EU/Germany parting of the ways?

EU/Germany parting of the ways?

February 12, 2021

By Francis Lee for the Saker Blog

From its inception the European Union was an ambitious strategy to build an economic bloc which would serve as a counter-weight to the US’s global economic dominance. (1) One of the primary conditions of this overall construction involved the creation of a single strong currency, the euro, that could become the rival to the US$. This was not just a political question, it also involved financial, economic and possibly even geopolitical dimensions. The Germans in particular were involved in the EU blueprint ever since the initial Treaty of Rome or EEC Treaty, as it was called, brought about the creation of the European Economic Community (the EEC). The treaty was signed on 25 March 1957 by Belgium, France, Italy, Luxembourg, the Netherlands and (West) Germany, and it came into force on 1 January 1958. At the outset Germany was on board the launch and prepared to give up her much beloved Deutschmark (DM) in order to eventually adopt the euro. A European super-state was envisioned complete with its own currency and act as a counterweight to the US Leviathan.

EXORBITANT PRIVILEGE

Since the end of the Bretton Woods system in 1971 the US dollar had become the global currency – a pure fiat currency without any gold backing – and had been used widely and routinely by other states as international reserves; as monies circulating in the dollarized countries; and as a means of payment in international trade. Ever since the US had allowed its currency to float freely the US trade balance has been negative. Surplus European countries, but which also included Japan, had earned US dollars which at one time had only been redeemable in gold payments by the US. But this arrangement ended when Nixon took the dollar off the gold standard in August 1971. From this time on the surplus countries could only swap their dollars for US Treasury Bills, that is to say, American debt.

In this way the US has appropriated real goods and services from the surplus countries and exported debt back to those same countries.

In the trade this is called seigniorage.

‘’This term was used to describe the right of the medieval lord, or seigneur, to coin money and keep for himself some of the precious metals from which it was made. About $500 billion of US currency circulated outside of the United States, for which foreigners have had to provide the United States with $500 billion for real goods and services.’’ (2) This was an exchange of real value as embodied in goods and services, for fictitious value contained in little green paper substitutes. Nice little racket. Who says you can’t get something for nothing! This didn’t go down at all well in the European mainland and was described by the French politician Valery Giscard D’Estaing as being an ‘exorbitant privilege’. Monsieur D’Estaing certainly had a point.

The evolution of the euro has emerged as the only real challenger to the US$’s seigniorage. The preconditions to any such challenge rested on a dual criteria: The euro had to represent a real currency on the same scale as that of the United States, and, in addition, it had to be a strong currency, it needed to be strong even at its design stage. The birth-pangs of the euro underwent a long pregnancy, and it was not until 1999 that the EU monetary authorities announced the birth of the new currency. It should be pointed out that not every country in the European Union was/is a member of this currency union; some countries kept their own national currencies – e.g. the UK, Sweden, Denmark, and most of Eastern Europe, and that remains the case even today.

Germany was of course the key player in this process. The euro was to be a hard Teutonic currency which mirrored Germany’s powerful position as a globally competitive manufacturing base. It was envisioned that the euro currency would be extended to other parts of the eurozone. (3) However, the euro was unwisely broadened to include peripheral countries which were far from the levels of productivity – and thus of international competitiveness – needed to contribute to making the euro a strong currency. This was particularly the case in Europe’s southern periphery. These nations simply could not compete with Germany since their unit costs were too high and productivity levels were lower than Germany’s (and for the rest of the northern European bloc). Moreover, the get-out-of-jail ‘solution’ by Greece, Spain, Ireland, Portugal, and the Baltics, of a currency devaluation was closed since these states were all members of the Eurozone who had abandoned their old currencies and now used the euro.

In passing it could be argued that devaluation is not necessarily an optimal economic policy. Certainly, devaluation makes exports cheaper, and provides a breathing space for indebted states; but the obverse side of this practise is that it also makes imports more expensive. Imports which include strategic commodities such as oil, foodstuffs, drinks and tobacco, motor vehicles, chemicals, machinery and transport equipment, mineral fuels, and lubricants. The rise in prices in these imported goods and services may well lead to imported cost-push inflation.

Thus Europe’s southern periphery attempted to skirt around the devaluation problem with what became known as a policy of internal devaluation. This involved engineered austerity, whereby a country seeks to regain competitiveness through lowering wage costs and increasing productivity and not reducing the external value of the exchange rate. This enforced policy has resulted in what can only be described as a disaster as country after country in the southern bloc clocked up larger and larger trade deficits whilst the North European bloc including both members and non-members of the euro, e.g., Sweden and Denmark, clocked up big trade surpluses with the Eurozone in the southern periphery. In any case Germany had pre-empted this internal depreciation by its own earlier competitive devaluation as contained in the Hartz reforms.(4)

TRANSITION STATES

Things were not much better on the Eastern periphery. Present current growth figures for Czech Republic 0% Poland -0.1% Croatia N/A Hungary 0-1% Bulgaria -1.6% and Romania -4.4% all struggle with trade deficits.

At some stage during the 1990s, it became common to refer to these Eastern European countries as “transition states” or the ‘New Europe’ an interesting description by Donald Rumsfeld (See below).This implied an optimistic future, a linear progression, a transformation from a failed communist past to a stable western European future. Surely one of the most obvious lessons from the financial crisis and recession of recent years, however, is that the idea of such a transition is misplaced. If the societies of central-eastern Europe are indeed in transition, the mode of transit is that of the covered trailer, haphazardly attached to a juggernaut, driven by remote political and economic forces. And it is very unclear what the destination will be, given the continued economic upheavals and displacement across the whole of Europe.

The result of the transition so far seems to have been the creation of a low-wage hinterland, a border economy on the fringes of the highly developed European core, and this has had wider political and social ramifications for the entire European project – in effect shifting the goalposts of what it means to be European.

