June 13, 2013

Austerity isn't working as France teeters

Posted in Banks · 116 comments ·
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Here’s something bold. Not only is the European economy not going to recover but a secondary depression is now on the cards. The putative European recovery has evaporated – as anyone with a grasp of Leaving Cert economics would have forecast a few years ago given the policy mix adopted.

Not only is austerity not working on the periphery in places like Ireland, Spain and Greece but the core of Europe is weakening rapidly and the most fragile country on the continent is now France. Economic indicators – ranging from unemployment to industrial production and corporate earnings – have deteriorated so rapidly in France in the past few months that it is almost certain that France will enter a recession in the summer months.

Meanwhile, today in Germany, something bizarre is happening.

The head of the German central bank is taking the German representative on the board of the European Central Bank to court.

The Bundesbank is claiming that the ECB’s latest move to “do whatever it takes to save the euro” is against the German constitution.

Last year, the ECB claimed that it was ready to buy the IOUs of dodgy European countries in order to prevent the euro imploding.

The Germans cried foul and claimed that this was tantamount to financing delinquents on the periphery. And now they are all in court.

And it’s not just any court, it’s the German constitutional court in the small town of Karlsruhe.

This court has seen all the greatest German constitutional battles of the past 50 years. The Federal Republic elevated the position of the constitutional court to that of the independent central bank following the Second World War.

Having been destroyed by Hitler – a man who treated the constitution as no more than a worthless piece of paper – the new Germany gave the court enormous powers.

It is here that the Germans will decide whether the ECB is being anti-constitutional.

Now why does all this matter to Ireland? The first reason is tactical. If the Germans decide that the ECB buying the bonds of member countries is unconstitutional, we will not be able to exit the troika bailout; at the very least it will be extremely difficult. “Exiting the bailout” has apparently fixated the Government. Even though all this means is having the sovereignty to borrow yet more – in a country where too much borrowing caused the problem in the first place.

In addition, the Government talks at length about regaining sovereignty – but if you look at the plan for deeper European integration, it’s based on totally giving away sovereignty. So we are regaining our independence in order to throw it away!

We could call this fanaticism “bailout exitism”; where simply exiting the bailout is the end, not the means.

Irrespective of these inconsistencies, we still have to find a medium-term strategy to allow Ireland to exit without the troika. Given the fact that we have too much debt and too little growth, Irish bond yields couldn’t remain low without the ECB’s understanding that it would buy Irish IOUs if necessary.

Why might the ECB be so necessary for Ireland? Surely, after five years in the convalescent ward years, we don’t need a monetary Sugar Daddy anymore?

Yes we do. In fact, we need one now more than ever. Last year the ECB’s tactic was to buy time when there was the very real threat of default in Spain and Italy.

By saying that it would buy bonds of countries and then announcing it would do so in enormous quantities – as long as the countries stuck to a fiscal plan – the ECB ensured money flowed into Spain and Italy, bringing down bond yields.

However, this rally in peripheral bond markets – Ireland included – was rented, not earned. The ECB rented it until the real economic recovery could earn the rally outright. But as we are seeing all over Europe, especially now in France, the real recovery never arrived. Worse still, the economy stalled and went into reverse.

But why are our government people so shocked? Europe has a liquidity trap: the banks don’t want to lend and the people don’t want to borrow, so it doesn’t matter how low interest rates are, they don’t work.

In addition, governments peddled the nonsense that countries could grind down wages in the slump and this would somehow make them competitive. But this view is fantasy, not reality. Companies don’t react to slowdowns by cutting wages. A recent study by the Central Bank of Ireland that covered a survey of “14,975 firms from 14 European countries, representing around 47.3 million employees. Just over two per cent of firms had cut wages over the last five years at the time of the survey”.

This is extraordinary. Most firms said they didn’t want to cut overall wages because it would affect morale and the good people would leave. This implies that in a downturn, firms prefer to lay off new workers than force overall wage cuts. This both increases the overall rate of unemployment and reinforces the insider/outsider dilemma in the workforce, pitting those in work against those out of work.

The upshot of this is that taxes fall and dole payments rise, pushing up budget deficits. As deficits rise, the financial markets take fright and flee the afflicted country.

This forces governments to cut spending at exactly the wrong time. Then, as growth slumps and bond buyers flee, the ECB must come in with a promise to stand behind the countries.

THIS promise is what has the Germans up in arms, but surely they can see that the budget deficits are the consequence, not the cause, of the problems. But they can’t, so they do what Germans always do when they don’t like the look of something – legislate against it, as if by outlawing something you can make it go away. But that’s what they are doing anyway, and they are taking it seriously. Yesterday, the conservative newspaper ‘Allgemeine Zeitung’ wrote in a front-page editorial: “It is one of the most important court cases in history.”

As France heads into recession, the rally will peter out and the Germans are right to be worried. So too, for that matter, should be the “bailout exitists” in the Department of Finance.

 

I’m chairing a debate – ‘What is the point of the Leaving Cert’ – on Saturday, June 15 at the Dalkey Book Festival. Tickets available here.

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  1. Adam Byrne

    Back in the saddle and boy it feels good.

  2. Lius

    First up is best dressed Adam

  3. quote DMcW:

    A recent study by the Central Bank of Ireland that covered a survey of “14,975 firms from 14 European countries, representing around 47.3 million employees. Just over two per cent of firms had cut wages over the last five years at the time of the survey”.

