Posts Tagged ‘Debt’

Debt As Tax Deferred, Or Why Public Debt For Public Interest Works Boosts The Economy

January 17, 2019

In A Way No Private Spending can replace

ECONOMIC ACTIVITY BOOSTED BY PUBLIC SPENDING FROM GOVERNMENT DEBT:

IN THE LAST decade, the US has happily run massive deficits. Under Obama, deficits were often around 10% of GDP, or more. Obama deficits peaked at 15% of US GDP. Meanwhile, the US economy grew so much, it overtook the entire, growing, European GDP output (UK included). In 2017 US nominal GDP was 19 trillion dollars, just above the EU GDP (which is still higher at PPP, $23 T). US yearly GDP, charging ahead at a Chinese like clip, has passed $20 trillions as these lines are written.

The Obama spirit of deficit was happily pursued by Trump… And now the new Democratic controlled Congress, wisely enough, has not uttered a peep about this (it prefers to distract its audience with the notion of billionaire Trump as an agent of Putin).

Each three months of 2018 America’s federal government borrowed nearly $320 billion, or about 6% of quarterly GDP. The deficit was 1.5 percentage points higher than in the same quarter the year earlier, despite the fact that unemployment fell below 4% in the intervening period (and thus borrowing more was just because the Trump government is embarked on increasing spending).

The USA borrowed as much in a single quarter as it did in all of 2006, towards the peak of the previous economic cycle.

That debt Graph would look very different if one incorporated EXTINGUISHED debt

Orthodox economists have traditionally been self-assured, arrogant, and idiotic about debt. “Government spending must be paid for now or later,” wrote Robert Barro, of Harvard University, in a seminal paper published in 1989. “A cut in today’s taxes must be matched by a corresponding increase in the present value of future taxes.”

“Must”? Why? How much more idiotic can one get? Governments can default on debt, and can do it soft, or hard. They can even make default look like an act of God: consider the Russian default when the Soviets took power, in 1917, leaving millions of French investors the poorer for it (yet also leaving Russia with a much improved industrial basis and better trains).

The USA also defaulted twice during the Twentieth Century (under presidents FDR and Nixon). A way to default is devaluation of the currency, another way to sneakily default is inflation.

The late 1920s bull mania was a deliberate attempt by the US Fed and the bank of England, to extinguish debt from World War One. So was the inflation of the 1930s (Paris, against it, argued with Washington, for it; the US was right, France wrong; of course Hitler inflated beyond reason, encouraged by Washington…)

Once again, a traditional, but misleading graph: it contains violently extinguished debt

Inflation is not just a way to extinguish excessive debt: I have argued that it is a way to accelerate the economy, making it more technological.

So why would a Harvard professor say such a stupid thing? Do I need to ask? Even rhetorically? Because it pleased the US plutocratic class at the time, which probably rewarded him handsomely.

Looking around history, one can see big differences between the economy of the last four decades, and the period 1935-1975. The first period was characterized by massive expansion of economy and education (in spite of the 100 million directly killed by generalized fascism). For example air travel, universal higher education and universal health care appeared and became dominant. After that, pretty much stagnation… except for the increase of inequality.

And what do we also see since the Glorious Thirties (the 1945-1975 period when Western economies saw a wealth expansion of the 90%; after that, all the growth in income went to the 1%…)? Public spending on infrastructure, educational, or industrial, collapsed, throughout the West, thanks to the Trickle-Down plutocratic ideology.  

Reciprocally, a return to massive public spending might raise the activity, hence the returns to private investment, generating more the latter. (Calling that “populism” worked for a while as an insult, but should be now backfiring… as We The People realizes that there is nothing wrong with We The People… contrarily to what the insulting elite keeps on claiming…)

Eurocrats and their masters, the Europlutocrats, brandish the scare of public debt. However, japan with a more elderly population, is roaring back thanks to Abenomics… And a 230% of GDP public debt.

Economists out France or Germany say that Japanese public debt is a terrible thing. Why? If worse came to worst, the Japanese government would have to tell those who bought Japanese debt: ’Sorry, we can’t pay you back. At all.’ What would then have happened? A tax! Like in Europe! In other words, should the Japanese government 100% default, those wealthy enough to have lend to the Japanese government would then have to pay… a tax! They would be reduced to the status of French taxpayers, horror of all horrors!

Except, of course, in France, taxes, being mostly indirect, strike the poor and the poorest of the poor… whereas a Japanese default (which will not happen) would strike the wealthy (including a few wealthy foreigners…). The same is a fortiori true for US debt.

If the US defaulted on its debt (and it will not happen), lots of wealthy foreigners may cry… Meanwhile the US economy will have roared ahead… thanks to foreign money. What will the foreigners do, if the USA default, to get even? Invade? (No, the US military, paid by aforesaid foreigners, is too strong…) Refuse to lend some more? Not necessarily: when you can’t beat up the strong, you may as well join it. That’s exactly what happened when the US defaulted… and the USA defaults all the time…

There are many ways to default: first one can default on the interest only, or part of it.

Inflation also extinguishes debt. The CPI (the inflation measurement) in the San Francisco Bay Area, the biggest tech engine of the US and world economy, reached nearly 5% last year (2017). Such a healthy dose of inflation will absorbs lots of debt. Meanwhile, among many other things, said Bay Area fabricated for more than twelve billion dollars of electric cars in 2018…. While Apple Inc. based a few miles away, generated more than 200 billions in revenue…  

So the SF Bay Area is a perfect illustration that a roaring economy goes well with roaring inflation, thus roaring debt, etc. Looking in detail within the machinery of some major tech companies (say Oracle) show lots of debt at major points of development…

When the pace of economic (GDP) growth exceeds the rate of interest on a country’s public debt, managing indebtedness is a shrinking business: debt incurred in the past shrinks steadily as a share of GDP without any new taxes needing to be levied.

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Public Debt Helps The Public In General, and the Poor First of All:

Some are sure to whine that debt might nonetheless rise if annual deficits are sufficiently gigantic, as they are in US America now. Even so, at prevailing interest rates and growth rates, and with deficits continuing at 5% of GDP, it would take more than a century for America’s ratio of gross public debt to GDP to reach the current Japanese level…. And then, as I pointed out, so what? A tax? A 2018 French-like situation? Overtaxation? No, not really: remember, only the wealthy lend. So debt will reduce inequality. Actually MASSIVE debt reduces inequality in two ways:  it potentially taxes the wealthy, in the future, and, in the meantime, it feeds countries and the poor (who are the first to profit from public infrastructure)…

Hypocrites will come, and suggest inflation hurts the poor… However, although inflation extinguishes debt, there are other ways to extinguish debt, and thus rampant debt doesn’t mean rampant inflation…

Olivier Blanchard, long chief economist of the IMF, pointed out that since 1870, the average nominal interest rate on one-year US government debt has been 4.6%, though the average annual growth rate of nominal GDP has been 5.3%. Growth rates have surpassed interest rates in every decade since 1950, except the 1980s…. And guess what happened in the 1980s? Plutocratization! (Much admired by all too many “democrats”, including Barry Obama…)

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The Rise Of Evil Power, aka, Plutocracy was tied in to debt extinction:

(Perhaps unwittingly, and hopefully witlessly) Evil US president Carter launched a secret war in Afghanistan, using Muslim Fundamentalist and the Muslim Fundamentalist ISI of Pakistan… On July 3, 1979, and immediately afterwards, Reagan, helped by the evil Democratic Congress, led by fellow Irishman Tip O’Neil, launched officially trickle-down economics: instead of making everybody wealthier through public debt, Reagan and his “democratic” little helpers claimed that, the economy would do better by making the wealthiest wealthier…

Nicholas Crafts of the University of Warwick observed that the difference between growth and interest rates did more to reduce British debt loads in the 20th century than budget surpluses. Indeed, austerity-induced deflation in the 1920s frustrated attempts to pay down war debts (that was followed by the attempt of inflating out, which was too brutal, and helped bring the 1929 crash…)

Inflating out of debt was successful after World War Two. At the same time, the uppermost margin rates were pushed by Republican president Eisenhower up to 93% (nobody has accused Eisenhower to be a socialist… yet) Similar rates applied in Britain and high taxes on the wealthy also applied in throughout Europe…

In the past decade our great leaders have listened to their future benefactors, and sponsors, the wealthiest. The wealthiest want the poor ever poorer, so that wealth, power, can be worth having, ever more. So our great leaders, who are great servants of the wealthier, have done as ordered, and have stimulated public economies too little. (To make the lowest people feel good enough about themselves, while they undermined them, they have paid them with PC speech, and “identity politics”, that is, racism…)

Result? Rich countries have spent ever more time below their productive capacity than above it—at grave economic cost: while French, German, British and US  politicians explained to We The people that they cost too much, China, India and their satellites (population three billions) roared ahead, spending on the public as needed by the public. This is how Europe, its colonies and the US did it in the Nineteenth Century (and even in centuries prior, following the dominant economic theory known as “Mercantilism”)

An overdeveloped fear of public debt, invented by plutocrats, nurtured by prostituted economists, is to blame. But now a new class of “populist” leaders have appeared, who call a lot of it, for what it is. So some government economists have been ordered to acquaint themselves with reality.

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The 3% Deficit Limit Is Killing the European Union:

And guess what? Experience suggests that governments face much looser budget constraints than once was claimed on every rooftop. So governments enjoy more freedom to support struggling economies than previously believed. Economists, happy to get orders less debasing to themselves, are taking note, that, indeed, yes, governments can borrow more…..

“Neoliberalism” is fundamentally a lie. “Neoliberalism” is a creed, a faith, and a conspiracy for the gullible. “Neoliberalism” asserts that the economy does best, when left to private enterprise. This is a lie, just there, and propaganda. Indeed it always omits a detail: how money is created.

In the “Neoliberal” creed, the (private) banks create money by lending. To whom do they lend? The wealthiest. So the wealthiest privates get more and more money, and the poor, less and less, augmenting inequality, year after year, as observed: the color of the skin of the president has nothing to do with it.

