The Incredible Stupidity of the Western Statist - Let's CRUSH Russia!

Image Source: http://news.bbc.co.uk/2/shared/spl/hi/pop_ups/05/europe_enl_1136301170/html/1.stm


Western statists in government and the media view the entire world as one big chess board wherein they only have to make a few brilliant moves to economically crush annihilate their perceived enemies to control the planet and its resources.

Matthew Yglesias at Vox.com exhibits such a mentality and arrogantly believes his own delusion that the US and Europe can so economically impair Russia that Russia can be blasted back to the Stone Age. Aside from the genocidal insanity that deliberately hurting and harming folks is indeed a desirable foreign policy goal, the stone cold reality of actual facts dismisses such dangerously juvenile aspirations, despite the best efforts of Yglesias to believe his own warped rant and he isn't focused on merely punishing Russia (who did nothing to earn punishment) but he's thoroughly focused on CRUSHING Russia.

One fact that explains how Europe could crush Russia's economy by Matt Yglesias 

Yglesias is convinced that if Europe sanctions Russia that Russia will surely end up burning in the sanctions toaster. He validates his position by asserting that the trade relationship between Europe and Russia is far more valuable to Russia and even implies that Europe doesn't even need to trade with Russia. Yglesias then proceeds to defend EU statism as if it's a force so powerful that no nation state can escape it dictates.

The fly in the ointment is that while Russia is a nation-state, the European Union is a confederation of separate countries. The EU has incredible clout when it speaks with one voice....

The European economy presently sucks, especially southern Europe, so cutting off trade doesn't just hurt Russia, it also hurts Europe because trade is always a 2 way streak. Just how much is EU-Russia trade worth? It's worth a whopping $412 billion according to a CNN infographic, yet Yglesias dismisses $400 billion in trade as if it's really nothing, a most bizarre assumption considering that Europe is Russia's largest trading partner and Russia is Europe's 3rd largest trading partner.

  
The price of 'crushing' Russia economically would be quite steep for Europe but there is much more to the Russia-EU economic alliance and mutual dependency.  Europe is also dependent upon Russia for gas.

Map: Europe's thirst for Russian gas

30% of the EU's gas comes from Russia - in Germany it's 40% and Germany is the Europe's powerhouse economy.

Europe gets very cold in the winter, especially its frigid northern nations like Germany.  Does anybody really think that Europeans and the Germans are about to risk freezing in the winter and risk losing over $400 billion a year in trade to appease the US Empire?   Well, some believe that it's no problem and that the US can supply Europe with all the gas it needs.  Mic.com (formerly policymic.com) reports, here:

Europe's reliance on Russia is temporary. By 2020, the U.S. could become a major energy exporter, supplying Europe with about half of the gas that Russia supplies now, according to the Obama administration. If the EU and the U.S. can agree upon an "energy policy," then Europe could rely on the U.S. as one of their main energy suppliers. That endangers Russia's grip over the EU, but it also means that Europe would only have to manage the next few years under Russian dominance.

The bold assumption that the US can supply Europe with all its gas needs begs the question: Who controls the largest natural gas reserves on the planet and who has the infrastructure to deliver it?  It's not the US.

Top Natural Gas Reserves by Country 2014

Russia has 1,688.00 trillion cubic feet
Iran has 1,193.00 trillion cubic feet
Qatar has 885.29 trillion cubic feet
Turkmenistan has 265.00 trillion cubic feet
US has 308.44 trillion cubic feet

Source: http://www.quandl.com/c/markets/natural-gas

Gas as a resource is worthless without a delivery system and pipelines are indeed the main delivery source. While Russia and Europe are linked by a complex network of pipelines, the US can't deliver gas to Europe because there is no infrastructure in place to accomplish such deliveries, forgetting momentarily that Russia has more than 5 times the natural gas reserves of the US.

Any efforts by the US to deliver gas to Europe will be expensive, require a huge infrastructure investment (probably one that isn't even close to being economically viable) and will also drive up energy costs across Europe, all of which will negatively impact Europe's already ailing economy.

The bottom line is that nobody can meet Europe's natural gas needs more efficiently and cost effectively than Russia, despite the grand delusions of US media foreign policy wonks preaching the hallucinations of USG policy wonks.

If you were a citizen of Europe, would you risk freezing in the winter and suffering more economic hardship just to appease the US Empire?

While the USG and its media hacks may be suffering from an acute case of inhaling way too many summer vapors, at the end of the day Europe will tell the US to take a hike with a polite "Thank you very much but we rather like our $400 billion plus trade with Russia, we very much like Russian gas and we aren't about to commit economic suicide or freeze or genuflect before DC, and by the way we still remember the NSA, YES, America can go straight to hell and we are totally fed up with the damn Yanks."

