Aphorisms June 2012

Dinosaurs Warmed Blooded After All?

Some have argued that dinosaurs had hearts like birds. Now some Spanish researchers have confirmed older studies on dinosaur bones. However the best evidence for warm blooded dinosaurs may simply be that birds evolved from bird like dinosaurs.

That latter observation is typical of the philosophical approach, in this case, using an economy of thought: since the birds, present in the last 80 million years of the dinosaurs’ reign, were warm blooded (right from the start, as flying requires lots of energy), it stretches the imagination that they would have grown wings, feathers, and become warm blooded simultaneously .

To quote the San Francisco Chronicle: …”in his conclusive argument in Nature that accompanied the report, titled “A bone for all seasons,” Kevin Padian of the UC Berkeley Museum of Paleontology noted that microscopic features of dinosaur bones show precisely the same lines of arrested development as the bones that Köhler and her colleagues studied in modern animals, which live in all the world’s climates.

“The bone growth patterns of dinosaurs establishes that they grew just like large mammals do, and at comparable rates,” Padian said in an e-mail Wednesday. “So their physiology could not have been like lizards and crocodiles, which grow much more slowly and whose bones look very different inside.”

Padian has long argued that warm-blooded and cold-blooded animals have formed a “continuum” in evolution.

***

…But Are Many Thinkers Cold Blooded?

“Actually there never was any evidence that dinosaurs were ectotherms,” Padian said Wednesday. “It was just sort of like, well, dinosaurs are reptiles, and living reptiles are cold-blooded, so dinosaurs were cold-blooded too.”

The last part that I emphasized is fascinating. You see, scientists are supposed to be temples of reason. But, actually, they are not. Just like most of the commoners, scientists are careful to toe the line. Scientific revolutions are rarely engineered by anybody else but outcasts, or extremely fierce personalities.

All to often, in science physical or human, and also in philosophy, or even literature, reasoning by induction means to follow the flow of common wisdom, or common emotionality. Nothing more. The herd is safe, and the herd is thrilling, when it stampedes.

***

Crazy Does It:

The big lessons from modern logic, starting with Russel, and then Goedel. Logic comes with context. Moreover, logic wants to grow out of the context that gave birth to it. But it cannot. Except when we take a (by definition not rational in the sense of the old logic) decision about what the new context will do. Thus, not only the heart has its reason that reason does not, but reason needs reasons that it does not have.

***

World War Two Resistants Tell You: Behind It All, The Same Mass Criminality As In 1939:

Manolis Glezos is a 89 years old Greek. He was a European MP, and was a candidate for the radical left, against the austerity plan. For him, there is no doubt: global finance is the enemy. same as in WWII.

Some say: how do you dare assimilate what is going now with what happened with Nazism? Some even claim that what happened with Hitler is incommensurate with anything, before and after.

William Randolph Hearst, the American press magnate, was paid by Hitler, from German taxpayer money. In 2009 a visiting Jewish tourist to the “Hearst Castle” in California, recognized family paintings which had been stolen by the Nazis. Hitler gave them to Hearst in… 1935. (A lot of the Nazi economic miracle had to do with stealing opponents, and redistributing the stolen riches to supporters.) The paintings were returned by the National Park Service.

As I have long argued, it is the same (sort of) people, the same organizations who financed, and organized Nazism. The banker JP Morgan was in the lead, when Hitler was still in primary school.

That idea has also been put forward by Stephane Hessel, 94 years old, and an authentic hero of the resistance and the free French in WWII (although he was an “Israelite”, so one would think he would have laid low, but most French Jews actually were in the forefront of the armed struggle. them and the old right wing French aristocrats).

Mr. Glezos is famous in Greece. In 1941, he climbed up the Acropolis, and stole the Nazi flag that was floating there. his brother was caught, and shot, with another 700 other Greeks, that day, that hour, in that place..

***

Serfdom: On Its Way Back In The USA?

I explained many times that Obama’s ironically labeled “Affordable Health Care Act” was unconstitutional. But Roberts, Chief Justice, a Bush right wing appointee, found it constitutional. Am I an idiot?

No: Chief Justice Roberts just decided the obligation of getting into a private contract with a private health insurance company was a “tax“. That I did not expect. It is of course incorrect in a res-publica, because, in a republic, taxation is only paid to the government.

The naïve on the left applaud: they do not see that Obamacare was right wing. Now Roberts has gone further right. Makes sense.

Indeed, is there a precedent? Assuredly, private taxation was deemed to be correct when the Frankish authorities established the feudal system. (Private taxation culminated with the “Fermiers Generaux“, who were decapitated in the French revolution.)

However, the Franks had kept some republican decency. The Franks knew that it made no sense to force commoners into contracts with private parties (in this case the Lords), in a republic. The Roman empire they had reconstituted, the Imperium Romanorum, was, after 800 CE, as in its preceding version, based in Rome and Constantinople, viewed as a sort of republic. After all the Frankish kings were -supposedly- elected!

Thus Frankish law made a principle that serfs were in a contract with the lords, because the lords provided services. When those services were discontinued (say because the serfs fled), this contract was broken (that it was broken by the serf was irrelevant). Thus the serf was relieved of this contract. Hence, if a serf ‘escaped’ for 30 days, he was a plain, normal Frank, that is, he, or she, was free. Many of the newly freed went to the cities. Cities did not depend upon lords (except for the rather theoretical oversight of the imperial government, that is, in France, or England, the king).

No such opportunity in the present USA.

I spent last weekend with a health care professional, a top notch doctor, who told me how to rack up the medical bills by 100%, for the benefit of the doctor signing such bills. In several ways. I will not give any details at this point, because it was rather confidential.

Taxpayer money irrigating uncontrolled corruption reeks of plutocratic perversion. Obamacare will change that not. However, the American left’s tenors are officially happy: more taxpayer money to be sent to plutocrats, so that they take care of the commoners. An American creed is that to be rich is good, and one proof is that the rich are good (that’s why they are called “philanthropists“).

Chairs have been re-arranged on the Titanic, the commoners are happy, the orchestra is still playing, the sea is calm: what could go wrong on SS USA?

***

When Confusion Is A Weapon:

A trick was found, long ago: playing dumb, allowing to do evil, as if by accident.

The idea is to confuse the issue of deliberate evil behind the smokescreen of, well, complete confusion. There is no magic, but there are people doing as if they believed in it, and their alleged idiocy allows them to hide their Dark Side. Various superstitions and religions have been used that way too.

Ultimately the principle is always the same: excusing one’s evil behind a thick cloud of playing dumb.

The Iraq invasion was propelled by total evil: on Fox News, luminaries were claiming that the invasion would pay for itself. A minimal aim was achieved: to demolish Iraq as an independent force. Iraqi oil is pretty much shut down at this point, and that allowed the USA to switch to fracking, while, of course, Iraq was prevented to trade in euros…

Now Americans are coming up, explaining to us all that they just confused reason and magic. But, when Obama targets families for assassination (as the New York Times recently claimed), it’s not because Obama believes in magic. It’s because he believes in evil.

***

Athens Had Direct Democracy, We Have Kings;

Representative democracy, clearly, does not work. Ancient Athens used a form of direct democracy (the ecclesia, the popular assembly, had 43,000 members). Even the Populus of republican Rome kept, for many centuries, a very tight leash on elected officials (Consul were elected for a year, but the powers rotated between the two Consuls on a monthly basis).

Right now we elect kings with more powers than kings of passed ages ever had. Then we pretend the People rules. But if it walks like a king, speaks like a king, rules like a king, and even order assassinations in full view, as Obama does, it is a king.

In a first reform, one should adopt a Swiss like system, where a seven member Federal Council rules, rather than one person (although there is a president, elected for a year within the council). In Europe, parliament could elect the Commission, or something like that.

 ***

 Something Economists Don’t Understand: The Economy Is Not Fundamentally About Money:

Economy is, ultimately, what the state decides to do, some of which it calls “the market”. For example, in the USA, the military-industrial complex is (still) strong.
When the state decides nothing, and, instead, let the unelected bankers, and other plutocrats run amok, we don’t lose just democracy, but even the economy. This is what we observe presently.

Two heads of the Camerkozy are still alive and biting the destitute, by the way…

Being a full human being is an indispensable way for making one’s thoughts better, and deeper.  Greed is not enough that way. Yet, thinking is man’s most productive work. To overlook this is a major flaw of conventional socio-economic thinking.

The Internet is a storm in which minds get easily spread about to the four winds, for the best, and the worst. An advantage, and a threat.

***

 How To Save Rhinoceroses:

Just harvest their horns in official programs. After the horn has been cut, the rhinoceros loses its financial value. Yet, the horn regrows. Thus rhinoceroses’ horns can be harvested. Domesticated rhinos don’t mind. They use their horns in combat. But, on a farm, they don’t have to fight (actually horns have been cut by rangers on wild rhinos from particularly threatened sub species!)

Rhino horn material is worth several times gold, by weight. Something about China. So farming rhinos for their horns could pay for much nature conservation… Besides saving entire rhino species.

Making the profit motive a friend of conservation, an ally to the biosphere: that’s not re-arranging the chairs on the Titanic, while playing democratic music. The sea is not calm. The sea is rising, faster and faster. Planet Earth is sinking.  We can do better than re-arranging chairs and playing irrelevant music.

A way to achieve serious relief, would be with a carbon tax. After all, carbon burning has already killed hundreds of times more than nuclear (even including Hiroshima and Nagasaki, which is not fair). But have Obama and company the sort of brains, and guts needed to impose a carbon tax? Not, so far (even though it would solve the Taxgameddon problem).

***

Patrice Ayme

Europe, Victim Of Plutocracy

SOVEREIGN STATES USE FORCE AND FIAT MONEY.

Rapid Reaction Force: Fighting Krugman’s Plutophile Disinformation.

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EUROPHOBES DON’T KNOW MUCH:

Another day, another misleading editorial from Paul Krugman “Greece As A Victim” (NYT, June 18, 2012). As all good propaganda, there is lots of truth therein, just as in all good poisoned beverage, there is much goodness, to make sure the victim drinks it all. So Krugman piles up the truths, all to better lead to the same old stinger, down with the euro:

“…many things you hear about Greece just aren’t true. The Greeks aren’t lazy — on the contrary, they work longer hours than almost anyone else in Europe, and much longer hours than the Germans in particular. Nor does Greece have a runaway welfare state, as conservatives like to claim; social expenditure as a percentage of G.D.P., the standard measure of the size of the welfare state, is substantially lower in Greece than in, say, Sweden or Germany, countries that have so far weathered the European crisis pretty well.

So how did Greece get into so much trouble? Blame the euro.”

“Blame the euro.”: this is Krugman’s sing song. He has used different words to sing the same underlying music. But he, naturally, does not find the right reason to be against the present organization of the European Monetary Union, namely that the EMU was installed as a plutocratic device (by French socialists, of all people, 30 years ago!)

Krugman explains that Greece was doing fine, then it got in the Eurozone (soon he will explain to us that it was doing fine under the American sponsored dictatorship of colonels!). Here is more Krugman:”Then Greece joined the euro, and a terrible thing happened: people started believing that it was a safe place to invest. Foreign money poured into Greece, some but not all of it financing government deficits; the economy boomed; inflation rose; and Greece became increasingly uncompetitive.   

Please remind me of this next time: if people come, bearing gifts to the Greeks, it’s a terrible thing.

Krugman omits an important fact here, a fact that I have never seen mentioned anywhere, except by yours truly. A fact all European authorities want to forget, because they are entirely to blame: the Drachma, the old Greek currency, was converted at TWICE its true rate. It was a question of national pride for the Greeks, etc. Other countries (including Germany) thought that was cute and innocuous.

