And the Elites Condemn As They Must?

Posted in Culture of Lickspittle, Decline and Fall, Extremism, The Corporate Bund at 2:18 pm by George Smith

Let’s call it “Ask the Crybaby.”

It’s the news phenom in which US reporters ask Brit-expats, almost always wealthy, what they think of Brexit. The old blog term for it was Shoeshine, that being what the well-off will say or think in support of those at the very top. A high button performance in kickdown on the classes below the chosen and their servants.

From Brattleboro, Vermont, Peter Solley, a Brit hack session producer/musician from the era of classic rock:

I was shocked. Absolutely shocked … I’m ashamed to call myself English. I see no positive future for the United Kingdom. They’ve taken something that created the longest lasting peace since World War II and just thrown it away.”

Solley runs a snob ice cream gelato company.

In fairness, the newspaper goes on to interview one person with a bit of a different viewpoint.

For the sake of timeliness I’m reading Greek economist Yanis Varoufakis’ latest book, “And the Weak Suffer What They Must?” on the EU. Obviously written before Brexit, it’s fair to say Varoufakis saw it coming.

Britain didn’t always have it so great and the City of London, its financialization engine, wasn’t its sole place of super successful economic activity. Things were hard before the EU was called that, the Seventies, when it was the European Communities. Even Margaret Thatcher was not a fan at all, being ridden out of power by peers who wished to be in on the administration of a newer monetary order.

Varoufakis’ book is a history of the EU, its early precursors and the economic policies and tides that have led to where it is today.

There are a numbr of reasons for its genesis, prime among them being the Paul Volcker-devised Nixon shock that did away with the Bretton Woods system.

It’s a complicated story.

But very briefly and incompletely Bretton Woods instituted a system in which the US made the dollar a euro-dollar. The purpose was to re-initialize the economies of Europe after World War II. Germany was in ruins. France had been occupied, turned into a vassal state, and been a battleground, too. And Britain was encumbered with crushing debt. The US used Bretton Woods to back the European reconstruction of currencies and value with gold set at a rigid price in which one ounce was an absolute guarantee of 35 US dollars.

But by the early Seventies, Germany and Japan had been rebuilt, going from deficit to surplus nations. The US had been the supreme global surplus nation, controlling the currents of the world economy. No longer was it the single pole of the engine.

The rise of Germany and Japan meant the US went from being a surplus to a deficit nation. This, along with gold speculation by German bankers and the French, destabilized Bretton Woods.

Paul Volcker, then the head of the New York Federal Reserve Bank analyzed what had happened and developed a scheme for keeping America’s upper hand in the global economy. It would no longer honor Bretton Woods. It uncoupled the gold pledge, raised global interest rates and instituted tight money.

Varoufakis explains:

“High interest rates are wonderful for those living on unearned income, the so-called rentiers, but not so good for manufacturers who see their investment costs skyrocket and the purchasing power of their customers plummet. For this reason, combining high returns to financial capital (requiring high interest rates) with high profit rates for American businesses (requiring low interest rates) was never going to be easy, and Volcker knew this. It was a combination that could only come about if another way of providing that profit could be found. And one way to do that would be to reduce wages. On the one hand, the Fed would push interest rates through the roof while, at once, the federal government would turn a blind eye, indeed promote, policies that crushed the real wage prospects of American workers …

“Soon, the fate of America’s working class was to infect the circumstances of weak citizens in Britain, in France and, by the 1990s, even in Germany …

“Disintegration was in the air and the majority of people in a majority of countries eventually acquiesced to the notion that labor was overvalued and overprotected, manufacturing was overrated, while finance was undervalued and in need of unshackling. Everything became increasingly reducible to its financial value.”

Varoufakis’ book is fascinating, particularly as a history in which the European economic engine is assembled in a jerrybilt way as a substitute for Bretton Woods, but regularly misfiring and bringing misery, plagued by the monetary policies of its leading nations, primarily here set by German bankers and their autocratic agendas. The story Varoufakis tells is surely not one at all favored by the current rulers of the EU and American economic machines.

So while the institutional complainers, the shoeshine boys of the ruling elites, go after the the alleged misinformed and nativist flaws of the Leavers, they really don’t know a lot more about what they’re talking of than those they’ve condemned so vehemently. Of course, from their short term point of view, Brexit is bad.

Historically, perhaps something like this was slated to happen. And if a similar political earthquake transpires here, it can’t be unexpected. At least that’s the impression Varoufakis’ reasoning gives me.

Varoufakis continues, mid-book:

When John Connally crudely explained to President Nixon, relying on Volcker’s underlying analysis, that “all foreigners are out to screw us and it’s our job to screw them first,” what he meant was that the Bretton Woods balancing act was becoming imbalanced by the surpluses of countries like Germany and Japan.

Impervious to the global responsibility that comes with large trade surpluses, these foreigners were trying, childishly, to take advantage of the United States’ commitment to global balance, the result being a complete collapse of the postwar equilibrium. Like immature children that know not what is good for them, European governments and Japan, sporting increasing surpluses, were taking advantage of America’s difficulty in maintaing order with detrimental results for everyone.

