Decapitate Plutocracy

BY DECAPITATING THE WRONG PHILOSOPHY

Guillotine The Obsession With Making The Gold Man Richer.

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Abstract: Plutocracy and democracy are, by definition, incompatible. I give perspective on how and why decapitating wealth would help to restore civilization. I answer a question from one of the commenters on this site, Old Geezer Pilot: …“if the 99% were to CONFISCATE ALL THE WEALTH of the 1 %, would it amount to very much?”

In financial wealth, it would amount to only 42% (in the USA). In philosophical and civilizational import, infinitely more. It would change the atmosphere of civilization. From unbreathable, to life sustaining.

One cause of the Greater Depression is economic inequality, which has risen to the level of the late 1920s. Economic inequality, in turn, has led to strident philosophical and even cognitive imbalances. In part because that is the ecology wealth needs to survive, in part because wealth bought universities, and the media (even in France, see below).

Mad bull plutocracy needs to be decapitated, before it causes further mental imbalance to civilization. So what would confiscation of the properties stolen by the plutocrats bring? Well, it would bring a change of mood, back from worshipping the Golden Calf, plutocracy, back to democracy.

Trashing the Goldman Calf is not just important philosophically and emotionally, it’s even important for daily life. officially, since 2008, the west has spent 8.9 trillion dollar on private banks, while cutting everything else, including fundamental scientific research (something neither India nor China has done, quite the opposite!).

The coming victory of the French Socialist party will change everything. Hollande declared that: “My true enemy has no name, no face, no party. He will never stand for election and will never be elected. Despite all this, he is in charge. My enemy is the world of finance.”

paris-gargoyle

To think well, don’t forget the Dark Side (view from Notre Dame Cathedral. Paris).

This ought to remind Obama that, having governed as if he were Romney, complete with Romneycare, there is little incentive for those who wanted change to go vote for Romney again, so they may well stay home. Just to whine that the real Romney is more scary, may not carry the day.

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FRANCE: HEADING OUT OF PLUTOCRACY IN 3 WEEKS?

Spanish bulls for corrida are from a special, hyper aggressive breed. I saw a funny scene on video: a bull came into the still deserted arena, totally fuming. He was furious to have been deported from the wilds he enjoyed the last few years. So he charged, at an amazing speed, in such a straight trajectory that he hit the wall on the far side of the arena without deviating or slowing down any. His head went one way, its body another, and he flipped upside down in the air like a crepe.

There it laid in the sand, half dead. This is a good metaphor for plutocracy. it will not stop, it makes no sense, it is just inhabitated by Pluto. Trying bipartisanship with that, it’s Sarkozy and Obama. The former may soon jump from the Elysee palace to a judge’s hot seat.

That soon to be ex-president of France, Sarkozy, is in the same spiritual family as Thatcher and Reagan: be ever kinder to the rich, they will employ you.

True enough: ex-British PM John Major made a fortune working for the Carlyle Group, an international arms’ and financial conspiracy that makes the interface between corrupt Western politicians, the wars they organize, and the banks they feed. Tony Blair’s immense fortune is entirely made of pay-backs for his work on behalf of international plutocracy. He shows up at hedge fund, they give him enormous sums for opening his mouth, that’s how he does it. No prostitute was ever so expensive.

Same for Bill Clinton. It is thus difficult to wag the finger at Putin (who does the same, while not even waiting for the end of his rule, which, he announced modestly, will be around 2024).

Putin has to do the work all by himself, he cannot depend upon the vast pre-existing network of Western plutocracy, going all the way back when Hitler was just a wet dream, JP Morgan had, when he plotted with his young pet, the German Schacht, a quarter of a century later, one of Hitler’s creators. (Yes Schacht, one of the great criminals of history, was exonerated by the Nuremberg tribunal, although he had to attend that formality.)

The brother of the French president, Olivier Sarkozy, heads the Carlyle Group: international plutocracy is well organized. Sarko, bro of Sarko, is immensely rich.

In three weeks, Mr. Hollande, the candidate of the Parti Socialiste will be elected president of France. He will raise the top margin tax rate to 75%, he will yank the French army out of Afghanistan. That’s going to be a shot across the bow of world plutocracy. A little shot: the top USA tax rate under president Eisenhower, was 92%.

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DOES FRANCE MATTER? YES, BUT WAS MADE INTO A PLUTOCRATIC TROJAN HORSE WITH EMU:

Cynics will laugh that one has seen that movie before. Mitterrand was elected in 1981, in the teeth of Thatcher and Reagan’s revulsion back to stone age (still unfolding, as the crash that never ends). Mitterrand, a pseudo socialist, ex-Vichy, soon had to revert to smaller objectives.

Mitterrand supported Thatcher on day one about the Falklands, while Reagan dithered, and had nothing to offer. Mitterrand trained the British military against the French weapons Argentina had, Super Etendards, Mirages, Exocets cruise missiles.

The British knew how dangerous Exocets could be: they had the world’s largest stock of them.  Mitterrand gave secret codes and counter-measures, secret factory stuff. During the war the Argentines were very courageous, and capable, but often of their weapons mysteriously failed at the second of impact. Many British ships got hit with bombs that did not explode. Even the warhead of the Exocet that sank the Sheffield did not explode.

It’s highly likely that, without the secret French help, enough of her Gracious Majesty’s Navy would have ended at the bottom of the Atlantic to make the recovery of the Falklands, a really ugly affair. Lady Thatcher owed the “Sphinx” (Mitterrand). So she consented to the tunnel under the Channel, and, more importantly to the Single European Act. She also did not obstruct the European Monetary Union (EMU), probably Mitterrand’s greatest achievement.

Little did Mitterrand realize that the crafty plutocrats had infected the architecture of the EMU completely with the poisonous idea that they, the plutocrats, and they alone, could finance the EMU. And that they, and they alone, could be financed by the European Central Bank. Somehow, they imparted upon their victims that the notion that putting banks in control of the states was the most moral, most economically correct position.

That nightmare had been put in place by French socialists viewed at the time as very smart (such as Jacques Delors, Mitterrand’s finance minister, and then grand master of European construction, making Thatcher eat in his hand). In retrospect those French socialist experts were, at best, incompetent fools.

It did not struck them that the initial law passed in France in 1973 prevented the Banque de France to finance the Treasury, was passed under president Pompidou. It’s similar to Obama and his democrats not being alarmed that the health law they pushed for was a product of the right wing Heritage Foundation, and his Romney (a “private equity” quick buck artist).

Pompidou was hired in 1953 by Guy de Rothschild to work at the bank Rothschild. In 1956, Pompidou was appointed the bank’s general manager, a position he held until 1962, when president De Gaulle  made him Prime Minister. This Pompidou banker became president in 1969. Naturally enough, he passed a law that has now subjugated all of Europe to the banks’ good will.

Except Britain, where banks have been nationalized in 2008.

And the French socialists understood nought, and still don’t seem to have. The socialists instituted their European welfare state as a wholly subsidized subsidiary of the banking sector. Obama seems to harbor a similar hope. The advantage is that, doing so, one does not antagonize plutocracy. The disadvantage is that history will know one was on the Dark Side, someday to be judged as roughly as the Roman Principate.

Even more remarkably, the mystification of plutocracy as socialism, economic and moral rectitude, keeps on going.

There was a debate of the ten French presidential candidates against a panel of journalists, one of them, Longlet, specialized in economy. Marine Le Pen, the National Front candidate complained that the Banque de France had lost the ability to buy treasuries. That ought to be a well known fact, at the core of the European sovereign debt crisis.

However, unbelievably, the economic journalist told her dismissively that buying treasuries would make France into Iran, or Zimbabwe. Le Pen, a lawyer by training, correctly told him that buying treasuries with its central bank was exactly what the USA has been doing. Instead of admitting that this fact was indeed a fact (that’s called Quantitative Easing), the economic specialist scolded Le Pen for knowing no economy. That Longlet was obviously paid for being lying so outrageously.

Another candidate, the highly educated Cheminade, made charges similar to le Pen, and all journalists ganged up on him because they said he had claimed that some in Britain and the USA had supported Hitler. They told him, and dozens of millions of watching French viewers, that he was a lunatic to entertain such notions. (reminder: Great Britain signed in 1935 a treaty with Hitler that explicitly violated the Versailles Treaty, as it allowed Hitler to rebuild a Navy and expand to the east, in exchange for setting up a trilateral trade system between Britain, the Empire, and Hitlerland).

