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Is the Eurozone Crisis a British-American fantasy?

The English-language media seems to be of one mind on Europe in general and Greece in particular: the system is toast, and a series of sovereign defaults leading to either a fundamental restructuring or failure of the Eurozone is inevitable.

But that’s not the universal view on the Continent. Consider this from GlobalEurope Anticipation Bulletin, a French group (I think) that publishes provocative analysis of the global economy from a European perspective.

Global systemic crisis – Fourth quarter 2011: Implosive fusion of global financial assets

…But let’s come back to Greece and what is beginning to be a “very repetitive old story” which, as we have already explained, returns to the front of the media stage every time Washington and London are in serious difficulties. Moreover, coincidentally, the summer has been disastrous for the United States which is now in recession, which has seen their credit rating cut (an event deemed unthinkable by all the “experts” only six months ago) and exposed their political system’s state of widespread paralysis to an astonished world, all whilst being incapable of putting any serious measure in place to reduce their deficits. At the same time, the United Kingdom is sinking into depression with riots of uncommon violence, an austerity policy that fails to control budget deficits whilst plunging the country into an unprecedented social crisis, and a ruling coalition that doesn’t even know why it governs together against the backdrop of the scandal of collusion between political leaders and the Murdoch empire. No doubt, in such a context, everything was ripe for a media relaunch of the Greek crisis and its corollary, the end of the Euro!

If LEAP/E2020 had to summarize the “Hollywood style” or “Fox News” scenario, we would have the following synopsis: “While the US iceberg is ramming the Titanic, the crew leads the passengers in search of dangerous Greek terrorists who may have planted bombs on board!” In propaganda terms, it’s a known recipe: it’s a diversion to allow, first of all, the rescue of the passengers one wants to save (the informed elite who know very well that there are no Greek terrorists on board) since everyone can’t be saved; and then, hide the problem’s true nature for as long as possible to avoid a revolt on board (including some of the crew who sincerely believe that there really are bombs on board).

…For now, as we have said for several quarters, the media and financial hysteria surrounding the Greek crisis is primarily in the realm of propaganda and manipulation. To see this, it suffices to note that outside Greece, no Euroland citizen would realize that there is a crisis in Greece if the media didn’t regularly make it the subject of their headlines. Whilst in the United States, the daily ravages of the crisis do not need media coverage to be felt severely by the tens of millions of Americans…

Focusing on the background, we must emphasize that the “promoters” of a Greek crisis presented as a fatal crisis for the Euro have spent their time repeating it for almost two years without any of their forecasts coming to pass in any shape or form (except to continue talking about it). Facts are stubborn: despite the media outcry that should have seen off many economies or currencies, the Euro is stable, Euroland has come on in leaps and bounds in terms of integration and is about to break even more spectacular new ground, the emerging countries continue to diversify out of US Treasury Bonds and buy Euroland debt, and Greece’s exit from the Euro zone is still completely beyond consideration except in the Anglo-Saxon media articles whose writers generally have no idea of how the EU functions and even less of the strong trends that drive it.

Now our team can do nothing for those who want to continue to lose money by betting on a Euro collapse, Euro-Dollar parity, or Greece’s Euroland exit. These same people spent lot of money to protect themselves against the so-called “H1N1global epidemic” that experts, politicians and the media of all kinds “sold” for months to people worldwide and proved to be a huge farce fueled in part by pharmaceutical companies and cliques of experts under their orders. The rest, as always, is self-propelled by the lack of thought, sensationalism and mainstream media conformity. In the case of Euro-Greek crisis, the scenario is similar, with Wall Street and the City in the role of the pharmaceutical companies.

In fact we recall that what terrifies Wall Street and the City are the lessons that Euroland’s leaders and its people have been in the process of learning from these three years of crisis and the ineffective solutions that have been applied. The nature of Euroland creates a unique forum for discussion among the elite and American and British public opinion. And this is what disturbs Wall Street and the City, which is systematically trying to kill this forum, either by trying to plunge it into a panic by announcing the end of the Euro for example; or by reducing it to a waste of time and evidencing Euroland’s ineffectiveness, an inability to resolve the crisis. Which is the limit given the complete paralysis prevailing in Washington!

… Our team now expects a strong revival of European politics from the end of 2012 (similar to the 1984-1985 period) including a Euroland political integration treaty which will be put to a Euroland-wide referendum by 2015…For LEAP/E2020, there is no doubt that minds are ripe, throughout most of Euroland, for private creditors being asked to pay 50%, or even more, to resolve the future problems of public debt. This is, without doubt, a problem for European banks, but it will be managed to protect depositors. The shareholders themselves will have to take full responsibility: besides it’s really the foundation of capitalism!

Meanwhile, with 340 billion USD to find for refinancing in 2012, the European and American banks will continue to kill each other while trying to maintain the pre-crisis situation which gave them unlimited central bank support. As for Euroland, they may have a very bad surprise.

