News & Analysis
Has the Power Elite Over-Reached?
Last week, Greece was rescued with a package worth €110 billion ($146 billion) – for the time being. That's a lot of money. Yet in the greater scheme of things, the Greek economy is just a "hill of beans," to borrow from Humphrey Bogart in Casablanca. The momentous question is whether the euro will survive. Journalists should only quote others, so please forgive this author for a little self-indulgence. In 1997, I wrote an essay in the New York Review of Books titled "The Euro: The Engine That Couldn't." It laid out the current crisis by way of metaphor: a common currency without a common government is like "several locomotives, each running under its own power, strung together to make up a single train. Each engine must steam ahead at the same speed in the same direction at the same time." Unless all the engineers behave as one, "the couplings will break," or the "locomotives will go off the rails." – Time Magazine
Dominant Social Theme: From disaster to triumph – the EU story is being written even now.
Free-Market Analysis: Greece has gone off the rails, and there are lots of post-mortems being written – especially in the mainstream press – about what went wrong and what could go right. The idea, just as we expected, seems to be that the EU will use this crisis as way of implementing tighter political controls over what were until recently fairly sovereign countries. This Time Magazine article makes just that point, actually.
But we are not sure that tighter political control is feasible – not give all the controversy surrounding the Lisbon Treaty. We think the power elite may be in over its head in Greece. In this article, therefore, we will pick up where we left off yesterday (see EU Elite Continues to Stagger) and argue that the power elite behind the EU has overreached, partially as a result of the modern era of communication technology, and that what is going on in Europe is neither especially well thought out or practical.
Why do we return to this point? Because despite the elite's ongoing losses of credibility and power, the alternative press seems loathe to write about elite mistakes and defeats in the 21st century, preferring to profile an elite that has more in common with the 20th century than the 21st. In the 21st century, the elite is damaged in our opinion as a power player; it's every move is analyzed on the Internet and an increasingly broad spectrum of non-elite citizens understand the game, the way it is played and are telling others about it.
This is important to note. It is has ramifications for people living in the West – and especially for investors who could always comfortably bet with the power elite in the 20th century. Not so anymore. The elite machine is back-firing on occasion. It did with global warming. And the EU isn't running so smoothly either.
Elite dominant social themes – promotions – can only function when people don't understand they are being promoted. People generally don't like being manipulated. Once they've figured it out, the game is up. These fear-based promotions that the elite uses to gather further control and wealth absolutely depend on people not figuring out that they are being purposefully frightened. In the 20th century, there was no Internet and no way to get the word out. All that has changed.
The mechanisms of these promotions are all over the 'Net now. The UN bureaucracy, for instance, issued numerous warnings about global warming last year – indicating that future of the planet was at stake and that the world would likely end by 2010 (or so they seemed to be saying in hysterical speech after speech.) And yet the world kept spinning. The same thing happened with swine flu. Millions were scheduled to die if they didn't get vaccinated. But many chose not to receive the vaccinations and still they did not pass away in horrid contortions. Increasingly, these fear-based promotions are dead-in-the-water. Instead, millions read the Internet and alternative news articles, and gradually figure out the manipulation. Thus millions – and more – now understand.
Yet we continue to peruse articles in the alternative Internet media (of which we are a modest part) that in our opinion give the power elite too much credit. These articles claim that the current crisis was preplanned by the West's major money center banks, and that the IMF, the World Bank, etc., (only and solely) intend to loot Greece and then the other PIGS as they have looted South America, Asia, etc. Also, contrarily, that the American Federal Reserve will come to Europe's rescue, etc., because American banks have interests in Europe and must be bailed out.
All this may be so, but as we commented yesterday, we don't believe that the Anglo-American power elite is especially enjoying itself currently. We don't believe it wants Europe to unravel anymore than the EU bureaucracy does. And sure ... while what is going on in Europe seems to be a kind of pro-forma IMF/World Bank rescue of the type that has happened before (and a terrible thing to watch and experience because it is done for the benefit of the banks rather than the nation's citizens) there are differences in the European situation that may be quite significant.
First of all, there can be apparently no effective devaluation in Greece, so the pain will be commensurately longer and deeper, as it will be Ireland and other countries that are stampeded into EU-style austerity measures. Second, many EU citizens are already aware of the impossible sums of money being laid out be central banks to salvage the larger banking system. Trillions have been disbursed to financial entities, and the millions of, say, Greeks who will now be required by their government to live on far less (while paying more taxes) will likely resent the disparities, and fiercely so. Finally, all of this is playing out on the Internet, which is a flexible and informative device, capable of mass entertainment and the most painstakingly detailed presentations.
