by Ramin Mazaheri
If you don’t already understand that headline, you are missing the primary goal of neoliberal capitalism over the past nearly 40 years.
Stop assuming the 1% wants growth economies…please. Just stop.
The 1%’s interest is only in supporting the “keep all I got” model. Accept this as a rule and you are halfway to enlightenment, and you will pierce the technocratic lie that “economics is too hard to understand”.
Yet the fundamental misconception that high finance actually wants a “high-growth” model – but just can’t figure the darn thing out – is likely to persist. This is fostered by the mainstream media’s longtime deification of economic growth rates; but the recent twist is their newfound insistence that the 1.7% predicted 2017 Eurozone growth rate constitutes a turnaround, recovery, success story, blah blah blah.
Talk to the man on the street and they don’t know what recovery is being bandied about. Heck, Cuba does better than 1.7%, even with an international blockade!
This growth rate deification was never preordained – other alternatives were rejected: real unemployment rate (which includes underemployment), poverty rate, purchasing power index, etc.
Let’s play their game: surely they have been able to win according to their fixed rules?
Obviously…no. Or as they like to say: “Not just yet.”
So when are France and the Eurozone going to experience serious, broad growth? As the world’s largest macro-economy their stagnation is, after all, slowing the economies of the entire (non-socialist planning) globe.
In a nutshell, I can guarantee you that the Eurozone’s current near-depression/recession will not relent until wages and working conditions are drastically reduced, as is the collective ability to demand the minor redistributions of wealth permitted under capitalism.
My two guarantees are, after all, essentially what Juncker, Merkel, Schauble, Macron, Draghi, Dijsselbloem (Who? Exactly.) and other Eurozone leaders have repeatedly admitted…people just don’t want to believe it (or re-broadcast it). Economics, you see, are not forced by economic imperatives, but by political and cultural choices.
I would like to return to a quote by former Greek Finance Minister Yanis Varoufakis – I have used his 2016 book, “And The Poor Suffer What They Must?” as the jumping-off point for this 7-part series, which is now concluding. The first article of this series lambasted him for preferring to be a rock star instead of a true leftist. The second article replaced his fake-leftist analysis of the formation of the Eurozone with a truly leftist one. But, for the most part, the rest of the series has commended, re-broadcast and expanded upon his admirable whistleblowing regarding the appallingly corrupt and dangerously precarious nature of the Eurozone today.
Varoufakis related a discussion he had with an ECB & IMF interlocutor on the economically self-defeating nature of raising the value-added tax (sales tax) on a country like Greece. I place it here to show that the introduction of clearly counterproductive and ineffective economics – the policies of austerity – is by design. But what is the design?
“’Someone whose views matter here wants to demonstrate to Paris what is in store for France if they refuse to enact structural reforms.’”
To take a timely quote from the essential modern economist Michael Hudson – from his new, superb, comprehensive article on The Saker, “Socialism, Land and Banking: 2017 compared to 1917”:
“The word ‘reform’ as used by today’s neoliberal media means undoing Progressive Era reforms, dismantling public regulation and government power – except for control by finance and its allied vested interests.” (emphasis added)
This series was to be a call to arms in France, but the war is already over
This series was mostly written at the end of August, when the news is always slow.
It was expected that France would return from summer vacation and demonstrate like hell against the labor code “reforms” of the neoliberal concoction Emmanuel Macron. But it is early November and the fight is long over. “For now, he’s winning the game, no point in hiding it,” said Jean-Luc Mélenchon, France’s most famous leftist politician, last weekend.
Macron signed his labor code rollback into law by decree in late September. Not only was it not approved by the legislative branch, it was not even debated there. But some in the French government media would not completely hold their tongue regarding the phony claim that unions and grassroots groups helped write the law: “…the ‘social partners’ had just two hours to read the final 159-page version of 36 changes to French labour law.”
Macron had moved extremely swiftly. It was quite intelligent…but not so intelligent that I wasn’t asking everybody in August: “Why are the unions and leftist groups and Mélenchon waiting until late September to schedule their protests? It will obviously be too late!”
So either I’m a genius, or they are incompetent, or there is collusion, or the French have decided to be content with only ending the multi-decade reign of the Socialist and conservative parties, and only had the political energy to throw themselves on the mercy of Macron.
Bad idea….Despite constant polling showing significant majority opposition to the changes, Macron grinned in our face as he signed them into law even earlier than anticipated and on live TV.
So…anyway…back to part 7 – the true goal of “reforms”.
Varoufakis’ “structural reforms” have not been invented in France, of course. I think we all already have a very good idea about the pro-neoliberal capitalist/anti-socialist nature regarding the measures which have been implemented across the Eurozone in recent years despite massive democratic opposition.
So there’s no point to get into explaining them – after six years of results in France we have a big enough data set to draw solid conclusions: These reforms and austerity measures are self-defeating in terms of creating growth, and even the future achieved growth will necessarily be limited: you cannot make firing people easier and not expect that to offset some of your planned job gains, no?
My two proposed conditions for ending austerity – the gutting of worker wages/conditions and the assured inability to renegotiate – combined with the inability to democratically discontinue this policy, make it inevitable that the Eurozone will soon achieve a “Lost Decade”. And then also a “Lost Score”, just as Japan did.
