Debt Might Drive Us away from Democracy? Socialism is Responsible for Most of this Debt.

Abstract: The horrors of Fascism, or worse, are now brightly ensconced in the diminutive minds of greedy and incompetent politicians that are frantic to preserve their power in the face of a public revolt against massive debt. An article by Jason Groves surveys the narrow view that any other form of government is evil and must be rejected even though the ‘democracies’ in place in the European Union have spent their futures into the abyss of unrecoverable debt.

We live in a world full of carefully sealed doors that we may not dare open as they contain known Evils that can consume us or so we are told by politicians and their lackeys in academia.  We have traveled these roads and found them unacceptable they pronounce at great length and with somber tones and the literature is full of incidents to prove this elementary fact. The fruits of an ‘education[1]’ currently contain stories of evil intent and the construction of totalitarian governments who oppressed the citizens and keep the gulags and reeducation camps full right up to the very edge of the barbed wire enclosures. If we inspect a few historical episodes that ended in war, financial ruin, poverty, chaos or a combination of these [e.g. Germany, Russia, USSR, France, Spain, Greece, etc.] we experience the strange sensation that most of these initial frameworks were initially wildly supported by ‘voters’ or ‘the masses’ crusading in some form of a political movement or a similar loose ensemble of angry citizens.  They wanted change and they got exactly that. Eric Hofer[2][3] surveyed all this and made the important observation that leaders of mass movements didn’t launch their hoards ab initio against what was then the current offensive establishment but that the movement was already underway and such leaders were essentially opportunistic and managed to get pushed into action and endowed with political power from behind. The threat that peoples might swing too far to the right is an eternal precept that must not even rate some serious thinking or even consider the slightest case of experiment with this horror. In academia, the opposite view of this notion is not tolerated. Those who oppose the far left socialist outlook are termed anti-Communists and must be scorned in such a way that their ideological hatred for anything to the right is not perceived as overtly supporting communism.

Ronald Reagan, who never budged a millimeter in his eternal war against Communism, and whose heroic efforts are detailed in a book entitled Reagan’s War won out against the Red Tide.[4]  He is still the foremost eternal target of the anti-anti Communists [even moderate liberals and all to the left].[5] There is much to be learned about keeping faith with your views and many politicians seem to still believe that they can shift and bob and weave and tell the suckers who vote ‘what they want to hear.’ An excellent example of this myopic political mentality is the use of the term McCarthyism[6] which first justifies and then reverses the direction of the smear tactics used against the 50s era senator and is now universally used in a blanket mode to reproach criticism of the left or as a attack mechanism against their right-wing enemies. McCarthy was first smeared and then labeled as the smearer. McCarthyism was an expeditious political construct designed to stop his investigations of the Executive Branch, mostly the Department of State. He terminated the careers of several communist sympathizers[7] and was a threat to both Republicans and Democrats of the Eisenhower and Truman administrations.  All this is outlined in the book Blacklisted by History: The Untold Story of Senator Joe McCarthy and His Fight Against America's Enemies by M. Stanton Evans. Baboonish stooges like the fallen Maryland senator Millard Tydings [8] manufactured a hoax whereby one of McCarthy’s speeches was recorded on a record he brandished before Congress. He later testified, under oath, that the record was blank. Such a crass action is not even condemned by liberals even today.

These views are stilted and condensed from both fictions and facts and tend to form a foundation of fear of any alternative that merely questions the status quo for the current status of liberal government across the globe, which is mostly socialism or an admixture of capitalism and socialism. The European Union is such a place and many of those community members have recently spent their way into financial oblivion. Pure far-left socialist states are complete failures [North Korea, Cuba, many places in Africa and soon perhaps Venezuela] but are signaled as outstanding examples of governance by ‘scholars.’ There have been many revolutions against diverse political systems so we wonder why the citizens howl for a change in not only the leadership but the organizational style of their governments. If socialism is so very good then why would those citizens who were raised in that system want to change it? It must be because the current mechanism of socialism has failed in several aspects. We can count the number of stable socialist states on one hand and most have some unique source of funding such as the Swedes who dealt in the dirty gun and explosive business for 150 years while offering to be brokers of peace and entertaining tourists or perhaps the Swiss who readily squirrel away vast sums of money from criminals, despots and tyrants and keep those accounts secret and free of taxes. Most of the media drones today are advocates who leap upon any tidbit of news to ruffle up the fears of the Nazis and howl in chorus to startle and mobilize the voters to reject them and their philosophy.