The next day,  Jean-Luc Mélenchon, the most prominent candidate of the three from the “left of the left” is Le Pen’s fiercest adversary. She had walked off a debate with him a few weeks before (and he passed her as the third most popular candidate as a result; together they pull more than one third of the electorate!) However, confronted to the same journalist gang the next day, he condemned them for lying to Le Pen, and all of France about the Fed. Yes, Mélenchon said, Le Pen was right, and you were wrong. The gang did their best to change the conversation.

I was left with a weird impression: here were ten candidates, from the extreme right, to the extreme left, and none of them said anything really outrageous (OK, Philippe Poutou admitted that imprisoning bosses was a past time of his; but, in France this is a time honored tradition). However the journalists were deeply outrageous: they supported the established order, national or international, tooth and nail, and even provided Hitler’s sponsors with the shade they have always enjoyed.

Just as no Anglo-Saxon super capitalist could have ever helped Hitler in any way, according to those media super stars, it was also Zimbabwean for a national central bank to lend a dime to the national treasury.

Believe it or not, this is the conventional wisdom in Europe. Years ago, I was kicked out of a web site called the European Tribune, because I opposed these views. The site was managed by a highly successful, you guessed it… banker, and plenty of his colleagues on the site were enraged as I evoked all the American banks which financed Hitler, and how the USA government seized German property after WWI, to redistribute it to its plutocratic friends, and their German interface came to be known as the Nazi Party. (Conveniently the building where the records of the transactions were kept burned down: who needs fiction, when we have reality?).

Mélenchon accused the journalists to received outrageous salaries. My personal impression was worse: they are clearly paid by the financial plutocracy to utter counter-truths. All of this, notice, in France. it is of course much worse in the USA or briatin. Actually the Guardian ran an article on how scandalous it was to see Philippe Poutou, and his kind on TV. Whines the Guardian about these terrible things, equality and democracy:

“…why the equal billing?… We are seeing a lot more of Poutou, candidate for the New Anti-capitalist party, these days thanks to one of the quirks of French presidential elections that means as voting day approaches, a law kicks in giving every candidate equal air time on radio and television. It’s not just the length of time they’re given, but the quality … meaning no shunting the no-hopers off to midnight slots… Poutou stands no chance of being elected, and doesn’t want to be. Like the other no-hope candidates he is using the election to air his party’s political views..

In the USA, there are no democratic “quirks”. Hope is for sale, after being bought. Actually, there is just one party, the bipartisan party, and the president lauds it. Plutocrats give more money to whom they favor, and, in 94% of the cases (House of Representatives, Senate), the candidate who spends more get elected. In 2008, for the first time since public financing of candidate existed, a candidate refused to it, to gather much more money through private donations. That was Obama, and he out-spent, not just Clinton, infinitely, but his final opponent two to one. Wall Street fat cats financed Obama massively, while Obama  hid behind millions of tiny contributions to claim it was not what it appeared to be, whatever it was (personal disclosure: I did finance Obama massively; however, to my dismay, I found out he preferred to socialize with the meowing fat cats; differently from me, they have millions to offer him, after he gets out, if he is a good boy, and that is apparently what he prefers, following in this the despicable Bill Clinton).

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1930S: WHEN “DEMOCRACY WAS FINISHED

The other time France went against the grain was in the 1930s. France refused to let her central bank allow banks to create massive money (a policy that was replicated as the ECB’s vicious mandate). All other leading countries did the opposite, and the Great Depression hit France longer. Economics were secondary, though, as everybody could see that another war with German fascism was looming, and war preparations were more important.

By 1936, France elected Léon Blum as socialist Prime Minister. A socialist of Jewish ancestry was the perfect answer to Hitler’s anti-Judaism. Blum passed a lot of far reaching legislation later adopted throughout the West, and now the world. 

On his second time as PM, in 1938, Blum sent heavy weapons to the Spanish republic under assault from the fascist conspiracy. However it was too little too late. American plutocrats, such as the oil company Texaco, had been supplying Hitler’s and Mussolini’s armies invading Spain. It was difficult for France to fight Germany, Italy, a rebel Spanish army, and, basically, those who ruled the USA. At that point, having got rid of its strong pro-Nazi elite, Great Britain was becoming more aware of the necessity to align herself with France, instead of the sort of plutocratic  propaganda of the American ambassador, Joe Kennedy.

Said Joe, on the record:”Democracy is finished in England. It may be in the USA.” Plutocracy at its best. The guy was obsessed by becoming the first Catholic president of the USA.

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WHEN SOME OF THE RICHEST JEWS NOURISHED NAZISM:

So are we getting in a similar situation? Yes, and no. Yes, in the sense that plutocrats, hysterical at the sight of one of the leading countries freeing themselves from subjugation,  are going to do their best to sabotage French socialism, in the hope to stop any momentum that way in other countries. This is what happened in the 1930s.

However this time is different. In the 1930s France, from the People to the secret services, was well aware of the conspiracy between international plutocracy and fascism (some, even in France, loved it; many of these traitors met their demise in 1944-45, when dozens of thousands were executed, more than were during the French Revolution of 1789, or the Commune’s annihilation). The secret services tried a sophisticated operation to expose the connection between Nazis, international financiers and industrialists, and even Jewish-American billionaires. That Simon Warburg affair backfired as Dutch “justice” ordered the book destroyed, worldwide (only one copy survived in Switzerland).

To this day a colossal amount of disinformation exists about the Warburg family. Although some facts are in plain sight: two of his members, for example, served on IG Farben’s board.  IG Farben was the giant Wall Street created chemical monopoly that was behind Hitler, Auschwitz, and Zyklon B. It was part of a giant conspiracy set-up by Wall Street to turn around the anti-monopoly laws of Teddy Roosevelt, with the full support of the government of the USA.

The conspiracy behind Nazism boggles the mind. It extended, it extends, well after the death of the participants. In a few days I will be in Washington’s airport: it’s named after one of the main Nazi collaborators in the USA: the Dulles brothers. Now celebrating Martin Luther king’s dream is excellent, but celebrating it too much leaves no passion to condemn the implicit celebration of the triumphant duplicity of the supremacist Dulles. In other words, the martin Luther King cult, poorly executed, becomes a cover-up for the plutocracy underneath. MLK would have been the first to call attention to that.

All of this shows the importance of moods.

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THE 1% IS NOT THE PROBLEM, THE .1% IS:

Another point, and very practical: the 1% is not really the problem. The bottom half of the 1% retire on a post tax income roughly equal to the average family income in the USA. Most of them have worked very hard all their life on a post tax income of around $250,000, out of which they can invest at most $100,000, as they live typically in expensive area where it cost $150,000 to live in mediocre life (try to live in New York or San Francisco on $150,000: you will live less well than with $30,000 in, say, Montana).

The real problem is the top .1%. Their worth is above 100 million dollars. They can go anywhere, borrow for nothing (their preferred method to avoid tax). They use tax heavens, worldwide. They go to politicians, tell them what to do. To illustrate, see Barak Obama using Warren Buffet as a piece of his brain (Obama is now going around in circles with what he calls a “Buffet rule“, which says that the richest of the richest shall be taxed at 30%, half the upper margin rate of the upper middle class).

To defang the top .1% is very simple: index the capital gains tax on income (and in particular so called “carried interest“). Leave it as now for less than a million dollars, and then bring it up to 90%. also make tax heaven unlawful.

Some say that the rich would leave if taxed and hounded throughout the West. Where? China? Siberia? Iran? North Korea? Mars?

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PLUTOCRACY IS NOT JUST A CLASS, IT’S A MOOD, AND A HOPE:

Old Geezer observes and asks: The 1 % have treed the 99 %. So, I ask as a thought exercise, if the 99 were to CONFISCATE ALL THE WEALTH of the 1 %, would it amount to very much? Other than making us all feel better for seeing justice done, would there be much of a change? I am asking this question because I really don’t know the answer. It is NOT rhetorical.”

Excellent question. Confiscation will address vengeance and justice. Redistribution of property can have also a very positive effect on the economy, and on society.

The reason why Che Guevara failed in Bolivia is that he had not weighted enough the impact of the redistribution of land that happened in Bolivia in the 1950s. Thus the proletariat was not anxious to support him. Redistribution did not happen in Rome when the Gracchi asked for it, but something a bit like that happened under Tiberius (among the middle/upper classes). Tiberius intervened with national banks created for the occasion.

Morality: we should not believe we have nothing to do with imperial Principate Rome. By the way only 52 individuals were executed in Tiberius’ times for treason. Many were obviously very culprit, in a sordid plot, more than a decade long, that resulted in the death by poison of Drusus, Tiberius’ son. The crime was found out only 8 years later. 

