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Europe's Last Resort: The (Very Much Doomed) Maginot Line Part Deux

Tyler Durden's picture


As those who have studied some history know all too well, any mention of the Maginot Line usually does not have a Hollywood ending. Alas, the same can be said for the highly unique analysis by JPM's Michael Cembalest who looks at Europe's latest "Maginot Line", this time however for the insolvent, 21st century, generation. "Rather than focus on what EU politicians said at yet another summit this week, let’s look at the lines of defense they may eventually have to rely on to defend the European Monetary Union. For illustration’s sake, we have superimposed these defenses on a map of the Maginot Line constructed by France in the early 1930’s to defend against an attack from the East." The 8 steps outlined present, from start to finish, the flow chart of what will happen in the next few months as Europe scrambles to avert one crisis after another, which as we pointed out months ago, ends with the "last resort" federalization of Europe, via the Eurobond paradigm. Alas, the response to that is (or isn't) revolution, in which the people finally tell their treasonous (there, we also used that word) governments they have had enough of funding other people's greed, gluttony, and overall mistakes. Just as the idiotic Maginot line, praised back in its day as a work of genius, was circumvented in one simple move when the German army simply invaded France through the Ardennes forest and took over in hours, so this latest Maginot line will do absolutely nothing to prevent the final outcome which even Europe's deranged bureaucrats know is coming: the end of the most flawed generational experiment in globalization history.

From Eye on The Market by Michael Cembalest of JPM:

The Maginot Lines. Rather than focus on what EU politicians said at yet another summit this week, let’s look at the lines of defense they may eventually have to rely on to defend the European Monetary Union. For illustration’s sake, we have superimposed these defenses on a map of the Maginot Line constructed by France in the early 1930’s to defend against an attack from the East. Right now, the weak link in the European chain is Italy. It looks like Italy will run out of cash some time in September. The good news is that 10-year Italian bond yields have declined by 1% since early August, most likely due to ECB purchases in the secondary market. But if new issue sovereign debt markets are not available to Italy at acceptable yields 1, the defenses shown below would presumably begin to kick in, one after the other, and only should the prior one fail.

There are quite a few gaps in some of these defense lines:

  • Insufficient firepower. Increasing the EFSF to 440 bn does not create enough capacity if Italy does not access debt markets, since most of it is already promised to Greece, Ireland and Portugal
  • Unproven weaponry. I cannot remember a situation where an exogenous buyer (central bank, the IMF, an alien from outer space) through its own non-economic purchases, drives up a credit-impaired secondary market price and thereby resets the new issue price at that level. In other words, if the ECB pays champagne prices for spumante, will anyone else?
  • Self-inflicted losses. Some lines of defense entail ever-growing contingent obligations taken on by AAA-rated Germany and France. Their gross debt to GDP ratios already range from 80%-87%. Could EFSF expansion trigger a downgrade?
  • Tepid allies. The IMF does not appear to be in the mood to increase its contribution.
  • Vulnerability to attack from within the ranks: some lines of defense might be hard for national parliaments to accept. The
    basis of Germany’s entry into Maastricht was that it would not be a fiscal transfer union of commingled national obligations. Even Sarkozy conceded that Eurobonds would lack necessary the democratic legitimacy right now.

It’s hard to handicap the backdoor politics, given conflicting views across the EU. What we do know is that these steps are unlikely until there is some kind of market riot, which means asset prices may be much lower by the time they happen. I agree that there’s a wide array of defenses to prevent a disorderly default or unwind of the EMU. However, back to history: despite perceived impregnability, the Maginot Line 2 was an exercise in futility, as the German army simply went around it, crossing into France through Belgium and the Ardennes Forest. Similarly, if the European Periphery is stuck in a structural growth rut from which it cannot emerge without weaker exchange rates, financial engineering can only delay the inevitable. I have not seen a country be able to indefinitely endure low growth, high unemployment, austerity  imposed from abroad, large debt burdens and limited prospects for a way out. As shown below, that’s where the  European Periphery is right now, in sharp contrast to the prior 40 years of close connection to the Core. Optimists believe that Peripheral growth will rise once the multiyear fiscal adjustments are complete; I’m not so sure. European equities are priced cheaply, but are likely to stay that way.

The Maginot Lines crossed by European banks make this crisis harder to navigate and assess:

  • Listed Western European banks rely much more than US or Japanese banks on volatile wholesale (non-retail) funding. We have seen reports from Gavekal Securities which suggest that US branches of EU banks have at least 33% of their assets  in cash. This could be an indication that they are preparing for a pretty severe storm.
  • Many European banking systems, relative to their economies, are much larger than the US banking system
  • European banks have raised roughly half the capital (as a % of total assets) compared to US banks since March 2009

Message to the ECB, quoting Police Chief Martin Brody: “I think you’re gonna need a bigger boat” (Jaws, 1975).

  • 1. Italy last issued 10 year debt at 5.7% on July 28th, and Spain issued at roughly the same level the prior week. German bunds are at 2.10%.
  • 2. The Maginot Line was considered an amazing achievement at the time: a series of anti-tank barriers, bunkers, fortresses and heavy artillery, all connected by road and underground rail, stretching for hundreds of km from Luxembourg to Switzerland, and which was often 25 km deep. Cost back then: 5-6 billion francs. In 1964, the French government began to sell off parts of the Line through public auction. The purchasers (many from Germany) turned the casements and shelters into holiday chalets, garages, mushroom farms and a disco.

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Fri, 08/19/2011 - 00:38 | 1575782 gangland
gangland's picture

remember to keep the right flank strong!

Fri, 08/19/2011 - 02:46 | 1576045 eureka
eureka's picture

"other people's greed, gluttony, and overall mistakes..."

- oh, like bond vigilante people... ?

- and Giant Squid & U.S. Empire let's-rig-the-world-with-debt-and-dollars-and-take their-equity people?

yeah, that would be right-flank domination - U.S. facist-nazi style...

I will personally take out a thousand of them quite soon.

Fri, 08/19/2011 - 03:11 | 1576056 gangland
gangland's picture

ok, but I was refering to the germans flanking the maginot in ww2 and recalled a quote from ww1.

The Schlieffen Plan was the German General Staff's early 20th century overall strategic plan for victory in a possible future war where it might find itself fighting on two fronts: France to the west and Russia to the east.

The First World War later became such a war with both a Western Front and an Eastern Front.

The plan took advantage of expected differences in the three countries' speed in preparing for war.

In short, it was the German plan to avoid a two-front war by concentrating their troops in the west, quickly defeating the French and then, if necessary, rushing those troops by rail to the east to face the Russians before they had time to mobilize fully.

The Schlieffen Plan was created by Count Alfred von Schlieffen. The plan has been the subject of intense debate among historians and military scholars ever since.

