August 30, 2012

We'll all shiver if Germany can't shake economic cold

Posted in Irish Independent · 142 comments ·
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IF you want to know where the classic 1980s power ballads (the theme from ‘Dirty Dancing’, Laura Branigan’s ‘Self Control’, Heaven 17 numbers and assorted gems from the New Romantic era) ended up, look no further than German radio. While I was driving through the northern bit of the Rhine yesterday, the car radio offered up an eclectic mix, ranging from the reasonably nostalgic to the God-awful, in a display of Catholic music tastes befitting a journey that concluded just outside Cologne cathedral, Europe’s biggest.

The other noticeable thing about driving in Germany on a weekday is the sheer amount of commerce on the roads. The inside lane of the autobahn is an uninterrupted convoy of trucks shipping Germany’s exports all over the continent.

If you want to feel the German economy, the best way is to sense the shudder of the thousands of trucks on the A3 autobahn, which bisects Germany top to bottom.

But commerce and trade don’t end there. In front of the cathedral last night, the Rhine was a scene of controlled industry as dozens of barges plied their way up and down this beautiful river. The melodious repetition of the giant diesel engines — thud, thud, thud, thud — might be a soundtrack that some of Germany’s more excitable radio DJs could do with taking time to listen to, given the cacophony to which they subject the average driver.

But listening to the local radio gives you a sense of what the producers deem to be news. Yesterday it was all economics; Greece, the differing internal German political views on the euro and the best way forward.

The biggest news — and this is what is setting the political tone here — is that business sentiment fell for the fourth successive month in Germany.

There is a real sense that the assumption that the European crisis would stop at the Rhine, the Roman Empire’s natural boundary with Germany, dividing the Latins from the Teutons, is now in shreds.

The five-year crisis in the eurozone has been the story of slow but progressive contagion as one economy after the other weakened and orders dried up, affecting more and more suppliers until they ultimately affected Europe’s biggest supplier, Germany.

Worse still from a German perspective, the historically low interest rates which were designed to kick-start demand in the periphery have only served to drive up things like property prices in Germany, threatening to inflict upon Germany the very virus that floored some of the peripheral countries in the first place.

First, there was a banking crisis in Ireland and a government crisis in Greece; then Portugal got sucked in; then the contagion spread to Spain and its consumer bubble deflated rather too quickly for its bankers’ tastes as some of the banks were exposed as little more than ponzi-scheme operators. Then Italy began to grind to a halt, led by consumers who stopped spending.

The assumption at this stage was that Europe’s prudent core countries would be okay, but then France started to slow down and ultimately its biggest trading partner, just over the Rhine, felt a chill. But Germany hasn’t been able to shrug off that chill. In fact, it is feeling progressively worse.

The question we should now be asking, one which seemed utterly implausible a few months ago, is whether Germany is heading not for a slowdown, but for a recession?

And if it is, what would a recession in Germany do to the tolerance of the German people for more European bailouts?

Hans-Werner Sinn, president of the Ifo Institute — one of the most accurate German economic think tanks — said export expectations were slightly negative for the first time in almost three years.

“The German economy continues to falter,” he said.

Last week, we had a fascinating piece of research from GaveKal — an influential Hong Kong-based think tank — which suggested that a recession in Germany was on the cards, very much so.

Despite the fact that the highways and byways of Germany are still choca with commercial traffic, something very familiar to those of us in the rest of Europe is happening; the recession is moving in waves and no one country has sufficient economic levies to hold back the tide. For Germany, we have the added, non-European problem of a sharp drop in Chinese demand for machines. This affects Germany’s heavy-industrial export sector disproportionately.

Looking at survey data, export data and output data, as well as assessing the prospects of the countries to which Germany exports, and taking into account the fact that Germany itself is a huge importer too, the authors of the GaveKal report conclude: “There can be no escaping the fact that reduced German imports must cause a decline in French and Italian exports. This will likely be a shock for those who expect the German juggernaut to drag the southern economies back to growth. To put it bluntly, Germany will very shortly be subtracting from growth in the rest of Europe.”

Because Italy and France are not competitive against Germany, a slowdown in Germany will, as it always does, expose the least competitive first, impacting on Italian and French producers.

If the authors are even half-right, this puts huge question marks over the entire EU’s strategy with regard to the euro crisis. Up to now, there has been a sense that ultimately, if everything goes pear-shaped, Germany will pay.

BUT what happens if Germany can’t pay because it is in a recession? Then all bets are off and it is the slowdown and, more acutely, the encroaching recession that might explain the hard-line stance of Germany and France with the Greek prime minister last weekend when they said that Greece had run out of road.

We should not gloat over the Greeks’ dilemma, because if Germany’s industrial muscle atrophies, we are next in line.

We, more than any other country, are dependent on the willingness of the Germans to dig deep for Ireland at this stage. Up to now our negotiating tactic has been based on the “Germans will pay” dictum.

Strolling along the side of the great river last night, listening to the thud, thud of the giant barges, the idea that a weakened Germany would remain ever willing to dance to someone else’s tune seems, at best, fanciful.


  1. SMOKEY

    I am sending this to a friend in San Francisco who said almost the exact same thing in a conversation we had a week ago. Great minds think alike. A lifelong accountant and economics and political junkie she loves when I forward your articles to her. Nice one David.

  2. ThomasFergus

    Shouldn’t that be ‘levees to hold back the tide’ rather than ‘levies’?

    Otherwise great article as usual David.

  3. Puschkin the Black and White Cat

    My only question is , when will it start? , I mean when will the phony recession end and the “real” recession begin, when, oh when.

    I thought June 2012. Back in the 90′s I said it would start 2003 , then 2006 , I was oh so wrong. I love to read all the comments on this site, but now I challenge the contributors, when will it start ?????.

    I define a “real” recession as Ireland being in an 80′s mode, That is, no holidays abroad, one car families, 8 to 20 years old cars, 10% of youth going to third level (not 85%), people saving for months to go to a wedding, I mean a “real” recession.

    • For what it’s worth my car is 19yrs old, a tender little toyota Carina E ( 2 litre )…she’s only coming into her own now :)

    • polomint

      With layabouts like you Puschkin, we`ll be back to those days even quicker than you might think.

      Let me guess- pessimists like you are longing for a return to those days- nothing to better to do than see how we can return to those days..

  4. Volks

    There is something nice how the Germans think in their culture when referring to their kinsfolk . The predominance of the word ‘Volks’ symbolises their entrenchment how they attach to themselves and ‘others’ .Its their symbol of power together to work together to be better and better . This word morphs metaphorically when addressing things to the word ‘ System’ ie ‘Kaffee mit System’ .

    I often wonder was Bugs Bunny a German Immigrant to the USA .

    Thats All For Now Folks.

  5. MjHi

    I was recently in Germany myself in a town called aschersleben.Small town surrounded by some heavy industries in mainly an agriculture dominated landscape.I too was surprised at the amount of trucks on the autobahns particularly the A2 near Hannover. It simply was hundreds of kms of trucks.However when I went shopping in Ascherleben I was surprised also to see small cafes & specialised shops closed down. Only the Aldi & Lidl shops busy.It made me think why so many shops & cafes closed down in such a prosperous country.I was thinking is this a sign that Germany is also coming to a stop.

    • Deco

      Just like here…

    • bonbon

      That town was in the “Zone” (DDR) until 1990. Somehow economists miss the fact that unemployment is up to 60% in parts of Saxony, and other regions, that despite lip service to reconstruction after the Wall.

      Deutsche Bank chief Herrhausen, who planned a massive Recontruction of Poland as a bridge to build up the DDR in 1991 was assassinated for precisely that. This was the first step to the Euro. Kohl signed into that blackmail. So there was no Reconstruction, only privatization and the entire Comecon lost its main machine tool supplier.

      There is a very deep connection to the catastrohic Euro and the geopolitics of Mitterand and Maggie to corset Germany. Ireland played right along into this criminal game. Every time that happens guess who suffers?

  6. Philip

    Well, the article merely explains that the final domino is falling. Look over the last few months articles and it is as plain as nose on your face. Demand is disappearing everywhere.

    Question now is WHY?

    It’s not totally the euro’s fault.

    Global trade imbalances have allowed people to become more dependent on forms of income which are dependent to fewer sources of wealth generation.

    Our primary industries are in the control of very few interests. Food, Fuel and Minerals – when these get locked up, you pay the piper. It was not always that way. When everyone was doing a bit of everything, these primary sources where spread around. But once labour was exported en masse – I think people’s reliance on services which relied merely on rent related services shot up and people saw money as the only way to make it.

    Meantime, the resources where starting to cluster in China and India and to make things happen fast, you needed big pockets – and the money was made available.

    From the prime mortgage scandal (and similar in Europe) we are witnessing a cascade of wealth destruction because people are now starting to save to hoard critical commodities…including the banks. That’s why China and now Germany are faltering.

    Ask yourself…why is fuel so pricey? Industrial demand has collapsed and there is shed loads of the stuff for centuries. Answer – It’s because that’s how you are going to loose your shirt.