Confiscation can have two dimensions:

1) confiscation of wealth

2) confiscation of power.

Wealth is power, but not all power is under the form of confiscable wealth. When Putin reigns as a tsar, he uses his power. His considerable wealth is for his retirement.

Both wealth and power need to be confiscated from the plutocrats. The top 1% owns 40% of property in the USA, observes Stiglitz (Nobel Prize eco 2001). They leverage that into enormous power because they completely dominate intellectually the representatives of the PEOPLE, and the media class. .

The foremost positive effect of confiscation would be to change completely the philosophical guidance of civilization.

Take health care, USA. Obama claimed his plan, Obaromcare, is about insuring 30 million Americans not insured now. Sounds good, but not fixing the main problem, and that is the health care plutocracy, and it sucking ever more of GDP. The plan was mostly devised for those. So Obamromcare was an elaborate con job.

Look at the banks: nine trillions were given to the managements that caused the crisis, or their brothers, to invest more into “financial products”, and keep the hedge fund “industry” afloat.

So was Afghanistan: first of all, a profit for the military-industrial. So, in France, was Sarkozy cutting the taxes on the hyper rich. (Instead of having an industrial policy, as Merkel had.)

In all these abominable plots, one sees that the overall philosophy was that making the rich richer was a meta-value: from it all goodness will flow. Once that philosophy, that the key economic strategy is to make the rich richer is guillotined, one can put a completely different philosophy on the throne.

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Patrice Ayme

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43 Responses to “Decapitate Plutocracy”

  1. Jens Says:

    Dear Patrice,
    whether Hollande really wants to or is actually able to fight the banks remains to be seen. You rightly point out that it is the .1%, and not the 1% that is the problem. But what then, is the point of the 75% income tax? It will do nought to the .01% that currently have an open door to the Elysée. Although I agree that the first step is to shut that door, but I don’t see how the 75% tax rate on income is anything else than political horse trading.

    As for where the wealthy will run to? Singapore (they have no capital gains tax), which, as Lee Kuan Yew’s dream of being a part of a federation with Malaysia finally comes true, is the capital of the new country ASEAN. Though in practice, only some rich run to another country while many chose to stay regardless of tax, shame can be a powerful motivator.

    Capital gains tax must be streamlined over all jurisdictions, fair enough, but at what level?. You claim that income over $1m should be taxed 90%, yet I would be more than happy if one could actually manage to charge them 30% all over the world, if so, US federal tax income would increase about 10%, allowing a basic income programme with 50% more money than the current social security. Solely relying on tax to chop the head off of the plutocracy is not the way to go, other measures like democratising money (basic income), democratising education (independent schools), democratising nutrients, combating propaganda (advertisement) by organising consumers are other measures that could be just as important to achieve lasting change.

    Also I am very sceptical of all government spending (except healthcare, which in the US should be nationalised) that is not simply giving money directly to the people.

    Jens

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    • Patrice Ayme Says:

      Dear Jens: Healthcare is nationalized in Canada, UK, Sweden, among others. However Germany (oldest: Bismarck) and France have different systems. The French system would be the one easiest to morph the USA system into.
      In France, there is a single payer for basic healthcare, Assurance Maladie. Although under democratic control, it is independent.
      My suggestion to Obama was to morph Medicare in a form closer to Assurance maladie, by decree. That would have been consitutional, and would have taken 5 mintes at the White House, one day in Congress. at the limit, Medicare For All could become exactly like Assurance Maladie.
      end of story, no need to nationalize anything.
      PA

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    • Patrice Ayme Says:

      Dear Jens: The banks are actually state companies. They are living off the state, everyday. When big banks were nationalized in the UK, there was not a squeak. Most people did not even notice. France, I mean Hollande (confusing: hollande used to be where france was from…) is thinking of imitating USA legislation. Could pose a problem inside Europe, but, well, heck, France is France, and Europe her garden… BTW, Monaco is a fake state… So, to some extent, Ireland, or Iceland. The EU could return Ireland to potatoes anytime. Iceland talks big, but the UK insures its defense (although the UK and Iceland were at war twenty years ago: Iceland did not exactly win…)

      Power in the service of goodness is goodness, not just power.
      PA

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  2. Old Geezer Says:

    Thanks, PA, for answering that question.

    42 percent.

    Of what? Cash? Realestate? Stocks? Bonds? Mortgages?

    And how much is that in US Dollars?

    Jens’ comment is well taken. These folks are not about to stand around like sheep when they spot the shearing machine. Real estate is probably the only thing that cannot be beamed to some Cayman Island shelter. The reason the Mittster pays so little tax is that the Congress set the carry interest exemption. Very likely, the hedge hogs actually WROTE the legislation.

    And made a hefty contribution to its sponsors.

    In the 50s, the top income bracket was 91%. Cap Gains were taxed as one half yout income, unless the stock was held for more than 6 months in which case it was one quarted.

    As a boy, I used to be a messenger, running those shares around lower Manhattan in the morning, and picking up enormous checks in the afternoon. It was all done by hand. I even changedout the ticker tape roll.

    Now, the average trader holds the average stock for ELEVEN SECONDS. There was a “flash crash” a few years ago when the programmed trade algorithms falsely interpreted some trader in Kansas City who liquidated his entire position in one stock the wrong was. The DJIA dropped 1000 point in 2 minutes. This is the kind of Casino we have before us.

    How to regulate, much less tax such a beast?

    Perhaps we should have the Marines invade the Cayman Islands.

    Like

    • Jens Says:

      Dear Old Geezer,
      A tobin tax of, lets say 1% of any sale of shares would effectively wipe out day trading. And if capital gains taxes were harmonised across the world at 30%, we would increase tax receipts incredibly.

      But if capital gains tax were at 90%, it would force tax competition between jurisdictions. And even if that didn’t happen, people would simply not realise their capital gains personally, but let a company they owned do it at the corporate tax rate of 30%, while never selling their own company. If you want a 90% capital gains tax for individuals, you need to have a 90% corporate tax rate. This would have a whole heap of consequences.

      Jens

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      • Old Geezer Says:

        I know. I’m not really sure that high-speed trading is the central issue here. And harmonizing cap gains around the world is a pipe dream.

        Low tax policies are the vehicle many countries use to attract businesses as well as investors. Cayman, Monaco, even Ireland.

        They will never sign up for 30%.

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        • Patrice Ayme Says:

          Old Geezer Pilot: They can be forced to comply. Just set up a black list. Last time that was tried, they all scambled to the grey list. The real problem is that the plutocrats control legislation. That law enforcement would not work is just propaganda, and one can point at the opposite.
          BTW, I know extremely well some people with accounts in Suisse, and I have talked with outlaw bankers who were into money laundering, and proposing to do some more, and how, so I know the law can reach down there.

          Those small countries don’t have marines, nor nuclear submarines, that’s the whole point. The EU and USA cn shut down any country they want, any time. even Israel. The real problem: Western plutocrats, already in command, don’t want to.
          PA

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      • Patrice Ayme Says:

        dear Jens: the trick of never cashing out for avoiding tax entirely is already used in Silicon Valley. Larry elison, Steve Jobs’ family just borrow against their shares as collateral. Zero tax. For the greedy, 15% tax is already too much. all this can be shut down by writing a few lines of tax code. even Obama should be able to do that, if he wished.
        One does not need to bring taxes up to 92% (Einsenhower’s rate!!!!!!)… right away.
        The trading tax is a natural: it’s already applied throughout the economy. First it could be put at a fraction of 1% (already the case in parts of Europe, sometimes, somewhere, for years).
        PA

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    • Patrice Ayme Says:

      The 42% were of total property, including real and financial assets, in USA dollars. For the last year with numbers I think the top .1% made HALF of all cap gains (source: IRS). Numbers of course vary a bit, according to year and source. Stiglitz said 40% for the 1%…
      Sure, the hogs did write whatever. We can do the same too. I know some about investments as an investor, and I was shorn myself by the hogs, so I want to shear them in turn. I know they are bad not just for 99.5% PEOPLE at large, but even for 90% of investors…

      I have advocated a speed limit on trading to reintroduce causality.

      The point about the marines is serious. The leading countries of the West have the military might to invade whatever, and especially the Caiman Islands. The military is still under the order of We The People, not Them The Hogs. if we wait too long, that will change, and then it’s curtains on democracy, for centuries.

