Mathew D. Rose: Merkel’s Götterdämmerung, Victory in Ukraine and Draghi’s Old Trick

Yves here. Mathew’s post describes the political and ideological dynamics that continue to drive failed austerity policies in Europe. But even more important, it also explains why Europe, and German leaders like Angela Merkel have fallen in line with the US and are escalating the conflict with Russia over Ukraine. As we’ve discussed, they’ve convinced themselves that Russia will suffer from the economic sanctions imposed by the US and EU before Russia can play its energy card. And some analysts further believe that Russia would not dare restrict gas supplies to Europe, that it cannot afford to lose the income.

By Mathew D. Rose, a freelance journalist in Berlin

That the financial policy dictated by Germany for the Euro Group of Nations following the Great Recession is a failure is probably clear to everyone – with the exception of the Germans and their political sycophants in the EU.

The most recent economic figures are ghastly. Secular stagnation seems no longer a threat, but reality. The next European recession, as well as deflation, lurks round the corner. For the Germans however, their policy is beyond reproach. At fault is not their programme of austerity in a demand side crisis, but the unwillingness of the prodigal and undisciplined Southern Europeans to follow the rules as proscribed by Germany strictly to the letter– oh yes, and economists.

As past winners of the Nobel Prize in Economics met last month in Germany to discuss current developments in their field, Ms. Merkel lectured them. She began by raising the question of why the economic sciences in the past several years of crisis have been so egregiously wrong in predicting or describing economic reality. Were the underlying economic theories wrong, or were leaders listening to the wrong people, she queried.

One economist who Ms Merkel was certainly not listening to on that day was Joseph Stiglitz, also attending the event, and his scathing criticism of her economic policies. His optimism, that Ms. Merkel would question her failed policy, was most likely misplaced.
Following four years of economic malaise due to an austerity regimen in the Eurozone

Ms. Merkel should be mulling over Mr. Stiglitz’s comments. However, her remarks before the economists made obvious that she is imperturbable in her dogmatism. The Bundeskanzler must further feel her policy has been vindicated by a budget surplus in the first half of the year for the first time in almost a quarter of a century. This result, which according to proponents of austerity should be increasing confidence and therewith an increase in investment, has been the opposite. Investment in the private sector, well under the European average for years, sank once again in the second quarter of this year. German GDP also declined.

The cause of the Eurozone’s interminable crisis, according to Ms. Merkel, is the refusal of some nations (meaning the likes of Italy and France) to embrace the German model of austerity and structural reform. Despite Germany’s persistent efforts to force the rest of Europe to adopt its economic policy into law or agreements, many nations simply have remained intransigent, especially with regards to deficit spending in the face of horrific unemployment comparable to the Great Depression. Worst still, lamented Ms. Merkel, “We have very little, if any, possibility of sanctioning those countries that break the rules”, although this did not hinder the EU from removing democratically elected governments who did not properly comprehend the German Economic New Order in the recent past.

Even as Germany slips back into recession, others are to blame: those in the EU who lack the moral resolve and discipline of the Germans. This attitude is nothing new in Germany. During the Third Reich, as the Soviet troops began their inexorable advance westwards, Hitler did not question his own strategy and decisions, but blamed the German people for not being sufficiently strong or sufficiently ready for sacrifice. His solution was the destruction of Germany – Götterdämmerung. Many Southern Europeans, especially the young unemployed, must feel this has already begun in here.

German hubris in Ukraine is further complicating the economic situation in the EU. Led by Germany, the EU embarked on a foreign adventure in Ukraine, a nation that was leading a politically and economically neutral existence between the West and Russia, to draw it into the orbit of the EU and NATO. The Germans meddled in Ukrainian domestic affairs, supporting the boxer Vitali Klitschko as a new political leader for that nation. Things went terribly wrong and a further oligarch has been elected president, while Klitschko received the post of mayor of the capital, Kiev.

Oddly, no one in Germany’s foreign ministry had considered that Russia might react as it had done in Georgia a few years ago, intervening militarily. Should the inevitable occur, as it did, the European nations have cut back their military spending so prodigiously to reduce their deficits, that they no longer possess a military deterrent against Russian military aggression. The EU is now completely reliant upon US military might.

Nonetheless, German media declared victory over Russia months ago. Purportedly Russia could not survive the financial and trade restrictions imposed by NATO and its allies – despite warnings that trade restrictions, if at all effective, need years to have significant consequences. Report after report appeared in German media describing a moribund Russian economy deteriorating dramatically. Finland’s Prime Minister Alexander Stubb put it very diplomatically recently when he observed that the “jury is still out” on whether sanctions had worked.

Germany is Russia’s biggest trade partner in the EU, a fact that German media belittles. Trade with Russia was portrayed as negligible, except for gas imports, which the Russians would never tamper with, due to their dependency on its export. The Russians are not only still standing, but in July retaliated with trade restrictions upon agricultural products from the EU. Things have suddenly taken on a new dimension, as the EU is mobilising funds to support hard-hit farmers. This is a further burden in addition to providing Ukraine’s oligarchs with funds to keep them in power and prevent their country going bankrupt – and enabling Ukraine to purchase weapons from EU member states.

Maybe Germany or any other individual EU nation is not in the least dependent upon trade with Russia, but added together it does seem to be having an exponential effect, more serious than expected.

Another aspect being ignored is the amount of money spent by Russians within the EU, especially for luxury goods. For the past couple of years I have heard more Russian than German when visiting Berlin’s luxury department store KaDeWe. Already hit by the downturn in sales of such products in China, another major market is being negatively affected by the conflict.

Russians area also significant investors in equities, property and banks in the EU. Should Putin introduce capital controls or force Russian citizens to repatriate this money, it could have further repercussions for European finances and economies.