    Quote WSI (german economy think tank) http://www.boeckler.de/2877_43254.htm

    Germany has the seventh largest low wages market in Europe. In EU 2010 17% are working on low wages. This number will be higher by now due to enforced austerity policies. IN Germany 2010 a total of 22,2% were working on low wages.

    Low wages means, they earned less than 2/3 of the average per hour wage.

    • Bamboo

      A recent study by the Central Bank of Ireland that covered a survey of “14,975 firms from 14 European countries, bla bla bla . ….

      Since when does Central Bank of Ireland do studies?

      This sounds exactly like a face cream ad. 92.3% of the 165 women surveyed feel their face look younger.

  4. 5Fingers

    We have 3 factors at work

    1) Governments listen to markets rather than people. The markets must not be panicked, the markets must be obeyed … and we ask why people are getting disengaged? – by the way, that is the plan. Disengaged people are easier to manage. Totalitarian governments (such as ones who are elected by the people and then u-turn on their manifestos and do what they will for 5 years)are being tolerated because people seem to think life is good and will stay that way as long as they comply. Ya see David, the thing about the leaving cert is not about exams or talent, but about locking whole families down so they comply with the promise of future middle class happiness.

    2) Above works ok as long as you keep people occupied and generally happy. With 30-60% youth unemployment due mainly to little need for lo skilled workers and massive outsourcing etc etc. Social timebomb. The conflict between haves and have nots will become sticky. Watch the need to safety, compliance and having big brother keep a watch on us for our security. This is no longer histrionic nonsense. As consumers we see how feeding a social network such as this keeps us tracked.

    3) Borrowing has stopped because no one is doing it. Actually, not totally true. Borrowing to pay interest is an irreversible and mandatory interlock on government. When all you are doing is paying off interest, you are not destroying printed money at all and indeed making more of it if all the interest is not netted off. That causes taxes to ramp, spending to be cut. But neither does anything to allow the material economy to build. Debt is not being washed out at all. Austerity will remain no matter what.

    We have lost democracy and people are idiots (in the Greek meaning of the word). There’s your problem.

    • bonbon

      With Snowden’s NSA whistleblowing and Guardian exposure by Greenwald, the name for what has happened to democracy is Obama, as long-time columnist Nat Hentoff, in a column published in WND.com.

      Senator Rand Paul wonders if Snowden will be assassinated by a Drone.

      We face overt dictatorship if Obama is not impeached, Watergated.

  5. Original-Ed

    This is an insightful piece –
    The government is hell bent on exiting asap so that they’ll be able to buy the next election – what’s new about that?
    The germans know fullwell that grinding down wages in the peripherals will cause problems but they see the excesses racked up in these countries as being off the wall and have no confidence that they’ll ever change character.
    It’s not looking good.

    • bonbon

      Germany has ground down wages at home savagely, so why not everywhere the logic goes. Never heard of Hartz 4? Of course RTE might not report this, but what’s new about that?

    • Adelaide

      “The government is hell bent on exiting asap so that they’ll be able to buy the next election.”

      I’d be surprised if the electorate are aware of the bail-out exit or could give a damn either way, it’s pies and numbers in the sky to most people, I don’t reckon that issue will be on their minds the next time they vote.

      • Adam Byrne

        Exactly, most of the ‘citizens’ are thick as pig shit and get what they deserve.

        • Adelaide

          Well, they didn’t seem too perturbed when it was first introduced, as I remember the poor attendance at the gov buildings rally the night the ‘Soldiers of Treachery’ passed the bill. (ps no joking, there were more people queuing that evening at HMV round the corner on Grafton for the latest iPhone or iWhatever release, that says a lot really.)

          The Insider vs Outsider analogy could be applied to people’s general awareness of the issues impacting their lives. Two groups, The very knowledgeable keep themselves informed and involved crowd VS The pig shit crowd.

          Whereas before the ‘crisis’ five years ago I held a view that generally the People were the victims, but now with the dispiriting years experience of trying to engage fellow citizens, I now hold the view that the People get exactly what they deserve, good or bad.

          I ask myself these days, against my own better nature, are the oft-quote 99%, are they victim, or are they simply idiots? The last few years experience has diminished my faith in The People. Perhaps I should change sides and join the 1% and use my energies to feather my own bed for a change, after all, life is short.

      • bonbon

        Are you aware that Noonan has pushed BAIL-IN since before Enda did it to Cyprus. Just wait until Noonan grabs personal deposit accounts. Most people do nothing until “MY MONEY”, my wallet, is grabbed. And by the way Japan has just passed a bail-in law.

        Things have moved faster than most can follow it seems.

  6. bonbon

    Ghost of Nazi Carl Schmitt Exposed in Karlsruhe Hearing

    June 12, 2013 (EIRNS)–The government’s obsessive pro-euro argumentation at the German Constitutional Court hearing, particularly the claim that the crisis justified measures without any legal basis at all, was harshly attacked by critics as reviving the thinking of the infamous Nazi Crown Jurist Carl Schmitt:

    Andreas Fisahn (legal representative of the Linke party, one of the plaintiffs) said that this leads straight back to Carl Schmitt and his emergency ideology at the sacrifice of democracy; Markus Kerber (of the Europolis group, a plaintiff with 15 other professors) said that this argumentation has a striking resemblance to the utterances of Carl Schmitt, especially the latter’s Heidelberg essay on the “constitutional emergency,” which purportedly justifies the creation of a new institution that would override all other institutions, for the duration of the emergency, thus preparing the ground for the pro-Nazi regime- change in Germany 80 years ago.