    Real Money = Real commodities. Pass the bread please…

    • I agree, Ireland needs to ramp up its exports. Maybe not bread but the world needs milk and meat. 4 sides of beef will buy a car from the Koreans and soon 2 sides of beef will buy a car. We also need to start exporting energy.The Germans are closing down their Nuclear plants . Are we going to let the French supply them with Nuclear power instead when we could send wave power.
      Instead of talking about laying off our civil servants (which we know the government hasnt got the balls to do) let us foster an efficiency drive and get these people working to take the load of our farmers, manufacturers and energy producers so that they can export. Some lateral thinking please and yes Real money = Real Commodities.

      • Perhapx

        Good enough idea but what is likely to happen to all our fine resources is that some foreign business will buy our wind and wave power and sell the electricy generated to the UK and take the proceeds back home to their investors. Our government will capitulate for a meagre short term lump sum to bail out the banks IMF.
        We won’t even get to manufacture the kit.
        You can wave bye bye to our ‘own’ resources.
        Wave power will last into the future, so perhaps we can kick them out after proof of concept. Just don’t hold your breath.

        • bonbon

          Wave, wind and sun, the greenie dream of extracting sunbeams out of cucumbers, as Swift hilariously showed in the 18th century, was daft then as now. Germany’s Godmother, Angela, apparently never read Swift, otherwise she would not have stopped nuclear power. Germany is for the first time a net imported of power! And the prices are about to go through the roof for manufacturing.

          Enjoy the waves and wind from the Atlantic, the couple of hours sun luckily, but dump the insane delusion the greenie wild-eyed magicians are promoting.

          Nuclear power is the way to go. The resources for that require mental capital, the most essential part of an economy.

  7. CorkPlasticPaddy

    Couldn’t agree more with what’s been said!! It’s true. If Germany is heading into a recession then quite literally the ‘brown stuff’s going to hit the fan’.End of story!!

    Things aren’t getting any better. In point of fact they’re just getting worse, especially in this country!! I’m sorry to have to say it, but the banks should’ve been left ‘go to the wall’ back in September 2008. Ever since the time of bank guarantee being brought in things have just gone from bad to worse!!Unless the banks all over the world aren’t brought into line soon then nothing is going to change. Yes, folks, as many people have kept on emphasising it’s the banks and the bankers that have brought Europe and the rest of the world to its knees!!

    • Tony Brogan

      It is the debt based credit system of the central banks killing us all.
      Law of deminishing returns has gone into reverse gear.
      A stimulative dollar loaned into the economy at a lower interest rate initially stimulated 5 times the economic activity. Boom, BOOM went the economy. But like a junkie the fix must be repeated. This time more infusion less results. Only a 2:1 increase. Boom slowing. Add more, whoa there it does not seem to work any more. Only improved the economy 50 cents for every dollar added.
      Bring on QE, increase the dose. Wow the economy is contracting. Every dollar of stimulus is resulting in lower actity.
      Hey the junkie is dying. The bigger the fix the worse it gets.

      The next shots should do the trick. Cardiac arrest. Fatal credit.
      Patient died from too much debt. You see it on the streets everywhere. Even in the wealthy neighbourhoods.

      If you want to survive get back to clean living, good food, and exercise. Same for the economy.

      Get off the cheap credit. raise the interest rates, stop feeding the patient junk. The withdrawal pains will be servere, but those with a strong will will pull through.

      Survival of the fittest never rang so close to home.

      Close the central banks, ban fractional reserve banking, and go on a money system that does not allow easy credit. A Sound money metal money system.

      DMW full of good intentions will feed you full of junk.Stop being a credit junkie. Look after yourself, There is only one person who cares for your well being when the chips are down. YOU
      It’s every man for himself. If you have a life boat or floatation device use it. You are going to need it.
      Buy gold and silver vat or no vat. If you had bought 5-10 years ago you would be 2-4 times better off than now.
      Silver 10 years ago was $5 With VAT $6.25. Sell today at $30 is nearly 5 times.
      If you believe gold at 4000 an ounce and the gold silver ratio will drop to 30:1 from the currnet 55:1 then silver will be $133 per ounce. If the ratio goes to historical norms of 15: then with gold hardly rising and being only 2000 then silver is going to $133

      I believe gold is going to an easy 5000 or $10,000 per ounce in the next 5 year or sooner and silver will be at just 10:1 ratio as there is no silver available so that puts silver at a minimum of $500 or even $1000 per ounce. Don’t feel guilty about being frugal and saving. Why should you be urged to spend to save the economy when it means you will die a credit junkie. Look after yourself first. When you are healthy help a friend or family neighbour.

      Financial Titanic has a hole in it but the band plays on. Soon everyone heads for the lifeboats but there are not enough for everyone. When the rush for gold and silver get on there will be none available for you at any price. Too bad. Nobody will be selling except to buy necessaries.

      VAT will look like a pinch of dust at today’s price.

      I feel as Noah must have. Everyone laughed as he built the ark but it rained the legendary 40 days and forty nights. Well it has started to rain all right with a few puddles around and it is not too late to get aboard.

      You can’t say, “I did not see it coming” . there are plenty on this blog telling you now.

      YOUR CHOICE.

      • Tony,

        …There is only one person who cares for your well being when the chips are down. YOU It’s every man for himself….

        I profoundly disagree, it is exactly what they want and is the result we see today. The opposite is true, we need a large scale solidarity amongst the people.

        • Tony Brogan

          Hello Georg

          Your semtiment is noble and admired.

          My point being that if as an individual one does not look after oneself then you are useless to society in terms of support to others.. Each person has strengths and weaknesses no doubt and nobody is to be discarded and abandoned.

          There are numerous comments on this blog about the cost of government and the ineffiencies of the government. I have taken no part in that discussion except to say that economically speaking government should remain at or below 35% of GDP.How that is accomplished is another problem.

          As an individual I give my greatest support to the community when I am healthy and productive.
          At the same time if there are insufficient resources and funds and all are broke where are the resources to support anyone at all. so it behoves me to look after myself because in the end that is all I can rely on. In the current economic climate even pension funds are technically going broke as their contingent liabilities exceed assets. Low interest rates will distroy capital and savings, leaving the individual with no support.
          governments have similar problems now as contingent liabilities for social programs are not “on the books” and if properly accounted for double and triple the national debt.
          Actuarialy these programs need radical adjustments. Politically it is hard to execute.
          Pensions should not be issued by the state if at all until the age of 75. Then there is about 5-7 years of funding on average instead of the current 15-17 years.
          People are living longer by 10 years than they were a generation back when the pensions were conceived.

          Solidarity of the people is fine but against what for what?. The problem is evident but the solutions offered vary. I believe I am correct in my assessment that it starts with the central banks. Few others show agreement.
          The perpetrators of the crime have the finest propaganda and obscure the problem and the solution. They lead us down false trails, and exhaust us in endless failures.

          That is why I say look after #1 and then help your family and friends.
          At that point I am able to offer resources to the commumity to work for better results for all.

          That is why I have put endless hours of altruistic effort into this blog. But I will not do it at the cost of my survival because then I am useless to anyone. If I can help one person to make themselves better that is good. After that any others are a bonus.

          That is why charity is a wonderful attribute. It returns to the community and is voluntary. The old maxim “Tis better to give than receive” suggests value value for both the donor and the receiver.It call ba called a win win for all parties.

          I am with you Georg but only when I am ready and able.

          As I expect to have little effect on the common weald I must resort to taking care of what I can control.

          • Morning, well said Tony, and yes, CB’s are one powerful tool in the hands of a few that shape our reality, and I often wondered who has more, admirals or central bankers / politicians.

            Of course, it is both in conjunction that do the job, however, the admiral depends on the banker / politician to enable his tools to be paid for, paid for by every single citizen, citizen’s who still are convinced we live in a functioning democracy.

            Citizens who were asked to cast a vote, and when they did, the vote was dismissed as wrong, and repeated, on purpose to enable those who act now, as the TROIKA and ruthlessly implement a new reality that is being dictated by foreign forces, to maintain dollar hegemony under any circumstances.

            Thanks Tony!

            Best
            Georg

          • Tony Brogan

            “Citizens who were asked to cast a vote, and when they did, the vote was dismissed as wrong, and repeated, on purpose to enable those who act now, as the TROIKA and ruthlessly implement a new reality that is being dictated by foreign forces, to maintain dollar hegemony under any circumstances.”

            Same thing here in canada. If the referendum does not pass as requested then the issue was not properly explained and so we must do it again.

            There is a case in BC here where the government lied in regard to the imlimentation of the coelescing of two taxes in to one. Turned out the result was extra taxes and not neutral as proposed.

            a remarkable effort to get signitures of as least 10% of all the registered voters in every riding in the provice on a petition was achieved ..
            This forced a referendum to reverse the tax and it succeeded despite suspected gerrymandering.
            Then of course the reversal is to be carefully implemented in 2 years, but it succeeded and shows a well organised campaign with a clear objective can get the support of the people.

          • coldblow

            Hi Georg

            “Citizens who were asked to cast a vote…”

            Intresting. I thought you dismissed these all as benighted “reactionaries”.

            They have been asked to vote again on a few things of course and I’m sure you can remember what these issues were.

  8. Adam Byrne

    subscribe.

