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Yanis Varoufakis: The Annotated Wolfgang Schäuble (PR Versus Reality, European Periphery Edition)

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Yves here. Varoufakis performs the important service of translating what is effectively a formal communication from Germany on its stance towards subject states, meaning the Eurozone periphery.

By Yanis Varoufakis, a professor of economics at the University of Athens. Cross posted from his blog

On 19th July Mr Wolfgang Schäuble, Germany’s finance minister, published an article in The Guardian entitled We Germans don’t want a German Europe. The article was written hours after Mr Schäuble left Athens, following a controversial visit during which he told Greeks to expect no relief and to stick to the script written three and a half years ago. Below, you will find Mr Schäuble’s article (in black) annotated liberally by yours truly.

WE GERMANS DON’T WANT A GERMAN EUROPE

The Guardian, 19th July 2013. By Mr Wolfgang Schäuble

Germany has no taste for shaping others in its image – but we want a European Union that can compete.

YV: He wants a mercantilist Europe reflecting Germany’s mercantilist mindset. But he does not want (and I believe him) a hegemonic role for Germany. This combination of (a) demanding of the rest that they ‘compete’ and (b) the reluctance to manage aggregate demand in Europe leads, with mathematical precision to self-defeating authoritarianism.

Where do we in Europe stand today? Three years after the start of the first assistance programme for Greece, and about three months after we agreed on a programme for Cyprus, the picture is mixed. On the plus side, there are many encouraging signs from the crisis-hit countries in the eurozone. Labour markets and social security systems are being reformed; public administration, legal structures and tax regimes are being modernised. These efforts are already bearing fruit. There is more competitiveness. Economic imbalances are shrinking. Investor confidence is returning.

YV: “Ubi solitudinem faciunt, pacem appellant” (tranl.: Where they make a desert they call it peace). They removed all worker protection and turned unemployment into a norm, and they called it ‘reformed labour markets’. They disbanded social security and reduced public heath provision to a cruel joke, and they called it ‘reformed social security’. They closed down public radio and tv, and ensured that Greeks have no income from which to pay their increasing tax bill, and they called it ‘reformed public administration’. They shrank wages to third world levels and put armies of workers on the dole, and they called it ‘more competitiveness’. They pushed investment into negative territory, and they called it ‘investor confidence’.

Institutional improvements in Europe have increased the likelihood of sound budgets in future years. We have introduced more binding fiscal rules, brakes on national debt and a robust crisis-resolution mechanism that gives us time to pursue the necessary reforms.

YV: George Orwell eat your heart out! They fashioned the most fragile crisis-resolution mechanism possible and described is as ‘robust’. They sent debt-to-GDP ratios into the stratosphere and have the audacity to speak of ‘sound budgets’. They introduced more of the Maastricht-like limitations that Germany was the first to violate (quite rightly) when it faced a public finance crisis; and they congratulate themselves like latter-day King Canutes who will stem a future tide of troubles by a mere command of their debt brakes.

The next step is the banking union, which will further reduce risk, both for the financial sector itself and for taxpayers.

YV: This is the richest of rich statements, coming as it does from the finance minister who ensured that the Banking Union will be celebrated in the breach and certainly not in the observance; the minister who insists on a Banking Union which does not involve the problematic banks, or the subsidiaries of the TBTF banks; which has no union-wide resolution fund behind it; which will lead to deposit haircuts in some countries of the Eurozone but not others.

Our efforts to regulate financial markets will ensure that those who make high-risk investment decisions are liable for any ensuing losses. In other words, we are restoring the link between opportunity and risk.

YV: Except of course for German banks which will be forever shielded from any losses and from any serious scrutiny into their idiotic and quasi-criminal practices.

But there is also a negative side. There is widespread uncertainty among people in our countries. Young people in parts of Europe face a dearth of opportunity. People are losing their jobs because their country is undergoing a profound economic transition. And too often public discourse about the crisis is dominated by mutual recriminations and populist commentary. National clichés and prejudices, which we believed to be long overcome, are rearing their ugly heads again.

YV: Like in the case of Banking Union, the author is acknowledging the need into order to legitimate his steadfast commitment not to do anything that might help meet it.

