A Federal Europe By The Back Door

Here is clip in honor of the late Margaret Thatcher who warned against the Euro.

And here is a clip of Nigel Farage speaking the truth about the European Union and discussing the recent wealth confiscation of the people of Cyprus. (This is a portent of what will happen in the next economic crisis here and around the world.)

The current economic crisis in the EU was predicted by some of the finance ministers of the various European nations that signed up for the Euro. They had wanted to create a political and economic union that would have created a united states of Europe. They couldn't get the political union by consent of the European people, so they settled for an unsustainable economic union that would force the political union on the people of Europe through an economic crisis:

  "On 1 January 1999, with the introduction of the an important part of national sovereignty, to wit monetary sovereignty, was passed over to a European institution...The introduction of a common currency is not primarily an economic, but rather a sovereign and thus eminently political act...political union must be our lodestar from now on: it is the logical follow-on from Economic and Monetary Union,” then German foreign minister Joschka Fischer told European Union lawmakers just days after the introduction of the euro in 1999.
Fischer was not alone, with many of the founding members of the euro zone making it clear that the single currency was significant as a stepping stone to political union.

"The single currency is the greatest abandonment of sovereignty since the foundation of the European Community...it is a decision of an essentially political nature. We need this United Europe...we must never forget that the euro is an instrument for this project” said Felipe Gonzalez, then Spanish prime minister. Even those who opposed the idea and refused to join agreed that the euro had little to do with economics.

"A single currency is about the politics of Europe. It is about a Federal Europe by the back door,” John Major, the former U.K. prime minister, said two years before the euro was born and six months before being routed at the polls by Tony Blair.

Historian Niall Ferguson wrote in this weekend’s Sunday Times that the euro’s founding fathers were well aware that the introduction of the euro would lead us to a crisis very like this one. [Emphasis is mine.]

Vladimir Bukovsky states that the European union is the new Soviet Union:

The European Union is template for the coming world government that will be forced upon the people of the world in the coming economic crisis.

What Do You Think?

Europe is dealing with major economic issues that are threatening the survival of the European Economic and Monetary Union (EMU) and the whole European political project.

The historian Niall Ferguson points out that a monetary union requires economic and thus political centralization:

Is to follow through the original logic of monetary union. If you go back to 1989 Delors report it was explicit that one consequence of monetary union would be central control of national budgets, of national policy. And that is ultimately the crucial staging point for a federal system of the sort that you have here in Canada.

So if this logic is correct, then for the EMU to saved it will require further political and economic integration.

Do you think that the current situation in Europe will lead to the break up of the European Monetary Union or do you think that it will try to be saved. My opinion is that there will be further political and economic integration as the cost of not doing this would be too economically costly for Europe and the rest of the world.

The Fed Is Helping To Bailout Europe

I came across this article describing how the the Federal Reserve is helping to bailout Europe and what this is resulting in:

On Tuesday, March 26, 2012, I was invited by Ron Paul and his staff to assist a meeting of the Domestic Monetary Policy and Technology Subcommittee of the House Committee on Financial Services.[...]

The hearing dealt mainly with the Fed's currency swap with the ECB, which amounts to a covert bailout of European banks.[...]

During the financial crisis between 2007 and 2009, the Fed had bailed out European banks mainly through direct loans to subsidiaries in the United States. In order to conceal the bailouts, the Fed now uses mainly currency swaps. In the swap, the Fed sells dollars to the ECB and buys them back later at the same price, receiving interests. This construction resembles a dollar loan to the ECB at about 0.6 percent (0.5 percent above the federal-funds rate). The ECB can then use these dollars to lend them to troubled European banks. At the hearing the Fed officials did not deny the obvious: the bailout of European banks by the Fed. Rather, they claimed that the bailout was basically a free lunch for US taxpayers, as they would get an almost-risk-free benefit in the form of the interest on the swap.[...]

Let's have a look at these startling arguments. First, there ain't no such a thing as a free lunch; not even for the Fed, the ultimate money producer.[...] One cost of the swap operation acknowledged by the officials in the hearing is the moral hazard created. Banks and governments worldwide may expect that the Fed will come to save them, too, especially if they are well connected with the US financial system. So why be prudent?

The article then goes on to point out what bailing out bankrupt welfare nations through the IMF and the Federal Reserve is resulting:

The highest cost of the swaps, though, may be something else. Through the swaps, the Fed is helping the ECB to bail out European banks that finance insolvent and irresponsible governments. The Fed is indirectly bailing out countries like Greece, Portugal, and Spain, debasing the dollar. Thanks to the bailouts, the political project of the euro continues. Without the swaps, some European banks might have failed, and with them their sovereigns. Thanks to the swaps, the eurozone stays intact.