Put all this together and you have a 1930s-style crisis running in glorious techno-color in the 21st century. The EU bureaucracy can make all sorts of resolutions in very official sounding language, but it may not help. They can commit more funds, as well, but at some point, some countries are going to have to OK some of these expenditures. In just a few minutes, as a matter of fact, Frau Merkel of Germany may get an object lesson in how angry her constituency is over the Greek bailout she just helped launch.
Likewise, the American Fed under tenacious attack in Congress, has less room to maneuver now that at any time since 1913, when it was launched. Let the Fed do ANYTHING underhanded or unconstitutional to bail out Greece or the other PIGS and it will likely be found out and broadcast over the Internet by GATA or some other watchdog group – and then Bernanke will undergo yet another grilling from Congressman Ron Paul. And it is not the grilling that is painful but the constant thump-thump of the collective feet of the public, growing angrier and angrier as they pursue the truth. Information has consequences. An enlightened public is a dangerous thing from the standpoint of the powers-that-be.
Before we finish with this article, we want to quote a little more from Time Magazine. But first let's meet the author. Jossef Joffe is the writer – the editor of Die Zeit and a fellow of the Institute for International Studies and of the Hoover Institution at Stanford University. And what is Die Zeit? According to Wikipedia, it is "a German nationwide weekly newspaper that is highly respected for its quality journalism. With a circulation of 488,036 and an estimated readership of slightly above 2 million, it is the most widely read German weekly newspaper ... The paper is considered to be highbrow. Its political direction is centrist to social democratic, but has oscillated a number of times between slightly left-leaning and slightly right-leaning. It is known for its very large physical paper format (Nordisch) and its long and detailed articles."
OK, Joffe is certainly a mainstream-media type of guy. Now to Joffe's summary in Time Magazine (ie: What must be done.):
There are only three ways out: 1) the sinners mend their ways; 2) the better-off keep paying; 3) the worst offenders decouple, go into default and thence into brutal devaluation as did Argentina in 2002 — a nation that had previously chained itself to the dollar in a one-way monetary union.
With the rescue package of this month, Europe has gone for options 1 and 2 — for the heavy hand of austerity and the soft heart of 110 billion in emergency loans. When the markets reopened on May 3, they were unimpressed, continuing to short the euro. The traders may have remembered Argentina. The country was given several injections of assistance only to default in the end, with creditors getting just a fraction of what they were owed.
Greece, to be sure, is a small economy, about one-tenth the size of the German one, so other Europeans can afford to keep Greece on track even if its government will not risk death by pleasing its creditors. But Greece is just the most egregious problem. Next in line is Portugal, followed by Spain and Italy — and these latter two are economies of real size. All of which implies a fourth solution, which should have been imposed in 1999 when monetary union took off: a system of economic governance that keeps speeds and timetables in sync.
Logically, this is the only way to prevent future Greeces. But logic is not the same as politics. Whose rules would govern such a system? Germany's, with its insistence on fiscal discipline? Or those of France, which demands more vice from the Germans, that is, to sacrifice their export surpluses by stimulating domestic demand and letting wages creep up? "Slow down so that others may keep up" is not a slogan that will go over well in Merkel Land.
Europe will not choose a single engineer to run the entire train. It will continue to muddle through. That is not necessarily a disaster, but rather the way Europe was built, with disaster followed by renewal. So the Greek calamity, which is far from over, may be a salutary wake-up call. You can't have monetary union without a system of supervision and crisis-control. The E.U. has known what Greece and others have been doing for years, but it chose not to notice, let alone to intervene.
We can see here, in this article, that Joffe is suggesting what we have predicted – that the EU will use this crisis to develop a closer and more perfect union with its "states." This is from our perspective a most cynical approach, though we are certainly aware it was one that the EU elite counted on when it initiated this horribly flawed euro-currency. As we have tried to point in several articles, however, this approach (as enunciated by Joffe) may end up being a non-starter. We wonder if Europe's tribes are going to be pliant enough to go along, and we wonder if the EU has the stomach – in the Internet era – to rewrite the rule book once again to make all this practical.
There is a third reason. A closer political and economic union very obviously at this point means a Europe dominated by Germany. That would be a terrible irony from the point of view of a Europe that bled and suffered through World War II – only to end up with a German empire that dominates economically rather than militarily. The sociopolitical ramifications would be endlessly resentful from our point of view. Chaos, averted now, will strike eventually.
