Too Little

More Deck Chairs To Starboard


Chancellor Angela Merkel, President Nicolas Sarkozy (AAP)

Leaders of all 27 member governments of the European Union gathered in Brussels today for a summit conference, which was supposed to provide either a final, concrete plan to stabilize the Euro through unified member action, or the beginning of the end for a common currency and ultimately the EU.

There had been plenty of jockeying for position before the meeting. Angela Merkel and Nicolas Sarkozy have been pressing EU governments hard to vote on reopening the Treaty of Lisbon, the legal basis of the European Union, and allow it to be amended.

The suggested treaty changes would force the lowering of national debts through EU governments' ruthlessly cutting their own spending, reducing support for public programs and services. As reported by the UK Guardian, the treaty changes would "[confer] intrusive rights on European institutions [i.e., the European Central Bank and Financial Stability Facility] to enforce budgetary policy in countries breaking the [E]uro's debt and deficit rules, as well as quasi-automatic penalties for delinquents".

The New York Times reported that the treaty amendments "would allow the European Court of Justice to strike down [an EU] member’s laws if they violate fiscal discipline" -- in short, individual EU governments would have to agree to give up some national sovereignty over their economies to save the Euro, and the Union. The amendment would have to be ratified by the parliaments of EU member states, which would have to take the opinions of their respective voters into account -- but, if and when it was done, the Austerity Hawks would have the backing of European law.


Odd Man Out: Cameron In Brussels (Reuters - Francois Lenoir)

Their efforts to amend the Treaty of Lisbon failed. Britain's Tory Prime Minister, David Cameron, blocked the effort with a veto. He wouldn't accept his nation's financial center (known colloquially to the British as the 'City Of London', in the same way we use the term 'Wall Street') being dictated to by the ECB / EFSF. As quoted in the Guardian, Cameron said "... if I couldn't get adequate safeguards for Britain in a new European treaty then I wouldn't agree to it. What is on offer isn't in Britain's interests so I didn't agree to it." He could not allow a "treaty within a treaty" that reduced the UK's position in the EU's single market.

Apparently, Cameron had conferred with leaders of the Labor party (who dislike Cameron intensely, but "We're all Britons, after all")

EU leaders [reported the Guardian] promptly agreed to bypass Britain and establish a new accord on the [E]uro among themselves by March. The EU appeared poised to line up 26-1 against Cameron in support of the Franco-German blueprint, leaving Britain utterly isolated.

Cameron's bombshell came at what was billed as the most important EU summit in years, with the fate of the single currency hanging in the balance. The veto was unexpected and was being seen as a watershed in Britain's fractious relationship with the rest of Europe. Cameron insisted on securing concessions on, and exemptions from, EU financial markets regulation as the price of his assent to the German-led euro salvation blueprint.

Merkel and Sarkozy dismissed Cameron's performance with a wave ("Mr. Cameron was never with us at the table," Merkel quipped to the press) and immediately moved to Plan B -- a "fiscal compact" which would have to be ratified by each EU members' parliaments, and with the same Austerity elements as were in the treaty amendments, all to be in place by March of 2012.

As the New York Times noted, "Sarkozy also said he was tired of British criticism of the handling of the crisis. 'I am sick of hearing every day David criticizing us,' Mr. Sarkozy said, according to one official briefed on the discussions. On Friday, as the summit meeting was breaking up, Mr. Sarkozy snubbed Mr. Cameron, brushing past his outstretched hand."

[The result of the summit] is viewed as unlikely to calm fears that Europe is unwilling to muster the financial firepower to defend the sovereign debts of big member states, including Italy and Spain, that have little or no economic growth and have big debt bills coming due soon.

At the meeting, member governments agreed to raise up to $270 billion that could be used by the International Monetary Fund to aid indebted European governments, and they moved up the date that a European rescue fund [EFSF] would come into operation. But the sums involved fell well short of what many investors and some Obama administration officials have argued are needed to ensure the survival of the euro. Administration officials on Friday welcomed the long-term overhaul of the euro zone’s rules, but argued that stronger measures were needed in the short run.

Going into this summit, Merkel, Sarkozy and their allies had only one choice -- to take amazingly bold financial and (for them) politically dangerous positions. This would have involved a near blank check from the ECB to banks in at-risk EU nations (Portugal, Spain, Greece) for bailout funds; the announcement of a creation of a "Eurozone Bond"; and the formation of an EU "fiscal union".

Anything less would only kick the can further down the road, trying to buy more time for a long-term solution. And, that's what's happened. Pushing the beginnings of that solution out until March of next year, without taking drastic action to provide sufficient backstopping of EU banks, or speed up the creation of the EFSF, leaves Europe at risk to another debt crisis -- another Greece, another Italy; another key bank which implodes.

Felix Salmon, a commenter at Reuter's online, summed it up pretty succinctly today:

Here’s how the [London Financial Times] put it on Wednesday: "... The stakes are therefore very high at Friday’s summit. The world cannot afford another half-baked solution."

And yet, inevitably, another half-baked solution is exactly what we got. Which means, I fear, that it is now, officially, too late to save the Eurozone: the collapse of the entire edifice is now not a matter of if but rather of when.

For one thing, fracture is being built into today’s deal: [R]ather than find something acceptable to all 27 members of the European Union, the deal being done is getting negotiated only between the 17 members of the Euro zone. Where does that leave EU members like Britain which don’t use the euro? Out in the cold, with no leverage...

... It seems that German chancellor Angela Merkel is insisting on a fully-fledged treaty change... Europe, whatever its other faults, is still a democracy, and it’s clear that any deal is going to be hugely unpopular among most of Europe’s population. There’s simply no chance that a new treaty will get the unanimous ratification it needs, and in the meantime the EU’s crisis-management tools are just not up to dealing with the magnitude of the current crisis.

The fundamental problem is that there isn’t enough money to go around. The current bailout fund, the European Financial Stability Facility, is barely big enough to cope with Greece; it doesn’t have a chance of being able to bail out a big economy like Italy or Spain. So it needs to beef up: it needs to be able to borrow money from the one entity which is actually capable of printing money, the European Central Bank.

But the ECB’s president, Mario Draghi, has made it clear that’s not going to happen... a former vice chairman and managing director of Goldman Sachs, he’s perfectly comfortable delivering Italy the bad news that he’s not going to lend her the money she needs...

... All of Europe’s hopes right now are being placed in something called the European Stability Mechanism — a permanent successor to the temporary EFSF. Since it’s permanent, the ESM is going to have to be constructed with the ability to put out fires of any conceivable size. And as such, it’s going to have to be able to borrow enormous amounts of money, and lend them on to countries which have found themselves in trouble.

But that would make the ESM, essentially, a bank. And the European leaders seem determined, today, to prevent the ESM from operating as a bank at all. Which means it will never get the firepower it needs to be taken seriously... the ESM seems set to be capped at a mere €500 billion euros ... compare [that] to Italy’s total debt of roughly €2 trillion. And that isn’t even counting Spain, or Portugal, or Ireland, or whatever money Greece might yet still need.

