Ramin Mazaheri for The Saker Blog
A 7-part series in 2017 addressed the same subject as this 10-part series – the state of the global economy as impacted by QE and the Age of Austerity. Part 2 was, “Why no Petroeuro? or France’s historic effort for an anti-austerity Eurozone”.
Despite the leftists’ usual approach of assuming all White Europeans are neoliberals and neo-imperialists, there is a very real and widespread personality type – the anti-imperialist EU who fears US imperialism.
In Part 2 I discussed how we must give France some credit for genuinely trying to create a pan-European project based on French notions of egalitarianism, which are not socialist-levels of equality but which are certainly far more just than German, US and Anglo-Saxon nations of equality. As I wrote: “France may never have been more than one-third communist, but it was Marxist-influenced enough to realize that modern socio-economic policies are needed to fight imperialism – in France’s case, the United States. They realized that France was in a fight to keep its sovereignty, and so it conceived of the European Union as a Franco-German bulwark against imperial domination.”
As France conceived it, the pan-European project may have been an anti-socialist capitalist cartel, but at least it was also an anti-US, anti-socialist capitalist cartel.
France saw that the US tapped Germany, not England and certainly not France (who was even excluded from the Yalta accord), to be their industrial partner by calling off the deindustrialization plan for Germany. France is of course neo-imperialist, but that doesn’t mean it is not concurrently subject to the domination of stronger neo-imperialists – thus they have always been the biggest historical proponents of a united Europe – united against the US). Spoiler: while that was the very real view of De Gaulle and others who fought for France’s freedom in WWII, it’s true that French neoliberalism prevailed making the EU united with the US (against France).
This theory is grounded in historical actions: In 1965 France launched the first salvo against the Bretton Woods system of dollarization, which gave the US “exorbitant (financial) privilege”, per De Gaulle, who withdrew $23 billion in gold after realizing the US could not possibly have enough gold to genuinely back their almighty greenback. That followed the “shock” 1963 Élysée Treaty with West Germany, a clear attempt to pull Germany closer to France/a united Europe and away from the US sphere.
That 2017 series excoriated ex-Greek finance Minister Yanis Varoufakis for fake-leftism, and he was also mistaken here: “For the French elites, a common currency with Germany was an attempt to neutralize Germany, indeed to conquer the Bundesbank without firing a shot.” The accurate historical interpretation is that France wanted to not be conquered by the US-German alliance, so they kept proposing a Franco-German (capitalist, eventually neoliberal capitalist) alliance.
And to achieve this alliance with a Germany – which preferred to be a sycophant to the US – France has accepted austerity measures since Francois Mitterrand’s famous U-turn in 1981 on what would have been the most socialist-inspired economic program in West European history. As I wrote (I keep quoting myself for the lazy/uninterested/unimpressed who don’t want to read 2017’s Part 2): “The truth is that France had a genuine commitment to a pan-Europeanism guided by a mixed socialist/pro-growth/not-rabidly-capitalist economic plan.” But France miscalculated: “France mistakenly assumed that Germany would fight for a capitalism which was, at least, not totally modeled on American ruthlessness.”
Varoufakis noted how nothing has changed since 1981: “And so President Mitterrand’s government abandoned anti-austerity policies on the dubious grounds that austerity could only be defeated Europe-wide once the French economy was subjected to doses of anti-austerity sufficiently large to placate the money markets and to convince Germany’s elites to bow to the superior wisdom of French economic policymaking.” (my emphasis)
French policymaking WAS superior because it was based on their “Mixed Economy” ideals, which are not neoliberal capitalist… but this is all in the past.
Francois “high finance is my enemy” Hollande gave up the fight even after being elected on a platform of ending austerity; then he plucked Macron from the Rothschild chorus; Macron has proven to be a rabidly intolerant and unreflecting pro-European, an anti-sovereigntist and total neoliberal capitalist who would rather die than see anything remotely resembling Mitterrand’s 1981 economic plan even if he could wage decades of “doses” of neoliberal economics.
Europe’s problem – its crises – are still provoked by Germany
Europe’s problem in 2020 is not mainly Macron but still Germany, as they refuse to accept an iron economic law which a child could grasp: for every trade surplus there must be a corresponding trade deficit.
On even the psychological-cultural level, Germany still appears to tighten at the idea that a deficit of any time could actually not be fatal, infecting, an existential threat, etc.
But this is the main problem: Even decades into the pan-European project Germany still refuses to share their surplus. From Bismarck to Hitler Germany was a lousy neighbor – now it’s a lousy partner.
Despite causing the horrific suffering of World War II the almost-equally fascistic US made them their partner, and Germany’s actions show that they remain committed to gutting the continent for German benefit in total emulation of the US model. As I wrote in 2017, Germany’s goal is not a united Europe but to, “make a ‘United States of Europe’ with Berlin as Washington DC, Frankfurt as New York City, and everyone else as flyover country full of poor deplorables.”
