Austerity

Greece…One Way…or the OTHER!

Off the keyboard of Michael Snyder

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Published on The Economic Collapse on July 9, 2015

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European Leaders Promise The Greek Debt Crisis Will Be Resolved One Way Or Another On Sunday

The wait will soon be over.  Greece submitted a final compromise plan to its eurozone creditors on Thursday, European finance ministers will meet on Saturday to discuss the proposal, and an emergency summit of all 28 EU nations on Sunday will make a final decision on what to do.  The summit on Sunday is being billed as a “final deadline” and a “last chance” by EU officials.  In essence, Greece is being given one more opportunity to embrace the austerity measures that are being demanded of them by their creditors.  So has Greece gone far enough with this new proposal?  We shall find out on Sunday.

For months, the entire planet has been following this seemingly endless Greek debt saga.  Global financial markets have gyrated with every twist and turn of this ongoing drama, and many people have wondered if it would ever come to an end.  But now European leaders are promising us that the uncertainty is finally going to be over this weekend

This time, the leaders’ summit called for Sunday is being billed by all concerned as the definitive moment that will determine Greece’s future in the euro. It’s “really and truly the final wake-up call for Greece, but also for us — our last chance,” EU President Donald Tusk said on Wednesday, the day after the most recent emergency session.

So what is the general mood of European leaders as they head into this summit?

Overall, it does not appear to be overly optimistic.

For example, just consider what the head of the Bundesbank is saying

Bundesbank Chief Jens Weidmann, meanwhile, said that central banks have no mandate to safeguard the solvency of banks or governments, and stressed that emergency liquidity to Greece should not be increased.

And even normally upbeat leaders such as ECB President Mario Draghi are sounding quite sullen

Just how uncertain the coming days are was highlighted when ECB President Mario Draghi voiced highly unusual doubts about the chances of rescuing Greece.

Italian daily Il Sole 24 Ore quoted the ECB chief, under growing fire in Germany for keeping Greek banks afloat, as saying he was not sure a solution would be found for Greece and he did not believe Russia would come to Athens’ rescue.

Asked if a deal to save Greece could be wrapped up, Draghi said: “I don’t know, this time it’s really difficult.

That certainly does not sound promising.

It isn’t as if the Greeks are not trying to find a compromise.  Their latest offer reportedly contains some very painful austerity measures

Greece is seeking another bailout totaling at least 50 billion euros ($55 billion) from its European creditors and offering to make painful spending cuts and tax increases as it races to avert a financial meltdown, according to government sources.

Under a 10-page blueprint completed late Thursday, the country said it would undertake austerity measures worth between 12 billion and 13 billion euros ($13 billion to $14 billion), including raising taxes on cafes, bars and restaurants.

But once again, it appears that pensions may be a major sticking point.  The following comes from a Zero Hedge report about the latest Greek proposal…

The biggest surprise is once again in the biggest hurdle: pensions. Recall that as we accurately predicted two weeks ago, it was the government’s unwillingness to directly cut pensions that led to the IMF refusing to even negotiate the Greek proposal.

As a further reminder, this is what IMF’s chief economist Olivier Blanchard said almost a month ago on the topic:

Why insist on pensions? Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone.  Pension expenditures account for over 16% of GDP, and transfers from the budget to the pension system are close to 10% of GDP.  We believe a reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and that it can be done while protecting the poorest pensioners

Fast forward to today when MNI reports that “there are no pension cuts in the draft of the proposal.”

And if recent experience is indicative, this likely means that the Troika will once again refuse to move on with the draft.

We shall see what happens on Sunday.

I have a feeling that it is all going to come down to what Germany wants to do.  At this point, the Greeks owe the Germans approximately 86.7 billion euros.  The German people are overwhelmingly against pouring more money down a financial black hole, and German leaders have taken a very hard line with Greece in recent days.

If Germany does not like this new Greek proposal, it will almost certainly fail.  And if there is no deal, Greek government finances will totally freeze up, the Greek banking system will utterly collapse, and the Greeks will probably be forced to switch back to the drachma.

Speaking of the drachma, check out what Bloomberg is reporting

Between June 28 and July 4 at a Hilton hotel in Athens, transactions on a Bloomberg reporter’s Visa credit card issued by Citigroup Inc. were posted as being carried out in “Drachma EQ.”

The inexplicable notation — bear in mind, the euro remains Greece’s official currency — flummoxed two very polite customer service representatives and spokesmen for the companies involved. It depicts a currency changeover that the Greek government and European officials have been working for over six months to avoid.

Banks around the world are bracing for the increasingly real possibility that Greece may be forced to abandon the euro, a currency it shares with 18 other European countries.

Could plans to roll out the drachma already be in motion behind the scenes?

The next few days promise to be extremely interesting.

Meanwhile, there are all sorts of other indications that big economic trouble is ahead for the entire planet.  For instance, global commodity prices have been plunging big time

While market commentators worry whether an economic collapse in Greece could trigger turmoil in financial markets, a slump in commodity markets may be signaling the world is already in a deep recession.

The slump in the Chinese stock market and concern over the Greek debt crisis sent commodities towards multiyear lows. The S&P GSCI—an index which represents a diversified basket of commodities—has been down nearly 40% over the past year and had slumped by more than six percent as of Wednesday, July 8th.

We witnessed a similar pattern just prior to the financial crisis of 2008.

And in addition to the problems that have erupted in China, Greece and Puerto RicoCNN is reporting that every major economy in Latin America “is slowing down or shrinking”…

Every major Latin American economy is slowing down or shrinking. The World Bank predicts this will be Latin America’s worst year of growth since the financial crisis. As if that’s not dire enough, the world’s two worst performing stock markets are in the region as well.

Very few people are talking about Latin America right now, but the truth is that the region is in the midst of a slow-motion economic implosion.  Here is more from CNN

Venezuela is arguably the world’s worst economy with sky-high inflation. Next door, Colombia has the world’s worst stock market this year. Its index is down 13% so far this year. The second worst is Peru, down 12.5%.

Right now, trouble signs are emerging all over the planet.  That is why we shouldn’t just focus on Greece.  Yes, if Greece is kicked out of the euro that is going to greatly accelerate things.  But no matter what happens with Greece, the truth is that we are steamrolling toward another major worldwide financial crisis.  Perhaps you didn’t notice, but I purposely did not use the word “Greece” once in my recent article entitled “The Economic Collapse Blog Has Issued A RED ALERT For The Last Six Months Of 2015“.

Yes, I am taking what is happening over in Europe very seriously.  I believe that we are about to see some things happen over there that we have never seen before.

But the Greek crisis is only part of the picture.  Everywhere on the globe that you look, red flags are going up.

Sadly, just like in 2008, most people have chosen to be willingly blind to what is happening right in front of their eyes.

Greece Votes NO – Let The Chaos Begin…

Off the keyboard of Michael Snyder

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Published on The Economic Collapse on July 5, 2015

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The result of the referendum in Greece is a great victory for freedom, but it is also threatens to unleash unprecedented economic chaos all across Europe.  With almost all of the votes counted, it is being reported that approximately 61 percent of Greeks have voted “no” and only about 39 percent of Greeks have voted “yes”.  This is a much larger margin of victory for the “no” side than almost everyone was anticipating, and it represents a stunning rejection of European austerity.  Massive celebrations have erupted on the streets of Athens and other major Greek cities, but the euphoria may not last long.  Greek Prime Minister Alexis Tsipras is promising that Greece will be able to stay in the euro, but that gives EU bureaucrats and the IMF a tremendous amount of power, because at this point the Greek government is flat broke.  Without more money from the EU and the IMF, the Greek government will not be able to pay its bills and virtually all Greek banks will inevitably collapse.  Meanwhile, the rest of Europe is about to experience a tremendous amount of pain as financial markets respond to the results of this referendum.  The euro is already plummeting, and most analysts expect European bond yields to soar and European stocks to drop substantially when trading opens on Monday morning.

Personally, I love the fact that the Greek people decided not to buckle under the pressure being imposed on them by the EU and the IMF.  But amidst all of the celebration, the cold, hard reality of the matter is that your options are extremely limited when you are out of money.

How is the Greek government going to pay its bills without any money?

How are the insolvent Greek banks going to operate without any money?

How is the Greek economy going to function without any money?

Now that the Greek people have overwhelmingly rejected the demands of the creditors, it will be very interesting to see what the EU and the IMF do.  Prior to the referendum, European leaders were insisting that a “no” vote would put an end to negotiations and would force Greece to leave the euro.

Now that the results are in, are they going to change their tune?  Because the ball is definitely in their court

“This does two things: it legitimises the stance of the Greek government and it leaves the ball in Europe’s court,” ANZ Bank analysts said in a note.

Europe either folds or Greece goes bankrupt; over to you Merkel.”

So would they actually let Greece go bankrupt?

It is going to be fascinating to watch what happens over the next few days.  Right now, Greek banks are on life support.  If the European Central Bank decides to pull the plug, they would essentially destroy the entire Greek banking system.  The only thing that can keep Greek banks alive and kicking is more intervention from the ECB.  The following comes from the New York Times

Now that Greek voters have said no to the economic demands of its international creditors, the fate of the country’s struggling banks is in the hands of the European Central Bank.

Greece’s banks, closed since last Monday because they are perilously low on cash, have been kept alive in recent weeks by emergency loans from the European Central Bank. On Monday, the central bank’s policy makers plan to convene to determine how much longer they are willing to prop up the Greek banks, now that the country has essentially said no to the unpopular dictates of the other eurozone countries.

Of much greater concern to the rest of the world is how financial markets are going to respond to all of this.  As I write this article, things already appear to be unraveling.  The following comes from CNBC

Germany’s Dax is indicated sharply lower from Friday’s close at around 4 percent, while the euro was down 2 percent against the yen as the news emerged. U.S. stocks are expected to open around 1 percent lower Monday, according to recent stock futures data.

What could be most important for those worried about contagion from the Greek crisis is how Portuguese, Spanish and Italian government bonds perform in Monday morning trade.

If these peripheral euro zone countries, often lumped in with Greece, suffer a sharp spike in yields, this could cause alarm about whether Greece leaving the currency might cause further contagion to other weaker euro zone economies.

This could potentially become a “trigger event” that unleashes a wave of financial panic all over Europe.  And once financial panic begins, it is very difficult to end.

If the EU and the IMF want to avoid a crisis, they could just give in to the new Greek government.  But that would be politically risky for certain high profile European leaders.  For instance, Angela Merkel would face a huge backlash back home if she conceded to the new Greek government now.  And other German leaders are already calling the referendum result a “disaster”

German politicians branded the result a ‘disaster’, with the country’s economy minister Sigmar Gabriel Sigmar accusing Tsipras of ‘tearing down the last bridges on which Greece and Europe could have moved towards a compromise’.

He added: ‘Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness.’

And the president of the European Parliament, a German, told a German radio station over the weekend that a “no” vote would almost certainly mean that the Greeks will be forced out of the euro

If after the referendum, the majority is a ‘no,’ they will have to introduce another currency because the euro will no longer be available for a means of payment,” Martin Schulz, European Parliament president, said on German radio.

That is pretty strong language, eh?

Here is yet another quote from Schulz

Without new money, salaries won’t be paid, the health system will stop functioning, the power network and public transport will break down, and they won’t be able to import vital goods because nobody can pay,” he said.

So at this point it is all up to the EU and the IMF, and in particular the focus will be on the Germans.

What will they decide to do?

Will they give in, or will they force the Greeks to leave the euro?

If the Greeks do transition from the euro to a new currency, it will be a process that takes months (if not longer).  You just can’t change ATMs, computer systems, cash registers, etc. overnight.  So a move to the drachma  would not be as simple as many are suggesting…

British firms like De La Rue, which prints 150 currencies worldwide, are believed to have been contacted with a view to providing such services.

It’s done in great secrecy to prevent currency speculation. The other big problem is the logistical challenges of switching a currency. All ATMs, computers and other machinery of commerce that bears the euro symbol will have to be adjusted. It could, and would, take months.

And if Greece does leave, it will be a massive shock for global financial markets.  Faith in the European project will be shattered, the euro will drop like a rock, bond yields all over the continent will rise to unsustainable levels and major banks all over Europe will fail.

I think that the following quote from Romano Prodi sums things up quite well

Romano Prodi, former chief of the European Commission and Italy’s ex-premier, said it is the EU’s own survival that is now at stake as the botched handling of the Greek crisis escalates into a catastrophe. “If the EU cannot resolve a small problem the size of Greece, what is the point of Europe?

Meanwhile, we should all keep in mind that a financial crisis has already erupted over in Asia as well.  Chinese stocks have lost 30 percent of their value in just the last three weeks.  In fact, the amount of “paper wealth” wiped out in China over the past three weeks is approximately equivalent to “10 times Greece’s gross domestic product”

A dizzying three-week plunge in Chinese equities has wiped out $2.36 trillion in market value — equivalent to about 10 times Greece’s gross domestic product last year.

The great financial collapse of 2015 is well underway, and it should be a very interesting week for global markets.

But no matter what happens this week, we all need to keep in mind that this is just the tip of the iceberg.

A “perfect storm” is on the way, and we all need to get prepared for it while we still can.

 

Welcome to Blackswansville

From the keyboard of James Howard Kunstler
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avalanche
 
Originally Published on Clusterfuck Nation July 6, 2015
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While the folks clogging the US tattoo parlors may not have noticed, things are beginning to look a little World War one-ish out there. Except the current blossoming world conflict is being fought not with massed troops and tanks but with interest rates and repayment schedules. Germany now dawdles in reply to the gauntlet slammed down Sunday in the Greek referendum (hell) “no” vote. Germany’s immediate strategy, it appears, is to apply some good old fashioned Teutonic todesfurcht — let the Greeks simmer in their own juices for a few days while depositors suck the dwindling cash reserves from the banks and the grocery store shelves empty out. Then what?

Nobody knows. And anything can happen.

One thing we ought to know: both sides in the current skirmish are fighting reality. The Germans foolishly insist that the Greek’s meet their debt obligations. The German’s are just pissing into the wind on that one, a hazardous business for a nation of beer drinkers. The Greeks insist on living the 20th century deluxe industrial age lifestyle, complete with 24/7 electricity, cheap groceries, cushy office jobs, early retirement, and plenty of walking-around money. They’ll be lucky if they land back in the 1800s, comfort-wise.