...The European Banking Authority, with exquisite timing, informed the world on Thursday that the continent’s banks need to raise €115 billion in new capital, including more than €15 billion for Spain’s Banco Santander alone ...

Europe’s leaders have set a course which leads directly to a gruesome global recession, before we’ve even recovered from the last one. Europe can’t afford that; America can’t afford that; the world can’t afford that. But the hopes of arriving anywhere else have never been dimmer.

Any questions?

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MEHR: Paul Krugman notes:

Let me return for a minute to Kevin O’Rourke’s recent piece on the European summit. Aside from pointing out just how bad an idea the new super-stability pact is, O’Rourke makes an important observation about what the European experience teaches us about macroeconomics:

One lesson that the world has learned since the financial crisis of 2008 is that a contractionary fiscal policy means what it says: contraction. Since 2010, a Europe-wide experiment has conclusively falsified the idea that fiscal contractions are expansionary. August 2011 saw the largest monthly decrease in eurozone industrial production since September 2009, German exports fell sharply in October, and now-casting.com is predicting declines in eurozone GDP for late 2011 and early 2012.

A second, related lesson is that it is difficult to cut nominal wages, and that they are certainly not flexible enough to eliminate unemployment. That is true even in a country as flexible, small, and open as Ireland, where unemployment increased last month to 14.5%, emigration notwithstanding, and where tax revenues in November ran 1.6% below target as a result... how does the EU expect [cutting wages] to work across the entire eurozone periphery?

The world nowadays looks very much like the theoretical world that economists have traditionally used to examine the costs and benefits of monetary unions. The eurozone members’ loss of ability to devalue their exchange rates is a major cost. Governments’ efforts to promote wage cuts, or to engineer them by driving their countries into recession, cannot substitute for exchange-rate devaluation [between different currencies]. Placing the entire burden of adjustment on deficit countries is a recipe for disaster.

Basically, European experience is very consistent with a Keynesian view of the world, and radically inconsistent with various anti-Keynesian notions of expansionary austerity and flexible prices.

The point about nominal wages is especially telling. Ireland has clearly — clearly — faced a massive demand shock; maybe Casey Mulligan will find some way to insist that 14.5 percent of the Irish work force has voluntarily decided to refuse employment, but it’s just not true.

It is really, really hard to cut nominal wages, which is why reliance on “internal devaluation” is a recipe for stagnation and disaster.

The crisis really has settled some major issues in economics. Unfortunately, too many people — including many economists — won’t accept the answers.

Buckle up. This ride's just beginning; I'd pick out your cardboard box now. Don't wait. Make sure you have the capacity learn to love a Prestident Gingrich ("Historian" and Randyman), with all your heart. Or else.

Not kidding.

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Two Minutes To Midnight

Investing In Canned Goods Might Be Prudent


Map Of Eurozone By Andrew Rae (New York Times, November 30, 2011)

It's difficult to say this without appearing to overstate, but the next week is a critical juncture in world history. The future of the European Union and its official currency, the Euro, is what's at stake. How the dice fall will affect the Western world.

The EU and its constituent leadership have tried coming together twice this year already and failed to find any agreement on how to resolve what has become a crisis not only in bank debt, but sovereign debt. Most of the EU's members have national debts far above their GDP's (the U.S., by comparison, is 'only' at 80-plus per cent).

For America, a failure by Europe's leaders to resolve that crisis will mean very serious consequences for our own fragile economy. I strongly recommend paying attention to what happens.

In as few words as possible: Sixteen years ago, to become a politically united force and reap the benefits of interdependence, Europe (with few holdouts, such as Great Britain) accepted a common currency. This allowed economic and trade cooperation, but maintained the sovereignty of each EU member nation's governments -- and their central banks, each tied to private banks that do business in each country.

Before the crash, some EU member governments had national debts in excess of 100% of their GDP. The EU has seventeen economies and seventeen central banks, each having a loose association with the European Central Bank (ECB), which acts primarily as a clearinghouse for issues related to the Euro. The ECB also had the ability to put together loan packages from banks in the Eurozone if necessary.

When the Made In USA™ 2007 real estate-backed securities / derivative crisis affected those private banks, governments worldwide were advised either protect your banks or face a worldwide financial Armageddon. Like us, their finance ministers and advisors believed they had no other choice but to bail out the institutions which had helped create the crisis.

What were private debts became public. Before the crisis, governments in Greece, Spain, Ireland and Portugal, Slovakia and Italy had been overextended; taking on billions in bank debts made them even shakier. It wasn't long before loan packages from the ECB became necessary -- to shore up the banks, prevent the contagion from spreading.

In the three years since the 2008 collapse of Lehman Brothers, Bear-Stearns and Countrywide Financial, the EU lurched from one crisis to another as Europe's banks (who always seemed to have understated how much debt they really held; surprise!) needed even more "assistance". Then, the ECB began putting loan packages together to shore up the European governments themselves -- Spain, Ireland and Portugal, and (several times) Greece.

These were always intended to be band-aids -- because to qualify for ECB loans (backed primarily by healthier German and French banks), the EU members had to promise to reduce their government debt. The only way to do this was through voluntary Austerity programs: Cutting government programs, civil service wages and pensions, and selling or 'privatizing' government assets.

That would mean a drastic fall in the standard of living and the quality of life for millions of Europeans -- but worst of all, it would mean the economies of Europe would be caught in a vicious spiral of cost-cutting, leading to more businesses closing and jobs lost, leading to more economic contraction. This couldn't be clearer; events and data have already proven it in England and Greece.

Even so, this Austerity has been an unshakable demand of both Germany's Angela Merkel and French President Nicholas Sarkozy, whose nations are not as overextended as the rest of the EU.

Now, all the possible fixes and band-aids that could be applied to the situation through the ECB, and EFSF rescue fund have been done, and it clearly isn't enough. There is a summit of EU leaders taking place in Brussels beginning today, and lasting through December 9th. As David Gow for the UK Guardian reports,

Europe has five days to find a solution to the sovereign debt crisis or else the EU itself will collapse, political leaders warned on Sunday at the start of a week of high-stakes summitry.

Torn between the need for stability and the desire for solidarity, EU leaders have to find an immediate fix for the broken eurozone and embrace a longer-term plan for fiscal union by Friday night...

Senior opposition politicians put severe pressure on French President Nicolas Sarkozy and German Chancellor Angela Merkel ahead of their pre-summit talks in Paris on Monday to approve a "grand bargain" or, at least, workable plan that will gain the support of partners such as the US.

Timothy Geithner, Treasury secretary, will be in Europe for talks all week.

Sarkozy's main opponent in next spring's presidential election, socialist leader François Hollande, accused him of caving into German demands for a new EU treaty on budgets that was bound to fail, exacerbating French weakness in an unbalanced relationship with Berlin and ignoring the need for immediate solutions.

So far, Merkel's notion of what's needed is a rewriting of sections in the European Union Treaty itself -- making economic policy a permanent part of the political association. For Europeans who still remember a Europe dominated by a resurgent (nazi) Germany, the idea that the EU will be redefined and effectively led by Die Deutschen is uncomfortable.