    Whether the court will take this criticism seriously and rule against the government, is doubtful against the background of past rulings, since the judges, although they should be informed about Schmitt’s role, argue from viewpoints within the pro-euro system and will not challenge it on fundamentals. A ruling is not expected, anyway, before the national elections at the end of September, and may not even come before the end of the year, sources from both camps at the hearing told {EIR}.

  7. Reality Check

    Great Article David, you’ve succinctly pointed out the mines in the waters ahead.
    I’ll add one more; Derivatives crash ahead?

  8. Jimmy Gavin

    I was just listening to the Plank Kenny show, where they were discussing the preparations that are taking place in Eniskillen for the G8 summit next Monday 17th June. It turns out that they have used false shop fronts to cover up existing shop fronts in the town….

    The reason it seems is to reflect a town that is thriving and industrious as opposed to the derelict, semi-derelict and recently closed shops that predominate the local landscape…
    This all reminds me of an article that David wrote some years back where he outlined the story of the “Potemkin villages” and for those not familiar, briefly, “According to the story, Russian minister Grigory Potemkin who led the Crimean military campaign erected fake settlements along the banks of the Dnieper River in order to fool Empress Catherine II during her visit to Crimea in 1787………

    I suppose the key point here is that all of this is part of the” extend and pretend” policies that are being pursued across Europe and elsewhere in order to avoid the blindingly obvious need to acknowledge losses and mistakes of previous economic policy….

    In the grieving process, acceptance is needed in order for healing to take place….

  9. bonbon

    Eyewitness in Karslruhe: The Aliens of the ECB and the EU

    Just have a look at the incredible ECB arguments here, reported by an eyewitness on the spot. Sophistry!

  10. clonined

    Stephanie Flanders over on the BBC is arguing the exact opposite with regards to wages and the UK recessions: http://www.bbc.co.uk/news/business-22874889

  11. SLICKMICK

    Recently, I e mailed Joan burton and Dick Bruton asking them what proportion of jobs advertised through FAS paid the average wage, circa 36k per annum. Their reply stated that “FAS don’t collate that type of information” . When translated, they mean ” zero ” . LOL. A mickey mouse agency.

    • Bamboo

      There is not enough data collected in Ireland to make any sense and/or make any models. The bit of pieces of mickey mouse data is too scatty with too many empty records. When they say “FAS don’t collate that type of information”, they mean “we can’t be bothered”.

      • Adam Byrne

        Yep, they can’t be arsed. Bone idle lazy. There’s nothing in it for them. They’re looking for the next get-rich-quick-scheme to line the pockets of of top level management. This country is a shambles.

    • 5Fingers

      FAS are a waste of space. The sad fact is that low skill is attracting lower and lower wages. FAS do little beyond low skill.

      High skills attract higher wages. A person driving a forklift will gravitate to that of the lowest in the world. Ditto for a good high skilled systems analyst. Funny thing is, price of a good Chinese Analyst is same as same in London of same efficacy.

      When we all cry about falling real wages, it really is falling lo skill wages. Germany, UK and indeed most industrialised nations have the same issue. Higher skilled are getting a lot more in real terms – but they are a lot fewer.

      BBC’s S. Flanders gives a more interesting twist. Lower wages lower need to borrow for higher capitalisation meaning the high debt is driving lower productivity irrespective of how low wages become. It really shows how excessive debt is hampering real growth.

  12. Bamboo

    David, do you not think mentioning Hitler is a bit over the top when you talk Germany?

    • bonbon

      In fact DMcW’s reference, while brief, is mostly correct. Carl Schmitt, Hitler’s crown jurist, wrote the Enabling Laws that nullified the Weimar Constitution, and brought dictatorship.

      Now this week Carl Schmitt was openly referenced at the Karlsruhe Constitional Court see above.

      That is not considered “over the top” anymore in Germany, so why anywhere else? Barely a couple of years ago this was utterly unheard of in Germany – things have dramatically changed.

  13. Pat Flannery

    I agree with Allgemeine Zeitung that this is one of the most important court cases not only in German but European history. And I hope the German court finds that Mario Draghi’s rash promise to “do whatever it takes to save the euro” is found to be against the German constitution. It certainly is against the economic well-being of Europe.

    Do you really believe that opening the ECB floodgates to bail out the bond markets is the answer? This would not be just financing delinquents on the periphery, it would be bailing out the predatory moneylenders who lent these corrupt governments (including Ireland) all this money in the first place.

    This is not about France or Germany, it is much deeper than that. The German people seem to be the only ones who get it – that the present crisis is caused by shylock moneylenders called bondholders.

    Sooner or later the people of the world, like the German people, have to face up to the global moneylending dictator called the bond market. Ironically it may turn out that the German people played Churchill while the “big bazooka” proponents (like yourself?) played the Chamberlain appeasers.

    One thing upon which we do agree however is that this war has barely begun.

    • 5Fingers

      Germany are up against popularist anti-austerity band. It seems their people are not afraid of the markets and are prepared to NOT fund them either. Their leadership in that regard is to be applauded. We need their values to be held solid to instill the correct behaviors elsewhere – like…representing the people, running a clean shop, eliminating the wasters.

