Euro

Collapse Cafe 10/4/2015: UK Special Edition

gc2When Does the Sun Set on Britain?

Discuss this article at the Diner TV Table inside the Diner

Our discussion with Norman Pagett and Jason Heppenstall on issues focused on the UK as the collapse of industrial civilization progresses

Also, don't forget to take the Energy Survey!  We are going to hold it open an extra week because links to the survey were broken when  I launched the Survey.  They have since been fixed.

The Future of Energy Survey

Survey: Fate of Countries in Collapse – Results: Currency Collapse

survey-says-2gc2smOff the keyboard of RE

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on the Doomstead Diner on September 22, 2015

toast2

Discuss the Results at the Survey Table inside the Diner

TAKE THE FATE OF COUNTRIES SURVEY HERE

One of the longest running arguments on the Diner is how various different countries will fare as collapse progresses forward.

http://www.philipcaruso-story.com/wp-content/uploads/2015/02/Where-To-Live.jpgMost often, this pits the FSoA against China, and the Diner has some China Bulls and some China Bears.  I am a notorious China Bear gong back to my days on the Peak Oil Forum, where at the time because China was such a hot investment opportunity with double-digit growth rates it was common wisdom the Chinese would out-compete the FSoA Empire to lead the world in the second half of the 21st Century.  It was there I first added my Tag Line to analysis posts on China, "The Chinese are TOAST". 😀

Now in reality here, as time goes by EVERY industrialized nation is toast, in the sense every one is dependent on the systems that are driven by copious quantities of fossil fuel energy.  Once that energy can no longer be accessed or afforded, life as we know it now wll come to a halt.

However, this is unlikely to happen all at once, and it is unlikely to play itself out exactly the same way in different countries, different regions and even from town to town.

In this survey we look at the large nation states individually and regionally for the smaller ones, to find out the opinions of the Kollapsniks TM on which ones are the best positioned as collapse gathers speed, and which ones will fare the worst.

Besides China and the FSoA, the other one of the "Big Three" countries often discussed in comparing on this topic is Russia.  Russia is often cited as more resilient by virtue of the fact they already went through one collapse when the USSR collapsed, plus the fact they have a decent amount of fossil fuel energy still left in the ground.  However, they have numerous problems as well, wars ongoing to their south, the Ukrainian situation and enormous financial and currency turbulence.

Take the survey, and let us know who you think will do best and which ones worst as collapse gets fully underway.

TAKE THE FATE OF COUNTRIES SURVEY HERE

Results: Currency Collapse & Debt Implosion Survey

http://joeforamerica.wpengine.netdna-cdn.com/wp-content/uploads/2013/04/survey-says.jpgOK, now onto the results from last week's Collapse Survey TM, Currency Collapse & Debt Implosion.

First question to look at is which of the current major currencies is likely to collapse first, and which has the potential to hold up the longest.

This is obviously important if you want to try to "preserve wealth", you certainly don't want to be holding the currency that collapses first! Duh. Roll Eyes

On the other hand, you have the problem of the utility of a currency in your neighborhood.

For instance, say the Norwegian Krone holds its value while the FSoA Dollar crashes.  Even if you have some Krone stashed in a Norwegian or Swiss Bank account, or even actually have some of their Notes in your basement safe along with your stash of Gold Coins, is Walmart going to take your Krone for a purchase of a bag of rice in Peoria, IL?  Not very likely.  You might stand a better chance in Europe, particularly Scandinavian countries if you have Krone, but here in the FSoA they are unlikely to do you a whole lot of good.  Only if you want to do currency trading during the spin down is this worthwhile to consider, and first off you need to be pretty flush to do that kind of trading, and second it's a fool's game these days with manipulated markets.  Even back in the day when I messed with currency trading it was nuts.  You have to leverage to beat the band to make any money this way.  You can get SWAMPED in a big move overnight.  Then the margin calls hit, and your next trip is out the window of the 49th floor.

Leaving aside the question of whether holding foreign currencies might benefit you personally, on the nation state level it's important to consider because he whose Currency crashes first, Collapses first.  So who is it gonna be?

I found the results of this particular question to be absolutely astounding.  Here's the results:

  1 2 3 4 5 6 7 8 Standard Deviation Responses Weighted Average
Chinese Renminby/Yuan 10
(9.8%)
23
(22.55%)
8
(7.84%)
17
(16.67%)
10
(9.8%)
8
(7.84%)
8
(7.84%)
1
(0.98%)
5.92 102 4.81 / 12
European Euro 9
(8.82%)
13
(12.75%)
15
(14.71%)
19
(18.63%)
10
(9.8%)
11
(10.78%)
5
(4.9%)
5
(4.9%)
5.24 102 4.88 / 12
Japanese Yen 15
(14.71%)
8
(7.84%)
13
(12.75%)
12
(11.76%)
11
(10.78%)
10
(9.8%)
8
(7.84%)
15
(14.71%)
4.92 102 4.98 / 12
Russian Ruble 7
(6.86%)
16
(15.69%)
21
(20.59%)
13
(12.75%)
8
(7.84%)
13
(12.75%)
2
(1.96%)
2
(1.96%)
5.91 102 4.99 / 12
Brasil Real 29
(28.43%)
14
(13.73%)
6
(5.88%)
3
(2.94%)
7
(6.86%)
5
(4.9%)
3
(2.94%)
4
(3.92%)
7.53 102 5.29 / 12
British Sterling/Pound 0
(0%)
3
(2.94%)
7
(6.86%)
10
(9.8%)
21
(20.59%)
6
(5.88%)
11
(10.78%)
16
(15.69%)
5.74 102 6.78 / 12
US Dollar 27
(26.47%)
7
(6.86%)
5
(4.9%)
1
(0.98%)
1
(0.98%)
3
(2.94%)
1
(0.98%)
2
(1.96%)
10.02 102 7.1 / 12
India Rupee 3
(2.94%)
13
(12.75%)
10
(9.8%)
4
(3.92%)
6
(5.88%)
8
(7.84%)
7
(6.86%)
6
(5.88%)
4.59 102 7.29 / 12
Canadian Loonie 0
(0%)
3
(2.94%)
4
(3.92%)
9
(8.82%)
2
(1.96%)
9
(8.82%)
16
(15.69%)
14
(13.73%)
6.69 102 7.66 / 12
Australian Dollar 1
(0.98%)
0
(0%)
5
(4.9%)
7
(6.86%)
8
(7.84%)
7
(6.86%)
11
(10.78%)
11
(10.78%)
7.49 102 7.84 / 12
Norwegian Krone 0
(0%)
2
(1.96%)
6
(5.88%)
2
(1.96%)
8
(7.84%)
5
(4.9%)
22
(21.57%)
17
(16.67%)
6.17 102 7.93 / 12
Swiss Franc 1
(0.98%)
0
(0%)
2
(1.96%)
5
(4.9%)
10
(9.8%)
17
(16.67%)
8
(7.84%)
9
(8.82%)
6.63 102 8.43 / 12

IMHO, this ordering is INSANE.  Apparently Kollapsniks TM think that the Chinese Renminby will collapse BEFORE the Euro and Yen!  WTF?  Not only that, the Indian Rupee will outlast the FSoA Dollar! hahahahahahahaha.

Which currency outlasts them ALL (according to Kollapsniks)?  The Swissie!  A currency issued by a tiny nation of 8M people with a GDP of $685B (2013 data) is going to outlast the Dollar and Renminby?  WTF?  There are more people living in NY Shity than all of Switzerland!

When the Euro goes down, the Swissie goes with it.  The SNB has HUGE exposure to Euro denominated debt, they have been buying it up to keep the exchange rate from going through the roof.  It's simply nuts to think this currency can outlast those of the Big 3.

My order for currency collapse?

Brasil Real
India Rupee
Russian Ruble
Japanese Yen
European Euro
British Sterling/Pound
Norwegian Krone
Swiss Franc
Australian Dollar
Canadian Loonie
Chinese Renminby/Yuan
US Dollar

Brasil is already on the serious ropes, and so is India.  Weak economies and too much poverty.  Russia should be strong, but they are a target for the Western Illuminati Banksters, so they will be under constant currency attack.  Yen & Euro go next, and then subsidiary currencies like Sterling, the Swissie and Krone go after them.  The Oz Dollar and Hoser Loonie keep value because of how closely they are connected to the FSoA Dollar.

One caveat to this is that once the cascade begins, it may be impossible to tell which one collapsed first.  Once a major like say the Japanese Yen collapses, this will cause so much havoc in the Interbank lending market that everything else will lock up in pico-seconds.

IMHO, the Final Battle for All the Currency Marbles is between the Chinese Renminby and the FSoA Dollar.  I think the Dollar wins this battle, because so much debt is denominated in dollars. Too many .01%ers have their wealth wrapped up in Dollars or Dollar denominated assets to let that one collapse.  We'll see on that one.

OK, now onto Q2, which is whether Gold & Silver will replace Fiat Currencies once they collapse?

Survey-Gold

  Yes No Standard Deviation Responses
All Data 34
(33.01%)
69
(66.99%)
17.5 103

Overwhelmingly by a 2/3rds majority, most Kollapsniks TM do not think Gold and Silver will replace Fiat once it crashes.

I tend to agree with that one, the PMs are too centralized and too few people have access to them for them to be workable as a currency medium.  There also is no clear idea on how these could be distributed out, or how letters of credit would be issued or anything else.  They might function as a Barter item, but as a currency that many use, it seems unlikely.

If Gold & Silver are NOT likely, what is likely once this Currency Regime fails? icon_scratch That was the subject for Q3.  Here's the results for that one:

  1 2 3 4 5 Standard Deviation Responses Weighted Average
TPTB will institute a New World Currency, the SDR or something similar 37
(39.36%)
11
(11.7%)
19
(20.21%)
13
(13.83%)
14
(14.89%)
9.47 94 2.53 / 5
LETS (Local Exchange Trading System) Money will be issued in many locales 23
(24.47%)
21
(22.34%)
19
(20.21%)
26
(27.66%)
5
(5.32%)
7.28 94 2.67 / 5
Paper Money will be issued based on Gold and Silver held in a Central Bank 11
(11.7%)
19
(20.21%)
29
(30.85%)
22
(23.4%)
13
(13.83%)
6.46 94 3.07 / 5
Gold & Silver Coins will be used as Currency 7
(7.45%)
32
(34.04%)
18
(19.15%)
20
(21.28%)
17
(18.09%)
7.98 94 3.09 / 5
No money will work and Trade will be all Barter 16
(17.02%)
11
(11.7%)
9
(9.57%)
13
(13.83%)
45
(47.87%)
13.3 94 3.64 / 5

A large plurality (almost 40%) of Kollapsniks TM think that TPTB will be able to institute a new centralized currency regime from the BIS (Bank for International Settlements, Basel, Switzerland, Central Bank of Central Banks, Home Base for the Illuminati). This is a particularly favored idea by Conspiracy Theorists, but it is not one I hold as most likely.  The likely candidate are SDRs, aka Special Drawing Rights, a concoction the BIS already has in place for internal use based on some potpourri of currencies and commodities and who knows what else they threw in that basket..

I am not in that camp.  Perhaps they will try this, but to get every country in the world to cede their monetary sovereignty over to the BIS would be near impossible IMHO.  It's like the Euro on Steroids.  It really does nothing other than re-denominate debt, and it sure doesn't put any new resource back in the ground.   To me, this is a non-starter.  Not to say it won't be attempted though.  It's a last gasp effort for the Illuminati to maintain hegemony over the economic system.

LETS systems of Local Currencies come in at #2, and this I feel is most likely to occur.  Regional breakup of the One to the Many TM will at least at the beginning require each region to develop their own local currency.  Potlatch at this stage of the spin down seems unlikely.

Far as Centrally held Gold being a basis for a currency, to me this is also a non-starter.  If you have a Central Bank holding gold in the Basement Safe, after a crisis of banking confidence like this, who would not go to the bank and DEMAND their "Gold Backed Note" to actually be redeemable in said Gold?  Once the gold is redeemed, what does the Bank have as an Asset?  At this point, the Gold you redeem for the note the Bank printed on it is just a barter item.

Will all trade eventually go all Barter?  It's already on its way there in some places, but that will take some time in the core countries I imagine.   Cannot be sure on this though, a rapid collapse could make barter the only functioning economic system in your neighborhood for a while.  Good idea to have barterable goods in your preps. Alcohol and Cigarettes are traditional barter items, I suggest also Tampons, Pampers, Condoms, Ammo, & Shoes as good choices of barter goods that last a long time.  Shoes in particular, have you noticed how many of the pictures of refugees show them to be barefoot?  Once trade with China halts, shoes are going to be hard to come by.  Right now though, you can buy a nice pair of sneakers at Wally World for $15 on sale.

Finally in this survey, how long before the Dollar finally dies completely and you can't use it to buy food at the major food retailers?  This could be either because the Dollar has hyperinflated to worthlessness or the shelves are empty.  Here's the results for this one:

  2016 2018 2020 2025 2030 The Dollar will keep working for the forseeable future Standard Deviation Responses
All Data 10
(9.71%)
16
(15.53%)
16
(15.53%)
22
(21.36%)
14
(13.59%)
25
(24.27%)
4.98 103

You have a pretty nice Bell Curve here, except for the 25% or so of people who thnk the Dollar will keep working past 2030.  The 2025 date seems about right to me, although again a major banking crisis and lockup could change that in an instant.

All in all, this was one of our most interesting surveys to date.

 

4 Signs of Deflation

Off the keyboard of Michael Snyder

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Economic Collapse on July 20, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

http://theeconomiccollapseblog.com/wp-content/uploads/2015/07/four-asphalt-public-domain-460x345.jpg

Discuss this article at the Economics Table inside the Diner

4 Things That Are Happening Today That Indicate That A Deflationary Financial Collapse Is Imminent

When financial markets crash, they do not do so in a vacuum.  There are always patterns, signs and indicators that tell us that something is about to happen.  In this article, I am going to share with you four patterns that are happening right now that also happened just prior to the great financial crisis of 2008.  These four signs are very strong evidence that a deflationary financial collapse is right around the corner.  Instead of the hyperinflationary crisis that so many have warned about, what we are about to experience is a collapse in asset prices, a massive credit crunch and a brief period of absolutely crippling deflation.  The response by national governments and global central banks to this horrific financial crisis will cause tremendous inflation down the road, but that comes later.  What comes first is a crisis that will initially look a lot like 2008, but will ultimately prove to be much worse.  The following are 4 things that are happening right now that indicate that a deflationary financial collapse is imminent…

#1 Commodities Are Crashing

In mid-2008, just before the U.S. stock market crashed in the fall, commodities started crashing hard.  Well, now it is happening again.  In fact, the Bloomberg Commodity Index just hit a 13 year low, which means that it is already lower than it was at any point during the last financial crisis…

 

#2 Oil Is Crashing

On Monday, the price of oil dipped back below $50 a barrel.  This has surprised many analysts, because a lot of them thought that the price of oil would start to rebound by now.

In early 2014, the price of a barrel of oil was sitting above $100 a barrel and the future of the industry looked very bright.  Since that time, the price of oil has fallen by more than 50 percent.

There is only one other time in all of history when the price of oil has fallen by more than $50 a barrel in such a short period of time.  That was in 2008, just before the great financial crisis that erupted later that year.  In the chart posted below, you can see how similar that last oil crash was to what we are experiencing right now…

Oil Price 2015

#3 Gold Is Crashing

Most people don’t remember that the price of gold took a very serious tumble in the run up to the financial crisis of 2008.  In early 2008, the price of gold almost reached $1000 an ounce, but by October it had fallen to nearly $700 an ounce.  Of course once the stock market finally crashed it ultimately propelled gold to unprecedented heights, but what we are concerned about for this article is what happens before a crisis arrives.

Just like in 2008, the price of gold has been hit hard in recent months.  And on Monday, the price of gold absolutely got slammed.  The following comes from USA Today

The yellow metal has tumbled to a five-year low amid a combination of diminishing investor fears related to foreign headwinds in Greece and China, and stronger growth in the U.S. which is leading to a stronger dollar and coming interest rate hikes from the Federal Reserve. Investors have been dumping shares of gold-related investments as other bearish signs, such as less demand from China and the breaking of key price support levels, add up.

Earlier today, an ounce of gold fell below $1,100 an ounce to $1,080, its lowest level since February 2010. Gold peaked around $1,900 an ounce back in 2011.

For years, I have been telling people that we were going to see wild swings in the prices of gold and silver.

And to be honest, the party is just getting started.  Personally, I particularly love silver for the long-term.  But you have got to be able to handle the roller coaster ride if you are going to get into precious metals.  It is not for the faint of heart.

