Europe’s dilemmas
“Those who follow obsolete paradigms become victims.”
We’d like to move on to other topics, but Europe’s crisis has our attention. We could hope that Europe is on the verge of splitting apart and rediscovering nationalism, but this optimism is premature. Instead we are looking for forces of alignment and conflict within Europe, and trying to assess how effective the Greece bailout might be.
Greece may sue U.S. banks.
Greece is thinking in the right direction, about how to protect itself from U.S. banker exploitation and seek redress, but we doubt that Greece could get enough settlement money to fix its fiscal problems.
Why Germany went all in with the Greece bailout: Sarkozy threatened to withdraw from the euro.
Negotiations over the bailout fund appear to be primarily between France and Germany, but we wish we had more information on other European countries’ negotiating stances. We believe the eurozone is “all in” with the bailout fund and the resistance is mainly “populist.”
German opposition considers that Germany might be stuck with paying the bill for corrupt Greek socialists.
What we learned: Greece does not deserve sympathy because its elites weren’t paying taxes, its government was corrupt, and it spent ridiculous amounts of money on bureaucrats’ perks.
On street violence in Greece.
What we learned: Street violence in Greece probably won’t amount to anything of significance. The government propaganda line is working to pacify the strikers and protesters. Street demonstrations need to be huge and persistent, with a focused message, to bring down governments. No one really has the knowledge or will to do it. And, we wouldn’t support union demands in any case as more socialism only makes things worse.
German populist sentiment against the bailout is growing. Enough to ruin Merkel’s coalition and set Germany up for a change in government.
Not everybody is going to be happy that Merkel and Sarkozy decided to put Europe under IMF and Federal Reserve control rather than allow Greece to default on its bonds.
How Europe is going to save its banks: ECB purchase of bad assets, imitating the Fed.
Thoughts on banker corruption. Just a brief summary of predatory practices at the big banks. The good stuff appears below.
A prediction on “long, grinding decline” of the markets. It’s hard to see what forces will revive economic growth in Europe. It looks like the euro needs to fall further to stimulate exports. But forecasting markets is too tricky for us.
How they created $1 trillion out of thin air to save the banks. Basically, they are imitating the Federal Reserve model in the U.S.
What we learned: Part of the argument in Europe was over ECB purchase of banker debt. It’s a bank bailout, not a Greece bailout. The dangerous strategy of “sterilization.” The big gamble on “normalization” puts all further economic growth at risk if it doesn’t work. The economy has to be stimulated enough for the central bankers to get paid back. If not, really bad times ahead. The strategy in a nutshell: elites get to keep their jobs, while savers are put at risk from massive future price inflation.
“Those who follow obsolete paradigms become victims.”
The bankers are unlikely to be the victims because the bailouts were arranged in haste, financial regulation is insufficient to stop their parasitism, and they are smart enough to game the system.
Why the financial system is totally out of control. The split between the real economy and the financial economy is widening.
Doug Noland on why the markets are dysfunctional.
What we learned: The entire “shadow market” is the arena of speculation on a scale unprecedented in history and almost unimaginable. This shadow market is the big boys’ casino. It invites more risk, but when sovereign debt insurance risk premiums rise, the resulting contagion affects all global markets and collapses currencies.
“There’s nothing like liquidation and forced de-leveraging to really bring out the animal spirits for those seeking to make nice speculative profits from others’ misfortune.”
The big global banksters want this casino open as it is the source of their obscene profits. They don’t mind swarming short and attacking countries, corporations, banks, any weak player. They love financial instability as it is the source of speculative profits.
Why markets are rigged, and what caused the 1000 point drop, the “flash crash.”
What we learned: The idea of stock and bond and commodity markets as “free markets” is a dangerous illusion.
How the scams work:
How George Soros, Goldman and other big banks create more currency than the central banks have, then use it to short a country’s currency. If Goldman made money every day, could you call it “trading”? Why the big banks play by their own rules. Why short selling has to be curtailed if nations want to survive. Why Britain has a bad future.
Why short selling is a criminal enterprise.
Europe’s dilemmas:
Can a common euro currency survive when the economies of individual nations are diverging? What happens when divergence increases more, i.e., when countries diverge strongly on measures of inflation and deflation?
Can any nation in Europe grow its way out of debt, particularly when stimulus packages end?
How will elections go after unemployment rises, wages fall, and benefits are cut? Will any European nation be able to sustain its socialist welfare programs?
Will anti-immigrant sentiment grow in an era of higher unemployment and the obvious purging of the white population under globalist socialism?
As governments take on more debt, can they withstand short-selling raids? Will anti-banker sentiment increase to the point of transferring bad assets back to the banks?
Even if Europe stabilizes, will individual nations have the will to reform socialism?
