Wolf Richter: Sanction Spiral Successful – German Exports to Russia Plunge

Dave here. Note that the latest set of EU sanctions (“sweeping”) were released today, as well as new ones from the United States. While the cut-off for Russian state-owned banks from purchasing long-term debt above 90 days’ maturity is seen as the most consequential action, the impact of these moves on, in particular, the export-driven German economy will bear watching in the coming months.

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.

The sanction spiral concocted by the US and the EU in response to the ever more tragic fiasco in Ukraine is supposed to force, or at least encourage Russian President Vladimir Putin to abandon whatever schemes he may have concerning Ukraine. So the 28 EU members are trying to hash out new sanctions today, to be duct-taped to the existing spiral that ineffectually jabs at 87 Russian individuals and 20 Russian organizations.

This time, the sanctions are supposed to have teeth. And a broad impact that would squeeze the Russian economy, much to the liking of the US government. Under discussion are, among other goodies, curtailing Russian banks’ access to EU capital markets and kicking the defense and energy sectors where European technologies play a big role.

But there is fear that the sanctions could bite back. Trade between the US and Russia is minimal. So it’s easy for the US to talk. Not so between Europe and Russia, and particularly between Germany and Russia. France has a lot at stake too. And much of Europe depends on Russian natural gas. Elegant compromises are needed.

So European Council President Herman Van Rompuy had a dream: the sanctions, he said, “should have a strong impact on Russia’s economy while keeping a moderate effect on EU economies.”

The “emerging consensus” is that only future contracts would be hit. This would allow France to deliver the first of two helicopter-carrying assault and command ships sold to Russia via a €1.2 billion contract, signed with fanfare in 2011. France’s economy and budget are in trouble, and this contract is of utmost importance to France. That France would not cancel the contract, whatever the pressures might be, has been clear for months [read…. France Thumbs Nose at Obama Over Sanctions: Will Deliver Two Warships to Russia].

And the sanctions against Russia’s energy sector would also be well targeted. They would of course spare the natural gas sector, given the EU’s dependence on Russian gas. Instead, they’d hit the oil sector.

Member states are hoping – because that’s the only thing left to do – that these additional sanctions will soon get Putin to see the light. And they’re hoping fervently because shrapnel from those sanctions as they blow up is already hitting Europe, particularly Germany.

The quasi-governmental Association of German Chambers of Commerce and Industry (DIHK) warned that exports to Russia are expected to plunge 17% this year from prior year, based on information the DIHK has received from German companies in Moscow and St. Petersburg.

And the DIHK is not exaggerating to score political points, though surely they’re trying to score political points. Exports to Russia have already gotten clobbered: In March, as the Ukrainian fiasco was developing, they dropped 7.2% year over year; in April, as the sanction spiral began to spiral out of control, they dropped 16.9%; in May, they dropped 17.5%. To bring the whole year down by 17%, the next few months would have to be even worse.

The German economy lives and dies by its exports. While Russia isn’t Germany’s largest trading partner, not anywhere near, it is important. In 2013, German exports to Russia had already dropped over 5% to €36.1 billion, triggered by the economic downturn in Russia. So the 17% plunge this year on top of last year’s drop would amount to a 22% swoon from the halcyon days of 2012. And now there are worries about the 300,000 jobs in Germany that depend on this trade with Russia.

“The German-Russian economic relations are currently heavily burdened,” Volker Treier, foreign trade chief of the DIHK, told the Handelsblatt. Many German companies in Russia are fretting that Russian companies are going to walk away from the relationship. “In part that has already happened,” he said. “Russian customers fear evidently that German companies would be unable to fulfill their delivery and maintenance obligations because of the threat of economic sanctions.” This fear is particularly widespread in the mechanical engineering sector, Germany’s forte.

As employee of a semi-government entity, Treier had to say what they always have to say, that it is of course the “primacy of politics” to exert political pressure on Russia. But it’s important for German companies “that the sanctions have a clear time frame, and that it’s clearly defined what is required to stop them” to make sure that the partnership won’t be burdened long-term.

German exporters are already frazzled by a broader economic slowdown of the BRICS – in addition to the steep slowdown currently underway in Russia. Last week, Treier had lamented that the DIHK had lowered its forecast of total export growth in 2014 to 4%, from 4.5% before the Ukrainian fiasco erupted. And “the renewed escalation of the crisis will likely cause us to lower our forecast again.” And that is going to hit the Germany economy, though it might not get a grinning Putin to budge.

Capital flight, particularly from the vast underground economy, is Russia’s most pressing economic problem. And Putin’s angle of attack is, well, brutal in its own way.

Print Friendly, PDF & Email
This entry was posted in Guest Post on by .

About David Dayen

David is a contributing writer to Salon.com. He has been writing about politics since 2004. He spent three years writing for the FireDogLake News Desk; he’s also written for The New Republic, The American Prospect, The Guardian (UK), The Huffington Post, The Washington Monthly, Alternet, Democracy Journal and Pacific Standard, as well as multiple well-trafficked progressive blogs and websites. His has been a guest on MSNBC, CNN, Aljazeera, Russia Today, NPR, Pacifica Radio and Air America Radio. He has contributed to two anthology books, one about the Wisconsin labor uprising and another on the fight against the Stop Online Piracy Act in Congress. Prior to writing about politics he worked for two decades as a television producer and editor. You can follow him on Twitter at @ddayen.


  1. Gerard Pierce

    It seems that our neo-cons have solved a classic Sufi teaching problem: “Cut a hole in the fence of your back yard that is just large enough foryour chickens to get through and eat in your neighbor’s garden – and just small enough that your neighbors chickens cannot get get through to eat in your garden”.

  2. Yonatan

    Meanwhile the Ukrainian government fires three tactical missiles each with a 500 kg warhead into the area around the MH17 crash site. The US admits it has satellite imagery of the launch points and the targets, but won’t release it because it was an act committed by the Good Guys (TM). It also has satellite imagery of the MH17 incident but won’t release that either because ….

    1. OpenThePodBayDoorsHAL

      Lots of eyewitness reports of Ukrainian fighters hiding behind commercial air traffic, swooping down to bomb separatists, then returning to hide under/behind. And if the separatists fire a missile: WIN for the Ukrainians in world opinion. This is the only explanation that makes sense to me; notice how they have yet to release the cockpit voice (perhaps stating there are fighters alongside MH 17?). So who is to blame in THAT case. The simple narrative “Ooh Bad Putin Ooh” must have some other behind the scenes reasoning…or maybe it’s just Obomba’s pissing contest after he was humiliated in Syria.
      Overall I think the major powers’ are playing a funny little game, “hey let’s start a bunch of small wars, we’ll make a lot of money”…but I think they are losing control of their funny little wars…

      1. Nathanael

        Putin is acting completely crazy geopolitically, but then he’s playing for the domestic audience: it’s like McKinley and the Spanish-American War.

        The EU doesn’t really care about Ukraine, but needs to stop being dependent on Russian gas — this change is one which for some reason Germany has not yet made.

  3. Katniss Everdeen

    I’ve heard the Russia/EU/US relationship described this way:

    The US says, “You two fight. We’ll hold your coats.”

  4. Christopher Dale Rogers

    I’m absolutely at a loss at why the European Western powers are following the whims of US-imperial diktat.

    One thing is becoming quite obvious, the EU/EC is now beyond repair and ruled by maniacs with a similar preposition to the fruitcakes in Washington. Obviously, little was learned from the May 2014 Euro elections, or growing anti-EU feeling in many of the member states. Why the UK, France and Germany desire to all shoot themselves in the foot I don’t know, what possible national or economic benefit is to be gained.

    I realise that many businesses in the EU are addicted to their markets within the USA – which is an Empire in decline to put it bluntly. Surely, given the economic growth potential in Russia, its untapped reserves and bounty of natural resources, the EU would be better off in the long run turning its attention to the East and embracing strong economic ties with Russia. Further, European cooperation would facilitate further the development of democratic institutions in Russia. Instead, we get the EU sanctioning a “coup” in the Ukraine and contributing to the slaughter of many an innocent.

    Well done the European Union, nothing but a poodle for its American masters – I for one dislike slavery and serfdom – is this really what our so called leaders want, is this really in the interests of Europe and global peace. The answer is no, so lets get rid of this corrupted institution and create a foundation that actually benefits all who reside in Europe, not just a powerful clique which wants to bleed us all dry and be part of a US-inspired new world order with the USA clearly the dominant figure.

    Cowards the lot of them and certainly not in my name.

