EU Unraveling – Greece vs. Germany
By Staff News & Analysis - February 26, 2010

Two weeks ago, European leaders tapped Germany to lead a bailout of Greece. Since then — sturm und drang and chaos. Germans are infuriated over everything from Greece's hiring of Wall Street firms to hide its debt to the country's retirement age (in Germany, 67, in Greece, 61). In turn, Greeks have accused German papers of racism and western European leaders of paternalism. Yesterday, a 60,000-person strike shut down Athens and turned violent, Theodoros Pangalos, the deputy prime minister of Greece, brought history into it. In an interview with BBC radio, he invoked the 1941 Nazi invasion of Greece, which caused an estimated 300,000 deaths. – FP Passport

Dominant Social Theme: It will turn out all right in the end.

Free-Market Analysis: Actually we're not too sure where the tussle between Greece and Germany is going to end up. It could easily be an early warning signal of the dissolution of the EU. Or perhaps the IMF could step in. Or Germany could eventually bail Greece out, and then other countries as necessary. This is the difficulty with analyzing power elite memes in a time of confusion. The Internet, in our opinion, has thrown everything out of whack and, in the short term anyway, figuring out where the world is headed is a most difficult proposition.

Used to be there was little problem in understanding good investment bets if you understood the way the world worked. Even if you didn't absolutely understand dominant social themes and their implementation, you could still likely sniff which way events were headed by watching how players lined up. Take global warming. The savvy investors would have seen the UN and the EU getting behind it, would have discerned the creation of carbon-trading markets – even before the fact – and witnessed massive international gabfests creating global understandings that would eventually result in a formal enterprise.

But somewhere between then and now, global warming got snagged. Today the idea of carbon trading seems a lot further off than it did even six months ago. Companies are backing away from the concepts and those who have invested literally decades in preparing for massive international carbon trading business are facing steep losses.

And then there is green industry. GM, for instance, is betting on small, fuel-efficient cars that offer a lower carbon footprint. But when people are polled these days, especially in America and Britain, global warming comes in at virtually last place in terms of people's concerns. GM may be making a bad bet – and all car companies rushing toward small, low-carbon cars may have misinterpreted the market – and the clout of the power elite in the Internet era.

There are plenty of other memes in our opinion that are in trouble. We think the central banking theme is doing poorly these days. We think the "one world/one financial regulator" meme is having difficulty grabbing traction. Regulations and regulators themselves are in poor odor. We believe that peak oil and other scarcity memes are not making the headway they once were. We believe that in America especially the military industrial dominant social themes – the war on terror, Islamofascism and the 9/11 attacks – are coming under scrutiny as well. We have the suspicion that almost every dominant social theme launched by the elite will find hard slogging in the early 21st century. That makes investing and generally planning for the future a lot more difficult than it used to be.

Back to the EU. In Europe one is faced with the massed power of the bureaucracy and generational wealth on one side and common-sense observation on the other. Practical observation tells us that the EU is an absurd and ludicrous invention that cannot possibly stand, especially without a strong political union to accompany the economic one. Now there is agitation for such, but one gets the feeling it may be too late. The antipathy to the EU is internalized and the European street itself has had enough of these power grabs. Are the Greeks really going to go along with turning their country over to Germany and, by definition, Brussels?

One can speak all that one wants to about the stability of the currency, the low interest rates and discipline that the euro has brought to the market. But in fact, the idea of melding Europe's fractious nation states into a "union" was always a far-fetched idea and the underhanded way that it occurred has made the current crisis worse because there is no social compact on which to fall back. There is no deep reservoir of good will. Bribes and threats only go so far. Here's some more from the article:

"[The Nazis] took away the Greek gold that was at the Bank of Greece," [said Theodoros Pangalos, the deputy prime minister of Greece.] "They took away the Greek money and they never gave it back. This is an issue that has to be faced sometime in the future. I don't say they have to give back the money necessarily but they have at least to say "thanks." And they shouldn't complain so much about stealing and not being very specific about economic dealings.

… The Greeks don't want German help, and the Germans don't want to have to give it to them. But, the alternative is mass unemployment and emigration, deep cuts to social services, and a prolonged depression. … Even moderate austerity measures combined with very high taxes on the rich, the Greek populist proposal, simply will not work. … Angela Merkel saying "Thanks for the gold!" [will] not go down well in Athens at all.

It is not just Greece that Germany has to bail out. Little Dubai's flirtation with bankruptcy turned out to be a big problem for the West. Greece is said to be a "little" country too, but it is a lot bigger than Dubai. And Italy and Spain are a lot bigger than Greece. We cannot imagine the havoc in international markets if these nations begin to visibly fail. So – you decide, perhaps – they will be bailed out because they must be. But who is to do so? Where does all the bailout money come from?

We are as puzzled as you, dear reader. Whether it is global warming, the EU unraveling or even something slightly more mundane such as the health care program in the US, power elite promotions seem to be foundering. Centralization and regulation do not seem an entirely sure thing anymore. Certainly some who read the Bell and other alternative news sites will continue to believe that the elite is an unstoppable force and that the current difficulties are mere speed-bumps in a relentless march toward global centralization.

We don't think it's nearly so simple, though, and there are a growing number of others, we believe, who share our conclusions. Blame it on the truth-telling alternative media sites thriving on the Internet. The Internet is a modern Gutenberg press and that invention played havoc with the powers-that-be of the time. Today, from an investing standpoint, things have never been so confused.

Will central banks continue to stimulate markets? Perhaps, but central banking is under attack as never before, and the leveraging of the business cycle may not be nearly so efficient this time around (and thus stock market accruals may be far less dependable than in the past). Fiat money itself – a primary promotion of the elite – is under attack as well, with more and more questioning the West's fundamental money structure.

After Thoughts

Are you an investor? What are you going to do in this modern era? Where are you going to turn? Some are investing a portion of their assets in gold and silver. That's been a good bet and may continue to be. The point is, with power elite promotions unraveling – if indeed you believe they are – the trends that one could count on are unraveling as well. For those who want certainty, the early 21st century may unfortunately provide little.

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