Some say the Germans should Remember that Austerity gave them Hitler and should therefore Forgive some Greek Debt

Posted by PITHOCRATES - February 19th, 2012

Week in Review

There are more Nazi comparisons in the continuing saga of the Greek debt crisis as people keep picking on Germany.  The strongest Eurozone state.  And the only one who can bail out the weaker ones (see Germany has forgotten the lessons of war reparations by Jeremy Warner posted 2/17/2012 on The Telegraph).

While on the subject of historical parallels, there’s another which has not yet been given sufficient an airing. This was the vexing question of German war reparations after the slaughter of the First World War, brilliantly identified by John Maynard Keynes at the time in his polemic, “Economic Consequences of the Peace”, as fundamentally unfair on the Germans. Keynes branded the Treaty of Versailles a “Carthaginian Peace”.

True.  The Treaty of Versailles did treat the Germans unfairly.  A word commonly bandied about at the time in Germany was humiliated.  And betrayed.  Even stabbed in the back.  Because the Germans didn’t start that war.  Everyone was eager to go to war.  And nearly everyone did thanks to those entangling alliances that George Washington warned us about.  And another thing.  The Germans didn’t lose the war.  No one did.  And no one won the war.  It ended in an armistice.  Much like the Korean War.  And yet during the treaty process they identified Germany as the sole culprit that caused the war.  And the allies all tried to recoup their losses and rebuild their empires by bleeding Germany dry.

Part of Germany’s purpose during interminable attempts to renegotiate these debts on less oppressive terms was to demonstrate that the German economy was in no position to pay – ergo, the creditor was at some stage going to have to take an almighty hit. Indeed, it is sometimes argued that the Weimar hyperinflation was deliberately engineered in order to demonstrate this fact beyond doubt. There can be no other explanation for the bizarrely ruinous policies of deficit financing pursued by the Bundesbank at that time. No sane central banker could possibly have sanctioned such a strategy…

Given its history, it is quite strange that Germany has such difficulty in grasping this reality. It is sometimes said that German attitudes to the economy and the current crisis are instructed by experience of Weimar inflation and its catastrophic consequences. Yet it wasn’t hyperinflation that brought Hitler to power, but rather the depression of the early 1930s, which in Germany’s case was greatly exaggerated by the pro-cyclical austerity the government of the time insisted on applying to the problem. Those who who [sic] don’t learn from the past are doomed to repeat it.

The Weimar hyperinflation played a part.  But what really motivated Hitler was the Versailles Treaty.  Hitler was a veteran of WWI.  He served bravely.  Was promoted to corporal.  Suffered temporary blindness from a gas attack.  And he knew the Germans weren’t beaten.  Exhausted?  Yes.  War weary?  Yes.  But militarily defeated?  No.  It was the humiliation of the Versailles Treaty that drove Hitler.  So much so that when his panzer armies conquered France he met the French in a special rail car to sign the instrument of surrender.  The same rail car the Germans signed the humiliating Versailles Treaty.

Many Germans rallied around Hitler because they felt the same way.  Germany had grown to be the dominating European power.  And that treaty did what Germany’s enemies couldn’t do.   Change the balance of power in Europe.  To reverse the German successes of the last century or so.  This is what brought Hitler to power.  Vengeance.  To right the wrongs done to Germany.  Had they not been so wronged it is unlikely that a gifted orator would have risen to inflame the masses.  For there may have been no hyperinflation without those punishing reparations in the first place.  And without that economic crisis the world wouldn’t even know the name Adolf Hitler.  (Probably.  Unless a prosperous Weimar Germany liked and bought his art.  Then instead of remembering him as a crazed mass murderer we would remember him as an artist.)

In contrast nobody wronged Greece.  They got into this mess on their own.  By irresponsible government spending.  And the cure for irresponsible spending is responsible spending.  Not forgiving debt so they can keep spending irresponsibly.  German hyperinflation resulted from unjust war reparations that destroyed the German economy.  The Greek crisis resulted from irresponsible spending that destroyed the Greek economy.  Spending is the problem.  It needs to be cut.  So they stop running deficits.  And stop growing their debt.  But cutting government spending is easier said than done.  For once the government makes the people dependent on government benefits the people tend to not want to give them up.  But they must.  It’s the only way to fix the underlying problem.  Irresponsible spending.  And forgiving debt not only misses this central point.  It encourages more of the same.

