Time For Euro To Get Tough?


The Obvious Solution To The Euro, And European Sovereign Insolvency Crises, Or How To Get Civilizing Compliance From Washington Such As A financial Transaction Tax. 


Some of the American press about Europe and the euro, is borderline hateful. The Wall Street Journal, September 20, 2011, in an editorial (“Global View“, Bret Stephens) was comparing Europe to a “Madoff like event“, a “parade of horribles“. “What comes next is the explosion of the European project.”

Timothy Geithner, the pinocchio from Wall Street (also secretary of the Treasury), blocked any talk of a Financial Transaction Tax (to pay for the Greek bail-out), proposed by France, Germany and Austria. Instead Geithner claimed that what was truly damaging was the fight between the European Central Bank and the European states. So Geithner would invent anything, to avoid talking about worldwide financial piracy, and the capital flow problems it creates.

When facing such hostility, it’s high time to do something to about it. There is an aggressive method to solve the euro crisis, and rescue Europe from her enemies. I am going to propose it now, and you can probably read it in “The Economist” one of these days. I doubt “The Economist” will like it.

Speaking of “The Economist”, that European magazine, was far from hateful about the euro, and sounded even very worried (!), in its last issue. No less than 5 articles therein in just the last issue flew at the rescue of the European currency. This shows how bad things are getting, as “The Economist” has always made a point of being dismissive of the European Union.    

“The Economist” ran a cover story about the euro, where it proposed to save the euro in the exact same way that I have proposed to save it: let the states which are insolvent, default. Right away. (For technical reasons, if a strong distinction is not kept between insolvent and illiquid states, there is a danger of a contagion, propelled by market manipulators, to simply illiquid states, such as Spain or Italy.)

Instead the present method used to save the likes of Greece, is to lend some more, to those insolvent states, so that they can pay their preceding loans. Not only that’s idiotic, using new debt to pay old debt, but the math are getting increasingly worse, quickly, as the interest rates of the insolvent states are going up, quickly. Hence the states are driven ever deeper into insolvency, in the guise of rescuing them.

This is why the inevitability of default ought to be accepted soon, and being prepared accordingly. After default of the insolvent states, such as Greece, European states could rescue, and, or nationalize the banks, as needed.

To those who feel it’s a tall order, a reminder: the Greek Gross Domestic Product is no larger than that of just one French department, the Hauts de Seine (92). France has 101 departments. Surely France could keep the Haut de seine afloat, if it went bankrupt. A fortiori France could keep afloat just a few banks which lent to the Haut de Seine, the case equivalent to the Greece situation.

Another possibility “The Economist” considers is a euro break-up. Everybody, even the big bank UBS, which studied what would happen, agree that it would cause, even in Germany, a PERMANENT loss of GDP of at least 40%, and maybe above 50% (if it were combined with probable complications with the EU itself). So euro destruction is about as interesting as committing suicide.

The solution that I proposed and that now “The Economist”, in its wisdom, duplicate, is the nice method. Unfolding slowly, it will allow the Greeks to start to have with taxes, honesty and accounting a more Franco-German attitude. This is more or less what the Merkozy strategy is. Except that worthy duo obstinate themselves to claim that Greece will not default, which is impossible… for the good and simple reason that the Greek state has been already defaulting since July, a detail omitted by the ignorant.

In truth, Merkozy knows that Greece will default, but they are trying to gain time (hoping for god knows what: elections will come and those two conservatives, and arch conservatism at the service of plutocracy will be defeated, to be replaced by more pro-European socialists).

However, there is another solution about which absolutely nobody talks. It is not a nice, but it will send the problem back where it originated, with the American based plutocracy. I have restrained myself all too long, and I see no warrant of arrest coming for Goldman Sachs.

Moreover, I got somewhat irritated, because I read and heard all too many nasty fools equipped with bully pulpits, who are obviously not well. Enough with the mania of maniacs bellowing unimpeached. Time to reply in kind. I am tired of listening to selfish American pundits and policy makers, coming up with one outrage, after the next, repeating exactly the mood of 1930, when the USA brought its tariffs up unilaterally… by 50%.

We are increasingly at one of these moments, when one has to choose between democracy, and plutocracy.

Athens, the primal direct democracy, a modern state in so many ways, some more modern than we can yet muster, was undone by deep philosophical mistakes. At least deep enough for the happy quarto of Socrates, Plato, Xenophon and Aristotle, and hundreds of their less gifted commentators and duplicators ever since, not to have noticed them. At the root were several ethical failures (which are presently duplicated by the USA and, to  a much lesser extent, European powers).

