Bad Germany? Or Bad Advice From Pluto?

Germany decided to go greener than green. Weirdly, that meant increasing the production of the most polluting fossil fuel, lignite. Apparently scared by the tsunami in Japan, it also involved closing down nuclear power. Nuclear power makes zero emissions of greenhouse gases, and it’s nearly as cheap as wind power.

Thus, instead of a fast tsunami increasing sea level by fifteen meters in minutes, Germany has opted for a slow tsunami increasing sea level by seventy meters over, well, a much longer time.

OK, nuclear power has drawbacks: ever since civil nuclear power was used in the USA, nobody ever got killed or injured from it, there. (Whereas coal kills at least hundreds a month… some of it probably from radioactivity, but never mind…) So nuclear power is dreadfully boring. Hence the need to freak out about it.

Going green by going lignite, is a parable for all too many, slightly demented German policies.

All of the Eurozone is on the verge of recession, Germany has grown two percent, total, in six years. Main cause? Not enough money to make the economy turn properly. Also a despondent inner German economy. Hence the need to sell German luxury cars all over the world. OK, machine tools, too.

I used to disdain Paul Krugman’s opinions on Europe, as he was too unaware of the fundamentals, be they historical, political, or economic. However the situation has changed: he had much to learn, and he learned much. Also change did my opinion of German policy, as Merkel got ever more obstinate. In any case, I agree with all of Krugman’s well researched article, Being Bad European. Let me quote from it:

“Unemployment in the euro area is stalled at almost twice the U.S. level, while inflation is far below both the official target and outright deflation has become a looming risk.

Investors have taken notice: European interest rates have plunged, with German long-term bonds yielding just 0.7 percent. That’s the kind of yield we used to associate with Japanese deflation, and markets are indeed signaling that they expect Europe to experience its own lost decade.”

Paul has the courage to go in full PI mode. PI? Politically Incorrect, or Profoundly Investigative:

“Why is Europe in such dire straits? The conventional wisdom among European policy makers is that we’re looking at the price of irresponsibility: Some governments have failed to behave with the prudence a shared currency requires, choosing instead to pander to misguided voters and cling to failed economic doctrines. And if you ask me (and a number of other economists who have looked hard at the issue), this analysis is essentially right, except for one thing: They’ve got the identity of the bad actors wrong.

For the bad behavior at the core of Europe’s slow-motion disaster isn’t coming from Greece, or Italy, or France. It’s coming from Germany.”

Germany has a dreadful history to use its own population as cannon fodder for its plutocrats (see the 1914 German invasion and attack), and currency has a spoiler for reason (see the 1923 inflation, engineered by Schacht, an agent of JP Morgan, and later an instigator and puppet master of Hitler; don’t worry, Dr. Schacht came out of WWII, and a little Nuremberg Trial, just fine).

Here is Krugman again:

“If you try to identify countries whose policies were way out of line before the crisis and have hurt Europe since the crisis, and that refuse to learn from experience, everything points to Germany as the worst actor.

Consider, in particular, the comparison between Germany and France.

France gets a lot of bad press, with much talk in particular about its supposed loss in competitiveness. Such talk greatly exaggerates the reality; you’d never know from most media reports that France runs only a small trade deficit. Still, to the extent that there is an issue here, where does it come from? Has French competitiveness been eroded by excessive growth in costs and prices? 

No, not at all.”

One thing that was out of line with Germany, is that it mistreated its working class:

“Since the euro came into existence in 1999, France’s G.D.P. deflator (the average price of French-produced goods and services) has risen 1.7 percent per year, while its unit labor costs have risen 1.9 percent annually. Both numbers are right in line with the European Central Bank’s target of slightly under 2 percent inflation, and similar to what has happened in the United States. Germany, on the other hand, is way out of line, with price and labor-cost growth of 1 and 0.5 percent, respectively.”

Dis-information about France is great in the USA, because plutocratic propaganda knows France is the number one danger country, the place out of which the most dreadful anti-plutocratic, atheist policies emanate. But Krugman has now understood this, so he pounces some more:

“In other words, to the extent that there’s anything like a competitiveness problem in Europe, it’s overwhelmingly caused by Germany’s beggar-thy-neighbor policies, which are in effect exporting deflation to its neighbors.

