Thursday, July 01, 2010

The Potemkin Economy

EU Skull-Dragon

Intuition tells us that the European welfare state is more brittle than EU leaders would have us believe. Severe problems are out in the open in Greece and Spain, but each European country — not to mention the United States, Canada, and Australia — faces the same intractable dilemma: the state has committed itself to providing its citizens with future benefits that it cannot possibly afford without continuing to borrow ever greater quantities of money.

The result is a massive debt overhang whose collapse is inevitable. For the time being most governments can pretend everything is fine, and carry on with business as usual. Eventually, however, the house of cards must come crashing down, and when it arrives the collapse may be breathtakingly swift.

Udo Ulfkotte, reporting in Europe News, reports that the leaders of the EU are well aware of the coming catastrophe, but have instructed the media to suppress news of what is likely to happen. Many thanks to JLH for translating the article from the original German:

European Union Now Warns of Civil War and the Return of Dictatorships in Europe

by Udo Ulfkotte

At a meeting of union leaders, EU Commission President Jose Manuel Barroso warned of apocalyptic conditions. He said, if the financial resources made available to bankrupt EU countries should not be sufficient, (which was foreseeable), there would soon be civil wars and possibly military putsches in the EU. Barroso told the visibly shocked union leaders: In countries like Greece, Spain and Portugal, democracy would very quickly be a thing of the past. Dictatorship would return. In some states, a military putsch would be a threat. The danger of civil wars in some countries would become more likely, because coffers would be empty, but citizens would want a continuation of their accustomed social services.

The EU head of government’s remarks are being quoted worldwide by leading media (for instance in the London Daily Mail), just not in Germany. Reason: In several meetings the federal government had asked the media chiefs to whitewash the situation inside the EU, for reasons of political correctness. Not until a few days ago did the EU leadership let it be known that the social system in almost all EU countries is verging on collapse.
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For example, to avert unrest, for some time leading German media have not been permitted to report truthfully about the fact that citizens will get back about 15% less from life insurance than they have put in. Even when economics professor Hans-Werner Sinn speaks of the coming crisis of state in Germany, the German “system” media mention it only sporadically. Furthermore, weeks ago the intelligence services went so far as to predict wars in connection with the horrendous government debt. Yet leading German journalists must lie and withhold the truth from the public. The chancellor told them to do that.

Therefore, the latest remarks of President Jose Manuel Barroso about imminent civil war in Europe are not at all surprising. For some time, the federal government has been commissioning secret reports listing all those areas of Germany where it expects severe internal unrest in the future.

14 comments:

Sean O'Brian said...

Therefore, the latest remarks of President Jose Manuel Barroso about imminent civil war in Europe are not at all surprising.

It would be very surprising to all the people who believed the fatuous claim that it was the EU that has somehow prevented a European War since 1945. The truth of the matter is that NATO(=Need Americans to Operate) prevented a hostile takeover by the Soviet Union and there was never a chance of any other European power stuggle breaking out from then to now. Even though I think the EU will in the future be looked back on as a Vichy-like state I don't think it is directly to blame for these financial problems.

Rather it is the moral and mental attitude to life of contemporary Europeans. What epitomises this for me is the continuous rise in obesity rates and the proposed solutions to this obesity epidemic. Some experts call for regulation of the food industry while others call for more nutritional education or labels on children's food. Two archaic words you will never hear in public discussion of this issue: 'sloth' and 'gluttony'. (Imagine the shock on people's faces.)

The way people eat is connected to the way they spend and borrow beyond their means - fuelled by almost limitless desires and without any restraint. When consumerist liberalism becomes the ethos of your society you then have a moral right to self-expression and the attainment of the things (even if they are just worthless junk-items) that you believe may make you happy. But material things don't make people happy. The senselessness and confused depair of this kind of existence causes people to shut down, I believe.

spackle said...

For want of house the dollar was lost
For want of the dollar the banks were lost
For want of the banks the government was lost
For want of the Government the people were lost
For want of the people Western civilization was lost
And all for the want of home loans for deadbeats.

I know this is simplistic and can be spun different ways, but you get the picture. Here is a Ben Franklin version:

A little neglect may breed mischief ...
for want of a nail, the shoe was lost;
for want of a shoe the horse was lost;
and for want of a horse the rider was lost.
-Benjamin Franklin
Poor Richard's Almanac, preface (1758)

Svartwulf said...

@Sean, it is not capitalism that has caused this problem in Europe, but rather Socialism. Under Captialism, while there is room for excess, there is risk of loss, which means that people both spend and hoard at the same time. Look at the world under capitalism from the industrial age till the 1950-60's. Obesity wasn't a problem. It was only after Socialist attitudes came about that risk was removed and it became government taxes like crazy and you want to spend all you have left 'cause the government will take care of you.

@spackle, that is awesome and very, very true.

1389 said...

Greece was more prosperous under Pappadopoulos than it is now. No wonder the socialists here, there, and everywhere hated him so much.

Considering the speed with which democracy devolves into some variant of socialism and/or jihadism, those of us in the US who are non-communists and non-jihadis would be much better off under the likes of Pappadopoulos or Pinochet than under the failed republic that we have now.