In both of these major economic regions, recession has been fabricated in order to wage a social war against the 99%. Return to Dr. Hudson’s quotation above for a more in-depth explanation.
Why does the West believe that Japan is on another planet?
Another of our very few truly indispensable modern economists is Richard Werner. He is known for having developed the term Quantitative Easing, but his greatest contribution is in bridging the gap between Europe and Japan, two economic giants. His book “Princes of the Yen” is a first-hand account of Japan’s sudden shift from economic powerhouse to economic sick man – they went from being poised to buy the entire world, to perpetual stagnation. The 2001 book is so good that it did the impossible: it was an economics book that went to #1 on the sales charts (in Japan).
Perhaps it is because I am Iranian and am used to hearing about to hearing about the glories of 500 BC, but I feel that even an era as long as 16 years ago may still have things to teach us today….
But Varoufakis does not mention Werner; does not appear to have an international view of capitalism, socialism or economics; even evinces a Eurocentric prejudice. In his book he mentions the Bank of Japan just twice:
“From the late 1990s onwards, Europe’s banks copied the practices of the Anglosphere’s all-singing, all-dancing financial sector without having the safety net of a Federal reserve, a Bank of England or even a Bank of Japan to catch them when the inevitable fall from grace occurred.”
That’s a fine quote, but what on earth is “even a Bank of Japan”? Since when is being the longtime 2nd-largest economy small potatoes? It’s no shame to get passed by China, and the BoJ is certainly far more powerful than the Bank of England. The only reason for this casual dismissal of Japan that I can think of is – Eurocentrism. And this casual dismissal is from an alleged Marxist…and an alleged economist!
But if all of us would study Japan’s recent economic choices it gives us no doubt about two key issues: The Eurozone is following in Japan’s foolish footsteps, and that bankers are the same everywhere. Yes, those 1917-era caricatures are still correct….
The rise, replacement & decline of the Japanese model
I must repeat: these “reforms” were not invented in Europe. Instead, Europe is enacting/ has enacted the same reforms with the same ideology, goals and tools as in “Lost Score” Japan – the only differences are in skin color, eye shape and per capita rice consumption.
Much like postwar Germany, Japan was tapped as the US’s choice for regional manufacturing powerhouse…even though both nations wreaked such immoral, imperialist havoc during decades of suffering and repression. But both were defeated and thus easy to manipulate; both countries still host the highest number of American forces in the world today, even more than an “occupied” nation like Afghanistan.
Until 1985 Japan’s industrial/banking system worked superbly, with well-known results. It was a stronger version of France’s “mixed economy” model, with even more government direction about where, to whom and how much money to lend in order to create broad growth.
What changed was the decline of the dollar’s dominance, the end of Bretton Woods and the US’s creation of neoliberal economics in order to maintain American domination.
With the Plaza Accord of 1985, Japan adopted the US-orchestrated neoliberal changes that were designed to suck the surpluses from Japan back into the United States. ((West) Germany, France, the US & the UK also signed, but Japan had accumulated the most to lose.) From a capitalist, 1% point of view it made perfect sense and worked perfectly well, which is why Japan’s 1% adopted it. But from a nationalist or 99% point of view it was economic suicide.
As Michael Hudson related in 2008, Japan was, “acting as the Thirteenth Federal Reserve District and Republican Re-Election Committee” by going along with a plan which was clearly against its own national interests and sovereignty. Such an assessment should inflame our Japanese readers, as well as the victims of American imperialism worldwide. But it is textbook communism that the 1% cares more for money than their hometown neighbors, whether the 1% is in Japan or elsewhere.
What was the biggest specific change (and mistake) Japan made? Making the Bank of Japan “independent” from the Ministry of Finance, i.e. from the government…i.e. from accountability, oversight, The People, law, justice, morality, the influence of democratic votes, etc.
Deride communism as ‘government domination’, but examine the opposite
The core foundation of neoliberal capitalism means one thing which we will all agree on: government stands in the way of money (its power, and the ability for individuals to make it).
Therefore, the surest system to aid big money is to have a government which is politicians and not bureaucrats/civil servants.
You may have heard a lot of bad things about government workers, but they often actually know their limited terrain better than any ivory tower technocrat or special interest lobbyist/researcher. And – crucially – at least they aren’t in it only for the money. Can anyone say that about the revolving door of “politics/lobby/business” of Western politics?
Nobody will honestly or justifiably claim that that ALL socialist civil servants are “corrupt”, of course. The mainstream narrative is that socialism produces endemic corruption, but especially at the highest level.
But (and I assume we all know this but just won’t discuss it) in Western capitalism it is only not called “corruption” because the vices of capitalism – unilateralism (personal initiative), greed, “creative” destruction, a mafia-inspired “family over society” which is the barest exception to untrammeled individualism, ignoring the weak and the old, and too many other sins to name – are hailed as virtues. All we gotta do is unleash those “animal energies” of the economy, right…?
The core foundation of finance capitalism which cannot be denied is: shareholders and bankers rule (central bankers, too).