However, a purely nationalist argument is insufficient for any leftist: “But France’s consistency is ultimately a foolish one; it is France’s fault for believing international solidarity plays any role at all in capitalism.”
Mitterrand’s U-turn was caused by his refusal to implement socialist controls on capital, thus he was ruined by the collusion of Germany with high finance: “Capital flight from France to Germany immediately took place with Mitterrand’s coming victory, putting the franc in immediate peril. Long-term borrowing rates (10-year bond) went from 9.6% in March 1979 all the way to 17.3% in May 1981, when Mitterrand was elected.”
It should not be lost on us that the arrival of anti-austerity Hollande provoked a bond crisis in 2012, just as the arrival of Mitterrand did in 1981. Collusion is what the 1% always does, and they get more effective on the international level with every passing year.
Should an anti-austerity candidate prevail in France in 2022 – Jean-Luc Melenchon seems like the only possibility, and it’s not a good possibility – the same tactic would certainly be used. This is why quoting myself is not self-indulgent, LOL.
Back to 2012: Hollande arrived in May and by June Spain went up to the unsustainable 7% bond rate for the first time since the Euro’s creation in 1999. However, France was never threatened with higher costs because Hollande capitulated almost immediately. This shows that the pan-European project – with its lack of a banking union and shared debt – has made it even easier for international high finance to intimidate, ruin and make democratic votes irrelevant: they can simply pick on the weaker nations first.
As I wrote: “Macron represents the death of France’s historical push to end the imperial domination of Germany, the US and high-finance”, but “blame it all on Macron” is a mistake made by that component of Yellow Vests who are truly political novices. It is not all Macron’s fault.
“This is a generational, cultural trend in the making since the 1980s, when the scourge of fake-leftism began.”
Sarkozy, not Macron, rejoined NATO. West European youth had the idea that “the EU, at any cost, is necessary to prevent war” hammered into them their entire lives. What I called “Latin Leftism” in 2012, to represent the anti-austerity Latin bloc of France, Spain and Italy, simply does not exist in strong enough numbers anymore. Two years into his term it is clear that 25% of France are hard-core Macronistas, and the 30% of postwar France who used to be socialist are no longer there.
The lack of public media and domination by private media assures that leftist analyses of daily media events never reach the masses.
So what’s new in 2020?
I’m sorry to inform those newly interested in economics, but QE was never intended to be a remedy to the decades of German/international high finance-imposed austerity – QE money was never intended to reach the masses and produce broad growth.
This 10-part series (this is Part 8) uses as its jumping-off point the 2018 book Collusion: How Central Bankers Rigged the World by Nomi Prins, a former Wall Street executive who saw the light and is now informing on the crimes of Western imperialism-capitalism. Prins gives a thorough and chronological account of central banker doings in key areas – Mexico, China, Brazil, Japan and Europe – ever since US banker crimes set off the Great Recession in 2007. The essence of her thesis is that the US orchestrated collusion among the central bankers of many of the G20 economies and the Eurozone in order to primarily save busted US banks, and then also to maintain the 1%-enriching policies of QE, ZIRP and no-strings attached bailouts.
Prins recognizes how QE was more of the same-old “Germany keeps getting richer” as early as 2013: “The results were in. Cheap-money policy strengthened Germany at the expense of the rest of the EU. Germany was now against it, and yet, cheap money wasn’t actively helping the populations of the rest of Europe either. Many were left to wonder what was the point?”
Prins leaves this question hanging, but the historical background I gave supplies the answer: to enrich Germany at the expense of its neighbors… as usual.
Since 2013 Germany has continued to rail against the moral evils of QE all the way to the bank. They have criticized the bailouts while being both the first to profit from them and also being the main nation which could have stopped them if they would only unite with the rest of continent by supporting a truly pan-European project. But Germany is neither anti-US imperialism nor does the “anti-1% sentiment” exist anywhere as strongly as elsewhere in Europe. An anti-austerity Five Star Movement is nowhere close to winning in Germany.
Germany continues to propose one policy: surpluses for them, K-rations for everyone else, and the idea that everyone is unworthy of a broad consumer/household/infrastructure-growing policy.
As Prins writes, German culture is so far away from normal reality as to be worrying: “The main criticism German politicians levied at Draghi was that easing was not bringing growth, but it was harming German savers with low rates.”
Germany is indeed in an internationalist project, but it’s clear that they don’t see it that way – this is a huge problem because Germany is de facto a leader in many respects solely because of its huge population: the pan-European project, history has shown, has failed because Germany is its incapable, unjust, hypocritical leader.
