REVEALED: MORE MYTHS ABOUT THE EUROZONE, & WHY THEY’RE PERPETUATED

Four more myths that benefit the euromobsters:

*That the ECB’s solvency is at risk

*That Germany stands to lose money

*That the eurozone has nothing to fear from Greek default

*That ClubMed bailouts cost member States money

Having pointed out for some five weeks now that Grexit is neither probable nor possible without EU Treaty change, The Slog explodes another myth forever: that of national and taxpayer liability for a member’s default. Further, I expose clear and obvious motives for the insistence of Schäuble’s obsession with Greece staying in ‘the programme’, and why Draghi’s QE splurge won’t cause him any sleepless nights.

Picture the scene: you’re in a smart, clean, air-conditioned and completely legit looking casino. All the staff of the casino – especially the head croupier – are strict about obeying the rules. There is to be no dealing off the bottom, the roulette wheel will be perfectly horizontal and demagnetised – and even if you lose, the house will extend credit for as long as you keep paying the interest. It’s all one big happy family of people who like a harmless little flutter. No mobsters allowed in here, no violence, and there’s enough to go round for everyone…because directly below the casino, there is one of the biggest and most reputable banks in the world. And that bank cannot go bust. It’s a house rule. Even better, once you’re a member of the casino, it’s for life: no annual subs or renewals required. You’ve made it….you’re in the élite forever.

It sounds like an inveterate gambler’s wet dream. But it’s real, and it’s called the eurozone.

I’m sure most of you spotted that from a few lines in. But coming up are some things you perhaps don’t know about some of the motives for apparently insane behaviour.

The key to understanding is the deconstruction of economic, fiscal and political issues deliberately woven together by the Troika’s main players to confuse and obfuscate what ECB/German policy really is.

>>>>>>>>>>>>>>>>>

When I grow up, I want to be a central banker

All the politicians and central bankers in all the so-called ‘western democracies’ are hard at it, telling us there will be only bailins from now on. The equity holders and creditors will cough up first, period. And if the bank goes bust – tough: taxpayers will not bail it out. The bank will be insolvent, and fail.

Except when that bank is a central bank. Because with a central bank – ever since the world went off the gold standard – all the accounting rules are null and void: not a penny of the liabilities are secured by any other charges.

What’s more, if the bank loses trillions on useful things like QE or buying square peanut futures, the equity holders in that central bank will not have to pay a red cent. The CB will simply carry on with a capital basis that’s negative…this being carried forward in the obvious certainty (natch) that one day it will become positive capital.

No matter how huge the negatively knackered balance sheet gets, if the equity holders in that bank are Sovereign States, the only thing they lose is the interest payable on loans, and the profit shares. As far as invested money is concerned, they have nothing to lose.

You thought ordinary banking accountancy was a licence to win and never lose? Well, a central banker’s book-keeping makes their task look like an away game against Chelsea by comparison.

Now the more sharp-eyed among you may have noticed that the myth of national bank insolvency contagion and taxpayer losses in the eurozone is one that continues to be pumped out day after day by the media, leading politicians, and above all, the German Bundesbank….and Wolfie Schauble the wannabe Fiskalunionfuhrer. Wolfgang Strangelove in particular is keen to tell us that only FU with him at the helm can stave off the spendthrift disaster that is ClubMed. And that the only way for market confidence to be maintained in European debt bond issues is for ClubMed to keep on paying back the unrepayable.

And it’s all – every last word of it – complete bollocks.

The financial and political motives behind ClubMed debt slavery

But here’s the twist: the longer ClubMed stays in the programme of infinite bailout – with added austerity to ensure no escape – the more money Germany earns….more, in fact, than any other eurozone country.

Because Germany is a 27.1% equity holder in the ECB which cannot become insolvent. Nice work if you can get it, nicht?

The following is a real example of the system in relation to the ECB buying €1bn of Spanish Bonds at a 4% annual coupon.

The ECB collects €40m in interest, and of that roughly €10m goes straight into the German coffers, pro rata to its equity holding. The longer ClubMed keeps on paying, the more money Germany, France and Holland keep on making.

Tot up the total bailout interest paid so far, divide it by four, and then work out that the Germans aren’t insane after all. The number is a whopping €235bn. Germany’s ‘cut’ is €60m.

