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The Center Cannot Hold: Kleptocracy Delegitimizes The Status Quo
Via Charles Hugh-Smith of OfTwoMinds blog,
The center cannot hold because it has failed the nation by defending the Status Quo kleptocracy.
Let's start with William Butler Yeats' (1865-1939) poem, The Second Coming:
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Though the poem was penned in 1919, it speaks presciently to our era. If we take "the center" to be the political machinery at the gravitational center of the Status Quo, Yeats is suggesting the center cannot hold as things such as the economy and living standards fall apart.
As a case study, let's look at Greece, a nation that is the leading-edge of Status Quo delegitimization and destabilization. As I noted last week, ( In a Dysfunctional Status Quo, Reform Triggers Collapse), corruption isn't a feature of the Greek Status Quo: it is the Status Quo. Any reformation that eliminated corruption would dismantle the Status Quo and bring down the Elites who have been looting the nation at will.
Corruption Continues Virtually Unchecked in Greece:
How can someone who has declared an annual income of €25,000 ($32,400) transfer €52 million abroad? What kind of supplementary income must an individual have who, according to his tax returns, earned €5,588 in 2010, yet still managed to move €19.8 million abroad? And how can it be that a Greek citizen sequesters €9.7 million abroad although he supposedly earned exactly zero euros?
The "Lagarde List" contains the names of 54,000 Greek citizens who have transferred major assets out of the country. The Greek Establishment is (naturally) doing nothing to investigate these 54,000 people, because the 54,000 are the Greek establishment.
I have long held that Greece Is a Kleptocracy (June 28, 2011). This chart is the acme of unsustainability.

By all accounts, these tax revenue figures are wildly optimistic, and so the actual current deficit is much higher.

To cut to the last act: the Status Quo of Greece is expending the last dregs of its legitimacy and cash defending its kleptocratic Elites from their fellow citizens and from the nation's creditors. As noted above, it is impossible to "reform" a Status Quo whose foundation is corruption, just as it is impossible to wean an economy based on debt and leverage for its "growth" of excessive debt and leverage: financialization isn't a feature of the economy, it is the economy.
The entire eurozone is a kleptocracy as well: 500 Million Debt-Serfs: The European Union Is a Neo-Feudal Kleptocracy (July 22, 2011).
Here are the key dynamics of delegitimization:
1. The consequences of austerity. The kleptocratic "fix" is to divert more of the debtor nations' national incomes to debt service. In other words, money that once went to labor (wages) and social services now goes to debt repayments and interest.
What are the consequences of this massive diversion of income? The economy shrinks. Less income means less spending, which means negative growth.
The Eurozone's "solution" of debt-on-debt depends on debtor economies "growing their way out of debt." If labor's share of the national income is falling, and both private and government spending and income are falling, precisely where is the "growth" supposed to come from? As private income falls, tax revenues fall, causing the government to raise taxes and junk fees. This further reduces private income, and so on in a self-reinforcing feedback loop of contraction.
Austerity sets up a positive feedback loop of less income and less spending. The people in these debtor economies can look around and see the consequences: everyone has less money, and less confidence that the "austerity fix" will do anything but put debt-junkies into fatal withdrawal.
Once an economy becomes dependent on debt that rises faster than the resulting "growth," then that economy is set on an unwavering path to implosion. (The Cycle of Dependency and the Atrophy of Self-Reliance).
When Belief in the System Fades (March 12, 2008), institutions lose their legitimacy(The Three Ds: Delegitimization, Definancialization, Deglobalization July 1, 2011) and people naturally save more as insurance against an uncertain future. Fewer people are willing to risk their capital in new ventures, and as the economy loses vitality then these trends reinforce each other.
2. This loss of faith and confidence triggers hoarding and capital flight. As Ludwig von Mises noted long ago, the only way to organically "grow" an economy is for capital to accumulate faster than the population, that is, capital increases on a per capita basis. Capital means savings/cash, not debt, that is invested in productive assets and enterprises.
So what happens when you skim more of a nation's income to service debt? There is less capital accumulated, and thus less capital available for investment.
What happens when people lose faith in the financial institutions and their coercive "fixes"? They move their capital to less-risky, more productive climes. In other words, capital flight is another positive feedback: as people move their capital out of the country, then there is less available per capita for productive investment. Toss in a kleptocratic government which increases taxes while misallocating precious capital on crony Capitalism and corruption, and you get a death-spiral of capital flight and risk avoidance.
The irony of a loss of faith is people instinctively place their capital in non-productive savings: in gold, Swiss lock boxes, and so on. This instinct removes capital from the pool of investments in productive assets.
