By Simon Johnson
Most of the current policy discussion concerning the euro area is about austerity. Some people – particularly in German government circles – are pushing for tighter fiscal policies in troubled countries (i.e., higher taxes and lower government spending). Others – including in the new French government — are more inclined to push for a more expansive fiscal policy where possible and to resist fiscal contraction elsewhere.
The recently concluded G20 summit is being interpreted as shifting the balance away from the “austerity now” group, at least to some extent. But both sides of this debate are missing the important issue. As a result, the euro area continues its slide towards deeper crisis and likely eventual disruptive break-up.
The underlying problem in the euro area is the exchange rate system itself – the fact that these European countries locked themselves into an initial exchange rate, i.e., the relative price of their currencies, and promised to never change that exchange rate. This amounted to a very big bet that their economies would converge in productivity – that the Greeks (and others in what we now call the “periphery”) would in effect become more like the Germans. Alternatively, if the economies did not converge, the implicit presumption was that people would move – i.e., Greek workers go to Germany and converge to German productivity levels by working in factories and offices there.
It’s hard to say which version of convergence was more unrealistic.
In fact, the opposite happened. The gap between German and Greek (and other peripheral country) productivity increased, rather than decreasing, over the past decade. Germany, as a result, developed a large surplus on its current account – meaning that it exports more than it imports. The other countries, including Greece, Spain, Portugal and Ireland, had large current account deficits – they were buying more from the world than they were selling. These current account deficits were financed by capital inflows (including from Germany but also through and from other countries).
In theory, these capital inflows could have helped peripheral Europe invest, become more productive, and “catch up” with Germany. In practice, the capital inflows – in the form of borrowing – created the pathologies that now roil European markets.
In Greece, successive governments overspent – financed by borrowing — as they attempted to stay popular and win elections. Some of these same politicians will likely return to power following the elections last weekend.
Greece has already adopted a considerable degree of fiscal austerity. Now it needs to find its way to growth. Cutting the budget further won’t do that. “Structural reform” – a favorite phrase of the G20 crowd – takes a very long time to be effective, particularly to the extent that it involves firing people in the short-run. Throwing more “infrastructure” loans from Europe into the mix – for example, via the European Investment Bank – is unlikely to make much difference. Additional loans of this kind are likely to end up being wasted or stolen as more and more well-connected people prepare for the moment when the euro is replaced by some form of drachma.
In Spain and Ireland, capital inflows – through borrowing by prominent banks – pumped up the housing market. The bursting of that bubble has contracted their real economies and brought down all the banks that gambled on loans to real estate developers and construction companies. Their problems are not much to do with fiscal policy. As conventionally measured, both Ireland and Spain had responsible fiscal policies during the boom – but they were building up big contingent liabilities, in the form of irresponsible banking practices.
When the banks blew up in Ireland, this created a fiscal calamity for the government – mostly due to lost tax revenue. It remains to be seen if Ireland can now find its way back to growth.
Spain still needs to recapitalize its banks – putting more equity in to replace what has been wiped out by losses — and, most important, must also find a renewed path to private sector growth. Investors are rightly doubtful that the current policies are pointed in this direction.
In Portugal and Italy, the problem is a long-standing lack of growth. As financial markets become skeptical of European sovereign debt, these countries need to show that they can begin grow steadily – and bring down their debt relative to GDP (something that has not happened for the past decade or so). Fiscal austerity will not help, but fiscal expansion is also unlikely to do much – although presumably it could boost headline numbers for a quarter or two. The private sector needs to grow, preferably through exporting and through competing more effectively against imports.
Peripheral Europe could, in principle, experience an “internal devaluation”, in which nominal wages and prices fall, and they become hypercompetitive relative to Germany and other trading partners. As a matter of practical economic outcomes, it is hard to imagine anything less likely.
Some politicians still hint they could produce the rabbit of “full European integration” of the proverbial magic hat. What does this imply about quasi-permanent transfers from Germany to Greece (and others)? Who pays to clean up the banks? What happens to all the government debt already outstanding? And does this mean that all Europe would now adopt German-style fiscal policy?
