A Beautiful Mess
John Nash, the “Beautiful Mind” in the film based on Sylvia Nasar’s biography, was a far less pleasant fellow than the character played by Russell Crowe, and the “Nash Equilibrium” a far less pleasant vision of the world than the book or film allowed. Nash demonstrated that it is quite possible for competitors to choose mutual annihilation as a matter of rational self-interest. Let’s say you belong to a neolithic tribe that hunts mammoths. If the tribe next door kills more mammoths than you do, they eat more, get stronger, and kill you (and possibly eat you, too). So you kill as many mammoths as possible, both to eat more and deny sustenance to the competition. So does everyone else. Mammoths become extinct, and you all die out. A simple way to put it is that people only accept a solution as long as it includes them.
Europe is locked in something of a Nash Equilibrium: the political class will commit collective suicide and take what remains of the European economy down with it, rather than accede to terms that would save the economy, but eliminate the political class. The political class draws on a vast number of actual and prospective wards of the state who stand to live miserably if governments really were to cut spending enough to allay the fiscal crisis.
From the standpoint of many Italian voters, it makes no sense to accept budget cuts, because the proportion of elderly dependents will rise from 30% of the population today, to an impossible 65% around 2050. Italy’s present generation, which had about 1.25 children per female, will age into a world in which the tax base cannot possibly support them for the simple reason that too few taxpayers will exist. Fiscal austerity is not a question of comfort but of survival, and Italians have no rational reason to accept the sort of terms that the European Central Bank would like, because under austerity, their lives would change beyond recognition. This is an existential crisis, as the consequences of Italy’s gradual demographic death peak over the horizon.
Italians want to postpone the reckoning by extracting more subsidies from Germany, but German voters vehemently oppose this, and expressed their anger at their government by crushing the ruling party in six state elections in succession. By 2040, Germany’s old-age dependency ratio will rise to 58%, almost as bad as Italy’s. Because Germany has succeeded in dominating key niches in the world market for capital goods, Germany has more flexibility. But Germany’s problem is almost as severe as Italy’s, and Germans do not believe they should subsidize their feckless southern neighbors.
On the face of it, the stock market’s fixation with southern Europe seems unwarranted; as I argued in this morning’s Spengler column at Asia Times Online, national bankruptcy is the best thing that could happen to Italian manufacturing. FIAT, to be sure, probably will go bankrupt (and deserves to for the offense of pitching the poor man’s car of the Italian 1960s, the Cinquecento, to downwardly-mobile American consumers). The real Italian economy exists off the books, in pockets of technical talent preserved in thousands of family-owned firms. Without the predatory incompetence of the Italian state, these talented companies could find Asian partners and extend their reach to the world market.
Not the entire ruling political class is committed to European solidarity.
I guess the current extend of financial support is the most the German government will provide to the PIIGS, as the Bavarian conservatives CSU and the market-liberal FDP oppose further extension and among the ruling coalition only Merkel’s Christian Democrats may support more contributions to the EU.
A relative of mine worked for a large Italian family firm that was successful in setting up manufacturing operations in China. Listening to his accounts, I took it that one reason for their success, unlike some other Western companies, is that they knew how to operate in a corrupt or crony-networked society, and were comfortable doing so.
Now, if the Chinese were to buy Italian know-how, is it so unthinkable that they might find a solution that included also some of the corrupt Italian political class? After all, they might be comfortable operating in such a system.
I call BS on several key assumptions. The first is that Asia, Latin America, and China are all enjoying growth. This is not true, what they are experiencing is a bubble about to burst in China. Indeed the Markets are not reacting to Southern Europe (already baked in) but slowdown in China (new information). China is basically one giant ponzi scheme with a real estate and cheap goods manufacture component.
The second key assumption is that Europe cannot grow its way out of the predicament. Real economic growth by new technology creating productivity advantages over China and other cheap-labor houses can allow Europe to fund the retirement AND THEN SOME of the current population. HOWEVER this means kicking out all the Muslims, Africans, and others who drag productivity down and consume the lions share of social spending. See Sarrazin, Theo, “Germany Abolishes Itself.”