      The real problem is that the hogs have set-up for themselves tax heavens in an elaborate exchange policy: Isle of man, Jersey, Monaco, Wyoming, etc. a French can’t use Monaco, but a Swede or an American can. A French can use Wyoming, let alone the Seychelles (Bettemcourt had a private island there, complete with runway, unbeknowst to the French fisc). But the EU and the USA could pass a global law, and say gun boats will be sent to enforce it, end of story. Gun boats are not even needed, an electronic guillotine will do very well on some type of transactions.

      The USA has been very good at terrorizing Switzerland, in the last 3 years. But that capability was used that to push the Swiss sharks away, to replace them by Manhattan sharks… Suisse has fallen down the ranks of tax heavens, the USA (under GNP guise) have jetted up…

      The GDP versus GDP difference is of the essence there. In France the former is 10% larger than the latter… PA

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      • Jens Says:

        Singapore is a different story, and they can’t be forced into submission so easily…

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        • Patrice Ayme Says:

          Dear Jens: The West is the only game in town in Singapore. They use Western weapons, fly Western planes, trade with the West. Who are they going to ally themselves with? Malaysia? China? China is in the West’s pocket too. Simply We The PEOPLE don’t know it.

          Right now the PRC is in the plutocrats’ pocket, but the PRC can turn on a dime, and put its communist hat back on. As the PM basically said this week. We still, We The PEOPLE have all the power, we just don’t use it. But we have to, or we will lose it.
          PA

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      • Jens Says:

        Singapore is a part of ASEAN which are cooperating ever more closely militarily, and the integration of the ASEAN countries is happening at a breakneck and professional pace because it is all organised from Singapore – Lee Kuan Yew wanted Singapore to be a part of Malaysia, but they were kicked out of Malaysia. Until recently ASEAN has been a relatively useless organisation, but economic and geopolitical imperative is forcing them together. If the West tries to bully Singapore with military force they might find 600m people backing Singapore, if not for any other reason than doing otherwise would be to lose face…

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        • Patrice Ayme Says:

          Dear Jens: True ASEAN is growing fast. True they would be bullying us now if we changed our tax laws, and then they accepted all our tax cheats, while we allowed the tax cheats to still participate in the West’s economy. True, some Western money changers have fled to Singapore already, while still doing business in the West. But the West has the power to stop that.

          Indeed enough of all this! As it is, we are cruising towards a world war, because the plutocracy is in power. Why world war? Because, if nothing else (nuclear war with Iran, or Pakistan, or North Korea) at some point the CO2 crisis is going to go so bad that we will have to nuke the coal plants (my funny way to put it). But ASEAN develops on coal, lots of it from Australia. So we will have to confront ASEAN, lest they come to their senses (and that they won’t lest we are very clear, in a timely manner).

          On the positive side, we have the two giants of the area, Japan and the PRC in our pocket at that point. They share our philosophy. let’s ride it while we can.
          PA

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      • Old Geezer Says:

        I wonder what the dollar value is of this 42 %. I mean, if it were totally confiscated (this is a thought exercise, not a call to action), would there be enough money to, say, pay off the national debt, provide universal health care, start a WPA program toward sustainable solar power, etc etc.

        Just how much wealth do the wealthy have?

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        • Patrice Ayme Says:

          Dear Old Geezer: The point I was trying to make in the essay is that their wealth is leveraged into power incommensurate to it. Their number one crime is that they use their influence to misdirect civilization.

          To answer the question directly, the net worth of the USA at the end of 2008 was (still!) $75 trillion or 5.2 times GDP.
          That means the present wealth of the 1% is at least 45 trillion presently, that is, three times the national debt (and more than 4 times that held by the public).

          There are plenty of resources to start a WPA, etc., here, or in Europe. But the plutocrats, at this point, want all resources to be directed towards themselves, or the causes they support, like fossil fuels, or the forever war in the Middle East.

          They are crafty: good grand father Buffet, who has the ear and mouthpiece of the president, is both heavily in government debt (USA, EU), while rating it (as he owns the rating agencies!) Teddy Roosevelt would have screamed a rebel yell, and charge! Those people belong in jail, instead they are worshipped by the spineless, let alone brainless…
          PA

          Like

  3. BM Says:

    Bernard: AH enfin tu le cries haut et fort. Il n’y a pas d’autre solution.

    Like

  4. Jens Says:

    Dear Patrice,
    Fair enough, let’s assume we manage to get a 90% tax on income over $1m. Probably, some people would run off, but let’s say a decent amount of people staid back. What would stop them from not realising their capital gains and remain in control of the functions that ultimately makes democracy a charade?

    Jens

    Like

    • Jens Says:

      Dear Patrice,
      What do you propose to do with companies’ and funds’ capital gains, are they also to be taxed similarly to individuals?

      Like

      • Patrice Ayme Says:

        Dear Jens: I am totally against double taxation.
        So one would have to make sure that does not happen. One has to return to the spirit of taxation: it’s there to share the burden in paying for services one uses, such as the nuclear submarines We The PEOPLE need to siege the Caiman Islands to insure the surrender of tax cheats (disclosure: I have a friend with a mansion in the Caiman Island… He works in finance in the USA, of course).

        The present codes allow a violation of the spirit of taxation, using strategically disposed loopholes.
        PA

        Like

  5. Jacques Richarme Says:

    Jacques Richarme

    Hollande a en effet des chances d’être élu sauf si nous nous souvenons de l’ère Mitterrand ou LES SEPT PECHES CAPITAUX DE LA GAUCHE FRANCAISE

    1°-MITTERAND : la retraite à 60 ans
    (Par une loi, donc difficilement modifiable, alors qu’il était évident qu’un grand choc démographique allait arriver : les autres pays rallongent l’âge de départ !)

    2°-MITTERAND : la 5° semaine de vacances
    (Là encore par une Loi, 1° entorse à la compétitivité des salariés français)

    3°-MITTERAND : création de l’ISF
    (Impôt sur l’impôt, confiscatoire et vexatoire, qui a déclenché le départ définitif de 15 Md€ hors de France : les autres pays le suppriment ! )

    4°-MITTERAND : politique d’immigration incontrôlée et en parallèle création ex nihilo du Front national
    (Cauchemar de la Droite dite républicaine)

    5°-FABIUS : le NON au referendum sur l’Europe
    Avec création du repoussoir du « plombier polonais »
    (Il valait mieux importer des ressortissants extra-européens. Et heureusement que l’€uro est là !)

    6°-JOSPIN : embauche subreptice d’un million de fonctionnaires
    (Avec salaires à la clé, programmés jusqu’à leur retraite)

    7°-JOSPIN : gigantesque erreur économique: les 35 heures
    (Vaste sujet de moquerie à l’étranger, qui se garde bien de nous imiter car, en pratique, la France arrête le travail chaque vendredi à midi et les cadres non exécutifs sont démobilisés : là encore la Loi , au départ, était prévue pour les seuls salariés du privé mais fut vite étendue à toutes les fonctions publiques et le salaire initial a dû être conservé d’où une augmentation brutale des charges salariales de 12,6% : pour permettre aux entreprises privées de survivre à une telle augmentation, il faut leur injecter plusieurs dizaines de Md€ d’aides publiques et ce de façon pérenne)

    D’où viennent des Mds que la France est obligée d’emprunter? des fonds de pension, américains, anglais et autres! Si Hollande est élu, je ne donne pas 1 mois pour que les intérêts sur la simple reconduction de nos emprunts doublent ou triplent!
    Tout ce qui restera à la France et à ses Français est de subir ce que va subir les Espagnols après les Grecs: il faudra alors toucher le fond, NE PLUS POUVOIR PAYER L’ARMADA DE FONCTIONNAIRES ne travaillant que 35 h moins les arrêts maladie (“On s’arrête”! et ce sans délai de carence!), voulant retourner à la retraite à 60 ans (avant les trop timides réformes de Sarkozy,nous avions un vivier d’infirmières mères de 3 enfants, qui prenaient leur retraite à 55 ans et qui nous retrouvions dans le Privé avec le salaire conventionnel…+ leur retraite). Quant à l’âge de la retraite, il faut savoir que feu mon père, revenant d’Allemagne après 5 ans de captivité ne pesant que 38 Kg, n’est parti en retraite qu’à 64 ans et demi. Et que dire de ces ploutocrates de médecins français, dont le départ est fixé à…65 ans. Il est vrai aussi que le travail d’un chirurgien absolument pas fatiguant ni stressant!!!
    Bon dimanche,
    Jacques

    Like

    • Patrice Ayme Says:

      Bonjour Jacques!
      Je suis tout a fait d’accord avec toi que tout cela c’etait des erreurs de la part des socialistes… Les Suisses viennent de voter CONTRE une sixieme semaine de vacances… Ils avaient peur de ce que tu dis.

