Archive for March 15th, 2012

Euro Inner Devaluation

March 15, 2012

A SOLUTION FOR THE GREEKS

How did the situation get so bad in the Eurozone periphery? There are three explanatory layers below the usual one. I will concentrate on the case of Greece, just to focus minds.

Usually the trouble with Greece is described as follows: Greece is a barely functioning state, without even a registry of who owns what, full of liars and plutocrats who pay no taxes and overspend into silence the People with corruption generalized, thanks to the full complicity of vicious bankers knowing very well that they are too big to jail, as they hypnotized all important Western politicians into abject submission.

There is a lot of truth in the preceding, but the truth is not always and only where everybody believes it is. There are explanatory layers, much deeper than the preceding ones. And they are not restricted to Greece, or even Europe. Nor to recent times.

Those deeper explanatory layers I will expose are never explored, because making them explicit would endanger the vast conspiracy the self declared financial “Masters of the Universe” have engaged in. Not only would it expose their manipulations, but how to remedy them, and spoil any further enjoyment of this vain art.

I will presently address the most superficial of these causal layers, and leave the other two for some other times (although I have mentioned them many times before). Even that most superficial of layers is something the best American economists are careful not to talk about (or maybe they are just plain ignorant?).

Economists friendly to plutocratic supremacy have failed to mention that explanatory layer: I do not wonder why, as they are plutocratically financed themselves. They are decent people, they do not want to even think about biting the hands that feed them.

Greece has no interest, does not want, cannot, and will not, leave the euro. 

That, let it be said in passing, is the number one notion for decent economists to integrate. Leaving the Eurozone would only make the situation worse, for everybody, except for those who cling dearly to American supremacy, and those who prefer dictators to lead European regimes. Indeed, if Greece leaves, why not everybody else? (I explained before that the banking problem is logically independent of the currency used.)

As Dominique Strauss-Kahn just said at Cambridge University, accepting the destruction of the Eurozone would be accepting that Europe become a “province” of the USA. (I am heavily rephrasing what he said, but his meaning was clear.)

And if that is a “province” as the original “provincia” (now “Provence“) was, that means annexation. (By the way, thank to Geo, a contributor to this site, for pointing out to me the March 2012 DSK speech. I was totally unaware of it; it’s well worth listening to.)

What was wrong with the annexation of Provincia?

Well, Provincia was a Greek state, a mini empire led by Massilia, extending from beyond Barcelona to the west to beyond Nice (the Greek Νίκαια) to the east. That empire was as old as Rome, and an ally. Massalia had been founded as a colony of the most enterprising Greek nation, Phocaea, itself much older than Rome (or Athens, for that matter), and a member of the Ionian League (now under the Meccan crescent moon’s boot).

Now Phocaea, 20 centuries later, is under the Muslim boot, and it’s all Rome’s fault. Think whatever you want about the  “mildly Islamist” ruling party in Turkey, it has more than 100 journalists in jail, for various degres of treason, or criminal inciting to deep thought.

Dominique Strauss-Kahn, who was going to be France’s much needed next president, is in very good position to know the difference of civilization between Europe and the USA (the prosecutor in New York, Vance his name, is financed by Wall Street, which hates Strauss-Kahn, just as the plutocrats in Rome hated the richest of them all, Caesar, because Caesar was the head of the “Populares“).

Rome, by breaking ancient Greek democracy-through-city-states, and unions thereof, paved the way not just to its own gigantically tyrannical self, and its grotesque mindless theocracy, but also to the giant, instantaneous Islamist tyranny of the seventh century. All this to explain not just why the relationship between Massalia and Phrygia is not as close as it used to be, but also why there was a lot of stagnation in between.   

When Rome conquered the Greeks, it killed intellectual innovation.

The Romans, whatever their charms, were no intellectuals. Nearly all Roman intellectuals of the Greco-Roman empire were actually Greeks, just as later nearly all Arabic speaking intellectuals were actually either Christian or Jewish (or  from families recently superficially converted to the master race’s religion).

