At the End of the Day

Governments are paying off their debts with our liberal democracy

Watching the political gymnastics taking place in Paris today, it was hard not to reach the conclusion that we are doing the wrong thing for a dizzying variety of wrong reasons.

Consider: Berlin is going helter skelter to push 17 largely unwilling nations into an even more exit-free zone than the one one which has just pushed us all to the edge of fiscal oblivion. A eurozone trapping antithetical cultures inside one currency is now to be roped even more tightly into a grouping whose differing economic dictates will be ignored in favour of targets set by people not of those cultures. Who cares if the overseer is a Belgian or a German? The simmering resentment of the yoked nation would be obvious to a five year-old.

And why? Because – it really is this simple – reckless lenders want to be reassured that, in future, a Sugar Daddy will be always available to ensure that loans will be repaid on the nose. Today’s surreal Franco-German agreement to guarantee Sovereign lenders repayment in perpetuity – no matter how usurious or callous the loan agreement had been – seems to be on offer without any guaranteed commitment by the pawnbroker to abide by a strict set of rules in return. We are assured that this will be forthcoming; but then, we have been told again and again that haircuts will be taken and allowances made. It’s just that we still haven’t seen any.

Is this the correct ground upon which to base increased European integration? Is this what the Grand Project was about? Even in their framing, these questions invite the negative response of all those with a sense of justice.


In truth, what’s happening in Europe now is the logical end result of 35 years of deregulating maniacs, dumbing down voters, and promoting nonentity plonkers to positions of serious power. The barbarians have been given full citizenship, the real citizens their bread and circuses, and the useful idiots in power are busy at the process of facilitation. It is all too easy to stick within the confines of a dysfunctional eurozone, but the reality remains that this same procession of risible ideas is present in every Western democracy.

One could do a lot worse than start here in Britain, where dotty economics started soon after Reagan began to expound them in the US.

A good place to kick off the story of British insanity might be 1982, when the bizarre neocon ideas of Levitt & Friedman began drivelling about trickle down wealth, globalism, and decisive markets. They continued in vogue after 1997, when the grinning Bambi and his Scottish Drood voted to carry on regardless. Pick up again in 2002, when Gordoom went for fiscal incontinence. Fast forward now to 2004 when Greenspan knew the credit madness was out of control, but did (along with Brown) nothing about it. Until we arrived at 2008, when the banks imploded up themselves, got bailed out….and then continued as before.

Now here we are in 2011, and the banks have just been absolved by Merkozy of ANY future haircuts in the eurozone. So whatever sense of responsibility they had just got removed.

I contend that our leaders are exchanging their incompetently accrued and unrepayable debts for our liberal democratic rights.


The evidence for that assertion is far from arcane: it is clearly visible in every news release, proposal and decision made over the last few months by the people at the top of the European Union.

In the EU, a group of five (the GdF) led by a duo of two Laurel & Hardy oddities is telling 27 nations what to do and by when. In Rome and Athens, two unelected bankers are telling whole nations what to do. In London, maybe 70 0r 80 tax wizards are ensuring that multinationals and banks pay a fraction of the tax loaded onto 55 million British citizens.

The entire western world has fallen for a ludicrous idea suggesting that 1% must be billionaires if the other 99% are to stand any chance of being happy. That banks must create notional wealth 30 times greater than global gdp in order for the economy to function. And that big, faceless, unwieldy companies and countries are better than small, mutually-run outfits serving the community.

Did I ever imagine – as a student in the late 1960s – that such piffle would be given the time of day? Perhaps I should’ve done, because the Maoist and pro-Ho Chi Minh bollocks was equally prevalent. But back then, only a tiny minority of we spoiled bourgeois kids clung to such daft ideas….and only for a short time, before reality intervened. Today, it seems that almost the entire Caucasian species has bought into a mad belief in production volume, shopping, restaurant cuisine, a 15-hour working day, loft conversions, leveraged bazookas, default swaps, multicultural Superstates, and the never-never-never-never nature of debt.

SciFi novels of my youth tended to depict a future in which huge wealth, endless drugs and total protection would be used to persuade citizens that they did not need their rights to free expression, and votes against tyrants. But  in the here and now, ours is a Faustian generation that somehow made the worst bargain of all time. Without noticing – without even being asked – we have signed a deal with the Devil to guarantee going backwards, in return for something which is never made entirely clear.