It is worth pointing out that, as is always the case, not everyone lost out. Shock therapy had its domestic supporters, people entranced by the ideas of neoclassical and Hayekian economics. Sometimes this was based on genuine intellectual engagement, as neoliberal western economists gained fervent followers in the universities and colleges of Warsaw, Prague, Bucharest, and Budapest. More often, however, the new disciples of neoliberalism were cynical converts from communism, the prospectors of a new capitalist order. Through incorporation into western institutions, such as NATO/EU, some of the new capitalists hoped to entrench their situations as the primary political arbitrators, a new elite of western-influenced reformers. All very reminiscent of the Yeltsin years. (5)

THE US INTERVENTION

US Defence Secretary Donald Rumsfeld’s ‘New Europe’ involved a geopolitical incorporation whereby the ex-soviet republics, and Warsaw Bloc allies were enrolled into the EU and more importantly were brought into NATO. Membership of the NATO was mandatory for all new EU entrants. Rumsfeld opined that “You’re thinking of Europe as Germany and France. I don’t. I think that’s ‘old Europe … If you look at the entire NATO Europe today, the centre of gravity is shifting to the East. And there are a lot of new members. And if you just take the list of all the members of NATO and all of those who have been invited in recently — what is it, 26, something like that? [But] you’re right. Germany has been a problem, and France has been a problem.”

If this was not a blatant intrusion into European affairs I stand to be corrected. This was the creation of a geopolitical beach-head militarily primed and ready to go; its purpose was to prevent any modus vivendi crystallising between Europe as a whole, and, in particular Russia. Central to this strategy …

‘’There was an overarching strategic concept of sorts in the double enlargement – strategic and economic – it was a strategy for Americanising the social structures of Europe within the NATO security perimeter whilst Americanising the hinterland beyond the perimeter. Firstly the Central European and Eastern Countries (CEECs) have become and will continue to be a significant middle-class market for western multinationals grabbing market share there at will, using the Single Market Rules embodied in the European Agreements to legitimise their market domination. Secondly, the CEECs will offer a limitless supply of cheap labour for western multinationals to use for the labour-intensive parts of the production circuits. Thirdly these attractions will be used by big capital in Western Europe to threaten to exit eastwards unless Western Europe Americanises its labour markets and turns the welfare state into minimal safety nets and allows British and American levels of social inequality, poverty, urban decay, and prison populations. Western Europe will then be distinguishable from the USA only by the virulence of its internal racist, neo-fascist, and xenophobic movements. (6)

WITHER GERMANY?

At the present time and at the beginning of a new and even bigger crisis in the global economy the future of the EU depends on the interests of the different factions of the German ruling elite. This is nowhere better instanced than in the Nordstream-2 episode. One faction, German big business, which has extensive investment in Russia together with other financially strong countries wants to reorientate its long-term strategies seeking an expansion of Germany toward China and Russia. There are several reasons for this;

‘’Firstly Both Russia and China have immense resources and reserves of raw materials. Secondly, the level of China’s economic growth and the size of its market are way above those of the EU. Thirdly, Germany’s technological superiority is the ideal condition for intra-trade appropriation of Chinese surplus value. Fourthly, if bi-lateral trade relations were to continue at the current pace Beijing will become Germany’s main trading partner by 2021. Fifthly, for China, Germany is the European state with the most optimal investment opportunities; China is the second largest non-European investor in Germany after the United States. Finally, China’s ultimately likely goal is to lessen US influence in Europe by forging its own close ties to the EU – and Germany is China’s strategic foothold in Europe. These are ideal conditions for German expansionism to scale down its interests in Europe and redirecting its attention to the East.’’(7)

The other faction in Germany are the geriatric Atlanticists, political, security (BND) and military elites, with the Greens in tow of course, who are apparently still fixedly stuck in an Americo-centric NATO bloc not knowing which way the wind is blowing and on which side their bread is buttered. The Nordstream-2 issue is crystallising these fault-lines among the German ruling elites with Frau Merkel being pulled hither and yon between Germany’s reactionaries and its more forward-looking business class which is enamoured of the pro-China-Russia siren songs. Moreover, given the centrifugal drift within the Eurozone there seems sufficient reason to believe that a new bloc of northern European states, grouped around Germany, Holland, Scandinavia, and possibly including the Tax Havens of Switzerland, Luxembourg, and Liechtenstein, could coalesce around the establishment of a new Northern Euro. This delinking from the ‘weak’ euro by the Northern bloc could well be the strategy that Germany, that is to say, its business elite, pushes – or at least does not oppose – the default of the weaker countries in the south and the east so that they leave the Eurozone.

At the present time this is conjecture, but the slow but inexorable economic and geopolitical underground shifts make change inevitable.

NOTES

(1) It should be noted in passing that this was never intended to take on the contours of a European geopolitical alternative to the American continental hegemon. That came later. At the time there was a school of thought that held the creation of a European alliance to act as a third force based upon social-democratic and unaligned neutrality which would act as a buffer between US imperialism and Russian communism, and as an alternative to the two heavily armed super-states. Alas that was not to be. The collapse of the Soviet Union was regarded in Anglo-American right-wing circles and their euro proxies – the UK, Poland, and the Baltics – as a wonderful opportunity to punish and over-run the prostrate and weakened Russian state. It almost succeeded as an enlarged NATO gobbled up ex-soviet republics pushing right up to Russia’s western borders.

(2) Barry Eichengreen – Exorbitant Privilege 2018 – pps3/4

(3) The Eurozone is composed of 19 out of 27 European States. The following use the euro as their currency: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Portugal, Slovakia, Slovenia, Spain

(4) The Hartz Reforms. These reforms involved the restructuring of Germany’s internal labour markets involving a lowering of labour costs and introducing ‘mini’ jobs wage and welfare cuts. So the reduced share of unemployed in the German work-force was achieved at the expense of the real incomes as those in work. Fear of low benefits if you became unemployed, along with the threat of moving businesses abroad into the rest of the Eurozone or Eastern Europe, combined to force German workers to accept exceptionally low wage increases whilst capitalists reaped an excessively big profit expansion. Real wages in Germany have fallen during the Eurozone era and are now below the level of 1999. This whilst real GDP per capita has risen nearly 30%.

(5) The accession states of Eastern Europe are simply an entrenched euro version of a US/Mexico periphery grouping on the border of the US southern states. These maquiladoras have certain tax advantages which make them attractive to US businesses. These US businesses can capitalize on a cheaper labor force in Mexico and also receive the benefits of doing business in the U.S. The presence of maquiladoras contributed significantly to the industrialization of the Mexican-American border.

(6) Peter Gowan – The Global Gamble – p.317.

(7) Guglielmo Carchadi – From Crisis of Surplus Value to Crisis of the Euro – A Global Analysis of Marx’s Law of Profitability. – p.419

Reforming the EU – Like waiting for Godot!

Reforming the EU – Like waiting for Godot!