  9. Around 1.5 years ago, I exchanged opinions with H.W. Sinn on this global heist. He was the one who started this somewhat academic Target II discussion.

    As some of you might know me from earlier contribution, I do call a spade a spade.

    In a somewhat longer email, I argued that taking “everything” – This was the longer part – into account, I see no other way out of this but large scale debt forgiveness, cancellation of odious debts, a seismic restructuring to be required to have the slightest chance to get a grip on this mess.

    He agreed!

    His “accuracy” as David calls it, well, it is a double edged sword as the Target discussion and others showed, and if anything, H.W.Sinn is a prime example on how you can use data to create and shape political discussions and opinions.

    However, correct is that his CESifo institute is Germany’s most influential economical weather man.

    http://www.cesifo-group.de/ifoHome/facts/Survey-Results/Business-Climate/Geschaeftsklima-Archiv/2012/Geschaeftsklima-20120827.html

  10. padser

    David’ In the “car – crash, in slow motion” analogy of this five year till now protracted “Bust”….what makes you think the EU hasn’t had the time to figure this part out?
    Have we not defied’ conventional economic consequence to date?
    The “resume play” or even the “fast forward” button could ‘in my opinion’ have been pressed at many junctures over the past five years.
    In this analogy, would “x2 slow motion” not be a likely reaction?

    P.S Please go easy on me if you choose to answer this post. I’m a confused, angry, unemployed Construction Labourer. My construction skills at present, amount to no more than “building” arguments and asking questions… have been compelled with anger to not just find out when the car “actually” crashes (I don’t care where) …but who built the damn thing who unmistakably put rocket fuel in it, and turned the ignition!

  11. padser

    David’ you missed an opportunity as per your opening paragraph with “Nena-99 Red Balloons” (1983) & “Nena-99 Luftballons (2009)…..

    …wasn’t there a connection to the 1983 version to Armageddon?

  12. German exports Q1/Q2

    The “Statistisches Bundesamt”. the German equivalent of the Irish CSO, hence the official government statistic forgers, just reported:

    Q1 and Q2 German exports to:

    Portugal -14%
    Spain -9.4%
    Greece -9.2%

    EuroZone total -1.2%

    Netherlands and France saved the day increasing >4%

    Total of German export Jan-june+4.8% a total of E550.5 billion, with 211.6 billion in the Eurozone. Exports into non EU contries increased 11.1%, hence count for 42% of total german exports.

  13. michaelcoughlan

    Hi,

    I am not sure I agree with the article. I don’t have the stats but my understanding is that the UK and the USA are our biggest export markets and ad we all know Ireland has two economies; The internal economy and thd exporting external economy. As the euro continues to slide exports which currently are in surplus will continue to grow even if Germany contracts. The internal economy will be ground into the dust to facilitate the reparyment of the failed speculative loans of international banks irrespective of what happens in the fatherland. I can’t see how trouble in Germany will affect us here unless as the article points out that if the Germans can’t continue to bail us out we are in for a right spot of bother.

    This bother will happen anyway since the banking debts which we have been landed with are to big to pay back with the sovereign debt so we are in for an interesting 3 to 6 months.

    • Philip

      Maybe it’s a case that Ireland’s exports are such a small part of the overall picture, it would need US and UK to be utterly zapped before we’d see an effect. We can be export rich from the crumbs of others.

  14. Deco

    So Gunther invested in Lorries, when Paddy was investing in overpriced properties. Gunther still has his lorries. Paddy has his overpriced properties.

    Shurr….aren’t we all happy….

    • Philip

      Maybe it is a matter of where you see your future income. Gunther invested in small and medium sized businesses and had a history of doing it right while Paddy retreated to properties as a hedge against lost pension performance and loss of a real job when the dot com bubble burst and cost relativity for assembly work went against us.

  15. Deco

    Marc Faber Swiss Economics commentator resident in Thailand, has declared that it is “100% certain that we will enter a global recession” in the next few months.

    Given how Just in Time inventory works, Germany, The Netherlands, Switzerland, Singapore, Australia, Canada, Russia, Brazil, South Korea, Ireland, and many more export driven economies countries will get sudden changes in their economic predicament.

    • Philip

      Exactly. And shocking that back into action will be interesting. So my next question…who’s holding the money? People who bought long on critical commodities and looking for top dollar and soaking up any ability of the market to diversify beyond critical commodity purchase. Oil and Food. If real pump prices keep going up and up, that the proof. I really hope I am wrong.

  16. bonbon

    The Genie is out of the bottle in Germany! DMcW wonders what will be the effect of a recession. Well obviously the focus on the banking system will be become priority.

    Former German Chancellor Helmut Schmidt Moots Glass Steagall and Blasts Foreign Interference into Other Countries

    Aug. 29, 2012 (EIRNS)–Former German Chancellor Helmut Schmidt was hosted at a public event by Munich Mayor Christian Ude, who heads the SPD slate in the Bavarian state elections next year. The event was held in a theater in order to allow Helmut Schmidt to smoke, which is now prohibited in Bavarian pubs and restaurants.

    The meeting was to pay homage to Schmidt’s long career, but it was also to help Ude’s campaign, which involved Ude raising questions with the elder statesman, such as: What do we do with the financial system, which has become decoupled from the real economy? Schmidt replied:

    “In the U.S. there was a division between commercial and investment banking until the end of the 1990s. Today, the banks are also investment banks, which means speculators. Financial managers today are just as powerful as they were before the Lehman Brothers crisis. In 2008, there was a conference of the leading countries, where regulating the banking systemwas discussed. Nothing happened. Today the U.S. and Great Britain don’t want regulation. Great Britain is also a member of the EU. The question is: Will the other governments be strong enough to push through regulation?

    “It’s the same with the commissions that financial managers are paid. They are immoral, everyone knows this. But the question is: Do governments want to change it and do they have the power to impose it? The present situation is also a reflection of the morality of the population in general.”

    Schmidt also criticized foreign intervention into other countries, saying it is against international law, which is based on sovereignty. We intervened into Libya and a number of other countries. We should be more restrained, he said.

    He was also asked his judgment on the U.S. Presidential elections. Ude asked whether he is publicly supporting Obama, because Romney wants to change Obama’s health-care reform. Schmidt’s answer was interesting: “I think Obama’s health-care reform is not enough. In the next 40 years, African-Americans and Hispanics will become the majority in the U.S. They are usually the poorer ones. They will demand a better social system and the big question will be whether the U.S. will reach this quicker than China, which also has to do it.”

    The BüSo saturated the event with 150 leaflets containing Helga’s latest article, and another 150 copies of the call for a Glass-Steagall reform and credit system to finance great projects. People often supported the idea of a Glass-Steagall system and only a few refused to take the leaflets.

  17. bonbon

    Germany: The Trennbankensystem Genie Is Out of the Bottle

    August 29, 2012 (EIRNS)–Under the headline “Hot Debate, the Situation in Germany,” the first German TV channel, ARD, ran an article on its website, acknowledging that the debate on banking separation is on in Germany. Obviously, they had to take up the issue unwillingly, and therefore they report mainly negative voices, such as Bundesbank Deputy President Sabine Lautenschläger, who told the {Fnancial Times Deutschland} that even after a separation, bailouts may be necessary. ARD also quotes German Banking Association head Michael Kemmer, who bluntly lies, saying that the collapse of the mortgage bubble was a problem of the commercial banking system and homeowners, and not the issue of securitized debts on the investment banking side.

    Lastly, the article quotes Gustav Horn from the Institute of Macroeconomics (IMK), who defends Deutsche Bank, saying, “All that would be left is the rump, which would probably not increase the stability of the German financial system.” The article then ends by attacking the only good thing that Finance Minister Wolfgang Schäuble has uttered in recent months, when he acknowledged he would not be against a separation.

    The genie is out of the bottle, and German citizens will remember who it was that first pushed the need for a Glass-Steagall-style Trennbankensystem: namely the BüSo and the LaRouche movement internationally.

  18. bonbon

    Everyone is waiting for the Constitutional Court ruling on the ESM in Germany.

    Credit creation must be brought back into the hands of sovereign governments, and whenever one discusses this in Germany one is labeled “right-winger”. A well known economics journalist put it so : “its something we have to live with”.

    This journalist is studying some of the debates for government credit/monetary creation under FDR in the mid-1930s, when, despite Glass-Steagall and the Reconstruction Finance Corp., the banks were still pursuing a credit crunch to the real economy.

    In fact it is well known that FDR activated the Credit Clause against fierce resistance from Wall Street who organized a coup-d’etat. The plan was whistleblown by General Smedley Butler when Wall Street tried to recruit him to lead the junta “The Business Plot”.
    http://en.wikipedia.org/wiki/Smedley_Butler

  19. bonbon

    On the physical economic front, Germany has made some hugely damaging mistakes, or more correctly disastrous moves. 1 – the nuclear power exit, a tsunami waiting to hit manufacturing and 2 – the Transrapid cancellation.

    Result is that the highest prices for power in the EU, likely the world are going to be even more damaging in 2013. And the roads are totally over stressed – that cargo should be on 500kmh Transrapid mainline trains. Deutsche Bahn made a catastrophic error putting its effort only into the ICE, which cannot run fast without totally repalacing track – all “unexpected costs” in the billions. Even now most ICE’s are running in smaller chunks, packet to the hilt and the air conditioning fails all summer.