      Je n’ai personellement jamais aime’ Mitterand. et j’aurais prefere’ Giscard et ses diamants reprendre 7 ans… Mais faut reconnaitre que le Vichyissiste Mite-rat a amene le tunnel sous la manche, le Single European Act et l’Euro. Mitterrand n’etait pas particulierement socialiste, il voulait juste le pouvoir. Il a d’ailleurs demoli le Parti Communiste.

      Je n’aimait pas non plus Fabius.
      Maintenant il semble s’etre assagi.
      Malheureusement je serai a Rome, dans une semaine, donc je ne pourrai pas voter pour mon kamerad Melanchon… ;-(….

      Faire la fable du loup et de l’agneau avec Hollande comme agneau? Le socialiste Schroeder en Allemagne a fait d’excellentes reformes, poursuivies plus tard par Merkel. Sarko n’a rien fait loin des jupes de Bettencourt… Bon, d’accord apres que BHL se soit finalement reveille’ il a tres bien lance’ son chien Sarko contre Kaddafi, comme je l’avais recommande’ des mois avant que BHL se reveille…

      La situation actuelle demande, de demolir les banques comme je l’ai explique’, dans
      https://patriceayme.wordpress.com/2011/09/14/to-save-the-world-please-default/
      en presentant une autre solution la semaine derniere:
      https://patriceayme.wordpress.com/2012/04/09/radical-banking-fix/

      Cela demande de realiser que les banques sont des organismes d’etat. Les pires fonctionaires sont les banquiers, ils s’en mettent plein les poches et font la grand messe a Pluto tous les jours. Ils orientent toute l’economie vers un desastre. Le Premier Ministre Chinois vient d’expliquer que cela se passait meme en Chine. Et que le parti devrait faire quelquechose.

      Comme a dit Jesus, l’homme riche a moins de chance de finir au paradis que le chameau par le chas de l’aiguille. Et surtout si il a tout vole’, comme le banquier, pour commencer… Je suis pour la confiscation de toutes les proprietes acquises par les traders, dans les 10 dernieres annes. Une taxe a 92%, comme sous EISENHOWER aux USA, serait la bienvenue…

      Le frere de Sarko est certainement un voleur et un criminel, a mon avis, et Jesus est tout a fait d’accord. Sarko, frere de Sarko, a fait tout son possible pour que ce genre de gens dominent, il est temps de s’en debarrasser.

      Derniere note: Sarko, un fils d’emigre’, est mon enemi personel, car il a traite’ moi, un francais de souche, et ma famille, comme des etrangers. D’apres ce fils d’emigre’, on avait meme pas le droit de sejourner en France, chez nous. Cela me ferait vraiment plaisir qu’il aille mediter en prison sur ses erreurs a la place de DSK.

      Je remarque d’ailleurs que Sarko a dit qu’Eva Joly etait “mechante” avec lui. Il a pas dit qu’elle avait tort, donc j’espere que cela veut dire qu’elle a raison, et que Sarko pourra aller se refaire une sante’ a la Sante’….

      Bonne votation! (Comme disent les Suisses)
      Patrice

      Like

  6. Bernard M Says:

    Dis bonjour au pape pour moi, mais surtout qu’il participe a la guillotine de la plutocracie

    Like

  7. reverse psychology and propaganda should not exist « JRFibonacci's blog: partnering with reality Says:

    […] Decapitate Plutocracy (patriceayme.wordpress.com) […]

    Like

  8. Jens Says:

    Dear Patrice,
    You have argued your points well and I am now convinced that there is a great need for very high tax rates above some threshold that will catch the super-rich. In fact, that it is imperative to achieve the needed momentum of change.

    However, I believe that taxing work/income is not very smart because for both individuals and society as a whole it is generally a good thing to be working. Of course, extremely excessive incomes have little to do with work and much more to do with shifting wealth towards a very select few, which, as you have explained carry it’s own problems and hence must be taxed. But more regular type of wages don’t have to be taxed, as this is the main activity that keeps our society moving.

    If there is need for a certain amount of taxation, it should in some way be a representation of the ecological impact in the price of a product. This can be achieved by pricing the use of geographical locations, mineral deposits, geostationary orbit locations, portions of the electromagnetic spectrum and ecosystem services (implying that these need some free area to function).

    If a farm works sustainably by being a fully functioning ecosystem, it would need to pay as much rent as a building that displaces the entire ecosystem that was already there before. Roads can divide parts of ecosystems in two and therefore displaces much more ecosystem services than merely the land area they occupy and hence would have to pay higher rent. If someone builds a building they would have to pay for renting the area and the displaced ecosystem services until the building is removed and the land restored.

    Hence long-lasting, labour-intensive things would become cheaper, while short-lasting, resource-intensive things would become more expensive. Getting a pair of solid shoes you can wear for a long time and might have to repaired to extend their life would not be the ‘expensive’ option any longer. Also building taller settlements, rather than expansive ones would be more economical.

    Jens

    Like

    • Old Geezer Says:

      An interesting comment about taxing the fruits of WORK. Originally, when the 13th amendment was passed (the 1% tax on income), INCOME was considered as being PASSIVE INCOME, e.g. from interest and rents. Somehow, somewhere, over the years, that original concept has morphed into the opposite, where labor is taxed at the highest rate and hedge hogging at the lowest.

      Moral: Don’t do honest work for a living – get a job in finance moving money around on the computer screen.

      Like

      • Patrice Ayme Says:

        dear OGP: Well the AWE of trading on a computer screen is pretty much zero (it creates nothing that can act on the world). So money traders ought to earn zero. A transaction tax would terminate their activities, in any case. At this point by far the greatest trading is the one on derivatives, an unbelievable roughly two-thirds of it on Credit Default Swaps CDS… They have proved splendidly ineffective (2008, Greece). Yet, nobody asks why they are still around, what’s teir true function… (I gave my suggested answer, i wonder if somebody has another…)
        PA

        Like

    • Patrice Ayme Says:

      Dear Jens: Thanks for agreeing with me. I do agree that work of the commons, as you say, as “it keeps our society going”, should not be taxed much. I also believe that capital gains and even inheritance of the commons ought not to be taxed much, if at all.
      The European Union has a mandatory 15% AVT, Added value Tax, taxing consumption, and that’s a good thing.
      I do believe in what I call AWE, a theory were economic value is computed from the Absolute Worth of the Energy deployed. A bit like the good shoes you talk about.
      Product of low AWE could be taxed more than those of high AWE, to encourage sustainability, say within an AVT. This is what energy taxes already do to some extent, but it would be generalized. The carbon tax is a particular case. (AWE computation of a product would take into account all the CO2 of that product.)

      When restricting the sell of rare earths, China declared that it was because it was so polluting.
      PA

      Like

  9. Jacques R Says:

    Hollande a en effet des chances d’être élu sauf si nous nous souvenons de l’ère Mitterrand ou LES SEPT PECHES CAPITAUX DE LA GAUCHE FRANCAISE

    1°-MITTERAND : la retraite à 60 ans
    (Par une loi, donc difficilement modifiable, alors qu’il était évident qu’un grand choc démographique allait arriver : les autres pays rallongent l’âge de départ !)

    2°-MITTERAND : la 5° semaine de vacances
    (Là encore par une Loi, 1° entorse à la compétitivité des salariés français)

    3°-MITTERAND : création de l’ISF
    (Impôt sur l’impôt, confiscatoire et vexatoire, qui a déclenché le départ définitif de 15 Md€ hors de France : les autres pays le suppriment ! )

    4°-MITTERAND : politique d’immigration incontrôlée et en parallèle création ex nihilo du Front national
    (Cauchemar de la Droite dite républicaine)

    5°-FABIUS : le NON au referendum sur l’Europe
    Avec création du repoussoir du « plombier polonais »
    (Il valait mieux importer des ressortissants extra-européens. Et heureusement que l’€uro est là !)

