Posts Tagged ‘Devaluation’


January 15, 2016

The strategy. The tactics. Everything. Since 2008, the central banks have created money. Why? Key actors of the economy lost too much money in 2008 to keep on functioning. Some of these actors: banks and “shadow banks”.

How did the central banks create money? Mostly by buying government debts from the large private banks. The banks thus made money. Who caused the 2008 crisis? The banks. Thus the very strategy used is Orwellian, and promotes a vicious circle. Upon closer inspection, the situation deep down inside is more of the same and even worse.

The result has been a faltering of economic growth, a creeping destitution of the 99.9% in the West, and the blossoming of colossal inequalities and corruption, worldwide:

Inequality Has Brought Down World GDP Growth. And Bringing That World GDP Growth Too Low Brings War

Inequality Has Brought Down World GDP Growth. And Bringing That World GDP Growth Too Low Brings War

True, banks are more regulated than in 2008 (but much less than before the Clinton presidency brought devastation to the regulation of finance!) However, a large, maybe the largest, part of the banking system is “Shadow Banking”. That’s not regulated. By fostering fiscal heavens and anonymous financial entities, Great Britain and the USA are actually expanding the “Dark Pools” of money which feed “Shadow Banking”.

So what have the banks done with the money generously given to them by central banks? Did they invest it somewhere fabulous? No. There has been no new technological, industrial, economic, social breakthrough which needed, and provided with, the opportunity of massive investment.

(There were some efforts towards “sustainable energy”, but those subsidies and regulations are dwarfed by those in favor of fossil fuels, which total 5.5 trillion dollars, according to the IMF; the key is fossil fuels do not require much new investment, including in research, development and education as new energy sources would.)

No new nuclear program was instituted (say replacing all old reactors with better and safer ones), no thermonuclear powers plants (although a crash program would have probably produce those already), no massive space program (comparable to Apollo in the 1960s).

Even biomedical innovation, hence investment, has petered down (research has been smothered down by marketing, regulations, and cut-throat academia producing poor research).

But, mostly, there has been no new construction program in housing and physical infrastructure. Oh, there is a massive need: the dearth of housing is why real estate is getting out of reach of the middle class, in the top cities, worldwide. (Moreover one can now make positive energy buildings, which produce energy.)

And don’t forget public education has been let go to waste, in the leading countries (with few exceptions: Switzerland, Canada…) It is as if the leadership in the West was afraid that We The People would get knowledgeable and smart.

So where did the money the banks were given by the central banks go? To hedge funds and the like. To the industry of HOT MONEY. One day they buy this, the following week, they sell it, making money, both ways (thanks to financial derivatives). The money created by the banks (which are better regulated, as I said), at this point, once given to financial manipulators, escapes regulation (that’s the whole idea).

“Leaders” know about this. But they obviously intent to keep on getting money from shadow financiers. An example: Obama did not try to tax “carried interest” by hedge funds (although Donald Trump proposes to do so!)

The leading states (USA, UK, EU, China, Japan, etc.) believed that to provide money (“liquidity”) would relaunch the economy. Absent this, massive devaluations would help. Thus Japan devalued by 50%, undercutting South Korea and China severely.

Meanwhile the IMF has allowed these competitive devaluations, following the advice of economists such as Friedman, Krugman. However, this is tickling the tail of the worst devil. War. Economic war is the first step to all-out war, indeed. Competitive devaluations are a form of war.

And what’s the main mission of the IMF? Preventing economic war between the states. This is why the IMF has been created in 1945: “The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”

Thus the IMF is failing to do its main job. Notice that many American economists, from Friedman to Krugman, in their anti-European frenzy, have pleaded FOR the economic war of (European!) state against (European!) state, thanks to competitive devaluations.

Notice too that Abenomics, the devaluation of Japan, has not had much of a dent: Japan is still mired in stagnation, no doubt still afflicted by its main problem, the collapse of its population (a problem many developed countries have, especially in Europe; the USA and UK have escaped demographic collapse, mostly through massive immigration).

The world economic strategy reflects the mood of the times: the so-called “free market” is all the thinking and activity we need since Ronald Reagan. That’s in contradiction with policies followed by Colbert, Henri IV and Sully, or even emperors Diocletian and Darius. (Darius reigned over Persia 25 centuries ago.) They, like Julius Caesar, thought that the economy had to be governed by the state.

Will China try a massive devaluation, a la Abe in Japan?

Since 2008, the governments, mostly in the West, have been cowardly. The USA suffers from massive inequalities (and no, Mr. Obama, the situation is no as good as eight years ago), the European Union suffers from too much regulations (including at the level of services, where the European UNION has not been implemented), China is a dictatorship which became richer by exploiting workers relentlessly, etc.

