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gc2smFrom the keyboard of James Howard Kunstler
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Originally Published on Clusterfuck Nation  August 29, 2016

 


Would fate permit it, the election of Hillary Clinton will be the supreme and perhaps terminal act in an Anything-Goes-And-Nothing-Matters society. Yet, even with the fabulous luck of running against a consummate political oaf, she struggles to get the upper hand, and she may land in the White House with the lowest voter turnout in modern history. And then her reward in office may be to dodge indictment for four years while the nation crumbles around her. This is the way the world ends: not with a bang or a whimper but with a cackle.

Imagine the scene following Hillary’s election. In order to salvage the last shred of its credibility, the Federal Reserve raises its overnight funds rate another quarter percent and crashes the last Potemkin semblance of a “recovering” economy, that is, the levitated stock markets. Tens of millions of retired individuals previously driven into them by zero interest rate policy are wiped out. Even more gravely, pension funds and insurance companies are destroyed, but not before their troubles trigger derivative contracts with big banks which then explode and expose the inability of counterparties to make good on their ends of the bet.

In a blind panic, the Federal Reserve reverses its policy in December, drops the Fed Funds interest rate back to 25 basis points and announces the grandest new round of “quantitative easing” (money printing) ever, while congress is coerced into voting for the greatest bailout of institutions the world has ever seen, along with a “one time” helicopter drop of a cool trillion dollars in the form of combined tax cuts and “shovel-ready infrastructure projects.” The media rejoices. The US Dollar tanks. Absolutely nobody wants US treasury bonds, bills, and notes. The pathetic remnant of the American middle class stares into the abyss. (If it looks hard enough, it sees the US government down there.)

We’re now living in the setup for this, treating the election shenanigans so far as just another sordid television entertainment. It’s more than that. It’s an engraved invitation to the worst crisis since the Civil War. The crisis may even feature events like a civil war with identity groups skirmishing around our already-ruined “flyover” cities just like the factions in Aleppo and Fallujah. Thank the “Progressive” Left for that. Believe me, history will blame them for chucking the idea of a unifying common culture onto the garbage barge.

And yes, for all our tribulations here in America, the rest of the world will be struggling with its own epic disorders. It remains to be seen whether they will lead to war as, say, the Chinese ruling party attempts to evade the crash of its own rickety banking system, and the inflamed millions of ruined “investors,” by starting a brawl with Japan over a few meaningless islands in the Pacific. Could happen. And, oh, is North Korea for real with its right out front nuclear bomb-and-missile program? What does the rest of the world plan to do about that?

You don’t even want to look at the Middle East. The grisly conflicts there of recent decades are just a prelude to what happens when the House of Saud loses its grip on the government. That will happen, and then the big question is whether Aramco can continue to function, or whether the critical parts of it end up damaged beyond repair as competing tribes fight over it. In any case, the world will begin to notice the salient fact of life in that part of the world: namely, that the Arabian desert, and much of the great band of arid territory on either side of it, cannot support the populations that mushroomed in the nutrient bath of the 20th century oil economy. And they won’t all be able to self-export to Europe either.

Speaking of that interesting region, around the same time Hillary sets up for intensive care in the third floor of the White House, the old order will be swept away across Europe. Farewell Merkel and Monsieur Hollandaise. Farewell to the squishy Left all over the place. Enter the hard-asses. You’d think if anything might unite that continent it might be the wish to defend secular freedom under the rule of law, but even that remains to be seen.

Yes, the world following 3Q 2016 is looking like one hot mess. If you remember anything, let it be this: the primary mission of your cohort of the human race is managing contraction. The world is getting wider and poorer again and the outcome everywhere will be determined by the success of people to manage their lives locally. The big things of this world — governments, corporations, institutions — are losing their traction and whatever we manage to rebuild will get done locally. In victory, Hillary may utterly cease to matter.

 


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

The Syndicate takes over Greece

Off the keyboard of Yanis Varoufakis

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Published on Yanis Varoufakis Blog on July 22, 2015

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Europe’s Vindictive Privatization Plan for Greece – Project Syndicate

For the Project Syndicate site click here. Or…

ATHENS – On July 12, the summit of eurozone leaders dictated its terms of surrender to Greek Prime Minister Alexis Tsipras, who, terrified by the alternatives, accepted all of them. One of those terms concerned the disposition of Greece’s remaining public assets.

Eurozone leaders demanded that Greek public assets be transferred to a Treuhand-like fund – a fire-sale vehicle similar to the one used after the fall of the Berlin Wall to privatize quickly, at great financial loss, and with devastating effects on employment all of the vanishing East German state’s public property.

This Greek Treuhand would be based in – wait for it – Luxembourg, and would be run by an outfit overseen by Germany’s finance minister, Wolfgang Schäuble, the author of the scheme. It would complete the fire sales within three years. But, whereas the work of the original Treuhand was accompanied by massive West German investment in infrastructure and large-scale social transfers to the East German population, the people of Greece would receive no corresponding benefit of any sort.
Euclid Tsakalotos, who succeeded me as Greece’s finance minister two weeks ago, did his best to ameliorate the worst aspects of the Greek Treuhand plan. He managed to have the fund domiciled in Athens, and he extracted from Greece’s creditors (the so-called troika of the European Commission, the European Central Bank, and the International Monetary Fund) the important concession that the sales could extend to 30 years, rather than a mere three. This was crucial, for it will permit the Greek state to hold undervalued assets until their price recovers from the current recession-induced lows.
Alas, the Greek Treuhand remains an abomination, and it should be a stigma on Europe’s conscience. Worse, it is a wasted opportunity.

The plan is politically toxic, because the fund, though domiciled in Greece, will effectively be managed by the troika. It is also financially noxious, because the proceeds will go toward servicing what even the IMF now admits is an unpayable debt. And it fails economically, because it wastes a wonderful opportunity to create homegrown investments to help counter the recessionary impact of the punitive fiscal consolidation that is also part of the July 12 summit’s “terms.”
It did not have to be this way. On June 19, I communicated to the German government and to the troika an alternative proposal, as part of a document entitled “Ending the Greek Crisis”:

“The Greek government proposes to bundle public assets (excluding those pertinent to the country’s security, public amenities, and cultural heritage) into a central holding company to be separated from the government administration and to be managed as a private entity, under the aegis of the Greek Parliament, with the goal of maximizing the value of its underlying assets and creating a homegrown investment stream. The Greek state will be the sole shareholder, but will not guarantee its liabilities or debt.”

The holding company would play an active role readying the assets for sale. It would “issue a fully collateralized bond on the international capital markets” to raise €30-40 billion ($32-43 billion), which, “taking into account the present value of assets,” would “be invested in modernizing and restructuring the assets under its management.”
The plan envisaged an investment program of 3-4 years, resulting in “additional spending of 5% of GDP per annum,” with current macroeconomic conditions implying “a positive growth multiplier above 1.5,” which “should boost nominal GDP growth to a level above 5% for several years.” This, in turn, would induce “proportional increases in tax revenues,” thereby “contributing to fiscal sustainability, while enabling the Greek government to exercise spending discipline without further shrinking the social economy.”

In this scenario, the primary surplus (which excludes interest payments) would “achieve ‘escape velocity’ magnitudes in absolute as well as percentage terms over time.” As a result, the holding company would “be granted a banking license” within a year or two, “thus turning itself into a full-fledged Development Bank capable of crowding in private investment to Greece and of entering into collaborative projects with the European Investment Bank.”

The Development Bank that we proposed would “allow the government to choose which assets are to be privatized and which not, while guaranteeing a greater impact on debt reduction from the selected privatizations.” After all, “asset values should increase by more than the actual amount spent on modernization and restructuring, aided by a program of public-private partnerships whose value is boosted according to the probability of future privatization.”

Our proposal was greeted with deafening silence. More precisely, the Eurogroup of eurozone finance ministers and the troika continued to leak to the global media that the Greek authorities had no credible, innovative proposals on offer – their standard refrain. A few days later, once the powers-that-be realized that the Greek government was about to capitulate fully to the troika’s demands, they saw fit to impose upon Greece their demeaning, unimaginative, and pernicious Treuhand model.
At a turning point in European history, our innovative alternative was thrown into the dustbin. It remains there for others to retrieve.

Read more at http://www.project-syndicate.org/commentary/greece-privatization-plan-public-assets-by-yanis-varoufakis-2015-07#HHZZL9E3voHpScF5.99

American Dreaming – From G1 To Bilderberg

Off the keyboard of Pepe Escobar

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Published on Russia Today on June 11, 2015

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What’s the connection between the G7 summit in Germany, President Putin’s visit to Italy, the Bilderberg club meeting in Austria, and the TTIP – the US-EU free trade deal – negotiations in Washington?