Putin, like Tsar Nicholas I and Stalin before him, knows that the winter is often Russia’s best ally. If global warming does not come to the aid of the EU, this winter could be especially eventful for the EU. Should the Russians decide to use energy as a strategic weapon, Ms Merkel should be at least be pleased: higher energy bills would increase the anaemic inflation rate in the EU.

Oddly enough, the figure of hope for the Eurozone seems to be the President of the European Central Bank, Mario Draghi, a neo-liberal and supporter of austerity. At the beginning of the year Mr. Draghi was explaining to journalists that he saw no deflation in the Eurozone, claiming “a rising confidence in the Eurozone” would pull the economies of the member states out of their doldrums. By June he had recognised the danger of deflation and rolled out a raft of desultory-measures., which have solely succeeded in driving down the Euro against the dollar, much to the satisfaction of Germany.

Mr. Draghi, who dares not antagonise his masters in Berlin, keeps trying his amazing trick of two years ago claiming he would do whatever it takes to preserve the Euro, while knowing full well he could not deliver on his promise. In the last couple of months he has repeatedly claimed that he is prepared to intervene forcefully in the current deflation crisis using “all the available instruments”. However, what instruments Mr. Draghi has available is determined by Germany. This fact was made clear by Germany’s finance minister, Wolfgang Schäuble, who declared that he does not believe the ECB has tools to deal with inflation.

On Thursday, when the ECB policymakers meet to determine the ECB’s September policy, we shall all find out whether Mr. Draghi and the ECB control its policy or Germany does.

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  1. vidimi

    “Should the inevitable occur, as it did, the European nations have cut back their military spending so prodigiously to reduce their deficits, that they no longer possess a military deterrent against Russian military aggression. The EU is now completely reliant upon US military might.”

    I hate this trope of European military insufficiency. France and Britain are both in the top five military senders and, combined, EU countries far exceed Russia in military spending. With or without the United States Europe should have no problem keeping Russia at bay although the concept of ‘defence’ is likely foreign to them.

    1. Banger

      Spending does not necessarily equal an effective fighting force. The U.S. military spends spectacular amounts but not on making an effective fighting force but on making money for the MIC. The U.S. has a fairly mediocre fighting force that relies and mass quantities of everything–should logistics be disrupted–I’m not sure many units in the U.S. would fare well against a disciplined enemy. I suspect the Europeans, particularly the French and British use military spending to enrich cronies.

      At any rate, Russia is absolutely no threat to Europe–the idea is ludicrous and 100% pure Orwellian propaganda. The Europeans saw how well U.S. oligarchs have done in creating false enemies they are copying the masters of propaganda to stay in power through arousing fear in the populace. After WWII the most powerful army in the world was the Red Army and they could have gone on to take all of Europe while the U.S. was still occupied in Japan. The Red Army, btw, committed horrible atrocities in WWII which is why it is easy for the Eastern Europeans to hate Russia.

      1. steviefinn

        Common sense would I think lead to the conclusion that Russia under Putin is no threat to Europe. the threat to Europe comes from a combination of the idiots who run it & US meddling. I cannot imagine anyone being stupid enough to attack Russia head on, but history is full of idiots & those who should be locked up in asylums with their Napolean costumes. What worries me is what the West could possibly provoke in Russia perhaps causing more hawkish elements to overthrow Putin – Better the devil you know ?
        Merkel is from Eastern Germany where thousands of atrocities were committed in the form of mass rape, there are also rumours of her having being a member of the Stasi.

        1. jgordon

          Our leadership has certainly lost all contact with reality, much more so than the average delusional American. Attacking Russia in the winter is probably near the top of the list for things they want to get done in the near future. Rather unfortunately Americans cannot declaim responsibility for the actions of the corrupt idiots we let be in charge. Any consequences wrought from being complacent, entitled, lard butts who can’t bother themselves to pay attention to what’s going on in the world will be well deserved.

          1. Doug Terpstra

            I heartily concur, but less so on the responsibility of ordinary Americans for their psychopathic leaders. Bill Blunden just posted an excellent article at Counterpunch that delves into the dynamics of American power that shows how utterly impotent the electorate really is under what he calls “democratic elitism”.

            “Why the Deep State Always Wins: The Zero-Sum Game of Perpetual War” … could have been written by Banger, except Blunden seems to think a (very) hot war is not unlikely as a result of collective blundering and hubris. Bears are dangerous, extremely so when provoked.

            “…narratives put forth by the press are under the influence of an extensive subversion apparatus that CIA officer Frank Wisner referred to as the Mighty Wurlitzer[xi]. Powerful groups build consensus behind closed doors and then, as Chomsky and Herman explain, coax the rest of society along by manufacturing consent[xii]. Thus enabling what’s known as democratic elitism.”


        2. Tsigantes

          I would add NATO to the ‘threat to Europe’ list. Also, for the record,
          Europe has several highly professional and specialised armies / navies, France, the UK, and – actually – Greece, among others.

          Outside of Poland and the 3 Baltic countries, no one in Europe wants war with Russia….or sees any reason for war with Russia. Au contraire, a huge proportion of the EU population would happily trade Putin for their “leaders”. However Washington war rhetoric is obediently regurgitated by much of the European msm – but NOT all. And often in the main UK conservative papers there are decisive dissenting opinions, such as the UK Telegraph. The comment threads beneath each article meanwhile belie the rhetoric of the text.

          An important point made by Micheal Rose is that the toxic EU offer to Ukraine was solely (in Europe) a German initiative. Last summer 2013 there were several oblique comments in non-German EU papers about Germany conducting its own foreign policy. This is not the first time: a newly re-united Germany conducted its “own foreign policy” in 1991 by formally recognising breakaway Croatia, thus precipitating the Yugoslav war. A war that is still inexplicable to the majority of Europeans – where to this day many of the resulting statelets appear to be provinces in search of a country.