That’s why getting rid of independent finance ministers is a real goal – the good ones are not working for profit, but for the People. Bankers can be certain of what motivates other bankers; they are not sure where people like Varoufakis are coming from (to his great credit).
So we all know that the decoupling of finance/lending banking in the US took a major step forward with the repeal of the Glass-Steagal Act, and that reduction of government oversight caused the subprime housing crisis in the US.
But how many remember this “ancient history” a few years further back and across the Pacific? What happened when Japan divorced government oversight from banking following the Plaza Accord? Japanese bankers created the Asian Tiger Boom and the Asian Tiger Bust.
How? They flooded the area with easy credit, and then revoked it. Not being able to pay your bills is indeed a crisis….
And who organized the European Sovereign Debt crisis in the PIGS countries? Northern European bankers: by flooding the area with credit and then revoking it.
Many are saying the Eurozone Sovereign Debt Crisis is over, despite all the evidence to the contrary. (The previous six parts of the series have tried to marshal as much proof as possible for that thesis.)
So the multinational, regional parallels between the Southeast Asian and European crises are unmistakable.
But now we must add in the US: they have flooded their own market with housing debt, then car and appliance debt, and then credit card debt in order to cannibalize within its own rich borders.
So one would think that the lesson should be clear by now, because we clearly see the same results in all three regions which are the outgrowth of the same motivations – neoliberal capitalism.
In all three the government could have used its powers to end the crisis, but did/are not. The reason is encapsulated in my headline: Forced recession as a tool of social war against the 99%, or, enacting “reforms”.
Call the end goal whatever you like – modern debt peonage, new serfdom, the Modern Manor System – it is undeniable that Westerners live (suffer) at the apex of capitalism’s global dominance.
But the Eurozone is far, far worse off than Japan, and getting worse
This is because the European Central Bank, created amid the heyday of American neoliberalism and the death of the USSR, unfortunately has independence enshrined in its charter. LOL, given what I have related – you have to laugh to keep from crying!
The ECB cannot be constrained by any national parliament, nor can their offices be searched – they are totally above the law…so like the UN, minus the internationalist solidarity. The future of the Eurozone is so hopeless because the ECB is more purely controlled by bankers – and by foreign bankers – than Japan or the US ever was.
Thanks to Varoufakis’ whistle-blowing, praised in part 3 of this series, that horrendously undemocratic bankers’ cabal called the Eurogroup has been pushed into the light.
So we should now understand that those at the helm in Brussels/Eurogroup have always had the resources, the potential, and the will to be even more purposely destructive in a capitalist fashion as their colleagues in New York City and Tokyo.
And this is what they have done with that power:
(As the next section will illustrate further) Exactly like Japan, the Eurozone’s nearly decade-long failure of its austerity policies is now producing enough apathy, fear, desperation, and acquiescence to force through major “reforms” to Europe’s hard-won postwar social safety net and societal/labor structure:
Workers’ and trades unions’ rights will not be increased while mass dismissals have been made easier; workers will not have confidence to demand their fair share of the profits produced when they can’t even get a full week of work; when “full unemployment” (the mainstream never mentions “underemployment”) does return it will be without the stability of long-term contracts, the norm in places like France; the knowledge that refugees will be happy to leave their tent and take your job – when combined with anti-socialist racism – will be another divisive card for the bosses to play; and how can the standard of living “fall” when the 99% is all falling together? All of this will be the new “normal” and, of course, a success…for the 1%.
It does get even worse: Yet another crisis is coming for Europe – a political crisis. A multi-speed Europe has already been announced by the four major economies in a major betrayal of the 1991-era promises. The lender countries will simply take their money, go home, start sending monthly bills, and I recount this indisputable trajectory in part five of this series, “The Eurozone has likely entered its final calendar year, contraction coming”.
At some point Asia is going to re-decouple from the West
But not yet. I guess it’s because socialist China is still not strong enough to offer a better partner? Japan should realize that with friends like these, who needs enemies?
Japan’s Shinzo Abe can be seen as a clear precursor to Macron: after 15 years of near-recession, a beaten, desperate and misled populace voted in Abenomics, which is based on quantitative easing and structural “reforms” of the type of the French had resisted for so long.
Abe has just been reelected as Prime Minister this week. QE has, just like in Europe today, been celebrated as a champion merely by achieving the pathetic goal of “avoiding recession”. He also benefited from the recent manufactured North Korea crisis to gain a typical election bump in highly nationalist Japan. He only won power in 2012 when the long-dominant “fake-leftist” party was finally punished for continuing the conservative, regressive and despised post-Plaza Accord economic choices.
The results of Abenomics are clear: dismal by capitalist standards, criminal by socialist standards.
Abe’s QE – putting aside the accompanying societal changes to the labor structure – is astronomical when compared with the ECB and Fed: as a percentage of the country’s GDP it is three times larger than that of his Western counterparts, nearing 100%.