#4 The U.S. Dollar Index Is Surging

Before the U.S. stock market crashed in the fall of 2008, the U.S. dollar went on a very impressive run.  This is something that you can see in the chart posted below.  Now, the U.S. dollar is experiencing a similar rise.  For a while there it looked like the rally might fizzle out, but in recent days the dollar has started to skyrocket once again.  That may sound like good news to most Americans, but the truth is that a strong dollar is highly deflationary for the global financial system as a whole for a variety of reasons.  So just like in 2008, this is not the kind of chart that we should want to see…

Dollar Index 2015

If a 2008-style financial crisis was imminent, these are the kinds of things that we would expect to see happen.  And of course these are not the only signs that are pointing to big problems in our immediate future.  For example, the last time there was a major stock market crash in China, it came just before the great U.S. stock market crash in the fall of 2008.  This is something that I covered in my previous article entitled “Guess What Happened The Last Time The Chinese Stock Market Crashed Like This?

As an attorney, I was trained to follow the evidence and to only come to conclusions that were warranted by the facts.  And right now, it seems abundantly clear that things are lining up in textbook fashion for another major financial crisis.

But even though what is happening right in front of our eyes is so similar to what happened back in 2008, most people do not see it.

And the reason why they do not see it is because they do not want to see it.

Just like with most things in life, most people end up believing exactly what they want to believe.

Yes, there is a segment of the population that are actually honest truth seekers.  If you have felt drawn to this website, you are probably one of them.  But overall, most people in our society are far more concerned with making themselves happy than they are about pursuing the truth.

So even though the signs are obvious, most people will never see what is coming in advance.

I hope that does not happen to you.

Did the Greeks DESERVE to get Greeked?

Off the keyboard of John Ward

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Slog on July 16, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

slogging-through-mud

Discuss this article at the Economics Table inside the Diner

GREECE: Applying a needle and thread to the idea that somehow “the Greeks deserved it”

“Rape ‘er? Are you kiddin’ mate? She was f**kin* gaggin’ for it”

I really don’t know how to define or rationalise this post other than calling the piece “getting it off my chest”.

I was directed to Richard North’s site this morning and read a lucid, well documented column from a powerful eurosceptic voice. But something throwaway towards the end got right up my nose and evoked the comment thread that follows.

Maybe at times I get too sensitive about Greece and what’s being done to it. God knows, I’m more aware than most of the infuriating nature of the place at times. But if you sympathise with this summary, I’d deem it a great favour if you’d pump some internet oxygen into it.

‘Oh dear. Just when I thought that, at last, an article about endemic Greek corruption was going to reach the right conclusion, it turns into a vague apologiae for Troika gangsterism.

I have been a regular visitor to Greece and enthusiastic Grecophile for 45 years. I have probably written more on the injustices inside (and done to) Greece than any other Western blogger. So allow me please to expand and correct here and there.

1. As you point out, Franco-German to Greece export & banking corruption is every bit as disgusting as that of the Greek élites. I don’t see anyone punishing Germany. Or France.

2. 80% of Greeks approve of tax evasion because history has taught them that their payments go into the same back pockets of bureaucrats and bent developers as everything else that the ordinary Greeks produce with such thrift and passion.

3. The entire medical sector is about 6-7% of the Greek population. Every doctor and dentist I’ve ever met takes bribes… even when the treatment is free on the State. None of these people have suffered a jot from austerity, and over 90% of them vote Nia Dimokritia. Pharmacies cheat the system because they too are an élite mafia. Ordinary Greeks don’t benefit from this corruption, they pay through the nose for it. It is the corrupt pols who refuse to regulate it.

4. Despite all this obvious evidence of WHERE the corruption problem lies, Troikas 1&2 chose to deal with precisely those people fostering it…who of course heaped the cost of austerity onto the people who are not the problem. But the EU is every bit as corrupt as they are: Herr Doktor Schäuble prefers to deal with those of like mind to himself.

5. When at last the vast majority of Greeks woke up and elected a government determined to root out and destroy the pre-1789 style privilege of the élites on their backs, the EU, EC, ECB, and Eurogroupe gargoyles worked overtime to turn down every proposal they made and destabilise that Syriza régime. This would seem quixotically deranged behaviour for a group of people allegedly in favour of “reform”. Here they were, presented with the most idealistic, honest and popular Greek political party for more than 40 years…but as the IMF correctly reports, EU fiscal blackmail in the final fortnight (all of it illegal under EU Law) took Greek debt unsustainability from the surreal to the impossible.

What exactly makes you think either Tsipras or the toiling classes he represented ‘deserved’ that level of depraved sociopathy?

6. Cornered at last, the IMF’s Christine Lagarde has blown a massive hole in this ridiculous wall of Brussels-am-Berlin sanctimony. The aim of these three bailouts is now clear for all to see: it never was nor indeed could ever be debt repayment. To use the French term, it was a summary and gratuitous execution pour encourager les autres. And at a level even more base than that, it was a full-frontal attack by federalist fanatics on the sovereignty of a nation…a nation I observe, year in year out, working much harder than any Nordeuropeans of my acquaintance.

https://hat4uk.wordpress.com/2015/07/14/new-troika-perfidy-revealed-by-reuters-the-smoking-gun-with-creditor-dna-all-over-it/

Greece: No Plan B

logopodcastOff the microphone of RE

Follow us on Twitter @doomstead666
Friend us on Facebook

Aired on the Doomstead Diner on July 15, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

Euro_collapse

Discuss this article at the Podcast Table inside the Diner

Snippet:

…I took a break from the Greek Souvlaki Kabuki Theater last week, after being thoroughly saturated with this nonsense for the last month, beginning about the time that Souvlakis stormed out of negotiations with the Euroclowns and the Tsipras called for an impromptu referendum on the terms being offered to them in order to get fresh input of Funny Money they would never see, but merely go to pay interest on old loans that are steadily accumulating over time here.

In what should have been a fairly predictable outcome, the Greek population soundly reected the proposals in a 61-39% majority, but according to Brit Prep School Butt Boy Ambrose Evans-Prtchard Alex the Less than Great did not predict that, but rather thought they would lose this referendum and then Syriza could go ahead and sign the slavery contract with the approval of the slaves. Unfortunately for Alex his pollsters got this wrong, leaving him in the unenviable position of having to go back to the bargaining table once again, this time himself without Souvlakis running interference…

For the rest, LISTEN TO THE RANT!!!

Is Democracy Hitting the Fossil Fuels too Hard?

Off the keyboard of Allan Stromfeldt Christensen

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on From Filmers to Farmers on July 14, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

Stick that in your democracy and smoke it?

Discuss this article at the Geopolitics Table inside the Diner

Over the past few weeks the notion of democracy has been getting its fair share of attention in the media, and quite rightfully so; Greece had a referendum on whether or not it was going to accept new terms for another round of bailout funds in exchange for the prolongment of austerity measures and the continuation of its debt peonage.

That this was a welcome occurrence is thanks to the short shrift that the term "democracy" has been getting the past few years, and I'm not just talking about neoliberals claiming to bring "democracy" to Middle East countries and such. What I'm talking about is how the term "democratization" has been continually added willy-nilly to just about every new technology that comes along: there's been the democratization of cell phones, of high-speed Internet access, of automobiles, and much more. So rather than "democratization" implying the beneficence of freedom upon a people, it now generally means the accessibility and wide adoption of the latest consumer gimmick by the masses.

Democracy, however, did not start out as a device for unfettered consumption, but rather implied a government assembled by the people through freely elected representatives. So it was therefore a welcome relief to hear Greece's prime minister stating the other day after the recent referendum that "Today we celebrate the victory of democracy. We proved even in the most difficult circumstances that democracy won't be blackmailed," for that was in fact an exercise in democracy.

Nonetheless, with some commentators going so far as to claim that we are seeing an "epic battle for the future of European democracy," one could be forgiven for thinking that the Greek crisis has spurred on what might be called "democracy at the crossroads." For in a somewhat similar manner, an article entitled Europe Doesn't Have a Debt Crisis – it has a Debt Crisis goes on to examine a piece by author Wolfgang Merkel: Is Capitalism Compatible with Democracy? In it, Merkel makes the claim that "the crisis of capitalism threatens to turn into a crisis of democracy." What does that mean? From what Merkel explains, "an interventionist tax and welfare state was able to belay the tensions between capitalism and democracy," but which has since resulted in "the financialization of capitalism [which] since the 1980s [has been breaking] the precarious capitalist-democratic compromise." True enough. For as Merkel also explains, "deregulated globalized markets have seriously inhibited the ability of democratic governments to govern." This can be seen in many ways, be it Structural Adjustment Programs forced upon 3rd World countries, or free trade agreements (of which are oftentimes orchestrated behind closed doors) foisted upon the better-off nations.

 

That all being said, there is the notion out there that democracy itself poses a problem. As William Ophuls puts it in his short, yet very insightful book Immoderate Greatness: Why Civilizations Fail,

In the end, mastering the historical process would require human beings to master themselves, something they are far from achieving. (This is why democracy, considered by some to be an asset in the struggle against the forces that challenge industrial civilization, is in fact a liability.)

As Ophuls describes it, a democracy is a particular liability in this time of collapsing industrial civilization due to a lack of mastery we have over ourselves. This "mastery" can take the guise of many forms (and is fodder for books of its own), but I think that a quick stroll down most any street and an observance of all the advertising around is enough to validate the notion that we certainly haven't mastered ourselves. Nonetheless, I do wonder if it's fair to say that democracy is the problem, and if it might then be more appropriate to instead combine Merkel's and Ophuls' statements so that together they read: "the crisis of industrial civilization threatens to turn into a crisis of democracy."

First off, that neatly rids us of the distraction of squabbling over right wing vs. left wing, free-market capitalism vs. state capitalism (aka communism), and rightfully lumps both sides of that argument under industrialism. Secondly, by insinuating that the supposed crisis of democracy is due to a crisis of industrial civilization, then we are able to ponder about what, if anything, might a crisis of industrial civilization be. And the answer to that, fortunately, is easy enough. The crisis that industrial civilization is facing is one that gets to its very core – a shortage of fossil fuels.

Since fossil fuels – and specifically oil – are currently peaking, this means that there will be less and less of the "lifeblood" that makes industrial civilization "go." As an early example of this we can take a look at Greece which, for various reasons, is lacking an adequate supply of fossil fuels to make its modern industrial civilization run at mid- to late-20th century levels. This is no small issue. With seemingly very few people aware of the underlying issues affecting Greece, and with much denial going on as well, an immense amount of confusion, dissatisfaction, frustration, and worse, will likely occur and escalate as the crisis in Greece makes its inevitable jaunt across the globe. This is where the crisis of democracy enters.

First off, democracy has been around for much longer than the copious use of fossil fuels, dating all the way back to ancient Greece. Secondly, democracy entails a citizenry with enough surplus energy so that it may have the time and opportunity to govern itself. Although ancient Athens didn't have fossil fuels, what it did have was the energy of slaves.

While slavery has been a vital component and institution of human societies throughout history, those with a penchant for optimism are quick to point out that slavery was eliminated some 200 years or so ago in developed parts of the world. But putting aside that there are actually more slaves today than at any other time in history (although there's also a larger population today than at any time in history), this generally accepted notion of enlightened progress overlooks one crucial point: the energy of slaves was replaced with the energy of fossil fuels.

Thanks to the improvements upon the steam engine by James Watt in the late 1700s, the conferred ability to pump water out of coal mines allowed for greater extraction (and use) of coal, and thus triggered the Industrial Revolution. In short, the "cheap" energy extracted from deep mines thus enabled a machine enabled to do more work than a human via manual labour. In strict monetary terms, to a large degree this made slavery uneconomic. Meanwhile, congruent to their powering of the Industrial Revolution, fossil fuel usage also led to and allowed for various social and political changes, such as demands for greater equality and, no less, democracy.

As the 19th and 20th centuries progressed, increasing fossil fuels in the form of coal, then oil, then natural gas also allowed for the reduction, if not elimination, of such things as child labour, poor working conditions, and low living standards. This rising prosperity allowed for the emergence of what is called "the middle class," and led to political campaigns for strong labour unions and ever-expanding public projects – in the form of hospitals, schools, highways, and more.

But with oil supplies now hitting their peak, the fossil fuels that have allowed for our current experience of democracy will be putting the very foundation of our modern way of life into question – and for some people it already is.

(image by Aleksandr Zykov)

 

To a certain extent, it might be said then that Greece, the birthplace of democracy, is turning out to be a bit of a litmus test in regards to how the crisis of industrial civilization will play out and effect our modern variant of democracy. Are we to realize the fundamental factors behind crises such as that currently besetting Greece, or are we to stick to our outdated and ultimately distracting notions of right wing vs. left wing, 1% vs. 99%, etc.?

As stated by Greece's defence minister and head of Independent Greeks (the coalition member of Syriza), "I want to state clearly, I am not afraid of Grexit [but] I am afraid of one thing: national division and civil war." In other words, there are already those in office publicly recognizing possible unfortunate outcomes of industrial civilization's crisis. But are those such as Greece's defence minister aware of what the crisis is truly about? I'm not so sure about that, and it appears that although circumstances such as those described by Greece's defence minister have once again been averted (what with Greece's third loan package just agreed to the other day), one might wonder if they've just been delayed to another day when loans and subsidies and bailouts and bailins are no longer possible and so make unwanted crises inevitable.

Nonetheless, the possibility still exists that a lower energy future will see significant amounts of political power move back from the centres to the peripheries as lower energy supplies stifle the grip on power by central governments. If so, then there's a chance that we can re-establish an inclination for local governance and not only maintain some of our political structures, but the social progress we've made while on those fossil fuels.

But seeing how alternatives to democracy – such as the heavy hand of an autocratic ruler and/or state – certainly don't guarantee a merry ride through the collapse of industrial civilization, it's probably a bit of a stretch to single out democracy as a liability.

Do our chances with democracy look good at the moment? I'll leave it to you to answer that for yourself, but I'd nonetheless say that it's fair to point out that fossil fuels have allowed for a lackadaisy modern way of life that places an overwhelmingly stronger inclination on the various guises of narcissism than on genuine civic participation.

That being said, I know that I'd certainly prefer to face our civilizational collapse with at least a chance at a fair share of freedom, as opposed to what the alternatives might imply. And if living, for now, in our modern-day, fossil-fuelled democracy means having to live amongst "the culture of narcissism," then at least I can choose to not own a remote control or a season's pass.

Greek Debt Deal Collapsing

Off the keyboard of Michael Snyder

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Economic Collapse on July 14, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

Puzzle Pieces - Public Domain

Discuss this article at the Economics Table inside the Diner

The ‘Greek Debt Deal’ Is Already Starting To Fall Apart

The “deal that was designed to fail” has already begun to unravel.  The IMF, which was expected to provide a big chunk of the financing, has indicated that it may walk away from the deal unless Greece is granted extensive debt relief.  This is something that the Germans and their allies have resolutely refused to do.  Meanwhile, outrage is pouring in from all over Europe regarding what the Greek government is being forced to do to their own people.  Most of this anger is being directed at the Germans, but the truth is that without German money the Greek banking system and the Greek economy will completely and utterly collapse.  So even though Greek Prime Minister Alex Tsipras admits that this is a deal that he does not believe in, he is attempting to get it pushed through the Greek parliament, and we should know on Wednesday whether he was successful or not.  But even if the Greek parliament approves it, we could still see either the German or the Finnish parliaments reject it.  It seems as though nobody is really happy with this deal, and these negotiations have exposed very deep divisions within Europe.  Could this be the beginning of the end for the eurozone?

The Germans appear to believe that they can push the Greeks out of the eurozone and that everything will be okay somehow.  This is something that I wrote about extensively yesterday, and it turns out that a lot of other prominent voices agree with me.  For example, just consider what Paul Krugman of the New York Times had to say about this.  I am kind of amazed that he finally got something right…

Suppose you consider Tsipras an incompetent twerp. Suppose you dearly want to see Syriza out of power. Suppose, even, that you welcome the prospect of pushing those annoying Greeks out of the euro.

Even if all of that is true, this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.

Greece desperately wants to stay in the euro, and they desperately want money from the rest of Europe to keep coming in.  At this point, they will agree to just about anything to keep from getting booted out of the common currency.  That is why the Germans and their allies had to make the deal so horrible.  They were attempting to find some way to make things so harsh on the Greeks that they would finally choose to walk away.

