By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth
I was going to start out saying yesterday was the saddest day in Europe in 50 years, or something like that, because of the insane and completely nonsensical largesse the ECB permits itself to launch, aimed at once again saving a banking system, but which will not only not help the European people, it will make things even much worse than they already are. Which is also, lest we overlook that ‘detail’, entirely thanks to the ECB/EU/IMF Troika.
I’ve said many times that the EU in its present form should be dismantled tomorrow morning (even though it’s not the same tomorrow morning anymore), and if Draghi’s $1.1 million x million ‘stimulus’ should make anything clear, it’s that the dismantling gets more urgent by the day.
But calling it the saddest day in Europe in 50 years would show far too little respect for the people who died in former Yugoslavia, and in eastern Ukraine. It’s still a very sad day, though. And I was already thinking about that even before I read Theopi Skarlatos’ article for the BBC; that really made me want to cry.
When you read about female doctors(!) feeling forced to prostitute themselves to feed their children, about the number of miscarriages doubling, and about the overall sense of helplessness and destitution among the Greek population, especially the young, who see no way of even starting to build a family, then I can only say: Brussels is a bunch of criminals. And Draghi’s QE announcement is a criminal act. It’s a good thing the bond-buying doesn’t start until March, and that it’s on a monthly base: that means it can still be stopped.
I’ll get back to Skarlatos’ story in a minute. First the insanity of the ECB QE itself. The problem with Europe’s economy, what drives it into high unemployment and deflation, is that people are not spending. If QE would really be aimed at reviving the economy, or at battling deflation, it would need to assume that people will start borrowing on a massive scale just because Draghi buys bonds – and soon perhaps even stocks – from bankers. There simply is no logic in that. The stated goals, pro-growth and anti-deflation, are not true. It’s a sleight of hand.
In order to achieve the stated goals, money would have to reach the real economy. As it stands, the best Draghi can do is to ‘hope’ it will. That’s not enough by a mile. This is not about doubts over its effectiveness, that’s baloney, we know it’s not effective when it comes to the stated goals. It will still leave Europe with no growth, and deeper deflation, and now €1.1 trillion deeper in debt. While banks can grow their reserves.
And it’s not as if Draghi doesn’t understand. Draghi is Goldman. And neither is it as if this is the only option. Steve Keen’s modern version of a debt jubilee, in which money is given directly to the people, under the condition that they first use it to pay off debt if they have any, would be much more effective. But it would be far less profitable for the banks, and that’s why it’s not considered. China yesterday announced a third option: they will effectively raise salaries of government workers by 60%.
Not that I’m terrible in favor of that kind of plan; I think any stimulus plan in our time should focus on reorganizing economies in such a way that jobs are created. That must mean moving away from centralization, and the return of production of essentials to communities and societies themselves, instead of emphasizing the ‘benefit’ of hauling goods halfway across the world, or an entire continent. It’s incredibly stupid that for instance most of our furniture and clothing is made in China.
We can produce those things at home, and give people jobs doing it. And China can focus on its domestic market too. And we can swap gadgets and other sheer luxuries, but not food or tables or shirts. Because we need to make those ourselves to keep our people employed.
Back to QE, or Draghi’s big swindle. I think Simon Jenkins at the Guardian had as good a go at it this morning as anyone:
QE For The Eurozone Is A Gigantic Confidence Trick. It Should Fool No One
The former BBC economic pundit Stephanie Flanders told the world it was “Santa Claus time”; the ECB has ridden to the rescue. No it has not.
Europe’s great and good, partying on the slopes of Davos, are blinded by snow and celebrities. Santa Claus gives presents to people; the ECB gives presents to its banks. It is merely tipping large sums of money into the vaults of precisely the institutions whose crazy lending caused the crash of 2008, and which have been failing Europe’s economy ever since. There is absolutely no requirement on these banks to release this money into private or commercial bank accounts.
Given the fear of over-lending that regulators have struck into bank bosses since the collapse of Lehman Brothers, the money will simply build up reserves. That is exactly what has happened to quantitative easing in Britain since 2010: there has been no surge in bank lending, except into property investment. Quantitative easing is a gigantic confidence trick.
It was promised that it would yield new investment. It has not. It was promised that it would “pump money into the economy”. It has not. It was also feared that printing money would lead to hyper-inflation. It has not, for the simple reason that no one gets to spend the money. It is a bookkeeping transaction between a central bank and a commercial bank. It means nothing as long as banks are told to build up their reserves. Money in circulation matters. The whole of Europe, including Britain, is chronically short of demand, which is why deflation is such a menace.
If no one can afford to buy anything, no one will sell anything or invest money in making anything. The chronic imbalance between northern and southern states of the eurozone, previously ameliorated by selective devaluation, has bound poor and rich countries alike in a rictus of cash starvation. Collapsing demand drives down prices and profits; there is nothing for banks to invest in. The Chinese are laughing. Greece and some other Mediterranean economies are facing poverty not seen in half a century.
A return to normal growth means they must declare themselves bankrupt, restructure past debts, leave the eurozone and devalue. Don’t bury money in their banks. Bury it in their wallet. The eurozone may still look great from the top of a Swiss mountain; it looks terrible from the foot of the Acropolis.
I also liked ADMISI’s Marc Ostwald’s take right after Draghi did the announcement, courtesy of Tyler Durden:
Risk sharing is very limited, with national central banks taking 80% of the risk on sovereign bond purchases, and rather un-reassuring was Draghi’s comment that “most national central banks have adequate buffers to absorb a negative event” – most being how many.
Not good news for Greece, while it and Cyprus will be eligible for purchases of govt under a ‘waiver’ for (bail-out) ‘programme countries’, the ECB already has a very high volume of Greek bonds on it balance sheet from the SMP programme, and given a limit on total holdings for each sovereign issuer, it will not be eligible for purchases until it redeems debt in July and August.
It should be added that Italy and Spain and other bail-out countries will implicitly also have a lower available volume of total purchases, until SMP holdings are redeemed.
Draghi is going the save German banks, not weaker eurozone nations. Their banks maybe.
BUT perhaps the key aspect relates to the limits on the 25% limit on purchases of a single issue, which ensures that the ECB adheres to the ECJ’s ruling about the ECB ensuring that is does not interfere with “price formation”. So here’s the key aspect, there are some $12.0 trillion of FX reserves in the world, of which roughly a quarter are held in Euros.
Operating on the traditional metric that roughly half of those will be invested in Govt Bills and Bonds, this means that FX reserve managers will have to be involved in the process of establishing prices for whatever is purchased under the Govt bond QE programme. Eminently anything that is sold by central banks will not find its way into the private financial sector, therefore that €60 billion figure may often overstate what is being injected into the market.
Last but not least, the expanded programme does not start until March 15, so “Mr Market” now has a very long waiting period to sit on holdings of EUR debt before selling to the ECB, and with plenty of event risk in the world, starting with the Greek election, and an imminent Ukrainian default. Sort this under an uncomfortably long period before the QE ‘party’ gets started.
And in case you’re still wondering whether QE works and/or how effective it is, this graph also comes from Durden:
And that doesn’t even yet include stock markets and bank reserves at the Fed. What is obvious is that the Fed’s QE3 has been a mind-boggling failure for the American people, and a smashing success for the Davos crowd.
What’s wrong in Europe is not just Draghi, it’s the entire EU. If you join into a union with other nations, you can’t let some of them sink into despair, and worse, while others sit pretty. And I know the answer from Brussels will be that what is needed is a stronger and closer union, fiscal, political, but I think that if you already let your fellow union members plunge this deep into misery in the early stages of a union, a country like Greece would be out of its mind if not outright suicidal to sign on to a closer union. Northern Europe survives by sucking the lifeblood out of the South. It’s a really simple story that nobody will tell you.
Let’s return to Theopi Skarlatos for the BBC. This is heart rendering. How can the people of Germany, Holland, France, ever have let it get this far? What could possibly be their excuse? That their media never informed them? You have the most pervasive media in history, and you didn’t know? What are you going to do? Blame the lazy Greeks? Who need to ‘reform’ their societies?
