Intelligence at the core of humanism – Patrice Ayme

This is a full copy of a recent post from Patrice Ayme published on Learning from Dogs with Patrice’s written permission.

I am bound to say that many of the arguments set forth in much of Patrice’s writings stretch my brain cells but that is not the point.  The point is that all right-minded (not in a political sense, you will grant me!) citizens of the free world need the expressions of thoughtful people in order to make the best decisions they can; for themselves, their families and the wider community.  For me that is why Patrice should be read.

Here is the article from Patrice Ayme published on his Blog on the 22nd October. (It’s long – but it’s a Sunday so think of it as your Sunday newspaper, settle down in an easy chair and get stuck in!)

Krugman, or Crudeman?

By Patrice Ayme

HIGH DEBT = HIGH PLUTOCRACY.

Abstract: President Obama has been getting atrocious economic and financial advice, all across the spectrum, from Summers to Krugman.

This abominable advice reinforced the plutocracy, with tax cuts, and a giant spigot of money creation directed at giant banks and their demons. While the banks are getting nearly all the money, the rest of the economy has been weltering. The government is obsessed with throwing money at bank holding companies to save its friends, while accusing everybody else.

The main architect of this quiet coup, Summers, and his demoncrats and democrats, is supposedly on his way out (see Note1). That may be just a ruse to escape the sword of justice and positive change.

Another Reagan adviser posing as a democrat, and a progressive, Paul Krugman, has been more in evidence recently, as some of his advice has obviously gained traction.

Krugman’s advice: accusing China, with GUSTO (while sparing the American plutocracy of much blame), and augmenting government spending, BLINDLY. It does not matter if said spending is on foolish things: just spend. Keynes, the Jesus Christ of Krugman’s religion, said so, so it ought to be right. A detail: said augmented spending goes through… the friendly giant banks. Friendly to them oligarchs (see Rahm Emanuel’s 17 millions from one bank).

After accusing China, whatever China does, Krugman has also targeted European austerity programs, from Ireland to Lithuania, blaming them for the difficulties of the USA.

Krugman’s latest attacks are against the British government austerity program (some of which was started by Labor before the election in Spring, so there is real tripartisan support for it).

China and Europe are trying hard, in many ways, to change their economies and societies for the best, though, whilst the USA is just forking more money to its greedy plutocrats, calling thatdismal masquerade “recovery and reinvestment“ (a lot of these huge transfers of money go through hermetic notions such as “Quantitative Easing”, or buying toxic garbage from the banks, as if it were worth anything: it’s done through the banks… the private banks).

Let me repeat slowly. The advice of Krugman is dressed in leftist garb, but it is nothing of the sort. It’s like getting currency advice from Soros: dangerous at any speed.

The policies Krugman promotes, such as Quantitative Easing 2 (flushing the biggest banks with money), and xenophobia, are deeply pro-plutocratic (unsurprisingly Soros advises QE2 too).

This essay will rectify some of Krugman’s massive disinformation. Whether he is fully conscious of it, or not, is irrelevant: Krugman gives bad advice to the government of the USA. The USA needs to engage in Colbertism, as Europe and China are doing, and the defense department of the USA does.

Sending more money on the ravenous world manipulating financiers, as Krugman suggests to do even more of, in practice, amounts to feeding more poison to the victim, throwing more gasoline on the fire, breeding more black mambas inside the house, while screaming that more insanity will bring strength. And lying about other countries, from China to Great Britain, does not help. It’s internationalism at its worst.

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DEBASING CHINA:

According to Krugman, China is bad, Europe is bad, whilst the hard working USA is good, as it tries single handedly to pull the entire world economy out of the slump it itself created. But the USA’s goodness is not quite enough to master the foreign devils. So sad. This is apparently Krugman’s latest New Trade Theory: USA sinks, because big bad aliens did it.

Nothing to do with reaganomics, Obama’s admiration for Reagan, Clinton’s dismal selling of democracy and the future to plutocracy, and Krugman’s work for Reagan, hand in hand with Summers. This is all the past, we don’t need to ruminate it. Krugman would rather talk about…1937. (Not to tell us about American plutocracy supporting Hitler, while undermining democracy, as what was going on then, but to talk about FDR overenthusiastic support of… interest rates!)

One has to know that Krugman is viewed as one of the authors of“New Trade Theory”, NTT, a sophistry which basically boiled down to claiming that trade is good, no matter what. NTT did not work for the common folk, thus apparently Paul Krugman is now down to trading insults with reality, in the apparent hope that this will distract enough simple common folks. Thus New Trade Theory has revealed its true nature: adding insult to injury.

