The French government led by prime-minister Manuel Valls resigned this morning following the split provoked by the Minister for the Economy - Arnaud Montebourg - who said that he couldn't sanction the government's belief that the solution to France's economic woes lay in simply getting the public sector deficit down to the 3% level imposed by the Lisbon Treaty.
Montebourg was right. There is absolutely no reason to believe that austerity could fix things. The Germans and the ECB are putting pressure on governments to respect the limit on public sector deficit imposed by the Lisbon treaty. This sets the upper limit at 3% of GDP.
Have you ever wondered why the number is 3% of GDP? Shouldn't it be 0%? Surely, governments should be encouraged to run a balanced budget, right? They shouldn't be spending more than they can raise from taxation. So why 3%?
Well, if you look at the amount of taxpayers money that gets spent paying the interest payments on public sector debt (see my blog entry here), you will note that the Eurozone governments spent 2.9% of GDP in interest payments in 2013. Coincidence? No, I don't think so. I think that the 3% figure was specifically chosen to be a value where the total amount of public sector debt need not increase, but where it allows the banking sector to extract as much taxpayers money as possible. Indeed, I have argued that the 3% value was quite possibly suggested on the grounds that this was the amount that the UK's banking system has been extracting from UK taxpayers at least since the early 1950s.
Specifically, those interest payments cost the 18 Eurozone countries €279 billion in 2013, and that brought the total since 1995 to €5.16 trillion - which is over 57% of all Eurozone public sector debt, which just went over €9 trillion at the end of 2013.
Now, don't forget that the Banks who lend the "money" to our governments, don't actually have any money to lend. As the Bank of England admitted a few months ago, they just create the money used to make loans out of thin air - a point that was also stated with breathtaking clarity by Bernard Maris, a member of the government body of the Banque de France.
And, according to the Basel II and III banking regulations, Banks can create infinite amounts of this "money" when they lend to AAA to AA- rated governments, because they don't even need any capital to back up the loans. That's because such loans are considered to have a risk weighting of 0% - they simply don't count.
This surely has to be the biggest scam ever. Commerical banks can create infinite amounts of money out of thin air, with absolutely no capital to back up the loans. They then use this "money" to lend to our governments, who then agree to pay up to 3% of their nation's GDP to the bankers for service provided. They also manage to get the governments to sign a treaty that obliges them to find any such money by borrowing from the markets - otherwise they might borrow directly from Central Banks.
About the only thing that you can say is that the 3% GDP limit is designed so that the system can be run indefinitely without necessarilly leading to increases in the overall level of public sector debt.
Unfortunately, now the European economy has been hit by a massive recession, the only way to maintain the totally unjustifiable interest payments to the banking sector is to cut back on public sector services and government spending. All that is just to keep the parasites well fed.
It's all amazingly well planned. Any good parasite knows that it is not a good idea to take too much - otherwise you might kill your host. But, I for one have seen the enormous tapeworm that is feeding off the European economy. It's time to come up with a drastic cure to rid us of these parasites....
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