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Award winning author and economist Tomas Piketty calls out Greek crisis hypocrisy, ‘Germany has never repaid its debts’

Tomas Piketty, “What a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”

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Post originally appeared on Zerohedge.

One year after Tomas Piketty sold a record number of economic textbook paperweights which virtually nobody read past page 26, once again showing the power of constant media hype, the French economist and wealth redistributor is out and about, this time pouring more gasoline on the fire started by the IMF last week when it released the Greek debt sustainability analysis showing Greece needs a 30% haircut, only to be met with stern resistance by, who else, Germany who know very well that should Greece get a debt haircut it will unleash the European dominoes which not even all the bluster and rhetoric of the ECB can halt.

And while Piketty’s book may have sold out in socialist France, it seems Germany did not leave a pleasant taste in the celebrity economist’s mouth, and in an interview with Germany’s Zeit magazine, translated into English, the Frenchman just made sure he will never sell another book east of the Rhine. Here is the reason why:

When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.

… Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War.However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.

What he said is perfectly factual and accurate, but in the new normal, truth is not a welcome commodity, especially when it pulls the scab on the single biggest problem with the modern economy, namely the gargantuan debt overhang (see Greece) which nobody can possibly default on without triggering massive contagion around the globe and thus leaving (hyper)inflation as the only possible way out.

A good question is whether this philosophical contrast exposed by Piketty is also indicative of the fundamental schism that is appearing not only within the Troika, where the IMF effectively won Tsipras’ referendum for him, but also within the Eurogroup, where Germany may soon find itself increasingly isolated as not only peripheral countries but soon France start clamoring for debt haircuts not only abroad but also back at home…

Full interview:

Thomas Piketty: “Germany has never repaid.”

In a forceful interview with German newspaper Die Zeit, the star economist Thomas Piketty calls for a major conference on debt. Germany, in particular, should not withhold help from Greece. This interview has been translated from the original German.

Since his successful book, “Capital in the Twenty-First Century,” the Frenchman Thomas Piketty has been considered one of the most influential economists in the world. His argument for the redistribution of income and wealth launched a worldwide discussion. In a interview with Georg Blume of DIE ZEIT, he gives his clear opinions on the European debt debate.

DIE ZEIT: Should we Germans be happy that even the French government is aligned with the German dogma of austerity?

Thomas Piketty: Absolutely not. This is neither a reason for France, nor Germany, and especially not for Europe, to be happy. I am much more afraid that the conservatives, especially in Germany, are about to destroy Europe and the European idea, all because of their shocking ignorance of history.

ZEIT: But we Germans have already reckoned with our own history.

Piketty: But not when it comes to repaying debts! Germany’s past, in this respect, should be of great significance to today’s Germans. Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe.

ZEIT: But shouldn’t they repay their debts?

Piketty: My book recounts the history of income and wealth, including that of nations. What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.

ZEIT: But surely we can’t draw the conclusion that we can do no better today?

Piketty: When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.

ZEIT: Are you trying to depict states that don’t pay back their debts as winners?

Piketty: Germany is just such a state. But wait: history shows us two ways for an indebted state to leave delinquency. One was demonstrated by the British Empire in the 19th century after its expensive wars with Napoleon. It is the slow method that is now being recommended to Greece. The Empire repaid its debts through strict budgetary discipline. This worked, but it took an extremely long time. For over 100 years, the British gave up two to three percent of their economy to repay its debts, which was more than they spent on schools and education. That didn’t have to happen, and it shouldn’t happen today. The second method is much faster. Germany proved it in the 20th century. Essentially, it consists of three components: inflation, a special tax on private wealth, and debt relief.

ZEIT: So you’re telling us that the German Wirtschaftswunder [“economic miracle”] was based on the same kind of debt relief that we deny Greece today?

Piketty: Exactly. After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

ZEIT: That happened because people recognized that the high reparations demanded of Germany after World War I were one of the causes of the Second World War. People wanted to forgive Germany’s sins this time!

