How the US Has Perfected the Use of Economic Imperialism Through the European Union!

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Thu, 05/13/2010 - 11:00 | 349083 jmc8888
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The Euro is Britain's way of controlling Europe.  Monetarily at least.

Notice THEY never got in.  Notice their leaders never 'pushed' to get in either. 

So yes, the U.S. has seniorage, BUT, the treasury and federal reserve are goldmanites and queen lovers.  So who REALLY runs it? England, and the queen's monarchy.

Who runs the fed? Why it's majority foreign owners.  *cough* england.

Wall Street is the outgrowth of London's markets.  Started by the same monetarists. 

So when you the squid, and the federal reserve having such power, you really could say that ENGLAND, or the QUEEN REALLY hold all the cards.

Remember Geithner = Squid

Bernanke = federal reserve

IMF = Geithner and Bernanke

Thus IMF is said to be U.S., but it's really for the queen and her monetarists (the squid)....just like the euro.

The monetarists games go quite far and complex, but it really is all out there in the open.

 

Wed, 05/12/2010 - 12:56 | 346529 kaiserhoff
kaiserhoff's picture

create a public debt snowball effect that could push the troubled countries towards insolvency when the IMF debt becomes repayable in three years time.

Reggie, you're better than this.  Greece doesn't have three years.  They might have 3 weeks!  This of over/done.  Their government kaput ist.

The paper is just paper.  Enough mit dem goat roapers.  Go where the front is.

Wed, 05/12/2010 - 12:37 | 346459 2discern
2discern's picture

Expanded behind the scenes view of the global cabul $ manipulation

see link-

http://www.globalanalysis.net/news/289_biden_geithner_emanuel_taking_bus...

 

Wed, 05/12/2010 - 12:04 | 346350 JR
JR's picture

The collateral is devalued by having the IMF step in front of existing claim holders.  – Reggie

Reggie, this is the ballgame.  This is the essence of the bailout events in the Eurozone. The IMF has the U.S. taxpayer as the underwriter.

The underwriter word is one that Bernanke uses to calm whenever waters begin to look troubled: “unlimited.”   Instantly the worries of the socialists and the bankers ease knowing they won’t have the German people as the referee. Of course, the IMF takeover of any nation’s economy is bad news for the people.  And it’s bad news for the underwriter of the world’s debt—the American middle class. 

The truth is, there’s no such true concept as “unlimited,” and when the final verse begins to be sung, the United States will face bankruptcy.

Wed, 05/12/2010 - 10:43 | 346122 SNAFU
SNAFU's picture

Just spoke to General Ripper.  He is certain the EU are siphoning his Precious Bodily Fluids.  Ft. Detrick has been sealed.

Wed, 05/12/2010 - 10:20 | 346030 Greenhead
Greenhead's picture

In the event of foreclosure/default, what collateral is available from a bankrupt sovereign nation?  In the old days, tribute was extracted by force.

Wed, 05/12/2010 - 10:13 | 345995 Leo Kolivakis
Leo Kolivakis's picture

Reggie,

Greece just approved drastic pension reforms and Spain is following suit. Please, please, stop publishing doomsday scenarios that are not taking into account these major reforms. It won't be easy, but you might be surprised to see these countries come out ahead in five years.

Wed, 05/12/2010 - 10:43 | 346120 Reggie Middleton
Reggie Middleton's picture

You seem to be missing the point Leo. The collateral is devalued by having the IMF step in front of existing claim holders. How is that a "doomsday scenario"? You toss that term around much too lightly. Listen, Spain, Portgual, and Greece could default and it still wouldn't be doomsday. It would simple be several sovereign defaults, all of which have probably defaulted before in the past and the world still survived. Tone down the drama.

Wed, 05/12/2010 - 10:53 | 346154 Leo Kolivakis
Leo Kolivakis's picture

No drama, but the IMF should have received preferred status since it ponied up crucial financing for this bailout. You seem to be convinced that debt defaults are on their way, and that this won't be a big deal. I disagree, it will be a big deal and that's why they acted so forcefully. At the end of the day, the idiots who were lending Greece billions of euros forgot to ask a few simple questions, like what percentage of your economy is public sector as opposed to private sector?

