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Europe's Greek Showdown: The Sum Of All Statist Errors
Submitted by David Stockman via Contra Corner blog,
The politicians of Europe are plunging into a form of ideological fratricide as they battle over Greece. And “fratricide” is precisely the right descriptor because in this battle there are no white hats or black hits—-just statists.
Accordingly, all the combatants—the German, Greek and other national politicians and the apparatchiks of Brussels and Frankfurt—- are fundamentally on the wrong path, albeit for different reasons. Yet by collectively indulging in the sum of all statist errors they may ultimately do a service. Namely, discredit and destroy the whole bailout state and central bank driven financialization model that threatens political democracy and capitalist prosperity in Europe——and the rest of the world, too.
The most difficult case is that of the German fiscal disciplinarians. Praise be to Angela Merkel and her resolute opposition to Keynesian fiscal profligacy and her stiff-lipped resistance to the relentless demands for “more stimulus” from the likes Summers, Geithner, Lew, the IMF and the pundits of the FT, among countless others. At least the Germans recognize that if the EU nations are going devote 49% of GDP to state spending, including nearly a quarter of national income to social transfers, as was the case in 2014, then they bloody well can’t borrow it.
Notwithstanding the alleged German led austerity regime, however, that’s exactly what they are doing. Germany has managed to swim against the surging tide of EU public debt, lowering its leverage ratio from 80% to 76% of GDP in the last four years. Yet the overall debt ratio for the EU-19 has continued to soar—meaning that the rest of the EU drifts ever closer to fiscal disaster.
Euro Area Government Debt As % of GDP
Indeed, Germany’s frustration with the rest of the European fiscal sleepwalkers is more than understandable, as is its fanatical resolve not to give an inch of ground to the Greeks. Or as Merkel’s deputy parliamentary leader, Michael Fuchs told Bloomberg,
There is no way out” for Greece from its treaty obligations….. conditions set for Greece by The Troika (EU, ECB, IMF) for bailout funds “have to be fulfilled…. That’s it, very simple.”
This isn’t just teutonic rigidity. It’s actually all about the so-called capital contribution key—-the share of the EU bailout fund that must be covered by each member country in the event of a default.
At dead center of Greece’s $350 billion of debt is $210 billion owed to the Eurozone bailout mechanism. Germany’s share of that is 27% or roughly $57 billion. Yet the prospect of tapping the German taxpayers for some substantial part of that liability in the event of a Greek default is not the main problem—-even as it would mightily catalyze Germany’s incipient anti-EU party.
The real nightmare for Merkel’s government is that the next two largest countries in the capital key are on a fast track toward their own fiscal demise. So what puts a stiff spine into its insistence that Greece fulfill the letter of its MOU obligations is that if either France or Italy is called upon to cover losses, the whole bailout scheme will go up in smoke.
There is not a snowball’s chance that the already faltering governments of either country would survive a capital call from the EU bailout funds. Indeed, the prospect of a partnership with Marine Le Pen and Beppe Grillo is undutedly what was on German Finance minister Schaeuble’s mind when this picture was snapped during his meeting with Varoufakis.
Just consider the delusionary partners Germany has at present—even before any Syriza-style election upheavals. In another of his patented outbursts of truth over the weekend, the Greek finance minister suggested that Italy was next and that it too, will discover “it is impossible to remain inside the straightjacket of austerity.”
That drew an immediate response from Italy’s Economy Minister, Pier Carlo Padoan, who tweeted to the world that Italy’s debt is “solid and sustainable”.
Is he kidding? Italy’s GDP is dead in the water and has been since 2007. Yet it has continued to run massive budget deficits—about $75 billion this year alone–so its debt to GDP ratio has gone nearly vertical.
Indeed, the very notion that the trend shown below has any resemblance to a “solid and sustainable” fiscal posture is indicative of the sheer corruption of discourse that has been introduced by the Keynesian commentariat and the policy apparatchiks of the EU, IMF and Washington.
Their specious claim that all is well in Italy rests on the fact that it has close to a “primary surplus” before interest payments.
So what! The undeniable fact is that Italy is borrowing heavily year after year to pay its interest, and is thereby impaling itself in a debt trap. That is, a situation so hopeless that no imaginable Italian government can stop the fiscal hemorrhage—- owing to the fact that the vast scale of the tax increases and spending cuts that would be necessary to reverse the debt spiral would be too toxic politically to accomplish.
And that’s the crucial point. The Keynesian modelers can always make the debt curve bend downward by assuming that the vigorous application of more of the same poison—deficit finance—can magically cause Italy’s “aggregate demand” and GDP to spring upwards and grow out from under the debt. But Europe’s fiscal crisis is no longer about whiteboard policy options; its about the absolute breakdown of fiscal governance.
To their great credit, the Germans do not believe in magic napkins of either the supply side or Keynesian varieties. Accordingly, the last thing they want to test is the capacity of Italian politicians to come up with even a tiny fraction of the approximate $37 billion of Greek debt they have guaranteed. For avoidance of doubt, here is the post-crisis trajectory of Italy’s real GDP—–a curve which is heading, not surprisingly, in a decidedly southward direction.
Moreover, Germany’s nightmares as to who will ultimately pay the piper most surely do not end with the Five-Star Movement descending on Rome. France’s share of the Greek debt is appximately $42 billion. But like the case of Italy its economy is flatlining, having gained only 1% in real terms since its crisis peak.