The Mess in Europe - Will Germany Pull the Plug on the Euro and EU?

There can be no question that Germany is the powerhouse economy of Europe with a whopping 20.2% of the European Union's total GDP, followed by France (15.8%), Britain (13.9%) and Italy (12.7), here.  As wealth transfers from Germany to weaker and poorer EU nations have accelerated over the years, the Germans are growing weary of constantly bailing out their incompetent, corrupt and irresponsible neighbors.  In fact, the German people are stirring up a hornets nets of anti-EU rage.

While Angela Merkel is fully committed to sustaining the EU and the Euro, whatever the cost, the German people are embarking on a populist crusade similar to the populist movement fired up in Italy by comedian turned politician Beppe Grillo whose rise in electoral power has shocked the establishment and its banksters, here.

The Telegraph reported that 65% of the German people think the Euro is damaging and 49% believe that Germany would be better off outside the EU.

Germany's anti-euro party is a nasty shock for Angela Merkel The Telegraph

A new party led by economists, jurists, and Christian Democrat rebels will kick off this week, calling for the break-up of monetary union before it can do any more damage.

"An end to this euro," is the first line on the webpage of Alternative für Deutschland (AfD). "The introduction of the euro has proved to be a fatal mistake, that threatens the welfare of us all. The old parties are used up. They stubbornly refuse to admit their mistakes."

They propose German withdrawl from EMU and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns, and like-minded nations. The French are not among them. The borders run along the ancient line of cleavage dividing Latins from Germanic tribes.

The plans draw on work by Hans-Olaf Henkel, former head of Germany's industry federation (BDI) and a chastened europhile -- the "worst error of my professional life", he told me.

The appeal of German exit is obvious. It is the least traumatic way to end the 20pc to 30pc misalignment between North and South, the cancer eating Europe. Club Med keeps the euro. It enjoys instant devaluation, while still able to uphold euro debt contracts. The spectre of sovereign defaults recedes....

Should she sign off on a bail-out out for Cyprus -- safeguarding the "dirty funds of Russian oligarchs", as the AfD puts it -- she will be raked by heavy fire.....

The latest ZDF poll shows that 65pc of Germans think the euro is damaging, and 49pc think Germany would be better outside the EU.

The Cyprus bank bailout scandal is especially noteworthy because it's common knowledge that Cyprus banks were controlled and operated by Russian oligarchs who were engaged in laundering money and other nefarious activities.  Wolf Richter at Testosteronepit.com summed up the Cyprus bank situation best, here. 

Timing couldn’t have been worse. Or more opportune. A “secret” report by the German version of the CIA, the Bundesnachrichtendienst (BND), bubbled to the surface, asserting that the pending bailout of Cyprus would use the money of taxpayers in other countries, particularly in Germany, to bail out mostly rich Russians who have over the years deposited their “black money” in Cypriot banks that are now collapsing.

Not that the bailout of this tiny speck of land with 840,000 people isn’t in enough trouble. Admitted into the Eurozone in 2008, Cyprus veered towards bankruptcy in 2011 but was temporarily bailed out last November by a €2.5 billion loan from Russia. That money didn’t last long. In June, it asked the Troika, the austerity gang from the EU, the ECB, and the IMF, for a full-fledged bailout. So Troika inspectors have been combing through the financial rubble to determine a bailout amount and needed structural reforms.

Bailing out their poor and unfortunate socialist European neighbors was one thing but the Germans are justifiably incensed over being faced with the horror of bailing out rich Russian oligarchs.  While the well publicized travails of Greece are common knowledge, no one was really all that worried because Greece only represents 1.9% of total EU GDP.  Cyrus is even far less economically significant than Greece with Cyprus GDP representing a very puny .10% of EU GDP.  Why the rush to bailout Cyprus banks with the hard earned money of ordinary Europeans?  It's a valid question.  The banksters are a crime syndicate brotherhood and they absolutely rule the world.

Meanwhile, the Troika - European Central Bank (ECB), European Commission (EC) and the International Monetary Fund (IMF) - remains committed to bailing out every thieving bank for all eternity and the Troika doesn't care if the economies of every European nation collapse into ruin.  The Troika is the guardian of the rich and their financial interests, just as its American partners, the Federal Reserve and the US government, are also the guardian of the rich and powerful, wherever they are.

