Friday, December 28, 2012

The Advent of Berlin (Part 1 of 2)

The escalation of the war, the correlation of forces, neo-mercantilism, the zero-sum policy, the sustainability of public debt, Greece’s negotiation capabilities, and the currently available solutions for Greece

‘’In broad terms, the swift attack against a nation and the instantaneous prevalence, keeps the environment under control and paralyzes or overwhelms the opponent’s senses, affecting one’s ability to understand the facts. The purpose of the method «shock and awe», is to make the opponent completely unable to function – let alone resist’’.

‘’Mercantilism is a centralized, systematic economic policy, where government revenues are necessary for the maintenance of a costly state power, and the functioning of its expansionistic character. Its key elements are:

a) Targeting an increase in product exports, b) the reduction of product imports, c) the creation of a «strong fleet» for the transportation of the products and the avoidance of war conflicts, d) the creation of a road-system, e) the establishment of colonies, achieved through a supported cooperation of the «attacking» country with its strongest businesses (corporations) – in which case the colonies are to remain under absolute dependence to the metropolis.’’


It’s obvious that the German danger was severely underestimated by the US, which had focused its attention mainly towards China, and secondly towards Russia (the failure of the IMF, during the Russian default, to work to the benefit of the US, is one of the biggest mistakes in its recent history – compared to Germany, which managed to utilize correctly and to its benefit the sudden collapse of the Soviet Union, buying back its reunification at low cost).

As a result, the «neo-mercantilistic» economic invasion of Germany in the Euro-zone, and its continuous expansion to the rest of Europe, seems to have been crowned with success – let alone the fact that Berlin has almost entirely replaced Brussels. Perhaps the only «flaw» of the whole process is the invasion of the IMF in the Euro-zone, an act though that Germany itself provoked –in order to replace it later on with the ESM, since it used the «Fund» on the one hand to take on the «dirty work», and on the other hand to exploit it, learning from its past experiences and gain knowledge (learning the «technology» of the newest economic weapon the IMF possesses and has used many times in the past).
If Great Britain eventually withdraws from EE, despite the fact that it realizes where the continent is heading, and taken together with the proven inability of France to face Germany (already the Chancellor has formally stated that ‘’it worries about the economic condition of France’’, with an obvious intent of setting the markets against it), Germanys plans will be fulfilled – whether the Euro collapses or not.
In the first case, the German onslaught will continue, with the formation of «satellites» (Netherlands, Austria, Finland, etc.), as well as «economic zones» of complete submission to the country (Greece, Spain, Portugal, etc.), directly dependent on its industry (industrial products). In the second case, that is if the euro will eventually not collapse, Germany will become the undisputed ruler of Europe – with the submission of all its partners to the its desires and plans (and as already stated by the Chancellor publicly, ’’it is not possible for a country that owes more than 90% of its GDP, to demand for its national independency’’).
In our opinion Italy, which faces major economic problems, and as a result has to deal with the danger of being «locked out» of the markets (funding), cannot confront Germany on its own – especially when Spain is on the verge of economic collapse, which threatens to have a domino effect throughout the entire South.
On the other hand, we expect Poland to be selected to replace France as the «partner» of Germany – with the criteria of both the size of its economy, as well as the acceptance of German supremacy on its behalf, and the influence Poland has on countries of the Former Soviet Union that dislike Russia.
The only possible danger Germany faces, is Russia – which has already openly stated its willingness to offer economic aid to Greece and Cyprus, an action that would allow Russia to create a docking system in the Mediterranean for its war navy, and would also open a window for the utilization of the rich undersea energy deposits of the two countries. Apart from that, Germany’s dependence on Russia to cover its energy needs is one of the biggest drawbacks of Berlin – a situation that may prove disastrous in the future.
Furthermore, Germany’s major weapon, is the European Central Bank – with the help of which Germany has the ability to impose itself on other countries, since it dominates the ECB, and through it controls Europe’s banking system (that is currently extremely fragile). Let’s not forget here the words of M.A. Rothschild: ’’Allow me to freely issue and control the money supply of a nation, and I wouldn’t care about who votes its laws’’.
An additional weapon of Germany, one that is not yet in full operation (when it will, it will transform into a German IMF), is the ESM – through which Germany will acquire the banking systems of its «partners», who not only will pose no resistance, but will actually plead instead for it to happen (as is already the case with Spain, Ireland, Greece and so on, which in order to avoid taking on the banking systems bad debts and increase their public debt, push for the recapitalization of their banks via the ESM).

Continuing, China is undoubtedly a very important competitor of Germany, with access both to Greece, Italy and elsewhere. Although both countries are organized under a state (authoritarian) capitalistic structure (as is Russia), a kind of modern National Socialism better stated, with «neomercantilistic» foundations, cooperation between them is not easy to be achieved.

Furthermore, Japan is also broadening its activities in Europe, by acquiring German companies – a behavior that does not seem to bother Germany though, which faces Japan more like a partner (targeting most probably in a cooperative concentration against a common enemy, China, to which the entry to the production of high technology products will not be allowed without resistance).

