by Ramin Mazaheri
To best gauge the stability of the Eurozone today, an appropriate way to start is to reassess how the Eurozone responded to their last crisis.
In 2012 the European Sovereign Debt Crisis peaked, and European Central Bank chief Mario Draghi resorted to the same tactics as Mike Ditka, the legendary American football coach for the Chicago Bears.
But both promised to do: “Whatever it takes”.
Ditka made his promise during the 1990 season and, like Draghi, he made it from a position of relative weakness:
The 1986 championship (universally considered to be the most dominant American football team of all-time) was long gone, and Ditka’s aging team was at the end of their string. But he promised to do “Whatever it takes” to return to the playoffs that year, and thousands of T-shirts were dutifully printed up for the die-hard fans of “da Bears”. That 1990 team did make the playoffs – just barely. But by 1992 the Bears were losers and – unimaginably – Ditka was fired.
I bring up this bit of sports trivia because – and I do not exaggerate here – in the summer of 2012 Mario Draghi allegedly “saved” the Eurozone by uttering just one sentence: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.”
Draghi implied that the ECB would violate the “no bailout” clause in the Maastricht Treaty. This is the clause that has prevented an immediate solution for the “united-but-not-really” Eurozone.
But Draghi’s promise, like the same one from “Iron Mike”, was apparently enough to will victory into reality: high finance relented, the more troubled Eurozone economies saw their bond interest rates plummet and Draghi is considered the most successful central banker working.
And that takes us all the way to today.
However, the fact that I can leap ahead by more than five years so easily is the real problem.
Because since the 2012 crisis there has been no reform, no increase of democracy, no increase of Eurogroup accountability and no changes to or within that bankers cabal/legal cartel which I just described in part 3 of this 7-part series on the Eurozone.
I have used former Greek Finance Minister Yanis Varoufakis’ 2016 book, “And The Poor Suffer What They Must?” as the jumping-off point for this series. And while I repeatedly expose his allegedly “leftist” analyses and remedies, he has been an invaluable whistleblower, and he has also accurately described the perilous state of not just Greece’s situation, but that of the entire monetary bloc. I will quote his book repeatedly:
“The reason it (Draghi’s promise) worked was that, like a winning bluff, the ECB was never tested. Draghi’s word was taken on trust – or fear to be more precise.”
And because it wasn’t tested, the 1% has never been forced to change the perilous status quo.
So skipping ahead one five-year plan is fine – you aren’t missed anything: the Eurozone is still totally screwed up and, like the 1990 Bears, likely at the end of its own string. We just haven’t had a crisis since then to make this evident, nor have we had an “unimaginable” termination take place. Yet….
Back in 2012 we thought the Latin Front would push back the fascist Germans
(Just to be clear: that subhed is not an exaggeration, because neoliberalism is a form of fascism.)
I remember covering France in that summer of 2012 – optimism was extremely high.
France’s new president Francois Hollande was given a clear anti-austerity mandate, and a united “Latin Front” was finally going to throw its weight around. Mario Monti’s call for a very necessary pan-Eurozone banking union broke the taboo against honest talk on this subject. Because it was such obvious good sense, Germany was forced to accept it…but only in public – privately they totally defanged it.
The resulting banking union does not reach anywhere close to all of Europe’s 6,000 banks; the collective insurance fund for failed banks is totally inadequate in the case of a crisis; and there is still no common, Eurozone-wide banking regulation. It will not stand up to a stiff breeze, much less another crisis.
This failure means that: “…the nexus of failed banks and bankrupt member states – the hideous embrace – was to be preserved intact….Europe’s celebrated banking union lives in name only, while in reality and in practice its banking disunion is as toxic as ever.”
Hollande, “the meekest of leaders” per Varoufakis, soon totally capitulated on multiple other fronts, anyway, even though high finance put no pressure on France’s bond market. I speculated in Part 2 of this series that they knew the whole time that he was a paper tiger, and I have also called him the ultimate patsy. The end result was that he became the first Western president who couldn’t even run for re-election that I can recall, and that the pan-European optimism of 2012 did not even last the year.
So do not be mistaken: where we are today is not structurally different than in 2012.
Italy, Spain, Greece, etc.: it’s not only that they are even more in deeply in debt than in 2012, it’s that they are still unsustainably in debt. And it’s not only that the Eurozone’s banking system is structurally unsound; it’s that in many mistakenly believe that its structural problems have been fixed since 2012.
It’s this mix of multinational risk combined with delusions of economic health which is so perilous to the entire global economy. In 2017 an economy can absolutely run on faith, but it cannot run perpetually on ignorance.
So what did Draghi and the Eurogroup do with their 5-year reprieve? What else could capitalists possibly do? They enriched themselves and their fellow oligarchs, only.
Why is a crisis still certain? Nothing was delivered, locally
With the extra time he gained from his bluff, Draghi introduced multiple waves of Quantitative Easing.