… just as the EU and the banks, from 1982 to 2009, lent freely to Greece and without pressing for accounts, over the same period, the world has lent freely to the United States believing its leaders’ promises about the state of the economy and the country’s finances. And in both cases, the money has been wasted in real estate booms with no future, in extravagant crony politics (in the US cronyism is Wall Street, the oil industry, health service providers) and in unproductive military spending. And in both cases, everyone discovers that in a few quarters you can’t fix decades of recklessness.

So, in November 2011 the United States will brace itself for a politico-financial “perfect storm” that will make the summer problems look like a slight sea breeze.

Some thoughts:

The idea that the UK and US have manufactured the Eurozone crisis in order to distract from their own impending doom is a little jarring to American sensibilities. But it’s not surprising that the rest of the world differs from Fox News and the Wall Street Journal. Watch the political coverage of the BBC and Al Jazeera, for instance, and you’ll see that US media’s take on world affairs isn’t universally shared.

Still, it’s hard to see any other way of interpreting the euro’s situation, since the numbers for Italy, Greece and the other PIIGS countries are what they are. At their level of indebtedness, austerity won’t work because it produces lower tax revenues in the short run, which forces higher borrowing from ever-less-enthusiastic lenders. Interest rates rise, debt costs soar, and the numbers keep getting worse. When you can’t pay your bills you don’t pay your bills. And asking German and French taxpayers to cover the difference, as German chancellor Angela Merkel is discovering, is a recipe for regime change.

And the idea that a consensus is forming in Europe around forcing banks to take a 50% haircut on their sovereign debt seems to bump up against the size of the banks’ holdings. According to these charts, European bank exposure to PIIGS country debt is so high that the result of this kind of writedown would be either multiple bank failures with all that that implies or a continent-wide bailout in which taxpayers (i.e. Germans) rather than bankers eat the losses.

It’s also hard to see how it matters where the next crisis erupts. It could easily be the US or UK, since their numbers don’t add up either. Both countries have insoluble problems which will eventually lead to collapse and/or currency crisis. But when one of us goes, the rest will necessarily follow. That’s the nature of an interconnected financial system. A depression or hyperinflation here means a depression or hyperinflation there, and after a few years we won’t remember or care where it started.

51 thoughts on "Is the Eurozone Crisis a British-American fantasy?"

  1. I have think this very thing for a while now.

    The US media keeps focussing on Greece,
    But they forget that the USA has 19% unemployment.
    Has had virtually zero interest rates for years
    Has been printing money for years
    Has a huge balance of payment problem
    That many States are laying off teachers and police !
    That everything they have tried to create jobs has not worked
    etc etc

  2. I appreciate the breadth of views and the relative openness of debate on this website – and I would like to mention some aspects that I think are important. My field of expertise is methodology with an emphasis on systematically integral understanding, and among others I have dealt extensively with the problems of economics and society. What I perceive in the debates in this field is mostly what I call tactical considerations – what is possible right now under the given or produced circumstances. But any tactics is only as good as the strategic background system on which it relies – while most of what is being declared as strategy these days is only blown-up tactics because there is practically no secure foundation in the ways of thinking. The crisis of confidence is finally a crisis of knowing how to think adequately, i.e. in a truly all-encompassing and hence secure way; after all, this is the only means for achieving a secure strategic basis for reasonable tactical moves. But most protagonists today believe that complete understanding is impossible anyway, a mere chimera, and feel coerced to muddling through – not noticing that they operate in a self-fulfilling prophecy. Instead of relying on empirical observation for testing theories on problematic foundations – as is usual, and many believe only that procedure is legitimate – one can rely on the laws of integral logic that define intelligibility, for then setting up views and theories that hold in a secure way without needing a prop-up by something empirical in an external sense (which is always limited anyway and can therefore never warrant any complete certainty).
    Lacking a secure basis, the debate on socioeconomic questions rests on mere beliefs – basic assumptions that do not allow any truly complete grasp of the whole eco-social process between human beings and nature – think for instance of thinking basically in terms of trade, of “homo oeconomicus”, or of more or less complete information, etc., or in the monetary sector of defining money as an exchange medium that should be brought into circulation by backing it with assets of some sort (at the highest level: the economies of nations). The basis for valuation remains in man-made ideas, it does not rest securely on laws imposed by nature. On the conceptual and hence theoretical level, the ultimate relation between value and money is still a huge problem. The approach via the domestic product is logically circular. The lack of completeness in the possible understanding of ultimate reality, resulting from shared basic beliefs, accounts for constraints in the actually produced eco-social reality (for instance a coercion to economic growth, calling for returns on investments, which extract money from sectors that are not immediately profitable, such as health care, education, or the state) with the corresponding wild meanders, and induces many one-eyed debates. The collapse of leading currencies is nothing astonishing, it is a logical consequence of relying on perfunctory assumptions. Today’s problems will not be solved by business ethics and moralistic appeals, as is now usual, because the systemic implications per se push problematic people to the top of the echelons. This fact, coupled with relying on mere beliefs that can become dogmas, is why now many powerful people want information wars instead of real problem-solving. Truly solving today’s problems requires thinking adequately the totality of the factual interrelations, which then allows restructuring the institutional setup in a secure and sane way.
    This is why I would like to discuss matters a bit from a strictly integral point of view. GEAB – LEAP and Dollar Collapse are – to my knowledge – among the good places for such a discussion, due to relatively open and competent contributors. Is there anybody here who would like to join?
    Whoever would like to have some “background material” for getting an idea of the positive scope might consider two extensive articles that I have published a few years ago and which are available online (at http://www.ijtr.org in their archive) – cf. Alec Schaerer (2008) “A general methodology for reconciling perspectivity and universality : applied to the discrepancy between theoretical economics and eco-social reality”, and (2009) “The basic concepts of theoretical economics : developing systematically the content of the law of real value”.