Conclusion: The hysteria of the mainstream media over the plight of the EU and the necessity to salvage it is misplaced. As is the perception of some in the alternative media that the elite has planned the current unraveling in detail and is on top of the situation. We think, in fact, that the EU, in various ways, is verging on becoming yet another failed elite promotion and, as we have written before, it couldn't happen to a more deserving bunch.
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Posted by Thomas on 11/01/10 02:50 PM
To answer Rom's question of "A war between whom? I doubt there is any nation willing or able to undertake a war." you need look no further than Israel and Palestine.
Now that Israel has pledged to continue building after their 10 month moratorium, Hamas has all the support it needs to abandon diplomany.
Boatman was right that there is a religious war coming. If Israel is not careful they run the risk of fulfilling the prophecy of Daniel, but if that is the case then they are just doing what they are supposed to do.
Personally I believe now is not the same to be playing the blame game, though I will throw in that Ron Paul is a freemason, so don't be fooled into thinking you actually have somebody out there working for you. We need to all take care of our own, stock up on supplies and food, transfer as many assets out of fiat currency and into tangible goods in hand, and get ready for a bumpy ride.
The Federal Reserve is about to destroy the dollar with the next round of quantitative easing, and the EU's policy doesn't seem to be any different. Precious metals are still worth having at today's skyrocketed prices, because a fiat currency will be used as toilet paper by the time they get done with it.
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Posted by The Gimlet Eye on 05/10/10 09:09 PM
I would say that the power elite both overreaches and strangles, one act following on the other. Neither is any sort of solution that freedom loving human beings (are there any other kind?) could live with. The "bailout" will not help Greece, but will only make things worse. The Greeks are now "debt slaves." We can expect more unrest, riots, and, dare I say it, a "revolution"? The same goes for any country which has the great misfortune to travel down this road of fiscal folly.
Click to view link
Reply from The Daily Bell
We tend to agree.
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Posted by D. L. on 05/10/10 01:47 PM
"There is a third reason. A closer political and economic union very obviously at this point means a Europe dominated by Germany. That would be a terrible irony from the point of view of a Europe that bled and suffered through World War II - only to end up with a German empire that dominates economically rather than militarily..."
Gee, do you guys read Christopher Story's "World Reports" at
Click to view link ? He's been saying the same thing for years and also claims that this is what the Germans planned as they were losing WW2. the EU is a German intel operation, and the Treaty of Elyesee set it into motion.
Reply from The Daily Bell
Yes, we don't entirely believe it. We think the Anglo-American axis was just as positive about the EU if not moreso.
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Posted by Elite AntiElitist on 05/10/10 01:07 PM
About the part where you say: "People generally don't like being manipulated. Once they've figured it out, the game is up." I think it's not like that at all. Many people have one-layer explanation vs multiple layer (a good multi-layer example is in Click to view link ) and even then they feel powerless to affect change. For sure information is critical, but that's why the elite also employ disinformation to discredit the information as conspiracy. And the average person is not very well adapted to filtering info/disinfo (this will change, I estimate, as people get "trained" in this game).
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Posted by Wolfgang Jones on 05/10/10 04:54 AM
There will be a global Click to view link will be an electronic number on a debit card...no pretty designs or catchy names...just a number.
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Posted by Ken Brodeur on 05/09/10 09:27 PM
Overvalued and a system of pillage (short selling) economic as opposed to direct force (military) is the demise before us. Ultimately, the most wealthy have the most to lose.
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Posted by Weeble on 05/09/10 03:42 PM
Did it again! "Elaborate".
Reply from The Daily Bell
See previous message and response.
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Posted by Weeble on 05/09/10 03:39 PM
Sorry for the spelling mistakes. Writing in a tiny box is difficult to proof read. I should use my word processor...
I did not understand your reply. "All too fast. Too arrogant". Could you elaborate, please?
Reply from The Daily Bell
We were agreeing with you. We have written already that the unfolding elite scheme for global government has taken decades, even centuries to gestate. Yet now there seems to be an unseemly and clumsy haste to drive it forward in the face of the Internet which is scrutinizing elite actions as never before. It would seem, therefore, to us, that those running the activities of the elite are not necessarily up to the task or have grown so arrogant that they are jeopardizing much of what has patiently been accomplished in the past.
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Posted by The One That Got Away on 05/09/10 02:24 PM
Ask most Germans and they will tell you that Brussels is creating too many rules for the Germans to tolerate. Of course the problem is that they tolerate them. The Greeks ignore the rules.