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LESSONS LEARNED #31: “Islam and guns are a lot alike. And yet when something bad happens, we try to ban one and forgive the other.” -Old Pithy

Posted by PITHOCRATES - September 16th, 2010

PEACE IN OUR TIME

What do you know about the Goths?  The Visigoths?  The Ostrogoths?  The Vandals?  The Franks.  Do you even know who these people are?  The Romans did.  And they were a pain in their ass.

The Great Migration of Huns from Asia into Europe displaced these European Germanic tribes.  Which brought them into contact with the Roman Empire.  The Romans then brought some into the empire.  First into the legions that were protecting the frontier against these displaced Germanic tribes.  Then some Germans commanded these legions.  Then the Romans built entire legions from these Germanic people.  Germans faced Germans on the frontier.  Loyalties tugged between empire and blood.  When the empire began to crumble, blood often won out.  And when the Western Roman Empire fell, these Germanic tribes stepped into the void.  Picked up the Roman banner and became the Holy Roman Empire.  Some of the Germanic tribes founded nations.  Spain, France and England.  But not Germany.  Not yet.

 It took the Franco-Prussian War (1870) to unite the German people into a nation.  And into the dominate Central European power at that.  That dominance ended in 1919 with the Treaty of Versailles.  Germany lost Alsace-Lorraine (which they took during the Franco-Prussian War).  She lost territory that became a reconstituted Poland (which separated her from East Prussia).  She had to take sole responsibility for causing World War I (which was unfair to say the least).  And pay reparations to the victors that would take forever and a day to pay.  The German people were not happy.  As was a decorated army corporal.  Adolf Hitler.

Hitler made it clear that he was going to restore the German empire.  The third in the line of empires.  A Third Reich.  Successor to the Holy Roman Empire.  And it would last a thousand years.  He established the official Nazi ideology (racial purity and the Master Race).  He renounced portions of the Versailles Treaty.  Began to rearm.  These actions worried the Allies.  But Hitler assuaged their worries in a speech given 5/21/1935.  He said Germany wanted peace.  And only peace.  The Allies breathed a collective sigh of relief.  Then he remilitarized the Rhineland.  Annexed Austria.  Then came Munich.  Great Britain’s Prime Minister, Neville Chamberlain, met with Hitler, concerned.  Hitler assured Chamberlain that this was his last territorial grab.  After all, Germany wanted peace.  And only peace.  So those at Munich gave the Czechoslovakian Sudetenland to Germany.  (Incidentally, the Czechs weren’t at Munich).  Chamberlain returned to England announcing they had attained “peace for our time.”  Soon thereafter, Germany took the rest of Czechoslovakia.  And one non-aggression pact with the Soviet Union to partition Poland later, Hitler invaded Poland, starting World War II.  So, no, they did not have peace in for their time.

FROM STETTIN IN THE BALTIC TO TRIESTE IN THE ADRIATIC AN IRON CURTAIN HAS DESCENDED ACROSS THE CONTINENT

Franklin Delano Roosevelt loved Joseph Stalin.  He liked what he was doing in the Soviet Union.  Now there was some Big Government doing big things.  Just like he was doing.  Only on a grander scale.  Then that non-aggression pact with Nazi Germany just broke his heart.  But the gods were smiling down on FDR.  Hitler turned on Stalin and invaded the Soviet Union.  Killed some 20 million Soviets.  FDR was elated.  He could embrace Uncle Joe again.

FDR said he could talk to Stalin.  Turn on the old FDR charm.  So he tried.  At the Yalta Conference where the Big Three (FDR, Churchill and Stalin) discussed the post-war world.  His plan was bold.  Give Stalin everything.  Ask for nothing.  And then Uncle Joe will work with him in establishing world peace and democracy.  He had a hunch it would work.  I mean, once he turned on that FDR charm, well, FDR got what FDR wanted.