October 22, 2020

By Francis Lee for the Saker Blog

There is a human tendency to cling on to cherished beliefs even in the face of overwhelming evidence to the contrary. There was a time, during the heady days of Jacques Delors and the Social Chapter, when the EU appeared to represent a social-democratic and neutral geopolitical bloc; a third force between the USSR as it then was and the US/NATO – this, however, is no longer the case. The EU has long since transmuted into part of an aggressive neo-liberal and neo-conservative imperial alliance under US command. The liberal, centre-left Remainers such as Yanis Varoufakis seem to think that it is possible to reverse this development and get the EU back to its original prototype, presumably by dint of political will. In view of historical developments this view seems increasingly difficult to sustain.

EU/NATO PUSHES EAST.

In particular since the ratification of the Lisbon Treaty of 2005 the EU Defence and Security Policy has been aligned with NATO. Indeed, EU membership has become a stalking horse for NATO membership and vice versa. NATO’s geopolitical drive to Russia’s western borders has been concurrent with the EU’s economic expansion – a strategic partnership between a military push and an economic push.

Not surprisingly perhaps the Russians see the siting of US anti-ballistic missile systems on their western borders in Romania and Poland, together with ongoing NATO military exercises involving tens of thousands of alliance troops as something of a provocation. Little wonder we now have a second cold war.

The position of the EU is, in geopolitical terms, completely subordinated to US interests. If there is a Russian-NATO conflict it will be fought on Europe’s turf not on America’s; Europe is ultimately expendable. This much can be inferred from facts on the ground, though this must be kept assiduously secret from the electorates of western Europe. Eastern Europe, however, seems only too willing to serve as the cannon-fodder for the US imperial designs; witness the incessant baying for war on the part of Russophobic states such as Poland and the Baltics, as well as NATO-EU wannabees like Ukraine and Georgia. It was precisely this expansion to the East (or new Europe as it was called by Donald Rumsfeld) which served as the essential prerequisite for the NATO takeover of the whole of Europe. The change has been noted:

EUROPE FROM LISBON TO VLADIVOSTOCK – AN IMPOSSIBLE DREAM.

‘’The destructive Russophobia of the new Europe undermined the credibility and cohesion of Europe as a whole. It had been anticipated that the new members’’ – Poland, the Baltics. etc. – would be ‘socialised’ into the ways of the EU, but, instead, the EU was in danger of reverse socialization incorporating the axiological (ethical – FL) dynamics and virulent neo-liberalism of some of the newer members, accompanied by their prioritisation of Atlantic Security over EU social solidarity.’’ (1)

In its original quasi-Gaullist form the EU might have played a constructive part in the Ukrainian crisis as a third party and disinterested broker between Russian and American interests, but by 2014 the EU had been transformed into something very different from its original configuration: it had become joined at the hip to the US imperial juggernaut. Moreover, the EU’s status in this relationship was subaltern rather than equal. It should be understood that the United States does not do ‘partnerships’ only master and flunkey slave relationships. It is further commented that:

‘’Instead of a vision embracing the whole continent it (the EU) it has become little more than the civilian wing of the Atlantic security alliance … The drift toward a merger with the Atlantic Security system left it bereft of autonomy and policy instruments when it really mattered – maintaining peace on the European continent.’’ (2)

COSTS IN EUROPE OF US FOREIGN POLICY

The terrorism and refugee crisis in Europe – the blowback – was unquestionably traceable to the US bull-in-a-china-shop foreign policy in the middle east, this much is obvious to even an impartial observer; but answering the call of duty the western media has strained every nerve and muscle in an attempt to deny what was a blatant fact. Terrorism and refugee flows were ripped out of the wider context in an attempt to obfuscate any causal connexions with these phenomena and US/EU/NATO foreign policy. The media propaganda tsunami notwithstanding the electorates of Europe were able to put 2 and 2 together, and this resulting in an ongoing political crisis in Europe which shows no signs of stabilization and, if anything, seems to be intensifying including the Brexit vote which committed the UK to leaving the EU, and, the electoral advances for the AfD in Germany as well as anti-EU sentiments which in Hungary and Poland has gained significant support from the population of those states. Propaganda and economic stagnation seems to have its limits; like Abe Lincoln said: ‘You can’t fool all of the people all of the time.’

So much for the geopolitics.

WASHINGTON CONSENSUS CROSSES THE POND

Perhaps as significant is the shift in economic policies and development which has taken place within the EU. Without doubt there has taken a sharp right turn since the 1980s.This policy consists of full-on neo-liberal economic and social imperatives involving the imbibing of a ruthless, winner-takes-all orthodoxy and its equally brutal imposition; Greece is perhaps the most egregious victim of this frugal economic diet, followed by Latvia, Estonia, Ireland, Portugal, Greece and even Italy, all of which are being forced into penury and debt-peonage courtesy of the Troika’s relentless austerity programme.

THE EURO – A NON-OPTIMAL CURRENCY WITHOUT A STATE.

Piling on the agony the creation of the Euro single currency (the key problem) since 1992 has put the Euro member states into an economic strait-jacket. The currency value cannot be changed or devalued to boost national exports during economic downturns such as that experienced since 2008. The result has been that the largest industrial power in the Eurozone, Germany, has benefited from the stable euro while weaker economies on the periphery of the EU, including most notably, France, have endured catastrophic consequences to the rigid Euro rate. The cost and productivity structures of Germany and the northern bloc in the EU, means that its goods will be cheaper than the higher costs and lower productivity levels in the southern belt. It follows therefore that the northern bloc runs permanent trade surpluses whilst the south has permanent trade deficits.

In a new report, the Dutch think-tank, Gefira Foundation, notes that French industry has been contracting since the adoption of the euro. “It was not able to recover after either of the 2001 or 2008 and present crisis because the euro, a currency stronger than the French franc would be, has become a burden to France’s economy. The floating exchange rate works like an indicator of the strength of the economy and like an automatic stabilizer. A weaker currency helps to regain competitiveness during a crisis, while a stronger currency supports consumption of foreign goods.

The only reason that the Germans were prepared to abandon their beloved deutschmark was that it would be replaced by a hard euro whose exchange rate was fixed and overvalued. The euro is an orphan, a currency without a state, and thus a foreign currency to all the European states in Europe.

EASTERN EUROPE:

TWO COLLAPSES. 1. COMMUNISM, 2. NEOLIBERAL CAPITALISM

The EU’s eastern periphery also has problems, but of a different kind. However only the Baltics, Slovenia and Slovakia actually use the euro. It is planned to include them into the euro in the fullness of time. Apart, that is, from basket cases like the Baltics whose government, unlike the people, went where angels feared to tread – into the Eurozone and the euro.