Greece was not nearly this poor before it joined the EU. And we’ve seen above that Draghi’s QE won’t do anything to relieve their misery, nothing at all. If you’re going to spend 1.1 million times a million euros, shouldn’t that go towards doing something for Greece, instead of a group of banks and their shareholders?
Love In A Time Of Crisis In Greece
As Greeks prepare to vote in Sunday’s general election, anti-austerity party Syriza is ahead in the polls and campaigning under the slogan, “Hope is on its way”. The average wage has fallen to €600 (£450: $690) a month; half of all young people are unemployed and the economy is barely emerging from six years of recession. But Greeks remain determined to maintain their hold on normality. “We don’t have much else,” they say, “we may as well enjoy our freddo cappuccinos.”
But despite the drinking, flirting and dating, since the onset of financial disaster, a fundamental change has taken place in Greek society. Deejay Tommy paints a sad picture of young Greeks waking up every day without a job. “Things have lost a little bit of their romanticism,” he says. “The crisis has forced love to become a secondary priority. There are other things to worry about. I see many women looking for someone who will have money to take them out, who’ll take them on holidays. I see this quite a lot and it saddens me.”
Down the road along the shoreline, the Bouzoukia clubs ring with live renditions of popular Greek love songs. Crowds sipping on vodka throw the singers red carnations and sing along to lyrics of heartbreak and pain. “We save up to come once every few months and we look forward to it,” says Katerina Fotopoulou, 30, at a table with her friends. “We don’t have the money to do much any more. We’re always talking about future plans, going on holiday, but no-one ever does anything.” Living at home, Katerina describes herself as an adult forced to live as a teenager, her life put on hold.
Compared with other Europeans, Greeks are still fairly traditional. For many young women, it is awkward bringing a boyfriend through the front door to meet the parents. And that poses a problem, considering the high numbers unable to afford a place of their own. “Relationships are complicated these days,” says Katerina. “No-one is even thinking about getting married or having children.”
Indeed, Greece’s population is shrinking at an increasing pace according to data released by the Hellenic Statistical Authority (Elstat). Since Greece first signed its EU-IMF bailout agreement the number of births has declined rapidly. In 2010 there were 114,766 live births, and by 2013 that number had declined by almost 20,000 (94,134). Obstetrician Leonidas Papadopoulos says miscarriages at the Leto maternity hospital have doubled over the past year. “Maybe it’s down to stress,” he says. “There is no proof, but you can see it in the eyes of the people, there is stress and fear for the future.”
He describes how a woman he had been treating with IVF came to him one day crying because she was pregnant. She had lost her job and demanded an abortion. But he felt he could not perform the procedure. “Soon,” says Dr Papadopoulos, “the population will be halved and there won’t be any young people to work and pay for the pensions of the elderly. All the social problems will rise up in front of us.”
Some who have children and are struggling to support them have turned to sex work, to put food on the table. Further north, in Larissa, Soula Alevridou, who owns a legal brothel, says the number of married women coming to her looking for work has doubled in the last five years. “They plead and plead but as a legal brothel we cannot employ married women,” she says. “It’s illegal. So eventually they end up as prostitutes on the streets.”
A doctor, Georgia, explains how she also works as an escort in the sex industry to support her family. Her private clinic currently treats three patients a week, but the peak summer season in the sex industry enables her to keep up with the rental payments on her family’s home and the healthcare bills for her elderly parents. “I live a double life and only I can know about it,” she says. “I have applied for jobs in medicine abroad and wait every day in hope of a reply.”
For journalist Elini Lazarou, having a baby was not something she was prepared to put on hold while waiting for a change in the political or economic climate. “Love in the time of crisis can function as a painkiller, with which someone can forget the problems they’re facing, or as a source from which someone can draw strength, energy and optimism,” she says.
On a wall in downtown Athens, a simple message is daubed that reads “Love or nothing”. It strikes a defiant tone amid the blighted lives hidden behind pure economics.
And against that backdrop Brussels and Frankfurt ‘heroically’ decide to prop up the banks with another €1.1 trillion. They should be dragged before judges, but what they do is presently legal (guess who makes the laws). So it’s up to the people of not just Greece in this weekend’s election, but to everyone who lives in the European Union. It’s up to the Dutch and the Germans and the Finns to end this monstrosity.
The troika is creating third world nations within the EU, and you guys are just sitting there watching them do it, and hoping that more money for your banks will mean your own petty little lives will be secure and safe, while Greek doctors are forced to prostitute themselves.
Please Syriza, please Tsipras, win the elections and fight this bunch of criminals. And please all of Europe, get up from your couches and refuse for this to be committed in your name. If not, you’re accomplices, whether anyone calls you on it or not. Shame on you, you’re a disgrace to mankind.
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Being from the Netherlands, I can’t vouch for the pervasive media thingy AT ALL. The fact we have a neolib government, is largely to blame on the degree to which our mainstream journalists emphasised a euro-exit doomscenario if the socialists would be voted in during the last elections. There’s not one newspaper here that’s sufficiently able (or willing) to expose free-market rhetoric for the vessel of exploitation it is.
That’s why alternative media and social media are so important.
By the way, my best friend was born in Rotterdam and still reads the Dutch papers everyday, but not for serious news. He thinks the Dutch papers have become nothing but tabloids.
“We didn’t know” isn’t a valid defense in the modern age. We have at our fingertips the most powerful information tool in the history of mankind. It would take only the absolute minimum amount of effort possible to type “current Greek unemployment rate” or “social impacts of austerity in Greece” into a search engine. But people refuse to do even that. Instead they spend hours on Facebook, or playing League of Legends, or watching cute animal videos on YouTube.
I know it puts me in the same category of Calvinist moralizing that has lead to austerity in the first place, but when I think about the extreme, willful ignorance of the general public in the West I can’t help but feel we as a whole deserve whatever hardships are coming to us. When I read about substantial numbers of Americans still thinking torture works, or being completely ignorant of the number of civilians we’ve murdered with drones, I can’t help but feel that in some sense we are all collectively damned. There are a lot more of us than there are of the elites. All of this nonsense would stop tomorrow if a plurality of us demanded it stop.
“There are a lot more of us than there are of the elites. All of this nonsense would stop tomorrow if a plurality of us demanded it stop.”
There are limits on how much a system that proudly trumpets and markets itself as a democracy–and yes, this applies even to corrupt ones–can openly, sneeringly game the system for a minuscule minority and at the same time be popularly seen as legitimate and I see the system in the US and a lot of other places seemingly approaching those limits.
Only if a large enough number of people realize how much they’re being screwed. And clearly active censorship isn’t really needed, people themselves simply choose not to seek out information.
Wow that is straight talking. An excellent article. Very clear and easy to follow. Well done.
My “emotions” exactly as I read it. Part of what makes it so good, made it resonate with me – besides the accurate headline – is Ilargi leads with the incredible immorality of QE.
People starving…and the response is to give $trillions$ to banks and the rich? This is what humans have become in the Western world?
It’s sounds so incredible nobody would believe it, yet there it is.
And adding insult to injury, the starving are used as an excuse to give money to the banks.
More to the point: when covering the eurocrisis and the situation of Greece, it’s not uncommon for dutch media to endlessly repeat there’s a lot of money going to ‘the Greeks’. In visual media this is often accompanied by imgagery portraiing Greek civil life. This seems meant to imply every Greek is cashing large checks from the european government, while -of course- in reality this money is given to banks mostly as an insurance for the accumulated wealth of few. Meanwhile the average Greek pays with his or her civil rights, a social devolution which seems inevitable to benefit only the same few.
So I might grant you pervasive as meaning omnipresent in society. In the domain of social economical analyses however, our media seem rather focused on sticking to the marketing sceme.
Sorry for filling up your comment section, but you caught me off guard here.