The only way to cut that vicious circle is having the Treasury create money and use said created money for public work. The Treasury can do this by creating bonds. That will spur the economy.

Should a crisis arise, a sovereign government can grab the debt and extinguish it.

In 1790, Secretary of the US Treasury Alexander Hamilton did just that: he took all the debt, from all the states, and extinguished it, by making it into Federal Debt (hint to the European Union… do the same…).

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When Not Sovereign Debt To Foreigners Means Loss of Independence: the Case of Dauphiné

The French Crown had done exactly the same extinction of debt with the state of Dauphiné in 1349 CE. Long an independent republic in the Roman empire, that region, named after an altruistic sea mammal, found itself with crushing debts in the Fourteenth Century. In exchange Dauphiné lost its independence inside the Roman Empire, becoming instead subject to the kingdom of France, “empire in its own kingdom” (don’t ask: a consequence of the Frexit of the Tenth Century; France by then had discovered that it would be better to make one with the region east of the Rhone-Saône).

Dauphiné has a very long independent history, all the way back to before Hannibal. The Dolphin was selected as a symbol of the altruism of that Alpine quasi-republic. Differently from fellow Switzerland, debt enslaved it… But France was the superpower of the time… Switzerland solved the ownership problem by fighting its owners, the Habsburg, to death…

The kingdom of France, empire onto itself had debts, of course, but when it so pleased. Otherwise, it could always send the army to visit lenders with too much of an inappropriate attitude (as the soon to be ex-Republic of Florence found out…)

Sovereignty and debts are bound together. The EU should do as the US did in 1790 CE. Meanwhile, the present European situation is not sustainable: whereas the USA can grow debt as big as it wants, and the notion of debt doesn’t even exist in China, Europe is reducing its economic activity to profit its plutocrats.  

At least US politicians are not so treacherously corrupt, that they will stoop that low. 

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Conclusion: Debt is tax deferred. Public debt for public interest works boosts the economy, in a way no private spending can replace. Indeed, private spending is motivated by profit, but serving the public is serving the public, not profiting from the public.

The “Neoliberal” creed, truly the power of evil, has insisted human beings know just one motivation: greed. But humanity, in full, know many other motivations, including that of serving public good. Servicing public good is more deeply anchored in human psychobiology, because, prehistorically speaking, the individual couldn’t exist without the collective (the tribe).

We need more public spending, thus, to not overtax the economy, more debt.  

Patrice Ayme

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Even “The Economist” has noticed. Consider: Economists reconsider how much governments can borrowThe profession is becoming less debt-averse”

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Dauphiné lost its independence to Paris in 1349 CE… But not its Parliament. However, in 1788 CE, one year before well known events in Paris, the French Revolution started, for real, south of Grenoble in the city of Vizille, encircled by mighty mountains. A consequence of the Revolution would be the loss of regional parliaments, including that of Grenoble…

 

Puerto Rico’s Default: Back To The 1930s?

August 5, 2015

We were told, for years, the outrageous lie that Greece’s debt crisis was “caused” by the Euro… Even by supposedly left wing economists of the USA (Paul Krugman, etc.), and their European parrots. I exposed this as a cover-up of the outrageous state of banking under a thick layer of Europhobia, even more than four years ago. Now Puerto Rico exhibits an increasing unwillingness to pay interest on its debt. Now what?

Puerto Rico’s Default Has Got To Be Europe’s Fault:

It’s only a matter of time before the plutocratic press, or, if you want, the Main Stream Media, make the Euro and Greece the reason for Puerto Rico’s failure. (For such a devious reasoning, see below.)

After 2008, the economy turned bad, and governments borrowed heavily to keep the society going. As the prospects got dimmer, https://patriceayme.wordpress.com/2014/06/21/new-york-vulture-justice/, bought Puerto Rican debt. Vultures hate education, as education makes for rebels, and they are in position to reduce educational spending, in Greece or Puerto Rico. When Vulture Funds had their fill, of Puerto Rican debt, they sprang the trap: mistaking Porto Rico for Greece, they required the Porto Rican government to reduce spending in education… So that Porto Rico could pay them the extravagant interest payments.

Is Puerto Rico The Object Of A (Financial Engineered) Genocide?

Is Puerto Rico The Object Of A (Financial Engineered) Genocide?

Debating Puerto Rican debt appears to be about finance, state debt, schools, hedge funds. Yet, ultimately, it’s about who owns Puerto Rico.

The Guardian, and magazine such as Slate, bought the hedge fund propaganda, bait, hook, line, sinker, if not the boat itself. Jordan Weissmann in Slate, a famous electronic magazine, blared: Hedge Funds Think Puerto Rico Should Shut Down Schools to Pay Its Debts. Is That So Wrong?

No, of course, it’s right. Hedge Funds should have all rights you can possibly imagine. They already buy and sell entire countries.

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The Truth About Porto-Rico: Tax Haven, Millionaires’ Haven:

The total tax receipt in Puerto Rico is 10%, a small fraction of what it is in advanced countries (at least 23%). Taxes on the rich are small, full of loopholes. Moreover, the USA treats Puerto Rico like an exploited colony, so full reimbursements and compensations available to full citizens of the USA are not available in Puerto Rico.

Another truth is that educational spending is exploding in the USA, because health spending (Obamacare”) does not control costs (contrarily to what propaganda says). So plutocrats from hedge funds profit from an inflation which fellow plutocrats in health care engineered, thanks to an arguably too Machiavellian by half White House.

Porto Rico is a weird island, a territory of the USA which is neither destined to independence, nor a state. In the 1950s, four Puerto Ricans went to the Congress of the USA, and shot 30 rounds onto the Representatives, to ask for independence.

Krugman says Puerto Rico is not Greece: indeed, Puerto Ricans flee massively to the USA. Greeks no doubt ought to do the same and contribute free, or menial labor, to the splendor of the economy as celebrate by Krugman. People who are in the know stridently contradicted Paul Krugman’s positions and exposed them for what they are: the term “neo-colonialism” is too good. Pursued to the end, Puerto Rico would just vanish, except as a tax haven (just as the Virgin Islands next door).

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Mussolini Fustigated What He Called “Demoplutocracies”:

Hitler joined the Italian dictator in complaining about the “plutocrats”… whom he knew all too well (top Nazis commiserated with him for having to dine with “plutocrats”, and make small talk to “plutocrats“, etc.)  

Does that mean that those who complain about “plutocracy” a lot, such as yours truly, are also fascist?

No. Of course not. First it shows that Mussolini and Hitler called their dinner guests “plutocrats” because that’s what they, all often, were. It also reveals that, in the 1930s, it was a common political truth, worldwide, that plutocrats had caused the financial and economic crisis… As they had, since they were in command (the bubble of the 1920s was deliberately engineered by Lord Montague and his American alter ego, to mitigate British debt from World War One by inflation and over-activity).

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President Roosevelt, Knight Of The Dark Side:

People often ask me what the Dark Side is. Neither “Evil“, nor “Star Wars” do justice to the notion. That force is strong, but its strength varies. The politician who acted the best, for his own country, when faced with that plutocratic crisis, was President Franklin D. Roosevelt. Roosevelt devalued the dollar, shackled Wall Street and the banks, created a Command and Control economy (headed by a young Canadian!). Roosevelt, himself a plutocrat, behaved in an extremely progressive, socialist way. Because he had to. Sometimes, the Dark Side is all about doing what is necessary (I see Obama chuckling in the distance with his drones). Embracing many of the solutions of the hard left, was the price Roosevelt paid to save plutocracy.

Maybe to compensate, for his own exuberant socialism, Roosevelt was abusive with the French (who still adore him), and exploitative with the British. He also helped making sure that Stalin, Hitler and Mussolini could devastate Europe… To the great profit of the USA. In 1939, or early 1940, Roosevelt could have declared war to Hitler. That would have probably made him win re-election in November 1940 in a landslide.

Roosevelt ran for an unprecedented Third Term. President Washington had refused to do so; Roosevelt was not obligated to run for an unprecedented third term. But he was morally, civilizationally, and strategically obligated to declare war to Nazism. FDR never did: Hitler declared war TO him. So why did not he?

Because Roosevelt was a master of the Dark Side: he let Nazism being used as a blunt instruments to destroy the competition in Europe, the other representative democracies (France, UK, Netherlands, Belgium, Norway… and their allies: Czechoslovakia, Poland, etc.) In the USA, this makes him a great man, an immense patriot, the founder of the “American Century”. The judgment of history, is another matter, entirely, let’s hope I contribute to it with my own point of view (“theory“).

In any case, President Roosevelt was a master plutocrat, whereas Hitler and Mussolini depended upon plutocrats. The case of Stalin is different: the Dark Side was so strong with him, he was able to surf over lots of plutocrats, as if they were waves, one after the other. Early on plutocrats of the USA (such as the Harriman Brothers) financed him (say to develop Baku oil fields). Engel in his theoretical book had said to do away with marriage, and embrace, free, secxual love. So Stalin’s satanic approach was pragmatic. Allied to German fascists, from 1916, until savagely attacked by his colleague Hitler, Stalin dictated his conditions to a weakened Roosevelt who was all too happy to give him half of Europe to chew on.

The Pragmatic Approach Can Be Opposed to the Principled One:

The USA stays highly pragmatic, never having ratified the Kyoto Protocol. Obama presented a plan to lead from behind technological progress (it affects energy production, about 30% of the CO2 production, but not transportation, another third, or industry). The solution, of course is to take out all subsidies for fossil fuels, starting with the richest countries, and doing so progressively. If Europe and the USA decided this, they could impose it, worldwide, through a carbon tax.

A conference in Paris is supposed to make desperate efforts to stop the rush through the two degrees Celsius, but the largest sub-arctic zone, Russia, has already barreled right through.

As long as hedge funds feel they can order the world around why should it be any different? What else?

Plutocrats say: all the problems arise from French-like socialism, and the European Unification related to it. Thus, they have got to say that so it is, with Puerto Rico’s debt crisis.

