COMMENT: German Foreign Policy further develops the story of the economic and social devastation manifesting in Europe as a direct result of the measures dictated to the European Union by Germany.
Far from inspiring “growth through confidence,” as the Germans and American GOP would have us believe result from “austerity,” the measures are driving the countries of Southern Europe into serious recession.
In addition to ravaging Greece, the austerity measures being dictated by Germany are also exacerbating the problems of Italy, Spain and Portugal. Greece is approaching Third World status.
As we have seen in several posts, the EU/Germany installed a provisional government in Greece that included the Greek neo-Nazi LAOS party, headed by a Holocaust denier. The citizens of Greece–“the cradle of democracy”–had no say whatsoever in the incorporation of the Greek Nazi party into the government!
As noted by British Prime Minister David Cameron, the EU (read Germany) has “outlawed Keyesnianism.”
One can scarcely blame the Greek policeman’s union for advocating the issuing of a warrant for the arrest of the EU overseers of Greece. When the medicine for Greek recovery involves slashing of the minimum wage by 25% (32% for the youth), what is to be expected but economic disaster?
The settlement may well be sowing the seeds for a future political crisis in Europe, because European Union taxpayers will be responsible for the debt of the unfortunate Southern European nations.
In time, the export-dependent German economy may well fall victim to the malaise as well, as noted in the article excerpted below.
“Berlin’s European Recession”; german-foreign-policy.com; 3/16/2012.
EXCERPT: The austerity dictate imposed by Berlin and Brussels is driving nearly all indebted southern European countries deeper into the recession, as shown by new data on the economic developments of Spain, Italy, Portugal and Greece. According to this data Portugal’s economy, for example, declined by 1.3 percent in the last quarter of 2011 and could shrink by up to six percent this year. Industrial production in Italy registered a sharp decline. Retail sales in Spain — an indicator of private consumption — declined by almost a quarter in comparison to 2007. Greece is approaching the economic level of countries in Latin America or Southeast Asia, which, up to now, had clearly lagged behind European standards. In the longer run, the recession could have a backlash on Germany because the massive slump is also affecting German exports. This could have serious repercussions.
“On the Right Path”
Germany is continuing to impose disastrous economic austerity measures all over Europe. Top German politicians and officials relentlessly plead for the continuation of the austerity policy, undeterred by the erupting recession in areas of the Euro zone. The policy became binding for almost all EU member countries through the signing the Fiscal Pact on March 2. As German Finance Minster Wolfgang Schäuble declared March 6, by signing the Fiscal Pact, Europe is on the “right path.”[1] Indicating the Czech Republic and Great Britain, both of which refused to sign the treaty that will slowly erode national sovereignty, he added that he hoped all EU members would soon sign up for the Pact, which Berlin substantially formulated. On March 13, Federal Bank President Jens Weidmann called for the southern Euro countries, which are currently slipping into recession, to apply “stiffer reforms” and additional austerity measures. . . .
On the Way to the Third World
Where this austerity policy, imposed by the German government on Europe, will lead, can be seen in Greece’s dramatic crash, which can literally be characterized as Greece saving itself to death. According to all predictions, in 2012 the country will remain in its fourth year of recession and continue to approach the economic level of the third world. The German business press predicts that if Greece’s economic contraction continues, it will be bypassed by countries such as Vietnam or Peru. A deeper recession could even saddle Greece with a GNP, in terms of buying power, lower than the GNP of Bangladesh. The German edition of the Financial Times speaks of a “historically exceptional” economic collapse. “Some experts fear that the GNP for 2012 will again decline up to eight percent, after an approx. 6.5 percent drop in 2011. This is “the worst recession that a western country has encountered since the war,” explains Barry Eichengreen, an economic historian at the University of Berkeley. . . .
Yup, the plan is proceeding according to... The Plan. Let’s just take the working thesis that Europe — or more precisely Brand EU, its play-money, its play-politics and play-policies — is not meant to “succeed” as such, but works as one of successive instruments to bring about longer term aims of the 0.1%. Sounds trite, but what else do we call it/them? A centralizing force, disempowering public will, rendering quaintly passé the notion of national sovereignty (leaving it to a subsidized and media-genic far-right to sort out)... nothing new here, except maybe the level of distillation. As in the 20th century, however, the Reich itself is merely an actor in this drama, not the author. (And a real Westphalian ham, at that!) Mainstream politicos and journalists are bit players and extras, paid and unpaid, making the whole seem genuine for the audience. Make no mistake, here we find no conspiracy, but the continuous upward flow of wealth, and — in every sense of term — the corruption inherent in that flow.