Americans tend to totally ignore what is happening in Europe because they are sufficiently delusional to believe that whatever happens across the pond would never happen in America.  The general perception of the average American is that their government and banksters are honest and decent folks who would never allow such shenanigans to occur in America.  Americans just fail to grasp the stone cold reality that their government and banksters are indeed partners with the crime syndicate that rules Europe.

What is happening in Europe isn't a benign ripple in the lake effect that will softly reverberate across the big pond known as the Atlantic Ocean.  It will hit America like a tidal wave as the startled and unprepared American people are struck with a lightening bolt and forced to comprehend that the US government, American banks and the Federal Reserve are all critically tethered to the European banks and all central banks.  Europe and the Euro can't fail without bringing America down with it, and most economies of the world for that matter.

As the German people are waking up to their own vulnerability in the extremely volatile and dangerous financial mess that was 100% spawned by central banks and bankster bailouts, they are contemplating their own economic predicament.  Eventually, one does in fact become sufficiently informed and terrified to focus on their own survival.

Can the Underground Economy Take Down the NWO, its Banksters & Thieving Governments?

Wolf Richter who runs the website Testosteronepit.com had a fascinating article about how the Italians are wealthier than the Germans.

A “Politically Explosive” Secret: Italians Are Over Twice As Wealthy As Germans

Germany’s federal government only had a minuscule deficit in 2012. But high taxes and the citizens’ greater willingness to pay them—though cheating is a national sport—have over the years extracted a lot of wealth from the people and transferred it to the government. In Italy, people have been more adept at hanging on to their wealth.... 

It could stir up a firestorm in Germany. It’s not just jealousy. Strung-out German taxpayers would have to be bamboozled into bailing out the mountain of Italian government debt that the Italians, whose median wealth is twice that of Germans, refused to pay for. It won’t sit well. Not at all.

While it's true that the Germans have born the financial brunt when it comes to bailing their southern European EU neighbors, there's a much bigger question here.  Why are the Italians financially better off than the Germans?  Germany is indeed the powerhouse economy of Europe as well as one of its more financially solvent nations.  Conversely, Italy and the Italian economy are boiling to death in its cauldron of unsustainable debt.

What is absolutely certain is that high tax nations tend to spawn underground economies, especially in bad economic times when the folks perceive that government no longer offers them any value.  The proliferation of underground economies translates to cash and/or barter economies that are beyond the tax collectors reach.  Folks who make the decision to just opt out of the system typically refuse to pay taxes to thieving governments and they also tend to opt out of the traceable electronic banking system.

While the growth of underground economic activity does vary from nation to nation and region to region, they are getting noticed.  ChiefExecutive.net wrote about the rise of the underground economy in high tax California and also discussed other underground economies.

What California’s Growing Underground Economy Says About Sacramento

The underground or “black economy” generally refers to transactions that go unreported to evade taxation. Most people associate this with the illegal drug or sex industries but when government policies seek to reach further into private activities it often has the effect of driving activities that are normally above ground such as repair, services, and construction into cash or barter transactions.

Countries such as the U.S., Switzerland and Japan historically have had relatively small, nonreporting and/or illegal sectors, a typical estimate falling between 8 percent and 13 percent of GDP. Most European countries with higher taxes and regulation report underground economies of at least 20 percent of GDP with countries such as Italy and Greece having at least 30 percent of all economic activity going unreported.

Economic studies have shown that when people believe the taxes they are required to pay are reasonable and the political leaders tend to spend their tax dollars wisely, tax compliance rises, and when the reverse is true more economic activity is driven underground. California is showing signs that it is beginning to share one more characteristic with countries such as Greece and Italy: Its black economy is on the rise.

Last December, the LA Times reported that Sacramento officials are increasingly agitated by employers who pay their workers cash under the table to avoid payroll taxes, workers’ compensation insurance and other government mandates. This is in addition to smuggled cigarettes and counterfeit apparel. Officials believe that these underground activities are costing California about $7 billion annually in lost tax revenue.

It's been reported that that up to 50% of all Greek economic output is underground and the Italian underground economy is 2nd only to Greece, all of which means that the Italian underground economy is substantial and probably growing.

If the Italians are wealthier than the Germans, it's because they are keep their money earned in the underground economy.  The underground economy is a very good thing because it represents a phenomena that is literally terrorizing big spending governments by depriving them of revenues and the power to plunder.  USA Today has reported on the underground economy.

Tax evaders in Greece, Spain and Italy better beware

In Greece, tax officials fly helicopters over residential areas to spot swimming pools of the alleged poor. In Italy, inspectors raid elite ski resorts to catch the down-and-out in their Ferraris. In Spain, taxmen snoop about homes rented to sun-seeking vacationers — then visit the owners who neglected to report the income.