This debate is full of contradictions, not least where Germany’s role in tackling the crisis is concerned. There is little consensus in Europe, either about what Germany is doing or about what it should be doing. Some commentators even claim that the notorious “German question” is back. It has been said that Germany is “too strong” to fit in, but also that it is “too weak” to lead the continent. Germany has been simultaneously accused of wanting to reshape Europe in its own image and of refusing to show any leadership.

YV: Quite rightly so. Europeans understand that the powerful, surplus countries must lead. But they also understand the gigantic difference between powerful, hegemonic leadership and idiotic authoritarianism.

And even those calling for more German leadership seem to be doing so for contradictory reasons. Some want Germany to drop its resistance to debt-financed stimuli, claiming that this would help us to overcome the crisis. Others want even more fiscal solidity in exchange for Germany’s solidarity.

YV: A venerable rhetorical strategy of timid leaders: Point to a cacophony of views about the ‘leader’ to justify his inanity along the lines: “If they all criticise me I must be doing something right.”

The views on Germany’s actual policies are no less contradictory. For example, voices outside the country have called for Germany to relax its “draconian” austerity policies while, in Germany, the government has been accused of not saving nearly enough, or even at all. As is so often the case, the truth is somewhere in between. We are working to achieve a reasonable degree of consolidation, to build confidence and thus to lay the foundations for sustainable growth in Germany and in Europe as a whole.

YV: A task at which his government’s policies are failing with aplomb.

The idea that Europe should be – or even can be – led by a single country is wide of the mark. Germany’s restraint does not just reflect the burden of its history. The truth is that the unique political structure that is Europe does not lend itself to a leader–follower dynamic. Europe signifies the equal coexistence of its member states.

YV: Only some member states are much more equal than others; e.g. a certain state which denied other states the right to declare bankruptcy when they became insolvent; foisting upon them huge loans on condition that they shrink their… national incomes!

At the same time, however, Germany does feel a special responsibility towards the mutually agreed strategy for resolving the crisis in the eurozone.

YV: Yes, it certainly does!

We are taking on this leadership responsibility in a spirit of partnership, especially with our French friends.

YV: Whom we never miss an opportunity to drag through the mud, to put in their ‘place’ (with long Bundesbank treatises on how Paris must reform itself), to push into an unnecessary recession.

Like the other countries in the eurozone, both big and small, we know how fundamentally important it is to co-ordinate our efforts closely if we want to overcome the crisis.

YV: Then why has Germany spent four years investing into the mother of all coordination failures?

From the very beginning of the crisis we Europeans have pursued a joint strategy. This strategy aims to achieve the overdue consolidation of public budgets.

YV: “Let’s pursue a joint strategy” is the Eurozone equivalent to the Chicago gangsters’ “I shall make you an offer you cannot refuse.”

But even more, it aims to overcome economic imbalances by improving the competitiveness of all eurozone countries.

YV: And how are we doing this? By converting workers in Greece, Spain etc. into unemployable wrecks or pushing the best skilled toward migrating to Germany, the United States, even China.

This is why the adjustment plans for countries that are receiving financial support call for fundamental structural reforms that aim to put them back on track towards long-term growth and thus secure sustainable prosperity for all.

YV: Quite so. Only problem is that none of these reforms are possible in failed states of the sort caused by the current policy mix.

Sound public finances create confidence.

YV: Sure they do. Which is why Greece, Portugal et al create industrial scale insecurity and shatter confidence – as debt to GDP ratios shoot for the stars, courtesy of the income destroying effect of universal austerity.

But sound public finances are not enough to ensure sustainable growth.

YV: For instance, planet Mars has perfectly public finances (no debt, no deficits) but its economy is… stagnant.

In addition, we need to reform and modernise our labour markets, our welfare state, and our legal and tax systems.

YV: A perfectly true and perfectly besides-the-point statement. It is like saying that a starved person, on the brink of death from malnutrition, needs vitamins, and would benefit from never smoking again as well as from some resistance training; while failing to add that, above all else, she needs… food and clean water. Similarly here, Mr Schäuble neglected to mention the need for large-scale investment funding, for an end to zombie-like national banking systems (that are in a death embrace with insolvent, corrupt national political systems) and, crucially, the dearth of aggregate demand at a European level.