So the Greeks became TWICE richer than they should have been, just by replacing drachmas with euros, at the rate decided by the ECB. Hence one way to look at the present crisis in Greece is that Greece is readjusting down to what should have been the correct conversion rate of the Drachma.

Why were the Germans so anxious to accept Greece in, while making it artificially rich by a factor of two? The answer is obvious. So that the Greeks could afford to buy Porsches, of course. The way the Germans looked at it then, no harm done, all goodness to Germany in general and VW in particular. This explains also why the German authorities, including at the Bundesbank, are so anxious to blame the Greeks: to deflect the revelation of their own instigation of the whole machination of the Greek mess.

***

PROFITABILITY IS WHAT THE STATE DECIDES, NOT THE “FREE MARKET”:

Krugman, mentions “productivity“, which is, fundamentally how much one’s work is valued. Valued by whom? Well, maybe by the politicians one rigged the system with. For example in the USA, most of the wealthiest people pay little (Romney’s tax rate: 13.9%) or no tax at all. Contemplate the tax bills of most Silicon Valley titans:  they borrow their spending money, and don’t touch their financial assets ownership.

And as far as the so called “market” valuing things properly, some the hedge fund managers have “made” (for themselves) up to 5 billion dollars, making them the most “profitable” members of the biosphere. Part of how they make their money is by selling short entire countries, after careful conspiracies which seem to have the support of the president of the USA (as he sings the praises of the most successful conspirators, the so called “Sage of Omaha”: different countries have different notions of wisdom).

Of course, if the empire was different, hedge fund managers would be rewarded by expropriation, and long jail sentences. The argument can also be made that modern bankers are, by the standard of the Imperium Romanum, and direct descendant regimes, a period of more than two millennia (Roman republic-SPQR-Imperium Francorum-Imperium Romanum-Francia, etc.), simply counterfeiters, a crime punishable by being boiled alive, and slow, under the Franks.

***

THE STATE IS A FORCE THAT GIVETH MEANING:

Krugman explains that the USA holds together because of transfer payments: “Ask yourself, why does the dollar area — also known as the United States of America — more or less work, without the kind of severe regional crises now afflicting Europe? The answer is that we have a strong central government, and the activities of this government in effect provide automatic bailouts to states that get in trouble.”

Well the truth, historically, is that the USA stayed in one piece because of the application of massive deadly force. When the Confederacy seceded, Lincoln resisted, and won, by killing more than 850,000 people in the process. 850,000 dead is the latest lower bound in the number of death out of a total population of 31.4 millions in 1860, including nearly 4 million slaves. One can round that up to 3% dead (as the stats are known to be underestimates). This was the deadliest civil war known in the West for at least three centuries.  

The second reason the USA is together has to do with being a sovereign state, and that, as in all sovereign states through history, means that the USA has the ability to give money to whoever it pleases, in whatever amounts it pleases.

Krugman will not tell you this, because it is embarrassing for its cherished Wall $treet, and for the policy he has been promoting, Quantitative Easing. In a way a toddler can understand, the policy consists in using the state to give money to friends.

Under Bush II and Obama, the government of the USA, through the central bank, transferred in excess of five trillion dollars of “monetary base” to a handful of very big banks managed by whom Obama calls “friends” (yes, at least a third of GDP). For three quarters of his administration, Obama loudly called Jamie Dimon, head of JP Morgan, a friend and confessed he could never managed the immense and glorious portfolio of Dimon (who used to live in a 20 room mansion in Chicago). Now the Main Stream Propaganda has been busy forgetting these facts (because said facts show that Obama did more, so far, for plutocracy, than Romney ever did!)

So, considering this enormous conceptual picture he royally ignores, why is Krugman “blaming the euro”?

***

500 BILLIONS KRUGMAN DID NOT HEAR ABOUT:

It used to be that europhobic Americans such as Krugman accused the Eurozone to not be an “optimal currency area“.

But, it turns out that “productivity” varies just as much in various regions of the USA. So that reasoning was so specious, that the most sophisticated Europhobes were called back to order, and changed their music. So what’s their latest music? Their new music is all about the lack of redistribution in Europe (as it is the EU redistributes only 2% of the total EU GDP). Yet, in truth, redistribution is not, by far, the proximal problem in Europe.

On the face of it, Krugman’s ignorance is mind numbing. Krugman should learn that the total aid to Greece is in the process of passing the 500 billion dollars mark (yes, 500 billions, a total aid of half a trillion). After Krugman integrates that notion it will be interesting to see if his “non redistribution” music changes! Krugman is the plutocratic canary, singing deep in the mines of the subservient soul to reassure the slaves of the established order that Europe is at fault.

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PROBLEM WITH EMU; IT CANNOT CREATE FIAT MONEY:

“Blaming the euro” is the usual anti-European condemnation by innuendo.

So what is the real problem? In truth, the problem is how the European Monetary Union was exactly set-up. The EMU generalized a French law passed by the pro-plutocratic government in 1973 (president Pompidou had been head of the Rothschild bank). The law forbade the French state to borrow from the Banque de France. Thus, similarly, states of the EMU were forbidden to borrow from the ECB. They thus lost their Fiat Money capability.

So what happened? All states use rolling debt. The plutocrats, using a worldwide conspiracy, with the rating agencies (owned by Buffet) and Goldman Sachs (on and off owned by Buffet), and the likes of Buffet and hedge funds (shorting the sovereign debt of states, just before their rating agencies lower their ratings!), have cranked up the interest rates (up to and beyond 100% for Greece). That is why Italy, which has no primary deficit, is now in trouble.

The usual explanation is that the lenders are afraid. But that explanation is all too charitable for the wealthiest people and organizations on Earth. The non charitable explanation is that these wealthiest of the wealthy are maximizing their profits. They do this by using all the tricks they can find, as they operate in a (deliberately organized) judicial vacuum. One of the tricks is simply to blackmail states, by having organized an enormous conspiracy to jack up the interest rates European states have to pay. They will not try the same trick to the USA, because that would be do it to themselves, and Obama has drones, plus the taste to be judge, jury and executioner.

That is why they conspired successfully to force Spain, which has much less government debt relative GDP than Germany, to pay ridiculous high, debt augmenting interest rates, well above 7%. Greed. The striving towards a new feudal order.

Krugman dislike the EMU, while protecting the vast plutocratic plot, because Europe is too socialist and that means too anti-Wall $treet. He wants Manhattan to gleam in the sun, and his mansion well furnished.

It was not the arrogance of European officials that led to the present EMU mess, as much as a silent coup by the pro-plutocratic forces. Now the French socialist, who set-up this mess in the 1980 have the occasion to undo it, and do the right thing, namely gives the ECB all the prerogatives of a central bank, such as creating Fiat Money. Interestingly Milton Friedman would agree to that. Thus the present plutocratic system is amazingly to the right of Friedman!

With Fiat Money, all the European interest rates could be brought down to basically zero, as in Britain, USA, Japan (although Japanese debt is 236% of GDP, much higher than Greece).

***

FOLLOW CAESAR AGAIN, & INTEGRATE GERMANIA IN THE GRECO-ROMANO-FRANKISH IMPERIUM:

When Octavian, the grand nephew, and heir of Caesar, took power, he established a plutocracy, and was called Augustus (the one who augments). Later three of his crack legions, plus auxiliaries, and support personnel were annihilated in a three day running battle in Northern Germany. Maybe 50,000 dead, many tortured in gory sacrifices.

Augustus enjoined his successors to leave Germany alone, and keep the limes where it was, awkwardly following the Rhine and then the Danube. There is a gap between both streams, and through it, German invaders would strike again and again, as the centuries flowed. (Germanicus could have fixed things, but Tiberius feared him, and the assassin Consul Sejanus may have poisoned him, as he did Drusus, Tiberius’other son, consul, and expert general!)

Finally the Franks, the hard core of the last two centuries of the Late Roman empire, took power in their own name. The Franks, who were Romanized Sea Germans (the Salian Franks spoke Old Dutch, and wrote in Latin) followed the wise instinct of Iulius Caesar, the assassinated head of the Populares, uncle to the plutocratic Augustus, and decided to conquer all of Central and Western Europe. The Franks did most of Germany in a few years, by crushing the Goths and the Alemanni (“All Men“, French “Allemands”). To finish the task Caeasar had decide upon, took the Carolingians, three centuries later (when the roman Empire, Imperium Romanum, was officially re-established in Pars Occidentalis).

After getting their hands on Eastern European silver, the Franks were able to re-establish enough of a currency for prosperous trade (the Later Romans, like the Chinese, chronically, had run out of enough precious metals to run their economies with free markets).

Unfortunately prosperous Europe attracted invaders and scavengers (in chronological order: Muslims, Avars (a type of Mongols), Vikings). Those powerful and simultaneous invasions forced  the Franks to establish a war society, the feudal order (my analysis is very different from that of Karl Marx; Marx considered feudalism within a purely economic model, preliminary to capitalism, proving he knew ver little history, and that of Rome, not at all!).

This exhausting war, democratic forces against plutocrats on a rampage is still on-going: the French led war against the plutocracy in Libya was nothing else (hey, for once that Sarkozy did something right, we may as well celebrate…) Re-establishing a republic in Syria would be more of that reconquista of democracy…

The feudal order, in turn, led to a split of the Imperium Romanum (Charlemagne’s official name of his 300 counties imperium). Rich Francia went on to reconquer Britain, while the relationship with the rest of the Imperium Romanum became murky. Sometimes differences were settled on the battlefield, sometimes the French king-“emperor in his own kingdom” would support his candidate to lead the Imperium Romanum (the addition of “Sacrum” to “Imperium Romanum” came in a superstitious period, centuries later).

That’s how Barbarossa became emperor: he was the candidate of Louis VII of France who wanted to use him against several of his uppity vassals, such as Savoyards, or Normands, the later ruling over Aquitania, England and much of Italy. Soon the splits turned into outright fragmentation. In Barabarossa’s time the feudal order had broken up Germania in 1600 states! Italy and France were not doing much better, with many independent, or quasi independent nobilities and cities. The French king would support English princes living in France in wars against their father the king living in London, etc.

As European states grew in power, one thing became clear: that growing power could be used for unending, ever growing wars. The (civil) war between France and England lasted nearly 5 centuries (from around 1320 CE to 1815 CE). The war between France and Spain around 150 years (from around 1520 to 1666 CE)… within the later was the 80 years war to create the Netherlands, which used to be the old heart of Francia known as Flanders. And so on.

The mood conducive to conflicts reached its absurd conclusion in 1945. after that a different paradigm was increasingly imposed. It is this paradigm that people such as Krugman try to understand, while not doing a very good job.

Europe is a small place. It has space for just one state, Europe. That is what Caesar thought, and Caesar was right. Caesar, arguably the best general who ever was, was also the chief of the anti-plutocratic party. Not a coincidence. So why did the French socialists set-up the European Monetary Union is a way so friendly to plutocrats? Well, maybe some who went along were just stupid, or corrupt. But maybe some were very clever, and set-up an elaborated trap according to Machiavellianism 101. Now the German mammoth has fallen in the trap. Its struggles are mighty. But in vain.

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MACHIAVELLIAN POLITICS: CONSPIRACIES WITHIN, AND NOT WHAT THEY APPEAR TO BE:

To the discharge of the French socialists who set-up the EMU, maybe they thought that is all they could get from the Germans, at the time. Now Germany has swallowed the bait, and France’s position, in spite of Sarkozy selling the country to international plutocracy, is stronger than ever. France is the country of the future, Germany the country of the old. France has 35% more young people than Germany. The two most represented age slices in Germany are the scared, fat 50 to 60 year olds Merkel incarnates so well. Mr. Hollande, the socialist French president, has four adult children. Ms. Merkel, clinging to a past she neither master, nor understand, and rules which are beyond her, has no children.

