EU on the Brink?.. Terror for Domestic Repression

EU on the Brink?

Friday, February 05, 2010 - by Staff Report

Joaquin Almunia / Getty

The European Commission has ordered Greece to slash public spending and spell out details of its austerity plan within "one month", invoking sweeping new EU Treaty powers to impose a radical shake-up of the Greek economy. Greece's labour federation immediately called a general strike for February 24, dashing hopes that Europe's provisional backing for Greek crisis policies would restore investor confidence. Joaquin Almunia (pictured left), the EU economics commissioner, said tough measures were "extremely urgent" to prevent a further flight from Greek debt. "The huge imbalances from which the Greek economy is suffering are not sustainable in the long run. The fact of the matter is that markets are putting on pressure. This pressure cannot be ignored." Mr. Almunia said concerns have spread beyond Greece to other eurozone countries where public finances are spinning out of control, chiefly Spain and Portugal. "In these countries we have seen a constant loss of competitiveness ever since they joined the eurozone. The external financing needs are quite big," he said. Yields on 10-year Portuguese bonds jumped 21 basis points yesterday as funds switched their fire to the next "domino", questioning whether the government of Jose Socrates can deliver spending cuts without a parliamentary majority. "The lightning rod has been passed to Portugal: who is next - Spain?" asked Marc Chandler, from Brown Brothers Harriman. George Papandreou, the Greek premier, has agreed to a rise in fuel taxes and a partial freeze in public wages to stop the country "falling off a cliff". Even this will not be enough to satisfy Brussels - itself under pressure from Germany and the European Central Bank. The EU's hard-line faction is afraid that fiscal discipline will break down altogether across "Club Med" nations unless Greece first suffers public flagellation. - UK Telegraph

Dominant Social Theme: Challenges to overcome? ...

Free-Market Analysis: The fight to maintain the European Union has been joined, and it is not clear what the outcome will be. It is possible that result will be a shrunken EU, even a shattered EU - or perhaps a EU that fights through the difficulties now arising and maintains its federal integrity in some sense. The latter possibility carries with it ramifications of its own, however, having to do with the EU's degenerating economic and regulatory reality and the increasingly questionable status of the euro.

But in this article we want to examine an even larger point, one having to do with investing and dominant social themes. Readers of the Bell, will recall that the EU's unraveling has been a preoccupation of this modest paper, and that the Bell has in fact pointed out that the EU is what could be seen as a power elite promotion - a theme that has been enlarging and coalescing for almost half a century. It is fear-based as all power-elite themes tend to be (a union such as this one is needed to avoid another world war) and the solution is of course authoritarian - power must be delivered into the hands of a few wise men, elected and unelected, who will wield unaccountable power on behalf of hundreds of millions of voter-citizens.

Here are just a few articles (we figure we've written perhaps 30-40 over the past two years) that chart the decay of the EU, and place the inevitability of the present crisis into a referential framework:

Monday, February 01, 2010
The Great Greek Unraveling of the EU

Wednesday, January 20, 2010
Merkel's Germany to Let Euro Die?

Tuesday, February 24, 2009
Germany's Precarious Predicament: Continue to Stand on the EU Gallows or Walk Away

Monday, February 16, 2009
Failure to Save Eastern Europe Will Lead to Worldwide Meltdown

Friday, October 10, 2008
Who is Going to Bail Out the Euro?

We've been aware, based on reader response, that our EU articles may have seemed a bit trivial compared to larger and more pressing investment realities. But as we have tried to show, investing in today's theme-driven world MUST try to take a long-term view when it comes power elite promotions - and the EU promotion to our mind was a most important and weighty endeavor. The unraveling of a dominant social theme can be infinitely more important to one's financial position than the success or failure of, say, an Apple iPad.

Here's a headline from the Drudge report posted yesterday:

BLAME IT ON EUROPE - DOW FIGHTS 10,000 ... Dow Tumbling Toward 10,000 ... Stocks tumbled 2 percent Thursday, putting the Dow dangerously close to breaking through 10,000, amid worries about the US job market and Europe's ability to get a grip on its debt. Major indexes were down more than 2 percent. Alcoa, JPMorgan and Bank of America led the decline on the Dow Jones Industrial Average. Just one of the 30 Dow components was higher - Cisco. The CBOE volatility index, the market's fear gauge, spiked above 25. Global markets started the day's spiral amid worries about debt in Portugal, Spain and Greece and those countries' abilities to get it under control.

We've pointed our recently that global warming promotion - evidently and obviously an elite meme - has seemingly unraveled for the moment, and with it, astonishingly, some trillions of potential carbon-trading revenue. The ramifications are huge not only for global corporations and banks but also for myriad "green" industries and alternative power utilities and products. The failure, or potential failure, of a power elite meme is a big financial event - and those who are willing to admit they exist and are therefore willing to evaluate them and follow them as the promotions they are, will in our opinion have an advantage over those who are still locked into stock picking, mutual fund diversification, etc.