The project of the euro leads to an ever-increasing rescue fund, and gradually toward a fiscal union and more centralization. A European financial government and the European super state, which would most likely abolish tax competition in Europe, are on the horizon. The highest cost of the Fed policy, therefore, may be liberty in Europe.[...]

Finally, the Fed claims to be prudent. But how can the Fed know the point at which it is no longer prudent to bail out foreign banks? How can it know when the costs of the bailouts start to exceed the benefits to the US public? How can they know what is best for the United States? Interpersonal-utility comparisons are arbitrary. Thanks to the bailouts, some banks may win, some stock owners may win, but at the cost of liberty in Europe and to the detriment of dollar users. Moreover, bailouts produce moral hazards, crises, and losses for individuals in the future. Yet the Fed claims to know what to do: social engineering at its best — or, as Hayek would put it, a fatal conceit on the part of central (banking) planners.

In sum, the Fed has assumed the task of bailing out the financial industry and governments worldwide by debasing the dollar. Fed officials claim to know that the bailout-swaps are basically a free lunch for US taxpayers and a prudent thing to do. Thank God the world is in such good hands.

The whole article is a worth reading. This last main points of the article state some of the main arguments that I have against the IMF/World Bank, the Federal Reserve, and central banking in general: that is is allowing the continuation of failed socialist economic policies and failed welfare states to the effect of helping to set up a global economic system based on central planing/socialism. Whether this is by design or simply the result of hubris on the part of the central banks does not change what is happening. ("The Creature From Jekyll Island" is worth reading to learn more about central banking in general.)

The World Bank Makes Recommedations To China

I have plans to do a more in depth post on the IMF and World Bank and how they promote socialism and state-dominated economies under the guise of free market language. In the mean time I will do a short post that illustrates, to an extent, this point. I readily admit that the stated goals of the IMF and World Bank do make it sound as if their policies are promoting free markets; but when you examine more closely their recommendations you can see that they do not advocate nor promote free markets but instead promote a state-controlled economic system where the state uses the market mechanism to advance its agendas and goals. Part of this is using state control in the form of market incentives, like carbon taxes, to promote sectors of the economy that the state deems worthy to be promoted . This is opposed to a free market system where the market is the entity determining which sectors will dominate. A perfect example that illustrates this point is the recent report by the World Bank that forecasts that the China will become the world largest economy before the year 2030 and make recommendations on how the Chinese should reform their economy:

China must relax its grip on industry and move towards a free-market economy, the World Bank said on Monday in a report that forecast the country would become the world's largest economy before 2030.[...]
An executive summary of the 400-plus page report, made public by Zoellick, had six broad recommendations for Beijing: strengthen a market-based economy, foster innovation, go "green", provide social security for all, improve the fiscal system and seek mutually beneficial relations with the world.

I know that "move towards a free-market" might take our breath away and make us go out and be cheer leaders for the World Bank. Just like saving the environment makes us want to support the environmental movement. But we have to look more closely at the issue. One thing that caught my eye was the "go green" statement. The world bank has bought in to the lie of man-made climate change: "Fifth, while China’s green development strategy is driven almost entirely by domestic considerations, it will make a significant contribution to tackling global climate change." As has been noted before, the green movement is not about saving the environment but is rather about advancing communism and socialism and that there is no man- made climate change. When you take a closer look at at the specifics of the World Bank's recommendations( around page 39), it appears that the belief in man-made climate change is being used to promote a government-led economic system and not a free market system:

A key goal of using market incentives is to harness the creativity and entrepreneurial energy of China’s private sector and state enterprises to protect the environment and turn China’s green industries into an important source of growth by making them world-class innovators and competitors. Market incentives are also the best way to foster efficiency, which, in the case of green development, goes beyond financial efficiency to include resource use efficiency and the reduction of environmental externalities. [...]

Instead, the government should consider market mechanisms such as taxes, fees, tradable permits, tradable quotas, and eco-labeling. In degraded ecosystems, rehabilitation is warranted, especially through expanded payments for ecological services in poor and ecologically important rural areas (for example, upriver watershedsor downriver flood plains).

There is no better place to begin than by ensuring that market prices of goods and services reflect the true cost of production and consumption to society. For example, the price of oil, water, coal, and other natural resources should include a tax to reflect the social and environmental costs incurred with their use. Complementary actions would involve removing direct and indirect subsidies, raising pollution taxes, and canceling export tax rebates for high-pollution, high emissions, and resource-intensive industries. (Indeed, export targets for these industries should also be curtailed, if not abolished altogether.)[...]