    1. Windsock

      Remember, there were hundreds of EU citizens on that flight. EU leaders feel a need to be seen to be doing something about that to bolster the EU’s own position with its own citizens. (It won’t work – those citizens are not that stupid.) Cameron and Hollande are both in trouble politically at home and acting tough on a “world stage” is always a good move to try to divert attention away from that. Absent any military power, economics it is!

      Add to that the EU bureaucrats WANT the TTIP to go ahead and are telling their own public sweet FA about it, and you see why “we” (those of us who live here but have no input to the process) are acting the way they are. YUA! USA! We still remember the way US helped us eventually in WWII and would expect US help in any new major military conflict. While the current US government might be wary of this with its Pacific pivot, I expect its military/industrial/neocon complex would be happy to oblige.

    2. Katniss Everdeen

      ” I’m absolutely at a loss at why the European Western powers are following the whims of US-imperial diktat.”

      You may find the answer in that “haystack” the NSA is constantly sifting through looking for “needles”. Unless I miss my guess, this is the very situation for which that “haystack” was invented.

        1. hunkerdown

          Six lines from the hand of the most honest man was enough for Cardinal Richelieu to get someone hanged.

      1. NotTimothyGeithner

        Don’t underestimate old fashioned racism. Remember, the slavs are savages. Oh sure, they may be a step above the darker races, but the basis of European international thievery has been a softer racism than we are familiar with here. It’s still there, hiding behind baguettes. The stuff about Polish workers in the 90’s would make your skin crawl. Being bombed into oblivion didn’t make them nice all of a sudden.

        Pressure from Truman and Ike were vital to the end of European colonies. They would have fought for the colonies if they thought the U.S. would look the other way. The Sinai grab and Ike’s response was a rude awakening for Western Europe.

        1. EmilianoZ

          Very true, my friend. The US and Europe have to stick together because only they share those fundamental Western values handed down to them since the Great Classical Civilizations. What other civilization on the whole wide earth has put man, the individual at its center? What other civilization has pledged to guarantee the Freedom of the Individual as sacred and inviolable? What other civilization has placed its faith in Reason and Progress through Enlightenment?

          There is no other alternative for Europe. What are they to do? Cozy up to Asiatic despots?

          1. Banger

            Seriously? I’ve lived in Japan and certainly there are elements of life there I found annoying but no more so than anyplace else. The government is not more despotic than in the U.S where it is decidedly despotic at this time–or more accurately, episodically despotic.

    3. Banger

      CDR, I feel your pain–but here is the deal, and you know this without me telling you: reality is not what the mind-control regime says it is. We live in an Empire ruled by some kind of mysterious Central Committee, I say it’s an emergent network but maybe it is a good old-fashioned secret death cult or maybe aliens or some combination of all three–but events in the world cannot POSSIBLY be understood without that in mind. Katniss says it has something to do with NSA I would add CIA and its stable of contractors and she’s right. For example, can you become a politician today without someone having something on you? It’s not like politicians kind of rise to the top like cream–you know as well as I do that they are, by and large, a pretty mediocre bunch. Even more mediocre are the news-readers and “reporters” in the mainstream media who are trained to have no imagination and little sense of humanity–most of them are on medication according to someone I know who is very well connected and is in the business (in the USA, who isn’t on some kind of anti-depressant, anti-anxiety or whatever med?).

      The more I’ve looked into things the more I see how deep the lies and mind-control goes. Whatever was invented in or brought together in the service of the State in 1917 with the creation of Committee on Public Information (CPI) in the U.S. and later copied around the world by both “free” and authoritarian societies has developed into something exquisitely effective and well integrated with what, over time, became the Empire–a structure as unfeeling and sinister as the fictional Empire of Star Wars.

      Back to the subject at hand. Logically both Europe and the U.S. should be cooperating with Russia and Iran–both states have nothing inherently wrong with them in terms of being particularly ambitious in terms of wanting to intimidate neighbors, both have, from a policy perspective, acted fairly responsibly as regional powers. None of their societies have ideologies like Nazism or Communism that would be a threat to civil society in the West–there is a reasonable degree of literacy in both countries (contrary to myth Iranians aren’t barbarians, in fact their civilization is older than ours). Both countries have suffered mightily under indirect rule by the Empire–the Yeltsin years in Russia, the Shah years in Iran yet have no great antipathy for the U.S. and the West–so why should there be this tension? This is a question we need to ask over and over again until we start seeing more clearly what is actually going on here and alerting others to wake the f-ck up!

      1. Christopher Dale Rogers

        A few comments is response to all on this thread, first and foremost, and before turning my attention to relations with Russia, I’m saddened at the silence on Gaza by Europe, the silence really is deafening for someone like me.

        With regards what’s being concocted against Russia, it has all the hallmarks of those 37 days between the assassination of a detested Austro-Hungarian Archduke and the outbreak of hostilities between the Great Five powers. On July 28 1914 Austria issued an ultimatum to Serbia, which it was expected would be refused, thus offering a pretext for war – it did not work out that way, but war ensued regardless.

        For the life of me, and given my personal extensive knowledge of post 1848 European history, I fail to understand why our leaders in Western Europe, all hiding behind the EU and NATO are intent on sticking a rather large stick into the hornets nest of Russia – if Russia had no nuclear arms, I could certainly understand it, but given the nuclear arsenal at Putin’s disposal I find the West’s behaviour crass, if not blatantly idiotic, and again I ask, for what good reason, what has Putin and Russia supposedly done – Russia has acted with a cool head over the Ukraine, Russian influence defused the Syrian crisis – again manufactured by the West, and russia could no doubt accommodate a Federal Ukraine and even accept this new political entities membership of the EU, certainly not NATO though.

        So, either the USA and Western Europe is pissed with Russia for standing up for the sovereignty of the nation state, the USA and Western Europe in tow dislike the fact that the BRICs are beginning to go it alone, or basically are they, that is the ruling elite in the USA and Western Europe intent on nuclear war, a war which many in the commanding heights of the USA believe the USA can actually win. However, given the neocons track record with foreign policy since the advent of Bush junior, not as if Clinton gets any points – it would seem their policy failures are legion, so why the heck would anyone wish to follow them down this dead end, unless they hope a nuclear conflict will achieve what is their ultimate game plan, namely our genocide, which obviously can be seen as a means of population depletion that favours our elites – this seeming the logical outcome of their own deranged minds and policies in the past 25 years.

        1. Ken Nari

          “I’m saddened at the silence on Gaza by Europe, the silence really is deafening for someone like me.”

          I just tried to post a reply with info that might explain this.

          My comment included a link to a Greek site that argues German arms manufacturers are making great progress in winning Israeli business from the U.S., and that the war in Gaza is providing a wonderful opportunity for international weapons makers to test their latest technologies in crowd control. This will come as no surprise to Banger.

          The comment appeared briefly, for a few seconds — not long enough for Yves or any other moderator to read it — and then disappeared.

          Same thing happened yesterday at Moon of Alabama. After five tries and five immediate deletions, I gave up. My comments without the link (like this one) remained. What’s going on?

          1. hunkerdown

            I had trouble posting comments on an entirely unrelated blog this morning because I included a naked link in my first comment. I think Akismet might have had a bit of colic today.

          2. Nathanael

            The Merchants of Death, as they called them in the 1910s. It’s extremely nasty for them to be selling their weapons of murder to a genocidal Israeli government for the purpose of committing a pogrom against the ghetto of Gaza.

        2. Nathanael

          Sorry, it’s quite clear that Putin is the instigator here; Russia now is in the position of Germany or Austria-Hungary in 1914, with Ukraine as Serbia. Running paramilitary invasions for the purpose of claiming territory. Putin is an idiot; he should have quit when Gorbachev told him to.

          The further trouble, however, is that the US is run by people as feckless, incompetent, reckless, and unpopular as the Tsar was in 1914.

          The EU is in the position of… well, France in 1914, I guess. It doesn’t really have a dog in this fight, but it’s going to get dragged in anyway.

      2. Paul Tioxon

        The Atlantic Elites, were forged from the aftermath of WWII. The Atlantic Charter, The NAtlanticTO military alliance, The Atlantic Council http://www.atlanticcouncil.org/news/press-releases/atlantic-council-names-jon-m-huntsman-jr-as-chairman, which is currently led by John Huntsman, former Ambassador to China. Obama isn’t the only one who pivots. And there is also the grand daddy of networking policy influence, The Council On Foreign Relations, http://www.cfr.org/about/people/board_of_directors.html.

        Now, without resorting the list of 10 things the secret government of the Dual State doesn’t want you to know, you can easily read their publications and websites to see who has influence and how policy is sorted out, which eventually, depending on who takes the WH, is implemented. You can also go the website, Who Rules America, run by William Domhoff, to get a serious analysis of power. The people in America and Western Europe from government, business, and academia build relationships face to face, and are able to work across national boundaries and private interests to maintain the status quo or shape and control the rate of change erupting around the world.

