by Ramin Mazaheri for The Saker Blog
US bankers caused the Great Recession, and thus the US was the first to suffer economic turmoil. The coronavirus is a novel malady: we now know that it only severely attacks infirm and unstable bodies – it’s not overly facile to graft this idea onto the global economy.
Therefore, among Western nations and their client states it is the Eurozone (the weakest link in the global macro-economy, despite being also the biggest link) which will see the worst economic effects of the “Great Lockdown” stupidity.
(It is “stupid” because the West is employing quarantining and control methods used by Asian nations, but without having similar cultures of governmental economic intervention nor widespread trust in their governments.)
Because reality is multilayered we must not become immune – even though many want to focus only on the medical/tabloid/political sniping/fear aspects of corona – to the enormity of the Great Lockdown’s economic consequences. So it’s wake-up call time:
Hey! It is now really bad, economically!
Double hey!! Europe was already bad, economically!!
Triple hey!!! Europe was already intellectually paralysed when it came to fixing their bad political-economics!!!
We all get the first point, but regarding the second: Sadly, I am a rare Europe-based journalist who has publicly discussed how the Eurozone has already had a Lost Decade worse than either of Japan’s two – here is the data, which was quite easy to crunch but nobody in the Mainstream Media wanted to crunch it (or publish it).
So I tear you away from your corona-fear porn to point out: the Eurozone already had severe underlying morbidity. (Japan’s ailments – such as an obese debt-to-GDP ratio – are of an entirely different order for so many obvious political-structural reasons.)
I keep asking myself: “Maybe it’s not so bad, economically?” After all, the Eurozone has one competitive advantage over their US partners: their governments often chose to protect employment by assuming wage payments. This will prove vital psychologically (which influences consumer activity) and logistically (keeping supply chains normal) upon reopening.
But it is not the “Socialist Republic of the Eurozone” but rather the “Neoliberal Empire of the Eurozone”: some nations have suspended rents and debt repayments, but these are temporary suspensions and not total forgiveness of 1%er rentier parasitical activities. The state orders you to cease economic activity but will not fully cover the costs of doing so – cui bono? The Eurozone, after all, does not want socialist equality but capitalist inequality and wealth/market concentration – it’s the “birthplace of human rights (for aristocrats)”.
But the Eurozone’s wage assumptions and its larger social safety net – funded by the stolen wages of over two centuries of imperialism – cannot mask its fundamental weakness relative to other currencies.
Not much EU QE yet, but what else could they do – go socialist? Or perhaps fix the pan-European project?
Round after round until today’s “well past the point of ‘QE Infinity’” has proven that modern neoliberalism has only one play in its playbook. So we should not be surprised that 2008 is repeating itself.
The US has once again been the first to announce the biggest bailout. Currency swaps to debt-entrap client states were immediately opened in a series of hugely successful moves to buttress the dollar, yet again. In order to diffuse and stagger the effects of money-printing from threatening the dollar’s global dominance – just like a decade ago – we should expect the European Central Bank to hold off their major bailout once again.
The multinational 1% works in tandem, not competition, much to the consternation of analysts who can’t analyse in terms of class warfare. This Western “bankocracy” is something which I described in a 10-part series from last winter: Western central bankers: they’re God, they trust – a 10-part series on the QE economy.
Accordingly, the ECB has only announced a €750 billion rescue package, which is dwarfed by the $6 trillion of the US and even – in a rather significant development – the €1.1 trillion of Germany. France’s bailout is just 10% that of Germany’s, despite being 70% its economic size, because Emmanuel Macron is – of course – 100% supportive of the international 1%’s long-running goal of crushing the French model.
(“Fiscally responsible”, “debt fearing”, “Weimar-scarred” Germany has also additionally announced a “limitless” aid program for small- and medium-sized businesses: this was made possible due to the collateral appropriated from a decade of heartless strangulation of small- and medium-sized businesses in weaker areas of the Eurozone. Disgusting, how the rich get richer and how hypocritically Germany turns socialist just when the heat is turned on. As I point out over and over, because it is a fact: for over a century the obstacle to European stability remains Germany.)
So the ECB is obviously laying back, waiting for US QE to wend its way through the Western economy, but it’ll be the same playbook: G20 central banker + corporate banker collusion to keep QE going across the West.
But how long can infinity last?
Which is to say: how long can European nations keep borrowing from middlemen banks instead of using the ECB as it ought to be used – directly and with sovereignty, and not with national debt-increasing loans, as in this rescue package but outright purchases? The ECB directly funding national governments is against EU law.