The Athenian crisis had two phases, separated by a century. In the first phase, Athens was philosophically erroneous, not to say mass murdering criminal, and, as a result, lost the Peloponnesian war. Athens then got nearly destroyed, losing half of her population. Socrates, having corrupted the young plutocrats, was executed. In a sort of hubristic repeat, Germany would engage in the same sort of mix of hubris and mass murdering crime, 22 centuries later. Germany was not as philosophical, and had less to boast about, and its psychological collapse into hell was incomparbly worse (although its enemies were very generous, and it did not get punished as severely as Athens… which happened precisely because so many had Athens’ envy).

The second phase in the destruction of Athenian democracy was lower key, but terminal. It was more sneaky, underground, and a greater lesson for today.

It was a close run thing, but Athens lost a war to (by then defunct) Alexander (“the Great”) ‘s generals. And Athens lost in part, at the very least, because Athenian plutocracy preferred to live under Macedonian fascism and its militaro-industrial complex rather than fighting to death for Athenian direct democracy. OK, granted, Macedonian fascism was not as terrible an enemy as Achaemenid Persia, but it extinguished direct democracy for 23 centuries (and counting…)

Is there an equivalent situation today? Sure. For example the euro is threatened by a conspiracy of various plutocrats and their devices (including Goldman Sachs). Europeans are fighting back, but softly. Why so soft? Because of a kind of breathing together of European leaders with American superrich (Sarkozy has several direct family connections with plutocracy in general, and American plutocracy of the New York type, in particular; Cameron is outright a small plutocrat, Berlusconi, a very big one, bunga bunga, as he says).

When the Macedonian shock troops invaded Athens, the anti-fascist philosopher Demosthenes took poison. How would a really strong philosopher oppose the Wall Street order of king dollar? The order of Wall Street supreme? what ideas are worth taking poison for?

It’s the world’s simplest thing: let the European Central Bank buy INDEFINITE AMOUNTS OF DOLLARS whenever the euro is above one dollar. It would cost nothing. Problem solved.

USA visited by own devices: financial 9/11, nothing left this time, smoldering ruins of the USA plutocracy all over. Indeed the entire strategy of the American plutocratic order has been financed by others, using tricks such as the ubiquituous, but cheap dollars.

So what I propose is the equivalent of what Europe did in 1930, when it retaliated with its own tariffs. Some will say, that this is nasty, not very philosophical: why can’t we go on with the beatings and punishments? Well, nasty breeds nastier. So far, the USA has had a free ride with the world socio-economic order, for 67 years. And it’s not working. Actually, civilization is going backwards, as the USA was the only country to officially back torture and extra judicial processes, in its desperate search for military supremacy. even Hitler’s Third reich never went down that slippery slope.

If the Greek currency, the euro, was down 40% it is sure that Greece’s most important industry, tourism, would improve dramatically. Add to this a 50% default in the Greek debt which is in euro, and the Greek insolvency problem vanishes.

How come nobody proposed this? Well, plutocracy is one, worldwide. Plutocrats are jailers in arms. Plutocracy knows that it is Wall Street and its pets in government, especially the government of the USA, look at boy Geithner, who have set up the excellent system for the superrich as it is. To keep it, one has to keep a mighty Wall Street and Washington sucking its toes.

As I hinted, a massive devaluation of the euro would break the economy of the USA. Oops.

The USA is still the world’s greatest manufacturer, in added value. American exports would collapse. That would bring the crisis where it belongs. Then Americans would have to face their responsibilities. There would be a depression. But there is already a depression. Just its main source, Washington. has been more protected by various tricks than it deserves to be, including by having the dollar as the world currency, while keeping it low enough.

It is time for European leaders to stop making a plutocratic compatible discourse. Europe, even Great Britain, even Switzerland, are fundamentally socialist,  the USA is fundamentally plutocratic (watch Obama boasting about getting all his ideas from the world’s richest men). It is time for Europe to go socialist on the biggest scale, as it will have to, when recapitalizing the banks with half a trillion dollars.

In August, the new (French) IMF director, Christine Lagarde, claimed that European banks needed 200 billion euros in fresh capital. The markets are obviously unwilling to give them, leaving us with the states. In other words, as the American route of just giving to the superrich would be resisted by European streets, European banks, many of them, need to be nationalized. Now, as I write this, the IMF is saying that 300 billion euros is needed for recapitalization of European banks.

Don’t be surprised that the arch conservative, plutocratic friendly, European governments are in denial, whine that it ain’t so, and keep on pointing at Greece (which just lowered retirements by 20% above 1,200 euros a month).

The European street is anti-plutocratic, Americanism is vaguely perceived as plutocratic, as the “hopey-changey” thing (to quote Obama quoting Palin) is fading away as the smoke and mirrors it was (Obama himself seems unable to give one example of realized hopey-changey). This will get worse, as the truth gets clearer.