The Greeks may not recognize this, but they are in the vanguard of a movement that is wrenching the techno-industrial nations back to much older, more local, and simpler living arrangements. The Euro, by contrast, represents the trend that is over: centralization and bigness. The big questions are whether the latter still has enough mojo left to drag out the transition process, and for how long, and how painfully.

World affairs suffer from the disease of terminal excessive complexity. To make matters worse, much of the late-phase complexity operates in the service of accounting fraud of one kind or another. The world’s banking system is mired in the unreality of so many unmeetable obligations, cooked books, three-card-monte swap gimmicks, interest rate euchres, secret arbitrages, market manipulation monkeyshines, and countless other cons, swindles, and hornswoggles that all the auditors ever born could not produce a coherent record of what has been wreaked in the life of this universe (or several parallel universes). Remember Long Term Capital Management? That’s what the world has become.

What happens in the case of untenable complexity is that it tends to unravel fast and furiously. That’s exactly why avalanches and earthquakes happen all at once, not stretched out over a six week period. The global financial scene not so different. It’s just another matrix of linked mutually-supporting relationships that can implode if a few members weaken.

One question worth reflecting on is whether the implosion is actually well underway on-the-ground in real economies, with just the scrim of illusion to make the surface appear intact. That surely seems to be the case in the USA, where the so-called economy has already avalanched into a rubble heap of part-time scut jobs, defaulted college loans, underwater mortgages, and groaning pension funds — with an overlay of pointless and endless motoring.

Over in Euroland, the Greek “no” also implies that every other sovereign nation wallowing in deep financial shit will demand a haircut (and a disinfectant shower). Italy, Spain, Portugal, Ireland, and even France cannot possibly meet their debt obligations. Their citizens are being taunted with currency controls, too, and they have every bit as much potential to go ape-y as the Greeks. Notice you haven’t heard much from their leaders and financial ministers in recent weeks. They are all standing on the sidelines watching the Greeks go through the wringer — but you can be sure they are all making plans of their own.

The failure of the European experiment will be extremely demoralizing to the hopeful citizens of that continent, who emerged from the bloodbath of the early 20th century to become the world’s premier peaceful tourist theme park. I don’t know that they necessarily have to go back to fighting each other on battlefields with things that blow up and destroy human flesh, but they surely have to decentralize and re-fashion some kind of simpler, local way-of-life if they expect to remain civilized.

It’ll happen everywhere. The Japanese are next, of course, and they may be the most fortunate, since they retain more than a few shreds of memory for exactly that mode of life: the Tokugawa shogunate (the Edo period, 1600 – 1853), a manner of high pre-industrial economy and culture that might have persisted indefinitely had not Commodore Perry come knocking on their door, so to speak, in his “black ships.”

Ukraine is about halfway back to being medieval with excellent potential to overshoot even that. The Euroland PIIG(F) nations don’t have the energy resources to extend Modernity, even if the banking system wasn’t terminally ill, and then on top of that they have the ethno-demographic quandary of creeping Muslimization — plus the additional flotillas of desperate boat people arriving daily.

America, count your blessings. Tattoos, obesity, drug use, and shiftlessness are all basically behavioral choices. You don’t need a finance minister or a central banker to overcome those problems.

 

James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

Dead Nation Walking

From the keyboard of James Howard Kunstler
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Brosnan to narrate Thomas the Tank Engine
 
Originally Published on Clusterfuck Nation May 18, 2015
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Many people seem to think that America has lost its sense of purpose. They overlook the obvious: that we are striving to become the Bulgaria of the western hemisphere. At least we already have enough vampires to qualify.

You don’t have to seek further than the USA’s sub-soviet-quality passenger railroad system, which produced the spectacular Philadelphia derailment last week that killed eight people and injured dozens more. Six days later, we’re still waiting for some explanation as to why the train was going 100 miles-per-hour on a historically dangerous curve within the city limits.

The otherwise excellent David Stockman posted a misguided blog last week that contained all the boilerplate arguments denouncing passenger rail: that it’s addicted to government subsidies and that a “free market” would put it out of its misery because Americans prefer to drive and fly from one place to another.

One reason Americans prefer to drive — say, from Albany, NY, to Boston — is that there is only one train a day, it never leaves on time or arrives on time, and it takes twice as long as a car trip for no reason that makes any sense. Of course, this is exactly the kind of journey ( slightly less than 200 miles) that doesn’t make sense to fly, either, given all the dreary business of getting to-and-from the airports, not to mention the expense of a short-hop plane ticket.

I take the popular (and gorgeous!) Hudson River Amtrak train between Albany and New York several times a year because bringing a car into Manhattan is an enormous pain in the ass. This train may have the highest ridership in the country, but it’s still a Third World experience. The heat or the AC is often out of whack, you can’t buy so much as a bottle of water on the train, the windows are gunked-over, and the seats are often broken. They put wifi on trains a couple of years ago but it cuts out every ten minutes.

Anyway, even if Americans seem to prefer for the present moment to drive or fly, it may not always be the case that they will be able to. Several surprising forces are gathering to take down the Happy Motoring matrix. Peak oil is actually not playing out in the form of too-high gasoline prices, but rather a race between a bankrupt middle class unable to pay the total costs of motoring and an oil industry that can’t make a profit drilling for hard-to-get oil. That scenario is plain to see in the rapid rise and now fall of shale oil.

Nowhere on earth is there passenger rail that pays for itself. But, of course, you don’t hear anyone complain about the public subsidies for driving or air travel. Who do you think pays for the interstate highway system? What major airport is privately owned and operated?

Some of the decisions made over our rail system are so dumb you wonder how the executives on board ever got their jobs. For instance the train between New York City and Chicago never runs on time for the simple reason that Amtrak sold the right-of-way to the CSX freight line. CSX then tore up the second track because there was an antiquated state real estate tax on railroad tracks. As a result, freight trains have priority on the single track and the passenger trains have to pull over on sidings every time a freight needs to go by. Earth calling the New York state legislature. Rescind the stupid tax.

America is going to need trains more than it thinks right now, despite what the “free market” says. The condition of our trains is symptomatic of the shape of the nation. The really sad part is we missed the window of opportunity to build a high-speed system. Capital will soon be too scarce for that. But we still have a conventional network that not so many decades ago was the envy of the world, and we know exactly how to fix it. We just don’t want to. No will left. Apparently we’d rather just turn into the walking dead.

 

James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

Slog Tri-fecta

Off the Keyboard of John Ward

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Published on The Slog on February 27-28, 2015

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RE Note: Slogger JW has been especially prolific of late with quite a bit of good stuff, so I am compiling a few at a time now instead of posting them individually.

GREECE LATEST: HUGE GREEK BANK OUTFLOWS, EURO FALLING AGAINST THE £, BUNDESTAG BACKS GREECE MEMORANDUM

ChambptIf the Varoufakis memorandum ‘deal’ is so respectable, why do none of the players, or their Party bigwigs, or the markets, like it?

There’s a piece in the online magazine Counterpunch at the moment purporting to show how Greek finance minister Yanis Varoufakis has ‘kept Greece in the euro by its fingernails’. Without going over the same tedious ground yet again, nobody can do that, because Greece doesn’t need to cling onto anything: once you’re in the euro, there’s no way out.
The piece continues as follows:‘So, those who think that Varoufakis should have given the Eurogroup an ultimatum (“Reduce our debts or we’ll leave.”) simply don’t understand the nature of the negotiations.  Varoufakis was forced to operate  within very strict parameters. Given those limitations, he nabbed a very respectable deal.’
If I had a Pound for every expert who responded to an injection of reality with “no no, you don’t understand” I’d be a very rich man indeed. QE, derivatives, the gold price, the euro’s value, UK ‘growth’, fractional reserve banking, the Manchester United owning Glazer brothers, ludicrously over-priced bourses, the EC’s finances, and BoJ asset purchases have all been ‘sold’ to me over the years are the best way forward…when they are obvious disaster areas waiting to happen.
In this case, it’s the idea that what Varoufakis signed last week was a ‘very respectable deal’. I’d like to put one simple question to the Game Players: if the deal is so good, why does no side – there are more than two – want it?
The Greek KKE doesn’t want it, 8 senior Syriza MPs don’t want it, and yesterday afternoon Merkel was given a seriously rough ride by her own CDU Upper Circle. I’ve yet to meet a single anti-federalist who likes it…but I’ve been told a dozen times that Varoufakis has “bought time”. He has: but is it peace in our time, or time for things to get worse for the Greeks?
Even the fairly large print of the Memorandum makes YV’s job impossible, and it isn’t helped by the obviously manipulated departure of bank deposits. Four months from now they will be back around the same table, and there is just one thing alone that might make Yanis’s hand stronger: Italy turning to sh*t – which it could do….and ought to do.
But if your main adversary is an Italian crook heading up the ECB, I wouldn’t hold your breath on it. In that four months, there’ll be 24/7 smearing and trolls, manufactured bank panics, and pretty much anything they can think of to take Syriza’s eye off the ball. Last month, a record €12.2 billion left Greek banks: that is more  than any outflows experienced during any of the previous Greek crises and bailouts. Zero Hedge is now confirming the Slogpost of last week when it says ‘the Troika did everything in its power to accelerate the bank run in order to crush any negotiating leverage Varoufakis may have had’.
As for Tsipras himself, his hardest task will be to keep the Coalition together…plus social protests and unrest coming from the KKE and Golden Dawn…both of whom are virulently anti-euro.

I wrote earlier this week that Varoufakis missed his chance to exploit the enormous Bundesbank v ECB v France rift – the thing that will do for the entire EU in time regardless of anything else that might happen. But he failed to call the bluff. That’s all Draghi had: bluff.

Today, with this marvellous deal nobody likes, the euro has fallen further, and now stands at 1.38 to Sterling. If he had walked last Friday, Troika2 would’ve been in l’ordure profonde. There is an old adage that says, “When you borrow £10,000 from a bank, it’s your problem. When you borrow $280billion and can’t pay it back, it’s the bank’s problem”. So far, EU citizens haven’t paid a red cent of any of the funny-money involved in bailing out Greece. Now they will have to…and it could tip at least two of them – Spain and Italy – over the edge. This is the size of the opportunity Varoufakis missed.

On verra. But I remain at a loss to see what Greece has gained here…except the bewildered disrespect of a lot of the neutrals.

At the End of the Day

We’ve just had a sunset here that can’t measure up to West Indian or Greek ends-of-day for awesome brilliance followed by soft red, but will always beat them hands-down for the range of colours involved.

In this sort of late-winter Aquitainian sunset, there are light greys, charcoals, limes, four shades of blue, infinite yellows – and spectacular solid rays that reach up to the heavens. Religiously influenced 19th century paintings of the English sunset made great play with the rays thing, but they all look insipid alongside what I just saw here.

The thing that’s particularly enthralling about the skies in the Lot is that they’re never boring. This enhances the sense, at sunset, of the illusion of Time being played out second by second: it’s a bit like watching a Turner painting observed through the Polaroids of David Hockney. You can’t take your eye off it for even a second, because all is change. As the Buddhist mantra has it, all things are in transition.

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If only the same could be said for Wolfgang Schäuble. You always know where you are with Wolfie: the bloke comes with a cast-iron guarantee that he will always support his inflexible approach with an insane argument. He was on top form in the Bundestag today, asserting to his CDU naysayers that “This is not about lending more money to Greece, it is about continuing with the programme”.

Just to insert the odd undisputed fact here, since 2010 his geliebte programme imposed upon Greece has produced the greatest depression of any Western economy in recorded history. Yet Dr Strangelove insists that Greek recovery will without question emerge from Aphrodite by the waterhole standing firmly at the side of Phoenix among the ashes – neither of whom have any money to consume the goods that the Greek economy cannot produce, because it has no finance.

You really do have to be profoundly mad to stick to that kind of programme.

But in Germany, political rebellion takes place in a way no other country can reproduce. In Germany, the leading CDU rednecks give Merkel a hard time for being a liberal pinko, and then traipse into the Bundestag to vote overwhelmingly for the extension of the Programme. In a German revolution, everyone forms an orderly queue to express dissatisfaction at the soft treatment being meted out to the Üntermenschen who do not grasp their Weltanschauung. Then they obey whatever bonkers bollocks Mutti Merkel comes out with.

It is all terrifyingly similar to Goebbels yelling that “All Jews are Communists, and all Communists are Jews”.

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Now that South Korea’s Constitutional Court has decriminalized adultery, Bloomberg reports that the country’s leading condom manufacturer Unidus shares rose by 11.75% today.

If you’re in any doubt about the importance of this ruling, I should point out that in 2008, actress Ok So Ri acknowledged publicly she had an affair with a singer. So her compassionate actor husband called for the maximum penalty of two years in prison. She got a suspended eight-month term. I’m not the world’s most right-on person, but the idea of this kind of chastity-belt claptrap still existing in the 21st century is not good news. Take a look at Indonesia’s laws against women: they beggar belief.

I do believe in long-term relationship sexual loyalty, but manufacturing crime out of human passion is about as bad as it gets.

That said, I have problems with the share price rise…as I so often do with f**kwitted stock market logic. If you’re marrried and you have an affair involving unprotected sex, presumably your husband knows you’re unprotected. So why would condoms be necessary – especially in the passion of the moment?

I do dislike reducing love to the mechanics of it all. But the problem with bourses the world over is that they’re dominated by daft testerone-fuelled blokes whose left brains are atrophied as a result of none-use.

And on that happy note, I bid you all bon weekend.

Our politicians make a hash of it because they’re bought, not because they’re braindead

mcteeth From Athens to Washington via Berlin, Paris and London, we are getting the wrong policies for us, because they’re not designed to be for us in the first place

Herewith a very small proportion of some major political cockups of recent vintage:

The EU ‘annexed’ former Soviet satellites in central and eastern Europe without giving a thought to what the effect might be in terms of cheaper goods and lower-cost workers.

The EU and US conspired to meddle in Ukrainian politics, and as a result were given a bloody nose by Putin.

The EU created one currency across 18 cultural divides without giving any exit door, and as a result the Greek population is paying for the crimes of the pro-EU oligarchy.

The EU is imposing a mad scorched earth policy on the Greeks in the bizarre hope that the grass will regrow two minutes after the fire goes out.

The EU trampled all over Cyprus, and as a result Putin has completed a bailout deal with them….in return for naval bases there.