The truth is, the French state has been meandering toward economic stasis and fiscal bankruptcy for several decades under governments of the left and right. With the state now consuming nearly 60% of GDP, it cannot reasonably expect any measureable economic growth. None. Capitalism doesn’t function when it is smothered by taxes, bureaucracy, cronyism and welfare state torpor.
So France is now experiencing a breakdown long in the making. Its rapidly deteriorating fiscal condition has nothing to do with the financial crisis or the current flurry of so-called deflation. Its economy has finally succumbed to the destructive toll of statist economics, while its public debt continues to rise inexorably. Accordingly, it too has a debt to GDP burden that is rapidly heading beyond the 100% level.
So Germany’s unbending position on the Greek debt is understandable. If the default barrier is breached, it will start a EU-wide voter run on the parliaments. Even the Dutch would be stranded high and dry in the event of a capital call—-finance ministers Dijsselbloem’s lectures to Varoufakis about fiscal rectitude notwithstanding. Indeed, just how long would he and the current Dutch government remain in office after a capital call given the debt spiral already in motion?
In short, the EU outside of Germany and rounding error states like Finland has passed the point of no return on the fiscal front. No government that has to raise it share of the default cost will survive.
Germany will be left holding the entire bailout bag. And that serves them exactly right.
Merkel and her disciplinarians may be fiscally virtuous, but they are downright dense on the matter of central banking and the monetary order. In fact, they don’t have a clue about what capitalism in the financial system even means.
To be sure, they jabber endlessly about the impermissibility of central bank finance of “state deficits”. But this whole ideology amounts to a ritualized and intellectually vacant assault on a monetary straw man. Germany went along with the ECB’s $1.3 trillion LTRO program, for instance, apparently because it did not involve the “purchase” of sovereign debt.
In fact, the ECB injected into the European financial system this massive flow of cash made from thin air by advancing three-year discounts to EU banks that were strictly collaterized by the public debt of Germany, France, Italy, Spain etc. Accordingly, the credit risk assumed by the ECB was not that of BNP-Paribas, for example, but that of the French state bonds it hocked.
Needless to say, that’s state financing by any other name. Moreover, this is not merely evidence of German hair-splitting hypocrisy on the monetary policy question.
Had they really been committed to sound money they would never have permitted the ECB to go on the money printing rampage that occurred after German governments mesmerized by the “European Project” swapped the monetary quietism and rectitude of the Bundesbank for what quickly became the energetic, Keynesian macro-management regime of the ECB.
During the 10 years culminating in Draghi’s “whatever it takes” ukase of July 2012, the balance sheet of the ECB exploded by nearly 4X. It matters not one wit that this eruption was based on sovereign collateral rather than “outright” purchases of government debt, and whether the underlying cash injections to the EU banking system were deemed to be permanent or multi-year “temporary” loans.
Under today’s worldwide money printing mania, central bank balance sheets never shrink; they metastasize endlessly. The differences between outright purchases and repo-style transactions are merely technical.
Like all central banks, the ECB has become a monetary roach motel right under Germany’s nose. The bonds go in, but they never come out. And as explained below, the recent nominal shrinkage of the ECB’s balance sheet, which Draghi has now vowed to reverse with full German concurrence, was an accounting illusion, anyway.
The fact is, the ECB has been engaging in monetization on a massive scale from its inception. So doing, it has drastically distorted price discovery in the euro bond markets and thereby aided and abetted the fiscal profligacy that rages over the entire continent.
As indicated above, the fact that the ECB’s balance sheet appeared to shrink sharply (by about 1 trillion euro) during the two years after Draghi’s ukase, and in consequence of the pay down of the LTRO discounts, was merely an exercise in monetary sleight-of-hand. The ECB’s massive haul of assets was just temporarily parked off balance sheet in the accounts of hedge fund punters and national bank fellow travelers.
These speculators were more than eager to front run Draghi’s warranted word that the ECB would implicitly monetize any and all sovereign issues that might be required to keep the debt markets open to EU borrowers at the most congenial rates imaginable. Since this included, especially, all of the fiscal profligates of the periphery, the front-runners feasted heartily. Capturing the soaring value of the bonds they had funded on zero cost repo or deposits, they essentially rented their balance sheets to the Frankfurt apparatchiks at what amounted to obscene profits.
Yet none of the explicit bailout of Greek debt, or the defacto bailout of Italian, Spanish, Portuguese etc. debt via the Draghi ukase, would have happened had the ECB enabled honest price discovery in the debt markets during the phony boom years prior to the crisis. In effect, the ECB became a tool of the EU superstate, flooding member state ministries and parliaments with false prices on their sovereign debt.
Actually there was no reason for government bond rates to fall drastically during the decade run-up to the 2010 crisis. Prior to the recent downward blip of the euro zone CPI owing to the global oil and commodity crash, the trend level of inflation had not changed since the turn of the century. So in massively inflating its balance sheet by nearly 4X between 2002 and 2012, the ECB was the active agent that unleashed fiscal profligacy throughout the EU.
Over that period, the euro zone CPI rose relentlessly at a 2.3% compound annual rate, while public leverage ratios climbed steadily. There was no reason, therefore, either by way of declining inflation or improving fiscal performance for bond rates to fall— in the periphery or the core for that matter.