Given the global push on climate mitigation, the most effective way for China to establish itself as a global green technology leader is by implementing stringent and effective policies to reduce greenhouse gas emissions and to internalize the cost of carbon emissions in the operating costs of enterprises. Stringent emissions reduction policies, achieved through such diverse market mechanisms as carbon trading, a carbon tax on fuels, technology standards, and regional carbon partnerships, can act as a powerful mobilizing force for innovation in green technologies. This, in turn, will help lower economic costs associated with improving the quality of the environment and help drive overall growth.[...]

To mobilize collective action on environmental protection and climate change, the
government needs to launch mass education campaigns to increase public awareness of these issues and the actions that individuals and households can take to contribute
toward the national effort. China can make emissions reduction and environmental protection a desirable lifestyle, thereby increasing market demand for green products. To do so, it could mobilize nongovernmental organizations, industry associations and the, media. It can also change consumer behavior by providing better information, through energy efficiency labeling for example.

While these recommendations sound good--externalize costs, internalization cost, using market incentives, carbon tax, and etc.-- and even seem like they are promoting the free market, they do not promote the free market and they are not free market based. They instead advocate the state functioning as the mechanism which determines the economic sectors that are to be dominate and how scarce resources are to be utilized.

Communism has proven to be a failed economic system and those that advocate for the communist economic system are no longer advocating for the old version of communism with total state control over the economy, but instead are advocating for more of a fascist economic model where the state determines how scare resources are to be allocated for the purpose of advancing the goals and agenda of the state--usually social justice or environmental justice. It is yet to be seen if the Chinese government will actually listen to the advice of the World Bank, but the main point to take away from this is that the World Bank does not an advocate for free markets. The World Bank and the IMF that were created out of the Bretton Woods conference are evolving into a world central bank that will issue a single currency, just as its founder Keynes had envisioned. A world-socialist-economic system with international organizations like the IMF and World Bank functioning as a world central bank is being created before our eyes.

Very interesting report from the National Intelligence Council.

I got this report off of Glenn Beck dot com and I thought it was very interesting. I haven't read much of it but I will post a few interesting things I got from the very beginning. The report comes from the National Intelligence Council which according to its website is

Welcome to the website of the National Intelligence Council. The NIC is a center of strategic thinking within the US Government, reporting to the Director of National Intelligence (DNI) and providing the President and senior policymakers with analyses of foreign policy issues that have been reviewed and coordinated throughout the Intelligence Community.

The report is titled "Global Trends 2025: A Transformed World". The report is similar to the "Joint Operating Environment" report in the required reading section of the blog and it seems to restate some of the basic "predictions" present in the JOE report: "Although the United States is likely to remain the single most powerful actor, the United States’ relative strength—even in the military realm—will decline and US leverage will become more constrained."

The report also states the fact that wealth is being transferred from the West to the East, "The unprecedented shift in relative wealth and economic power roughly from West to East now under way will continue." This sounds like one of Obama's goals and maybe Obama can help make this a reality.

Another interesting thing is that the report seems to agree with the premise that anthropological climate change is a fact, "Climate change is likely to exacerbate resource scarcities, particularly water scarcities."

The next fifteen years will be marked by great changes,

More Change than Continuity The rapidly changing international order at a time of growing geopolitical challenges increases the likelihood of discontinuities, shocks, and surprises. No single outcome seems preordained: the Western model of economic liberalism, democracy, and secularism, for example, which many assumed to be inevitable, may lose its luster—at least in the medium term.

One of the "shocks" will come from the energy transition that will occur when the world shifts more away from traditional fossil fuels to renewable energy sources. The report notes that this has in the past lead to great advancements for civilization; but if there is a transition away from traditional sources of energy without any new reliable renewable sources that don't exist as of now, then this would be a regression for civilization, at least for the West. Just look at the goal of fighting climate change that entails the Western nations lowering its energy consumption while transferring its wealth to the developing nations.

On the recent financial crises and how it has strained current international governing entities, IMF, and the global economic structure which calls for major reforms in the international economic structure,

The crisis has increased calls for a new 'Bretton Woods' to better regulate the global economy. World leaders, however, will be challenged to renovate the IMF and devise a globally transparent and effective set of rules that apply to differing capitalisms and levels of financial institutional development. Failure to construct a new all-embracing architecture could lead countries to seek security through competitive monetary policies and new investment barriers, increasing the potential for market segmentation.[...] Despite recent inflows into dollar assets and the appreciation of the dollar, the dollar could lose its status as an unparalleled global reserve currency by
2025, and become a first among equals in a market basket of currencies. This may
force the US to consider more carefully how the conduct of its foreign policy
affects the dollar.