Excluding Russia, of course, these Eastern European states – termed ‘transitional economies’ – have become stalled in economic stagnation which so far has been difficult if not impossible to overcome. These obstacles have been specific to the Eastern periphery. The European Union now consists of 28 states. No fewer than 10 of these are former states of the Eastern Bloc, and this proportion is set to grow with the impending accession with some minor Balkan nations. Although Georgia and Ukraine are in line for membership of the EU, they are also expected to join NATO as has become customary for aspirant EU states.

Whether they obtain either is a matter of conjecture, however, as this would be almost certain to cross Russia’s red lines and result in a major geopolitical flareup. Europe’s centre of gravity is shifting. And while the process of joining the European Union is driving change within these countries, it is also changing the nature of Europe itself. Those Eastern European states which emerged from the break-up of the Soviet Union had been led to believe that a bright new world of West European living standards, enhanced pay levels, high rates of social mobility and consumption were on offer.

Unfortunately, they were sold an illusion: the result of the transition so far seems to have been the creation of a low-wage hinterland, a border economy on the fringes of the highly developed European core; a Euro version of NAFTA and the maquiladora, i.e., low tech, low wage, low skills production units on the Mexican side of the US’s southern borders. Moreover there are acute demographic problems confronting the ‘new Europe’.

Eastern Europe is bleeding people. With low fertility rates, higher death rates, and emigration. Case study:

‘’IN THE Lithuanian town of Panevezys, a shiny new factory built by Devold, a Norwegian clothing manufacturer, sits alone in the local free economic zone. The factory is unable to fill 40 of its jobs, an eighth of the total. That is not because workers in Panevezys are too picky, but because there are fewer and fewer of them. There are about half as many students in the municipality’s schools as there were a decade ago, says the mayor.

Such worries are increasingly common across central and eastern Europe, where birth rates are low and emigration rates high. The ex-communist countries that joined the European Union from 2004 dreamed of quickly transforming themselves into Germany or Britain. Instead, many of their workers transported themselves to Germany or Britain. Latvia’s working-age population has fallen by a quarter since 2000; a third of those who graduated from university between 2002 and 2009 had emigrated by 2014. Polls of Bulgarian medical students show that 80-90% plan to emigrate after graduating.

Lithuania’s loss of workers is costly, says Stasys Jakeliunas, an economist. Remittances and EU money for infrastructure upgrades have helped, but labour shortages discourage foreign investment and hurt economic growth. According to the IMF, in some countries in eastern Europe emigration shaved 0.6-0.9 percentage points from annual GDP growth in 1999-2014. By 2030 GDP per person in Bulgaria, Romania and some of the Baltic countries may be 3-4% lower than it would have been without emigration.

All of this imperils public finances. Pensions, which take up about half of social spending in eastern Europe, are the biggest worry. In 2013 Latvia had 3.3 working-age adults for each person older than 65, about the same as Britain and France; by 2030 that is projected to fall to just over two, a level Britain and France will not reach until 2060. Countries are raising the retirement age (apart from Poland, which is recklessly lowering it). Benefits are already meagre, leaving little room for cuts. As a share of GDP, social spending in Bulgaria, Romania and the Baltic states is roughly half of that in many richer European countries.

Unable to dissuade people from leaving, governments are trying instead to lure them back, inspired by successful efforts in Ireland and South Korea. Daumantas Simenas, project manager of the Panevezys free economic zone, credits his return from Britain to the country’s “Create for Lithuania” programme, which matches educated professionals from the diaspora with government jobs. Having a job already lined up made the decision to return easier, he says. Plus, he adds, “home is home.”

Whether such efforts can turn the tide seems doubtful. “Create for Lithuania” has brought back more than 100 people since its launch five years ago, says Milda Darguzaite, who started the programme after leaving an investment-banking career in America for a government post in Vilnius. Returnees include an MP, a deputy mayor and several advisers to the prime minister. Bringing back doctors and engineers, however, is trickier. Studies show that skilled workers from eastern Europe are attracted abroad primarily by the quality of institutions such as good schools; better social benefits matter more for unskilled migrants. Data on return migration are scanty, but a recent report by the IMF suggests it has been “modest”, in some countries as low as 5% of those who left.’’ (3)

In more general terms figures for Eastern and central Europe as a whole are as follows. With the exception of the Czech Republic and Slovakia and Russia, every eastern European country has a declining population. Population declines as follows from 2006 to 2018:

Latvia and Lithuania = 12%

Ukraine = 9%

Hungary = 8.5%

Romania = 7%

Bulgaria = 6%

Estonia = 1.5%

Poland = 0.3%

The comprador vassal elites on the wrong side of the Oder-Neisse Line have been caught in the trap of dependency and semi-development, and in some cases under-development, and this was partly of their own making due to their rush to throw themselves into the arms of the US-NATO-EU alliance and an expected pay-off/bribe. The only states to avoid this have been Czechia, Slovakia and Russia. In the Balkans the same devastating NATO coalition engineered the destruction and break-up of what was once the sovereign state of Yugoslavia.

Thus In both economic and foreign policy the European political and financial elites have acted as overseas branch managers of a multinational enterprise whose HQ is on the other side of the pond (the US) where policy is determined and exported. Quislingism might be an appropriate word in this context.

DEMOCRATIC DEFICIT – THE FINAL ACT.

Finally, we come to the democratic deficit. This is important since the only way that change is possible is through the EU institutions. In order of importance these institutions comprise 1. The Council of Ministers, 2. The European Central Bank, 3. The European Commission. The last of these institutions consists of a President, at present, Ursula Von der Leyen, and formerly, Jean-Claude Juncker, seven, Vice-Presidents, whose identities are not known to me, and twenty Commissioners, equally obscure. Juncker succinctly enunciated the process of EU’s decision making as follows: ‘’If it’s Yes, we will say on we go, and if it is a No, we will say we will continue.’’ So much for open and flexible debate on policy.

The Council of Ministers and the ECB also pull various levers, often in tandem with extra-European global institutions such as NATO, WTO and IMF. Of course there is absolutely no sign that the current policies of the EU are not continuing along their present reactionary trajectory; and since the electorates of the EU have no control of the Council of Ministers and ECB there seems no way to break into this closed system of rule by a technocratic oligarchy. Once again political unrest in Europe suggests a causal connexion between the nature of the EU’s political and economic structures and the policies and outcomes emanating thereof.

