Too Many Eurozone Summits
by Gary North: On
The New World
Order is in big trouble. The European subdivision is visibly coming
apart at the seams.
You can always
tell when an important NWO arrangement is in crisis mode. The representatives
of the mainstream media keep asking high-level spokesmen, "Does
this threaten your program?" They answer, "No, this is just a temporary
aberration." They say this over and over. Meanwhile, the events
that led to the question keep getting more threatening.
The other sign
of a true crisis is that the world's political leaders repeatedly
meet at something called summits. A summit means "the top of the
heap." The highest-level officials meet with each other. They meet
in private, but the meeting is visible for the media.
love a summit meeting, because summits are always held is swank
hotels in hoity-toity locations. I mean, who would take seriously
a summit held in, say, Hoboken, New Jersey? Nobody. So, the leaders
meet in some Very Expensive Place. The reporters get to go there
and lard up their expense accounts. And a good time is had by all.
with this strategy is that protesters can show up without much trouble.
They do not stay at the swank hotel. The media never report on exactly
where they stay. Somehow, thousands of them have the money to pay
for plane fares. They find shelter at some bargain-basement price.
Then they parade in front of the hotel, carrying signs and yelling
a lot. "No more this! No more that! No more this! No more that!"
Maybe someone carries a "Free Mumia" sign. This goes on until the
they turn violent. A few dozen are arrested.
of the summit never say anything publicly about the protest. The
media politely do not ask.
The press release
assures the world that there were frank discussions at the summit.
There will be further frank discussions by members of the permanent
committee that has been assigned the task of examining the issue
in depth. The attendees meet for a group photo. Then the meeting
And Mumia remains
When the group
meets again within two months to consider The Problem, we can be
sure that the folks at the top of the heap the real top,
not their elected front men are in trouble. The previous
meeting of their spokesmen did not calm the situation. The crisis
is getting worse. So, the word goes down to the Official Leaders
that they had better call another summit meeting. The press release
from the most recent one did not do the trick.
So, the Official
Leaders have their assistants schedule a reservation at another
swank hotel. They pack their bags, assemble their entourages, fire
up their Official Leader jets, and fly off to another prestige city
for the next summit. They meet in secret, but this time allow the
media photographers into a room for a photo op of a staged frank
discussion between two highest Official Leaders or, rarely,
the top three. They sit in $2,500 chairs and look very concerned.
Then the group
issues another press release that announces the creation of a permanent
framework for future discussions of The Problem.
stock markets rise sharply for one day. Then the next day they fall
back to where they were the day before the press release.
Here is an
unbreakable rule: if there is a third summit within a three-month
period, the banking system is in really big trouble. If, in between
summits two and three, there are a couple of failures of banks or
brokerage firms that the public has never heard of, but which turn
out to have had assets of tens of billions of dollars, the folks
at the top of the heap are in panic mode. They ask themselves, "Who's
next?" Each of them thinks "maybe my bank," but of course they mention
to each other only some large bank that has been trying for years
to get into the inner circle, but has not yet made it.
that discuss the same problem are a sign of a problem that is not
going away. It is getting worse.
A summit always
starts on a Friday and ends on Sunday. The meeting begins after
the stock market in the time zone of the swank hotel has closed
for the day. This way, the regional market will not plummet, thereby
sending a signal to the markets that remain open in earlier time
meeting is where the leaders decide what issues will be covered
by the Sunday press release. The main areas of discussion are these:
- How much
taxpayer money will the press release mention?
- Which nations
or international organizations will take how much of the collective
- How long
will it take to borrow the money, and from whom?
- How long
until the actual money must be ponied up?
- Who is
going to call the Chinese premier for another promise to buy more
are very frank. "Don't try to stick this on me! How many times do
you people think I can go back to the voters? My coalition is about
to break up." "How can we convince the voters that we are not throwing
their money down a rat hole?" "Which country's largest three banks
will need an infusion of funds?" "Which country's banks might come
up with the necessary loans if we offer loan guarantees?" And so
Sunday. Nobody at the summit goes to church. They don't worship
back home, so any indication that they are in need of divine intervention
might send the wrong message to capital markets on Monday morning.
On Sunday afternoon,
they issue the press release.
If they wait
until Sunday evening, the markets will open down by 1% on Monday.
If they announce
no decision, the markets will open down 3%.
The press release
must appear to say something new. There will be a new framework
for discussion. The group has pledged a total of [X] billion euros,
to be payable to the government of [Y]. This means that the banks
that loaned 4X worth of euros to Y will not go bust. Yet.
problem should be obvious. Because the biggest banks made stupid
loans, based on the cooked books of the previous coalition government,
no one is sure which banks have the credit rating and sufficient
liquid capital to make the promised loans to the inter-European
bailout agency. The whole banking structure is at the edge of the
abyss. If two or three big banks announce that they are busted,
MF Global style or Dexia-style, there will be a rush of hedge fund
lenders to reallocate their remaining funds to what they hope will
be one solvent large banks. Which banks might these be? Nobody knows.
"Place your bets. The window is about to close."
The G-20 is
an organization that specializes in annual press releases regarding
the world's financial condition, which is always improving, compared
to the mess that prevailed immediately prior to the previous meeting.
The last scheduled meeting was held in France, October 14-15. There
has been an emergency summit this week.
