FOLLOW US ON:
GET THE NEWSLETTER
CONTACT US
500 Million Debt-Serfs: The European Union Is a Neo-Feudal Kleptocracy


 
A guest essay from Charles Hugh Smith, cross-posted from his Of Two Minds blog. His latest book is titled An Unconventional Guide to Investing in Troubled Times and is available in the Kindle format. You do not need a Kindle Reader to read it, just download the free Kindle app and read it on virtually any device. Get the links, read the Intro, Table of Contents and Chapter One, and buy the ebook of An Unconventional Guide to Investing in Troubled Times on the info page. For Dangerous Minds readers the ebook is discounted 30% ($6.85) through this Friday, July 29, 2011.

The banks of Europe are the new Feudal Manors and Masters. All Europeans now serve them as debt-serfs in one way or another.

If we knock down all the flimsy screens of artifice and obscuring complexity, what we see in Europe is a continent of debt-serfs, indentured to the banks under the whip of the European Union and its secular religion, the euro.

I know this isn’t the pretty picture presented by the EU Overlords, of a prosperity built not just on debt, but on resolving the problem of debt with more debt, but it is the reality behind the eurozone’s phony facade of economic “freedom.”

What else can we call the stark domination of the big banks other than Neo-Feudalism? In one way or another, every one of the 27-member nations’ citizens are indentured to the big international banks at risk in Europe, most of which are based in Europe.

Amidst the confusing overlay of voices and agendas, there is really only one agenda item: save the big European banks. Everything else is just mechanics. The banks are the new feudal manor houses, the bankers are the new feudal lords, and the politicians of the EU and its influential member nations are the servile vassals who enforce the “rule of law” on the serfs.

Here is the fundamental fact: there are trillions of euros of debt which can never be paid back. In a non-feudal system, one in which the banks were not the Masters, then this fact would be recognized and acted upon: something like 50% of the debt would be written off in one fell swoop, all the banks whose assets had just been wiped out would be declared insolvent and liquidated, the remaining debt would be sized to the economic surplus of each debtor nation, and a new, decentralized banking sector of dozens of strictly limited, smaller banks would be established.

To the degree that is “impossible,” Europe is nothing but a Neo-Feudal Kleptocracy serving its Banker Lords.

The Greek worker whose pay has been slashed in the “austerity” demanded by the banks serves the Banker Lords, as does the German worker who will be paying higher taxes to bail out Germany and France’s Banker Lords. Though the German is constantly told he is bailing out Greece, the truth is Greece is just the conduit: he’s actually bailing out the EU’s Banker Lords.

We can clear up much of the purposeful obfuscation by asking: exactly what tragedy befalls Europe if all the sovereign debt in the EU was wiped off the books? The one and only “tragedy” would be the destruction of the “too big to fail” banks, not just in Europe but around the world. As the big European banks imploded, then their inability to service their counterparty obligations on various derivatives to other big banks would topple those lenders.

While the political vassals call that possibility a catastrophe, it would actually spell freedom for Europe’s 500 million debt serfs. From the lofty heights of the Manor House, then the loss of enormously concentrated power and wealth is indeed a catastrophe for the Lords and their political lackeys. But for the debt-serfs facing generations of servitude for nothing, then the destruction of the banks would be the glorious lifting of tyranny.

Just as a refresher, here is a definition of kleptocracy:

Kleptocracy, alternatively cleptocracy or kleptarchy, from the Ancient Greek for “thief” and “rule,” is a term applied to a government subject to control fraud that takes advantage of governmental corruption to extend the personal wealth and political power of government officials and the ruling class (collectively, kleptocrats), via the embezzlement of state funds at the expense of the wider population, sometimes without even the pretense of honest service. The term means “rule by thieves”.

Extracting the wealth of 500 million people via the EU’s central governance machinery to serve a handful of big banks is definitely a form of systemic embezzlement. As for corruption: where are the politicians who speak to the enormous benefits of writing off these debts and destroying the power of the big banks, utterly and completely, as the only way to free the people from debt-serfdom?

While the European Central Bank (ECB) and the vassals’ favorite form of oppression, the European Financial Stability Facility (EFSF), print or borrow more euros into existence to fund the illusion of solvency, the cold reality is that the only way to service these trillions in impaired debt is to skim the surplus from the labor of the debt-serfs.

Since the political vassals control the means of taxation, then it is their job to squeeze hundreds of billions of euros out of the labor of their nation’s debt-serfs.

There is a fatal weakness in the Grand Scheme of European Neo-Feudalism, and the lackeys in the EU are desperately trying to fix it under the banner of “integration.”

The fatal flaw is that the political union of the EU vassal states did not include fiscal union in which the EU could impose and control taxation within all member states.