In fact, under a sound money regime, the ECB balance sheet would have grown hardly at all after the turn of the century. What the EU countries needed more than anything else was an honest bond market to bring home to its constituent governments the true cost of permitting public debt to spiral in the face of faltering growth and a relentless tide of crippling demographics. That is, a soaring population of social insurance recipients versus plunging birth rates and future labor force shrinkage.
Stated differently, the EU states desperately needed a monetary regime that required their deficits to be financed out of private savings and capital inflows, not the central bank printing press. That would have caused a visible “crowding out” of private investment, rising interest rates and political opposition to fiscal free-booting in the EU capitals.
Indeed, central bank financial repression and monetization of sovereign debt is the arch-enemy of Germanic fiscal rectitude. But the successive governments in Berlin had no clue and still don’t.
Not surprisingly, peripheral country interest rates during the post-2000 course of the ECB’s massive monetization became a snare and delusion. In this context, it doesn’t matter whether the ECB was actually buying Italian or Greek debt at the time (it wasn’t) or what the precise composition of its balance sheet eruption actually entailed. Debt market instruments are arbitraged and fungible. The adverse impact of the ECB drastic financial repression would have happened whether it was buying Italian debt, Spanish road bonds or Greek seashells.
Spanish 10-Year Bond
Italian 10-year Bond
Greek 10-Year Bond
Needless to say, there is always a counter-party. By the time the peripheral debt crisis reached fever-pitch in 2010-2012, European banks and insurance companies had gorged on the vastly mispriced debt that had been enabled by the ECB’s drastic financial repression. Accordingly, that was the moment when the scales should have fallen from Berlin’s eyes, and when its should have recognized that the cause of the crisis was not merely profligate Latin politicians, but the Keynesian money printers at the ECB which had tossed the Bundesbank’s sound money standards into the dustbin of history.
Instead, it stumbled into a monumental error. At the peak of the crisis, all of the big German, French and Italian banks were economically insolvent because the embedded mark-to-market losses on peripheral sovereign and private debts alike were orders of magnitude larger than the balance sheet equity of these institutions.
In the case of Deutsche Bank, for instance, its $1.9 trillion balance sheet at the end of 2010 was balanced precariously on just $34 billion of tangible equity. In effect, it was leveraged at 56X. The big French banks were not much better. BNP-Paribas had $60 billion of tangible equity pinned beneath $2.1 trillion of assets including more than $600 billion of exposure to high risk loans and bonds.
Yet the insane leverage ratios sported by the big EU banks were the product of another statist policy scheme in which the German fiscal conservatives were fully complicit. Namely, the regulatory regime known as risk-based asset accounting. Under the latter, sovereign debt is not counted for the purpose of computing capital adequacy. In short, the ECB midwifed vast losses on drastically mispriced sovereign debt and the EU bank regulators said not to worry. It doesn’t count!
Outside the primitive world of Keynesian GDP flow mechanics where financial markets and balance sheets do not even exist, there are three extremely dangerous “givens” in the real world of finance.
The first is that banks are not free market institutions, but dangerous wards of the state that must be strictly regulated and supervised lest they gamble recklessly with depositor funds, investor capital and the various insurance and safety net schemes of the state.
The second is that politicians must face the true economic cost of borrowing or they will be endlessly tempted to perpetuate their power and prerogatives by dispensing free lunch entitlements, subsidies and tax subventions to organized interest groups and crony capitalist plunderers. State borrowing has to hurt real world constituencies, not merely offend the requisites of fiscal virtue.
Finally, financial markets are the vital core of capitalism, but by their very nature they attract gamblers and risk-takers. Accordingly, the most dangerous enemy of capitalist prosperity is not really the political left. Instead, it is the insuperable “moral hazard” that results when agencies of the state—-including the fiscal authorities and central banking branches alike—-bailout the mistaken wagers, soured bets and excesses of reckless greed that inexorably arise in the financial markets.
It goes without saying that the German fiscal disciplinarians ignored all three of these cardinal rules when they partnered up with the Keynesian apparatchiks in Brussels and Frankfurt to bailout the entirety of the soured peripheral country debt at 100 cents on the dollar. So doing, they committed an immense act of statist folly.
In the first instance, they stripped European financial markets of whatever vestiges of discipline and honest price discovery which then remained; allowed the financial executives and traders responsible for loading their institutions’ balance sheets with drastic losses to go unscathed; and taught the gamblers unleashed by the ECB and EU bailouts that the sky was the limit.
No longer was their any risk of loss. In the event of even brief spats of market turmoil and modest sell-offs, the Germans made it clear that the EU superstate would come running with safety nets and subventions. The sorry spectacle of the hedge fund gamblers buying up Italian and Spanish bonds, and even Greek bank equities prior to Syriza’s emergence, and riding them for massive gains after Draghi’s ukase was the inevitable result of what amounts to the EUs quasi-nationalization of the sovereign debt markets.
Yes, this papered over the insolvency of Europe’s banking sector. But even on that score, the Germans are deeply culpable. There was no necessity whatsoever to shield banks and other investors from losses on their holdings of Greek and other peripheral debt. If they had wanted to protect purportedly innocent depositors and the financial system generally, they could have permitted Greece to tumble into bankruptcy back in 2010 and the losses to be taken on other peripheral debt in the years thereafter—and then recapitalized the banking system with public money, new leadership and an effective and honest regime to insure bank safety and soundness going forward.