    • bonbon

      When we burn the bondholders, which will happen sooner than later, the screeches from the particular banks that sit on these “bonds” will surprise you. Guess where they are? And guess why Schäuble is so stunningly using daft arguments at Karlsruhe?

      No one wants war, except Obama and his Queen. We need now to split the banks with Glass-Steagall, then the necessary bondholder singing will be relatively harmless, to good banking that is.

      And then get on with economic reconstruction instead of the incredibly stupid idea that any onlookers at a thermonuclear exchange will live to comment.

  14. nickcol

    If you like following David, Peter Schiff, Max Keiser, Gerald Celente and lots of other top commentators the Android app that I have developed will help you do that. You can find it here: http://bit.ly/XoccqO. Hope you like it!

    • Joe R

      A doomsayer economist app! that is just what is need ed after 5 years of this crisis!

      Perhaps you should consider developing a positive energy and news app…..you know like, to balance out all the negative vibes.

      Particularly, that inaccurate clown called Keiser…

    • Bamboo

      Great app nickcol. Hope it will be a great success.

  15. 5Fingers

    To whom is all this money owed and for what exactly? Let’s see…

    Goods Delivered? No
    Services Rendered? No
    Interest Payments… YES.

    This is not interest to pay for admin and for the use of deposits. This is just a case of interest being the only thing that is owed. Even the fractional reserve practice of “creating money” through borrowing and destruction of same via payback, neglects the scenario of how interest is paid back and also how it becomes the largest part of any outstanding debt. I think the time has come for someone to say to someone else to take a hike for services non-rendered.

    • Pat Flannery

      Those who rant about “austerity” are either cold propagandists for the bondholders or do not understand what is happening.

      They say that “austerity” isn’t working. No shit? Of course it isn’t working! No more than selling the clothes off your back to pay for more drugs doesn’t work too well.

      The “austerity” propagandists urge more debt. Does drinking more alcohol cure alcoholism? Does taking more cocaine cure the addiction? Should a government that became addicted to debt borrow more and sell its county’s assets until it is down to the clothes on its people’s backs? That’s what the “austerity” “propagandists are urging.

      Just as drug-pushers are in the drug addiction business, debt-pushing bond salesmen are in the debt addiction business. Neither cares who their victims rob so long as they pay the pusher.

      Governments became addicted to debt and are now paying the debt-pushers with the clothes off their people’s backs. We the people are like the dependent children of drug addicts.

      THAT is what the debt-pushers call “austerity”. They say that more debt will cure everything. Right!

      • bonbon

        There is more to it. Do not just look at austerity, look at energy, food as well. All together it is witches brew to cull humanity. And the witch says it openly. That explains why most wonder if people are completely stupid with austerity.

        Biofuels + austerity + windy energy + r&d shutdown + nasa dismantling…, a converging series on only one intention : 1 billion survivors.

        • Pat Flannery

          Is that what I sound like on here? Just another bonbon? Is that the level of debate here? Maybe it’s time I moved on before I start to sound like another wingnut. My mother used to say “show me your friends and I’ll tell you what you are”. You are destroying a good site bonbon.

          • bonbon

            You started posting about “addiction”, “pushers”, “addicts” – as if that is what is all about. Come on, you protest too much.

            Austerity is destroying the physical means of food production, biofuels is stealing agriculture at the same time, and countries are saddled with illegitimate debt.

            Now DMcW does point out the damage austerity is doing.

            So protest about the destruction of the transatlantic economies, not mere etiquette, please.

          • Bon bon, you are like an ostridge. You spend a lot of time flapping wings but not getting off the ground and then you go stick your head in the sand.

      • EMMETTOR

        Well, Austerity is working, insofar as it’s a Political program and will therefore cause chaos in the Economy. If it was an Economic plan, it would be risible. Austerity is the New Normal.

  16. Mr Happy Dole Dude

    Nice to see the expression ‘IOU’ when come to bank alchemy, is this a first for David McWilliams?

    We always need to be reminded of past and the vacuums which led to the rise of the like Hitler particularly now in the present climate people of the west appear to believe that oppression only happens in the lands of far far away.

    The idiotic acceptances of the likes of Obama/bush patriotic act, Obama’s National Defence Authorization Act of 2013, Prism and Irelands bank bailout … we are not living in a democracy here in Ireland we are Taksim square.

    “Hitler – a man who treated the constitution as no more than a worthless piece of paper” If you left a blank space where the name Hitler appears in McWilliams line above how many so called democratic western politicians could replace the name Hitler. The complicity of the “idiot” in societies continues to enfranchise the modern dictator a shrug is not an involvement in democracy. Meanwhile Ireland is been bought by on the cheap by the “insider” outsiders.

    As for companies not cutting wages, wage stagnation is effectively a cut-the loose statistics above in McWilliams article above are misleading in the extreme. Employment is raising in the UK as a result wage stagnation – a form of wage collective communism is at play.
    They have taken away the shovel and replaced it with a spoon – productivity remains the same even with new entrants into the UK workforce.

    Maybe the UK wages will be low enough to compete with China in the future this may be a good – the west is continually findinding it more difficult to exploit the poor- we may soon be on par with the China class.

    • bonbon

      Good points!

      The point about Hitler is, have a look at how many chief justices, ministers and professors of law, all across the transatlantic and EU, who praise Carl Schmitt! (see above).