In this context, with Turkey visiting Germany, practically «begging» for its inclusion in the E.E., it’s hard to any one not to notice certain similarities to the past – since the former allies of the Second World War seem to be coming together once again. Greece on the other hand, if it stops re-enacting the Trojan horse under the command of the U.S., and based at least on the unilateral policy adopted by its government, seems to have chosen the German side this time – with a government that puts all its hopes to the Chancellor.

Concluding, the major difference between the U.S. and Germany (China, Japan, Russia), as well as countries that follow the «example» of the one or the other, from an economic standpoint, is that the U.S. are characterized by a balance of trade deficit, while Germany runs a surplus.

Table I below, demonstrates the weak spot of the U.S. being its trade balance, compared to Germany, China and Russia (whose export trade is not as safe or mercantilistic as that of the others, since it is based on energy and raw materials):

TABLE I: The five countries with the greatest surplus and deficit, based on the balance of trade – in million $, in 2010

Great Britain
Saudia Arabia

Source: WP

Table: V. Viliardos

From a political viewpoint now, in the U.S. the state is at the service of the individual (liberalism and neo-liberalism), while in Germany (China etc.), the individual is at the service of the sate (state capitalism or a type of National Socialism) – with the economic police today playing the role of the once existent «security battalions» (SS, Schutzstaffel), especially regarding the implementation of the terrorize tactic.

As a result, the private property of the US is enormous (about 38 trillion $), and so is its public debt (15 trillion $), as well as its the budget deficits – while in China, the opposite stands true, since the property of its citizens is low, and the country’s public debt is negligible. As far as Germany is concerned, it seems that the country has changed course, targeting a direct and accelerated reduction of its public debt, increasing constantly its tax revenues, that will exceed 600 billion € in 2012 – while at the same time reducing expenses/spending, with the help of its «partners» (zero interest rates, etc.).

Finally, when such «imbalances» are being formed in the global economy, wars are inevitable – as demonstrated historically throughout the centuries when mercantilism dominated. We should note here, that when we write about Germany, we do not mean the German citizens, but the country’s political leadership (which acts under the orders of an industrial establishment of international reach, with Prussian characteristics and authoritarian foundations).


Although we have talked about mercantilism briefly before, it seems appropriate to analyze some of its important features, so we can better understand the «neo-mercantilistic» policy that Germany seems to follow (with some variations of course, «attuned» to the current economic conditions).

Specifically, in terms of the needs of authoritarian states during the 16th-19th century, for consistent and ever increasing government revenues, so that the army can be sustained, as well as the constantly growing public sector (government officials/employees), a political and economic system was created in most European countries, which was based on the almost complete government intervention on the economy. The key feature of this system was to achieve surpluses in foreign trade – or to elaborate, to expand exports, while at the same time reducing imports, so as to magnify the money reserve (gold at that time).

The export of raw materials was prevented, targeting the production and sale of finished/processed goods, which could be sold at much higher prices, create more jobs, etc. The exports of precious metals were strictly prohibited, especially gold, and the high interest rates on deposits where set in order to entice savers not to put their money elsewhere.

At the same time, exports strengthened with the re-exportation of products, that where initially imported at low prices from countries with low cost labor – a policy that Germany is currently implementing which, with the help of the strong Euro, and also due to the country’s high liquidity, pushes down prices of imported goods from Asia and elsewhere (products that Germany then re-exports to its European «Satellites»).

On the other hand, due to increased support to investments made in manufacturing industries, a dramatic drop in lending rates was observed –currently a prevailing situation in Germany, assisted by the increasing influx of money from the surrounding regions, caused by depositors need for security (after previously accomplishing, unfortunately with the help of US rating agencies, to create conditions of insecurity in the southern countries – resulting in a massive outflow of deposits from the banks there, with their ultimate destination largely being Germany).

We should note here, that the intentional reductions in imports at that time, were accomplished with the imposition of tariffs on foreign products – today, with the reduction of domestic consumption, the «management» of which is actualized with the help of payroll policy adjustments (salaries lower than productivity, salary increase adjustments lower than inflation, wage freezes – methods Germany has been using, after entering the Euro-zone, aiming at total control over Europe).

The wars at that time, as well as the constantly growing hostility between states, was the result of this policy, mainly because mercantilism «defined» foreign trade as a «zero-sum» game – a transaction that is, in which the one side wins and the other looses, since the total revenues are given and constant.

Continuing, a policy which all followers of mercantilism find themselves agreeing on, is the oppression of the working class. Both industrial workers and peasants, where forced to live close to their survival limits – so that the products produced could cost the minimum. The goal was to increase the output to its maximum, at the lowest possible cost, while completely disregarding the living standards of workers (their quality of life).

According to the then prevailing view (similar to Germanys view today, an idea of what should be imposed on Germany itself and on its «partners»), only a country that would be able to offer its employees the minimum means for survival through hard work, could achieve the highest possible production levels, with the minimum possible cost.

Furthermore, always according to the theory of mercantilism, higher wages, leisure time or the education of lower income classes, would increase costs for businesses, reduce competitiveness, push employees towards «laziness», and generate large losses to the state.

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