The European Union is an attempt to reconstruct a world somewhat similar to the best union of independent democracies of the very ancient world, say when the the Ionian League reigned, next to Lydia and Phrygia, or even earlier, when the non sexist Cretan thalassocracy ruled the seas, in good intelligence with mildly authoritarian Egypt…

This model of an union of democracies, is the only one for this world. The historical model of the USA, crushing all the savages with the ever extending frontier pushed by crazed out plutocrats, is simply not viable. It only worked against American First Nations, because those were, really, savages.

(Why the extermination model had worked so well against the much more advanced Aztecs and Incas has to do with an immune problem, which was less important three centuries later; smallpox got to the Incas before Pizarro, and killed the Inca, starting a civil war, among other things; there is plenty of evidence that Spain massacred the American civilizations much by accident, and it was stopped at the top; the queen made enslavement of the Indians unlawful. Later Charles V ordered the arrest of the conquista, for cause of holocaust. In total contrast, the extermination of the North American Indians by the USA was deliberate, and the inability of the USA to revisit that monstrosity stays a threat… to the whole planet.)

Leaving the Eurozone would make the situation horrible for Greece: it would have to pay for all its energy and imports in an enormously devalued currency… And the People of Greece would lose the financial help from hundreds of millions of European taxpayers, and ultra cheap money directly from the European Central Bank (thanks to the amazing offices of the good Mr. Dragghi, an Italian banker, ex-partner at Goldman Sachs!).

In the 1940s, after engaging in successful war against Mussolini’s Italy, Greece was overrun by Hitler’s Nazis. Fortunately the Nazis suffered heavy losses, which piled up on top of the enormous losses they, and especially their officer corps, had already suffered over England, the enormously lethal Battle of France (May-June 1940, 200,000 soldiers killed), and in Norway (against the Norwegians first, and later against victorious Franco-British forces).

Even earlier the Nazis’ professional assassins had enjoyed unexpected losses in Poland. Bombing of Berlin by the French did not help German morale. It should have been fairly clear, even to the dimmest of Germans, that WWII would not be a repeat of WWI. This time the fascist snake would be struck at the head. But just as the Romans had no notion of intellectuality, nor did the Germans in 1940.

Thus when Hitler, delayed 6 weeks by a very costly invasion of Crete, finally attacked the USSR, his forces of professional assassins were much weakened. Many a good Nazi engineer had died in suicide charges against French fortifications, and most elite Nazi paratroops had been annihilated in Crete (they would be used again only against the French resistance in Vercors, in Spring 1944, it took that long to replenish them).

Hence we may say that democracy owes much to the courage of the Greeks against fascism, not just 25 centuries ago, in many formidable battles against the invading Persian juggernaut . But also during World War Two.

Nevertheless, for all their efforts, the Greeks were rewarded by a civil war in the 1940s between Greek communists, and foreign invaders, Anglo-Saxon plutocrats, aided by local agents. I am not exaggerating: the “Greek” civil war started with a British general giving an ultimatum in Greek to the… Greeks in Greece.

So now, here we are. Economists with access to all the centers of power, breathing together with Wall Street plutocrats, are giving advice to conservative European politicians and circles about what to do with Greece. It reminds me of 1946, with Anglo-Saxon military and special services telling the Greeks what would be happening in Greece, for the greater good of plutocracy (don’t scoff: ever since Greek ship magnates paid no taxes, and have been able to procure the likes of Jackie Kennedy as escort girls, a tradition pursued to this day).

Yet, there is an obvious mild solution to the mess developing in Europe: give to Greece and the like, the same medicine that Germany profited from.

In his editorial in the New York Times: “What Greece Means“, the honorable Paul Krugman pontificates erroneously that: “… countries like Greece and Ireland… had and have no good alternatives short of leaving the euro, an extreme step that, realistically, their leaders cannot take until all other options have failed — a state of affairs that, if you ask me, Greece is rapidly approaching.”

Well, that’s simply not true. I will demonstrate that not only there is an alternative, but that this alternative, a powerful weapon, was wielded by Merkel for her own selfish interest. Unjustifiably so.