  3. Both the US and the UK have a Current Account Deficit and therefore at the mercy of their creditors, i.e. the rest of the world. AFAIK the Eurozone (as a whole) has a small Current Account Surplus and would suggest that they are not at the mercy of its creditors.
    This does not mean that the Eurozone doesn’t have large financial problems.

  4. From my point of view seems that always we are focusing or analyzing matters from a wrong (or not too much lucky) vision. Take few seconds to change the point of view and see it like it follows: We are in a world wide crisis of confidence (this is something we ought to agree more or less). We are seeing that one of the problems of that crisis for standard people or standard corporate is volatility, tensions, strong currency movement, wrong focus of the politicians (in general) in their comments, speeches, etc… And in that period of uncertainties/doubts which is the strongest or dangerous risk? a collapse of the financial markets/system? a collapse of that where will finish? >>> in the international currency I suppose… today this currency is the USD and it’s country the United States… so what is doing people? instead of focusing in the problems of US they are focusing in the problems of others that could after that affect US? seems at least and indirect path… What will happens if Eurozone collapse? probably that the world will follow them… What will happen if US collapse? probably that the world will follow it faster at least… And today we are reading in front of our eyes the levels of debt, budget, unfunded liabilities of US that at least today are worst that Eurozone in aggregate (it’s true, Eurozone still have the fiscal problems to manage) BUT what is our way of thinking about it? as US is the currency of the world instead of pushing for a better management of their problems we are focusing on the weak… but don’t forget that: A worldwide currency as a worldwide country influence OUGHT to be much more followed and controlled because a collapse of that would be cataclysmic. And what is our view? AS THEY ARE THE CENTER OF THE FINANCIAL SYSTEM/MARKETS WE GIVE THEM MORE “CREDIT OF MANEUVER”… It’s less problematic that they surpass the 80-90 debt to GDP? it’s less problematic that they do not agree on debt limit risings? it’s less problematic their huge unfunded liabilities? well… seems that YES, and that the wrong point of view because we are CONFIDENT that they can solve better what other can’t simply because they are bigger, international and a reference… BUT don’t forget again that: we are in periods of confidence crisis… and everybody is focus on other arenas… and that is dangerous…

  5. “But it’s not surprising that the rest of the world differs from Fox News and the Wall Street Journal. Watch the political coverage of the BBC and Al Jazeera, for instance, and you’ll see that US media’s take on world affairs isn’t universally shared.”

    I certainly would agree with your position regarding alternative media outlets – they tend to present more of an ‘unbiased’ presentation than do our Politically-Correct, over-regulated government-media complexes. That said, I find it curious your obvious selectivity regarding Fox news and the WSJ, while omitting some of the other major media outlets. The same could easily be said for the more ‘liberal’ Major media outlets not mentioned… Not that there is a hairs-breadth of Real difference between the the so-called ‘conservative’ and ‘liberal’ media – they are both nothing more than Establishment Arms of the Status-quo-at-all-costs Government-Media-Complex, but I digress…

  6. Good article and true comments. I am sorry but I didn’t understand how much GOLD I will need to survive this crisis?
    Sincerely Batpesho ,

  7. This notion of “us” vs “them” conversations distracts our attention away from the common roots of all these countries’ economic problems. The unifying force behind European, United Kingdom, and the United States economic problems are the structure of our economies. The “low regulation” “free market” fundamentalists have swept these nations into over-leveraged under-capitalized disasters. These economic structures have fueled ballooning sub-economies, which once hey began to fold under their weighted debts led to more failure throughout the wider economies. To argue over who is saying what about whom misses the reality that our economic model is crumbling on both sides of the Atlantic.

    1. So then David, what is the other side of your low regulation, free market ‘fundamentalism’…? I don’t know where you reside, but here in the U.S., we have ANYTHING BUT a ‘free market’ system. And I would challenge you to ask any small-medium sized business owner who doesn’t have connections in DC, just how ‘low’ his government regulatory burden is – at the local, state and Federal level…

      More ‘regulation’ is not and never was the answer. Perhaps Enforcement of myriad regulations already on the books might have helped some but alas, we’re human and therefore bribes, kickbacks, contributions, etc., have a way of making the otherwise stalwart Eliott Ness’s of the regulatory world, cave with desire for personal gain, or being outright in-the-pocket of the Political-Financial complex.

