Monday, June 18, 2018

Bill Mitchell – European-wide unemployment insurance proposals – more bunk!

The Europhiles have been tweeting their heads off in the last week or so thinking that the corner has been turned – by which they mean that Germany is about to get all cuddly with France and agree to fundamental shifts in thinking which will make the dysfunctional Economic and Monetary Union (EMU) finally workable, without the need for the ECB to break Treaty law by propping up the private bond markets. The most recent incarnation of the ‘saviour’ is a few words that the new German Finance Minister, Olaf ‘Wolfgang Schäuble’” Scholz said during an interview with Der Spiegel (June 8, 2018) – ‘Germany Has a Special Responsibility’ – about his support for a new unemployment insurance scheme for the Eurozone. It seems even the smallest things excite those who remain in denial about the long-term viability of the common currency. The proposal that Scholz was advancing has been out in the public debate for some years and is nothing like an effective solution to the terminal design flaws in the EMU. It is just an application of the same thinking that led to the creation of that flawed architecture in the first place and reinforces the conclusion that the main players in Eurozone policy setting have no intention of creating an effective federated monetary system. Just more of the same. Tomorrow, the tweets will be extolling the virtues of some other erroneous plan that some Europhile has come up with to save the system. And so it goes.…
The German solution? Create more debt for the South. How magnanimous. Another round of BS in the making.
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Konrad said...

The euro was a scam from minute one. Many people saw this from the beginning, myself included. Expecting the euro scam to get better is like expecting the USA to stop acting like a savage empire, or expecting Israel to grow a moral conscience. It is not possible. Water is wet, a triangle has three sides, the U.S. Empire is founded on greed, and Israel is an abomination.

It is a fact (not a belief) that any nation will be doomed if these two things apply…

[1] The nation has a huge and growing trade deficit


[2a] The nation cannot create its own currency out of thin air

Or, alternately…

[2b] The nation can create its own currency, but the currency is not accepted outside the nation’s borders

#1 and #2a apply to euro-zone nations like France and Greece

#1 and #2b apply to nations like Brazil and Argentina

China and Russia have huge trade surpluses. Therefore, even though their currencies are not as widely accepted as is the U.S. dollar, this is changing. The USA’s main exports are weapons and shi*ty movies. This is not enough to keep an empire alive. The U.S. Empire can only play games with debt and finance just so long, until the laws of material reality catch up with it.

Meanwhile in the euro-zone, the Troika is now talking about mandating unemployment insurance payments from indebted nations. This is yet another Troika attack on euro-zone nations that have already been screwed like France and Greece. .

In euro-zone nations that have trade deficits, ever-increasing unemployment is unavoidable. Trying to cure this with mandatory unemployment insurance is like trying to cure blood loss by slicing open the patient’s arteries.

+++++++++TAKEAWAY POINT...+++++++++

The euro-zone's problem is that it is a monetary policy union, but not a fiscal union.

In order for there to be a fiscal union, the Troika would have to GIVE (not lend ) money to euro-zone states.

Kaivey said...

I was very young at the time but I remember being told that the EC was a Common Market where European countries would buy and sell from each other keeping out cheaply made foreign goods. This meant that the British Commonwealth countries would suffer a bit, but by only trading with each other we were told we would be protecting our standard of living. Well, everyone liked the idea of cheap wine and protecting our wages, but we were conned on both the above counts.

Konrad said...


Trump says he will direct the Defense Department and the Pentagon to create a new “Space Force” as an independent sixth branch of the armed forces.

This is silly.

The US Air Force Space Command already has 88,000 people in 88 locations worldwide. The US Army Space and Missile Defense Command is similar in size. So is the US Navy’s Space and Naval Warfare Systems Command.

Q: If it is unnecessary, why will Trump do it?

A: Everything Trump does is motivated by vanity and insecurity. He wants to be loved, but only by the “right people,” which for Trump is the Military Industrial Complex (MIC).

In order to buy this love, Trump keeps throwing more and more money at the MIC. This latest nonsense is an excuse to increase the money giveaway, and to create yet another bureaucracy with hundreds of thousands of offices, each of which will have Trump’s portrait on the wall.

(And no one ever asks, “How will you pay for it?”)

