DESPERATE AMERICAN PLUTOCRACY PROPOSES TO DISSOLVE EUROPE.
Abstract: The American plutocracy has American public opinion wrapped around its little finger. This deal with the Devil has been going on for nearly a century, and provided with a thrilling high. But so doing it wrecked the essential and delicate machinery of real democracy inside. The similarities with the Roman republic rise and fall have been poignant. If I pointed at the most devastating examples of these abyssal depths, most American readers would consider I have lost all respectability, and would stop reading. (So I will not do so now, but examples are on Tyranosopher.com.)
The latest propaganda aims at preserving the bread and butter of the plutocracy of the USA, a worldwide financial system greatly resting on lies, tax heavens and other hidden exploitation schemes, served and organized by the machinery of the entire government and upper society. Although the American People have been compliant so far, the Europeans have had enough. The European Union has a social charter. The EU is not a plutocracy, but a democracy, by law. So the EU wants strong regulations for finance. The plutocracy of the USA knows this, and has started an intense propaganda campaign to prevent the EU to crack down. A smear campaign against the core of Europe is part of it. Top US editorialists are apparently being recruited to howl an anti-European message. (While this was going on, Obama, in the last few days, came out to favor the rule of law. In other words, Obama seems inclined to impose tough and clever regulations to the financial system (as Sarkozy and Merkel want, and as Summers does not). Just as I warned Obama about Summers-Geithner and their ilk, the essay below warns him, and those who genuinely support change, that even opinion makers I often agree with, can be 100% wrong on crucial advice. Why? Well, they are well paid, and they go to the same cocktail parties as those who pay them. That’s where the friendly “recruiting” I alluded to is done. It’s a class phenomenon. The great heights of the CEO class is surrounded by a friendly cloud of pundits that brings it life bearing moisture. Just as there is a CEO class, there is a class of fellow travelers that depends upon the plutocracy as it is, and, when push comes to shove, they express thoughts that the plutocracy lives by. All together, they constitute the reigning oligarchy. It’s understandable, but it should be fought.)
Overview: The International Monetary Fund has suggested to spend 2% of GDP of stimulus in all and every country. This is an excellent, probably minimal idea. Otherwise some countries could ride on the back of the stimuli of others. But one has to be careful about what qualifies as a stimulus, and what does not. A true stimulus cannot consist of welfare catch up, or of stealing Peter (the Federal taxpayer) to pay Paul (the taxpayer deprived of local state services and employment). More than two-thirds of the “stimulus” in the USA is fake that way, some is even an anti-stimulus. All in all, the USA is spending less in real stimulus than say, France. Worse: the USA has stopped investing into itself for decades. Thus, as Vice President Biden found out to his dismay, a rusted bridge he was kicking holes into cannot be repaired right away: plans have to be proposed by engineers, bids have to be compared, and debated, administrations have to decide, politicians have to approve, etc. Meanwhile no work-hour intensive work is started. So much for “shovel ready”.
By comparison, France’s excellent infrastructure is an ongoing work. France is now feeding 2,000 projects with its stimulus. Most of these projects were ongoing, and are just been accelerated. This also shows that the USA stimulus has no meaning if it does not come back year after year. An example: the USA stimulus has 8 billion dollars for high speed rail (added at the last second by the White House, it is said). It would probably cost more to make the Washington-Boston corridor high speed. The San Francisco high speed train terminal, by itself, would cost a billion dollars. San Francisco cannot decide if it should go ahead or not, the Federal funds being completely insufficient.
Instead of thinking carefully about what it all means, what is a stimulus and what is not, and instead of pondering which financial regulations are needed, many top editorialists in the USA are obviously finding too heart wrenching, or shall we say stomach wrenching, to criticize the American elite. Instead, they are reverting to carp, or more exactly shark, with very misleading and sometimes outright false accusations against Europe. I give three examples below. Paul Krugman, usually sensible, goes as far as suggesting that Europe would be better without the European Union and without the Euro. He gets so agitated that he self contradicts blatantly (see below). OK, it is difficult for American opinion makers to recognize that they have been cuddling with evil, but the timing is such that it reminds one a bit too much of the blind support for G. W. Bush in the early years of the Iraq war. It calls into question the independence of American intellectuals (generously supposing there is such a thing) with the plutocracy that feeds it and celebrates it.
This sudden hysteria occurred conveniently just before the G20 summit, where the main subject ought to be how to prevent American plutocracy to keep on ruling the world in a diabolical way forcing everybody else to serfdom. The Europeans should not be distracted by the tactics of the USA, and remember that is the same crowd as before, even if the figurehead has changed colors.