New Trade Theory faltered by ignoring the enormous leverage American plutocracy would get by going global, while no legal strings were attached, and conspiring with local dictators (the later a good source of Bill Clinton’s prodigious income). Plutocracy could drive at any speed, carry whatever cargo it wanted, including the most precious good: people’s employment.

The result is the unfolding economic and social disaster in the USA (and a lot of the world). Krugman may be trying to change his spots to cleanse his soul. And Krugman liberally attacks all foreigners, all over, most of the time, thus diverting attention to the root cause of the problem, already clear with his old boss, Reagan.

Last week Krugman was furious because China had lifted its short term interest rates up to 2.5%. That should lift the Chinese currency, which is one of the obsession of Krugman. So Krugman gets what he wanted, but that makes him even angrier (because, as expected, it changes nothing).

Meanwhile the dollar of the USA is returning a colossal .18% on short term maturities (Fed Funds rate). Yes that is about zero percent. Yes, that is about 13 times LESS than the return on the Chinese currency! In other words the USA is trying to lower the dollar as much as possible (Obama said he wanted to double USA exports in the next five years. But he forgot the slight detail that the USA is becoming a banana republic. I cannot believe he will find so many bananas to sell, even if they come super cheap, not everybody wants to splurge and become obese on American bananas).

So Krugman accuses China to debase its currency, but the USA is debasing the US dollar thirteen times more (this, what I just uttered, is a parody of what plutocratic economists call a model, full of sophisticated mathematics, the sort of things Krugman claims he does. but it’s little more than smoke and mirrors, and silly graphs which mean nothing, except that plutocracy is hiding behind them).

In truth China has something like four giant infrastructure projects running concurrently, in education, trains, biology, clean energy, etc. China builds universities, and China builds Airbuses (yes, from the company headquartered in Toulouse). Just the Chinese High Speed Rail infrastructure project amounts to 500 billion dollars or so (it uses basic European HSR technology).

China has even offered to finance and build the High Speed Rail in California. That is because all the American money goes to American plutocrats, and none is left for mundane activities. As Stiglitz pointed out a few days ago:

“The US Federal Reserve may make funds available to banks at close to zero interest rates, but if the banks make those funds available to small and medium-sized enterprises at all, it is at a much higher rate.”

The banks keep the money, making risk free profits, feeding their bonuses, and their power.

And don’t worry: Silicon Valley plutocrats use private planes, and do not want to see 250 mph trains in their backyards, for many reasons, so it will not happen, for a long time (except if American sheep wake up and turn into combative Europeans, which is unlikely, because they have been brainwashed into believe that it is cool to be as cool and politically minded as barnacles).

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WRONG IS WRONG:

Krugman, Stiglitz, and also myself, would be viewed, by many as critics from the left. As the last British election unfolded, I was more in support of Mr. Brown, who had long aggravated me, but changed his spots, once he became Prime Minister. However, I hold that the truth is the truth. It is not because one overall disapproves of the general drift of the new PM, Cameron, that one should then support invented data inimical to Cameron. But that is what Krugman has been doing.

When the sheep invents data to support its cause, it invites the wolf to do the same, and the wolf will do it better, with more drastic consequences for the sheep.

In a remarkably misleading editorial, Krugman says the following (see full quotes in the notes):

1) “Fiscal austerity is the fad of 2010. That fad is fading, but the damage is done.” (False: successful Europeans nations, such as Sweden and Germany, have been at austerity for arguably 20 years. Let alone France in the 1930s…)

2) Krugman asserts that austerity does not rest on careful analysis(False: not only it rests on careful analysis, all the way from the High Middle Ages, but austerity rests on careful experience: Europe is made of more than 30 nations, and some went austere, and came out ahead, while the profligate ones are down in the dumps.)

3) Krugman claims that austerity has been justified by the hope of gaining confidence. (False: Europeans and Chinese don’t give primacy to market and business confidence, due to the fact that there, in China and Europe, the state rules, rather than the plutocracy. In the EU around half of the economy is state.)

4) Krugman claims that “The sensible thing, then, is to devise a plan for putting the nation’s fiscal house in order, while waiting until a solid economic recovery is under way before wielding the ax. But trendy fashion, almost by definition, isn’t sensible — and the British government seems determined to ignore the lessons of history.“

(False: the sensible thing to do is to do what has worked several times in Europe, let alone China: re-establish fiscal, economic and social order, FIRST. Don’t wait for plutocracy to toll for thee. There is no evidence that the other way around ever worked.)