Those competitive devaluations and lots of money sloshing around have been addictive: central banks engage in them, to give the states space, and the states, momentarily relieved, put off necessary reforms.

Inequalities suck up “liquidity” (so power and means) from average people, while putting huge amounts of money, and power, under the control of a few hands. And this money is invested in liquid investments, instead of serious things such as massive, affordable, state of the art housing and cities. Thus this money slosh around the world, like the waves of a tsunami, devastating all it touches (example: Greece, Spain, Portugal, Ireland, Iceland, etc.).

The reason the crisis goes on is the confusion between symptoms and disease. That the main actors in power have interest not to understand the nature of the crisis explains why understanding has not been fostered. Thus very few economists have seen it, let alone politicians. (From Obama down to Nancy Pelosi, Krugman, and countless “Republicans”, but also French Socialists, EC bureaucrats, USA universities professors, most actors of influence have interest to sound as intelligent as cows watching a train pass.)

How did the world come out of the slump of the 1920s to 1940s? Through reconstruction in the “30 glorious years” after 1945. Reconstruction from total war. Something to think of. One thing: many countries are on the verge of implosion. One culprit? The obvious world devaluation blatant in the collapse of the price of oil.

What is the way out of the world socio-economic crisis? The same way as it was done after 1945. Massive social, educative, health and construction programs in the West,  building a useful economy, by taxing those who create the inequalities, and grab all the economy, and opportunities to themselves.
Patrice Ayme’

Europe Trapped By Masochism, Intellectual Laziness?

January 5, 2015

Greece, Euro, Algerian FNL, Colonialism, Bullying, Whining and Depression.

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

Some Germans, claiming to have talked with officials, uttered that Greece could leave the Euro. Why don’t those Germans mind their business? The Euro is Greek money. Greeks want to keep their money.

Meanwhile Lithuania adopted the Euro. All European countries are supposed to adopt the Euro. Even the Swiss Frank is locked to it (and is going down accordingly).

If Germans want a clean Europe, they can accept the official French proposal to create a European Banking Union, the equivalent of the FDIC of the USA. Conservative Germans are not anxious to do this.

Indeed the German Landbanks, the local banks, crucial to finance the German “Mittelstand”, the middle companies, are bankrupt, and live on accommodations with the authorities. In other words; disguised subsidies.

“Austerity” in Europe means not enough money to operate the economy. Let Syriza bite Merkel’s well fed derriere!

Euro Still Way Too High:

Politics, when not totally democratic, can be absolutely Machiavellian. The Euro reached 1.45 dollars, a few years ago. Clearly it should rather be half that.

Based on the very long range equivalence of the French Franc with the Dollar, the Euro was made to be worth one Dollar. However, the economy of the USA has been much stronger, for years. Thus the Euro should be lower than its lowest level ever (when Germany was in trouble, a decade ago). That was 83 Dollar cents.

A way out of the European crisis is to boost the economy and lower the Debt/GDP by lowering the Euro. This has been zehr klar, for years. After the article in Der Spiegel saying Berlin wanted to expel Greece (which cannot be constitutionally done), Siebert, spokesman of Merkel, said policy had no changed.

However, the Der Spiegel article may have been planted, just to hasten the lowering of the Euro (which reached 1.18 Dollar, lowest in nine years). If so, it would be in agreement with France (which has to be pushing for a Euro at 80 cents, if still endowed with brains).

It will not escape conspiracy theorists that a collapse of the Euro would be painless, as oil, paid in Dollar, has seen its own price cut quickly by half. Hopefully, Putin is also been cut in half.

Maybe God is a conspiracy theorist?


Too Much Mushy Whining, No Action:

Women tears’ smell lower testosterone in human males. In other words, if women want some action, they better act as activists, or even aggressors (“bitchy”) and not as whiners.

Instead of whining about “colonialism”, Europeans ought to have found what was wrong about it, and how to correct it for the best.

Shrinking onto oneself, that’s called depression.


Colonialism: Very Bad, Indeed, But the Wrong Notion

What’s the difference between an immigrant, a migrant, a colon, an invader?

I was always a fanatic of cultural, and ethnical mixed background. Why? Because the more cultural ingredients around, the wealthier the minds.

Example. Although I vigorously attack both Bible and Qur’an, my dirty little secret is that I live very faithfully according of some of the elements of both I approve of… For example I don’t touch alcohol (being drunk on my own thoughts all day long, will cynics no doubt notice).