I expect this current crisis to be used as the basis for further centralization of EU authority. Basically Brussels will use this as an excuse to control even more aspects of everybody's lives. On the pretext that the markets have failed. And the Germans will buy in on the basis that it is the only way they will get their money back. The French will buy in on the basis that it will give them more clout on the world stage. The Irish and the Danes will become sceptical. And the Club Med countries will be signed up by politicians eager to get their hands on money from the Germans to buy votes from their electorate.
The EU is one gigantic transfer of funds for power scheme that is utterly corrupt. One you know this, you will not be fooled by the pretense!
Reply from The Daily Bell
An analysis providing food for thought.
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Posted by Weeble on 05/08/10 11:22 PM
I just found handy conversion calulator for the SDR into all the world's currencies. It is not a currency itself. (Yeah, right).
Click to view link
When the music stops and we all have to sit down, will your currency have a nice seat?
ChinaEyes SDR as a global currency 3/29/10:
Click to view link.cn/bizchina/2009-03/23/content_7607627.htm
What China failed to say was they want to protect the Trillion US reserves they own.
The SDR seems to be like a universal translator. Like Star Trek, where the funny looking aliens were speaking English to Jean Luc Picard. He didn't look very French to me.
All the money clouds whirling around in the heavens will eventually come down to earth as dust. They will not pull this one off as easily as they think.
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Posted by Weeble on 05/08/10 10:02 PM
I just watched a Ron Paul video about Greece needing to liquidate their debt, not keep moving it around to other countries and diluting their currency.
Interesting. Debt being liquidated. What a concept.
If debt was truly liquidated, the Power Elite would feel the pain, because they are the true major asset holders in this world. They are currently protected with a shield of sovereign debt. The sovereign debt shield is crumbling. For the last 40 years of fiat money supply growth, the host country's citizens feel the pain when pain needs to be felt. Once all countries are in pain in unison (coming soon to your country), then there is nowhere for the pain to go, but up the leg, to the head. The Power Elite have finally done it. They have blown their own "bubble".
Moment of silence please. The Power Elite bubble is popping, and we all get to talk about it on the net. Oh goodie.
I can just imagine the secretive lifestyle they have right now, living in the lap of luxury on 1600 acres. Pretty soon, their security guards will give them up to friends and relatives living in poverty close by. "Let's grab a few gold candlestick holders. We've got nothing else to do". The security guards will look the other way (for a smmall cut), as their lot in life is crumbling also.
Let's say you had shares in a company. GE for example. The stock goes to $80. You have 1000 shares. They announce a stock split, but they decided to give your new 1000 shares to Citibank. You would be pretty angry right? You owned 1000 x $80 = $80,000, but now you have only $40,000. Most people cannot draw a parallel between their currency and the stock split, because they may only have $500 to their name, and there's $15 trillion floating around in the economy.
Most people cannot comprehend fiat currency, but that is changing fast. That is why Germans, Zimbabweans and Argentinians hate currency devaluation. They know how it feels. It will destroy the means of trade. No-one will know if a horse is worth 2 cows, or if a gallon of gas is worth a pint of tomatoes. Especially once the dollar goes postal.
I am really beginning to think that they have no more rabbits to pull out of a hat, except for the SDR becoming a reserve currency. They already posed the "currency breadbasket" as a reserve currency a few months ago.
I can just imagine. The SDR is put in place while every government is writhing in heroin-like debt withdrawal. They'll say yes to anything to solve their parasitic infection.
Once the SuperDollaR is in place, the debt sluices will open again, and the Power Elite have the world in their pocket. Banks will again be dragging you off the street to partake in some cheesy debt comestibles.
But I think they have a timing problem these days. The Power Elite are weak sons of the great ones in past times. They just aren't the Schiffs, Morgans and the Rothschilds of old. They think are. That will be their great undoing. If I were looking up from hell at my descendants doing the Mexican shuffle like they are doing, I would be saying, tut, tut, you have blown it. Why are you going for the gusto with so any things on to go at once. Are you crazy?
Let's hope so, so our sake.
Reply from The Daily Bell
All too fast. Too arrogant.
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Posted by Adrian W. on 05/08/10 09:58 PM
In just a few minutes, as a matter of fact, Frau Merkel of Germany may get an object lesson in how angry her constituency is over the Greek bailout she just helped launch. -DB
Over 63% of the German citizenship cares not for the "bailout". Over 70% of the American people felt the same way to our situation.