But if you were thinking that Japan is worse off than Europe you are mistaken – the reason is economic nationalism, perhaps the only defense left against globalization (assuming you foolishly reject Socialism, the solution):
The fact is that Japanese people own Japanese debt. 95% of government debt is owned by Japanese citizens; capital flight is thus not a risk; citizens are not going to dump their bonds; you cannot foreclose on both your grandmas because then you have nowhere to spend your holidays; Japan’s government thus has tremendous flexibility to print its way out of a problem (the problem is they are not printing for productive investments); Germany, the US or China cannot impose their will on Tokyo like they did with Athens.
Therefore, Japan’s problem is not international capitalists, but national capitalists; if they could ever subdue their 1%, the world would be following their lead just as much as many are following Beijing’s.
Japan, it has often been written since they were “opened” to the West in the late 19th-century, apparently still has some sort of inferiority complex regarding the West: they have chosen to pathetically ape it for the benefit of their 1%, only. They should be reading Franz Fanon to understand the psychology of the colonized, which they are culturally even if not economically.
Back to the point of this series – the Eurozone’s near-future outlook: Japan provides a clear model of expectation:
Japan’s growth rate since 1990 is nearly the same as France’s since 2010 – always around 1%. That’s enough to avoid the bad-press headline of “recession” but not enough to produce genuine growth. It is enough for clueless politicians to say that good times are “just around the corner”, and enough for “ever busier putting food on the table” citizens to pray they are finally right.
Whether in Japanese or French, the capitalist media and official government responses are the same. The common thread is that they have all embraced 1980s style neoliberal capitalism, the worst form of capitalism implemented in the post-industrial era. This is also known as “the American way,” or globalization.
So has the European sovereign debt crisis been solved or postponed by Draghi?
This entire series is based around the idea that Draghi has to end QE sometime, and that when he does the bond markets will go back to the crisis of 2012 because nothing has fundamentally improved since 2012.
On October 25 the ECB’s Mario Draghi gave his long-awaited speech. So was it more “free money” to the 1%, or will they start looking for other ruthless, capitalist, speculative investments?
Draghi refused to use the scary word “tapering”, but the ECB is doing just that by going from €60 billion to €30 billion in bond-buying per month, for nine months. This will bring the total holdings of the ECB to approximately €2.6 trillion. Draghi really had no choice as far as the length of nine months – QE must end because there are almost no more national bonds to buy under the current rules.
So this is just a postponement, and an admission that the Eurozone economy is still not prepared to stand alone without government banker bailouts, daily. But make no mistake – nothing has been delivered for the 99%.
When they run out of national bonds, maybe they will change the rules in order to buy more…? Unlikely, because die-hard capitalist (West) Germany is tired of postponing the obvious – an oh-so-profitable Troika-led gutting of more than just Greece.
Or, the ECB might move on to buying corporate bonds? Maybe that will appease the speculators temporarily, but it will not change the fact that the Eurozone’s national bond markets – totally uncoupled from each other despite living in a multinational project – will be back to where they were in 2012 by next September. Governments will still need to sell bonds….
So Draghi’s announcement did not rattle the bond markets because the status quo has not been changed – the can has been kicked down the road again.
But nothing changes the crucial fact that five years of QE has gone towards the 1%, the stock market, and assets like real estate, jewelry and artwork, instead of productive investment geared towards producing jobs, growth and prosperity for the 99%… or anything which would have improved the “real economy” and thus reduced the chances for another crisis.
Voila….That is where the Eurozone stands today – as the biggest link in the global economy, and still the weakest link.
Thanks for reading this series and let’s postpone our rendezvous.
See you next September, Mario! You may be hoping for a miracle, but high finance will not grow a conscience by then. Buy Bitcoin while it’s still in 4 figures!
Sorry to add here that I have not even discussed how the three Western regions of the United States, the Eurozone and Japan have no viable plan to sell all of this massive QE debt to the private sector. They will flood the market at the same time, where enough demand cannot possibly exist, and thus will have real difficulties getting these debts off their books. Somebody is taking a haircut – under capitalism it is always the People. But…because the People have already bailed out the banks, the haircut is coming from your wages and stability.
So where does this “unloading QE haircut” come from, then? You tell me….
Planned mistakes aren’t ‘mistakes’ – thus socialist economic governance is needed
In the end, there is no way out: government spending is the only way. We will always collect taxes, after all.
But there is government spending in capitalist countries (where bankers decide where the money goes – their pockets), and then there is government spending in socialist countries (where elected/appointed/recallable/imprisonable bureaucrats decide where the money goes): you decide which is better.
Both Werner and Hudson (with his vital modern critique of the FIRE sector that is usuriously bleeding the West dry, just as they did it in 500 BC, 500 AD, 1500 AD and at all points in between) do not denounce quantitative easing per se – they denounce that it is being used to benefit only the 1%. That is simple economics and simple economic history….
Regarding political history and the pan-European project: It is common knowledge that Europe’s founding fathers hoped that a monetary union would lead to a political union, in order to support said monetary union. It is also clear they hoped that an economic crisis would provoke efforts towards a closer political union.
But this is not a democratic plan in the slightest! This is blackmail of the European People!
This is the undiscussed, undemocratic secret at the foundation of the pan-European project, akin to slavery in the US, imperialism in the French Republic, and perhaps foot binding in modern Imperial China. Only one of these regions has forced a modern peoples’ revolution to throw off this sinful system….