When austerity measures are in fact discussed by our media as impacting
Greek civilians -I admit his happens sometimes-, these measures are usually presented as a cost they have to pay for years of working very little and living very large. So even when discussing impact upon civil right, it’s quite common for this segment of our public intellectual elite to resort to victim-blaming. This is of course not limited to the Greek situation, but applies to austerity measures whenever discussed by these venues of discourse.
It’s well known that the Mediterranean countries put in their hours:
http://www.theguardian.com/news/datablog/2011/dec/08/europe-working-hours
It very often seems to me that the UK lives in a kind of fantasy world of royals and Blairs, but I thought that the Dutch were supposed to be more hard-headed about things.
It will still leave Europe with no growth, and deeper deflation, and now €1.1 trillion deeper in debt. While banks can grow their reserves.
QE will not leave Europe in greater debt, it will transfer government-issued securities from bank balance sheets to central bank balance sheets. No debt is created in this process. If banks get more reserves in the process, so what? They get to let it sit in a reserve account; lucky them.
It does serve to drain interest-bearing assets from the economy, so that is a reduction in income. But agreed re Ilargi not understanding central bank and private bank operations. Should have issued a caveat at the top of the post.
Yeah, it will be deflationary. The question is how deflationary?
This week the euro fell to $1.12, down over 18% from its dollar value of a year ago. Devaluation corresponds to an easing of monetary conditions, which acts to push inflation up rather than down.
“This week the euro fell to $1.12, down over 18% from its dollar value of a year ago. Devaluation corresponds to an easing of monetary conditions, which acts to push inflation up rather than down.”
Yes but…doesn’t QE in general create “inflation” only for the rich by inflating asset prices, while inflation for the rest of us does not happen and can even decline? Isn’t that how it has worked out in general here in USA?
Sure, QE creates asset inflation. And I’m no advocate of QE. But it doesn’t create deflation.
To the extent that QE contributed to the euro’s decline, it should boost euro zone consumer inflation over what it would have been otherwise … if that’s what they want.
QE, despite what you’re reading in Mankiw’s textbook, is likely to be deflationary. Deal with it. We don’t need you coming in here to regurgitate what every talking head on CNBC is saying.
why would QE be deflationary?
Here in the US post QE3, there is no “deflation”, caused by QE.
Energy is down due to wholly unrelated circumstance,and other than the energy sector, Nothing is cheaper than it used to be.
Labor, has seen no inflationary pressure on wages, but that too has nothing to do with QE anything.
So I ask, In America, where has QE caused deflation? Just curious.
QE will create deflation in the Eurozone as household saving are much greater there the the US, suppressing interest rates in Europe will decrease household incomes. Not really helpful in creating inflation.
Didn’t work in rhe U.S. and didn’t work in Japan. Relative devaluation does not = a sustained rise in the general price level.
Credit Suisse:
Likewise, the euro zone’s mirror-image 18% depreciation implies the opposite — it’s equivalent to about 50 basis points worth of easing.
Classic example of a near-miraculous depreciation cure was when Frank Roosevelt devalued the USD 41% against gold in 1933-34, stopping a raging 10% deflation in its tracks like a silver cross warding off a vampire.
Say … you ain’t one of them Alf Landon Republicans, are you?
You have an exceedingly black-and-white view of the world, Jim. It’s hyper-simplistic and ignores the myriad variables involved. Your quote from Suisse assumes a monetary system we don’t have. You talk about basis points which has nothing to do with the topic. Inflation resulting from abandoning the gold standard does not mean buying bonds will have the same effect, nor do you acknowledge the U.S. did not avoid deflation, with prices falling in 1936 and 1939.
Devaluation is a one-off deal. If it succeeds then prices adjust upward and then continuing deflationary forces take over again. That isn’t inflation, which is a continuing rise in the general price level. If you hadn’t noticed Japan devalued, experienced an upward adjustment in the price level and now inflation is rapidly falling off.
Your beef is really with Credit Suisse. They calculate their Monetary Conditions Index for all the major countries — presumably to make money, not just to score rhetorical points.
In the US, the period of severe deflation (around minus 10%) began in 1931 and continued through April 1933 (-9.13%). During the subsequent 12 months when Roosevelt was devaluing the dollar by 41%, inflation rose to +5.56% in April 1934. Coincidence? I reckon not. But you hard-money Republicans never give up, do you?
You guys are having a cryptic conversation I don’t understand. Ben, I know you’re an MMT-er, and I respect that, but I really don’t understand your statement that QE is deflationary. If it inflates asset prices, why would that not translate into a rise in the general price level – why would it in fact cause a drop in the general price level? Would it always do this, or is this a special circumstance? Truly trying to understand.
I thought Ilargi was referring to the second-order impact of the process where purchasing such bonds would encourage/enable governments to issue yet more, at unrealistic rates. Without such subversion of the discipline of the market enabled by QE, the amount of debt in the system would necessarily decrease. Not that this monetary system or the rational of its workings should exist in the first place–like cancer, the only reason to study and think about such a system is to learn how to more effectively vanquish it.
Europe has been racking up debt for four years without QE. Greece already defaulted once and then went right back to borrowing.
Yves,
I don’t get yours and Ben Johannson’s point, debt held within banks is private debt, even if the debt held happens to be government issued debt by way of bonds or treasuries – the banks are still on the hook for it. By transferring said debt back to the Central Bank, ultimately this leave the taxpayer on the hook for the debt, the rest is but smoke and mirrors as they say.
Here’s my take on what has gone on, and is going on, and why it’s straight-up EVIL:
Under these circumstances, I am pretty surprised that there hasn’t yet been some kind of mass uprising to overthrow the gov’t. The shell game is so obvious, and so sickening….
Indeed. It’s because even the harshest critics of this system persist in characterizing its heinous crimes as honest mistakes. Even six years after the GFC, with exactly the same felons in charge, the same charlatan economists at the pulpit, the same puppets in the MSM, and the same warmonger-in-chief at the helm, it’s always a given — these are all well-meaning people who are simpy mistaken, year after year, crisis after crisis, war after war. And, after six years, any day now, our hapless, impotent, cowardly president might still fulfill one of his campaign promises in his last two years, assuming of course that those evil Republicans let him. It could happen; let’s not lose hope or get angry about it.
There have been many huge protests in recent years. Not just the well-known ones in Greece, Italy, and Spain, but in Northern Europe as well. So far, In Europe and on this side of the Atlantic the supply of bread and circuses has been sufficient to delay a true tsunami of public indignation mighty enough to sweep away the kleptocratic regime.
This current regime knows that it has completely failed to provide competent leadership that serves the public good. They will continue to heavily propagandize us, and feed us more soma. Yet the armored cars in the streets, the lockdown after the Boston Marathon incident, the violent suppression of Occupy are all suggestive of a decision already made to take the iron fist out of the velvet glove.
Every Pharoah, Czar, Emperor, King, Commander-in-Chief, is invincible, exercising total unshakeable power over his subjects– until he isn’t. We are morally obliged to resist violent tyranny with non-violent truth , while at the same time pleading with those who rule to peacefully surrender their power.
Yet what was true a half-century ago is still true today:
— John F. Kennedy
Stephanie Flanders is my undisputed choice to be crowned “worst bank shill anywhere”. Whatever she writes, the truth is the opposite. Which of course explains why she is the go-to choice of the British MSM for conventional economic “wisdom”. I think she sells her copy by the yard.
Come on Clive Ms. Flanders left the BBC some time ago (end of 2013 by Wiki) to take JP Morgan’s poisoned shilling so of course she’s going to shill for the banksters and their CB money spigots.
I wouldn’t bring this up except that a phrase such as “former BBC pundit/correspondent/editor” still adds a patina of credibility so its worth pointing out that the revolving door is an international curse not just a Versailles-on-Potomac one.
Finally they are described properly … as criminals as are the criminals that run our monetary system here in the US specifically the FED. I have watched all these years as the press, including the libertarians and radical left, have bemoaned the “mistakes” of the FED including QE. The problem is that QE, other gambits and their public relations were all known to have the effects they had, namely to benefit the banksters and corporations.