Puerto Rico’s debt crisis has to be related to the hydra of European unifying socialism, sneakily propelled by the French.  How could that not be? Contagion, what plutocrats fear the most, this what Greece and France brought: contagion of rebellion. Destroying direct democracy is why Persia financed the war of Sparta against Athens. Plutocrats have profited of this Persian investment, ever since.

The Greeks did not want to pay for their banks’ errors, and the state debt resulting from it. So the Greeks started a mood, a mood where those who owe resist their lords, the lenders. Hence the Puerto Rican legislature sudden decision to resist its masters, the hedge fund managers. So, you see, European leftists are not innocuous, they are already attacking on U.S. soil.

And the climate crisis? Purely a French invention. Proof? The climate conference is to be held in Paris in four months.

Nowadays, thanks in part to the Multiverse fanatics, no proofs are really necessary, screaming insanities is sufficient, to qualify for respect (as long as you have a big gun, or pocketbook, or aura given by those with guns, or pocketbooks). Everybody knows this, by now: the tedium of the medium is the message, and the massage.

Patrice Ayme’

Why Euro Wrecks. So Argue About It.

July 3, 2015

In Greece, some of the upper class, including conservative officers high in the army, or investors who absolutely did not vote for the leftist Syriza, plan to follow Prime Minister Tsipras’ advice to vote NO to the referendum. In other words, the country is very divided.

(In the same vein, I have, unusually, no strong advice: there are great arguments for both the YES and the NO vote; however, I think it’s a good thing to vote, people ought to do this all the time, because they are all forced to go out and think about the process; it’s too bad Tsipras called the referendum with such short notice, though; the arguing process needs time, as the “votations” in Switzerland show: one can see opinions change, over a period of months. If I had to vote, I would vote NO. But it’s not a vote against the Euro, of course. It is just a vote against the obsequious butlers of arrogant plutocrats, their institutions, the so-called “creditors”, and the wanton cruelty, viciousness and outrageous lies, and sneaky misrepresentations and red herrings.)

Paul Krugman in “Europe’s Many Economic Disasters” points out that:

“It’s depressing thinking about Greece these days, so let’s talk about something else, O.K.? Let’s talk, for starters, about Finland, which couldn’t be more different from that corrupt, irresponsible country to the south. Finland is a model European citizen; it has honest government, sound finances and a solid credit rating, which lets it borrow money at incredibly low interest rates.

It’s also in the eighth year of a slump that has cut real gross domestic product per capita by 10 percent and shows no sign of ending. In fact, if it weren’t for the nightmare in southern Europe, the troubles facing the Finnish economy might well be seen as an epic disaster.”

Greek Debt Service Was Reduced Too Little, Too Late

Greek Debt Service Was Reduced Too Little, Too Late

Astutely, Krugman insists that these crises are not just ubiquitous, but also that the usual plutocratic interpretation cannot be brandished, because the FRENCH Republic, the most social country of them all, escapes relatively well. Krugman:

“And Finland isn’t alone. It’s part of an arc of economic decline that extends across northern Europe through Denmark — which isn’t on the euro, but is managing its money as if it were — to the Netherlands. All of these countries are, by the way, doing much worse than France, whose economy gets terrible press from journalists who hate its strong social safety net, but it has actually held up better than almost every other European nation except Germany.”

The case of the French Republic is special: France in more ways than one, is a mini USA. The French economy does everything, from extremely high tech and science to exporting agriculture. It is the most diversified economy in the world, with the USA. However, it has been suffering immensely from too high a currency.

In comparison, Finland is a two tricks pony: timber and Nokia. Germany does well with high quality high tech exports, but one can expect China to catch up with luxury cars.

The meaning of recovery in Greece has become unreal. Krugman:

“And what about southern Europe outside Greece? European officials have been hyping the recovery in Spain, which did everything it was supposed to do and whose economy has finally started to grow again and even to create jobs. But success, European-style, means an unemployment rate that is still almost 23 percent and real income per capita that is still down 7 percent from its pre-crisis level. Portugal has also obediently implemented harsh austerity — and is 6 percent poorer than it used to be.”

European so-called “leaders”, these corruptocrats drunk on power, have a lot of explaining to do. Krugman:

”Why are there so many economic disasters in Europe? Actually, what’s striking at this point is how much the origin stories of European crises differ. Yes, the Greek government borrowed too much. But the Spanish government didn’t — Spain’s story is all about private lending and a housing bubble. And Finland’s story doesn’t involve debt at all. It is, instead, about weak demand for forest products, still a major national export, and the stumbles of Finnish manufacturing, in particular of its erstwhile national champion Nokia.”

Krugman comes close to the real explanation, but his semantics start to drift inappropriately:

“What all of these economies have in common, however, is that by joining the eurozone they put themselves into an economic straitjacket. Finland had a very severe economic crisis at the end of the 1980s — much worse, at the beginning, than what it’s going through now. But it was able to engineer a fairly quick recovery in large part by sharply devaluing its currency, making its exports more competitive. This time, unfortunately, it had no currency to devalue. And the same goes for Europe’s other trouble spots.

Does this mean that creating the euro was a mistake? Well, yes.”

Well, no. The Euro was not a mistake. The mistake was to put Goldman-Sachs and its ilk in command (see below). Competitive devaluations are a form of war. And the idea of an Union is no more war. The USA went to war for Union, and out of it came the “greenback”, the national currency of the USA (which was created for the war, and was part of the war effort). The dollar was created to make a more perfect union. Europe wants, and needs, a more perfect union.

The real mistake is that Jacques Delors, head of the European Commission,  and his team had said the Euro ought to stand on two legs. However, only one was built. National governments, power hungry, made sure that the other transnational leg not be built. It was also handy that by not building the required transnational EUROPEAN governance, one made the sure that High Finance and its plutocrats could have free rein. In other words, Goldman Sachs and its ilk were given the opportunity to lead Europe, precisely because the European “leaders” did not give the Peoples of Europe the opportunity to build a European governance in matters financial, monetary and economic. Krugman:

“But that’s not the same as saying that [the Euro] should be eliminated now that it exists. The urgent thing now is to loosen that straitjacket. This would involve action on multiple fronts, from a unified system of bank guarantees to a willingness to offer debt relief for countries where debt is the problem. It would also involve creating a more favorable overall environment for countries trying to adjust to bad luck by renouncing excessive austerity and doing everything possible to raise Europe’s underlying inflation rate — currently below 1 percent — at least back up to the official target of 2 percent.”

But there are many European officials and politicians who are opposed to anything and everything that might make the euro workable, who still believe that all would be well if everyone exhibited sufficient discipline. And that’s why there is even more at stake in Sunday’s Greek referendum than most observers realize.”

A characteristic of the Euro has been that, in spite of a terribly worsening economic situation, and desperately low interest rates, the Euro stayed very high, as if the situation was rosy. When the situation was bad in Germany, ten years ago, the Euro was at 86 cents on the Dollars. When several Euro countries hit unemployment of nearly 30% (as Spain did), the Euro was very strong, nearly 150 cents on the dollar. Who engineered that absurdity? The same Goldman Sachs specialists who (were paid to) hid part of the Greek debt The bankers lent inappropriately, and to whom did they lend? To their friends, their associates, the rich? 92% of the money borrowed by Greece since the crisis began went to banks. Why were the bankers not prosecuted? Differently from simple Greek retirees who saw their retirement collapse, they are culprit. The real question is, to whom did establishing this mess profit? The creditors? Are they trying to reduce everybody to misery?

Krugman feels that using a bit of violence against European authorities would be a good thing:

“One of the great risks if the Greek public votes yes — that is, votes to accept the demands of the creditors, and hence repudiates the Greek government’s position and probably brings the government down — is that it will empower and encourage the architects of European failure. The creditors will have demonstrated their strength, their ability to humiliate anyone who challenges demands for austerity without end. And they will continue to claim that imposing mass unemployment is the only responsible course of action.

What if Greece votes no? This will lead to scary, unknown terrain. Greece might well leave the euro, which would be hugely disruptive in the short run. But it will also offer Greece itself a chance for real recovery. And it will serve as a salutary shock to the complacency of Europe’s elites.

Or to put it a bit differently, it’s reasonable to fear the consequences of a “no” vote, because nobody knows what would come next. But you should be even more afraid of the consequences of a “yes,” because in that case we do know what comes next — more austerity, more disasters and eventually a crisis much worse than anything we’ve seen so far.”

Well, it’s not that simple. In 2008, everybody was supposed to freak out because ONE BANK of the USA went bankrupt. Now we have an entire country going bankrupt. A country with twice the population of Norway, or that of the average state of the USA.

If Greece is allowed to go fully bankrupt (no, I am not contradicting myself: in the case of the IMF, there is a three month grace, or limbo, period), we will know that European countries are allowed to go bankrupt.

And why? There are many reason, but one is particularly salient: Goldman Sachs, an American bank, and high finance conspiracy outfit, deliberately engineered a misrepresentation of Greek finance. Why are these conspirators not punished?

If countries are allowed to go bankrupt, why don’t they all go bankrupt? After all, that’s the idea of devaluation Krugman likes so much.

The referendum is a good idea, allows Europeans to accuse those who torture Europe. Already the IMF is backing off, and just announced that, after all, some of the Greek debt ought to be reduced (PM Tsipras immediately asked for a 30% debt reduction).

The referendum is good, because it allows Europeans to argue about which Europe they want.

Do they want a Europe where Goldman-Sachs is free to conspire, or one where We The People rule? Let’s have referenda and arguments all over.

That’s how baboons vote (they vote with their feet). If baboons can do it, Europeans ought to be enable to emulate them.

Fundamentally, plutocrats want the monopoly of money and power, which defines them. In Europe, they have made sure to starve all what We The People want or need, and they did this by restricting how many Euros, how much currency, circulates.

By the way, it’s also how the Roman economy collapsed. By 300 CE, Rome did not have enough money, and so established a control and command economy (what the USSR became famous for).

Now the corrupt clowns who lead Europe are afraid that We The People, all over Europe, is going to start fighting against the creditors. An obvious case is “Podemos” in Spain, a party similar to Syriza. All over, We The People has to ask: how come so much borrowing was made in our name, to reimburse banksters?