And you can call it hostage-taking, opportunism, and just plain sadistic cruelty, because Europe’s capitalist elite knew that when the next financial crisis inevitably came along in capitalism, great suffering would be produced worldwide by the ill-prepared monetary union.
Perhaps the one point of this series is to prove that nothing has changed in the Eurozone since 2012, and that Spain and Italy still remain on the edge of a punishing Troika bailout. Just as the Asian Tigers and Greece were busted out – the bankers’/Troika’s toll is terrible, so terrible that “reforms” are being accepted in places like France in a plea for preventative mercy.
Which is why there is resistance: Brexit has been followed by Catalonia, which will be followed by the departure of Central Europe when “multi-speed Europe” arrives, which will be followed by some other -exit for as long as this atrocious status quo exists in Europe.
Communism is, after all, an entire cultural system and not just an economic point of view. Because the current aim of this particular pan-European project is so ruthlessly capitalist and yet has been so imbibed unthinkingly, it will take many years of re-education to learn what is true, harmonious pan-European solidarity.
The jury is out as to which will come first: solidarity or breakup.
Conclusion: You either aspire to the imperialist 1% or dare the socialist dream
I recently interviewed a prominent investment fund, as a part of my work for Press TV. After our 15-minute interview, I left thinking that I disagreed with everything the investment banker said – not surprising given my adherence to communism. We chatted afterwards as he smoked, and he rattled off a clichéd national stereotype to explain the economy of every global region. We needed to film his office to get some extra footage for our report and, probably because he saw that I was reading his investment magazines to pass the time, he printed out a 10-page article he had recently written. I turned the last page to read his conclusion, and here is his third to last sentence:
“When taking into account the level of stock market valuations, we find that the momentum can be found to firmly install the fiscal reforms which will – finally – put in place the American system.”
And this guy is French….I don’t think “the American system” is what de Gaulle expected, or what the French fought the Germans for and, most crucially, what the French people want? That last point, due to the dictates of national sovereignty, may be more important than the key fact that the American model does not even work for the average person.
I think the investment banker’s final sentence reveals the obvious, ongoing collusion between high finance and central banks:
“It seems necessary to have a greater clarity on the monetary politics of the two central banks (US Fed & ECB) not only in the direction in which it is leading, but on the timing and amplitude of the direction.”
Rest assured that nobody in the investment, banker, or central banker community is reading this series.
If they even caught a whiff of it they would drop it immediately, as it would produce immediate and painful cognitive dissonance due to their false assumptions and self-serving conclusions.
Because they cannot tolerate different ideas, they live in a little insulated bubble, and they don’t want anything to touch them physically or even intellectually. They seem to hope to earn a lot of money quickly, in order to escape the daily grind, the sweating masses, the idea that all labor is equal.
I will end this 7-part series with a quote from Varoufakis because, despite my on-the-ground experience as a daily, hack journalist (where breadth and urgency confer real virtues, although certainly not the only ones), people will take his (fake-leftist) word over mine.
“To believe that Europe’s problem was debt. Not the architectural design of the Eurozone. Not its unenforceable rules. But debt. Debt was never Europe’s problem. It was a symptom of an awful institutional design.”
The tragedy of the European austerity I have reported on and am living through is that it ensures that the indebted will never be able to repay: Greece will never ever pay off what they owe – believing that is just proof that you have been misled by the media.
They are being told “no bailout, and no bankruptcy”…this can only end in revolution or a stay of execution by their monetary masters. The Third World knows that the governor never calls in time….
European imperialism has finally turned inward. The lessons must be learned. The People must demand new rules. These rules cannot be capitalist. Socialism remains our only option.
This is the final article I have written in a 7-part series on today’s Eurozone which will combine some of Varoufakis’ ideas with my 8 years of covering the crisis first-hand from Paris.
Here is the list of articles slated to be published, and I hope you will find them useful in your leftist struggle!
Varoufakis book review: Rock star economist but fake-leftist politician
Why no Petroeuro? or France’s historic effort to create a permanently anti-austerity Eurozone
The hopelessly corrupt structure of the Eurozone & the Eurogroup
The Eurozone: still as primed for collapse as ever
The Eurozone has likely entered its final calendar year, contraction coming
The English-speaking world’s fear of calling communism, ‘communism’
Forced recession as a tool of social war against the 99%
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. His work has appeared in various journals, magazines and websites, as well as on radio and television. He can be reached on Facebook.
US GDP is now based just 28% of real economy while 72% is fake virtual economy according Chinese study. When Nixon was forced to cut tie between dollar and gold in 1971 US real economy growth stopped. That’s the main reason why US medium wages are quite near the level of 1973-74 and now middle class has immense problems to send their kids to collage/university. In fact 1% see now reason why to educate young generation at all. US will never ever become global factory.
Drawing attention to Varoufakis-the-whistleblower is great. Calling out Varoufakis-the-one-armed-lefty has been thought provoking.