Wed, 05/12/2010 - 11:07 | 346195 Reggie Middleton
Reggie Middleton's picture

Actually Leo, there is drama. Don't you recognize any delta between a "big deal" and "doomsday"? Isn't there some middle ground? The path of least resistance will be a default. Read Professor Rogoff's latest book, "This Time It's Different". 600 years of history show that it really is not different this time around...

The EU members contributed a lot more than the IMF, thus using your logic they should get even more preference than the IMF, correct? The facts on the ground imply otherwise.

Wed, 05/12/2010 - 11:16 | 346230 Leo Kolivakis
Leo Kolivakis's picture

Wrong, I said the IMF provided crucial financing and they were made out to be the bad guys, imposing austerity measures on Greece. The Euro patsies were not able to do this, so they brought in the IMF. I read Rogoff's book, and I do think that some form of restructuring will take place in the next few years, but not outright default.

Wed, 05/12/2010 - 11:33 | 346268 JR
JR's picture

Leo, I disagree. This is financial oligarchy, saving the banks from losing on their toxic mortgages and debts, using the IMF as enforcer, using the IMF to bail out the banks. And it’s not just a financial war, it’s a social war that guarantees that the standard of living of the Greeks, the Spaniards, the Portuguese, the Italians, the Irish…will be crushed; guaranteeing that “a dictatorship of capital shall reign.”

As Economist Michael Hudson said: “In today’s world, the easiest way to obtain wealth by old-fashioned 'primitive accumulation' is by financial manipulation.” He calls it “a lapse back into neofeudal debt peonage.”

It is largely a question of timing, he says: “That’s what the financial sector plays for – time enough to transfer as much property as it can into the hands of the banks and other investors. That’s what the IMF advises debtor countries to do… This is the underlying lawless character of today’s post-bubble debts.”

Warns Hudson, “Anything that bolsters IMF authority cannot be good for countries forced to submit to its austerity plans. They are designed to squeeze out more money to pay the world’s most predatory creditors…

Speaking of Latvia, Hungary in 2009, Hudson said: “Debtor countries must borrow a trillion from the IMF not to revive their own faltering economies, not to pursue counter-cyclical policies to restore market demand (that is only for creditor nations), but to pass on the IMF “aid” to the poisonous banks that have made the irresponsible toxic loans. (If these are toxic, who put in the toxin?”

As to Greece in 2009, Hudson said in THE IMF RULES THE WORLD: “Where has this economic crisis come from? It is not a natural disaster. It is not a storm that has blown in off the sea. It is a manufactured crisis, created by international banks that prey on the weak. There is no new and sudden shortage of raw materials, labor, food, or other tangible goods in Greece that are the causes of true crises in meeting people’s needs. There is the same capacity for production as before the crisis began”

And he asks: Will the debtors fight back?

http://www.counterpunch.org/hudson04062009.html

Wed, 05/12/2010 - 12:06 | 346356 Leo Kolivakis
Leo Kolivakis's picture

I know and admire Michael Hudson. The problem is that the banksters own us all, he just doesn't want to admit it.

Wed, 05/12/2010 - 13:07 | 346578 Panafrican Funk...
Panafrican Funktron Robot's picture

1.  What is the enforcement mechanism for the austerity measures?

2.  Are the austerity targets achievable?

Keep in mind Leo, in regards to #2, that a cut in government spending also means a cut in resultant tax revenue on the back end.  I think they are not correctly accounting for this.  The government spending cuts are going to need to be much more draconian than is currently proposed to hit that 3% target.

Wed, 05/12/2010 - 11:20 | 346243 Reggie Middleton
Reggie Middleton's picture

OK, I'll bite. How is the IMF financing more crucial than the rest of the EU? Germany insisted on harsh auterity measures, as did the ECB. What's the difference, and how is the IMF made out to be the "bad guys" as compared to the other parties mentioned.

I do think that some form of restructuring will take place in the next few years, but not outright default.

