"Down With Reform"

Tyler Durden's picture

Authored by Charles Gave of GKResearch,

Italian electors’ rejection of Brussels-imposed economic diktat is an extraordinarily important moment in the history of modern Europe - perhaps the best political news since the fall of the Berlin Wall. Given the power of unelected technocrats, it is easy to forget that sovereignty in Europe still resides with the nation state as expressed through elections. The problem for those unelected officials who conspired to capture the political system - think Jacques Delors, Jean Claude Trichet or Mario Monti - is the obvious failure of their great project. For the first time a majority of electors has decisively voted against the euro and rejected policies imposed by technocrats.

As usual, the proponents of technocracy claim that the Italian vote changes nothing substantively and soon it will be business as usual. This is the standard response whenever European electors express disagreement (think of referendums in Ireland, France, and Holland..) and upset this freedom-killing project. Since more than half of Italian voters chose parties with an overt anti-euro stance, I would beg to differ.

The euro project is a financial Frankenstein which could not and has not worked; this Italian vote may mark the beginning of the system’s ultimate demise. Italy is different from other European problem economies since it runs a primary budget surplus, a current account surplus and finances most of its debt internally. Hence, Italy can leave the euro tomorrow and be much better off. Italians have led the way and soon the Spaniards, French and the Portuguese will reject this slavery in order to achieve "reforms" whose only purpose is to make a dysfunctional system work.

But let us stop and consider what these technocratic elites mean by “reform”—an end which is apparently worth so much suffering. To translate their bureaucratese into a commonly understood language let’s first define the different groups which compete for resources and influence in the modern European context:

  1. The fellows who want to take care of themselves and be left alone - i.e., the entrepreneurs and those working in the private sector. These guys and only these guys create economic growth.
  2. Those who want someone else to look after them. These fellows tend to work in the public sector or be retired and can be called the “new rentiers.” These guys want to lead a stable and uneventful life.
  3. The fellows who want to lead their inferiors to a better future because they are smarter and know what is best. Borrowing from Thomas Sowell, I will call them the "anointed" since they very often have a very special relationship with their God, a kind of idol which they call by a strange name: the State. These guys have one and only one objective: the growth of their own political power.

Europe’s anointed decided a long time ago that we had too many little gods in Europe (The French State, the Italian State, the German State, etc.) and we needed to move to monotheism, thereby creating a European State
or an altar where everybody could properly worship. Previously, each little individual god had its own "money,” with the peseta, drachma, French franc, etc., used by the local citizens to pay their dues to the local god. But as the French free market economist Jacques Rueff said, "a currency is a sewer in which unearned income is collected." In other words, if compensation is awarded even when nothing of value is produced, such “unearned income” will in time drag down the value of the currency.

The stuff that gets distributed through the sewage system varies greatly from one country to the next. Take the example of Italy, a strange country (which I love dearly) if there ever was one. The north has a large community of entrepreneurs, and the south a majority of “new rentiers”. Up until 2000, Italy had a simple way of solving this problem. Massive transfers were made from the north to the south in the local currency, while the fellows in the north were effectively paid in deutschmarks. From time to time, the lira was devalued which guaranteed that the fellows in the north remained competitive against their German competitors. Similarly, the "new rentiers" received their retirement income in the local currency, which minimized transfers taking place between generations.

Balance was maintained since private sector salaries tended to be indexed (with a lag) to the DM, while retirement benefits and public sector salaries were paid in lira. The same thing happened in France, where an abnormally large part of the population (much higher than in Germany) wanted to be "rentiers” i.e. civil servants.

Because the French and Italian currency sewage systems had more waste to recycle than their German equivalent, the exchange rates adjusted accordingly and harmoniously downwards. As 19th century philosopher Ernest Renan noted a nation is defined by "a willingness to live together" - and every nation in Europe, for most of the post WW2 period, found a way to uphold its local social contract.

To cut a long story short, it is the constitutional right of every country to be badly managed if the survival of the social contract binding the population is at stake. Finding a way to live together is much more important than being well managed.

Unfortunately, this common sense formulation was never understood by the European zealots, who were intent on destroying the old gods to replace them with their new and unique god - a new Roman Empire. In this sense, the similarity with the USSR project is striking (see our discussion of a Christian Europe vs the new Roman Empire in Was The Demise Of The Soviet Union A Negative Event?).