These schemes are moving even beyond the far-fetched notions that brought us the euro. “Europe only integrates in the face of crisis” is the last slogan of the euro-enthusiasts. Perhaps, but crises have a tendency to get out of control – particularly when they produce political backlash.
Most likely, the European Central Bank will provide some big additional “liquidity” loans to bring down government bond yields as we head into the summer. We should worry about how long any such feel-good policies last. Historically, August is a good month for a big European crisis.
At these difficult times approach, some people will admonish governments to stand up to markets. But when you are relying on capital markets to finance a large part of your continuing budget deficit and your debt rollover, this is empty bravado.
European governments should never have put their heads so far into the lion’s mouth with regard to public sector borrowing. But the politicians – and many others – convinced themselves that they were all going to become more like Germany.
Peripheral Europe will never be like Germany. It’s time to face the implications of that fact.
An edited version of this post appeared this morning on the NYT.com’s Economix blog. It is used here with permission. If you would like to reproduce the entire blog post, please contact the New York Times.
62 thoughts on “The End Of The Euro: What’s Austerity Got To Do With It?”
Germany is a mess right now, cement boots all around, good luck sleeping with banjo’s and the horn section blarin away just as you dosed off. Didn’t graduate? We have a loan for that, just repay twice the prime rate compounded daily and all is well, nothing to it.
“But the politicians – and many others – convinced themselves that they were all going to become more like Germany.”
Politicians convinced themselves that what they were doing was most likely to result in reelection. There, Simon. Fixed it for you.
These European countries locked themselves into an initial exchange rate and threw away the key.
Obviously, either the Eurozone will break apart, or German wealth will be transferred to the periphery. Eurocrats are trying to arrange the latter without the German people understanding what is happening. I suspect they will succeed, but it’s a close call.
Meanwhile it should be a good ride.
It sounds like you are giving the arguments for why the best solution for peripheral Europe is to leave the Euro. But you never actually state your policy recommendation. Is it to abandon the ill-conceived Euro?
That sounds like the right and inevitable decision, even though members currently enjoy the stability of their common currency, and even though it will be traumatic. But explicit devaluation does allow the possibility of future growth.
Europe can either break the Euro peacefully, with the mutual understanding that the core wasn’t greedy and the periphery wasn’t lazy – it was just a bad idea. Or the Euro can break-up in a moment of disorder when a new Italian or Spanish government lashes out in anger. The choice depends on if Europeans are indignant or informed. Unfortunately nationalism is reinforcing indignation and ignorance.
“Most likely, the European Central Bank will provide some big additional “liquidity” loans to bring down government bond yields as we head into the summer. We should worry about how long any such feel-good policies last.”
Feel-good policies ?! You are dismissing the only thing that can fix this crisis !
Presenting LTROs as a backdoor bailout is silly. They worked (bond yields down, inflation expectations up) because they addressed the main problem currently faced by the eurozone: the total breakdown of interbank credit channels, which results in a growth-killing credit crunch. There is currently no monetary policy going on in the eurozone as refinancing rates in the core and periphery differ by almost a full percentage point. Inflation expectations are currently negative and nominal GDP is more than 10% below trend. Europe needs massive monetary stimulus, whatever the form, and it needs it yesterday. The rest is a giant waste of time, breath, resources, jobs, and lives.
Will it happen ? Ha. A dismantling of the Euro seems much more likely indeed.
@Simon Johnson “In practice, the capital inflows – in the form of borrowing – created the pathologies that now roil European markets.”
And that excessive borrowing was caused by the excessive willingness of banks to lend when for instance German banks were allowed to leverage their equity 62.5 times to 1 when lending to Greece at the same time they were limited to a leverage of 12.5 to 1, five times less, when lending to a German small business or entrepreneur.
And the crisis in Europe at this time is made so much worse because the wimpy regulators insists on that banks withdraw en masse urgently from any sovereign now deemed as risky and for which the banks do not have the required capital.
The crisis was not caused by the lack of bank capital, it was caused by the bad lending that resulted from the distortions produced by different capital requirements.
The austerity that is killing Europe, and the Western World, is the risk-taking austerity imposed on our banks by the nannies of Basel.