The third key assumption is that Europe cannot and should not simply put up protectionist walls against Chinese imports (the way China does for foreign imports). Why sell off assets to China when you can simply ban Chinese imports, demand in return for access to the European market Chinese investment dollars, technology transfer (from China to Europe) and ceding intellectual property? Otherwise pursue national/European champions ala China, but with machines not cheap labor pushing productivity. [And again, kick all the Muslims, Africans, etc. out because they are social drags.]
That is the path to prosperity. It has nothing to do with Jackboot thugs, merely copying the best of China (economic nationalism) while junking things that don’t work (cronyism, an impoverished workforce) and getting rid of their social drains (likely by lump-sum payments as they’re deported to Muslim countries where they can massacre each other and random Christians and Jews to their hearts content). Call it the ultimate anti-Colonialism, Europeans should not run other countries nor other peoples and countries run Europeans.
China’s still expanding. Read the news, e.g.
http://www.businessweek.com/news/2011-10-03/global-manufacturing-clings-to-growth-amid-slump-in-europe.html
Europe can put up all the walls it wants, declare bankruptcy, and starve for all I care. But that’s not their best move.
http://www.sovereignman.com/expat/obvious-signs-of-a-slowdown-in-china/
Simon Black believes that the Red Chinese bubble is popping.
Crazy moves in copper and a one-month sales halt in rare earths by the world’s largest miner tell a tale of weakness — and fear.
Central Planning has done in Red China — the same as it has America’s housing sector.
Excess centralism is the global curse.
OT.Whiskey. Long time no hear from. Any luck getting back to BC?
Regarding “getting rid of their social drains (likely by lump-sum payments as they’re deported to Muslim countries…”
And what if they don’t want to go? Now, about that “nothing to do with Jackboot thugs…”
That’s precisely what the establishment calls anyone who objects to more Islam in Europe. Nazis. The elites are pitching for more “inclusion.” In a funny way though. For instance, the wealthier arronndisements of Paris can afford to pay a fine and therefore avoid their minority quota. This allows the elites to dodge the dreary business of actually dealing with Muslims and blacks while simultaneously feeling morally superior to their inferiors.
Thanks Spengler
I hope that you are a sperm donor
How about an answer for Whiskey?
Isn’t the demographic crisis in mainland China just as bad (or even worse depending on whose measurements you believe) than that in Europe?
This does seem to be an issue with China, clearly, as well as with many other Asian “tiger” economies. I have raised the question to David before as well. That said, China has a couple of significant advantages over Europe and the other Asian states in this regard:
1 – the “depopulation” is not voluntary and in theory can be reversed with a change to the current “one child policy” laws. The dearth of children in Europe and other parts of Asia was a voluntary act by their populations, who are unlikely to change course any time soon.
2 – China still has a huge inland non-urban population that it has not been absorbed into the growth sectors of the economy. This means the (mostly coastal) urbanized and globalized population can continue to grow through in-migration from the provinces for a generation or so while the countryside more or less depopulates.
If the Chinese can reverse the population death spiral in the next couple of decades, they could theoretically come out of this better off than they would have been with a massively overpopulated and under-developed countryside.
One last note, although this is not really a positive. China has a very rudimentary social welfare system. The “iron rice bowl” really only covers the urban areas and not even all of them. The regime can be fairly heartless. If there are not enough children to care for the old, then perhaps they will simply not be cared for. The burden on society may not be that great if society simply ignores the aged and allowes them to fail.
About two years ago the Chinese gov’t renewed the one-child policy for at least another ten years. Also, there has always been an exemption for the rural peasants-they can have a second if the first is a girl or has other imperfections. And because of that particular sexist attitude there is a significant imbalance in the sex ratio due to female infanticide and selective abortion.
All of this means that even if they lifted the ban tomorrow the birth rate per woman is going to have to be much higher than the minimal replacement ratio of 2.1 or so, and it will need to occur among urban women which is pretty unlikely since they are the ones who are more likely to voluntarily opt for very small (or no) families. This is what happened in Korea- with modernization and urbanization the Korean gov’t found that it has done little good to plead with women to have more children. They just don’t want to.