Our best guess:
Price and wage deflation accompany currency devaluation, making everyone (except the bankers) poorer.
The next question:
After 18 months of austerity, Europe tries to achieve growth and export acceleration. Does social suffering in the weaker countries or some unforeseen emergency force Europe to postpone a return to export-driven growth? Does European stagnation diverge from Asian recovery and U.S. recovery? Does Europe become the permanent “poor man” of the global economy?
The bigger picture:
No one has curbed the excesses of the big banksters and hedge fund managers. The politicians are too dumb to understand exactly how the game works. Angela Merkel probably knows as much about economics as your average feminist financial reporter interviewing some Wall Street insider. But Merkel is waking up to the predatory nature of the banksters and may even get regulation in place. The bigger question is whether any politician has the knowledge and the power to break these banks and destroy the shadow markets for the good of the people.
Probably not. Obama, similarly, is probably economically illiterate and depends on his inner circle of bankster cronies for advice. We’re quite sure all the market policies are set by Summers, Geithner, and Volker, just as Clinton depended on Rubin and Bush depended on Henry Paulson.
The U.S. is resisting austerity measures and maintaining unionized bureaucrats’ employment and perks. The Obama administration is betting that Europe will restructure first, feel the pain first, see its currency devalued first.
The bad news is that the New World Order financial integration is stronger under the EU bailout. Nothing is being done to take down the big predatory banks. Financial regulation is probably mostly mirage and band-aid at this point. The world needs a politician who is big enough to bring down the banks. We don’t think one will appear.
Short-term outlook: The U.S. “strengthens,” relative to Europe, but Europe’s weakness means any recovery of “global growth” gets postponed. The U.S. socialism bubble grows. Banksters remain essentially unregulated despite reform legislation. The bankster criminals become even richer and more powerful. More social pain.
Summary
What just happened to Europe? Greece ran out of money and was about to default on its debt, so it applied to an ad hoc council of leaders for more credit. The national leaders agreed that their central banks could create more money out of nothing and lend it to Greece. The Obama administration and the U.S. Federal Reserve urged reluctant European leaders to follow its policies, to keep the European Union and the global financial system functioning.
The immediate results were, Greece got a bailout loan and agreed to austerity measures. The euro fell and stock markets around the world declined, wiping out hundreds of billions of dollars of wealth for euro currency holders and stock holders around the world. Greece’s bureaucrats got pay and benefit freezes and layoffs. Everyone in Europe got less purchasing power for their euros. The other European countries got reduced investment for their future as more debt was added to their sovereign balance sheets.
There is no such thing as Jeffersonian “will of the people,” there are only individual interests collectively aggregated in the era of individualism. The Greek bureaucrats protested in the streets, but this will amount to nothing. The citizens of Germany realized they had been robbed and responded with anti-bailout opinions and a vote against Merkel’s coalition. The rest of the world looked on passively as more funny money was created and more wealth evaporated.
The elites who run the world are pleased with the European Central Bank gamble because it solidifies their global financial machinery. The people are less enthusiastic because they are condemned to a gradually lower standard of living, and they bear the brunt of the gamble with currency destruction if the formula “create more debt to reignite economic growth” fails.
The forces of global integration won a huge victory, but the tensions between European Union membership and national interest remain. Meanwhile, the total amount of debt increases, meaning these tensions will play out until some future date, when European nations may face a similar crisis but will be poorer.
Where you stand depends on where you sit, and we will be discussing the problem of individual identity, national identity, and global identity in future posts.
Most people lost big, but they watch events through a prism of inferior knowledge (the obsolete paradigms of socialism and capitalism as progress) and are left with mixed feelings. Actually you are on your own. The elites are playing in their own global pool, betting big that they can take you over. There is no “people’s advocate” smart enough to do the job that needs to be done, run the bankster criminals out of business and undo global integration.
Those who follow obsolete paradigms become victims. You are following obsolete paradigms. You are the victim of failed socialism and New World Order financial integration.
Of interest:
Spain finally decides to cut 13,000 socialist bureaucrats and freeze the wages of the rest. Finally, Spain is listening to New World Order University.
We are interested in the pattern spreading to every other European country. Will the people take to the streets after cuts are announced, will the austerity measures actually work to the benefit of the economy and forestall debt default, and will any government that cuts budgets be able to survive an election?
Who Goldman Sachs finances inside the Obama administration.
The argument for the German empire, and why no one should feel sorry for Greece. We love anti-New World Order thinking. We even fantasize occasionally about what great culture might develop from nationalism in Europe. Flowers sprouting from the dead corpses of socialism and its financier, corrupt global capitalism, linking to the greatness of Europe before the “Enlightenment.”
A reminder that the United States is the biggest terrorist on the planet, financial and military.
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