@Rob Coogan: Well, I don’t know about the U.R. being ‘just’ an actor.....but I do think they’re certainly not the only arm of the world crime network that needs to be dealt with.
Based on the persistent unctuousness of Steven L’s comments, my suspicion is that he/she may be a troller, or a bit simple, or both. But, against my better judgment, I’ll take the bait, if only to make a point.
@Steven L.: No nation (sovereign state, whatever) or its people benefit from the hyperbolic concentration of wealth that marks our present age — not Germany, not Britain, and obviously not Greece.
And while we’re on the subject of nations not benefitting, hopefully the resources are at your disposal to conclude that no nation (et al) benefits from war. Sure, some strata increase their wealth and stature. (Just watch the US and Israeli war industries’ stock indices closely when — not if — Israel attacks Iran. It’s coming after the next US elections, and the next massive downward spiral is coming for the rest of us after that.) Any purported benefit to a nation’s people from war you’d have take exclusively on faith, or dismiss such claims as soporific pablum.
I can’t say if or when nations ever had meaningful existence. I’ll defer to wikipedians here — which means the point is moot. But certainly the last century of near apocalyptic wars has made the actual apparatus of so-called nations into vehicles of legitimacy, expedients for elite interests. Judiciaries are politically stacked. Mainstream political parties and legislatures are owned outright — and by now these are not even controversial statements! The Oval Office, No. 10, and all the rest are basically regional sales offices for the war industry.
My reading of Dave’s work tells me that he (rightly, I think) sees the Kennedy assassination as only one step in this slo-mo elite power grab. It’s the brazenness, the pervasiveness, the grotesqueness of the grab that is the stuff of these pages.
My reading also tells me that Dave’s construct “The Underground Reich” is at its core an organized and meticulously coordinated fragment or aspect of what I’ve called the 0.1%, i.e. the players and beneficiaries of upward concentration of wealth.
Steven L., if you are real, then please pay attention closely: Neither the UR or the 0.1% is a nation, therefore neither is “ ‘just’ [sic] an actor ....” These are instead terms used to denote the elite agents and beneficiaries of this massive upward concentration of wealth.
The Reich (Germany) and the disposable EU being my current topic of discussion, I recommend that if you can unsuspend your disbelief, you might see the play as a play. Makes the news a lot easier to parse.
@ Rob Coogan: That’s a pretty sound analysis. Keep going.
@Rob: In all honesty, I do apologize for having misread your comment, I had just recently woken up when I wrote that. I know there’s probably been a fair share of stupid trolls who’ve come on here and spewed all sorts of crap(apparently, there were several on a recent 9/11 related thread), but just so you know, I am neither stupid nor a troll and am completely genuine(honestly, if I had been either, I likely would have been banned from this site’s comments board a LONG time ago). Hopefully this clears things up a little. =)
And I do agree with your second post as well, Rob. Hopefully, people can start waking up soon.
@Rob: Guess I misunderstood you, huh? Sorry. And don’t worry, Rob, I can assure you that I’m 100% real. =)
@Dave: Okay, Dave, thanks for letting me know. My apologies. =)
It seems relevant, so I’m reposting something I wrote for another site. Fascism is not so much a created ideology, consciously chosen, as it is a self-perpetuating process that has been given a label. As much as fascism ostensibly promotes personality, the reality is that it suppresses both personality and nationality. The concept of the nation state is temporarily useful for creating wars but is otherwise an obstacle. Likewise the roots of fascism are in no country but in all of them. My repost:
The first installment of Rand’s Atlas Shrugged is on Netflix. Her cardboard character heroes are sure to delight a hardline rightwinger and amuse or nauseate the rest of us. Rand’s major hallucination in her barely readable novel is that large corporations are headed by brilliant individualists, inventors and innovators who strain to keep civilization afloat against the efforts of useless socialist bureaucrats. The decision to make this series now is indication that someone thinks the time is right for her comic book ideology to be test marketed to a voting public.
excerpt:
Ayn Rand’s ideas have become the Marxism of the new right.
By George Monbiot, published in the Guardian 6th March 2012.
It has a fair claim to be the ugliest philosophy the post-war world has produced. Selfishness, it contends, is good, altruism evil, empathy and compassion are irrational and destructive. The poor deserve to die; the rich deserve unmediated power. It has already been tested, and has failed spectacularly and catastrophically. Yet the belief system constructed by Ayn Rand, who died 30 years ago today, has never been more popular or influential.