I fear she'll be rewarded well by the elite for her decision that already took place secretly awhile ago. It happens daily in the U.S. to the corrupt politicians. So she gets voted out. Who is a possible good replacement for her? The deck is stacked just as it is with the Republicrats. Nothing will change from the status quo until there are trustworthy politicians to replace the trash.
Sanders, an independent, can't even be trusted. The Fed Audit bill has been diluted and will contrarily, allow the Fed even more power. The rhetoric on more regulating is just a smoke screen...
Then there's the 'black box' action last Friday on the Stock Market. Slight of hand? Repeat of 1987? What exactly occurred? A Chinese monetary 'bailout'?
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Posted by F. Beard on 05/08/10 08:40 PM
"Meanwhile, gold retains purchasing power." The Daily Bell
Yes it does. I am for free banking so let people use gold, fractional reserve lending, etc. as they choose. But there is a perpetual argument about the correct quantity of money. I am familiar with Rothbard's argument that any "reasonable" amount of money is OK since prices and wages will adjust to that quantity. I am willing to concede that that is probably true but the fact remains that the adjustment process might be quite painful to an economy, especially during deflation. In any event, under liberty there is no need to argue about the proper amount of money since anyone is free to create it. Let the free market discover the correct quantities (plural) of monies (plural).
Reply from The Daily Bell
Very good!
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Posted by F. Beard on 05/08/10 07:15 PM
"Somehow we thought you knew of her." The Daily Bell
Well, I saw the name a couple of times on Mish Shedlock's blog and I saw her on Max Keiser this morning but I thought her gig was Wall Street corruption which I have little interest in. When you said "Browinian analysis" my first thought was Harold Browne, the libertarian Presidential candidate. I still know very little about her but I am intrigued that she is exploring monetary reform which is a passion of mine.
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Posted by Herman Hesse on 05/08/10 04:37 PM
1st - people should learn how to pay taxes - if we want to save capitalism and state.
2nd - capitalism as any other system based on wrong features - legalised greed in this case will not survived when main gain points are owned.
3rd - elite should start think that feel good actions regarding the rest of population are making it elite. people will call you elite not money or power.
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Posted by GKS on 05/08/10 03:59 PM
As a christian I believe in Gods word the Bible. If you go to Daniel and read his interpetation of the giant figure that he explains to Babylon King N. you will see that europe is the feet of clay with some steel and will never be joined as one nation. so watch for one europe to fall apart.Show me one of any of the kings or dictators that ruled all europethis past 5000years. These prople have a hard time running their own country let alone all europe. When they go down we may suffer with them economicaly.
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Posted by F. Beard on 05/08/10 03:31 PM
My thanks to the Daily Bell for the Ellen Brown recommendation. I now know what you mean by a "Brownian" analysis. Life is good.
Reply from The Daily Bell
You're welcome. Somehow we thought you knew of her.
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Posted by Jim on 05/08/10 02:30 PM
Germany has/will conquer Europe with out firing a shot. Turn all of your euro's into gold now, before they are worthless.
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Posted by F. Beard on 05/08/10 02:28 PM
"Usually in a free-market money system, there is mild deflation, or so Rothbard teaches us (though he was no free-banker)." The Daily Bell
Yep, I'm a big Rothbard fan though I do advocate free banking. The mild price deflation puzzles me. Perhaps the rate of gold mining has slightly lagged the real average growth rate historically speaking? The other possibility is the dread "hoarding" that Keynes so feared. The only "hoarding" I see today is that of the banks who are terrified of lending into a deflating economy that they caused!
Reply from The Daily Bell
No, it has to do with technology. Technology, absent regulation, advances and makes everything less expensive as a person's life goes on. Meanwhile, gold retains purchasing power.
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Posted by F. Beard on 05/08/10 01:19 PM
"Eventually, you'd likely end up with significant inflation, though." The Daily Bell
I don't see how. In an environment of competing monies, who would pick one with significant price inflation? On the one hand, banks would wish to expand their private money supply but on the other hand they would risk other monies being used instead of theirs if it wasn't managed properly.
My favorite private money is bank or business common stock since the recipients of the money become part-owners and thus can vote on how much new money should be issued. While money-for-debt is one of mankind's worst inventions, the common stock company is one of his greatest, IMO. It's the difference between looting wealth and justly sharing it.
Reply from The Daily Bell
If public central banks hold a monopoly on money (see Ellen Brown) the chances of inflation would seem to be good, sooner or later. In a free-banking environment, you are quite right. Money competition would likely hold inflation down. Usually in a free-market money system, there is mild deflation, or so Rothbard teaches us (though he was no free-banker).
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