And to a certain extent it seems to be working.  Even some members of Syriza are publicly declaring that they are going to vote against this package.  The following comes from the Washington Post

Greek Energy Minister Panagiotis Lafazanis, who leads a hard-line leftist faction within Syriza, said in a statement Tuesday that the country’s creditors had “acted like cold-blooded blackmailers and economic assassins.”

Yet he also took indirect aim at Tsipras, calling on the Greek prime minister to reverse himself and tear up the agreement, which he described as a violation of the party’s ideals.

Even if Tsipras can pass the deal in Parliament, as he is expected to do, Lafazanis vowed that the Greek people would “annul it through their unity and struggle.”

Right now, the vote looks like it could be quite close.  Even though Greek Prime Minister Alex Tsipras has publicly admitted that this is a deal that “I do not believe in“, he is really pushing hard to get the votes that he needs.  In fact, according to Reuters he has been actively reaching out to opposition parties to secure votes…

Having staved off a financial meltdown, Tsipras has until Wednesday night to pass measures tougher than those rejected in a referendum days ago. With as many as 30-40 hardliners in his own ranks expected to mutiny, Tsipras will likely need the support of pro-European opposition parties to muster the 151 votes he needs to pass the law in parliament.

But even if this deal gets through parliament, it is highly questionable whether Greece will actually be able to do what is being required of them.  For instance, the 50 billion euro “privatization fund” seems to be something of a pipe dream

Privatisation agency Taiped has put out to tender assets with a nominal value of 7.7 billion euros since 2011, but has cashed in only just over 3.0 billion euros, according to 2014 figures.

On June 26 even the International Monetary Fund (IMF), one of Greece’s creditors, raised eyebrows over the idea of raking in lots of money from privatisations.

It stressed that the sale of public banking assets was supposed to raise tens of billions of euros but it was “highly unlikely that these proceeds will materialise” considering the high levels of nonperforming loans in the banking system.

It said that realistically only 500 million euros of proceeds were likely to materialise each year — at which rate it would take around 100 years to reach the 50 billion euro goal.

For the moment, though, let’s assume that the Greek parliament agrees to these demands and that by some miracle the Greek government can find a way to do everything that is being required of them.

And for the moment, let’s assume that this deal is approved by both the German and Finnish parliaments.

Even if everything else goes right, this deal can still be killed by the IMF

The International Monetary Fund has sent its strongest signal that it may walk away from Greece’s new bailout programme, arguing in a confidential analysis that the country’s debt is skyrocketing and budget surplus targets set by Athens cannot be achieved, reports FT.

In the three-page memo, sent to EU authorities at the weekend and obtained by FT, the IMF said the recent turmoil in the Greek economy would lead debt to peak at close to 200 percent of economic output over the next two years. At the start of the eurozone crisis, Athens’ debt stood at 127 percent.

In order for the IMF to participate in this new Greek bailout, the IMF must deem Greek debt to be sustainable.  And at this point that does not appear to be the case

Under its rules, the IMF is not allowed to participate in a bailout if a country’s debt is deemed unsustainable and there is no prospect of it returning to private bond markets for financing. The IMF has bent its rules to participate in previous Greek bailouts, but the memo suggests it can no longer do so.

But the Germans made it very clear that there would be no bailout unless the IMF was involved.

So what would satisfy the IMF?

The IMF study seems to indicate that massive debt relief for Greece would be required.  The following comes from Reuters

The study, seen by Reuters, said European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension. Or else they must make annual transfers to the Greek budget or accept “deep upfront haircuts” on existing loans.

Needless to say, those kinds of concessions are anathema to the Germans.  There is no way that anything like that could ever get through the German parliament.

But to be honest, the Germans never intended for this deal to be successful anyway.  Just consider what German Finance Minister Wolfgang Schauble told reporters on Tuesday

German Finance Minister Wolfgang Schauble made clear in Brussels on Tuesday that some members of the Berlin government think it would make more sense for Athens to leave the euro zone temporarily rather than take another bailout.

This is what Schauble and his allies have wanted all along.  This entire “deal” was crafted with the intent of creating conditions under which Greece could be forced out of the euro.

By this time tomorrow, we should know what the Greek parliament is going to do.  However, that won’t be the end of the story.  One way or another, the Germans are going to get their wish.  But once they do, I think that they will be quite surprised by the chaos that is unleashed.

OXI! Ugo Bardi, Gail Tverberg, Steve Ludlum & RE discuss the Greek Referendum

Discuss this Vidcast at the Diner TV Table inside the Diner

Audio Only (mp3 Download avaialable on Diner Soundcloud)

man-watching-tvIn the aftermath of the Greek Referendum results of a Vote of "OXI", or NO to the proposals made by the Troika and the Globalists, Ugo Bardi, Gail Tverberg, Steve Ludlum and myself got together for a Collapse Cafe to discuss the underlying causes of the Greek problems, and how this is being dealt with on the Political & Economic Level.

Production Notes:  Steve had connection issues early in the broadcast (around the 9 minute mark).  These were resolved later in the broadcast.

Entertainment Notes:  At around the 35 minute mark, you will be entertained by something quite novel in our Vidcasts.  A few Bloggers go BALLISTIC.  LOL.

Enjoy.

RE

Euro Margin Call

Off the keyboard of Steve Ludlum

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on Economic Undertow on July 5, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

http://www.economic-undertow.com/wp-content/uploads/2015/06/Triangle-of-Doom-0601151.png

Figure 1: Triangle of you-know-what, continuous WTI futures contracts, chart by TFC Charts, (click for big). Petroleum price decline is just one piece of evidence for credit distress; another is the steady increase in bond yields which reflects the anxiety on the part of lenders that they might not be repaid.

Discuss this article at the Economics Table inside the Diner

It is difficult to make heads-or-tails out of the Greek melodrama playing out at this moment. To default or not default, in the eurozone or out. Who knows? Observers are confused and so are the participants, what is clear is that the stakes are very high. The group designated to absorb the hardest blows cling to the bottom of the economic mast; workers, pensioners, students and suckers lured into investing in countries like Greece … then again, maybe not. There is the chance of contagion, anything is possible including the chance that some tycoons might lose their fortunes.

Regardless of outcome, the politicians are winners. Even as their follies multiply they meet nothing in the way of discomfort. Walking on gilded splinters, they spend every moment within settings as extravagant as Hollywood sets, fawned over by hordes of lackeys. Stuffed like geese for foix-gras on mysterious ‘luxury food’, their greatest hazard is that they might get too fat … or that they might be revealed as libertines. When their crimes and blunders have ripened they retire with their fortunes; enormous (borrowed) pensions, favorable (borrowed) business arrangements, excessive (borrowed) speaking fees and … (borrowed) … consulting jobs even as their constituents are hounded into penury so as to make the interest payments.

Other winners include the ordinary ‘Brand X’ criminals who take advantage of the vacuum that is the natural outcome of their betters’ ineptitude. Misery multiplies … none of this is new. The die for the current round of crises was cast long before the turn of the millennium … there has been that long to do something about it.

One thing is clear; that the brouhaha in credit markets is a symptom, not the disease. Analysts must observe carefully the larger trends and connect the dots. The problem is not a matter of adjusting the model but with the model itself. Industrial enterprise does not offer a return. Capital and value — and purchasing power — are converted into waste, what stands for ‘wealth’ is a measurement of the wasting process. Our economy has bloated into a monstrous organism that consumes everything and puts nothing back. The disease is the reaching of planetary limits; access to water, fuel, minerals, soil fertility, waste-carrying capacity and credit. Capital resources are being allocated by rationing access to loans. No credit = no resources, taking place under everyone’s nose is ‘Conservation by Other MeansTM‘.

This is a nasty and unpredictable process, what connects the dots together is the common outcome: ‘less’.

The one fact about parties is that they all end. The cocaine runs out. Everyone has to go home.

 

In the Eurozone and elsewhere, the cocaine — cheap credit — is running out. What remains is the hangover and daunting task of sobriety. Along with the credit, going is the gasoline. Things will never be the same.

‘Never be the same’ are fighting words for the Establishment which entrenches itself more deeply into the present even as both it and establishment become less relevant. Because it has lost the ability to reform itself, the establishment lashes out in a reflexive attempt to preserve its vanishing prerogatives. This is self-evident: if reform was possible it would have already taken place, the reforms would have prevented the crises.

Managers do not grasp the currency risk that emerges from both continued austerity programs or default. Economies are containers of social- and political values, shared understanding built upon edifices of trust. Within economies a collective suspension of disbelief takes place that insists bits of colored paper or electronic data are worth something. The trust emerges as more people share the same ‘worth’ idea and gain benefits from it.

Germany is Europe’s responsible party, it is EU’s paymaster and the long-time primary beneficiary of the Euro-economic activity. Mercantile Germany sits at the center of Continental trade; German euro surpluses are the consequence of its partners’ deficits. Ironically, German currency risk is no different from Greek risk, because both countries do business in what amounts to a foreign currency. Germany holds a borrowing advantage at the moment but both are built with the same financial armature, the defects of one country are the defects of all the others. The idea that Germany can integrate Europe around its economy … then somehow pull up the ladder when convenient is a hallucination.

Presently, managers carelessly discount one group’s sense of worth then another’s. Today is Greece, tomorrow is another country. Trust wavers then evaporates, at that point the economy is junk and the money is worthless, even if ‘the numbers’ indicate otherwise.

Reckless Germany gambles with euro risk even as it cannot afford to do so. It holds trillions of EU liabilities both in the form of currency and credits in its banking system along with ongoing business relationships with companies outside of Germany and the Eurozone. German wealth is nothing other than the trust earned over the entire post-WWII period. The ideal is that each European will engage profitably with others; not as slaves, some paying while others collect. Germany pretends it controls its destiny but this is something it cannot guarantee. Trust cannot be directly inserted into the minds of others: what Germany has cultivated carefully with one hand it casually undermines with the other.

Right now Germany plays the part of enforcer for Europe’s criminal banks. The blows it levels against its neighbors rebound against itself; the outcome of this is slow suicide. The impaired assets on European balance sheets outweigh investor equity and bondholder credit together. Europe is insolvent, liabilities are looking for a place to hide. The logical destination is Germany whether there is a euro or not. Within the euro, Germany cannot escape the full weight of its neighbors’ liabilities. Consequently, it has no choice but to succeed at its unification endeavor … otherwise, the worthlessness of the others’ balance sheets will be marked up against its own.

German banks and industry are right now stuffed with euros but this is momentary. There is no way possible for the current conditions within German finance to survive the demise of the currency. Germany cannot simply pick up its luggage and move itself away from Europe taking its ‘wealth’ with it. There is no road map for Germany to get from the euro to a substitute currency space The Germans and other creditor countries frozen to the spot: any sign that the Germans might abandon the euro would be the alarm for the others to do the same, to the instant ruin of German creditors, who are owed tens of trillions of euros.

The end of the euro anywhere within the Eurozone would also cast into doubt the security of Germany’s bank deposits. Uncertainty would trigger a run on German banks just as there is a run on Greek banks today. Germany would find itself bound by domestic politics to defend the euro to the bitter end, to protect its depositors. By doing so, Germany would become the fool of the market, the dumping ground for all European liabilities. This is a fate it cannot avoid, because of its long-running success it is the only European country with money!

The alternative strategy would have Germany racing Greece and Italy out the door. The survivor would be the first to grab a lifeboat on the Titanic. This is the nature of unraveling Ponzi schemes where the few winners get out early.

Add the currency trap to Keynes’ liquidity trap amplified by the political expediency trap. In its desire to party forever Europe is confronted with the persistence of liabilities that are generated along the way. These liabilities pitch Germany’s tent on the lip of the abyss. With the passage of time and accumulating mis-management, holders question whether euros are ‘worth the hassle’ and ‘worth the risk’ or not. This is not the proper sort of inner dialog to have about any currency.

With a non-euro currency, Germany’s option would be to depreciate. Doing so at a scale that would ‘manage’ liabilities would be default by another name with the costs falling on German depositors. To choose otherwise and not depreciate would leave Germany facing the same ruin as Greece faces right now; it would ‘become’ Greece, with massive and unsupportable demands for repayments in a foreign currency, a shortage of money, the absence of liquidity and a breakdown of export trade.

The only way for Germany to manage EU-legacy repayment claims would be to re-denominate them from euro to d-mark and then somehow inflate them away against a background of economic growth. However, jettisoning the euro would cut Germany off from its now-captive European markets. This would eliminate the growth potential; Germany would be crushed by its debts in a deflationary environment.

As bad as conditions would be for Germany, they would be worse for the other European countries. There would be a scramble for hard currency: everyone for themselves. If this is to be a hard German currency there would be a shortage much worse than there is today. The Europeans would be faced with the task of cobbling together a monetary system while the rubble of the current regime collapses on its head. Constructing a new model would require enormous investment of funds and good will that the Continent does not now possess; a breakdown would remove any possibility of either, there would be insufficient capital with which to (re)build anything.

The euro monetary union has had obvious structural defects from the get-go as admitted to by the Euromasters themselves. Now there is resolute refusal to address these defects even as the entire European enterprise accelerates to destruction. If not now, when? Does Angela Merkel or Wolfgang Schäuble honestly believe the Greeks will ever trust the Germans again after such rough treatment at the hands of faceless Troika functionaries? What good can this portend for German business? How do German businessmen expect their enterprises to succeed, on what alternative planet?

Dire times are when political instincts abandon professional politicians at a moment when these instincts are necessary. The Germans refuse to share any of the hardships their policies inflict upon their neighbors. Germans whine but their finance industry underwrote the bad loans, with eyes wide open, for the benefit of German manufacturers … whose ‘goods’ cannibalize the trading partners’ capital. German finance ignored the risks as it ignores currency risk today.

There are depositors run from Greek- and other banks into Northern Europe. The run itself is a part of the long-standing flow of funds from the rest of Europe into Germany’s national account. The ‘First Law’ states that as surpluses increase, the cost of managing them becomes greater than the surpluses’ worth. This can be seen in Europe where cost of Germany’s current account surplus is a shortage of liquidity and broken markets. Germany must unwind its surpluses, reducing the costs to both its customers and itself. It can unwind its smug sense of institutional superiority at the same time.

 

The world falls apart, nobody has an idea what to do about it.

 

Europe has been in a finance crisis for years, there has been plenty of time to ‘innovate’ solutions. Sadly for the Euros, all of the real solutions require giving up something … which nobody wants to do. Instead there is punishment for those tied to the mast; the workers, pensioners, students and suckers lured into investing in countries like Greece. The best the bosses have come up with so far is bailouts for giant banks, ‘appropriation’ of depositor funds and (incoherent) public relations.

Europe needs debt relief and stringent energy conservation. Finance collapse turns out to be the implement of conservation as bankrupt Europeans cannot drive, small countries with nothing to offer but their own worthless currencies cannot import fuel. Finance dares not risk relief to Greece because it cannot withstand the losses. Relief to Greece means granting relief to other Euro-deadbeats France and Italy (Germany). What is taking place right now is a margin call against the euro. The absence of relief insures the collapse of the entire finance edifice as defaults proliferate and distrust propagates.

In Part II we will look at some of the steps that can be taken including The Greek government issuing non-liability fiat euros — Greenbacks — and use them to retire euro denominated obligations on a fixed schedule.

Greece as Strange Attractor: Wings of the Butterfly

logopodcastOff the microphone of RE

Follow us on Twitter @doomstead666
Friend us on Facebook

Aired on the Doomstead Diner on July 1, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

http://www.evolutionnews.org/Illustra/ButterflyEffect-CreativeCommons-Hellisp.jpg

The Butterfly's Wings Effect– Small changes in intitial conditions lead to wildly different outcomes in complex systems.

Discuss this Rant at the Podcast Table inside the Diner

Snippet:

What the Euroclowns are hoping here is that the Syriza Goobermint collapses under the weight of the capital controls, like people unable to withdraw more than €60/day from the ATMs, increasingly long lines at those ATMs, decreasing FOOD available for purchase on the shelves of the local Groger Grocery store, lack of Toilet Paper, etc. IOW, the Eurotrash version of Venezuela. Cut them off from the MONEY, and they will capitulate. No Bombs necessary, the population will riot, the Goobermint will be deposed, and a New Regime of your choice can be dropped in their place, amenable to administering the debt slavery. That's the plan, but it's not clear it will work this time, at least not before the whole EZ is caught up in the contagion. Contagion is really the problem here, not Greece itself.

http://upload.wikimedia.org/wikipedia/commons/9/97/Hurricane_Katrina_LA_landfall_radar.gifIt's a Chaos Theory problem, and Greece is the Lorenz Attractor in this real life example of the Butterfly's Wings effect. Normally used as an example in the genesis of a Hurricane, what this math shows is that just a small change in a complex system in its initial conditions has a vast effect down the line as those conditions change the state and a cascade of new conditions elsewhere in the system result from that. The Hurricane here is Financial Implosion of the Euro, and Greece is the Butterfly…

For the rest, LISTEN TO THE RANT!!!