        I would add, especially for you Banger, a site called Theory-Talks org , which is especially focused on International Relations, IR. They have regular interviews, and all of the well known heavy weights are there and others who may not be familiar, due to their heavy weight status in China or Africa. Wallerstein, David Harvey, Walz are present, along with a number of women, more than you find weighing in as experts on the news on these matters elsewhere.

        But to answer the question as to why should European Allies follow the USA lead, we have developed and sustained long standing relationships not only with people at the commanding heights of capitalism, but also with the people of Europe. The linkages, are economic, military, cultural, political via treaties and personal, more so than with any other place on earth. If you had seen some of the D-Day reporting, of old American Vets going to France or Belgium and saw the honor they received by people, some who were little children and remember these soldiers coming to their town, you know how deep the linkages run. Not to mention all of the relatives many of us have, whether we are aware of them or not throughout most of Europe. The Atlantic Elites have forged strong bonds, through multiple channels and dozens of networks compromising hundreds and thousands of important people in critical positions of decision making, and influencing decision makers, in order to get what they want from the world most of the time.

        And the multi-generational nature of building up familiarity with one another by grooming the next generation or recruiting talent and grooming them via cultural exchanges, such as Rhodes Fellowships, Fulbrigh Scholars and more recently, in China, Schwarzman Scholars, funded by BlackRock rich guy, in the exact same mold as all of the other institutions that let people from the commanding heights power meet with one another face to face.

        Why does this power relationship endure, why does Europe fall back into line when the USA makes policy directions that may seem against their interests? Because, there is no monolithic interest, but a gathering coalition that the US builds, on any one issue, piece by piece as needed. Europe still lives under the Aegis of the Pentagon. Ramstein Germany has the US Military Air Base with over 50,000 Americans, plus family plus thousands more German civilians who have jobs there as well. Like the Okinawa US Military installation, it is a remnant of WWII, but grown to be cultural exchange for untold hundreds of thousands of Americans and Germans over the past 50 years. Repeat this all over Europe, with Rota Air Base in Spain, the UK, Italy and on and on. Unless the European’s want us to pack up and go home, and they can then spend all of their money on Naval and Air power, instead of Audi plants and Air Bus facilities, they will go along when pressed, most of the time. They are not yo-yos, on a string, but they are too closely related to us more than Russia, to ignore us as they please.

        Russia is very isolated in the world today. The US was pushing into their borders with Ukraine, which was supposed to be a buffer, demilitarized zone, a non NATO kind of Switzerland. We interfered with the internal politics of the Ukraine, and Russia, not being stupid, pushed back. They aren’t very good at neo-colonial push back. And the reason is clear. In reading the Durant’s history of civilization, a telling analysis on the strength of the Roman Empire was emphasized. When a kingdom or empire went up against Rome, even if they were a military match, such as Carthage, Rome presented foreign threats with hundreds of years of politically and militarily steeped Patrician Families, groomed for war by mandatory service in leading a legion, socialized in sophisticated power wielding by senior family members, and libraries of reports of actions of previous generations. When Rome battled a king, that king battled thousands of his equivalent Roman ‘kings’, each his equal or better in warfare, power policy and leadership. The legions of Rome were lead by someone who could be thrown aside if he failed and replaced by someone who would succeed. The Atlantic Elites have a legion of seasoned leaders, general, diplomats, presidents, chairmans and most are all familiar with one another going back generations. In Russia, all bets seem to placed on one man, who faces a legion of men and women as smart, as ruthless, as tough minded and determined to contain his nation, and get it on board with all of the other nations, heading is the same direction.

        Look at the Schwarzman Scholars site, you will see some of the exact same people on the Atlantic Council, such as Robert Rubin. Interlocking leaders allows networking, uniform policy development resulting in compliant national interests converging around US lead initiatives. It’s not a mystery any more, it’s in plain sight. And it is the reason why they like to say TINA.

        1. Publius Democritus

          A very formidable list of reasons why the Atlantic/Western elites are invincible, just like Ancient Rome…..
          Wait a second, what happened to the Roman Empire, again?
          The problem with your impressive assessment, Paul, is that you are drinking their “Kook-Aid.”
          Despite the tight network of connections, and the power that accrues from that, or because of it – the whole system suffers from group-think. Group-think inevitably leads to disaster, defeat, and collapse, because it denies reality. It breaks the observation-orientation-decision-action (OODA) loop.
          It is also not likely to be true that Russia is dependent on only one man to lead them in their struggle against the neocon assault. Really? In a nation that large, there is only one human being with the wisdom and intelligence to lead? I highly doubt it.

          If anything, your assessment is a parody of the overconfidence and hubris that will lead to the downfall of the Atlantic fools.

          1. Paul Tioxon

            The problem with pinheads like you is firstly you are a bunch of anon douchebags who can’t STFU while on the internet with people who know what they are talking about. They 2nd thing wrong is your assumptions, which make an ass out of you exclusively. Because I talk about people with power is not admission or revelation of my admiration but a description of what is going on. The self appointed messiahs of denouncing each and every instance of transgressing so some vague standard of purity in search of ferreting out co-opted sell outs, secret CIA plants, neo-liberal trojan horses, Jew bankers, crypto nazis, fellow travelers, or other clandestine forces of manipulation is a well worn cliche. Hopefully, you and all of your kind will get into dental school, finish that graduate thesis you have been laboring on, and leave serious people alone to enjoy a discourse without mind numbing attacks of a stupifyiingly one dimensional nature.

            There is no group think at this level. There is fierce competition. If there was group think, they wouldn’t have established these social spaces to meet and mingle. Your stepford wives OODA is for formal organizations, a unit of analysis far different than the global system analysis I am trying to outline. You do not know the future any more than they do, but they are putting more effort into maintaining their positions of power than you have demonstrated to me that you are doing about anything. This is macro analysis of international relations, not office politics in a firm or government agency. The scale is much larger, filled with more players and requires different thinking than applying whatever it is you thought you read on wikipedia.

            And finally, your disrespect to call these people fools, on the basis of completely projecting your personal animus onto my brief paragraphs shows you have not interest in facts, empirical analysis just a wistful notion that history is on your side, presumably, you good, them evil, lesser and greater. There is no side to history. It is not a personal god that plays favorites because it knows you and loves you. It will result from the totality of all our actions on the earth we live on. That’s all. We could be witnessing the worst of humanity or the best flowering of humanity or get hit by asteroid. I don’t know, and people like you need to calm down if you hope to get a clue.

            1. Jackrabbit


              I think you dismiss the issues raised by Publius too lightly. Group-think isn’t just for office politics. There is a frame of reference that is shared by Western leaders. Those who raise questions that go against this framework are dismissed.

              The 2008 Global Financial Crisis is a case in point. There were many organizations, of different types, involved: Regulators, Rating Agencies, Banks, Investment Banks, Institutional investors, and more. Yet the free market framework that they all operated under resulted in a stupendous disaster. Even after being informed of the market bubble via empirical evidence of rents, Greenspan would not act. He just couldn’t ‘wrap his head around’ it. He was suffering from the same ‘markets know best’ group think as everyone else. In fact, he was a cheerleader for this faulty notion. Years later, he blamed his inaction on his faulty mental model – the same model shared by all other financial market participants.

              And your praise of the Western bench of leaders and their super decision-making model only makes one wonder why we see failures as often as we do. Our arrogant foreign policy (pre-emptive war, spying, rendition, etc.) has disturbed friends and united enemies. Despite winning the Cold War, today we find Russia and China closer, and more willing to flex their muscles, than ever. Each supports Iran and BRICS anti-Western initiatives.

              Your writing reminds me of those who believe policy-making of Western Democracies is inherently sound because democracy allows for all sides to be heard. The problem with that view is that we are less a ‘Democracy’ now than ever before.

              H O P

            2. Kurt Sperry

              I couldn’t actually read past the first two sentences.

              Worthwhile/fruitful/intellectually engaging discussion generally requires a certain generosity and goodwill–or at the very least civility–between its participants.

              That’s been my experience at any rate.

              1. Paul Tioxon

                Thanks for insulting my parents for not teaching me good manners and civility. It’s difficult for me to accept criticism from someone who doesn’t read past the first 2 sentences. I hope you were not too traumatized.
                I’ll try really hard not to be misunderstood in the future. I know it’s not what I say, it’s HOW I say it. I guess you missed all of the usual racist accusation of regular oral sex being performed by all of the elected pols for their corporate masters, and only skip to the most high minded non accusatory analysis presented here. To you, as good as you are, from me, as bad as I am. I am as good as you are, as bad as I am. There see, I’m civil.