As the Status Quo fails to protect the national interests and the citizenry from the neofeudal kleptocracy, faith in the political center fades. The centerist parties cannot "reform" corruption because they are the embodiment of corruption. In desperation, people move from the center to the extreme left or right, seeking a party that is willing to overthrow the corrupt, failed kleptocracy.
This is of course the pathway to dictatorship and fascism: Love or nothing: The real Greek parallel with Weimar.
These were the men who tried and failed to use a mixture of austerity, tough policing and what we might now call "technocratic" rule to save German democracy. They failed.Horrified inertia is now seeping from the world of the semi-outlawed young activists into the lives of ordinary people.
On the streets of Athens there is already the answer. You can feel what it is like when the political system - and even the rule of law - becomes paralysed and atrophies.
The "hopeless inertia" begins to grip even the middle classes, as the evidence of organised racist violence encroaches into their lives.
My Greek sources report that the abandonment of the failed political center is well under way as austerity is tightened while kleptocrats maintain their grip on the machinery of governance.
The solution has long been obvious: Greece, Please Do The Right Thing: Default Now (June 1, 2011).
The same holds true for every nation ruled by kleptocratic Elites that has attempted to "grow our way out of debt" by piling debt on debt. Doesn't that include Spain, Italy, China, the U.S. and a host of other nations?
For more on this topic:
The First Dominoes: Greece, Reality, and Cascading Default (February 13, 2012)
Do We Really Know Greece's Default Will Be Orderly? (February 17, 2012)
Greek Theater Double-Feature: A Farce and a Tragicomedy (June 19, 2012)
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I can't wait to get this farce over with tomorrow night. I am eager to find out if we are going to have four more years of this shit or four more years of this shit. I'm on pins and needles.
The Fonz has power, all is well with NY.
As for this post, this is what I "saw"
Choice 2012
America: From Status Quo to Quo Vadis?
hopefully, the Apocalypse is nigh...and all shall be revealed ;-)
ori
http://aadivaahan.wordpress.com/2012/11/05/apocalypse-now/
Tails I win Heads you Lose, both of them are going to be the same. May be some time although when we find out who actually wins. The polls are insanely close and I would say there are going to be many recounts.
http://schiffblog.blogspot.ca/
Welcome back fonz!
Thanks guys. It's same shit here. I had another family just move in with me. It's astonishing. I don't want to hijack every thread with updates. I appreciate the karma on here though. I may hit this up later with one big final thought assessment. This site really helped shape the way I see things.
It's good to hear from you. Sloane checked in earlier., she is doing pretty well staying busy helping out with the clean up. I haven't seen kito post in a while. Good luck.
Good to hear about Sloane. I am convinced Kito is in Equador. Good for him if he is.
If you know the history of sharecropping, having family members come to move in isn't such a bad situation. Well, at least around here it has been as we have a strict "if you don't work, you don't eat" policy.
Yeah I hear you. Everyone is chipping in. If anything my house is running more efficiently. I do feel for the other family and especially their kids.
I hear you...I don't know how much more I can take. When I have conversations with friends and they start talking about "their guy"I just want to tell them to shut the hell up. Thank goodness that 13 years of raising children has given me good selective hearing so I can tune them out. My eyes glaze over like a person when you try to explain options to them.
Waterboys recently recorded via phone cam. the new "WB Yeats tour" in Europe. Here is "Mad as the mist and snow" ends the song with "THE SECOND COMING".
http://www.youtube.com/watch?v=O7xtjpU6Aak
THIS MIKE SCOTT CHANNELING OF YEATS IS THE SHIT! Listen to the lyrics and think about these days we live in...this is cranking in the F150 through the Focals every day this fall.
Too bad Yeats wasn't smart enough to know the difference between chaos and anarchy. Doubly so, given his status as a well-renowned wordsmith.
How can we ever live in peace when the only path to it has been obliterated by such men?
I know. "...full of passionate intensity," is completely out of meter and doesn't rhyme with anything. Like he suddenly decided he was drunk enough to write prose at the end of a poem.
:/
Yeat's poem didn't even ryhme.
I have their Pagan's Place from the early eighties. Red Army Blues was my favorite.
Waterboys helped me stay a free thinker all these years. The non conformist Mike Scott, unlike Bono and Sting (NWO pimps), has stayed true to the rugged individualism ideals, self expression, spiritual enlightentment through travel, music, art and cultures. This video sums it up and Wickham is my favorite fiddler of all time.
http://www.youtube.com/watch?v=_VKouBHarIo
Here in the US, lets see if Chris Christie did derail Romney's train so that Chris can run in '16.
Unless he makes some lifestyle changes fast, Christie won't be around in 2016.