We start at the G7 in the Bavarian Alps – rather G1 with an added bunch of “junior partners” – as US President Barack Obama gloated about his neo-con induced feat; regiment the EU to soon extend sanctions on Russia even as the austerity-ravaged EU is arguably hurting even more than Russia.

Predictably, German Chancellor Angela Merkel and French President Francois Hollande caved in – even after being forced by realpolitik to talk to Russia and jointly carve the Minsk-2 agreement.

The hypocrisy-meter in the Bavarian Alps had already exploded with a bang right at the pre-dinner speech by EU Council President Donald Tusk, former Prime Minister of Poland and certified Russophobe/warmonger: “All of us would have preferred to have Russia round the G7 table. But our group is not only a group (that shares) political or economic interests, but first of all this is a community of values. And that is why Russia is not among us.”

So this was all about civilized “values” against “Russian aggression.”

The “civilized” G1 + junior partners could not possibly argue whether they would collectively risk a nuclear war on European soil over a Kiev-installed ‘Banderastan’, sorry, “Russian aggression.”

Instead, the real fun was happening behind the scenes. Washington factions were blaming Germany for making the West lose Russia to China, while adult minds in the EU – away from the Bavarian Alps – blamed Washington.

Even juicier is a contrarian view circulating among powerful Masters of the Universe in the US corporate world, not politics. They fear that in the next two to three years France will eventually re-ally with Russia (plenty of historical precedents). And they – once again – identify Germany as the key problem, as in Berlin forcing Washington to get involved in a Prussian ‘Mitteleuropa’ Americans fought two wars to prevent.

 

As for the Russians – from President Putin and Foreign Minister Lavrov downwards – a consensus has emerged; it’s pointless to discuss anything substantial considering the pitiful intellectual pedigree – or downright neo-con stupidity – of the self-described “Don’t Do Stupid Stuff” Obama administration policy makers and advisers. As for the “junior partners” – mostly EU minions – they are irrelevant, mere Washington vassals.

It would be wishful thinking to expect the civilized “values” gang to propose alternatives for the overwhelming majority of citizens of G7 nations getting anything other than Mac-jobs, or barely surviving as hostages of finance-junkie turbo-capitalism which only benefits the one percent.Rather easier to designate the proverbial scapegoat – Russia – and proceed with NATO-infused fear/warmongering rhetoric.

Iron Lady Merkel also found time to pontificate on climate change – instilling all and sundry to invest in a “low-carbon global economy.” Few noticed that the alleged deadline for full “decarbonization” was set for the end of the 21st century, when this planet will be in deep, deep trouble.

 

G7 summit at the Elmau castle in Kruen near Garmisch-Partenkirchen, Germany (Reuters / Christian Hartmann)

 

 

 

 

 

G7 summit at the Elmau castle in Kruen near Garmisch-Partenkirchen, Germany (Reuters / Christian Hartmann)

 

Achtung! Bilderberg!

Obama’s neocon-induced newspeak continues to rule that Russia dreams of recreating the Soviet empire. Now compare it to what President Putin is telling Europe.

Last week, Putin found time to give an interview to the Milan-based Corriere della Sera at 2 am; the interview was published as the Bavarian Alps show went on, and ahead of Putin’s June 10 visit to Italy. Russia’s geopolitical interests and US- Russia relations are depicted in excruciating detail.

So Putin was a persona non grata at the G1 plus junior partners? Well, in Italy he visited the Milan Expo; met Prime Minister Renzi and Pope Francis; reminded everyone about the “privileged economic and political ties” between Italy and Russia; and stressed the 400 Italian companies active in Russia and the million Russian tourists who visit Italy every year.

Crucially, he also evoked that consensus; Russia had represented an alternative view as a member of the G8, but now “other powers” felt they no longer needed it. The bottom line: it’s impossible to have an adult conversation with Obama and friends.

And right on cue, from Berlin –where he was displaying his sterling foreign policy credentials, Jeb Bush, brother of destroyer of Iraq Dubya Bush, fully scripted by his neocon advisers, declared Putin a bully and rallied Europe to fight, what else, “Russian aggression.”

 

 

The rhetorical haze over what was really discussed in the Bavarian Alps only began to dissipate at the first chords of the real sound of music; the Bilderberg Group meeting starting this Thursday at the Interalpen-Hotel Tyrol in Austria, only three days after the G1 plus junior partners.

Possible conspiracies aside, Bilderberg may be defined as an ultra-select bunch of elite lobbyists – politicians, US corporate honchos, EU officials, captains of industry, heads of intelligence agencies, European royals – organized annually in a sort of informal think tank/policy-forming format, to advance globalization and all crucial matters related to the overall Atlanticist agenda. Call it the prime Atlanticist Masters of the Universe talkfest.

To make things clear – not that they are big fans of transparency – the composition of the steering committee is here. And this is what they will be discussing in Austria.

Naturally they will be talking about “Russian aggression” (as in who cares about failed Ukraine; what we need is to prevent Russia from doing business with Europe).

Naturally they will be talking about Syria (as in the partition of the country, with the Caliphate already a fact of post-Sykes-Picot life).

Naturally they will be talking about Iran (as in let’s do business, buy their energy and bribe them into joining our club).

But the real deal is really the Transatlantic Trade and Investment Partnership (TTIP) – the alleged “free trade” deal between the US and the EU. Virtually all major business/finance lobbyists for the TTIP will be under the same Austrian roof.

And not by accident Bilderberg starts one day before “fast track” presidential authority is to be debated at the US Congress.

 

Russian President Vladimir Putin (R) meets Pope Francis during a private meeting at Vatican City, June 10, 2015 (Reuters / Gregorio Borgia)

 

 

 

 

 

Russian President Vladimir Putin (R) meets Pope Francis during a private meeting at Vatican City, June 10, 2015 (Reuters / Gregorio Borgia)

 

WikiLeaks and a ton of BRICS

Enter WikiLeaks, with what in a fairer world would be a crucial spanner in the works.

The fast track authority would extend US presidential powers for no less than six years; that includes the next White House tenant, which might well be ‘The Hillarator’ or Jeb “Putin is a bully” Bush.

This presidential authority to negotiate dodgy deals includes not only the TTIP but also the Trans-Pacific Partnership (TPP) and the Trade in Services Agreement (TiSA).

WikiLeaks, just in time, published the Healthcare Annex to the secret draft “Transparency” chapter of the TPP, along with each country’s negotiating position. No wonder this draft is secret. And there’s nothing “transparent” about it; it’s an undisguised hold-up of national healthcare authorities by Big Pharma.

The bottom line is that these three mega-deals – TTP, TTIP and TiSA – are the ultimate template of what could be politely described as global corporate governance, a Bilderberg wet dream. The losers: nation-states, and the very concept of Western democracy. The winners: mega-corporations.

Julian Assange, in a statement, succinctly nailed itIt is a mistake to think of the TPP as a single treaty. In reality there are three conjoined mega-agreements, the TiSA, the TPP and the TTIP, all of which strategically assemble into a grand unified treaty, partitioning the world into the West versus the rest. This 'Great Treaty' is described by the Pentagon as the economic core to the US military's 'Asia Pivot.' The architects are aiming no lower than the arc of history. The Great Treaty is taking shape in complete secrecy, because along with its undebated geostrategic ambitions it locks into place an aggressive new form of transnational corporatism for which there is little public support."

 

So this is the real Atlanticist agenda – the final touches being applied in the arc spanning the G1 + added junior partners to Bilderberg (expect a lot of crucial phone calls from Austria to Washington this Friday). NATO on trade. Pivoting to Asia excluding Russia and China. The West vs. the rest.

Now for the counterpunch. As the show in the Bavarian Alps unrolled, the first BRICS Parliamentarian Forum was taking place in Moscow – ahead of the BRICS summit in Ufa next month.

Neocons – with Obama in tow – knock themselves out dreaming that Russia has become “isolated” from the rest of the world because of their sanctions. Since then Moscow has signed major economic/strategic contracts with at least twenty nations. Next month, Russia will host the BRICS summit – 45 percent of the world’s population, a GDP equivalent to the EU, and soon bigger than the current G7 – as well as the Shanghai Cooperation Organization (SCO) summit, when India and Pakistan, currently observers, will be accepted as full members.

G1 plus junior partners? Bilderberg? Get a job; you’re not the only show in town, any town.