Yes, the ECB has bought $2.5 trillion of government bonds under just the latest wave of QE measures, which began in March 2015. This amount is double what they initially promised (…so much for capitalism’s “superior efficiency to socialism”). It is also slightly more than the entire GNP of France in 2016; so take all the value of goods and services Frenchmen produced last year, and now put it in one place – the pockets of the 1%.
Because everybody living under Eurozone austerity feels – even if they may not be able to fully intellectually explain – the reality that all of the ECB loans in QE have gone for…nothing.
They have not strengthened the real economy by building any infrastructure, which would have improved the ease of doing business and thus increased state revenue; nor funded any pension, health or education programs, which would reduce fiscal drags and produce productive tax streams; nor gone into wage increases which would have increased consumer demand universally and provided economic growth. Any of these would have qualified as “good debt”, which would have produced multiple euros for every euro invested.
The ECB’s “invented money” has instead been used for societally unproductive investments, mainly in the stock market, just like the Fed’s did in the United States.
Stocks are high solely because rich entities are flooded with bailout money and 0% interest rates, which let them borrow even more money at no cost. What do you often do with an unexpected payout, assuming that your personal financial situation is stable? You play with it, and for rich people that means wagering in the stock market, thus creating the demand that has pushed up stock prices.
The US stock market has tripled since 2009 and doubled since 2012 – how much of this is money from European taxpayers? France’s CAC40 stock market has doubled since 2009 and is up 65% since 2012, despite a horrible, near-recession growth rate of about 1% overall since then. The real estate bubble in Paris is likely now at a record high. This is all even though the Eurozone’s economic growth rate since 2011 is 0.8%, with just 1.8% and 1.7% projected for the next two years. There is no longer ANY doubt that the Eurozone will have a “lost decade” – sad….
But wait, there’s more!
The super-low interest rates are actually penalizing savers and pension funds – i.e., banking for regular people – and this is more weakness added to the “real economy” (as opposed to the fake “FIRE economy” of Finance, Insurance and Real Estate). The average person has also had their purchasing power gutted even further by inflation (up a combined 24% since 2000 in France), so they are even less capable to come to the rescue of an economy hijacked by bankers than they were in 2009.
Quantitative Easing is simply a get-rich quick scheme, and when it stops flowing speculators will go back to exactly where they were in 2012: holding poorer governments hostage in the bond market, as I described in detail at the end of Part 3.
If you do not let the absence of crisis mislead you into thinking that things have fundamentally changed…you will be doing a lot better than many leaders in Europe, who are also seemingly persuaded that things have fundamentally improved as well….
Nothing was delivered transnationally, either
QE was never meant to go to the Greeces or the jobless of the Eurozone, the people who are a drag on the Eurozone’s growth.
Firstly, due to the EU’s “no bailout” rule, any country which accepted a bailout could not be involved in QE. So Greece, the country most in need, is not getting anything from QE. Moral of the story: don’t get a Troika bailout, of course.
Secondly, to not violate the “no bailout” rule, QE has benefitted the richest economies the most. The way the system works is proportional, and not sensible – just check the so-called “capital key” to see how much each nation has received.
A sensible approach would be if the ECB did not buy any German bonds – as their interest rates are low and there is no inflation – but instead targeted their bond-buying for the poor economies. “Nein”, said Germany, as they reject any attempt at wealth redistribution to poorer/trade deficit nations, or any change to a status quo which has them placed as the top dog.
So it’s all been proportional – the ECB hands Germany 18%, France 16%…and Portugal 2%, etc., even though countries like Portugal, Ireland, etc. need a much bigger portion (of course not because of Portugal’s or Ireland’s flaws, but because the citizens of these nations have been forced to bail out the mistakes of mostly French, German and Dutch banks).
Varoufakis mistakenly says this is “…in order maintain the fiction that the ECB’s silly charter is respected.” But from a leftist point of view, calling it a delusional “fiction”, or denigrating it as “silly” is quite lazy as well as incorrect: This perpetuation of economic inequality via the “capital key” is textbook capitalism – “the rich get richer” and to hell with socialist solidarity.
Thirdly, QE is not based on any “central planning”, so it was never going to be distributed democratically to begin with.
Central planning – subduing capitalist entities underneath the needs of the People – is a key foundation of communism, and what allowed Iran, Cuba and China to weather the 2009 financial storm with solid economic growth (even when compounded by a Cold Financial War in the cases of Iran and Cuba (impressive, no?)).
Because the Eurozone is capitalist, the fundamental idea behind QE is: if you give a huge supply of free money to the rich ruling oligarchy (bankers)… they will do what’s best for society with it.
That’s amusing…but then, I’m a God-fearing communist. Communism says: if you give a huge supply of free money to an avant-garde political leadership drawn from all sectors of society, they will do what’s best for society with it. And they do… certainly their track record is far, far better in the last four decades, even with the implosion of the USSR.