          Banger, btw, there is no doubt that Merkel was connected to the Stasi. This has been established first of all in Germany from Stasi records. Her father too.

          The real question in all of this is Germany. It has emerged this summer in the German press that although the occupying powers let her re-unite following 1989, they – France? US? the UK? – did not return her formal sovereignty. The implications of this are not clear to me – perhaps someone can elucidate? However it is fair to ask, if Germany is not sovereign, then who is her leige lord? Meanwhile Germany hosts the US military Command HQ for Europe, and upward of 300,000 permanent American soldiers, on the largest bases in Europe.

          Going back further in time, why did the Americans choose to rebuild Germany as an industrial power after WW2, when in fact its factories lay in ruins? Not only, but why did the US demand that Nazi-destroyed allied countries give up their claim on reparations to ennable the “German miracle” to forge ahead? [London Conference 1953]. Why did they not invest in industry and infrastructure in the Allied countries, so as to relatively de-industrialise and defang Germany and let other countries forge ahead? It is not as if the other countries were incapable of creating ‘miracles’ given the investment – they simply did not receive the investment. Not only, they sacrificed reparations. So Germany was not only returned to strength, but on steroids. Why?

          This may all seem like ancient history but it is highly relevant. Germany did not rebuild itself, it was rebuilt by US money and opaque US policy decisions. Yet Germany today is still apparently not completely independent and hosts a foreign army and foreign European Command on its soil.

          Meanwhile who can explain the utter spinelessness of EU politicians toward Washington, against the wishes of their populations, their own Foreign Office preferences, and in many cases their own personal opinions? Europe’s silence and uniform obedience is an astonishing case of the dog that didn’t bark. Yugoslavia, Iraq, Ukraine – it is wholly inexplicable. Or perhaps it is highly explicable given the overwhelming presence of NATO in Europe – our very own “Trojan Horse’ [DeGaulle].

          Therefore, how independent IS Merkel? Does she (and do all DE chancellors) play a special role vis a vis Washington? And finally, how independent is the EU?

          1. Banger

            Excellent comment!! You ask important questions. Yannis addressed the “why Germany” question last week sometime by giving a nice précis of the history of the EU. My own opinion is that defeated powers can be easily seeded by agents of the victorious power not just in the beginning but throughout time. As long as there are troops garrisoned in German then Germany is owned by the US–it isn’t just troops stationed there but US intel operatives who work out of Germany and Italy. Having said that it is a more complicated relationship than it might seem–Russia still has people, I believe embedded within the German bureaucracy. We need John Le Carre to sort it all out.

          2. sleepy

            If neither the US, France, nor the UK returned sovereignty to Germany at the time of unification, I would imagine that the USSR likewise didn’t.

          3. Jagger

            —–Going back further in time, why did the Americans choose to rebuild Germany as an industrial power after WW2, when in fact its factories lay in ruins? ….. Not only, they sacrificed reparations. So Germany was not only returned to strength, but on steroids. Why?

            The allies saw the Soviet Union as a major threat. So they wanted a rebuilt and re-militarized Germany as a powerful buffer to the Soviet Union after WW2. So Marshall plan, NATO, multiple foreign bases on German soil, etc. It was an act of self interest.

            1. Jazzbuff

              Two old and unfortunately now gone friends told me of their experiences during WWII. One of them was doing political education of our troops. The war in Europe was still being fought and his “education” material changed message from our enemy the Germans and our friends the Russians to our friends the Germans and our enemy the Russians.

              The other was involved, as the U.S. army marched through Germany, in getting anti-Nazis who were still alive and in prison out and placing them in local leadership positions and locking up the Nazi officials. He and his colleagues were replaced by junior people who were charged with taking the Nazis that had been locked up and put them back in charge.

              Remember that the Dulles brothers had very close ties to the German elite.

  2. mmckinl

    It should be quite obvious by now that the banksters control monetary policy having completely indebted the public with bad bankster debt because of their crisis and as the author noted replaced reticent governments within a matter of weeks. Governments went broke and the very wealthy became even more wealthy picking the bones of public infrastructure for pennies on the Euro.

    Austerity, financial crises, economic espionage, health crises, proxy wars and hot wars … This is what peak oil looks like. The PTB are using destabilization to suppress the price of oil through economic and social turmoil. This tactic has worked well indeed. the demand for conventional oil, which peaked in 2005, is down. The figures they use for oil production, refinery gain, nat gas liquids weren’t even used before 2005.

    As far as Germany, Merkel is in a tight spot. She knows the the Bundesbank is at the mercy of the privately owned and operated Federal Reserve. It is no coincidence that Draghi and many other financial officials throughout the EU are graduates and Alumni of Goldman Sachs school of control and plunder. The Bundesbank exposure to derivatives is enormous. One Austrian bank has already failed … deja vu 1929?

    Merkel is being held hostage. Notice the rumors of her stepping down come 2017? The Banksters are playing their trump cards right and left. The Ukraine is the lever to neuter Putin politically at home and abroad. The Banksters want control of Russia’s commodities especially oil and nat gas. We are well into the endgame as many countries buck the dollar but will find nothing but woe if the BRICS gambit crumbles … or comes WWIII.

    1. mmckinl

      Debt Rattle Sep 2 2014: This Is As Big As We Will Get ~ Ilargi

      “This it. The is the biggest we’re going to get. We won’t grow anymore. Not bigger, not wider, not taller (just thicker perhaps, in the sense of more stupid). I return to this from time to time, and still I never see even just one voice in the media with even one hair’s breadth of doubt about the overarching theme of growth at all costs.”