In the 1950s, it was fashionable for French intellectuals to be “anti-colonialist”. This, in turn was amplified worldwide, and became the credo of the left and progressives.

According to the theory, the French had conquered the world, and needed to go back to their barracks. They did, and were replaced worldwide, by American plutocrats, and their GIs. The same was extended to other European colonialists, of course.

Did French intellectuals realize they had been had?

Most died without being officially aware. But some who were the youngest, and most frantically anti-“colonialism” are changing their tune. Decades of history have instructed them forcefully.

Rene’ Vautier, a French movie maker joined the Algerian FNL (to the point he was implicated in factions struggles therein, and got imprisoned because of this). He just died at 86, and gave a final interview.

Interestingly, this FNL fanatic, changed his music in recent years (“before I get senile” he added).

Vautier fought as a teenager against the Nazis in the French resistance. A communist he was sent to Africa. At the age of twenty-one years old in 1949 the Ligue de l’enseignement en Afrique sent him to make a film about life in the French African colonies. It was filmed in the Ivory Coast.

Under French administration, Ivory Coast was peaceful.

(I was left free as a toddler on the beach there; my only fear, whom I had been instructed to have, was of a vicious, roguish wave that would appear from time to time; ever since I have a healthy fear of waves… That does prevent me to surf, occasionally, or even been swept in recent year by a rogue wave in California, and losing a camera, but when I am by the ocean, I worry.)

Since the French left, as with many European ex-“colonies”, from Pakistan to Fidji, Shri Lanka to Somalia, Nigeria, Rwanda, Congo, Cambodia, or the CAR, Ivory Coast was wrecked by a vicious civil war (about who was really an Ivorian).

In his last interview, Vautier, a worldwide icon of anti-“colonialism”, declared he wished the struggle against “colonialism” had not been all in vain.

But in vain it was. In many places, where imperial states had blocked plutocratic excess, now the worst of the worse were free to roam and feast.

In The Trap Again?

Krugman wrote a blog post “Europe’s Trap”. It’s entirely correct. However, Europe fell into the trap when the Kaiser and his generals listened to the songs of Colonel House, right arm of American president Wilson.

Sure that the USA would help, the Prussian (also known as German) army attacked the French Republic in an all-out attack, August 3, 1914, invading and declaring war to secondary countries in the process. A month later, after retreating for three weeks, the French army successfully counter-attacked.

American help to trade with the Kaiser’s dictatorship, through the “neutral” Netherlands, extended the First World War three years. But that was only the beginning of the involvement of the USA in European submission affairs.

However, nowadays, the USA has come to realize that it cannot rule the world alone. So the enlightened ones agree that the European Union is a precious ally, and it needs its own currency. As Keynes had pleaded in 1944, the Dollar cannot do it all.

It’s nicer to have a peaceful union under Franco-Germania, rather than a West fighting itself to death.

If we want peace, we need as little exploitation as possible, and it starts in the neighborhood. To have a strong Europe is in the USA’s best interest.

Example: the disastrous, trillion Dollar price F35 flounders. This is the worst fighter plane ever put into production, and is a threat to the security of the USA (but not to North Korea or Putin).

However Europe has two excellent canard fighter-bombers, the Eurofighter/Typhoon and the Rafale, both armed with the excellent Meteor ramjet missile (Mach 4, 100 miles range). Both have excellent Infrared vision, and can fire infrared long range missiles. The Rafale has active stealth, and that works, whereas passive stealth not only does not work, but cannot work.

An astute U.S. Air Force could ditch the dangerous F35, and build one of the Euro canards, under licence and renovated. Thus Euro strength would profit USA strength. An example of many. At the Las Vegas consumer electronic show, January 2015, the second largest delegation, with more than 100 companies, is… French.

Meanwhile French president Hollande declared that the rise of the Islamist State is directly attributable to the refusal to strike mass bloody dictator Assad (in the end, only the French wanted to attack). Indeed (as I said for years).

Colonialism? No. Where are the colons? And are immigrants replenishing Europe, colons?

Just administering the empire. The worldwide empire we need to run good enough to survive, civilizationally speaking.

… And which is already running, albeit in plutocratic form.

Patrice Ayme’

Time For Euro To Get Tough?

September 22, 2011


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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Patrice Ayme

Plutocracy Hollows The Core

May 20, 2011


Abstract: the Obama’s administration attempts at resurrecting the economy of the USA are in the “too little, too late” category, due to a lack of understanding of the real problem. Neither understanding, nor resolution, are helped by the likes of the honorable Paul Krugman singing the praises of dollar devaluation.  