    6°-JOSPIN : embauche subreptice d’un million de fonctionnaires
    (Avec salaires à la clé, programmés jusqu’à leur retraite)

    7°-JOSPIN : gigantesque erreur économique: les 35 heures
    (Vaste sujet de moquerie à l’étranger, qui se garde bien de nous imiter car, en pratique, la France arrête le travail chaque vendredi à midi et les cadres non exécutifs sont démobilisés : là encore la Loi , au départ, était prévue pour les seuls salariés du privé mais fut vite étendue à toutes les fonctions publiques et le salaire initial a dû être conservé d’où une augmentation brutale des charges salariales de 12,6% : pour permettre aux entreprises privées de survivre à une telle augmentation, il faut leur injecter plusieurs dizaines de Md€ d’aides publiques et ce de façon pérenne)

    D’où viennent des Mds que la France est obligée d’emprunter? des fonds de pension, américains, anglais et autres! Si Hollande est élu, je ne donne pas 1 mois pour que les intérêts sur la simple reconduction de nos emprunts doublent ou triplent!
    Tout ce qui restera à la France et à ses Français est de subir ce que va subir les Espagnols après les Grecs: il faudra alors toucher le fond, NE PLUS POUVOIR PAYER L’ARMADA DE FONCTIONNAIRES ne travaillant que 35 h moins les arrêts maladie (“On s’arrête”! et ce sans délai de carence!), voulant retourner à la retraite à 60 ans (avant les trop timides réformes de Sarkozy,nous avions un vivier d’infirmières mères de 3 enfants, qui prenaient leur retraite à 55 ans et qui nous retrouvions dans le Privé avec le salaire conventionnel…+ leur retraite). Quant à l’âge de la retraite, il faut savoir que feu mon père, revenant d’Allemagne après 5 ans de captivité ne pesant que 38 Kg, n’est parti en retraite qu’à 64 ans et demi. Et que dire de ces ploutocrates de médecins français, dont le départ est fixé à…65 ans. Il est vrai aussi que le travail d’un chirurgien absolument pas fatiguant ni stressant!!!
    Bon dimanche,
    Jacques

    Like

    • Patrice Ayme Says:

      Bonjour Jacques!
      Je suis tout a fait d’accord avec toi que tout cela c’etait des erreurs de la part des socialistes… Les Suisses viennent de voter CONTRE une sixieme semaine de vacances… Ils avaient peur de ce que tu dis.

      Je n’ai personellement jamais aime’ Mitterand. et j’aurais prefere’ Giscard et ses diamants reprendre 7 ans… Mais faut reconnaitre que le Vichyissiste Mite-rat a amene le tunnel sous la manche, le Single European Act et l’Euro. Mitterrand n’etait pas particulierement socialisite, il voulait juste le pouvoir. Il a d’ailleurs demoli le Parti Communiste.

      Je n’aimait pas non plus Fabius.
      Maintenant il semble s’etre assagi.
      Malheureusement je serai a Rome, dans une semaine, donc je ne pourrai pas voter pour mon kamerad Melanchon… ;-(….

      Faire la fable du loup et de l’agneau avec Hollande comme agneau? Le socialiste Schroeder en Allemagne a fait d’excellentes reformes, poursuivies plus tard par Merkel. Sarko n’a rien fait loin des jupes de Bettencourt… Bon, d’accord apres que BHL se soit finalement reveille’ il a tres bien lance’ son chien Sarko contre Kaddafi, comme je l’avais recommande’ des mois avant que BHL se reveille…

      La situation actuelle demande, de demolir les banques comme je l’ai explique’, dans
      https://patriceayme.wordpress.com/2011/09/14/to-save-the-world-please-default/
      en presentant une autre solution la semaine derniere:
      https://patriceayme.wordpress.com/2012/04/09/radical-banking-fix/

      Cela demande de realiser que les banques sont des organismes d’etat. Les pires fonctionaires sont les banquiers, ils s’en mettent plein les poches et font la grand messe a Pluto tous les jours. Ils orientent toute l’economie vers un desastre. Le Premier Ministre Chinois vient d’expliquer que cela se passait meme en Chine. Et que le parti devrait faire quelquechose.

      Comme a dit Jesus, l’homme riche a moins de chance de finir au paradis que le chameau par le chas de l’aiguille. Et surtout si il a tout vole’, comme le banquier, pour commencer… Je suis pour la confiscation de toutes les proprietes acquises par les traders, dans les 10 dernieres annes. Une taxe a 92%, comme sous EISENHOWER aux USA, serait la bienvenue…

      Le frere de Sarko est certainement un voleur et un criminel, a mon avis, et Jesus est tout a fait d’accord. Sarko, frere de Sarko, a fait tout son possible pour que ce genre de gens dominent, il est temps de s’en debarrasser.

      Derniere note: Sarko, un fils d’emigre’, est mon enemi personel, car il a traite’ moi, un francais de souche, et ma famille, comme des etrangers. D’apres ce fils d’emigre’, on avait meme pas le droit de sejourner en France, chez nous. Cela me ferait vraiment plaisir qu’il aille mediter en prison sur ses erreurs a la place de DSK.

      Je remarque d’ailleurs que Sarko a dit qu’Eva Joly etait “mechante” avec lui. Il a pas dit qu’elle avait tort, donc j’espere que cela veut dire qu’elle a raison, et que Sarko pourra aller se refaire une sante’ a la Sante’….

      Bonne votation! (Comme disent les Suisses)

      Like

  10. JMcG Says:

    Patrice,
    Krugman is of the opinion that some European countries are driving themselves off a cliff of their own making consisting of excessive amounts of fiscal austerity. The Germans have not held their banks responsible for creating the concentration of systemic risk that occasioned the finance crisis any more than have the Americans. The five biggest banks in the U.S. are now larger than before the finance crisis. Banker-in-chief Jamie Dimon continues to bridle at the notion that the biggest banks should be brought into an era when their size and the size of their balance sheets shall be sigificantly reduced. The latest proof Dimon disagrees is J.P. Morgan’s enormous positions in the corporate credit derivatives markets made by its London trader Bruno Iksil.
    You have suggested that the ECB should set a higher inflation target, in the neighborhood of 2 to 4% instead of 2%. I believe you have misidentified the real source of the problem. Hungarian-born U.S. investor George Soros has commented recently, “…that the creators of the single European currency believed that imbalances were created in the public sector without understanding that markets themselves can create imbalances. He said the euro crisis is being dealt with by policymakers as a fiscal crisis though the crisis began as a collapse of the banking system in the United States and was compounded by a divergence of competitiveness among European countries.
    He said that failure to deal with the crisis was creating tremendous tensions because people, who see that policy is failing, are driven into anti-European positions and dissent is growing within and between the countries of Europe….”

    Currently bond yields in Spain are being driven to unsustainable levels even as Spain’s economy is in a depression. Within the EU itself, the finger is currently being pointed at countries which borrowed excessively from banks in other European countries, i.e. the Spanish from German banks, which helped inflate Spain’s real estate bubble leading to its present position. Interestingly, German citizens themselves were not borrowing profligately preceding the finance crisis, which is why they do not want to pay further money to bail out Greece and other economies on the periphery of the EU. German banks were lending profligately however. German citizens, egged on by political factions have come to feel that they will have to pay up more and more to keep the Eurozone intact, without the possibility having been offered up that perhaps some of the mountain of debt taken up by Spain (to name the current example) during the finance crisis should in fact have been nullified by the monetary authorities, just as more of the mortgage debt (and its derivatives like CDO’s and synthetic CDO’s that greatly raised the stakes in Wall Street’s casino even as Wall St. expected to be bailed out in the end) created by Wall St. should have been nullified by the government INSTEAD DECIDING TO ALLOW INSTITUTIONS LIKE A.I.G. TO PAY OFF CREDIT DERIVATIVES AT 100 CENTS ON THE DOLLAR WHICH ONLY SERVED TO INCREASE THEIR LEGITIMACY. THE U.S. GOVERNMENT IS STILL SEEKING TO LEGITIMIZE WHAT FORMER TREASURY SECRETARY PAULSON DID BY ADVERTISING THAT THE GOVERNMENT WILL MAKE A PROFIT ON THE FUNDS LENT DURING THE BAILOUT TO BUY THE SECURITIES OF BANKRUPT FIRMS LIKE A.I.G. AND CITIGROUP HOWEVER THE WEIGHT OF THE MISTAKES ARE STILL BEING FELT.

    During the finance crisis some large firms such as Ford, Deutsche Bank and J.P. Morgan declared that they did not need government bailout money as they sought to avoid being made to submit to new regulation stemming from the finance crisis. In both the U.S. and Germany governments insisted large banks and industrial firms take the money in any case at least for a limited period of time however the governments were less successful at reducing systemic risk by reducing outright the size and the size of the balance sheets of the largest banks. Some efforts were made to increase the Tier 1 capital of the banks but as can be seen from the recent case of J.P. Morgan, some of the largest banks have not refrained from taking very large positions in some markets on their own account. The goal of the still not yet implemented Volker Rule was to ban proprietary trading by banks, but the evidence is that this will be more difficult to accomplish that hoped for.