Obama had decided to double American exports in five years, or, otherwise said, to export the USA’s depression, while filling up his plutocracy’s coffers. Well, visit him with his own medicine. It’s only fair.

Even the arch conservative governments in Europe have to calm down their streets. After Sarkozy judiciously suggested that Palestine ought to be admitted as an observer state at the United Nations, tensions went down.

It is time for Europeans to take care of themselves. That means if treated nastily, fight back nastily. And beware of not being led by Trojan horses, as the Athenians were. Once is enough. Resist imperial fascism with all your might. Krugmania sings on all roofs that devaluation is the solution for Greece? Thus act accordingly. Devalue the euro, it can be done tomorrow.


Patrice Ayme

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23 Responses to “Time For Euro To Get Tough?”

  1. multumnonmulta Says:

    Cher Patrice, it’s become obvious, to me at least, that the world is at war (e.g., http://multumnonmulta.blogspot.com/2011/09/when-did-wwiii-start.html ). Common practice (inertia, etc.) obfuscates such state of things.

    Let’s agree about one thing: If the EUROpeans devalue, which is a clever and logical move on its own, without working in concert, the real war won’t be late coming. Soloists in that concert, beside the Europeans, ought to be the US and China. See the Plaza Accord ( http://en.wikipedia.org/wiki/Plaza_Accord ).

    We both seem to be aware that it’s been Obama, acting on behalf of the Anglo-American plutocrats, who stokes the fire. His determination is given by the fact that he’s thrown even the American folk under the plutocratic bus.

    The biggest obstacle to any progressive/positive move, that I can see, is the confusion of the regular folk in the west. They/we cannot restart the machinery unless undertake directed action, and the brains, alright, so called, are as stuck in self destructive action as you can think of. You seem to be more optimistic about the European elites, and I hope you are right–by now, you know my distaste for Merkozy (what an apt appellation!). À bientôt, mon ami!


    • Patrice Ayme Says:

      dear Multumnonmulta: As we agree, most of the presently governing European elites are either directly plutocratic (and even BHL, and especially BHL, Enthoven, and company, the philosophers… nearly all the famous ones are teaching for the establishment, when they are not directly full members of said establishment!) or at the beck and call (case of Merkel, I guess).

      That is why the European crisis is allowed to fester, to a great extent. Although it’s also pretty obvious that many of the influential Greek (and other Italians!) have to change their ways (even France has clearly too many civil servants, although many are employed by the French equivalents of American states, so not under Paris’ control).

      So reforms may as well be introduced. Papandreou and company have been dragging their feet about firing civil servants and privatizing disfunctional state enterprises, let alone taxing the superrich…

      So the present push towards Greek reform is not useless, but it is not the main problem, which is, as I said, that the more they lend, the more powerful bankers got, and now they are blackmailing everybody by threatening to bring down world finance.
      Well, that’s perfet; it should be brought down.

      The case of Obama, is exactly as you describe. he made a pathetic sight at the UN yesterday, contradicting himself, long standing American policy, and even UN law (which had recognized a Palestinian state in 1948, side by side with Israel, I remember…)

      Obama apparently hope that the rest of the world is as clueless and unmotivated than the American public. But it is not. So, Obama is epsilon from being viewed as a treachorous clown by the world at large. Treachorous to its own “hopey-changey” thing, that is. The Bushama interests no one. Once the world discovers Obama is just a clown whose main act is to insist that his chin be placed higher than his brains, he will de discarded, as not even amusing. That’s a conclusion many leaders have drawn already.

      For example Saudi Arabia (the theocratic dictatorship) is carefully moving to augment its economic activity, while making its oil fields less attractive for an American armed forces take-over.
      Meanwhile Sarkozy hopes that his foreign policy successes, which are undeniable, will hypnotize the French public, but I don’t think it will happen, the French public being less foolish than the American one, and people can see through his machinations. Same for Merkel. I don’t think the German public will be fooled by her hopey-changey green thing… The slowly unfolding catastrophe in Europe will have more impact.

      Everything indicates that the next president of France will be Hollande (revealing name for a French president…) In Israel, the government obviously computes that the next president is Perry… even Palin is threatening the clown, in at least one poll… Beyond the pale, there was Palin…


    • multumnonmulta Says:

      …just to make sure it’s clear: if the Europeans devalue unilaterally, it means they will have responded in kind to the Greek provocation.