Full transcript of this Rant will be available HERE in a few days

Earlier Rants in the Greek Kabuki Souvlaki Series

The Game Continues…

For you Rant Fans, I found a New Gear for this one, and got it into OVERDRIVE by about the 7 minute mark, channeling Peter Finch.  🙂  A little Charlton Heston for Spice too!

Also, be aware I started the script for this last Friday during the first meetings, so the first part is not about the stupidity today, but a preview of that stupidity.

Snippet:

…Well, a thoroughly anti-climactic day here in the Greek Souvlaki Kabuki, as DieselBoom and Souvlakis spent a whole day talking past each other, with absolutely no indication that anyone is going to give an inch here. The Can Kick for this now is back to the 'Deadline' date of next Monday and the ultimatum that the Greeks will be CUT OFF from their Euro Gold Card and left to twist in the wind.

So what's the chances that they can come up with a SOLUTION to the problem on Monday they couldn't come up with today? Slim & None of course, unless somebody capitulates, and neither side can do that. The market of course believes that this is just another one of the endless series of “Deadlines” that will be Can Kicked down the road once again, and that very well might happen. Or maybe not.

What will it take to get a reaction here? Basically, the day the Greeks finally declare a Bank Holiday and start printing New Drachmas. Then Mr. Market finally wakes up from the stupor and does a Charlton Heston Planet of the Apes scene.

You did it! You finally really did it! You Blew it all Up! Damn You! Damn you all the HELL! LOL…

 

For the rest, LISTEN TO THE RANT!!!

 

In case you missed them, here are the last 2 installments of Greek Kabuki…

Bond Market Collapse and the Banning of Cash

logopodcastOff the microphone of RE

Follow us on Twitter @doomstead666
Friend us on Facebook

Aired on the Doomstead Diner on May 22, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

MoneyHoleDiscuss this Rant at the Podcast Table inside the Diner

 

Snippet:

…Bitcoins, a relatively new form of electronic money are also often hawked as the latest and greatest solution to keeping your money safe. Except EVERYBODY KNOWS about Mt. Gox by now. From Wiki:

Mt. Gox was a Bitcoin exchange based in Tokyo, Japan. It was launched in July 2010, and by 2013 was handling 70% of all Bitcoin transactions.[1] In February 2014, the Mt. Gox company suspended trading, closed its website and exchange service, and filed for a form of bankruptcy protection from creditors called minji saisei, or civil rehabilitation, to allow courts to seek a buyer.[2][3] In April 2014, the company began liquidation proceedings.[4] It announced that around 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time.[5][6] Although 200,000 bitcoins have since been "found", the reason(s) for the disappearance—theft, fraud, mismanagement, or a combination of these—are unclear as of March 2014.[7]

You think Fraud, Mismanagement and Hacking will STOP if money goes cashless? OF COURSE NOT, IT WILL GET WORSE! There is no computer system ever that is foolproof and incapable of being hacked, and of course the rewards for hacking such a system or “mismanaging” it gets bigger all the time, so the Best & the Brightest spend all their time figuring out how to do that…

For the rest, LISTEN TO THE RANT!!!

Full Rant Transcript available HERE

ALSO, IF YOU HAVE NOT DONE SO ALREADY, TAKE THE SURVEY ON NEAR TERM HUMAN EXTINCTION BELOW!

Fantasy Islanders

Off the keyboard of Steve from Virginia

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on Economic Undertow on April 26, 2015

Discuss this article at the Economics Table inside the Diner

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

Triangle of Doom 041515

Figure 1: We have now entered the post-economic Triangle of Doom period TFC Charts, (click on for big); the triangle has outlived its usefulness, the oil – credit markets have broken down. What remains is relentless decline … as resources along with purchasing power are annihilated.

Can we handle it? In place of hard-headed realism and a turn toward effective policy, there is denial and lies. Analysts insist lower oil prices have no affect on output. Others pretend that debt-riddled economies can be cured by adding more debt. In ways great and small, the real world offers clear warnings about consequences of consumption … but these are ignored as the establishment frolics on Fantasy Island.

From the dawn of the industrial era, companies have been able to stay afloat by borrowing. This included oil drillers: since 2008, extraction firms have borrowed over a trillion dollars at very low cost. They can certainly and reasonably expect to borrow more, after all the funds cost the lenders nothing to create. But who repays? Someone must: a firm can borrow from its own lenders for a long time but at some point the customers must step up and borrow for the firm’s benefit. Otherwise the firm’s indebtedness becomes greater than any potential number of customers can bear: at that point the firm is insolvent and out of business.

The ongoing petroleum price crash is by itself evidence that customers can no longer support the oil industry. Citizens cannot lend their own funds into existence, they must borrow from others or swap their time- and skills for (borrowed) funds. Because the aggregate worth of human labor represents a kind of upper bound to leverage, the outcome is a ‘repayment shortage’ which strands the drillers and their lenders; every additional dollar a firm borrows to stay alive is a dollar that is ultimately uncollectible from the firm’s tapped-out customers.

Stripped to fundamentals, oil use turns out to be recreational not economic. Modernity is revealed to be nothing more than ‘lifestyle’, pointless wars and other distractions. We must eat and drink to live, we drive to fill the empty spaces between television shows.

Gold TOD 042415

Figure 2: The gold futures continuous contract by way of TFC Charts, (click for big): gold has led the industrial commodity markets down, with its own break occurring in 2012. The gold price trend over the past year and a half is generally sideways. Look for similar price action in other commodities including petroleum over the intermediate term.

Gold can be sold below cost because it is indestructible whereas oil is simply wasted. Any shortage of new gold results in a scarcity premium being attached to the gold that remains above ground. The premium is real, not necessarily nominal, the beneficiaries are the gold holders who gain whether new gold is mined or not.

Selling below cost does not work with petroleum because consumers destroy it, what they gain in return is generally worthless. In this way, fuel users turn their asset into a compounding liability. Unlike gold, the petroleum scarcity premium doesn’t benefit anyone either holders (drillers or distributors) or customers, scarcity takes the form of a disruptive tax … that is ultimately uncollectible from the firms’ tapped-out customers.

Denial creates its own perverse dynamic: when low prices do not provoke the needed ‘lifestyle adjustments’ they decline further until they do. Conservation is the necessary adjustment, yet low prices are an incentive to waste more. When customers conserve there is the appearance of a ‘glut’, this in turn leads to lower prices. The outcome is a price signal that is hard to interpret, confusion rather than clarity because the consumer response to the ‘false glut’ and a real one is the same.

Real price increases can only occur when customers become wealthier relative to the drillers … when they become able- willing to borrow more; when repayment obligations can be shifted onto others. None of this is happening right now, instead customers are bankrupted by their own energy waste. Because fuel use does not produce anything; industries can only offer improved efficiency, that is, the exhaustion of what remains of our non-renewable capital at a slightly slower pace. The same efficiency means losses that must be made up with volume => diminished (non-existent) collateral for loans => less ‘growth’ and lower prices including interest cost of money. Increased efficiency means more unsecured lending, more finance industry risk along with diminished ability to properly price it; along with customer bankruptcy, these are forms the petroleum scarcity premium assumes.

A long-term resident on Fantasy Island is Ambrose Evans-Pritchard:

Oil slump may deepen as US shale fights Opec to a standstill

 

 

 

 

 

 

Continental’s Harold Hamm says US shale industry has ‘only begun to scratch the surface’ of vast and cheap reserves, driving growth for years to come.

The US shale industry has failed to crack as expected. North Sea oil drillers and high-cost producers off the coast of Africa are in dire straits, but America’s “flexi-frackers” remain largely unruffled.

One starts to glimpse the extraordinary possibility that the US oil industry could be the last one standing in a long and bitter price war for global market share, or may at least emerge as an energy superpower with greater political staying-power than Opec.

It is 10 months since the global crude market buckled, turning into a full-blown rout in November when Saudi Arabia abandoned its role as the oil world’s “Federal Reserve” and opted instead to drive out competitors.

If the purpose was to choke the US “tight oil” industry before it becomes an existential threat – and to choke solar power in the process – it risks going badly awry, though perhaps they had no choice. “There was a strong expectation that the US system would crash. It hasn’t,” said Atul Arya, from IHS.

“The freight train of North American tight oil has just kept on coming. This is a classic price discovery exercise,” said Rex Tillerson, head of Exxon Mobil, the big brother of the Western oil industry.

Mr Tillerson said shale producers are more agile than critics expected, which means that the price war will go on. “This is going to last for a while,” he said, warning that any rallies are likely to prove false dawns.

 

 

 

 

 

Enter the Petro-industry Ponzi buzz-words: ‘vast and cheap’, ‘flexi-frackers’, ‘energy superpower’ and ‘price discovery exercise': what is wrong with these? A: just about everything …

Hamm and Exxon have both lost billions since the beginning of the year. It isn’t just private companies: Russia, Saudia, Brazil even Islamic State have lost ‘vast’ amounts of income from fuel sales. It is nonsense to believe that these losses are inconsequential. Someone must bear them, if not the firms then the firms’ lenders and loan guarantors; if not the governments then certainly the drilling agencies which require investment funds. Every one, company and country, is dependent upon the borrowing capacity of their customers …

A large percentage of mid-sized energy firms are simply failing. So are lenders who stand to be wiped out, also Canada and its poorly conceived real estate extravaganza … also Canada banks. Don’t forget Australia; also Russia. Previously drilled wells are left uncompleted, rig count has plunged. The assumption is that shortages will re-ignite a bidding contest; however, customer purchasing power shrinks faster than the rate of depletion. This is because the elites’ share of purchasing power expands at the expense of the customers’. As a consequence, even very low prices for petroleum and other resources are unaffordable at any given time.

Fantasy Islander Jeffrey Sachs suggests American fuel- guzzling, Las Vegas lifestyles can be powered with solar panels and windmills. Sachs ignores how wimpy/pathetic these power sources are compared to gigaton carbon burning and nuclear, (Project Syndicate):

 

Photo of Jeffrey D. Sachs  

Jeffrey D. Sachs, Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University, is also Special Adviser to the United Nations Secretary-General on the Millennium Development Goals.

ExxonMobil’s Dangerous Business Strategy

Jeffery Sachs

NEW YORK – ExxonMobil’s current business strategy is a danger to its shareholders and the world. We were reminded of this once again in a report of the National Petroleum Council’s Arctic Committee, chaired by ExxonMobil CEO Rex Tillerson. The report calls on the US government to proceed with Arctic drilling for oil and gas – without mentioning the consequences for climate change.

While other oil companies are starting to speak straightforwardly about climate change, ExxonMobil’s business model continues to deny reality. That approach is not only morally wrong; it is also doomed financially.

The year 2014 was the hottest on instrument record, a grim reminder of the planetary stakes of this year’s global climate negotiations, which will culminate in Paris in December. The world’s governments have agreed to keep human-induced warming to below 2º Celsius (3.6º Fahrenheit). Yet the current trajectory implies warming far beyond this limit, possibly 4-6º Celsius by the end of this century.

Just as the global shift toward renewable energy has already contributed to a massive drop in oil prices, climate policies that will be adopted in future years will render new Arctic drilling a huge waste of resources.

 

 

 

 

 

Sachs is as hopeful as Evans-Pritchard, he fusses over extraction but simply dismisses the consumption side with a breezy, hand-waving reference to: “low-carbon energy like wind and solar power, and to electric vehicles powered by low-carbon electricity.”

Low-carbon wind and solar are high cost, dispersed power sources that cannot provide the same loss-leading subsidy to industry that petroleum has offered since the turn of the 20th century. Sachs assumes that the same consumers who are too broke to afford diesel and gasoline will somehow pony up for alternatives that have greater life-cycle costs … alternatives that are themselves entirely dependent upon unaffordable diesel and gasoline for manufacture, transport, installation and maintenance.

Wind and solar might become something more than a marginal amendment to conventional grid electric or portable generators but this is hard to quantify due to intermittancy. EROI calculations tend to omit storage- and grid/infrastructure costs. Also avoided is energy cost of the factories making the turbine- and panel factories, factory components and these factories’ components in turn. Transportation and installation costs are difficult to calculate because they are not monolithic, self-contained processes but widely distributed (most panels are made in China and installed elsewhere). The manufacturing base of transportation industry is itself fossil fuel dependent.

Widespread penetration of low-carbon electric vehicles is found on Fantasy Island and nowhere else: every kind of car is possessed of immense life-cycle costs including interconnected chains of energy gobbling factories and infrastructure. There are no solar tires or window glass, no wind-turbine highways, bridges or real estate developments. Infrastructure requires steel, concrete, plastic and asphalt; all of these require work, high-density power derived from fossil fuels.

Our planetary scale built environment is likewise dependent upon ‘vast’ and ‘massive’ finance industry debt … as are solar panels and wind turbines.

Most likely, that ” … global shift toward renewable energy,” has added to fossil fuel demand where it would otherwise decline. Only indirectly has renewable energy triggered Prof. Sachs’ “massive drop in oil prices …” Solar and wind firms must borrow, in doing so they strip credit from their hapless customers … collapsing oil prices by way of the back door.

Energy Commodity Futures (Bloomberg)

Commodity Units Price Change % Change Contract
Crude Oil (WTI) USD/bbl. 55.74 -0.97 -1.71% May 15
Crude Oil (Brent) USD/bbl. 63.45 -0.53 -0.83% Jun 15
RBOB Gasoline USd/gal. 192.99 -0.55 -0.28% May 15
NYMEX Natural Gas USD/MMBtu 2.63 -0.05 -1.86% May 15
NYMEX Heating Oil USd/gal. 188.24 -2.56 -1.34% May 15

 

 

 

 

 

Precious and Industrial Metals

Commodity Units Price Change % Change Contract
COMEX Gold USD/t oz. 1,203.10 +5.10 +0.43% Jun 15
Gold Spot USD/t oz. 1,204.22 +5.67 +0.47% N/A
COMEX Silver USD/t oz. 16.23 -0.06 -0.34% May 15
COMEX Copper USd/lb. 277.00 +0.25 +0.09% Jul 15
Platinum Spot USD/t oz. 1,171.50 +11.75 +1.01% N/A

Next to Sachs and Evans-Pritchard on Fantasy Island are the Greeks and their European bankers, (Wolf Richter):

The Greek People Just Destroyed Syriza’s Strategy

 

 

 

 

 

 

Greek stocks ventured deeper into purgatory. The ASE index dove below 700 intraday on Wednesday for the first time since the crisis days of June 2012. Then word spread that the ECB had raised the cap on the Emergency Liquidity Assistance for Greek banks by €1.5 billion to €75.5 billion. It’s the oxygen line for Greek banks. Without it, they’re toast.

The ELA provides the liquidity so that the Greeks can continue yanking their beloved euros out of their banks to stash them elsewhere before their desperate government confiscates them.

The government, under the cool leadership of Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis, is already confiscating €2.5 billion in “idle” cash that state agencies, state-owned enterprises, and local governments kept at commercial banks, the same banks that the ELA is propping up and that the Greeks are fleeing. Now these entities have to transfer the money to the central bank so that the government can “borrow” it for other purposes.

 

 

 

 

 

Did you get it? The flow of funds into and out of Greece is almost farcical. Money loaned by the ECB originates in EU banks, the ECB is a conduit. The funds flow to ordinary Greeks who remove them from Greek banks and re-deposit them in the same EU banks the loans came from; full circle! The EU banks are not deploying Greek savings but are instead offering loans to Greek depositors who are themselves are on the hook for repayment … the Greeks are in essence getting loans instead of their own money … the costs of which the depositors are attempting to dodge by hustling their funds out of Greece … Meanwhile, repayment for loans to Greek depositors are being extracted from the same Greek depositors by the Greek government!

You cannot make this s**t up. Behind the Vaudeville is the fantasy of Greece leaving (being forced out of) the euro. This is impossible, it cannot happen and everyone knows it. The only outcome is the euro lives or the euro dies.

The euro = gasoline. The Europeans including Greeks will never voluntarily give the euro up because it enables driving. Without the euro half of the Europeans would have to walk … horrors! Even if the Greeks could somehow ‘go off’ the euro, it would still circulate in Greece but outside the reach of government. Greece outside the euro would create more instability than it does now. Greeks would use the euros (gasoline) and do whatever they could to get them including discount their own ‘replacement’ currency. Jettisoning the euro would not solve euro-related debt problems, either. The problems — petroleum scarcity premium — would simply be shifted around from one country to others wreaking havoc.