Trump also reasserted plans to land astronauts on the moon again and, eventually, Mars. This is another scam.

NASA space programs were funded by the U.S. government, which creates its spending money out of thin air, and therefore has no need to make a profit. By contrast, private companies demand huge and immediate profits, and they cannot survive even one disaster.

THE BOSS:“Go to Mars? Prove how that would bring huge and immediate profits to me, or else get out.”

TRUMP: "You can collect billions of dollars a year for doing 'research' without ever producing any results, just like the military contractors do. The name of the game is delays, cost overruns, and patriotic bullshit. It doesn't matter if we never get to Mars. What matters is that the federal dollars keep flowing in."

THE BOSS: "Okay, set it up. But I'll tell you right now that no office here will have your ugly picture hanging on the wall."

Konrad said...

A common market is one thing.
A monetary policy union is another.
A fiscal union is yet another.

For Germany the euro-scam is great, because Germany has a huge trade surplus. The euro-scam has allowed Germany to suck weaker nations dry.

For France, Finland, Greece, Cypress, and Portugal, the euro-scam is a nightmare, since they have trade deficits. The euro-scam has plunged them into a spiral of ever-worsening debt an austerity.

The wild card is Italy, which has had a trade surplus since 2013, and yet the current Italian government wants to dump the euro.

The Troika will do everything conceivable to prevent this. The Troika will use bribes, threats, propaganda, false flag terrorist attacks, and even direct military attack if necessary.

GLH said...

Konrad: I would like to hear your take on what will happen to the dollar and dollar holders when it is finally dumped as the world currency.

Matt Franko said...

Bill has a new post up today that is anti-dialectic.... uh oh!!!

Konrad said...

@GLH: U.S. power is based not on the U.S. military, but on the widespread use of the U.S. dollar.

U.S. banks and the U.S. government can create infinite dollars out of thin air, and they use those infinite dollars to buy the planet and reduce billions of people (including average Americans) to debt slavery.

Because the dollar is so widely accepted, the USA is able to maintain the world’s largest trade deficit. Foreigners send us goods, and we send them dollars. (About $50 billion a month on average.)

Should dollars cease to be accepted outside U.S. borders, the USA will cease to exist.

This will happen no matter what. The cancer of debt will never stop growing. The end of the USA is coming inevitably. However it will not be all at once. Instead, other currencies like the Chinese yuan are steadily gaining more and more usage worldwide. Their gain will accelerate more and more as the U.S.-imposed debt load becomes too much for mankind to bear. The U.S. Empire will try to save its debt tyranny by launching wars, but this will further accelerate the empire’s doom. All this is inevitable.

As the U.S. dollar becomes less and less widely used, the U.S. population will be more and more pressured by its lack of self-sufficiency.

In 1991 the USSR split into fifteen independent countries. However Russia still exists, and is still the largest of the fifteen. The USA will split into several independent countries. None will be anywhere near the size of Russia or China.

Some empires are destroyed by external cataclysms like war or a prolonged drought. Most empires are destroyed by greed and internal corruption. The USA will be destroyed by a combination of both.

Tom Hickey said...

Bill has a new post up today that is anti-dialectic.... uh oh!!!

Matt, it is about political strategy. Bill is saying to be successful in political persuasion, it is better to be logical and truthful rather than rhetorical and expedient.

Dialectic is the collision of opposing views. Bill is saying that logically and truthfully expressing a position is the superior strategy in such a conflict of perspectival ideas that feminist philosophers call "standpoint epistemology."

This is what liberal democracy is supposed to be about, sincere and informed people arguing over different POVs as ways of approaching current policy decisions. Then the outcome is supposed to be compromise as win-win, although no faction gets everything they want.

What we have instead is factionalism using every trick in the book to win in a zero-sum game, including bringing power and propaganda to bear instead of logic and truth in a spirit of debate based on open inquiry. Instead, what we have is hogging the mic and marginalizing opponents that cannot be completely silenced.

The historical dialectic resembles war much more than the much touted but rarely observed principles of liberal democracy. There are many ways that the conflicts that lie at the foundation of dialectic are pursued.

Bill is offering his strategy and a ruing for its adoption in the case of the EZ.

Tom Hickey said...

"a ruing" = arguing