Volcker’s 1978 Warwick speech had given the Europeans ample warning. He effectively threw down the gauntlet to Bonn, Paris, London and Tokyo. Between the lines he was foreshadowing the second phase of America’s postwar global dominance. In 1971, Volcker implicitly told his audience, America dismantled the monetary system whose integrity Europeans had foolishly undermined. Its next move would be to bring about a highly imbalanced global system that the United States controlled fully because, rather than in spite, of America’s twin deficits (its trade deficit and its federal government budget deficit).

The price for that new system, which would extend America’s dominance, was high: weak people and fragile countries were, once more, left to their own devices, suffering not what was globally optimal but that which they “must” in a world economy unrestrained by New Deal–like rules and institutions. Politics would become toxic, social solidarity would weaken, international relations would turn nastier, abject poverty would multiply in Latin America and Africa. Nonetheless, the United States was bound to emerge as a net beneficiary of this painful “disintegration”…

I can’t do the book all the justice it deserves. At best, I have cherry-picked pieces with which I have great affinity. Yet there is much food for thought here from every angle and you must read “And the Weak Suffer What They Must? Europe’s Crisis and America’s Economic Future” yourself.

The morning after “Brexit” our “elites” were wringing their hands in opinion pages everywhere over how Leave delivered to Britain’s “elites” an epic punch in the face.

But did you notice that while the “elites” were doing all the explaining, excusing and bemoaning, there was no initial invitation to let any people who felt they had to throw that punch to the public speakers table?

For examples of the shunning of the common pariahs, you only needed to look at the opinion pages of the New York Times. One of the six-figure explainers, Roger Cohen, delivered no less than two condemnations.

From the first, it’s final bit: “My nephew wrote on Facebook that he had never been less proud of his country. I feel the same way about the country I grew up in and left.”

Ashamed and shamed, from the gold-plated opinion-maker to the upper crust Facebook lad to the hoity-toity ice cream vendor.

But where was opinion from the winning side? Missing entirely.

A day later, Owen Jones, author of “Chavs: The Demonization of the Working Class” was in the Guardian:

“Above all else, it was about immigration, which has become the prism through which millions of people see everyday problems: the lack of affordable housing; the lack of secure jobs; stagnating living standards; strained public services. Young remainers living in major urban centres tend to feel limited hostility towards immigration; it could hardly be more different for older working-class leavers in many northern cities and smaller towns.”

The sentiments are familiar. The “social problem” is here, too, quite obviously so.

The betters have had years to extend a hand. Telling people to suck it up, get more education and not be bigots because your station comes inevitably as a result of your choices and talents. That worked for awhile. Now it’s seen for what it always was, a fob.

This is what destroyed the GOP. And it’s what threatens the Democratic Party and the predicted inevitable presidency of Hillary Clinton. They have no answers, either. In fact, they’re pretty much all right with how things have turned out, Brexit, a mere inconvenience in this hemisphere.

We have to work together, not tear each other down, they say. The words are hollow.


  1. Christoph Hechl said,

    June 30, 2016 at 3:01 am

    I guess Varoufakis takes the same approach as David Graeber, that history makes more sense when looked at from the financial side.
    The terrible thing is this feeling of inevitability, that you mention. You see whats coming and feel absolutely helpless to do anything about it.
    Apparently still not enough of that to start a revolution, though. Not that i beleive anything good would come from that, but at least a change might bring new worries.

  2. George Smith said,

    June 30, 2016 at 8:30 am

    Felt that for awhile. I don’t think it’s uncommon. It’s been said by others who believe that even if Trump is kept out of the White House, things will still get worse with HRC. I believe, in fact, she could set off a catastrophe, not with the economy but with the war machine.

    I think it’s quite possible for the US military to precipitate a situation in the Black Sea, or Baltic, or Syria, in which its firing on Russian units. We managed to avoid this through the Cold War. Now we have worse leadership at all levels, exacerbated by an overwhelming hubris.

  3. Christoph Hechl said,

    June 30, 2016 at 11:59 am

    Funny you should mention that:
    My first thought when i tried to picture her presidency was: She will go to war and she will go too far.

  4. George Smith said,

    July 1, 2016 at 11:43 am

    You’ll find this interesting. NATO’s old commander, Phil Breedlove, campaigned to escalate tensions and forces in the Ukraine.


    It’s hard to imagine the lack of vision and ignorance in an American general who’d like to start a proxy war in the Ukraine vs. Russia but there you have it.

    Small note, he consults with Harlan Ullman who, it would seem wisely, mostly ignored him.

    Ullman was briefly famous 15 years ago for this:


    It would appear he changed his views somewhat in the intervening period.

  5. Christoph Hechl said,

    July 3, 2016 at 1:47 am

    The NATO have spread through all of eastern europe despite promises in the eighties not to do so. Now they are on the russian border and have the nerve to blame the russians as aggressors.
    “We did a maneuver on foreign soil, next to the russian border with thousands of soldiers, but hey those damn commies, dared have one on their side of the border with even more men!”
    How can anyone in their right state of mind deny that the russians ARE being threatend by us? With military, financial and propaganda forces.

  6. George Smith said,

    July 3, 2016 at 6:18 am

    Well, at least your foreign minister startled Washington by mentioning the inappropriateness of the NATO wargame that was going on.

    We Americans like to constantly blow our own horn about how allegedly great we were in WWII. Conversely, we have generally no idea about the Great Patriotic War, Barbarossa and the Eastern Front.