      • Patrice Ayme Says:

        Yes, Multumnonmulta. And my point is that they can do it, peg the euro down at one dollar, as it was supposed to be. And the fact there is a vast plutocratic conspiracy, is that no one mentioned this. Krugman, who wants Greece to devalue, does not even realize what he is saying… He nearly reminds me of my good friend Obama… You know that pilot who says:”Pull Up! Pull Up!”… After the plane has already hit a few houses… Did I say houses? Well, OK, he can still emigrate to his beloved, well worth investing in, Afghanistan… And preach the right form of Islam (hey, since he can pick up the evil forms of Islam, he probably can pick the right ones, I would imagine…)

        To come back to the euro, the powers that be in the USA ought to understand the force is not on their side. Only treachery is, but that’s a two way street. And the partisan of plutocratic USA ought to understand, led by Obama, that, right now, they are getting a subsidy from the European Union (the pound moves with the euro these days).


  2. Celina Says:

    What is the significance of the date 739 BC?

    We all may well ask. We may inquire of history: “what about it, history?”

    I myself have no idea, but here in a brief tale is how I arrived at the date, with Kismet or without, all the while on a most serendipitous isle of souls lost, found and wandering around.

    I was, or it was I or seemed to be, having an imaginary conversation within my head as it were with, well, never mind who, but during the course of this imaginary conversation found myself saying to never mind who:

    “.. and then however many million times the earth has revolved since the birth of Christ..”

    when I said to myself with appropriately apportioned (given the circumstances, which are almost unmentionable) imaginary exasperation at how I might during life’s course err numerically and be therefore deserving of comeuppance lurking to wreak his remorse-less vengeance (I had heard from early youth the tales, as everyone these days has been informed, however vaguely, for the sake fair play) : “wait, that can’t be right — it must be far smaller than several million..”

    So, sitting at my laptop as usual when reading these marvelous essays, I clicked on the icon for the calculator and managed the multiplication of the number 2000 by the number 365 and as I said to myself “won’t this turn out to be 730,000?” noticed that is was.

    Close to a million. In need of only 270, 000.

    Is that really so much?

    Egged on in pursuit of precision and dogged by curiosity, I said to myself, “well now, Celina, my sweetness and truest love, how far precisely before the mythical Y2K event would one have to move backward in time, measured in 365 days year units for the sake of a quick estimate of course, to stand with Sisyphus and all the mighty gathered futility in the name of noting, in the midst of daily endeavors, that One million revolutions of Orbis Terra herself had elapsed, as they say?

    Pursuing this noble quarry, was it not your correspondent herself who now entered on her desktop calculator the number 1,000,000 and divided it by the number 365?

    Receiving in the sulphur-lime-green window of her laptop’s interface with digital calculation the reply:


    Celina, being able yet to bear in mind that it was the excess over 2000 which she had wondered off to seek, ignored all decimals, mentally subtracted, and voila, what was she left with?


    739 BC, to be precise.

    And she decided to share her discovery, which she does not fathom, but appreciates, with the colossal world.

    Thus this note.

    She thanks Patrice. She thanks Mutumonmulta.

    And refers them to Camus, not Sartre, in reference to the Absurd.


    • Patrice Ayme Says:

      Dear Celina: I felt completely inadequate reading your esoteric considerations. For a historical ant such as me, 739 CE is mostly notable for Charles Martel’s final destruction of the Siryan-Arab-Berber forces which had tried to invade Gallia-Francia three times (battle of Narbonnes). The destruction of its mostly Syrian army led the Umayyad to defeat, all over. In 739 a major Berber Revolt broke out in Morocco and then North Africa, which was subdued only with difficulty. But soon the Persians could not be resisted. That’s how Damas fell (still falling), and the Persian influence on the Caliphate, headquartered in Baghdad, took over…
      Thus the Franks broke the Arabs (not the Arab speakers, but the Arabic caliphate)…

      OK, that’s one of my pet theses, invented by me, for my enjoyment… And hopefully those of others. But an important point is that the region is much more interconnected that people usually think, and the military aspect, dominant. BTW, speaking of that, the Umayyad had started to invade Pakistan and North India, just at the time they tangled with the Franks, and were soon blocked. The Umayyads had sent a famous general and an army, not missionaries…(As Islam apologists would have it…)
      I will let you handle the numbers…

      I thought that, because Sartre was more absurd than Camus, on a personal basis, he was the specialist… camus took politics seriously, Sartre was obviously posing, and that is why he nearly wetted his pants when he met Cavailles during the war (Cavailles being a real hero).
      Thanks for thanking us…


  3. Jo Says:


    Devaluation as a means of retaliation against the WSJ, is that your plan? Why should i lose 40% of my purchasing power and 40% of my Euro-denominated savings and why should i have to pay 40% more for imported gas to heat my flat and 40% more for imported fuel to get around? Only to have you fight an economic war that n o b o d y needs? I have you know that the Eurozone is running a pretty substantial trade surplus vis-a-vis the US as it is ($53 billion for the first 7 months of this year alone). At the same time the US invest 3 times more money in the EU than in all of Asia together (2010). Yes, this includes Japan, China and India. Any change in this relationship would hurt the Eurozone more than it would hurt the US. To what benefit? So that we go from a trade surplus with the US to a break-down of trade with our most important trading partner in the case of retaliatory measures? To get even deeper into recession and have anyone on a fixed income freeze in the winter? Have the balance sheets of the ECB explode? So that Greece can get some more tourists? To teach the lesson to the problem countries in the Eurozone, that they don’t need to reform as their problems will be “solved” by the press anyhow?