USA PROPAGANDA CAUGHT IN THE ACT:
Why did G. W. Bush have an 85% approval in the US polls as he destroyed Iraq? I am not talking here just about the invasion, but about the wanton destruction that followed it. As the horrors unfolded on TV, US citizens approved. What held US minds in such a strong grip?
US citizens were told so many horror stories by the media, propagandists, editorials, and various talking heads, that they believed them all. After all, that is all they heard: the yellow cake, the mushroom cloud, the biological labs on wheel, Saddam Hussein in bed with Bin Laden. Nobody was there to scream that was all absurd. Americans are trained to disrespect screaming and respect their government, and especially their plutocracy. When the richest of the rich come on the screen, they pay attention. or so it was before the present crisis. Now cracks are appearing all over. Revered figures, such as Warren Buffet, owner of a major credit evaluation agency at the heart of the crisis, belong in the dock, answering tough questions from the public prosecutor. Thanks to years of propaganda, Mr. Buffet, long the world’s richest man, has been viewed for decades with abject respect and trust by the awe struck American natives.
As Hitler pointed out with glee, if lies are big enough, people will believe them, because they are unaccustomed to big lies. The idea, made quite clear at the time of the Iraq war, was to finance the war by seizing Iraqi oil. Nobody was there to scream that was a violation of the Geneva Conventions. “Defense” Secretary Rumsfeld came on, and, in measured tones, called Geneva “quaint”. He has not been prosecuted yet (outlaws are prosecuted in the USA, except if they belong to the oligarchy). It was clear what interest the plutocracy of the USA had in the matter of the invasion of Iraq.
Fast forward to 2009. Now the plutocracy is fighting for the survival of its way of life. It has now become clear to everyone that it is, to put it mildly, in need of tough regulations (and “punishments” as Fed Chief Bernanke put it in the first interview ever given by a Fed Chief, March 15, 2009). At the G20 meeting in London in April. France and Germany want tough regulations for the financial industry. I myself proposed an arsenal of science fiction regulations several month ago. I proposed tough trading limits and drastic limits on derivatives and leverage, driven by the aim of making the market machinery shock absorbent instead of shock amplifying. Investing should not be about a Monte Carlo rigged by the richest of the rich. Instead it should be about retirement and sovereign funds.
Instead of preparing for regulations, a flurry of editorials have appeared in the USA accusing Europe to be at fault, for this, that, and the other thing. A bit more, and it would be reminiscent of the anti-French frenzy of 2003. What is going on? The White House only wants to hear about stimulus. Inside the USA, Lawrence Summers, the architect of the modern, strident plutocracy (see the preceding post), and his Geithner are fighting to keep their system of America-for-the-Rich-and-only-the-richest-of-the-rich, intact. And regulations would kill it, that was Summers’ point in 1998, and it is Summers’ point today.
IMPOSSIBLE IS NOT FRENCH:
Roger Cohen, who had been reasonable for years, having apparently recovered from his acute case of Middle East invasion mania, suddenly took leave of his senses, claiming that France was a “temptation Obama should resist”. Cohen admitted that “one has to be crazy not to live in France”, except for one thing: “possibility“. No “possibility” in France, guys. Those French never got to the realm of the possible. Cohen was obviously unaware of the famous trait of French culture that the French remind to each other all the time as a proverb: “Impossible n’est pas francais”: impossible is not French. Cohen does not know that nothing excites the French as much as a supposed impossibility. That is the root of French progressivism. The French progress is not all about justice, but also about the excitement of the challenge of making the impossible impossible. Although Americans love challenges, the French love them even more, and that is why France produces deeper intellectuals. As the divine Marquis de Sade concluded, having tried everything else before, including personally instigating the revolution of 1789, the greatest outrage is writing.
Then the New Times Editorial board came out with a blast against an alleged lack of stimulus in Europe in general, and in France in particular. The argument was that the French stimulus was only 1.4% of GDP, whereas Obama’s was 4.8%. Well, sure, but the methodology behind the semantics was completely in error: more than two-thirds of the Obama stimulus is not a stimulus at all, by European definition. Stimuli like that have been legally imposed in Europe, for decades. (The IMF has very different stimulus numbers, with a different methodology removing the economic stabilizers, the USA number is then 2% of GDP, Spain 2.3%, Germany 1.5%, UK 1.4%…)
Ten percent, 10%, of the Obama “stimulus” was a total cheat (the AMT tax relief belongs to the general budget). Of the rest, half was a zero sum game to compensate partially the collapse in local States’ spending, and the other half an attempt to imitate ephemerally a small of the automatic stabilizers that are in the French budget on a permanent basis. When one has done the math, the true stimulus of the USA comes out smaller than the French stimulus. Moreover, since States’ spending is collapsing and the Obama “stimulus” has spending reductions, the entire contraption is deeply flawed and functions often as an ANTI-STIMULUS. (Because straight tax rebates when people are desperately saving is only money that disappear from the system; by definition, the stimulus ought to be about creating jobs, not creating savings. In the European Union, a 15% minimum Added Value Tax is imposed; that feeds the automatic stabilizers, free education, heath care, research, and other mandated government activities; the point being that in this recessionary context, rebates feed the recession, whereas taxes can feed economic stability.)