Europe was built mostly by intellectuals who conspired to create situations where the easiest solution would be to “come out by the top“. The Steel and Coal Union between France and Germany (1948) was conceived to make war between France and Germany impossible, and so on.

The French Socialists are now in command of 21 of France’s 22 regions. They also control the French senate, the French National Assembly, the French presidency, and most significant cities. Even 8 of 11 MPs for the French living in foreign countries went to the Socialist Party.

In 1914, as the plutocrats, fascists and militarists in Germany marched towards war, the German SPD and the French socialists planned a general strike. This faltered as Jaures, the intellectual French socialist leader was assassinated. This time, though, as the plutocrats further their conspiracies, the socialists are in total control of France, and can plot the overthrow of the plutocratic order incarnated by Merkel with the SPD, Sozialdemokratische Partei Deutschlands.

Granted, when plutocracy is at bay, plutocracy is at its most dangerous. The real reason the plutocrats in Germany went to war in 1914 is that they felt at bay, hounded by the SPD, which was asking for more power for the parliament. Dubious encouragement from Colonel House (photo therein the link, interesting in other ways too!) persuaded the Kaiser the USA would support him against France, and Germany’s army attacked an astounded world in august 1914.

Well, it won’t happen again. Greece is a victim of plutocratic plots, not of “the euro”, as Krugman would have it. I say plots, in the plural, because the richest people and organizations in Greece made a tax code which excludes them from taxation.

For example, Greek ship magnates own more than 3300 vessels, 15% of the world’s total. They employ 200,000 people, in Greece alone. Shipping is an example of the globalization of plutocracy. As a major shipping plutocrat, Victor Restis, put it:“Sure tax me. Find me.” He means that nobody can find him, as his life style is global, overseas.

Such plutocrats say that, if the European Union tax them, they will go to Dubai and Singapore. I say: it’s time to use force. French, British and American police and the military could find them, worldwide. Satellites and drones can be used. Ships can be impounded. Magnates can be arrested, expropriated, judged, condemned, jailed. Or then they can restrict their trading between China and North Korea.

France, by the way, just judged and condemned Somali pirates, arrested on the ground, by helicopters, within the country of Somalia (not just the high seas). Somalia pirates are easy to avoid; don’t come next to the Horn Of Africa. But financial pirates are worldwide, they cannot be avoided.

Lincoln is revered in the USA, not because he averted his eyes from infamy, but because he used force, in the name of goodness.

Plutocracy also uses force. When the interest rates the Spanish state is forced to pay reach 7.25%, as it did June 18, 2012, force is being used against the Spanish People, thus against Europe (Spain has a much smaller government debt than Germany). It used to be that finance grabbed 8% of the profits. Now it’s 40%.

The French socialist foreign minister, the extremely experienced Laurent Fabius, an ex-PM, has called  Assad of Syria, an “assassin”. The French want to use force in Syria. Very good, once some secular precautions are taken. However, there is an even more crucial need to use force against “le monde de la finance”. As president Hollande said: “My true enemy has no name, no face, no party… He will not be elected, yet he governs. It is the world of finance.”

The state, thus democracy, rests on force, be it only to resist plutocracy. So it has been ever since civilization exists. Time to be reminded of this basic fact.

***

Patrice Ayme

CRUELTY AGAINST BIOSPHERE

DON’T JUST DEPLORE, RESTORE!

Highest Form Of Cruelty Cynically Fixed, If Need Be.

***

Abstract: As Wikipedia puts it: “Cruelty can be described as indifference to suffering, and even positive pleasure in inflicting it. If this habit is supported by a legal or social framework, then it receives the name of perversion.” Several species disappear, each day. The biosphere has clearly entered its sixth great extinction, in 500 million years. And it’s caused by just one species, us.

Usually people evoke, a la Cousteau, the prospect of the sad, uninteresting world that their grandchildren will inherit to give themselves some moral spur to save the biosphere. This is a valid argument, at least to people who care about their grandchildren, real or imagined. 

But there is a more fundamental moral question.

Is it CRUEL to be indifferent to the suffering of the biosphere? Is destroying the biosphere a perversion of the degeneracy of  civilization that affects us? And if it is, why should we be surprised that this cruelty, once fully exercized and in great shape, does, of course, come out somewhere else, here, there, everywhere, to exert its horror on all things human?

There is a solution to the deterioration of the biosphere: restoration, on an industrial scale (you want to lower unemployment? Here you go!). Restoration does not mean just asking the Indians to save Asiatic Lions, the Chinese to save the Pandas, and Africans to be trampled by elephants. It means for the richest countries to take the burden directly, even more so.

To restore the biosphere is not just an esthetic and hedonistic necessity, but also a socio-economic necessity. Beyond this, restoring crucial elements of the life we are meant for, is a moral necessity, a psychological necessity, and even a neurobiological necessity.

The perverse society plutocracy is pushing on us is enabled by a loss of moral and common senses, both originating from cruelty against the biosphere.

(As I will hopefully explain in this and a companion essay.)

***

CAN THOSE WHO ATTACK MOTHER EARTH FEEL GOOD?

Cruelty against various species is often condemned. However, although great prayers evoking lofty principles are always good, they can also immunize against effective action, by replacing the humble, mitigating task by self satisfaction. The sad fate of individual animals should not be used to occult a much more ominous fate, the assault against life itself.

That assault is fundamentally immoral, and that immorality has drastic consequences. They lay at the bottom of the present socio-economic crises, as I will show in this essay, and the next.  

Some will say:”Wait a minute, which moral system are you using? Certainly not Judeo-Christo-Islamism!” Ok, first there is no doubt that religions and moods such as found in the Indian sub-continent, all about the inter-connectivity of lives and life, have more expertise in their appreciation of the wealth of the biosphere. Spinoza and Schopenhauer, even Nietzsche, infused Indian thinking into their Western brew (since their thoughts are derivative, I will ignore them).

As my attack against Jainism below will show, I present as all encompassing a moral system closer to that of “First Nations“.  I don’t know of a name for it, but it’s the simplest thing. Maybe I should call it paleolithic morality.

“Mores” means long term habits, ways of doing things, which have proven sustainable.

So morality is what works in the long run for the continuation of the human experience.  Anything making human life unsustainable is immoral. Certainly the destruction of the biosphere qualifies as the ultimate immorality. Because without biosphere, man dies. And when everything dies everything, and everybody will suffer. And the indifference to that is the definition of cruelty.

Thus one can say that cruelty against various animals generalizes to a much higher form, CRUELTY AGAINST THE ENTIRE BIOSPHERE.

Instead of hounding businessmen who want to make a buck from the biosphere, much salvation, especially regarding the preservation of species, could be found, by carefully turning greed on its head.

Example: To save elephants, as a species, one should use their two greatest assets, and those are tourism (of course)  and…ivory. Otherwise elephants will disappear, because common people need very good reasons to learn to manage their lives with up to 11 metric tons beasts around, those mountains of irascible flesh capable of charging at 40 km/h through rice paddies (yes, there is native rice in Africa).

Making the biosphere profitable, by investing in it, is a high moral calling.

And if it means unsavory means, so be it. After all, people are known to go to the euphemistically named “restroom” everyday. The biosphere may be a temple, but Aztec style, with lots of blood. Invest in the biosphere, as it is, avert your senses, if need be.

***

AUSTERITY DOES NOT WORK: DEPEND, SAYS THE BIOSPHERE!

Many ecologists have an anti-technology, anti-passion approach to the biosphere. They think AUSTERITY (that concept again) will solve it all. There is a Jainist side to them.

Jainism is the original version, 3,000 years old, of fanatical pacifism and ultra Buddhism. Its main idea, as practiced by its monks, is to have no dependency whatsoever. No dependency to love, even to their own parents. No dependency even to appreciating food, which is viewed only as a necessary fuel, as bland as possible. No dependency even to clothing, so they wear strictly none.

That works better in balmy India, rather than Siberia.

Jainism is superficially impressive. Its (naked) priests were already well known to pre-Socratic Greeks (who called them “gymnosophers“, that is the naked wise ones).

The silence of Greek philosophers is deafening. It’s not that the Greeks were afraid of nakedness: they exerted in the nude (gymnastics!). The Greeks could only feel that Jainism was mostly wrong. First because it denies the nature of Homo Sapiens, Earth’s ultimate predator. So it’s make belief. Even the rice the Jainist monks eat comes from violence. If Jainist monks want to be involved in absolutely no violence, they better stop eating. However, they would then commit violence against themselves. Jainism is a religion which tries to make us believe that lions can be angels, if they would just beg for grass and stop wearing clothing.

As a semi anecdote, Hitler wanted to be seen as a man of peace. That is the angle he found in Maynard Keynes’ “The Economic Consequences of Peace” (a German supremacy document that alleged that anything causing Germany umbrage was against peace!). So Hitler adopted the most sacred Jainist symbol, the Swastika (changing its red color to black, and putting the red around in a creative fit of his).

The fundamental intuitions of Jainism that we can just disconnect from the world, and that this is a good thing, are wrong, on both counts.

A baby depends upon love and adults, for years. All Jainists who ever existed started with love and dependency. Even Jesus had to acknowledge he needed a support system, when very little.

Of course one can deny co-dependency, and believe one is better than anybody else, that’s what the Nazis did, on an industrial scale. But that means one is either incapable of thinking correctly (co-dependency is a fact), or one hates all and any life. The Nazis proved both phenomena can happen at the same time (and Merkel is trying her best to demonstrate the same point again).

But that’s a mistake, austerity is anti-life, dependency the way, the biosphere is about exuberance, passion, experiments. Life is about the Red Queen Hypothesis (Alice asks the Red Queen why they are running the landscape does not move, and the queen explains they have to run, just to stay in place). Don’t go Jain on us, that’s what mussels do, and we are not mussels.

Life is all about maximum interdependence, no holds barred, it’s about bursting out of the biosphere, and death itself (French researchers just found that muscular stem cells keep the entire rebirth capability, 17 days after “death”, and out of one of these apparently dead cells, a million new ones could be born).

The most developed world should reintroduce dangerous megafauna. A new industry, another new way to fight unemployment (same as the old one, during eons passed, when the genus Homo was already the manager of life, at least on land).

***

THE SUFFERING MOON BEARS: YES, BUT HOW MUCH?

I had not heard of all the charms of Traditional Chinese Medicine. However Sherryn Groch revealed to me in “Raging Against Cages”  an industry that I never suspected existed: extracting bile from caged bears. One gram of bile sells for $20 (that is half the price of gold)… Here we have a piece of nature with a high market value. From the BBC’s China bear bile farms stir anger among campaigners:

“In a secretly shot video, a Chinese farmer holds up a bag of yellowish bile he has just extracted from a caged bear.

“Some Westerners say this is cruel – but I think the bears are making a contribution to mankind,” says the grinning man.

Animal welfare groups have recently stepped up their campaign to end the practice of milking bears for their bile, still legal in China. They say the animals suffer enormous physical and psychological pain.

But bear bile has been used in traditional Chinese medicine for hundreds of years and it is not proving easy to change habits formed over generations. Pharmaceutical companies that farm bears are also fighting back to protect their industry, in a public relations battle to win hearts and minds.”  

Sherryn exhibits gruesome cases, which could clearly be outlawed for extreme cruelty against an advanced animal, the Asian Black Bear (“Moon Bears“).

Sun Bears, and the much larger Moon Bears, are tropical bears, all black, except for a big white crescent moon on their chests. Animals like these are part of the megafauna, and, as man replaces primary forest everywhere with furniture, palm plantations, asphalt, they are threatened with extinction.

