Khalid Hussain –
The Iconic John Clarke and Bryan Dawe duo did a very funny mock interview shortly before Clarke died in 2017. Dawe questions Clarke on the European Union debt crisis for their regular hit television segment on ABC TV.
“How much debt does Greece have? Greece owes 367 billion dollars. To whom does Greece owe this money? To other EU economies. How much does Ireland owe? 865 billion. And how much do Spain and Italy owe? They owe one trillion dollars each. And who do they owe the money to? Mainly to Britain, France and Germany. How are France, Germany and Britain doing? They have been struggling a bit themselves. Why is that? Because they have lent vast amounts of money to other European Union (EU) countries that possibly cannot pay them back. So what are the lenders going to do? They will have to bail them out. Where will they get the money to bail them out? I don’t have the answer to that one: How can broke economies lend money to other broke economies who haven’t got any money because they can’t pay back the money the broke economies lent to other broke economies and shouldn’t have done that in the first place because the broke economies can’t pay them back?”
The satire is powerful because it is uncannily true!
Finance has now become a macabre joke in our world. The EU has been struggling to stay afloat since the 2008 global financial contagion that started with the sub-prime debt crisis in the United States of America. Britain has already taken the selfish Brexit way out. This threatens to undo the whole EU which in turn poses a mortal threat to the German and French economies.
Brexit has, however, still not become reality. It has a new extended deadline of October 31 this year. This is in itself no less serious an affair than the global debt crisis which has been shaping global politics from the year 2000 when the Americans faced their dot com bubble burst. What began with 9/11 in 2001 continues unabated as an exceptional contingency without any legality. And a lot of violence since has kept the world from asking straight questions or taking a saner course for peace.
The fact that the US –and the EU and other richer economies including Japan—have been able to bail out their economies by conjuring money out of thin air to lend around without a thought to the payback is symptomatic of what has been the real structural failure no one wishes to correct in the rich countries. The United States had earlier externalized its economic woes by unleashing a violent war across the world using terrorism as a thinly veiled pretext. The Europeans joined them gladly for the growth war afforded their advanced economies is akin to a drug no junky can resist.
British Establishment desires Brexit because the EU wanted them to put an end to their off shore financial heavens to bring taxation in order across Europe. It has been argued that England cannot live without off shore heavens and that is why it wanted out of the EU. However, subsequent British failure to exit makes one imagine there is more to it than any one dares point out.
The EU has been desperately trying to woo Britain back because once the exit begins, there is no telling if others won’t follow suit. The EU is a sinking ship without Britain on board. Why? Because if the British are with the EU then they cannot be with the United States of America and thus the EU can make the unruly global power to behave. And if Americans refuse to behave, their economy will go under for the day of reckoning cannot be pushed back forever.
The US government debt of 22 trillion dollars and the American corporate debt of 11 trillion dollars are insurmountable obstacles. It cannot continue to service that debt forever. Hence, the EU is strategically obliged to try and keep Britain from leaving. This is why we have seen the EU granting Brexit extensions despite having asserted they will not do so. However, the incompetence the English has shown in making Brexit a reality makes one wonder if that has not been on purpose?
Before we contextualize this internationally, it is worthwhile to recall the EU is the only economic block in our world that rivals the mighty United States of America. It has the capacity to compete and the collective size to muster the clout to counter America economically. No other economy in the world rivals that of the US. Neither has any other society the human resource and the social, economic and cultural capacity to match America in all areas of production and trade.
That is so except for the military arena which is why Trump keeps on pushing the EU to spend more on NATO while simultaneously urging the UK to complete their exit from the EU. As a matter of fact, the American state has made no bones they desire the European Union to be disbanded. This is what has recently cemented relations between France and Germany. And that is why Macron has repeatedly called for the creation of an European military.
That is the context in which Queen Elizabeth II played host to Trump on his state visit to the United Kingdom. That the US has been pressing the UK for Brexit before they conclude a trade deal appears to be another rouse to keep the Europeans guessing while the old allies plot the future they plan to dominate sans the EU. The many direct and indirect references to D-Day, the Atlantic Charter and future prosperity of the two nations in Trump’s pompous show must be making the Germans, Austrians, Norwegians and other die hard Europeans squirm inside.
