Where Greece’s Money Actually Goes
This is just an update to a previous post indicating where Greece’s debt comes from… at least in part. And, again, it is not (or not only) lazy Greek tax-evaders that contributes to the country’s debt but the ‘need’ for Greek tax-payers to support Greek and Western banks (through loans/debt) so that they can support French, German, and U.S. arms manufacturers. I mean, how else is Germany, France or the U.S. going to maintain the illusion that they have robust economies? Sadly, Western nations could not survive without the Ponzischem-o-nomics of governments, the financial sector, and arms manufacturing.
See Zero Hedge’s article and the German original at Zeit Online.
peace.
The UK and the EuroZone Debt Crisis
Over the past weeks I have been watching with some amusement as people in Canada boast that we are truly different from all other Western economies in that we are fiscally conservative and responsible economic actors. While their might be some truth to that, no economy is an island and what is more, there are indicators and data that prove otherwise.
Another source of amusement has been Britain. While the EuroZone inches toward financial implosion, other countries (like the U.S. and Canada) pretend that the they are on the road to recovery and that it is Europe (or the uncertainty over Europe) that is holding them back. Then there is the U.K. PM David Cameron has delighted Eurosceptics in his country by talking tough and not participating in any scheme to save Euro banks. And while many in Canada and the U.S. applaud Cameron’s decision for his apparent intent to not expose the U.K. economy to the disaster that is Europe, there are probably other reasons why Cameron does not want to participate in any talks that might include financial reform in Europe: to save the London financial sector.
But before I get to that, I should like to reiterate that the Eurocrisis (just like the financial collapse of 2008) is not (only) a sovereign-debt/lazy-society problem… it is a global banking problem. Sure, Greeks retired early, don’t like paying their taxes, and didn’t work hard enough. But the problem goes well beyond that. Germany is often held up as the EuroSaviour. The hard-working Germans work hard, generate wealth and pay taxes. End of story. But that is not quite true as well as they have a hand int he problem that is the EuroZone. The easiest way to understand this is through the phrase, “It takes two to tango.” Greece (or the other PIIGS) did not get to where they are on their own. If the Greek government has lived beyond its means by taking on too much debt, once must understand that that debt comes from somewhere. And the “somewhere” is primarily other Western economies. The debt that Greece owes is owned by Greek and other Western/European banks. What is more, a lot of that debt was taken on to finance purchases from corporations in those other Western economies. So, it should come as no surprise that, while the discussion of what Greece should do was just getting started, countries like France and Germany threatened Greece that they had to get their economic house in order, but such austerity should not threaten arms purchases from French or German military contractors. (See this article from the Jerusalem Post from May 2010 as an example: http://www.jpost.com/International/Article.aspx?id=176792.) Greece led Euro countries in military spending (measured against GDP, a standard measure of military spending) and much of that spending was for French and German armaments. The hypocrisy did not go unnoticed in Europe and this, in part, points to how misleading it is to only point fingers at Greece in the EuroCrisis. The economies in places like Germany and France are dependent upon countries like Greece overspending, especially for such costly (and mostly useless) expenditures like military spending. (In case you are wondering, the reason why Greece buys so much armaments is because it is in a long-standing rivalry with Turkey.)
As I said, it takes two to tango. More realistically, it takes many to create a debt crisis. The economies of France and Germany, for example, are dependent upon sovereign overspending. Those economies would not seem so strong without it (and that also goes for countries like China and Canada). The global banking system is dependent upon sovereign overspending (on defence and all kinds of social programs like health care and pensions). It is all of a piece. That is why the discourse that the EuroCrisis is the fault of lazy Greeks is so inaccurate: the Western financial system is entirely dependent upon things like Greek overspending and sovereign deficit spending.
And this is how we arrive at the U.K. While Cameron is acting like the responsible steward, steering his country away from the EuroIceberg, the real reason he is walking away from the EuroTable is because he fears any financial regulation… for such regulation would likely stop the PonziSchem-onomics that is the British economy. There is a reason why financial pundits (the honest ones) have called the U.K. (London in particular) as the “ground zero” when it comes to the global financial crisis. And that is because the loosest rules have allowed for all kinds of financial shenanigans that are still coming to light. Case in point is the revelation that when tallying all debt (government, corporate, and individual), no one rivals the Brits… whose debt-to-GDP ratio is somewhere in the 1000% range.
That’s right, U.K. debt-to-GDP ratio is somewhere near 1000%!! (Actually it is around 950%… but, hey, ’1000′ is much more dramatic.)
I am sure that the numbers here will become more transparent in the months to come as more people start poring over the data. For those interested, check out this Zero Hedge article from Dec. 18 (it is from this article that the graph at left is borrowed):
“Psssst France: Here Is Why You May Want To Cool It With The Britain Bashing – The UK’s 950% Debt To GDP” (Dec. 18, 2011)
http://www.zerohedge.com/news/psssst-france-here-why-you-may-want-cool-it-britain-bashing-uks-950-debt-gdp
Much more amusing is Episode 226 of the Keiser Report (the discussion starts around the 14 min. mark):
http://rt.com/programs/keiser-report/episode-226-max-keiser/
And, finally, take a look at Steve Keen’s website (he is the interviewee in the Kesier Report report above)… he is more sceptical of the numbers at the moment but I am sure will have more on this in the future once the data become ore clear:
http://www.debtdeflation.com/blogs/2011/12/23/max-keiser-me-the-uks-950-debt-to-gdp-level/
The point here is that Western economies (and the developing economies that have been serving them) are entirely dependent upon a financial sector that has itself reached gargantuan and absurd proportions relative to the real economies of those nations. All of this was fuelled, in my humble opinion, by the need to maintain the illusion that Western economies are healthy and productive. The U.K. should really be the poster boy of the global financial crisis at perhaps it still will turn out that way. IN the meantime, politicians like Cameron will continue play-acting… but that should not be very surprising either. At any rate, don’t bet on seeing too much in the mainstream media on this until the moment the U.K. economy completely implodes because, as we all know, there are too many Google 2011 ‘Top Search’ lists, Twitter Twends, and celebrity Facebook posts to “report” on.