David, should we label your demographic work “anti-malthusianism”, “Goldmanism” or “Spenglerism”? (Haven’t heard much from the population bomb folks lately…and they were sooooooo sure of themselves.)
More importantly, your work with demographics raises another issue. No one, to my limited knowledge, has really developed a case for stasis. Most economic models depend on growth with some so-called manageable level of inflation, avoiding deflation at all costs.
What happens if birth rate is steady at about 2.2 children per adult female? (I believe that is the correct population sustaining number, but defer to more accurate info from others)
If then Cost of Living is relatively static, an individual would advance along the promotion/ longevity portion of the pay scale. Since promotion is pyramidal, longevity is most likely sort of increase in earnings. My Grandfather joined the Navy in 1919. The pay scale remained unchanged until 1941 or so. His financial advancement was based upon his promotion growth in the Navy and the longevity function of the pay scale. Worked out just fine.
All of this is to ask what if Eurocrats convinced native European women to shoot for two children each and let multiple births and accidents do the rest? In 18 to 20 years (15 in some areas) new native workers come on line. What do the curves look like then?
A thought.
Though both speculative and gross, 1.95 or even 1.9 children per female might just be sustainable as a consequence of advancing medicine and fertility technology. What Europe is doing is suicide, however.
There’s still a good chance that earnings and prices will be uncorrelated for the next 10-15 years. It always happens in big bear territory.
When it comes to motherhood, you don’t convince the women, the convince themselves, one at a time. Parenting is an act of faith, most particularly faith in the future of one’s society, and that faith is, Thanks God, (joke not intended) a personal choice. at least I hope so.
Point taken, and concur. Another interesting side note; some believe that single child families raise self-centered adults. Siblings must be lived with…regardless. Just thinking out loud.
Being a single child is not quite as fortunate as being one of the brood. On the other hand, perhaps single children are uniquely qualified to tell the rest of us what depopulation feels like?
Lonely? (I am eldest of 4)
The 1950s-era FIAT 500 actually had a 500 CC engine; considerably larger than Vespa scooters (about 125 CC), but about the same or smaller than almost all British and German motorcycles of that era. And while it was barely adequate mechanically (the safety standards then were a joke), it was dirt cheap. A genuine “Peoples’ Car”. The new 500 may be plenty downwardly mobile, but it ain’t so cheap, since the present engine is larger than that of most of the VW Beetles (which line began at 1200 CCs in the 1940s and ended at 1800 CCs forty years later, more or less).
I remember the old Italian dung-beetle well– vastly inferior to (but cheaper than) the wonderful old VW. At 101 horses and 15k stripped, I doubt the updated 500 will wow Americans.
Given that the Fiat 500 costs as much as a Ford Focus or Hyundai Elantra – real cars not a “toy car” like the Fiat or Smart – I can’t see many Americans going for it. Not even mega-rich Jennifer Lopez, singing and dancing in the current Fiat ad, will sway them.
I went to look a new Fiat 500 over; I’m 6’3″ and my head was in the roof. It is simply too small; no head room. That is not true of many small cars here in the US, where a big fellow can comfortably sit in a compact car. A huge design oversight for a US market. I’m take the Ford Focus or the VW Rabbit, or the Civic anyday.
David,
For an excellent analysis of the fall of EU that agrees with your perception of who will defend it to the death see:
Daniel Hannan’s “The End of Europe’s Fantasy is Now in Sight”
http://www.standpointmag.co.uk/node/4105/full
I quoted it at length at my blog.
The PostWest
http://fallofknowledgeandreason.blogspot.com/2011/10/daniel-hannan-on-end-of-european-union.html
I’ve been predicting the decline of Europe for years now based simply on commonsense and intuition, not on expertise. I question, however, that the fall of Europe will not have a large impact on the rest of the world. Surely there will be repercussions, that will shake all of us in different ways. ?? What about western culture? Who will be the guardians of the museums with their treasures of western civilization? What about the different Orchestras and Opera companies? These are not small things.