 

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

The German question

Off the keyboard of Pepe Escobar
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Originally published in Ron May 8, 2015

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Seventy years after the end of World War II, and twenty-five years after the fall of the Berlin Wall, Germany is once again under the grip of ‘sturm und drang’, but this time barely registered in either East or West.

Without a serious attempt at myth busting, it’s impossible to discern what could be interpreted as a new, discreet German attempt at hegemony.

Contrary to a myth currently propagated by US ‘Think Tankland’, political Berlin under Chancellor Merkel is not a mediator between a still hegemonic US and an “aggressive” Russia.

The reality is Berlin, at least for the moment, would rather give the impression of singing Washington’s tune – with minor variations – while chastising Russia. That’s the case even when we consider the solid energy/trade/business ties with Moscow, as in Germany importing a third of its natural gas, and German industry/companies/corporations hugely invested in Russia.

Contrary to a second myth, political Berlin does not seek “stability” in Europe’s eastern borderlands, but rather outright vassalage. The relentless Eastern European integration to the EU, led by Berlin, was as much a strategy to open new markets for German exports as to erect a buffer between Germany and Russia. As for the Baltic States, they are already vassals; Germany is the largest trading partner for all three.

Yet another myth is that Berlin cannot lift – counterproductive – sanctions against Moscow as long as “security” of Central and Eastern Europe is not assured. The reality is that Germany would rather exert total political/economic control over the periphery of the former USSR.

As for the EU itself, now mired in a post-democratic, un-egalitarian, austerity-ravaged toxic environment, with no discernible way out, Germany already rules, politically and economically.

Deutschland under control?
Amidst the current EU intellectual quagmire where, to quote Yeats, “the best lack all conviction, while the worst are full of passionate intensity” – think puny neoliberal ideologues scurrying under their sinecures in that Kafkaesque temple of mediocrity, Brussels – a modern Diogenes would be hard pressed to find an informed observer capable of seizing up Germany’s game.

Thus the glaring exception of historian and anthropologist Emmanuel Todd, author of the seminal 2002 essay After the Empire which showed no mercy in its cartography of American decline. In a long 2014 www.les-crises.fr interview, centered on Germany, Todd hits the geopolitical ball out of the park.

Todd deeply worries about the West’s dysfunction – manifested at its prime in Europe being “virtually at war with Russia”. He sees the anxious, sick West’s “fixation” on Russia as the search for a scapegoat, or better, “the creation of an enemy, necessary to maintain a minimal coherence of the West. The European Union was created against the USSR; it cannot do without Russia as an adversary.”

And yet, behind the EU, there’s the real deal; the German project, which Todd identifies as a project of power, driven “to compress demand in Germany, to enslave the debt-ridden countries of the South, to put to work the Eastern Europeans, to throw some peanuts to the French banking system.” And that project of power could not but open the ominous door to Germany’s “immense potential for political irrationality” – a theme very much prominent now with all those rehashes of the fall of the Reich.

Todd identifies what Lacan would dub the great European non-dit (“not enunciated”); “The key to the control of Europe by the United States, which is the inheritance of the victory of 1945, is the control of Germany.”

German Chancellor Angela Merkel (Reuters/Hannibal Hanschke)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yet now the control is dissolving, albeit chaotically, and that means “the beginning of the dissolution of the American imperium.” And imperial decline – visible in myriad declinations – leads Todd to a bombshell; the real threat to the US, much more dangerous than Russia – “which is external to the empire” – is Germany.

And what about the threat to Russia from Germany? Todd strongly implies the populations of Russian language, culture and identity are being attacked in Eastern Ukraine with "the approval and support" of the European Union – which is a fact. At the same time, he interprets the Russian "silence" about it not "as in the French and the American case, a refusal to see reality,” but as good diplomacy; "They need time. Their self-control, their professionalism, compels admiration." Try finding this kind of analysis in CIA-infested European corporate media.

“Europe” out, Germany in
So what Todd is essentially gaming here is “the emergence of a new face-to-face between two great systems: the American continent-nation, and this new German empire, a political-economic empire which people continue to call ‘Europe’ out of habit.” And yes, he’s got a compelling case.

Using a political science concept coined by Belgian anthropologist Pierre van den Berghe, Todd qualifies the German system as “un-egalitarian domination”; whatever equality is left concerns only the dominant, as in German citizens. Welcome, then, to Herrenvolk democracy – the “democracy of the master people.”

Todd bolsters his case by pointing to the dynamism of the German economy as based in the former USSR satellites; “Part of the success of our German neighbors stems from the fact that the communists were much interested in education. They left behind them, not only obsolete industrial systems, but also populations that were remarkably well educated.”

So “annexing” the populations of Poland, Czech Republic, Slovakia, Hungary, etc, meant Germany reorganizing its industrial base using low-cost labor. But then there’s a major “if”; Todd believes Germany might also “annex” an active population of 45 million in Ukraine, “with its good level of training inherited from the Soviet period.”

Not only that’s extremely unlikely; Moscow has been explicit this is a red line. Moreover, “Ukraine” is a failed state in terminal disintegration, now a lowly, de facto, IMF colony, whose only interest for the “West” is rich agricultural land to be plundered by Monsanto and cohorts.

“He hasn’t seen Germany coming”
The fun really starts when Todd examines the mess “classical American geopoliticians of the ‘European’ tradition,” are in. He had to be talking mostly about notorious Dr. Zbig “Grand Chessboard” Brzezinski; “Obsessed by Russia, he hasn’t seen Germany coming.”

Todd correctly notes how Dr. Zbig “has not seen that the American military might, by extending NATO all the way to the Baltic States, to Poland… was in fact cutting out an empire for Germany, at first economic, but at present already political.” And in parallel to what I have been examining for years now, he hints that “the extension of NATO to the East could in the end bring about a version B of Brzezinski’s nightmare: a reunification of Eurasia independently of the United States.”

The clincher is to be savored like the best Armagnac; “Faithful to his Polish origins, he feared a Eurasia under Russian control. He is now running the risk to go down in History as another one of these absurd Poles who, out of hatred of Russia, have insured the greatness of Germany.”

For the moment, political Germany – but not its industrialists – has chosen to continue to be subjugated to the US/NATO as Chancellor Merkel appears to be enforcing the encircling of Russia.

The Reichstag building, the seat of the German lower house of parliament Bundestag (Reuters/Fabrizio Bensch)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Todd nailed it, Germany painstakingly organized its EU hegemony on the basis this disparate basket of nations would provide Berlin with the economy of scale to win against its main industrial competitor, the US. Yet Germany lacks energy – oil and gas. Supply from Africa and the Middle East is inherently unstable.

So this is how we come to another scenario circulating among what Bauman called “nomad elites of liquid modernity”; not think tanks or Western intel agencies.

According to this scenario, instead of a EU trying to work with Russia, we have Berlin trying to undermine Moscow to ultimately seize financial control of Russia’s immense resources; back to those good old disaster capitalism Yeltsin days, when everything was collapsing other than Russia’s natural resource production.

After all the ‘New Great Game’ is mostly about control of the natural gas, oil and resources of Russia and Central Asia. Will they be controlled by oligarch fronts supervised by their masters in London and New York, or by the Russian state? And once Russia had been subdued, then the Central Asian “stans”, especially gas republic Turkmenistan, would also be free to do Germany’s bidding.

But for the moment, it’s all shadow play. Merkel utters platitudes about the Minsk ceasefire – when every serious player knows Kiev breaks it on an everyday basis. Berlin works backstage to keep the proverbial “reluctant players” – Italy, Greece, Hungary – on board with sanctions on Russia while spinning it’s doing its best to contain hysterical Poland and Lithuania.

Merkel is very much aware the US prosecutes much of its drone war out of Germany while the BND – German intel – spies for the NSA on the French, the European Commission (EC) and even German industry.

So she will never directly antagonize Washington – as she in fact mostly fears German Atlanticists, while posing about Putin and the Kremlin living “in a different world.” Berlin and Moscow continue to talk diplomatically, but the mood tends to the tone deaf.

The new exceptionalism
Todd is one of the few who at least are setting alarm bells ringing. As in this formulation: “German culture is un-egalitarian: it makes difficult the acceptance of a world of equals. When they are feeling that they are the strongest, the Germans will take very badly the refusal of the weaker to obey, a refusal which they perceive as unnatural, unreasonable.”

Once again, we’re in the realm of exceptionalism, but now with the added, historically troubling German penchant for political irrationality. The new, remixed lebensraum may revolve around an ever-expanding export powerhouse – adding on global trade by using educated, low-cost labor. While the Reich disintegrated in a larger than life folly seventy years ago, the new deal accomplished a dream; as Todd characterizes it, there are two great “developed industrial worlds” today, America and “this new German empire.”