The EU created a government structure in which unelected functionaries have all the ‘ideas’ – and the elected MEPs get to rubber stamp them – and hoped that democracy would flourish.

The US blundered into Iraq twice, supported the Muslim Brotherhood in Egypt, bombed Iraq for a third time, supported the rebels in Syria, and then changed its mind to support Bashar Assad and bomb the rebels…all in pursuit of energy control, without ever trying with any consistency to develop beyond fossil fuels.

The UK Prime Minister David Cameron gave a speech in Ankara heaping praise upon closet Islamist Recep Erdogan and referring to Gaza as “a concentration camp”….while Erdogan was busy supplying the unfortunates living in the small State with arms.

Cameron hired Andy Coulson despite being warned by a dozen well-placed people that he’d committed myriad crimes while at Newscorp.

The UK supported Bush in the Gulf War without any thought for the jihadist consequences…leading directly to 55 deaths in London and a wholesale radicalisation of British Islamics.

Successive UK governments allowed immigrants to pour into Britain over a 40 year period, dismissing all naysayers as racists – but without a thought for where they were all going to live….and now dismisses all opponents of their radical house-building policy as tree-huggers.

The UK government supports fracking – despite the calamitous fall in the oil price and the obvious threat to Britain’s already compromised water supply…and thus also increased lack of land on which to build homes to house the migrants they thoughtlessly let in after 1970.

…………………………..

I could go on like this all day. For a week even – and never stop, except for comfort breaks and sleep. Whichever way you cut it, these politician chaps are not very good, are they? Also, they’re incorrigibly corrupt…as the latest revelations in the UK showed only too well this week. And not very bright. Unpleasant when you meet them. Unresponsive. In fact, incapable of seeing the consequences of anything they do. So we need another bonfire –  after the ones for civil servants, lawyers and accountants die down – on which to chuck the politicians.

The current crop of politicians in the West are indeed pretty dire, and woefully lacking in leadership skills or the ability to unite rather than divide. But they’re the product of a culture – nothing more, nothing less.

The one thing all these idiot policies have in common is self-serving lobbyists.

In consecutive order, the lobbying that dictated the disasters listed above came from the US State Department, multinational business, the CIA alongside Silicone Valley, multinational banking, the German Interior Ministry, Wall Street, the European Central Bank, the US oil industry, NATO, Newscorp, the race relations industry, neoliberal employer organisations, and the construction industry.

Now you could argue that a lot of those lobbies are merely part of the political process, but they are not. Only two sets of people should set political policy: elected legislators, and the electorate. The rest – especially Whitehall – are supposed to shut up and pay attention, but they don’t. The same applies to central bankers, bourse districts, and business generally. The policies currently driven by lobbyists fail over and over again because they are about ego and bottom lines, not the needs or Will of the People.

When Jean Blondel wrote Voters, Parties and Leaders in the late 1950s, he described what he called ‘pressure groups’. Their job was to bring to the government’s attention plights and opportunities, not to bribe them: such a thing was thought completely improper then. Today, US, UK, and EU civil servants openly take up positions in banks, multinationals, and energy companies after leaving the bureaucracy. This is a twofold phenomenon: the reward for past favours done, and the ability to show the poachers how to avoid the gamekeepers.

You may choose to believe, for instance, that John McCain is mad. But he is far from that: he is almost exclusively bankrolled by the oil and munitions industries – especially the US areospace business. So instead of ‘mad’, think Middle East, ISIS oilfield attacks, arming the Ukraine, and bombing jihadists. All the wrong policies, and all for the same reason: more munneee for Mr McCain, more contracts for the arms business, and security of supply for the oilcos.

If you take a degraded culture – some would even say a depraved culture – and allow it to produce the politicians…who then get offered free wonga by obsessive multinationals, this is the entirely predictable result. The final result might, one day, be final in the most terrifying sense of the word: greedy little men like McCain starting World War III as a result of selling jets to Iran, or 2D undetectable weaponry to the Israelis, or covert nuclear delivery to the Germans, tactical nukes to African mercenaries, or anybody else – never mind who, business is business kid – that has the munnneeeee.

I’ve been giving Syriza something of a bashing this week (which I think they richly deserve) but the great thing in their favour is the desire to make Greece a more open, honest and accountable culture. It is the ultimate c-word, and the only way real radicals can effect change now. We need a different way of rolling back greed through education and example: what we don’t need is the old Big State Left and Neolib Right ideologies replayed yet again: they don’t bear any relevance to social anthropology, and so I switch off once the empty historical syntax gets trotted out.

Syriza’s form of localism appeals to me because its communal and bottom-up. Sadly, I now fear that the situation will go tits-up before they get the chance to put it into practice. One thing people who don’t ‘get’ Greece can’t grasp is that Syriza’s ‘natural’ franchise of voters is probably under 6%, if not less. It is a loose collaboration of convenience designed to stand up to Brussels and get rid of the Greek oligarchy. Once people think its leaders are just as boneless as their predecessors, Greek politics could easily descend into chaos…perhaps even civil war.

But Tsipras and co still have a chance – albeit a slim one – to tell the EU where to get off, and then watch as the opposing edifice collapses in acrimony. If they do, then four things have to go in Greece: neoliberal drivel, privately funded political Parties, dishonest officials, and lobbying. If they can start to make a go of that alongside communal support and better education, they might just achieve something truly worthwhile for citizens everywhere around the World.

Greece & the Eurozone Crisis

Off the keyboard of Brian Davey

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Published on FEASTA on February 17, 2015

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Note: this is an update to my shortly-to-be-published book Credo: Economic Beliefs in a World in Crisis.

The Syriza government has been elected to power in Greece with an electoral mandate to end the austerity policies imposed on Greece by the European Union, the IMF and the European Central Bank.

The first point to make about this is the obvious one that a government that has power to issue a national currency of its own can always cover a deficit – an excess of spending over tax revenues. This is because, in the end, it can print money to make up the difference. (Or, if you like the government can issue bonds and the central bank can create money to buy them). Countries entering the Eurozone lost this power and with the replacement of the Greek Drachma with the Euro so did Greek governments. The Maastricht Treaty is explicit on this – Eurozone governments cannot be funded by money creation by their own central banks. Money creation is a prerogative of the private banks in Europe, and of the European central bank . If states get into financial difficulties they can get loans, but on conditions. The conditions are taking steps to balance tax revenues and government expenditure.

With the benefit of hindsight it seems almost inevitable that Greece would fall foul of Eurozone financial rules because it had been running a government deficit since 1973 and very high deficits since the early 1980s. Much of government expenditure was used to pay for a very large military budget. After the USA, Greece spent a higher % of its GDP on the military than any other country in NATO. This is partly because of enmity with Turkey but it might also have something to do with keeping the military types happy given that Greece had emerged from a military dictatorship – so the soldiers were given lots of high tech toys to keep them sweet. A lot of these toys were bought from German arms companies who did not complain.

At the same time economic development in Greece was limited mainly to tourism and shipping. Against larger northern European nations, particularly Germany, there was little chance of competing in most forms of industrial production. Instead Greek governments used money to provide public sector jobs, generous pensions and social benefits in a form of “development” that, with hindsight, was never going to be long run sustainable. At the same time many of Greek people, like many the populations in other countries absorbed the idea that the good life was all about self-display, leisure and consumption – an idea that they might have got partly from the stream of tourists from northern Europe to whom they catered.

One commentator has described how the development model was “underpinned by a historically influenced mentality in which property counted for more than work and people admired people who possessed wealth for which they had not had to work”.[1]

In other words the inflated state was associated with a system of patronage – not unlike the systems of well connectedness between business and state that characterise most other “developed countries” – the USA, UK, Germany.

However, all clubs of power not only have insiders but they are formed over and against everyone else – and in Greece the young people excluded by this corrupt club of power organised in resistance against it. It is this that explains the rise of Syriza as a new political force. What we are witnessing with the new government in Greece is a political transformation that is also a generational change.

What has brought this about has been the radicalisation of the population as a result of a humanitarian crisis in which the old “development model” collapsed.

When they entered the Eurozone Greek governments could not continue as before. By joining the Eurozone at the rate of exchange that they did the Greek people got a lot of Euros for their converted drachma and thus plenty of purchasing power to buy lots of imported consumption goods from abroad at very favourable prices. Interest rates were also low.

Times were good – but not for long. The short Euro honeymoon prepared the collapse. The excess of imports over exports can be thought of as an “export of their purchasing power” to northern Europe and a corresponding worsening of the competition situation of the Greek economy. This made the government deficit even worse too – while Greek purchasing power was helping to boost the German economy, it was not flowing back into the Greek economy, and not flowing into domestic tax payments.

The solution which governments used was to disguise what was going on was fiddling the statistics. They fell into a deadly embrace with international financial sharks like Goldman Sachs which, with other banksters, received generous fees for disguising the true extent of the borrowing. Loans were disguised as swaps.

The global financial crisis of 2007/2008 brought the real situation out into the open with the inevitable crisis and recession. With falling tax revenues and rising government expenditure the state financial crisis got worse. The extent of the fiscal fraud was revealed. Nevertheless it was still possible in 2010 for the Greek government to refinance their deficit by again borrowing mainly from European and international banks – albeit at much increased rates of interest. Paying these very high rates of interest then made the government deficit even worse. As so often happens in economics a self reinforcing vicious spiral was occurring.

The subsequent bail out loans made available to Greece by the European Union were mainly used to pay off these bank loans – with only a part going to cover an underlying deficit (ie the part that did not include servicing and repaying bank debt). It was thus not  “Lazy greeks” who were being bailed out  but the banks of Germany, France and Holland. However the ordinary people of Greece were now on the hook to pay back European taxpayers whose governments had made available taxpayer money so that European banks did not make a loss.

The austerity policies imposed in Greece have, in turn, produced a humanitarian crisis and a collapse in its national income. Unsurprisingly, a country whose national income has fallen by 25% is even less able to pay its taxes and its debts and a new political force has been elected to reject a policy direction that is both futile and creating massive distress.

One of the themes of my book is that of bias – economic textbooks claim that economists describe the world as it is rather than describing the world as it should be. There is a claim that economists are aware of the “fact” – “Value” distinction and that they stick to the facts rather than express their values.

Unfortunately, “bias” is not so easily banished as that. When you try to explain the world it involves a choice of where to look for explanations, as well as a choice of the directions and issues you do not to look at. In a political-economic crisis there are conflicts and thus at least two points of view. There are at least two ways of explaining things. Typically the two explanatory narratives have little in common and are about different things. What then happens is that people are pressured to take sides and exposed to arguments where protagonists reduce the complexity of the situation dramatically – this is particularly the case when the public relations industry and the popular press seek to simplify. Then it becomes “Lazy Greeks who will not pay their debts” versus “Greedy bullying Germans”.

If it is almost impossible to avoid “bias” one can at least be explicit about where one is coming from. What interests me, since economics is supposed to be about wellbeing, is the measurement of wellbeing through public health data. When we use public health data to look at the Greek situation what is immediately clear is that there is a “humanitarian crisis”. Instead of measuring wellbeing with a nebulous idea of “happiness” we can use instead use actual mental health data – with statistics for suicides and depression telling us what is going on in .

In this regard firstly, the prevalence of major depressive disorders in Greece has more than doubled from 2008 to 2011, with people facing serious economic problems being most at risk [2]

Secondly increasing numbers of people are killing themselves. A study published in the British Medical Journal tells us that:.

“In 30 years, the highest months of suicide in Greece occurred in 2012. The passage of new austerity measures in June 2011 marked the beginning of significant, abrupt and sustained increases in total suicides (+35.7%, p<0.001) and male suicides (+18.5%, p<0.01). Sensitivity analyses that figured in undercounting of suicides also found a significant, abrupt and sustained increase in June 2011 (+20.5%, p<0.001). Suicides by men in Greece also underwent a significant, abrupt and sustained increase in October 2008 when the Greek recession began (+13.1%, p<0.01), and an abrupt but temporary increase in April 2012 following a public suicide committed in response to austerity conditions (+29.7%, p<0.05). Suicides by women in Greece also underwent an abrupt and sustained increase in May 2011 following austerity-related events (+35.8%, p<0.05). One prosperity-related event, the January 2002 launch of the Euro in Greece, marked an abrupt but temporary decrease in male suicides (−27.1%, p<0.05).”[3]

So let’s be clear on that. Suicides went down when the euro was introduced and went up – not only when the recession started (suicide rates went up all over the world during the recession) but also particularly when the austerity policies were introduced.

In a recession all sorts of people suffer – including some of the rich. Austerity policy induced poverty is, however, particularly directed at those who are most vulnerable. It is those who are most vulnerable that are reliant on others and on the state, so their needs are downgraded. The attack on vulnerable people is to find the resources to save those who are “too big to fail” – particularly the banks.

Austerity policies are also an attack on ordinary people because austerity is not just about economic resources, it is also an exercise in social psychology. Austerity also has elements of scapegoating. In an economic crisis a society is undergoing an immense amount of anger, fear, tension and distress. This is dangerous for the elite that has taken the society into this crisis and the emotions from the crisis must be re-directed away from them. A lot of those negative feelings are thus directed downwards, on more vulnerable people in a process of emotional displacement – in a word in scapegoating.

We have seen similar things in the UK and many countries – groups like disabled people, migrants become targets for the hatred and distress generated as people seek to manage the practicalities of their lives and relationships under more difficult conditions. Powerful emotions are generated and people wonder “who is to blame?”. Governments keen to divert discontent away from themselves work with the media to fix on groups who cannot fight back.

In my book I also described the way in which particular groups of people are pre-disposed to see “the solution” to economic problems as being in pushing around more vulnerable people – “loyal bullies” I call them. Loyal bullies get a chance to persecute people through austerity policies which appear to be exercising greater control, for example over benefit “scroungers and cheats”. An explicit ideology emerges that sees the problems of society in a lack of discipline and cheating and finds the apparent solutions in bullying, bureaucratic harassment and forms of violence. It creates growing fascist tendencies among people, petty autocrats in state bureaucracies and in the police and armed forces. In Greece this has led to the development of groups like “Golden Dawn”.

It is thus no wonder in circumstances like this that mental health problems are on the rise.

Another indicator of the crisis in Greece has been a rising trend in infant mortality which increased by 43% between 2008 and 2012.