As Lou Reed wrote in The Boulevard, ‘Somewhere a landlord’s laughin’ til he wets his pants’.

38 thoughts on “At the End of the Day

  1. “”But I don’t want to go among mad people,” said Alice. “Oh, you can’t help that,” said the cat. “We’re all mad here.””


  2. Nice summing up JW.
    As per Felix Salmon today – “The FT is reporting today that the new fiscal rules for the EU “include a commitment NOT to force private sector bondholders to take losses on any future eurozone bail-outs”. If this principle really does get enshrined into some new treaty, it will be one of the most fiscally insane derelictions of statesmanship the world has seen”

    Madness all of it. All short termism, in this case Sarkozy knows that any haircuts cripple the French banks, France loses it’s AAA (which as per S&P last night might happen anyway) and thus he loses whatever wafer thin chance he has of re-election nexr year, which he really shouldn’t have anyway, but never rule out the Parti Socialiste’s chances of snatching defeat from the jaws of victory, although with the Front Nationale………..


  3. I thought the general idea was to totally enslave us all in debt and petty bueracracy.
    I see Gerald Celente of the highly credible Trends research centre in the US is predicting “economic martial law in America” in the first quarter of 2012 in the form of a long BANK bank holiday! Maybe Timmy has other reasons for his visit to Europe today?


  4. You really don’t care much for Reagan and Thatcher do you?
    I don’t understand why you believe either would be in favour of loose credit (Thatcher was NOT in favour of the Lawson boom and stopped it when she worked out what was happening!)
    Reagan was in the process of winning the Cold War (well worth the cost because compared with todays problems that REALLY was dangerous-as in potentially millions of dead people-you and I and the bloggers here among them).
    I cannot imagine for a single moment that they would have been paralysed like the current pygmy leaders. Don’t get me wrong, they surely had their faults, but failure to get to the root of the problem wasn’t one of them.
    Just for some balance, Thatcher (or her advisers) were promoting the service based economy-total bollocks-I never believed for a single moment that was possible for a country the size of the UK (or even Switzerland which does a nice line in precision engineering and associated design). But some how we had to get back to reality-she was the medicine-nobody else had the balls to do it. The result is far from perfect; not doing it would have been even less perfect.


  5. Lets not forget where this sorry mess started.

    Back with the Clinton administration who decided that “owning your own home was a human right” – not too far different from people buying council houses at 50% off. It was the Clinton Administration that introduced the regulations that encouraged short termism within the banking industry, it was the Clinton administration that tore down FDR’s firewalls, that Reagan had the good sense to leave in place. And being Clinton’s blood brothers Blair and Brown did all they could to join the party.

    Most of this took place before the Eurozone even came into being.

    And along came the Bush administration, which did all they could to further Clinton’s policies, as well as adding large Federal deficit spending and tax cuts for the uber-rich.

    That doesn’t mean the Euro’s architecture wasn’t defective when it was drawn up by 1980’s crew (Delors, Mitterrand, Kohl & Thatcher), and that it wasn’t poorly implemented by the 1990’s crew (Prodi, Kohl & Chirac – not Blair because thanks to George Soros UK was out of the EMU by then).

    However, without the crash of 2007/2008 today’s crisis may not have happened, at this time or at least it probably wouldn’t have been so severe.

    Britain’s problems are largely of its own making, the EU regulations are annoying and some ‘hurt’ Britain’s economy, but most of them have nothing to do with the Euro. And Britain would continue to endure many of the EU regulations even if it were outside the EU and rejoined EFTA.

    BTW British investors are trying to raise the money to buy cotton & wheat farms in Australia, whilst China is paying cash for Australian vineyards & wineries.


  6. Are all Europeans stupid ? I have no doubts about the French midget, but Dont the other Europeans realize that the Fourth Reich is here to stay? Lets rise and burn all European flags and lets get out of the EU & Euro NOW before it is to late. As to Bankers, they can either kiss their worthless electronic money goodbye or kiss a Greek arse for starters.