It never hurts
to review the official website
on any high-level New World Order organization. This always
requires a translation out of official jargon.
G20 was established in 1999, in the wake of the 1997 Asian Financial
Crisis, to bring together major advanced and emerging economies
to stabilize the global financial market. Since its inception, the
G20 has held annual Finance Ministers and Central Bank Governors'
Meetings and discussed measures to promote the financial stability
of the world and to achieve a sustainable economic growth and development.
G-20 was created to deal with the first major threat to the New
World Order's plan to launch the euro in 2000, as the first step
in the establishment of a worldwide managed currency.
tackle the financial and economic crisis that spread across the
globe in 2008, the G20 members were called upon to further strengthen
international cooperation. Accordingly, the G20 Summits have been
held in Washington in 2008, in London and Pittsburgh in 2009, and
in Toronto and Seoul in 2010.
Asian bailout of 1998 held the system together, mainly because the
Asians are experiencing economic growth. This got their banks out
of the hole. But, in 2008, a variant strain of "Asian flu" hit the
West. This has required an annual meeting to keep the signs of breakdown
concerted and decisive actions of the G20, with its balanced membership
of developed and developing countries helped the world deal effectively
with the financial and economic crisis, and the G20 has already
delivered a number of significant and concrete outcomes:
a meeting of revolving heads of state several a year in Japan
solves the world's crisis-driven financial problems at a
weekend meeting held on schedule once a year, only to issue a press
release, we can be sure that there are things going on behind the
scene and in between annual press releases. These include:
the scope of financial regulation has been largely broadened and
prudential regulation and supervision have been strengthened. There
was also great progress in policy coordination thanks to the creation
of the framework for a strong, sustainable and balanced growth designed
to enhance macroeconomic cooperation among the G20 members and therefore
to mitigate the impact of the crisis. Finally, global governance
has dramatically improved to better take into consideration the
role and the needs of emerging of developing countries, especially
through the ambitious reforms of the governance of the IMF and the
Keynesian knee-jerk solution to every problem is more regulation.
This is known in other circles as locking the barn door after the
horse has escaped. The G-20 has a framework for balanced growth,
which has been is short supply since 2008. Also, the IMF has borrowed
lots of money to hand over to Third World dictators to fund their
Swiss bank accounts.
on these important progresses, the G20 has now to adapt to a new
economic environment. It must prove that it is able to coordinate
the economic policies of major economies on an ongoing basis.
new economic environment is this: the entire international fractional
reserve banking system is coming apart, and it will take more than
press releases to hold it together. Behind the scenes, each government
is trying to pass on liability to the other governments. "Our banks
are in worse shape than your banks!"
will be the occasion to build on the recent successes of the G20
and ensure an active follow-up on processes already underway. It
will also be the time to address other essential issues which are
crucial to global stability such as the reform of the international
monetary system and the volatility of commodity prices.
are just barely holding this system together in the face of continuing
bankruptcies. That's as much success as we are capable of at this
time. Meanwhile, the markets are so volatile that they are calling
attention to the fact that our tightrope walk between inflation
and recession is becoming visibly disturbing. We don't want to wind
up like the Great Wallendas."
believe indeed that today's key economic challenges require a collective
and ambitious action which the G20 is able to impulse.
am not sure what "able to impulse" means. Sorry.
this year have reflected the presence of investment pessimism regarding
(1) the imminent departure of Greece from the eurozone, (2) the
increasing probability of a Greek default on its euro-based debt,
(3) the loss of hundreds of billions of euros by large northern
European banks, (4) the threat of bank failures in Italy after the
Greek government defaults, (5) the shaky condition of Portuguese
and Spanish banks, (6) the increasing likelihood of a worldwide
recession in 2012, and (7) the fear of a black swan event resulting
from a "Dexia moment."
have also reflected optimism regarding (1) the calming power of
press releases from summit meetings, (2) the hope that the central
bank of China will still keep inflating at home in order to buy
euro-based IOUs in order to hold up the euro in order to promote
Chinese exports, (3) the hope that the Federal Reserve will do something
new that might possibly turn things around, (4) the hope that cash-flush
companies will announce stock buy-back programs in order to make
senior managers' stock options rise.
The stock markets
are more volatile today than at any time in recent memory. To the
extent that 20% of Americans who hold about 80% of the individual
stocks pay attention, they are getting this message: nobody knows
what is happening. As far as the common man knows, things are not
getting any better for him. The stock market's gyrations are just
more noise. He is worried about his job's security for good
That Be are facing Problems That Won't Go Away. The heart of their
control is fractional reserve banking and the market for government
bonds (sovereign debt). Both are under siege. Both are showing signs
of unprecedented vulnerability.
The euro summit
meetings are turning into reality shows. Which team will be The
Survivors? Merkel-Sarkozy? Papandreou-Berlusconi?
Estonia is the only nation in the West that is not in fiscal trouble.
whose banks defaulted on $85 billion in 2008, completed a 33-month
International Monetary Fund program in August. The Washington-based
fund expects Iceland's economy to grow faster than the average for
the euro area this year and next. It costs less to insure against
an Icelandic sovereign default than it does, on average, to hedge
against a credit event in Europe's single currency bloc, debt derivatives
Estonia never get invited to major European summit meetings. They
are not in the G-20. There is a lesson here.
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 20-volume series, An
Economic Commentary on the Bible.
2011 Gary North
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