      Disgusting.

      Enabling Laws such as the ESM, and the ECB acting even without them is the reason Karlsruhe is up in arms. Will the judges there act in time, this time? Doubtful.

  17. Joe R

    Did we not see a this type of carry on before with a german euro bailout case, with lots of scaremongering media speculation and a pro EU result?

    http://m.guardian.co.uk/business/2012/sep/12/eurozone-crisis-german-court-bailout-fund

    • bonbon

      That Karlsruhe court has a history of “yes, but” rulings. Now they have to say no. But will they?
      A ruling is not expected until well after the elections anyway.

      • Joe R

        What area is the suit being brought under? If it is a constitutional complaint about a rights violation the odds of success are 40/1 according to the source, linked and quoted below.

        From Wikipedia;

        “Constitutional complaint: By means of the Verfassungsbeschwerde (“constitutional complaint”) any person may allege that his or her constitutional rights have been violated. Although only a small fraction of these are actually successful (ranging around 2.5% since 1951), several have resulted in major legislation being invalidated, especially in the field of taxation. The large majority of the court’s procedures fall into this category; 135,968 such complaints were filed from 1957 to 2002.´´

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

      • bonbon

        The odds of success of the euro surviving are meager.

        These court hearings are brought by highly trained Prof’s of law, with careful tactical and legal arguments. As the EU treaties got signed into the Basic Law, if it can be proven this encroaches on Article 20, the historical precedent comes immediately to the fore. Looking at the argument’s posted above here from an eyewitness account you can get an idea of what is going on – an drawn-out brawl. This has not stopped, rather reached a new level, where taboo’s are broken. Mentioning Carl Schmitt is a major breakthrough.

        • Joe R

          Ah LaRouche – extract follows interesting piece from the NY Times on LaRouche, linked below;

          Twenty years ago, in a review of Dennis King’s book “Lyndon LaRouche and the New American Fascism,” George Johnson, an editor at The New York Times, wrote, “Newspapers and television news programs generally consider Mr. LaRouche too loony to write about. There has long been a feeling among newspaper editors that the best way to fight political extremists is to ignore them. Mr. King shows how this hands-off policy has been partly responsible for the growing influence of Mr. LaRouche’s cult.”

          http://thelede.blogs.nytimes.com/2009/08/25/visitors-from-planet-larouche/

  18. There are two basic alternatives for the major economies to be able to see a form of recovery. both result in contraction and debt purging.

    Either 1. practice austerity which I understand to mean to live within ones means, personally and nationally, or 2. keep borrowing and expand the money supply and hope to inflate the debts away. (done successfully in prior times.)

    The first results in hardship and deprivation. It is unwelcome by the populace and not preferred by the politicians. The second requires people and business to borrow funds and spend them to buy products that others make. (Davids your spending is my income). This is preferred by the politicians and is more palatable to the populace.

    The problem is that buying goods with credit may employ people in another part of the world and not employ your neighbor. The US has done this for 50 years. The second problem is that very few have the capacity to borrow more and the banks are unwilling to lend.

    The net result will be a desire to implement expansion through borrowing but a stagnant economy such as Japan.

    Overall no matter what the economy will grind to a halt and or a monetary collapse, or both before the debts are expunged.

    The third plan may be a revaluation of the price of gold in all currencies to a level that will balance the books and so effectively wipe out the debt.

    I will not be surprised to have such an event occur within 5 years or less where the US dollar value of gold will be reset at $20,000 an ounce or more with other currency values set according to the market demand.

    There will not be a confiscation of gold before this event as there is so little in the hands of the people as to not matter. This is unlike the 1933 gold revaluation by FDR when people still used gold as money.
    It was revalued from 20.65 to 35 an ounce then.

    This action is likely to be precipitated by China when their gold reserves reach the range of 20,000 tonnes, enough to back their world reserve currency.

    In short, austerity comes regardless of what transpires next, relentlessly, and carries a big stick.

    For other perspectives than the above one may visit TED
    https://www.google.ca/#output=search&sclient=psy-ab&q=TED&oq=TED&gs_l=hp.12..0l4.2740.3873.0.10129.3.3.0.0.0.0.282.684.0j1j2.3.0…0.0.0..1c.1.17.psy-ab.sjNdN9WKdb0&pbx=1&bav=on.2,or.r_cp.r_qf.&bvm=bv.47883778,d.ZGU&fp=4db5efce7ae5ce7b&biw=1366&bih=667

    • bonbon

      Missing the point again. Austerity is a failure. Money printing is a failure. And Gold never worked in a moden agro-industrial world.

      So splitting off the banking with its synthetic debts, never ever allowing access to commercial collatoral, Glass-Steagall, will allow massive reconstruction, something always avoided by monetarists, now urgently needed.

      That’s the alternative, Hamiltonian Credit Systems in a nutshell.

      Think big, not merely “my shekels”, and realize that’s what we are, not some money, metal slaves. There is a huge amount of development to be done, high-tech, not milking goats.

      • I understand what you miss bon bon.

        there was no suggestion austerity will Work in the context of saving the current system. but then there is little that can be done to avoid austerity as the alternative of continuing to live beyond ones needs will and is and does lead to bankruptcy.

        The time to practice austerity is in a time of affluence and save for the coming rainy day!