At the end of the day, the statist road chosen by the Germans has become a dead end. And it was the German government that ultimately choose the route of money printing and bank bailouts because no other EU country had the financial resources and credibility to make it happen.
The massive transfer of bank and speculator losses to the peripheral nations has inherently resulted in the destruction of democratic sovereignty in the bailed-out nations. And this extends far beyond the blatant usurpation that occurred when Brussels virtually deposed the elected governments of Italy and Greece during the heat of the crisis.
The fact is, the hated Troika “program” and MOU would not exist absent the statist depredations of the Germans. In its absence, by contrast, the elected governments of the bankrupt EU nations would have needed to design and impose their own “austerity” programs in order to compensate for the absence of borrowed cash and to earn their way back into the capital markets on the basis of their own credit profile.
So Syriza is right to say that the devastated citizens of Greece do not owe Deutsche Bank and the rest of the bankers and punters a dime for the Greek bonds that their earlier governments imprudently issued and which the traders and managers of these institutions foolishly bought. The fact that German government caused these debts to be transferred to their own taxpayers is Berlin’s problem, not Athens’.
Indeed, that is the towering irony of the current fiasco. At the end of the day there will be no “mutualization” of the bailout debt of Greece or any other peripheral nation. It will all end up on Germany’s account because any other government which attempts to pay its share will end up like the Samaras government two weeks ago—that is, running off with the state’s internet passwords and office supplies in the middle of the night.
So the bailouts were one of the greatest acts of fiscal folly of all time—performed by the only fiscal disciplinarians left in Europe.
There could now be only one greater act of statist folly left on Berlin’s docket. The German’s could loose their nerve, allow Greece to stay in the EU without adherence to its commitments, and embrace Syriza’s out-and-out socialist plan for a modern day “New Deal” in the entire EU funded by the European Investment Bank (EIB).
Well, that would be debt mutualization of an even more cancerous type. Surely by now Frau Merkel has learned her lesson and will decline the offer to jump from the fiscal frying pan she has created into the raging fires that the populist left in Europe will otherwise stoke-up if given the chance.
In short, Germany has no choice except to let Greece go and to allow the entire EU bailout state to unravel, and then to pay the piper for its statist follies.
The alternative is an all-powerful superstate in Brussels and Frankfurt that will necessarily extinguish whatever remains of political democracy and capitalist prosperity in Europe.
The latter would also permanently bury German taxpayers in other people’s debt. The fiasco in Greece has already proven at least that much.
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ZH Quiz: Given the degree to which each of the negotiating parties are misjudging each other, does this remind you more of:
(a) Bear Stearns
(b) Lehman
(c) The beginning of World War I
I wonder how long it will be until a US aircraft carrier is parked off the Greek coast. Or A Russian or Chinese one.
The Chinese and the Russians are harboured there. No need for a carrier.
More concernedd about the Chinese arming Hawaiian seperatists
Don't worry about the Chinese, worry about "Driver's License Checkpoints":
https://www.youtube.com/watch?v=_MmJwMvMGzM
Enforce the 4th!! For those in denial, this is the cost of ignoring fraudulent false flags like 9/11.
9/11 truth, if broadly understood, takes this shit out at the knees.
And the end shall come as a thief in the night...
Statist, oh, I thought you said Statanist.
I like the fact that the Greek finance minister is willing to give credit to Mao Tse-tung for his many great achievements. Now, you may not agree with all of Mao’s policies, but politics aside I think many of us can agree that he was a kind and compassionate human being at heart.
http://accredited-times.com/2015/02/09/breaking-the-cycle-of-poverty-2/c...
It's no co-incidence that everything around the globe has gone to shit since the year the American Fuhrer took over.
MDB, any reference to Mao other than he was a filthy, dirty, rotten pedophilia-tic, and murdering psychopath who murdered 40+ Million countrymen, women and children, would be criminal.
Doesn't leave you much wiggle-room.
Only one thing to do: Gerxit. And fast!
The French invented it, the French should pay the price.
"Merkel and her disciplinarians may be fiscally virtuous, but they are downright dense on the matter of central banking and the monetary order. In fact, they don’t have a clue about what capitalism in the financial system even means. "
Uh, no Germany does have a clue about economics and the financial system. They did produce that leaked report on Peak Oil. So internally, they know. But as far as appearances go, they don't let on.
Papers? What is your business in Sector N?
Even the president uses a fake ID. Ha! I spit on your stinking papers
It wasn't just the guys on the grassy knoll there was a dude in the water drain too.
I'm put more in mind of the Bruce Jenner penis beheading. Ouchy
I can honestly say that I have never thought about Bruce Jenner's penis.
...nor would have, except for....
I know, eh! We're all awaitng photos of his new vagina. What?
"Aaaaaaaaaaahhhhhhhhhhhhhhhhh!!!!!!," he ran screaming into the night.
Got Drachmas?
This sure looks like the start of a war to me.
I find articles like simply failing to grasp at what the reality that the market is saying: a lot of people could wind up dead here.
All this economic talk doesn't seem to be the actual "talk."
These guys seem like they wanna...
"throw down"
as they say in hockey.
The bankers/financiers have always been about printing (for them) and then foreclosing (on you). This plan has been working since the dawn of society. It only encounters problems when everyone tries to do it. Above all, society benefits when the monetary units cannot be easily counterfeited...
Same as it ever was...