But his administration was full of Soviet spies.  He stayed in the Soviet embassy (to show his trust of Stalin).  They bugged it.  The Soviets knew everything.  Not a strong negotiating position.  For FDR and Churchill, that is.  It was a very strong position for Stalin.  He could whisper whatever sweet nothings FDR wanted to hear.  Lie through his teeth.  In the end, he got Eastern Europe.  Instead of a Nazi occupation, it would now be a Soviet occupation.  Some saw Stalin for who he was.  Winston Churchill, for one.  Later, in 1946, he tried to warn us about Stalin.  He came to America and spoke at Westminster College in Fulton, Missouri.  He said:

“From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in some cases, increasing measure of control from Moscow.”

The old warhorse was right.  Stalin had no visions of democracy.  He wanted to conquer.  To spread communism.  And he did.  In Eastern Europe.  Wherever the Red Army was at the end of World War II the Red Army stayed.  Where they weren’t he tried to use the local communist parties (i.e., the Fifth Columns) in their stead.  To stir up trouble.  Eat away the nations from within.  To gradually convert them to communism.  Sometimes he used blunt force.  As in the coup d’état in Czechoslovakia.   American aid helped Western Europe, Greece and Turkey to rebuff Stalin’s advances there.  West Berlin, inside of East Germany behind the Iron Curtain, was a thorn in his side.  So he tried to blockade it.  Which we relieved with the Berlin Airlift.  Our guy in China (Chiang Kai-shek) lost to Mao Tse-tung in the Chinese Civil War making most of Asia communist.  This was the Cold War.  East vs. West.  Communism vs. Democracy.  The Soviet Union vs. the United States.  The Cold War at times got hot.  As the two superpowers fought each other by proxy.  In Korea.  Cuba (the Bay of Pigs was the hot part.  The more dangerous part was the cold part, playing nuclear chicken).  Vietnam.  The Iran-Iraq War.  Nicaragua.  And in a place called Afghanistan.

MR. GORBACHEV, TEAR DOWN THIS WALL

The Soviet Union supplied a lot of military hardware that killed a lot of Americans in the Vietnam War.  We returned the favor in Afghanistan.  And helped liberate the Afghanis from the Soviet Occupation.  The Soviet mechanized army and their Hind attack helicopters fought an impoverished and ill-equipped force.  The Mujahedeen.  Who soon got international support.  And U.S. antiaircraft Stinger missiles.  And the Soviet Union had their Vietnam.

Ronald Reagan grew weary of the Cold War.  He wanted to end it.  He understood collectivism.  And he knew history.  Capitalism worked.  Collectivism didn’t.  So he would turn up the pressure.  While the Soviets bled money in Afghanistan, he modernized our nuclear forces.  Proposed the Strategic Defense Initiative.  Spent money on defense.  And gave America an unprecedented decade of prosperity.  The Soviets tried to keep pace.  But couldn’t.  They couldn’t even feed their own people.  On June 12, 1987, in front of the Berlin Wall, at the Brandenburg Gate, Reagan said:

“We welcome change and openness; for we believe that freedom and security go together, that the advance of human liberty can only strengthen the cause of world peace. There is one sign the Soviets can make that would be unmistakable, that would advance dramatically the cause of freedom and peace. General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization, come here to this gate. Mr. Gorbachev, open this gate. Mr. Gorbachev, tear down this wall!”

In time he did.  Or, rather, stopped trying to prevent it from happening.  And Reagan consigned the Evil Empire to the “ash heap of history.”  Which left the Mujahedeen well armed, well financed and without a fight.

TO THE VICTORS GO THE SPOILS

The Western Roman Empire fell to the Germanic tribes but the Eastern Empire held on for a few more centuries.  It wouldn’t be the Germans causing her ultimate demise.  No.  The Eastern Empire fall to the Arabs.  Islam spread west from the Arabian desert into Egypt and across North Africa and up into Spain.  Saladin (revered Islamic hero) wrested the Holy Land from the Christians and then fought off the Christian Crusades when they tried to take it back.  Islam advanced across the Bosporus and into the Balkans before the European Christians finally stopped them.  A good chunk of the Christian Roman Empire was now Muslim.  And remained so for centuries.  Until World War I.  When Ottoman Turkey was on the losing side of the Great War.