By far the biggest Greek creditor today is….the ECB. Schäuble fudges this one again by referring to the need “to include the lenders” in eurogroupe outcomes. It’s pure, timewasting poppycock: they’re the same people.

But the weighted Roulette Wheel starts to list severely to starboard the more one delves into QE. If Draghi is buying the bonds of one country, he is supposed to recompense pro rata the countries whose bonds he doesn’t buy. So not only is Draghi illegally keeping Greece out of bond-buying (which would of course dramatically reduce it future liabilities) he is equally illegally depriving Hellas of its legal entitlement to compensation.

And it gets even worse. The first country to have loads of bonds bought under the QE scheme is….well ping my blog, none other than Germany. Which also just happens to be the biggest shareholder in the ECB….and the richest nation in Europe. And has spent every day since the euro was launched benefiting from a rebranded ‘cheap’ Mark called the euro.

But for once, this isn’t really about the munneee

Now of course, those of us steeped in German culture have long been aware of their capacity for sanctimony. But in the greater scheme of things, Germany making a bit of walking around money by keeping ClubMed in penury is merely the icing on the cake for this nation of upright oops sorry, I mean downright hypocrites.

We have to get this clear: Schäuble whining his pointy little lying head off about lazy Greeks putting German finances at risk is just a smokescreen. Wolfie Wheelchair is calling the Greek problem economic, and telling whoppers about the fiscal risk to the eurozone. But this is just a thick veil behind the smokescreen wrapped in a tirade of distractional loincloth about the need for discipline.

It is not economic or fiscal contagion Schäuble fears, because he knows perfectly well that is just another myth on a scale even bigger than the possibility of Grexit. His fear is one of political contagion. His fear is his beloved FU power never getting off the drawing board.

As I said at the outset, Greece really does hold all the cards

If Syriza, one day soon – and as The Slog posted yesterday, it has got to be soon – tells the eurogroupe (and thus by definition the ECB) where to stick it, the myth of invincibility is gone forever. Next will be an Italian departure and default, then a Spanish one via Podemos…and then a French one as the two founders finally fall out on the deficit issue….and the idea of a control-freak spook like Schäuble in charge of it.

This is what ties Schauble and Draghi – however temporarily – together: their naked, unhealthy desire for absolute power. Draghi works for globalism and the mighty Dollar; his aim – outlined in secret session during a 2014 FinMin session – is to create a low-wage ClubMed serf economy to compete with Asia. Schäuble wants his hands on the eurozone national member purse-strings, and another crack at turning every European into a Good German.

Sadly Wolfgang never paid any attention to the old German family command: sei nett zu einander –
be nice to each other

Which leaves us with the last prong on the Troika that no longer dare speak its name haha: the IMF.

Why Varoufakis is giving Lagarde the five-star treatment

A few days back I was speculating on Syriza’s small re-entry into the bond markets. From what I can glean, most if not all of the money raised will go to paying off the IMF tranches due. That is happenstance, but only up to a point: I still think that the Athens Government’s policy may well be to impress upon Christine Lagarde its desire to be a trusted debtor to the US. Or, if it came to it, Moscow. For Greece, the prime goal has to be to prove independence from the euronauts when it comes to fiscal stabilisation.

The fact is that, as a left-wing Party determined to destroy oligarchies, I have to believe that Wall Street, the EC Commission, the ECB and the German elite would all be on their ideal Christmas list of things for Santa to destroy. An alliance with Italian 5-Star and Spanish Podemos to rebalance financial power in Southern Europe must (surely?) still be their preferred option.

As a medium-term stepping-stone to that goal, paying off the IMF (and then defaulting inside the eurozone) gives the remaining ezone pitchfork prongs an insoluble problem. Athens can’t be thrown out, but can whip up the maximum trouble in Italy, Spain and France…and very probably borrow money from the Russians (in return for Med bases) and other selected Asian markets.

Breaking news from the front in this tedious and time-wasting trench warfare supports my argument that the Troika is bluffing: the European Stability Mechanism confirmed late yesterday that it has been forced to give Greece a €500m bridging loan to tide it over in March. But nobody from Athens forced them to.

Meanwhile, German media yesterday were openly calling upon Schäuble to stop kicking the small kid and start work on the big problem: France.

Only time will tell, but my view remains that Troika2 and its agents will go for maximum distraction, threat, and confusion…and some Greeks now really are nervous. The only things that can scupper Greek independence from here on are lost electoral support, Syriza collapsing into squabbles, or its two leaders lacking the balls to pull the trigger.