Merkel has resisted the possibility that the next level of 'fix' for the crisis lies through the issuing of 'Eurobonds' -- treasuries which could be traded on the international market, bought by the world's financial community and other non-EU governments (like the U.S., say, or Saudi Arabia, or China).

That wouldn't require a rewriting of the EU Treaty, but might demand that EU member governments would give up some amount of control over their own economies -- to the ECB, or some special EU commission -- and again, there are many in Europe who don't (as they see it) want to give the Germans, with the French as their handmaidens, that much power over their sovereign states.

Another aspect of issuing Eurobonds is, would anyone buy them? The most recent auction of German treasury bonds was almost a failure; Italian treasuries sold, a little, but with higher interest rates. 'The Market', which EU ministers want to calm and give assurances to, seems not to trust the ability of EU governments to make good on their issuance of debt.

And underneath every plan to save the day, Austerity is the only hope.

Philipp Rössler, economy minister, rejected eurobonds outright but Günter Oettinger, an EU commissioner and member of Merkel's CDU, said they could not be excluded categorically.

Mark Rutte, Dutch premier, said: "It is really important that the markets see that Europe is prepared to help the countries in trouble, so long as those countries commit to very tough reforms and austerity programmes."

And there are no shortage of shills for Austerity as a morality play here at home. Jonathan Chait in the NYT ("Godzilla vs. Bambi, Op-Ed Edition", December 2nd) compared the bullshit views of Little Davey "Bucky The BoBo Beaver" Brooks with that of Nobel-winning economist Paul Krugman:

David Brooks today devotes his column on Europe to the familiar conservative morality tale, in which the European countries in trouble are paying the price for their slothful, profligate ways:

Over the past few decades, several European nations, like Germany and the Netherlands, have played by the rules and practiced good governance. They have lived within their means, undertaken painful reforms, enhanced their competitiveness and reinforced good values. Now they are being brutally browbeaten for not wanting to bail out nations like Greece, Italy and Spain, which did not do these things, which instead borrowed huge amounts of money that they are choosing not to repay.

Does anybody else on the Times op-ed page care to rebut this? Perhaps somebody who has glanced at the relevant data? Yes, you there, the bearded man with the Nobel Prize in economics:

How did things go so wrong? The answer you hear all the time is that the euro crisis was caused by fiscal irresponsibility. Turn on your TV and you’re very likely to find some pundit declaring that if America doesn’t slash spending we’ll end up like Greece. Greeeeeece!

But the truth is nearly the opposite. …

Only Greece ran large budget deficits during the good years; Spain actually had a surplus on the eve of the crisis.

On his blog, Krugman also has a chart showing that Italy and Spain both had shrinking debts as a percentage of GDP in the dozen years before the crisis.

The global financial system is so deeply interwoven by counterparty obligations, derivatives, and the Great Overnight Tides Of Financing which allow so many institutions to appear solvent (MFGlobal, no?). The amount of debt which banks and governments are attempting to deleverage themselves from is so vast (and among governments, growing by month, quarter and year) that all the best-laid plans seem nothing more than misdirection, a kick-the-can-down-the-road, Three-Card Monte scheme to buy a few more months or weeks.

So, too, Europe. I just don't have any confidence the current situation can end well. Issuing Eurobonds may temporarily increase 'market confidence' (expect 'big gains' in the Dow and SPX if it happens) and might work as a foundation for a more permanent solution, if there were wise men and women at the helm.

But there aren't. Merkel and Sarkozy, and supporters (such as England's Conservatives, busy running Britain into the ground), demand Austerity from the simple folk -- that the EU's citizens pay for the failure of their governments to protect them from the very financial institutions which participated in a global ponzi scheme, and are now being defended by those same governments -- and only governments who "commit to very tough reforms and austerity programmes" will be taken seriously. Get with the programme, you Keynesian heretics.

(Otherwise, they may have to fall -- as they did in Greece, and Slovakia, and Italy. Now, Papandrou's government was politically unpopular; and Corrupt Clown Prince Berlusconi was a self-perpetuating joke. And, Sarkozy did say that 'regime change' was not the intention of EU economic policy. Even so...)

To be fair, Merkel and Sarkozy, et Cie, are trying to maintain a political European Union, and at the same time address the reality of seventeen nations, independent, but financially interdependent through use of the Euro.

The single currency bound Europe in better times, and holds its members hostage in crisis -- in the same way seventeen people, trying to escape a burning building, are hobbled by being tied at the ankle to a single chest full of Euros. It will take all seventeen to pull the Eurochest out of the building before it collapses; they'll be burned but alive, though financially damaged. But if one or more of them untie themselves from the Euro and run for it, they may all may die.

As EU member states hand over some control of their sovereign finances to the EU in exchange for a promised security, the resulting loss of growth -- precisely what's happened in England -- will strangle Europe's overall economy. The only security will be for the financial houses or Europe, and America. And a very small percentage of the world's population; the Owner Class.

Again -- as in our own country -- citizens of the EU will pay, for generations, for the sins of a relatively small group of greedy, rapacious, financial oligarchs.

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El Testa Di Cazzo Di Tutta l'Europa Berlusconi Resigns

Rome Greets Announcement With More Austerity

New Reaches Rome Of The Poco Pene's Resignation

As Italy's people steady themselves to withstand the rigors of Austerity which the EU demands as price for saving the Euro lending German and French banks, really Italy money -- the selfsame Italian people took Winston Churchill's advice on V-E day, and "allowed ourselves a brief period of celebration".

Silvio Berlusconi resigned today as Prime Minister of the Republic Of Italy, after nearly two decades of playing factions within Italy's political parties off against each other, in order to deliver a (sometimes) working coalition in the country's Parliament. This was the real reason he hadn't been gotten rid of earlier, not some indispensable personal ability or sage leadership. He was canny -- what the Germans refer to as Schlau -- but ultimately, not possessed of high intelligence.

He also used his position as Prime Minister to make some deals -- he is a Billionaire, and as a member of the planet's Oligarch class, saw nothing wrong with it. In that connection, Berlusconi was accused of money laundering and witness tampering and bribery, trying to evade the charges by having a law passed through the Parliament, giving the Italian Prime Minister immunity from prosecution for any crime -- only to have it repealed.

He also treated the international public to a flamboyant peep-show of his private life; it was the women he dallied with who passed on details to an ever-hungry Tabloid press. And it was in that connection which made him beloved to a superinteligent parakeet and the four other readers of Before Nine.

Obligatory Photo Of Superintelligent Parakeet In Middle Of Blog Rant

So, as he slinks back to his palatial estates and can return to manipulating the Italian people through what issues from the media empire he owns -- here are a few links to our Roll Of Shame for Silvio! -- Chief Clown Prince Of Europe!

May, 2009: See Naples And Divorce

June, 2009: Comedy Relief: Arrogance So Large It Has Its Own Postal Code

September, 2009: He Thinks With Little Silvio, Which Isn't That Bright. Come To
Think Of It, Big Silvio's Stupid, Too.

October, 2009: Meanwhile, In Downtown Italy

December, 2009: Berlusconi Attacked By Cathedral

March, 2010: Wearing Purple, Seeing Red

December, 2010: Salvato! Silvio Salvato Per Avere il sesso con più ragazze adolescenti!