      Unfortunately, the path to real prosperity and economic fairness is a road few wish to take, because it involves personal responsibility, risk and the foreknowledge that there won’t be a Nanny-government stooge at your beckon call to FOrce everyone to play ‘fair’. However, we have already observed the abject FAILURE of ‘regulators’ to regulate properly due to human frailties as mentioned above, so what is there to lose by simply letting the market sort it out – without an overburdensome and ineffective regulatory body sticking their nose into the contractual agreements among men…?

      Ditch the ‘regulators’ (i.e., petty fiefdom-hungry, non-productive bureaucrats), and watch real growth and prosperity thrive.

      1. Don’t be so ignorant that financial regulations have been repealed and changed so Wall Street and banks could increase their positions without regard to their holdings, the separation between the banks and investment houses could merge to create behemoths “too large to fail” which brought about their failure. We had stability before “free market” fundamentalists took over the politics of Washington. Self-serving ignorance prevails for all who profit on the backs of the rest of us.

        PS we are not talking of the same issues, all your arguments are about the small business sector, where as mine are directed at the problem in the financial sector which brought us to this economic collapse.

  8. I am Harald Greib, from Hamburg, and a Board member of LEAP (which by
    the way is a truly European think-tank : not a French one, not based in
    Brussels either, but a network of indiduals scattered throughout Europe
    … and sometimes beyond).

    Hi Harald,

    Thanks for the contribution! I’m no regular reader of LEAP andw wrongly assumed that LEAP was essentially centered around the work of Franck Biancheri. I highly value Franck’s positions.

    Sorry for the mistake. I’m quite happy to hear that the work is a fully transnational work.

    I’ll certainly pay more attention to your collegial work in the future:)

  9. Regarding LEAP, read their previous bulletins and notice that their predictions have until now been disturbingly coherrent with what developements have lead up to, usually they have erred on the time factor, but the general outline of their forecasts/predictions over the years have proved right. Their tracrecord is too solid for anyone to dismiss them.

  10. by the way, I am a European living in the USA:

    it seems almost as if this debt crisis and default concerns and the inability of the states and the countries to collaborate is a scripted charade, a movie, badly written.

    All you have to do is just drag decisions out as long as possible and then you see yourselves exactly right here, watching this really horribly made movie, following the story, stuck to the screen. A soap opera has a better value…

    Why is it in my opinion all scripted and planned out at all levels of detail? If I didn’t believe this hoax, or fabricated charade (possibly a conspiracy – the all-hated word with the least credibility given by the upper 2% high-end rich-class leaders of the world, the G-20’s and the G-7’s), then I can only reasonably assume that all the leaders are complete morons, idiots, by nature of their limited brains, probably on some kind of a drug, or something…

    But, I truly believe, all the leaders involved in the USA-Euro-zone debt crisis charade are all working together intelligently, all well scripted, and supported by their own media to sell us this story, and that in each country respectively according to an “idiot” registry gauged to the population.

    Anybody else has any other or better suggestions?

    Of course i want the global economy to improve. Of course I want safety and human rights applied to all nations, kindred, and peoples…

    At this stage, “I CAN’T TAKE IT ANYMORE”. I am even wishing for an all-inclusive collapse, just so we get it over with. This charade is offending my remaining intelligence. Serious, somebody turn off this super-horrible movie…

  11. The US Fed is actually bailing out bad European banks, giving them cheap loans at the expense of US taxpayers and holders of US currency. This is very wrong. Bernanke is responsible. He must be relieved of his position, urgently.

    1. ventureshadow-“Bernanke is responsible. He must be relieved of his position, urgently”

      It was my understanding the Federal Reserve Bank is a private bank, owned by shareholders, which are also private banks. Also, it is my understanding that Bernanke is just a public figurehead. It is his job, as I understand it, to announce the Fed’s policies.

      Do you honestly believe that Bernanke would take any actions contrary to the private owners of the Fed? If Bernanke was fired, whith whom would you replace him?

      Of course the Fed is bailing out European banks. They are the owners of the Fed. Do you expect them sit there like a bump on a log while they watch themselves implode? Why not order Bernanke to bail them out of their mistakes?

  12. mr. rubino, the name of your site is dollarcollapse.com. and from your book, i have been investing with the idea that a collapse is a foregone conclusion. yet you write in the above paragraph, “Both countries have insoluble problems which will eventually lead to collapse and/or currency crisis”. does that mean you are not sure about a collapse, and instead may just have a “crisis”? what are the implications for each?

    1. Kito,

      Currency crisis and currency collapse mean basically the same thing: a situation where no one wants to hold a given currency and its value plummets (though collapse is the more extreme and unfortunately more likely version). This site and the dollar collapse book are based on the premise that the US is trying its best to destroy the dollar, and will probably succeed. But the future is tricky. The global debt deflation could theoretically overwhelm the Fed’s printing press and send us back into a 1930s style depression, in which case you’ll want to be short financial stocks (as James Turk and I recommend in our book) as well as long precious metals.