The problem is actually much more general than the one found in the USA. Devaluation of a currency hides the real problem, which is general civilizational devaluation. (The former tends to imply the later too.)

General civilizational devaluation is not incidental to plutocracy, but it is its very principle. So it is when plutocracy takes over: civilizational devaluation is not just a symptom, but the socio-economic method looking forward. Yes, in other words, as any mathematician worth its salt would point out, an exponential phenomenon feeding on itself.

The plutocracy empties the core, because it is its safest course.



Krugman looked at the trade balance of the USA in manufacturing. He found it much improved. His conclusion? “The weaker dollar really has made a big difference.”

Indeed, recently the euro had risen 50% above its very long term average on the French Franc (the reference for the long term value of the euro versus the dollar). The weak dollar has been manufactured by keeping very low interest rates for cash. So international investors have no interest to keep earning American interest. 

This has two consequences:

a) American savers, the little grandmothers, lose money by keeping money inside saving accounts (as inflation is higher than the interest earned).

b) Big banks make like bandits, risk free; they borrow from the government at zero interest, and then turn around and reinvest with long term bonds of the government at 4-5%. (This is risk free, as long as the whole pyramid scheme does not come crashing down, but the government has no interest for this to happen, once again, so it will keep interest at zero as long as possible.)

The preceding holds in one sentence: the government of the USA has found a new method to transfer trillions from the poor to the rich, without the poor noticing. You can’t fool all the People all the time, in the same way, so the masters had to find new tricks.

The manufacturing deficit is not as bad as it used to be. Says Krugman: Crucially, the manufacturing trade deficit seems to be coming down. At this point, it’s only about half as large as a share of G.D.P. as it was at the peak of the housing bubble… major U.S. firms like Caterpillar that once shifted production abroad but are now moving it back. At the same time, companies from other countries, especially European firms, are moving production to America.

And one potential disaster has been avoided: the U.S. auto industry… has weathered the storm. In particular, General Motors has now had five consecutive profitable quarters…”

Well, Obama’s task is not easy, especially since he did not do much when he could have done something because he controlled the Congress and the Senate. The GM rescue, one of the rare things done, cost 49.5 billion dollars.

Imagine: saving GM cost nearly as much as the Goldman Sachs (total) rescue. GM makes car, Goldman Sachs makes trouble… And makes American politicians. Especially with its perverse influence on American politics. History will not view it as a coincidence that the Wall Street District Attorney indicted the short, fat, sick, on oxygen, grandfather at the head of the IMF, a respected university professor, for assaulting a six foot tall, 200 pounds Diallo, thirty year his junior, and in great shape from her physically demanding job.  The DA Cyrus Vance Jr, not to name him, son of his influential dad, has just prosecuted a construction company for abusing… Goldman Sachs. Naturlich. 

Krugman concludes:”while we still have a deeply troubled economy, one piece of good news is that Americans are, once again, starting to actually make things. And we’re doing that thanks, in large part, to the fact that the Fed and the Obama administration ignored very bad advice from right-wingers — ideologues who still, in the face of all the evidence, claim to know something about creating prosperity.” In the end, the government of the USA did not spend much on the reindustrialization of the USA. Its main policy remains the cheap dollar.

Krugman, and most American economists are great believers in devaluation: they would fix all the problems of Greece, Spain, etc. by devaluation relative to France and Germany. Extending the reasoning, one would expect the American Rust Belt,  Detroit, or Nevada to devalue relative to Manhattan. But that would break the great American nation… Not fun. Whereas breaking Europe, that’s a moral duty. Same as the time before that. 



Krugman admits that: “The manufacturing revival isn’t going to make health reform unnecessary or obviate the need for a strong social safety net.” The USA has of course other problems. Education is one of them: there is not enough public funds to insure the quality of yesteryear.

Inequities have also made the USA into the world’s most repressive country, at least if one looks at the numbers of people incarcerated, or under active judicial punishment (for an astounding total of 10 million).

Inequities also are demotivating, and make people fearful of expressing the sort of ideas which could help fight the descent into submission, and its attending despondency. The author of this set of essays has lost most of his American friends and family as those worthies expressed that president Obama can only be displeased (although most of them do not know Obama personally). I know it sounds unreal, and pure insanity (especially in a supposed democracy). Sometime in the future, I will give details (right now I am too shocked to do so).

One can easily imagine that, if this sort of fear permeates society, not much significant progress will happen. That also explains a lot of Obama’s caution. Obama, by telling Israel to reintegrate its 1967 borders took an enormous risk, political, and even personal (remember what happened to Isaac Rabin!) Now that he has done in bin Laden, the Islamist-in-Chief, the Commander-in-Chief plays the agent provocateur…



Devaluation relieves symptoms of de-industrialization, but it does not treat the decease. It’s like a shot of adrenaline. It will not fix the underlying decay at the heart of the USA.

