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Telling It like It Is: VERY Powerful, Accurate Words from Former Moody’s Vice-Chairman about German “Clausewitzian” Economic Policy toward Europe

German economic vision for peripheral Eurozone countries

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COMMENT: In so many posts and programs, we have discussed and analyzed the EMU/EU as the embodiment and realization of German plans for European and world conquest. It is beyond the scope of this article to sum up such an important, detailed analysis. Serious users of this website should undertake to examine the arguments at length and detail.

Suffice it to say for our purposes here, that Germany is realizing a predetermined, deliberate policy of pursuing von Clausewitz’s dictum of “war by other means.” It is simply being done by economic and political policy, rather than by force of arms.

In our most recent post about “Clausewitzian health care” in Greece, we underscored the fundamental continuity between the results of contemporary German fiscal policy and Hitler’s military adventurism.

For those who consider our analysis to be extreme and manifesting hyperbole, we present a devastating critique of German EMU policy vis a vis the peripheral economies of the eurozone. Discussing Cyprus as exemplary of German methodology and intent, Christopher T. Mahoney couches his critique in altogether unambiguous language.

Mahoney is a former Vice Chairman of Moody’s! In the article below, he sounds very much like–well–Dave Emory!

“Cyprus: Victim Of German Colonialism” by Christopher T. Mahoney; Project Syndicate; 7/26/2013.

ENTIRE TEXT: “We anticipate the banking resolution mechanism for the Cypriot banking sector to result in a significant downsizing of banks’ activities and therefore to severely affect the economic performance of the island from 2013 onwards. We expect an acceleration in the contraction of the Cypriot economy in 2013, with a negative real growth rate in the low double-digits and no return to positive growth before 2016. Our view is further supported by the negative feedback loop that expenditure cuts may have on the economy given the importance of public services, hence potentially challenging future consensus on fiscal strategy. We note that large uncertainties remain regarding the magnitude of further recapitalization needs for the financial sector given the expected sharp deterioration in the operating environment which will erode asset quality, as well as the behavioural responses of all economic actors to the shocks experienced by the financial sector (including risks of financial disruption related to the timing and approach for lifting of capital controls). In light of all the downside risks and the limited number of upsides, we view Cyprus as likely to default again in the coming years, as reflected by the rating level and negative outlook. Although it is not its central scenario, Moody’s also sees a material risk of a Cypriot exit from the euro area which is captured in the Caa2 country ceiling. As a result of the immediate downsizing of the banking sector and the expected spillovers to rest of the economy, especially in terms of weakened consumer and investor confidence, we forecast that the economy will contract by 12% this year and another 6.4% next year.”

–Moody’s, 15 July 2013

The purpose of EMU is to reduce the occupied states to penury in order to make them more like Germany, or Ethiopia. Ultimately the question is is: how low can per capita income decline until “Europe” becomes a dirty word, and “liberty” becomes the popular desideratum. Cyprus is the laboratory of this experiment, along with Greece and Portugal. Here is the experiment: How many people must eat out of garbage cans before the euro elites understand that EMU is destroying lives?

It must be pleasing to be ingesting a nice Brussels dinner while discussing how subhuman the Cypriots are, and how they must be “taught a valuable lesson”. That was how Stalin felt about the “rich peasants” of the Ukraine: surplus empty mouths to feed. Wouldn’t the world be a better place without so many peasants?

Perhaps, in a perfect world, Cypriots wouldn’t exist, like the kulaks and the Crimean Tatars. All Cypriots do is enable Russian plutocrats. Why should they exist? Liquidate them. Indeed, liquidate all of the parasite states of the Eurozone.

So we now know that the purpose of EMU is not to enrich the vassal states, but to occupy them and to make them penurious colonies of the hegemon. Peripheral Europe is Germany’s Latin America. But there is a crucial difference: the US has not forced its Latin American colonies to join the dollar zone. Latin America, despite its colonial status, retains monetary sovereignty. Aside from the Bolshevik laboratories of Argentina and Venezuela, Latin America is outperforming its colonial parents. Portugal and Spain should have monetary union with Brazil and Mexico, instead of Finland and Germany.