Your economic analyses are veering into hypotheses which can be grounded in prediction quality data. Please consider this voice in the wilderness. https://econimica.blogspot.com/2016/06/why-this-time-is-completely-utterly.html This blogger has arduously investigated (to seeming silence) the demographic realities which underscore the stuff that is going on. He keeps finding tighter ways to highlight his conclusion.
“Population growth” is a canard, rather, the growth in persons who earn, pay tax and consume is what economic vitality is based on. And if one uses that subset of a population as an independent variable, things pop out. And they have been visible, it seems, for a long time.
Please enjoy seeing the national players in a different way.
I lived in Japan in the eighties. The Japanese took a dive because they have no illusions about the US having the will or the ability to drop Nukes on them, which the US already did twice. Also real estate prices were rising astronomically which were devastating the middle class. The Japanese wanted a lower profile while the US self destructs because they know anti-Japanese racism is rampant in the US. Also because of WWII, if US Japan relations broke up entirely, the Chinese have long memories of Japanese Militarism. The Japanese bureaucrats, not the 1% still run Japan.
many Japanese in the eighties thought the system was good for the Bank of Japan and corporations, but not really benefiting most Japanese.
The enormous inflation in real estate was the result of the 1985 Plaza Accord. Under secret US pressure, the Bank Of Japan was fundamentally changed away from growth of Japan’s economy and into neo-liberal austerity. The immediate cause was the abrupt end of “window control”, a WW2 era allocation of central bank credit to corporations. One of the by-products was that corporations were no longer constrained to invest in R&D or into more factories. Corporations quickly found they could “earn” far more money by investing in the real estate boom. It only took about 4 years for the Japanese economy to collapse under this neo-liberalism.
Let me suggest a very informative Youtube on this topic.
Princes of the Yen: Central Bank Truth Documentary
It runs 92 minutes, but it’s well worth it. There’s also a website for
Princes Of The Yen
BTW, this has to rank as Mazaheri’s best essay yet, and that’s saying a lot !
The documentary they made on “Princes of the Yen” is very good. As I recall, the abundant footage of Werner talking about all this on Japanese financial TV shows – while it is actually going on – is really exceptional viewing, because you just wouldn’t expect that.
“invest in R&D” is a phrase I should have used more often in this series!!! But that is what I think was made clear by phrase like “no investments in the ‘real’ economy in order to produce broad economic growth, jobs, etc.” I guess I was trying more to popularize Michael Hudson’s terminology of “FIRE economy/ Real economy”.
Yes to R&D, no to the FIRE sector. That’s about all the investment program any government needs today.
Is interesting that the ECB is seriously talking about – now that they are running out of national bonds – investing in corporate bonds. We assume that they would use it for R&D, new hires, capital investment…but who’s to say that they wouldn’t just use this taxpayer money for more stock buybacks to inflate their stock price? Without government direction – socialist central planning – we taxpayers have no guarantees… And we should view that is unacceptable.
Many thanks to all for the kind words – very glad people liked the series!
You made an extremely important point that the elites are so very rich that they don’t care about increasing their wealth, but instead their priority is to preserve their hold on power. Sometimes more wealth is irrelevant.
What I never understood is how the Japanese economic system could be destroyed in plain view of everyone. I worked for a Japanese company and once spent 10 days there. I know something about Japanese culture, but it doesn’t add up. They are run-of-the-mill nationalist about their culture, but are non-political, with unquestioning silence and conformism on the strategic issues. Not so different from the US, really. Japan’s real elites live very separate lives from the rest of their people, and perhaps that is the explanation. Japan’s elite run things from behind the scenes and the politicians are merely window dressing – like elsewhere..
The French dissidents (for example Egalite Et Reconciliation) make a similar point that the French elite chose to go into WW1, with the explicit motive of smashing the lower classes. It worked for them, and the evidence is painful. In what’s called “the inter-war period”, when the French people were in absolute misery and forced to focus on just putting bread on the table, while the elite was stronger than ever.
Corporations buying back their own shares with borrowed money is one of the major time-bombs in the US economy. In about ten years, companies become unable to repay those loans because they didn’t spend money on capex (capital expansion) for R&D or more capital equipment. Of course more capital equipment doesn’t make sense when the consumers can’t buy stuff any more, or if factories are being off-shored. But rising stock prices create hefty bonuses for the top managers in the short run.
Somehow the link to Egalite et Reconciliation did not work Here is the URL which you can just paste into your browser:
I watched the Princes of Yen. Excellent. After 9/11 I renewed my interest in conspiracies that had started with assassination of JFK and the escalation of the Vietnam War. However, I soon realized that the monetary system rigged for the elites of the day is the biggest conspiracy – in plain sight. I am like most people so reading economic texts is better than any sleeping pill as a cure for insomnia. .Or listening to Alan Greenspan. This is how they do it. Make any economic explanation overly complicated. Growing up, the authorities would make fun of the Soviet 5 year or 10 year plans – but these international financiers have 5 or 10 or 20 year plans – however long it takes to create a crisis. Use this crisis to make the changes for more control and less for us. We can’t know when its going to happen but they make it happen so they the powers that be can be prepared all the while saying whocoodhavenone. 2nd half of 2018 anyone?