I lend you money and we have terms that you pay it back at par plus interest. If you don' t do that, you defaulted on our agreement. We can make up names to call it whatever we want so the technical term "default" doesn't have to get thrown in the mix, but at the end of the day, I didn't get paid as originally agreed and that is deflationary. It is, by all intents and purpsoses, a default on the orignal agreement.

 

Wed, 05/12/2010 - 12:00 | 346342 Leo Kolivakis
Leo Kolivakis's picture

It's all a matter of haircuts. Had the IMF not been part of the deal, Greece would have defaulted outright, and those German and French bondholders would have taken a much deeper haircut. That's why the IMF had the leverage to get the terms it got.

Wed, 05/12/2010 - 12:27 | 346427 Reggie Middleton
Reggie Middleton's picture

The IMF gets aggressive terms in every deal it does. The guys on the other side don't have a lot of bargaining power. The terms that the IMF are no different (materially) than it usually gets. The amount that the IMF is giving is a minority, thus I don't see how you are coming up with a default without the IMF participation, particularly an outright, immediate default.

Please explain, justify (or you can just admit that it isn't the case, that is if you beleive it is not).

As it stands now, in the case of a default or restructuring, those standing behind the IMF will be getting a decent sized haircut (over 30%) as it is.

Wed, 05/12/2010 - 13:34 | 346721 Leo Kolivakis
Leo Kolivakis's picture

Reggie,

The EU could have bypassed the IMF but chose not to. Think about why and you'll find your answer.

Wed, 05/12/2010 - 13:52 | 346808 Reggie Middleton
Reggie Middleton's picture

Leo, that doesn't add to the credibility of your reply. I asked you for a direct justification and you tell me to think about something and I'll have my answer. Why don't you do the thinking and give me the answer?

Wed, 05/12/2010 - 14:21 | 346919 Leo Kolivakis
Leo Kolivakis's picture

Ok, let me spell it out for you. No IMF, no way Germany or France were going to impose austerity measures on Greece. Also, no IMF, no way the Fed was going to open those dollar swap lines to help Europe. It's that simple. The Americans control the show. If they didn't get what they wanted, an imminent outright default was in the cards, and those German and French banks would have taken much deeper haircuts than what they will take in the future when they do restructure Greece's debt.

Wed, 05/12/2010 - 14:56 | 347098 Reggie Middleton
Reggie Middleton's picture

Germany made it clear from the start that stiff austerity was the term du jour, hence I disagree with your assertion.

The Fed has opened up the swap lines in the past, and didn't do so for charitable reasons. Read my post on FICC risk and bank implosions on my blog. The Fed can't afford for Euro banks to start calling on those faux hedges. That's why the lines are open.

"Americans control the show"

Probably...

If they didn't get what they wanted, an imminent outright default was in the cards, and those German and French banks would have taken much deeper haircuts than what they will take in the future when they do restructure Greece's debt.

Any haircut you get before adding on a trillion dollars of debt and the IMF standing in front of you for $120 billion is going to be less then the one you get afterwards. I don't see your point here! Do you actually believe Greece will earn their way out of this, because if they don't then its defaultsville!

Wed, 05/12/2010 - 15:37 | 347246 Leo Kolivakis
Leo Kolivakis's picture

Reggie,

Let's agree to disagree. Greece will do whatever it takes to fix its tax system and cut costs. It will not grow its way out of this problem, but the sums involved are so trivial that the EU will cary them, especially if they see some real efforts of reform.

Wed, 05/12/2010 - 10:36 | 346094 RichardENixon
RichardENixon's picture

You might want to hold that thought until we see how that general strike in Greece plays out.

Wed, 05/12/2010 - 10:10 | 345960 kaiten
kaiten's picture

Oh, someone´s missing a point here. It´s an EU/IMF bailout, so clearly EU countries will be acting/voting as one. US may have the most votes individually, but jointly EU countries have more.

IMF countries quota:

EU countries - 31,78%, USA - 17,09%, Japan - 6,12% ....