    A witches brew of greenie regression and financial fantasies ruining the economy everywhere.

  20. dwalsh

    David wrote:

    “The question we should now be asking, one which seemed utterly implausible a few months ago, is whether Germany is heading not for a slowdown, but for a recession?”

    Well, only people who had their heads stuck in the sand would have thought that. Or put another way — only people who had their heads stuck in the mainstream media might have thought that. Which sadly is just about everybody.

    This entire debacle has played out as a sustained propaganda exercise in denial and misinformation in the mainstream media.

    David’s analysis is couched in the standard economic pundit’s terms of imports and exports etc; as if we are witnessing fluctuations in the mythical business cycle; rather than an on-going global meltdown caused by the excesses of the financial sector…

    …the Trojan horse down by the docks which we were told would enrich us all; but which has in fact destroyed our economy and our sovereignty.
    It is ghoulishly appropriate there is a statue fronting it in memory of the famine. There is a poignant picture of the both on the IFSC Wikipedia page.

    http://en.wikipedia.org/wiki/Irish_Financial_Services_Centre

    We are in uncharted territory and facing perhaps the greatest disaster in human history; including the real possibility of global conflict — even nuclear conflict. The usual business cycle indices and euphemisms no longer suffice.

    The notion David has of Germany paying the bill to bail us all out….but when the German workers decide not to pay, then the Euro will be caput….is, in my opinion, and to quote David again “at best, fanciful”.

    The ESM and the on-going changes in Europe completely alter the fiscal landscape. The basis of Europe’s response and survival is being collectivised; and whatever financial arrangements are enacted in future will be underwritten by the entire population of Europe.

    The truth is that the ultimate underwriter of all banks – including central banks – are the people. This is of course another fact that is elided in the mainstream media. Good heavens! if the people were to really understand that they are the ultimate underwriters of the financial system they might demand changes.

    Changes such as removing the system from private control. They might demand a sovereign financial system run as a utility for the benefit of the entire population; rather than for the private enrichment of a tiny elite.

    As always the subtext in David’s message seems to be his wish to see the demise of the Euro and the European project.

    • padser

      +1
      “The notion David has of Germany paying the bill to bail us all out….but when the German workers decide not to pay, then the Euro will be caput….is, in my opinion, and to quote David again “at best, fanciful”.”

      I agree, I don’t really buy the idea that Germany pulls absolutely every string (if any). Too much hype and postulation!

    • Philip

      Food & energy security should drive government action if for nothing else, plain national security. But with the supply chains and markets for both so tied to the international scene and the Governments being utterly oblivious to it all, it risks being a case of too little too late.

    • bonbon

      Face it. The Euro is doomed. It a flawed contruct, and all the kings men cannot put it together again.

      Even if the judged in Karlsruhe do not deliver, the ESM cannot work.

      Sovereignty, meaning the modern nation-state, is under attack, and the only workable way forward. Sovereign Hamiltonian Banking after we clear the garbage out of the financial system, will be in demand. So study it.

      • dwalsh

        @ bonbon

        You are correct about the nation state. It is under attack – by globalised corporate power. That’a what globalisation is to them at the highest levels; a global coup.
        Strong independent nation states which use their resources for the public good must be destroyed…etc.

        As many have pointed out; corporations are private empires; similar in many ways to the despotic empires of the ancient world. If they prevail our civilisation will enter a dark age.

        But either way the age of the nation-state as we have known it is passing. In one form or another humanity must begin to organise itself at a global level.

        It would be ideal if this task could be achieved in a rational and humane way. But such may be beyond humanity at this time.

        • bonbon

          The entity that dislikes the nation state, is most threatened now. The Nation state was discovered as the way to dump the ancient age of empires for 99% of history. IT is now finished. Empire cannot function when mastery of fire has brought their game to and end. Thermonuclear fire.

          The nation-state, cooperating with other sovereigns, commited to the betterment of the other (Treaty of Westphalia 1648) is the way forward. Nation-Stated take the generation of credit, firmly out of the hands of passee fondi (Venetian style private entities). This is Hamiltonian Credit System banking, the foundation of the US, and also of Eire.

          The humane thing to urgently do no is break up the TBTF’s with Glass-Steagall – applying the constitutional principle. It is not beyond anyone, as numerous calls from all quarters, including London and WallStreet themselves, show. All imperial tricks have failed, and nothing will save that system under any circumstances. It is utterly finished. The last empire is doomed.

          • dwalsh

            Yes I agree, the nation state must be the basis of our shared global future; and this can only come about when the corporate usupation is finally recognised and dealt with.

            In my view money or currency is properly the perogative of the people and should be administered for the common good by the public treasury. The central bank should be a national bank.

            Of course this requires that a legitimate government be in place; and so long as the private money trust funds the political system we will not have legitimate government.

            The media conglomerates also must be broken-up and control of the media distributed through the private and public sectors; so there is a diversity of information for the public; and not the blanket of dissinformation and downright lies peddled in the Western corporate media these days.

            Just my views…which seem similar to yours.

          • bonbon

            The media question is about “popular opinion”, that is the problem. Tigers held utter inanity as popular and look what it achieved. Every politician knows just how fickle that thing is. And moneybags buy popular opinion with media, slander, sports, weather etc. President Michael D. Higgins campaigned on ideas against the anti-intellectual culture prevalent, and won. So that is proof enough people are not always all the time fooled.

            A science driven economy, top down, by a nation committed to the future is the only way to show up popular opinion for what it is. We are rapidly approaching the point when no “popular opinion trick” will work anymore. Populists will be lucky if they are not stoned in public.
            As Percy Shelley wrote “…profound and impassioned conceptions respecting man and nature” will dominate. NAWAPA XXI brings that to the table. Green the deserts or be popular and die waiting for rain.

          • dwalsh

            @ bonbon

            So you are a Larouche supporter!
            Well – I am opposed to his irresponsibly dangerous geo-engineering schemes.
            The only thing more important than scientific development, is responsible use of science; and NAWAPA XXI is irresponsibility on a planetary scale….it is the antithesis of respect for either man or nature.

    • David’s analysis is couched in the standard economic pundit’s terms of imports and exports etc

      Of course it is… after all, he is an Insider himself!

      I remember back in 2009 I was briefly exchanging some emails with Dr. Doom, asking him on his opinion on large scale debt cancellation, and guess what, he too is just that, a bloody tunnel visioned economist.

      His answer? Liability are assets.

      Exactly such textbook economic views are BS and no longer apply under the changed circumstances we witnessed, but what can I say… Long live the bondholders… NOT!

      • Liabilities… created at the push of a button…. to transfer wealth from the people to the few, to dismantle democracy and serve the plutonomists… not only today, but for generations to come.

        Thing is, all such grandiose plans failed in the long run, dramatic failures, and history is full of them.

        • dwalsh

          Well let us hope this one fails too.

          What you say here applies nicely to how Mitt the Twit acquired his swagg. That such a creature is seriously proposed for the USA presidency is a clear sign of the degraded state of American consciousness.

          • bonbon

            Look at Paul Ryan, and shudder. As Maureen Dowd in the NYT said, the lovable guy who wants to hurt millions of Americans. Extreme Austrian School, as he said himself, he developed from Ayn Rand to von Hayek.

            This kind of extreme ideology is popular with the the elites, and people buy into it at the cost literally of the very livelihoods.

            The same insane degraded belief in the Euro has ruined Europe. That a mere coin has such magical powers, a cornucopia, is a belief in magic. It just shows it is tranatlantic culture.

          • dwalsh

            @ bonbon

            Yes I shuddered when Romney introduced him as a man with a big heart!

            He will push millions of Americans from poverty into destitution in service to his Wall St masters and his neoliberal creed of greed.

      • coldblow

        Who is Dr Doom? Sinn? David? Gurdgiev?

    • coldblow

      Not sure I understand this. By what mechanism might the people demand the system be run as a utility? Who exactly will interpret the popular will, or rather who will determine it? Are you in favour of the European project? What does it stand for in your view?

      • dwalsh

        Democratic government is the interpreter of the popular will. At least it ought to be.
        Today government seems to be in thrall to international finance capital; so we don’t have legitimate government at this time. This is most acutely obvious in the USA whose government has thrown its own population off the bus….and is in process of running it into the ground and destitution.

        Yes, I am in favor the European project.

        • bonbon

          The popular vote rejected the EU “Constitution” 2 times. Even the banker had to back off.

          Now no one really knows that the EU project is.

          The attempt at a Bankers Union, is the fag end of this, and won’t work anyway.

          Of course as the Aztecs feared the Sun would not rise, sacrifice began, to appease the unknowable, the terrible “forces” that would not cooperate. Greece has been offered, disemboweled, and still the Euro will not work.

          What is a banker to do , oh dear?

          • dwalsh

            Essentially all human progress has been stalled and dissipated in the past couple of decades due to the neoliberal assault on the nation state and the civil commons. Until the disease is recognised and diagnosed and excised all bets are off….no one knows what anything’s about anymore.