Things are coming to a head. The economic crisis, engineered by plutocrats, feeds the Islamist crisis, whose deep inception was also plutocratic:

The danger of an extremely violent insurrection against the established order is increasing by the day. After all, president Teddy Roosevelt took drastic measures against monopolistic capitalism. What had happened before? Well, Teddy’s predecessor, Mac Kinley, had been assassinated (1901 CE). So had been French president Sadi Carnot (1894). These assassinations were part of a general assassination campaign against political leaders of anarchist ideology. Islamist ideology may well play a similar role. Already many blond blue eyed Europeans are converting to Islam, and joining Jihad. Rage against the system is why they do. The enemies of my enemies may not be my friends, but, when violence has gone too far, only more violence can stop it.

Patrice Ayme’

Beware Of Those Who Brought Greeks Gifts

April 20, 2015

The hidden logic in various human activities is often different from the apparent one. This is true in sociology, politics, economics. Consider NAFTA (North American Free Trade Accord), QE (Quantitative Easing: make banks richer so they be gooder), TPP (Trans Pacific Partnership: Terrifying Plutocracy Punishing China), etc.

For a decade the Greeks, having had their Drachmas converted into Euros at twice their natural worth, brought gifts to the rough Germans, by buying their luxury cars. Now Germany is rich and powerful, and Greece poor, and weak. Best conditions to pay for Greek arrogance.

There is totally no economic reason to keep on punishing Greece at this point. So why do the punishments keep on coming? One has to resort to a few twisted psychological explanations.

Lots Of Debt: Some Can Be Turned Into Tax, Some To Foreign Extortion

Lots Of Debt: Some Can Be Turned Into Tax, Some To Foreign Extortion

My twisted psycho analysis will complement the excellent editorial from Krugman: ”Greece on the Brink”.

“…Can Greek exit from the euro be avoided?

Yes, it can. The irony of Syriza’s [the present governing party, in alliance with nationalists] victory is that it came just at the point when a workable compromise should be possible.

The key point is that exiting the euro would be extremely costly and disruptive in Greece, and would pose huge political and financial risks for the rest of Europe. It’s therefore something to be avoided if there’s a halfway decent alternative. And there is, or should be.”

Notice that Paul Krugman has now an opinion on the “Grexit” exactly opposite to the one he had just two years ago. What he and others have not understood, is that I do not see why Greece could not default and stay in the Eurozone. To identify both concepts, is a way to terrify, but it does not have to be, except as a terror instrument.

Krugman: “By late 2014 Greece had managed to eke out a small “primary” budget surplus, with tax receipts exceeding spending, excluding interest payments. That’s all that creditors can reasonably demand, since you can’t keep squeezing blood from a stone. Meanwhile, all those wage cuts have made Greece competitive on world markets — or would make it competitive if some stability can be restored.

The shape of a deal is therefore clear: basically, a standstill on further austerity, with Greece agreeing to make significant but not ever-growing payments to its creditors. Such a deal would set the stage for economic recovery…

But right now that deal doesn’t seem to be coming together… the creditors are demanding things — big cuts in pensions and public employment — that a newly elected government of the left simply can’t agree to, as opposed to reforms like an improvement in tax enforcement that it can. And the Greeks, as I suggested, are all too ready to see these demands as part of an effort either to bring down their government or to make their country into an example of what will happen to other debtor countries if they balk at harsh austerity.

Rightly so: if Greece default, students in the USA, with an outstanding, non-extinguishable debt of 1.2 Trillion dollars (!) may think: ’Why not us?’

Greece has a ratio of 170 per cent of debt to GDP. However, the debt has a very low interest rate and a maturity of over 15 years. Its impact on the economy is much lower than in Portugal, Spain, or Italy. And that is the entire point: the Italian economy is terrible. Last year 170,000 refugees flooded Italy (they came back to be colonized again by the big bad colonialists!)

A new round of Greek restructuring would create political problems for Eurozone governments which, as a percentage of GDP, face a higher interest bill than Greece. How can the Spanish or Italian Prime Minister tell their aghast subjects: ‘Greece has a lower interest burden than we have, but we need to alleviate their burden! And not yours!’

And then there is the question of countries like France, where austerity is applied, while the country is paid by investors to consent to store their money there. That can only mean that, in the light of our guides, austerity is an absolute good.

Krugman detects the will to torture the Greeks, because:

To make things even worse, political uncertainty is hurting tax receipts [and investing!!], probably causing that hard-earned primary surplus to evaporate. The sensible thing, surely, is to show some patience on that front: if and when a deal is reached, uncertainty will subside and the budget should improve again. But in the pervasive atmosphere of distrust, patience is in short supply.

It doesn’t have to be this way. True, avoiding a full-blown crisis would require that creditors advance a significant amount of cash, albeit cash that would immediately be recycled into debt payments. But consider the alternative. The last thing Europe needs is for fraying tempers to bring on yet another catastrophe, this one completely gratuitous.”

None of these apparently absurd policies imposed on Greece, are absurd. They just look absurd to those attached to human rights. From the point of the perpetrators, they are fully logical. And they are certainly not gratuitous.

Contemplate this: If the Greek government succeeded to augment tax revenues, it would succeed to tax the 1% significantly, especially the super-rich. If, in combination with a primary surplus, that was deemed sufficient for the rest of Greece creditors (including those based in Washington, like the IMF), that would be a demonstration for all to see that the present economic crisis has to do with NOT taxing the hyper rich enough. As taxing them would be enough to solve everything.

This is exactly the lesson the plutocrats and their servants do not want to be advertised.

Hence their reluctance to accept that taxing the hyper-rich is enough. But there is a further twist. The “Socialist” French Finance Minster, Sapin, is as hysterical as his German colleagues to insists Greece should pay… Until catastrophe ensues. Of course, as all the others, he has to think about his income once he gets kicked out of government within 2 years (probably). But there is still another angle.

Suppose catastrophe ensues: Greece defaults, exits the Eurozone. Then what? The Euro probably goes down much more (for a long number of reasons… no least that there would have been a default, and Greece would still have to be helped!)

Then the Euro, may go as low as it was when Germany was in great difficulty, a decade ago. So it would be good for Europe: whereas the USA depends only for 13% upon international trade, France depends at 28%, and Germany much more.

Right wing individuals, many of them who have been partners at Goldman Sachs (Monti, or the head of the ECB), or in general are tied in to High Finance, are not interested in seeing a left-wing government succeed, where the right has failed. Creditors will keep destroying the Greek economy. They may be nice people, but mostly with their kind.

One could point to creditors that they were the ones who converted the Drachma at twice its real rate against the Euro. As co-responsible, they should be punished too! However, this would not go in the sense we are supposed to attribute to history.

This Greek tragedy makes sense. Plutocratic sense. This is a world where the weak and small is in debt to the mighty, and has to learn living that way, as serfs did, in the Middle-Ages. Otherwise, they can be made an example of.

Patrice Ayme’

Too Little Debt & Too Much Blood Money Kill

February 9, 2015

Dying Of Too Little Debt, and Too Much Institutionalized Crime:

Nobody Understands Debt” says Paul Krugman, and he demonstrates it in an excellent editorial. I am happy that he is finally getting black on white, what I wrote long ago. He does not put it as spectacularly as I have: at worst, debt becomes tax.

From Krugman’s description Dr. Merkel comes out as a complete fool (so it is not reassuring that she goes around the world that the Ukrainian Republic should not be sold lethal defense weapons: is she Putin’s agent?). Krugman concludes: “…if the euro does fail, here’s what should be written on its tombstone: “Died of a bad analogy.

The world economy can die of other things too, such as massive corruption under the increasing weight of global plutocracy.

The presence of more than 30,000 known tax evaders in just one subsidiary of the British bank HSBC in Switzerland alone, between 2005 and 2007, has been revealed today. The total amount of tax evasion is 180 billion euros (200 billion dollars; lower numbers were initially announce, in good disinformation style). The accounts tied to politicians, royalty, designers, sports figures, corrupt businessmen, dictators, arms industry officials, drug traffickers, and high-end criminals.

The bank actively helped customers conceal the accounts from authorities. The bank also provided customers with cash under the form of bundles of old bank notes, in various currencies so they couldn’t be traced. Organized crime, also known as banking, is in charge of creating money… as debt. (97% of money is created by banks as credit, worldwide.)

The data was “illegally” downloaded by bank employee Herve’ Falciani, who later fled to France. Falciani told CBS’s 60 Minutes Sunday night that colleagues at the bank helped him with the data.

“Friends — let’s say partners — gave me these data,” Falciani says. “I’m not the only person in banking system that wants to raise alarm.”

60 Minutes made a biased report, insisting on Falciani wearing disguises, etc. Falciani was in jail in Spain (because of an Interpol warrant for his arrest launched by Switzerland, at the British bank’s prodding) for 5 months. During that time, Spanish authorities, fearing for his life, let him appear only under a heavy disguise (“60 Minutes” did not mention that the authorities disguised him; instead, “60 Minutes” insisted that Falciani wearing a disguise reflected the general mental derangement “60 Minutes” was anxious to impart to its viewership that Falciani was suffering from! Of such little details good propaganda is made of). Falciani has now police protection in France (and I would suggest that France sends warrant of arrest against various Swiss “authorities” instead; actually what about Putin’s 40 billions residing in Switzerland…).

Many heads of states were involved in HSBC Switzerland, including the King of Morocco, who had 8 million dollars on one account alone at HSBC Suisse. Ironically enough, Moroccan law forbids foreign bank accounts. The King of Jordan had 41 million in one account.

Also several dozen major Arab plutocrats owned accounts obviously set-up to feed Bin Laden’s Al Qaeda. Terrorism can be so expensive nowadays… Plenty of accounts of HSBC could be traced to blood money.

The brother in law of the Tunisian dictator Ben Ali. Family members of the Syrian blood bathing dictator, Assad. A major woman politician from Burundi. Money from major drug traffickers, being laundered.

HSBC says that it did not know. That’s a lie: the bank called all the owners of the accounts exposed to politics “PEP” (“Politically Exposed People”).