The plan:
Germany becomes now a key factor for the desirable federalization of the eurozone through an unprecedented "haircut" of the social state, labor rights, pensions and salaries, in the name of the fiscal discipline and competitiveness. Dijsselbloem's "suggestions" to Germany show characteristically that the power will be transferred from Berlin to Brussels and to the European economic mechanisms which already took the power from politicians through Draghi's decisions.
no way
d you thought re-unifying Germany was a good thing
"unprecedented "haircut" of the social state, labor rights, pensions and salaries," ---
Yes, but who's labor rights, pensions and salaries exactly?
"unprecedented "haircut" of the social state, labor rights, pensions and salaries, in the name of the fiscal discipline and competitiveness."
That's what should happen, that's the only real solution, but most likely the ECB will just inflation-finance the socialistic status quo until it collapses in hyperinflation. Just like the US and Japan. If you want a glimpse of the West's future, take a look at Venezuela.
It's pretty much a dry run for Port, Ita and Esp. They like what they see.
The weakness of Southern Europe becomes Germany's strength. Germany is the real parasite.
The Greek hope headlines are back as an excuse for pumping stocks...
MW... U.S. stocks on rise along with hope for Greece deal
Rising equities, dampening vol.... cheap puts, come to papa!!
EU- we are the god of free money. We demand your first born or the drones of heaven will send you to hell.
Yanis- FU EU.
I love reading Stockman's articles, if only because it grows my vocabulary by at least one word every time. In this article it was 'ukase'. An arbitrary command.
We refer to them as Executive Orders thank you
The force is strong with this one.
No Debt: Ukase is derived from a Russian word meaning "decree" or "edict".
If banks don't have to pay their debts why should I?
If the public treasury bails out banks/insurers/corporations why not me?
If the public treasury gives 0.25% loans to banks why not give them to me and mine?
After witnessing a decade or more of this skullduggery the natural response of individuals, then communities, then nations to the parasitic statists and banks/insurers/corporations will be "Go fuck yourself".
Welcome to moral hazard.
Great post Ebworthen. You summed up my thoughts exactly.
700 billion given by Hank in one day to the Jamies and Lloyds.
BUT prior to that in 2005 they passed the law that We can't write off student loans, which are with us for life. no I don't have one, I am clear with the board Heavy Metal folks.).
It always goes to the house....
bravo!
Statist.
Hmmmm... add an A Prior to first T, substitute an N for the 2nd T and, voila! Fixed the title.
:-)
ALL HAIL, STANTAN!....
(dislexic)
No, it's Astanist. I added an A (where I felt like it) and replaced the second T with an N.
Or maybe it's 'Steak Sauce'. I'm not sure. I get confused easily.
A Statist is anybody who thinks there should be laws period.
If a single law can exist, there must be a state to enforce it.
States exist because the ability to back up lies with violence exists. It is NOT possible for there to be no states, because it is not possible for lies and violence to cease to exist. The only things which can actually exist are the dynamic equilibria between different systems of organized lies operating robberies. However, human history has selected for those who were the best at backing up deceits with destruction to be able to make and maintain civilizations controlled by enforced frauds. Inside that context, the only significant public discussions tend to be nothing but bullshit fighting bullshit!
Stockman's use of the world "statism" seems rather superficial and misleading to me, as do ALL other commonly used labels that I am aware of. In my view there is only one system, and that is the combination of organized crime and its controlled opposition. Stockman has some relatively superficial view that things have gone wrong in relatively recent times, due to central banks' excesses. However, my view is that things have been going wrong at an exponential rate throughout the history of Neolithic Civilizations' social pyramid systems being based on backing up lies with violence, which became more sophisticated systems of legalized lies backed by legalized violence, which are not primarily manifested by the ways that governments are the biggest form of organized crime, controlled by the best organized gangsters, the banksters.
States emerged out of the history of War Kings. States gradually morphed to become dominated by the Fraud Kings, the central banks, and the rest of their Royal Court of Fraud, from the King of Kings of Fraud being the Bank of International Settlements, on down through the most significant National Kings of Fraud, such as the Federal Reserve Board, etc. ...
The deeper problems are that the biggest bullies have so dominated society for so long that there is practically nothing but their bullshit, in the form of the dominate natural languages, as well as the dominant philosophy of science, to the degree that it is practically impossible to have any kind of rational public debates about political economy, due to ALL the language that we use being almost totally based on bullshit, through and through, because the ONLY actually existing systems are those of organized crime and controlled opposition.
The ONLY connection between human laws and natural laws is the ability to back up lies with violence. That is what actually exists, and must necessarily exist. Any intelligible discussion of political economy ought to be based on that view. However, instead, the dominate public "debates" are totally based on bullshit, from BOTH the established systems of organized crime, and their controlled opposition groups.
"If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt — above all, because it immediately makes it seem that it’s the victim who’s doing something wrong."
-- David Graeber,
DEBT: The First 5,000 Years
Greece adopted the Euro, then was allowed to have access to lots of "money" made out of nothing as debts, then that bubble popped ... The established systems of enforced financial frauds are attempting to force Greece to stay inside of that system. However, the new Greek finance minister has been stating the situation that Greece has ALREADY LOST, in the sense that he admits that he is "the finance minister of a bankrupt country!" ... The Greeks were already sucked into the machine of the combined money/murder systems, that have mangled their economy.