Are Libertarians and the radical left finally waking up to the fact that the public and they themselves have been duped into thinking that these banksters were actually running the system for their own pillage and looting? Will those who have been flacking the FED is naive, the FED just doesn’t understand, if only the FED knew narrative finally WTFU.
You say: “The problem is that QE, …benefit[s] the banksters and corporations.”
Of course. It was intended thus. Bernanke himself pointed out that fiscal action was required for anything beyond that – and that such action must come from Congress.
Your beef is with Congress and its spending priorities, not with the Fed.
The same is true in the Eurozone. QE will do what QE does… but the problem lies elsewhere. The problem is using the Central bank’s action as a beard to hide the lack of fiscal action.
Not that I’m terrible in favor of that kind of plan; I think any stimulus plan in our time should focus on reorganizing economies in such a way that jobs are created. That must mean moving away from centralization, and the return of production of essentials to communities and societies themselves, instead of emphasizing the ‘benefit’ of hauling goods halfway across the world, or an entire continent. It’s incredibly stupid that for instance most of our furniture and clothing is made in China.
———
True. But the problem that most developed countries refuse to see is at a higher level: the claim on future energy and resource distribution.
Developed countries have high debt-to-GDP ratios and have built themselves a system that needs huge amounts of energy to keep on going… never mind growing! Emerging markets have low debt-to-GDP ratios and are now imitating developed countries. Developed countries have exported many jobs to take advantage of the arbitrage and emerging markets have been working hard feeding their consumption. While most of the US debt used to be owned internally now it is owned by foreigners… many who worked to get that claim on American assets. The US, 5% of the world population consumes more than 20% of world energy. Probably more than 30% when you include all the oil burned to make products in emerging markets only to get shipped to the US.
Right now, everything is calling for a world rebalancing of resources and energy… with a lot of this consumption shifting to emerging markets, leaving developed markets in the dust… and crumbling infrastructure.
The elite are trying to keep this claim on future assets by using all kinds of financial engineering tricks but it is not looking so good. It’s getting harder and harder to justify what makes us so special here in the developed world considering most of our biggest talents revolve around printing dollars and consuming. Only once this global distribution of resources and energy is determined will we be able to start sharing internally. Right now everyone in the developed world thinks that their entitlement amount is bigger than what it will be when the global redistribution is reset.
We are both the audience and the cast in the denouement of Phil Graham, Bill Clinton and The Committee to Save the Worlds (“The inside story of how the three marketeers have prevented a global economic meltdown – so far.”) genius cock-up. Naomi Klein is on to something but it’s not climate change that “Changes Everything” but Disaster Capitalism. The Smartest Guys in the Room took the 3 Marketeers prescription and were turned into the greedy addicts they always were. Biggest side effect is Fuldism (of the Richard Lehman Bros. strain) – “if left alone I would still be smart and rich”. QE to infinity and other of the high flying private jetting elitist policies are meant to put off the inevitable – a deflated world wide Greater Depression. The questions of consumption, over-population, peak resource supply will be answered. What screw ups who lead us.
Phil Graham … any relation to Bill Graham?
Live at the Fillmore East …
In any court of law actions imply intent; often prove it. So after 7 years of proclaiming panic over an unforeseen global crash and massive deflation (requiring all sorts of magic tricks), it is finally obvious that it must be the intent of central bankers and neoliberals to create a train wreck followed by a long slow decline, to create deflation while pretending to stimulate inflation. So is it global warming? Is it an unsustainable human population? If it weren’t for the “system” (capitalist free marketing) other methods could have been used, including honesty. But it has been the goal of this crisis to keep the system on life support. The last thing people in power want is to confess the system is the problem. The world can most certainly live without trickle down extortion. If all the titans of industry were shut down and countries mobilized to produce their own basic necessities CO2 would reduced to a minimum. No cars. No airlines. No steel mills. No overproduction of garbage just to make a profit to keep the system going. Capitalism requires 2% inflation just to stay alive. Either that or mainline money to the banks and corporations. Cool. Let’s all go out and buy a new car.
We the people and our government must borrow to live because the lenders have too much money, own the government and won’t submit to the taxation or wage increases that would solve the debt problem.
I sense that a consistent theme at NC is that if they’d only do things differently the problem would be solved. Perhaps that is correct, though they’ll never do what NC advises therefore such a theory will never be put to the test.
The problem I have is that common sense tells me it is too late to fix anything. That a change in our standard of living is inevitable and either we face it now or continually put it off – making the crisis even worse when it finally hits. I apologize that I have no grand economic wisdom to base this on. All my life I’ve seen my society run by criminals and we’ve gone out of our way to find the worst elements of society and elevated them to power. How can that have a happy ending for anyone other than the parasites at the top? Meanwhile, I’ve lived in a system where one of the richest countries in human history is in debt, endless debt, because that debt allows a portion of citizen’s wealth to be directly transferred to the financial sector. Quite acceptable when citizens have lots of material stuff to play with and don’t really miss the funds(just gets packaged as more debt anyway, what’s the harm in that?). But what happens when the material stuff runs out? Even worse, what happens when this endless debt grows to involve every household?
Can such a crisis that we’ve been gradually creating our entire life time be solved with a simple policy change? Like the travelling Medicine Man with his bottled miracle cure potion, it sounds too good to be true. Common sense won’t allow me to trust this idea that less austerity will magically put everything back to normal again. Given what “normal” has led us to, why would we even want normal again?
What is really unfair is how the US consumes more than 20% of energy with 5% of world population.
Phase 1 is to determine the redistribution of energy and resource on a global scale. Once this is determined, then we can try do internally divide our share fairly…. that’s phase 2.
Right now we are going through a global tug-of-war for energy and resources but the developed world does not seem to notice. It thinks it can keep on printing money and keep on consuming its absurd share of energy to maintain unsustainable infra forever.
“What is really unfair is how the US consumes more than 20% of energy with 5% of world population.”
I’ve seen you post that at least five times now. You want to talk about per capita energy use? According to World Bank data, Canada uses slightly more per capita than the U.S. So, please, enough with the hypocrisy. If the quote is correct then Canada consumes more than 2% of energy with 0.5% of world population. The only difference is roughly 10 times more people in the U.S. — it’s the same profligate energy use in U.S. and Canada. So, Canada’s behavior is just as “unfair.”
Not attacking you, just your hypocrisy as a Canadian. If you were, say, Nicaraguan or Honduran, then OK, but Canadians don’t have a right to complain about U.S. energy gluttony as far as I am concerned.
I have a feeling that you and just about every USian and Canadian would be quite unhappy with their “fair share.”
Any civilization that consumes its capital (and the worlds’ capital) as income will end. No way around it, and Canada is just as guilty as the U.S. in per capita consumption of the world’s natural capital (energy being a big one, but soils are right there with it).
“We are the octopus congratulating itself for becoming fat by eating its own legs.” — Masanobu Fukuoka
(Apologies to Yves and Lambert for this OT stuff, I wanted to get that off my chest.)
BTW a huge percentage of the energy Canada consumes is to produce energy…
And when I talk of the developed world, Canada is included. However, it’s not because Canada uses too much energy that the US can be excused.
I am saying that neither the U.S nor Canada can be excused if energy consumption is the metric, that’s all.
Point taken about use for production, but it still is consumption and its purpose is to turn natural capital into income, which is the other point I was making.
When they scrap austerity, we won’t get growth. We’ll get the dreaded inflation! Why? Because growth depends on good investments, not just killing austerity. And it will be the same bozos who have no clue what good investments are who will still be running everything. Their biggest talent is efficiently printing money.
+ about a zillion for eoinW and moneta
EoinW:
what would you suggest?
Great wealth was generated through the massive surpluses that cheap almost free energy from FFs and the easy abundance of all other natural resources.
