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Flowcharting The True Cause Of The Eurozone Crisis
All neoclassical-Keynesians or whatever else they like to call themselves these days (mendacious voodoo shamans works great but for some reason is considered insulting), should flip through this great flowchart from the BBC which explains how it was nothing else than simply untenable debt that both precipitated and exacerbated the debt crisis, resulting in various derivative offshoots that led to a feedback loop that required ever more debt to artificially smooth out the developing divergences between Europe's two opposite worlds. And yes, while cutting spending involves significant pain, it means a soft reset for the system which will lead to a viable outcome for everyone in the long-run. On the other hand, the Keynesian espoused lunacy is to keep doing more of the same, and hoping for a better outcome which i) will never come and ii) will result in a hard reset from which there will be no recovery. Ironically, it is Europe doing the right thing, and while it will suffer a very deep recession shortly, it will come out stronger at the end. More importantly - it will come out. Which is much more than we can say about America.
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Broke Bitchez!
But some people deserve their pensions, and retirement, etc. They deserve it!
Credit is the new debt. Masterful re-wording. put those two words together and you have the chain around our collective ankles.
The World Bank is "crediting" many programs (for better alopathic health care (aka pharma whoring) in rural India) and building roads so Caterpillar may sell a few hundred more of it's yellow monsters... etc. Such good folk, giving credits.
Sounds much better than debt enslavement.
Death By Debt.
ori
/the-plan/
Very confusing!
If Europe is doing the "right" thing why are their bond yields eye popping by comparison?
Because they will default on most of it. (rather than print to buy it).
Oh, those pesky roads, I bet your fellow countrymen so much prefer dirt tracks.
Would you care to switch off the electronic item you are typing in, to avoid Dell/HP/Toshiba from selling a few hundred more laptops?
Unfortunately, no matter what your political philosophy, there will always be a place for moneylenders in the economy. The problem is an economy based on debt as (tradeable) asset. Forget the fact that as soon as the debtor stops paying interest, the asset immediately becomes a liability. Forget the ballooning of risk when shadow financials are attached to the debt (asset), compounding the fallout. Forget also the fantasy island spastic fractional reserve practiced by the banks to create money out of thin air.
The fact is, when your lender takes your signature on a loan agreement and sells it to somebody else with other shit loans and calls it "structured finance", the lender is abusing his position to trade a piece of your life (The duration of the loan, and the work you will do to pay the principle and interest), and prostituting you for monetary gain. A loan agreement should be a solemn contract between two parties, not an opportunity for bankers to pretend that the loan is worth 50x the value, not an opportunity to pimp your customers, and certainly not an opportunity to pretend that the unwholesome business of moneylending is in any way respectable. They are not, and they have never been, until now on a global scale using whole countries to pimp and pump their wares.
Really nice presentation.. nicely spelled out.
So which European banks / insurance companies will come out alive from this carnage to come ?
Will be interesting to watch as this unfolds.
But didn't they already agree to this back in the 90s?
They are reaffirming their marriage vows.
One more flowchart and I'm going to throw up.
If you spew, spew on the flowchart.
Ohh! You can use that to feed the tilapia in your pool!
Of course Europe will come out better. It didn't completely destroy its productive base.
Even Paul Krugman admitted America and the dollar are fucked.
http://azizonomics.com/2011/12/22/the-old-paul-krugman/
Krugman speaks from the corners of his mouth.
When there is a 'sharp rise in interest rates'.
But within the past week he said they couldn't because the US controls its own currency and the political will is the same in both the fed and treasury.
Of course, shit hits fan and folks line up double to buy eurobonds-oh wait it is US paper that was priced at 0% this week?
Yea continent wide decimation of military but not of the productive base-I read it on the internet.
Nice...is it called/spelled a seance? Anywho whatever the future may bring what we KNOW is that Greece is...for lack of a better term "Texas Toast." If you're a GOVERNMENT bond trader and are long that market you are FEASTING on that SOVEREIGN yield. The only one I can think of is William (Bill) GROSS. We are of course long government debt as well...and have been....throughout the...."ordeal." if course we don't have a problem with handicapped people either--and love to kill those who do. Go figure.....