The ECB wants to end these rules for this rescue package, but they could be challenged legally. However, they seem to have already thrown out this rulebook and are buying Italian bonds disproportionately – we are in the middle of a crisis, after all, and the wheels of justice move slow. But we don’t know that for sure because – in the lack of transparency which repeatedly plagues pan-European institutions – the ECB does not have to publish details of what it is buying under its emergency bond purchases
How long can this nonsense go on, both legally and politically, as well as historically and culturally?
I assume we’ll only find out for sure when the bond crisis fully hits the Eurozone.
It’s the bond market, stupid
As I wrote in Part 5, How QE has radically changed the nature of the West’s financial system:
“(Nomi) Prins (author of Collusion) quotes Bank of England leader Mark Carney in 2015 to illustrate this point: ‘As I wrote to G20 Leaders, the structure of (the) financial system has changed significantly since the crisis. Virtually all of the net credit since the crisis has been from the bond markets and the size of assets under management has increased by 60% to $74 trillion.’
Those numbers are staggering. The 2017 estimate for worldwide total GDP was around $75 trillion. Global QE had reached $12 trillion in 2016.”
Both the US and Eurozone now have huge corporate debt problems due to QE-funded stock buybacks, but while the biggest problem in the US in 2008 was mortgage debt in the Eurozone it was government debt. If a government – the largest economic player in any nation – cannot pay its bills (and in the Eurozone individual nations have no power to print money to pay their bills) said nation necessarily collapses. This is why government debt problems in the US and Japan are not at all comparable to the government debt problems of Greece, Belgium, France, etc.
Government debt is thus a fundamentally more troubling issue than subprime mortgage or corporate debt, and this is why their Sovereign Debt Crisis lasts four years and was not contained until 2012, years after the US “solved” their issue.
So the key question revolves around lending to sustain the Eurozone’s governments (at what interest rates), and the difference (spreads) between bond rates of different members of the Eurozone (because the failure of one major member could imperil the 19-member euro currency).
Wars increase interest rates, as there is demand caused by the activity of reconstruction, but epidemics historically produce lower interest rates, because nothing needs to be rebuilt and everyone is still peering through a crack in their front door and finding even that risky. This is significant given that European banks were greatly weakened by the 2008 and 2012 crises, to the point where only one European investment bank is now among the world’s 10 biggest (long-wobbly Deutsche Bank); and also that banks play a more vital role than in the US – European companies eschew selling bonds and shares to procure two-thirds of their credit from banks, a rate double that of the US.
We also know that the ECB has already been in negative-interest rate territory since 2014, so they cannot go lower than stealing your savings (and thus gutting their banks profits and making them weaker, and also forcing them to search for risker investments); we also know that nations such as Spain and Italy have had panic-inducing borrowing problems relatively recently; and we also know that their collective currency essentially refuses to be a political collective other than agreeing to all use the same bits of coloured paper.
Europe was supposed to be “forged in crisis”, and what has 12 years of fire revealed? The “pan-European project” essentially comes down to sharing the same bits of coloured paper and free (border, capital) movement. The lack of true international solidarity (which only exists in socialism, and never in competition-based capitalism) makes this a national project with no nation. That sounds paradoxical and nonsensical, but hey – I didn’t pen the Eurozone’s corrupt and unaccountable structure: the teachers of the Chicago Boys did.
A project of international solidarity based on the furthest-right capitalist and most rabidly anti-socialist principles has proven to be as stupid a concept as that sounds. In this crisis Eurozone nations are outbidding each other for personal protective pandemic gear (nor sharing it among themselves, in a public relations campaign the average Eurozoner is galled by), but also the favors of international high finance.
It is the latter which which will kill far more than corona via poverty.
But how has the ECB responded thus far? Typical: steal from others and claim they invented it
What we can certainly count on from the stagnant Eurozone is to expect zero creativity – since 1980 that is only found in Japan and the US, and all the Europeans can do is trail in their wake and try to look smugly stylish.
The European Central Bank’s key April 7 announcement reads like a bunch of concessions to common sense born of desperation, because that’s exactly what they are.
Here is the very start and bullet points of their press announcement – the key here is to note how very much they are willingly degrading the quality of their collateral/financial instruments:
- ECB adopts an unprecedented set of collateral measures to mitigate the tightening of financial conditions across the euro area
- Temporary increase in the Eurosystem’s risk tolerance in order to support credit to the economy
- ECB eases the conditions for the use of credit claims as collateral
- ECB adopts a general reduction of collateral valuation haircuts
- Waiver to accept Greek sovereign debt instruments as collateral in Eurosystem credit operations
- ECB will assess further measures to temporarily mitigate the effect on counterparties’ collateral availability from rating downgrade.