Piketty: Nonsense! This had nothing to do with moral clarity; it was a rational political and economic decision. They correctly recognized that, after large crises that created huge debt loads, at some point people need to look toward the future. We cannot demand that new generations must pay for decades for the mistakes of their parents. The Greeks have, without a doubt, made big mistakes. Until 2009, the government in Athens forged its books. But despite this, the younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s. We need to look ahead. Europe was founded on debt forgiveness and investment in the future. Not on the idea of endless penance. We need to remember this.

ZEIT: The end of the Second World War was a breakdown of civilization. Europe was a killing field. Today is different.

Piketty: To deny the historical parallels to the postwar period would be wrong. Let’s think about the financial crisis of 2008/2009. This wasn’t just any crisis. It was the biggest financial crisis since 1929. So the comparison is quite valid. This is equally true for the Greek economy: between 2009 and 2015, its GDP has fallen by 25%. This is comparable to the recessions in Germany and France between 1929 and 1935.

ZEIT: Many Germans believe that the Greeks still have not recognized their mistakes and want to continue their free-spending ways.

Piketty: If we had told you Germans in the 1950s that you have not properly recognized your failures, you would still be repaying your debts. Luckily, we were more intelligent than that.

ZEIT: The German Minister of Finance, on the other hand, seems to believe that a Greek exit from the Eurozone could foster greater unity within Europe.

Piketty: If we start kicking states out, then the crisis of confidence in which the Eurozone finds itself today will only worsen. Financial markets will immediately turn on the next country. This would be the beginning of a long, drawn-out period of agony, in whose grasp we risk sacrificing Europe’s social model, its democracy, indeed its civilization on the altar of a conservative, irrational austerity policy.

ZEIT: Do you believe that we Germans aren’t generous enough?

Piketty: What are you talking about? Generous? Currently, Germany is profiting from Greece as it extends loans at comparatively high interest rates.

ZEIT: What solution would you suggest for this crisis?

Piketty: We need a conference on all of Europe’s debts, just like after World War II. A restructuring of all debt, not just in Greece but in several European countries, is inevitable. Just now, we’ve lost six months in the completely intransparent negotiations with Athens. The Eurogroup’s notion that Greece will reach a budgetary surplus of 4% of GDP and will pay back its debts within 30 to 40 years is still on the table. Allegedly, they will reach one percent surplus in 2015, then two percent in 2016, and three and a half percent in 2017. Completely ridiculous! This will never happen. Yet we keep postponing the necessary debate until the cows come home.

ZEIT: And what would happen after the major debt cuts?

Piketty: A new European institution would be required to determine the maximum allowable budget deficit in order to prevent the regrowth of debt. For example, this could be a commmittee in the European Parliament consisting of legislators from national parliaments. Budgetary decisions should not be off-limits to legislatures. To undermine European democracy, which is what Germany is doing today by insisting that states remain in penury under mechanisms that Berlin itself is muscling through, is a grievous mistake.

ZEIT: Your president, François Hollande, recently failed to criticize the fiscal pact.

Piketty: This does not improve anything. If, in past years, decisions in Europe had been reached in more democratic ways, the current austerity policy in Europe would be less strict.

ZEIT: But no political party in France is participating. National sovereignty is considered holy.

Piketty: Indeed, in Germany many more people are entertaining thoughts of reestablishing European democracy, in contrast to France with its countless believers in sovereignty. What’s more, our president still portrays himself as a prisoner of the failed 2005 referendum on a European Constitution, which failed in France. François Hollande does not understand that a lot has changed because of the financial crisis. We have to overcome our own national egoism.

ZEIT: What sort of national egoism do you see in Germany?

Piketty: I think that Germany was greatly shaped by its reunification. It was long feared that it would lead to economic stagnation. But then reunification turned out to be a great success thanks to a functioning social safety net and an intact industrial sector. Meanwhile, Germany has become so proud of its success that it dispenses lectures to all other countries. This is a little infantile. Of course, I understand how important the successful reunification was to the personal history of Chancellor Angela Merkel. But now Germany has to rethink things. Otherwise, its position on the debt crisis will be a grave danger to Europe.

ZEIT: What advice do you have for the Chancellor?

Piketty: Those who want to chase Greece out of the Eurozone today will end up on the trash heap of history. If the Chancellor wants to secure her place in the history books, just like [Helmut] Kohl did during reunification, then she must forge a solution to the Greek question, including a debt conference where we can start with a clean slate. But with renewed, much stronger fiscal discipline.