    Yes, there is a lot of New York/London based speculating against certain Euro countries going on, but your claim that the Euro “is threatened by a conspiracy of various plutocrats and their devices” is only half (or rather a quarter) of the truth and certainly no reason to shot oneself in the head in order to get rid of an headache. The main reason for the Euro going belly up does not lie in the actions of the baddies on Wall Street but rather in the way (why/how/when) it was created, how it was expanded and most of all how individual countries behaved within its framework.

    – Jo


    • Patrice Ayme Says:

      Dear Jo: excellent points all, indeed, some well known, some completely overlooked. Thank you for reminding us of them. Good stuff.

      I wish it would be retaliation against the WSJ only. However my resentment is much greater than that. Put Krugman in the same basket as the WSJ (I am sure he will not like that). Put also all the right wing conservative and demeaning American commentators (are there any others?) One hears so much venom against Europe, in the USA, that the American opinion makers, like the Nazis before them, are now believing their own propaganda… It’s time, in my opinion, to show them they are not the only bullies on the block. For their own sake.

      You would lose 40% of your purchasing power, but only if you travelled to the USA, after my proposed devaluation. Or let’s rather called, proper valuation. The euro value was fixed on very long term averages of the franc against the dollar.

      The real practical problem at this juncture is not what happened: for example, everybody knew, at the time, and the Bundesbank first of all, that the Drachma had been converted at way too high a level.

      The real culprit is, now, the spirit of plutocracy; some banks have faulted, they may have not enough capital. OK, so it’s Lehman all over again. Let them default, and nationalize. Instead the present course is to make the Europeans into Americans, by asking them to pay for the banks, without taking possession of them (and then knocking some sense in them).

      I persist and sign that a euro proper valuation is way better than a euro termination. Let Greece default some more (it’s already doing so). Then what? The Greeks will just be forced to reform not by the ECB, the EU and the IMF, but by the necessity of food inside the plates. OK, my battery running low, more later…


    • multumnonmulta Says:

      Jo, if devaluation is too radical an idea for you, though some further analysis may change one’s mind, consider revaluation. Which can happen orderly, through agreement at least among the US & Japan and the EU, or unilaterally. If you come to think of it, it’s not only overall better than trying to prop up the ghost of the Deutsche Mark but also necessary! The Asians should come up relative to the western currencies. As for the raw materials, I thought that’s why we went together in Libya, to show a strong hand.

      Now, do you want an objective criterion by which to devalue? I’m afraid I cannot offer one, for it’s needed some collective attention to the matter (read, objectivity is consensus, that is, discard any market illusion). People would look at individual liabilities and overall assets and possibly allow for a temporary imbalance, yet sooner or later, if we don’t want war we should revalue.

      Now, should you desire to even indirectly punch the non-Nordic economies/nations by insisting on a strong Euro, I would find that lacking. The Europeans should learn not only to play by the common rules, but also to play on each country’s strengths!



      • Patrice Ayme Says:

        dear Multumnonmulta: a fact to remember is that France and Germany were the first to discard the 3% deficit rule. Even now, the Greek deficit relative to GDP (10.4%) is less than the 10.6% of the USA… Let alone when one considers the total USA debt… which is nearly 5 times GDP!
        A super Deutschmark zone would sink Germany, economically, so it is curious that those who claim to take care of Germany, advocate it. But then maybe terrorized Germans would make more children?
        Seriously, France and the Netherlands would be plenty strong enough economically to replace Germany completely. In any case, this is like shooting the breeze, because there are enough sane Germans left to stop the non sense, at some point.


    • Patrice Ayme Says:

      Dear Jo: I do not see why to threaten plutocracy with, say, a 20% euro devaluation, is the end of the world. To keep on surrendering to plutocracy, though, certainly will lead to the end of the world. So, if Merkel and Sarkozy were not, just as Obama is, serving their true masters more than democracy and common sense, they would fight back.

      My basic observation is that plutocracy hates the EU, which it considers dangerously not at its beck and call. Never mind that the EU we have is so friendly to the wildest capitalism: it’s not enough. As far as plutocracy is concerned, it would be better if boy Geithner, and similar lying Pinocchios were in charge all over.