-So what history is Krugman alluding to? Just the relevant, but specious case of the 1937 USA, when FDR squeezed “liquidity” (that is, money creation by private banks, in financial jargon) too early, reverting a nascent recovery of the PRIVATE economy.- This a special case, irrelevant to the present Europe and China. And, of course, irrelevant to the present USA where short term interest rates have long been put at zero by the government (and other rates have been made very low, by same government, to HUGE opportunity cost for the rest of society)-

5) Krugman compare incomparables by claiming that “Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages.”Krugman confuses here the private sector in the USA in 1931, with the public sector in Great Britain in 2011. So many words, so many ideas, so many concepts, so many years! It can all go zoom zoom in one’s head!

6) Krugman then observes that Great Britain’s debt is below “historical average”. He disingenuously forgets to say that historically average debt, contracted in World War One was what the boom of the 1920s was engineered to fix (causing Great depression II). And that historically average debt, furthered by World War Two, and the USA financially perfidious behavior, ruined Great Britain durably thereafter. As a good American patriot, Krugman wants Great Britain to be historically indebted, so it can keep on being the USA’s poodle. Fortunately the present British government has no docile canine temperament, and has figured out American perfidy.

7) Sanctimoniously, Krugman gives the usual preaching about learning from history. But the preceding shows that as he threatens Great Britain with Japan’s fate, he forgets that Japan has a total state debt above 200% of GDP, nearly double that of Greece (itself much larger than Britain’s). Among dozens of other important facts he conveniently forgets to mention as true.

Paul Krugman forgets to say that, overall, the British government spending will keep on augmenting. UK government spending is planned to be UP by 6% in nominal terms by 2014. (Down 3% in real terms with inflation taken into account.) So much for the gloom and doom. Oh, wait…

Why so many spectacular cuts while spending increases? Because the payment of the interest on the British government debt is exploding, and the government has to budget it. It is pretty telling that Krugman does not mention the rotting elephant in the bathroom: what a jolly sight, what a happy surprise!

The problem of exploding interest is not exclusive to Great Britain. In France the entire national income tax is used to pay for the interest on the national debt. French national debt is still augmenting as more debt is piled up to pay for retirees, some retiring at 54 (as in the railways, as if we were still in the age of steam and coal). 10% of the French retirement is paid through more national debt.

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KRUGMAN IS RIGHT (OF THE PLUTOCRATS), EXCEPT FOR ALL THE FACTS:

I reacted to Krugman’s “British Fashion Victims” with the following reply that the honorable Krugman and his New York Times had the kindness to publish:

In truth, Europe knows what it is doing, and Krugman, with all due respect, does not know enough about what he is talking about, to be cogent, as we will presently demonstrate by deconstructing most of his remarkably erroneous essay.

An example: Prime Minister Cameron program will reduce government employees by 490,000 (much of them through attrition, as employees retire with their expensive pensions). Krugman says that’s terrible, and it will depress the British economy.

However, Great Britain has six million civil servants in 2010. Proportionally to the population, it is as if the USA had 30 millioncivil servants (the UK has a bit more than 60.5 million citizens, the USA a bit more than 310 millions).

But how many civil servants do the USA have? Krugman forgot to point that number out. The USA has 18 millions employed in government, three times as much as in Great Britain. Three times as much, for five times as big a population. Thus, to have the same relative number of civil servants as the USA, PM Cameron would need to fire more than two million British civil servants.

Thus the situation is much different from what Krugman depicts it to be. Different times, different countries, different situations.

Krugman compares Prime Minister Cameron in 2011 to Hoover in 1931. In truth, by letting banks close, Hoover was destroying the private economy. Cameron and his government are cutting what they view as government fat. Education and defense are basically untouched. Nationalized health care is left completely untouched (as promised in the campaign).

Cameron’s and Clegg’s idea is to increase high technology plus innovation. Tories and Liberals are singing the praises of Airbus (a major employer in the UK, as it builds there Airbus’ wings). This is very far from what the Americans expected, as it behooves them that Britain would be anti-European, that is, against itself. The British government wants to make economies by sharing aircraft carriers with France. What is there not to like in this no non sense approach to the real European economy?

Indeed, the analysis in Britain is that the UK has fallen behind France and Germany in high technology industry (after centuries of leading, or being equal), and that this is the root of Great Britain’s doom, should it be not fixed immediately. The aim is to do whatever it takes to catch up in industrial high technology. This is a major insight of Tories and Liberals. It is of course a major rapprochement with the main line of France, first, and Germany, second.