    In essence, despite the efforts of governments and central banks to rein in market excesses after the finance crisis, markets are still insisting on the destruction or impoverishment of certain parties as the penalty to be paid by parties that took on too much debt. The legitimacy of the debt or a portion thereof should have been challenged in the courts instead of focusing only on the ability of the indebted parties to repay the debt in full. Therefore, countries like Spain should not be held hostage to the bond market as is currently the case. Neither should Italy (and some cities which were also duped in similar cases) have had to pay Morgan Stanley 3.4 billion Euros to cancel interest rate swaps it bought in the expectation this would lower its borrowing costs.

    Soros warns euro crisis could destroy the EU
    By John Acher | Reuters
    COPENHAGEN (Reuters) – Billionaire George Soros warned on Monday that the euro crisis is growing deeper, tearing at the fabric of European Union cohesion, because policymakers are prescribing the wrong remedies.
    “I’m afraid that the euro crisis is getting worse. It’s not over yet, and it is going in the wrong direction,” Soros said in discussion with Denmark’s economics minister hosted by the daily newspaper Politiken.
    “The euro is undermining the political cohesion of the European Union, and if it continues like that could even destroy the European Union,” Soros said. “That is due to a misunderstanding of what the problem is.”
    Soros, the Hungarian born U.S. investor, said that the creators of the single European currency believed that imbalances were created in the public sector without understanding that markets themselves can create imbalances.
    He said the euro crisis is being dealt with by policymakers as a fiscal crisis though the crisis began as a collapse of the banking system in the United States and was compounded by a divergence of competitiveness among European countries.
    He said that failure to deal with the crisis was creating tremendous tensions because people, who see that policy is failing, are driven into anti-European positions and dissent is growing within and between the countries of Europe.
    “It could be reversed at any time if only the authorities understood that the box is broken and you need to find some out-of-the-box invention to bring it back inside the box and then put it right, change the rules of cohesion,” he said.
    Soros said the crux of the problem was that debt reduction was coming at a bad time for the European economy. “You can grow out of excessive debt, you cannot shrink out of excessive debt.”

    And he warned that the euro zone fiscal compact, an agreement by 25 EU leaders to prevent another debt crisis and restore confidence, was pushing in the wrong direction because it obliged governments to balance budgets and reduce indebtedness at a time of inadequate demand.
    He said that because fiscal stimulus was ruled out, monetary policy remained the only tool available.
    (editing by Ron Askew)

    Op-Ed Columnist
    Europe’s Economic Suicide
    By PAUL KRUGMAN
    Published: April 15, 2012

    On Saturday The Times reported on an apparently growing phenomenon in Europe: “suicide by economic crisis,” people taking their own lives in despair over unemployment and business failure. It was a heartbreaking story. But I’m sure I wasn’t the only reader, especially among economists, wondering if the larger story isn’t so much about individuals as about the apparent determination of European leaders to commit economic suicide for the Continent as a whole.

    • Increasingly in Europe, Suicides ‘by Economic Crisis’ (April 15, 2012)
    • Paul Krugman Blog: Insane in Spain (April 15, 2012)

    • Read All Comments (691) »
    Just a few months ago I was feeling some hope about Europe. You may recall that late last fall Europe appeared to be on the verge of financial meltdown; but the European Central Bank, Europe’s counterpart to the Fed, came to the Continent’s rescue. It offered Europe’s banks open-ended credit lines as long as they put up the bonds of European governments as collateral; this directly supported the banks and indirectly supported the governments, and put an end to the panic.
    The question then was whether this brave and effective action would be the start of a broader rethink, whether European leaders would use the breathing space the bank had created to reconsider the policies that brought matters to a head in the first place.
    But they didn’t. Instead, they doubled down on their failed policies and ideas. And it’s getting harder and harder to believe that anything will get them to change course.
    Consider the state of affairs in Spain, which is now the epicenter of the crisis. Never mind talk of recession; Spain is in full-on depression, with the overall unemployment rate at 23.6 percent, comparable to America at the depths of the Great Depression, and the youth unemployment rate over 50 percent. This can’t go on — and the realization that it can’t go on is what is sending Spanish borrowing costs ever higher.
    In a way, it doesn’t really matter how Spain got to this point — but for what it’s worth, the Spanish story bears no resemblance to the morality tales so popular among European officials, especially in Germany. Spain wasn’t fiscally profligate — on the eve of the crisis it had low debt and a budget surplus. Unfortunately, it also had an enormous housing bubble, a bubble made possible in large part by huge loans from German banks to their Spanish counterparts. When the bubble burst, the Spanish economy was left high and dry; Spain’s fiscal problems are a consequence of its depression, not its cause.
    Nonetheless, the prescription coming from Berlin and Frankfurt is, you guessed it, even more fiscal austerity.
    This is, not to mince words, just insane. Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression. And because investors look at the state of a nation’s economy when assessing its ability to repay debt, austerity programs haven’t even worked as a way to reduce borrowing costs.
    What is the alternative? Well, in the 1930s — an era that modern Europe is starting to replicate in ever more faithful detail — the essential condition for recovery was exit from the gold standard. The equivalent move now would be exit from the euro, and restoration of national currencies. You may say that this is inconceivable, and it would indeed be a hugely disruptive event both economically and politically. But continuing on the present course, imposing ever-harsher austerity on countries that are already suffering Depression-era unemployment, is what’s truly inconceivable.
    So if European leaders really wanted to save the euro they would be looking for an alternative course. And the shape of such an alternative is actually fairly clear. The Continent needs more expansionary monetary policies, in the form of a willingness — an announced willingness — on the part of the European Central Bank to accept somewhat higher inflation; it needs more expansionary fiscal policies, in the form of budgets in Germany that offset austerity in Spain and other troubled nations around the Continent’s periphery, rather than reinforcing it. Even with such policies, the peripheral nations would face years of hard times. But at least there would be some hope of recovery.
    What we’re actually seeing, however, is complete inflexibility. In March, European leaders signed a fiscal pact that in effect locks in fiscal austerity as the response to any and all problems. Meanwhile, key officials at the central bank are making a point of emphasizing the bank’s willingness to raise rates at the slightest hint of higher inflation.
    So it’s hard to avoid a sense of despair. Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy — and their society — off a cliff. And the whole world will pay the price.
    A version of this op-ed appeared in print on April 16, 2012, on page A19 of the New York edition with the headline: Europe’s Economic Suicide.

    Like

    • Patrice Ayme Says:

      Really a lot in all what you present, Jeff!
      I have covered I think all those angles, over the years. Soros has been a cause of great trouble all over Europe, for decades.

      It’s a bit like having Himmler teach us about “imbalances” in Europe. Soros kicked Britain out of the EMU, with a number of unsavory maneuvers, and made more than a billion, doing so. It’s Dracula, but he criticizes the blood.

      Not all he says is wrong. You tell me that I misidentified the problem, but it’s black on white in many of my essays, although I do not use Soros’ technical hypocrisy. “Imbalances” instead of “conspiracies”, etc… By coincidence my last published essay explains the history of what Soros tries to evoke.

      You have a guy like Buffet owning the rating agencies, and what they rate (states bonds). They don’t even need to conspire with others, they can just conspire with themselves.

      Anyway, I am travelling with Athena and her mom. Washington today, Rome Wednesday, next week the Alps.

      This below is what I replied Sunday to Krugman editorial you quote.
      It was published on the NYT website.
      *

      The suicide started long ago, when, in 1973 under the conservative French president, who was a banker before De Gaulle made him Prime Minister, a law was passed forbidding the French central bank to loan to the treasury. Instead they had to borrow from friendly private banks. That was generalized to all of Europe by French socialists, who were “bipartisan” when Obama was still in high school.

      The subjugation to plutocracy naturally brought corruption. There was not just a housing bubble but a corruption bubble fueled by banks, a large proportion of them, German. Massive projects, such as airports and train lines were built, with no hope of profits, sucking up from public debt. There are massive probes and arrests in Spain. Politicians of the Valencia area built pharaonic projects, including an airport that never saw a plane.
      Germany was fully involved in the craze, and did nothing to stop it. Germany had to nationalize a giant bank, Hypo Real Estate (its name describing its project)

      This system deserves to crack before it destroys too many lives. Generalized default is the way out.
      https://patriceayme.wordpress.com/2011/09/14/to-save-the-world-please-default/
      Everything will change when France will elect in three weeks Mr. Hollande, her future French socialist president. Hollande wants to commit to growth, not just austerity. Merkel will get her marching orders, and be forced to collaborate (!). To show that she is game she went to vacation in Naples, italy, and flew there in a low cost airline. She knows that the German SPD is following their French comrades, not her.
      PA.