This is not the EU we (the UK) signed up to in 1976, and there comes a time in politics where it is judicious to give up flogging a dead horse. A ‘progressive’ Labour government – if such a political animal is possible – would not be allowed by EU law to implement its economic reforms, cancel Trident, leave or even modify its NATO membership. Democracy is impossible without some measure of sovereignty, and nations must get control of their own foreign and economic policies since if they don’t the globalisers and Bilderbergers will and have done. There is nothing wrong with a volte face in politics.

It was J.M. Keynes who once said: ‘’When the facts change, I change my mind. What do you do sir?’

NOTES

(1) Richard Sakwa – Frontline Ukraine.

(2) Sakwa, Ibid. pp.227/228)

(3) The Economist – 19/01/2017. It should be added that the Economist is very much the house journal of the British elite. Yet even they have their doubts about the Euro project.

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US

April 18, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US

by Ramin Mazaheri for The Saker Blog

US bankers caused the Great Recession, and thus the US was the first to suffer economic turmoil. The coronavirus is a novel malady: we now know that it only severely attacks infirm and unstable bodies – it’s not overly facile to graft this idea onto the global economy.

Therefore, among Western nations and their client states it is the Eurozone (the weakest link in the global macro-economy, despite being also the biggest link) which will see the worst economic effects of the “Great Lockdown” stupidity.

(It is “stupid” because the West is employing quarantining and control methods used by Asian nations, but without having similar cultures of governmental economic intervention nor widespread trust in their governments.)

Because reality is multilayered we must not become immune – even though many want to focus only on the medical/tabloid/political sniping/fear aspects of corona – to the enormity of the Great Lockdown’s economic consequences. So it’s wake-up call time:

Hey! It is now really bad, economically!

Double hey!! Europe was already bad, economically!!

Triple hey!!! Europe was already intellectually paralysed when it came to fixing their bad political-economics!!!

We all get the first point, but regarding the second: Sadly, I am a rare Europe-based journalist who has publicly discussed how the Eurozone has already had a Lost Decade worse than either of Japan’s two – here is the data, which was quite easy to crunch but nobody in the Mainstream Media wanted to crunch it (or publish it).

So I tear you away from your corona-fear porn to point out: the Eurozone already had severe underlying morbidity. (Japan’s ailments – such as an obese debt-to-GDP ratio – are of an entirely different order for so many obvious political-structural reasons.)

I keep asking myself: “Maybe it’s not so bad, economically?” After all, the Eurozone has one competitive advantage over their US partners: their governments often chose to protect employment by assuming wage payments. This will prove vital psychologically (which influences consumer activity) and logistically (keeping supply chains normal) upon reopening.

But it is not the “Socialist Republic of the Eurozone” but rather the “Neoliberal Empire of the Eurozone”: some nations have suspended rents and debt repayments, but these are temporary suspensions and not total forgiveness of 1%er rentier parasitical activities. The state orders you to cease economic activity but will not fully cover the costs of doing so – cui bono? The Eurozone, after all, does not want socialist equality but capitalist inequality and wealth/market concentration – it’s the “birthplace of human rights (for aristocrats)”.

But the Eurozone’s wage assumptions and its larger social safety net – funded by the stolen wages of over two centuries of imperialism – cannot mask its fundamental weakness relative to other currencies.

Not much EU QE yet, but what else could they do – go socialist? Or perhaps fix the pan-European project?

Round after round until today’s “well past the point of ‘QE Infinity’” has proven that modern neoliberalism has only one play in its playbook. So we should not be surprised that 2008 is repeating itself.

The US has once again been the first to announce the biggest bailout. Currency swaps to debt-entrap client states were immediately opened in a series of hugely successful moves to buttress the dollar, yet again. In order to diffuse and stagger the effects of money-printing from threatening the dollar’s global dominance – just like a decade ago – we should expect the European Central Bank to hold off their major bailout once again.

The multinational 1% works in tandem, not competition, much to the consternation of analysts who can’t analyse in terms of class warfare. This Western “bankocracy” is something which I described in a 10-part series from last winter: Western central bankers: they’re God, they trust – a 10-part series on the QE economy.

Accordingly, the ECB has only announced a €750 billion rescue package, which is dwarfed by the $6 trillion of the US and even – in a rather significant development – the €1.1 trillion of Germany. France’s bailout is just 10% that of Germany’s, despite being 70% its economic size, because Emmanuel Macron is – of course – 100% supportive of the international 1%’s long-running goal of crushing the French model.

(“Fiscally responsible”, “debt fearing”, “Weimar-scarred” Germany has also additionally announced a “limitless” aid program for small- and medium-sized businesses: this was made possible due to the collateral appropriated from a decade of heartless strangulation of small- and medium-sized businesses in weaker areas of the Eurozone. Disgusting, how the rich get richer and how hypocritically Germany turns socialist just when the heat is turned on. As I point out over and over, because it is a fact: for over a century the obstacle to European stability remains Germany.)

So the ECB is obviously laying back, waiting for US QE to wend its way through the Western economy, but it’ll be the same playbook: G20 central banker + corporate banker collusion to keep QE going across the West.

But how long can infinity last?

Which is to say: how long can European nations keep borrowing from middlemen banks instead of using the ECB as it ought to be used – directly and with sovereignty, and not with national debt-increasing loans, as in this rescue package but outright purchases? The ECB directly funding national governments is against EU law.

The ECB wants to end these rules for this rescue package, but they could be challenged legally. However, they seem to have already thrown out this rulebook and are buying Italian bonds disproportionately – we are in the middle of a crisis, after all, and the wheels of justice move slow. But we don’t know that for sure because – in the lack of transparency which repeatedly plagues pan-European institutions – the ECB does not have to publish details of what it is buying under its emergency bond purchases

How long can this nonsense go on, both legally and politically, as well as historically and culturally?

I assume we’ll only find out for sure when the bond crisis fully hits the Eurozone.

It’s the bond market, stupid

As I wrote in Part 5, How QE has radically changed the nature of the West’s financial system:

“(Nomi) Prins (author of Collusion) quotes Bank of England leader Mark Carney in 2015 to illustrate this point: ‘As I wrote to G20 Leaders, the structure of (the) financial system has changed significantly since the crisis. Virtually all of the net credit since the crisis has been from the bond markets and the size of assets under management has increased by 60% to $74 trillion.’