I call Bullsh*t!
There is NO WAY that 'Debt' caused the 'Debt Crisis'.
Where's M.D.Bonus, he'll explain it better than I can.
Ironically, it is Europe doing the right thing, and while it will suffer a very deep recession shortly, it will come out stronger at the end.
As what ? ... 17 National currencies maybe ?
& ..... "Have agreed to drastically reduce their spending "
LOL ... how naive .
27 nations equell 27 national elections equells 27 possible changes of government at any time.......and they call this stability?
Forgive me if I'm recalling my world history incorrectly, but hadn't Europe operated this way for the entire history of the world BEFORE TPTB decided it was in THEIR best interest to unify the peoples of Europe?
Yep and before the TPTB a lot of empires tried uniting Europe with force with the same end-results...if this was such a great idea the centre of power would still reside in Rome rather than Brussels....just sayin
Rock meet hard place.
Dick meet pussy
Doesn't quite work like rock meets hard place - dick slips into pussy easily
Guess you've never had an Asian chick...
Cool chart! But look at Latin America compared with Europe.
Greece, LTRO and The European Bond Malaise – Hungary Suffers, Latin America Shineshttp://confoundedinterest.wordpress.com/2011/12/22/greece-ltro-and-the-e...
Oh they're next, don't worry. These people (a specific elite) are hellbent on taking down (all) the world's economies.
They'll turn to South and middle america again, after it's a little bit more fattened up.
"All neoclassical-Keynesians or whatever else they like to call themselves these days (mendacious voodoo shamans works great but for some reason is considered insulting)"
Actually, you can call them Marxists. That will do the trick:)
That flowchart was a waste of time and space. The BBC as the ultimate font of economic knowledge? Really?
Pure rubbish.
The old joke is that BBC stands for 'British Bullshit Corporation' ... propaganda, but with much more subtlety than the American style big media news, interwoven with those wonderful nature and history shows.
Europe gets a separate CNN in English, because the United States version of CNN appears too extreme, too Joe Goebbels here.
What's NOT on the flowchart is more interesting than what is. :-)
'More importantly - it will come out. Which is much more than we can say about America.'
America... [sigh]
American politicians say: If stupidity got us into this, why won't stupidity get us out???
Fuck this, the US has vast resouces to fuel a reset. We don't!
Certainly that land mass between the French and Dutch is fucked...
... pick a team, I'd go with the Dutch.
Ah, so it was the butchers and the bakers and the candlestick makers and the “mortgage borrowers” who caused this crisis and not their politicians with their banker connectedness who drove the debt deeper and deeper. And the innocents have been the government-connected banks and Goldman Sachses… boy, were they taken for a ride by the small businessmen…
The problem with this analysis is that the writer is assuming that the banks will stand back and accept the process of parliaments reducing budgets and if economics improve, will suddenly become honest about their reserves and resolve never again to return to risk-taking and the manipulation of fiat money and sovereigns.
I don’t buy it.
To control the reserve currency and be able to give themselves the free money to go out and buy a corresponding amount of real wealth in the market place, even that advantage wasn’t enough for the robbers who call themselves “bankers..” No. They had to go into sovereign countries and take the savings from the newlyweds trying to accumulate a down payment for a family shelter and from the old ladies and old men trying to parcel out their life’s meager reserves to the end. They had to push the Congress and parliaments into even more and more borrowing. They had to force millions into unemployment lines and destroy the edifice of civilization at a massive cost of human suffering to the verge of starvation that brought on an Arab Spring…worldwide
It’s like crack; they can’t get enough. The next day, they’ve got to have a more and eventually, every day, and then that’s not enough. They lose the house, the marriage goes, the job goes, their friends desert them, they begin to beg and cheat, and then they steal and assault and kill…until it all finally collapses…
"Herein lies the basic flaw of the existing monetary system” that is causing the crackup of Western Civilization.