      Ilargi attributes the “death of growth” to debt. And he is indirectly correct … It is now to the point where there are problems in every country with this debt. But what if this debt were reconciled? Could we return to growth?
      The answer is NO … peak oil limits our economic boundaries and “efficiencies” and alternative energy are in no way going to bridge this energy gap. It would be productive for a less violent outcome if this debt were rationalized but it won’t happen because the banksters will crash the world economy first …

    2. proximity1

      “The Ukraine is the lever to neuter Putin politically at home and abroad. The Banksters want control of Russia’s commodities especially oil and nat gas.” ? True?

      From these Banksters’ financial point of view, what does it mean–or indeed matter?–to have “control of Russia’s commodities” ? As long as they are marketed–bought and sold, what do banksters care about who the particular nominal state or private owners may be? Does Goldman Sachs earn more from Russian oil and gas sales if these are nominally under the “control” of actors other than Putin and his cliques? Why?

      I think what we need in order to judge how to approach the problems raised by the Ukraine-Russia conflict are some hard facts about Russian financial and material resources, the sort of facts which the heads of state in the U.K., France, the U.S. and elsewhere in Europe ought to have. Then we should pose and answer some questions based on a review of those facts:

      What does Putin really want in Ukraine? And what actual dangers to international relations does he pose as long as he remains in power? Does he want “only” the easter-border Russian-speaking areas and Crimea or effective hegemony of the whole nation? How far is he both able and willing to go militarily to secure those aims? Is he actually bluffing the U.S. and European states which favor Petro Poroshenko’s government or does he intend instead to use all the conventional military forces he has to vindicate his ambitions? If so, and the U.S. and Europe do not effectively oppose and prevent that, what should we expect as consequences from Putin? — further territorial aggressions? Or nothing else in expansionist moves?

      Concerning economic/financial sanctions–
      Aren’t there some really serious financial sanctions (i.e. complete international banking isolation) which could and should make a serious and rather sudden difference in Putin’s power relations? Or, would various non-Russian private banking interests secretly help Russians evade them if they were legally imposed? What would be the other likely consequences of imposing them? Could Putin and his cronies operate effectively indefinitely by cash, barter and black-market dealings and circumstventions if, suddenly, they could no longer move money and securities around through the international financial system’s regular operations? If Putin responded with withdrawals of supply of natual gas and other natural resources export trade, should that do him or the buyer nations more harm? How long could either afford to endure such a trade conflict?

      Is Putin’s power base effectively his feudal relations with various Russian oligarchs at home and abroad? Is Putin vulnerable to pressure from them if they were, in turn, to find their financial interests serverely crimped?


      1. Carolinian

        Curious this Western belief that the money boyz in Moscow will bring Putin to heel or even provide the regime change they so dearly wish for. This can probably be chalked up to what the psychologists call projection–after all the money boyz do rule the USA and europe–rather than any knowledge of history. An instructive example might be Cuba where sanctions and an embargo were supposed to bring Castro to his knees in short order–fifty years ago. In fact they, probably more than anything else, kept him in power. Countries don’t like being threatened and patriotism, as it turns out, trumps the almighty dollar any day. Putin’s soaring approval rating shows that the more we threaten the more popular he becomes. Doubtless the neocons long for some kind of Bay of Pigs to take him out but it may be a long wait.

        1. proximity1

          RE: “Countries don’t like being threatened and patriotism, as it turns out, trumps the almighty dollar any day.”

          I don’t think it does. Since it is very easy to proclaim one’s self a patriot, you may be confusing what many people with very little money to their names genuinely feel about their home nation or cultural identity with what others with multi-millions and multi-billions of dollars or Euros or pounds sterling feel about their natural home nations. Billionaires’ “patriotism” is more likely, I think, to be limited to those private or state powers which actually protect and preserve their wealth or make the best, most convincing, job of showing that they would protect and preserve it. If the uber-wealthy are so damn patriotic, why don’t they pay their fair share–and often their legally due part–in taxes rather than flocking to off-shore tax havens either in a legal pro forma way or in acutal residential fact? If they’re so patriotic, why, when they flee their national homes, do they do everything possible to transfer their wealth and movable property so that it goes along with them out of the country? If they’re so damn patriotic, why are there so very few of them in uniform, under arms, defending their country against those who seek to destroy it? Could it be that they feel at home wherever their cheques and credit cards are accepted and wherever they’re safe from having to bear real social responsibilities for their professional lives?

          1. Carolinian

            I don’t think history supports your point of view. Of course the globalists are trying to kill off nationalism as quickly as possible but even here in the dollar centric US any national threat brings out the flags and becomes priority one. We saw this after 9/11.

            While I’m not claiming to be any kind of a Russia expert I believe that as long as the generall public supports Putin–and it seems they do according to polls–the “Atlanticists” will be in retreat. It’s not like Russia is a country that has shown any incompacity to deal with shortages, suffering.

            1. Gaianne

              Well said, Carolinian.

              As near as I can tell, the American oligarchs actually believe the nonsense they spew about Russian psychology.

              Like many Americans, the oligarchs think money is more important than anything.

              Russians know this is not true: Survival comes first. Americans live in a system so tightly regulated that they think money and survival are the same thing. Russians know otherwise from long as well as recent experience.

              Russians also know that every few decades they are invaded from the West. In the 19th century they were invaded by the French and then by the French and the English. In the 20th century twice by the Germans. Now the Americans. It may sound tedious but it comes with being Russian. They intend to survive and are very serious about it.

              Putin–no matter how he looks to the West–is already a national hero, as he saved Russia from the incipient destruction of the Yeltsin years. Currently, he appears capable of fending off the current American aggression via the Ukraine, and his popularity has never been higher.