February, 2011: Oh God; Not Again

Now, Italy will go forward, bravely keeping the Banksters and the rich warm, and safe, and with many treats. Just as our Tea Partei and GOP, and many Democrats, want to do right here in the Good Old Eusa.

Silvio Berlusconi: Auf Nicht Wiedersehen, you Nutter.

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Not That It Matters

All Aboard The Failboat

"R.A." is a writer for The Economist, legendary pro-business and fairly conservative publication based in the UK. R.A. published an article, "Finito?" on Wednesday, which describes the trap the EU and the Eurozone finds itself in pretty succinctly (paragraphing added for clarity):

I have been examining and re-examining the situation, trying to find the potential happy ending. It isn't there. The euro zone is in a death spiral.

Markets are abandoning the periphery, including Italy, which is the world's eighth largest economy and third largest bond market. This is triggering margin calls and leading banks to pull credit from the European market. This, in turn, is damaging the European economy, which is already being squeezed by the austerity programmes adopted in every large euro-zone economy. A weakening economy will damage revenues, undermining efforts at fiscal consolidation, further driving away investors and potentially triggering more austerity. The cycle will continue until something breaks.

Eventually, one economy or another will face a true bank run and severe capital flight and will be forced to adopt capital controls. At that point, it will effectively be out of the euro area. What happens next isn't clear, but it's unlikely to be pretty...

I hate to get this pessimistic about the situation. It feels panicky and overwrought. I can't believe that Europe would allow so damaging an outcome as a financial collapse and break-up to occur. And I still don't understand why, if this is all as obvious as it seems to me, equities aren't down 20% now, rather than 2% or 3%.

But the window within which something could be done to prevent it is closing, and fast. I hope to be proven astoundingly wrong in my assessment, but I'm struggling to see alternative outcomes.

It seems obvious to so many professional economists and analysts that Austerity is not the medicine for the Made-In-USA financial crisis -- that reductions in the spending by governments will only continue to reduce growth, maintain high unemployment, and lead to who knows what potential political upheavals.

A commenter, "LexHumana", to R.A.'s post summed up the "centrist" and "reasonable" opinions of a large number of people:

Not to say that the Kubler-Ross model is applicable in all such cases, but I am continuingly amazed at how this Eurozone crisis (and the comparable U.S. financial crisis) nicely follows the five stages of grief. Europe began with denial ("there is no problem, everything is normal"), then moved to anger ("damn those profligate Greeks"), then to bargaining (which still has not been successfully concluded with Greece), and are now entering the stage of depression ("oh my god, we are doomed").

Eventually, Europe will reach "acceptance", and realize that there is no bloodless way of solving this problem -- the Greeks will accept that the days of wine and roses are officially over and go back to the way Greece was in the 1950s, the bondholders will accept the fact that you can't get blood from a turnip and write-off much of the debt as uncollectable, and the rest of the European citizenry will (via their central banks) accept that in order to avoid a financial collapse by the bondholders some degree of bailout will be required and they will be the ones to foot the bill.

An extraordinary amount of pain needs to be shared among the parties, and this is going to push Europe into a recession, but it is survivable.... as long as they get to "acceptance" sooner rather than later.

The problem is, this argument depends upon the premise that the European citizenry will... accept that in order to to avoid a financial collapse... some degree of bailout will be required and they will be the ones to foot the bill.

Why? the "European citizenry" are already asking why they should have to pay to bail out their own versions of TBTF banks. Unlike the Americans, they found their voices on this subject pretty quickly -- footage of Greeks facing off against riot police in Athens, or in Italy, Spain, and the U.K., proves that. Rather than agree to support a rotten system, they're refusing. They want changes made that benefit the majority.

(The way Europeans are saying "no" reminds me, in spirit, of a scene in James Cameron's Aliens: Ripley (Sigourney Weaver) says the Marines should simply nuke the nest of alien creatures; it's the only way to solve the problem and ensure the safety of everyone. The corporate Yuppie slimeball, Burke (Paul Reiser) says, "Whoa, whoa, whoa; You can't do that. This area has a significant dollar value, and represents a significant investment to the company" [Too Big To Fail, in other words?]. "Well, they can bill me," Ripley snorts.)

Why, Europeans ask, should they assist the same people who created this problem? Why should they do with less, see their children go hungry, to subsidize the lifestyles of the wealthy?

It could be argued that Europeans have a longer history of "knowing their place", and dealing with the whims and excesses of aristocrats and nouveau parvenus, and so can 'take it'. It could also be argued that Europe has a tradition of not taking it. And under the grinding, enforced poverty of The New Austerity (so obvious an arrangement to benefit bad banks, bad actors and bad governments), Europe's Communist political parties could become resurgent. Who knows; they might get it right the second time around.

But we don't have to go there. The current dilemma is all avoidable. But we're still going to be forced to go there anyway, to save the banks and the rich and the hurt fee-fees of The Masters Of The Universe.

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MEHR: The Krug Man explains the entire crisis in one sentence.

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What's Goin' On

Europa, Europa

The crisis within the European Union, involving its banks, interconnected economies, and loan structures to bail out the 'peripheral' Eurozone nations [the so-called PIIGS: Portugal; Ireland and Italy; Greece, and Spain], continues.

The difference between the U.S.'s financial problems and the EU's, is that shared currency, the Euro, which is the financial prop behind the political structure of the Union. The EU is a realization of the dream of European political cooperation, and to organize as an economic bloc to compete with Asia, Russia, and the United States.

Having a single currency in the Eurozone not only makes it possible to sell goods and services between member EU countries, but to negotiate trade or industrial agreements -- with China, or Brazil, say -- around import-export, or the price of steel, cotton and foodstuffs, that benefit all the members equally: Italy doesn't receive a better deal than Poland when buying raw Indonesian rubber.

Another difference between the financial crisis Here, and There, is that Europe's crisis involves a series of interdependent, failed national economies. In the PIIGS nations, their governments stepped in and paid taxpayer monies to pay to bail out their failed banks -- what we did here in the U.S. But, their economies aren't as diverse and large as ours.

By taking on more debt to bail out their own banks and keep paying for social services for their populations, Greece ended up running a national (i.e., public) debt equal to nearly 150 per cent of their GDP. Germany's debt-to-GDP ratio is nearly 75%; France is at 84%; Italy and Ireland are at 118 and 94 per cent respectively. The world's most indebted nation is Japan, with a national debt equal to 225% of its annual economic output (These figures are for 2010, via the International Monetary Fund; the full list is here). By contrast, the United States' national debt is equal to roughly 92% of our GDP, which is bad enough.

Piggie, Piggie, Piggie

The PIIGS received loan packages from the European Central Bank (ECB), primarily from French and German banks. But, they have had to agree to enact 'New Austerity' principles -- cuts in government spending, even the sale of national assets, resulting in a radical downward shift in the quality of living. Services provided by governments would continue only at reduced rates, if at all. Budgets would be slashed. The PIIGS governments would have to shrink their payrolls -- and in Europe, a government job is more common than in America, and that would mean immediate higher unemployment rates.

