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Saturday, 9 June 2012

US, UK and media pressure Germany to further "support" bankrupts

US and UK officials, and the media, are increasing pressure upon Germany to increase German financial support for bankrupt European nations, and to support money printing.  Greek public sentiment towards Germany is hostile, despite German financial support.

Many Greeks resent Germany's requirement for fiscal prudence (to spend less than one earns) as a condition for hundreds of billions of euros worth of ongoing financial aid to bankrupt Greece.  Some Greeks draw parallels between Germany's requirements for Greek financial prudence, and Hitler's control over Europe. 

Commentary that Germany is impeding a solution to the European debt crisis rests on the premise that the solution is to print more money, and that Germany guarantees further debt of bankrupt nations.

The solution to excessive debt is to repay it;  or to default.  Getting a financially disciplined country such as Germany to guarantee increasing debt of bankrupt nations won't solve the problem.  The solution to excessive debt is not to print more money. 

Money printing results in uncontrollable future inflation.  Uncontrollable inflation can lead to hyperinflation. Hyperinflation destroys peoples lives, causes political extremism, and can lead to dictatorships. The money printing solution, and the sharing of bankrupt nations' debt with Germany, will delay and amplify the problem, and can not solve it.

The solutions called for by US and UK authorities effectively call for unconditional funding by Germany of spendthrift broke nations, throwing good money after bad.  And further money printing will result in inflation, amplified and prolonged financial destruction, and long term international social upheaval and political extremism.

Germany opposes those solutions because they lead to dictators like Hitler.

Rising interest rates for Greece and Spain are good.  They signal the increased risk of lending to those countries, and they reward lenders for taking that risk. The solutions called for by US and UK authorities corrupt those free market signals.  To print money, and to use German creditworthiness, to artificially contrive lower interest rates for bankrupt or broke nations, corrupts the free market.  Ultimately such manipulation destroys that very confidence in the free market system which the US and the UK claim to value.

The US and UK panic response proposals therefore destroy the global free market system, for a short term reprieve of the inevitable defaults, at the expense of the future.  The result will be worse problems over a far prolonged period of time.  The problems will be social, political, economic and financial.  Liquidity (money printing) fuelled foreign exchange rate volatility will probably impede international trade.  Reactive nationalism will probably favour domestic trade.

In the normal world, any entity which falsifies their accounts and requires at least two bail-outs to avoid bankruptcy would be bankrupted.  We are no longer in a normal free market financial world.  The US and UK authorities are preserving the illusion, at the expense of reality.  But in the end, illusions never overcome reality.

See "Leaders plotting EU superstate:  'fiscal union' looms... with the Germans in charge".  Even the photography is designed to sway opinion against German leadership.

Also see "How Goldman Sachs helped falsify Greece's national accounts", "Greece's third bail-out defies reality", and "Is Germany being covertly pressured?" from November, 2011.

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