I’ve been a fan / follower of yours (and James) since I watched your Bill Moyer’s PBS program many years ago. So, you obviously don’t need my amateur endorsement, but …
Your “End Of The Euro” article was so well written (striking just the right balance between complex subject matter and clear explanations) that I just had to write and yell: KUDOS !
Same for ’13 Bankers’ and ‘White House Burning’.
Please keep up your marvelous work and informative writing.
PS: When will the politicians listen to your informed wisdom ?!
Can these countries issue national bonds to be purchased by their own people? Perhaps total amount is too large or citizens don’t have faith in their own government?
(I second the opinion of Michael C. This article was very well written.)
@ Simon Johnson
This is a fine analysis and it implicitly points to a crucial point: Europes` growth model doesn´t work any longer and unless a new one is being found, the crisis will continue. But this is true for the US-Economy too.
To me the main reason for the rising imbalances in current accounts actually has not been considered in the debate on how to resolve the crisis. Most global markets today are dominated by just a few very large companies and banks or to put it differently by “national champions”. For the countries in the so called periphery of the European Union it will be hardly possible to solve their current account and growth problems, because they simply don´t have any national champions. Greeces´ economy just can´t get competitive because it can´t compete with Volkswagen, General Electric, Samsung, Nestlé or JP Morgan on –which is another very important fact- mature, saturated global markets.
The core problem is the market structure in combination with the saturation of global markets, because it basically produces “eternal” winners and “kills” any truly innovative activity that might bring about economic change and new growth. Austerity is the wrong answer to this as is any kind of stimulus program.
Gees Stefan, that made absolutely no sense, and then you capped it off with the granny of all misnomers. You seem to want it both ways and then pick the best winner for you. Good luck with that gasket problem a brewin in the future.
After having lived, worked and studied in Italy, and lived in Spain I would like to make a couple of points.
1. People there have a different life view than Northern Europeans. They don’t want to work as hard. They want to take things easier while at work and have more time off. This is a cultural difference.
The solutions to this are 3
1. They leave the Euro live with their own currency high inflation and devaluations every few years, like Mexico Vs US.
2. They stay in the Euro and receive fiscal transfers, e.g New Mexico and New york.
3. Structural reforms are succesfull and they have much lower wages than the Northern countries.
If Simon believes 3 won’t work then option 2 is clearly better than 1 for Europe in General. Look at the difference between Mexico and New Mexico.
2. The banking crisis and “too big to fail” issue should clearly be addressed by having an FDIC type arrangement for the EU as proposed by Barroso. Perhaps Dr. Johnson could encourage the U.K. government and academics to push for this. Also Dr. Johnson could advise the EU commision in this regard. Also stronger than Dood Frank legislation is needed for Europe. Of course Dr. Johnson and colleagues have been leading with excellent suggestions on the ‘too big to fail” issue, such as breaking up the banks, capital requirements etc and I encourage them to continue.
The correlation between the problem loans of banks and the lower capital requirements allowed when assets were, ex ante, officially perceived as not risky, is 1
And bank regulators are deepening the crisis by requiring the banks, ex post, to hold more capital when there is none to be found.
The Great Bank Retrenchment to the Last Safe Haven is on full speed ahead and so all our banks seem doomed to end up trampled to death on the shores of the Bundesbank and US Treasury.
@ filbt zambas
Are you really sure you understand how markets & competion work? Persiting instability, where does come from? And what is the result of high concentrtion on global markets under free trade conditions over time? And just for the fun of it – there is quite some empirical evidence: http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf
Nice article but you don’t go far enough. The euro nations all use a foreign currency – the euro — over which they have zero control. The United States on the other hand, along with Japan, Canada, Australia, the UK, and a host of other nations, operate on a fiat currency over which they have sole control. The eurozone nations operate exactly like they are on a fixed gold standard system. Those nations, as you point out, who have no way to become competitive without years of painful internal devaluation would be far better off to leave they euro and regain their financial sovereignty. What the leadership is doing to he people is cruel and unusual punishment and unnecessary punishment.
“Peripheral Europe will never be like Germany.” Why not? Given that the Greek economy is less productive than the German, are the Greek people less productive than Germans? Are they less educated? Are they lazier? Are they less honest? Or are there public and private institutions which reduce productivity? In any case, why can these problems not be overcome?