Those numbers are staggering. The 2017 estimate for worldwide total GDP was around $75 trillion. Global QE had reached $12 trillion in 2016.”

Both the US and Eurozone now have huge corporate debt problems due to QE-funded stock buybacks, but while the biggest problem in the US in 2008 was mortgage debt in the Eurozone it was government debt. If a government – the largest economic player in any nation – cannot pay its bills (and in the Eurozone individual nations have no power to print money to pay their bills) said nation necessarily collapses. This is why government debt problems in the US and Japan are not at all comparable to the government debt problems of Greece, Belgium, France, etc.

Government debt is thus a fundamentally more troubling issue than subprime mortgage or corporate debt, and this is why their Sovereign Debt Crisis lasts four years and was not contained until 2012, years after the US “solved” their issue.

So the key question revolves around lending to sustain the Eurozone’s governments (at what interest rates), and the difference (spreads) between bond rates of different members of the Eurozone (because the failure of one major member could imperil the 19-member euro currency).

Wars increase interest rates, as there is demand caused by the activity of reconstruction, but epidemics historically produce lower interest rates, because nothing needs to be rebuilt and everyone is still peering through a crack in their front door and finding even that risky. This is significant given that European banks were greatly weakened by the 2008 and 2012 crises, to the point where only one European investment bank is now among the world’s 10 biggest (long-wobbly Deutsche Bank); and also that banks play a more vital role than in the US – European companies eschew selling bonds and shares to procure two-thirds of their credit from banks, a rate double that of the US.

We also know that the ECB has already been in negative-interest rate territory since 2014, so they cannot go lower than stealing your savings (and thus gutting their banks profits and making them weaker, and also forcing them to search for risker investments); we also know that nations such as Spain and Italy have had panic-inducing borrowing problems relatively recently; and we also know that their collective currency essentially refuses to be a political collective other than agreeing to all use the same bits of coloured paper.

Europe was supposed to be “forged in crisis”, and what has 12 years of fire revealed? The “pan-European project” essentially comes down to sharing the same bits of coloured paper and free (border, capital) movement. The lack of true international solidarity (which only exists in socialism, and never in competition-based capitalism) makes this a national project with no nation. That sounds paradoxical and nonsensical, but hey – I didn’t pen the Eurozone’s corrupt and unaccountable structure: the teachers of the Chicago Boys did.

A project of international solidarity based on the furthest-right capitalist and most rabidly anti-socialist principles has proven to be as stupid a concept as that sounds. In this crisis Eurozone nations are outbidding each other for personal protective pandemic gear (nor sharing it among themselves, in a public relations campaign the average Eurozoner is galled by), but also the favors of international high finance.

It is the latter which which will kill far more than corona via poverty.

But how has the ECB responded thus far? Typical: steal from others and claim they invented it

What we can certainly count on from the stagnant Eurozone is to expect zero creativity – since 1980 that is only found in Japan and the US, and all the Europeans can do is trail in their wake and try to look smugly stylish.

The European Central Bank’s key April 7 announcement reads like a bunch of concessions to common sense born of desperation, because that’s exactly what they are.

Here is the very start and bullet points of their press announcement – the key here is to note how very much they are willingly degrading the quality of their collateral/financial instruments:

  • ECB adopts an unprecedented set of collateral measures to mitigate the tightening of financial conditions across the euro area
  • Temporary increase in the Eurosystem’s risk tolerance in order to support credit to the economy
  • ECB eases the conditions for the use of credit claims as collateral
  • ECB adopts a general reduction of collateral valuation haircuts
  • Waiver to accept Greek sovereign debt instruments as collateral in Eurosystem credit operations
  • ECB will assess further measures to temporarily mitigate the effect on counterparties’ collateral availability from rating downgrade.

“Mitigate”, “increase in… risk tolerance”, “eases”, “reduction of collateral valuation” – everything is about making banking/fiscal standards lower, and thus riskier. In a monetary bloc which stared into the abyss in 2012, and which has had only growth rate stagnation and internally-weakening austerity ever since… does allowing more risk sound like a good solution?

Perhaps the easiest way to understand the Eurozone’s intrinsic dysfunction is that Greek national bonds, which were formerly considered to be too risky to be part of the ECB’s bond-buying program, will now be bought. This measure should have been implemented immediately in 2012 to help collectively mitigate bad Greek collateral, but richer Eurozone members wanted to force their products into Greece and buy up Greek assets. But what they are saying now is that collateral which was bad in 2012 is acceptable in 2020 even though said collateral is fundamentally even weaker, due to the failed solutions of austerity and upcoming post-corona economic prospects.

In a neoliberal bankocracy with a normal, united currency the ECB would socialise this bad collateral directly, but they cannot; they cannot bypass the banking middlemen (because they have never created “more Europe”), who can indeed refuse to buy Eurozone national bonds and send borrowing costs to unsustainable 7% levels.

The last one is the kicker, “rating downgrade”: for reasons only “capitalist conspiracy” can probably explain, word on the street is that ratings agencies feel that their credibility is on the line this time and so they will not be lenient like in 2008. Thus, the corona lockdown will produce a ton of corporate and banking downgrades, which will increase their borrowing costs, thus provoke bank bankruptcies in a currency bloc heavily dependent on their banks. The ECB is thus acknowledging to these groups that it knows this is coming and that it will do “whatever it takes”, a la ECB chief Mario Draghi in 2012… but this time for weak corporations that deserve to go bust (in capitalism). This is an immediate echo of the unprecedented, historic, unexpected Fed decision last week to start buying corporate junk debt.

This is the bond pin on which the Eurozone will turn

The Eurozone’s atrocious neoliberal underpinnings fundamentally leaves themselves more wide-open to the machinations of high finance than any other currency. The Eurozone and the pan-European project can be conceived of as a US/German federal system, where the states have a lot of power to gain or fail based on their own policies, but with only a tiny amount of federal support available in case of emergency.

Here is the crux of the biscuit for the Eurozone in a post-corona world: QE is not going to finally create economic growth unless strings are FINALLY attached. Not down-loaning this round(s) of QE means total, prolonged economic chaos combined with rapid governmental insolvency in the awful neoliberal-empire structure which is the Eurozone.

But it’s the same rub, yet on a wound which is even more raw than in 2012: any such formal strings will cause bankers to shy away from loaning to these ever-riskier national Eurozone economies; at the same time, successfully attaching said strings would enrage the populace because why are these banker-middlemen needed at all?