Regardless of my opinion and the differences between capitalist and communist economic planning: “QE works, but even under the best possible circumstances works neither very well nor in the manner it is intended to.”
Right again, Yanis. But wrong again, Yanis: it was always “intended” for the 1% – this is not socialism.
So to put it simply, QE has acted essentially as a shock absorber: the 2009 crisis laid the structural problems of the Eurozone bare; high finance freaked out in 2012; they have been pacified with free money; but when that is gone the road will necessarily get much bumpier.
“Mr. Draghi’s QE caused the price of shares and upmarket property in surplus countries like Germany and Holland to go up, but it did not help mobilize idle savings in those countries by turning them into productive investments, and it especially failed to do this in the crisis countries. And yet the financial press seems convinced that QE has worked.”
This passage shows the perils of confusing a politician with a journalist: a professional journalist knows that Holland is NOT a country but a region of the Netherlands (in English usage).
This passage also shows the perils of a politician posing as a genuine leftist, because Varoufakis doesn’t realize that the financial press is almost exclusively read by the 1%, and aims to advance the needs of the 1%. The financial press is not at all interested in pushing a broad “growth-based” economy which would benefit the 99%. This “financial press” he is talking about is The Economist, The Wall Street Journal, Le Figaro, etc. – it is not the business editor of Cuba’s Granma, after all! So, of course, for the financial press QE definitely has “worked”!
But for the average mainstream media – as differentiated from the financial press – they definitely do deserve demerits for failing to champion the needs of the 99% by acting in direct opposition to their colleagues who shave, have square haircuts and wear pinstripe suits. However, in my experience, the average Westerner is never even exposed to the analytical tools provided by leftist economic thought, and the average Western mainstream journalist is no different; they evince very little interest in economics whatsoever, and have been successfully intimidated into worshiping at the altar of Brahmin technocrats they presume to be speaking Sanskrit.
Fourth, we must ask: what is the collateral which is funding QE?
Of course, the Eurozone has not given up $2.5 trillion worth of gold….
They have created this money out of “air”, which they lend to national central banks in the Eurozone, who then distribute the “air” to private banks, who instead of loaning it out for lower-yield but socially-productive investments instead invest the “air” in a high-yielding stock market, which also allows stockholders to show private banks their “air” inflated stocks as collateral to get more private loans to feed their lifestyle, and all this “air” increases the balance sheets/assets of private banks, empowering private banks to give different “air” (they now totally own) to national governments in the form of bond buying, and this private bank “air” then permits the Eurozone’s national governments to fund their budgets, and this continued ability to remain solvent/aversion of bankruptcy/haircuts gives the Eurozone’s national governments the credibility to collectively back the ECB’s original “air” loan.
Air to air to air to air to air to air…. And this dance happens every month to the tune of €60 billion.
Somebody is smiling, but it’s not you or me.
So we see that at a transnational level, the highest level of the Eurozone: the bailouts were always intended to benefit the rich more than the poor, and that they were always intended to satisfy the 1% and high finance, and never intended to repair the causes of the economic crisis.
Again, this is not 500 BC – the problem is not that gold for warriors has been replaced by air; it’s where the air has gone.
And the only way to get this money back would be to suspend the right to private property and confiscate as much as you can before the 1% flees with their pockets packed. And then the only way to hold on to what was rightfully confiscated would be to make this revolution a socialist one. History has proven this repeatedly, but not often, sadly.
The simple reason QE hasn’t worked: it forgets who is really in charge
Firstly, but most importantly, QE never works:
“In Japan and in the United States QE failed to bring about recovery, but at least it ensured that the recession was not allowed to turn into a depression.”
Therefore a far weaker structure like the Eurozone is sure to produce less positive results.
If you want to stop reading here, I think you can make your predictions for the Eurozone’s future based on just that one sentence.
I remind everyone that – because busts are inevitable in a capitalist system which rejects central planning – the main barometer of success in a capitalist system is: “How long do the inevitable recessions last, and how deep are they?” The answers for the Eurozone are: at least 10 years with no end in sight, and, second only to the Great Depression.
But here is the main issue of why “air” is not working – it is not based on the understanding that The People are the main economic drivers, and not high finance:
Banks and central banks are not being forced to lend the risky air money to businesses and individuals, as they would in a communist government or even a Japanese-style government pre-1985 Plaza Accord. Therefore, the bankers have money but they have decided to have no confidence in the situation, and do not inject anything into the “real economy”. Therefore, they don’t lend to businesses – small, medium and large. These real, employing businesses then have no money for expansion or new hires. Those people who actually have a job see that things are stagnant, and are worried, due to the lack of stability. This job instability causes them to have no confidence to take out a loan for a house, car, dishwasher or anything else in the “real economy”. And, therefore, a self-defeating cycle is created and perpetuated.
This analysis – looking at the situation with The People as the primary mover (because they are and must be) – is nowhere in Varoufakis’ book: He does not understand that worker confidence and stability is the true bedrock of any economy.