After the war, Great Britain occupied some of the former Muslim lands.  Protected the Suez Canal for her shipping lanes to India and the Far East.  And to her oil interests.  Also, the League of Nations designated that Great Britain should administer the territory comprised of Palestine and Transjordan.  This British Mandate also included a provision for a future Jewish homeland in the Palestine territory.  Long story short, that happened in 1947 when the United Nations General Assembly voted to partition these territories into Jewish and Arab states.  The following year, May 14, the day before the British Mandate expired, the state of Israel came into existence. 

The Arabs didn’t agree to that deal.  Of course, the Jews didn’t like the Roman occupation.  And the Christians didn’t like the Muslim occupation of the Holy Land.  But to the victors go the spoils.  Not enjoying being on the loser’s side, they wanted Palestine back.  In fact, they want all of the land that used to be Muslim back.  Lands they gained by military conquest but later lost to military conquest.  They want to re-conquer lost land.  And conquer new.  One man in particular.  A Saudi who joined the Mujahedeen.  Osama bin Laden.  Who would lead his unemployed freedom fighters into a new line of work.  In a new organization.  Al Qaeda.

WORLD CONQUEST ISN’T NEW

The Romans conquered the known world.  Hitler had ambitious plans to do the same.  Ditto for Stalin.  (Even Mussolini wanted to restore the Roman Empire.)  And on 9/11/2001, that’s what Osama bin Laden was trying to do.  His devastating attack on the U.S. was to cause a spontaneous uprising by Muslims throughout the world.  There was none.  He failed.  He would be no Saladin.  He would rule little more than a network of caves on the Afghanistan/Pakistan border.  And be remembered as just another terrorist.  But his dream is shared by others.  And they’ve no doubt learned a lot from the Nazis.  And the Communists. 

There are elements within Islam, the so-called few who pervert this great religion of peace, that want to see bin Laden’s vision realized.  They’re using force.  Lying.  Trying to convert from within.  And turn to our constitution whenever anyone confronts them.  But these ambassadors of peace won’t condemn terrorist organizations or recognize the state of Israel.  They demand that everyone accommodate Islam while Islam accommodates only Islam.  They say that the U.S. was responsible for 9/11.  Even that the U.S. orchestrated 9/11 and blamed it on the Muslim world.  There is cause for concern.

A FEW IS ENOUGH

Not all Germans were Nazis but we still fought Nazi ideology.  We fought the communist ideology because it called for the conquest of western capitalism.  Ideology counts.  Not all Muslims are ‘the few who pervert’ but we should, at least, be on our guard against Islam.  Because how do we know who is lying?  If we err on the side of caution, all Americans (including Muslim Americans) are safe.  If we don’t, Americans can die.  Including Muslim Americans.

History has shown that the descendents of empire want to restore empire.  That people who lost land want to get that land back.  And ideological purity kills people.  That tells me we should be wary of a highly ideological people who once had an empire and desperately covets land.  And if we can’t know who those few are, it would be irresponsible not to be on our guard against anyone who might be one of those few. 

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LESSONS LEARNED #5: “When it comes to regretting past choices, liberals lead conservatives when it comes to their vote.” -Old Pithy

Posted by PITHOCRATES - March 18th, 2010

BEFORE THE SS death camps, before the Einsatzgruppen (action groups tasked to mass murder civilians in Poland and the Soviet Union), before the policy of conquest for Lebensraum (living space) for the ‘master race’, before eugenics and selective breeding policies were enacted to produce a ‘master race’, before the Munich Agreement (the Nazi annexation of Czechoslovakia’s Sudetenland), before Kristallnacht (a coordinated Nazi assault on Jewish people and their property in Germany and Austria), before the Nuremberg Laws (anti-Semitic laws), before the Anschluss (the Nazi annexation of Austria), before the Enabling Act gave Hitler full dictatorial powers, before The Reichstag Fire Decree suspended habeas corpus and most of the Weimar Republic’s constitutional civil liberties, before these despotic actions there were free elections.  And the National Socialist German Workers’ (Nazi) Party rose to power by the ballot, not by arms. 

The Treaty of Versailles treated Germany poorly.  It blamed her solely for World War I.  And to the victors went the spoils.  From Germany.  Economically destroyed by the war, the peace was little better.  Runaway inflation and rampant unemployment of the Great Depression.  Humiliation.  People were looking for something.  They didn’t know what.  But Hitler did.