We have to make sure that all citizens of Europe enjoy working and living conditions that are not based on artificial growth bubbles.

YV: Like the ones occasioned by the predatory lending of banks such as Deutsche Bank Mr Minister?

These reforms will not take effect overnight. We Germans know this better than anyone.

YV: Is this why you have been resisting for four years the idea of a common bank resolution mechanism and fund?

Ten years ago Germany was the “sick man of Europe”. We had to tread a long and painful path to become today’s engine of growth and anchor of stability in Europe. We too had extremely high levels of unemployment, even long after we started to adopt urgently necessary reforms.

YV: What the Minister meant to say, of course, was that, while the rest of the global economy was booming, Germany’s wage and inflation squeeze improved its relative position and managed to export deflation and predatory loans while importing net profits. Had those ‘reforms’ (effectively the wage squeeze) been tried after 2008, Germany would be in tatters now. Just like Europe’s Periphery now is.

But without these reforms there can be no sustainable growth.

YV: Not exactly Mr Minister. Your precious reforms worked well for you, and at the expense of Europe, when the rest of the world, and Europe, were growing. But they guarantee sustainable depression when the rest of the world is in a recessionary spasm; as it has been since 2008.

Stimulus programmes based on even more government debt will only shift higher burdens on to our children and grandchildren, and will have no lasting benefits.

YV: True. And this is why our Modest Proposal is recommending four policies that will see to a reduction of aggregate public debt, a vast rise in investment and a cleansed banking sector. Only problem is that Mr Schäuble’s government vetoes all such rational and systematic resolutions of the Eurozone’s systemic crisis.

To create new jobs in Europe, we need businesses that offer innovative and attractive products that people want to buy.

YV: Mr Schäuble has obviously not been educated to the difference between necessary and sufficient conditions. Attractive products are necessary. But they do not consitute a sufficient condition. In the Fall of 2008, just in 1929, the attractiveness of products did not collapse. What collapsed was aggregate demand. Europe is suffering today not because we do not produce attractive goods and services but because of a collapse of credit and demand.

European companies can do this only if governments create the right conditions to help companies to achieve success in our increasingly globalised world. That applies not just to German businesses, but to French, British, Polish, Italian, Spanish, Portuguese and Greek companies as well.

YV: How about, then, fixing our banking system (without which firms, large and small, are dead in the water) by ending the idiocy of having the insolvent Spanish or Italian governments recapitalise the Spanish and Italian banks by means of monies guaranteed by the hapless German taxpayer?

The idea that Germans want to play a special role in Europe is a misunderstanding. We do not want a German Europe. We are not asking others to be like us.

YV: Dear Mr Schäuble, it would be a tragedy (and, moreover, a lie) if Germany refused a special role in Europe. Are you really confusing, in your own mind, a German aspiration to play a special role with a commitment to effecting a German Europe? (Perhaps you need to re-think you choice of speech or article writers.)

This accusation makes no more sense than the national stereotypes that lurk behind such statements. The Germans are joyless capitalists infused with the Protestant work ethic? In fact, some economically successful German regions are traditionally Catholic. The Italians are all about dolce far niente (delicious idleness)? The industrial regions in northern Italy would not be the only ones to bristle at that. All of northern Europe is market-driven? The Nordic welfare states, with their emphasis on social solidarity and income redistribution, certainly do not fit this caricature.

YV: If the first casualty of war is truth, then the first beneficiary of a systemic Europe-wide crisis is stereotypical, quasi (or full blown) racism. Mr Schäuble you are, I am very much afraid, sowing the harvest that you planted four years ago when you committed yourself to a wholesale denial of the systemic nature of the Crisis, opting instead to treat it as a Greek crisis, a Portuguese Crisis, an Irish Crisis etc.

Those who nurture such stereotypes should look at recent surveys that show a clear majority of people – not just in northern Europe, but also in the south – in favour of combating the crisis through reforms, public spending cuts and debt reduction.

YV: Permit me not to be impressed with surveys of views amongst our bewildered fellow Europeans. Back in the bleak era of the Black Death most Europeans believed that the plague was caused by sinful living and would be exorcised through self flagellation.