“Mitigate”, “increase in… risk tolerance”, “eases”, “reduction of collateral valuation” – everything is about making banking/fiscal standards lower, and thus riskier. In a monetary bloc which stared into the abyss in 2012, and which has had only growth rate stagnation and internally-weakening austerity ever since… does allowing more risk sound like a good solution?
Perhaps the easiest way to understand the Eurozone’s intrinsic dysfunction is that Greek national bonds, which were formerly considered to be too risky to be part of the ECB’s bond-buying program, will now be bought. This measure should have been implemented immediately in 2012 to help collectively mitigate bad Greek collateral, but richer Eurozone members wanted to force their products into Greece and buy up Greek assets. But what they are saying now is that collateral which was bad in 2012 is acceptable in 2020 even though said collateral is fundamentally even weaker, due to the failed solutions of austerity and upcoming post-corona economic prospects.
In a neoliberal bankocracy with a normal, united currency the ECB would socialise this bad collateral directly, but they cannot; they cannot bypass the banking middlemen (because they have never created “more Europe”), who can indeed refuse to buy Eurozone national bonds and send borrowing costs to unsustainable 7% levels.
The last one is the kicker, “rating downgrade”: for reasons only “capitalist conspiracy” can probably explain, word on the street is that ratings agencies feel that their credibility is on the line this time and so they will not be lenient like in 2008. Thus, the corona lockdown will produce a ton of corporate and banking downgrades, which will increase their borrowing costs, thus provoke bank bankruptcies in a currency bloc heavily dependent on their banks. The ECB is thus acknowledging to these groups that it knows this is coming and that it will do “whatever it takes”, a la ECB chief Mario Draghi in 2012… but this time for weak corporations that deserve to go bust (in capitalism). This is an immediate echo of the unprecedented, historic, unexpected Fed decision last week to start buying corporate junk debt.
This is the bond pin on which the Eurozone will turn
The Eurozone’s atrocious neoliberal underpinnings fundamentally leaves themselves more wide-open to the machinations of high finance than any other currency. The Eurozone and the pan-European project can be conceived of as a US/German federal system, where the states have a lot of power to gain or fail based on their own policies, but with only a tiny amount of federal support available in case of emergency.
Here is the crux of the biscuit for the Eurozone in a post-corona world: QE is not going to finally create economic growth unless strings are FINALLY attached. Not down-loaning this round(s) of QE means total, prolonged economic chaos combined with rapid governmental insolvency in the awful neoliberal-empire structure which is the Eurozone.
But it’s the same rub, yet on a wound which is even more raw than in 2012: any such formal strings will cause bankers to shy away from loaning to these ever-riskier national Eurozone economies; at the same time, successfully attaching said strings would enrage the populace because why are these banker-middlemen needed at all?
High finance pre-corona has been pacified with no-strings QE in order to keep them from attacking the Eurozone’s national bond markets – but if strings get attached then high finance can’t hoard the QE, get it? This is the ultimate height of neoliberal capitalism’s parasitical rapaciousness, and which is never reported.
So either Europe cuts out the middlemen and lends directly – and investors pounce upon the national bond markets in retaliation, as they did in 2009 or after Mitterrand’s anti-austerity victory in 1981 – or the Eurozone formally admits the middlemen are indeed the government in Western bankocracy, and national populaces revolt. A good place to read about this historical trend and economic inevitability is part 2 from my 7-part series from 2017, back when I foolishly assumed QE Infinity was an impossibility: Why no Petroeuro? or France’s historic effort for an anti-austerity Eurozone.
Insolvency in a Eurozone nation is thus the biggest, most likely threat to the Western-dominated global order. The Eurozone remains a disunited currency, which is an unsustainable paradox.
The long-running historical reality is that Germany preferred to join a neo-imperial project led by the US rather than the one led by Paris and Brussels, and this is why collective aid to nations has never been done in the Eurozone. Macron warns of EU unravelling unless it embraces financial solidarity – France has said this for so many decades that it no longer has any effect. Germany and their true partners – the US – simply don’t believe in European solidarity, only dominance of Europe.
The US can get away with making BlackRock the new private bureaucracy of the Fed & the financial strong-arm of the executive branch – Europe isn’t as dumb. The Yellow Vest and national strike marches hung effigies to BlackRock. Europeans are different, special, more intelligent, the global catalyst for modernity, the intellectual leaders of the West, etc.
Or so they keep telling us.
Time to show off that European finesse they’re so self-satisfied with… or throw it out altogether and join the Yellow Vests.
Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis, and I hope you will find them useful in your leftist struggle!
Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020
Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020
A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020
MSNBC: Chicago price gouging up 9,000% & the sports-journalization of US media – March 25, 2020
Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020
If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020
Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020
Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020
(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020
Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020
Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020
‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020
Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020
No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020
Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020
No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020
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’.
I agree with the author that insolvency is the EU(ro)’s biggest threat to keep existing in its current form. As a Dutch person I hope it will be the trigger to get the whole project destroyed. It was and is an unholy project to privatise the gains and socialise the losses on an epic scale.
Greece should have defaulted. The banks, savers with them banks and other lenders to Greece should have been made to eat the losses. Even if that ment bankrupting them. Tough shit, you get paid interest for the risk. If you do not want risk, do not save for interest nor lend at interest.
It is a huge shame that the ECB now buys Greek stuff. Just as Italian stuff and so on. They already get huge hand outs each year. Each Dutch person has to spend (net) around 500 Euro a year thus 2000 for a family of four being solidair with the southern European states. They spend that and more, lots more on roads to nowhere, airports without planes and so on.
It costed us big raising the retirement age big time (I have to work till I am 71, in France you get to retire when 62 or earlier if you are a government employee). Our healthcare, not enough affordable housing and so on. I truely dislike being told that I am a heartless Dutch person and should fork over more to the French so the can keep retiring at 60, keep building airports that have no planes, roads no one drives on and so on. Oh and ofcourse keep funding the totally useless EU burocrazy that is more intend on making life harder and harder on normal people and small and medium sized enterprises in favor of the huge multinational corporations that drain our wealth instead of adding to it.
The ones that are not showing any solidatiry that was promised were the southern European countries. Never doing the reforms they promised. Never being financially responsible. Taking our money to raise their living standards (illusionary) and keeping in to their political reality. Promis the sky, wreck your finances and hyperinflate. THis time bringing the way more responsible Northern countries down with them and blackmailing them. You should bring down your peoples wealth down even more to increase ours even more. Plus the corruption costs ofcourse.
Really, European solidarity now should be the South facing up to their lies. Telling their populations, yeah, we lied to you for decades. No pension for you. No social security for you. No nothing. We lied (as a political class) to you for decades. You have to accept that or realise it will be even worse. The north already did it and did it in time so their system is somewhat decent now. If you dont accept that. You will destroy them as well.
SInce that is not going to happen, the collapse is going to be epic. It wont be reserved to the West though. China will collapse as epic. Just as the US.
On solidarity thoughts
I am a hard core communist when it is about family and really loved ones. I dont care what it will cost me to say keep them alive.
WIth good friends I have for years. I am a hard core socialist. Will share happy when they are in dire need.
With total strangers I am a hard core capitalist. We made a deal, if you cannot keep your part of the deal. I will get your equaty. Only when there truely is a disaster preventing you delivering I consider compassion.
I surely have 0 compassion for the Yellow Vests. This since I know if they win, it will be me retiring at well, never. Of course I understand why they are upset. They were promised a lot of things and paid for it. Just as I did and turned out to be a lie. A really, really big lie. Tough shit Yellow Vests, you have been screwed by the system. Deal with it. Your problem, not mine.
To now state that the North has to pay to keep that lie alive is cruel to all involved. The political class in the South should tell this. You know our countries history. We always lied to you with promises we could not keep to get into power. In the past, ask your parents, grand parents, great grand parents and soon we hyperinflated our way out of it. Leaving all of them in ruins. Now we joined the Euro and they are given us tons of money to reform and raise our living standards. We fucked up since this made our corruption and lies even bigger. Was fun while it lasted though.
Now we endanger the Northern states that were kind to us and we abused their kindness and threating to bring them down with us. We cannot ask more from them since they given so much and we are sorry we wasted it all on corruption mostly. So now is the time to be responsible. That is the only way the project will continue but obviously wont. If it does, the EU, ECB and countries involved are more corrupt then I thought.
This writer makes me fear I will be plunderd more so the French can claim victory and keep me working 15 years longer then they are in the name of solidarity among many other things. I am considering taking on huge loans I surely cannot pay back since money is free, have a blast and then see what happens. Probably more free money. Seems better then being a responsible human in this situation.
Thanks for reading this rant.
The Dutch pension system is routinely ranked #1 in the world, but some people complain over anything I guess.
The retirement age is 66. It is projected to hit 71 around 2070.