One can practice, of course, any kind of standard investment methodology, but if one does not understand, or is not willing to accept, that the power elite is seemingly locked in a desperate struggle to retain the credibility of manifold dominant social themes, then one is refusing to recognize the availability of a most important tool. Power elite memes in fact are absurdly easy to spot once one accepts their reality. The impediment to such recognition, of course, is the refusal to accept that one lives in a world in which a privileged few try to manipulate a harried multitude. It is perhaps too depressing.

Then there are those - and we have noticed this recently - who have begun to take the opposite tack. Now that power elite themes are less deniable (and more obvious) commentary is appearing on the ‘Net to the effect that the elite - in its shadowy manner - has decided that the implosion of its memes is a preferable and necessary objective. By detonating the credibility of long-established dominant social themes, the elite (so the logic goes) will so destabilize Western society that some sort of "one world government" will be seen as preferable to the impending chaos.

We are not so sure. We do believe in the existence of an evident obvious power elite, one that has invested time and treasure in current promotions; we find it hard to believe that it would simply sacrifice them, at least some of them, without fighting hard for their preservation. We don't see, necessarily, that the destruction of the global warming meme serves the interests of the elite (not even by bringing "science" into disrepute). We don't see the unraveling of the EU, after 50 years construction, as desirable to the elite either. In fact, a signature of elite themes of course is that they utilize the power of governance to continue to be viable even when they are seen to be otherwise generally discredited.

What is clear to us is that the Internet continues to pose a difficulty to the implementation of elite promotions. Like the Gutenberg press before it, the Internet (in 20 years rather than 100) has destabilized most power elite memes and made some into a laughingstock. There is more to come because the information presented by the Internet has already penetrated popular (Western) culture and the younger generation especially is aware of the gap between the "official" reality and the world as it is. In fact, the Internet's effects have been felt worldwide, and the reverberations in our humble opinion have not fully manifested themselves.

We don't know what is going to happen to the EU, or even to Greece. We've made some informed guesses, but we don't think anyone can say with any certainty. What one CAN do is observe the conversation and decline to interpret these unfolding events as merely serial serendipity. They have a meaning and they are animated by forces we think we understand, at least in a macro way, and hope you do too.

A final point: The above Telegraph article spends a good deal of time concluding something that we have reported on numerous times as well - that the EU is ultimately a German mechanism now and will live and die to a degree depending on what the Germans wish to do or can be harried into doing by the political establishment. This does not mean that the Germans control the EU, in that we believe it is ultimately an Anglo-American creation (historically it certainly was) aimed at providing a stepping stone toward worldwide currency consolidation. But the Germans have a good deal of say within the framework that has been erected. Eyes on Germany, therefore, would be advisable.

Conclusion: We'll surely follow this most important (imploding) dominant social theme, as we have in the past. We are sure our readers will, too, as it may ultimately have a goodly impact on their pocketbooks. It may even have an impact on metals markets. If the euro really does unravel, we wonder if that may provide some impetus for a free-banking gold-and silver private-market standard. We're on record as believing that the implementation0of such a standard is not so outrageous as it sounds. After all, the idea that the global warming meme would fall into disrepute or that the EU itself would face some fairly difficult challenges may once have seemed far-fetched. But we live in interesting - and even unprecedented - times, as does the elite.

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NOTED: EU instructs Sweden to store all citizen data ... The European Court of Justice has told Sweden that it must implement a 2006 measure requiring telecom operators to store information about their customers' phone calls and emails. The European Union directive, known as the Data Retention Directive, was approved by Brussels in March 2006, but Sweden has yet to implement the measure more than three years after its passage. The Swedish government conceded to the court that it had not fulfilled its obligations and assured the court that the EU directive 2006/24 can be expected to pass into Swedish law on April 1st 2010. But hours after the verdict was made public, Justice Minister Beatrice Ask told news agency TT that the government would not be preparing a legislative proposal on the issue prior to this autumn's general election. "The extent to which private companies should be forced to store information about the activities of individuals is an important matter of principle. That's exactly what this is about," Ask told news agency TT. The minister added that the government would at least wait until the completion of an inquiry into police methods, the findings of which are expected to come at the start of the summer. - The Local (Ed Note: Sweden has seemed fairly pro-EU in the past, especially the political class. Wonder if this will make them reevaluate.)


Terror for Domestic Repression

Friday, February 05, 2010 - by Staff Report

Getty Images

America has slid back again into its own special brand of terrorism-derangement syndrome. Each time this condition recurs, it presents with more acute and puzzling symptoms. It's almost impossible to identify the cause, and it's doubtful there's a cure. The entire forensic team from House would need a full season to unravel the mystery of what it is about the American brain that renders us more terrified of terrorists today than we were five years ago and less trusting of government policies to protect us. The real problem is that too many people tend to follow GOP cues about how hopelessly unsafe America is, and they've yet again convinced themselves that we are mere seconds away from an attack. Moreover, each time Republicans go to their terrorism crazy-place, they go just a little bit farther than they did the last time, so that things that made us feel safe last year make us feel vulnerable today. Policies and practices that were perfectly acceptable just after 9/11, or when deployed by the Bush administration, are now decried as dangerous and reckless. The same prominent Republicans who once celebrated open civilian trials for Zacarias Moussaoui and Richard Reid, the so-called "shoe bomber," now claim that open civilian trials endanger Americans (some Republicans have now even gone so far as to try to defund such trials). Republicans who once supported closing Guantanamo are now fighting to keep it open. And one GOP senator, who like all members of Congress must take an oath to uphold the Constitution, has voiced his concern that the Christmas bomber really needed to be "properly interrogated" instead of being allowed to ask for a lawyer. - Slate

Dominant Social Theme: Those Republicans are to blame.