Why, yes I do.
@Stefan, “The core problem is the market structure in combination with the saturation of global markets, because it basically produces “eternal” winners and “kills” any truly innovative activity that might bring about economic change and new growth. Austerity is the wrong answer to this as is any kind of stimulus program.”
I think there might be a fundamental misunderstanding about goals. Wanting to maintain a sustainable civilization built upon the REALITY of a man to land ratio was the TRADITION of many Western Countries. After that fundamental foundation was established – they did branch out based on what they CHOSE to swap with others. Greeks have a decent boat building industry, do they not? Granted, not enough to match the extreme love affair of mechanics that Germany has, but still, what good can come from robbing them of their sustainable traditions? Selling Mount Olympus to Pepsico isn’t going to change ancient history or replace it with something BETTER than sustainable, CIVILIZED traditions!
It’s all just blatant extraction – much more savage in scope than the *ism* seizures that Europe had to endure for all of the 20th century that were launched along with the Federal Reserve Board.
FIAT $$$$ is a supernatural power. That’s what everyone wanted it to be. The fact that is is turning out to be the worst psychobabble god invented yet, well, why is that a surprise?
It needs to be pointed out that perfect convergence doesn’t happen even in principle. More convergence is better than less, and the details have to be worked on to promote convergence, but the system has to be set up to work in the presence of imbalances, forever.
Given any real economy there will be differences in competitiveness, and eventually they’ll need to be resolved with protectionism, subsidy, or bankruptcy and reclamation of the weak. External observers champion the first option, while in Europe the fight is between the other two.
Germany, the powerhouse of European engineering, design, and manufacturing, will always lead Europe in internal fiscal integrity, that is, unless of course, it attempts to recapitalize and re-coup insolvent banks on the periphery. This is wasteful and un-productive, and what German worker doesn’t fully appreciate this fact?
Greece, with tourism and olive oil exporting is what, somehow going to rival BMW and Siemens in the world market place? Not in this lifetime.
Greece is an island paradise, while Germany is the brass ball component in the entire European package.
The encouraging news for Europe is the doppler shift away from austerity, and towards expansionism in the fiscal realm. With demand so depressed, more austerity just means more pink slips and higher unemployment, and less purchasing power by the citizens of Greece, Spain, Ireland, Italy, and Portugal. Austerity is a bankrupt option, with reams of evidence showing clearly the policy is ill-conceived, and ill-motivated. The immorality of having working men and women pay for the excesses of banks, politicians, and others for the calamity caused by the derivatives implosion (still proceeding apace), is not lost on those living in the periphery of Europe and indeed elsewhere.
Germany’s account surplus is driven by excellence in production and manufacturing, and not by a bet that convergence of economies from a fixed Euro exchange rate would be lost.
Germany needs to stop insisting the people have to make up the difference, and start realizing austerity is a complete bummer for both the overall economic plight of so much of the European theater, but more so, to the poor b*st*rds made to pay who had nothing to do with the crisis directly.
Although there are many problems with the institutions and human capital of the periphery, the glaring imbalance is with the distribution of productive (industrial and IP) capital. It’s very difficult to change this distribution.
People who LIVED it will tell you that everyone did what needed to be done in Russia, and now the same in Greece – knowing that there was no paper symbol ($$$$) floating around. “Money” basically pretended that people did not exist.
It is indeed tiresome.
That a group of academics, practitioners and bankers are not able to resolve these issues.
Are these issues new? In our extended histories from biblical times,
the Napoleanic wars,
the Dutch Tulip episode,
the South Sea bubble,
world war 1,
the Great Depression,
world war 2,
the abandonment of the Gold Standard..
the Oil crisis,
the LTC saga,
the Japan experience,
the Asian financial crisis
Probably inherent in the genes of Capitalism of boom & bust.
We will come out of this, I am certain.. in the process, we will have wars, exchange controls, the appearance of maniacs ( which may be a good thing ). Its like dying in very, very slow motion…
Living in South East Asia, we are all very far away and cannot feel the effects ( if any, yet. I am sure the bullet is on its way)
In fact we have too much money. Come over and take a look.