Greece could dollarize but the country’s credit problems would not go away. Not because the government overspends or because the Greeks have too many overpaid workers (who sadly happen to be temporarily indisposed) but because Greeks have too many cars and cannot earn anything by driving them. Greece — like the rest of the world — is bankrupted by its own fuel waste and the uncollectible petroleum scarcity premium.

Greece is an agrarian vacation paradise with smuggling rings. It has its own currency — the euro — but acts like the currency is a gift from (banking) gods. Because Greece has its own currency it really controls its own destiny to the degree that it can buy some time and use it to wean itself from imported fuel and Northern European finance credit.

Another Fantasy Island resident is Yanis Varoufakis:

A New Deal for Greece – a Project Syndicate Op-Ed

 

 

 

 

 

 

ATHENS – Three months of negotiations between the Greek government and our European and international partners have brought about much convergence on the steps needed to overcome years of economic crisis and to bring about sustained recovery in Greece …

The “troika” institutions (the European Commission, the European Central Bank, and the International Monetary Fund) have, over the years, relied on a process of backward induction: They set a date (say, the year 2020) and a target for the ratio of nominal debt to national income (say, 120%) that must be achieved before money markets are deemed ready to lend to Greece at reasonable rates. Then, under arbitrary assumptions regarding growth rates, inflation, privatization receipts, and so forth, they compute what primary surpluses are necessary in every year, working backward to the present.

Our government’s position is that backward induction should be ditched. Instead, we should map out a forward-looking plan based on reasonable assumptions about the primary surpluses consistent with the rates of output growth, net investment, and export expansion that can stabilize Greece’s economy and debt ratio. If this means that the debt-to-GDP ratio will be higher than 120% in 2020, we devise smart ways to rationalize, re-profile, or restructure the debt – keeping in mind the aim of maximizing the effective present value that will be returned to Greece’s creditors.

Besides convincing the troika that our debt sustainability analysis should avoid the austerity trap, we must overcome the second hurdle: the “reform trap.” The previous reform program, which our partners are so adamant should not be “rolled back” by our government, was founded on internal devaluation, wage and pension cuts, loss of labor protections, and price-maximizing privatization of public assets.

Our partners believe that, given time, this agenda will work. If wages fall further, employment will rise. The way to cure an ailing pension system is to cut pensions. And privatizations should aim at higher sale prices to pay off debt that many (privately) agree is unsustainable.

By contrast, our government believes that this program has failed, leaving the population weary of reform. The best evidence of this failure is that, despite a huge drop in wages and costs, export growth has been flat (the elimination of the current-account deficit being due exclusively to the collapse of imports).

 

 

 

 

 

More buzzwords: ‘forward-looking’, ‘reasonable’, ‘surpluses’ (who doesn’t like surpluses?), ‘sustainability': reassuring and even-tempered like the mad computer Hal 9000 in Kubrick’s ‘Space Odyssey’.

It’s pretty sad to see the genial/obnoxious Varoufakis scuffling from pillar to post, tugging his forelock like a latter-day Oliver Twist, begging criminals like Wolfgang Schäuble and Christine Lagarde for ‘more'; “Please sir, some more” … more loans of course. Without loans-constant increase in credit there is no Greek ‘industry’ … or any other countries’ industry for that matter.

Using econo-speak, Varoufakis attempts to square the circle, arguing the Greek claims to live large: “The others do it,” thunders/pleads Varoufakis, “why not us?” Solving an excess debt problem with more loans works on Fantasy Island but offers no hope elsewhere. Varoufakis cannot grasp the post-petroleum world he now inhabits, the world bankrupted by non-remunerative, resource-depleting ‘lifestyles’. Europe burns through 12 million barrels of imported crude oil per DAY, every barrel paid for with borrowed euros (BP). As a consequence the Continent is entirely-hopelessly insolvent; monetary flexibility is a myth, there is no such thing as independent policy; the price of the euro is set at the gas pump by millions of motorists buying (or not buying) fuel. The monetary- and fiscal establishment in Brussels and elsewhere are irrelevant. At the same time, Europeans have enslaved themselves to the (non)establishment status quo because the euro = gasoline.

The first thing the humans must do is face reality. What is underway in Greece and elsewhere is ‘Conservation by Other Means™’. There is no chance at the ‘good old days’ of wasteful consumption and auto-centric ‘development’. It’s over, its untenability IS the crisis … this should be clear to both the Greek government, the IMF, the ECB and the monetary establishment. The second order of business is for the Greek government — not finance or the central bank — to begin to issue euro payments to banks as well as individuals/firms in Greece who do business with the government. If Greek government can issue collateral by fiat it can issue payments the same way. By doing so the Greeks can end the imposed, artificial ‘money shortage’ that is strangling them and buy some precious time.

Greeks can then use the time gained to reconfigure their economy around conservation and husbandry, for the Greeks to begin to live within their means … they have no choice, one way or the other this is something that Greeks and others will do.

Cannibalizing the world’s capital/resource endowment for fun is at the heart of the ongoing crisis in Europe and elsewhere. The human technology experiment including its myriad mechanical toys is coming hard up against the limits set by thermodynamics. Physical forces do not negotiate, conditions are set and humans adapt … or else. The inevitable outcome should the Greeks stubbornly carry on is that the country becomes a kind of hybrid mafia gangland dependent upon smuggling and murder.

MapNobody will admit that Europe is 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, university professors, pundits, finance- and energy bloggers, fiction writers, poets and bass fishermen not seeing what is taking place right under their noses!

Welcome to Fantasy Island …

 

 

Greek Deadline Fatigue

Off the keyboard of John Ward

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Slog on April 24, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

slogging-through-mud

Discuss this article at the Geopolitics Table inside the Diner

Greece: Deadline fatigue is in danger of boring us all to death

I went for a long lie down in a cool room this afternoon after a morning full of chores, followed by a lunchtime laying gravel, and then bordering it with rocks the size of Earth-threatening asteroids.

All of this, I’m here to tell you, was less tiring than Deadline Fatigue – a new board-game for all the family invented by the Eurogroupe-Varoufakis-IMF Toy Company.

I’m up and about again now, preparing dinner while lighting the fire-pit outside because the weather’s gone a little grey and chilly here. Things also seem to have gone a little chilly in the ‘tough’ negotiations between sound economics on the one hand, and Jeroboam Drivelclown on the other. Tough or not, this ridiculous paint-drying championship could have been predicted from Day One.

I shrink, as always, from the limelight; but as it happens, The Slog did piss off just about everyone at the outset by suggesting there were no grounds at all for optimism on the subject of compromise.

I posted this gentle mickey-take on the chances of building bridges between Frankfurt and Athens last January 28th. What followed was obduracy after obduracy: the Draghi/Schauble ambush of Yanis Varoufakis in late February, and the rise and rise of their Dutch bumboy Dieselbang…with Pristine Lowgrade joining the ‘non’ tendency despite a Varoufakis attempt to charm the charmless.

The timeline, as one looks back now, really is almost funny: Greece must default on February 26th, then March 11th, then March24th, then April 14th. Reuters might just as well have had a daily column called ‘Another day, another deadline’.

All this week we’ve been fed with spin about ‘rapid progress being made’, but today’s free-for-all presser was nothing more than a statement of the obvious: the two sides are no nearer a compromise today than they were almost three months ago to the day.

The following realities need to be borne in mind in this poker marathon:

1. The weak card in the Syriza hand is without doubt that they have a mandate to tell Brussels to piss off, but not to take Greece out of the euro.

2. Over 50% of all Greeks believe they could be kicked out of the euro, although legally this is an impossibility.

3. The weak card in the Troika2 hand is that – despite what the markets might suggest now – the reality of a Greek default within the eurozone is that discontent contagion will swiftly follow….and whether or not that’s reflected immediately in bond yield spikes is neither here nor there. The markets would have to be deficient in all the primary senses not to spot that rebellion on such a scale spelt the end of the euro.

4. If Troika2 really was comfortable with the idea of Greek default, they would’ve engineered it by now: you are a boxer and you have the other guy on the ropes….do you just tickle him under the armpits and spin things out until the bell goes for the end of the round? I think not. Bear in mind that twice now, Draghi has continued to drip feed ELA funds to Greek banks. It is a very odd general indeed who plays to keep his enemies in the game.

5. Far away to the West, we are a little over 12 days away from the UK General Election. Nigel Farage is very excited because a new poll in the constituency he’s fighting – Thanet – puts him nine points clear…when just two weeks ago he looked in danger of losing. This is Nigel looking very excited:

nigelexcited24415Nigel gets excited by almost anything…a media crew, a flood, a camel hair coat, a pint of Old Scrotum and so on. But if there really is a Ukip surge about to take off, while it is highly unlikely to deliver more than four seats in total, this will nevertheless represent a third front opening against beleaguered Brussels-am-Berlin: not only an austerity rebellion in Greece and euro rebellions in Italy and Spain, but suddenly an EU rebellion in Britain. Marine Le Pen in France may very well intensify in the nightmare in two years time.

I do think now that the time is long past when anyone can credibly raise an argument to say that Master Tactician Yanis Varoufakis knows exactly what he’s up to, and every step is carefully planned: as I have written before, Yanis overestimated the leverage available to produce a compromise, and Troika2 drastically underestimated the unwillingness of the Greek electorate to buy into any more “serves you right” bollocks.

I still believe that in late February Varoufakis should have revealed the Eurogroupe perfidy and walked away from the ambush. But all this is now water under the bridge. The reality is that if a deal were to be reached now, it would have zero credibility in the markets, and a Syriza having done that deal would have zero electoral credibility at home.

Yanis thought it necessary to prove beyond any reasonable doubt that Syriza was holding an olive branch, whereas the Troikanauts were wielding baseball bats. I suspect this was the truth: but it’s not the way the Western MSM have portrayed it.

The only honourable path ahead for Tsipras and Varoufakis now is to say, “Right – do your worst: we are not going to accept your neoliberal crap thinly disguised as “reform”. We will default inside the eurozone: let’s see how you like them apples”.

The Battle of Yesterday vs Tomorrow

Off the keyboard of John Ward

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Slog on April 19, 2015

slogging-through-mud

Discuss this article at the Geopolitics Table inside the Diner

ANALYSIS: Why the standoff between Greece and the EU is really the first major battle in the war between Yesterday and Tomorrow

2day2morrow19415As the days drag on towards some kind of dénouement to what is rapidly becoming the silliest, longest and most empty threat of a death sentence in political history, I continue to be amazed that the Western media are reporting the Greece-eurogroupe ‘deadlock’ as if it was a purely technical matter.

There are only two elements of the ‘crisis’ that concern me: the emotional dimension of an at times infuriating but fundamentally sound culture I’ve loved for over forty years being pelted by a salvo of Brussels sprouts, controlling sauerkrats, and past-sell-by date Frankfurters; and the former politics student’s fascination with the factions and rivalries on both sides.

If you’re a Python nut like me, then you will remember the Life of Brian sequence where Graham Chapman innocently asks the anal splinter-group leader Michael Palin if “we” are the People’s Group for the Liberation of Palestine, and Palin snaps back, “Are you f**king mad? We f**kin’ spit on the PGLOP. We, my friend, are the People’s Army for Palestine Liberation. There’s a world of difference”.

Sadly, a great deal of contemporary in-fighting between Middle East opponents of the US, Israel and NATO have proved in the 36 years since that movie how madness will eventually – somewhere – become reality. But it is also one of the strongest arguments against large States like Europe, China, the US and Russia that the citizens reach a point where a substantial minority no longer feel any affection for the much-vaunted body. For them, it’s more of a cadaver: a giant corpse they simple cannot remember as the flower of their youth.

More and more, this anthropological reality both colours and muddies European affairs.

The current impasse/standoff/crisis/negotiation is not – let’s get this straight for starters – a conflict between the EU and Greece. It is not even a war between national liberty and superstate dictatorship.

Rather, it’s the first battle in what could be a long war between yesterday and tomorrow. And be aware: the battle is no way as simple as ‘EU yesterday vs Greek tomorrow’: this is a battle in which there are more false flags, civil wars around the edges and power struggles going on than in the emerging Nazi Party of 1931.

*********************

Let’s deal quickly with my first concern: although depicted as the punishment of corrupt Greek politicians, backhanding officials and tax-evading taverna owners, none of that is even closely related to the facts. Far from punishing Nia Demokratia, PASOK and their serially unpleasant leaders, the Troika has insisted from Day One that it will only deal with these gargoyles. This is the same principle as hanging the war criminals at Nuremburg….up to but not including rocket scientists the victors wanted on their sides.

Germany largely benefited from corrupt officials (especially during the various insane arms deals with Greece) rather than suffering in any way; and precious few of those Fat Crats have been brought to justice….although Syriza is now on the case.

And finally, small businesses evade tax in Greece because the tax system is corrupt, not through greed in many cases: they know that every pol and bureacrat wants a kafelaki (small envelope). And people evade the Troika taxes today because they see them for what they are: a disgraceful attempt to pick the pocket of the vagrant in the gutter. I live in France now, and I’ve visited Greece between forty and fifty times in the last half-century; everything I see related to le noir francais is exactly the same as in Greece – except for one thing: it’s a far bigger problem in France.

I’m told by some that the desire to evade tax became an act of patriotic resistance during the Ottoman hegemony over Greece, but that was a long, long time ago: more accurate, I think, is the phrase used to me over and over again: “It’s a national sport”….and the trophy is nothing more than sticking it to the depraved elites that have been sitting on real Greeks for decades.

The punishment meted out by the Troika fits not the crime, but the greed, geopolitical ambitions and cynical control freakery of its three prongs – Wall Street, the US/EU, and Berlin/ECB interest groups. This is far from empty conspiracist assertion: the investment banking firms and Hedge Funds got clean away with a fat profit during the initial bailouts, Schäuble stands accused of conspiring with Venizelos to exaggerate the size of debt hole in 2010, a German-controlled and run concept of Fiskalunion has emerged directly from this totally unnecessary mess, the federalisation of the EU has been accelerated, and above all the euro was saved to die another day.

Greece, Italy, Spain and Portugal are on Calvary at the moment, but they’re dying to cleanse a worthless currency of its flaws, not to save anyone’s soul. And no amount of crucifixions from here to Warsaw via Budapest are going to remove the euro’s flaws.

Greece is saddled with an obscene debt and carpet-bombed economic structure because Schäuble wanted to convince the markets of eurozone viability, Trichet’s borrowing controls were hopelessly lax, Goldman wanted to sell credit, Sarkozy was terrified of the effect on his banks, and Berlin wanted – plus ca change – to run Europe using the best alternative to military force: the munnneeee.

There is little difference in general substance between QE and Zirp killing economies across the globe, and ClubMed austerity killing most of the ezone economy: except of course, the one in Germany. Gott in Himmel: perish the thought that such a thing might occur.

*********************

Nobody in the neoliberal owned and controlled press is ever going to accept that version of events, no matter how empirically databased it is. But no other explanation can explain the consistent actions of those in charge of the fiscal policies involved….policies that cannot possibly be related to sound economic actions – or even sound minds.

The mistake many observers and commentators make is to get the motive for the Greek tragedy wrong: get it right, and everything makes complete sense. Read the MSM account, and none of it does.

However, as I pointed out at the start of this mini-essay, there’s no simple tug-of-war going on. The best analogy I can summon up for the moment is to see the EU/ECB/Berlin attack on Greece as akin to Abe Lincoln deciding to attack Samuria-Shogun-Meiji fractured Japan just after the first Battle of Bull Run.

The two ‘sides’ in 2015 square up as follows:

EC vs Eurogroupe vs Frankfurt vs IMF vs ECB vs Berlin vs Paris vs UK

vs

Syriza vs KKE vs PASOK vs Nia Demokrita vs Golden Dawn vs To Potami vs ephiles vs ephobes

Without getting into too much detail, Jean-Claude Junker’s power base is the EC. Inside that, he has an anti-austerity rebuilding fund of allegedly €350bn, whose purpose he has kept deliberately vague. He befriended Alexis Tsipras, and could shaft the eurogroupe royally if he decided to invest it in Greece on a bigger scale than at present. This is because the eurogroupe’s attempt to wrest power from Juncker gets up his nasal orifice – and threatens the Cyprus-style tax evasion racket he runs in Luxembourg.