Outlawing all and any bear farming is very honorable, at first sight, a bit like when Gandhi proclaimed that he did not want India to take part in World War Two. A honorable end: peace at any cost.

Never mind that if Hitler’s henchmen had their way, they would have stuffed the likes of Gandhi in an oven. If the means destroy the ends, are the ends worth pursuing?

Indeed, there is another side to the whole question. The Asian Black Bears are a “threatened” species. Yet, officially pharmaceutical companies in China hold 10,000! Some want to hold even more, and be listed on stock exchanges.

Says the BBC: “…. [a] company opened its doors to journalists – the BBC was not allowed in – to counter claims that its business is cruel.

Reporters were shown bears playing in a pit and others being milked for their bile by workers dressed in face masks and protective clothing. The bears appeared comfortable and unconcerned by the procedure.

At a news conference, company director Zhang Zhijun said making a hole in a bear’s abdomen was no different to “piercing people’s ears”.”

The notion that the pain can be so small should be judicially explored. If it is demonstrated, then the business ought to be tightly regulated, but kept legal. And I am going to explain why.

***

SAVE PRESTIGIOUS SPECIES BY CAGING THEM IF NECESSARY:

A few years back, a company asked for authorization to farm a nearly completely disappeared species of sea turtles. They intended to grow thousands, although only a few hundreds were left in the wild. As the mortality, in the wild, is more than one adult turtle for 1,000 baby turtles, from predation, it’s easy to save sea turtles, if one raise them on a farm. They were refused. (I did not follow the story after that.)

Generally conservation organizations make the silly argument that it is more important to save the environment, and that, if one saves the most prestigious species in captivity, people will be less motivated to save entire ecological system. (Merkel makes a similar argument: better a dead patient, pour encourager les autres.)

However this is exactly how the California Condor was saved. Instead of waiting for the South West USA to return to wilderness, state conservationists captured all the condors, and bred them in captivity. They are now back in the wild, over several states. (Still dying from lead pellets, though.)

I do think that one should encourage the (as non cruel as possible) farming of some species threatened by extinction presently (say some sea turtles, sharks, etc.). As is done with some saurians (there are highly successful crocodile farms; crocodiles in farms are so well nourished and content that they do not practice cannibalism, differently from their common practice in the grand outdoors.)

I do not mean one should kill dolphins, because they are good to eat. Japan should stop killing whales. One should draw the line somewhere, with sentient animals. (Although I have seen Africans butcher dolphins, as they have always done traditionally to feed themselves; they should be allowed to keep on doing so, under legal monitoring, as is done with “first nations” Arctic hunters and sea mammals).

The case of elephants is different: dolphins or whales are innocuous to humans, and do not live where people do, whereas elephants, who are as intelligent, need another reason to justify their encumbering existence, in the midst of humans, because they are very dangerous, if not carefully managed (that means half domesticated; wild elephants can be domesticated, they are that intelligent).

In general saving prestigious species helps to remind common people how prestigious the environments they came from, as a species, were. Thus reintroducing the prestigious species is conducive to re-introducing said environment. For example California is making efforts to be ecologically correct enough so that condors can survive. Little things, such as leaving enough carcasses.

***

THE GREATER CRIME: EXTINCTION.

There are three crimes often committed nowadays against the animal kingdom:

1) the cruelty to individual animals. (Princeton philosophy professor Singer has waxed lyrically, not to say rather grotesquely, on the subject, with the base, not to say deranged, argument that, since people are animals, animals are people. Or something akin to that.)

2) the cruelty to the biosphere, by amputating it of its species. If one thinks about it carefully, literally, etymologically speaking, exterminating a species is genocide (it kills genes!). Some will say I torture semantics, but, if one insists to torture the biosphere, the following will happen:

3) inuring ourselves to being cruel and devastating to the biosphere, and the termination of species. That will make the commission of genocide something normal. We will start with bugs, and, when we run out of bugs, we will treat human beings as we treated the bugs (yes, this is a reasoning similar to Singer’s, and Singer falls exactly in that pit, like the mammoth he is). Call that psychological inertia: commit cruelty here, consider it normal, carry it somewhere else.

2) and 3) are arguably higher category moral wrongs than the cruelty against individual creatures. It’s torture against creation itself.

Farming wild species may often be the way out. For example, saving rhinoceroses by large scale farming beats the disappearance of the species, anytime. As it turns out, rhinoceroses readily domesticate (they were even used militarily, because they are highly combative. ).

Farming wild species may also necessitate saving enormous areas of wilderness (say if one were raising elephants for ivory). Hunting ranches in Texas are said to have more of some subspecies of tigers than there are left in the wild.

Another example is Spanish fighting bulls used for corrida de toros. They constitute a breed of their own. To cultivate their ferocity, they are brought up wild. For human reasons (bullfighting is cruel, at least at some terminal point, for beast, and, or, man alike) corrida may well be outlawed (as it just was in Catalonia). Then the breed will certainly disappear.

In general species without any commercial interest whatsoever may well disappear. Better sell a sea turtle soup, than to see the species the soup is made from, disappear forever.

A related activity would be to displace threatened species to places where they would have much more room. My preferred example would be to transfer surplus zoo Amur leopards to Yukon national parks (reducing if need be the local mountain lions’ population).

In conclusion, developing commercial interests to save elements of the biosphere is not crime, but virtue and (short term) solution.

Reciprocally, preventing the rise of legitimate, lawful, well regulated businesses, augments even more the commercial value of organized crime, and is leading to the present disappearance of many species.

***

NO DANGEROUS LIFE WITHOUT HIGH INCENTIVES:

The main reason Asian Black Bears are eliminated is that they are very dangerous. They are known to attack people without provocation, viciously and lethally. As someone who got charged twice by black bears (in the American West), and had many all too close calls (as a solo mountain runner), I can testify that only lions I fear more (OK, I have never run among grizzlies, and did not try it when I could, fishing proved dangerous enough).

If Asians are not given very good pecuniary reasons to keep dangerous predators around, they simply will not. True there are lots of national parks in the USA, but they are mostly in the empty west, and the really dangerous predators, such as grizzlies, and the equivalent of tigers and lions, have long been eliminated. The progressive return of the wolf is highly resisted.

Large animals tend to be deadly. A small, 5 kilogram shark is not a problem. It is a problem when it is 100 times more massive. The lethality of some species calls to actively manage them, and thus to make them profitable to:

1) pay for said management.

2) give a considerable incentive for the population to live cautiously, if not dangerously.

Elephants in Sri Lanka constitute a particular subspecies.  Under human pressure, they have quickly become smaller in the last two centuries. Without careful management, they are terrifying, and dangerous neighbors.

There are at least 5,000 elephants, there used to be 15,000 two centuries ago. They particularly like the rich alluvial plain, best for rice farmers and their families. Often girls come back from school and have to stop before getting home, terrified by a trumpeting band of irate multi tons quadrupeds in the distance. More than 100 elephants a year are killed to protect crops and houses. Their habitat is extremely fragmented.

An extensive government monitoring and teaching program, complete with frightening pachyderms at night with firecrackers, has established some modus vivendi. However, that program is expensive, and will survive if, and only if watching elephants can be turned into such a profitable tourist activity, that it pays for itself. Blatantly.

***

RESTORE NATURE AS IT EVOLVED TO BE. IN GIANT PARKS EVERYWHERE:

Speaking of elephants brings attention to the hypocrisy of much of the North Atlantic countries will be exposed. Large species related to elephants, mastodons and mammoths, used to roam present say NATO. Agreed, they were a threat. But also a resource. NATO now has the technology to enjoy the resource, and keep the threat in check.

There used to be mammoths, wooly rhinoceroses, and elks with antlers 3 meters across all over Europe. Men eliminated them all in the last 14,000 years. The extermination started with the (giant) Cave Bears, about 50,000 years ago. Thank the Neanderthals for that.

Up to 3,000 years ago, European Lions were still found in Western Europe. Aurochs survived until the 17C. Lions and tigers were still in the Caucasus-Caspian area up to very recently. The Atlas lion, a larger species, survived until the 20C. Poison nearly completely eliminated Brown Bears in Europe (the ancestors of American Grizzlies), and wolves (who are coming back, big time).

So is Europe going to show the way, and re-introduce what it used to enjoy? Real big dangerous animals? Experiments in France (reintroducing prehistoric horses and bison) show that nature becomes completely different, taking more the appearance of a park, like the African savannah park (for the same reason). 

Homo sapiens has eliminated megafauna on most continents. Australia had many large animals (marsupial “lion”, marsupial “rhinoceros”). Men arrived by boats, killed them all. Ever since Australian ecology has been out of balance (in spite of dingoes to play predators).

Notice that the usual anti-idea that the climate fluctuations and attending vegetation change truly killed the megafauna do not hold for Australia: the extent of glaciation in Australia was rather reduced (to put it ironically). Verily, it’s the other way around. It is likely that killing (most of the) megafauna changed the vegetation, and maybe even the climate.

Exterminating “lions” allowed the cattle to multiply. This is what Neolithic herders wanted. However, differently from lions (previously the most frequent species, as they eat everything, from rabbit up), cattle make a lot of methane, CH4, the powerful greenhouse gas. Thus the first man made greenhouse. It may have prevented a return of a little glaciation.

It’s high time to reverse all this, and restore megafauna. Before being able to re-create the original species, stand-ins ought to be brought in. Elephants and rhinoceroses have been suggested for Australia, be it only to reduce the (African) Gamba grass (a giant grass, meters tall, made to burn spectacularly. I have seen some of these brush fires in the park-savannah).  Australia had a full megafauna, with rhinoceros sized “giant wombats“, and predators to control them. It disappeared 50,000 years ago, as Homo Sapiens invaded (that disappearance led, in turn, to climate change… this, please notice, is the exact opposite to what Conventional Wisdom is paid to babble about).

The full panoply of prehistoric animals ought to be reintroduced, say in Europe. OK, none of the ancient animals has been yet recreated, using genetic engineering (although some Japanese have just such a plan for mammoths). However some animals close to extinction such as the Amur Leopard, the Siberian Tiger could be reintroduced in safe places, along the lines of the reintroduction of the California Condor.

And yes, some of these places ought to be in Western Europe. Britain could start by reintroducing the wolf, exterminated in the 17C (the UK has signed a treaty to this effect, but “forgot” to implement it).

***

RESTORE THE HUMAN MINDS, IN FULL:

Why should we restore wild nature? As I said above, to abate cruelty, restore morality. However it goes much further than that, as I evoked in the abstract. That will be the second part of this essay, where spectacular connections with neurobiology, neurohormonology, institutional cycles, and the present civilizational crisis will be established.

***

Patrice Ayme

Why Austerity?

AUSTERITY IS PLUTOCRACY’S BEST FRIEND.

We are in a giant ecological crisis, the collapse of the biosphere. That’s new. We are also in the midst of the silent coup of global plutocracy. That’s nothing new, plutocracy has ravaged many a civilization.

Collapse and plutocracy are entangled, they always have been. The economic crisis is only an appendage of a catastrophe of antediluvian proportions.

Krugman pointed out in “Reagan Was A Keynesian“, that, by the fourth year of Ronald Reagan’s presidency, because the economy had faltered, total government spending was augmented 130% more than in the comparable period under Obama. Thus confirming that Obama is to the very far right of Reagan (especially considering that the economy is now in a grave depression, the Greater Depression, not just a Federal reserve engineered recession, as it was under Reagan!)

President Ronald Reagan caused in part, through his military built-up, a built-up in high tech. That was highly profitable, in the end. The ecological and energy crises can be solved by such a technological built-up. They can only be solved by such a much greater built-up. Such a built-up would then prove very profitable. For all of humanity, yet again.

Austerity is the enemy of technology. Superior technology asks for a measure of irrational exhuberance, as does, even more, its fertile ground, new science. Indeed, if we knew how it worked already, it would not really be new.