One of the main themes of my book is that those who bear the worst consequences of economic crises are rarely the people responsible for bringing that the crisis about. The most powerful people are protected by their wel- connectedness, their favoured client status and access to friends in high places – whether in political office at home (in Greece) and abroad (in international political and financial centres) . They can get themselves bailed out or protected. That’s why responses to economic crises are all about shifting burdens downwards onto more vulnerable people.

You could not get more dramatic evidence in the Greek case than rising infant mortality – obviously infants and children have no role in economic policy formation yet in increasing numbers they pay for austerity with their lives. “Sustainability”, of course, is supposed to be about the rights of future generations – but the evidence shows that the policies increase the chance of children dying before you reach adulthood. Of course most children do survive but when they try to enter the labour market in Greece young people have found that there are no jobs for them. In 2014 youth unemployment was averaging over 50%.

When the IMF and financial technocrats visit a country you can expect a number of things – income will fall, unemployment will rise and the local healthcare system will be attacked.[4]

As a matter of fact, as a proponent of degrowth I actually do see a need for economic contraction – but austerity has a number of features that make it very different from degrowth. Austerity is about attacking the poorest, the weakest and most vulnerable – as well as asset stripping publically owned assets by forcing privatisation on governments in crisis. In Degrowth it would be those who can afford to bear the cuts who would do so while attempts are made to help the most vulnerable cope with the economic contraction. However, this is difficult to achieve in today’s globalised world since, if governments take steps against the rich and well-connected, this elite group have a large number of ways to put their money out of reach.

At the same time as the crisis in Greece was back into the news it was being revealed how the HSBC bank had been helping rich people all over the world avoid tax by setting up swiss bank accounts to put their money in them. Places like the city of London and its associated network of tax havens are all about helping rich people put their money out of reach. That means that when the Greek ruling elite felt threatened they took their money abroad. The technical term is “capital flight”.

Just how huge the sums of money involved are can be seen graphically. A look at this graph reveals that in just a few months in 2010 capital flows out of Greece were roughly of 60% of the 2014 GDP while another 30% was taken out the country in 2011. In the last 5 months of 2014 money was again leaving the country at the rate of 12% of GDP.

If you want to balance a state budget then who exactly is it that has the pockets deep enough to pay taxes with? It is the people responsible for this kind of capital flight. It is that money, shifted out of the country, that needs to be targeted. Successive Greek governments had no intention of doing that – it would have involved taking action against their cronies. In any case they did not have an administrative machinery to do it with. This is what they lost when Greece joined the euro since there can be no exchange control between countries to prevent money moving from one part of the Eurozone to another. Successive governments squeezed ordinary people and the Greek welfare state instead – and were put under pressure to put publically owned assets for sale to global financiers at a knock down price.

The results of this are entirely predictable. When people are impoverished – in the case of Greece losing 25% of GDP – they are less able to pay their debts and their taxes, not more. The debt situation has spiralled out of control and a humanitarian crisis was created. However the next act in this drama has been the election of a government of outsiders who are not part of the crony circle – with a mandate to oppose austerity in order to end the humanitarian crisis.

What happens next?

One thing we can be sure about – neo-liberal politicians in the financial centres over the world want to see Syriza fail. If Syriza are successful they will inspire people throughout southern Europe and Ireland – not to mention any other government under the thumb of the IMF. They will also want to see Syriza fail because Syriza have only one option for reform – to clean up the old corrupt elite and tax where the resources really are. There are policies that could be deployed – like land valuation taxation which would be hard to evade. But policies have to be set up. Administrative machinery has to be created and corruption rooted out. This takes time – and the new Greek government does not have time. Money is being withdrawn from the banks and from the country. To prevent that requires capital controls that the government does not have access to under European union rules. The government will run out of money shortly – and again it cannot create money under European Union rules. The kind of action that the Greek government has to take will be opposed by financial and political elites the whole world over – a new generation of outsiders, who are not compromised and co-opted, is a genuine nightmare and they must be shown to fail.

That is why I find it difficult to believe that European politicians will give any leeway or support to Greece. If Greece were now to exit the Eurozone the process would be chaotic so if I were a politician in Greece I would be playing for time and doing what Argentinian local authorities did – paying the bills with low denomination IOUs which can effectively function as a currency alongside the Euro (Patacones).Then, if the eurozone authorities rule against the Greek government’s actions it would be the European authorities that have slung Greece out and, further, an alternative quasi currency would already be in circulation.

Greek exit from the eurozone would not be painless for the Greeks because it would probably mean a devaluation of the new currency of perhaps 40%. Imported goods would be 40% more expensive. However, the experience of other countries like Argentina is that a devaluation of this sort can lead to an economic recovery. This would give the Greek government time to start working on cleaning up the corruption of the old elite. The new generation could settle in to do their job properly.

In the rest of Europe this would set a number of processes running. It is being said that Grexit would not now lead to a financial crisis as the larger European banks and financiers are no longer so exposed and Greece is, after all, one of the smaller countries in Europe.

Perhaps – however they underestimated the impact of letting Lehman Brothers go bankrupt badly. Even if the financial repercussions are small – the political repercussions in other countries in a similar situation to Greece would be huge.

Endnotes

1.

http://www.taz.de/Neue-Regierung-in-Griechenland/!154307/

2. http://www.bmj.com/content/345/bmj.e7988/rr/694119
3. Branas et al “The impact of economic austerity and prosperity events on suicide in Greece: a 30-year interrupted time-series analysis” 2nd February 2015
http://bmjopen.bmj.com/content/5/1/e005619.full?sid=2cfe20f5-31b3-4ea5-9ca5-d85645fa4ecf
4. http://www.bmj.com/content/345/bmj.e7988/rr/694119

Featured image: money in sock. Source: http://www.freeimages.com/photo/1433053. Author: Uros Kotnik

Greek Souvlaki Kabuki Roller Coaster

logopodcastOff the microphone of RE

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Aired on the Doomstead Diner on February 11, 2015

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The Game Continues…

Snippet:

 

…Going into the weekend, the chairman of the Eurozone FinMins Jeroen DieselBOOM laid down the LAW with the Greeks, basically giving them about 10 days to either CAPITULATE or be thrown under the bus and pitched out of the Eurozone, though nobody is quite clear on how legal that is to do.

There was a decent amount of speculation in the aftermath of that that it would cause the Greeks to fold up their tent and come begging for more money, but the exact opposite occurred here, which is that by Sunday both Tspiras and Souvlakis were issuing out even MORE uncompromizing Tweets, basically threatening to bring down the entire Eurozone with them if they are flushed down the toilet.

The Clowns and Jokers in Brussel Sprouts have their Poker Face on, bluffing that the economic cascade from a Grexit can be “contained” and the rest of Europe will do just fine without Feta Cheese, so best of luck there fellas! LOL…

 

For the rest, LISTEN TO THE RANT!!!

 

In case you missed it, here is the last installment of Greek Kabuki…

Syriza Hits the Ground Running

Off the keyboard of John Ward

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Published on The Slog on January 26, 2015

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GREECE ANALYSIS: SYRIZA HITS GROUND RUNNING AS TSIPRAS BROKERS ANEL COALITION DEAL TO SEAL MAJORITY RULE

 Prime Minister Tsipras faces a cold dawn of Monday reality

In a rapid (and smart) move that demonstrates both energy and planning, Alexis Tsipras is this morning 95% of the way into a Coalition with ANEL – better known in the West as the Independent Greeks. This is an anti-euro Party of right-wing Greek nationalists.

In going for this option, Tsipras shows that – unlike most on the Left – he can unite against a common enemy. I also suspect that his advisers see this as one dimension in an overall strategy designed to calm down bank depositors and bond markets. But shrewd or not, the new Prime Minister is going to face several waves of attack from those hostile to his election – both inside and outside Greece.

The first thing to set off screaming headlines will be the effect on the euro. Overnight, the single currency plunged down to 1.12 against the Dollar – before the weekend it was around 1.15. We should expect to see a further weakening during the day.

A second and highly likely immediate threat is a spike in Greek bond yields – pushing Greece’s borrowing costs through the roof. This will add urgency to the blatant destabilising strategy of the ECB’s Mario Draghi, who for spurious reasons announced last Thursday that Greece would be locked out of the QE programme.

A third issue is the bank withdrawals that preceded Syriza’s stunning victory yesterday. Here too, threats have been forthcoming from both Brussels and Frankfurt to cut off ELA (emergency liquidity assistance) to four big banks in Greece.

Last but not least is the worryingly high poll achieved by the Greek Nazi Party, Golden Dawn – which now becomes the third largest Party in the country with 17 seats. They will, I have no doubt, use that bloc to disrupt as much Parliamentary business as possible…and plot with the hard Right to take over should things look to be spiralling out of control.

A weak euro is technically good for Greek exports, but Syriza will of course be blamed for “beating the euro to death on its sickbed” and the pro-Euro professional classes will weigh in heavily on that angle. So then, apart from Europe-wide opprobrium, soaring borrowing costs, the chance of a Putsch and imminent bank collapses, there’s nothing at all for the new Prime Minister to worry about.

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But there is also another side to this. My own hunch is that the Greek voter really did three things in the election: first, vote for a radical change of strategy; two, kick Samaras out with the biggest boot available; and three, decide to give the new generation a chance. I looked up Tsipras’s date of birth last night, and he is of course the leader of that generation who never knew life under the Colonels’ Junta. He is also surrounded by people with zero respect for tradition: Varoufakis has already promised to “completely demolish the Greek oligarchy” as a matter of priority. Corruption in high places has been a Greek given forever; rooting it out would get approval from all but the fatties who support Samaras.

Secondly, the Greeks ignored all the EC/ECB/IMF/Juncker/Schäuble veiled threats and scaremongering. That bullying will now, without any doubt, be stepped up. I predict it will backfire, and further unite the country. Because in the light of the previous paragraph, it will play very badly against the prevailing atmosphere of ‘give them a chance’ and Troika-hatred.

I have made my view clear about Draghi: he has already decided for his own reasons to Grexit Athens from the equation: he’ll be delighted to get the euro down to Dollar parity, and supremely confident in his ability to mess up any plans Syriza have. I expressed the view strongly early last year that Tspiras should never have dropped his opposition to the euro, but it now looks to have been a wise idea: without doing that, he would never have been elected with such power – and with it he can (quite justifiably) evade blame for its collapse…he can play the Good European.

It’s too early to call this kind of stuff. But it’s good to know where the touchlines are. All we need to do now is find the ball.

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As for the poppycock streaming nonstop from Brussels-am-Berlin about the ‘zero effect’ Syriza’s success and Grexit is having or might have on the euro – indeed, the EU itself – it is beneath contempt. It will spike ALL Clubmed bond prices, keep liquidity away from Europe, confirm the europhobia in Italy, and encourage the growing Left support in Spain…where they have the added problem of Sovereign fragmentation.

In other areas too, the knock-on effect will have geopolitical consequences. Moscow will I’m sure see this development (and what must inevitably follow) as likely to move Greece more into its orbit: and you can be sure that Viktor Orban in Hungary (and Polish voters) will welcome further opposition to the juggernaut. Orban is one of the few, I think, who has not only grasped that the Brussels Bus is actually being driven by Washington, but is also prepared to talk about it openly.

In the UK, it can only spur on the UKip camp. But Nigel Farage blotted his copybook very badly last night by referring to the Syriza win as “a cry for help”. What a profoundly pompous and patronising twerp he is.

Brussels Imperial Insanity

Off the keyboard of John Ward

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Published on The Slog on October 7, 2014

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ANALYSIS: HOW THE BRUSSELS IMPERIAL INSANITY COULD KILL THE FRENCH ECONOMY, AND LET IN LePEN

https://hat4uk.files.wordpress.com/2014/10/2waystreet.pngWhen the Unhinged Empire headed east, it forgot that life is a two-way street

In what seems to most people of my generation a terrifyingly rapid process, the EEC has gone from being an economic community to a political free-trade bloc and then a hopelessly botched attempt at currency and fiscal federalism. After 1990(ish) however, the EU lost its mind…and borrowed others belonging to idiots – based in Brussels, but increasingly genuflecting towards Berlin. The Belgian Rome has since morphed into the an expansionist EU…aka Empire of the Unhinged.

The degree of marble-loss became really clear when the van Rompuys and Barrosos began gaily talking of recruiting from the Arab Spring, via the introduction of Turkey into the EU. But long before that, the collapse of the USSR gave the Eunatics (prodded from behind by Washington) the chance to annexe twelve former Soviet satellites: these were Finland (1995), the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia (2004), Bulgaria, Romania (2007), and latterly Croatia (2013). They effectively whipped 11 satellites from under the Russian bear’s twitching nose in nine years.

This was about geopolitics, not sound fiscal economics and gradual organic growth. In one year – 2004 – the Euronauts added eight new East European members. One might more exactly say that this was egopolitics. And although myriad other factors were at play (of equal malignancy on both sides of the conflict) it inevitably set up and exacerbated the Ukrainian crisis.

As the egopolitics of Brussels-am-Berlin were lubricated by Washington’s energy obsessions in these early years of the new millennium, I doubt whether anyone thought much about the third dimension being added to the cage these clowns had built for themselves. Not only had they corruptly allowed far too many countries into the eurozone – and thus created the makings of a brittle, inflexible currency – they now admitted former Communist countries to EU membership: countries where the nature of living standards and marketing expertise were in almost every case several divisions below those of Western Europe. Further, they inherited a surprising number of former soviet functionaries whose only motivation was the continuation of life in a feather bed. Overnight, the Zil drivers became, variously, trade emissaries, eurofanatics and lickers merely of a Brusslin arse – as opposed to the rather more ample one in Moscow. (The ease with which these leaches made the transition says a great deal about the true nature of the EU).

But the killer effect has been the speed, vigour and commercial acumen with which the poorer central and Eastern novices grabbed the opportunity offered by free movement of labour…and the increasingly obvious advantage of not being in the euro.

As early as 2008, the world economic trade institute was writing about ‘rapidly growing [Polish] exports to western Europe’ and adding – significantly – “income disparities and rapid adoption of high-technology in Poland offer enormous opportunities for growth”. In fact, six years on, the growth centres in Warsaw, Poznan and Wroclaw – spreading to Cracow – are making huge continental share gains against Western countries in several key basic industrial sectors – multiple retailing, metal, wood, stone, plastics, decor, automotive software…and the poorer areas to the east received €2.3 billion from the EU’s structural and cohesion fund Between 2007 and 2013. For along with growth, Poland’s parallel problem has been chronic agrarian unemployment.