Hey, take it easy on the guy. After he tastes running for the White House, then, and only then, has he tasted everything.
and yet still some 60% to 70% of the Greeks want to stay in the eurozone and keep the EUR
a small thing, and yet CHS has no explanation for it. Greeks ain't Americans and ain't Brits
Not enough misery for them to want out of the EURO yet.
Maybe a cold winter(forecast) will be the tipping point.
It can get cold there on occaison, even in the lowlands.
Problem is even if people want change, they have trouble identifying exactly who the Elites are, why they need to be brought to justice, and exactly how to change the system to stop Kleptocracy.
I hope this time around with information flowing more freely, that the exact idenity of these people and their crimes become widespread public knowledge. And a system that doesn't allow pschopaths to secretly run everything gets put into place.
2 conclusions here
1. Greece is fucked to the third power
2. Tyler Durden (n) = Charles Huge Smith
I disagree
1. fucked is when you have to pay 20% of your tax revenue for debt servicing. CHS's number is 14.2%
2. different style. CHS is practically a lefty. TD comes over as nihilistic, perhaps, but sure not a lefty
Tyler Durden = FinAnons
The latest Anonymous Psy-op/SuperWikileaks/WHistleblowingvia P2P is called....drum roll...
TYLER... http://www.youtube.com/watch?v=TqMhINA0290
Hmmmm...
ori
Damn right I can imagine!
Charles Hugh is a statist through and through. Probably the only person posting here further away than Tyler from being a statist is pods.
I'm pretty non-statist. I'm just stingy with words or mentally lazy, perhaps both.
BTW, glad to see that fonz made it through OK.
You know, sounds like what we really need is a White Knight to ride in on his charger and grasp this thing by the horns, right the Ships of State and Finance. He'll be lauded as a hero the world over.
Whew! Just in time, too!
:D
Ahh yes, the king with a military to roll the dice with it by going forth subjugating and to master those other people.
Any time now...such exquisite timing.
Almost worthy of honor, beyond the fact the if I don't he'll come forth to master me.
Seems to me this story has played out before, must be déjà vu.
Yeah, and his name is "R," too!
What a coinky-dink!
______________
Addo: Believe me, they pay a lot of attention to such stuff...
How inspiring!
Willing to sell his soul AND a name that starts with "R".
Cool, let's make him a king!
Madness I say!
'But of course' is the response.
Bottom line is because we can and we want to.
Wow, I just can't wait to see how this unfolds! /sarc off/
I'm really tired of this bullcrap here in Greece, any single fuck that participated the last 38 years in those govement must get imprisoned ASAPOR
38 years, that goes all the way back to the end of the military junta in 1974. You don't really want to go back to living in a police state do you? I was in Greece as a 16 year old tourist in 1973, and could clearly see just how much the Greek people hated and feared the junta. Made a real impression on me about the dangers of living in a country where the people and the government despise each other. Sadly, I see the same thing on the rise in America today.
I had the enlightening experience of spending 3 hours looking down the wrong end of a Thompson SMG in Greece in '71... alls well that ends in release, tho... And it was such a small thing that got me invited to the party!
Is there some reason the text gets lighter and lighter? I thought I was going blind for a minute.
cut back on you-know-what that causes blindess.
Gotta wash your hands after you shave them before you rub your eyes.
And when countries allow corporations like Amazon and Starbucks to pay little if any taxes, but leave the tax paying to their own people instead, then the end will come all the sooner
Your graph could represent any Western country in any future time period. The game at the highest level here is simple and faulty:
1. Take garbage loans off books of banks or allow them not to write them down
2. Wait it out..years if necessary for when the "growth" comes back and the assets can be disposed of without crushing losses.
3. Keep printing...as long as it takes until that magical 4% growth number pops up on the reports.
The problem with this is that all the growth of the last 20 years has been fueled by debt without going back to ridiculous loans on ridiculously risky people and companies this game is over. We will either need to 1. Fake the numbers and create false euphoria allowing bad debt owners a window to get out 2. Allow banks never to take losses while sticking it to the taxpayer and hope for no revolts. 3. Print forever and ignore rising debt levels because "everyone is doing it".
greek kleptocrats are pikers when compared to usa maggots
Yeat's poem is as true for the Western World now as it was then.
Each generation seems to forget the lessons of the past.
WWI was the biggest waste of life and resources ever, until WWII came after the great depression and money printing by Germany (and excessive speculation and consumption elsewhere).
What have we learned since then?
Seemingly nothing, other than to allow new generations to forget the wailing and gnashing of teeth and death brought about by the lust of mammon and abandoning humility and simple living.
I'm solidly anti-war, but even I believe there was a compelling reason to prevent Germany turning Europe into an empire of vassal states again.
Other than WWII, though, yah.