                1. Lambert Strether

                  Yikes! I can either work on my post or go upthread and figure this out, so I’m going to work on my post, but suffice to say you’re both valued commenters. “Let’s have a good clean fight here. No holding, no low punches, no biting, gouging or rabbit punches. You’ll break when I say break. And if you’re decked, you’ll get a count of ten to get back on your feet.” Been wanting to use that one for years, thanks for the opportunity….

                2. Kurt Sperry

                  There’s an important distinction I think you are missing, which is the difference between being civil or uncivil to public figures at the heart of whatever issue is being discussed (wide latitude, not directly addressed to/ extremely unlikely ever to be read by the person under examination) and being gratuitously uncivil to fellow participants, who are personally unrelated in any real way to the substance of a discussion–where the point is to insult the target directly in lieu of a substantive refutation. Calling out powerful public figures, even in the harshest ways, can be situationally appropriate, whereas using the same attack directly on someone whose only connection to the topic is their presumed disagreement with you is likely to be boorish, uncivil and inappropriate in my view.

                  In other words calling Obama, Netanyahu or GWB a baby murdering piece of shit may be perfectly acceptable rhetorical tactic (and particularly so as it not an outrageous characterization in any of these cases), but calling someone you are directly engaging with a pinhead or douchebag simply due to disagreement is both uncivil and as an ad hom, lazy and poor argument.

                  1. Lambert Strether

                    Yep on the “public figure” distinction. The boundary condition is the paid tr0le, and that can be safely left to the admins. We watch for that. (Of course, that’s not to say that your ordinary, garden variety commenter isn’t capable of a Rule #1 violation — I certainly — but it’s best to let them sit rather than go down a rathole of meta about who’s the douchebag. We watch for that too.)

            3. Nathanael

              Paul: Contrary to your unfounded assertions, there’s severe groupthink on the elite level. You can even watch it play out in the newspapers. Competition doesn’t prevent groupthink; just ask competing teams of soccer players.

              The cabals which are running things are going to violently collapse because they are failing to recognize the current state of the world (global warming, peak oil), and are even failing to recognize some basics about economics (Keynesian principles), and don’t understand things which an Egyptian Phaorah would have understood (keep the people fed). They are competing, but they’re all tacitly accepting the same “rules” as each other (nicknamed the “neoliberal consensus”), and that’s their gross error.

              I’m not saying that their collapse is going to lead to something we would like. It probably won’t! The collapse of the Roman Empire led to the DARK AGES. The collapse of the Ancien Regime in France led to Napoleon. The collapse of the Tsar in Russia led to Stalin. The overthrow of the unsustainable regime of the Shah in Iran led to… Khomenei. In WWII, the sclerotic regimes of Arabia were replaced with… ibn Saud, who was much worse. And so on and so forth.

              The current regime — the entire interlocking cabals of elites — are inevitably doomed by their own groupthink and resulting incompetence. Their collapse will probably lead to more vibrant, up-to-date, clear-thinking… evil warlords. Think of the new “Islamic State” in Syria and Iraq for a small example.

              The goal for good people is to try to plan so that when the existing regime collapses, we can create a replacement regime which is decent, rather than getting a Napoleon or a Stalin or “Islamic State” or the Dark Ages. I am not at all sure how to do this.

              1. Lambert Strether

                I’m not at all sure that “cabal” is the right analytical tool. Dynasties, factions, parties, flexian networks all have a role to play in the machinations of the ruling class, and that’s before we get to institutions. “The cabals that run things” seems to me to be oversimplified, and dangerously so, though fun as a narrative. “It’s called a ruling class because it rules,” as Arthur Silber says.

        2. Christopher Dale Rogers

          Paul Sir,

          Yes, all nicely put, but there are many caveats that can be placed in your analysis, so let me attempt to do this.

          First and foremost, to date all empires have imploded and the length of time it takes for each empire to implode reduces with the passing of each baton, for the record, and in terms of duration, the Roman Empire still takes the honours and in reality managed to endure for a fair duration, essentially quite a few years before the birth of Christ, and if truth be told, a longtime there after if we accept that the Holy Roman Empire and Byzantium were the Western and Eastern offshoots of Rome. by comparison, the USA is a usurper and I would place the US Empire in its fullness beginning with the Suez Crisis, rather than 1945 itself. Again, the British Empire did not become imperialistic until the late 1790’s and witnessed its own demise with Indian independence in 1947 – so effectively a 150 year duration, of which for 100 years it was the only kid on the block – this backed up via naval power, that than a vast standing army.

          Now, it took generations for Rome to achieve the interconnections you discuss, yet the USA can only be called an Imperial global power from 1945 and global hegemony since the demise of the USSR in 1991 – and by the way, many of the British elite were none too pleased with the USA’s treatment of the UK and its Empire in the immediate post war years, and certainly extending after Suez itself – so something else is at play.

          Further, as of 1947 we had an emerging Cold War with two adversaries, each with nuclear weapons and a rather large military capability with Western Europe prostrate in the middle – obviously I’m ignoring Africa and much of the Far East in this, but the equation changes only a little with Communist China right up until the late 70’s.

          Now, essentially you are saying that in little over two generations via intercourse in many avenues that the USA is able to maintain its single hegemony and its does this via cultural exchanges of one sort and the other. Which is fine by me, elites for any country being much the same as elites from another – they all fear the masses don’t they?

          Again, and staying on track, at the end of the day Imperial Rome could only keep up a pretence of power with bread and circuses for the masses, and indeed in the 35 years after 1945 we certainly have witnessed much bread and many circuses. Regrettably, and with instruments of propaganda unknown to our predecessors, the new Imperium deems it justified to maintain the circus, but remove the bread, which is a policy that sooner or later will lead to its own demise, unless the masses are tamed, or removed.

          I’ll leave Russia out of this analysis, which obviously is a thorn to the US Empire, but I do not believe the Chinese will be as easily assimilated as you make out, and I know first hand that the Japanese are not so easily subsumed by US imperial interests.

          Perhaps its just me being a class warrior and believing that a class system exists I don’t purchase into US crud, however, I’m fully aware that my beloved UK Labour Party has been corrupted by the means you have explained, but none of these people corrupted actually belonged to the working class – I’m here referring to one David Miliband, who if truth be told, was groomed to be Tony Blairs, and hence Thatcher’s successor – his brother put a spanner in that one though.

          1. Christopher Dale Rogers


            The one other caveat I should have highlighted, but did not is that of oil, the US Empire has been built on oil and without access to oil its military machine is worth zero in the long run, and oil is slated to run out at the very latest before this century is out – and for all the intercourse and connectedness between TPTB in Western Europe and the USA, surely none can be stupid enough not to recognise this salient fact – now add your economic decline internally with the fact that the USA, unlike Europe has been built around the automobile, if I were a European leader, the last place I’d be putting my eggs and faith is with the USA, which it would seem the Poles at least recognise.

          2. Paul Tioxon

            Mr Rogers,
            Thank you for you kind response. My sympathies on the demise of yr Labour Party, it must be galling for you. I feel the same way about my party of FDR, JFK and LBJ. If you have not checked, let me just tell that the very 1st person on the Schwarzman Scholars Advisory Board is Tony Blair, followed by Sarkozy. Schwarzman put up over $100mil USD to stake this venture, and brought on board an all star international cast of advisers, including Colin Powell, Condy Rice and Henry Kissinger.

            What people find startling is the implications of the extensive networking, and interlocking nature of these Councils. Like Davos, they are the social spaces where leaders from around the world try to work out broad policy, while pressing the flesh face to face and getting to know one another. And there are many such organizations, these are the highlights, and they exist because so many governments, so many political parties, so many factions, so many competing companies and competing industries need a place to try to iron problems before they blow up into out of control crises. Now, their idea of out of control crises, their idea of problems, aren’t yours and mine. Not on a day to day basis certainly, but even in our more high minded intellectual grappling with trying to get a clear picture of what is going on at the commanding heights and how we can influence for our own benefit.

            I am certainly in agreement with you on oil, and fossil fuels, unrenewable resources and their negative consequences for industrial production of the things we need and petro chemical agricultural inputs for what we need to eat to live at all. The push for solar energy, wind power and extremely efficient electric sipping household appliances along with passive solar housing designs is a priority in my activities. There is so much to do, I pick a place to work and work it.