The National Socialist German Workers’ Party was the party for German workers, not the capitalists.   In fact, the Nazis were anti-capitalists.  This was good because the people blamed capitalists for the Great Depression.  Socialism put people before profits.  Nationalism would restore Germany’s pride.  There was a lot about the Nazi party to like in 1930s Germany.

The Nazis put people back to work.  Building public works and building for war.  They printed money to pay for what the confiscated wealth of the ‘undesirables’ didn’t.  They ‘enslaved’ workers by prohibiting strikes, labor unions and the voicing of workers’ complaints.  Hitler paid them less than they were in the Weimar (i.e., capitalist) days.  Then they turned on the business owners.  They once supported Hitler because they thought he would remove the grip of labor on business and allow unfettered capitalism.  But the state’s grip just replaced labor’s grip.

War followed the war economy.  And conscription.  And another generation of German dead.  The devastation of World War II dwarfed that of World War I.  World War I didn’t have carpet bombing.  And the Soviets never reached Berlin in World War I.  But it had all sounded so good back in the 30s.  A nation so eager for government to do something.  And government did.  But few Germans liked the result.  If they could all do it over again they would probably have supported the Weimar Republic, not the National Socialist German Workers’ Party.

THE CONSERVATIVE government of Winston Churchill won the war but the Labour Party won the peace that followed.  They, too, blamed capitalism for the Great Depression.  It wasn’t going to be business as usual now that the war was over.  So they nationalized Big Industry (coal, steel, rail, etc.).  There would be no more abject poverty or squalor.  They created a nanny state.  From the cradle to the grave.  And they created the National Health Service.  Health care for everyone.  Courtesy of the taxpayer.

Of course, to pay for such huge government spending you need taxes.  A lot of them.  And when you can’t tax anymore, you depreciate your currency (i.e., print money).  Like every other nation in the world has ever done when their government spent more than it could afford to spend. 

With monopolies came inefficiencies.  Shortages.  A shortage of coal required scheduled electrical blackouts.  Also with monopolies came power.  Union power.  Whenever they wanted more pay they just had a strike until the bosses caved.  It became the way of doing things.  The strikes were epidemic and crippling.  People outside of Great Britain called them the ‘British Disease’.

Excessive government spending to pay for the national industries, the unions, the nanny state and the National Health Service was turning Great Britain back to the discontent of a Dickens novel.  Only instead of the business owners, the oppressors were Big Labor and their unions.  The common people were tired of going without and sitting in the dark.  Especially when they were paying enormous taxes (the Beatles left Great Britain to escape the confiscatory taxes).   Economically, life was becoming more similar to that like in the Soviet Union.  The difference was that the Soviet people didn’t know what life under capitalism could be like.  The British, of course, did.  And they could vote.

And they did.  Labour was out.  The conservatives were in.  Margaret Thatcher took on the unions and privatized industry.  These moves were not popular at the time because poorly ran businesses lost government subsidies and failed.  Unemployment grew.  In the short term.  Things did get better in time, though.  You see, propping up bad businesses with government subsidies forced consumers to pay more for inferior goods.  This was in addition to already paying high taxes to subsidize the businesses in the first place.  It just couldn’t go on.  And didn’t.  They controlled costs.  The people kept more of their earnings.   They spent and stimulated.  The economy grew.  As did the living standards of the common Briton.

THE MORAL OF this lesson is to be careful what you wish for.  Whenever anyone talks about putting the people first, warning flags should go up.  History is full of people who have said this.  And just about every one of them was a liar.  They want something.   Anyone who read Mein Kampf would have known Hitler’s plans.  Some did but chose not to believe.  They just wanted to believe the lie.  They wanted what Hitler was offering.  It was just too good to be true.  And, as it turned out, it was. 

When they nationalized British industry the goal was not to repeat what had happened during the Great Depression.  For anyone who had lived through the Great Depression didn’t want to live through another.  So there was popular support.  But nationalization didn’t improve life for the common Briton.    Instead, the life of organized labor got VERY good at the expense of the common Briton.  Until it couldn’t be sustained anymore by the common Briton.

So be careful what you wish for.  You might just get it.  And all the unintended consequences that come along with it.

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