Human beings MUST operate as entropic pumps of energy flow. However, they have understood that in the most backward ways possible. Systems of lies backed by violence have been promoted as being totally the opposite to what they actually are. The people who were the best at doing that, and the most successful in taking advantage of the systems of social and environmental robberies and rapes, have been able to indulge in their own bullshit that they were the "good guys."
The levels of paradox present here are practically infinite. People who make "money" inside of the established systems have elaborate layers of bullshit that they tell themselves and others about what they were doing. Money is measurement backed by murder. Human beings MUST live as robbers. However, human history has selected for those who were the most successful at doing that to become the biggest bullies, whose bullshit social stories dominated civilization.
The PROBLEM has been that military successes based on deceits, which enabled monetary successes based on frauds, has enabled the development of an economy in which "money" was made out of nothing as debts, in order to "pay" for strip-mining the planet's natural resources, which strip-mining is running into the limits of diminishing returns, due the planet being finite. Our fundamentally fraudulent financial accounting systems have driven us to high-grade ourselves to hell, building everything at an exponential rate in the most unsustainable ways possible.
Greece adopted the Euro, which then enabled their politicians, who were puppets of the banksters, to "borrow" lots of "money" made out of nothing to blow into bad investment bubbles which popped, leaving misery behind for the majority of Greeks. The same fates await everyone else. However, for those who are more towards the core and towards the top of the social pyramid systems, they can continue to enjoy operating within the established systems of organized lies operating robberies, making "money" inside of fundamental fraudulent financial accounting systems, while simultaneously being able to indulge in bathing in all the well-established and entrenched bullshit about how they are the "good guys."
Our civilization was always controlled by systems of backing up lies with violence, which became the current systems of legalized lies, backed by legalized violence, in the form of a fundamentally fraudulent financial accounting system, that makes "money" out of nothing as debts, which "money" can disappear back to nothing when those debts disappear, which is blatantly violation of the basic laws of physics, EXCEPT when seen as an ENFORCED FRAUD.
Greece is merely one of the leading edges of the globalized systems of ENFORCED FRAUDS driving their consequences, which are the result of attitudes of evil deliberate ignorance towards everything which is outside of the fundamentally fraudulent financial accounting systems. There is the nominal wealth which flows from being able to indulge in making "money" out of nothing (which actually is making money as measurements backed by murders) without having to face any of the facts regarding the realities of the longer term consequences from doing that.
Everyone MUST live through some systems of organized lies operating robberies, since everyone MUST live as entropic pumps of energy flows. However, developing better dynamic equilibria between those systems has become politically impossible, due to the degree that the most socially successful people who have been doing that are the most fanatical believers in the State Religion monetary system, who tend to be able to not want to perceive that the State Religion national security system that backs that up is just as deceitful as the monetary system is fraudulent.
Hence, the typical kind of smug rationalizations of the mainstream morons who are able to operate their own systems of lies and robberies, without themselves perceiving those facts, while they can project the blame onto others, who are the "bad guys." The degree to which the self-deluded "good guys" are fanatical believers in the State Religion monetary systems makes developing any better overall dynamic equilibria politically impossible. Religious fanatics tend to not have enough sense of humour to be able to perceive their own ironies, enough to get out of their own boxes.
There is no way to imagine what Greece would look like, IF the world was not being controlled by enforced frauds, and deceits backed by destruction. Those who indulge in thinking that they are "productive" and are making "productive investments" from which they deserve to make a "profit," tend to deliberately ignore that the entire system that they operate within is based on the production of destruction controlling production. Mainstream financial advisers deliberately ignore, as much as possible, that they are making "money" inside of fundamentally fraudulent financial accounting systems. Their smug self-righteousness is one of the main reasons why it is practically impossible to develop better dynamic equilibria.
There is no way to actually connect the fundamental physical facts with the social facts, since the social facts are based on thousands of years of being able to back up lies with violence, which has resulted in there being nothing but systems of organized crime and control opposition, in which most problematic political "debates" are based on denying that those are the facts, or asserting that those should not be the facts, when those are the actual facts, and MUST NECESSARILY BE!
Obviously, Greece has become badly unbalanced. However, everywhere else is too. Overall, it is almost impossible to imagine how UNBALANCED the established systems of globalized electronic monkey money frauds, backed by the threat of force from apes with atomic bombs has become. The sheer magnitude of that makes imagining the future in any coherent ways practically impossible. The corrections to the Greek problems can NOT be within any return to exponential growth, based on still strip-mining the planet's natural resources ... There is NOWHERE left where that is actually possible anymore.
EVERYONE PROMOTING "SOLUTIONS" BASED ON MORE EXPONENTIAL ECONOMIC GROWTH IS DELIBERATELY IGNORING WHAT THE REAL PROBLEMS ARE! Rather, we need to develop new systems dynamic equilibria. However, those imperatives have as their major obstacles all the fanatical believers in the dominate State Religion monetary systems, promoted by those who were "successfully" making "money" in fundamentally fraudulent ways, which they nevertheless were able to rationalize were due to them being the "good guys."
Actually, there are NO "good guys," only different kinds of "bad guys." However, the degree to which some of those "bad guys" believe that they are "good guys" makes developing any better balancing practically impossible. The mainstream morons within the established systems, who are the most fanatical about the State Religion monetary systems, are almost impossible to reason with. Similarly, the reactionary revolutionaries in the controlled opposition are also almost impossible to reason with. The paradoxes of success based on enforced frauds continue to get bigger and BIGGER ...