      Like

  11. pendantry Says:

    I had thought it axiomatic that ‘the needs of the many outweigh the needs of the few’. That must be in a different universe though, to the one I currently inhabit.

    Like

    • Patrice Ayme Says:

      Right, pendantry! I am in Rome right now, studying the situation. Fascinating. Little time to comment, got to catch a bus! Not easy with child and brand new broken stroller!
      PA

      Like

  12. Chris Snuggs Says:

    Obama’s biggest problem is not telling the American people straight what a horrendous mess their society is in and in particular not lambasting the Republicans for supporting greed and a ludicrous economic system which permits – for example… – the Walmart family to own more wealth than the poorest ONE HUNDRED AND FIFTY MILLION Americans. Perhaps his job is impossible because Congress is hoplessly unrepresentative of most of the mass of the people (ever seen a former mailman Congressman?) and the inmates too concerned with pork-barrelling their own supporters rather than the long-term good of the country.

    Like

    • Patrice Ayme Says:

      Chris: Obama’s motto seems to be: Don’t criticize who you love, or who you want to love… Obama crows that he read the Financial Times, way back… Community organizing by studying the FT???? I know some who knew him 40 years ago (!), and are very disappointed by him, personally…
      PA

      Like

  13. JeffMcG Says:

    Maybe time to send in the clowns….

    Patrice,

    How was Rome?

    In France, Hollande says if elected he will raise taxes (to 75% on incomes of Euro 1 million or more?) and is making the usual talk politicians make that he will make a departure with the ways of his opponent. Nothing surprising there on either count. Many people, including French business owners think the real problem with France’s economy is the Code du Travail, too restrictive rules on employers’ ability to hire and fire at will. Some employers speak of having started several companies of 50 or fewer employees to avoid having to deal with further restrictions. No union busting in France like what has been going on in the U.S. for decades. Hollande’s talk of opposing further austerity measures is also not surprising to hear, but some think this is also only what he will say to get elected. Once elected he will work with Merkel because he must, they say, because Europe must find a way out of the fiscal mess it is in. Somehow it will. If we only knew when….

    Then there is Spain, it’s credit rating just downgraded another two notches by S&P from A to BBB+. Spain’s 10-year notes nearly hit 6% today. Funny, but in Spain the government has said it wants the banks to lend it money instead of what we’ve become accustomed to hearing, the government bailing out private enterprise. But Spain’s banks seem to be dragging their feet on doing writedowns on bad real estate debt. Unemployment in Spain has reached extremely high levels. Not surprising they would be weary of austerity although the Spanish government insists it does not want a bailout. Too much austerity, an economy deeply in recession. Something has to give. The question is, what?

    At least it matters to the French to have an election. Often in the U.S. after hearing nothing but nonsense from the contenders for months on end people are eager just to have it over with – probably just what the powers that be would like. I know only that Sarko is not so popular with his countrymen and that Hollande, though he says he would offer something different, has little experience in government posts.

    Today I listened to investor Jimmy Rogers, former Soros Quantum hedge fund founder and wise man for a few minutes. He says Bernanke has zero credibility, that all he knows how to do is print money and that there’s no difference between Obama and Romney, a pox on both of their houses, he said. Further, he expects to see further civil unrest in Europe and the U.S. but isn’t worried that the slowing economy in China will have this result there.

    My conclusion? Still a crazy world, just like yesterday. Maybe time to send in the clowns….

    Like

    • Patrice Ayme Says:

      Hi Jeff!
      Rome was amazing, visiting comforted my theories… I will have essays on the subject soon…

      Hollande is not alone. He has the entire socialist party, and most of the intellitgensia behind him… Taxing at 75% is going to be an interesting breakthrough. BTW, 2/3 of fortunes in Germany are INHERITED (even more than in France, and nearly 3 times more than in the USA, but I believe USA numbers to be a cheat). Merkel is not white as snow. As I have argued on my site, she practiced an “internal devaluation”. Sarko, being 5 years slow in replicating it, is going to his sarkophage… precisely because of that. So she reignes, because of schroeder’s reforms, and her own, but it’s not as much because of austerity that a very effective Colbertism (Kurztarbeit, etc.)

      I talked to a London banker. That too comforted my theories… Big time. The banks don’t lend, and ought to be nationalized, the banker agreed…

      I think the clowns are already in power. They don’t know what else to do… OK, just one more week of Sarko(zy) before he gets to his Sarkophage…

      I listened to the Jim Rogers’speech. I like Jim Rogers, but that particular interview did not go in the root of the problems. He went to Singapore to educate his blonde daughter properly (that he did not mention in that particular interview). Jim did not answer the big question: what does he propose to do? Just telling us that the pox should be both on Obama, Romney, and that Bernanke has zero credibility does not help. Fact is they all do their superficial thing because nobody of influence has proposed any better. Even Krugman only proposes that Bernanke is not Bernanke enough…
      Education is central, though. Jim knows this. What to do? G-O-V-E-R-N-M-E-N-T. As of old.
      PA

      Like

  14. JMcG Says:

    Good essay. And Stiglitz is right. Good reference.

    You mentioned in another note Krugman’s idea that the Fed should tolerate higher inflation and Bernanke answered his challenge. The chief argument against allowing higher inflation remains (and it is a good argument) that to do so would erode savings, therefore the monetary authorities should not take actions that penalize savers. After all, the credit bubble that preceded the finance crisis was fueled in part by a low savings rate even as much of the excess credit originated in countries that had a high savings rate. As American workers’ wages continued to fail to keep pace with prices they were ever more encouraged to borrow against their homes, thus becoming poorer in the process. (Wall St. is very good at transfers of capital from one part of the globe to another, similarly in abruptly yanking credit and capital out of countries it suddenly finds itself in disfavor with, i.e. after industries are nationalized, debts are renounced or currencies are devalued). Wall St. also borrows where money is cheap (called the carry trade), leverages the borrowed money and uses it somewhere else where it expects to earn higher returns. This leads to instability in financial markets when unexpected news suddenly creates losses in the leverages gambits. Even worse, when such bets are in so-called crowded trades, the losses multiply and hedge funds have their lines of credit called in, find they cannot put up enough additional collateral to stay in business and close their doors. This happened to many of them last year when their bets soured.

    A better medicine for the economy than the monetary authorities allowing a higher inflation target (the cost of government debt would also rise precipitously, eliminating one of the only benefits of the massive QE’s we’ve seen thus far and the U.S. currency’s safe haven status) would be for the government to do more about disposing of the huge amount of bad real estate-related debt as was done successfully to deal with the results of the savings and loan crisis of the 1980’s with the creation of the Resolution Trust Corp. (Even Greenspan agrees on this, commenting in a recent interview that the Congress hasn’t been so unable to reach compromise as now since the 1850’s.) Bad assets were disposed of swiftly, allowing the banks to re-capitalize and begin lending again. This time around, though the banks have been massively assisted by the government with a flood of cheap money of Biblical proportions, they have not returned taxpayers the favor by resuming lending because they still have most of the bad debt on their books. (Mark-to-market accounting having been eliminated, bankers were granted the right to hide all the bad debt from view, but it’s there nonetheless.) The clowns in Congress who cannot get along with each other even long enough to compromise on what is probably the most pressing problem facing the nation’s economy richly deserve to be excoriated for this neglect. But Congress doesn’t care for the plight of citizens anywhere near as much as it likes pursuing its own agenda: spending most of its energy getting re-elected.
    Jeff

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    • Patrice Ayme Says:

      Thanks Jeff!

      I am happy you like it!

      I agree with the quandaries you present about inflation. Dilemmas, or, as DSK likes to say between two pairs of fellow “libertines”, trilemmas…

      However my own slant is to distinguish between different forms of inflation. We have bad forms right now, and not the good ones… Energy and CPI inflation is good, education, health care inflations are bad….

      Ultimately, I say this:

      https://patriceayme.wordpress.com/2011/09/14/to-save-the-world-please-default/

      Hollande will be elected president Sunday, May 6. Then all bets are off. I hope he blows them all out of the water, starting with the ignorant self satisified Obama… Here money is pretty much completely out of the presidential campaign. Speaking times are down to the second.

      Sarkozy spoke 75 minutes and 17 seconds in the one on one presidential debate.

      Hollande spoke 75 minutes and 17 seconds in the one on one presidential debate.
      Democracy. Money NOT invited. When I see this, real democracy mightily deployed, and I think about what is going on in the USA in comparison, I feel literally ashamed to be an American.
      In the USA, no doubt Sarkozy would have been re-elected by his plutocractic friends. Not so here.
      PA

      Like

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