But the Frankfurt Bundesbank hardliners think the eurogroupe and its ally the ECB will have a disastrous effect on money supply and inflation via QE…plus (they assert) it was a mistake to let the US-controlled IMF and its mathematically dyslexic boss Christine Lagarde loose anywhere in Europe. In Berlin, however, Schäuble wants to have total control over the reins of euro-fiscal policy, and so would do anything to vapourise ECB boss Mario Draghi…while Chancellor Merkel (whom Schäuble dislikes, but who has the electoral appeal he lacks) has similar doubts to me about what Draghi’s really up to: is he working for the euro, or is he working for its replacement, the Dolleuro?

Paris, meanwhile, is infinitely more guilty of fiscal vandalism than Greece (as are Germany and Holland) but is no longer avoiding the consequences of its soi-largesse with quite the ease it was. The French Establishment has been rattled by some of the fiscal disciplinary methods imposed on France after the March eurogroupe summit: but Berlin must beware of pushing too many French voters towards the undiluted anti-EU nationalism of Marine Le Pen’s Front Nationale.

And last but not least, dear old Blighty stuck out there in the island limbo of “Ukip if you want to, but we’re wide awake, and we want out”.

You may think the Sceptred Isle doesn’t count, but I would suggest you’re wrong. At the moment, the Eunatics face threats on four ClubMed fronts, interference from the US, and an allegedly weak Putinesque Russia which suggests that it isn’t either weak or stupid. The last thing the EU elites need is to roil the markets with a secession request from Britain in 2018….even if it is only England by then.

This does, I think, go a long way to explaining why Draghi has of late switched tack, and begun persuading his ‘colleagues’ that the time is not yet quite right for the Greeks to default. Much smart money had been targeting April 26th as the moment of truth for Athens. But yesterday the ECB boss told a Washington audience that he “won’t even contemplate” the possibility of a Greek default on its debt repayments during April, because such an event would throw the eurozone into “uncharted waters.” This from the man who six weeks ago claimed that Greek default would be no more than a gnat-bite on the bum for eurobanks…because this time, the system “is prepared”. Yeh, right: that must be why he arm-twisted the ELA into coughing up the liquidity to help Greece pay off the last IMF kilo of flesh, sorry, installment.

Far more money is now being placed on a Greek default on or after May 9th. And spookily, that just happens to be two days after the UK General Election finishes. I think it would be safe to say that – were a Greek default to throw everything into European bond-spiking confusion before April 26th – there would be a massive Ukip surge, as well as potential pressure on the UK’s George Osborne in terms of borrowing rates. The continued UK national debt explosion is, after all, the Chancellor’s Achilles heel.

So there you have it. Or rather, you don’t: because twixt you, me, the gatepost and the other girls, trying to discern 8 x 8 possibilities producing 64 possible outcomes (when any new left-field factor could make that 4096 scenarios) is the original mug’s game.

Much better, I’d opine, to stick to the basics. And I’ve remained consistent about these since this rapidly dwindling time-window began last February 24th.

Those who would rather have a meteorite collide with Earth than give up on the euro project have far, far more to lose than a nation of 11.5m people who would (in my view) be much better off deserting the euro. But there remains that Greek inferiority complex pride thing of not wanting to be the catalyst of destroying a single market that acts as an economic and political bulwark against American multinational domination of the Globe.

I think that viewpoint to be muddled, but then I’m not Greek, or foraging in the Athens garbage cans. My gut feeling is that Varoufakis underestimated the Cosa Nostra nastiness of those with whom he must deal, and Troika2 underestimated the fatigue of the Hellenic population at large with being made a scapegoat.

Either way, a lot of very sour derivative bets placed on euro success cannot be allowed to trigger an omni-directional bazooka aimed at Wall Street. Sorry to repeat myself, but I still think the high face-cards are in the Greek hand.

Exposing the Euro Clowns

Off the keyboard of John Ward

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Slog on April 10, 2015

Euro_collapse

Discuss this article at the Economics Table inside the Diner

EXPOSED: The reason why none of us can be sure what’s going on in the EU v Greece yawn

merkmario1pt

When there is only cacophony, nobody can follow the tune

I’ve posted many times before about why a neolib minority constantly dissembles to confuse: there is so little ‘truth’ behind their ridiculous socio-economic and fiscal theories, they have no choice but to do what they do.

The same thing applies to the European Union, the ideas behind which – non-sovereign federalisation and yet a single currency ambition – make no anthropological, banking, libertarian or Bond market sense at all.

But there is another reason why second-guessing what comes next in the EU has been an impossible task in recent years: the people allegedly running it (another Slog hobby-horse this) are split along several crucial dimensions. So apart from the banking lies and the let’s-rewrite-history school of mogul-lapdog tabloid journalism, we have this factor added to the witch’s brew: if they don’t know what’s going to happen next, how the hell are we supposed to speculate with any accuracy?

We are now, little by little, beginning to see the odd glimpse of holey stocking beneath the holy, long skirts of sanctimony pumped out by the various power points in Berlin, Frankfurt, Paris and Brussels. Even better, we can catch these glimpses…..and view them alongside what the BSDs – preparing for what they think is to come – put out their agenda in the media they own and/or influence.

This morning offers a classic example of this. The Americo-Austropathicus threat Rupert Murdoch puts out this version of the immediate future in his Times newspaper this morning:

‘….Eurozone countries are secretly drawing up plans to expel Greece from the European Union’s single currency as they prepare for the country to be declared bankrupt next month.

A memo drawn up by the finance ministry in Finland, which is closely allied to Germany, has revealed preparations for a Greek exit from the euro.

The document warns of “very difficult political decisions” this spring amid predictions that Greece will be bankrupt next month unless the eurozone agrees the next tranche of aid for it within the next three weeks.

Greece has been given until next Friday to come up with…..’

Here the message ends, the rest of it hidden behind Roop’s paywall – which continues not to get many people paying to climb over the wall. This is slightly different to the Telegraph, where the Barclay Twins peddle their corporate bias completely free, but both readers and journos are climbing a Berlin Wall in a desperate bid to get out.

But the tone is clear: Greece is a disaster area, they’re all scrounging mongrels, so like dogs they shall be kicked out of the house. Except of course this can’t happen legally without treaty change….so here we see more Turdcock readying the ground for something illegal that will be accepted by the Sleeple because they, er, read it in a quality newspaper recently or something and what should we download from Netflix tonight?

Here, Murdoch is doing the will of ECB boss Mario Draghi….because he agrees with what Mario and the Goldin Sacks lads see as the future.

But this is just one power centre. Wolf Street pointed out yesterday in another smart piece that the Jean-Claude Drunker view of the world is quite different, because he leads the EC – an unelected bedlam of corruption which is seeing its power rapidly eroded by the ECB and Berlin, plus the odd Weidbombe thrown in by Frankfurt.

This time, the road being followed conjures up an entirely different future…one in which the FuhrerJuncker’s Luxembourg will be left alone to pull every tax-evading bank stunt in the book, but those in the commercial sector will be asked to return to some vague version of recognised value.

We’ve been here before, but the subhead is ‘Clubmed banks no longer able to disguise loan made in 2002 to Tartan Paint Co Venezuela sa as an asset’. This is going to cause all kinds of mayhem in Greece, Italy, Portugal and especially Spain – where the practice has been used to suggest the banks are still solvent, when of course we all know they’re broke.

More importantly, although the ECB pays lip-service to reforming ezone banking accountancy, the EC policy will put it on a collision course with Mario Draghi.

But we don’t want to leave it like that, good God no – get a grip dear reader: this is the EU, where disaster must be meticulously planned to ensure that it moves from probable outcome to racing certainty.

And so we move on to Wolfgang Schauble the Secret Wheelchair Weapon…and Jens Weidmann, the Bundesbank’s Big Banana. While they share the ECB-Eurogroupe-Troika’s general approach – “Let’s blame Greece and show the markets we’re safe” – the Dutch Donkey Dijessilbloem is hated by the ECB because he’s a threat to their power….and despised by Weidmann as a fiscal lightweight. Dieselboom also has a tendency to blab, a trait which doesn’t endear him to Wolfie.

Where the two Germans chiefly differ from the rest of the pack is that they believe in fiscal and currency discipline – and of course, the ulltimate right of Berlin to run the Fiskalunion. Also their heads are stuck in 1923.

Two days ago, Weidmann went public again to say he did not think Greece should issue any more Treasury Bills – to help stave off the bankruptcy forced upon Greece by a Berlin-exaggerated problem and a Wall Street/Troika inspired infinite slavery repayment ‘programme’ – and he did not think QE was necessary. In short, real monetarism rules, OK.

I’m sorry to labour this point, but these are thus the three ‘strategies’ being proposed by ‘A United Europe’:

1. Greece should be kicked out (ECB)

2. Banks should be telling the truth about their balance sheet fraud (EC)

3. We should stop QE now and get Greece back in the programme at all costs (Germany)

Now, what we are not going to get is a debate followed by a decision, because this is The Fourth Reich, and we don’t do discussion…we do divide and rule. Also we have a crypto-Queen in Berlin who never makes any decisions until one eventuality or another is crystal clear. (The real sign to watch for is Frau Doktor Merkel moving her Chancellery fridge down into the bunker. Or Moscow. Or Frankfurt. Or Washington. Those wanting to have it all must “get on their bikes”).

What we will get is all three being followed at the same time. And this must involve a continuing QE blast alongside Greek forced exit from the eurozone (breaking the Lisbon Treaty on at least five counts) but still in the EU plus a contagion outwards towards Italy and Spain accelerated by the EC’s search for Beyond Basel III to come into force plus the German financial and fiscal power centres trying to effect the exact opposite on all fronts.

There are thus in turn three potential (ie, realistic) outcomes:

1. Chaos

2. Draghi & the Eurogroup cut off the EC’s balls, leaving Juncker as a very loose but fully-loaded cannon, and with a very high voice.

3. Merkel sides with the 1923 Tendency, and leaves the eurozone.

Many other related events will of course follow – and the above trio of troubles aren’t mutually exclusive. But my view remains the same as it was by the end of 2010: the euro is dead, and the EU is eating itself. Only Mario Draghi launching a putsch to get himself declared Supreme Emperor of Europe could stop the process.

That isn’t going to happen. Draghi’s view of chaos is “bring it on”….because down that road lies US domination of all european transactions. For in this, the epoch of Western decline, that is what the Looney Tunes on Wall Street, inside the State Department/CIA axis and in Texas want.

The bottom line: anything could happen, and nothing will change on the road to global corporatocracy.

Yet.

But eventually, top-down will collapse…as all flawed administrative processes do. And after the chaos, things will very slowly get better.

I end where I started. With too many factions wanting different things from the Greece deadlock – external and internal – the reason no clear interpretation of outcome is possible swings on the surreal 3D hinge of there being no united Sovereign, and little or no commonality of aims between the factions.

EuroSoap

Off the keyboard of John Ward

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Slog on March 20, 2015

Discuss this article at the Geopolitics Table inside the Diner

https://hat4uk.files.wordpress.com/2015/03/eusplits.png

TSIPRAS/MERKEL SUMMIT: You thought Greek politics complicated? Wait until you tot up the seismic splits in the EU

Take a close look at the timeline since Thursday night’s mini-summit marathon between Alexis Tsipras and Angela Merkel.

After a 3am Friday finish, German Chancellor Angela Merkel described the meeting as “good and constructive,” but warned that the Greek government will have to meet commitments before it can access EU money. She gave Syriza exactly seven days to offer fully detailed “reform” proposals to Troika2, and then left clutching several haunches of Venison and 683 sausages for her beloved fridge.

A few hours later, however, Jean-Claude Juncker – the President of the European Commission (EC) – announced a completely unconditional 2 billion euro contribution immediately available to Greece to boost growth, tackle youth unemployment and help with the “humanitarian crisis”. Juncker said the cash for this would come from “unused EU development funds”.

When I called the EC press office this afternoon and asked how this circle might be squared, there was much scurrying about and promises of getting back to me…none of which materialised.

Those EU schisms in full

This is what’s really going on here: pissed off by the degree to which Germany and the Troikanauts are increasingly adopting the Führerprinzip in relation to EU affairs, the EC as led by J-CJ is doing everything in its power to be good-cop to Greece in general, and Tsipras in particular. This is a good old-fashioned Nazi Party power struggle, and there is every opportunity for Athens to exploit it.

But equally, we must remember that on another level entirely, Francois Hollande of France got away almost scot-free last week on deficit failures that far outweigh those of Greece….but was forced to bring in Troika-demanded laws about tax evasion…and ECB diktats about bank liquidity. This has not gone down well in his Party.

The Parti Socialiste de France doesn’t like this crap because (like many of us) they foresee the wholesale handing over of millions of votes to Marine Le Pen’s Front Nationale.

So then: we have the EC at war with Berlin and Troika2, plus France at war with Frankfurt. But just when you thought you had it sussed, more fractures appear.

For Wolfgang Schäuble is at war with Merkel over his single-minded obsession to become Supreme Leader of the as yet unformed Fiskalunion…and fighting a second front against Mario Draghi’s ECB, which in turn is fighting on another front entirely with Jens Weidemann and the German Central Bank…who rightly think that Draghula is working not for the euro, but a planned eurodollar spookily approaching parity with, um, the euro. And Merkel too distrusts the ECB boss’s motives….preferring as she does to keep her options open on the subject of which way to jump in the Dollar v Rublenimbi chasm.

Confused? You will be after this latest episode of Eurosoap. But there are far more plot lines and faultlines to develop before your confusion is comprehensively constructed.

There is the coming UK election, and the increasing likelihood of the ‘biggest’ Party needing to do a deal with EU-secessionists. There is the growing secessionist and europhobic tendency in Italy. There is Podemos support in Spain growing with every act of defiance from Greece. There is the Austro-German bank collapse epidemiology threatening everyone from Santander to Deutsche. And there remains the implacable unwillingness of Viktor Orban in Hungary to have anything to do with globalism in general, or the euro in particular.

Face facts: the EU is imploding.

 

Is Greece Planning to Print Energy?

Off the keyboard of Allan Stromfeldt Christensen

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on from Filmers to Farmers on March 15, 2015

energy-in-hand

Can these new Greek gods (minus the ties) conjure energy
from thin air? (image: Sergey Khakimullin)

Discuss this article at the Energy Table inside the Diner

Over the past couple of months the story keeping many people on the edge of their seats has been the ongoing dilemma of Greece’s detested debt burden, its Great Depression-worthy 25% contraction of its economy, and its voluntary or even forced withdrawal from the eurozone – the fabled “Grexit.”

For about five years now, heavy austerity policies (cutbacks in government spending) have contributed to what is being described by some as a “humanitarian crisis.” As per stated in the conditions of €240 billion in loans that Greece has received over these years, the Greek government has had to significantly cut back on expenditures, which has included laid off government workers, reduced pensions, a gutted minimum wage, and the selling of state institutions. Partially as a result of this, general unemployment is a bit above 25% while youth unemployment is at nearly 60%; suicide rates are up by 35%; rates of divorce, depression, children suffering from malnutrition, children suffering from physical and emotional abuse, and hospitals lacking basic equipment and medicines are all up; infant mortality has increased 43%; and married women are begging brothels to let them work, but who are then turned away because, well, it’s apparently illegal to sell oneself for sex if one is already betrothed.

Nonetheless, and to the acclaim of many alternative media outlets, late-January saw the stunning election-win of what is called a far-left political party, Syriza. The prime mandate on which it was voted in on by the Greek electorate was to reverse the five-year policy of austerity and to essentially tell its Troika creditors (the European Union, the European Central Bank, and the International Monetary Fund) to shove it where the sun don’t shine.

With Syriza promising to repeal all the aforementioned discomforts, accolades came pouring in, possibly the most astoundingly hyperbolic drivel coming from the online magazine Truthdig.

Exhibit #1: “[T]he Greek people have defied the global ruling class by electing Syriza.”

No, ticking a different box on a ballot while changing nothing about the way you live your life changes absolutely nothing.

Exhibit #2: “[W]hat the European elites perhaps fear most is a successful left-wing government in Greece.”

Painting this as a left-wing versus right-wing issue is about as ridiculous as it gets. That should be made obvious as I continue.

Exhibit #3: “Opposing austerity means nothing more than bringing back the mainstream policies of mid-20th century industrial societies… (which remain in place in Northern European countries),… but that represents an existential threat to the logic of neoliberalism and must be drowned in the bath.”

Long story short, and elaborated upon in a moment, wrong again. Industrial civilization is coming to an end.

And finally, exhibit #4: “Syriza’s appeal… is about more than just alleviating the crisis – it’s about a common-sense vision for a better, fairer society that goes beyond Europe’s progressive social democracies of the second half of the 20th century. And herein lies the tremendous promise of this moment: Out of crisis, an empowered left may be born that not only takes on neoliberalism, but also raises the specter of something truly worth fighting for, the most humane and egalitarian technological societies yet.”