Awash with cash in every corner. Smart phones in every teenager’s pocket. LCD TV in every room of each home. 2 Cars for each home ( with the worlds highest tax on cars.. a Toyota Camry costs US$200,000 and rising )
How do fiscal transfers within the US actually work – leaving aside the Finanzausgleich in Germany for a moment – and can those institutional rules be applied, to a certain extent, to the European Union to mitigate any future eurozone crisis?
@ filbt zambas
Unfortunately I can´t wathc this video because it isn´t available in my county. But given it´s date and title to me it seems like we are talking about different things here, aren´t we.
Should not that in economic terms so peripheral state of Mississippi issue its own currency, so that it can better compete with the other US states and also escape the transfer curse?
MIssissippi already tried that, with disastrous results, Per.
Anonymous… I know that is why I wonder why they suggest Greece do it… I believe they are better with the Euro… even if they are thrown out of the Eurozone
@ filbt zambas
Unfortunately I can´t watch this video because it isn´t available in my county. But given it´s date and title to me it seems like we are talking about different things here, aren´t we.
I don’t know, I have never been out of the country.
PER, BETTER off with the Euro….Greece……agree.
If you wamt to watch the video use FoxyProxy with Firefox !
The way forward is “simple”, Europe needs to do what the US did after the Revolutionary War, assumtion of the sovereign debt by ECB and the imposition of taxes to pay down those debts. It’s the same solution instituted by Hamilton that saved the United Stared and allowed it to borrow and grow. This strategy seems to be the cleanest way to get the rich countries to pay down the debts of the highly indebted countries.
The European banking system will soon collapse and it won’t just be the end of the Euro that’s at stake.
The grim reality is no one can live beyond their means. This terrible fact holds true for individuals, cartels, corporations, societies, nations, and oligarchs! There is no escaping the hard math of this simple truth.
The Eurozone as an idea, may have merit, but only if it is designed in practical application as a confederacy with a central government promoting a conferate economic policy. The stronger players (imagine New York and California support the weaker, Luisianna and Rhode Island for example for the common good of the confederacy as a whole.
Personally, Europe with its wildly divergent cultures, languages, heritage, economies, – and with centururies of bloodletting and warring is never adopt the kind of continental confederacy necessary to compete globally as a single union. Sovereign states with centuries of rich history will never relinquish their respective sovereignties. There is too much history, too much blood. A new European order is necessary and inevitable.
That said – the predatorclass is quick to for brutsl austerity on their own populations to pave a way forward to bailout a den of vipers and thieves, – but nowhere is there any call for austerity from the predatorclass. No austerity for the den of vipers and thieves in the predatorclass financial oligarchs .
No austerity for the respective military, private military, intelligence, private intelligence, agriculture, pharmaceutical, and prison industrial complexes!!!! Why are the poor and Middleclass expected to swallow ruthless austerity measures for relief, – but NOT one single predatorclass oligarch is asked, or expected to undertake any form of austerity.
The answer to this simple questions frames the core difficulties facing societies, and nations globally.
The global financial system is a catastrophic mess and wanton FAILURE.
Remedying this horrorshow will require real sacrifice from everyone – the 99% and predatorclass alike. It’s the only way forward.
The predatorclass heaping all the hazards, burdens, losses, and hardship on the 99% is the very definition of fascism, of nazi’s.
There’s only one way to deal with or negotiate with fascists and nazis – bullets!!!!
Austerity merely continues the after-shocks but at an accelerated pace, not unlike the Spent Fuel Pool 4 reactor building at Fukushima Daichi. Two disasters, and two out of control situations that outstrips the capacity of man to deal with.
Shred, delete, disintegrate, negate, cancel derivatives, which were illegal from the early 1930’s here until the Clinton maladministration changed things, and made them worse.
Hijacking the conversation to imply that there is something other than wanton fraud and delusional monetary theory at play in Mississippi and Greece is strange, at best.
Mississippi and Michigan are excellent examples about micro economies on which tons of derivative leverage were created to support perpetual war in the Middle East. Mississippi representing agriculture, in general, a living off the land and sea, and Michigan being Germanic, a manufacturing powerhouse.