He sees Russia as a “secondary question” and he has not examined China’s long game; thus he’s not focused – as in my own case – on myriad moves toward Eurasia integration. But what he’s concentrating on is no less than a thriller for the ages, a “completely different future for the twenty years to come, other than the East-West conflict;” Germany rising – and the US and Germany inevitably clashing, all over again. History may yet repeat itself as (lethal) farce after all.


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).

Exposing the Euro Clowns

Off the keyboard of John Ward

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Published on The Slog on April 10, 2015

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

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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.

Slog Tri-fecta

Off the Keyboard of John Ward

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Published on The Slog on February 27-28, 2015

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

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

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

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

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

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

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

At the End of the Day

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

…………………………..

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

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

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

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

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

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

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

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

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

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

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

From Minsk to Brussels, it’s all about Germany

Off the keyboard of Pepe Escobar
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Germany's Chancellor Angela Merkel (L) talks to France's President Francois Hollande during a meeting with the media after peace talks on resolving the Ukrainian crisis in Minsk, February 12, 2015. (Reuters / Grigory Dukor)

Germany’s Chancellor Angela Merkel (L) talks to France’s President Francois Hollande during a meeting with the media after peace talks on resolving the Ukrainian crisis in Minsk, February 12, 2015. (Reuters / Grigory Dukor)

Originally published in RT on February 13, 2015

Germany holds the key to where Europe goes next. A fragile deal may have been reached on Ukraine, but there’s still no deal with Greece. In both cases, there’s much more than meets the eye.

Let’s start with the grueling Eurogroup negotiation in Brussels over the Greek debt.

Greek officials swear they never received a draft of a possible agreement leaked by Eurogroup bureaucrats to the Financial Times. This draft, crucially, referred to an agreement “amending and extending and successfully concluding,” the current austerity-heavy bailout.

German Finance Minister Wolfgang Schaeuble cut off “amending”. This is the draft that was leaked. But then Greek Finance Minister Yanis Varoufakis called Prime Minister Tsipras – and the statement, still not signed, was rejected. So this was a top Tsipras decision.

Tsipras could not possibly balk – not after previously raising the stakes – as in promising to boost the Greek minimum wage and halt privatizations. He’s still betting the house that the Troika won’t allow a ‘Grexit’. Yet he may be wrong; the possibility of ‘Grexit’ is hovering around 35 percent to 40 percent, and it will be much higher if no deal is reached on the next crunch meeting, Monday.

Tsipras and Eurogroup President Jeroen Dijsselbloem at least agreed that Greek officials and the Troika (EC, ECB, IMF) should start talking “at a technical level.” Translation: they will be comparing the current austerity nightmare with new Greek proposals.

Athens essentially has only two choices. Either the Troika accedes to some form of debt repudiation – real or as a sleight of hand (that’s Syriza’s proposal – an arrangement that fosters growth); or ‘Grexit’ ensues, with Athens creating its own central bank and currency as an independent nation. There’s no third choice; a debt of 175 percent of Greece’s GDP is totally unpayable.

As much as the Troika and its institutional derivatives spin ‘Grexit’ won’t be a big deal, the fact is a Greek debt default could have a more devastating effect than the Lehman Brothers case. It was not the fundamentals at Lehman that caused widespread panic when it went down; but the fear that their derivative exposures would bring down the system.

And cutting through all the spin, what remains, essentially, is what European Commission President Jean-Claude Juncker told Le Figaro a few days ago; it’s out of the question to suppress the Greek debt and, most of all, “there can be no democratic option against European treaties.” There it is, crystal clear: EU institutions work against democracy.

Plan B remains a distinct possibility. Moscow has already invited Tsipras to meet with Putin. And Beijing has invited Tsipras to meet with Prime Minister Li Keqiang. These are the “R” and the “C” in BRICS in action.

It’s worth remembering Greek Defense Minister Panos Kammenos when he articulated if not a majority view, at least a substantial perception among Greek public opinion; “We want a deal. But if there is no deal, and if we see that Germany remains rigid and wants to blow Europe apart, then we will have to go to Plan B… We have other ways of finding money. It could be the United States at best, it could be Russia, it could be China or other countries.”

Alea jacta est. Troika or RC?

And it’s all about NATO

Greek Prime Minister Alexis Tsipras addresses a news conference after a European Union leaders summit in Brussels February 12, 2015. (Reuters / Francois Lenoir)

Greek Prime Minister Alexis Tsipras addresses a news conference after a European Union leaders summit in Brussels February 12, 2015. (Reuters / Francois Lenoir)

Then there’s Minsk. What was achieved after nearly 17 hours of a grueling marathon is not exactly, in French President Francois Hollande’s words, a “global” agreement and a “global ceasefire” in Ukraine.

There’s every possibility the ceasefire will be nullified only a few minutes after its implementation at midnight this Saturday – irony of ironies, at the end of Valentine’s Day. Significantly, the final statement bears no important signatures: Putin, Merkel, Hollande and Poroshenko.

German Foreign Minister Steinmeier was cautious, warning Minsk 2.0 is not exactly a breakthrough, but at least de-escalates matters. Merkel preferred to spin that Putin had to pressure the Eastern Ukraine federalists of the DNR and the LNR to agree to the ceasefire.

Predictably, like clockwork, even before the ceasefire, the IMF – under Washington’s orders – suddenly announced it would continue to rape, sorry, help bailout bankrupt, failed state Ukraine with a tranche of$17.5 billion, part of a large $40 billion, four-year “rescue” package. Translation: Kiev’s goons now have fresh cash to throw at a war they don’t want to give up on.

Poroshenko himself took no time to torpedo the ceasefire – spinning there’s no autonomy granted to the areas controlled by the federalists, and refusing to confirm Putin’s assertion that Kiev has agreed to terminate the vicious economic blockade of Donbass.

The precise contours of the demilitarized zone – bordering one frontline in September and a very different frontline five months later – remain a mystery. And Washington immediately turned the “withdrawal of foreign forces” clause into a joke. The Pentagon has already announced it will begin training Ukraine’s National Guard next month.

Minsk 2.0 hardly qualifies as a band-aid. Ukraine is unredeemable. It would only come back from the dead if a tsunami of cash – almost equivalent to the cost of German reunification – were poured in. Needless to add, no one in Europe wants to dish out even a few devalued euro.

This was, remains, and will continue to be, essentially about NATO expansion. Washington and the Kiev marionettes will never allow any constitutional reform that lets the Donbass block NATO embedded in Ukraine. So the ‘Empire of Chaos’, in a nutshell, won’t cease from using Ukraine to bully Russia. The ‘Empire of Chaos’ is not exactly in the business of nation building – quite the contrary.

Crossing the German bridge

And that brings us to the crucial role played by Germany – with France as sidekick.

Chancellor Merkel had to go to Moscow to negotiate with Putin because she saw which way the wind was blowing – counterproductive sanctions; Ukrainian economy in free fall; Kiev’s goons defeated on the battlefield. That was as much an imperative as a crucial demarcation away from the imperial NATO expansion obsession.

As Immanuel Wallerstein has observed Moscow is pursuing “a careful policy. Not totally in control of the Donetsk-Lugansk autonomists, Russia is nonetheless making sure that the autonomists cannot be eliminated militarily. The Russian price for real peace is a commitment by NATO that Ukraine is not a potential member.”

So Merkel may have defused the Obama administration’s drive to weaponize Kiev – but only for a moment. There’s no evidence – yet – that the Obama administration and its embedded neo-con cells have admitted that the self-proclaimed People’s Republics of Donetsk and Lugansk (DPR and LPR) are essentially “lost” to Kiev’s influence.

Hollande provided the perfect cover for Merkel. It was Hollande who publicly supported autonomy – as in federalization – for the DPR and the LPR. At the same time, both Merkel and Hollande know that Kiev will never de facto accept it (and even a substantial portion of the Donbass only accepts federalization as a stepping stone to eventual secession and union with Russia.)

Merkel – at least in terms of German public opinion – did manage to achieve her goal, emerging as a victor (“The world chancellor,” as the tabloid Bild coined it) after her frequent-flyer marathon. Putin also emerged a victor of sorts – as Merkel essentially rehashed proposals he made months ago. So yes, whichever angle we look at it, this was in fact a Moscow-Berlin deal.It’s easy to see who is extremely disgruntled and will do everything to bomb it; Washington, Kiev, London, Warsaw and the hysterical “Russia is invading” Baltic states.