            But what I hope to do in my longer briefs is to try to move the needle of political analysis of good people who I believe come to this site in search of something that is more than a party line. One of the worst aspects not only on this site, but for people in general is the paranoid conspiracy outlook. There seems to be a belief that in the social sciences, there is some simple mechanism that will explain it all, like gravity or the 2nd law of thermo-dynamics. In lieu of that, there is the none dare call it conspiracy school of thought. This is just a misapprehension of widespread socialization of people. Culture is the engine, not secret meetings for the most part. The fact that I speak English or people in Peking speak Chinese is not a conspiracy, it is socialization. It is learned behavior. I have no doubt group think exists, in groups, but the whole world is not a group.

            America is much younger than Rome or Britain, without a doubt. And all processes have a beginning, a middle and an end. While the British Empire is over, the British people are still with us, you did not all fall under the waves of the ocean like Atlantis.

            The Fall of America Poems of these states 1965-1971 is a book by the American poet Allen Ginsberg. It was written at the height of the Viet Nam war. Brian Eno has an album from the same period called: BEFORE AND AFTER SCIENCE with a great song called “energy fools the magician”. I am not at all sure, that the America Ginsberg bid farewell to, is the Hegemon that is the main subject of what we mean when we talk about America today on this site. He was seeing the transformation into what we have before us today. But intellectually and practically, we can count on change to happen. What these Councils anticipate is their capacity to direct the change, the rate of the change and adapt accordingly. What I hope to do is to extract from these times of jarring change as many concessions as possible to strengthen the New Deal/Great Society structural changes and build upon and expand them. In addition to the artists who helped me expand my consciousness and develop faculties of perception beyond the received wisdom of traditional socialization was one of the critical questions of the time of my coming of age: If we can put a man on the moon, why can’t we end poverty? Of course the times were in upheaval with so much change going on, it is impossible to convey today just how disruptive each new day was. The feminists posed the same question like this: If we can put a man on the moon, why we can’t we put all of them there? Maybe Elon Musk and Richard Branson will do that. But for me, disregarding utopian social planning and wishful thinking only used as brain storming technique, I know some day, there will be no USofA, but there will still, perhaps be a lot people living on the N American continent where the Delaware and Schuylkill rivers meet. And hopefully, the things I build today will be of some practical use to them as they take all the pleasure from life that they deserve and more.

        3. visitor

          There is an often forgotten aspect to all that Roman Empire stuff people like to bring up in order to compare the USA to it.

          There was an empire that was as large, as well-organized, as rich, as militarily powerful as Rome, with “hundreds of years of politically and militarily steeped Patrician Families, groomed for war” and “socialized in sophisticated power wielding by senior family members” in similar ways, and which was not afraid of confronting Rome head-on — resulting in the bloody end of three Roman emperors and one triumvir: the Persian Empire.

          For almost 700 years, Rome and Persia were embroiled in an endless conflict — which Rome actually started. Bringing down Persia was an obsession for Rome. Rome repeatedly invaded Persia, but never managed to conquer it or subjugate it. Persia made repeated incursions into the Roman empire, never managed to really occupy anything, although once it almost managed to bring down the Roman Empire (more or less reconstituted under Byzantine emperors).

          Russia is not Persia, but as much as people like to make the comparison, the USA is not comparable to Rome either (for a start, where are the generations of “politically and militarily steeped Patrician Families, groomed for war”?)

          1. Paul Tioxon

            Obviously, I can’t compare, directly, a civilization, that spanned at least 1,000 years, another 500 on top of that if you count the fall of Constantinople in the late 1490s,with one that has not been in power for a hundred and not even 300 years since its founding. But, that is not the point of global systems analysis. Rome was not a global empire. It is to point out the organizations that develop an elite leadership to manage the global system they dominate, which includes people from these more ancient areas of the world as well as ones with more recent experience in global dominance, the Imperial European powers. Their elites have similar institutional arrangements that lead to successful power retention. The modern man has learned from the ancient man, as anyone who has studied the Renaissance knows. We live and learn from others who have lived before us. Our capacity to exist in time, mentally, and draw from a past deposited in writings is priceless, don’t you think?
            There are not 30 generations deep bench of talent in America, but our university systems provides more than enough developed people to take on great responsibilities of keeping the civilization operating, of course, until it doesn’t. The people who face off against the current global system, do not have even a sliver of that institution capacity or social capital, much less military power. America industrialized and built up more material wealth in a generation that the House of Windsor did over centuries. The result speaks for itself.

          2. Nathanael

            It’s worth noting that Persia is still going. It was conquered by the first great Islamic Empire, but on the whole it remains unconquerable; the few who conquer it “go native”. In this regard it is much like China.

        4. Ping

          Rapidly unfolding world events including ‘trade’ deals seem a reflection of the famous quote by Carol Quigley toward a feudalistic one world government.

          “The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland; a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank… sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.” – Carroll Quigley, member of the Council on Foreign Relations

          Yet while cloistered collaboration and strategy sessions in rarified atmosphere amidst whiz bang global maps and technological data must seductively induce logic suspending endorphins ….it is divorced from pesky REALITY unless creating worldwide large scale desperate populations with chaos everywhere and a largely uninhabitable planet is part of their master plan.

          I am even further demoralized at how even farther we have degraded as human beings with the mainstream media presentation of the decimating of the captured population of Gaza, after years of their land and water being stolen as unfortunate but acceptable.

          It should be clear to Europe or any other ‘partners’ who may have idolized the US in the past, the US military and intervention now almost exclusively leaves behind destroyed economies, societies and smoldering wreckage. And the US will throw anyone under the bus including it’s own population as they further progress to destroy the ‘commons’ and social safety nets/insurance even as the likes of Nancy Pelosi and others unanimously make the Sunday talk show rounds espousing the billions we must send for weaponry to bomb the smithereens out of the concentration camp that Israel operates and for their further testing of population control on a desperate captive population.

          Before these policies and activities were kept secret. Now we are fully exposed and are we as degraded as those in the bubble high on the endorphins of their rarified atmosphere? Are we numbed and paralyzed as humans to tolerate or subscribe to this illogical behavior. What other species is so genetically flawed psychologically?

          Aside from the existential rant, it should be obvious to the rest of the world by now the US is incohesive and unsustainable and to hitch a wagon at peril.

    4. different clue

      When a critical massload of my fellow Americans decide that . . . ” the USA is an Empire in decline” is a relief rather than an insult, we shall have have reached a critical tipping-point threshhold. The next threshhold would be deciding the Empire itself is a burden, not a benefit.

  5. EoinW

    I’d say Europe’s elites hope to complete their sell out to the Amerikaner Reich before the European populace is hurt by it and rise up in anger. These are not leaders acting in their country’s best interest. They are Quislings, practically CIA operatives. Think of them in that light and what they are doing makes perfect sense.

  6. The Dork of Cork

    There is perhaps elements of Fordism within UK & French elites policy.
    This corporate mechanism of returning purchasing power to customers has the singular advantage (for bankers) of not attacking the bank scarcity mechansim directly.

    Russia was becoming a major european producer of cars (and also a major customer of Volks)
    See this video at 2.45 which looks at projected Euro car production.
    “However the reality without Russia is somewhat different”

    One can never overstate the power of the car industry to drive the manic & grossly unsustainable trade practices within the European entreport.
    It creates such massive physical deficits both directly and indirectly people are forced to be pointlessly dynamic in their efforts to export to find scarce money.
    What we are seeing is the satanic system managers directing scarcity within the European banking vice – indeed to the point of starting another great war.

  7. MtnLife

    I wonder who the sanctions are hurting more, Russia, who can turn around and sell to the BRICS, or the EU, who seems to have lost an important export market? This reminds me of the Blazing Saddles scene where he takes himself hostage and points the gun at his own head. Only this is more brutal in that the EU has shot themselves in the foot a few times just to let everyone know how serious they really are (or at least how serious the US is). Shorter US policy: no allied economy is safe from destruction in attaining the goal of punishing Russia.

  8. Banger

    If these sanctions do indeed cut deep then we see the shape of the iron fist within the velvet glove. How does the U.S. run this con? How do they get the EU to do their bidding time-after-time? Look into the mechanism of control.

    1. Andrew Watts

      I sincerely doubt the sanctions are going to bite as hard as the propaganda peddlers would like us all to believe. European officials are already on record openly worrying that harsh sanctions would encourage Putin to overtly intervene in Eastern Ukraine.

      1. NotTimothyGeithner

        They may not bite in the short term, but I suspect the BRICS won’t be as open to Euro trade in the future as they have thrown their lot in with deranged Yanks. If Russia is sitting on the goods over MH17, Europe is being set up as a group expressing their old colonial sentiments for the world to see. After France’s recent diatribes, how well will French companies fair in the former colonies versus Russia and China? Oh no, Germany started another fight with the Russians, and the UK still makes no working products besides a children’s television show.