Another complication is the vicious cycle of national bonds: The PIIGS nations issue government securities, like any other country, to generate revenue (We've done it with China for almost twenty years, and it's paid the interest on our National Debt). The amount of interest charged on those bonds indicaes how other governments and institutions feel the PIIGS are creditworthy, good investments. The higher the interest rate on those bonds means there's less confidence among investors that they'll be being repaid.

It also means the PIIGS will have to make good on those bonds, down the road when they come due. The interest rate on a five- or ten-year bond can go up or down, of course, which means as a government becomes more solvent, the less they'll have to pay in future -- but the focus now is on the short term. Can Greece, for example, make its ECB loan repayments on time, and pay back its treasury bonds at whatever interest rates?

Meanwhile, the citizens in the PIIGS countries don't agree with a lopsided bailing out of the rich, and many have been angry enough to participate in large and widespread demonstrations against the New Austerity, with strikes by unions, civil disobedience and even rioting.

'New Austerity' has been insisted upon by Angela Merkel of Germany and Andre Sarkozy of France -- principally because the risk for the ECB loans to the PIIGS is being borne by German and French banks. Unfortunately, Austerity kills any possibility of government job creation, or future private-sector growth -- private business can't grow in countries where The People can't afford to buy anything. And if the ECB loans are to be repaid on time, jobs and growth are critical.

Scrood, Tattood: We Will All Go Together When We Go

Greece has already missed one deadline this year, and the EU had to scramble to put a second loan package together, which didn't seem to work either. It's pump-and-shore belowdecks on the Good Ship S.S. Grecia -- and chained to the Greek economy are the French and German banks. They are chained to American, British and Asian banks; the European stock market; and the American and Asian markets. The Greek ship of state is also chained to the S.S. Italia, the Lisbon, the Eire and the Espania.

The Greeks can abide by the terms of New Austerity, and make good their government's decision to spend like crazed weasels when times were good, and to prop up Bad Zombie Banks with taxpayer money when things got bad for them. This would require the Greek people to live at lower standards of living, paying for the salvation of the rich, and selling the Parthenon to Russian Oligarchs. This is unlikely.

They could walk away; the Greeks could simply say, "No We Can't!" to the New Austerity, and default on it's ECB loans. French and German banks would suddenly be unable to borrow short-term money (as all banks do from each other); their stocks sink in the market, and stock exchanges all over the world would take a broad nose-dive.

As capitalization disappears, corporate businesses spend less and lay off more employees, or engage in more ruthless offshoring and outsourcing to remain competitive. Unemployment rises. Prices overall rise. Our economy, large as it is, becomes more vulnerable to the ripple effects of individual commodity price increases -- especially oil, but nearly all raw materials.

This is essentially the part where all of We, The People are, as my father used to say, screwed and tattooed.

That Sinking Feeling

There's a variant on this, where the Greeks pull their economy out of the Eurozone, and re-adopt the Drachma as their currency. Their economy would be quickly hit with massive inflation; on international markets, it could take hundreds or thousands of Drachma to equal a Euro -- but paying back loans with inflated currency is simpler at the macro level, and less painful, than before.

However, this might be the beginning of the end for the Euro, and the Eurozone; in which case the French and German banks end up taking it in the shorts, again. And, after a few months, 90% of America's population finds itself waking up to discover it had been forced to, uh, 'Do Things' the night before, and finds We all have a brand-new tattoo we don't remember getting.

The third possibility for the European debt crisis is the rapid implementation of a new financial structure for the EU -- something that would more tightly bind the EU economies and political structures together, and insist on the New Austerity, on making The Peoples of Europe pay for the greed-driven errors of Bad Politicians and Bad Banksters.

Putting a new, über-finance structure in place over the EU could preserve both the Euro (the financial structure of the EU), and the political Union. This is possible, but remember that not all EU member nations use the Euro (the UK is the largest, still using the Pound), and at this point it would take a tremendous effort of united political will. I'm not sure the Europeans have it. We certainly don't -- our government is about to be shut down, again, by the same Brownshirts who nearly did it a few weeks ago.

When Little Timmeh! Geithner went to Europe earlier this month and lectured the G20 finance ministers and central bankers on the need to fix Europe's economic issues or everything would blow up, he wasn't wrong. However, they felt insulted at being spoken to by Timmeh this way -- given that the global financial real estate and derivatives market which created this crisis was a Made-In-USA product from top to bottom, and exported around the globe.

One way or another, whatever happens There will come to live with us, Here; and that right soon, if any one of a dozen things goes wrong before the end of the year -- and the Bad News will all play out in a matter of weeks, not years, if it happens.

The international financial and economic structure is so tightly interwoven that the basic issues which created the crisis -- greed, a lack of transparency and regulation; more greed, and the general spinelessness of a political structure in service to wealth -- almost guarantees failure.

Since the Crash in October of 2008, government and finance efforts on both sides of the Atlantic have been an attempt to slow the rate of fall for the major economies. That was accomplished with a lot of free money being given to incompetent and greedy men, and with little or no cooperation on the part of the financial or corporate business structure -- banks won't lend; corporations are piling up as much cash reserves as they can.

Panic has started to set in, a bit; it's Every Man For Himself, abovedecks, on the U.S.S. Columbia. The speed of our fall since the end of 2008 has diminished; some days you don't even know you're still heading for the ground -- and, there's still plenty of teevee, plenty of Little Rupert's entertainments to watch that will keep your mind off that constant, sinking feeling.

But we're still falling. And, if you fall from fifty thousand feet going 150 MPH, or from one thousand feet at 50MPH, it doesn't matter. When you land, you'll still be dead.

Buy your popcorn now, while you can afford it, and before the stores selling it close. And, I say; more deck chairs from Port to Starboard!

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MEHR: Paul Krugman, one of the smartest humans on Earth, mentioned in his New York Times Opinion Page column this Monday morning:

On one side, Europe’s situation is really, really scary: with countries that account for a third of the euro area’s economy now under speculative attack, the single currency’s very existence is being threatened — and a euro collapse could inflict vast damage on the world.

On the other side, European policy makers seem set to deliver more of the same. They’ll probably find a way to provide more credit to countries in trouble, which may or may not stave off imminent disaster. But they don’t seem at all ready to acknowledge a crucial fact — namely, that without more expansionary fiscal and monetary policies in Europe’s stronger economies, all of their rescue attempts will fail.

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Wir Sind Die Piratenpartei!!

Berlin Tells Chancellor Merkel's CDU: ARRRRRRR!

Harrrr! Und (Trotz Der Witze) Dann Ihr Hab Gesiegt!

Ooo. Here's some news: Elections were held in the Mark of Brandenburg and Stadt Berlin today -- meaning Germans were going to the polls, even though there was Bundesliga action on the teevee. And when Germans voluntarily give up watching soccer to vote, it's serious. Trust me.

The vote went decisively for the Center-Left, rather than Chancellor Angela Merkel's Center-Right coalition.

