COMMENT: Standard & Poor’s recent downgrade of eurozone countries’ credit ratings leaves us with much to ponder:
- Germany’s credit rating remained at triple‑A.
- The McGraw family–owners of S & P–are decades-long power elite associates of the Bush family.
- As noted by Paul Krugman (and the vigilant “Pterrafractyl”) S & P’s own analysis warns that the “continued austerity” promised by Angela Merkel was very likely to make things worse for the countries that had their credit downgraded.
- Maintaining Germany’s triple‑A rating in the short run is likely to increase Germany’s influence over the EU and over the eventual fate of the Euro.
- The Euro will continue to be a weak currency, thereby increasing Germany’s already robust export economy.
- With a collapse of the Euro, the global economy would be thrown into chaos, thereby motivating political and economic movers and shakers around the world to go along with Germany’s political will in this regard.
- In light of the above, we must not lose sight of the political and economic ties of the Bush/McGraw milieu to The Underground Reich and the Bormann capital network and the dominance of that network over the German corporate economy.
- Paul Krugman characterizes Merkel’s vow for more austerity (“Austerereich”) as continuing down the road to nowhere. It is not a road to “nowhere”–it is a road toward German imperialism. The Euro was never intended as a vehicle for mutual economic benefit, but rather as a vehicle for the realization of the Third Reich’s goals for European and world domination. (Those goals were first envisioned by Friedrich List. BTW–the German word for Austria is “Osterreich.”)
“S & P Got France Right, Germany Wrong: Opinion” by Peter Morici; The Street; 1/16/2012.
EXCERPT: Standard & Poor’s was correct to downgrade the credit ratings of France and seven other eurozone governments but wrong to affirm Germany’s triple‑A rating.
Profligate government spending surely caused many problems now besieging Mediterranean and French governments, but investors understand austerity alone won’t save them from default, and the costs of refinancing and insuring sovereign debt have risen significantly.
Slashing government spending and raising taxes are pushing the Club Med and French economies into deep recessions, and tax revenues will not be enough to meet deficit reduction goals.
Only rapid improvements in exports could get those economies going, but proposed labor market reforms will not improve competitiveness quickly enough. And those reforms will be tough to implement with unemployment at more than 10% or 20%.
Sooner or later, Greeks, Spaniards and Italians will ask why — if the euro was supposed to boost prosperity — are wages falling, taxes rising and is unemployment so high.
Political upheavals will usher in governments promising to quit the euro and remark sovereign debt to reinstituted national currencies. Capital flight and exchange-rate depreciation will follow, imposing huge losses on creditors. European sovereign bonds, as valued in dollars or yen, will fall dramatically. . . .
France shot itself in the foot with its 35 hour work week and mandatory early retirement.
There’s some conflicting messaging coming out of the German export-oriented business leaders regarding the fate of the eurozone and possible remedies. One faction appears to be voicing an increased willingness for Germany to dump the euro because returning to “Old Europe” is not an option:
So is this what the business leaders are planning on making “New Europe” look like:
Because that’s not what “New Europe” is looking like:
In light of the forced collapsed of the PIIGS’s economies, it’s worth asking why the German business elites seem to intent on making the weaker eurozone nations more “competitive” when that very process will gut the ability of those nations to keep buying Germany exports. After all, much of the tab would be paid by the German taxpayer for either bailouts or some sort of subsidization of Germany’s weaker neighbors in order to make the eurozone sustainably viable (instead of a giant trade imbalance debt bubble machine), with the bulk of the benefits accruing to the export business owners with increased exports and a cheaper currency. It’s a question the German middle class should be asking itself because the unfolding situation is looking a lot like one where the middle class loses and the export business elites win. Everywhere, including in Germany. Because there is an alternate sustainable mode of economic growth that Germany’s export businesses can use to keep growing in the face of sustained reduced demand from their eurozone neighbors: Turn the PIIGS into Germany’s Mexico/China. Germany’s middle class may not like paying for the “profligacy” those “lazy” Greeks (that actually work more hours on average than their German counterparts), but they’re probably not going to like wage negotiations with an employer that can open up new manufacturing operations in “New Greece”, where labor laws and social safety net are deemed to be “uncompetitive”. After all, with the loss of all those exports to the lazy PIIGS, the whole eurozone needs to become more “competitive” and the PIIGS aren’t the only ones that can be sent to the slaughterhouse.
One of the critical questions that don’t seemed to be asked very much about the proposed visions for a future eurozone is the question of what, exactly, a “competitive” economy might look like. There’s an article in NY Times about Apple’s manufacturing supply chain in China and the reasons why those jobs are unlikely to ever return to developed nations. It might give us a hint as to what a “competitive” manufacturing-based economy might look like for any putative PIIGS in need of a massive fundamental social contract overhaul. Hint: it involves lots of “flexibility”:
Of course, no one can reasonably expect European countries to transition to the Chinese-model of factory cities where employees are forced to live next to the factory and work under slave-labor standards in a job that destroys their bodies and provides no futures for advancement...it’s unthinkable:
Truly competitive societies employ teeming masses of disempowered citizens willing to destroy their bodies and minds for subsistence wages. Remember that folks. It’s the new normal.
It begins...again...
I wonder if there are any “moral hazards” in this new fangled EU-debt-troika-government system that seems to have a default anti-labor/social safety net mandate via a default temporary de facto mini-dictatorship every time the financial sector bursts ones of its bubbles? If so, like all moral problems facing society, some austerity is in order. Maybe even austerity for the financial sector. Just as long as folks don’t go overboard.
Oh look, another country’s banking system is looking a little queasy. More “labor market” reforms are the only possible solution:
It looks isntalling a troika in place of Greece’s government didn’t go far enough:
It’s a good thing Europeans kept all those castles around. They’ll make great scenic backdrops for Europe’s neo-feudalist future.
At least it sounds like Greek politicians are dismissing the new proposal coming out of Berlin. And as details continue to dribble out, we also learning that Greece shouldn’t take this new proposal too personally...the rest of the eurozone would also be living under the new eurozone sword of Damocles:
So if Greece ends up in this new budget trap, where all state expenditures must be spent on paying bond holders before anything else after Greece exceeds the deficit limit, are things like schools and hospitals subject to getting shut down? How about national defense-related costs? These seems like a question worth asking before the latest radical overhaul in the social-contract gets agreed upon. Amputation isn’t the best diet plan.
Putting the ‘vicious’ in ‘vicious circle’:
So does Protugal’s minimum wage get a pass once Greece slashes its minimum wage below Portugal’s or do they keep playing this game forever?
Anschluss economics!?
@GrumpusRex: Perhaps, more like Lebensraum. LOL. =D