So it is not the confidence of investors, stock owners, high finance, currency speculators, real estate magnates or any other get-rich-quick schemers: it is the confidence of the average person which is the key. But we have only heard about the “confidence fairy” of high finance…because Western media is controlled by capitalists and not communists – it is that simple.
But make no mistake: It’s the everyday purchases by The People which have the greatest impact on an economy’s health.
And this supplies yet another reason why the Eurozone is even weaker today than it was in 2017:
Austerity is not just budget cuts and bailouts, but the gutting of labor codes and putting everyone on short-term contracts/part-time work.
This means that citizen-consumers will remain worried about their instability and continue to not buy houses, cars, etc. Thus, the strongest economic brake is being applied full-strength, and for the foreseeable future in the Eurozone and Western economies as a whole.
The problem is that a capitalist society’s democracy allows the interests of the rich to take precedence. Always. If some “trickles down”, then fine. If it doesn’t trickle down – they could not care less. Of course, a communist would say to all this: “Well, that’s why we switched over.”
Anyway, back to QE – the alleged “solution” – and what the next steps will inevitably be (failing a socialist revolution):
“…the net effect (of QE) on employment in the Eurozone was negligible (I add this to restate a commonly-known fact). The non-negligible reality is that Europe is devaluing its own labour through internal competition in the 1930s.”
In brief, the capitalists want everyone in the Eurozone to go through the reactionary “Hartz Reforms” of pre-crisis Germany, which promoted part-time work and, of course, shot poverty and inequality through the roof. This is what Macron has just done with his labor code decree.
But, really, this is not the German but the “American model”: part-time, wages over salary, high poverty, high inequality, high instability…but low official unemployment rates combined with just enough of a social safety net to prevent mass homelessness.
This is the culmination of the Western Model. This is Western imperialism turned inward.
This is all the Western Model has achieved since the Great Depression, because previous social gains are gone or going. Other nations would be crazy to follow….
What I’ve described is a multi-year process, and certainly secret, but also certainly as clear as day.
The exceptional Troika-led punishment of Greece makes logical sense only in this context of internal devaluation/fostering internal competition/gutting of labor codes.
Varoufakis relates an anecdote when he queried an interlocutor with the ECB and IMF about why on earth was the Troika insisting on a regressive sales tax (regressive because it falls equally on everyone, as opposed to a “progressive tax” which targets the rich ones most able to pay), which would only depress state tax revenue, thus giving Greece less money to pay back their “aid” with? Varoufakis was told:
“’Someone whose views matter here wants to demonstrate to Paris what is in store for France if they refuse to enact structural reforms.’”
Like I said, barring revolution as the next step, that’s what’s in store across the Eurozone: the Troika in any nation which refuses to implement neoliberalism on their own.
It is much, much, much better – Greece shows – to fall in line and beggar-your-neighbor, literally, than to let the Troika do it for you.
Nice monetary bloc y’all got here…I hate to see what you do to your enemies.
The crisis is coming and the world is saying so
So a failed decade will be certain, as will a failed two decades…just like in Japan, which went through all this before the Eurozone, being more bound (and bound earlier) to the United States as Japan’s 1% foolishly chose to be.
(I get into the Japanese precedent, and the clear precedent of their “failed score”, in the final part of this series.)
QE has already been extended further than originally intended, but it’s supposed to gradually taper off in 2018, possibly terminating in August.
This will be decided on October 25.
But QE will stop, because the Eurozone is not the United States: this is yet another delusion which adds to the likelihood of a Eurozone collapse:
The US Fed can print an endless amount of dollars, but the ECB has limits which are heavily influenced by Germany…and the bottom line is that Germany is looking out for Germany and not the Eurozone as a whole. It is truly as if New York could say to Idaho: “If you don’t pay us, expect a visit from our repossessors tomorrow.”
This anti-social behavior from Germany goes back decades; goes against the wishes of other euro zone members; and which I described in historical detail in the 2nd part of this series, Why no Petroeuro? or France’s historic effort to create a permanently anti-austerity Eurozone.
And what happens when Germany insists on turning off the ECB’s tap – and there is only the question of “when” and not “if”? Those economies – Italy, Spain, etc. – which were targeted by speculators in 2012 will simply be targeted again.
And why wouldn’t they?
Austerity “deforms” have only produced near-recession levels of real growth; loans created from invisible digital euros have gone into the stock market and not to boost productivity or health in the “real economy”; individual savings have not been increased due to zero percent interest rates; consumer confidence is only going to get lower as the number of part-time work increases due to the gutting of labor codes.
So why wouldn’t greedy capitalists NOT charge higher interest rates once the ECB removes its support? Things are far, far worse than in 2012!
The same major economies will return to looking like they will need a Troika-led bailout program. This will be refused, again, by Italy and Spain, as they are too powerful, and that’s when the “multi-speed Eurozone” will begin.