Last but not least, let’s call attention to the monumental white elephant in the room. Minsk 2.0 was conducted in the total absence of the ‘Empire of Chaos’ and the (increasingly irrelevant) “special relationship” British minions.

Slowly but surely, public opinion across Europe – and especially Germany – is experiencing a tectonic shift. The obsession by the ‘Empire of Chaos’ to further weaponize Kiev has horrified millions – resurrecting the specter of a war in Europe’s eastern borderlands. Not only in Germany but also in France, Italy, Spain, there is a growing continental consensus against NATO.

Even at the height of a vicious Russia demonization campaign unleashed by virtually the whole German corporate media, a Deutschland Trend survey revealed that most Germans are against NATO troops in Eastern Europe. And no less than 49 percent would rather see Germany position itself as a bridge between East and West. The leadership in Beijing definitely took note.

So it’s tempting to hop on the Merkel/Hollande peace train as the heart of Europe finally exercising their sovereignty and frontally defying the ‘Empire of Chaos’. Perhaps that could be the embryo of a German-French partnership for peace in Europe and even beyond, from the Middle East to Africa.

That would frontally antagonize NATO’s screenplay – which implies the ’Empire of Chaos’ ruling uncontested over Europe, the Middle East and even across Eurasia, with continental European powers, especially Germany, France and yes, Russia, at the margins.

Sooner or later European politicians will have to wake up and smell the coffee; the notion of a German-French-Russian pan-European peace/trade partnership is way more popular than reflected in failed corporate media.

Now it’s up to Germany to clean up its act on Greece. The choice is stark. The EU may embark on a quadruple-dip recession as the ECB further destroys what is left of the European middle class. Or Germany, reflecting the thinking among its captains of industry, may tell the EU – Troika included – that the way to go is to shift the strategic, trade and political focus from West to the East. That would start by stuffing the corporate US-devised TTIP treaty – that’s NATO on trade. After all, this is going to be the Eurasian century – and this train has already left the station.

 

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).

The Belles of St. Trillions, Greek Myths & Bond, James Bond

Off the keyboard of John Ward

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Published on The Slog on December 31, 2014 & January 1, 2015

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The Belles of St Trillions

As 2014 closes, let us celebrate those of the other gender fashioned from Adam’s rib who finds themselves at the centre of the global storm: the Belles of St Trillions.

argiebintCristina Elisabet Fernández de Kirchner, commonly known as Cristinnza Kirchner referred to in Argentine media as CFK.  Reelected President of Argentina. Prime supporter of Argentian onwnership of islands where less than 0.2% of inhabitiants want to be Argentinian. Total national debt of Argentina: £1.3 trillion.

lagardebintChristine Lagarde, first ever female leader of the International Monetary Fund (IMF). A French lawyer who took up the post after Dominique Strauss-Kahn was stitched up on a sexual abuse charge of which he was innocent. Currently due to be indicted in France on charges of gross corruption and misuse of public funds. Widely quoted in 2012 as saying that French banks are “as safe as houses” just a week before they sold their investment in a  major Greek bank for 1 euro. Total national debt of France: £1.7 trillion.

merkfrownAngela Merkel, Bundeskänzler of reunited Germany, formerly a Youth Leader in the Communist DDR and daughter of the only senior German official ever to defect from West to East Germany. Total national debt of Germany: £1.9 trillion.

I fancy this might be circumstantial evidence suggesting that it isn’t just men that waste money, don’t know how to provision, and can’t understand domestic budgets.

Next year: why men are more fun in supermarkets.

GREEK MYTHS: OH WHAT A DIFFERENCE A NEW YEAR DOESN’T MAKE.

horoscopeThe appalling horrorscope of the Barclay Twins’ power to mislead

We have a New Year that promises interest in the Chinese sense. But fear not…for nothing has changed: if necessity be the mother of invention, then money is the father of convention. And the contemporary convention is that greed is good. Except when it isn’t. After the Christmas blowout, anyone for metaphors?

A tragedy, and yet a New Year’s message for anyone prepared to see it: another year, another number, another twelve months spent drowning in denial. Mind you, things have moved on slightly at the DailyTelegraph, where Android Evan-Elpus’s schizoid condition has been formalised. The most recent offering gets this introduction to AEP’s shock-horror OMG take on things:

GreecontagionSo then, lots of people likely to suffer along with those nasty smelly Greek lazy hairy oily fatsos if the Red Brigade led by Beelzebub incarnate Alexeivitch Trotpras seizes power. But below the main picture a mere five centimetres later, we learn:

Greecontagion2The use of the word ‘rebels’ there is an appalling insult to the Greek electorate; but the abrupt 180 degree U-turn on interpretation is a record even for Ambrose. However, both these signs suggest to me that after AEP left the office, one of the Barclay twins’ quisling bumboys emailed the Odd Couple in the Channel. Either they both have the consistency associated with all card-carrying newsbending fascists neoliberals, or (I’d imagine more likely) the Teletubbies couldn’t agree on the ramifications. At the age of 80, perhaps they’ve finally become doolally. But once again, I am forced to ask here whyTF these two clowns are allowed to turn out this bilge of self-interested and near-deranged news manipulation using a national institution as their vehicle. And the answer is, of course – just as with Newscorpate Austropathicus – they are way beyond any law that counts.

But far be it from me to be holier than they: I feel terrible. I don’t know how it happened, but I forgot to send the Baby Jesus a birthday card. What am I like?

At the End of the Day

The year opened with the momentous news that The Slog has passed 13 million views since being launched in 2009.

This evening’s filmic offering on ITV2 was the James Bond epic Live and let Die Another Day only Not Twice Forever. I tried to follow it for the first five minutes, and then I gave up. My guests spent the next two hours asking whether the black love interest was CIA, whether the Chinese agent had undergone plastic surgery, and whether M was really angry with Bond, or just spurring him on to new heights.

‘The country is on course for a brighter future…Over the past five years we have gone a long way to restoring our fortunes, but letting Labour into power risks throwing it all away.’ This is what the man I still find it difficult to think of as our Prime Minister, David Cameron, wrote in the Maily Telegraph today. On reading it, I was struck by how the plot of Live and let Die Another Day only Not Twice Forever was far more believable. It involved swimming for hours through ice-cold waters that would kill anyone within two minutes, disappearing cars, and harnessing the sun purely for the purposes of killing one of Bond’s assistants. But compared to the idea of Greece staging a recovery and Italy staying in the eurozone, it was clinically true-to-life. And when put alongside the idea that the UK’s economy is anything other than a manufactured bit of paper drivel and housing bribes, Live and let Die Another Day only Not Twice Forever was a painstaking documentary.

Earlier in the day came The Wizard of Oz – and this too was an inspired choice of reality television. Ed Miliband was well cast as the lion with no courage, and Jeremy Hunt played the tin man with no heart to perfection. But outstanding for me was Antonis Samaras as the scarecrow with no brain. Christine Lagarde as the wicked witch of the west was certainly believable, and the decision to hand the role of Dorothy to Tony Blair was, if nothing else, courageous.

We kicked off with eight degrees of frost this morning,the temperature soared to minus 4 by mid afternoon, and tonight it’s ten below. So far this winter, this has to be game and first set to Vladimir Putin.

ANOTHER Greek BAILOUT!

Off the keyboard of John Ward

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Published on The Slog on December 3, 2014

tsipras14COMETH THE HOUR, IS HE THE MAN?

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GREECE: Slog vindicated again as Athens calls for new €10bn bailout

It does strike me as very odd (as I’ve written many times before) than an old pro-am hack like me, hunkered down in the south west of France, seems able to understand the real Greek debt situation…..but most experts don’t. Or do, but don’t write about it – I’m never entirely sure.

Last January, I posted a long piece – “Mind the Gap” – pointing out with the use of simple maths that, without further bailout monies, Greece would default in May 2014; and even if they got that money, they’d be in trouble again during the Autumn and early winter.

So it proved. With the European elections as a handy distraction, I was nevertheless able to confirm on March 27th that the Samaras Coalition would be given €8.5bn toavoid default in May. The Wall Street Journal  ran a piece soon afterwards agreeing with the view. After some deliberate obfuscation, on 10th May Athens got the money it needed to make a dent in over €11bn of bond maturaties that became due.

The previous year, Angela Merkel had gone into the German elections and lied her fat head off about the Volk not being asked for any more money, and how the future was bright. She plodded home with ease, since when –  in general eurozone and specific Greek terms – things have gone from very bad to a whole lot worse.