As the constraints of a finite planet began to effect this process we started the shift to generating artificial surpluses through Financialization. The thinking being that all constraints can be overcome by money, a belief that continues to dominate the Global discussion of all of the converging constraints.
NOTHING can be done until this issue is confronted head on and despensed with entirely not justed tweaked and since it is those most entrenched in and benefiting most from this situation that are in control that is unlikely to happen.
The current system only serves the 1%. Therefore isn’t it logical to end that system? I’d suggest that is the first step towards fixing things. Not up to me to decide how exactly one ends it. I’ll leave that to the rest of the 99% to decide. Either they fix things or they live with the consequence of not fixing things. I do hope that ultimately civilisation learns from our current mistakes and is better for it. Does that mean I’ll get to live to see the return of the 10 cent chocolate bar? A wonderfully nostalgic thought. Of course dark chocolate is better for me.
‘This is heart rendering.’ — Ilargi
Yeah. But ‘heart rendering’ makes really tasty hamburger.
First they removed the ‘ham’ from ‘hamburger’, then re-define & re-prioritized ‘tasty’ and true to their alchemist roots, they transmuted it to a “standard” global mining experience…and mammon looked down from on-high and declareth “this is gooood!”.
What were the “golden” arches ‘trading’ at cob, Jim? Are they still charging ‘hamburger’ ‘prices’ and transmuting peanuts to make ‘payroll’?
I’m very pleased to see Ilargi featured here. His overview is dense and sometimes difficult to discern; but that is, in itself telling.
There is much evil afoot trying its damnedest to obfuscate and Ilargi busts them at every turn…
what is the meaning of the symbol drawn along with the message “love or nothing”?
Superb post, Yves. It’s good to see more refutation of the “well-meaning but mistaken” benefit-of-doubt passes persistently granted to the criminal elite, with dopemonger Obama as top beneficiary.
Their policies of financial terrorism and aggressive war go well beyond depraved indifference to malice aforethought. It’s time to drop the polite civility and undeserved respect they are constantly accorded in public. It’s time to get in their faces, confront their propaganda, ridicule their lies, expose their crimes, and give voice to their victims. More please.
Very well said! The difficulty we have, in doing as you suggest, is the system of violent repression of dissent the kleptocrats’ servants have built is very aggressive. I complained to my friend the other day about difficulty sleeping– because of a ringing, and pain in my ears. He explained to me that the LRADs the NYPD has been deploying against us protesters causes permanent damage, not just temporary discomfort.
Now I have to weigh the very real chance I’ll lose the ability to appreciate my daughter’s music– against my determination to keep exercising my 1st amendment rights. My cracked rib from a police baton at Zuccotti has pretty much healed. Should I risk going deaf now?
Of course my own petty troubles are nowhere near as significant as the misery endured by so many on this planet. Still, it is a real grind, and I fear many will surrender and wander back into the relative, temporary safety of the veal pen.
Here’s to you for being there in the first place.
Second, is that not many people realize that the “veal pen” is just a way station on the journey to the slaughterhouse.
I was clicking through the Yahoo news site to try and find a particular item. My wife looked over my shoulder and laughed. “My, my. You are a naughty boy.” “Huh?” was all I could reply. She continued, “Why look at all this soft core porn. When we were kids, this stuff would have got us grounded for a week.” I took a closer look. “Yes, you’re right. Look at all that cleavage, and look, half a nipple! Is that a camel toe?” “Down boy!” she grabbed me by my ears and wiggled my head. “You’re supposed to be an adult.”
It takes an outside observer to show how infantilized our “popular” culture has become. Now I think I know how a “pleb” in ancient Rome felt.
“It’s time to drop the polite civility and undeserved respect they are constantly accorded in public. It’s time to get in their faces, confront their propaganda, ridicule their lies, expose their crimes, and give voice to their victims.”
Totally agree. I’ll forward this to NSA/FBI/State, along with me (in case they don’t already have it).
turning America into a 3rd world country/another banana republic is the end result of the deflation process of QE. Reading about the “oil spills in the rivers/aquifers/land and other corporate “accidents/TTIP/TTP,” these incidents really are orchestrated by the Elites’ “terrorists”. Terrorizing is quite the apt description, never knowing when or where their “accidents” of greed will destroy our cities, towns, air, rivers or countryside. such an apt definition of “terrorism.”
the Elites are going to continue to steal what they can for as long as they can. only when the music stops, will we begin to see some of the final “costs.” continuation of the “Con” is their “raison d’être,” to extend and pretend. Till the damn breaks. watching the prolonged extraction of Greece’s “assets” is a clear example of their “Terrorist-like” actions and reinforces how important it is to perpetuate this kind of “zombification.” to keep the “sheep” quiet for as long as possible.
I can’t conceive that Greek’s Tspiras or Syriza will be allowed to upset their precarious applecart. Looking behind the curtain is not allowed. Don’t the Greeks know that. The “Spice” must flow! like Kennedys/King, all must obey and follow through with the “new world order” of Neo Feudalism. there won’t be angry mobs carrying pitchforks until the media stops “propagandizing” the sheeple. Americans are so willfully ignorant. not being European, i don’t know how they can not revolt, especially the Southern “lazy” Europeans. but i gather the FEAR has been installed and maintained to keep the “rabble” muzzled.
The kind of growth that arises once the scam stops, will be nothing like it was before the Neolibs/NeoCons took over, like our present form of Puritanical Calvinist American style brainwashing. What will arise will probably be quite peculiar to the locality/country. especially here, where the “Inherit the Wind” ideology prevails.
Guillotines are too nice for these “terrorists”. Truth definitely is subversive. living in “exceptional” times is not for the feint of heart.
I think you are being a bit too harsh imputing intention to “the Elites’ “terrorists”” and their “corporate accidents”, environmental and otherwise. Raiding the commons has been a time-honored business practice in the West for at least 500 years. Anything that doesn’t immediately kill (or even if it does but is ‘legal’) and makes money is permitted – cost-benefit analysis and all that. I still believe in ‘progress’, i.e. that the world is slowly getting smarter at least in its struggle for subsistence. But it is probably way past time to stop and take inventory of all our past ‘progress’, i.e. to determine what represents genuine progress and what is ultimately just theft during the commission of which hundreds of millions of capital crimes have been committed.
I agree with Bernard. Agressive war and coups are integral to disaster capitalism, wich is industrial-scale murder, state terrorism, that dwarfs the asymmetric civilian caualties of suicide bombers and jihadis driven to desperation and vengeance by those wars. Ask the Palestinians if they are terrorized, or the Afghanis, Syrians, Iranians, etc. Ask Hondurans and Ukranians if they would define the US-sponsored coups as acts of terrorism. We’ve been relentlessly conditioned by the Ministry of Truth to believe that only our crusaders are legal combatants protected by international laws (but not subject to them) and that our wars and coups are not terrorism, but they are, and they begin on Wall Street.
I too suspect that Tspiras and Syriza will not be allowed to upset the applecart, whether they are permitted to win or, more likely, not.
Could we be talking about a coup in Athens if Syriza wins the election today?
It has been done in the past. In all this sturm and drang, no one seems to have talked to the generals about their intentions. Something like 1918 Germany perhaps?
Not sure one way or another. One thing I do know is that they won’t hold onto power by playing nice. I’m sort of amazed they took default and Grexit (IIRC) off the table, though maybe “they had to say that.” The way to win a game of chicken is to be the guy craziest enough to throw the steering wheel out the window first….
I hope it’s not like the game of chicken one plays with an armed person in the car with you. First, you get on some sort of highway. Second, you get up to speed, and then above. Third, you do a little swerving and tell your opponent that either they relinquish the weapon or both of you will die when you steer the car at high speed into the next bridge, telephone pole, or other ‘immovable’ object. Fourth, you have to have the courage of your convictions. This kind of double bluff is hard to pull off successfully. (I’ll send flowers.)