        1. Andrew Watts

          Talk is cheap. I fail to see how the French long term relationship with their ex-colonies or anybody else is threatened. The sale of warships is not apart of this round of sanctions. The Germans are going out of their way not to offend Russia. Other non-aligned nations have nothing to gain from taking sides over the Ukrainian situation. Though I imagine that China views this situation as an opportunity to strengthen it’s position vis-a-vis Russia and as well as it’s economic ties with other countries.

        2. Andrew Watts

          Heck, even Obama is proclaiming this isn’t the start of a new Cold War. Everybody just needs to calm the fuck down.

    2. different clue

      Probably the con is being jointly run by the Overlords of both entities ( US and EU) against the inhabitants of both entities (US and EU). It may not be a case of the US Overclass controlling the EU Overclass. So perhaps the mechanism of control to really look into is the mechanism by which the two respective Overclasses control their respective bunchloads of inhabitants. And it looks like the EU Overclass may have a little less control over its bunchload than the US Overclass has over its bunchload, which is us.
      A major goal of both Overclasses is to recreate the Cold War and turn the US and the EU into bigger, kinder and gentler North Koreas. If I am right about that, then the German bussiness-class thingmakers are not part of the EU Overclass but rather to be written off as acceptable collateral damage. Do they have the power to launch a rebellion or a coup of some kind against their political Overlords?

  9. Theo van Doesburg

    Isn’t this all about preserving the global dollar system? Driving a wedge between the EU and Russia fits into this strategy, as do the Trans Atlantic trade deal and the Transpacific trade deal, which both seem to be aimed at isolating Russian and China. An Eurasian economic bloc, isn’t that the biggest threat to the dollar system?

    1. Yves Smith

      Even with China pushing for greater use of the renminbi, only 1.5% of global trade in invoice in the RMB.

      China isn’t willing to run trade deficits, nor does it have deep bond markets, both of which are necessary to assume reserve currency status.

      This looks like continuation of a dubious policy (NATO moving into former Warsaw Pact countries, contrary to the deal struck between Bush Senior and Gorby) plus personal pique at Putin (Snowden, Syria, helping Iran).

      1. Theo van Doesburg

        Yves, your point on the RMB is well taken, but if it is a continuation of dubious NATO policy, what is the US strategic goal to isolate Russia?

        1. wendy davis

          My understanding is that NATO (and the CIA, deep state NGOs, etc.) are the Empire (plus the Africa desk). Kyiv had already been advised by Hillary Clinton (WikiCables) that joining the EU would be a backdoor entrance to NATO, and NATO Tweets seem to agree. Think: bases, missile systems, as well as the fact that the West may be bonkers about the BRICS moves toward their own low-interest development bank, maybe internet, plan to trade oil and gas in a ‘basket of different currencies’, as well as the fatct that US-base multinationals have already invested in Ukraine itself (as has the IMF, heh), and it makes sense to Crush the Bear. Gads, you should watch Zbig’s Twitter account: no quarter!

        2. Synopticist

          There doesn’t need to be much of a strategic goal, beyond Yves’ point about pique with Putin. That in itself is easy 75% of the motivation. It’s become a personalised thing, as it has with a long list of baddies before him. He’s the next new Hitler, and they dream of getting rid of him through some colour revolution type overthrow.

          There has been a very sharp drop in the intellectual rigour of our foreign policy establishment in the west. Don’t assume they’re all brilliantly machievelian and following a secret and highly sophisticated plan. They’re mostly a bunch of grubby opportunists on the make, blessed with low cunning and lucky birth.

          1. NotTimothyGeithner

            Jumping off Jackrabbit’s point about group think, I wonder how many years Euro-crats still operate under the notion Obama can pull 300,000 in Cairo. They set down Berlin for Obama last year at the Brandenburg Gate, and at the last moment, it became an event for U.S. soldiers and their families.

        3. EmilianoZ

          I actually think there is a great strategic plan about Russia. Russia cannot be left alone for the same reason as Saudi Arabia cannot be left alone. They’re just too damn important. Russia has vast natural resources that’ll be vital for the future growth of the planet’s economy.

          If you take the long term view, it’s even more important. With global warming, many places on earth will become inhabitable. But look at Siberia! You cannot find such a huge reservoir of empty space anywhere else on earth. The Chinese will pay a fortune to buy the right to relocate Shanghai somewhere there. Now imagine the US acting as the gatekeepers after proper privatization of Siberia.

          Russia is far too important to be left to the Russians.

        1. The Dork of Cork

          One cannot overestimate the role of vehicle production in the euro entrepot.
          Its the primary vehicle for driving scarcity in the Euro entrepot. and thus driving pointless export activities (so as to seek scarce currency and thus control the european population via pointless work.) .
          Russia was a bridge too far east it seems.
          Morrocco maybe but not Russia – at least until its sovergin power is smashed.

          1. The Dork of Cork

            On November 28, 2007, Volkswagen Group opened a new assembly plant in Kaluga, with further expansion plans planned to be completed by, or during, 2009. The investment has reached more than 500 million Euro. The plant currently assembles the Volkswagen Passat and Škoda Octavia. Planned annual capacity from 2009: up to 150,000 vehicles.[11]

            On October 15, 2007, the Volvo Group broke ground on a new truck assembly plant, that was inaugurated on January 19, 2009.[12] The plant has a yearly capacity of 10,000 Volvo and 5,000 Renault trucks.[13]

            On December 12, 2007, PSA Peugeot Citroën announced its decision to build a new assembly plant in Kaluga.[14] By March 2010 the plant was operational, building Peugeot 308s for the Russian market and would also produce Citroën and Mitsubishi models.[15]


            Yves talks of Russia as having only the size of California…….
            But this is not a large economy built on services as in the UK.
            Its the center of primary and increasingly secondary goods production and consumption.
            There was 72, 000 + Volks Polos sold in Russia in 2013 for Christ sake.
            The car consumption (see the consumer /war economy) was going ballistic.

            1. Nathanael

              Oil-based. Unsustainable.

              Think bigger if you’re going to think geopolitically. The discussion of the importance of Siberian farmland is “bigger”. But then, isn’t Canada just as important?….

  10. Ed

    What is actually being publically demanded of Russia. Presumably Russia has to do or to stop doing something to get the sanctions lifted. What is that they have to do or stop doing?

    1. Carolinian

      They need to stop doing the stuff they aren’t actually doing. Also give back Crimea.

      Seriously, the Russians are apparently giving some arms to the Ukraine rebels just as we arm the Syrian rebels. Maybe we should sanction ourselves. However Putin did tell the rebels in Ukraine not to secede and he probably meant it. When they did so anyway he was under a lot of domestic pressure not to completely turn his back on them.

      Bottom line: why is this any of America’s business?…the question that never gets asked.

      1. Lambert Strether

        The United States isn’t the only power that can foment continuing chaos for its own realpolitik. And if Putin wanted that part of the Ukraine, he would already have it. QED.

      2. Andrew Watts

        The answer would be extremely uncomfortable to most Americans; we’re an empire.

        “But why should we, in Washington, feel it a threat to our interests if an allegedly independent Italy should decide to turn communist unless she has actually become a part of our defence system from which we cannot let her go even if we wanted because the only alternative open to her would be to join the defence system of our rival empire? However, if Italy lies within our defence system, our own boundaries must lie in Italy. This means that, whatever we may declare, subconsciously and by implication we consider her as one of our dominions, free to choose her own road only within the limits of our pleasure. And the same is true of all other countries this side of the Iron Curtain.“

        “Since a bastion must lie within and not outside one’s orbit of power, Turkey is thus by implication considered as inside the American orbit. But an orbit larger than a nation’s boundaries is not a national but an imperial orbit. Only empire can stretch beyond one’s country.” -Leopold Kohr, The Breakdown of Nations (1957)

        When a country is caught between competing foreign powers we have a situation like Ukraine featuring coups, insurrection, and civil war. The important thing to remember is that there really are no heroes to cheer for. This is something that is lost on the ignorant children that constitute the vast majority of the American people. The history of the Poland-Lithuanian Union makes for an apt historical comparison.

        1. James

          When a country is caught between competing foreign powers we have a situation like Ukraine featuring coups, insurrection, and civil war. The important thing to remember is that there really are no heroes to cheer for. This is something that is lost on the ignorant children that constitute the vast majority of the American people.

          Perhaps evenly more importantly, it’s certainly lost on the innocent children who somehow get “lost” in such fights. And we certainly don’t have to look too far for those these days, now do we?

    2. Nathanael

      Russian trooops have been sent across the border into Ukraine to invade. Presumably Russia is being asked to stop that.