      Plutocracy sees Europe in difficulty, a dream come true, and calls to kill it. Now. Plutocracy has this in common with Evangelical Christians that it calls for the apocalypse.

      Merkozy has called for the financial transaction tax, a necessity to save the world from the tyranny of the basest instincts of an army of financial crocodiles. Plutocracy said niet. I just say that Merkozy ought to remind the plutocrats that they can sink their main basis of operation, the machine of Wall Street called Washington. That’s all. At some point one has to draw the line. But Merkozy is trying appeasement.

      According to the theory I subscribe to, Hitler was, to a great extent, a tool of Germano-Anglo-Saxon plutocracy. So plutocracy was the problem, even then. It’s back. It has to be crushed again. And the sooner, the better. Same as with Nazism. Same disease, Pluto unchained, same remedy: a greater force. Time to finish the job.


    • Patrice Ayme Says:

      Dear Jo:
      My argument all along has been that bank generated capital flows (in other words loose lending from the usual suspect plutocrats) caused the crisis. They went in like a flood, they are getting out, like a tsunami.

      This is supported now by honorable weathervane Paul Krugman (September 23) commenting approvingly a study by the aptly named Kash Mansori: http://streetlightblog.blogspot.com/2011/09/what-really-caused-eurozone-crisis-part.html

      Thus the EuroZone crisis is not about the bad behavior of bad countries, but bad behavior of all too plutocrat friendly politicians in the highest places letting the banksters having the run of the place, in conspiracy with other pseudo-investors (and many of the major lenders were not in the EuroZone periphery! Or say, insurers of lenders, such as Lloyd…)

      Thus, the people of Europe, including Greece, have not much to do with this mess, and should not let their currency be destroyed by those money-changers. The euro is an insurance against war, including the enabling of the sort of ugly nationalistic mood we see reappearing in Germany including from people who should either study history, or go back to Vietnam, as the “Vice Chancellor” probably should if he is going to keep on uttering statements such as:

      “re-establishing the affected state’s ability to function, perhaps with a temporary restriction of its sovereign rights”.

      Does he mean to send the Wehrmacht?

      By the way, Hitler was not German born, either. Not a problem for me, but apparently a problem for him, and the other one. Those who are anxious about their patriotic appearance, want to exhibit their patriotism by indulging in patriot acts… let’s be clear: I have advocated a Greek default, to spare the Greek population, and EuroZone taxpayers. It has nothing to do with, it is the opposite mood from attacking the Greeks by throwing them out of the EuroZone, or “restricting their sovereign rights“>.

      Preventing the restriction of other people’s sovereign rights is precisely why the euro exist. Preventing war is why the euro exist. The euro exists precisely so that the ugly mood of the Vice Chancellor cannot be expressed.

      The euro does not just exist to give Germans a greater purchasing power.


  4. Jo Says:


    Countries are not children left alone with a gun to play around while the grown ups are on holiday, but responsible actors with access to a wide variety of ressources. If (!) capital inflows are an important part of the problem as the study you fund suggest, it is still the responsibility of governments to channel and/or stop these inflows by the standard policy means available as part of their macroeconomic stewardship of their countries economies. Problems associated with capital inflows are not a new phenomenon (see Asia in the 90s and 2000s) and their inflationary effect (not relevant within the Eurozone framework) and tendency to lead to the development of asset bubbles, particulary real estate bubbles, is well researched and should have been a concern for policymakers particulary in Spain and Ireland. Krugman mentions this article because it seems to support his anti-consolidation pro-stimulus position, as structural deficits are not portrayed as a major factor for the current sovereign debt malaise. But we are now (!) confronted with massive structural deficits in many countries in the aftermath of the crisis as it has now become brutally obvious for countries like Greece, Portugal and Spain that the amount of government spending arrived at during boom times is not sustainable in an environment where the bubbles, inflows and cheap credit, that seemed to allow this spending, have evaporated. The structual deficits of TODAY have to be tackled, the question of the sustainabilty of government spending pre-blow up – on top of the tide so to speak – is irrelevant at this point. Responsibility lies within the governments whose inaction on the one hand and opportunism at the other led to this point and – as they are their representatives – with the populace that voted them into office.

    However I still fail to see how a devaluation of the Euro would solve anything or serve to “punish” what you call (with some right) plutocracy. Some of the downsides I have mentioned in my first post, could you list some upsides? Let’s imagine I’m an technican working for Alstom in Belgium and a nurse working in a public hospital in Austria, how will I profit from a central bank controlled devaluation of the EURO from currently 1,36 to 1$ and how will, say, Lloyd Blankfein suffer form it?