Moreover, the problem with devaluation is that, as Germany, or Argentina, and many other countries found long ago, devaluation can get out of control. Or it can become an addiction. 

The dollar has devalued at least 40% versus the euro. Still the Eurozone has stayed, by far, the world’s greatest exporter. How? By making manufactured products of the highest quality. The higher the euro goes, the greater quality the Europeans are forced to endow their products with. European know-how is forced to become ever more awesome. It’s a virtuous spiral, up.

Reciprocally, the lower the dollar, the more shoddy American products can be, and still be competitive. It’s a vicious spiral, down.

The real question is how come the manufacturing of the USA, which used to be second to none, became so bad? An ant sees the details, but the baboon can scan the horizon. The very nature of American economists prevents them to see the big story.

The sort of decomposition which seems to affect the USA is found in any large plutocracy in history. The plutocracy always hollows the core (and this has been the problem of Muslim countries, as Islam can be instrumentalized to favor tyranny).

One out of six worker in the USA is foreign born, with much higher proportions in the most plutocratically weighted states (California has 35% of foreign-born workers, New York and New Jersey are at 27%; nobody cares about the boondocks, where little U.S. GDP is generated, and direct descendants of those who used to make much of the industrial strength of the USA, the Rust Belt, the new native Americans, live).

Plutocracies do this, even militarily. Eschatologically, Rome depended upon entire German nations for its military (the Franks being the most famous). At some low point, Rome even recruited the Huns (until the Roman-Hun army got defeated in south-west Gaul). Muslim regimes  were particularly good at this: Egypt, the Ottoman, and even the Iranians depended, at their core, upon foreign-born militaries.

Why so? Why do plutocracies fear the natives? To ask the question is to answer it; it makes the truth self obvious. Plutocracies fear the natives because the plutocrats fear revolution. So they do what they can to make the People at the core weak, dumb, impotent, in other words, not too competent, employed, or irreplaceable. That way revolutions are easy to contain. Hence the “Panem et circenses” Juvenal noticed, 19 centuries ago. Give them bread and circuses. But don’t give them employment.

As plutocracy has interest to weaken the core, it can only reinforce itself by using the periphery (thus making it stronger). That is why great plutocracies always engage in heavy immigration and foreign mercenaries (look at the Ottomans, the Achaemenids, Rome, China, etc.),

If this is all correct, the USA, by employing the Chinese, while bringing in hordes of unsophisticated immigrants, reacts as a typical plutocracy, and the old middle class and its descendants are in the crosshairs of the masters of America. The last thing masters of finance and oil, and health care, and the dark arts, want is a People of engineers who know where all the levers are.  

Thus the worsening of unemployment and the general melting down of all the civilization supporting factors, such as investing in progress, industrial or educative, are no accident. It’s the system the plutocracy needs to survive and thrive. It’s not a disaster, it’s a conspiracy. (Reminder: I use the word conspiracy not as “plot”, but in its etymological, original sense: the fact of breathing together, and they do more than that: they drink, eat, sleep, think, feel and work together.)

The USA is victim of a plutocratic metastasis, devouring all in its way. Lowering the dollar for ever has no future as a valid strategy. If anything, it makes the problem worse, as pain relief disguises the real disease. The only way out, is for average citizens to realize that they are manipulated into impotence and submission before they become too decerebrated  to notice anything significant beyond sports. The basic problem is nothing new. It was already in full view  at Marathon. When a small army of free men defeated the world’s largest plutocracy.

In the case of the “Oriental Part” of the Roman empire, the realization never came. By the Sixth Century, sports were reigning supreme, and the serious rebellion against emperor Justinian (“Nikka Riot”) started in the sport arena. People were afraid to think, let alone to see what was wrong. Justinian stayed in power, barely so. And proceeded to massacre much of Anatolia, millions dead, to make triumph, he said, his interpretation of what Christ said (he was just warming up, he devastated Italy later). In truth he was just the typical follower of Pluto.

In the “Occidental Part”, by then the renaissance had started because it was again the land of the Free, or, as they said, the land of the Franks. (And those were the only ones Justinian did not dare to attack.)