The euro was created as a first step towards a new Roman Empire and the result was that Italians had to effectively transfer deutschmarks to the south. France was also forced to pay its innumerable civil servants in DM. Retirement benefits across the eurozone were effectively set in DM, which savaged the younger generations. The result was that local entrepreneurs lost competitiveness and peripheral eurozone economies started to go bankrupt. The euro has thus caused the probability of recurrent devaluations to be replaced by the certainty of national bankruptcy. This fate can only be avoided by a total surrender of national sovereignty to so called creditor nations, which is a remarkable achievement.

It is against this dreadful backdrop that the Italians have just voted.

However, the fact that the euro is a disaster has absolutely no impact on our "anointed." They are not interested in the well being of the local citizens, but are in fact missionaries for a faith. Since they are appointed from upon high, they are able to preach to the sinners and demand their repentance, i.e., that they should "reform". Monti, for example, was very big on preaching the "reform" sermon.

By “reform”, our proselytizing elite mean the dismantlement of "national contracts” which had managed to unify each European polity. In their place, we have been granted a new social contract whereby the Germans pay for the Sicilian and French civil servants (read a “Federal Europe”).

The Germans are not exactly keen on this idea, so in order to placate their own virtuous fellows, Berlin has offered to organize a world of ever falling salaries in southern Europe—to teach the sinners a lesson. For the lapsed southern Europeans, such collapses in their standard of living is the only way to stay competitive so long as the fixed exchange rate stricture remains. Compliance also implies dismantlement of all the social protections that the rentiers of southern Europe have over many years managed to secure.

As a Frenchman, as a European, I want a diverse Europe in which each nation is managed by its own elected people. If the nation chooses to be poorly managed—so be it, this is what democracy is all about. I am not interested in a Europe where the standard of living falls precipitously for a large part of the population, nor am I interested in humiliating what were once proud countries in the hope that they desert their old deities and accept a new god.

And neither do I want to be administered by unelected technocrats delegated by the northern Europeans on the flimsy pretext that my own politicians are useless; they may be hopeless, but I am entitled to have them that way.

What the eurocrats offer under the banner of "reform" is nothing of the sort but just an increase in their power and the destruction of the incredible diversity which made Europe an endlessly fascinating place.

It is time to return to market prices and democracy and to accept that technocracy cannot work. I love Italy more and more. Indeed, for the first time in years, I can envisage a situation in which I feel bullish on Europe.

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IamtheREALmario's picture

So, globalist technocrats everywhere should be tried for high crimes against humaity and then sentenced to the appropriate punishment. They should not be allowed to weave their schemes with impunity.

kliguy38's picture

Warm weather coming soon.......and it will not just be bringing beach parties in the Eurozone this year......

fourchan's picture

euro crumbles like cookie, film at 11.

Row Well Number 41's picture

Count DeMoney: Your Highness, the peasents are revolting!
Good King Louie:  I know they stink on ice.
    -- Mel Brooks


docinthehouse's picture

Market loves the sequester.

It is only one month of Bernanke juice!

El Oregonian's picture

Well, what the hell to you guys so long?

Dr. Richard Head's picture

Price discover? pffffrftttttt!!!!!  That is so last century. /sarc

falak pema's picture

Psst...just for those who remember that history is our collective page that NONE can efface :

I am BEn's younger brother in the age of Pax Americana....You know those who attacked the Nautillus ...umm, the world's illusion of  democracy.  (That dumbass Nemo thought he was progress.)

And I want to be remembered as someone who tried his BEST in the mandate that the SQUID gave him with his letter of engagement to run Oligarchy Europe :  If you renege on us we will find you anywhere in the world and nail that horse's head at your feet; then nail your HIDE by the neck to Blackfriar's Bridge...Capische?

With an ultimatum like that you understand only too clearly how your skin depends on YOU executing your mandate ; you are for THEM or against THEM; there is no middle ground in this game! 

So.... what is the next move Boss?  (I know a lot of people feel the Oligarchy is topsy turvy; the other way round!)

Dream on...when push comes to shove, as it will, the Oligarchy heirarchy will become clear : who is Caesar and who is Caesar's puppet.  There may be some surprises as fiat illusion is not oil profusion; but in the end the big stick will count; if its backed up on the ground.  Humm, can the drones do the job without the GI Joes' in post combat stress trauma? 

That is a game changer one way or the other, if Armageddon chimes start to ring bigtime. Drones and human clones...

1000924014093's picture

First time? I recall both Ireland and France decisively rejecting the EU constitution when given the opportunity to vote on it.

Of course, the lesson learned for the EU diktat was to never, ever let them vote on anything of importance again.