The Germans themselves are the last people who would want to put up with a German Europe. We want to put Germany at the service of the European community’s economic recovery – without weakening Germany itself. That would not be in anybody’s interests. We want a Europe that is strong and competitive, a Europe where we plan our budgets sensibly, and where we do not pile up more and more debt. The key task is to create conditions that are conducive to successful economic activity, in the context of global competition and demographic trends that pose a challenge for the whole of Europe. None of these things are German ideas. They are the tenets of forward-looking policies.

YV: For once, I shall agree while, at once, repeating the well known adage about good intentions and the road to hell.

Sound fiscal policies and a good economic environment are the only ways to gain the confidence of investors, businesses and consumers and thus achieve sustainable growth. All international studies confirm this, as do the European Central Bank, the European commission, the OECD and the International Monetary Fund – organisations headed, incidentally, by an Italian, a Portuguese, a Mexican and a Frenchwoman respectively.

YV: Someone please introduce asap Germany’s Minister of Finance to the recent treatises against his policies by the IMF and the OECD.

And the policies of European governments are geared towards these objectives.

YV: Yes, Mr Minister, our politicians have been bending to your will, while citizens, North and South, East and West, are being turned off Europe – your Europe, which they increasingly see as the enemy, as the villain of the piece. By silencing all opposition among your partners’ leaders, Mr Minister, you are gutting the House of Europe and destroying its democratic legitimacy.

Those European countries currently grappling with complex adjustment processes deserve our highest appreciation for the way they are reforming their labour markets and social security systems, modernising their administrative structures, legal systems and tax systems, and consolidating their budgets. We should have the deepest respect for the efforts they are making.

YV: Echoes of British Generals in Gallipoli while sending thousand of young men to their pointless death.

Our reward – everyone’s reward – will be a strong and competitive Europe.

YV: I suppose everything, in the end, works out. Even the Black Death had its silver lining, reducing Europe’s over-population issues and, thus, giving rise to Modernity… I suppose that a determined leader will always manage to find something to caress his conscience with, however destructive his policies.

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19 comments

  1. psychohistorian

    Nicely parsed, thanks!

    Wolfgang sounds like he is running a profit/debt machine instead of a system of governance for the benefit of humans.

    If we got rid of (as in not allow) inheritance, or most of it, we would have both a solution to the debt problem as well as the bought government folks.

    In networking, flattened hierarchies are much simpler to manage. I think eliminating the top 10% from our current class system would change all the right social incentives for the better.

  2. scraping_by

    One thing Mr. Schauble maintains that is seed and sunlight to this dark crisis: the sanctity of debt.

    The legitimacy of the debt, the standing of those who signed the papers, the long term is never questioned or even discussed. It’s just taken as a tenet of faith. The rest of us don’t need to share his religion.

    Germany is not out to turn the rest of Europe into provinces of some Greater German State. The process is more turning them into colonies, much as Europe did Africa and Asia or Latin America for the US.

    The economics and soon, the governance are classic colonialism. Imposed and maintained with diplomacy instead of rifles.

    Does Franz Fannon’s Wretched of the Earth translate when it’s white on white colonialism?

  3. Calgacus

    Schauble the Feeble-Minded Slavemaster:Stimulus programmes based on even more government debt will only shift higher burdens on to our children and grandchildren, and will have no lasting benefits.

    YV: True. And this is why our Modest Proposal is recommending four policies that will see to a reduction of aggregate public debt, a vast rise in investment and a cleansed banking sector. Only problem is that Mr Schäuble’s government vetoes all such rational and systematic resolutions of the Eurozone’s systemic crisis.

    Gllakkkk!! AAaagghh!! “True” Are you insane? Have you drunk Schauble’s Kool-Aid? Yanis – agreeing with Schauble, ever, makes anyone an idiot. If he said 2 + 2 = 4, I would check the arithmetic.