Patrice Ayme

Why Plutocracy Hates The European Union

December 1, 2010




The middle class of the USA has seen its income go down markedly in the last decade, while its costs, in health and education, and unemployment, have gone up considerably. It is a curious thing that, as the USA struggles with the increasing economic despondency of most of its population, many American opinion makers obsess about Europe and the Eurozone currency, the Euro. Less than a decade ago, the Euro used to be worth .79 dollar. But then the Euro doubled in value relative to the Dollar.

A massively overvalued Euro is not so bad for Europe; European exporters have so increased the quality of their products that they sell them nevertheless. Moreover, the Eurozone has no oil whatsoever, most of the oil trade is made in Dollar (particularly since Saddam Hussein hanged by the neck shortly after switching to the Euro!) Thus, after the Euro doubled relative to the Dollar, the cost of oil for the Eurozone was halved.

This ought to have delighted "liberal", supposedly left wing, nationalist American economists such as Stiglitz and Krugman. They claim that the devaluation of a currency is good, because it makes the country which has devalued more competitive (although standard European theory on devaluations, for 30 years, has been that they are always bad).

So, as the Dollar went down, by 50% relative to the Euro, American nationalists really believing that devaluation is heaven should have been singing the praises of the Euro. But not at all. Instead we hear concerted howling, all over Anglo-Saxon’s most respected media, on the sorrow of not seeing Spain devalue relative to France. It sounds like coyotes in the deep woods: fascinating, but not thinking.

American economists claims computations show that when Europe was cut up in small nations, it was optimal. Devaluation is the only way to attenuate, according to them, the Iberian peninsula supposed misery.

Honorable critters may undervalue a few facts they rarely mention: keeping notes for 27 countries in one’s pockets is confusing and time consuming to truck drivers, tourists, and prevented transnational prices comparison, let alone purchases (French who want to buy a cheap French car, shop in Spain, or Italy, because, Spaniards or Italians being less rich than the French, car are cheaper there, and they can do this at a distance, every price being in the same currency; since Spain and Italy are contiguous to France, getting the car is very easy).

However judiciously byzantine American economists computations may be, they are irrelevant to the bottom line. And the bottom line, in Europe, is not economics. Not everything in society is about money, or even economics. The main set of reasons for a European currency is not about economic optimization. It has to do with war, or more exactly avoiding its return.

It’s no coincidence that the Secession War in the USA was followed by the establishment of a single currency (which did not exist, prior to said bellicose activity). The American Civil war is the deadliest civil war that a Western country has known. It’s no coincidence that the greatest war gave rise to the greatest currency known.

The astute will notice that World War Two ought to be seen as a civil war too, as it killed around 50 million civilians in Europe. Thus, to this even greater civil war, ought to correspond an even greater currency.

American economists who trash the Euro claim that the Euro is bad because it prevents devaluations: they always mix the idea of independent currency with salvational devaluation. It is a bit as if one were deploring the law, because it prevents to kill one’s neighbor when it is handy. Why not to do the right thing economically, to start with, instead?

Verily, the present crises in the USA and EU have nothing to do with currencies, but everything to do with nationalizing the losses of some private companies which have captured the minds of the elites. Hence those particular private companies are viewed as the highest national interest. Which, of course, they are not.

Saving the top financial companies in the USA such as Goldman Sachs and Citigroup cost nearly 5 trillion dollar, in the USA alone (more than a third of GDP, wasted in two years mostly through Quantitative Easing). Why? Because plutocracy has captured the psychology of the leaders. Obama went around aloud, calling some of the world’s greatest, not to say dirtiest, plutocrats "my friend", while they were stealing billions. He obviously thought that was a small price to pay to ingratiate himself to those powers that be.

Let me add two technical points here: one has to distinguish between banks, and bank holding companies. One also has to distinguish between insuring depositors (certainly innocent, so who should be saved) and those plutocrats, or plutocratic organizations, which pull the strings of the bank holding companies (and who are presumably culprit, or at least responsible). A systematic confusion has been entertained by the plutocratic media between saving depositors and their ATMs with saving the plutocrats, and their derivatives.

Verily, the plutocrats do not have to be saved: they played dead and dying, but it was all a trick, or more exactly a CONSPIRACY. If they were dying of anything, it was of indigestion, or the anxiety they had about realizing their next plan, the boldest so far. The plutocrats deliberately engaged in the whole financial disaster operation, knowing full well that the greatest risk to society was actually the greatest profit imaginable to themselves: leveraging themselves more than ever, using the full power of governments as the ultimate lever. What they basically did was steal all the money, hide it, for their private enjoyment, and then observe there was none left for the normal functioning of society, and order the people to bring those necessary funds, or else civilized society would be shut down…

Obviously depositors of the non plutocratic type ought to have been saved, and the ATMs and managements of the banks themselves kept open (this should have been done by nationalizations of these restricted entities, instead of the much larger gifts made by national government to the private bank holding corporations and their plutocratic puppet masters.)

