A new way looking at the economy based on the central idea that what is important is not complicated and what is complicated is never important.
by Tyler Durden
In one of the clearest (and most
optically pleasing) discussions of recent months, David McWiliams (of Punk Economics) succinctly explains how Europe has
evolved from a democracy to a bankocracy, the implications of which lead to austerity for
the people and a Franco-German imposition (the 'fiscal compact') that can only
lead to social unrest and chaos.
In this brief (and expertly
illustrated) video, the Irish economist clarifies Europe's 'dirty little
secret' where economic policy is being run almost exclusively for the banks
which, as we see in Greece and Ireland, means the political elite are becoming
more and more detached from the people. The terror of the r-word (referendum)
looms large as McWilliams analogizes the two
ways out of a debt crisis (squeeze the debtor or forgive the debtor) with the catholic
and protestant perspectives on sin and forgiveness.
While falling short of calling for
governments to go full-Keynesian (everyone knows you never go full-Keynesian),
he (focusing on the problems of the current hopeful solution) summarizes the
fiscal union as envisaged by France and Germany (which actually penalizes
countries that are in trouble, rather than help them) as not a
friendly-union but a vindictive strait-jacket put in place to help banks, not
countries.
It comes as no surprise to him that
the price of Gold (and Bunds) is firm as the 'example' that Greece is likely to
set (or face extreme social upheaval) will domino-like stumble across the other
troubled nations and as he points "we have been
warned". Our view remains that austerity works if
countries manage to cut expenses while keeping a balance. Alas, the balance is out
of skew due to 30 years of runaway full-Keynesianism, which leads
indeed to the problems that McWilliams so well espouses.
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