Per Bloomberg News, The SPD (Social Democratic Party, the Socialists), the main German opposition party to Merkel's government, "extended their 10-year rule in the German capital after beating Merkel’s Christian Democrats [CDU] into second place." Merkel’s coalition partner in the Brandenburg-Berlin Council, the FDP (Frei Demokratische Partei, or Free Democratic Party) lost all its seats in a Regional Assembly for the fifth time this year.

This appears to be significant, though Berlin's politics don't necessarily reflect the rest of the country. But, it's clear that voter sentiment towards Merkel's policies, principally the 'New Austerity', won't win her any votes and may eventually remove the CDU's Center-Right coalition in a populist-SPD comeback.

Klaus Wowerweit, the extremely popular SPD (and openly gay) Regierender Bürgermeister of Berlin, not surprisingly won an easy re-election. But most surprising of all, the Pirate Party, Die Piratenpartei (be advised their site is in German, so Gib' Ihren Deutsch An!), ran a slate of candidates on platforms of digital freedom -- principally free access to wireless and Net Neutrality -- and won a not-statistically insignificant 8.9% of the city-wide vote.

This is significant because even if a portion of those who voted Arrrrrrrr! did so as a protest, it means support for the coalition which pushes Merkel's policies is deteriorating. We'll see.

Meanwhile, Fünfzehn Mann auf des toten Mannes Schrankoffer - Yo Ho Ho, und eine Flasche auf Broadband! And three Hochs! for the Pirates Of Berlin!

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There's All This Stuff On Bee Bee Cee

Somebody die or get married or something?

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The Greek Way

Protestors In Athens Suppressed By Police

©Archie Comics (No Date): International Archie And Jughead

αψίδα άνθρωπος: Do you not understand the time of season, Man with head of breasts? We live like animals! Read this "Tweet" -- we are massing in the central square! Our current situation can mean a Greek Revolution!

ο άνθρωπος με το κεφάλι στο στήθος: That's harsh, dude!

Niki Kitsantonis of the New York Times reports that in Athens, Greece, "Violent clashes between protesters and the police broke out ... as the two main labor unions staged the first general strike of the year against the government’s austerity drive, paralyzing public services and disrupting transportation." The confrontation turned rather ugly.

A Green union official told Kitsantonis that similar strikes "would be repeated until the Greek government reviewed its agreement with its international creditors, who pledged about $150 billion in loans to Greece last May if the country pushed through a raft of austerity measures, trimmed the public sector and changed the pension and tax systems."

It was demanded that Veronica, raven-haired character from the Archie and Jughead comics series, replace the image of the Greek Goddess Athena on official buildings, currency, and in logos on travel brochures.

I always thought that Veronica looked like "Wonder Woman', anyway.

Veronica (©Archie Comics); Wonder Woman (Alex Ross, 2000)

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If This Is Tuesday, It Must Be Belgium

Twenty-Euro Note: The EU Has Some Beautiful Currency

David Marsh is an Op-Ed columnist for the New York Times, which published one of his pieces yesterday entitled "The Euro's Lost Promise".

It's a good example of how a large topic can be presented in relatively few words -- and is one of the best brief descriptions of the history of the Euro I've read in a while.

Americans don't really care about that history, or a common European currency -- unless you're a currency trader, or are vacationing there just now (and now would be a good time: 1.00 Euro is worth 1.24 US. A few weeks ago, the exchange rate was 1.48 US to the Euro, and San Francisco was full of German and French tourists).

Can't we all just get along?

Europe, a collection of nationalities and near-tribal subgroups, has a history of trade wars and religious wars and wars of national conquest and national unification going back over 1,300 years.

The dream of a Europe united under a single set of laws and currency wasn't really Napoleon's -- though he's often credited with it, that idea was just an extension of his personal ambitions; the same is true for German hegemony in Europe between June, 1940 and June of 1944. Unification has swirled around the edges of European history for generations, mostly gaining traction around the rise of Socialism before the Great War, and Communism after. But, the reasons it was so attractive as an idea (national chauvinism; right- and left-political radicalism; trade) were the same reasons it was politically dead: European governments couldn't get over themselves.

A case in point are Franco-German relations. Germany took the province of Alsace-Lorraine in 1871, a war that humiliated France, which plotted Revanche and a final reckoning with the hated Hun... which didn't occur until 1919, when France got Alsace back, but the Versailles Treaty paved the way for Hitler, with a little help from Wall Street and the Great Depression, ver. 1.0. A resurgent (and nazi) Germany kicked France to the curb in May of 1940, which endured years of occupation until being liberated in the high summer of 1944.

It took the rise of the nazis, the Holocaust, and the Second World War (also known as the Great War, Part II) and its political aftermath to make any European government believe unification was desirable, even possible.

We Don't Get Fooled Again

The specter of fighting another intra-European war was too terrible to contemplate. In addition, the Soviets had swallowed up the eastern third of the continent, and Western Europe was dependent on the United States for financial and military aid (and, particularly in Germany, for lots of bulldozers).

Ultimately, the EU and the Euro were attempts to force Europeans to interrelate with each other in the face of what was then still a Communist Russian threat, and to build a political and financial structure which could hold its own in the face of American domination and the eventual rise of China.

These are serious ideas for Europeans. It's an opportunity for them to create a model of separate, sovereign states acting in collaboration, not competition. There's an obvious tendency for Americans to perceive the EU in terms of 'states', like those in the U.S., but that's laughable, because, well... Europe is not America!!!

There are other questions involved here -- whether Europe's privately-owned banks were ready for a common currency; whether human beings can ever cooperate through long-term coalitions like the EU or the UN; or if 'human nature' is inherently selfish and evil. (A good number of Europeans like the cooperative model, and might ask If not now, when? If not us, then who?).

But, read Marsh's article. You'll learn something.

UPDATE (5/21/10): The German Bundestag has given a vote of support to the EU/IMF $750-Billion Euro (about $1 Trillion US) loan package to Greece and other EU countries through the European Central Bank, primarily due to the efforts of Die Eisenen Kanzellerin, Angela Merkel, and her CDU-dominated coalition.

We'll see what happens next.

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Victory

Victory In Europe (V-E) Day; May 8th


May 8th, 1945; Kaiser-Wilhelms Church
Kurfurstendamm, Berlin


San Francisco, May 8, 1945


May 8th, 1945; Times Square, New York City


Canadian Troops, German Refugees Outside Hamburg, May 8, 1945


May 8th, 1945; Ebensee Concentration Camp, Bavaria


May 8th, 1945; Russian Soliders At The Reichstag, Berlin


May, 1945; Russian Soldiers Near Führerbunker Show Location
In Chancellery Garden Where Hitler's Corpse Was Burned


May 8th, 1945; Berlin


May 7, 1945; Survivors Of Mauthausen Concentration Camp


May 8th, 1945; Winston Churchill At Whitehall, London


May, 1945; Bomb Damage Still Being Cleared, Central London


May, 1945; Berlin


May 8th, 1945; Paris


May 8th, 1945; German Refugees, Juchen (N.Rhein-Westphalia)


Memorial, Mamayev Kurgan, Volgograd


Memorial, The Cenotaph, London


Memorial, Near The Mall, Washington, D.C.


