[P2P-F] Article : "Germany will not accept monetization"

Sat Oct 29 16:09:40 CEST 2011

While this writer seems to have most of the political issues identified,  
his analysis lacks a perspective that explains why the instability of the  
PIIGS countries Euro periphery. The metphor of the EMU and EU as being  
tied to the imperial construct of neo-classical economism (sic) as The  
United States of Europe requires a deeper inspection. First as a model it  
is extremely narcissistic in the manner totalitarianism. Second, posing  
the US/Federal state model as without significant flaws is self-deluding  
in addition.

I expect that if some related research was done the dominant pattern under  
this model that the "balance of trade" among "states" would break down  
into rural areas where low value added and labor intensive products are  
produced against the areas where high value products are produced. This is  
also the basis of the PRChina's trade/economic strategies in using their  
own cheap labor as the bait to corporate return on investment ratios.There  
are significant areas within the US which are treated much like  
neo-colonial extensions. The under-development of these regions of  
extraction is quite deliberate, and it provides little basis to ever  
balance trade between various regions. Is a nutshell Ricardo's  
"comparative advantage" is just another utility in the library faith based  
fictions. The premised promises of raising all boats has no functional  
relationship with the prejudiced dynamics

Germany seems to be locked into a historical and cultural commitment to  
neo-classical economics, aka faith based(finance sector) economics. In  
effect there is a much greater barrier to change in identifying the  
sovereign wealth of Germany to represent more than the other side of the  
PIIGS deficits and one down trading positions. Where the EU was promised  
as a path to collective prosperity, what has been delivered via the EMU  
has been a wealth extraction process. Neo-classical economics is  
effectively imperial in its coding. Another, question is whether some  
sense of German pride and sovereignty will blind the EMU/ECB to the part  
that its objectives and utilities have been detailed.

The EMU is at a transition point where the ways out are either further  
forward or a full retreat into the past and fictions of corporate  
capitalism/neo-classical. The retreat is likely going to escalate the  
conflicts and Germany will uncomfortably have to recognize the large  
population of foreign born workers and their families as German citizen's.  
This makes the situation pretty much of the same cloth as World War II,  
and for that matter World War I never really ended except for the natural  
citizens.

The MMT folks have been speaking to the issues of monetary and  
macro-economic dysfunction for quite a number of years. In short the  
EMU/PIIGS problems are a result of the design of the EMU. Either there has  
to be involvement in the fiscal and economic development policies of the  
otherwise sovereign countries who are pledged to the Euro need to have  
their interests also integrated into the political process. Part of the  
current dynamic is the identification of the interests of financialization  
who have substituted their own interests as foremost in the EU/EMU  
macro-economic model.

Greece is not being bailed out. It will be the banks that made risky loans  
and ill-advised fiscal policies for the EMU. Instead of providing th basis  
for economic buoyancy, the switch was made to economic slavery under the  
neo feudalism of faith based economics.

Tadit

On Sat, 29 Oct 2011 08:10:15 -0400, Dante-Gabryell Monson  
<dante.monson at gmail.com> wrote:

> below or on
> http://www.pippamalmgren.com/80.html
>
> note : http://en.wikipedia.org/wiki/Monetization
> hence in this case, in my understanding,
> the issuing of ( central bank ) money ( and not, here, commercial bank
> credit ) in exchange of buying debt / government bonds.
> also see :
> http://en.wikipedia.org/wiki/Money_supply#Fractional-reserve_banking
>
> ---------- Forwarded message ----------
> From: Arno Mong Daastoel <amd at daastol.com>
> Date: Thu, Oct 27, 2011 at 12:51 PM
> Subject: Re: [gang8] Abolishing the euro
> To: gang8 at yahoogroups.com
>
>
> **
>
>
> Peter Spengler has drawn my attention to a good analyst.
>
> Malmgren's point is that Germany is commited to price stability asnd
> therefore cannot accept a carte blanche to printing money for the euro's
> souther periphery. She claims the euro may die but only to return more
> realistic and stronger.
>
> Arno
>
>
> http://www.pippamalmgren.com/80.html****
> Germany will not accept monetization****
>
> *This commentary was submitted on the 19th of October in response to the
> Eurasia Group CEO Ian Bremmer's article in the FT entitled "Germany will
> never leave the Eurozone". The article can be found
> here<http://blogs.ft.com/the-a-list/2011/10/18/germany-will-never-leave-the-eurozone/#ixzz1bQFPH0FM>.
> *****
>
> I respect Ian's opinion but *he does not capture the issue that is  
> forcing
> Germany's hand*. They increasingly fear having to choose between  
> permanent
> price instability and temporary currency appreciation. *What Germany  
> cannot
> do is accept monetization of the debt*. The *social contract between
> Germany's citizens and its leaders preclude this option given their  
> history*.
> ****
>
> *If the ECB* under the new leadership of Mario Draghi buys so-called PIG
> bonds or attempts to *print money*, *Germany will feel it has a central
> bank that has no "rules*" and which simply *serves as a blank check to  
> the
> other member states*. This *means permanent price instability*. If the  
> *ECB
> refuses to monetize* the debt and no other white knight can be found (the
> IMF cannot fill the hole, Germany and China won't fill the hole, Tim
> Geithner would love to but the American public won't permit it, and the
> idea that the G20 can do it provokes howls of laughter from G20  
> government
> officials), then* multiple sovereign defaults will occur well beyond  
> Greece.
> * The Greek *default will continue with new haircuts* leaving investors
> lucky to get 20 cents on the Euro. That would *mean a substantial fall in
> the Euro* and no possibility of recovery until the last element of  
> default
> was done. That *will feel like permanent price instability to the  
> Germans.
> *
> *Either way, Germany will find itself hostage* just as a skilled and
> prepared mountainclimber might find himself fully locked onto the
> mountainside but his colleagues are dangling in the wind. *National
> interest will demand self preservation* no matter how much Germany might
> like to keep the climbing team together. *They don't want to cut the rope
> but they may be forced to.
> *
> *A return to the Deutschemark will not mark the end of Europe, the  
> European
> Union or the effort to enhance integration*. Instead, *Germany has  
> already
> begun to emphasize the need for a new EU Treaty that would compel fiscal
> harmonization, penalties* for those that break the Maastricht Treaty  
> rules
> and other undertakings that would harden Europe's defenses against  
> economic
> default risks going forward. 100 years from now the Euro will be a trick
> question on a history test, given that it only survived for 12 years. How
> many people in the market today even remember an earlier version of the
> Euro which was called the Ecu? The FT should start a competition to name
> the new "Euro" that will have more substance behind it.
>
> For those who argue that the Germans will never survive the massive
> appreciation of the DMark, should they decide to go down that road, they
> forget that *throughout history the Germans have usually got an  
> appreciated
> currency and almost never compete on price anyway. They compete on  
> quality*.
> And, is there really a European export market that would be sacrificed?
> It's hard to imagine many Greeks or Italians buying Mercedes in the next
> few years.
>
> *The European project will move forward much more robustly once everyone
> finally realizes that the Euro in its current format is unworkable*.
> Nothing stops Europe from moving forward other than public opinion. *The
> fact is that Germany's social contract is very different* from the social
> contract between the citizens and the state in any of the peripheral
> countries. *What is required to satisfy Germany brings riots in southern
> capitals*. *What is required in Southern capitals breaks the social
> contract in Germany*. The failure of the Euro will bring this conflict  
> into
> sharper focus and set the stage for new commitments to create a Europe  
> that
> can satisfy the needs of the members without destroying civil society in
> Europe ****
>
> ** **
>
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