In comparison, the French stimulus was launched in December 2008, when France was not yet in recession (although the USA already was). The French stimulus is already feeding thousands “shovel ready” projects, and is expected to be at full power in April. It includes work on four very high speed, 250 mph, electric train lines. “Weatherization” dear to Obama, is not in it. “Weatherization is mandatory in Europe, thanks to enormous energy prices, and other laws.
Finally the honorable Paul Krugman was rolled out, with a blistering editorial: “A Continent Adrift”. Tell us more Paul: “Europe is facing at least as severe a slump as the United States, yet has failed to respond effectively to the downturn.” Because the USA, with its failure to nationalize its grotesque bank holding companies and to fire its corrupt managers, has responded effectively? In the only (half) French bank that was nationalized, Dexia, the management was fired within an hour of getting the money.
WHEN KRUGMAN TURNS ANTI-EUROPEAN:
Here is Paul Krugman going ballistic: …”the situation in Europe worries me even more than the situation in America. Just to be clear, I’m not about to rehash the standard American complaint that Europe’s taxes are too high and its benefits too generous. Big welfare states aren’t the cause of Europe’s current crisis… The clear and present danger to Europe right now comes from a different direction — the continent’s failure to respond effectively to the financial crisis. Europe has fallen short in terms of both fiscal and monetary policy: it’s facing at least as severe a slump as the United States, yet it’s doing far less to combat the downturn. On the fiscal side, the comparison with the United States is striking. Many economists, myself included, have argued that the Obama administration’s stimulus plan is too small, given the depth of the crisis. But America’s actions dwarf anything the Europeans are doing….a major reason for the lack of fiscal action: there’s no government in a position to take responsibility for the European economy as a whole. What Europe has, instead, are national governments, each of which is reluctant to run up large debts to finance a stimulus that will convey many if not most of its benefits to voters in other countries.”
Sorry? Europe is doing nothing? Who has been nationalizing banks? Did the USA nationalize banks? Britain, Ireland, Belgium, The Netherlands, Luxembourg and France nationalized several banks. Germany, after claiming it would never do such a thing, because it was a reminder of the 1930s, spent 100 billion Euros trying to recapitalize “Hypo Real Estate” (which, as its name indicates, is partly owned by a US investment group), and is moving towards nationalization.
Maybe America’s actions dwarf whatever, but America is at the bottom of the canyon that it dug by itself. Even after the recent flurry of American activity, the total government spending of the USA is clearly inferior to that of Germany and Britain (which are above 45% of their GDP). France’s latest number is 52% of GDP. So the claim that “Europe has come short in fiscal policy” is fully contradicted by the facts. In very measured terms, and all due respect for the jetlagged Krugman, it’s a big misrepresentation.
After hammering his counterfactual fiscal “fact”, Krugman bemoans the lack of European unity:
You might expect monetary policy to be more forceful. After all, while there isn’t a European government, there is a European Central Bank. But the E.C.B. isn’t like the Fed, which can afford to be adventurous because it’s backed by a unitary national government.
It does not come to Paul Krugman’s mind that Europeans believe more in saving than spending money they do not have (credit). Then the honorable Paul, having jetted to Spain to provide advice, succeeds to completely self contradict himself in a few sentences:
“…there’s a deeper problem: Europe’s economic and monetary integration has run too far ahead of its political institutions. The economies of Europe’s many nations are almost as tightly linked as the economies of America’s many states — and most of Europe shares a common currency… But — a government that has already moved to share the risks of the Fed’s boldness, and will surely cover the Fed’s losses if its efforts to unfreeze financial markets go bad. The E.C.B., which must answer to 16 often-quarreling governments, can’t count on the same level of support. Europe, in other words, is turning out to be structurally weak in a time of crisis. The biggest question is what will happen to those European economies that boomed in the easy-money environment of a few years ago, Spain in particular.For much of the past decade Spain was Europe’s Florida, its economy buoyed by a huge speculative housing boom. As in Florida, boom has now turned to bust. Now Spain needs to find new sources of income and employment to replace the lost jobs in construction. In the past, Spain would have sought improved competitiveness by devaluing its currency. But now it’s on the euro — and the only way forward seems to be a grinding process of wage cuts. This process would have been difficult in the best of times; it will be almost inconceivably painful if, as seems all too likely, the European economy as a whole is depressed and tending toward deflation for years to come. Does all this mean that Europe was wrong to let itself become so tightly integrated? Does it mean, in particular, that the creation of the Euro was a mistake?”