Brussels has handed three things to the Poles on a plate: market access minus import duty, freedom of labour movement plus welfare, and investment in the economic infrastructure. As a result, In Q1 2014, the Polish economy grew by 3.4% – and is expected to grow by 3.4% in 2014, 3.7% in 2015 and 3.9% in 2016. Since 2011, Polish exports have doubled. It is now the 6th largest economy in the Union.

In Germany, competing with those advantages is meat and drink: in France, Italy and Portugal, it isn’t. Poland’s young workforce and growing entrepreneurial class are today supplying anyone in the West who wants it with better made, cheaper, and far more reliably delivered materials….and labour that costs half the French equivalent with almost twice the productivity.

Far from blaming the former centro-eastern Soviet satellites for grabbing this opportunity, I salute them. But for those supposedly in charge of ‘running’ an EU already in need of reform, creating higher costs alongside tough margin competition before that reform had been undertaken was a crass, uncommercial and disastrous decision taken on the basis of dick size rather than left brain.

For most Western EU members, the Eastern imperial ambitions of Brussels have thus been the equivalent of taking poison with one hand and giving money away with the other.

While it is smaller and has further to climb as yet, the economic situation in Hungary is if anything even more dynamic. It has a debt/gdp ratio of 80% – which is too short term in some structural elements, but well below most Western competitors. In turn, it has the florint rising against the euro, and thus offering potential to cut that sovereign debt. And its controversial but hugely popular leader Viktor Orbán has kept the euro-sellers, IMF leaches and Banker-prodded globalists at bay.

Everything is a trade-off between competiveness and debt these days, but the Hungarian leader both knows his mind and is good at reducing his strategies to easy-to-grasp populism. Speaking last Saturday in Székesfehérvár, 60 kilometres west of Budapest, Orbán  said that the coming development period will be an era of giving Hungarian businesses with the will to expand “colossal new opportunities”. Expressing as usual his preference for local nationalism over global colonialism, he added that he expects “Hungarian businesses to grow stronger, expand, innovate and help make the create the five million jobs Hungary needs”.

Orbán thinks that Hungary’s economy will be safe from “the coming global cataclysm” if Hungary’s companies have sufficient local business power to keep the economy running. Either way, there have been some notable successes: in 2013,, economic trends developed even better than expected: budget deficits levelled off at under 3% of GDP, public debt was reduced, and in the third quarter of 2013, Hungary’s economy grew 1.8%, rising to  around 2.5% by the year end.

It has the same three advantages that Poland enjoys: an expansion of manufacturing (by 10% YOY), employees prepared to work better, harder and cheaper than the West, and a currency not tainted by the euro.

It will come as no surprise to most better-informed observers that Brussels is working very hard to destabilise the Orbán regime because it doesn’t kiss ass – and succeeds where they have failed. It has a successful mining sector, and rapidly growing exports in metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), and cars. Again, all these are of higher quality and at lower prices than those on offer in the Western EU.

French difficulties in particular have been increased massively by imperial EU expansion. What an irony it would be if Marine LePen rides to victory in the Presidential elections by blaming the country’s ills on foreign workers and EU membership. It suits her book perfectly, and the case is easy to make. Once more, the EU’s greed will have spawned a lurch to the intolerant Right. Plus ca change, and all that.

 

The fall of a superpower

Off the keyboard of Pepe Escobar

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THE ROVING EYE

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Originally published in Asia Times on July 11, 2014
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SAO PAULO – I know; Israel bombing civilians in Gaza, Kiev bombing civilians in eastern Ukraine, the Caliph running amok in the Middle East, The Empire of Chaos playing trickster. But let me get something out of my chest first. 

I was saving this picture for the right moment. Which is now. Meet a classic tropical paradise – as in Santo Andre, in Bahia, close to the spot where Brazil was “discovered” by the Portuguese in 1500. The Mannschaft training camp is right behind those trees on the left. I was there at the start of the World Cup; my gracious host Anna Mariani owns a fabulous beach house right next to it.

The German camp – actually a beach condo – was secluded and customized to perfection. Yet the players interacted with the small village nearby, visited a local school, fraternized with Pataxo Indians, went for morning beach walks. And trained very, very hard; discipline, commitment, work ethic – while loving every minute of their side of paradise and imbibing rituals of Brazilian culture. This is where the already famous/infamous 7-1 evisceration of Brazil really started. 

The Brazilian national team, meanwhile, was starring a (literal) tearjerker psychodrama convulsing 200 million people. It was like an abysmal telenovela – bearing no hard work or discipline; just bling bling (look at my new haircut!) coupled with a smug sense of entitlement. In the end they should win because after all, runs the top national myth, “God is Brazilian”. 

Now for a globalization parable. Way before the Cup, Brazil – once a mighty footballing superpower – had been reduced, by concentric levels of mismanagement, to a minor role of commodity exporter (as in talented players). There had been no thought of investing in the future; all that mattered was profitable TV rights privileging a media racket. Germany, on the other hand, since they lost the 2002 World Cup (to Brazil …) invested in a vast network of football schools, part of a national system of nurturing talent, educating them, and preparing coaches as well. 



Three hours before the start of the 7-1 humiliation, I was asked at my barbershop about the match result. I shot back “Germany 4-0”. Everyone was stunned. Well, I flew in from Asia and then Europe to follow the World Cup in Brazil as if I was covering a war; what I initially suspected was confirmed as the psychodrama started to unroll/unravel. 

All signs pointed to a bunch of psychologically unstable young Brazilian millionaires ready to spectacularly implode – as they had threatened to while playing Chile and then Colombia. It finally happened in the space of only six minutes when Germany scored 4 goals – and at the 29th minute the Europeans were already leading by 5-0. 

Surprise? Not really. Brazil has ceased to play jogo bonito (the beautiful game) a long time ago, after that fabulous 1970 side and then the best side that never won anything, in 1982. Since the 1990s, Brazil as the home of jogo bonito was just another myth – an elaborate marketing trick (with a Nike hand). And all the way, Brazilians loved to fool themselves, draped in a perennially cheap “We Are the Champions” brand of nationalism. 

Until hubris prevailed. It took Germany to reclaim the real jogo bonito, with their scintillating passes, top finishing and triangulation flair worthy of the Chicago Bulls in their heyday. 

The Brazilian team turned into a nervous wreck first of all for tactical/technical reasons; this was a team with no midfield playing against the best midfield on the planet. Blame it on their handlers, the Brazilian football federation and the “technical commission” they appointed; a talentless, arrogant/ignorant lowly bunch that mirrors, crystal clear, the arrogance/ignorance of Brazilian political/economic elites, old and new. As much as Brazilian police, quite ironically, dismantled a FIFA corporate ticket black market racket in Rio of all places (Scotland Yard couldn’t do it), it missed another racket – a spin-off at the shadowy corridors of Brazilian football. 

The technical commission, in their post-traumatic press conference, the same day Argentina and Holland played like grown ups for an interminable 120 minutes to 0-0 (then solved it on penalties), reminded me of the Pentagon dismissing Abu Ghraib: “Oh, that was just a freak accident.” No, it was not. The Brazilian cowards in charge simply could not admit the “blackout” was systemic. 

There will be endless political reverberations about this 7-1 thrashing. It goes way beyond the (white) Brazilian moneyed crowd who could afford to buy FIFA’s tickets while despising President Dilma Rousseff’s spending on social welfare. It certainly has to do with the handsome profit of FIFA’s own funfest (US$4 billion, tax-free) supplied by the locals, as well as the overall bill (a staggering $13.6 billion). Compare it to the pitiful investments in education, public services, “urban mobility”, still appalling infrastructure – while no-holds-barred corruption reigns supreme. 

The biggest global sport humiliation in living memory is directly related to the trademark Brazilian elites’ ignorance/arrogance syndrome (and sense of entitlement). At the same time, you cannot aspire to become a BRICS “superpower” when your self-identity is constructed around a sport – football – debased by crooks. 

The gods of football have mercifully declared the 200 million-strong psychodrama over. Still I really feel sad for the losers – the overwhelming majority of these 200 million supporters, honest and hardworking people for whom football is a meager relief from their pain and struggle; they have been taken for a ride, and consistently lied to. 

Brazil may still enjoy an unlimited stock of soft power across the world, but it must get its corrupt/inefficient act together. If football is to remain the only element that keeps this aspiring superpower glued, better think hard, understand where the humiliation came from, get rid of all those self-important bums, show some humility and work very hard. Learn from the German sports model – one that certainly does not have to do with EU austerity. And then you will be back in paradise. 

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

Retail Death Rattle Grows Louder

Off the keyboard of Jim Quinn

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Published on The Burning Platform on May 25, 2014

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The definition of death rattle is a sound often produced by someone who is near death when fluids such as saliva and bronchial secretions accumulate in the throat and upper chest. The person can’t swallow and emits a deepening wheezing sound as they gasp for breath. This can go on for two or three days before death relieves them of their misery. The American retail industry is emitting an unmistakable wheezing sound as a long slow painful death approaches.

It was exactly four months ago when I wrote THE RETAIL DEATH RATTLE. Here are a few terse anecdotes from that article:

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end.

Retail store results for the 1st quarter of 2014 have been rolling in over the last week. It seems the hideous government reported retail sales results over the last six months are being confirmed by the dying bricks and mortar mega-chains. In case you missed the corporate mainstream media not reporting the facts and doing their usual positive spin, here are the absolutely dreadful headlines:

Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%

Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%

Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%

JC Penney Thrilled With Loss of Only $358 Million For the Quarter

Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%

Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%

Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores

Gap Income Drops 22% as Same Store Sales Fall

American Eagle Profits Tumble 86%, Will Close 150 Stores

Aeropostale Losses $77 Million as Sales Collapse by 12%

Best Buy Sales Decline by $300 Million as Margins Decline and Comparable Store Sales Decline by 1.3%

Macy’s Profit Flat as Comparable Store Sales decline by 1.4%

Dollar General Profit Plummets by 40% as Comp Store Sales Decline by 3.8%

Urban Outfitters Earnings Collapse by 20% as Sales Stagnate

McDonalds Earnings Fall by $66 Million as US Comp Sales Fall by 1.7%

Darden Profit Collapses by 30% as Same Restaurant Sales Plunge by 5.6% and Company Selling Red Lobster

TJX Misses Earnings Expectations as Sales & Earnings Flat

Dick’s Misses Earnings Expectations as Golf Store Sales Plummet

Home Depot Misses Earnings Expectations as Customer Traffic Only Rises by 2.2%

Lowes Misses Earnings Expectations as Customer Traffic was Flat

Of course, those headlines were never reported. I went to each earnings report and gathered the info that should have been reported by the CNBC bimbos and hacks. Anything you heard surely had a Wall Street spin attached, like the standard BETTER THAN EXPECTED. I love that one. At the start of the quarter the Wall Street shysters post earnings expectations. As the quarter progresses, the company whispers the bad news to Wall Street and the earnings expectations are lowered. Then the company beats the lowered earnings expectation by a penny and the Wall Street scum hail it as a great achievement.  The muppets must be sacrificed to sustain the Wall Street bonus pool. Wall Street investment bank geniuses rated JC Penney a buy from $85 per share in 2007 all the way down to $5 a share in 2013. No more needs to be said about Wall Street “analysis”.

It seems even the lowered expectation scam hasn’t worked this time. U.S. retailer profits have missed lowered expectations by the most in 13 years. They generally “beat” expectations by 3% when the game is being played properly. They’ve missed expectations in the 1st quarter by 3.2%, the worst miss since the fourth quarter of 2000. If my memory serves me right, I believe the economy entered recession shortly thereafter. The brilliant Ivy League trained Wall Street MBAs, earning high six digit salaries on Wall Street, predicted a 13% increase in retailer profits for the first quarter. A monkey with a magic 8 ball could do a better job than these Wall Street big swinging dicks.

The highly compensated flunkies who sit in the corner CEO office of the mega-retail chains trotted out the usual drivel about cold and snowy winter weather and looking forward to tremendous success over the remainder of the year. How do these excuse machine CEO’s explain the success of many high end retailers during the first quarter? Doesn’t weather impact stores that cater to the .01%? The continued unrelenting decline in profits of retailers, dependent upon the working class, couldn’t have anything to do with this chart? It seems only the oligarchs have made much progress over the last four decades.

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Retail CEO gurus all think they have a master plan to revive sales. I’ll let you in on a secret. They don’t really have a plan. They have no idea why they experienced tremendous success from 2000 through 2007, and why their businesses have not revived since the 2008 financial collapse. Retail CEOs are not the sharpest tools in the shed. They were born on third base and thought they hit a triple. Now they are stranded there, with no hope of getting home. They should be figuring out how to position themselves for the multi-year contraction in sales, but their egos and hubris will keep them from taking the actions necessary to keep their companies afloat in the next decade. Bankruptcy awaits. The front line workers will be shit canned and the CEO will get a golden parachute. It’s the American way.

The secret to retail success before 2007 was: create or copy a successful concept; get Wall Street financing and go public ASAP; source all your inventory from Far East slave labor factories; hire thousands of minimum wage level workers to process transactions; build hundreds of new stores every year to cover up the fact the existing stores had deteriorating performance; convince millions of gullible dupes to buy cheap Chinese shit they didn’t need with money they didn’t have; and pretend this didn’t solely rely upon cheap easy debt pumped into the veins of American consumers by the Federal Reserve and their Wall Street bank owners. The financial crisis in 2008 revealed everyone was swimming naked, when the tide of easy credit subsided.

The pundits, politicians and delusional retail CEOs continue to await the revival of retail sales as if reality doesn’t exist. The 1 million retail stores, 109,000 shopping centers, and nearly 15 billion square feet of retail space for an aging, increasingly impoverished, and savings poor populace might be a tad too much and will require a slight downsizing – say 3 or 4 billion square feet. Considering the debt fueled frenzy from 2000 through 2008 added 2.7 billion square feet to our suburban sprawl concrete landscape, a divestiture of that foolish investment will be the floor. If you think there are a lot of SPACE AVAILABLE signs dotting the countryside, you ain’t seen nothing yet. The mega-chains have already halted all expansion. That was the first step. The weaker players like Radio Shack, Sears, Family Dollar, Coldwater Creek, Staples, Barnes & Noble, Blockbuster and dozens of others are already closing stores by the hundreds. Thousands more will follow.