          • bonbon

            Well you just wrote you know what it’s about, the attack on the nation-state. That’s what it was always about, and will be about.

            This disease, classed under British Empire – liberalism, was diagnosed by Alexander Hamilton, Friedrich List, and Arthur Griffith. The medicine is to take credit creation back into the hands of sovereign nation-states, which the empire fears above all else. Immediately it becomes painfully obvious what was done to the physical economy by that band of pirates over 40 years. That must be reconstructed, after throwing the garbage overboard. That’s Political-Economics, not monetarism is all its guises, gold, silver or paper.

  21. It is traditionaly known by Germans that if one of their folks were put into a forest they would come out with a complete house . Nowadays a German would be lucky to come out with a branch.Thus this infalibility value added unit they once enjoyed is diminishing and the older age profile of the nation is a contributary factor to this in addition to the influx of other nationalities .

    The original promoters of Aldi and Lidle who are both brothers in their late nineties will upon their deaths cause changes in the projected corporate philosophies and in good time their niche in the market places will diminish and replaced by another . Maybe Carrefour !

    • LOL

      On a serious note, it truly is jaw dropping John, Merkel’s approval rates that is.

      Then again, if both old chancellors, from totally opposed positions and fractions, condemn this generation of “politicians” as mediocre civil servant souls at best, it tells a lot in deed.

      Take a piece of charcoal and shove it up a German’s rear, wait 10 seconds, and you get a diamond back, made in Germany, of course.

  22. Deflated

    Can we the people of Ireland put a stop to the bailout agreements and push an Iceland style approach.

    Is it a case of Riot Riot Riot Now Now Now?

    • Philip

      Croke Park agreement needs to crumble before that happens.

      • Deflated

        Dump it, held to ransom by our own. gets better every day. Is this not now a case of rip it up and start again. this is a national emergency.

    • bonbon

      Iceland did not do a Pussy Riot as far as I know. They want to be the first country to use Glass-Steagall to break up the banks, since FDR in 1933.

      That’s the spirit.

      Oxford University likes to push Riot in Russia instead.

  23. michaelcoughlan

    Hi Tony,

    Gold FELL $8/oz in the last day or so. David’s previous article regarding deflation seems to be playing out in the Market place as bonds are returning almost nothing in real terms. Deflation it seems is what thd markets are expecting and if that is the case cash is king!

    There is one caveat though. Thd fact that the US is so hopelessly insolvent leads me to believe that the investors in long term us tresuries invest their money because they believe the us will use it’s military to keep up the value of those bonds at all costs.

    In a nut shell despite all the bullshit to the contrary what human beings all round the world want is war because that is what is required to ensure the return of capital.

    Matrix moment or what? I hope if God exists he dosent save America I hope he saves his children, FROM TZhEMSELVES!

    • bonbon

      Human beings do not want war, but Obama and Blair intend to give it with thermonuclear 470kt basic units that in 60 minutes the planet is destroyed. Forget return to capital.

      That is the logical end-game for this insane oligarchical dinosaur. Our mastery of fire, which no animal has, has ended the game of war, best shown by Homer’s Illiad. This has been going on a long time.

      Time to drop sill old British imperial war incantations. No one would survive more of that claptrap.

    • Tony Brogan

      Yes it is down from 1900 overthe last year. This is not a problem but requires fortitude to stay invested.

      fundementals and technical analysis indicate the cartel is in retreat to a higher level. when 1710 is broken it will be new highs to 2200.

      bonds are highly inflated as the inverse of the interestrate is the value of the bond.
      Bonds are in a major bubble and the cental bank is vertually the major purchaser. Object to keep the intertest rates artificially low to spark a recovery. They will stoke another boom.
      when people lose trust in paper money it will deflate to zero and interest rates will jump in the real world. Economy will screech to a halt wheels locked.

      Fiscal deflation + monetary inflation = a hyperiflationary depression

      gold will be the standout..

  24. Deflated

    German Jokes -
    1:
    Knock Knock
    Who is ther?
    The Gestapo.

    2:
    Why is there no Aspirin in the rain forest?

    Because it wouldn’t be financially viable to try and sell pharmaceuticals in the vastly unpopulated rain forest.

  25. bonbon

    Glass-Steagall Comes to Wharton School

    August 30, 2012 (LPAC)–Long a British intelligence-run bastion of anti-human economics in the United States, Philadelphia’s Mellon-funded Wharton School acknowledged the raging brawl over the restoration of Glass-Steagall, in an August 29 posting to its “Knowledge” blog titled: “Should Big Banks Be Broken Up? Yes — or Maybe.” Referencing Sandy Weill’s July Glass-Steagall-backing CNBC interview, the blog writes:

    “According to many analysts, Weill’s comments signal a much larger shift. `There is a growing chorus of voices from the financial sector that is calling for the breakup of the big banks, so his voice does not stand alone,’ says Phil Angelides, former chairman of the Congressionally appointed Financial Crisis Inquiry Commission. `It’s no longer a small movement.’ The list includes at least three former CEOs of top banks or brokerages, Republican and Democratic Congressmen who voted to break up Glass-Steagall, several heads or governors, past and present, of regional Federal Reserve Banks, a former chair and a current board member of the FDIC, a former chief economist for the International Monetary Fund, a Republican presidential candidate and the governor of the Bank of England.

    “Angelides notes that when the Commission completed its work in January 2011, he still believed that large financial institutions could be regulated, given sound management and the right restrictions. His opinion has changed in light of further upheavals — not least the recent LIBOR scandal — that show how giant banks bend, or break, rules with impunity, even under intense regulatory scrutiny. `I have come to the conclusion that they are too big to fail, too big to manage and too risky,’ Angelides says. `They can badly distort markets and democracy.’”

    The rest of the article reports inconsequential mouthings from a couple of resident quakademics at Wharton who argue `maybe, maybe not,’ or simply `no’ to Glass-Steagall.

  26. bonbon

    Garbage Disposal To Prepare the Way for Glass Steagall

    August 30, 2012 (EIRNS)–Rowan Bosworth-Davies, former Chief Investigator for FIMBRA, the U.K. predecessor to the Financial Services Authority (FSA), has called for the U.K government to start prosecuting banksters. Bosworth-Davies stated on his Blog Aug. 29th: “…we must insist that Government implement an urgent review of the powers of the regulators to bring criminal prosecutions, and their relationship with the Serious Fraud Office (SFO) and the Crown Prosecution Service to be upgraded and given far more flexibility, in the hope that we shall see many more banksters being forced to grip the rails of the Old Bailey.”

    Davies’ call echos recent voices in the U.S., most recently last Sunday’s {New York Times} editorial calling for prosecution of Wall Street banks.

    Like a companion Sunday {New York Times} article by Roberto Saviano (“Where the Mob Keeps It’s Money”), today’s Austrian {Wirtschaftsblatt} (“Mafia Profits from The Debt Crisis in Europe”) focuses on crime and narcotics money aiding the banks. Both articles cite a Colombian study which concludes that 97.4 % of all the cocaine income generated from Colombia’s cocaine smuggling is laundered by means of numerous financial manipulations in European and North American banks.

    Saviano’s article begins: “The global financial crisis has been a blessing for organized crime. A series of recent scandals have [sic] exposed the connection between some of the biggest global banks and the seamy underworld of mobsters, smugglers, drug traffickers and arms dealers. American banks have profited from money laundering by Latin American drug cartels, while the European debt crisis has strengthened the grip of the loan sharks and speculators who control the vast underground economies in countries like Spain and Greece.” Saviano uses former U.N. Anti-Drug czar Antonio Maria Costa’s statement to underscore his point: “Interbank loans were funded by money that originated from the drugs trade and other illegal activities.”

    Rowan Bosworth-Davies and other pro-Glass Steagall, pro-prosecution experts, like former Manhattan District Attorney office prosecutor John Moscow, will be giving presentations at an upcoming Jesus College, Cambridge University “Symposium on Economic Crime”, which starts September 2nd. In 1989, Moscow came back from attending that year’s crime symposium convinced of the need to indict BCCI. His office worked with Senate subcommittee Chief Counsel Jack Blum who had turned over to the Manhattan D.A. office material on BCCI’s drug-laundering activities. Blum just recently demanded in {Politico} that the Justice Department launch criminal indictments against HSBC for money laundering, warning, that the government was going for another slap-on-the-wrist fine and Deferred Prosecution Agreement.

    Robert Masur, an anti-money laundering expert, will also be speaking at Economic Crime symposium. Masur was the famous U.S. Customs undercover operative who infiltrated the cocaine money-laundering operation between Pablo Escobar’s cartel, and BCCI. So, too, John Cassara, a former CIA undercover operative and then Customs investigator who is an expert on the money laundering techniques used around the Afghanistan heroin traffic, including the role of the Dubai hub.

    Perhaps some discrete discussions at the Cambridge symposium can help break the ongoing cover ups.

  27. From the Daily Mail.

    Dumas: ‘Without euro exit, Germany will soon be in big trouble’

    Charles Dumas of Lombard Street Research suggests Germany should not, perhaps cannot, afford the euro.

    According to Dumas:

    It is a myth that the German economy has gained from euro membership.

    Its growth has decelerated. Its growth of productivity has halved.