Schlieffen's last words were "remember to keep the right flank strong".

they didn't watch the right flank and germany lost at the battle of Marne in September 1914, effectively ending the german double envelopment hannibal of carthage punic war strategy that had worked against the romans.


Fri, 08/19/2011 - 03:33 | 1576099 eureka
eureka's picture

Yes - and this piece of history is all good stuff.

However, the "analogy" to today's financial war is misplaced; the dividing line today is not - however much the U.S. elite's media machine loves to bash & ridicule France - not the Maginot line, i.e. not between France and Germany, but rather between the EU continentals and UK, which is a US vassal state and home base number one for blobalist oligarchs and their hedgefund capital collectives (minus the dozens who have relocated to Switzerland due to regulations forced upon London by the EU continentals).

UK is the EUR spoiler - as well as European champions of destroying its own working class, using the same old playbook as the U.S. right wing: blame and destroy the poor - and, UK is doing U.S.' bidding to destroy the EUR, because it has become strong enought oth thraten USD world dominance.

The game is on - between fiat asset mongers US & UK - versus real goods everyone wants producers Germany & France - and the right flank/continent will win this time, because the "greatest U.S. generation" which was once upon a time is long gone, replaced by mediocre, greedy, selfish morons devoid of social marrow, whereas France, Germany and Russia are increasingly in sync on social values and gameplan.

Fri, 08/19/2011 - 03:39 | 1576109 gangland
gangland's picture

anglo-us axis subordinating eu, read my post below, there is no left/right divide, just neoliberalism triumphantly blaring the neoconservative war trumpet, all for the benefit of finance capital under the last vestiges of dollar hegemony.


Fri, 08/19/2011 - 04:09 | 1576149 eureka
eureka's picture

Despite the eloquent arguments you project, I maintain that EU will prevail and U.S. will fragment - for the simple reason that EU populations in the final analysis are far more socially and solidarity oriented, whereas U.S. population segments genuinely hate each other and have no common glue except a language which have been deformed to mere consumerist facilitation and allegiance to empty/dead symbols which require nothing less than a massive false flag attack in order to produce the only viable unifying factor in the U.S., namely the negative unifier of an "external" enemy - to cover up for the complete elite destruction of the U.S. masses.

EU sovereigns do not stimulate banks and fiat leverage driven "growth" like the US-UK - THE USUK's, my term - do it - but rather try to stimulate continued employment by conditional stimulus to EU employers.

For all these reasons and many more which transcend the utterly ego-centric Anglo model - EU will create new variations of the Christian social models as the USUKs sink into the cannibalistic chaos rising quite logically from the slimy depths of the cult of pseudo-individualism in which individual identity and worth is defined singularly by the unnatural volumes of submission and dominance manipulatable in the culturally  fragmented psyches of its subjects.

Fri, 08/19/2011 - 05:01 | 1576196 StychoKiller
StychoKiller's picture

All this socialist/progressive's it working for the EU, so far?

Fri, 08/19/2011 - 06:16 | 1576249 Pay Day Today
Pay Day Today's picture

Just need the EU politicians to let a few TBTF banks actually fail. Or at least take 50% haircuts.

Free healthcare and socialised housing will keep European populations and societies intact.

Fri, 08/19/2011 - 05:27 | 1576217 smore
smore's picture

Despite the fact that I essentially agree with you, I have to remind you that excessive consumption of decontructionist gobbledegook rots the prose.

Fri, 08/19/2011 - 06:05 | 1576242 Rock the Casbah
Rock the Casbah's picture

RMAO! Oh man. Sorry abt laughing AT you.

Fri, 08/19/2011 - 06:07 | 1576243 twotraps
twotraps's picture

good point, they have no ultimate political union but they are more resilient day to day dealing with limited economic opportunity $8 gas....the US has all the political unity it can handle and we cry over the smallest things.

Fri, 08/19/2011 - 08:50 | 1576603 I Told YOU So
I Told YOU So's picture

US citizen of EU lineage, I would agree with this opinion, the reason is that nothing is stationary, when the PTB decide its time to rearrange the power base and move it back to Europe, they'll do so. always remember that we are still a UK (EU) colony. and ruled by europian banking families, which in effect own the fed. and therefore the US>

Fri, 08/19/2011 - 12:38 | 1577861 DrunkenMonkey
DrunkenMonkey's picture

Free trade is what has screwed the poor, since unskilled manual labour jobs no longer exist outside the third-world, although inefficient industries were put to the knife in the UK by Thatcher, admittedly. Skilled manual is now imported because, for some reason, we pay the 'poor' too much, too easily to make it worth seeking the jobs now done by africans and recent entrants to the EU.

Fri, 08/19/2011 - 00:45 | 1575807 BigDuke6
BigDuke6's picture

To fully appreciate the subtle ironies of the euro crisis it takes a sense for history. Europe’s common currency has practically achieved the very opposite of what its creators originally intended. Instead of framing the Germans in Europe, the crisis has elevated Germany to the continent’s new,seemingly reluctant, fuhrer. 

Last Sunday, the Asia Society hosted a dinner for World Bank President Robert Zoellick in Sydney.  Zoellick also gave an insight into the early history of European monetary union.

After the fall of the Berlin Wall in November 1989, Zoellick was the lead US official in the ‘two-plus-four’ negotiations that prepared Germany’s re-unification in October 1990 (so named after the two German states and the four allied forces – Britain, France, the Soviet Union and the US). He was thus intimately involved in the diplomatic balancing act of unifying Germany while reassuring the British and the French that they had nothing to fear from this new and bigger country in the heart of Europe. For his achievements, Zoellick was even made a Knight Commander of the German order of merit, a very high award for a foreign national.

British Prime Minister Margaret Thatcher was horrified about the prospect of a united Germany. “We beat the Germans twice, and now they’re back,” she allegedly told a meeting of European leaders at the time. Thatcher even invited historians to a seminar at Chequers to discuss the question of how dangerous the Germans really were. 

French suspicions of the rise of a new evil German superstate were equally strong, He saw them as behaving brutally in the pursuit of their new national interests.

The tensions between Germany and its neighbours around the time of unification were enormous. Even the Soviet Union was more open to the idea than West Germany’s old allies. France especially needed to be convinced that it had nothing to fear from a reunited Germany.

There had always been rumours that in the two-plus-four negotiations the French had demanded Germany to give up its beloved Deutschmark in return for a French ‘oui’ on unification. More than once the dominance of the über-solid Deutschmark had caused the French and other European nations pain. Forcing the Germans to abandon their currency would surely be an appropriate way to weaken them so they could not become a threat to other nations, the French probably thought.