So why all the austerity now? Why undermining what can save the biosphere, and us?

Because austerity advantages the plutocrats, in the coup they are conducting, silently.

Such a phenomenon, a coup by the richest, under other guises, happened several times in Roman history: the situation was dire, and the plutocrats in control of the Senate tried their best, including sometimes mass assassinations, to reduce spending. In the end, austerity reigned, and reigned so much that plutocracy killed Rome.

Why is austerity favorable to plutocrats? Because, when one has it all, as plutocrats do, the best way to keep it, is to make sure that the others get ever more impotent. And when one has it all there is to be had, one can only get more, if one makes sure that others get less.

***

Here are a few elaborations on the preceding, justifying the aphorisms above:

AUSTERITY IS THE ENEMY OF TECHNOLOGY:

Time and time again, Roman inventors, under the empire, presented drastic inventions, which could have changed the flow of history. They were squashed. Because plutocracy has no interest to change the flow of history, or even to have one. (As imperial Rome did not progress technologically, but the barbarians and the ecological difficulties did, irresistibly. The plutocrats heading the Roman state, cornered, became weirder and weirder, calling ever more to the fascist instinct to enforce a fanatic war against imaginary enemies, while, naturally, ignoring the real ones, namely themselves.)

***

THE BIOSPHERE IS APPROACHING A TIPPING POINT:

An article in 07 June 2012 issue of Nature considers that the entire planetary biosphere may be close to a “tipping point”. Indeed. The two essential observations are that;

a) the biosphere has undergone dramatic “phase shifts” in the past, and

b) that the present stresses on the biosphere are the greatest in at least twenty million years.

In a phase shift, typically the gas content (more or less CO2 or oxygen, O2), or the temperature change abruptly, and for many million years. Such events seem to be associated with ultra-massive volcanic events (core volcanism, for want of a better expression: Dekkan, Siberian Traps), or possible asteroid impacts (Yucatan, Chesapeake Bay, Siberia events).

The article concludes:”It is also necessary to address root causes of how humans are forcing biological changes.” “Root causes” have to be addressed. If they are not, the problems fester. Rome did not address the “root cause” of its problem, so the Roman empire went through a succession of catastrophic tipping points. See below.

***

THE GIANT COUP BY THE LORDS OF FINANCE: has been made possible by its stealthy character. The flies have not seen the spider web in which they are englued.

The civilization sized coup of the Lords of Finance, has been in the making for at least half a millennium, ever since bankers financed Francois I and Charles V, so that they could ostensibly make war against each other (circa 1520 CE). At least, so it looked, officially. War is a reason that gives plutocracy meaning.

Well financed war between France and Spain, for 150 years or so, allowed oligarchies of the splendid, on both sides, to have an excuse to make said war. War was a distraction, that diverted the People from revolution. The exploits of the knight Bayard may still mesmerize the naïve, but when men of war turned their traditional expertise to religious wars, it was distinctly less funny.

The silent coup, has thus unfolded over five centuries. It has consisted of several phases and elements:

a) LEVERAGING THE WAY MONEY IS CREATED PRIVATELY. Money mostly created by credit lines made possible by the fractional reserve system (privately managed, but set-up by the public government).

The fractional reserve system is highly technical and non linear. It allows private individuals, the bankers, to create 99% of the money. The complexity of the fractional reserve system hides it from democratic scrutiny. However, president Jackson, a great, extremely brutal and macho general and duelist, understood enough of fractional reserve and bankers to prevent its establishment in the USA in connivance with the state. Jackson called that his proudest achievement. On his deathbed.

Jackson’s  hostility to the Rothschild was amply justified by fact and theory. The Rothschilds (Red Shield in its original German) were feeding both sides of the so called Napoleonic Wars. Napoleon certainly did not start them: the Rothschild were out there financing wars, even before Napoleon was born. Maybe the Napoleonic wars should be called the Rothschild wars.

Alluding to the fractional reserve system, the Rothschilds had been crowing about their control of nations:

Mayer Amschel Rothschild: “Give me control of a nation’s money and I care not who makes the laws.” 

(In other declarations, Rothschild boasted that he “issued” the nations’ money.)

Tellingly the theoreticians of class struggles of the Eighteenth and Nineteenth Centuries missed out that angle entirely. Marx vaguely complained about the banks’ “monopoly”. He forgot to say that it was monopoly in money creation. That private individuals could monopolize money creation would have floored the leaders of countless polities in passed millennia. Leaders, in the past, knew that striking coinage, that is, in practice, Fiat Money, was the prerogative of the state. That state monopoly was backed-up by military force.

However, president Roosevelt was not fooled: he “welcomed the hatred of money changers“.

(“Money changers” was the old derogatory term for financiers used during the Middle Ages’ great age of independent republics and cities: Roosevelt knew history.)

b) THE METASTATIC RISE OF FINANCIAL DERIVATIVES under Clinton and complete deregulation of finance (London’s “Big Bang, etc.) Derivatives were initially a way to insure farmers (say rice farmers in Japan 16C, or corn growers in Illinois 19C). They have their place as a form of insurance for commercial operators. But a distinction ought to be drawn between those and speculators. Moreover, when there is no insurance connected to the bets (as has been the case with CDS), then one obtains A CASINO INSURED BY THE PUBLIC, ALBEIT OWNED  BY SHARKS. Thus a welfare system for plutocrats set-up by the public.

c) MAKING THE STATE SERF TO PLUTOCRACY: The French law of 1973 passed by Rothschild banker Pompidou forbade the state to create money. Instead the state had to ask the richest men for money, and they were free to make as much money as they wanted from this begging. It was generalized to all of Europe by dim witted or treacherous socialists (Delors and his crew).

d) THE BANKERS STOLE THE ECONOMY, GIVE THEM MORE: The crisis of 2008 (Subprime, etc.) was “solved” by throwing trillions of public money (“monetary base”) to (private) banks. The bankers had lost that money, to themselves, and their friends.

That “solution” made private financiers more powerful than ever. The same is done in Europe, with the same result. The 100 billion euros “rescue’ for Spain is more of the same. Breaking up Europe would make the financiers even more powerful, that is why they are trying their best to do so.

***

SUSTAINABLE ENERGY IS UNSUSTAINABLE WITHOUT STORAGE:

Only very much higher technology will solve the present crisis. Sustainable energy, in particular could work, with storage systems… That we do not have: the best are dams, but dams cannot go in every backyard. (Dams allow to recover 80% to 90% of the energy, by working turbines in reverse to bring the water up, when there is excess energy; the method was inaugurated to serve nuclear plants, which never stop producing, night and day, month after month…) -Denmark better start building dams, to stop depending upon coal (as it does now). In the case of Denmark, a flat country, that means elevated lagoons.

More advanced storage are possible. Fuel cells have high efficiency (but they have proven finicky, expensive, and even dangerous). On the island of Corsica a private-public partnership with the local university, is building fuel cell systems connected to the grid.

***

ROMAN PRECEDENTS:

Roman history is very instructive, and deserves much better, to be so instructed, than the parody of it taught right and left (last example: the May 2012 book “Why Nations Fail“).

Rome knew several plutocratic and debt crises. The first one, the rise of plutocracy, put an end to the republic; the next one was solved radically by Tiberius, by massive public refinancing; the following one set the roots for the collapse of the Principate, and even the empire: the plutocrats refused to pay enough taxes to keep the barbarians off the gates… Already under Marcus Aurelius! It got only worse and worse in the following three centuries, or until Roman armies were replaced by Frankish armies… Which were paid by Frankish taxes… Or nationalizations.

The present crisis is a combination of the three Roman financial, economic and social crises.

Europe, always more inventive, has found still another crisis to add to the mix.

***

EUROPE, OR WHEN THE STATE ENTRUSTS THE COUNTERFEITERS WITH CREATING MONEY:

Europe has entrusted the plutocrats with money creation. In ancient Rome, as in any state worth this title, it’s the state that created money. It is still like that in the USA, Japan, China, Britain, Mongolia, or Argentina. But not in Europe’s European Monetary Union.

Part of the problem of Late Third Century Rome was that, precisely because the plutocrats refused to pay taxes, and they had the means to refuse, the Roman empire ran out of money. Diocletian corrected that with an economic command and control system that worked obviously very well, and was sustainable…

Until the Vandals cut the food line between Africa and Rome in the Fifth Century: there had not been enough money to pay a sufficient army, or navy to stop 10,000 or so Vandal warriors!

Thus command and control in the economic realm, had not fixed the fundamental problem, the disconnection of the plutocrats, and the resources they commanded, from the rest of society. The plutocrats could afford (private) armies, precisely because the state could not afford the PUBLIC army. Plutocrats did not care that cities needed walls to protect themselves; they had their own armies to defend themselves.

Present day Europe has hyper linked to that condition of the Later Roman Empire, at warp speed.

***

HOW ROME FELL, SHORT VERSION:

Plutocracy makes stupid, and stupidity was the proximal reason for the fall of Rome. Rome swung from general to general, as a gibbon from branch to branch, and finally the fiercest of them all, Constantine, allied himself with the army of the Christians, a state within the state, resulting in the establishment of full blown theocracy.

Plutocracy, plus theocracy, makes for a doubly stupid leadership, hence really stupidly conducted wars, and the consequence was the successful invasion of the Roman empire by the Goths. In comparison with the Franks, who were deeply romanized, the Goths were savages. It took 130 years for the Franks to beat the Goths, and re-establish a military successful Roman state (the Imperium Francorum, which took officially the title of Imperium Romanum, “Roman empire” only in 800 CE, when both the Pope and the Roman imperial state in Constantinople agreed).

When Rome fell, that means, when the giant Roman socio-economy collapsed, most of the population could not get to food, nor even drinkable water. Most people died. We are even more vulnerable now.

The mushrooms of plutocracy, such as austerity, can appear beautiful, but they are most venenous…

***

Patrice Ayme

Boosted By Soros On Europe:

BAD GERMANY, BAD EUROPE:

Abstract: I agree with much of what Soros said on the bank and currency crisis in Europe. Under his calm language, his indictment of Germany is frightening. I add fuel to the fire, naturlich.

[This is the European centered part of Soros’ discourse.]

***

  Soros:The fallibility of market participants, regulators, and economists must also be recognized.  A truly dynamic situation cannot be understood by studying multiple equilibria.  We need to study the process of change.

PA: In the case of European Monetary Union (EMU), even the equilibrium analysis was flawed from the start. It is not a question of Europe not being an optimal currency area (as American Europhobic destroyers often have it). It was much more basic than that: the nature of money was misunderstood.

  Soros: The euro crisis is particularly instructive in this regard. It demonstrates the role of misconceptions and a lack of understanding in shaping the course of history. The authorities didn’t understand the nature of the euro crisis; they thought it is a fiscal problem while it is more of a banking problem and a problem of competitiveness.

PA: As Soros himself would say further on, it’s even deeper than that: the possibility of making “fiat money” was denied. Thus European states were cut at the heel. “Fiat Money” goes at the heart of the concepts of money… and state.

There is also a massive corruption problem, and it is not confined to banks. It implicates the very nature of today’s constitutions.

The very nature of representative democracy is to put a lot of power in a few hands. This is also what plutocracy does. Make interact together the very few elected ones with the very few who have a lot of money, boost all of this with the fractional reserve privately money creating banking system, and churns out the rule of wealth, an aspect, with titanic corruption, of plutocracy.

  Soros: And [European Officials] applied the wrong remedy:you cannot reduce the debt burden by shrinking the economy, only by growing your way out of it. The crisis is still growing because of a failure to understand the dynamics of social change; policy measures that could have worked at one point in time were no longer sufficient by the time they were applied.