    Its citizens have accepted severe wage restraint without the former benefit of a rising currency, leading to negligible gains in consumer welfare. The undervaluation granted by their wage restraint has benefited producers artificially, and weakened the incentive to cut out waste — hence lower productivity growth.

    It is a myth that Germany can hold the euro together simply by subsidising Club Med, while the Mediterranean countries adjust their finances. Their savage fiscal deflation is slashing spending and income, and hence tax revenues, so that budget deficits scarcely improve.

    Only with reversal of their excessive relative cost build-up vis-à-vis Germany can growth return. But without depression in Club Med, that can only occur within the euro if Germany accepts a wage/price inflationary spiral, as well as prolonged subsidy payments.

    Recent recovery, dependent on grotesquely distorted Chinese policies, is subsiding, so overheating and inflation (which Germans anyhow hate) could require large budget deficits.

    Alongside major understatement of the unavoidable disasters of keeping the current euro membership goes the myth that leaving the euro would make Germany seriously uncompetitive and unable to grow.

    German consumers need the lower import costs that a rising currency would bring, to raise their spending power without wage inflation, and German businesses need the discipline of a higher real exchange rate to enforce productivity gains.

    Without euro-exit, Germany will soon be in big trouble. With it, growth can return.”

    Dr Merkel is glad handing in China while facing a tough election. If the alternative to supporting the rest of Europe (IMHO political suicide)is to stand alone, notwithstanding a stronger Deutchmark, whilst still being lender of last resort (at profitable rates), then there’s a way out for Germany and Dr Merkels hide.
    The rump of Europe then becomes the Japan of the 21st century.
    Just a thought.

    • bonbon

      Lombard Street Research, which I have quoted also a few times, just shows that there are sane bankers in the U.K. After all it was the FT that called for breaking the banks on July 4 2012.

      And the icon of bankers, Sandy Weill of Citigroup, amplified that call from the other side of the Atlantic days later.

      There is an open brawl, and all kinds come flying out through the saloon window. Truth even breaks out!

  28. molly

    The last government and the present government and the banks killed off Ireland .
    What would have happened in the past if Germany went into recession WAR,after the seckond world war Germany was rebuilt .
    The German people can’t prosper without exports and ireland is like German it to puts to much into exports saving Ireland.
    We are heading back wards and I believe we ant seen nothing yet so batten down the hatches we are in for a ruff ride.

  29. molly

    Doctor James Reilly was going to reform the HSE and cut out all the wast of money, we now now that this government has not got a clue , they tell the HSE we are cutting your budget and what’s the first thing the HSE is going to cut ,front line services and close beds .
    God help you if you get sick try to travel up north or over to the uk if you get sick, you will have a better chance of living, now add all this crap to the property tax and the cost of living in the banana republic and now are you happy with the present government .

    • padser

      I agree, never seen a guy bluster so much b4 the elections..Dutch model this…Dutch model that! His ideologies will surely amount to no more than his predecessors!

      I personally believe in the saying: “If there’s a will – there’s a way”

      • molly

        It shows that the present government are full of bullshit and are good at protecting themselves and there croneys,when you tell lies to get elected it will come back to haunt you .

  30. Philip

    This is how berlin, brussels, london and washington are solving the problem…

    http://www.youtube.com/watch?v=HSD1d-6P6qI

    It’s all under control folks

  31. cooldude

    Slightly off subject I know but it would appear that NATO are getting ready to launch a false flag chemical attack in Syria in order to have an excuse to send in their own troops instead of merely paying mercenaries to do their dirty work. The attack will be launched from ambulances posing as humanitarian aid and the mainstream (bought and paid for) media will pin the blame on the Assad government. Before any of you anti conspiracy nuts go mental on this lets just see if what is being warned about actually comes to pass.
    http://www.infowars.com/nato-plot-to-use-ambulances-as-cover-for-humanitarian-invasion-of-syria/

    • bonbon

      Be precise, Obama is doing this. NATO cannot function with the US. Obama did Libya, look at what he created.

      Be very clear, the attack is aimed at Russia, who knows very well. Obama and Blair are trying to start a thermonuclear war. No-one could survive that.

      So Obama must be impeached, legally!

  32. Philip

    Yanis Varoufakis, was not he the Greek economist who predicted that if Greece was badly handled, the whole lot would be destroyed and Germany would be doing a runner. I remember the Vincent Browne show…it was a cracker

  33. Philip

    Could we be seeing the ultimate fallout of having uniformity for economies of scale versus lots and lots of fragmentation whose individual units are self reliant.

    I mean, when you think of it – Germany is really a collection of communities, small businesses where the communities have strong local representation and empowerment. Contrast that with our “republic”. Indeed, I would say that if you wanted to see where there real wealth and industry is in the western world, just look at the local community democratic structure and how progressive it is.

    • bonbon

      Economicly completely wrong. A nation like Germany is not a “collection of communities”. That’s prince Charles quaint feudal fantasy.

      Bismark found a collection of communities run by barons of all kinds, and founded the country Germany, based on Friedrich List’s political economics. Come on, this the modern nation-state, despite 2 utterly destructive attempts to dismember it. Now that the country is re-united, since 1990, it sounds very silly to hear an Irishman whose country is being dissolved, harking back to pre-Bismark times. Maybe you would like Eire to dissolve into “communities” each fending for itself?

      Now for the hard facts, every single “Gemeinde”, parish or “community” as the Distributionists of British Fabian notoriety like to say, is bankrupt. The Euro is destroying Germany from the inside. Everyone notices the schools, services being quietly shut down, not repaired. Add to that the energy bill coming right now after the Godmother Angela’s insane nuclear exit.

      DMcW, even though apparently did not visit the East, partly right. The export numbers do not tell the story of the voters, the workers who actually build those goods. Their kids tell them when facilities are shut.

      So forget G.K. Chesterton’s Fabian Distributionism, Communitarianism. It is from the same forge as the weird claim that an economy is “a collection of transactions which must be in gold”. A Political Economic system, as Arthur Griffith well said, cannot flourish without attention. Left to itself it will collapse.

      • Philip

        Reading your note, it is hard to tell if your a centralist corporatist fascist or centralist communist planner. But the common theme in all your nation state descriptions is that individuals are idiots and need to be corralled as part of big plan for building star ships and undersea farms for a humanity eugenically divined by a great bunch of 1950s imagined technocrats who rule a benevolent dictatorship. It’s the closet thing to Logan’s Run I have ever heard – and we all know what happens when you run out of time there…

        To be honest, I do not know precisely where Germany’s power derives from. But I have experienced it over several years. They seem empowered at every level. They seem to do their “thing” with ease while taking all their holidays and breaks. They are consistent and pretty well unstoppable and they are definitely empowered and Merkel will do as she is told by here people. FULL STOP.

        Contrast that with Ireland. We have yet to have a nation state.

        • bonbon

          Forget that British Fabian Communitarianism, Mussolini based his original fascist state (coining the word) on “communities”. The Distributionists of G.K. Chesterton defined Mussolini’s policies – British made. And he was in their service for a decade before.

          Arthur Griffith defined National Political Economics, and referred to Alexander Hamilton who’s genius defined the Credit System, with sovereign control over credit creation, not private banking bubbles. Friedrich List was the inspiration for the United Irishman broadsheets on economics and history. Of course the schools never mention that.

          Ireland, Germany and the US are nation-states, Britain definitely not, but there is hope for the U.K. Still it is difficult when the empire has residence to keep a republic, as Benjamin Franklin said.

          Germany’s “secret” is Friedrich List. And sure it has been almost erased by the British Empire and its henchmen. Bismark, no economist, made a huge leap in his approach, only after his close collaborator showed how a national economy must work. Germany went from a backward agrarian fiefdom to a modern nation and in 10 years a major industrial economy. Edward VII planned a 7-year war as Bismark warned – it was WWI.

        • bonbon

          Godmother Angela has stopped nuclear power, an extreme attack on Germany’s core industrial base. So who told Angela to do this?

          Why did all 3 major parties sign an exit document 4 months before Fukoshima? The only honest answer is cultural degradation. Imagine the CDU who built up that base now destroying it.

          The greenie onslaught, like the march on the institutions of the Council for Cultural Freedom, is bringing the nation to its knees. Not surprisingly it turns out all the financial liberalization lobbying and legislation was by greenie politicians.

          We managed to dump the greenies with FF, but got FG. Now will FG be greenier than greenie and be windy, and wavy (ah so natural and peacefull), not nuclear?

  34. molly

    News flash the crow park agreement is dead in the water Ireland’s version of the world at war is about to kick off,let’s see what this government are made of now,my message to the government is its time long over due time to separate the men from the boys.

    • Harper66

      dont expect anything from the government with regard to the croke park agreement.It is the higher earners such senior civil servants, union leaders and politicians that are most protected the cpa – the lower paid ones are the ones being hung out to dry.

      • molly

        Yes you hit the nail on the head ,maybe I am mad but this government is about to realise what real pain is and if they think they can shield themselves and there croneys from real cuts,the cuts that have got to start at the top .
        I was in a car crash a couple of years ago and I was sent to see a doctor in the matter private his fee for 15 mins was 280 euro and he wanted 580 for his report.
        It’s people like this and James Reilly telling the low payed in the HSE to take more pain while he has his big pay packet and all the frills ,bells and whistles,what a neck I hope the lower payed hard working people force this government to start cutting at the top .
        Propper cuts not the mickey mouse cuts they tried to pawn of on the Irish workers do they think we are stupid .