    Stimulus programs are based on more government money = government debt. Yes, there is a tiny, theoretical, exceedingly indirect, possible arguable burden “imposed” on the children and grandchildren. But it is microscopic, imperceptible. Dwarfed by the immediate and longterm benefit of the “stimulus” (= not strangling) of economies. These (grand)children won’t be born to have debts “imposed” on them if the Schauble-screwball mortification-of-the-flesh maniacs continue their successful efforts to create poverty amidst plenty. Yeah, FDR’s horrible New Deal deficit spending imposed a burden on the 50s and 60s and 70s. Yeah, right.

    1. Jose

      The problem with YV’s approach is that he seems to be asking the core Eurozone to start behaving in a more rational mode towards the periphery.

      But he leaves out the other side of the coin: the fact that periphery governments are enthusiastically implementing the Schauble agenda.

      Perhaps it would be wiser for Greek – and Portuguese, etc. – citizens to concentrate on electing representatives who will truly oppose the Troikas’ policies instead of wasting energy on naive appeals for a U-turn in the hearts and minds of the eurozone controllers in Brussels, Frankfurt, Berlin or Paris.

    2. Susan the other

      Agree, Calgacus. Schaeuble has reached the dead-end and he’s saying, well all we have to do is do this all over again. Varoufakis is all for investment to jump start the EU. Both he and Wolfgang agree that budgets need to be controlled. Neither one of them thinks national debt serves a purpose and both of them insinuate national debt is nothing more than looting. They both worship the god of investment, competition and productivity. They both avoid talking about how populations are spiraling down all over the planet and demand is dizzy or dead. Neither one of them acknowledges that “investing” in a capitalist enterprise devoted to global competition will impoverish people at an accelerated rate because all those investors want returns at the expense of the 99%, the labor and consumption crowd. And certainly neither one of them ever proposed anything as sane as government jobs providing millions of LOW-productivity jobs of high social value. And they never will.

    3. F. Beard

      Government money can be issued without borrowing, to eliminate even that possibility of burdening future generations.

      So whose cool-aid have YOU been drinking that you fail to mention this? Hmmm?

    4. F. Beard

      Stimulus programs are based on more government money = government debt. Calgacus

      Money that does not have to be repaid is NOT debt. Deficits by the monetary sovereign are debt-free money assuming the monetary sovereign never runs a surplus which it shouldn’t anyway and assuming the monetary sovereign does not borrow which it also shouldn’t.

  4. tongorad

    “Labour markets and social security systems are being reformed.”

    How I have come to loath this word “reform.” I read a comment the other day, don’t recall where exactly, about how we the elites are simply seeking revenge against the working class. How else can you explain their viciousness?
    This is war – it’s either them or us.

  5. Anton

    Regarding the Pew poll (http://www.pewglobal.org/2013/05/13/the-new-sick-man-of-europe-the-european-union/) that Schäuble and his ilk have spun beyond all recognition, a number of points should be made:

    A large majority among those polled favored prioritizing jobs not debt.
    It is true that a large majority also say there should be less, not more, government spending, which is hardly surprising given the relentless propaganda barrage people are subjected to from all quarters, notable from people calling themselves “socialists”. Although, strikingly, in the most relevant country, Greece, a considerable majority take the opposite position. There people seem to have a different understanding, for some odd reason.

    It is claimed that the poll demonstrates that Europeans, including the South, wholeheartedly embrace the Troika’s present policies. If this is true how come the symbol of these policies, Merkel, gets a considerably lower approval rating than Hollande in Spain, Italy and Greece?

    The poll could just as well be interpreted as showing that the people of Europe think that what the government should do now is fixing the jobs problem by whatever means necessary – even if it means a stimulus – while in the longer term aiming to bring public spending down to a “sustainable” level. This is a reasonable position.

    Note further that people say there should be “less spending”. They don’t say “there should necessarily be less of the kind of spending that is aimed at making sure old people may not starve to death.” It could just as well be that people advocate reducing the kind of spending that is aimed at providing liquidity for financial institutions to hoard not lend, as a way of rewarding them for causing the crisis through criminal activities. Given that this kind of spending is in fact the root of the sovereign debt crisis, this would also be a perfectly reasonable position.

    So I don’t know if the Black Plague analogue is necessarily fair.

  6. Gerald Muller

    There is no other way to restore a competitive Europe than to abandon the Frankenstein monster that is the Euro.
    Period. All the rest is…literature.