This flaw means that the Banker Lords lack the necessary means to impose serfdom directly through the “laws” of the EU itself; instead, they must coerce the vassal political class within each member state to impose debt-serfdom on its citizenry.

This has proven cumbersome, as some nation’s debt-serfs are threatening to refuse to submit to serfdom. Such a rebellion would of course bring down the entire house of cards that is Neo-Feudal Europe, and so the lackeys in Brussels and elsewhere are frantically trying to sell “fiscal integration” as the “necessary step” to centralizing the power of the banker Lords over the citizenry of all 27 EU member states.

The euro was intended to be the enforcement mechanism, but alas, voluntary agreement is not a solid foundation for neo-feudalism. At its heart, the euro currency was ultimately a Grand Arbitrage for the big European banks: they could loan essentially unlimited sums to citizens and sovereign member-states in a stable currency, and be guaranteed that they would be repaid in that same currency regardless of the weaknesses of the debtors.

That was a very sweet deal, an essentially risk-free license to generate monumental profits, all backstopped/guaranteed by the EU and ECB.

In the old, horribly risky system of independent states and currencies, any bank foolish enough to loan vast sums to weak states and its citizenry would soon find the currency in which their loans were paid would weaken to the point that even if the loans were repaid in full, their losses would be crushing.

For example, say a bank loaned Greece 1 billion drachma when the drachma was equal in value to the U.S. dollar. The loan would thus be worth $1 billion. But let’s say that by the time the loan was repaid, the drachma had fallen to 50 cents. Measured in dollars, the bank suffered a loss of 50%, even when the loan was paid in full.

The euro removed all that nasty risk, and created a massive vassal class of EU bureaucrats to enforce the rules and make good any defaulted debt via the European Central Bank (ECB), the supra-national lender that served the big banks as guarantor. Ultimately, the ECB was funded by the member states’ taxpayers, which spread the costs of the arbitrage over such a large number of citizens that it seemed impossible that the guarantee could be broken.

But the Banker Lords got greedy, and they overshot the carrying capacity of the EU’s economy by a trillion euros; the debt loads are now so enormous that the surplus skimmed from the debt-serfs isn’t enough.

That is the core dilemma of the Banker Lords and their political vassals. Since the Banker Lords lack the legal mechanism to impose new taxes via the EU itself, they must rely on the cumbersome processes of illusion and propaganda, of “extend and pretend” extensions of debt and harsh “austerity” to skim as much cream as possible.

The cloak has been removed, and the bloodied whip is now visibly in hand. In a household analogy: your mortgage has been rolled over into a new form of servitude, and your wages have been cut even as your taxes have been raised to service your debt to the Banker Lords. The vassals are bowing and scraping before their Lords, promising deeper cuts and higher taxes; yes, Master, we will obey.

But this isn’t enough, of course; the Lords are demanding the rings off the fingers of the debt-serfs, and the rights to sovereign assets; they are casting a covetous eye on the comely daughter as well, and we can fully expect a discreet demand to exercise droit du seigneur, a right befitting the Lords of the new Feudalism.

Charles Hugh Smith’s latest book is titled An Unconventional Guide to Investing in Troubled Times and is available in the Kindle format. You do not need a Kindle Reader to read it, just download the free Kindle app and read it on virtually any device. Get the links, read the Intro, Table of Contents and Chapter One, and buy the ebook of An Unconventional Guide to Investing in Troubled Times on the info page. For Dangerous Minds readers the ebook is discounted 30% ($6.85) through this Friday, July 29, 2011.

Posted by Richard Metzger
|
07.27.2011
02:34 pm
|
Portugal brings a little revolution to the Eurovision Song Contest


 
Once again, it’s the Eurovision Song Contest - that annual shindig where people who should know better represent their country in a live televised song competition. Even if you haven’t heard of Eurovision, you’re bound to have heard some of the past winners, such as: Abba with “Waterloo”, Teach-In with “Ding-a-Dong”, Lulu with “Boom-Bang-a-Bang”, France Gall with “Poupée de cire, poupée de son”, Dana International with “Diva”, Bucks Fizz “Making Your Mind Up” and Johnny Logan, with..well, Johnny’s your actual Mr Eurovision, having won the competition on three separate occasions.

This year the Eurovision has been slightly overshadowed by the (near) bankruptcy of certain Euro-zone countries and their bail out. This financial melt-down has inspired Portugal to select Homens Da Luta with their rousing radical ditty, “The Struggle Is Joy”, as their offiiclal entry into the competition.

The band have come up with “a politics-packed staging of their routine” which, as the Wall Street Journal reports, includes:

...red-and-green lighting to commemorate the country’s 1974 revolution, outfits symbolizing Portugal’s history (which, apparently, shares a lot with that of the Village People), and lyrics that tackle the Lusophone nation’s parlous economic state:
There’s no point in tightening the belt
There’s no point in complaining
There’s no point in frowning
And rage is pointless, it won’t help you

Indeed, the €78 billion ($115.69 billion) financial bailout the country agreed with the IMF and EU last week will likely cause the Portuguese economy to contract by around 2% in 2011 and 2012, meaning that Homens Da Luta can’t afford to do too well when it comes to the voting, as hosting the competition next year — the winner’s honor — would likely add to the country’s budget problems.