Regarding demographics and the aging population of the developed nations and the ensuing "pension boom",

The Pensioner Boom: Challenges of Aging Populations Population aging has brought today’s developed countries—with a few exceptions such as the US—to a demographic “tipping point.” Today, nearly 7 out of every 10 people in the developed world are in the traditional working years (ages 15 to 64)—a high-tide mark. This number has never before been so high and, according to experts, in all likelihood will never be so high again.

I don't have much time to read the whole thing and to do a well-put-together post. Overall, the report is interesting but it doesn't seem to say anything new and I don't really know what to make of it. But I think it is interesting to read and provides a look into the world of the future--although it is a prediction and nobody can accurately predict the future.

A Response to the Imaginistas

I've been wrestling with a response to the very good article and very good comments in the last post.  I still haven't come up with a response that's adequate, but I don't feel like working more, so I'll throw up what I got.  If you guys rip it to shreds, I'll just say, I could have written it a lot stronger...but I didn't, so there!

Anyway, have at it!

IMAGINE

Isn't that sweet?

Jeff's interesting previous post has gotten a lot of thoughtful comments from everybody. This is what this blog's all about! To greatly over-simplify their comments, Jeff seems to think World Government is inevitable and that it is not necessarily a good thing, Melkor seems to think World Government is inevitable and that it is a good thing. I've got my thoughts about whether it is good or bad, but it's the inevitability that I am taking exception to.

I've got to say, I think Melkor's ideal view is theoretically good, but when you put real people with real cultures and selfish motives (in other words, typical humans) in these positions of authority then the theoretically beneficial system becomes a ' what can it do for me and mine ' system. I think Melkor's IMF is the most perfect super-national actor, but that's one good actor among many bad actors, or maybe a better phrase would be 'one selfless actor among many selfish actors'.

The United States works as sort of a super-national system only because the many states that constitute it are (or were) basically one primarily English culture (those that were brought here forcibly, or immigrated from other cultures were absorbed into the culture until recently), with one language and one culture (more or less). When a place like Louisiana suffers a disaster, we have a sense of community and rally to its support, gladly supporting our government. Not because it makes economic sense for us to do so, but because they are kin. They are culturally our brothers. That is an important thing that both Melkor and Jeff seem to be ignoring in their praise (or at least idea of inevitability) of world management organizations. Same when a portion of the country is economically depressed. We are not terrbily upset that our tax dollars are spent helping to build up that area (even if, as RTP&GGrs, we think that the area should figure out how to pull itself up out of the mud). By contrast, the EU is made up of many countries and speak different languages and have varying cultures. It's no accident that Germany is highly efficient/prosperous/clean, while Greece is a 3rd-world backwater. The Europeans, or at least the elite of Europe see what the US has going for it and are trying to turn Europe into the same type of place. However, it is my opinion, that this won't truly be done until Europe is culturally as uniform as the United States. The German elite may want desperately to keep helping the Greeks live their lazy socialist welfare-state lifestyle in order to hold the EU together, but I predict that the typical German will not stand for this forever, unlike the way the West Germans have consistently stood and supported their slacker East German brethren. I predict Angela Merkel will pay at the ballot box whenever her party is up for elections next (though I'm not sure how dearly as she already is the European version of a conservative, and choosing the Social Democrats or Greens would only aggrevate the situation (uhm, but to parenthesize even further, Republicans and Bush were rightly slammed for their profligate spending and we sure showed them by electing Obama and Democrats into power, so who knows!)). Europeans from different countries do not view each other as brothers. They view each other as people to do business with who talk differently and act differently. Also, they each have their own army and cannot be brute-forced into cooperating if they really don't want to. That is another huge difference. If the Greeks say "fuck you" to the EU and continue their welfare-state ways, they may be penalized economically, but the EU cops (ha!) aren't going to march in and confiscate their businesses and property. If anything, the elites will bend over backwards to bail them out some more. If a Federal bailout were to happen in the case of a defaulting California, California would cooperate regarding the conditions or else.

Taking this to the next level we go to the UN where not much of anything works and it is basically the tyranny of the many leaches harrassing the few providers. It only exists at all because of the rich countries' magnanimous contributions (possibly liberal-elites' -misplaced- guilt about colonialism) and again, a desire of the elites of the rich countries to have this 'Imagine'-like one-world paradise. That the poor countries hold out their hands and take this magnanimity while at the same time spitting in the elites' faces is a source of both amusement and anger to me.  The Imaginistas in the US and Europe may be able to Imagine there are no borders, but the rest of the world will laugh at them and take their money and land.  The rest of the world cares very much.

The problem with the world-wide governing authorities is that cultures are different around the world. We don't have one people with similar interests, we have many people with divergent interests, all looking out for each group's own best interests.