High finance pre-corona has been pacified with no-strings QE in order to keep them from attacking the Eurozone’s national bond markets – but if strings get attached then high finance can’t hoard the QE, get it? This is the ultimate height of neoliberal capitalism’s parasitical rapaciousness, and which is never reported.

So either Europe cuts out the middlemen and lends directly – and investors pounce upon the national bond markets in retaliation, as they did in 2009 or after Mitterrand’s anti-austerity victory in 1981 – or the Eurozone formally admits the middlemen are indeed the government in Western bankocracy, and national populaces revolt. A good place to read about this historical trend and economic inevitability is part 2 from my 7-part series from 2017, back when I foolishly assumed QE Infinity was an impossibility: Why no Petroeuro? or France’s historic effort for an anti-austerity Eurozone.

Insolvency in a Eurozone nation is thus the biggest, most likely threat to the Western-dominated global order. The Eurozone remains a disunited currency, which is an unsustainable paradox.

The long-running historical reality is that Germany preferred to join a neo-imperial project led by the US rather than the one led by Paris and Brussels, and this is why collective aid to nations has never been done in the Eurozone. Macron warns of EU unravelling unless it embraces financial solidarity – France has said this for so many decades that it no longer has any effect. Germany and their true partners – the US – simply don’t believe in European solidarity, only dominance of Europe.

The US can get away with making BlackRock the new private bureaucracy of the Fed & the financial strong-arm of the executive branch – Europe isn’t as dumb. The Yellow Vest and national strike marches hung effigies to BlackRock. Europeans are different, special, more intelligent, the global catalyst for modernity, the intellectual leaders of the West, etc.

Or so they keep telling us.

Time to show off that European finesse they’re so self-satisfied with… or throw it out altogether and join the Yellow Vests.

***********************************

Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis, and I hope you will find them useful in your leftist struggle!

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020

MSNBC: Chicago price gouging up 9,000% & the sports-journalization of US media – March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the upcoming ‘Socialism’s Ignored Success: Iranian Islamic Socialism’.

IMF who? Lagarde shows ECB is the top dollar job in QE age

July 17, 2019

by Ramin Mazaheri for the Saker blog (cross-posted with PressTV by permission)

IMF who? Lagarde shows ECB is the top dollar job in QE age

(Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea, and elsewhere. He is the author of “I’ll Ruin Everything You Are: Ending Western Propaganda on Red China.”)

Christine Lagarde just quit her top post at the International Monetary Fund in order to run the European Central Bank. This shows just far the euro has come (and central bankers), and represents either a historic step backwards or a leap of faith forward in the fight against the global domination of the US dollar.

The dollar’s dominance is what allows Washington to impose murderous, illegal sanctions on countries like Iran, Cuba, Korea and elsewhere, which is why many are so keen to end it.

The dollar’s imposition began after World War II, when the war-ravaged powers were forced to accept equating US paper with (but actually above) gold, a move which Charles de Gaulle bitterly referred to as the “exorbitant privilege” of the United States. The logic is simple: a $100 dollar bill cost Washington only the price of a piece of paper, whereas everyone else still had to mine, barter, earn or steal $100 worth of gold (or its equivalent in goods) to acquire that banknote.

The expensive US failure in Vietnam caused Richard Nixon to end this policy in 1971, but QE – printing money out of thin air – was opposed back then, so a replacement tool had to be quickly found in order to maintain US empire. The solution to effectively maintain the Bretton Woods system was found with the petrodollar” agreement of 1973: every barrel of Saudi oil sold to anyone had to be purchased in dollars, and surplus Saudi profit would be invested in US banks and in US debt securities (“petrodollar recycling”, per Henry Kissinger).

Washington had no qualms about propping up the ruthless, reactionary House of Saud to maintain US economic hegemony. The system expanded to other oil producers to the point where: no dollars? No oil.

The petrodollar keeps money flowing into the US and allows the US to “print gold” – it finances their huge budget deficits, high demand for the dollar fights off their inflation, it gives their banks a source of income for which they do zero genuine work, and the US themselves can buy “as much oil as they can print” from the Saudis. This is obviously a tremendous bargain for the US – the only reason the Saudis accept it is because they know they have absolutely zero legitimacy and would be deposed instantly without US arms and military support.

But the great deal is only for some in the US, as they are rabid neoliberal capitalists: from 1980 onwards the US elite funnelled these huge monies into Wall Street and other asset classes which only their fellow elite can touch, as opposed to intelligently and patriotically using the income to improve the overall conditions of their own nation, or even just raising wages (neoliberals call these concepts “socialism”).

Pick your poison: the US or the IMF?

The IMF, which is always led by a European, has long-pushed something to end this scam that weakens everyone for the US’ benefit, via the concept of the SDR (special drawing rights): a basket of international currencies which could replace the dollar as the world’s backing currency. Who needs the Fed when the SDR can provide international liquidity and financial stability? It wasn’t a great system, but it was closer to the IMF’s original aim of having an international monetary system, instead of the current US empire system of (petrodollar) tribute, which is no different from the Roman era.

The Great Recession pushed the superiority of the SDR to the fore – in 2009 China publicly supported, for the first time, that an international reserve currency be based on the SDR and be run by the IMF. The immorality and business failures of US bankers caused the Great Recession – it was only logical that the Americans lose their banking primacy.

The IMF was thus poised to become top banker, and one of their own was even about to be democratically elected.

In 2011 then-current IMF chief Dominique Strauss-Kahn, a major backer of the SDR basket, was outpolling Nicolas Sarkozy 2 to 1 to head the world’s 5th-largest economy and the neo-imperialist master of North and West Africa. He was certain to win, but on American soil he was accused of attempted rape of a hotel maid, dooming his presidency. The charges were dropped, but Strauss-Kahn admitted the liaison. People screamed “conspiracy” – I always found it highly coincidental that Strauss-Kahn found a maid whose native language was French in a country where seemingly all the cleaning women are Latinas? Conspiracy theorists assumed Sarkozy was behind it, with few noting how the IMF, the SDR and Strauss-Kahn threatened US economic hegemony.

QE means the US’ 1% never have to pay for their crimes

The US pushed back the IMF with one arm while the other arranged the current global financial regime – Quantitative Easing.

