Germany and France are PIIGS too

First off, the headline which inspired this post: German economy contracts, France stagnates, Italy in recession.

Back during phase one of the global debt Ponzi melt down from 2007-2009, everyone rallied around France and Germany as being the big men on the Eurocampus.  They had the production that everyone wanted but could not pay for.  As I explained many times in these pages, Germany and France are good at manufacturing so they wanted to do more of what they are good at.  Their own citizens could not afford to buy more of the stuff produced by the manufacturers.  The manufacturers had tried to use exporting as a mechanism of generating profits but they were greedy.  Instead of making the other countries paygo (pay as they go), they pulled forward future consumption by allowing the consumers to buy things on credit.

Historically the foreign consumers really could not afford to pay for the goods because French and German goods are nice but not cheap.  So as the goods were bought on more and more credit there came a point when the bill had to be paid but it could not be paid.  The consumer countries simply did not have the money. In order to avoid outright default, the consumer countries simply inflated a big part of the debt away given that the debt was denominated in local currencies.  The debt was thus repaid in devalued, Lira, Drachma, and other bullshit fiat currencies.  It was a partial default by any other name.

This, and this alone, is the real major reason for the very existence of the EU.  It had nothing to do with what people were told it was all about.  It was meant as a way to disable the soft default on manufactured goods.  If everyone had to use the Euro whose value was centrally controlled then PIIGS (Portugal, Italy, Ireland, Greece and Spain) could not just inflate away their problems.  Thus, figured the manufacturing elite, they would eventually have to be paid on any future good sold.  Because of this new way of paying credit ratings were adjusted upwards for the consumers. 

But using a new currency actually changed nothing.  Instead of soft defaulting, the PIIGS needed larger and larger loans at lower and lower interest rates in order to continue borrowing to consume.  If the debt were ever called in, the PIIGS would not soft default, they would just plain old default.  And so the IMF and other simply kept them in perpetual debt and used this debt to control their behavior.

All the while, France and Germany were held up as the shining examples of what a true Eurocrat should behave like.  They were manufacturing powerhouses and they paid their bills.  But I know what is really going on and so should you, even if the main stream media doesn't get it.  Europe and France are engaging in a vendor finance scam.  The rich industrialists of these nations need customers more than customers need them.   Unless these folks just continue manufacturing more and more stuff, their profits would stagnate.  So in order to create credit worthy customers, they created the Euro and then allowed anyone with a pulse to join.  Suddenly, what used to be deadbeats for decades prior had triple A credit.

The ensuing spending spree was great for the industrialists and so they borrowed money themselves in order to build more factories for these broke customers who could only buy if they had a credit card to put it on.  So we are now in the end game of the debt Ponzi where people have decided they have enough stuff or that they cannot rack up any more debt on their line of credit.  As a result, the sales (which in past years were pulled forward by the use of debt) are now falling rapidly for France and Germany.  If they don't act soon, it will be revealed that they are in fact the biggest PIIGS of all because they will begin to default on the debt used to build all of that excess capacity for which there never were any REAL customers, only those who could imitate real customers because they had the Euro Express card (don't leave Sicily without it!).

I told all of these truths years ago in this blog.  Here is a post from 2011 to prove it but this was far from the first time I explained it.  I strongly urge everyone to read that post because it shows some basic truths which very, very few people understand:

• The economic models which tell us all to be net exporters as a mechanism for making profit are all fraudulent in nature when a fraudulent money supply is used because of two basic truths: 
• Everyone cannot be a net exporter by definition.  If you are a net exporter you have to be exporting to someone else who is a net importer.
• A country which continuously exports more than it imports simply ends up with IOUs from those who run trade deficits.  At some point those IOUs will be defaulted upon..