  7. Look, I can only get 50 people to sign up for a referendum after days of campaigning on the internet, you have NO chance of getting anybody off their backsides to burn a flag…..
    If apathy was oil it would be twopence a barrel….


  8. JW – for what it’s worth, Right Paddock has it right.

    Your tracking of the unfolding of the present crisis is valuable but your “analysis” of its origins rather flawed in my opinion.

    I doubt you’ll publish this comment so I won’t waste too much time on it, but the problem is not Thatcher’s deregulation of the city, the problem was Clinton’s insistence that all shall have mortgages (the Economist for one was warning for years about the US mortgage market, Fannie Mae and Freddie Mac etc) which led to the 2008 problems, and the Bush/Brown spending frenzies. On the Continent fiscal incontinence ruled the day.

    The essential problem is hubristic and greedy politicians climbing into bed with greedy bankers to buy votes and fleece the public.

    Governments and banks have to be allowed to go bust from time to time pour encourager les autres.

    The current Merkozy plan seems to want to replace moral hazard (essentially, the free market) with a soviet style mandated set of government behaviours. It didn’t work for the so-called stability and growth pact, or the warsaw pact, and it won’t work now.

    Things are about to get much worse.


  9. JW

    Thought you might like this, apparently Van Rumpuy says that Merkozy does not have to go down the road of a full Treaty change, with all the attendant potholes and roadblocks, if his advice is followed.

    The last trick this little man was up to was locking the Debating Chamber of the Belgian Parliament, and hiding the keys, so that a vote he didn’t want couldn’t be held.

    Eurodemocracy in action?


  10. Referenda is the Achilles heel. Just one nation to hold a referendum and they will all want one, and don’t they just know it.
    Contagion is a two way street!


  11. @cuffleyburgers “for what it’s worth, Right Paddock has it right.”

    Careful mate I’ll start believing my own bullsh*t. AFAIK JW doesn’t delete or edit any posts unless they use bad language or they’re abusive.

    FWIW : Fannie was created by FDR and Freddie was created by Nixon. Its always puzzled me that the Land of the Free has all these socialist schemes – there’s another one called Ginnie Mae, I forget what it does.

    Anyway ZH is asking : Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B? ==>>

    WTF : The yield on the Italian 10-year has fallen below 5.8%


  12. @B**gger (now a gorilla?)

    Interesting slight of hand. No British vetoes to worry about either – not that Cameron would do much.

    I wonder what they are going to do …


  13. Someone said that last week, I think it might have been Angie when she addressed her Parliament. Who thought of it tho’, I really dunno, maybe Schaueble, he’s a cunning old fox.


  14. MickC
    They also left behind other unpleasant detritus.
    Reagan left the US more indebted than it had ever been before.
    Thatcher gave the economy to the bankers.
    They thought wealth would trickle down. and society didn’t matter. They were wrong.
    The Left is also wrong.
    It’s the nature of this site to believe this. It’s unlikely to change.


  15. kfc1404
    You are absolutely right, I’m afraid.
    It may well be that all the members of our little glee club here are wankers, myself included.


  16. In the end banks will collapse and savings over a certain amount will be wiped out. Those below this will be devalued. Property and land will be a protection to a certain extent. But that too will fall in real value as in the end people can only afford to pay for a house from the wealth that the economy generates. Also, the state will take death duties.
    The banks know they will collapse one day and are trying to postpone the inevitable so they can make/take as much as possible before the collapse.
    The governments were hoping that growth would cancel out the debt. Growth was boosted by mobile phones and the internet increasing efficiency but this effect could not go on indefinitely. One way to boost growth again would be to remove employee protection laws which inhibit employers from employing – hence having the opposite effect to that claimed. Businesses will not take on staff who cannot be sacked and will cost them a fortune if they try and get rid of them. Obviously another way would be to reduce public spending, but in the absence of a leader like Thatcher this will not happen. We are a pathetic nation who do nothing except vote for MPs who want more public spending, more crime and more immigration. So we deserve what’s coming to us. Or at least those who vote for these things do.


  17. @Billy

    As to stringent employment laws, there are always ways around these. It is a pity that Britain keeps whingeing and not doing.