              The Russians are not happy about the sanctions, but they understand you can not be dependent on your enemies for the things you need for survival. Economic collaboration with the West had long been a hope, but as the West rejects the possibility a turn back toward self-sufficiency is natural and expected. Also possible, which it probably would not have been a decade ago. Add that the entire world is fed up with American plundering and and you see the Russians are not as isolated as our media imagines.


          2. Tsigantes

            The very small group of uber rich people you describe are dedicated only to money and self-preservation. They are little more than criminals.

            It’s worth pointing out though that wealth in itself does not automatically mean lack of patriotism. In Greece the uber wealthy carpetbaggers are not the wealthy old families, nor the great majority of shipowners. They are a special group that rose from murky beginnings during the junta. As a group they have doubled their fortunes and more during the crises, aided and abetted by the Troika-supported coalition of corrupt old parties.

        2. proximity1

          P.S.– In Moscow, no less than in New York or Paris or London, “money boyz” (and girlz) are in charge of things. In Russia, the state is in the hands of various mafia-like groups, with Putin at the top as Godfather of all the lesser Dons. Who are you kidding? And, even worse, this sort of situation is gaining in more and more places which once knew something more respectable in civil government.

          1. EoinW

            Oh for the Good Ole days of Yeltsin, when the Russian money boyz sent their tithes to the neo-liberal Gods in the West.

            I thought it was America and its allies starting wars and endlessly imposing sanctions that was the problem. Silly me for not realizing Putin is the problem.

            1. NotTimothyGeithner

              But Obama said Putin and Russia are evil! You know, Obama, the guy who flooded Libya with weapons and released Gaddafi’s old stockpiles to any both Syria and Central African extremists who went from manageable to heavily armed overnight. There is a reason the kidnapped girls of hash tag diplomacy fame disappeared from Western news. Their kidnappers were the direct beneficiaries of Gaddafi’s fall.

              I think Obama could identify a fellow traveler.

              1. Banger

                Also Obama said he would DESTROY ISIS!!!! OMG, now he means bidness be caused they killed an American!! Imagine the audacity!

                Had Orwell dropped acid and hung with Bill Burroughs he’d have written some great stuff, perhaps the current scenario.

          2. Banger

            If you are right then Putin will cave to the sanctions–I don’t think you are right, btw about the power-relations within the RF. You are dealing with stereotypes that don’t fit, in my view for this simple reason. In Russia there are balances of power between the oligarchs, some of whom Putin, disemboweled or sent to Israel, the gangsters, and various security services, the Church (newly resurgent) and various other constituencies inclusing “the people” a skilled leader plays one against the other and, in the Russian tradition, they feel more secure with a single Tsar not group rule as in the USA. Very different dynamic–this is why the U.S. leadership is always aggressive–they use War to maneuver within the Washington millieu to gain influence because they are unsure of their power–Obama is not the center of power–he has some power but shares it with many others and hasn’t been able to hold it together as should be obvious.

            1. NotTimothyGeithner

              The attacks from the West on Putin and the disdain have washed away any reliance on any relations to oligarchs Putin might have had. He went from king to imperator without firing a shot.

              The source of Octavian’s power came from Marc Antony’s own version of sanctions by withholding grain.

      2. EoinW

        Why are you asking questions the Russians have already answered? Just because western leaders do nothing but lie – and the Australian PM was in “full cry” the other day as it ceases to be shocking how stupid they think the unwashed masses are – why the assumption Putin is lying? Because all your questions are based on the assumption the Russians can’t be trusted for what they say and have ulterior motives. I skepticism I suspect you do not apply to western leaders. And why no questions regarding the behavior of the factionalized West. Our leaders are surely the wild card that could turn this into a encore performance of 1914.

        Finally, why is it the only leader to have put an oligarch on trial and in prison is considered to be so endebted to his oligarchs? Are we ever going to see Murdoch, Soros or Buffet in court? It’s the western 1% that is run by its financial oligarchs. The issue with Putin is his popular support as that is his real power base. The feudal relations exist in the West, not in Russia.

        A great post if you replace Russia and Putin with America and Obama or Germany and Merkle.

      3. Banger

        Sorry, but this is complete nonsense. Why would Putin have any territorial ambitions? Why would he, for example want to conquer say Poland and Ukraine. What do you imagine that he would put half the populations of those countries in Gulags? Gulags are very expensive to run–what possible benefit would there be? What possible precedents for Russian aggression do you have. WWII was a defensive War. Stalin didn’t want war with Germany any more than Russia wanted war with France. Where do you get this stuff? There are aggressive nations, historically, Britain, France, Germany, Italy, Spain, Holland, Belgium, Sweden and so on. Russian history is very violent internally but it has seldom been an aggressive country.

        But we have to look at the arch-imperial country, the U.S. to see what aggression is. Look at U.S. history–war with Mexico, Spain–all wars of aggression. Wars with all the Native nations–all wars of aggression from the beginning! War in the Phillipines–aggression! Wars covert and overt in Central and South America–all wars of aggression with the intention to conquer and exploit territory whether for bannanas, sugar, gambling (Cuba). What about Vietnam–clear war of aggression fought just to fight a war to assuage the U.S. fascists on the right (listen to Lyndon Johnson’s tapes sometime). How about the Dominican Republic, Panama, Grenada and all the wars covert and overt. What was Iraq about? Bringing “freedom” to the people of Iraq–I don’t think so. How about Libya–under the control of a cranky dictator who, actually, cared about his country and shared the wealth and people were doing fairly well, same with Syria–even more ruthless, the Assad family ruled Syria with an iron hand–but they kept the peace and, for the most part, did fairly well for the actual human beings within its border. Afghanistan was one of most advanced countries in the Islamic world when the U.S. started to meddle and bait the Soviets who stupidly took the bait–read your history, real history, not the mainstream Narrative which is, at this point, mainly propaganda.