This takes us to the 5th part of this series: The Eurozone has likely entered its final calendar year, contraction coming
So I guess this article’s headline underestimated things a bit – the Eurozone is FAR MORE primed for collapse than ever.
***********************************
This is the fourth article I have written in a 7-part series on today’s Eurozone which will combine some of Varoufakis’ ideas with my 8 years of covering the crisis first-hand from Paris.
Here is the list of articles slated to be published, and I hope you will find them useful in your leftist struggle!
Varoufakis book review: Rock star economist but fake-leftist politician
Why no Petroeuro? or France’s historic effort to create a permanently anti-austerity Eurozone
The hopelessly corrupt structure of the Eurozone & the Eurogroup
The Eurozone: still as primed for collapse as ever
The Eurozone has likely entered its final calendar year, contraction coming
The English-speaking world’s fear of calling communism, ‘communism’
Forced recession as a tool of social war against the 99%
Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. His work has appeared in various journals, magazines and websites, as well as on radio and television. He can be reached on Facebook.
I forgot to add: the anti-social handling of the euro zone crisis – piling taxpayer-funded bailout on top of taxpayer-funded bailout – is a reason why investors around the world are flocking to bitcoins.
I described this in more detail in a previous article: “Europe’s unsolved debt crisis will legitimize bitcoins in October”: /europes-unsolved-debt-crisis-will-legitimize-bitcoins-in-october/
Let’s remember that: “Secretly embedded in the very first block of bitcoin code – Block Zero – was this: A London Times front page with the headline: ‘Chancellor on Brink of Second Bailout for Banks’.”
This is partially what I meant by the final subbed: “The crisis is coming and the world is saying so”
Eurozone is ready to explode, but probably not for the reasons you think
http://bit.ly/1UV0bJw
A nice article from Greece, many thanks.
Let’s remember that many of the smaller Eurozone countries had solid and desirable economic fundamentals…but then their citizens got loaded with the price of bailing out Northern bankers into 2008-9, as I have noted. That was just the first wave of bailouts.
Some good highlights from that article.
“But perhaps the intensive efforts of the German leadership, highlighting the crisis of the European periphery economies (Greece, Spain etc.), as the main problem of the eurozone, are simply a smokescreen to cover the inherent instability of the financial system.”
“And since the banks did not failed, they didn’t have to learn any lesson, convinced that the leaders of northwestern Europe would not leave them helpless in a similar situation in the future.”
“For the German leadership, the Greek crisis is a convenient scapegoat to divert attention of the European public from the painful reality.”
The European Union is a banker creation. It was initialized by the Bilderberg Group, which wanted a federation of European states based on the US model. The EU is the result. It’s a copy of the US. Both the US and EU have central banks under control of private bankers. The purpose of the EU is to terminate the sovereign status of European countries, to use these countries for plundering and, in conjunction with NATO, to move the EU towards Russian borders.It was also introduced to prevent a German-Russian economic alliance, the nightmare of Anglo-Saxon bankers for more than a hundred years, going back to the 19th century when the English geographer Halford Mackinder warned the British Government that a German-Russian alliance would create the most dangerous political and economic union in the world, as Eurasia held the key to economic power. His writings were picked up by Brzezinski, who said the same. The coup d’etat in Kiev in 2014 was backed by NATO and the EU, who used neo-Nazis (and others) to overthrow President Yanukovich. The neo-Nazis yesterday held a parade in Kiev. Some days ago Greece payed 1 billion euros in interest to the EU Central Bank. Is that why Greece joined the EU ? The point is that the EU has no future. It cannot work. It’s been turned into a bureaucratic monster which cannot function, as the smaller, weaker states cannot keep up in obligations with the larger states. Even France is in huge financial difficulties. In 2015 the EU Central Bank started printing 1,1 trillion euros backed by nothing. The euro is becoming as worthless as the dollar. On the other hand, the Eurasian Economic Union is becoming reality, after more than one hundred years of waiting to become so. It’s only a matter of time before Germany joins it. The US controls Angela Merkel and the German bankers, but Merkel has lost control of German industrialists, who are ignoring sanctions against Russia, and who openly conduct business talks in Russia. The question is not is the EU will disintegrate, but when. As for the Eurozone, I never took it seriously, always concentrating on the EU as a whole.
Thanks Ramin, for a very interesting article. Don’t bother that you have written about the subject often, the present EU cannot be critisized enough.
‘Because the Eurozone is capitalist, the fundamental idea behind QE is: if you give a huge supply of free money to the rich ruling oligarchy (bankers)… they will do what’s best for society with it.’
Nail. Hammer. Hit.
Just read the book ‘Die Pluenderung der Welt’ from Michael Maier.
The main thing is, that money itself has no value. It’s only a claim on something of value. So, QE means transporting the burden to create something of value to the next generations. Or, to say it more cynically, the unborn cannot vote.
It’s all about saving banks. The Deutsche bank has a solvability of only 2% (which means, that they have to lend 50 euros for every euro that they lend out). That’s even worse than Lehman Brothers in 2008.