Naive.
1. EU governments certainly did not 'agree to drastically cut spending'
2. Germany did not 'become an export powerhouse' when euro was introduced. It has always been en export powerhouse.
Yeah, but it became an export powerhouse on steroids after the Euro. Plus they kept their costs down which made them even more of a powerhouse.
The true cause of the Euro crisis is.... wait for it...... The Euro:)
Optimal Currency Area's work as well as communism, i.e. they don't.
Look, there is something far more fundamental going on here. The truth is simple, basic, and easy to understand. 'The West' has believed for generations now that their labor is worth more than the rest of the world's labor. Interestingly, the U.S. Declaration of Independence declares that, "all men are created equal." How that ever morphed into "westerners deserve more because they rule the planet" is absolutely beyond me. Productivity of resources is the only path to what we call wealth, and the ability of the world's population to create wealth is beginning to level out thanks to technology and education. Due to this simple fact, it is becoming increasingly obvious the 'the west' has too much share of 'the wealth' based on nothing more than currency valuations. Currency wars are not a means to an end, the war is just the machinations of a population hell bent on holding onto what they no longer deserve to have.
Your argument is the international banker perspective, reducing human activity to a level where it can be controlled through a central government. It is the counter argument to freedom and while grossly incorrect it is dangerous. It is freedom that has produced the fruits of prosperity that are now advancing the standards of living across the globe; yet you, like the bankers, intend all standards of living to be submerged to a plantation level, America must have her comeuppance.
America did not become the world's greatest success by burning and consuming her resources; she got there by developing and growing her resources - by replenishing the earth.
Human energy has not varied greatly in 6000 years; the physical earth has not changed historically; many poor peoples live on resource rich lands. It is not raw materials, it is the uses that human energy makes of raw materials, that create this rich new world.
In short, freedom, not hydrocarbons, created this new world.
America’s gift to the world, the gift that lifted the standards of living for all people, was the fruit produced from individual freedom: the opportunity to own property and develop the means of production. America, as steward of her resources, advanced man’s progress that for more than 60 known centuries had advanced no farther than wagon wheels and open fire cooking, where men were no more than beasts of burden, carrying their possessions upon their backs.
The fruits of freedom lifted poverty and fed peoples throughout the globe. It is those fruits that are now being confiscated by the NWO bankers and, therefore, America's standard of living must, as they and you say, nose dive.
" America did not become the world's greatest success by burning and consuming her resources; she got there by developing and growing her resources - by replenishing the earth."
With all due respect, how do you figure? I contend that she got there by raping other nation's resources by exchanging $ for them. That's my opinion. Replenishing the earth?? I just don't see it. I respect your opinion though - your point about freedom is valid.
Sitenine, it is innovation through freedom, as the American Dream proved, that restores resources; it is lack and starvation that depletes resources and their potential.
This doesn’t excuse the rise of the tyrants in America, the tyrannical bankers who would use organizations such as the IMF to exploit the labor and natural resources of America and other countries, going so far as to wage war for resources such as petroleum. These tyrants are not capitalists but fascists who actually threaten the successes of freedom through their despotism. But it is a mistake to assign Americanism to these forces, because America’s influence has enabled many peoples of the world to develop plenty through their own resources as their governments became more democratic.
Ruth Wilder Lane in The Discovery of Freedon: Man’s Struggle Against Authority (1943) explains the situation:
“Why did men die of hunger, for six thousand years?
Why did they walk, and carry goods and other men on their backs, for six thousand years, and suddenly, in one century, only on a sixth of this earth’s surface, they make steamships, railroads, motors, airplanes, and now are flying around the earth in its utmost height of air?
“Why did families live six thousand years in floorless hovels, without windows or chimneys, then, in eighty years and only in these United States, they are taking floors, chimneys, glass windows for granted, and regarding electric lights, porcelain toilets, and window screens as minimum necessities?