  11. peteybee

    If you take Russia out of the trade equation, Europe and especially Germany’s negotiating position with China weakens too. The Chinese will be able to negotiate more favorable trade, since the EU/Germany will have fewer alternatives. Similarly, the Chinese will have MUCH more leverage over Russia, and will likely be able to demand weapons technology transfer from Russia, in exchange for supplying them with dollars, euros, and whatever else they need. Imagine Chinese industry mass-producing the latest Russian weapons. Nice job Obama.
    (shameless plug: my blog

    1. James

      Imagine 10 years down the line, Russia as peddler of “third world” weapons technology developed in the US to the “first world” Chinese, in a world where all such “world” concepts have suffered “a blow or two.” Me thinks Washington suffers mainly from a lack of imagination as to where current policies are bound to take them.

  12. Jerry

    Since weapons are our big export, we must keep the war machine going all over the world. Karry comes in with money to loan for those governments unable to buy from our war machine.
    Karry hurries into the Gaza Israel conflict with money and early to create a ceasefire that sets up the situation for another conflict in a few years.
    Oh, and by the way…..why don’t those cities with infrastructure problems invite Karry to a party in their cities…maybe his bulging wallet might pay for some of the things you need so you don’t have to take the payday loans from the big finance boys…..oh, sorry, won’t work because you won’t be buying from the war machine….

  13. kevinearick

    Divide & Conquer: Wimpy Socialism & Bear Capitalism

    It’s always pay you on Tuesday for a hamburger today, and the duration mismatch only grows until their money is worthless, and everything in their path has been destroyed. Raising productive children, not money and not property, is the only path to the future. Economics is always about demographics, despite any and all efforts by the accounting wizard to prove otherwise.

    Russia still has vast resources, of which gas is just a pawn, and it has already learned its lesson on digital fiat, while Canada is destroying its environment just as fast as it can, to feed a petulant global population, in return for digital fiat, and all the ‘empires’ have destroyed economic trust, with Family law, feudalism. Don’t bet against Russia so long as you can avoid doing so.

    The problem with employing a bear as a disposable counterweight, a point made at the time, is that you teach the bear. The enemy of your enemy is not your friend. Your own false assumptions are your worst enemies. The biggest story of the upcoming war is the media blackout of the demographic collapse preceding it, until time ran out on stupid.

    The demand for equality isn’t about equal pay for equal work; it’s about getting one person to do all the work while everyone else pretends to work, for better pay, and being stupid enough to replace the whole crew with robots, designed by critters pretending to work, the noble occupation of politics. Russia already played that card.

    Legacy lives only on account of arbitrarily assigning debt to others, as an asset to itself. The upper middle class only lives on account of arbitrarily assigning debt to others, as income to itself. And the lower middle class stands in line, getting further behind as labor evacuates, until it gets out of line, and stops chasing debt as asset, with debt as income.

    Civil marriage, entirely dependent upon doctors, has never worked, but that never stops the fools from taking the shortcut, on a promise that only materializes, fleetingly, for the ponzi brokers. The majority looks only at what it is told to see, mesmerized by an artificial business cycle created for the purpose. The AMAs make the MBAs look like pikers.

    That pendulum is connected to an alternator, which is only a dc clock if you redirect half the swing, at increasing cost, which the committee does, ratcheting critters to the point of bankruptcy, with buy to let mortgage proliferation, and recycling the wasting assets, waiting for the next demographic boom. In the meantime, they have war, to protect the competing bankrupt superstitions.

    “Rates will rise when they rise.”

    With no access to intelligent labor, to mimic and scale, all the empire knows is that virtual space is required to exit its global natural resource depletion ponzi, and so, naturally, occupies it with MAD dc securities and their derivatives, creating global FILO dependence. Theoretically, the problem could be solved tomorrow, but herd behavior, the source of their power, locking them into war, cannot be altered in real time.

    Each event horizon has its advantages and disadvantages, its trade-offs. As labor, you get all the empire disadvantages, have to raise the productive children, and are hunted down for your effort, but you are the end and the beginning of each cycle, and you can build a new clock at will. Don’t worry about the superstitious dress; what remains of legacy will suit itself.

    On what magic day did you expect the critters not to place an artificial border in your path and fight over the toll booth? If you can’t get two critters to behave like human beings, what makes you think that you can get a committee, or a planet, populated by automatons to behave like human beings?

    Going to war, with nothing more than the ability to efficiently automate false assumptions, is a fool’s errand. Dr Frankenstein breeds MBAs, in concentration camps built for the purpose. Don’t go in there expecting anything else. The line, to get in lines, to take a shortcut, can only grow, until it collapses. That is the nature of ponzi specialization, subject to the laws of gravity.

    The middle class is always welcome to vote labor off the island, but don’t be surprised when the bear comes down from the north, and nothing remains but mercenaries, paid with inflation, digital fiat, running the other way.

  14. The Dork of Cork

    A decline in 2014 Russian car sales follows a increase in European car sales.

    The Guild Navigators are simply trying to manage the consumer war economy.
    The scale of the inputs grossly exceed the Second world war T -34 / Tiger tank era.
    Russian car consumption remains vastly higher then Italy or Spain of today.

    The object of the game remains not to produce goods that would typically be consumed in a village but to produce and force feed consumer soldiers as if they were on a batllefield.
    This was the very reason for the Paul Samuelson school ………….to shift Keynes war economy into a consumer war economy……….

  15. The Dork of Cork

    Indeed the Russian car and light truck market is bigger (in volume and not cost) then France and somewhat equal to UK consumption which is the only large dynamic vehicle consumption area in western Europe.

    That is what Europe and the American experiment has done to Euro vassal nations – they are either dynamic consumers of cars or not.
    That is how we define ourselfs in the modern era.
    Its no accident that when we lose the purchasing or credit power to buy these vehicles that we have nothing else to define ourselves casung a general collapse of these materialist. constructs within the void of the bankers creation.

  16. Christopher Dale Rogers

    Well, it would seem we have had a vigourous debate as Lambert has stated, but a singular conclusion to my initial enquiry: Why are the Western European powers falling in line with the Washington consensus remains as elusive as ever.

    So its worth noting a few simplified observations on governance and policymaking in NAZI Germany and seeing if we can transpose this to both the USA and EU presently. From the late 70’s onwards a large body of work was undertaken as to the operation of the NAZIS State and how central Hitler was to this process, perhaps epitomised by the question: Did Hitler actually sign any decree or policy paper that resulted in the Genocide of millions of people?

    The general historical consensus is that Hitler signed no actual decree, rather, due to competing power interests trying to out do each other in undertaking Hitler’s every whim, and hence gaining his favour, resulted in the bureaucracy of the German State turning itself over fully to state-sponsored genocide on a massive scale. Indeed, the historical consensus was up until the late 90’s that their was no singular control mechanism in Germany, but a number of overlapping power structures each determined to out do each other to ultimately win Hitler’s approval – essentially it was organised chaos, which suited Hitler fine as he could play one interest of the other to achieve his ultimate goal, this being a 1000 year Reich.

    The problem with applying this analysis to either the USA or the Western European powers is that we have no singular physical entity to satisfy, and yet we still have these elite competitive forces trying to outdo each other in pursuit of what I ask. Is it purely financial orientated, is it purely power orientated, or is it, as many believe, a desire by many of these competing powers to develop a singular world governance with a handful of persons at its apex pulling all the strings? I’ll leave it for you chaps to dwell on this, but for myself, I think I’d rather fall in behind Banger with his analysis of what’s presently going on, rather that believe, as actually was the case in Hitler’s Germany, that we are achieving policymaking and policy via mistakes and misunderstanding of the elites themselves.

    As for Paul Tixon volumes input on this thread, well he should be applauded for trying to summarise some of his views, he’s right in highlighting the various “think-tanks”, conferences and academic exchanges that have popped up in our post 1945 world in the West – although such intercourse between the elites existed in the nineteenth century, many of whom in Europe were actually related by blood to each other – so this is by no means a new phenomena.

    More worrying with Paul’s analysis is who actually decrees who’s in and who’s out. Mr. Tixon mentioned a few names and organisations all committed furthering neoliberalism, neoconservativism and the attendant Washington Consensus. So lets ask ourselves this, who anoints the likes of Tony Blair and Kissinger as international spokesmen, remember that both Blair and Kissinger have millions of deaths on their combined hands in pursuit of what I just don’t know.

    So, lets face facts, we are actually living in an undemocratic world populated by sociopaths and psychopaths holding the reins of power. Lets us be in no doubt that all these “think tanks” are undemocratic institutions, that the academic exchanges lack democratic oversight and that the self anointed ruling elite lacks democratic oversight and that it is this lack of actual real “democracy” that is allowing these forces to destroy our families, our relationships and our planet.