This interview was translated by Gavin Schalliol.

References:

http://www.zerohedge.com/news/2015-07-06/piketty-germany-has-never-repaid-its-debts-it-has-no-standing-lecture-other-nations

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Trump’s wish to take the US out of NATO leaves NeoCons seething

The US President has seen the truth of the irrelevance of NATO, but there is enormous resistance to change.

Seraphim Hanisch

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Tucker Carlson, Fox News and Russian and American news outlets alike have picked up the story that US President Donald Trump has on numerous occasions, opined that the United States would do well to depart from the North Atlantic Military Organization, or NATO.

This wish caused enormous fury and backlash from those opposed, which, oddly enough include both Democrats and Republicans. Their anger and alarm over this idea is such that the media networks through much of the US are alive with the idea of impeaching the President or bringing 25th Amendment proceedings against him for insanity!

Take a look:

Tucker Carlson, as usual, nailed it.

NATO was formed to make Western Europe secure in the face of a perceived Soviet threat. In 1991, the USSR collapsed and the threat of Ivan the Communist bad guy collapsed with it.

But 28 years later, NATO is still here. And, why?

Well, many “experts” continue to point at Russia as a threat, though after that statement no one seems honestly able to elucidate precisely how Russia would, in fact, threaten any nation, take over it, or conquer the world. Indeed, if anyone seems to understand the perversity of being in charge of the whole world, it seems to be Russia, as expressed by politician and LDPR leader Vladimir Zhirinovsky (see how this is so here).

Zhironovsky observed that China is the other nation that is running at full force, but viewing the problems the US is having with being the leader of the world, China stops short of trying to attain this position itself. The question becomes “What does a nation that rules the world actually do then?”

President Trump appears to be seeing the same question, or some similar variant based on the same theme. NATO serves no constructive purpose anymore. Despite the conflicts in Ukraine and Saudi Arabia and Yemen, Israel and Syria, there simply are no great threats in the world as it stands today. While there are certainly still wars, none of these wars represents an existential threat to the United States.

Why wouldn’t a US leader want out? In fact, there is further no existential threat to Europe from any present war, nor is there a threat from Russia itself. In fact, Russia has been entering into business relations with many European countries who wish to buy cheap and easily available Russian natural gas. Turkey purchased an S-400 antimissile system in addition to its US made Patriot battery.

There would seem to be very little in the way of concrete and reliable reasoning for the alliance to continue.

But the American Deep State and liberal establishment have come together to resist the US President in a truly furious manner, and it is revelatory of the hypocrisy of anti-Trump politics that American liberals, typically the “sing Kum-ba-yah peacenik” crowd, displays paroxysms of outrage and horror that NATO might be disbanded.

As the result of that, the American media is determined to choke off any possibility of one thinking, “well, what if we were to disband NATO?”

Why is this?

Simple. A lot of people make their living by preparing for the Russian “threat”, and it would mean the end of their work, the end of their money, and a great disruption in life. It does not matter that while this is true, these same people could conceivably apply their considerable skill sets to deal with real problems that face a world that no longer has a dipolar alignment, or to help prevent a real problem from arising from real situations, such as the recent and current Islamization of many European cities.

One of the great afflictions of American politics and policy has been that so much of it appears to be focused on “short term” or “no term” matters. We see this with the problems related to border security, the coming advent of AI-based automated processes that may furlough low-skilled workers in tremendous amounts in a short period of time. Rather than solve real problems, the elected representatives and media seem more content to oppose Donald Trump when he, as a businessman ought to do, makes a federal case out of what he sees on the horizon.

The Border Wall, for example, is a highly logical part of a properly handled set of immigration policies. But the very direct behavior of President Trump helped amplify the resentment the Democrats still hold against him for defeating Hillary Clinton in 2016, and so, the Democrats have effectively said “nuts!” to the needs of the nation and they take out their resentment on the nation by refusing to negotiate with the President about how to close the border.

NATO is another example. The alliance served its purpose. It is time for the alliance to end, or to be radically restructured in terms of new goals based in real, and not just flimsy rhetorical, needs.