“Why did workers walk barefoot, in rags, with lousy hair and unwashed teeth, and workingmen wear no pants, for six thousand years, and here, in less than a century –silk stockings, lip sticks, permanent waves, sweaters, overcoats, shaving cream, safety razors. It’s incredible.
“For thousands of years, human beings used their energies in unsuccessful efforts to get wretched shelter and meager food. Then on one small part of the earth, a few men used their energies so effectively that three generations created a completely new world.”
What explains this?
Freedom.
BTW, 50,000 jobs are being lost per month in the U.S. since China joined the WTO in 2001 and 46,000 factories were transferred from the US to Asia over the same 10 year period, according to Gordon T. Long. The profits in this world plantation scenario primarily are going to the international bankers and the multinational corporations egged on by their enablers in China and Taiwan; it is they, wedded to the Fed's ancillary arms, the IMF and World Bank, who are raping the earth of its resources with the duplicity now of the U.S. Congress and Third World dictator-leaders, as so effectively explained in Perkins' great book, Confessions of an Economic Hitman.
Totally wrong account of history.
Starvation was ended in Europe prior the rise of US citizens.
The same in some other places of the world. On the contrary, it was the expansion of US citizens who shipped the food produced in those places (free markets) that reintroduced starvation in those places.
The story of the US is one of extortion and farming.
Extorting the weak works. Farming the poor works.
US world order.
The wealth of the United States is phenomenal. It is now (1890) estimated at $61,459,000,000. In 1880 it was valued at $43,642,000,000, more than enough to buy the Russian and Turkish Empires, the kingdoms of Sweden and Norway, Denmark and Italy, together with Australia, South Africa and all South America—lands, mines, cities, palaces, factories, ships, flocks, herds, jewels, moneys, thrones, scepters, diadems and all—the entire possessions of 177,000,000 people. The most remarkable point of this comparison is the fact that European wealth represents the accumulations of many centuries, while more than half of ours has been in twenty years.” –Our Country, Rev. Josiah Strong, Ph.D., Revised Edition, based on the Census of 1890, copyright 1885, 1891.
1890? Are you even remotely serious? You do understand that there have been 2 world wars and a century of plundering since, right? I was kind in my previous reply, but come on! Take your democratic peace theory elsewhere. We're not buying it here.
AnAnonymous was quoting PAST history, stating “Starvation was ended in Europe prior the rise of US citizens.”
And I quoted you PAST history out of an ancient book that was based on the Census of 1890 to make my point. I see you missed it.
To quote some more "ancient" history:
The only way the Soviet Union and its failed communist economic system with its slave-labor force and concentration on armament production survived as long as it did was with the help of the United States. Kissinger and the banking oligarchy who profit have applied the formula in communist China.
Alexander Solzhenitsyn defined it: “It is American trade that allows the Soviet economy to concentrate its resources on armaments and preparations for war. Remove that trade, and the Soviet economy would be obliged to feed and clothe and house the Russian people, something it has never been able to do. Let the socialists among you allow this socialist economy to prove the superiority that its ideology claims. Stop sending them goods. Let them stand on their own feet, and then see what happens.”
And to quote Dr. Strong again: "Socialism attempts to solve the problem of suffering without eliminating the factor of sin," forgetting as Herbert Spencer remarked, "there is no political alchemy by which you can get golden conduct out of leaden instincts."
You lost me at Alexander Solzhenitsyn, and who the fuck is Dr. Strong? Seriously Einstein, who gives a shit about how stupid rich the U.S. used to be? That's history. The U.S. does not have phenomenal riches, and maybe you've noticed. The U.S. has phenomenal debt, but apparently you haven't noticed. Thanks for all the pretty quotes though.
Made me laugh. So funny.
US propaganda growing cheaper by the day is itself a highly visible symptom of world resources depletion: as it depletes, US citizens cant but allocate less and less resources to their propaganda.