        You can diss gold as money all you wish but you miss the major point that 3/4 of the world call it money even if you do not.

        The greatest time of agro/industrial output was under a gold as money regime from 1870-1910. and the history confirms this.

        going off the gold standard allows profligacy and money expansion to conduct war and other outrage, including the onset of inflation that leads to an inevitable bust in the economy.

        gold enforces a standard of behavior that precludes having a violent boom and the use of debt and thus prevents the bust and the attendant austerity.

        If you do not want or like austerity then use the discipline of the gold standard to eliminate the boom and bust economic cycle. Unfortunately it requires people of a solid moral background to handle and administer. People of greed and avarice are always tempted to remove the gold standard for which they express a multitude of excuses.

        • Adam Byrne

          Neither austerity, NOR gold standard, NOR Glass Steagall is going to make a blind bit of difference. It’s all cheap make up on a doylt of ugly pigs. Ya’ll pissing in the wind.

          In the meantime Pauldiv, ZOOK is the most romantic music in the world – it beats listening to Billy McNeil any day of the week, and what’s more I shagged that bird back in Guadeloupe in 2001 and yes Colin, she IS mixed blood so it’s proves I’m not a racist, although her old man is a Muslim so I told him he shouldn’t have been let into the Windwards 500 years ago, he can go back where he came from, him and his sexy daughters.

          My little 5 year old Caribbean Princess is arriving Sunday morning to Dublin Airport – haven’t seen her for 9 months – so to say ‘I can’t want’ is an understatement…

        • bonbon

          No suggestion that austerity will work and a deafening silence on what this means. Nothing whatsoever to offer a collapsed economy, no mission. Just a nudge-nudge wink-wink, the Hayek “well will start small”. Have you any idea what Hayek was actually saying? Do you realize what that “nudge” means? Are you so bedazzled by metal?

          • There is a mean glint in your eye, bon bon. It must be the mote aggravating your vision that causes your angst.

          • bonbon

            What do you think Hayek meant by that “small” hint? Today it is much more openly paraded – population reduction. Hayek dreamt of a “crash before I die”, yearned it seems. Today it is the agenda. Ask Bill Gates at TED if you get a chance….

    • bonbon

      The jobs erased in the last few years are not caused by “droids”, unless you mean the Robot’s of the Troika, Obama, and Brussels.

      They do actually look remarkably human, display godlike aura’s and do actually destroy jobs at quite an amazing rate. In fact 26 million here in the U.S.E just dropped tools in awe of this Cybernetics! Yer man Mcafee is attempting godhood, awesome!

  19. http://www.ted.com/talks/george_papandreou_imagine_a_european_democracy_without_borders.html

    Bring democracy to the people and devolve the power from Brussels!!
    BUT make a European citizenship.

  20. Mr Happy Dole Dude

    “Hitler – a man who treated the constitution as no more than a worthless piece of paper”

    Obama – a man who treats the constitution as no more than a worthless piece of paper

  21. molly

    Can france help change things that might help us.

    • bonbon

      Hollande has reneged. Promises all dumped. And making noise about Syria, which you can be sure will lead to WWIII.

  22. bonbon

    Professor Hankel: don’t run into gold, invest in the real economy!

    Prof. Hankel is one of the plaintiffs of a series of German legal challenges to the Euro. This statement is a major breakthrough!

    • The good professor confuses the private citizen trying to protect their savings from the policies of a predatory and incompetent state.

      He admits the euro will self destruct, and unsaid is the fact that all other major currencies will too. That statement has been put here to the blog for months so where is the breakthrough.

      The real economy is in a shambles because of the aforesaid so the conclusion is to put ones savings in as safe a place as possible to ride out the engulfing storm.

      Without sound money there will not be a sound economy. When fraud and chicanery are rewarded and encouraged one is bound to get more of the same.

      • bonbon

        I take Hankel literally. The euro is finished. The DM will be brought back. After all the DM had its birth in the greatest reconstruction ever, the German recovery after the physical destruction of WWII. That makes it the most successful currency ever. And there are still some who know about this. The gaggle of austrian shooler’s in Berlin may need reminding sometimes.

        Herrhausen who ran Deutsche bank had a major landbridge plan ready to rebuild the Comecon after the fall of the Wall. He never got to present that plan in NY – someone put a landmine in his driveway. Deutsche Bank since became possible the worlds biggest derivative casino. 2 raids of over 500 police each over last Christmas to gather evidence of the kind of fraud you only barely hint at is a lesson to bear in mind with these Karlsruhe hearings.

        Do not put the DM in the same trough as the Euro, you would throw out the baby with the bathwater! That would be a childish tantrum, rather like the puerile Morganthau plan which would have blocked all industrial development, for milking goats.

  23. Mr Happy Dole Dude

    The tool of death does not make a moral distinction -”a red line” – the west – UK France USA – is not altruistic – Hunger kills as effectively as guns,, bombs or saran gas Why “a red line” on the method or choice of the killing apparatus – Drones phosphorous, tear gas, joblessness suicide, starvation caused by greed …why no “red line” is the death by gas -“red line” – some form of morality that justifies more deaths.

    Why is it only a few that feel morally compelled to intervene in others civil wars why is it always the same UK France USA who have higher morality when killing.

    CS gas – tear gas made in the UK is outlawed in wars under the Geneva Convention but it’s ok to use it on civilians in the UK-on the people of a democracy.