Rand was a Russian from a prosperous family who emigrated to the United States. Through her novels (such as Atlas Shrugged) and her non-fiction (such as The Virtue of Selfishness(1)) she explained a philosophy she called Objectivism. This holds that the only moral course is pure self-interest. We owe nothing, she insists, to anyone, even to members of our own families. She described the poor and weak as “refuse” and “parasites”, and excoriated anyone seeking to assist them. Apart from the police, the courts and the armed forces, there should be no role for government: no social security, no public health or education, no public infrastructure or transport, no fire service, no regulations, no income tax.
end excerpt:
In Ayn Rand’s theoretical paradise, the role of government is reduced to war making and the use of force to suppress the Homeland common folk. This is extreme free market ideology in a nutshell — sociopathic, fascist, Darwinian. Rand’s white Russian Nazi friends had a hand in the numerous political murders of last century. It’s a good thing, I think, that these ideas are being presented in the daylight, as it were, stripped of any pretense to compassionate conservatism. The battle lines are being drawn.
@Steven–
I’ve been combining some of your comments on a particular post in the interest of saving space on the front page, where these comments track.
When you are simply agreeing with someone, valuable space can be saved and your comment still registers.
Otherwise, the front page will have much space taken up by “I agree, me too, etc.”
Best,
Dave
[...] The Berlin Recession [...]
I’d just like to say that I find Steven L.‘s persistent optimism to be an uplifting voice of hope on a site that contains some of the most depressing content on the interwebs. So there. =P
@Pterrafractyl–
Steven is indeed optimistic. In my ’60’s, I very much wish I could summon up some of Steven’s spirit.
Maybe that’s the difference between old and young. I’ve never queried Steven about his age, but I suspect I’ve been on the air (33+ years) longer than he’s been alive.
Best,
Dave
@Dwight: Krugman’s latest column column includes some perfect present day examples of what you desribe....a society basically waging war on its own people under the banner of “free-market”, “limited government” ideals:
@Dave: Well, Dave, I’ll be honest with you here: I’m only 21.....but at least I’m one of those college kids who’s been waking up to reality. =)
@Pterrafractyl: Thank you kindly, my friend. Much appreciated. =)
The head of the IMF’s mission to Greece and fellow travelers have some supportive comments for their patient: Keep up the great work on destroying your economy...you still need to shave off another 6–7%. This should all be over in about a decade...:
I found the comment at the end about the need for a “regime change in policy implementation” a little curious. Hasn’t “regime change” sort of been the signature policy of the eurozone crisis so far? Silly me, trying to parse psycho-speak.
The NY Times had an interesting piece recently on the “Age of the Shadow Bank Run”. The gist of it is that modern globalized finance, with its unprecedented shadow banking system, has created new mechanisms for what are essentially bank run, except the “running” is done more by financial investors removing short-term credit to financial institutions vs the bank runs of the past where savers suddenly rushing to withdraw their money. The explosion of derivatives is also cited as one of the big factors in creating this “new normal”. The piece, written by the NY Times libertarian economist Tyler Cowan, concludes that there’s nothing that can be done about it so suck it up plebs.
Fortunately, some enterprising entrepreneurs have just the solution needed for these troubled times:
So Germany’s public sector workers are about to get a big pay increase and, right on cue, the head of the Bundesbank is warning of rising inflation and the need to cut back on stimulus spending and emergency lending measures (unless prices fall enough in the other eurozone members to offset it). Great timing:
In other news, Spain’s borrowing costs rose as a result of tepid demand for Spanish bonds. And in completely unrelated news, Austria’s central bank is joining with the Bundesbank in rejecting the use of government bonds as collateral if that government gets a bailout.
This sounds familiar
Isn’t living in bizarro-world fun?
Krugman has a couple of posts on a debate over the forces driving the historically low interest rates on bonds. There’s speculation that this is due to a growing “safe assets” shortage, where investors are so desperate for bonds from the “safest” entities (like US or German bonds) that they’ll accept historically low rates in exchange for perceived safety.
Regardless of whether or not a perceived safe asset shortage is really the cause of today’s ultra-low rates, the topic is an reminder of just how much real clout the P.I.I.G.S. have in the eurozone crisis. Because if there’s a breakup of the eurozone in the future there won’t be a debate over whether or not a safe asset crisis is at hand...a safe asset demand surge will be inevitable along with the resulting currency appreciation that is currently muted by the currency union. And those surging currencies won’t do good things for the competitiveness of export-oriented economies facing a non-euro world. The “mutually assured” nature of the destructive policies being imposed on the P.I.I.G.S. will become much more evident should the Big Bad Wolf actually succeed in blowing their houses down. That’s something the P.I.I.G.S. should keep mind the next time the Big Bad Wolf gets all huffy and puffy, nearly blows the house down, and then demands the mortgage as collateral for the foundation-repair services.