There would be no Irish crisis if some large private banks had gone bankrupt. What caused the crisis was that large BRITISH and Eurozone private banks had given to Irish developers funds for crazy leveraging, and, as the bubble imploded, they did not want to go bankrupt. So they used their political influence to make the governments (hence taxpayers) provide them with what they had lost (and a bit more for bonuses).

Then the national governments got bankrupt instead. This is the case of Ireland, or the USA.

Britain offered to pay for Ireland, with the Eurozone, and with the USA (the latter through the IMF). All this because our so called democratic leaders cannot stand the private pain of the plutocrats. Plutocrats in pain is the end of the world as they know it. Our democratic leaders would do anything to prevent that: without plutocrats to give them a future, how could they have a present.

So the world financial crisis is all about plutocracy not currency.

So why so much talk about China and its currency, and why the obsession of so many opinion makers of the USA with the doom and gloom of the Euro? One month they feel the Euro is too weak, the next, they see it as too strong. In all and any case, it is the dollar which stays weak.

Plutocracy talks about currency, as the end all, be all, because it deflects the conversation from itself.

Plutocracy is out to destroy the European Union, that is, Europe, because, once again, it sees the danger that the force of democracy, which is strong there, rebels and fights back. As it ought to.

As I have tried to explain in many essays, plutocracy hates democracy. In essence the wars which wrecked Europe in the period 1853-1945 were an attempt, by plutocracy and its insanely murderous servants, to destroy democracy and replace it by plutocracy (hence the elaborate relations between fascism and its corporate sponsors).

The European Union was precisely designed, initially to prevent the return of war and fascism. But who had caused, animated, organized and supported the later? Plutocracy. The European Union fathers did not want to confront plutocracy directly, so they used other names, as they built an institution to fight it.

Lo and behold, a plan presented by France and Germany requires the plutocrats ("lenders") to be responsible when the ventures they engage in fail. But only starting in 2013. Why give the plutocrats three more years?

What we contemplate now is the vengeful return of the ultimate cause of the wars in Europe, namely plutocracy (this theory was well known in July 1914). Hence the continual verbal attacks, in the USA, against Europe, its Union, and its currency. The plutocrats could well instigate still another war as a better distraction, and source of funding, if verbosity is not enough, and the government of the USA is not as compliant as it used to be.

It may be time for Europe to address the real problem, plutocracy, instead of ignoring its attacks, while throwing it all the fresh meat it howls for, as if it was going to appease it.

It will not. Appeasement only encourages plutocracy, as once upon a time, its servant, Hitler, used to be encouraged by every kind gesture coming his way, to become ever more insane.


Patrice Ayme



August 10, 2008


Overview: The USA has used a devaluation of the US Dollar to help the US economy by increasing exports. This is an attempt to rob Jeanne (d’Arc) to feed (Uncle) Sam, and the exact sort of attempt to claw out some unfair advantage, that ignited the Great Depression that led to World War Two. This is not just injust and immoral, it’s grotesque, immoral, and very dangerous. Instead the USA should proceed with its long delayed drastic economic overhaul.

Currency devaluation to gain a short term economic advantage leads to political, social and moral devaluations. Ultimately it is the most guaranteed path to fascism and war, and defeat, history is very clear on that, all the way back to Rome. The USA cannot use its old devaluation trick to re-launch its economy anymore, because the rise of the rest of the world, and, in particular, of the colossal European Union, has deprived it of its special status. Obama is now talking about (part of) this, and it’s excellent news. Putting the US back on track involves first a rise of the Dollar, and since that’s done with the mouth, and a few clicks of the mouse, it can be done right away.

A lot of the rise of commodity prices, measured in dollars, has been caused by the devaluation of the US Dollar. In the last eight years, as oil went from 20 to 150 in US Dollars, the relative rise in Euros was only half of that.

As Barack Obama puts it:.”If we had a strengthening of the dollar, that would help” reduce fuel costs, (he said, according to Reuters). Instead, Fed Officials and the Bush administration blame high commodity prices on supply and demand, despite falling demand due to slower global growth. Meanwhile, they pursued what the Wall Street Journal calls “their destructive and all but explicit dollar devaluation strategy” (WSJ, August 8, 2008).

The recent lowering of the dollar was a competitive devaluation (ever since it breached parity with the Euro). In a competitive devaluation, a country (call it X) lowers its currency, to make its products cheaper. This is supposed to bring up the economic activity inside the country. There are several problems with this though:

1) In the very first stage, other countries get irritated because they then sell less of their own products, lowering their own activity, making them lose long term market share to X, etc.