Canucklehead's picture

The solution is simple.  Add a special stupid tax to any product or service that the deadbeat nation states within the European Union sell outside their respective countries.  Those easily generated taxes will pay for any problems their mal-administration may cause to the rest of the EU, or the world (for that matter).

q99x2's picture

Don't jump the shark yet Willy. You're not free yet. The banksters typically bring about mass chaos to cover their tracks. Better roust them up for trial while you can.

bank guy in Brussels's picture

Superb article, exactly right

The Italian vote is the beginning of the end for the euro-scam

It is the start of the New European Revolution

We will triumph, and be our unruly charmingly different selves again

Nobody For President's picture

Greenie for 'unruly charmingly different selves"

It might even be worth returning to Europe as a tourist someday, which is now off the menu indefinetly.

magpie's picture

One last idea to save the Euro...an exit tax, for whole countries.

dbTX's picture

Obama & Bernake, are you listening?

JR's picture

The citizens who are concerned are always lamenting that the sheeple will not stand up. But they will, when the fight is clear and the chips are down; the Italians have shown the way.

EXCELLENT article.

DeliciousSteak's picture

People did not vote against the Euro. They voted against austerity. It is of course assumed that the Euro can be kept, entitlements can be kept, and austerity should be gone. This is also the case in Greece.

rustymason's picture

In a democracy, people get the kind of government they deserve.

Dugald's picture

In a democracy, people get the kind of government they deserve.

Deserve? rarely, they get the useless oft crooked sleaze foisted on them under the guise of free and fair elections, not until "the people" understand and exercise "due diligence" will things improve, and, sadly, that time is still some way off....

debtor of last resort's picture

I will drink a good Italian espresso watching the European flag burn.

tony bonn's picture

charles - your essay is ravingly brilliant - thank you for such wisdom....

"The fellows who want to lead their inferiors to a better future because they are smarter and know what is best. Borrowing from Thomas Sowell, I will call them the "anointed" since they very often have a very special relationship with their God, a kind of idol which they call by a strange name: the State. These guys have one and only one objective: the growth of their own political power."

whether they know it or not, their god is satan.

geewhiz's picture

Hidden hands moving hidden hands. Who knows how many layers? Satan will have to think he is the top puppetmaster until the Boss of it all comes around to claim what's His.

Griffin's picture

This EU was supposed to be trade union, not a federal state or some kind of a ring of power.

As it grows bigger it gets more difficult to run, its like it has reached a point where the complexity of the situation has overtaken the intelligence that is in stock to counter the problems.

The problems can continue to grow, but the potential to solve them seems to have reached its limits.

People in Italy seem to be sick of the whole political system, not just the EU.

They want something different and better, and they have taken the first step in that direction.


They Tried to Steal My Gold's picture

Right you are Tyler and how wrong you are too....


The people will not stand for the austerity and vote for a politician that says no to austerity. 

Then the EU puts 10 million in a Swiss bank Account in his/her name and says "Now you're a believer."


The politicians then says - "Please pull strings Master."

Ghordius's picture

What drama - and how slanted

Mario Monti + unelected democrat + majority of...: a majority of italian voted for the same two alliances that supported his cabinet for whole 15 months

Both Grillo's and Berlusconi's supporters are not all in the same camp regarding the EUR, and Grillo specifically said this matter has to be solved through a referendum done after a serious and honest national discussion

The big drive was and is against bad governance first and austerity second, not the EUR

EUR Frankenstein that does not work? It IS working, up to now. Look around you, we are in a currency war, the very thing for which it was designed. Without the EUR we'd be all engaged in an orgy of competitive devaluation, with all the broken windows that entails

and before you talk about the Germans remember that it was a broad national political push by France and Italy of support for German re-unification in exchange for the EUR - against British resistance

Leaving the eurozone makes only sense if a full or partial default by devaluation is involved. This is what you are really asking the Italians to do

nowhereman's picture

As long as they can keep the focus away from the banking cartel they will succeed.  When the populous begins to understand, then all hell breaks loose.

It's like when your municipality, pension fund or state invested in the dreck peddaled as AAA rated investments that all went bust, with no one brought to justice, and now you find that YOU have to pay the price for the fraud, it is this awakening that will cause tempers to flare.

steve from virginia's picture






"It is time to return to market prices and democracy and to accept that technocracy cannot work. I love Italy more and more. Indeed, for the first time in years, I can envisage a situation in which I feel bullish on Europe."


Spew ... spew ... spew, spew, spew!