@Pterrafractyl–
When updating us on investigations like this, or PIMCO andout MBS’s, Deutsche Bank offering a way around Dodd/Frank, I’d like to request that you really stretch out and take what might to you seem to be an inordinate amount of time to explain the fine points to those of us who are not as fluid and conversational with the investment world.
I think it will prove very enlightening for those of us who follow your posts and will also help you to refine your analysis.
Thanks,
Dave
@Dave: I too, find Pterrafractyl to be a valuable member of the (still small, but seemingly growing) SpitfireList community. His(her?) insights have certainly been very helpful to me, personally, in analyzing various events.
Regards to all,
Steven. =)
@Pterrafractyl: I agree with the above opinions. I find myself in this position too. My financial and economical background is mimimal, so I need more explanations “for the laymen” than the amount you use to contribute. The material that you post is abviously terrific and informative but unfortunately I don’t have the background to really grasp it in all its subtleties. It is not criticism but rather a suggestion to enhance the experience.
Have a good day.
@Dave: Sure thing. Fortunately, there’s a Bloomberg article that highlights what I was eluding to in the above comment about the “safe assets” shortage. It discusses the growing volume of capital that is flowing from the distressed eurozone members (Spain and Italy) and into the banks in the Netherlands, Luxembourg, and Germany as part of the normal capital flows out of countries deemed to be “unsafe” and into the “safe” countries. There’s a great graphic in the article here. Now, under normal circumstances, this kind of capital flow would cause a depreciation in the value of currencies in the countries where money is flowing out of (Italy, Spain, etc.) and an increase in the value of the currencies where the money is flowing into(Germany, Netherlands, Luxembourg). BUT, because we’re talking about money flows in a monetary union in this instance we don’t see the euro itself rising or falling from these capital flows so each of the above countries won’t see the expected shift in their currency valuations. That expected shift in valuations is just part of what it supposed to make the “market” a self-correcting system but it’s been broken by the imposition of a currency union and THAT type of dysfunctional market mechanism is a highly desireable situation for the recipients of these capital flows (Germany, Netherlands, Luxembourg) because they get all the money without the cost of a higher currency valuation. It’s especially desirable for Germany because of its intense reliance on exports.
So what the P.I.I.G.S. (Portugal, Ireland, Italy, Greece, and Spain) need to remember while they’re being asked to destroy their human capital base and futures to salvage the currency union is that the threat of leaving the eurozone is a very real threat to Germany, the Netherlands, and Luxembourg (thie three biggest “safe havens” in the eurozone). Those types of capital flows out of “unsafe” countries and into “safe” countries will still take place with or without the eurozone currency union, but they will be A LOT more painful to Germany, especially, in the absence of the eurozone. Instead of having German banks receive all these billions of of euros in capital while still maintaining a cheap export currency, the Germany banks will still receive all that capital but with a resulting surge in the value of the Deutsche Mark (or whatever post-euro currency gets implemented). The P.I.I.G.S., while still losing that capital, will at least have a shot at exporting their way back to stability with they’re newly devalued currencies.
But there’s a bigger shock that’s been set in place if the eurozone unravels because not only will there be a return to pre-currency-union currency market dynamics (with the associated currency valuations fluctuations), but this return to the “old normal” will all be taking place in the midst of a massively destabilizing global crisis (the loss of the euro would send the global economy into a tailspain), and it’s when those global crises take place that export-oriented countries like Germany have to REALLY worry about money from around the globe flowing into the German economy and shooting the Deutsche Mark through the roof. The Deutsche Mark is like a super-compressed spring just waiting to get the chance to decompress. The only thing really holding it down right now is the existence of the currency union and if that spring starts decompressing (and speculative animal spirits kick in) it’s hard to say just how overvalued a new Deutsche Mark could become over a fairly short period of time. This is not a trivial hypothetical threat either. It’s what non-eurozone countries with healthy economies deal with all the time.
The final point is that, in the absence of a currency union, there are still plenty of mechanisms that a country like Germany can use to keep it’s currency at a subdued value. Just look at what China or Switzerland do. They maintain currency “pegs” and just do continual interventions in the currency markets in order to make their currencies artificially cheap. But this isn’t a cheap policy to maintain...not by a long shot. Just take a look at Switzerland right now...there’s so much hot money flowing into there right now in search of “safety” that bond holders are getting NEGATIVE interest rates. Investors are so desparate for “safety” that they are paying the Swiss to borrow their money just so they have liabilities in Swiss Francs. That’s the “new normal” for the non‑P.I.I.G.S. if the P.I.I.G.S. bolt and leave the currency union and it’s not something the non‑P.I.I.G.S. should be looking forward to and their policy-makers certainly recognize this unpleasant reality.