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It is freedom that has produced the fruits of prosperity that are now advancing the standards of living across the globe; yet you, like the bankers, intend all standards of living to be submerged to a plantation level, America must have her comeuppance
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Freedom? But the US started as a slaver nation.
It was not freedom that advanced US prosperity. It was theft of the land, enslavement that brought wealth.
Extorting the weak works. Farming the poor works.
Until the point the weak has no more to yield and the poor is too poor to give.
66666666666666666666666666666666666666666666666666666666
America’s gift to the world, the gift that lifted the standards of living for all people, was the fruit produced from individual freedom: the opportunity to own property and develop the means of production. America, as steward of her resources, advanced man’s progress that for more than 60 known centuries had advanced no farther than wagon wheels and open fire cooking, where men were no more than beasts of burden, carrying their possessions upon their backs.
8888888888888888888888888888888888888888888888888888888
Even better. Actually, it is a tale often told by US citizens, but the conditions of abundance were brought by the previous orders.
US citizens only rised at the proper moment, when the benefits of the scientific advancements were about to show massively their positive sides, way before showing their negative sides.
US citizens have zip to do with the conditions of abundance. King George the third all. US citizens nothing.
The gift of the US to the world is the current state of the world, a world of duplicity, greed, murder, denial of basic reality, a world rushing to nowhere but formidable sights to come for all death cultists known as US citizens.
US citizens wont tell the future, they are way too busy monetizing the denial of the future.
The gift of the US to the world is that consumption race, because abundance is notliked by US citizens. You've got to be the one to consumethe most resources, to no other avail but beingthe one who would have consumed the most.
What happens next? Who cares? I'll be the one who has consumed the most.
Etc...
+1 For expressing far more eloquently than me how wrong JR is. I am trying really hard not to use profanities. :O)
Excellent post!
Slavery was the worldwide norm in 1776,
and modern medicine was witchcraft,
but otherwise excellent points. The world was a wonderful place,
with an avg lifespan of abt 35yo,
and man's existence close to caveman status,
really should stop posting about freedom from the continent of 450 sq ft flat renters and public transport users.
Europe's greatest claim to fame the last 100yrs is how much freedom can the big government liberal socialist confiscate under the guise of progress from the eurotrash before they actually notice.
I can list my personal indispenable product list that comes fr Europe below:
You evidently have not studied much history.
You say "America, as steward of her resources, advanced man’s progress that for more than 60 known centuries had advanced no farther than wagon wheels and open fire cooking, where men were no more than beasts of burden, carrying their possessions upon their backs."
How did Christopher Columbus discover the "New World"?
Have you ever heard of the Industrial Revolution? Any idea where it started?
I agree with a lot of what you say but that one sentence above is THE biggest pile of SHITE that I've ever read on ZH.
Stick around. If the bankers succeed in reducing everyone to a plantation status, you can have your hand-drawn well and grow your own food on scorched earth and try to get enough fire wood together in the winter to survive. Be careful though not to say anything against the government - because they'll kill you.
When America began, Europe was in the throes of despotism. You think I don’t know the wheel was discovered before Columbus discovered America? it is very hard to argue or make points with people whose only object is to discredit.
You want to fault America, you want to criticize America. You can go through a thousand history books and find faults with America; they mean nothing compared to the massive influence that this country had on the world. To ignore this is to be dangerous, wars were fought over the philosophy of Nietzsche and Marx, these people who sat in the dust in their little offices and wrote this junk criticizing the morally, the Christianity, the triumph of individualism, the property rights and freedom and good that America’s founders wrought.
In 1920, in a February 8 edition of the Illustrated Sunday Herald (London) Winston Churchill wrote: “From the days of Weishaupt to those of Karl Marx to those of Trotsky, Bela Kuhn, Rosa Luxembourg, and Emma Goldman, this worldwide conspiracy has been steadily growing. This conspiracy has played a definitely recognizable role in the tragedy of the French Revolution. It has been the mainspring of every subversive movement during the 19th century, and now at last, this band of extraordinary personalities from the underworld of the great cities of Europe and America have gripped the Russian people by the hair of their heads and have become practically the undisputed masters of that enormous empire.” (Is that too ancient for you?)
