As the Next Phase of the Crash Accelerates, Watch for More Looting


The earth avoided getting hit by an asteroid last night. Then today, FEMA tested its catastrophic communications system, only to discover some problems. In my own case, the warning signal started skipping, dadadadadadada, sounding like a machine gun, before it switched my jazz to a bad disco station. Outside, there are whistling high winds blowing through the dark afternoon and a threat of snow.

All of which feels appropriate as a set of clowns arrive in the state and prepare to debate over whether they were right to say MI’s major industry–and my state–should go bankrupt.

Jefferson County, AL just did go bankrupt. Finally.

Which sort of feels like the preview to the collapse of Europe. Here’s Brad DeLong:

Time to Spread Foam on the Runway: The Federal Reserve Needs to Act Now to Firewall Off the Eurocrisis

I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria–that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II. Well, right now guess what? The time is 1931, and we are Austria.

And he quotes Paul Krugman.

This is the way the euro ends.

Not with a bang but with bunga-bunga.

Seriously, with Italian 10-years now well above 7 percent, we’re now in territory where all the vicious circles get into gear — and European leaders seem like deer caught in the headlights.


I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure. Irresistible force, meet immovable object — and watch the explosion.

The crash is starting to accelerate again.

With that in mind, it’s worth reading this Misha Glenny piece.

Capricious, unreliable and ideologically driven were some of the more printable epithets hurled at George Papandreou in his final week as Greek prime minister. We should look at the motives of his detractors before taking such critiques at face value. While engaged in titanic political struggles at home and abroad, he has been quietly trying to tackle one of the most intractable root causes of the Greek tragedy – crime and corruption.

As the new Greek government struggles to convince Europe of its resolve to cut the country’s bloated public sector, it also has to decide whether to face down the real domestic threat to Greece’s stability: the network of oligarch families who control large parts of the Greek business, the financial sector, the media and, indeed, politicians.


The oligarchs have responded in two ways. First, they have accelerated their habitual practice of exporting cash. In the last year, the London property market alone has reported a surge of Greek money.

Second, they have mobilised hysterical media outlets which they own in order to denounce and undermine Mr Papandreou at every opportunity, aware he is the least pliable among Greece’s political elite.

Their aim is clear – they are waiting to pounce on the state assets which, under the various bail-out plans, the Greek government must privatise.

I’ve long suspected this crisis has been regarded by some–if not planned–as a means to accomplish in developed nations what their fellow Oligarchs in developing nations used to pull off via geography: the wholesale looting of their countries. And with it, dismantling the social contract on which modern democracy has depended.

Who needs democracy when you can force more austerity onto a country to shield the banks? Who needs democracy when you can add city after city to the ranks of those led by Emergency Financial Managers.

Yeah, the Occupiers have inspired some real fear among the looters. Small-d democracy won some battles last night in Maine and Ohio. But that’s not enough, without real vigilance, to stop the looters.

16 replies
  1. scribe says:

    I have long wondered why Papandreou was so supine in meeting the ECB’s demands. Frankly, a head of state who meets the kinds of demands the bankers brought isn’t much of a head of state. Sending the bankers’ heads home in a diplomatic pouch, with a nice note – the Roman way – was the more appropriate answer.

    As it is, the ECB may well have been improved – in its policy choices – by such treatment. It surely would have gotten their attention and redirected the discussion from austerity to rationality.

  2. readerOfTeaLeaves says:

    I’ve long suspected this crisis has been regarded by some–if not planned–as a means to accomplish in developed nations what their fellow Oligarchs in developing nations used to pull off via geography: the wholesale looting of their countries. And with it, dismantling the social contract on which modern democracy has depended.

    Not news to anyone who’s been reading around EW’s for awhile, but there has not been nearly enough public discussion of the deeply criminal roots of a great deal of our current problems.

  3. allan says:

    Speaking of Jefferson County, EW has graciously not linked to Bloomberg’s companion
    , which uses an innovative narrative device called a `timeline’.
    This is what separates real journalists from mere amateurs.

  4. orionATL says:

    well, most of this is driven by goldman-sachs-style shorting, is it not?

    you bet money to make billions on a company’s ( or a nation’s failure) .

    betting on failure and prospering from that failure –

    that’s what alan greenspan’s unregulated markets have led to.

    welcome to a world of 7 billion humans –

    a world in which betting on the failure of civil government in a nation is a money-making proposition.

  5. orionATL says:

    thanks, ew,

    for putting the criticism of papandreiou in perspective.

    your comments help remove some of the fog about what’s really been happening.

  6. orionATL says:

    actually, with respect to the oligarchs gobbing up state-owned “corporate” assets and land, this situation sounds much like what took place in the former soviet union in the 1990’s .

    or for that matter, when the u.s. dropped its demands for diverse media ownership, cf “clear channel” corp, or the depredations of the anti-american media baron, rupert murdoch.

  7. klynn says:

    But that’s not enough, without real vigilance, to stop the looters.

    Do you have any ideas we should try to run with?

  8. orionATL says:

    also from brad delong’s weblog:

    delong cites mike konzcal.

    note the comments of prez obama on why we need to reduce deficits.

    my interpretation is that obama was way out of his depth when it came to macro-economics and had been innoculated with anti-deficit thinking.

    the consequence has been the slowly-unfolding disaster of the lesser depression managed by a president who believed he understood what was happening when he did not – the certainty of the ignorant who have been misinformed (or manipulated).

  9. orionATL says:

    the key quote from obama’s state-of-the-union address is this:

    “… Now, I know that some in my own party will argue that we can’t address the deficit or freeze government spending when so many are still hurting.  And I agree — which is why this freeze won’t take effect until next year — (laughter) — when the economy is stronger.  That’s how budgeting works. But understand –- understand if we don’t take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery -– all of which would have an even worse effect on our job growth and family incomes…”

    so there you have it,

    the reason why the federal gov’t has not worked as it should have and COULD have to prevent the “lesser depression”

    we have entered into,

    the reason why this president and his satraps in the congressional super-committee would agree to 3 trillion in budget

    cuts at a time in the economic cycle when gov’t spending needs to be as high as it reasonably can be.

    this guy obama just does not understand what needs to be understood – economics.

  10. sd says:


    Philosophically, how are you going to handle how to use your vote? I gave it a long hard thought and decided the only option I had left was to register as an undeclared and drop party membership.

    The looting is getting worse. The DOJ has become a cruel joke.

    Jesse over at Jesse’s Café Américain has a brutal piece on MF Global today, MF Global’s Customer Assets – STOLEN – And Nothing You Hold In This System Is Safe.

    If a registered broker can simply take Treasuries and receipts for physical assets like gold and silver from customer accounts and give them to a complicit crony lender, and then look at the public with a straight face and say the money is missing and they do not know where it is, then no one’s accounts are safe, anywhere, at any bank or broker, in the US financial system.

    This has every appearance of a legally sanctioned theft, pure and simple.

  11. pdaly says:

    Occupy Denver news:
    Denver’s mayor requested Occupy Denver choose a leader that the city and state officials could negotiate with.
    Occupy Denver elected Shelby, a border collie. One Shelby supporter states:

    “Shelby is closer to a person than any corporation: She can bleed, she can breed, and she can show emotion.”

  12. GulfCoastPirate says:

    The new Greek prime minister is a central banker and has worked both in our Fed and the European Central Bank. Not only are the bankers looting the country they now have one of their own installed as head of state to help them along.

    I don’t see how this ends well ………………

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