      1. I hope we’re right about precious metals (gold & silver, that is) doing well in a deflationary depression. My only concern is that – irony of ironies – despite all of the dollar’s abuse to date and the Fed’s continued efforts to devalue it, it ultimately survives and even thrives because it is needed to pay debt (60% of the debt in the world is denominated in dollars). So far as I see it, unless most debtors (from individuals to sovereigns) choose to default on their debts and instead buy G/S to preserve what wealth they have left then all assets will fall in price as they are sold to raise dollars. That seems to be what has been going on globally lately. Gold and silver is being sold to raise dollars. The question is, will the debtors of the world choose to impoverish themselves to pay off their debts, or will they default instead for their own survival.

  13. This is sort of like the inflation/deflation debate. Pretty meaningless, though entertaining.

    At some point, in the not too distant future, they will instruct all the players (the human race) that the game is over and it is time to put the ‘chance’ cards, the play money, plastic houses and hotels, and the little metal hats and other pieces back in the ‘Monopoly’ box.

    While we’re on ‘break’, you can take $50 per day out of the ATM. But starting next Thursday, the ATM will be fully functional. Oh, and don’t mind the pastel colors. Also, remember, it’s not ‘dollars’ any more. Around here, we call them ‘Obamas’, lol. In the EU, you guys will call them ‘Tricky Thichets’. You will need 50 of them to buy a gallon of gasoline.

  14. Hi Brad,

    sorry but you’re completely wrong. There definitely is a media manipulation regarding the Greek debt crisis. LEAP is absolutely right on that one.

    Here are three examples which popped up today, in just a single morning, of their analysis about US-UK media manipulation:
    (and don’t forget that LEAP also mentionned, as a pro-active partner in this manipulation process, the traditionnal Euroskeptics within the EU).

    1. http://www.marketwatch.com/story/china-bank-halts-swaps-with-some-european-banks-2011-09-20:
    Title : China bank halts swaps with some European banks
    Content : Reuters says that this happens because of Chinese fears of the European sovereign debt crisis …. while DowJones Newswire says it happens because the Chinese banks have exhausted their trading credit lines.
    Then, the article keep on elaborating on Chinese political blackmail on Europe as if only Reuters version was true.
    That’s objective information isn’it?

    2. http://www.zerohedge.com/news/latest-rumor-greece-hold-referendum-much-hated-austerity
    A good point for zerohedge which calls it what this rumor is : an idiocy. But nevertheless this false information, completely denied by the Greek gvt, is making the news all over the medias, including European ones where Euroskeptics are too happy to promote these false news.

    3. http://www.cnbc.com/id/44589868
    CNBC tells us that the Financial Times (once again) gave a false information this morning when it says that Siemens had pulled 500 millions€ out of France’s Société Generale.

    In time of world crisis, it’s tough to see through the fog of war!

    Happily there are great sites like DollarCollapse to blow the wind of truth on this fog of lies!

    Have a nice day.


    1. You missed my point entirely Eric. I never mentioned LEAP in my post. You infer what wasn’t implied.

      The notion that Washington/London are solely responsible for manipulating media coverage of Greece’ budget deficits is laughable. LEAP is a participant in the info war cloaking itself as some impartial arbiter of all that is holy and anti-American.

      Here’s your reality check Eric, everyone with skin in the game is attempting to manipulate the media.

      1. Sorry Brad, but I bring into the debate some facts; not opinions. And nothing manipulated.

        I think too that LEAP has been doing the same for quite a few years. It’s easy to find out anyhow : the ability to foresee the events and their calendar is the ultimate proof that one relies on facts; not on ideology.

        Besides, thinking that Wall Street and the City will not interfere for their own sake within the current global financial/economic/monetary mess (including the Euro) would be very naive. They are into survival mode right now.

        Last but not least, since when is it that criticizing Wall Street is anti-American? Are the TBTF holy? If so, then today, it seems to me that there are quite a lot of Americans who are ‘anti-Americans’ and not respectful of such ‘holyness’. Starting by DollarCollapse, by the way! -)

        The true adversary of an infowar is not the other side … but those who try to uncover the facts.

        Have a good day.


        1. In your first paragraph you purport to bring facts not opinion to the discussion. You then begin your second paragraph with the words, “I think.” Thank you for the chuckle.

          As to your third paragraph; Eric, the entire world is in survival mode right now. And to the fourth paragraph, Euro criticism of Washington and Wall Street is Euro diversion and media manipulation.

          Nice job paraphrasing Aeschylus, “In war, truth is the first casualty” though.

          All the best,

          1. Hi Brad,

            What exactly do you think you are achieving in the debate by refusing to discuss the issue with facts and rather arguing on vocabulary?
            Come on I am sure that you can do better! -)

            I gave precise examples of the manipulation mentionned by LEAP. That’s facts.