Big fleas have bigger fleas upon their backs to bite ’em

Meanwhile, Vlad the Lad lies offstage, watching the drama – and thinking of chess moves. And the Black Dude in the White House (along with State) knows what Putin would like. And that in turn suggests that, when push comes to shove, the US will tell the eunatics to tone down the Greek Untermenschen rhetoric.

Connected from yesterday’s Slog: Why Troika2 keeps Syriza busy, busy, busy

POSTSCRIPT: I think regular Sloggers would accept that I try to keep viralising appeals to a minimum in these columns. This one, however is a special case. The self-styled “elite” may be outnumbered, but they own 90+% of the media power. The pro-EU/anti-national independence lobby is in the hands of an unrepresentative Establishment: both UK large political Parties, almost all the papers apart from the Express, the BBC and the Daily Telegraph daily hose down all reason with a non-stop bollocks-stream over what is really going on here.

With due respect to Greece, the issue here is much bigger: it is one of whether the euro or the EU are anywhere near worth liberal democracy being ground into the dust. I vote no, no, no, no. But we live in a dumbed-down world. For instance, I believe the Greek dilemma should be a much bigger part of UKip’s electoral campaign in the UK….because one day soon, the gangsters will be running Westminster permanently if they aren’t stopped here. 

I would ask all those who agree with the viewpoint I express here to R/T, email, share and Facebook everyone to whom they think it’s relevant…especially the senior bods in UKip.

Thank you.

43 thoughts on “REVEALED: MORE MYTHS ABOUT THE EUROZONE, & WHY THEY’RE PERPETUATED

  1. because one day soon, the gangsters will be running Westminster permanently if they aren’t stopped here. I thought the gangsters were already running Westminster.

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  2. ” . . . outlined in secret session during a 2014 FinMin session – is to create a low-wage ClubMed serf economy to compete with Asia.”

    Are details of the meeting available?

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  3. Good article, small typo about halfway down – ‘The number is a whopping €235bn. Germany’s ‘cut’ is €60m.’ I presume that last figure should be €60bn instead of €60m? Cheers.

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  4. I have to ask that, if this is apparent to you, is it also not apparent to Varoufakis? If it isn’t, then, why isn’t it? Because if it is then surely Syriza should be in the driving seat, and not on the back foot, unless of course there is more to this than meets the eye, which I suspect there is, and another reason why Farage is quietly looking the other way.
    Truth is, we don’t know the half of it, and do people really care? They wouldn’t let you write this stuff JW if they thought it made any difference, much like voting, if it mattered they wouldn’t let us do it.

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  5. A friend of Varoufakis explains the HSBC (built on drug money & still at it) non-taxpaying scandal, to George Galloway.
    His solution? Small banks. I stumbled on this chap from Mish’s global economics site.
    http://www.youtube.comwatch?v=KPJ_LVZQR04
    13.09 mins
    JW has the picture: it’s no longer about money, it’s about power. & the creation of a european serf class is just the first step. The project is a global one. We can only hope Putin & Xi Jinping stand firm.

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  6. “All the staff of the casino – especially the head croupier – are strict about obeying the rules.”
    However their accounts have not been signed off by the auditors for at least sixteen years – if ever??

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  7. all very intriguing….
    Personally speaking, I don’t think UKIP can orchestrate much more than a piss up in a brewery. They might have the support if they could show themselves to be streetwise managers, which they are not, they are just spoilers.
    Let’s be frank, the germans have got a serious grip on this situation, whatever we think. The sheep are still buying german cars and goods as if there was no tomorrow.
    Get real…we’ve lost this battle, this war and our futures.
    Greece was the last chance, but they flunked it big time.
    Only individual actions aka SOE off the radar will be the fleabites to the bullying jackboot.

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  8. UK reality today: Dawn raids for suspected benefit cheats in Croydon, while drug runner HSBC boss, Steven Green is made a Lord by the Camoron.
    & a deconstruction of the despicable whore, our impossibly Orwellian named Middle East Peace Envoy, Stony Bliar.
    You literally could not make this stuff up.
    http://www.youtube.com/watch?v=-0Auz5gEzIE
    Or, put in search box: Keiser Report: Plague of benefit cheats (E719) (ft. George Galloway)
    25 mins.