        And I’m not ignorant about Russia–members of my family were ruthlessly raped and/or killed by the Red Army going into the eastern part of Germany. I read the Gulag Archipelago and am not ignorant of the cruelty of the Soviet regime that trumps even the Nazis. But we’re talking aggression against foreign states here not internal repression–we are talking about which the actual track record in post-WWII history–which country has been the aggressor since then?

        There is no threat to continental Europe by Putin other than the Orwellian new Cold War that has been created by the West to control their populations.

        1. Ned Ludd

          They asked if our own nation wasn’t using massive doses of violence to solve its problems, to bring about the changes it wanted. Their questions hit home, and I knew that I could never again raise my voice against the violence of the oppressed in the ghettos without having first spoken clearly to the greatest purveyor of violence in the world today – my own government.

          — Martin Luther King, Jr., Beyond Vietnam — A Time to Break Silence

        2. Jagger

          Actually the Soviet Union did have aggressive intentions based on the spread of world communism after the Russian Civil War. The 1920 war with Poland began as a fight over the borderlands but morphed into an attempt to conquer and convert to communism the entire nation-which failed. If the Reds had won, they would have had direct land links and the ability to support communist movements in Germany. Stalin offered substantial support and troops to the Spanish Republic during the Spanish Civil War. In 38 or 39?, Stalin attacked Finland although I don’t recall the specific causes or objectives. Stalin and Hitler jointly invaded Poland and carved up the nation in 39?. Upon the completion of WW2, the Soviet Union imposed communist based governments on all of Eastern Europe and formed the Warsaw Pact with membership mandatory and enforced militarily. Russia also invaded Afghanistan-although I again I don’t recall the specific objectives and reasoning. So the Soviet Union from the late 20s till the fall of the Berlin Wall was very aggressive based on the ideology of world communism.

          But since the collapse of the Soviet Union and the disappearance of the discredited World Communist ideology, I don’t see any driver for Soviet Union expansion outside of protection of Russian minorities-which significantly limits any sort of reasoning for Russian expansion.

      4. Doug Terpstra

        “…what should we expect … from Putin [and his cronies]? — further territorial aggressions? … expansionist moves?”

        And one more,”when will Putin stop beating his wife?”

  3. Jesper

    Whose hubris in Ukraine? Germany’s or the US?
    I have to admit that I thought it was the US who meddled in the Ukraine and the EU got pushed/dragged/led into the crisis.

    & this:
    “Russians area also significant investors in equities, property and banks in the EU.”
    Ordinary people have other things to be concerned about rather than stock-markets, property prices going down (many would actually like that), and when it comes to banks….. Not sure if the Russians are putting their money at risk in banks that are allowed to fail – if the Russians would stop their investments in TBTF banks then who’d care?

    And this:
    “She began by raising the question of why the economic sciences in the past several years of crisis have been so egregiously wrong in predicting or describing economic reality. Were the underlying economic theories wrong, or were leaders listening to the wrong people, she queried. ”

    I’m actually wondering the same thing :-)

  4. John

    No one is backing down. We’ve had an intrepid reporter interviewing and touring around the contested areas in western Ukraine and every ethnic Russian claims to have been attacked by the Ukrainian army. Russia has come in uninvited to provide relief where possible. Putin seems to have taunted Barroso during a phone conference over the weekend. Putin says it was taken out of context. The Commission is likely (this week) to raise the stakes further and will put in place additional sanctions on Russia. Our newly minted High Commissioner, to signal what side she is on because it was reported she was too Russia friendly, has come out stating Russia is no longer a strategic partner with the EU.

    We are in dangerous territory.

    1. EoinW

      Yes push Russia even harder and just as the summer is ending. These people aren’t stupid. Therefore it seems clear they want Russia to turn the gas off this winter. Blame Putin for everything because it’s all about to fall apart?

    2. Banger

      We are and we aren’t in a dangerous position. I’ve been observing geopolitics all my life–I grew up in it. My father’s mentor at the U. of Chicago was Hans Morgenthau the “father” of the “realism” in foreign policy. I grew up with the classical historians and have incorporated their general skeptical stance on human events particularly Machiavelli.

      To me this is all nonsense as was the latter part of the Cold War–in that “War” both the U.S. and S.U. oligarchs benefited from the tensions over, essentially, nothing. The U.S. used “anti-communism” to repress and destroy the labor movement in particular and the left in general–and it worked. That’s the point of this phony war–yes, there was a coup engineered, in my view, by Western operatives and financed by rival (to the pre-coup democratically elected regime) oligarchs and Western covert and overt funding. This is blatantly obvious and no one in the U.S. made any secret of this project. But this has nothing to do with expanding NATO or the EU–this has everything to do with everything the oligarchs in Europe and the U.S. keeping a tight hold on their own populations.

      We have to realize that we are dealing, in terms of world events, with theater. This is what it has come to, frankly. ISIS or IS is theater–they are good Hollywood-type villains, absolutely perfect–better than Osama, Saddam, Assad, Noriega, Khomeni, the previous Iranian PM (I can’t spell his name)–and, here’s the innovation–IS does not have a real “face” they are now just using a collective movement rather than a single villain–real innovation. To be more serious–of course it is not merely theater where they hire actors to portray characters–it is more like “reality” TV–you put people in certain setting and situations and manipulate the scenes a little and let ’em go–sort of like the Stanford Prison Experiment!

      1. Jackrabbit

        But this has nothing to do with expanding NATO or the EU – this has everything to do with everything the oligarchs in Europe and the U.S. keeping a tight hold on their own populations. . . . [It is, in a word] theater”

        I’d say US/Western populations are already pretty well controlled. Like many, you have been lulled into complacency. You’re hopeful that Deep State oligarchs will push back against neocon ideologues that have time and time again outmaneuvered realists and everyone else.