            Then I asked you questions, linked with your previous post, which you seem not willing to answer. So I repeat them again in case you did not see them -):
            ‘Last but not least, since when is it that criticizing Wall Street is anti-American? Are the TBTF holy? If so, then today, it seems to me that there are quite a lot of Americans who are ‘anti-Americans’ and not respectful of such ‘holyness’. Starting by DollarCollapse, by the way! -)’

            Let’s hope that you will try some candid answer, otherwise, the interest of debating will be reduced to nothing. The world crisis and this great site deserve much more than just playing with words.

            Have a good day.


  15. I fully agree with Daniel.
    Europeans have a so much different vision of what a market really is, and what it isn’t and will never be.
    Moreover, we Europeans are able to think also in terms of centuries, or more. Not only milliseconds HST. This means we are able to remember a time where UK was the superpower, US not, and how this has changed. We are able to understand information weapons, and not panic simply because of some mainstream journalists opinions, or some peak in spreads. We understand the true facts, not infowar manipulations, and strengthening alliances, within Eurozone and also with BRICS. And we can understand why US will lost its superpower status, and how this will occurs quickly : currently with a currency war, together with an information war. This is not a war with US people, but a war with US elites alone, who have sacrified US middle class and civil society, their best allies. Hence this war is quickly turning into a war of US elite against US people, when they will see Euro is still alive and kicking. Then they will unleash dollar hyperinflation.
    What some of you cannot see or imagine does not mean it is not existing now, nor will take place soon. Dollar collapse will surely be a blow for world economy, but not a deadly blow. World can live with a highly disminished US economy, and specifically Europe and China. Please have a look on the % GDP theses countries are exporting to US in 2010.
    All this is very sad for US people, really, because they will suffer a lot more than today, even with all the current jobless people. But sorry it is also a failure of US society, not only a failure of TBTF Wall Street and banksters. US people let this kind of people grow and take all the powers in US during 1 century. At this time they were much weaker but nobody was able to teach them the basic social rules, because you convinced yourself your new ideology was far better. But it was castle on sand. Your ignorance is the TBTF corporate strength. Individualism means everybody is weaker alone. Do you think banksters are alone ? They sold you an ideology they never believe in. They catched all of you you in jails because, you know, “there is no alternative”. And all theses words will be used again and again when they will explain you why dollar inflation is growing so fast. Then will you believe in them again ?
    You will start to become citizens again when you will be able to drop you old ideas and create new ones. This is what US means above all, not Fed, not dollar, not QE, not banksters, not electronic voting and shadow statistics.

  16. Thank you John for generating such an interesting debate with our last

    I am Harald Greib, from Hamburg, and a Board member of LEAP (which by
    the way is a truly European think-tank : not a French one, not based in
    Brussels either, but a network of indiduals scattered throughout Europe
    … and sometimes beyond).

    I don’t want to interfere with the ongoing debate (as I fully endorse
    our GEAB 57 communiqué’s content), but I want to mention that there is a
    very special occasion to get a ‘live debate’ on this topic and others
    connected with the crisis, because Franck Biancheri, director of
    LEAP/E2020 and I, will be in Houston on October 3rd/4th to discuss the
    global crisis, the future of the EU, the future of the US and the
    resulting prospective for the Transatlantic relationship (which will be
    in my opinion extremely different by 2020 from what we used to know
    since 1945).

    The conference is hosted by Stefen F. Austin State University.

    I guess that it may interest some of your numerous
    readers/contributors. In any case, Franck and I, attach a great
    importance to such kind of direct, candid European/American debates.
    More info there : http://www.sfasu.edu/laa/334.asp

    Thanks again for your great site and forward looking website.

    Kind regards

    Harald Greib

  17. Obviously the Europeans still aren’t responsible enough to stand up and be accountable for their own actions. Our Central and Private Bankers will underwrite their debt for them. Kind of sad really. Then again what do you expect from a continent that couldn’t defeat Libya.

    The usual political cartoonists here see it in terms of socialism v. capitalism. They are flat out wrong. This debate is TBTF Euro style. There are no libertarians in a crisis. Crisis are highly profitable. Bankers everywhere are corporate welfare bums.

    1. Yes, but it is the tenets of socialism that too many people accept (often unknowingly) that allow for and tolerate the mercantilism, corporate welfare, and central planning that leads to the “Too Big To Fail” circumstances in the first place.

      1. I don’t know if that’s entirely accurate Bruce. The present policy of privatizing profit and socializing loss is more a function of corruption than ideology.

          1. My life’s experience is different from yours Bruce. I’ve found cons merely use ideology to get over on their mark. Doesn’t matter if that ideology is political or religious. The only ideology the corrupt practice is lining their own pockets by the most expedient mean and method.

          2. Corruption is a result of greed, it has nothing to do with ideology. Policemen and politicians take bribes because they want something, not because they believe in something.

          3. Ideologies which promote centralization and top-down management do tend to increase corruption. Partly because of the concentration of power (the old adage, power corrupts) and partly because bureaucracy distances people from their constituents / clients, so that natural human empathy doesn’t come into play anymore. One of the silver linings of any future collapse is that we will have to re-localize, which will mean people will behave far more morally, in my expectation. E.g. a person might work for Monsanto for a high salary and tell themselves lies to obscure the damage they’re doing, but they’re far less likely to spray their crops with poison and sell the veggies to families in their own neighborhood. Humans in small groups have empathy and a conscience for evolutionary reasons, but (apparently) only in small groups and close-up. Any ideology involving central planning and the scientific management of a huge population by a smaller group of technocrats (and an even smaller group of elites) is just ripe for corruption, in a way that distributed, local government is not.