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  9. It all makes sense now – a powerful and astonishing analysis.

    A couple of typos:
    Germany’s cut is EUR60bn, not million.
    Surely the piggy-backing fleas are smaller?

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  10. I doubt China and Russia will buck the trend. As long as they get to keep their own fiefdoms intact, they will just tow any totalitarian line regardless I suspect.

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  11. Dear John!

    The difference between central banks and commercial banks isn’t that big. Central banks create reserves out of nothing. Commercial banks create book money out of nothing. It is simple accounting. (Well, you and me and all other economic participants are not allowed to do this kind of miraculous accounting, it would – correctly – be called fraud.)
    Just in case you do not know: That (commercial) banks create (book) money out of nothing is not a conspiracy theory anymore. Since 2013 there is empirical evidence:
    http://www.sciencedirect.com/science/article/pii/S1057521914001070
    http://www.sciencedirect.com/science/article/pii/S1057521914001434

    Best regards,

    Reinhold

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  12. As I pointed out previously, as far as I can calculate 90% of what ALL politicians say is essentially a lie. Oh the words may contain truth but the spin, innuendo and deliberate misdirection make those words into lies. Why anyone clings to the hope that perhaps this time they are being straight or honest I simply do not know.

    It truly has become pointless to listen, you will never work out what the true agenda or the real intent are until actual events unfold, even then you will never be certain what unfolded was actually desired, whether it was accident or design, and sure as eggs is eggs they aren’t going to tell us.

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  13. I don’t think you are thinking straight.
    You have not given a single reason why Nigel Farage should jump in to this. What can he possibly gain at this time, Surely even you are smart enough to know when to hold your powder dry, and you do not shoot at moving targets, especially when the view is obscured, and the real target, the filthy EU scum are getting dragged through the slime by Varoufakis.
    And trust me, he is doing exactly that, Greece has nothing to fear, they can play this game for as long as the DESPERATE, visibly wetting themselves, quivering in rage and fear, the EU posse of utterly deranged sociopaths, know all too well that they will have to cough up, no matter how absurd Greece’s offers to fix the economy are like hiring tourists to spy on Greeks, they might as well offer to add VAT to bj’s and luxury tax if its over 5 inches or should that be 6. No matter what they offer it won’t work.. Only Greece leaving the stinking filthy ponzi fake euro voucher can ever fix its economy.

    Either way,Nigel should keep deathly quiet and then at the point of greatest humiliation for the EU scum, unleash a broadside as never seen before. Because one thing is absolutely certain in this, to save thier own filthy skins, the EU terrorists will give Greece anything it needs to prevent it leaving, and draggy is already doing it spades by bag fat brown envelopes.

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  14. If what I have read about Varoufakis is correct his ideological standpoint is at odds with with his current actions. A possible explanation for this is that he has been told that there is no default, no exit – no choice. Having gone from academic to government minister he has been allowed behind the Wizard’s curtain and told the cold hard truth that the fiat/fractional reserve banking nexus is backed ultimately by the American nuclear arsenal, he can pull the plug and default but the country will immediately be subjected to a Victoria Nuland/Ukraine style subversion programme by the US/EU axis and hey presto – there goes your freedom.

    He is then sent back to Greece to cobble together some kind of fudge to fend off the advance of the neocon hegemons.

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  15. O/T. ‘More myths about the pound sterling’ ? Government borrowing under control, really? Zero chance of a socialist coalition after May 7, excuse me. .Forex markets will ignore another divided government, you think? Buoyant consumer spending, house prices in lala land, not a problem? Interest rates immune to currency pressures?

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  16. Excellent, regarding perception of the Greek situation. The real problem of Syriza is electorate support and to put it more cynically, tax-payer, depositor and syndicate support. Their real enemy is internal and Soy-bleu knows it.

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  17. @ Bernard
    We did actually write to them some years back and put this to them. No accounts independently audited?
    Then came the firm, brief and very steely response. Yes they are/were audited. ( Wish we’d kept the email now).
    These people are fanatical lying fascists. They will not listen to you or your vote, and they will lie to the death.
    The great shame is that 98% of the population just don’t know this or even care.

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  18. I agree about paying back the IMF then defaulting on EU debts. It puts all the scrabbling around into perspective.