But you have to take a look at what happened to all the Gulf States in the past decade. Basically, the once in a lifetime event happened – a hurricane of biblical proportions, so to speak. After the event, time passed SO SLOWLY for the survivors because they were NOT told that the organization of USA wealth stored to rebuild from such act-of-god events – national guard, insurance, emergency stocks of food/ clothing/ shelter in USA locations not hit, transportation – was not there! It had already been looted to support the wars and FIAT $$$$ was playing around building castles in the sand in the Middle East! THAT event – Hurricane Katrina – is what blew up the derivative scheme. What has been done since then is nothing other than savage and vicious “privatizing the profits, socializing the loses”. Basically, still EXTRACTING from those states after EVERYTHING was already blown out to sea! Demented stuff…
Now, add in the BP Oil Spill disaster, and the last SUSTAINABLE micro-economy of the southern tier of states still alive was also brought to a complete halt, for a time, and now slowing dying over time – who wants to eat a crab with one pincher and three eyes?
The ages old practice of putting aside surplus to cover the inevitable hard times that HAPPEN (place your bets that they DO happen) was secretly robbed and this theft became obvious after Hurricane Katrina.
Greece is another story, no? Its sustainable micro economies are mostly intact. The Greece story is pure leveraged buy-out EXTRACTION of wealth.
@Tony F – The grim reality is no one can live beyond their means.
It’s not a “grim reality”. One lemon tree produces 300 fruit, under the right conditions. That’s a generous little tree :-)).
Everything in the web of life that is sustainable in a generous manner is lost when the man-to-land ratio is breached. I think that is what you mean by “living beyond their means”…
Billionaires, currently, have no limit of access to “means”. They certainly live beyond the “means” of millions. FIAT $$$$ is supernatural power.
The word “growth” appears many times in this article. Everybody wants it. But I don’t think anyone understands what growth really is, let alone how to achieve it.
@Nine yarder “I don’t think anyone understands what growth really is, let alone how to achieve it.”
That might indeed be so, but I sure know that by subsidizing what is perceived as not risky and taxing what is perceived as risky, as bank regulators effectively do with their capital requirements for banks based on perceived risk, is an effective way to hinder growth.
Perhaps you should define it first.
Yesterday was history, and tomorrow is a mystery.
“There’s a huge problem in the global banking sector” Keiser said.” In their core they [banks] are as dead as a corpse”.
Keiser also said banks would see massive defaults across Europe and the World, adding that major banks are already “technically insolvent.”
“Deutsche bank is insolvent, BNP is insolvent, Societie General is insolvent and Goldman Sachs is also insolvent” Keiser said.
From Maryland to St Louis on a training exercise for apparently the sooner-than-you-think MARTIAL LAW. Police state much?
“Military Rolls Tanks Onto St. Louis Streets…But Why?”
“U.S. Banks Aren’t Nearly Ready for Coming European Crisis”
(This sheds some light on why the military is in serious training exercises for martial law).
What’s the difference between a professional poker player who makes millions, and a hedge fund owner who also makes millions? One admits to a profession, and the other anonymously swims in the river of denile.
What’s the difference between an investment bank(ster) and the mafia? The mafia has better tailors and better rates and terms.
“you’ve been punk’d…” sums it up, don’t it?
As long as the US doesn’t say “we can help with your finances” because that would be a lie.
I agree with most of your excellent article. However, the Euro need not have become a problem but for borrowers and lenders who failed to foresee rainy day consequences and failed to realize that individual sovereign guarantees were ultimately meaningless without individual sovereign currencies. The EU as a whole shares some of the blame for creating false expectations. Banks share some of the blame for not being smarter.
The question is how to manage a fair reset. I suggest the EU agree as a whole to take back and eliminate bank loans to EU governments at some percentage of their face value. Banks that cannot live with the consequences of their lending to entities with a country should be taken over by good banks with their net liabilities being added to the EU rescue pool. EU governments will then have to live within their own means.
Where is the EU going to get the money to liquidate all the debt? It should create it. In this way, guilty parties are punished to some extent and no country is left directly bearing the cost.
Intriguing whoeveryouare. Hopefully you are in some position of leadership somewhere in the Eurozone, and can promote this your policies to the powersthatbe. Failure must be recognized and punished, or at least prevented from promogulating more failure. If not – then FAILURE will matasticize until the host entity is destroyed.