Creating a real estate bubble is also killing the middle-class in Paris today, and elsewhere. It hasn’t reached those incredible 1980s Tokyo proportions, but it sure does take a lot of my money.
So it is the same tactic – neoliberal fueled increases in the stock market, real estate, capital assets – which, if left unchecked, will produce the same medium term results: a “lost score”.
Ramin Mazaheri, you are the rock star.
Thank you for this wonderful series.
Thank you for pointing out the sanity of socialism as the antidote to capitalist thievery.
I had never fully understood that socialism is not a thing of the past but a thing of the future.
So, there is a path forward. The people need their own money.
People need to take control of power over them. They don’t get what the CBs are doing and how the system works against them. 80+% people have no clue and if you try to make it clearer for them, they don’t listen because it’s not about stuff from a TV.
Once the system gets transparent, people can get their own money. The system needs to be uncovered, otherwise nothing will change. Only then socialism can get a chance.
Thank you, for a wonderful article.
While reading this piece, I thought of some related readings.
Naomi Klein, “The Shock Doctrine” …. one of her main thesis is how the bankers and the 1% (this was pre-Occupy, so she didn’t use that term) use times of crisis to get the things they could otherwise never get a democracy to agree to. To the point where they deliberately create a crisis to get what they want. After I read this, I watched Obama come into office and immediately declare a giant crisis so he could bail out the banks, and felt I knew exactly what it was I was watching. On my list of important books to read to understand the world.
Chalmers Johnson. Wrote a series of three books, beginning with “Blowback”. He talks a lot about Japan in that book. Draws the analogy that essentially Japan was to the United States what East Germany was to the Soviet Union. He’s an economist who specialized in Asia. The preface to (I think) the first book caught my eye, because this older, 1950’s trained economist starts his book stating how ‘economics’ has become just like a cult religion. Economists spout idealogy and doctrine, but no longer do serious studies of what’s really going on. Free Trade is Good! etc, etc, etc.
the shock doctrine should be mandatory reading to understand this topic. I would also suggest “memories of an economic hitman” (or similar, tltg).
The main concept I think people should understand is that it is always clouded in a veil of incompetence and mistakes, when in fact, all these problems come on purpose, by design.
“Stop assuming the 1% wants growth economies…please. Just stop.”
A truly fine point.
There are several points in your article with which I disagree.
“Creative” destruction in Capitalism is truly creative in most of cases. The main difference in the world is not between verbal and ideological constructs such is “capitalism” or “socialism” but between those social systems which fear creative destruction (i.e. “status quo” / conservatives) and those which adore constant change and love “creative destruction”.
There is an excellent book on that topic which tries to extrapolate that simple truth from historical perspective written by economists Acemoglu and Robinson under title “Why nations fail” ( http://norayr.am/collections/books/Why-Nations-Fail-Daron-Acemoglu.pdf ). I strongly suggest it to you in order to fully understand to what degree elites do not love any changes, especially economical changes.
One more thing. As far I can conclude from your writing, you aspire toward a “socialist dream”, but as I tried to explain, it doesn’t matter whether is there socialism or capitalism but what matters the most is a fact whether institutions of certain society are inclusive or exclusive.
To illustrate my point I’m giving you the link where you can see that every elite-based society which has no functioning market is “imperialist” and “oppresive” ( http://web.mit.edu/slava/homepage/articles/Gerovitch-InterNyet.pdf ).
Soviet leadership interest groups feared they are going to obsolence and did everything to keep their power grip.
So, Ramin, you should know that so called “creative destruction” is really the thing which matters the most and contributed the lion share to the progress of humankind’s technology and civilization.
Maybe the european society is dying of succes ? of old age ?
Too many retired people , too many students of irrelevant careers , too many non productive inmigrants , too much drugs and alcoholism , too much Government and too little religion , too many taxes , too many freaks …..
And in North America add too many wars and coups , too many military and intelligence
The ” West ” , the land of sunset , sunset of the ” west ” ?
Well said sir.
I decry the furious chase of money as if money is a thing unto and by itself. There are far more important things than money, glorious money (may I have more, please sir?).
Money (of whatever currency) is simply a means of exchange. It is supposed to represent the ability to exchange goods.
But it has become more than that. It represents control. SWIFT. Petro-dollar.
The vast amount of wealth in the world is not real. It’s not backed up by actual goods or resources. It’s owned by financial institutions like banks, insurance companies. The former has been allowed to get away with ‘fractional reserves’, the latter simply increases their insurance rates to cover any losses.
Both are seriously f*cked up. Essentially, a licence to print money.
Printing (i.e. dreaming) wealth is no way to run a planet. It represents cognitive dissonance, a refusal to recognise reality.
Yep, “The 1%’s interest is only in supporting the “keep all I got” model.”
Taken straight from a link previously published in theSaker’s comments section
“We already have all the wealth we need, so our main goal is to preserve it.” and “While indebting a nation is good business since we can eventually take it over when they default, just like we did with Greece, we can’t have the entire world defaulting at the same time. Collapses have to be done on our orderly schedule.”
So forced recession, done on an orderly schedule, is definitely one of the tools used against the 99%.