    As for the anti-German rhetoric – I see also that some Siemens bribery charges have resurfaced in Greece. And if they look hard, the Greeks may find they are a submarine short as well. Plus the war reparations discussions. All making Germany out to be the bad guy (esp as they won’t extradite some of the alleged bribers).

    Which brings us back to the big question – what do you call a German EZ exit Dexit? Gerexit?

    J

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  19. Hiero
    While I find this bloke refreshingly erudite and direct, I don’t think he goes far enough in specifying where the pols “go drifting off into”.
    I think what they do is pursue the munneeee…so my question remains, why do they do that & how can we stop it?

    Answer: take the money out of politics, & you take corrupt pols out of politics.

    BTW great to see you back as always amusing & enlightening regular comment threader here.

    JW

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  20. Ed P et al

    No, Berlin’s cut is 27.1% of the annual interest, NOT the loan amount all up. Hence in millions not billions.

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  21. Well said William. Raising interest rates after 7th May was going through my mind as Soros and co spot a sitting duck with a Lab/SNP government.

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  22. Saw this a week or so ago.
    I like the way he gave the incriminating evidence to the BBC who surely are part of that very UK PLC Political Establishment!

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  23. Pingback: John Ward – Revealed : More Myths About The Eurozone, & Why They’re Perpetuated – 11 March 2015 | Lucas 2012 Infos

  24. In addition, Greece’s woes are keeping the Euro nice an low, to keep Germany’s exports flowing. If Germany had the Deuchmark, that would have gone the same way as the Swiss Frank, and made every industry in Germany uncompetitive. So Germany wins both ways.

    R

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  25. ‘The market never lies.’ The Rothschilds got rich by selling too soon’. ‘Buy on a strike’. Apart from these old market truisms, I suggest people look at RIT’s accounts, in particular for currency exposure. Jacob knows about creating and PRESERVING wealth.

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  26. You remind me of a professor,yes the one that said he would eat his hat if the German’s could build rockets,your a fool,it has only just started,far from over

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  27. Difficult to say much in a short vid, he does have some practical ideas though. Taking the munnee out of politics is, of course, very difficult indeed as vast sums of it are inevitably involved in policy budgeting and implementation. Party funding is a different matter and, in theory and given the will to address the matter, it would be possible to achieve a system less open to abuse.

    One major problem now is the ease with which the consequences of financial mismanagement can be avoided through the use of (fiat) currency debasement. This is a standing temptation to all kinds of chicanery and abuse, and has led to a tremendous loss of value and, equally importantly, of values. Honesty and integrity have never been in shorter supply and until we find a way to address this, nothing much will change. Our social development, and as a result everything else, seems to have reached an impasse.

    During the last months I have been fighting the beast in the Family Court and the Special Educational Needs and Disabilities Tribunal, both of which are cesspits of wickedness in ways that most people can hardly imagine. As elsewhere, appearance now counts for everything, substance for nothing, and these institutions are becoming increasingly prone to a heartless pragmatism based on agendas that are antithetical to any real notion of justice.

    The Slog, more often than not, remains a call to sanity and an excellent forum for exchanging ideas or just letting off steam. Your prodigious energies are not wasted, JW.

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  28. You forgot to use the word old, the origin of wisdom.
    comments from the ghost are usually uninformed illiteracy fuelled by junk food, lack of exercise and poor education, topped off with a career lounging around in the public sector.

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  29. Pingback: John Ward – Crash2: The Risk List In Full, And Why The Collapse Is An Eventuality We Cannot Resist – 12 March 2015 | Lucas 2012 Infos

  30. Excellent piece as per John! Who was it who said Germany and Japan lost the war? Really? they just found a different way to enslave us!

    The Uk is now a country of service industry businesses- LOW PAID/0hours-multicultural workforce, except in little corner shops, not many white folks get jobs in them. And they offer nothing to the wealth of the country with the tax credit claiming staff ( all working part time) oh really. and business tax claimed back, in most cases.

    The Germans and Japanese didn’t sell out their identity, and their work ethic is outstanding and rewarding. Smart leaders sticking with the electorate! can we compete? We could If we bothered about manufacturing, and creating real jobs. I mean it breaks me into a sweat to think that ‘Big Issue’ sellers are classed at ‘earners’ and can claim housing benefit/tax credits. More people coming in and claiming to be homeless – Oh the IRONY.

    Good on the Germans, wish we had a government like that!!! oh…wait…

    Like

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