I have met many colleagues from Spain and Greece. After their universal degree, they grabbed their suitcases and left their countries, because they wanted to work. In Greece only, some 40% of the graduates leaves. Society invested in them, but cannot provide work.
‘But, really, this is not the German but the “American model”: part-time, wages over salary, high poverty, high inequality, high instability…but low official unemployment rates combined with just enough of a social safety net to prevent mass homelessness.’
Unemployment figures are heavily manipulated. It has also been calculated in reverse: Take the amount of people able to work, and what amount is really working? The real unemployment in the USA is between 30 and 40%, not much better than Greece.
Homelessness? In Germany there are over 200000 Germans homeless: https://en.wikipedia.org/wiki/Homelessness_in_Germany . Mutti does nothing for them, but every homeless illiterate African without papers but with the latest smartphone, having paid up to 10000 euros to people smugglers, is taken care of.
Sorry for being cynical, but that’s reality. And a lot of Germans know.
Homelessness is a hidden issue in the USA as well. Remember the tent city in Calais? Well, look at the tent cities in the USA, there are hundreds of them: https://www.google.com/search?tbm=isch&source=hp&biw=1920&bih=992&q=tent+cities+in+america&oq=tent+c&gs_l=img.1.0.35i39k1j0l9.217.5311.0.9301.14.11.3.0.0.0.215.1342.0j7j1.8.0….0…1.1.64.img..5.3.405…0i10i24k1.0.KIZaFog_9T8
The main reason of the EU may have been to create a similarity of the USA, dissolve nation states and progress up to the borders of the Russian Federation (like @B.F. describes).
However, they created a similarity of the USSR. Massive overhead, central planning, unchosen members of the European Commission (did somebody vote for Jean-Claude Juncker?), and a parliament that can just say ‘yes’ or ‘no’ but cannot propose legislation. That’s exactly how the Kremlin used to function.
The EU will implode, but how and when is the riddle.
I can highly recommend the book ‘Europe, the dark continent’ from British historian Mark Mazower. He shows that the democracies evolving after WW2 in Europe are not natural, but more a coincidence.
My guess is, that when social security is not enough (and for the society affordable anymore) to survive, everything will collapse.
Remember the EBT system failure for a day in the USA? Total riots were the result.
My guess is the first collapse will be Sweden. The Europeans are willfully being replaced with 3d world people. That’s not a coincidence, it is planned by the EU. Just look at this painful documentary: https://www.youtube.com/watch?v=z7mLP5ioBQs&feature=youtu.be
Dark times are ahead.
Uk paper -yuk- Daily Mail said couple weeks ago 27 Sept that German banks are just a time bomb ready to crash….it will be …could be 2009 all over again.
Levels of personal debt.business debt, business debt,evictions from properties,bankruptcies are at really really scary levels too…….
.will the latestUK cross government parties moves on tv tonight to prevent a hard brexit really benefit or act as a “stabiliser” during the transition really make a difference one wonders…..the Austrian elections this weekend could be a sign of some kind of realism setting in …..Catalonia separatism could be a burnt out movement as opposition groups really saying Spain must stay united(even supporters of referendum are saying they feel let down over the prevarication of Catalonian President) so what will happen Monday could be interesting…..
thanks for another great thoughtful article….maybe I should buy a bar of gold or two or spend savings whilst they have some value…..sighs…as us ordinary bods are surely quite helpless….?
If you do not take into account what the Maffia wants to realize you miss an important part of the picture. Their goal is the New World Order which is a form of communism.
They like to destroy Europe financially, psychologically and culturally and in the mean time they can rob countries like Greece for bargain prices and create jewish monopolies and destroy the competition. They are doing just fine. Another war might just help them. The Freemason-traitors are running the EU, UK, US and more countries. Sheer evil. You can only hope that these plans somewhere have a miscalculation.
I spent some time in Russia recently then the balrics before making my way to my motherland.
Other than the refugees near gare nord in brussels, nothing felt or looked different.
I’m sure there is some sense to the concerns of economic and social crisis and yes there are certainly tensions, but there have always been tensions.
I suspect the poorer areas remain worsening, the urban centres remain fine and prospering. As in England, Belgium, Poland, Czech as I learned from the natives in Russia. This is more a natural symptom of capitalism…
It’s the same all over the world, at least in most capitalist countries.
As for the impending crises….no sign at all in the major urban centres of England, Belgium, Poland, Czech, Lithuania, Estonia or Russia. Quite the opposite. All these areas were thriving…people happy. Just the typical anti Russia silliness in the baltics. That was my only gripe, but it’s not as if people are living in serious fear. Vilnius especially was delightful.
Great article. When the crunch comes the citizens might find out in some of these euro countries that they might not have the gold they think they have. Lots of gold swaps made at the behest of the “land of the free”. This is where they sell their gold with a paper claim on America’s gold. America will never honor those claims and as you know possession is………….