 

http://www.imf.org/external/np/sec/memdir/members.htm

Wed, 05/12/2010 - 10:45 | 346131 Reggie Middleton
Reggie Middleton's picture
  1. The US still has the right to singularly vote down a supermajority, and it is the only single state to be able to do that.
  2. We see how well the EU has agreed on things in the past when time was of the essence
  3. The EU voluntarily took subordinate positions to existing claimholders, that was the purpose of the bailout. The IMF has never inferred such
Wed, 05/12/2010 - 13:12 | 346603 kaiten
kaiten's picture

Well, I simply think that you make too far-sighted conclusions made mostly on assumptions. Sure, Greece can go wrong, but it can also go right. Who knows? But if you only focus on negatives, you cant see the whole picture. And that´s not journalism. Although, perhaps, it´s not intended to be.

 

Wed, 05/12/2010 - 10:17 | 346013 Popo
Popo's picture

True that. Although, in two years time, Germany might not be so aligned with the rest...

Wed, 05/12/2010 - 13:15 | 346613 kaiten
kaiten's picture

Sure, it might not be. Isolationism makes a lot sense in 21.century.

Wed, 05/12/2010 - 10:23 | 345928 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Well, no Hope, but surprising the hopium addicts by adding several more states to the Union, united under the USD, now that's change!

 

Nothing wrong with economic imperialism Reggie, as long as the great USA is the imperialist.

(See the suit wearing zombie, he'll explain all).

 

Ps- Are there any Red Roof Inns over there? Usually not my style, but since we own them now I figured why not visit some friends in the EU.

Wed, 05/12/2010 - 11:17 | 346238 WaterWings
WaterWings's picture

Yeah. And I ain't payin' for the mini-bottles. I own this, bitch!

Wed, 05/12/2010 - 09:32 | 345909 williambanzai7
williambanzai7's picture

"Preferred Creditor Status," is that sort of like the exemption that holders of derivative claims get from bankruptcy preference claims in a Chapter 11 proceeding?

Wed, 05/12/2010 - 12:27 | 346428 John Self
John Self's picture

Probably more like the treatment of secured creditors in bankruptcy -- lower classes can't get anything until the more senior class gets paid in full.  Derivatives counterparties get some beneficial treatment, but not to the same extent or in the same way.

Wed, 05/12/2010 - 09:29 | 345904 DudleyDoRight
DudleyDoRight's picture

I see your point, but it is tempered by the fact that lenders must exercise due diligence.  Creditors need to take haircuts, moral hazard must be diminished.

Wed, 05/12/2010 - 09:20 | 345891 tim73
tim73's picture

Canada is there! It must be evil!

Wed, 05/12/2010 - 09:10 | 345871 doggis
doggis's picture

reggie - you rock! i think your work defines excellence.

Wed, 05/12/2010 - 12:19 | 346396 John Self
John Self's picture

I agree.  I've given Reggie a hard time once or twice about the self-aggrandizing language that he uses.  But looking only at the substance, Reggie's work is meatier and more thorough than almost anything else I've seen.  Basically, he does the work so that the rest of us can back up our half-baked contentions.

Wed, 05/12/2010 - 13:21 | 346652 Reggie Middleton
Reggie Middleton's picture

It's good that you can have such positive comments about the free samples that I give out. I assume you would love the paid stuff. It is the higher level stuff that Sprott, et. al. refer to when they coment on the work.

Thanks for the supportive words.

Wed, 05/12/2010 - 10:27 | 346056 mikla
mikla's picture

+1

We've talked about the structural problems that IMF activity won't fix (big debt getting bigger), but the seniority rights of the IMF loans is a novel point:  It might be practiced, but it's not explicitly written that you can enforce this seniority over sovereigns.

Really nice work, and a novel point.

Wed, 05/12/2010 - 09:16 | 345884 Reggie Middleton
Reggie Middleton's picture

Blush... blush...

Just wait until word of the guaranteed haircut to the haircut gets out from my blog (subscribers will actually have haircut examples to show their clients by the end of the day).

Wed, 05/12/2010 - 08:58 | 345848 lucky 81
lucky 81's picture

deck chairs on a sinking ship. let the band play on. long physical gold and silver.

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