        • padser

          Just on that point Molly, I had an injury several years ago to my shoulder. Being referred by my doctor – he advised me to bring €80 for the Specialist’s assessment fee. At the same time, my Doctor told me that the treatment would follow the assessment at a later date.

          I went for the assessment and paid the fee. Upon paying I asked the receptionist how much the treatment would cost and after speaking to the Specialist, she told me it would cost €210. I said I’d better give you my VHI number.

          About two weeks after the treatment, I got a copy of the invoice from the VHI….Yeah you guessed it €360.

          I phoned the VHI and told them that I was quoted €210. They told me not to worry about it and it was the norm for treatment’s to variate from the initial diagnoses. I explained to them that I had received only a Cortisone injection which ‘was’ explained to me by the Specialist.

          They (VHI) more or less told me it was no concern to me what they were willing to pay to the Specialist.

          I did not follow it up any more…but what a scam!

        • Harper66

          http://www.independent.ie/national-news/revealed-the-pay-and-perks-of-your-local-councillors-3216502.html

          THE country’s 883 city and county councillors benefited from a €28m payments’ windfall last year.

          The highest earner in Ireland, Wicklow Fine Gael councillor George Jones, last night defended the €83,000 in payments he received in 2011, saying he was not “cashing in”.

          • molly

            All these story’s witch are true just prove that no matter who’s running the show and also who’s elected or what ever councillor is elected from what ever party be they in government or on the sideline it does not matter because its all on big game.
            Things will never change in this banana republic,that’s why I like so many others see no point in giving any of the current partys any support,in fact if I can ever do there anything to be unhelpful to any of the shower of self serving tosspots I would .

          • bonbon

            Be brave and give the only party making sense, founded by an economist, Arthur Griffith in 1905.

            Step out of the Tiger shoes.

            Risk it.

            The future has no guarantee, but no future guarantees another An Gorta Mor, and I mean Mor.

  35. Tony Brogan

    I am the economy and I am sick and tired of you messing with me. Every time I try to make a move there is a banker or a politician or some too big to fail business telling me what I have to do.
    I’m getting really pissed off at all this interference, changing my interest rates, giving out subsidies, not letting a business go to the wall, practicing cronyism, changing my money supply.
    Do you know what that does to my self esteme. It gives me a headache just to think about it. I am ready to blow.
    You think you can mess with me, just you wait, I am going to get my revenge. There is going to be mayhem. Broke businesses, unemployment, busted bond bubbles. You have seen nothing yet.
    You will wish you had left me alone to do what I know best. I could give you a sound economy but you just won’t let me.So I will teach you a lesson you will never forget.

    http://www.goldmoney.com/gold-research/alasdair-macleod/the-purpose-of-market-intervention.html?utm_source=english-subscribers&utm_medium=email&utm_campaign=w35-2012-newsletter

    • bonbon

      All hail the Market Economy. Mammon, where’s the Gold?

      Shortly the poor, disabled, chronically ill, will be brought to the alter and sacrificed to appease the terrible unknowable dark forces of the free Economy!

      Baal, (Celtic Bel) “I am the Sun and ye must sacrifice babies to appease”. Or the Aztec Tenochtitlan Temple of the Moon where 25,000 teenagers were murdered to appease the unknowable Quetzalcóatl.

      This is what happens when creativity is banned from a culture, such as today, the Celts, or the Aztecs. The insane belief in unknowable spontaneous “forces” precedes a collapse to barbarism. This is the real meaning of “pagan”.

      Today’s barbarism involves Obama’s intent to use thermonuclear fire to appease (to him) unknowable forces, to prevent the only solution to this barbarism.
      —–
      I think it is much better to develop our Political Economy for our future. First we clear away the garbage of that old “free-spirited demon” the untouchable, unknowable, and after all non-existent invisible hand. And we will flourish the nation-state, build up the physical economy, and tell tales of bygone Aztecs, Obamas, Blairs, and strange Hayeks, all wraiths.

    • bonbon

      Glass-Steagall is a creative intervention, a fearless salvo against the “awfull dark forces, unknowable in their arbitrary claiming of victims, entire countries”.

      Behind this conjured theater, the oligarchy loots everyone.

      We will have more fearless creative salvo’s, that you can be sure of, with our science-driven economy.

  36. bonbon

    Tremonti Blasts Draghi for Having Abolished Banking Separation

    Aug. 31 (EIRNS)–At a public meeting in Belluno, Italy on Aug. 29, former Italian Economy Minister Giulio Tremonti blasted European Central Bank President Mario Draghi for having abolished the legislation that since 1936 had regulated Italy’s banking system under Glass Steagall-like rules.

    Tremonti’s statements echo the recent confrontation between {EIR} and Draghi on this issue at the last ECB press conference, which was reported in the {EIR Strategic Alert Service}, a publication which is circulated among business and political layers. Tremonti also called for an FDR-like solution to the financial and economic crisis.

    “Draghi is the father of the banking legislation in Italy which {de facto} re-established a dangerous entanglement between chartered banks and investment banks, a situation which had already provoked the 1929 crisis,” Tremonti said. Draghi “makes capital injections, for which banks pay 1% and loan at 6%.”

    Tremonti, who has broken with former Prime Minister Silvio Berlusconi, said he will soon make a comeback, “but I am not yet ready.” He has a government program, however: “I would do like Roosevelt in 1933: shut down banks and reopen only the healthy ones, eliminate speculation by law and relaunch a massive plan of public works.” Tremonti said common European bonds should be used for that.

    In a previous interview with {Corriere della Sera}, Tremonti blasted the Monti government, charging that the labor reform “will produce 1 million unemployed.” Again, he promised a comeback, although neither in his old PDL party, which “is more and more anthropomorphic” (i.e., modeled after Berlusconi’s personality), nor in the Lega Nord which, under the new leadership, “has positions very different from those [it] expressed in the last government.” Tremonti was referring to current Lega leader Roberto Maroni, who has adopted a “Europe of the regions” separatist pitch.

    Rumor has it that Tremonti is thinking about a new party which would draw votes from a section of the PDL and a section of the Lega led by founder Umberto Bossi, who is ready to split.

  37. John Q. Public

    Maybe Germany needs a good recession in order to see things from our point of view. Maybe then it would focus their minds on a solution we can all engage in.

    • bonbon

      Most Germans well remember 1923, and the terrible 13 years. Hyperinflation is a lesson Germany already experienced, but not Dublin. The insane rush to follow Blair’s crazy printing policy is well understood for what it is.

      Germany also remembers dictatorship and how it was sold. Dublin not. The effort now for a Bankers Union, dictatorship, is understood for what it is.

      And Germans remember the DMark !!!

  38. bonbon

    ECB Bankers’ Dictatorship To Be Formed

    Aug. 31 (EIRNS)–The European Commission will soon release its proposals which will institute a full bankers’ dictatorship over the Eurozone financial system. The front-page story of the {Financial Times} today is the European Commission’s plans for all bank supervision to be conducted by the European Central Bank (ECB), that “would strip existing national supervisors of almost all authority to shut down or restructure their countries’ failing banks, giving those powers to the ECB.” Banks would be bailed out directly by the European Stability Mechanism as the ECB sees fit. The move is obviously aimed at preventing any sort of Glass-Steagall reform from passing.

    The plan was agreed upon this week by European Commission President José Manuel Barroso and Commissoner for Internal Markets and Services Michel Barnier, the EU financial regulator. The actual details will not be released until September 12.

    The {Financial Times} plays up German opposition to the plan. The Germans want only the largest banks to be regulated by this dictatorship, rather than every bank in the EU. German Finance Minister Wolfgang Schäuble has an op-ed to this effect in the {Financial Times} itself. In a rather milquetoast commentary, he writes that not all 6,000 banks can be supervised in that way, but he nonetheless supports the principle of such a supervisor.

    If such an atrocity is passed by all the EU countries, it would complete the bankers’ dictatorship.

  39. bonbon

    Bubbles Ben: Money-Printing Is a Success, But Doesn’t Work

    Aug. 31 (LPAC)–Federal Reserve Chairman Ben Bernanke gave a much-awaited, extremely long, and paradoxical speech at the Kansas City Fed’s Jackson Hole banking conference today, in which he claimed that large-scale central bank money-printing is a justified success historically, theoretically, and in the recent financial crash–but has not worked on the economy. He also appeared to be promising more money-printing from the Fed in the near future. But because Bernanke was promising more hyperinflation while obviously acknowledging that it had failed, the response to his oracular speech by financial “experts” and markets was quite confused. It ranged from CNBC’s “Bernanke: No More Stimulus for Now,” to Reuters’ “Bernanke Says Fed Ready To Act,” with every gradation in between.

  40. bonbon

    Some Work Available on Obama’s Low-Wage Plantation

    Aug. 31 (LPAC)–The National Employment Law Project (NELP), which tracks Americans receiving and losing unemployment benefits, released a report today on the destructive spread of low-wage employment throughout the economy during Barack Obama’s Presidential term. The report is based on analysis of Bureau of Labor Statistics reports for the past six years.