Almost in passing, and as if it was the most obvious thing in the world, Zoellick explained his understanding of how Europe got its common currency. And his account confirmed the rumours that it had a lot to do with German unification.

As Zoellick told us (that was probably unaware of how controversial these issues still are in Europe) it was very clear that European monetary union resulted from French-German tensions before unification and was meant to calm Mitterrand’s fears of an all-too-powerful Germany. According to Zoellick, the euro currency is a by-product of German unification. As one of the key insiders in the two-plus-four negotiations, trusted and highly decorated by the Germans, nobody would be better qualified to know the real story behind European Monetary Union. Despite all official denials coming from the German government until the present day, there are no good reasons not to believe Zoellick’s account of the events...

The great historical irony of this story is, of course, that if the French had really planned to weaken the powers of newly reunited Germany through monetary union, this attempt has now completely backfired. Sure, the Germans will pay massively for the sake of keeping the euro project alive (if they don’t pull out of monetary union once they realise this). But in strategic terms, Germany’s influence has never been greater. As the continent wants to bank on Germany’s AAA rating, Berlin can now effectively dictate fiscal policy to Athens, Lisbon and Rome – perhaps in the future to Paris, too.

The Germans would be content being just a greater version of Switzerland – prosperous, a bit boring and vigorously unengaged in international affairs. It is the very role the West Germans learnt to play to perfection between 1945 and 1990. This also means that France and Britain would have had nothing to fear from the Germans at the time of unification. If they had known the post-war Germans better, they would have been very relaxed about a larger Germany.

As it turns out, the euro is not only an unworkable currency. It actually started as a French insurance policy against German power. But even as an insurance policy it has failed. Against their will, it has turned the Germans into the new rulers of Europe. And it has consigned France to be the weaker partner in the Franco-German relationship. Haha.

If Mitterrand had known all this in advance, he would have insisted on Germany keeping the Deutschmark as the price for German unification.

Fri, 08/19/2011 - 01:21 | 1575885 The Shootist
The Shootist's picture

Did you write that BigDuke? Very informative and well researched, thanks.

Fri, 08/19/2011 - 08:21 | 1576468 BigDuke6
BigDuke6's picture

Me? hahaha, have you read my posts around here?  i'm rarely sober .... like not now

but i do subscribe to a few financial websites and crop their interesting stuff for here - if they allow 

rarely though... i cant be arsed mostly, and less as i realise the only thing you need to do now is accumulate physical gold and silver and maybe some paper oil for when isreal bombs iran

Fri, 08/19/2011 - 02:15 | 1575929 gangland
gangland's picture


it's a little more complicated than that....


The US federal reserve presides over an inherently expansionary system.

By contrast, reflecting the different position the European economy occupies in the circuits of global capital, EMU firmly subordinates macroeconomic policy to short-term global financial markets in such a way that the expansion of liquidity becomes conditioned on the disciplinary judgments those markets make on the performance of European export sectors, relieved only by bouts of mercantalist depreciation.

This approach initially arose out of the imperatives of the niche strategy of the West German "model", which was generalized and internalized to the other member states through the exchange rate mechanism and the terms of the monetary cooperation fund.

Under EMU, European macroeconomics continues to function in a similar way, facilitating competition between individual niche strategies rather than strategically coordinating a pan-European macro-economy.

This is the effect, inter alia, of the asymmetry between a supranational monetary policy, an intergovernmental fiscal policy, and a tenuous Growth and Stability Pact, the minimalist "negative integration" of mutual recognition that characterizes the single market, the deregulation of financial services, and the attendant disorganization of Europe's national systems of governance.

The "open method of coordination" in labor markets and industrial policy complements this pattern.

Given the constraints operating on the ECB, flexible labor markets - or structural reforms - are offered as the cure for eurosclerosis and, indeed, as the only means of saving the monetary union.

The EU has sought to replicate the Anglo-US model of labor flexibility and deregulation, while rejecting its emphasis on macroeconomic growth.

Yet, flexible labor markets and capital mobility exacerbate, rather than resolve, the problem of low growth and high unemployment.

The ensemble of competing niche strategies is self-limiting because it generates a "game" of competitive austerity (Albo, 1994) among its constituent parts.

In this game, each unit reduces domestic demand as part of it export-oriented production strategy wherein wage increases and benefits are kept below productivity growth rates.

This reduces growth rates and concentrates productivity gains on corporations, the value of which is stored and transacted in financial networks.

This has resulted in stagnation due to lack of effective demand expansion through the eurozone, with the concomitant effects of decreased output and productivity when compared to the US.

European elites have argued that the neoliberal integration politics of the post-Maastricht era are compatible with the social- and Christian democratic variants of the European social model.

Yet, the economic stagnation that follows the pursuit of "competitive austerity" places ever greater pressure on political elites to continually seek to renegotiate the social model in response to the alleged necessities of finance capital and global markets.

In other words, Europe's subordinate participation within the transatlantic order, as structured by finance, preempts the possibility of resolving structural problems associated with post-Fordist industrial transformation in a way that is compatible with social and Christian democratic models.

In this organically created European crisis, traditional distinctions between right and left have been rendered virtually meaningless and reform is primarily a function of market rationality.

Implementation of these policies follow a logic that is determined by the ebb and flow of grassroots militancy and protest voting, and not party mobilization or the nominal ideology of the governing party.

Political parties have thus become mere electoral machines dependent on mass media, decoupled from traditional social and political movements.

Europe's second integration project is subordinated to finance capital and neoliberal ideology.

It is fatally undermined by a lack of understanding of the radically destabilizing effects of its implementation.

It is this failure to construct a corresponding polity which has resulted in social, political and economic fragmentation and instability.

from: cafruny&Ryner "Europe at Bay: In the Shadow of US Hegemony" (2007)


Fri, 08/19/2011 - 02:24 | 1576016 WorkOutWellForAll
WorkOutWellForAll's picture

Insightful, all. Can someone please deny, if possible, these "finance markets" that are the manipulating neo-liberal superstructure.

Ain't neo-liberalism of Jewish US Zionist dominated origin? In Europe you can't touch the Jews in public criticism, cuz it's illegal -- and then they got the American military-Shalom-Bernanke base to fuel the Euro manipulations.

Problem, as I see it, is all these smart guys around here got their lights from Jewish Zionist ideologized universities -- so anybody with brains orjust money, just learned it's easier to ignore the obvious conspiracy.

Which makes me wonder too about the NSDAP -- there were 100,000s of in the Anti-Semite Leagues in Germany in the 30s, for real reasons, rather than the Jewish psychologically inferred evil in the everyday Germans.

Wonder how two generations of Nazi guilt, running alongisde the firming ascendancy of this Israeli Jewish finance, tech, 9/11 operators. Paid off the Germans as the HQ? Or former German-Jew pro-Nazi sell-outs now running the world finance from there between Tel Aviv and New York?