Evading taxes is almost a national pastime in European nations such as Greece, Spain and Italy, and for years their governments largely looked the other way.....

Greece, Spain, Italy, Portugal and other countries are raising taxes and clamping down on those who have found creative ways not to pay them. Many people admit they cheat, but the wealthy say they are being unfairly singled out to cover for government overspending — and people in the middle class, who have seen their household incomes crumble, are bitter about losing even more to taxes.

Governments are so desperate for money because they've over-spent, over-taxed and over-borrowed that they are attempting to frame the crisis in the context of class warfare since they no longer have the cash, tax revenues or debt proceeds to fund entitlements that were never affordable anyway.  That's precisely what the French socialists led by Francois Hollande did and they promptly raised taxes on the rich to 75%.  Well, the rich as well as businesses started fleeing France in droves, a situation that only made the dire economic situation even worse.

The delusion that taxing the rich will solve all problems is just that - a delusion.  The famous French actor Gérard Depardieu  who moved to tax friendlier Belgium was already paying 85% of everything he earned to the French government and that was before the Hollande 75% tax increase, here.

“I was born in 1948,” he wrote, “I started working aged 14, as a printer, as a warehouseman, then as an actor, and I’ve always paid my taxes.” Over 45 years, Depardieu said, he had paid 145 million euros in tax, and to this day employs 80 people. Last year he paid taxes amounting to 85 per cent of his income. “I am neither worthy of pity nor admirable, but I shall not be called 'pathetic’,” he concluded, saying that he was sending back his French passport.

The 'tax the rich' strategy is a fraudulent con and many of the tax absconders are just ordinary working stiffs attempting to survive and feed their families in an economy that has gone very bad for them.  Reuters detailed the plight of one working man, here.

Working informally, he pockets about 2,000 euros a month. His wife, a domestic helper, also works unofficially, earning 400 euros a month when she isn't busy taking care of their four- and six-year old children.

Sitting across from him at the cafe, his friend Marco flashes a conspiratorial smile when asked which side of the law he falls on.

He did want to be on the right side, he says with a sigh, but realised the economics were against him.

When taxation becomes so punitive that working class folks don't have enough left over to eat and provide necessities for their families after paying their taxes, there is zero incentive to continue to participate in the system of systematic plunder.  The rich who who are plundered at the rate that French actor Depardieu was plundered by the French government (85%) have the resources to pack up and move to tax friendlier abodes.

Governments do indeed understand capital flight and the underground economy, and they are prepared to declare war on ordinary folks who are just trying to make it in a world gone mad because survival in the NWO is verboten without government permission.  What is the government's weapon?  CASH - governments are restricting the use of cash with the goal of creating a 100% cashless, traceable and electronic fiat currency system.

The International War on Cash

The relentless war against cash payments waged by governments worldwide has perhaps gone furthest in Scandinavia. The ostensible reason given by our rulers for suppressing cash is to keep society safe from terrorists, tax evaders, money launderers, drug cartels and sundry other villains, real or imagined. But the actual aim of the recent flood of laws rendering cash transactions less convenient or limiting or even prohibiting them is to force the public at large to make payments through the financial system in order to prop up the unstable fractional-reserve banks and, more importantly, to expand the ability of governments to spy on and keep track of their citizens’ most private financial dealings.

Many nations have already passed laws that severely restrict cash transactions and the ultimate goal is clear - abolish cash as legal tender.  However, most nations still have legal tender laws so at best all governments can do presently is to restrict the use of cash in certainly transactions.

There can be no question that cash is king in the underground economy and, quite frankly, it's the only method of survival for the multitudes caught up in a nasty economy with nowhere to go.

It's probably also true that the underground economy is the only free market economy left on the planet.  As underground free market economies based on voluntarism proliferate they will indeed start to replace the statist planned economy in a most significant way.   Governments and bureaucrats determined to maintain their power and control will resort to anything, including murder and military dictatorship, to keep folks from engaging in voluntary commerce.

Why is Europe Such a Freaking Disaster?

The European Union is one of the worst economic disasters ever concocted by modern government. In fact, it’s nothing but a failed experiment in socialism, income redistribution and the concentration of power in Brussels, frequently dubbed The Throne in Brussels, where un-elected and overpaid bureaucrats tax and plunder the crap out of member nations and people while deciding who gets the plunder.

The original EU included 6 nations – Belgium, France, Italy, Luxembourg, Netherlands, West Germany but grew to 15 with the addition of the United Kingdom, Denmark, Ireland, Greece, Spain, Portugal, Austria, Finland, Sweden.