In all fairness, Krugman’s main aim in the editorial was to show that austerity was bad, and that the situation in Greece proved the point. I agree, to a great extent. However I believe that targeted austerity, and targeted growth is where it’s at: grow schools for everybody, the market conditions for futuristic industries, and a sustainable energy procurement system; don’t grow plutocrats, socially irresponsible banks or the Islamist (“republic of“) Afghanistan. It’s all about precision bombing.  

“Why did Greece default? Americans economists, such as the pre-cited Paul Krugman, love to accuse the euro. They may as well accuse the evil eye. The euro, per se, has nothing to do with it. The all too weak powers of the ECB, much more (that is why one should be thankfull to Mr. Dragghi for violating the ECB charter; he (basically) gave more than a TRILLION to European banks englued in the crisis they created… in three months!)

All too many American “liberal” economists hate the euro, because, with all due respect, they are protecting their turf, New York City. All the caviar. Living in mansions. Looking intellectual. Without Wall Street, New York City would be just a larger Philadelphia. Made huge by all this Wall Street money, the giant 35,000 officers strong NYC police force can incarcerate all Wall Street occupiers, any time it is ordered to.

Americans have been enjoying the status of the dollar as the world’s reserve currency, so the opinion of any American economist is suspect (as Keynes, not a shrinking, anti-capitalist violet, was the first to point out in 1944; Keynes wanted a world currency, not the dollar as world currency. Don’t expect Krugman to tell you that).

Without Wall Street, the Greek conservatives who got the country in the Eurozone, could not have cheated with the help of Goldman Sachs. Was Greece a Trojan Horse conceived by the Gold Man sacking civilization?

In any case, the fruits of empire are bound to make American economists lazy, more worried about pushing for Quantitative Easing to help those who buy them caviar, than for liquid thorium nuclear reactors, to save the biosphere.

What we have done, instead of putting engineering in the lead, is allowing plutocrats to think the world. The lowest and basest have been put in charge of the grandest and most noble, penetrating vision. Saurians are steering the bus. Now we are sinking in the tar sands of lost imagination, turning away from all possibilities but for surviving as living fossils, burning whatever we can dig in the ground, like forsaken Homo Erectus.

There are three causal layers to explain the European disaster deeper than what conventional economists tend to analyze, and let’s finally roll out, after these preliminaries, the obvious one.

It points, surprisingly, at Germany. The good Frau Doktor Merkel in particular, is an obvious culprit. Merkel poses as austere, a steady hand, but she forgets to advertize loudly that she was an engineer in Greece’s demise. That’s too bad, because therein a solution.

After coming to power, Merkel effected an INTERNAL DEVALUATION. That gave an unwise advantage to Germany…that it did not need.

Merkel jacked up the German Added Value tax from 16% to 19%. This acted like a protectionist measure inside Europe. The Added Valued Tax is charged on imports, not exports, so it behaves as an import tax.

Meanwhile she lowered considerably the taxes German companies had to pay when employing someone (by a third, I computed).

OK, maybe Merkel was right: the world’s greatest exporter is the European Union. You will not hear that from those who sing on roof tops about Europe’s decline. Maybe 45% of that is directly from German exports (after a back of the envelope computation, inside my head). However, considering the impact that her internal devaluation was bound to have on the rest of the Union, Merkel should have had the courtesy of informing the others, loudly, on the probable impact of her policy.

Maybe she did, sotto voce. This is an argument why European ministers should sit on each other’s councils of ministers (as DSK tried to impose, long ago). Some will say they have more important things to do. Yes, like what? 

The rest of Europe did not engage in such an internal devaluation trick in a timely manner.

Now Sarkozy, the plutophile French president, desperate for re-election, is proposing to do the same (mysteriously he calls that the “TVA sociale“). He proposes that, 6 years after Germany effected it. Too bad he did not notice before. He was probably too busy making love with the richest of the rich, and tasting the most refined caviar together (as there is an embargo on the best Caspian sea caviar, caviar is now made in France, illustrating where Sarkozy France’s priorities are. France used to have ideas, now she has caviar…)

All the states from the European periphery should do the same: give back to Germany some of its own medicine, some of this internal devaluation Merkel loves so much.

