How Europe Has Evolved From A Democracy To A Bankocracy And Why Austerity Will Lead To Chaos

In one of the clearest (and most optically pleasing) discussions of recent months, David McWiliams (of Punk Economics) succinctly explains how Europe has evolved from a democracy to a bankocracy, the implications of which lead to austerity for the people and a Franco-German imposition (the 'fiscal compact') that can only lead to social unrest and chaos. In this brief (and expertly illustrated) video, the Irish economist clarifies Europe's 'dirty little secret' where economic policy is being run almost exclusively for the banks which, as we see in Greece and Ireland, means the political elite are becoming more and more detached from the people. The terror of the r-word (referendum) looms large as McWilliams analogizes the two ways out of a debt crisis (squeeze the debtor or forgive the debtor) with the catholic and protestant perspectives on sin and forgiveness. While falling short of calling for governments to go full-Keynesian (everyone knows you never go full-Keynesian), he (focusing on the problems of the current hopeful solution) summarizes the fiscal union as envisaged by France and Germany (which actually penalizes countries that are in trouble, rather than help them) as not a friendly-union but a vindictive strait-jacket put in place to help banks, not countries. It comes as no surprise to him that the price of Gold (and Bunds) is firm as the 'example' that Greece is likely to set (or face extreme social upheaval) will domino-like stumble across the other troubled nations and as he points "we have been warned". Our view remains that austerity works if countries manage to cut expenses while keeping a balance. Alas, the balance is out of skew due to 30 years of runaway full-Keynesianism, which leads indeed to the problems that McWilliams so well espouses.

Comments

[michigan independant]

http://mises.org/books/memoirs_mises.pdf

To many can miss the root issue and subsequent confusion to original so called design. Read why and when you get some time and convince yourself what model can exist since that is all that can be done. Do not consider this reading suggestion as a view but observation on how the directions have consequences.

[Peter K]

Europe is not a bankocracy. The pols still control the police, military and the rest of the security apparatus. But the real problem with Europe is that it is the last bastion of functional socialism on the planet. And just like the other great socialist experiment that went tits up, i.e. the Soviet Union, Europe is arriving at its very own Gorbachev moment. It has spent all it's money (wealth) both in the treasury and in its proxy treasuries, i.e. its banks balance sheet. And now it needs to either get more money (from other nations treasuries who have it, hence the China, Brazil, India excursions) or simply to go into insolvency. Just like the USSR during Gorbachev's reign. As for the banks/bankers, this is a political distraction to turn the sheeples attention away from the real cause of the problem into a hate fest against a group of people who are a convenient enemy. Think Jews during Weimer. And if the muppets who write this bankster garbage get lucky, they can get the Bamster reelected so that we can witness the fall of socialism on our own shores.

It's just that simple.

[Sandmann]

The pols still control the police

Funny ideas you have.  In Britain ACPO, a private company controls the Police and runs its own Intelligence operations infiltrating dissident groups. 

http://en.wikipedia.org/wiki/Association_of_Chief_Police_Officers

The Association of Chief Police Officers of England, Wales and Northern Ireland), established in 1948,^[1] is a private limited company that leads the development of policing practice in England, Wales and Northern Ireland.

In 1997 [Blair Era] ACPO was incorporated as a private company limited by guarantee. As a private company, ACPO does not have to comply with the Freedom of Information Act.

ACPO began preparation of the Public Order Manual of Tactical Operations and Related Matters. Police forces began training in its tactics late in 1983. 

ACPO Criminal Records Office ACPO Vehicle Crime Intelligence Service

The National Public Order Intelligence Unit (NPOIU) is a United Kingdom police intelligence unit set up in 1999 to track green activists and public demonstrations.^[1]

http://en.wikipedia.org/wiki/Confidential_Intelligence_Unit There is a web of police coordination activities OUTSIDE political control as the activities of Agent Provocateurs recently revealed has shown politicians - extending to Police Undercover Agents acting in Berlin without German Police knowledge and all coordinated by a private limited company run for the benefit of senior police officers OUTSIDE political control

[Mario55]

The Punk Economics' article is like the milions articles that are surfing on the wave of the populist anger against the banks. Banks are just the instruments through which our western governement have gotten the money to buy votes, either directly or indirectly thanks to cheap housing for example. The culprits are our governments, not the banks. Of course when there is a lot of money floating around, it is easier to help oneself some. But for the people, it is  more difficult to acknowledge that governements are the culprits rather than the banks because people have voted for their governements and have accepted their niceties for decades without wondering where the money for them was coming from. 

[cjbosk]

Help the fligling countries that got themselves into this mess?  Really?!

How about we let them collapse, and learn a valuable lesson, once and for all...Spain, tried to go green 25 years ago, now 22% unemployment and broke (pay attention U.S., green energy is death nell to economoy), Greece has no economy, olives and beaches can't drive real growth.  And Italy, well then have a chance I suppose as they actually do something.

Let the chips fall where they may.

[cjbosk]

As for the banks, remember who created the rules, the framework by which they were required (er forced) to lend money.  That came straight from Uncle Sam himself.  The banks didn't make the rules, they merely played within' the confines of the rules. 

Plenty of guilt to go around here but without any personal accountability/responsibility, we're not going to get very far.

[thurstjo63]

I agree except for the idea that government spending will get the economy going again. There are funds available for investment. Either they can be used by government for projects which generally realize no return on their investment or private investment in wealth creating projects. It's the latter which generates economic growth.

[Tom Green Swedish]

Definition of insanity not stupidity. There are meds for these people Germany is a huge market for Zyprexa.

[CitizenPete]

Saw this a month ago -- seen through a pure ignorant Keynesian perspective IMHO.   Perhaps it ia time to not to reboot the whole monetary system -- that is not try and make the old ones work again -- but redesign the system. 

http://youtu.be/NJKYHTkLMS0

[mcbrouder]

Here's the latest Punk Economics Lesson 5 http://www.youtube.com/watch?v=wJ-l1LIdWOU

[mcbrouder]

Here's the latest Punk Economics Lesson 5 http://www.youtube.com/watch?v=wJ-l1LIdWOU