Why don’t banksters go to prison? Say, for decades. Why, instead of asking the Greek people to pay for bankers, we don’t systematically recover all the properties of all the officers, and shareholders of all the banks which lent to Greek plutocrats? One should also expropriate said plutocrats. Let’s do it, and see what’s left… If anything.

Here is Krugman again: “Many economists, including Janet Yellen, view global economic troubles since 2008 largely as a story about “deleveraging” — a simultaneous attempt by debtors almost everywhere to reduce their liabilities. Why is deleveraging a problem? Because my spending is your income, and your spending is my income, so if everyone slashes spending at the same time, incomes go down around the world.

Or as Ms. Yellen put it in 2009, “Precautions that may be smart for individuals and firms — and indeed essential to return the economy to a normal state — nevertheless magnify the distress of the economy as a whole.”

The worst thing that can happen with national debt is that it does not get reimbursed. Then debt will act as a tax on those who had money to lend it. Not a tragedy. The failure of the Euro would be a tragedy, though.

So is sub-performing economic activity. It’s not a question of not buying enough cars, TV, pants and houses. It’s also a question of the educational system going down (so kudos to Obama for proposing to make college free… Although that just part of the problem).

What does debt do?

It augments the quantity of money on the economy while allowing greater economic activity. So, when demand is faltering, it makes demand higher than it otherwise would have been.

With all the infrastructure decaying, or proven insufficient, such as the educational system, one can only observe that more activity is needed.

A related problem is that the velocity of money has collapsed… Another indication of the insufficient economic activity.

Krugman again: “This was a prescription for slow-motion disaster. European debtors did, in fact, need to tighten their belts — but the austerity they were actually forced to impose was incredibly savage. Meanwhile, Germany and other core economies — which needed to spend more, to offset belt-tightening in the periphery — also tried to spend less. The result was to create an environment in which reducing debt ratios was impossible: Real growth slowed to a crawl, inflation fell to almost nothing and outright deflation has taken hold in the worst-hit nations.

Suffering voters put up with this policy disaster for a remarkably long time, believing in the promises of the elite that they would soon see their sacrifices rewarded. But as the pain went on and on, with no visible progress, radicalization was inevitable.”

Radicalization? It looks more like Enlightenment to me. Or then, one should go at the root of radical, which is root. Voters are starting to get to the root of the problem: they were manipulated by a class of greedsters who hold power…. And lied to get there.

Insufficient economic activity creates a plebs that does nothing but getting enough subsidies to get by, while a plutocracy rules above it. This is what happened to the Roman empire. Starting around 160 CE, taxes, especially on very rich estates became insufficient to support even the military.

Taxing the hyper rich then (as was done earlier under emperor Trajan) would have allowed to re-institute welfare for children, and make the military as strong as it was under Trajan (that, in turn brought peace and prosperity).

Are we not learning history?

Patrice Ayme’

Mental Inertia, Evil’s Friend

February 3, 2015

Mental Inertia: Putin, Germans and their Evil Ways, Obama…

Or Why Doing Nothing, That Is, Collaborating With Evil, Is So Comfortable:

It is well known that: “All that is necessary for the triumph of evil is that good men do nothing.” (attributed to Plato and then Mill, Burke). The question is: why would good men do nothing, when evil is triumphing? The short of it: (barring unsavory explanations) because of mental inertia.

The Parisian mathematician, physicists, philosopher and adviser to Kings, Buridan, discovered what had eluded Aristotle. Inertia. Circa 1340 CE (Buridan named it “impetus”; see note on inertia.)

Mental inertia was not an obvious feature, if one did not know what the brain was made of. But now we do. Modern neurology has revealed the immense complexity of the brain. The brain is not something that can be tinkered with in five minutes. We now know that the brain is the most complex architecture.

Just as it takes a long time to erect, or change a vast building, so it is with the brain. The brain has inertia. Thus psychological inertia.

This mental inertia is why human beings tend to go on with a task, or with an attitude, once they got launched into it (a Jihadist laden with explosives just flew by).

Once a force is applied to an object, for example a propaganda to a brain, it tends to gather momentum, and develop ever more inertia.

Putin of course creates his own propaganda, and then can listen to it, reinforcing his deviance, in a self-reflective way. It’s all the more efficient if others repeat his ideas, and he listens to them. Actually that’s not just a problem with Putin, but with all Great Leaders. (And that’s one reason why Great Leadership has to be discontinued, and replaced by Direct Democracy.)

This amplifies the inertia.

By not fiercely opposing Putin, one collaborates with him. It is not just a question of sanctions. Putin is a liar, and an aggressive one, he should be publicly called for what he is.

Another example of inertia is the lethal mood that makes a strength of Germany: discipline.

GERMANY’S PERSISTANCE IN EVIL WAYS:

It was a case of splendid mental inertia. Why did the Germans persist with deplorable ways for more than a century (I am referring here to the acerbic critique patriots such as Nietzsche made of Germany, by the 1870S; and also the fact Prussia, soon to unify Germany was already racist and “anti-Semitic”, by the 1700s). Why did Kant want to enslave Africans, why did Luther want to hear the screams of tortured Jews (that’s what both of them wrote, I am just repeating, while full of contempt… for those two).

This is a highly practical question nowadays, now that the evil extreme left in power in Greece has made extremely reasonable proposals to reduce Greece’s otherwise lethal debt burden.

In German “Shuld” means both crime and debt. Thus a debt feels like a crime. Unfortunately for Germany, both have been more indulged by Germans rather than by Greeks in the last century or so.

One can visit Northern France. There was the tallest castle of the Middle Ages, the tallest dungeon in the world. The Coucy Castle. In 1918, the German army, facing a sea of French tanks, some supporting fresh American troops, was thoroughly defeated. The French Air Force, the world’s largest, could roam at will, so it could not be argued that Coucy had a military value for observation. Still, the retreating Germans dynamited the castle (and not just the dungeon).

For decades, a French public-private effort has tried to rebuild the completely shattered castle, still reduced to a sea of stones.

I do not see the Germans anxious to repay that debt. Their Coucy debt. Actually Germany repaid its (much reduced) reparations for World War One, only a few years ago.

Germany had deliberately destroyed all of the industrial base of North East France, and most of Belgium, including the mines, and paid back only a small fraction of the cost of its destruction.

Germany’s debt was extinguished, or partly extinguished 4 times during the Twentieth Century. Germany didn’t pay for Nazism, and the wanton destruction it inflicted on Europe, including Greece. At least, not financially.

It is not that 340 billion were given to the Greeks. That’s propaganda. 340 billion was given to the banksters who had invested with their accomplices, some of them, Greek plutocrats.

But back to Germany, and its moral rectitude.

And how did all this Twentieth Century German mayhem originate? Because Germans did exactly what they were told. By whom? By the plutocrats who ruled over them. Surely, the Kaiser and his ruffians were the essence of plutocracy. Afraid to lose their plutocratic hold on Germany to the German Socialist Party, and see the rise of Parliamentary Democracy inside Germany, they decided instead to attach the French Republic, a Parliamentary Democracy.

Then, of course, Hitler was the pawn of plutocrats (ironically enough, many, if not most of them, were American plutocrats).

By doing what today’s plutocrats want, Germany is repeating history. Time to wake up!

https://patriceayme.wordpress.com/2015/01/30/europes-greek-tragedy/

Notice that German attitude is a case of mental inertia: used to obey to masters, first Prussian aristocrats, then crazed fascists fronting for rabid plutocrats, now Germans want to do exactly what banksters say (said banksters don’t have a Euro in the Greek fight; what they are afraid is that, if the discourse switches from accusing the Greeks, it may well accuse the real culprits, namely high finance, of which they are a part).

OBAMA’S INERTIA:

So Obama came and gave us change we could believe in, namely none at all. So now we get a course correction:

Obama’s Budget: Plenty Enough, Six Years Too Late.

Nice, very nice. This near 4 trillion dollar budget. No more financing of the wealthiest. At last. At last a progressive budget, turned towards the future, reducing inequality, while augmenting opportunity for all, and thus improving both society and economy. We little people can dream again.

Question: why was not this proposed when “Democrats” controlled Congress, say six years ago? Because then it could have passed? Fortunately, it was not presented, so it did not pass, and now plutocrats are richer, and more splendid than ever. They will be happy to reward Obama and his collaborators handsomely, with very nice tips.

Better: Obama can now safely pose as a great progressive, giving a chance to the next fake progressive sponsored by plutocracy through the “Democratic” Party, to come up with more smoke and mirrors.

Democrats hope, that, somehow, We The People will end up believing that the Obama revolution was stopped by evil Republicans (instead as do-nothing “Democrats”, as it truly was!) Then, by mental inertia, they will come out pristine as freshly fallen snow…

Was Obama unable to rule in part because of mental inertia? No doubt. Is it enough of an excuse? Fat chance.

Patrice Ayme’

On inertia: that its discovery is still attributed to Newton is a great scandal. Buridan wrote “Newton’s First Law” very explicitly, 340 years before Newton. They both wrote in Latin, so one cannot argue that Newton deserves priority because he wrote in English…

Not all the details of how one goes from inertia in Quantum processes to brain inertia are in, but that Quantum inertia, and then Mental inertia RULE, is clear enough. Yes, one can be ruled by the laws of physics, not just those of men… (By the way, Einstein’s motivation in his Theory of so-called General Relativity was to explain inertia: he failed miserably, as his theory is local, not global; I suggest it has to do with Quantum Entanglement, I win!)

Economic Incompetence A Cover-Up?

December 14, 2014

Senator Elizabeth Warren (Democrat, Massachusetts) is one of the couple of American politicians with a progressive mindset. She has criticized the latest government funding bill because it repeals part of Dodd-Frank (notice that the Democrats are still in power, doing this re-augmentation of the power of financial plutocrats, just before leaving office, no doubt to reap their rewards when they will be looking for juicy compensations in a few weeks).

Warren also disagreed with Obama’s nomination of investment banker Antonio Weiss for the Treasury Department (not the first time Obama names such a fat cat to watch the hens, a method now copied by Hollande).