    Expelling an Al-Qaida member from the UK only to arm them in Syria this is clearly a sign of insanity but the truth will not be found in logic

  24. bonbon

    Tom Hoenig Tells Germans: Separate Banks!

    June 13, 2013 (EIRNS)–In an interview with Germany’s Handelsblatt business daily, given to its New York correspondent, the FDIC’s Tom Hoenig charges the banks with using funds for purchasing shares rather than for loans to the real economy. Therefore, banking operations should be separated, he says: “Classic banking and money trade should no longer be allowed to exist one next to the other, in a bank.”

    Hoenig categorically discards the argument of separation opponents that investment banking is “systemic” and therefore has to be protected, saying that “only traditional banks are irreplaceable,” and that the state should stop granting tacit guarantees to investment banks. “They should leave the investment banks to [the good will of] the financial markets,” he says.

    Hoenig adds that the next big financial crisis is preprogrammed, and that one should be prepared for it. Banks that fail, even bigger ones, should not be rescued, if they are not banks of relevance for the real economy, he says.

    • EMMETTOR

      “Banks” should not be “Financial Institutions” and vice versa. The latter are gambling casinos and the connections between the two types of operations has exposed the real economy to their fantasy losses, like a wormhole between two alternative universes. I wouldn’t even allow Banks to sell insurance.

  25. bonbon

    Bond Bubble Threatening the Financial System, Says Haldane

    June 13, 2013 (LPAC) — Bank of England Financial Stability Director Andrew Haldane warned in Commons testimony June 13 that the bursting of “the biggest bond bubble in history” is the key danger to financial stability. Haldane said that “I feel acutely right now” the risk created by central banks’ money-printing and-pumping over the past five years.

    “Let’s be clear,” said Haldane. “We’ve intentionally blown the biggest government bond bubble in history. We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted.”

    • Correctly suggested that the bond bubble is inflated deliberately. Now no acknowledgement that the only way out is a bust as long forecast as inevitable by the “maligned” Austrian school. Being vigilant to the consequences of the bubble deflating faster than intended is code for we can do nothing while we watch with great attention but we do not want a collapse just yet but will allow it a little later with more devastation.

      When the chaos takes place the solution offered will be more centralization and less sovereignty resulting in further loss of freedom to all.

      Hopefully China and Russia will thwart the plan for world dominion.

  26. Doo doo doo; doo doo dah; Dum!

    That is the opening Bar to Smokey’s Second Dat Emotion (1967)
    If you google it remember to swap the ‘D’ for ‘th’.

    Not everyone understands Dublin grunts and semantic sounds.
    It’s clear they can’t talk properly down there and need tuition

    The Irish Bros are so depressed they don’t even know it’s Friday and the forget they gave the world The Committments and Joey ‘the lips’ Fagan

    Friday night is beer night and Saturday is a day what for whatever tickles your mick

    They forget what it’s like to get suited on a Friday, polish the shoes and give the hair a tug before heading out to have a laugh and maybe a flirt. Now they are all talking about gold and ‘investments’

    A boring bunch really. Could you imagine being landed with such a bore at a ‘gathering’. Not that I know of many gatherings.

    So what do we see today? Cardboard cut out Garda stations painted to look alive and Coronation Street facades in Ennis-killing. And Plasticine porters with harsh shallow eyes echoing ‘the news’ after the Angelus. The national teleprompter turns the nation stupid while the peasants devour cabbage and HP sauce while looking forward to the evening’s opium regarding abortion and seanad abolition. I’d rather fucking shoot myself than swallow such dope

    What a bunch

    Good on you for giving Oor Adolf both barrels sir. He was many tings but top of the list is the fact that he was a loathesome little can’t and some of us is still living with da consequences. You get me bro?

    Whither or not the new Germany is a paragon of virtue or breathing embers from it’s monstrous past is nither here nor there. I could not give a height and hope they flip on their arses and take a sound bang to the head. They surely will

    I would never, ever humiliate myself by asking a German for help. They are cold iron robots and not exactly at the races when it comes to the personal touch. You get my drift?

    In short they are not normal and they know it. They are certainly inferior to the Scottish I am not sure why people adore them so much

    They brew world class beer and some of their women know how to reach a mans heart more than an Irish bird even could but that is about all I have to say about them. I don’t like or dislike them and I find them very hard to warm to. The Irish are more my sort as long as they are bright and not your typically tick corrupt gormless morally challenged Paddy

    It’s hard to think of Gemans while trying to blot out images of firebombed tenements and orphans. Then again it’s very easy to put them in their place when needs must. I can smell shame at a 1000 paces and I can tell that a lot of Irish are ashamed at their country’s performance in WW2

    Still waters run deep and we tried the forgiveness crap but the fact is all that is political claptrap. People don’t want sympathy. They want truth and honesty

    Now we will see lots of little Irelanders crawling from under stones showing their true colours. Like lice who stand for nothing and who will fall for anything

    I was delighted to see AA back in the #1 position. Oh what a lonely boy

  27. Mr Happy Dole Dude

    “Detroit defaults on some of its debts” Common Ireland

  28. Mr Happy Dole Dude

    “Detroit in decline

    Population has shrunk from a peak of 2 million in the 1950s to 713,000 today

    Highest violent crime rate of any major US city, with 15,245 reported incidents in 2011

    Some 78,000 abandoned and blighted buildings

    40% of street lights do not work

    Only a third of the city’s ambulances are in service

    Just 53% of owners paid their 2011 property taxes”

  29. bonbon

    ECB Warns Italy, Government Obeys

    June 14, 2013 (EIRNS)–The European Central Bank (ECB) warned the Italian government, in its June 13 monthly bulletin, that the 3% deficit-to-GDP ratio threshold should not be crossed.