  7. Dr. Hackenbush

    Is the following quote from YV completely accurate, or slightly exaggerated? Greek wages are literally/factually at “third world levels”? Does that mean, what- 2 or 3 dollars a day?

    And “disbanded social security”? This is literal? The US economy is more “socialized” now than Greece and other EU countries?:
    —————-
    They disbanded social security and reduced public heath provision to a cruel joke, and they called it ‘reformed social security’. They closed down public radio and tv, and ensured that Greeks have no income from which to pay their increasing tax bill, and they called it ‘reformed public administration’. They shrank wages to third world levels and put armies of workers on the dole, and they called it ‘more competitiveness’.

  8. emmrob

    The world is a debt-drowned place to begin with. The debt problem is endogenous, and can therefore be solved via a system shift. This will not happen as long as politicians are in the pockets of the international banksters and the monetary authorities.

    What troubles me as an European living in the Netherlands, is that Mr Varoufakis is referring to Germany almost as if it is an occupying foreign entity. Germany didn’t pursue such a role. Germany didn’t ask for the euro, it was forced upon her by France after the Berlin Wall came down (in exchange for France’s consent to the reunification).

    Germany and the other eurozone members didn’t ask to be cheated upon by the corrupt Greece politicians, when Greece manipulated it’s public finances to join the euro. Why was Greece so eager to join the common currency in the first place? Low interest rates, purchasing power based on the goodwill of other members? New political promises to the electorate?

    Mr Varoufakis never mentions this. The Greek people have to reflect on themselves for a change before they point to someone else. They have to clinse corruption out of every layer of their society. The private sector has already written off 107 billion euro’s of Greek debt. The ECB has bought sone 60 billion Greek bonds, the Greek target2-position is almost 150 billion euro’s and the rescue effort is about 240 billion euro’s.

    Of course Mr. Varoufakis can time and time again explain how harmfull the present set-up is for Greece because the rescue is used tot roll over old debt. The basic question remains: “How on earth can a country with 11 million people build-up a financial black hole of over 500 billion euro’s within 10 years?

    So please leave the eurozone and go back to your drachme. Lower your personal profile and reflect on your culture. Look after yourselves from now on and the eurozone will take the losses once again. I wonder what kind of credit rating the world will favour Greece in light of it’s financial reputation. Readers familiar with the dutch language can read about the historical background of the eurozone in the following article. http://www.economie-macht-maatschappij.com/euro.html

    1. Hugh

      Nice fantasy. It’s right up there with the one in this country that somehow banks with all their experience in lending, their legal departments, accountants, and loan officers were serially fooled by millions of ordinary Americans, most of whom would have trouble balancing their checkbooks, into the housing bubble and the subsequent meltdown.

      First, you fall for the standard line that the euro crisis is a North-South problem. It is not. It is a conflict between European 99%s against their 1%s.

      Second, you buy into the meme of the virtuous lenders and the profligate borrowers. The only conclusion I can draw from this is that you must think that German bankers are really stupid. Like the bankers in this country, they continued to lend money and blow bubbles in the South, despite the clear risks (you have heard of risk, haven’t you?) in doing so.

      Third, you do realize I hope that all this is ultimately about how to bail out Northern and German banks. All the savings from austerity and money heading South are going straight back North to recapitalize Northern banks and make good, not ordinary Germans, but the German rich and elites. Personally, I can not see why you are so vehement about defending the German rich who created this mess and why you wish to blame ordinary Greeks and Spaniards who are being victimized not only by their own rich and elites but now Germany’s. Again I can only conclude that you are a banker or are being had.

  9. TC

    1). Proper naming convention suggestions:

    a). Don’t call the German Finance Minister “Wolfgang Schäuble.” Call him “Montague Schacht.” A mixed metaphor, yes, but he and the European continent more generally need “hear” the message that, as ever, Nazi leadership desires alliance with Her Royal Bankruptcy’s Britain (or, as I like to call it, “Venice on the Thames”).

    b). Never call the capital of Germany “Berlin.” Rather, for the duration of the financial war reparations crisis call it “Versailles.”