Where is Germany now?
On the brink of recession, like everyone else in the Eurozone… finally.
What did they expect – that the no-growth policies applied to the Eurozone wouldn’t eventually turn back on them? Who can buy exports when they are broke and working a job with US/German levels of precariousness?
The past five quarters in Germany have seen an average growth rate of 0.1%. Much like France, they “miraculously” keep avoiding a recession (two negative quarters) by reporting rates of growth of 0.1% or 0.2%.
But only the pedantic journalists say, “0.1% is not a recession!” That’s an anal-retentive view worthy of Germany psychology for sure…. Politicians have to make such a stupid claim – their re-election depends on it.
One word we can agree on is “stagnation”, and it is certain to take hold: in October the IMF’s global forecast said the global “big four”—the US, China, Japan and the eurozone—would not see any improvement in their growth rates over the next five years. The eurozone is the biggest of the big four – Germany is screwing up not just Europe, but the whole world.
Europe has been stagnant for so long they forget what booming looks like – they see two construction cranes in Germany and stop the car in awe. The reality is that since 2012 Germany’s economy has averaged just 1.4% annually – this represents economic failure. Only in the modern Western media – which judges economic success via the stock market – could this have been considered “powerhouse” success, as they often refer to Germany.
Germany’s account surplus remains the biggest in the world’s – bigger than even China’s – but what would that surplus be at if it was Germany which had to bail out their failed banks instead of the ECB and, by extension, the taxpayers of all the Eurozone?
That, of course, is what makes German moralizing so hard to swallow for Europeans! That is what makes German anti-austerity so aggravating!
The idea that Germans have not been rapacious and greedy is total nonsense because it was their banks which made the mistakes – but unlike Greece the Germany lobby simply has more power in Brussels and thus can bail out German interests.
Equally false is Germany’s repeated insistence that the ECB is “apolitical” and “independent” – the ECB has essentially never gone against Germany’s interests. German elites have profited from QE yet blame the ECB publicly – classic German hypocrisy, classic German arrogance to believe that we can’t see through their smug claims.
The reality continues to be that “German dominance of the pan-European project” only gives false pride to the average Germans – exactly as Jim Crow laws in the US kept the average southern White in the same economic bondage as Blacks but afforded them ego-stoking pride that their race was the one on top, at least. German precariousness and poverty rates are worse than in France, but Macron is trying to “catch up”.
Merkel’s pinning of the blame on nonsensical, almost eugenics-related “behavioral patterns” of profligate Greeks is pathetic, but is just another typically capitalist response – a leftist blames instead the clear pattern of rapacity in capitalism.
One can only wonder how long negative interest rates can last before self-righteous Germans storm their neighbors?
Or maybe prolonged German contraction will finally wake up their 99% to the fact that the primary problem with Europe is not Greece, Portugal or France, but the German 1%.
Indeed the simplest solution for the EU, given that Germany refuses to share its surplus is: a Germexit. Europe can dare to dream of a life where they are not led by Germany, for Germany.
The reality is that things have changed only for the worse, but I rehashed/updated my 2017 article because we must understand just how long this problem has been going on, and how it is caused by the 1%-er collusion which is endemic in capitalism.
I suppose there is an alternative – wait for Germans to take a moral stand against their exploitation of Europeans. I wouldn’t hold my breath – they prefer to take a moral stand which openly justifies their exploitation of their “partners”.
Part 9, Don’t forget the real root of Brexit: fear of Eurozone economic contagion, has already been published – just ahead of the recent UK vote which installed Conservative Party dominance.
That means the next part to be published is the final Part 10! Organise your “publication parties” before party supplies run out in your area!
Here is the list of articles slated to be published soon, and I hope you will find them useful in your leftist struggle!
Part 1 – Western central bankers: they’re God, they trust – a 10-part series on the QE economy
Part 2 – How QE has radically changed the nature of the West’s financial system
Part 3 – QE paid for a foreign buying spree: developing countries hurt the most
Part 4 – Iran vs Mexico: ‘economic inflows’ versus ‘economic independence’
Part 5 – Understanding the West’s obsession with inflation
Part 6 – The new ‘beggar thy neighbor’: wars to devalue labor, not currencies
Part 7 – Blaming China for the Great Recession… to avoid emulating China’s (socialist-inspired) success
Part 8 – 1941, 1981, 2017 or today – Europe’s mess is still Germany’s fault
Part 9 – Don’t forget the real root of Brexit: fear of Eurozone economic contagion
Part 10 – Bankocracies: the real Western governance model
Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books I’ll Ruin Everything You Are: Ending Western Propaganda on Red China and the upcoming Socialism’s Ignored Success: Iranian Islamic Socialism. His work has appeared in various journals, magazines and websites, as well as on radio and television