Yes, for some reason the Dutch pension system is ranked nr 1, 2 or 3 best in the world. Says something how horrible it is in the rest of the world. The 71 age has been postponed a bit. That is true but defenately not untill 2070. My prospect is 70 and a few months (44 and a bit now). SInce the previous crisis hit there has been no indexing of pensions to compensate for inflation so its purchasing power fell significantly since we had around 2% inflation each and every year. So that is a loss of puchasing power of pensions well over 20%.
On top of that, even though they do creative accounting, is falling short big time so there is talks about cutting them even further (cutting in real pay, not inflating obligations away). Yes I read the yearly financial statements of my pensionfund. Because of the very creative accounting I wanted to take my money out. No Sir, you cannot do that.
If you want to get an idea of what being a contributer to a pension system in Holland. Imagine saving roughly 20% of your pay and burn it each year for around 7 years and keep it for 5 years (2008 – 2020) and the part you do not burn he value devalued by inflation and not being able to not do so.
Hugo, seems to me your pension prison confirms what the author said about the Eurozone will kick off Western chaos. Holland is full of good hardworking people like you, and so is Greece; but European economies are stagnant and savings drained by Capitalist financiers sucking up the money into offshore accounts. Have you ever wondered who owns those giant corporations of which Holland is so proud? (The way Greeks are so proud of their ship-owning plutocrats). Have you ever questioned the Dutch government’s investigations into the illness of Dutch residents after the Scheephól crash or into the murder of Dutch citizens on MH17? Or were you too busy looking after your family and looking down on even less well performing members of the Eurozone?
I am afraid that it is likely the European system will kick off the chaos. I do not think it will stay inside the west though. The Chinese banking system is also levered up to the hilts.I think all are going to suffer world wide. I am afraid the most hardly hit will be the poorest countries that have their currency based on the dollar. Then there are less poor countries (like Brazil and South Africa) that based their currencies on a free floating price of gold. This assuming the paper gold market will be killed by this event. Then you get to the so called rich countries. The higher in debt they are, the more vulnerable they are. Ofcourse relative gold holdings can change that picture. The country most positioned to do well in this mess is Russia. Ofcourse that is just me thinking. No guarantees.
As I stated before. I believe in decentralisation. So no, please let them fail if they fail. I dont know who owns them and dont really care. Probably them royals have a big hand in them and related bad people (self censored there lol). Like the ones profiting from WW2, lets keep it at that. Please, dont break open my mouth about them since can get me in jail if I dont watch out. Yes. a protester here has thrown a small candle towards the golden carriage (I kid you not, that silly stuff still happens here) and gotten thrown in jail and into a mental ward. I am not going to risk that.
The bail out of KLM is an utter disgrace for example. Buying back stock for years to boost their share price and now public money please? Let them fail and share holders whiped out. Bonus claw backs, sure. There is one, yes one, corporation I like to make an exeption for them. ASML. I dont know who owns them but some geniouses founded them. What they did to revolutionise computer chip making is amazing. They are the kind of corporation I like. Sure, they earn their Euro but man, they did so much to improve life for so many (mostly indirect) and, as far as I know, never went into financialisation.
Ofcourse I also know about the Schiphol crash, my conclusion, an Israelian flight loaded with illegal stuff, most likely radioactive and covered up bit time, including the health effects. The MH17 flight, false flag.
But let me ask you back. do you know about operation paper clip, operation gladio, operation and so on? Who knows, maybe even operation corona. All the socialistst tend to like to put their life, health and so on into the centralised system that have been proven again and again to only act in their own bennefit and power and even conspire to achieve that.
I assume you dont know what brought the Greek system down? I invite you to look into that. Super short summary. Draghi was responsible for the off balance sheet loans to Greece via derivatives. Their (Greek) central banker made it to 2nd in command in the ECB and Draghi mr nr one there. When it blew up guess who was appointed in Greece to be a place holder PM. You guessed right. Even the IMF via miss Lagarde published the so called Largarde list on the Greece people who pulled the plug in a coordinated way. The only reporter who reported on that gotten fired and even jailed. Ofcourse this is a super summary on this scandal. Want more, feel free to ask. Got tons of Dutch scandals to share. Like faulty landmines fully well known to the DoD and send out a guy that had to tell families their kids sucked with them. He even survived an assination attempt on his life when blwoing the whistle. Or what about out most exprensive proven fraud of 50 billion and only the whistle blower gotten his life destroyed.
But hey, you seem to fine and happy to fork over more of your hard earned money and rights to keep all of this structure in place. If only if we elect a socialist or something seems to be your thinking. I do not believe that for one moment.