Currently, the European Union, substantially socialist in operation and theme, is collapsing from debt. It is strange that this is happening considering the vast number of university-trained administrations and esteemed cauldron stirrers in the sixteen member coalition of member countries who advocated this union and its manifold wonderfulness.  After all, they ‘teach’ this stuff so why didn’t it work out? Is this sorry outcome a reflection of some basic flaw in the socialist methods or can we blame capitalism again? You cannot extract such a comment that might cast a sallow pallor upon their union from any academic in Europe without excessive pressure but, then, the citizens are unhappy about something and threaten their respective governments in with riots in several cases. If they are mired in terminal debt and angry then who is to blame for their plight other than their governments? The blame will not be squarely placed upon those who suggested that the formation of a monetary union was a dumb idea in the first place so the trust to maintain this collective circus runs forward at full speed. There is even an expansionary nostrum afloat that would form come governmental body dictating government to the entire group. This is fanciful.

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Here are some urgent and alarming warnings from the former prime minister of Portugal:

“Democracy could ‘collapse’ in Greece, Spain and Portugal unless urgent action is taken to tackle the debt crisis, the head of the European Commission has warned.

In an extraordinary briefing to trade union chiefs last week, Commission President Jose Manuel Barroso [former prime minister of Portugal and leftist radical turned Thatcherite-e.d.] set out an ‘apocalyptic’ vision in which crisis-hit countries in southern Europe could fall victim to military coups or popular uprisings as interest rates soar and public services collapse because their governments run out of money.”[9]--Nightmare vision for Europe as EU chief warns 'democracy could disappear' in Greece, Spain and Portugal By Jason Groves 15th June 2010 [Emphasis is mine in all quotes.]

The word democracy is deliberately snarled with several obscure meanings and as an example we can cite the U.S. which is not a democracy but a federal republic and the United Kingdom which is a limited monarchy but the masses think they practice democracy in some form so they are democracies if that makes sense in the common circular idiom. For a top of the hat laugh we find that North Korea is a democratic republic as was the USSR where everybody had the right to vote.  So, the notion that these EU governments might fall by some mechanism other that the ballot box is not so far fetched given the elastic definition of democracy and those who vote with rocks and Molotov cocktails in the streets. To mollify some of the debts, bailouts for Greece and Spain may reach 1 trillion euros or more as the debt process continues to consume their societies like a virulent tumor. That is a lot of money anywhere except the United States whose leaders are not concerned with spending a trillion here and a trillion there.[10] Note that this money is a zero-sum exercise in arithmetic since somebody in the EU must put up most of the financing of bailouts except for the IMF and then many of those same community members also contribute to this questionable slush fund. The Germans and French have been given the privilege of underwriting the debts of several of the PIIGS[11] as they are known. This comes at an obtuse time when even the engines of the EU are having some budget difficulties. The concept of paying back sovereign loans has apparently been abandoned.

It is interesting that any known country in the universe seems to think they can grow out of their debts by exporting their goods and services to other countries, many of which are thinking the same thing. South Korea actually did this. This nostrum soars beyond absurdity as the net effect is that many debtors will be trying to peddle their stuff to other debtors. But, this logic prevails and must be called government.

History might repeat itself.

“Greece, Spain and Portugal, which only became democracies in the 1970s, are all facing dire problems with their public finances. All three countries have a history of military coups.” --Nightmare vision for Europe

This is not the place to dive deep into the history of these three states, but Italy’s period of dictatorship occurred because of the threat of Bolshevism, which has not turned out well in every instance you might want to examine since 1919. This is not an endorsement of Fascism but an observation. What we should look for here is the answer to the question: did a violent change away from democracy, a kingdom, duchy or socialist state provide a better living for the respective citizens after the commissars were finished with their process? Spain, currently one of the PIIGS fought off Bolshevism in 1936 with Fascism and that worked for a while although with much street fighting, a dictatorship but they avoided a fateful entry in a world war. We might state with some fairness that Italy is a bit better off than North Korea at this time although that might be temporary.

We need t0 think about China, Cuba, and Russia and wonder why we should just accept Marxism, an offshoot of socialism or one of its congeners as the proper system of governance to be endorsed anywhere. The German citizens willingly voted in Hitler [democracy in action?] as a dictator because he promised prosperity and delivered that promise for a while until he went too far into militarism and revenge against the French. Hitler’s political power was propelled by the Treaty of Versailles that sought to crush the German state and render it helpless against not only aggressive intent but the defense of her own soil. What was the alternative here since the French wanted to knock Germany down to some groveling peasant nation and extract every bit of wealth they could for a few dozen years to pay reparations for the German war with France? It is difficult to imagine the outcome of Russia from Lenin forward to Brezhnev if we could reverse history and set up a capitalist system [or other system] there that could have utilized the vast natural resources in that country to benefit all the citizens. Communism, after 74 years and some 35 million dead bodies didn’t work out very well as we saw in 1989 when the system collapsed and the ruble was essentially worthless.  Maoism was a failure too. Then, there is Africa.

