|
|
The English-language media seems to
be of one mind on Europe in general and Greece in particular: the system is
toast, and a series of sovereign defaults leading to either a fundamental
restructuring or failure of the Eurozone is inevitable.
But that's not the universal view on
the Continent. Consider this from GlobalEurope
Anticipation Bulletin, a French group (I think) that publishes provocative
analysis of the global economy from a European perspective.
Global
systemic crisis - Fourth quarter 2011: Implosive fusion of global financial
assets
...But let's come back to Greece and
what is beginning to be a "very repetitive old story" which, as we
have already explained, returns to the front of the media stage every time
Washington and London are in serious difficulties. Moreover, coincidentally,
the summer has been disastrous for the United States which is now in recession,
which has seen their credit rating cut (an event deemed unthinkable by all
the "experts" only six months ago) and exposed their political
system's state of widespread paralysis to an astonished world, all whilst
being incapable of putting any serious measure in place to reduce their
deficits. At the same time, the United Kingdom is sinking into depression
with riots of uncommon violence, an austerity policy that fails to control
budget deficits whilst plunging the country into an unprecedented social
crisis, and a ruling coalition that doesn't even know why it governs together
against the backdrop of the scandal of collusion between political leaders
and the Murdoch empire. No doubt, in such a context, everything was ripe for
a media relaunch of the Greek crisis and its
corollary, the end of the Euro!
If LEAP/E2020 had to summarize the
"Hollywood style" or "Fox News" scenario, we would have
the following synopsis: "While the US iceberg is ramming the Titanic,
the crew leads the passengers in search of dangerous Greek terrorists who may
have planted bombs on board!" In propaganda terms, it's a known recipe:
it's a diversion to allow, first of all, the rescue of the passengers one
wants to save (the informed elite who know very well that there are no Greek
terrorists on board) since everyone can't be saved; and then, hide the
problem's true nature for as long as possible to avoid a revolt on board
(including some of the crew who sincerely believe that there really are bombs
on board).
...For now, as we have said for
several quarters, the media and financial hysteria surrounding the Greek
crisis is primarily in the realm of propaganda and manipulation. To see this,
it suffices to note that outside Greece, no Euroland
citizen would realize that there is a crisis in Greece if the media didn't
regularly make it the subject of their headlines. Whilst in the United
States, the daily ravages of the crisis do not need media coverage to be felt
severely by the tens of millions of Americans...
Focusing on the background, we must
emphasize that the "promoters" of a Greek crisis presented as a
fatal crisis for the Euro have spent their time repeating it for almost two
years without any of their forecasts coming to pass in any shape or form
(except to continue talking about it). Facts are stubborn: despite the media
outcry that should have seen off many economies or currencies, the Euro is
stable, Euroland has come on in leaps and bounds in
terms of integration and is about to break even more spectacular new ground,
the emerging countries continue to diversify out of US Treasury Bonds and buy
Euroland debt, and Greece's exit from the Euro zone
is still completely beyond consideration except in the Anglo-Saxon media
articles whose writers generally have no idea of how the EU functions and
even less of the strong trends that drive it.
Now our team can do nothing for those
who want to continue to lose money by betting on a Euro collapse, Euro-Dollar
parity, or Greece's Euroland exit. These same
people spent lot of money to protect themselves against the so-called
"H1N1global epidemic" that experts, politicians and the media of
all kinds "sold" for months to people worldwide and proved to be a
huge farce fueled in part by pharmaceutical companies and cliques of experts
under their orders. The rest, as always, is self-propelled by the lack of
thought, sensationalism and mainstream media conformity. In the case of
Euro-Greek crisis, the scenario is similar, with Wall Street and the City in
the role of the pharmaceutical companies.
In fact we recall that what terrifies
Wall Street and the City are the lessons that Euroland's
leaders and its people have been in the process of learning from these three
years of crisis and the ineffective solutions that have been applied. The
nature of Euroland creates a unique forum for
discussion among the elite and American and British public opinion. And this
is what disturbs Wall Street and the City, which is systematically trying to
kill this forum, either by trying to plunge it into a panic by announcing the
end of the Euro for example; or by reducing it to a waste of time and
evidencing Euroland's ineffectiveness, an inability
to resolve the crisis. Which is the limit given the complete paralysis
prevailing in Washington!
... Our team now expects a strong
revival of European politics from the end of 2012 (similar to the 1984-1985
period) including a Euroland political integration
treaty which will be put to a Euroland-wide
referendum by 2015...For LEAP/E2020, there is no doubt that minds are ripe,
throughout most of Euroland, for private creditors
being asked to pay 50%, or even more, to resolve the future problems of
public debt. This is, without doubt, a problem for European banks, but it
will be managed to protect depositors. The shareholders themselves will have
to take full responsibility: besides it's really the foundation of
capitalism!
Meanwhile, with 340 billion USD to
find for refinancing in 2012, the European and American banks will continue
to kill each other while trying to maintain the pre-crisis situation which
gave them unlimited central bank support. As for Euroland,
they may have a very bad surprise.
... just as the EU and the banks,
from 1982 to 2009, lent freely to Greece and without pressing for accounts,
over the same period, the world has lent freely to the United States
believing its leaders' promises about the state of the economy and the
country's finances. And in both cases, the money has been wasted in real
estate booms with no future, in extravagant crony politics (in the US
cronyism is Wall Street, the oil industry, health service providers) and in
unproductive military spending. And in both cases, everyone discovers that in
a few quarters you can't fix decades of recklessness.
So, in November 2011 the United
States will brace itself for a politico-financial "perfect storm"
that will make the summer problems look like a slight sea breeze.
Some thoughts:
The idea that the UK and US have manufactured the Eurozone crisis in order to
distract from their own impending doom is a little jarring to American
sensibilities. But it's not surprising that the rest of the world differs
from Fox News and the Wall Street Journal. Watch the political coverage of
the BBC and Al Jazeera, for instance, and you'll see that US media's take on
world affairs isn't universally shared.
Still, it's hard to see any other way
of interpreting the euro's situation, since the numbers for Italy, Greece and
the other PIIGS countries are what they are. At their level of indebtedness,
austerity won't work because it produces lower tax revenues in the short run,
which forces higher borrowing from ever-less-enthusiastic lenders. Interest
rates rise, debt costs soar, and the numbers keep getting worse. When you
can't pay your bills you don't pay your bills. And asking German and French
taxpayers to cover the difference, as German chancellor Angela Merkel is discovering,
is a recipe for regime change.
And the idea that a consensus is
forming in Europe around forcing banks to take a 50% haircut on their
sovereign debt seems to bump up against the size of the banks' holdings.
According to these charts, European bank exposure to PIIGS
country debt is so high that the result of this kind of writedown
would be either multiple bank failures with all that that implies or a
continent-wide bailout in which taxpayers (i.e. Germans) rather than bankers
eat the losses.
It's also hard to see how it matters
where the next crisis erupts. It could easily be the US or UK, since their
numbers don't add up either. Both countries have insoluble problems which
will eventually lead to collapse and/or currency crisis. But when one of us
goes, the rest will necessarily follow. That's the nature of an
interconnected financial system. A depression or hyperinflation here means a
depression or hyperinflation there, and after a few years we won't remember
or care where it started.
|
|