And we know the ramifications of what transpired under Lenin, Trotsky, Stalin and their iron-fisted control.
That my friend is what I am talking about – man’s struggle against authority. If freedom ends, it will end the way it always ends, with man descent into paganism and barbarism during some six thousand years of his history: his submission to Authority, to Government, to Tyranny.
Probably none of us will live long enough to know whether you're right or not (the long view), but one thing you're right about is that the US has plenty of competition regarding invention, production, and labor, and we're too busy playing and whining to pay attention.
If you ever wanted to know why they are so stubborn, watch this
http://youtu.be/JanzfoSQCFA
I am pleased to see ZH report that Europe is doing the right thing.
Europe is putting itself onthe path of blobbing up.
Is it not what US citizens want? Does it not make it the right thing to be as it allows blobbing up?
If you can tell me what "blobbing up" is perhaps I'll presume to speak on behalf of US citizens.
"Good news for Germany, bad news for Europe".
Boy, I'm hearing the jingle of Deutschmarks again...
The main reason for Europes decline is its increased imports of external energy which functions like increasing interest payments on debt over time.
Ever since 1986 & the propoganda associated with Chernobyl and also the neo liberal "spend money on consumption and not investment" dogma the imports have risen year after year.
Listened to We Pollock debate about Nuclear and it was Absolute Nonsense - talking about the economics of Nuclear without mentioning the opportunity cost of burning NG !!! which is best burned producing heat for cooking etc or in a combustion engine for transport , as in all electrical production much is lost through transformation.
As for renewables have people seen Denmarks windmill friendly primary energy graphs ?
www.iea.org/stats/pdf_graphs/DKTPES.pdf
www.iea.org/stats/pdf_graphs/DKTPESPI.pdf
You have trouble finding the hotair associated with wind.
Jesus.
Contrast this with France which is a very energy poor country even in comparsion to Denmark which is oil Independent.
www.iea.org/stats/pdf_graphs/FRTPES.pdf
www.iea.org/stats/pdf_graphs/FRTPESPI.pdf
with the decline of oil consumption in France in the last 3 years since these Graphs , it now produces nearly 50 % of its primary energy needs.
Its kind of ironic that the propoganda used to bring down the USSR will bring down the Western Imperium - it just takes enough time for the plants to age and not replace.
Instead we spent it on long term projects such as Holiday homes in Spain and BMWs.
A massive failure of policey.
Thanks Dork. The graphs on Denmarks primary energy supply are enlightening, and from a good source, the IEA.
Helpful analysis but it misses some key points. First it is primarily government spending rather than borrowing that is critical. The borrowing is the difference between the former and the revenue raised.
During a bubble, governments tax the apparent wealth being created in the private sector. The wealth creation is illusory, the taxes are not, they are a transfer of real wealth from the private sector to the public sector. Since much of the wealth creation in a bubble is illusory, this means the net wealth of the private sector is reduced by the process.
While a bubble is underway, governments don't need much borrowing in order to finance greatly expanded government spending, since they are milking wealth from the private sector. Once the bubble bursts, the taxation source disappears and they are left with a grossly oversize public expenditure which they then try to finance through debt.
This is the reason for Spain's apparent exemplary government borrowing program to 2010. It milked the massive housing bubble in Spain, so the debt blowout appeared in the private sector and government taxed the transactions associated with the blowout. Now it has a huge hole in funding its government expenditure.
Rather like the US, except the US has its own CB to print money and monetize government debt and Spain depends on the ECB which can only monetize debt to the extent Germany will accept.
That is an amazlingly accurate diagram of how the Euro got into this sorry state. Now hopefully Germany can get a grip on things and prevent a global economic collapse.