Free-Market Analysis: Maybe Slate has not realized that Republicans and Democrats are basically equal opportunity offenders when it comes to the alarming erosion of civil rights and privacy in the United States. While damage to the protections provided by the Constitution to US citizens accelerated dramatically under the Bush administration, the Obama administration has acceded to the trend (which continues unabated) - not surprisingly given that there is little difference between the two parties at this point.

The establishment of Homeland Security, the endless false terror alarms and the constant pressure for more and quicker spying on criminals and terrorists is turning the US into a kind of quasi-police state. The FBI's warrantless wiretapping, where large swathes of the public may be serially wiretapped and not know it, could well destroy what is left of the market-based entrepreneurial spirit of that country. In the past it was said of even the least regulated Western countries that "anyone could be arrested for anything." But these days the authorities in America have the means as well as the law to destroy almost anyone they wish. It is never enough, however. Here is a recent article from CNET reporting on yet more American intel and police demands:

Police want backdoor to Web users' private data ... Anyone with an e-mail account likely knows that police can peek inside it if they have a paper search warrant. But cybercrime investigators are frustrated by the speed of traditional methods of faxing, mailing, or e-mailing companies these documents. They're pushing for the creation of a national Web interface linking police computers with those of Internet and e-mail providers so requests can be sent and received electronically.

CNET has reviewed a survey scheduled to be released at a federal task force meeting on Thursday, which says that law enforcement agencies are virtually unanimous in calling for such an interface to be created. Eighty-nine percent of police surveyed, it says, want to be able to "exchange legal process requests and responses to legal process" through an encrypted, police-only "nationwide computer network."

The survey, according to two people with knowledge of the situation, is part of a broader push from law enforcement agencies to alter the ground rules of online investigations. Other components include renewed calls for laws requiring Internet companies to store data about their users for up to five years and increased pressure on companies to respond to police inquiries in hours instead of days.

But the most controversial element is probably the private Web interface, which raises novel security and privacy concerns, especially in the wake of a recent inspector general's report (PDF) from the Justice Department. The 289-page report detailed how the FBI obtained Americans' telephone records by citing nonexistent emergencies and simply asking for the data or writing phone numbers on a sticky note rather than following procedures required by law.

Some companies already have police-only Web interfaces. Sprint Nextel operates what it calls the L-Site, also known as the "legal compliance secure Web portal." The company even has offered a course that "will teach you how to create and track legal demands through L-site. Learn to navigate and securely download requested records." Cox Communications makes its price list for complying with police requests public; a 30-day wiretap is $3,500.

The pressure that America's largest communications companies are under to cooperate with America's vast intel nexus is considerable and ongoing. The eventual result must be a seamless net of public/private surveillance in which the resources of America's still-innovative corporate enterprises are continually turned on the American public at the behest of the police.

The convergence of public policing and corporate resources is an inevitable sign of civic degradation. It means that all levels of society have been turned inward - on themselves - to facilitate the deterrence of criminal malfeasance. The result, unfortunately, is that the state can criminalize almost any activity and now has the wherewithal, increasingly, to enforce even the maddest conceits. Whether it is white-collar crime, the war on drugs or terrorism itself, the ability to gather endless amounts of evidence in order to find something - anything - that is provable in court is facilitated by this dismaying trend.

There is more of course. The recent insistence of American government intel spokesmen that Americans abroad can be targeted for assassination if they are deemed supportive of terrorism (and thus migrate to the status of "enemy") can be seen as part of a larger strategy aimed at suppressing DOMESTIC dissent. Those who are anti-war, or even against the current economic reign, may eventually find it prudent to move abroad given the wiretapping and other intrusive security arrangements increasingly being pursued domestically. But in such situations, US citizens (and eventually those from other countries) will face the uncertainties that stem from the US government's continued use of rendition and no doubt even more harassing activities. Again, it would seem, the mechanisms (illegal or not) purportedly developed to fight the war on terror inevitably are turned against those who would voice disapproval within the ambit of their own societies.

Conclusion: Yet, having written all this, it remains our humble estimation that the rapid degradation of civil liberties in America and in the West will eventually be counteracted. Unlike past episodes of repression, the current environment must contend with the liberating effects of the Internet, which is constantly and inevitably exposing the justifications that are being used to install the foundations of a surveillance society. Of course many still do not believe that the Internet will truly have an impact on what's occurring, especially when it comes to the erosion of civil liberties. We think it will.