Now Mish’s Global Analysis (which reblogged my January piece) reveals that, yes indeed, Athens needs more money. To be more exact, €10bn. Back in January, I said it would be €5.6bn….but then other targets were missed as the economy got worse and worse; and last week in Paris, the Troika up and mentioned that there were €2.5bn of cuts that the Greeks hadn’t fulfilled. So as I say, now it’s worse than ever.

One side of the devalued coin in this farcical saga is that – even allowing for the fact that Homo Kalamatus Antonikis Samaras has an olive stone where his brain should be – he has lied three times on national Greek television about the reality of the situation. So not surprisingly, Alexis Tsipras’s Party Syriza is now comfortably leading in the polls…..and with the Assembly vote for a new President coming up, Samaras possibly lacks the support required to carry the day. Technically, under the Greek constitution this is a resigning issue, and so we’ll get elections early next year rather than in 2016.

For Brussels, this has all the makings of the sort of nightmare in which a loose nuclear cannon is careering all over the eurozone and fomenting revolt. But sadly, Tsipras has toned down his rhetoric: today he claims that the loan package will have to be renegotiated, but he doesn’t want to dump the euro. Economically this is idiocy, but the Syriza leader knows he can only win the election by appearing ‘reasonable’…ie, he is – as David Cameron would say – a non-violent extremist.

I confess to being disappointed by Tsipras, and here’s why. If you look at the numbers involved in ‘saving’ Greece, then the four bailouts represent probably the most expensive face-saving exercise in history. To protect a potential original loss in the region of €40bn, the Troika threw confetti money at a debt write-off roughly equivalent to Cameron’s HS2 folly. As of this latest bailout, it will have poured €240bn of confetti money onto a debt conflagration that is raging like a Greek forest fire in August.

Do the Sprouts feel humble about this? They do not: “Greece is not in a position to negotiate“, they told the media last week. That is about as Betty Swollocks as Brussels fantasy gets: Although it has a huge debt, Greece at last has a current account surplus. If it renounces the debt, it could reverse the austerity nonsense, leave the euro and be quids in. Which is why I think Tsipras, if he does win the election, needs to play some serious hardball.

I posted at the weekend that 2 euros in 3 being ‘repaid’ by Greece are funny money. The truth is that – with most of the vultures having had their kilo of flesh – the ECB could write off two-thirds of the debt without losing any real money at all. Better that, I would’ve thought, than a defaulting defector with Italy now looming over the same horizon.

In licking the creditors like this, Tsipras is sending a signal to say he’ll be happy with a compromise. He says he wants “a €chunk” of the debt “forgiven”, whereas I think he should shout “fraud” and shoot for the Moon. It’s actually Brussels-am-Berlin that’s in no position to press too hard with the jackboot on this one.

Juncker Doctrine

Off the keyboard of John Ward

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Published on The Slog on November 3, 2014

https://hat4uk.files.wordpress.com/2014/11/camerkjunckpt.png

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EU EXCLUSIVE: JUNCKER DOCTRINE SPELLS OUT WHY UK CANNOT CHANGE THE ESSENTIALS

Cameron bombed by Berlin & Brussels

HAS THE PRIME MINISTER READ THE JUNCKER DOCTRINE?

In a post last week, I chastised David Cameron for complaining about the €1.7bn additional payment…the principle of which is (literally) on Page One of the EU contributions manual. If he goes to the website of Jean-Claude Juncker, he can read that his latest moan is non-negotiable…confirmed this morning by the German Chancellor Angela Merkel. Why does he keep using a bike to reach the stars? The Slog reveals the Juncker Doctrine and injects some reality into the saga.

The Füherin from Berlin has warned David Cameron about freedom of movement. “One false move Britischer Scwheinhund,” she told him, “and you vill be sent to ze Eastern Front”. The thing about Dave is, he tries ever so hard to persuade the Brits that we should stay in the EU and reform it….but every time he tries to reform it, he gets kicked in the teeth. He’s a game girl and all that, but he should learn from the experience.

In the last six weeks alone, he has lost three in a row: Juncker as President, the €1.7bn additional UK payment, and now the freedom of movement question. And he is making no headway on the issue of being forced into the euro….a subject that is still being given an oddly low profile in the British media, of which more later.

But returning to Camerlot the Brick Wall Bouncer, surely he can reach these simple conclusions:

1. Chances are we shouldn’t be in this Union….especially as it’s even more bankrupt than we are

2. If I’m going to have to win a Referendum on EU membership, maybe it would be smart not to tilt at windmills all the time.

These two posers are rhetorical, because there’s a dead simple reason why Cameldung can’t do either: he’d split the Party down the middle, and be bashed by the flapping of Left and Right wings respectively. Further, he’d have to admit that UKip has been right all along. So he should be like one of those blokes in the pub, ready for a fight – but constantly insisting his mates hold him back. Instead of which, he keeps trying to biff the iceberg.

All newer EU member states have to adopt the euro by a target date, and with three exceptions all referendums are forbidden: the three exceptions are the UK, Denmark and Sweden…but Denmark already has one foot in the grave. Several of the newer arrivals have put back target dates anyway, and the UK, Sweden and Hungary have made it clear that joining the euro is absolutely off the agenda. Only defeat for Viktor Orban in Hungary would facilitate them ditching the Florent – that’s very unlikely to happen – and the idea of joining the euro is very unpopular in Poland.

All of this (it goes without saying) is academic, as the chances of the eurozone as we know it surviving the coming storm are near-zero. But that isn’t really the point: however radically the eurozone changes, it is very clear that Britain is going to become a second-class member of the EU – with all the costs and none of the influence – if it stays in the EU.

If you go to European President Jean-Claude Juncker’s website, he is remarkably frank about not only wanting to settle Britain’s issues within the next five years, but also what the maximum is we can expect as a result of the process: (his emphases not mine)

‘No reasonable politician can ignore the fact that, during the next five years, we will have to find solutions for the political concerns of the United Kingdom. We have to do this if we want to keep the UK within the European Union – which I would like to do as Commission President. As Commission President, I will work for a fair deal with Britain. A deal that accepts the specificities of the UK in the EU, while allowing the Eurozone to integrate further. The UK will need to understand that in the Eurozone, we need more Europe, not less. On the other hand, the other EU countries will have to accept that the UK will never participate in the euro, even if we may regret this. We have to accept that the UK will not become a member of the Schengen area. And I am also ready to accept that the UK will stay outside new EU institutions such as the European Public Prosecutor’s Office, meant to improve the fight against fraud in the EU, but clearly rejected by the House of Commons and the House of Lords. We have to respect such clear positions of the British Parliament, based on the British “opt out” Protocol. David Cameron has recently written down a number of further key demands in an article published in the Daily Telegraph. As Commission President, I will be ready to talk to him about these demands in a fair and reasonable manner. My red line in such talks would be the integrity of the single market and its four freedoms; and the possibility to have more Europe within the Eurozone to strengthen the single currency shared so far by 18 and soon by 19 Member States.

To the best of my knowledge, I have not seen this extract published anywhere in the UK media…and that’s confirmed by even drawing a blank on Google:

junckersearchBut basically, the Juncker Doctrine isn’t even implication: it is explicitly warning that if Britain stays in, EU financial regulation will continue, centralised financial systems will tighten, the EPPO will be closed to UK citizens, and the four basic tenets of the EU are sacrosanct…ie, not open for negotiation. Particularly telling is the ‘more Europe within the Eurozone to strengthen the single currency’ line.

Not only is it absolutely crystal that Juncker has learned three-fifths of -30% from the inflexibility of the euro; he’s saying there’ll be more, not less rigidity and central control…courtesy of Wolfie Wheelchair. And the four “freedoms” remaining forever come what may are:

free movement of goods, capital, services and persons

Hence warnings from Geli von Fridgidaire about freedom of movement. As always with our Prime Minister, one is left with two potential ways to interpret his tactics in constantly playing this ram against the Boulder Dam game. This isn’t the way to stifle UKip and keep his Party together: so is he…

1. Just very thick, or..

2. is there a sub-text?

Either way, every statement that comes from Brussels, Berlin and Luxembourg now adds another million+ votes to Faisal Naraj’s Salvation Army. Mark Reckless must be rubbing his hands with glee at this latest flying brick from Berlin.

The Novorossiyan 300

Off the microphone of RE

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Aired on the Doomstead Diner on September 3, 2014

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Don’t miss also the recent related Podcasts with Dmitry Orlov

Analysing Ukraine and MENA

Supply Chains, Population & Community

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300 movie image Gerard Butler

Snippet:
…However, for a while there the Ukies also had superior equipment, more artillery, tanks etc that were legacy gifts from Mother Russia from the Soviet era. So Novorossiyan  irregulars armed mainly with rifles and RPGs were on the retreat, consolidating inside their home region for a Final Battle for all the Marbles.