But what about debt? Isn’t non-German Europe paying the price for past fiscal irresponsibility? Actually, that’s a story about Greece and nobody else. And it’s especially wrong in the case of France, which isn’t facing a fiscal crisis at all; France can currently borrow long-term at a record low interest rate of less than 1 percent, only slightly above the German rate.”

What Germany did was cutting salaries as low as one Euro per hour (completely illegal in France, where the minimum wage was at least ten times that; in 2014 Germany introduced a minimum wage comparable to France’s.)

And Krugman to conclude:

“What we’re seeing, then, is the immensely destructive power of bad ideas. It’s not entirely Germany’s fault — Germany is a big player in Europe, but it’s only able to impose deflationary policies because so much of the European elite has bought into the same false narrative. And you have to wonder what will cause reality to break in.”

It’s true that “German” policies have actually been plutocratic policies: France, Italy and Spain, together, form an economic behemoth much larger than Germany, so they could easily force “Germany” to do whatever they decided. They did not, because they are all serving Mammon.

German policy at this point is irresponsible. It is demonstrated with the numbers Paul rolls out. But there are others. Germany, weirdly, has resisted French efforts at a Banking Union (it agreed only to phase in slowly a reduced version).

The Banking Union would be similar to the FDIC in the USA: banks would be forced to pitch in what would be a mutual insurance fund. With some rules attached.

However Germany is scared that thousands of its banks are under water, so it has refused the oversight of Banking Union. This tends to show that Germany cares more about what Europe brings to it, rather than it can bring to Europe.

When Greece was in full corruption crisis, a small city in Greece was the greatest purchaser of Porsche in the world. This kind of details was viewed as good for German business, but it actually means that the Germans cooperated with the very corruption they later denounced.

So why is Germany behaving this way?

Tough German reforms were instituted by Schroeder, a “Socialist” who turned out basically into an employee of Putin. The West has known many of these pseudo-socialists, who are actually greedy agents of Plutocracy Supreme. (The latest case is the preceding “Socialist” PM of Portugal, who made millions under the table; he was just arrested.)

Schroeder squeezed German workers as much as possible. That depressed German demand, making Germany more dependent upon exportations. But it made the wealthiest, wealthier.

Same old same old: plutocrats reign.

Some will say: ”Oh, but then you agree with the Brits?” Not at all: London has arguably displaced New York as the world’s dirtiest plutocratic center. London is rich, for the worst reasons, to a great extent (not to a full extent: there are actually some good policies in England, if one searches carefully for them).

So what London does cannot be duplicated elsewhere: its unicity makes it wealthy, mostly by attracting plutocrats from all over, insuring they escape the taxman and the lawman, and any sort of decency.

Ultimately, although Krugman praises France, he did not say that France, herself probably the mightiest country in Europe, all around, could very well break out of the plutocratic mold.

What the government of the French Republic has to do is simple: just look at the European Commission in the eye, and say: ”We plan to run a 4.5% deficit for the next two years. Submit.”

Guess what?

In a break with the plutocratic tradition, this is finally just what France did. The preceding European Commissioner of Finance and Economy, a man completely sold to Pluto, bleated his approval. He was then replaced by a Frenchman, ex-finance minister Moscovici.

This whole situation is about a system of thought. It’s time to change it. Understandably, Germany does not trust its revolutionary instincts. That leaves us, once again, with France to lead the way.

Although it’s hard to imagine Hollande leading anything, his Prime Minister is more of a man. Thus, probably, the change.

Patrice Ayme’

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21 Responses to “Bad Germany? Or Bad Advice From Pluto?”

  1. pshakkottai Says:

    Dear Patrice:
    –Germany wants Spain and France to remain “bile bears” Friday, Feb 28 2014

    “Introduction: Per Wikipedia, China uses bear bile as an ingredient in Traditional Chinese Medicine. To facilitate the bile milking process, the bears are commonly kept in extraction cages, also known as crush cages. The cages prevent the bears from being able to stand upright, or in some cases even greater restriction
    Berlin attacks EU’s easing of austerity demands

    The German and Finnish finance ministries have issued a stinging rebuke of Brussels’ attempt to ease austerity demands on struggling eurozone countries, saying such flexibility improperly provided France and Spain with additional time to cut their budgets to meet EU deficit limits.