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A dispassionate case for the American border wall

All the arguing on both sides is a rhetorical war that prevents action from happening. Here are simple reasons the border wall should go up.

Seraphim Hanisch

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One of the hottest news stories in the American press has been that over the border wall, proposed by President Trump during his campaign, and now resting at the center of a debate that has about one-quarter of the US governmental services in a state of shutdown. We have observed fiery, passionate, and even disgusting levels of rancor and bitterness in the political rhetoric concerning the wall. This debate goes on in the news media, and many of the Americans who watch and listen to this take on the fire of these arguments to even more passionate levels.

However, the passion has largely obscured the actual issue of border security, perhaps by design. As long as people keep fighting over it, it still is not getting done. And while thankfully the American government is designed to work very slowly in determining important matters, here, that trait is being exploited, mostly by Democrats, but also by Republicans and even possibly, President Trump himself.

The motives each side has vary.

President Trump wants Congress to pass wall funding because then it is a legislative act that the Legislative and Executive branches of government agree on. It is unlikely that the Supreme Court will be called upon to test such a resolution for its legality. This is one very significant reason why the President is trying every way possible to get this through Congress.

If he goes the route of declaring a “National Emergency” then, according to a number of sources, the first thing that is likely to happen after the build order is a lawsuit that stops the process in its tracks – probably a land-use lawsuit regarding eminent domain and damage to the properties of private citizens, who for various reasons do not want a barrier built through their lands. This is a problem that the American government has sadly created for itself with a very poor reputation of proper reparations for the invocation of Eminent Domain land claims.

This is the simplest way to explain the raison d’être behind the President’s hesitation to invoke executive emergency powers.

For the Democrats, the motive is interesting. The rhetoric from conservatives, including the President, is that the Dems do not want the wall simply because the “imposter” President wants one. 

For anyone who thinks that this is an utterly insane, and indeed, childish, argument, well, you would be exactly right. It is.

It also appears to be true. Evidence for this is shown by the fact that almost every critic quoted by the mainstream press is a Democrat. How is it possible that Democrats have a unique hold on facts that other people just don’t? Even when a Republican expresses a concern about the wall, there is still actual logistical information backing the claim:

Republican and Democratic lawmakers raised immediate concerns over shifting funds that have already been approved by Congress for projects in states across the nation.

Rep. Mike Simpson of Idaho, a top Republican on the Appropriations Committee, said he has been hearing from lawmakers in recent days concerned that Army Corps projects in their states could be canceled or postponed.

(This is a concrete situation that is based on normal concerns about money and not about ideological political views.)

“If they drag the money out of here,” Simpson said in an interview late Thursday, “a lot of members will have problem with it.”

(But now in come the Democrats, and observe as logic leaves and is replaced by fiery language.)

Rep. Peter DeFazio, D-Ore., the incoming chairman of the Transportation and Infrastructure Committee, said in an interview that rebuilding the disaster areas is “a way higher priority benefiting the American people than a wasteful wall.”

He said the Army Corps works on dams, levees and other projects across the nation and has an enormous backlog of unfunded needs. “It would be an incredible disservice to the American people and the economy” to divert the money to the border wall, he said.

And Rep. Nydia Velazquez, D-N.Y., said in a statement that it would be “beyond appalling for the president to take money from places like Puerto Rico that have suffered enormous catastrophes, costing thousands of American citizens’ lives, in order to pay for Donald Trump’s foolish, offensive and hateful wall.

“Siphoning funding from real disasters to pay for a crisis manufactured by the president is wholly unacceptable and the American people won’t fall for it,” she said.

The Republican here spoke without passion, simply saying there is concern about shifting funds for the wall. But the Democrats used incendiary language like “wasteful” and “foolish, offensive and hateful” as adjectives to describe the border wall. Very passionate expressions, which are being repeated ad nauseam by the mainstream press and all of the Democrat party.

The bias most notably and publicly showed in the accusatory language of the Democrat kingpins themselves, Chuck Schumer and Nancy Pelosi.

There is little true “debate” about the border wall. Most discussion on the news media or social media is verbal rock-throwing rather than respectful, honest and fair discussion. As noted before, this may be part of the design to prevent action on the wall.