You all know the story of the 300 from the film by the same name, which was a fictionalized account of the Battle of Thermopylae in 480 BC. From Wiki:

“Both ancient and modern writers have used the Battle of Thermopylae as an example of the power of a patriotic army defending native soil. The performance of the defenders at the battle of Thermopylae is also used as an example of the advantages of training, equipment, and good use of terrain as force multipliers and has become a symbol of courage against overwhelming odds. “

You also may have heard the poem by Alfred Lord Tennyson, Charge of the Light Brigade. I will read it in full.

Half a league, half a league,
Half a league onward,
All in the valley of Death
Rode the six hundred.
“Forward, the Light Brigade!
“Charge for the guns!” he said:
Into the valley of Death
Rode the six hundred.

“Forward, the Light Brigade!”
Was there a man dismay’d?
Not tho’ the soldier knew
Someone had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die:
Into the valley of Death
Rode the six hundred.

Cannon to right of them,
Cannon to left of them,
Cannon in front of them
Volley’d and thunder’d;
Storm’d at with shot and shell,
Boldly they rode and well,
Into the jaws of Death,
Into the mouth of Hell
Rode the six hundred.

Flash’d all their sabres bare,
Flash’d as they turn’d in air,
Sabring the gunners there,
Charging an army, while
All the world wonder’d:
Plunged in the battery-smoke
Right thro’ the line they broke;
Cossack and Russian
Reel’d from the sabre stroke
Shatter’d and sunder’d.
Then they rode back, but not
Not the six hundred.

Cannon to right of them,
Cannon to left of them,
Cannon behind them
Volley’d and thunder’d;
Storm’d at with shot and shell,
While horse and hero fell,
They that had fought so well
Came thro’ the jaws of Death
Back from the mouth of Hell,
All that was left of them,
Left of six hundred.

When can their glory fade?
O the wild charge they made!
All the world wondered.
Honor the charge they made,
Honor the Light Brigade,
Noble six hundred…

For the rest, LISTEN TO THE RANT!!!

Merkel Capitulates, World is Saved, Now What?

Posted originally on Economic Undertow on July 6, 2012 by steve from virginia

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Now that the Wicked Witch of the North (Angela Merkel) has been turned to stone/burned at the stake and Europe saved for the next five minutes, all eyes turn toward China.

 

Falling Star

Jonathan R. Laing (Barrons)

The Chinese economy is slowing and is likely to slow a lot more. Get ready for a hard landing.

After three decades of annual growth averaging 10%, China’s bullet-train economy is slowing markedly. Economic problems in Europe and the U.S. are stunting export growth, long the primary driver of China’s economic miracle. Growth in industrial production has likewise been decelerating for months. This year growth in gross domestic product could slip to 8%—and it may get a lot worse from there. Though recently announced interest-rate cuts and a ramp-up in the government’s already massive infrastructure spending could postpone the day of reckoning, to us it looks like the Great China Growth Story may be falling apart.

A comprehensive report by Nomura Global Economics issued late last year entitled “China Risks” paints at least one scenario in which China’s growth would fall in half to under 4%.

 

The Euro-zone is just as far away from Euro-bonds, Euro-reform, Euro-conservation and Euro-salvation as it was two weeks ago, Merkel is just as belligerent, the region is just as broke and dependent upon external sources of both credit and fuel as it was two weeks ago … certainly none of these problems apply to China, right?

Figure 1: China’s petroleum consumption massively increases, it does so at the expense of China’s overseas customers. We can see how this works in the unraveling markets outside of China. Analysts believe non-remunerative fuel waste can increase endlessly into the future, one look at China’s exponential consumption should put an end to such nonsense. China depends on overseas merchandise sales to the same countries that China’s expansion starves of fuel.

Here is distributed vulnerability in a zero-sum world: China is as dependent as Greece on outside capital, almost as dependent as the US on petroleum imports. China isn’t support for the world economy, it cannibalizes the world economy instead: petroleum consumption chart is from Jonathan Callahan’s excellent Mazama Science Energy Export Databrowzer (BP Data).

China is no slouch in the production department but its consumption is out of this world, with a proportion of imports to domestic production similar to the US. With its ballooning auto fleet China is increasingly dependent upon petroleum imports. China also requires a flow of hard currency from outside the country which it uses to purchase the fuel. The yuan does not trade in forex markets: China is unable to ‘borrow’ fuel or gain it by seigniorage as do the US and the EU. It is left with the ‘poison dog food for oil’ trade.

Here are the US and Chinese energy consumption charts side-by-side, (Click on chart for big):

Figure 2: US and China consumption is virtually identical, the Chinese burn much more coal. Waste-begets-waste: China export trade is cheap coal in the guise of near-worthless consumables, an energy subsidy to US ‘consumers’.

According to the International Monetary Fund the US nominal GDP for last year was: US$15.094 trillion.
According to the IMF the China nominal GDP in US dollars for last year was: US$7.298 trillion.

What this means is China is structurally half as productive as the US: to obtain the same unit of output as super-guzzler USA China must burn twice as much fuel. For China to have the same level of goods- output as the US it must double its already staggering fossil fuel waste or reconfigure its energy use infrastructure to be twice as efficient. It is hard to see how the Chinese can do this on top of the massive (mal)investments already made in the capital-intensive sectors.

The use of coal speaks for itself: China has built the cheapest possible energy base for a Victorian-style manufacturing economy. According to a 2007 MIT report:

 

China is currently constructing the equivalent of two, 500 megawatt, coal-fi red power plants per week and a capacity comparable to the entire UK power grid each year.

 

Power plants have life-spans of 50 years or more. The Chinese cannot afford to replace inefficient current plants with newer versions of the same plants, nor can China afford to abandon them. Nevertheless, to cut fuel use the Chinese have little choice but to do without, they have put themselves into the American ‘sunk capital’ quagmire. As Chinese resource waste declines, so must GDP.

It is hard to imagine Chinese industry having the capacity to physically move energy goods into- and within the country at much more than the current rate. Like everything else, fuel acquisition and handling is subject to diminishing returns.

China burning twice as much coal would blow out our planetary life-support due to excess CO2 emissions and knock-on effects. Chinese fuel waste processes are collateral for loans to Chinese oligarchs and nothing more: burning more coal would be the equivalent to robbing a bank by blowing up the city where the bank is located with a nuclear weapon.

Because China is dependent upon capital flows from outside the country, slowdowns elsewhere such as Europe adversely effects China company sales, this in turn effects consumption within China. The slowdown in capital flows follows flows in goods which bounces back into capital flows in a self-reinforcing cycle.

Slowdowns emerge among China vendors such as coal exporter Australia which is staring at a recession (Fureyous):

Figure 3: Yields on Australian credit issues, the inverted yield curve is an alarm bell. Anyone looking for signs of the 2008 credit crisis would have predicted it after seeing the obvious negative Treasury yields in 2007. The curve is inverted when longer duration government debt trades at a higher price (lower yield) than rediscounted debt, the price of which is defended by the central bank. Inverted yield curves indicate lower long term interest rates — and a recession — in the future.

Australia is in the middle of a credit-driven real estate ‘bubble’[1] which makes that country vulnerable to declines in asset prices and increases in unemployment. Capital flowing into Australia rewarded miners and real estate lenders, the capital flowing out of Australia is in the process of stranding the same businesses: look for a sharp decline in house prices and many defaults on high-priced mortgages, look for subsequent Australian banking failures.

Energy constraints are amplified by currency repatriation and dollar-preference worldwide. Priced in crude, dollars have worth: here is the world’s inadvertent monetary policy. The ‘price’ of money is set at gas pumps by millions every single day.

 

Figure 4: Here is China’s Unholy Trinity along with everyone else’: there are currency pegs with China and her trading partners, monetary policy is set in the world’s filling stations.[2] The world’s monetary regime has become inflexible. What remains for China and its vendors is the free flow of capital: bank runs and cross-border capital flight which are underway right now.

The same conditions hold true in the EU with its fixed exchange rate nonsense and Europe’s fuel waste setting monetary policy. These areas have the choice of conserving energy — to sever the relationship between fuel and money, to ‘go off’ crude as nations went ‘off gold’ in the early 1930s. Or they can endure fatal bank runs leading to financial system collapse.