There is a lot of truth – and more than a few misconceptions – buried in this post and the comments IMHO:
QE for ‘demand creation’ (jobs, guaranteed income, whatever) – There either is or is not a right not just life but a decent quality of life. If there is, then the first priority should be to guarantee that everyone has one – whether or not they genuinely have anything to contribute to the common welfare. But “reorganizing economies in such a way that jobs are created…. moving away from centralization, and the return of production of essentials to communities and societies themselves” is throwing the baby out with the bathwater. The economics profession may not get much right these days but you have to give it ‘economies of scale’ and maybe even throw in ‘specialization and division of labor’ for good measure. I would even go along with “the return of production of essentials to communities and societies themselves” until national and global economies can be reorganized in ways that promote the most efficient creation of wealth – while taking into account existing historical and political realities.
If the world has learned anything since 2008 it should have been that money isn’t wealth. (It is debt. See Soddy, Frederick M.A., F.R.S.. Wealth, Virtual Wealth and Debt, Distributed Proofreaders Canada.) We can create all the ex nihilo money the world needs in a few minutes. Real wealth is a different matter. Moneta gets to the heart of the matter RE genuine wealth creation when she introduces energy into the equation. One certainly could argue (as I believe Yves has) that those whose skills have been rendered obsolete by automation (progress?) are least likely to be able to find productive uses for their freedom and thus should be ’employed’ if only to keep them out of trouble. But a life is a terrible thing to waste – as is all the energy that goes into bombs and bullets. As for sharing the world’s energy, after the US fully develops its renewable energy potential if there is not enough to provide for its genuine needs I am all in favor.
But back to QE, European style… It seems to me the world is unfairly beating up on banksters. It is true many of them keep more than a reasonable amount of the money that passes through their fingers. But in the end they are just the employees of people with too much money on their hands. To varying degrees that is most of the readers of NC. But it is especially true of people who have so much the only use of the excess will always and forever be to acquire even more money. It is to them that Wall Street and other financial centers around the world market what Dr. Michael Hudson calls it’s “product”. Money is in the last analysis debt, a claim on society’s wealth. But when you have stripped a society of its ability to repay that debt by sending its productive capacity and skills beyond its borders and / or insuring that “only little people pay taxes, the only way to retain even the illusion of solvency is to transfer that debt from individual members of society to ‘the people’s government (SIC, obviously).
P.S. If anyone made it this far, I would really be interested in knowing how much of the sovereign debt overhang has really gone towards financing the right to a decent quality of life in the West as opposed to the ‘odious debt’ created by its lenders of last resort for the convenience of its political leadership – who find it much easier to borrow from than obtain through taxation the money to run the societies from which Western elites obtain their wealth. (Sorry about the length.)
I see I might have room to take a little jab at Steve Keen for attaching that precondition about first repaying any outstanding debts with the proceeds of his debt jubilee; good politics maybe and to a certain degree a technical necessity to avoid ill-gotten gains by debt-leveraged speculators – but self-defeating if the purpose is to stimulate effective demand from the ‘little people’.
I believe a country will never cut its total energy use to let another one thrive unless it is forced to. This is why I am skeptical about alternative energy as the solution
. Here in Canada government has managed to waste billions in the name of alternatives. More pocket lining it turned out to be. So I think tensions are going to intensify over the next decade or 2. With debt levels quite high in the developed world vs. Emerging markets, this means we in the developed world should over the next decades work to pay for emerging market consumption. Logically the forces of nature are in place for the us to go towards 5% world consumption of energy over the long term. Of course, no one in the developed world wants to see it this way. They want to believe that there is enough energy to go around or that there is no need to cut our material or energy consumption. Or they will politic like mad to keep this world imbalance like the UK and France have done for centuries.
This politicking will increase unfairness because we all know that two wrongs don’t make a right. There is no way we will accept to reduce our share of world energy consumption so as long as our policies are based on global unfairness wealth distribution will not improve because these policies will be made on shifty foundations.
So either the western middle class will get distributed globally with shantytowns growing in developed economies or nationalism will spike as each country tries to control its energy and resource stake.
We might end up with a lot of new countries born out of secessions starting with a fresh balance sheet and the right allies.
Take a look at Soddy. I am still dumb enough to be seeking after universal truths (or as near to them as I can get):
That “original source” is either nuclear fusion or the sun – if as some people who know a lot more about the subject than I do are correct in their belief that the technical hurdles for ‘practical’ fusion reactors are insuperable.
Until it is demonstrated they aren’t, the practical limit to growth seems to be the amount of energy that can be harvested from the sun in real time. (and even if those hurdles ARE overcome I don’t think it would be such a good idea to turn the earth into nothing more than a wriggling mass of humanity). Building a world economy based upon “ancient sunshine” (oil) was not such a hot idea. But until we can restructure that economy to operate on a truly sustainable basis a little energy sharing may be required.
I don’t think that means people used to the convenience, the “use values”, that energy provides need to give them up. A huge part of the economic activity of the last century has been pretty much solely for the purpose of providing investment opportunities for people with too much money, e.g. war and waste.
Anyhow for universal truths, try the laws of thermodynamics.
It’s a shame that Soddy is not better known. With the recent attention given to Polanyi here, you can almost hear echoes of Soddy in his work. They have been referred to as pioneers of eco-economics, which imho offer a much clearer understanding and use of the terms “consumption” and “growth”.
In “Science and Sanity” Alfred Korzybski argued that our understanding of thermodynamics came as a result of evolving our use of language beyond trying to describe things as simply warm and cold.
At least part of the problem Soddy isn’t better known, at least in the U.S., is US copyright laws which probably make it illegal for you to download this link if you live here: Wealth, Virtual Wealth and Debt, 2nd Edition, by Frederick Soddy (http://www.fadedpage.com/showbook.php?pid=20140873 – I got my copy from a university library through inter-library loan.) This particular work falls under the category of “orphaned” titles to which publications rights are reserved to the heirs of the authors, even when those heirs can not be identified and / or contacted.
Thanks for the references! (Since it is impossible to have an original idea) Can someone provide me with the URL of a site that publishes a “10 most important titles for those pretending to basic literacy in political economics” list?
In addition to IP laws but possibly related is the fact that he was branded as a “Chemist” and viewed as an intruder on the plot assigned to eCONomists. His views were scorned and labeled anathema to the “wisdom” of the high priests of academia.
Which Soddy work would you recommend?
Wealth, Virtual Wealth and Debt, 2nd Edition – If you are Canadian, you can just click the link or copy and past it (http://www.fadedpage.com/showbook.php?pid=20140873) into your browser without fear of running afoul with the law. If you want a hard copy, good luck finding it – especially the 2nd Edition!
A word of caution… A lot of people say Soddy is tough sledding, mainly because of his style of prose . He isn’t bed time reading but once you get into him, I hope you will agree he is worth the effort. If you do, maybe I can set up a Google group where we can discuss him, Polanyi, “Science and Sanity” Alfred Korzybski and anything anyone else stumbles across (before we get kicked off Naked Capitalism for being too much off-topic).
Without hesitation it would be the one referenced by Steven, i.e., “Wealth, Virtual Wealth and Debt”. I want to qualify that I don’t personally subscribe to over-emphasis on any single individual. I believe that seeing things through other POV’s can challenge our notions and belief’s, and have the effect of expanding our vision. That said, I agree with Steven that Soddy is well worth the effort. Also want to say that I appreciate reading your comments and those of others. In the time I’ve been visiting NC, my vision has expanded at least thirty degrees or maybe the blinders I came with fell off somewhere along the way.
Agreed! (I need to get out more.) If you have come across any serious criticism of Soddy’s ideas, I would appreciate some references. Again, thanks for the ones you have already provided.
At this point, what seems to be required is some general framework to guide popular understanding of what needs to be done for what Soddy called our “scientific civilization” to survive – and maybe a credible explanation of what is causing it to come “off the rails”.