        We are witnessing a showdown between Putin’s Russia/BRIICS and the US/Western neocons over the fundamental nature of the world order. This conflict will continue and likely intensify until one or the other prevails.

        H O P>/a>

        1. Banger

          Western populations are still fairly complacent to be sure–but a bit less so because most people I meet feel something is rotten–they don’t know what it is but if incomes and wealth continue to shrink and debt continues to rise eventually there will be various levels of revolt–inchoate since the radical left long ago abandoned the field but ripe for creating disruptions in the cosy arrangements of the oligarchs. Tension and war will keep people focused on external threats and provide an excuse to continue to build up the police state.

      2. Jackrabbit

        “But this has nothing to do with expanding NATO or the EU – this has everything to do with everything the oligarchs in Europe and the U.S. keeping a tight hold on their own populations. . . . [It is, in a word] theater”

        I’d say US/Western populations are already pretty well controlled. Like many, you have been lulled into complacency. You’re hopeful that Deep State oligarchs will push back against neocon ideologues that have time and time again outmaneuvered realists and everyone else.

        We are witnessing a showdown between Putin’s Russia/BRIICS and the US/Western neocons over the fundamental nature of the world order. This conflict will continue and likely intensify until one or the other prevails.

        H O P

        1. Chauncey Gardiner

          Jackrabbit, I agree. A profound geopolitical paradigm shift appears to be underway.

          Just looking at the video of jihadists jumping into the swimming pool of the abandoned U.S. embassy in Tripoli, Libya:

          Then there is this headline in Bloomberg this morning, which is now being “clarified”: “Putin, Poroshenko Largely Agree on Ukraine Cease-Fire Steps”, by Ilya Arkhipov, Daryna Krasnolutska and Angela Greiling Keane Sep 3, 2014 5:05 AM PT
          See Link:

  5. Seamus Padraig

    “Oddly, no one in Germany’s foreign ministry had considered that Russia might react as it had done in Georgia a few years ago, intervening militarily.”

    It seems to me, actually, that they were expecting that. That’s why they’ve been hollering about a Russian for months now. In typical judo fashion, though, Putin has hit them where WEREN’T expecting it, by backing the rebels in the Donbass instead. Of course, they’re going to holler about a Russian invasion anyway, because that was what they had planned for, and if the MSM goes along with the story, it might work anyway. We’ll know that the neo-cons have succeeded when they get Europe to embargo Russian oil. If that doesn’t happen, then they’ve failed.

    1. EoinW

      Our 1% are confident that their control of the media means they can impose their narrative and people will accept it. Wouldn’t it be ironic if they discovered the majority are no longer in the Matrix. The Idi Amin Villa in Arabia would fill up pretty fast!

  6. madisolation

    “… that they no longer possess a military deterrent against Russian military aggression.”
    Not to nitpick, but what “Russian military aggression?”

    1. Jim Haygood

      And drink more beer, to increase grain demand. Oktoberfest is coming. Nevertheless, compensatory aid to EU farmers is small beer compared to the $17 billion IMF program for Ukraine. As one might easily guess, some ‘teething troubles’ already are emerging on that front:


      Ukraine might need billions in additional support if the fighting between the military and the separatists in the country’s east persists through next year, the International Monetary Fund warned Tuesday. Only covering the shortfall in the central bank’s reserves would require an additional $19 billion by the end of 2015, the fund said.

      The banking sector has had to cope with larger-than-anticipated deposit outflows, and the exchange rate has depreciated more than expected at the time of the program request. The current bailout program already faces a financing shortfall of $3.5 billion through 2015 even under the current — rather optimistic — outlook, the IMF said. More money will also be needed to rebuild destroyed infrastructure and houses in the east once fighting stops.

      In addition to the IMF bailout, the 28-nation European Union has pledged a support package of loans and grants worth $15 billion.


      $17 billion here, $19 billion there, and another $15 billion over there, and pretty soon you’re talkin’ real money!

      To my understanding, Ukraine has a big chunk of foreign currency denominated debt, meaning that a sinking hryvnia makes the debt grow as a share of GDP. As Argentina demonstrated in 2002, that’s a recipe for disaster. At this point, let us review the minutes of the last meeting:

      ‘In late 2000, Argentina began to experience severely diminished access to capital markets. To this, the IMF responded by providing exceptional financial support. Uneven implementation of promised fiscal adjustment and reforms led to the complete loss of market access and intensified capital flight by the second quarter of 2001. In December 2001, the Argentine authorities imposed a partial deposit freeze.

      ‘With Argentina no longer in compliance with the conditions of the expanded IMF-supported program, the IMF decided to suspend disbursements.’


      Faced with a Ukrainian bailout cost of triple its lowball $17 billion estimate, at some point the iMFers are likely to cut and run, leaving the Ukraine to twist slowly, slowly in the wind.

      I, too, support the strong hryvnia!

      1. Fíréan

        IMF loans come with an increasing amount of conditions, including austerity measures and sell off of state assests ( ‘reduced of trade union rights, restructure and privatise public enterprises, and reduce minimum wage levels.’ etc..)

  7. Jackrabbit

    The ‘energy card’ is more likely to an increase in price rather than turning off the spigot, throwing the EU into recession while (mostly) maintaining Russia’s income (and avoiding the worst of the ‘blame game’).

    The West is just as likely to play the ‘energy card’ by cutting off Russian access to the SWIFT payment system. As described in the article, it is thought that Russia desperately needs energy sales and any disruption can be blamed on Putin. The much ballyhooed gas pipeline to China will not be completed for years.

    Then there is the China (and other BRIICS) question: Would they stand by while Putin/Putinism is driven out? Economic support from these other nations could allow Russia to better weather the storm.