What Germany is doing to Cyprus is a crime.

 

Discussion

4 comments for “Telling It like It Is: VERY Powerful, Accurate Words from Former Moody’s Vice-Chairman about German “Clausewitzian” Economic Policy toward Europe”

  1. You’re absolutely right! It is a crime and it would be in Spain and Portugal’s best interest to ally themselves with Latin America instead of Germany or other European nations. So, why don’t they? Juan Luis Guerra, a protest singer from the Dominican Republic, said it well in his song: “The Cost of Life”:

    “We’re a hole between heaven and sea
    500 years later
    a vibrant new race
    black, white and indian but:
    Who was discovered by whom?

    The cost of life keeps rising
    and unemployment has bitten me too
    yet nobody cares what we think,
    Is it because we don’t speak English or French?

    Nobody cares…
    Not Mitsubishi, not Chevrolet….”

    https://www.youtube.com/watch?v=_zLpacr1DlU

    Of course, things have changed dramatically in the region since he wrote this song in the early 90’s but it’s not easy going against 500 years of colonial heritage. Spain and Portugal do not see Latin American nations as their equals even if we surpass them economically within the next decade. Nations like individuals have a difficult time recognizing their sons or daughters have grown up and are no longer their children. However, as Heraclitus once said: “There is nothing permanent except change”.

    Posted by Shibusa | July 29, 2013, 7:32 am
  2. “German hegemony of the Eurogroup has been growing over the last two years and is increasing almost by the day now,” says the anonymous Eurogroup official:

    Germany’s Schaeuble set to stay centre stage in euro crisis
    Reuters – Sun, Jul 28, 2013 4:29 AM EDT

    By Annika Breidthardt

    BERLIN (Reuters) – Two years ago, German Finance Minister Wolfgang Schaeuble was on the point of giving up his role as iron fist in the euro zone debt crisis, but the 70-year-old champion of closer European integration now seems likely to remain on Europe’s centre stage.

    Chancellor Angela Merkel, who made her independent-minded and famously irritable former rival finance minister in 2009, is expected to reappoint him if, as widely forecast, she wins a third term in the September 22 parliamentary poll.

    Differences in their visions of Europe may curtail some of his plans, but the enormous clout he wields among European policymakers dealing with the four-year-old euro zone debt crisis shows no sign of waning.

    “German hegemony of the Eurogroup has been growing over the last two years and is increasing almost by the day now,” said an official who sits with Schaeuble in the 17-member group.

    Such is his importance that the head of the International Monetary Fund, Christine Largarde, broke off from marathon talks to agree a bailout for Cyprus in March to make a late night visit to his office herself.

    “Nobody wanted to imagine what would happen if he had left the building in a huff,” a source close to the negotiations told Reuters. “The volcano was not allowed to erupt.”

    Merkel needs Schaeuble not only for his sharp intellect and as a contrast to her power politics, but to woo the party’s conservative south-western power base.

    Wheel-chair bound since a mentally ill man shot him in 1990, he is one of Germany’s most popular politicians and has hinted strongly that he wants to stay on.

    COMPROMISES

    Just two years ago, the man who negotiated German unification offered to resign when recovery from an operation was longer and tougher than expected. He was also badly shaken by the deaths of his two brothers, in 2011 and early this year.

    But he has returned to full health and works often gruelling hours. “I still enjoy politics otherwise I would not stand as a candidate again,” he told Reuters.

    Schaeuble is unlikely to alter his insistence on tough budget cuts and reforms for indebted European states after the vote bearing in mind he also plans to cut debt for Germany, which forecasts growth of just 0.4 percent this year after 4.2 percent in 2010.

    “Schaeuble makes compromises, but it’s his initial position that forms the benchmark of the debate with the small margins for manoeuvre he indicates he is willing to accept,” said an official with close knowledge of the workings of the Eurogroup.

    With the election out of the way, however, he may be willing to compromise on some hot topics on hold until after September 22.