Let me close this comment with a quote that I think is true. From 1984;
“Now I will tell you the answer to my question. It is this. The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power, pure power. What pure power means you will understand presently. We are different from the oligarchies of the past in that we know what we are doing. All the others, even those who resembled ourselves, were cowards and hypocrites. The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives. They pretended, perhaps they even believed, that they had seized power unwillingly and for a limited time, and that just around the corner there lay a paradise where human beings would be free and equal. We are not like that. We know that no one ever seizes power with the intention of relinquishing it. Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power. Now you begin to understand me.”
That I see is happening sadly. Hope you get my point of view better now. When do you take responsibility in your own life instead of looking for others to both blame and solutions? If you have ideas other then that, happy to hear so.
My solution to my problem is to hold god accountable in the form of time and slaves to money as I have been, everyday she doesnt pay her obligations at the back end of the day, I deduct the same amount of time at the beginning of the night, its going to be fun seeing her tribe become slaves to money for 20+ years and counting everyday.
Hope she wont mind and take a lesson learned of not using these same people unless you want these same results.
“It is a huge shame that the ECB now buys Greek stuff. Just as Italian stuff and so on. They already get huge hand outs each year.”
“We Did???” I speak for my close Italian friends, who are well-informed, educated people who know, precisely what the EU/German/The US did to Italy and Greece.
Maybe the Northern Europeans have that perception about Italy and Greece, but it is dead wrong!
Instead, the EU system destroyed Greece with massive AUSTERITY MEASURES that went on for years. Who ended up with the trinkets of Greece? The 1% Wealthiest.
Ditto for Italy: years of AUSTERITY MEASURES saw wholesale destruction of Public Hospitals, the millions of civil servants, including teachers had their salaries destroyed. They now earn a pittance amount. What the EU/Germany/US is after are all the family-owned hotels, restaurants, and the rich jewels of Italian monuments, and museums.
You wonder *why* Italians died by the thousands in Northern Italy: look at Milan’s PRIVATIZED health care that few of the population could never possibly afford.
A Reality Check is needed by the poorly informed Northern Europeans when it comes to Italy and Greece.
So don’t tell us the Italiand & Greeks were receiving “HAND OUTS” from the EU. In fact, the opposite occurred.
Exactly – the Dutch and Germans have been totally propagandized to hide the fact that their nations and businesses have profited in the past year. But they are told believe they are making sacrifices and that Southern Europeans are profligate.
Pathetic, the misinformation.
I do not think I am propagandised and think I know quite well how this system works. I even know how the Italians and Greeks made it into the EUro with thanks to mr Draghi when still working for Goldman Sachs. While both governments agreed to the 60% max state debt limit their debts grew even though the states were net recipients of help from the North they let their debts grow. Unlike in the North.
But if you want to point out where I am propagandised, please enlighten me. To be clear, I truely think it is NOT fair to many, many honest, hard working people. Both in the North and South. This happens when you have a centralised system. Power corrupts, absolute power corrupts absolutely and we see that, sadly, on a massive scale.
Not to sound cruel but its prolly maybe two decades of disfunction coming back to bite the behind? What the OP says what we see now is effect and you say it’s the cause. Differing view points on if we look north or south.
I think EU as a money union will be toast. It can be a loose federation of common UL standards and SI units. Money wise, I don’t still understand why the 4-10th largest economies (at that time) decided to combine when they could have still stayed between 4-15 today? What did they really get out of it?
Fully agreed with you, well said. Though I think the coming of the Euro papered over some of the disfunction before the Euro as well so I would not be suprised if we see the chickens coming home to roost over well more then 2 decades of mismanagement. Here as well. For example, even though we seen the demographic crash coming no adjustments to our school system nor elderly homes needs were taken into account. We have tons of empty schooling place and lack of elderly homes (in all forms).
I hope you are right on the money union ending but I dont count on it. Something the Saker taught me (smile or cry). When something fails in the West, they double down on it! Default on the debt and restart. The South and North have lots to offer to eachother and I loved the EEC (European Economic Comminity). But we have to stop hurting eachother for the bennefit of a very, very few.
Do you deny that the Northern European states net contributers to the southern states and they take this for decades now? Do you also deny that most Southern states have let their government debts raise and raise still?
If you as a person live well above your means for quite a while. You will end up homeless as well.
What I ofcourse agree with you about is the disgusting is the fact you mention is that the 1% (actually 0.01%) took the winnings for pennies on the Euro and let the people in the North and South holding the bag. That is why I propose decentralisation as much as possible. Then this kind of robbing of normal people would not be possible. At least way, way harder.