    Translation: “Yes, we know the euro is a disaster. We know Euro users have surrendered the single most valuable asset they have: Their Monetary Sovereignty. So unless a monetarily non-sovereign nation has positive net exports (not all can), its money supply dwindles and its economy (the majority not part of the upper 1% income/power group) suffers.”
    Please read the full article.
    Partha

  2. Nirwanda Says:

    The French elite is a giant control-freak monster obsessed by regulation, state control, intervention in every aspect of life, and of course taxation. The idiot Hollande’s first great idea on coming into office was to invent or increase 70 taxes. There are 3650 pages in the French Code du Travail compared to 70 in Switzerland. There are innumerable privileged lobbies stifling free trade and raising costs: driving-schools are a good example. I don’t buy into this “France could save Europe” idea. Both France AND Germany are dragging Europe to collapse, but it is France’s elitist, bureaucratic and arrogant “we know best” mindset on which EU bureaucracy was founded and which will kill Europe. And the solution is less control-freakery, not more spending of money we do not have.

    • Patrice Ayme Says:

      Amen! I agree 100% about the French elite, and the entrenched interests, and the money we should not have for things we do not need. Yet, the austerity thing for austerity’s sake is a catastrophe. For example there should be more for fundamental research, and education.

      And true, as much of Switzerland ought to be duplicated. So it’s not too difficult: all of Europe ought to duplicate Switzerland Yet, that would kill the elite, and that would be too painful…

  3. gmax Says:

    Bile bears? I am not sure I understand Pshakkotai’s analogy. Why would Germany keep France in detention? To have a demand market?

    • pshakkottai Says:

      I continue the quote. “These two countries are hemorrhaging euros, but their good neighbors feel they are not bleeding fast enough. (None of this would be a problem if France and Spain still were Monetarily Sovereign and could create their own money. It became a problem when they bound themselves to an alien currency, the euro.)

      When the bleeding becomes so bad that the nations teeter on the precipice of death, they will be “saved” by a new loan from the EU or a “moderation” of the terms. Thus France and Spain (and the other euro nations with a negative balance of trade) will be kept alive as trading partners, but little else.

      And it’s all to save the euro, the greatest device ever invented for draining a nation’s life-blood and widening the gap between the rich and the rest.

      France and Spain (and Italy and Greece et al), you have volunteered to be Germany’s bile bears.

      Enjoy your cage.

      Rodger Malcolm Mitchell
      Monetary Sovereignty”
      Partha

      • Patrice Ayme Says:

        France has been allowed to run an official 4.5% deficit for two years… So 4.5 is the new 3!!!!!
        France could have done that earlier, BTW. The problem thus was not Germany, but the influence of plutocracy on the French gov.

      • Patrice Ayme Says:

        Calling the Euro an “alien currency”, in the case of France, is putting the world upside down. In truth, the Euro is the French Franc. The Euro’s level was fixed according to Franc’s long term averages relative to the Dollar. Plus; the Euro was a French idea, and imposed by France.
        So it’s not Germany or “Alienhood” that is at fault, but alien theories on what makes a country worthy.

        Krugman blames Germany, but French theories are even more at fault.

  4. Nirwanda Says:

    “Stop spending money we/you have not got.” That is Germany’basic attitude, and hard to argue with.

    The solutions are simple: pass these laws 1) No govt may run a budget deficit. 2) No govt may spend more than 40% of GDP 3) No govt will steal more than 30% of someone’s money 4) Nobody may serve in govt who has not worked at least two years in the private sector in a wealth-creating job.

    • Patrice Ayme Says:

      1) Sovereign states can/ought to make as much money as they need for their economy. (Parthat’s point I guess; and mine, surely)

      2) that cannot create inflation. (As Krugman has come to understand, and others have not, as he points out.)

      3) the Euro is at least 60% OVERvalued relative to the Dollar. Thus, roughly, 60% more money could be created in Europe, just for it to go USA equivalent.

      4) governance has two aspects:
      a) executive (and that ought to be severely limited)
      b) legislative (and that ought to be mostly reserved to the People).

      Japan has 240% of debt/GDP, and that’s a good thing relative to the alternatives (massive taxes, or collapse of the economy).

      Right now, investors are willing to lend money to France for ten years, will less than 1% interest. Obviously, they are desperate (the investors). So what to do? Have the government step in as Hoover, FDR, (and to some extent Hitler, early on), with productive investments (see Hoover dam; or FDR 24 fleet carriers construction program, launched in 1933).