    One of those is the establishment of a single authority to shut or repair troubled eurozone banks, a part of banking union that has stalled because of German opposition on legal grounds.

    Seeing the euro zone crisis as an opportunity to further political integration in Europe, he has got his party to back the idea of a directly elected European Commission President to give such integration a face.

    “Europe is close to my heart,” says the man who grew up near the French border, an area where the post-war divisions were more tangible than elsewhere in Germany.

    Merkel distanced herself from the party position in June, telling Der Spiegel magazine a directly elected EC president “would throw the entire structure of the EU out of balance”.

    It was one of many blows the chancellor has dealt to Schaeuble, Germany’s longest-serving member of parliament and the eternal number two in conservative politics, initially as heir-apparent to Helmut Kohl, then loyal to Merkel.

    In 1999, she pushed her career at his expense and later passed him over when he had ambitions to become president. But she often lets him deviate from her line, so much so that some Brussels officials wonder if he speaks for himself or Berlin.

    FEARED BUT RESPECTED

    His European colleagues fear him, beyond the unpopularity any German finance minister might attract for representing the continent’s largest economy.

    “If you are on his side of the argument, you feel very good. But if you are the one with whom he is arguing, you wish you had never spoken,” said one euro zone official, adding Schaeuble might bang the table or tap his finger next to the microphone when he gets angry.

    Behind closed doors, some also say Paris was outraged when Schaeuble, concerned about the health of the zone’s second biggest economy, asked a panel of German economic advisors to look into reforms France needed.

    But days after the news broke of the affront against Germany’s closest ally, he showed his political skill by holding a joint news conference with his counterpart Pierre Moscovici to soothe any suspicion of discord.

    A former senior French official who worked with Schaeuble in the Eurogroup, called him a “rare minister with a genuine long-term vision of what Europe could be: strict rules based on unwavering discipline, but with real solidarity“.

    Schaeuble’s vision: strict rules based on unwavering discipline, but with real solidarity. What’s not to love?

    Posted by Pterrafractyl | July 29, 2013, 11:44 am
  3. http://www.spiegel.de/international/europe/germany-profiting-from-euro-crisis-through-low-interest-rates-a-917296.html

    Profiteering: Crisis Has Saved Germany 40 Billion Euros
    August 19, 2013 – 11:38 AM

    Germany has profited from the euro crisis to the tune of 41 billion euros in reduced interest payments. Strong demand for its debt has cut yields and made it cheaper for Germany to borrow. Meanwhile, the crisis has only cost Germany a mere 599 million euros thus far.

    Germany is profiting from the debt crisis by saving billions of euros in interest on its government debt, which has enjoyed a steep drop in yields due to strong demand from investors seeking a safe haven.

    ANZEIGE
    According to figures made available by the Finance Ministry, Germany will save a total of €40.9 billion ($55 billion) in interest payments in the years 2010 to 2014. The number results from the difference between actual and budgeted interest payments.

    The information was released in response to a parliamentary inquiry from Social Democrat lawmaker Joachim Poss.

    On average, the interest rate on all new federal government bond issues fell by almost a full percentage point in the 2010 to 2014 period. Financial investors regard Germany as a particularly safe creditor because of its solid state finances.

    The interest rate savings combined with unexpectedly high tax revenues generated by the strong economy have also led to a decline in new borrowing. Between 2010 and 2012, the German government issued €73 billion less in new debt than planned.

    The Finance Ministry is trying to maximize the benefits of the low interest rates by placing more longer-term bonds at favorable rates. Between 2009 and 2012, the proportion of short-term debt issues with maturities of less than three years fell to 51 percent from 71 percent.

    According to the Finance Ministry, the costs of the euro crisis for Germany have so far added up to €599 million.

    Posted by Vanfield | August 20, 2013, 9:54 am
  4. Wonder if this limited hangout signals a change?
    Sorry about the Google translation, English can be read between the German text below, or go to this link for the full English text:

    http://translate.google.de/translate?sl=de&tl=en&js=n&prev=_t&hl=de&ie=UTF-8&u=http://www.mmnews.de/index.php/wirtschaft/14429-schaeuble-berater-euro-bricht-auseinander

    Schäuble advisor expects breakup of the euro zone. Top adviser to the Ministry of Finance Kai Konrad says: “Germany can not save the euro zone.” Max Planck economist advises: “If, then Germany must get out of the euro”.