PA: They applied the wrong remedy deliberately. Merkel, Sarkozy and the Brussels’ fauna are in cahoots with the private financial pirates; they are their legal arm. All they wanted to do is that their friends, the pirates, recover their principal, after squeezing hard enough the colonized. So they set-up an aid system nominally for the latter, but, truly for their bankster friends. 

The delay in the correct measures was also deliberate. The allies of plutocratic banks (Merkel, Sarkozy, Barroso, etc.), have used it as a tactic to do nothing.

Always doing too little, too late, is an efficient way to do nothing, while claiming one meant well. Let’s not be fooled by Merkler and her kind.

The basic, deliberate flaw at the base of the EMU, is to make money creation a plutocratic affair. It would have emerged anyway. It emerged now, because we have a plutocratic bubble.

That bubble, in turn, was caused by the arrogance consecutive to the Bush-Obama(-Blair-Sarkozy-“Citizens-United”) years, when the plutocrats’ influence has started to look unimpeachable, and this once-in-a-civilization chance to grab power once and for all has made them frantic! 

The same happened after 150 BCE in Rome. Then, the plutocrats won, and Rome started its long decline. This time the decline is guaranteed to be short and brutish.   

  Soros; Since the euro crisis is currently exerting an overwhelming influence on the global economy I shall devote the rest of my talk to it. I must start with a warning: the discussion will take us beyond the confines of economic theory into politics and the dynamics of social change. But my conceptual framework based on the twin pillars of fallibility and reflexivity still applies. Reflexivity doesn’t always manifest itself in the form of bubbles. The reflexive interplay between imperfect markets and imperfect authorities goes on all the time while bubbles occur only infrequently. This is a rare occasion when the interaction exerts such a large influence that it casts its shadow on the global economy. How could this happen? My answer is that there is a bubble involved, after all, but it is not a financial but a political one. It relates to the political evolution of the European Union and it has led me to the conclusion that the euro crisis threatens to destroy the European Union. Let me explain.

PA: Agreed that there is a political bubble. But to say there was not a financial bubble is, simply false. The financial bubbles in Greece, Ireland and Spain were blatant. So was a general real estate bubble. For years, decent, hard working upper middle class people could not afford to live decently in the world’s most expensive cities, although those concentrated much of the GDP of the world (this is an allusion to New York, London, Paris, Tokyo, among others). So the main producers of added value work could not afford to live where they added the value, making the West’s economy inefficient (and society unjust).

Actually there is even, worldwide, a plutocratic bubble, the one Soros does not want to see. But I agree with him that the European Union is threatened at this point. Mountainous decisions have to be taken in days, in a system made to produce a few mice in a decade.

  Soros: I contend that the European Union itself is like a bubble. In the boom phase the EU was what the psychoanalyst David Tuckett calls a “fantastic object” – unreal but immensely attractive. The EU was the embodiment of an open society –an association of nations founded on the principles of democracy, human rights, and rule of law in which no nation or nationality would have a dominant position. 

PA: Although I see what he is trying to say, Soros is starting to thread very dangerous ground here. The European Union has to be, or there will be another war. It is not a bubble, it is the main weapon against insanity.

Europe is not a “fantastic object’, it is a necessity.

  Soros: The process of integration was spearheaded by a small group of far sighted statesmen who practiced what Karl Popper called piecemeal social engineering. They recognized that perfection is unattainable; so they set limited objectives and firm timelines and then mobilized the political will for a small step forward, knowing full well that when they achieved it, its inadequacy would become apparent and require a further step. The process fed on its own success, very much like a financial bubble. That is how the Coal and Steel Community was gradually transformed into the European Union, step by step.

Germany used to be in the forefront of the effort.

PA: Sort of. Although German politicians used to be in the forefront of the effort in the 1920s, after Germany fell into Nazism, it was of course unable to lead mentally. If nothing else, Nazism had decapitated Germany. Instead, after the Nazi disaster, Germany followed the lead of French statesmen, who had brandished the olive branch (say by not insisting to recover the entire West bank of the Rhine; the same generosity was mysteriously applied to Italy, although clearly major ex-French speaking parts of Italy such as Val D’Aoste, and next to Turin, used to be part of French speaking Savoy, and, after Mussolini’s forced Italianization could/should have very well be annexed!).

One can observe Soros’ drift into anti-European, pro-plutocratic and (implicit) anti-French bias. All students of the early European Union know that Robert Schuman and Jean Monnet, two Frenchmen, played the leading roles, and the German role consisted mainly to salute the French led effort, and goose-step behind it. The tables of collaboration had been turned around.

Many surviving Nazi generals knew all too well that they got incredibly lucky in 1940, and had been in excellent position to observe the self defeating nature of the war against France. So, although still influential in German society (!), in the 1950s, they pushed for the symbiosis with France, that Hitler himself, at Speer’s urging, had to admit had to happen. That drove Hitler to many a feat of rage.

But if even Hitler had to collaborate with France, the country that he hated so much, how could any German refuse to collaborate with France?

If Hitler had to collaborate with France, then why did he start the war? Hitler obviously felt. The answer, as the Nazis insisted at Nuremberg is that it was France, not Germany, which had started the war. Well, France had to start the war, it was a question of civilization, and the proof was Auschwitz.

Hitler and Rommel had admitted earlier that the French strategically destroyed the Afrikakorps at Bir Hakeim (don’t believe what all Anglo-Saxon Wikipedia says about it; they quote from some vengeful Nazi). The resistance at Bir Hakeim to the fury of the entire Afrika Korps deprived it from its only chance to surrender and destroy the British army protecting the Middle East. The scythe move in the desert before Tobruk, was blocked by the tiny army of (ironically named) general Koenig.

By the time of this strategic French victory (May-June 1942) the Americans had not fired one shot against the Nazis yet. If Israel exists today, it’s thank to Bir Hakeim. OK, back to our Jewish survivor here.

  Soros: When the Soviet empire started to disintegrate, Germany’s leaders realized that reunification was possible only in the context of a more united Europe and they were willing to make considerable sacrifices to achieve it. 

PA: Soros here is starting to get really crafty. He knows very well that what he says he is not true: it’s the French (and, especially Mitterrand, who I do not like, but was right on that) who insisted upon the Euro, in exchange for supporting Germany’s reunification. As Mitterrand had (unlawfully?) financed his good friend Kanzler Kohl’s re-election, it was hard to say no. The French idea was precisely to make European Unification impossible to reverse.

(Mitterrand used similar methods on Thatcher, by supporting her crucially for the Malouines/Falkland war, he extracted from her the Chunnel and the Single European Act…)

So why is Soros lying? Because he is trying to put in sharp contrast the alleged wisdom of Germans in the 1990s versus the sort of neo-Nazism we are now condemn to contemplate the apparent rise of. Here we have the spectacle of a Jew, Soros, being too crafty by half, and much too polite with proto-fascism, the sort of process philosopher Hannah Arendt, also a Jew, loudly, and justly,  decried in the 1930s and 1940s.

  Soros: When it came to bargaining they were willing to contribute a little more and take a little less than the others, thereby facilitating agreement.  At that time, German statesmen used to assert that Germany has no independent foreign policy, only a European one.

PA: That’s the least Germans could do, after fostering, for a century, a policy of systematic assault against other nations, starting with a war against Denmark in 1864. This policy was ended by force, in an action started by France (leading) and Britain (following belatedly), on September 1, 1939 (Ultimatum to Germany) and ended May 8, 1945 (capitulation without condition of said Germany. Now some Germans are saying they are tired of the “Nazi blackmail”. Well, then, they should not practice it, again.  

  Soros: The process culminated with the Maastricht Treaty and the introduction of the euro. It was followed by a period of stagnation which, after the crash of 2008, turned into a process of disintegration. The first step was taken by Germany when, after the bankruptcy of Lehman Brothers, Angela Merkel declared that the virtual guarantee extended to other financial institutions should come from each country acting separately, not by Europe acting jointly. It took financial markets more than a year to realize the implication of that declaration, showing that they are not perfect.

The Maastricht Treaty was fundamentally flawed, demonstrating the fallibility of the authorities. Its main weakness was well known to its architects: it established a monetary union without a political union.

PA: This is true, but that was a deliberate plan, to force unification from the top down.

There was an more proximal flaw. As created the European Central Bank was deprived of many fundamental powers that all other central banks have had, since there are central banks. (The first central bank was the Bank of England, with a tight relation to the financing of the Royal Navy, followed later by the Banque de France.)

In general, sovereigns have always struck coinage. However, under Dutch (highly leveraged) influence (“Glorious Revolution”, 1688, truly an invasion), Britain set-up a highly leveraged plutocratic system, the fractional reserve. (That it is plutocratic was observed by the Rothschild themselves, who were at the core of it.)  

  Soros: The architects believed however, that when the need arose the political will could be generated to take the necessary steps towards a political union.

PA: The main architect was the French, Jacques Delors, a socialist and loud Christian. He amplified thus the system put in place by French banker, Rothschild servant, and also French president, George Pompidou. A law of 1973 outlawed the financing of the French state by its central bank (something all other central banks do). Instead the French state had to go to plutocrats to beg for money.

As leveraged banks are truly state institutions, this established a further control of the French state, hence Europe (after the European Monetary Union), by private individuals, the bankers.  

  Soros: But the euro also had some other defects of which the architects were unaware and which are not fully understood even today.

PA: Those architects claimed to be socialist, while ruling that banks would rule thereafter. In other words, if they were not arrogant idiots, they were deeply corrupt (yes, I am talking about Delors… somebody I long viewed as a European hero, and now looks more like a European horror!)

  Soros: In retrospect it is now clear that the main source of trouble is that the member states of the euro have surrendered to the european central bank their rights TO CREATE FIAT MONEY. They did not realize what that entails – and neither did the European authorities.

PA: Not just that: the power of the ECB to create fiat money is ALSO very restricted (it cannot be lent to states directly, governors can’t be overruled, etc.) As it is, it left only the plutocrats with the power to create, through private banks, money in Europe.

As I already said, can one be that idiotic without being deeply corrupt?

Money is nothing without a state. A state is nothing if it cannot project power, and this it is does through military power, first of all, and financial power, when it is in a good mood. The stick, and the carrot. The way the EMU was set-up, there was not carrot in control of the state, the carrot was in control of wealthy people and their managers. Nor was there a stick. And the state does not really exist, either.

  Soros: When the euro was introduced the regulators allowed banks to buy unlimited amounts of government bonds without setting aside any equity capital; and the central bank accepted all government bonds at its discount window on equal terms. Commercial banks found it advantageous to accumulate the bonds of the weaker euro members in order to earn a few extra basis points. That is what caused interest rates to converge which in turn caused competitiveness to diverge. Germany, struggling with the burdens of reunification, undertook structural reforms and became more competitive. Other countries enjoyed housing and consumption booms on the back of cheap credit, making them less competitive. Then came the crash of 2008 which created conditions that were far removed from those prescribed by the Maastricht Treaty. Many governments had to shift bank liabilities on to their own balance sheets and engage in massive deficit spending. These countries found themselves in the position of a third world country that had become heavily indebted in a currency that it did not control. Due to the divergence in economic performance Europe became divided between creditor and debtor countries. This is having far reaching political implications to which I will revert.

PA: Perfect analysis, nothing to add.

  Soros: It took some time for the financial markets to discover that government bonds which had been considered riskless are subject to speculative attack and may actually default; but when they did, risk premiums rose dramatically.

PA: Soros is admitting here implicitly the culpability of money changers (such as hedge funds… there are 20,000 of those; one, failed for being on the wrong side of trades in Italian government bonds; it was headed by J. Corzine ex-gov of New jersey, ex-head of Goldman Sachs… Billions disappeared mysteriously…)

  Soros: This [speculative attacks] rendered commercial banks whose balance sheets were loaded with those bonds potentially insolvent. And that constituted the two main components of the problem confronting us today: a sovereign debt crisis and a banking crisis which are closely interlinked.