None of this is optional or subject to negotiation. The rigidities that the establishment appears willing to defend to the utmost allow for no other outcome. The argument is that economies can grow without increasing energy waste, that money can be decoupled from fuel. It can, but not in the way that the establishment hopes for. One way or the other there will be conservation of energy and other resources. It will be accepted voluntarily or it will be imposed at the (empty) ATM machine or at the point of a bayonet.

Additional symptoms of China distress emerge as the various Ponzi schemes that make up the Chinese economy are exposed. If resource waste was truly productive there would be no need for such schemes in the first place as running wasteful machines in circles would pay for itself. The emergence of these schemes — and others — is suggestive of the fundamental earning incapacity of the waste-based regime.

Anyone looking for evidence that money is brain poison has to look no further than China: Craig Tinsdale notes The Looting of China by the Kleptokapitalist Bourgeoisie Roaders, long-time China expert Patrick Chovanek describes how Chinese non-response to US complaints about China company bookkeeping threatens to have all Chinese companies deregistered from US exchanges. While this last step is unlikely, it is reasonable that most if not all US-listed Chinese companies are accounting control frauds created specifically to take advantage of the ‘Super-China economic growth miracle narrative’ and the associated suckers. Here is John Hempton’s take:

 

China is a kleptocracy. Get used toit.

I start this analysis with China being a kleptocracy – a country ruled by thieves. That is a bold assertion – but I am going to have to assert it. People I know deep in the weeds (that is people who have to deal with the PRC and the children of the PRC elite) accept it. My personal experience is more limited but includes the following:

(a). The children and relatives of CPC Central Committee members are amongst the beneficiaries of the wave of stock fraud in the US,

(b). The response to the wave of stock fraud in the US and Hong Kong has not been to crack down on the perpetrators of the stock fraud (so to make markets work better). It has been to make Chinese statutory accounts less available to make it harder to detect stock fraud.

There are also banking system alarms in Chinese media, that finance is over-leveraged with bad loans multiplying.

The ongoing China exposé is suggestive: Warren Buffett’s naked swimmers appear therefore the tide must be going out. What is seen right now is the tip of the crime iceberg: as deflation takes hold more naked swimmers and deformed monsters emerge. Consequently, the public loses confidence while the process feeds on itself. It will be interesting to see whether the Chinese crooks are more effective than their European- and American counterparts at the arts of finance can-kicking, ‘key-man propping’ and promulgating false hopes.

It is possible the Chinese — unlike the Greeks, Irish, Spanish and Americans — will explode in a blind fury and turn the country into a large and bloody version of Syria. Keep in mind that a large part of China’s petroleum consumption is immediately exportable …

Wasting resources produced an immediate short-lived statistical revolution at the expense of long-term stability. The the future has been spent into the atmosphere for some easily stolen ‘wealth’, the outcome is inevitable resource starvation. Swapping poisoned dog food for the Disney-fied US-style waste-based economy turns out to be a horrible long-term trade for the Chinese.

Conventional remedies dance around reality. People presume the Eternal Kingdom is not subject to physical laws and natural conditions: that it cannot have recessions with negative-growth like all the other economies. An entire saga of economic rationalizations has been erected around the fantasy of endless Chinese positive GDP growth. When other economies flatten out the Chinese will be there with their 8% GDP to bail everyone out. This gives economic agents the luxury of doing nothing but wait for the Chinese to show up with bags of money.

While the waiting is underway, the idea is for the downtrodden Euro-zone to become more like China. How this is supposed to work is never explained but Spain, France and the rest are to become a source of cheap industrial labor, ready to slug it out in wage competition with the Chinese — or Bangladeshi — sweatshops. Here is the conventional remedy in the New York Times dolled up with some currency ‘devaluation’:

 

To Save the Euro, Leave It

By Kenneth C. Griffin and Anil K. Kashyap

A better, bolder and, until now, almost inconceivable solution is for Germany to reintroduce the mark, which would cause the euro to immediately decline in value. Such a devaluation would give troubled economies, especially those of Greece, Italy and Spain, the financial flexibility they need to stabilize themselves.

Although repeated currency devaluations are not the path to prosperity, a weaker euro would give a boost in competitiveness to all members of the monetary union, including France and the Netherlands, which is why they might very well choose to remain in it even if Germany were to gradually leave. A resurgence of manufacturing would also allow the vast unemployment rolls of Spain, Portugal, Greece and other countries to begin to decline. The tremendous loss of human capital and human dignity we are witnessing would ease.

 

Left out of this discussion is that Europeans cannot produce China-like GDP numbers unless they can waste energy at the same rate as China.

The Europeans are supposed to become China just as China implodes! The recycled solutions are easy mercantilism, easy currency depreciation, easy ‘flexibility’ and competitiveness. Mercantilism is rent-seeking at the national scale: it fails when everyone intends to become mercantile states. Currency depreciation fails when everyone tries to cheapen their currency at the same time. Doctrinal flexibility avoids non-industrial choices: the unintended consequence is self-reinforced rigidity.

The competitiveness concept applied to labor is intellectually dishonest. It is nothing more or less than industrial slavery, the race to the bottom. The term is a gross distortion of language: the idea suggests labor as a harmless child’s game. In the real world, the competitiveness ‘winners’ are entrepreneurs who use management monopoly and wage arbitrage to repress workers. The endgame is revolution because industrial slavery is intolerable.

Americans encountering wage competition cannot be counted on to endlessly consume: their rate of energy waste declines along with the Europeans. This impairs China capital flows: they find themselves in a competition with the US establishment for dollars needed to obtain fuel.

Minuscule manufacturing profits don’t matter because the infrastructure allows Chinese entrepreneurs to borrow vast personal fortunes leaving to the West’s customers and Chinese labor/depositors the burdens of repayment.

Mercantile ‘wealth’ is is skimmed from Chinese accounts and spirited elsewhere. The rats are fleeing another sinking economic ship.

&nobs;

China’s Rich Head for the Exit

Pan Kwan Yuk (Financial Times)

According to the two surveys … by rich list publisher Hurun Report and Bain & Co. … 60 per cent of about 960,000 Chinese people with assets of over Rmb10m ($1.6m) have already begun the process of emigrating or are considering doing so. The US was the top destination, followed by Canada, Singapore and Europe. But immigration officials in less obvious destinations such as St. Kitts and Nevis in the Caribbeans, as well as Bulgaria, are also reportedly seeing a sharp in interest from well-off Chinese.

 

Those in the best position to know inform by way of their actions the countries supposed to become more like it that China is not the plutocrats’ paradise it has been made out to be. Filling a country with malcontents, smokestack industries, racketeers and the world’s most monstrous real estate ‘developments’ makes Bulgaria a paradise by comparison.

While the discussion circles around the unscrupulous Chinese establishment, what unravels the Chinese economy is its own operation. Waste provides many opportunities to steal but less is gained with the passage of time. In twenty years the Chinese have built a colossus, they have little choice but to pick away at its margins while waiting for it to collapse under the weight of its own waste.

The remedy is to reduce centralized industrial production altogether so that distributed community supply can meet community demand. Without single-source manufacturing there is less distribution rents (mercantilism), this results in the elimination of middlemen and ‘fixers’ along with a diminution of the power of advertising as well as the end of industrial China as the economic model for everyone else.

Says Pu Zhiqiang (lawyer):

“No matter what, we must not lose confidence in justice and human nature. We believe this will overwhelm the leviathon (China establishment). Our aim is not to knock it off, but to ensure a peaceful transition after the fall.”

 

Sounds like Economic Undertow.

[1]

Debtonomics does not support ‘bubbles’, that is: bubbles do not exist within the framework of debtonomics as all credit expansion represents a bubble, rather there are changes in the rate of the supply of credit (Keen).

[2]

Note the pointlessness of central bank policies. Of the three points of the triangle, one cannot exist because there are no independent monetary policies: there are never such policies anywhere within the fuel-consuming (auto driving) world. The worth of money is determined continually by drivers voluntarily swapping it (or not) for a valuable resource. Petroleum is as gold was during the 1930s: the material basis for the world’s currencies … some more so than others.

The impossible trinity has the eurozone with a fixed exchange rate regime within the zone and the free flow of capital within (and without).

The impossible trinity has China with fixed exchange rates with its trading partners and the free flow of capital. When the Europeans install capital controls to address bank runs that will be the automatic end of the euro which is nothing more or less than a fixed exchange mechanism.

Capital controls in China means currency peg breakdown and successful speculative attacks on the yuan leading to China’s loss of forex reserves. At that point China — like Greece — will have difficulty importing fuel.

Knarf plays the Doomer Blues

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