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Edge of Chaos is a political podcast starring Joe Ryan and Neurotoxin. Its aim is to have a free-flowing discussion of news and current events that also examines the empirical outcomes of public policy, avoiding biases based on ideology and policy intentions. Listener discretion is both advised and encouraged.

Thursday, June 26, 2014

Ukraine: From Slavery to Serfdom

My worst enemy would not accuse me of being a Putin supporter, and I'm certainly glad to see Russia slowly backing off and relinquishing its claims on Ukraine; but forgive me if I'm not jumping on the joy of freedom bandwagon for the Ukrainian people just yet. According to CNN yesterday:

"NATO foreign ministers on Wednesday endorsed a package of support strengthening the ability of Ukraine, which is not a member of the alliance, to defend itself.

...the package includes 'the creation of new trust funds to support defense capacity building in critical areas such as logistics, command and control, cyber defense and to help retired military personnel to adapt to civilian life,' according to NATO."

What does that really mean?

Put simply, Ukraine needs only look slightly past the Black Sea to Greece and Cyprus for a glimpse into its future. Countries don't have rich grandfathers that die. 'Trust fund' is just a more politically acceptable term for foreign debt; this after Ukraine has already been loaded up with 10s of billions of it to sustain its civilian economy through the crisis.

The governments of North America and Western Europe are not motivated by philanthropy or belief in democracy. They are saddled with banking systems that have been on publicly subsidized life support for the better part of a decade now, and have shown 0 signs of recovery despite the desperate re-writing of policy definitions and measurement adjustments, AND despite politicians like Obama and Hollande referencing these over and over like braindead parrots. As anti-EU parties from all sides of the spectrum sweeping the EU Parliamentary election last month demonstrated, people are catching on that central banking is a scam and are determined to let the predatory multinational corporations involved starve. Ukraine offers the banks and the center-left politicians who serve them the opportunity to pretend they are solvent for a few years by backing up toxic debt from Southern Europe with Ukrainian promissory notes. Sure, Transparency International ranks the corruption in Ukraine to be almost double that of Italy or Greece, and the World Bank ranks its development at 1/5th of those countries on a generous day; but perhaps the electorates don't know that. It just might work for a few years, and for an international criminal cartel - that's an unusually safe bet.

To make matters worse, this debt is earmarked for military expenditures, and subject to the approval of international organizations that Ukraine is not even a member of. In other words, "you will spend the money you owe us however we tell you". Even if you're still enamored with the fairy-tale of a single global economy where banks from rich countries invest in infrastructure and development in poor ones, and the poor ones then pay back the loans with stimulated domestic growth; Ukraine is not a romance novel you can curl up with by the fireplace. As we have witnessed with over a decade of military and security expenditure extravagance here in the US, it does not contribute to anything but a sharp economic downturn. This is common sense. The government cannot print the raw materials needed to produce weapons, military supplies, fuel, ammunition, or even food and other goods consumed by the war machine. It can borrow money from its own central bank, in other words PRINT it, to buy these. But supply is limited, and the increased demand drives up domestic prices without producing economic growth when they are expended; bringing us $4/gallon gasoline, runaway inflation on food which is conveniently excluded from the Consumer Price Index, and domestic businesses being forced to close their doors and lay off employees because they can no longer make ends meet. It takes a fundamental ignorance of economics to expect debt-repaying growth from security and defense loans; but from a crony capitalist perspective this makes perfect sense.

With every election, there is more and more of those rat bastard fringe politicians from both the right and the left in the legislatures on both continents - socialists, communists, nationalists, libertarians, theocrats, etc.; and the one thing they all  hate more than meddling in foreign countries using debt serfdom, is meddling there with guns and rockets. Forget boots on the ground, even a mention of a 'limited' airstrike in some desolate desert in the Middle East or North Africa raises an uproar and threats of no confidence votes or impeachment proceedings. There is simply no convincing the electorates THAT is a good idea. So if the center-left is threatened, the center-right that serves international death dealers like Halliburton and Raytheon is teetering on extinction, and the only way either can hope to create profit for their corporate masters is by holding hands. If predatory bankers are allowed to print 10s of billions of dollars or Euros to prolong their illusion of solvency, some of that money better be spent on defense or there is no hope of a majority vote in favor.

The good news is, there is no doubt in my mind that both types of corporate cartels are flying toward history's trash can. The size of Ukraine and its level of economic and political development virtually guarantee a default on any loans hastily shoved down its throat in the modern crisis; and a default that takes significantly less time to materialize than Italy's or Greece's and one whose magnitude makes bailouts simply infeasible. And unless you can do so with toilet paper fiat currency printed under the guise of some bigger project, no one is going to buy weapons and military equipment on a scale meant for superpower warfare - so when the banks go, what's left of the military-industrial complex is going with them.

But I do feel bad for the people of Ukraine. An ancient, beautiful country with an amazing culture and history; and their only option for escaping slavery to a murderous tyrant having wet dreams about a dead superpower is to sell themselves into indentured servitude to the decaying afterbirth of imperial aristocracies still struggling to preserve their nobility in a system demanding public accountability. We really haven't come remotely as far from the political and economic situations surrounding WWI, the Napoleonic Wars, or even the 30 Years War as we like to think. On the bright side though, NONE of the entrenched special interests involved in those conflicts survived them, and my hope for the modern situation is that their looming disposition is less violent.

-Toxin

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