From a sublime point of view, with a macabre sense of humour, the degree to which people are able to believe in bullshit is amusing. However, as the Greek example shows, believing in the banksters' bullshit has very bad longer term consequences. Since the banksters' bullshit dominates the whole world, the whole world is headed towards recapitulating the problems that Greece now faces. We continue to wait and watch, as the tragic trajectory of successfully enforcing frauds devolves ... Nobody can possibly know for sure what happens next!
Violence and lies will exist, but force can also be used to hasten the end of lies or to defend against aggression or threats. It is for this reason that advanced technologies and innovations in weaponry and the art of war are much more beneficial to freedom than most people realize. For example, the atomic bombs you mention aren't well suited for many uses other than to target centers of state power (capital cities, financial centers). Armed drones, combined with anonymous communication, assassination markets, etc. have the potential to make any government office or enforcement position undesirable.
It is quite possible, and I would argue inevitable, to achieve a dynamic equilibrium where no government is able to impose its power over people who do not wish to be governed.
I think the word you meant to use is 'legislation'. It is important to know the distinction between law that exists within state institutions (generally legislation) and the broader concept of law. There are actually many categories and examples of non-state law, such as polycentric law, not to mention some forms religious law which exist separately from any state (there is such a tradition in the Islamic sharia, as far as I know). There are many laws that are enforced without the involvement of a state.
The Domino scene from ROBOTS is a great visual of small Greece going, then Spain, Then France, Then Italy, .....
Only about 30 seconds long but you get the picture of what happens when a small inconsequential domino falls...
https://www.youtube.com/watch?feature=player_detailpage&v=EzVrzJy1ujc#t=44
(oh, then start it from the begining, very good)
Greece Good, Bad, Indifferent.... They are simply the first. We will all be in the same position. The US would be there now if we didn't have the reserve currency.
The huge wave of the currency/debt tsunami((very small while it was out to sea) is starting to have it's bottom hitting the rising shore, the bottom can no longer travel as fast as the top, it cannot carry it any longer, It will crash on the shore line taking out much when it does.
https://www.youtube.com/watch?v=y97rBdSYbkg
Exactly. Having your center of gravity outside your base is a bitch.
It releases a billion times more energy in 13 steps? We are going to need a bigger boat...
Only a fool with take these crimes, committed by bankers, and blame them on the ephemereal "statists."
Exactly. The problem is oligarchy/banksterism, and Libertarians flat out ignore the role of oligarchs in private/state corruption. They never talk about the revolving door between the state and private enterprise, and drone on about "socialists" and "statists". They're like the church - some good ideas, but mostly bullshit.
State and private power are inconsistent with a Libertarian system. Libertarians see the role of government as protecting the individual from collusion between state and private power. Libertarians would ask how exactly you would protect the oligarchs from being run out of business if smaller more efficient individuals can start up businesses competing with them.
Private power is in no way limited by a Libertarian system. A Libertarian government can't protect competition, because the first company that can afford it, will lobby to influence the laws, buy power and rig the game to crush smaller competitors. For example, small, efficient fiber-optic ISPs have succeeded to gain market share almost everywhere, except in the US, where the Internet is crap, because a few laissez-faire monopolies have control over the laws, and their lobbyists control the FCC. The punchline: much more statist systems, like Scandinavia, where the Internet is considered a regulated utility and a public right, are more progressive, because the market really regulates business, and doesn't let it do whatever it wishes, as Libertarians prefer.
The only way to prevent oligarchy, is to impose democracy. Not unregulated libertarianism, but true democracy, where laws reflect majority opinion, not who can buy more politicians. Libertarianism has never been good at reigning in monopoly, banksterism and oligarchy, which is why Libertarians prefer not to talk about it very much. Peter Schiff, for all his great insights, has nothing to say about banksterism. Neither does the Mises institute. Again, they're like the church. Some good ideas, but mostly bullshit.
Wrong, libertarians constantly criticize the revolving door between government and big business.
We are opposed to all corporate welfare in all forms (subsidies, regulations, money printing, war, etc).
What we understand, which the left does not, is that the source of the problem is state power - not business.
Private enterprise cannot hurt you except through the state.
It is amazing how the left can simultaneously complain that the government uses its power to serve business lobbies and then suggest that the solution is to give government even more power!
John Wilmot, like Communists, who are technically against the state, but can't do anything about it, because there's no provision to limit it (their war cry is to destroy the state, but what comes after? A new state). The same way, Libertarians have no limits whatsoever on corporate dominance, aside from the wishful thinking that monopolies can't exist in their perfect world. Their war cry is "free private enterprise from the tyranny of the state". And what comes after? Corporations that create their own laws and subvert democracy. The best system we have so far is what we see in Scandinavia - neither Libertarian Capitalism nor Statist Socialism, only the best parts.
Only a fool would think the solution to an excess of concentrated power is to give the perperators more power.
Not sure I follow you. The way I see it, these are 100% statism enabled crimes they are committing. Without the violent arm of 'law' created by the state, nobody would be forced to use the currencies they manipulate and debase. They take by force the productivity of others to pay for their selfish purposes. Without the false authority of law, they would have no means of taking the property of others.
Keynes arch enemy Ludwig von Mises said it best-
The issue is always the same: the government or the market. There is no third solution.