  18. They are not just a French group, it is a European group. There main contractor is the EU. You should consider this when you read there bulletin.

    Over here the general idée is that the Greek are bankrupt and will default on there dept. Most of the people don’t care if they do so. Just the politicians are interested in saving them. No body else is.

    We all (over here) know the Greek mentality and there situation very well. A lot of people go there for vacations. There is absolutely no way that county can be saved!

    1. Jane, you just forget to mention that Greece should never ever been allowed into the eurozone because its mediterranean mentality cannot match German Lutheran orthodoxy so please don’t blame the Greek people just the foolish european politicians who dreamed of a united europe but just forgot the law of financial gravity and everyone knows that all thing that goes up must come down.

      1. Waco, you also seem to forget that what you call the mediterranean mentality is accountable for the great empires that ever existed i.e. Ancient Greece, Roman Italy, Spanish and Portuguese empires. The truth is that all PIGS population work as many and even more hours per day than France or Germany (I can point out some charts and studies if you are interested). Their retirement age is equal to other european countries and they even have less holidays than Germany for instance. So lets cut the rubbish talk about “mentality” and pay attention to facts.
        Another thing that you seem to forget to mention is that when Greece and other small countries joined the EU and later the Euro, is that Germany and France financed those countries to cease their agriculture and fishing activities and by financed I literally mean paid thousands of Euros to fishermen to burn their boats, for example. And what was the purpose of this, you may ask. It is very simple those big countries needed either to sell and export their products or cut production thus leading to unemployment and less growth in their own countries. The plan was therefore to make Greece (and other PIGS) a vacation’s country whose main source of income and growth would be tourism. But, no country can survive solely on tourism importing all essential products and here is the outcome. Of course, Greece proceeded very badly when hiding and lying about their economical figures but they were desperate. The City and Wall Street coalition tried to take advantage of it as a diversion to their own problems, but it seems they will also be caught in their own trap.
        To conclude, I just would like all europeans to change their northern mentality about PIGS countries because it only shows prejudice and mostly ignorance.

        Kind regards,

    2. Sorry to contradict you, I am a LEAP’s board member I can not accept your saying that LEAP receives subventions from or is a contractor of the EU (or any national government). It is fully independent and lives solely from the subscription to its monthly Bulletin, GEAB. You may disagree with our anticipations but let’s get things right about our independence. Kind regards

  19. The end result of all this agitation
    will be:
    All big nations will dissolve into
    smaller units, albeit allied ones.
    Superpowers will cease to exist or
    be outlawed.
    Most sovereign debt will be defaulted
    on, ditto the promises those countries
    have made to their retired and elderly.
    Livings standards will fall, if for
    no other reason than shrinking supplies
    of essentials, and resultant price hikes. The growth game is over. CFB

  20. I don’t agree with LEAP’s suggestion that the crisis is just US/UK management of perception, because Der Spiegel has done a lot to stoke anxieties over Greece (maybe more than any other media source). Obviously the other PIIGS nations benefit from keeping all eyes on Greece, as well. And of course, there’s a lot of money to be made on the short side when a crisis erupts, so there are some folks (hedge funds and others) who want to make this seem as bad as possible, and those people could care less about protecting US/UK national interests.

    The US may be in even worse shape than the Eurozone, but as far as I can tell, markets practically ignore the longer term. Greece is an imminent problem, so that does sway markets. Furthermore, there’s a lot more uncertainty about how the EU will handle crises than the US. This idea that the US is similarly unpredictable, and that markets don’t trust Washington anymore because of the debt ceiling debacle, seems a little silly to me. We all know that was just theater. When push comes to shove Congress will do as they’re told; they don’t make the rules, the banks and corporations do. And the Fed is surely willing to print as much as it takes to paper over the next crisis. In the EU it’s much harder to know what will happen because of legislative processes and legal challenges. The focus on Europe seems merited.

  21. A brief look at the numbers does in fact support the notion that the media has over-hyped the story of debt overburdened “socialist” European sovereigns:

    [USA$ 2010]
    02160 revenue
    01296 deficit (60% of revenue)
    01653 increase in debt position (77% of revenue)
    14500 USA Fed Debt (626% of revenue)
    14900 USA GDP
    17500 public sector (local+state+fed) debt (117.5% of GDP)

    [EU27€ 2010]
    05404 revenue
    00784 deficit (14,5% of revenue)
    01061 increase in debt position (19,6% of revenue)
    09828 Gov Debt (182% of revenue)
    12281 GDP
    09828 public sector debt (80% of GDP)

    Note that even in terms of the (often cited but also misleading) GDP ratios, USA public sector debt (adding in state and local government debt to be comparable to the reported consolidated general government sector debt positions of EU members) is now 17.5/14.9 $tr = 117.5% of GDP (2010), not including about 5.5 tr$ off-balance sheet GSE liabilities (Fannie, Freddy, etc.). For the EU[27] this ratio is 80%.