You forgot to wrap your wonderful self in a flag. What do you think is going to happen when the Italians offer some of their newly printed lira to the Saudis for some of the million or so barrels of oil the country needs to keep its even more wonderful cars running aimlessly in circles 24 hours per day?


"Get out of here and don't come back without bringing us dollars!".


If you think euros are hard to come by now ... guess how hard it will be for Italians to find dollars ... for anyone willing to sell them?


The euro was and is an energy hedge. Period. You don't get it, Europe is being de-carred. This is not a game, people, it is physics and the player is Mr. Entropy who simply doesn't give a fuck.





Haus-Targaryen's picture

If only we could be de-steved.

Oh note, new car registrations are going up in Northern Europe.


Radical Marijuana's picture

Good article, full of insights based on one of the primary perceptions, that the fiat money system is a RELIGION. Faith based money was due to the history of fraud being able to be effectively enforced by governments. Building a pan European fiat money religion was supposed to eventually drive all the sovereign powers of the nation states into one collective group, which could later be assimilated into a global system of privatized fiat money frauds, backed by the force of a global government.

Such runaway triumphs of fraud were never good for anyone but the tiny minority who had direct benefit from being the masters of the privatized fiat money system. Of course, that power enabled them to dominate the political processes, and mass media, and educational institutions, etc., so that they tended to be able to get away with making the state religion money system become ever more triumphant.

However, that runaway triumph of frauds backed by the force of governments was always very bad for the vast majority of people, who were being systematically robbed through that state religion. Of course, just because more people wake up a little more to the blatant facts that the state religion money system is faith, based on nothing but bullshit, backed by the history of triumphant organized crime, does NOT mean that enough the Zombie Sheeple masses are actually waking up whatsoever with respect to any of the deeper reasons WHY that happened, and WHAT that means realistic resolutions should be. I still think that this article is too optimistic in expecting that enough of the masses of Zombie Sheeple are waking up a little bit more to what bullshit the state religion money system is ... However, I like to believe that this article is correct in that presumption.

The greater paradoxes within the state religion being the money system are, so far, not remotely close to being understood any deeper by the masses of people. Also, I get the superficial impression that the author of this article has not done that much yet either. My basic assertions are that the fraudulent state religion money system must have been covertly backed by force. What made War King then made Fraud King. Money is backed by murder. The "rentiers" operate within that context, without having fully understood that, especially by themselves!

Indeed, the grand paradox of the state religion money system is that it is patently absurd, but people still believe in that absurdity because they want to! Practically nobody wants to face the fundamental facts that money is backed by murder, and must be. Despite the history which made nation states being the history of war, somehow that history is forgotten after the best organized gangs of criminals are able to take control of governments, and turn their monetary system into the state religion.

Where this tangled up human silliness goes next is still a wide open question ... Of course, I am in general agreement with the notion of "Down With Reform" since there are NO possibly adequate "reforms" within a fundamentally fraudulent monetary system, which has been promoted to become the almost universally global state religion by the banksters.

However, we are still not remotely close to having any sufficiently accepted theories regarding the necessary "monetary revolutions." What we have now is an insanely idealized and abstracted mechanical economics, which is deliberately divorced from its real environment and ecology. It got that way through the tortuous processes whereby the War Kings segued into the Fraud Kings, whereby the technocratic bankster elites were able to covertly take over the sovereign powers of states, and use those powers to enforce their runaway financial frauds.

Since that triumphantly privatized financial fraud so totally dominates the globalized Neolithic civilization, we have a runaway system where the basic laws of nature are deliberately ignored by our economic systems, since fiat money violates the principles of the conservation of energy, momentum, and matter, and thereby enables an economic system to operate through the maximum possible deceits that routinely get away with deliberately ignoring and marginalizing the overall environmental ecology.

We have thereby developed the must astonishingly absurd sorts of state religions, which everyone is forced to accept, and live within. Those state religions are utterly absurd, and yet, those frauds were enforced, and assembled into ever bigger units, towards the goal of a unified global system of financial fraud, backed by the force of a global government, in which context the European Union was supposed to be a significant stepping stone towards building.

I am theoretically in favour of a global government, however, I see no way that could work unless it was based on a firmer scientific foundation, which would require that government admitting more truth about itself, which is that it must be some system of organized lies, operating organized robberies. That paradox of the authorities admitting more radical truth about themselves is the obvious obstacle in the way of a society which becomes more scientific about everything else, EXCEPT, SO FAR, ITSELF!