Warren will never be part of the real government of the USA (those are people such as Weiss, or (famous for her “Fuck-Europe) Nuland who stand just below the figure heads (Obama, Hagel, Kerry, etc.) Or then she will have to do what she is told.

It is true that some American politicians instituted forceful reforms: the two Roosevelts and JFK were from a plutocratic background, and the three of them were also warriors (real ones). Johnson, however rotten, rode JFK’s assassination to pass a progressive agenda, and Eisenhower, with his 93% upper margin tax, was also a warrior.

In all cases, progressive American politicians were extremely aggressive types. In comparison, Bill Clinton, a spineless schmoozer, made it so that the financial derivatives market went from 80 TRILLION dollars to the present 800 trillions.

So the financial derivatives market is about 12 times WORLD GDP. In other words, for one transaction among the low lives, the fat cats make 12.

Here comes Krugman, in his latest, “Made As Hellas”:

“The Greek fiscal crisis erupted five years ago, and its side effects continue to inflict immense damage on Europe and the world. But I’m not talking about the side effects you may have in mind — spillovers from Greece’s Great Depression-level slump, or financial contagion to other debtors. No, the truly disastrous effect of the Greek crisis was the way it distorted economic policy, as supposedly serious people around the world rushed to learn the wrong lessons.”

Well, I have several twists on this: first, the fundamental crisis was the financial derivatives crisis in New York and London. Second, as I will show, the wrong lessons were taught by the usual cast of deviant characters and their servants. It was, it is, a case of intoxication with the wrong ideas, to poison the world’s entire economy, thus its society, and future… to profit the few who hold the strings.

Krugman pursues: What happened last time, you may recall, was the exploitation of Greece’s woes to change the economic subject. Suddenly, we were supposed to obsess over budget deficits, even if borrowing costs were at historic lows, and slash government spending, even in the face of mass unemployment. Because if we didn’t, you see, we could turn into Greece any day now. “Greece stands as a warning of what happens to countries that lose their credibility,” intoned David Cameron, Britain’s prime minister, as he announced austerity policies in 2010. “We are on the same path as Greece,” declared Representative Paul Ryan, who was soon to become the chairman of the House Budget Committee, that same year.

In reality, Britain and the United States…were and are nothing like Greece. Now Greece appears to be in crisis again. Will we learn the right lessons this time?

I have no idea how events in Greece are about to turn out. But there’s a real lesson in its political turmoil that’s much more important than the false lesson too many took from its special fiscal woes.”

Krugman is superficially correct, but fundamentally naïve.

An elite of sort-of thinking thieves conspiring with the world’s biggest plutocrats, rules, abuses, exploits, and splurges.

That elite of robbers has run out of sophisticated bogus arguments which everybody believes in, so, now, they are trying to present themselves as incompetent … but they then add that anybody else would do much worse than they do.

In other words, the plutocrats and their political accomplices and agents use now their own incompetence as a cover-up.

How do I know that they deliberately use incompetence as a cover-up?

I saw recently the worst accusations being flung at some cabinet ministers in France (where it is a crime to insult the members of the government) and against others, such as Juncker (a fitting name, close to “junk”).

Juncker, the new head of the European Commission, who, over a quarter of a century, as Finance Minister, and then Prime Minister of Luxembourg, organized outrageous tax evasion of the order of trillions of Euros by some of the wealthiest individuals and corporations in the world, thus putting in misery hundreds of millions of Europeans. Juncker, is arguably, one of the world’s top criminals, ethically speaking. His monstrous crimes leave him impassible: apparently he has seen, or committed, worse.

So how do these extremely high level politicians react, when they are told, in public, they are greedy, thieving, conniving, low lives? Well, they react as if they fully expected those complaints and insults: they find them natural. Why? Obviously because they did, indeed, commit them, and they know very well their crimes are in plain sight.

We have many examples of the worst regimes in the last 4,000 years of recorded history, when regimes went astray, and yet, they found many to serve them.

We are experiencing now such a case. Basically all European politicians, and the political system they grew from ought to be thrown out, and replaced by direct democracy. How? Just copy what is done in Switzerland.

The problem is the same in the USA. But, as the world’s largest national economy, and military, and networked empire, the USA plutocrats have fed their servants with more crumbs. Hence the more subdued and less revolted state of the American populace…

Patrice Ayme’

Live Within Our Means, Say Mean Plutocrats

December 5, 2014

Austerity Is A Conspiracy By Those Who, Having All The Money, Want Us To Have None:

What do plutocrats want? In the common, all too restrictive sense of plutocracy as the “rule of money”, “plutocracy” is supposed to mean that plutocrats want their money to rule.

Yet, plutocracy is not just about money. Even if one starts with “money”, one ends up with much more. Indeed, money is power onto others. By establishing charities, foundations, political financing, and other networks of influence, plutocrats extent invisibly their power beyond the horizon, and below the ground.

However Homo Sapiens Sapiens not being made to be submitted to others “power”, we have there, in this will to quasi-infinite plutocratic power, a form of cruelty, not to say, mayhem. Power struggles kill, among chimpanzees.

Britain Won Its Place In The World Through Ultra Massive Borrowing & Money Creation

Britain Won Its Place In The World Through Ultra Massive Borrowing & Money Creation

Notice that, with chimpanzees, even the alpha male has very little power: as soon as three of his subordinates gang up against him, he is toast. The same holds with wolves, or lions.

But civilization is all about power. When only a few have its reins, they become like gods. At least in their minds, habits, ways, and means. That’s why plutocrats, their obsequious servants, and those they have hypnotized, worry so much about “us living within our means”.

 

A Few Guys Have ALL The Power, What Could Go Wrong?

Whereas a modern bureaucrat, like Eichmann, can send millions to death. Some will say the analogy is in poor taste. But not so. People such as Obama, Hollande, Putin, can literally launch actions that, in the worst possible case, could lead quickly to the death of billions (it takes just one 300 kiloton thermonuclear bomb to destroy most of any city on Earth).

I do believe that so much power, in so few hands, in so few brains, is not just immoral, but unwise. This makes civilization highly unstable.

However, a meta-discourse has been held, not just logically, but emotionally: it is OK to have so much power in so few hands.

Let’s put aside the main problem aside. The main problem being that absolute power corrupts absolutely, and that Czar Putin, for example, has more power than all the Czars who existed before him, put together: it’s not just that Stalin, had no H bombs. Both him, and Brezhnev, were worried by the Politburo (their top communist colleagues). Putin, by comparison reigns on a coterie of obsequious plutocrats, anxious about Polonium in their tea, or homicide by heart attack.

Not that Putin needs to give a direct order. For someone who can roughly kill half of Chechnya, and then get away with offering luxury homes there to his gregarious friend the “star”, not to say czar, Depardieu (not prosecuted for war profiteering, whereas the French government prosecutes commoners for basically nothing, commonly), letting it known to its secret services subordinates that he would love it if contradictors could just vanish, is elementary.

An aside here: when top official of the Nazi administration asked Adolf Hitler directly whether there was a systematic policy in place for killing Jews, Adolf Hitler firmly denied there was. At the Wannsee Holocaust conference, top Nazis confronted SS General Heydrich, and told him that Hitler had personally told them that it was not the policy of the Reich to kill the Jews. And they felt sure that, should they ask Hitler that same question again Hitler would give the same answer.

To that Heydrich icily replied, with a thin smile: ”Of course, he will!”

The fundamental problem with the top Nazis was not that they had some very bad ideas, it was that they had too much power. That enormous power (greatly enabled by the dog-like submissivity of the average German at the time), led them in a quick succession of choices, ever more abysmal, starting in January 1933. (To this, as soon as 1933, the French and American Republics reacted by engaging in giant military spending to equip themselves for a world war; Poland and Britain, instead, reacted by becoming Hitler’s best friends… They would realize their mistake in 1939)

 

If A Few Guys Can Fry Us All, Why Can’t They Own Us?

If it’s OK to risk thermonuclear Armageddon with a few morons in control (for vicious moron, consider Putin), why is it not OK to risk an economic apocalypse, let alone a climate apocalypse, with even more morons in control?

Is it not more… democratic? If Obama has too much power, does not giving ever more power to the Koch Brother, Bill Gates, and the Z guy from Facebook counterbalance that?

In any case, bleat the sheep, if plutocrats have all the power, they take all the decisions, and we can rest.

So, indeed, we have to ask again, what do plutocrats want? What train of evolutionary thought do they come from?

Well, simply the cruel streak which leads to extermination. The main problem of man has been man. For millions of years, being the top predator.

 

Insane Austerity Is Plutocracy Under Another Name:

One of the appreciated commenters on this site, Chris Snuggs, made the observation that:

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 Italy and Greece simply steal it.

If it were just Italy and Greece, we would be safe. Stealing from politicians is a worldwide phenomenon.

The son of the preceding (“socialist”) president of Senegal, found himself with a fortune of more than a billion dollars. After a change of president, judges put him in jail, in the hope of finding out where the money came from. Senegal is one of the world’s poorest countries (having no resources of any sort, but for fish devoured by Korean factory ships, which, I am sure, paid very well; the fish came back after the new president asked the Koreans to pay, and the French empire lent a military jet which takes pictures).

Living within our means” sounds good, but a sovereign country is not a family (contrarily to what Obama said).

The money within a country is not a store of value (only gold reserves are; most countries got rid of them). Instead, money enables the population to do a number of things. If there is not enough of money around, these things cannot be done.

Moreover, money, like blood, has to circulate.

However, it’s not doing that anymore, as the wealthiest store it, and have less use for it than the lower classes.

 

How Not To Live Within The Means Of the Wealthiest:

Take the case of France.

Suppose France borrowed a trillion Euros on the free market, at the present rate of less than 1%. Investors, in their despair, are ready to lend to France at that rate, on the ten year bond.

Such a borrowing would allow the government to augment enormously its spending: it could pay for the best universities in the world (as China is presently trying to do), it could finance all sorts of fundamental research, it could even fabricate large Thorium reactors, with the whole economy to go with them (mines in Brittany, U 233 breeders, etc.). Presto, no more energy and CO2 crisis, and reactors which could be sold worldwide.