    H O P

    1. NotTimothyGeithner

      Russia can weather t he storm because it’s too big to be isolated, and the U.S. is very clearly deranged. This is not Pravda stories of old; although, they may be wondering if those were real.

  8. thom prentice

    I learned recently that “Germany” has coveted Ukraine since at least the emperor Barbarossa — which might explain why Hitler named his invasion of the Soviet Union after Emperor Barbarossa. One must wonder whether this coveting of Ukraine — for some kind of Lebensraum — is in some measure a motivation behind Merkel et al.

    One must further wonder at the contempt and punishment heaped and meted out by Merkel upon the “browner peopled” nations of the European south in light of the division once delineated by Herr Hitler between the more “Nordic, Alpine” Europeans and those less so….

    1. Tsigantes

      Germany coveted Ukraine (and Romania and Turkey) for their abundant wheatfields. The biggest bread-eating nation in the world, Germany, has never been self sufficient in wheat.

  9. thom prentice phd

    I recently learned that “Germany” has coveted Ukraine at least since the emperor Barbarossa which perhaps explains why Hitler named his invasion of the Soviet Union – which then included Ukraine – Barbarossa. It may also explain the continuing German interest in current activities in Ukraine. Herr Hitler wanted Ukraine for Lebensraum for his Aryan race – elbow room so to speak – and perhaps the same desire for Lebensraum at the expense of the humans of Ukraine motivated Merkel’s policy and Mario Draghi’s path of least resistance to Merkel’s policy.

    It is also worthy to note the arrogant condescension Merkel directs toward southern European peoples and nations as if they were mere German subjects expected to simply obey the dictates of the Europe-wide German empire. Interesting it is how Herr Hitler himself drew a distinction between the more superior “Nordic, Alpine” peoples and those with a browner complexion.

  10. kevinearick

    Shock & Awe Wars

    “Women who seek to be equal to men” are just as stupid.

    If I can produce a superior product in 2 hours, why would I enter a competition for 8, 40 or 60 hours at $10/hr, or $15/hr, or $25/hr, to produce an inferior product, chasing 25% real estate inflation, 10% stock market inflation, and 5% bond inflation, with 2 and 20 leverage, only to have the Fed restock the losers with free money (debt assigned to my children), Congress tax me into further submission, and SCOTUS kidnap my kids, when the system fails to produce a surplus for redistribution?

    And why would I work for gold, with even more irrational moneychangers, who obtained the gold on the empire’s credit card, to inflate the empire’s gold price?

    The longer it takes to dismantle Family Law, the more people are going to die, the more barbaric they are going to die, and the higher probability they will die on American soil, because America no longer has the support of labor, there is no geographic relief valve, and virtual space is pre-occupied with surveillance technology, collecting an avalanche of useless and irreconcilable data.

    The petty dictators trained by American politicians in Syria and elsewhere, the petrodollar, and the US Navy are sunk costs. And you cannot win a war with mercenaries paid in inflation.

    That’s what Putin knows, and, right now, he’s the biggest shark in the tank, which the waiting sharks are hoping will self-destruct, because they are expecting History to repeat.

    Never bank on a politician, who will go to bed with anyone, to die another day. Politicians are like diapers; some you throw away, and others you throw in the wash, until you throw them away.

    The point is not just to survive, or to collect toys for juveniles. The Bay Area is being set up as the scapegoat. $125 for the cheap seats at the latest peer pressure coliseum; that’s a good sign.

    Life cannot be quantified, for a reason, but keep increasing rent on busy work, swapping the paper in shorter institutional durations on longer mortgage durations, expecting a different outcome.

    So, I’m laying brick for a Jew, who adopts children to recycle Mexican immigrants, so he can burn down his own house at Bermuda Dunes Country Club, to collect the insurance, again, watching Bench sail a ball past the green from the tee, waiting to play Frisbee golf, before there was Frisbee golf…and a chocolate maker adopt children to work in the factory, as a street/Internet façade for medicinal pot growers, cutting and burning down redwoods, so the landlords can increase rent in a tourist destination for Bay Area hot money derivatives…the best democracy public, private and non-profit corporations can buy/steal.

    You gotta play on your knees to make a game of it, and it’s still not worth playing. Bring on the winning fascist, and occupation army of automatons breeding automatons, practicing child yoga and spiritual living, in a community of witches and warlocks, raising, impoverishing and programming a child to its own end. Scary stuff.

    Medicinal potheads taxing tobacco to fund busy work, thinking the war is going to give them a pass…you might want to get your own house in order, before knocking at the door of labor again, or not.

    Let’s see, what cannot be fitted – Exceptionalism, Capitalism, Socialism, Bell Curve, or IQ Test?

    OK, so, go ahead. Shock and awe me, with the next city manager cum laude, gang commander, and child workforce, to feed the ponzi.

  11. Jack Oliver

    It’s not a fight about ENERGY – It’s a fight about GREED . You seem like an educated lot on here – If you understand Tesla’s physics then, you would know that the planet can provide ABUNDANT energy FREE – A previous correspondent suggested,we should embrace a more sustainable LIFE ! Essentially humans just want happiness and freedom to live their lives as they choose – No Monsanto,No War – Fracking by US companies using chemicals (made by Halliburton ) containing radioactive poisons will contaminate Ukrainian farmland – the ‘bread basket” will become the basket case ! The world is pinning their hopes on Vlad – We simply DON’T have a future otherwise. Look what Tesla did to Tunguska, 100 years ago !! This WAR will not be fought with conventional weapons – Putin warned the WEST not to ‘MESS’ with Russia ! Tesla boasted he could SPLIT the planet using Resonant Frequency !! When this is all over – we will occupy ONE side EACH !!
    ( something the US must do to maintain their economies)

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