This is such basic logic that it always shocks me to hear Nobel prize winning economists talk about the important of exports as a way of boosting GDP.  If you trade your labor in return for accounting entries that say that your customer owes you for them, did you ever really make the sale?  I think not!  You can delude yourself about it and industrialists can pat themselves on the backs about it and pay themselves big bonuses and stock options but in fact if you are financing other people's consumption on a regular basis then you are just giving them the stuff because if they could pay for it without taking on debt, they would do so.  The fact that they have to use debt means they could not afford it otherwise.

In addition, the industrialists are fucking their own people over by creating fake customers which creates artificial demand which keeps prices high.  So a factory worker at BMW or Mercedes cannot afford to buy the product he builds. The bosses get uber-rich and the labor gets fucked.
 
Trade has one and only one valid purpose: diversification of consumption.  Anyone who tells you it can be used to systematically and permanently boost the GDP of the exporter is just a con man.  Dear Paul Krugman:  I, The Captain, do hereby challenge you to public debate on this subject.  Of course you will not accept the challenge because why debate an unknown person even if their logic stands the tests of math and history?  But the challenge is on the table nonetheless you conniving, academia-infected salesman for the global fraudsters.  You can bring all of the other eCONomen with you and it won't matter because I understand the deal and can put it into plain words whereas you would like to make everything vague and difficult for people to understand using sophistry and fed speak.

In one of the paragraphs above I wrote something that I hope stuck in your brain (and not in a good way) as you were reading it.  I wrote,"If they don't act soon, it will be revealed that they are in fact the biggest PIIGS of all". What actions did you think I was referring to?  Cutting back on the fraudulent practice of vendor finance scammery?  I hope you did not think that is what I was referring to because doing so leads to the same result as defaulting: the rich elite would have to stop overproduction and that stops the easy profit flow that they are used to.  This is not their goal!!  They will avoid that at all costs.

If you still don't get what I meant then let me introduce you to the elitist concept of creative destruction.  One of the best descriptions I ever saw of it was found in the movie, "The Fifth Element" starring Bruce Willis.  In this 1 minute long scene from Youtube, the villain, played by Gary Oldman, explains how chaos and destruction are actually beneficial and helpful people.  The elite of the world know this concept.  When the debt Ponzi grows so big that it must collapse of its own corrupt weight, something must be done to fix the situation without admitting that the elite are nothing but a bunch of lying con men who use the people like toilet paper before throwing them in the toilet.

Let's review the main elements of the problem that they seek to avoid:

• The economic collapse which must occur because of debt default must not be tied back to those who actually created it lest they be strung up in the streets for treason.
• The overcapacity which was paid for with debt must be reduced somehow in order to enable the industrialists to start the con over again.
• The debts must be wiped out.
• The population must be stripped of the stuff they bought before so that they will have to work to buy more (along with taking on new debt).

There is one easy solution for all of these issues: WAR.  Industrialists get paid while they overproduce and then they get paid to create machines and munitions to break and ruin all the stuff that people bought from them.  These bastards get paid coming and going.  This is the one of the real primary reasons for war.  The Euro con men need war and they need it soon lest it be revealed that Germany and France have been running a massive vendor finance scam.

At the end of the day, what is happening is no different than harvesting honey from bees.  The bees work their asses off in order to put up enough food for the winter.  If they ever have enough food then they can slow down but until then they have to work like, well, like bees in order to create more.  On a regular basis someone who the bees don't know comes along and fills the hive with smoke.  Then they pull the hive open and steal a big portion of the honey.  Where it goes nobody in the hive really knows but the bee farmer ends up with pots of honey that his slave bees created.  The bees quickly forget all the other bees that died in the process and they get on with the task of building up those reserves again.

And therein lies the basis of it all. The system is designed to enslave the workers of the world without anyone being the wiser.  Theft of your productive output is a form of slavery.  On a regular basis peoples lives are disrupted, their property ruined or stolen and their sons are killed.  All so that elite industrialists and moneymen who enable the scam can have a far better life for themselves off the backs of the people than they could ever produce using real labor from their own hands.  Nobody wants to just say it outright like that but there it is.  Hello, Mark and Patsy, welcome to the truth.