The eurozone is now repeating what had often happened in the global financial system. There is a close parallel between the euro crisis and the international banking crisis that erupted in 1982. Then the international financial authorities did whatever was necessary to protect the banking system: they inflicted hardship on the periphery in order to protect the center. Now Germany and the other creditor countries are unknowingly playing the same role.

PA: Once again, for pedagogical and diplomatic reasons, Soros is extravagantly polite with the German authorities. There is no way they do not understand that they are destroying Europe. (…And helping Putin’s Russia. BTW, Merkler speaks Russian.)

  Soros: The details differ but the idea is the same: the creditors are in effect shifting the burden of adjustment on to the debtor countries and avoiding their own responsibility for the imbalances. Interestingly, the terms “center” and “periphery” have crept into usage almost unnoticed. Just as in the 1980’s all the blame and burden is falling on the “periphery” and the responsibility of the “center” has never been properly acknowledged.  Yet in the euro crisis the responsibility of the center is even greater than it was in 1982. The “center” is responsible for designing a flawed system, enacting flawed treaties, pursuing flawed policies and always doing too little too late. In the 1980’s Latin America suffered a lost decade; a similar fate now awaits Europe. That is the responsibility that Germany and the other creditor countries need to acknowledge. But there is no sign of this happening.

The European authorities had little understanding of what was happening. They were prepared to deal with fiscal problems but only Greece qualified as a fiscal crisis; the rest of Europe suffered from a banking crisis and a divergence in competitiveness which gave rise to a balance of payments crisis. The authorities did not even understand the nature of the problem, let alone see a solution. So they tried to buy time.

Usually that works. Financial panics subside and the authorities realize a profit on their intervention. But not this time because the financial problems were reinforced by a process of political disintegration. While the European Union was being created, the leadership was in the forefront of further integration; but after the outbreak of the financial crisis the authorities became wedded to preserving the status quo.

PA: Merkozy caused a lot of damage, in other words.

  Soros: This has forced all those who consider the status quo unsustainable or intolerable into an anti-European posture. That is the political dynamic that makes the disintegration of the European Union just as self-reinforcing as its creation has been.  That is the political bubble I was talking about.

At the onset of the crisis a breakup of the euro was inconceivable: the assets and liabilities denominated in a common currency were so intermingled that a breakup would have led to an uncontrollable meltdown. But as the crisis progressed the financial system has been progressively reordered along national lines. This trend has gathered momentum in recent months. The Long Term Refinancing Operation (LTRO) undertaken by the European Central Bank enabled Spanish and Italian banks to engage in a very profitable and low risk arbitrage by buying the bonds of their own countries. And other investors have been actively divesting themselves of the sovereign debt of the periphery countries.

If this continued for a few more years a break-up of the euro would become possible without a meltdown – the omelet could be unscrambled – but it would leave the central banks of the creditor countries with large claims against the central banks of the debtor countries which would be difficult to collect. This is due to an arcane problem in the euro clearing system called Target2. In contrast to the clearing system of the Federal Reserve, which is settled annually, Target2 accumulates the imbalances. This did not create a problem as long as the interbank system was functioning because the banks settled the imbalances themselves through the interbank market. But the interbank market has not functioned properly since 2007 and the banks relied increasingly on the Target system. And since the summer of 2011 there has been increasing capital flight from the weaker countries. So the imbalances grew exponentially. By the end of March this year the Bundesbank had claims of some 660 billion euros against the central banks of the periphery countries.

The Bundesbank has become aware of the potential danger. It is now engaged in a campaign against the indefinite expansion of the money supply and it has started taking measures to limit the losses it would sustain in case of a breakup. This is creating a self-fulfilling prophecy. Once the Bundesbank starts guarding against a breakup everybody will have to do the same.

PA: Yes, Germany is rotting at the head, and it’s not just the heads of Chancellor Merkel and her government.  Launching a self fulfilling prophecy of evil is no small matter, morally speaking.

  Soros: This [a self-fulfilling prophecy of breaking up] is already happening. Financial institutions are increasingly reordering their European exposure along national lines just in case the region splits apart. Banks give preference to shedding assets outside their national borders and risk managers try to match assets and liabilities within national borders rather than within the eurozone as a whole. The indirect effect of this asset-liability matching is to reinforce the deleveraging process and to reduce the availability of credit, particularly to the small and medium enterprises which are the main source of employment.

So the crisis is getting ever deeper. Tensions in financial markets have risen to new highs as shown by the historic low yield on Bunds. Even more telling is the fact that the yield on British 10 year bonds has never been lower in its 300 year history while the risk premium on Spanish bonds is at a new high.

The real economy of the eurozone is declining while Germany is still booming. This means that the divergence is getting wider. The political and social dynamics are also working toward disintegration. Public opinion as expressed in recent election results is increasingly opposed to austerity and this trend is likely to grow until the policy is reversed. So something has to give.

In my judgment the authorities have a three months’ window during which they could still correct their mistakes and reverse the current trends. BY THE AUTHORITIES I MEAN MAINLY THE GERMAN GOVERNMENT AND THE BUNDESBANK because in a crisis the creditors are in the driver’s seat and nothing can be done without German support.

PA: Europe is so organized that one country can block everything if so determined. However, even Thatcher’s Britain never did this. That Germany is thus cornering Europe, on the first real threat that European integration faces in 65 years, is astounding, considering history.

  Soros: I expect that the Greek public will be sufficiently frightened by the prospect of expulsion from the European Union that it will give a narrow majority of seats to a coalition that is ready to abide by the current agreement. But no government can meet the conditions so that the Greek crisis is liable to come to a climax in the fall. By that time the German economy will also be weakening so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities. That is what creates a three months’ window.

Correcting the mistakes and reversing the trend would require some extraordinary policy measures to bring conditions back closer to normal, and bring relief to the financial markets and the banking system. These measures must, however, conform to the existing treaties. The treaties could then be revised in a calmer atmosphere so that the current imbalances will not recur. It is difficult but not impossible to design some extraordinary measures that would meet these tough requirements. They would have to tackle simultaneously the banking problem and the problem of excessive government debt, because these problems are interlinked. Addressing one without the other, as in the past, will not work.

Banks need a European deposit insurance scheme in order to stem the capital flight. They also need direct financing by the European Stability Mechanism (ESM) which has to go hand-in-hand with eurozone-wide supervision and regulation. The heavily indebted countries need relief on their financing costs. There are various ways to provide it but they all need the active support of the Bundesbank and the German government.

PA: Even the famous anti-European magazine “The Economist” said as much about all the preceding.

By the way, there is more than 1.1 trillion dollars ready to help (before leverage), allowed by existing treaties. However, let’s notice that, in spite of funds being at the ready, and dedicated for Greece’s research and high education, they have not been disbursed for two years. So, it’s not because the money is here, that Germany will allow to use it. Is Germany deliberately trying to sabotage Europe?

  Soros: That is where the blockage is [Germany]. The authorities are working feverishly to come up with a set of proposals in time for the European summit at the end of this month. Based on the current newspaper reports the measures they will propose will cover all the bases I mentioned but they will offer only the minimum on which the various parties can agree while what is needed is a convincing commitment to reverse the trend. That means the measures will again offer some temporary relief but the trends will continue. But we are at an inflection point.  After the expiration of the three months’ window the markets will continue to demand more but the authorities will not be able to meet their demands.

It is impossible to predict the eventual outcome. As mentioned before, the gradual reordering of the financial system along national lines could make an orderly breakup of the euro possible in a few years’ time and, if it were not for the social and political dynamics, one could imagine a common market without a common currency. But the trends are clearly non-linear and an earlier breakup is bound to be disorderly. It would almost certainly lead to a collapse of the Schengen Treaty, the common market, and the European Union itself. (It should be remembered that there is an exit mechanism for the European Union but not for the euro.) Unenforceable claims and unsettled grievances would leave Europe worse off than it was at the outset when the project of a united Europe was conceived.

PA: After so much insanity deployed and allowed to rampage, the British and French military budgets will also have to be cranked up… To insure that further insanity is contained, looking forward, all the more since, as in the 1920s and 1930s, Germany is flirting with the dictators of Russia.

  Soros: But the likelihood is that the euro will survive because A BREAKUP WOULD BE DEVASTATING NOT ONLY FOR THE PERIPHERY BUT ALSO FOR GERMANY.

PA: However, Hitler started a war, just so that he could lose, as Salvador Dali pointed out. A country with a culture so idiotic and criminal that it could develop Nazism, over several generations, as the great philosopher Nietzsche pointed out at the outset, is perfectly capable to keep on acting dramatically against its own interests, just in the hope of punishing everybody.

Punishing everybody, that’s what Germany did in 1914, and 1939, launching wars it had no moral right, nor reason, to wage, and a quasi zero probability of winning without enormous devastation to itself.

Maybe Germans like so much to be the bad guys and to lose, they want an encore?

  Soros: It would leave Germany with large unenforceable claims against the periphery countries. The Bundesbank alone will have over a trillion euros of claims arising out of Target2 by the end of this year, in addition to all the intergovernmental obligations. And a return to the Deutschemark would likely price Germany out of its export markets – not to mention the political consequences. So Germany is likely to do what is necessary to preserve the euro – but nothing more. That would result in a eurozone dominated by Germany in which the divergence between the creditor and debtor countries would continue to widen and the periphery would turn into permanently depressed areas in need of constant transfer of payments. That would turn the European Union into something very different from what it was when it was a “fantastic object” that fired peoples imagination. It would be a German empire with the periphery as the hinterland.

PA: Soros is 100% wrong here. There will be no German empire. Germany is completely delusional and delirious at this point. German domination of Europe will not happen, because German culture is on its way out, whereas French culture is on its way up.

France rests on universalism, Germany on tribalism. Just to get the workers it needs, Germany is forced to draft non Germans into tribal Germany.

Let me explain more: in 1940, France had less than 40 million inhabitants, and Germany more than 80 millions. Nowadays, France has 66 millions, and her population augments by 350,000/year, internally (no immigration, thanks to the ferocious and ungrateful Sarkozy, now eliminated). These 350,000 new French a year are real French of fangs and claws, not the imported kind.

Whereas, even with significant immigration, the German population is decreasing. A fiortiori, the part of Germany of genuine German culture, so to speak.

Already now there are 30% more young French people than young German people (and, as I hinted, many of the latter are not really of issued from German culture). Merkel herself had no children. Her nasty cultural disposition will not be passed to her children.

German median age is 5 years older than the French (although the French live two years longer).

Verily, part of the senile reaction of Germany to the Euro crisis is directly imputable to Germany’s aging and scared behavior.

  Soros: I believe most of us would find that objectionable but I have a great deal of sympathy with Germany in its present predicament. The German public cannot understand why a policy of structural reforms and fiscal austerity that worked for Germany a decade ago will not work Europe today.

PA: Soros is right, “most of us would find” that sympathy for Germany should be limited. In some ways Germany is a plutocracy led by rich Mittelstand owners. I know some. Those mini plutocrats are the kings and queens of Germany. They work the little people hard, while scaring them with destitution. Those who know history will be reminded of the old landed aristocracy, especially of the Prussian type, which was a major, probably the major factor, in the rise of German fascism and racism (craftily, their tool, Hitler, electorally campaigned against them)

There is no minimum hourly wage in Germany. The states force some of the poorest people to work for one Euro an hour.

