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22 Jul, 2020 12:30

The EU’s €1.1 trillion budget and €750 billion bailout prove you can never taper a Ponzi scheme

The EU’s €1.1 trillion budget and €750 billion bailout prove you can never taper a Ponzi scheme

The European Union bailout announced this week won’t be enough, and it’ll be the obedient EU taxpayers who have to pick up the tab for future packages. Britain should be relieved it’s no longer part of this sorry mess.

This week’s futile European Union ‘kick-the-can-down-the-road’ budget and bailout negotiations proved to be contentious, but as always, Germany won. France crumbled, and the resistance – feebly led by the Netherlands and featuring Denmark, Sweden and Austria – caved. What a shock!

Well, it shouldn’t be a shock. The more things change, the more things stay the same. Will €750 billion bail out the EU’s bloated sovereign balance sheets, corporations, insolvent banks, underfunded pension funds, ludicrous property valuations and busted supply chains? Absolutely no way. This is the beginning of the EU’s flame-out.

The EU’s endgame has always been a power grab all about globalization. Membership has no privileges, but it does require subservience – every member must surrender their sovereignty. All member states are required to give up all of their rights to create laws independent of the EU Court of Justice while pledging full and unfettered compliance and obedience to the opaquely appointed five presidents of the European Commission. Good deal? No way.

The EU could never work without a central treasury mechanism, which ensures that each of the member states is equally compliant with fiscal and budgetary constraints and the rule of law. Unfortunately, the EU’s composition and structure have been skewed in Germany’s favour from day one – and behind the scenes, Germany has always been the economic powerhouse driving the economic engine of the EU.

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It remains the key driver of everything legislative and financial that receives a rubber-stamp from the compliant EC. The select few who ride Merkel’s coat-tails, like obedient lap-dog France, survive politically. There is no chance of being ‘Berlusconied’ if you obey. 

The most significant EU divide is between the fiscally conservative member states and the heavily indebted, profligate, southern European nations such as Italy, Spain, Portugal and Greece – plus, to a lesser extent, Ireland.  

Greece never belonged in the EU, and if Goldman Sachs had not assisted and enabled the falsification of the country’s balance sheet and financials, it would have been denied EU entry. The crushing austerity imposed by the German-led troika and lying Greek politicians has hollowed out Greece, leaving it a stricken shell of its former self.

Fortunately, in 2016, the people voted to withdraw Britain from the EU. The ‘resistance’ forced a second leave vote in 2019 via a general election, and we departed in January 2020, leaving the EU with a massive cash shortfall.

Luckily for Britain, we departed the club before the worldwide economic depression, the Covid-19 crisis and the coming bailouts that will collapse the global financial system and end the prospect of globalization. This means Britain will be off the hook for the next rounds of massive bailouts by the EU.

But this latest EU summit was different. It came up with the nifty term ‘taxpayer-funded non-recourse loans’, which is just another name for grants. So, no matter how fiscally irresponsible Italy, Spain, Portugal, Greece and France have been or are, or how many times they ignore, miss or fail to comply with mandatory budgetary requirements, the bailouts keep coming and the EU taxpayer will keep getting stitched up and left with the tab.

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Too much debt, credit and leverage caused the 2008 financial crisis. Today, some of these levels are ten times higher than in 2008. As debt skyrockets, how do you think this ends? Very badly, with taxpayers getting screwed again.

It’s almost as if governments have stolen a page from the reckless central banks’ playbook: Do not be sore, print some more, pray and delay, extend and pretend, forgive and forget, or screw the middle class and widen the wealth inequality gap.

The elite’s actions will force civil unrest that makes a shift to crazy Marxian ideology seem almost sane. As a diversion, they will offer up the usual scapegoats you can blame for all your problems: China, Russia, Brexit, Putin, Trump, Farage, systemic racism, white privilege and Covid-19. In fact, Covid-19 and social media are the perfect empty vessels to take away all your ‘free-speech’, rights, freedoms and liberties during the coming financial crisis – all for ‘your safety’, of course. Obedience and control, using ‘woke mob’ violence if necessary.

After decades of lies, dammed lies, and the misguided central banks’ money printing, the public is beginning to realize that rogue hedge funds masquerading as omnipotent central banking deities can print as much money as they like, but this printed money will never create aggregate demand. All these ‘group think’ Keynesian economic charlatans’ policy prescriptions will do is create another much more massive crisis. 

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Take, as an example, Japan’s three-and-a-half lost decades and its total policy failure. Will the monstrous egos of these economists ever admit they were wrong? Not on your life or on mine. None of them seems to understand the difference between the provision of liquidity and solvency. Printed money inflates unsustainable and grotesque bubbles in every asset class.

Instead of bankruptcy, insane amounts of printed money sustain hundreds of billion-dollar insolvent zombie corporations. Tesla is a case in point on the greed, ‘tech euphoria’ and non-existent corporate governance: just watch the company’s stock price after today’s close and ‘earnings’ – LOL – are announced.

Elon Musk’s net worth has bubbled to over 74 billion dollars, and he will pay himself – via the Tesla board he controls – bonuses of over four billion dollars in the first half of 2020 alone for his role at the company. 

Tesla makes no profits, and today its valuation is over $300 billion. Its market cap is larger than every auto company in the world by far. Tesla is the poster child illustrating a dysfunctional and broken regulatory system allowing a lack of corporate governance, monstrous stock bubbles, irrational exuberance and corporate plunder.   

Germany’s Deutsche Bank is a zombie that should be wound up. All of Italy’s banks are bust, stuffed to the hilt with crappy Italian bonds. Italy alone has around five trillion dollars in debt it will never repay. Keep in mind this week’s nearly €2 trillion EU budget, bailout and grant insanity is only the beginning.

All of which proves two things: You can never taper a Ponzi scheme, and as every Ponzi scheme ends badly, so will this one.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.