Ooooh but there’s even more. Here’s an excerpt from that article, and note how there’s an extra liability on the non‑P.I.I.G.S. if the P.I.I.G.S. balk and leave the union: One of the mechanisms used to enforce the currency union involves the central bank of a member nation that receives capital flows being forced to lend that same amount of money to the central bank of the country where the money came from. So if $100 billion leaves Spanish banks for German banks that’s $100 billion that the Bundesbank has to lend to the Spanish central bank. And if the Spanish central bank is forced into insolvency (say, the bond market just stops buying Spanish bonds), that $100 billion loan to the Spanish central bank won’t be paid back to the Bundesbank and the Bundesbank just has to eat it. In other words, these massive capital flows within the eurozone are also liabilities for the big recipients. That’s just the way the system was set up:
Hopefully this sort of clarifies things. And hopefully the P.I.I.G.S. realize just how much clout they have in this situation because a lot of powerful interests seem to have aquired an appetite for pork:
@Steven: Thanks!
@Pterrafractyl: Great work. Thanks to you, we can see now that there is a flight capital program inside the EU itself. And the most interesting is that it appears to involve nations that were part of the Axis during WWII, from Spain and Italy to Germany, the Netherlands and Luxembourg. Is this a coincidence? Well, we know that there is no such things as coincidences!
Best.
@Pterrafractyl–
First off, I want to echo Claude’s praise.
Beyond that, I’d like to request that you flesh out your contribution of some weeks ago that Deutsche Bank had implemented a program permitting U.S. financial institutions to sidestep Dodd/Frank.
I’d also like you to further develop the “quiet bank run” phenomenon you highlighted a short time ago.
Lastly, I’d like you to do a lengthy comment on PIMCO. Recently, you posted an article in which an analyst noted that PIMCO was already “too big to fail”, but was pursuing failure bound investment policies.
Note that if it DOES fail and the feds have to bail it out, that will put still more impetus into the “austerity” dogma being pushed by the Underground Reich and their satraps in the GOP and other political right wings.
I’d like to request that you really stretch out on the topic of PIMCO, a wholly-owned subsidiary of Allianz, the German insurance giant and defendant in Holocaust law suits by survivors a decade and a half or so ago.
Again, you understand many of these maneuvers that the giant houses are implementing. Most people, including Yours Truly, don’t past a point.
These gambits are meant to be opaque, not transparent, and the extent to which you can pull aside the veil of obfuscation for us will be most welcome and useful.
Best,
Dave
Just some facile speculation here: Pimco manages assets on behalf of millions of mainly American retirees and payers into pension and retirement funds. These assets are largely in dollars.
If Pimco is headed for a designed crash and if Allianz is sufficiently shielded from potential losses at Pimco, we may be watching an historically huge currency futures game. Pimco’s sheer size and potential failure would cause the dollar to plummet. In the derivatives market anyone who could control the timing of a large drop in the dollar could profit greatly, especially if Pimco was slated for eventual taxpayer rescue.
That’s all just a guess based on these characters’ previous exercises in destructo-economics.
@Dave: Lengthy response in progress (it’s lengthy, taking too long, ugh)...
@Claude: I can totally understand your confusion on this stuff. Not only are my descriptions of the situation going to be unable to capture the full scope of the awfulness that is modern finance (the financial news generally leaves me speechless so it’s hard to put that into words), but one of the dirty little secrets of the modern financial/economic system is that it doesn’t make sense. So no story about finance or economics from, say, the George W. Bush era onward really ever made much sense. And it barely made sense in the two decades before W. It started getting really loopy with Reagan in the 80’s and after Glass-Stegall was repealed in 1999 and the derivatives revolution got taken to the next level all it took was a global housing bubble to take down the whole global economy. And two wars. And the general craptacularness of things. You know what I mean. Things were really messed up in the 90’s but the 00’s was a ride on the crazy train the whole way.
So I wouldn’t expect any description of things to be comprehensible. As Dave put it, these things are meant to be opaque. That includes logically opaque. The kind of of insanity I’m alluding to is in the latest Krugman Column. Europe’s economic suicide. It’s nuts. It doesn’t make sense. And yet it is.
@Pterrafractyl and dave, not having Dave’s remarkable memory for details I’m not one for minute forensic analysis. One little discussed facet of cartel capitalism might shed some light on these broad economic events where it appears that corporations or hedge funds or other large aggregations of capital are not pursuing what seems superficially to their best advantage.