"...that threatens political democracy"
Lol, if not Democracy, if not voting themseleves greater and greater power over their fellow citizens, then how the heck do you think they all got themselves into this mess. The people of the Eurozone do not need to protect democracy, they need protection from it.
This is all very true, but it avoids the explicit statement regarding Germany's motivations - that they benefitted from a weaker Euro which has kept their manufacturing sector in overdrive. So they made a deal with the devil to preserve their export surpluses, and now they have no way out. It is what it is...
I agree, does the downvoter care to comment? or just a hit and run?
Its not statist per se, its Private Oligarchy that has conquered the political class.
And now Syriza, a tiny Tom Thumb, is showing this for the world to see : Oligarchy GULLIVER in chains; all the while HSBC shows what true Oligarchy power does to rob the people with the complicity of crony-baloney politicians of all first world nations, servants of now global Oligarchy combine. But a combine that is fragile as comprised of thieves who ALWAYS fall out!
That's History.
In this whole race to bottom, where modernity relapses into crass feudalism, it is important to understand who controls the show and who is surrogate, to understand the power structure of lead player : Pax Americana's bosses.
The makers of this capitalism gone 'Reaganista' mad world.
when I hear the word statism, I think of it's definition as;
"The belief that one is justified in initiating violence or theft in order to obtain the property of another or make another behave in a way that is counter productive to their best interests."
Not sure if there is an official definition of the word anywhere, but this is just based on my understanding. Going by this definition, private oligarchs are really just statists.
when I hear statism I hear Jefferson.
Choose your own, but without the slaves.
It is the Private Oligarchs that have sold state power to the masses, who have elected people to advance the power of the state to control their lives, because only through the power to control the individual can the Oligarchs stay in power.
Praise be to Angela Merkel and her resolute opposition to Keynesian fiscal profligacy and her stiff-lipped resistance to the relentless demands for “more stimulus”
Has Stockman heard of that QE by the ECB thingy yet?
Excellent article
tl;dr = the fundamental problem in Europe is that governments have been spending too much and stifling economic growth for decades; the proximate cause of the current crisis was the ECB's print-fest from 2002 to 2008 which artificially lowered interest rates and thus allowed said governments to be even more profligate; and the "solution" of bailing-out these governments (and the investors who own their bonds) has merely extended the crisis by allowing governments to delay the fiscal belt-tightening and pro-market reforms which are the real solution to Europe's problem.
The world must be coming to an end...I'm rooting for the socialists.
"There is no way out" has got to be the worst phrase you could use in a negotiation. Amazing how stupid these people ARE when it comes to understanding human nature!
Not even human...even people who deal with animals know that you never, ever corner one. Unless you WANT to get hurt.
You NEVER force your opponent to the solution. You guide him there in steps, and allow him to go there himself. And you ALWAYS leave him an escape route in case he panics.
Negotiation is an art. And these guys paint-by-numbers.
So, Germany's posture of fiscal rectitude is merely an act.
The "bailout" of Greece in 2010 was really a bailout of the German, French and Italian banks that were holding Greek Sovereign bonds and IOUs from Greek banks. To save the German, French and Italian banks, the IMF/ECB/EC Troika bought the impaired sovereign bonds and Greek banks' IOUs, but made the Greek government shoulder all liability and impose austerity on the Greek populace.
The Euro system prevents Germany's exchange rate from rising with respect to its customer countries in Europe in spite of Germany running huge trade surpluses with those customers. Thus Germany has profited hugely from the Euro system by having its exports priced artificially low and any competitors in its customer countries lose any competitive advantage a lower-valued home currency could give.
Meanwhile, German cooperated with the ECB's low interest and expansionary policies.
The ECB low interest policy and Draghi's "Whatever it takes" decree enabled speculators to borrow cheap from the ECB and over-invest in PIIGS sovereign bonds, bidding prices up and depressing real rates of return to ridiculously low levels - as if the PIIGS were as risk-free as Germany. The ECB now has to go full QE to buy up those bonds from the speculators to save their skins and maintain the myth of economic recovery. Brilliant!
Germany's further hypocrisy is shown by their outrage that Greece will not accept more advances and keep up the Extend and Pretend game of pretended economic health while debt levels climb.
... Thus Germany has profited hugely from the Euro ...
What you guys don't understand, (fiat-) money is just cotton or bits/bytes, nothing with real intrinsic value. The PIIGSF "printed" worthless cotton sheets and got real value for it (cars, machines, food, ...). Now Germany is sitting on these piles of nothing without hope of getting anything real back. A real PIIGSF-ponzi. So who is the real winner of this €-thing?
END THE EURO-SCAM NOW !
Talk about fraud,it's everywhere...http://www.silverdoctors.com/end-of-the-line/
The biggest battalion of the Free Shit Army isn't brown people. It's fat, pampered boomers---in western Europe as well as the US who spent their entire adult lives spending the inheritance of the children they didn't bother to have, and now expect someone else's kids to keep them in the style to which they think they're "entitled." They spent like drunken sailors for a generation, and plan on taking another generation to die.
Their children, screwed out of their inheritance, hate their guts.
Be honest. When TSHTF, dear old Mom and Dad's pensions and savings go up the spout and nobody will take their McMansion for love or money, will any of you give them more than the truth about what you really think of the old buzzards if you have a choice?
Possible answers include:
a) No.
b) Fuck, no.
c) Where the fuck are those death panels when you really need them?