    In Germany and the Netherlands, new vacancies are often filled by a temporary worker from an agency. The agency is not obliged to employ the person full time, but must give them full working rights if they are. It means that a company can take on new labour and do not have to worry about sacking them if they are no good. The upside is that if the new employee turns out to be good, they pay off the agency and take the person on their staff.

    Tough regulations in the workplace tied into tough regulations on registering mean that immigrants to the Netherlands need to jump through several hoops before being allowed such things as state benefits. The up-side to these regulations is that an immigrant gets the same rates of pay: the downside is that the Dutch employer might choose to have a Dutch person.

    Were the British employer to see the benefits of strict regulations in the workplace they might do a better job overall. Working with and around regulations leads businessmen to have a keener eye for business opportunities in their field of operation. After all, these do not come knocking at their door saying “please sell to me” – it seems that too many businesses expect this.


  18. @KFC
    If it is found out by Merkel that the ECB has been printing without her explicit authority, she will make Thatcher’s handbagging look like a friendly handshake.

    The bonds have been steadily dropping from the end of November for reasons not adequately explained, indeed ignored by the Mainstream.

    Whatever else, anybody now holding a derivative attached to an Italian CDS is in serious trouble.


  19. @Gemz – I’ve been getting these sort of items into my RSS Reader for about a week –

    The MSM source a lot of stuff from the agencies, and the latter pump out the same stuff day after day with minor updates. Which is why, I at least, keep thinking – hang on I’m sure I read that the other day.

    One thing that has popped up for me is the Euro-Plus Pact. It appears that what Merkozy are proposing is Euro-Plus + the Court of Justice. What would the Court do, chuck politicians into the slammer, or impose fines on countries, that means the ECB prints some money, gives it to the country, which gives it to the Court which gives it to a bank – right that was useful – for the bank.


  20. “As to stringent employment laws, there are always ways around these. It is a pity that Britain keeps whingeing and not doing.”

    The regulations, often supported by Criminal Law are not easy or cheap to ‘get around’. They are time consuming and complicated to deal with and are therefore expensive. That of course is another overhead cost for firms large enough to justify employing an expensive specialist to deal with the issue. It is potentially the kiss of death for a fledgling business. Since this is an issue which has been discussed at government level recently one might consider there are grounds for the contention that there is room for significant improvement.

    When you refer to Britain whingeing, I would be grateful if you could be more specific. Do you mean the fledgling business which will not expand because of the difficulties attached to having staff on the payroll? Or do you mean the professional personnel chief of a company employing 150 people? Or the numerous small businesses which have problems when their single and therefore key member of staff takes maternity leave? It isn’t clear from your generic comment and so I cannot deal with it adequately, but your choice of ‘whinge’ rather than the more normal ‘complain’,might be regarded as intended to be merely inflammatory.

    As to converting temp staff employed through an Agency, it is an option, but an expensive one, both to use initially and to convert and in the UK they are entitled to the same benefits as fulltime staff. It might be the answer but I suspect that where it is, business in Britain apply it as a solution. Do you have evidence to suggest otherwise as you appear to be doing?

    As to the ‘British employer’ seeing the benefits of strict regulations, I wonder if again you could be more specific? Does this mean the small business or all sizes of business? What evidence do you have that *business* in Britain do not see benefits from ‘strict regulation’? Or are you assuming that because the regulations that exist are sometimes regarded as overly strict thus becoming counterproductive, all British businesses are anti any regulation? You appreciate that from your very broad brush comments it is difficult to deal with as accurately as might be the case should you care to be more specific.

    Saying that Britain’s whinge is a little like saying “pigs smell”, some might but some are also kept as household pets and which clearly do not smell. So there might be a reason why the pigs that are smelly, do smell, if you see what I mean? Similarly there might be a reason why some Britains whinge.


  21. There is way too much “short termism” in UK employment and Sales both from the producer in respect of how big a profit can be made in the shortest time possible and to some extent the expectations of those for the “lower paid jobs” as to what they are expected to do


  22. @Paddy
    The Italians don’t need to print: they have €8 trillion in savings squirreled away, all looking for the next bond issue. They have been laughing all the way to the … oh … there is a flaw somewhere in this argument.


  23. Pingback: Fiscal analysis: Why money no longer just talks | The Slog

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