    I have read your earlier essay where you expressed your support for a partial default of Greece. Well, you have arrived at the German position (total default March 2008, haircuts for investors 2010). Now, you only habe to convice the French government of the wisedom in such a step. However it seems that French banks have a higher exposure and/or lack of capital than publicly admitted so that Sarko is not in favour of it and convinced Angie – afraid of seeing France go tits up and Germany joining it right after – to commit to a strategy of keeping Greece afloat “under any circumstances”. Nobody knows exactly whats going on, but my best guess is, that the two of the them have agreed to play on time, in the hope that certain institutions can deleverage and the threat of contagion can be handled. Who knows. What’s certain is, that Greece eventually is going into default one way or the other.

    The mood in Germany is very much anti-bail out, as it is in France, the Netherlands, Finnland, Austria and Slovenia btw. But this is very much different from a mood of “ugly nationalism”. You can’t read German and you have consequently no feeling for the sentiments prevalent within Germany, so stop projecting. I still remember how different my picture of France was before i started to learn the language (for the most attractive of reasons).

    Best wishes


    • Patrice Ayme Says:

      Thanks Jo!
      That I cannot read German is neither here nor there: if I could, I would not have the time. I have instituted a recent cult of reading the French press, but it’s pretty much restricted to an abstract of Le Figaro, and not even everyday.
      But I am very interested by what you say the Germans feel and think, because as I said, I have no time. At this point I specialize in Americans. I have been exasperated by the Vice Chancellor, and in my next essay, I recommand he goes to abrogate Vietnamese sovereignty (a joke that will be explaice to most readers in the next essay; OK, it’s somewhat racist, but he started it, big time, and I am not Vice Chancellor, so, even if I were culprit of hate speech, as he is, against democracy, I am not representing a state)…
      In France the anti-bail out mood is 68%… Merkozy is obviously using the occasion to reform Greece, on this, they are right.

      My main drfit was extremely supportive of their efforts, actually: I was just pointing out that they can use a euro blackmail. They can tell Obama: give us the Financial TransactionTax, now, or we peg the euro at (say). 1.30. If you have not tried to pass the FTT by October 31, we peg the euro at 1.25. Then we will peg it down .01per week, or something funny.

      Countries are not children? Apparently Obama, having read by blog came in with the exact program: nationalizations of banks, FTT, etc. But the Summers-Geithner-Rubin (pulling the strings of the preceding plus 2 others in the WH), just lied, and implemented nothing. Obama is a child.

      Another child is Sarko who is going to have a big surprise in his re-election. French justice is on his tracks, and if things go at the rate they are going, he will have zero chance of re-election in 3 months… For the capital riptide problems, see http://www.nytimes.com/2011/09/23/business/spains-banking-mess.html?src=recg…I will talk more about it next…


    • Patrice Ayme Says:

      Dear Jo:
      Two more things:
      a) what you said below is entirely correct:
      “it is still the responsibility of governments to channel and/or stop these inflows by the standard policy means available as part of their macroeconomic stewardship of their countries economies. Problems associated with capital inflows are not a new phenomenon (see Asia in the 90s and 2000s) and their inflationary effect (not relevant within the Eurozone framework) and tendency to lead to the development of asset bubbles, particulary real estate bubbles, is well researched and should have been a concern for policymakers particulary in Spain and Ireland.”

      However, I would say that if a French or German bank endangers Franco-Germania by lending to the real estate company building the airport to nowhere in the middle of nowhere land in Spain (a real case!), that’s more a problem for Franco-Germania than Spain.

      France so far had to nationalize no bank, differently from UK, Belgium, Germany… I am not super impressed by the manipulative tricks of the usual suspect, that is why I propose to threaten them with their own game. Was not that what Krugie boy proposed for years?
      And what of Obama’s tricky doubling of export in 5 years? Why don’t we export the same policy to them? OK, you gave excellent reason why not. But let’s not confuse accomodation with appeasement. Hitler did not just happen: it was grown in the fertile soil of encouraging his ever more dreadful behavior. Yes, “it”. It was a disease, and it can recur, at least in the USA. (I doubt Germany will be a problem after Roesler’s rights have been abrogated..)

      b) German was my second live language, and I studied it formally five years. I have been known to read physics in German…
      Heil Myself!


      • Jo Says:


        My advice: don’t waste your time on writing anything about Roesler. At this point he has become increasingly irrelevant. He tried to improve the poll ratings of his struggling party (the Berlin election was coming up – Berlin has the status of a federal state in Germany) by playing the tough guy on Europe. The electorate saw through his maneuver with the result that his party (with 3% of the total votes) was kicked out of the Berlin parliament.

        Public sentiment in Germany is still very pro-europe. He made the mistake of mixing up the opposition to bail outs with a general anti-europe feeling and got slaughtered in the election and ridiculed by the other parties, even by his coalition partner (Angies crew).