    Schäuble-agent: euro falls apart
    17.08.2013 17.08.2013
    Schäuble-Berater rechnet mit Auseinanderbrechen der Euro-Zone. Schäuble advisor expects breakup of the euro zone. Top-Berater des Bundesfinanzministeriums Kai Konrad sagt: “Deutschland kann die Eurozone nicht retten”. Top adviser to the Ministry of Finance Kai Konrad says: “Germany can not save the euro zone.” Max-Planck-Ökonom rät: “Wenn, dann muss Deutschland aus dem Euro raus”. Max Planck economist advises: “If, then Germany must get out of the euro”.

    Der führende wissenschaftliche Berater des Bundesfinanzministeriums erwartet wegen der wachsenden wirtschaftlichen Ungleichgewichte ein Auseinanderbrechen der Euro-Zone. The leading scientific adviser to the Ministry of Finance expects a breakup of the euro zone because of the growing economic disparities. “Deutschland kann die Eurozone nicht retten. Wer das glaubt, verweigert sich der Realität”, sagt Kai Konrad im “Welt”-Interview, er ist der Direktor des Max-Planck-Institut für Steuerrecht und Öffentliche Finanzen in München ist und Vorsitzender des Wissenschaftsbeirats bei Finanzminister Wolfgang Schäuble (CDU). “Germany can not save the euro zone. Whoever believes that refuses to accept the reality,” Kai Konrad says in the “world” interview, he is the director of the Max Planck Institute for Tax Law and Public Finance in Munich and Chairman of the Scientific Advisory Board with Finance Minister Wolfgang Schäuble (CDU).

    Deutschland könne zwar aus politischen Gründen aus dem Euro nicht selbst aussteigen. Although Germany could not get off for political reasons from the euro itself. “Die anderen Länder könnten Deutschland aber dazu drängen. Dazu kann es kommen”, meint Ökonom Konrad und rät im Gespräch mit der “Welt”: “Wenn man die Währungsunion aufbrechen will, sollte man dies an der Nordgrenze tun. Wenn, dann muss Deutschland aus dem Euro raus.” . “Other countries could Germany but urge this can happen,” says economist Konrad and advises talking to the “world”. “When you want to leave the monetary union, this should be done on the northern border If, then Germany must out of the euro. ”

    Konrad hält das Aufbrechen der Währungsunion für ein ökonomisch aussichtsreiches Manöver: “Und wenn Deutschland und ein paar andere starke Länder die Währungsunion verlassen, wird der Euro abwerten und die südeuropäischen Länder kämen wirtschaftlich wieder auf die Beine.” Conrad maintains the breakup of the monetary union for an economically promising maneuver: “And if Germany and a few other strong countries leaving the monetary union, the euro will depreciate and the southern European countries would come back on its feet economically.”

    Der Furcht vor einem anschließenden Ruin der deutschen Wirtschaft durch Aufwertung der dann wiederbelebten D-Mark tritt der Münchner Ökonom entgegen. The fear of a subsequent ruin of the German economy by upgrading the then revived D-mark disputes the Munich economist. “Sie könnte sogar gestärkt daraus hervorgehen. Sie hat die regelmäßigen Aufwertungen der DM in früheren Jahrzehnten immer wieder gemeistert und wurde so fit für den Wettbewerb. Heute haben sie es da besser. Aber die Fähigkeit, auf Herausforderungen zu reagieren, geht dabei verloren. Und das ist gefährlich”, sagt Konrad. “You could even emerge stronger., You have mastered the regular revaluations of DM in earlier decades and over again and was as fit for the competition. Now they have it better there., But the ability to respond to challenges, is lost. And this is dangerous, “says Konrad.

    Posted by Swamp | August 30, 2013, 9:53 am

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