I know it is a hard pill to swallow for most in the South. I am sure most are hard working decent people. At least that is my impression. That is why I also suggest to default on the loans and go for it with your own currencies. Do not hand over anything real unless the loan stipulated it. When currency is loaned. Interest is paid for risk of default. Greece, Italy and so on should never have been loaned that money. So let them eat their losses.
You guys in the South get a chance to restart and be rebuilding like Russia did. We in the North get to feel the consequences of irrisponsible lending. I know, my pension will take a huge blow. But please, pull the plaster now, dont do it slowly as we are doing now.
“…. I surely have 0 compassion for the Yellow Vests….”
I see it in exactly opposite way – I admire French courage to stand up for their rights, and I don’t like Dutch sheepish acceptance of continuous degradation of their quality of life.
What rights do you mean that the French have? It is quite clear their government, that they elected, way overpromised their electorate. Now they are finally being told, hey, you elected liars. Now we cannot keep up the lies anymore. Deal with it now or face a systemic collapse. You choose.
If you refer to the brutal crack down of peacefull protest what is done is ofcourse a total shame on their government. If you want to reform, you have to be honest, brutally honest. Macron should have been totally honest. Showing and telling, well, we are around 100% of state debt to GDP. Usually that means a total distruction of currency but that we cannot do. We have a demographic issue with not enough workers to pay for the social stuff. The solution we tried with getting tons of immigration failed and added to the costs. So we need to reform. You voted for liars, let me show you how and build consensus from that.
While during that, he should have also pointed out the absurdities in this current system. Like ones debt is anothers wealth / saving. That is a base of creating conflict big times. In countries, in trade blocks and even on a global scale An understanding I learned to late is that one should not think that when you save in some one else his / her debt, expect interest on it and consider it your wealth is silly to say the least. But that is what we all do.
We met the enemy and it is us. The 0.01% is just exploiting that. There are enough ways to take the power back. Decentalise, do not trust power, hold power accountable (only possible in a decentralised system), be your own central bank, learn skills that are worth something to people close to you and so on.
Good luck to us all, we are in this mess together. How you position yourself for riding out the effects of this mess….. well that will mean a huge difference in how you exit it all.
The next domino to fall will be Japan, because Europe is its largest trading partner, and Japan has a very high debt to GDP ratio due to its ongoing QE over many decades and its demographics. Ramin Mazaheri’s article is astonishingly spot on and informative.
When the EU was created it transformed the debts of individual countries into Euros. Then the Euro doubled in value, thereby doubling the debts of the countries of the south. That tipped them over the edge requiring bailouts. The EU was destined to fail by how it was set up in the beginning, i.e. creating a common currency, but not consolidating the debts at the time to be backed by the EU.
The Euro is a privatized currency created out of thin air by banks, who then have the effrontery to charge compound interest.
Why do supposedly democratic countries allow this scam ?
“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”
@Why do supposedly democratic countries allow this scam ?
To allow you to charge them compound interest when the shoe is on a different foot and not feel bad about it.
The whole system of privatized fractional reserve banking is fraudulent. It should be the US Treasury that CREATES money as a data entry on their computer to fund all government spending, that would largely obviate the need for taxation. The US Treasury would also then be in a position to lend money at interest to private banks, who would then act as money retailers, rather than money creators. This would mean full reserve banking, but it would not eliminate interest payments from businesses or individual borrowers, or to depositors.
In this way the US Treasury could fund every US state on a per capital basis, that would eliminate state income and sales taxes and local property taxes. Inflation of the currency could then be controlled by a progressive federal income tax, whereby the IRS deletes money back out of existence as required.
Actually it really doesnt matter who creates the money or what ledger it goes onto. And the need for taxation is directly dependent on how efficient your country can operate, or live. Not spending money on things that one has nothing to show for after having been spent.
The difference between buying a tractor every four years and buying one once a century is the difference between failing and passing. The money not needing to be spent on tractors can be used to feed the people instead still using the same tractor to aid in producing the food.
Also, yes. I did steal the #goteamusa line from comedy central’s ‘robot chicken’ show,… I think…
You are a good man, and a good writer. I believe you understand economics, politics, etc very well.
I have tried to learn from your articles for several years now. Your articles have seemed precious, as they seemed, more than most economics authors’ articles, to offer some hope for me as reader to learn what the h__l economists and financiers are talking about when they write/speak. Occasionally, I have felt I might have learned something from the articles – but alas I am practically giving up now. Most of it still comes across as jargon, with crucial steps in the logic ‘left to the student as an exercise’ as they used to state in some of the course text books I had the misfortune to have assigned by my so called ‘teachers’. I could probably draw examples of perplexing statements from most of the paragraphs in the subject article.
