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Cyprus Haircut: Germany's Social Darwinist Economic Miracle

Politics / Eurozone Debt Crisis Mar 18, 2013 - 04:03 PM GMT

By: Andrew_McKillop

Politics

ANGELA MERKEL WAS FIRM
The now celebrated "Cyprus haircut" of bank depositors' savings and private wealth, from the account of the smallest "man in the street" to those of the Russian oligarchs who have transformed Cyrus's banking system into a vast money-laundering machine, was described by Germany's Angela Merkel as follows:


"I think it is right that this step has been taken, and I think it's a good step that makes agreeing to help Cyprus definitely easier for us". She added: "Anyone having their money in Cypriot banks must contribute to the Cypriot bailout". (Newswires).

At its worst, made easier by there being no "nice side of the affair", this operation marks a major victory for Germany in its never-disclosed strategy of getting a revenge on history, for its wartime defeat. In Europe today, Germany is the only real winner, with the lowest unemployment and a rock-solid huge trade surplus. Everywhere else, there is a toxic mix of recession, debt, government deficit, mass unemployment and misery - called "austerity politics".

GERMAN ECONOMIC MIRACLES, THEN AND NOW
Commentators are already warning of the causal linkage between deliberately forcing citizens into unemployment and misery (AKA "austerity politics"), and the rise of extreme political movements. Germany in the 1930s is the classic case. As unemployment soared above 25% of the workforce, so did the votes for the Nazi Party. Immediately after it obtained total power in 1933, the Party operated its famous, but short-lived "economic miracle". In the 5 years 1933-1938 unemployment fell by 5.4 million or 96%. Through 1933-1937, Germany ran a trade surplus every year.

In Europe, the so-called Technocrats operating their now four-year-long process of huge bailouts for private banks, and ever-rising unemployment are acting in cynical disregard to the political result of their action. Unlike the Nazi "miracle", the likelihood of their action reducing joblessness is zero.

Underappreciated by many, the Nazi Party favoured "liberal" policies which avoided heavily taxing wealthy private citizens and major enterprises. It preferred crowd-pleasers like a series of laws making it impossible for Jews to work in Nazi Germany, creating jobs when the Jews fled, and laws excluding women from most types of work. Hitler had made it clear that women true to the Aryan race should stay at home and look after children. This again reduced the male unemployment rate.

Massively raising defence spending, from 3% of GDP in 1933 to 32% in 1939 employing 22% of all working Germans in defence-related industries, and outlawing all trade unions, also helped.

More importnt and dangerously similar to the de facto but never admitted underlying policy and strategy of today's German-dominated elite "technocrats" in Europe, through institutions ranging from the bank and finance sector to the ECB, the European Commission and its agencies, one of the first Nazi Party actions in it "miracle working" programme was to bring the bank sector into "close proximity" to the Nazi leadership - but in no way to nationalize it. In fact the opposite. In 1934 Hjalmar Schacht, president of the Reichsbank and the Party's Minister of Economics, stated that around 70% of the capital of Germany's corporate banks had been controlled by the Weimar Republic. Citing "unwarranted interference by the State",  and in quick succession the Commerzbank, Deutsche Bank and Dresdner Bank were reprivatized garnering large inflows of revenue for Germany's Treasury. The private owners of the newly private banks were of course "onboard" for the rest of the Nazi ride.

Similar privatization action was applied in most other sectors of the economy, but the underlying strategy was to lever ever-increasing State control. Economic historians often conclude that the Nazi Party, exactly like Europe's "technocratic" elites of today was not only looking for business community support, but sought a concentration of capital in a few trusted large corporate hands, operating a "stealth strategy" for more control over the economy. In the same way as Europe's elites of today, privatization was a tool to “facilitate the accumulation" of economic power in the hands of the Party's foremost collaborators.

LESSONS LEARNT
Learning an important lesson from history, todays German dominated "Eurocrat" programme for gaining total control of the economy - or whats left of the economy - avoids offending powerful external players. In Cyprus, Russian oligarchs will probably treat a one-time 10% "wealth tax" as a reasonable tax to pay on their money-laundering operations, as long as it is not repeated. Conversely, in 1941, the Nazi Party's "privatization" of American-owned German bank assets, with the only permitted corporate buyers being German, was a certain but often ignored factor driving the US into war with Germany.

Like our "Eurocrat" elite of today, the Nazi Party of the 1930s was Social Darwinist. Its leader, Adolf Hitler in 'Mein Kampf' had explained that the "competition-and-exclusion principle", his interpretation of Darwin's natural selection, not only favoured the Aryan race, but set the framework for economic triumph. This required the concentration of capital in the hands of a chosen elite, who would use this power not only to their own benefit, but also for the benefit of "ordinary Germans".

In 1931, in a speech that Angela Merkel could very easily recycle today, Hitler said: "I want everyone to keep what he has earned subject to the principle that the good of the community takes priority over that of the individual....every owner should feel himself to be an agent of the State…". In Cyprus today, even the Russian oligarchs will be forced to pay a 10% "money-laundering tax" on their scams, but this action will help draw the power elites ever closer together.

To be sure, in Cyprus today, the real scandal is how Europe let the Cypriot banks get into such deep trouble that there were no easy ways out and the "wealth tax" was seen as the least bad option. Average government friendly media adds that allowing countries like Greece and Cyprus into Europe’s financial "inner sanctum" creates moral hazard, scarcely concealed corruption, and dangerous financial instability. They add that when the house of cards collapses, alarmed investors look to governments to save them, but ignore the real process in play - the concentration of financial power in the invitation-only circle of approved hands.

With the now celebrated "Cyprus haircut" crowding out all analysis of Europe's crony bankster clan always moving forward in its linkage with the Eurocrats and selected external banksters - in the Cyprus case, Russian - Germany has stamped its own interpretation of "Social Darwinism" on the ever declining economy. Europe's new Third Reich has made it clear: it will always retain the right to take what it wants, where it wants, always operating with and for the elite.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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