The pessimist would bemoan that we cannot afford it.

Of course we can: it would cost, nothing.

How so?

Hopefully, inflation, over the next ten years, will be 1% per year, entirely cancelling the interest payments. Higher inflation, though, would devour the principal.

Is this all fancy? Today the Chancellor of the Exchequer (Britain’s finance and economy minister), G. Osborne, announced that Great Britain will, finally, reimburse its First World War debt. How? By borrowing at 4%, the lowest interest in Britain for a very long time.

Says Osborne: “This is a moment for Britain to be proud of. We can, at last, pay off the debts Britain incurred to fight the first world war. It is a sign of our fiscal credibility and it’s a good deal for this generation of taxpayers. It’s also another fitting way to remember that extraordinary sacrifice of the past.”

Actually it’s even better than that: some of the debt to be repaid comes from the Crimean War, the wars against revolutionary France, and even the South Sea Bubble (three centuries ago).

 

Borrowing Can Buy You The World:

As Dominique Deux, another esteemed commenter on this site, reminded me: “Britain did not get to be the world’s first industrial power by “living within her means” but by extensive long-term borrowing.”

Right.

It is even better than that: The Bank of England, the world’s first central bank, was created to support the Royal Navy. Basically, if the Navy needed money, the Bank would print it.

That was put to good use a century later. France was much larger economically, economically, not to say intellectually, than Britain, so fighting the French superpower seemed ridiculous. However, as France was in the way, this is exactly what Britain did in 1756-1815. Paying Prussia as an attack dog, creating a huge Navy, etc.

How?

By borrowing extravagantly. So much borrowing that Britain won, but for the little problem of the French engineered creation of the American Republic (a foundation which proved the undoing of both France and Britain…)

 

To Make Money, Government Can Just Grab It From The Filthy Rich:

Famously, confronted to the invasion of Francia by the Arab, Syrian, Berber, and generally hysterically Muslim armies, and navies, in 721 CE, the Merovingian government of Prime Minister (and effective head of state) Charles Martel, just nationalized the Catholic Church, selling its precious metals, and stones.

That was a stroke of genius, as it defeated both Christianism and (what the Franks viewed as) its Islamist sect. (OK, it took a full generation of total war.)

That method is more available, the more plutocrats there are.

Osborne (out hero of the day, the conservative plutophile who heads things financial in the UK), spoke yesterday of introducing a “Google Tax” of 25%. Says the Guardian: “Responding to outrage about the minimal contributions big corporations make to European governments, the Treasury is targeting Silicon Valley companies such as Google, Amazon and Apple, but the measures will reach beyond technology to high street chains such as Starbucks.

“We will make sure that big multinational businesses pay their fair share,” assured Osborne. That will not be easy: one is talking here about what some view as the richest criminal enterprises in the world.

Facebook made something like 100 million dollars of profit in Britain, and paid not even five thousand dollars of tax. The Guardian: “Google paid just £20m tax in the UK last year. But its actual British revenues were £5.6bn. The group as a whole has a profit margin of 20%, suggesting the company’s real profits in the UK could have been as high as £1.2bn. Taxed at the proposed 25% rate, this would deliver £280m a year in revenues for the Treasury from just one company.”

Having plenty enough of money to accomplish important work, is pretty much how the West went through the 30 glorious years of strong economic expansion after World War Two.

In practice, though, debt can be reduced by taxing the wealthy. Why to borrow from the rich, when one can tax them? Well it all depends if one lives in plutocracy (borrow), or in democracy (tax).

Under general-president Eisenhower, the wealthiest were made to contribute (Ike used his 93% upper margin tax rate; it was of course the same in Europe).

That’s how to live within the better means we could create for ourselves.

This means, first, defanging what, and those who, have too much power, be it thermonuclear, political, economic, or even ideological.

Democracy is not just a way of life, but the way to survival… Just what the cruelest, and fiercest instincts do not want.

Patrice Ayme’

Krugman Rising From The Deep

October 31, 2014

Nowadays, I rarely bother to criticize, let alone advise, Obama (OK, I did it on Syria).

The One has become insignificant, it does not matter what he thinks, supposing he thinks at all. (Chuck Hagel, the Defense Secretary just called the policy of the USA in Syria strategically compromised, long term, as it profits the other enemy of civilization, Assad. Hagel is right. Attacking ISIL without taking out Assad is unbalanced. I am sure another Christain, or Druze strongman can be found.)

Soon the entire Congress will be Republican, and the Obama groupies will wonder what happened. Well, they have only themselves, and their reveling, to blame.

What happened is that, while Obama adulators were celebrating, when Obama became president he got surrounded by a thick cloud of plutocrats and their servants. Thus all Obama’s policies were all plutocratic, including (most of) Obamacare.

Unfortunately, the so called “Democrats” were not brainy enough to realize this. They believed that their beige hero would save them all. And, besides, superman like, find a solution to everything.

And, even if “Democrats” had brains, they had neither theory, nor a plan on how to handle the world.

The same problem has arisen with Clinton, Bill, earlier, and with the dimwits of the Socialist Party in power (supposedly) in France: no progress whatsoever.

I can’t reproach right wingers such as Cameron, or Merkel to be right wing. Even Abe in Japan does what he said he would do.

But the left, in Europe and the rest of the West has long been derelict.

Why? How? Lack of correct ideas. They did not think it through.

The best Krugman could suggest, for years, was more money for kleptocratic banks (“QE”), or devaluation (as Abe is doing in Japan). Fortunately, at last, Krugman is changing. As he is the most followed political economist in the world, it matters. Polls in Europe showed that the (Ex(?)-Europhobic Krugman) is the most trusted voice… On the left!

Then, of course, it all makes sense: if Krugman, the most trusted voice on the left, was actually on the right, or nowhere in particular, then no wonder the left was a right, and civilization got off the rails.

Krugman is realizing, slowly, that the debate has been framed by the plutocracy, especially about the lack of investments.

So now Krugman realizes that he and his kind (ex-Fed chief Bernanke) owe apologies to Japan. Says he:

TOKYO — For almost two decades, Japan has been held up as a cautionary tale, an object lesson on how not to run an advanced economy. After all, the island nation is the rising superpower that stumbled. One day, it seemed, it was on the road to high-tech domination of the world economy; the next it was suffering from seemingly endless stagnation and deflation. And Western economists were scathing in their criticisms of Japanese policy.

I was one of those critics; Ben Bernanke, who went on to become chairman of the Federal Reserve, was another. And these days, I often find myself thinking that we ought to apologize.”

Well, indeed, you should: to keep its economy up, the Japanese government engaged in a gigantic effort (its debt is now 240% of GDP… Slightly more than the 90% of Britain or France).

And Krugman to diagnose: “… the West has, in fact, fallen into a slump similar to Japan’s — but worse. And that wasn’t supposed to happen. In the 1990s, we assumed that if the United States or Western Europe found themselves facing anything like Japan’s problems, we would respond much more effectively than the Japanese had. But we didn’t, even though we had Japan’s experience to guide us. On the contrary, Western policies since 2008 have been so inadequate if not actively counterproductive that Japan’s failings seem minor in comparison. And Western workers have experienced a level of suffering that Japan has managed to avoid.”

If it were only workers! Grandmothers and everybody not a banker or hedge fund managers also suffered from Quantitative Easing (which brought savings’ interest down to zero).

So what happened? Krugman again:

”What policy failures am I talking about? Start with government spending. Everyone knows that in the early 1990s Japan tried to boost its economy with a surge in public investment; it’s less well-known that public investment fell rapidly after 1996 even as the government raised taxes, undermining progress toward recovery. This was a big mistake, but it pales by comparison with Europe’s hugely destructive austerity policies, or the collapse in infrastructure spending in the United States after 2010. Japanese fiscal policy didn’t do enough to help growth; Western fiscal policy actively destroyed growth.”

And Krugman to evoke the austerity mistake even in Sweden, and to conclude:

“I’ll be writing more soon about what’s happening in Japan now, and the new lessons the West should be learning. For now, here’s what you should know: Japan used to be a cautionary tale, but the rest of us have messed up so badly that it almost looks like a role model instead.”

I added the following in a comment:

The case of Japan is special: it has collapsing demographics, not compensated, as it is in many Western countries, by a vigorous immigration. Japan also has no indigenous energy to speak of (even its nuclear waste recycling long depended upon France).

It was long obvious to yours truly, that the conditions we are in are worse than in 1930s. The Great Depression of the 1930s happened mostly accidentally; it was a succession of obvious mistakes: a boom, followed by a crash, made worse by a tariffs war, leading to industrial shrinkage, and a liquidation of banks.

Nowadays, it’s different: the planet is crashing, a more serious problem. This could be stopped, but for that the general mindset would have to be different. However, said mindset is constructed by an ever more powerful plutocracy, a few hundred individuals who order the world around.

In particular, the plutocratic mindset has seized the financial sector and the government. The former does not need the public to make money: the financial sector has tricks such as Quantitative Easing up its sleeve, boosted by the continual authorization for banks to cooperate with, or engage in financial piracy.

The latter, the government, refuses to engage in massive public investment, from top notch free public schools, to massive infrastructure to massive public healthcare (if you brandish Obamacare, contemplate its deductibles). Simply because, as a proximal reason, if government goons hold that line, cushy jobs are for them to take when they come out of government.

The way it connects with the financial pirates is simple: money creation is a zero sum game, when pushed to the max. If more money went to the real economy, it would be as much not going to the financial pirates.

Krugman, and his eminent colleagues have not understood this yet, that all the money created for financial thugs, is as much not going for vaccine research, schools, bridges, healthcare, etc. Hopefully, they will, some day. Before that day, do not expect progressive polices to bear fruit, or, even, to exist.

The media, everywhere, is little better than FOX News: it’s a giant propaganda machine which has interest to make the rich richer, and the poor, stupider.

Plutocracy is the metastatic cancer which has invaded, paralyzed all the minds. Before a stunted economy, and decaying society, we are confronted to decomposed minds. And mostly on the left. The right, at least, the plutocratic right, knows how to take care of its own.