Perhaps Ireland? They saved civilization once, perhaps they can do it again.
And all joking aside, their birth rate is above replacement AND they have the ability to recover from this mess, unlike their PIIGS littermates to the south. They also seems quite interested in preserving their heritage, possibly because they haven’t had quite the same tide of immigrants upon their shores. So perhaps it will fall to the colonies- Ireland, the US, Canada (they will have an interest in preserving French history, as well) and Australia.
A beautiful mess – well, beauty is in the eye of the beholder.
As far as I’m concerned, Europeans are getting what they deserve & I suspect you hold the same view.
Terry,
I 80+% agree with you,except for two things:
a) As things collapse, you KNOW they will blame it on the few remaining Jews and let their Islamist mobs loose to kill them.
b) As I look at Greece, broke and militarily threatened by the new Ottomans, prostrating itself before Israel because of the latter’s natural gas and military capability, I must wonder how utterly humiliated the Greeks must feel at having to go begging to us lowly Jews, of all people. (I actually think PM Papandreous is personally OK on the issue of Jews, but then again, he grew up around Jews in Minneapolis and San Francisco.)
You seem really obsessed with this “Europeans killing Jews” issue. It’s rather probable that Muslim Migrants or Gypsies will be targeted by populists and radicals as already happening.
I am guilty of nit-picking but the introduction part seems to me more in line with the Prisoner’s Dilemma of game theory where each participant has only one optimal solution (rat on each other). Nash showed in games where there is no obvious solution it is possible to find equilibrium strategies. In terms of the mammoth example, the 2 tribes could agree to cooperate assuming there is a credible punishment for violating the pact.
Technically you are of course correct, but it is pardonable to maintain the restriction that primitive tribes do not wish to cooperate for purposes of illustration.
I have argued in a book that we are already engaged in a long running civil war over debt bondage (slaveery) to the welfare state. However, territory has shifted significantly (partly to the Internet) and the war is being fought with proxy armies (illegals, unions, anarchists as at Wall Street) becaue te regime can’t count on the military for support. In other words, the financial collapse is unavoidable because of the bloated welfare state combined with demographics. http://www.futurnamics.com/civilwar.php
“Italy’s present generation, which had about 1.25 children per female, will age into a world in which the tax base cannot possibly support them for the simple reason that too few taxpayers will exist.”
Which is why immigrants are flooding into Italy, as well as the rest of Europe. The Europeans know that they are not having nearly enough kids to sustain their welfare states. Which is why they now have so many North African Muslims pouring into Europe and why there is so much social unrest there now. Can you imagine what will happen if these countries go broke and they have to tell these new immigrants that they’re not going to be getting all of the benefits they were promised? You already got a taste of that in France with the Muslim riots and in the recent London riots. When these countries collapse, and they will soon, the rioting will be enormous and there will be a very real possiblity of revolutions taking place, especially if people start to go hungry.
Revolutions leading to what? I’m not saying that to be belligerent, I really want to know. There will soon be an enormous class of non-taxpaying citizens (the elderly) being supported by a younger population that is becoming less productive by the day.
It would be one thing if it were a flood of hardworking immigrants. e.g. those who just want the American dream or its European equivalent, but as you point out that is probably not the case. When young AND old are to be supported by the taxpayers, who will be left to pay the tax?
It is reminiscent of Egypt. There has been a revolution, but there has been no change in the economic status of the people, because there can’t be.
Probably communist revolutions. People are not really aware here in the United States that the Communists are still big in Europe (as well as the anarchists, but they tend to follow whatever the communists do). If there are revolutions in Greece, a case can be made by the Greek communists that capitalism doesn’t work so the next logical step is communism. Heck, the current prime minister in Greece is the head of the Socialist Party, so it isn’t a huge leap to go over to communism. You could also see more of the Nazi brand of National Socialism. People also tend to forget that Hitler was NOT a right wing dictator, he was a National Socialist. In some countries, like Spain or Portugal, you could have the return of a Franco-type of dictator, taking over power while still providing basic services to the people. Either way, it will NOT be a good outcome for the Europeans.