After a capital aggregate surpasses a certain critical size and share in the market it no longer seeks a simple maximum return on capital. Instead it seeks what could be called a maximum ‘relative’ return. If there is a scenario where other competing capital actors can be damaged with zero damage to the instigator, that result is seen as a positive return. It is the ‘beggar thy neighbor’ strategy in its rawest form and is used against both populations and competing capital networks. It’s part of the inexorable working logic of large competing capital aggregates. The actual makeup of the capital network involved in these destructive maneuvers often can’t be identified until after the fact by observing what group or groups came out relatively more powerful. I think we’re watching the climactic war of the titans as different capital groups sometimes collide and sometimes cooperate in their struggle for global power. Being able to identify these separate entities, to the extent that they are separate, would clarify the flow of events, but since banking, corporate and government structure is designed to obfuscate that identification, we fall back on naming countries as the primary active agents. I think that’s sometimes valid and sometimes off the mark.
I think I’ve made the situation more vague and confused than it was. My work here is done.
This is going to be a looong ride for Spain on the Crazy Train:
As Rajoy says, they’re just getting started. All aboard the Crazy Train! *toot* *toot*:
@Dwight: Yep, as more and more financial wealth gets concentrated into the hands of the titans, the less valuable “money” is to those actors relative to other stores of wealth. Power comes in a lot other forms; destroying a competitors economy, a war that destabilizes/depopulates a region for some long-term objective, big investments in money-losing operations that buy political patronage, etc. And as we continue down this path of ever-fewer “too big to fail” corporate mega giants that can move markets at will, and with financial/economic death traps getting institutionalized into law (e.g. the band new eurozone “fiscal treaty” that’s a guarantee for endless “debt crises”/austerity in the future), there’s just going to be too temptation for the economic elites to use disaster capitalism as the standard tool in the toolbox. It’s too tempting NOT to do it, especially when you’re talking about financial empires that ARE “The market” and already have more money than they know what to do with. Case in point.
Wow, that’s some really compelling leadership coming from the Bundesbank: Stop whining about
cuts that will destroy your human capital and futureshort-term growth concerns. The “market” will get upset otherwise and jack up your borrowing rates even more. That’s pretty much what they said:According to Merkel, when a number of Germany’s fellow eurozone members have lost control of their own destiny due to their debt crises. Also, she notes the world doesn’t really understand what’s taking place in Europe. Yep:
It’s going to be very interesting to watch how the German electorate views this ongoing austerity-only-and-forever program that’s become a central campaign platform for the CDU and FPD. Because one of the main excuses that the politicians in Berlin have been able to use to justify their austerity fetish was that they were placating their domestic voters that don’t want to bail out their neighbors. But if the German public is now starting to sour on the austerty-only-and-forever policies — maybe they realize that the German public is going to be sent to the slaughterhouse after it’s done with P.I.I.G.S. sooner or later — if that shift happens, and we STILL see austerity-only-and-forever being pushed by the CDU, that will at least put the rest one of the main excuses used for this ongoing madness and hopefully a few more folks will be able to see this whole thing for the radical revolutionary financial coup attempt that it is.
@Pterrafractyl: Going along with Dave’s suggestion of using your expertise in the domain of the economy, finance and related subjects, I would like to suggest to you the work of Kevin Freeman about the 2008 financial crisis. In a nutshell, he makes the case that the crisis was provoked through “Bear Raids” and others shenanigans, volontarily set in motions to crash the system. “Attacks” according to him were originating from Russia, China and Islamic finance milieus. Check my article here if you would, with the related links and presentations. Then, if you have any comments, observations, supplements to add, please feel free.
http://lys-dor.com/2012/04/22/kevin-freeman-on-economic-and-financial-terrorism-second-installment-two-video-presentations/
Thanks.
Jens Weidmann, the head of the Bundesbank, is continuing to play the official “bad cop” to Merkel’s/Draghi’s “good cop” roles in the eurozone crisis (When Merkels is the “good cop”, things are bad indeed). Note how Weidmann isn’t forcing a lunatic austerity-only solution on the eurozone. No, no. He’s just voicing “unpalatable truths” and promoting a “culture of stability”:
@Claude: Thanks! I’ll take a look at Freeman’s work. Part of what made the financial situation in early 2008 so grimly fascinating is that it was just generically vulnerable to attacks from...well...anyone. It’s not just the usual suspects — JPMorgan/Goldman Sachs/Deutsche Bank/Credit Suisse, etc — where it’s sort of an auto-immunological attack by the financial system on itself (The giant vampire squid needs to feed you know). But back in 2008, things were so out of whack that other nation states that couldn’t normally carry off a successful financial attack would have seen one of the best windows of opportunities in decades. So who knows how many different players were strategically “moving pieces” around the global financial realm in the lead up to the meltdown....