I'd consider moving to the first place that gets a military coup run by a responsible officer or junta who knows who our common enemies are and is willing to get the socialists out of power and the debt off the balance sheet.

EscapeVelocity said...

Areas with diverse cultures, ethnicities, religions, will be much more likely to devolve into civil wars when prosperity fails. Its one of the nice features of multiculturalism.

Where one ethnicity and religion and peoples are, they will more likely rally together and execute a plan for the betterment of the tribe.

Enjoy!

EscapeVelocity said...

Rather it is the moral and mental attitude to life of contemporary Europeans. --- Sean

Bingo!

More to the point....their abandoning of Christianity. You are witnessing the fruits of Secular Hedonism. Not Christian Capitalism.

Svartwulf said...

As a historian, I see more of the old Germanic and Greek-Roman pagan attitudes in capitalism and the free market economy than I do Christian. Simply put, philosophically, Socialism is nothing more than Christian attitudes where Government has replaced God and the rewards for a "Holy Life" are in this world rather than in the next.

To be clear:

Germanic/Scandinavian heathenism's attitude is this; The gods will not grants us anything we do not take for ourselves. In other words, you want something, you have to get it on your own.

Christianity: God will provide for us that which we need, because he loves and forgives us wicked human beings for our sin in exchange for our worship and our souls. Replace God with Government and you have the basic promise of Socialism. Gov will provide us that which we need, because Gov loves us wicked, racist, evil, greedy people in exchange for our Work and our Lives.

But perhaps the best illistration of my point comes mainly from modern times. In the words of Gordon Gecko: Greed is Good. Capitalism thrives on Greed. But Greed is one of the Seven Deadly Sins under Christianity. Therefore, I ask you, how can something that is a Sin under Christianity, be truly Christian? Or would it be better served to think of Capitalism as an extension of Pre-Christian Pagan/Heathen thought that was born from societies that praised the accumulation of wealth?

Food for thought.

EscapeVelocity said...

Christianity is the restraint upon captialism. Capitalism without individuals holding themselves to a moral code, is exactly what its detractors paint it as.

Replacing God with Government is a heresy so egregious, for you to claim Socialism as Christian is utterly preposterous. Christianity is individual focused....not collective.

Captialism, as in production and trade to increase ones survival and reproduction success is not pagan in nature. Its Darwinian.

You are seriously confused.

Mark Quinn said...

Attempting to find an analogous relationship between religion and socio-economic models is counter-productive.

ENGLISHMAN said...

"democracy could become a thing of the past"is this bloated non-entity serious?democracy has not existed in western europe since the end of the last war,yes we have a facsimilie of "democracy"but only if you do as you are told,only if you "vibrantly"wish to give your countries away and become the next case of genocide,barroso,bring it on,and in the imortal words of john wayne,lets get down to the rat killing.

Anonymous said...

Norse Alchemist :

Socialism certainly derives some of its concepts from Christianity. However, it perverts them while doing so.

You cannot replace God with government, and pretend that something fundamental has not changed in the process.

Government is made of men. God is, well, God. When men begin to think they are God, some terrible things are bound to happen.

Sean O'Brian said...

Interesting comments.

I would add that the era of modern capitalism started in Holland in 1609 when, under Calvinism, the Bank of Amsterdam began charging interest. (Aristotle and St. Thomas both forbade usury.) We can say with near certainty that without the Reformation we would not be now living in the modern capitalist epoch.

Earlier than that there was the emergence of capital in Florence and Venice in the 12th and 13th centuries, under the Doges. All that is meant by capitalism before this era is, as far as I'm aware, trading between different nations and empires which was a normal human activity everywhere in the ancient world.

Svartwulf said...

@Robert, thank you for you support of my statement. Also, thank you for mentioning that Socialism is a perversion of Christian teachings. I should have mentioned that and perhaps my words would not have stung some people as much.

@Sean, also, thank you for the information on the origins of capitalism. I think it will help me with a theory I have been working on.

gxm said...

“when it arrives the collapse may be breathtakingly swift”

Yes, economic processes often tend to be exponential in nature. If you study exponential curves you will note that there is a “knee” after which the curve moves upward (downward if the rate is negative) quite markedly. You arrive at this point (the knee) at different times depending on the rate of change. A good example of such a curve is compound interest, i.e. (1 + i)^n where i is the rate of interest and n the number of periods typically months or years. This formula gives the sum of 1 after n periods. After many years even with a moderate rate of interest the sum becomes quite large. This is why there are laws against perpetuities. After arriving at the knee of an exponential curve representing any natural or socioeconomic process that process breaks down and you have a collapse. And you are right in the beginning the process can seem quite benign and deceptive. The hyperinflation in the Weimar Republic is a good example. Inflation actually began in 1914 due to the war but the really devastating acceleration in debt, money and prices was in late 1922 through 1923. Probably very few if any Germans realized the trouble they were in even as late as mid 1922. The whole process was a classic debt driven inflation that got completely out of control and resulted in the German currency becoming worthless by the end of November 1923.