It's just gotta be factored in and refuted, or it begs the questions -- and, I believe, or this fire in my American loins tells me, that the fucking Jews running all this country's institutions and world finance need to be publically exposed as such. No violence -- just accurate, public discussion here on Zero and elsewhere.

Fri, 08/19/2011 - 07:11 | 1576304 Pay Day Today
Pay Day Today's picture

You've taken the prize for 100% non-Buddhism on a blog. Well done.

Fri, 08/19/2011 - 08:18 | 1576502 BigDuke6
BigDuke6's picture

You can be the worlds first funny fabian.  Well done to you!

Fri, 08/19/2011 - 13:10 | 1577963 DrunkenMonkey
DrunkenMonkey's picture

You only have to look at history briefly to gather that money-lenders throughout the ages have been despised and tortured, exiled or killed by their debtors because that was much easier than paying back the sums owed.

Fri, 08/19/2011 - 01:44 | 1575937 gwar5
gwar5's picture


Very nice. I did not know that. I thought it was all hugs and kisses after German reunification.

Those Europeans really know how to fvck things up good just trying to sneak around. 




Fri, 08/19/2011 - 01:54 | 1575949 macholatte
macholatte's picture

Nice work, Duke.

May I suggest that the new warfare of the 21st century is totally different than ever before. WMD have made conventional war obsolete. The smart guys, like Germany, allow others to waste their money on armies & weapons & such while they enjoy the fruit from treaties that protect them from harm. So they spend their money on making their country prosper. Japan did pretty good for quite a while and as long as Germany doesn't screw up, they will conquor Europe without firing a shot.

May I suggest that China is doing a similar job. They bail out countries and get, among other things, relaxed immigration rules which is really defacto colonization. They are buying real estate all over the planet. They have allowed business to educate them in how to make stuff and they are learning quickly. They have their own aircraft carrier now. They'll fix their trains and export some too. And so it goes. 

[Tyler, can you put that spell checker back?]

Fri, 08/19/2011 - 01:51 | 1575955 Michael
Michael's picture

The pilot program for the new world order global government has been a complete and total dismal failure.

The EU model is completely broken.Thank God there will never be a global carbon tax to make it work either.

Fri, 08/19/2011 - 02:08 | 1575984 Michael
Michael's picture

If you are going to panic, panic first.

Fri, 08/19/2011 - 02:47 | 1576052 scratch_and_sniff
scratch_and_sniff's picture

If you can keep your head, while those around you are losing theirs, then you have probably misunderstood the seriousness of the situation...


p.s its way too late to panic.

Fri, 08/19/2011 - 02:29 | 1576022 Oh regional Indian
Oh regional Indian's picture

Excellent read BigDuke. Thanks.

It's the 4th Reich, just as planned.


Fri, 08/19/2011 - 03:35 | 1576105 Sudden Debt
Sudden Debt's picture

There is also a almost unknown part of History from the 80's/90's were almost every European country had some serious currency problems.

The problems back than where growth. Possitvive growth.

The real problem back than was that regions within countries found it pretty "unfair" that their national currencies depended on all regions. Especially the regions that slacked behind the growth curves.


The rich regions wanted to get rid of the poor regions and split up. All of these movements still exist and they are comming back in numbers and brutal force.

The Spanish had the Basks,

The French had a problem with the north french communities,

The Belgiums....we had over 20 initiatives to split up our national currency.

The Irish


When the Euro falls, we'll have a mixture of currencies beyond belief. BUT!! There will be plenty of strong once between them that could quarintine the problems out.

We Europeans have a history of rulers who fucked up our currencies. Wars. etc...

we survived them all and even profited from it.

This time will be no other.


Fri, 08/19/2011 - 04:01 | 1576117 gangland
gangland's picture

exactly what i said above if you read it carefully.

btw how did europeans profit from ww2 relative to the us?

Fri, 08/19/2011 - 05:56 | 1576240 Sudden Debt
Sudden Debt's picture

It depends on what you did.

My grandparents where cattle traders.

After WOII, the entire industry was gone to shitters, logistics was a mess and there where massive food shortages. I was actually pretty bad.

They made a fortune selling meat and butter at insane prices and the Americans even gave them extra money if they sold they wanted to slaughter animals.

Second: everything go robbed. Poor people settled scores with rich people and robbed them blind. There was actually a communist thinking getting started where everything belonged to everybody.

So to keep the communists out and stop the people from robbing everybody, the Americans created jobs and gave them every communist advantage there was.

The plan was also to introduce that in America but your president back than died to early to finish it and only Europe got the deal.


Fri, 08/19/2011 - 06:08 | 1576247 gangland
gangland's picture


good stuff SD, just one thing, full disclosure, it wasnt my president. and how come no caps/bold? jip ; )

Fri, 08/19/2011 - 06:22 | 1576255 Pay Day Today
Pay Day Today's picture

I've never heard of that way of looking at it before. Damn.

Fri, 08/19/2011 - 17:51 | 1579215 falak pema
falak pema's picture

It was called a welfare state under the Marshall Plan. All of europe got it. Belgium was no exception. The communist menace was real as the communists were the back bone of resistance movements during WW2. They were all armed. The allies disarmed them, but there was much poverty until 1949.

Fri, 08/19/2011 - 06:16 | 1576250 twotraps
twotraps's picture

Awesome perspective, really enjoyed that.  Since there is no 'out-clause' in the Euro, what are your thoughts on a break-up?  Guess that would be a boost for the dollar but what about opportunities in Europe?  Do we stay long germany just in case as a small hedge?    I was in Europe at the time of the Euro Currency launch and found it fascinating to watch an unheard of politically driven effort become an economic reality for so many people.  It did not happen out of necessity....politicians at the time sold it as a way to compete with the dollar as the power of combined countries would surpass the US.   Greece and Ireland were fudging their applications and France held up the launch at the last minute unless they agreed that Wim D would step down in less than full term and let a french guy in!!!!!  Voila, Trichet.

Fri, 08/19/2011 - 17:48 | 1579102 falak pema
falak pema's picture

To be fair to Mitterrand he had his back against the wall in 1983, when the socialist Keynesian experiment in France back fired, as Volcker's monetary tightening occurred precisely then. So While USA/UK were cutting the inflation jugular in 1981-1982 Mitterrand's France was doing just the opposite borrowing massively at high interest rates to kick start French growth in classical Keynesian mode. It backfired and Mitterrand changed tack in 1983. After devaluing FF he then jumped on the European monetary bandwagon. To his surprise Kohl supported his EU convergence policy. It worked so well that the Euro became the stalking horse to ensure Germany would coalesce and lead the financial front, whereas France led the political front (badly as we saw in ex-Yugo collapse), hoping that german support would ensure subisidies to France's strategic farm industry. German reunification was a result of the incredible demise of the USSR. Nobody saw it coming so fast. And Kohl put them before the fait accompli when the wall fell and he offered EG a parity exchange of 1DM=1RM. He caught Mitterrand off guard. By then the Maastricht deal and the Euro concoction were irreversible. History moved faster than Mitterrand had thought it possible. Kohl was the big winner then. As Merkel could be now.