And once again Europe is back in a situation where economies are faltering (Spain is officially in a recession again), concerns about the future of the whole eurozone project are back, and a growing number of voices are questioning the wisdom of the austerity-only policy solution. But now, with electoral setbacks for the supporters of austerity-only solutions in France and the Netherlands, Merkel and the Bundesbank are going to have to have their work cut out for them if the austerity-only policies are to continue because it’s looking more and more like the German public-sector workers are about to find themselves in the cross-hairs. And the voters in the large industrial powerhouse of North Rhine-Westphalia (NRW) appear to be particularly irked by the growing threats of austerity at home. This is an important voting demographic in determining the direction of Merkel’s government (and therefore the Bundesbank, and therefore the ECB). On top of the current discomfort over austerity-only leadership, it sounds like there’s even a growing backlash in the NRW over the German reunification “solidarity-pact” that forced large-scale state subsidization of the former East Germany. This is one of those stories that’s a reminder of how the situation in the eurozone could change rapidly once the most influential electorates (German, Dutch and French especially) begin rejecting the current status quo. That doesn’t mean the status quo is going to go, but as the increasingly crisis-prone eurozone limps along through another austerity-induced market scare the forces fighting for austerity might have to switch up their game:
Adding to the complications for Merkel and her austerity allies, France’s likely election of a center-left president is causing consternation in Germany’s industrial sector. The prospect of EU meddling by a French center-left government is viewed as an unwelcome threat against the German industrial sector’s sovereignty. The German trade group’s suggested future is through greater trade and technology transfers with China:
It sounds like Germany’s vast family-owned manufacturing sector that form the back bone of the economy is going to be increasingly open to direct competition by the high-tech, low-cost chinese labor market. This was an inevitability, but a blossoming German/Chinese tech/investment alliance is the type of thing that’s going to unfold over the decade decade or so. The German labor market is about to get hammered by labor cost pressures during a period when closing the “competitiveness” gap with German labor counterparts is now a requirement for national survival across the continent for years going forward. A trade relationship that puts downward pressure on German wages is just too tempting to pass up because the pressures on the German labor markets are going to reverberate across the eurozone labor markets once the “fiscal compact” comes into effect and fun things like “wage harmonization” get implemented in some dystopian democratic-ish eurozone of tomorrow. If German manufacturing wages can be kept down forcefully that is going to impact the next decade of the eurozone labor market in ways that wouldn’t have taken place before so the German/Chinese manufacturing trade relationship will be something worth watching:
Paul Krugman has been banging his head against the wall quite a bit recently over the media’s non-stop ability to reframe the eurozone crisis as a bunch of unproductive nations hooked on wasteful government social spending and the looting of the shared eurozone credit line. Poor Paul. He’s totally heading for a concussion*:
There’s another NY Times story today that contains a couple of fun-facts that highlight just how extensive the housing bubble was in Spain. Think of it as the “80/80 bubble”:
More than 8 out often Spaniards owned a home and had 80% of their assets tied up in real estate on average. For a country that’s apparently crippled with mass dependence on Big Government that sure was a high rate of ownership...one might even say Spain became George W. Bush’s “ownership society”. One of the things about these “ownership societies” that isn’t normally mentioned is that it starts out as a “mortgage society” before it becomes a full-fledged “ownship society”. So if the bubble bursts before the “mortgage society” pays off the mortgage on itself, it’s still going to become an “ownership society”, it’s just not the public doing the owning. I’m sure this was all somewhere in the fine print.
*I think the phrase “heading for a concussion” might qualify as a pun in the head-banging context. And for such a‑Paul-ing** punning I must a‑Paul-ologize***.
**My apologies.
***Ditto.
Headline: “Germany Shifts Rhetoric to Growth Before French Runoff”.
A more accurate headline:“Germany Shifts Rhetoric to Growth Before French Runoff While Continuing To Insist On Austerity-Only Policy Solutions”:
Wow, Spain just figured out how to make Fridays suck:
This is one of those ‘a picture speaks a thousand words’ posts from Krugman. They might not be very pleasant words, mind you, given the story being told in those two pics.
This was really just a matter of time:
With the waves of unemployed workers from around the eurozone poised to flood into Germany after the austerity-induced destruction of its neighboring nations the German unions appear to be about to taught a timely lesson in REALLY in charge. No more walking down easy street for the eurozone laborers:
High unemployment and low worker pay? That’s just the normal, reasonable sacrifice that any member of the public should be happy to make. But raising taxes? Unthinkable. Now get back to work proles.