@anonymous, “From Maryland to St Louis on a training exercise for apparently the sooner-than-you-think MARTIAL LAW. Police state much?
“Military Rolls Tanks Onto St. Louis Streets…But Why?””
Okay then, if we’re getting into all out live action, here’s a place up for grabs….guess they need more than guys with clipboards to throw people out of their dwellings for the next go round of fraudclosures in Maryland and St. Louis…
Let’s see who Sheldon’s mercenaries are…
Exactly, the key problem faced by the eurozone is the large productivity gap between Germany and the troubled economies in the South.
“The culprit of all this mess is the single exchange rate. After all, people in the PIIGS are free to choose a laid-back lifestyle. But what they need is a currency that can reflect and match the national competitiveness.”
Re: The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See
This may sound harsh, but once the US went globalist, the policymakers knew that the middle class would evaporate (become extinct/irrelevant) and that the new USA would eventually look like the Philippines (gated enclaves and stark income disparities). Wall Street doesn’t need the middle class now that multinational corporations (including nominally American) have outsourced production. What the US does need is a highly militarised police force to keep the slaves in check. And, everybody knows, we got that already–police state USA-r-us.
Their psychobabble will get them killed in the final analysis.
It was not immoral or greedy for a human being to labor to build a home for the family. It WAS immoral for liars, thieves, and murderers to use that fundamental “weakness” against the human being to lay filthy hands on unearned wealth.
Every HUMAN BEING has the RIGHT to make their lives less miserable through HONEST WORK. That’s LIFE.
Just War is on. History keeps repeating the more “expert” you profess you are at interpreting it – go figure.
Recall if you dare the Enron scandal. Do you own googles and the information is thick and damning. Though this twisted tail is washed off the radar – at heart we witnessed a pack of ruthless swindlers manipulate energy futures markets for obscene profit while inflicting horrible hardships on the people. This criminal escapade is the model for how the den of vipers and thieves on wall street work. A slimy slithering reptile like ken lay bribes and funds fascist in the socalled government (in this case bush the idiot – draft dodging, Yale cheerleader and pathetic papa’s boy and his fathers fiends and shaitans in the oil and energy sector
, including that satanic beast cheney) to illegally manipulate energy futures markets for wonton profits. No concern for the people they harm. No concern for that thing we call theruleoflaw. No morality or conscience. No humanity. Just wanton greed and psychopathic avarice. Then when the house of cards crumble, all the key government culprits walk away. Lay passed, conveniently (and may he rot in hell), Arthur Ndetson (the nonauditors) crumbled and Enron died going from $90.00 to $1.00 per share in months – but the real crimes were whisked away and tossed off the radar. But many of us will not forget, or forgive. The same crimes are rampant in our socalled financial markets (which are totally dependent on central bank rumors of unending largess, and have absolutely no relation to economic fundamentals)
These monsters are our arch enemies. Much more lethal than any jihadi freak.
In a world where there are no laws – there are no laws for anyone predatorclass biiiiaatches!
@Tony F – totally agree with you about the birth and rise of the Enron Cabal after the scum bags were briefly defeated by minimal prosecution for the Savings and Loan schtick. But now they have embedded themselves into housing and health care along with energy – which is way too personal – as Liz Warren notes – they destroyed housing one mortgage at a time – it WAS personal. As for health care – YIKES! What a freekin’ mess. The one question that needs to be asked is never asked, as you note. How we got here is swept under the rug….
And all this sadistic criminality happening while the billion dollar security apparatus being erected under The Patriot Act to “protect” us against “terrorists” was in play….connect dots much? :-)
Prof Johnson has a good article out there today about “conflict of interest”…I guess that is one way to frame it :-)
But there has to be some real physical containment applied, also. That’s where the real problem is here – can’t physically grab the monsters and lock ’em up and that absolutely needs to be done.
A fine well thought out, well structured post by Simon, is followed by lovely decay sequence in the commentary…. as each new public comment becomes less coherent, and intelligibility declines at accelerating rate, , the anonymous’ begin to debate each other….
Call the entropy of knowledge to information to noise.
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