That’s logical. Communism wasn’t even on my radar screen, so obvious a failure it has been. But the right kind of demagogue could do exactly as you propose- after all, the Germans felt unfairly put-upon after WWI and Hitler rose to power by exploiting the “poor me” sentiment. The Greek people aren’t ready to accept responsibility, either, even though they have benefited from their government’s escapades more than the German people ever did.
I was living in Paris during the Muslim riots of 2005. You are mistaken about the cause. The French at that time had about 12% unemployment. Non-Europeans in France are not hired. In fact, the French actively try to hire people with French or European names. They do not import Muslims and blacks for the purpose of employment, believe me. The Muslim riots were an escalation of car-burning that goes on all the time in and around areas occupied by Muslims. They were sparked by a police shooting, similar to the LA riots, after the Rodney King video, and other riots throughout the US.
When de Villepin tried to enact a law that would allow French companies to fire anyone within the first two years of hiring this set off indigenous French student riots and strikes, starting at the Sorbonne and spreading throughout France and eventually into the high schools. The law was defeated. This effectively destroyed de Villepin’s career and opened the door for Sarkozy.
…..Does anyone hear Karl Marx chortling quietly along with Engles and Lenin as they contemplate their fantasia of “From each according to his abilities, to each according to his needs.”?
This of course omits the spongy African and Muslim who refuse to fit in with the “pool” and assimilate, while breeding heartily. And, it pisses off those industrious and talented who say, “Why should I work my a** off just to pay more taxes?”
The answer may very well be more Lichtensteins and Caribbrean Offshore Vaults with green-eyeshaded accountants truly ruling the world by becoming the new gatekeepers.
Indeed a real Mess.
…….Paging James Bond and Arthur C. Clarke…….
It must be difficult for the modern sophisticated calculating European political class, those children of the ideal (Bismarkian) state that can’t be bothered to inbreed anymore, for whom the ideal Hegelian state of affairs is where the real is rational and the rational is real, except for the clodhoppers in Greece and Bosnia and the millions of local backwater villages where they can’t or won’t balance their books and frankly don’t care, and have never viewed the state as rational anyway. Poof, there goes the Enlightenment.
‘fleas on a dead dog’
There should be a pulitzer prize for one liners.
inevitably:
The fleas hop off the dead dog and bite all the harder on the former owner. Which takes away from the mood of mourning period.
When players lack the means to coordinate, say because they are distrustful, or have asymmetric information, the outcome of the game may be inefficient from a global point of view. The “sovereign debt game” is a non-cooperative bargaining between debtor, Greece and major creditors Germany and France. Technically, Greece is insolvent: it does not have the future resources to repay. Admitting default would mean write offs by banks and possibly bankruptcies. So, bankrupt banks would have to be recapitalized. This was politically damaging and also required money. Unfortunately, European central bank is NOT the lender of last resort: Germany “owns” the bank. So, Merkel and Sarkozy acted as if Greece were illiquid piling debt upon debt. This strategy though had a severe limitation in that the longer the negotiation takes, the higher the chances of transforming a local financial trouble into a major systemic problem. Greece itself also wanted to prolong the negotiation because the longer it took the higher the chances of a bailout to avoid a contagion. Now, I think the problem has morphed into the viability Euro. The crisis have shown that without a fiscal union, monetary union would be a big gamble. Also, there is not much unity in European union. As Kissinger famously said, “if you wanted call the European Union, who do you call?”
Greece was and is a sovereign embezzler. Her books were cooked all the way along.
She simply must be cut off.
The mega-banks will have to be nationalized and the high wages ended. They need to be shrunk.
It’s hard for Americans to scope just how oversized these European institutions are.
The HFT algos are rallying Wall Street on the back of Euro-USD correlations — a false positive for them.
This time around the strength in the Euro is entirely due to liquidation of profitable positions in US Treasuries ( thank you Mr. Bernanke & operation twist ) and repatriation of said proceeds in Euros.
These winnings are then presented to the authorities as reductions in risk and a bump in Tier 1 Capital.
The algos don’t comprehend that the system is in an asset liquidation phase. And so it is that we have endless ‘risk-on’ betting — in equities, in commodities and perhaps even in Class A real estate.
It’s a head fake.
@ David
A few observations from an old expat.
“Europe is locked in something of a Nash Equilibrium: the political class will commit collective suicide and take what remains of the European economy down with it, rather than accede to terms that would save the economy, but eliminate the political class.”
The politcal classs are mostly, in some form, socialists, so the steps needed to save the economy would be alien in concept and unacceptable at a base pyschological level to most.
“the entire political class of Germany is dedicated to European solidarity as an antidote to German nationalism and cannot imagine throwing the Greeks under the bus (that is, pushing them out of the Euro).”
Most of those who participated in the bad old days of 33′-45′ are long dead and hoisting collective guilt on the younger generation, and enslaving them with debt or wiping out any chance of savings, isn’t gaining them any voters. On the other hand, the Germans have the same birth rates as most of W. Europe and alot of the educated youth I meet are looking to immigrate.
“And each time the Greeks display their empty pockets and grin.”
Rumour on the ground is that Greece is taking any bailout money they receive and are buying gold to secure themselves when the eventual collapse or booting out of the EU comes.
The political class is socialist, all right, which in plain English means, “corrupt.” To kill the fleas, you have to kill the dog — put the state in receivership.
“The political class is socialist, all right, which in plain English means, “corrupt.” To kill the fleas, you have to kill the dog — put the state in receivership.”
I completely agree. However I think that most Europeans themselves have not come to the full realization just how bad of a situation the EU is in nor has the political class, or its lapdog media, been forthcoming about the facts (natch).
I’m also not sure if the Europeans themselves are up to making such a needed correction, but as there isn’t much more road for the proverbial “tin can” to be kicked it’s to be seen. I don’t think this will end peacefully.
Someday all you losers will understand what this is about. Namely that the money supply is based on the price of real estate. And as long as real estate prices are falling there will be no recovery. Hopefully within the next 1000 years you will understand. I wont get my hopes up though. A 1000 years might not be long enough to get the message through your thick skulls. Have a happy recession and enjoy yourself with all your bullshit explanations.
“Namely that the money supply is based on the price of real estate. And as long as real estate prices are falling there will be no recovery.”
How about providing some analysis and explanations to your statement instead of insults? Just a suggestion.
So…you really don’t know what you’re talking about, eh?
Spengler,
Loved the article on Italy turning into a theme park (so true) and thanks for letting us know ahead of time about the Kudlow appearance. I think you hit the nail on the head in regards to your argument that Europe’s political elites live off of their countries productive assets. Europe is the most glaring example of what you rightly call crony capitalism. It should be noted that one politician, and really just one, has identified, defined and discussed the economic and moral importance of ending crony capitalism. That politician is of course Sarah Palin. Just saying…
Re:…..”… one politician, and really just one, has identified, defined and discussed the economic and moral importance of ending crony capitalism. That politician is of course Sarah Palin. Just saying….”
This strange person’s name, Sarah Palin, keeps popping up like a mushroom after rain. But like a mushroom, she’s very lightweight, bland, and possibly toxic. What about her explains her sort of vacuous attraction? Where’s that woman’s substance? Who ghosts her stuff?
How can anyone be serious about her in any elected office at all in the future after she resigned from the office of Governor of Alaska? Certainly more attention needs to be given to that under-reported event.
“How can anyone be serious about her in any elected office at all in the future after she resigned from the office of Governor of Alaska? Certainly more attention needs to be given to that under-reported event.”
Considering the unhinged, rabid attacks on her as a public figure, even after the election, I think her decision was more based on that as a public official, one cannot sue the people slandering you, and members of your family.
I think more attention is needed on how a one term senator, who didn’t even complete that, with a dubious background, unexplained trips abroad, unreleased educational documents and strange, if not repugnant, acquaintances ended up as POTUS. Maybe you can shed some light. Thanks.
Palin was driven from office by a continuous series of false ethics accusations brought by Democratic Party activists. Even though the accusations were false, she had to spend large amounts of money on legal bills to defend against them. This was barratry on the part of the Dems, and intentionally done to bankrupt her and her family. When the legal bills reached half a million dollars and when fighting the lying slanders took 80 percent of her working time, she resigned. The Palins, unlike all those Democratic politicians, were not wealthy, so they could not afford to pay all those legal bills.
The reason Palin’s name keeps coming up is that she is a person of integrity and courage. It’s too bad that lying propaganda and elitist snobbery have made it impossible for her to become President, because she would probably be a better one than most. For one thing she has a great fund of common sense, something that most politicians, especially Democrats but also some Republicans, lack completely. She reminds me of Oliver Wendell Holmes, Jr.’s comment about FDR: a second rate intellect but a first rate temperament. Temperament and character count for far more than sheer intellect in a President (look at who were supposed to bethe most intelligent among 20th century Presidents: Wilson, Hoover, Nixon, Carter, and allegedly Obama). Palin has both good temperament and good character.
The bitter irony is that Europe’s deadly, delusional fear and hatred of Jews as a people secretly bent upon hegemony over Europe and, for that matter, eventually the entire world — in other words, the Big Lie — has turned out to be the very opposite — the Plain Truth — when it comes to Muslims in their midst, who, far from denying it, openly proclaim such conquest to be their goal and day in and day out rub Europe’s face in it, while Europeans kiss their ass and grovel before them, still pointing their fingers at the Jews as the cause of their troubles.
Perhaps Europe needs to think about cutting the Gordian Knot by restoring the divine right monarchies. It is entirely possible that France could not be worse governed by the likes of Louis XIV. The same for the rest of the republics. Perhaps the still-existent monarchies need to get shed of the pretence of democracy and let their monarchs rule their countries. In essence, most of the problems of Europe can be traced to the political classes and their reptilian accomplices (aka MSM). Perhaps we all need to rethink our fundamental attitudes?
Regarding the US introduction of the Fiat 500, I wonder how much Fiat had a choice in that decision. Part of the reason Chrysler was given to Fiat for a song was because Fiat already had the small car designs in hand, and this is what the White House wanted to see on American roads. The 500 may serve Fiat in the same way the Volt serves GM. They are politically correct “must haves” that were required of them to simply play the game. Both are probable failures. The Volt is simply an unjustifiable vehicle for the price, it may be headed for the Hall of Fame of Detroit’s disasters. The Fiat 500 is yet a usable car. Not a great car, but it is certainly more attractive than the insane Volt.
Respectfully, I disagree with the author on several fronts; this is not an issue of financial failure, immigration policy, or low birth rates (which are symptoms of moral decay and narcissism); but another utter failure of command and control economics. For various reasons in order for the elites to keep the reigns of power they must have this type of system. Call it what you will, socialism, communism, nazism or islamic fascist; it is about control. In the United States we call this malaise “liberalism” or for the politically correct “progressive”. Europe will either embrace the traditions of 1688, John Locke and Winston, or fail utterly. Europe will then sink not into darkness but into the deep shades of colorless gray of twilight before the setting of the sun. No one can change this but the average European (I deem the odds to be 50:50 only because they will look to America as a beacon of sober guidance in the best traditions of Liberty). From a financial standpoint; lets say I have 10,000,000.00 Pounds or an equivalent amount, and I’m holding sovereign debt or exposed to the Euro in a big way; sooner or later (and preferably before the crash). I know I have to liquidate that position (for the sake of argument I am not a member of the elites or the trust fund crowd). I also know time, is not on my side. 1. We have the makings for capital flight coupled with immigration. 