But socialism is not the cure, only increased Nationalism is. The 1% aren’t fighting against socialism, they are fighting against Nationalism. Nationalism is by definition is anti-globalization. Socialism, on the other hand, is intrinsically pro-globalization. Nationalistic governments should force their young people to maintain their culture, their religion, their language, and to have kids; human rights, immigrant rights and female rights be . If nationalistic governments don’t dictate to their people then their people are going to go extinct and the 1% will rule the un-cohesive rabble that remains like kings.
Nationalistic countries do have their bad points, they do tend to attack their neighbours and maybe colonize them. But they also have their good points, they don’t allow anyone to just walk in and take over their country. Seems like nationalistic countries who obey international law are the answer.
Hard to accept the point we are…to face it…the fact is WE NEED to. 1)I hope there are good changes to come from other parts of the world, I do hope…2) we had “silenced” examples such as Cuba, Venezuela and Iran…a Revolution comes from people’s spirit, was só hard and beautiful to see my beloved heroes from Venezuela (not the traitors, of course there are…local eliteste blah)…w/sanctions w/blasting dirty media and local collusion, dead Police men and citizens totalky linked to the opposition, lies and brainwsh in their own msm (think about the rest of msm, well..We saw it, actually we saw the sil lente media..a different world is possible but people’s mindset has to change…a country is made by its people (and the other way around). I experience the disgrace of lawfare and psyops in my country (Brazil) and here we are, in a much worst position than we were when we had a formal dictatorship/ 60s 70s… Since Lula (2003-2010) we had universal healthcare for FREE, great access to universities..credit for small business etc etc. We were just FINE. But when people are eager, blind, slavery supporters, arrogants and the extreme lack of solidarity of nowadays, things often go wrong (our former President was convicted daily publicou humiliating for years w/ no evidence at all, our country is destroyed, back to poverty lines and below, we were the 5th economy of the world with Lula.Local media oligopolies and ancient predjudices avoid us to keep the progress and threw us to embarassment, illegal prisons (routine), even suicide occured based on this mentality of persecution..a lot to think about, sure we will have a lot to talk about from different perspectives. Keep up the brilliant work with all your passion, dear Ramin. We need it more than ever, dear friend :) Layla Pontello Dal Prá Reis
“Sorry to add here that I have not even discussed how the three Western regions of the United States, the Eurozone and Japan have no viable plan to sell all of this massive QE debt to the private sector. They will flood the market at the same time, where enough demand cannot possibly exist, and thus will have real difficulties getting these debts off their books. ”
Ramin, there is a way for some of this QE balance sheet reduction, the US Fed is simply rolling off the debt as it matures. What this means is that as the securities mature, they are simply not reinvesting all (or any of it depending on amounts). The meaning is, as securities mature, Fed gets paid in money, they hand it over to Treasury, or destroy it. So yah, reverse QE. Pulling money out of the economy. Get some details here:
So its a slow process, that will speed up.
“The word ‘reform’ as used by today’s neoliberal media means means nothing less than the undoing Progressive Era reforms, dismantling public regulation and government power – except for control by finance and its allied vested interests.”
Yes, the corruption of the English language is a political weapon in the hands of the Transnational Elites.
”Defenceless villages are bombarded from the air, its inhabitants driven from the countryside, its cattle machine-gunned, its huts set on fire with incendiary bullets: This is called – pacification.”
George Orwell – Politics and the English language (1946)
We could add a few of our own. How about:
Sweden is considering joining NATO which means that Russian Szarmat and Iskander nuclear-tipped missiles will be pointed straight at Stockholm in response. I can imagine how some brainless NATO nonentity would describe this process.
This will improve and is vital for Sweden’s security – we are told. The idiocy is self-evident.
Language is now being used to mean the opposite of what is actually happening. And even whilst is happening ‘it isn’t really happening’ (Harold Pinter – British playwright.)
And we have from the Guardian a complete historical whitewash of Stepan Bandera and the UPA who is described as being ‘contraversial’ Yes, I suppose in the same way that Heinrich Himmler was ‘controversial’.
Social and economic regression is now described as progression. This applies, particularly to labour laws. Reform is in fact un-reform. It wasn’t that long ago that early British trade unionists were shipped to the then virgin wastes of Australia for their sins. The Tolpuddle Martyrs were a group of 19th-century Dorset agricultural labourers who were arrested for and convicted of swearing a secret oath as members of the Friendly Society of Agricultural Labourers. The rules of the society show it was clearly structured as a friendly society and operated as a trade-specific benefit society. At the time, friendly societies had strong elements of what are now considered to be the predominant role of trade unions. On 18 March 1834, the Tolpuddle Martyrs were sentenced to penal transportation to Australia.
In our topsy-turvy world historical regress is described as historical progress. The ‘progressive’ liberals and their media pals should better be described as ‘regressives’ rather than ‘progressives’
What was the biggest specific change (and mistake) Japan made? Making the Bank of Japan “independent” from the Ministry of Finance, i.e. from the government…i.e. from accountability, oversight, The People, law, justice, morality, the influence of democratic votes, etc.
This is wrong. Japan lost it’s independence when it lost ww2. They just took their orders here.