QE has been a total failure for the average person worldwide, but nowhere more so than in Europe. Incredibly, 1.5 years after it became official, PressTV and I remain one of the very few people to write about the statistical reality of Europe’s “Lost Decade”. I saw it happening in painful slow-motion, being PressTV’s chief correspondent in Paris.

The reason the Mainstream Media doesn’t want to talk about the failure of QE to provide broad economic growth is because their pro-capitalist media are owned by the same billionaires who get all the profit from QE.

The printing of trillions of paper money (which are certainly not backed by trillions in newly-mined gold) has, just like the oil-produced fruits of the petrodollar, gone to remake the same asset bubbles which sparked the Great Recession.

Once again, only the wealthy are profiting from shady capitalist practices: Housing Bubble II, new stock market records despite the endemic failure of the “real-economy” (evidenced by the Lost Decade), and absurd records in the prices of absurd luxury goods like MBS’ purchase of a da Vinci painting – this has all been paid for by the neoliberal-neoimperialist policy of QE which has failed the average Western citizen and continued the economic misery of the developing world.

But QE has proven one thing: governments are the most powerful forces in society, not bankers. This is something which socialist-inspired democracies are based on, but which only the 1% appear to take advantage of in Western liberal democracies.

Lagarde moving from the IMF to ECB would have been thought of as a step down pre-QE, mainly because nobody imagined that the head of the ECB could create several trillions of dollars simply by tapping a keyboard, as her predecessor Mario Draghi did. The IMF has a lot of money, but they do not have the power to create money.

Lagarde: More bad news for Europe’s 99%

When Lagarde was announced as the new head of the ECB the Western mainstream media provided – of course – none of this background, nor any perspective which fairly criticises the record of neoliberal thought and practice. Instead, their leading media justified Lagarde on one criterion – gender. The New York Times’ article was, “In Tense Times, ‘Call in the Woman’: Lagarde Will Lead the E.C.B”.

The Times championed Lagarde’s own claim that she deserved the job because she was not a male: “As I have said many times, if it had been Lehman Sisters rather than Lehman Brothers, the world might well look a lot different today.”

Such a claim is preposterous and shows how little Lagarde understands the principles and practices of neoliberal economics. However, everyone can quickly see that it also denies the existence of empresses, queens, Thatchers and Clintons; it also denies that women have played any role in shaping the positive and negative aspects of our modern world; it is a justification entirely based on divisive, distracting “identity politics” instead of a class-based true feminism.

Certainly, nobody would claim that simply being a male would be all that is necessary to head the ECB. And yet, such nonsense is all it takes in 2019 – we must all cheer simply because the new boss is female. This is what works with the average American today.

But the ECB is not American – why Lagarde?

The Times repeated the same misleading claim – that Lagarde is an “antitrust lawyer by training” : she worked for the world’s biggest law firm, based in Chicago (the Qom of neoliberal capitalist thought), meaning that she likely worked to manipulate the law in order to maintain trusts, not to dismantle trusts. The Times was forced to acknowledge that she has no experience as a central banker and will thus have a “steep learning curve”.

The West continues to put people in power based on the most absurd pretences of qualification for public service, even when such posts are unelected.

Investopedia had the same assessment as The Times: “However, the absence of an economics background or a discernible opinion on monetary policy means she would have to rely on financial technocrats a fair amount. Lagarde, who says she faced sexism and discrimination in her professional life….”

Lagarde clearly does not have the background required – just like The Times, Investopedia ignores this to assert her “gender qualifications”.

Pity the poor European Mainstream Media reader: Largarde is only a shiny tool whose ascension will do nothing but put an unqualified person in charge of the QE money-printing scheme. She will obviously kowtow to “technocrats” who insist that QE will eventually, one day stop creating Lost Decades.

Lagarde thus got the job not her qualifications but her ideology: it is not Islamic, nor socialist, nor moral – she believes in phony technocratism, because for Lagarde and her ilk “technocrats” are synonymous with “the 1%”. I know Lagarde well from covering the Tapie Affair in France: she was found guilty of negligence and misuse of public funds in a case where she got Sarkozy’s friend Bernard Tapie a hugely controversial 400-million euro payout from the French public coffers.

She only doesn’t have a criminal record and didn’t go to jail, which would seemingly have disqualified her for the ECB Post because…because Frances judicial system is not independent but totally corrupted by 1% influence – the judge simply decided to let her go scot-free, despite her guilt.

Negligence, misuse of public funds, payouts for millionaires – now we understand why Lagarde is considered to be “qualified” to run the ECB, and their QE scam, and to continue the phony “the 99% must work their nation out of debt” justification for austerity policies. More “Western-style leadership”…..

The leap of faith forward I mentioned at the start is this: the ECB runs the world’s largest macro-economy – it is possible they could decouple themselves from the dollar’s decades of exorbitant privilege, and the Chicago school of (neoliberal) capitalism, and start pursuing policies which do not flood the 1% with cheap credit to buy cheaply the lives of people across Europe.

However, the legal structures of the EU and the Eurozone are written in post-1989 language which is even more typically American than what underpins the system of the US itself. Therefore we can have little basis for faith that the cabal of bankers and public-into-private national finance minsters which is the Eurogroup, which runs the Eurozone with zero democratic accountability or even transparency, is going to start caring about the 99% in any of their respective nations.

The selection of the French Lagarde illustrate that Europe is no longer sovereign, but content to be a tool of US economic hegemony.

The BRICS countries hold out hopes for ending the petrodollar-fuelled US global finance domination, but they have effectively lost Brazil via the US-orchestrated coup against Dilma Roussef, and they have foolishly not offered to make it BRIICS, with the second ‘I’ standing for Iran. No need, really: China, Russia and Iran continue to make the most headway against the dollar, via the Belt and Road Initiative but especially the unstoppable petroyuan.

Cryptocurrency is another unstoppable way for countries to oppose US control over the global financial system, which is why The New York Times and the US treasury secretary just screamed, “Cryptocurrencies Pose National Security Threat, Mnuchin Says”. Cryptocurrency was indeed created in order to end the US petrodollar and QE schemes, which is why they are so wonderful and why they must be supported.

Lagarde leaving the IMF for the ECB is definitely a historic shift in the (Western) priority rankings. It is simply tragic for the West’s billion of innocents that unaccountable, unelected central bankers and their ineffective, corrupt cronies have become their political elite. This, of course, has equally lamentable consequences for those nations suffering under neoimperialism, illegal sanctions and other Washington-based policies.

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