if there are a lot of them scampering about each one will only have 1/32nd of their unique DNA specialness. Maybe he only cares about the “fittest” descendents that manage to have the have kids and pass on an ever-shrinking bit of that Niall Ferguson-specialness for one more round? One thing is clear, Niall cares about the future.
Perhaps there’s an austerity-related lesson in this research:
So research suggests that primates tend to be inherently except when they get too competitive and frustrated and their bad sides come out. And when times get tough they tend to band together. And these moral or immoral responses appear to be deeply wired into our evolutionar primate psychology. So basically, we should expect austerity policies to subconsciously turn us into asshole chimpanzees:
Remember, every economic contraction is an opportunity boom (if you happen to have lots of cash or credit lying around). And falling wages just means rising opportunities and higher quality! Down is up, pain is pleasure, and bad is good in the Paradise of the Elites:
This is a moment when it might be useful to point out that even Hoover’s Treasury Secretary Andrew Mellon, known for his “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate ... it will purge the rottenness out of the system.”-mentality, eventually rejected this kind of destructive and predatory mentality: