The horizon is not so far as we can see, but as far as we can imagine

Tag: Germany

Germany Honors Biden For Destroying Nordstream & Their Economy

I cannot believe this is happening:

Germany honored U.S. President Joe Biden for his contribution to trans-Atlantic relations on Friday, ahead of his meetings with European allies on Russia’s war in Ukraine and the conflict in the Middle East.

TIME Magazine: Germany Honors Biden for His Contribution to Trans-Atlantic Ties as the U.S. Election Looms

Germany Honors Biden for His Contribution to Trans-Atlantic Ties as the U.S. Election Looms

The sheer delight the pathetic “Traffic Light” coalition government takes in abasing itself before the US hegemon is pornographic in its shameless indecency. Especially the same week that the Danes reported this:

Just days before the Nord Stream gas pipeline attack in September 2022, warships belonging to the U.S. Navy were on the scene and ordered nearby officials to keep away.

That is according to John Anker Nielsen, who is harbour master at Christiansø, the easternmost part of Denmark in the Baltic Sea, northeast of the island of Bornholm and close to the sites of the Nord Stream explosions.

Map showing the route of Nord Stream 1 and 2 in the southern Baltic Sea and location of the leaks. AWZ=Exclusive Economic Zone
Map: AFP / Nadine EHRENBERG, adapted

Nielsen late last month told a reporter at Politiken, a major Danish daily, that he went out with a rescue team four or five days before the blast to check on nearby ships with switched-off radios, suspecting there might have been an accident, only to find U.S. warships, whose staff ordered the team to turn back immediately.

Never forget Biden threatened Nordstream:

Biden: If Russia invades uh that means tanks or troops crossing the uh the border of Ukraine again then uh there will be uh we there will be no longer a Nordstream 2. We will bring an end to it.
Reporter: What? How would you how will you do that exactly since the project and control of the project is within Germany’s control?

Biden: We will. I promise you we’ll be able to do it.

and Nuland did it too. This video is still up on the State Department’s official Facebook page because they’re proud of it:

“If Russia invades Ukraine, one way or another, Nord Stream 2 will not move forward.”

And Never forget what Nuland said at a Senate Foreign Relations Committee hearing on January 26, 2023:

“I am, and I think the administration is, very gratified to know that Nord Stream 2 is now, as you [Ted Cruz] like to say, a hunk of metal at the bottom of the sea.”

Blinken celebrated it as an economic opportunity:

“…ultimately this is also a tremendous opportunity.  It’s a tremendous opportunity to once and for all remove the dependence on Russian energy and thus to take away from Vladimir Putin the weaponization of energy as a means of advancing his imperial designs.  That’s very significant and that offers tremendous strategic opportunity for the years to come…”

And then there was this from Anne “It’s Time to Prepare for a Ukrainian Victory” Applebaum’s husband who’s a Polish official:

Former Polish FM thanks US for damaging Nord Stream pipeline

The consequences of this have been the deindustrialization of Germany:

German industry increasingly struggles to compete on the world stage. Particularly hard hit are its mighty chemical and heavy industry sectors, which are now in rapid decline. One of the main drivers is policies that have made energy costs skyrocket, and there Germany serves as a canary in the coal mine for other leading industrial nations.

It’s kind of grimly amusing that Forbes’ use of the euphemism “policies that have made energy costs skyrocket” rather than say “self-defeating sanctions on cheap Russian gas combined with the biggest act of industrial sabotage in modern history” and it also doesn’t mention that it’s been America’s policies that have deindustrialized Germany.

It’s also so humiliating as an American that the neo-conservative cabal of psychopathic nitwits has been in sole control of US foreign policy since the Clinton administration and now they have a lock on US corporate media as well.

The above mentioned Anne Applebaum provided the perfect example of their delusion and idiocy with her September, 2022 prediction that Ukrainian victories in Kharkov would bring down Putin.

But that brings me back to Germany’s pathetic ruling coalition. This is how well they’ve done in recent state elections:

In the eastern states of Saxony and Thuringia, the far-right AfD received more than double as many votes as the three parties which make up the federal coalition government — the center-left Social Democrats (SPD), environmentalist Greens and neoliberal Free Democrats (FDP) — combined. These parties’ results are each in the single digits. The Greens in Thuringia and the FDP in both states even failed to meet the 5% threshold to be represented in the state parliaments.

And on the left:

newly established populist party, the Sahra Wagenknecht Alliance (BSW), managed to score votes in the two-digit range in their very first election.

The German people are chomping at the bit to vote out the gang of traitors who have allowed the US to annihilate their economy.

Although in fairness, they also gave the last US President who walloped the Germany economy the same award:

“Biden received the highest class of Germany’s Order of Merit, which was also bestowed on former U.S. President George H.W. Bush for his support of German reunification.”

Kind of fitting that the era of American unipolarity is framed this way. Bush at the beginning. Biden at the end. The Germans footing the bill for American foreign policy.

 

 

 

EU Delusion on Sanctions and Europe’s Future

While the EU was considering more sanctions against Iran because it attacked Israel in retaliation for Israel bombing its embassy, Russia is sending Iran:

Meanwhile America is threatening China that if they don’t stop sending Russia “dual use” goods, the US will slap on more sanctions.

Boo hoo.

Let us remember the results of chip sanctions. China now owns the legacy part of the industry, and is making progress western “experts” said would take decades in years. Huawei has recovered from the sanctions and created its own OS. It is now a massive electric vehicle manufacturer in addition to everything else. BYD will soon become the largest EV manufacturer in the world, eclipsing Tesla. Something about its cars being cheaper, and Tesla gave up on building a cheap version of their cars. Maybe Tesla will survive because the US keeps all Chinese EVs out, but my guess is that if Musk stays CEO, Tesla’s best possible future is as a luxury EV manufacturer. Their “Cyber Truck” is a disaster.

Iran has built a formidable military with hypersonic missiles while under sanctions, sanctions which started at the same time the Islamic Republic was created. But now, what I’m sure happens, is that China sells Russia goods and Russia trans-ships them to Iran. That hasn’t undone the sanctions completely, but as the world moves away from using the dollar as the medium of trade and routes around US, EU and anglosphere banks, the effects of the sanctions will continue to diminish.

There’s very little that Iran needs (though still some) that China and Russia don’t make. And anything sold to Russia by, say, India, can also make its way to Iran. Cutting Russia off almost entirely gives it no reason to play by Western rules, and it doesn’t.

This is especially true now that America has taken Russian reserves and will be giving them to Ukraine. Anyone who trusts the US with their money who isn’t a complete ally, or satrapy, is a fool. There’s a reason why money used to be frozen before, but not actually taken. There’s a big difference between the two.

But let’s move back to Europe. This article from FT is to the point, German gas prices are two-thirds higher, structurally, than they were before the Ukraine war.

That’s after prices dropped massively. The simple fact is that US natural gas costs a lot more. Russia was selling Europe and Germany oil and gas for bargain prices. Russia’s still willing to sell, but Europe has its head up its ass.

The recent history of European industry is simple. When the Euro came into effect, it raised everyone’s prices except Germany’s, pretty much. Industry in all of Europe except Germany was badly damaged (this was especially bad in Italy which was more of an industrial power than most realized.) Germany, in effect, received a subsidy: the Euro was worth less than the German Mark.

Germany has (had) a lot of heavy industry: a lot of energy intensive industry. To get energy for this, Germany got cheap, below market Russia oil and natural gas. Russia got bulk sales of one of the few things it had to sell and Germany kept its industry competitive.

Those days are over, essentially permanently.

And the problem is that Germany’s dominance was in legacy heavy industry and automobiles. They aren’t creating a lot of new tech and science. They don’t have large new industries developing. They don’t have scale costs like China does. They relied on being very efficient and already dominating industries.

But those industries are leaving. A lot of them are going to America, the actual company facilities, but the production is, effectively, also moving to China and other countries.

I know I’m a bit of a stuck record on this (do youngs understand that simile?) but Europe is walking into its decline with its leaders acting as if it’s no big deal, indeed as if they are, to use my father’s crude insult still “King shit of turd island.” Sanctioning Iran, lecturing Africans and acting as if they are superior in every way: the only truly civilized people in the world.

Even as they do, the foundations of their prosperity, their “garden” are eroding out from under them at the speed of soil blowing away during the Dust Bowl.

They’re insane. Completely detached from reality, and some of the stupidest elites in the world, even exceeding America’s very high bar.

The Sun always sets. European leaders seem determined to make it set as soon as possible.

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German Dependence On China

So, the German central banks noted that 29% of German companies import essential parts and materials from China.

Multiple industries. Germany, much like the US, but even more so, let China pick up, among other things, much of the tool making industry, especially those related to auto manufacture.

 

Ouch.

When you consider this is an absolute terms and not relative, it’s even worse.

This comes on top of anti-Russia sanctions and the sabotage of the Nord Stream pipelines cutting off Germany’s access to cheap energy.

Germany is a relatively small country without a lot of natural resources. To be wealthy it needs to produce high value goods, and to do that it needs inexpensive inputs for its industries, or it needs to have much higher industrial productivity than everyone else.

Outsourcing so much of the supply chain for its manufacturers was an understandable mistake: it made those inputs cheaper.

But if you’re a small country without a lot of resources, you have to keep your supply chains and trading relationships stable. German leaders at the start of the Ukraine war expressed the most doubts about massive sanctions and they were right.

Germany is, as predicted at the time, in real trouble. Their model had flaws, and was a mean one, impoverishing and de-industrializing other EU nations, so there’s a certain irony to EU consensus Russia policy now screwing them over, but at this point if Germany goes down it’ll take the entire EU’s economy with it.

Germany cannot afford to follow the US into a cold trade war with China.

Moreover, this is a demonstration of something simple: what is good for Western EU countries and what most Eastern EU countries want (anti-Russia policies and NATO expansion) are two different things. Germany needs good relations with cheap resource suppliers and the only practical one was Russia.

It’s all very well to say, as many have, that this is the price of standing up for “freedom”, but if Germany goes down, so does the EU.

Likewise, what is “good” for the US, is not good for most European countries, and especially not good for Germany. (Ironically, Macron is the only major EU leader to be honest about this.)

The EU, if it continues on this course, will be reduced to an even weaker American satrapy than it was is the cold war period, and one with a lot worse living conditions.

China’s moving up the value chain. Sanctions against China, rather than slowing this down are speeding it up. Correct industrial policy would have been to negotiate with China about what industries or segments of industry each country is going to specialize in.

Incorrect policy is to have a cold war against both your cheapest energy supplier and the country that is now the world’s manufacturing floor.

Damn near suicidal policy, in fact.

Europeans need to get thru their heads that the European/American near monopoly on tech and high productivity is broken and that Europe, in particular, is coasting on legacy industry, without a great number of natural advantages. It was a backwater for most of history, and is reverting. The job of European leaders is to keep that reversion from happening for as long as possible and to slow down whatever reversion occurs.

Now, it could be that full commitment to a “US and Europe+Anglo countries” trade block, with full re-shoring would be a viable policy, if aggressively pursued, but that’s not what’s happening, the US is, instead, taking advantage of EU and German weakness to grab up high energy cost industries.

As for Europe’s elites, they should remember that owning overseas resources is dangerous. Britain’s “hidden empire” — its overseas investments, was a huge part of its strength, and essentially liquidated in WWI. Germany’s chemical patents and electrical patents were broken by the Allies in WWI and they didn’t reinstate them after the war was over.

Anything you own in another country doesn’t really belong to you unless you have the troops and willingness to occupy that country and the ability to then administer the country.

Germany in specific, and Europe in general, if they don’t change their policies and their commitment to being American satrapies, are on the path to ruin.

(Oh, and as I said at the time, most of the Eastern European countries should never have been let into either NATO or the EU. They offer little but vulnerability; are economic soaks, and have interests contrary to those of Western European countries. The only way they could have been absorbed effectively was if the EU decided to become a real federal nation with former countries reduced to provinces at most, and in most cases divided into multiple provinces.)


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America Defeats Germany Again, Europe Foolishly Helps

(I’m aware others have made the same US defeats Germany point before this. Just becoming super obvious.)

There’s a good article in Der Spiegel on the German energy/industrial crisis which is worth your time.

Basically industries which have high energy costs are being crushed. In particular this means chemical and automotive, both big in Germany, but extends far further.

(Indeed, the chemical industry was essentially invented by Germany in the 19th century, and American industry exists because the patents were broken in WWI and not reinstated after the war.)

This has a lot of knock-on effects, not only in price increases (which are big), but shortages. For example:

The coronavirus pandemic showed how easily modern production processes can get out of sync. Supply chains interlock like the insides of a clock, and if one cog fails, the entire machinery can grind to a halt.

An example is a small company from Lutherstadt Wittenberg, Germany, which has made it onto the prime-time news broadcasts in recent days because its products are needed almost everywhere. “Our production has been halted completely,” says Torsten Klett, the co-managing director of SKW Stickstoffwerke Piesteritz. “And we will only be able to restart if the gas price drops significantly or if politicians provide us with massive support.” The chemical company is one of Germany’s largest producers of fertilizers and AdBlue. Natural gas has also become too expensive for SKW. If political help doesn’t arrive soon, the company could be forced to send its 860 employees into a work furlough program in October.

Few modern diesel engines can be operated without AdBlue – not those of the fire department, not those used in public transportation and, above all, not the 800,000 or so trucks that transport goods of all kinds across Germany’s roads every day. Should companies no longer receive the products they need for their own production, the result wold be devastating, and almost all sectors would be affected.

The national association representing the logistics industry has begun warning of potential bottlenecks, even though AdBlue is also manufactured by BASF and the Norwegian firm Yara. But BASF began cutting back on ammonia production last year due to increased gas prices. The world’s largest chemical company can still compensate for the shortfall by buying on the world market, though the costs continue to rise.

So, logistics crisis intensifies because of lack AdBlue.

Meanwhile increased energy prices are hammering every single business and homeowner just for electricity, heating and cooling, so much so that it’s causing many retailers to become non-viable. Employment is actually tight (whisper after me “Covid deaths and Long Covid”), so there’s pressure on wages, but prices are increasing faster than wages so consumers don’t want to spend.

Industries that Germany has been powerful in for over a century are being hammered.

Now a lot of Europeans hate Germany, and with good reason. The Euro has been less than Germany would have had given its own currency with their level of exports, but higher than it should be for most other European countries, meaning that German industry was subsidized and other nations like Italy and Finland were penalized.

Germany aggressively policed other European countries, making it near impossible for them to protect their industry thru other means like subsidies, generally under the rubric of “fiscal discipline” and when countries were in crisis engaged in a fair bit of looting.

Meanwhile Eastern Europe was never properly integrated into Europe, remaining primarily a source of cheap labour and not properly moving up value chains.

To Eastern Europeans Germany is a traitor who made deals with the evil Russians to keep their energy prices low and didn’t really share the ensuing prosperity. (Germans would mostly disagree, noting the subsidies. But countries want their own prosperity, not welfare.) To Western Europeans Germany has repeatedly abused its economic and political power to keep its industry strong, even as others lost theirs.

So Germany has a lot of power in the EU, but few true friends, and there’s a lot of resentment.

Still, whatever the causes, Germany is the industrial powerhouse of Europe and Europeans who are laughing at Germany’s loss of industry during this energy crisis are being foolish, because what’s happening is that Europe as a whole is becoming weaker.

But the beautiful icing on the cake (if you’re an American oligarch) is:

A big winner from the energy crisis in Europe: the U.S. economy.

Battered by skyrocketing gas prices, companies in Europe that make steel, fertilizer and other feedstocks of economic activity are shifting operations to the U.S., attracted by more stable energy prices and muscular government support.

As wild swings in energy prices and persistent supply-chain troubles threaten Europe with what some economists warn could be a new era of deindustrialization, Washington has unveiled a raft of incentives for manufacturing and green energy. The upshot is a playing field increasingly tilted in the U.S.’s favor, executives say, particularly for companies placing bets on projects to make chemicals, batteries and other energy-intensive products.

“It’s a no-brainer to go and do that in the United States,” said Ahmed El-Hoshy, chief executive of Amsterdam-based chemical firm OCI NV, which this month announced an expansion of an ammonia plant in Texas.

Some economists have warned that natural-gas producers from Canada to the U.S. and Qatar may struggle to fully replace Russia as a supplier for Europe in the medium term. If so, the continent could face high prices, at least for gas, well into 2024, threatening to make the scarring on Europe’s manufacturing sector permanent.

It’s not other Europeans who are going to win out of this, everyone’s being hurt to some degree and any gains are relative, not absolute. “Well this hurts the Germans so much more than us” is only a relative win. But it weakens Europe overall: the production mostly isn’t moving to other European countries This is the wrong way to deal with a real problem, in other words, and the right way was political and a rejection of neo-liberalism. But since neo-liberalism is religion to Eurocrats, that wasn’t possible. Dealing with Germany couldn’t be done rationally and sensibly, so instead it has been done stupidly and harmfully, so that no one benefits except the US.

As I have said since the start, anti-Russia sanctions primarily hurt Europe and help America. They make Europe weaker and re-enforce the European political position as American satrapies. Since they do very little harm to Russia, the rational course would have been to continue to buy Russian oil while only putting on targeted sanctions (no military or dual use sales), and spend the next 2-4 years gracefully moving to alternatives in a way that would not deeply damage Germany and Europe’s industrial base and wouldn’t cause a general economic crisis in Europe.

Longer term, my forecast is that Europe as a whole will move to second world status. Their decisions around Ukraine have made that a certainty, since they make it a virtual certainty they will also wind up going along with the US in the cold-war against China. Europe has less and less tech and industry that the world must have: there are other consumers available and they no longer have a military worth worrying about.

Europe’s massive living standard was based technological, industrial and military superiority which is going away. The rise of China ends that: there are now 4+ major industrial/technological powers and Europe isn’t needed. As China climbs the tech chain, there will soon be nothing significant they, or anybody else, must get from Europe (jets may be the last holdout, but even that will not last.)

Mishandling of Ukraine, the war and sanctions is Europe’s decision to go ugly into its twilight.

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Germany Is Being Crushed By “Anti-Russia” Sanctions

One does have to wonder who anti-Russian sanctions are actually designed to hurt.

German producer price inflation in May.

German trade balance:

Hey, the first negative trade balance in 30 years. Of course, it’s not very negative yet, but wow, that’s a decline.

Meanwhile:

Top German industries could face collapse because of cuts in the supplies of Russian natural gas, the country’s top union official warned before crisis talks with Chancellor Olaf Scholz starting Monday.

“Because of the gas bottlenecks, entire industries are in danger of permanently collapsing: aluminum, glass, the chemical industry,” said Yasmin Fahimi, the head of the German Federation of Trade Unions (DGB), in an interview with the newspaper Bild am Sonntag. “Such a collapse would have massive consequences for the entire economy and jobs in Germany.”

The German economy is essentially mercantalist. The Euro, because it includes countries which are net importers, has been  undervalued. The Germans bought cheap materials, made them into high value goods and got pretty rich.

Now the Euro collapsing (it’s almost down to even with the dollar), but it’s not collapsing enough and in any case there’s a problem, one which has been forgotten in the global order.

Physical objects, like natural gas and aluminum and oil and so on are dug up in certain places, refined in other places and shipped thru specific pipelines or on specific trucks over specific roads, or specific trains over specific railroads. They cannot be magically replaced if you cut off a large supplier, and even when they can be replaced they may cost a lot more money and the replacement isn’t instant, as with buying US natural gas.

The PPI increase is “if you can even get it.”

Germany is a manufacturing state which does not have a lot of natural resources in its own borders. It must be a trading state, and Russia was the cheapest place to get a lot of what it needed, plus there isn’t enough excess on the global market to make every good and even when there is it requires logistical solutions (ports, ships, rail lines, refineries, etc…) which are not in place.

Meanwhile the EU has sanctioned goods coming from the Chinese province of Xinjiang. It turns out that Xinjiang produces about half of the world’s supply of polysilicon, which is the primary ingredient in solar panels.

It is to laugh.

Germany is committing economic suicide over Ukraine, and Germany is the industrial heartland of the EU.

Some bottlenecks just aren’t going to be broken without some sort of deal or cut-out, the supply isn’t there.

Others can be dealt with by paying more, some will require money and time measured in years. Europe is going to wind up going nuclear, there’s no other way to make the numbers work. (So will Japan and many other nations.)

But overall the people saying that the EU was hurt more by Russian sanctions are correct.

Now don’t think this is anti-democratic: polls show that most Europeans want to cut off trade ties with Russia.

But we’ll see how they feel as they take the hits required to do so.

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World Economy Heading for Recession

That seems most likely to me. China has been stalling out for some time, Japan’s “stimulus” didn’t work, Europe has been suffering under austerity for years (despite some minor good news), the other emerging economies are doing badly, the petro-states have been hammered by the drop in oil prices and now the US job market has fallen off a cliff after a few months of excellent results.

Those results were driven almost entirely by the drop in oil prices, but were unsustainable with most of the rest of the world economy in the doldrums.  Low oil prices should be generally good for everyone but oilarchies, but their effect is muted (in comparison to past decades) by the oligarchical and oligopolistic nature of our economy.  Put simply, there are too many barriers to entry for new businesses to arise and even lower oil prices don’t put enough money into ordinary people’s hands to create enough new demand for long enough.

In an economy where individual sectors tend to be controlled by a few companies, and where those companies are already awash with money, more money means little; those with pricing power will simply take it away and add it to the stockpiles of money they already aren’t using for anything productive.

The standard solution to the situation we’re in now would either be to implement very high corporate and individual marginal taxation (if private actors won’t spend, take the money from them) and/or to break up oligopolies and/or to heavily regulate them so that they aren’t sopping up all the excess cash in the economy.  (Why are app stores still allowed to take 30%, for instance?)

Since we refuse to do any of those things, and since we only print money to give to rich people and corporations (thus pooling money at the top, doing little for widespread demand), the western economy (which includes Japan) remains stagnant. You may get a few good months here and there, but that’s all you’re going to get.

Labor Force Participation Rate Graph

Labor Force Participation Rate Graph

Let’s discuss some individual countries and regions. First, take a look at the above labor force participation rate graph. It shows the number of people either looking for work or who have work.  Can you tell that there were a few good months?  That’s how good the American economy is after your few good months. It didn’t really improve much, it just went horizontal.

You need a few years of such job results to make a difference.  And that’s before we get to the fact that most of those jobs were low-paying and that all of the gains of the last economic cycle have gone to the top three to five percent of the population (depending on how you slice it).  And the top 1% has done better than 3%, the top .1% better than the top 1% and so on. This is your economy on unconventional monetary policy.

Japanese monetary base and inflation to early 2015

Japanese monetary base and inflation to early 2015

Ah, unconventional monetary policy. In Japan they call it “Abenomics.”  The idea was to get inflation going in the Japanese economy–get the Japanese to spend and bring Japan out of its 30 year slump. The chart to the right shows how well it has worked.

But don’t think that money has been “wasted!” Abenomics may have done nothing for ordinary people, but it’s helped a lot of rich people become richer. That money went somewhere. In Japan’s case, a ton of it will have gone overseas, with foreigners borrowing for low costs in Japan and then speculating with that money elsewhere for higher gains (or so they hope).

Unconventional monetary policy is, and always has been, about giving money to the rich, wealthy, and corporations. At first, it was about bailing them out after the financial collapse. Now, it’s just about giving them money, lots of money, in a way that the hoi-polloi can’t access.

This brings us to Europe and austerity. Austerity is a wonderful thing, if you’re rich. Public assets are put on the selling-block which you normally could never buy and they are put there for cheap. You get to own more of the economy, your relative wealth increases. While it’s true that one might be richer in a generally prosperous economy, you must remember, this isn’t about absolute wealth. It’s about relative wealth. Better to be somewhat poorer and able to lord it over everyone else, than be richer in a world where the peons don’t have to kowtow to your every whim or don’t have to live miserable, want-filled lives. If the price is a lot more poverty, that doesn’t affect you in any meaningful way.

Not all peons suffer, of course.  A lot of Germans do very well in the current regime.  As the South of Europe suffers under austerity, they’re doing great. The worse the southern economies are, the better for Germany, since it reduces the price of the Euro, increasing German exports. If everyone in the Euro area was doing well, Germans wouldn’t be doing nearly so well. If the price is suicides, widespread poverty, homelessness, and so on, that’s certainly a price Germans are willing for Italians, Spanish, Greeks and Portuguese to pay.

Meanwhile in Canada, there is a housing bubble which kept on going from the point where the US bubble collapsed. Better, inflated prices are guaranteed by the Federal government, so when the bubble bursts, it can cause maximum damage to public finances. With oil prices falling, and with Canada now a petro-state (as I noted almost a decade ago) due to deliberate government policy, those housing prices are looking less and less sustainable.

In the UK, we also have London’s housing bubble (which is to say, the majority of the actual economy of the UK, if you want to call a housing bubble and financial services an economy, which UK politicians do).  This shouldn’t be a surprise, since the UK hired Canada’s ex-central banker to come to the UK and do what he did to Canada: Blow a nice big bubble. The UK hardly has any other economy besides real estate and financial ponzi schemes, so we’ll see how that works out for them.

In general, understand this: The world bailed out bankers and brokers and traders  and they went back to doing what they were doing before. Blowing bubbles. There are CDOs out the wazoo, there are stock market bubbles, there are real-estate bubbles in various places (they just tend to be more localized now, but they’re still huge).

The economy will NEVER be good for everyone until this is changed, but that doesn’t precisely mean this is unsustainable. The elite’s had one fundamental realization and it was this:

“We can print as much money as we want and as long as we make sure it doesn’t get into ordinary people’s hands it won’t blow up the economy.”

Many people expected that unconventional monetary policy would cause general inflation. It hasn’t because the money stayed in the hands of a very few people and major corporations. It did cause massive inflation in the things rich people buy, but not general inflation.

So the rich, and the politicians and central bankers they own, aren’t worried about the various bubbles because they handled them in 2007 and 2008, and they’re sure they can handle them the same way if they burst again. These bubbles may never all burst at the same time again, because if they show signs of doing so, the elites can always just have the central banks print money and buy up assets before they even become distressed.

As long as there is no actual price discovery (and how can there be), there is no real threat to the only part of the economy that matters: The economy of the people with enough money buying up politicians.

Everyone is addicted to this game, even China, which has printed unbelievable amounts of money (more than Japan, America and Europe combined) and has used it to create vast amounts of unused and unusable housing and other boondoggles. China, granted, wants much of the benefits to get to ordinary people (because the Chinese are still willing to riot extremely violently and the Communist party’s leadership knows their lives are on the line), but they’re still playing the late-capitalist game of credit pumping, rather than the mercantilist game which built the Chinese economy. That makes sense, in a way. As China’s customer-economies stagnate, it becomes harder and harder to create widespread growth for the most populous country in the world through simple exports.

The correct strategy would be to start decoupling and move to a domestic market, and in a sense, the Chinese have tried that, but they’ve bungled it on boondoggles. Capitalism of the variety we do today is terrible at redistribution and redistribution is what the Chinese economy needs, in a huge way, in order to boost widespread demand.

So that, my friends, is your world economy on austerity and unconventional monetary policy.  As I predicted right after Obama put out his worthless “stimulus” program in early 2009, for most people, the economy will not recover for at least a generation. It will only recover then if the population is willing and able to rebel, peacefully or violently. If not, we are in for decades of stagnation and decline, exacerbated by the absolute certainty of catastrophic climate change.

And so it goes…


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Is Comparing America to Germany Absurd?

Since I made the comparison between America and Germany today, I have been told that my argument is absurd. Here is my response.

Nuremburg chief prosecutor Ferencz said pre-emptive war against Iraq was a war crime, the same as that committed by the Germans in WWII.

If someone wants to make the case that America is better in kind, not just scale, make it.  (I guess one can say “we still haven’t tried to kill an entire racial group even if we did engage in pre-emptive war.”  Feel free to do so.)

  • Pre-emptive war: Check
  • Systematic Torture: Check
  • Genocide: Nope
  • Number of dead: Much less but still plenty, especially if you’re an Iraqi

But just trying to dismiss the comparison out of hand only tells me that some people aren’t looking hard enough in the mirror.  It is understandable, of course.  No one likes having the standards they apply to others applied to them.

However, I would find it intellectually honest if Americans were to apologize to those Germans they hung for pre-emptive war and other non-Holocaust crimes and say that those crimes, in retrospect, aren’t that big a deal, and that in any case, America after WWII should have been looking ahead, and not behind.  You can also apologize to the Japanese who were tried for waterboarding.

Go ahead and be the first.

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