        Sadly, we will not see anything like a transaction tax enacted in the US in the near future no matter what. However it will be very interesting to see if our two (anti)heros can enact this tax in the EU or the Eurozone while the UK is in strict opposition to this effort. Currently there is a strong anti-european movement within the conservative backbenchers, while the liberal democrats are still rather pro-europe and Cameron has taken a position of “practical euro-scepticism”. Will the transaction tax lead to a showdown in Europe, forcing the UK to finally make a choice long postponed? We will see.



        • Patrice Ayme Says:

          Dear Jo: Thanks for the advice! I would follow it with pleasure, but I already wrote a section on Roesler in my next essay. He suffers from the Kaiser-Hitler-Sarkozy-Obama syndrome of proving by outrageous pseudo patriotic acts that he truly belongs.
          I am happy to learn he was kicked out of Berlin.
          The American leadership, or lack thereof, is getting ever more pathetic: see Obama and Palestine, contradicting the Nov 29, 1947 UN resolution, the very modus operandi of the UN, and even stuff he was saying a year ago. Obama is short circuiting.
          That is why I say Wall Street-Washington has to be blackmailed into the FTT. The FTT is crucial pillar to reform the world economy back to health. WSW understands only force. Obama’s export policy is too plutocratic and too destabilzing to the rest of the world economy. Now he discovered there are bridges to repair, inside the USA. dozens of billion of dollars of bridges…

          Getting tough with London in matter of finance is a necessity. Work too dirty for WS was made in London (see AIG)… Right now England is suing the Eurozone because of new EZ regulations, which would weaken London. Well, the UK can adopt the euro… Although, oops, clearly the British deficit is too high. Much higher than Greece…


  5. Celina Says:

    Cher Patrice,

    This link belongs more properly with your speculations on physics, but in a hurry and expect, if you haven’t come across it yet, you’ll want to see this claim by very professional experimental physicists concerning observation of neutrinos at slightly transluminal velocities:


    There is even a link to the research paper on archivX for the public to download as a PDF.




    • Patrice Ayme Says:

      Thanks Celina:
      Fascinating indeed. I looked at the paper, but could not ascertain their (statistical) timing method. Anyway, the experiment will be repeated. The Gran Sasso used to be the butt of jokes, but no more. And that neutrino gun from CERN is really something… I guess there is some mental life remaining in old Europe…

      Several of the leaders of the enormous multinational effort are French and work at CNRS (a research institute without equivalent in UK or USA, but sort of like Max Planck institute in Germany).I will allude to the context in my next essay (which is a continuation of the crisis study, with more weight to what happened to Athens 23 centuries ago)

      Let me just say this, and that I have said many times in the past. Some of Einstein’s logic about light and time is closer to faith than rigor. I got an interesting idea on the subject yesterday (which I know was not published, at least in the classical texts).
      I have long thought that Quantum Physics contradicted Einstein’s vision of time…


  6. SM Says:

    Hi Patrice,
    I’d love to see the ECB start printing money; if targeting exchange
    rates was the story that could convince them to start, fine. In fact,
    a mutual round of devaluations in all the major economies would be
    great. (Except for whoever jumps last — like France and the gold
    standard, eh?)


    • Patrice Ayme Says:

      They don’t need to print anything. Just use existing euros, and buy dollars with it. OK, once the ECB has no more euros, print. Indeed. At this point, as you point out, with refined knowledge that few are aware of, the European Union is playing France in the 1930s… Got to be a habit…


    • multumnonmulta Says:

      SM&Jo, the idea is a concert of the western economies to bring Asian currencies and western folk where they belong, respectively and relative to each other. Revaluation is NOT inflation–you keep the same amount of money in circulation (contrary to the US cries for stimulus. The Alstom worker becomes more competitive relative to the, say, S. Korean one. For the European nurse will be more expensive to buy Asian manufactured stuff.

      The American call for capital infusion can in effect lead to the result of devaluation in the dreamy world of Ben Bernake–things can and will most likely spin out of control, read inflation/stagflation. Besides, I am afraid we in the US have lost our legitimacy for stewardship.

      The other two overarching issues are: globalization and the complexity of our societies.

      Now, to return the the devaluation suggestion, how can you devalue unilaterally, by buying Dollars or Asian currencies? The future might have arrived, it’s just that we are a bit late in seeing it…


  7. Europe Trapped By Masochism, Intellectual Laziness? | Patrice Ayme's Thoughts Says:

    […] Syriza, a Party in Greece, threatens to win elections on January 25. Its leader has announced Syriza was not a danger for Europe, but that Merkel was. His views are those I long held within these pages. “To Save The World, Devalue!” […]


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