Fri, 08/19/2011 - 00:49 | 1575818 holdbuysell
holdbuysell's picture

"Message to the ECB, quoting Police Chief Martin Brody: “I think you’re gonna need a bigger boat” (Jaws, 1975)."


Fri, 08/19/2011 - 00:49 | 1575820 alien-IQ
alien-IQ's picture

9) Mass exodus from Europe.

Fri, 08/19/2011 - 02:56 | 1576057 Sudden Debt
Sudden Debt's picture


I'd better start making some flagpoles and start planting!



Fri, 08/19/2011 - 00:56 | 1575829 Western
Western's picture

The answer is obviously African colonialism.................... again.

Fri, 08/19/2011 - 01:34 | 1575913 Oh regional Indian
Oh regional Indian's picture

I don't think the black will fall for missionaries as the front-men for white colonialism again. No massah!

Plus, China's already got/bought it! All!


Fri, 08/19/2011 - 01:49 | 1575945 M.B. Drapier
M.B. Drapier's picture

The principal front-man for white colonisation was the Maxim gun, if I recall correctly. The missionaries tended to be in the rear, sometimes a long way in the rear. And Christianity seems to be doing fine in post-colonial Africa.

Fri, 08/19/2011 - 02:54 | 1576038 Oh regional Indian
Oh regional Indian's picture

MB, I'm India, so have been under (actually still am) under the colonial boot-heel, figuratively anyways.

The model has remained the same everywhere. No successful colonial occupation began at the barrell of a gun. Zit always began under the guise of "We're here to help".

The Jesuit missionaries came to india as a far far ahead front guard, preparing the way for what were to become the Dutch and later British East India Companies.

The African and pan-Asian (definitely South American) models were all the same. Same pattern. Somewhere it was the Jesuits, somewhere the catholics and elsewhere the protestants.

Would it surprise you to know, for example, that Dubai is run, pretty much from the highest to the lowest levels by a state in India called Kerala, which is hugely Syrian Christian?

Indian Syrian Christians running Dubai/ME in general.

Colonialism is alive and well and always came with an iron fist in a missionary glove.

And as for your assertion that Christianity is alive and well in Africa, well it is here to. On the back of millions of Vatican Dollars funneled through shady priests and other "converters", spreading the love of Hesus with a little inducement. Straight up, monetary inducement to convert. Works like a charm on poor folk.


Fri, 08/19/2011 - 04:19 | 1576160 slewie the pi-rat
slewie the pi-rat's picture

if "Hesus" had travelled to "india" in his formative years, or even after the gospels were posted on his website, what, if anything, would he have leaned from the peeps there?


Fri, 08/19/2011 - 04:38 | 1576163 gangland
gangland's picture

that he ^is india and something about "the black"....such as...the ayyyy-rak


Fri, 08/19/2011 - 05:12 | 1576203 Oh regional Indian
Oh regional Indian's picture

Tch tch, typical, pick up a couple of typos and make fun. 

Of course, your Avatar (a hindu word by the way, so suck on that for a bit) gives you away as a troll, and a what, neo-nazi troll at that?

No Hesus needed, i could teach you a thing or three, punk. But I never, ever strike a weaker human intellect. I think Slewie has learnt that lesson already. Weak intellects, ad hhominism, pointless.

Which is what makes the likes of you so dangerous. Cornered rats will bite, I hear.

Now go, suck on your swastika (also a hindu symbol, so suck on that a little more) and remember days past, when your country was not screwing the whole world, but just destroying the locals while telling yourselves that it was manifest destiny and all.

Oh and I wanted to add, thump that bible while you are at it will you? It will make empty noises, just like the ones you hear inside your head. All those empy historical facts you've spewed upthread take up very little space.


Fri, 08/19/2011 - 06:35 | 1576233 gangland
gangland's picture


you low spoojie? you mad brah? i think you're having a very extended existential crisis.

My suggestion would be to meditate on this, let your third eye be opened, the one on your forehead you perv:

k oriii ? k

Fri, 08/19/2011 - 06:50 | 1576275 Oh regional Indian
Oh regional Indian's picture

Hhhaaaaaaha! The last resort of a man with nothing to say. A youtube video.

Well played gangbanger, gunslinger or whatever your neo-nazi brain tells you you are at any given instant.

Look, just take a look at your own post and it's hasty edit. First you come off sounding like Vin Diesel, then you want to throw in big words, so switch to your whitey, superior, probably educated but only in words self and try and give me youtube advice? on where to meditate?

Split personality, this web anonimity will do it to the best of us, what to speak of worth-less or un-worthies such as yourself.

Now have a taste of this, original work, me. On you tube.

And rue your attitude, the very reason for your collective and clearly individual fall from grace.

I've lived long enough amongst your ilk to smell you from a mile.


Fri, 08/19/2011 - 08:33 | 1576558 BigDuke6
BigDuke6's picture

i don't think i remember seeing gangland behaving in a skinheady manner around here.

ORI is behaving like a 'oh normal indian'  - i know indian ways and my best mate is half kashmiri so you can imagine he is a mad bastard...

any indians love to play up the race card while sniggering away at how dumb we are for caring about it...

they believe they are the coolest dudes anyway and its whitey who's inferior.  which is laughable  :p


Fri, 08/19/2011 - 09:30 | 1576781 Oh regional Indian
Oh regional Indian's picture

BD6, first time you meet someone, you say somethign snarky, it just shows plain old bad manners or a total lack of upbringing. Or a small (figurative) person trying to be lionesque under anonymity.



Fri, 08/19/2011 - 14:12 | 1578055 gangland
gangland's picture

Thanks duke, apparently the subtler points allude this one, he has nothing, it's pathetic really, he attacks my nationality without knowing it, my country without knowing it, so he takes the low hanging fruit and blabbers on about nazism without grasping the meaning of the handle or avatar, hasn't read and doesn't understand anything i ve written, assumes im christian because of my use of socioeconomic analysis above visavis "christian democratic" EU politics, he shows an absolute reactionary lack of understanding about what I posted and I seriously doubt he read or understood anything I posted,  so he blasts christianity and me with it. btw im not religious! ooops! #Winning!

further exposed as the very blatantly childish, shallow flailings of an insecure and dull sap. yawn.

my advice orrreee: keep yer powder dry spooj boy, you're still annonymous to me, so stop with the quasi-courageous, pseudo-pioneering , taking-the-higher-road narrative, it's transparent and not very original at all.  quite boring in fact.

you remind me of barton biggs!

ai ai ai ai ai just dont see what youre looking at!