Soddy concluded it was money – the way it is created (out of nothing) and the way it functions as a perpetual motion machine (as interest-bearing debt) defying the laws of thermodynamics. He had nothing against capitalism, or for that matter money. He just wanted to make it work. And he didn’t believe that could be done if a civilization’s social institutions ran counter to the laws governing the physical universe.
FYI – My world view was principally shaped by a combination of Soddy, Marx, Veblen and Dr. Michael Hudson (who IMHO ought to have been awarded about 10 Nobel Prizes by now if they meant anything). Hudson’s emphasis on debt dovetails nicely with Soddy. Following is a (after agonizing, severely edited) snippet from Soddy’s “The Inversion of Science” providing his explanation for Timothy’s admonition that “The love of money is the root of all evil”:
Where have you been lately? I can attest to the growth of shantytowns here in the U.S. as all of the ‘marginalized’ people start living, out of necessity, in tent encampments and semi public ‘shelters’. The forces of ‘law and order’ keep rousting the ultra poor and moving them about, but not really helping them. Meanwhile, houses remain abandoned and decay to rubble for lack of sufficient economic resources to “buy” them. The mismatch between needs and resources is obvious and glaring. When you finally get someone, from any level of our socio-economic hierarchy, to look squarely at this phenomenon, they, if at all honest in their thinking, will acknowledge the problem. The next step is much harder; to get them to abandon the old paradigm and think about actually solving the problem. That most people haven’t taken that first step is the depressing truth. Here, education takes centre stage. Blogs like this are, if I read the Ladys’ pronouncements aright, part of that process.
Here’s hoping that there is still time to speak truth to power and bring sanity to governance.
Yes, that’s insane to have a homeless crisis at the very same time the foreclosure crisis left empty homes. Perhaps, in retrospect and from my comfortable armchair, it might have been better to have encouraged squatting, at least in conjunction with preventing foreclosure. Homeless people were prominent in Occupy, and were happy to have work to do that they considered important…
Just like they were dumping harvests in the ocean during the Great Depression.
The bottleneck always comes down to the redistribution issue. Each one of us has a very clear and definite idea of what fairness is but when we sit down and negotiate we find out that it is not so clear… Who gets to keep the empty waterfront property and who gets the empty house in Camden? Do we share the calories equally or do we give more to those who have bigger constitutions?
That`s why wars and inflation are used. Resources get redistributed and the blame can not be pinned on one person in particular.
‘Blockadia’ seems to be mobilizing a diverse group of people in a useful way. This involves capitalism and the democratic process as well as climate change.
http://www.yesmagazine.org/planet/welcome-to-blockadia-enbridge-transcanada-tar-sands
In her new book, Naomi Klein has a chapter ‘Blockadia: The New Climate Warriors’.
“Blockadia is not a specific location on a map but rather a roving transnational conflict zone.”
At first these were seem as extremists made up often of local Indigenous populations. As extreme extraction has endangered the livelihoods and health of many more people and the global nature of the problem is being better appreciated it is gaining more widespread political support.
More people are being exposed to the dangers of polluted air, soil and water.
“Over and over again, we are catching glimpses of how badly we are breaking critical parts of our ecosystems that our best experts have no idea how to fix.”
We are paralyzed because we are in denial. The pollution caused by modern industrial economies is massive. Every city. Every port. Every person on earth. And we kibitz around like it’s really not important. Technology (that frail hope) will change things. Every car. Every smokestack. Every airplane. Every hot meal. Every pair of running shoes. We can’t stop. Even Davos is depressed and central banksters are trying to jolly up everyone with comments about how things are turning around economically. That translates into growth. That translates into a dead planet even faster. It would be so refreshing if just one bleary-eyed world leader would put on his bathrobe and shuffle up to the podium with a to-do list. Or more specifically a not-do list.
Steven,
You jab at Steve Keen is a little undeserved, whilst his public pronouncements are not too radical, what is thought privately is a little different. For your info, moves are afoot to centralise much radical/heterodox economic views into a single while for dissemination and discussion, and this means working with a large number of Institutions and Universities espousing views that many here find agreeable. Indeed, within the not too distant future a large-scale gathering featuring said views with an emphasis on “debt/deficits” will be arranged. As ever though, funding such undertakings is a mammoth task, as is getting policy-makers to attend.
Obviously, they prefer jamborees like Davos, which are all froth with little by way of real substance – they just feel better for making the right noises, but never planning to actually do anything about the issues they allegedly are so interested in – what the left-of-centre requires are persons like the Koch’s and Peterson’s, regrettably they are very few and far – alternatively we could go the democratic route via “crowd-sourcing”.
Mr. Rogers;
I know I am pushing the boundaries of civilized discourse but, I must point out that the ultimate form of “crowd sourcing” is Revolution. I mention this to warn those working on the heterodox symposia to expect extreme reaction to their project from the Official Sources. The Powers That Be will most certainly view heterodoxia as revolutionary, and react, or I should say, proact accordingly. Be wary of “assistance” from actors associated with Orthodoxy. Trojan Horse and all that is relevant here.
Anyway, no matter what. Good luck with the project!
I’ve been listening to these podcasts. One lesson I draw is that the French Revolution was a process that lasted forty or fifty years — it’s not all 1792 — that chance and luck had their part to play, and that at most points the players, smart, experienced, and committed as most of them (the Bourbons aside) were, had little idea of how their collective actions would come back to bite them. And I’m with also with Chou En-Lai on how 1789 (or possibly 1968) netted out: “It is too soon to say.” One blindingly obvious lesson of the 20th Century is that it’s always possible to make things worse, and wannabe elites in the form of self-appointed revolutionaries are to be distrusted (on a personal, if not a systemic basis) as much as actual elites. Meet the new boss….
Your caution is very wise. Perhaps one of the more powerful imaginations of how dangerous it might be to “upset the apple cart,” is the near-futurist fiction so ably written here by the Archdruid: http://thearchdruidreport.blogspot.com/2014/02/fascism-and-future-part-three-weimar.html
It is indeed foolish to fall into a cult of personality trap– of following self-appointed revolutionary “leaders” who are more committed to their own power than to changing things for everyone else’s benefit. I still cling to a small shred of hope that our constitutional system here in the U.S. may allow the citizenry to undo the soft corporate coup d’état that has resulted in Citigroup quite literally writing our legislation [ http://www.commoncause.org/democracy-wire/the-money-behind-cromnibus.html ].
Yet in spite of my optimism I think that the odds of us achieving the “peaceful revolution” that President Kennedy invoked, shortly before he was assassinated, are diminishing every day.
http://www.truthdig.com/report/item/our_invisible_revolution_20131028
I like this site you mentioned. I particularly like their ‘Donate’ button being under the sign, “Support Revolutions.” Now that’s crowdfunding done right.
Chou’s remark was done in typically “Inscrutable Chinese” mode. Yes, the Chinese elites do plan for years ahead, but now they seem to be vacillating between ‘Traditional’ and ‘Modern’ modes. I would suggest that the Chinese have something we in the West do not have, an almost unbroken cultural tradition going back millennia. Mao began to break the constricting forms of Chinese culture when he introduced pinyin writing. Now any sufficiently bright peasant can aspire to work in the Forbidden City. No matter whether that aspiration is realistic or not, the fact of the potential is sufficient to motivate millions to study and learn. The society as a whole benefits. Previously, such hope was of the Horatio Alger variety; an explicit admission of the stratification of class, and opportunity.
Coming back full circle, I must again remark that the Obama Campaign team had a very powerful symbol in their grasp when they focused on ‘Hope.’ Hope will cover a multitude of sins. Sadly, this bunch of hacks, for one reason or another, failed to carry through with the ‘Hope’ promise. That has been a “make things worse” moment for America. When you deny people hope, they turn to rage and her little brother, fear. That is the fire the present political class in America plays with. Once, as you rightly point out, people learn to distrust “wannabe elites” as much as the “actual elites”, we can hope, there’s that word again, that elites as a class get the heave ho. Knowing human nature as we do however, a more realistic expectation would be to organize as best as possible to restrict the excesses of the revolutionary movement itself.