This isn’t some doom and gloom prediction based on nothing but my opinion. This is the inevitable result of demographic certainties, unequivocal data, and the consequences of a retailer herd mentality and lemming like behavior of consumers. The open and shut case for further shuttering of 3 to 4 billion square feet of retail is as follows:

  • There is 47 square feet of retail space per person in America. This is 8 times as much as any other country on earth. This is up from 38 square feet in 2005; 30 square feet in 2000; 19 square feet in 1990; and 4 square feet in 1960. If we just revert to 2005 levels, 3 billion square feet would need to go dark. Does that sound outrageous?

  • Annual consumer expenditures by those over 65 years old drop by 40% from their highest spending years from 45 to 54 years old. The number of Americans turning 65 will increase by 10,000 per day for the next 16 years. There were 35 million Americans over 65 in 2000, accounting for 12% of the total population. By 2030 there will be 70 million Americans over 65, accounting for 20% of the total population. Do you think that bodes well for retailers?

  • Half of Americans between the ages of 50 and 64 have no retirement savings. The other half has accumulated $52,000 or less. It seems the debt financed consumer product orgy of the last two decades has left most people nearly penniless. More than 50% of workers aged 25 to 44 report they have less than $10,000 of total savings.

  • The lack of retirement and general savings is reflected in the historically low personal savings rate of a miniscule 3.8%. Before the materialistic frenzy of the last couple decades, rational Americans used to save 10% or more of their personal income. With virtually no savings as they approach their retirement years and an already extremely low savings rate, do retail CEOs really see a spending revival on the horizon?

  • If you thought the savings rate was so low because consumers are flush with cash and so optimistic about their job prospects they are unconcerned about the need to save for a rainy day, you would be wrong. It has been raining for the last 14 years. Real median household income is 7.5% lower today than it was in 2001. Retailers added 2.7 billion square feet of retail space as real household income fell. Sounds rational.

  • This decline in household income may have something to do with the labor participation rate plummeting to the lowest level since 1978. There are 247.4 million working age Americans and only 145.7 million of them employed (19 million part-time; 9 million self-employed; 20 million employed by the government). There are 92 million Americans, who according to the government have willingly left the workforce, up by 13.3 million since 2007 when over 146 million Americans were employed. You’d have to be a brainless twit to believe the unemployment rate is really 6.3% today. Retail sales would be booming if the unemployment rate was really that low.

  • With a 16.5% increase in working age Americans since 2000 and only a 6.5% increase in employed Americans, along with declining real household income, an inquisitive person might wonder how retail sales were able to grow from $3.3 trillion in 2000 to $5.1 trillion in 2013 – a 55% increase. You need to look no further than your friendly Too Big To Trust Wall Street banks for the answer. In the olden days of the 1970s and early 1980s Americans put 10% to 20% down to buy a house and then systematically built up equity by making their monthly payments. The Ivy League financial engineers created “exotic” (toxic) mortgage products requiring no money down, no principal payments, and no proof you could make a payment, in their control fraud scheme to fleece the American sheeple. Their propaganda machine convinced millions more to use their homes as an ATM, because home prices never drop. Just ask Ben Bernanke. Even after the Bernanke/Blackrock fake housing recovery (actual mortgage originations now at 1978 levels) household real estate percent equity is barely above 50%, well below the 70% levels before the Wall Street induced debt debacle. With the housing market about to head south again, the home equity ATM will have an Out of Order sign on it.

  • We hear the endless drivel from disingenuous Keynesian nitwits about government and consumer austerity being the cause of our stagnating economy. My definition of austerity would be an actual reduction in spending and debt accumulation. It seems during this time of austerity total credit market debt has RISEN from $53.5 trillion in 2009 to $59 trillion today. Not exactly austere, as the Federal government adds $2.2 billion PER DAY to the national debt, saddling future generations with the bill for our inability to confront reality. The American consumer has not retrenched, as the CNBC bimbos and bozos would have you believe. Consumer credit reached an all-time high of $3.14 trillion in March, up from $2.52 trillion in 2010. That doesn’t sound too austere to me. Of course, this increase is solely due to Obamanomics and Bernanke’s $3 trillion gift to his Wall Street owners. The doling out of $645 billion to subprime college “students” and subprime auto “buyers” since 2010 accounts for more than 100% of the increase. The losses on these asinine loans will be epic. Credit card debt has actually fallen as people realize it is their last lifeline. They are using credit cards to pay income taxes, real estate taxes, higher energy costs, higher food costs, and the other necessities of life.

The entire engineered “recovery” since 2009 has been nothing but a Federal Reserve/U.S. Treasury conceived, debt manufactured scam. These highly educated lackeys for the establishment have been tasked with keeping the U.S. Titanic afloat until the oligarchs can safely depart on the lifeboats with all the ship’s jewels safely stowed in their pockets. There has been no housing recovery. There has been no jobs recovery. There has been no auto sales recovery. Giving a vehicle to someone with a 580 credit score with a 0% seven year loan is not a sale. It’s a repossession in waiting. The government supplied student loans are going to functional illiterates who are majoring in texting, facebooking and twittering. Do you think these indebted University of Phoenix dropouts living in their parents’ basements are going to spur a housing and retail sales recovery? This Keynesian “solution” was designed to produce the appearance of recovery, convince the masses to resume their debt based consumption, and add more treasure into the vaults of the Wall Street banks.

The master plan has failed miserably in reviving the economy. Savings, capital investment, and debt reduction are the necessary ingredients for a sustained healthy economic system. Debt based personal consumption of cheap foreign produced baubles & gadgets, $1 trillion government deficits to sustain the warfare/welfare state, along with a corrupt political and rigged financial system are the explosive concoction which will blow our economic system sky high. Facts can be ignored. Media propaganda can convince the willfully ignorant to remain so. The Federal Reserve can buy every Treasury bond issued to fund an out of control government. But eventually reality will shatter the delusions of millions as the debt based Ponzi scheme will run out of dupes and collapse in a flaming heap.

The inevitable shuttering of at least 3 billion square feet of retail space is a certainty. The aging demographics of the U.S. population, dire economic situation of both young and old, and sheer lunacy of the retail expansion since 2000, guarantee a future of ghost malls, decaying weed infested empty parking lots, retailer bankruptcies, real estate developer bankruptcies, massive loan losses for the banking industry, and the loss of millions of retail jobs. Since I always look for a silver lining in a black cloud, I predict a bright future for the SPACE AVAILABLE and GOING OUT OF BUSINESS sign making companies.

Let’s You and Him Fight

Off the keyboard of James Howard Kunstler

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Originally Published on Clusterfuck Nation  March 3, 2014
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     So, now we are threatening to start World War Three because Russia is trying to control the chaos in a failed state on its border — a state that our own government spooks provoked into failure? The last time I checked, there was a list of countries that the USA had sent troops, armed ships, and aircraft into recently, and for reasons similar to Russia’s in Crimea: the former Yugoslavia, Somalia, Afghanistan, Iraq, Libya, none of them even anywhere close to American soil. I don’t remember Russia threatening confrontations with the USA over these adventures.

     The phones at the White House and the congressional offices ought to be ringing off the hook with angry US citizens objecting to the posturing of our elected officials. There ought to be crowds with bobbing placards in Farragut Square reminding the occupant of 1400 Pennsylvania Avenue how ridiculous this makes us look.

     The saber-rattlers at The New York Times were sounding like the promoters of a World Wrestling Federation stunt Monday morning when they said in a Page One story:

“The Russian occupation of Crimea has challenged Mr. Obama as has no other international crisis, and at its heart, the advice seemed to pose the same question: Is Mr. Obama tough enough to take on the former K.G.B. colonel in the Kremlin?”

     Are they out of their chicken-hawk minds over there? It sounds like a ploy out of the old Eric Berne playbook: Let’s You and Him Fight. What the USA and its European factotums ought to do is mind their own business and stop issuing idle threats. They set the scene for the Ukrainian melt-down by trying to tilt the government their way, financing a pro-Euroland revolt, only to see their sponsored proxy dissidents give way to a claque of armed neo-Nazis, whose first official act was to outlaw the use of the Russian language in a country with millions of long-established Russian-speakers. This is apart, of course, from the fact Ukraine had been until very recently a province of Russia’s former Soviet empire.

     Secretary of State John Kerry — a haircut in search of a brain — is winging to Kiev tomorrow to pretend that the USA has a direct interest in what happens there. Since US behavior is so patently hypocritical, it raises the pretty basic question: what are our motives? I don’t think they amount to anything more than international grandstanding — based on the delusion that we have the power and the right to control everything on the planet, which is based, in turn, on our current mood of extreme insecurity as our own ongoing spate of bad choices sets the table for a banquet of consequences.

     America can’t even manage its own affairs. We ignore our own gathering energy crisis, telling ourselves the fairy tale that shale oil will allow us to keep driving to WalMart forever. We paper over all of our financial degeneracy and wink at financial criminals. Our infrastructure is falling apart. We’re constructing an edifice of surveillance and social control that would make the late Dr. Joseph Goebbels turn green in his grave with envy while we squander our dwindling political capital on stupid gender confusion battles.

     The Russians, on the other hand, have every right to protect their interests along their own border, to protect the persons and property of Russian-speaking Ukrainians who, not long ago, were citizens of a greater Russia, to discourage neo-Nazi activity in their back-yard, and most of all to try to stabilize a region that has little history and experience with independence. They also have to contend with the bankruptcy of Ukraine, which may be the principal cause of its current crack-up. Ukraine is deep in hock to Russia, but also to a network of Western banks, and it remains to be seen whether the failure of these linked obligations will lead to contagion throughout the global financial system. It only takes one additional falling snowflake to push a snow-field into criticality.

     Welcome to the era of failed states. We’ve already seen plenty of action around the world and we’re going to see more as resource and capital scarcities drive down standards of living and lower the trust horizon. The world is not going in the direction that Tom Friedman and the globalists thought. Anything organized at the giant scale is now in trouble, nation-states in particular.  The USA is not immune to this trend, whatever we imagine about ourselves for now. 

 

 

***

James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

 

 

Disintegration

Off the keyboard of Steve from Virginia

Posted on Economic Undertow on September 22,2012

Discuss this article at the Epicurean Delights Smorgasbord inside the Diner



The economic crisis in Europe and elsewhere deepens, political systems are unable to respond, conditions are rapidly spiraling out of control.

 

 

In English, this remark from the Chinese social networking site, Weibo:

 

beijingwanbao: We can adapt as times change. If the foreign devils haven’t said the U.S. army won’t get involved, what are we doing tying up our own hands and feet? If we don’t even have this measure of resolve, we’ll just be blackmailed. //@tracelesstraveler: China affirms it would not use nuclear weapons first. //@beijingwanbao: “Starting a Sino-Japanese War: Comparing Weaponry in Pictures” http://t.cn/zWsiGrC (via @milnews) Why waste energy? Skip to the main course and drop an atomic bomb. Simple.Reposts: 2082 Comments: 974

 

Beijing Wanbao is a Chinese capital city news broadcaster. The frenzy is about the purchase of the Senkaku Islands, a couple of uninhabitable islands by the Japanese government from their private owners last week. These islands are located near Formosa.

 

Around 1900, Japanese entrepreneur Koga Tatsushirō constructed a bonito processing plant on the islands with 200 workers. The business failed in 1940 and the islands have remained deserted ever since.

 

Back then, nobody cared …

 

The islands came under US government occupation in 1945 after the surrender of Japan ended World War II. In 1969, the United Nations Economic Commission for Asia and the Far East (ECAFE) identified potential oil and gas reserves in the vicinity of the Senkaku Islands.

 

The xenophobic, paranoid hyper-nationalism of the Chinese is never far from the surface, the smallest scratch brings it to the surface:

More Weibo: the sign says, “Even if China becomes nothing but tombstones, we must exterminate the Japanese; even if we have to destroy our own country, we must take back the Diaoyu Islands.”

Kill humans so that there might be cars!

It’s not just about the oil, it’s about the denial about the oil: the banner is posted in front of an Audi automobile dealership by employees. Without the presumed gusher of fuel from Diaoyu-Senkaku Islands, cars are a hard-sell. The Chinese fanatics defend both their pocketbook interests and their new-found adoration of the sports sedan. The Chinese are late to the party and they know it: the furious desperation with which they grasp their last, best chance is indicative. They will have their wasteful moment in the sun and they will blow up anything and everything that stands in their way.

Like Americans, the Chinese have bet the rent money on endless supremacy of the automobile over all other things into the far distant future. Cognitive dissonance: what the banner holders don’t grasp is their cars devour the fuel supply that they themselves are willing to kill and die for. Each Chinese dies twice, once to gain oil concessions then again when their pet cars burn up the fuel supply. At the end of the day, the Chinese have nothing to show for their human sacrifices other than some used cars … and massive debts that cannot be repaid.

All of this and violent anti-Japanese riots on top of threats by the Chinese establishment to bankrupt Japan by dumping its collection of Japanese IOU’s on the market at once.

Clearly the American Way loses something in the translation to Chinese. Cars cease being ‘fun’ when they become instrumental to mass destruction.

China’s fury is misdirected: the Japanese are flat broke, depending upon the Bank of Japan to keep the debt collectors at bay for one more day (Ambrose Evans-Pritchard):

 

The Bank of Japan is to buy a further 10 trillion yen (US$130bn) of bonds, bringing the total accumulated so far in its battle against deflation to 80 trillion yen, or 20pc of Japanese GDP.Jun Azumi, Japan’s finance minister, praised the bank’s “bold” efforts to hold down the yen, lending credence to suspicions that the real motive is to counter “beggar-thy-neighbour” currency devaluations by other powers and prevent the strong yen choking Japan’s export industry.Yunosuke Ikeda, from Nomura, said the Bank of Japan had yielded to “immense political pressure” after months of criticism.

 

Japan seeks to protect its own precious automobile industry, the central bank jumps on the quantitative easing bandwagon in an attempt to keep the status quo intact. The fact of mass, coordinated QE speaks for itself. Meanwhile, the crisis in Europe takes a political turn (Ambrose Evans-Pritchard):

 

Spain risks break-up as Mariano Rajoy stirs Catalan fury.

The ruling parties of Catalonia have sought guidance from Brussels on the legality of secession from Spain, requesting a “route map” for membership of the European Union and the euro as an independent state.