2) Simultaneously, inflation of imports inside X is proportional to the lowering of the currency of X. This is what is happening to the US right now with oil and commodities. The lowering of the currency of X can lead foreigners to not invest in X as much as they should, because they wonder where it will stop (the USA is at this stage where foreigners are starting to pull away).

3) In the preceding stage, if the rise of exports’ worth does not keep pace with the rise of imports’ cost, the situation of X can get worse (this is not yet the case in the USA presently: the trade imbalance is going down). That stage is often facilitated if other countries take, in response to (1), corrective measures, not to say outright retorsion. Should the rise of exports not keep pace, other countries and investors lose trust in X’s currency, and, in a first stage, pull their investments out, making a bad situation way worse (the USA is approaching this stage: the big European countries receive much more Foreign Direct Investment than the USA, increasing the gap; the UK gets about three times more FDI, relative to its population).

4) In the final stage, X becomes so cheap, foreigners swoop in, and exert undue influence (this happened to imperial Rome, just before it transmogrified itself into a fascist “Catholic Orthodox” theocracy: it was easier to teach the rudiments of civilization to barbarians through a superstitious religion, than by sending them to school).

Competitive devaluations are therefore economically destabilizing and lead to civil unrest, fascism, and war. The textbook examples are the Weimar Republic and Argentina in the twentieth century. Britain, France, and many Mediterranean countries used competitive devaluations on a regular basis, creating havoc. Meanwhile Germany, (remembering that after using a massive devaluation to annoy France in the early twenties, she ended up with Nazism), became obsessed, come what may, to insure the value of the Deutsch Mark. The result was a flourishing economy, and that strategy was so good, it was even adopted by France within a generation, resulting ultimately in the creation of the Euro (after the Franc and the Mark got locked together for a decade, one may as well have called them the same, indeed).

This is not the first time the USA indulges in a competitive devaluation. In the past, though, the US Dollar was the world’s one and only reserve currency. So, when the US Dollar was going down, US exports would become cheaper, but payments of oil and commodities would not go higher (because they were all in US Dollars). The USA could engage in competitive devaluation without punishment, so it did. Now, for the first time, it’s being punished.

Indeed, the European Union’s sixteen trillion dollar economy has become much larger than that of the USA’s, and it has its own currency, the Euro (the British Pound , Swiss Franc, and various critters are more or less locked to it). Thus, the US Dollar should not be the world reserve currency anymore, and it is in the process of losing this status. Many countries are building reserves of Euros, and following Saddam, are asking for payments in Euros for oil and commodities. (As a confirmation of the economic, financial and increasing rise of Europe, world’s British Pound reserves are now larger than the reserves in the Japanese Yen… A telling forecast of what the world thinks of the future of open Britain and semi closed Japan.)

When Saddam Hussein decided unwisely to switch to oil payments in Euros, the USA replied by invading and destroying Iraq. That method, though, cannot be duplicated easily. Many countries are now switching to Euros, and when oil and commodities have prices in Euros, as the US Dollar goes down, their prices in Dollars go up. The USA is now approaching the sort of infernal descent into an inflationary spiral Argentina was destroyed with, nearly a century ago. The only saving grace is that the US debt to foreigners is, so far, in US Dollars (so it goes down with the Dollar; Argentina had a lot of its debt in foreign currency).

Barack Obama is right to call for a rise of the US Dollar. When the Euro was created, its value was found by looking at the long term average of the French Franc relative to the US Dollar over a century (around 6.66 Francs for a Dollar). That fixed the Euro-Dollar parity, and we are presently more than 50% above it. The present imbalance has been caused by deliberate short term neglect of the Dollar and US economy, and long term erroneous civilizational strategies. A correct US administration would point out that this is over, and that the US Dollar will regain its correct value right away. The turn around will be signaled by turning the Dollar around. This can be done tomorrow morning: the European Central Bank will be delighted to have an opportunity to ambush the speculators, it has been chomping at the bit, and is tired to intervene alone). This would bring capital in the USA immediately, helping to reverse the part of its economic decline which is caused by a dearth of modern investments.

Whereas, if the present situation perdures, it would do so because of the persistence of disastrous economic policies inside the USA, and the failure to even talk as if one wanted to turn things around. Ultimately, a catastrophic loss of control over the US currency could occur if a clear signal does not come that US authorities have decided to stop the decay of their country. Not a good way to go. Remember Argentina.

Patrice Ayme.