However there are dispassionate and reasonable arguments that support the construction of this project. Here are some of those reasons:

  •  A 30-35 foot tall wall running the entire length of the border is probably the cheapest and most cost effective single deterrent to illegal border crossings. Whoever wants to cross the border has to make some provision for dealing with the wall. If that provision is rather difficult, it will dissuade most people from trying it.
  • A wall reduces the need for manpower along the border. While it is absurd to assume that the wall alone would keep every illegal immigrant out, it also facilitates efficient deployment of manpower and other means for active border control.
  • Even if the wall is not continuous along the entire length of the border (which is likely to wind up as the case), where it isn’t is easier to monitor. This is another aspect of the manpower issue. There are likely to be gaps and open spaces for a variety of reasons. But right now, there are about over 1,200 miles of the 1,954 mile long border that have no barrier present. That is a lot of space to monitor actively.

These three reasons are really so close as to be almost the same exact reason. But the arguments for and against the border wall are being conducted in an apparent context that in order to secure a border, this is all anyone needs to do. This is an absurd idea and is being used to try to deflect action.

  • The best border security systems in the world are systems of walls, fences and monitoring facilities. Even the Great Wall of China did not stop all invaders. It deterred a lot of probable attempts though. The wall was also manned so that active attempts to get through it could be stopped in active manners.
  • The North – South Korean DMZ and the Berlin Wall are also particularly effective as parts of an overall border crossing deterrent system. The fences, trenches and watchtowers along the length of these two borders create an extremely effective measure to deter illegal crossings. For example, the Berlin Wall stood from 1961 to 1989, a total of 28 years. During that period, only five thousand people crossed that border. The US Border Patrol conducted over 300,000 apprehensions of illegal immigrants crossing the border in 2018 alone.

The imagery of walls like North Korea’s and East Berlin’s are part of the reason why the border wall comes across as an unsavory idea. There is probably no American that does not know this image, and no one in the country like the idea of such a barrier being associated with the United States.

However, that is simply not the issue. The US is not a police state trying to keep people inside. It is dealing with a decades-long stretch of bad policy regarding immigration which will not be stopped except by radical means.

Many families made a very long journey this year in the migrant caravans to try to game the American system. It is understandable that many of these people are trying to get away from bad conditions in the countries they left. But taking advantage of the United States is wrong, and the wrong is shared equally by the actions of the illegals and by the weak posture of the United States herself.

The simplest fact is that only strength assures freedom. A strong border reinforces safe immigration. A strong and effective immigration policy relies on having a tightly controlled border AND an asylum and entry facilitation process that is thorough, lawful and dispassionate. The USA has had this in place in other points of entry, such as Ellis Island. Leaving the Mexican frontier open now is just stupid policy. An integrated, careful process to process would be immigrants as quickly and carefully as possible needs to become part of the new American way of doing things. There is no swifter way to guarantee overall immigration policy change than the construction of the physical barrier along the US-Mexican border.

It does not matter how anyone feels or thinks. Walls work when used rightly. President Trump’s plan satisfies all the required needs for a good US immigration policy as regards the Mexican border.

 

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US Women’s March implodes upon itself [Video]

This year’s Women’s March collapses due to not being politically woke enough, in a truly astounding fashion.

Seraphim Hanisch

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If this doesn’t make your head spin, perhaps you are either dead, or sufficiently “woke.” The Humboldt County Annual Women’s March, set for January 19th of this year got canceled because it was “too white.”

Yes. Too white. This is a county in Northern California, 270 miles north of San Francisco. According to the Wikipedia entry, on this locale, the 2016 census gave this demographic result.

In other words, the county’s own demographics are very white.

So, does this make sense? No? Well, maybe the interview will clear it up.

Still no?

It seems that Jesse Watters was just as stunned as anyone else. The expression on his face is priceless. Should I laugh now, or later? How does this woman actually believe her own rhetoric?

But the woman, Kelsey Reedy, seems to have the logic worked out in her mind.

Maybe that is because she is a woman. A liberal woman. Fantasy turned inside out. But wait! She also even included expletive language on a televised interview, which is indecent in of itself.

It would appear that being “woke” can truly turn in on itself.

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