    2). Nothing wrong with a “banking union” as long as it institutionalizes a Hamiltonian credit system promoting the very goals Schacht claims “Europe” represents, rather than attempting to legitimize that hopelessly bankrupt, imperial monetarist system Venice on the Thames evidently fails to recognize is sowing the seeds of republican revolution on the continent.

    3). Disagree that, “the powerful, surplus countries must lead.” Greek Prime Minister Alexis Tsipras would disagree, too.

    4). Schacht says, “Stimulus programmes based on even more government debt will only shift higher burdens on to our children and grandchildren, and will have no lasting benefits.”

    This is FALSE you big dummy! Stop agreeing this statement is “true.” If “more government debt” need be temporarily added in order to momentarily SAVE THE LIVES of human beings in which prior productive investment has been made, this that their productive employment be assured once the periphery nations are back on their feet generating lasting wealth whose fruits offer to pay back the added debt many times over, then the “children and grandchildren” will praise the government that kept their ancestors ALIVE that they might be born into this precious life at all. IT REALLY IS A BIG MISTAKE AGREEING WITH SCHACHT ON THIS POINT! The proper response to Schacht’s imperial monetarist debt sophistry per the “children and grandchildren” is there will be none around to worry over their nation’s debt on account of a policy assuring human extinction! Should Schacht choose to go here again, be sure to suggest increasing the Tobin Tax, that the “children and grandchildren” become only the more likely to see the light of day at all, because the government of the nation into which they were born had the wherewithal to survive at a time when its capacity to thrive was being suppressed by hopelessly bankrupt oppressors (and, yes, Thomas Hoenig agrees DB is quite INSOLVENT).

    5). See point #2 per Europe’s “collapse of credit and demand.” For practical instruction on how to alleviate this problem, see FDR’s transformation of Hoover’s “Reconstruction Finance Corporation”–the “TARP” of its day–into a virtual national bank financing many a great infrastructure project whose completion facilitated the means by which the nation’s wealth more readily was increased.

    6). Forget Germany’s “special role” in Europe. There’s nothing made there you can’t get in China. Trust me, I know. I’m an American and everything here is “Made in China.”

    7). The true “crisis” is in London and New York: the “Axis of Fraud.” These pigs–the very creators and facilitators of the EMU–are hopelessly insolvent and have massively hemorrhaging central banks backstopping their gargantuan mountain of garbage to prove it!

    8). NEVER call a sovereign “insolvent.” Inept or incompetent is more apt for an entity possessing a power no bank has: the power of taxation. Leverage THAT, bitch.

    9). Has there ever been a land mass “over-populated” before it was not first under capitalized and under invested in its physical economy? I am of the view there are no limits to growth, so there simply can be no such thing as “over-populated.”

  10. allcoppedout

    I take it TC that you feel it’s time to put sword to gizzard. I’m too old now
    There is a problem with growth. 3% growth doubles economies in 23 years, 10% in 7. But that’s not the end of the analysis. Each successive doubling period consumes as much resource as all the previous doubling periods combined (Rod Smith of Imperial College). If we grow at 3% until 2040 we will consume as much as all previous bipedal chimps since we left the trees.
    What we can’t do because of economics are the right things to do. We could be making our fuel from air by now but it is cheaper to frack and the rest. We are in an Idol of the theatre and economics is its control fraud.
    Germany was bankrupt between the wars and is now the most modern country in the world. Of course, if we all copied the Fatherland we’d all be screwed not successfully modern.

    Ted Trainer (an Aussie – a once proud nation now mere humiliation fodder for rampant English cricket) has pointed out de-growth means a collapse of the market and a new mentality on investment. He talks of a collapse in the desire to gain. We don’t put the question marks in deep enough. A trading block big enough to do any with money and interest in favour of transparent accounting would work. Some Nazis believed this but long knives got rid of this impediment to the rich.

  11. allcoppedout

    Away not any – I mention the Nazis because we should beware good ideas that don’t do something about the rich. ‘Animal Farm’ looks more like an allegory of Germany between the wars than the USSR to me.

  12. Hugh

    Varoufakis does a masterful job of showing Schäuble channeling his inner Goebbels. But he continues to want to fix a system that is beyond repair by tweaking it.

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