Many people advise you to watch out
Many people wish to silence you
Many people want you to feel resentful
Many people want to sell you the air itself

This, surely, is a thinly-veiled reference to the multiple downgrades suffered by the country recently and IMF Chief Dominique Strauss-Kahn saying the package will require a “sacrifice” by the Portuguese people.

Moreover, just as some question the compatibility of the EU bailout package with the bloc’s treaties, Homens Da Luta, are being purposely vague with their lyrics in order to stay on the right side of Section 4, Rule 9 of the Eurovision Song Contest, which, just to recap, states that “No lyrics, speeches, gestures of a political or similar nature shall be permitted during the Eurovision Song Contest.”

This kind of specific political message is what saw Georgia’s 2009 entry excluded on the grounds of it’s Putin-baiting lyrics, bringing an unprecedented convergence to geopolitical tension in the former Soviet bloc and magenta sequin disco hot pants. According to Homens Da Luta, though, the message is more of a generalist call to feel good about Portugal.

“Our song doesn’t speak badly of Germany or any other country,” lyricist Jel told the BBC. “We go to Germany to show Europe that Portuguese people are not sad people. We are happy people who want to live with all our brothers in Europe.”

 

 
Portugal’s Homens Da Luta sing ‘The Struggle Is Joy’, after the jump…
 
With thanks to Ewan Morrison
 

READ ON
Posted by Paul Gallagher
|
05.10.2011
05:59 pm
|
Raver Kid reacts to Bin Laden’s death


 
Hmm, I think the subtitles on this clip are not an accurate representation of the conversation taking place. But still, it made me laugh, and it combines two currently popular memes - Bin Laden dying and a look back at rave culture.  

Edit - turns out this guy’s name is Dimitri - thanks Tara and Woody!

In all seriousness though, the reaction of the rave generation to the clamping down on personal freedoms since 9/11 is to me one of the greatest cultural disappointments of the last decade. Especially as the rave “scene” in the UK was born out of opposition to police and government harassment. I touch on this topic in my article “2001: All Eyes on New York”, part of a retrospective series on Noughties music for for the Weaponizer site. Contrast the reality of what has happened these last years to how the ravers themselves imagine they have changed society in the 2000 documentary “The Chemical Generation”, posted by Paul on this site only a few months ago. It’s grim.

But anyway! Enough of that, let’s have a laugh:
 

Posted by Niall O'Conghaile
|
05.10.2011
11:30 am
|
Not just Berkeley & London: The international student movement is on fire!

image
Demonstration against the privatization of education, New Delhi, December 2, 2010
 

As our UK-based Dangerous Mind Paul Gallagher has noted, London students have taken the issue of educational democracy off the campuses into both the city’s freezing streets and the faces of lines of cops. Of course these have been paralleled by media coverage of a couple of years of anti-tuition hike protests at the University of California. But they’re just the tip of the iceberg.

Turns out the international student movement that’s been brewing is on the way to becoming the primary dynamic popular movement of our time. From Manila to Santiago to Jakarta to Marrakech to Milan to Prishtina, students have been hitting the capitals to protest the privatization, commodification and militarization of education and research. Their fight against the fee hikes, budget cuts and other politricks affecting access to education is already the most effective and wide-reaching youth movement you’ve ever seen. Period.

To state the sweepingly obvious, the global financial industry played a huge part in causing the worldwide educational crisis. And democratized education will be key to defending humanity against the most powerful wave of greed we’ve seen in a while. That makes the global struggle for free, emancipatory education the key struggle of our lifetimes.

You may think I’m overstating it. Hell, maybe I am. But just in case, do yourself a favor: keep an eye on this movement and support it in whatever way you see fit.
 

 

Posted by Ron Nachmann
|
12.11.2010
01:06 pm
|
Refait: Football as Everyday Life

image


 

In a stroke of pure Euro genius, France’s Pied La Biche art collective have produced Refait, a complete re-enactment of the 15-minute penalty phase of the 1982 World Cup semifinals between France and Germany in the setting of Villeurbane, just northeast of Lyon.

By mapping the grinding tension of an extended penalty across the wide spaces and casual attitude of a small industrial town, Pied provide an irreverent yet plaintive—and somewhat hypnotizing—perspective on the frailty of human achievement. Horst Hrubesch’s winning shot never seemed so enduring.

 

Refait from Pied La Biche on Vimeo.

 

Posted by Ron Nachmann
|
06.15.2010
02:11 am
|