Peace.
(And may 2012 be better than 2011.)
Iran in August? Some Think the Winds of War are again Blowing
For the past week, I have locked myself in my home office in order to write (basically from scratch) a 30ish-page, 10,000ish-word essay for a journal and its special, double issue on the Cultures of Militarization. So, I have not found much time to read or catch news via any medium.
Now that is has been sent off, I have taken a little break to get caught up in what may or may not be happening in the world. One surprising development was how much Iran as a potential target of Western agression/self-defence. This had been building over the summer, especially the recently-announced economic sanctions and what not, but it seems that things have really taken off in my week’s absence from the world (or it just seems like it).
But it does make a lot of sense. Forces within the U.S., Israel, and other Western nations have been eyeing Iran for some time now. But the events of the recent past, it seems those forces seem to be empowered once again. The global financial near-collapse (war can be very profitable for those accustomed to making lots of money), a weakened U.S. President (wars can be good for rallying the population), a resurgent right-wing/neocon movement (which always looks to war), wary Arab states, and an Israeli government that has been in conflict diplomatically with the current White House.
At any rate, I was surprised to see, again and again, discussion of this topic in a variety of places. Here are a few of the most intriguing I came across today:
VIPS Sends Memo To Obama Warning Israel May Bomb Iran “As Early As This Month”
Obama is Preparing to Bomb Iran
It makes one wonder… and in Canada, I don’t think there would be any question how our current government would react if the Israel/U.S. attacked Iran, especially given recent statements on Israel, how quickly the government announced Canada too would be joining the economic sanctions, the fact that the Conservatives (led by Stephen Harper) were very outspoken about joining the U.S. in the invasion of Iraq when they were the official opposition, and all the recent funding for new weapons/equipment for the military.
If it were to happen, and if it were–as many seem to fear–to expand and proliferate to include other Gulf nations and expanded terrorism… well….
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Obama’s garrison state
Hmmm… while reading the following article, a useful phrase came to mind: ‘Plus ça change, plus c’est la même chose.’
The more things change, the more they stay the same. I hate to say it, but that pretty much sums up what Barack Obama means for me now. His ‘fix’ for the financial crisis was to retain all the same Wall Street criminals in positions of authority over public policy (while scolding them for the TV cameras from time to time), and then he fulfilled all the wishes of idealist democrats and cynical republicans by printing money like there was no tomorrow. Then there is his, ahem, ‘belt-tightening.’ I just came across this at the Huffington Post:
Jo Comerford, “A Titanic Budget in an Ocean of Icebergs: Will the USS Budget Go Down?” http://www.huffingtonpost.com/jo-comerford/a-titanic-budget-in-an-oc_b_480060.html
Of course any defense-related spending is off the table when it comes to the new fiscal reality! I mean, how could a military empire exist without it squandering most of its resources (and, since the U.S. uses a quarter of the world’s annual output of petroleum, the world’s resources) on its military? (Yes, the sarcasm here can be cut with a knife.) So, that is why I found this passage particularly infuriating:
With a price tag now approaching $330 million per plane and a total program cost of well over $65 billion, the C-17, produced by weapons-maker Boeing, has miraculously evaded every attempt to squash it. In fact, Congress even included $2.5 billion in the 2010 budget for ten C-17s that the Pentagon hadn’t requested.
Keep in mind that $2.5 billion is a lot of money, especially when cuts to domestic spending are threatened. It could, for instance, provide an estimated 141,681 children and adults with health care for one year and pay the salaries of 6,138 public safety officers, 4,649 music and art teachers, and 4,568 elementary school teachers for that same year. Having done that, it could still fund 22,610 scholarships for university students, provide 46,130 students the maximum Pell Grant of $5,550 for the college of their choice, allow for the building of 1,877 affordable housing units, and provide 382,879 homes with renewable electricity — again for that same year — and enough money would be left over to carve out 29,630 free Head Start places for kids. That’s for ten giant transport planes that the military isn’t even asking for.
Honestly!!
My worry is that under the current government in Canada (which has, on more than one occasion, expressed its admiration of war and war-mongerism), we too will start to mould ourselves on the Garrison State that Obama seems so intent on preseving in his country. The problem with Obama is that with all the cuts that will come to various other areas of the federal budget (and by extension, state budgets), those things that make the U.S. a great country will be wittled away… leaving nothing behind but a freedum-spouting, resource-destroying, war-mongering state. So much for ‘hope’ and ‘change.’
I certainly am not one that agrees with the endless accumulation of debt. In fact, I think that Western countries will have to undertake some quite drastic belt-tightening in the 21st century once we realize that our economies are little more than giant ponzi schemes. And this will mean that we are going to have to make some very difficult choices when it comes to what it is in the future that we fund with public money. And so, it is very dishearteneing that Obama is virtually powerless to steer the U.S. peacefully from its superpower/military-empire status. Instead, as its financial power declines, it is likely to morph into something even worse: a dying yet unpredictable and even more dangerous militarized state.
God help us all.
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