    “The deficit reduction path spelled out in the 2013 stability program update must be strictly adhered to so as to minimize the risk of again breaching the 3% of GDP reference value in the near future,” says the bulletin. “This will be a key policy challenge for the new government that was sworn in on 28 April 2013.”

    The warning was immediately received by banker Fabrizio Saccomanni, Italy’s new Finance minister. Saccomanni said that lack of money and the 3% constraint put a question mark on the planned cancellation of the value-added tax (VAT) increase. The increase was planned by Prime Minister Mario (Goldman) Monti as part of his austerity plan. The government is not even sure whether the other relief promised — the cancellation of the property tax on housing — can be implemented. Both measures cost EU8 billion.
    (Don’t tell Italian voters that the German government has just announced a new EU8 billion indebtedness to finance reconstruction in the wake of the flooding.)

  30. bonbon

    It’s Not Market Rumors, It’s A Meltdown
    Don’t even THINK, sorry, think, of even a slight slowing of the money press, $85 per month, in case, shh, of triggering a total blowout.

    There is an update on the Triple Curve showing the dilemma the British Empire finds itself in, no amount of money printing can save those financial aggregates. Desperation is very likely to trigger disaster starting with Syria, and Hague’s trip to D.C., made in London.

    • Simply explained as in previous postings as debt suffocation. No graphs need for that.
      The economy is over loaded with debt which must be expunged one way or another.
      Paid off. written off
      OR
      Gold revalued to its correct price in devalued currencies so that the books are balanced

      AND the one thing no-one will touch, removing the debt based money system and closing the BIS and its affiliated central banking system.

      Reversion to national currencies is a start and then setting the currency as an option and reversing the legal tender laws is next. Let people choose which money they prefer to use. They will pick the best available. no longer then economic serfs and a debt based slave to the current monetary system.

      • bonbon

        Split the banks, we need functioning banking for the massive reconstruction, as NAWAPA 21 for example, shows. Actually the banks will thank us for clearing the air.

      • bonbon

        That is why it is critical to understand what the Triple Curve shows – that physical economic destruction no monetarist dares to talk about. In fact the stubborn refusal to even dress that Triple Curve defines a monetarist. QED.

        • You are the biggest monetarist on the planet bon bon.

          You wish to impose a statist solution using vast sums of credit money conjured out of thin air.
          A form of collectivism too. You will probably cosy up to the mega corporations of international size (who else can achieve your grandiose plans) which is a form of fascism is it not. Government indistinguishable from corporate entity and the combined policies. Jobs for the boys

          Confused policies from a confused mind infused with LaRouche indoctrination.

  31. bonbon

    Besides the Karlsruhe Court hearing, have a look at this :

    Prominent German Oskar Lafontaine Calls for Return To National Currencies, New, Non-Speculative, Monetary System

    June 15 (EIRNS)–In an interview with the Saarbruecker Zeitung daily, former Linke party chairman Oskar Lafontaine said he does not see a conflict between his party’s program and his call for a return to national currencies. “We need a better monetary system, in which there is room for national currencies to exist, for example in Cyprus and Greece.” The Linke program does state that the euro monetary system is a misconstruct from its start, Lafontaine said, adding that a only return to national currencies such as the D-Mark was not sufficient, however:

    “We need a new monetary system. The creation of money by the speculation shops is ruining the world economy and must be put to an end.”

    Apart from resembling aspects of the ongoing BueSo campaign for the return of the D-Mark, Lafontaine’s remarks also reflect discussions about a life after and without the euro, among leftist currents in Greece, Cyprus, Portugal, Spain, Italy–and recently, also in Germany.

    His Die Linke party is a a major part of the Party of the European Left, whose Political Economy Task Force, meeting in early April in Greece, adopted a program that included as point 3 :

    “Bank separation according to activity (commercial or investment) as was done in the United States with the Glass-Steagall law from 1933 to 1999, along with abolishing tax havens.”

  32. dwalsh

    For anyone who still believes there is a civil war going on in Syria see this video of Former French Foreign Minister Roland-Dumas saying he was told by British officials in London 2 years before the crisis that Britain was preparing gunmen to invade syria.

    https://socioecohistory.wordpress.com/2013/06/16/former-french-foreign-minister-roland-dumas-said-that-britain-had-been-preparing-gunmen-to-invade-syria-two-years-before-the-crisis-there-flared-up-in-2011/

    The crisis in Syria is a Western-backed invasion by Sunni jihadi terrorists.

  33. http://www.goldmoney.com/gold-research/alasdair-macleod/gold-is-being-supplied-by-western-governments.html?gmrefcode=gata

    Physical demand far outstrips world supply. Banking financial system saved temporarily once more. Financial crisis draws closer.

  34. http://www.goldmoney.com/gold-research/alasdair-macleod/gold-is-being-supplied-by-western-governments.html?gmrefcode=gata

    Physical demand far outstrips world supply. Banking financial system saved temporarily once more. Financial crisis draws closer and closer.

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