Posts Tagged ‘EU’
Why ACTA’s Dangerous

EU Official Who Resigned Over ACTA Details Why ACTA Is Dangerous; While His Replacement Seems Unlikely To Care: He explains how those backing ACTA, by saying that it won’t have any impact on EU laws, are being misleading. He says that if that’s true, then the document is useless. And if it’s not true, then it’s a threat to people’s rights:

State of denial

It’s a mad mad world. People are being driven mad by the expropriation of national treasure, basically their future taxes, to pay off financial vested interests. France of course averts its eyes from the insanity in front of its face to focus on the future of a “Europe” most of its citizens voted not to bring into being:

French say firm ‘No’ to EU treaty: French voters have overwhelmingly rejected the European Union’s proposed constitution in a key referendum.

Naturally Europe’s elite maneuvered their way around the law and the will of the people by agreeing to a treaty rather than a constitution. Heaven forbid that democracy should get in the way of a “progressive” project. Leaving Sarkozy to claim it would be madness to threaten this Union by withdrawing from the Euro:

Sarkozy tells nation leaving euro would be ‘madness’: “Do not believe, my dear compatriots, those who suggest that we leave the euro. The isolation of France would be madness. The end of the euro would be the end of Europe,” he said in a message broadcast on television.”

Sarkozy’s comments reminded me of the Yes Minister episode in which Sir Humphrey explains to cabinet minister Jim Hacker that you can never be certain that something will happen until the government denies it. In that spirit Barry Ritholz posted this marvelous series of quotes:

Its All Greek to Me!







I am not sure who exactly Sarkozy thinks France and Europe are or are not. I am almost past the point of caring about the prattling of Presidents and Prime Ministers. There is a surer way to gain insight into them and their institutions:


We are overdue for a mighty large bonfire.

As for the future of the European Union, I stand by this post:

Sovereign default: there are too many countries with too many arms which would be better off defaulting for EU forces to step in successfully. The European Union is too lacking in legitimacy to overrule them peacefully. They do not have the forces to override the desires of its composite states. In any event, the merest hint of civil war would probably initiate the credit event they are trying to avoid.

Given the magnitudes of the debt and the likely domino effect of chain defaults the world will be rocked by the financial system. This time it will occur when governments have much weaker balance sheets, thanks to their choice to intervene in the way in which they did.



While the unraveling will be rapid once it really gets going, the lead up always takes longer than expected. It took years for the Weimer Republic to experience its bonfire. The EU could also take years to reach its tipping point. The exact timing is not possible to determine. Nor is the exact nature of what replaces it. Europe has so many problems in so many areas that it is hard to know what will dominate. Or even if there will be a serious attempt to rectify things before countries fall into the abyss.

What we can say is that there is too much debt. Countries can not meet their past and future commitments. Excessive realized past commitments take the form of debt. Future commitments are often promises that have not been payed for. But people have made life choices based on believing their governments promises. Miserable health care, pensions and other government benefits will be seen as a betrayal. As will the inevitable write-offs, hair cuts and inflationary reduction in the value of private and public debt. There are tough times ahead for the developed world. This will be the case whether or not you are Greece, Ireland, Spain, Portugal….etc.

No losses by government decree

Central banker pointing at who will bear losses

The system is broken. Central bankers know we are in a hole, but keep digging madly anyway. It’s easier to deny reality than to confront the truth and start the long hard climb out of the hole. How else can you explain this from the head of the European Central Bank?

Trichet agreed that markets needed greater clarity from EU political leaders and said the rules would not automatically demand that private investors bear losses.

Of cause Hugo Chavez beat the EU to it:


Meanwhile in the USA the too big to fails get bigger as does the Fed balance sheet. As for investment returns, Zerohedge put it rather well:


Graphically the main foreign recipients are:

The EU democracy deficit is well known, the term oligarchy seems to suit it well. Venezuela is basically socialist despite maintaining some democratic trappings.

What about the USA? Is it a kleptocracy or a democracy?

I’ve been leaning toward the USA being a kleptocracy for some time. If the USA is not prepared to enforce the law or even allow market forces to work then it is not what it used to be. I think the rise of the Tea Party suggests others are aware of the change. But there will be powerful forces seeking to undermine the movement and co-opt it for the benefit of the few.




But the financial vested interests are making their move:





But the vice like chokehold the financial sector has on the US will not last forever. The day of reckoning is approaching. The time will come when the people of the developed/indebted world gain a better appreciation of reality. In that instant the world will be irrevocably changed.

Concentrating the debt at ever higher levels will in the long run not generate better outcome than letting those who took the risk, and for many years received the benefits, bear the consequences of their decisions. The losses are real. They have to be born. As Schrodingers Pension concludes:

If you are worried about your pension – and you should be- then kill the banks and allow productive activity to restart in the economy. ONLY a healthy economy will give you your pension.  Keeping dead banks alive, keeping the box closed WILL NOT save you or your pension.

We are playing for serious stakes:

If we fail in this I sense that we will descend into barbarism. There is only three days without food between a happy sociable person and a mad psychopath and we really need to be very careful here. There is a Manichean competition going on with many and various symptoms-all visible at the moment, with a huge awakening of many people who were previously just compliant victims. Source: The MacPuddock comment on Schrodingers Pension