The story of the Greek railways - a slow but functional service that was shut down
Due to the financial problems of Greece TrainOSE has come to suspend regional services on following lines:
Since 13 February 2011, due to the Greek financial crisis and subsequent budget cuts by the Greek government, all international services have been suspended,[9] as outlined below.
The european experiment is a full frontal attack on the nation state concept of banks perhaps really in charge but restrained by political forces...........now they are unrestrained.
This is the Modern market state.
Meanwhile their current darling Turkey is getting sweetheart deals until they turn the debt screw that is.
http://www.railwaygazette.com/news/single-view/view/ankara-izmir-high-speed-line-contract-signed.html
They changed their donkey for a Porsche far too fast in Greece..
The problem with defaulting is that they can't pay their way ... economies have become far far too fragile to be able to catch a sudden shift from 10s of percent of trade deficits to trade balance, especially with the poor leadership we have nowadays, it would be absolute chaos and fascism would still win out.
Hmmm.... CHS uses phrases I use frequently, like "looting the nation", "feudalism", "serfs". Maybe there's hope for him after all.
Please folks, stop drinking the QE koolaid.
It's looting, plain and simple.
Seeking a party sounds right by me.
The status quo so many people love... War, taxes, corruption, constitution shredded, rapists at the airports, police state, fake elections, banks robbing everybody, MSM being bought and paid for, crappy schools, crappy economy, outsourcing of jobs, lies about pensions, health care system failing, inflation.
Keep voting for the two parties monsters you dumbasses sheeple.
Nice article re-stating Michael Hudson's thesis of debt peonage. Hudson's analysis of Greece was spot on: the drive to privatization is now in full swing just as he predicted, that's selling off PUBLIC assets to the bankers for pennies.
The road to debt peonage started with Latvia and Iceland.
The road to debt peonage started with Latvia and Iceland.
'72/'73 Chile?
If you shut down your railways because your people don't have enough national credit tokens to use these transport services your oil balance of trade will not move but your capital account will get destroyed.
Which means you will continue to export your national wealth via hard currency to sustain the banks and the oil shieks they are in bed with.
Greek oil balance of trade (Jan - Aug millions of euros)
Y2010 : -6,191 million euro
Y2011 : -7,634 million euro
Y2012 : - 7,445 million euro
Trade balance excluding oil and ships (Jan - Aug millions of euros)
Y2010 : - 11,342 million euro
Y2011 : - 8,712 million euro
Y2012 : - 6,115 million euro.
The above is the depreciation of existing capital assets both of the mechanical and human variety by simply not importing replacements so as to sustain oil imports without any rational national response because the Eurozone is the enemy of the Nation state concept.
http://www.bankofgreece.gr/Pages/en/Bank/News/PressReleases/DispItem.aspx?Item_ID=4075&List_ID=1af869f3-57
fb-4de6-b9ae-bdfd83c66c95&Filter_by=DT
2 months of current account surplus now.............
Greece must remain in current account surplus so that others such as France ? UK and US can remain in deficit as it all balances out in the end.
I would like to see how the UK and US would get on if they were driven by force into current account surplus.
I like this sort of articles as they usually depict the fundamental core of the problem. The original article at Of Two Minds is clear, straight, and eye-opening for many.
"How can someone who has declared an annual income of €25,000 ($32,400) transfer €52 million abroad"
Easy, the 52m can be capital or cash, and the person no longer works to earn salary/income so it's just sitting in the bank. With money market rates at 0.05%, 52m in a money market earns you about 26k annually.
man, it's a simple friggin concept but so many don't get it. assets owned ARE DIFFERENT than income earned.
You're saying someone's got €52 million in a BANK ACCOUNT?
Bwa hah ha!
We live in a world where western governments vehemently cling to the notion that all economic prosperity can be financed by borrowing from the future; while these same western goverments all declare that Greece (the very birthplace of all western goverment ideologies) is not worthy of a future worth borrowing from...
It does seem ironic, no?
In a world where credit is money, the power will always gravitates to the lender (the issuer of credit).
In a world where savings is money, the power will always gravitate to the lender (the holder of capital).
In a world were bullets are money, the power will always gravitate to to those who choose not to expend their ammo.
its gonna be funny when Singapore & Switzerland go full retard klepto.
Of course for Yeats the center not holding meant the poem ends this way:
The darkness drops again but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
What is the nature of this era's rough beast?
The Age of kali-yuga...
A small correction from Greece, in the numbers Tyler gives, 54,000 is the number of Greeks that exported their capital (legit or not) to foreign banks in the last 3 years, according to our local IRS.
The Lagarde list contains 1,960 or 2,050 high net worth Greeks with deposits in HSBC's Swiss branch.
And today that another list from Jersey's HSBC was leaked, we saw another 95 Greeks prefering the Channel Islands from the crowded Greek ones for their deposits' holidays...