I’ll check out those podcasts since I just finished, last fall, a history of the French Revolution, which had some interesting things to say about the influence of the American Independence War on the French.
You’re up late and early Lambert. As Eisenhower used to ask in the oval office, “What are we going to refrain from doing today?” War related, of course, but it applies equally to the war we have been engaged in (free marketeering) against the planet for two centuries.
Thanks for the link to Revolutions Lambert. I am unsure our generation will have to go a violent route to recover democracy. My feelings is our strength is in unity and our greatest enemy is the chap who will not join the team. If the team-players well outnumber the rest, we can use existing tools to take back political control of the country.
The particular defect I see in the French Rights of the Citizen and in the U S constitutional documents (Bill of Rights particularly) is the omission of an enforcement clause. The French philosophers and the American founding fathers assumed we would ensure our rights were continued but we have failed to do that.
Either we have been hoodwinked by the Utilitarian argument that man in society must surrender some rights to preserve the rest, or we have simply allowed the moneymen to obtain legislation – Sunday trading, War on Terror, etc. – that has both lessened the time we have to study the news and restrained our natural egalitarian responses.
We need a new institution to bat for us. I see it as a sort of Peace Corps of young people on finishing education and before starting work, who all spend a year protecting the Constitution by closely monitoring the representatives from campaign and election to Congressional performance. We need young people for this because the spirit of fairness, truth and justice is fully alive in them.
Ilargi’s anecdotes regarding the victims of the Troika’s criminality are incomprehensible to those of us who subscribe to a Western humanist tradition. But let’s put the criminals’ hats on for a moment.
The large transnational primary dealer banks are selling their sovereign bonds to the ECB. What will the banks do with their newly created “found money” from the ECB in a deflationary environment?…
Will euro currency depreciation, currently low oil and commodity prices, and labor “adjustments” be sufficient to enable the neoliberals to lift the EU out of the deflationary morass on a sufficiently timely basis that they will be able to maintain their political control? I think not.
I fear that, when the economic control scheme fails, the Elites will fall back on the tried and true methods: Propaganda, the suppression of dissent, the demonization of various “others,” and finally, the ‘liquidation’ of the dissenters.
The Bundesbank (and/or Deutschebank?) blurbed that EU QE will not accomplish anything to bring the EU economies back to a higher level of production and therefore advised everyone to buy EU stocks. Funny guys. But it is certainly true that QE is nothing more than life support for insolvent banks. Deutsche Bank must have realized that it was cooked either way. That should be the point of the discussion – western economies are cooked either way whether they choose austerity or QE.
Western humanist tradition? Is that a fucking joke? Genocide, murder, rape, pillage and piracy are the western traditions since Columbus set foot in the new world. Before that it was constant war among the western Europeans.
Didn’t say that it was your philosophy, par 4, nor that it is considered by past or currently dominant poliicy makers. Btw, good luck with your game.
Right on that. I remember playing the local Par Three golf course. It was attached to the local “major” golf course. I had the mini set of clubs, bought at a Thrift store along with a cheap golf bag. No woods, but, if I remember correctly, a three iron, a seven iron, a nine iron, and a putter. We used to dive one of the big water hazards, with mask and flippers, for golf balls on a Wednesday evening. Wednesday because the greens keepers had their weekly meeting at the clubhouse then. Doing it then because, even that long ago, the course had a ‘contract’ with a couple of scuba divers to recover the balls from the water hazards and split the revenues from selling the balls cheap to the duffers. It was a nice, big golf course, in the middle of an urban zone. A green belt if you will.
Out here, SF, the most you hear is the mewling of the brussell sprout growers along the peninsula.
Something has changed in petroland with the death of the king. The Salman seems canned.
Oh well, good time to drive.
“Brussels is a bunch of criminals.”
Great concentration of power in a few hands inevitably assures criminal behavior. The EU is simply a manifestation, and in no way unique.
The EU, like most western economies, has struggled mainly because of the narrowing distribution of income. Capital (along with management, but management does not have as much of an impact) has been taking a bigger share of the revenue/earnings pie, and leaving less for labor. It might not be as bad as it is if they were putting their slice back into the economy, but they have been hoarding profits for years now. This hoarding shrinks economies, as profits must be re-circulated to grow, and that wasn’t/isn’t happening.
QE has not rescued the US economy all by itself, as it required all that cash to be used., and QE just makes the capital available at low cost Consumers cannot drive increased spending, as the writer suggests, because they don’t have the money. Obama at least forced large deficit spending as a response to the crash seven years ago, and that spending has replaced the hoards that the parasitic class has extracted from the economy. In the past, deficit spending without QE led to higher interest rates, which caused corrosive second order effects, as financing the deficits became more expensive. To combat narrow income distribution, both QE and deficit spending are necessary. One without the other will fail.
Unfortunately for EU member states, they cannot implement both on their own. Draghi does not have control over individual EU member spending. Yes, he has to hope that the nations borrow and spend, but that is his only option. Obama could not get jobs bills or tax increases on the wealthy passed in Congress, but he was able to get his spending bills passed (as much as Republicans complain about deficits, they don’t turn down federal spending in their own districts). Sure, the EU as a concept has a basic flaw, but that’s the nature of their organization. If they try to compete with the larger economies of the world as individual states, though, they will lose. The EU tried to emulate the “united” states of America, but they can’t really do that, as they don’t have one government at the top, and they never will. If the US were fifty individual states (or even just ten) fifteen years ago, they never would have banded together to form one country, either. Politicians do not like giving up control to a higher level authority because they want to be the highest authority. So a real EU is not going to happen anytime soon, and this is the best they can get.
The banksters will profit from this QE, just like they have in the US. They will get money for free and often lend it back to the same governments at a higher rate. That sucks, but so does letting the status quo go unchallenged. The best solution would be a tax system to address the unsustainable and distorted income distribution, but that can’t happen as long as the parasitic class has control. IF Europe wants to recover, they need to use this fountain of cheap debt to finance all kinds of public spending, getting the money back into circulation. The capital class will not like it, and will whine, which is ironic for two reasons; they will be making more money, and their extraction of a larger share from labor is the cause of the weak economy in the first place.
The economic systems in the modern world are fairly complex, probably too much for the average voter to comprehend (or even care about). Until they do get it, it will be hard to implement a tax system that insures a sustainable distribution of income. We have that problem in the US, and there is no sign of any change happening soon.
Re: “I think any stimulus plan in our time should focus on reorganizing economies in such a way that jobs are created. That must mean moving away from centralization, and the return of production of essentials to communities and societies themselves.”
Here we have a wannabee commissar ready to replace the free market with his dictats.
Re: “instead of emphasizing the ‘benefit’ of hauling goods halfway across the world, or an entire continent. It’s incredibly stupid that for instance most of our furniture and clothing is made in China.”
The wannabee commissar knows better than real business people running real businesses in the real world.
Why is it “stupid that for instance most of our furniture and clothing is made in China?” The wannabee commissar does not say. The answer, of course, is that it is not stupid. The reason why it makes sense was given by economist David Ricardo hundreds of years ago: comparative advantage. The fact that comparative advantage is now perceived to work against American manufacturers and workers (but certainly in favor of American consumers) does not negate its economic reality.
American manufacturers and manufacturing workers enjoyed a unique advantage after WWII that was never before seen in world history. All of the other manufacturing powers (Japan and the European countries) had had their industrial bases and infrastructure destroyed; the US was the last man standing in the industrial world. It took decades for the rest of the world to catch up to a US that had gotten fat, dumb, and happy thinking that the dominance it had would endure forever. Now foreigners play the consumer-goods manufacturing game better than Americans and THAT’S NOT FAIR! Now we have the howls of indignation because something can be manufactured in China and shipped to the US for less than it can be produced domestically.
What’s wrong with people in China and elsewhere living better by selling goods to US consumers for less than American producers? The author does not say, but they better do it without inconveniencing American producers.