Interestingly, the voters in Norway voted not to join the EU and the fiercely independent Swiss, who actually kept their republic, never joined the EU. Iceland never joined either and is now recovering nicely from its financial meltdown.

What nations have the top performing economies on the planet? The Legatum Institute did an analysis on the issue. The report includes overall rankings and rankings on individual issues including economy, entrepreneurship/opportunity, governance, education, health, safety % security, personal freedom and social capital.

THE 2012 LEGATUM PROSPERITY INDEX™ RANKINGS

Overall rankings have Norway as #1 and Switzerland as #9. However, on the economy and governance, Switzerland ranked #1 and #1. Norway ranked #2 on the economy and 13th in governance.

The moral of the story is that nations who maintain their economic independence, sovereignty and refuse to submit to a higher centralized taxing and economic authority are clearly the most prosperous. Denmark is ranked #3 overall but Denmark did not join the common Euro currency so it's not embroiled in the euro currency crisis.

The great tragedy of the EU is that the union consists of giver nations and taker nations in accordance with the Marxist principle ‘from each according to his means and to each according to his needs’. It’s also called the Tragedy of the Commons. Some nations have literally been feeding off of the production and wealth of prosperous nations.

Take Greece. Greece has contributed 1.7 billion euros to the EU but got back a whopping 6.5 billion euros, an astounding 270% return according to The Guardian that did a detailed report on the EU relative to who pays and who receives.

EU budget: how much does each country pay and where does it get spent?

When the EU expanded the union from 15 nations to 27 nations, the newly added EU nations were: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Malta, Cyprus, Bulgaria and Romania.  These nations have received HUGE subsidies and handouts from the EU.

Czech Republic paid 1.4 billion euros but got back 3 billion euros, 107% more than it paid

Estonia paid 135 million euros but got back 504 million euros, 269% more than it paid

Hungary paid 836 million euros but got back 5.3 billion euros, 537% more than it paid

Latvia paid 160 million euros but got back 911 euros, 470% more than it paid

Lithuania paid 257 million euros but got back 1.7 billion euros, 542% more than it paid

Poland paid 3.2 billion euros but got back 14.4 euros, 347% more than it paid

Slovakia paid 576 million euros but got back 1.8 billion euros, 209% more than it paid

Slovenia paid 327 euros but got back 847 million euros, 159% more than it paid

Malta paid 56 million euros but got back 135 million euros, 140% more than it paid

Cyprus paid 160 euros and got back 184 million euros, 14% more than it paid

Bulgaria paid 346 million euros but got back 1.1 billion euros, 219% more than it paid

Rumania paid 1.1 billion euros but got back 2.7 billion euros, 138% more than it paid

Even Croatia, who won’t officially become a EU member until July, 2013, has gotten 113 million euros and it has not paid a dime in EU dues/taxes.

And it’s not just Greece and the recently added EU members that are cleaning up, even older EU members are getting back way more than they paid.

Portugal paid 1.6 billion euros but got back 4.7 billion euros, 194% more than it paid

Spain paid 9.9 billion euros but got back 14 billion euros, 37% more than it paid.

What nations are getting royally shafted?

Netherlands got back 47% less than it contributed
United Kingdom got back 41% less than it contributed
Sweden got back 38% less than it contributed
German got back 38% less than it contributed
Italy got back 33% less than it contributed
Denmark got back 30% less than it contributed
Finland got back 28% less than it contributed
France got back 27% less than it contributed

These are astounding percentages given that many of the nations that are heavily subsidizing other nations are now experiencing severe fiscal and economic problems themselves. France is in bad economic condition yet it gave the EU 18 billion euros while only getting back 13 billion euros.

Meanwhile, the EU Nazis just finished a contentious 2 day meeting on the EU budget and it ended badly because they could not agree on anything.

EU summit ends without budget deal

A European Union summit wound up Friday with "no agreement" sealed for the bloc's next long-term budget, officials from several EU delegations said.

"There is no agreement," one official said.

With the 27 heads of state and government bitterly divided over spending policy, there had been little hope of a deal on a trillion-euro budget for 2014-20 during the two-day summit.

British Prime Minister David Cameron headed a group of austerity-driven nations demanding huge cuts in the next seven-year budget to match belt-tightening measures at home.

Divisions between have and have-not nations on how to spend the EU's billions caused further disagreements.

Talks to settle the bitter disputes that surfaced at the two-day summit will resume in January, Belgium's Foreign Minister Didier Reynders said on his Twitter account.