Memorial, The Neue Wache With Kollwitz Pieta, Berlin


Memorial, Deportees And Prisoners; Lyon, France


Memorial, Yad Veshem, Jerusalem


Kaiser-Wilhelms Church; Kurfurstendamm, Berlin


European Union Headquarters Building; Brussels, Belgium

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Bellwether

The Wheels Coming Off The Wagon: Athens, May 2010

[A quote from The Great Curmudgeon, unexpurgated:]

The Madness Of Central Bankers
While they never put it in this way, it of course makes sense for elites to be concerned about tiny upticks in the inflation rate rather then the human suffering of millions of people out of work. A bit of unexpected inflation might erode their fortunes a bit, and if the rest of us have to live in vans down by the river so be it.

The basis for this post was (via the link) discussion by Matthew Yglesias that "the European Central Bank could take decisive action to avert disaster in Europe but almost certainly won’t for no real reason".

Analysts had hoped the ECB might use its almost limitless ability to create money to stanch the crisis (something our own central bank, The Fed, has done here), though doing so could hurt the long-term credibility of the European Central Bank as an inflation fighter that does not yield to politics.

"But I’ve witnessed" (Yglesias goes on), "a prominent European central banker state, live and in person albeit off the record, that the purpose of central bank independence is to allow him to 'fight inflation, regardless of the human cost.' "

"You or I [Matt says]... or someone who’s not a sociopath might say the point of central bank independence is to allow to him pursue technocratically sound monetary policy that advances the long-term interests of the people of Europe. But that’s not necessarily how they see things in Frankfurt. The madness of the European Central Bank is, in my view, the most underexplored and underappreciated aspect of the crisis thus far. The Eurozone, not the United States, is the world’s largest economy and the Eurozone, not China, is America’s largest trade partner."

He's got that right.

UPDATE: I haven't said anything about why the Greek financial crisis is important. And, in brief (very hard, for a dog), here it is (Click on image to enlarge -- Nett und Spass für dich !)

Comparison Of Greek And Eurozone Financial Key Data

>> Greece is part of the Eurozone, the common financial and trading system supporting the European Union. The Euro is its common currency, and the current Greek debt crisis threatens its stability;

>> There is a European Central Bank (ECB), acting much as the Fed does here in the U.S. by arranging loans or financing for member states. This is what's been happening over the past few weeks as the ECB arranged a loan package which includes funds from the International Monetary Fund (another super-bank), and member EU states, like Germany;

>> The IMF-ECB loan package will cover payments the Greek government must make on loans it already holds -- but the loan comes with conditions: Accepting the loan will force Greece to balance its budget and reduce its National Debt, which is equal to 125% of Greece's GDP;

>> There will have to be job cuts and service cutbacks in a country where over 30% of the workforce are in civil service and many public services are taken for granted. The Greek standard of living, expectations for income, vacations, buying foreign goods, will have to be lowered;


Greece's Largest Union Marches In Athens Earlier This Week

>> The Greek on the street is not happy with any of this -- not with their government, not with the EU. There have been strikes and riots over the past few weeks; just a few days ago, crowds set fire to several banks around the country, killing two bank employees in the process. The Greek Communist Party has agitated heavily for support in the past few months;

>> If the Greeks cannot balance their national budget, and default on any outstanding loans (or later default on payments for this IMF-ECB loan package), they may have to drop out of the Eurozone;

>> This means they will no longer use the Euro as their principal currency, and return to the Drachma -- which will not be valued very highly. This can destabilize the entire Eurozone... and much like the interconnected Wall Street investment bank community which were all doing deals with each other, the problems of one Eurozone country can affect all of Europe;

I agree that Europe and the EU is America's largest trading partner. If they suffer, if their economies falter and stock exchanges have selloffs that force EU businesses to fire workers and reduce production, the U.S. will get hit with that as well -- just as we were trying to crawl out of our own terrible Great Recession.

Another fact about Greece's circumstances we should be paying attention to, here in the United States, is what happens when a nation's public debt becomes larger than the value of its domestic goods and services (Gross Domestic Product, or GDP). It generally ends in catastrophic financial collapse, hyperinflation, and a devaluation of its currency -- along with potential political upheavals (revolution, or a coup d'etat).

Paul Krugman, Nobel laureate and general good guy, had this observation to make in the New York Times this morning. He doesn't paint a rosy picture:

So how does this end? Logically, I see three ways Greece could stay on the euro.

First, Greek workers could redeem themselves through suffering, accepting large wage cuts that make Greece competitive enough to add jobs again. Second, the European Central Bank could engage in much more expansionary policy, among other things buying lots of government debt, and accepting — indeed welcoming — the resulting inflation... third, ...fiscally stronger European governments could offer their weaker neighbors enough aid to make the crisis bearable.

The trouble, of course, is that none of these alternatives seem politically plausible. What remains seems unthinkable: Greece leaving the euro. But when you’ve ruled out everything else, that’s what’s left.

If it happens, it will play something like Argentina in 2001, which had a supposedly permanent, unbreakable peg to the dollar. Ending that peg was considered unthinkable for the same reasons leaving the euro seems impossible: even suggesting the possibility would risk crippling bank runs. But the bank runs happened anyway, and the Argentine government imposed emergency restrictions on withdrawals. This left the door open for devaluation, and Argentina eventually walked through that door.

If something like that happens in Greece, it will send shock waves through Europe, possibly triggering crises in other countries. But unless European leaders are able and willing to act far more boldly than anything we’ve seen so far, that’s where this is heading.

As the Curmudegon and Matt Yglesias pointed out, the European Central Bankers don't want to risk any inflation. And that decision, while it protects a small group of Owners and Masters Of The Universe, may put the structure supporting the Euro at risk -- and, ultimately, the EU itself. And because Europe is our largest trading partner, all that will wash up on our own shores, as surely as millions of gallons of BP crude in the Gulf.

But I'm only a Dog, and no one listens to me.

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Why I Am A Socialist

Sex in the workplace is hot!
A shame that 4 million Germans can't enjoy it!
SPD!

Poster advertising Germany's Sozial-Demokratische Partei, or SPD, the Social Democrats. Their position as the ruling party in the German Bundestag for quite a while had given them the ability to appoint one of its party leaders as Chancellor, and a majority of cabinet ministers -- to run the government and set national policy, so long as they held a parliamentary majority.

That Pull Position of the SPD ended in 2005 with nationwide elections. The SPD / Green Party coalition (which had dominated Germany's government and policies for neatly 20 years) had broken apart, allowing the conservative CDU (Christian Demokratische Union) to take a majority of seats in the Bundestag -- something they have continued to do since. Germany's current Chancellor, Angela Merkel, was appointed in 2005 and is principal leader of the CDU.

The CDU is roughly equivalent to our Republican party -- except, without being pushed farther and farther to the Right by fundamentalist religious crazies, or having its party's future shaped by barely stable media personalities who preach a particularly vicious, know-nothing brand of hatred in the name of making Even More Money.


Lil' Boots Attempts To Give The Chancellor Of Germany A Shoulder
Massage: G8 Summit, 2008. (Laß mich in Ruhe, Lumpenhund!)