The structural foundations of realpolitik in our world cannot be explored without making some facts explicit. Foremost of these is that we all live in the American Empire that has chosen to keep its subjects ignorant on who rules over them. This is not something that escapes the powerful economies that came together to form the EU in order to seek each other’s support for their own survival. However, this is a fact that the rest of the world has never been allowed to articulate. And that is primarily why no country has tried to resist. No sensible understanding of global affairs, however, is possible without asserting this fact.
The age of the American empire began with the advent of the multilateral system in 1947 when the US dollar became the global reserve currency. The Europeans –including the British—and the Americans, Canadians, Australians and New Zealanders all have a shared history and close kinship. The animosity they have shared in their past is despite their kinship and affinities.
The roots of the present crisis lie in the end of the second World War. Germany and all who supported her were defeated. America won the war that Britain started. France was devastated. The English had to give up their colonial empire in lieu of American support that saved their country. And let it not be forgotten that the Soviet Union was also an ally of the United States and it was later they became enemies. The British got into a subservient relationship with the Americans that has kept them afloat.
France did challenge the US Empire in the late 1960s when President Charles de Gaulle demanded America convert their dollar reserves to gold as per the legally binding Brettonwoods Agreement that set the price of gold at 35 dollars an ounce. The Americans had been printing money wantonly and the market price of gold had risen to nearly 300 dollars per ounce by that time. That is when the American Empire first flexed its mighty military muscles and told the European cousins to behave. President Richard Nixon delinked the American dollar from Gold on August 17, 1970. This is the famous Nixon Shock that started the new Age of American Empire in our world.
To control fallouts, American wooed China with Henry Kissinger successfully recruiting Mao Zedong into the now toothless multilateral system. And Britain helped America peg all oil trade to dollar. In turn London became the global financial hub. These two moves left the Europeans helpless. This is the time when 97 per cent of international trade used to take place between the 22 countries of the Organization of the Economic Cooperation and Development (OECD). They Europeans had no choice but to bow before the Emperor and continue trading.
The rest of the world blissfully remained ignorant as if nothing had happened. However, even a cursory review of any set of indicators is enough to show how people in third world countries were condemned to new depths of poverty as the Europeans, Americans and their Japanese allies traded first in paper and then with digital currency. This unleashed the genie of inflation which opened up the world of derivatives trade forcing the world to trade with a fictional currency.
This is the first time ever in human history that an empire has been able to rule the world without the world being aware of who is their overlord. It is also the first time that people have been trading without ever being clear on how to determine value for the goods they exchange. The long and short of it is that the organized economies of the rich countries have been working hand in glove with the American Empire to rob the rest of the world from all value they have been producing.
This is an empire that rules by subterfuge. And the Europeans are partners in this crime against the rest of the humanity with the Americans and the British. That the Chinese joined this exploitative system is an enigma unique to their internal social and political compulsions. As for the rest of the world, the corrupt leaders are kept happy with ill-gotten wealth through the off shore financial heavens run by the British and other European countries. That is why, the EU has no way of making a global public case against the United States as threatening to upend this system of fictional finances will also liberate the rest of the world from the yoke of tyranny.
In summary, Pax Americana One began with the end of the second World War. Pax Americana Two ensued with the Nixon Shock. Pax Americana Three started with 9/11. And now the world is at a tough place for the very fiction of currency America and Europe together created is now threatening to hang their economies by the neck.
Recall the demands for a new Brettonwoods by British Prime Minister Tony Blair in the wake of the 2008 global financial meltdown to understand that no new multilateral agreement can be arrived at without first getting the status quo to the liking of the American Empire and their closest ally, Queen Elizabeth II of England.
That is why it has not happened to date. And that is also why the Americans are so desperate to see the EU disbanded. Therefore Brexit is a considered move by the British Establishment for strategic ends.
Doesn’t matter what the EU may do, the British will always go with the Americans. And France too will have to ditch Germany to survive.
To be continued…
Khalid Hussain is Resident Editor of TLTP – You may contact Khalid Hussain at Resident.Editor@tltpnews.com.pk
The Law Today Pakistan, commonly known as TLTP, is the largest news wire service, headquartered in Islamabad. The service is providing fast, comprehensive and verified news on superior courts adjudications, regulatory framework of fiscal, monitory and external sectors, economic regulatory bodies amid apex institutions regulating the financial system. TLTP is empowering readers of more than 12 national English dailies in the country.