Bank Crisis, Yes. Euro Crisis, No.

THOSE WHO TALK ABOUT THE EURO OBSESSIVELY WANT TO TALK ABOUT PLUTOCRATIC BANKS NOT.

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I am working on an essay which explains why some civilizations are superior to others, and how to measure that objectively, beyond the capability gunships provide with. It depends upon the notion of structure (among these structures are democratic institutions).

Measuring civilization is a much more interesting, and a much more difficult subject, that the silliness below. It is silly, because it should be totally obvious. But, somehow, it is not. As even Nobel Prize winners will not address it, someone has to. Sometimes one has to stoop, go to the trenches, and shoot back at the enemy, even when it’s a friend. After all Socrates killed at least four in real combat, and he is still esteemed…

I came across a post of April 11, 2011, from Paul Krugman, entitled "The Road to the Euro Crisis". That is a piece of not so crafty propaganda. Look at the title: it assumes that there is a "Euro Crisis".

That is a confusion of genres. There may be a crisis, but it is not of a crisis of the Euro itself. The Euro is strong, all too strong. The Euro was carefully calibrated to be worth one American dollar (by looking at very long term averages). Instead it has been for years hovering above 1.4 US dollar. The Euro is the world’s strongest currency. It would be better for the European economy if there were a Euro crisis.

Paul has claimed recently his European enthusiasm. If so, the aim of his propaganda would be rather mysterious. If it is not anti-European, what is it? Well, a careful analysis of the genesis of Krugman’s thought shows that, until a few months ago, he had no idea what was the idea behind the construction of the European Union. Then he discovered Robert Shuman, who explained clearly that Europe had to be made by irreversible moves, filling in the details in mopping-up operations later. Krugman, in truth, made a stubborn hostility against the Euro, part of his trade, for more than a decade.

That hostility against the European currency may be coming from the fact that, to keep overlording over the rest of the planet, it is better that the USA has by far the largest market, with the largest currency, so to speak. Since everything is written large in the USA, other countries become as many details, easily crushed. Ideas, feelings and companies get amplified in the internal market of the USA, and then they take over the world.

France and the USA conducted several war by proxy against each other after World War Two (although they were allied with several others).

The USA’s belated enthusiasm for democracy had allowed the European empires to be wounded to death by fascist Germany and Imperial Japan, and the USA moved in to replace them. Britain, not knowing too well which side it should chose, and mostly France, tried to resist this. A succession of wars happened, where interests and companies supported by the Americans confronted those supported by the French. Some of these wars are now forgotten: Katanga, Biafra…

I personally put the Rwanda war among these. It was terminated when a French paratroop division was dropped over Rwanda in Opération Turquoise, another of these UNSC operations implemented by France (one is just being conducted in Cote d’Ivoire). The origin of the Rwanda war have never been elucidated. However, before the holocaust, before the assassination of the two presidents which ignited it, the rebels spoke exclusively English, in a French speaking country, and were richly armed (including with anti-aircraft missiles). So some Anglo-Saxon power was behind them, and that may explain the lethargy of the USA to the whole Rwandan civil war.

Meanwhile the French, who were not exactly born yesterday, culturally speaking, proposed to the Germans to make an union, since disunion was clearly not working.

All Americans attached, one way or another to the reigning American plutocracy can only tremble, or more exactly can only toe the line that anything big from Europe is necessarily bad to the big, bad USA.

Thus the Euro is big, so the Euro is bad. Very bad: if the USA had to pay their oil, or their debt, not in Dollars, but in Euros they would quickly go the way of Argentina. So, from the context of the reigning American plutocracy, stopping the Euro is pretty much a question of survival. From the European point of view, the Euro is a way to stop being subjected to American domination. If not to stop outright exploitation, as the scale of the USA allows mediocre American companies and unspectacular ideas to become world dominant.

So the Euro is hyper strong, there is no Euro crisis, but clearly we have a Krugman crisis. Here is Paul’s short post, in its entirety:

“Just a note: I see that some readers are confused when I talk about how the coming of the euro led to low interest rates in the European periphery.

It’s actually very clear in the data:

Eurostat

As the euro became a done deal, countries that had previously had to pay a large interest premium found themselves able to borrow on the same terms as Germany; this translated into a big fall in their cost of capital. The result was bubbles, inflation, and in the aftermath of the bubbles and inflation, what you see now.”

Euro currency was introduced on 1 January 2002. This convergence-divergence of interest rates has nothing to do with the Euro. It has to do with the markets. As can be seen at the right hand of the graph, the interest rates are now diverging… But Spain is still in the Eurozone!

So this is not a Euro crisis, as far as the friends of the Euro can see. It is mislabeled a "Euro crisis" by the enemies of the Euro. So what is it?

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PLUTOCRATS GET REIMBURSED, PUBLIC PAY:

In truth, the crisis is a private bank crisis, which has been transmogrified into a public debt crisis, as states came to the rescue of private banks, by making good on what they had lost.

That rescue of private banks, and all sorts of “shadow banks”  was led by the Bush, Obama, Greenspan ,Bernanke administrations in the USA: trillions of dollars were made available from taxpayers to plutocrats, as plutocrats, like Atlas, support the world.

The case of Iceland is enlightening: the state tried to persuade voters to pay for the obligations of a private bank based in Iceland, "Icesave". That bank lost 4 billion Euros of savings from savers in Britain and the Netherlands alone. The British government reimbursed the British savers, and then asked Iceland to reimburse the British state. Voters in Iceland said no. (Notice that the Brown and Cameron governments agree on this, that Britain is not in the Eurozone, and that Britain has been pretty much toeing the American and rest-of-Europe line on this.)

Iceland has a tiny population, 320,000, and it has been harder for the government to hypnotize the tiny population with plutocratic arguments, as Iceland is too small to be rules by plutocrats.

Icelanders have been told that their attitude compromised their application to the EU. I don’t see why. Police banks, and don’t enslave people who have nothing to do with them.

Ireland has a crushing debt. Why? Because the Irish government decided to refloat private banks in which other European private banks had invested in (although it refused to reimburse foreign banks directly invested in Ireland…). Ireland, and the like, ought to default, and that would be the end of the story. It’s a private bank crisis, not a currency crisis. More generally, it is a crisis of the relationship between all too generous public officials, and greedy sharks in private practice known as financiers. Private French, British and German banks have invested badly, they have to pay the price, the public should not.

Whenever a bank cannot survive, its operations ought to be nationalized, and small private savers accounts guaranteed. (What "small" means can be debated, but it should be big enough to cover the upper middle class, at least, but not so large to cover the hyper wealthy, as it presently does.)

There is vast hypocrisy in Germany in particular, as Germans profited vastly from loans of German banks to peripheral countries of Europe, to buy, well, German products, making Germany the number one world exporters.

It is high time for countries, that this for the public, to follow the example of the Icelanders, and say:"ekki" to the plutocrats! And, why does not Paul Krugman talk about that, rather than obsessing about the European currency? Is it because his renown, among the rich, famous and powerful, depends upon it? Why not use talent against evil, rather than using it to suggest that European nations should try to undermine each other, with small, weak, unworthy currencies?

Patrice Ayme

Tags: Euro, Iceland