Now please don’t get me wrong – I’m not a fan of neoliberalism in the slightest. But with that out of the way, let me just say then that paralleling the energy of actual slaves that allowed some Europeans to live lives of privileged comfort in the 19th century and prior, what the “progressive social democracies of the second half of the 20th century” were based on was the latest energy of slaves. Or in other words, on fossil fuels. No fossil fuels, no “mid-20th century industrial societies.”

In other words, what’s going on isn’t just another juvenile left-versus-right debate-class game. Because the fact of the matter is that thanks to peak oil we’ve now entered the early stages of a world that is smacking up against the limits to growth. Simply put, since the world’s supply of conventional oil (that under the ground and deserts) peaked in 2005, and since conventional plus unconventional supplies of oil (the former plus tar sands, fracking, and deep sea oil) are all about to peak as well, the world simply doesn’t have the energy required to power the continuation of economic growth. With growth slowing down in some places and even reversing into contraction, this means that there is less economic activity to create revenues to pay off debts. Greece just happens to be one of the first losers in this game of musical chairs, also known as triage from modernity and the industrial economy. Why might Greece be a deindustrializing vanguard?

(graph: The Global Economy, data: EIA)

First off, and unlike a “Northern European country” such as Norway, Greece doesn’t have abundant supplies of oil to power its modern industrial economy, nor to sell on the open market to pay for imports (or to pay off debts). Secondly, unlike Japan (which has barely any domestic supplies of fossil fuels either), exports of baklava don’t quite bring in the revenue that Hondas and Nintendos do, and being part of the eurozone, Greece can’t print out yen (or euros in its case) to paper over all its problems and convey the illusion of solvency.

(That being said, Norway and Japan will soon enough be losing out in the musical chairs game as well: crashing oil prices are already hitting some in Norway hard and are a sign of things to come; and when the world can no longer afford high-tech Japanese toys, Japan is going to be in a world of pain which no yen sorcery will be able to paper over and which will make the Greek situation look like a case of the chickenpox.)

Unfortunately, and as all appearances indicate, Syriza is under just as much of a mass delusion as Truthdig is. As Greek finance minister (and former academic on game theory) Yanis Varoufakis stated in a New York Times opinion piece before Syriza’s election win, he wants to “bring back growth,” to “table our proposals for regrowing Greece,” and that there will be “[n]o more loans – not until we have a credible plan for growing the economy in order to repay those loans [and] help the middle class get back on its feet.”

Again, this is utter nonsense. Unless Varoufakis and company are on the one hand trying to pull a fast one on the Troika, or on the other hand trying to fool the Greek electorate, then it appears that Syriza is just as much of a band of deluded fools as the ones whose offices they took over, and that Varoufakis’ New York Times piece is nothing but a game theorist trying to take game theory to the next level and so game theory-theory other game theorists.

Since, as already mentioned, growth is now over, similar talk about securing Greece a “new deal” is just as ridiculous. In a time of booming growth, sure, it could be possible, but when growth is stagnating the world over – even in China, and even in Germany – foreign lenders aren’t about to sacrifice their middle-class creature comforts so that Greeks can have back their middle-class creature comforts thank you very much.

These specs sure do look nice, but new drachmas and new narcissists just aren’t going to cut it (image courtesy of Pavlos Vatikiotis)

Regardless of that though, if Syriza were to implement a default on Greece’s loans and unilaterally pull off its Grexit from the eurozone, it could thus free itself from the euro straightjacket and enable itself to reissue and print as many new drachmas as it likes, even Greenback-styles, via the government and not private banks. However, not only would a new drachma crash in value the moment it was released, and not only could there be a line-up of unscrupulous and pissed off former creditors itching to take revenge on the newly issued currency, but who in their right mind is going to want to sell oil to Greece for depreciated drachmas, particularly when all they’re likely to get in return for the depreciated currency are container ships of said baklava?

However, even though discussions about money and currency provide plenty of fodder for pundits on the payroll, money has essentially nothing to do with the current problems in Greece. As I explained in my previous post,

the core function of money is that it enables us to command energy – the energy used to move our bodies with, to power our machines, to feed to domesticated animals whose energy we then use to do work (which nowadays generally means entertaining us), etc. In other words, it might be tough and/or inconvenient, but one can get by without money. You can’t get by without energy.

(graph: The Global Economy, data: EIA)

In other words, what Greece needs in order to revive its growth, its middle-class creature comforts, its “European social contract” and “mainstream policies of mid-20th century industrial societies,” and the rest of all that claptrap, is oil. Greece isn’t short on money. It is short on energy.

Is the Greek populace aware of all this? For the most part I would say no, and if solidarity marches with the chant of “let Greece breathe!,” which recently erupted in Paris, Madrid, Amsterdam, Berlin, Copenhagen – basically all over Europe – can be taken as an indication, then the answer is no. Most of Europe apparently hasn’t the slightest clue that remaining in the eurozone (in order to maintain modernity) means debt peonage, and that a quick Grexit means poverty on a whole new level for much of the Greek populace.

So unless Syriza is planning to come out straight with the Greek electorate and inform them that modernity and industrial civilization (the myth of progress) are coming to a close, and that they’re going to have to cut back on – if not give up – their happy motoring, the majority of their imports, and their pirated Netflix feeds, then the only option they have left to make up for their shortcomings is to print energy. But not even these new Greek gods can do that.

(image: Telesur)

To be fair, those on the other side of the negotiating table have even far less credibility to speak for. For starters, when the Troika and the rest of the Wall Street shills state that no further aid will be granted upon Greece until all austerity measures are met, this is a load of disingenuous BS. So are statements by finance ministers who proclaim that “Greece has lived beyond its means for a long time.” Truth be told, only a miniscule amount of those loans actually stayed in Greece, with an even tinier amount going to assist the hungry. The fact of the matter is that the vast majority of the loans are simply shuttled right back to banks in Germany, France, Holland, etc., simply to pay off interest on the old loans and prop up their parasitic banks. In short, it is banks that are being bailed out, and on the backs of Greeks, to boot.

To explain why this must inevitably happen requires a little lesson in banking. As it stands, private banks currently enjoy the racket of being able to create money out of thin air (no, they don’t simply lend out the deposits of others) under the fractional-reserve, interest-bearing debt system. Furthermore, because private banks create and issue out the principal but not the interest, there is never actually enough money in circulation to pay off all the loans plus all the interest. While some players in this game of musical chairs do in fact earn enough profits from their loans to pay back all the principal plus interest charges, since the system was short the funds to pay back all the principal and all interest charges in the first place, not only do some end up short of the funds to make payments on their debts, but since their initial loans were siphoned away as profits by those who managed to pay off their loans and interest (and who may have even stashed away some money as savings) these “losers” in the game sometimes lack not only the interest but even the principal to pay back. In other words, unless they – Greece – miraculously switch(es) roles with one of the “winners” – a Germany – then their loans can never actually be paid back.

On global and national scales, when in the past “losers” in this game have claimed bankruptcy, the system has been able to somewhat absorb the losses thanks to economies growing at strong enough rates. That is, copious and growing amounts of fossil fuels enabled enough economic growth so that new loans could be created quick enough in order to inject new money (“liquidity”) into the system to cover (paper over) the defaulted loans.

However, as things now stand, if enough “losers” in the game were to now claim bankruptcy, not only would they be throwing themselves into a world of pain, but, and through no direct fault of their own, they could theoretically precipitate an implosion of the entire interest-bearing debt, fractional-reserve, house of cards, monetary system. Reason being, since peak oil means that there is no longer an increasing amount of cheap fossil fuels available to spur on economic growth, this then means that there simply isn’t enough new economic activity to seek out new loans to pay off the interest on old loans.

Sure, in the past central banks have ramped up the “printing presses” (also known as “quantitative easing,” or QE for short) in order to temporarily paper over the problems until the oil started flowing again, but this time the problem isn’t that the oil is being held back for whatever political reason(s), but that it has finally reached its maximum level of output. Yes, central banks all over the world are currently “printing” money like there’s no tomorrow, and banks are offering super-low-interest-rate credit cards to pretty much anyone who can fog up a mirror, but in the long run this can only lead to inflated currencies, bankruptcies galore, and things getting uncomfortably hairy.

Since the oil has now peaked, growth can no longer continue and the grandiose fractional-reserve, interest-bearing debt system is coming to an end. For now there is just one Greece, but soon there will be another, then another, then another, until it is discovered that not only the European Union but the entire world is essentially insolvent. No amount of austerity, free market ideology, Keynesian stimulus, or any other fake solution can right this ship.

Sure, in the short run perhaps Russia with its massive fossil fuel reserves will prop up Greece for a while longer, allowing those on the left to pompously vilify those on the right as being the bad guys here. But that just kicks the can down the road and buys Greece – never mind those next in line – just a few years of token respite. On the other hand, perhaps the European Union and Greece are planning for some kind of orderly Grexit. But that still wouldn’t address issues of energy shortages.

In summation, at this point in time there are no options left to avert serious economic pain, but that doesn’t mean that implementing the suggestions that some have been speaking of for years now (and even decades) are all for naught. Although this is putting it a bit simplistically, the more localized our food systems become, the more local currencies we implement (like the Tem in Volos, Greece), the more we strengthen our local democratic systems, the better we’ll be able to deal with the upcoming collapse of our national and global economies.

As I like to say, the best, easiest, and most accessible way(s) to enable this to actually start happening would be to ditch the TVs and forego yet more purchases of brand new cars. But truth be told, those have actually always been good ideas.

The Last, Great Run For The U.S. Dollar

Off the keyboard of Michael Snyder

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Economic Collapse on March 10, 2015

money-burning

Discuss this article at the Economics Table inside the Diner

The Death Of The Euro And 74 Trillion In Currency Derivatives At Risk

Dollars Euros - Public DomainAre we on the verge of an unprecedented global currency crisis?  On Tuesday, the euro briefly fell below $1.07 for the first time in almost a dozen years.  And the U.S. dollar continues to surge against almost every other major global currency.  The U.S. dollar index has now risen an astounding 23 percent in just the last eight months.  That is the fastest pace that the U.S. dollar has risen since 1981.  You might be tempted to think that a stronger U.S. dollar is good news, but it isn’t.  A strong U.S. dollar hurts U.S. exports, thus harming our economy.  In addition, a weak U.S. dollar has fueled tremendous expansion in emerging markets around the planet over the past decade or so.  When the dollar becomes a lot stronger, it becomes much more difficult for those countries to borrow more money and repay old debts.  In other words, the emerging market “boom” is about to become a bust.  Not only that, it is important to keep in mind that global financial institutions bet a tremendous amount of money on currency movements.  According to the Bank for International Settlements, 74 trillion dollars in derivatives are tied to the value of the U.S. dollar, the value of the euro and the value of other global currencies.  When currency rates start flying around all over the place, you can rest assured that someone out there is losing an enormous amount of money.  If this derivatives bubble ends up imploding, there won’t be enough money in the entire world to bail everyone out.

Do you remember what happened the last time the U.S. dollar went on a great run like this?

As you can see from the chart below, it was in mid-2008, and what followed was the worst financial crisis since the Great Depression…

Dollar Index 2015

A rapidly rising U.S. dollar is extremely deflationary for the overall global economy.

This is a huge red flag, and yet hardly anyone is talking about it.

Meanwhile, the euro continues to spiral into oblivion…

Euro U.S. Dollar

How many times have I said it?  The euro is heading to all-time lows.  It is going to go to parity with the U.S. dollar, and then it is eventually going to go below parity.

This is going to cause massive headaches in the financial world.

The Europeans are attempting to cure their economic problems by creating tremendous amounts of new money.  It is the European version of quantitative easing, but it is having some very nasty side effects.

The markets are starting to realize that if the value of the U.S. dollar continues to surge, it is ultimately going to be very bad for stocks.  In fact, the strength of the U.S. dollar is being cited as the primary reason for the Dow’s 332 point decline on Tuesday

The Dow Jones industrial average fell more than 300 points to below the index’s 50-day moving average, wiping out gains for the year. The S&P 500 also closed in the red for the year and breached its 50-day moving average, which is an indicator of the market trend. Only the Nasdaq held onto gains of 2.61 percent for the year.

There’s “concern that energy and the strength in the dollar will somehow be negative for the equities,” said Art Hogan, chief market strategist at Wunderlich Securities. He noted that the speed of the dollar’s surge was the greatest market driver, amid mixed economic data and concerns about the Federal Reserve raising interest rates.

And as I noted above, when the U.S. dollar rises the things that we export to other nations become more expensive and that hurts our businesses.

This is so basic that even the White House understands it

Despite reassurance from The Fed that a strengthening dollar is positive for US jobs, The White House has now issued a statement that a “strengthening USD is a headwind for US growth.”

But even more important, a surging U.S. dollar makes it more difficult for emerging markets all over the world to borrow new money and to repay old debts.  This is especially true for nations that heavily rely on exporting commodities

It becomes especially ugly for emerging market economies that produce commodities. Many emerging market countries rely on their natural resources for growth and haven’t yet developed more advanced industries. As the products of their principal industries decline in value, foreign investors remove available credit while their currency is declining against the U.S. dollar. They don’t just find it difficult to pay their debt – it is impossible.

It has been estimated that emerging markets have borrowed more than 3 trillion dollars since the last financial crisis.

But now the process that created the emerging markets “boom” is starting to go into reverse.

The global economy is fueled by cheap dollars.  So if the U.S. dollar continues to rise, that is not going to be good news for anyone.

And of course the biggest potential threat of all is the 74 trillion dollar currency derivatives bubble which could end up bursting at any time.

The sophisticated computer algorithms that financial institutions use to trade currency derivatives are ultimately based on human assumptions.  When currencies move very little and the waters are calm in global financial markets, those algorithms tend to work really, really well.

But when the unexpected happens, some of the largest financial firms in the world can implode seemingly overnight.

Just remember what happened to Lehman Brothers back in 2008.  Unexpected events can cripple financial giants in just a matter of hours.

Today, there are five U.S. banks that each have more than 40 trillion dollars of total exposure to derivatives of all types.  Those five banks are JPMorgan Chase, Bank of America, Goldman Sachs, Citibank and Morgan Stanley.

By transforming Wall Street into a gigantic casino, those banks have been able to make enormous amounts of money.

But they are constantly performing a high wire act.  One of these days, their reckless gambling is going to come back to haunt them, and the entire global financial system is going to be severely harmed as a result.

As I have said so many times before, derivatives are going to be at the heart of the next great global financial crisis.

And thanks to the wild movement of global currencies in recent months, there are now more than 74 trillion dollars in currency derivatives at risk.

Anyone that cannot see trouble on the horizon at this point is being willingly blind.

Kurrency Kollapse: To Print or Not To Print?

logopodcastOff the microphone of RE

Follow us on Twitter @doomstead666
Friend us on Facebook

Aired on the Doomstead Diner on March 14, 2015

MoneyHole

Discuss this Rant at the Podcast Table inside the Diner

“THE GREATEST BONFIRE OF PAPER WEALTH IN ALL OF RECORDED HISTORY TM

money-burning

Snippet:

http://www.angelfire.com/art/masks/images/mask01.jpg…So to try to resolve this mess, one choice for Da Federal Reserve would be to issue out multiples of the $Trillions$ it has already issued out and take every last indebted country onto its own balance sheet as the collateral, effectively essentially putting say France under the Ownership of the Federal Reserve! Then the Frogs get the same treatment that Greece gets now taking it up the ass from the Troika. The population gets squeezed dried, but this STILL does not stop the implosion from progressing onward.

The other choice, which in the words of Ambrose Evans-Pritchard is to “take their medicine” is that Da Federal Reserve STOPS pitching Worthless Money after more Worthless Money out, and TBTF Banks and entire nation States go Bankrupt in a huge Daisy Chain, or as I once wrote on the Peak Oil Forum, “The Greatest Bonfire of Paper Wealth in All of Recorded History”.

There is no Third Option as yet identified here, it’s a Shakespearian Comedy/Tragedy, “To Print or not to Print, that is the question? Whether ’tis nobler to die by the slings and arrows of Hyperinflationary misfortune,, or to dry up liquidity and die slowly in a Deflationary Spiral, and by collapsing this stupid shit end this utter nonsense? To sleep, perchance to die…”

For the rest, LISTEN TO THE RANT!!!

Words US ‘think-tank-land’ dare not speak

Off the keyboard of Pepe Escobar
Follow us on Twitter @doomstead666
Like us on Facebook

BRICS 2014

Published in Asia Times on March 9, 2015

Winston Churchill once said, “I feel lonely without a war.” He also badly missed the loss of empire. Churchill’s successor – the ‘Empire of Chaos’ – now faces the same quandary. Some wars – as in Ukraine, by proxy – are not going so well.