Would love you do do some digging in the murky world of gold. GATA does a lot of good work in North America but would like a Euro perspective.
Anyways great work.
Great article This year two Italian banks failed and Italian taxpayers had to foot the bill despite the SRM, which was promised to protect taxpayers from being saddled with the debts from bankers gambling, greed and incompetence.
The ECB, EU and their banks should disgust us. The betrayal of Greece, of Europe’s taxpayers, the boom and bust, QE for investors, austerity for the rest and the arrogant punitive EU response to UK Brexit is but the latest example.
The painting by Hieronymus Bosch, ‘Garden of Earthly Delights’ is surely prophetic depicting Brussels Euroiimperial’ decadence today as in, the EU/US-driven ethnic cleansing of millions of Ukrainians in the dark, inflamed horizon.
Many Irish people deplore the EU experiment, which is all it can be. Russia is a vital part of the true Europe which is distinguished and defined by the richness of its diverse peoples, cultures, civilization, and many sovereign national struggles for freedom, democracy and socio-economic progress.
The US might not let the EU/ECB collapse! It’s too profitable, low-tax (for them) and so entirely controllable ever since the Marshall Plan terms first required Europe’s beneficiary states to sign up for integration, toward pan-Europe, and NATO.
Thereby, the sovereignty (national/democratic freedom) of the nations and citizens of democratic European nation states was fatally compromised. The EU transnational psEUdo-state, the transnational institutions, large banks, NATO, big businesses, lawyers, lobbyists and accountants were given Europe’s destiny, to deliver as per instructions.
The EU is not really a legitimate democratic anything. Lacking substantive integrity, common identity, firm ground and foundations, common language etc.,… it needn’t, should’nt and cannot be taken 100% seriously (except perhaps by a psychiatrist!).
The EU helped divide Ukraine, and divide Russia from Europe… and engaged with the US in the overthrow of the Libyan state and the ongoing war in Syria. Qui buono? Washington, calling the shots!
Europe needs to safeguard its reputation among the nations of the world and with the BRICs and to qualify its support for the ‘globally-demanding’ US,… and for the disappointing US global policy leadership
Interesting article on the ownership structure of the ECB:
“ECB Suffers from “Corporate Capture at its Most Extreme”
https://wolfstreet.com/2017/10/14/ecb-suffers-from-corporate-capture-at-its-most-extreme/
This is an argument for a more rational Europe…The Wider European Adventure is over…… arafel.co.uk #TheEurOmerta (see archive)..
One of the answers to Europe’s financial problems would be to find a way to declare all the euros taken out of the eurozone, to be hoarded in off-shore tax havens non-negotiable. In other words: it would have no value within the Eurozone. Of course, a move like this would only work if the US and other Western nations could see the advantage of declaring their mountains of hidden cash null and void. The hoarder could left free to spend them as they like within the confines of the islands they were kept, but not in nations that joined the financial sanctions on tax-havens, which would have to be the leading Western economies. And should they wanted to return any cash they would have to pay huge duties to transform it back into legal tender. Don’t worry Mr Branson, it’s not physically painful, it just takes a few taps on the keyboard.
I can almost hear the groans from here that it would never work. Don’t worry, nobody’s ever going to try it, but the reality is that it would release trillions of euros and dollars to be invested back into the real economy freeing everyone from the bankers shackles. The trillions that are the same as the ‘air’ talked about in the article.
There is no cash in the vaults of the tax-havens, they are completely empty of money of any significance. The banks the cash is supposedly kept in are often nothing more than a brass plaque on a door. It never left the shores of the nations that generated it any more than a suit of new clothes left the tailors to become part of the Emperor’s wardrobe. If you believe there are mountains of cash in strongrooms on small Carribean islands then, to all intents and purposes, there are mountains of cash in strongrooms on small Carribean islands. But this is the illusion that must be smashed. An illusion that is nothing more than suspension of debelief. We have all been mesmerised, and it’s high time someone snapped their fingers.
The true value of money is in the labour and materials of the people. Capitalism has appropriated that true value by hyptonising us into believing it can be stored on islands. There is nothing on the islands means they have tricked us into believing the impossible: that nothing exists.
The reality is that when cash ceases to act as the oil of the economy it loses value. That’s all it is, oil. Like any working machine, if the economy is oiled regularly and sufficiently with cash it seizes.
A good example of this is the massive inflation that is occurring right at the top of the market, where the economy is being “over-oiled”. Property prices everywhere have been rising – despite the fact the value for a house is really that it serves as a place of shelter – but, at the top of the market they have rocketed, along with the prices of fine art, antiques, fine wines and all other luxury items. Surprisingly, until relatively recently, these price rises have not been reflected in gold and silver, something the Russians and Chinese have been quick to act on, hoovering up all they can, while the US concetrates on trying to manipulate the price of the petrodollar, by stealing oil and walking the tightrope that satisfies the domestic market for cheap fuel to suppress growing dissatisfaction.