This line of progress was the line of the Franks: instead of enslaving men, let technology do the work… And let’s keep the government small. After five hard centuries of using that method to pull out of the Dark Ages imposed by the Christian obscurantism and fascist theocracy, by the year 1000 CE, the Franks (basically the present Eurozone) had achieved the world’s highest GDP per head.

So it is not surprising that Europe is going back to the tried and true. All of Europe is reigning in state spending. Even Norway (which is more than twice richer, per head, than the USA). Even Sweden, the temple of social democracy, richer per capita than France, or Germany.

Even in Germany, the world number one exporter (even beating sneaky China, most of the time).

In France, more than 10% of the present retirement spending is paid by further borrowing by the state. This is unsustainable, thus unacceptable. Most of the French population (more than 60%) believe that it is unacceptable (while, paradoxically a majority supports the strikers according to the sacred French principle that loud protests are the only religion worth having… as long as it does not interfere with the All Saints vacation).

And the stingy Europeans are right. Those who have borrowed money are owned by those who lent it to them. The last time there was really major borrowing in Europe, it came to be called serfdom. This is indeed what happened in the High Middle Ages.

The debt had to be piled up, then, because the Imperium Francorum was invaded from all directions. First Charles Martel nationalized the church, to pay for the army. But that was not enough.

The terrible Muslim invasions were very expensive to fight as the attacking fascists had harnessed the resources of more than half, and the richest half, of the Roman empire to feed and equip their jihadist armies.

Thus, although the Franks had outlawed slavery, overspending, caused in great part by the necessity of rising the greatest armies since the heydays of imperial Rome, and the cost of reconstruction once the ravaging Muslim armies had been pushed out, brought them right back down into a system where the average person was indebted… And being indebted means being indebted to the rich.

The first European Prime Minister who came to understand that government spending had to be cut down was the Swedish PM, and he was a Social-Democrat. Social democrats had put in place the all controlling Swedish nanny state. That Swedish PM, as progressive a liberal as they come, embarked on a savage austerity program who made him very hated.

At the time, the Swedish economy was collapsing, so there was no choice. The PM started very crafty changes, replacing a lot of costly central state functions by cheaper local citizen initiatives, for example in health care ( midwives and other non MD medical personnel were allowed to make a lot of medical procedures, and lots of health care is conducted on the phone, making Sweden the best health care system, even ahead of the 2% of GDP costlier French health care, which is more gold plated).

Now, but for oil rich Norway, Sweden is doing better economically and socially than all other European countries. And Sweden is in the EU, and it has no oil. The Swedes are proselytizing, and the rest of the 26 EU countries are inspired by it.

In general, Scandinavia has long cracked down on the imperial state. Scandinavian politicians pay for all their private expenses, and do not fly business on flights less than 3.5 hours. One is far from the Imperial Roman state based in Washington, with a First Man (“Princeps”) and a “First Lady” who make Nero and Caligula look like misers, relatively speaking.

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IMPERIAL USA, DOWN THE PLUTOCRATIC ROAD: I SELL, THEREFORE I RULE:

Why does this all mean? Trying to boost the economy through throwing money at the people was done during the worst centuries of Rome. It led to success only in the sense that the fascist imperial degeneracy kept on going.

Of course, some will say that those days are back. Imperial Rome was at its most grotesque when the Praetorian Guard put the imperial throne for auction. Yesterday, Barack Obama came to the San Francisco Bay Area. Plutocrats paid $30,400 per person to come to events where the president was acting up. Two months old plutocratic babies paid their $30,400. Then, to have your photograph taken with the president, it would cost you another $6,500.

Yes, $30,400 is more than half the average family income in the USA. And yes, Barack Obama visited several plutocratic homes. Meanwhile the Praetorian Guard is building bases as if it were going to stay a century in Afghanistan. Never mind what Obama says, he will do as the plutocrats say. As long as they pay. A Silicon Valley plutocrat spent more than 100 million dollars of her money to be elected governor.

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LEVERAGING STATE SPENDING FOR THE TECHNOLOGICAL ADVANCEMENT OF THE ECONOMY:

I am as progressive as they come. I am for central state spending in health, education, etc. I believe in Colbertism, the invention, earlier, by King Henri IV, of the high technology, legislated advancing economy to provide every family with a hen in the pot, at least once a week, as he put it.