  Soros: Germany then could enjoy an export led recovery but the eurozone today is caught in a deflationary debt trap. The German public does not see any deflation at home; on the contrary, wages are rising and there are vacancies for skilled jobs which are eagerly snapped up by immigrants from other European countries. Reluctance to invest abroad and the influx of flight capital are fueling a real estate boom. Exports may be slowing but employment is still rising. In these circumstances it would require an extraordinary effort by the German government to convince the German public to embrace the extraordinary measures that would be necessary to reverse the current trend. And they have only a three months’ window in which to do it.

We need to do whatever we can to convince Germany to show leadership and preserve the European Union as the fantastic object that it used to be. The future of Europe depends on it.

PA: The future of peace, too. To believe that a fractious Europe, after such a stab in the back, the deliberate destruction of the European Union by Germany, would stay long at peace, is delusional. In any case, socialist France has already constituted a vast coalition, and, differently from 1939, Spain (conservative), Italy (conservative), and the USA (more to the right than any European country) are in it. Even Britain is scared out of its wits that German driven selfishness will drag it further down the abyss.

So what are German officials thinking of? (Besides the desire to self destroy?) Well, the siren song of the ex-KGB officer, Putin, is obvious in the distance. Putin is trying to seduce Germany, which gets already all its gas from there (more than 22% of total German energy usage). The mutual seduction between Germany and Russia in the 1920s and 1930s had a deplorable effect on both, a mutual feedback loop of brutish behavior.

Brutish behavior is what we see today when Bundesbank officials talk as if they ruled Greece. They don’t. What is happening in Greece, as Soros said, is more the fault of the creditor countries than Greece’s. The aid programs to Greece have been, truly, mostly aid programs to non Greek banks which financed their friends in Greece (often plutocrats they had dirty deals with).

The arrogant, offensive and injurious attitude of so many German officials shows that those who did not learn humility from history cannot be trusted.

So are we back in the 1920s and 1930s? Is the collaboration between Germany and Wall $treet based plutocracy back on the front burner? (It sure sounds that way; major Wall $treet banks, such as JP Morgan, have come out with astounding pieces of propaganda, as a reader kindly informed me)

Are we back in the 1920s and 1930s? … When Germany was secretly plotting, and training with Stalinist Russia? That blossomed in the formal alliance in 1939, of the USSR and Nazi Germany, in a vain attempt to block France’s thirst for justice.

So is Merkel working for the Putin, that is for the KGB, or Goldman Sachs and its ilk? Both maybe? Like Hitler, in the end, rather ironically, did? (The Fuehrer basically said so himself in his political testament…)

There are very good reasons to suspect all these schemes, and they will be further divulgated soon. It would be all very funny, if it were not so disconcerting.

***

Patrice Ayme

Sorting Out Soros.

A FEW TRUTHS FROM AN OLD PLUTOCRAT:

(With A Bit of Dissemblance Too.)

***

Abstract: George Soros, the major plutocrat, made Remarks at the Festival of Economics, Trento Italy, June 02, 2012. A lot of what he said is pretty good.

Soros eschews the deeper things such as: the divulgation of the injustice of the Fractional Reserve System, what it means to be a state, the Plutocratic effect, the Will To Evil, etc,. which are all major constituents of the deeper fundaments of the present crisis.

And of course, Soros made a billion dollars pushing Britain out of the European Monetary Union, so its compassion vis a vis Europe has got to remind us of that of the fox for the hens he killed. Indeed, the EMU would be stronger, with Britain in, as would have happened if no hedge fund manager such as Soros had ever existed. 

But still, his work is worth commenting upon, it’s much deeper than the usual platitudes.

***

A note on Soros: After living under Nazi occupation, and escaping those German monsters by the skin of his teeth, as a Hungarian Jewish child, Soros went to London to study economics (and the philosophy of Popper). Soros made a career as a major financial manipulator, first in the company of Jim Rogers. He was operator of the “Quantum Fund”, one of the earliest, largest and most successful hedge funds.

Soros played a very positive role in the opening of the Iron Curtain, financing Hungarian students.

Soros often talks as if nothing mattered more for him than being viewed as philosopher. He is obsessed by “reflexivity“, a notion he used in his trading. Reflexivity is nothing new for those who reflect reflexively. But Soros is right to insist on its importance. What he means by this, he explains below.

Finance and economics are riddled with non linear feedback loop, entangling subject and object, which often dominate, causing catastrophes. The same is true in politics, sociology, cultures… Such is the human, all too human factor.

As the present German loss of control about Europe demonstrates. Is that one of these famous Hitler’s rages again?

Below I put Soros in italics, my comments are in regular script. I took the freedom of underlining passages of Soros which I find particularly interesting. That generally indicates approbation (and reprobation will be duly expressed, if needed). I cut out one section of Soros’ discourse, for lack of punch. All the rest is there. Let Soros talk:

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Soros: Ever since the Crash of 2008 there has been a widespread recognition, both among economists and the general public, that economic theory has failed. But there is no consensus on the causes and the extent of that failure.

I believe that the failure is more profound than generally recognized. It goes back to the foundations of economic theory. Economics tried to model itself on Newtonian physics. It sought to establish universally and timelessly valid laws governing reality. But economics is a social science and there is a fundamental difference between the natural and social sciences. Social phenomena have thinking participants who base their decisions on imperfect knowledge. That is what economic theory has tried to ignore.

Scientific method needs an independent criterion, by which the truth or validity of its theories can be judged. Natural phenomena constitute such a criterion; social phenomena do not. That is because natural phenomena consist of facts that unfold independently of any statements that relate to them. The facts then serve as objective evidence by which the validity of scientific theories can be judged. That has enabled natural science to produce amazing results.

PA: By the way, that is exactly what fails in Quantum physics: in Quantum physics, facts unfold in dependence with any statements that relate to them. Because the observing act affects the observed. That was Bohr’s great point, and it is the main difficulty with making a Quantum computer.

The Quantum computer can be made, as it is the way the natural world works. But to realize one, in full, I believe, our understanding of Quantum physics will have to progress.

Somehow, Quantum physics replaces local physics, made of points, by the integrated whole. In other words something where all participants participate, be they geometry, potentials, initial conditions, etc. That integrated whole approach is the engine at the heart of biology, and it is the one that allows to circumvent the Second Law of Thermodynamics (you will have heard it here first!). OK, back to Soros:

Soros: Social events, by contrast, have thinking participants who have a will of their own.  They are not detached observers but engaged decision makers whose decisions greatly influence the course of events. Therefore the events do not constitute an independent criterion by which participants can decide whether their views are valid. In the absence of an independent criterion people have to base their decisions not on knowledge but on an inherently biased and to greater or lesser extent distorted interpretation of reality. Their lack of perfect knowledge or fallibility introduces an element of indeterminacy into the course of events that is absent when the events relate to the behavior of inanimate objects. The resulting uncertainty hinders the social sciences in producing laws similar to Newton’s physics.

PA: Quantum computer, here we come!

Soros: Economics, which became the most influential of the social sciences, sought to remove this handicap by taking an axiomatic approach similar to Euclid’s geometry. But Euclid’s axioms closely resembled reality while the theory of rational expectations and the efficient market hypothesis became far removed from it. Up to a point the axiomatic approach worked. For instance, the theory of perfect competition postulated perfect knowledge. But the postulate worked only as long as it was applied to the exchange of physical goods. When it came to production, as distinct from exchange, or to the use of money and credit, the postulate became untenable because the participants’ decisions involved the future and the future cannot be known until it has actually occurred.

PA: By the way, Euclidean, and Non-Euclidean geometries, are COMMUTATIVE geometries. Instead…

Quantum physics uses NON COMMUTATIVE geometry (what it consists of exactly is a matter of debate among mathematicians). Basically, the order of events matter, just as the order of rotations in space matter, or just as the order in which what happens to social participants matter.

Soros: I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them. That is an indictment in itself but I shall leave a detailed critique of these theories to others.

Instead, I should like to put before you a radically different approach to financial markets. It was inspired by Karl Popper who taught me that people’s interpretation of reality never quite corresponds to reality itself. This led me to study the relationship between the two. I found a two-way connection between the participants’ thinking and the situations in which they participate. On the one hand people seek to understand the situation; that is the cognitive function. On the other, they seek to make an impact on the situation; I call that the causative or manipulative function. The two functions connect the thinking agents and the situations in which they participate in opposite directions. In the cognitive function the situation is supposed to determine the participants’ views; in the causative function the participants’ views are supposed to determine the outcome. When both functions are at work at the same time they interfere with each other. The two functions form a circular relationship or feedback loop. I call that feedback loop reflexivity. In a reflexive situation the participants’ views cannot correspond to reality because reality is not something independently given; it is contingent on the participants’ views and decisions. The decisions, in turn, cannot be based on knowledge alone; they must contain some bias or guess work about the future because the future is contingent on the participants’ decisions.

[…] Bubbles are usually asymmetric in shape: booms develop slowly but the bust tends to be sudden and devastating. That is due to the use of leverage: price declines precipitate the forced liquidation of leveraged positions.

PA: Busts are also caused by panic. An animal generally approaches a threat with more caution that it puts in flight. Panic insures survival, the most important instinct, most of the time. Whereas greed is a luxury, and, if there is an instinct for it, it’s much less developed. Carnivores have been known to kill, for killing’s sake (a form of greed). But if they experience the slightest fear, they won’t engage in it, and will spend lots of energy putting lots of distance between them and the threat.

Soros: Well-formed financial bubbles always follow this pattern but the magnitude and duration of each phase is unpredictable. Moreover the process can be aborted at any stage so that well-formed financial bubbles occur rather infrequently.

At any moment of time there are myriads of feedback loops at work, some of which are positive, others negative. They interact with each other, producing the irregular price patterns that prevail most of the time; but on the rare occasions that bubbles develop to their full potential they tend to overshadow all other influences.

According to my theory financial markets may just as soon produce bubbles as tend toward equilibrium. Since bubbles disrupt financial markets, history has been punctuated by financial crises. Each crisis provoked a regulatory response. That is how central banking and financial regulations have evolved, in step with the markets themselves. Bubbles occur only intermittently but the interplay between markets and regulators is ongoing. Since both market participants and regulators act on the basis of imperfect knowledge the interplay between them is reflexive. Moreover reflexivity and fallibility are not confined to the financial markets; they also characterize other spheres of social life, particularly politics. Indeed, in light of the ongoing interaction between markets and regulators it is quite misleading to study financial markets in isolation. Behind the invisible hand of the market lies the visible hand of politics. Instead of pursuing timeless laws and models we ought to study events in their time bound context.

My interpretation of financial markets differs from the prevailing paradigm in many ways. I emphasize the role of misunderstandings and misconceptions in shaping the course of history. And I treat bubbles as largely unpredictable. The direction and its eventual reversal are predictable; the magnitude and duration of the various phases is not. I contend that taking fallibility as the starting point makes my conceptual framework more realistic. But at a price: the idea that laws or models of universal validity can predict the future must be abandoned.

Until recently, my interpretation of financial markets was either ignored or dismissed by academic economists. All this has changed since the crash of 2008. Reflexivity became recognized but, with the exception of Imperfect Knowledge Economics, the foundations of economic theory have not been subjected to the profound rethinking that I consider necessary. Reflexivity has been accommodated by speaking of multiple equilibria instead of a single one. But that is not enough. The fallibility of market participants, regulators, and economists must also be recognized.  A truly dynamic situation cannot be understood by studying multiple equilibria.  We need to study the process of change.

The euro crisis is particularly instructive in this regard. It demonstrates the role of misconceptions and a lack of understanding in shaping the course of history. The authorities didn’t understand the nature of the euro crisis; they thought it is a fiscal problem while it is more of a banking problem and a problem of competitiveness.

[To be continued in the next essay, “Boosting Soros On Europe“].

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Patrice Ayme