Patrice Ayme’

No Euro Crisis, No Debt Crisis.

April 9, 2013

No French Currency Crisis, Either. JUST PLUTOCRATIC DERANGEMENT SYNDROME.

American economists just discovered what the Euro is all about. Namely the Euro is the French currency. (Please applaud how much more clever they just got!). Professional economists could have known this long ago, if they did more than read each other. See my: Why Europe, Why The Euro.

French yields have improved dramatically. Why? It’s not just what American economists just learned that (Euro = France), because that was true ever since the European Currency Unit (more than 20 years ago).Yield Collapse In April Caused By Anti-Plutocratic Crack Down?

What has really occurred is that the cause of the present Greater Depression has been stumbled upon, for all to see. Moreover real remedies have started to be applied. (For the first time in this crisis that exploded in 2008.)

The French finance ministry took the lead in making plutocrats pay for their mess (at least in Cyprus; one has to start somewhere!). Good. But that was just a warm-up. Real reforms are now happening everyday.

And a miracle happened. Thanks to Jérôme Cahuzac, a bandit of plutocratic type who happened to be French budget minister, French and Swiss Justice are presently demonstrating how pervasive the plutocratic phenomenon and its entanglement with politicians and tax havens are. In the USA, of course, Jérôme would be just another wealthy politician, legal thoroughly, and cabinet minister. (See, Rice, Susan, for further edification; plutocracy is legal in the USA).

But France and Switzerland are supposed to be democracies, not plutocracies. The incoming consequences of discovering how huge tax evasion by the plutocracy is, are going to be huge. And are already showing up.

Indeed a corollary is that bond market participants know now that Europeans are going to realize that austerity is not just a sham, and a crime, but also a Transfer of Assets To Rich People (TARP!). The bond market understands that the collective consciousness is changing, and that real change on the way. For the better. Hence the collapse in yields.

In a society which does not revere plutocrats as “philanthropists” (as the USA pathetically does), austerity does not have a reason to be. Thus austerity ought to be discontinued, in Europe, the world’s largest economy. But austerity made the deficits worse. So, if tax evasion is mitigated, the economy can restart, and debt loads ought to stay manageable. Hence the bond rally in France. Now for some more details and perspectives.

***

EURO = FRENCH INVENTION:

The Euro is, first of all, a French invention. President Mitterrand proposed to his good freund Kanzler Helmut Kohl to create the Euro, in a deal to support, in all ways, the reunification of Germany (including with French direct investment in East Germany).

Since the grotesque Second World War, all those who half think in Franco-Germania, decided that the one and only way to terminate the interminable, perfectly ridiculous Franco-German wars, was to reset the macropolitical clock back to 800 CE, when the Renovatio Imperium Romanorum extended from Catalonia to Poland. For about a millennium, there was just one currency in Europe. After that, there was war.
Paul Krugman in “France Has Its Own Currency Again” discovers the notion:

Joe Weisenthal draws our attention to a development that may surprise many people: French borrowing costs are plunging. (Don’t tell George Osborne — he thinks that low British rates are a unique personal achievement)…

But wait– wasn’t France supposed to be the next Italy, if not the next Greece?

Well, Joe has what I agree is the right explanation: markets have concluded that the ECB will not, cannot, let France run out of money; without France there is no euro left. So for France the ECB is unambiguously willing to play a proper lender of last resort function, providing liquidity.

And this means that in financial terms France has joined the club of advanced countries that have their own currencies and therefore can’t run out of money — a club all of whose members have very low borrowing costs, more or less independent of their debts and deficits.

Welcome to the club, France. Now, why are you doing all this austerity?”

[France is not doing that much austerity: she went into a full war in Mali, and the deficit is still going to be closer to 5% rather than 3%; that’s less austere than the USA. Still, there is enormous waste in, and from, the French bureaucracy; a referendum to diminish the bureaucracy just failed in Alsace].

***

WHY THE EURO IN A NUTSHELL:

So American economists, traders and speculators are suddenly realizing what was true all along, that the Euro is very much the French currency. Always has been.

Many Anglo-Saxon leaders are so much into the business of deriding anything French that they believe reality has an anti-French bias, in all things, except wine and cheese. Now that dear Paul Krugman and company self congratulate each other for having come across the obvious, so true for 30 years, let me point out that their slaps in the back do not explain the sudden drop in yields in April 2013.

Before I proceed to do that, let me re-iterate what I have long said.

The Euro is more than the French currency. The Euro is the Franco-German currency. Just like the French, the Germans, after May 1945, and even many of the Nazis themselves (for example Albert Speer) several years before that, came to understand that the only way to win a war against the other  was by total unification.

This is what makes the Euro not just unavoidable, but necessary. Once Franco-Germania (re-)unifies, a superpower is immediately created. Indeed, France and Germany, plus the crumbs in between (Benelux), represent more than 180 million people. To this one has to add other satellites: Northern Italy, Austria, Catalonia… Even Switzerland (Swiss Franc is, had to be, pegged to Euro). At this point, one talks about 250 million people, a power roughly comparable to the USA in most of the most significant long term characteristics, most of them living an average distance of 500 kilometers from Bale/Basel.

The fact the distances are so small is of the essence: one can drive through pieces of the largest of these countries with one car, in one day. The Euro is a driving necessity. Before I used to dread to travel from my Alpine home without the proper papers, currencies, etc. It’s as if I were in enemy territory within twenty minutes of setting behind the wheel. Now I am still at home around home, I am not fighting WWII all over again.

***

SO WHY DID FRENCH YIELDS JUST COLLAPSE?

The yields were high because of two reasons:

1) speculators prefer high yields, so they made it so (remember that, thanks to unregulated and mostly secretive derivatives, they have tremendous leverage at their disposal).

2) some bond investors were genuinely afraid they would not get reimbursed by the governments they lent to. (Indeed, watch Stockton, California, file for bankruptcy; ah, not in Europe? Just a detail. Still a government of sorts.) High interest is a way to make sure they get their money back.

An indication of future inability of government to pay back is if said government has high debt and is running a primary deficit (mostly borrowing more to pay past debt). Most Western government ran high primary deficits after 2008, because they had to pay jobless people, and re-capitalize banks.

At least, that’s the conventional explanation. The truth is more subtle. in truth, banks were recapitalized with public money, instead of being recapitalized by finding the money that had apparently disappeared.

Take Cyprus: extravagantly high interest rates (5% to 9% were paid, for years, as world finance collapse). So a Russian Afghan drug runner having dropped his ill acquired wealth in the “Popular bank of Cyprus”, could have made 50% on his money in 5 years.

The way the crisis of 2008 was solved, French and German taxpayers should have saved his 50%. But this time the French and German finance ministers said NEIN. Instead the drug runner plutocrat was told to kiss “his” money bye bye. Next time he can go leave his money in Dubai. This was giant conceptual progress.

By the way, 96% of depositors in Cyprus’ banks recovered 100% of their saving (plus extravagant interests paid!). It’s only the fat cats who are being punished (and even then, mostly in 2 banks).

The old way to solve the financial corruption crisis was plutocratic, unfair, and just a way to extend the crisis, by going on with the transfer of capital from taxpayers (the poor) to the hyper wealthy (the plutocrats whining that their banks had gone bankrupt, because they just finished stealing them down to the last Dollar or Euro).

This is what I have been saying for years.

The old way just made the public deficits worse. “Austerity” was then introduced as a further boost for cutting money to the poor some more.

The “new” way adopted to solve the Cyprus crisis, make the plutocrats pay for the crisis they fabricated, instead of just augmenting the deficits some more (still the Europe gave 9 billion euros to Cyprus, augmenting public deficits by that much, and the IMF, one billion. So even USA taxpayer and beggars pitched in!)

There is nothing really “new” about this “new” way. Debtors going bankrupt were severely punished in the past. Now we are just going to forse them to regurgitate what they stole. Hopefully.

If plutocrats are going to regurgitate a bit, why not go the whole way? Then, it turns out, the deficits would completely disappear. Tax evasion to tax havens in the European Union is evaluated at more than a trillion euros. About half of the yearly budget of the USA.

Hence the following evidence, pointed out today by L’Humanite’, the Communist newspaper: austerity does not have to be. It would be enough to strike the tax evading plutocrats with austerity, as I have been claiming all along.

***

THANK YOU Jérôme:

That’s why we all have to say thanks to Jérôme the bandit. You see Jérôme, was not just a successful plastic surgeon. Part of his business development involved not just having, with his wife, also a surgeon, a private clinic. No. Jérôme became a “socialist”, just like many wealthy people become “democrats” in the USA. You know, the sort of people the president sleeps in with, in the Silicon Valley (Silly Cone?).

As an MD, Jérôme was a natural big negotiator of health stuff with rich health care providers such as Novartis. Thus the bright, towering, energetic and good looking Jérôme was naturally part of the “socialist’ government in the 1980s. he negotiated many things with the likes of Novartis.

Under the table. Under Swiss tables, more exactly. That’s why, as baking secrecy was threatened in Switzerland in 2009, Jérôme tried to get a number of Swiss banks to transfer 15 million euros from Suisse towards the safer tax haven of Singapore. That was not easy, because the banks noticed he was a Member of the French Parliament. Jérôme had to falsify a finance ministry document.

Under Hollande, Jérôme became budget minister, making a giant noise on how he was going to find and punish those who engaged in fiscal evasion. Ironically, the full and enthusiastic cooperation of prosecutors in Geneva brought his case to light, with the amplification of the French Internet magazine “Mediapart“.

Now French Justice has charged Jérôme with “blanchiment de fraude fiscale” (laundering of fiscal fraud”).

***

So let me repeat slowly: the reason for austerity is out. It turns out that French finances are actually excellent. And the finances of many other European countries are also excellent. This is why the yields are collapsing in France.

What has just been revealed to the masses is that the debt crisis was mostly about the hyper rich splurging with other people’s austerity. Make the hyper wealthy fraudsters regurgitate their stolen goods, and deficits disappear.

***

Patrice Ayme