An EU diplomat said the main obstacle at the summit was Cameron's demand for reductions in the planned [budget,] adding that "the most virulent" countries by his side were Sweden and the Netherlands.

Yes, the fight has definitely started over the European fiscal mess and the fight will only grow more intense and fierce.  I suspect that many European nation, especially the solvent and economically viable nations, will continue to oppose the Eurocrats, their insane spending and their absolute power.

Where does all this EU money go? Apparently it serves no useful or productive purpose whatsoever except to grow the hugely expensive and un-affordable EU bureaucracy that is directly responsible for squashing the economic and civil liberties of Europeans. According to the Guardian article, here's how the money is spent:

• Administration Running the EU in each country

• The EU as a global partner International aid, activities outside the EU

• Citizenship, freedom, security and justice Asylum, education and culture

• Preservation and management of natural resources Common agricultural policy, environment, fishing

• Cohesion for growth and employment Helping poorer regions of Europe

• Competitiveness for growth and employment Economic growth grants to small business, science and research

The EU is nothing more than a crime syndicate styled jobs protection racket for the parasitic public sector and its thieving bureaucrats. However, I will give Europe credit for one thing. At least the facade of fiscal solvency has finally melted away and now a real fight and a real debate has begun. That's more than you can say about bind, deaf and dumb America where denial runs deep and our bureaucratic class consistently fails to heed the warnings about going over the fiscal cliff. As far as clueless American politicians are concerned, everything is just perfect and they will continue to attempt to spend their way to prosperity even if it means nuking and laying waste the entire US economy.

What Happens When Governments No Longer Have Money to Pay Entitlements and Pensions?

Greece is broke. Spain is broke. Portugal is broke. Italy is nearly broke. Bailout requests continue to mount. Many nations simply borrowed heavily to sustain an unsustainable socialist cradle to the grave paradise. Folks are protesting in the streets in big numbers. They are protesting cuts in entitlements. They are protesting cuts in public sector pensions.  They are protesting cuts in healthcare benefits.  They are protesting the lack of jobs.

Demand for Spanish Bonds Collapses; "No Money Left to Pay Services" says Treasury Minister; Massive Protests Over Austerity; Two-Year Yield soars 60 Basis Points

But they can protest all they want. At the end of the day, broke is still broke, bankrupt is still bankrupt and there literally is no money to pay promised benefits. As the debt mounts, more and more revenues are siphoned off just to service the gargantuan debt which in turn decreases the amount of money left over for entitlements.

In France, Francois Holland won an election by promising to tax the rich at a rate of 75%, a campaign promised that he kept.  It's widely believed that such a draconian measure will drive the wealthy out of France and to much friendlier tax abodes.  The panicked Spainards are considering similar measures.

Prepare for Spanish Implosion: Businesses Threaten to Leave Spain Over Tax Hikes; Finance Minister Proposes 56% Tax on Short-Term Financial Transactions

Americans tend to ignore what is happening across the pond because they really don't believe that what is happening in Europe and elsewhere could ever happen in America.  Of  course, Americans are living in a fantasy land but that won't last long and when reality finally hits America it will pack a wallop of a bite.

There are credible signs in America that our delusions will be short lived.  The US is sitting on unfunded liabilities (pensions, SS, Medicare, Medicaid and other entitlements) of over $100 trillion.  This didn't come from Alex Jones.  It came from the Dallas Federal Reserve!

According to our calculations at the Dallas Fed, that unfunded debt of Social Security and Medicare combined has now reached $104 trillion—trillion with a 'T'—in discounted present value. – Richard Fisher, February 10, 2010

There is also the issue of massively underfunded public sector pensions and retirement benefits at the state and municipal level.

Public Sector Pensions Underfunded by $4.6 Trillion - That's a Future Tax Folks

Here's what is really going to happen.  Sooner rather than later, nations and people will simply be forced to start living off what they actually produce and save instead of the debt fueled consumerist economy driven by fiat banksters.

Will it be painful?  Absolutely.  But the alternative of continuing to live the monetary lie will be far more painful as central banks just continue to inflate currencies to the point where folks will need a truckload of greenback just to buy a loaf of bread.

Governments steal from the people by devaluing currencies with inflation.  And yes, citizens are complicit in the schemes so long as they perceive a value for themselves (raking in their share of the plunder).