Jose-Manuel Garcia-Margallo, the (Spanish) foreign minister, threw down the gauntlet, calling Catalan secession “illegal and lethal”. He warned that Spain would use its veto to stop the region of Catalonia becoming an EU member “indefinitely”.

Catalan leader Artur Mas held high-stakes talks with Mr Rajoy in Madrid on Thursday, armed with a mandate from the Catalan parliament and with charged emotions left from an unprecedented protest by 1.5m people in Barcelona 10 days ago.

He demanded an independent treasury for the rich Catalan region, with control over its own tax base akin to the model already enjoyed by Basques. The 9m Catalans have an economy the size of Austria’s.

[ … ]

A serving army officer, Colonel Francisco Alaman, has fueled the flames by comparing the crisis with 1936 – when Gen Francisco Franco seized power – and by vowing to crush Catalan nationalists, described as “vultures”.

“Independence for Catalunya? Over my dead body. Spain is not Yugoslavia or Belgium. Even if the lion is sleeping, don’t provoke the lion, because he will show the ferocity proven over centuries,” he said.

Retired Lt-Gen Pedro Pitarch, a former army chief, said the words reflect “deeply-rooted thinking in large parts of the armed forces”. He also accused Madrid of bungling the Catalan drama disastrously.

“Are we looking at a failed state?” he asked. Investors holding Spanish debt are listening carefully.

 

There are disputes, violence and disturbances relating to oil and other resources in the Arctic, in northern, eastern, southern and western Africa, out and out war in the Middle East, in the Eastern Mediterranean littoral, the Persian Gulf in both Iran and Bahrain, in South Asia, as well as political gridlock in Europe, Japan and the United States. Every day the world steps closer to the precipice. As the economic tools prove to be useless to stem decline what remains are military tools, the means to simply steal from others. The imperial West has resorted to these tools already, to kill all of us so that (presumably) all of us might drive.

All of the above is more Peak Oil denial, like the ‘Central Bank Printing Money’ meme. The gist of the militarist argument is that stealing resources is a permanent solution to resource constraints, that the resources are available to steal, that they will be better employed by the thief.

China, Japan, Spain and the rest are bankrupted by their unaffordable automobiles. None of these countries can pay for their past consumption of non-renewable resources. They have borrowed in the past and seek to borrow now, to pay for the resources and to retire older debts.

Meanwhile, the same countries have nothing worthwhile to offer as payment for the resources they need tomorrow … or for the generations to come. They consume the means with which to pay. They offer up comic-book drek … of a careless future the outlines of which are becoming more clear. In the place of a fanciful futurama of robot kitchens and flying cars, there is a continual unraveling accompanied by denial of the same unraveling, a collective inability to respond appropriately leading to system breakdown: more cognitive dissonance.

 

Reality about energy supplies begins to emerge and it’s as ugly for ‘Autoworld’ as Thanksgiving is for turkeys. Peak Oil has blitzed the Greek economy into the dumpster with stunning dispatch, so much so it seems beyond the ability of sensible Greeks to understand what happened to them. Greece isn’t a hedge fund or an over-leveraged investment bank peddling fubar MBS out of a back room but a modern, middle-class nation with a (semi)functioning government and a four-thousand year history: all that except for the history is gone … in a heartbeat. Fall asleep in Greece, wake up in Angola.

— from ‘God, Peak Oil and Turkeys’ (March, 2012)

Nobody will admit that Greece was undone by peak oil, nobody will even discuss it or entertain the possibility! This isn’t economists in 2004 missing a prediction about what might happen in 2008. This is an entire army of exceptionally well-paid, over-educated analysts, policy makers, business leaders, economists, educators, pundits, energy bloggers, fiction writers, poets and bass fishermen not seeing what is taking place right under their noses!

Now it is Spain’s turn to be swept off the table by its automobile waste. The only issue is how long will the process take. Using Greece as a model, once the establishment is admittedly insolvent, the spasm of national ruin and follow-on decline is almost instantaneous.

Like Greeks, the Spanish bet the rent on the American Way waste-based consumer economy, not realizing it was a scam. Now that they ‘know’ (or are dimly aware) there is nothing they can do about it, there is nothing the Spanish want to do about it. Like the Greeks the Spanish want the euro, they want the cars they want the modernity and will continue to do so even when the Spanish economy completely collapses. The Spanish have spent centuries living off the soil in small villages and they have no desire to return.

Same with the Chinese and Japanese.
“There’s a lot of momentum embedded in the passion of Chinese here to adopt higher-standard of living … they want their apartment, they want their cars, they want their air conditioning.

— Bloomberg
These countries’ chances to turn aside from faddish consumerism came and went decades ago. They caught themselves in the self-reinforcing web of fashion … that requires chic Spaniards/Greeks/Japanese/Chinese to have a shiny new cars, luxury jobs, designer ‘accessories’, new houses in the suburbs and ‘resorts’. Add the predatory lenders and ruthless manufacturers, shills and gamblers and the moderns were doomed. They had no idea what it was they were signing their futures away for, they believed the salesmen rather than following common sense.

All of this overhead structure is precariously balanced upon slender resources. The amounts of oil near the Senkaku Islands look to be very small. Information from the International Energy Agency (IEA, 2008)

Field Estimated Oil Reserves (Mbbl)
Canxue 5
Baoyunting 4.5
Chunxiao 3.8<
Cuanqaio 2.2
Wuyunting 1.9
Tianwaitin .5
Total: 17.9

Twenty million barrels is an insignificant amount of oil to go to war over. Presumably there is more than the 20 million … that can be retrieved by improved drilling. Yet, even 2 billion- or 20 billion barrels of proven reserves would do little to address the 10 million barrel per day consumption habits of the Japanese and Chinese. A decade and more of extraction enterprise is required to bring any oil to the markets. In the meantime, the world’s other oil wells relentlessly decline. Bloated demand outruns all possible sources of new supply. The only question is how long will it be until this demand is bankrupted?

 

Next goes Europe, itself. The Greek default closes the book on Europe in its current form, which is a lost cause. It is the end of the beginning: there is not going to be any ‘recovery’ or way back from the abyss that is now engulfing the continent. Some fragments here and there might save themselves for a little while, then like sparks from a bonfire be swept away by the wind. The crisis must now burn itself out: Europeans, look to yourselves and may your turkey-God have mercy on your souls.

 

Not much longer, children ….

Of Mad Men …

Off the keyboard of Steve from Virginia

 

Not many people would recognize the name Edvard Beneš, some might identify him as a Hungarian. Others would suggest an obscure novelist or a symphony conductor … obviously intelligent and well-mannered individual, an economist or law professor. He would have a hotel or a library named after him somewhere: take a little time to look up the name Edvard Beneš:

 

Edvard Beneš was born into a peasant family in the small town of Kožlany, Bohemia, ca. 60 km west of Prague.  …  He spent much of his youth in Vinohrady district of Prague, where he attended a grammar school from 1896 to 1904. During this time he played football for Slavia Prague. After studies at the Faculty of Philosophy of the Charles University in Prague, he left for Paris and continued his studies at the Sorbonne and at the Independent School of Political and Social Studies (École Libre des Sciences Politiques). He completed his first degree in Dijon, where he received his Doctorate of Laws in 1908. Then he taught for three years at the Prague Academy of Commerce, and after his habilitation in the field of philosophy in 1912, he became a lecturer in sociology at Charles University.

[…]

During World War I, Beneš was one of the leading organizers of an independent Czechoslovakia abroad. He organized a Czech pro-independence anti-Austrian secret resistance movement called “Maffia”. In September, 1915, he went into exile where in Paris he made intricate diplomatic efforts to gain recognition from France and the United Kingdom for the Czechoslovak independence movement, as he was from 1916–1918 a Secretary of the Czechoslovak National Council in Paris and Minister of the Interior and of Foreign Affairs within the Provisional Czechoslovak government.

[…]

From 1918–1935, Beneš was first and the longest serving Foreign Minister of Czechoslovakia, and from 1920–1925 and 1929–1935 a member of the Parliament. He represented Czechoslovakia in talks of the Treaty of Versailles. In 1921 he was a professor and also from 1921–1922 Prime Minister. Between 1923–1927 he was a member of the League of Nations Council (serving as president of its committee from 1927–1928). He was a renowned and influential figure at international conferences, such as Genoa 1922, Locarno 1925, The Hague 1930, and Lausanne in 1932.

Beneš was a member of the Czechoslovak National Socialist Party (until 1925 called Czechoslovak Socialist Party) and a strong Czechoslovakist – he did not consider Slovaks and Czechs to be separate ethnicities.

In 1935, Beneš succeeded Tomáš Garrigue Masaryk as President. He opposed Nazi Germany’s claim to the German-speaking so-called Sudetenland in 1938. In October, the Sudeten Crisis brought Europe on the brink of war, which was averted only as France and Great Britain signed the Munich Agreement, which allowed for the immediate annexation and military occupation of the Sudetenland by Germany.

 

Neither Beneš nor any member of the Czecho-slovak government was permitted to attend the conference where the little country was sacrificed to Hitler and his mad men.  The Euro-powers England and France were unprepared for war, they overestimated Hitler’s readiness and demurred. Czecho-slovakia was sacrificed to buy goods that could not be had: peace or greater preparedness. Out of recession and deleveraging of the 1930s, no country had anything but a transient material advantage over the others.

What emerged instead was a contest of institutional restraints, or between restraints on one part versus their absence on the other. There was the high-minded rationalization on the part of the powers versus the total absence of same on the part of the Germans. The German strategic advantage was set in high relief in Munich by Germany’s reasonable and well-intended adversaries. To outmaneuver whatever obstacles Germany might encounter on its path to geographic empire it had only to react to restraint as if it was acknowledgement of fatal weakness. The Germans would demand everything, to threaten annihilation otherwise, to exceed all limits, to put its army on wheels so that it might be turned loose in all directions, to massacre without conscience … to be unorthodox in all things or appear to be so. To be modern, in other words: restraint was prissy and old-fashioned, bourgeois and incompetent. According to German doctrine, there was to be no place in the modern world for anachronistic little duchies and principalities … Negotiations and conferences existed only to produce surrender documents.

After Munich, restraint was synonymous with cowardice and appeasement along with the word ‘Munich’ itself. Hitler was outraged that the appeasement had cost him a war that he was sure Germany would win.

Neville Chamberlain, British ambassador Neville Henderson, German foreign minister Ribbentrop and Hitler at Munich. By 1946 all of these men were dead, all of the European countries and their economies were destroyed.

Sudetenland was handed over immediately after the Munich Accord, announced with fanfare, the rest of the country was annexed by Germany and Hungary within six months. The accord offering ‘Peace in our time’ was not worth the paper it was written on, like so much else within modernity, it was a another false ‘tomorrow promise’.

After Munich, Beneš fled into exile in Britain, after the war he was part of a brief independent Czech government that was eventually undermined by the Soviets in 1948.

Right now ‘Munich 2.0′ spools out right under everyone’s noses: the Spanish public is sold into the abyss by the feckless government seeking to buy a little time. Like the Czechs and Slovaks in 1938, the people have nothing to say about their own fate … which is determined in the shadows by unrestrained and unaccountable mad men (Telegraph):

Prime minister Mariano Rajoy explains the surrender of Spain to the Anglo-American banking cabal in front of the Spanish Parliament, admits draconian terms demanded by EU financiers. Photo: AFP

 

Debt crisis: Spain bows to EU ultimatum with drastic cuts

Spanish premier Mariano Rajoy has raised VAT sharply in a humiliating volte-face and pushed through €65bn (£51bn) of drastic austerity measures to comply with a European Union ultimatum, risking a downward spiral into full depression.

Ambrose Evans-Pritchard

In Churchillian tones of blood and toil – even as Asturian miners and their wives clashed violently with police after a three-week march on Madrid – Mr Rajoy called for yet another round of cuts, admitting that Spain was obliged to take “urgent” action under the terms of the latest EU summit deal.

“We Spanish no longer have the choice whether or not to make sacrifices. We no longer have such liberty,” he said.

Hours before, the daily newspaper El Pais had stunned the nation by publishing the leaked “Memorandum” imposed by the eurozone’s creditor bloc as the condition for Spain’s €100bn bank rescue.

The draconian terms include an EU takeover of the Spanish financial system, with calls for haircuts on €67bn of junior and hybrid bank debt, a bad bank to wind down crippled lenders, “on-site” raids by inspectors, and intrusive demands across the gamut of fiscal policy.

 

The Washington Consensus succeeded brilliantly in Greece, the obvious reason to apply it with more vigor in Spain.

Chamberlain and Daladier ‘understood’ that Germans would not annex anything more than a small part of Czecho-slovakia. Rajoy understood that Spain would not be subject to severe austerity by the finance sector in return for what amounts to a trifling borrowed sum. Unlike the aggressive, militaristic Hitler, today’s mad men are well mannered and abstract. The outcome for the victims is identical, bondage and pillage. Because no one else will lend to Spain, with no great power England or France — or United States — to rescue her, there is no choice for the unimaginative Rajoy but to sell his country down the river.

Like the hapless Beneš there is certain to be a place in the Spanish rump for the elder statesman Rajoy long after the country is a smoking ruin. Like Beneš, he looks good in a suit.

The Spanish establishment does not understand symmetry. There is nothing to compel Spain to borrow under duress, or to prevent Spain from repudiating the odious- and ill considered debts it has already taken on. If the country had a real government instead of a cowardly fake it would behave the same as the mad men, to stand up to them, to beat the bullies and put them in their place. The establishment fails to understand the economic dynamic that is underway. The cost of submission is no different from the cost of non-submission. Putting the costs of unrestricted capital back upon capital is where it belongs. Spain would abandon its costly ‘prosperity’ but would maintain its sovereignty and the freedom if its citizens to act for themselves. By surrendering, the prosperity is gone and so is the sovereignty. The citizens are free to be paupers or emigres. Spain becomes a colony of Wall Street.

The current tragedy in Europe is unfolding with the same sense of dishonor and inevitability as during 1938. History may rhyme as Mark Twain once said, but it clearly is repeating itself, now. The establishments around the world insist on sacrificing others to the mad men. This strategy fails, appeasement makes these men bolder, they cannot be satiated or even evaded. Their ambition and reach has become universal, they are monsters. They must be destroyed, annihilated and all memories of them done away with. Their tools of destruction which they promote as ‘efficiency’ must be hammered flat and repudiated. The steps leading to Munich failed to bring peace but led instead to a great war, the steps leading to Brussels follow the exact same path. It is the cowardice of the good people, the moral relativism of the disinterested who refuse to see it.