Fri, 08/19/2011 - 04:47 | 1576187 Pay Day Today
Pay Day Today's picture

He would have learnt the ancient Brahmic, Hindu and Buddhist traditions, he would have skilled up as a Yogi, he would have been able to access many different abilities and survival/endurance skills.

See those tribesman on the Discovery Channel piercing themselves through with blades, needles and nails? That's sheer mental and spiritual firepower over physical frailties.

After that point walking on water or regenerating from near death would have been a walk in the parlk.

Fri, 08/19/2011 - 05:15 | 1576210 Oh regional Indian
Oh regional Indian's picture

Exactly PDT. In fact, there is a legion of literature that says that is exactly hesus was in his "missing" years. In Northern India and Tibet, learning the secrets of Kashmiri Shaivism and Tibetan Bon Tantrik practises.

Quite fascinating stuff.


PS: i'll be the first to break from the Anonymity here on the hedge. 

The name is Vivek. Pronounced Vi-vake, rhymes with bake.

Fri, 08/19/2011 - 05:55 | 1576237 Pay Day Today
Pay Day Today's picture

Greetings, Vivek.

Fri, 08/19/2011 - 06:39 | 1576266 Oh regional Indian
Oh regional Indian's picture

:-) Greetings PDT.


Fri, 08/19/2011 - 07:06 | 1576294 tarsubil
tarsubil's picture

He could have gotten a job at the carnival. Too bad there aren't any around anymore here in the States.

Fri, 08/19/2011 - 01:48 | 1575944 What_Me_Worry
What_Me_Worry's picture

I LOL'ed.  I must be racist.

Maybe you are on to something.  We didn't hit peak oil.  We hit peak subjugation.

Fri, 08/19/2011 - 01:00 | 1575841 AUD
AUD's picture

I cannot remember a situation where an exogenous buyer (central bank, the IMF, an alien from outer space) through its own non-economic purchases, drives up a credit-impaired secondary market price and thereby resets the new issue price at that level. In other words, if the ECB pays champagne prices for spumante, will anyone else?

Hunh? This was exactly what happened from 2004, central banks bid for mortgage junk & other bad credit thus inflating the market. Lots of people were buying new issues at inflated prices. In fact, that's the way the market & its irredeemable credit works.

Fri, 08/19/2011 - 01:02 | 1575846 Element
Element's picture

Message to the ECB, quoting Police Chief Martin Brody: “I think you’re gonna need a bigger boat” (Jaws, 1975).


Would the Titanic do?

Fri, 08/19/2011 - 01:18 | 1575872 TruthInSunshine
TruthInSunshine's picture

If the captain of the ship was Trichet (or Bernanke, for that matter), it would use the intercom to tell the passengers that they shouldn't be disturbed by a few jolts that they are about to feel from a transitory encounter with some small chunks of ice, and to keep on enjoying the food, drink, music and gift shop.

Fri, 08/19/2011 - 01:40 | 1575920 Element
Element's picture

Ah, T-in-S, this is because the wiley Bernank has directed the firehoses into the forecastle of das boot to increase da water presure, thus to push the North Atlantic back out again ... see, we have the 'tools' to deal with this situation ... have some faith ...


Fri, 08/19/2011 - 01:41 | 1575928 TruthInSunshine
TruthInSunshine's picture

The Titanic put?

CDS on the Titanic would have been a killer trade.

Fri, 08/19/2011 - 01:05 | 1575847 choorles
choorles's picture

STOP! WHAT IS MONEY? The money that the world uses today is created by private banks lending non-existent money called credit. This credit has never, does not and will never exist, except in theory on computer screens. People starve and die all because they do not have enough digits on a computer screen. All of this credit, created by the private banks, is owed back to those same banks, plus interest. By design, there is never enough credit in circulation to pay back all the principal plus interest on the loans outstanding, which is why the concept of bankruptcy is built into the system.

Using the simple system above, banksters are given the ability to manipulate the world’s economies into ‘boom and bust’ cycles. In essence, the only difference between a boom and a bust is the amount of credit in circulation, or rather, the net amount of numbers on people’s computer screens. Initially, banksters create a boom by increasing the supply of credit in the economy. During this boom period, individuals and businesses are encouraged to take on more debt as they are more confident of increasing their income in the future. All this extra credit in the system leads to more activity, which in turn creates more confidence in the system, with many getting into more debt. This boom is akin to a fishing trawler, the bankster throws out a credit line and waits, once the bait has been taken the bankster begins to wind in the credit by taking credit out of circulation, it’s gone. The economy then moves into a slump or recession, simply because there are not enough units of credit in circulation. The banksters are then able to trawl from people the wealth that does exist, in exchange for money that never existed in the first place.

“To some this downturn may seem like a destructive event, the economic crisis is actually a constructive event that paves the way for the future [silver, gold, bitcoin] … The stability of several major European banks has been seriously threatened and government leaders are in constant teleconferences to discuss how to halt the crisis. The US, on its part, has lost its status as AAA and 7 trillion dollars of stock value has gone up in smoke … Yet, a downgrading of the US creditworthiness and the loss of 7 trillion dollars of stock value really does not mean anything except that the numbers associated with certain papers have been depreciated. It is thus essentially correct when commentators say that so far the crisis has not had any effect on the ¨real economy.¨ The recent fall in the markets simply shocked the mental duality between abstract values and real values. There is however no reason to expect that it will be possible to limit the crisis to the ¨unreal economy¨. Thus, I expect that now also the real economy will be hit. How quickly this will actually manifest is hard to tell but I expect that events will lay the foundation for massive unemployment in many major Western countries (It is of course high already, but for many it has still been possible to keep on with the previous lifestyle). I also expect that there will be a large runaway from the stock markets and the stability of currencies will be negatively affected to a point where new radical solutions need to be considered … I think it is realistic that there will be some kind of political reaction to the developing chaos”

the monetary revolution will not be televised... you need

Fri, 08/19/2011 - 01:43 | 1575932 AUD
AUD's picture

You are missing that this 'private bank' credit has to be matched by an asset. A bank's books must balance.

The problem is not the fact that banks create credit but that the assets that said banks create credit against are not worth the bank's liabilities.