However, this government investing in a valuable future works better when the spending is similar to what is done with money creation through private banks (the fractional reserve money creation system). The state brings in 10%, of the money, the privates do the rest. So the privates leverage on public money. For example in Europe, 250 mph, High Speed Rail is financed and built by private companies, leveraging governmental input. The USA used to do this, for example when railroads were built in the USA in the 19C. But for that government has to have available money to spend. This is highly relevant: 1.2 million construction workers are idle, and they could be put to work on conventional railroads, making them faster, safer, more efficient. But of course that cannot happen as long as the money goes to the corruptocrats and other plutocrats.

To borrow for current spending is unacceptable, in a family, but even more in a country: a family can die, and escape debt that way, but not a country…without great mayhem. Actually this is exactly how debt leads to war.

Cautious spending, investment spending, is the way to go. Unfortunately, Obama’s spending, deluded by Reagan advisers, and their plutocratic masters, has been neither. What British PM Cameron is doing is risky, but it may well work. What has been done under Obama, so far, cannot work.

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Patrice Ayme

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Note 1: STIMULATING PLUTOCRACY, NOT JOBS: First there was Larry Summers, who used to be a Reagan economic adviser, at the inception of the plan to put the plutocracy in power much more than it already was (“trickle-down economics”). Summers advised to write as many big checks to the banks as needed, to save their owners and managers.

TARP was put in evidence, but was only a small part of the (on-going) support to the giant banks and their giant owners. A grandly called “stimulus” was also put in evidence. But it was nothing of the sort. More than half of it was made of tax cuts (yes, a la Reagan!), and most of the rest compensated for the states’ financial collapse. A tiny proportion went to creating jobs (mostly of the menial, non multiplying type, such as improving trails in the middle of national lands).

This meant that money creation was mostly directed at Wall Street. Money was created, to serve Wall Street, not industry. In 2 years Obama stimulated jobs for 50 billion dollars (the trails above, and a few potholes), while Wall Street, in bonuses alone, distributed to itself 300 billion dollars. The source of the money is the same: taxpayers. To create these 300 billion dollars of bonuses, about four trillion dollars were spent.

How? Through Quantitative Easing. Basically the government lent short at zero interest to the giant banks, which were then allowed to reinvest with the government on so called longer maturities, at much higher interest. Many other tricks were used, such as having nationalized companies (FHA, Fannie Mae, Freddie Mac) buy at outrageous prices worthless mish mash of over-valued mortgages. said nationalized companies are broke.

The other of ex-twenty something Reagan adviser, Summers’ alter ego, at least in the Reagan White House, was Paul Krugman. He seems to be listened to recently (considering the USA’s aggressive dollar devaluation, and all azimuths attacks against other countries).

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Note 2: HOW THE QUR’AN CREATED MIDDLE AGE SERFDOM: One way the Franks beat the Muslim armies, aside from sheer intelligence, was with very heavy cavalry, and its giant armored horses. The cost was tremendous, but a cavalry charge by European knights would go through Muslim horse like a hot knife into butter. More generally a highly specialized military aristocracy, training itself from early childhood was created (under Charles Martel). But it put all of Western Europe in debt. On the positive side, the savages from the north (Vikings), from the east (various types of Huns), and the south (Muslims), were thereafter domesticated, once their armies had been defeated and chased out (which took more than 12 centuries in the case of Europe itself, and various Muslim theocracies).

Note 3: American ignorance is an astounding marvel: The other day, Fox News’ Neal Cavuto, one of Fox’s stars, who thinks he is a business genius, was interviewing a BRITISH European Member of Parliament in Strasbourg, France (the Euro parliament sits in Strasbourg, part time).

As he interviewed the British European MP, Cavuto idiotically insisted, again and again, that “Great Britain had to be happy not being part of that club“. Meaning that Great Britain had to be happy not being in the European UNION. First, the EU is not a club, but an Union.

Secondly Cavuto was interviewing a British Euro MP, knowing very well that the gentleman was British, and a Euro MP, but apparently, Cavuto was congenitally incapable of drawing the conclusion that this meant that Great Britain was part of the European Union.

This is the degree of ignorance of Americans about Europe, in full evidence. And it’s not just Fox’s Cavuto: Krugman and Stiglitz, and smart, for American economists, are both deeply ignorant of European politics, history and economics, to the point that the advice they give about Europe reminds of the advice of Huns about Ukraine.

(Stiglitz, as Krugman has long been anti-European; in the last few days, Stiglitz wrote an essay in the Financial Times along the lines I have long held, of doing what one could call an investment stimulus… by opposition to a current account debt pile up, advocated before. So some are learning… Hopefully such knowledge can reach Obama…)

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