Asking whether a tight European integration, this chronological side of Adolf Hitler, is justified, indicates that even the best of Americans know way too little history. Or at least not enough to draw the correct precautionary and moral conclusions. Plus, it is a contradiction to bemoan that Europe is both not unitary enough, and then to claim that national interest rates should be freed to jump all around nation by nation, as the natives see fit, on the spur of the moment. But, what are contradictions, when Europe is in the way?
WHY EUROPE WILL PERDURE:
When the nations of Europe had their own currencies and fixed their own interest rates, not only there were wars, but there were also cycles of bust and booms, as countries were competing with each other this way or that, voluntarily undermining their own currencies to encourage their industries (and the later led to the former). Why don’t we do the same in the USA? Some states in the USA are doing much less well than others, so why does not Krugman give them their own currency, and their own interest rates? That would dissolve the USA, but Krugman does not give us any argument against that.
The financial crisis simply shows that Europe has to be integrated more. Europe, and the Euro, just the same as the USA, and its Dollar, were built for more fundamental reasons than satisfying local potentates. Actually they were built precisely to prevent the local potentates from playing with interest rates and currencies. The idea was that preventing them to have their own currency diminished the powers of the local potentates (“potentates” derive from potentia, power). The basic idea was to weaken local potentates so much that they could not wage war against each other. In Mexico, there is a quasi civil war, because the drug lords, the new local potentates, have become all too strong.
The Civil War of the USA was all about how much power the local potentates could have. The States of the South wanted to secede, and Lincoln instead decided to use force to maintain the Union. That killed and wounded about 3% of the total population. Out of a total population of thirty-one millions, 625,000 were killed and another half a million seriously wounded. Now Lincoln is viewed as a hero because he had the courage to use an ocean of blood to preserve the union by force (canceling slavery was only an afterthought, a strategic trick the British had inaugurated during the Revolutionary War).
That Spain and others will have somewhat difficult years ahead, sure. But Spain, Greece and Portugal are doing better than under the fascist regimes, inspired by the USA, that the European construction kicked out. Spain had an enormous boom for decades, and now, well, a readjustment is called for. No big deal. Hopefully it will correspond to an economic switch out of tourism and construction. The Spanish government is keen to clean up the coast from too much concrete: instead of frantically constructing, a bit of deconstruction is called for…
The French stimulus is not less than the Obama true stimulus, and kicked in early (2008). True the German government has been slow and self contradictory, but it’s a coalition government arguing with itself, and several elections are coming within months. Now Germany mostly agrees with France on everything, which is all that truly matters to find European solutions to European crises.
INFLUENTIAL AMERICAN EDITORIALISTS ARE SUDDENLY SCREAMING AGAINST EUROPE, SO THAT THEIR PRECIOUS PLUTOCRACY CAN REIGN AGAIN:
The upper layers of the USA are an incestuous mixture of money, politics, and propaganda, deeply entangled with each other. It reminds one quite a bit of the similar mix in the upper layers of the Roman republic, and one knows how that ended.
Both Germany and France want to regulate financial markets heavily. The last time they were in this situation, with a US made disaster on their hands, was the early 1930s, and the USA had lost control of its economy and its mind. France and Germany remember very well how this all ended. It ended with Hitler, a mentally deranged piece of social wreck that was elected to the highest office. It is this author’s informed opinion that the plutocrats of the USA were perhaps the most important force that made Hitler all he could be.
Thus Germany and France want rigor now. And so the USA would rather talk about something else, like Europe having a bad hair day. Why? Because New York and London profited enormously from their giant Ponzi schemes. New York and London would rather like to refurbish these financial schemes that made them rich without much effort. If New York and London could not leverage themselves anymore by abusing the rest of the world with colossal dishonesty, these two cities may have to depend upon other industries than “finance”. They will have to work harder for their riches. Now a lot of opinion makers live and work in the New York area (including the afore mentioned Cohen and Krugman, and some hedge fund fanatics such as Thomas Friedman, the well known pro-invasion propagandist of the New York Times, three times “Pulitzer”). Such inhabitants favor their hometown. The concentration of media within miles of Wall Street make them loving to Wall Street.