Fri, 08/19/2011 - 01:11 | 1575861 irishlink
irishlink's picture

Oh my what a tangled web we weave when ........... Yes the irony hit me about a week ago that Germany after two failed attempts to rule a reluctant Europe now may have the area begging for the fatherland to manage our problems  and all without firing a single bullet or invading a single border or expanding the standing army. I am sure this is THE crisis which is THE opportunity not to be missed.

Fri, 08/19/2011 - 01:36 | 1575918 WorkOutWellForAll
WorkOutWellForAll's picture

Ain't it just the German national economy that is the front for the transnational super wealthy that do all the purchasing or not purchasing of the bonds -- the "virtual senate"?

The standard ideological line is presenting these groups' decisions, which are coordinated quasi-publically, as "markets" -- that somehow are just reacting to conditions arise outside their machination.

Since there are the livelihoods of the richie Euro Semites in the balance, and below them x100 the world's poor -- shouldn't we be struggling to forge an oppositional analysis to this bourgeois ideology?

Although I hear the crickets -- since the folk her care first and foremost about their own net worth -- or are the poorer sitting in the sidelines watching them and playing along in the talk-aganda.

Fri, 08/19/2011 - 02:30 | 1576021 M.B. Drapier
M.B. Drapier's picture


Fri, 08/19/2011 - 01:12 | 1575862 Jovil
Jovil's picture

Living through a currency devaluation and how to cope

In 1976 I was managing an American subsidiary of a successful large US Company in Mexico. It had been a financial turnaround for our team. Cash flow had accumulated in our bank in Mexico and corporate didn’t want the money repatriated to the US. Although we had already paid a 35% income tax to the Mexican government, we would have to pay an additional 30% exit tax to repatriate the money. In addition, we would have to pay high fees for the peso/dollar exchange, in order to make the transfer. The company wanted to expand our successful business and so we decided to keep the money in Mexican pesos to be used for further expansion.

One morning, as my wife and I were on a trip driving on the highway, we heard a national message from the President of Mexico, Luis Echevarria, one of the most corrupt presidents in Mexican history. “It is a lie that we are going to devalue the peso,” he said.

Read more

Fri, 08/19/2011 - 01:29 | 1575900 WorkOutWellForAll
WorkOutWellForAll's picture

Quit your fuckin' spam advertising, you Jewish asshole.

Fri, 08/19/2011 - 02:30 | 1576024 M.B. Drapier
M.B. Drapier's picture

I think you need to work on your loving-kindness.

Fri, 08/19/2011 - 03:08 | 1576073 WorkOutWellForAll
WorkOutWellForAll's picture

You need to grow some un-Jewish sucking balls.

Fri, 08/19/2011 - 07:10 | 1576303 tarsubil
tarsubil's picture

Can you do those finger handstands? That is so cool.

Fri, 08/19/2011 - 04:24 | 1576165 slewie the pi-rat
slewie the pi-rat's picture

hey, thx for the link.  i had seen this last week, too.  when you introduce this you say, at the top:  AND WHAT IS WAITING FOR US, yet the article you link to says (Paste):

The reason for the devaluation of the peso was simply that it had been pegged to the USD for too long and they rose and fell in unison. Because of better economic conditions in the US the dollar continued to go up in value and the peso increased in value artificially. Mexican goods were too expensive to trade with other countries and hence the devaluation, which allowed exports to increase. For the first time in decades the peso was allowed to float and since then it has been allowed to freely rise and fall against the dollar.  (emph. mine)

then the author goes on, like you, to predict a devaluation, with mexico's paling in camparison to what ours will be, so, BUY SILVER!

however, the article itself does not really provide and reasoning behind the devaluation prediction, and, if read carefully, indicates reasons for it not to happen.  e.g., our currency is already floating.  the swiss looked at "pegging" to this or that, and, as i figured, and put up on zH, didn't, b/c nobody's gonna peg to nuthin at this point

this leaves us with the scenario of the dollar's "collapse" most likely cause being: a skyrocketing euro   L0L!!

i'm not trying to predict the future, but the "lone ranger" is!  maybe he's right.  i'm just very glad that that there are other reasons to buy silver


please be advised, "drapier"

Mon, 08/22/2011 - 12:05 | 1586216 M.B. Drapier
M.B. Drapier's picture

It must have been someone else who dropped a link to that article: I'm pretty sure I hadn't heard of it before myself.

Fri, 08/19/2011 - 01:38 | 1575922 gwar5
gwar5's picture

I read that and it was a good article. Very much what I expect will happen to the West. I always try to tell people that such things happen all the time and to just look and see how the Mexicans, Russians and Argentinians coped and do the same. 

Fri, 08/19/2011 - 01:21 | 1575880 carbonmutant
carbonmutant's picture

It is worth remembering the the EU was unable to form an effective coalition in WWII until the US agreed to participate...

Fri, 08/19/2011 - 01:22 | 1575887 scratch_and_sniff
scratch_and_sniff's picture

Be very, very bold and jump to 8 without delay...the funny thing is, by the end of this crisis, countries will be rushing to give their sovereignty away. 8 could come with get out clauses too, like conceeding to a temporary loss of sovereignty, rather than it being permanent, i.e. set conditions for distressed countries to exit the eurobond system if they wish, but dont make it worthwhile for them to do so.

Fri, 08/19/2011 - 01:23 | 1575889 Seasmoke
Seasmoke's picture

Looks like the Hitler Plan continues marching on

Sat, 08/20/2011 - 05:58 | 1575924 WorkOutWellForAll
WorkOutWellForAll's picture


Fri, 08/19/2011 - 01:46 | 1575940 What_Me_Worry
What_Me_Worry's picture

$440B here, $440B there and pretty soon you're talking real money.

Fri, 08/19/2011 - 01:50 | 1575950 gwar5
gwar5's picture


The Maginot Line is actually much more useful as an analogy than it was in real life.

I'm glad the EU supranational experiment is failing.  We won't be hearing any more NWO talk from these humiliated elitist bitches for a long time.


Fri, 08/19/2011 - 01:55 | 1575963 gwar5
gwar5's picture

Gold just hit $1845. 


Nah, just kidding... it hit $1846.40



Fri, 08/19/2011 - 02:16 | 1575997 Waffen
Waffen's picture


Fri, 08/19/2011 - 02:58 | 1576060 Sudden Debt
Sudden Debt's picture

Soon Gold will leave the 19th century AND GO STRAIGHT INTO THE 20TH!!!


AFTER THAT 2040 => MARS!!!!

Fri, 08/19/2011 - 02:13 | 1575993 eworrall
eworrall's picture



Trying to donate money but for some reason the payment will not process.  I'm trying from new zealand if that is a problem?


Fri, 08/19/2011 - 03:24 | 1576094 Isotope
Isotope's picture

Yeah, the NZD has appreciated too much vs. the USD and the system can't handle it.