2. Where do I flee to (hint; 50 years ago it would have been the United States but not today, please see command and control economies above) Japan?; MITA has proven to be a fabulous experiment; the Nikkei went from 39,000 in 1989 to what it is today; 8605.62; Carter/Obamanomics sure does work? How about China or Hong-Kong? On the plus side the Communist Chinese Government are using the Milton “Reaganomics” Friedman economic model (I am not kidding). On the minus side to living there can be summed up in one word; corvie. Corvie (gee hope I spelled that right) is what your accountant calls a non-reciprocal transaction or a tax (to many a tax is necessary (especially if you benefiting from it)). Instead of paying a percentage on your income, you “donate” your labor. From then on your highest priority is to place sandbags up and down the Yellow River. Besides the down side of Corvie the tax code is dependent on a government(that killed 70 million of its own citizens/slaves) of the “Middle Kingdom”; whose highest priority at this time is to give China its first real blue water navy since the Ming Dynasty (500 years) to challenge CTF 77 on the open seas. Regardless of the Navy Crosses and Silver Stars that will be awarded to Navel Aviators (USN and USMC) and attack submarine crews of all stripes. So where do I move? Blah, blah, blah……….Singapore (I was thinking Mexico for the free machine gun and ammunition give away by the President and his Attorney General; but I hear that program may be coming to an end. Something should really be done about those inconsiderate Republicans, this is about “Social Justice” not the law.)and hope the Japanese Imperial Army stays put for at least the next 50 years. Now lets get to the crux of the disagreement with the author; when I leave the Euro zone or take a defensive action to persevere my capital; 1. I sell. 2.The price declines to the bid and if the position is large lower than the bid. 3. I take the wife and kids and we either immigrate or take a holiday (your choice). Now lets talk about the real money, mutual funds, hedge funds, pension funds and speculators. All four groups have margins. A. To maintain that margin I must either sell my position or borrow more to avoid a margin call (if not answered the brokerage firm sells your holdings to avoid default and you wind up with a zero balance in your account). B. In order to loan the money to the funds and the speculators on margin the banks must have cash on hand above the reserves that have to be maintained by law, set by the Federal Reserve (at this point you usually get a pretty good “correction”; for a very funny and first hand account of the 1907 debacle (caused by the sales of bonds by the Theodore Roosevelt Administration) please read Reminisces of a Stock Operator as E.F. Hutton relays the conditions of the situation at the “Money Post” to Larry Livingston (aka. Jessie Livermore)). C. So lets get to the rat killin; the ECB provides liquidity over reserves; forced if necessary; once that reserve drops below the legal limit,(think credit default swaps) banks cannot loan to the funds or speculators on margin. European investor’s must then liquidate their holdings in the United States, China and Japan to maintain margins. Metals and other commodities drop because of asset reallocation as will market averages; look for 2008/9 levels. In summary; the markets will correct, but do not give up hope. Viper
Like communism, capitalism has its own built-in seeds for self-destruction, one of which is stratospheric concentration of corporate wealth and power which ends up in kleptocratic alliance with a (corrupt) political system, resulting in cronyism and the corporate welfare state. We see its consequences today. Check out “9 Wall Street Execs Who Cashed In on the Crisis” (http://motherjones.com/politics/2010/01/wall-street-bailout-executive-compensation)
which relates their hauls of hundreds of millions to the hundreds of billions in taxpayers’ bailouts. No society can withstand this, particularly if becomes incentivized routine operation.
The PostWest
http://www.fallofknowledgeandreason.blogspot.com
You’re describing the Money Trust ™ and its impact upon society.
It was Clinton, Gorelick, Rubin and Reno who re-assembled the Money Trust. ™
Rubin collected a $1,000,000 per MONTH annuity from Citicorp for his corruption of the marketplace. ( Remember, he quit the government and went to ‘work’ for Citicorp days after completing its construction. ) He had no secretary, office hours or duties! Yet still his money was reported as W-2 income!
Gorelick was vectored off to Freddie Mac — and a total take of $ 35,000,000 during her short tenure there! ( As salary and bonuses — running a quango! )
The total payout from Freddie and Fannie quangos exceeded even Wall Street norms. Virtually to a person all were Democrats at the height of the bust out — legacy appointees of Clinton.
Clinton left office only mildly wealthy. Subsequently he’s become a centimillionaire as aliens have paid him as much as $ 10,000,000 for his ‘negotiating services.’ The prospect that his wife would be back in the oval office did the trick.