America has one huge advantage.  The dollar still maintains its lofty status as the world's reserve currency and it's also a petro-currency.  If oil ever starts trading in non-dollar currencies, the dollar is toast and America officially becomes just another failed banana boat republic.  Moreover, there is the issue of our mountain of unsustainable debt and the continued willingness of foreign nations to subsidize our outsized debt fueled fictitious lifestyles.  Many astute financial pundits believe and have documented the fact the foreign nations are quietly and not so quietly shedding Treasuries because they are very concerned about ever getting paid. The simple truth is that America is a Debt Man Walking.   Who is the largest purchaser of Treasuries?  The Federal Reserve!

The Federal Reserve has been the largest buyer of U.S debt in the last three years...here.

Economist Peter Schiff has been saying for years that America needs to get back to producing things, learning to save and living within our means.  He's right.  It's precisely how America became the wealthiest and greatest free nation to ever grace the planet.   America once had the most prosperous middle class in all of human history.

We simply blew it by allowing government, banksters, militarists and corporatists to concentrate wealth and power into the hands of a few.  The consequences have been devastating.

Pundits like using the term SHTF (shit its the fan).  When the SHTF what will really happen?  Commodities will become the new temporary currency, especially food, fuel and medicines.  Alternative paradigms of survival will emerge, notably in underground economies that will grow as government becomes powerless.  There are communities in Greece where they barter and use local currency (not the Euro).   Raw and absolute survival instincts will kick in and trump loyalty to the state.

Some folks have put forth the premise that America's failed system of governance and its fascist, crony capitalist economic system must fail if the people are ever going to have the opportunity to rise in liberty and restore their prosperity.  It's a valid premise.

100 years of Keynesian statist economic central planning has effectively obliterated all that once propelled western nations to liberty and prosperity.  The system can't be tweaked or even saved. All that's left is starting over and starting over can only work with sound money and minimal government power.

Greece: Yes, Life Does Go On When the SHTF

The Greeks legitimately lay claim to one of the world's oldest surviving civilizations.  It's a fascinating and tumultuous history full of wars, empires, conquests and much more.  During the 20th century the Greeks endured civil war, monarchy and eventually settling on a democracy of sorts, a situation fairly similar to all European nations.  At the end of the day the Greek are no different than anybody else - they are just people trying to survive in a world gone mad.  What makes the Greeks unique is that while their situation is not necessarily historically unique, Greece is the first western nation to literally implode financially and politically, a fate that many predict will ultimately fall on most western nations as a result statism and fiat central banksters.

Greece is at the end of its rope. It  indebted itself on a massive scale to sustain its socialist paradise and there is no way the debt can ever be repaid without making Greek citizens debt slaves for a very long time. Michael Lewis summarized the Greek situation best in his book Boomerang.

As it turns out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past twelve years the wage bill of the Greek public sector has doubled, in real terms – and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a years. Twenty years ago a successful businessman turned minister of finance….pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension…..and there isn’t a single private company in Greece with that kind of average pay.”

If you think the words of Michael Lewis are harsh, the Brits have their own peculiar views of Greeks and basically accuses the Greeks of being lazy and/or overpaid folks who robbed European taxpayers while refusing to pay their own taxes.

The Big Fat Greek Gravy Train: A special investigation into the EU-funded culture of greed, tax evasion and scandalous waste 

Andrew Malone of Mail Online writes:

Even on a stiflingly hot summer's day, the Athens underground is a pleasure. It is air-conditioned, with plasma screens to entertain passengers relaxing in cool, cavernous departure halls - and the trains even run on time. There is another bonus for users of this state-of-the-art rapid transport system: it is, in effect, free for the five million people of the Greek capital....

Indeed, as well as not paying for their metro tickets, the people of Greece barely paid a penny of the underground’s £1.5 billion cost — a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer) to help the country put on an impressive 2004 Olympics free of the city’s notorious traffic jams. The transport perks are not confined to the customers. Incredibly, the average salary on Greece’s railways is £60,000, which includes cleaners and track workers - treble the earnings of the average private sector employee here....

Significantly, since entering Europe as part of an ill-fated dream by politicians of creating a European super-state, the wage bill of the Greek public sector has doubled in a decade. At the same time, perks and fiddles reminiscent of Britain in the union-controlled 1970s have flourished.

Whatever the situation in Greece and for whatever reason(s), life as the Greeks know it is rapidly coming to an end.

The bailouts arranged by the Troika (the European Commission - EC, the European Central Bank - ECB and the IMF) are a big fail and only added more debt to the gargantuan mountain of Greek debt. Postponing reality was the primary motivation of the Troika because European banks can’t handle the write-off of Greek debt without severe pain, pain sufficiently painful to crash the Euro and many European banks, notably French and German banks. Essentially, the Greek bailout was really nothing more than a temporary bailout of primarily French and German banks.