Fri, 08/19/2011 - 05:11 | 1576206 Pay Day Today
Pay Day Today's picture

How do people from New Zealand even discover Zero Hedge? Seriously. Are there lamb futures or spray dried milk powder articles at Zero Hedge? Nothing personal just surprised.

Fri, 08/19/2011 - 07:00 | 1576284 MaxPower
MaxPower's picture

Be pleasantly surprised! I met a fellow ZH'er last year in New Zealand. I live in SE Asia, and am currently writing this from Papua New Guinea!

We are everywhere!

Wed, 08/24/2011 - 21:47 | 1597797 eworrall
eworrall's picture

Doing my best to spread the gospel.  Bringing people round slowly.

Wed, 08/24/2011 - 21:47 | 1597798 eworrall
eworrall's picture

Doing my best to spread the gospel.  Bringing people round slowly.

Fri, 08/19/2011 - 02:44 | 1576048 praetorianhedge
praetorianhedge's picture

Only question is when does Germany decide to pull the plug...

Fri, 08/19/2011 - 02:56 | 1576059 lookma
lookma's picture

let’s look at the lines of defense they may eventually have to rely on to defend the European Monetary Union

Hey JPM blowhard, how about GOLD!  Its the first f*ckin' asset on their balance sheet, they mark it to market quarterly.

Must be hard to see as its so prominently diaplayed I guess. Wake Up!!

Fri, 08/19/2011 - 03:19 | 1576086 straightershooter
straightershooter's picture



EFSF= Europe Found Spectacular Failure (EFSF), or Euro Future Sink France (EFSF)

Fri, 08/19/2011 - 04:59 | 1576193 mantrid
mantrid's picture

fine visualization. but I don't see any room for China - which undoubtfully participates in the game - in this plan. There's no way EFSF could chew Italy and Spain. If I were Merkozy, I'd work hard to involve China - it's the only way to kick the can once again.

Fri, 08/19/2011 - 05:06 | 1576201 eckart
eckart's picture

Artical is simply wrong. The banks will be taken down, not the EURO; anyway, the European have 10k tonnes of gold. The US is what worries me... 

Fri, 08/19/2011 - 05:13 | 1576208 Pay Day Today
Pay Day Today's picture

And prey tell, where exactly is all this supposed gold kept? Not at the NY Fed I hope?

Fri, 08/19/2011 - 05:46 | 1576230 Franken_Stein
Franken_Stein's picture


But Tyler, you always forget to mention that none other than David Rockefeller and Henry Kissinger are sitting in the steering committe of the Bilderberg Group, the central organization that envisioned and planned the European Union and the Euro.


Who was calling the shots in Western Europe after WW2 ?

The U.S..


Do you really think that they could have planned and erected this EU without the U.S. knowing about it, or having any say in it ?

The U.S. has been part and parcel of the erection of the EU since day 1, which is in 1954.


The father of the EU and founder of the Bilderberg Group is / was Prince Bernhard of Biesterburg-Lippe, a compatriot of mine, who later became Prince Bernhard of the Netherlands, and who is none other than the father of Queen Beatrix of the Netherlands.


Now you know it.

Hope you enjoyed the history lesson.



Prince Bernhard became member of the SS in 1934, which after the invasion of the Netherlands was a key reason why the Netherlands was left pretty unscathed by the Wehrmacht, because they were regarded as "friendly" more or less to the Reich.


Fri, 08/19/2011 - 05:48 | 1576235 greek 83
greek 83's picture

In order to understand international relations one must understand what's the driving force between all the movements in this international chessboard.The driving force of course is the need to control more resources (and deny them from competitors),secure markets for your industries etc.It's actually a game being played for centuries.


Saying that Germany(meaning the german elit) wants to be like Switzerland is utterly wrong.Germany wants markets for its industries and wants a safe and constant su[pply of resources.For these reasons alone Germany has interests that span the globe,from chinese market to russian energy resources.In fact Germany(just to take an example) is in contast struggle with its competitors (which are also its supposed allies like USA,Japan etc) for these things.


Take for example EU from the 50's where it had six members till now.Was it founded just to heal the wounds from ww2 or because the european big states suddenly found that they are to small compared to the two superpowers?With France's colonoes revoltin,the former Reich seperated and overall smaller those countries could n't hope to compete with USA in market size,control of resources etc.That was and is the driving force between EU and eurozone.Germany or France on their own are middle weight countries,backed however by the whole eurozone they become a major player.Eurozone's history and problems can,by taking this view,suddenly be explained.The deinstrulization of the south europe,deficits,the supposed money transfers to the south(supposed since most of these  money returned to the north),the "help" that Germany is giving now(the project is to big to fail) etc.


Euro was their last step to totaly oudo american hegemony(since in the industrial sector eurozone is actually stronger).Still the only thing that euro lacks in its way to world currency is the control of (oil)resources that dollar zone has thanks to american carriers.To this end Russia and eurozone(Germany) are bound to come closer ad closer.

Fri, 08/19/2011 - 07:01 | 1576285 Catullus
Catullus's picture

If the analogy is that Europe is putting its faith in a defense that will ultimately be ineffective because it can't account for other contingencies, then I agree with the analogy.  If it's to say the actual bailout methods will be ineffective, then I don't agree.  You can recapitalize banks by buying all of the assets on their books.  You can do as Timothy Geithner suggested in 2008: guarantee everything. That defense against bank run works.  The problem is you get "outflanked" by the inflation you create.  People run from your ever devalued currency and into safe havens currencies (Swissie, US Dollars, Gold, Yuan, etc.) and you piss off the disenfranchised unemployed.

Fri, 08/19/2011 - 09:05 | 1576672 Beendare
Beendare's picture

Seems to me Europe was playing right into Germanys hands until......woah, 1944 rewind.....they bit off more than they can chew

Fri, 08/19/2011 - 17:39 | 1579150 falak pema
falak pema's picture

My views concur with Eureka. The EU has a spinal chord that is more resilient than the 'free market' but in reality Imperial oligarchy chaos play of the Anglo axis. Europe will have a role model that could be a game changer based on social democracy. It is now  a question of cutting the umbilical chord linking it to USA, legacy of past colonialist Imperial play in Europe by its nation states, and the two WWs. This crisis could be the trigger to that paradigm change through greater nation state rapprochement. The banks in current melt down being the second last bastion of Anglo hegemony. The last bastion being the US MIC...that is a big barrier to European emancipation. 

As energy is now a world ressource constraint, getting out of the ME oil monopoly will also be very painful for EU, as it is very oil dependent. Lots of black swans ahead...

Sat, 08/20/2011 - 20:18 | 1582417 gangland
gangland's picture


i agree falak, culture will be more powerful than economics, qualitative over the quantitative.


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