With anti-austerity sentiments spreading across the eurozone, Latvia has emerged as the new pro-austerity poster-child (Ireland used to be that poster child but that hasn’t really worked out ). Latvia’s president is publicly bragging over his country’s economic performance as evidence that country’s should not just implement austerity measures but aggressively front load the austerity while the recession is just getting underway. Latvia’s miraculous experience was an 18% drop in 2009 followed by a 5% bounce back in 2010. The wonderful tradeoff for the 13% drop in the economy over a two-year period was a drop in Latvia’s budget deficit from 9% to 3.3%. So for every 2% in lost economic activity Latvia got a 1% cut in it’s decit. These are our modern lessons:
For a country that’s seen its economy decimated as a result of a bank lending/housing bubble, the Latvian’s are taking the dismantling of their society with a remarkable quiet stocism. According to this article from last September, that’s mostly due to the fact that the Latvian’s have been seeing the economy destroyed and looted so many times, especially in the 90’s, that they’s simply become inured to economic hardship:
So Latvia joined the EU in 2004, got flooded with cash from Swedish banks, and experienced the largets credit boom in Europe, and saw its housing market blow up with the rest of the global economy in 2008. And the response by the IMF and EU to the expected budget crisis was to force immediate tax hikes, spending cuts, and public worker pay cuts equal to 10% of Latvia’s GDP over 2 years. This was when the economy was in a free fall, contracting 25% from 2008–2009. So now that the economy is projected to grow 2% this year and the unemployment rate has dropped from 20% to 16% the country is declared a wild success and the poster-child for austerity. Latvia does indeed seem to be a poster-child, although not exactly for something positive.
“At least a generation”:
http://www.bbc.co.uk/news/world-europe-18078845
Hollande’s plane gets a message; “may have been” struck by lightning; Berlin powers not happy about Hollande
” ... Newly sworn-in French President Francois Hollande has arrived in Berlin for key talks with German Chancellor Angela Merkel, after his plane was apparently hit by lightning.
“... The plane was forced to turn back to Paris ...
“... Describing the incident with the first plane, Mr Hollande’s spokesman said that the aircraft “could have been hit by lightning”, the AFP news agency reports.
“... “For security reasons, it turned back,” he said, adding that no-one was hurt.
“... BBC’s Europe editor Gavin Hewitt says “In Berlin there is suspicion of Mr Hollande. They do not like the fact that during the campaign he raised the standard against austerity and championed growth. Many (German elite) saw that as a bid to reclaim French leadership in Europe ...”
Comment: Hollande may be getting electrifying messages to remind him who’s dictating, but he also appears to be an awful lot like our current American Tony Blair.
@R. Wilson: How is Obama exactly an American Tony Blair? I’m sorry if this ends up being out of line but that’s as ridiculous as somebody saying that Occupy Wall Street was born as a CIA op or John F. Kennedy was done in by the Mossad......(sorry if I just offended you, Bob, but Obama is far from being Tony Blair and I only brought up those two other things because they’re two other examples of truly ridiculous claims......both, btw, are being trumpeted by some the so-called ‘Truthers’ and ‘Patriots’, especially the former these days.)
But, but, but I was told that “the market” wanted austerity at any cost. “The market”, it appears, is a much less complicated sociopath than the austerions would have us. It just wants as much money as possible as quickly as possible:
I’d agree with the article that our quasi-hidden overlords in “the market” appear to demonstrate the collective foresight of a pack of hungry dogs, and that’s certainly nothing to celebrate. But in the context of a global debate over “austerity”, and whether strip-mining the middle class and divesting in human capital is the best path forward, the hungry dog mentality of “the market” is a salient fact when we’re repeatedly told that “the market” hungers only for “austerity”. The “market” is just a hungry dog. It needs to feed. And bite (It’s kind of rabid too). But “the market” isn’t Cerberus guarding the gates of hell. That role is played by others in this mess.
Well, ok, some assholes in “the market” can, indeed, claim to be Cerberus.
Lol, ok, I guess I misjudged what “the markets”. It turns out that “the public and markets have been led to believe in short-term measures for far too long. And they know there is too much moral hazard already.” Yes, the same “market” that experiences love at first same with every trashy bailout that crosses its bath is now concerned about all the ‘moral hazard’ out there. And the public, I guess, LOVES austerity. So says the Director General of the German Ministry of Finance. The whole post is a good read but the final commentary by Martin Wolf is really worth repeating:
I wish I could believe that last little history lesson was actually forgotten.