    Obama constantly claims he wants to give tax relief to “the middle class,” but middle-class work has disappeared on his watch, greatly accelerating a process underway during the Bush Presidency, the report shows.

    The NELP defined low-wage work as earning $7.35-13.85/hour, or the equivalent of $12-22,000 a year. Low-wage jobs accounted for 19% of the job {losses} from 2007-2010; but 60% of the employment {gains} from mid-2010 to today. For example, just retail sales (median wage $11/hr) and food preparation ($9/hr) accounted for 700,000 new jobs, or nearly 20% of all the new employment under Obama.

    By contrast, medium-wage employment, which NELP defined as roughly $14-22/hr, or $23,000-$50,000 annually, was the inverse: It accounted for 60% of the jobs lost from 2007-10, but just 19% of the employment gain from mid-2010 to today. A large part of the middle-class employment loss has been among public employees at all levels, pushed out by the Obama Administration’s {de facto} policy of cutting government employment across the board, and avoiding any Rooseveltian infrastructure employment projects.

    Not that low-wage employment has grown rapidly either–just by 8.7% total since 2001–but medium-wage employment has dropped by 7.3%–5 million jobs–over that entire decade.

    • StephenKenny

      When looking at US & UK employment news items, it’s also worth bearing in mind the the above mentioned ‘food preparation’ has, since about 2002, counted as ‘manufacturing’ employment. So a burger bar has a number of manufacturing jobs, and a coffee bar that serves toasted paninis probably has 0.5 to 1 manufacturing job.

      • bonbon

        Right, burger flipping as production. That started already under Bush granpa. The BLS imputes job creation from some financial “investment” statistic – it is not measured.

        Even with all these cover ups, it is now not to hidden anymore.

        So FDR, the New Deal, NAWAPA XXI and onto mars, instead of flipping burgers.

        Enslavement to progress and pursuit of happiness instead og golden chains around the plantation low-wage jobbers.

  41. Harper66

    http://namawinelake.wordpress.com/2012/09/01/leaked-at-last-the-ecb-extortion-letters-to-brian-lenihan-in-octobernovember-2010/

    The three letters which have “been seen” by the Irish Times are indeed threatening but there is no mention whatsoever in today’s reporting of bondholders…

    “The three letters which have “been seen” by the Irish Times are indeed threatening but there is no mention whatsoever in today’s reporting of bondholders. It has commonly been believed that the ECB threatened to withhold liquidity funding of Irish banks if Minister Lenihan did not agree to protect bondholders — there is no allusion to this in today’s reports.

    The letters are threatening in that they tied the continuation of the ECB continuing to provide liquidity funding, to Ireland seeking a bailout programme. In other words “apply for a bailout with close scrutiny of your finances and actions, or we will withhold cash and your banking system and economy will collapse” This is outrageous.”

    • molly

      Yes I agree we have and are being sold down the river .
      The government in power at the time sold us down the river.
      The present government are doing the same thing .
      The past and the present government are protecting the elite and themselves next to follow is the blackmailing is about to start and the worst to suffer is going to be other low to middle class .
      Wake up Ireland before its to late.

  42. bonbon

    Must read : “The Dog and the Frisbee” !!!

    Speaking at The Central Bankers conference at Jackson Hole, one of the top directors of the Bank of England called for a return to the Glass Steagall principle of reforming the banking system.

    The speech was written by Andrew G Haldane, Executive Director, Financial Stability and member of the Financial Policy Committee and Vasileios Madouros, Economist, Bank of England and delivered by the former. Haldane is well known as an advocate of Glass Steagall.

    His speech, entitled “The Dog and the Frisbee”, while have the disclaimers that “the views are not necessarily those of the BOE or the FPC”, was unambiguous about the virtues of Glass Steagall. As the title implies the speech calls for keeping the regulation of banks as simple as the ability for a dog to catch a frisbee without knowing any laws of physics. The bulk of the 36 page speech, including graphs is a experimental demonstrations that complex regulatory systems like Basel, Dodd-Frank or Vickers, are doomed to failure.

    Full text here :

    http://laroucheirishbrigade.wordpress.com/2012/09/01/bank-of-england-calls-for-glass-steagall-at-jackson-hole/

  43. Harper66

    http://www.independent.ie/national-news/hse-chief-overseeing-130m-cutbacks-defends-pay-hike-3216507.html

    ” Asked if it sent out the wrong message when he is overseeing €130m in health cuts, affecting many elderly and the disabled, Mr O’Brien said the salary figure was a matter for the Government and it was less than his predecessor earned…”

  44. Tony Brogan

    http://www.thedailybell.com/4237/Anthony-Wile-Ben-Bernanke-Plots-More-Mayhem

    Another opinion that messing with the economy by the likes of meglamaniac bon bon kills any hope of a recovery or stable economy.
    some one else who knows that FDR fixed nothing. The depression ended after the WW11.

    don’t be fooled by those who promote a nation state on the one hand and then propose a grandiose scheme that overrides any authority of the nation state such as his favourite NAWAPA.

    Beware Glass Steagall as it is a sop to the masses to pretend a fix to the banking problem. It addresses a symptom and allows the perpetrators of the debacle , the central banks, to continue unhampered.

    Beware the false prophet in your midst. Evaluate, think, reason and expose the truth.

    LaRouche Brigade accolytes are zealous in their promotions of the organization. Research Larouche and see the background and history for yourself. Easy –google Lyndon Larouche and read for a half hour.I need say no more.

    • bonbon

      Mr Austrian School, NAWAPA is the action of sovereign nation States in the service the public good, in this case water and power dor agriculture, greening the deserts. The TVA and the Shannon Scheme, not to mention numerous other nation-state projects are in fact those that work. As Arthur Griffith, the founder of the modern nation-state, Eire,said, Britain itself used that method to build up its economy, while promoting free trade and liberalism for others.

      The Austrian School after all is a subsidiary of the London School of Economics, still promoting Adam Smith’s invisible hand world wide. To counter this we have the American, German and Irish system of Political Economy, first really elaborated by the genius Alexander Hamilton an the First National Bank of the USA. Later Bismark, and Arthur Griffith refined these direct opposites of the British Empire’s financial apparatus.

      That apparatus is now doomed. All kinds of efforts are popping up everywhere to rescue it. None can work.

      So let’s green Chad, the Aral region, the Great American Desert with massive intervention into the biosphere, an intervention which the biosphere will gladly assimilate. This is work for the nation-state dedicated to the general welfare, in today’s terms.

      The von Hayek’s et. al, are simply too small minded (Schumacher’s Small is Beautiful) to even conceive of planetary intervention. It is time now to think big, the future is very great. And we have a huge problem, to be dealt with huge intervention. After Glass-Steagall claears out the garbage.

      Typically of the Hayek mentality, Her Majesty said when Armstrong landed on the moon with a Giant Step for Mankind, “the universe is so big and we are so small”.
      Well the British Empire has been shrinking since. Why should we shrink with it?

      • Tony Brogan

        “And we have a huge problem, to be dealt with huge intervention.”

        Well here we go. Interventionism is your creed. My way or the hiway. Seems the poor nations state you say you approve of will do exactly what they are told to do for the common good.
        Who decides the common good?
        The mega central planner is what you propose.
        You are a one world government elitist, you want a central government that plans from the top down that will tell us what to do.. Not much different than the central bankers who already control the money system and dictate policy to government.
        What a mess that is as we see. your proposal is worse.

    • bonbon

      As I posted above, Bernanke said his QE was a success but did not work.
      Her is the strange reason it did not :

      ” Bernanke first reviewed the money-printing policy, recounting how rapidly the Fed moved the discount rate from 5.75% (August 2007) to 0-0.25% (December 2008), and reviewing all the many trillions of liquidity facilities for, and asset purchases from, the banks. In other words: It has been done. He then reviewed at length the theoretical literature on money printing, concentrating particularly on Milton Friedman and James Tobin, getting deep into “lessons of the Great Depression” and the niceties of “portfolio substitution effects”, etc. In other words: It {should} have worked.”

      You see he followed the Chicago School’s Milton Friedman’s theories about the Great Depression. It did not work!

    • bonbon

      The only megalomaniac, with his finger on the thermonuclear extinction button, is Obama. And we have General Dempsey in Dublin right now warning the world to keep out of Syria and Iran to avoid a thermonuclear conflict with Russia.
      Blair’s whispering in Obama’s ear is a deadly threat.

      Just to calm you zealous slander.

      • Tony Brogan

        Not too subtle threat. Talk about your sources as reported in wire magazines and other media and there is a suggestion of slander.
        However you can put everyone else in a box and give them a label.
        As soon as you are challenged you suggest you will resort to the law to close dicussion and disclosure of fact. bully tactics.
        Where is the slander. Please disclose..

      • dwalsh

        Larouche is gaga at this point. His estimation of Obama is nonsense. Obama is a figure head; a public relations brand; not a leader. His finger goes where it is told. Calling for his impeachment or removal is utterly vacuous.

        Removing the finger is useless if the head remains.

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