And the loss of empire increasingly manifests itself in myriad moves by selected players aiming towards a multipolar world.

So no wonder US ‘Think Tankland’ is going bonkers, releasing wacky CIA-tinted “forecasts” where Russia is bound to disintegrate, and China is turning into a communist dictatorship. So much (imperial) wishful thinking, so little time to prolong hegemony.

The acronym that all these “forecasts” dare not reveal is BRICS (Brazil, Russia, India, China, and South Africa). BRICS is worse than the plague as far as the ‘Masters of the Universe’ that really control the current – rigged – world system are concerned. True, the BRICS are facing multiple problems. Brazil at the moment is totally paralyzed; a long, complex, self-defeating process, now coupled with intimations of regime change by local ‘Empire of Chaos’ minions. It will take time, but Brazil will rebound.

That leaves the “RIC” – Russia, India and China – in BRICS as the key drivers of change. For all their interlocking discrepancies, they all agree they don’t need to challenge the hegemon directly while aiming for a new multipolar order.

The BRICS New Development Bank (NDB) – a key alternative to the IMF enabling developing nations to get rid of the US dollar as a reserve currency – will be operative by the end of this year. The NDB will finance infrastructure and sustainable development projects not only in the BRICS nations but other developing nations. Forget about the Western-controlled World Bank, whose capital and lending capacity are never increased by the so-called Western “powers.” The NDB will be an open institution. BRICS nations will keep 55 percent of the voting power, and outside their domain no country will be allowed more than 7 percent of votes. But crucially, developing nations may also become partners and receive loans.

Damn those communists

A tripartite entente cordiale is also in the making. Indian Prime Minister Narendra Modi will be in China next May – and ‘Chindia’ will certainly engage in a breakthrough concerning their bitter territorial disputes. As much as Delhi has a lot to benefit from China’s massive capital investment and exports, Beijing wants to profit from India’s vast market and technology savvy. In parallel, Beijing has already volunteered economic help to Russia – if Moscow asks for it – on top of their evolving strategic partnership.

The US “pivoting to Asia” – launched at the Pentagon – is all dressed up with no place to go. Bullying Southeast Asia, South Asia and, for that matter, East Asia as a whole into becoming mere ‘Empire of Chaos’ vassals – and on top of it confronting China – was always a non-starter. Not to mention believing in the fairy tale of a remilitarized Japan able to “contain” China.

Isolating the “communist dictatorship” won’t fly. Just watch, for instance, the imminent high-speed rail link between Kunming, in Yunnan province, and Singapore, traversing a key chunk of a Southeast Asia which for Washington would never qualify to be more than a bunch of client states. The emerging 21st century Asia is all about interconnection; and the inexorable sun in this galaxy is China.

As China has embarked in an extremely complex tweaking of its economic development model, as I outlined here, China’s monopoly of low-end manufacturing – its previous industrial base – is migrating across the developing world, especially around the Indian Ocean basin. Good news for the Global South – and that includes everyone from African nations such as Kenya and Tanzania to parts of Southeast Asia and Latin America.

Of course the ‘Empire of Chaos’, business-wise, won’t be thrown out of Asia. But its days as an Asian hegemon, or a geopolitical Mob offering “protection”, are over.

The Chinese remix of Go West, Young Man – in fact go everywhere – started as early as 1999. Of the top 10 biggest container ports in the world, no less than 7 are in China (the others are Singapore, Rotterdam, and Pusan in South Korea). As far as the 12th Chinese 5-year plan – whose last year is 2015 – is concerned, most of the goals of the seven technology areas China wanted to be in the leading positions have been achieved, and in some cases even superseded.

The Bank of China will increasingly let the yuan move more freely against the US dollar. It will be dumping a lot of US dollars every once in a while. The 20-year old US dollar peg will gradually fade. The biggest trading nation on the planet, and the second largest economy simply cannot be anchored to a single currency. And Beijing knows very well how a dollar peg magnifies any external shocks to the Chinese economy.

Sykes-Picot is us

 A parallel process in Southwest Asia will also be developing; the dismantling of the nation-state in the Middle East – as in remixing the Sykes-Picot agreement of a hundred years ago. What a stark contrast to the return of the nation-state in Europe.

There have been rumblings that the remixed Sykes is Obama and the remixed Picot is Putin. Not really. It’s the ‘Empire of Chaos’ that is actually acting as the new Sykes-Picot, directly and indirectly reconfiguring the “Greater Middle East.” Former NATO capo Gen. Wesley Clark has recently “revealed” what everyone already knew; the ISIS/ISIL/Daesh fake Caliphate is financed by “close allies of the United States,” as in Saudi Arabia, Qatar, Turkey and Israel. Compare that with Israeli Defense Minister Moshe Yaalon admitting that ISIS “does not represent a threat to Israeli interests.” Daesh does the unraveling of Sykes-Picot for the US.

The ‘Empire of Chaos’ actively sought the disintegration of Iraq, Syria and especially Libya. And now, leading the House of Saud, “our” bastard in charge King Salman is none other than the former, choice jihad recruiter for Abdul Rasul Sayyaf, the Afghan Salafist who was the brains behind both Osama bin Laden and alleged 9/11 mastermind Khalid Sheikh Mohammad.

This is classic ‘Empire of Chaos’ in motion (exceptionalists don’t do nation building, just nation splintering). And there will be plenty of nasty, nation-shattering sequels, from the Central Asian stans to Xinjiang in China, not to mention festering, Ukraine, a.k.a Nulandistan.

Parts of Af-Pak could well turn into a branch of ISIS/ISIL/Daesh right on the borders of Russia, India, China, and Iran. From an ‘Empire of Chaos’ perspective, this potential bloodbath in the “Eurasian Balkans” – to quote eminent Russophobe Dr. Zbig “Grand Chessboard” Brzezinski – is the famous “offer you can’t refuse.”

Russia and China, meanwhile, will keep betting on Eurasian integration; strengthening the Shanghai Cooperation Organization (SCO) and their own internal coordination inside the BRICS; and using plenty of intel resources to go after The Caliph’s goons.

And as much as the Obama administration may be desperate for a final nuclear deal with Iran, Russia and China got to Tehran first. China’s Foreign Minister Wang Yi was in Tehran two weeks ago; stressing Iran is one of China’s “foreign policy priorities” and of great “strategic importance.” Sooner rather than later Iran will be a member of the SCO. China already does plenty of roaring trade with Iran, and so does Russia, selling weapons and building nuclear plants.

 

Berlin-Moscow-Beijing?

And then there’s the German question.

Germany now exports 50 percent of its GDP. It used to be only 24 percent in 1990. For the past 10 years, half of German growth depended on exports. Translation: this is a giant economy that badly needs global markets to keep expanding. An ailing EU, by definition, does not fit the bill.

German exports are changing their recipient address. Only 40 percent – and going down – now goes to the EU; the real growth is in Asia. So Germany, in practice, is moving away from the eurozone. That does not entail Germany breaking up the euro; that would be interpreted as a nasty betrayal of the much-lauded “European project.”

What the trade picture unveils is the reason for Germany’s hardball with Greece: either you surrender, completely, or you leave the euro. What Germany wants is to keep a partnership with France and dominate Eastern Europe as an economic satellite, relying on Poland. So expect Greece, Spain, Portugal and Italy to face a German wall of intransigence. So much for European “integration,” it works as long as Germany dictates all the rules.

The spanner in the works is that the double fiasco Greece + Ukraine has been exposing. Berlin as an extremely flawed European hegemon – and that’s quite an understatement. Berlin suddenly woke up to the real, nightmarish possibility of a full blown, American-instigated war in Europe’s eastern borderlands against Russia. No wonder Angela Merkel had to fly to Moscow in a hurry.

Moscow – diplomatically – was the winner. And Russia won again when Turkey – fed up with trying to join the EU and being constantly blocked by, who else, Germany and France – decided to pivot to Eurasia for good, ignoring NATO and amplifying relations with both Russia and China.

That happened in the framework of a major ‘Pipelineistan’ game-changer. After Moscow cleverly negotiated the realignment of South Stream towards Turk Stream, right up to the Greek border, Putin and Greek Prime Minister Tsipras also agreed to a pipeline extension from the Turkish border across Greece to southern Europe. So Gazprom will be firmly implanted not only in Turkey but also Greece, which in itself will become mightily strategic in European ‘Pipelineistan’.

So Germany, sooner or later, must answer a categorical imperative – how to keep running massive trade surpluses while dumping their euro trade partners. The only possible answer is more trade with Russia, China and East Asia. It will take quite a while, and there will be many bumps on the road, but a Berlin-Moscow-Beijing trade/commercial axis – or the “RC” in BRICS meet Germany – is all but inevitable.

And no, you won’t read that in any wacky US ‘Think Tankland’ “forecast.”

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).

Support the Diner

Search the Diner

Surveys & Podcasts

NEW SURVEY

Renewable Energy

VISIT AND FOLLOW US ON DINER SOUNDCLOUD

" As a daily reader of all of the doomsday blogs, e.g. the Diner, Nature Bats Last, Zerohedge, Scribbler, etc… I must say that I most look forward to your “off the microphone” rants. Your analysis, insights, and conclusions are always logical, well supported, and clearly articulated – a trifecta not frequently achieved."- Joe D

Archives

Global Diners

View Full Diner Stats

Global Population Stats

Enter a Country Name for full Population & Demographic Statistics

Lake Mead Watch

http://si.wsj.net/public/resources/images/NA-BX686_LakeMe_G_20130816175615.jpg

loading

Inside the Diner

4 Tactics Used by Monsanto to Undermine Potential Link Between Glyphosate and Cancer By Genna ReedGenna Reed   [img width=25 height=30]http://www.createaforum....

Quote from: Palloy2 on Today at 03:18:32 PM When ISIS is finally destroyed and peace is declared, Syria will be left a broken and divided state, and Russia-China-Iran will have to pick up the pieces.Somehow, I ...

The folks Joe Bageant used to write about.REhttp://www.greanvillepost.com/2017/03/30/reviews-white-trash-both-a-book-and-trump-revolution/[size...

Kerry said this before, and now Tillerson confirms it on behalf of the Trump administration.  Presumably that's what Turkey's announcement means as well.  Saudi Arabia probably won't say anything publicly.  When ISIS is finally destroyed and peace is d...

Diner Twitter feed

Knarf’s Knewz

Quote from: knarf on Today at 09:14:55 AMYep, I go [...]

Quote from: knarf on March 29, 2017, 05:47:04 AMI [...]

Yep, I got hooked on Alex Jones about 6 years ago. [...]

Yes, Soros has invested in many political organiza [...]

Diner Newz Feeds

  • Surly
  • Agelbert
  • Knarf
  • Golden Oxen
  • Frostbite Falls

Yer afternoon papers:http://paper.li/Surly01/14902 [...]

Helena Norberg-Hodge: Trump Traumahttps://voxpopul [...]

Quote from: Eddie on March 29, 2017, 06:18:24 AMSo [...]

Sounds like work for the admin. [...]

COLLAPSE.GLOBALOK Diners, the Newz Page has been r [...]

Quote from: Surly1 on Today at 12:24:09 PMQuote fr [...]

Quote from: Surly1 on Today at 12:24:09 PMQuote fr [...]

Quote from: knarf on Today at 09:14:55 AMYep, I go [...]

Quote from: knarf on March 29, 2017, 05:47:04 AMI [...]

Yep, I got hooked on Alex Jones about 6 years ago. [...]

Yes, Soros has invested in many political organiza [...]

Zero HedgeShandong Gold Group, China’s second bigg [...]

2017-03-26 - Brazil handing over the Amazon rainfo [...]

Second State In Less Than A Month Challenges Fed, [...]

Health Freedom Victory: How a Small Supplement Com [...]

I just want enough Smack to go out the EZ and rela [...]

Quote from: azozeo on March 27, 2017, 11:24:54 AMQ [...]

Quote from: azozeo on March 27, 2017, 07:49:50 PMI [...]

I love the mine car scene, thanks... [...]

Alternate Perspectives

  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

It Hurts When I Do This By Cognitive Dissonance   “Well, then don’t do that” is the proper response [...]

Standard Issue Incompetence - More Evidence of Imperial Decay (Time for Fight or Flight?) By Cogniti [...]

By Cognitive Dissonance   de·lu·sion·al dəˈlo͞oZH(ə)nəl/ adjective: delusional Characterized by or h [...]

By Cognitive Dissonance Back in the days of sword and sail, warships mounted heavy cannon on their d [...]

This issue of my Patreon Newsletter is open to the public. Please enjoy the article. (I now have a P [...]

Event Update For 2017-03-28http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-03-27http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-03-26http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-03-25http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-03-24http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

The sounds of the Romanian countryside, unleashed by Fanfare Ciocărlia for twenty years and counting [...]

Fanfare Ciocărlia's lead vocalists (and trumpet players) Radulescu Lazar and Costică "Cima [...]

When I finally made the first steps to end my abstention after more than ten years in the "musi [...]

All digital reproductions are equally made with zeroes and ones, although some zeroes and ones are m [...]

The appearance of the music industry's various formats, plotted along M. King Hubbert's 19 [...]

Daily Doom Photo

man-watching-tv

Sustainability

  • Peak Surfer
  • SUN
  • Transition Voice

Rescuing Los Angeles"How can we use our hard wiring to communicate to the herd that it is time to veer off from a r [...]

Wetiko"When we visited Los Angeles, what we were seeing was not so much a collective neurosis as a co [...]

The Sheer Wall"A system that places monetary value on products and services but places little value on their [...]

Climate Ecoforestry"Want to leap the social barrier to cool living? Behold: a stargate."  In 2008 we asked Fr [...]

Cicero and the Summer of 45"Happiness, Cicero said, is not dependent on things that pleasure the body, but on pleasures of [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

Click here to visit Sustaining Universal Needs’ YouTube Channel! [...]

There is no excerpt because this is a protected post. [...]

In the echo-sphere of political punditry consensus forms rapidly, gels, and then, in short order…cal [...]

Discussions with figures from Noam Chomsky and Peter Senge to Thich Nhat Hanh and the Dalai Lama off [...]

Lefty Greenies have some laudable ideas. Why is it then that they don't bother to really build [...]

Democracy and politics would be messy business even if all participants were saints. But America doe [...]

A new book argues that, in order to survive climate change and peak oil, the global money economy ne [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

But if any kind of energy use is an (entropy-related) over-all loss of energy, is there anything oth [...]

Thanks, Gail! I had never thought of that Lord's Prayer phrase in that way. It had always just [...]

Athletes are really into yoga wear. My son is an elite hockey player and he and all his teammates we [...]

"couple of years (or more) of failing crops." I don't know if there would be anything [...]

We all are standing that way. That's why I sometimes wear a dress for gardening. [...]

"My feet are standing in both worlds!" Me too!!! I think I just ripped the crotch of my pa [...]

Eyeores, my list is not for suvival. When BAU is over, JIT is over and we are f.....es. It is for my [...]

Thanks for the great post Eeyore. The system is obviously going to take this cycle of exploitive mad [...]

Elmar - Sure it all sounds good butttttttt!!!! I produce about maybe a quarter of what our three per [...]

RE Economics

Going Cashless

Off the keyboard of RE Follow us on Twitter @doomstead666...

Simplifying the Final Countdown

Off the keyboard of RE Follow us on Twitter @doomstead666...

Bond Market Collapse and the Banning of Cash

Off the microphone of RE Follow us on Twitter @doomstead666...

Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

Off the Keyboard of RE Follow us on Twitter @doomstead666...

Kurrency Kollapse: To Print or Not To Print?

Off the microphone of RE Follow us on Twitter @doomstead666...

SWISSIE CAPITULATION!

Off the microphone of RE Follow us on Twitter @doomstead666...

Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

Off the keyboard of RE Follow us on Twitter @doomstead666...

Merry Doomy Christmas

Off the keyboard of RE Follow us on Twitter @doomstead666...

Peak Customers: The Final Liquidation Sale

Off the keyboard of RE Follow us on Twitter @doomstead666...

Collapse Fiction

Useful Links

Technical Journals

This paper examines the effects of climatic and non-climatic factors on cassava yields in Togo using [...]

Climate is one of the single most important factors affecting watershed ecosystems and water resourc [...]

Municipalities are important actors in the field of local climate change adaptation. Stakeholders ne [...]

The Global Climate Model (GCM) run at a coarse spatial resolution cannot be directly used for climat [...]