Well, it will not happen. Not anymore. The world is seriously not amused by American shenanigans this time. The editorialists of the USA are barking in vain.
The crisis in Europe should not be overestimated: some banks failed spectacularly, but many French banks had multi billion dollar profits in 2008, and real estate in Lyon is still peaking (!). Although governments are heavily in debt, French deficit this year is expected to be 5.5% of GDP, whereas that of the USA is expected to be 12%. But the overall debt of individuals is much lower than in the USA. Nationalizations of the European financial institutions that were under capitalized the most, should allow the credit machine to get restarted more smoothly. Americans do not understand that credit is much less important for European individuals. Europeans are free individuals that save and own, not serfs living in bondage, giving gages of death (mort-gages) to banks. It is always cheaper to provide oneself with capital from savings than from credit.
The greatest danger to Europe would be an attack against the European construction. It will not happen, but countries in Eastern Europe will have to learn that their boss is not in Washington. I would not call that a crisis. I would call that a solution. And getting to know the truth of history. It was not France and Britain that gave Eastern Europe to Stalin. It was Washington. Divide et impera.
Addenda: 1) Krugman is in Spain, advising. But if it is to advise to get out of the Union and the Euro, he would provide Spain with a typical self serving American “advice”. Krugman would then be to Spain what Summers is for Obama, or eminent American academics were to Russia. In the early 1990s, the Russian government, with colossal naivety, brought in various famous economists of the USA for advice (Sachs of Harvard, etc.). The self serving “advice” of the Americans was to go plutocratic, in other words to build a money Mafia like the ruling CEO-investment bank class of the USA.
Russia went ahead, and soon was the property of tycoons associated to the Anglo-Saxon plutocracy. It was a disaster for Russia. Russia entered a depression: the median income collapsed, so did life expectancy. Soon many Russian plutocrats, prosecuted for theft, fled to London where the local plutocracy welcomed their billions, and called them freedom fighters. (Putin is still trying to get out of this rabid infection of Anglo-Saxon style plutocracy, with dubious, but probably unavoidable methods…) What the plutocracy of the USA wants, and those that support it want, is more people like them, worldwide. Because the American plutocracy will long stay the senior partner, it augments its power base, and its imperium, to have obedient servants and collaborators, worldwide.
2) Long ago, in the 1920s, Wall Street and associated plutocrats of the USA organized and financed German remilitarization, and German military reindustrialization, and the Nazis themselves (these are not words in vain: Wall Street created IG Farben, the world’s largest chemical monopoly, for example; Wall Street armed the Nazis, smuggled their weapons, etc.). Without enormous help, aiding and abetting from top US plutocrats and industries, the Nazis would have gone nowhere: the German military would have snuffed them. Instead the Nazis became all what they could be, thanks to the plutocrats of the USA (this is explained in detail in several essays on Tyranosopher.com).
3) Some will say that the strident argument that Krugman makes about Europe not stimulating enough is only fair. The idea being that the USA makes the effort of spending while Europe, or more exactly the Eurozone, stands back, and counts its Euros, selfishly avoiding to get into debt much further.
As I said above, this argument ignores the fact that the French government has already maxed out at governmental spending equal to 52% of GDP. But there is another argument buttressing this one. Geithner has barked against China keeping its currency too low (according to The Economist it may be too low by 3%, nothing to bark frantically about…). That is ironical, in light of the governmentally controlled short term interest rates being at 0% in the USA. Japan is also at 0%, and Great Britain at .5%. In comparison the Eurozone interest is has just been lowered at 1.5%, which is relatively gigantic. What the USA, japan and Great Britain are doing is called quantitative easing, creating huge quantities of Dollars, Yens and Pounds. So the Euro climbs relative to the other currencies, and this destroys Eurozone exports (German exports were down 20% year over year in January, while French industrial production fell more than 15%). The European Central Bank, the ECB, is focused on not letting inflation and (related) overall debt get out of control. Sarkozy has been critical of ECB’s chief Trichet. Trichet was tight as Banque de France chief. But, just as the Fed could not lend money it did not have in the 1930s, by a law that was changed since, the ECB, by statute, and differently from the Fed, is supposed to worry only about inflation, not the overall economy.
Thus Krugman should complain about the ECB, first, and not so much about stimulating, which is already maximum. But Trichet has the reputation to be very serious and well informed, and he is supported by the chiefs of the national central banks, so may be Krugman does not want to be seen as criticizing such a noble and prestigious assembly of governmental bankers. Such is the trap of respectability…