Michael ‘Mish’ Shedlock accurately summarized the situation in his blog, Global Economic Trend Analysis, here.

Pressure from the Troika and fear-mongering by all the politicians in the bailout-bed will be immense. There will be another decade of pain and suffering for Greeks if they stick to the Troika plan.

However, there will be short but intense pain for Greeks if they tell the Troika to shove it. Which is worse? It seems Greeks have come to the correct conclusion.

The Greeks really need to just bite the bullet now which is different than putting the gun in their mouths, pulling the trigger and eating the bullet, something the Troika expects the Greeks to do. When a nation is so debt ridden and so bankrupt that most of its revenues go to debt service, there is only one option: default. Many financial pundits are predicting that Greece will simply be forced to exit the Euro-zone but not the EU. But the systemic risk is far wider than Greece as Spain and other nations find themselves in dire financial condition. Some pundits have even suggested that the Greeks might attempt to blackmail the Troika just to keep the Euro-zone from financially detonating itself.

Greece Black Mailing Eurozone? As mentioned above most of the Euro 400 billion of Greek debt is now owed to other euro-zone member state institutions and the IMF, therefore a Greek default will have a double whammy on the Euro-zone as institutions such as the ECB will be sitting on huge losses that would require a bailout from member states even before it attempted to rescue the euro-zone wide banking system from collapse. Clearly the Greek politicians are using the losses the euro-zone would directly suffer were Greece to default as a blackmail tool to try and evade any responsibility. However the problem with the Greek strategy is that if Greece is allowed to successfully black mail the Euro-zone then so will other larger countries such as Spain and Italy eventually engage in similar tactics to evade economic austerity pain as their populations also demand a similar solution to economic austerity as Greece were being allowed to get away with.

Read the rest here

The Market Oracle

But how are the Greek surviving economic calamity? Folks are fleeing Athens for the rural life and learning agricultural skills.

Crisis-hit Greeks leave the cities for a new rural life

”Before, the olive groves had all been abandoned,” said Flores, noting that the island now has an industrial press and for the first time, is producing its own olive oil.

But the Greeks are doing far more than sharpening their survival skills, they are learning to barter with each other as communities work cooperatively.

Battered by Economic Crisis, Greeks Turn to Barter Networks

VOLOS, Greece — The first time he bought eggs, milk and jam at an outdoor market using not euros but an informal barter currency, Theodoros Mavridis, an unemployed electrician, was thrilled. “I felt liberated, I felt free for the first time,” Mr. Mavridis said in a recent interview at a cafe in this port city in central Greece. “I instinctively reached into my pocket, but there was no need to.” Mr. Mavridis is a co-founder of a growing network here in Volos that uses a so-called Local Alternative Unit, or TEM in Greek, to exchange goods and services...Part alternative currency, part barter system, part open-air market, the Volos network has grown exponentially in the past year, from 50 to 400 members. It is one of several such groups cropping up around the country, as Greeks squeezed by large wage cuts, tax increases and growing fears about whether they will continue to use the euro have looked for creative ways to cope with a radically changing economic landscape.

The Greeks have also become adept at operating an underground economy and producing goods and services that escapes the grubby hands of the dreaded and insidious tax collector.

In Greece, Underground Economy Fuels Financial Crisis

If you think there's been a tax revolt in the U.S. -- or even California -- consider Greece. The estimates we've heard, from the sources that seem the most reliable: 40-50 percent of the Greek economy is underground. i.e., untaxed. When we were in Spain, people there were embarrassed that the estimate was as high as 25 percent. In the U.S., the usual estimates are less than 10 percent.

Paul Solman, who wrote the above referenced 7/2010 PBS article attributed Greek financial problems to its inability to collect taxes. Solman writes:

The key to fixing the Greek economy is getting Greeks to finally stop paying cash and start paying their taxes. It would be a revolution. It would be a transformation. The push is on. In April, the top income tax rate was raised to 45 percent for those making more than 100,00 Euros and the country raised taxes on dividends, large real estate holdings and offshore companies. "The new tax bill is a revolution for Greece," said Prime Minister George Papandreou at the time. "No government in the past has dared such reforms."

Like every other big government statist, Solman actually believes that an ailing economy can be magically resurrected from the dead and instantly made prosperous and flourishing simply by raising taxes.

How well did that work out for the Greeks?

When public corruption is rampant and taxation continues to rise to feed government waste and fraud, there is a point when folks just refuse to feed the system and they go underground.  It's called 'screw the government that's done nothing but screw me'.

Judy Morris