Perhaps your articles, Ramin, are meant after all to be inhaled by economics and finance graduates instead of by the majority of the populace, the rest of us, who have spent much/most our learning time in other aspects of life.
Is there any hope that you could present your considerable and highly esteemed economic and political knowledge in ways that the rest of us could more easily, with a little effort on our parts, understand?
this is a great book on the subject – I learned much more from it than from my whole University degree in Economics (In England).
Also Naomi Klein’s The Shock Doctrine (but read Michael Hudson’s book first)
here are free versions from pdfdrive.com
even if you study economics at Harvard etc – you end up learning a lot of shit that has no connection with reality. I worked on trading floors of investment banks in City of London etc. And some of the most famous consulting firms etc…It took me a decade to forget all the harmful BS they install in my head
These books will help you cut through the crap and tell you what and why is really going on
Tricking people into thinking economics is far too complex for a normal person is the foundation of the fraud and exploitative plantation economy we have. In reality it’s very simple – kind of like making care you don’t spend all your money buying lottery tickets, not throwing your money away, making yourself sustainable and a lot of similar common sense on a larger scale – it’s really very simple
Also another great book is Humanizing the Economy:
So grateful to you. Many thanks.
What’s pretty amusing about the EU’s neoliberal rot is the ”ideological impact” it has upon the Euro-trash in the form of sharply worsening enmity between the latter’s northern and southern constituencies. At bottom, they share the same reactionary and chauvinist First World outlook and the hopes that their beloved You’re_a_peon Union were going to protect them accordingly. However, as I’ve said before: Whenever there are conflicting interests between the big and the petty bourgeoisie, the former always wins out, hands down. The absolutely monumental corruption, incompetence, sleaze, and greed which are the hallmarks of the EU’s ”Elites” in every member state stand out as a giant •••• you! to the EU:s middle classes and labour aristocracies.
So now we have an uplifting, inspiring scenario with angry noises back and forth about lazy slobs (= southern Euro-trash) vs. callous imperialists (= northern Euro-trash). But maybe there’s hope to be found in the honorary (= eastern) Euro-trash with its fiery pan-Europeanism. Poles and Ukro garbage coming to the rescue of European values in times of European troubles, LOL.
The European parasites are now at each other’s throats as they fight over the spoils of empire, and who deserves a greater cut of the economic loot–which they have extracted from the Developing World through their wars of aggression or predatory brand of “Free Market democracy.”
This is European values at its finest.
A pox (or is that a coronavirus?) on all their houses.
Yes, the infighting of the Euro-trash over the spoils of Western imperialism looks even funnier/sillier against the backdrop of changing demographics brought about by imperialist war. Here, the big bourgeoisie broke its solemn promise to the petty bourgeoisie of keeping ’The Great Unwashed’ out forever. Secondly, we have the very nasty problem of high tech being less and less a Western phenomenon due to, most notably, Russia’s and China’s vast progress and the effects hereof on the Global South. The Euro-trash — like its Pindo kith and kin — makes all kinds of funny noises about treason and corruption as they correctly perceive their betters don’t care about them and will ditch them unceremoniously sooner rather than later.
Also, by the way, the way out of this mess is really really stupid simple.
1- Zero all scales.
2- Establish honest and fair value for all goods, commodities, and services.
3- Establish honest value of all currencies.
4- Establish positive financial value system of exchange and economics. Honestly.
5- Take it from there.
P.S. Returning to genuine gold and silver coin is not such a bad idea (all markers redeemable anywhere on the spot, etc…)…
Hmm… not if you spent the last five generations building that company, castle, crown or collection. If they put a fair price on goods, it will be like “fair price coffee”. Only the rich can afford it.
I believe this could explain why, to the best of my knowledge, no European company, let alone a German one, has developed and released a video game console that could effectively compete with, and become as famous as, Sony’s PlayStation (Japanese, although SIE has since moved to the US), Microsoft’s Xbox (American), and Nintendo (also Japanese), although other factors may have been present as well (as a gamer myself, I’d be grateful to hear them).
Greek debt is being bgt now BECAUSE all of its assets have been bought up by those up north and to increase its value and laler sell it off they need to instill other investors confidence.
This is std practice – akin to selling down a countrys FX currency value once they con it to floating it – then keep it low to bring in investment funds and buy up as much as they can, then when they have its value goes up to entice investors and get more profits on FX changes. Soros was used to try to pull that stunt in the 1990s in Russia but fortunately he failed.
Because Greece uses Euro they can pull a FX sell down, but they achieve same effect by not buying the Greek debt until now.
The entire practices of the ECB need looking at.