To get back to the upper echelons, where the rich are unable to see the devaluation of the currency they keep stealing. They have fooled themselves into believe that things getting more expensive is the same as increasing value. In reality they are just getting far less for their buck. A house doesn’t get any bigger, just the price tag.
The obscenely wealthy don’t understand the real financial implications of the massive inflation they have created at the top of the market. A beer can only support so much froth before the customers begin to complain. The market at the top is overflowing with froth.
The1% and another 9% are only too happy living under the illusion the things they own are increasing so much in value, without realising that it’s really everybody’s cash getting devalued. Your house increasing in value has the same effect as food increasing in value in 1920s Germany. Your cash ends up decreasing in value as you have less of it so you can buy less. As a larger part of your disposable income is spent on a mortgage you have less to spend on food. It’s as simple as that. But there reaches a point where growing number of people have almost no money to spend on food. That means the supermarkets sell less, they employ fewer people and the growers and distributors of food start to have fewer jobs, and so on, and so on.
At this point in time the 1% are extracting even more wealth out of the economy to keep their merry- go-round running, devaluing all means of exchange in the process. Inevitably, that means that even less goes into the real economy where it is needed most. This massive devaluation of currency at the upper reaches of the economy is a relatively new phenomenon, but you don’t need a degree in economics to know that it will lead to the same results as massive inflation in any part of the economy.
As a lot of economists that got this far with my comment will realise, I don’t have a degree in economics. I can only work out the basics, it’s up to you to work out the fine details, something most leading economists have signally failed to do so far. Sorry for any typos, my brain hurts
The entire current economic and monetary system is corrupt and cannot be sustained nor corrected.
It cannot be sustained or corrected by Capitalism, Communism, Leftists, rightists, centrists or any ideological, philosophical, political or social system or thought.
The money you use is 3% printed out of thin air in the form of paper, and 97% electronically created by computers in banks.
“Banks do not, as too many textbooks still suggest, take deposits of existing money from savers and lend it out to borrowers: they create credit and money ex nihilo – extending a loan to the borrower and simultaneously crediting the borrower’s money account” – Lord Adair Turner, formerly the UK’s chief financial regulator……
………When they lend money, banks create money out of nothing. They can do so with no deposits at all, since that money is in electronic form. All it requires is a single keystroke.
You cannot have a just, orderly, free and fair system (world / planet) while using money that has no intrinsic value and that is created by a small group of people.
The entire fundamentals are completely corrupt and upside down……actually it is a form of madness on a global scale. With billions of people having no sense of historical knowledge, let alone any religious knowledge.
People do not know any better, because they do not even know how things were in the past (except for a very few). And because people do not know how things were before, they cannot possibly imagine, let alone comprehend how they can fundamentally change things to a better future.
They believe because they are living longer lives and more technologically advance, that everything in their lives is better than before….while they are blind to unprecedented destruction and corruption of our planet and the people around us.
When you deny religion and God’s divine laws……you are actually denying history itself……and when you deny history itself………you know or comprehend nothing except the state that you are in and rely only on your instincts (“I feel that the banking system is corrupt but I have no idea what is better or how it should be”)…….(“hmmm, what new fundamentals should we come up with now ?”).
Shock figures reveal Britain is half a TRILLION pounds poorer than thought
The ONS quietly published a massive review of the national accounts last month
It burst into view today exposing a £490billion write down in Britain’s wealth
Liberal Democrat Sir Vince Cable said: ‘News of this massive write-down shows our economy is in real trouble.
‘Jobs are being lost at major employers such as Vauxhall and BAE, the pound has already lost 20 per cent of its value in a year, our balance of trade and productivity are poor, and we have fallen to the bottom of the growth league for major economies.
‘As Theresa May struggles to negotiate a divorce settlement with the EU, Britain cannot afford to lose half a trillion pounds in assets.’
Read more: http://www.dailymail.co.uk/news/article-4984798/Half-TRILLION-pounds-wiped-Britain-s-wealth.html#ixzz4vkozdhk1
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Thanks to all for the kind words. But I don’t think I’ve ever had an article with so few comments!
I guess everybody here already knows about the perilous economic state of the Eurozone, LOL!
EU risks financial meltdown if it punishes the City to make a ‘political point’ over Brexit, warns London stock exchange chief
LSE chief Xavier Rolet warned EU could trigger financial crash by punishing UK
Said businesses likely to consider moving to EU without certainty on future
Negotiations are deadlocked ahead of a crucial EU summit in Brussels tomorrow
European parliament president Antonio Tajani branded UK cash offer ‘peanuts’
Read more: http://www.dailymail.co.uk/news/article-4992010/EU-warned-risks-financial-meltdown-punishing-City.html#ixzz4vrel7jov
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In this sentence there is something I do not understand (maybe there is a mistake):
“And this supplies yet another reason why the Eurozone is even weaker today than it was in 2017”
But the current year is 2017 and the article was comparing the current year with 2012.