Reminiscence to the horrors of Fascism is echoed in this comment:

“Mr Monks yesterday warned that the new austerity measures themselves could take the continent ‘back to the 1930s.’”--Nightmare vision for Europe

Now, a conundrum is injected into the fray: If a government spends too much, incurs debt with ugly interest rates that hobble the economy and the remedy to part of that problem is to cut government spending and that forces austerity then what is the alternative? Default on sovereign debt? An exit from the EU? A gift from some other nation? Loans solicited from those countries too ignorant to see that they will never be repaid? An exercise in simple accounting shows that entities that run deficits, have excessive debts [nearing 70-120% of their GDP], have high spending rates  and low tax revenues because of high unemployment or other reasons, turns up only financial solutions that use imaginary numbers. You must throw in some money from somewhere or print it up yourself to make this elementary balance sheet balance out. It seems that although this is rudimentary accounting nobody can seem to accept or acknowledge the answer. Austerity is obvious in all cases of the PIIGS and other nations that will soon be rated in this class and that is not acceptable we learn.

The warning:

“Mr Barroso’s warning lays bare the concern at the highest level in Brussels that the economic crisis could lead to the collapse of not only the beleaguered euro, but the EU itself, along with a string of fragile democracies. But it risks infuriating governments in southern Europe which are already struggling to contain public anger as they drive through tax rises and spending cuts in a bid to avoid disaster.”--Nightmare vision for Europe

So far, this article does not tell us anything since we could have predicted all this with only our own starting list of countries and their debt to GDP ratios as the story is always the same and apparently those who planned these messes believed that “this time will be different” as the title of the new book[12] by Reinhart and Rogoff so elegantly details. The times are never different. Debt is debt. The EU cannot hold together for numerous reasons.

The local bean counters weigh in:

“Yesterday the European Commission and the statistics authority Eurostat met to consider Spain‘s plight as many EU countries consider the austerity package proposed by the Madrid administration insufficient to deal with the country‘s problems.”--Nightmare vision for Europe

So, their own bean counters have failed to find a way to refill the bean sacks.

So, no austerity programs for these states? Here is another view from a Brit:

“Il Sole has published a letter by 100 Italian economists warning that the austerity strategy imposed by Brussels/Frankfurt risks tipping Europe into a self-feeding downward spiral. Far from holding the eurozone together, it will cause weaker countries to be catapulted out of EMU. Others will leave in order to restore sovereign control over their central banks and unemployment policies.”[13]--The euro mutiny begins by Ambrose Evans-Pritchard of The Telegraph June 16th, 2010 [Emphasis is mine in all quotes.]

I guess 100 Italian economists must be right.  We can recall the 1927 song "Fifty Million Frenchmen Can't Be Wrong[14]" as well.

Ambrose Evans-Prichard goes on with some quotes and this analysis seems to be exact if not quite long:

“The fundamental point to understand is that the current instability of monetary union is not just the result of accounting fraud and over-spending. In reality, it stems from a profound interweaving of the global economic crisis and imbalances within the eurozone …..

It blames the crisis on the “deflationary economic policies” of the richer states. “Especially Germany, geared for a long time to holding down salaries in relation to productivity, and to the penetration of foreign markets, gaining European market share for German companies…

They say the policy has led to growing surpluses in Germany, offset by growing debts in Southern Europe. The adjustment mechanism has not only failed. Matters have got worse, and worse.

“This is the deeper reason why market traders are betting on a collapse of the eurozone. They can see that as the crisis drags on this will cause tax revenues to fall, making it ever harder to repay debts, whether public or private. Some countries will progressively be pushed out of the eurozone, others will decide to break away to free themselves from a deflationary spiral… It is the risk of widespread defaults and the reconversion of debts into national currencies that is really motivating bets by speculators.”-- The euro mutiny begins

One way to default, explained in detail in the Reinhart-Rogoff book is to switch the denomination currency in a give debt instrument to one that is worth much less or is inflating thus debasing the debt. Greece, for example, and following Argentina, might break out of the EU, issue a New Drachma, switch the payment currency to the new Greek paper and print off some worthless paper that ‘satisfies’ the debt. This is not amusing in international finance.  Germany here is the goat because they wisely held wages within limits and stressed exports and that wage suppression was the very reason the country is prosperous and debt free. What we see is that the very example of success in their midst is now blamed for the plight of the other members and that must indicate that wages should be raised for Germany and all others in some tormented nightmare. This criticism is the sour grapes of envy and failure.

The most interesting point in all this is not that 1000 years of living has taught the Europeans how to count beans, but the salient nostrum that whatever the outcome they need to keep some phony paste-up Marxian union system together is paramount. This invites the circus notion that they will be happier in mutual poverty in some struggling ‘union ’than risking an adventure back into the open world and its probably good outcome, as in Germany,  for some or all of the states. The EU cannot tolerate success so something has to break. If Germany leaves the rest of the sorry sisters will collapse in inflation and poverty. If Germany stays and kicks out some of the weak sisters the system has some chance to survive. If the EU takes on come ‘cetnral government’ with delegates from all members they this form of ‘democracy’ will resemble California where the low class can only seem to vote money to themselves.  I now invest in  Asia and I think avoiding Europe is good business.

rycK

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