    The key theme, and only thing that will deter these buggers, is democracy and democratic oversight, which means we actually have a systems failure on a massive scale – one that only a minority are now awakening too.

    In a nutshell, our elite fears the power of the Demos, hence its requirement for secret cabals, and whilst Davos and the likes are open for oversight, lets not forget that the Bilderberg gatherings have no such oversight, and it would seem that out of the various think tanks, Davos and academic exchange groups opinions of the elites are filtered and discussed at this forum for action by our elite – AND THIS WE SHOULD BE VERY AFRAID OF!

  17. Jackrabbit


    I think the answer eludes you because there is no singular cause. There are cultural connections, as noted by Paul Dioxon, but that is only part of the story. And there is also a cult of leadership (as evidenced by Blair and Obama) which you allude to that is very powerful as it is buttressed by elites that ‘know which way the wind is blowing’. Then there is group-think tethered to what is believed to be received wisdom (exceptionalism, neoliberalism, etc.) and a ‘keeping of the flame’ pecking order (CFR member, etc.) that is devoted to these maxims. All of these reinforce a concentric hierarchy of oligarchical power that is very difficult to break free of.

    What we have seen recently is a hardening of this power structure (what Banger calls an “emergent network”) as the ‘Washington Consensus’ becomes a litmus test and factions seek to wield the power of this structure for their own ends. Increasingly we see imperial diktat of one form or another (e.g. TINA, propaganda) replace genuine debate and consensus.

    This will go on until it ends due to corruption and misadventures. Until then, God help us.
    H O P

    1. Lambert Strether

      From 2005:

      [The idea of “emergent conspiracy”] can be applied to the Italian Job Yellowcake Forgeries. Many different entities acting out of very different, self-interested motives but the end result is a conspiracy. Multiple actors working together, with tight coordination even if not strict command and control, towards a common goal.

      It can also be applied to TraitorGate. Journalists and Government officials working together for different reasons towards outing a covert CIA agent. Even within the White House, maybe there never was a meeting where all the players sat down and decided to punish Joe Wilson by going after his wife. Maybe it was just a series of phone calls between people who all understood what needed to be done.

      That’s how the Sopranos operate. I would expect no less from these people.

      Paulie: “Eh, Tony, you remember our friend Joe? Somebody told me he’s got a lovely wife. Lovely. But she don’t like people to know what her job is. Weird. “

      Tony: “Yeah, weird. I’ll pick up some sfogliatella at the bakery and I’ll see you at the Bing.”

      But is it not a conspiracy if it wasn’t proposed and agreed upon in a sit-down with all the players present? The theory of Emergent Conspiracies would say it is a conspiracy.

      As can be seen, I like “emergent” very much, although it does not imply “hardening,” but rather an emergent property of a complex system. And I’m not sure even how much “tight coordination” there needs to be, if all parties are using the more or less the same playbook. (Here we might look to work on “flexians.”) This work was done on the Bush administration, but there’s no reason not to apply to to the political class generally:

      From a review in, of all places, The National Review, of Ian Kershaw’s Hitler: 1936-1945: Nemesis:

      The Fuhrer state, as Kershaw shows, moved dynamically in a radical direction. Hitler himself was the source of all power because of his hold on the German Volk. There was no need to issue detailed orders. He merely set forth the goals in broad outline, as he had done in Mein Kampf and countless speeches. Here Kershaw introduces an expression I had not known before: “working toward the Fuhrer.” Individuals competed for Hitler’s favor by divining his wishes and getting things done. Whether building U-boats or bombers, producing artificial rubber, or rounding up and “relocating” Jews, the elites of the Reich “worked toward the Fuhrer.” This produced accelerating activity in the direction he was known to favor. Little was to be gained by arguing that the country had enough U-boats, for example. And there were no institutional checks: no Politburo, no highly organized and bureaucratic party.

      Sound familiar? Especially that part about “no checks”?

      History may not repeat. But it certainly does rhyme.

      I guess I find systems and incentive structures and playbooks and above all class interest more interesting and useful than narratives that imply tight coupling (“con•spir•acy,” “breath together”) between villains. Because everything is all … perfectly… normal…. Just people sitting at their desks or maybe working the phone or having conversations in the hall… Banal…. With imperial decor to inflate and gild the banality, of course.

      1. Jackrabbit


        It seems that you took my mention of Banger’s ’emergent networks’ as some kind of endorsement of conspiracy theories. It is not. I see Banger’s “emergent networks” and Paul Tioxon’s “cultural connections” as very similar. I’ve previously criticized Banger’s ‘Deep State’ comments because it is self-defeating to focus on something that you can not change. I don’t doubt that there are conspiracies but they are edge cases in the grand scheme of things. Iran-Contra was a conspiracy. But often the ‘conspiracies’ are open: one could easily conclude that blaming protests against a video for the death of an Ambassador or that the entire Senate votes to support Israel stem from conspiracies.

        Also, Banger’s ’emergent networks’ hints at ’emergent properties’ of a complex system while maintaining the simple definition of: a network (of people) that is emerging in importance or recognition. I kind of like that hint that it could be more, but I think the simple definition is predominate.

        My conception of “concentric hierarchy of oligarchy” is closer to your ‘incentive structures and class’ that it may appear. The “hardening” that I mention is via the increasing understanding of oligarchs/establishment that success lies with going along, and even helping to strengthen the prevailing power structure – with Washington at the center. AND Washington’s self-awareness that this is so allows them to act in an imperial manner.

        Then there is the group-think that I mentioned earlier (see above) where I discussed the ‘markets know best’ group-think leading up to the 2008 GFC. This seems to be the Achilles heal of the system because the exceptional/neolib framework is so ingrained.

        Lastly, I hope that the thrust of my comment is not lost on future readers due to this added explaining. I don’t think there is a singular explanation for elites in Europe and elsewhere to accept what Washington wants.

        1. Jackrabbit

          Just another comment or two on this important topic.

          The question with conspiracy theories: is where do you draw the line? Essentially all lobbyists and all turf-protecting bureaucrats can be seen as conspirators. But I think that Banger is right that there are conspiracies that rise to a level that is very troubling (e.g. crony capitalists and the revolving door) but these are often public knowledge. As Christopher Dale Rogers says, the answer is in strengthening Democratic institutions and accountability.

          Paul Tioxon points to a benign ‘networking’ that builds understanding among peoples. International travel and the Internet have helped greatly to further this networking. Banger, rightfully, sees ’emergent networks’ of nationalists (CIA, NSA) and (I assume) new aristocracy types (together Deep State). But I think his analysis fails to credit the importance of political actors who set the agenda (I have said this in comments many times). Wresting back public policy from neolibcons by reforming campaign finance is the big challenge of our time. Until people get fed up enough to do that (there are signs that they are awakening), we will continue to be governed by an ‘inverted totalitarian’ system.

          This ‘inverted totalitarian’ circle-jerk benefits all rent-extractors. Essentially, all wealthy elites (an those that serve their interests) have a stake in the continuance of this system. So traditional ‘reform’ is not possible. Only a sharp reversal such as economic malaise and foreign policy disaster(often coincident) will bring real change. Strangely/Ironically/Naturally (take your pick), this seems to be in the cards via austerity and foreign adventures.

          As others have pointed out, it behooves progressives to form the outlines of real reform now because without such a basis, the elite and those that work for them will push self-serving half-measures, while crying TINA! IMO ‘Reforms’ that enhance the power of oligarchs, leading to a Ukrainian-like society, would be a step back for humanity.

          1. Nathanael

            The line I keep pushing is the Earl Grey line.

            The current ‘inverted totalitarian’ system of rent-extraction benefits rent-extractors and elites IN THE SHORT TERM. However, by withdrawing the bread for the masses, and by creating general distrust in the system, it increases the risk of the guillotine IN THE MEDIUM TERM.

            Therefore, the rent-extractors and elites should look to the future of themselves and their children, and — as Lord Grey did in the 1832s — demand reform, so as to get the lower classes invested in the system. The purpose of reform, from this point of view, is to prevent Robespierre and Napoleon. The English noblemen are still around — what happened to the French noblemen, who refused to even consider reform?

            1. Lambert Strether

              Exactly. See E.P. Thompson’s awesome The Making of the English Working Class for the bottom-up, flip-side version of that tale. There’s a reason the British elites didn’t get guillotined, and there’s a reason they were able to run India with a few thousand people, and keep their empire rolling for a lot longer than we will ours. Not to excuse them, mind you; just to say that one learns from the best, and that our elites seem quite unable to do.

Comments are closed.