  22. I don’t think the “Eurozone crisis” is a British-American fantasy but I do agree with LEAP that blame for US and global stock market volatility is blamed primarily on the financial problems of the European banks, as opposed to domestic political and economic/fiscal/monetary issues.

    Unfortunately, the numbers don’t “speak for themselves”, which is why Europeans have the subjective freedom to think that “Greece’s exit from the Euro zone is still completely beyond consideration” despite short-term Greek bond rates over 100%, etc., etc. I’ve never accused European leaders of stupidity, just overly intellectual socialist idealism, which can appear as such.

    I’m glad to read that the on-going 3 year “discussion forum” among Europeans has (finally?) learned some lessons, but spare me the appeal to capitalism’s foundation as the basis for the recent consideration that private creditors should suffer private losses. Thanks to the internet, the socialistic-minded Euro-citizens have simply learned about the agenda and don’t want to take the hit either. That’s so British-American of you, LEAP!

  23. Considering it was Goldman Sachs that shoehorned Greece into the EU in the first place, I think they have a right to be a bit peeved with the USA on this issue, though they didn’t mention this connection..

    With respect to the quoted article, you might want to mention that there is a link to it right on the dollarcolapse.com website, Global systemic crisis – Fourth quarter 2011 – GEAB, dated 9/19/11.

    GEAB seems to make some pretty valid points regarding the ‘super’ committee. About half of them are supposedly in favor of a balanced budget amendment. Therefore, in theory, they should have no trouble identifying $1.4 trillion in cuts, PER YEAR, which is what would be required to balance the budget right now without tax increases. But of course they are all adamantly opposed to any significant spending cuts, once the requirement is made to specifically name the areas to be cut.

    So while they have small pockets of Greece-like fiscal basket cases, such as Greece, Ireland, Portugal, we have one big Greece, headquartered in D.C. Of course the whole mess will most likely go down the drain together.

  24. One point our French friends forgot to mention; last week big French bank managers were saying; we have no USD financing problem. So why did all the Western central banks had to give them financing in block?

  25. Thanks for tackling the issue.

    Of course as a citizen of a Eurozone country, the treatment by the US financial blogosphere is considered harsh and is most unwelcome.

    Nobody here in Europe has forgotten the behaviour of Goldman-sachs and a few others.

    Quite a a number of people in the financial and money arena were not exact fond of the way the subprime crisis was handled. Not from a financial point of view. Since this is all private money but from a judiciary point of view.

    Long life to GS, Mozillo and a few others. long life to you my friends !

    This is rarely stated publicly or even openly but Europeans have ZERO confidence in both Washington – since Irak WMD – and Wall Street – since subprime.

    Wall Street is considered crooks. No more no less. Here in Europe, bankers may be considered evil. But most of them are not smart enough to be crooks. Not even smart enough to make political pay for their mistakes as well.

    This tarnished reputation is sad and certainly does not apply to American people taken as individuals. A lot of people here have friends – sometimes very tight and dear ones – in the States!

    LEAP – they are French indeed – are considered a bit too “europeists” by to-day Eurozone standards. But sure quite a few people here share their views within the Eurozone . Especially in the North of Europe – where the subprime debacle has triggered irredeemable damages to the US to a upper class that was so “americanophile” as we say here in Paris.

    Anyway the feeling here, not only Paris but in Berlin as well, is that US banks – and UK right-wing analysts à la Ambrose EP – and their “clique” are trying to transform the Greece issue into a test for the Euro. With the open will to break it using the CDS market in a smart way (no Socgen and al are not in the smart league when it comes to manipulating these instruments).

    This agenda is considered improper. Both from a monetary perspective – since the eurozone is globally on balance – and from a political perspective.

    Hence the harsh treatment on US Treasure Secretary of State… He is paying for the coarse words on his recent visit. He was paying for Wall Street attitude more than anything else!

    PS: thanks for the great work. You are certainly one of favourite readings. Your “best of Web” is an absolute must! Certainly not European in style but positively American in the way we love(d) America:)

  26. Good article and well balanced. There is one point I’d like to add about Germany. Merkel is effectively losing one election after another but she loses to the left. The German left is pro integration and pro bailouts. In this week end elections in Berlin, the minority party of the current coalition, that can be compared to the tea party, lost even the 5% quorum to have a representation to congress. They campaigned against Europe.

  27. Clever hypothesis by LEAP.

    But, the crisis in Europe seems real to me: bailouts will require legislative approval, and such may not be forthcoming from Finland and The Netherlands; continued voter revolts against Merkel; thinly capitalized European banking system on tenterhooks, with any emergent problems — e.g., rogue UBS trader — further reducing minimal capital reserves; German memory of ’20-’23, which will put a brake on printing; etc.

    I just do not see how the Euro survives through 2012.

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