      Debt, well done, combined with inflation can allow to reduce taxes (see the “30 glorieuses”)

      If others stopped spending “money they don’t have”, the German economy would collapse…
      PA

  5. Nirwanda Says:

    It is not “austerity for austerity’s sake”, Patrice. It is simply the principle of “living within one’s means”. NO COUNTRY IN EUROPE IS DOING THIS. The idea that “ending austerity” is the solution is risible leftist claptrap. It is the failure to live within our means that has led to this as politicians at all levels either bribe voters with the latters’ own money, or in the case especially of Italt and Greece simply steal it.

    France’s solutions are always 1) blame someone else 2) raise taxes. They (the politicians, not the people) deserve the coming revolution.

    • Patrice Ayme Says:

      The USA created 8 trillions out of thin air. Result: 3% unemployment in the SF Bay Area, and hordes of German and French start-ups… There…
      This said, I am infuriated against French politicians, and the system there. It’s outright oligarchic, through and through.
      In California, taxes on the rich were raised by referendum. Now the politicians want to reduce them… But the polls show people don’t want it… A good example of corrupt politicians, versus We The People.

      The USA, BTW, is the archetype of NOT living within one’s means…

      • pshakkottai Says:

        Dear Patrice, I agree. Any monetary sovereign country must not live within its means because any such country has zero need for ‘means ‘ and has infinite means at the same time. Money is created and taxes are not ‘means’. California, not being allowed to create $ has to raise taxes, its only means.
        Partha

  6. dominique deux Says:

    The fallacy of “living within one’s means”, meaning you must manage a polity like a household, is incredibly daft. Britain did not get to be the world’s first industrial power by “living within her means” but by extensive long-term borrowing (and manipulating the notion of free trade, but that’s another issue). Businesses only get to live if they spend years, something decades, incurring operational losses, with the help of credit. Even small farmers in developing countries are now benefiting from comprehensive credit systems, and slowly showing results. Only national entities are expected (ordered) (diktated) to behave like nineteenth century pauper-workers, getting their weekly salary in cash, spending most of it at the nearest pub to forget their predicament, and bringing the rest home to the missus for spending over the week.

    What is needed is rational and informed management of long-term flows, and the endless harassment countries like France are subjected to from the outside is not conducive to that – let alone the sheer stupidity of their “elites”.

    • Patrice Ayme Says:

      I have an essay just on this, incoming. And yes, you make an excellent point I have mentioned in the past, Dominique, but which I forgot this time.
      Great Britain defeated the much larger, demographically, and economically, French superpower, in several wars in 1756-1815, thanks to enormous borrowing. I am going to add the point.

  7. Chris Snuggs Says:

    Patrice says: “France had just look at the European Commission in the eye, and say: ”We plan to run a 4.5% deficit for the next two years. Submit!” Done.”

    Chris Snuggs: Well, France has always run a deficit, especially in the pockets of its own citizens. Why does/did Germany think that a leopard can change its spots.

    And the thing is, if you can run a 4.5% deficit then why not a 6% deficit? Or indeed a ten million % deficit? All is possible if you are a great country led by complete morons.

    • Patrice Ayme Says:

      Dear Chris: You should read my essay more thoroughly.

      France’s long term bonds yield less than 1% (Germany is tiny lower at .7%). This is actually a DANGER signal. A DEFLATION danger signal. To bring the yield back-up, indeed, France should run a 6% deficit, as you suggest. Doing so could perhaps one day bring French ten year bond yields up to the British level, 4.1%…

      That French politicians are not running a 6% deficit is a testimony to their stupidity, indeed. And I agree that French politics, or any political system in Europe outside of Switzerland (by far the best, with its direct democracy) and a few Scandinavian countries are offensive dictatorship run by corrupt thieves.

      • Chris Snuggs Says:

        I simply do not believe any more in spending money you haven’t got. This is the direct opposite of most of Europe’s ruling elite, which is why the continent is in decline.

        Deflation? So what? What you want is INFLATION to ruin the value of my pension and get the ruling scum out of the mess they have created.

        • Patrice Ayme Says:

          Patrice Ayme: Inflation can be cured, not deflation. Or, more exactly only MASSIVE GOVERNMENT intervention can cure deflation. Or then civilization going down… I have shown graphs, on my site, showing money velocity is collapsing, and explained what it meant. “Spending money you haven’t got.” does not apply to states. A state budget is NOT a family budget: only Obama believes that.

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