German conservatives are -- well, conservative -- but much more adult. Most European politicians are certainly capable of lining their own pockets, but they give more than just lip service (Silvio! being the exception) to the belief that politicians are in fact accountable to their people, rather than to the Rich, and to each other, as it is here.

Unfortunately, few Americans are interested in European politics. Most Europeans look at America's internal political clown show with a grimace, but most Germans also look at us with real alarm: They've seen what's happening here before.

They've already been down the road our Right (and Left) seem determined to take us -- and they note we don't seem to care, which alarms them even more. Germans tend to get frightened and angry when any form of totalitarianism appears; and some get really angry. Like, shove-a-boot-up-the-ass-of-any-neonazis-first, and worry-about-the-niceties-of-political-discourse-later kind of angry (As Woody Allen put it in Manhattan, "No; physical force is always better with nazis; 'cause it's hard to satirize a guy in shiny boots").


Schieb' ein Stiefel in ihren Arsch! Berlin, 1.5.04
Anitnazi Poster -- Lisa With Tire Chain and Pepperspray;
"Prevent Nazi March In Berlin!" Put A Boot Up Their Ass!
(Poster by Antifa, an antifascist coalition; No Pasarán!)

Gosh; think they might have a reason for feeling this way? Think they might know what Rightist political extremism leads to?

Why did 200,000 Germans come to the Siegessäule in Berlin on July 24, 2008, to listen to (then-candidate) Obama speak? I'll be succinct: Because Bush, his cronies and handlers were seen by Europeans as running a proto-fascist, repressive government, in control of (what was then) the most powerful economy and military in the world.



To Europeans, the Bush-time smacked of the Hitlerzeit -- an aggressive war, waged primarily to prove America's foreign policy was now based on invading whomever it wanted and intimidating anyone else; complete with secret police, secret arrests and prisons; torture as official policy; special laws for enemies of the State and secret courts; mass surveillance of communications; and demands for an uncritical support and loyalty to the State by the mass media.

All of this frightened Europeans -- because many alive today can still remember what German (or Soviet, or their own home-grown Communist) occupation felt like. Their history (unlike ours) is a progression of wars, of lives disrupted and repressed, destroyed, and millions murdered by tyrants and religious mania. They know, too, what swearing allegiance, giving up your Soul to a tyrant or the "-ism" of the moment is like, and what the cost of that can be -- the Germans in particular.



And, I would bet serious money that many of the 200,000 Germans who came to see Obama speak did so (not because of a rock band or free food, as Right-wing blogs trumpeted in the U.S.) but at a minimum because Obama's appearance meant that the idea of America -- the 'Noble Experiment' in representative government begun in 1776, might not end in failure and the kind of totalitarianism their own history has seen.

Many Europeans believe in the power of ideas, and of hope; often, it's all they've had to hang on. The idea of America has always represented the Rule Of Law, and at least the notion that a basic fairness in human affairs was possible. Most Europeans saw Bush's rule as effectively shitting on not just that tradition, but on the concepts themselves.

So, on that Summer evening approaching sunset at the 'Grosser Stern' in the western half of the Tiergarten, when a clear sky is made out of pale colors so delicate they seem floating, liquid; a Hochsommer hint of Lime trees and Lindens in the air... at that moment, to the 200,000 listening, Obama represented the ideas and the hope that America can still claim to hold out to the world.

However, Obama's Presidency hasn't quite worked out so well. If anything, America's liberals and progressives seem dispirited and disappointed. The Banksters are firmly in control; if you believe our conservative-leaning media, the Right appears poised to roar back in our faces, and the fringe elements -- the Becks, Palins, Bachmanns, Limbaughs and screeching Teabaggers; all of them courted, pampered and feted by the Mainstream Media -- keep pushing the GOP ever further Rightwards, from common sense to a radical, fundamentalist-christian-colored incoherence.



They're no longer a political party of fiscal sobriety and smaller government; they're a party of crony politics and corruption, run by unstable personalities who only believe in power, and maintaining it.

Climate change agreements are in the toilet (Industrialized Nations To 'Developing World': Learn To Swim); the Goldman-Sachs' of the world keep getting obscenely richer, with active assistance from the Obama administration; hundreds of thousands of ARM mortgages on American homes will reset in 2010, leading to more unemployment and another kick in the teeth to an already damaged economy -- and the administration we elected to right the country and reverse the damage done by the Thugs are doing very little -- most of their political capital is now spent on a Health Care Bill which will years of fine-tuning to make any real difference to human beings, and will probably be sabotaged by the Right.


More Homeless; Fewer Busses; Larger School Classes, Fewer
Teachers; Higher Prices; No New Jobs -- Thank Lil' Boots
and Wall Street... (Photo: The Homelessblog, 2008)

In short, we seem to be entering a Weimarzeit of our own, which the Germans know very well: The time of the Weimar Republic, fourteen short years between the Germany of the Kaisers and World War One, and the rule of the nazis. Everyone knows what happened after that.

The Weimar-time was marked by growing disorganization in government, hysterical political agitation, and the alienation of regular citizens from the idea of 'government' at all. Well-meaning liberal or centrist governments were continually paralyzed by demonstrations and attacks from the Right. Finally, frightened of the possibility of a far-Left takeover, the Weimar government offered Hitler the position of Chancellor, to unite most of the political parties in the Reichtag into a coalition which could get something done (Hey! Guys! How'd that work out?).


(Cartoon By Mr. Fish; Harper's Magazine)

Nothing seems to be able to stop the Rich, and the Right, from rising -- and making the United States into a place more like Oligarch-run Russia, where wealth and power rule; and the rest of us should be fucking grateful for long hours and less benefits. And, we'd better learn to keep our traps shut, move along, and remember to bow and smile when Our Betters pass by.

A German acquaintance (who is a lifelong SPD member, back home) said to me some months ago, "It is part of the understanding of every European what can happen when a country's government is driven farther Right by a radical minority," she said. "You end up with oligarchs and fascism, no matter what name you call it."

"This is part of the lesson of what happened, with [Germany], with Spain, with Russia; with the Eastern European dictatorships under Communism. The warnings are right in front of you. But America thinks it's immune from history, somehow -- you are just allowing this to be a real possibility, letting this happen. Like [the Germans] allowed the nazis to happen. And, your Democratic party seems willing to participate in this."


Lesson Of History Learned: Dresden, February, 2009:
Police restraining Antifa coalition demonstrators
at annual neo-nazi march on anniversary of the city's
firebombing in 1945 (Photo: Reuters)

"Don't your people even remember what it was like with [Lil' Boots] Bush? That was nothing -- a taste. But we know what can happen -- to you, too -- and it can be worse. It might not happen for you; I hope not -- but it's part of our history, and believe me, no one is special," she finished, and shrugged. "Maybe you won't believe it's possible, until it happens to you."


Message From Palin-Huckabee and the Republican Party, 2012

Oh, yes -- The SPD poster which started this whole post is about high unemployment, and presented in a way that wouldn't be allowed here in America without making Xtian fascists upset... and we just can't have that, can we.

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