The Europeans and their economic ministers and economics do not understand what it underway. Europe is subject to an Anglo-American credit embargo similar to those implemented in Latin America in the 1980s and in S. Asia in the 1990s. The US gains more from Europe’s bankruptcy than it can gain as return on new credit.

Because the establishment does recognize the energy component to their economic troubles they cannot see the potential gains to others … from Europe’s collapse.

Europe consumes 15 million barrels of petroleum per day: by bankrupting the EU 10 millions of those barrels can be exported to the US instead. This is the equivalent to the production of Saudi Arabia, without all the drilling.

The 5% reduction in fuel availability in the West in 1973 resulted in what was the world’s deepest post- WWII recession, excluding the current recession. At issue is a reduction of 70%.

Analysts blame the European problems on corrupt Greeks and others but these countries did not make the loans to themselves: it takes two corrupts to tango. The Eurozone was a pit of predatory lending under false pretenses (for fake, USA-style ‘prosperity’). The euro was — and is — a defective credit instrument similar to a sub-prime mortgage.

No sovereign can repay finance-level debts, such a thing is impossible. Greece cannot repay, Spain cannot hope to begin to repay.

Not only cannot Greece repay, Germany in full flower of industrial output cannot repay Greek debts. The demand for repayment is a charade and anyone bothering to look for more than five minutes can see that this is true.

The rate of change in GDP year over year is the surplus carried forward over the previous year’s expenses. It is this margin from which a country’s debts might be serviced — not retired — the annual increase in German GDP might be sufficient to partially service Greek debts for that year. Anyone who believes that Germany could repay Greek debts believes in unicorns and fairies.

Keep in mind that GDP growth must also meet other expenses besides service of loans outstanding. Almost all debt service is financed along with principal roll-over.

The Germans object to the obligation to repay Greek debts, it is because such a thing is impossible regardless of intentions.

Greece is dependent upon external sources of (borrowed) capital: Germany genuflects in the direction of capital because Germany itself is just as dependent on external capital flows as is Greece.

If Germany cannot repay Greek debts how can Greece be expected to do so, in the face of a credit embargo?

The embargo is effective because there is no European lender of last resort: what passes for one appears to offer unsecured loans to banking clients which themselves are insolvent. A lender of last resort cannot at the same time be insolvent: the one concept excludes the other. When the central bank takes on the impaired loans of its clients it becomes insolvent, it loses credibility.

Because of system insolvency there are fatal bank runs. These are taking place this minute.

Debts are intractable: they must either be replaced/refinanced with more debts or they must be repudiated, there is no other way. When debts are repudiated, the country is de-industrialized as it cannot import fuel, its money is unacceptable.

The fantasy of industrialization and so-called ‘progress’ is what various ‘leaderships’ including Rajoy’s are loathe to abandon. This is even as industrialization destroys the countries’ economies and the countries themselves. Managements cling to the false promises that have been offered for 400 years, that have brought wealth to a handful of thieves in exchange for Napoleon, revolutions. Communism, Hitler, world wars and great depressions. This, then … is the dividend of concentration and economies of scale, leaving out the complete destruction of the very air, land and water upon which we as living creatures absolutely depend … for a few pieces of colored paper.

If the country does not repudiate its debts, its money is unacceptable anyway as the money is proxy for nothing but unserviceable debts.

This non-acceptance is the end of the road … the end of all the roads.

By repudiating the debts all of the associated wealth is annihilated: wealth = debt. The problem is the foolish Europeans  want to get rid of the debt and keep the wealth. They do not accept that, a) this cannot be done, and b) there is really no such thing as money-wealth.

What comes this way is the contest between the few, the mad men with their machines and their blandishments, their constant readiness to do the world ill for their immediate gain. On the other side of the contest is the void, a bloated dependent (over)population: here is the reason for overpopulation in the first place! Dependents dare not agitate without risking starvation, homelessness or withholding of institutional ‘benefits’. There is the loss of place, a generalized self-contempt, selfishness and institutionalized laziness. Not the stuff of revolutions or reform.

The mad men inch closer to self-immolation, to take the rest of the world with it. This is the end-game of industrialization, the promise of Valhalla the reality of a wasteland.

Keynes was wrong, in the short run we are all dead.

Hang ’em High

Discuss this article inside the Diner

One of the most difficult problems I face on basically a Daily Basis on the Diner is that I advocate for a change in the Legal Structure to allow for Capital Punishment for Banksters rather than the typical Perp Walks.   I often refer to this as “The Inquisition”, nomenclature coming of course from the Spanish Inquisiton. Most Diners, and in fact most people find all the excesses engaged in during the original Spanish Inquisition, along with the Reign of Terror run by Robespierre in the aftermath of the French Revolution to be highly objectionable.  Why?

Well, first off it’s lots of DEAD PEOPLE! Nobody likes the idea of lots of DEAD PEOPLE! Well, at least nobody besides some Satanist Illuminati anyhow.  Then there is the problem of one person or persons PASSING JUDGEMENT  on some other person or persons.  INNOCENT people could be put to DEATH, and of course if you do that, you cannot take it BACK afterward if you made a MISTAKE.

Thing is of course, even if you just wrongly IMPRISON somebody for a few years, you can’t take that back EITHER.  You spend 20 years in Prison for a Crime you did not commit, some dude owns up to it on his Deathbed and you get Set Free, you STILL lost 20 years you can NEVER get back.  So the process of Passing Judgement on people because all Justice Systems are fallible always has problems associated with it.

The problem here we are faced with is that ONGOING are HIGH CRIMES AGAINST HUMANITY.  This is not just limited to such outstanding and obvious Crimes like the Macondo Well Blowout in the GOM or FUK-U-Shima Fiasco, which is clearly a result of EXTREME levels of corruption between both Goobermint and Private Industry in Japan.   It extends to the AUSTERITY being forced down the throats of J6Ps all over the world as their Pensions are cut and current workers are laid off, all to SAVE THE BANKSTERS!  Bond Holders MUST be preserved at ALL COSTS!  Such costs of course include Greek Senior Citizens committing Suicide because they see their future Eating out of Dumpsters.

It extends to the continuing POISOINING of the Food Supply by Monsanto and other corporations with GMO Foods.  It extends into the pharmaceutical industry with Mercury based Vaccines. It extends into the Banking Industry with faulty MERS Titles and Foreclosures.  It extends into the highest tiers of Goobermint, where Politicians are literally paid MILLIONS to vote in the interest of Lobbies rather than their constituencies.  These Crimes Against Humanity are ONGOING, and they are ALREADY taking thousands if not Million of lives.

This does not even touch the ongoing WARS being pursued for the Oil Resource in MENA by the Big Ass Military of NATO,  led of course as it is by theFSoA. The “Collateral Damage” of Women and Children CIVILIANS being MURDERED by Drone Aircrraft is already uncountable. Yet STILL, nobody is HELD ACCOUNTABLE for it.

Nobody can be held RESPONSIBLE for this? All the Managers, all the Stockholders are UNNACCOUNTABLE, protected as it were by the veil of Corporate Personhood?Our Political Leaders are also not Accountable?  Its NOBODY’s RESPONSIBILTY here?  What?

NO.  There MUST BE ACCOUNTABILITY!

We cannot Save Ourselves or Save this Planet if people who are pursuing Evil for their own self-aggrandizement are allowed to do so without CONSEQUENCE for these actions. What consequence, what PUNISHMENT is appropriate for CRIMES AGAINST HUMANITY? There is only ONE Punishment that can meet this goal even partially, and that is DEATH.  People simply cannot be allowed to pursue such agendas which result in the death of MILLIONS and walk away scot free with Golden Parachutes in the Millions of Dollars or Euros  usually.  They must be STOPPED, and made an EXAMPLE of.

Right now, Crime does indeed PAY very well.  The BIGGER the Crime, the Bigger the Payday.  This is a thoroughly dysfunctional Legal System as it stands.  It must be ABOLISHED.   The Punishment must fit the Crime.  The Crimes have become SO Great now, SO systemic that we are backed into a very ugly corner, a Morton’s Fork of unprecedented proportions.  We are OUT of Options.  English Common Law must be REPLACED.   Replaced by what you ask?

The LAW OF THE INQUISITION!

Hang ’em High!

Hang em High

RE

Scapegoating Da Goobermint Unions

Posted originally on TBP on 18th February 2011 by Reverse Engineer  in Economy

Discuss this article at the Kitchen Sink in the Diner

Round 9: Pummel Da Goobermint Unions

 

We now have entered the stage Greece hit about a year ago. The Illuminati have their backs against the wall and they need a new Scapegoat. Blazing across the MSM at the Speed of Light on the Internet the word went out from Goobermint to the Propaganda Machine, and the word was WAR on the Goobermint Unions.

Far and wide, from WI to IL to NY the Goobernators slashed Jobs and slashed collective bargaining rights. Except for the Cops and Firemen of course. They’re going to NEED them. Lots of them.

20,000 or so irate Goobermint Employees surrounded the State House in WI, and a dozen or so Demopublican legislators fled the state to prevent the bill coming to a vote. Billionaire Pigman Mayor/POTUS wannabee Michael Bloomber announced he is going to lay off-get this-some 4400 Teachers. NYC schools ALREADY have absurd teaching ratios over 30:1, which means you would have to redistribute out around 13K students into other classrooms. Hello, besides the obvious issues of controlling said classrooms, when the buildings were constructed the size of the classrooms maxed out at 30 kids, and that was crowded. Really, you cannot even physically put 40 kids in such a classroom unless you make it Standing Room Only.

As I have mentioned, I run a sort of One Room Schoolhouse paradigm here on the Last Great Frontier. I have set it up so each of our classrooms max out at 16:1, with 12:1 being the expected number and 10:1 is about Break Even at the current tuition. Besides myself, I have 2 Kindergarten Teachers (1 Half day, 1 Full day), a Grade 1-2 Teacher, and yours truly, Grades 3 to AP College Courses in ALL subjects an AP Test is available for taking. I am a generalist, I learned a lot about everything. I don’t specialize, I look for relationships in information. At the moment though maxing out at 6th Grade since we are only 4 years into the paradigm. Reason we need fewer teachers as we go up in grade level is because after Kindergarten, mostly the parents go into the Public Schools, because they are of course FREE. However, as the education there deteriorates due to high teaching ratios, those who can afford it will keep their kids in this paradigm. I only need 10 to teach to Break Even. As we are economically structured at the moment, if you want this for your kid, a median income will suffice if you direct it toward the child’s education. However, I will not keep any child in the classroom who will not Listen & Obey. You can’t buy into it with lots of money. Eventually as we move to subsistence level, I expect this to be done by Barter. Unless there are not enough Fishermen and Farmers with kids they want educated, I should do fine with this. I can give a child the equivalent of an Ivy League education such as I had, just with a little better ideological underpinning and some focus change on what is actually worthwhile to learn for the FUTURE we are presented with. Nobody stays in my classroom who will not Listen & Obey though, I have ZERO tolerance for disobedience. I am as intolerant of that as I am of Capitalist Pigmen here on TBP. LOL. I am a TEACHER, not a fucking Babysitter or Prison Guard. To the best of my ability also I will SCHOLARSHIP kids out of my own pocket if they are good kids who like to learn. I can’t do that past the point of break even though. I am also limited in how many I can actually Save myself, it maxes out at 16 kids. I CANNOT save them all.

I am drifting off topic here a bit though, the issues here in this post are not about teaching paradigms, its about what will happen as a result of Austerity being dropped down on Public Education, as well as the other sectors of Goobermint.

In reality, these kids will no longer BE in these classrooms, like the Unemployed who fall off the roles at 88 weeks, they will no longer be counted. Where WILL they be then? They will be out on the street, making Trouble and getting IN Trouble. Ever been around a bunch of wasto teens in a Mall? Its SCARY. Lord of the Flies time.

Now, here in the FSofA, we aren’t in quite the situation that Greece is in, since at least the Financial Economy at the TBTF Bank level is still functioning and at least theoretically paying Taxes on the money they are making FROM the Taxpayers. Its not spinning down quite as fast YET, but the Shot Heard Round the World was FIRED at the Unions and Goobermint Workers in the MSM over the last couple of days. THESE are the folks we should REVILE, because they make so much money and have such good bennies we can no longer afford!

Obviously it is true we cannot afford this, but these folks are NOT the ones who soaked up most of the wealth here. They are just apparatchiks who made it possible for the Illuminati to soak up most of the wealth. Cutting these people off from their source of income so Bonds can be paid off on to the Illuminati is NOT going to help our economic situation at ALL. In NYC, you just took 4400 Tax Paying Teachers and put them on the UE roles. You took 13.000 kids and put them out on the street where they will do mayhem. You INSTANTLY made more criminals and potential “terrorists”. Laying off these teachers is a SOLUTION to our socioeconomic woes? Hardly. It will only exacerbate them.

Meanwhile, folks like Mish are having their Wet Dream come true of the Goobermint Unions being destroyed. Sadly Mish, this isn’t going to solve the economic problems, it will just make them WORSE. Laying off Goobermint workers and cutting pensions just means that you will have fewer people with disposable income to keep the consumer based economy running. This will drive more private biznesses which exist as a result of their disposable income to go belly up also. Austerity doesn’t work to make you more solvent in such a system, it just drives a deflationary spiral. It is irrelevant here how much money Helicopter Ben prints, it just is not getting distributed out into the consumer economy. The fake money eventually will go up in smoke. Prices in commodities will rise past the ability of the people to buy them, there will be excess product causing more companies to fail, prices will fall and speculators who did not exit fast enough will get hammered.

Food prices aren’t JUST affected by the speculation though, they are also affected by actual production, and if that ALSO is falling off a cliff here, even in a deflationary spiral those prices could increase. That just means more people are pushed over the edge, and economic destruction translates to real starvation. Happening already in the poorest countries, Coming Soon to a Theatre Near You if the spiral is not interdicted.

Somewhere along this timeline there WILL be Interdiction. The more Goobermint Workers that get laid off and SHAFTED of what was promised to them, the more will begin to act like Greeks. It can get ugly quite fast in such a situation. Only time will tell if this latest attempt to salvage the system doesn’t quickly BLOWBACK. I suspect it will.

RE

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