That counter-measure is already applied, and not just in Greece (where the AVT is now 23%!).

It goes without saying that Germany should help repair the damage it caused, by doing the opposite, internally revalue (lowering the German AVT, and rising other taxes could be done next week: Merkel is obviously over-eating while Rome burns).

The state of Greece has been in default since 2010, when it stopped paying private contractors which had worked for it. The default is official in March 2012, at least the credit rating agencies say so. Greece has stopped interest payments on old bonds enjoyed by the banks.

Technically more than 80% of the banks exchanged the loans for new ones which lost more than half of their value. A few banks chose instead to activate Credit Default Swaps.

If all banks had activated the CDS, we would have been in a repeat of 2008, as those CDS are backed up by drastically insufficient capital. In 2008 the major states of the West basically ordered the taxpayers to make the CDS payments. Taxpayers had to pay for something they had never heard of, financial derivatives. This time the banks paid. Progress.

Of course the crisis is not finished. The big problem is that, worldwide, greed has created imbalances. Worldwide bankers and financiers sit with politicians and they together breathe (in Latin: con spirare).

Plutocrats don’t even hide for their breathing together: see Davos.

And this is why coal plants are everywhere ever more spewing deadly gases, from CO2 to mercury vapor. It is also why China has caught up, and sometimes passed, the West in science and technology. Hence the trade imbalance problem. Now the West (EU, USA, Japan) whines at the WTO that China was unfair with rare earths. Why don’t they extract their own, as the West used to? (By the way, energy crammed thorium is often produced as a waste, doing so.) Too much money for caviar, and bankers’ private jets, not enough for productive work? And now whining that Chinese slaves are greedy?

Thorium nuclear reactors, or rather the absence thereof, make a very good illustration of the unfolding disaster. This technology was made to work 50 years ago, but was never developed. Thorium would allow us to escape the catastrophic CO2 crisis poisoning the biosphere, besides providing the solar system with cheap abundant energy and fast transportation for hundreds of thousands of years, all the way to Ganymede, Enceladus and Triton.

Why do I mention those three? Those moons of the Solar System have gigantic quantities of (very frozen) water, and are thus much more suitable for human exploration and colonization, than, say, Mars, had we very fast transportation, something a thorium engine could provide cheaply.

It is a big universe out there, and it is a very small enchanted paradise of a planet here. When one sees that European politicians took 6 years to realize that the leading country had grabbed for itself an advantage that should be theirs, bringing forth an easily avoidable disaster, one can only smirk.

Meanwhile the Obama administration, having apparently run out both of money and imagination, cancelled Mars missions that were supposed to find out what happened to life there. You see letting plutocrats go tax free, and banks getting nearly all the money in the world, has consequences. Obama wants a billion dollars for the re-election of his beautiful brown self, because he claims his color has civilizing properties. But he does not have a billion dollar for Mars.

What will people remember in the future? That the first American president of half African descent was so obsessed by skin color, that he gave up on the solar system. One billion dollar for him, none for Mars. In other words, intellectual terra nulla. Rome’s first African born and raised emperor, Septimus Severus, founder a dynasty, is not remembered for his racial origin. He is remembered for the warning he gave about the Senate based Roman plutocracy.

Never mind that the Mars missions were collaborations with ESA (European Space Agency). Ever since 1939, when the USA allied itself with Hitler, what Europeans think, or, actually thinking itself, has not been number one priority in Washington. Do Europeans want to become a province of that? Does the world have interest to become a province of that? 

Yes, the behavior of the USA at Munich, in 1938, or with the Hitlerian Air Force in 1939 (allowing it to fly, by providing crucial industrial products) is something American civilization avoids to talk even more carefully than the extermination of American First Nations. However, facts talk louder than silence.

A frustrated American soldier killed many civilians, including nine less than nine year old children last week, four of them less than 6 year old girls. By cancelling the Mars missions, Obama saved what the Pentagon spends in ten hours capturing and killing obnoxious Americans and Afghan children terrorists, out there. Especially all those little girls. Priorities, priorities…

***

Patrice Ayme


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